Halma plc · LSE:HLMA
Halma — Investor Day (February 2013)
38 slides from Halma's investor day presentation, Feb 14, 2013
Slide 1: Capital Markets Day
Capital Markets Day 14 February, 2013 Andrew Williams – Chief Executive Kevin Thompson – Finance Director Adam Meyers – Director
Slide 2: Strategic model / Financial model
Strategic model Active portfolio Long-term market drivers management Financial model Niche products & strong Organisational agility market positions Halma Capital Markets Day – February 2013
Slide 3: Sustained growth
Sustained growth 600 140 Revenue Profit* £m £m 120 500 100 400 80 300 60 200 40 100 20 0 0 72/3 75/6 78/9 81/2 84/5 87/8 90/1 93/4 96/7 99/0 02/3 05/06 08/09 11/12 72/73 75/76 78/79 81/82 84/85 87/88 90/91 11/12 93/4 96/7 99/0 02/3 05/6 08/9 * Before tax, amortisation of intangibles, acquisition cos
Slide 4: High returns
High returns 25 10 Return on sales Dividend per share* % pence 20 8 15 6 10 4 5 2 0 0 72/3 75/6 78/9 81/2 84/5 87/8 90/1 93/4 96/7 99/0 02/3 05/6 08/9 11/2 72/3 75/6 78/9 81/2 84/5 87/8 90/1 93/4 96/7 99/0 02/3 05/6 08/9 11/2 * Adjusted for scrip issues Halma Capital Markets Day – February 2013
Slide 5: Growth 2005 - 2012
Growth 2005 - 2012 area proportional to profit 26 24 22 20 18 ROS % 16 14 12 10 0 100 200 300 400 500 600 Revenue £m Halma Capital Markets Day – February 2013
Slide 6: Sector growth 2005 - 2012
Sector growth 2005 - 2012 area proportional to profit Industrial Safety Health & Analysis Infrastructure Sensors 26 24 22 20 18 ROS % 16 14 12 10 0 50 100 150 200 250 300 Revenue £m Halma Capital Markets Day – February 2013
Slide 7: Reporting Sector changes
Reporting Sector changes Industrial Safety Process Safety Infrastructure Sensors Infrastructure Safety Medical Health & Analysis Environmental & Analysis Halma Capital Markets Day – February 2013
Slide 8: New sectors: primary growth drivers
New sectors: primary growth drivers Health & Healthcare Life-critical Safety resources Process Safety Infrastructure Safety Medical Environmental & Analysis Halma Capital Markets Day – February 2013
Slide 9: New sectors revenue and profit
New sectors revenue and profit HY 2012/13 Revenue Profit* £298m £65m Process Safety Infrastructure Safety Medical Environmental & Analysis * Adjusted profit before finance expense and central costs Halma Capital Markets Day – February 2013
Slide 10: Revenue trends
Revenue trends Full year revenue Safety Health & Environmental £m £m 200 200 150 150 100 100 50 50 0 0 Mar Mar Mar Mar Mar Mar Mar Mar 2009 2010 2011 2012 2009 2010 2011 2012 Process Safety Infrastructure Safety Medical Environmental & Analysis Halma Capital Markets Day – February 2013
Slide 11: New sectors: revenue by end-market
New sectors: revenue by end-market HY 2012/13 gross revenue Process Infrastructure SAFETY Buildings - new £62m £102m Buildings - existing Utilities Healthcare/Medical Scientific/Environmental Medical Environmental Process Industries ENVIRONMENT Energy & Resources HEALTH & Others £60m £79m Halma Capi
Slide 12: New sectors: revenue by region
New sectors: revenue by region HY 2012/13 external revenue Process Infrastructure SAFETY £62m £101m UK EUR USA Medical RoW Environmental ENVIRONMENT HEALTH & £60m £75m Halma Capital Markets Day – February 2013
Slide 13: Acquisition pipeline: sectors
Acquisition pipeline: sectors Infrastructure Process Medical ~500 Environmental Halma Capital Markets Day – February 2013
Slide 14: Acquisition pipeline: sectors and regions
Acquisition pipeline: sectors and regions Process Infrastructure RoW RoW UK UK US US EUR EUR ~500 UK RoW RoW UK US US EUR EUR Medical Environmental Halma Capital Markets Day – February 2013
Slide 15: Summary
Summary ¾ Proven strategy and financial model ¾ New sectors ¾ Reflects sector growth trends ¾ Aligned with growth drivers ¾ Aligned with end-markets ¾ Simplifies reporting ¾ Simplifies investor proposition Halma Capital Markets Day – February 2013
Slide 16: Active portfolio management 'deep dive'
Active portfolio management ‘deep dive’ ¾ M&A model ¾ M&A track record & sustainability ¾ Case study: Health Optics division ¾ Q&A Halma Capital Markets Day – February 2013
Slide 17: M&A model: disciplined decision-making
M&A model: disciplined decision-making • Halma growth drivers • Strong financial performance BUY • Technology we understand SELL [15-20 year view] [5 year view] • Markets we know • Ambitious local management MERGE Halma Capital Markets Day – February 2013
Slide 18: M&A model: primary focus is growth
M&A model: primary focus is growth ¾ Investment for growth ¾ innovation, collaboration & market intelligence ¾ management development ¾ international expansion ¾ mitigate risk ¾ Operational improvement ¾ financial control and intelligence ¾ lean operations Halma Capital Markets Day – February 2013
Slide 19: M&A model: DCEs drive the process
