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					                                                                                                                                             Equity Research
                                                                                                                                                     24 April 2013


Testing & Inspection
How bad commodities?                                                                                            INDUSTRY UPDATE


                                                                                                                European Business Services
In light of commodity price weakness, spending constraint at the mining majors and                              POSITIVE
exploration funding weakness, we are revisiting commodities exposure at the                                     Unchanged
Testers. The bad news is that the Mineral market has clearly deteriorated, and we
are trimming estimates by 1-3% in 2013/14. We now expect a sharp slow down in                                   For a full list of our ratings, price target and
                                                                                                                earnings changes in this report, please see
Minerals upstream exploration activity in 1H with little likelihood of a rebound in 2H.                         table on page 2.
SGS is most exposed. The good news is that the scale and diversity of these groups
means that they can withstand a sharp contraction in minerals exploration activity                              European Business Services
without much impact. With valuation multiples in the c19-20x range, downgrades                                  Paul Sullivan
(however modest) are unwelcome. Nevertheless we still see organic growth in the                                 +44 (0)20 3134 3307
6-8% range for this year, with 11-16% EPS growth. Longer term our enthusiasm for                                paul.sullivan@barclays.com
the testing groups remains undiminished (see our recent initiation for more detail);                            Barclays, London
short term we retain a balanced view – preferring Intertek (Overweight 4000p                                    Joshua Veit
target) over SGS (Equal Weight, CHF2650, down 2%) and Bureau Veritas                                            +44 (0)20 3134 3727
(Underweight €102 target) – a function of ITRK’s higher growth, lower commodities                               joshua.veit@barclays.com
exposure and slight PE discount.                                                                                Barclays, London

Commodities in perspective – SGS is most exposed, with 16% of group revenues                                    Paul Checketts
directly from Minerals, of which 6% is exploration-related. Intertek has least Minerals                         +44 (0)20 3134 0522
                                                                                                                paul.checketts@barclays.com
exposure at 6% of group revenues (within which exploration activities represents only
                                                                                                                Barclays, London
2% of group). Our new base-case is for the Minerals revenues to decline on average by
-4-5%. Within this we forecast a -15-20% decline in exploration activity, flat growth in
upstream production and modest growth in trade-related activates, which tend to be
more resilient (with growth fuelled by emerging market demand).

Mineral margins likely to take a hit - at SGS, we now estimate Mineral margins could
contract by c150-bps this year. For BV and ITRK we now assume Commodity margins
flat, with contraction in Minerals offset by growth in other areas (Oil & Gas).

In other areas growth appears robust –we expect BV to report challenging conditions
in France and at Marine (see below) although this is largely expected. Elsewhere, we
expect strong consumer growth this year (supported by regulation, social responsibility
mandates and electronics growth). Industry should prove resilient, although growth
rates could be tempered by project deferrals, in our view.

Next catalysts: Bureau Veritas reports Q1 results on Tuesday 30th, May. We forecast Q1
organic of 4.9%, within a likely range of 4-5%. By division we forecast Marine -3%;
Construction -4% (50% exposed to France); Commodities +2%; IVS +2.5%; Certification
+4%; Industry +11%; Consumer +13% and GSIT +15%. For the full year we now
forecast +5.9% organic revenue growth vs. 6.5% previously, which implies modest 2H
improvement.


Barclays Capital Inc. and/or one of its affiliates does and seeks to do business with companies covered
in its research reports. As a result, investors should be aware that the firm may have a conflict of interest
that could affect the objectivity of this report.
Investors should consider this report as only a single factor in making their investment decision.
This research report has been prepared in whole or in part by equity research analysts based outside the
US who are not registered/qualified as research analysts with FINRA.
PLEASE SEE ANALYST(S) CERTIFICATION(S) AND IMPORTANT DISCLOSURES BEGINNING ON PAGE 29.
Barclays | Testing & Inspection

Summary of our Ratings, Price Targets and Earnings Changes in this Report (all changes are shown in bold)
Company                                              Rating         Price               Price Target                 EPS FY1 (E)                  EPS FY2 (E)

                                                   Old New 22-Apr-13              Old         New      %Chg      Old     New %Chg          Old       New     %Chg

European Business Services                         Pos Pos
Bureau Veritas SA (BVI FP / BVI.PA)                UW UW           90.86        102.00      102.00        -      4.09    4.06      -1      4.55      4.54       0
Intertek Group plc (ITRK LN / ITRK.L)              OW OW           3334.0       4000.0      4000.0        -     154.6 152.2        -2     175.0      172.4      -1
SGS SA (SGSN VX / SGSN.VX)                          EW EW         2218.00       2700.00 2650.00          -2     94.47 92.34        -2     109.62 106.81         -3
Source: Barclays Research. Share prices and target prices are shown in the primary listing currency and EPS estimates are shown in the reporting currency.
FY1(E): Current fiscal year estimates by Barclays Research. FY2(E): Next fiscal year estimates by Barclays Research.
Stock Rating: OW: Overweight; EW: Equal Weight; UW: Underweight; RS: Rating Suspended
Industry View: Pos: Positive; Neu: Neutral; Neg: Negative




Valuation Methodology and Risks
European Business Services

Bureau Veritas SA (BVI FP / BVI.PA)
Valuation Methodology: Our price objective is based on a DCF, using a weighted average cost of capital of 7.7%, long term growth of +3% and a
terminal incremental ROCE of 15%. This compares to an historical ROCE of 23% at Bureau Veritas.
Risks which May Impede the Achievement of the Barclays Research Price Target: Upside risks include: 1) a reacceleration in Minerals
exploration and other more cyclical activities which could drive higher organic growth and margin expansion; and 2) further safety legislation
could drive another surge in Consumer revenues.
Intertek Group plc (ITRK LN / ITRK.L)
Valuation Methodology: Our price objective is based on a DCF, using a weighted average cost of capital of 7.7%, long term growth of +3% and a
terminal incremental ROCE of 15%. This compares to an historical ROCE of 26% at Intertek.
Risks which May Impede the Achievement of the Barclays Research Price Target: 1) the pace of slowdown in Commodities and Minerals in
particular; 2) risk to Consumer margins; 3) pace and use of cashflow and balance sheet; 4) Operational gearing in Industry as attention turns to
margin from organic growth.
SGS SA (SGSN VX / SGSN.VX)
Valuation Methodology: Our price objective is based on a DCF, using a weighted average cost of capital of 7.7%, long term growth of +3% and a
terminal incremental ROCE of 15%. This compares to an historical ROCE of 29% at SGS.
Risks which May Impede the Achievement of the Barclays Research Price Target: Upside risks include: 1) a reacceleration in Minerals
exploration and other more cyclical activities could drive higher organic growth and margin expansion; 2) further safety legislation could drive
another surge in Consumer revenues.Downside risks include: 1) the pace of slowdown in Commodities and Minerals; 2) risk to Consumer
margins; 3) pace and use of cashflow and balance sheet; and 4) Swiss franc strength.
Source: Barclays Research.




24 April 2013                                                                                                                                                        2
Barclays | Testing & Inspection


                                            Forecasts trimmed 1-3% on commodity weakness
                                            In light of declining commodity prices, capital spending constraint and lack of funding for
                                            Junior exploration partners within the mining industry, we are trimming industry earnings
                                            estimates by 1-3% in 2013/14. We now expect a sharp slowdown in Minerals upstream
                                            exploration activity in 1H with little likelihood of a rebound in 2H. SGS is most exposed,
                                            with 16% of Group revenues directly from Minerals, of which 6% is exploration-related.
                                            Here we also estimate Mineral margins could contract by c150-bps this year. Intertek has
                                            least Minerals exposure at 6% of group revenues (within which exploration activities,
                                            represents only 2% of group).

                                            Our new base-case is for the Minerals revenues to decline on average by -4-5%. Within this
                                            we forecast a -15-20% decline in upstream/ exploration activity, flat growth in upstream
                                            production and modest growth in trade-related activates which tend to be more resilient
                                            (with growth fuelled by Emerging Market demand).

                                            The most exposed at Group level is SGS - minerals accounts for 16% of FY12 revenues at
                                            SGS, 10% at BV and 6% at Intertek. However, mining exploration activity is limited within
                                            this: 6%, 3% and 2% of SGS, BV and Intertek respectively.

                                            FIGURE 1
                                            Minerals expsoure greatest at SGS, with particularly in Exploration activity

                                                                                  % Minerals revenues                        % Group revenues

                                            Minerals activity               SGS            BV           ITRK          SGS             BV            ITRK

                                            Exploration                     40%            30%          30%            6%             3%            2%

                                            Production                      40%            55%          50%            6%             5%            3%

                                            Trade/ midstream                20%            15%          20%            3%             2%            1%

                                            Total                          100%          100%           100%          16%             10%           6%
                                            Source: Barclays Research estimates, Company documents. Based on FY12 figures.


                                            Industry guidance back in February was for exploration to slow in Q1 (from double-digit in
                                            2H12, as 20% growth in 1H12 is lapped), but then reaccelerate in 2H13. We instead expect
                                            steady deterioration throughout the year.

FIGURE 2
Commodities growth slowed in 2H, particularly in Minerals – we expect weakness persists into 1H13

Commodities           FY06      FY07       FY08      FY09       FY10      FY11      1H12        2H12     FY12     FY13 E     FY 14E        '02-12 '13-15E

Organic revenue growth                                                                                                                      Avg growth

SGS                  12.3%     12.1%     16.1%       -2.8%      5.7%     12.4%     14.8%         9.9%   12.3%       5.5%      8.7%          9.5%      8.1%

  > OGC              13.2%     12.4%     11.6%       0.1%       4.2%      7.7%     11.2%     12.0%      11.6%     11.0%      11.0%          9.2%     10.7%

  > Minerals         15.9%     17.0%     27.6%      -10.9%      12.2%    23.5%     20.6%         7.6%   13.8%      -3.5%      4.0%          12.7%     3.5%

  > Agri              5.7%      4.3%       9.3%      4.3%       -0.1%     5.7%     13.3%         8.9%   11.0%     11.0%      12.0%          6.1%     11.0%

BV                   14.0%     20.0%     18.0%       7.0%       12.2%    10.1%     13.8%     13.2%      13.5%       2.0%      6.0%          13.5%     6.0%

Intertek              6.1%     13.0%     10.7%       2.2%       8.0%     11.9%     10.5%         6.9%    8.6%       3.0%      7.0%          8.4%      6.0%
Source: Barclays Research estimates, Company documents.




24 April 2013                                                                                                                                              3
Barclays | Testing & Inspection


                                  • Modest reduction to revenue forecasts

                                  Our forecasts now assume a c-4-5% decline in mineral related revenues this year, with
                                  exploration activity within this, assumed down -15-20%.

                                  FIGURE 3
                                  Changes to organic growth forecasts for Commodities segments

                                                                                   2013                         2014

                                  Organic growth                       old             new   change      old    new      change

                                  SGS Commodities                     7.6%         5.5%      (211 bps)   9.0%   8.7%      (31 bps)

                                  > SGS Minerals                      2.0%         -3.5%     (550 bps)   5.0%   4.0%     (100 bps)

                                  BV Commodities                      4.0%         2.0%      (200 bps)   6.0%   6.0%         0 bps

                                  > BV Minerals                       0.0%         -5.0%     (500 bps)   4.0%   4.0%         0 bps

                                  Intertek Commodities                4.0%         3.0%      (100 bps)   7.0%   7.0%         0 bps

                                  > Intertek Minerals                 0.0%         -5.0%     (500 bps)   4.0%   4.0%         0 bps
                                  Source: Barclays Research estimates, Company data.


                                  For Bureau Veritas, we now forecast Commodities organic growth of 2% vs 4% previously.
                                  BV’s quarterly disclosure will provide the clearest view of the industry’s trajectory; we expect
                                  1Q13 Commodities organic growth to slow to 2%, from 12% in 4Q12. Within
                                  Commodities, c.55% of revenues relate to Minerals (including coal), c.35% Oil & Gas, with
                                  Agriculture c.10%. We now assume Mineral revenue declines 5%, offset by double-digit
                                  growth from O&G and Agri (estimates unchanged). Within Minerals, we estimate that
                                  around 30% of revenue is exploration-related, 55% production and 15% trade. We assume
                                  production revenue growth is still flat, trade up modestly (+5%), but exploration activity
                                  down close to 20%. Every additional 5pt of exploration revenue decline takes just under 1%
                                  off Commodities revenue growth, in our view.

                                  For SGS, we forecast Minerals decline of -4%, with underlying market deterioration partially
                                  mitigated by investment initiatives coming on stream (new labs etc.). To put this decline in
                                  perspective, revenue fell -11% in 2009. Within Minerals, we estimate that around 40% of
                                  revenue is exploration-related, 40% production and 20% trade. Assuming production
                                  revenue growth is flat, trade up modestly (+5%), implies exploration activity down close to
                                  15%. Every additional 5pt of exploration revenue decline takes c.2% off Minerals revenue
                                  growth, in our view.

                                  For Intertek, we now forecast Commodities organic growth of 3% (from 4% previously).
                                  Within Commodities, around only c. 20%, relates to Minerals, and of this, only one-third to
                                  exploration. We now assume Mineral revenues declines -5%, offset by c5% growth in Oil
                                  and other businesses (government). Within Minerals, we estimate that around 30% of
                                  revenue is exploration-related, 50% production and 20% trade. We assume production
                                  revenue growth is still flat, trade up modestly (+5%), and exploration activity down close to
                                  20%. Every additional 5pt of exploration revenue decline takes off less than 50bps off
                                  Commodities revenue growth, in our view.

