Intertek Group plc

Good day, ladies and gentlemen, and welcome to Intertech Full Year Results 2025. At this time, all participants are in a listen-only mode. Later, we'll 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've dialed in, please select star 9 to raise your hand and star 6 to unmute. Instructions will also follow at the time of the 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, Chief Executive Officer, to start the presentation.

Good morning to you all, and thanks for joining us on our call. I am with me, Comme Dizier, CFO, and Denis Moreau, VP of Investor Relations. 2025 marks the third consecutive year of WGTPS growth, and I would like to start our presentation today by recognizing all of my colleagues around the world for the strong delivery of our AAA differentiated strategy for growth. Here are the key takeaways from our call today. In 2095, we have converted our 4.3% revenue growth into 10.1% EPS growth with a strong margin progression of 90 basis points. Cash conversion was excellent at 110%, providing us with the funds to invest 300 million in growth and return 602 million to our shareholders. Following the launch of our AAA strategy three years ago, our earnings per share had grown two times faster than revenue, our margin progression of 240 basis points was ahead of target, and we have delivered a cumulative operating cash flow of £2.3 billion. Importantly, we have increased dividend per share by 17% per year on average in the last three years. In 2026, we're expecting a strong performance with mid-single-digit lag for algorithmic roles, further margin progression, strong learning roles, and a strong cash generation. Let's start with the highlights of our 2025 performance. We have delivered indeed a strong financial performance. Our revenue growth was robust, up 4.3% at constant rate and 1.1% at actual rate. Our operating margin was excellent, at 18.1%, up here and there by 90 basis points. Our operating profit growth was strong, up by 9.3% at constant rate and 5% at actual rate. EPS grew at 10.1% at constant rate. Our RIC was excellent, 21.3%, and our organic RIC increased by 70 basis points. And as I said earlier, our cash conversion was excellent at 110%. Let's now discuss our like-for-like revenue growth performance. The demand for our ATF solution was robust, and our like-for-like revenue growth of 3.9% at constant rate was driven by both volume and price. Our like-for-like growth in consumer products, corporate insurance, health and safety, and industry infrastructure combined, which represents 90% of the group's earnings, was 5.4%. The world of energy performance was driven by two factors. First, a very demanding base, with 8% like-for-like revenue growth in 2024 and 8.7% like-for-like revenue growth in 2023, as well as, as we know, a slowdown in transportation technology in the second half of 2025. In the last three years, as you can see on the slide, our group Gitsim Digital Act product revenue growth was broad-based and in line with our AAA targets. The acquisitions we've made are performing very well. We've made seven acquisitions in the last three years to strengthen our IT value proposition in high-growth and high-margin sectors. These investments have valued equity to the group, having delivered in aggregate a margin of 34% in 2025. We are truly excited about the consultation opportunities in our industry and will continue to target high-quality business service. Indeed, two weeks ago, we've acquired Aerial TV, a drone-based inspection business to strengthen our value proposition in the solar energy. And last week, we've acquired Q-Test in Colombia to expand our internet tech electrical network in Latin America. In the industry, Intertech is recognized for its science-based customer excellence. With our ATIC premium offering, they bring a superior customer service. Our high-margin and capsule-like assurance business solution is the fastest-growing business. From a geographic standpoint, we've benefited in the last few years from broadband rooming roles within each region. There's been a lot of discussion about the economy in China, and let me give you an update on the performance of our China business. We have a very strong business in China, operating a diversified portfolio with scale positions across all of our business lines. We've delivered a like-for-like revenue growth of 5.4% in 2025, in line with our three-year like-for-like revenue growth of 5.6%. We are extremely pleased with our margin performance of 18.1%, which was up 90 basis points as constant currency. We have benefited from portfolio mix, fixed cost leveraged into growth, productivity improvements, our restructuring programs, and of course, our creative investments. These positive margin drivers were partially offset by the cost of inflation and our investments in growth. A few years ago, we announced a cost reduction program to target productivity opportunities based on operational streamlining and technology upgrade initiatives. Our restructuring program is valued at 13 million savings in 2023, 11 million in 2024, and 6 million in 2025. We expect 8 million benefit in 2026 from the restructuring that we've done in 2025. In the last few years, we've increased our margin by 80 basis points on average per year, well ahead of our AAA targets. I will now hand over to Carmen to discuss our full year results in detail.

Thank you, André. In summary, in 2025, the group delivered a strong financial performance. Total revenue grew to £3.4 billion, up 4.3% at constant currency and 1.1% at actual rates. Sterling strengthened compared to major currencies, impacting our revenue growth by a negative 320 basis points. Operating profit at constant rates was up 9.3% to £620 million, with operating margin of 18.1%, up year on year by 90 basis points at constant currency and 70 basis points at actual rates. Diluted earnings per share were 253.5 pence, with growth of 10.1% at constant rates and 5.4% at actual rates. Now turning to cash flow and net debt. Group delivered adjusted cash from operations of £762 million down from our 24 peak, largely due to EBITDA being impacted by translation and, of course, lower working capital change than the prior year. Adjusted free cash flow was £352 million down from our 24 peak due to a lower cash generated from operations, higher interest and borrowing costs, higher cash tax outflow following our strong EPS progression, and higher capex investments. Turning to our financial guidance for 26, we expect net finance costs to be in the range of 71 to 72 million pounds, excluding FX. We expect our effective tax rate to be between 25.5% and 26.5% Our minority interest would be between 21 and 22 million, and our CapEx investment would be in the range of 150 to 160 million pounds. Our financial net debt guidance prior to any material movements in FX or M&A is 930 million pounds to 980 million pounds. I'll hand back to André now.

