2013/14 Andrew Williams Chief Executive Kevin Thompson Finance - PowerPoint PPT Presentation

Half Year results 2013/14 Andrew Williams – Chief Executive Kevin Thompson – Finance Director Halma Half Year results – November 2013

Summary Half Year 2013/14 Revenue Profit ROS Growth & +12% +9% 19.5% High returns £333m £65.1m (LY: 20.0%) R&D spend ROW revenue Portfolio Strategic +10% +13% £17m spend investment Inc. earn-outs £16.4m £84m Cash flow Dividend Net Debt Good cash 86% +7% £110m performance of adjusted profit £110m Mar 2013 4.35p Halma Half Year results – November 2013

Financial Review Halma Half Year results – November 2013

Record results H1, 2013/14 Revenue Profit* £m 70 £65.1m £333m 350 60 300 50 250 40 200 30 150 20 100 10 50 0 0 2009 2010 2011 2012 2013 2009 2010 2011 2012 2013 * Profit before amortisation of acquired intangibles, acquisition costs and profit on disposal of operations 2012 HY profit has been restated by £1.1m to reflect changes to IAS19 accounting for pensions. Earlier periods have not been changed Halma Half Year results – November 2013

Revenue growth H1, 2013/14 % growth  Headline growth 12%  Prior year disposal 2%  Excluding disposal 14% (6)%  Acquisitions  Organic growth 8%  Currency (2)%  Organic constant currency growth 6% Halma Half Year results – November 2013

Revenue by destination Revenue and revenue growth, H1 2013/14 (excluding disposals) Other 12% UK Asia Pacific 13% 8% 19% 16% 17% 24% Europe USA 32% 10% 17% Halma Half Year results – November 2013

Revenue by destination: O rganic constant currency Revenue and revenue growth, H1 2013/14 Other 7% UK Asia Pacific 6% 6% Europe USA 4% 6% Halma Half Year results – November 2013

Profit* Bridge £m Acquisitions** Organic Profit* IAS 19 Profit* Currency Disposal Profit* ccy 1.2 3.6 (0.9) 1.5 (1.1) 65.1 57.5 59.7 60.8 H1 12/13 H1 12/13 H1 13/14 As reported Restated * Profit before amortisation of acquired intangibles, acquisition costs and profit on disposal of operations ** Net of financing costs Halma Half Year results – November 2013

Strong Returns Return on Sales  Range 18-22%  H1 2013/14 19.5% (H1, 2012/13: 20.0%) ROCE* 71.3% (H1, 2012/13: 71.0%) ROTIC** 15.6% (H1, 2012/13: 16.1%) * Return on Capital Employed ** Return on Total Invested Capital Prior year restated to include the impact of IAS19 accounting for pension costs Halma Half Year results – November 2013

Cash flow H1 2013/14 Debt b/f Mar 13 0 Working capital: outflow £7m (H1, 2012/13: £9m) £(20)m Acquisitions: £17m spend including £14m earn-outs Working £(40)m capital Capex > Profit Depn Tax £(60)m Pensions Acquisitions £(80)m Dividend Disposal Dividend: 7% increase £(100)m Other (net) Debt: £109.8m net debt (March 2013: £110.3m net Debt c/f debt) £(120)m Sep 13 Halma Half Year results – November 2013

Strong financial position  £260m facility – 5 years to 2016  Comfortable with net debt up to 1.25x EBITDA (H1: 0.7x)  Funding options available Halma Half Year results – November 2013

Trading Review Halma Half Year results – November 2013

Sector performances (excluding disposal) Revenue Profit* Environmental & Environmental & Process Process Analysis Analysis Safety Safety (3)% +9% +11% +8% 21% 19% 23% 25% £71m £333m 46% 27% 29% 32% 24% Medical Medical Infrastructure Infrastructure +36% +27% Safety Safety +7% +10% Profit before amortisation of acquired intangibles, acquisition costs and profit on disposal of operations and excluding finance and central administration costs Halma Half Year results – November 2013

Process Safety : Trading performance (excluding disposal) Revenue: +8% Profit: +11% £m £m Organic ccy: +7% Organic ccy: +11% 120 25 100 20 £16m 80 15 £62m 60 10 40 5 20 0 0 2009 2010 2011 2012 2013 2009 2010 2011 2012 2013 Return on Sales: 26% Halma Half Year results – November 2013

Process Safety : Revenue by destination % of sector & % growth (excluding disposal) Other UK +5% 0% 11% 22% Asia Pacific +33% 19% 25% Europe (2)% 23% USA +15% Halma Half Year results – November 2013

Process Safety : Revenue by end market % of sector (excluding disposal) Buildings 6% 16% Utilities 15% 1% Science/Env Process 37% 25% Energy/Res Others Halma Half Year results – November 2013

