SGS 2011 Full Year Results Presentation

CONTENT

 FINANCIAL HIGHLIGHTS
2011 Highlights
Revenue Analysis
Operating Income Analysis
Cash Flows
FINANCIAL HIGHLIGHTS

Currency Analysis
BUSINESS OVERVIEW

Second half 2011

 BUSINESS OVERVIEW

Financial community – 17 January 2012 2

HIGHLIGHTS

 Revenue growth of 13.7% to CHF 4.8 billion (constant currency)
• 0.8% at historical rates
 Organic revenue growth of 10.5% (constant currency)
 Adjusted Operating income(1) up 10.7% (constant currency) to
CHF 815 million resulting in a margin of 17.0%
 Net Profit for the period of CHF 534 million
 Basic EPS of CHF 70.52 per share
 Proposed dividend to shareholders of CHF 65 per share
• Ordinary dividend of CHF 30 per share
• Additional dividend of CHF 35 per share

Financial community – 17 January 2012 (1) Before amortisation of acquisition intangibles, transaction and integration-related costs 4

FINANCIAL HIGHLIGHTS

CHF million 2011 2010 2010
December December December
Pro-forma (2) Published
Revenue 4,797 4,219 4,757
Change in % 13.7 % 0.8 %

Adjusted Operating Income (1) 815 736 848
Change in % 10.7 % (3.9)%

Adjusted Operating Income Margin (1) 17.0 % 17.4 % 17.8 %

Operating Income (EBIT) 790 725 836
Change in % 9.0 % (5.5)%

Net income 534 509 588
Change in % 4.9 % (9.2)%
Basic EPS 70.52 67.30 77.64
Diluted EPS 70.16 66.94 77.22
Period end no. of employees 71,220 63,224
(2) Constant currency basis

SERVICE PORTFOLIO
REVENUE GIS ADJUSTED GIS AGRI
AGRI
AUTO 4.6% OPERATING INCOME(1) 6.3% 6.3%
6.8%
5.7% AUTO
7.3%
ENVI MIN MIN
5.9% 14.1% ENVI
16.1%
3.3%

IND
9.8%
IND
15.6%

OGC OGC
SSC 15.1%
19.0% 8.4%
SSC
7.6%
LIFE
LIFE 2.5%
CTS 4.0% CTS
16.7% 24.9%

REVENUE REGION

ASIA PACIFIC
28.2%

EUROPE /
AFRICA /
MIDDLE EAST
50.4%

AMERICAS
21.4%


REVENUE GROWTH COMPOSITION
10.5% 3.2% 0.0% (12.9)% 0.8%

134
(538)
444

Constant currency growth: 13.7% 4,797

4,757

Revenues Currency Revenues
December 10 Organic Acquisitions Disposals impact December 11

LOCAL CURRENCY GROWTH BY BUSINESS

AGRI 5.7% 2.1% 7.8%

MIN 23.5% 0.3% 23.8%

OGC 7.7% 0.2% 7.9%

LIFE 5.2% 6.6% 11.8%

CTS 10.3% 0.3% 10.6%

SSC 5.6% 5.6%

IND 10.9% 3.1% 14.0%

ENVI 13.1% 1.4% 14.5%

AUTO 7.1% 51.1% 58.2%

GIS 6.6% 6.6%

TOTAL 10.5% 3.2% 13.7%

Organic Acquisition Disposal

REVENUE GROWTH AND HEADCOUNT
CHANGE BY REGION

Δ in EOP headcount 2011 2010 Δ
December December

Group Headcount 71,220 63,224 7,996

Europe / Africa &
7.9% 4.4% 12.3%
Middle East Organic Business Growth 6,604

Acquisitions* 1,392

Disposals -
Americas 13.5% 3.9% 17.4%

Increase in Group Headcount 7,996

Asia / Pacific 13.0% 0.6% By Region Headcount Headcount Revenues
13.6%
Δ Δ% Δ%

Europe / Africa / Middle East 3,761 13.8 % 12.3 %
TOTAL GROUP 10.5% 3.2% 13.7%
Americas 1,284 9.8 % 17.4 %

Asia / Pacific 2,951 12.8 % 13.6 %

TOTAL 7,996 12.6% 13.7%

Financial community – 17 January 2012 *Including 833 ITV headcount acquired effective 31 December 2010 10

ADJUSTED OPERATING INCOME(1) GROWTH
5.7% 5.0% 0.0% (14.6)% (3.9)%

37
42 (112)

