WELL POSITIONED TO NAVIGATE AN UNPRECEDENTED PANDEMIC MAY 2020 TRADING STATEMENT 21 May 2020
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. IFRS 16 was adopted on 1 January 2019 for our statutory reporting, without restating prior year figures. As a result, the discussion of our operating results is on an IAS 17 basis for all periods presented, unless otherwise stated. Nothing in this presentation should be construed as a profit forecast. 21 May 2020 2
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INDUSTRY LEADER WITH HIGH QUALITY EARNINGS MODEL • Global network of state-of-the-art operations in 100 + countries with subject matter experts • Scale and with market-leadership positions across the Product, Trade and Resources • Depth and breadth of mission-critical ATIC High margin, solutions strongly cash generative earnings model • High-performance, passionate organisation • High-margin and strongly cash generative earnings model and disciplined capital allocation policy
TRACK RECORD OF CONSISTENT VALUE CREATION Adj. Operating Margin (%) Revenue (£m) Adjusted EPS (p) +170 2,987 +43% 17.2% 211.7 +60% bps 15.5% 2,093 132.1 FY14 FY19 FY14 FY19 FY14 FY19 Free Cash Flow (£m) ROIC - Actual (%) Revenue per employee (£) 22.8% 66,425 380 +650 +21% +106% bps 54,845 16.3% 185 FY14 FY19 FY14 FY19 FY14 FY19 5
STRONG BALANCE SHEET • Group net debt of £629m*, 1.0 x net debt:EBITDA, down from 1.4x in prior year, reflecting continued strong cash generation • Debt has a long duration maturity profile, with Company having recently refinanced and extended its Revolving Credit Facility to US$850m with a syndicate of 8 banks in January 2020 for a 5-year term • Company had undrawn committed borrowing facilities of c.£325m* and confirmed that it is in a position to draw down on the Bank of England’s CCFF facility, should it need to do so. *At December 31, 2019 at IAS 17
PROGRESSIVE DIVIDEND POLICY • Group operates progressive dividend DIVIDEND (P) policy with targeted payout ratio of c.50% • Intertek ranks 2nd highest in the FTSE100 in-terms of dividend progression since 2002 IPO 14-19 CAGR: +16.6% 105.8 99.1 71.3 • FY 2019 dividend of £170m 62.4 52.3 49.1 • 105.8p per share, up 6.8% YoY • Final dividend paid on 11 June FY 14 FY 15 FY 16 FY 17 FY 18 FY 19 +6.8%
BRINGING QUALITY, SAFETY AND SUSTAINABILITY TO LIFE • Total Quality Assurance superior customer service • Powerful portfolio • High-quality compounder earnings model • Passionate customer-centric organisation • Disciplined performance management
AGILE AND FAST TO ACT • Adapted to new operating environment with agility and speed • Comprehensive policy and processes to protect our people’s health and safety • Helped our clients resume operations
THE SITUATION EVOLVED RAPIDLY… Insert Footer Here 10
FIVE OPERATIONAL PRIORITIES Employee Customer Health and Margin Cash Engagement Service Safety 11
HEALTH & SAFETY COMES FIRST INTERTEK COVID 19 HSE POLICY 1. The use of personal protective equipment, including face masks 2. Hygiene, control and prevention measures 3. Social distancing and restrictions on gatherings 4. The sanitisation of facilities 5. Guidance for visitors to our facilities 6. Guidance for those of our employees who work at client premises or locations in the field 7. Restrictions on international travel; and 8. Guidance on what to do if you feel unwell. 9. Working from home for non-billable employees 10. Health monitoring for employees who are unwell
MISSION-CRITICAL ROLE IN THE ECONOMY • Committed to providing uninterrupted service to our clients to make sure their supply chains operate safely • Keeping our operations open 24/7 to provide maximum support to our clients during these very difficult times • Increased client communication frequency to make sure we understand their needs quickly
SUPPORTING OUR CLIENTS WITH INNOVATIVE SOLUTIONS Curbside pick-up, Design, development, Food and Chemical & innovative sample pick-up testing and certification of Increased productivity and Pharma labs provided 24/7 solution to ensure social Healthcare and Medical shift working hours, testing and inspection distancing and safety of Lighting to aid diagnostics offering 24/7 hotlines services customers and healing IMMEDIATELY RESPONDING TO OUR CUSTOMERS’ NEEDS 14
