Half Yearly Report

RNS Number : 5295I

Intertek Group PLC

26 July 2012

 



2012 HALF YEAR RESULTS ANNOUNCEMENT

26 JULY 2012

Intertek Group plc ("Intertek"), a leading international provider of quality and safety services, announces its half year results for the period ended 30 June 2012.

Strong growth in revenue and earnings

Highlights

·  Strong revenue growth of 29.9% to £991.0m; constant currency organic growth of 9.9%

·  Strong profit¹ growth of 28.2% to £152.2m; constant currency organic growth of 12.7%

·  Adjusted operating profit¹ margin 15.4%

·  Diluted EPS¹ increase of 28.2%

·  Three bolt on acquisitions since 1 January for £17.4m

·  Interim dividend increase of 21.5%

Adjusted results (1)	2012	2011	Growth as reported	Organic growth at constant currency
Revenue	£991.0m	£763.1m	+29.9%	+9.9%
Operating profit	£152.2m	£118.7m	+28.2%	+12.7%
Profit before tax	£140.0m	£110.6m	+26.6%
Diluted earnings per share	58.2p	45.4p	+28.2%

1. Adjusted results are stated before separately disclosed items which include amortisation of acquisition intangibles £15.0m (H1 11: £9.5m), acquisition and related integration costs £1.1m (H1 11: £9.5m), Project costs £1.8m (H1 11: £6.3m). See Presentation of Results and note 3 to the Interim Financial Statements.

Statutory results	2012	2011	Growth
Operating profit	£134.3m	£93.4m	+43.8%
Profit before tax	£122.1m	£85.3m	+43.1%
Diluted earnings per share	50.7p	32.6p	+55.5%
Interim dividend per share	13.0p	10.7p	+21.5%

Wolfhart Hauser, Chief Executive Officer, commented:

"Intertek has delivered strong growth in revenue, operating profit and earnings in the first half of the year, as demand for quality services across the diverse industries and geographies that we operate in continues to expand.

Our businesses continue to perform well.  Within energy and commodities end-markets we are seeing very good demand for global quality services. Demand in consumer retail and commercial manufactured product industries was strong against a weaker prior year period. Customers continue to seek more testing support on the performance, sustainability and compliance of products and new technologies and are seeking greater 'total supply chain' quality solutions. We made further progress on improving the Group's underlying organic margin, whilst the total operating margin reduced slightly due to the dilutive effect of exceptional growth in Moody; acquired in April 2011.  

Global economic conditions are becoming increasingly uncertain; however, with the Group's balanced industry and geographic portfolio, we continue to expect to grow revenue at high single digits on an organic constant currency basis for the full year."

Contacts

For further information, please contact

Aston Swift, Investor Relations

Telephone:      [phone] [e-mail]

Richard Mountain, FTI

Telephone:      [phone] [e-mail]

Analysts' Meeting

There will be a meeting for analysts at 9.30am today at Goldman Sachs International, Peterborough Court, 133 Fleet Street, London, EC4A 2BB.  A copy of the presentation will be available on the website later today.

The 2012 Half Year Report will be available to download from the website later today. If you wish to receive a printed copy of this report, please contact Intertek by email to [e-mail] or request by calling [phone].

Corporate website: www.intertek.com 

About Intertek

Intertek is a leading provider of quality and safety solutions serving a wide range of industries around the world.

From auditing and inspection, to testing, quality assurance and certification, Intertek people are dedicated to adding value to customers' products and processes, supporting their success in the global marketplace.

Intertek has the expertise, resources and global reach to support its customers through its network of more than 1,000 laboratories and offices and 33,000 people in over 100 countries around the world.

Intertek Group plc (LSE: ITRK) is listed on the London Stock Exchange and is a constituent of the FTSE 100 index.

HALF YEAR REPORT 2012

BUSINESS REVIEW

For the six months ended 30 June 2012                                    

In order to present the performance of the Group in a clear, consistent and comparable format, certain items are disclosed separately on the face of the income statement. These items, which are described in the Presentation of Results section of this report and in note 3 to the Interim Financial Statements, are excluded from the adjusted results. The figures discussed in this review extracted from the income statement and cash flow are presented before separately disclosed items.

 

Overview of performance

 

	H1 12	H1 11	Change	Organic change
	£m	£m	at actual rates	at constant rates
Revenue	991.0	763.1	+29.9%	+9.9%
Operating profit	152.2	118.7	+28.2%	+12.7%
Margin	15.4%	15.6%	(20)bps	40bps
Net financing costs	12.2	8.1
Income tax expense	38.8	31.0
Earnings for the period	94.8	73.9	+28.3%
Diluted earnings per share	58.2p	45.4p	+28.2%
Cash generated from operations	118.1	91.1	+29.6%
Capital investment - acquisitions	17.4	449.9
Capital investment - organic	45.7	31.6	+44.6%

 

Revenue increased by 29.9% to £991.0m, principally due to strong organic growth and the acquisition of, and very strong subsequent growth in, the Moody International ('Moody') business. Excluding the results of acquisitions made since 1 January 2011, organic revenue increased by 9.9% at constant exchange rates with all divisions contributing to growth.

Operating profit was £152.2m, up 28.2% driven by strong growth in all divisions. The Group made further progress with its margin improvement programme, with Industry & Assurance and Commodities contributing to a 40 basis points increase in the Group's organic margin at constant exchange rates. Total margin at actual exchange rates was 20 basis points lower as good organic margin progression was more than offset by an additional four months and the mix effect of exceptionally strong revenue growth in Moody.

Net financing costs were £12.2m, an increase of £4.1m on the first half of 2011, principally due to increased borrowing, partially offset by an interest receipt on a tax repayment relating to prior years.

The adjusted effective tax rate was 27.7% (H1 11: 28.0%) and the full year rate is expected to be around this level.

Cash flow from operations increased by 29.6% to £118.1m principally due to strong profit growth.

The Group completed three bolt-on acquisitions for £17.4m on a cash and debt free basis. The Group ended the period in a strong financial position with net debt of £618.5m and an annualised net debt to EBITDA ratio of 1.6 (H1 11:1.9 on a pro forma basis).

Diluted adjusted earnings per share for the six months ended 30 June 2012 increased by 28.2% to 58.2p.

Following good progress during the first half and considering the outlook for the Group, the Board has approved a 21.5% increase in the interim dividend to 13.0p per share. The dividend will be paid on 16 November 2012 to shareholders on the register at 2 November 2012.

