SGS S.A.

Good morning, everyone. Thank you for being here for our annual 2025 results presentation. So let me start now here with our first performance. Marta and I will go through the full financial presentations, but here I would like to start with a couple of remarks. As we know, for the whole world, 2025 has been a challenging year marked by international conflicts and fluctuating volatility in economy. I'm happy to say that at SGS, we've kept the course and even executed our best financial performance ever. We have recorded the highest sales in Swiss francs, highest adjusted operating income and highest free cash flow in the group history. Sales grew by 2.2% despite a strong adverse forex during the year again, offset by a strong organic growth of 5.6% and good contribution from acquisition. The adjusted operating income margin has reached 16%, boosted by operational performance and cost-saving plans. Cash generation and earnings per share have recorded excellent growth and Marta will give more color about this. For 2026 now, we expect to follow the same trends. Organic growth should remain between 5 and 7%. You may remember that we signed the acquisition of Applied Technical Services in July 2025. ATS deal was successfully closed early January 2026. And together with the bolt-on acquisitions, we will exceed an additional 5% sales coming from acquisitions. In terms of margin now, we want to keep full flexibility to invest in innovative solutions. Therefore, we don't want to put more pressure on profitability for 2026, which I remind you is also subject to forex fluctuations. Therefore, we will maintain 16% adjusted operating income margin minimum in reported terms. And similarly, cash generation will remain high. On top of our excellent 2025 results, I'm also very proud of how we have executed our strategy 27. I can now say that we have achieved all necessary milestones to reach all of our initial objectives. We have launched, for sustainability and digital trust, we have launched powerful offerings designed to match client needs. And these offers are the foundation of double-digit organic growth. Together with a targeted bolt-on policy, we are already in 2025 close to where we are expecting to be in two years. In July, I already had the opportunity to share with you that we had achieved 80% of our objective to double sales in North America compared to the baseline of 2023. And now ATS is closed. So it's a great achievement that we have accomplished. And this will be obviously an excellent complementary of expertise and services for SGS. Finally, as you know, we've completed the reorganization that gives us more agility and performance. So with all these actions, we have reached the excellent level of profitability, cashflow and balance sheet that we report today. So focusing on sustainability, we have recorded above 15% growth. The four pillars of impact now strongly contributed leading to a very strong performance on an organic basis. And we also added complementary offers through bolt-on acquisitions, especially in environmental testing. Digital trust services are really at the heart of our strategy. more than ever and in this area we have a very solid basis to our clients growing needs in connectivity cyber security and in ai here we also recorded a very strong organic growth and a double digit growth from acquisitions in our strategic plan 2027 we included the objective to significantly increase our presence in north america We believe that North America will provide the foundations for sustainable growth on a long-term basis. The reasons for this are that it's a market with high consumption levels. There is high consumer demand and regulatory requirements, notably for life sciences. In addition, a few years ago, as you know, the country entered into a phase of reindustrialization, which is now further accelerating. So we definitely needed to be there, we definitely need to be there, and this is done with the acquisition of ATS. Now let me give you a short update on Bolton acquisitions. Since our last sales update call in October, we have acquired seven additional companies. Let me go briefly into these companies. And I remind you that all these boltons represent 190 million Swiss francs of additional sales on an annual basis. So who are the newcomers? Semi in France, essentially a carbon accounting platform. Australian Superintendents Company provides inspection and laboratory services for exported agricultural products. Information Quality, again in Australia, is a digital engineering services company. Panacea InfoSec is a leading cyber security services company based in India. MSMEAN in Chile provides asset reliability and integrity services for the mining sector. Murray Brown Laboratories is specialized in food safety in the US. Qian Rui, finally, is a digital trust player with an expertise in digital forensic in South Africa. So I'm very excited to welcome the talented employees of these companies. Before reviewing the business drivers of 2025 in more detail, we wanted to give you a sense of the group development since we implemented our strategy 27. Sales has regularly expanded, sustained by organic growth between 5 and 7%. Adjusted operating income and free cash flow have both grown over proportionally to the sales growth. and also benefited from improved organisations and improved