REMOTE VIDEO INSPECTION AND AUDIT Remote inspection and audit solutions using Inview, Intertek remote solutions, enabling mission-critical ensuring the safety of our employees and customers business continuity Turnkey remote audit and inspection solutions, reducing turnaround times while providing transparency and peace of mind that work is Remote testing solutions using live video streaming performed to the highest Intertek standards Remote report review and certification services to ensure business continuity BETTER, FASTER AND MORE SUSTAINABLE ACCESS TO INTERTEK’S TEAM OF QUALIFIED AUDITORS, INSPECTORS AND EXPERTS 15
PRIORITY TESTING SERVICE FOR LIFE-SAVING MEDICAL EQUIPMENT Strong Intertek Medical Devices Services End-to-End Services for Medical Devices Platform • TQA expertise to support our non-medical clients in Surgical Lights Anaesthesia developing and manufacturing medical equipment • Prioritisation, and increasing services for critical care and life sustaining products Patient Monitors Ventilators • Suite of ATIC services for germicidal lighting products to sanitise hospitals, homes and workplaces Imaging Defibrillators equipment • Partnering with US FDA and UK MHRA to deploy programs for emergency use Electrosurgical Surgical beds • Center of excellence in Americas, Europe and Central units Asia, and Asia Pacific 16
GLOBAL SOLUTIONS FOR PERSONAL PROTECTIVE EQUIPMENT Supporting PPE manufacturers to meet heightened demand from governments, medical organisations and consumers… Safety Goggles and Masks Protective Gowns Gloves Face Shields • Bacterial filtration • Blood resistance • Sterility and performance • Fluid penetration • Transmittance tests • Pathogen resistance test covering latex single use gloves and reusable • Particle filtration • Optical tests • Dry microbial penetration vinyl / rubber gloves • Breathability • Mechanicals tests • Resistance to wet microbial penetration tests • PPE performance tests 17
EXPRESS SERVICE FOR HAND SANITISERS Intertek is providing services to test sanitisers according to WHO guidelines End-to-end efficacy testing of hand sanitizers to fight COVID-19 Label claim testing for hand sanitizers Complete set of tests to evaluate best-in-class Ethanol Suppliers for hand sanitizers 18
SUPPORTING THE PHARMA INDUSTRY Vaccine development Therapeutic development Contingency and risk support, support for screening and Diagnostic support to help mitigation services to repurposing and with testing of suspected maintain medicine supply re-deployment of existing reformulation of drug patient and developing chains. Supplier, and quality medicines which are products to combat testing kits for efficacy systems audits to support considered as potential continuous improvement COVID-19 treatments COVID-19 TOTAL QUALITY ASSURANCE FOR SOME OF THE WORLD’S LARGEST AND MOST INNOVATIVE PHARMACEUTICAL COMPANIES 19
LEADING INNOVATIONS IN THE ENERGY SECTOR RiskAware, innovative data analytics solution, enabling customers to focus their quality assurance and quality control Our 130+ years of experience in Oil & Gas industry, and spending on higher criticality equipment our remote inspections, data analytics, and e-reporting solutions across the world are ensuring continuity of Solutions to mitigate risks associate with storage shortages – Oil & Gas supply chains predictive blending, fuel stability solutions and stock monitoring activities for offshore floating storage Robotic sampling in Minerals testing labs, enabling our TQA experts to adhere to social distancing recommendations while being able to process increased sample volumes Remote video inspections and e-reporting tools for real-time reports are enabling seamless supply chains of our customers 20
CYBERSECURITY ASSURANCE SUPPORTING REMOTE WORKING Mass remote working network security penetration testing With our comprehensive cyber-security portfolio, Intertek is perfectly positioned to support our Critical network and infrastructure testing, and network customers to manage the cyber risks arising as their resilience testing employees' transition to home working Increased requirement for higher bandwidth fixed and wireless infrastructure Audit and on-site inspections of remote working practices in-home Security support for acceleration of 5G demand COMPLETE CYBER SECURITY CERTIFICATION, ASSURANCE, TESTING AND INSPECTION SERVICES ASSURING NETWORKS AND PRODUCTS ARE CYBER SECURE 21
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