Business development highlights

Acquisitions

During 2012 the Group made 3 bolt-on acquisitions for £17.4m, on a cash and debt free basis.

In March 2012 the Group acquired 4th Strand for £4.1m, a provider of product quality and benchmarking services to the retail industry in North America.

In April 2012 the Group acquired Automation Technology Inc, a provider of asset integrity support services to the US Power industry for £10.0m.

In May 2012 the Group acquired Vigalab Mineral Laboratory in Chile for £3.3m which complements Intertek's growing international minerals capability and supports the expansion of quality and safety services in Latin America.

We continue to evaluate additional acquisition opportunities and expect to make further bolt-on acquisitions in the second half.

Separately disclosed items

Separately disclosed items before tax were £17.9m in the first half of 2012 (H1 11: £25.3m). This comprises the amortisation of acquisition intangibles of £15.0m (H1 11: £9.5m), acquisition transaction and integration costs of £1.1m (H1 11: £9.5m) and £1.8m (H1 11: £6.3m) for a Business Process Outsourcing initiative. Further information on separately disclosed items is given in the Presentation of Results section of this report and in note 3 to the Interim Financial Statements.

OPERATING REVIEW BY DIVISION

		Revenue				Adjusted operating profit
		H1 12	H1 11	Change at actual rates	Organic change at constant rates	H1 12	H1 11	Change at actual rates	Organic change at constant rates
		£m	£m			£m	£m
Industry & Assurance		318.5	154.6	+106.0%	+14.3%	33.6	15.1	+122.5%	+27.6%
Commodities		278.2	251.2	+10.7%	+10.5%	34.3	28.3	+21.2%	+19.9%
Consumer Goods		163.9	146.3	+12.0%	+8.9%	51.6	47.0	+9.8%	+6.6%
Commercial & Electrical		157.9	141.4	+11.7%	+9.8%	26.1	22.9	+14.0%	+10.6%
Chemicals & Pharmaceuticals		72.5	69.6	+4.2%	+3.6%	6.6	5.4	+22.2%	+16.7%
		991.0	763.1	+29.9%	+9.9%	152.2	118.7	+28.2%	+12.7%
Net financing costs						(12.2)	(8.1)
Adjusted profit before income tax						140.0	110.6	+26.6%
Income tax expense						(38.8)	(31.0)
Adjusted profit for the period						101.2	79.6	+27.1%
Adjusted diluted EPS						58.2p	45.4p	+28.2%

A review of the adjusted results of each division in the six months to 30 June 2012 compared to the six months to 30 June 2011 is set out below. 

Revenue and operating profit are presented at actual exchange rates and growth rates are shown at actual exchange rates. In addition, organic growth at constant exchange rates is also presented. Operating profit and operating margin are stated before separately disclosed items.

Industry & Assurance

	H1 12	H1 11	Change	Organic change
	£m	£m	at actual rates	at constant rates
Revenue	318.5	154.6	106.0%	14.3%
Operating profit	33.6	15.1	122.5%	27.6%
Operating margin	10.5%	9.8%	70bps	90bps

Industry & Assurance - using in-depth knowledge of the oil, gas, nuclear, power, renewable energy, construction, food, chemical and agricultural industries, the division provides a diverse range of services to help customers optimise use and value of their assets and meet global quality standards on their products. These include technical inspection, asset integrity management, exploration and production support, consulting, training and third-party management systems auditing. The division also provides certification services, second-party supplier auditing, sustainability data verification and process performance analysis.

Total revenue more than doubled to £318.5m, primarily due to the acquisition and strong subsequent growth of Moody. Excluding the effects of acquisitions, organic revenue growth was 14.3% at constant exchange rates. There was good organic growth in Technical Inspection and Business Assurance (previously Systems Certification) in the US and UK, and across the Food and Agri business lines.

The Group is benefiting from combining the Intertek and Moody operations, and winning a significant number of new capital projects in the energy industry despite a competitive environment.

Total operating profit was £33.6m, up 122.5% and the margin increased by 70 basis points.

In April 2012 Intertek acquired Automation Technology Inc, a provider of asset integrity support services to the US Power industry for £10.0m. This adds to the expanding range of services Intertek can provide to its customers.

Despite a recent drop in global oil prices, continued capital investment, in particular by global energy companies, is expected to continue to drive growth in the coming months.

Commodities

	H1 12	H1 11	Change	Organic change
	£m	£m	at actual rates	at constant rates
Revenue	278.2	251.2	10.7%	10.5%
Operating profit	34.3	28.3	21.2%	19.9%
Operating margin	12.3%	11.3%	100bps	100bps

Commodities - provides independent cargo inspection, analytical assessment, calibration and related research and technical services to the world's petroleum, mining, minerals and biofuels industries. The division also provides services to governments and regulatory bodies to support trade activities that help the flow of goods across borders.

Revenue increased by 10.7% to £278.2m with growth from all business lines. There was strong growth from Product Conformity Programmes in the Government & Trade Services segment as the scope of some contracts widened compared to the first half of 2011. The Minerals segment, which now accounts for almost a fifth of the division, continued to perform very well on the back of new exploration projects as well as increased samples from existing mining contracts. Oil cargo inspection was strong, particularly in Asia and the Middle East, offsetting steady market conditions in North America.

Operating profit increased by 21.2% to £34.3m, and the operating margin increased 100 basis points.  

In May 2012 Intertek acquired Vigalab Mineral Laboratory in Chile for £3.3m which complements Intertek's growing international minerals capability and supports the expansion of quality and safety services in Latin America.

Consumer Goods

	H1 12	H1 11	Change	Organic change
	£m	£m	at actual rates	at constant rates
Revenue	163.9	146.3	12.0%	8.9%
Operating profit	51.6	47.0	9.8%	6.6%
Operating margin	31.5%	32.1%	(60)bps	(70)bps

Consumer Goods - the division is a market leading provider of services to the textiles, toys, footwear, hardlines, food and retail industries. As partner to retailers, manufacturers and distributors it offers expertise on issues ranging from restricted hazardous substance and sustainability, to supply chain security and legislation relating to environmental, ethical and trade security issues. Services include testing, inspection, auditing, advisory services, quality assurance and hazardous substance testing.

