Halma Plc · LSE:HLMA
Halma — H1 2013/14 Earnings Presentation
38 slides from Halma's earnings presentation, Nov 19, 2013
Slide 1: Half Year results 2013/14
Half Year results 2013/14 Andrew Williams – Chief Executive Kevin Thompson – Finance Director Halma Half Year results – November 2013
Slide 2: Summary Half Year 2013/14
Summary Half Year 2013/14 Growth & Revenue Profit ROS High +12% +9% 19.5% returns £333m £65.1m (LY: 20.0%) R&D spend ROW revenue Portfolio Strategic investment +10% +13% £17m spend £16.4m £84m Inc. earn-outs Cash flow Dividend Net Debt Good cash performance 86% +7% £110m of adjusted profit 4.35p £11
Slide 3: Financial Review
Financial Review Halma Half Year results – November 2013
Slide 4: Record results
Record results H1, 2013/14 £m Revenue Profit* 70 £65.1m 350 £333m 60 300 50 250 40 200 150 30 100 20 50 10 0 0 2009 2010 2011 2012 2013 2009 2010 2011 2012 2013 * Profit before amortisation of acquired intangibles, acquisition costs and profit on disposal of operations 2012 HY profit has been restat
Slide 5: Revenue growth
Revenue growth H1, 2013/14 % growth Headline growth 12% Prior year disposal 2% Excluding disposal 14% Acquisitions (6)% Organic growth 8% Currency (2)% Organic constant currency growth 6% Halma Half Year results – November 2013
Slide 6: Revenue by destination
Revenue by destination Revenue and revenue growth, H1 2013/14 (excluding disposals) Other 12% UK Asia Pacific 8% 13% 19% 16% 17% 24% Europe USA 32% 17% 10% Halma Half Year results – November 2013
Slide 7: Revenue by destination: Organic constant currency
Revenue by destination: Organic constant currency Revenue and revenue growth, H1 2013/14 Other 7% UK Asia Pacific 6% 6% Europe USA 6% 4% Halma Half Year results – November 2013
Slide 8: Profit* Bridge
Profit* Bridge £m Organic Profit* IAS 19 Profit* Currency Disposal Acquisitions** Profit* ccy 1.2 (0.9) 3.6 (1.1) 1.5 60.8 57.5 59.7 65.1 H1 12/13 H1 12/13 H1 13/14 As reported Restated * Profit before amortisation of acquired intangibles, acquisition costs and profit on disposal of operations ** Ne
Slide 9: Strong Returns
Strong Returns Return on Sales Range 18-22% H1 2013/14 19.5% (H1, 2012/13: 20.0%) ROCE* 71.3% (H1, 2012/13: 71.0%) ROTIC** 15.6% (H1, 2012/13: 16.1%) * Return on Capital Employed ** Return on Total Invested Capital Prior year restated to include the impact of IAS19 accounting for pension costs H
Slide 10: Cash flow H1 2013/14
Cash flow H1 2013/14 Debt b/f Mar 13 0 Working capital: £(20)m outflow £7m (H1, 2012/13: £9m) Acquisitions: £17m spend £(40)m Working including £14m earn-outs Profit capital Capex > Depn Tax £(60)m Pensions Acquisitions £(80)m Disposal Dividend Dividend: 7% increase £(100)m Other (net) Debt: £109.8m
Slide 11: Strong financial position
Strong financial position £260m facility – 5 years to 2016 Comfortable with net debt up to 1.25x EBITDA (H1: 0.7x) Funding options available Halma Half Year results – November 2013
Slide 12: Trading Review
Trading Review Halma Half Year results – November 2013
Slide 13: Sector performances (excluding disposal)
Sector performances (excluding disposal) Revenue Profit* Environmental & Process Environmental & Process Analysis Safety Analysis Safety +9% (3)% 19% +8% 21% 23% +11% 25% £333m £71m 46% 32% 27% 29% 24% Medical Infrastructure Medical Infrastructure +36% Safety +27% Safety +7% +10% Profit before amort
Slide 14: Process Safety: Trading performance
Process Safety: Trading performance (excluding disposal) Revenue: +8% Profit: +11% £m £m Organic ccy: +7% Organic ccy: +11% 120 25 100 20 £16m 80 £62m 15 60 10 40 5 20 0 0 2009 2010 2011 2012 2013 2009 2010 2011 2012 2013 Return on Sales: 26% Halma Half Year results – November 2013
Slide 15: Process Safety: Revenue by destination
Process Safety: Revenue by destination % of sector & % growth (excluding disposal) Other +5% UK 0% 11% 22% Asia Pacific +33% 19% 25% Europe 23% (2)% USA +15% Halma Half Year results – November 2013
Slide 16: Process Safety: Revenue by end market
Process Safety: Revenue by end market % of sector (excluding disposal) Buildings 6% 16% 15% Utilities 1% Science/Env Process 37% 25% Energy/Res Others Halma Half Year results – November 2013
Slide 17: Infrastructure Safety: Trading performance
Infrastructure Safety: Trading performance Revenue: +7% Profit: +10% £m £m Organic ccy: +4% Organic ccy: +6% 120 25 £107m £21m 100 20 80 15 60 10 40 5 20 0 0 2009 2010 2011 2012 2013 2009 2010 2011 2012 2013 Return on Sales: 19.2% Halma Half Year results – November 2013
Slide 18: Infrastructure Safety: Revenue by destination
Infrastructure Safety: Revenue by destination % of sector & % growth Other +8% Asia Pacific 7% UK +4% +2% 26% 16% USA 21% +8% 30% Europe +12% Halma Half Year results – November 2013