Thank you, Tom. And I'll summarize now our performance by division. All comments will be at Consumers Currency. Our consumer products delivered a stellar performance in 2025 with $983 million in terms of revenue up year-on-year by 6.2%. Our 6.3% like-for-like revenue growth was driven by high single-digit like-for-like in sub-line, mid-single-digit like-for-like in hard-lines, mid-single-digit like-for-like in electrical, and double-digit like-for-like in GTS. Operating profit was up 11% to £299 million, with a margin of 30.4% up year-on-year by 250 basis points as we continue to benefit from a strong operating leverage and productivity gains. In 2026, we expect the consumer product division to deliver mid-single-digit like-for-like revenue growth. We grew revenue in our corporate assurance business by 6.8% to 514 million pounds. Our like-for-like revenue growth was driven by high single-digit like-for-like in business assurance and low single-digit like-for-like in assurance. Operating profit was 116 million, up year-on-year by 3%, and our side margin reduction after a strong 2024 was driven by mixed and investment in growth. In 2026, we expect our corporate assurance division to deliver high single-digit like-for-like revenue growth. Health and Safety delivered a revenue of £347 million, an increase year-on-year of 5.5%. Our 2.4% like-for-like revenue goal was driven by double-digit like-for-like in food, low single-digit like-for-like in agri-world, and negative low single-digit like-for-like in chemical and pharma, after a strong baseline effect in 2023 and 2024, and a temporary project delay by several times. Operating profit rose 2% to £45 million with a margin of 13% slightly down on the year-on-year after a strong 2024 driven by a mix. In 2086, we expect our health and safety division to deliver low-symmetry life-for-life to revenue growth. Revenue and industry infrastructure increased 5.3% to 858 million pounds, and a 4.7% like-for-like revenue growth was driven by stellar performance from minerals, double-digit like-for-like revenue growth, mid-simile-digit like-for-like in industry services, and low-simile-digit like-for-like in building construction with a strong second half. Operating profit of 95 million was up 24% and our margin was up 170 basis points as we benefited from operating leverage, productivity gains, and portfolio mix. In 2026, we expect our industry infrastructure business to deliver mid-single-digit, like-for-like revenue growth. Revenue in our world of energy business was 729 million pounds, 1.3% lower than 24. Our like-for-like performance was driven by low single-digit like-for-like in cadet rate after a strong 24 and 23 when we reported high single-digit like-for-like revenue growth. Negative high single-digit like-for-like in TT was due to a temporary reduction of investment by several of our clients. And a negative high single-digit LAC4LAC in our CE business was due to a baseline effect following a strong double-digit LAC4LAC performance in 2024. Operating profit was 63 million pounds, down 15%, due to a mix and, of course, a low revenue in TT and CEA. In 2026, we expect our world energy division to deliver low single-digit LAC4LAC revenue growth. Three years ago, in 2023, we introduced our AAA differential strategy for growth to unlock the significant value growth opportunities ahead. And today, I would like to step back and give you a strategic update on where we are and how excited we are about the future. Our AAA strategy is all about being the best every single day for every stakeholder. We want to be the most trusted partner for our clients. We want our employees to be fully engaged. We want to demonstrate sustainable excellence in all of our operations and community. And of course, we want to deliver durable value creation for our shareholders. Our AAA commitment to all stakeholders is simple, demanding, and compelling. Quality grows assured. Our clients invite us into the most critical parts of their value chain because they know that our science, our independence, and our ethics are non-negotiable. Our high quality portfolio with easy to scale position is growing in structurally attractive markets where regulation, complexity and innovation are rising year after year. We target quality revenue growth focusing on setting our ethics solutions in high growth and high margin segments. Our quality revenue growth combined with strong fixed-cost control, productivity gains, and disciplined investment in growth deliver continuous margin progression, resulting in strong earnings growth, which we convert into excellent cash generation. That's how the Intertech Earnings Model compounds value over time. That's how the Intertech Earnings Model delivers durable quality growth. Ten years ago, we recognized that TIC solutions were necessary but not sufficient to give a superior customer service to our clients, given the complexity in their global operations. We invented ATIC, and today, we are the premium leader in risk-based quality assurance. Our systemic end-to-end quality assurance, combined with our scientific technical expertise, is what makes us truly unique and the best in the industry. Our ATIC approach is industry agnostic and let me show you some examples on how ATIC works across categories. Here you can see how ATIC works for a teacher in a software industry part of our consumer product division. Here you can see how ATIC works for the development of data center for high growth areas for electrical and building construction operations. In the fast-growing energy storage market, ATIC solutions are of course mission critical for the performance and safety of batteries. And here you can see from an ATIC standpoint how it works in an attractive energy sector which plays, as you know, a significant role in the energy transition. Our growth model has compounded significant value over time. Our earnings per share have gone at an average of 10% since 2004. Outstanding financial performance starts, of course, with the trust of our clients, based on our silence-based customer excellence advantage. At the bottom of the slide, you can see a few examples of our Google VMAs campaigns where our clients acknowledge publicly the trust they have in Intertech. And, of course, there are many more examples on our website. We are very excited about the growth opportunities ahead. Every day, in every industry, we pursue three types of growth opportunities. In the outsourced quality assurance market, we are targeting higher ethic penetration with existing clients as well as the acquisitions of new clients. In the in-house quality assurance market, outsourcing remains a significant opportunity. Of course, the most exciting growth scenario is the untapped opportunity based on the quality assurance work that our clients don't do today and will do moving forward. Our clients indeed invest more to 10 years ago in quality assurance, but they still do not invest enough, given the increased risks in their operations. That's why our role of independent quality assurance is mission critical for the world to operate safely. Regulations on quality, safety and sustainability are tightening. Supply chains have become more global and more complex. The energy transition and electrification are creating new growth opportunities. For sure, innovation cycles are shortening in all categories, and consumers are demanding more choice and high-quality choice to drive SKU proliferation. Finally, digitization and data-driven assurance increase the value of our science-based, ethical