Last checked at 4 Aug 2008 07:00
\* TIntertek Group plc Interim Report\* T 4 August 2008 2008 HALF YEAR RESULTS Intertek Group plc ("Intertek"), a leading international provider of quality andsafety services, announces its half year results for the period ended 30 June2008. Financial Highlights \* T H1 08 H1 07 Growth Growth at actual rates at constant rates (3) (4)Revenue £457.4m £360.8m 26.8% 21.3%Operating profit £64.3m £52.6m 22.2%Adjusted operating profit (1) £68.7m £54.5m 26.1% 20.1%Profit before income tax £58.5m £48.4m 20.9%Adjusted profit before income tax (1) £62.9m £50.3m 25.0%Basic earnings per share 25.1p 21.5p 16.7%Diluted adjusted earnings per share (2) 27.6p 22.5p 22.7%Interim dividend 7.1p 5.8p 22.4%\* T \* T1. Before amortisation of acquisition intangibles of £4.4m (H1 07: £1.9m).2. Diluted adjusted EPS based on adjusted profit (see note 7 to the interim financial statements).3. Cumulative average exchange rates for the six months to 30 June 2008 and the six months to 30 June 2007.4. Cumulative average exchange rates for the six months to 30 June 2008.\* T Highlights -- Strong revenue and operating profit£ growth of 26.8% and 26.1% -- Organic revenue and operating profit£ growth of 17.6% and 15.0% -- Operating profit margin£ of 15.0% -- Operating cash flow of £56.7m, up 31.9% -- Eight businesses acquired in first half for a total consideration of £40.3m -- Businesses reorganised to allow greater focus on growth opportunities -- Interim dividend up 22.4% Wolfhart Hauser, Chief Executive Officer, commented: "Through our strategy of focusing on the current and future needs of ourcustomers, we have delivered strong growth in the first half of 2008 and bycontinuing to invest strategically we have extended our services into industrysectors which provide us with a platform for future growth and marginenhancement. Our first half performance demonstrates that our business remains resilient andtherefore, whilst we continue to be aware that uncertainty in global economicgrowth could have a negative impact on broader trading conditions in certainmarkets, we expect the Group to perform strongly in the remainder of the year". Contacts For further information, please contact: Aston Swift, Investor RelationsTelephone: +44 (0) 20 7396 3400 aston.swift@intertek.com Richard Mountain, Financial DynamicsTelephone: +44 (0) 20 7269 7121 richard.mountain@fd.com Analysts' Meeting There will be a meeting for analysts at 9.30am today at JPMorgan Cazenove, 20Moorgate, London EC2R 6DA. A copy of the presentation will be available on thewebsite later today. Corporate website: www.intertek.com High resolution images of Intertek businesses are available to download, free ofcharge from the News & Media section of www.intertek.com INTERIM REPORT 2008 Management ReportsThis half yearly report forms one of the interim management statements thatIntertek is required to publish under the EU Transparency Directive with effectfrom the financial year beginning 1 January 2008. Intertek will issue the nextinterim management statement in the fourth quarter of 2008. The year end resultswill be announced on 9 March 2009. Interim ReportRecent changes to the Listing Rules of the Financial Services Authority haveremoved the requirement to issue a hard copy interim report to shareholders.However, if you require a hard copy of this statement please contact the CompanySecretary. This statement is available on www.intertek.com. OVERVIEWIntertek's strength lies in our strategy of focusing on the current and futureneeds of our customers. We develop and extend our service offering to add valueto their businesses and products in a rapidly changing global environment.Through this focus and our dedication to our customers' success we havedelivered strong growth in the first half of 2008 (H1 08) and through continuingstrategic investments we have extended our services into industry sectors whichprovide us with a platform for future growth and margin enhancement. We have reorganised our operating divisions to align more closely with theindustries in which our customers are based. Details of the reorganisation aregiven in the Business Review further on in this Interim Report. All prior periodfigures have been restated to allow a like-for-like comparison. Centraloverheads are now allocated to the operating divisions resulting in margins foreach division being lower than previously reported. We did not incur anyexceptional costs to complete the reorganisation. To aid comparison withpreviously reported figures, our segmental analysis in the interim financialstatements presents the results in both the old and the new structure. Thediscussion that follows is based on the new divisional structure. All divisions apart from Government Services reported strong revenue growth inH1 08 compared to H1 07. Consumer Goods and Oil, Chemical & Agri reportedparticularly strong organic revenue growth, with revenue being further increasedby acquisitions. The adjusted margins referred to below are the operatingmargins before the amortisation of acquisition intangibles. Consumer Goods revenue increased 32.6% (29.7% organic) in H1 08 over H1 07,driven by strong demand for toy testing and good growth in textile testing. Theheightened demand for heavy metals testing in toys which started in the secondhalf of 2007, continued into the current year. Whilst we expect demand to remainhigh, the rate of growth in the second half of 2008 will not be as high as inthe first half. The adjusted margin after allocating central overheads was28.9%. Oil, Chemical & Agri revenue increased 22.3% (20.1% organic) in H1 08 over H107. The market demand for petroleum inspection and testing and chemical testingcontinued to be strong in all regions. The adjusted margin, after allocatingcentral overheads increased 120 basis points to 10.6%. We expect growth toremain strong in the second half of the year. Commercial & Electrical revenue increased 23.3% (13.7% organic) in H1 08 over H107. The growth was driven by the Americas where the electrical sector, which ismore than half of the division, performed particularly well. Asia also reportedgood revenue growth. The adjusted margin after allocating central overheadsdecreased 110 basis points to 12.8%, mainly due to investment in new keyindustry sectors such as photovoltaic. We expect the margin to improve in thesecond half of the year. New Divisions comprise Analytical Services, Minerals and Industrial Services,all of which are in the development stage of their growth cycle. Revenueincreased by 43.1% (organic 9.0%) mainly due to the impact of acquisitions. Theadjusted margin after allocating central overheads was 9.0%. We have investedsignificantly in these sectors, both organically and through acquisitions;adding new product lines in industries which we believe are strategicallyimportant and have considerable growth potential. We expect the margins in thesenew divisions to improve considerably. Government Services revenue declined 3.6% due to the discontinuance of apre-shipment inspection contract in Ecuador at the end of 2007. The margin afterallocating central overheads decreased 240 basis points to 9.2%. AcquisitionsIn the first half of 2008 we completed eight acquisitions for a totalconsideration of £40.3m (H1 07: £58.0m). These were spread across all divisionsother than Government Services. In July 2008, we acquired Applica, a foodtesting business based in Germany, for an initial cash consideration of £3.0mand a contingent consideration of up to £0.6m payable in March 2009 dependent onfinancial performance. We continue to see many further acquisition opportunitieswhich will widen the scope and range of the services we offer. FinanceTo date, we have added a total of £75.0m to our existing bank facility and wehave also raised US$100.0m by way of a senior note issue. These additionalfacilities will enable us to continue our investment programme. OutlookOur first half performance demonstrates that our business remains resilient andtherefore, whilst we continue to be aware that uncertainty in global economicgrowth could have a negative impact on broader trading conditions in certainmarkets, we expect the Group to perform strongly in the remainder of the year. BUSINESS REVIEWFor the six months ended 30 June 2008 Overview of resultsRevenue for the Group increased to £457.4m, up 26.8% (21.3% at constant exchangerates). Excluding the results of acquisitions made since 1 January 2007, organicrevenue increased 17.6%. Operating profit for the Group before the amortisation of acquisitionintangibles (adjusted operating profit), was £68.7m, up 26.1% (20.1% at constantexchange rates). The Group's adjusted operating profit margin was 15.0% whichwas down 10 basis points from the margin for the first half of 2007, primarilydue to investment costs in Analytical Services, Minerals and IndustrialServices, which we expect to be margin accretive in the future. Performance Review by DivisionIn response to growth opportunities in new sectors and to increase our focus oncustomers in their specific industries, from 1 January 2008 we have reorganisedour internal management structure from four divisions to seven. The AnalyticalServices and Minerals businesses have been separated from the Oil, Chemical &Agri business and are now managed independently. A new division calledIndustrial Services was formed comprising Systems Certification, which waspreviously included in Commercial & Electrical, and Industrial Inspection whichwas previously included in Government Services. Consumer Goods remainsunchanged. Because of their relatively small size, the results of the Mineralsand Industrial Services divisions are combined with Analytical Services and arecurrently discussed in total as New Divisions in the Business Review. In order to present a more accurate operating margin for each division, centraloverhead costs are now allocated to each of the operating divisions and, figuresfor prior periods have been restated on the same basis. The revenue and adjustedoperating profit for the six months to 30 June 2008 are shown below for both thenew and old structures. The reorganisation did not result in any exceptionalcosts. Revenue for the six months to 30 June 2008 \* T New Structure Old Structure ------------------------------------ ------------------------------------ Adjusted Adjusted operating operating Revenue profit Margin Revenue profit Margin £m £m £m £m ----------- ----------- ------------ ----------- ----------- ------------Oil, Chemical & Agri 143.8 15.3 10.6% 216.5 26.7 12.3%Consumer Goods 108.1 31.2 28.9% 108.1 32.8 30.3%Commercial & Electrical 95.8 12.3 12.8% 105.1 13.8 13.1%Government Services 21.7 2.0 9.2% 27.7 3.5 12.6%New Divisions 88.0 7.9 9.0% - -Central - - - (8.1) ----------- ----------- ------------ ----------- ----------- ------------Total 457.4 68.7 15.0% 457.4 68.7 15.0% ----------- ----------- ------------ ----------- ----------- ------------\* T A review of the performance of each division in the six months to 30 June 2008compared to the six months to 30 June 2007 is set out below. Revenue andadjusted operating profit are presented at actual exchange rates and the growthrates are shown at both actual and constant exchange rates. The figures for thesix months to 30 June 2007 have been restated to reflect the new structure. \* TOil, Chemical & Agri H1 08 H1 07 Change Change £m £m at actual rates at constant rates--------------------------------- ----------------- ----------------- ----------------- -----------------Revenue 143.8 117.6 22.3% 17.2%Adjusted operating profit 15.3 11.0 39.1% 34.2%Adjusted operating margin 10.6% 9.4% 120bp 130bp--------------------------------- ----------------- ----------------- ----------------- -----------------\* T The Oil, Chemical & Agri division provides independent cargo inspection as wellas non-inspection related laboratory testing, calibration and related technicalservices to the world's energy, petroleum, chemical and agricultural industries. Oil, Chemical & Agri delivered an excellent performance