Constant currency growth: 10.7%
815
848

Op. Income Currency Op. Income
December 10 Organic Acquisitions Disposals impact December 11

HISTORICAL MARGIN PROGRESSION

Adjusted EBITDA MARGIN(1) Adjusted OPERATING MARGIN(1)

DEC 07 DEC 08 DEC 09 DEC 10 DEC 11 DEC 07 DEC 08 DEC 09 DEC 10 DEC 11

24.0% 18.0%

21.0% 15.0%

18.0% 12.0%

15.0% 9.0%

12.0% 6.0%
20.8% 21.3% 22.0% 22.4% 21.3% 16.4% 17.0% 17.4% 17.8% 17.0%


ADJUSTED OPERATING MARGIN(1) BY BUSINESS

30.0%

25.0%

25.3%

23.4%
21.9%
20.0%
19.4%

18.7%
15.0%
15.7%

13.5%

10.0%
10.8%

10.7%

9.4%
5.0%
15.7%

14.9%

25.8%

21.1%

13.2%

10.7%

18.4%

18.2%
19.2%

15.6%

SSC
LIFE
OGC

GIS
MIN

ENV
IND
CTS

AUTO
AGRI

December 10 December 11


CASH FLOW

CHF million Dec 11 Dec 10
PROFIT FOR THE PERIOD 561 614  Negative foreign exchange impact on
Non-cash items 433 417 Operating Cash Flow of CHF 100
Depreciation, amortisation and impairment 225 225 million.
Share based payments 15 2  Increase in Net Working Capital
Tax 203 215 driven by:
Other (10) (25) • accelerated business growth in
(Increase)/decrease in net working capital (84) (33) Q4.
Taxes paid (220) (215)
• Long term contracts / projects.
OPERATING CASH FLOW 690 783
Net (purchase)/sale of fixed assets (337) (250)  Stable group DSO (Days of Sales
Acquisition and divestments of businesses (112) (302) Outstanding).
Proceeds from sale of investments - 2
Other from investing activities 6 (1)
CASH FLOW FROM INVESTING ACTIVITIES (443) (551)
Dividend paid to equity holders of SGS SA (494) (455)
Dividend paid to non-controlling interests (16) (25)
Increase/(decrease) in non-controlling interests (2) (4)
Cash received/(paid) on treasury shares (50) 85
Interest paid (21) (15)
Increase/(decrease) in borrowings 716 237
CASH FLOW FROM FINANCING ACTIVITIES 133 (177)
Currency translations 16 (32)
INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS 396 23


CAPITAL EXPENDITURE
CAPEX REGION CAPEX GIS AGRI
6.7% 4.9%
AUTO
4.9%
MIN
ENVI 17.7%
ASIA PACIFIC 8.1%
36.2%
EUROPE /
AFRICA /
MIDDLE EAST IND
46.7% 10.1%

SSC
1.5% OGC
18.3%

CTS LIFE
AMERICAS 3.5%
17.1% 24.3%

ANNUAL CAPEX
CHF million

2006 2007 2008 2009 2010 2011

400

300

200

100
Capital Expenditure Depreciation & amortisation


FOREIGN CURRENCY REVENUES 2011

AVERAGE RATES
2011 2010 Change
Other
EUR 1.2334 1.3837 (10.9)%
23.7% USD 0.8868 1.0435 (15.0)%
EUR CNY 0.1372 0.1541 (11.0)%
32.3%
AUD 0.9144 0.9569 (4.4)%
CAD 0.8968 1.0127 (11.5)%
TWD 0.0302 0.0331 (8.8)%
HKD
2.4% GBP 1.4210 1.6111 (11.8)%
BRL BRL 0.5306 0.5925 (10.4)%
2.5% HKD 0.1139 0.1343 (15.2)%
GBP
2.9% INR 0.0191 0.0228 (16.5)%
TWD
2.9%
CAD
4.4% USD
AUD 13.7%
5.7%
CNY
9.5%


FOREIGN CURRENCY SENSITIVITY ANALYSIS

EURO 1.20 1.23 1.30

Revenues (42) 0 84
Income (6) 0 11

USD 0.80 0.89 0.95

Revenues (64) 0 47
Income (6) 0 4

CNY 0.120 0.137 0.150

Revenues (57) 0 42
Income (17) 0 13


FINANCIAL HIGHLIGHTS (H2)