Slide 19: Infrastructure Safety: Revenue by end market
Infrastructure Safety: Revenue by end market % of sector 2% Buildings Others 98% Halma Half Year results – November 2013
Slide 20: Medical: Trading performance
Medical: Trading performance Revenue: +36% Profit: +27% £m £m Organic ccy: +11% Organic ccy: +1% 120 25 100 £20m 20 £81m 80 15 60 10 40 20 5 0 0 2009 2010 2011 2012 2013 2009 2010 2011 2012 2013 Return on Sales: 24.2% Halma Half Year results – November 2013
Slide 21: Medical: Revenue by destination
Medical: Revenue by destination % of sector & % growth Other UK +25% +16% 6% 11% Asia Pacific +69% Europe 16% 22% +20% 45% USA +41% Halma Half Year results – November 2013
Slide 22: Medical: Revenue by end market
Medical: Revenue by end market % of sector 1% 4% 5% Health/Medical Science/Env 90% Process Others Halma Half Year results – November 2013
Slide 23: Environmental & Analysis: Trading performance
Environmental & Analysis: Trading performance Revenue: +9% Profit: (3)% £m £m Organic ccy: +3% Organic ccy: (9)% 120 25 100 20 £83m 80 £15m 15 60 10 40 20 5 0 0 2009 2010 2011 2012 2013 2009 2010 2011 2012 2013 Return on Sales: 18.2% Halma Half Year results – November 2013
Slide 24: Environmental & Analysis: Revenue by destination
Environmental & Analysis: Revenue by destination % of sector & % growth Other +9% UK 7% +61% Asia Pacific 19% (9)% 17% Europe 16% +7% 41% USA +4% Halma Half Year results – November 2013
Slide 25: Environmental & Analysis: Revenue by end market
Environmental & Analysis: Revenue by end market % of sector 1% Buildings 21% Utilities 25% Health/Medical 1% 8% Science/Env 6% Process Energy/Res 38% Others Halma Half Year results – November 2013
Slide 26: Priorities 2013/14
Priorities 2013/14 Organic growth E&A Improvement Strategic Investment Portfolio Management Acquisition integration Opportunity pipeline progression Halma Half Year results – November 2013
Slide 27: People Development: Building the talent pipeline
People Development: Building the talent pipeline Halma Half Year results – November 2013
Slide 28: Portfolio Management: Acquisition pipeline - typical year
Portfolio Management: Acquisition pipeline - typical year Trade Shows Halma Group Search Subsidiaries Brokers 500 New leads & prior year prospects 50 Qualified target 25 Cultivating contact 10 Active discussion 2 or 3 Completed Halma Half Year results – November 2013
Slide 29: Summary: Outlook statement 2013/14
Summary: Outlook statement 2013/14 “Order intake since the period end has continued to be slightly ahead of revenue and in line with our expectations. Halma remains on track to make further progress in the second half of the year.” Halma Half Year results – November 2013
Slide 30: Questions
Questions Halma Half Year results – November 2013
Slide 31: Appendices
Appendices Halma Half Year results – November 2013
Slide 32: Currency impacts
Currency impacts $ % € % change change Average rates 13/14 12/13 13/14 12/13 • H1 v £ 1.54 1.58 2.5% 1.17 1.25 6.4% • Full Year v £ N/A 1.58 N/A 1.23 • 1% change* (Annual $ (~ 40% of total) € (~15% of total) impact) Revenue +/- £2.7m +/- £0.8m Profit +/- £0.5m +/- £0.2m • At $1.58/€1.18 Average rate
Slide 33: Pensions
Pensions DB plans Deficit Sept 13 March 13 £m £m Assets 179.2 176.3 Liabilities (220.0) (223.5) Deficit (40.8) (47.2) Closed DB plans to new members in 2003 Contributions to pay off deficit : £7m/year IAS 19: Comparatives restated Profit reduction HY, 12/13: £1.1m FY, 12/13: £2.1m (of which £0
Slide 34: Acquisitions
Acquisitions Consideration Initial Maximum Earn out 2013/14 Acquisitions Acquired EBIT* £m £m £m Talentum April 13 3 0 0.6 3 0 0.6 Earn-outs re prior year acquisitions - Cash 14 17 * At acquisition run-rate Halma Half Year results – November 2013
Slide 35: Impact of M&A
Impact of M&A Revenue * Actual Expected Expected £m H1 13/14 H2 13/14 Full Year 13/14 Acquisitions/Disposal 12/13 10 9 19 Acquisitions/Disposal 13/14 1 1 2 11 10 21 Profit after financing costs * Actual Expected Expected £m H1 13/14 H2 13/14 Full Year 13/14 Acquisitions/Disposal 12/13 2.4 1.8 4.2 Ac
Slide 36: Sector history
Sector history £m 09/10 10/11 11/12 12/13 13/14 Sector revenue Process Safety 46.3 49.5 58.0 62.5 62.2 Infrastructure Safety 91.3 96.0 101.1 100.5 107.3 Medical 32.6 38.1 48.6 59.8 81.1 Environmental & Analysis 52.0 65.6 72.5 75.5 82.6 Inter-segmental sales (0.1) (0.1) (0.2) (0.2) (0.1) Group revenu
Slide 37: Full year forecasts
Full year forecasts Full year 13/14 forecasts Capex ~ £17m Effective tax rate ~ 24.6% Central costs ~ £8.5m Net finance expense ~ £5m Halma Half Year results – November 2013
Slide 38: 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