Halma plc · LSE:HLMA
Halma — FY2012/13 Earnings Presentation
48 slides from Halma's earnings presentation, June 2013
Slide 1: Final results 2012/13
Final results 2012/13 Andrew Williams – Chief Executive Kevin Thompson – Finance Director Halma Final results – June 2013
Slide 2: Summary 2012/13
Summary 2012/13 Growth & Revenue Profit ROS High +7% +8% 21.1% returns £619m £130.7m (LY: 20.8%) ROW revenue R&D spend Portfolio Strategic 6 acquisitions investment +14% +13% £157m £31m 1 disposal Cash flow Dividend Good cash performance 84% +7% of adjusted profit 10.43p Halma Final results – June 2
Slide 3: Financial Review
Financial Review Halma Final results – June 2013
Slide 4: Record results
Record results Continuing operations £m £m Revenue Profit* 700 140 £130.7m £619m 600 120 500 100 400 80 300 60 200 40 100 20 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 Halma Final
Slide 5: Revenue growth
Revenue growth Organic: £m Total Constant Currency H1 298 6% 3% H2 321 7% 3% Total 619 7%* 3% * Excluding disposals in current and prior year, growth is 9% Halma Final results – June 2013
Slide 6: Evolution of Geographic Revenue
Evolution of Geographic Revenue 07/08 12/13 RoW UK RoW UK 19% 19% 28% 25% £395m £619m 26% 25% 27% USA 31% Europe USA Europe Halma Final results – June 2013
Slide 7: Revenue by destination
Revenue by destination Revenue and revenue growth, 2012/13 Other 12% UK 8% 9% 9% Asia Pacific 19% 21% 15% 15% 16% 27% 28% 25% USA 31% Europe 20% 2% Halma Final results – June 2013
Slide 8: Revenue by destination: organic constant currency
Revenue by destination: organic constant currency Revenue and revenue growth, 2012/13 Other 10% UK 9% 3% Asia Pacific 21% 11% 15% 27% 28% USA Europe 4% 0% Halma Final results – June 2013
Slide 9: Profit growth
Profit* growth Organic: £m Total Constant Currency H1 60.8 6% 3% H2 69.9 11% 7% Total 130.7 8%** 5% * Profit before amortisation of acquired intangibles, acquisition costs and profit on disposal of operations ** Excluding disposals in current and prior year, growth is 10% Halma Final results – June
Slide 10: Profit Bridge
Profit* Bridge Profit* Currency Disposals Acquisitions Organic Profit* £m ccy $ € Other 6.4 0.5 (1.1) (0.9) (1.6) 6.9 120.5 130.7 11/12 12/13 * Profit before amortisation of acquired intangibles, acquisition costs and profit on disposal of operations Halma Final results – June 2013
Slide 11: Strong Returns
Strong Returns ROCE* 71.3% (2012: 74.7%) ROTIC** 15.8% (2012: 16.8%) Return on Sales 2012/13 21.1% (2012: 20.8%) Range 18-22% * Return on Capital Employed ** Return on Total Invested Capital Halma Final results – June 2013
Slide 12: Return on Sales – 25 years
Return on Sales – 25 years Current target range % 18% - 22% 25 20 16% 15 10 5 0 88/89 12/13 Halma Final results – June 2013
Slide 13: Cash flow
Cash flow Working capital: outflow £11m (2012: £8m) £m Profit Working Capex: 120 capital Capex > Depn £15.5m (2012: £16.5m) Tax 100 110% of depreciation Effective tax rate: 24.2% (2012: 23.5%) 80 Acquisitions Tax paid: £25m (2012: £28m) 60 Acquisitions + disposal: £148m (£137m initial less £5m net 4
Slide 14: Pension changes
Pension changes Deficit £47m (2012: £33m) IAS 19 profit impact 13/14: £2m negative 12/13 profit restatement approx. £2m negative Halma Final results – June 2013
Slide 15: Funding
Funding £260m facility – 5 years to 2016 Increased finance cost Strong balance sheet Funding options available Halma Final results – June 2013
Slide 16: Trading Review
Trading Review Halma Final results – June 2013
Slide 17: Four new sectors
