Intertek Stock

Good day, ladies and gentlemen, and welcome to Intertek's Strategic Review and 2026 Q1 Trading Update. [Operator Instructions] I would like to remind all participants that this call is being recorded. I will now hand over to Andre Lacroix, Chief Executive Officer, to start the presentation.

Good morning to you all, and thanks for joining us on our call. I would like to welcome Laura Crespi, our new CFO on our call today. And of course, Denis Moreau, our VP of Investor Relations, is also on the call with us. There are 3 main takeaways in our call today.

First, we are announcing the start of the strategic review to determine whether we can accelerate growth and drive further shareholder value by creating 2 specialist scale global ATIC businesses, Intertek Testing and Assurance and Intertek Energy and Infrastructure.

The second key point on today's agenda, we had a strong start to the year with a robust like-for-like revenue growth at 5.4% constant currency in the first quarter.

And the third important message, we are confirming our full year guidance. We are on track to deliver a strong 2026 with mid-single-digit like-for-like revenue growth at constant currency, continuous margin progression, strong earnings growth and a strong free cash flow. I'd like to start by saying that we are truly energized by the launch of our strategic review to unleash the full potential of Intertek and deliver greater value for all.

I am very proud of our passionate and talented colleagues who are building a stronger Intertek every day in every single business with the disciplined execution behind our AAA growth strategy. We've launched our AAA strategy about 3 years ago. Since then, we've delivered annual revenue growth of 6% at constant currency, 240 bps margin accretion, an average EPS growth of 12% per annum and of course, all of that with industry-leading margins and returns.

Intertek has always been a pioneer in the industry and true to our ever better high-performance culture, we truly believe in the power of reinventing ourselves to accelerate growth and unleash our potential. We believe that the group has now reached a scale and breadth that would benefit from greater simplification and strategic focus to take our industry-leading global business lines to greater heights.

That's why we have initiated a strategic review to evaluate whether the separation of Intertek Testing and Assurance and Intertek Energy and Infrastructure, either by the way of a sale or a demerger could accelerate growth and create greater value for shareholders. In a stronger growth environment that we are experiencing across our markets, we believe that 2 specialist scale global ATIC businesses could be better positioned to unlock our full potential.

Intertek Testing and Assurance and Intertek Energy and Infrastructure are high-quality businesses with scale and are renowned for their science-based ATIC customer excellence and have earn the trust of our clients through the delivery of superior customer service for many years. Both businesses have compelling opportunities for further growth and value creation. They are offering premium market-leading ATIC solution to their clients with their global network, and we believe could grow faster with a more focused portfolio strategy, sharper capital allocation and faster in-market execution.

Intertek Testing and Assurance and Intertek Energy and Infrastructure have different customers, operating in different markets with different financial characteristics and offer distinct value propositions. The decentralized and coordinated operating structure that we have in place at Intertek means that these 2 businesses have built the talents, the processes, have the assets and technology capability they need to thrive in today's and tomorrow's market.

During the strategic review, which will be concluded and implemented by mid-2027, we will remain very focused on the disciplined execution of our AAA strategy, delivering on our corporate goals of mid-single-digit like-for-like revenue growth at constant currency, continued margin progression, strong cash generation, disciplined capital allocation and an excellent ROIC.

Let me turn briefly to trading in the last 3 months. As usual, all the comments we'll make are at constant currency. We have benefited from a strong demand for ATIC solutions across all divisions and geographies, enabling us to deliver a robust 5.4% like-for-like revenue at the group level.

Our Consumer Products division delivered like-for-like revenue growth of 6.5%, delivered with mid-single-digit like-for-like revenue growth in Softlines, high single-digit like-for-like growth in Hardlines and Electrical, while GTS delivered a mid-single-digit negative like-for-like performance as it was impacted by the trading disruptions in the Middle East.

Our Corporate Assurance division delivered like-for-like revenue growth of 10.8%, driven by double-digit like-for-like growth in Business Assurance, while we saw a low single-digit negative like-for-like performance within Assuris due to a baseline effect linked to a few large contracts that lapsed at the end of June last year.

Our Health and Safety division delivered like-for-like revenue growth of 5.9%, driven by double-digit like-for-like revenue growth, mid-single digit in Food, mid-single-digit like-for-like revenue growth in C&P and AgriWorld delivered a stable like-for-like performance. Our Industry Infrastructure division delivered like-for-like revenue growth of 5.5% with low single-digit like-for-like revenue growth in Industry Services, with double-digit like-for-like revenue growth in our Minerals business and a low single-digit like-for-like revenue performance in Building & Construction.

Our World of Energy division delivered a stable like-for-like revenue performance with low single-digit like-for-like revenue growth within Caleb Brett and CEA while our Transportation Technology business reported negative double-digit like-for-like revenue performance due to the reduction by some of our clients in R&D investments as they continue to focus on cost reduction in the challenging automotive environment. As always, there is much more detail in the RNS.

Overall, we had a strong start to 2026, and let's now discuss the performance at the group level for Q1. Our revenue for Q1 grew 6.7% to GBP 838.5 million. Our like-for-like revenue growth, as I said, was 5.4%, driven by both volume and pricing. The 4 acquisitions we made in 2025 to scale up our portfolio in attractive growth in margin sectors with TESIS in Brazil, Envirolab in Australia, Suplilab in Costa Rica and PTL in the U.S. are all performing very well.

We saw continued margin progression as we benefit from divisional mix, operating leverage, cost control and productivity improvements. We delivered a strong free cash flow and continue to operate with a strong balance sheet. We continue to invest in organic and inorganic growth opportunities.

We've recently announced the acquisition of Aerial PV in Europe to expand our market-leading position in solar energy and the acquisition of QTEST in Colombia to expand our electrical business in an attractive Latin American market. Turning now to the outlook for 2026.

We are confirming our full year guidance. We expect to deliver mid-single-digit like-for-like revenue growth at constant currency with high single-digit like-for-like in Corporate Assurance, mid-single-digit like-for-like in Consumer Products, Industry Infrastructures and low single-digit like-for-like in Health and Safety and the World of Energy. We are targeting further margin progression which combined with our expected revenue growth will deliver strong earnings growth.

Our cash discipline will remain in place to deliver strong free cash flow. We'll invest in growth with a CapEx of circa GBP 150 million to GBP 160 million. We, of course, continue to deliver an excellent ROIC. A quick update on currency for your model.

The average sterling rate in the last 3 months applied to the full year results of 2025 will be broadly neutral at the revenue and operating profit level. In addition, going forward, I'm pleased to announce that we'll be providing quarterly trading updates for the 3 months ending March and September.

In conclusion, we have seen a significant performance acceleration with the strong delivery of our AAA strategy. And looking ahead, we are super excited about the significant value growth opportunity. To deliver quality growth and value for our shareholders, we'll capitalize on our high-quality cash compound earnings model, benefiting year after year from the compounding effect of mid-single-digit like-for-like revenue growth, continuous margin accretion, strong free cash flow and disciplined investments in high-growth and high-margin sectors.

Our enduring competitive advantage underpins our confidence to deliver quality growth moving forward. We operate a high-quality portfolio with leading scale positions in attractive industries that are all poised for global growth. We are the premium leader in Quality Assurance with superior ethic customer service, which has earned the trust of all of our clients over the years.

Our high-quality cash component earnings model is underpinned by disciplined performance management, both on financial and nonfinancial metrics. Our science-based organization is a high-performance organization. We attract and we develop and retain the best talent in the industry. And last but not least, we operate with a culture of doing business the right way with strong controls, compliance and very strong governance.

The strategic review we're announcing today will determine is the separation of Intertek Testing and Assurance and Intertek Energy and Infrastructure into 2 specialist scaled global ATIC leaders will augment this enduring competitive advantage with 3 major benefits. First, the focused specialist portfolio approach for each business, resulting in greater strategic focus.

Second, a sharper capital allocation to seize the immediate and long-term growth opportunities, targeting faster market share gains. And third, a simpler business to manage resulting in faster in-market execution, increased productivities and higher returns.

We are all energized about the start of our strategic review to unleash our full potential and see the significant value growth opportunities ahead. Having said that, we all remain laser-focused on delivering quality growth in Q2, Q3, Q4 to make sure that we have a strong 2026. And of course, we continue to deliver strong performance in '27 and beyond.

Thank you for joining our call today. We'll take now any questions you might have.

[Operator Instructions] Our first question comes from Rory McKenzie with UBS.

Andre, it's Rory here. And my first question, I just want to ask about, I guess, why now? I think all the divisions have always been run relatively independently and the historical view in the testing sector was that there's a benefit to them being a large central brand to leverage.

So can you explain more about why you think that this kind of more focused specialist approach for each unit could accelerate organic growth and what that would really change? And then secondly, in terms of any carve-out, can you just talk through more about how Intertek is structured today?

The divisions have existing different management and finance teams, what costs might need to build up so each unit can standalone? And just how do you expect to go through the process of kind of legal entity separation for the different countries?

All right. Thanks, Rory. Look, this is a strategic insulation that we've been thinking about for quite a long time. This is not a short-term thinking. We came to the conclusion that the generalist portfolio model that is the one we've been using for decades to build global scale in each of our global business lines, local scale in each of our markets, developing the depth and breadth of ATIC solutions has been doing extremely well for us, but might be reaching its potential.

And there is merit in greater strategic focus. There is merit in sharper capital allocations, and there is merit in faster in-market execution. And what we are proposing is to evaluate the merits of these strategic assumptions. Of course, we have not made decisions. We'll obviously work on that. But it is our working assumptions that the specialist portfolio model will drive greater focus, sharper capital allocations and faster in-market execution and accelerate growth.

That's -- and why we're doing it now because we've concluded that the generalist portfolio strategic approach is reaching its full potential. This is not a new idea. This is something we've been thinking about for quite a long time. And of course, today, we are just announcing the start of the strategic review that I just explained.

How are the businesses being managed today? We have, as we've talked about in the past, an operating model that is decentralized and coordinated. What does decentralized mean? It means that at our head office here in London, we operate with a very little overhead unit. We have about 50 to 60 people here in London. All of our resources, that's why we are the best in terms of customer service have always been in the market.

And essentially, all of our global verticals have got their own operational teams and functional teams. So to the question about dis-synergies in terms of supporting cost, look, it's still early in the process. But given the fact that we've operated with a very decentralized and coordinated approach where the resource are in the market and the process are aligned with very, very state-of-the-art technology, we believe that this will be limited in terms of dissynergies. But that's the work that we have to do with Laura and the team.

Yes. I understand. It's still early. And just to clarify, I guess, in most countries, would Intertek only currently have one legal entity? And will that be again something to work through in different jurisdictions.

No. Look, in terms of legal entities, we have plenty of legal entities. So we're going to go through all of these. Don't worry.

Our next question comes from Suhasini Varanasi with Goldman Sachs.

Hope you can hear me.

Yes.

Two questions from me, please. Number one, clearly, a pretty strong start to the year, which is very reassuring to see. Just wanted to check if there was a bit of a catch-up effect from November, December last year, which is obviously a bit slower than expected.

And have you seen any changes to the operating environment since the Middle East conflict started? Any changes to oil and gas trade volumes or any increases to oil and gas CapEx trends, for example?