Revenue in Consumer Goods was £163.9m, up 12.0%. Following low growth in the comparable period, Consumer Goods reported good revenue growth in the traditional testing segments of Textiles, Toys & Hardlines as well as Inspection of consumer goods, factory audits and increasingly, supply chain services. Investment in geographic expansion as well as developing new services to support global retail clients in the wider aspects of supply chain optimisation will continue to ensure Intertek's market leading position in this sector.

Operating profit increased by 9.8% to £51.6m at an operating margin of 31.5%. The organic margin at constant exchange rates was down 70 basis points over the prior period reflecting the business mix and investment in new service lines.

In March 2012 Intertek acquired 4th Strand for £4.1m, a provider of product quality and benchmarking services to the retail industry in North America. This company brings expert product procurement knowledge and experience to the Intertek Group that will support the drive to increase the range of services to the retail industry initially to North America and then to Europe and other geographies.

The key drivers of the Consumer Goods business remain unchanged. Concerns over the safety of consumer products, ongoing legislation, the sourcing of products from countries where production costs are low, the trend towards shorter product life-cycles and increasing product variety will continue to contribute to its growth.

Commercial & Electrical

	H1 12	H1 11	Change	Organic change
	£m	£m	at actual rates	at constant rates
Revenue	157.9	141.4	11.7%	9.8%
Operating profit	26.1	22.9	14.0%	10.6%
Operating margin	16.5%	16.2%	30bps	10bps

Commercial & Electrical - the global network of accredited facilities provides manufacturers and retailers with the most comprehensive scope of safety, performance and quality testing and certification services. The division supports customers in a wide range of industries including home appliances, consumer electronics, lighting, medical, building products, industrial and HVAC/R (heating, ventilation, air conditioning and refrigeration), ICT (information and communication technology), renewable energy and automotive.

Commercial & Electrical delivered strong growth in the first half of 2012 across its business streams, all of which was organic. Revenue increased to £157.9m, up 11.7% with North America and China both growing strongly. New product launches and new product models in the core electrical and electronic service lines such as Home Appliances and Consumer Electronics, HVAC/R, ICT, and Lighting supported this growth as well as a stringent new Safety Standard relating to Medical Devices. Recent investments into 4th Generation wireless networks and energy storage for electric vehicles testing are adding to this growth.

Operating profit was £26.1m, up 14.0% and the margin improved by 30 basis points to 16.5% due to the strong business line growth and the favourable geographic mix, with the fastest growth coming from China and Asia.

Chemicals & Pharmaceuticals

	H1 12	H1 11	Change	Organic change
	£m	£m	at actual rates	at constant rates
Revenue	72.5	69.6	4.2%	3.6%
Operating profit	6.6	5.4	22.2%	16.7%
Operating margin	9.1%	7.8%	130bps	100bps

Chemicals & Pharmaceuticals - serving a wide range of industries, including chemicals and refined products, pharmaceutical, healthcare and beauty, and automotive and aerospace, the division offers advanced laboratory measurement and expert consultancy related technical support services and sustainability solutions. It has an established track record of success in laboratory outsourcing with many large, internationally recognised companies. The division's world leading technical experts also support internal technical development.

Total revenue increased to £72.5m, up 4.2%, of which 3.6% was organic. High single digits organic revenue growth from the Chemicals & Materials and the Health & Environmental segments more than offset a weaker performance in the Pharma testing business.

Total operating profit was £6.6m, up 22.2% with an operating margin up 130 basis points to 9.1%.

PRESENTATION OF RESULTS

Adjusted results

In order to present the performance of the Group in a clear, consistent and comparable format, certain items are disclosed separately on the face of the income statement. These separately disclosed items which are described below, are excluded from the adjusted results.

Organic growth

Organic growth figures are calculated by excluding the results of acquisitions made since 1 January 2011.

Constant rates

In order to remove the impact of currency translation from our growth figures we present revenue and profit growth at constant rates. This is calculated by translating H1 11 results at H1 12 exchange rates.

Separately disclosed items

Separately disclosed items are items which by their nature or size, in the opinion of the Directors, should be excluded from the adjusted results to provide readers with a clear and consistent view of the business performance of the Group and its operating divisions. When applicable, these items include amortisation of acquisition intangibles, impairment of goodwill and other assets, the profit or loss on disposals of businesses or other significant fixed assets, costs of acquiring and integrating acquisitions, the cost of any fundamental restructuring, material claims and settlements, significant recycling of amounts from equity to the income statement and unrealised gains/losses on financial assets/liabilities. Details of the separately disclosed items for the six months ended 30 June 2012 and the comparative prior period are given in note 3 to the Interim Financial Statements. 

PRINCIPAL RISKS AND UNCERTAINTIES

 

The Board has overall responsibility for the establishment and oversight of the Group's risk management framework. The Board has an established, structured approach to risk management, which includes continuously assessing and monitoring the key risks and uncertainties of the business.

 

During the first half of the year the Board reviewed the risk management framework and the Group's principal risks and uncertainties to ensure they continued to be relevant to the Group. Following the Moody acquisition, the integration process was identified as a key risk. The Board reviewed the progress of the integration during the period and this is no longer considered a key risk to the Group.

The remaining principal risks relevant to the Group, which are set out on pages 45 to 47 of the Group's Annual Report for 2011, which is available from our website at www.intertek.com, are outlined below:

 

·     Loss of reputation

·     Dependence on accreditation

·     Management expertise

·     Political action

·     Litigation

·     Regulatory compliance

·     Foreign currency risks

·     Liquidity risk

·     Risk of financial irregularities

 

The Business Review and Operating Review by Division include consideration of key uncertainties affecting the Group in the remaining six months of the year.

MANAGEMENT REPORTS

Intertek will issue the next interim management statement in the fourth quarter of 2012. The full year results will be announced on 4 March 2013.

HALF YEAR REPORT

If you require a printed copy of this statement please contact the Group Company Secretary. This statement is available on www.intertek.com.

LEGAL NOTICE

This Half Year Report and announcement contain certain forward-looking statements with respect to the financial condition, results, operations and business of Intertek Group plc. These statements and forecasts involve risk and uncertainty because they relate to events and depend upon circumstances that will occur in the future. There are a number of factors that could cause actual results or developments to differ materially from those expressed or implied by these forward-looking statements and forecasts. Nothing in this announcement should be construed as a profit forecast. Past performance cannot be relied upon as a guide to future performance.

