Halma plc · LSE:HLMA
Halma — H1 2021/22 Earnings Presentation
35 slides from Halma's earnings presentation, Nov 18, 2021
Slide 1: Half Year Results 2021/22
Half Year Results 2021/22 18 November 2021 Andrew Williams – Group Chief Executive Marc Ronchetti – Chief Financial Officer
Slide 2: Introduction
Introduction Andrew Williams Group Chief Executive Growing a safer, cleaner, healthier future for everyone, every day
Slide 3: Our Sustainable Growth Model
Our Sustainable Growth Model Purpose and DNA Defining our culture and addressing significant global challenges Growth Strategy Investing in markets with resilient, long-term growth drivers Business Model Agile and responsive to fast-changing challenges & opportunities Leadership and People Successio
Slide 4: Half year 2021/22: Record first half results
Half year 2021/22: Record first half results Revenue Profit1 Statutory profit Strong growth +19% +27% +74% £737m £155m £168m Solid cash generation Cash flow2 R&D spend3 Acquisitions4 & increased strategic 85% 5.6% 10 (H1 21: 111%) (H1 21: 5.6%) £107m spend investment Return on Sales ROTIC Interim di
Slide 5: Positive outlook maintained
Positive outlook maintained Recently upgraded guidance unchanged, despite continued operational disruption Strong order book; order intake ahead of revenue and same period last year Strong organic investment and healthy M&A pipeline More typical revenue growth and Return on Sales expected in H2 Halm
Slide 6: Financial Review
Financial Review Marc Ronchetti Chief Financial Officer Growing a safer, cleaner, healthier future for everyone, every day
Slide 7: Record first half results
Record first half results H1 2021/22 Revenue Profit* £737m £155m 800 160 700 140 CAGR 11% CAGR 11% 600 120 500 100 £m £m 400 80 300 60 200 40 100 20 0 0 12/13 13/14 14/15 15/16 16/17 17/18 18/19 19/20 20/21 21/22 12/13 13/14 14/15 15/16 16/17 17/18 18/19 19/20 20/21 21/22 * Profit before amortisatio
Slide 8: Revenue growth
Revenue growth +4.5% (2.3)% (6.2)% +23.2% £737.2m +19.2% £618.4m 2020/21 Organic Acquisitions Disposals Currency 2021/22 Halma Half Year Results 2021/22 – 18 November 2021 8
Slide 9: Revenue by destination
Revenue by destination Revenue and revenue change, H1 2021/22 Reported Organic constant currency UK UK +55% +46% 18% USA USA +10% 38% +19% £737m Europe +23% Europe +19% 20% +15% +18% 7% 17% Other Asia Pacific Other Asia Pacific +1% +25% +6% +30% Halma Half Year Results 2021/22 – 18 November 2021 9
Slide 10: Profit growth
Profit* growth +3.6% (1.3)% (7.0)% +31.7% £154.9m +27.0% £122.0m 2020/21 Organic Acquisitions Disposals Currency 2021/22 * Profit before amortisation of acquired intangibles, acquisition items, significant restructuring costs, and profit or loss on disposal of operations. Halma Half Year Results 202
Slide 11: Return on Sales normalising
Return on Sales normalising 25% Average 20.2% Target: 18-22% 20% • Consistent Return on Sales trends prior to pandemic 15% • Return on Sales maintained during first lockdown 10% • Very strong Return on Sales in H2 20/21 and Q1 21/22 5% • Variable overhead costs now returning 0% • More typical Return
Slide 12: Net debt and cash flow
Net debt and cash flow 0 Effective tax Cash conversion rate 85% 21.8% H1 21: 111% EBITDA FY 21: 20.1% Working capital £(100)m Working outflow capital Lease Pension deficit additions £26m Capex £5m H1 21: FY 21: £23m £6m inflow Acquisitions Capex £(200)m Dividend spend £14m Tax Pensions £41m H1 21: £
Slide 13: Safety
Safety Revenue by destination Revenue Return on sales £320m: +19% USA UK 23.0% Organic ccy1 +25% +9% +57% H1 21: 21.6% +18% occy +69% occy 24% 24% Other (14)% £320m 8% (9)% occy 16% 28% Europe Profit2 Asia Pacific R&D spend +14% £74m: +27% +22% +18% occy £18.0m: +23% +25% occy Organic ccy1 +32% 5.6%
Slide 14: Environmental & Analysis
Environmental & Analysis Revenue by destination Revenue Return on sales UK £210m: +18% +19% 25.4% Organic ccy1 +25% +14% occy H1 21: 24.1% 19% USA +12% Europe +27% occy 47% £210m 12% +25% +19% occy 18% Profit2 4% R&D spend Asia Pacific £53m: +24% Other +26% £10.3m: +1% +34% occy Organic ccy1 +31% +2
Slide 15: Medical
Medical Revenue by destination Revenue UK Return on sales £208m: +21% +252% 22.3% +52% occy Organic ccy1 +18% H1 21: 22.1% Europe 10% +11% +17% occy 16% USA +9% 50% £208m +12% occy 17% Asia Pacific Profit2 +28% R&D spend 7% +32% occy £46m: +21% Other £12.8m: +36% Organic ccy1 +20% +14% 6.2% of reven
Slide 16: Performance against financial KPIs
Performance against financial KPIs Acquisition profit Organic revenue* Organic profit* Revenue outside ** UK/USA/Europe +23% +32% +4.3% +17% Threshold 5% Threshold 5% Threshold 10% Threshold 5% Return on sales Return on Total Cash conversion R&D investment Invested Capital (% of revenue) 21.0% 14.9%
Slide 17: Summary
Summary Record first half results Strong revenue performance in all sectors and major regions Very strong reported and OCCY1 profit growth Continued high returns; Return on Sales now normalising Solid cash generation and robust balance sheet 1: On an organic constant currency basis. Halma Half Year