And the second one is on the strategic review. Can you help us understand maybe what would make you consider a sale versus a demerger, vice versa? And will you be considering also a change in listing maybe to the U.S. That's it.

Yes. Thanks. I mean on the second question, right, all the ideas you mentioned are options available to us. It's very early on. We're going to be evaluating every single option with a very simple goal to maximize, obviously, the value we can create through the separations for our shareholders and not only the value and including, of course, the certainty if we decide to do so.

So look, plenty of options to consider, as you rightly said, but it's too early to say, but we are considering all potential options. We are very, very open, and we have not determined if we do that, how we're going to do it.

As far as the performance in Q1, look, it was a very strong start indeed. I wouldn't say that we had some catch-up from orders that were not fulfilled in Q4 because, as you know, our customers cannot wait. I mean when we deliver basically a testing report or an assurance report, it's got to be done with a short turnaround time. So it's really a representation of the organic performance of the group. The question that you have asked on the Middle East is an important one.

And let me just give you a bit of background what's happening in the Middle East and what does it mean for oil and gas. Maybe if I were to contextualize what is the Middle East business for Intertek. It's about 6% of the group revenue. We have multiple business lines, but the 3 biggest business lines we have in the Middle East are Caleb Brett, Industry Services and GTS.

The Middle East business was slightly down in the month of March, low single digit, but was up double digit in Q1. This is a strongly performing business for Intertek. There is no question that within these 3 large business lines, Caleb Brett, Industry Services and GTS, the 2 businesses that were mostly impacted are Caleb Brett, which was double-digit negative in March in the Middle East and GTS, which was, as I said, during my remarks, impacted by trading.

What does it mean in terms of the overall oil and gas trends around the world, which is your other questions. We all know that the Middle East is about 20% of the daily supply and consumption of oil and gas around the world. And clearly, the production and the export out of the Middle East has obviously reduced significantly in margins, public information.

Now it takes time for a cargo to go from Dubai to Singapore or to Australia. So there is a bit of a lag in what it means for supply chain to our clients at the receiving end. We expect, obviously, Asia to be the most impacted region if things continue as they are today. Having said that, we are seeing a very, very strong acceleration of production and export in the Americas, where Intertek is very, very strong, as you know. So that's the situation. Obviously, we are following that very, very carefully.

Our teams have remained operational despite the war and the safety considerations that have been taken very seriously by all of our colleagues locally in the Middle East. We are ready to start, obviously providing testing and inspection to our clients when the export of Strait of Hormuz start to increase again. But at the moment, it's quite a slow business environment. But having said all of that, the Middle East is only 6% of Intertek Group revenue. And within Caleb Brett globally, which is, I think, the important business line to have in mind, it's also 6% revenue. So we can manage.

Our next question comes from Annelies Vermeulen with Morgan Stanley.

I have 2 questions, please. Two questions, please. So firstly, on the strategic review, could you elaborate a little bit more on why you think diversification is not the right strategy or rather you've talked about seeing the generalist model reaching its full potential.

What indicators would you point to that, that is the case? Like what are you seeing in the business that makes you think actually we can't unlock the full value while remaining as one business? What are the barriers to do that?

And then secondly, again, if you think about your M&A strategy as you undergo this review, do you -- would you expect to allocate capital to acquisitions across sort of both of these buckets of businesses? Or do you think you'll focus more on the consumer side?

Thanks, Annelies. I mean, look, on the second question, it's business as usual, right? We have not made our mind. We are initiating a strategic review to see if it makes sense. But as far as running the business for value and growth, we're not going to change anything. I think your question is where do you see the benefits.

I think if you go back into the history of Intertek, and I'm not going to go too far in times just when we obviously listed the company here in London at the beginning of the century, the businesses had a operating model that was essentially made of verticals, i.e., global centrally driven organizations to develop the industry through global accounts. I'm just making it simple for us to understand. And that worked tremendously for us to basically develop the market.

There was a very big inflection when the organization decided that to augment the growth of global accounts, we also had to focus at the local level and trying to basically win local customers. That's when the organization that we have today, which is essentially a matrix between global verticals and regions was created to make sure that we scale up not only with global accounts, but with local accounts. We have now reached a real strong position in each of our markets.

We have scale in our global verticals, in our local verticals. And there is no question that when you run a region -- if you run a regions with 15 business lines, there is complexity attached to making decisions that are the right decisions in terms of people, capital allocations, investments, M&A for these 15 businesses.

And we believe that to take the business to the next phase of growth, we will benefit from, number one, more strategic focus in terms of portfolio. What does it mean? It means that the management that is running that country or that regions will be focused on fewer industries being closer to their customers, certainly having sharper insights in terms of innovations. And when it comes to people development and execution, it will simplify the agenda.

The second area is capital allocation. When you operate in a group like Intertek, you have a certain envelope of capital allocation, which we've talked about is 4% to 5% every year. But there is arbitrage. And there is de facto competition between high growth, low-margin business, high-growth, high-margin business.

And you can imagine that in 2 separate units, you will operate with a capital allocation that is focused on your end markets. And these 2 businesses that we talked about, Intertek Testing and Assurance and Intertek Energy and Infrastructures operate in different end markets.

Intertek Testing and Assurance is obviously focused on global leading brands, FMCGs, retailers or Intertek Energy and Infrastructure is focused on the global world of energy, fresh oil and gas, renewables and of course, the infrastructure investments through the work that we are seeing with our Minerals and B&C. So there will be a sheer benefit from sharper capital allocations.

And then the last point in terms of decision-making, the focus that you're going to create at the portfolio level, the complexity that you're going to remove will accelerate decision-making and de facto accelerate in-market execution. So we have not decided we're going to do that. We want to evaluate if this strategic working assumption I just talked about, specialist portfolio model capital allocation policy that is dedicated for each business and faster in market executions will accelerate growth and create more value for our shareholders.

That's the work we're going to do right now. But we believe that it might be the time to take the next inflection in the way we run the group to move from the generalist portfolio model to a specialist model with 2 global ATIC business of scale.

Perfect. Very clear. Just as a follow-up, I mean you've obviously said several times, there's different end markets, different customers. So can we assume there's not a lot of customer overlap between these 2 segments, and therefore, you don't see any risk of revenue dis-synergies from breaking up the business?

Yes, you said it right.

Our next question comes from James Rowland Clark with Barclays.

Can you hear me?

Of course.

Three questions, please. On the strategic review, I'd just be interested to know if in the recent history, you've been approached by buyers for any of your verticals within World of Energy and Industry and Infrastructure and whether those interested parties tended to be trade buyers or private equity.

My second question is on Health and Safety. That's a division you're planning to keep. It's underperformed, the group. It's growing low sort of single digits this year, and you've done a sort of restructuring in that division. Is there any reason why that isn't considered within your strategic review as potential for sale or demerger?

And then finally, insurance improved a lot in Q1 versus the end of the year. And I think you mentioned this in the answer to Suhasini's question, but is there any catch-up there? Can you just help us with what the underlying growth really is in Assurance at the moment?

Yes. All right. So let me just start with the last question. No, there is no catch-up in Assurance, as I was saying to your colleague. I mean we have a key priority with every single of our customers for turnaround time, right? If you basically test tissues or gene, you've got to deliver your report within a few days. And it's the same with Assurance. I mean our clients don't wait very long.

So no, I think there is no catch-up to the growth that we got in Q1 basically because we had built the backlog of demand for Q1 and the rest of 2026. As far as Health and Safety, look, Health and Safety, yes, had a bit of a slow '25, but I just want to put things into context. I mean we did 7% revenue growth in '23, 7.9% revenue growth in '24, and we did 5.9% revenue growth in Q1. So this is a strongly performing business.

Yes, we had a bit of a slowdown in one of our business line last year for the reason we talked about it, but it's a fantastic business. And going back to the question that Annelies was asking about customers. I mean, the big difference between industry -- so energy and infrastructure and testing and assurance, testing and assurance work for global leading brands being retail or consumer brands.

And this is a business that is definitely part of our testing and assurance division moving forward and has been performing very well, recognizing that we had a bit of a slowdown in 2025. But as you know, she cannot keep growing full speed ahead every single year. As far as your first question on strategic review, no, we've never received any formal offer or approach for one of our World of Energy business. So that's what I say.

Our next question comes from Victoria Chang with JPMorgan.

[Technical Difficulty]

Thank you for your patience, everybody. Victoria, if you would like to repeat your question.

Can you hear me?

Yes, of course. Sorry for that, Victoria. Apologies.

Yes, of course. So my question was if you can confirm that you expect to keep all business lines within Industry and Infrastructure and World of Energy in the Intertek new Energy and Infrastructure business? Or are there certain business lines that you could expect to move into the rest of the business, for example, CEA, which I understand could be a bit more assurance based.

My second question is also on Assurance activities. What percentage or what -- how big is the Assurance activity business within Industry and Infrastructure and lot of energy? And do you expect that to stay there? Or does it make more sense to move any kind of Assurance activities into the other business?

Yes. Thanks. I mean, really 2 very good questions. CEA, which is our solar Assurance business, will move into the electrical business because this is the way it's run. It's obviously solar panels and energy storage and battery and it's managed today by our global electrical business. So that will basically move from the World of Energy into consumer products. The rest doesn't change.

Your question on Assurance is really a good one. We have developed our ATIC value proposition over the years. And when we offer assurance, we have 2 type of Assurance solutions. We have the Assurance solutions that are industry-specific and which are basically managed by the business lines, let's just say, B&C or Moody or Caleb Brett.

And you've got the industry agnostic Assurance solutions that are part of corporate assurance. So that's the distinction that we make, all right? So nothing will change in terms of the ATIC solutions that Caleb Brett or B&C or Moody provides and sells their clients today, all right?

I see. Okay. And is it possible if you could disclose what level of industry-specific Assurance activities you have within Intertek Energy and Infrastructure?

Yes. Look, we disclosed the ATIC revenues on a global basis every year. And if you want to get a sense of the weight, if you want, in terms of revenue of the non-industry agnostic Assurance solution, the best way is to take the revenue that you at a group level minus the corporate assurance and you will get the answer.

Okay. I understand. Sorry, just one more follow-up. Government and Trade services within Consumer Products, do you think it makes sense to continue fitting there? Or do you think it's a more natural synergy -- okay.

Of course, of course. We are working with global brands, right?

Our next question comes from Virginia Montorsi with Bank of America.

Just a quick one. Could you remind us what was the M&A contribution in Health and Safety in Q1? And what contributed mostly to it?

Yes. Essentially, we bought a business called Envirolab, which is an Australian-based environmental testing assurance business, and that was the main driver of the difference between organic and global revenue.

Our next question comes from Geoffroy Michalet with ODDO BHF.

Yes. Two questions for me. First one on the TT business. We've seen that this deal still affected. Do you have any change in the totality of your clients about when they speak about coming back on the market within this division?

And then the second question is on the Middle East disruption. Can you describe us some positive side effect that you are seeing? You talked a bit about oil and gas in the U.S. Is it something that we witnessed already in Q1? Or is it more something that you anticipate for Q2 and going forward?

Yes, great questions. Look, TT remains very challenging for clients. Look, we expect that our clients are going to resume investments in R&D based on the discussion we have, they are not obviously reducing their innovation investments over time. But at the moment, they are still on a short-term cost and cash management. So it remains very tough, and we'll take it a step at a time. We'll see how the second half unfolds.