in the first half of theyear with strong growth across all regions, particularly in non-inspectionrelated testing. Total revenue increased to £143.8m, up 22.3% (17.2% at constantexchange rates) and organic revenue increased by 20.1%. The organic growth wasdriven by favourable market conditions, higher demand for alternative fuels andincreased regulation, which together resulted in greater demand for testing andinspection services. Total adjusted operating profit increased to £15.3m, up 39.1% (34.2% at constantexchange rates). The adjusted operating margin improved by 120 basis points to10.6%. The improvement in margin was mainly driven by the strong growth innon-inspection related testing of petroleum which generates a higher margin thanthe inspection business. In January 2008, Electrical Mechanical Instrument Services (UK) Ltd (EMIS) wasacquired. EMIS provides calibration services to the oil and gas industries inthe UK and the Middle East and complements the existing upstream servicesoffered by the Group. We expect market conditions to remain favourable and therefore the strongperformance should continue in the second half of the year. \* TConsumer Goods H1 08 H1 07 Change Change £m £m at actual rates at constant rates--------------------------------- ----------------- ----------------- ----------------- -----------------Revenue 108.1 81.5 32.6% 25.8%Adjusted operating profit 31.2 23.5 32.8% 26.3%Adjusted operating margin 28.9% 28.8% 10bp 10bp--------------------------------- ----------------- ----------------- ----------------- -----------------\* T The Consumer Goods division provides services to the textiles, toys, footwear,hardlines, food and retail industries. Services include testing, inspection,auditing, advisory services, quality assurance and hazardous substance testing. The Consumer Goods division delivered strong results with total revenue of£108.1m up 32.6% (25.8% at constant exchange rates) and organic revenue up29.7%. The toy sector, which accounted for just over a quarter of the revenue inthe first half of 2008, performed exceptionally well with revenue growth of 60%.This was mainly due to increased demand for heavy metals testing driven byheightened consumer concern over the safety of toys. Revenue from textiletesting increased, particularly in China. Total adjusted operating profit was £31.2m, up 32.8% (26.3% at constant exchangerates). The total adjusted operating margin was 28.9% compared to 28.8% for thecomparable prior year period. In April 2008, the Group acquired 4-Front Research, a group of companies in theUK, France and India which provide analytical support for clinical researchstudies on cosmetic, personal care, functional food and over-the-counterpharmaceutical and medical products. With seven sites in England and sites inHyderabad, India and Paris, France, 4-Front extends the services the Group isable to offer its consumer healthcare customers and also provides a strategicplatform for development in India and other fast growing Asian markets forconsumer healthcare products. The key growth drivers in Consumer Goods remain strong, principally the sourcingof products from China, the increasingly wide range of products being sold byretailers and shorter product lifecycles. Concern over the safety of consumerproducts has increased demand from consumers and regulatory bodies forindependent assurance of quality and safety. Although two-thirds of revenue isderived from toys and textiles testing, the remainder is from developingservices such as consultancy, inspection, supply chain services, food andcorporate social responsibility where margins are not always as high as thoseearned by the established services. \* TCommercial & Electrical H1 08 H1 07 Change Change £m £m at actual rates at constant rates--------------------------------- ----------------- ----------------- ----------------- -----------------Revenue 95.8 77.7 23.3% 18.3%Adjusted operating profit 12.3 10.8 13.9% 7.9%Adjusted operating margin 12.8% 13.9% (110)bp (130)bp--------------------------------- ----------------- ----------------- ----------------- -----------------\* T The Commercial & Electrical division provides services to a wide range ofindustries including those in the home appliances, lighting, medical, building,industrial and HVAC/R (heating, ventilation and air conditioning andrefrigeration), IT and telecom and automotive sectors. Total revenue increased to £95.8m, up 23.3% (18.3% at constant exchange rates)and organic revenue increased by 13.7%. The electrical sector which accountedfor 60% of the division's total revenue grew well, particularly in the US, whereincreased acceptance of the ETL mark contributed to growth in market share. Allother industry sectors also reported revenue growth in the first half of 2008compared to the first half of 2007. Revenue in Asia increased in the first half of 2008 compared to the first halfof 2007, mainly due to good growth in China. Total revenue in Europe increased,although organic revenue growth was slower in the first half of 2008 compared tothe first half of 2007. Total adjusted operating profit was £12.3m, up 13.9% (7.9% at constant exchangerates). The total adjusted operating margin decreased 110 basis points to 12.8%.The decline in margin is partly due to slower growth in Europe but also toinvestment in new technology to support new key industry sectors such asphotovoltaic (solar) and geographic expansion of automotive testing services inChina and Japan. In February 2008, the Group acquired Epsilon Technical Services Ltd. Epsilon isbased in the UK and offers safety and advisory services to companies withproducts for use in potentially explosive atmospheres. This acquisitioncomplements and extends the Group's existing explosive environment certificationservices. The outlook for Commercial & Electrical for the rest of the year is good. Over50% of the division's revenue is generated in the Americas where, despite theweak economy in the US, the growth prospects are good. Investment in newindustry sectors provides good opportunities for growth and we expect to see animprovement in margin in the second half of the year. \* TGovernment Services H1 08 H1 07 Change Change £m £m at actual rates at constant rates--------------------------------- ----------------- ----------------- ----------------- -----------------Revenue 21.7 22.5 (3.6)% (6.9)%Operating profit 2.0 2.6 (23.1)% (28.6)%Operating margin 9.2% 11.6% (240)bp (280)bp--------------------------------- ----------------- ----------------- ----------------- -----------------\* T The Government Services division offers a range of services to governments,national standards organisations and customs departments. Services include cargoscanning, fiscal support services and standards programmes. Revenue declined 3.6% due to the discontinuance of a pre-shipment inspection(PSI) contract in Ecuador which was cancelled in 2007. Operating profit declined23.1% to £2.0m and the margin decreased 240 basis points to 9.2%. The division's reliance on traditional PSI contracts has reduced and 66% ofrevenue is now generated by other services such as standards contracts andsupply chain security. The Government Services division continues to seek newopportunities and is committed to developing innovative solutions to the cargosecurity issues facing international trade. \* TNew Divisions H1 08 H1 07 Change Change £m £m at actual rates at constant rates--------------------------------- ----------------- ----------------- ----------------- -----------------Revenue 88.0 61.5 43.1% 37.1%Adjusted operating profit 7.9 6.6 19.7% 14.5%Adjusted operating margin 9.0% 10.7% (170)bp (170)bp--------------------------------- ----------------- ----------------- ----------------- -----------------\* T New Divisions comprises the Analytical Services, Minerals and IndustrialServices divisions. Total revenue increased to £88.0m, up 43.1% (37.1% at constant exchange rates)and organic revenue increased by 9.0%. We have invested both organically andthrough acquisitions in these businesses as they are in sectors which have highgrowth potential. Total adjusted operating profit was £7.9m, up 19.7% (14.5% at constant exchangerates). The total adjusted operating margin declined 170 basis points. Themargin decline was mainly due to development and integration costs. We are veryconfident that the investment in these divisions will lead to improved margins. Analytical Services, which comprised 63% of the total revenue for New Divisionsin the first half of 2008, provides laboratory services to the chemical,pharmaceutical, cosmetics/personal care, oil and gas and automotive/aerospaceindustries. Upstream Services reported strong growth in revenues in the first half of 2008over the first half 2007. Downstream, Chemicals and Materials also performedwell, apart from lubricant testing in the US which suffered from lower volumesin 2008 ahead of new standards being issued in 2009. Pharmaceutical testing grewwell in the US but underperformed in the UK due to delays in a number of clientprojects. In February 2008, the Group acquired the UK based Commercial Microbiology Groupwhich provides laboratory and consultancy services and sells testing kitsrelated to the measurement and management of bacteria in the upstream oil andgas industries. This acquisition expands the suite of expert services that theGroup can deliver as a partner to the oil and gas exploration industriesglobally. In February 2008, the Group also acquired Bioclin Research Laboratories Ltd, anIrish company which provides product quality testing and bio-analytical servicesto pharmaceutical, medical device and bio-technology companies. In March 2008, the Limburg Water Boards of the Netherlands outsourced alllaboratory activities and transfered the employees of Waterschapsbedrijf Limburgto Intertek for a minimum period of five years. The Group will provide extendedanalytical testing and consultancy services in the areas of environmentalscience, regulation and complex analysis of silt, soil and water. The outlook for Analytical Services is good and we expect to see marginimprovement in the second half of the year although lubricant testing will notshow significant improvement until next year when new standards are issued. Minerals, which comprised 20% of the total revenue for New Divisions in thefirst half of 2008, provides inspection, testing and advisory services to theminerals industry. The minerals market remains very buoyant and revenue grew strongly in the firsthalf of 2008 over the first half of 2007. In April 2008, the Group acquired a company which operates the largestcommercial assay laboratory in the Philippines and offers geophysical surveysand inspection services to the minerals industries in Asia. Activity in the mining and exploration industries is expected to remain high andwe will continue to expand the Minerals Division geographically and investsignificantly in new laboratories to optimise the growth opportunities in thissector. We expect the margin in Minerals to improve in the second half of theyear. Industrial Services, which comprised 17% of the New Divisions revenue for thefirst half of 2008, combines Systems Certification, which provides high valueaudit services to a wide range of industries in both the manufacturing andservice sectors, and Industrial Services which provides quality and safetyservices to oil and gas, industrial and process industries. These servicesinclude quality and control inspections, personnel outsourcing, asset integritymanagement, dimensional control, laser scanning, specialist testing and REACH(registration, evaluation, authorisation and restriction of chemicals) services. Revenue from Industrial Services grew well in the first half of 2008 over thefirst half of 2007. In April 2008, the Group acquired Hi-Cad Technical Services Ltd which providesspecialist 3D data capture and measurement services, primarily to customers inthe upstream and downstream oil and petroleum industry in the UK and the US.This acquisition strengthens the development