STRONGLY CASH GENERATIVE EARNINGS MODEL€¦ · 31/07/2020 · Adjusted cash flow from operations. 268.1. 274.0 (5.9) Net capex (31.2) (45.7) 14.5. Adjusted cash flow operations

STRONGLY CASH GENERATIVE EARNINGS MODEL

31 July 2020

2020 HALF YEAR RESULTS PRESENTATION

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This presentation contains certain forward-looking statements with respect to the financial condition, results, operations and business of Intertek Group plc. These statements and forecasts involve risk and uncertainty because they relate to events and depend upon circumstances that will occur in the future. There are a number of factors that could cause actual results or developments to differ materially from those expressed or implied by these forward-looking statements and forecasts. Nothing in this presentation should be construed as a profit forecast.

31 July 2020

0501 03Performance

Highlights

02 04H1 2020 Financial

Results Strategy Update Divisional Review Conclusion

GLOBAL PANDEMIC TRIGGERED UNPRECEDENTED GLOBAL SUPPLY CHAIN DISRUPTION

Global Asia PacificGreater China

South Asia Sub-Saharan AfricaMENAP

North America Europe and Central AsiaLatin America

Sources: www.worldometers.info/coronavirus/ and www.ecdc.europa.eu

Confirmed COVID-19 cases (daily basis)

0

100k

200k

Jan Feb Mar Apr May Jun

0

20k

40k


0

8k

16k


0

10k

20k


0

1,500

3,000


0

5k

10k

Jan Feb Mar Apr May Jun0

12k

24k


Active cases: 3,617,581Total deaths: 486,528

0

30k

60k

Jan Feb Mar Apr May Jun0

50k

100k


THE PANDEMIC HAS SEVERELY RESTRICTED GLOBAL MOBILITY

Global Asia PacificGreater China

South Asia Sub-Saharan AfricaMENAP

North America Europe and Central AsiaLatin America

Sources: Google. Baseline is measured as the 5-week period Jan 3 – Feb 6 2020.

(2%)(16%)

(45%)(34%)

(22%)

(80%)

(60%)

(40%)

(20%)

-

Feb Mar Apr May Jun

(12%) (11%) (15%) (10%) (6%)

(80%)

(60%)

(40%)

(20%)

-

Feb Mar Apr May Jun

(1%)

(27%)

(51%)(36%)

(19%)

(80%)

(60%)

(40%)

(20%)

-

Feb Mar Apr May Jun

1%

(24%)

(58%) (51%)(42%)

(80%)

(60%)

(40%)

(20%)

-

20%

Feb Mar Apr May Jun

1%

(17%)

(44%)(32%)

(22%)

(80%)

(60%)

(40%)

(20%)

-

20%

Feb Mar Apr May Jun

1%

(21%)

(51%) (44%)(31%)

(80%)

(60%)

(40%)

(20%)

-

20%

Feb Mar Apr May Jun

(0%)(14%)

(65%)

(44%)(31%)

(80%)

(60%)

(40%)

(20%)

-

Feb Mar Apr May Jun

2%

(19%)

(64%)(49%)

(33%)

(80%)

(60%)

(40%)

(20%)

-

20%

Feb Mar Apr May Jun

0%

(19%)

(48%)(34%)

(21%)

(80%)

(60%)

(40%)

(20%)

-

20%

Feb Mar Apr May Jun

5

WE RESPONDED QUICKLY WITH LASER FOCUSSED PRIORITIES

Employee Health and

SafetyCustomer

Service Margin Cash Engagement

• Employee health and safety is our first priority

• Specific Covid-19 HSE policy adopted globally covering all key topics, including PPE usage, hygiene standards / processes, travel restrictions and work from home practices

• Passionate, customer-centric organisation providing mission critical ATIC services

• Uninterrupted customer service

• Rapidly broughtinnovations to market

• Launched Protek – the world’s first industry agnostic end-to-end Health, Safety and Wellbeing ATIC programme

• Cash collection controls remain in place

• Capex review and reduced by c.1/3rd to £90-100m

• Voluntary 6 month salary deferral scheme for top 1,200 management

• Local authority tax deferrals where available

• Disciplined approach to margin management

• Strict controls on pricing and cost

• Additional measures include:

- Pause on all recruitment - 6mth delay on annual

salary increase- Government support

• Best-practices to engage with remote working employees

• World-class digital communication platform, WhatsIn

• Daily Intertek Hero recognising our colleagues

6

WE OPERATE A STRONGLY CASH GENERATIVE EARNINGS MODEL

H1 2020 H1 2019 YoY % / bps(Actual rates)

YoY % / bps(Constant rates)

Revenue £m 1,330.6 1,442.6 (7.8%) (7.8%)

Like-for-like revenue1 £m 1,326.7 1,440.9 (7.9%) (8.0%)

Operating Profit2 £m 168.2 248.9 (32.4%) (32.2%)

Adjusted Operating Margin2 (%) 12.6 17.3 (470bps) (460bps)

Adjusted diluted EPS2 (p) 63.1 98.2 (35.7%) (35.5%)

Interim Dividend (p) 34.2 34.2 -

Adjusted FCF2 £m 141.9 104.6 35.7%

Financial net debt £m 650.1 826.3 (21.3%)

Financial Net debt / Adj EBITDA 2,3 1.1x 1.4x (IAS 17)

7Notes: (1) Like-for-like revenue includes acquisitions following their 12 month anniversary of ownership and removes the historical contribution of any business disposals/closures; (2) Before separately disclosed items; (3) On a last twelve months basis. As IFRS 16 was adopted on 1 Jan 19 and measures are on a last twelve months basis, results for HY 20 are on an IFRS 16 basis and HY 19 are on an IAS 17 basis.

WE DELIVERED A RESILIENT REVENUE AND A ROBUST MARGIN PERFORMANCE

Note: (1) At 2020 constant currency rates; (2) Adjusted. Bubble size represents H1 2010 revenue in left hand chart and Operating Profit in right hand chart

Operating Profit and margin1,2Revenue YoY 1

(15.0%)

(10.0%)

(5.0%)

0.0%(15.0%) (10.0%) (5.0%) 0.0%

Tota

l rev

enue

gro

wth

1(%

)

Like-for-like revenue growth1 (%)

Resources: (2.1%)

Products: (8.7%)

Trade: (10.2%)

£800.3mrevenue

£235.6m

£294.7m

(800)bps

(600)bps

(400)bps

(200)bps

0(60.0%) (40.0%) (20.0%) 0.0%

Mar

gin

mov

emen

t YoY

1(b

ps)

Operating profit YoY1 (%)

5.3%

Resources: (15.4%)

Products: (28.3%)

Trade: (54.6%)

16.9%operating

margin

£235.6m

6.8%

8

TARGETED COST MANAGEMENT TO KEEP FULL ATIC CAPABILITY FOR RECOVERY AND GROWTH

Portfolio review

• Growth and margin accretive portfolio strategy

• Organic and inorganic investments

• Consolidation of facilities

Headcountreduction Savings2

2017 400 £7m

2018 400 £7m

2019 300 £5m

H1 2020 150 £4m

Productivity management Portfolio strategy

• Monthly performance reviews for Top 30 countries/16 Business Lines

• Business Line and country benchmarking

• Site span of performance management

+c.4%

vs Budget 20Total costs c.(6%)

vs H1 19Total costs (2.6%)£1,194

m

Total Costs

H1 19

Total Costs

Budget

£1,162m

Total Costs

H1 20

Note: (1) Total costs defined as External revenue less Adjusted Operating Profit; (2) Annualised cost savings

1 1 1

9

STRONG CASH PERFORMANCE

190 206 228

271 270

336

255

HY 14 HY 15 HY 16 HY 17 HY 18 HY 19 HY 20

Adjusted EBITDA (£m)1

14-20 CAGR: 5.1%

14-20: (720)BPS

53

85 59

132

99 105

142

HY14 HY15 HY16 HY17 HY18 HY19 HY20

Adjusted Free Cash Flow (£m) 1

14-20 CAGR: 18.0%

10.6% 11.0%

13.4%

8.2% 7.7%6.4%

3.4%


Working Capital as % of Revenue 1

125% 127% 125% 143%123% 126%

149%


Cash Conversion (%) 2

1.6 1.5

2.0

1.31.0

1.41.1


Financial Net Debt / Adjusted EBITDA 2

143164

146

218196

264 261

HY 14 HY 15 HY 16 HY 17 HY 18 HY 19 HY 20

Cash Generated from Operations (£m) 1

14-20 CAGR: 10.6%

Note: (1) IFRS 16 was adopted on 1 Jan 19 and as such results prior to 2019 are on an IAS 17 basis; (2) On a last twelve months basis. As IFRS 16 was adopted on 1 Jan 19 and measures are on a last twelve months basis, results for HY 20 are on an IFRS 16 basis and prior to that are on an IAS 17 basis.

