Valued Quality. Delivered. 2010 Full Year Results Presentation 7 March 2011 Lloyd Pitchford Wolfhart Hauser Chief Financial Officer Chief Executive Officer
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. 7 March 2011 07/03/2011 2 www.intertek.com 2010 Full Year Results Presentation
Results presentation agenda Vanni Treves Introduction Chairman Wolfhart Hauser Acquisition of Moody Chief Executive Officer Lloyd Pitchford Financials Chief Financial Officer Business Update Wolfhart Hauser And Conclusion Chief Executive Officer 3
Acquisition of Moody 7 March 2011 Wolfhart Hauser Chief Executive Officer
A Strategic Step Becoming a leading provider of quality & safety services for the global energy market An important step in the ongoing development of Intertek Adds £293m revenue and 2,500 people in 60 countries The Transaction Strategic deal with strong financial returns • £450m cash • All funded by debt • Immediate EPS accretion 5
Overview Revenue ($m) 2,500 People 60 Countries, 80 Offices 500 12% CAGR 450 System 400 Industry Services Certification 87% Revenue 350 13% Revenue 300 Technical Asset Expert System 250 Integrity Inspection Consulting Certification 200 Inspection Inspection Safety Training ISO 9000/14000 150 Technical Risk Welding & Risk-based Auditing Assessment Materials Training Auditing 100 Expediting Data Analysis Placement of Food & Auto 50 Experts Supervision > 30,000 Certificates - Assessments 2006 2007 2008 2009 2010 Total revenue 6
Industry services Complementary coverage Finland Norway Sweden Moody Russia Intertek Moody Moody Poland Kazakhstan Intertek Pakistan Algeria Qatar Saudi Moody Moody India Arabia Intertek Nigeria Cameroon 2010 Revenue (£) Intertek Brazil 254m Moody Australia 63m Intertek Moody Total £317m Moody 7
Systems Certification Achieving total global coverage Intertek Finland Norway Sweden Moody Russia Intertek Poland Moody Kazakhstan Moody Pakistan Algeria Qatar Saudi India Moody Arabia Moody Nigeria Intertek Cameroon Intertek 2010 Revenue (£) Brazil 39m Moody Australia 23m Intertek Moody Total £62m 8
Billion tonnes of oil equivalent Energy Outlook Targeting one of the world’s 18 most important future markets 16 14 ~40% increase in total demand 2010-30 12 10 8 6 4 2 0 1990 2000 2010 2020 2030 Gas Oil Coal Hydro Renewables Nuclear Energy demand growth 1 Notes: 1. Includes biofuels. Source: BP Energy Outlook 2030 9
Energy Market Drivers Energy Increasing demand, capex and maintenance: ~10% pa growth Emerging Fast growth in emerging markets Markets Environmental Renewable infrastructure expansion; Environmental concerns needs Globalisation Globalisation of multinationals’ supply chain; Outsourcing of Q&S Quality & Increasing Q&S across geographies; Higher incident awareness Safety 10
…the Energy Path Energy Our Support Downstream Upstream Production R&D Trading Products Quality & Quantity OCA Control Optimise Manage Risks Process Problem-solve Measure AS, IS, OCA People Assets Design Construct Maintain Extend 11
Systems Certification …A Strategic Cross-Selling Opportunity The Customer Management: Quality Systems ISO 9000/14000…. Distribution Supply R&D Products Production Marketing & Chain Sales Intertek currently 12
Summary Intertek assumes a leadership position in quality and safety services for the global energy market Stronger service portfolio to be leveraged across the Intertek-client base Increase penetration of existing and new clients in Systems Certification Immediate value generation Diversification of Group portfolio with balanced exposures to growth 13
Lloyd Pitchford Chief Financial Officer Financial Performance 2010 Full Year Results Presentation
Results overview • Strong results; capturing recovering growth • Organic revenue growth of 7.7% • Operating margin 16.6% • Cash conversion of 96% • EPS and dividend up 10% 15
A strong and consistent growth record Revenue Operating profit (adjusted) £m £m 20% CAGR 22% CAGR 1,475 250 1,400 225 1,325 200 1,250 175 1,175 1,100 150 1,025 125 950 100 875 800 75 725 50 650 25 575 500 0 2006 2007 2008 2009 2010 2006 2007 2008 2009 2010 16