of asset integrity managementservices in the Group and enables the Group to offer a cohesive vendorassessment and quality inspection service to customers globally. The Group's strategy for Industrial Services is to grow the division organicallyand by acquiring complementary businesses. FINANCIAL REVIEWFor the six months ended 30 June 2008 RevenueRevenue for the six months ended 30 June 2008 was £457.4m, up 26.8% from thecomparable prior period. The Group operates in 69 currencies other than sterling, although the majorityof the Group's overseas earnings are denominated in US dollars, Chineserenminbi, Euros and Hong Kong dollars. Therefore the Group's results are exposedto changes in the value of these currencies when translated into sterling. Exchange rates which could have a material impact on the Group's earnings areshown below: \* TValue of £1 H1 08 H1 07 Change------------------------------------------- ---------------- ------------------- -------------------US dollar 1.99 1.97 1.0%Euro 1.30 1.48 (12.2)%Chinese renminbi 14.04 15.25 (7.9)%Hong Kong dollar 15.50 15.43 0.5%------------------------------------------- ---------------- ------------------- -------------------\* T Whilst sterling remained relatively steady against the US dollar in the firsthalf of 2008 compared to the first half of 2007, it weakened significantlyagainst a range of other currencies, including the Euro and the Chineserenminbi. This had a beneficial effect on the Group's earnings for the first sixmonths of 2008. At constant exchange rates, revenue increased 21.3%, compared to26.8% at actual rates. Adjusted operating profit and marginOperating profit before amortisation of acquisition intangibles (adjustedoperating profit) was £68.7m for the six months ended 30 June 2008, up 26.1%from the comparable prior period. At constant exchange rates, adjusted operatingprofit increased 20.1%. The Group's adjusted operating profit margin was 15.0%, compared to 15.1% forthe comparable prior year period. Amortisation of acquisition intangiblesThe charge for amortisation of acquisition intangibles was £4.4m in the firsthalf of 2008 compared to £1.9m in for the comparable prior year period. Theincrease was due to the number of acquisitions made in recent years. Additionalintangible assets of £10.7m were acquired in the six months to 30 June 2008 (H107: £9.6m). Operating profit and marginOperating profit after amortisation of acquisition intangibles was £64.3m forthe six months ended 30 June 2008, up 22.2% from the comparable prior period.The operating margin was 14.1%, down 50 basis points over the margin for thecomparable period due to the increased amortisation charge described above. Net financing costsThe Group reported finance income for the six months to 30 June 2008 of £2.9m(H1 07: £2.2m). The increase was mainly due to an increase in the expectedreturn on pension assets and higher foreign exchange gains. The Group's finance expense for the six months to 30 June 2008 was £8.7m (H1 07:£6.4m). The charge comprised interest on borrowings, pension interest cost,other foreign exchange differences and other financing fees. The increase wasprimarily due to higher levels of debt. Income tax expenseThe tax charge is based upon the estimate of the tax rate expected for the fullfinancial year. For the six months to 30 June 2008 the estimated effective taxrate was 26.5% compared with 25.4% for the six months ended 30 June 2007. Differences between the estimated effective tax rate of 26.5% and the notionalstatutory UK rate of 28% include, but are not limited to, the effect of taxrates in foreign jurisdictions, non-deductible expenses, the effect of utilisedtax losses and withholding taxes. Profit for the periodProfit for the period after income tax was £43.0m (H1 07: £36.1m) of which£39.5m (H1 07: £33.7m) was attributable to equity holders of the Company. Minority interestsProfit attributable to minority shareholders was £3.5m for the first six monthsof 2008 (H1 07: £2.4m). The increase was mainly due to the strong growth in theGroup's non-wholly owned subsidiaries in Asia. Earnings per shareEarnings per share are calculated by dividing the profit attributable toordinary shareholders of the Company by the weighted average number of ordinaryshares in issue during the year. As set out in note 7 to the interim financialstatements, basic earnings per share for the six months to 30 June 2008 were25.1p (H1 07: 21.5p), an increase of 16.7%. A diluted adjusted earnings pershare calculation is also shown which removes the impact of amortisation ofacquisition intangibles from earnings, and includes potentially dilutive shareoptions in the number of shares, to give diluted adjusted earnings per share of27.6p (H1 07: 22.5p), an increase of 22.7%. DividendAn interim dividend of 7.1 pence per share will be paid on 18 November 2008 toshareholders on the register at 7 November 2008. This represents an increase of22.4% on last year's interim dividend. Cash and liquidity \* T H1 08 H1 07 Increase £m £m--------------------------------------------------- ------------------- -------------- --------------Cash generated from operations 56.7 43.0 31.9%Less net acquisition of property, plant, equipment and software (26.7) (17.8) 50.0%--------------------------------------------------- ------------------- -------------- --------------Operating cash flow after capital expenditure 30.0 25.2 19.0%--------------------------------------------------- ------------------- -------------- --------------Adjusted operating profit 68.7 54.5 26.1%--------------------------------------------------- ------------------- -------------- --------------Operating cash flow/adjusted operating profit 43.7% 46.2%--------------------------------------------------- ------------------- -------------- --------------\* T The primary source of the Group's cash liquidity is cash generated fromoperations and the drawdown of debt. A portion of these funds has been used tofund acquisitions and capital expenditure and to pay interest, dividends andtaxes. Cash flow for the first six months of 2008 was good. Cash generated fromoperations was £56.7m for the first half of 2008, compared to £43.0m for thefirst half of 2007. The increase of 31.9% was due to improved profitability andeffective working capital management. In the first half of 2008, 43.7% ofadjusted operating profit was converted into cash compared to 46.2% in H1 07.The 250 basis points decline was due to increased investment in property, plant,equipment and software. To support our growth strategy we need to invest continually in our operations.In the first six months of 2008, net cash flows used in investing activitieswere £77.3m (H1 07: £61.2m). We paid £34.6m net of cash acquired, (H1 07:£43.9m) for eight new businesses and £16.4m additional consideration deferredfrom acquisitions made in prior periods. In addition, we invested net £26.7m (H107: £17.8m) in property, plant and equipment and computer software. Cash flows from financing activities primarily comprised cash inflows from theissue of share capital following the exercise of employee share options of £2.3m(H1 07: £4.4m) and the net drawdown of debt of £85.8m (H1 07: £52.7m), and cashoutflows of dividends paid to minorities of £0.8m (H1 07: £1.0m) and dividendspaid to Group shareholders of £19.2m (H1 07: £16.0m), which resulted in a netcash inflow of £68.6m (H1 07: £40.1m). As shown in note 10, interest bearing loans and borrowings were £322.8m at 30June 2008, an increase of 41.4% over the borrowings at 30 June 2007. Of theseborrowings, £13.9m is repayable in less than a year and £308.9m is due in morethan a year. The Group's borrowings are in currencies which match its assetbase. The increase in borrowings comprised exchange adjustments of £5.8m due tothe translation into sterling of borrowings denominated in other currencies andthe net drawdown of debt of £85.8m, (£92.7m drawdown less £6.9m repayment). Thedebt drawdown was mainly used to finance acquisitions. Cash and cash equivalentsat 30 June 2008, were £83.2m, an increase of 48.0% over cash at 30 June 2007. BorrowingsThe Group has a multi-currency senior bank facility that was placed in December2004. This facility was originally due to expire on 15 December 2009, howeverthe Group exercised its option to extend the facility by a year in 2005 and by afurther year in 2006. The facility is now due to expire in December 2011. Themargins currently paid on borrowings are in the range of 0.3% to 0.6% overLIBOR. In August 2007, the Group extended the senior debt facility by a further£100m to £400m. This was achieved through adding an additional Term D tranche offinance. Term D margins are in the range of 0.3% to 0.5% over LIBOR in therelevant currency. In June 2008, a further £60m was added to this facility from two new banks onthe same terms and conditions and margins as the existing facility. In July2008, another £15m was added from another new bank, again on the same terms andconditions and margin. Also, in June 2008, the Group raised US$100m by way of asenior note issue. This debt is repayable on 26 June 2015 and the interest rateis fixed at 5.54%. The Group's policy is to ensure that a liquidity buffer is available, in theshort term, to absorb the net effects of transactions made and expected changesin liquidity both under normal and stressed conditions without incurringunacceptable losses or risking damage to the Group's reputation. Including theadditional funds raised to date, the Group has liquid funds of approximately£217m, an increase of 27% over the available funds at 31 December 2007. Where appropriate, cash is managed in currency based cash pools and is put onovernight deposit, bearing interest at rates fixed daily in advance. RisksThe Board continuously assesses and monitors the key risks of the business.Despite the current uncertainty in the global economy, the key risks that couldaffect the Group's medium term performance, and the factors which mitigate theserisks, have not significantly changed from those set out on pages 22 to 24 ofthe Group's Annual Report for 2007, a copy of which is available from ourwebsite www.intertek.com. The Business Review includes consideration ofuncertainties affecting the Group in the remaining six months of the year. There has been no material change in the risks that the Group is exposed to inthe period since the Annual Report was published. Related party transactionsThere have been no material changes in the related party transactions describedin the Annual Report for 2007. See note 14 for disclosure of related partytransactions for the six months to 30 June 2008. Cautionary statement concerning forward-looking statementsThis interim report and announcement contain certain forward-looking statementswith respect to the financial condition, results, operations and business ofIntertek Group plc. These statements and forecasts involve risk and uncertaintybecause they relate to events and depend upon circumstances that will occur inthe future. There are a number of factors that could cause actual results ordevelopments to differ materially from those expressed or implied by theseforward-looking statements and forecasts. Nothing in this announcement should beconstrued as a profit forecast. Past performance cannot be relied upon as aguide to future performance. \* TCondensed Consolidated Interim Income StatementSix months ended 30 June 2008 Six months to Six months to Year to 30 June 30 June 31 December 2008 2007 2007 (Unaudited) (Unaudited) (Audited) Notes £m £m £m----------------------------------------- --------------------- ------------------ ------------------ ------------------Revenue 5 457.4 360.8 775.4Cost of sales (366.6) (288.0) (615.9)----------------------------------------- --------------------- ------------------ ------------------ ------------------Gross profit 90.8 72.8 159.5----------------------------------------- --------------------- ------------------ ------------------ ------------------Amortisation of acquisition intangibles (4.4) (1.9) (5.1)Impairment