As far as the positive effect outside of the Middle East in Q1, yes, I mean, clearly, we had a very strong performance for Caleb Brett in the Americas, both North America and LatAm. Why? Because, of course, Europe is importing more from the U.S. and LatAm, and we've seen some benefit from it. No question. All right.

[Operator Instructions] Our next question comes from Joe Brent with Panmure Liberum.

Can you hear me?

Of course, yes.

Two sort of related questions really. Firstly, you've hopefully given a divisional split of revenue for the potential demerger. Could you give us some indication of what the profits of those 2 businesses could look like?

And secondly, I appreciate it's early in the process, but just thinking about potential extra costs from having 2 businesses versus 1. Is it fair to say that you'd expect the extra cost to be less than 1% of total sales?

All right. So in terms of the margin the 2 businesses. When you look at our full year disclosures, essentially, you have the contribution margin by division after all overhead allocations at the group level. And as I said earlier in the call, we do not have a lot of overhead in the center. We operate a decentralized market-focused business model.

So if you do crudely the margin calculations based on these disclosures, you will get a sense of the margin of both Intertek testing and assurance and Intertek energy and infrastructure. Of course, Laura and I are going to need to do some work on overhead allocation and absorption which obviously will change this margin profile a bit, but it's not going to be something that we believe is going to be materially different. But there will be some, obviously, change of economics based on overhead absorption depending on the formula that we use and where we put the overhead.

As far as how much incremental costs are going to be added to the business. Look, this is something that we're going to do diligently during the strategic review. Of course, if you do a demerger and you list 2 businesses, i.e., we have to list another business in addition to Intertek today, they will have a certain level of cost if obviously you do sell, it's a different level of cost. So this is going to be part of the work we're going to do. And I'm not going to say much more than that for now.

There are no further questions on the webinar. I will now hand over to management for closing remarks.

Well, thank you very much for being on the call today. I know it was on short notice. We really appreciate you making the time for Intertek. And then Denis will be available if you have any more questions. Thank you very much.

Thank you for your participation in today's call. You may now disconnect.

Good day, ladies and gentlemen, and welcome to Intertek Full Year Results 2025. [Operator Instructions] I would like to remind all participants that this call is being recorded. [Operator Instructions] I will now hand over to Andre Lacroix, Chief Executive Officer, to start the presentation.

Good morning to you all, and thanks for joining us on our call. I have with me Colm Deasy, our CFO; and Denis Moreau, our VP of Investor Relations.

2025 marks the third consecutive year of double-digit EPS growth, and I would like to start our presentation today by recognizing all my colleagues around the world for the strong delivery of our AAA differentiated strategy for growth. Here are the key takeaways from our call today. In 2025, we have converted a 4.3% revenue growth into 10.1% EPS growth with a strong margin progression of 90 basis points.

Cash conversion was excellent at 110%, providing us with the funds to invest GBP 300 million in growth and returned GBP 602 million to our shareholders. Following the launch of our AAA strategy 3 years ago, our earnings per share have grown 2x faster than revenue. Our margin progression of 240 basis points was ahead of target, and we have delivered a cumulative operating cash flow of GBP 2.3 billion.

Importantly, we have increased dividend per share by 17% per year on average in the last 3 years. In 2026, we're expecting a strong performance with mid-single-digit like-for-like revenue growth, further margin progression, strong earnings growth and a strong cash generation.

Let's start with the highlights of our 2025 performance. We have delivered indeed a strong financial performance. Our revenue growth was robust, up 4.3% at constant rate and 1.1% at actual rate. Operating margin was excellent at 18.1%, up year-on-year by 90 basis points. Operating profit growth was strong, up by 9.3% at constant rate and 5% at actual rate. EPS grew at 10.1% at constant rate. ROIC was excellent, 21.3% and our organic ROIC increased by 70 basis points. And as I said earlier, our cash conversion was excellent at 110%.

Let's now discuss our like-for-like revenue growth performance. The demand for our ATIC solution was robust and our like-for-like revenue growth of 3.9% at constant rate was driven by both volume and price. Our like-for-like growth in consumer products, corporate insurance, health and safety and industry infrastructure combined, which represent 90% of the group's earnings was 5.4%. The World of Energy performance was driven by 2 factors.

First, a very demanding base with 8% like-for-like revenue growth in 2024 and 8.7% like-for-like revenue growth in '23 as well, as you know, a slowdown in transportation technology in the second half of 2025. In the last 3 years, as you can see on the slide, our group mid-single-digit like-for-like revenue growth was broad-based and in line with our AAA targets. The acquisitions we've made are performing very well.

We've made 7 acquisitions in the last 3 years to strengthen our IT value proposition in high-growth and high-margin sectors. These investments are value accretive to the group, having delivered in aggregate a margin of 34% in 2025. We are truly excited about the consolidation opportunities in our industry and we will continue to target high-quality businesses. Indeed, 2 weeks ago, we've acquired Aerial PV, a drone-based inspection business to strengthen our value proposition in the solar energy. And last week, we've acquired QTEST in Colombia to expand our Intertek electrical network in Latin America.

In the industry, Intertek is recognized for its science-based customer excellence with our ATIC premium offering, delivering a superior customer service. Our high-margin and capital-light assurance business solution is the fastest-growing business. From a geographic standpoint, we've benefited in the last few years from broad-based revenue growth within each region. There's been a lot of discussion about the economy in China, and let me give you an update on the performance of our China business.

We had a very strong business in China, operating a diversified portfolio with scale positions across all of our business lines. We've delivered a like-for-like revenue growth of 5.4% in 2025, in line with our 3-year like-for-like revenue growth of 5.6%. We are extremely pleased with our margin performance of 18.1%, which was up 90 basis points at constant currency. We have benefited from portfolio mix, fixed cost leverage linked to growth, productivity improvements, our restructuring programs and of course, our accretive investments. These positive margin drivers were partially offset by the cost inflation and our investments in growth.

A few years ago, we announced a cost reduction program to target productivity opportunities based on operational streamlining and technology upgrade initiatives. Our restructuring program has delivered GBP 13 million savings in 2023, GBP 11 million in 2024 and GBP 6 million in 2025. We expect an GBP 8 million benefit in '26 from the restructuring that we have done in 2025. In the last few years, we've increased our margin by 80 basis points on average per year, well ahead of our AAA targets.

I will now hand over to Colm to discuss our full year results in detail.

Thank you, Andre. In summary, in 2025, the group delivered a strong financial performance. Total revenue grew to GBP 3.4 billion, up 4.3% at constant currency and 1.1% at actual rates. Sterling strengthened compared to major currencies impacting our revenue growth by a negative 320 basis points. Operating profit at constant rates was up 9.3% to GBP 620 million, with operating margin of 18.1%, up year-on-year by 90 basis points at constant currency and 70 basis points at actual rates. Diluted earnings per share were 253.5p with growth of 10.1% at constant rates and 5.4% at actual rates.

Now turning to cash flow and net debt. Group delivered adjusted cash from operations of GBP 762 million, down from our '24 peak, largely due to EBITDA being impacted by translation and, of course, lower working capital change than the prior year. Adjusted free cash flow was GBP 352 million, down from our '24 peak due to a lower cash generated from operations, higher interest and borrowing costs, higher cash tax outflow following our strong EPS progression and higher CapEx investments.

Turning to our financial guidance for '26. We expect net finance costs to be in the range of GBP 71 million to GBP 72 million, excluding FX. We expect our effective tax rate to be between 25.5% and 26.5%, our minority interest to be between GBP 21 million and GBP 22 million and our CapEx investment to be in the range of GBP 150 million to GBP 160 million. Our financial net debt guidance prior to any material movements in FX or M&A is GBP 930 million to GBP 980 million.

I will hand back to Andre now.

Thank you, Colm. And I'll summarize our performance by division. All comments will be at constant currency. Our Consumer Products delivered a stellar performance in 2025 with GBP 983 million in terms of revenue, up year-on-year by 6.2%. Our 6.3% like-for-like revenue growth was driven by high single-digit like-for-like in Softline, mid-single-digit like-for-like in Hardlines, mid-single-digit like-for-like in Electrical and double-digit like-for-like in GTS.

Operating profit was up 11% to GBP 299 million with a margin of 30.4%, up year-on-year by 250 basis points as we continue to benefit from a strong operating leverage and productivity gains. In 2026, we expect the Consumer Product division to deliver mid-single-digit like-for-like revenue growth. We grew revenue in our Corporate Assurance business by 6.8% to GBP 514 million.

Our like-for-like revenue growth was driven by high single-digit like-for-like in Business Assurance and low single-digit like-for-like in Assurance. Operating profit was GBP 116 million, up year-on-year by 3% and our slight margin reduction after a strong 2024 was driven by mix and investment in growth.

In 2026, we expect our Corporate Assurance division to deliver high single-digit like-for-like revenue growth. Health and Safety delivered a revenue of GBP 347 million, an increase year-on-year of 5.5%. Our 2.4% like-for-like revenue growth was driven by double-digit like-for-like in Food, low single-digit like-for-like in AgriWorld and negative low single-digit like-for-like in Chemical & Pharma after a strong baseline effect in '23 and '24 and a temporary project delays by some of our clients. Operating profit rose 2% to GBP 45 million with a margin of 13%, slightly down year-on-year after a strong 2024, driven by mix.

In 2026, we expect our Health and Safety division to deliver low single-digit like-for-like revenue growth. Revenue in Industry Infrastructure increased 5.3% to GBP 858 million and our 4.7% like-for-like revenue growth was driven by a stellar performance from Minerals, double-digit like-for-like revenue growth, mid-single-digit like-for-like in Industry Services and low single-digit like-for-like in Building & Construction with a strong second half.

Operating profit of GBP 95 million was up 24%, and our margin was up 170 basis points as we benefit from operating leverage, productivity gains and portfolio mix. In 2026, we expect our Industry Infrastructure business to deliver mid-single-digit like-for-like revenue growth. Revenue in our World of Energy business were GBP 729 million, 1.3% lower than '24. Our like-for-like revenue performance was driven by low single-digit like-for-like in Caleb Brett after a strong '24 and '23, where we reported high single-digit like-for-like revenue growth.

Negative high single-digit like-for-like in TT was due to a temporary reduction of investments by some of our clients and a negative high single-digit like-for-like in our CEA business was due to a baseline effect following a strong double-digit like-for-like performance in 2024. Operating profit was GBP 63 million, down 15% due to mix and, of course, a lower revenue in TT and CEA. In 2026, we expect our Water and Energy division to deliver low single-digit like-for-like revenue growth.

Three years ago, in 2023, we introduced our AAA differentiated strategy for growth to unlock the significant value growth opportunities ahead. And today, I would like to step back and give you a strategic update on where we are and how excited we are about the future. Our AAA strategy is all about being the best every single day for every stakeholder. We want to be the most trusted partner for our clients. We want our employees to be fully engaged. We want to demonstrate sustainable excellence in all of our operations and community. And of course, we want to deliver durable value creation for our shareholders.