RESPONSIBILITY STATEMENT OF THE DIRECTORS IN RESPECT OF THE HALF YEAR REPORT

We confirm that to the best of our 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 of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and

(b)   DTR 4.2.8R of the Disclosure and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the entity during that period; and any changes in the related party transactions described in the last Annual Report that could do so.

By order of the board of Intertek Group plc

Wolfhart Hauser	Lloyd Pitchford
Chief Executive Officer	Chief Financial Officer
25 July 2012	25 July 2012

Independent review report to Intertek Group plc

Introduction

We have been engaged by the company to review the condensed set of financial statements in the half year report for the six months ended 30 June 2012 which comprises the condensed consolidated interim income statement, statement of comprehensive income, statement of financial position, statement of changes in equity, statement of cash flows and the related explanatory notes. We have read the other information contained in the half year report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

This report is made solely to the company in accordance with the terms of our engagement to assist the company in meeting the requirements of the Disclosure and 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 the company those matters we are required to state to it in this report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company for our review work, for this report, or for the conclusions we have reached.

Directors' responsibilities

The half year report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half year report in accordance with the DTR of the UK FSA.

The annual financial statements of the group are prepared in accordance with IFRSs as adopted by the EU. The condensed set of financial statements included in this half year report has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU.

Our responsibility

Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the half year report based on our review.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the Auditing Practices Board for use in the UK. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half year report for the six months ended 30 June 2012 is not prepared, in all material respects, in accordance with IAS 34 as adopted by the EU and the DTR of the UK FSA.

Stephen Wardell

for and on behalf of KPMG Audit Plc

Chartered Accountants
15 Canada Square

London E14 5GL
25 July 2012

Condensed Consolidated Interim Income Statement

Six months ended 30 June 2012

		Six months to 30 June 2012 (Unaudited)			Six months to 30 June 2011 (Unaudited)
		Adjusted results	Separately disclosed items*	Total	Adjusted results	Separately disclosed items*	Total
	Notes	£m	£m	£m	£m	£m	£m
Revenue	2	991.0	-	991.0	763.1	-	763.1
Operating costs		(838.8)	(17.9)	(856.7)	(644.4)	(25.3)	(669.7)
Group operating profit	2	152.2	(17.9)	134.3	118.7	(25.3)	93.4
Finance income		3.4	-	3.4	4.5	-	4.5
Finance expense		(15.6)	-	(15.6)	(12.6)	-	(12.6)
Net financing costs		(12.2)	-	(12.2)	(8.1)	-	(8.1)
Profit before income tax		140.0	(17.9)	122.1	110.6	(25.3)	85.3
Income tax expense	4	(38.8)	5.7	(33.1)	(31.0)	4.5	(26.5)
Profit for the period		101.2	(12.2)	89.0	79.6	(20.8)	58.8
Profit attributable to:
Equity holders of the Company (earnings)		94.8	(12.2)	82.6	73.9	(20.8)	53.1
Non-controlling interest		6.4	-	6.4	5.7	-	5.7
Profit for the period		101.2	(12.2)	89.0	79.6	(20.8)	58.8
Earnings per share**
Basic	5			51.5p			33.2p
Diluted	5			50.7p			32.6p
Dividends in respect of the period				13.0p			10.7p

*   See note 3.

** Earnings per share on the adjusted results is disclosed in note 5.

Condensed Consolidated Interim Statement of Comprehensive Income

Six months ended 30 June 2012

		Six months to	Six months to
		30 June	30 June
		2012	2011
		(Unaudited)	(Unaudited)
	Notes	£m	£m
Profit for the period		89.0	58.8
Other comprehensive income
Foreign exchange translation differences of foreign operations		(10.1)	(1.0)
Net exchange gain / (loss) on hedges of net investments in foreign operations		7.1	(3.5)
Effective portion of changes in fair value of cash flow hedges		(0.5)	-
Actuarial gains and losses on defined benefit pension schemes		(5.8)	-
Income tax recognised in other comprehensive income		(0.4)	-
Total other comprehensive income for the period, net of tax		(9.7)	(4.5)
Total comprehensive income for the period		79.3	54.3
Total comprehensive income for the period attributable to:
Equity holders of the Company		73.0	48.9
Non-controlling interest		6.3	5.4
Total comprehensive income for the period		79.3	54.3

Condensed Consolidated Interim Statement of Financial Position

As at 30 June 2012

		At 30 June	At 30 June	At  31 December
		2012	2011	2011
		(Unaudited)	(Unaudited)	(Audited)
	Notes	£m	£m	£m
Assets
Property, plant and equipment	10	270.0	248.5	265.0
Goodwill	9	655.7	616.9	637.0
Other intangible assets		160.2	184.3	169.5
Investments in associates		0.8	-	0.7
Deferred tax assets		29.3	24.0	27.6
Total non-current assets		1,116.0	1,073.7	1,099.8
Inventories		13.5	11.8	12.3
Trade and other receivables		504.3	431.4	442.6
Cash and cash equivalents	8	160.2	171.8	181.9
Total current assets		678.0	615.0	636.8
Total assets		1,794.0	1,688.7	1,736.6
Liabilities
Interest bearing loans and borrowings	8	(1.2)	(38.0)	(38.7)
Derivative financial instruments		-	(0.2)	-
Current taxes payable		(45.9)	(35.1)	(44.1)
Trade and other payables		(295.4)	(251.4)	(295.5)
Provisions		(19.5)	(22.1)	(17.1)
Total current liabilities		(362.0)	(346.8)	(395.4)
Interest bearing loans and borrowings	8	(777.5)	(771.9)	(723.9)
Deferred tax liabilities		(45.4)	(49.9)	(49.2)
Net pension liabilities	6	(16.6)	(4.6)	(11.3)
Other payables		(4.5)	(5.7)	(9.0)
Provisions		(1.4)	(0.3)	(1.3)
Total non-current liabilities		(845.4)	(832.4)	(794.7)
Total liabilities		(1,207.4)	(1,179.2)	(1,190.1)
Net assets		586.6	509.5	546.5
Equity
Share capital		1.6	1.6	1.6
Share premium		257.3	256.6	256.7
Other reserves		24.5	47.3	27.9
Retained earnings		277.5	177.4	236.3
Total attributable to equity holders of the Company		560.9	482.9	522.5
Non-controlling interest		25.7	26.6	24.0
Total equity		586.6	509.5	546.5

