Halma plc · LSE:HLMA

Halma — Investor Day (September 2016)

49 slides from Halma's investor day presentation, Sep 29, 2016

  1. Slide 1: Investor Site Visit

    Investor Site Visit 29 September, 2016

  2. Slide 2: Agenda

    Agenda 11.00 Halma 11.30 Infrastructure Safety 12.15 Facility Tour – part 1 13.00 Apollo Fire Detectors 13.30 Lunch 14.30 Facility Tour – part 2 15.15 Close 15.30 Departures to station Halma Investor Day, September 2016

  3. Slide 3: Consistent strategy, sustained success

    Consistent strategy, sustained success Disciplined market/product selection Enabling Simple organisation financial & culture model Halma Investor Day, September 2016

  4. Slide 4: Sustained growth

    Sustained growth £m 900 £m 180 800 Revenue 160 Profit 700 140 600 120 500 100 400 80 300 60 200 40 100 20 0 0 07 08 09 10 11 12 13 14 15 16 07 08 09 10 11 12 13 14 15 16 Halma Investor Day, September 2016

  5. Slide 5: Sustained strong returns

    Sustained strong returns % Return on Sales Return on Total Invested Capital* % 24 20 22 16 20 18 12 16 8 14 4 12 10 0 07 08 09 10 11 12 13 14 15 16 07 08 09 10 11 12 13 14 15 16 Halma Investor Day, September 2016 * post-tax profit

  6. Slide 6: Sustained strong returns – dividend per share

    Sustained strong returns – dividend per share* 14 12 10 8 pence 6 4 2 0 72/73 74/75 76/77 78/79 80/81 828/3 84/85 86/87 90/91 92/93 94/95 96/97 98/99 00/01 02/03 04/05 06/07 08/09 10/01 12/13 14/15 01/1 * Adjusted for scrip issues Halma Investor Day, September 2016

  7. Slide 7: Revenue Growth (%)

    Balance between organic and acquisition revenue growth 20 acquisition 16 organic Revenue Growth (%) 12 8 4 0 07 08 09 10 11 12 13 14 15 16 Halma Investor Day, September 2016

  8. Slide 8: M&A activity since 2006/07

    M&A activity since 2006/07 200 192 160 (proceeds) / Spend £m 143 120 80 105 89 40 42 14 22 4 21 3 0 (20) (2) (5) (20) (3) (40) Year end 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 No.Acq’ns 4 2 2 1 7 2 6 1 3 4 No.Disp’ls - 1 - - - 1 1 - 1 - Halma Investor Day, September 2016

  9. Slide 9: A scalable growth model

    A scalable growth model £m 200 100 180 160 80 140 No Halma Profit 120 60 Companies 100 80 40 60 40 20 20 0 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Halma Investor Day, September 2016 Year

  10. Slide 10: Sustained organic growth

    Sustained organic growth  Relentless increased investment  innovation  international expansion  talent development  High quality portfolio  resilient market growth drivers  valuable product niches  active M&A  diversity Halma Investor Day, September 2016

  11. Slide 11: Diversity provides resilience

    Diversity provides resilience £m 900 800 700 600 E&A Revenue 500 Medical 400 Infrastructure 300 Process 200 100 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Halma Investor Day, September 2016

  12. Slide 12: Infrastructure Safety Sector

    INFRASTRUCTURE SAFETY SECTOR Paul Simmons Sector Chief Executive 29 September 2016

  13. Slide 13: Management

    INFRASTRUCTURE SAFETY SECTOR Management Group CEO A. Williams Sector FD Sector CEO Acquisition G. van der Pant P. Simmons Photo needed Executive C. Liu Sector VP Sector VP M. Zhang Vacancy

  14. Slide 14: Agenda

    INFRASTRUCTURE SAFETY SECTOR Agenda 1. Introduction to Infrastructure Safety 2. Growth strategy: International growth 3. Growth strategy: New products 4. Growth strategy: Acquisitions 5. Growth strategy: Talent

  15. Slide 15: To protect commercially & publicly owned infrastructure assets

    INFRASTRUCTURE SAFETY SECTOR “ To protect commercially & publically “ owned infrastructure assets and improve the safety & mobility of people.