intelligence. Over the years, we have built a high-growth, quality portfolio to seize these opportunities in every single of our business lines. Moving forward at the group level, we continue to expect to deliver mid-single-digit lack-for-lack revenue growth. Let me explain how we'll do that starting with consumer product. Consumer product, our largest division in revenue and profit, has reported lack-for-lack revenue growth of 5.2% between 2023 and 2025, ahead of our guidance. As a result, we are upgrading our corporate guidance for consumer product to deliver mid-single-digit lack-for-lack revenue growth in the medium term. In the medium term, we continue to expect high single-digit to double-digit like-for-like growth in corporate assurance, mid-single-digit to high-single-digit like-for-like growth in health and safety and industry infrastructure, and low-single-digit to mid-single-digit like-for-like growth in the world of energy. Margin accuracy program growth is central to the way we manage performance at Intertech. Between 2015 and 2025, we have step-changed our margin performance, having increased our reported margin by 220 basis points. Indeed, we have benefited from our portfolio mix and strong pricing power, We've delivered consistent revenue growth with good operating leverage. We've reduced our fixed costs, both at the operating and management levels. We have reinvented our processes to increase productivity. Our capex and M&A investments were made in high growth and high margin sectors. And these positive margin drivers were partially offset by the cost of inflation and the investment that we've made to accelerate growth. The margin accretion potential ahead is significant, and we are on track to deliver our 18.5% plus margin targets. On cash and shareholder returns, we've also made significant progress between 2015 and 2025 with our end-to-end cash performance management. The opportunity ahead is also significant from a cash generation and in terms of return for shareholders. We'll continue to, of course, be very, very disciplined in terms of cash management on a daily basis. Being the best every day for customers is mission critical to deliver quality growth for shareholders. We do regular customer research monitoring our performance versus our peers, and I can proudly say that Intertech is positioned as the absolute premium leader in collectivization. Being the best for our customers gives us the opportunity to benefit from growing recurring reviews with our existing clients, as well as win with new clients, giving us a strong reputation in the industry. To deliver superior returns, as we just discussed, we consistently convert our revenue growth into fast-earning growth and strong cash generation. On that slide, we provide a benchmark of performance versus our two peers, and I'm pleased to report that Intertech stands out with best-in-class productivity metrics, margin, and returns in the industry. Of course, a key component of our superior returns is our creative capital allocation. We allocate CapEx in working capital, targeting 4% to 5% of our revenue to support growth, and since 2015, we've invested more than $1.2 billion in CapEx. In terms of shareholder returns, our goal is to grow dividend over time, with a payout ratio of around 65%. Selective acquisitions to strengthen our leadership positions are important, and we've invested since 2015 $1.4 billion in M&As. Lastly, our goal is to operate with a leverage target of $1.3 to $1.8 net debt to EBITDA and return excess capital when it cannot be deployed at attractive returns. Our high-quality cash component earnings model that we just discussed has played and will continue to play an essential part in unlocking the value ahead and delivering quality growth. We have good visibility on the structure of growth drivers to deliver our revenue growth targets. We are confident that we'll deliver the substantial upside to our medium-term target in terms of a margin of 18.5%. We have step-changed the cash generation of the group, and our disciplined capital allocation policy is, as we just discussed, accretive. We'll continue to benefit year after year from the compounding effect of mid-to-single-digit life-forward revenue growth, margin accretion, excellent free cash flow, and disciplined investments. This is how we'll deliver durable quality growth and unlock significant value ahead. Over the years, we've built five enduring competitive advantages which underpin our confidence moving forward. We operate a high-quality growth portfolio focused on global growth with a leading scale position in attractive industries. We are the prime leader in quality assurance with our superior intake offering, giving us the trust of our clients. Our high-quality cash component earnings model delivers industry-leading productivity and returns, and our high-performance science-based organization continues to attract the best talents in the industry. And finally, we operate with doing business the right way. This is part of our culture, and this is supported by strong controls, strong compliance, and a tight governance. Before taking your question, let's discuss guidance for 2026 and beyond. We're entering trade statistics with confidence in the last few years. As we just discussed, we've accelerated our revenue growth to 6% per year and have grown EPS two times faster than revenue at 12%. Our operating margin has expanded by 240 basis points. We've increased EPS by 17% a year. And we've delivered $2.3 billion in operating cash flow and $1.1 billion in free cash flow. We've invested $396 million in CapEx. 207 million in acquisitions and return almost a billion to our shareholders. And above all, we have delivered an excellent ROIC with a free average of 21.4%. Our growth momentum was strong throughout 2025, and in 2026, we expect to deliver mid-single-digit like-for-like review growth at constant currency, with high single-digit like-for-like in corporate assurance, mid-single-digit like-for-like in consumer product, industry, and infrastructure, and low single-digit like-for-like in health and safety and the world of energy. We are targeting further margin progression, which combined with expected revenue growth will deliver strong operating growth, cash discipline, will remain in place and will deliver a strong free cash flow. We plan to invest around 150 to 160 million in CapEx. As you would expect, we continue to focus on delivering a strong ROIC. In terms of currency, the average selling rate in the last six months, applied to the three-year results of 2025, will be broadly neutral at the revenue and operating level. Beyond 26, of course, the value growth opportunity is significant. We continue to expect our life-long revenue to be at mid-single-digit and will benefit from value-accretive M&As. Margin-accretive revenue growth, as we just discussed, will remain a top priority, and we are confident that there is upside to our 18.5% plus margin target. We'll remain very disciplined in terms of cash conversion and cash allocation to seize the organic and inorganic opportunities in the market. And of course, we'll continue to reward our shareholders with a 65% dividend payout ratio. In summary, the value growth opportunity ahead is significant. Our 3.0 strategy is about being the best all the time, and our commitment to all of our stakeholders is simple, demanding, and compelling. quality growth assured. That's what our AAA differential strategy growth is all about. We'll not take any questions that you might have.