Condensed Consolidated Interim Statement of Changes in Equity

Six months ended 30 June 2012

	Attributable to equity holders of the Company
			Other reserves
	Share capital	Share premium account	Translation reserve	Hedging reserve	Other	Retained earnings*	Total before non-controlling interest		Non-controlling interest		Total equity
	£m	£m	£m	£m	£m	£m	£m		£m		£m
At 1 January 2011	1.6	256.3	45.1	-	6.4	149.5	458.9		23.1		482.0
Comprehensive income for the period	-	-	(4.2)	-	-	53.1	48.9		5.4		54.3
Dividends paid	-	-	-	-	-	(30.1)	(30.1)		(2.1)		(32.2)
Issue of shares	-	0.3	-	-	-	-	0.3		0.2		0.5
Purchase of own shares**	-	-	-	-	-	(0.4)	(0.4)		-		(0.4)
Equity-settled transactions	-	-	-	-	-	4.6	4.6		-		4.6
Income tax on equity-settled transactions	-	-	-	-	-	0.7	0.7		-		0.7
At 30 June 2011	1.6	256.6	40.9	-	6.4	177.4	482.9		26.6		509.5
At 1 January 2012	1.6	256.7	21.5	-	6.4	236.3	522.5		24.0		546.5
Comprehensive income for the period	-	-	(2.9)	(0.5)	-	76.4	73.0		6.3		79.3
Dividends paid	-	-	-	-	-	(37.0)	(37.0)		(4.6)		(41.6)
Issue of shares	-	0.6	-	-	-	-	0.6		-		0.6
Purchase of own shares**	-	-	-	-	-	-	-		-		-
Equity-settled transactions	-	-	-	-	-	5.8	5.8		-		5.8
Cash settlement of share awards	-	-	-	-	-	(5.8)	(5.8)		-		(5.8)
Income tax on equity-settled transactions	-	-	-	-	-	1.8	1.8		-		1.8
At 30 June 2012	1.6	257.3	18.6	(0.5)	6.4	277.5	560.9		25.7		586.6

*After £244.1m for goodwill written off to retained earnings as at 1 January 2004 in relation to subsidiaries acquired prior to 31 December 1997.

** The Group purchased through its Employee Benefit Trust nil shares (2011: 20,000) of Intertek Group plc to satisfy the future likely vesting of shares.

The dividend of £37.0m which was paid on 22 June 2012 represented a final dividend of 23.0p per ordinary share in respect of the year ended 31 December 2011. The dividend of £30.1m which was paid on 17 June 2011 represented a final dividend of 18.8p per ordinary share in respect of the year ended 31 December 2010. There was an issue of 621,812 ordinary shares during the period on exercise of share awards.

Condensed Consolidated Interim Statement of Cash Flows

Six months ended 30 June 2012

		Six months to	Six months to
		30 June	30 June
		2012	2011
		(Unaudited)	(Unaudited)
	Notes	£m	£m
Cash flows from operating activities
Profit for the period		89.0	58.8
Adjustments for:
Depreciation charge		29.1	27.0
Amortisation of software		1.8	2.0
Amortisation of acquisition intangibles		15.0	9.5
Equity-settled transactions	7	5.8	4.6
Net financing costs		12.2	8.1
Income tax expense	4	33.1	26.5
Loss on disposal of property, plant, equipment and software		0.1	-
Operating profit before changes in working capital and operating provisions		186.1	136.5
Change in inventories		(1.3)	(2.7)
Change in trade and other receivables		(65.8)	(33.0)
Change in trade and other payables		(4.3)	(18.3)
Change in provisions		(1.0)	(5.0)
Special contributions into pension schemes	6	(0.6)	(1.2)
Cash generated from operations		113.1	76.3
Interest and other finance expense paid		(11.9)	(9.0)
Income taxes paid		(35.2)	(19.7)
Net cash flows from operating activities		66.0	47.6
Cash flows from investing activities
Proceeds from sale of property, plant, equipment and software		0.8	0.3
Interest received		1.3	1.0
Acquisition of subsidiaries, net of cash acquired	9	(17.4)	(449.9)
Consideration paid in respect of prior period acquisitions	9	(0.5)	(2.3)
Acquisition of property, plant, equipment and software	10	(45.7)	(31.6)
Net cash flows used in investing activities		(61.5)	(482.5)
Cash flows from financing activities
Proceeds from the issue of share capital		0.6	0.3
Purchase of own shares		-	(0.4)
Cash settlement of share awards		(5.8)	-
Drawdown of borrowings		201.3	575.3
Repayment of borrowings		(178.7)	(152.6)
Dividends paid to non-controlling interest		(4.6)	(2.1)
Equity dividends paid		(37.0)	(30.1)
Net cash flows from financing activities		(24.2)	390.4
Net (decrease) in cash and cash equivalents	8	(19.7)	(44.5)
Cash and cash equivalents at 1 January	8	181.9	217.0
Effect of exchange rate fluctuations on cash held	8	(2.0)	(0.7)
Cash and cash equivalents at end of period	8	160.2	171.8

Cash outflow relating to separately disclosed items was £5.0m (six months ended 30 June 2011: £14.8m).

Notes to the Condensed Consolidated Interim Financial Statements

1   Basis of preparation

Reporting entity

Intertek Group plc (the 'Company') is a company incorporated and domiciled in the United Kingdom. The Condensed Consolidated Interim Financial Statements of the Company as at and for the six months ended 30 June 2012 comprise the Company and its subsidiaries (together referred to as the 'Group').

The Consolidated Financial Statements of the Group as at and for the year ended 31 December 2011, are available upon request from the Company's registered office at 25 Savile Row, London, W1S 2ES. An electronic version is available from the Investors section of the Group website at www.intertek.com.

Statement of compliance

These Condensed Consolidated Interim Financial Statements are prepared in accordance with IAS 34: Interim Financial Reporting as endorsed and adopted for use in the European Union and the Disclosure and Transparency Rules (DTR) of the Financial Services Authority. They do not include all of the information required for full annual financial statements, and should be read in conjunction with the Consolidated Financial Statements of the Group as at and for the year ended 31 December 2011.

The comparative figures for the financial year ended 31 December 2011 are not the Company's statutory accounts for that financial year.  Those accounts have been reported on by the Company's auditors and delivered to the Registrar of Companies.  The report of the auditor was (i) unqualified, (ii) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report, and (iii) did not contain a statement under section 498(2) or (3) of the Companies Act 2006.