  16. Slide 16: Halma's largest sector by contribution

    INFRASTRUCTURE SAFETY SECTOR Halma’s largest sector by contribution per 2015/16 Final Results

  17. Slide 17: What we make

    INFRASTRUCTURE SAFETY SECTOR What we make Fire Fire Elevator Door safety detection suppression safety (People & Security vehicle flow) 47% 10% 13% 20% 10% of sector revenue of sector revenue of sector revenue of sector revenue of sector revenue

  18. Slide 18: Strength & Resilience

    INFRASTRUCTURE SAFETY SECTOR Strength & Resilience Our products are often subject to non-discretionary spend: giving us unusual resilience to general market trends We benefit from ~60% of revenue comes construction from existing infrastructure, investment as new reducing cyclicality: buildings requi

  19. Slide 19: Growth drivers

    INFRASTRUCTURE SAFETY SECTOR Growth drivers  Increasingly demanding Health &  Need for increased efficiency in Safety regulations buildings and movement  Continuing trend of urbanisation  Need for protection from increasing threats to security  Growing and ageing population

  20. Slide 20: Evolution: Revenue

    INFRASTRUCTURE SAFETY SECTOR Evolution: Revenue £265m £0m 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010 2013 2016 Note: 3rd party revenue as reported in the Annual Report and Accounts. Growth from 1983-2000 averaged in graph.

  21. Slide 21: 7.3% CAGR over last 10 years

    INFRASTRUCTURE SAFETY SECTOR Evolution: Revenue £265m 7.3% CAGR over last 10 years £0m 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010 2013 2016

  22. Slide 22: Worldwide

    INFRASTRUCTURE SAFETY SECTOR Worldwide Fire Detection Fire Suppression Elevator Safety Door Safety Security

  23. Slide 23: Revenue

    INFRASTRUCTURE SAFETY SECTOR Revenue

  24. Slide 24: Agenda

    INFRASTRUCTURE SAFETY SECTOR Agenda 1. Introduction to Infrastructure Safety 2. Growth strategy: International growth 3. Growth strategy: New products 4. Growth strategy: Acquisitions 5. Growth strategy: Talent

  25. Slide 25: Growth strategy – emerging markets

    INFRASTRUCTURE SAFETY SECTOR Growth strategy – emerging markets  China  Strong presence – five companies sales presence (3 full functions)  Significant investment underway in local products  India  Urbanisation/increasing middle class  Five companies have sales presence  R&D centre c. 30 peop

  26. Slide 26: Agenda

    INFRASTRUCTURE SAFETY SECTOR Agenda 1. Introduction to Infrastructure Safety 2. Growth strategy: International growth 3. Growth strategy: New products 4. Growth strategy: Acquisitions 5. Growth strategy: Talent

  27. Slide 27: Growth strategy – new products

    INFRASTRUCTURE SAFETY SECTOR Growth strategy – new products  Strengthen core  e.g. Panachrome +, Fireray…  Low cost R&D: Texecom & Apollo in Bangalore  Geographical expansion  Local R&D (Avire/BEA/Apollo in China)  e.g. Apollo China  Adjacent markets  e.g. Texecom connect R&D spend is 5.3% o

  28. Slide 28: Agenda

    INFRASTRUCTURE SAFETY SECTOR Agenda 1. Introduction to Infrastructure Safety 2. Growth strategy: International growth 3. Growth strategy: New products 4. Growth strategy: Acquisitions 5. Growth strategy: Talent

  29. Slide 29: Growth strategy – acquisitions

    INFRASTRUCTURE SAFETY SECTOR Growth strategy – acquisitions  Advanced joined in 2014:  added fire control panels and systems  Firetrace joined in 2015:  our entry into suppression – specialised area of micro environments  Seeking companies in core, adjacent or new markets:  Share IS’ growth dr

  30. Slide 30: Growth strategy – acquisitions

    Growth strategy – acquisitions • Natural hazards: Earthquake, floods, pollution detection Access to • Manmade threats: Identity management & biometrics, border security, counter terrorism New Markets • User comfort, efficiency & safety: smart traffic/parking, waste management Expansion • Natural haz

  31. Slide 31: Sector strategy – potential new applications

    INFRASTRUCTURE SAFETY SECTOR Sector strategy – potential new applications  Existing markets Fire Fire Elevator People & vehicle Security + New & Adjacent mkts (Acq) detection suppression safety flow Public buildings & spaces    + Commercial buildings      Air, sea, road & rail   + + Trans

  32. Slide 32: Introduction to Firetrace

    INFRASTRUCTURE SAFETY SECTOR Introduction to Firetrace

  33. Slide 33: Agenda

    INFRASTRUCTURE SAFETY SECTOR Agenda 1. Introduction to Infrastructure Safety 2. Growth strategy: International growth 3. Growth strategy: New products 4. Growth strategy: Acquisitions 5. Growth strategy: Talent