CHF million 2011 2010 2010
H2 H2 H2
Pro-forma (2) Published

Revenue 2,452 2,141 2,405
Change in % 14.5 % 2.0 %

Adjusted Operating Income (1) 441 402 460
Change in % 9.7 % (4.1)%

Adjusted Operating Income Margin (1) 18.0 % 18.8 % 19.1 %

Operating Income (EBIT) 427 395 453
Change in % 8.1 % (5.7)%

Net income 288 277 318
Change in % 4.0 % (9.4)%

(2) Constant currency basis

LOCAL CURRENCY GROWTH BY BUSINESS (H2)

AGRI 8.7% 2.8% 11.5%

MIN 23.0% 23.0%

OGC 8.7% 0.1% 8.8%

LIFE 3.1% 5.0% 8.1%

CTS 12.2% 0.5% 12.7%

SSC 5.4% 5.4%

IND 11.3% 3.6% 14.9%

ENVI 11.7% 1.8% 13.5%

AUTO 7.4% 51.6% 59.0%

GIS 9.9% 9.9%

TOTAL 11.3% 3.2% 14.5%


ADJUSTED OPERATING MARGIN(1) BY
BUSINESS (H2)

30.0%

26.9%
25.0%

23.8%

23.4%
20.0%
20.3%

20.1%
17.5%

15.0%
14.1%

10.0%
11.2%

10.7%

10.4%
5.0%
18.1%

20.5%

17.6%

16.8%

26.5%

22.9%

13.8%

17.5%

18.9%
12.2%
SSC
LIFE
OGC

GIS
MIN

ENV
IND
CTS

AUTO
AGRI

December 10 December 11


AGRICULTURAL SERVICES (AGRI)
CHF million December December December  Overview 2011
2011 2010 2010 • Seed and crop services revenue growth ~30% for the
2
Pro-forma Published year with three acquisitions closed (South Africa,
Canada, USA) and portfolio expansion continues.
Revenue 327.1 303.5 344.1
• Trade services produced strong H2 with Black Sea
Change in % 7.8 (4.9)
origins re-entering the market. Russia in particular
Adj. Operating Inc. (1) 51.2 45.9 54.0 producing record volumes.
Change in % 11.5 (5.2) • New revenues from laboratory start-ups and expansion
due to food safety concerns.
Margin %1 15.7 15.1 15.7
• Supply chain services continue to grow in Eastern
(1)
Before amortisation of acquisition intangibles, transaction Europe and China.
and integration-related costs • GMO rejection package driven by EU legislation gaining
(2)
Constant currency basis acceptance.

 Outlook
• Higher grain demand, however, limited financing may
challenge the ability of the trading community to execute
during H1’ 2012.
• Further acquisitions in Inland Services expected in 2012
to extend geographical coverage.
• Information and Market Research developing
capabilities and geographical coverage.
• New focus on biotechnology as client investments
expected to grow significantly.


MINERALS SERVICES (MIN)
2011 2010 2010 • Strong market conditions combined with focused sales
2
Pro-forma Published efforts deliver 23.5% organic revenue growth with
margin improvement to 19.4%.
Revenue 677.7 547.4 615.6
• Global exploration spend reached a record high of USD
Change in % 23.8 10.1
17 billion (Metals Economics Group).
Adj. Operating Inc. (1) 131.2 102.1 117.9 • Exceptional growth in Africa, South America and China.
Change in % 28.5 11.3 Balanced growth across all parts of the service portfolio.
• Key project wins including BHP Mitsubishi Alliance
Margin %1 19.4 18.7 19.2
(Australia) and Oceana Gold (New Zealand).
(1)
Before amortisation of acquisition intangibles, transaction
and integration-related costs
(2)
Constant currency basis

 Outlook
• CIMM acquisition closed on 6 January 2012.
• Energy Minerals services in Australia expanding, with
new laboratories in Mackay and Brisbane.
• Expansion of Metallurgy testing capacity in Perth and
Canada operational in H1’ 2012.
• Major Geochem expansions coming on-line in Ontario,
Vancouver, West Africa, Liberia and Turkey.
• Major commodity prices off from their peak, however still
at historically strong levels. Availability of financing for
junior mining companies may become an issue.

OIL, GAS & CHEMICALS SERVICES (OGC)
2011 2010 2010 • Excellent growth in Trade related services and Plant
2
Pro-forma Published and Terminal Operations (PTO) driven by strong
demand for oil, gas and chemicals and continuing
Revenue 911.7 845.3 956.6
outsourcing trends.
Change in % 7.9 (4.7)
• Strong growth in upstream services with high volumes
(1) in Australia after last year’s floods.
Adj. Operating Inc. 123.3 129.5 148.9
Change in % (4.8) (17.2) • Further expansion of Lube Oil Condition Monitoring
services in South America and Turkey.
Margin %1 13.5 15.3 15.6
• Margin impacted by significant investments and start up
(1)
Before amortisation of acquisition intangibles, transaction costs in upstream services as well as a drop in high
and integration-related costs margin Cargo Treatment services due to change in
(2)
Constant currency basis trading patterns.

