SGS S.A.

SGS delivered excellent results in 2024. Sales reached an all-time high with strong organic growth. Profitability had an excellent progression. Free cash flow was outstanding. And return on invested capital was at an industry-leading level. This is the result of the fast execution of Strategy 27. Accelerating growth, building trust. Our strategy is based on three powerful value drivers. Growth. We increased sales in sustainability and digital trust. We relaunched M&A with 11 acquisitions in 2024 and already three more in 2025. People, performance, and agility. We implemented a culture of accountability and simplified our operations. which has already delivered a strong financial and ESG profile. We improved our balance sheet and we're recognized as one of the most sustainable companies in the world. This is just the beginning. We are ready for another year of accelerating growth, building trust. SGS, when you need to be sure.

Good morning ladies and gentlemen and welcome to our analyst conference on the full year results of 2024. I'm very excited to speak first about the highlights and give more color on the business trends and the performance by end market. Then Marta will give you more insights on the financial performance. So in 2024, SJS delivered excellent results and achieved key steps of strategy 27 at the same time. Sales and profitability reached the top of our guidance and the cash generation has been a record high at 748 million Swiss francs. We see this great momentum continuing in 2025 and I will come back to it in detail later, but we expect the organic growth and the cash generation to remain strong and the profitability to continue to progress. So, as just said, we have made solid progress on the three pillars of strategy 27. First, on growth. You know that we have signed 14 highly synergistic bolt-on acquisitions since January 2024. They reinforced our portfolio, they bring complementary expertise and fresh talents to the group. I'm also especially happy with the launch of ImpactNow and the incremental sales of 100 million Swiss francs that we recorded in sustainability. Digital trust is becoming more than ever an increasingly powerful driver for SGS, which demand continue to grow in AI and digitalization among our clients. Our other two pillars are also well on track. Our efficiency program has already significantly improved our margin this year with a full effect to be reached at the end of 2025. And we have also reduced our leverage to reinforce our firepower. So, 2024 has been driven by our continued commitment to achieve this milestone you can see here on the screen. Starting with one single acquisition in Q1, Arclight, we have been welcoming to the group more than four companies every quarter. In terms of organic growth initiatives, we made significant investment in environmental testing, especially PFAS in the US, and launched ImpactNow for sustainability in November at our capital market event. Our 100 million Swiss francs of efficiency plan has been executed and we announced additional savings of 50 million Swiss francs in November during the capital market event. I want to take this opportunity to thank all SJS teams for their relentless work that helped us to achieve these strong results. Thanks to the successful relaunch of M&A, we have signed 14 bought-on acquisitions. They all have a good strategic fit with synergies easy to implement. Half of them, as you can see, are located in North America. And this is, as you know, part of a strategy where we have committed to more than double our sales by 2027. Since the capital market event in November, we have closed also the acquisition of Certix, the leading Swiss functional safety and cybersecurity certification company. In 2025, we announced three more deals. And you can see there's Aster. Aster is a sustainability company which is specialized in the greenhouse gas emissions. We have also signed RTI Laboratories, which provide environmental services. It adds on our capacity in North America, in the US. And Stella is an Italian company which has a strong expertise in customs. So I wish a warm welcome to all the employees of the new members of SGS. Sustainability. We're very proud of the 100 million Swiss francs of incremental sales from sustainability. In particular, we have recorded a strong double-digit growth in climate-related services led by GHG emissions verification and monitoring. Nature delivered a strong double-digit growth mainly to all the PFAS testing in North America. We had great momentum and circularity supported by waste recyclability in Europe. And finally ESG assurance recorded double-digit growth led by increased demand in Asia Pacific. Today, as some of you may know, is a safer internet day in 150 countries in the world. This safer internet day has permission to educate kids and family on how they can use internet safely. In the world of today, there is obviously no need to demonstrate that digital trust is a strong driver of growth. With a huge investment in AI announced in the United States and in Europe, the cybersecurity demand is growing rapidly. And in parallel, our clients, our industrial clients, need support when they transform their plans to make them more digital. So we already have strong assets with BrightSight Network, which has