SGS 2015 Full Year Results Presentation

2 FULL-YEAR RESULTS PRESENTATION © SGS SA 2016 ALL RIGHTS RESERVED

20 JANUARY 2016

DISCLAIMER

Certain matters discussed in this presentation may constitute forward-looking

statements that are neither historical facts nor guarantees of future performance.

Because these statements involve risks and uncertainties that are beyond control or

estimation of SGS, there are important factors that could cause actual results to

differ materially from those expressed or implied by these forward looking

statements. These statements speak only as of the date of this document. Except

as required by any applicable law or regulation, SGS expressly disclaims any

obligation to release publicly any updates or revisions to any forward looking

statements contained herein to reflect any change in SGS Group’s expectations

with regard thereto or any change in events or conditions on which any such

statements are based.


20 JANUARY 2016

2015 HIGHLIGHTS

(1) Constant currency basis - (2) Before amortisation of acquisition intangibles, restructuring, transaction, integration-

related costs and other non-recurring items – (3) Net Income / (Non current assets + Net Working Capital)


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2015 NET WORKING CAPITAL MOVEMENT


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2015 ACQUISITIONS

(1) Minority equity stake - (2) Legal clearance pending. Not consolidated in 2015


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88 000 EMPLOYEES(1) AND 1 800 OFFICES & LABORATORIES AROUND

THE GLOBE ENABLING REACH AND LOCAL SUPPORT

(1) End of period


20 JANUARY 2016


20 JANUARY 2016

2015 FINANCIAL HIGHLIGHTS

(1) Before amortisation of acquisition intangibles, restructuring, transaction, integration-

related costs and other non-recurring items - (2) Constant currency basis


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2015 REVENUE GROWTH COMPOSITION


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2015 BUSINESS PORTFOLIO


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2015 REVENUE GROWTH(1) BY BUSINESS

(1) Constant currency basis


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2015 REVENUE GROWTH(1) BY REGION



20 JANUARY 2016

EVOLUTION OF HEADCOUNTS


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2015 ADJUSTED OPERATING INCOME(1) GROWTH


related costs and other non-recurring items


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2015 ADJUSTED OPERATING INCOME(1) PORTFOLIO


related costs and other non-recurring items


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ADJUSTED OPERATING MARGIN(1) BY BUSINESS




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2015 RESTRUCTURING


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2015 CONSOLIDATED BALANCE SHEET

(1) Net Income / (Non current assets + Net Working Capital)


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2015 CONDENSED CASH FLOW


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2015 CORE OPERATING CASH FLOW

(1) Cash flow from operating activities less Capex – (2) Core operating cash flow / Adjusted EBITDA


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2015 CAPITAL EXPENDITURE


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CASH SOURCES AND USES IN 2015

(1) Net Capex


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2015 FOREIGN CURRENCY REVENUES


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FOREIGN CURRENCY AVERAGE RATE CHANGE

FY 2015 VERSUS FY 2014 RATE


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H2 2015 FINANCIAL HIGHLIGHTS




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H2 2015 REVENUE GROWTH COMPOSITION


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H2 2015 REVENUE GROWTH(1) BY BUSINESS



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H2 2015 ADJUSTED OPERATING MARGIN(1) BY BUSINESS




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FINANCIAL SUMMARY

35

Revenue growth of 3.6% in a challenging environment and

in line with guidance.

Maintained Adjusted Operating Margin(1) flat at 16.1%.

Implemented the majority of CHF 64 Mio restructuring

measures to lower the cost base.

Investment of CHF 405 million in Capex and Acquisitions.

Core operating cash flow of CHF 1.1 BN.

Return on Invested Capital (ROIC(2)) of 19.7%.

Proposed dividend of CHF 68.

(1) Before amortisation of acquisition intangibles, restructuring, transaction, integration-related costs and

other non-recurring items - (2) Net Income / (Non current assets + Net Working Capital)


20 JANUARY 2016

OVERVIEW

OUTLOOK

PERFORMANCE



AGRICULTURAL SERVICES (AGRI)

PERFORMANCE

Organic growth of 4.0 % despite fishing ban in

Peru and CMA wind-down

High Trade volumes in Eastern Europe and

Americas

Strong growth in Seed & Crop and

Laboratory services

Profit improvement initiatives delivering

benefits in North America

AGRI transitions to new “Agriculture, Food

and Life” business line

Stable Trade revenues despite bearish export

outlook for key commodities

Recent investments in Seed & Crop to gain

traction in 2016

OVERVIEW

OUTLOOK


20 JANUARY 2016

OVERVIEW

OUTLOOK

PERFORMANCE



MINERALS SERVICES (MIN)

PERFORMANCE OVERVIEW

OUTLOOK

Despite strong price pressure, margins

improved due to cost containment and

benefits from restructuring

Continued strong performance in onsite

laboratories with 4 new labs in operation

Energy Minerals performed strongly in Russia

and China

Mid-single digit growth: fertilizer trade services

Market expected to remain flat

Growth in South Africa from the Richards Bay

Coal terminal contract win

Continued focus on Mine and Plant Services

targeting existing onsite clients

Integration of Bateman Modular Process Plant

business into the Minerals portfolio


20 JANUARY 2016

OVERVIEW

OUTLOOK

PERFORMANCE



OIL, GAS & CHEMICALS SERVICES (OGC)


