Intertek Group plc

And ladies and gentlemen, thank you for standing by, and welcome to the Intertech 2023 Half-Year Results Conference Call. At this time, all participants are in listen-only mode. Later, we will conduct a question-and-answer session, and instructions will be given at that time. If you should require assistance during the call, please press star, then zero. As a reminder, today's conference is being recorded, and I would now like to turn the conference over to your host, Mr. Andre LeCroy. Please go ahead, sir.

Good morning to you all, and thanks for joining us on our call. I have with me Colm Deasy, our CFO and Daniel Moreau, VP of Investor Relations. I would like to start our call today recognizing all of my colleagues at Intertech for having delivered a robust financial performance with revenue growth acceleration, margin progression, and a higher ROIC. Some of you got to meet my senior team at the Capital Market event in May when we presented our AAA growth strategy, and I would like to give them a special thanks. There are a few takeaways in our presentation today. Our AAA growth strategy is in place to capitalize on the faster AT growth opportunities ahead. Our like-for-like revenue growth momentum is accelerating, and we have delivered our highest like-for-like revenue growth in the last 10 years. We have made very good progress on margin as we benefited from our pricing and productivity initiatives. Our RIC is much higher than last year, We've delivered a strong free cash flow. And last but not least, we are extremely pleased to announce this morning a double-digit increase in the interim dividend. So let's start with our performance highlights. We have indeed delivered a robust financial performance in the first half. Group revenues up 8.3% at constant rate and 9.9% at actual rate. Like-for-like revenue growth of 7.1% at constant rate. Operating profit was up 13.3% at constant rate and 12.9% at actual rates. We saw robust operating margin of 15% up 70 basis points at constant rate year on year. EPS growth was 10.6% at constant rate and 10.1% at actual rates. RIC of 19.3% was up 120 basis points at constant rate and 260 basis points at actual rates. Our cash generated from operation was super strong, 270.5 million, up 13.6%. Our free cash flow was robust at circa 80 million. We are investing in growth. And as you can see, our CapEx and M&A investments are up year on year. And as I just said, our interim dividend of 37.7% is up 10.1% year on year. And last but not least, we continue to operate with a very strong balance sheet with a net debt to EBITDA ratio of 1.1. Let's now discuss our like-for-like revenue growth, which, as I just said, at 7.1% at constant rate was the best performance in the last 10 years. We are indeed seeing an increased demand for ATX solutions and like-for-like revenue growth was driven by both progress on both volume and price. Given the change we've made in terms of disclosures on the slide here, we are showing a like-for-like performance using the previous and the new disclosures. So looking at the results through the previous disclosures, our product and trade divisions delivered mid-single-digit like-for-like, while our resource business delivered double-digit like-for-like. Looking at the like-for-like revenue growth performance based on the new segmentations, we delivered double-digit like-for-like in corporate assurance as well as in industry and infrastructure, We saw a high single-digit like-for-like in the world of energy, health and safety record a mid-single-digit like-for-like, and consumer product delivered, as expected, a low single-digit like-for-like. Our China business rebounded strongly after Chinese New Year, following the relaxation of the COVID restrictions in January, and we've delivered a like-for-like revenue growth of 7.3% at constant rate. Outside of China, our like-for-like revenue growth was 7%. Our geographical portfolio is strong, and we have the right exposure to the right growth opportunities in the global economy. Our revenue growth was broad-based, as you can see on the slide from a geographic standpoint, with Americas, EMEA, and APAC growing respectively at constant currency by 7.8%, 7.6%, and 9.4%. We are really proud of the margin we delivered at 15%. up year-on-year by 70 basis points at constant rate and 40 basis points at actual rate. As you know, marginal equity revenue growth is central to the way we deliver value. We have a superior ethnic customer service, which we discussed in May, and that gives us a strong pricing power and high retention rates. We allocate capital targeting the attractive growth and margin segments. We are laser focused on that. And our performance management discipline is, of course, well embedded in the organization with the data advantage we have side by side. We announced the cost reduction program in March that targets productivity opportunities based on operational streamlining and technology upgrade initiatives. The execution of the cost reduction program is on track, and we saw 10 basis points of margin improvement in H1 due to that. In H1, we've also identified additional restructuring opportunities which would deliver an annualized savings of $4 million and circa 1 million benefit in 2023. So when you bring the two programs together, 2022 and 2023, our cost reduction program should deliver an annual savings of 19 million pounds with an expected 7 to 8 million pound savings on annual basis, and of which, sorry, in 2023, of which 1.7 million has been delivered in H1. Looking at our margin performance through the PTR disclosures, our margin increase of 70 basis points was driven by margin progress in products and resources while trade was down. The margin performance based on the new divisional disclosures show that we've made good progress year on year in three of our five divisions, and I will give you more details later on the call. The recent SAI, GLA, and CA acquisitions that we've made to scale up our portfolio in attractive growth and margin sectors are performing well in line with our expectations. Later in the presentation, you will see how these three acquisitions have contributed to our growth performance in H1. The integration of the recently announced acquisition we made in Brazil, Control Analytico, is on track. I will now hand over to Con to discuss our H1 results in detail.

Thank you, André. In summary, in H123, the group has delivered a robust financial performance. Total revenue growth was 8.3% at constant currency and 9.9% at actual rates, as beneficial movements in FX rates impacted our revenues by 160 basis points. Operating profit at constant rates was up 13.3%, to 245.5 million, delivering a margin of 15%, up year-on-year by 70 basis points. Diluted earnings per share were 95.2%, growth of 10.6% at constant rates and 10.1% at actual rates. The group delivered adjusted cash from operations of 270.5 million of year-on-year by 13.6%, and adjusted free cash flow of 79.6 million was down year-on-year by 16.2 million, as growth in operating cash flows was offset by higher capex investments and higher net financing costs. We finished H123 with financial net debt of 791.3 million, which is down year on year and represents financial debt to adjusted EBITDA ratio of 1.1. Now turning to financial guidance for 23, we expect net finance costs to be in the range of 40 to 42 million pounds, We expect our effective tax rate to be in the range of 25.5 to 26.5%. Our minority interest to be between 22 and 23 million pounds and capex investment to be in the range of 115 to 125 million pounds. I will now hand back to Andre.