Intertek Group PLC
LSE:ITRK
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Intertek Group PLC
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Hello and
welcome
to
the
Intertek
2021
Results
Conference
Call.
My
name
is
Courtney
and
I'll
be
your
coordinator
for
today's
event.
Please
note
this
call
is
being
recorded
and
for
the
duration,
your
lines
will
be
on
listen-only.
However,
you
will
have
the
opportunity
to
ask
questions.
[Operator Instructions]
And
I
will
now
hand
you
over
to
your
host,
André
Lacroix,
Chief
Executive
Officer,
to
begin
today's
conference.
Thank
you.
Good
morning
to
you
all,
and
thanks
for
joining
us
on
our
call
following
the
release
of
our
2021
results.
I
have
with
me
Jonathan
Timmis,
our
CFO;
and
Denis
Moreau,
our
VP
of
Investor
Relations. I'd
like
to
start
our
call
today
recognizing
all
of my
colleagues
around
the
world
at
Intertek
for
having
delivered
a
superb
performance
in
2021.
Indeed,
2021
marked
the
seventh
consecutive
year
of
group
earnings
being
in
line
or
above
expectations,
and
our
consistent
performance
delivery
demonstrates
the
strength
of
our
differentiated
ATIC
value
proposition,
the
Science-based
Customer
Excellence
of
our organization,
our
unique
performance
management
approach
and,
of
course,
the
quality
of
our
earnings
model,
delivering
sustainable
growth
and
value
for
all
stakeholders.
In
our
call
today,
there are
essentially
three
takeaways.
First,
we've
made
strong
progress
in
the
second
half
delivering
broad-based
like-for-like
revenue
growth
with
profitability
ahead
of
2019.
Second,
we
expect
the
industry
to
grow
faster
post-COVID-19,
and
we
are
very
well-positioned
to
benefit
from
our
current
increased
investments
in
risk-based
Quality
Assurance.
Thirdly,
we
enter
2022
with
confidence
targeting
robust
like-for-like
revenue
growth
at
constant
rates
with
margin
progression
and
strong
cash
generation.
So
let's
start
with
our
performance
highlights.
In
2021,
we've
delivered
a
strong
performance
at
constant
rates
in
revenue,
earnings
and
ROIC.
Group
revenue
was
£2,786.3
billion, up
6.5%
year-on-year.
Like-for-like
revenue
was
up
5.6%.
Operating
profit
was
£473.9
million,
up
15.4%.
Operating
margin was
17%,
up
130
basis
points
year-on-year.
ROIC
was
strong
at
18.2%.
And
our
organic
ROIC
was
excellent
at
24.4%,
up
350
basis
points
year-on-year.
We've
announced
the
full
year
dividend
of
£1.058
in
line
with
our
dividend
in
2019
and
2020.
As
I
said
earlier,
in
H2,
we
benefited
from
a
strong
momentum
and
delivered
a
broad-based
like-for-like
revenue
growth
within
each
of
our
three
divisions,
delivering
mid-single
digits
like-for-like
revenue
growth
at
constant
rates.
Let's
now
look
at
our
performance
compare
to
2019.
Our
strong
performance
in
H2
enable
us
to
deliver
full
year
margin of
17%,
only
50
basis
points
below
our
industry-leading
operating
margin
of 17.5%
delivered
in
2019.
In
the
second
half,
our
group
like-for-like
revenue
was
in
line
with
2019
whilst
our
profit
and
margin
were
above
2019.
In
our
Products
division,
we
delivered
like-for-like
revenue,
operating
profit
and
margin
ahead
of
2019
for
the
full
year
of
2021.
We've
continued
to
make
great
progress
on
cash
management.
We've
reduced
our
negative
working
capital
further
with
a
cash
conversion
of
132%.
Cash
generated
from
operation
was
£696
million,
and
adjusted
free
cash
flow
was
strong
at
£402
million.
We've
closed
the
year
with
a
robust
balance
sheet.
Our
net
debt
to
adjusted
EBITDA
ratio
was
1.1,
higher
than
last
year
as
we
continue
to
invest
in
growth
through
the
acquisitions of
SAI
and
JLA.
Let
me
take
a
few
minutes
to
reflect
on
these
two
strategic
acquisitions.
SAI
Global
Assurance
is
a
very
exciting
move
for
Intertek.
We
are
scaling
up
our
leading
assurance
business
at
a
time
when
the
ATIC
industry
is
expected
to
grow
faster
post-COVID-19.
As
you
all
know,
assurance
is
a
capital-light,
high
growth,
and
high
margin
service
which
is
mission-critical
to
addressing
the
increased
corporate
focus
on
risk.
The
strategic
fit of
the
SAI
Global
Assurance
portfolio
with
Intertek
is
excellent
both
from
an
excellent
geographic
complementary
standpoint
and
service
standpoint.
Geographically, it
strengthen
our
scale
position
in
Australia,
the
US,
Canada,
UK,
and
China.
And
in
terms
of
service,
it
expands
our
audit
offering
in
the
high
growth
sectors
of
Food,
Agriculture,
Quick Service
Restaurant,
Sustainability,
and
Global
Market
Access.
The
integration
of
SAI
is
progressing
well
and
we
are
on
track
to
deliver
the
expected
revenue
and
cost
synergies
in
the
next
few
years.
JLA
expands
our
existing
Food
and
Agri
abilities
in
LATAM.
JLA
was
established
in
1990
and
is
a
Food,
Agri
and
Environmental
testing
business
with
a
strong
track
record
of
organic
expansion. JLA
enables
us
to enter
the
food
testing
market
in
Brazil, one
of
the
largest
exporter
of
agri-food
products
in
the
world.
I
will
now
hand
over
to
Jonathan
to
take
you
through
the
financials.
Thank
you,
André.
In
summary
in
2021,
the
group
delivered
strong
revenue
growth
and
double-digit
profit
and
EPS
growth.
Total
revenue
growth
was
6.5%
at
constant
currency
and
1.6%
at actual
rates
as
FX
translation
negatively
impacted
our
revenues
by
490
basis
points
driven
by
depreciation
of
sterling.
Like-for-like
revenue
grew
5.6%
at
constant
rates.
Operating
profit
at
constant
rates
was
up
15.4%
to
£473.9
million,
delivering
a
year-on-year
margin
improvement
of
130
basis
points.
Diluted
earnings
per
share
were
£1.908,
a
growth
of
16.8%
at
constant
rates
and
11.6%
at
actual
rates.
I'll
now
take
you
through
the
high
level
operating
margin
performance
by
division. Looking
more
closely at
the
operating
margin
bridge,
Products
delivered a
strong
operating
profit
margin
of
22.8%
and
accounted
for 90
basis
points
of
group
growth.
Trade
operating
margin
grew
to
9%
and
contributed
20
basis
points
to
the
year-on-year
change,
while
a
decline
in operating
margin
in
Resources
to
5%
had
a
negative
minus
20
basis
points
year-on-year
effect.
Divisional
mix
had
a
positive
20 basis
points
contribution
given
the
strong
growth
in
Products.
Finally,
FX
had
a
positive
10 basis
points
impact
on
the
group margin.
Our
disciplined
focus on
cash
management
continued
during
the
year.
The
group
delivered
adjusted
free
cash
flow
of
£401.8
million,
representing
a
cash
conversion
of
132%.
Working
capital
improved
further
in
2021,
but
not
as
much
in
absolute
terms
as
2020,
leading
to
cash
generation
slightly
down
year-on-year.
In
2021,
we
invested
£96
million
in
CapEx,
up
25%
versus
prior year.
We
finished
2021
with
financial
net
debt
of
£733
million,
which
is
up
year-on-year
due
to
acquisition
of
SAI,
representing
a
financial
net
debt
to
adjusted
EBITDA
ratio
of
1.1.
Now,
turning
to
our
financial
guidance
for
2022,
we
expect
net
finance
costs
to
be
in
the
range
of
£35
million to
£39
million.
We
expect
our
effective
tax
rate
to
be
between
26.5%
to
27%,
our
minority
interest
to
be
between
£20 million
to
£22
million,
and
CapEx
investment
to
be
in
the
range
of
£135
million
to
£145
million.
Our
financial
net
debt
guidance
before
any
material
change
in
FX
rates
or
M&A
is
£640
million
to
£690
million.
I'll
now
hand
back
to
André.
Thank
you,
Jonathan.
And
let's
now
discuss
the
performance
of
our
business
lines
starting
with
Products.
As
always
and
unless
stated
otherwise,
all
my
comments
will
be
at
constant
rates.
In
2021, our
Products
business
delivered
a
strong
performance
in
like-for-like
revenue
operating
profit
and
margin
combined
with
all
three
measures
ahead
of
2019.
In
H2, our
performance
was excellent
as
our
revenue,
profit
and
margin
were
respectively
up
by
14%,
34%,
and
350
basis
points
compared
to
H1.
Picking
out
some
of
the
highlights:
Both
our
Softlines
and
Hardlines
businesses
reported
double-digit
like-for-like
revenue
growth
for
the
full
year.