10

0501 03Performance

Highlights



KEY P&L FINANCIALS

YoY %

H1 20 H19 Actual Rates Constant Rates

Revenue £1,330.6m £1,442.6m (7.8%) (7.8%)

Like-for-like revenue1 £1,326.7m £1,440.9m (7.9%) (8.0%)

Operating costs £1,162.4m £1,193.7m (2.6%) (2.7%)

Adjusted operating profit2 £168.2m £248.9m (32.4%) (32.2%)

Adjusted operating profit margin2 12.6% 17.3% (470bps) (460bps)

Adjusted diluted EPS2 63.1p 98.2p (35.7%) (35.5%)

Notes: (1) Like-for-like revenue includes acquisitions following their 12 month anniversary of ownership and removes the historical contribution of any business disposals/closures; (2) Before separately disclosed items 12

OPERATING MARGIN BRIDGE

17.3%

12.6%(280bps)

(150bps)(10bps) (20bps) (10bps)

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

18.0%

H1 1

9

Prod

ucts

Trad

e

Reso

urce

s

Divi

siona

l mix

Excl

udin

g FX FX

H1 2

0

(460bps) at constant rates

12.7%

13

£m @ actual exchange rates H1 20 H1 19 YoY

Adjusted operating profit1 168.2 248.9 (80.7)

Depreciation/amortisation 87.3 86.6 0.7

Change in working capital 6.9 (76.2) 83.1

Other2 5.7 14.7 (9.0)

Adjusted cash flow from operations 268.1 274.0 (5.9)

Net capex (31.2) (45.7) 14.5

Adjusted cash flow operations less capex 236.9 228.3 8.6

Other3 (95.0) (123.7) 28.7

Adjusted free cash flow 141.9 104.6 37.3

Financial net debt 650.1 826.3 (21.3%)

Financial net debt/Adjusted EBITDA (rolling 12 months)4 1.1x 1.4x (IAS 17) -

CASH FLOW & NET DEBT

Notes:(1) Before separately disclosed items; (2) Comprises special pension payments, equity settled transactions and other non-cash items; (3) Comprises: interest paid/received and tax, lease liability repayment. (4) On a last twelve months basis. As IFRS 16 was adopted on 1 Jan 19 and measures are on a last twelve months basis, results for HY 20 are on an IFRS 16 basis and HY 19 are on an IAS 17 basis. 14

£0 m

£100 m

£200 m

£300 m

£400 m

£500 m

£600 m

£700 m

£800 m

H2 20 H1 21 H2 21 H1 22 H2 22 H1 23 H2 23 H1 24 H2 24 H1 25 H2 25 H1 26 H2 26

RCF New USPP USPP

WELL BALANCED DEBT MATURITY PROFILE ENHANCED BY NEW $200M USPP

• New $200m USPP signed June 2020: $120m 3 year / $80m 5 year • Drawdown in December 2020, aligned with repayment of existing $150m facility • Strong demand resulting in an attractive coupon rate of c.2%

GBP/USD @ 1.25 15

FINANCIAL GUIDANCE

Note: Before any material change in FX rates and any additional M&A

FY 2020 Guidance (IFRS 16)

Net finance cost £35 - 38m

Effective tax rate 25.5 – 26.0%

Minority interest £19 – 21m

Diluted shares (as at 30 June 2020) 162.4m

Capex £90 – 100m

Financial net debt £625 – 675m

Full year FX impact Broadly neutral

16

0501 03Performance

Highlights



SUPPLY

TIER 3 TIER 2 TIER 1

PRODUCTION

3RD PARTY OWNED

DISTRIBUTION

TRANSPORTATION DISTRIBUTION CENTRES

RETAIL

IN-STORE ONLINE CONSUMER

INSPECTION

CERTIFICATION

ASSURANCE PROVIDES AN END-TO-END ASSESSMENT OF QUALITY & SAFETY PROCESSES

TESTING, INSPECTION & CERTIFICATION PROVIDES QUALITY & SAFETY CONTROLS

TESTING

ASSURANCE

©Intertek Group

RISK BASED QUALITY ASSURANCE

MISSION CRITICAL ATIC SERVICES WILL BENEFIT FROM COVID-19 RECOVERY

• Enabling our customers to identify and mitigate intrinsic risk in their operations, their supply and distribution chains and quality management systems