Financial highlights For the twelve months to 31 December 2010 +11.1% at actual Revenue £1,374.2m +7.7% at constant organic +8.9% at actual Operating profit 1 £227.5m +5.9% at constant organic -30bps at actual Operating profit margin 1 16.6% -30bps at constant organic Profit before tax 1 £211.9m +10.6% Diluted adjusted EPS 1 89.4p +9.7% Operating cash flow £271.4m -2.5% 1. Before separately disclosed items 17
Revenue growth + 11.1% Actual rates £m £m 1,400 18 1,400 1,374 1,374 25 13 16 14 96 46 1,350 1,350 25 1,300 1,300 21 1,237 1,237 1,250 1,250 1,200 1,200 + 7.7% Constant 1,150 1,150 rates 1,100 1,100 1,050 1,050 1,000 1,000 Acquisitions 2009 Organic FX 2010 Analytical OC&A 2009 CG C&E Industrial Minerals 2010 18
Organic revenue growth • Organic revenue growth * Resilient business model • Rapid return to strong % growth 12 • 10 “Intertek as One” 8 supporting revenue growth 6 4 2 0 YTD Q3 09 FY 09 YTD Q3 10 FY 10 03 to 08 Avg Q1 09 H1 09 Q1 10 H1 10 * Constant currency. YTD at each quarter 19
Cash flow • * Cash conversion % EBITDA conversion: 96% % • 120 DSO 64 days • 100 Cash flow from ops: £271m 80 • Capex: £66m; 60 4.8% of revenue • 40 Seven acquisitions: £42m 20 0 2006 2007 2008 2009 2010 * cash flow from operations / EBITDA Days Sales Outstanding (DSO) DSO 72 70 69 62 64 20
Interest, tax and dividend • Interest charge of £15.6m 1 , down £1.9m • Effective tax rate of 26.7% 1 • Net debt of £169.7m: 0.6x EBITDA • Separately disclosed items: £22.0m (2009 £22.3m) • 10% increase in full year dividend 1 Before separately disclosed items 21
Transaction highlights • Completion expected Q2 • Price: c $730m at completion • Valuation • In line with recent similar TIC transactions • 2009 EBITA $66m; 11.1x • 2010 EBITA $54m; 13.4x • Value • 3.5% transaction and integration costs in 2011 • $10m cost synergies p.a. by 2013 • EPS: 2011 accretive; strong long term accretion 22
Financing • Facility Maturity Profile Net debt: EBITDA of 0.6 $m • New facilities: 800 Total Facilities: 700 • $250m bonds (7,10 yrs) £0.9 billion 600 • $600m bank facility (5 yrs) 500 • £30m bank facility (5 yrs) 400 • $300m acquisition facility (2 yrs) 300 • Continued financial strength 200 to support growth 100 0 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Fixed Rate Bonds Bank Facilities Acquisition Facilities 23
Outlook • Intertek margin outlook pre-acquisition • 100 – 150 bps by 2013 • Organisational alignment • Back office efficiencies • Scale benefits • Outlook post acquisition of Moody • 2011 margin broadly similar to 2010 • Post transaction synergies and improving energy market • Enlarged Group up 100 – 150 bps by 2014 • Outlook: high single digit organic revenue growth and margin progression 24
Commercial & Electrical Consumer Goods Textiles Medical Toys & Consumer IT & Telecoms Healthcare & Beauty Home Appliances Building Products HVAC and Automotive Commodities (Oil, Chemical & Agri) Oil & Gas Minerals Government Services Industry & Assurance Chemical & Pharma (Industrial Services) (Analytical Services) Chemicals & Materials Food & Agriculture Pharmaceutical & Healthcare Industrial Services Health, Safety & Environment Systems Certification 25
Summary • Strong results; capturing recovering growth • Strongly financed • Moody acquisition • Positive outlook for high single digit organic revenue growth 26
Wolfhart Hauser Chief Executive Officer Operating Performance 2010 Full Year Results Presentation
Growth from new technology 8 Standards 1 Standard 2010 1980 250 hrs testing 50 hrs testing Electrical Safety : BS EN 60335-2-7 Mechanical Safety : BS EN 60335-2-7 Electrical & Mechanical EMC: BS EN55014-1; BS EN55014-2; BS EN61000-3-2; BS EN61000-3-3; Safety : BS 3456 Part 2 Chemicals : BS EN 62321 Waste : BS EN 50419 Labelling : BS EN60456 Energy Efficiency : BS EN60456 28
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