Capital Markets Day 14 February, 2013 Andrew Williams – Chief Executive Kevin Thompson – Finance Director Adam Meyers – Director
Strategic model Active portfolio Long-term market drivers management Financial model Niche products & strong Organisational agility market positions Halma Capital Markets Day – February 2013
Sustained growth 140 600 Revenue Profit* £m £m 120 500 100 400 80 300 60 200 40 100 20 0 0 72/73 75/76 78/79 81/82 84/85 87/88 90/91 93/4 96/7 99/0 02/3 05/6 08/9 11/12 72/3 75/6 78/9 81/2 84/5 87/8 90/1 93/4 96/7 99/0 02/3 05/06 08/09 11/12 * Before tax, amortisation of intangibles, acquisition costs, movement on contingent consideration and profit on disposal of operations Halma Capital Markets Day – February 2013
% High returns 10 15 20 25 0 5 72/3 75/6 Halma Capital Markets Day – February 2013 78/9 81/2 Return on sales 84/5 87/8 90/1 93/4 96/7 99/0 02/3 05/6 08/9 11/2 pence 10 0 2 4 6 8 72/3 75/6 Dividend per share* 78/9 81/2 * Adjusted for scrip issues 84/5 87/8 90/1 93/4 96/7 99/0 02/3 05/6 08/9 11/2
Growth 2005 - 2012 area proportional to profit 26 24 22 20 18 ROS % 16 14 12 10 0 100 200 300 400 500 600 Revenue £m Halma Capital Markets Day – February 2013
Sector growth 2005 - 2012 area proportional to profit Industrial Safety Health & Analysis Infrastructure Sensors 26 24 22 20 18 ROS % 16 14 12 10 0 50 100 150 200 250 300 Revenue £m Halma Capital Markets Day – February 2013
Reporting Sector changes Industrial Safety Process Safety Infrastructure Sensors Infrastructure Safety Medical Health & Analysis Environmental & Analysis Halma Capital Markets Day – February 2013
New sectors: primary growth drivers Health & Healthcare Life-critical Safety resources Process Safety Infrastructure Safety Medical Environmental & Analysis Halma Capital Markets Day – February 2013
New sectors revenue and profit HY 2012/13 Revenue Profit* £298m £65m Process Safety Infrastructure Safety Medical Environmental & Analysis * Adjusted profit before finance expense and central costs Halma Capital Markets Day – February 2013
Revenue trends Full year revenue Safety Health & Environmental £m £m 200 200 150 150 100 100 50 50 0 0 Mar Mar Mar Mar Mar Mar Mar Mar 2009 2010 2011 2012 2009 2010 2011 2012 Process Safety Infrastructure Safety Medical Environmental & Analysis Halma Capital Markets Day – February 2013
New sectors: revenue by end-market HY 2012/13 gross revenue Process Infrastructure SAFETY Buildings - new £102m £62m Buildings - existing Utilities Healthcare/Medical Scientific/Environmental Medical Environmental Process Industries ENVIRONMENT Energy & Resources HEALTH & Others £60m £79m Halma Capital Markets Day – February 2013
New sectors: revenue by region HY 2012/13 external revenue Process Infrastructure SAFETY £62m £101m UK EUR USA RoW Medical Environmental ENVIRONMENT HEALTH & £60m £75m Halma Capital Markets Day – February 2013
Acquisition pipeline: sectors Infrastructure Process ~500 Medical Environmental Halma Capital Markets Day – February 2013
Acquisition pipeline: sectors and regions Infrastructure Process RoW RoW UK UK US US EUR EUR ~500 UK RoW RoW UK US US EUR EUR Medical Environmental Halma Capital Markets Day – February 2013
Summary � Proven strategy and financial model � New sectors � Reflects sector growth trends � Aligned with growth drivers � Aligned with end-markets � Simplifies reporting � Simplifies investor proposition Halma Capital Markets Day – February 2013
Active portfolio management ‘deep dive’ � M&A model � M&A track record & sustainability � Case study: Health Optics division � Q&A Halma Capital Markets Day – February 2013
M&A model: disciplined decision-making • Halma growth drivers • Strong financial performance BUY SELL • Technology we understand [15-20 year view] [5 year view] • Markets we know • Ambitious local management MERGE Halma Capital Markets Day – February 2013
M&A model: primary focus is growth � Investment for growth � innovation, collaboration & market intelligence � management development � international expansion � mitigate risk � Operational improvement � financial control and intelligence � lean operations Halma Capital Markets Day – February 2013