                                  • The impact could be felt through margins

                                  Minerals has greatest operational gearing of the commodities verticals, due to 1) capital
                                  intensity of testing labs, and margin vulnerability to sample volume contraction, and 2)
                                  expert staff needed to conduct the analysis, with limited scope to reduce headcount short
                                  term.



24 April 2013                                                                                                                     4
Barclays | Testing & Inspection


                                  We now assume Mineral margin contraction at SGS of -150bps this year, with flat margins
                                  for Commodities at both ITK and BV (Mineral contraction of c.100bps offset by growth
                                  elsewhere, coupled with specific margin initiatives). To put this in perspective SGS Mineral
                                  margins fell -260bps in 2009. The wildcard for SGS remains their investment programme
                                  and whether management curtails it in light of lower growth. Unless this downturn proves
                                  particularly severe, we believe this is unlikely.

Mineral downside manageable       All in, our EPS forecasts reduce only modestly: -3% for SGS, -0.5% for BV (an underlying
at Intertek and BV                2% reduction is offset by YTD M&A) and -1.5% for Intertek.

                                  FIGURE 4
                                  Changes to forecasts summary (Group)

                                                                                   2013                             2014

                                  Local ccy                           old          new         change      old      new      change

                                  SGS revenue                          6,153           6,091      -1.0%    6,706     6,625      -1.2%

                                  SGS organic                            8.2%           7.0%   (123 bps)     9.0%     8.5%    (45 bps)

                                  SGS EBITA                            1,081           1,053      -2.6%    1,247     1,212      -2.8%

                                     > EBITA margin %                   17.6%          17.3%    (28 bps)   18.6%     18.3%    (30 bps)

                                  SGS EPS                                95.1           92.3      -2.9%    110.3     106.8      -3.2%

                                  BV revenue                           4,162           4,165       0.1%    4,487     4,504       0.4%

                                  BV organic                             6.5%           5.9%    (56 bps)     7.8%     7.8%      3 bps

                                  BV EBITA                               705            702       -0.3%      776      775       -0.1%

                                     > EBITA margin %                   16.9%          16.9%     (7 bps)   17.3%     17.2%     (8 bps)

                                  BV EPS                                 4.09           4.06      -0.5%      4.55     4.54      -0.3%

                                  Intertek revenue                     2,318           2,301      -0.7%    2,506     2,487      -0.7%

                                  Intertek organic                       8.4%           7.8%    (59 bps)     8.1%     8.1%     (0 bps)

                                  Intertek EBITA                         390            385       -1.3%      437      431       -1.3%

                                     > EBITA margin %                   16.8%          16.7%    (10 bps)   17.4%     17.3%    (10 bps)

                                  Intertek EPS                         154.6           152.2      -1.5%    175.0     172.4      -1.5%
                                  Source: Barclays research estimates, Company data.


                                  • Downside case manageable if confined to Minerals

                                  If we were to assume a 10% reduction in Minerals revenue this year, the impact on earnings
                                  (assuming a 40% drop-though) would be a further -2% for SGS, -1% for BV and less than
                                  1% for ITK. Clearly if a slowdown is containable to Minerals and exploration specifically,
                                  then these declines are manageable in our view (we look below at the impact should we see
                                  contagion to other sectors).

                                  • What about risks to other sectors?

                                  Overall, we estimate that between 30-50% of the listed TICs’ revenues are derived from Oil,
                                  Minerals and Energy clients. This includes both direct inspection/ testing of oil and mineral
                                  samples (Commodities segment), and indirect inspection/testing of capex/ opex for the oil
                                  and mining majors, refineries or power networks (largely within Industry segment). In the
                                  latter, slower progress with a number of large projects, may temper Industry growth a little
                                  this year.



24 April 2013                                                                                                                         5
Barclays | Testing & Inspection


                                  Cyclical Minerals exposure (exploration) is just 2%, 3% and 6% of Intertek, Bureau Veritas
                                  and SGS revenues respectively. If we broaden the definition to include Industry and Oil &
                                  Gas we estimate that around c.10-15% of revenues are exposed to the sharper end of the
                                  commodities cycle but where we are less concerned about OGC given the more robust
                                  nature of Oil major capex plans.

                                  FIGURE 5
                                  Oil, Minerals and Energy c.35-50% revenues, of which SGS has most cyclical exposure
                                                                                                          % group revenue

                                  Group Energy exposure                                   SGS                     BV        Intertek

                                  Minerals exposure                                       16%                     10%         6%

                                     > of which exploration                                6%                     3%          2%

                                  Oil, Gas & Chemicals exposure                           19%                     6%         22%

                                     > of which exploration/ upstream                      4%                     1%          3%

                                  Industry - Energy/ Power related exposure                8%                     11%        22%

                                     > of which capex                                      6%                     7%         15%

                                  Other Energy-related                                     3%                     5%          2%

                                  Total Oil, Minerals and Power                           46%                     33%        52%

                                     > of which cyclical                                  16%                     11%        20%
                                  Source: Barclays Research estimates based on FY12, Company documents.


                                  Only under a more bearish downside-case scenario would our forecasts be significantly
                                  reduced: For example, if Minerals were to decline -10-15%, and this weakness extended to
                                  Oil & Gas and Industry capex, we estimate -3-5% further cuts to our 2013/14 earnings
                                  forecasts. Within this we assume Minerals exploration falls -35-40%, upstream Oil & Gas
                                  grinds to flat, and capex-related Industry revenues are 3-5% below current forecasts (still
                                  growing 5-8%). We assume revenue declines in Minerals drop through to operating profit
                                  at c.30% given the operational gearing in volume-related testing, and in Industry at 20%.

                                  FIGURE 6
                                  Downside sensitivity to more dramatic Commodities weakness

                                                                                                           2013

                                  Local ccy                                           base case              downside           change

                                  SGS organic                                              7.0%                    3.2%       (379 bps)

                                  SGS EBITA margin %                                      17.3%                   17.0%        (27 bps)

                                  SGS EPS                                                  92.3                    87.2          -5.5%

                                  BV organic                                               5.9%                    3.7%       (222 bps)

                                  BV EBITA margin %                                       16.9%                   16.7%        (14 bps)

                                  BV EPS                                                   4.06                    3.93          -3.3%

                                  Intertek organic                                         7.8%                    5.9%       (190 bps)

                                  Intertek EBITA margin %                                 16.7%                   16.6%        (16 bps)

                                  Intertek EPS                                            152.2                   147.6          -3.0%
                                  Source: Barclays estimates, Company data.




24 April 2013                                                                                                                             6
Barclays | Testing & Inspection


                                             What to do with the shares?
                                             We recently initiated on the testing and inspection stocks, with an Overweight
                                             recommendation on Intertek, Equal Weight on SGS and Underweight recommendation on
                                             Bureau Veritas. This balanced spread reflected our near term concerns surrounding
                                             valuations and commodity trends. Longer term, our positive industry view remains
                                             undiminished (see our initiation note, Quality worth paying for, published March 8th, 2013).

                                             Short term, minerals exposure creates a sentiment and forecast headwind, However,
                                             though we expect Commodities growth will slow, we do not yet fear a 2009-style collapse
                                             and believe it will be largely confined to Minerals (and not Oil & Gas). Medium-term we also
                                             would point to a number of structural positives: declining ore grades which require more
                                             sample tests, new centres of production (Africa, Latam and Australia) which lend
                                             themselves to outsourced testing deals, the trend for Majors to outsource services to reduce
                                             costs, which helps underpin our growth assumptions.

FIGURE 7
Testers Comps

                                    P/E                               EV/EBITDA                       EV/Sales                      FCF Yield

                       2012A       2013E      2014E      2012A          2013E     2014E      2012A     2013E      2014E    2012A     2013E      2014E
SGS                     26.8x       24.0x     20.8x          13.9x      12.3x       10.5x    3.01x      2.76x     2.51x    2.3%       2.9%      3.8%
Bureau Veritas          24.9x       22.4x     20.0x          15.3x      13.7x       12.1x    2.86x      2.64x     2.40x    3.2%       3.6%      4.4%
Intertek                25.4x       21.9x     19.3x          15.1x      12.7x       11.0x    2.92x      2.56x     2.31x    2.0%       3.4%      4.2%
Weighted Average        26.0x       23.1x     20.3x          14.6x      12.8x     11.1x      2.9x       2.7x      2.4x     2.5%       3.2%      4.1%

                             Organic Growth                          EBITA Margin                       EPS                        EPS Growth

                       2012A       2013E      2014E      2012A          2013E     2014E      2012A      2013E     2014E    2012A     2013E      2014E
SGS                     10.2%       7.0%      8.5%       17.3%          17.3%     18.3%        82.6       92.3     106.8   12.4%     11.7%      15.7%
Bureau Veritas          7.8%        5.9%      7.8%       16.9%          16.9%     17.2%        3.65       4.06      4.54   14.8%     11.2%      11.7%
Intertek                8.6%        7.8%      8.1%       16.7%          16.7%     17.3%       131.2      152.2     172.4   22.4%     16.0%      13.3%
Weighted Average        9.2%        6.8%      8.2%       17.1%          17.1%     17.8%                                    15.0%     12.4%      14.0%

                                  EPS 2013E                           EPS 2014E                       EPS 2015E            13 Div YTD Ab. YTD Rel.

                        BarCap       Cons.     Var. %        BarCap      Cons.      Var. %   BarCap      Cons.    Var. %   Yield      Perf.     Perf.
SGS                        92.3       95.1     -2.9%          106.8      111.2      -4.0%     120.3      124.3     -3.2%   2.9%       9.5%      7.3%
Bureau Veritas             4.06       4.14     -1.8%           4.54       4.59      -1.1%      5.10       5.18     -1.5%   2.2%       7.3%      5.2%
Intertek                  152.2      152.7     -0.3%          172.4      173.2      -0.5%     192.2      195.9     -1.9%   1.4%       7.6%      5.4%
Weighted Average                               -2.1%                                -2.4%                          -2.4%   2.4%       8.5%      6.3%
Source: Barclays estimates, Datastream, Company documents.


                                             We retain our preference for Intertek, as we view Intertek’s 7-8% forecast organic revenue
                                             growth as the least volatile among the listed Testers. The group has relatively mild
                                             peripheral Europe, upstream Commodities, and cycle-dependent Marine/ Construction
                                             exposure.     While Consumer was the growth and margin engine of the 2000s,
                                             management’s acquisition of Moody in 2011 passes that baton to the Industry segment,
                                             ahead of what we believe to be a decade of energy infrastructure investment. We think the
                                             existing portfolio can generate 14% 3-yr EPS CAGR as it stands, yet Intertek remains small
                                             enough that bolt-on M&A still moves the needle. We estimate free cash flow will drive net
                                             debt to 0.9x by FY13, leaving comfortable headroom for £100-150m of bolt-on acquisitions
                                             per annum which could add at least 2-4% p.a. to our base-case FY13-15E earnings and still
                                             leave the group under-levered, in our view.


24 April 2013                                                                                                                                           7
Barclays | Testing & Inspection


                                              How bad Commodities?
                                              Over the past three years, the testers have benefitted from the surge in exploration and
                                              production spend across both the minerals and oil/ gas markets, with a knock-on effect to
                                              their Industry asset inspection businesses due to increased capex spend from oil and mining
                                              majors. But with some commodity prices down sharply, mining majors talking more about
                                              capital discipline/ pulling back projects, and Junior exploration funding depressed, risks to
                                              Testers’ Commodities/ Energy-exposed businesses has grown. Our base-case is that asset-
                                              related activity (mainly in Industry segment) should remain buoyant, but growth in physical
                                              Commodities inspection – specifically Minerals – will see a contraction this year.

                                              Commodities (Minerals, Oil & Gas and Agriculture), plus Energy & Power clients contribute
                                              35-50% to TIC revenues by our estimates (SGS 46%, BV 33%, ITK 44%). They have been a
                                              consistent source of growth over the last decade: between 2002-2010, the Commodities
                                              and Industry segments (where the majority of Energy & Power exposure sits) grew by 8-9%
                                              and 9-12%, respectively (peaking for SGS at >20% growth in 2008 & 2011).

                                              • Key indicator: exploration spending – The largest delta for exploration activity comes
                                                   not from the major mining companies but from the junior players, as they handle most
                                                   “greenfield" (ie new location) exploration, while the Majors focus on production. While
                                                   Junior equity issuances stepped up in 4Q12, 1Q13 has again seen low levels of equity
                                                   issuance. Exploration activity usually follows mineral prices, most of which have been
                                                   weak recently.