M&A model: DCEs drive the process Resources HALMA EXTERNAL Typical Timeline DCE* GAE** MDs Finance Broker Advisors Process Search 6 mths – 3 Cultivate yrs Agreement Due diligence 2 - 3 mths Completion Integration 3 - 6 mths Accountability Future * Divisional Chief Executive ** Group Acquisition Exec
Slide 20: Summary of M&A activity since 2002/03
Summary of M&A activity since 2002/03 180 160 140 141 120 (proceeds) / Spend £m 100 105 80 60 40 50 20 35 40 31 24 14 4 21 0 (15) (5) (2) (5) (22) (20) (40) Year end 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 To date No.Acq’ns 2 - 2 3 4 1 2 1 7 2 5 No.Disp’ls - 3 - 8 - 1 - - - 1 1 Halma
Slide 21: Revenue and profit 2003 – 2012
Revenue and profit* 2003 – 2012 Subsidiaries in Group at March 2012 before finance expense and central costs 700 Revenue 140 Profit* £m £m 600 120 500 100 400 80 300 60 200 40 100 20 0 0 Core Companies Acquired Companies Halma Capital Markets Day – February 2013 * Excludes operations disposed of bet
Slide 22: Revenue progression 2003 – 2012
Revenue progression* 2003 – 2012 Subsidiaries in Group at March 2012 £m Total CAGR 11% 600 88 576 500 162 400 Core Organic CAGR 6% 300 133 50 200 35 193 31 100 0 2003 CORE Acquired Acquired 2012 CORE Organic Companies Companies TOTAL Growth Growth Halma Capital Markets Day – February 2013 * Excludes
Slide 23: Profit progression 2003 – 2012
Profit progression* 2003 – 2012 Subsidiaries in Group at March 2012 before finance expense and central costs £m 150 Total CAGR 13% 20 126 36 100 Core Organic CAGR 7% 33 50 50 37 0 2003 CORE Acquired Acquired 2012 CORE Organic Companies Companies TOTAL Growth Growth Halma Capital Markets Day – Februa
Slide 24: Optimal rate of growth has 3 key factors
Optimal rate of growth has 3 key factors Organic growth SHAREHOLDER RETURN M&A Dividend multiples growth Halma Capital Markets Day – February 2013
Slide 25: Acquisition spend for 15% pa total growth
Acquisition spend for 15% pa total growth* £m 200 180 160 140 Annual spend 120 100 80 60 40 20 0 2013 2014 2015 2016 2017 Year *assumes average multiple 8xEBIT; 7.5% organic growth; Net Debt <1.25xEBITDA Halma Capital Markets Day – February 2013
Slide 26: Span of control is a critical factor to manage
Span of control is a critical factor to manage £m 140 140 120 120 100 100 Profit 80 80 No Halma Companies 60 60 40 40 20 20 0 0 2003 ‘04 ‘05 ‘06 ‘07 ‘08 ‘09 ‘10 ‘11 2012 Year Halma Capital Markets Day – February 2013
Slide 27: Case Study: Health Optics division
Case Study: Health Optics division Adam Meyers – Director Halma Capital Markets Day – February 2013
Slide 28: Health Optics division: ophthalmic market
Health Optics division: ophthalmic market Refractive surgery Diagnostic Instruments Cataract surgery Pharmaceutical £12Bn Lenses & eye care Halma Capital Markets Day – February 2013
Slide 29: Health Optics division: market characteristics
Health Optics division: market characteristics ¾ Excellent long term drivers – Healthcare demand ¾ Aging global demographics ¾ Improving worldwide access ¾ Increasingly difficult global regulations ¾ Well-established competitors ¾ Physician choice devices Halma Capital Markets Day – February 2013
Slide 30: Health Optics division: what we make
Health Optics division: what we make Ophthalmology surgical Ophthalmology Primary care diagnostics diagnostics Halma Capital Markets Day – February 2013
Slide 31: Health Optics division: evolution
Health Optics division: evolution £150m MICROSURGICAL TECHNOLOGY™ Revenue Pre-2005 2007 2009 2011 2013 Halma Capital Markets Day – February 2013
Slide 32: MicroSurgical Technology Inc.
MicroSurgical Technology Inc. ¾ Ophthalmic surgical products, focusing on single-use devices in cataract surgery ¾ $57M at closing with up to $43M contingent consideration ¾ “Typical” M&A process Halma Capital Markets Day – February 2013
Slide 33: MicroSurgical Technology Inc.: next steps
MicroSurgical Technology Inc.: next steps ¾ Execute Integration Plan ¾ RoW coverage ¾ Collaborate with Medicel ¾ Explore Divisional synergies ¾ Regulatory ¾ US surgical sales ¾ Capital investment Halma Capital Markets Day – February 2013
Slide 34: Health Optics division – strong global presence
Health Optics division – strong global presence Principal operations Sales & support offices Halma Capital Markets Day – February 2013
Slide 35: Health Optics division: expanding opportunities
Health Optics division: expanding opportunities Ophthalmology Primary Care Diagnostic Surgical OEM Physician OEM MICROSURGICAL TECHNOLOGY™ Core market Secondary market Halma Capital Markets Day – February 2013
Slide 36: Summary M&A
Summary M&A ¾ Clear strategy, sustainable success ¾ Disciplined M&A approach ¾ Buy good businesses we understand ¾ Primary focus is growth ¾ DCEs drive the process ¾ Organic growth/cash generation crucial ¾ Growth opportunities always increasing Halma Capital Markets Day – February 2013
Slide 37: Investor Event 2013
Investor Event 2013 Location: Orlando, Florida Date: 29th/30th April, 2013 Halma Capital Markets Day – February 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