Our AAA commitment to all stakeholders is simple, demanding and compelling, quality growth assured. Our clients invite us into the most critical parts of the value chain because they know that our science, our independence and our ethics are nonnegotiable. Our high-quality portfolio with leading scale position is growing in structurally attractive markets where regulation, complexity and innovation are rising year after year. We target quality revenue growth, focusing on selling our ATIC solutions in high-growth and high-margin segments.

Our quality revenue growth, combined with strong fixed cost control, productivity gains and disciplined investment in growth deliver continuous margin progression, resulting in strong earnings growth, which we convert into excellent cash generation. That's how the Intertek earnings models compound value over time. That's how the Intertek earnings models deliver durable quality growth. 10 years ago, we recognized that TIC solutions were necessary but not sufficient to give a superior customer service to our clients given the complexity in their global operations. We invented ATIC and today, we are the premium leader in risk-based Quality Assurance.

Our systemic end-to-end Quality Assurance, combined with our scientific technical expertise is what makes us truly unique and the best in the industry. Our ATIC approach is industry agnostic, and let me show you some examples on how ATIC works across categories. Here, you can see how ATIC works for a T-shirt in the Softline industry part of our Consumer Products division.

Here, you can see how ATIC works for the development of data center, the high-growth areas for electrical and building construction operations. In the fast-growing energy storage market, ATIC solutions are, of course, mission-critical for the performance and safety of batteries. And here, you can see from an ATIC standpoint, how it works in attractive LNG sector, which plays, as you know, a significant role in the energy transition.

Our growth model has compounded significant value over time. Our earnings per share have grown at an average of 10% since 2004. Outstanding financial performance starts, of course, with the trust of our clients based on our science-based customer excellence advantage. At the bottom of the slide, you can see a few examples of our Your BMAs campaigns where our clients acknowledge publicly the trust they have in Intertek. And of course, there are many more examples on our website.

We are very excited about the growth opportunities ahead. Every day in every industry, we pursue 3 type of growth opportunities. In the outsourced Quality Assurance market, we are targeting higher penetration with existing clients as well as the acquisitions of new clients. In in-house Quality Assurance market, outsourcing remains a significant opportunity. Of course, the most exciting growth areas is the untapped opportunity based on the Quality Assurance work that our clients don't do today and will do moving forward.

Our clients indeed invest more today than 10 years ago in Quality Assurance, but they still do not invest enough given the increased risks in their operations. That's why our role of independent quality assure is mission-critical for the world to operate safely. Regulation on quality, safety and sustainability are tightening. Supply chains have become more global and more complex. The energy transition and electrifications are creating new growth opportunities.

For sure, innovation cycles are shortening in all categories and consumers are demanding more choice and high-quality choices driving SKU proliferation. Finally, digitization and data-driven assurance increase the value of our science-based ATIC intelligence. Over the years, we have built a high-growth quality portfolio to seize these opportunities in every single of our business line. Moving forward, at the group level, we continue to expect to deliver mid-single-digit like-for-like revenue growth.

Let me explain how we'll do that, starting with Consumer Products. Consumer Products, our largest division in revenue and profit has reported like-for-like revenue growth of 5.2% between '23 and '25, ahead of our guidance. As a result, we are upgrading our corporate guidance for Consumer Products to deliver mid-single-digit like-for-like revenue growth in the medium term. In the medium term, we continue to expect high single-digit to double-digit like-for-like growth in Corporate Assurance, mid-single-digit to high single-digit like-for-like growth in Health and Safety and Industry Infrastructure and low single-digit to mid-single-digit like-for-like growth in the World of Energy.

Margin accretive revenue growth is central to the way we manage performance at Intertek. Between '15 and 2025, we have step changed our margin performance, having increased our reported margin by 220 basis points. Indeed, we have benefited from our portfolio mix and strong pricing power. We've delivered consistent revenue growth with good operating leverage. We've reduced our fixed costs, both at the operating and management levels. We have reinvented our processes to increase productivity.

Our CapEx and M&A investments were made in high-growth and high-margin sectors, and these positive margin drivers were partially offset by the cost of inflation and the investments that we've made to accelerate growth. The margin accretion potential ahead is significant, and we are on track to deliver our 18.5% plus margin target. On cash and shareholder returns, we've also made significant progress between '15 and 2025 with our end-to-end cash performance management. The opportunity ahead is also significant from a cash generation and in terms of return for our shareholders. We'll continue to, of course, be very, very disciplined in terms of cash management on a daily basis.

Being the best every day for our customers is mission-critical to deliver quality growth for our shareholders. We do regular customer research monitoring our performance versus our peers, and I can proudly say that Intertek is positioned as the absolute premium leader in Quality Assurance. Being the best for our customers gives us the opportunity to benefit from growing recurring revenues with our existing clients as well as win with new clients, giving us strong reputation in the industry. To deliver superior return, as we just discussed, we consistently convert our revenue growth into faster earnings growth and strong cash generation.

On that slide, we provide a benchmark of our performance versus our 2 peers, and I'm pleased to report that Intertek stands out with best-in-class productivity metrics, margin and returns in the industry. Of course, a key component of our superior returns is our accretive capital allocation. We allocate CapEx in working capital, targeting 4% to 5% of our revenue to support growth. And since 2015, we've invested more than GBP 1.2 billion in CapEx.

In terms of shareholder returns, our goal is to grow dividend over time with a payout ratio of around 65%. Selective acquisitions to strengthen our leadership positions are important, and we've invested since '15, GBP 1.4 billion in M&A. Lastly, our goal is to operate with a leverage target of 1.3 to 1.8 net debt to EBITDA and return excess capital when it cannot be deployed at attractive returns.

Our high-quality cash compound earnings model that we just discussed has played and will continue to play an essential part in unlocking the value ahead and delivering quality growth. We have good visibility on the structural growth drivers to deliver our revenue growth targets. We are confident that we'll deliver the substantial upside to our medium-term target in terms of margin of 18.5%. We have step changed the cash generation of the group and our disciplined capital allocation policy is, as we just discussed, accretive.

We'll continue to benefit year after year from the compounding effect of mid-single-digit like-for-like revenue growth, margin accretion, excellent free cash flow and disciplined investments. This is how we'll deliver durable quality growth and unlock significant value ahead. Over the years, we've built 5 enduring competitive advantage, which underpin our confidence moving forward. We operate a high-quality growth portfolio poised for global growth with leading scale position in attractive industries.

We are the premium leader in Quality Assurance with our superior ATIC offering, giving us the trust of our clients. Our high-quality cash compound earnings model, deliver industry-leading productivity and returns and our high-performance science-based organization continue to attract the best talent in the industry. And finally, we operate with doing business the right way. This is part of our culture, and this is supported by strong controls, strong compliance and a tight governance.

Before taking your questions, let's discuss guidance for 2026 and beyond. We're entering 2026 with confidence in the last 3 years. As we just discussed, we've accelerated our revenue growth to 6% per year and have grown EPS 2x faster than revenue at 12%. Operating margin has expanded by 240 basis points. We've increased EPS by 17% a year, and we have delivered GBP 2.3 billion in operating cash flow and GBP 1.1 billion in free cash flow. We've invested GBP 396 million in CapEx, GBP 211 million in acquisitions and returned almost GBP 1 billion to our shareholders. And above all, we have delivered an excellent ROIC with a 3 average of 21.4%.

Our growth momentum was strong throughout 2025. And in 2026, we expect to deliver mid-single-digit like-for-like revenue growth at constant currency with high single-digit like-for-like in Corporate Assurance, mid-single-digit like-for-like in Consumer Products, Industry and Infrastructure and low single-digit like-for-like in Health and Safety and the World of Energy.

We are targeting further margin progression, which combined with expected revenue growth will deliver strong earnings growth. Cash discipline will remain in place and will deliver a strong free cash flow. We plan to invest around GBP 150 million to GBP 160 million in CapEx. As you would expect, we continue to focus on delivering a strong ROIC.

In terms of currency, the average sterling rate in the last 6 months applied to the full year results of 2025 will be broadly neutral at the revenue and operating level. Beyond '26, of course, the value growth opportunity is significant. We continue to expect our like-for-like revenue to be at mid-single digit and will benefit from value-accretive M&As.

Margin accretive revenue growth, as we just discussed, will remain a top priority, and we are confident that there is upside to our 18.5% plus margin target. We remain very disciplined in terms of cash conversion and cash allocation to seize the organic and inorganic opportunities in the market. And of course, we'll continue to reward our shareholders with a 65% dividend payout ratio.

In summary, the value growth opportunity ahead is significant. Our AAA strategy is about being the best all the time, and our commitment to all of our stakeholders is simple, demanding and compelling, quality growth assured. That's what our AAA differential strategy growth is all about.

We'll now take any questions that you might have.

[Operator Instructions] We'll take our first question from Rory McKenzie with UBS.

It's Rory here from UBS. Firstly, I appreciate it's only 2 months, but can you just help us get from the November to December exit rate of 1.9% organic growth to your guidance of mid-single-digit growth for this year overall? I know your outlook comments suggested that some areas are supposed to pick up quite a bit. So could you maybe just give us some more detail on what caused that high single-digit decline in World of Energy in the end of last year and what you're seeing so far this year? And also why Corporate Assurance slowed and why you see a pickup?

And then secondly, obviously, it was good to see the strong adjusted EBITA margin progression, but also restructuring charges, I think, have increased quite a bit. H2 was the highest run rate we've seen for several years. Can you share more about where those programs are targeted and why you decided to expense them this year? And also just what should we expect in terms of the payback from those charges?

Of course. Look, in terms of like-for-like revenue growth, there is no question that in the second half and particularly in November, December, we faced a very demanding base when it comes to the World of Energy. As I just explained, the World of Energy had a very, very, very strong '23 and '24.

Just to remind everyone about the data, we had a '23 like-for-like of 8.7% in 2023 with 9.6% in November, December 2023. And then in 2024, the like-for-like revenue growth of World of Energy was 8%, and it was 10.7% in November, December last year. So if you basically put the November, December like-for-like revenue growth, which is the first part of your question in context, if you basically take that baseline effect into consideration, recognizing, of course, as I said earlier, that we saw a demand reduction in the transportation technology industry, our like-for-like revenue growth was 4.7% ex the World of Energy in November, December and was 5.4% in the full year 2025.

So from my perspective, yes, you might call it a slowdown in the month of November, December, but a good reason for that. The reason why we are confident about mid-single-digit like-for-like revenue growth is pretty clear from our perspective.

Let's go through each division one at a time. If you look at Consumer Products, there is no question that it's a stellar performance in all segments within Consumer Products. We have done super well in Electrical for many, many, many years, and we continue to innovate and drive growth in our all electrical operations around the world.

There is no question that we've made tremendous progress in Softlines, and you can see from the numbers that we are gaining market share in the industry. We've won a lot of new contracts. And Hardlines is performing very well, but also quite a lot of new contracts, and VTS is in a good place. So from a pure consumer product standpoint, there is no question that we are very, very comfortable with our guidance for the year.

Looking at Corporate Assurance. Corporate Assurance essentially always has a bit of a slowdown in November, December because this is the period where we are at peak capacity, and it's very difficult to basically go beyond the auditors capacity that we had. Having said that, the backlog is strong, and we are very, very comfortable with the guidance we are giving. And as I said earlier in the call, we are investing in expanding our auditors capacity to deliver the orders we have in the backlog.

