2016 FULL YEAR RESULTS PRESENTATION Strong Revenue, Earnings and Cash Performance 7 March 2017
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 2017 2
AGENDA Performance Highlights 01 2016 Financial Results 02 03 2016 Strategic Update 2017 Outlook by Division 04 Summary 05 3
01 PERFORMANCE HIGHLIGHTS André Lacroix Chief Executive Officer
STRONG REVENUE AND EARNINGS GROWTH Operating Profit (£m) Operating margin (%) Revenue (£m) 2,567 15.9 16.0 2,166 410 343 FY 15 FY 16 FY 15 FY 16 FY 15 FY 16 +18.5% +19.3% +10bps +8.8% CCR +10.4% CCR +30bps CCR Adjusted EPS (p) Dividend (p) ROIC (%) 167.7 62.4 21.7 140.7 20.0 52.3 FY 15 FY 16 FY 15 FY 16 FY 15 FY 16 +19.2% +19.3% +170bps CCR +9.6% CCR 5
M&A IN ATTRACTIVE MARKETS STRENGTHENING INTERTEK’S PORTFOLIO £242m additional revenue from M&A PSI MT Group FIT-Italia EWA Canada ABC Analitic Business model Building & Construction Building & Construction Food Electrical and Wireless Environmental Location US US Italy Canada Mexico Completion Date November 2015 October 2015 January 2016 October 2016 November 2016 Market position Leading US provider of testing Leading provider of materials Market leader in food assurance Leading provider of cyber Market leader in the provision of and assurance services to testing and speciality and inspection in Italy security and assurance services environmental water testing and commercial and civil construction inspection in for products, equipment and analytical services in Mexico construction markets New York networks across multiple industries Integration status Completed Completed Completed In progress In progress Synergy plans on track US infrastructure and non- US infrastructure and non- Increased focus on food supply Growth in IoT and wirelessly Increased corporate and Growth drivers residential building development residential building development chain risk management connected devices government focus on environmental safety 6
GROUP’S CENTRE OF GRAVITY MOVING TOWARDS HIGH GROWTH HIGH MARGIN SECTORS Group Revenue Group Operating Profit Group Margin £450m £3,000m 16.2% +10bps £410m +30bps CCR £2,567m £400m +40bps 16.0% +20bps CCR £2,500m 16.0% £343m 15.9% £2,166m £350m £324m £2,093m £2,000m £300m 15.8% 57% 73% £250m 51% 48% 68% 15.6% £1,500m 64% 15.5% £200m £150m £1,000m 15.4% 25% 23% 25% £100m 20% £500m 15.2% 22% 20% £50m 27% 24% 20% 16% 10% 7% £0m £0m 15.0% 2014 2015 2016 2014 2015 2016 2014 2015 2016 7
GDP+ ORGANIC GROWTH IN 93% OF EARNINGS 2016 Organic revenue growth CCR (%) Products 10.0% 73% of 4.1% Organic Trade earnings Growth in 20% Products & Trade of earnings 2016 Total revenue growth CCR (%) (10.0%) 20.0% 10.0% 7% of earnings Resources (15.0%) 8
CONTINUOUS COST AND MARGIN DISCIPLINE Organic operating margin improvement 1 +70bps +10bps FY 15 FY 16 Cost reduction activities Productivity management Portfolio strategy • Monthly performance reviews for Top • Organic & inorganic growth in Products Savings 2 Headcount 30 countries/16 Business Lines and Trade 2014 1,100 £10m • Business line and country • Strategic review of underperforming benchmarking business units 2015 200 £4m • Site span of performance management • Consolidation of facilities 2016 550 £10m • Targeted performance management Notes: (1) Organic growth at constant currency rates (CCR); (2) Annualised 9
STRONG CASH CONVERSION AND ACCRETIVE DISCIPLINED CAPITAL ALLOCATION Cash Conversion Cash Generated from Operations Working Capital as % of Revenue 139% £543m 9.3% 8.8% 136% £442m 7.1% £387m 125% +14.3% +22.9% FY 14 FY 15 FY 16 FY 14 FY 15 FY 16 FY 14 FY 15 FY 16 Dividend Investment & Growth Free Cash Flow £318m 62.4p £235m 52.3p £185m 49.1p £231m £35m £40m £109m £112m £106m +27.3% +35.2% +6.5% +19.3% FY 14 FY 15 FY 16 FY 14 FY 15 FY 16 FY 14 FY 15 FY 16 M&A Capex 10
02 2016 FINANCIAL RESULTS Edward Leigh Chief Financial Officer