operations. Earning per share has followed the same positive trend. Let's start with industries and environment. The business here delivered strong organic sales growth of 6.5% and an improved adjusted operating income margin of 13.1% driven by inspection, safety and supervision. Safety, for instance, delivered double-digit organic growth fueled by robust demand in the Americas and in Eastern Europe, Middle East and Africa. Inspection and supervision of construction projects recorded also a double-digit growth. It was driven by new project wins and robust execution, particularly in Latin America as well as Asia Pacific, which benefited from infrastructure development and energy transition-related activity. Industrial testing delivered solid performance across all regions supported by construction material testing. And finally, environmental testing achieved solid organic growth with sustained momentum in field monitoring and sustainability related services like PFAS, supported by tighter regulation and growing customer focus on environmental quality. Let's now move on to natural resources. Natural resources delivered a solid performance in the year with organic sales growth of 3.4% and an adjusted operating income margin of 13.6%. Minerals delivered solid growth led by trade services in Europe, Latin America and Asia-Pacific. This growth was supported by strong demand for metals, including gold and copper, and critical minerals. This demand, as you know, was driven by electric vehicles, battery-related regulations. When we look at oil, gas, and chemicals, they achieved a solid growth, reflecting resilient demand, particularly in Asia-Pacific and also in Latin America. Finally, agriculture grew moderately with strong activity in the Americas, but that was partly offset by softer market conditions, notably in Europe. If we look at connectivity and products now, they delivered a strong organic sales growth of 6.4% and an improved margin of 22.8%. That was driven by positive momentum across all the business segments of connectivity and product. And let's start with connectivity, which delivered strong organic growth led by product safety, continued electric vehicle momentum in Asia-Pacific, and robust wireless demand in North America. The demand for technology security and compliance continues to increase as connectivity requirements expand across devices, platforms, and networks. This reflects a strong demand for digital trust services. Hardline achieved excellent organic growth benefiting from strong demand for home appliances. When we look at Softline, they posted a very strong organic growth driven by performance testing in what we call athleisure, the athletic leisure garment and all the wellness products alongside with high demand for eco-friendly products. Government services also recorded solid organic growth that was led by anti-fraud and conformity assessment services as authorities continue to strengthen consumer protection and trade compliance. Let's turn to health and nutrition. This business line recorded a strong performance with 7.3% organic sales growth and an improved adjusted operating income margin of 14.1%. Food delivered double digit organic growth, was supported by strong demand for food safety services and contaminant testing that was across all regions. This growth reflects tightening regulation and an increased focus on food toxicology, rising consumer health awareness, and growing expectations around product safety and transparency. We have continued to invest in analytical capabilities, particularly in Southeast Asia, to support this growing demand. Pharma. Pharma delivered a solid growth. It was led by clinical research activity in Europe, which was partly offset by softer performance in drug development, despite improving pipeline conditions in the United States. Here we continue to focus investment on higher value areas, including biologics and advanced drug developments. And that will support our long-term growth in pharma. Cosmetics and personal care recorded solid organic growth. Performance was partly impacted by mid-year tariffs, followed by a recovery in activity toward the end of the year. That was supported by new project wins and an improving demand. Let's now turn on to Business Assurance. Business Assurance delivered organic growth of 4.2% and adjusted operating income margin of 19.6%. Performance was led by sustainability and digital trust. Digging into more details, all the quality management systems, the ISO certification schemes, were impacted by a high comparable of last year, that was coming out of a post-certification cycle. Consulting also remained soft in business assurance. But by contrast, sustainability continued to deliver double-digit growth, driven by strong demand for supply chain audits and greenhouse gas emissions verification. It was also supported by increasing regulatory requirements and stakeholders' expectations there. Food and medical devices certification also maintained double-digit growth, reflecting tightening regulation. And you know that certification here plays an absolute key role in protecting product integrity, safety, and market access. Digital trust delivered strong double-digit growth as demand for cyber resilience and data protection continues to accelerate. So with that, I will now hand over to Marta to review our 2025 financial performance.