We
benefit
from
growth
in
e-commerce
and
a
higher
demand
for
testing
of
PPEs,
home
furnitures
and
toys,
as
well
as
from
the
easing
of
lockdown
restrictions.
Our
Electrical
&
Connected
World
business
delivered
high-single
digit
like-for-like
revenue
growth,
benefiting
from
an
increased
focus
on
energy
efficiency
regulatory
standards,
more
testing
of
medical
devices,
and
5G
equipment.
Our
Business
Assurance,
Food,
and
Chemical
&
Pharma
businesses
delivered
double-digit
like-for-like
revenue
growth
in
2021.
Business
Assurance
experienced
a
rebound in
ISO
audit
while
our
Food business
benefited
from
a
recovery
in
the
global
supply
chains
of
our
clients.
Thanks
to a
stronger
second
half,
our
Building &
Construction
business
delivered
stable
like-for-like
revenue
in
2021.
Our
Transportation
Technology
business
also
bounced
back
in
the
second
half
as
OEM
investments
in
new,
more
efficient,
and
environmentally
friendly
powertrains
picked
up
in
the
second
half,
enabling
us
to
deliver
low-single digit
negative
like-for-like
revenue.
In
2022,
we
expect
our
Products
division
to
deliver
robust
like-for-like
revenue
growth.
In
2021, our
Trade
business delivered
a
good
performance
in
like-for-like
revenue
operating
profit
and
margin.
We
saw
an
acceleration
of
our
like-for-like
revenue
growth
in
the
second
half, enabling
us
to
increase
revenue, operating
profit
and margin
by
respectively, 7%, 57%
and 340
bps
versus
the
first
half.
Caleb
Brett
recovered
as
global mobility
picked
up
with
improvement
in
the
second
half,
resulting
in
low-single
digit
like-for-like
revenue
for
the
year.
Our
Government
&
Trade
Services
business
showed
a
slowdown
in
the
second
half
a
little
bit
due
to
supply
chain
disruptions
in
some
of
our
markets,
resulting
in
low-single
digit
like-for-like
revenue
growth
for
the
year.
Benefiting
from
growing
demand
for
food
inspections,
the
AgriWorld
business
delivered
double-digit
like-for-like
revenue
growth
in
both
the
first
and
the second
half
of
the
year.
In
2022,
we
expect
our
Trade
divisions
to deliver
robust
like-for-like
revenue
growth.
For
the
full
year,
our
Resources
division
delivered
a
solid
like-for-like
revenue
performance
with
a
margin
performance
below
2020.
In
the
second
half,
we
saw
like-for-like
revenue
growth
acceleration
in
each
of
our
three
businesses
compared
to
H1
revenue
was
up
7%,
operating
profit
was
up
11%,
and
margin
was
up
10
basis
points.
Our
CapEx
Inspection
services
business
delivered
stable
like-for-like
revenue
growth
in
H2
as
our
oil
and
gas
clients
started
ramping
up
their
investments.
OpEx
Maintenance
services
picked
up
in
the
second
half
and
delivered
mid-single
digit
like-for-like
revenue
growth.
Increased
demand
for
testing
and inspection
activities
saw
our
Minerals
business
deliver
double-digit
like-for-like
revenue
growth
in
the
second
half.
In
2022,
we
expect
our
Resources
business
to
deliver
good
like-for-like
revenue
growth.
Let's
now
discuss
the
growth
outlook
for
the
group
moving
forward.
COVID-19
has
been
much
more
than
a
tragedy
for
the
world.
In
our
view,
COVID-19
would
be
remembered
as
the
greatest
dislocation
of
the
global
supply
chain
since
the
1970s,
creating
significant
challenges
across
the
world.
Our
clients have
realized
that
they
will
need
to
increase
their
investments
in
Quality
Assurance
to
operate
with
high-quality
safety
and
sustainability
standards.
Indeed,
COVID-19
has
made
the
case
for
Total
Quality
Assurance
stronger.
At
Intertek,
we
are
supporting
our
400,000
customers
every
day
as
they
try
to
synchronize
their
sourcing,
production,
and
logistics
activities.
The
supply
chain
disruptions
within
the
ecosystems
of
our
clients
are
highly
complex.
And
although
everybody
is
working
hard,
it
will
take
time
before
the
global
supply
chain
is
back
to
normal.
This
is
a
major
learning
for our clients
from
this
significant
global
supply
chain
dislocation.
They
have
been
operating
with substantial
intrinsic
risks
in
their
supply
chains
without
the
right
data,
process,
and
independent
assurance.
That's
why
80%
of
companies
will
increase
their
investments
in
Quality
Assurance
to
strengthen
their
operations.
Based
on
the
extensive
discussions
we've
been
having
with
our
clients,
these
investments
will
be
in
three
areas;
supply
chain
resilience,
innovation,
and
sustainability.
COVID-19
is
indeed
proving
a
catalyst
for
many
corporations
to
improve
the
resilience
of
their
supply
chains.
We
expect
corrective
actions,
and
these
will
include:
better
data
on
what's
happening
in
all
parts
of
the
supply
chain;
tighter
risk
management
with
razor-sharp
business
continuity
planning;
and
more
diversified
portfolio
of
tier
1,
tier
2,
tier
3
suppliers;
and
more
diversified
portfolio
of
factories;
investments
in
processes,
technology and
training;
and
independent
assurance.
We
are
also seeing
our
clients
realize
that
in
addition
to
their
supply
chain
challenges,
they
need
to
invest
more
in
product
and
service
innovation
to
meet
the
changing
needs
of
their
consumers.
As
you
would
expect,
during
a
major
global
crisis
like
COVID-19,
consumers'
expectations
are
changing
given
the
desire
to live
in
a
much
better
world.
Corporations
need
to
step-up
their
game
in
quality,
safety,
sustainability,
convenience,
and
value
for
money
to
enhance
their
products
and
services.
The
third
major
area
of
investments
inside
corporations
is,
of
course,
sustainability.
The
sprint
to
net-zero
emissions
is
real,
and
corporations
are
having
to
reinvent
the
way
they
reduce
their
carbon
footprint
across
the
entirety
of
their
operations
and
the
way
they
communicate
the
progress
they
make
on
net
zero.
The supply
chain disruptions
experienced
by
corporations
across
multiple
industries
has
made
the
need
for
comprehensive
risk-based
quality,
safety,
and
sustainability
assurance
more
critical
than
ever.
All
stakeholders
in
society
expect
governments
and
corporations
to
build
back
a
better
world
with
a
sharper
focus
on
end-to-end
Quality
Assurance.
The
Quality
Assurance
market
will grow
faster
post-COVID,
capitalizing
on
the
unchanged
strong
structural
growth
drivers
pre-COVID
and
benefiting
from
company's
increased
investments
in
resilient
supply,
innovation,
and
sustainability.
The
like-for-like
revenue
growth
outlook
for
Quality
Assurance
moving
forward
is
GDP+
in
real
terms.
We
are
well-positioned
to
benefit
from
the
increased
investments
of
our
clients
in
Quality
Assurance.
We
are
the
global
leader
in
risk-based
Quality
Assurance
given
the
depth
and
breadth
of
our
unique
ATIC
solutions
underpinned
by
our
continuous
investment
in
M&A
and
innovation
to
address
the
emerging
needs
of
our
clients.
I've
already
mentioned
M&A.
Let's
talk
about
innovation.
Investment
innovations
to
meet
the
emerging
needs
of
our
clients
in
Quality
Assurance
are
essential
to
deliver
superior
ATIC
customer
service.
Let
me
remind
you
our
approach
in
innovation.
We
pursue
a
three-tiered
approach
to
innovation,
building
on
the
strengths
of
existing
services,
which
we
call
innovation
from
the
core,
developing
new
products
and
services
in
adjacent
fast-growing
and
high-margin
markets,
and
developing
breakthrough
services
creating
new
markets.
In
the
last
few years,
we have
shared
with
you
the
strategic
investment
we've
made
through
acquisition
and
innovation
to
strengthen
our
portfolio
of ATIC
solutions.
These
investments
in
high-growth
and
high-margin
segments
were
made
within
a
disciplined
capital
allocation
framework.
We
are
scaling
up
these
successfully
as
evidenced
by
our
excellent
organic
ROIC
of
24.4%.
We constantly
look
at
opportunities
to
invest
in
new
growth
opportunities
in
high-margin
sectors.
Our
team
are
working
on
exciting
new
ideas
to
continue
to
strengthen
our
ATIC
value
proposition
[indiscernible]
(00:15:58) with
confidence.
Notwithstanding
the
supply
chain
challenges
our
clients
are
facing
in
some
markets,
we
expect
the
group
will
deliver
robust
like-for-like
revenue
growth
at
constant
currency
with
margin
progression
year-on-year
and
a
strong
free
cash
flow
performance.
We'll
continue
to invest
in
growth
and
we
expect
the
full
year
CapEx
investments
to
be
circa
£135
million to
£145
million.
We
expect
the
financial
net
debt
to
be
in the
range
of
£640
million
to
£690
million.
And
a
quick
update
on
currencies
for
your
model.