FIGURE 8                                                                         FIGURE 9
Junior exploration equity fund raisings have dried up after a                    Usual seasonal pickup in Q1 has not materialised
promising Q4

 35%                                                                   3,000      3,000              2010           2011           2012    2013
                                                     US$m, 3mma

                                                                       2,500      2,500
 25%
                                                            Equity
                                                          raisings     2,000      2,000
 15%                                                       back at
                                                        low levels     1,500      1,500
  5%
                                                                       1,000
                                                                                  1,000
 -5%
                                                                       500
                                                                                    500
-15%                                                                   0                    equity raisings -60% below 2012 levels
        08      09        10       11       12            13                           0
          Mining Juniors' equity raisings (RHS)                SGS Minerals                Jan Feb Mar Apr May Jun         Jul Aug Sep Oct Nov Dec
Source: Bloomberg, Barclays Research estimates, SGS documents. We estimate       Source: Bloomberg, Barclays Research estimates.
Mining Juniors equity raisings based on those<$200m in value. April-13 is pro-
forma using month-to-date run-rate.


                                              • Commodities prices pulled back sharply from 2011 highs, recovered in 2H but have
                                                   recently reversed some of those gains.




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Barclays | Testing & Inspection


FIGURE 10                                                                          FIGURE 11
Base metal and iron ore – after sideways movement through                          Gold px down -20% from 2012 highs, but coal recovering
2012, 2013 seeing pull-back

  270     Jan-09 = 100                                                   35%         250                                                                                      35%
                                                                                            Jan-09 = 100
                                                    base metals
  250                                                                                230                                                          gold down -21%
                                                  recenly under
  230                                                  pressure          25%                                                                       from 2012 peak             25%
                                                                                     210
  210
                                                                                     190
  190                                                                    15%                                                                                                  15%
                                                                                     170
  170
  150                                                                    5%          150
                                                                                                                                                                               5%
  130                                                                                130
  110                                            iron ore rallied        -5%         110                                                                                      -5%
   90                                          sharply, then fell                     90                                        coal recovering
   70                                                                    -15%
                                                                                      70                                                                                      -15%
        08        09       10      11            12       13
                                                                                           08           09           10           11              12         13
             LME base metals index                Iron ore px index
             SGS Minerals (RHS)                                                            Gold px index                  Coal px index                 SGS Minerals (RHS)
Source: Bloomberg, Barclays estimates. LME base metals index is 45%                Source: Bloomberg, Barclays estimates.
Aluminum, 25% copper, 15% Zinc, 12% Lead, 2% Nickel, 1% Tin


                                               • The largest mining Majors have tempered capex guidance (-10%-15% decline now
                                                   expected in 2013), with exploration spending likely hardest hit in our view. However, Oil
                                                   & Gas spending looks more secure.


FIGURE 12                                                                          FIGURE 13
Mining capex from Majors set to fall -11% in 2013e                                 Oil company approved project capex growth of 3-4% over
                                                                                   next three years likely conservative
$80                                                                       50%
                                                                                                                          36%
        $bn                                                                         40%
                                                     39%                                                                        32%                              forecasts only
                         39%
$70                              36%                                      40%                                                                               include confirmed
                 34%
                                                                                                                                            26%
                                                                                                                                                            projects; delivered
                                                                                    30%
$60                                                                       30%                                                                                   growth usually
                                                                                                                                                                     adds c.5%
                                                                                                                                      18%


                                                                22%
                                                                                                  16%




$50                                                                       20%
                                                 15%                                20%
                                                                                                        11%
                                                                                                              11%




                                                                                                                                                            11%
                                                                                                                    10%




                                                                                                                                                                  10%
$40                                                                       10%

$30                                                                       0%        10%
                                                                                                                                                                        4%


                                                                                                                                                                                   3%
                                                                                                                                                  3%




                                                                                                                                                                             3%
                                                                                                                                                       3%




$20                                                                       -10%

$10                                                             -11%      -20%       0%
                                       -18%
                                                                                            -4%




 $0                                                                       -30%                                       Majors                 Euros           GEMs
        2005 2006 2007 2008 2009 2010 2011 2012E2013E                              -10%
                    Total Capex          Growth                                             00          02          04          06          08         10         12E        14E
Source: Barclays research, Company data. Based on mining capex plans for           Source: Barclays Research estimates, Company documents.
Alcoa, Anglo-American, BHP Billiton, Freeport-McMoran, Rio Tinto, Vale, Xstrata.


                                               Looking to history, in 2009 the Testers’ Commodities segments slowed by 10 percentage
                                               points. Intertek and BV growth still remained slightly positive, but SGS’s minerals segment
                                               (representing c. 33% of Commodities exposure at the time) went from +28% organic
                                               growth in 2008 to -11% in 2009. While Intertek was able to hold margin decline to -50bps,
                                               SGS minerals segment saw margin decline by -260bps in the year, reflecting the high fixed
                                               cost base intrinsic to lab testing.




24 April 2013                                                                                                                                                                           9
Barclays | Testing & Inspection



FIGURE 14                                                                      FIGURE 15
Commodities revenue subject to volatility, particularly                        Commodities margins have trended upwards, but 2009 saw
Minerals                                                                       sharp correction in Minerals margin

 28%      organic                                                               21%      EBITA
          growth                                                                         margin
 24%                                                                            19%
 20%
                                                                                17%
 16%
 12%                                                                            15%
  8%
                                                                                13%
  4%
  0%                                                                            11%
 -4%
                                                                                  9%              SGS Minerals                     SGS OGC
 -8%                 SGS Mineral                     SGS OGC
                                                                                                  BV Commodities                   ITRK Commodities
-12%                 BV Commodities                  ITRK Commodities             7%
       02 03 04 05 06 07 08 09 10 11 12 13E 14E 15E                                    02 03 04 05 06 07 08 09 10 11 12 13E 14E 15E
Source: Barclays Research estimates, Company documents.                        Source: Barclays Research estimates, Company documents.


                                            In any case, we see exposure to the most volatile parts of the industry as relatively limited
                                            and it is important to differentiate between exposure to exploration vs production and
                                            trading, the latter, being much more stable.

                                            Overall we estimate that around c.10-15% of revenues are exposed to the sharper end of
                                            the commodities cycle and even here we are less concerned about OGC. Cyclical Minerals
                                            exposure (exploration) is therefore just 2%, 3% and 6% of Intertek, Bureau Veritas and SGS
                                            revenues respectively.

                                            Looking in more detail at the segments affected geared to Energy/ Commodities:

                                            • Within minerals, 2% (Intertek), 3% (Bureau Veritas) and 6% (SGS) of group revenue is
                                                exposed to exploration (30-55% of divisional revenue). Within our forecasts we assume
                                                exploration-related growth declines modestly this year.

                                            FIGURE 16
                                            Mineral operations by activity – SGS has sizeable exploration
                                                                                  % Minerals revenues                        % Group revenues

                                            Minerals activity               SGS           BV           ITRK           SGS          BV           ITRK

                                            Exploration                     40%          30%            30%            6%          3%           2%

                                            Production                      40%          55%            50%            6%          5%           3%

                                            Trade/ midstream                20%          15%            20%            3%          2%           1%

                                            Total                          100%          100%          100%           16%          10%          6%
                                            Source: Barclays Research estimates, Company documents. Based on FY12 figures.


                                            • Within Oil, Gas & Chemicals (OGC), we see 1-4% of group revenue skewed to upstream
                                                activities most sensitive to changes in capital expenditure plans (based on FY12 figures).
                                                We are more relaxed here relative to minerals, given signs that oil majors’ spending
                                                continues to surprise positively, coupled with outsourcing opportunities, allowing the
                                                testers to take market share.




24 April 2013                                                                                                                                          10
Barclays | Testing & Inspection


                                             FIGURE 17
                                             Oil Gas & Chemical operations by activity – SGS has greatest exposure
                                                                                     % OGC revenues                             % Group revenues

                                             OGC activity                     SGS            BV          ITRK*           SGS            BV          ITRK*

                                             Upstream                         20%           10%           15%             4%            1%            3%

                                             Trade/ midstream                 40%           40%           61%             8%            2%           14%

                                             Analytical/ downstream           40%           50%           24%             8%            3%            5%
                                             Source: Barclays Research estimates, Company documents. Based on FY12 figures. *For comparability, we include
                                             Intertek’s Oil & Gas “Upstream” activity which is reported in its Industry segment (c.3% group revenue, 10% of
                                             reported Industry).


                                             • Within the Industry segment, Energy/ Power clients account for c.50-70% of revenues
                                                 (FY12 estimates). These are skewed towards capex-related inspection (c.60-70% by
                                                 our estimates, including new build/ construction, procurement and design review), with
                                                 the remainder of revenues from opex (asset life extension-related, safety audits,
                                                 decomissioning). Together these represent 8-22% of Group revenue, with Intertek the
                                                 most exposed to Energy/ Power markets (brought by Moody acquisition).

                                             FIGURE 18
                                             Energy/ Power exposure within Industry segment – Intertek has greatest exposure
                                                                                             % Industry Revenues                  % Group revenues

                                             Industry segment exposure                     SGS         BV        ITRK          SGS         BV        ITRK

                                             Energy/ Power expsosure in Industry           52%        50%         67%          8%         11%        22%

                                             > of which % capex                            36%        33%         47%          6%          7%        15%

                                             > of which % opex                             16%        17%         20%          3%          4%         7%
                                             Source: Barclays Research estimates, Company documents. Based on FY12 figures. Note – for comparability, we
                                             exclude Intertek’s Oil & Gas “Upstream” activity (c.3% group revenue, 10% of reported Industry division).


                                             By commodity type, Gold, iron ore and coal dominate TICs exposure. Respectively, we
                                             estimate that SGS and Intertek derive up to 50% and 35% of Minerals revenue from gold,
                                             the latter particularly in Indonesia. Iron ore represents c.25-30% for each as well.


FIGURE 19                                                                        FIGURE 20
Mining revenue exposure by mineral                                               SGS minerals division demonstrates high operational gearing

       Copper/ Base      Iron ore     Coal    Gold/ Precious        other                                                                           bps YoY
                                                                                    30%                                                                 300
           0%                                                 0%                    25%                                                                    250
                                    8%
                                                                                    20%                                                                    200
                                    23%                      35%
          50%                                                                       15%                                                                    150
                                                                                    10%                                                                    100
                                                              5%
                                    23%                                             5%                                                                     50
                                                             25%                    0%                                                                     0
          20%
                                    23%                                             -5%                                                                    -50
                                                                                  -10%      margin -260 bps                                                -100
          20%                                                35%                  -15%                                                                     -150
                                    23%
          10%                                                                              02 03 04 05 06 07 08 09 10 11 12 13E14E15E
                                                                                             SGS Minerals margin (RHS)               SGS Minerals organic
           SGS                       BV                      ITRK
Source: Company data, Barclays Research estimates. Based on FY12.                Source: Company documents, Barclays Research estimates.




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Barclays | Testing & Inspection


                                           BV offers the most diverse exposure by commodity type (roughly 23% each in Copper/base
                                           metals, iron ore, coal and gold/precious metals, with 8-9% uranium exposure).

                                           By geography – SGS offers the widest exposure, with sizeable operations in South Africa, SE
                                           Asia, Australia and South America. In contrast BV is concentrated in Australia (c.40%
                                           exposure, by our estimate), and Intertek in Australia (iron ore), South Africa and Indonesia.


                                           Structural offsets could help limit the fall-out
                                           1.    Diversity in terms of geography & commodity exposure offers some protection.
                                                 Gold represents 20-50% exposure, with the remaining split between iron ore, coal and
                                                 base metals. Intertek is strongest in Australia, and has large S.Africa and Indonesia
                                                 operations (especially gold). BV has now diversified away from Australia (but still 40%
                                                 FY12 revenues) adding exposure to S. Africa and Latam. SGS has the broadest
                                                 footprint by our estimate, including Australia, Africa, Latam and Indonesia.

                                           2.    Marginal extraction more difficult – Ores are becoming more difficult to extract.
                                                 Copper grades, for instance, will fall from current 1.1% to 0.98% by 2020 (Brook Hunt).

                                           3.    EM growth: China matters. China and other EMs remain the marginal consumer of
                                                 copper, (which is the metal that leads all others, in our view). Asia copper
                                                 consumption, already accounting for 60% of global demand, is forecast to grow at a
                                                 5% CAGR through 2020, compared to Europe only 0.6% and North America 0.2%
                                                 (Brook Hunt). Barclays economics expects Chinese GDP to gradually recover in 2013
                                                 (7.9% real GDP forecast), and with it construction/ base metal demand.


FIGURE 21                                                                FIGURE 22
Proportion of demand from China continues to grow                        Copper px vs other pxs, or a base metals px index vs organic
 90%         % global copper                                              1.4%                                                           12%
                                                                77%                   Copper grade
             demand
 80%                                                    74%                                                                              10%
                                           71%
 70%                                                                      1.3%                                                           8%
 60%
                                                                                                                         Global copper   6%
 50%                                                                                                                    demand (RHS)
                                                                          1.2%                                                           4%
 40%
                                                                                                                                         2%
 30%
                                                                          1.1%                                                           0%
 20%
                                                                                                                                         -2%
 10%
                       Emerging markets             Mature markets
   0%                                                                     1.0%                                                           -4%
        00          04         08          12E          16E      20E             00    02   04   06   08    10 12E 14E 16E 18E 20E
Source: Brook Hunt/ Wood Mackenzie. Barclays Research                    Source: Barclays, Brook Hunt/ Wood Mackenzie




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Barclays | Testing & Inspection


                                  FIGURE 23
                                  Global GDP growth forecast to pick up more in EM in 2013E
                                  Real GDP growth %                        2011A           2012A           2013E           2014E
                                  Global GDP                                  3.8             3.1             3.2             4.0
                                  Advanced                                    1.4             1.2             1.1             2.0
                                       > United States                        1.8             2.2             1.9             2.3
                                       > Eurozone                             1.5            -0.5            -0.3             1.4
                                  Emerging                                    6.5             5.0             5.3             6.0
                                       > BRIC                                 7.6             6.0             6.4             6.9
                                         >> China                             9.3             7.8             7.9             8.1
                                  Source: Barclays Research estimates.