• Evaluating how our customers’ products and services meet and exceed quality, safety, sustainability and performance standards

• Validating the specifications, value and safety of our customers’ raw materials, products and assets

• Formally confirming that our customers’ products and services meet all trusted external and internal standards

18

DEEP AND LONG-LASTING CUSTOMER RELATIONSHIPS

Intertek Total Quality Assurance expertise delivered

consistently, with precision, pace and passion, enabling

our customers to power ahead safely

Customer Centric

Entrepreneurial, putting the Customer 1st

Net Promoter Score

Listening to c.7,000 customers per month

Data Intelligence

Benchmarking by site, service, and customer

TQA Value Delivery

Disciplined operating processes and continuous

ATIC innovations

Our TQA Customer Promise

19

RESEARCH & DEVELOPMENT

RAW MATERIALS SOURCING

COMPONENT SUPPLIERS

MANUFACTURINGTRANSPORTATION

DISTRIBUTION & RETAIL

CHANNELS

CONSUMER MANAGEMENT

Assurance | Testing | Inspection | Certification

Our Customer Promise

Intertek Total Quality Assurance expertise delivered consistently with precision, pace and passion, enabling our customers to power ahead safely

Helping corporations manage the complexity of their supply chains by taking a systemic risk-based approach to quality assurance

INTERTEK TQA VALUE PROPOSITIONA SYSTEMIC APPROACH TO QUALITY ASSURANCE

Assurance ensures our customers identify and mitigate the intrinsic risk in their operations, supply chain and quality management systems

Assurance

Testing is evaluating how products and services meet and exceed quality, safety, sustainability and performance standards

Testing

Inspection

Inspection is validating the specifications, value and safety of raw materials, products and assets

Certification is certifying that products and services meet trusted standards

Certification

20

INNOVATION AND KAIZEN

INNOVATIONS: CUSTOMER FACING DIFFERENTIATED SOLUTIONS

KAIZEN: OPERATIONAL MARGIN ACCRETIVE SOLUTIONSSHARED SERVICES SYSTEMSOPERATING SYSTEMS

INNOVATIONS IN ADJACENT SEGMENTSINNOVATIONS FROM THE CORE

Launch of POSI Check

BREAKTHROUGH INNOVATIONS

5G Testing Centre, Shenzhen First Sustainable Wine bottle

21

INNOVATIONS: PRODUCTS

INTERTEK PROTEK• Innovation: The world’s first industry-

agnostic, end-to-end health, safety and wellbeing assurance programme for people, workplaces and public spaces, providing audit, training, inspection, verification and certification solutions.

• Customer Benefit: Based on Intertek’s unique approach to total quality, Protek safeguards people, systems and processes, facilities, materials, surfaces and products.

INLIGHT 2.0• Business Assurance Innovation: Our market-

leading supply chain compliance solution now with enhanced analytics and integration of our Wisetail™ dynamic online learning platform.

• Customer Benefit: Provides greater flexibility, customisation and visibility. Clients can turn potential disruptions and compliance irregularities to their competitive advantage.

ALCHEMY PLAYBOOK• Business Assurance Innovation: An app to

enable clients to create, deliver, and validate job-specific training, right on the production floor. Playbook also tracks employees’ job qualifications, so clients can quickly find a qualified worker for any job for their facility or operations.

• Customer Benefit: Alchemy Playbook can be used on any mobile device and makes it easy to for clients to deliver consistent, accurate training, while helping to optimise resources and increase productivity.

22

INNOVATIONS: TRADE

INTERTEK INVIEW FOR GTS• GTS Innovation: Our unique remote auditing

and inspection solution, which connects clients in real-time via a live video stream to our team of technical experts

• Customer Benefit: Inview reduces turnaround times and enhances transparency with better and faster access to Intertek’s technical inspection experts. Potential issues are identified during inspection and follow-up actions can be discussed without delay. Where travel and access restrictions prevent the conduct of in-person inspection services, Inview offers greater flexibility and a more sustainable alternative.

BLOCKCHAIN POWERED POST-TRADE MANAGEMENT• Caleb Brett Innovation: Intertek Caleb Brett

is partnering with UK-based blockchain platform VAKT to deliver digitised Assurance solutions to the global commodities trading industry.