The
average
sterling
rate
since
the
beginning
of the
year
applied
to
the
full
year
results
of 2021
will
be
broadly
neutral
at
the
revenue
and
earnings
level.
I
would
like
to
finish
our
call
with
a
few
remarks
on
how
important
sustainability
is
for
all
of
us at
Intertek.
Sustainability
is,
of
course,
the
movement
of
our
time.
We
are
purpose-led
company,
living
on
strong
values
every
day.
The
global
pandemic
has
demonstrated
what
we
do
at
Intertek
is
mission-critical
to
society.
Our
role
of
bringing
quality,
safety,
and
sustainability to
life
has
never
been
more
important.
All
of
us
at
Intertek
are
passionate
about
making
the
world
a
better
and
a
safer
place.
And
I
can
proudly
say
that
Intertek
is
an
amazing
force
for
good.
Sustainability
is
about
delivering
sustainable
value
for
all
stakeholders
starting
with
our
customers.
Every
day,
at
Intertek,
we
focus
on
our
vision
of
being
the
world's
most
trusted
partner
for
Quality
Assurance.
That's
why
we
are
very
customer-centric
organization.
We
never
stop
reinventing
ourselves
to
deliver
superior
ATIC
service
to
our
clients.
And
this is
how
we
help
our
clients,
build
strong
businesses,
capitalizing
on
Intertek's
Science-based
Customer
Excellence.
What
our
clients
are
looking
for
today
is
a
systemic,
independent
end-to-end
assurance
on
all
aspects
of
their
sustainability
journey.
Our
answer
is
Intertek's
unique
Total
Sustainability
Assurance is
a
holistic
program
empowering
our
customers
to
achieve
sustainability
excellence
across
all
aspects
of
their
businesses
and
communicate
results
with
confidence.
Intertek
Total
Sustainability
Assurance
is
comprised
of
three
parts,
our
Intertek
Operational
Sustainable
Solutions,
Intertek
ESG
Assurance,
and
Intertek
Sustainability
Certification.
Intertek
Total
Sustainability
Assurance
is
a
global
program,
leveraging
our
footprint
in
over
100 countries
and
covering
all
industry.
We
built
a
team
of
sustainability
experts
in
every
major
region
who
can
help
their
clients
with
both
the
global
and
local
perspective.
Both
leadership
and innovation
is
what
set
us
apart.
Internally,
we
are
focused
on
sustainability
excellence
in
every
single
operation.
We
believe
that
doing
business
the
right
way
with
a
systemic
approach
is
the
only
way
to
deliver
our
corporate
goals.
To
do
that,
we
follow
precise
sustainability
processes
in
10 areas.
We
are
targeting
net
zero
emissions
by 2050.
And
starting
in
2022
we
have
included
a
carbon
emission
reduction
target
in
our
short-term
incentive
for
all
employees
in
addition
to
revenue,
profit,
and
ROIC.
Sustainability
is
of
course
much
more
than
achieving
net
zero.
We
pursue
beyond
net
zero
target
in
the
areas
of
customer
satisfaction,
diversity
and
inclusion,
health
and
safety
compliance,
employee
turnover
engagement.
Moving
forward,
we'll
continue
to
deliver
sustainable
growth
and
value
for
all
stakeholders.
Our
USP
at Intertek
is a
Science-based
Customer
Excellence
in
quality,
safety,
and
sustainability,
giving
our
400,000-plus
clients
with
ATIC
advantage
to
strengthen
their
businesses.
We
operate
a
high-margin,
capital-light,
carbon-light,
and
cash-generative
earnings
model.
Intertek's
approach
to
value
creation
is
based
on
the
compounding
effect
year-after-year
of
margin-accretive
revenue
growth,
strong
cash
generation,
and
disciplined
investment
in
growth.
In
summary,
we
have
a
clear
purpose
of
making
the
world
ever better,
and
our
leading
ATIC
solutions
are
what
society
needs
to
build
back
ever
better.
The
growth
in
our
end
market
is
accelerating,
given
that
our clients
have
realized
during
COVID-19
that
too
many
risks
in
their
supply
chains
were
not
properly
mitigated.
Given
our
strong
market
leadership
positions
and
our
Science-based
Customer
Excellence,
we
are
well
positioned
to
seize
the excellent
growth
opportunities
ahead.
We
are
a
high-quality
global
growth
business
with
a
track
record
of
continuous
growth
in
revenue,
margin,
cash,
and
dividends,
delivering
an
excellent
ROIC.
Moving
forward,
we'll
continue
to
deliver
sustainable
growth
and
value
for
all
stakeholders.
Thank
you
for
your
attention,
and
we'll
take
any
questions
you
might
have.
Thank
you.
[Operator Instructions]
Our
first
question
comes
in
from
the
line
of
Simona
Sarli
calling
from
Bank
of
America.
Please
go
ahead.
Yes.
Good
morning,
gentlemen,
and
thanks
for
taking
my
questions.
I
have
three
questions.
Good
morning.
First
of
all,
if
you
could
please
give
us
an
update
on
the
pricing
dynamics
and
current
wage
inflation
you
are
experiencing
across
regions,
as
well
as
if
you
are
seeing
any
difficulties
in
recruiting.
Secondly,
if
you
could
please
give
an
update
on
the
synergy
realization
for
SAI
Global
Assurance.
And
lastly,
you
mentioned
that
you
entered
2022
with
confidence.
Can
you
please
provide
some
color
on
the
growth
rates
observed
at
the
beginning
of
the
year,
both
at
group
level
and
by
division,
and
how
do
they
compare
versus
what's
observed
in
the
last
months
of
2021?
Thank
you.
Okay.
Thanks
for
your
call.
Let
me
just
take
these
questions
one
by
one.
Look,
your
question
on
pricing
is
very
important,
of
course.
So,
if
we really
step
back
and
you
look
at
what
Intertek
stand
for,
we
are
very
focused
on
delivering
a
superior
quality
to
our
clients.
We've
been
tracking
NPS
score
many,
many,
many
years.
And
I'm
pleased
to
say
that
we
have
a
high
NPS
level
and we
make
great
progress.
I've
also
talked
on
the
call
on
our
USP
based
on
our
Science-based
Customer
Excellence
where
our
clients
get
really
superb
customer
service
and
also
the
technical
expertise
from
Intertek
that they
really
value.
And
the
other
thing
that
I
would
say
upfront
is
that
if
you
go
back
to
the strategy
we
put
together
many,
many
years
ago,
we
basically
decided
to
focus
on
margin-accretive
revenue
growth
based
on
the
right
portfolio
choices
and
our
day-to-day
performance
management,
which
is
looking
at
good
revenue,
which
is
based
on
volume/price
mix,
margin
accretion,
strong
cash
generation,
and
investing
in
a
high
growth,
high
margin.
And
all
of
that
is
what
underpins
the
Intertek
virtuous
economic
model.
It
means
that
intrinsically,
Intertek
is
very
disciplined
on
volume/price
mix
management,
and
we
have
a
very
strong
pricing
power.
And
for
us,
good
organic
revenue
is
based
on
the
right
volume
at
the
right
price.
So,
our
pricing
strategy,
if
you
want,
doesn't
change.
We
have
a
premium
price
positioning
in
the
market. Of
course, we
are
commercial
and
technical
at
times,
if this
is
important
for
scale.
But
largely,
we
command
a
very
strong
pricing
in
the
market.
And,
of
course,
inflation
is
on
the
agenda.
But
if
you
look
at
the
100
markets
we
operate
around
the
world,
we've
always
operated
in
a slightly
high inflationary
environment.
And
typically,
the
way
we
do
it,
we'd
typically
try
to
pass
50%
of
the
inflation
to
our
customers
and
we
take
the
other
50%
through
margin
management.
So,
looking
at
2021,
which
was
a
year
with
relatively
strong
inflation,
you've
seen
the
quality
of
the
margin
we've
delivered.
And
therefore,
our
portfolio
volume/price
mix
margin
strategy
remained
the
same.
And
we
are
–
continue
to
take
a
very
well-balanced
approach
to
pricing.
And
if
you
take
our
organic
growth
in
2021,
I
think,
at
the
group
level,
you
could
say
one-third
is
pricing
and
two-third
is
volume,
which
is
a
good
demonstrations
of
what
I
talk
about.
So,
going
into
2022,
we're
going
to
continue
to
be
focused
on
our
premium
portfolio
and
superior
customer
service
strategy.
We're
going
to be
very,
very
disciplined.
And,
yes,
there
are
some
pricing
issues
in
some
parts
of
the
global
economy,
but
it's
not
everywhere,
as
you
know.
To
your
second
question
on
recruitment,
which
is
also
a very
important
questions,
you
would
recall
that
when
we
went
into
2020
with
COVID-19,
we
made
the
assumptions
that
COVID-19
was
going
to be
a
temporary
disruption
to
the
global
supply
chain
of
our
clients.
Of
course,
we
couldn't
put
a
precise
timing
to
that.
But
the
implication
of
that
is
that
we
didn't
do
any
restructuring
in
2020,
as
many
corporations
did,
because
we
wanted
to
protect
our
quality
and
our
service
capability.