OUTLOOK

Oil prices continue to impact activities

Single-digit growth in Trade related activity

Flat performance in Plant and Terminal

Operations

Exploration impacted by oil price in

Upstream activities

Non-inspection related testing performed well

with double-digit growth

Oil prices expected to remain low in 2016

Moderate growth expected to be maintained

in Trade related activity

Low oil prices will continue to impact

exploration in Upstream services

Solid growth expected in remainder of

OGC portfolio


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OVERVIEW

OUTLOOK

PERFORMANCE



LIFE SCIENCE SERVICES (LIFE)


OUTLOOK

Double-digit revenue growth in laboratories

Laboratory margin improved by 200 basis

points driven by labs in Europe and Asia

Clinical Research results are below prior year

due to postponed projects partly offset by

strong biometry performance

New quality control laboratory opened in Paris

Incorporation into new Agriculture, Food and

Life business line

Revenue performance expected to be above

market growth with improved profitability

Mixture of strategic investments and organic

growth to drive future results

Operational excellence, quality improvement

and customer focus will remain key objectives


20 JANUARY 2016

OVERVIEW

OUTLOOK

PERFORMANCE



CONSUMER TESTING SERVICES (CTS)


OUTLOOK

Organic growth of 4.9% and 1.4% from

recently acquired SVA Ltd UK (Food) and

Courtray (CPCH) in France

Strong growth in Food Testing Services in Asia

High double-digit growth in Auto parts testing

and CPCH

Strong results from Eastern Europe and

Middle East, Americas and Eastern Asia

Food to keep growing at high single digits

Softlines and Hardlines to regain growth

momentum

Continued expansion of Electrical and

Electronic capabilities

Auto and CPCH to expand their geographical

footprint and replication of services


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OVERVIEW

OUTLOOK

PERFORMANCE



SYSTEMS & SERVICES CERTIFICATION (SSC)


OUTLOOK

Strong Management Certification growth with

high adoption rates of new ISO 9001:2015

standards and other Food standards

certification

Double-digit growth in training activities

Cost pressure in Asia due to stronger

competitive landscape

Improved margins in Africa and North America

Growth is expected to remain healthy, driven

in part by training, hospitality and automotive

Margin expected to remain stable with new

initiative to streamline certification procedures

Management System: demand for certification

expected to be moderate

Further consolidation of back office operations


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OVERVIEW

OUTLOOK

PERFORMANCE



INDUSTRIAL SERVICES (IND)


OUTLOOK

Oil prices impact revenues and margins in

North America, Africa and in South East Asia

Pacific

Double-digit growth in China due to increase

in volume of testing activities

Stable revenue in South America despite

difficult market conditions

Larger geographic footprint will bring improved

revenues and margins

Revenue decline in the Energy sector due to

current oil prices

Acquisition strategy continues with focus on

laboratory testing activities and construction

supervision


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OVERVIEW

OUTLOOK

PERFORMANCE



ENVIRONMENTAL SERVICES (ENVI)


OUTLOOK

Strong growth in double digits, increased

market share and margin improvement

Diversified work mix and successful

integration of acquisitions drive growth in

Europe and the Americas

Australia faces pressure on margins due to

difficult market conditions

Growth to remain healthy driven by

established activities and expansion into

health and safety sector

Geographical and service diversification will

minimize exposure to seasonality

Accutest acquisition will provide a solid base

to strengthen our position in USA


20 JANUARY 2016

OVERVIEW

OUTLOOK

PERFORMANCE



AUTOMOTIVE SERVICES (AUTO)


OUTLOOK

Year-to-date growth above expectations

Extension of Vehicle Inspection concession in

Ivory coast to 2020

Strong results in USA from testing services

and improvement of commercial business

Acquisitions in USA & France to expand

services and footprint

Expanding business to include Aerospace,

Marine and Rail

Vehicle & Engine testing services expected to

expand organically in North America

Focus on Vehicles (their sub-components,

materials, …) and operations

New concession in Uganda expected to start

in Q4 2016


20 JANUARY 2016

OVERVIEW

OUTLOOK

PERFORMANCE



GOVERNMENTS AND INSTITUTIONS SERVICES (GIS)


OUTLOOK

Double-digit growth in PCA in Asia, Europe

and Middle East

Launch of SGS e-Valuator® to replace PSI

Exit of PSI market in-line with WTO and WCO

recommendations

PCA expected to deliver solid top-line growth

Conversion of PSI to e-Valuator in Cameroon

Roll out of new services

Roll out of TransitNet activities in

Western Europe


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NEW BUSINESS STRUCTURE


20 JANUARY 2016

INDICATION(1) OF THE REVENUE ALLOCATION

NEW STRUCTURE

(1) Indicative figures. Restated figures to be communicated in March 2016


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2016 OUTLOOK(1)

(1) At stable market conditions


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OUTLOOK 2016 - 2020

Mid single digit organic growth on average with improvement over the period supported by the new focused structure and new strategic initiatives

Accelerating M&A activities with acquired revenue over the period in the range of CHF 1 billion

Adjusted Operating Income Margin of at least 18% by end of the period supported by the new focused structure, new strategic and efficiency improvement initiatives

Strong cash conversion

Solid returns on invested capital


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ACRONYMS AND OTHER ABBREVIATIONS


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UPCOMING EVENT DATES

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INVESTOR RELATIONS INFORMATION

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SGS 2015 Full Year Results Presentation