KEY FINANCIALS YoY % Actual Constant FY 16 Rates Rates Revenue £2,567m 18.5% 8.8% Organic revenue 1 £2,322m 8.9% 0.1% Operating profit 2 £410m 19.3% 10.4% Operating profit margin 2 16.0% 10bps 30bps Adjusted Diluted EPS 2 167.7p 19.2% 9.6% Free cash flow £318m 35.2% increase Notes: (1) Organic revenue excludes the impact of acquisitions and disposals in 2015 and 2016; (2) Before separately disclosed items 12
OPERATING MARGIN BRIDGE 17.0% 50bps 16.6% 0bps 0bps 20bps 16.0% 15.9% (40bps) 16.0% (20bps) 15.0% +70bps at constant rates 14.0% 13.0% FY 2015 Products Trade Resources Divisional mix Excluding FX and Acquisitions FX FY 2016 & Disposals Acquisitions & Disposals 13
CASH FLOW & NET DEBT £m @ actual exchange rates FY 15 FY 16 • +19.3% at actual rates Adjusted operating profit 1 343.4 409.7 Depreciation/amortisation 85.2 89.5 Change in working capital 26.8 52.4 Other 2 10.3 13.7 • Cash conversion at 139% 5 Adjusted cash flow from operations 465.7 565.3 Net capex (110.9) (102.5) Other 3 (119.6) (144.7) • Increase in Free Cash Flow of 35.2% Free cash flow 235.2 318.1 Acquisitions 4 (231.3) (34.8) • Net debt / EBITDA ratio 1.5x Net debt 775.4 743.7 Notes: 14 (1) Before Separately Disclosed Items; (2) Comprises Special Pension payments, add back Equity Settled transactions and other Non-Cash Items; (3) Comprises: Exceptionals, Interest Paid/Received and Tax; (4) Total cash consideration in FY16 for 2016 acquisitions £34.8m, net of cash acquired £0.7m; (5) Excludes Special Pension payments of £2.8m
FINANCIAL GUIDANCE FY 2017 Guidance Net finance cost c.£25m Effective tax rate 25.5 – 26.0% Minority interest c.£17m Diluted shares (as at 31 December 2016) 162.6m £120 – 130m 1 Capex Net Debt £650 – 700m 2 Note: (1) Before any material change in FX rates; (2) Before any material change in FX rates and any additional M&A 15
03 2016 STRATEGIC UPDATE André Lacroix Chief Executive Officer
ATTRACTIVE GROWTH IN THE $250BN GLOBAL QUALITY ASSURANCE MARKET Existing customers: $50BN • Increase account penetration • ATIC cross selling Currently outsourced New customers: • New contracts $200BN Existing & New customers: • Outsourcing Currently in-house 17
STRUCTURAL GROWTH DRIVERS Products Trade Resources 57% of Revenue 73% of Profit 23% of Revenue 20% of Profit 20% of Revenue 7% of Profit Brand & SKU Faster innovation Long term demand Investment in Population growth GDP growth proliferation cycle for energy infrastructure Focus on Increased Development of Growth in transport Supply chain risk Growth in sustainable regulation regional trade infrastructure management alternative energy products Improvements in Increased focus on Focus on Growth in port Sustainability of Focus on health & safety, performance risk management traceability infrastructure energy supply safety and quality GDP growth Long-term growth GDP+ Mid- to long-term outlook: GDP+ Organic revenue growth 18
5X5 DIFFERENTIATED STRATEGY Our Customer Promise Intertek Total Quality Assurance expertise delivered consistently with precision, pace and passion, enabling our customers to power ahead safely 5 Strategic Priorities 5 Enablers Strong Brand Proposition Living Our Customer Centric Culture Superior Customer Service Disciplined Performance Management Effective Sales Strategy Superior Technology Growth and Margin Accretive Portfolio Energising Our People Operational Excellence Delivering Sustainable Results 5x5 Strategic Goals 1 2 3 4 5 Fully engaged Superior customer Margin accretive Strong cash Accretive, employees working in service in Assurance, revenue growth based conversion from disciplined capital a safe environment Testing, Inspection on GDP+ organic operations allocation policy and Certification growth 19
5X5 DIFFERENTIATED STRATEGY FOR GROWTH IN ACTION Revenue growth priorities 4. New 3. ATIC 5. Customer 2. Customer 1. Customer Customer Wins Cross-Selling Outsourcing Penetration Retention 20 20
Recommend
More recommend
