Intertek : 2021 Half Year Results Announcement

2021 HALF YEAR RESULTS ANNOUNCEMENT

30 July 2021

Strong Performance in Revenue, Earnings, Cash and ROIC

• Revenue of £1,317.6m: +4.8% at constant rates; -1.0% at actual rates
• Robust L4L revenue of +5.8% at constant rates: Products +9.7%; Trade +1.1%; Resources -1.6%
• L4L revenue growth accelerated in May and June to 12.0%: Products +13.9%; Trade +8.5%; Resources +9.5%
• Adjusted operating profit of £201.7m with operating margin increasing 260bps at constant rates to 15.3%
• Adjusted diluted EPS of 78.2p: +31.4% at constant rates; +23.9% at actual rates; statutory diluted EPS of 70.9p
• Strong Cash conversion of 135%, robust balance sheet with net debt of £435m
• Investments to seize attractive organic and inorganic growth opportunities
• Interim dividend payment of 34.2p; unchanged on prior year
• Return on invested capital of 23.4%, +400bps YoY and +360bps at constant rates
• Well positioned to benefit from the growth acceleration in the global Quality Assurance industry

André Lacroix: Chief Executive Officer Statement

"I would like to thank all of our colleagues for having delivered a strong performance in the first half of 2021. Group revenue was £1,317.6m, up a robust 5.8% like-for-like at constant rates with growth accelerating through the period. We have made continued progress on margin, profitability and free cash flow, with margins increasing to 15.3%, EPS growth of 23.9% and strong cash conversion of 135% at actual rates. We have announced an unchanged interim dividend of 34.2p.

The Group is on track to deliver a strong 2021 with robust like-for-like revenue growth, year on year margin progression and a strong free cashflow performance, notwithstanding the lockdown restrictions in several of our markets impacting the supply chains of our clients and mobility. We expect our Products division to deliver robust like-for-likerevenue growth and both Trade and Resources to deliver good like-for-likerevenue growth.

We are investing to seize the attractive growth opportunities in the global Quality Assurance market which we expect to grow faster in the post-Covid world, as companies have realised the need to increase investments to reduce risk in their supply chain. In May, we entered into an agreement to acquire SAI Global Assurance which will expand our global industry leading assurance offering to access the high growth opportunities in the high margin and capital light Assurance market. Most recently, in July we announced the acquisition of JLA to enter the fast-growing Food testing industry in Brazil, an industry segment with strong, secular growth trends.

We are investing in scaling up our winning innovations to support the emerging needs of our clients to help them address their operational and supply chain challenges. In the first half: we launched Intertek CarbonZero certification which enables companies worldwide to confidently market qualifying carbon neutral products and services, issuing the first certificate to Lundin Energy; we launched WindAware, a data intelligence solution to help wind asset owners and operators optimize asset performance; and we introduced Rice Inspection on the blockchain-based Sustainable Rice Exchange. Our passionate commitment to innovation is what enables us to deliver sustainable shareholder value through the cycle.

All of us at Intertek are truly excited about the Quality Assurance growth opportunities as the Covid-19global pandemic has made the case for Total Quality Assurance (TQA) clearer and stronger for our clients. The structural growth drivers in the $250 billion global Quality Assurance Market pre-Covid-19now include a wide array of new opportunities to help foster a better and safer world for all post-Covid-19and are compelling, ranging from:

• Safer, more diversified supply chains with greater traceability, improved intelligence and increased resilience
• A lower carbon economy, stay-local lifestyles, more remote working, distance learning and online shopping
• Better personal safety, higher health, hygiene and wellbeing standards and greater investment in healthcare

With our industry leading ATIC (Assurance, Testing, Inspection and Certification) capability and expertise, innovation and insight, Intertek is uniquely positioned to seize the compelling growth opportunities and to benefit from the GDP+, like-for-like revenue growth prospects in the Quality Assurance Industry in the medium to long-term.In short, the pandemic has brought to life as never before the importance of Intertek's purpose-ledrole in society."

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Key Adjusted Financials

2021 H1

2020 H1

Change at

Change at

actual rates

constant rates1

Revenue

£1,317.6m

£1,330.6m

(1.0%)

4.8%

L4L revenue2

£1,317.6m

£1,319.0m

(0.1%)

5.8%

Operating profit3

£201.7m

£168.2m

19.9%

26.2%

Operating margin3

15.3%

12.6%

270bps

260bps

Profit before tax3

£186.3m

£151.5m

23.0%

30.3%

Diluted earnings per share3

78.2p

63.1p

23.9%

31.4%

Interim dividend per share

34.2p

34.2p

-

Cash flow from operations less net

£213.9m

£236.9m

(9.7%)

capex3

Free Cash Flow3

£122.6m

£141.9m

(13.6%)

Financial net debt4

£434.9m

£650.1m

(33.1%)

Financial net debt / L12M EBITDA3, 4

0.7x

1.1x

1 Constant rates are calculated by

Key Statutory Financials

2021 H1

2020 H1

Change at

actual rates

translating H1 20 results at H1 21 exchange

rates.