of goodwill - - (0.4)Other administrative expenses (22.1) (18.3) (37.9)----------------------------------------- --------------------- ------------------ ------------------ ------------------Total administrative expenses (26.5) (20.2) (43.4)----------------------------------------- --------------------- ------------------ ------------------ ------------------Group operating profit 5 64.3 52.6 116.1----------------------------------------- --------------------- ------------------ ------------------ ------------------Finance income 2.9 2.2 5.4Finance expense (8.7) (6.4) (15.6)----------------------------------------- --------------------- ------------------ ------------------ ------------------Net financing costs (5.8) (4.2) (10.2)----------------------------------------- --------------------- ------------------ ------------------ ------------------Share of loss of associates - - (0.1)----------------------------------------- --------------------- ------------------ ------------------ ------------------Profit before income tax 58.5 48.4 105.8Income tax expense 6 (15.5) (12.3) (27.0)----------------------------------------- --------------------- ------------------ ------------------ ------------------Profit for the period 43.0 36.1 78.8----------------------------------------- --------------------- ------------------ ------------------ ------------------ Attributable to: Equity holders of the Company 39.5 33.7 73.2 Minority interest 3.5 2.4 5.6----------------------------------------- --------------------- ------------------ ------------------ ------------------Profit for the period 43.0 36.1 78.8----------------------------------------- --------------------- ------------------ ------------------ ------------------ Earnings per share----------------------------------------- --------------------- ------------------ ------------------ ------------------Basic 7 25.1p 21.5p 46.7p----------------------------------------- --------------------- ------------------ ------------------ ------------------Diluted 7 24.8p 21.3p 46.2p----------------------------------------- --------------------- ------------------ ------------------ ------------------ Dividends in respect of the period 7.1p 5.8p 18.0p----------------------------------------- --------------------- ------------------ ------------------ ------------------\* T \* TCondensed Consolidated Interim Balance SheetAs at 30 June 2008 At 30 June At 30 June At 31 December 2008 2007 2007 (Unaudited) (Unaudited) (Audited) Notes £m £m £m------------------------------------------------------- ----- ------------- ------------- -------------AssetsProperty, plant and equipment 166.3 131.2 149.2Goodwill 183.4 113.6 148.4Other intangible assets 41.6 27.4 35.0Investments in associates 0.6 0.7 0.6Deferred tax assets 13.1 13.8 11.9------------------------------------------------------- ----- ------------- ------------- -------------Total non-current assets 405.0 286.7 345.1------------------------------------------------------- ----- ------------- ------------- ------------- Inventories 5.3 3.9 4.0Trade and other receivables 228.1 183.5 191.0Derivative financial instruments - 0.1 -Cash and cash equivalents 10 83.2 56.2 58.6------------------------------------------------------- ----- ------------- ------------- -------------Total current assets 316.6 243.7 253.6------------------------------------------------------- ----- ------------- ------------- ------------- Total assets 721.6 530.4 598.7------------------------------------------------------- ----- ------------- ------------- ------------- LiabilitiesInterest bearing loans and borrowings 10 (13.9) (14.2) (13.7)Derivative financial instruments (0.6) - (0.7)Current taxes payable (25.2) (28.5) (25.3)Trade and other payables (134.7) (102.3) (128.6)Provisions (14.4) (20.1) (22.7)------------------------------------------------------- ----- ------------- ------------- -------------Total current liabilities (188.8) (165.1) (191.0)------------------------------------------------------- ----- ------------- ------------- ------------- Interest bearing loans and borrowings 10 (308.9) (214.1) (217.5)Deferred tax liabilities (7.4) (3.7) (5.3)Net pension liabilities (4.7) (15.5) (7.3)Other payables (0.7) (1.4) (0.9)Provisions (2.3) (0.8) (0.9)------------------------------------------------------- ----- ------------- ------------- -------------Total non-current liabilities (324.0) (235.5) (231.9)------------------------------------------------------- ----- ------------- ------------- ------------- Total liabilities (512.8) (400.6) (422.9)------------------------------------------------------- ----- ------------- ------------- ------------- Net assets 208.8 129.8 175.8------------------------------------------------------- ----- ------------- ------------- ------------- EQUITYShare capital 11 1.6 1.6 1.6Share premium 11 249.6 246.7 247.3Other reserves 11 17.1 6.8 11.7Retained earnings 11 (74.8) (135.5) (96.4)------------------------------------------------------- ----- ------------- ------------- -------------Total equity attributable to equity holders of the Company 11 193.5 119.6 164.2Minority interest 15.3 10.2 11.6------------------------------------------------------- ----- ------------- ------------- -------------Total equity 208.8 129.8 175.8------------------------------------------------------- ----- ------------- ------------- -------------\* T \* TCondensed Consolidated Interim Statement of Cash FlowsSix months ended 30 June 2008 Notes Six months Six months to to Year to 30 June 30 June 31 December 2008 2007 2007 (Unaudited) (Unaudited) (Audited) £m £m £m------------------------------------------------------ ----- ------------ ------------- ------------Cash flows from operating activitiesProfit for the period 43.0 36.1 78.8Adjustments for:Depreciation charge 16.6 13.3 27.7Amortisation of software 1.4 1.1 2.3Amortisation of acquisition intangibles 4.4 1.9 5.1Impairment of goodwill - - 0.4Equity-settled transactions 9 1.6 1.4 3.0Share of loss of associates - - 0.1Net financing costs 5.8 4.2 10.2Income tax expense 6 15.5 12.3 27.0Loss on disposal of property, plant and equipment - - 0.1------------------------------------------------------ ----- ------------ ------------- ------------Operating profit before changes in working capital and operating provisions 88.3 70.3 154.7Change in inventories (0.3) (0.3) (0.3)Change in trade and other receivables (25.6) (23.9) (20.7)Change in trade and other payables (2.4) (2.0) 14.4Change in claims and other provisions (0.3) 1.7 3.8Special pension contribution (3.0) (2.8) (2.8)------------------------------------------------------ ----- ------------ ------------- ------------Cash generated from operations 56.7 43.0 149.1Interest paid (5.9) (4.5) (10.8)Income taxes paid (19.3) (10.6) (28.4)------------------------------------------------------ ----- ------------ ------------- ------------Net cash flows from operating activities 31.5 27.9 109.9------------------------------------------------------ ----- ------------ ------------- ------------ Cash flows from investing activitiesProceeds from sale of property, plant and equipment 0.2 0.1 0.3Interest received 0.4 0.5 1.1Acquisition of subsidiaries, net of cash acquired 12 (34.6) (43.9) (85.8)Contingent consideration paid in respect of past acquisitions 12 (16.4) - -Acquisition of property, plant and equipment (26.0) (16.8) (41.3)Acquisition of software (0.9) (1.1) (2.5)------------------------------------------------------ ----- ------------ ------------- ------------Net cash flows used in investing activities (77.3) (61.2) (128.2)------------------------------------------------------ ----- ------------ ------------- ------------ Cash flows from financing activitiesProceeds from the issue of share capital 2.3 4.4 4.9Issue of shares by subsidiary undertaking to minority 0.5 - -Drawdown of debt 92.7 59.4 70.6Repayment of debt (6.9) (6.7) (21.2)Dividends paid to minorities (0.8) (1.0) (3.6)Equity dividends paid 11 (19.2) (16.0) (25.2)------------------------------------------------------ ----- ------------ ------------- ------------Net cash flows from financing activities 68.6 40.1 25.5------------------------------------------------------ ----- ------------ ------------- ------------ Net increase in cash and cash equivalents 10 22.8 6.8 7.2Cash and cash equivalents at 1 January 10 58.6 49.5 49.5Effect of exchange rate fluctuations on cash held 10 1.8 (0.1) 1.9------------------------------------------------------ ----- ------------ ------------- ------------Cash and cash equivalents at end of period 10 83.2 56.2 58.6------------------------------------------------------ ----- ------------ ------------- ------------\* T \* TCondensed Consolidated Interim Statement of Recognised Income and ExpenseSix months ended 30 June 2008 Six months Six months to Year to to 30 June 30 June 31 December 2008 2007 2007 (Unaudited) (Unaudited) (Audited) Notes £m £m £m--------------------------------------------------------- ----- ------------ ------------- ------------Foreign exchange translation differences for foreign operations 11 10.9 (1.9) 10.0Actuarial gains and losses on defined benefit pension schemes - - 8.5Tax on income and expenses recognised directly in equity 11 (0.3) (1.0) (2.3)Effective portion of changes in fair value of cash flow hedges 11 0.1 (0.2) (1.1)Net (loss)/gain on hedges of net investments in foreign operations 11 (5.6) 2.9 (3.2)--------------------------------------------------------- ----- ------------ ------------- ------------Income and expense recognised directly in equity 5.1 (0.2) 11.9Profit for the period 43.0 36.1 78.8--------------------------------------------------------- ----- ------------ ------------- ------------Total recognised income and expense for the period 48.1 35.9 90.7--------------------------------------------------------- ----- ------------ ------------- ------------ Total recognised income and expense for the period attributable to: Equity holders of the Company 44.3 33.5 84.5 Minority interest 3.8 2.4 6.2--------------------------------------------------------- ----- ------------ ------------- ------------Total recognised income and expense for the period 48.1 35.9 90.7--------------------------------------------------------- ----- ------------ ------------- ------------\* T Notes to the Condensed Consolidated Interim Financial Statements 1 Reporting entity Intertek Group plc is a company incorporated and domiciled in the UnitedKingdom. The Condensed Consolidated Interim Financial Statements of the Companyas at and for the six months ended 30 June 2008, comprise the Company and itssubsidiaries (together referred to as the 'Group') and the Group's interest inassociates and jointly controlled entities. The Consolidated Financial Statements of the Group as at and for the year ended31 December 2007, are available upon request from the Company's registeredoffice at 25 Savile Row, London W1S 2ES. An electronic version is available fromthe Investors section of the Group website at www.intertek.com. 2 Statement of compliance These Condensed Consolidated Interim Financial Statements are prepared inaccordance with IAS 34: Interim Financial Reporting as endorsed and adopted foruse in the European Union and the Disclosure and Transparency Rules (DTR) of theFinancial Services Authority. They do not include all of the informationrequired for full annual financial statements, and should be read in conjunctionwith the Consolidated Financial Statements of the Group as at and for the yearended 31 December 2007. The comparative figures for the financial year ended 31 December 2007 are notthe Company's statutory accounts for that financial year. Those accounts havebeen reported on by the Company's auditors and delivered to the registrar ofcompanies. The report of the auditor was (i) unqualified, (ii) did not include areference to any matters to which the auditors drew attention by way of emphasiswithout qualifying their report, and (iii) did not contain a statement undersection 237(2) of (3) of the Companies Act 1985. 