H A L M A Halma p.l.c. Half year results 2011/12 Summary of analysts’ presentation by: Andrew Williams, Chief Executive Kevin Thompson, Finance Director 22 November 2011 Halma p.l.c., Misbourne Court, Rectory Way, Amersham, Bucks HP7 0DE, UK. Registered in England number 40932. Tel: +44 (0)1494 721111 Fax: +44(0)1494 728032 Email: investor.relations@halma.com Web: www.halma.com
Page 2 on 22 November r 2011 Summ mary of an nalysts’ pr resentatio “Rec cord reven nue a and p profit with incre eased d retu urns” ” Andrew W Williams, H alma’s Chi ief Executive e, began w ith an over rview of a record f first half pe erformance e. Halma has s made goo od progress s during the first ha alf, reflectin g the streng gth of the Group’s p roducts, ma arkets and b business model. rofit 1 of We achiev ved record h half year pr £57.5m, u up 17% from m last year. Revenue i increased b by 12% to a a new record for the half yea ar of £280m m. All Once e again we d delivered re ecord reven ue three sect tors (Health and Analys sis, and p profit. Reve enue of £28 0m was up 12% Infrastruct ture Sensor rs and Indus strial profit 1 of £57 and p 7.5m was £ £8.2m (17% ) Safety) inc creased rev venue and p profit. highe er than the f first half of 2 2010/11. H alma les 2 from has in ncreased its s first half p profit in 34 o of the We increa ased our Re eturn on Sal past 3 36 years. 19.8% to 2 20.5% - ma aintaining th e higher Return on Sales achi eved in the second nic 3 revenue Organ e growth at constant half of the last financi ial year. Al l three curre ncy (i.e. exc cluding the impact of sectors im mproved Ret turn on Sale es. busin nesses acqu uired and cu urrency transl lation effect ts) was 6%. . Currency We increa ased investm ment in our 3 transl lation had a a small (app proximately 1%) strategic in nitiatives, (I Internationa al adver rse impact o on the repo orted figures s with Expansion n, Innovatio on and Mana agement a wea aker US$ a nd stronger r Euro relati ve to Developm ment). Reve enue from o outside Sterli ng, compar red with the e first half of f last the UK/US SA/Mainland d Europe in ncreased Organic 3 p year. profit growth h at constan nt by 13% to o £65m, incl uding a 29% % curre ncy was 4% %. increase in n China. R R&D spend w was up by 10% to o £13.4m, re epresenting 5% of We a chieved go od revenue e growth aro ound revenue. We commit tted a furthe er £22m the w world. UK g rowth was v very strong at in complet ting two acq quisitions in n the US, 18%. All of our t three secto rs performe ed (Kirk Key Interlock an nd Avo Pho tonics). well h here, with p articularly g good We are inc creasing ou ur interim di vidend perfo rmances fro om Fire Det tection, Wa ter by a furthe er 7% this y year. and m many of our r Industrial S Safety busin nesses. Kevin Tho ompson, F inance Dir ector, reviewed the Group p’s financia al performa nce. This is ano other strong g set of half f year results. W We improved d profitabilit ty even further and d in addition n renewed o our bank facilities to o support gr rowth and acquisition ns. Halma p.l.c., M Misbourne Cour rt, Rectory Way y, Amersham, B ucks HP7 0DE, UK. Registered d in England nu mber 40932. Tel: +44 (0)14 494 721111 Fa x: +44(0)1494 7 728032 Email: investor.relation ns@halma.com Web: www.hal ma.com
Page 3 on 22 November r 2011 Summ mary of an nalysts’ pr resentatio The USA remains ou r largest sa ales We c ontinue to s search hard d for acquisi itions. destination n at 28% of f the total an nd was In 20 10/11 we sp pent £82m on new up by 6% in the half y year, benef iting busin nesses and this delivere ed EBIT somewhat t from the a acquisitions we have (Earn nings before e interest an nd tax) of £1 11.8m made, in p particular in Health and d on an n annual ba sis. Analysis. Again Indu ustrial Safety y showed good prog gress. Mainland Europe, 27 % of the Gr roup, was up 15% in n the half ye ear. All thre e sectors delivered growth with h Health and d Analysis in ncreasing s strongly incl uding