As
I
said,
what
we
offer
to
our
clients
is
Science-based
Customer
Excellence.
And
the
IP
we
have
is
basically
our
people
being
there
with
their
subject
matter
expertise
for
our
clients
when they
need
us.
So,
we
wanted
to
make
sure
that
we
were
there
when
our
clients
will
start
obviously
to
operate
at
a
pre-COVID-19
level.
What
it
means
is
that,
in
2021
and
2022,
we have
not
had
to
hire
back
massively
like
lots
of
corporations
and
we have
not
faced
the
issues
of
recruitment
that
companies
are
talking
about.
Now,
I'm
not
saying
that
the
labor
market
worldwide
is
not
very,
very
difficult
in
certain
part
of
the
global
economy,
of
course.
But,
overall,
for
us,
at
Intertek,
it's
not
an
issue
because
we
have
kept
all
capability
intact.
And
I
have to
say,
we
still
have
[ph]
some
slot (00:26:13).
We
are
not
back,
as
you
know,
to
our
pre-COVID-19
level
in
Trade
and
Resources,
so we
have
some
opportunities
there.
As
far
as
your
question
on SAI,
look,
SAI
is
a very
strategic
move
for
us.
We
are
the
global
leader
in
risk-based
Quality
Assurance.
Assurance
is
central
to
our
strategy.
It's
been
on
the
agenda
for
many,
many
years.
We
are
very
focused
on
that,
and
SAI
gives
us
the
benefits
I
talked
about
in
terms
of
geographic
and
service
complementarity.
From
a
pure
integration
standpoint,
look,
we
have
a
lot
of
experience
inside of
Intertek
in
terms
of
integrating
acquisitions.
The
integration
is
on
track.
And
the
financial
guidance
that
we
gave
when
we
acquired
the
business
is
obviously
the
one
that
we
are
committed
to
and
we're
making
good
progress.
I'm
not
sure
it's
worth
going
through
all
the
details,
it's
on
the
slide
I
presented.
And
if
you
have
more
question
on
that,
happy
to
do
that
outside
of
this
call.
But
we
are on
track
from
both
the
revenue
and
cost
standpoint.
And
as
far
as
the
beginning
of
the
year,
we
are
today
talking
about
the
2021
performance
and
we
are
not
commenting
on our
January-February
results.
We
are
just
giving
you
the
guidance.
Thank
you.
Your
next
question
comes in from
the
line
of
Sylvia
Barker
calling
from
JPMorgan.
Please
go
ahead.
Thank
you.
Hi.
Good
morning,
everyone.
Morning.
Could
I
ask
firstly
on margins.
I
guess
product
is
now
at
a
record
level.
Could
we
assume
further
upside
in
2022?
And
could
you
maybe
just
comment
on
the
mix
within
that?
Secondly,
on
working
capital,
I
guess
that
improvement
has
been
very,
very
[indiscernible]
(00:28:02)
Your
guidance
on
net
debt
is
always
conservative
and
does
imply
an
outflow.
But
could
you
maybe
just
give
us
an
idea
of
that
new
normal
within
that
working
capital?
And
then
finally
on
Building
&
Construction,
could
you
comment
on
the
order
book
shape
and
maybe
how
that's
progressed
during
the
second
half
of
2021
and
entering 2022? Thank
you.
Thanks,
Sylvia,
and
I
will
answer
the
first
and
the
third
question,
and
Jonathan
will
give
you
where
we
are
on
working
capital
[indiscernible]
(00:28:43).
As
far
as
our
portfolio
strategy,
which
is
really
the
first
question
on
Products,
yes,
of
course,
Products
is
at
a
very,
very
high
level
in
terms
of
margin.
And
certainly,
the
performance
we
delivered
is
an
all-time
high.
But
if
you
look
at
the
performance
of
our
Products
divisions
year-after-year,
one
thing
you
can
see
is
the
consistency
of
margin-accretive
revenue
growth
that
I'd been
talking
at
the
group
level,
which
is
embedded,
if
you
want,
in
our
performance
management.
And
while
the
margin
of
our
Products
business
looks
very
high
and
certainly
is
something
that
we
are
very
proud
of.
We
are,
as
you
know,
[ph]
a never
better
type
(00:29:28)
of
companies.
We
always
look
at
opportunities
to
do
better.
And
we
believe
that
our
Products business
will
have
continued
to
do
well
in
terms
of
margin-accretive
revenue growth
moving
forward.
We're
not
putting
any
targets
out
there,
as
you
know,
but
we
are
very
proud
of
our
Products
business
like
our
Trade
and
Resources
business.
And
the
reality
is
that
we
have
opportunities
in
all
parts
of
the
business.
And
as
you
realize,
when
you
run
a
company
like
Intertek
with
100-plus
countries,
1,000-plus
laboratories,
so
many
end
markets,
so
many
different
type
of
solutions,
you
have
a
very
big
opportunity,
which
is
called
the
[ph]
span
of (00:30:09)
performance.
And
no
matter
how
proud
I
am
about
what
we
do
every
single
day,
I
know
that
we
can
always
be
better
and
[ph]
span of (00:30:16)
performance
remains
a
significant
opportunity
for
us
in
terms
of
margin
management
in
Products, but
all
the
businesses.
The
other
thing
I
would
say
is
portfolio
strategy.
And
when
we
innovate
and
when
we
invest
in
acquisitions,
targeting
the
high-growth,
high-margin
solutions
and
sectors
give
you,
of
course,
mix
effect
that
you
know
so
well.
So,
look,
we
are really,
really
pleased
on
where
we
are,
and
moving
forward
we
are
very,
very
positive.
As
far
as
B&C
is
concerned,
look,
the
second
half
was
better
indeed,
as
you
noted.
We've
always
seen
that
in
the
post-election
year
there
is
always
a
slowdown
in
the
US
construction
market
when
it
comes
to
large
projects.
We
have
seen a
good
rebound
in
the
second
half,
and
all
the
indicators
talk about
good
growth
in
2022
in
terms
of
a
nonresidential
B&C
market
in
the
United
States.
And
as
you
know,
we
have
a
tremendous
organization
with
PSI
and
we
look
forward
to
benefiting
from
that.
So,
B&C
looks
good
for
2022.
Jonathan,
working
capital?
Yes.
So,
on
the
working
capital,
we're
pleased
with
where
we
are. We've
been
working
hard
on
the
[ph]
span of
performance
(00:31:36). And,
as
you
know, cash
management
is an
important
part
of
our
earnings
model.
We've
given
our
net
debt
guidance,
which
takes
into
account
a
number
of
moving
parts
including
working
capital.
So,
yes,
that's
built
into
the
net
debt
guidance.
Thank
you,
Sylvia.
Thank
you.
Your
next
question
comes
in
from
the
line
of
George
Gregory
calling
from
BNP Paribas.
Please
go
ahead.
Good
morning. Yeah.
Two...
Good
morning,
George.
...for
me, please.
Good
morning,
André.
Hi.
Two.
Firstly,
if
I
could
just
follow-up
on
Sylvia's
question
on
working
cap,
and
specifically
the
payables
balance,
which
seems
to
have
been
the
main
driver
there
where
the
DPO
has
grown
quite
materially
over
the
past
few
years.
I
wondered
if
there's
anything
you
can
sort
of
elaborate
on
what
has
driven
that
or
what
you've
done
to
achieve
that.
And
secondly,
I
appreciate
it's
early
days,
but
just
any
thoughts,
André,
as
to
how
the
more
recent
geopolitical
situation
may
impact
you
and
any
sort
of
exposure
you
have
to
the
region,
please.
Thanks.
Yeah,
Thanks, George.
I'll
take the
second
one
and
Jonathan
will
cover
your
question
on working
capital.
Look,
we
have
a
very
small
presence
in
Russia
and
Ukraine.
Just
to
give
you
a
sense,
on
combined
basis,
it's
less
than
1%
of
the
group
revenue.
So,
of
course,
we
are
watching
the
crisis
unfolding
step-by-step.
Our
primary
focus
is
the
safety
of
our
colleagues.
We
have
just
39
colleagues
in
Ukraine
and
obviously
slightly
more
in
Russia.
We,
of
course,
are
following
the
implications
of
the
sanctions,
which
at
the
moment
seems
to
be
very
focused
on
the
payment
systems
and
technology
transfer
and
seems
to
indicate
that
what
we
do
is
not
really
captured
here.
Having
said
that,
it's
an
evolving
situations
and
we've
got,
as
you
can
imagine,
a
special
task
force
on
that.
This is
the
way
we
manage
risk
each
time
there
is
a
emerging
risk
in
the
world
of
Intertek.
It doesn't
matter
if
it's
very
small
or
significant,
we would
put
the
right
resources.
So,
I'll
be
following
that
on
a
daily
basis.
But
I
would
say,
so
far,
so
good.
Obviously,
a
very
tragic
situation
for
all
of
our
colleagues
and
friends
in
Ukraine,
and
I
just
have
a
–
next
to
my
office,
a
young
executive
whose
parents
are
in
Ukraine
and
basically
protecting
themselves
in
the
basement
of
their
house.
