Halma Plc · LSE:HLMA
Halma — FY2021/22 Earnings Presentation
41 slides from Halma's earnings presentation, Jun 16, 2022
Slide 1: Full Year Results 2021/22
Full Year Results 2021/22 16 June 2022 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: A year of notable achievements…
A year of notable achievements… Record revenue >£1.5bn and 19th consecutive year of record profit 43rd year of dividend growth of 5% or more Substantially increased strategic investment, including 13 acquisitions Increased investment in technology, R&D, leadership and culture Agile responses to new
Slide 4: …enabled by our Sustainable Growth Model
…enabled by our Sustainable Growth Model Our purpose Growing by addressing significant, long-term global issues Our DNA Organisation and culture enabling growth, returns and positive impact Growth strategy Investing in global niches with resilient, long-term growth drivers Business model Enabling ag
Slide 5: Full year 2021/22: Record revenue and profit
Full year 2021/22: Record revenue and profit Revenue Profit1 Statutory profit Record revenue and profit +16% +14% +20% £1,525m £316m £304m (FY21: £1,318m) (FY21: £278m) (FY21: £253m) Increased strategic R&D spend2 Acquisitions Cash flow investment and solid 5.6% 13 84% cash performance (FY21: 5.3%)
Slide 6: Financial Review
Financial Review Marc Ronchetti Chief Financial Officer Growing a safer, cleaner, healthier future for everyone, every day
Slide 7: Strong and sustainable growth
Strong and sustainable growth Revenue (£m) £1,525m Adjusted Profit before Tax (£m) £316m 300 1400 1200 11% CAGR 250 11% CAGR 1000 200 800 150 600 100 400 50 200 0 0 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Halma Full Year Results 2021/22 – 1
Slide 8: Record revenue
Record revenue +4.8% (3.2)% (3.3)% +17.4% £1,525.3m +15.7% £1,318.2m 2020/21 Organic Acquisitions Disposals Currency 2021/22 Halma Full Year Results 2021/22 – 16 June 2022 8
Slide 9: Revenue by destination
Revenue by destination Revenue and revenue change, 2021/22 Reported H1 H2 FY Reported UK Group £737m £788m £1,525m 25% Group +19.2% +12.6% +15.7% 18% USA Organic Constant H1 H2 FY 17% 39% Currency £1,525m 20% Europe Group +23% +12% +17% 12% USA +19% +21% +20% 7% 16% Europe +18% +8% +13% Other Asia P
Slide 10: Record Profit
Record Profit +3.6% (1.9)% (3.5)% +15.4% £316.2m +13.6% £278.3m 2020/21 Organic Acquisitions Disposals Currency 2021/22 Profit is profit before amortisation of acquired intangibles, acquisition items, significant restructuring costs, and profit or loss on disposal of operations. Halma Full Year Resu
Slide 11: Continued strong Return on Sales (RoS)
Continued strong Return on Sales (RoS) 25% 2016-2020 average 20.2% FY22 20.7% Target: 18-22% 20% • Consistent trends prior to pandemic • Lower RoS due to Covid during H2 19/20 and H1 20/21 15% • RoS elevated in H2 20/21 and H1 21/22 10% • RoS normalising in H2 21/22; higher technology spend 5% of £1
Slide 12: Solid cash generation
Solid cash generation Cash conversion Effective tax rate £100m 84% 21.6% FY21: 104% FY21: 20.1% 0 Working capital Working Lease Capex Pension outflow capital additions contribution £63m £12.2m FY21: FY21: £13.7m £3m inflow £(100)m Capex Dividend spend Acquisitions Disposal £27m £(200)m Tax Pensions
Slide 13: Safety sector
Safety sector Revenue by destination Revenue R&D spend £641m: +9% USA UK +18% £36m: +16% Organic ccy +16% +14% +36% occy 2020/21: £31m +18% occy 26% 23% Profit1 R&D % of revenue £641m £146m: +8% Other 7% 5.6% Organic ccy +13% (15)% 2020/21: 5.2% (11)% occy 28% 16% Europe +5% Asia Pacific +10% occy R
Slide 14: Environmental & Analysis sector
Environmental & Analysis sector Revenue by destination Revenue UK R&D spend £443m: +23% 11% £23m: +11% Organic ccy +25% 6% occy 2020/21: £21m 17% USA 27% Europe Profit1 36% occy 47% 13% 28% R&D % of revenue £443m £110m: +23% 15% occy 5.1% Organic ccy +23% 2020/21: 5.7% 18% 5% Asia Pacific 19% Return