                                  4.     Geographic expansion/New markets & lab investments – Especially in West Africa
                                         (Sierra Leone/ Liberia/ Namibia) – closely linked to exploration spend/ mine financing
                                         and more broadly commodity prices.

                                  5.     End-to-end process improvement – Opportunity to get involved in the entire supply
                                         chain from pre-planning, feasibility, all the way through to project design (but not the
                                         mining itself), balancing of metallurgy etc. Driving improvement in ore recovery rates
                                         can support a shift to value based pricing over time. Offers significant margin
                                         potential.

                                  6.     Oil Exploration & Production (E&P) spending is forecast to slow to only +7% (from
                                         +13% from 2002-12), but that likely underestimates actual growth due to
                                         respondents’ cautious assumptions on oil and gas prices ($98 Brent, $3.50/mcf Henry
                                         Hub), plus typical overspend vs budgets. In addition, spend outside of North America is
                                         forecast to grow 9% in ’13, and average 12% in ’13-16e; TICs global footprint is a
                                         considerable advantage.

                                  7.     Oil “Super-majors” have a tendency to overspend. Approved capex projects point to
                                         only +4% growth this year, but overspending typically adds 2-4% p.a. In 2012,
                                         European majors overspent budgets by 4%, after overspending by 2% in 2011.
                                         Furthermore, in 4Q12, European Majors’ capex spend of $69bn was the highest on
                                         record, a sign that the Integrateds are becoming more comfortable to spend in a stable
                                         oil price environment.

                                  8.     Global oil & gas rig count looks set to grow at double-digits over next two years.
                                         SGS in particular is well positioned to plug into these trends.




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Barclays | Testing & Inspection



FIGURE 24                                                              FIGURE 25
Rig count set to grow by 15% in 2013e                                  Non-OECD energy demand growing +2.3% p.a through 2035

 800            Floaters      Jackups           15%                     500     mtoe                   OECD    Non-OECD
                                         12%                            450
 700                                                   10%
                                                              6%        400
 600                               4%
                                                                        350         Non-OECD
                             -2%                              448                   2.3% p.a.
 500                                                   430              300
                   -6%                          390
 400                                                                    250
                                         339
          355      315       305   314                                  200
 300
                                                                        150     OECD 0% growth
 200
                                                                        100
                                                250    271    292
 100               175             182   217                             50
          169                173
    0                                                                      0
           08       09       10     11   12     13E    14E    15E                1990      2008      2015     2020   2025   2030   2035
Source: Barclays Research.                                             Source: International Energy Agency.


                                         9.    Offshore regulation: EU to propose new offshore safety rules/ regulations on safety on
                                               platforms, emergency response and cleanup in case of an oil spill. This development
                                               comes as we expect new safety regulations will be proposed shortly by the U.S.'s
                                               Bureau of Safety and Environmental Enforcement (BSEE) for the Gulf of Mexico.




24 April 2013                                                                                                                             14
Barclays | Testing & Inspection


European Business Services                                                                                                Industry View: POSITIVE

Bureau Veritas SA (BVI.PA)                                                                                          Stock Rating: UNDERWEIGHT


Income statement (€mn)                    2012A    2013E    2014E    2015E     CAGR      Price (22-Apr-2013)                         EUR 90.86
Revenue                                    3,902    4,165    4,504    4,897     7.9%     Price Target                               EUR 102.00
EBITDA (adj)                                 728      803      891    1,002    11.2%     Why Underweight? Though Bureau Veritas looks well
EBITA (adj)                                  639      702      775      860    10.4%     on track to come in at the top end of the group’s
Pre-tax income (adj)                         570      638      715      805    12.2%     2015 strategic plan, it faces some near-term
Net income (adj)                             412      459      515      580    12.1%     headwinds: Marine is still treading water,
EPS (adj) (€)                               3.65     4.06     4.54     5.10    11.8%     Construction remain weak, Upstream Minerals
                                                                                         growth looks set to slow. We forecast revenue and
Diluted shares (mn)                        112.0    112.3    112.6    113.0     0.3%
                                                                                         earnings growth of 6.5% and 12% resp. this year, the
DPS (€)                                     1.83     1.99     2.22     2.50    10.9%
                                                                                         lowest of the big three listed TICs.

Margin and return data                                                        Average
                                                                                         Upside case                             EUR 123.00
EBITDA (adj) margin (%)                     18.7    19.3     19.8     20.5       19.5
                                                                                         More aggressive balance sheet deployment could lift
EBITA (adj) margin (%)                      16.4    16.9     17.2     17.6       17.0    FY14E EPS by between 6-8%. Coupled with 2%
Pre-tax (adj) margin (%)                    14.6    15.3     15.9     16.4       15.6    higher organic growth and more aggressive margin
Net (adj) margin (%)                        10.6    11.0     11.4     11.8       11.2    improvement, EPS could be 15% higher. Applying a
ROIC (%)                                    19.6    18.3     17.5     18.9       18.6    10% premium to current multiples yields €123 upside
ROE (%)                                     38.0    39.3     35.8     34.4       36.9    case.

Balance sheet and cash flow (€mn)                                               CAGR     Downside case                                EUR 80.00
Tangible fixed assets                        379     399      439      466       7.1%    Weaker macro backdrop and/or competitive issues
Intangible fixed assets                    1,872   1,858    1,790    1,737      -2.5%    lowers organic to 2% (2009/10 average), erasing
Cash and equivalents                         244     444      694      844      51.3%    margin growth. Lowers FY14 EPS by 8%. Assuming a
Total assets                               3,805   4,045    4,320    4,507       5.8%    de-rating to historical average PE multiple of 19x
                                                                                         implies a valuation of €80.
Short and long-term debt                   1,460   1,438    1,468    1,238      -5.3%
Pension liabilities                          125     125      125      125       0.0%
                                                                                         Upside/Downside scenarios
Total liabilities                          2,637   2,606    2,636    2,427      -2.7%
Net debt/(funds)                           1,151     994      774      395     -30.0%
Shareholders' equity                       1,145   1,415    1,659    2,055      21.5%
Change in working capital                    -25     -26      -37      -47        N/A
Cash flow from operations                    462     510      609      708      15.3%
Capital expenditure                         -135    -146     -158     -171        N/A
Adjusted FCF                                 327     364      451      537      18.0%

Valuation and leverage metrics                                                Average
P/E (adj) (x)                               24.9    22.4     20.0     17.8       21.3
EV/EBITDA (adj) (x)                         15.8    14.2     12.5     10.8       13.3
EV/EBITA (adj) (x)                          18.0    16.2     14.4     12.6       15.3
Adj FCF yield (%)                            3.2     3.6      4.4      5.2         4.1
EV/sales (x)                                 2.9     2.7      2.5      2.2         2.6
P/BV (x)                                     8.7     7.1      6.1      4.9         6.7
Dividend yield (%)                           2.0     2.2      2.4      2.8         2.4   POINT® Quantitative Equity Scores
Total debt/capital (%)                      56.1    50.4     46.9     37.6       47.7
                                                                                         Value
Net debt/mkt cap (%)                        11.3     9.7      7.6      3.9         8.1

Selected operating metrics
                                                                                         Quality
FCF/NI (x)                                   0.8      0.8      0.9      0.9
Capex/sales (%)                              3.5      3.5      3.5      3.5
D&A/sales (%)                                3.7      4.1      4.1      4.0              Sentiment
Organic growth (%)                           7.8      5.9      7.8      8.7



                                                                                            Low                                                High
                                                                                         Source: POINT. The scores are valid as of the date of this
                                                                                         report and are independent of the fundamental analysts'
                                                                                         views. To view the latest scores, click here.


Source: Company data, Barclays Research
Note: FY End Dec




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Barclays | Testing & Inspection




FIGURE 26
Bureau Veritas segmental forecasts
Revenue (EUR m, Dec YE)           2010A (RS)   2011A   1H 12A   2H 12A   2012A   2013E   2014E   2015E
Marine                                 314      319      161      156     317     309     327     354
   > organic growth                   -5.0%     2.4%    -2.8%    -5.2%   -4.0%   -1.0%    6.0%    8.0%
Industry                               608      715      400      475     875    1,039   1,187   1,329
   > organic growth                   10.3%    17.1%   17.5%    14.9%    16.1%   13.0%   13.0%   12.0%
In-Service Verification                431      441      239      242     481     491     516     542
   > organic growth                    0.9%     2.8%    4.3%     -0.4%    1.9%    3.0%    5.0%    5.0%
Construction                           428      414      224      224     448     413     433     468
   > organic growth                   -3.1%    -2.2%    -3.0%    -6.9%   -5.0%   -2.0%    5.0%    8.0%
Certification                          322      322      170      174     344     361     379     398
   > organic growth                    4.0%     0.1%     6.0%     3.1%    4.5%    5.5%    5.0%    5.0%
Commodities                            488      542      335      379     714     724     767     844
   > organic growth                   12.2%    10.1%    13.8%    13.2%   13.5%    2.0%    6.0%   10.0%
Consumer Products                      382      379      207      236     443     522     564     609
   > organic growth                    0.9%     1.5%     5.3%    11.1%    8.3%   12.0%    8.0%    8.0%
GSIT                                   179      227      127      155     282     307     331     354
   > organic growth                   12.8%    13.5%    21.3%    34.5%   28.2%   10.0%    8.0%    7.0%
Total Revenue                         3,151    3,359   1,862    2,041    3,902   4,165   4,504   4,897
   > reported growth %                10.6%    14.6%    14.7%    17.6%   16.2%    6.7%    8.1%    8.7%
   > organic growth %                  2.8%     6.2%     8.1%     7.5%    7.8%    5.9%    7.8%    8.7%
   > acquisition/ disposals %          2.9%     9.5%     3.2%     6.2%    4.7%    2.4%    0.3%    0.0%
   > FX %                              4.9%    -1.1%     3.4%     3.8%    3.6%   -1.6%    0.0%    0.0%

EBITA (EUR m, Dec YE)             2010A (RS)   2011A   1H 12A   2H 12A   2012A   2013E   2014E   2015E
Marine                                  91       94       47       37      85      79      85      93
   > margin                           28.9%    29.5%   29.4%    23.9%    26.7%   25.7%   25.9%   26.2%
Industry                                71       82       53       73     127     155     184     211
   > margin                           11.6%    11.5%   13.3%    15.4%    14.5%   15.0%   15.5%   15.9%
In-Service Verification                 53       48       23       30      53      57      62      68
   > margin                           12.2%    11.0%    9.4%     12.4%   10.9%   11.5%   12.0%   12.5%
Construction                            44       45       24       23      47      53      58      64
   > margin                           10.2%    10.9%    10.8%    10.2%   10.5%   12.8%   13.3%   13.7%
Certification                           66       67       30       32      62      66      70      74
   > margin                           20.6%    20.7%    17.6%    18.2%   17.9%   18.2%   18.5%   18.6%
Commodities                              52      69       44       55      99     100     109     126
   > margin                           10.7%    12.7%    13.2%    14.5%   13.9%   13.8%   14.2%   15.0%
Consumer Products                      106       97       47       61     109     128     137     147
   > margin                           27.6%    25.6%    22.9%    26.0%   24.5%   24.5%   24.3%   24.1%
GSIT                                     31      42       27       32      60      65      71      77
   > margin                           17.0%    18.5%    21.4%    20.9%   21.1%   21.1%   21.4%   21.6%
Total EBITA (adj)                      512      544      296      344     639     702     775     860
   > EBITA margin                     16.3%    16.2%    15.9%    16.8%   16.4%   16.9%   17.2%   17.6%
   > EBITA growth %                   13.2%    11.0%    13.9%    20.6%   17.4%    9.9%   10.4%   10.9%
Source: Barclays, Company data.




