Intertek Group plc

Good day, ladies and gentlemen, and welcome to Intertech H1 Results 2024. At this time, all participants are in listen-only mode. Later, we will conduct a question and answer session. If you wish to ask a question, we ask that you please use the raise hand function at the bottom of your Zoom screen. If you have dialed in, please select star nine to raise your hand and star six to unmute. Instructions will also follow at the time of Q&A. I would like to remind all participants that this call is being recorded. Questions will follow after the presentation. I will now hand over to Andre Lacroix to start the presentation.

Good morning to you all and thanks for joining us on our call. Hi, with me, Com Dizzy, our CFO and Daniel Moreau, our VP of Investor Relations. I would like to start our call today recognizing all of my colleagues at Intertech for having delivered a strong performance in the first half of the year with double-digit growth in operating profit, EPS, and free cash flow. Here are the key takeaways from our call today. We've delivered a broad-based like-for-like revenue growth of 6.1% at constant currency. We saw a very strong margin performance with a year-on-year improvement of 110 bps at constant currency. That resulted in double-digit EPS growth of 17.5% at constant currency. Cash conversion was excellent at 118%, and we saw a free cash flow increase of 14%. We continued to make progress on ROIC, which was up 210 basis points at constant currency to 20%. In line with our new dividend policy payout ratio of 65%, our interim dividend was up by 43%. We expect a strong performance in the second half of 2024. And importantly, the implementation of our AAA differentiated strategy for growth is on track. So let's start with our performance highlights. As I said, we delivered a strong financial performance. Group revenues were up 6.6% at constant rate and 1.8% at actual rate. Lack-for-lack revenue growth was up 6.1% at constant currencies. Operating profit was up 14% at constant rate and 8% at actual rate. We delivered a 15.9% operating margin, up 110 basis points at constant rate and 90 basis points at actual rate. EPS growth was super strong, as I said, 17.5% at constant rate and 10% at actual rate. The 20.4% ROIC performance was excellent, 220 basis points ahead of last year at constant rate and 110 basis points up on actual rates. Free cash flow of £91 million was up 14%. Our interim dividend of 53.9p is up 43% and our balance sheets remain very strong with a net debt to EBITDA ratio of 1. Let's now discuss our like-for-like revenue growth at constant rate, which was 6.1%. As I said, it was broad-based, consumer products up 6%, corporate assurance up 8.3%, health and safety up 8.5%, industry infrastructure up 2.2%, and world of energy up by 8.3%. Our like-for-like revenue growth was driven by both volume and price. We have seen an acceleration of our underlying lack-for-lack growth in the May-June period. Adjusting for two fewer days in that period, our lack-for-lack growth was close to 9% in May and June and 7.7% for the first half. It's great to see that the demand for oetic solutions is accelerating with a two-year lack-for-lack revenue growth of 13.2%. The GLA, CA, PairLink and BaseMed Labs acquisitions we've made to scale up our portfolio in high-growth and high-margin sectors are performing very well. The consolidation opportunities in our industry remain significant and we will continue to invest in inorganic growth. Margin-accretive revenue growth, as you know, is central to the way we deliver value, and our disciplined performance management has resulted in a margin progression of 110 basis points at a constant rate to 15.9%. We benefited from mixed pricing, fixed cost leverage linked to growth, productivity improvement, and our restructuring program, while continuing to invest in our ATIC capability for growth. Looking at our performance by division, we've made good progress, improving margin by more than 100 bps in three of our five divisions. Last year, we announced a multi-year cost reduction program to target productivity opportunities based on operational streamlining and technology upgrade initiatives. The implementation of this program is on track, and after having delivered a cost reduction of £13 million in 2023, we expect a full-year benefit from this program of £11 million in 2024, £5 million in H1 and £6 million in H2. As you can see on the slide, the compounding effect of our margin initiative has enabled us to deliver a two-year margin progress of 180 BIPs. I will now hand over to Con to discuss our results in more details.

Thank you, Andre. In the first half of 24, the group delivered a strong financial performance. Total revenue growth was 6.6% at constant currency and 1.8% at actual rates, as sterling strengthened compared to major currencies that impacted our revenue growth by 480 basis points. Operating profit at constant rates was up 14%. 0.2% to 265.1 million, delivering a margin of 15.9% up year-on-year by 110 basis points at constant currency and 90 basis points at actual rates. Diluted earnings per share were 104.9p, a growth of 17.5% at constant rates and 10.2% at actual rates. Our cash conversion was strong and we delivered adjusted free cash flow of 90.6 million up year on year by 14%. We finished the first half of 24 with financial debt of 708.2 million, which is down year on year and represents a net debt to adjusted EBITDA ratio of just one times. Turning to our financial guidance for 24, we expect net finance costs to be in the range of 41 to 43 million. We expect our effective tax rate to be between 25% and 26%, our minority interest to be between 23 and 24 million, and CapEx investment to be in the range of 135 to 145 million. Our financial net debt guidance, excluding change in FX and MA, is 510 to 560 million. I'll hand back to Andre now.