2023 FULL YEAR RESULTS
ANNOUNCEMENT
5 March
2024
Strong 2023 Performance in
Revenue, Margin, EPS, Cash and ROIC
• Revenue
of £3,328.7m, +7.1% at constant currency and +4.3% at actual
rates
•
Highest LFL revenue growth in the
last 10 years with 6.2% LFL revenue growth at constant
currency
• LFL of
8.2% in Corporate Assurance, Health and Safety, Industry and
Infrastructure, and World of Energy combined; Consumer Products LFL
of 1.3%
• JLA,
SAI and CEA acquisitions
performing well, and Controle Analítico and PlayerLync
integrations on track
•
Acquisition of Base Met Labs to expand our Minerals ATIC offering
in attractive growth and margin markets
•
Adjusted operating profit of
£551.1m, +10.9% at constant currency and +6.0% at actual
rates
•
Adjusted operating margin of
16.6%, +60bps at constant currency and +30bps at actual
rates
•
Adjusted diluted EPS of 223.0p,
+11.0% at constant currency and +5.6% at actual rates
• Daily
cash discipline delivers an all-time high operating cash flow of
£749.0m with cash conversion of 122%
• Strong
balance sheet; net debt reduced by
£127m to £611m, and leverage ratio improved to 0.8x
•
ROIC of 20.5%, +250bps year-on-year at constant
currency and at actual rates
• Cost
reduction programme delivered savings of £13m in 2023 and £10m
expected in 2024
•
Proven high quality compounding
model; On track to deliver our medium-term margin target of
17.5%+
•
Robust 2024 outlook:
Mid-single digit LFL at constant currency, margin progression and
strong cash flow
• Full
Year dividend of 111.7p up 5.6% year-on-year; increasing targeted dividend payout
to circa 65% from 2024
A FY results video is available on
our website: https://www.intertek.com/investors/2023-full-year-results-video/
André Lacroix: Chief
Executive Officer statement
"I would like to recognise all my colleagues
for their unwavering support enabling us to deliver a strong 2023
performance in revenue growth, margin, EPS, cash and ROIC. Our
revenue grew by 7.1% at constant currency driven by a
LFL revenue growth of 6.2%, the highest in the last 10 years, and
the contribution of our acquisitions. Our systemic performance
management drove strong profit conversion with margins rising 60bps
at constant currency, driving EPS growth of 11.0%
at constant currency. Cash conversion at 122% was
excellent. We have delivered our highest ever cash from
operations of £749m resulting in our net debt declining by £127m to
£611m. We have a strong balance sheet giving us the ability
to invest in growth. ROIC increased by 250bps to
20.5%.
Our clients are increasing their focus on
Risk-based Quality Assurance to operate with higher standards on
quality, safety and sustainability in each part of their value
chain, triggering a higher demand for our ATIC solutions which are
powered by our Science-based Customer Excellence ATIC Advantage.
Over the last nine years, from 2014-2023, we have delivered a CAGR
of 5.3%, 6.1% and 6.0% for revenue, operating profit and EPS,
notwithstanding the impact of Covid. In May 2023, we unveiled
our
Intertek AAA differentiated growth strategy to
capitalise on the best-in-class operating platform we have built
and target the areas where we have opportunities to get better. Our
highly engaged, customer-centric organisation is laser-focused to
take Intertek to greater heights putting our AAA strategy in action
and continuing to deliver sustainable growth and value for all
stakeholders.
Based on our positive momentum, we expect the
Group will deliver a robust performance in 2024 with mid-single
digit LFL revenue growth at constant currency, margin
progression and a strong cash flow performance. We are on track to
get back to our peak margin of 17.5% and beyond in the medium-term,
capitalising on the revenue growth acceleration we are seeing for
our ATIC solutions, our disciplined performance management and our
investments in high growth and high margin segments.
We believe in the value of accretive
disciplined capital allocation. In
recognition of our highly cash generative earnings model, our
strong financial position, the Board's confidence in the attractive
long-term growth prospects for the Group and its ability to fund
continued growth investments, we are increasing our targeted
dividend payout ratio to circa 65% of earnings from
2024."
Key Adjusted Financials
|
|
2023
|
2022
|
Change at actual
rates
|
Change at constant
rates1
|
Revenue
|
£3,328.7m
|
£3,192.9m
|
4.3%
|
7.1%
|
Like-for-like
revenue2
|
£3,300.9m
|
£3,192.9m
|
3.4%
|
6.2%
|
Operating
profit3
|
£551.1m
|
£520.1m
|
6.0%
|
10.9%
|
Operating
margin3
|
16.6%
|
16.3%
|
30bps
|
60bps
|
Profit before
tax3
|
£507.2m
|
£488.2m
|
3.9%
|
9.2%
|
Diluted earnings per
share3
|
223.0p
|
211.1p
|
5.6%
|
11.0%
|
Dividend per share
|
111.7p
|
105.8p
|
5.6%
|
|
Cash flow from operations less net
capex3
|
£643.6m
|
£609.7m
|
5.6%
|
|
Adjusted Free Cash
Flow3
|
£378.4m
|
£386.3m
|
(2.0%)
|
|
Financial net
debt4
|
£610.6m
|
£737.9m
|
(17.3%)
|
|
Financial net debt / EBITDA3,
4
|
0.8x
|
1.1x
|
|
|
ROIC5
|
20.5%
|
18.0%
|
|
|
Key
Statutory Financials
|
|
2023
|
2022
|
Change at actual rates
|
1 Constant rates are calculated by translating 2022 results at
2023 exchange rates.
|
Revenue
|
|
£3,328.7m
|
£3,192.9m
|
4.3%
|
2 LFL revenue includes acquisitions following their 12-month
anniversary of ownership and excludes the historical contribution
of any business disposals/closures.
3 Adjusted results are stated before Separately Disclosed Items
('SDIs'), see note 3 to the Condensed Consolidated Financial
Statements.
1,2,3 Reconciliations for these measures are shown in the
Presentation of Results section on page 24.
4 Financial net debt excludes the IFRS 16 lease liability of
£307.8m. Total net debt is £918.4m. See note 6 on page
36.
5 ROIC is defined as adjusted profit after tax divided by
invested capital.
|
Operating profit
|
|
£486.2m
|
£452.4m
|
7.5%
|
Operating margin
|
|
14.6%
|
14.2%
|
40bps
|
Profit before tax
|
|
£422.3m
|
£419.8m
|
0.6%
|
Profit after tax
|
|
£318.1m
|
£306.8m
|
3.7%
|
Diluted earnings per
share
|
|
183.4p
|
178.4p
|
2.8%
|
Cash generated from
operations
|
|
£725.9m
|
£704.1m
|
3.1%
|
The Directors will propose a final dividend of
74.0p per share (2022: 71.6p) at the Annual General Meeting on 24
May 2024, to be paid on 21 June 2024 to shareholders on the
register at close of business on 31 May 2024.
Contacts
For further information, please
contact:
Denis Moreau, Investor Relations
Telephone: +44 (0)20
7396 3415
investor@intertek.com
Jonathon Brill/James Styles, Dentons Global
Advisors
Telephone: +44 (0)7510
385 554
intertek@dentonsglobaladvisors.com
Analysts'
Call
A live audiocast for analysts and investors will be
held today at 10am. 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.
Annual
Report
The Annual Report comprising the Strategic,
Sustainability and Financial Reports for the year ended 31 December
2023 will be available on the Company's website www.intertek.com on 22
March 2024.
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
|
I would like to recognise all my colleagues
for their unwavering support enabling us to deliver a strong 2023
performance in revenue growth, margin, EPS, cash and ROIC. Our
revenue grew by 7.1% at constant currency driven by a
LFL revenue growth of 6.2%, the highest in the last 10 years, and
the contribution of our acquisitions. Our systemic performance
management drove strong profit conversion with margins rising 60bps
at constant currency, driving EPS growth of 11.0%
at constant currency. Cash conversion at 122% was
excellent. We have delivered our highest ever cash from
operations of £749m resulting in our net debt declining by £127m to
£611m. We have a strong balance sheet giving us the ability
to invest in growth. ROIC increased by 250bps to
20.5%.
Our clients are increasing their focus on
Risk-based Quality Assurance to operate with higher standards on
quality, safety and sustainability in each part of their value
chain, triggering a higher demand for our ATIC solutions which are
powered by our Science-based Customer Excellence ATIC Advantage.
Over the last nine years, from 2014-2023, we have delivered a CAGR
of 5.3%, 6.1% and 6.0% for revenue, operating profit and EPS,
notwithstanding the impact of Covid. In May 2023, we unveiled
our
Intertek AAA differentiated growth strategy to
capitalise on the best-in-class operating platform we have built
and target the areas where we have opportunities to get better. Our
highly engaged, customer-centric organisation is laser-focused to
take Intertek to greater heights putting our AAA strategy in action
and continuing to deliver sustainable growth and value for all
stakeholders.
Based on our positive momentum, we expect the
Group will deliver a robust performance in 2024 with mid-single
digit LFL revenue growth at constant currency, margin
progression and a strong cash flow performance. We are on track to
get back to our peak margin of 17.5% and beyond in the medium-term,
capitalising on the revenue growth acceleration we are seeing for
our ATIC solutions, our disciplined performance management and our
investments in high growth and high margin segments.
We believe in the value of accretive
disciplined capital allocation. In
recognition of our highly cash generative earnings model, our
strong financial position, the Board's confidence in the attractive
long-term growth prospects for the Group and its ability to fund
continued growth investments, we are increasing our targeted
dividend payout ratio to circa 65% of earnings from
2024.
Strong Value Delivered
In 2015, we took the decision to reinvent ourselves,
making Assurance, Testing, Inspection and Certification, or ATIC,
our Customer Promise and we rebranded Intertek as Total Quality.
Assured.
Our strategic goal with ATIC is to provide a
better-quality Assurance customer service, given how much global
trade had changed in the last 50 years. Today, companies operate in
a truly global market, running complex global multi-sourcing and
manufacturing operations, pursuing an omni-channel approach, when
distributing their products and services globally and locally.
When we did this, we were ahead of our time
and our clients agree that our industry has changed and is now all
about Risk-Based Quality Assurance powered by ATIC.
Assurance provides the independent end-to-end data on where
the quality, safety and sustainability risks are in the entire
value chain of any company, while Testing, Inspection and
Certification provide the critical independent quality controls in
the high-risk areas of supply chains.
We have made strong progress between 2014 and 2023
notwithstanding the impact of Covid and have delivered sustainable
growth and value for all stakeholders with the following
achievements:
•
Revenue growth of 59%, CAGR of 5.3%
•
Ebitda growth of 81.2%, CAGR of 6.8%
•
Operating margin increase of 110bps
•
Cash generated from operations growth of 85.5%, CAGR 7.1%
•
ROIC improvement of 420bps
Metric1
|
20142
|
2023
|
Change
|
CAGR
|
Revenue
|
£2,093m
|
£3,329m
|
59.0%
|
5.3%
|
EBITDA
|
£400.9m
|
£726.4m
|
81.2%
|
6.8%
|
Operating profit
|
£324.6m
|
£551.1m
|
69.8%
|
6.1%
|
Operating margin
|
15.5%
|
16.6%
|
110bps
|
12bps
|
Diluted earnings per
share
|
132.1p
|
223.0p
|
68.8%
|
6.0%
|
Dividend
|
49.1p
|
111.7p
|
127.5%
|
9.6%
|
WC as % Revenue
|
9.3%
|
(2.4%)
|
(1,170bps)
|
n/a
|
Cash generated from ops
|
£403.7m
|
£749.0m
|
85.5%
|
7.1%
|
ROIC
|
16.3%
|
20.5%
|
420bps
|
47bps
|
Note (1): On an adjusted basis,
(2) 2014 metrics are on an IAS17 basis
Faster Global Growth
for ATIC Solutions
Our industry has always benefitted from attractive
growth drivers and now more than ever everyone wants to build an
ever-better world which means that corporations will invest more in
quality, safety and sustainability, accelerating the demand for our
ATIC industry-leading solutions.
Indeed, our customer research
shows the well-known attractive structural growth drivers in the
Risk-based Quality Assurance industry will be augmented
by:
•
Higher investments in safer supply
•
Higher investments in innovation
•
A step change in sustainability
•
Higher growth in the World of Energy
•
An increase in new clients
Covid-19 has been a catalyst for many corporations
to improve the resilience of their supply chains. We are seeing a
significant change of focus within our clients on how they manage
their value chains with:
·
Better data on what is happening in all parts of the supply
chain
·
Tighter risk management with razor-sharp business continuity
planning
· A
more diversified portfolio strategy with tier 1/2/3
suppliers
· A
more diversified portfolio strategy regarding factories
·
Investments in processes, technology, training, and
independent assurance
Our superior Assurance offering means we are
well positioned to help our clients reduce the intrinsic risks in
their operations.