We will now start the Q&A. If you're dialed into the call and wish to ask a question, please use the raise hand function at the bottom of your Zoom screen. If you've dialed in, please select star 9 to raise your hand and star 6 to unmute. We'll take our first question from Rory McKenzie with UBS. Please go ahead.

Good morning, it's Rory here from UBS. Firstly, I appreciate it's only two months, but can you just help us get from the November to December exit rate of 1.9% organic growth? to your guidance of mid-single-digit growth for this year overall. I know your Outlook comments suggested that some areas are supposed to pick up quite a bit, so could you maybe just give us some more detail on what caused that high single-digit decline in the world of energy in the end of last year and what you're seeing so far this year, and also why corporate assurance slowed and why you see a pickup? And then secondly, obviously, it was good to see the strong adjusted EBITDA margin progression, but also restructuring charges, I think, have increased quite a bit. You know, H2 was the highest run rate we've seen for several years. Can you share more about where those programs are targeted and why you decided to expense them this year? And also just what should we expect in terms of the payback from those charges? Thank you.

Of course. Look, in terms of like-for-like revenue growth, there is no question that in the second half, and particularly in November, December, we faced a very demanding base when it comes to the world of energy. As I just explained, the world of energy had a very, very, very strong 23 and 24. Just to remind everyone about the data, we had 23 like-for-like of 8.7% in 2023. with 9.6% in November-December 2023. And then in 2024, the life-for-life revenue growth of World of Energy was 8%, and it was 10.7% in November-December last year. So if you basically put the November-December like-for-like revenue growth, which is the first part of the question in context, if you basically take that baseline effect into consideration, recognizing, of course, as I said earlier, that we saw a demand reduction in the transportation technology industry, or like-for-like revenue growth was 4.7% x the world of energy in November-December and was 5.4%. in the full year, you know, 2025. So from my perspective, yes, you might, you know, call it a slowdown in the month of November, December, but I would reason for that. The reason why, you know, we are confident about these single digits, like for like revenue growth, is Pretty clear from our perspective, let's go through each division one at a time. If you look at consumer product, there is no question that it's a stellar performance in all segments within consumer product. We have done super well in electrical for many, many, many years, and we continue to innovate and drive growth in all electrical operations around the world. There is no question that we've made tremendous progress in soft lines, and you can see from the numbers that we are gaining market share in the industry. We've won lots of new contracts, and hard lines is performing very well. We've also put a lot of new contracts, and DTS is in a good place. So from a pure consumer product standpoint, there is no question that we are very, very comfortable with our guidance for the year. Looking at corporate assurance, corporate assurance, essentially always has a bit of a slowdown in November, December, because this is the period, Rory, where we are at peak capacity, and it's very difficult to basically go beyond the auditor's capacity that we have. Having said that, the backlog is strong, and we are very, very comfortable with the guidance we are giving. And as I said earlier in the call, we are investing in expanding our auditor's capacity to deliver the orders we have in the backlog. Within health and safety, there is no question that food continues to be outperforming everyone in the industry. We are very, very proud of the double-digit revenue growth, and we don't expect food to basically slow down. There is no question that there was a bit of slowdown in chemical and pharma in 2025 for all the reasons we talked about. But we expect that to basically bottom out in the first half and start growing in the second half. We are obviously seeing an increased order momentum from all of our clients, given the temporary cuts they've done in 2025. When it comes to industry and infrastructure, and we are obviously comfortable with the guidance that we've just talked about, with a stronger H2 than H1, if I were to say it differently. If I look at industry infrastructure, look, minerals is, you know, going from strengths to strengths. You will have seen a double legit, you know, revenue growth performance well ahead of anybody in the industry. And this is because we are winning new contracts. Lots of our sourcing, you know, opportunities are coming our way, given our science-based, you know, customer excellence advantage. And here we're going to have another very, very, you know, good year. Moody continues to thrive and, as expected, we've seen a rebound in terms of demand with building and construction that has a stronger H2 than H1. And here, the backlog is very, very good indeed. As far as the world of energy is concerned, I'm not concerned about calibrate, nor am I concerned about CA. Transportation technology, which is the automotive industry, will take time to recover, but we expect the demand to start improving in the second half. When you go division by division, you can see why we're guiding the way we are guiding, and mid-simple digit, you know, like for like is really what we believe we will deliver in 2026, after having delivered that for three consecutive years in the last, you know, three years. When it comes to restructuring, very, very important questions. As you know, 2025 was the fourth year of our restructuring program. We have another year to go. And our view is that we give the operations maximum times to fix some of the issues. But one point of time, we need to make decisions for underperforming units. And we have taken some decisions. We've obviously taken some cost reduction in TT and CMP, given the trajectory that we have seen. We've continued to streamline our overheads. We continue to streamline the operational measurements within our units. We're using essentially a number of layers. And then there were a few sites that Comenac felt we had to basically get out of because after having tried for three and a half years, the results were not competing and they were starting to destroy value. So that's basically what I could say to these two questions. Thank you, Robert.