24 April 2013                                                                                       16
Barclays | Testing & Inspection




FIGURE 27
Bureau Veritas Profit & Loss

December YE (EUR m)                       2011A     2012A     2013E     2014E     2015E     2016E
Group Revenue                             3,359     3,902     4,165     4,504     4,897     5,262
  > Reported growth %                     14.6%     16.2%       6.7%      8.1%      8.7%      7.5%
  > Organic growth %                        6.2%      7.8%      5.9%      7.8%      8.7%      7.5%
  > Acquisition/Disposal growth %           9.5%      4.7%      2.4%      0.3%      0.0%      0.0%
  > FX %                                   -1.1%      3.7%     -1.6%      0.0%      0.0%      0.0%
Adj. EBITDA                                 621       728       803       891     1,002     1,103
  > EBITDA margin %                       18.5%     18.7%     19.3%     19.8%     20.5%     21.0%
Adj. Depreciation & Amortisation             (77)      (89)    (101)     (116)     (142)     (168)
  > D&A % Capex                           67.6%     65.6%     69.2%     73.5%     82.9%     91.4%
Adj. EBITA                                  544       639       702       775       860       934
  > EBITA margin %                        16.2%     16.4%     16.9%     17.2%     17.6%     17.8%
     > > bps change                          (54)       17        48        35        34        20
Adjustments to EBITA                         (64)    (121)       (79)      (70)      (55)      (55)
Amortisation of acquisition intangibles      (36)      (54)      (70)      (70)      (55)      (55)
Transaction-related costs                     (3)       (3)       (4)        0         0         0
Discontinued activities                        0         0         0         0         0         0
Restructuring costs                           (9)      (38)       (5)        0         0         0
Other adjustments                              0         0         0         0         0         0
EBIT, reported                            480.3     518.3     623.9     705.4     804.6     879.3
  > Margin %                              14.3%     13.3%     15.0%     15.7%     16.4%     16.7%
Net Interest costs                          (42)      (54)      (57)      (52)      (46)      (41)
Other financial income/(expense)            (17)      (15)       (8)       (8)       (8)       (8)
Net Financing Income/(Expense)              (58)      (69)      (65)      (60)      (54)      (49)
Share of profit of associates                 0         0         0         0         0         0
PBT, Adj                                   486       570       638       715       805       886
  > growth %                               9.3%     17.2%     12.0%     12.1%     12.6%     10.0%
PBT, reported                               422       449       560       645       750       831
Tax (headline)                             (130)     (158)     (179)     (200)     (226)     (248)
Headline tax rate %                       26.8%     27.7%     28.0%     28.0%     28.0%     28.0%
Net Income (headline)                      356       412       459       515       580       638
  > growth %                              10.4%     15.9%     11.5%     12.1%     12.6%     10.0%
Net Income (reported)                      305       307       399       465       547       608
Minority Interest                            (8)      (10)      (11)      (13)      (14)      (15)
Attributable adj. net profit               348       403       448       502       566       622
  > growth %                              10.4%     15.7%     11.3%     12.1%     12.7%     10.0%
Attributable profit (reported)             298       298       387       452       533       592
EPS (basic, reported)                      2.72      2.70      3.51      4.09      4.81      5.32
EPS (diluted, reported)                    2.67      2.66      3.45      4.01      4.72      5.23
Headline EPS (basic, adj)                  3.18      3.65      4.06      4.54      5.10      5.59
  > growth %                               9.5%     14.8%     11.2%     11.7%     12.4%      9.6%
EPS (dil, adj)                             3.13      3.59      3.99      4.46      5.01      5.49
  > growth %                               9.5%     14.8%     11.2%     11.7%     12.4%      9.6%
Gross dividend per share declared          1.27      1.83      1.99      2.22      2.50      2.74
  > growth %                              10.4%     44.1%      8.8%     11.7%     12.4%      9.6%
 Basic Weighted Av. Shares (mn)             110       110       110       111       111       111
  > growth %                               1.4%      0.1%      0.2%      0.3%      0.3%      0.3%
 Diluted Weighted Av. Shares (mn)          112       112       112       113       113       113
  > growth %                               1.2%      0.1%      0.2%      0.3%      0.3%      0.3%
Source: Barclays, Company data.



24 April 2013                                                                                   17
Barclays | Testing & Inspection


FIGURE 28
Bureau Veritas Statement of Cash Flow

December YE (EUR m)                     2011A     2012A      2013E    2014E    2015E    2016E
Starting Net Cash / (Debt)              (1,052)    (984)    (1,151)   (994)    (774)    (395)
Profit before tax (reported)              422       449       560      645      750      831
Provisions & other non-cash items           (5)       31         5        5        5        5
Depreciation & Amortisation               129       168       171      186      197      223
Cash interest paid                         (42)      (43)      (54)     (52)     (49)     (46)
Other                                        0         0       (25)       0        0        0
P&L interest costs                          45        61        65       60       54       49
Cash tax paid                            (150)     (180)     (185)    (198)    (203)    (223)
Change in Working Capital                  (39)      (25)      (26)     (37)     (47)     (57)
Operating Cash Flow                       360       462       510      609      708      782
Capex                                    (113)     (135)     (146)    (158)    (171)    (184)
  > as % revenue                          3.4%      3.5%      3.5%     3.5%     3.5%     3.5%
Acquisitions                               (70)    (243)       (78)       0        0        0
Purch./sale non-current fin. assets         (3)        1        (5)      (3)       0        0
Investing Cash Flow                      (186)     (377)     (229)    (160)    (171)    (184)
Dividends paid                           (131)     (147)     (201)    (220)    (246)    (277)
Share issuance / (reduction)                30        13        34       36       42       44
Share purchase by ESOP                      (1)      (66)       43      (45)      47      (49)
Debt drawdown / (repayment)                (47)     123         27       30    (230)       84
Financing Cash Flow                      (150)       (77)      (98)   (199)    (387)    (198)
Currency translation                         5        (4)        0        0        0        0
Other adjustments                           (8)      (48)        0        0        0        0
Net Cash Flow                               68     (167)      156      220      380      316
Y/E Net Cash / (Debt)                    (984)    (1,151)    (994)    (774)    (395)     (79)
Net Debt/EBITDA                          1.6x       1.6x     1.2x     0.9x     0.4x     0.1x
Free Cash Flow (Barclays)                  247      327       364      451      537      598
  > growth %                              -14%      32%       11%      24%      19%      11%
Free Cashflow per share (EUR)             2.21      2.92      3.24    4.00     4.75     5.28
Source: Barclays, Company data.




24 April 2013                                                                              18
Barclays | Testing & Inspection


European Business Services                                                                                           Industry View: POSITIVE

Intertek Group plc (ITRK.L)                                                                                       Stock Rating: OVERWEIGHT


Income statement (£mn)                    2012A    2013E    2014E    2015E     CAGR      Price (22-Apr-2013)                        GBp 3,334.0
Revenue                                    2,054    2,301    2,487    2,687     9.4%     Price Target                               GBp 4,000.0
EBITDA (adj)                                 399      463      523      582    13.4%     Why Overweight? Intertek’s 8% forecast organic
EBITA (adj)                                  335      385      431      475    12.3%     revenue growth is the least volatile among the listed
Pre-tax income (adj)                         308      360      409      458    14.1%     Testers. We think the existing portfolio can generate
Net income (adj)                             228      266      303      339    14.1%     14% 3-yr EPS CAGR. We estimate headroom for
EPS (adj) (GBp)                            131.2    152.2    172.4    192.2    13.6%     £100-150m of bolt-on acquisitions per annum which
                                                                                         could add at least 2-4% p.a. to our base-case FY13-
Diluted shares (mn)                        162.9    163.7    164.4    165.2     0.5%
                                                                                         15E earnings.
DPS (GBp)                                  41.00    46.74    52.35    57.58    12.0%

                                                                                         Upside case                              GBp 4,400.0
Margin and return data                                                        Average
                                                                                         More aggressive balance sheet deployment could lift
EBITDA (adj) margin (%)                     19.4    20.1     21.0     21.7       20.6
                                                                                         forecast FY14E EPS by between 7% and 10%.
EBITA (adj) margin (%)                      16.3    16.7     17.3     17.7       17.0    Coupled with 2% higher organic growth and more
Pre-tax (adj) margin (%)                    15.0    15.6     16.5     17.0       16.0    aggressive margin improvement, EPS could be 15%
Net (adj) margin (%)                        11.1    11.6     12.2     12.6       11.9    higher. Applying a peer group multiple of 22x points
ROIC (%)                                     8.4     7.9      7.7      6.7         7.7   to an upside case of 4400p.
ROE (%)                                     15.2    12.3      9.9      7.9       11.3
                                                                                         Downside case                            GBp 2,900.0
Balance sheet and cash flow (£mn)                                              CAGR      Weaker macro backdrop and/or competitive issues
Tangible fixed assets                        302     339      368      384      8.3%     lowers organic growth to 5.5% (2009/10 average),
Intangible fixed assets                      823     799      774      748     -3.1%     erasing margin growth, lowering FY14 EPS by 7%.
Cash and equivalents                         167     167      387      607     53.9%     Assuming a re-rating to historical average PE multiple
Total assets                               1,835   1,901    2,202    2,498     10.8%     of 18x implies a valuation of 2900.
Short and long-term debt                     717     603      666      699     -0.8%
Pension liabilities                           17      17       17       17      0.0%     Upside/Downside scenarios
Total liabilities                          1,180   1,079    1,176    1,240      1.6%
Net debt/(funds)                            -551    -436     -280      -93       N/A
Shareholders' equity                         673     840    1,043    1,273     23.7%
Change in working capital                    -57     -45      -50      -53       N/A
Cash flow from operations                    236     316      373      418     21.0%
Capital expenditure                         -113    -115     -124     -128       N/A
Adjusted FCF                                 110     187      233      273     35.4%

Valuation and leverage metrics                                                Average
P/E (adj) (x)                               25.4    21.9     19.3     17.3       21.0
EV/EBITDA (adj) (x)                         15.6    13.3     11.6     10.1       12.7
EV/EBITA (adj) (x)                          18.6    16.0     14.0     12.4       15.3
Adj FCF yield (%)                            2.0     3.4      4.2      5.0         3.7
EV/sales (x)                                 3.0     2.7      2.4      2.2         2.6
P/BV (x)                                     8.0     6.4      5.2      4.3         6.0
Dividend yield (%)                           1.2     1.4      1.6      1.7         1.5
Total debt/capital (%)                      51.6    41.8     39.0     35.4       41.9
Net debt/mkt cap (%)                       -10.1    -8.0     -5.1     -1.7        -6.2

Selected operating metrics
FCF/NI (x)                                   0.5      0.7      0.8      0.8
Capex/sales (%)                              5.5      5.0      5.0      4.7
D&A/sales (%)                                3.1      3.4      3.7      4.0
Organic growth (%)                           8.6      7.8      8.1      8.0

Source: Company data, Barclays Research
Note: FY End Dec




24 April 2013                                                                                                                                19
Barclays | Testing & Inspection


FIGURE 29
Intertek segmental forecasts

Revenue (£m, Dec YE)              2011A   1H12A   2H12A   2012A   2013E    2014E    2015E

Consumer Goods                      316     164     316     343     396      428      456
   > Organic Growth %              4.8%    8.9%    4.8%    7.3%    9.0%     8.0%     6.5%
Commercial & Electrical            291     158     291     318     362      394      430
   > Organic Growth %              8.7%    9.8%    8.7%    8.7%   10.0%     9.0%     9.0%
Commodities                        530     278     530     572     603      645      697
   > Organic Growth %             11.9%   10.5%   11.9%    8.6%    3.0%     7.0%     8.0%
Industry & Assurance               469     319     469     666     766      834      910
   > Organic Growth %              7.5%   14.3%    7.5%   10.4%   10.0%     9.0%     9.0%
Chemicals & Pharma                 144      73     144     155     175      185      194
   > Organic Growth %              3.9%    3.6%    3.9%    9.0%    9.0%     6.0%     5.0%
Total Revenue                     1,749    991    1,749   2,054   2,301    2,487    2,687
   > Reported growth %            27.3%   29.9%    7.8%   17.4%   12.0%     8.1%     8.0%
   > Organic growth %              8.3%    9.9%    8.3%    8.6%    7.8%     8.1%     8.0%
     >> PF organic (inc Moody)    11.7%   13.0%   11.7%   10.5%       --       --       --
   > Net acqu'n/disposals %       19.5%   20.2%   19.5%   10.7%    1.1%     0.0%     0.0%
   > FX                           -0.5%   -0.2%   -0.5%   -1.9%    3.0%     0.0%     0.0%


EBITA (£m, Dec YE)                2011A   1H12A   2H12A   2012A   2013E    2014E    2015E
Consumer Goods                     106      52      61     113     130      140      147
   > EBITA margin %               33.7%   31.5%   34.1%   32.8%   32.8%    32.6%    32.2%
Commercial & Electrical             44      26      25      51      59       65       73
   > EBITA margin %               15.2%   16.5%   15.3%   15.9%   16.2%    16.6%    17.0%
Commodities                         67      34      43      77      81       91      102
   > EBITA margin %               12.6%   12.3%   14.6%   13.5%   13.5%    14.1%    14.7%
Industry & Assurance                51      34      44      77      94      112      127
   > EBITA margin %               10.9%   10.5%   12.6%   11.6%   12.3%    13.4%    14.0%
Chemicals & Pharma                  13       7      11      17      21       23       25
   > EBITA margin %                8.9%    9.1%   12.8%   11.0%   11.8%    12.6%    13.0%
Total EBITA (adj)                  281     152     183     335     385      431      475
   > EBITA growth %               23.6%   28.2%   12.6%   19.2%   14.9%    12.0%    10.2%
   > EBITA margin %               16.1%   15.4%   17.2%   16.3%   16.7%    17.3%    17.7%
Source: Barclays, Company data.