Our clients have also realised that they need to
invest more in product and service innovation to meet the changing
needs of their customers. A recent survey by Capgemini shows that
67% of R&D leaders expect to increase their R&D investments
in 2023. These investments in innovation mean a higher number of
SKUs and a higher number of tests per SKUs - which will be
beneficial for our Testing and Certification solutions.
The other major area of investment inside
corporations is of course sustainability and we are seeing positive
momentum with new and emerging regulation. This means
companies will have to re-invent the way they manage their
sustainability agenda with a greater emphasis on independently
verified non-financial disclosures. This is excellent news for our
industry leading Total Sustainability Assurance solutions.
Sustainability is the movement of our time.
The growth opportunities in the World of Energy are
truly exciting as the energy companies are planning higher
investments. In 2022 and 2023, we all witnessed the concerns
reflecting energy security, and everyone agrees that global energy
production capacity is an issue that needs to be addressed quickly
to meet the growing demand for energy today. Given the
under-investments in traditional O&G exploration and production
in the last decade and the lack of scale for Renewables, investment
for production in traditional O&G and in Renewables will
increase. This is excellent news for our Caleb Brett and Moody
businesses.
We are seeing significant growth in the number of
companies globally given the lower barriers to entry for any brand
with e-commerce capabilities. The lack of Quality Assurance
expertise of these young companies is excellent news for our Global
Market Access solutions. Our decentralised Customer 1st
organisation has a strong track record of winning new clients.
Intertek AAA Differentiated Growth Strategy
At our Capital Markets event in
London last year, we unveiled our Intertek AAA
Differentiated Growth Strategy to capitalise on the best-in-class operating platform
we have built and target the areas where we have opportunities to
get better. Our passionate, innovative, and customer-centric
organisation is energised to take Intertek to greater heights
delivering AAA performance for all stakeholders. We are focused on
delivering value consistently, targeting mid-single digit LFL
revenue growth, margin accretion to get back to our 17.5% peak
margin and beyond, and strong cash generation, while pursuing
disciplined investments in attractive growth and margin
sectors.
We have made strong progress between 2015 and 2023
delivering sustainable growth and value for our stakeholders and we
are very excited about the significant growth value opportunity
ahead, capitalising on our Science‐based Customer Excellence TQA
advantage.
Our clients understand the mission‐critical nature
of Risk‐based Quality Assurance to make their businesses stronger,
operating with higher quality, safety and sustainability
standards. Therefore, we expect the demand for our ATIC
solutions to accelerate post‐Covid.
Our Intertek AAA Differentiated Growth Strategy is
about being the best and creating significant value for every
stakeholder every day.
We want to be the most trusted TQA partner for our
customers, the employer of choice with our employees, to
demonstrate sustainability excellence everywhere in our community
and deliver significant growth and value for our shareholders.
To seize the significant growth value opportunity
ahead we will be laser-focused on three strategic priorities and
three strategic enablers. Our Strategic Priorities are defined as
Science-based Customer Excellence TQA, Brand Push & Pull and
Winning Innovations, and our three strategic enablers are based on
10X Purpose-based Engagement, Sustainability Excellence and Margin
Accretive Investments. We will both further improve where we are
already strong and address the areas where we can get better.
Our high‐quality portfolio is poised for faster
growth:
•
The depth and breadth of our ATIC solutions positions us well to
seize the increased corporate needs for Risk‐based Quality
Assurance
•
All of our global business lines have plans in place to seize the
exciting growth drivers in each of our divisions
•
At the local level, our country‐business mix is strong, with the
majority of our revenues exposed to fast growth segments
•
Geographically we have the right exposure to the structural growth
opportunities across our global markets
We have improved our segmental disclosures to
provide a deeper understanding of our ATIC growth drivers in our
businesses and we now report revenue, operating profit and margin
in five divisions:
·
Consumer Products
·
Corporate Assurance
· Health
and Safety
·
Industry and Infrastructure
· World
of Energy
Mid-Single Digit LFL
Revenue Growth Target
In terms of LFL revenue growth in the medium to long
term, we are targeting Group mid-single digit LFL revenue growth at
constant currency with the following expectations by division:
· Low- to
mid‐single digit in Consumer Products
·
High-single digit to double digit in Corporate Assurance
· Mid- to
high-single digit in Health and Safety
· Mid- to
high-single digit in Industry and Infrastructure
· Low- to
mid‐single digit in the World of Energy
Margin Target of
17.5%+
Margin accretive revenue growth is central to the
way we deliver value, and we are confident that over time we will
deliver our medium-term margin target of 17.5%+. Our confidence is
based on three simple reasons: we have the proven tools and
processes in place, we operate with a span of performance giving us
significant benchmarking opportunity, and we pursue a disciplined
accretive portfolio strategy.
We announced a cost reduction programme last year
that targets productivity opportunities based on operational
streamlining and technology upgrade initiatives. Our cost reduction
programme has delivered £13m of savings in 2023, slightly more than
our expectation for £7-8m. We expect the programme to deliver £10m
additional savings in 2024.
We have also implemented some price increases and we
will continue to do so in 2024.
Accretive Disciplined Capital
Allocation
We believe in the value of accretive disciplined
capital allocation and pursue the following priorities:
•
Our first priority is to support organic growth through capital
expenditure and investments in working capital (target c5% of
revenue in capex).
•
The second priority is to deliver sustainable returns for our
shareholders through the payment of progressive dividends and we
have announced today that we are increasing our targeted dividend
payout to circa 65% of earnings from 2024 in recognition of our
highly cash generative earnings model, our strong financial
position and the Board's confidence in the attractive long-term
growth prospects for the Group and its ability to fund continued
growth investments.
•
The third priority is to pursue M&A activities that strengthen
our portfolio in attractive growth and margin areas, provided we
can deliver good returns.
•
And our fourth priority is to maintain an efficient balance sheet
with flexibility to invest in growth. Our leverage target is 1.3x -
1.8x net debt to EBITDA with the potential to return excess capital
to shareholders subject to our future requirements and prevailing
macro environment.
The recent SAI, JLA and CEA
acquisitions to scale up our portfolio in attractive growth and
margin sectors are performing well, in line with our
expectations.
Moreover, the integration of the
recent acquisitions we made Controle Analítico and PlayerLync are
on track.
We continue to be selective in our
M&A approach, focusing on growth and margin accretive
investment opportunities and yesterday we announced the acquisition
of Base Metallurgical Laboratories, a leading provider of
metallurgical testing services for the Minerals sector based in
North America reinforcing and expanding Intertek's ATIC offering in
the Minerals Industry.
In addition to M&A, we have
continued to strengthen our value proposition by launching several
industry-leading margin accretive innovations.
Sustainability
Excellence
Sustainability is the movement of our time and is
central to everything we do at Intertek, anchored in our Purpose,
our Vision, our Values and our Strategy.
Sustainability is important to all stakeholders in
society who are consistently demanding faster progress and greater
transparency in sustainability reporting. Companies therefore
continuously need to upgrade and reinvent how they manage their
sustainability agenda, particularly with regards to how they
disclose their non-financial performance.
This is why, under our global Total Sustainability
Assurance (TSA) programme, we provide our clients with proven
independent, systemic and end-to-end assurance on all aspects of
their sustainability strategies, activities and operations.
The TSA programme comprises three elements:
•
Intertek Operational Sustainability Solutions
•
Intertek ESG Assurance
•
Intertek Corporate Sustainability Certification
For ourselves at Intertek, we focus on 10 highly
demanding TSA sustainability standards which are truly end-to-end
and systemic. In 2023 we made progress:
•
Levels of Hazard Observations increased, reflecting greater
levels of activity across our sites as well as greater awareness
and reporting of Health and Safety overall.
•
Since 2015, we have used the Net Promoter Score ('NPS') process to
listen to our customers that has enabled us to improve our customer
service over the years consistently.
•
We are driving environmental performance across our
operations through science-based reduction targets to 2030. Our
rigorous monthly performance management of climate-related action
plans delivered operational market-based emissions reductions of
11% against 2022 and 37% against our base year 2019.
•
In 2023, our GHG emissions reduction targets were validated
by the SBTi.
•
We recognise the importance of employee engagement in driving
sustainable performance for all stakeholders, and we measure
employee engagement against our Intertek ATIC Engagement Index. Our
2023 score was 87 (2022: 80).
•
Our voluntary permanent employee turnover improved to a low rate of
12.3% (2022: 14%).
Outlook 2024
Based on our positive momentum, we
expect that the Group will deliver a robust performance in 2024
with mid-single digit LFL revenue growth at constant currency,
margin progression and a strong free cash flow
performance.
Our mid‐single digit LFL revenue
growth at constant currency will be driven by the following
contribution from our divisions:
•
Consumer Products: Low- to Mid-single
digit
•
Corporate Assurance: High-single digit
•
Health and Safety: Mid-single digit
•
Industry and Infrastructure: High-single
digit
•
World of Energy: Mid-single digit
Our financial guidance for 2024 is
that we expect:
•
Capital expenditure in the range of
£135-145m
•
Net finance costs in the £41-43m range
•
Effective tax rate in the 25-26% range
•
Minority interests of between £23-24m
•
Targeted dividend payout ratio to circa 65% from
2024 Interims
•
FY24 financial net debt to be in the range of
£510-560m
The average sterling exchange rate in the last three
months applied to the full year results of 2023 would reduce our FY
revenue and earnings level by circa 150bps.
Significant Value
Growth Opportunity Ahead
We have made strong progress in the last eight years
and equally, the value growth opportunity ahead is significant.
The demand for our strong and differentiated ATIC
value proposition is accelerating.
Our Science-based Customer Excellence TQA advantage
and our stronger portfolio at the global and local level positions
us well for faster growth.
Our Intertek AAA Differentiated Growth Strategy will
capitalise on the best-in-class operating platform we have built
and target the areas where we have opportunities to get better.
Our passionate, agile, and high-performance
organisation is energised to take Intertek to greater heights
delivering AAA performance for all stakeholders.
We will deliver value consistently, targeting
mid-single digit LFL revenue growth at constant currency, margin
accretion, and strong cash generation, while pursuing disciplined
investments in attractive growth and margin ATIC spaces.
André Lacroix
Chief Executive Officer
Operating Review
For the year ended 31 December 2023
To present
the performance of the Group in a clear, consistent and comparable
format, certain items are disclosed separately on the face of the
income statement. These items, which are described in the
Presentation of Results section of this report and in note 3, are
excluded from the adjusted results. The figures discussed in this
review (extracted from the income statement and cash flow) are
presented before Separately Disclosed Items
('SDIs').
Overview of
performance
|
|
2023
|
2022
|
Change at actual
|
Change at constant
|
|
|
£m
|
£m
|
rates
|
rates1
|
Revenue
|
|
3,328.7
|
3,192.9
|
4.3%
|
7.1%
|
Like-for-like revenue2
|
|
3,300.9
|
3,192.9
|
3.4%
|
6.2%
|
Adjusted
Operating profit3
|
|
551.1
|
520.1
|
6.0%
|
10.9%
|
Margin3
|
|
16.6%
|
16.3%
|
30bps
|
60bps
|
Net
financing costs3
|
|
(43.9)
|
(31.9)
|
37.6%
|
34.1%
|
Income
tax expense3
|
|
(124.8)
|
(128.4)
|
(2.8%)
|
2.2%
|
Adjusted
Earnings for the period3
|
|
361.7
|
341.8
|
5.8%
|
11.2%
|
Adjusted
diluted earnings per share3
|
|
223.0p
|
211.1p
|
5.6%
|
11.0%
|
1. Constant rates are calculated by translating 2022 results at
2023 exchange rates.
2. LFL revenue includes acquisitions following their 12-month
anniversary of ownership and excludes the historical contribution
of any business disposals/closures.
3. Adjusted results are stated before SDIs, see note 3 to the
Condensed Consolidated Financial Statements.
Total reported Group revenue increased by
4.3%, with 0.9%
growth contributed by acquisitions, a LFL revenue increase of
6.2% and a decrease of 280bps from foreign exchange
reflecting sterling appreciation against most of the Group's
trading currencies.
The Group's LFL revenue at constant currency
consisted of an increase of 1.3% in Consumer Products,
9.0% in Corporate Assurance, 7.0% in Health and
Safety, 7.9% in Industry and Infrastructure and 8.7%
in World of Energy.
We delivered adjusted operating profit of
£551.1m, up 10.9% at constant
currency and 6.0% at actual rates.
The Group's adjusted operating margin was
16.6%, an increase of 60bps from the prior year at
constant exchange rates and 30bps at actual
rates.
Net Financing
Costs
Adjusted net financing costs were £43.9m, an
increase of £12.0m on 2022 resulting from a combination of higher
interest expenses and the impact of foreign exchange rates. This
comprised £3.8m (2022: £2.2m) of finance income and
£47.7m (2022: £34.1m) of finance
expense.