Slide 18: Strategy Update
Strategy Update Andrew Williams Group Chief Executive Growing a safer, cleaner, healthier future for everyone, every day
Slide 19: Our Sustainable Growth Model
Our Sustainable Growth Model Purpose and DNA Defining our culture and addressing significant global challenges Growth Strategy Investing in markets with resilient, long-term growth drivers Business Model Agile and responsive to fast-changing challenges & opportunities Leadership and People Successio
Slide 20: Video
Video Halma
Slide 21: Our Sustainable Growth Model: creating value
Our Sustainable Growth Model: creating value + + = Value Growth Returns Positive impact Investment priorities Organic growth M&A Talent Sustainability Infrastructure Framework 21
Slide 22: Sustainability Framework Zoom-out: Group actions
Sustainability Framework Zoom-out: Group actions Group-level policies and targets • Scope 1 & 2 targets by 2030, Net Zero by 2040 • New gender diversity target for company boards • Sustainability metrics in remuneration Group-level support • Accelerate Halma: inspire and educate • Collaboration, bes
Slide 23: Sustainability Framework Zoom-in: Company actions
Sustainability Framework Zoom-in: Company actions Company responsibilities • Board member for sustainability • KSO Action Plans from 2022 onwards Company initiatives - examples • Transitioning to renewable energy • Reducing product weight/carbon intensity • Recyclable products in regulated markets •
Slide 24: Growing our positive impact: Purpose-aligned M&A
Growing our positive impact: Purpose-aligned M&A Financial data indicates the maximum total consideration 3 new standalone companies £74m spend for US$58m (c.£41m) for £15.5m for €20m (£17.2m) 8 bolt-ons for Five bolt-on existing acquisitions companies October 2021 for Total spend: £12.6m £38m spend
Slide 25: Summary and Outlook
Summary and Outlook Purpose and DNA • Record H1 revenue, profit and dividends • Sustainable Growth Model Strong returns Growth strategy • Agile response to fast-changing markets Business model • Strategic investment, healthy M&A pipeline Leadership and people • Strong order book; positive order inta
Slide 26: Questions?
Questions? Growing a safer, cleaner, healthier future for everyone, every day #safercleanerhealthier
Slide 27: Appendices
© Halma Appendices
Slide 28: Sector performances
Sector performances Revenue Profit* Environmental & Analysis Environmental +18% & Analysis xx% +24% Safety Safety 29% 31% +19% +27% xx% 43% 42% £737m £173m xx% 28% xx% 27% xx% Medical Medical +21% +21% * Adjusted operating profit before central administration costs, after share of associate. Adjustm
Slide 29: Sector performances: Organic constant currency
Sector performances: Organic constant currency Revenue Profit* Environmental Environmental & Analysis & Analysis +25% Safety xx% +31% Safety +32% xx% +25% +23% +28% xx% xx% xx% Medical Medical +20% +18% * Adjusted operating profit before central administration costs, after share of associate. Adjust
Slide 30: Sector History
Sector History £m 2018/19 2019/20 2020/21 2021/22 H1 FY H1 FY H1 FY H1 Revenue Safety 276.0 564.8 314.1 620.8 268.6 587.0 320.2 Environmental & Analysis3 153.9 321.3 173.2 370.7 178.0 361.1 209.5 Medical3 155.8 325.2 166.5 347.2 172.4 371.3 208.0 Inter-segment sales (0.2) (0.4) (0.1) (0.3) (0.6) (1.
Slide 31: Currency Effects
Currency Effects US$ % change Euro % change H1 2021/22 H1 2020/21 H1 2021/22 H1 2020/21 Average rates 1.39 1.27 (9.4)% 1.17 1.12 (4.5)% versus Sterling 1% change* US$ (~46% of total) Euro (~12% of total) Revenue £3.4m £0.9m Profit £0.7m £0.2m * Based on 2021/22 results. Halma Half Year Results 2021/
Slide 32: Profit Adjustments
Profit Adjustments* £m H1 2021/22 H1 2020/21 Intangible amortisation (20.8) (21.6) Acquisition items** (0.6) (4.1) Disposal of operations 34.0 - 12.6 (25.7) * items (charged)/credited in arriving at statutory profit. ** including acquisition costs, adjustment to acquisition contingent consideration
Slide 33: Pensions
Pensions Defined Benefit Pension Scheme 30 September 2021 31 March 2021 (£m) Assets 353.8 333.1 Liabilities (359.1) (355.6) Deficit (5.3) (22.5) • Discount rate 1.90% (March 2021: 1.95%). • Closed DB to future accrual December 2014 • Deficit recovery contributions: expected for 2021/22: £14.6m • Tri
Slide 34: 2021/22 Full Year Forecasts
2021/22 Full Year Forecasts 2021/22 Full Year Notes 2020/21 Actual Forecasts Capex c.£30m £26.4m Effective tax rate 1 c.22.3% 20.1% Central costs 2 c.£32m £22.9m Net finance expense 3 c.£9m5 £10.0m Pension contributions 4 £14.2m £13.3m IT upgrade programme spend c.£11m - Notes: 1. 2021/22 based on e
Slide 35: Disclaimer
Disclaimer This document contains statements about Halma plc that are or may be forward-looking statements. Forward-looking statements include statements relating to (i) future capital expenditures, expenses, revenues, earnings, synergies, economic performance, indebtedness, financial condition, div