expanded in Asia Pacific and in North America. We are also intensively working to enlarge our offer The acquisitions of GoSummer security solutions in North America and of Certix more recently in Europe have been key milestones to complete this objective that we have in cybersecurity. And others will come shortly. Let me now share some key highlights from our business lines. And let's start with industries and environment. An excellent organic sales growth of 8.3% was driven by all regions and services, particularly those related to sustainability. Environment continued to perform strongly with double-digit growth boosted by PFAS which delivered over 30% year-on-year growth globally. Double digit growth in safety was supported by increased demand for global safety solutions, particularly related to the protection against asbestos, noise and radiations on large industrial sites. All regions contributed to the growth and particularly strong performance was recorded in Asia Pacific, Latin America and Eastern Europe, Middle East, Africa. High single-digit growth in projects and advisory was driven by the new railway and mining projects in Latin America, and large energy supply chain contracts were won in Eastern Europe, Middle East and Africa. Continued strong growth in industrial testing was partly offset by the end of some low margin contracts in non-destructive testing, which we have chosen not to renew. Finally, I would like to note that SGS has continued to play an active role in supporting clients impacted by the carbon border adjustment mechanism or what we call the CBAM regulation in Europe. Globally, you know, we have strong expertise and we continue to see increased activity in GHG emissions verification and monitoring, carbon capture and renewable energy. Natural resources. Natural resources continued to benefit from the strong momentum of the energy transition and delivered a strong organic sales growth of 7.6%. Minerals delivered a strong performance, mainly fueled by double digit growth in critical battery metals testing in the Americas, where SGS has a recognized expertise. SGS continued to support companies and national governments in their transition to sustainable energy with multiple important projects we completed in 2024. In oil, gas and chemicals, high single-digit growth was driven by all regions with increased demand for inspection and laboratory testing services as well as various contract wins in LNG across the US, China, Australia and Qatar. Strong growth was also recorded in agriculture where SGS has diversified activities and a global coverage despite a slowdown in Europe due to the new crop season. Let's now move to connectivity and products. Organic sales growth in connectivity and product continued to accelerate in Q4 and we reached an excellent 8.2% for the full year. High single digit growth in connectivity was mainly driven by increased demand for product safety testing in Asia Pacific and strong double digit growth in wireless in North America. Rising production volumes and the implementation of upcoming chemical regulations in Asia-Pacific were key drivers of the double-digit organic growth in soft lines. Hard lines also delivered high single-digit growth, largely propelled by new regulation on food packaging materials in the US, Europe and Asia-Pacific. Health and nutrition organic growth there was primarily driven by food, which delivered a double digit organic growth for the year. You know, the strong performance across all food markets was supported by stricter regulations and heightened food safety concerns, which led to increased demand from food, global food brands and retailers. Strong recovery in pharma in H2 was driven by the biosafety and the bioanalysis testing, respectively in the United Kingdom and France. Similarly, in Asia Pacific, SGS successfully offset a still challenging R&D market by leveraging strong sales efforts and a well-positioned portfolio in the right segments. Cosmetics. Cosmetics delivered solid performance, supported by steady recovery in mature markets, such as the United States and Germany. Health and nutrition will remain a key strategic focus for the group going forward. In 2024, we have embarked on an ambitious expansion of our laboratory activities, particularly in North America and in Europe, where we see significant growth potential. For instance, as an example, we're leveraging the strong expertise developed by our pharma laboratory in Glasgow. We are launching a new state of the art facility near Boston, Massachusetts. The new facility facility will specialize in testing biosimilars rather than generics, aligning with emerging industry trends and market needs. Let's now review business assurance certification continued to deliver a strong performance and a double digit growth supported by medical devices and digital trust services organic growth in esg accelerated sequentially in q4 double digit growth in 2024 was led by non-financial reporting assurance and social audits as well as greenhouse gas emissions verification where, as I mentioned earlier, we have a recognized expertise. The strong results were partly offset by a slowdown in training and a very unfavorable comparable in consulting. Now, with that, I will hand over to Martha, who will present our financial performance.