Tax
The adjusted effective tax rate was 24.6%, a
decrease of 1.7% on the prior year (2022: 26.3%). The
tax charge, including the impact of SDIs, of £104.2m (2022: £113.0m), equates to an effective rate
of 24.7% (2022: 26.9%), the
decrease mainly driven by the geographical mix of
profits.
Earnings per
share
Adjusted diluted earnings per share at actual
exchange rates was 5.6% higher at 223.0p (2022:
211.1p). Diluted earnings per share after SDIs was 183.4p (2022:
178.4p) per share and basic earnings per share after SDIs was
184.4p (2022: 179.2p).
Dividend
Reflecting the Group's strong cash generation
in 2023, the Board recommends a full year dividend of 111.7p per share, a year-on-year increase of
5.6%.
The full year dividend of 111.7p equates to a
total cost of £181.2m or 50% of adjusted profit attributable to
shareholders of the Group for 2023 (2022: £170.6m and 50%). The
dividend is covered 2.0 times by earnings
(2022: 2.0 times), based on adjusted diluted earnings per share
divided by dividend per share.
Separately
Disclosed Items ('SDIs')
A number of items are separately disclosed in
the financial statements as exclusion of these items provides
readers with a clear and consistent presentation of the underlying
operating performance of the Group's business. Reconciliations of
the statutory to adjusted measures are provided in the Presentation
of Results section.
When applicable, these SDIs include
amortisation of acquisition intangibles; impairment of goodwill and
other assets; the profit or loss on disposals of businesses or
other significant fixed assets; costs of acquiring and integrating
acquisitions; the cost of any fundamental restructuring;
the costs of any significant strategic
projects; material claims and settlements; and unrealised
market or fair value gains or losses on financial assets or
liabilities, including contingent consideration.
Adjusted operating profit excludes the
amortisation of acquired intangible assets, primarily customer
relationships, as we do not believe that the amortisation charge in
the income statement provides useful information about the cash
costs of running our business as these assets will be supported and
maintained by the ongoing marketing and promotional expenditure,
which is already reflected in operating costs. Amortisation of
software, however, is included in adjusted operating profit as it
is similar in nature to other capital expenditure. The costs
associated with our cost reduction programme are excluded from
adjusted operating profit where they represent changes associated
with operational streamlining, technology upgrades or related asset
write-offs and are costs that are not expected to reoccur. The cost
reduction programme is expected to last up to five years. The
impairment of goodwill and other assets that by their nature or
size are not expected to recur, the profit and loss on disposals of
businesses or other significant assets and the costs associated
with successful, active, or aborted acquisitions are excluded from
adjusted operating profit in order to provide useful information
regarding the underlying performance of the Group's
operations.
The SDIs charge for 2023 comprises
amortisation of acquisition intangibles of £34.2m (2022: £34.8m);
acquisition and integration costs relating to successful, active,
or aborted acquisitions of £8.3m (2022: £5.5m); and restructuring
costs of £22.4m (2022: £27.4m).
Details of the SDIs for the twelve months
ended 31 December 2023 and the comparative period are given in note
3 to the Condensed Consolidated Financial Statements.
Acquisitions
and investments
The Group completed two acquisitions in the
year (2022: one) with consideration paid of £40.5m (2022: £65.9m),
net of cash acquired of £3.1m (2022: £13.4m), and further
contingent consideration payable of £3.7m.
In March 2023, the Group acquired Controle
Analítico Análises Técnicas Ltda (Controle Analítico), a leading
provider of environmental analysis, with a focus on water testing,
based in Brazil.
In August 2023, the Group acquired PlayerLync
Holdings, Inc. (PlayerLync), a leading SaaS-based platform, based
in the USA.
The Group invested £116.9m (2022: £116.5m)
organically in laboratory expansions, new technologies and
equipment and other facilities. This investment represented 3.5% of
revenue (2022: 3.6%).
Cash
flow
The Group's cash performance was strong with
free cash flow of £378.4m (2022: £386.3m), driven by strong cash
conversion, the result of disciplined working capital management.
Adjusted cash flow from operations was £749.0m (2022: £722.0m).
Statutory cash flow from operations was £725.9m (2022: £704.1m).
Net cash flows generated from operating activities were £535.0m
(2022: £559.9m), following higher interest and income taxes paid
during the year.
Financial
position
The Group ended the period in a strong
financial position. Financial net debt was £610.6m, a decrease of
£127.3m on 31 December 2022, primarily reflecting strong
cash generation in the business. The
undrawn headroom on the Group's existing committed borrowing
facilities at 31 December 2023 was £664.3m (2022: £707.3m)
and cash and cash equivalents were £298.6m (2022:
£320.7m), representing significant total
liquidity.
In December 2023, the Group issued EUR€185m of
senior notes. The notes were issued in three tranches with EUR€120m
payable on 21 December 2026 at a fixed annual interest rate of
3.94%, EUR€25m repayable on 21 December 2027 at a fixed annual
interest rate of 3.89% and EUR€40m repayable on 21 December 2028 at
a fixed annual interest rate of 3.88%.
Total net debt, including the impact of the
IFRS 16 lease liability, was £918.4m (2022: £1,060.1m).
Our financial guidance for 2024 is that we
expect:
• Capital
expenditure in the range of £135-145m
• Net finance
costs of around £41-43m
• Effective tax
rate in the 25-26% range
• Minority
interests of between £23m and £24m
• Financial net
debt at December 2024 of between £510-560m (prior to any material
movements in FX or M&A).
Operating Review by Division
To reflect the value creation drivers
identified in the Intertek AAA Growth Strategy, we have enhanced
our segmental disclosures and are reporting our revenue, operating
profit and margin in five divisions: Consumer Products, Corporate
Assurance, Health and Safety, Industry and Infrastructure and World
of Energy.
|
|
Revenue
|
|
Adjusted operating
profit
|
|
|
|
|
|
|
|
2023
£m
|
2022
£m
|
Change
at actual
rates
|
Change at constant
rates
|
|
2023
£m
|
2022
£m
|
Change
at actual
rates
|
Change at constant
rates
|
Consumer Products
|
|
935.8
|
964.2
|
(2.9%)
|
1.3%
|
|
246.8
|
268.5
|
(8.1%)
|
(2.6%)
|
Corporate Assurance
|
|
477.5
|
450.0
|
6.1%
|
9.5%
|
|
109.4
|
95.5
|
14.6%
|
19.2%
|
Health and Safety
|
|
326.3
|
302.3
|
7.9%
|
9.1%
|
|
43.2
|
40.7
|
6.1%
|
9.4%
|
Industry and Infrastructure
|
|
860.5
|
814.4
|
5.7%
|
7.9%
|
|
86.1
|
71.9
|
19.7%
|
22.0%
|
World of Energy
|
|
728.6
|
662.0
|
10.1%
|
11.7%
|
|
65.6
|
43.5
|
50.8%
|
57.3%
|
Group
|
|
3,328.7
|
3,192.9
|
4.3%
|
7.1%
|
|
551.1
|
520.1
|
6.0%
|
10.9%
|
|
Revenue
|
LFL
Revenue
|
Adjusted operating
profit
|
Adjusted operating
margin
|
|
2023
|
2022
|
YoY %
|
YoY %
|
2023
|
2022
|
YoY %
|
YoY %
|
2023
|
2022
|
YoY %
|
YoY %
|
2023
|
2022
|
YoY %
|
YoY %
|
|
£M
|
£M
|
(actual
rates)
|
(constant
rates)
|
£M
|
£M
|
(actual
rates)
|
(constant
rates)
|
£M
|
£M
|
(actual
rates)
|
(constant
rates)
|
£M
|
£M
|
(actual
rates)
|
(constant
rates)
|
Product
|
2,072.0
|
2,024.3
|
2.4%
|
5.2%
|
2,070.0
|
2,024.3
|
2.3%
|
5.0%
|
447.9
|
426.9
|
4.9%
|
9.5%
|
21.6%
|
21.1%
|
50bps
|
80bps
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade
|
664.0
|
635.6
|
4.5%
|
6.8%
|
657.5
|
635.6
|
3.4%
|
5.8%
|
49.6
|
57.9
|
(14.3%)
|
(7.6%)
|
7.5%
|
9.1%
|
(160bps)
|
(110bps)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Resources
|
592.7
|
533.0
|
11.2%
|
14.7%
|
573.4
|
533.0
|
7.6%
|
11.0%
|
53.6
|
35.3
|
51.8%
|
56.3%
|
9.0%
|
6.6%
|
240bps
|
240bps
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Group
|
3,328.7
|
3,192.9
|
4.3%
|
7.1%
|
3,300.9
|
3,192.9
|
3.4%
|
6.2%
|
551.1
|
520.1
|
6.0%
|
10.9%
|
16.6%
|
16.3%
|
30bps
|
60bps
|
Consumer Products
Division
|
2023
£m
|
2022
£m
|
Change at actual rates
|
Change at constant rates
|
Revenue
|
935.8
|
964.2
|
(2.9%)
|
1.3%
|
Like-for-like revenue
|
935.8
|
964.2
|
(2.9%)
|
1.3%
|
Adjusted
operating profit
|
246.8
|
268.5
|
(8.1%)
|
(2.6%)
|
Adjusted
operating margin
|
26.4%
|
27.8%
|
(140bps)
|
(100bps)
|
Intertek Value Proposition
Our Consumer Products division focuses on the ATIC
solutions we offer to our clients to develop and sell better,
safer, and more sustainable products to their own clients. This
division was 28% of our revenue in 2023 and includes the following
business lines: Softlines, Hardlines, Electrical/Connected World
and Government and Trade Services (GTS).
As a trusted partner to the world's leading
retailers, manufacturers and distributors, the division supports a
wide range of industries including textiles, footwear, toys,
hardlines, home appliances, consumer electronics, information and
communication technology, automotive, aerospace, lighting, building
products, industrial and renewable energy products, and
healthcare.
Strategy
Our TQA Value Proposition provides a systemic
approach to support the Quality Assurance efforts of our Consumer
Products-related customers in each of the areas of their
operations. To do this we leverage our global network of accredited
facilities and world leading technical experts to help our clients
meet high quality safety, regulatory and brand standards, develop
new products, materials and technologies, as well as the import of
goods in their markets, based on acceptable quality and safety
standards. Ultimately, we assist them in getting their products to
market quickly and safely, to continually meet evolving consumer
demands.
Innovations
We continue to invest in
innovation to deliver a superior customer service in our Consumer
Products-related businesses:
Global Market
Access
24/7 access to curated and up-to-date compliance
information
What it is: Global Market Access is a one-stop
digital knowledge portal, developed to increase regulatory
compliance for improved consumer safety and to protect corporate
reputations. Covering more than 180 consumer product types for 40
different markets - from soft goods such as apparel and textiles,
to hard goods such as cookware and furniture - it helps retailers
and manufacturers comply with the regulations in force in different
markets across the world.
Customer benefit: This self-help portal enables
compliance and quality managers to obtain up-to-date regulatory,
testing and recall information tailored to their needs - all in one
place, with just a few clicks, instantly. Currently, we offer four
e-services on the portal, including Regulatory Sheet, Test Plan,
Recall Summary and Gap Analysis, all helping our customers bring
their products to global markets more quickly.
Mestre Battery
Xcellence Centre
Supporting sustainable transport and energy
solutions worldwide
What it is: Our new Battery Xcellence Centre in
Mestre, Italy, features the latest technologies for testing battery
and energy storage systems, along with unrivalled industry
expertise. With equipment including battery cyclers, climatic and
salt-spray chambers, anti-fire containers and an altitude test
chamber, the centre meets the testing needs for transportation and
storage safety, functional safety, and performance for a wide range
of cells and battery packs. This state-of-the-art facility in Italy
joins our global network of specialist centres strategically
located in key markets including the USA, China, Taiwan, India,
Hong Kong and Europe.
Customer benefit: On the road to net zero, energy
storage is increasingly critical, and this new facility helps
customers in Italy and the South Europe region navigate the rapidly
evolving regulatory environment for batteries and battery-operated
products. Our Italian team will support businesses across a range
of sectors - including automotive, transportation, energy and
consumer goods - in taking their products from design to compliance
evaluation and global market access.
Hydrogen
Assurance
Expert advisory and assurance solutions for
hydrogen-based projects
What it is: Our Hydrogen Assurance platform provides
quality, safety and sustainability assurance across the entire
hydrogen value chain, from the early stages of project feasibility
and product design, through hydrogen production, delivery and
storage, to end-use product compliance and certification. This
includes comprehensive testing and certification of hydrogen
refuelling stations and dispensing and compression systems.
Customer benefit: The platform gives our customers
access to leading hydrogen expertise and engineering resources. Its
design services help bring products to market, while electrolyser
bankability services ensure projects are financially viable and
sustainable. Combining these with guidance on regulatory and
compliance requirements, Hydrogen Assurance supports the safe and
successful development and execution of hydrogen-based
projects.