3 Significant accounting policies These Condensed Consolidated Interim Financial Statements are unaudited and havebeen prepared on the basis of accounting policies consistent with those appliedin the Consolidated Financial Statements for the year ended 31 December 2007. The following interpretations, issued by the International Financial ReportingInterpretations Committee (IFRIC), are effective for the first time in thecurrent financial year and have been adopted by the Group with no significantimpact on its consolidated results or financial position: -- IFRIC 11- IFRS 2: Group and treasury share transactions There is no significant seasonality in the Group's operations. The Board continuously assesses and monitors the key risks of the business.Despite the current uncertainty in the global economy, the key risks that couldaffect the Group's medium term performance, and the factors which mitigate theserisks, have not significantly changed from those set out on pages 22 to 24 ofthe Group's Annual Report for 2007, a copy of which is available from ourwebsite www.intertek.com. The Business Review includes consideration ofuncertainties affecting the Group in the remaining six months of the year. 4 Estimates The preparation of interim financial statements requires management to makejudgements, estimates and assumptions that affect the application of accountingpolicies and the reported amounts of assets and liabilities, income and expense.Actual results may differ from these estimates. In preparing these Condensed Consolidated Interim Financial Statements, thenature of the significant judgements made by management in applying the Group'saccounting policies and the key sources of estimation were the same as thosethat were applied to the Consolidated Financial Statements as at and for theyear ended 31 December 2007. During the six months ended 30 June 2008, management reassessed its estimates inrespect of the contingent consideration payable in respect of acquisitions madein prior periods. See note 12 for further information. 5 Segment information Business analysis (Primary segment) From 1 January 2008, the Group is organised into seven operating divisions: Oil,Chemical & Agri, Consumer Goods, Commercial & Electrical, Government Services,Analytical Services, Minerals and Industrial Services. The costs of thecorporate head office and other costs which are not controlled by the operatingdivisions are allocated to these divisions. These divisions are the basis on which the Group reports its primary segmentinformation. Principal activities are as follows: Oil, Chemical & Agri provides independent cargo inspection, laboratory testing,calibration and related technical services to the world's energy, petroleum,chemical and agricultural industries. Consumer Goods provides services to the textiles, footwear, toys, food andhardlines industries. Commercial & Electrical provides testing, inspection and certification servicesto industries including those in the home appliances, medical, building,industrial and HVAC/R, IT and telecom and automotive sectors. Government Services provides trade services to standards bodies and governments. Analytical Services provides laboratory services to the chemical,pharmaceutical, cosmetics/personal care, oil and gas and automotive/aerospaceindustries. Minerals and Industrial Services each comprise less than 10% of the Group'srevenue, operating profit and net assets and therefore their results are notpresented separately. Minerals provides inspection, testing and advisoryservices to the mining and exploration industries and Industrial Servicesprovides high value audit services to a wide range of industries in both themanufacturing and services sectors and quality and safety services to oil andgas, industrial and process industries. Prior to 1 January 2008, the Group was organised into four divisions: Oil,Chemical & Agri, Commercial & Electrical, Consumer Goods and GovernmentServices. Central overheads which comprised the costs of the corporate headoffice and other costs which are not controlled by the operating divisions wereshown separately. Revenue and operating profit previously reported for periods prior to 1 January2008 have been restated to show a like-for-like comparison. For management purposes, the Group measures the performance of the divisions onoperating profit excluding amortisation of acquisition intangibles andimpairment of goodwill (adjusted operating profit). These figures are givenbelow together with a reconciliation to Group operating profit. There was noimpairment charge in the six months to 30 June 2008 or the six months to 30 June2007. Six months ended 30 June 2008 \* T Revenue Adjusted Amortisation Group operating of operating profit acquisition profit intangibles £m £m £m £m--------------------------------------------------- ----------- ------------ ------------ ------------Oil, Chemical & Agri 143.8 15.3 (0.3) 15.0Consumer Goods 108.1 31.2 (0.5) 30.7Commercial & Electrical 95.8 12.3 (0.6) 11.7Government Services 21.7 2.0 - 2.0New Divisions Analytical Services 55.3 5.3 (1.8) 3.5 Minerals and Industrial Services 32.7 2.6 (1.2) 1.4--------------------------------------------------- ----------- ------------ ------------ ------------Sub total New Divisions 88.0 7.9 (3.0) 4.9--------------------------------------------------- ----------- ------------ ------------ ------------Total 457.4 68.7 (4.4) 64.3 ----------- ------------ ------------Net financing costs (5.8)Share of profit of associates -Income tax expense (15.5)--------------------------------------------------- ----------- ------------ ------------ ------------Profit for the period 43.0--------------------------------------------------- ----------- ------------ ------------ ------------\* T Six months ended 30 June 2007 \* T Revenue Adjusted Amortisation Group operating of operating profit acquisition profit intangibles £m £m £m £m--------------------------------------------------- ----------- ------------ ------------ ------------Oil, Chemical & Agri 117.6 11.0 (0.2) 10.8Consumer Goods 81.5 23.5 (0.3) 23.2Commercial & Electrical 77.7 10.8 (0.2) 10.6Government Services 22.5 2.6 - 2.6New Divisions Analytical Services 44.1 4.7 (0.6) 4.1 Minerals and Industrial Services 17.4 1.9 (0.6) 1.3--------------------------------------------------- ----------- ------------ ------------ ------------Sub total New Divisions 61.5 6.6 (1.2) 5.4--------------------------------------------------- ----------- ------------ ------------ ------------Total 360.8 54.5 (1.9) 52.6 ----------- ------------ ------------Net financing costs (4.2)Share of profit of associates -Income tax expense (12.3)--------------------------------------------------- ----------- ------------ ------------ ------------Profit for the period 36.1--------------------------------------------------- ----------- ------------ ------------ ------------\* T The figures previously reported were as follows: \* T Revenue Adjusted Amortisation Group operating of operating profit acquisition profit intangibles £m £m £m £m--------------------------------------------------- ----------- ------------ ------------ ------------Oil, Chemical & Agri 168.1 20.1 (1.0) 19.1Consumer Goods 81.5 24.9 (0.3) 24.6Commercial & Electrical 86.0 13.2 (0.6) 12.6Government Services 25.2 3.4 - 3.4Central - (7.1) - (7.1)--------------------------------------------------- ----------- ------------ ------------ ------------Total 360.8 54.5 (1.9) 52.6--------------------------------------------------- ----------- ------------ ------------ ------------\* T Year ended 31 December 2007 \* T Revenue Adjusted Amortisation Impairment Group operating of of goodwill operating profit acquisition profit intangibles £m £m £m £m £m----------------------------------------- ------------ ----------- ------------ ------------ ------------Oil, Chemical & Agri 248.5 24.4 (0.5) - 23.9Consumer Goods 181.2 52.4 (0.5) - 51.9Commercial & Electrical 163.0 23.0 (0.8) - 22.2Government Services 45.2 6.0 (0.1) - 5.9New Divisions Analytical Services 95.7 11.7 (1.8) - 9.9 Minerals and Industrial Services 41.8 4.1 (1.4) (0.4) 2.3----------------------------------------- ------------ ----------- ------------ ------------ ------------Sub total New Divisions 137.5 15.8 (3.2) (0.4) 12.2----------------------------------------- ------------ ----------- ------------ ------------ ------------Total 775.4 121.6 (5.1) (0.4) 116.1 ------------ ----------- ------------ ------------Net financing costs (10.2)Share of profit of associates (0.1)Income tax expense (27.0)----------------------------------------- ------------ ----------- ------------ ------------ ------------Profit for the year 78.8----------------------------------------- ------------ ----------- ------------ ------------ ------------\* T The figures previously reported were as follows: \* T Revenue Adjusted Amortisation Impairment Group operating of of goodwill operating profit acquisition profit intangibles £m £m £m £m £m----------------------------------------- ------------ ----------- ------------ ------------ ------------Oil, Chemical & Agri 364.0 45.8 (2.9) - 42.9Consumer Goods 181.2 55.2 (0.5) - 54.7Commercial & Electrical 179.1 27.2 (1.6) (0.4) 25.2Government Services 51.1 7.6 (0.1) - 7.5Central - (14.2) - - (14.2)----------------------------------------- ------------ ----------- ------------ ------------ ------------Total 775.4 121.6 (5.1) (0.4) 116.1----------------------------------------- ------------ ----------- ------------ ------------ ------------\* T \* TGeographic analysis (Secondary segment) Six months Six months Year to to to 30 June 30 June 31 December 2008 2007 2007 £m £m £m----------------------------------------------------------------- ------------ ------------ ------------Revenue from external customersAmericas 157.3 128.9 271.7Europe, Middle East and Africa 138.2 112.1 235.0Asia Pacific 161.9 119.8 268.7----------------------------------------------------------------- ------------ ------------ ------------Total 457.4 360.8 775.4----------------------------------------------------------------- ------------ ------------ ------------ Group operating profitAmericas 21.9 17.0 36.7Europe, Middle East and Africa (1.7) 2.1 2.5Asia Pacific 44.1 33.5 76.9----------------------------------------------------------------- ------------ ------------ ------------Total 64.3 52.6 116.1----------------------------------------------------------------- ------------ ------------ ------------\* T 6 Income tax expense The tax charge on profits before tax for the six months to 30 June 2008 of£15.5m (30 June 2007: £12.3m) is based on the estimated effective rate for thefull year. The effective tax rate at 30 June 2008 is 26.5% (30 June 2007:25.4%). Differences between the estimated effective rate of 26.5% and the notionalstatutory UK rate of 28% include, but are not limited to, the effect of taxrates in foreign jurisdictions, non-deductible expenses, the effect of utilisedtax losses and under/(over) provisions in previous years. 