Significant accounting policies

These Condensed Consolidated Interim Financial Statements are unaudited and, except as described below, have been prepared on the basis of accounting policies consistent with those applied in the Consolidated Financial Statements for the year ended 31 December 2011.

There are no new standards effective for the first time in the current financial period with significant impact on the Company's consolidated results or financial position.

Risks and uncertainties

The Operating Review includes consideration of the risks and uncertainties affecting the Group in the remaining six months of the year. The Board has reviewed forecasts, including forecasts adjusted for significantly worse economic conditions, and remains satisfied with the Group's funding and liquidity position.  On the basis of its forecasts, both base case and stressed, and available facilities, the Board has concluded that the going concern basis of preparation continues to be appropriate.

Estimates

The preparation of interim financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense.  Actual results may differ from these estimates.

In preparing these Condensed Consolidated Interim Financial Statements, the nature of the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation were the same as those that were applied to the consolidated financial statements as at and for the year ended 31 December 2011.  During the six months ended 30 June 2012 management reassessed its estimates in respect of pensions (note 6), contingent consideration payable and fair value adjustments in respect of acquisitions made in prior periods (note 9 (c)) and also in respect of claims and settlements.

Foreign operations

The assets and liabilities of foreign operations, including goodwill arising on acquisition, are translated to sterling at foreign exchange rates ruling at the reporting date. The income and expenses of foreign operations are translated into sterling at cumulative average rates of exchange during the year.

The most significant currencies for the Group were translated at the following exchange rates:

	Assets and liabilities		Income and expense
Value of £1	Actual  rates		Cumulative average rates
	30 June 12	30 June 11	H1 12	H1 11
US dollar	1.56	1.60	1.58	1.61
Euro	1.25	1.11	1.21	1.15
Chinese renminbi	9.83	10.36	9.96	10.55
Hong Kong dollar	12.08	12.46	12.26	12.55
Australian dollar	1.55	1.52	1.53	1.56
Canadian dollar	1.60	1.57	1.59	1.58

Business analysis

The Group is organised into five operating divisions: Industry & Assurance, Commodities, Consumer Goods, Commercial & Electrical and Chemicals & Pharmaceuticals. The costs of corporate head office and other costs which are not controlled by the operating divisions are allocated to these divisions. These divisions are the basis on which the Group reports its primary segment information. A description of the activity in each division is given below.

Industry & Assurance provides a wide range of services including asset integrity management, engineering, inspection, auditing, certification, consulting, training, staffing and testing services. It serves a wide variety of industries including oil, gas, petrochemical, power, renewable energy, and civil and infrastructure. It also provides services to customers in the food and agricultural sectors.  

Commodities provides testing, inspection and other technical services to the global petroleum and minerals industries, and supports trade activities that help the flow of goods across borders.

Consumer Goods partners with global retailers, manufacturers and distributors to enhance clients' products, processes, and brands. Our services include testing, inspection, auditing, advisory services, quality assurance, and hazardous substance testing.

Commercial & Electrical provides global manufacturers and retailers with the most comprehensive scope of safety, performance and quality testing and certification services. The division supports customers in a wide range of industries including home appliances, consumer electronics, lighting, medical, building, industrial and HVAC/R (heating, ventilation, air conditioning and refrigeration), ICT, renewable energy and automotive.

Chemicals & Pharmaceuticals helps global industries to sharpen their competitive edge with expert measurement and consulting services that support core business processes, ranging from new drug development through to the development of new materials, polymers, composites and packaging.

2          Operating segments  

Six months ended 30 June 2012	Revenue from external customers	Inter-segment revenue	Total revenue	Depreciation and software amortisation*	Adjusted operating profit	Separately disclosed Items	Group operating profit
	£m	£m	£m	£m	£m	£m	£m
Industry & Assurance	318.5	0.9	319.4	(3.1)	33.6	(11.8)	21.8
Commodities	278.2	1.5	279.7	(10.8)	34.3	(1.0)	33.3
Consumer Goods	163.9	0.7	164.6	(5.4)	51.6	(0.6)	51.0
Commercial & Electrical	157.9	3.3	161.2	(6.8)	26.1	(1.2)	24.9
Chemicals & Pharmaceuticals	72.5	1.3	73.8	(3.0)	6.6	(1.4)	5.2
Eliminations	-	(7.7)	(7.7)	-	-	-	-
Total	991.0	-	991.0	(29.1)	152.2	(16.0)	136.2
Unallocated separately disclosed items					-	(1.9)	(1.9)
Group operating profit					152.2	(17.9)	134.3
Net financing costs					(12.2)	-	(12.2)
Profit before income tax					140.0	(17.9)	122.1
Income tax expense					(38.8)	5.7	(33.1)
Profit for the period					101.2	(12.2)	89.0

^{* Depreciation and software amortisation of £30.9m (2011: £29.0m) includes unallocated charges of £1.8m (2011: £1.6m).}

Six months ended 30 June 2011	Revenue from external customers	Inter- segment revenue	Total revenue	Depreciation and software amortisation	Adjusted operating profit	Separately disclosed items	Group operating profit			Group operating profit
	£m	£m	£m	£m	£m	£m	£m			£m
Industry & Assurance	154.6	1.0	155.6	(2.3)	15.1	(13.8)	1.3			1.3
Commodities	251.2	1.6	252.8	(10.6)	28.3	(1.3)	27.0			27.0
Consumer Goods	146.3	0.6	146.9	(5.7)	47.0	-	47.0			47.0
Commercial & Electrical	141.4	2.4	143.8	(6.1)	22.9	(1.4)	21.5			21.5
Chemicals & Pharmaceuticals	69.6	0.9	70.5	(2.7)	5.4	(2.0)	3.4			3.4
Eliminations	-	(6.5)	(6.5)	-	-	-	-
Total	763.1	-	763.1	(27.4)	118.7	(18.5)	100.2			100.2
Unallocated separately disclosed items					-	(6.8)	(6.8)			(6.8)
Group operating profit					118.7	(25.3)	93.4			93.4
Net financing costs					(8.1)	-	(8.1)			(8.1)
Profit before income tax					110.6	(25.3)	85.3			85.3
Income tax expense					(31.0)	4.5	(26.5)			(26.5)
Profit for the period					79.6	(20.8)	58.8			58.8

3          Separately disclosed items

		Six months to	Six months to
		30 June	30 June
		2012	2011
		£m	£m
Operating costs
Amortisation of acquisition intangibles	(a)	(15.0)	(9.5)
Acquisition and integration costs	(b)	(1.1)	(9.5)
Project costs	(c)	(1.8)	(6.3)
Total operating costs		(17.9)	(25.3)
Income tax credit		5.7	4.5
Total		(12.2)	(20.8)

(a)  Of the amortisation of acquired intangibles in the current year, the majority relates to the customer contracts and customer relationships acquired with the purchase of Moody International Limited ('Moody') in 2011. 

