SGS 2011 Full Year Results Presentation

2 Financial community – 17 January 2012

CONTENT

FINANCIAL HIGHLIGHTS 2011 Highlights

Revenue Analysis

Operating Income Analysis

Cash Flows

Currency Analysis

Second half 2011

BUSINESS OVERVIEW

B

USI

NES

S O

VER

VIEW

FI

NAN

CIA

L H

IGH

LIG

HTS

3

4

HIGHLIGHTS

Revenue growth of 13.7% to CHF 4.8 billion (constant currency) • 0.8% at historical rates

Organic revenue growth of 10.5% (constant currency)

Adjusted Operating income(1) up 10.7% (constant currency) to CHF 815 million resulting in a margin of 17.0%

Net Profit for the period of CHF 534 million

Basic EPS of CHF 70.52 per share

Proposed dividend to shareholders of CHF 65 per share • Ordinary dividend of CHF 30 per share • Additional dividend of CHF 35 per share

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


FINANCIAL HIGHLIGHTS

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

CHF million 2011December

2010December

2010December

Pro-forma(2) Published

Revenue 4,797 4,219 4,757 Change in % 13.7 % 0.8 %

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

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

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

Net income 534 509 588 Change in % 4.9 % (9.2)%

Basic EPS 70.52 67.30 77.64 Diluted EPS 70.16 66.94 77.22 Period end no. of employees 71,220 63,224


SERVICE PORTFOLIO AGRI6.3%

MIN16.1%

OGC15.1%

LIFE2.5%

CTS24.9%

SSC8.4%

IND9.8%

ENVI3.3%

AUTO7.3%

GIS6.3%

ADJUSTED OPERATING INCOME(1)AGRI

6.8%

MIN14.1%

OGC19.0%

LIFE4.0%CTS

16.7%

SSC7.6%

IND15.6%

ENVI5.9%

AUTO5.7%

GIS4.6%

REVENUE

EUROPE / AFRICA /

MIDDLE EAST50.4%

AMERICAS21.4%

ASIA PACIFIC28.2%

REVENUE REGION

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



REVENUE GROWTH COMPOSITION

RevenuesDecember 10 Organic Acquisitions Disposals

Currencyimpact

RevenuesDecember 11

4,757

444 134

(538)

4,797

10.5% 3.2% 0.0% (12.9)% 0.8%

Constant currency growth: 13.7%


LOCAL CURRENCY GROWTH BY BUSINESS

10.5%

6.6%

7.1%

13.1%

10.9%

5.6%

10.3%

5.2%

7.7%

23.5%

5.7%

3.2%

51.1%

1.4%

3.1%

0.3%

6.6%

0.2%

0.3%

2.1%

TOTAL

GIS

AUTO

ENVI

IND

SSC

CTS

LIFE

OGC

MIN

AGRI

Organic Acquisition Disposal

7.8%

23.8%

7.9%

11.8%

10.6%

5.6%

14.0%

14.5%

58.2%

6.6%

13.7%


REVENUE GROWTH AND HEADCOUNT CHANGE BY REGION

*Including 833 ITV headcount acquired effective 31 December 2010

10.5%

13.0%

13.5%

7.9%

3.2%

0.6%

3.9%

4.4%

TOTAL GROUP

Asia / Pacific

Americas

Europe / Africa & Middle East


12.3%

17.4%

13.6%

13.7%

Δ in EOP headcount 2011December

2010December

Δ

Group Headcount 71,220 63,224 7,996

Organic Business Growth 6,604

Acquisitions* 1,392

Disposals -

Increase in Group Headcount 7,996

By Region Headcount Δ

Headcount Δ%

Revenues Δ%

Europe / Africa / Middle East 3,761 13.8 % 12.3 %

Americas 1,284 9.8 % 17.4 %

Asia / Pacific 2,951 12.8 % 13.6 %

TOTAL 7,996 12.6% 13.7%



ADJUSTED OPERATING INCOME(1) GROWTH

Op. IncomeDecember 10 Organic Acquisitions Disposals

Currencyimpact

Op. IncomeDecember 11

848

42 37

(112)

815

5.7% 5.0% 0.0% (14.6)% (3.9)%

Constant currency growth: 10.7%



HISTORICAL MARGIN PROGRESSION

12.0%

15.0%

18.0%

21.0%

24.0%

Adjusted EBITDA MARGIN(1)

DEC 07 DEC 08 DEC 09 DEC 10 DEC 11

20.8% 21.3% 22.0% 22.4% 21.3% 6.0%

9.0%

12.0%

15.0%

18.0%

Adjusted OPERATING MARGIN(1)

DEC 07 DEC 08 DEC 09 DEC 10 DEC 11

16.4% 17.0% 17.4% 17.8% 17.0%



ADJUSTED OPERATING MARGIN(1) BY BUSINESS

15.7

%

19.2

%

15.6

%

14.9

%

25.8

%

21.1

%

13.2

%

10.7

%

18.4

%

18.2

%

15.7

% 19

.4%

13.5

%

10.8

%

25.3

%

18.7

%

10.7

%

9.4%

21.9

%

23.4

%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

AGRI

MIN

OG

C

LIFE

CTS

SSC

IND

ENV

AUTO GIS

December 10 December 11


15

CASH FLOW

Negative foreign exchange impact on

Operating Cash Flow of CHF 100 million.