FY 2023
Performance
In 2023, our Consumer Products-related business
reported revenue of £935.8m, up year-on-year by 1.3% at constant
rates but down 2.9% at actual rates. We delivered operating profit
of £246.8m, 2.6% lower year-on-year at constant currency and down
8.1% year-on-year at actual rates. Margin was 26.4%, down 100bps
year-on-year at constant currency, the decrease attributable to the
revenue decline in GTS, and the low-single digit LFL performance in
Softlines and Hardlines.
· Our
Softlines business delivered low-single digit LFL revenue growth
benefitting from growth in e-commerce, growth in Risk-based Quality
Assurance and increased investments in end-to-end
sustainability.
·
Hardlines reported stable LFL revenue benefitting from the growth
in e-commerce, the increased consumer demand for home furniture and
toys as well as the investments of our clients in
sustainability.
· With
increased ATIC activities driven by greater regulatory standards in
energy efficiency, higher demand for medical devices and 5G
investments, our Electrical & Connected World business
delivered mid-single digit LFL revenue growth.
· Our GTS
business provides certification services to governments in the
Middle East and Africa to facilitate the import of goods in their
markets, based on acceptable quality and safety standards. We saw
double-digit negative LFL revenue growth globally as the expansion
in the supply chain activities of our clients in the Middle East
and Africa was offset by the impact of the non-renewal of two
contracts in 2022.
2024 growth
outlook
In 2024, we expect our Consumer
Products division to deliver low- to mid-single digit LFL revenue
growth at constant currency.
Medium- to long-term
growth outlook
Our Consumer Products division will
benefit from growth in new brands, SKUs & e-commerce, increased
regulation, a greater focus on sustainability, technology, as well
as a growing middle class. We expect low- to mid-single LFL
revenue growth in the medium term at constant currency.
Corporate Assurance
Division
|
2023
£m
|
2022
£m
|
Change at actual rates
|
Change at constant rates
|
Revenue
|
477.5
|
450.0
|
6.1%
|
9.5%
|
Like-for-like revenue
|
475.5
|
450.0
|
5.7%
|
9.0%
|
Adjusted
operating profit
|
109.4
|
95.5
|
14.6%
|
19.2%
|
Adjusted
operating margin
|
22.9%
|
21.2%
|
170bps
|
190bps
|
Intertek Value Proposition
Our Corporate Assurance division focuses on the
industry agnostic assurance solutions we offer to our clients to
make their value chains more sustainable and more resilient
end-to-end. This division was 14% of our revenue in 2023 and
includes Business Assurance and Assuris.
Strategy
Business Assurance and Assuris are central to our
ATIC offering and are some of the most exciting businesses within
Intertek, given the increased focus on operational risk management
within the value chain of every company. Intertek Business
Assurance provides a full range of business process audit and
support services, including accredited third-party management
systems auditing and certification, second-party supplier auditing
and supply chain solutions, sustainability data verification,
process performance analysis and training. Assuris' global network
of experts provides a global network of scientists, engineers, and
regulatory specialists to provide support to navigate complex
scientific, regulatory, environmental, health, safety, and quality
challenges throughout the value chain of our clients.
Innovations and
M&A
We continue to invest in ATIC innovations to deliver
a superior customer service in our Corporate Assurance related
businesses:
Intertek
Inlight
Enhancing supply chain risk management and brand
protection
What it is: Intertek Inlight is a comprehensive
platform designed to help organisations gain a deeper understanding
of their supply chain risks and sustainability. Leveraging
Intertek's status as having the largest network of compliance
auditors worldwide, Inlight offers a customisable assurance
platform. It utilises data from over 100,000 annual audits and
integrates Intertek's real-time risk analysis capabilities.
Customer benefit: The platform provides reliable
information about suppliers' capabilities and compliance levels,
coupled with tools for the early detection of potential risks. This
functionality enables companies to develop a clear visibility and
transparency of their supply chains, create detailed risk profiles
for their suppliers, and make more informed decisions. Inlight is
an invaluable tool for businesses aiming to protect their brand
integrity, ensuring that they are working with compliant and
sustainable suppliers. By offering insights into supply chain
dynamics, Inlight empowers companies to navigate complex global
supply networks with confidence and foresight.
Green
R&D
Balancing sustainability, safety and quality
What it is: Green R&D is a science-driven
solution that offers comprehensive insights into product
development, focusing on safety, quality and sustainability. It
encompasses detailed performance testing, analysis, regulatory
compliance and environmental assessments, providing a holistic view
of a product's journey.
Customer benefit: The key benefit for customers lies
in the growing demand for eco-friendly products. Today's consumers
are increasingly conscious about the environmental impact of their
purchases. Green R&D services enable companies to respond to
this shift by ensuring their products are developed with minimal
environmental impact. This approach helps companies mitigate risks
and protect their brand reputation by achieving an optimal balance
between product quality, safety and performance, while adhering to
environmental standards. It offers a strategic advantage in a
marketplace where ecological considerations are becoming
increasingly pivotal.
PlayerLync
Enhancing our People Assurance offering
What it is: PlayerLync is a leading SaaS-based
platform which combines mobile content management, operational and
compliance support in a single native app. In 2023, the platform
became part of Intertek's People Assurance business, building on
our earlier pioneering acquisition of Alchemy/Wisetail by adding
robust mobile content management, communication and offline
synchronisation capabilities.
Customer benefit: With approximately 80% of the
global workforce operating in deskless roles today, the demand for
bespoke People Assurance solutions and mobile-based learning
delivered at the point of need continues to grow, driven by
increasing regulation and heightened end-customer expectations.
Software-based technology solutions that offer mobile training,
learning and development content are therefore becoming ever more
important, and the combination of Wisetail and PlayerLync is
exceptionally well-placed to meet those needs.
2023
Performance
In 2023, our Corporate Assurance-related business
delivered revenue of £477.5m, up year-on-year by 9.5% at constant
currency and 6.1% at actual rates. LFL revenue growth was 9.0% at
constant currency. Operating profit was £109.4m, up 19.2%
year-on-year at constant currency and up 14.6% at actual rates with
a margin of 22.9%, 190bps higher year-on-year at constant currency,
as we benefitted from operating leverage and productivity
gains.
·
Business Assurance delivered double-digit LFL revenue growth as the
business saw increased investments by our clients to improve the
resilience of their supply chains, the continuous focus on ethical
supply and the increased need for sustainability assurance.
· The
Assuris business delivered stable LFL revenue as we benefitted from
improved demand for our regulatory assurance solutions and from
increased corporate investments in ESG.
2024 growth
outlook
In 2024, we expect our Corporate
Assurance division to deliver high-single digit LFL revenue growth
at constant currency.
Medium- to
long-term growth outlook
Our Corporate Assurance division will benefit
from a greater corporate focus on sustainability, the need for
increased supply chain resilience, enterprise cyber-security,
People Assurance services and regulatory assurance. We expect high-single to double digit LFL revenue growth in
the medium term at constant currency.
Health and Safety
Division
|
2023
£m
|
2022
£m
|
Change at actual rates
|
Change at constant rates
|
Revenue
|
326.3
|
302.3
|
7.9%
|
9.1%
|
Like-for-like revenue
|
319.9
|
302.3
|
5.8%
|
7.0%
|
Adjusted
operating profit
|
43.2
|
40.7
|
6.1%
|
9.4%
|
Adjusted
operating margin
|
13.2%
|
13.5%
|
(30bps)
|
-
|
Intertek Value Proposition
Our Health and Safety division focuses on the ATIC
solutions we offer to our clients to make sure we all enjoy a
healthier and safer life. This division was 10% of our revenue in
2023 and includes our AgriWorld, Food, and Chemical & Pharma
business lines.
Strategy
Our TQA value proposition provides our Health and
Safety-related customers with a systemic, end-to-end ATIC offering
at every stage of the supply chain. In an industry with significant
structural growth drivers, our science-based approach supports
clients as the sustained demand for food safety testing activities
increases along with higher demand for hygiene and safety audits in
factories. Our longstanding experience and expertise in the
Chemicals and Pharma industries enables clients to mitigate risks
associated with product quality and safety and processes,
supporting them with their product development, regulatory
authorisation, chemical testing and production.
Innovations and
M&A
We continue to invest in innovation to deliver a
superior customer service in our Health and Safety related
businesses:
Intertek and World
Coffee Research
Enhancing Arabica coffee research through
collaborative partnership
What it is: Our AgriTech team is collaborating with
World Coffee Research ('WCR'), a leading non-profit organisation
focused on improving the future of the coffee industry. We are
contributing to WCR's innovative open-access database, which
contains crucial genetic information on Arabica coffee. Our role
involves providing specialised training in sampling techniques,
performing DNA extraction, offering genotyping services and
delivering comprehensive technical support.
Customer benefit: This collaboration offers
significant benefits to the coffee community, including
researchers, farmers and industry professionals. The availability
of a centralised and accessible genetic database is set to
transform the field of coffee research. It simplifies the process
of identifying and authenticating coffee varieties, leading to
substantial cost reductions. Our partnership with WCR not only aids
in advancing agricultural technology but also helps in lowering
quality control expenses, thereby contributing to the cultivation
of higher-quality coffee plants. This initiative represents a major
step forward in ensuring the sustainability and quality of the
coffee industry.
Crystek
Innovating to predict and prevent honey
crystallisation
What it is:
Crystek, developed by Intertek, provides services to evaluate and
estimate a honey sample's tendency to crystallise, as well as to
advise on and improve the quality of the honey and its production.
Customer
benefit: Honey crystallisation is a natural phenomenon where
honey turns from liquid to a semi-solid state. The start of this
natural process depends on the honey's characteristics and the
production process. Intertek has developed a physical instrument
that can be used to understand which part - characteristics or
production - has the biggest impact on crystallisation, with
experts available to support on-site or remotely. Intertek is one
of the world-leading experts in the analysis of honey and hive
products. The combination of Crystek and our unique expertise
allows us to help manufacturers develop the best process to prevent
crystallisation from taking place.
Controle
Analítico
Intertek enhances presence in attractive
environmental testing market
What it is: Controle Analítico is a leading
provider of environmental analysis, with a focus on drinking and
waste water, soil, and waste testing, based in Brazil. With
heightened societal awareness around environmental health and
sustainability, and population growth placing greater demand on
critical infrastructure, broadening access to sanitation and clean
water services has become increasingly important for stakeholders
around the world.
Customer benefit: In Brazil, legislation aimed
at providing at least 99% of the population with safe drinking
water and 90% of all in-country households with sanitation services
by the year 2033 is expected to require approximately US$128
billion of investment this decade. The acquisition of Controle
Analítico in April 2023 complemented Intertek's leading Food and
Agri Total Quality Assurance solutions in Brazil, expanding our
presence and providing a wider and much-needed service offering in
the Environmental testing market.
2023
Performance
In 2023, our Health and
Safety-related business reported revenue of £326.3m, up
year-on-year by 9.1% at constant currency
and by 7.9% at actual rates. LFL revenue growth
was 7.0% at constant currency. Operating profit of £43.2m was up 9.4%
year-on-year at constant currency and 6.1% at actual rates. Due to country-mix effect in
AgriWorld and investments in capability in Chemicals &
Pharma, margin of 13.2% was flat year-on-year
at constant currency.
·
AgriWorld provides inspection activities to ensure
that the global food supply chain operates fully and safely. The
business reported mid-single digit LFL revenue growth. We continue
to see an increase in demand for inspection activities driven by
sustained growth in the global food industry.
·
Our Food business registered high-single digit LFL
revenue growth globally resulting from increased demand for food
safety testing activities and hygiene and safety audits in
factories.
·
In Chemicals and Pharma we saw high-single
digit LFL revenue growth globally reflecting improved demand for
regulatory assurance and chemical testing and from the increased
R&D investments of the pharma industry.
2024 growth
outlook
In 2024, we expect our Health and
Safety division to deliver mid-single digit LFL revenue
growth.
Medium- to long-term
growth outlook
Our Health and Safety division will
benefit from the demand for healthier and more sustainable food to
support a growing global population, increased regulation, and new
R&D investments in the pharma industry. We expect mid- to
high-single digit LFL revenue growth in the medium term at constant
currency.
Industry and Infrastructure
Division
|
2023
£m
|
2022
£m
|
Change at actual rates
|
Change at constant rates
|
Revenue
|
860.5
|
814.4
|
5.7%
|
7.9%
|
Like-for-like revenue
|
860.5
|
814.4
|
5.7%
|
7.9%
|
Adjusted
operating profit
|
86.1
|
71.9
|
19.7%
|
22.0%
|
Adjusted
operating margin
|
10.0%
|
8.8%
|
120bps
|
110bps
|
Intertek Value Proposition
Our Industry and Infrastructure division focusses on
the ATIC solutions our clients need to develop and build better,
safer and greener infrastructure. This division was 26% of our
revenue in 2023 and includes Industry Services, Minerals and
Building & Construction.