  34. Slide 34: Growth strategy – talent

    INFRASTRUCTURE SAFETY SECTOR Growth strategy – talent  Recruit more than our fair share of talent  The “Halma story”  Top Grading (A players lead recruitment) & assessment tools  Build “Digital capability”  Talent mind-set  9 box: expectations on development investment & performance improvemen

  35. Slide 35: Strategy summary

    INFRASTRUCTURE SAFETY SECTOR Strategy summary New products Acquisitions New applications Talent development Geographic expansion

  36. Slide 36: Q&A…

    Q&A… Positioned as a key player in its market A model for all of our Process Safety companies

  37. Slide 37: Apollo Fire Detectors

    APOLLO FIRE DETECTORS Halma Investor Day 29th September 2016 Havant, UK

  38. Slide 38: Protecting lives & assets globally

    PROTECTING LIVES & ASSETS GLOBALLY Emirates Palace, Abu Dhabi  Apollo supplies fire detection and notification devices into commercial buildings Kremlin, Emirates Palace, Q1 Residential Skyscraper Moscow, Russia Dubai, UAE Surfer’s Paradise, Australia The Shard & Tower Bridge, London UK Statue of L

  39. Slide 39: Apollo value proposition

    APOLLO VALUE PROPOSITION  High quality product  Exceptional brand equity  Extensive range of approvals  Rigorous testing to exceed standards  Depth of product range for specific applications  Open protocol  Open distribution model with strong, historic channel partners

  40. Slide 40: Apollo evolution of products

    Y, SY ae apollo MKII 1977-1985 SERIES 20 1986-1996 SERIES 60 i 2992-2005 4997-2014 aera cnee 2GIG_— SOTERIA DIMENSION see z 201 XPANDER SOTERIA 2008- 2015- ‘SERIES 90 SERIES 30 986.1996 MKI 1984-1996 APOLLO EVOLUTION OF PRODUCTS

  41. Slide 41: System architecture

    SYSTEM ARCHITECTURE Fire Control Panel 4 apollo Discovery Vg \ vc Multisensor INTRINSICALLY SAFE ZONE | peeled *. Detector H 1 i) 1 vit, ' = Fe ee a f i SOP oo ty Nar, scoveny 1 Manual ——-XP95 1.8. xposis. | XPOSIS. XP95I.S. cr PF Optical ; ; 1 Beer Picea Coe Detector 1 Call Point Heat Detector Opti

  42. Slide 42: Specialist applications

    SPECIALIST APPLICATIONS Fire Fire Elevator People & Security  Existing markets detection suppressi safety vehicle flow Singapore Metro Trains, Singapore + New markets on Public buildings & spaces  Commercial buildings  Marine Lifting Vessels Air, sea, road & rail  Dover Ferry Terminal Dover, UK

  43. Slide 43: Apollo Growth

    apollo APOLLO GROWTH 2000 - 2016

  44. Slide 44: Revenue by region

    REVENUE BY REGION

  45. Slide 45: Innovation

    INNOVATION  Strong innovation pipeline  10 new product launches in next 12 months – next generation platform  Proprietary open protocol  5.1% of revenue invested annually in R&D  62 people in R&D, or 10% of total headcount

  46. Slide 46: Facilities

    FACILITIES  7 labs with significant investment in equipment – ability to replicate exactly conditions in test houses  3 manufacturing facilities across 3 continents covering a total of 110,000 square feet  Automated assembly line (currently undergoing acceptance tests) capable of producing a dete

  47. Slide 47: Regulatory environment

    REGULATORY ENVIRONMENT  Apollo holds 481 certificates with 44 different approval bodies  44 different tests to approve a detector  7 figure annual spend on approvals  Stringent quality requirements: • End of line testing of 100% of devices • Full lab testing of 2 devices per shift

  48. Slide 48: Talent development

    TALENT DEVELOPMENT  Apollo has a strategic commitment to developing people  Extensive training  Formal Talent Management process  Company values deeply rooted in the organisation

  49. Slide 49: Growth opportunities

    GROWTH OPPORTUNITIES  Strong growth in fire markets globally  Increasing safety awareness in developing world  Significant potential in China, South East Asia, India, Middle East  Complete new Soteria platform  New, open CoreProtocol as an enabler to leverage IoT opportunities

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