Thanks, Andrej.

Our next question comes from Susini Varanasi with Goldman Sachs. Please ask us a question and go ahead.

Hi, good morning. Thank you for taking my question. Just a couple for me, please. As a reminder, the restructuring charges that you took below the line, I think I missed it, but could you help us understand the quantum of the benefit you expect to SG&A in 2026? And just to help us understand the exit rate versus the early trends, is it possible to give us some color on early trading? in Jan-Feb this year. Thank you.

The benefit in 2026 from the restructuring in 2025 is $8 million. In terms of trading, I typically don't comment on short-term trading, but as I just said, I'm not worried about the life-for-life momentum for the group in 2026. So, you know, we're in a good place.

Thank you.

Our next question comes from Annalise Vermeulen with Morgan Stanley. Please ask your question and go ahead.

Hi, good morning. I have two questions, please. So firstly, on transportation technologies, you talked about customers' temporary reduction of investments, but we've also seen some of the OEMs make quite big decisions around moving away from EVs, for example. So when you think about that business, do you think that there'll be any need for restructuring as you try and position it to match where the growth actually is in the market and what gives you confidence on that recovery in the second half based on what you can see today? And then secondly, just on capital allocation, no new share buyback today, despite the still quite low leverage. So can we infer from that that you expect to continue to do more deals in 2026 and have the pipeline look in terms of what you're looking for specifically? Thank you.

All right, of course. Let me just double-click on TT because that's the first question you're asking. Essentially, if you look at the global automotive industry and if you look at the European brands, including here, JLR, the American brands, and the Chinese and Japanese brands, The Chinese market and the US market have always been the biggest but also the most lucrative markets for Western OEMs. Essentially, the reason why we've seen a very quick wave of restructuring across all OEMs in Europe and in the UK here, but also in the US, is essentially for two reasons, right? The Western OEMs have basically lost massive market share in China because the Chinese OEMs have an advantage in terms of electric vehicles. So the electric vehicle segment and hybrid segment continue to grow globally. The issue is that the OEMs are losing market share in China. And for the European OEMs, the tariff obviously have increased the cost of doing business in North America, which is the second most lucrative markets for all OEMs here in Europe and the UK. So that's why you've seen this massive cost-cutting in terms of irony projects and people and dividend in the short term, because these OEMs had to basically deal with short-term cash pressure. When you step back, and if you look at where our footprint is for Intertech in terms of transportation technology, we are very strong in the United States, we are strong in China, and we've got, I would say, decent operations in Europe. Looking at the investment moving forward, I don't think... that, you know, OEMs will stop investing on EV and hybrid for all markets outside of the United States because the demand continues to be very, very robust and all the Western OEMs need to dial up their EV and hybrid capabilities to compete against, you know, Chinese OEMs. The US, of course, we have never expected a huge, you know, growth for electric vehicles and and and this is a market where the traditional combustion engine will continue to play a big role i mean the good news for us is that in the us that's exactly what we do in the automotive industry so you know we are you know quite well positioned My view is that OEMs cannot stop investing in R&D to improve their market share. And we believe that they will resume investments step by step. So we are optimistic for the second half of 2026. As far as the capital allocation question goes, We did our share buyback last year because our net debt to EBITDA leverage was way below our target range. Now we're at 1.3 at the bottom of our target. We basically believe that the opportunities to create additional value for shareholders through M&A is increasing. We've seen the demand increase. increase in terms of good businesses being for sale. We've done quite a few acquisitions, as you know, in 2025 and these last few weeks. And we believe that being at 1.3 net debt to be there, we are in a good place to put in, if you want, our cash to work and the illustrative returns provide, of course, the opportunities are very significant. If, you know, at the end of 2026, we are in situations where our leverage is below our target and below the threshold, minimum threshold of our target, obviously we consider with the board that we've always said that, you know, if the group is below the minimum threshold of 1.3, we will obviously return excess cash that can be deployed for strong returns. But again, as I said in the presentation, you have seen the return that we've delivered in the last three years. The acquisition that we made, it's very, very accretive to the group. And if we find the right opportunities, we will cease this, we'll remain very, very disciplined, and we'll take a view at the end of the receipt with the board if there is excess cash that we need to return cash to shareholders. All right?