• Customer Benefit: Integration with the VAKT platform helps de-risk quality issues related to transposition of data and leads to a material improvement in turnaround time.

DIGITAL CETANE TESTING (SHANGHAI)• Caleb Brett Innovation: Caleb Brett’s new

Cetane Rating Engine is the only one of its kind in China for determining and certifying the ignition quality of diesel fuel, and supports the government on its nationwide fuel quality program to prevent and control air pollution

• Customer Benefit: Clients benefit from state-of-the art fuel testing technology as environment regulations become increasingly demanding.

23

INNOVATIONS: RESOURCES

INTERTEK CARBON CLEAR• Industry Services Innovation: The world’s

first independent certification program that independently verifies the upstream carbon intensity per barrel of oil.

• Customer Benefit: Brings unique clarity on the carbon impact of cradle-to-gate operations across all aspects of Oil & Gas exploration and production, providing producers with continuous opportunities to reduce their carbon emissions and participate in the transition to a low carbon economy.

WINDFARM ASSURANCE• Industry Services Innovation: An end-to-end

offshore windfarm solution incorporating site selection and characterization, feasibility studies, survey and installation oversight, Environmental Impact Assessments (EIAs) and scoping studies, metocean assessments, and risk management for a variety of offshore developments.

• Customer Benefit: Clients can proceed safely with the deployment of their most complex projects in renewable energies.

XRD BATCH PROCESS FOR IRON ORES• Minerals Innovation: A unique batching

method to speed up X-Ray Diffraction assessments of iron ores by processing with set phases and a pre-set refinement strategy

• Customer Benefit: Delivers results faster to our clients and reduces the cost of analysis.

24

THE WORLD WILL BE A BETTER AND SAFER PLACE POST COVID-19

BUILD BACK EVER BETTER

• Increased supply resilience• Faster access to critical supplies• Increased regulation• Improved supply intelligence• Higher focus on operational

sustainability• End-to-end traceability

SAFER SUPPLY

• Higher health, safety, well-being standards everywhere

• Mainstream usage of masks • Increased investment in health care • Increased investment in pharma

industry• Better safety risk management

locally & globally

BETTER PERSONAL SAFETY

• Stay local lifestyle• Working remotely• Distance learning• E-commerce shopping• Infrastructure investments in