Within Health and Safety, there is no question that Food continues to be outperforming everyone in the industry. We are very, very proud of the double-digit revenue growth, and we don't expect Food to basically slow down. There is no question that there was a bit of slowdown in Chemical & Pharma in 2025 for all the reasons we talked about, but we expect that to basically bottom out in the first half and start growing in the second half. We are obviously seeing an increased order momentum from all of our clients given the temporary cuts they've done in 2025.

When it comes to Industry and Infrastructure, and we are obviously comfortable with the guidance that we've just talked about with a stronger H2 than H1, if I were to say it differently. If I look at Industry and Infrastructure, look, Minerals is going from strength to strength. You would have seen our double-digit revenue growth performance well ahead of anybody in the industry. And this is because we are winning new contracts. A lot of our sourcing opportunities are coming our way, given our science-based customer excellence advantage.

And here, we're going to have another very, very good year. Moody continues to thrive. And pleasingly, as expected, we've seen a rebound in terms of demand with building and construction that has a stronger H2 than H1. And here, the backlog is very, very, very good indeed. As far as the world of energy is concerned, I'm not concerned about Caleb Brett nor am I concerned about CEA. Transportation Technology, which is the automotive industry will take time to recover, but we expect the demand to start improving in the second half.

So when you go division by division, you can see why we're guiding the way we are guiding and mid-single-digit like-for-like is really what we believe we will deliver in '26 after having delivered that for 3 consecutive years in the last 3 years. When it comes to restructuring, very, very important questions. As you know, 2025 was the fourth year of our restructuring program. We have another year to go. And our view is that we give the operations maximum times to fix some of the issues. But at one point of time, we need to make decisions for underperforming units. And we have taken some decisions.

We've obviously taken some cost reduction in TT and CMP given the trajectory that we have seen. We've continued to streamline our overheads. We continue to streamline the operational management within our units, reducing essentially a number of layers. And then there were a few sites that come and I felt we had to basically get out of because after having tried for 2.5 years, the results were not compelling and they were starting to destroy value.

So that's basically what I could say to these 2 questions. Thank you, Rory.

Our next question comes from Suhasini Varanasi with Goldman Sachs.

Just a couple for me, please. As a reminder, the restructuring charges that you took below the line, I think I missed it, but could you help us understand the quantum of the benefit you expect to SG&A in 2026? And just to help us understand the exit rate versus the early trends, is it possible to give us some color on early trading in Jan, Feb this year?

The benefit in 2026 from the restructuring we did in '25 is GBP 8 million. In terms of trading, I typically don't comment on short-term trading. But as I just said to Rory, I'm not worried about the like-for-like momentum for the group in 2026. So we're in a good place.

Our next question comes from Annelies Vermeulen with Morgan Stanley.

I have 2 questions, please. So firstly, on Transportation Technologies, you talked about customers temporary reduction of investments, but we've also seen some of the OEMs make quite big decisions around moving away from EVs, for example. So when you think about that business, do you think that there will be any need for restructuring as you try and position it to match where the growth actually is in the market? And what gives you confidence on that recovery in the second half based on what you can see today?

And then secondly, just on capital allocation, no new share buyback today despite the still quite low leverage. So can we infer from that, that you expect to continue to do more deals in 2026? And how does the pipeline look in terms of what you're looking for specifically?

All right. Of course. Let me just double-click on TT because that's the first question you're asking. Essentially, if you look at the global automotive industry and if you look at the European brands, including here JLR, the American brands and the Chinese and Japanese brands, the Chinese market and the U.S. market have always been the biggest but also the most lucrative market for Western OEMs.

And essentially, the reason why we've seen a very quick wave of restructuring across all OEMs in Europe and in U.K. here, but also in the U.S. is essentially for 2 reasons, right? The Western OEMs have basically lost massive market share in China because the Chinese OEMs have an advantage in terms of electric vehicles. So the electric vehicle segment and hybrid segment continue to grow globally. The issue is that the OEMs are losing market share in China.

And for the European OEMs, the tariff obviously have increased the cost of doing business in North America, which is the second most lucrative market for all OEMs here in Europe and the U.K. So that's why you've seen this massive cost cutting in terms of R&D projects and people and dividend in the short term because these OEMs had to basically deal with short-term cash pressure.

When you step back and if you look at where our footprint is for Intertek in terms of Transportation Technology, we are very strong in the United States. We are strong in China, and we've got, I would say, decent operations in Europe. Looking at the investment moving forward, I don't think that OEMs will stop investing on EV and hybrids for all markets outside of the United States because the demand continues to be very, very robust and all the Western OEMs need to dial up their EV and hybrid capabilities to compete against Chinese OEMs.

The U.S., of course, we have never expected a huge growth for electric vehicles. And this is a market where the traditional combustion engine will continue to play a big role. I mean the good news for us is that in the U.S., that's exactly what we do in the automotive industry. So we are quite well positioned. My view is that OEMs cannot stop investing in R&D to improve their market share. And we believe that they will resume investments step by step. So we are optimistic for the second half of 2026.

As far as the capital allocation question, we did our share buyback last year because our net debt-to-EBITDA leverage was way below our target range. Now we are at 1.3 at the bottom of our target. We basically believe that the opportunities to create additional value for our shareholders through M&A is increasing. We've seen the demand increase in terms of good businesses being for sale. We've done quite a few acquisitions, as you know, in 2025 and the last few weeks. And we believe that being at 1.3 net debt to EBITDA, we are in a good place to putting, if you want our cash to work and deliver superior returns, provide, of course, the opportunities are very significant.

If at the end of 2026, we are in a situation where our leverage is below our target and below the threshold -- minimum threshold in our target, obviously, we will reconsider with the Board. But we've always said that if the group is below the minimum threshold of 1.3, we will obviously return excess cash that can be deployed for strong returns. But again, as I said in the presentation, you have seen the returns that we delivered in the last 3 years with the acquisition that we made, it's really accretive to the group. And if we find the right opportunities, we will seize this. We'll remain very, very disciplined, and we'll take a view at the end of when we sit with the Board if there is excess cash that we need to return cash to shareholders. All right.

The next question comes from Virginia Montorsi, Bank of America.

I just had 2 quick ones. One is on the margins, particularly in Corporate Assurance and Health and Safety. You've mentioned in the press release some portfolio mix effect. So could you help us understand how to think about these 2 divisions margin-wise for 2026?

And then the second one, when we think about CapEx, it's increased slightly year-on-year and your guidance for next year is slightly higher. What are your priorities CapEx-wise for this year?

All right. Look, I think if you look at the mix effect within Corporate Assurance essentially that we have 2 big businesses, Business Assurance and Assurance and the like-for-like revenue growth was a bit lower on Assurance than on Corporate Assurance on Business Assurance, and this is what the mix effect was all about. And as I said, there was more than mix. We are investing in technology and auditors capability.

And in terms of Health and Safety, there is no question that the mix effect was driven by Chemical & Pharma, which was down year-on-year, and it's a really high-margin business for us. We do not guide in terms of margin by division for the year. We give you a guidance for the overall group. We expect, obviously, to deliver margin accretive revenue growth in most of our businesses and there are opportunities in 2026 for both business -- Corporate Assurance, sorry, and Health and Safety to do better.

And can I ask on CapEx?

Yes. I mean the CapEx question is pretty simple to think about it, right? We are in a unique position when it comes to seeing growth opportunities in each of our business lines. And we have obviously opened new sites in Asia Pacific, in Latin America and also in Europe. We have expanded certain of our sites in terms of building additional capacity. We, of course, have invested in technology. We are using technology to innovate and augment our value proposition.

And lastly, maintenance continue to be important, and we continue also to make some investment, as you would expect in the group in terms of overall IT strategy. So that's basically what we are doing. It's pretty broad-based. There is no single business line at Intertek that doesn't have opportunities to grow with good CapEx investments, and that's what we are doing. You can see with all the announcements that we are making around the world, the type of investments we've done in 2025.

Our next question comes from James Rowland Clark with Barclays.

You talked about the healthy M&A pipeline earlier. Can you just elaborate on how deep this pipeline is that you decided that, that is the priority for capital allocation right now? And how far out do you think this takes the business in terms of the sort of run rate of bolt-on deals for the foreseeable future?

My second question is on margins. It's another very strong year within the Corporate Consumer Products division in terms of margin progress. You've spoken earlier about growing a little faster in Assurance, adding auditors and also you're guiding higher on growth in consumer products. Do we assume that the opportunity for margin growth is still there in those 2 divisions? Or are you adding lots of capacity to drive the growth that will maybe delay the sort of operating leverage coming through in those 2 divisions in 2026?

And then my final question is on free cash flow. It looks like working capital was the reason that free cash flow was down 15% year-on-year. Are you now happy with the working capital sort of base to run off for 2026, i.e., payables and receivables days are in a normalized position now for 2026?

Well, thank you very much. I'll take these questions, starting with the third one. Look, I mean, you're right. I mean, we've made so much progress on cash over the last 10 years that we are now in the territory of incremental gains. But we are truly continuous improvement driven organization, and we'll continue to look at opportunities for better cash generation moving forward. There is no question that we can do much better than what we've done over the years, but we are talking about incremental gains.

So I would never say that our working capital is the best you can get. I would say it's a very, very good working capital, but we are going to go for incremental gains step by step. And you're absolutely right. The free cash flow was impacted largely by the lower change of working capital between '24 and '25 compared to what happened between '23 and '24. We had a stellar cash performance in '24, as you know.

In terms of margin, as I said to the previous question, we do not guide in terms of margin. But the way we operate internally is margin accretive revenue growth is central to how we deliver value for our stakeholders, right? And look, there are opportunities even within consumer products, even with Corporate Assurance to invest and continue to improve margin. And that's the way we are running the company. That's the way people are incentivized because essentially, to basically improve your margin, you've got quite a lot of levers you can pull if you run an operation. It starts with the quality of your portfolio strategy.

Are you targeting the high growth, high-margin segments in the industry so that the IP that our engineers and scientists have to offer to the market are basically priced at a higher price points and are targeted to high-growth areas. The second thing is, of course, you've got to stay very, very disciplined in terms of pricing.

We are the premium leader as I was explaining during the presentation, wouldn't have the productivity metrics that we have in terms of revenue per headcount, operating profit per headcount and free cash flow per headcount if we didn't have a very disciplined volume price mix management. In addition to that, the fixed cost leverage continues to be playing a big role when you want to drive margin accretion.

And despite the fact that you are investing in new opportunities, you should basically always target some productivity improvement. So net-net, we expect our teams to drive margin growth year in, year out. We do not always get there for reasons that we've just talked about, but that's the way we are running the company, and that's the way the incentive scheme is based and this is why we are obviously in the situation where we're in, in terms of margin performance. In terms of M&A, look, we are very disciplined in terms of M&A. We don't have any goals. We don't say we're going to do x number of M&As.

We want to be ultra, ultra careful on how we select these businesses. We only target high-quality businesses. And we believe the environment is obviously more positive for M&A in 2026 than it was in '25 and certainly in 2024. And therefore, we want to keep some firepower given the fact that we had a good place with our net debt to EBITDA at 1.3 level to seize the opportunities coming our way.