the benefit of Medicel, wh hich we acq quired in the secon d half of las st year. Tw o thirds of our bus siness in Ma ainland Euro ope is with North hern Europe ean custome ers. Revenue o outside of U UK/USA/Ma ainland Europe re presents 23 3% of the to otal We h ave made t two acquisit tions so far in revenue a and we cont tinue to mak ke 2011/ /12. Kirk Ke ey Interlock k Company and progress t towards our r target of th his being Avo P Photonics, b both based in the US. Initial 30% of Gr roup revenu ue by 2015. Far paym ments total £ £15m with u up to a furth er East and A Australasia continues t to grow £7m t to pay in the e future dep pending on strongly, u up 19% in th he half year r, with growt th. Their an nnual profit contribution n at China grow wing 29% a and now aro ound 5% the tim me of comp pletion is £2 2m. of Group r revenue. O Our other ter rritories were up 4 % reflecting g tough eco onomic ROTIC 4 (Re Our R eturn on Tot tal Invested d conditions s in Africa, N Near and M iddle Capit tal) increase ed to 16.9% % (2010/11: East but g good growth h in Latin Am merica. 15.5% %) showing that we con ntinue to cre eate share eholder valu ue through o our investm ments The perfor rmance in t he past five e half within n the Group p for organic c growth an d on years show ws strong p progress. acqui isitions. We s et ourselve s a target ra ange for Re eturn ales 2 of 18- on Sa 22%. Our o objective is to achie eve growth a and to main ntain these h high return ns over the long term. Halma p.l.c., M Misbourne Cour rt, Rectory Way y, Amersham, B ucks HP7 0DE, UK. Registered d in England nu mber 40932. Tel: +44 (0)14 494 721111 Fa x: +44(0)1494 7 728032 Email: investor.relation ns@halma.com Web: www.hal ma.com
Page 4 on 22 November r 2011 Summ mary of an nalysts’ pr resentatio increa ased opera tions in Sw itzerland, a lower tax en nvironment . We c ontinue to p pay extra ca ash into our r pensi ion scheme e (£6m per a annum) to reduc ce the sche me deficit in n line with t he actua aries’ recom mmendations s. The £45 5m defici t is not sign nificant relat tive to the s size of the G Group (2010 0/11 y/e: £36 6m). We a re increasin ng the Inter im dividend d by 7% o nce again, indicating o our confiden nce in the fu uture. Sales 2 incr Return on reased to 20 0.5% (2010/11: 19.8%) boo osted by the e high rate of pro ofitability of the compan nies we acquired, adding to o our existing high return bus sinesses. Cash flow w was solid i n the half y year. Our net debt a at the start o of the year o of £37m increased to £56m af fter paying f for the acquisition ns noted ab bove, a subs stantial dividend a and continue ed investme ent in our existing bu usinesses. In Oc ctober 2011 we put in p place a new w £260 m five year revolving c credit facility y, replac cing the pre evious £165 5m facility. This gives s greater ce rtainty over r funding in the mediu um term an d supports our strong balan nce sheet w which will allo ow us to ma ake furthe er value add ding acquis itions. Andr rew William ms then gav ve an overv view of the e trading p performanc ce of all thr ree majo or sectors. Working c capital incre ased, supp orting our growth h and enabl ling better s service to ROCE 5 (R our custom mers. Our R eturn on Capital Em mployed) re emained at t the high level of 69 9% (2010/11 1:72%) sho owing that we continu ue to use ou ur operating g assets very effec tively. Capital ex xpenditure w was 31% hig gher than last year w with investm ment across s a number of f businesse s. The effe ective tax rate was 2 23.1% (2010 0/11: 25.5% %) – our forecast fo or the full ye ear rate. Th he decrease was driven by lower U K Corporatio on tax rates s and the be enefit of Halma p.l.c., M Misbourne Cour rt, Rectory Way y, Amersham, B ucks HP7 0DE, UK. Registered d in England nu mber 40932. Tel: +44 (0)14 494 721111 Fa x: +44(0)1494 7 728032 Email: investor.relation ns@halma.com Web: www.hal ma.com
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