Slide 15: Medical sector
Medical sector Revenue by destination Revenue1 UK R&D spend £442m: +19% +121% £27m: +43% 32% occy Organic ccy +13% 2020/21: £19m Europe 10% 17% 19% occy Profit1 USA 16% R&D % of revenue £100m: +15% 12% 51% £442m 6.1% 8% occy Organic ccy +11% 2020/21: 5.1% 16% Asia Pacific 7% 19% 19% occy Return on s
Slide 16: Strong performance against financial KPIs
Strong performance against financial KPIs Organic revenue* Organic profit* Acquisition profit ** Revenue outside UK/USA/Europe +17.4% +15.4% +3.5% +10.4% Threshold 5% Threshold 5% Threshold 5% Threshold 10% R&D investment Cash conversion Return on sales Return on Total (% of revenue) Invested Capita
Slide 17: Financial Summary
Financial Summary Record revenue and profit: strong OCCY1 growth Strong growth in all sectors and major regions Increased organic investment, acquisitions and a disposal Solid cash generation and a strong balance sheet Continued strong returns 1: On an organic constant currency basis. Halma Full Yea
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 Our purpose Growing by addressing significant, long-term global issues Our DNA Organisation and culture enabling growth, returns and positive impact Growth strategy Investing in global niches with resilient, long-term growth drivers Business model Enabling agility and gr
Slide 20: Growth Strategy: Organic Investment
Growth Strategy: Organic Investment R&D investment • Operating company-led investment decisions £85m • Reflects confidence in the future and scale of opportunities +£15m in FY22 Digital products • > 40% of revenue now classed as digital products/services +15% • IoT / Software and services revenue +4
Slide 21: Purpose-aligned M&A to accelerate growth
Purpose-aligned M&A to accelerate growth Safety Environmental Medical Growth drivers Standalone £73m • Climate change, spend FY22 £16m €20m (£17m) US$58m (£40m) waste and pollution Bolt-ons • Increasing health, £91m safety & spend FY22 RNK environmental regulation Disposal • Growing demand £65m for
Slide 22: Business Model: Agility in a fast-changing world
Business Model: Agility in a fast-changing world Strong purpose- New growth driven demand opportunities Supply chain Tighter labour market disruption Inflation Halma Full Year Results 2021/22 – 16 June 2022 22
Slide 23: Business Model: Agility in a fast-changing world
Business Model: Agility in a fast-changing world Developing new Investing in new Introducing new Flexing a global products and production working patterns operational footprint solutions capabilities Halma Full Year Results 2021/22 – 16 June 2022 23
Slide 24: Leadership and People: Talent to scale
Leadership and People: Talent to scale Our people Our focus Outcomes Strong commitment of our people Passionate about our purpose Proactive succession planning to our continued success Internal appointments at all leadership levels Entrepreneurial Improved gender balance; gender and agile Developing
Slide 25: Sustainability Framework: good progress
Sustainability Framework: good progress Climate Change • Working towards net zero for entire value chain by 2050 • TCFD report: identifying opportunities in carbon transition • 35% reduction in GHG emissions from 2020 baseline • Renewable electricity consumption 42% of total (up from 8% in 2020) • P
Slide 26: Outlook: a strong platform for sustainable growth
Outlook: a strong platform for sustainable growth A strong purpose, culture and DNA, in markets with resilient long-term growth drivers Organisational scalability and agility to succeed in a fast-changing world Substantially increasing investment to fulfil our customers’ needs, now and in the future
Slide 27: Questions?