24 April 2013                                                                          20
Barclays | Testing & Inspection

FIGURE 30
Intertek Profit & Loss
December YE (£m)                         2011A    2012A    2013E    2014E    2015E    2016E

Group Revenue                            1,749    2,054    2,301    2,487    2,687    2,882
   > Reported growth %                   27.3%    17.4%    12.0%     8.1%     8.0%     7.3%
   > Organic growth %                     8.3%     8.6%     7.8%     8.1%     8.0%     7.3%
   > Acquisition/ Disposal growth %      19.5%    10.7%     1.1%     0.0%     0.0%     0.0%
   > FX %                                -0.5%    -1.9%     3.0%     0.0%     0.0%     0.0%
EBITDA (adj)                              341      399      463      523      582      638
   > EBITDA margin %                     19.5%    19.4%    20.1%    21.0%    21.7%    22.1%
D&A (adj)                                  (60)     (64)     (78)     (92)    (107)    (124)
EBITA (adj)                               281      335      385      431      475      514
   > EBITA margin %                      16.1%    16.3%    16.7%    17.3%    17.7%    17.8%
     >> bps change                         -49       24       42       60       34       17
   > adj growth                          23.6%    19.2%    14.9%    12.0%    10.2%     8.3%
Adjustments to EBITA                       (47)     (52)     (37)     (29)     (29)     (19)
Amortisation of acquisiton intangibles     (25)     (29)     (29)     (29)     (29)     (19)
Restructuring & Integration                (22)     (19)      (8)       0        0        0
Impairment of goodwill                       0       (3)       0        0        0        0
EBIT (reported)                           234      283      348      402      446      495
   > EBIT margin %                       13.4%    13.8%    15.1%    16.2%    16.6%    17.2%
Adj net interest                           (21)     (27)     (25)     (22)     (17)     (15)
PBT (adj)                                 260      308      360      409      458      500
   > growth %                            22.7%    18.6%    16.7%    13.7%    11.9%     9.1%
PBT (reported)                            213      257      323      380      429      480
Adj tax                                    (73)     (80)     (94)    (106)    (119)    (130)
Effective tax rate                       28.2%    26.0%    26.0%    26.0%    26.0%    26.0%
Net Income (adj)                          187      228      266      303      339      370
   > growth %                            20.3%    22.1%    16.8%    13.7%    11.9%     9.1%
Minority Interests                         (12)     (14)     (17)     (19)     (21)     (24)
Attributable profit (adj)                 175      214      249      283      318      346
   > growth %                            20.4%    22.5%    16.6%    13.8%    12.1%     9.0%
Net Income (reported)                     151      188      238      284      322      364
EPS (basic, reported) (p)                 86.8    108.2    137.0    163.3    184.3    207.7
EPS (dil, reported) (p)                   85.3    106.7    135.1    161.0    181.7    204.9
EPS (basic, adj) (p)                     109.1    133.1    154.3    174.8    195.0    211.6
EPS (dil, adj) (p)                       107.2    131.2    152.2    172.4    192.2    208.7
   > growth                              19.9%    22.4%    16.0%    13.3%    11.5%     8.5%
Dividend per share (p)                    33.7     41.0     46.7     52.3     57.6     63.3
   > growth %                            19.9%    21.7%    14.0%    12.0%    10.0%    10.0%
Wtd avg basic shares                      160      161      161      162      163      164
Wtd avg diluted shares                    163      163      164      164      165      166
   > growth %                             0.4%     0.1%     0.5%     0.4%     0.5%     0.5%
Source: Barclays, Company data.



24 April 2013                                                                            21
Barclays | Testing & Inspection


FIGURE 31
Intertek Statement of Cash Flow
December YE (£m)                              2011A    2012A     2013E     2014E     2015E     2016E
Starting net (debt)/cash                      (170)    (581)     (551)     (436)     (280)      (93)
Net Income                                     151      188       238       284       322       364
- plus depreciaction & amortisation             60       64        78        92       107       124
- plus amortisation of acquired intangibles     25       29        29        29        29        19
- plus other non-cash items & adjusts           93      109       120       129       136       145
- less net interest income                      (20)     (24)      (24)      (21)      (16)      (14)
- less cash tax paid                            (53)     (73)      (80)      (91)    (107)     (129)
Operating cashflow (pre-WC)                    255      293       361       422       471       509
Working Capital                                 (40)     (57)      (45)      (50)      (53)      (56)
Operating cashflow                             215      236       316       373       418       453
Capex                                           (79)    (113)    (115)     (124)     (128)     (137)
> capex as % sales                             4.5%     5.5%      5.0%      5.0%      4.8%      4.8%
Acquisitions                                   (460)     (40)       (5)        0         0         0
Other Investing                                  (4)      (1)        0         0         0         0
Investing cashflow                            (543)    (154)     (120)     (124)     (128)     (137)
Dividends                                       (58)     (71)      (84)      (94)    (105)     (116)
Share Issuances / (Buybacks)                     (7)      (0)        2         2         2         2
Debt Issuance & Other Financing                357       (22)    (115)       64        33      (177)
Financing cashflow                             292      (93)     (196)      (28)      (70)     (291)
Change in net debt                             (411)     30       115       156       187       202
Y/E Net cash / (debt)                         (581)    (551)     (436)     (280)      (93)      110
Average Net cash / (debt)                      (375)    (566)    (493)     (358)     (186)         8
   > ND/EBITDA                                  1.1x     1.4x      1.1x      0.7x      0.3x      0.0x
Free cash flow                                 126      110       187       233       273       297
   > growth                                     2%     -13%       71%       24%       17%        9%
   > FCF/ share (p)                           77.15    67.46    114.55    141.59    165.21    179.14
Source: Barclays, Company data.




24 April 2013                                                                                     22
Barclays | Testing & Inspection


European Business Services                                                                                                    Industry View: POSITIVE

SGS SA (SGSN.VX)                                                                                                        Stock Rating: EQUAL WEIGHT


Income statement (CHFmn)                  2012A     2013E     2014E     2015E      CAGR      Price (22-Apr-2013)                      CHF 2,218.00
Revenue                                    5,578     6,091     6,625     7,233      9.0%     Price Target                             CHF 2,650.00
EBITDA (adj)                               1,204     1,365     1,584     1,794     14.2%     Why Equal Weight? Global industry leader; most
EBITA (adj)                                  941     1,053     1,212     1,359     13.0%     geographically & functionally diverse of the three
Pre-tax income (adj)                         906     1,014     1,177     1,328     13.6%     listed players. Ambitious 2014E targets appear a
Net income (adj)                             630       706       820       925     13.7%     stretch, but we see EPS growth of 15% this year, 16%
EPS (adj) (CHF)                            82.65     92.34    106.81    120.32     13.3%     next, with organic revenue growth averaging 9%. We
                                                                                             see downside risk in Minerals, where momentum
Diluted shares (mn)                           7.7       7.7       7.7       7.7     0.3%
                                                                                             could slow through this year and potentially into
DPS (CHF)                                  58.00     65.00     75.00     85.00     13.6%
                                                                                             next.

Margin and return data                                                            Average
                                                                                             Upside case                               CHF 3,060.00
EBITDA (adj) margin (%)                     21.6      22.4      23.9      24.8       23.2
                                                                                             Re-levering the balance sheet could lift forecast
EBITA (adj) margin (%)                      16.9      17.3      18.3      18.8       17.8    FY14E EPS by 4-7%. Should Mineral growth prove
Pre-tax (adj) margin (%)                    16.2      16.6      17.8      18.4       17.3    more robust and margins achieve planned targets,
Net (adj) margin (%)                        11.3      11.6      12.4      12.8       12.0    overall forecasts could be 15% higher. Applying a
ROIC (%)                                    18.8      20.5      21.7      22.5       20.9    10% premium to current multiple points to upside
ROE (%)                                     33.7      41.5      36.8      35.8       37.0    case of CHF3060.

Balance sheet and cash flow (CHFmn)                                                CAGR      Downside case                           CHF 1,930.00
Tangible fixed assets                      1,018    1,167      1,262     1,344      9.7%     Weaker macro backdrop and/or competitive issues
Intangible fixed assets                    1,181    1,211      1,183     1,139     -1.2%     lowers organic growth to 2%, erasing margin growth.
Cash and equivalents                         972    1,022      1,172     1,397     12.9%     Lowers FY14 EPS by 12%. Assuming a de-rating to
Total assets                               4,994    5,417      5,851     6,357      8.4%     historical average PE multiple of 20x implies a
                                                                                             valuation of CHF1930.
Short and long-term debt                   1,323    1,391      1,376     1,412      2.2%
Pension liabilities                          176      176        176       176      0.0%
                                                                                             Upside/Downside scenarios
Total liabilities                          2,876    2,999      3,070     3,220      3.8%
Net debt/(funds)                             335      352        187        -2       N/A
Shareholders' equity                       2,060    2,353      2,706     3,052     14.0%
Change in working capital                    -73      -90       -101      -113       N/A
Cash flow from operations                    800      950      1,141     1,319     18.1%
Capital expenditure                         -387     -432       -457      -492       N/A
Adjusted FCF                                 389      486        648       787     26.5%

Valuation and leverage metrics                                                    Average
P/E (adj) (x)                               26.8      24.0      20.8      18.4       22.5
EV/EBITDA (adj) (x)                         14.9      13.2      11.3      10.0       12.4
EV/EBITA (adj) (x)                          19.1      17.1      14.8      13.1       16.0
Adj FCF yield (%)                            2.3       2.9       3.8       4.6         3.4
EV/sales (x)                                 3.2       3.0       2.7       2.5         2.8
P/BV (x)                                     8.0       7.1       6.2       5.5         6.7
Dividend yield (%)                           2.6       2.9       3.4       3.8         3.2   POINT® Quantitative Equity Scores
Total debt/capital (%)                      39.1      37.2      33.7      31.6       35.4
                                                                                             Value
Net debt/mkt cap (%)                         2.0       2.1       1.1       0.0         1.3

Selected operating metrics
                                                                                             Quality
FCF/NI (x)                                   0.6       0.7       0.8       0.9
Capex/sales (%)                              6.9       7.1       6.9       6.8
D&A/sales (%)                                5.0       5.4       5.9       6.3               Sentiment
Organic growth (%)                          10.2       7.0       8.5       9.2



                                                                                                Low                                                High
                                                                                             Source: POINT. The scores are valid as of the date of this
                                                                                             report and are independent of the fundamental analysts'
                                                                                             views. To view the latest scores, click here.


Source: Company data, Barclays Research
Note: FY End Dec




24 April 2013                                                                                                                                             23
Barclays | Testing & Inspection


FIGURE 32
SGS segmental forecasts

December YE (CHF m)                  2011E    1H12E   2H12E   2012E   2013E   2014E   2015E
REVENUE
Agricultural Services                  327     173     196     370     417     468     514
> Organic Growth %                    5.7%    13.3%    8.9%   11.0%   11.0%   12.0%   10.0%
Mineral Services                       678     422     446     868     873     918    1,010
> Organic Growth %                   23.5%    20.6%    7.6%   13.8%   -3.5%    4.0%   10.0%
Oil, Gas & Chemical Services           912     499     547    1,046   1,177   1,306   1,437
> Organic Growth %                    7.7%    11.2%   12.0%   11.6%   11.0%   11.0%   10.0%
Life Science Services                  192      95     105     199     211     217     239
> Organic Growth %                    5.2%    -1.6%    3.6%    0.9%    3.0%    3.0%   10.0%
Consumer Testing Services              802     438     498     936    1,039   1,133   1,224
> Organic Growth %                   10.3%    11.5%   10.1%   10.8%    9.5%    9.0%    8.0%
System & Services Certification        364     186     209     395     423     461     498
> Organic Growth %                    5.6%     6.0%    6.4%    6.2%    7.0%    9.0%    8.0%
Industrial Services                    747     422     477     899    1,012   1,118   1,240
> Organic Growth %                   10.9%     9.0%   10.0%    9.5%    9.0%   10.0%   11.0%
Environmental Services                 284     151     171     323     354     385     415
> Organic Growth %                   13.1%     5.5%    7.7%    6.6%    7.5%    8.5%    8.0%
Automotive Services                    270     143     144     287     306     326     344
> Organic Growth %                    7.1%     5.3%    3.9%    4.6%    5.5%    6.5%    5.5%
Government & Institutions Services     222     122     134     256     277     294     312
> Organic Growth %                    6.6%    20.5%   14.4%   17.3%    8.0%    6.0%    6.0%
Total Revenue                        4,797    2,651   2,927   5,578   6,091   6,625   7,233
> Reported Growth %                   0.8%    13.1%   19.3%   16.3%    9.2%    8.8%    9.2%
> Group Organic Growth %             10.5%    11.1%    9.3%   10.2%    7.0%    8.5%    9.2%
> Acquisition/Disposal Growth %       3.2%     3.9%    4.8%    4.3%    1.9%    0.2%    0.0%
> Currency Effect Growth %           -12.9%   -1.8%    4.9%    1.8%    0.3%    0.0%    0.0%
EBITA (Dec YE, CHFm)                 2011E    1H12E   2H12E   2012E   2013E   2014E   2015E
Agricultural Services                   51      25      36      61      73      87      99
> EBIT margin %                      15.7%    14.4%   18.5%   16.6%   17.6%   18.6%   19.3%
Mineral Services                       131      78      86     163     151     164     190
> EBIT margin %                      19.4%    18.4%   19.2%   18.8%   17.3%   17.8%   18.8%
Oil, Gas & Chemical Services           123      61      78     139     171     212     242
> EBIT margin %                      13.5%    12.2%   14.3%   13.3%   14.6%   16.3%   16.9%
Life Science Services                   21       8      10      17      24      32      36
> EBIT margin %                      10.8%     7.9%    9.4%    8.7%   11.5%   14.5%   15.0%
Consumer Testing Services              203      99     134     233     258     279     297
> EBIT margin %                      25.3%    22.5%   26.9%   24.9%   24.8%   24.6%   24.3%
System & Services Certification         68      31      42      74      82      95     106
> EBIT margin %                      18.7%    16.9%   20.2%   18.7%   19.5%   20.7%   21.3%
Industrial Services & Emerging          80      40      60     100     123     156     186
> EBIT margin %                      10.7%     9.5%   12.6%   11.2%   12.2%   14.0%   15.0%
Environmental Services                  27      12      22      34      40      47      53
> EBIT margin %                       9.4%     8.0%   13.0%   10.6%   11.3%   12.3%   12.7%
Automotive Services                     59      31      32      63      69      75      80
> EBIT margin %                      21.9%    21.8%   22.4%   22.1%   22.5%   23.0%   23.2%
Government & Institutions Services      52      28      27      55      61      66      70
> EBIT margin %                      23.4%    22.8%   20.3%   21.5%   21.9%   22.3%   22.5%
Adj. EBIT (EBITA)                      815     413     528     941    1,053   1,212   1,359
> Reported Growth %                   -3.9%   10.3%   19.8%   15.4%   11.9%   15.1%   12.1%
> Margin %                           17.0%    15.6%   18.1%   16.9%   17.3%   18.3%   18.8%
Source: Barclays, Company data.



