H A L M A Halma p.l.c. Preliminary results 2010/11 Summary of analysts’ presentation by: Andrew Williams, Chief Executive Kevin Thompson, Finance Director 21 June 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 Summ mary of an nalysts’ pr resentatio on 21 June 2011 1 “Rec cord resul lts an nd inc creas sed strat tegic inves stme ent” Andrew W Williams, H alma’s Chi ief Kevin n Thompso on, Finance e Director, Executive e, opened t the presen tation by revie ewed the fin nancial per rformance for putting th his year’s r results into o the 2010/ /11. longer ter rm strategi ic context a and also This y year’s resul lts show a v very strong by giving the highlig ghts of our r perfo rmance with h many rec ords, achie ving performa nce. or exc ceeding ou r targets. Halma has s had an ou utstanding y year. It is particularly y exciting to o see how o our strategic in nvestment i is delivering g not only higher gro owth but als so higher ret turns in our busine ess. This strate egic investm ment in Man nagement Developm ment, Interna ational Expa ansion, Innovation n and M&A will remain a core focus for t the Group in n the comin ng year as we see ek to accom mplish our m medium term goal of doubling g our profit e every 5 years. t before tax 1 1 from conti Profit nuing opera ations was u up 21% to £ £104.6m (20 010: £86.2m m) on During 20 10/11 we a chieved a v very h profit 1 reven nue up 13% % to £518.4m m (2010: strong fina ancial perfo ormance wit 459.1 1m). increasing g 21% to £1 04.6 million n and revenue u up by 13% to o £518 milli ion. Sales 2 incr Return on reased to 20 0.2% (2009/10: 18.8%) wh ilst we also made strong pro ogress on ou ur key strat egic initiatives. Our invest tment in R& &D increase ed by 20% to £2 26 million re epresenting 5% of revenue. Revenue fr rom outside e of our traditional markets in UK/ Europ e and USA incre eased by 26 6% to £124 million. We compl leted seven n acquisition ns spending a total of £8 82 million a nd good Acqu isitions con tributed 2% % and curren ncy cash gene eration from m our operat ting transl lation aroun nd 0.5% to t the revenue e companie s ensured t that we are able to growt th. There w was therefor re strong propose a an increase to our divid ded by nic 3 revenue organ e growth of 11% for the e 7% to give e a total of 9 9.10p per s hare for year. the year. We g rew revenu ue in all geo ographic reg gions. 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 Summ mary of an nalysts’ pr resentatio on 21 June 2011 1 UK revenu ue was up 8 8%, a good result, After an excellen nt first half w we finished this with profit 1 2 with all thr ree sectors growing the ere. year w 21% higher r. Acquisitio ons contri ibuted 2% t to this grow th and curre ency nic 3 Revenue t to the US w was 18% hig gher with transl lation less t than 0.5% g giving organ Health and d Analysis d delivering a an profit growth at t he high leve el of 19%. exceptiona ally strong p performanc ce, and there was good grow wth from the other The h half year on half year p profit chart b below two sector rs. show ws the good progress w we are makin ng. European revenue w as up 2%. Infrastruct ture Sensor rs and Heal th and Analysis g grew 4-5%. Underlying g growth was at a s similar level in Industria al Safety except for r a £3m con ntract delive red in Europe bu ut destined ultimately fo or South America in n 2009/10, w which did n ot repeat in 2010/11 1. In the Res st of the Wo orld (ROW) which includes A Asia Pacific and Austra alasia, as well as Afr rica, Near a and Middle East plus South Am erica, reven nue increas sed 26%. The s second half of last year r provided a a All three s sectors incre eased reven nue tough h comparati ve but we h have continu ued to between 2 20-35% - a very strong delive er strong pe erformances s. The split t of performan nce. It is int teresting to note that profit between fir rst and seco ond half at 6% of the 13% total G Group reven nue 47%/ 53% was m more typical for us than the growth ca me from the e Rest of th he World. patte rn we saw i n 2009/10. ROW now w makes up 24% (2010 0: 21%) of Group rev venue, on tr rack towards s our target of 3 30% by 201 5. China re evenue grew by 2 8% to £24m m and we ne eed this pace of gr rowth to ach hieve our ta arget of 10% of Gr roup revenu ue coming f from China by 2 2015. Reve enue to Jap pan represents s approxima ately 1.5% o of the Group. ng profit 1 gro There was s very stron owth this year. 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 Summ mary of an nalysts’ pr resentatio on 21 June 2011 1 of profit 1 - a We acquir red seven b businesses in the Opera ating cash w was 108% o solid year, mos tly in the se econd half. The perfo rmance. W Working Cap pital increas sed by three main n acquisition ns included d Alicat £4m ( (2010: £13m m reduction n) which wa s a Scientific a and Accudy ynamics, bo oth US good performanc ce given the e high reven nue companie s, which ad dded further r strength increa ase we ach ieved and f following on n from to our Flui id Technolo ogy subsect tor. an ex xceptional p performance e in 2009/10 0. Medicel, a a business b based in Capit tal expendit ure was 12 1% of Switzerlan nd, specialis ses in single e use depre eciation, a m more typica l level for us s after injector de evices used d in cataract t surgery. a rela atively low s spend last y year. We spent £82m with up to a furt her £25m con sideration t to pay in the e future depending g on future e earnings gr rowth. We contin nue to pay s sensible mu ltiples for good busi nesses. Our most recent acqu uisition, in M May 2011, was s of Kirk Key y Interlocks s based in the US, w hich adds s significantly to our US presen nce in the S Safety Interl ock market wh here we hav ve built a st rong position ar round the w world. The e effective tax x rate was 2 26.2% (2010 0: These are e all excellen nt additions s to the 26.5% %) and we e expect to se ee the rate l lower Group and d should en nhance grou up in 201 11/12 follow wing the red duction in U K profitability y in 2011/12 2 and beyo nd. Corpo oration tax rates and th he addition to the Group p of Medice el with its pr rofits taxed at the We contin nue to make e acquisition ns but low ra ates for com mpanies bas sed in organic gr rowth and h high returns are still Switz zerland. central to our strategy y. We achi eved record lev vels of return n in 2010/1 1. Subje ect to share eholder appr roval it is propo osed that we e increase o our dividend d by he 32 nd year 7% th his year – th r of an incre ease of 5% % or more. W We have pa aid out over r £350 m in dividen nds over tha at period. Divide end cover is s 2.25x, me eeting our ta arget of a d dividend cov vered aroun nd 2 times b by earnin ngs. We fi nished the year with £3 37m net de ebt (2010 0: £9m net c cash) and h have a £165 5m syndi cated loan facility whic ch runs to 2 013. Our fi inancial pos sition remai ns strong. Sales 2 incr Return on reased to 20 0.2% (2010: 18. .8%) with 20 0.5% achie ved in Andr rew William ms, continu ued with a the secon d half of the e year. Our r target is revie ew of tradin ng within H Halma’s thre ee to operate e in the rang ge of 18-22% % for secto ors. Sales 2 . R Return on Return on Ca apital d 4 (ROCE) a Employed at 71.9% (20 010: All thr ree sectors increased revenue an nd 61.3%) an nd Return o n Total Inve ested achie eved record profit. Capital 5 (R ROTIC) at 1 5.5% (2010 0: 13.6%) both incre ased strong gly due to o our high growth on a well-man naged asse t base. 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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