Having said that, we have built lots of bilateral relationships around the world. That's our preferred way of operating. That's how we did, for instance, Envirolab, that's how we did QTEST. That's how we did Suplilab, that's how we did Aerial PV. And building this relationship takes time, and you need to make sure that the owner is ready to monetize her or his asset base at the right time.

We, of course, participate in processes, which tend to be very, very competitive and there are situations where we win. But we don't have any quantified goal. It's got to make sense acquisition by acquisition. And the positive news is that we've got a very, very good integration approach. You've seen the return we delivered from acquisitions. We are very clear about where we want to invest. We target high-growth, high-margin sectors. that will augment the IP of Intertek.

And we believe that 2026 will be a good year. But I can assure you, we're not going to rush to make acquisition just because we want to say we've done M&As. We do M&As if it makes sense all the way.

Our next question comes from Victoria Chang with JPMorgan.

I have 2 questions, please. And the first one is with the U.S. IEEPA tariff ruling last week and the introduction of the Section 122 blanket tariffs on U.S. trading partners, do you see any impact of this to your consumer testing business maybe in terms of delayed decision-making or pull forward of SKU testing to take advantage of the lower tariff rates on certain products in Asia?

And my second question is on your initial thoughts on AI implementation in the business, please, how you're thinking about rolling out AI across the business to deliver efficiencies? And are there particular areas or business lines where you expect to see the most benefit in terms of the cost base?

All right. I think on tariff, there is no question that the news is better news for China and India than it was a few weeks ago. As you know, we are in the swing of the supply chains of our clients. We are working very closely with them. We've launched SupplyTek in 2025 to basically help our clients figure out what they could do to reengineer their supply chain based on the change potentially of economics, creating new routes, replacing routes.

I would say the overriding position within our clients is wait and see. They've made no big decision because the agenda has been moving around. Having said that, there is no question that we are having lots, lots, lots of meetings with our consulting teams, helping clients to figure out would these tariff situations settle at what is expected to settle at, what it will mean in terms of economics and potentially new routes. But the overriding situation is let's not rush and take our time.

And you can understand why because these supply chain changes are very, very costly, very risky, very, very timely and people only want to change their supply chain if it really makes sense not for tomorrow, but for many, many years to come. As far as -- of course, we continue to monitor that. But the net news of the new decision is that it's incrementally better for the economics in China and India. In terms of AI, look, we are called Intertek, so we use technology to augment everything we do for our clients internally.

And of course, we are investing on AI. If you were to be here in the office with us here next to our conference room, we have a lab, AI lab that is made of engineers that are providing support to our teams around the world to make sure that we develop the right AI solutions for our business. How do we think about AI at Intertek?

First of all, we believe there is a significant opportunity to help our clients manage the risk associated to the investment they are making in AI. If you basically take the technology company aside and largely some other industries like medical devices or defense, AI is pretty new for most corporations.

I'm not talking about using large language models, which are third-party large language models. Everybody understand that, but developing your own AI algorithms and using agents to basically either improve your customer service, drive more sales or, of course, work on productivity. So that's why we've launched AI2, which is an independent end-to-end AI assurance program to help our customers operate smarter and safer and with the right trusted AI algorithm. This is the external opportunity, if you want. And this is, of course, very, very good news for us. And here, I would say we are at the cutting edge of what's happening in the industry.

I think we are the only company to do that, competing with lots of very, very, very big companies like consulting firms and Big Four because we do have the expertise. In terms of using AI on how we do business, there is no question that we are looking at AI to augment the way we deliver total quality assurance for our clients, right? And I'll give you a few examples in a second. There is no question that we are looking at AI on how to improve our productivity, and I'll give you some examples on how we are seeing some benefits from a productivity standpoint.

And then finally, we are looking at AI to basically get faster to the right insights and decision-making by doing data science at scale in all parts of the organization to basically see the opportunities or the issues faster and therefore, make better decisions. As you know, we've built an incredible database of financial, nonfinancial indicators that we call 5x 5. This gives us a real depth and breadth of reach in the operations.

And this is where AI investments that we are making are making a big difference for us to basically look at some of the big trends and deviations and you understand all of this. When it comes to using AI on how to augment the total quality assurance value proposition of our clients, there is no question that all of our large-scale data-based platforms, the SaaS platform we've launched over the years, we have a very, very, very good position to differentiate ourselves.

And we are already using AI to, for instance, provide better targeted people assurance training with our Alchemy solutions. We are using AI to help our clients use platforms like SourceClear and Intertek and RiskAware, which are SaaS-based platforms where essentially it's all about intelligent document processing, getting the right risk-based quality assurance analysis on the trends and therefore, as a client, making some pretty big decision in terms of where you are in your testing investment or assurance investments to be.

When it comes to the internal use, we have invested over the years. We use Harvey, for instance, which is a pretty good platform to review client contracts to basically look at large documents when we do DD inside the data room for M&A. And then going into the operational opportunities. Anywhere where we have pretty well qualified digitized process, AI can help us obviously make much, much, much faster decisions and gain some productivity.

So the areas that we're looking at, for instance, is in terms of marketing, how do you basically qualify the right leads much faster. Another area, which is an obvious opportunity for us is the quality reviews of our test report, but also our audit report, very, very important area of opportunity where we are investing a lot is resource management.

So if you think about scheduling of auditors for BA or if you look at scheduling of inspectors for Caleb Brett or Moody's. And then there is no question that when it comes to global market access, we use AI to accelerate the speed at which we provide the right testing protocols to our clients when they want to go to market in other industries or in other markets -- in other geographies, sorry.

And then the real opportunities is data science, right? How do you basically take the work we do for our clients in Geochemistry and Minerals. We do a lot of work for them, and most of our clients do not basically use most of the data. Well, with the intelligence we have on Geochemistry, we can help our clients go beyond the test report. So we are very, very, very excited. Obviously, early days, but I would say that we are at the cutting edge of AI in the industry at Intertek.

[Operator Instructions] We'll take our next question from Karl Green with RBC.

Just a couple of follow-up questions around the restructuring costs in the year. I just wanted to clarify, did I hear correctly that the SG&A benefits expected for 2026 would be GBP 8 million. And if so, that ratio between the GBP 37 million of charges and the SG&A savings of almost 5:1 suggests that there's possibly savings in other cost buckets beyond SG&A. Is that correct?

The 8 million is the total savings we expect in our cost base in 2020 -- yes, in 2026.

That's good total cost. Okay. And then just for this year, this fiscal year, fiscal '26, how should we be thinking about likely P&L charges for restructuring costs? Obviously, it's been a consistent feature for the last few years as you've gone through this program. What ballpark number would you point people towards this year?

Look, we do not guide regarding restructuring costs. This is a process that Colm and I go case by case. We only do that when we believe it's the best way moving forward. I wouldn't want to give you any numbers because, frankly speaking, we're going to take every opportunity at its face value, and we'll do it very, very rigorously. We've got some clear rules on how we book this.

As you can imagine, we always announce our results fully audited. So that's been through the mute review of our auditors. But this is our final year of the 5-year program we announced a few years ago, but we'll continue to be very, very rigorous. So I wouldn't want to give you any number at this stage.

We'll take our last question from Ben Wild with Deutsche Bank.

Just one remaining for me. I think if I look back at the November trading update and compare with where you ended the year on net financial debt, you ended GBP 20 million above the guide that you gave in November. Just to understand, is there a one-off effect that reverses next year on the free cash flow? Or is there anything else that resulted in the difference between the November guide and the result?

It's a fair question. When we give the net debt guidance, we never include the M&A. So as you know, between November statement and year-end, we did an additional acquisition. So that's the only difference. There is nothing more to that.

There are no further questions on the webinar. I'll now hand back over to management for closing remarks.

Well, thank you very much for your time today. I know it's a busy day. Of course, we are available would you have any follow-up questions. Thank you very much, and have a good day.

Thank you for joining today's call. We're no longer live. Have a nice day.

Good day, ladies and gentlemen, and welcome to Intertek November 2025 Trading Update.

[Operator Instructions] I would like to remind all participants that this call is being recorded, questions will follow after the presentation.

I will now hand over to Andre Lacroix, Chief Executive Officer, to start the presentation. Thank you.

Good morning to you all, and thanks for joining us on our call. I have with me Colm Deasy, our CFO; and Denis Moreau, our VP of Investor Relations. There are essentially 5 key takeaways from our call today regarding our July-October trading statement.

First, we have benefited from a robust growth in our 2 highest margin division, Consumer Products and Corporate Assurance in the July-October period, where we've delivered a 5.8% like-for-like revenue growth on a combined basis despite a very demanding base last year. Second, we saw trading momentum improve in Industry & Infrastructure with a strong acceleration in Minerals and a good pickup in Building and Construction. Third, important message on Transportation Technology, the restructuring in the automotive sector in Q3 results in double-digit negative like-for-like revenue growth in Transportation Technology. The group like-for-like performance in July, October ex Transportation Technology was in line with the run rate we had in the first half.

Of course, we continue to invest in growth with the 3 acquisitions that we've made in 2025 in high-growth and high-margin sectors. And we have launched several industry-leading innovations like SupplyTek and AI². Final message for today, given our strong margin and excellent cash performance, we are on track to meet the earnings expectations for 2025. These are the key takeaways for our call today.

So let me just start our call today by answering the 3 most frequently asked questions in our investor meetings. And the first question we get is, what are your growth expectations in Consumer Products?

We are extremely pleased with the performance of our Consumer Products division, which has delivered a 6.9% like-for-like revenue growth in the first 10 months of the year after an excellent year in 2024, where we saw 8% revenue growth. The global consumer continues to expect more choices of high quality, triggering more innovation with existing brands and, of course, the emergence of new brands. We are very confident about the growth outlook of our Consumer Products division, and we do not expect that megatrend to change.

What I'd like to do now is give you a few examples of what our passionate and innovative colleagues do every day in our Consumer Products division. Within our softline teams, our global sales organization has won several new contracts with existing and new clients. Our online colleagues continue to expand the portfolio and recently created a breakthrough by opening a [indiscernible] center of excellence in Hong Kong. Our electrical colleagues are continuing to invest in fast-growing space like energy storage, EMC, HVAC. They are at the cutting edge of total quality assurance for AI-based products and services. And our GTS colleagues have won numerous new contracts in the Middle East and Africa.

The second question we get is what are the building blocks that you have in place to deliver your 18.5% plus margin target? As you know, margin accretive revenue growth is central to the way we manage performance at Intertek. We have a strong track record of consistent margin progression and expect to reach 18.5% margin in the next few years with plenty of further opportunities beyond. We drive margin accretive revenue growth based on 5 distinct priorities. First, the portfolio effect at the site level linked to volume, price and mix management; second, fixed cost leverage linked to revenue growth. The faster revenue growth, the better leverage you have. Third, variable cost productivity improvement. We never stop reinventing ourselves to find new productivity opportunities.

Fourth, targeted fixed cost reduction. We continue remove -- continuously remove unnecessary costs in the business. And fifth, of course, margin accretive investments when we do innovation, technology and M&A. We do this based on a best-in-class capability that we've built step-by-step over the years. We are indeed managing performance on a daily, weekly, monthly basis with digital operating systems that gives us real-time visibility. We have a strong pricing discipline and take price increase regularly leveraging our superior customer service. Our tight benchmarking tool gives our operation a precise constitutive analysis of where the opportunities are. We pursue a disciplined growth and margin accretive capital allocation policy. And importantly, 70% of our annual incentive scheme is based on margin-accretive revenue growth.