(b)  Acquisition and integration costs of £1.1m (six months ended 30 June 2011: £9.5m) include £0.3m of acquisition costs (six months ended 30 June 2011: £8.0m) and £0.7m of integration costs (six months ended 30 June 2011: £1.0m).

(c)  Project costs of £1.8m (six months ended 30 June 2011: £6.3m) relate to the Group's Business Process Outsourcing initiative.

4          Income tax expense

Income tax expense is recognised based on management's best estimate of the weighted average annual income tax rate expected for the full financial year applied to the pre-tax income of the interim period in respect of the adjusted results.  The income tax expense for the adjusted results for the six months ended 30 June 2012 is £38.8m (six months ended 30 June 2011: £31.0m).  The Group's adjusted consolidated effective tax rate for the six months ended 30 June 2012 is 27.7% (six months ended 30 June 2011: 28.0%).  The income tax expense for the total results for the six months ended 30 June 2012 is £33.1m (six months ended 30 June 2011: £26.5m).  The Group's consolidated effective tax rate for the six months ended 30 June 2012 is 27.1% (six months ended 30 June 2011: 31.1%). 

Differences between the estimated adjusted effective rate of 27.7% and the weighted average notional statutory UK rate of 24.5% include, but are not limited to the mix of profits, the effect of tax rates in foreign jurisdictions, non deductible expenses, the effect of utilised tax losses and under/over provisions in previous periods.

The Budget on 21 March 2012 revised the previously announced phased reduction in the UK statutory corporation tax rate. The rate is now proposed to reduce to 22% (previously 23%) by 1 April 2014. A reduction in the rate from 26% to 25% (effective from 1 April 2012) was substantively enacted on 5 July 2011, and further reductions to 24% (effective from 1 April 2012) and 23% (effective from 1 April 2013) were substantively enacted on 26 March 2012 and 3 July 2012 respectively. This change will not have a significant impact on the Group since the majority of its operations are outside the UK.

5          Earnings per share

	Six months to	Six months to
	30 June	30 June
	2012	2011
Based on the profit for the period:	£m	£m
Profit attributable to equity holders of the Company	82.6	53.1
Separately disclosed items (note 3)	12.2	20.8
Adjusted earnings after tax	94.8	73.9
Number of shares (millions):
Basic weighted average number of ordinary shares	160.4	159.9
Potentially dilutive share awards	2.4	2.9
Diluted weighted average number of shares	162.8	162.8
Basic earnings per share	51.5p	33.2p
Share awards	(0.8)p	(0.6)p
Diluted earnings per share	50.7p	32.6p
Basic adjusted earnings per share	59.1p	46.2p
Share awards	(0.9)p	(0.8)p
Diluted adjusted earnings per share	58.2p	45.4p

6          Pension schemes

During the period the Group made a special contribution of £0.6m (six months ended 30 June 2011: £1.2m) into The Intertek Pension Scheme.

The Directors have reviewed the significant actuarial assumptions used in the valuation of the Group's material defined benefit pension schemes as at 31 December 2011.  As a result of movements in the discount rates used to value the pension liabilities, the net pension liabilities have increased to £16.6m from £11.3m at 31 December 2011.

The expense recognised in the consolidated interim income statement for the Group's material defined benefit pension schemes consists of the current service cost, interest on the obligation for employee benefits and the expected return on scheme assets. For the six months ended 30 June 2012, the Group recognised a net expense of £1.1m (six months ended 30 June 2011: £0.9m).

7          Equity-settled transactions

During the six months ended 30 June 2012, the Group recognised an expense of £5.8m in respect of the share awards made in 2009, 2010, 2011 and 2012. For the six months ended 30 June 2011, the charge was £4.6m in respect of the share awards made in 2008, 2009, 2010 and 2011. The shares granted in 2012 had fair values of 2,262p for the Share Awards and for the EPS condition in the Performance Awards and 1,299p in respect of the TSR condition for the Performance Awards.

Under the Long Term Incentive Plan, 383,428 Share Awards (2011: 399,467) and 274,367 Performance Awards (2011: 297,754) were granted during the period. The Performance Awards have both an EPS (Earnings per Share) and a TSR (Total Shareholder Return) condition.

8          Analysis of net debt

The components of net debt are outlined below:

	1 January 2012 £m	Cash flow £m	Exchange adjustments £m	30 June 2012 £m
Cash	181.9	(19.7)	(2.0)	160.2
Borrowings:
Revolving credit facility US$600m	(304.4)	23.6	(1.2)	(282.0)
Bridge facility US$300m	(155.1)	151.5	3.6	-
Bilateral multi-currency facility	(13.4)	(26.6)	1.0	(39.0)
Senior notes US$25m 2014	(16.1)	-	-	(16.1)
Senior notes US$100m 2015	(64.6)	-	0.4	(64.2)
Senior notes US$75m 2016	(48.5)	-	0.3	(48.2)
Senior notes US$100m 2017	(64.6)	-	0.4	(64.2)
Senior notes US$20m 2019	-	(13.0)	0.2	(12.8)
Senior notes US$150m 2020	(96.8)	-	0.5	(96.3)
Senior notes US$140m 2022	-	(90.5)	0.6	(89.9)
Senior notes US$105m 2024	-	(68.1)	0.6	(67.5)
Other*	0.9	0.5	0.1	1.5
Total borrowings	(762.6)	(22.6)	6.5	(778.7)
Total net debt	(580.7)	(42.3)	4.5	(618.5)

* Includes other borrowings of £1.1m (2011: £3.0m) and facility fees.

