Halma plc Full Year Results 2019/20 Summary of analysts’ presentation by: Andrew Williams, Group Chief Executive Marc Ronchetti, Chief Financial Officer 14 July 2020 Halma plc, 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 Summary of analysts’ presentation 14 July 2020 Record results and sustainable value creation Andrew Williams, Halma’s Group Chief These challenges further reinforce the Executive, introduced the presentation importance of many of Halma’s of the full year results. strengths: o Halma’s purpose, ‘Growing a safer Good morning and welcome to our full cleaner healthier future for year results presentation. everyone, every day’; o our growth strategy to grow and Halma has delivered another year of acquire businesses in global niche record results, but clearly it hasn’t been safety, health and environmental ‘business as usual’ and so today we hope markets with long-term growth- to give you: drivers, giving us opportunities to o an insight into what we have grow sustainably for many years achieved over the past year and into the future; o our business model, including our how we have responded to the global COVID19 crisis; organizational design and culture o a greater understanding of how we which gives us huge agility through see the new financial year panning local autonomy with out; and accountability; o a shared confidence in our ability to o our recent strategic investment sustain record growth and returns focus – e.g. Diversity and Inclusion for all stakeholders in the long in our high calibre teams; digital & term. technology. These are underpinned by our robust financial model, and high levels of cash generation which allows is to invest in growth while maintaining modest leverage. Let me start by setting some context for the long-term sustainable value that Halma creates for all our stakeholders. As a society, we are facing profound and global challenges, not only in the immediate term from COVID-19, but also These charts illustrate how these from longer-term trends such as climate elements have sustained value creation change, and the growing, ageing and over a long period. urbanising populations. Halma plc, 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 3 Summary of analysts’ presentation 14 July 2020 In each of the past 17 years, we have delivered record revenue and profitability. Over this period, revenue has grown by more than £1 billion to £1.3 billion, a 10% compound annual growth rate, while profit has increased more than five-fold to £267m, an 11% CAGR. So, bringing things back to the here and This has been driven by a disciplined now, these elements are now more choice of valuable product niches in crucial than ever, supporting further markets with long term drivers and progress in last full year, our ability to where there is a strong element non- respond rapidly to the emergence of discretionary spend e.g. due to COVID-19 in the final quarter of the year regulation. to deliver a resilient performance in the first quarter of the current financial And this is only part of the story because year, and positioning us to deliver a our growth is also boosted by continuous resilient performance for the full year – increases in strategic investment, for expected to be in the range of just 5%- example: 10% below last year. o R&D spend has grown from £10m to over £70m in the period, to over 5% Importantly, we will achieve this in a way of sales; which ensures we continue to balance o we have increased investment in the value created for all stakeholders our physical assets…; including employees, customers and o … as well as in our Growth Enablers suppliers, investors and communities and which support our companies, society in general – and to ensure that especially in leadership talent. we can sustain that value creation in the future too. We have a disciplined and highly productive allocation of capital and So, turning now to the headlines of our talent which has maintained strong latest record full year performance. growth and returns and is reflected in our Post-Tax Return on Total Invested Capital or ROTIC, which has been consistently and substantially above our Weighted Average Cost of Capital (WACC) for each of these 17 years. This year our ROTIC was 15.3%, double our WACC. It was another year of widespread organic growth, plus a particularly strong contribution from M&A. Halma plc, 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 4 Summary of analysts’ presentation 14 July 2020 Revenue grew 10.5% to over £1.3bn, while If the final dividend is approved, Halma profit increased by 8.7% to £267m and will have delivered 41 years of dividend Return on Sales remained strong at growth of 5% or more, maintaining our 19.9%, even after increased investment long-term track record and policy. and provisions for COVID-related customer bad debts of £5m - Marc will Finally, we have maintained a robust give you more detail on this shortly. balance sheet and strong liquidity position, with net debt at the period end Turning to that increased strategic being £375m, including IFRS16 leases, investment across our Growth Enablers, and net debt to EBITDA at 1.1 times. which is led by our operating companies with selected central investment to Overall you can see that it has been a support their growth: successful year providing us with an excellent platform to navigate through o in innovation, R&D spend increased the current health and economic crisis by 14%, to £72m, up as a successfully. percentage of revenue to 5.4%, maintaining a high level of However, it is worth reiterating that investment in new products and these results would not be achieved solutions; without the tremendous commitment and determination of the high calibre o we continued to support our growth teams in our companies, sectors and through further facility expansions Halma centrally. and fixed asset additions, with capex growing 9% to £34m, well I would like to say how proud I am of ahead of depreciation excluding what they have achieved so far and how leases; they have positioned Halma to continue to deliver strong value for stakeholders in and it was a record year for the future. acquisitions, with Halma acquiring 10 companies, across all four More from me on how we’ve responded sectors, bringing new innovative to COVID-19 and a strategic update later technologies, digital capabilities, - now Marc. and further expanding our geographical reach. ============ Operationally, we delivered a very strong cash performance, with cash conversion of 97% of adjusted profit, against our KPI of 85%, to support investment and returns to shareholders. And we are recommending an increase in the total dividend for the year of +5%. This reflects our performance in 2020, a resilient start to the new financial year, continued confidence in our future prospects and an equitable approach to the Group’s stakeholders given the effects of COVID-19. Halma plc, 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
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