Thank you Geraldine and a very warm welcome to everyone. Let me start with the main financial indicators of 2025. sales reached a record high of 6.95 billion Swiss francs, supported by the strong organic growth of 5.6%. The adjusted operating income also hit a record high of 1.1 billion, or a 16% margin on sales. This is an excellent improvement of 70 basis points compared to 2024, and 130 basis points when compared to 2023, which is the baseline of Strategy 27. Earnings per share before the gain on disposal of our former headquarters in Geneva amounted to 3.21 Swiss francs, up 3.5%. Lastly, the record results were confirmed by a record free cash flow generation of 774 million Swiss francs, representing 57% cash conversion, in line with the already very strong cash conversion in last year. Moving to the sales breach, you can see the strong 7.3% growth in constant currency, comprising of 5.6% organic growth and 1.7% from M&A. The Swiss franc continued its appreciation, generating 5.1% negative forex, reducing the growth to 2.2% in reported terms. As you can see, sales growth was supported by all regions. In testing and inspection, Europe added 2.4% organically, with solid growth in health and nutrition and industries and environment. This was partially offset by low trading volumes in natural resources and connectivity and products. Asia Pacific delivered high 7.7% organic growth with strong performance across all business lines. And in particular, double digit growth in food and high single digits in connectivity and products. North America expanded 3.9% organically, led by a double-digit growth in safety, connectivity and food, and moderate growth in environment. Minerals and pharma remained stable. Eastern Europe, Middle East and Africa grew by 5.3%. despite low trading volumes in natural resources impacted by the political uncertainty in the region. Latin America added 13.6 percent organically, supported by new project wins in Chile. We saw double-digit growth in inspection and supervision, environment, safety, and food. And finally, As presented earlier by Geraldine, Business Assurance delivered 4.2% organic growth led by sustainability and digital trust services, while quality management systems were impacted by a high comparable from a post-certification year. Consulting remained soft. Looking now at the adjusted operating income of 1.1 billion. which is 16% margin on sales. It expanded organically by 108 million Swiss francs, equivalent to 70 basis points of margin improvement, boosted by the successful execution of the organizational efficiencies plans. Accretive bolt-on acquisitions added 26 million Swiss francs, contributing 20 basis points of margin progression. Lastly, the negative forex impact of 66 million, equivalent to minus 20 basis points, was driven, as commented earlier, by the strength of the Swiss franc. Zooming now at the forex, which remained a headwind. You can see here the main currency's impacts. Overall, the negative 5.1% forex on sales was equivalent to minus 6.4% on adjusted operating income, or 20 basis points in the AUI margin, as commented earlier. Moving at our efficiency plans update. We are proud to confirm that both the lean operating model and the procurement savings plans are now fully executed. They delivered 115 million Swiss francs visible in the P&L since 2024, with 150 million run rate reached at the end of 2025. In terms of phasing, you remember that in 2024, we already accounted for 50 million savings. This was followed by 65 million in 2025, bringing the cumulative impact to 115 million Swiss francs. The remaining part of the savings will flow through the P&L in 2026. Let's now dig into the full P&L. As presented earlier, sales grew by 2.2% and the adjusted operating income expanded over-proportionately by 6.5%, or 68 million CHF in absolute. When we look below the adjusted operating income, you can see the decrease in restructuring expenses as the lean operating program is now fully executed. The other non-recurring items and transaction costs include the gain on the HQ disposal, which was set by acquisitions and legal costs and loss on investments from non-core businesses in Eastern Europe, Middle East and Africa. The financial expenses improved slightly thanks to the net debt decrease. And the effective tax rate improved as well to 25% from 26% in prior year. Thanks to all that, the earnings per share reached 3.48 Swiss francs or an increase by 12.3%. When we exclude the HQ disposal gain, this becomes 3.5% expansion. Now, and as we report in Swiss francs, often regarded as the strongest currency in the world, especially today, we wanted to show how this compares when presented in Euro or US dollars. In terms of sales growth, The 2.2 percent in Swiss francs correspond to 3.9 percent in euros and 8.3 percent, should we report, in US dollars. The earnings per share before HQ disposal, which grew by 3.5 percent in Swiss francs, translates to 5.3 percent in euros and close to 10 percent in US dollars. Coming to the free cash flow, where I'm happy to report that the record 25 results were confirmed by the strong free cash flow record high as well of 774 million. This is 57% cash conversion on adjusted EBITDA in line with last year. Furthermore, The net proceeds from the former Geneva HQ disposal brought additional 67 million Swiss francs, bringing the total free cash flow to 841 million francs. Moving now at the return of invested capital ratio. In 2025, the ROIC remained at the industry-leading 24%. This illustrates our highly efficient operating model and disciplined M&A program execution. Now, in terms of debt leverage, the excellent profitability and high cash conversion further improved the ratio, which stood at 1.7 times of net debt on adjusted EBITDA. This improvement reflects our commitment to maintaining a solid financial profile, which is crucial for supporting growth initiatives. Finally, our excellent results allow us to maintain a highly attractive dividend of 3.20 CHF per share. This will be proposed as a script dividend, giving shareholders the option to receive it in cash or shares. 2025 was also a year of big progress in terms of ESG. Most notably, customer satisfaction increased to 92%. and we provided 7.7 million training hours to our customers and employees. We also maintained our leading ESG ratings position, and SGS was included for a second consecutive year in Time's World's Most Sustainable Companies list. And with that, I hand over to you, Geraldine.

Thank you, Martha. So now let's turn on the outlook again. And for 2026, I see that part of Omegatrend is becoming even more stronger and stronger. More precisely, cybersecurity and AI, as well as customer awareness and well-being, also called conscientiousness, that will drive growth in the future. And this will especially benefit digital trust services and life science activities. And we will provide more color at our next capital market event. So thank you for listening. And with that, we will now move to Q&A.