INTERTEK EXPANDS ITS GLOBAL ASSURANCE BUSINESS WITH THE ACQUISITION OF ALCHEMY A LEADING PROVIDER OF SAAS-BASED PEOPLE ASSURANCE SOLUTIONS 3 August 2018
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. 3 August 2018 2
ALCHEMY IS A LEADING TECHNOLOGY ENABLED PEOPLE ASSURANCE SOLUTION “With the acquisition of Alchemy, we are continuing to strengthen our TQA value proposition with the expansion of our global Assurance business into People Assurance , helping our clients operate with a higher level of quality assurance and productivity and with greater peace of mind.” STRONG LEADING ATTRACTIVE SCALABLE INTERNAL MARKET PEOPLE TECHNOLOGY INTERTEK COMMERCIAL GROWTH ASSURANCE PLATFORM SYNERGIES SYNERGIES OPPORTUNITIES CONTENT 3
ATTRACTIVE ASSURANCE GROWTH OPPORTUNITIES FINANCIAL HIGHLIGHTS ALCHEMY • • Transaction consideration: US$480m Founded in 2003 • • 2018E Billings of US$66m and 2018E adjusted Billings Headquartered in Austin, Texas EBITDA of US$22m • Employs c.270 people at four locations • Expected to be EPS accretive on a Billings basis from the across the U.S. and Canada first full year • Majority owned by the private equity firm • 5 Year guidance: The Riverside Company ▪ 20% growth p.a. in billings/revenues • 2016/18 organic Billings CAGR 17% ▪ >30% IFRS EBITDA by Year 5 ▪ >25% IFRS EBIT margin by year 5 ▪ Strong cash conversion / negative working capital ▪ ROIC > Group WACC by year 5 4
A STRONG TOP MANAGEMENT TEAM JOINING INTERTEK 5
AGENDA 1 ALCHEMY OVERVIEW 2 MARKET GROWTH OPPORTUNITY 3 STRATEGIC AND FINANCIAL CONSIDERATIONS 4 CONCLUSION 5 Q&A 6
1 ALCHEMY OVERVIEW
ALCHEMY SOLUTIONS HELP ASSESS, MONITOR AND IMPROVE EMPLOYEE SKILLS Alchemy provides people assurance solutions at the front end of the food supply chain 1 Combines innovative technology and proprietary, industry focused, content 2 Business model that is complementary to Intertek as it brings a new software enabled service 3 Delivers solutions to c.1,100 customers across 50,000 locations 4 67% of total Billings 33% of total Billings SAFETY & COMPLIANCE OPERATIONS & ENGAGEMENT • Assurance solutions for frontline employees in the North • SaaS-based solutions drive operational efficiency, American Food industry multi-dimensional communication, promote • Delivers SaaS-based food and workplace safety training innovative training and facilitate company cultures through a group-based / e-Learning platform • Mainly targeting food retail and restaurants • Proprietary library of over 400 digital courses • Courses can be customized by clients 8
FOCUS ON SAFETY & COMPLIANCE FOCUS ON SAFETY & COMPLIANCE SAFETY & COMPLIANCE BUSINESS UNIT OVERVIEW • Market Leader: The leading platform for frontline workers Alchemy’s solutions are unique and enhance existing systems due to: • Efficient solutions that allow for rapid group-based training, minimizing • Regulatory Compliance Reporting and Comprehensive Data employee and production downtime Analytics: Tracking of employee skills gaps / status expected / • Kitted hardware to mitigate the need for a customer computer room or laptop access workplace safety recordkeeping and audit reporting • Audience response remotes to drive engagement; remotes are assigned to specific employees, encouraging a “lean - in” classroom environment • Proprietary Content: Library of over 400 training courses and allowing managers to ensure that knowledge is retained creating high switching costs • Streamlined data collection and reporting capabilities at the employee-level • Platform Flexibility: Alchemy proprietary content edited with easy-to-use tools • Content Delivery: Can reach non-network enabled production worker through proprietary hardware • Alchemy Services Support: In-house team offers expert food safety regulatory consulting AUDIT AND REMEDY SKILLS GAPS OF FRONTLINE STAFF 9
