Analyst and investor call

November 10, 2020

Strong momentum in H2 trading

  • The July-October organic revenue decline was -3.8%, with strong improvement in September and October
  • Organic growth in China continued to improve, driven by the domestic business, PPE testing and connectivity services
  • All businesses showed an improvement in trend apart from OGC:
    • CRS growth has been very strong and AFL has returned to growth
    • GIS, IND and CBE all show a strong improvement in H2
  • July-OctoberAOI above prior year level supported by continuous improvement and optimising, implying a strong increase in margin
  • Free Cash Flow also above prior year level supported by the focus on working capital management
  • FY guidance remains withdrawn as second phase of lockdown yet to have an impact and due to the importance of the final two months of the year of trading

2

Acquisition of Synlab A&S

  • A European Environmental, Food and Life Sciences testing company
  • Hub-and-spokenetwork of strategically positioned laboratories
  • Highly regulated, mission critical services growing structurally
  • Strong organic revenue growth, margin expansion potential and strong cash generation
  • Revenue of € 202m and adjusted EBITDA of € 34m in 2019
  • Organic revenue growth was 5.8% in 2019 and 0.3% in 1H 2020
  • Purchase consideration of c. €550m, expected to close by early Q1 at the latest
  • Significant synergy potential through the integration and growth opportunities is expected to drive positive EVA in year 4 of ownership
  • Consistent with SGS Group's focus on accelerating M&A and investment in attractive, higher growth sectors with scope for automation and digitization

3

Well positioned in attractive European markets

KEY HIGHLIGHTS

37

11

2,000

Process

automation

Laboratories

Countries

FTEs

A&S Revenue (€m)

190.4

6.1%(1)

202.0

3.0%(1)

95.7

98.6

2018A

2019A

H1 2019A

H1 2020A

A&S EBITDA (€m)

16.5%

16.8%

13.7%

13.8%

31.5

7.6%

33.9

3.0%

13.2

13.6

2018A

2019A

H1 2019A

H1 2020A

EBITDA growth (%)

EBITDA margin (%)

SERVICE OFFERINGS

Environment

Comprehensive suite of soil, water, air, waste and

60% hygiene consulting, inspection, monitoring and analytics services

Food

20% Full range of microbial, nutritional, contaminant and genetic testing to cover the "farm to fork" value chain

Life Science

Full range of laboratory and consulting services to

10% support the critical path of bio-pharmaceutical development

Oil Condition Monitoring

10%

Laboratory analysis and consultancy services for

industrial clients

4

Source: Company information, Synlab management reports.

(1) Organic growth for 2019A and H1 2020A was 5.8% and 0.3%, respectively.

Approx. % share of 2019 Sales

A significant enhancement of SGS' European lab network

WHAT A&S BRINGS TO SGS

  • Enhances SGS' positions in European
    Environment, Food, Life Sciences and Oil Conditioning markets
  • Adds expertise and expands our EHS, AFL and OGC laboratory networks
  • Specifically increases our market share in Germany and Benelux and enables market entry into new markets in the Nordics
  • Accelerates the adoption of a hub and spoke laboratory model and facilitates the optimisation of existing laboratory network
  • Opens new multi-country services opportunities with key corporate customers

COMBINED ENVIRONMENTAL HUB

AND SPOKE LAB NETWORK

A&S testing hub

A&S testing spoke

A&S sales office

SGS testing hub

SGS testing spoke

SGS sales / field office

5

Strategic evolution

  • The next phase of our strategic evolution is being communicated to our global network over the next few weeks
  • Implementation is from January 2021
  • With a purpose of enabling a better, safer and more interconnected world for all stakeholders, we will align our global network more closely to the key TIC 'mega-trends' and customer demand
  • Simplified organizational structure - divisions reduced from eight to five and regrouped service lines
  • Strategy supported by our capital allocation strategy and EVA-driven performance management
  • Update on implementation at our FY results and a full strategy presentation at Investor Days next year

Q&A

© S GS S A 2 0 2 0

ALL RIGHTS RESERVED

Thank you

Frankie Ng - CEO

Dominik de Daniel - CFO

Toby Reeks - Investor Relations

www.sgs.com

© SGS Société Générale de Surveillance SA - 2020 - All rights reserved - SGS is a registered trademark of SGS Société Générale de Surveillance SA

8

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SGS SA published this content on 10 November 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 10 November 2020 10:26:01 UTC