Very clear. Thank you, Andrew.

Our next question comes from Virginia Montessori, Bank of America. Please go ahead.

Good morning and thank you for taking my question. I just had two quick ones. One is on the margins, particularly in corporate assurance and health and safety. You've mentioned in the press release some portfolio mix effect. So could you help us understand how to think about these two divisions? margin-wise for 2026? And then the second one, when we think about CAPEX, it's increased slightly year-on-year, and your guidance for next year is slightly higher. What are your priorities, CAPEX-wise, for this year? Thank you.

All right. Look, I think if you look at the mix effect within, you know, Corporate assurance is essentially that we have two big businesses, business assurance and assurances, and the life-long revenue growth was a bit lower on assurances than on corporate assurance, on business assurance, and this is what the mixed effect was all about. And as I said, there was more than mixed. We are investing in technology and auditors' capability. And in terms of health and safety, there is no question that the mixed effect was driven by chemical and pharma, which was down year on year, and it's a really high margin business for us. We do not guide in terms of margin by division for the year. We give you guidance for the overall group. We expect, obviously, to deliver margin-equity program roles in most of our businesses, and there are opportunities in 2026 for both business and health and safety to do better.

Can I ask on CapEx?

The CapEx question is pretty simple to think about it. We are in a unique position when it comes to seeing growth opportunities in each of our business lines. And we have obviously opened new sites in the Pacific, in Latin America, and also in Europe. We have expanded certain of our sites in terms of building additional capacity. We, of course, have invested in technology. We are using technology to innovate and augment our TQA value proposition. Lastly, maintenance continues to be important, and we continue also to make some investment, as you would expect, in the group in terms of overall IT strategy. That's basically, you know, what we are doing. It's pretty broad-based. There is no single business line at Intertech that doesn't have opportunities to grow with, you know, good CapEx investments. And that's what, you know, we are doing. You can see with all the announcements that we are making, you know, around the world, the type of investments, you know, we've done in 2025.

Perfect. Thank you very much.

Our next question comes from James Rowland-Clark with Barclays. Please unmute your line by pressing star six and ask your question.

Hi. Good morning. Thanks for taking my questions. You talked about the healthy M&A pipeline. You talked about the healthy M&A pipeline earlier. Can you just elaborate on how deep this pipeline is that you decided that That is the priority for capital allocation right now. And how far out do you think this takes the business in terms of the sort of run rate of bolt-on deals for the foreseeable future? My second question is on margins. It's another very strong year within the corporate consumer products division in terms of margin progress. You've spoken earlier about growing a little faster in assurance, adding auditors, and also your guiding hire on growth in consumer products. Do we assume that the opportunity for margin growth is still there in those two divisions or are you adding lots of capacity to drive the growth that will maybe delay the sort of operating leverage coming through in those two divisions in 2026? And then my final question is on free cash flow. It looks like working capital was the reason that free cash flow was down 15% year on year. Are you now happy with the working capital based to run off for 2026, i.e. payables and receivables days are in a normalised position now for 2026? Thank you.