FOCUS ON OPERATIONS & ENGAGEMENT BUSINESS UNIT OVERVIEW – ONTRACK & WISETAIL HOW CUSTOMERS USE ALCHEMY’S O&E SOLUTIONS • Holistic Solution: Content based on operating skills Operations- Ontrack Engagement- Wisetail • • The platform includes: Customers create a digital audit/diagnosis, training, communication, performance • corporate intranet A learning centre in which benchmarking and operational functionality • employees can be assigned Alchemy’s customers specific courseware plans and generate and continuously a knowledge forum push content to their • Operational Benchmarking: Automated collection of people • employees to communicate KPI benchmarker tool assurance levels / gaps vs expected levels, customer data key cultural messages • Communication tool • Operational Relevance: Configurable to the store level, ensuring team members are trained on the specific menu items, equipment and language of the individual location • Content Strategy: Develops content for organizations • Social Experience: Social networking features to interact on a day-to-day basis despite being in disparate locations and provides tools for them to develop their own content DRIVE OPERATIONAL EXCELLENCE AND ENGAGEMENT IN FRANCHISE BUSINESS 10
A BLUE CHIP CUSTOMER BASE WITH RECURRING, SUBSCRIPTION BASED REVENUE MODEL • Diversified range of clients throughout the entire food supply chain: • Upstream/Midstream: Growers, manufacturers BLUE CHIP and distributors CUSTOMER 1 • Downstream: Consumer and retail PORTFOLIO… • c.1,100 customer accounts, with c.200 new accounts acquired in 2017 Billing Cycle Contract Length • Mostly priced at an average per-user, per-month basis, with the majority of contracts billed annually < 3 Years Monthly/ …ENSURING over a three-year term Other 28% RECURRING 37% Annual • The Company receives payments in advance 2 REVENUE AND 63% 63% 9% (beginning of billing cycles) CASH FLOW Quarterly 3+ Years • Content compatible solely with its platform , creating substantial switching costs 11
DEPTH AND BREADTH OF CONTENT LIBRARY COVERING OVER 400 COURSES TRAINING CONTENT TRAINING DASHBOARD AND REPORTING • SaaS offering includes an innovative LMS and access to 400+ proprietary courses, High level indicators – training passed, Training by topic (Food Safety, Workplace Safety, etc.) to • With full-length courses averaging 20-25 minutes understand company focus and where investments are made training failed, training completed • Refresher courses averaging 10-15 minutes Courses Drilldown Transcript Trends 9% • Alchemy delivers the majority of its courses through SaaS- 17% Human Resources Training Food Safety based group training; training is also available on an individual Workplace Safety 53% Times Passed Times Failed Company Specific Transcripts 19% Others (as opposed to group) basis 860,629 0 860,629 0 860,629 824,546 36,083 Prior Year 1.27M • Proprietary content concentrates on Top 10 Groups by # Transcripts Year over Year Transcripts Greeley 118.70k 150K 40.0% • food safety Grand Island 99.07k 125K 20.0% Cactus 83.94k • workplace safety Brooks 67.42k 100K 0.0% # Change • human resource topics and life skills Transcripts OTTUMWA 66.80k 75K -20.0% Marshaltown 53.07k • courses are available in English, Spanish and French (Canadian) Worthington 53.05k 50K -40.0% Hyrum 44.91k 25K -60.0% Plainwell 32.93k Green Bay 31.94k • Alchemy’s LMS supports its own proprietary content 0K -80.0% January-17 February-17 March-17 April-17 May-17 June-17 July-17 August-17 0k 20k 40k 60k 80k 100k 120k ID % Change CY Transcripts PY Transcripts as well as customer-created or modified content Performance by Company performance YOY by month facility at a glance • The solution delivers rapid and comprehensive digital reporting, overcoming significant audit and compliance burdens 12
ALCHEMY'S VALUE PROPOSITION ADDRESSES THE FRONT END OF SUPPLY OFFICE WORKER CHARACTERISTICS • Limited direct impact on safety, quality, yield and productivity • Low risk environment • English fluent • Computer skills • Low turnover FRONTLINE WORKER CHARACTERISTICS ALCHEMY SOLUTIONS High Direct Impact on Safety, Compliance, Worker skills gaps diagnosis and training for Compliance / Quality, Yield, Productivity and Overall Brand Safety and Key Operational & Cultural Communications Job / Equipment Training and Professional Consulting High Risk Environment Group-Based Mobile Gamification Large, Highly Diverse Workforce Mobile Learning & Communication Platform Desk-less / Limited Computer Access Low Engagement / High Turnover Branded Corporate Culture Solutions FRONTLINE WORKER SKILLS GAPS DIAGNOSIS AND TRAINING 13
2 MARKET GROWTH OPPORTUNITY
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