So,
I've
got
also
this
every
day
story
on
what's
happening
there.
It's
tragic,
but,
look,
we'll
get
there.
Yeah.
So,
on
working
capital,
as
I
said,
we
continue
to
make
progress.
Obviously,
payables
is
an
important
part
of
that,
so
we
continue
to
work
on
improving
that.
Also,
within
that
number,
you
have
other
payables
and
various
variable
pay
accruals,
which
are
higher
than
they
were
at
this
time
last
year.
Thank
you,
George.
Thank
you.
Your
next
question
comes
in
from
the
line
of
Andy
Grobler
calling
from
Credit
Suisse.
Please
go
ahead.
Hi.
Good
morning,
everybody.
Good
morning.
Morning.
Two
for
me,
if
I
may.
CapEx,
you've
given
guidance
clearly
for
2022,
but
it
was
relatively
low
again
last
year and
the
average
over
the
past
six
years
is
about
3.8%.
Why
is
that
not
the
new
normal
for
Intertek
going
forward?
And
then
secondly
and
slightly
broader
question,
the
EU
is
proposing
its
SPI
initiative,
which
I
think
comes
at
the
end
of
this
month.
What
impact
do
you
think
that
could
have
on
kind
of broader
markets
and
Intertek
specifically?
Thank
you
very
much.
Sorry,
the
line
was
a
bit
difficult.
What
do you
mean
in
the
EU?
Are
you
talking
about
taxonomy?
Yeah. Well,
the
strategic
product
initiatives
around
labeling
and
traceability
that's
been
proposed
at
the
end
of
the
March,
I
just
wondered
what
your
views
were.
Of
course.
Yeah.
Okay.
Look,
I
know
how
you'd
feel
from
your
perspective
looking
at,
as
always,
being
conservative
when
it
comes
to
the
guidance
on
CapEx
and
net
debt.
Look,
if
you
look
–
the
approach
we
take
to
CapEx
is
essentially
opportunity-driven.
We've
got
some
very
clear
parameters
on
where
we
want
to
invest,
how
we
value
the
CapEx
proposal
from
our
colleagues,
and
how
we
make
decision.
And
it's
depending
on
the
opportunities
that
we
see
in
our
business.
I
would
say
that,
in
the
last
two
years,
the
world
has
been
coping
with
massive
day-to-day
operational
issues
getting
the
basics
in
place
in
their
supply
chains.
And,
as
you
know, it's
not
been
a
great
time
for
innovations
and
big
investments
inside
the
walls
of
our
clients.
My
view
is
this
is
going
to
change.
[ph]
And
according (00:37:22)
we're
going to
continue
to
invest
and
support
the
growth
agenda
of
our
clients.
I
think
you
need
to
do
it
just
on
time.
You
don't want
to
do
it
too
soon
or
too
late,
and
that's
the
balance
that
we
are
striking.
Look,
we
are
guiding
for
a
higher
CapEx
investments
in
2022.
And
we
believe
that
what
was
invested
in
2020
and
2021
is
not
a
function
of
what
we're
going
to
do
moving
forward.
If
you
look
pre-COVID-19,
we've
always
been
around
the
4-ish
percent
in
terms
of
revenue.
We are
always
guiding
between
4%
and
5%
because
we
want
to
give
you
a
sense
of
the
range.
It
might
well
be
that
we
have
a
tremendous
investment
opportunity
in
part
of
the
Intertek
portfolio
that
we want
to
seize
right
now,
and
we
might
go
beyond
that
5%
that
we
guide.
But
it's
not
something
we
decide
lightly.
We
take
our
time
and
then
we'll
take
it
a
step
at
a
time.
But
investments
in
the
right
growth
opportunities through
innovations
is
important. And,
of
course,
technology
and,
as
you
know,
lots
of
our innovations
have
technology
embedded
because
we
are
very
focused
on
the
SaaS
model.
As
far
as
the
agenda
that
the
EU
is
pursuing
in
terms
of
sustainability
at
large
with
taxonomy
and
product
labeling,
look,
it's
all
very,
very
positive.
There
is
no
question
that
the
consumers
around
the
world
want
to
know
more
about
the
end-to-end
traceability
of
what
they
buy
and
consume.
It's
hugely
complex,
hugely
complex.
That's
why
the
work
we're
doing
with
our
customers
in
terms
of
supply
chain
assurance
is
very
important
because
unless
they
understand
what's
happening
in
their
tier
1,
tier
2,
tier
3
suppliers,
unless
they
understand
what's
happening
in
the
factories
and
end-to-end
supply
chain,
it's
going to
be
very
difficult
for
them
to
be
precise
when
it
comes
to
carbon
labeling
because
carbon
labeling,
as
you
know,
will
have
to
be
Scope
1,
Scope
2,
and
Scope
3.
So,
I
think
the
right
move
from
the
EU
and
certainly
a
big
opportunity,
and,
of
course,
we
are
working
on
it.
We
have
clients
already
because,
as
you
know,
the
best
companies
in
the
world
don't
wait
for
the
regulators
to
do
the
right
thing.
They
are already
on
it.
And
carbon
labeling
is
a
priority
in
many,
many
executive
teams
around
the
world.
Great.
Thank
you
very
much.
The
next
question
comes in
from
the
line
of
Rory
McKenzie
calling
from
UBS. Please
go
ahead.
Hi. Good
morning.
Two
for
me,
please.
Good morning.
Firstly,
I
want
to
ask about
the
outlook
for
the
assurance
division.
Can
you
quantify
how
much
revenue
you
saw
in
2021
from
the
kind
of
catch-up
in
the
traditional
ISO
audits
and
therefore
needs to
normalize
this
year?
But,
of
course,
on
the
other
side,
can
you
talk
about
your
kind
of
pipeline
or
order
book
for
the
kind
of
larger
supply
chain
audits
and
the
new
solutions
you're
offering?
And
also,
it's
still been
a
very
disruptive
year
for
many
companies,
and
I'm
interested
to hear
how
the
kind
of
conversion
of
interest
into
actual
contracts
is
going
in
reality.
And
then
just
the
secondary
question
is
on
the
outlook,
the
kind
of
breadth
within
Trade.
It looks
like it
had
a
very
strong
November-December.
So,
can
you
talk
about
how
your
client has
been
responding
to
the
rising
energy
prices
and,
yeah,
the
outlook
for
this
year
given
the
situation
that
sadly
we're
in?
Thank
you.
Yeah.
Look,
I
think
on
assurance,
there
is
no
question
that
we
benefit
from
a
catch-up
in
ISO
audits,
which
had
been
delayed
in
2020.
But
our
assurance
portfolio
is
much
more
than
ISO.
As
you
know,
we
are
very
focused
on
ISO/non-ISO
audits,
also
people
assurance.
And
we
saw
double-digit
revenue
growth
in
each
of
these
three
segments
of
our
business.
So,
we
had
a
really,
really
strong
2021.
And,
look,
the
best
answer
to
your
question
about
2022
and
forward
is
basically
what
is
it
that
our
clients
are
telling
us,
and
that's
why
we
are
very
excited
about
assurance
moving
forward.
Just
stepping
back,
what
are
the
key
trends
that
customers
have
to
look
at
and
what
do
they
need
in
terms
of
support
from
us
for
an independent
assurance standpoint?
Number
one,
as I
were
just
saying
to
Andy,
right,
customers
want
to
get
end-to-end
visibility
on
what's
happening
in
the
supply
chain.
And
if
there's one
thing
that
COVID
has
demonstrated,
that
the
clients
didn't
have
the
right
data
on
what
was
happening
in
all
parts
of
their
supply
chain.
So,
big
data,
right,
end-to-end
assurance
with
the
right
analytics
is
a
big,
big,
big,
big
opportunity
for
us.
And
you've
heard
me
talk
about
Inlight,
which
we've
launched
many,
many
years
ago,
which
is
one
of the
hottest
platform
in
terms
of
end-to-end
traceability
around
the
world.
And
this
is
bang
on
based
on
what
the
world
is
now.
Now,
the
other
thing
that
is
happening,
in
addition
to
data
and
traceability
and
end-to-end
visibility,
is
the
manufacturing
footprint.
There
is
no
question
that
companies
have
to
diversify
their
manufacturing
footprint.
I
mean,
to
be
reliant
on
one
or
two
factories
or
a
few
components
producers
had
been
very
difficult.
So,
the
just-in-time
philosophy
that
we
saw
till
the
beginning
of
COVID-19
is
going to
be
questioned
rightly
so.
Easier
said
than
done.
Of
course,
we've
talked about
it in
the
past,
but
this
is
a
trend.
There
is
no
question
that
in
terms
of
diversifying
their
risk,
you're
going
to
have
increase
of
tier
1,
tier
2,
tier
3
suppliers.
And
this
is
very
good
news
for
us because,
as
you
know,
for
our
clients,
we
are
doing
verification and
audits
in
their
tier
1,
tier
2,
tier
3
suppliers.
Companies
are going
to
have
to
diversify
that,
right?
Traceability,
our
communication
from
a
consumer
standpoint
is
of
course
on
the
agenda,
it
goes
beyond.