sustainability

LOWER CARBON USE SOCIETY

25

BUILD BACK EVER BETTER WILL MAKE THE TOTAL QUALITY ASSURANCE MARKET GREATER

GLOBAL ATIC MARKET GROWTH OPPORTUNITY

$50BNCurrently

outsourced

Untappedpotential

$200bnCurrently in-house

CUSTOMER RETENTION

CUSTOMER PENETRATION

ATIC CROSS-SELLING

NEWCUSTOMER

WINS

CUSTOMER OUTSOURCING

01

02

03

04

05

26

ATTRACTIVE QUALITY ASSURANCE STRUCTURAL GROWTH DRIVERS

PRODUCTS ATIC60% OFREVENUE81% OFPROFIT

TRADE ATIC22% OFREVENUE12% OFPROFIT

RESOURCES ATIC18% OFREVENUE7% OFPROFIT

LONG-TERM GROWTH

GROWTH OUTLOOK: GDP+ ORGANIC REVENUE GROWTH IN REAL TERMS

Increased demand for Smart products

Increased focus on safety, performance and quality

Faster innovationcycle

Growth in Brands, SKUs & e-Commerce

Population Growth & social mobility GDP growth

Development of regional trade

Improvements in transport infrastructure

Increased need forEnd to end traceability

Increased Focus on Operational Sustainability

Population Growth& social mobility

Investment in E&P, Storage & Transportation

Total Energy withdiversified portfolio

Accelerated transition to renewable energies

Increased Focus onOperational Sustainability

Digital Supply chain management

GDP GROWTHGDP+

Higher demand for healthy & sustainably sourced products

Emerging Markets growing Middle Class

ATIC Risk-based quality assurance

People Assurance

Supply Intelligence & Resiliency

Corporate Sustainability

Health, Safety and Wellbeing

Enterprise Cyber-security

CORPORATE ASSURANCEIncreasedregulation

27

GDP GROWTH$250BN+ GLOBAL ATIC MARKET

$50bn Currently Outsourced

$200bn Currently In-House

Untapped Potential TQA SUPERIOR CUSTOMER SERVICE

• Global network of state of the art facilities

• Industry leading Technical expertise

• Unique ATIC offering

• Customer proximity with NPS

• Pioneering innovations

POWERFUL PORTFOLIO

• Leadership positions

• Scale operations• Growth accretive• Margin accretive• Disciplined capital

allocation

HIGH QUALITY COMPOUNDER EARNINGS MODEL

• GDP + like-for-like growth

• Mission critical services

• Strong pricing power

• High Margin and Strongly cash generative

• Strong ROIC

PASSIONATE CUSTOMER-CENTRIC ORGANISATION

• Passionate & innovative culture

• Customer 1st structure

• Precise operating procedures

• Aligned reward system and frequent recognition

• Leading training and coaching

EVER BETTER PERFORMANCE MANAGEMENT

• Site-BL-Country-Region-GBL-Group data analytics/ benchmarking

• Leading and lagging indicators

• Weekly, monthly, Quarterly cadence

• Continuous improvement

• Total sustainability

WELL POSITIONED TO SEIZE THESE GROWTH OPPORTUNITIES

GROWTH OUTLOOK: GDP+ like-for-like REVENUE GROWTH IN REAL TERMS 28

TRACK RECORD OF VALUE CREATION WITH HIGH QUALITY EARNINGS MODEL

INTERTEK RANKS 1st IN THE FTSE 100 IN ANNUAL DIVIDEND GROWTH 2003-19: 17% CAGR

20.8 25.5 28.1 33.7 41.0 46.0 49.1 52.362.4

71.3

99.1 105.8

FY 0

8

FY 0

9

FY 1

0

FY 1

1

FY 1

2

FY 1

3

FY 1

4

FY 1

5

FY 1

6

FY 1

7

FY 1

8

FY 1

9

Revenue (£m) Adjusted EPS (p)

Cash Generated from Ops (£m) Dividend (p)

1,004 1,237 1,374 1,749

2,054 2,184 2,093 2,166 2,567 2,769 2,801 2,987

FY 0

8

FY 0

9

FY 1

0

FY 1

1

FY 1

2

FY 1

3

FY 1

4

FY 1

5

FY 1

6

FY 1

7

FY 1

8

FY 1

9

11y CAGR 10.4%

67.1 81.5 89.4107.2

131.2 138.6 132.1 140.7167.7

191.6 198.3 211.7

FY 0

8

FY 0

9

FY 1

0

FY 1

1

FY 1

2

FY 1

3

FY 1

4

FY 1

5

FY 1

6

FY 1

7

FY 1

8

FY 1

9

11y CAGR 11.0%

11y CAGR 15.9%

194278 271 289 333 379 387 442

543 579 581 637

FY 0

8

FY 0

9

FY 1

0

FY 1

1

FY 1

2

FY 1

3

FY 1

4

FY 1

5

FY 1

6

FY 1

7

FY 1

8

FY 1

9

11y CAGR 11.4%

Note: 2019 Adjusted EPS and Cash Generated from Ops presented on an IAS 17 basis for comparability purposes

High margin, strongly cash

generative earnings model

DisciplinedCapital allocation

Strong freecash flow

Margin accretiverevenue growth

Investments inhigh-growth and

high-marginsectors

GDP+ organicrevenue growth

in real terms

29

0501 03Performance

Highlights



RESILIENT REVENUE AND ROBUST MARGIN PERFORMANCE IN PRODUCTS

Growth Drivers

Increased number of Brands & SKUs

Supply chain expansion in new

marketsIncreased demand in

chemical testingSoftlines Double-digitnegative

Hardlines

Electrical & Connected World

HY20 Actual LfL

Innovation from our customers leveraging wireless technology

Increased demand for chemical testing

Innovative inspection technology

Double-digitnegative

Electrical appliance innovations to provide better efficiency and

connectivity

Increased demand for IoT Assurance services, including

cyber securityLow-single-digit

negative

(8.4%) CCR(7.7%)

(8.7%) CCR(8.0%)

(28.3%) CCR(27.9%)

867 800

H1 19 H1 20

Revenue (£m)

188

135

H1 19 H1 20

Operating Profit1 (£m)

866 797

H1 19 H1 20

Like-for-like Revenue (£m)

21.7% 16.9

%

H1 19 H1 20

Operating Margin1 (%)