Revenue

£1,317.6m

£1,330.6m

(1.0%)

2 L4L revenue includes acquisitions

following their 12-month anniversary of

Operating profit

£184.5m

£146.9m

25.6%

ownership and excludes the historical

contribution of any business

Operating margin

14.0%

11.0%

300bps

disposals/closures. H1 20 L4L revenue has

been adjusted to present certain rebates

Profit before tax

£169.1m

£130.8m

29.3%

net within revenue to permit comparability

period to period where H1 21 L4L revenue

Profit after tax

£125.1m

£105.5m

18.6%

is also presented net of rebates.

3 Adjusted results are stated before

Diluted earnings per share

70.9p

58.6p

21.0%

Separately Disclosed Items ('SDIs'), see

note 3 to the Condensed Consolidated

Interim Financial Statements.

1,2,3 Reconciliations for these measures are

shown in the Presentation of Results

Net cash flows generated from

£187.0m

£201.8m

(7.3%)

section on page 20.

operating activities

4 Financial net debt excludes the IFRS 16

lease liability of £265.3m. Total net debt is

£700.2m. Reflects prior 12 months EBITDA

for relevant period. See note 7 on page 34.

The Directors have approved an interim dividend of 34.2p per share (H1 20: 34.2p) to be paid on 7 October 2021 to shareholders on the register at close of business on 17 September 2021.

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Contacts

For further information, please contact:

Denis Moreau, Investor Relations
Telephone:	[phone]	[e-mail]
James Styles, FTI Consulting
Telephone:	[phone]	[e-mail]

Analysts' Call

A live audiocast for analysts and investors will be held today at 7.45am London time. Details can be found at http://www.intertek.com/investors/together with presentation slides and a pdf copy of this report. A recording of the audiocast will be available later in the day.

Intertek is a leading Total Quality Assurance provider to industries worldwide.

Our network of more than 1,000 laboratories and offices in more than 100 countries, delivers innovative and bespoke Assurance, Testing, Inspection and Certification solutions for our customers' operations and supply chains.

Intertek is a purpose-led company to Bring Quality, Safety and Sustainability to Life. We provide 24/7 mission-critical quality assurance solutions to our clients to ensure that they can operate with well-functioning supply chains in each of their operations.

Our Customer Promise is: Intertek Total Quality Assurance expertise, delivered consistently, with precision, pace and passion, enabling our customers to power ahead safely.

intertek.com

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Half Year Results 2021

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HALF YEAR REPORT 2021

GROUP CEO REVIEW

"I would like to thank all of our colleagues for having delivered a strong performance in the first half of 2021. Group revenue was £1,317.6m, up a robust 5.8% like-for-like at constant rates with growth accelerating through the period. We have made continued progress on margin, profitability and free cash flow, with margins increasing to 15.3%, EPS growth of 23.9% and strong cash conversion of 135% at actual rates. We have announced an unchanged interim dividend of 34.2p.

We expect our Products division to deliver robust like-for-like revenue growth and Trade and Resources good like-for-like revenue growth. The Group is on track to deliver a good 2021 with robust like-for-like revenue growth, year on year margin progression and a strong free cashflow performance, notwithstanding the lockdown restrictions in several of our markets impacting the supply chains of our clients and mobility.

A Purpose-Led Organisation

Through our unique range of products and services, our high-margin,cash-generative earnings model consistently delivers value for all of our stakeholders.

This success is based on the energy and enthusiasm with which our people react to our meaningful Purpose of Bringing Quality, Safety and Sustainability to Life.

Our Vision is to be the world's most trusted partner for Quality Assurance, underpinned by our shared Values:

• We are a global family that values diversity
• We always do the right thing. With precision, pace and passion
• We trust each other and have fun winning together
• We own and shape our future
• We create sustainable growth. For all

Attractive Opportunities for Growth

The total value of the global quality assurance market is, we estimate, $250 billion of which 'only' $50 billion is currently outsourced. That means there is an opportunity to capture a share of the $200 billion that is currently managed in-house. Beyond this, increased complexities of corporate supply chains and the associated challenges of maintaining a high level of quality assurance end-to-end mean that there are further growth opportunities ahead which currently remain untapped.