The third question we get is what are your growth investment priorities? We operate in a very exciting industry, and we are laser-focused on the investments that we can make to seize the attractive growth opportunities ahead. And our #1 priority is, of course, to invest in our local operations. We've invested more than GBP 1 billion in CapEx in the last decade, close to circa 30% of cumulative adjusted free cash flow, and we operate a state-of-the-art lab network around the world.

Last month, we opened our footwear Center of Excellence lab in Bentonville, Arkansas, the home of Walmart, and have witnessed firsthand how these investments has already created immediate growth opportunities. Our second priority is to reinvent ourselves by offering our clients new solutions to address the needs that are not met in the industry today. We believe in the importance of technology to augment the strength of ATIC solutions. And let me give you a few examples of what we do in tech. Our People Assurance business provides a comprehensive suite of audit and training solutions with SaaS delivery platform reaching close to 5 million frontline workers today.

Within our softline and online businesses, we have strengthened our customer value proposition with the digitization of our testing solution with high care and inspection services with 2Q. Recently, we've partnered with Trace For Good to offer a digital platform for our clients that need to manage their data to get the digital passports ready. A few months ago, we've launched AI² to help our clients identify and manage the risks intrinsic to what they do with the app when they try to augment the value of their products or services.

Our third priority is to invest in M&A to expand our IT portfolio. Our acquisition strategy targets companies that have a strong track record in high-growth and high-margin sectors. We made 6 acquisitions between 2020 and 2024, and these 6 investments have delivered in aggregate a margin of 25.1% in 2024. This year, we've acquired 3 excellent companies, Tesis in Brazil and Envirolab in Australia and Suplilab in Costa Rica. We are seeing a good pipeline of M&A opportunities, and we remain selective to identify the right M&A opportunities.

Before I turn to our trading performance, I just want to let you know that in our investor website, you can now access 3 new type of information, an interactive financial modeling tool, the answers to the frequently asked questions and a dedicated You''ll be Amazed web page where you can discover what we do every day for our clients.

So let's now turn to trading in the last 4 months. The group has delivered a robust trading performance with a 4.1% like-for-like revenue growth at constant currency. We have seen a robust like-for-like revenue growth in Consumer Products and Corporate Assurance against demanding prior year comparator. Like-for-like revenue growth in Health and Safety was in line with expectations. We saw a trading momentum improvement in industry and infrastructure, while in the world of energy, we saw a stable performance.

Our Consumer Product division delivered like-for-like revenue growth of 5.4% at constant currency driven by double-digit like-for-like revenue growth in GTS, a high single-digit like-for-like revenue growth in Softline and a mid-single-digit like-for-like revenue growth in Hardlines and Electrical. The 2024 base was very demanding for Consumer Products. Over 2 years, we've delivered a 15.1% like-for-like revenue growth at constant currency.

Our Corporate Assurance division delivered a like-for-like revenue growth of 6.6% at constant currency, driven by high single-digit like-for-like revenue growth in Business Assurance and a stable like-for-like revenue in Assuris. The 2024 base was also very demanding for Corporate Assurance. In the past 2 years, we've delivered a 16.9% like-for-like revenue growth at constant currency.

Our Health and Safety division reported like-for-like revenue growth of 0.8% at constant currency. Double-digit like-for-like revenue growth in Food and a low single-digit like-for-like in AgriWorld was partially offset by negative mid-single-digit like-for-like revenue performance in Chemical & Pharma due to a strong comparator and some temporary project delays. On a 2-year basis, we delivered a 9.1% like-for-like revenue growth at constant currency in Health and Safety.

Industry & Infrastructure reported 6% like-for-like revenue growth at constant currency, which was a 300 bps acceleration compared to what we saw in H1, driven by an improved momentum in Minerals, where we delivered double-digit like-for-like revenue growth and improved building construction performance with a low single-digit like-for-like revenue performance, while Industry Services continued to deliver mid-single-digit like-for-like revenue performance.

The World of Energy delivered a stable like-for-like revenue growth at constant currency, driven by double-digit like-for-like revenue growth in CEA and a low single-digit like-for-like revenue growth within Caleb Brett while Transportation Technologies saw a double-digit negative like-for-like revenue performance due to a baseline effect and the temporary reduction of investments for some of our clients as they focus on reducing their cost base in what is a more challenging market for them.

Turning now to the performance at the group level on a year-to-date basis. Our revenue for the 10 months to the end of October was GBP 2.850 billion, a growth of 4.6% at constant currency and 1.2% at actual rate. Our like-for-like revenue growth of 4.3% at constant currency benefited both from volume and pricing. Our recent acquisitions are performing well and contributed GBP 9 million revenue on a year-to-date basis. Margin progression was strong as we benefited from our divisional mix, pricing initiatives, good operating leverage, disciplined cost controls and productivity improvements. We delivered an excellent free cash flow performance and ROIC was also excellent. We have completed GBP 328 million of our GBP 350 million share buyback program that we announced in March.

And we are basically now going to discuss our guidance for 2025. We continue to expect that the group will deliver mid-single-digit like-for-like revenue growth at constant currency, high single-digit like-for-like performance in Consumer Products and Corporate Assurance, mid-single-digit like-for-like performance in Industry & Infrastructure, low single-digit like-for-like performance in Health and Safety and a stable like-for-like performance in the World of Energy.

Given our strong margin performance in H1 and the strong quality of earnings in the July-October period, we are targeting strong margin progression. Our cash discipline will remain in place to deliver an excellent free cash flow. We'll invest in growth with circa GBP 135 million, GBP 145 million of CapEx. We now expect the financial net debt to be in the range of GBP 925 million to GBP 975 million, reflecting the 2 additional acquisitions made in the second half. Our interim currency guidance remains unchanged. Net-net, we are on track to meet the earnings expectations for the full year.

We are seeing high demand for ATIC solutions and the value growth opportunity ahead is significant. We are laser-focused on converting revenue growth into stronger profit growth, targeting our 18.5% plus operating margin targets. Our strong cash generation will enable us to invest in growth while providing our shareholders, of course, with strong returns. We are confident in the sustainability of the strong performance that we have seen in the last few years, and we look forward to another strong performance in 2026. Our confidence is based on the continuing increased demand for ATIC solutions and our expectations for a more supportive macroeconomic backdrop.

So let me summarize the highlights of our trading statements today before taking your questions. In the last 4 months, we've delivered quality growth with our 2 highest margin divisions, Consumer Products and Corporate Assurance, delivering a robust like-for-like performance. We are converting revenue growth into strong profit and excellent free cash flow, and we are on track to deliver a strong performance in 2025, and we are well positioned to deliver another strong performance in 2026.

So thank you for joining us on our call today. We'll answer any questions you might have.

[Operator Instructions] The first question is from Rory McKenzie at UBS.

It's Rory here. First question I wanted to ask about was on Consumer Products, where it's still delivering good organic growth but obviously, softlines and electricals have slowed a bit since H1. Is that just a higher comparison base you've hit so far in H2? Or are you seeing any hesitancy from brands at all given the uncertainty in some of the consumer markets? I think you commented that you are very confident in the growth outlook for Consumer Products. Just wanted to understand if that means we're at a fair run rate or whether you expect any changes in that one going forward?

And then secondly, in Transport Technologies, can you just give a bit more detail on your exposure here? Have you seen a slowdown across the auto space in U.S., Europe or China? Where is your biggest business there? And just maybe a bit more on where exactly you're involved in their projects?

Thanks, Rory. Look, I wouldn't call the like-for-like performance in July, October in Softlines and Electrical and hardlines or Customer Product slowdown. I just want to remind everyone that last year, in July, October, we did 9.5% like-for-like revenue growth in Consumer Products with an exceptionally strong performance in Softlines and Electrical. So look, it's compounding. The demand continues to increase. We are winning quite a lot of new businesses with existing and new clients. The team is doing a great job in terms of customer service innovation and of course, assurance solutions. So look, this is a very, very, very good place to be in. And we're not worried about demand within consumer products in the next few years. Everything is basically in line with our expectations.

As far as Transportation Technology, it's a relatively small business for Intertek. We are only present in 3 regions, the U.S., Europe and China. We are seeing essentially a significant level of restructuring activities and everything is public. You can see it, obviously, on the web. All major OEMs in Europe and in the U.S. have basically announced significant cost cutting in Q3 to deal with a few things. One is they are facing intense competition in one of their important market called China from the local OEMs. And of course, the cost of doing business in the U.S. is increased with the new tariff situation. So they're trying to basically rebase their cost structure to make sure they continue to deliver the right cash flow that they need to invest in growth.

We do not worry about the long-term prospect in Transportation Technology because we all know this is an industry where innovation in technology is paramount, and they will obviously start investing again after this temporary reduction in new project funding. Where we are invested in, we're essentially investing in greener fuels, hybrid electrical technology in both Europe and the U.S. and in China. So we are really front and center in the engine development being combustion engine for greener fuels or hybrid or electrical powertrains.

The next question is from Suhasini Varanasi from Goldman Sachs.

Just a couple of questions from me, please. I think this is the first time in a while that you've talked about the next year's outlook with the 3Q results. Just wanted to understand the rationale behind this. I know you mentioned a supportive macro backdrop but are you calling out a change in consumer or customer sentiment given that most of the tariff deals have been reached? Just want to understand that, please.

And secondly, in Industry & Infrastructure, can you maybe provide some color on the recovery that you've seen in Building & Construction and Minerals and your expectations for 2026?

Yes. Thank you. This is something that we also did last year. We announced our trading statement for July, October and start talking about 2025. So this is not new. As you know, we basically presented our strategy a few years ago, which has a very clear outlook in terms of mid-single-digit like-for-like revenue growth through the cycle with a target of 18.5% plus margin and strong cash and disciplined capital allocation. So our narrative, if I were to say so, in our Trading segment is in line with what we did last year and in line with the capital market event. We see a much better environment in terms of growth across all divisions for the next few years, and there is nothing more than that.

Of course, the point that we are making on the statement about a slightly better supportive macro backdrop, there is no question that there have been some uncertainties in certain industry driven by some of the tariff increases where companies have been obviously being a bit more careful with investment. We've not seen much of that in the Consumer Product division but there is no question that with the tariff situation being what it is at the moment, i.e., clearer and certainly very, very, very precise now for each of the operators, I think that should remove some of this uncertainty away. That's basically what we are basically saying.

As far as Building & Construction, look, we expected an acceleration of demand in building construction in the United States. This is where we operate, as you know, when there is an election year, there is always a bit of a pause before and after the election year. What we are seeing is with the lower interest rate environment, an increased confidence in future spendings. We are obviously benefiting from the activities in data centers to power the AI transformation in society, which is a business that we are well positioned to benefit from because we have essentially a building construction operation that can basically get involved in the design phase, the building phase but also when we do the commissioning. And also from an operational standpoint, our electrical business is highly involved with the certification of the equipment that goes into the data center. So there is no question that, that continues to be a driver for us.