Basically,
having
the
data
is
also
being
able
to
quantify
what's
happening
in
terms
of
Scope
1,
Scope
2
and
Scope
3.
And
we've
all
got
used
to
calories
and
fat
levels
on
food
products
that
we
buy
anywhere.
Well, in
a
few
years
from
now,
the
carbon
labeling
will
be
part
of
the
packaging.
Now,
a
lot
of
work
here
needs
to
happen
because
companies
need
to
understand
their
net
zero
footprint
end-to-end.
They
need
to
be
able
to
measure
it,
to
track
it,
and
to
not
only
report
on
net
zero
reduction,
but
also
on
the
progress
they
are
making
in
terms
of
disclosures.
And
full
carbon
labeling
is
going
to be
very,
very
exciting
for
us.
The
other
thing
that
we
should
not
underestimate
is
the
concept
of
risk-based
Quality
Assurance
where
you
use
testing,
inspection,
certifications
to
quantify
the
risks
in
their
high
exposure
of
your
supply
chain
but
use
assurance
to
give
you
the
end-to-end
data
to
make
sure
that
you
get a
systemic
performance
analysis
of
your
supply
chain.
I
mean,
this
is
very
much
on
the
agenda
of
our
clients
because
every
single
risk
committee
in
big
corporations
facing
supply
chain
challenge
is
asking
the
same
question.
Why
didn't
we
know?
Well,
you
didn't
know
because
you
didn't
take
an
end-to-end
risk-based
Quality
Assurance
of
course.
And
I'm
seeing
more
and more
clients
from
all
sectors
calling
and
say,
can
you
help?
And
some
of
the – and
we'll
go
back
to
oil
and
gas
in
a
second.
But
some
of
the
most
decentralized
operations
like
oil
and
gas
have
to
take
a
centralized approach
when
it
comes
to
end-to-end
assurance
in
their
supply
chain.
And
then,
one
thing
that
we
should
not
underestimate
is
the
importance
that
our
clients
are
realizing
when
it
comes
to
training
their
own
suppliers.
Every
brand
has
got
a
different
approach.
They
have
their
own
USPs.
And
one
of
the
big
area
of
focus
that
we
see
is
training
the
tier
1,
tier
2, tier 3 suppliers
of
our clients,
and
that's
an
area
where
Alchemy
is
well-positioned.
And
we've
just
launched
a People
Assurance
variant
of
Inlight
where
in
addition
to
Inlight
and in
knowing
where
your
tier
1,
tier
2,
tier
3
suppliers
are,
we
are
providing
the
right
operational
training
for
these
suppliers
to
make
sure
that
they
comply
with
what
their
clients
wants.
So
I
just
give
you
in
a
few
minutes,
right,
an
overview
of
the
macro
trends
that
we
see
in
our
Assurance
business.
And
that's
why
we
are
very,
very
positive
and
yes,
our
backlog
look
good.
As
far
as
your
second
question
on
Caleb
Brett,
look,
mobility
is
improving
and
certainly
the
period
we
are
entering
in
terms
of
international
travel
is
going
to be
much
more
positive,
touching
wood.
We've
managed
the
latest
[ph]
wave (00:46:35)
very,
very
well
on
global
basis.
And
if
you
step
back
and
look
at
the
oil
and
gas
supply
and
demand
worldwide,
we
were
slightly
more
than
the
100 million
barrels
a
day
in
2019,
which
was
the
latest
peak
obviously.
2021
was
super,
super
difficult.
2021
rebounded,
especially
in
the
second
half,
but
we
are
still
at
around
96.2
and
96.3
million
barrels
a
day.
That's
basically,
at
the
moment, the
equilibrium
between
demand
and
supply
based
on
Q4
data.
We
don't
have
the
Q1
data
so
far,
but
we
expect
the
oil
and gas
consumptions
to
increase,
of
course.
Now,
your
question
about
Ukraine
and
Russia
is
well-timed,
and I'll
come
to
that
in
a
second,
but
as
far as
Caleb Brett
is
concerned,
we've
seen
a
very
strong
rebound
in the
second
half,
and
we
expect
that
to
continue
in
2022. As
far
as
the
potential
implications
of
what's
happening
in
Ukraine
and
Russia
on
the
oil
and
gas
markets,
you
need
to
basically
look
at
this
question
with
two
lenses,
right?
The
first
one
is
you need
to
look
at
oil.
And
as
you
know,
Russia
is
a
big
producer
of
oil.
And
there
is
no
question
that
with
the
sanctions
that
are
happening
today,
there
is
a
big
question
on
what's
happening
to
oil
and
gas
supply.
So
far,
we've
not
seen
anything.
But
this
is
an
area
where
we
basically
need
to
monitor
carefully. Just
to
give
you
a
data
point,
Europe
is
about
50%
of
the
oil
and
gas
export,
the
oil
exports
from
Russia,
right?
As
far
as
gas
is
concerned,
it's
slightly
different.
And
the
supply
tensions
are
going to
be
probably
tougher
because
Russia
has
got
a
higher
market
share
of
the
gas
productions
globally.
So
we
have
to
take
it
a
step
at
a
time.
There
is
spare
capacity
in
the
short
term
in
oil.
Gas
will
be
a
bit
more
tense.
But
so
far,
oil
and
gas
trading
is
still
happening.
That's
all
really
helpful.
Thank
you.
You're
welcome.
Thank
you.
[Operator Instructions]
And our
next
question
comes
in
from
the
line
of
Arthur
Truslove
calling
from
Citi.
Please
go
ahead.
Good
morning,
everyone.
Good
morning.
Three
for
me,
if
I
may.
So,
first
one,
you talked
about
robust
organic
growth
in
your
outlook
statement. Is
it
reasonable
to
assume
that
that means
mid-to-high-single
digit?
And then
second
question,
from a
Resources
perspective,
it
looks
like
the
outlook
for
2022
is
slightly
slower
than
perhaps
within
the
Trade
division
or
the
Products
division.
Is
it
right
to
assume
that
the
energy
investment
backdrop
is
very
strong?
And
I also
wonder
what
the
phasing
was
and
when
you
were expecting
to
actually
see
that
revenue?
And
then
the
third
one
was
just
on Caleb
Brett.
Some
of
your
peers
have
talked
about
weak
pricing
trends
in
oil
trading.
And
in
that
context,
is
there
any
reason
why
you
can't
get
back
towards
2019
margins
in
that
Trade
division?
Thank
you
very
much.
Yeah. Thanks,
Arthur.
Look,
welcome
to
the
Intertek
world
in
terms
of
guidance.
As
you
know,
we
do
not
give
quantitative
guidance
beyond
the
financial
guidance.
So
there
is
a
lexicon
and
robust
has
got
a
range
to
it.
And
I'm
going
to leave
it
to
that
for
now.
And
then,
the
year
just
started
and
hope
you
appreciate
the
way
we
guide,
but
we'll
take
it
a
step
at
a
time.
And
we'll
report
back
in
May.
So,
we
only
have
few
months
away
from
that.
Look,
I'll
take
your
question
on
Resources
[indiscernible]
(00:50:56). As
far as Caleb Brett is concerned,
look,
I
don't
recognize
this
comment
that
you're
making
on
pricing
pressure.
So
I don't
know
where
this
is
coming
from,
but
we
are
the
market
leader
for Caleb Brett.
Globally,
you've
seen
the
growth
in
margin
that
we've
delivered.
We
are
very
disciplined
on
pricing.
So
I
don't know
where
this
is
coming
from
because
I'm
not
seeing
it.
And
as
far
as
the
Caleb Brett margin
rebound
opportunity,
of
course,
there
is
opportunities
to
improve
and
go
back
to
much,
much
higher
level.
As
I
just
said,
we
don't
give
any
quantitative
guidance,
but
we
are
very,
very
focused
on
that.
It's
a
business
we
are really
proud
of, plenty
of
growth
opportunities
so
we
are
in
a
good
place.
As
far
as
your
question on
Resources,
I
think
your
question
is
regarding
the
CapEx
investments
of
the
energy
companies
moving
forward.
And
this
is
an
important
question,
given
where
we
see
the
world
of
energy
and
I
will
address
it
precisely,
but I
just
want
to
give you
the
context.
The
reality
is
we
know
it
so
well
that
the
previous
oil
crisis
between 2014
and
2018
has
been
significant
in
terms
of
the
economics
of
our
energy
customers.
And
we've
seen
a
significant
reduction,
as
you
know,
during
these
periods
of
CapEx
investments.
And
it
really
started
rebounding in
2018
and
2019.
And,
of
course,
COVID-19
happened
in 2020
and
has
been
very,
very
difficult.
Every
single
energy
company
in
the
world
has
to
increase
investments
in
energy
production
because
they
need
to
do
two
things.
They
need
to
do
catch-up
in
terms
of
the
investment that
they've
made
in
the
traditional
oil
and
gas operations
as
well
as
new
explorations.
Because
unless
you
do
that,
there
will
be
some
capacity
issues
moving
forward
on
the
global
oil
and gas
market.