7 Earnings per ordinary share \* T Six months Six months Year to to to 30 June 30 June 31 December 2008 2007 2007Based on the profit for the period: £m £m £m---------------------------------------------------------- --------------- ------------- -----------Profit attributable to ordinary shareholders 39.5 33.7 73.2Amortisation of acquisition intangibles 4.4 1.9 5.1Impairment of goodwill - - 0.4---------------------------------------------------------- --------------- ------------- -----------Adjusted earnings 43.9 35.6 78.7---------------------------------------------------------- --------------- ------------- ----------- Number of shares (millions):Basic weighted average number of ordinary shares 157.5 156.8 156.9Potentially dilutive share options* 1.6 1.3 1.4---------------------------------------------------------- --------------- ------------- -----------Diluted weighted average number of shares 159.1 158.1 158.3---------------------------------------------------------- --------------- ------------- ----------- Basic earnings per share 25.1p 21.5p 46.7pOptions (0.3)p (0.2)p (0.5)p---------------------------------------------------------- --------------- ------------- -----------Diluted earnings per share 24.8p 21.3p 46.2p---------------------------------------------------------- --------------- ------------- ----------- Basic adjusted earnings per share 27.9p 22.7p 50.2pOptions (0.3)p (0.2)p (0.5)p---------------------------------------------------------- --------------- ------------- -----------Diluted adjusted earnings per share 27.6p 22.5p 49.7p---------------------------------------------------------- --------------- ------------- -----------\* T \* The weighted average number of shares used in the calculation of the dilutedearnings per share for the six months to 30 June 2008, excludes nil (30 June2007: 275,512; 31 December 2007: nil) contingently issuable shares as theperformance conditions were not met. 8 Pension schemes During the period the Group made a special contribution of £3.0m into theIntertek Pension Scheme. In April 2007, the Group paid £2.8m into the acquiredCapcis Limited Pension and Life Assurance Scheme. The Directors have evaluated the significant assumptions used in the valuationof the Group's defined benefit pension schemes and consider that there is nosignificant change in the net liabilities of the schemes since 31 December 2007.Therefore actuarial valuations of the assets and liabilities of the definedbenefit pension schemes for IAS 19 purposes were not performed at 30 June 2008.The Group has considered the impact of IFRIC 14 on its defined benefit schemesand concluded that there is no impact. The expense recognised in the consolidated interim income statement consists ofthe current service cost, interest on the obligation for employee benefits andthe expected return on scheme assets. For the six months ended 30 June 2008, theGroup recognised a net expense of £0.9m (30 June 2007: £1.2m; 31 December 2007:£2.2m). 9 Equity-settled transactions The Company has a share option scheme and a long-term incentive plan, details ofwhich were contained in the Annual Report for the year ended 31 December 2007.The share option scheme has been discontinued and the last options under thescheme were granted on 13 September 2005. The first awards under the long-termincentive plan called the Intertek Deferred Bonus Plan (the Plan) were made inApril 2006. Under the Plan, in April 2008, 427,876 deferred shares (2007:278,170) and 262,028 matching shares (2007: 156,386) were awarded. In accordance with IFRS 2: Share Based Payments, the fair value of servicesreceived in return for shares and share options granted to employees, ismeasured by reference to the fair value of shares and share options granted. Theestimate of the fair value of the services received is measured based on theBlack-Scholes formula, a financial model used to calculate the fair value ofshares and share options. During the six months ended 30 June 2008, the Group recognised an expense of£1.6m in respect of outstanding share options issued in 2005 and in respect ofthe share awards made in April 2006, 2007 and 2008. For the six months ended 30June 2007, the charge was £1.4m for outstanding share options issued in 2004 and2005 and in respect of share awards made in 2006 and 2007. During the year ended31 December 2007, the Group recognised an expense of £3.0m in respect ofoutstanding share options issued in 2004 and 2005 and in respect of the shareawards made in 2006 and 2007. 10 Analysis of net debt \* T At 1 January Cash flow Exchange At 30 June At 30 June 2008 adjustments 2008 2007 £m £m £m £m £m--------------------------------- ------------- ------------- ------------- ------------- -------------Cash 58.6 22.8 1.8 83.2 56.2Borrowings (231.2) (85.8) (5.8) (322.8) (228.3)--------------------------------- ------------- ------------- ------------- ------------- -------------Total net debt (172.6) (63.0) (4.0) (239.6) (172.1)--------------------------------- ------------- ------------- ------------- ------------- -------------\* T \* T At 30 June At 30 June At 31 2008 2007 December 2007 £m £m £m------------------------------------------------------------- ------------- ------------ -------------Borrowings due in less than one year (13.9) (14.2) (13.7)Borrowings due in more than one year (308.9) (214.1) (217.5)------------------------------------------------------------- ------------- ------------ -------------Total borrowings (322.8) (228.3) (231.2)------------------------------------------------------------- ------------- ------------ -------------\* T The Group has a multi-currency senior bank facility that was placed in December2004. This facility was originally due to expire on 15 December 2009, howeverthe Group exercised its option to extend the facility by a year in 2005 and by afurther year in 2006. The facility is now due to expire in December 2011. Themargins currently paid on borrowings are in the range of 0.3% to 0.6% overLIBOR. In August 2007, the Group extended the senior debt facility by a further£100m to £400m. This was achieved through adding an additional Term D tranche offinance. Term D margins are in the range of 0.3% to 0.5% over LIBOR in therelevant currency. In June 2008, a further £60m was added to this facility from two new banks onthe same terms and conditions and margins as the existing facility. In July2008, another £15m was added from another new bank, again on the same terms andconditions and margin. Also, in June 2008, the Group raised US$100m by way of asenior note issue. This debt is repayable on 26 June 2015 and the interest rateis fixed at 5.54%. 11 Shareholders' equity \* T Other reserves ------------------------------ Share Share premium Translation Hedging Retained capital account reserve reserve Other earnings* Total £m £m £m £m £m £m £m------------------------------------- -------- --------- ----------- -------- --------- ---------- ---------At 1 January 2008 1.6 247.3 6.1 (0.8) 6.4 (96.4) 164.2Effective portion of changes in fair value of cash flow hedges - - - 0.1 - - 0.1Profit for the period attributable to equity holders - - - - - 39.5 39.5Dividends paid - - - - - (19.2) (19.2)Issue of shares - 2.3 - - - - 2.3Equity-settled transactions - - - - - 1.6 1.6Foreign exchange translation differences for foreign operations - - 10.9 - - - 10.9Net loss on hedges of net investments in foreign operations - - (5.6) - - - (5.6)Tax on income and expense recognised directly in equity - - - - - (0.3) (0.3)------------------------------------- -------- --------- ----------- -------- --------- ---------- ---------At 30 June 2008 1.6 249.6 11.4 (0.7) 6.4 (74.8) 193.5------------------------------------- -------- --------- ----------- -------- --------- ---------- --------- At 1 January 2007 1.6 242.4 (0.7) 0.3 6.4 (153.6) 96.4Effective portion of changes in fair value of cash flow hedges - - - (0.2) - - (0.2)Profit for the period attributable to equity holders - - - - - 33.7 33.7Dividends paid - - - - - (16.0) (16.0)Issue of shares - 4.3 - - - - 4.3Equity-settled transactions - - - - - 1.4 1.4Foreign exchange translation differences for foreign operations - - (1.9) - - - (1.9)Net gain on hedges of net investments in foreign operations - - 2.9 - - - 2.9Tax on income and expense recognised directly in equity - - - - - (1.0) (1.0)------------------------------------- -------- --------- ----------- -------- --------- ---------- ---------At 30 June 2007 1.6 246.7 0.3 0.1 6.4 (135.5) 119.6------------------------------------- -------- --------- ----------- -------- --------- ---------- ---------\* T *After £244.1m for goodwill written off to retained earnings as at 1 January2004 in relation to subsidiaries acquired prior to 31 December 1997. Aspermitted by IFRS 1, this figure has not been restated. The dividend of £19.2m which was paid on 19 June 2008 represents a finaldividend of 12.2p per ordinary share in respect of the year ended 31 December2007. The dividend of £16.0m which was paid on 15 June 2007 represents a finaldividend of 10.2p per ordinary share in respect of the year ended 31 December2006. There was an issue of 358,201 ordinary shares during the period on exercise ofshare options. 12 Acquisition of businesses There were eight acquisitions in the period, all of which were paid for in cash. Provisional details of net assets acquired and fair value adjustments are setout below. The analysis is provisional and amendments may be made to thesefigures in the 12 months following the date of each acquisition, with acorresponding adjustment to goodwill. \* T Book value Fair value Fair value to prior to adjustments Group on acquisition acquisition £m £m £m-------------------------------------------------------------- ------------ ------------- -------------Property, plant and equipment 3.6 (0.2) 3.4Goodwill - 27.5 27.5Other intangible assets 0.3 10.4 10.7Inventories and work in progress 1.0 (0.2) 0.8Trade and other receivables 6.8 (0.1) 6.7Trade and other payables (4.1) (0.6) (4.7)Tax payable (0.5) (0.2) (0.7)Deferred tax liability (0.4) (2.8) (3.2)Minority interest (0.2) - (0.2)-------------------------------------------------------------- ------------ ------------- -------------Net assets acquired 6.5 33.8 40.3-------------------------------------------------------------- ------------ ------------- -------------Cash outflow (net of cash acquired) 34.6Contingent and deferred consideration 5.7-------------------------------------------------------------- ------------ ------------- -------------Total consideration 40.3-------------------------------------------------------------- ------------ ------------- -------------\* T In addition, £16.4m was paid in respect of contingent consideration in respectof certain prior period acquisitions. The additional consideration was £3.5mgreater than the amount originally estimated at 31 December 2007 giving rise toan increase in goodwill of £3.5m in respect of Genalysis Laboratory Services PtyLtd, which was acquired in 2007. This amount when combined with the goodwillshown in the table above gives total additional goodwill for the six months to30 June 2008 of £31.0m. (a) Hi-Cad Technical Services Ltd The largest acquisition was the purchase on 9 April 2008, of 100% of the sharecapital of Hi-Cad Technical Services Ltd (Hi-Cad), a company registered in theUK, which provides specialist 3D data capture and measurement services,primarily to customers in the upstream and downstream oil and petroleum industryin the UK and the US. Initial cash consideration, inclusive of expenses, was £12.1m and additionalcontingent consideration of £0.6m is estimated to be payable based on the futureperformance of Hi-Cad. Cash acquired within the business was £0.6m. Thisacquisition strengthens Intertek's Industrial Services division and thedevelopment of asset integrity management services. Provisional details of net assets acquired and fair value adjustments are setout below. The analysis is provisional due to the timing of the acquisition andamendments may be made to these figures in the 12 months to 8 April 2009, with acorresponding adjustment to goodwill. \* T Book value Fair value Fair value to prior to adjustments Group on acquisition acquisition £m £m £m-------------------------------------------------------- -------------- ------------ -------------Property, plant and equipment 0.4 - 0.4Goodwill - 8.1 8.1Other intangible assets - 4.5 4.5Inventories and work in progress 0.1 - 0.1Trade and other receivables 3.0 - 3.0Trade and other payables (1.8) (0.3) (2.1)Tax payable (0.2) - (0.2)Deferred tax liability (0.4) (1.3) (1.7)-------------------------------------------------------- -------------- ------------ -------------Net assets acquired 1.1 11.0 12.1-------------------------------------------------------- -------------- ------------ -------------Cash outflow (net of cash acquired) 11.5Contingent consideration 0.6-------------------------------------------------------- -------------- ------------ -------------Total consideration 12.1-------------------------------------------------------- -------------- ------------ -------------\* T The goodwill of £8.1m represents the knowledge and expertise of the Hi-Cadworkforce and the benefit that Intertek will gain from being able to offer acohesive vendor assessment and quality inspection service to its customersglobally. The other intangible assets of £4.5m represent the value placed onclient relationships, know-how and an exclusive software distributorship. Thefair value adjustment of £0.3m relates to additional accruals. The deferred taxliability fair value adjustment of £1.3m arises on intangibles. The profit after tax for the period 1 January 2008 to 8 April 2008 was £0.2m.The profit attributable to the Group from the date of acquisition to 30 June2008 was £0.3m. (b) CML Biotech Ltd On 13 February 2008, the Group acquired 100% of CML Biotech Ltd (CML), a UKregistered holding company for the Commercial Microbiology Group for an initialcash consideration, inclusive of expenses, of £8.0m. Additional contingentconsideration of £1.5m is estimated to be payable based on the futureperformance of CML. CML provides laboratory and consultancy services and sellstesting kits related to the measurement and management of bacteria in theupstream oil and gas industries. This acquisition will strengthen the serviceoffering of Intertek's Analytical Services division. Provisional details of net assets acquired and fair value adjustments are setout below. The analysis is provisional due to the timing of the acquisition andamendments may be made to these figures in the 12 months to 12 February 2009,with a corresponding adjustment to goodwill. \* T Book value Fair value Fair value to prior to adjustments Group on acquisition acquisition £m £m £m-------------------------------------------------------- ------------- ------------ -------------Property, plant and equipment 0.8 - 0.8Goodwill - 7.2 7.2Other intangible assets - 1.9 1.9Inventories and work in progress 0.1 - 0.1Trade and other receivables 1.4 - 1.4Trade and other payables (0.9) - (0.9)Tax payable - (0.3) (0.3)Deferred tax liability (0.1) (0.6) (0.7)-------------------------------------------------------- ------------- ------------ -------------Net assets acquired 1.3 8.2 9.5-------------------------------------------------------- ------------- ------------ -------------Cash outflow (net of cash acquired) 8.0Contingent consideration 1.5-------------------------------------------------------- ------------- ------------ -------------Total consideration 9.5-------------------------------------------------------- ------------- ------------ -------------\* T The goodwill of £7.2m represents the knowledge and expertise of the CMLworkforce and the benefit that Intertek will obtain from expanding the suite ofexpert services that the Group can deliver as a partner to the oil and gasexploration industries globally. The other intangible assets of £1.9m representvalue placed on client relationships. The fair value tax adjustment of £0.3mrelates to provision for additional tax liabilities. The deferred tax liabilityfair value adjustment of £0.6m arises on intangibles. The profit after tax for the period 1 January 2008 to 12 February 2008 was£0.1m. The profit attributable to the Group from the date of acquisition to 30June 2008 was £0.2m. (c) 4-Front Research Limited On 4 April 2008, the Group acquired 4-Front Research Limited, a holding companyof a group of companies registered in the UK, France and India for an initialcash consideration, inclusive of expenses, of £6.3m. Cash acquired within thebusiness was £0.9m. Additional contingent consideration of £3.3m is estimated tobe payable based on the future performance of 4-Front Research. 4-Front Researchprovides analytical support for clinical research studies on cosmetic, personalcare, functional food and over-the-counter pharmaceutical and medical products.With seven sites in England and sites in Hyderabad, India and Paris, France,4-Front will form part of Intertek's Consumer Goods division. Provisional details of net assets acquired and fair value adjustments are setout below. The analysis is provisional due to the timing of the acquisition andamendments may be made to these figures in the 12 months to 3 April 2009, with acorresponding adjustment to goodwill. \* T Book value Fair value Fair value to prior to adjustments Group on acquisition acquisition £m £m £m-------------------------------------------------------- ------------- --------------- -------------Property, plant and equipment 0.5 - 0.5Goodwill - 6.6 6.6Other intangible assets - 1.7 1.7Inventories and work in progress 0.5 - 0.5Trade and other receivables 0.7 - 0.7Trade and other payables (0.5) (0.2) (0.7)Tax payable (0.1) - (0.1)Deferred tax liability - (0.5) (0.5)-------------------------------------------------------- ------------- --------------- -------------Net assets acquired 1.1 7.6 8.7-------------------------------------------------------- ------------- --------------- -------------Cash outflow (net of cash acquired) 5.4Contingent consideration 3.3-------------------------------------------------------- ------------- --------------- -------------Total consideration 8.7-------------------------------------------------------- ------------- --------------- -------------\* T The goodwill of £6.6m represents the additional value that Intertek will gainfrom adding new high-value services to support its consumer healthcare customersand from having a strategic position in the developing market for consumerhealthcare products in India and other Asian countries. The other intangibleassets of £1.7m represent value placed on client relationships. The fair valueadjustment of £0.2m relates to additional accruals. The deferred tax liabilityof £0.5m arises on intangibles. The profit after tax for the period 1 January 2008 to 3 April 2008 was £nil. Theprofit attributable to the Group from the date of acquisition to 30 June 2008was £0.1m. (d) Other acquisitions The other five acquisitions were: (i) Electrical Mechanical Instrument Services (UK) Ltd (EMIS), a UK registeredcompany was 100% acquired on 3 January 2008, for consideration, inclusive ofexpenses, of £1.2m. Cash acquired within the business was £0.4m. EMIS providescalibration services to the oil and gas industries in the UK and the MiddleEast. (ii) Epsilon Technical Services Ltd (Epsilon), a UK registered company was 100%acquired on 5 February 2008, for initial cash consideration, inclusive ofexpenses, of £2.0m. No contingent consideration is expected to be payable.Epsilon provides safety and advisory services to companies with products for usein potentially explosive atmospheres. (iii) Bioclin Research Laboratories Ltd (Bioclin), a company registered in theRepublic of Ireland, was 100% acquired on 8 February 2008, for initial cashconsideration, inclusive of expenses, of £2.6m. Cash acquired within thebusiness was £0.5m. Additional contingent consideration of £0.3m is estimated tobe payable based on Bioclin's performance in 2008. Bioclin provides productquality testing and bio-analytical services to pharmaceutical, medical deviceand biotechnology companies, in Ireland and internationally. (iv) The Limburg Water Boards of the Netherlands outsourced all laboratoryactivities of Waterschapsbedrijf Limburg to Intertek with effect from 3 March2008, for a minimum period of five years and transferred employees to Intertek.Total consideration, inclusive of expenses, was £1.5m. Fixed assets acquiredwere £0.6m and intangibles relating to customer relationships were valued at£0.9m. Intertek will provide extended analytical testing and consultancyservices in the areas of environmental science, regulation and complex analysisof silt, soil and water. (v) 100% of a company registered in the Philippines, was acquired on 2 April2008, for cash consideration, inclusive of expenses, of £3.0m. This companyoperates the largest commercial assay laboratory in the Philippines and offersgeophysical surveys and inspection services to the minerals industries. The table below sets out a provisional analysis of the net assets acquired andthe fair value to the Group in respect of the five acquisitions described above.The analysis is provisional due to the timing of some of the acquisitions andamendments may be made to these figures in the period up to 12 months from thedate each business was acquired, with a corresponding adjustment to goodwill. \* T Book value Fair value Fair value to prior to adjustments Group on acquisition acquisition £m £m £m---------------------------------------------------------- ------------- ------------ -------------Property, plant and equipment 1.9 (0.2) 1.7Goodwill - 5.6 5.6Other intangible assets 0.3 2.3 2.6Inventories and work in progress 0.3 (0.2) 0.1Trade and other receivables 1.7 (0.1) 1.6Trade and other payables (0.9) (0.1) (1.0)Tax payable (0.2) 0.1 (0.1)Deferred tax liability 0.1 (0.4) (0.3)Minority interest (0.2) - (0.2)---------------------------------------------------------- ------------- ------------ -------------Net assets acquired 3.0 7.0 10.0---------------------------------------------------------- ------------- ------------ -------------Cash outflow (net of cash acquired) 9.7Contingent consideration 0.3---------------------------------------------------------- ------------- ------------ -------------Total consideration 10.0---------------------------------------------------------- ------------- ------------ -------------\* T The other intangible assets of £2.6m represent £2.3m for the value attributableto client relationships and £0.3m for software. The other significant fair valueadjustment of £0.4m relates to the deferred tax liability arising on theintangibles. \* TThe goodwill of £5.6m arises as follows: £m------------------------------------------------------------------------------------ ------------EMIS 0.3Epsilon 1.7Bioclin 1.8Minerals company 1.8------------------------------------------------------------------------------------ ------------Total 5.6------------------------------------------------------------------------------------ ------------\* T EMISThe goodwill of £0.3m represents the benefit that Intertek will gain fromincreasing the penetration of the Group's existing calibration and upstreamservices to the oil and gas industries in Europe and the Middle East. EpsilonThe goodwill of £1.7m represents the knowledge and expertise of the Epsilonworkforce and the benefit that Intertek will obtain from combining this businesswith the Group's existing explosive environment certification services. BioclinThe goodwill of £1.8m represents the benefit that Intertek will gain from havinga presence in Ireland which is a key European centre for pharmaceuticalmanufacturing. Minerals companyThe goodwill of £1.8m represents the benefit to Intertek of increasing itspresence in the South East Asian minerals market and gaining additionalmanagement and technical expertise in this region. These acquisitions contributed profits to the Group from their respective datesof acquisition to 30 June 2008 of £0.1m (e) Prior period acquisitions Goodwill of £3.5m arose in the period relating to Genalysis Laboratory ServicesPty Ltd, which was acquired in 2007. This additional goodwill arose due to thefinal contingent consideration paid in 2008 being in excess of the estimate at31 December 2007. (f) Impact of acquisitions on the Group results The Group revenue and profit after tax for the six months ended 30 June 2008would have been £461.4m and £44.3m respectively if all the acquisitions wereassumed to have been made on 1 January 2008. (g) Details of 2007 acquisitions Full details of acquisitions made in the year to 31 December 2007 were disclosedin note 24 to the Annual Report for 2007. 13 Property, plant and equipment During the six months ended 30 June 2008, the Group acquired assets with a costof £29.4m (six months ended 30 June 2007: £21.6m; year to 31 December 2007:£49.7m) including assets acquired through business combinations (see note 12) of£3.4m (six months ended 30 June 2007: £4.8m; year to 31 December 2007: £8.4m). There were disposals with net book value of £0.2m during the six months ended 30June 2008 (six months to 30 June 2007: £0.1m; year to 31 December 2007: £0.4m). 