Thank you very much. I'll take these questions, starting with the third one. Look, I mean, you're right. I mean, you know, we've made so much progress on cash over the last 10 years that we are now in a territory of incremental gains. But, you know, we are truly, you know, continuous improvement during an organization. And, you know, we'll continue to look at opportunities for, you know, better cash generation moving forward. There is no question that we can do much better than what we've done over the years, but we are talking about incremental gains. So I would never say that our working capital is the best you can get. I would say it's a very, very good working capital, but we're going to go for incremental gains step by step, and you're absolutely right. the free cash flow was impacted largely by the lower change of working capital between 24 and 25 compared to what happened between 23 and 24. We had a stellar cash performance in 24, as you know. In terms of margin, as I said to the previous question, we do not guide in terms of margin, but The way we operate internally is margin-accredited revenue growth is, you know, central to how we deliver, you know, value for stakeholders, right? And, look, there are opportunities even within consumer products, even with, you know, corporate assurance to invest and continue to improve margin. And that's the way, you know, we are running the company. That's the way, you know, people are incentivized. Because essentially, you know, to basically improve your margin, you've got quite a lot of levers you can pull if you are an operationist. Start with, you know, the quality of your portfolio strategy. Are you targeting the high growth, high margin, you know, segments in the industry so that, you know, the IP that all engineers and scientists have to offer to the market are basically priced at a higher price points and are targeted to high growth areas. The second thing is, of course, you've got to stay very, very disciplined in terms of pricing. We had a premium leader that was explaining during the presentation, wouldn't have the productivity metrics that we have in terms of revenue per headcount, operating profit per headcount, and free cash flow per headcount if we didn't have a very disciplined volume price mix management. In addition to that, you know, the fixed cost leverage continues to be playing a big role when you want to drive margin accruations. And despite the fact that, you know, you are investing in new opportunities, you should basically always target some productivity improvements. So net-net, you know, we expect our teams to, you know, drive margin accuracy for our roles, you know, year in, year out. We do not always get there for reasons that, you know, we've just talked about, but that's the way we are running the company, and that's the way the incentive scheme is based, and this is why we are obviously in the situation where we're in, in terms of margin performance. In terms of M&A, look, we... I'm very disciplined in terms of M&A. We don't have any goals. We don't say we're going to do X number of M&As. We want to be ultra, ultra careful on how we select these businesses. We only target high-quality businesses. And we believe the environment is obviously more positive for M&A in 2026 than it was in 2025 and so in 2024. And therefore, you know, we want to keep, you know, some firepower, given the fact that we had a good place to run, that we died 1.3 level to seize the opportunities coming our way. Having said that, um, We have built lots of bilateral relationships around the world. That's our preferred way of operating. That's how we did, for instance, EnviroLab. That's how we did Q-Test. That's how we did SupplyLab. That's how we did AeroPV. And building these relationships takes time, and you need to make sure that the owner is ready to monetize his asset base at the right time. We, of course, participate in processes which tend to be very, very competitive. And there are situations where we win. But we don't have any quantified goal. It's got to make sense acquisition by acquisition. And the positive news is that we've got a very, very good integration approach. We've seen the return we've delivered from acquisitions. We are very clear about where we want to invest. We target high growth, high margin sectors that will augment the IP of Intertech And, you know, we believe that 2026 will be a good year. But I can assure you we're not going to rush to make acquisition just because, you know, we want to say we've done M&As. We do M&As if it makes sense all the way.

Thank you.

Our next question comes from Victoria Chang with JP Morgan. Please go ahead.

Hi, I have two questions, please. The first one is with the US IEPA tariff ruling last week, an introduction of the Section 122 blanket tariffs on US trading partners. Do you see any impact of this to your consumer testing business, maybe in terms of delayed decision making or port forward of SKU testing to take advantage of the lower tariff rates on certain products in Asia? And my second question is on your initial thoughts on AI implementation in the business, please, how you're thinking about rolling out AI across the business to deliver efficiencies and other particular areas of business life where you expect to see the most benefit in terms of the cost base. Thank you.