Infrastructure Safety : Trading performance Revenue: +7% Profit: +10% £m £m Organic ccy: +4% Organic ccy: +6% 120 25 £107m £21m 100 20 80 15 60 10 40 5 20 0 0 2009 2010 2011 2012 2013 2009 2010 2011 2012 2013 Return on Sales: 19.2% Halma Half Year results – November 2013

Infrastructure Safety : Revenue by destination % of sector & % growth Other +8% Asia Pacific UK 7% +4% +2% 26% 16% 21% USA 30% +8% Europe +12% Halma Half Year results – November 2013

Infrastructure Safety : Revenue by end market % of sector 2% Buildings Others 98% Halma Half Year results – November 2013

Medical : Trading performance Revenue: +36% Profit: +27% £m £m Organic ccy: +11% Organic ccy: +1% 120 25 £20m 100 20 £81m 80 15 60 10 40 5 20 0 0 2009 2010 2011 2012 2013 2009 2010 2011 2012 2013 Return on Sales: 24.2% Halma Half Year results – November 2013

Medical : Revenue by destination % of sector & % growth UK Other +25% +16% 6% 11% Asia Pacific Europe +69% +20% 16% 22% 45% USA +41% Halma Half Year results – November 2013

Medical : Revenue by end market % of sector 1% 4% 5% Health/Medical Science/Env 90% Process Others Halma Half Year results – November 2013

Environmental & Analysis : Trading performance Revenue: +9% Profit: (3)% £m £m Organic ccy: +3% Organic ccy: (9)% 120 25 100 20 £83m 80 £15m 15 60 10 40 5 20 0 0 2009 2010 2011 2012 2013 2009 2010 2011 2012 2013 Return on Sales: 18.2% Halma Half Year results – November 2013

Environmental & Analysis : Revenue by destination % of sector & % growth Other +9% UK +61% 7% 19% Asia Pacific 17% (9)% Europe 16% +7% 41% USA +4% Halma Half Year results – November 2013

Environmental & Analysis : Revenue by end market % of sector 1% Buildings 21% Utilities 25% Health/Medical 1% Science/Env 8% 6% Process Energy/Res 38% Others Halma Half Year results – November 2013

Priorities 2013/14  Organic growth  E&A Improvement  Strategic Investment  Portfolio Management  Acquisition integration  Opportunity pipeline progression Halma Half Year results – November 2013

People Development: Building the talent pipeline Halma Half Year results – November 2013

Portfolio Management : Acquisition pipeline - typical year Subsidiaries Trade Shows Halma Group Search Brokers 500 New leads & prior year prospects 50 Qualified target Cultivating contact 25 10 Active discussion 2 or 3 Completed Halma Half Year results – November 2013

Summary: Outlook statement 2013/14 “Order intake since the period end has continued to be slightly ahead of revenue and in line with our expectations. Halma remains on track to make further progress in the second half of the year .” Halma Half Year results – November 2013

Questions Halma Half Year results – November 2013

Appendices Halma Half Year results – November 2013

Currency impacts € % % $ change change Average rates 13/14 12/13 13/14 12/13 • H1 v £ 1.54 1.58 2.5% 1.17 1.25 6.4% • Full Year v £ N/A 1.58 N/A 1.23 • 1% change* (Annual € (~15% of total) $ (~ 40% of total) impact) Revenue +/- £2.7m +/- £0.8m Profit +/- £0.5m +/- £0.2m • At $1.58/ € 1.18 Average rates for the year 2013/14 profit would increase by a net amount of £1.1m (1%) compared with using 2012/13 Fx rates**. * Based on 2013/14 Half year results ** Based on consensus 2013/14 results Halma Half Year results – November 2013

Pensions DB plans Deficit Sept 13 March 13 £m £m Assets 179.2 176.3 Liabilities (220.0) (223.5) Deficit (40.8) (47.2)  Closed DB plans to new members in 2003  Contributions to pay off deficit : £7m/year  IAS 19: Comparatives restated Profit reduction HY, 12/13: £1.1m FY, 12/13: £2.1m (of which £0.8m in central costs) Halma Half Year results – November 2013

Acquisitions Consideration Initial Maximum Earn out 2013/14 Acquisitions Acquired £m EBIT* £m £m Talentum April 13 3 0 0.6 3 0 0.6 Earn-outs re prior year acquisitions - Cash 14 17 * At acquisition run-rate Halma Half Year results – November 2013

Impact of M&A Revenue * Actual Expected Expected £m H1 13/14 H2 13/14 Full Year 13/14 Acquisitions/Disposal 12/13 10 9 19 Acquisitions/Disposal 13/14 1 1 2 11 10 21 Profit after financing costs * Actual Expected Expected £m H1 13/14 H2 13/14 Full Year 13/14 Acquisitions/Disposal 12/13 2.4 1.8 4.2 Acquisitions/Disposal 13/14 0.3 0.3 0.6 2.7 2.1 4.8 * at acquisition/disposal run-rate Halma Half Year results – November 2013