 Outlook
• Further growth in upstream services: Well Testing and
Wellside services expansion, specifically in the Middle
East; new upstream laboratories in Middle East and
South America; SGS Horizon subsurface consultancy.
• Trade related services to maintain development pace.
• Demand for PTO to remain strong, outsourcing a key
driver.
• Solid pipeline of new projects, innovations and efficiency
initiatives to be launched in 2012.


LIFE SCIENCE SERVICES (LIFE)
2011 2010 2010 • Revenue growth of 11.8% driven by:
2
Pro-forma Published – Biologics strategy, expansion in Asia and state-of-
the art laboratories in Europe and North America.
Revenue 192.0 171.7 193.6
Change in % 11.8 (0.8)
– Successful integration of M-Scan which
contributed above expectations.
Adj. Operating Inc. (1) 20.7 25.3 28.8 • Clinical Research: Limited growth with pressure on
Change in % (18.2) (28.1) margins in a market where the reduced molecule
pipeline is affecting volumes and prices.
Margin %1 10.8 14.7 14.9
• Strong growth with stable margins for laboratory
(1)
Before amortisation of acquisition intangibles, transaction segment supported by our global key account strategy
and integration-related costs and enrichment of the service offering.
(2)

 Outlook
• China and India will benefit from increased outsourcing
as many key accounts continue to focus on these fast
growing markets.
• New centres of excellence within our existing laboratory
network for biologics (biosimilar, cell-based assay,
biosafety) will fully leverage our recent investments.
• Clinical Research activity will remain under pressure.
Service offering enrichment developed to offset volume
decrease from main customers.


CONSUMER TESTING SERVICES (CTS)
2011 2010 2010 • Excellent revenue growth driven by increased activity in
2
Pro-forma Published Europe (France, Spain, Germany & Turkey) and Asia.
• USA continues to provide solid revenue streams, thanks
Revenue 802.0 725.2 821.4
to diversification and market share gains in traditional
Change in % 10.6 (2.4)
segments.
Adj. Operating Inc. (1) 202.7 185.4 211.9 • Increasing cost pressure in some executing countries
Change in % 9.3 (4.3) (e.g. China, India) and pricing pressure in mature
services.
Margin %1 25.3 25.6 25.8
• Margin maintained at a steady level as recent
(1)
Before amortisation of acquisition intangibles, transaction investments (services & capabilities) and improvement
and integration-related costs actions take effect.
(2)

 Outlook
• Volatile overall market conditions but existing order
pipeline provides stability going into 2012.
• Additional market share gains expected in key European
markets and, importantly, the USA.
• Further efficiency and cost optimisation measures to be
implemented to compensate for possible cost pressure
in some affiliates.
• Continuing investment in new segments (e.g.
sustainability, automotive) and in geographic expansion
(e.g. Morocco, Brazil).

SYSTEMS & SERVICES CERTIFICATION (SSC)
2011 2010 2010 • Automotive, Food and Medical Devices were the leading
2
Pro-forma Published sectors in terms of growth.
• Strong performance in Training thanks to investments in
Revenue 364.0 344.6 386.1
local capabilities.
Change in % 5.6 (5.7)
• A number of blue chip multinational companies chose to
(1)
Adj. Operating Inc. 68.2 72.1 81.6 sign global contracts with SGS.
Change in % (5.4) (16.4) • Excellent market share gains and double digit growth in
Eastern Europe, Middle East, China and most Asian
Margin %1 18.7 20.9 21.1
countries.
(1)
Before amortisation of acquisition intangibles, transaction • Steady recovery in Japan following the natural disaster
and integration-related costs and energy crisis.
(2)

 Outlook
• Expecting continuous growth in major geographies
particularly the Americas, Eastern Europe, China and
Africa.
• Diversifying our portfolio of services to meet our
customers’ needs to outsource internal functions.
• Pursuing growth opportunities in industry sectors such
as IT and Healthcare.
• Supply chain activity in environmental, health & safety
and social compliance becoming a major growth driver.


