Slide 1: Full Year Results 2023
Full Year Results 2023 15 June 2023 Marc Ronchetti – Group Chief Executive Steve Gunning – Chief Financial Officer Halma Full Year Results 2023 – 15 June 2023
Slide 2: Introduction
Introduction Marc Ronchetti Group Chief Executive Growing a safer, cleaner, healthier future for everyone, every day Halma Full Year Results 2023 – 15 June 2023
Slide 3: Our Sustainable Growth Model
Our Sustainable Growth Model Clear growth strategy Culture and DNA Ambitious Long-term Purpose growth markets Agile business Sustainable model financial model Halma Full Year Results 2023 – 15 June 2023 3
Slide 4: Our Sustainable Growth Model: priorities
Our Sustainable Growth Model: priorities Organic growth Clear growth strategy Culture and DNA Inorganic growth Ambitious Long-term Purpose growth markets Maintaining the agility of our business model Agile business Sustainable model financial model Optimising returns on investments Halma Full Year R
Slide 5: Record results, strong growth and high returns
Record results, strong growth and high returns Record revenue Record profit1 • Continued strong for 20th year growth +21% +14% • Substantial investment Record Cash conversion investment H2 FY23 • Improved cash >£0.5bn 90% generation Return on Total Dividend growth • High returns Invested Capital ≥5%
Slide 6: Financial Review
Financial Review Steve Gunning Chief Financial Officer Growing a safer, cleaner, healthier future for everyone, every day Halma Full Year Results 2023 – 15 June 2023
Slide 7: Full year 2023: Record results
Full year 2023: Record results Revenue Profit1 Return on Sales1,2 Strong growth £1,853m £361m 19.5% and high returns (FY22: £1,525m) (FY22: £316m) (FY22: 20.7%) 7 acquisitions3 R&D spend Infrastructure spend Record strategic £397m £103m £48m investment (FY22: £164m) (FY22: £85m) (FY22: £38m) Net deb
Slide 8: Strong organic revenue growth
Strong organic revenue growth £1,853m 8.1% +21.5% +4.3% (1.1)% +10.2% £1,525m Of which price c.4% FY22 Organic Acquisitions Disposals Currency FY23 Halma Full Year Results 2023 – 15 June 2023 8
Slide 9: Revenue growth in all regions
Revenue growth in all regions Revenue and revenue change by destination, FY23 Reported Organic constant currency Other Other +31% +16% Asia Pacific 8% Asia Pacific 8% +13% +3% 15% USA 15% USA 42% +31% 42% +12% £1,853m +10% +21% UK 15% UK 15% +4% +6% 20% 20% Europe Europe +22% +14% Halma Full Year Re
Slide 10: Record profit for 20th consecutive year
Record profit1 for 20th consecutive year £361.3m 9.0% +14.2% +2.8% (0.7)% +3.1% £316.2m FY22 Organic Acquisitions Disposals Currency FY23 1. Profit is profit before amortisation and impairment of acquired intangibles, acquisition items, significant restructuring costs, and profit or loss on disposal
Slide 11: Return on Sales
Return on Sales1 H1 FY16-20 FY16-20 22% average 19.3% average 20.2% 20% Target: 18-22% 18% 16% 14% 12% 10% Average H1 FY16-20 Average FY16-20 Average H1 FY21-22 Average FY21-22 H1 FY23 FY23 COVID Expect FY24 Return on Sales1 to be approximately 20% 1: Profit before amortisation and impairment of acq
Slide 12: Net debt and cash flow
Net debt and cash flow £200m Pension Cash conversion EBITDA contribution 78% £15.6m £100m FY22: 84% FY22: £12.2m Working 0 capital Lease Working capital additions Capex Net acquisition outflow £(100)m spend1 £96m Tax Pensions £398m FY22: £(200)m FY22: £108m £63m outflow £(300)m Capex Dividend spend
Slide 13: Safety Sector
Safety Sector Revenue by destination Revenue Other R&D spend £746m: +16% 24% USA £41m: +15% +17% occy Organic ccy1 +11% FY22: £36m +26% Asia Pacific 8% +12% occy +11% 28% Profit2 +5% occy 15% R&D % of revenue £153m: +4.3% £746m 5.5% Organic ccy1 (1.1)% FY22: 5.6% UK 20% +2% 29% +7% occy Return on Sa
Slide 14: Environmental & Analysis Sector
Environmental & Analysis Sector Revenue by destination Revenue Other R&D spend £552m: +25% +53% £29m: +26% +12% occy Organic ccy1 +9% Asia Pacific USA FY22: £23m +23% 6% +32% +10% occy +12% occy 18% Profit2 R&D % of revenue £134m: +22% £552m 5.2% Organic ccy1 +7% 50% FY22: 5.1% UK 14% +2% +1% occy 1
Slide 15: Healthcare Sector