Questions? Growing a safer, cleaner, healthier future for everyone, every day
Slide 28: Appendices
© Halma Appendices
Slide 29: Revenue and profit: First and second half performance
Revenue and profit: First and second half performance First half 2021/22 Second half 2021/22 Full year 2021/22 Reported revenue £737.2m (+19.2%) £788.1m (+12.6%) +15.7% Organic revenue** +23.2% +12.2% +17.4% Reported profit* £154.9m (+27.0%) £161.3m (+3.2%) +13.6% Organic profit* ** +31.7% +2.6% +15
Slide 30: Sector performances
Sector performances Revenue Profit* Environmental & Environmental & Safety Safety Analysis xx% Analysis +9.3% +22.6% +8.1% +23.0% 29% 31% xx% 42% 41% £1,525m £355m xx% 29% xx% 28% xx% Medical Medical +19.1% +15.0% * Adjusted operating profit before central administration costs, after share of associ
Slide 31: Sector performances: Organic constant currency
Sector performances: Organic constant currency Revenue Profit* Environmental & Environmental & Safety Safety Analysis xx% Analysis +15.9% +24.5% +13.3% +23.3% xx% +17.4% +15.4% xx% xx% xx% Medical Medical +13.0% +10.5% * Adjusted operating profit before central administration costs, after share of a
Slide 32: Safety sector
Safety sector +1.3% (5.2)% +15.9% (2.7)% £641.4m +9.3% £587.0m Revenue 2020/21 Organic Acquisitions Disposals Currency 2021/22 +0.4% (3.3)% +13.3% (2.3)% £146.2m +8.1% Sector £135.3m profit1 2020/21 Organic Acquisitions Disposals Currency 2021/22 1: See notes on slide 35 Halma Full Year Results 2021
Slide 33: Environmental & Analysis sector
Environmental & Analysis sector +5.0% (3.4)% £442.9m (3.5)% +24.5% +22.6% £361.1m Revenue 2020/21 Organic Acquisitions Disposals Currency 2021/22 £109.8m +4.2% (0.7)% (3.8)% +23.0% +23.3% Sector £89.3m profit1 1: See notes on slide 35 2020/21 Organic Acquisitions Disposals Currency 2021/22 Halma Ful
Slide 34: Medical sector
Medical sector +10.1% -% +13.0% (4.0)% £442.3m +19.1% £371.3m Revenue 2020/21 Organic Acquisitions Disposals Currency 2021/22 -% (4.4)% £99.5m +8.9% +15.0% +10.5% Sector £86.6m profit1 2020/21 Organic Acquisitions Disposals Currency 2021/22 1: See notes on slide 35 Halma Full Year Results 2021/22 –
Slide 35: Sector History
Sector History £m 2017/18 2018/19 2019/20 2020/21 2020/21 2021/22 Revenue Process Safety 184.5 197.5 200.0 188.8 Safety 587.0 641.4 Infrastructure Safety 348.8 408.6 466.5 450.5 Environmental & Analysis3 243.9 280.0 325.0 308.8 Environmental & Analysis3 361.1 442.9 Medical3 299.3 325.2 347.2 371.3 M
Slide 36: Currency Effects
Currency Effects US$ % change Euro % change 2021/22 2020/21 2021/22 2020/21 Average rates 1.37 1.31 4.6% 1.18 1.12 5.3% versus Sterling Movement for every 1% change* US$ (~47% of total) Euro (~12% of total) Revenue £7.1m £1.8m Profit £1.6m £0.4m * Based on 2021/22 results. Halma Full Year Results 20
Slide 37: Profit Adjustments
Profit Adjustments* £m 2021/22 2020/21 Intangible amortisation (42.7) (42.3) Acquisition items** (3.1) (5.2) Disposal of operations 34.0 22.1 (11.8) (25.4) * items (charged)/credited in arriving at statutory profit. ** including acquisition costs, adjustment to acquisition contingent consideration p
Slide 38: Pensions
Pensions Defined Benefit Pension Scheme (£m) March 2022 March 2021 Assets 347.6 333.1 Liabilities (317.1) (355.6) Surplus/(Deficit) 30.5 (22.5) • Discount rate 2.80% (March 2021: 1.95%). • Closed DB to future accrual December 2014 • Contributions to pay off deficit : 2021/22: £12.2m; expected for 20
Slide 39: Acquisition Contribution
Acquisition Contribution 2021/22 2022/23 Run-rate at Actual* Run-rate at acquisition (£m) (£m) acquisition (£m) Revenue 57.7 63.5 20.2 Operating profit 11.1 12.0 3.6 Profit (net of financing cost) 9.1 9.9 2.1 Return on Sales** 19.2 18.9 17.8 The table above gives the results for Static Systems acqui
Slide 40: 2022/23 Full Year Forecasts
2022/23 Full Year Forecasts 2022/23 Full Year Notes 2021/22 Actual Forecasts Capex c.£34m £27m Effective tax rate 1 c.22% 21.6% Central costs c.£40m £30.9m Net finance expense 2 c.£14m4 £8.4m Pension contributions 3 £14.6m £11.8m Notes: 1. 2022/23 based on expected mix of profit. 2. Assuming no furt
Slide 41: 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