14 Related parties Identity of related partiesThe Group has a related party relationship with its associates and with its keymanagement. Transactions between the Company and its subsidiaries and between subsidiarieshave been eliminated on consolidation and are not discussed in this note. Transactions with associatesThe Group holds a 40% interest in Allium LLC, a company registered in the US,which together with its subsidiaries manufactures testing equipment. In the sixmonths to 30 June 2008, Allium group companies sold equipment to Intertek Groupcompanies for £0.2m (six months to 30 June 2007: £0.2m; year to 31 December2007: £0.9m). At 30 June 2008 the Group owed £nil (30 June 2007: £nil; 31December 2007: £0.1m) to Allium in respect of those sales. Details of loans aregiven below. \* T At 30 June At 30 June At 31 December 2008 2007 2007 £m £m £m------------------------------------------------------------ ------------ --------------- -------------Loans due to Intertek Group companies 1.4 1.4 1.4Provision against loans due to Intertek Group companies (1.2) (1.2) (1.2)------------------------------------------------------------ ------------ --------------- -------------Net amount of loans due to Intertek Group companies 0.2 0.2 0.2------------------------------------------------------------ ------------ --------------- -------------\* T The loans to Allium LLC are denominated in US dollars and are interest bearing.In the six months to 30 June 2008 the average rate of interest charged was 6.0%. Transactions with key management personnel Key management personnel compensation, including the Group's ExecutiveDirectors, is shown in the table below: \* T Six months to Six months to Year to 30 June 30 June 31 December 2008 2007 2007 £m £m £m--------------------------------------------------------- ------------- ------------- -------------Short-term benefits 2.5 1.2 2.3Post-employment benefits 0.2 0.1 0.2Equity-settled transactions 0.9 0.3 0.7--------------------------------------------------------- ------------- ------------- -------------Total 3.6 1.6 3.2--------------------------------------------------------- ------------- ------------- -------------\* T Detailed information concerning Directors' remuneration, shareholdings, pensionentitlements, share options and other long-term incentive plans for the yearended 31 December 2007 was disclosed in the Remuneration Report in the AnnualReport for 2007. No consultancy fees were paid to Non-Executive Directors in the six months to 30June 2008. Details of fees paid in the year ended 31 December 2007 weredisclosed in note 28 to the financial statements contained in the Annual Reportfor 2007. 15 Post balance sheet events On 16 July 2008, the Group acquired the whole of the share capital of ApplicaGmbH, a food testing company, based in Germany for an initial cash considerationof £3.0m and a contingent consideration of up to £0.6m payable in March 2009dependent on financial performance. Based on provisional estimates, fixed assetsacquired were £0.9m and net current assets were £0.3m giving £2.4m arising inrespect of goodwill and intangibles. The intangibles will be separately valuedonce full details become available. 16 Contingent liabilities: claims and litigation From time to time, the Group is involved in various claims and lawsuitsincidental to the ordinary course of its business, including claims for damages,negligence and commercial disputes regarding inspection and testing and disputeswith former employees. The Group is not currently party to any legal proceedingsother than ordinary litigation incidental to the conduct of business. The outcome of the litigation to which Intertek Group companies are party cannotbe readily foreseen. Based on information currently available, the Directorsconsider that the cost to the Group of an unfavourable outcome arising from suchlitigation is unlikely to have a materially adverse effect on the financialposition of the Group in the foreseeable future. The Group holds a professional indemnity insurance policy that provides coveragefor certain claims from customers. The Directors consider this policy adequatefor normal commercial purposes. 17 Approval The consolidated interim financial information was approved by the Board on 1August 2008. Statement of Directors' responsibilities in respect of the Interim Report The Directors confirm that to the best of their knowledge: -- the condensed set of financial statements has been prepared in accordance with IAS 34: Interim Financial Reporting as adopted by the EU; -- the interim management report includes a fair review of the information required by: (a) DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication ofimportant events that have occurred during the first six months of the financialyear and their impact on the condensed set of financial statements; and adescription of the principal risks and uncertainties for the remaining sixmonths of the year; and (b) DTR 4.2.8R of the Disclosure and Transparency Rules, being related partytransactions that have taken place in the first six months of the currentfinancial year and that have materially affected the financial position orperformance of the entity during that period; and any changes in the relatedparty transactions described in the 2007 Annual Report that could do so. The Directors of Intertek Group plc are listed in the Intertek Group plc AnnualReport for 2007. By order of the board of Intertek Group plc \* TWolfhart Hauser Bill SpencerChief Executive Officer Chief Financial Officer1 August 2008 1 August 2008\* T Independent review report by KPMG Audit Plc to Intertek Group plc IntroductionWe have been engaged by the Company to review the condensed set of financialstatements in the half-yearly financial report for the six months ended 30 June2008 which comprises the Condensed Consolidated Interim Income Statement, theCondensed Consolidated Interim Statement of Recognised Income and Expense, theCondensed Consolidated Interim Balance Sheet, the Condensed Consolidated InterimStatement of Cash Flows and the related explanatory notes. We have read theother information contained in the half-yearly report and considered whether itcontains any apparent misstatements or material inconsistencies with theinformation in the condensed set of financial statements. This report is made solely to the Company in accordance with the terms of ourengagement to assist the company in meeting the requirements of the Disclosureand Transparency Rules ("the DTR") of the UK's Financial Services Authority("the UK FSA"). Our review has been undertaken so that we might state to theCompany those matters we are required to state to it in this report and for noother purpose. To the fullest extent permitted by law, we do not accept orassume responsibility to anyone other than the Company for our review work, forthis report, or for the conclusions we have reached. Directors' responsibilitiesThe half-yearly financial report is the responsibility of, and has been approvedby, the Directors. The Directors are responsible for preparing the half-yearlyfinancial report in accordance with the DTR of the UK FSA. As disclosed in note 2, the annual financial statements of the Group areprepared in accordance with IFRSs as adopted by the EU. The condensed set offinancial statements included in this half-yearly financial report has beenprepared in accordance with IAS 34: Interim Financial Reporting as adopted bythe EU. Our responsibilityOur responsibility is to express to the Company a conclusion on the condensedset of financial statements in the half-yearly financial report based on ourreview. Scope of reviewWe conducted our review in accordance with International Standard on ReviewEngagements (UK and Ireland) 2410: Review of Interim Financial InformationPerformed by the Independent Auditor of the Entity, issued by the AuditingPractices Board for use in the UK. A review of interim financial informationconsists of making enquiries, primarily of persons responsible for financial andaccounting matters, and applying analytical and other review procedures. Areview is substantially less in scope than an audit conducted in accordance withInternational Standards on Auditing (UK and Ireland) and consequently does notenable us to obtain assurance that we would become aware of all significantmatters that might be identified in an audit. Accordingly, we do not express anaudit opinion. ConclusionBased on our review, nothing has come to our attention that causes us to believethat the condensed set of financial statements in the half-yearly financialreport for the six months ended 30 June 2008 is not prepared, in all materialrespects, in accordance with IAS 34 as adopted by the EU and the DTR of the UKFSA. KPMG Audit PlcChartered Accountants8 Salisbury SquareLondon EC4Y 8BB1 August 2008 Copyright Business Wire 2008
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| Date | Source | Headline | |
|---|---|---|---|
| 22nd Mar 2024 | 9:00 am | RNS | Annual Financial Report |
| 14th Mar 2024 | 1:00 pm | RNS | Director/PDMR Shareholding |
| 14th Mar 2024 | 1:00 pm | RNS | Director/PDMR Shareholding |
| 13th Mar 2024 | 1:00 pm | RNS | Director/PDMR Shareholding |
| 5th Mar 2024 | 7:00 am | RNS | Final Results |
| 4th Mar 2024 | 7:00 am | RNS | Acquisition |
| 1st Mar 2024 | 1:00 pm | RNS | Directorate Change |
| 28th Feb 2024 | 1:00 pm | RNS | Director/PDMR Shareholding |
| 23rd Nov 2023 | 7:00 am | RNS | Trading Statement |
| 22nd Nov 2023 | 1:00 pm | RNS | Block listing Interim Review |
| 14th Sep 2023 | 1:00 pm | RNS | Director Declaration |
| 24th Aug 2023 | 7:00 am | RNS | Acquisition |
| 28th Jul 2023 | 7:00 am | RNS | Half-year Report |
| 12th Jul 2023 | 10:00 am | RNS | Directorate Change |
| 7th Jun 2023 | 1:00 pm | RNS | Director/PDMR Shareholding |
| 31st May 2023 | 1:00 pm | RNS | Director/PDMR Shareholding |
| 30th May 2023 | 3:00 pm | RNS | Holding(s) in Company |
| 30th May 2023 | 1:00 pm | RNS | Block listing Interim Review |
| 24th May 2023 | 11:00 am | RNS | Result of AGM |
| 24th May 2023 | 7:00 am | RNS | Trading Statement |
| 3rd May 2023 | 7:00 am | RNS | Capital Markets Event |
| 27th Apr 2023 | 4:00 pm | RNS | Director Declaration |
| 26th Apr 2023 | 4:30 pm | RNS | Director Declaration |
| 20th Apr 2023 | 4:00 pm | RNS | Director Declaration |
| 3rd Apr 2023 | 7:00 am | RNS | Acquisition |
| 24th Mar 2023 | 9:00 am | RNS | Notice of 2023 AGM |
| 21st Mar 2023 | 9:00 am | RNS | Annual Financial Report |
| 20th Mar 2023 | 7:00 am | RNS | Directorate Change |
| 14th Mar 2023 | 3:00 pm | RNS | Director/PDMR Shareholding |
| 14th Mar 2023 | 3:00 pm | RNS | Director/PDMR Shareholding |
| 14th Mar 2023 | 3:00 pm | RNS | Director/PDMR Shareholding |
| 28th Feb 2023 | 7:00 am | RNS | Final Results |
| 23rd Dec 2022 | 10:00 am | RNS | Directorate Change |
| 13th Dec 2022 | 11:00 am | RNS | Director Declaration |
| 12th Dec 2022 | 1:00 pm | RNS | Director Declaration |
| 24th Nov 2022 | 7:00 am | RNS | Trading Statement |
| 21st Nov 2022 | 1:00 pm | RNS | Block listing Interim Review |
| 2nd Aug 2022 | 9:00 am | RNS | Director/PDMR Shareholding |
| 29th Jul 2022 | 7:01 am | RNS | Acquisition |
| 29th Jul 2022 | 7:00 am | RNS | Half-year Report |
| 21st Jun 2022 | 1:00 pm | RNS | Director/PDMR Shareholding |
| 26th May 2022 | 7:00 am | RNS | Directorate Change |
| 25th May 2022 | 11:00 am | RNS | Result of AGM |
| 25th May 2022 | 7:00 am | RNS | Trading Statement |
| 23rd May 2022 | 1:00 pm | RNS | Block listing Interim Review |
| 4th Apr 2022 | 3:00 pm | RNS | Director/PDMR Shareholding |
| 22nd Mar 2022 | 1:00 pm | RNS | Director/PDMR Shareholding |
| 22nd Mar 2022 | 1:00 pm | RNS | Director/PDMR Shareholding |
| 18th Mar 2022 | 9:00 am | RNS | Annual Financial Report |
| 14th Mar 2022 | 1:00 pm | RNS | Director/PDMR Shareholding |
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