Healthcare Sector Revenue by destination Revenue Other R&D spend £556m: +26% +29% £33m: +23% +16% occy Organic ccy1 +10% Asia Pacific FY22: £27m +3% 8% (6)% occy 13% Profit2 USA R&D % of revenue UK +33% £130m: +31% +16% 9% £556m 54% +12% occy 5.9% Organic ccy1 +14% +13% occy FY22: 6.1% 16% Europe Re
Slide 16: Performance against financial KPIs
Performance against financial KPIs Organic revenue* Organic profit* Acquisition profit ** EPS growth +10.2% +3.1% +5.5% +17% Threshold 5% Threshold 5% Threshold 5% Threshold 10% R&D investment Cash conversion Return on Total Return on Sales (% of revenue) Invested Capital 5.5% 78% 14.8% 19.5% Thresh
Slide 17: Strong and sustainable growth
Strong and sustainable growth Revenue (£m) £1,853m Adjusted1 Profit before Tax £361m (£m) 1800 350 1600 10-year CAGR 10-year CAGR 1400 12% 300 11% 250 1200 1000 200 800 150 600 100 400 50 200 0 0 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 1: P
Slide 18: Strategy Update
Strategy Update Marc Ronchetti Group Chief Executive Growing a safer, cleaner, healthier future for everyone, every day Halma Full Year Results 2023 – 15 June 2023
Slide 19: Our Sustainable Growth Model
Our Sustainable Growth Model Organic growth Inorganic growth Maintaining the agility of our business model Optimising returns on investments Halma Full Year Results 2023 – 15 June 2023 19
Slide 20: Video
Video Halma Full Year Results 2023 – 15 June 2023
Slide 21: Growing opportunities
Growing opportunities Our long-term growth drivers Increasing demand for healthcare Protecting life-critical resources Climate change, waste and pollution Improving safety and efficiency Halma Full Year Results 2023 – 15 June 2023 21
Slide 22: Growing opportunities
Growing opportunities 1 3 2 4 5 6 8 9 7 Sources: 1: Washington Post, Joshua Partlow, 5 April 2023 2: BBC News, Barbara Plett Usher, 19 April 2023 3: Financial Times, Mary McDougall, 17 May 2023 4: Financial Times, Gill Plimmer, 18 May 2023 5: The Guardian, Julia Kollewe, 6 March 2023 6: BBC News, Vi
Slide 23: Evolving our portfolio through organic opportunities
Evolving our portfolio through organic opportunities Safer Cleaner Healthier Rupture discs for clean air Real-time air Custom-built dialysis pumps insulated switchgear quality monitoring for the Chinese market Halma Full Year Results 2023 – 15 June 2023 23
Slide 24: Evolving our portfolio through purpose-aligned M&A
Evolving our portfolio through purpose-aligned M&A Environmental Power safety monitoring Fire safety £50m £37m £132m High voltage electrical testing ROV inspections of renewable Sustainable fire suppression for for mass transit vehicles energy infrastructure lithium-ion battery power storage Bolt-on
Slide 25: Experienced and diverse leadership team
Experienced and diverse leadership team • Steve Gunning joined as Chief Financial Officer • Digital growth support for companies to be provided by Technology team Steve Gunning • Funmi Adegoke appointed Safety Sector Chief Executive Constance Baroudel • Constance Baroudel to add Chief Sustainability
Slide 26: Talent development and support
Talent development and support • New leadership development initiatives • Continued success of Halma Future MD leadership programme Accelerate Halma Leaders programme • Reconnecting our people • Supporting employee wellbeing • Offering competitive, flexible and Halma Future Leaders New Shanghai offi
Slide 27: Diversity, equity and inclusion
Diversity, equity and inclusion Gender diversity on plc and Women on company boards (%) Executive Boards • Gender balance: 29 26 22 • Board and senior roles in 40-60% range 44% 19 18 56% • Further progress on company boards • Strong diversity in Halma Future Leaders Women 2020 2021 2022 2023 Men pro
Slide 28: Summary: a position of strength
Summary: a position of strength Strong momentum and well invested Focused on attractive opportunities Positive culture and strong teams Proven strategy and growth model Clear priorities within our Sustainable Growth Model Halma Full Year Results 2023 – 15 June 2023
Slide 29: Outlook
Outlook A successful year in FY23 A positive start to FY24 Expect good OCCY revenue growth in FY24 Expect FY24 ROS to increase to approximately 20% Well positioned for further progress this year and in the longer term Halma Full Year Results 2023 – 15 June 2023 29
Slide 30: Questions?