Strategy
Our TQA value proposition helps our customers to
mitigate the risks associated with technical failure or delay,
ensuring that their projects proceed on time and meet the highest
quality standards as demand for more environmentally friendly
buildings and infrastructure grows. By helping to improve safety
conditions and reduce commercial risk, our broad range of
assurance, testing, inspection, certification and engineering
services allows us to assist clients in protecting both the
quantity and quality of their mined and drilled products.
Innovations
We continue to invest in innovation to deliver a
superior customer service in our Industry and Infrastructure
related businesses:
Intertek
Aware
Improving the safety, efficiency and performance of
complex equipment
What it is: Developed through Intertek Industry
Services, Intertek Aware is a Digital Twin offering which
integrates data from IoT sensors, robotic feedback and powerful
software, fuelled by analytics, to create an accurate visual
replica of your industrial world. The software empowers energy
asset owners and operators to improve reliability, increase safety,
estimate remaining useful life and manage inspection data, as well
as helps to reduce costs.
Customer benefit: Aware harnesses online and offline
data to fuel smarter decisions on operations, maintenance, outages
and inspections. The software helps to avoid forced outages,
visualises problem areas and tracks risk-based inspections,
failures and repairs. It also helps to meet code compliance
requirements with faster, standardised documentation.
MiQ
Helping energy producers minimise methane
emissions
What it is: MiQ is a leading certification standard
for methane emissions. As an accredited MiQ auditor, Intertek
independently certifies natural gas extraction and production
facilities (onshore and offshore), using data-led grading to
identify gas with higher or lower emissions. To provide a grade for
a producer or facility, we evaluate methane intensity, company
practices and monitoring technology.
Customer benefit: While reducing greenhouse gas
emissions focuses on CO2, there is increasing awareness
that methane is 80 times more potent in its first 20 years, so
reducing it can have a much greater immediate effect on managing
climate change. By providing grades that enable producers to
differentiate their natural gas, MiQ certification promotes
incentives for cutting methane emissions.
PhotonAssay
Enhancing efficiency and sustainability in West
African gold testing
What it is: PhotonAssay is a revolutionary
analytical technique, heralding a new era of speed, accuracy and
safety in gold analysis. We have introduced the technology at our
minerals laboratory in Tarkwa, Ghana, which is central to our
decades-long support for the West African mining industry. Unlike
traditional methods, PhotonAssay employs high-intensity X-rays to
excite gold atoms, producing unique gamma-ray signatures, which are
then measured to determine gold content.
Customer benefit: The innovative technology delivers
accurate results in a fraction of the time taken by conventional
methods. It also significantly reduces the use of hazardous
chemicals, minimising the environmental impact of testing
procedures. The PhotonAssay unit's ability to deliver rapid,
accurate and environmentally conscious results will assist to
improve the sustainability of our clients' operations and
contribute to the region's overall economic growth.
Intertek
Moody
Leveraging a legacy of engineering-based
excellence
What it is: The Moody legacy is synonymous with
engineering-based technical assurance. Building on a more than
100-year history, that foundational heritage of experience and
expertise was reignited with the return of the Intertek Moody
brand. Bringing back the brand not only harnesses its
industry-leading recognition and honours one of Intertek's founding
pioneers, but also reinforces the strength and stability forged by
the storied Moody legacy that still drives our global expertise,
pioneering industry innovations and local presence.
Customer benefit: As industries strive to meet
growing global energy and infrastructure demands, the need for
quality, safety and reliability is paramount. Delivering in-depth
expertise and local knowledge on a global scale, Intertek Moody has
a history of being where our customers need us, across the entire
supply chain and all stages of a project's life cycle. Our
first-class proactive and valued solutions, such as inspection,
expediting and project management assistance help reduce risks,
increase quality, optimise efficiency and improve safety.
2023
Performance
In 2023, our Industry &
Infrastructure-related business delivered revenue of £860.5m, up
7.9% at constant currency and
up 5.7% at actual rates. Operating profit of £86.1m was up 22.0%
year-on-year at constant currency and up 19.7% year-on-year at actual rates. Margin
improved by 110bps year-on-year at constant
currency to 10.0%
as we benefitted from operating leverage and productivity
gains.
·
Industry Services includes our Capex Inspection
services and Opex Maintenance services and delivered double-digit
LFL revenue growth as we benefitted from increased capex investment
in traditional Oil and Gas exploration and production as well as in
renewables.
·
The continuing high demand for testing and
inspection activities drove high-single digit LFL revenue growth in
our Minerals business.
·
Growing demand for more environmentally friendly
buildings and the increased number of infrastructure projects in
North America produced mid-single digit LFL revenue growth for our
Building & Construction business.
2024 growth
outlook
In 2024, we expect our Industry and
Infrastructure division to deliver high-single digit LFL revenue
growth at constant currency.
Medium- to long-term
growth outlook
The Industry and Infrastructure division will
benefit from increased investment from energy companies to meet
growing demand and consumption of energy from the growing global
population, the scaling up of Renewables, increase R&D
investments that OEMs are making in EV/Hybrid vehicles and from the
development of greener fuels. We expect mid-
to high-single digit LFL revenue growth in the medium term at
constant currency.
|
2023
£m
|
2022
£m
|
Change at actual rates
|
Change at constant rates
|
Revenue
|
728.6
|
662.0
|
10.1%
|
11.7%
|
Like-for-like revenue
|
709.2
|
662.0
|
7.1%
|
8.7%
|
Adjusted
operating profit
|
65.6
|
43.5
|
50.8%
|
57.3%
|
Adjusted
operating margin
|
9.0%
|
6.6%
|
240bps
|
260bps
|
Intertek Value Proposition
Our World of Energy division focuses on the ATIC
solutions we offer to our clients to develop better and greener
fuels as well as renewables. This division was 22% of our revenue
in 2023 and includes Caleb Brett, Transportation Technologies (TT)
and Clean Energy Associates (CEA).
Strategy
Our TQA Value Proposition provides world leading
expertise to enable our clients to benefit from the significant
opportunities in the World of Energy. We do this by providing
specialist cargo inspection, analytical assessment, calibration and
related research and technical services to the world's petroleum
and biofuels industries.
We provide rapid testing and validation services to
the transportation industry, leveraging our Transportation
Technologies subject matter expertise that is recognised by leading
manufacturers worldwide. We evaluate everything from
automobiles and energy storage to airplanes, and deliver top-tier
testing for emerging markets, such as autonomous and
electric/hybrid vehicles.
Our partner firm Clean Energy Associates (CEA) is a
market-leading provider of Quality Assurance (QA), supply-chain
traceability and technical services to the fast-growing solar
energy sector. Its leading assurance service offering includes
in-line monitoring that allows clients to oversee the management
and traceability of their supply chains, offering a comprehensive,
end-to-end service to support customers on their decarbonisation
and energy sustainability journeys.
Innovations
We continue to invest in innovation to deliver a
superior customer service in our World of Energy related
businesses:
Intertek and Zero
Petroleum
Pioneering the future of synthetic, carbon-neutral
fuels
What it is:
Intertek is collaborating with Zero Petroleum, an innovative energy
company at the forefront of developing synthetic, carbon-neutral
alternatives to traditional fossil fuels. Our role is vital in this
partnership, as we are responsible for thoroughly assessing the
composition and emissions of these synthetic fuels and verifying
their compliance with stringent industry standards and regulatory
requirements.
Benefits:
The overall benefits of Zero synthetic fuels are substantial in the
context of the global energy transition. These efuels, uniquely
created from air and water, offer potentially unlimited scale and
represent a significant advancement in moving towards cleaner, more
sustainable energy sources. Designed to directly replace
conventional petroleum-based fuels, they are applicable across
various sectors, including transportation, aviation and
agriculture. A key advantage of Zero synthetic fuels is their
compatibility with existing engines, allowing for seamless
integration without the necessity for any modifications or
adaptations. This compatibility underscores the potential of Zero
synthetic fuels to significantly contribute to reducing carbon
emissions and advancing environmental sustainability.
Electrification
Centre of Excellence
Supporting the move towards electric mobility
What it is: Strategically located near Detroit in
the epicentre of the automotive industry, our Electrification
Centre of Excellence in Plymouth, Michigan, offers some of the most
extensive testing capabilities in North America for electric
vehicle batteries and supply equipment. Through science-based Total
Quality Assurance solutions, this facility plays a crucial role in
supporting manufacturers in the transition to greener
transport.
Customer benefit: With sales of electric vehicles
growing rapidly, our Electrification Centre of Excellence helps
meet the automotive industry's increasing need for regulatory
support and safety and validation testing. As electrification
technologies continue to advance, the facility will support the
safety, performance and functionality of electric vehicles, battery
packs, charging systems and their related components.
2023
performance
In 2023, our World of Energy-related business
delivered revenue of £728.6m, up year-on-year by 11.7% at constant
currency and 10.1% at actual rates. LFL revenue growth was
8.7% at constant currency. Operating profit of £65.6m was up 57.3%
at constant currency and 50.8% at actual rates with margin
improving by 260bps at constant currency to 9.0%, as we benefitted
from operating leverage, productivity gains and portfolio mix.
•
Caleb Brett, the global leader in the Crude Oil and Refined
products global trading markets, benefitted from improved momentum
driven by increased global mobility and higher testing activities
for biofuels with high-single digit LFL revenue growth.
•
Transportation Technologies delivered mid-single digit LFL revenue
growth globally driven by increased investment in new powertrains
to lower CO2/NOx emissions and in traditional combustion
engines to improve fuel efficiency.
• Our CEA business delivered
double digit LFL revenue growth, benefiting from the increased
investments in solar panels which is the fastest growing form of
renewable energy.
2024 growth
outlook
In 2024, we expect our World of Energy division to
deliver mid-single digit LFL revenue growth at constant
currency.
Medium- to long-term
growth outlook
The World of Energy division will benefit from
increased investment from energy companies to meet growing demand
and consumption of energy from the growing global population, the
scaling up Renewables, increase R&D investments that OEMs are
making in EV/Hybrid vehicles and from the development
greener fuels. We expect low- to
mid-single digit LFL revenue growth in the medium term at constant
currency.
Presentation of Results
For the year ended 31 December 2023
Adjusted
results
To present the performance of the Group in a
clear, consistent and comparable format, certain items are
disclosed separately on the face of the income statement. These
items, which are described in the Presentation of Results section
of this report and in note 3, are excluded from the adjusted
results. The figures discussed in this review (extracted from the
income statement and cash flow) are presented before Separately
Disclosed Items (SDIs).
Like-for-Like
revenue
LFL revenue includes acquisitions following
their 12-month anniversary of ownership and excludes the historical
contribution of any business disposals and closures.
Constant
exchange rates
In order to remove the impact of currency
translation from our growth figures we present revenue and profit
growth at constant exchange rates. This is calculated by
translating 2022 results at 2023 exchange rates.
Separately
Disclosed Items
A number of items are separately disclosed in
the financial statements as exclusion of these items provides
readers with a clear and consistent presentation of the underlying
operating performance of the Group's business. Reconciliations of
the statutory to adjusted measures are provided in the Presentation
of Results section.
When applicable, these SDIs include
amortisation of acquisition intangibles; impairment of goodwill and
other assets; the profit or loss on disposals of businesses or
other significant fixed assets; costs of acquiring and integrating
acquisitions; the cost of any fundamental restructuring;
the costs of any significant strategic
projects; material claims and settlements; and unrealised
market or fair value gains or losses on financial assets or
liabilities, including contingent consideration.
Adjusted operating profit excludes the
amortisation of acquired intangible assets, primarily customer
relationships, as we do not believe that the amortisation charge in
the income statement provides useful information about the cash
costs of running our business as these assets will be supported and
maintained by the ongoing marketing and promotional expenditure,
which is already reflected in operating costs. Amortisation of
software, however, is included in adjusted operating profit as it
is similar in nature to other capital expenditure. The costs
associated with our cost reduction programme are excluded from
adjusted operating profit where they represent changes associated
with operational streamlining, technology upgrades or related asset
write-offs and are costs that are not expected to reoccur. The cost
reduction programme is expected to last up to five years. The
impairment of goodwill and other assets that by their nature or
size are not expected to recur, the profit and loss on disposals of
businesses or other significant assets and the costs associated
with successful, active, or aborted acquisitions are excluded from
adjusted operating profit in order to provide useful information
regarding the underlying performance of the Group's
operations.
Details of the SDIs for the twelve months
ended 31 December 2023 and the comparative period are given in note
3 to the Condensed Consolidated Financial Statements.