Increase in Net Working Capital driven by: • accelerated business growth in

Q4. • Long term contracts / projects.

Stable group DSO (Days of Sales Outstanding).

Financial community – 17 January 2012

CHF million Dec 11 Dec 10

PROFIT FOR THE PERIOD 561 614 Non-cash items 433 417

Depreciation, amortisation and impairment 225 225 Share based payments 15 2 Tax 203 215 Other (10) (25)

(Increase)/decrease in net working capital (84) (33) Taxes paid (220) (215)

OPERATING CASH FLOW 690 783 Net (purchase)/sale of fixed assets (337) (250) Acquisition and divestments of businesses (112) (302) Proceeds from sale of investments - 2 Other from investing activities 6 (1)

CASH FLOW FROM INVESTING ACTIVITIES (443) (551) Dividend paid to equity holders of SGS SA (494) (455) Dividend paid to non-controlling interests (16) (25) Increase/(decrease) in non-controlling interests (2) (4) Cash received/(paid) on treasury shares (50) 85 Interest paid (21) (15) Increase/(decrease) in borrowings 716 237

CASH FLOW FROM FINANCING ACTIVITIES 133 (177) Currency translations 16 (32)

INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS 396 23


CAPITAL EXPENDITURE AGRI4.9%

MIN17.7%

OGC18.3%

LIFE3.5%

CTS24.3%

SSC1.5%

IND10.1%

ENVI8.1%

AUTO4.9%

GIS6.7%

CAPEX

EUROPE / AFRICA /

MIDDLE EAST46.7%

AMERICAS17.1%

ASIA PACIFIC36.2%

CAPEX REGION

100

200

300

400

Capital Expenditure Depreciation & amortisation

2006 2007 2008 2009 2010 2011

ANNUAL CAPEXCHF million


FOREIGN CURRENCY REVENUES 2011

EUR32.3%

USD13.7%

CNY9.5%

AUD5.7%

CAD4.4%

TWD2.9%

GBP2.9%

BRL2.5%

HKD2.4%

Other23.7%

2011 2010 ChangeEUR 1.2334 1.3837 (10.9)% USD 0.8868 1.0435 (15.0)% CNY 0.1372 0.1541 (11.0)% AUD 0.9144 0.9569 (4.4)% CAD 0.8968 1.0127 (11.5)% TWD 0.0302 0.0331 (8.8)% GBP 1.4210 1.6111 (11.8)% BRL 0.5306 0.5925 (10.4)% HKD 0.1139 0.1343 (15.2)% INR 0.0191 0.0228 (16.5)%

AVERAGE RATES


FOREIGN CURRENCY SENSITIVITY ANALYSIS

EURO 1.20 1.23 1.30

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

USD 0.80 0.89 0.95


CNY 0.120 0.137 0.150




FINANCIAL HIGHLIGHTS (H2)

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

CHF million 2011H2

2010H2

2010H2

Pro-forma(2) Published

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

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

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

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

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


LOCAL CURRENCY GROWTH BY BUSINESS (H2)

11.3%

9.9%

7.4%

11.7%

11.3%

5.4%

12.2%

3.1%

8.7%

23.0%

8.7%

3.2%

51.6%

1.8%

3.6%

0.5%

5.0%

0.1%

2.8%

TOTAL

GIS

AUTO

ENVI

IND

SSC

CTS

LIFE

OGC

MIN

AGRI


11.5%

23.0%

8.8%

8.1%

12.7%

5.4%

14.9%

13.5%

59.0%

9.9%

14.5%


ADJUSTED OPERATING MARGIN(1) BY BUSINESS (H2)

18.1

%

20.5

%

17.6

%

16.8

%

26.5

%

22.9

%

13.8

%

12.2

%

17.5

%

18.9

%

17.5

%

20.3

%

14.1

%

11.2

%

26.9

%

20.1

%

10.7

%

10.4

%

23.8

%

23.4

%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

AGRI

MIN

OG

C

LIFE

CTS

SSC

IND

ENV

AUTO GIS

December 10 December 11



24

AGRICULTURAL SERVICES (AGRI)

Overview 2011 • Seed and crop services revenue growth ~30% for the

year with three acquisitions closed (South Africa, Canada, USA) and portfolio expansion continues.