The other important driver is, of course, the investments that are happening in the United States in terms of large projects and infrastructure. As you know, the previous administration passed 2 important bill, the infrastructure bill and also the Inflation Reduction Act. There is close to $1 billion of investments that have been approved that are basically being obviously invested at the moment. And largely, we're benefiting from that. And finally, the move towards greener buildings continues to be very beneficiary for us. So look, we expect Building & Construction to continue to do well.

The next question is from Allen Wells at Jefferies.

Just a couple for me. I just -- could you provide a little bit more kind of regional color on the business? You've alluded to some of the benefits coming through in North America. Maybe you can expand on that a little bit beyond the B&I side, what else you're seeing in North America? And then maybe a comment on China and exactly how the business in China is doing there? And then maybe following on from Suhasini's question on the Industry and Infra business and the growth pickup there. What does the pipeline look like on the CapEx side of that business as we think about 2026 as well?

Thank you. Look, we will give the data on a regional basis when we announce a full year basis -- full year results, sorry. But essentially, in North America, the key trends are B&C improving its run rate because essentially our B&C business is largely North America. So you got the data. And then we are seeing a better second half within Caleb Brett as expected. Your question about the pipeline in infrastructure. Look, it's looking good for next year. So we are positive. And China continued to motor ahead. I mean we had another mid-single-digit like-for-like revenue performance. So we are not seeing any slowdown whatsoever. The team is doing a great job there.

The next question is from James Rowland Clark at Barclays.

My first is just on Minerals. It's obviously had a pickup in performance in double-digit growth in the last 4 months. Can you talk about the drivers behind that and how sustainable you think that is going into next year?

And then secondly, on M&A, a couple of deals announced in the second half that's raised your net debt target. Could you also just talk a little bit about the multiple on those deals, the rationale and the sort of dilution or accretion to EPS?

Of course. Thank you. Look, on Minerals, a few years ago, you might recall, we invested in a center of excellence in Perth, that has been obviously operational now for a few years and fully ramped up, and we have increased essentially our capacity. And through technology, we have also increased our productivity. And we have an incredible operations in Australia, and I'm going to talk about the other regions in a second but starting with the biggest one. And essentially, the team is getting market share. We've been winning lots of new clients because we've got the superior quality and the right turnaround time and the center of excellence is working. So it's essentially investment in capability to provide an even better customer service and gaining market share.

There is no question that with gold being at the level it is, the exploration in gold is also helping but it's not the only driver of our growth in Australia. If you look at the other businesses where we are strong in minerals, we have a very strong operation in Africa, very strong operation in the Philippines, very strong operations in China. And these 3 markets continue to benefit from the investments in iron ore infrastructure, which is, of course, an important theme in these developing regions. So this is all positive for us. And clearly, I know I said it's double digit, but it's a strong double-digit performance, very pleased with the performance of Minerals in H2.

As far as M&A, as you know, we are very selective. We only invest in transactions that are going to be either growth and margin accretive to the group. This year, we have selected 3 individual businesses that are high-quality business. This is in Brazil, which is a premium product testing business with excellent management team and very, very, very strong delivery platform, which has delivered consistent growth and really, really good margin.

And I had the opportunity to spend quite a time after the acquisition was announced with the team, and this is definitely an asset that will help us capitalize on our building construction expertise and expand in Brazil and potentially in Lat Am. The Other important news in Lat Am is the acquisition of Suplilab. This is more recent. This is a gold standard food and medical device laboratory in Costa Rica. This is a market that we wanted to be in because we got tremendous expertise in food in the region. And not only it's a market where we have opportunities in Costa Rica but also this is essentially a gateway to expand our solutions in Central America. And this is a region where we see tremendous growth. Again, top-notch operators, fantastic delivery platform, high margin and really, really good growth opportunities.

And then the third acquisition we made this year is called Envirolab in Australia. I had the opportunity to spend time with the team a few weeks ago, excellent, excellent infrastructure, scale lab in Sydney, scale lab in Perth plus a few other regional labs. They are one of the top 3 operators. They've got the reputation of being the best in terms of quality customer service and certainly turnaround time. And I understand why this is a very, very, very top-notch operation, tremendous margin and excellent cultural fit.

I mean when you acquire a business and the management team tells you, well, the owner had to make a decision on who to sell the business. But I said to you, we were pushing [indiscernible] because there is the best cultural fit with science-based approach and ours, right? So these are 3 really fantastic acquisitions. And in terms of earnings potential, look, they are all above the group margin. So they are going to be very, very accretive to our margin performance. So very, very pleased.

The pipeline of opportunities is looking better than it was a year ago and 2 years. Having said all that, we're always going to be very selective. We only want to bring top-notch assets. And I talked earlier in the call today about the performance of the acquisitions that we made between 2024 and they have all delivered a significant margin performance well ahead of the group, and that's what we like to do.

The next question is from Virginia Montorsi at Bank of America.

Could you just talk a little bit more about how you're thinking about buybacks into next year? I think you clearly have the visibility and the flexibility on the cash to do more. So could you just help us understand how to think about it for next year?

Yes. Look, when we announced our share buyback program for 2025, we obviously recognize several important points that earnings model of the group has got so much stronger over the years that we have the opportunity to invest in organic growth and inorganic growth. And if we do not need the cash that is on our balance sheet, we basically return it to our shareholders. So that's basically how we make the decision. We have not made the decision for next year yet. It's going to be a decision that will be made by the Board later. But essentially, we want to grow. We're investing in organic and inorganic growth. And based on the opportunities that we have, if we don't need the cash, then we'll return it to our shareholders. That's as simple as that.

The next question is from Annelies Vermeulen at Morgan Stanley.

I wanted to ask about AI in particular, and your AI² squared product or solution. So could you talk a little bit about how fast that's growing? Where are you seeing demand from customers? What type of customers are asking for these solutions? And perhaps how does that offering compare to your competitors given the amount of investment that's going into AI, what are you doing to ensure that, that solution stays relevant? And as a follow-up to that, is this also a focus area for acquisitions in terms of increasing your capabilities around AI?

Yes. Thanks for asking the question. Essentially, our clients today are looking at AI, as you can imagine, in, I would say, 3 type of areas, right? The first obvious areas is how they use AI to augment the performance of their product and services and customer activities. The second, obviously, use of AI is how they use AI to develop their own algorithm and essentially improve their productivity and know exactly what it's all about being in the banking sector. And the third area, which is obviously a bit more nascent is a lot of companies are letting their employees get access to third-party large language algorithm. And this is an additional risk for corporations because the people will be uploading data on these large language models, right?

So essentially, AI², as you know, is an end-to-end independent AI assurance program. I don't think there is anything like that in the market. I've seen, of course, some of the tactical moves of our peers but there is nothing that basically is end-to-end like ours. It starts with governance. Essentially, it's helping companies put the right risk management framework. It's including ISO 42000 certification program. It's obviously including training as well as risk management. We focus on what we call transparent AI, so making sure that our clients have the right technical documentation that meet existing and future regulatory standards so that they are compliant with what's required. We want to make sure that there is always a human oversight when they develop algorithm. And of course, looking at any issue with data quality, which could influence the output of the algorithm as we know so well and of course, bias.

The other area that we focus on is what we call secure AI. There is a lot of concerns within the AI industry when it comes to cybersecurity. So we basically make sure that we do all what we do for our clients in terms of cybersecurity when they use AI algorithm, recting exercise, for instance, looking at security threats and that is very important. And the final, of course, important area we focus on, which is what we call Safe AI is essentially making sure that the functional safety of the algorithm is delivering what it's supposed to do. It's about obviously the managing the performance of the machine learning, but also looking at data verification and validation.

So essentially, we go to our clients when we have our C-suite meetings and present AI² like I just did today to you. The reaction is obviously very, very positive because this is a new technology that people do not understand very well with the exception of the big tech companies, let's be clear about it. And this is an area where with our assurance and testing activities, we can make a big difference. So look, I'm very, very optimistic. This is bang in line with what we've been doing in cybersecurity in the connected device and integrated cyber networks over the years. And there are tremendous synergies.

So the type of industries that are obviously high demand for us to develop medical devices where AI is part of the customer solutions robotics, very, very, very important. And of course, all the retailers that are obviously starting to augment the performance of their product with AI. So very, very exciting. And of course, we'll keep you updated.

[Operator Instructions] The next question is from Will Kirkness at Bernstein.

Two questions, please. I mean you sound pretty happy with the margin progress and you listed a number of factors. I just wondered if you could perhaps identify, which ones are most material if they are with that sort of savings leverage, M&A flowing into the mix?

And then secondly, if you could give the rough split of price versus volume and how you see the business being able to continue to push for price into next year?

Thank you. Look, I think on pricing, I mean, our revenue performance is about 1/3 price, 2/3 volume. As you know, we took a very partnership phase when we saw the inflation in '22 and '23. And there is a bit of catch-up because we didn't obviously increase the price by the same amount that we saw in terms of wage increase in this period. And our policy is that we basically believe in pricing power based on the superior customer service, innovation and then taking regular prices that are fair to your customers. If we invest in quality, our customers will, of course, see the difference and then basically are okay with continuous pricing. So we are in a good place here.

As far as the margin progression, look, there is no one silver bullet, right? It's about doing what I just talked about in the past. It starts first and foremost at the site level where every site has got the opportunity to drive margin accretive revenue growth based on the portfolio approach [Technical Difficulty] which is management and of course, making sure that they charge the right price for what they do. There is no question that organic growth. So if you've got a high organic growth, you get better operating leverage.

We are very demanding ourselves. We have a culture of have a better continuous improvement of Kaizen [indiscernible], and we never stop looking at ways to basically improve our productivity. I talked about the example of how automation is accelerating our turnaround time in Perth site in Australia. And this is, of course, having a big impact, big impact on margin. So each time we can use technology to basically improve productivity that has a benefit on margin. I mean you've seen it over the years. We never stopped looking at how we can reduce nonessential layers, take out fixed costs that are basically not necessary.

As you probably know, we run the company through global business line organizations and the regional organization. We don't have country management at Intertek anymore. We took it out over the years because there is a strong premium to industry expertise and our regional heads have got industry experts working with our global heads, and we felt that -- and that obviously has made a big difference over time in terms of overheads.

And then lastly, we are very disciplined when we invest our capital, right? We don't want to basically dilute our returns. So it's about discipline in capital allocation. Essentially, this is what it's all about. There is no question that the database that we've built side-by-side, looking at financial and nonfinancial metrics for several years now give us a huge data advantage that we've got an incredible visibility on where is the margin improving. But equally, where are the opportunities to get better.

As I've said on these calls in the past, standard performance, which is how the various sites perform in a certain country within the same business lines remains a significant opportunity, and it will always be an opportunity because when you drive margin accretive revenue growth, the best will get better and then the laggards will improve, but there will be still a gap. So look, this is central to the way we create value for our shareholders. We believe in high-quality like-for-like revenue growth, which is mid-single digit with margin accretion and strong cash and disciplined capital allocation. That's -- and the compounding effect of this is what you see in, obviously, the EPS performance of the group over the years.

There are no further questions on the webinar. I will now hand back to management.

Many thanks for attending our trading call today. Of course, Denis is available if you have. I wish you a great day. Thank you.