But
also,
they
need
to
invest
in
renewables
to
achieve
the
reduction
of
their
carbon
footprint.
So
we
are
getting
into
a
very,
very
exciting
time
for
our
Moody
business
which,
as
you
know,
is
all
about
engineering
base
inspections.
We
look
at
traditional
oil
and
gas
equipment
as
well
as
renewable
including
energy
storage
and
hydrogen
and
solar
panels
and
wind
farms.
And
all
indicators
are
showing
that
energy
companies
have
and
will
invest.
Now,
the
reason
why
we
are
guiding
for
good
in
Resources
is
because
we
had
a
really
strong
year
in
Minerals,
and
we
need
to
have
the
base
line
effect
in
line.
But
also
when
you
look
at the
big
projects,
it
doesn't
matter
if it's
oil
and
gas
platforms
in
the
Gulf
of
Mexico
or
if
it's a
new
energy
storage
plant
in
Australia.
There
are
two
phases,
right?
The
oil
and
gas
companies
will
approve
the
CapEx and
the
designs,
get
the
infrastructure
and the
foundations
in
place,
et
cetera
and
so
forth,
which
takes
quite
a
bit
of
time
and,
of
course,
CapEx.
And
then
they
put
their
bespoke
equipment
they
want
to
use
to
produce
the
energy
they
need.
And
that's
when
we
play
a
role.
And
typically,
it's
in
a
phase
2
because
this
needs
to
be
manufactured.
So
there
is
always
a
bit of
lag
between
the
rebound
in
the
oil
and
gas
CapEx
investment,
and
what
we
see
in
Moody.
But
we
are
very,
very,
very
positive
about
the
outlook.
Great.
Thank
you
very
much.
Thanks.
The
next question
comes
in from
the
line
of
Neil
Tyler
calling
from
Redburn.
Please
go
ahead.
Yeah. Good
morning.
Thank
you.
Good
morning.
Couple
of
questions,
please.
First
one,
I'd
like
to
perhaps
pick
up
on
your
answer
to
the
previous
question
around
the
Moody
business
and
resourcing
that
because,
at
the
moment,
[indiscernible]
(00:55:20)
still
some
way
below
2019,
and
I
suppose
alongside
that,
similarly,
your
sort
of Opex
Inspection
activities
are
also
some
way
below.
But
the
outlook
suggests
that
that's
going
to
improve
quite
markedly
potentially
and
how
you're
thinking
about
resourcing
that
business.
I
suppose
the
question
is,
are
there
engineers
and
the
right
caliber
people
available
at
the
moment
to
grow
that
business
aggressively
over
the next
few
years?
That's
the
first
question.
Second
question,
André,
in
your
prepared
remarks,
you
mentioned
a
comment
80%
of
companies
will
increase
their
investments
in
Supply
Chain
Assurance.
And
I
wonder
if
I
could
ask
you
to
sort
of
expand
on
that
a
little
bit
on
that
comment
and
whether
you
have
a
view
on
how
much
of
that
investment
is
directly
relevant
to
the
services
that
Intertek
provides.
Thanks,
Neil,
for
your
questions.
Look,
we
didn't
do
a
restructuring
in
2020
when
COVID-19
happened,
so
we've
kept,
if
you
want,
our
IP
and
our
capability
intact
inside
the
world
of
Intertek.
So,
our
Moody
business
is
still
not
back
to
the
productivity
level
that
we
had
in
2019
and
2018.
So,
there
is
slack, if
I were
to
use
that
expression,
for
us
as
we
start
capturing
more
revenue.
Having
said
that,
it's
just
a
function
also
of
how
much
growth
and
where
the
growth
is.
And
you're
absolutely
right,
and
one
thing
that
we
are
very
focused
at
Intertek
is
what
we
call
scheduling.
And
the
good
news
about
Moody
is
that
these
are
long-term
projects
where
we
have
visibilities.
And
when
we
have
a project
that
require
investment
in
additional
engineers
or
resources,
we
plan
accordingly
for
that. And
it's
like
assurance,
you've
got
a
good
visibility.
So
we'll
always
staff
up
if
need
be
where
we
need
to
deliver
the great
service
for
clients,
so
no
question
about
it.
As
far
as
the
quote
from
Gartner
that
82%
of
companies
will
invest
to
strengthen
their
operations,
of
course,
not
all
these
investments
will
be
in independent
assurance.
But
what
I
tried
to
do
in
the
prior
question
is
I
tried
to
– from I
think
Arthur
or
no,
it
was
[ph]
Rory (00:58:13).
I
tried
to
give
you a
sense
on
where
we
see
the
big
change
in
terms
of
Supply
Chain
Assurance
and
where
we
can
make
it
a
difference
helping
our
clients.
So
if
I
were
just
to
recap
where
I
see
the
growth
opportunities,
first
of
all, is
big
data,
making
sure
that
we
help
our clients
connect
the
dots
on
how
they
track
end-to-end
their
supply
chains.
And
I
talk
about
Inlight,
which
is
a
SaaS
platform
that
we
launched
in
2015,
that
does
just
do
that
and
help
clients
visualize
what's
happening
inside
their
entire
supply
chain,
and
basically
identify
the
emerging
risks
so
they
can
take
the
appropriate
actions.
So,
that's
one
opportunity
that
we
see.
Of
course,
the
entire
diversifications
of
Tier
1,
Tier 2,
Tier 3
suppliers
and
factories,
simply
said,
more
Tier
1,
Tier 2,
3
suppliers,
more
factory
means
more
audit
for
us
and
that's
very
beneficial. And
as
you
know,
our
Business
Assurance
business
do
ISO
and
non-ISO
audits
and
it's
all
linked
to
the
number
of
factories
that
our
clients
obviously
have
to
operate
or
manage.
The
other
area
that,
of
course,
is
very
important
as
companies
want
to
operate
with
high-quality
safety
and
sustainability
standards.
It's
not
only
tracking
where
you
are,
but
it's also
training
and
helping
them
manage
their
various
stakeholders.
And
that's
why
the
investment
that
we've
made
in
People
Assurance
with
Alchemy
and
Wisetail, we
play
a
central
role
here.
And
then
finally
in
terms
of
sustainability,
I
mean
we
all
have
watched
the
headlines
and
great
developments
in
Glasgow.
We
all
want
to
get
to
Net
Zero,
but
it's
hard
work
and
I
can
say
that
we
are
doing
it
inside
of
Intertek
and
we
use
our
really
detailed
approach
to
help
our
clients.
But
not
every
single
company
has
got
100%
data
reliability
in
terms
of
monthly
carbon
footprint
in
every
single
operation.
Well,
we
have
it
at
Intertek
because
we've
been
building
that
for
many,
many
years.
A
lot
of
clients
that
we
have
are
very
far
from
this
journey.
They've
got
spreadsheets
in
their
headquarters
and
making
some
plans
and
annual
reports.
Well,
this
is
high
risk
because
it's
very
likely
that
they've
got
their
baseline
wrong.
And
as
you
know,
SBTi,
you
need
to
start
with
the
right
baseline
in
2019. So,
these
are
areas
that
we
see
as
opportunities.
And,
of
course,
it's
going
to be
very
good
for
Intertek,
but
there
is
much
more
that
companies
need
to
invest
in.
Thank
you. That is
very
helpful.
Perhaps
if
I
could
just –
a
chance
to
follow
up
on
your
first
answer,
given
the
[ph]
invisibility
(01:01:06) that
you
describe
in
the Moody business,
do
you
anticipate
that
slack
being
absorbed
by
the
end
of
2022?
And
then
perhaps
can
you
extend
that
comment
across
the
Opex
Inspection
operations,
which
feels
to
me to
be
sort
of
further
below
the
2019
watermark.
I
guess
some
component
of
that
is
pricing.
But
on
a
volume
and
activity
basis,
can
I
ask
the
same
question
with
regards
to
the
trajectory
through
2022 versus
2019?
Thank
you.
Yeah.
Look,
I
think
as
far
as
the
visibility
is
concerned,
we
have
a
high
level
of
visibility
and
we
have
scheduling in
the
backlog
system.
And
I'm
not
going to
give
you
the
numbers
because
it's
commercially
sensitive,
but
I
know
exactly
where
my
full
year
revenue
is
in
terms
of
contract
[ph]
underpinned
in
the
hands (01:02:04)
for
the
full
year
in
all
parts
of
the
Moody business.
It's
not
100%
low,
right?
So
the
year
just
started
and
we'll
take
it
a
step
at
a
time.
And
there
are
some
regions
where
we
will
be
back
to
a
pre-COVID-19
level
and
some
regions
where
we
[ph]
weren't (01:02:24).
So,
look,
we'll
take
it
a
step at
a
time,
and
I'm
sure
you'll
appreciate
the
diversity
of
our
mix.
Look,
as
far
as
Opex
is
concerned,
it's
a
very
small
business
for
Intertek.
We've
got
essentially
three
operations,
one in
United
States
doing
very
well,
one
in
the UK
and
one
in
Australia.
And
look,
Opex
has
rebounded
stronger
and
faster
than
Capex
because
there
have
been
a lot of
issues
with
safety
and
quality
in
the
operations
of
our
clients.