• Trade services produced strong H2 with Black Sea origins re-entering the market. Russia in particular producing record volumes.

• New revenues from laboratory start-ups and expansion due to food safety concerns.

• Supply chain services continue to grow in Eastern Europe and China.

• GMO rejection package driven by EU legislation gaining acceptance.

Outlook • Higher grain demand, however, limited financing may

challenge the ability of the trading community to execute during H1’ 2012.

• Further acquisitions in Inland Services expected in 2012 to extend geographical coverage.

• Information and Market Research developing capabilities and geographical coverage.

• New focus on biotechnology as client investments expected to grow significantly.

CHF million December2011

December2010

December2010

Pro-forma2 Published

Revenue 327.1 303.5 344.1 Change in % 7.8 (4.9)

Adj. Operating Inc.(1) 51.2 45.9 54.0 Change in % 11.5 (5.2)

Margin %1 15.7 15.1 15.7

(2) Constant currency basis



25

MINERALS SERVICES (MIN)

Overview 2011 • Strong market conditions combined with focused sales

efforts deliver 23.5% organic revenue growth with margin improvement to 19.4%.

• Global exploration spend reached a record high of USD 17 billion (Metals Economics Group).

• Exceptional growth in Africa, South America and China. Balanced growth across all parts of the service portfolio.

• Key project wins including BHP Mitsubishi Alliance (Australia) and Oceana Gold (New Zealand).

Outlook • CIMM acquisition closed on 6 January 2012. • Energy Minerals services in Australia expanding, with

new laboratories in Mackay and Brisbane. • Expansion of Metallurgy testing capacity in Perth and

Canada operational in H1’ 2012. • Major Geochem expansions coming on-line in Ontario,

Vancouver, West Africa, Liberia and Turkey. • Major commodity prices off from their peak, however still

at historically strong levels. Availability of financing for junior mining companies may become an issue.


December2010

December2010


Revenue 677.7 547.4 615.6 Change in % 23.8 10.1

Adj. Operating Inc.(1) 131.2 102.1 117.9 Change in % 28.5 11.3

Margin %1 19.4 18.7 19.2




26

OIL, GAS & CHEMICALS SERVICES (OGC)

Overview 2011 • Excellent growth in Trade related services and Plant

and Terminal Operations (PTO) driven by strong demand for oil, gas and chemicals and continuing outsourcing trends.

• Strong growth in upstream services with high volumes in Australia after last year’s floods.

• Further expansion of Lube Oil Condition Monitoring services in South America and Turkey.

• Margin impacted by significant investments and start up costs in upstream services as well as a drop in high margin Cargo Treatment services due to change in trading patterns.

Outlook • Further growth in upstream services: Well Testing and

Wellside services expansion, specifically in the Middle East; new upstream laboratories in Middle East and South America; SGS Horizon subsurface consultancy.

• Trade related services to maintain development pace. • Demand for PTO to remain strong, outsourcing a key

driver. • Solid pipeline of new projects, innovations and efficiency

initiatives to be launched in 2012.


December2010

December2010



Adj. Operating Inc.(1) 123.3 129.5 148.9 Change in % (4.8) (17.2)

Margin %1 13.5 15.3 15.6




27

LIFE SCIENCE SERVICES (LIFE)

Overview 2011 • Revenue growth of 11.8% driven by:

– Biologics strategy, expansion in Asia and state-of-the art laboratories in Europe and North America.

– Successful integration of M-Scan which contributed above expectations.

• Clinical Research: Limited growth with pressure on margins in a market where the reduced molecule pipeline is affecting volumes and prices.

• Strong growth with stable margins for laboratory segment supported by our global key account strategy and enrichment of the service offering.

Outlook • China and India will benefit from increased outsourcing

as many key accounts continue to focus on these fast growing markets.

• New centres of excellence within our existing laboratory network for biologics (biosimilar, cell-based assay, biosafety) will fully leverage our recent investments.

• Clinical Research activity will remain under pressure. Service offering enrichment developed to offset volume decrease from main customers.


December2010

December2010




Margin %1 10.8 14.7 14.9




28

CONSUMER TESTING SERVICES (CTS)

Overview 2011 • Excellent revenue growth driven by increased activity in

Europe (France, Spain, Germany & Turkey) and Asia. • USA continues to provide solid revenue streams, thanks

to diversification and market share gains in traditional segments.

• Increasing cost pressure in some executing countries (e.g. China, India) and pricing pressure in mature services.

• Margin maintained at a steady level as recent investments (services & capabilities) and improvement actions take effect.