(470)bps CCR(480)bps

31Note: (1) Adjusted, before separately disclosed items

Growth Drivers

ISO standards upgrades

Increased focus of corporations on supply chain

and risk management

Increased consumer and government focus on ethical

and sustainable supplyBusiness Assurance

Building & Construction

Transportation Technology

Growing demand for greener, safer and higher quality commercial buildings

Increased investment in large infrastructure projects

Continued investment of our clients in new models and new

fuel efficient engines

Growth in the hybrid / electric engine

segment

Food

Chemicals and Pharma

Continuous food innovation

Increased focus on the safety of supply chains

Growth in the food service assurance

business

Increased scrutiny on emissions

Growth of SKUs

Expansion of the supply base in emerging markets

Increased concerns on product safety and

traceability

HY20 Actual LfL


High-single-digitnegative


Mid-single-digitnegative

Stable growth

RESILIENT REVENUE AND ROBUST MARGIN PERFORMANCE IN PRODUCTS

32

Global and regional trade structural growth drivers Increased transport infrastructureCaleb Brett

Government & Trade Services

AgriWorld

Award of new contracts GDP growth Population growth

The expansion of our clients’ supply chains in fast growing markets New customer wins

TRADE BENEFITED FROM AGRI DEFENSIVE STRENGTHS

Growth DriversHY20 Actual LfL

Stable growth



333 295

H1 19 H1 20

Revenue (£m)

(10.2%) CCR(11.4%)

46

20

H1 19 H1 20


(10.2%) CCR (11.4%)

333 295

H1 19 H1 20


(54.6%) CCR (56.3%)

13.8%

6.8%

H1 19 H1 20


(670)bps CCR(700)bps


COMMENDABLE REVENUE AND MARGIN PERFORMANCE IN RESOURCES

Minerals demand Technological innovationMinerals

Capex Inspection

Opex Inspection

Demand for energy Asset productivity Technological innovation

Capacity utilisation Asset productivityAgeing of equipment

Outsourcing

Growth Drivers

Good growth

HY20 Actual LfL


Robust growth

243 236

H1 19 H1 20

Revenue (£m)

(2.2%) CCR(3.1%)

15 13

H1 19 H1 20


(2.1%) CCR (3.0%)

242 235

H1 19 H1 20


(15.4%) CCR (15.4%)

6.1%5.3%

H1 19 H1 20


(90)bps CCR (80)bps


0501 03Performance

Highlights



WELL PLACED TO SEIZE GROWTH OPPORTUNITIES AHEAD

• Industry leader in an attractive $250bn ATIC market with increased needs for quality assurance

• Scale positions in end-markets and 100+ countries with a unique Total Quality Assurance proposition offering superior customer service

• Sustainable value creation with high quality compounder earnings model

• Innovative culture and operational discipline making Intertek Ever Better… Ever Stronger

• Well positioned to benefit from the post Covid-19 growth opportunities

36

GROUP PERFORMANCE (H1 19 – H1 20)

243.1 235.6

332.7 294.7

866.8 800.3

1,442.61,330.6

H1 19 H1 20

Revenue (£m)

14.9 12.646.0 20.1

188.0

135.5

168.2

H1 19 H1 20

Adjusted Operating Profit (£m)248.9

Margin Key Metrics H1 2020H1 19 H1 20 % Group

Revenue% Group

ProfitLike-for-like Revenue

Growth1

Products 21.7% 16.9% 60% 81% (8.7%)

Trade 13.8% 6.8% 22% 12% (10.2%)

Resources 6.1% 5.3% 18% 7% (2.1%)

Group 17.3% 12.6% 100% 100% (8.0%)

Note: (1) At 2020 constant currency rates38

KEY INVESTOR INFORMATION

Key dates:July - October Trading Update 24 November 2020

FY20 Results Announcement 2 March 2021

Conference attendance:Bernstein, Strategic Decisions Conference, London 23 September 2020 CEO, IR

Berenberg, Testing, Inspection & Certification Conference, London 1 October 2020 CEO, IR

Key contacts:Denis Moreau, VP Investor Relations;

+44 (0)20 7396 3400;

[email protected]

www.intertek.com/investors

mailto:[email protected]

http://www.intertek.com/investors

Documents

STRONGLY CASH GENERATIVE EARNINGS MODEL€¦ · 31/07/2020 · Adjusted cash flow from operations. 268.1. 274.0 (5.9) Net capex (31.2) (45.7) 14.5. Adjusted cash flow operations