M&A model: DCEs drive the process Resources HALMA EXTERNAL Typical Timeline DCE* GAE** MDs Finance Broker Advisors Process Search 6 mths – 3 yrs Cultivate Agreement 2 - 3 mths Due diligence Completion 3 - 6 mths Integration Future Accountability * Divisional Chief Executive ** Group Acquisition Executive Halma Capital Markets Day – February 2013
Summary of M&A activity since 2002/03 180 160 140 141 120 (proceeds) / Spend £m 100 105 80 60 50 40 40 20 35 31 24 21 4 14 0 (15) (2) (5) (5) (22) (20) (40) Year end 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 To date No.Acq’ns 2 - 2 3 4 1 2 1 7 2 5 No.Disp’ls - - 8 - 1 - - - 1 1 3 Halma Capital Markets Day – February 2013
Revenue and profit* 2003 – 2012 Subsidiaries in Group at March 2012 before finance expense and central costs Revenue Profit* 700 140 £m £m 120 600 100 500 80 400 60 300 40 200 20 100 0 0 Core Companies Acquired Companies * Excludes operations disposed of between 2003 and 2012 Halma Capital Markets Day – February 2013
Revenue progression* 2003 – 2012 Subsidiaries in Group at March 2012 Total CAGR 11% £m 600 88 576 500 162 Core Organic 400 CAGR 6% 300 133 50 200 35 31 193 100 0 2003 CORE Acquired Acquired 2012 CORE Organic Companies Companies TOTAL Growth Growth * Excludes operations disposed of between 2003 and 2012 Halma Capital Markets Day – February 2013
Profit progression* 2003 – 2012 Subsidiaries in Group at March 2012 before finance expense and central costs £m Total CAGR 13% 150 20 126 36 Core Organic 100 CAGR 7% 33 50 50 37 0 2003 CORE Acquired Acquired 2012 CORE Organic Companies Companies TOTAL Growth Growth * Excludes operations disposed of between 2003 and 2012 Halma Capital Markets Day – February 2013
Optimal rate of growth has 3 key factors Organic growth SHAREHOLDER RETURN M&A Dividend multiples growth Halma Capital Markets Day – February 2013
Acquisition spend for 15% pa total growth* £m 200 180 160 140 Annual spend 120 100 80 60 40 20 0 2013 2014 2015 2016 2017 Year *assumes average multiple 8xEBIT; 7.5% organic growth; Net Debt <1.25xEBITDA Halma Capital Markets Day – February 2013
Span of control is a critical factor to manage 140 140 £m 120 120 100 100 N o Halma Profit 80 80 Companies 60 60 40 40 20 20 0 0 2003 ‘04 ‘05 ‘06 ‘07 ‘08 ‘09 ‘10 ‘11 2012 Year Halma Capital Markets Day – February 2013
Case Study: Health Optics division Adam Meyers – Director Halma Capital Markets Day – February 2013
Health Optics division: ophthalmic market Refractive surgery Diagnostic Instruments Cataract surgery Pharmaceutical £12Bn Lenses & eye care Halma Capital Markets Day – February 2013
Health Optics division: market characteristics � Excellent long term drivers – Healthcare demand � Aging global demographics � Improving worldwide access � Increasingly difficult global regulations � Well-established competitors � Physician choice devices Halma Capital Markets Day – February 2013
Health Optics Health Optics division: what we make Ophthalmology surgical Ophthalmology Primary care diagnostics diagnostics Halma Capital Markets Day – February 2013
Health Optics division: evolution £150m M ICRO S URGICAL TECHNOLOGY ™ Revenue Pre-2005 2007 2009 2011 2013 Halma Capital Markets Day – February 2013
MicroSurgical Technology Inc. � Ophthalmic surgical products, focusing on single-use devices in cataract surgery � $57M at closing with up to $43M contingent consideration � “Typical” M&A process Halma Capital Markets Day – February 2013
MicroSurgical Technology Inc.: next steps � Execute Integration Plan � RoW coverage � Collaborate with Medicel � Explore Divisional synergies � Regulatory � US surgical sales � Capital investment Halma Capital Markets Day – February 2013
Health Optics division – strong global presence Principal operations Sales & support offices Halma Capital Markets Day – February 2013
Health Optics division: expanding opportunities Ophthalmology Primary Care Diagnostic Surgical OEM Physician OEM MICROSURGICAL TECHNOLOGY ™ Core market Secondary market Halma Capital Markets Day – February 2013
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