Reconciliation of Results to
Adjusted Performance Measures (£m)
|
2023
Reported
|
2023
SDIs
|
2023
Adjusted
|
2022
Reported
|
2022
SDIs
|
2022
Adjusted
|
Operating
profit
|
486.2
|
64.9
|
551.1
|
452.4
|
67.7
|
520.1
|
Operating
margin
|
14.6%
|
2.0%
|
16.6%
|
14.2%
|
2.1%
|
16.3%
|
Net
financing costs
|
(63.9)
|
20.0
|
(43.9)
|
(32.6)
|
0.7
|
(31.9)
|
Profit
before tax
|
422.3
|
84.9
|
507.2
|
419.8
|
68.4
|
488.2
|
Income
tax expense
|
(104.2)
|
(20.6)
|
(124.8)
|
(113.0)
|
(15.4)
|
(128.4)
|
Profit
for the year
|
318.1
|
64.3
|
382.4
|
306.8
|
53.0
|
359.8
|
Cash flow
from operations
|
725.9
|
23.1
|
749.0
|
704.1
|
17.9
|
722.0
|
Cash flow
from operations less net capex
|
619.4
|
23.1
|
642.5
|
591.8
|
17.9
|
609.7
|
Free cash
flow
|
355.3
|
23.1
|
378.4
|
368.4
|
17.9
|
386.3
|
Basic
earnings per share
|
184.4p
|
39.8p
|
224.2p
|
179.2p
|
32.8p
|
212.0p
|
Diluted
earnings per share
|
183.4p
|
39.6p
|
223.0p
|
178.4p
|
32.7p
|
211.1p
|
Reconciliation of
revenue
|
2023
£m
|
2022
£m
|
Change
%
|
Reported
revenue
|
3,328.7
|
3,192.9
|
4.3
|
Less:
Acquisitions / disposals / closures
|
(27.8)
|
-
|
|
Like-for-like revenue
|
3,300.9
|
3,192.9
|
3.4
|
Impact of
foreign exchange movements
|
-
|
(83.9)
|
|
Like-for-like revenue at constant currency
|
3,300.9
|
3,109.0
|
6.2
|
Reconciliation of financial
net debt for adjusted EBITDA (£m)
|
2023
|
2022
|
Net
debt
|
(918.4)
|
(1,060.1)
|
IFRS 16
lease liability
|
307.8
|
322.2
|
Financial
net debt
|
(610.6)
|
(737.9)
|
|
|
|
Reported
operating profit
|
486.2
|
452.4
|
Depreciation
|
156.0
|
160.2
|
Amortisation
|
19.3
|
20.3
|
EBITDA
|
661.5
|
632.9
|
SDIs
|
64.9
|
67.7
|
Adjusted
EBITDA
|
726.4
|
700.6
|
Financial
net debt / adjusted EBITDA
|
0.8x
|
1.1x
|
Constant currency
reconciliations
|
2023
£m
|
2022
£m
|
Change
%
|
Adjusted
operating profit at actual rates
|
551.1
|
520.1
|
6.0
|
Impact of
foreign exchange movements
|
-
|
(23.1)
|
|
Adjusted
operating profit at constant rates
|
551.1
|
497.0
|
10.9
|
Adjusted
diluted EPS at actual rates
|
223.0p
|
211.1p
|
5.6
|
Impact of
foreign exchange movements
|
-
|
(10.2)p
|
|
Adjusted
diluted EPS at constant rates
|
223.0p
|
200.9p
|
11.0
|
Diluted
EPS at actual rates
|
183.4p
|
178.4p
|
2.8
|
Impact of
foreign exchange movements
|
-
|
(10.5)p
|
|
Diluted
EPS at constant rates
|
183.4p
|
167.9p
|
9.2
|
Full Year
Report
If you require a printed copy of this
statement, please contact the Group Company Secretary. This
statement is also available on
www.intertek.com.
Legal
Notice
This Full Year Report and announcement contain
certain forward-looking statements with respect to the financial
condition, results, operations and business of Intertek Group plc.
These statements and forecasts involve risk and uncertainty because
they relate to events and depend upon circumstances that will occur
in the future. There are a number of factors that could cause
actual results or developments to differ materially from those
expressed or implied by these forward-looking statements and
forecasts. Nothing in this announcement should be construed as a
profit forecast. Past performance cannot be relied upon as a guide
to future performance.
|
Condensed
Consolidated Income Statement
For the year ended 31 December
2023
|
|
|
2023
|
|
|
2022
|
|
|
|
Adjusted Results
|
Separately Disclosed
Items*
|
Total 2023
|
Adjusted results
|
Separately Disclosed
Items*
|
Total 2022
|
Notes
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
Revenue
|
2
|
3,328.7
|
-
|
3,328.7
|
3,192.9
|
-
|
3,192.9
|
Operating
costs
|
|
(2,777.6)
|
(64.9)
|
(2,842.5)
|
(2,672.8)
|
(67.7)
|
(2,740.5)
|
Group operating profit/(loss)
|
2
|
551.1
|
(64.9)
|
486.2
|
520.1
|
(67.7)
|
452.4
|
Finance
income
|
|
3.8
|
-
|
3.8
|
2.2
|
-
|
2.2
|
Finance
expense
|
|
(47.7)
|
(20.0)
|
(67.7)
|
(34.1)
|
(0.7)
|
(34.8)
|
Net financing costs
|
|
(43.9)
|
(20.0)
|
(63.9)
|
(31.9)
|
(0.7)
|
(32.6)
|
Profit/(loss) before income
tax
|
|
507.2
|
(84.9)
|
422.3
|
488.2
|
(68.4)
|
419.8
|
Income
tax (expense)/credit
|
|
(124.8)
|
20.6
|
(104.2)
|
(128.4)
|
15.4
|
(113.0)
|
Profit/(loss) for the
year
|
2
|
382.4
|
(64.3)
|
318.1
|
359.8
|
(53.0)
|
306.8
|
Attributable to:
|
|
|
|
|
|
|
|
Equity
holders of the Company
|
|
361.7
|
(64.3)
|
297.4
|
341.8
|
(53.0)
|
288.8
|
Non-controlling interest
|
|
20.7
|
-
|
20.7
|
18.0
|
-
|
18.0
|
Profit/(loss) for the
year
|
|
382.4
|
(64.3)
|
318.1
|
359.8
|
(53.0)
|
306.8
|
Earnings per share
|
|
|
|
|
|
|
|
Basic
|
4
|
224.2p
|
|
184.4p
|
212.0p
|
|
179.2p
|
Diluted
|
4
|
223.0p
|
|
183.4p
|
211.1p
|
|
178.4p
|
Dividends in respect of the
year
|
|
|
|
111.7p
|
|
|
105.8p
|
*
See note 3.
Condensed
Consolidated Statement of Comprehensive Income
For the year ended 31 December
2023
|
|
2023
|
2022
|
|
Notes
|
£m
|
£m
|
Profit
for the year
|
2
|
318.1
|
306.8
|
Other comprehensive
(expense)/income
|
|
|
|
Remeasurements on
defined benefit
pension schemes
|
5
|
(2.6)
|
17.4
|
Tax on comprehensive income/(expense) items
|
|
3.0
|
(4.3)
|
Items
that will
never be
reclassified to
profit or
loss
|
|
0.4
|
13.1
|
Foreign
exchange translation differences of foreign operations
|
|
(147.1)
|
181.5
|
Net exchange gain/(loss) on hedges of net investments in foreign operations
|
|
58.8
|
(120.0)
|
Loss on
fair value of cash flow hedges
|
|
(0.1)
|
-
|
Items
that are
or
may be
reclassified subsequently
to
profit or
loss
|
|
(88.4)
|
61.5
|
Total
other comprehensive
(expense)/income for
the
year
|
|
(88.0)
|
74.6
|
Total
comprehensive income
for the
year
|
|
230.1
|
381.4
|
Total comprehensive income
for the period attributable to:
|
|
|
|
Equity
holders of the Company
|
|
211.6
|
363.1
|
Non-controlling interest
|
|
18.5
|
18.3
|
Total
comprehensive income
for the
year
|
|
230.1
|
381.4
|
Condensed
Consolidated Statement of Financial Position
As at 31 December 2023
|
|
2023
£m
|
2022
£m
|
|
Notes
|
|
|
Assets
|
|
|
|
Property,
plant and equipment
|
8
|
669.6
|
694.4
|
Goodwill
|
7
|
1,385.8
|
1,418.4
|
Other
intangible assets
|
|
330.9
|
362.9
|
Trade and
other receivables
|
|
21.8
|
21.5
|
Defined
benefit pension asset
|
5
|
21.8
|
21.3
|
Deferred
tax assets
|
|
36.4
|
45.0
|
Total non-current
assets
|
|
2,466.3
|
2,563.5
|
Inventories*
|
|
17.2
|
16.9
|
Trade and
other receivables*
|
|
725.1
|
726.4
|
Cash and
cash equivalents
|
6
|
299.3
|
321.6
|
Current
tax receivable
|
|
30.0
|
31.9
|
Total current assets
|
|
1,071.6
|
1,096.8
|
Total assets
|
|
3,537.9
|
3,660.3
|
Liabilities
|
|
|
|
Interest
bearing loans and borrowings
|
6
|
(97.5)
|
(262.4)
|
Current
taxes payable
|
|
(60.5)
|
(71.0)
|
Lease
liabilities
|
|
(69.9)
|
(70.6)
|
Trade and
other payables*
|
|
(735.6)
|
(723.2)
|
Provisions*
|
|
(18.0)
|
(15.8)
|
Total current liabilities
|
|
(981.5)
|
(1,143.0)
|
Interest
bearing loans and borrowings
|
6
|
(812.4)
|
(797.1)
|
Lease
liabilities
|
|
(237.9)
|
(251.6)
|
Deferred
tax liabilities
|
|
(75.3)
|
(99.2)
|
Defined
benefit pension liabilities
|
5
|
(4.8)
|
(2.2)
|
Other
payables*
|
|
(30.1)
|
(34.6)
|
Provisions*
|
|
(35.8)
|
(14.6)
|
Total non-current
liabilities
|
|
(1,196.3)
|
(1,199.3)
|
Total liabilities
|
|
(2,177.8)
|
(2,342.3)
|
Net assets
|
|
1,360.1
|
1,318.0
|
Equity
|
|
|
|
Share
capital
|
|
1.6
|
1.6
|
Share
premium
|
|
257.8
|
257.8
|
Other
reserves
|
|
(127.5)
|
(41.3)
|
Retained
earnings
|
|
1,191.5
|
1,065.9
|
Total equity attributable to
equity holders of the Company
|
|
1,323.4
|
1,284.0
|
Non-controlling interest
|
|
36.7
|
34.0
|
Total equity
|
|
1,360.1
|
1,318.0
|
* Working
capital of negative £78.8m (2022: negative £47.8m) comprises the
asterisked items in the above Statement of Financial Position less
IFRS16 lease receivable of £1.6m (2022: £2.9m).
Condensed
Consolidated Statement of Changes in Equity
For the year ended 31 December
2022
Attributable to equity
holders of the Company
|
Other Reserves
|
|
Share capital
|
Share premium
|
Translation
reserve
|
Other
|
Retained earnings
|
Total before
non- controlling
interest
|
Non- controlling
interest
|
Total equity
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
At 1
January 2022
|
1.6
|
257.8
|
(108.9)
|
6.4
|
925.1
|
1,082.0
|
32.3
|
1,114.3
|
Total comprehensive
income/(expense)
for the period
|
|
|
|
|
|
|
|
|
Profit
|
-
|
-
|
-
|
-
|
288.8
|
288.8
|
18.0
|
306.8
|
Other
comprehensive income
|
-
|
-
|
61.2
|
-
|
13.1
|
74.3
|
0.3
|
74.6
|
Total
comprehensive income
for the
year
|
-
|
-
|
61.2
|
-
|
301.9
|
363.1
|
18.3
|
381.4
|
Transactions with owners of
the company
recognised directly in
equity
|
|
|
|
|
|
|
|
|
Contributions by and distributions to the
owners of
the company
|
|
|
|
|
|
|
|
|
Dividends
paid
|
-
|
-
|
-
|
-
|
(170.6)
|
(170.6)
|
(16.6)
|
(187.2)
|
Adjustment arising from changes in non-
controlling interest
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
Purchase
of own shares
|
-
|
-
|
-
|
-
|
(2.3)
|
(2.3)
|
-
|
(2.3)
|
Tax paid
on share awards vested1
|
-
|
-
|
-
|
-
|
(4.4)
|
(4.4)
|
-
|
(4.4)
|
Equity-settled transactions
|
-
|
-
|
-
|
-
|
17.5
|
17.5
|
-
|
17.5
|
IFRS16
effects of deferred tax rate
Change
|
-
|
-
|
-
|
-
|
(1.3)
|
(1.3)
|
-
|
(1.3)
|
Total
contributions by and distributions
to the
owners of the company
|
-
|
-
|
-
|
-
|
(161.1)
|
(161.1)
|
(16.6)
|
(177.7)
|
At 31
December 2022
|
1.6
|
257.8
|
(47.7)
|
6.4
|
1,065.9
|
1,284.0
|
34.0
|
1,318.0
|
At 1 January 2023
|
1.6
|
257.8
|
(47.7)
|
6.4
|
1,065.9
|
1,284.0
|
34.0
|
1,318.0
|
Total comprehensive
(expense)/income
for the period
|
|
|
|
|
|
|
|
|
Profit
|
-
|
-
|
-
|
-
|
297.4
|
297.4
|
20.7
|
318.1
|
Other
comprehensive (expense)/income
|
-
|
-
|
(86.1)
|
(0.1)
|
0.4
|
(85.8)
|
(2.2)
|
(88.0)
|
Total comprehensive
(expense)/income
for the year
|
-
|
-
|
(86.1)
|
(0.1)
|
297.8
|
211.6
|
18.5
|
230.1
|
Transactions with owners of
the
company recognised directly
in equity
|
|
|
|
|
|
|
|
|
Contributions by and
distributions to the
owners of the company
|
|
|
|
|
|
|
|
|
Dividends
paid
|
-
|
-
|
-
|
-
|
(176.3)
|
(176.3)
|
(15.1)
|
(191.4)
|
Adjustment arising from changes in non-
controlling interest
|
-
|
-
|
-
|
-
|
-
|
-
|
(0.7)
|
(0.7)
|
Purchase
of own shares
|
-
|
-
|
-
|
-
|
(11.6)
|
(11.6)
|
-
|
(11.6)
|
Tax paid
on share awards vested1
|
-
|
-
|
-
|
-
|
(5.6)
|
(5.6)
|
-
|
(5.6)
|
Equity-settled transactions
|
-
|
-
|
-
|
-
|
21.2
|
21.2
|
-
|
21.2
|
Income
tax on equity-settled transactions
|
-
|
-
|
-
|
-
|
0.1
|
0.1
|
-
|
0.1
|
Total contributions by and
distributions to the owners of the company
|
-
|
-
|
-
|
-
|
(172.2)
|
(172.2)
|
(15.8)
|
(188.0)
|
At 31 December 2023
|
1.6
|
257.8
|
(133.8)
|
6.3
|
1,191.5
|
1,323.4
|
36.7
|
1,360.1
|
1 The tax paid on share awards vested is related to settlement
of the tax obligation by the Group via the sale of a portion of the
equity-settled shares.