Questions? Growing a safer, cleaner, healthier future for everyone, every day Halma Full Year Results 2023 – 15 June 2023
Slide 31: Appendices
Appendices Halma Full Year Results 2023 – 15 June 2023
Slide 32: Revenue and profit: first and second half performance
Revenue and profit: first and second half performance First half FY23 Second half FY23 Full year FY23 Reported revenue £875.5m (+18.8%) £977.3m (+24.0%) +21.5% Organic revenue** +9.5% +10.9% +10.2% Reported profit* £171.7m (+10.9%) £189.6 (+17.5%) +14.2% Organic profit* ** +1.9% +4.3% +3.1% Return o
Slide 33: Sector performances
Sector performances Revenue Profit* Environmental Environmental Safety Safety & Analysis & Analysis +16.2% +4.3% +22.2% 30% +24.7% 32% 40% 37% £1,853m £417m 30% xx% 31% xx% Healthcare Healthcare +25.8% +30.8% * For the sectors, profit represents adjusted operating profit before central administratio
Slide 34: Sector performances: Organic constant currency
Sector performances: Organic constant currency Revenue Profit* Environmental Environmental Safety Safety & Analysis & Analysis +11.2% +9.1% (1.1)% +7.1% 30% 32% 40% 37% +10.2% +3.1% 30% 31% Healthcare Healthcare +9.8% +14.0% * For the sectors, profit represents adjusted operating profit before centr
Slide 35: Safety Sector
Safety Sector £745.6m +5.2% +16.2% +2.4% (2.6)% +11.2% Revenue £641.4m FY22 Organic Acquisitions Disposals Currency FY23 £152.5m +4.5% +4.3% +2.3% (1.4)% Sector £146.2m (1.1)% profit1 FY22 Organic Acquisitions Disposals Currency FY23 1: See notes on slide 38 Halma Full Year Results 2023 – 15 June 20
Slide 36: Environmental & Analysis Sector
Environmental & Analysis Sector £552.1m +9.1% +24.7% +6.6% (0.1)% +9.1% Revenue £442.9m FY22 Organic Acquisitions Disposals Currency FY23 £134.2m +9.2% +22.2% +5.9% -% Sector +7.1% profit1 £109.8m FY22 Organic Acquisitions Disposals Currency FY23 36 1: See notes on slide 38 Halma Full Year Results 2
Slide 37: Healthcare Sector
Healthcare Sector £556.4m +11.3% +25.8% +4.7% -% +9.8% Revenue £442.3m FY22 Organic Acquisitions Disposals Currency FY23 £130.1m +12.8% +30.8% +4.0% -% +14.0% Sector profit1 £99.5m FY22 Organic Acquisitions Disposals Currency FY23 1: See notes on slide 38 Halma Full Year Results 2023 – 15 June 2023
Slide 38: Sector history
Sector history £m 2018/19 2019/20 2020/21 2021/22 2022/23 Revenue Safety 564.8 620.8 587.0 641.4 745.6 Environmental & Analysis3 321.3 370.7 361.1 442.9 552.1 Healthcare3 325.2 347.2 371.3 442.3 556.4 Inter-segment sales (0.4) (0.3) (1.2) (1.3) (1.3) Group revenue 1,210.9 1,338.4 1,318.2 1,525.3 1,8
Slide 39: Currency effects
Currency effects US$ % change Euro % change FY23 FY22 FY23 FY22 Average rates 1.21 1.37 (11.7)% 1.16 1.18 (0.2)% versus Sterling Movement for every 1% US$ (~50% of total) Euro (~12% of total) change* Revenue c.£9m c.£2m Profit c.£2m c.£0.5m * Based on FY23 results. Halma Full Year Results 2023 – 15
Slide 40: Profit adjustments
Profit adjustments* £m FY23 FY22 Intangible amortisation and (56.5) (42.7) impairment Acquisition items** (13.3) (3.1) Disposal of operations - 34.0 (69.8) (11.8) * items (charged)/credited in arriving at statutory profit. ** including acquisition costs, adjustment to acquisition contingent consider
Slide 41: Pensions
Pensions Defined Benefit Pension Scheme 31 March 2023 31 March 2022 (£m) Assets 284.7 347.6 Liabilities (246.8) (317.1) Surplus 37.9 30.5 • Discount rate 4.75% (31 March 2022: 2.80%) • Closed DB to future accrual December 2014 • Contributions to pay off deficit expected for FY24: c.£4m Halma Full Ye
Slide 42: Acquisition contribution
Acquisition contribution FY23 FY24 Run-rate at Actual* Run-rate at acquisition acquisition (£m) (£m) (£m) Revenue 55.9 65.6 52.4 Operating profit 13.4 13.8 19.5 Profit (net of financing cost) 8.2 8.9 11.5 Return on Sales** (%) 24.0 21.0 37.2 The table above gives the results for Hyfire Italy, Orca,
Slide 43: Full Year 2024 forecasts
Full Year 2024 forecasts Notes FY24 full year forecasts FY23 actual Capex c.£40m £30.1m Effective tax rate 1 c.22% 20.2% Central costs c.£44m £38.6m Net finance expense 2 c.£29m3 £16.9m Pension contributions £4.2m £15.6m Notes: 1. FY24 based on expected mix of profit. 2. Assuming no further acquisit
Slide 44: 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