	At 30 June 2012	At 30 June 2011	At 31 December 2011
	£m	£m	£m
Borrowings due in less than one year	1.2	38.0	38.7
Borrowings due in one to two years	16.1	149.4	115.9
Borrowings due in two to five years	431.3	466.4	447.1
Borrowings due in over five years	330.1	156.1	160.9
Total borrowings	778.7	809.9	762.6

Full details of the Group borrowings facilities were disclosed in note 14 to the Annual Report for 2011.  Key movements in the period are disclosed below.

Bridge facility US$300m

The US$300m facility was repaid on 27 February 2012.

2012 Private placement bonds

In October 2011 the Group secured funding of US$265m by way of a senior note issue. The funds were received in January 2012. These notes were issued in three tranches with US$20m repayable on 18 January 2019 at a fixed annual interest rate of 3.0%, US$140m repayable on 18 January 2022 at a fixed annual interest rate of 3.75% and US$105m repayable on 18 January 2024 at a fixed annual interest rate of 3.85%.

9          Acquisition of businesses

(a) Acquisitions

During the period the Group acquired three bolt on acquisitions for consideration of £17.4m:

4^th Strand

On 15 March 2012 the Group acquired 100% of the share capital of 4^th Strand LLC, a company based in USA, for a cash consideration of £4.1m.  Goodwill arising was £3.5m and represents the value placed on the benefits in expanding own brand testing in the USA in the Consumer Goods division.

ATI

On 5 April 2012 the Group acquired 100% of the share capital of Automation Technology Inc., a company based in USA, for a cash consideration of £10.0m. Goodwill arising was £8.9m and represents the value placed on the benefits in expanding in-service inspection in the USA in the Industry and Assurance division.

Vigalab

On 8 May 2012 the Group acquired 100% of the share capital of Vigalab S.A., a company based in Chile, for a cash consideration of £3.3m. Goodwill arising was £2.3m and represents the value placed on the benefits in expanding minerals testing in Chile in the Commodities division.

Provisional details of net assets acquired and fair value adjustments for all the acquisitions completed in the period, are set out in the following table. The analysis is provisional and amendments may be made to these figures in the 12 months following the date of the acquisition.

All acquisitions	Book value prior to acquisition	Fair value adjustments	Fair value to Group on acquisition
	£m	£m	£m
Property, plant and equipment	0.8	-	0.8
Goodwill	-	14.7	14.7
Other intangible assets	-	3.5	3.5
Trade and other receivables*	1.3	(0.1)	1.2
Trade and other payables	(1.2)	(0.2)	(1.4)
Deferred tax (liability)	-	(1.4)	(1.4)
Net assets acquired	0.9	16.5	17.4
Cash outflow (net of cash acquired)			17.4
Total consideration			17.4

^{*Trade receivables comprise gross contractual amounts due of £0.8m with a fair value of £0.7m.}

The goodwill of £14.7m (six months ended June 2011: £312.2m) represents the value of the assembled workforce and the benefits Intertek expects to gain from increasing its presence in the relevant sectors in which the acquired businesses operate.

The intangible assets of £3.5m (six months ended June 2011: £145.9m) represent the value placed on customer contracts and relationships and the deferred tax thereon was £1.4m (six months ended June 2011: £43.5m).

The revenue for the period from the dates of acquisition to 30 June 2012 was £1.6m. The revenue for the period 1 January 2012 to the dates of acquisition was £1.7m. The profit for the period from the dates of acquisition to 30 June 2012 attributable to the Group was £0.2m. The profit for the period 1 January 2012 to the dates of acquisition was £0.2m.

(b) Acquisitions subsequent to the balance sheet date

Subsequent to the balance sheet date, there have been no further acquisitions.

(c) Prior period acquisitions

Consideration of £0.5m (six months ended June 2011: £2.3m) was paid during the period in respect of prior period acquisitions.

The fair value adjustments to the net assets of Moody International were finalised by 27 April 2012. As a result of this exercise, goodwill increased by £7.3m compared to December 2011.

(d) Impact of acquisitions on the Group results

The Group revenue and profit for the six months ended 30 June 2012 attributable to the Group would have been £992.7m and £89.2m respectively if the acquisitions were assumed to have been made on 1 January 2012.

(e) Details of 2011 acquisitions

Full details of acquisitions made in the year ended 31 December 2011 were disclosed in note 10 to the Annual Report for 2011.

(f) Reconciliation of goodwill

	£m
Goodwill at 1 January 2012	637.0
Additions	22.0
Foreign exchange	(3.3)
Goodwill at 30 June 2012	655.7

10         Property, plant, equipment and software

(a) Additions and disposals

During the six months ended 30 June 2012, the Group acquired fixed assets with a cost of £46.5m (six months ended 30 June 2011: £36.7m; year ended 31 December 2011: £86.6m) including assets acquired through business combinations (note 9) of £0.8m (six months ended 30 June 2011: £5.1m; year ended 31 December 2011: £6.0m).

(b) Capital commitments

Contracts for capital expenditure which are not provided in these accounts amounted to £6.2m (at 30 June 2011: £8.2m; at 31 December 2011: £11.2m).    

11         Related parties

There are no related party transactions in the period that have materially affected the financial position or performance of the Group. There are no changes in the related party transactions from those described in the last Annual Report.

12         Contingent liabilities

Claims and litigation

From time to time, the Group is involved in various claims and lawsuits incidental to the ordinary course of its business, including claims for damages, negligence and commercial disputes regarding inspection and testing and disputes with employees. The Group is not currently party to any legal proceedings other than ordinary litigation incidental to the conduct of business.

The outcome of the litigation to which Intertek Group companies are party cannot be readily foreseen. Based on information currently available, the Directors consider that the cost to the Group of any likely unfavourable outcome arising from such litigation would not be expected to have a materially adverse effect on the financial position of the Group in the foreseeable future.

Tax

The Group operates in more than 100 countries and is subject to a wide range of complex tax laws and regulations. At any point in time it is normal for there to be a number of open years in any particular territory which may be subject to enquiry by local authorities. Where the effect of the laws and regulations is unclear, estimates are used in determining the liability for the tax to be paid on profits which are recognised in the financial statements. The Group considers the estimates, assumptions and judgements to be reasonable; but this can involve complex issues which may take a number of years to resolve. The final determination of prior year tax liabilities could be different from the estimates reflected in the financial statements.

13         Approval

The Condensed Consolidated Interim Financial Statements were approved by the Board on 25 July 2012.

 

END

 

 

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