Outlook • Volatile overall market conditions but existing order

pipeline provides stability going into 2012. • Additional market share gains expected in key European

markets and, importantly, the USA. • Further efficiency and cost optimisation measures to be

implemented to compensate for possible cost pressure in some affiliates.

• Continuing investment in new segments (e.g. sustainability, automotive) and in geographic expansion (e.g. Morocco, Brazil).


December2010

December2010




Margin %1 25.3 25.6 25.8




29

SYSTEMS & SERVICES CERTIFICATION (SSC)

Overview 2011 • Automotive, Food and Medical Devices were the leading

sectors in terms of growth. • Strong performance in Training thanks to investments in

local capabilities. • A number of blue chip multinational companies chose to

sign global contracts with SGS. • Excellent market share gains and double digit growth in

Eastern Europe, Middle East, China and most Asian countries.

• Steady recovery in Japan following the natural disaster and energy crisis.

Outlook • Expecting continuous growth in major geographies

particularly the Americas, Eastern Europe, China and Africa.

• Diversifying our portfolio of services to meet our customers’ needs to outsource internal functions.

• Pursuing growth opportunities in industry sectors such as IT and Healthcare.

• Supply chain activity in environmental, health & safety and social compliance becoming a major growth driver.


December2010

December2010




Margin %1 18.7 20.9 21.1




30

INDUSTRIAL SERVICES (IND)

Overview 2011 • Very strong organic revenue growth in Africa, East Asia

and China. • NDT business continues to perform well with increased

shutdown work in the European power and refinery sector.

• Statutory inspection business now growing again particularly in the recently opened German market.

• Large project wins for the Project Services business. • PfiNDE acquired in the USA for pipeline inspection and

Acumax in South Africa for rope access inspection. • Investments in organic initiatives impacted margins.

Outlook • Increasing demand for our renewable and conventional

power service offering in Asia and Europe. • Growth in oil and gas exploration providing more

opportunities for upstream inspection. • Large inspection and testing service contracts with oil

majors as they consolidate their supplier base. • New services for pipeline, rail and Russian GOST

business.


December2010

December2010




Margin %1 10.7 13.0 13.2




31

ENVIRONMENTAL SERVICES (ENVI)

Overview 2011 • Good performance of our European and Canadian

operations where growth was driven by service diversification.

• Operations in emerging markets have continued to deliver strong growth in industrial / mining sectors.

• Strong emphasis on performance improvement and laboratory process automation.

• Strengthened the portfolio in sustainable building, renewable energy and shipping sectors.

• Extended the footprint in Asia Pacific with acquisition of Leeder in Australia and Conserve in Malaysia.

Outlook • Market showing increased demand in renewable and

sustainability sectors. Mining and oil & gas developments continue to drive our traditional market.

• Large multi-year contracts currently under negotiation in major emerging economies.

• Data management and interpretation services to become standard at each SGS location.

• Continued growth in new geographies such as Liberia, Congo, Malaysia and the Gulf region.


December2010

December2010




Margin %1 9.4 10.6 10.7




32

AUTOMOTIVE SERVICES (AUTO)

Overview 2011 • ITV acquisition in Spain & Argentina fully integrated and

performing above expectations. • Statutory business provided solid results in Western

Europe and South America. Opened new test stations in Spain and Argentina.

• Rapid recovery in Ivory Coast. • Commercial activities in the USA still negatively

impacted by significantly lower volumes for off-lease inspections.

• Commenced statutory services in South Africa and Peru. • New environmental vehicle engine testing services

through acquisition of ETC.

Outlook • Statutory business will continue to provide solid results. • Low commercial inspection volumes expected

throughout 2012. • Several opportunities being pursued in the statutory

field in Asia, South America and Europe. • Expanding Statutory Business into Road Safety

Services.


December2010

December2010




Margin %1 21.9 18.3 18.4




33

GOVERNMENTS AND INSTITUTIONS SERVICES (GIS)

Overview 2011 • Product Conformity Assessment (PCA) programmes are

the main driver of double digit growth in Local Solutions. • New PCA programmes signed in Botswana, Iraq,

Kurdistan and Tanzania. Kenya renewed for three years.

• Global solutions had increased volumes and a new PSI contract was signed with Bangladesh with increased volumes.

• Strong performance from TradeNet in Ghana and Madagascar, while Ivory Coast results were impacted by recent political events.

Outlook • Continued transformation of existing PSI contracts. • Newly signed PCA contracts to start generating

revenues. • Completed deployment of TradeNet in Mozambique. • Completed implementation of new mandates in DRC

and Cameroon (Forestry), Ghana (Inland Revenue Services).

• Roll-out of new tracking services in Africa as well as new services in telecoms.


December2010

December2010




Margin %1 23.4 15.9 18.2




34

WWW.SGS.COM

© SG

S SA

2012

. ALL

RIG

HTS

RESE

RVED

.