24 April 2013                                                                            24
Barclays | Testing & Inspection




FIGURE 33
SGS Profit & Loss
December YE (CHF mn)                   2011A    2012A    2013E    2014E    2015E    2016E
Group Revenue                          4,797    5,578    6,091    6,625    7,233    7,870
  > reported growth                      0.8%   16.3%      9.2%     8.8%     9.2%     8.8%
   > organic growth                    10.5%    10.2%     7.0%     8.5%     9.2%     8.8%
   > acquisition / disposal             3.2%     4.3%     1.9%     0.2%     0.0%     0.0%
   > FX                                -12.9%    1.8%     0.3%     0.0%     0.0%     0.0%
EBITDA (inc. associates)               1,040    1,222    1,383    1,602    1,812    2,015
   > EBITDA margin                     21.7%    21.9%    22.7%    24.2%    25.1%    25.6%
D&A                                     (225)    (281)    (330)    (390)    (453)    (507)
EBITA (adj)                              815      941    1,053    1,212    1,359    1,508
   > EBITA margin                      17.0%    16.9%    17.3%    18.3%    18.8%    19.2%
EBIT adjustments                         (25)     (98)     (18)     (18)     (18)     (18)
Amortisation of acquired intangibles     (16)     (18)     (18)     (18)     (18)     (18)
Restructuring costs                        0      (55)       0        0        0        0
Other exceptional income/(expense)         0      (13)       0        0        0        0
Transaction-related costs                 (9)     (12)       0        0        0        0
EBIT (reported)                         790       843    1,035    1,194    1,341    1,490
Net interest (adj)                       (26)     (35)     (39)     (35)     (31)     (30)
PBT (adj)                                789      906    1,014    1,177    1,328    1,478
   > growth                             -6.2%   14.8%    11.9%    16.1%    12.8%    11.3%
PBT (reported)                           764      808     996     1,159    1,310    1,460
   > reported growth                    -7.8%    5.7%    23.3%    16.4%    13.0%    11.4%
Adj. tax                                (205)    (242)    (269)    (313)    (353)    (394)
Effective tax rate                     26.0%    26.7%    26.5%    26.6%    26.6%    26.7%
Minority Interests                       (27)     (34)     (39)     (45)     (49)     (54)
Attributable profit (adj)                557      630     706      820      925     1,029
   > growth                            -7.0%    13.0%    12.1%    16.1%    12.9%    11.3%
Attributable profit (reported)           534      556     688      802      907     1,011
EPS (reported, basic)                     71       73      90      104      118      131
EPS (reported, dil)                       70       72      89      104      117      131
EPS (adj, basic)                        73.5     82.6     92.3    106.8    120.3    133.8
   > growth                            -7.1%    12.4%    11.7%    15.7%    12.6%    11.2%
EPS (adj, dil)                          73.2     82.1     91.7    106.1    119.6    132.9
   > growth                            -7.0%    12.3%    11.7%    15.7%    12.6%    11.2%
Dividend per share (CHF)                65.0     58.0     65.0     75.0     85.0     90.0
   > growth                             0.0%    -10.8%   12.1%    15.4%    13.3%     5.9%
Basic weighted avg shares (m)          7,578    7,622    7,646    7,672    7,688    7,695
   > growth                             0.1%     0.6%     0.3%     0.3%     0.2%     0.1%
Diluted weighted avgshares (m)         7,617    7,671    7,695    7,721    7,737    7,744
Source: Barclays, Company data.




24 April 2013                                                                           25
Barclays | Testing & Inspection


FIGURE 34
SGS Statement of Cash Flow

December YE (CHF m)                           2011A    2012A    2013E   2014E    2015E    2016E
Starting net (debt)/cash                       259      (95)    (335)   (352)    (187)       2
Net Income                                     561      590      727     846      956     1,066
- plus depreciaction                           185      222      267     317      360      408
- plus amortisation of acquired intangibles     40       59       63      74       93      100
- plus other non-cash items                    208      212      291     353      406      463
- less net interest income                      (11)       0     (39)     (35)     (31)     (30)
- less cash tax paid                           (220)    (210)   (269)    (313)    (353)    (394)
Working Capital                                 (84)     (73)    (90)    (101)    (113)    (124)
Operating cashflow (Barclays)                  679      800      950    1,141    1,319    1,488
Capex                                          (345)    (387)   (432)    (457)    (492)    (535)
   > as % revenue                              7.2%     6.9%     7.1%    6.9%     6.8%     6.8%
Acquisitions                                   (112)    (182)    (76)       0        0        0
Other Investing                                   4      10        0        0        0        0
Investing cashflow (Barclays)                 (453)    (559)    (508)   (457)    (492)    (535)
Dividends                                      (494)    (497)   (443)    (498)    (576)    (654)
Share Issuances / (Buybacks)                    (68)     (12)    (40)     (50)     (93)     (94)
Debt Issuance & Other Financing                695       52       52      (21)     37       66
Financing cashflow (Barclays)                  133     (457)    (431)   (569)    (632)    (682)
FX/ other                                       (20)     (36)      0        0        0        0
Change in net debt                             (354)    (240)    (17)    165      189      239
Y/E Net cash / (debt)                           (95)    (335)   (352)    (187)       2     241
   > Avg net debt as x EBITDA                  -0.1x    0.2x     0.2x     0.2x     0.1x    -0.1x
Free cash flow                                 318      389      486     648      787      909
   > growth                                    -35%     22%      25%     33%      22%      15%
   > FCF per share (CHF)                       41.8     50.7     63.2    83.9    101.7    117.4
Source: Barclays, Company data.




24 April 2013                                                                                26
Barclays | Testing & Inspection


Testing and Inspection companies: comparable segment exposure
                       % Group Sales
                                                                                                                                    Degree
                                                                                                                        Degree       of
Segment /                                   Mkt size Mid-term                                                           of out-     fragmen-
Industry          SGS       BV     ITRK     (2012e) growth Growth factors                                               sourcing    tation     Competitive environment
Industry          13%      22%     24%       $24bn    9-11% Migration of manufacturing to low-cost countries.           Medium      High       A few large EU global players (BV, DNV, TUV Sud, TUV Rheinland,
                                                              Increase investment in industrial infrastructure (Oil &                          TUV Nord, SGS, Lloyd's Registrer, Applus, Apave, Moody Int'l). Large
                                                              Gas, Power, Mining) and in certain countries (BRIC).                             number of specialist local players. BV #1 with 4% mkt share. Top 8
                                                              New QHSE regulations.                                                            only 20% mkt share.

Commodities       41%      18%     29%       $8bn+     8-10%    Int'l trade. Price variations driving frequent trade. Medium        Medium
                                                                Tighter QHSE regulations. Outsourcing of lab testing.

  > Oil, Gas      19%       6%     22%                          Penetration of Upstream, including fluid testing,       Medium      Medium     Trade inspection dominated by SGS (#1), Intertek (#2), BV (#4).
  & Chemicals                                                   metering, wellhead testing. Growth in Int’l trade.                             ITRK #1 in US, BV #2. SGS strongest in Exploration, ITRK more
                                                                                                                                               skewed towards Production.
  > Minerals      16%      10%         6%                       Lower grades and more technical mine sites mean         Medium      Low        SGS #1, BV #2, ALS #3.
                                                                more testing needed.

  > Agriculture   7%        2%         1%                       Moving beyond trade inspection, to seed testing,        Medium      High       SGS only major global player. Largely a local business. Peterson
                                                                consulting.                                                                    Control Union #2. BV #3.

Consumer          17%      11%     33%       $11bn      5-8%    Shorter product lifecycles. Outsourcing inspection      Medium      Medium     Relatively concentrated market for toys, textiles & furnishings, with
  > Hardlines      4%       4%      8%        $1bn              and verification. New regulations. Supply chain                                BV, SGS and ITRK world leaders. More fragmented market for E&E
  > Softlines      4%       5%      9%        $1bn              optimisation. Market opportunity is 48% Food, only                             (UL is leader ahead of ITRK), and Food (Eurofins and SGS).
  > E&E            5%       3%     15%        $3bn              10% Softlines, 14% Hardlines, 28% E&E.
  > Food / HPC     3%       0%      1%        $5bn
Construction       2%      11%       --      $34bn      3-7%    New regulation (high-performance, energy                Low         High       A few large regional players (Socotec and Apave in FR; PSI and RPS
                                                                efficiency). Privatisation. New asset management                               in US; Nihon Teri in Japan), many local players. BV only global player.
                                                                assistance services.

In-Service        2%       12%         --    $14bn      5-7%    Regulatory harmonisation in Europe. Privatisation.      Low         High       A few large local or EU players (BV, Apave, Norisko-Dekra, Socotec,
Inspection                                                      Outsourcing of inspection.                                                     TUV Sud, TUV Rheinland, Lloyd's Register, insurance companies).
& Verification                                                                                                                                 Many local specialists.

Certification     7%        9%         3%    $6bn      10-13% Globalisation of ISO standards. New certification         High        High       A few global players (BV, SGS, DNV, BSI, Lloyd's Register), quasi-
                                                              schemes.                                                                         state-owned nat'l certification bodies, and many local players

Gov't & Trade     10%       7%         3%    $6bn       5-8%    Growth in Int'l trade. Increasing demand for trade      High (except Low       Four main players for gov't services (SGS, ITRK, BV and Cotecna).
(Incl Auto)                                                     security.                                               for tailor-            Main players in Auto: Dekra, TUV Sud, Applus.
                                                                                                                        made
                                                                                                                        audits)
Marine            --        8%         --    $4bn       5-8%    Growth in Int'l trade; New regulations; Migration of    High        Medium     11 members of the Int'l Association of Classfications Societies
                                                                manufacturing to Asia                                                          (IACS), incl BV, class c94% of global shipping fleet.
Life Sciences/    4%        --         8%    $7bn       2-5%    Emergence of Biosimilars. Pipeline execution.
Pharma                                                          Increased scrutiny of clinical trial efficacy.
Environmental     6%                         $6bn       2-5%




24 April 2013                                                                                                                                                                                                          27
Barclays | Testing & Inspection



                                  FIGURE 35 SGS segment exposure (bubble size represents % Group 2012 revenue)



SGS overweight Commodities,
moderately sized Consumer but                             26%
                                                                      Auto, 5%                                       Consumer, 17%
low relative Industry exposure.                           24%                                Gov't &
Only listed TIC with high-                                                              Institutions, 5%
                                                          22%




                                   EBITA Margin (2013E)
margin Auto statutory vehicle
                                                          20%                    Certification, 7%
inspection.
                                                          18%
                                                                                                                               Commodities*,
                                                          16%                                                                     41%        Industry, 16%
                                                          14%
                                                          12%
                                                                         Life Sci, 4%                        Environmental, 6%
                                                          10%
                                                                5%         6%              7%          8%          9%           10%       11%           12%
                                                                                                  Organic growth (2013-15E)


                                  FIGURE 36 Bureau Veritas segment exposure (bubble size represents % Group 2012
                                  revenue)
BV largest “Core” Industry                                30%
business, smaller than peers in                                        Marine, 8%                          Consumer, 11%

Commodities and Consumer.                                 25%
Only listed TIC with high-
                                   EBITA Margin (2013E)




margin Marine business, and                                              Certification, 9%
                                                          20%                                               Gov't Services &
largest Construction/ In-                                                                                     Trade, 7%
Service segment.
                                                          15% Construction, 11%

                                                                                                     Commodities,
                                                          10%
                                                                                                        18%                                Industry, 22%
                                                                                 In-service
                                                                             verification, 12%
                                                           5%
                                                                3%              5%                 7%             9%             11%            13%
                                                                                                Organic growth (2013-15E)


                                  FIGURE 37 Intertek segment exposure (bubble size represents % Group 2012 revenue)
Nearly one third each in                                  28%
Industry, Consumer (broken                                26%
into “Consumer” and                                                                                                                       Consumer*, 32%
                                                          24%
“Commercial & Electrical”) and                            22%
                                   EBITA Margin (2013E)




Commodities. Flagging                                     20%
                                                                     Commodities,
Chemicals & Pharma has                                    18%           28%
struggled over last two years.                                                                                                          Industry, 32%
                                                          16%
                                                          14%
                                                                                     Chem & Pharma,
                                                          12%                             8%
                                                          10%
                                                          8%
                                                                6%                         7%                     8%                       9%
                                                                                                 Organic growth (2013-15E)

                                  Source for all Figures this page: Barclays Research estimates, Company documents. *Divisions adjusted for
                                  comparability; SGS Commodities combines Minerals, Oil & Gas, and Agri. Intertek Consumer combines Consumer and
                                  Commercial & Electrical.