Thank you, Geraldine, and a very warm welcome to everyone. Let me start with the main financial KPIs in 2024. Net sales reached a record 6.8 billion Swiss francs, supported by 7.5% strong organic growth. The adjusted operating income of 1,040 million Swiss francs translated into 15.3% margin on sales, which is 60 basis points above the margin of 2023. The reported earnings per share of 3.10 Swiss francs grew by 3.3%, and this despite the restructuring expenses we incurred in 2024 to deploy our leaner operating model. In addition, we generated an outstanding free cash flow of 748 million Swiss francs, up by 24% compared to 2023. Let's now move on the next slide and see how sales compared to prior year. So all we know in reported terms, our sales increased by 2.6%. to reach the record 6.8 billion Swiss francs. The organic growth of 7.5% was equivalent to 494 million Swiss francs. The scope effect was broadly flat as the prior year disposals of the automotive asset assessment and the powertrain testing services were compensated by the acquisition of NutraSource in May 2023, followed by the successful closing of our new 11 bolt-on acquisitions in 2024. The Swiss franc continued to appreciate against all major currencies in 24, and this resulted in a negative Forex translation impact of 4.8%. And again, all we know, we delivered 2.6% growth in sales in reported terms. Let's now further drill down in our sales growth by region. The testing and inspection division delivered strong 7.6% organic growth, while the business assurance division increased by 6.2% organically. Specifically, in testing and inspection, Europe grew organically by a steady 4.4%, supported by all major countries and all business lines. Asia-Pacific expanded by 5.8% with high single-digit growth in connectivity and products, partially offset by the end of low profitability contracts in non-destructive testing. North America sales increased by 7.2% organic growth, further expanding in environmental testing while pharma remained soft. LATAM expanded by more than 17% organically with double digit growth across all business lines. And finally, in testing and inspection, Eastern Europe, Middle East and Africa grew organically by 14.1%, supported by all business lines. Our business assurance global segment delivered 6.2% growth and as explained by Geraldine just before, we saw double digit growth in certification of management systems and strong performance in ESG assurance and audits. On the other hand, this growth was partially offset by the high basis of comparison in consulting with MainPoint and a temporary slowdown in training in Asia Pacific. Moving now to the adjusted operating income. We achieved in 2024 15.3% of margin on sales, an excellent year-on-year progression by 60 basis points. The adjusted operating income grew by 136 million Swiss Francs organically, which represents 14% growth, close to double the organic growth of sales. This is equivalent to 90 basis points of margin improvement. Into that we have 70 basis points brought by the disciplined execution of our cost savings program and we had 20 basis points coming from our net operating leverage. This strong improvement was partially offset by the negative Forex translation impact of 70 million Swiss francs, which was equivalent to 30 basis points. Let's now look more in details in the Forex. The Swiss franc is one of the strongest currencies in the world. In 2024, it continued to appreciate. This led to a negative Forex translation impact of 4.8% in sales and 7.1% in adjusting operating income, translating into minus 30 basis points on our adjusted operating income margin as presented just before. Let's now move to our operational efficiencies plans. And we are very pleased with the very fast execution of the linear operating model and the procurement savings plans. And I can confirm that we are fully on track. All in all, they delivered 50 million Swiss francs savings accounted in 2024 alone, and will reach the 150 million savings cost savings run rate by the end of 2025. Let's now look at the full P&L. The excellent 2024 results translated into an over-proportional growth of 5.5% of the operating income, which reached 904 million Swiss francs. And this despite the 82 million Swiss francs restructuring costs which we needed for the execution of the linear operating model savings plan. The financial expenses, as well as the effective tax rate, remained broadly stable. And as a result, we achieved earnings per share of 3.10 Swiss francs to compare to 3 Swiss francs in 2023. Moving now to the free cash flow. We generated an outstanding free cash flow of 748 million Swiss francs. This is 144 million higher than 2023 and translated into the excellent cash conversion of 62%. I must say that aligning incentive at the beginning of the year with the group targets played a key role into driving further improvements in the net working capital and in maintaining a disciplined CapEx spend focused on growth. Let's now move on the return on invested capital. We are very happy of the 24% industry standard ROIC, which we achieved in 2024. This is two percentage points higher than 2023. And it was really driven by the increased profitability and the value of creative acquisitions together with the discipline cap expense focused on growth. Moving now to the debt leverage. Here, net debt, let me remind you, is the net debt including leases. So we had the leverage of two times in 2023, and we are proud of the improvement down to 1.8 times in 2024, really demonstrating the impact of the improvement of profitability and the outstanding free cash flow. This improvement reflects our commitment to maintaining a solid financial profile, which is crucial for supporting future growth initiatives and ensuring financial stability. Let's now look at the dividend. we proposed a stable, attractive dividend distribution of 3.20 Swiss francs per share. And this underscores our commitment to delivering consistent returns to our shareholders. Additionally, this will be a script dividend, giving shareholders the option to receive the dividend in cash or shares. 2024 was a strong year for SGS from financial performance point of view, but it was a very strong year from non-financial targets progress as well. We remain focused on maintaining our strong ESG profile, even though we are essentially a non-polluting company. As a result of the good progress made in 2024, we are fully on track to achieve our ambitious 2027 ESG targets. In 2024, we have also maintained our position at the forefront of the world's leading sustainability ratings. And we are very proud to have been ranked as the first professional services company in the Dow Jones Sustainability Indices. And with that, I hand over back to you, Geraldine.