The £115.5m dividend paid on 15
June 2023 represented a final dividend of 71.6p per ordinary share
in respect of the year ended 31 December 2022. The £115.5m dividend
paid on 17 June 2022 represented a final dividend of 71.6p per
ordinary share in respect of the year ended 31 December 2021. No
ordinary shares were issued in the period to satisfy the vesting of
share awards.
Condensed
Consolidated Statement of Cash Flows
For the year ended 31 December
2023
|
|
2023
|
2022
|
|
Notes
|
£m
|
£m
|
Cash flows from operating
activities
|
|
|
|
Profit
for the year
|
2
|
318.1
|
306.8
|
Adjustments for:
|
|
|
|
Depreciation charge
|
|
156.0
|
160.2
|
Amortisation of software
|
|
19.3
|
20.3
|
Amortisation of acquisition intangibles
|
|
34.2
|
34.8
|
Impairment of goodwill and other assets
|
|
2.6
|
15.3
|
Equity-settled transactions
|
|
21.2
|
17.5
|
Net
financing costs
|
|
63.9
|
32.6
|
Income
tax expense
|
|
104.2
|
113.0
|
Profit on
disposal of property, plant, equipment and software
|
|
(3.2)
|
(0.4)
|
Operating cash flows before
changes in working capital and operating
Provisions
|
|
716.3
|
700.1
|
Change in
inventories
|
|
(1.2)
|
(0.8)
|
Change in
trade and other receivables
|
|
(41.2)
|
(54.3)
|
Change in
trade and other payables
|
|
47.7
|
61.1
|
Change in
provisions
|
|
4.3
|
-
|
Special
contributions into pension schemes
|
|
-
|
(2.0)
|
Cash generated from
operations
|
|
725.9
|
704.1
|
Interest
and other finance expense paid
|
|
(71.9)
|
(37.5)
|
Income
taxes paid
|
|
(119.0)
|
(106.7)
|
Net cash flows generated
from operating activities*
|
|
535.0
|
559.9
|
Cash flows from investing
activities
|
|
|
|
Proceeds
from sale of property, plant, equipment and software*
|
|
11.5
|
4.2
|
Interest
received*
|
|
3.5
|
2.2
|
Acquisition of subsidiaries, net of cash received
|
|
(40.5)
|
(63.2)
|
Consideration paid in respect of prior year acquisitions
|
|
(2.7)
|
-
|
Acquisition of property, plant, equipment, software*
|
8
|
(116.9)
|
(116.5)
|
Net cash flows used in
investing activities
|
|
(145.1)
|
(173.3)
|
Cash flows from financing
activities
|
|
|
|
Purchase
of own shares
|
|
(11.6)
|
(2.3)
|
Tax paid
on share awards vested
|
|
(5.6)
|
(4.4)
|
Drawdown
of borrowings
|
|
160.5
|
477.2
|
Repayment
of borrowings
|
|
(249.6)
|
(536.8)
|
Repayment
of lease liabilities*
|
|
(77.8)
|
(81.4)
|
Purchase
of non-controlling interest
|
|
(0.7)
|
-
|
Dividends
paid to non-controlling interest
|
|
(15.1)
|
(16.6)
|
Equity
dividends paid
|
|
(176.3)
|
(170.6)
|
Net cash flows generated
from/(used in) financing activities
|
|
(376.2)
|
(334.9)
|
Net increase in cash and
cash equivalents
|
6
|
13.7
|
51.7
|
Cash and
cash equivalents at 1 January
|
6
|
320.7
|
264.0
|
Effect of
exchange rate fluctuations on cash held
|
6
|
(35.8)
|
5.0
|
Cash and cash equivalents at
31 December
|
6
|
298.6
|
320.7
|
* Free
cash flow of £355.3m (2022: £368.4m) comprises the asterisked items
in the above Statement of Cash Flows.
Adjusted cash flow from operations
of £749.0m (2022: £722.0m) comprises statutory cash generated from
operations of £725.9m (2022: £704.1m) before cash outflows relating
to Separately Disclosed Items of £23.1m (2022: £17.9m).
Notes to the Condensed Consolidated Financial Statements
1. Basis of preparation
Reporting entity
The financial information set out
above does not constitute the Company's statutory accounts for the
years ended 31 December 2023 and 2022 but is derived from the 2023
accounts. A full copy of the 2023 Annual Report and Accounts will
be available online at www.intertek.com in March 2024. Statutory accounts for 2022 have been
delivered to the Registrar of Companies, and those for 2023 will be
delivered in due course. The auditors have reported on those
accounts; their reports were (i) unqualified, (ii) did not include
references to any matters to which the auditors drew attention by
way of emphasis without qualifying their reports and (iii) did not
contain statements under Sections 498(2) or 498(3) of the Companies
Act 2006.
The preparation of the financial
statements requires management to make estimates and assumptions
that affect the reported amount of revenues, expenses, assets and
liabilities at the date of the financial statements. If in the
future such estimates and assumptions, which are based on
management's best judgement at the date of the financial
statements, deviate from the actual circumstances, the original
estimates and assumptions will be modified as appropriate in the
year in which the circumstances change.
Significant accounting policies
There are no significant new
accounting standards that have a material effect on the results of
the Group.
Key Estimations and Uncertainties
The preparation of financial
statements requires management to make judgements, estimates and
assumptions that affect the application of accounting policies and
the reported amounts of assets and liabilities, income and expense.
Actual results may differ from these estimates.
In preparing these Condensed
Consolidated Financial Statements, the key sources of estimation
were impacted with levels of estimation uncertainty in relation to
assumptions used in:
· impairment assessments (e.g. cash flow projections, long-term
growth, discount rate); and
· employee
post-retirement benefit obligations.
Risks and uncertainties
The Group has a broad customer
base across its multiple business lines and in its different
geographic regions and is supported by a robust balance sheet and
strong operational cash flows.
The Board has reviewed the Group's
financial forecasts up to 31 December 2025 to assess both liquidity
requirements and debt covenants.
In addition, the Group's financial
forecasts for 2024 and 2025, and the related liquidity position and
forecast compliance with debt covenants, have been sensitised for a
severe yet plausible decline in economic conditions (including an
illustrative sensitivity scenario of a reduction of 30% to the base
profit forecasts and the corresponding impact to cash flow
forecasts in each of these years). In addition, reverse stress
testing has also been applied to the model which represents a
significant decline in cashflows compared with the 30% downside
sensitivity. Such a scenario is considered to be remote. The Board
remains satisfied with the Group's funding and liquidity position,
with the Group forecast to remain within its committed facilities
and compliant with debt covenants even following the 30% downside
sensitivity. The sensitivity modelling excludes additional
mitigating actions (e.g. dividend cash payments, non-essential
overheads and non-committed capital expenditure) that are within
management control and could be initiated if deemed
required.
The undrawn headroom on the
Group's committed borrowing facilities at 31 December 2023 was
£664.3m (2022: £707.3m). The maturity of our borrowing facilities
is disclosed in Note 14 of the financial statements with repayment
of two senior notes totalling US$125m required by 31 December 2024.
Our models forecast these to be repaid using existing facilities.
Full details of the Group's borrowing facilities and maturity
profile are outlined in note 14 of the Annual Report and
Accounts.
On the basis of its forecasts to
31 December 2025, both base case and severe yet
plausible downside, and available facilities, the Board has
concluded that there are no material uncertainties over going
concern, including no anticipated breach of covenants, and
therefore the going concern basis of preparation continues to be
appropriate.
Foreign operations
The assets and liabilities of
foreign operations, including goodwill and fair value adjustments
arising on acquisition, are translated to sterling at foreign
exchange rates ruling at the reporting date. The income and
expenses of foreign operations are translated into sterling at
cumulative average rates of exchange during the year.
The most significant currencies
for the Group were translated at the following exchange
rates:
Assets and Liabilities
|
Income and expenses
|
|
Actual Rates
|
|
Cumulative average
rates
|
Value of £1
|
2023
|
2022
|
2023
|
2022
|
US
dollar
|
1.28
|
1.20
|
1.24
|
1.24
|
Euro
|
1.15
|
1.13
|
1.15
|
1.17
|
Chinese
renminbi
|
9.14
|
8.45
|
8.81
|
8.31
|
Hong Kong
dollar
|
10.00
|
9.37
|
9.71
|
9.68
|
Australian dollar
|
1.87
|
1.78
|
1.87
|
1.78
|
2.
Operating
segments
Business analysis
The Group is organised into
business lines, which are the Group's operating segments and are
reported to the CEO, the chief operating decision maker. These
operating segments are aggregated into five segments, which are the
Group's reportable segments, based on similar nature of products
and services and mid- to long-term structural growth drivers. When
aggregating operating segments into the five segments we have
applied judgement over the similarities of the services provided,
the customer-base and the mid- to long-term structural growth
drivers. The costs of the corporate head office and other costs
which are not controlled by the five segments are allocated
appropriately. A description of the activity in each segment is
given in the Operating Review by Division.
The results of the segments are
shown below:
For the year ended 31
December 2023
|
Revenue from
external customers
£m
|
Depreciation and
software amortisation
£m
|
Adjusted operating
profit
£m
|
|
|
|
Separately
Disclosed Items
£m
|
Operating
profit
£m
|
Consumer
Products
|
935.8
|
(55.4)
|
246.8
|
(15.1)
|
231.7
|
Corporate
Assurance
|
477.5
|
(14.0)
|
109.4
|
(26.2)
|
83.2
|
Health
and Safety
|
326.3
|
(21.7)
|
43.2
|
(4.9)
|
38.3
|
Industry
and Infrastructure
|
860.5
|
(32.3)
|
86.1
|
(9.5)
|
76.6
|
World of
Energy
|
728.6
|
(51.9)
|
65.6
|
(9.2)
|
56.4
|
Total
|
3,328.7
|
(175.3)
|
551.1
|
(64.9)
|
486.2
|
Group operating profit
|
|
|
551.1
|
(64.9)
|
486.2
|
Net
financing costs
|
|
|
(43.9)
|
(20.0)
|
(63.9)
|
Profit before income
tax
|
|
|
507.2
|
(84.9)
|
422.3
|
Income
tax (expense)/credit
|
|
|
(124.8)
|
20.6
|
(104.2)
|
Profit for the year
|
|
|
382.4
|
(64.3)
|
318.1
|
For the
year ended 31 December 2022
|
Revenue from
external customers
£m
|
Depreciation and
software amortisation
£m
|
Adjusted operating
profit
£m
|
|
|
|
Separately
Disclosed Items
£m
|
Operating
profit
£m
|
Consumer
Products
|
964.2
|
(58.0)
|
268.5
|
(11.0)
|
257.5
|
Corporate
Assurance
|
450.0
|
(12.1)
|
95.5
|
(26.4)
|
69.1
|
Health
and Safety
|
302.3
|
(22.2)
|
40.7
|
(6.2)
|
34.5
|
Industry
and Infrastructure
|
814.4
|
(33.6)
|
71.9
|
(11.9)
|
60.0
|
World of
Energy
|
662.0
|
(54.6)
|
43.5
|
(12.2)
|
31.3
|
Total
|
3,192.9
|
(180.5)
|
520.1
|
(67.7)
|
452.4
|
Group
operating profit
|
|
|
520.1
|
(67.7)
|
452.4
|
Net
financing costs
|
|
|
(31.9)
|
(0.7)
|
(32.6)
|
Profit
before income tax
|
|
|
488.2
|
(68.4)
|
419.8
|
Income
tax (expense)/credit
|
|
|
(128.4)
|
15.4
|
(113.0)
|
Profit
for the year
|
|
|
359.8
|
(53.0)
|
306.8
|
3. Separately Disclosed
Items (SDIs)
|
|
2023
£m
|
2022
£m
|
Operating costs
|
|
|
|
Amortisation of acquisition intangibles
|
(a)
|
(34.2)
|
(34.8)
|
Acquisition and integration costs
|
(b)
|
(8.3)
|
(5.5)
|
Restructuring costs
|
(c)
|
(22.4)
|
(27.4)
|
Total operating costs
|
|
(64.9)
|
(67.7)
|
Net
financing costs
|
(d)
|
(20.0)
|
(0.7)
|
Total before income
tax
|
|
(84.9)
|
(68.4)
|
Income
tax credit on Separately Disclosed Items
|
(e)
|
20.6
|
15.4
|
Total
|
|
(64.3)
|
(53.0)
|
Refer to the Presentation of
Results section for further details on SDIs
(a) Of the
amortisation of acquisition intangibles in the current period,
£0.4m relates to the customer relationships acquired with the
purchase of Controle Analítico Análises
Técnicas Ltda and £0.3m relates to the customer relationships,
trade names and technology acquired with the purchased of
PlayerLync Holdings, Inc. in 2023.