Four new sectors…………. Watch on YouTube Halma Final results – June 2013
Slide 18: Sector performances
Sector performances Revenue Profit* Environmental & Process Environmental & Process Analysis Safety Analysis Safety (1)% +3% (4)% +11% 20% 22% 25% 23% 46% 25% 22% 33% 30% Medical Infrastructure Medical Infrastructure +36% Safety +37% Safety +1% 7% * Profit before amortisation of acquired intangibles
Slide 19: Process Safety: Trading performance
Process Safety: Trading performance Revenue: +3% Profit: +11% £m Organic ccy: +10% £m Organic ccy: +16% 150 40 £126m £32m 30 100 20 50 10 0 0 2009 2010 2011 2012 2013 2009 2010 2011 2012 2013 Return on Sales: 25.7% Halma Final results – June 2013
Slide 20: Process Safety: Revenue by destination
Process Safety: Revenue by destination FY 2012/13: % of sector & % growth (excluding disposal) Other +29% UK +1% 12% 23% Asia Pacific +29% 17% 26% Europe 22% +2% USA +8% Halma Final results – June 2013
Slide 21: Process Safety: Revenue by end market
Process Safety: Revenue by end market % of sector Buildings 6% 15% 15% Utilities 1% Science/Env Process 39% 24% Energy/Res Others Halma Final results – June 2013
Slide 22: Infrastructure Safety: Trading performance
Infrastructure Safety: Trading performance Revenue: +1% Profit: +7% £m Organic ccy: +1% £m Organic ccy: +8% 250 50 £205m £42m 200 40 150 30 100 20 50 10 0 0 2009 2010 2011 2012 2013 2009 2010 2011 2012 2013 Return on Sales: 20.3% Halma Final results – June 2013
Slide 23: Infrastructure Safety: Revenue by destination
Infrastructure Safety: Revenue by destination FY 2012/13: % of sector & % growth Other +2% Asia Pacific 7% UK +3% +1% 26% 16% USA 21% +20% 30% Europe (11)% Halma Final results – June 2013
Slide 24: Infrastructure Safety: Revenue by end market
Infrastructure Safety: Revenue by end market % of sector 2% Buildings Others 98% Halma Final results – June 2013
Slide 25: Medical: Trading performance
Medical: Trading performance Revenue: +36% Profit: +37% £m Organic ccy: +12% £m Organic ccy: +20% 150 40 £136m £36m 30 100 20 50 10 0 0 2009 2010 2011 2012 2013 2009 2010 2011 2012 2013 Return on Sales: 26.4% Halma Final results – June 2013
Slide 26: Medical: Revenue by destination
Medical: Revenue by destination FY 2012/13: % of sector & % growth (excluding disposal) Other UK +21% 0% 12% 7% Asia Pacific +39% Europe 13% 24% +26% 44% USA +73% Halma Final results – June 2013
Slide 27: Medical: Revenue by end market
Medical: Revenue by end market % of sector 1% 1% 5% Health/Medical Science/Env 93% Process Others Halma Final results – June 2013
Slide 28: Environmental & Analysis: Trading performance
Environmental & Analysis: Trading performance Revenue: (1)% Profit: (4)% £m Organic ccy: (6)% £m Organic ccy: (12)% 200 40 £152m £30m 150 30 100 20 50 10 0 0 2009 2010 2011 2012 2013 2009 2010 2011 2012 2013 Return on Sales: 19.9% Halma Final results – June 2013
Slide 29: Environmental & Analysis: Revenue by destination
Environmental & Analysis: Revenue by destination FY 2012/13: % of sector & % growth Other UK +1% (15)% 7% 14% Asia Pacific +13% 20% Europe 17% (3)% 42% USA +0% Halma Final results – June 2013
Slide 30: Environmental & Analysis: Revenue by end market
Environmental & Analysis: Revenue by end market % of sector 1% Buildings Utilities 23% 21% Health/Medical 1% 7% Science/Env 7% Process Energy/Res 40% Others Halma Final results – June 2013
Slide 31: Strategy update
Strategy update Portfolio Management Innovation People Development International Expansion Halma Final results – June 2013
Slide 32: Portfolio Management: Acquisitions & disposal