All right. I think on tariff, there is no question that the news is That's the news for China and India than it was a few weeks ago. As you know, we are in the stream of the supply chains of our clients. We're working very closely with them. We've launched SupplyTech in 2025 to basically help our clients figure out what they could do to re-engineer their supply chain based on the potential of economics, creating new routes, replacing routes. I would say the overriding position within our class is wait and see. They've made no big decision because the agenda has been moving around. Having said that, there is no question that we are having lots, lots, lots of meetings with our consulting teams, helping clients to figure out would these direct situations expected to settle at, what it would mean in terms of economics and potentially new routes. But the overriding situation is let's not rush and take our time. And you can understand why, because these supply chain changes are very, very costly, very risky, very, very timely. And people only want to change their supply chain if it really makes sense, not for tomorrow, but for many, many years to come. As far as, of course, we continue to monitor that, but the net news of the new decision is that it's incrementally better for the economics in China and India. In terms of AI, we are called Intertech, so we use technology to augment everything we do for our clients internally. And of course, we are investing on AI to be here in the office with us here next to our conference room. We have a lab, AI lab, that is made of engineers that are providing support to our teams around the world to make sure that we develop the right technology. AI solutions for our business. How do we think about AI at Intertech? First of all, we believe there is a significant opportunity to help our clients manage the risk associated to the investment they are making in AI. If you basically take the technology company aside and, you know, largely some other industries like medical devices or defense, AI is pretty new for most corporations. I'm not talking about using large language models, which are third-party large language models. Everybody understands that. But developing your own AI algorithms and using agents to basically either improve your customer service, drive more sales or, of course, work on productivity. That's why we've launched AI Square, which is an independent end-to-end AI assurance program to help our customers operate smarter and safer and with the right trusted AI algorithm. This is the external opportunity, if you want, and this is, of course, very, very good news for us. And here, I would say, we are at the cutting edge of what's happening in the industry. I think we are the only company to do that, competing with lots of very, very, very big companies like consulting firms and big four, because we do have the expertise. In terms of... Using AI on how we do business, there is no question that we are looking at AI to augment the way we deliver total quality assurance for our clients. I'll give you a few examples in a second. There is no question that we're looking at AI on how to improve our productivity, and I'll give you some examples on how we're seeing some benefits from a productivity standpoint, and then Finally, we are looking at AI to basically get faster to the right insights and decision-making by doing data science at scale in all parts of the organization to physically see the opportunities or the issues faster and therefore make better decisions. As you know, we've built an incredible database of financial, non-financial indicators that we call 5x5. This gives us a real depth and breadth of reach in in in the operations and this is where ai uh investments that we are making uh are making a big difference for us to basically look at you know some of the big trends and and deviations and you understand all of this when it comes to um using ai on how to augment the total quality uh transferable position of our class there is no question that uh in all of our large-scale data-based platforms, the SaaS platform we've launched over the years, we have very good positions to differentiate ourselves. And we are already using AI to, for instance, provide better targeted people assurance training with our Alchemy solutions. We are using AI to help our clients use platforms like SourceClear and Interlink and RiskAware, which are SaaS-based platforms where essentially it's all about intelligent document processing, getting the right risk-based quality assurance analysis on the trends, and therefore, as a client, making some pretty big decisions in terms of where you want your testing investment or assurance investments to be. When it comes to the internal use, we have invested over the years. We use Harvey, for instance, which is a pretty good platform to review client contracts, to basically look at lab documents when we do DD inside the data room for M&A. And then going into the operational opportunities, anywhere where we have a pretty well codified, digitized process, AI can help us obviously make, you know, much, much, much, you know, faster, you know, decisions and get some productivity. So the areas that we're looking at, for instance, is, you know, in terms of marketing, how do you basically quantify the right leads much faster? Another area, which is an obvious opportunity for us, is, you know, the quality reviews, our test report, but also our audit, you know, reports. Very, very important area of opportunity where we're investing a lot is resource management, so if you think about scheduling of auditors for VA, or if you look at scheduling of inspectors for Caledonia or Moody, and then there is no question that when it comes to global market access, we use AI to accelerate the speed at which we provide the right testing protocols to our clients when they want to to go to market in other, you know, industries or in other markets, you know, geographically. And then, you know, the real, you know, opportunities is data science, right? How do you basically take the work we do for plants in geochemistry and minerals? We do a lot of work for them and most of our plants do not basically use most of the data. Well, with the intelligence we have on geochemistry, we can help our plants go beyond the test people. So we are very, very, very excited. Obviously, early days, but I would say that we are at the cutting edge of AI in the industry and in the tech.

Thank you. As a reminder, if you would like to ask a question, please use the raise hand function at the bottom of your Zoom screen. We'll take our next question from Carl Green with RBC. Please unmute your line by pressing star six and ask your question. Paul, please go ahead and ask your question.

Thank you very much. Yes, good morning. Just a couple of follow-up questions around the restructuring costs in the year. I just wanted to clarify, did I hear correctly that the SG&A benefits expected for 2026 would be 8 million? And if so, that ratio between the 37 million of charges and the SG&A savings of almost 5 to 1 suggests that there's possibly savings in other cost buckets beyond SG&A. Is that correct?

I think the £8 million is the total saving we expect on our cost base in 2020. Yeah, in 2086.

That's the total cost base. Okay, thank you. And then just for this year, this fiscal year, fiscal 26, how should we be thinking about likely P&L charges for restructuring costs? Obviously, it's been a consistent feature for the last few years as you've gone through this programme. What ballpark number would you point people towards this year?

And look, we do not guide regarding restructuring costs. This is a process that, you know, come and I go through. Case by case, we only do that when we believe it's the best way moving forward. I wouldn't want to give you any numbers, because frankly speaking, we're going to take every opportunity at its face value, and we'll do it very, very rigorously. We've got some clear rules on how we book these. As you can imagine, we always announce our results fully audited, so that's been through the minute review of auditors. But this is our, you know, final year of the five-year program we announced a few years ago. But we'll continue to be very, very rigorous. So I won't want to give you any number at this stage.

Okay, thanks.

We'll take our last question from Ben Wild with Deutsche Bank. Please go ahead.

Thanks for taking my question. Just one remaining for me. I think if I look back at the November trading updates and compare with where you ended the year on net financial debt, you ended 20 million above the guide that you gave in November. Just to understand, is there a one-off effect that reverses next year on the free cash flow, or is there anything else that resulted in the difference between the end of November guide and the results?

It's a fair question. When we give the net debt guidance, we never include the M&As. So as you know, between the reference statement and we did an additional acquisition, so that's the only difference. There is nothing more to that.

Okay. Thank you.

There are no further questions on the webinar. I'll now hand back over to management for closing remarks.

Well, thank you very much for your time today. I know it's a busy day. Of course, we are available if you have any follow-up questions. Thank you very much and have a good day.

Thank you for joining today's call. We're no longer live. Have a nice day.