(b) Acquisition and integration costs comprise £4.7m (2022:
£1.8m) for transaction and integration costs in respect of
successful, active and aborted acquisitions in the current year,
and £3.6m in respect of prior-years' acquisitions (2022:
£3.7m).
(c) During 2022, the Group initiated the first year of a cost
reduction programme. In 2023, costs of £22.4m (2022: £27.4m) were
associated with operational streamlining which included
consolidating sites and offices, streamlining headcount and related
asset write-offs.
(d) Net
financing costs of £20.0m (2022: £0.7) relate to the unwinding of
discount and changes in the fair value of contingent consideration
in relation to acquisitions. The increase in fair value of
contingent consideration predominantly relates to the CEA
acquisition made in 2022, with strong EBITDA performance during the
year driving an increase in the expected amount payable in
2024.
(e) Income tax Credit on SDIs totalled £20.6m (2022: £15.4m)
mainly relating to deferred tax impact of the movement in
amortisation on intangibles.
4. Earnings per share
(EPS)
|
2023
£m
|
2022
£m
|
Based on the profit for the
year:
|
|
|
Profit
attributable to ordinary shareholders
|
297.4
|
288.8
|
Separately Disclosed Items
after tax (note 3)
|
64.3
|
53.0
|
Adjusted earnings
|
361.7
|
341.8
|
Number of shares
(millions):
|
|
|
Basic
weighted average number of ordinary shares
|
161.3
|
161.2
|
Potentially dilutive share awards
|
0.9
|
0.7
|
Diluted weighted average
number of shares
|
162.2
|
161.9
|
Basic
earnings per share
|
184.4p
|
179.2p
|
Potentially dilutive share awards
|
(1.0p)
|
(0.8p)
|
Diluted earnings per
share
|
183.4p
|
178.4p
|
Adjusted basic earnings per
share
|
224.2p
|
212.0p
|
Potentially dilutive share awards
|
(1.2p)
|
(0.9p)
|
Adjusted diluted earnings
per share
|
223.0p
|
211.1p
|
5. Pension
schemes
The significant actuarial
assumptions used in the valuation of the Group's material defined
benefit pension schemes as at 31 December 2023 have been reviewed.
The discount and inflation rates used to value the pension
liabilities, as well as the updated asset valuations and the net
pension liabilities, have not moved materially since 31 December
2022. A net actuarial loss before taxation of £2.6m (2022: £17.4m
gain) has been recognised in the consolidated statement of
comprehensive income. The net pension asset stands at £21.8m for
the UK pension scheme (2022: £21.3m) and a net pension liability of
£4.8m for the Swiss pension scheme as at 31 December 2023 (2022:
£2.2m).
The total expense recognised in
the consolidated income statement for the Group's material defined
benefit pension schemes of £0.2m (2022: £1.8m) includes the current
service cost and administration expenses of £1.2m (2022: £1.9m)
recognised in operating profit, and net pension interest income of
£1.0m (2022: £0.1m) recognised in net financing costs.
6. Analysis of net
debt
|
2023
£m
|
2022
£m
|
Cash and
cash equivalents per the statement of
financial position
|
299.3
|
321.6
|
Overdrafts
|
(0.7)
|
(0.9)
|
Cash per the statement of
cash flows
|
298.6
|
320.7
|
The components of net
debt are outlined
below:
|
1 January
2023
£m
|
Cash flow
£m
|
Non-cash adjustments
£m
|
Exchange adjustments
£m
|
31 December
2023
£m
|
Cash
|
320.7
|
13.7
|
-
|
(35.8)
|
298.6
|
Borrowings:
|
|
|
|
|
|
Revolving
credit facility US$850m 2027
|
-
|
2.2
|
-
|
(2.2)
|
-
|
Senior
notes US$160m 2023
|
(133.1)
|
125.2
|
-
|
8.0
|
-
|
Acquisition facility 'A' AU$88.0m 2023
|
(49.4)
|
44.9
|
-
|
4.5
|
-
|
Acquisition facility 'A' US$96.9m 2023
|
(80.6)
|
75.1
|
-
|
5.5
|
-
|
Senior
notes US$125m 2024
|
(104.0)
|
-
|
-
|
6.3
|
(97.7)
|
Senior
notes US$120m 2025
|
(99.8)
|
2.2
|
-
|
3.8
|
(93.8)
|
Senior
notes US$75m 2026
|
(62.4)
|
-
|
-
|
3.8
|
(58.6)
|
Senior
notes US$150m 2027
|
(124.8)
|
-
|
-
|
7.6
|
(117.2)
|
Senior
notes US$165m 2028
|
(137.3)
|
-
|
-
|
8.2
|
(129.1)
|
Senior
notes US$165m 2029
|
(137.3)
|
-
|
-
|
8.3
|
(129.0)
|
Senior
notes US$160m 2030
|
(133.1)
|
-
|
-
|
8.1
|
(125.0)
|
Senior
notes EUR€120m 2026
|
-
|
(104.1)
|
-
|
-
|
(104.1)
|
Senior
notes EUR€25m 2027
|
-
|
(21.7)
|
-
|
-
|
(21.7)
|
Senior
notes EUR€400m 2028
|
-
|
(34.7)
|
-
|
-
|
(34.7)
|
Other*
|
3.2
|
-
|
(1.6)
|
-
|
1.6
|
Total borrowings
|
(1,058.6)
|
89.1
|
(1.6)
|
61.9
|
(909.2)
|
Total
financial net debt
|
(737.9)
|
102.8
|
(1.6)
|
26.1
|
(610.6)
|
Lease liability
|
(322.2)
|
77.8
|
(78.3)
|
14.9
|
(307.8)
|
Total net debt
|
(1,060.1)
|
180.6
|
(79.9)
|
41.0
|
(918.4)
|
* Other includes uncommitted borrowings of £0.8m (2021: £0.8m) and facility fees of £2.4m (2022: £4.0m).
|
2023
£m
|
2022
£m
|
Borrowings due in less than one year
|
96.8
|
261.5
|
Borrowings due in one to two years
|
93.2
|
103.0
|
Borrowings due in two to five years
|
464.6
|
286.0
|
Borrowings due in over five years
|
254.6
|
408.1
|
Total borrowings
|
909.2
|
1,058.6
|
Description of borrowings
Total undrawn committed borrowing
facilities as at 31 December 2023 were £664.3m (2022: £707.3m).
Key facilities
US$850m revolving credit facility
The Group has a
US$850m multi-currency revolving credit facility, which is the
Group's principal facility and in December 2021 was extended from
2026 to 2027. Advances under the facility bear interest at a
rate equal to relevant risk-free rate, or their local currency
equivalents, plus a margin, depending on the Group's financial
leverage. Drawings under this facility at 31 December 2023 were
£nil (2022: £nil).
US$692m Acquisition facility
In May 2021 the Group agreed a
US$692m multi-currency acquisition facility to finance the
acquisition of SAI Global with £357.4m repaid in March 2022 and the
balance of £130.0m repaid in September 2023. Advances under the
facility bear interest at a rate equal to USD LIBOR or AUD BBSW,
plus a margin. Drawings under this facility at 31 December 2023
were £nil (2022: £130.0m).
Private placement bonds
In October 2011 the Group issued
US$140m of senior notes repaid on 18 January 2022 at a fixed annual
interest rate of 3.75% and US$105m repayable on 18 January 2024 at
a fixed annual interest rate of 3.85%, funded from the existing
revolving credit facility.
In February 2013 the Group issued
US$80m of senior notes. These notes were issued in two tranches
with US$40m repaid on 14 February 2023 at a fixed annual interest
rate of 3.10% and US$40m repayable on 14 February 2025 at a fixed
annual interest rate of 3.25%.
In July 2014 the Group issued
US$110m of senior notes. These notes were issued in four tranches
with US$15m repaid on 31 July 2021 at a fixed annual interest rate
of 3.37%, US$20m repayable on 31 July 2024 at a fixed annual
interest rate of 3.86%, US$60m repayable on 31 October 2026 at a
fixed annual interest rate of 4.05% and US$15m repayable on 31
December 2026 at a fixed annual interest rate of 4.10%.
In December 2020 the Group issued
US$200m of senior notes. These notes were issued in two tranches
with US$120m repaid on 2 December 2023 at a fixed annual interest
rate of 1.97% and US$80m repayable on 2 December 2025 at a fixed
annual interest rate of 2.08%.
In December 2021 the Group issued
US$640m of senior notes. These notes were issued in four tranches
with US$150m repayable on 13 January 2027 at a fixed annual
interest rate of 2.24%, US$165m repayable on 15 March 2028 at
a fixed annual interest rate of 2.33%, US$165m repayable on 15
March 2029 at a fixed annual interest rate of 2.47% and
US$160m repayable on 15 March 2030 at a fixed annual interest
rate of 2.54%.
In December 2023 the Group issued
EUR€185m of senior notes. These notes were issued in three tranches
with EUR€120m repayable on 21 December 2026 at a fixed annual
interest rate of 3.94%, EUR€25m repayable on 21 December 2027 at a
fixed annual interest rate of 3.89% and EUR€40m repayable on 21
December 2028 at a fixed annual interest rate of 3.88%.
7. Acquisition of
businesses
(a) Acquisitions
The Group completed two
acquisitions in 2023 (2022: one).
On 31 March 2023, the Group
acquired Controle Analítico Análises Técnicas Ltda (Controle
Analítico), a leading provider of environmental analysis based in
Brazil, for a purchase price of £18.8m (£18.3m net of cash
acquired), generating goodwill of £13.2m.
On 9 August 2023, the Group
acquired PlayerLync Holdings, Inc. (PlayerLync), a leading SaaS-
based platform based in the USA, for a purchase price of £28.5m
(£25.9m net of cash acquired), generating goodwill of
£17.0m.
(b) Prior period acquisitions
£2.7m (2022: £nil) was paid during the
period in respect of prior period acquisitions.
(c) Details of 2022 acquisitions
One acquisition was made during
2022. Full details of the acquisition made in the year ended 31
December 2022 are disclosed in note 10 to the Annual
Report.
(d) Impairment
Goodwill generated from past
acquisitions has been tested annually as required by accounting
standards. No impairments were identified during the period and as
such no impairment charge was recorded (2022: nil).
(e) Reconciliation of
goodwill
|
£m
|
Goodwill
at 1 January 2023
|
1,418.4
|
Additions
|
30.2
|
Transfers
|
0.3
|
Foreign
exchange
|
(63.1)
|
Goodwill at 31 December
2023
|
1,385.8
|
8. Property, plant,
equipment and software
Additions
During the year, the Group
acquired fixed assets with a cost of £181.5m (2022: £197.9m). The Group acquired
£2.2m of fixed
assets through business combinations (2022: £0.1m). At 31 December
2023, the IFRS 16 right of use asset is £286.6m (2022: £297.6m).
9. Subsequent
events
On 18 January 2024, funded from
the existing revolving facility, a $105m senior note at a fixed
annual interest rate of 3.85% was repaid.
During February 2024, following a
review of the United Kingdom pension Scheme's investment strategy
and funding level, the Trustee approved changes to the Scheme's
asset allocation by class, as described in note 16 of the 2023
Annual Report and Accounts.