Portfolio Management: Acquisitions & disposal acquired acquired acquired sold Apr 2012 Apr 2012 May 2012 Aug 2012 acquired acquired acquired acquired LongerPump Dec 2012 Jan 2013 March 2013 April 2013 Halma Final results – June 2013
Slide 33: Innovation: HITE 2013
Innovation: HITE 2013 Watch on YouTube Halma Final results – June 2013
Slide 34: Innovation: Halma Award Winners 2013
Innovation: Halma Award Winners 2013 Halma Final results – June 2013
Slide 35: People Development
People Development Halma Final results – June 2013
Slide 36: International expansion: China growth
International expansion: China growth Revenue £m 40 30 20 +25% +25% +28% 10 +59% +25% +17% +20% 0 2006 2007 2008 2009 2010 2011 2012 2013 Halma Final results – June 2013
Slide 37: International expansion: China acquisition
International expansion: China acquisition Watch on YouTube Halma Final results – June 2013
Slide 38: Priorities 2013/14
Priorities 2013/14 Portfolio management acquisition integration opportunity pipeline progression Organic growth strategic investment E&A improvement Halma Final results – June 2013
Slide 39: Outlook statement 2013/14
Outlook statement 2013/14 Order intake since the start of 2013 has been consistent with our expectations of sustaining year-on-year organic growth and high returns. We remain confident that Halma will make further progress in the year ahead. Halma Final results – June 2013
Slide 40: Questions
Questions Halma Final results – June 2013
Slide 41: Appendices
Appendices Halma Final results – June 2013
Slide 42: Currency impacts
Currency impacts $ % € % change change 12/13 11/12 12/13 11/12 • Average 1.58 1.60 1% 1.23 1.16 (6%) rates v £ • 1% change* $ (~40% of total) € (~15% of total) Revenue +/- £2.4m +/- £0.9m Profit +/- £0.5m +/- £0.2m • At $1.55/€1.17 average rates full year profit would increase by a net amount of app
Slide 43: Acquisitions and Investment in Associate
Acquisitions and Investment in Associate £m Consideration Initial (Cash)/debt Initial Maximum 2012/13 Acquisitions Acquired Gross acquired Net Earn out EBIT* Sensorex Apr 12 24 24 - 2.4 Accutome Apr 12 11 2 13 3 1.3 SunTech May 12 34 (4) 30 4 3.5 MST Dec 12 36 (1) 35 27 3.4 Baoding Longer Pump Jan 1
Slide 44: Disposal – Tritech Holdings (Asset Monitoring)
Disposal – Tritech Holdings (Asset Monitoring) Sold August 2012 £m Proceeds Cash 19.7 Escrow 2.1 21.8 Net assets/costs (5.7) Goodwill (8.0) Gain on disposal 8.1 Annual Revenue: £12.3m, Profit: £2.4m Halma Final results – June 2013
Slide 45: Impact of M&A
Impact of M&A Revenue * Actual Expected 12/13 13/14 Acquisitions/Disposal 11/12 (3) - Acquisitions/Disposal 12/13 - 13/14 29 22 26 22 Profit after financing costs * Actual Expected 12/13 13/14 Acquisitions/Disposal 11/12 0.1 - Acquisitions/Disposal 12/13 - 13/14 5.2 4.9 5.3 4.9 * at acquisition/disp
Slide 46: Pensions
Pensions DB plans Deficit March 13 March 12 Assets 176.3 153.0 Liabilities (223.5) (186.0) Deficit (47.2) (33.0) Closed DB plans to new members in 2003 Contributions to pay off deficit : £7m/year Extra £1m in 2012/13 due to Volumatic disposal in March 2012 * Comparatives will be restated Halma
Slide 47: Sector history
Sector history £m 08/09 09/10 10/11 11/12 12/13 Sector revenue Process Safety 102.7 98.3 103.0 122.2 125.7 Infrastructure Safety 186.0 182.9 197.2 204.3 205.3 Medical 66.5 68.7 82.2 100.4 136.1 Environmental & Analysis 100.8 109.3 136.2 153.4 152.4 Inter-segmental sales (0.1) (0.1) (0.2) (0.4) (0.3)
Slide 48: 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