Companies are certainly doing far more today to improve quality and safety than they were even five years ago, but there is much that needs to be done to establish a robust, reliable, end-to-end Total Quality Assurance (TQA) approach that reduces risk. That is what we offer to our clients, leveraging our broad service portfolio, our technical expertise, our global laboratory network, and our passionate customer-centric colleagues to allow corporations to concentrate on their core value-generating activities.

All of us at Intertek are truly excited by the Quality Assurance growth potential as the Covid-19 global pandemic has made the case for Total Quality Assurance (TQA) clearer and stronger for our clients. The structural growth drivers in the $250 billion global Quality Assurance Market pre-Covid-19 now include a wide array of new opportunities to help foster a better and safer world for all post-Covid-19 and are compelling, ranging from:

• Safer, more diversified supply chains with greater traceability, improved intelligence and increased resilience
• A lower carbon economy, stay-local lifestyles, more remote working, distance learning and online shopping
• Better personal safety, higher health, hygiene and wellbeing standards and greater investment in healthcare

We see five growth opportunities.

First, we will be looking to leverage the growth opportunities presented by our existing customers. We aim to increase customer account penetration, both within the services we already provide to each individual organisation and by cross-selling between the various components of our integrated Assurance, Testing, Inspection and Certification (ATIC) offering.

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Second, we will continue to leverage our global portfolio of industry leading solutions to win new customer relationships with new and fast growing local, regional and global companies.

Third, we are well positioned to capture growth opportunities that are currently untapped, as the industry continues to evolve from TIC to ATIC and increase their investments in Risk-based Quality Assurance.

Fourth, as companies see the value in our TQA approach, there will also be tremendous growth potential in convincing corporations that currently conduct this work in-house to outsource their quality assurance requirements to us.

Fifth, our industry is highly fragmented and we will look at seizing the right M&A opportunities to enable us to expand our geographic coverage where needed, providing access to new kinds of offerings and strengthening our existing operations. Our highly cash-generative earnings model and strong balance sheet provides the flexibility to accelerate organic growth with value enhancing acquisitions.

Intertek Total Quality Assurance

Intertek has been the pioneer of our industry across the world for 130 years. We have a proven track record of innovating and anticipating the growing needs of our clients, constantly evolving and improving our customer proposition to meet their changing needs.

In identifying that for corporations to deliver sustainable performance, our customers need to take a risk-based approach to quality assurance across their entire supply and distribution chain, we evolved our service offering beyond Testing, Inspection and Certification of our clients' physical components, products and assets to also assist them with the reliability of their operating processes and quality management systems; Assurance is at the cutting edge of our value proposition.

Further, Intertek has continued to lead the industry as we expanded our Assurance services into People Assurance. In a world of increasingly complex supply chains and distribution channels, employees are key in driving operational excellence in multi-site organisations and we identified that there is a growing demand for bespoke People Assurance solutions to monitor and efficiently close critical skills gaps amongst frontline employees.

Today, our truly systemic, end-to-end Assurance, Testing, Inspection and Certification services enable our clients to operate safely and with complete peace of mind. This is what we call Intertek Total Quality Assurance.

Intertek's differentiated TQA value proposition is set to continue to lead the industry and sustain our growth trajectory in the years ahead.

Our High-Quality Earnings Model

Our high-margin,capital-light,carbon-light and strongly cash-generative earnings model is underpinned by the delivery of our TQA Value Proposition.

The Intertek earnings model is to provide ATIC solutions with superior customer service levels to businesses in the three economic sectors of 'Products', 'Trade' and 'Resources' across more than 100 countries. These sectors provide the framework of our high-quality earnings model, and each benefit from their own set of structural growth drivers.

We operate a capital-light business model which, combined with our entrepreneurial culture, enables us to react quickly to new growth opportunities.

At the Group level, in the medium- to long-term we expect to deliver GDP+ organic revenue growth that is margin- accretive and strongly cash-generative. This will enable us to allocate our resources in a disciplined fashion, to create additional value via carefully selected capital expenditure and M&A investments in high-margin and high-growth areas that in turn accelerate margin accretive revenue growth.

The Products sector, which currently delivers 85% of our earnings, comprises Softlines, Hardlines, Electrical & Connected World, Building & Construction, Chemicals & Pharma, Transportation Technologies, Food, and Business Assurance. We see the sector as continuing to benefit from corporations' growing investments in quality and innovation and anticipate continuing growth in response to rising consumer demand and a higher regulatory burden.

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