24 April 2013                                                                                                                                                 28
Barclays | Testing & Inspection


ANALYST(S) CERTIFICATION(S)
We, Paul Sullivan, Joshua Veit and Paul Checketts, hereby certify (1) that the views expressed in this research report accurately reflect our
personal views about any or all of the subject securities or issuers referred to in this research report and (2) no part of our compensation was, is
or will be directly or indirectly related to the specific recommendations or views expressed in this research report.
The POINT® Quantitative Equity Scores (POINT Scores) referenced herein are produced by the firm’s POINT quantitative model and Barclays
hereby certifies that (1) the views expressed in this research report accurately reflect the firm's POINT Scores model and (2) no part of the firm's
compensation was, is or will be directly or indirectly related to the specific recommendations or views expressed in this research report.



IMPORTANT DISCLOSURES CONTINUED
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individually, "Barclays"). For current important disclosures regarding companies that are the subject of this research report, please send a written
request to: Barclays Research Compliance, 745 Seventh Avenue, 17th Floor, New York, NY 10019 or refer to http://publicresearch.barclays.com
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The analysts responsible for preparing this research report have received compensation based upon various factors including the firm's total
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The Corporate and Investment Banking division of Barclays produces a variety of research products including, but not limited to, fundamental
analysis, equity-linked analysis, quantitative analysis, and trade ideas. Recommendations contained in one type of research product may differ
from recommendations contained in other types of research products, whether as a result of differing time horizons, methodologies, or
otherwise.
Primary Stocks (Ticker, Date, Price)
Bureau Veritas SA (BVI.PA, 22-Apr-2013, EUR 90.86), Underweight/Positive, F/J/K/M
Intertek Group plc (ITRK.L, 22-Apr-2013, GBp 3334.0), Overweight/Positive, C/J
SGS SA (SGSN.VX, 22-Apr-2013, CHF 2218.00), Equal Weight/Positive, C/J




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24 April 2013                                                                                                                                          29
Barclays | Testing & Inspection


IMPORTANT DISCLOSURES CONTINUED
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remuneration, other than normal course investment advisory or trade execution services.
Q: The Corporate and Investment Banking division of Barclays Bank PLC, is a Corporate Broker to this issuer.
R: Barclays Capital Canada Inc. and/or an affiliate has received compensation for investment banking services from this issuer in the past 12
months.
S: Barclays Capital Canada Inc. is a market-maker in an equity or equity related security issued by this issuer.


Guide to the Barclays Fundamental Equity Research Rating System:
Our coverage analysts use a relative rating system in which they rate stocks as Overweight, Equal Weight or Underweight (see definitions below)
relative to other companies covered by the analyst or a team of analysts that are deemed to be in the same industry (the "industry coverage
universe").
In addition to the stock rating, we provide industry views which rate the outlook for the industry coverage universe as Positive, Neutral or
Negative (see definitions below). A rating system using terms such as buy, hold and sell is not the equivalent of our rating system. Investors
should carefully read the entire research report including the definitions of all ratings and not infer its contents from ratings alone.
Stock Rating
Overweight - The stock is expected to outperform the unweighted expected total return of the industry coverage universe over a 12-month
investment horizon.
Equal Weight - The stock is expected to perform in line with the unweighted expected total return of the industry coverage universe over a 12-
month investment horizon.
Underweight - The stock is expected to underperform the unweighted expected total return of the industry coverage universe over a 12-month
investment horizon.
Rating Suspended - The rating and target price have been suspended temporarily due to market events that made coverage impracticable or to
comply with applicable regulations and/or firm policies in certain circumstances including where the Corporate and Investment Banking Division
of Barclays is acting in an advisory capacity in a merger or strategic transaction involving the company.
Industry View
Positive - industry coverage universe fundamentals/valuations are improving.
Neutral - industry coverage universe fundamentals/valuations are steady, neither improving nor deteriorating.
Negative - industry coverage universe fundamentals/valuations are deteriorating.
Below is the list of companies that constitute the "industry coverage universe":

European Business Services
Adecco SA (ADEN.VX)                                      Aggreko (AGGK.L)                       APR Energy (APREN.L)
Bunzl plc (BNZL.L)                                       Bureau Veritas SA (BVI.PA)             Capita Group Plc (CPI.L)
Crest Nicholson Holdings, plc. (CRST.L)                  Experian PLC (EXPN.L)                  G4S plc (GFS.L)
Hays plc (HAYS.L)                                        Intertek Group plc (ITRK.L)            Michael Page International plc (MPI.L)
Randstad Holding NV (RAND.AS)                            Rexam (REX.L)                          Securitas AB (SECUb.ST)
Serco Group plc (SRP.L)                                  SGS SA (SGSN.VX)                       Travis Perkins (TPK.L)
Wolseley (WOS.L)


Distribution of Ratings:
Barclays Equity Research has 2360 companies under coverage.
44% have been assigned an Overweight rating which, for purposes of mandatory regulatory disclosures, is classified as a Buy rating; 53% of
companies with this rating are investment banking clients of the Firm.
40% have been assigned an Equal Weight rating which, for purposes of mandatory regulatory disclosures, is classified as a Hold rating; 49% of
companies with this rating are investment banking clients of the Firm.
13% have been assigned an Underweight rating which, for purposes of mandatory regulatory disclosures, is classified as a Sell rating; 42% of
companies with this rating are investment banking clients of the Firm.
Guide to the Barclays Research Price Target:


24 April 2013                                                                                                                                   30
Barclays | Testing & Inspection


IMPORTANT DISCLOSURES CONTINUED
Each analyst has a single price target on the stocks that they cover. The price target represents that analyst's expectation of where the stock will
trade in the next 12 months. Upside/downside scenarios, where provided, represent potential upside/potential downside to each analyst's price
target over the same 12-month period.
Guide to the POINT® Quantitative Equity Scores:
The POINT Quantitative Equity Scores (POINT Scores) are based on consensus historical data and are independent of the Barclays fundamental
analysts’ views. Each score is composed of a number of standard industry metrics.
A high/low Value score indicates attractive/unattractive valuation. Measures of value include P/E, EV/EBITDA and Free Cash Flow.
A high/low Quality score indicates financial statement strength/weakness. Measures of quality include ROIC and corporate default probability.
A high/low Sentiment score indicates bullish/bearish market sentiment. Measures of sentiment include price momentum and earnings revisions.
These scores are valid as of the date of this report. To view the latest scores, which are updated monthly, click here.
For a more detailed description of the underlying methodology for each score, please click here.
Barclays offices involved in the production of equity research:
London
Barclays Bank PLC (Barclays, London)
New York
Barclays Capital Inc. (BCI, New York)
Tokyo
Barclays Securities Japan Limited (BSJL, Tokyo)
São Paulo
Banco Barclays S.A. (BBSA, São Paulo)
Hong Kong
Barclays Bank PLC, Hong Kong branch (Barclays Bank, Hong Kong)
Toronto
Barclays Capital Canada Inc. (BCCI, Toronto)
Johannesburg
Absa Capital, a division of Absa Bank Limited (Absa Capital, Johannesburg)
Mexico City
Barclays Bank Mexico, S.A. (BBMX, Mexico City)
Taiwan
Barclays Capital Securities Taiwan Limited (BCSTW, Taiwan)
Seoul
Barclays Capital Securities Limited (BCSL, Seoul)
Mumbai
Barclays Securities (India) Private Limited (BSIPL, Mumbai)
Singapore
Barclays Bank PLC, Singapore branch (Barclays Bank, Singapore)




24 April 2013                                                                                                                                    31
Barclays | Testing & Inspection


IMPORTANT DISCLOSURES CONTINUED
Bureau Veritas SA (BVI FP / BVI.PA)                                                   Stock Rating                                 Industry View
EUR 90.86 (22-Apr-2013)                                                               UNDERWEIGHT                                      POSITIVE
Rating and Price Target Chart - EUR (as of 22-Apr-2013)                               Currency=EUR

                                                                                      Date           Closing Price     Rating       Price Target
   110
                                                                                      08-Mar-2013       98.77        Underweight          102.00

   100



    90



    80



    70



    60



    50



    40



    30
         Jul- 2010    Jan- 2011      Jul- 2011    Jan- 2012   Jul- 2012   Jan- 2013

                     Closing Price         Target Price       Rating Change


Link to Barclays Live for interactive charting

F: Barclays Bank PLC and/or an affiliate beneficially owned 1% or more of a class of equity securities of Bureau Veritas SA as of the end of the
month prior to the research report's issuance.
J: Barclays Bank PLC and/or an affiliate trades regularly in the securities of Bureau Veritas SA.
K: Barclays Bank PLC and/or an affiliate has received non-investment banking related compensation from Bureau Veritas SA within the past 12
months.
M: Bureau Veritas SA is, or during the past 12 months has been, a non-investment banking client (securities related services) of Barclays Bank PLC
and/or an affiliate.
Valuation Methodology: Our price objective is based on a DCF, using a weighted average cost of capital of 7.7%, long term growth of +3% and a
terminal incremental ROCE of 15%. This compares to an historical ROCE of 23% at Bureau Veritas.
Risks which May Impede the Achievement of the Barclays Research Price Target: Upside risks include: 1) a reacceleration in Minerals
exploration and other more cyclical activities which could drive higher organic growth and margin expansion; and 2) further safety legislation
could drive another surge in Consumer revenues.




24 April 2013                                                                                                                                  32
Barclays | Testing & Inspection


IMPORTANT DISCLOSURES CONTINUED
Intertek Group plc (ITRK LN / ITRK.L)                                                   Stock Rating                                Industry View
GBP 33.34 (22-Apr-2013)                                                                 OVERWEIGHT                                     POSITIVE
Rating and Price Target Chart - GBP (as of 22-Apr-2013)                                 Currency=GBP

                                                                                        Date           Closing Price     Rating     Price Target
   45
                                                                                        08-Mar-2013       34.36        Overweight          40.00

   40



   35



   30



   25



   20



   15



   10

        Jul- 2010   Jan- 2011       Jul- 2011    Jan- 2012   Jul- 2012   Jan- 2013

                    Closing Price          Target Price      Rating Change


Link to Barclays Live for interactive charting

C: Barclays Bank PLC and/or an affiliate is a market-maker and/or liquidity provider in securities issued by Intertek Group plc or one of its
affiliates.
J: Barclays Bank PLC and/or an affiliate trades regularly in the securities of Intertek Group plc.
Valuation Methodology: Our price objective is based on a DCF, using a weighted average cost of capital of 7.7%, long term growth of +3% and a
terminal incremental ROCE of 15%. This compares to an historical ROCE of 26% at Intertek.
Risks which May Impede the Achievement of the Barclays Research Price Target: 1) the pace of slowdown in Commodities and Minerals in
particular; 2) risk to Consumer margins; 3) pace and use of cashflow and balance sheet; 4) Operational gearing in Industry as attention turns to
margin from organic growth.




24 April 2013                                                                                                                                  33
Barclays | Testing & Inspection


IMPORTANT DISCLOSURES CONTINUED
SGS SA (SGSN VX / SGSN.VX)                                                               Stock Rating                                   Industry View
CHF 2218.00 (22-Apr-2013)                                                                EQUAL WEIGHT                                       POSITIVE
Rating and Price Target Chart - CHF (as of 22-Apr-2013)                                  Currency=CHF

                                                                                         Date           Closing Price      Rating        Price Target

   2,800
                                                                                         08-Mar-2013      2415.00       Equal Weight            2700.00

   2,600


   2,400


   2,200


   2,000


   1,800


   1,600


   1,400


   1,200


           Jul- 2010     Jan- 2011     Jul- 2011    Jan- 2012    Jul- 2012   Jan- 2013

                       Closing Price        Target Price        Rating Change


Link to Barclays Live for interactive charting

C: Barclays Bank PLC and/or an affiliate is a market-maker and/or liquidity provider in securities issued by SGS SA or one of its affiliates.
J: Barclays Bank PLC and/or an affiliate trades regularly in the securities of SGS SA.
Valuation Methodology: Our price objective is based on a DCF, using a weighted average cost of capital of 7.7%, long term growth of +3% and a
terminal incremental ROCE of 15%. This compares to an historical ROCE of 29% at SGS.
Risks which May Impede the Achievement of the Barclays Research Price Target: Upside risks include: 1) a reacceleration in Minerals
exploration and other more cyclical activities could drive higher organic growth and margin expansion; 2) further safety legislation could drive
another surge in Consumer revenues.Downside risks include: 1) the pace of slowdown in Commodities and Minerals; 2) risk to Consumer
margins; 3) pace and use of cashflow and balance sheet; and 4) Swiss franc strength.




24 April 2013                                                                                                                                        34
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