I
was
just
having
a
discussion
yesterday
with
my
colleagues
from
Aberdeen
in
the
North
Sea
and
talking
about
the work
they
do
for
all
existing
assets.
And
what they were
telling
me
is
that,
look,
companies
have
realized
that
having
cut
so
much
in
terms
of
OpEx,
they're
now
at
risk
of
not
having
the
right
productivity
and
at
a
time,
frankly
speaking,
where
the
world
outside
of
Russia
needs
to
get
the
right
output.
So,
look,
it's
also
looking
positive
because
companies
have
saved
so
much
in
terms
of
CapEx
and
OpEx
investments in the
last
few
years
and
it's
not
sustainable.
So,
look,
it's
a
small
business,
so
I
don't
want
you
to
get
it
the
wrong
way,
but
it's
looking
good.
Thank
you
very
much.
The
next
question
comes in from
the
line
of
Rajesh
Kumar
calling
from
HSBC.
Please
go
ahead.
Hi.
Good
morning.
Hi. Good
morning,
Rajesh.
Good morning.
In
your
prepared
comments,
you
said
the TIC
industry
is
expected
to
grow
at
a
faster
pace
after
the
pandemic.
I
appreciate
that
your
competitors
have
some elaborate
Investor
Days
to
run
us
through
why
they
think
that.
It
would
be
really
useful
for
us
to
understand
why
you
think
that
is
also
true
for
Intertek,
i.e.,
what
were
the
headwinds
last
cycle
that
won't
be
there.
And
I
appreciate
that
CarbonClear
and
revaluing
of
supply
chains
are
tailwind,
but
some
thoughts
on
TAM, total
addressable
market,
there
would
be
super
helpful.
The
second
question
is
for
Jonathan.
Just
being
almost
10 months
in the
organization,
I'm
not
going
to
ask
you
how
it
is
working
with
a
new
boss,
but
more
interestingly,
what
were
the
main
positive
surprises
you
found
in
the
organization
and
what
are
the
biggest
opportunities
you
see
in
your
role
ahead?
And
last
one,
it's
just I
appreciate
some
new
people
are
looking
at
Intertek
and
you
have a
lexicon,
which
you use
for
guidance.
Can
you
remind
us
what
robust
exactly
means
in
numerical
range,
please?
Thank
you.
Okay.
Okay.
Well, we
start
with
Jonathan,
so
how
it
is
to
work
with
a
new
boss?
Good
question.
And
so,
I
mean
I've
been
following
Intertek
over
the
years
and
I've been
very
impressed
with
what
the
company
has
achieved.
I'm
impressed
with I think
the
culture,
[indiscernible]
(01:05:49)
management,
science
environment. And
I'm
really
excited
about,
[ph]
first,
the
Building (01:05:53)
Back
Ever
Better.
So
I
think
the
Net
Zero
plans
and
the
plans
that
the
teams
are
coming
up
with,
I
think
I
see
lots
of
energy
in
the
company
and
that's something
I'm
personally
very
excited
about
as
well.
In
terms
of
my
plans,
I'm
very
keen
to
make
sure
we
can
keep
driving
the
earnings
model
with
the
margin
accretive
revenue
growth
and
strong
cash
flow that
we
talked
about
earlier,
the
balance
sheet
and
the
disciplined
capital
allocation.
And
I'm
also
sort
of
excited
for
us
to
keep
developing
the
finance
team.
We've
got
some
great
people
and
to
keep
developing
our
capability
in
finance
and
IT.
And,
yes,
getting
used
to
working with
my
new
boss
and
enjoying
that.
So
thank
you.
It's
very
fun,
believe
it
or
not.
Okay.
So
going
back
to
business
on
your
two
other
question,
let
me
just
address
the
last
one
first.
Sorry
[ph]
very (01:06:48)
frustrated,
but
we
do
not
give
a
range
publicly
and you know, Raj,
people
have
this
range
well-documented.
So,
I'm
sure
people
will
find
a
way.
Look,
I
think
your
question
on
where
is
the
TIC
industry
growth
going
to
be,
I
think,
is
very important
one.
And
thanks
for
asking
it.
And,
look,
when
I
look
at
the
TIC
industry
or
what we
call
the
ATIC
industry
at
Intertek,
I
would
distinguish
that
analysis
in
a
few
periods.
And
if
you
look
at
the
periods
between
2014
and
2019,
the
industry
has
grown
at
about
3%
organic
growth
constant
currency,
right?
That's
a
number.
Now,
if
you
look
at
the
analysis
slightly
deeper
and
you
differentiate
2014 to
2017
and
2018
to
2019, you
will
see
that,
obviously,
the
growth
rate
was
slightly
lower
in
2014
to
2017 compared
to
2018
to
2019.
And
if
you
take
the
numbers
for
our
peers
and
you
do
an
ATIC
median,
you
will
come
to
that
analysis
that
you
know
so
well.
What
I
think
is
changing
moving
forward
is
the
fact
that
the
underinvestments
that
oil
and
gas
energy
companies
have
made
between
2014 and
2017s
are now
going to
be,
if
you
want,
a
slowing
factor
in
terms
of
growth
in
the
industry
because
they
had
no
choice.
They
need
to
invest.
And
if
you
look
at
the
growth
rate
that
the
industry
starts
showing
in
2018-2019
with
the
investments
basically
of
oil and
gas
companies
starting
all
over
again,
you
are
at
a
much
higher
number
than
the
3%.
You're
closer
to
the
4%.
That's
the
TIC
industry
between
2018
and
2019.
In
addition
to
this
difference
moving
forward,
i.e.,
the
energy
is
not
going to
slow
down
the
ATIC
industry
moving
forward,
I
think
there
are
three
additional
accelerators
I
just
talked
about
today
is
the
investments
that
companies
are
going to
do
in
making
their
supply
chain
more
resilient,
very,
very
important
because
the
pain
that
companies
have
been and
are
still are
under
in
terms
of
dislocation
in their
global
supply
chain
is
significant.
The
second
thing
is,
look,
consumers
never
stand
still
in
terms
of
expectations,
right?
We
all
have learned
to
live
our
lives
slightly
differently.
And
the
lifestyles
are
going
to be
very
different
moving
forward.
It doesn't
matter
what
we
consume,
how
we
eat,
how
we
travel.
And
it
means
that
companies
are
going to
need
to
invest
in
innovation
to
strengthen
their
own
performance.
So,
we're
going
to
see
an
increased
investments
in
innovations
moving
forward.
We
know
that
that's
going to
happen.
And
then
lastly,
the
third
area
of
investment is
sustainability.
As
I
said
in
my
previous
answer,
do
not
underestimate
the
complexity
for
any
corporations
around
the
world
to
have
a
bottom-up,
rigorous,
well-documented, and
well-tracked
Net
Zero
plan.
And
sustainability
is
much
more
than
Net Zero,
right? You
needs
to address
all
the
other
areas
that
I talked
about:
engagement,
health
and
safety,
I
think
diversities,
I
think the
communities,
on and
on
and
on,
right,
etcetera?
So,
look,
when
I
look
at
the
industry,
I
mean
this
is
a
great
industry.
No
question
that
the
growth
rate
between 2014
and
2019
around
3%
was
okay
but
it
was
what
it
was.
I
think
the
slowing
factor,
which
is
energy
underinvesting
in
CapEx,
is
not
going
to be
there
moving
forward.
And
in
addition
to
that,
you're
going
to have
additional
investment.
So,
that's
why
I
believe
that
the
industry
is
going to
grow
faster
post-COVID-19.
Thank
you
very
much.
Our
final
question
comes
in
from
the
line
of
Sylvia
Barker
calling
from
JPMorgan.
Please
go
ahead.
Hi.
Morning
again.
Just
one
very
quick
one
[indiscernible]
(01:11:04).
Hi,
Sylvia.
We've
talked
Assurance
a
lot
today.
So
I
was
just
wondering
if
you
can
give
us
a
bit
of
feel
on
how
big
Assurance
is
within
your
revenue
portfolio,
I
guess,
now
and
including
the
recent
acquisition
as
well?
Yeah.
Look,
we
do
not
disclose
our
revenue
split
between
ATIC
every
single
year.
We
do
that
from
time
to
time.
Our
thinking
of
doing
it
for
2021,
but
given
the
fact
that
we
have
had
the
acquisition
of
ICI,
which
is
only
going
to
be
a
few
months,
we
will
do
that
later
on.
But
the
last
time
we
reported,
we
basically
communicated
our
ATIC
revenues
in
2018,
but
it's long
overdue.
So we
will
do
that
at
the
end
of
the
year,
promise.
Okay.
Thank
you.
That
was
the
final
question
in
the
queue,
so
I
shall
hand
the
call
back
across
to
yourself,
André,
for
any
concluding
remarks.
Thank
you.
Well,
thank
you
all
for
being
on
the
call,
and
thanks
for
all
your
questions.
Obviously,
we
are
here
if
you
need
our
help.
Look
forward
to
catching
up
and
have
a
good
day.
Thank
you.