INDUSTRIAL SERVICES (IND)
2011 2010 2010 • Very strong organic revenue growth in Africa, East Asia
2
Pro-forma Published and China.
• NDT business continues to perform well with increased
Revenue 747.0 655.0 737.9
shutdown work in the European power and refinery
Change in % 14.0 1.2
sector.
Adj. Operating Inc. (1) 80.0 84.9 97.1 • Statutory inspection business now growing again
Change in % (5.8) (17.6) particularly in the recently opened German market.
• Large project wins for the Project Services business.
Margin %1 10.7 13.0 13.2
• PfiNDE acquired in the USA for pipeline inspection and
(1)
Before amortisation of acquisition intangibles, transaction Acumax in South Africa for rope access inspection.
and integration-related costs • Investments in organic initiatives impacted margins.
(2)

 Outlook
• Increasing demand for our renewable and conventional
power service offering in Asia and Europe.
• Growth in oil and gas exploration providing more
opportunities for upstream inspection.
• Large inspection and testing service contracts with oil
majors as they consolidate their supplier base.
• New services for pipeline, rail and Russian GOST
business.


ENVIRONMENTAL SERVICES (ENVI)
2011 2010 2010 • Good performance of our European and Canadian
2
Pro-forma Published operations where growth was driven by service
diversification.
Revenue 283.8 247.9 278.4
• Operations in emerging markets have continued to
Change in % 14.5 1.9
deliver strong growth in industrial / mining sectors.
Adj. Operating Inc. (1) 26.8 26.3 29.8 • Strong emphasis on performance improvement and
Change in % 1.9 (10.1) laboratory process automation.
• Strengthened the portfolio in sustainable building,
Margin %1 9.4 10.6 10.7
renewable energy and shipping sectors.
(1)
Before amortisation of acquisition intangibles, transaction • Extended the footprint in Asia Pacific with acquisition of
and integration-related costs Leeder in Australia and Conserve in Malaysia.
(2)

 Outlook
• Market showing increased demand in renewable and
sustainability sectors. Mining and oil & gas
developments continue to drive our traditional market.
• Large multi-year contracts currently under negotiation in
major emerging economies.
• Data management and interpretation services to
become standard at each SGS location.
• Continued growth in new geographies such as Liberia,
Congo, Malaysia and the Gulf region.


AUTOMOTIVE SERVICES (AUTO)
2011 2010 2010 • ITV acquisition in Spain & Argentina fully integrated and
2
Pro-forma Published performing above expectations.
• Statutory business provided solid results in Western
Revenue 270.2 170.8 195.1
Europe and South America. Opened new test stations in
Change in % 58.2 38.5
Spain and Argentina.
Adj. Operating Inc. (1) 59.3 31.3 35.9 • Rapid recovery in Ivory Coast.
Change in % 89.5 65.2 • Commercial activities in the USA still negatively
impacted by significantly lower volumes for off-lease
Margin %1 21.9 18.3 18.4
inspections.
(1)
Before amortisation of acquisition intangibles, transaction • Commenced statutory services in South Africa and Peru.
and integration-related costs • New environmental vehicle engine testing services
(2)
Constant currency basis through acquisition of ETC.

 Outlook
• Statutory business will continue to provide solid results.
• Low commercial inspection volumes expected
throughout 2012.
• Several opportunities being pursued in the statutory
field in Asia, South America and Europe.
• Expanding Statutory Business into Road Safety
Services.


GOVERNMENTS AND INSTITUTIONS SERVICES (GIS)
2011 2010 2010 • Product Conformity Assessment (PCA) programmes are
2
Pro-forma Published the main driver of double digit growth in Local Solutions.
• New PCA programmes signed in Botswana, Iraq,
Revenue 221.7 208.0 228.6
Kurdistan and Tanzania. Kenya renewed for three
Change in % 6.6 (3.0)
years.
Adj. Operating Inc. (1) 51.8 33.0 41.6 • Global solutions had increased volumes and a new PSI
Change in % 57.0 24.5 contract was signed with Bangladesh with increased
volumes.
Margin %1 23.4 15.9 18.2
• Strong performance from TradeNet in Ghana and
(1)
Before amortisation of acquisition intangibles, transaction Madagascar, while Ivory Coast results were impacted
and integration-related costs by recent political events.
(2)

 Outlook
• Continued transformation of existing PSI contracts.
• Newly signed PCA contracts to start generating
revenues.
• Completed deployment of TradeNet in Mozambique.
• Completed implementation of new mandates in DRC
and Cameroon (Forestry), Ghana (Inland Revenue
Services).
• Roll-out of new tracking services in Africa as well as new
services in telecoms.


SGS 2011 Full Year Results Presentation

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