Halma plc · LSE:HLMA
Halma — H1 2016/17 Earnings Presentation
38 slides from Halma's earnings presentation, November 2016
Slide 1: Half Year results 2016/17
Half Year results 2016/17 Andrew Williams – Chief Executive Kevin Thompson – Finance Director Halma Half Year results – November 2016
Slide 2: Summary Half Year 2016/17
Summary Half Year 2016/17 Growth & Revenue Profit ROS High +16% +12% 18.9% returns £442m £84m (LY: 19.7%) R&D spend ROW revenue Strategic investment +16% +14% £23m £112m Cash flow Dividend Net Debt Strong cash performance 84% +7% £237m of adjusted profit 5.33p £247m FY16 Halma Half Year results – No
Slide 3: Financial Review
Financial Review Halma Half Year results – November 2016
Slide 4: Record results
Record results H1, 2016/17 £m Revenue £442m Profit* 90 £84m 450 400 80 350 70 300 60 250 50 200 40 150 30 100 20 50 10 0 0 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 * Profit before amortisation of acquired intangibles, acquisition items and profit or loss on disposal of operations and restru
Slide 5: Revenue growth
Revenue growth H1, 2016/17 % growth Organic constant currency growth 2%* Currency 8% Acquisitions 6% Headline growth 16% * 6% growth on weekly average basis when adjusted for 27 weeks in the prior period Halma Half Year results – November 2016
Slide 6: Revenue by destination
Revenue by destination Revenue and revenue growth, H1 2016/17 UK +2% 16% USA +29% 36% Europe £442m 22% +13% 10% 16% Other Asia Pacific +10% +17% Halma Half Year results – November 2016
Slide 7: Revenue by destination: Organic constant currency
Revenue by destination: Organic constant currency Revenue and revenue growth, H1 2016/17 USA UK +3% +1% Europe +2% Other (4%) Asia Pacific Halma Half Year results – November 2016 +7%
Slide 8: Profit growth
Profit** growth H1, 2016/17 % growth Organic constant currency 2%* Currency 8% Acquisitions 2% Headline growth 12% * 6% growth on a weekly average basis when adjusted for 27 weeks in the prior period ** Profit before amortisation of acquired intangibles, acquisition items and profit or loss
Slide 9: Return on Sales
Return on Sales 2016/17 2015/16 H1 Acquisition* Without H1 £m contribution acquisitions £m £m £m Revenue 442 25 417 380 Adjusted profit 83.6 1.5** 82.1 74.7 Return on Sales 18.9% 19.7% 19.7% *Acquisition of Firetrace, Visiometrics and CenTrak made in H2 2015/16 ** Net of financing cost Halma Half Ye
Slide 10: Currency
Currency Translation impact H1 16/17 v H1 15/16 US$/£: ∆ 11% stronger US$ Euro/£: ∆ 12% stronger € Net positive impact: 8% revenue and profit At current Fx rates FY: ~ 10% positive More information in Appendix Halma Half Year results – November 2016
Slide 11: Cash/(Debt)
Cash flow H1 2016/17 £(100)m Working capital: Pensions: Outflow £8m Deficit £94.0m (FY 2015/16: (H1, 2015/16: £5m) £52.3m Annual contributions: £10m Effective tax rate: Dividend: 22% (FY 2015/16: 21.9%) £(150)m 7% increase Debt: £237.3m net debt (FY 2016: £246.7m net debt). Fx Cash/(Debt) Working Ca
Slide 12: Increased financial capacity
Increased financial capacity Revolving Credit Facility increased to £550m (previously £360m) to November 2021 5 existing plus 3 new banks In addition to existing $250m USPP Capacity for medium term growth Comfortable with ~1.25x gearing, and up to 2x Halma Half Year results – November
Slide 13: Full year factors
Full year factors H1/H2 pattern Growth – one less week Currency translation benefit HY: 8%, FY: ~ 10% Restructuring – small benefit in E&A sector Acquisition performance – expected improvement H2 with strong growth prospects Halma Half Year results – November 2016
Slide 14: Trading Review
Trading Review Halma Half Year results – November 2016
Slide 15: Sector performances
Sector performances Revenue Profit* Process Safety Infrastructure Process Safety Infrastructure (1)% Safety (9)% Safety +21% +30% 17% 18% 34% 34% 22% £442m 17% 46% £94m Env & Env & Analysis 27% Analysis 31% +13% Medical +9% Medical +29% +18% * Profit before amortisation of acquired intangibles, acqu
Slide 16: Sector performances: Organic growth constant currency
Sector performances: Organic growth constant currency Revenue Profit* Process Safety Infrastructure Process Safety Infrastructure (6)% Safety (13)% Safety +5% +17% 46% Env & Env & Analysis Analysis +4% Medical (2)% Medical +4% +2% * Profit before amortisation of acquired intangibles, acquisition ite
Slide 17: Group revenue by end-market: Reported
Group revenue by end-market: Reported Others +40% Energy/Res (5)% 7% Buildings 8% +17% Process Ind +1% 6% 33% Science/Env 12% +19% 7% 27% Utilities Health/Med (2)% +28% Halma Half Year results – November 2016
Slide 18: Infrastructure Safety: Trading performance
Infrastructure Safety: Trading performance Revenue: +21% Profit: +30% £m £m Organic ccy: +5% Organic ccy: +17% 160 £148m 40 140 35 £32m 120 30 100 25 80 20 60 15 40 10 20 5 0 0 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 Return on Sales: 21.6% Halma Half Year results – November 2016
Slide 19: Infrastructure Safety: Revenue by destination
Infrastructure Safety: Revenue by destination % of sector & % growth 15% USA USA +42% +1% UK UK 22% 27% +8% +7% Other As (9)% Organic Other 9% reported ccy +15% Asia 13% Pacific Asia 29% +4% Pacific +14% Europe Europe +25% +11% Halma Half Year results – November 2016
Slide 20: Medical: Trading performance
Medical: Trading performance Revenue: +29% Profit: +18% £m £m Organic ccy: +4% Organic ccy: +2% 160 40 140 35 £119m £29m 120 30 100 25 80 20 60 15 40 10 20 5 0 0 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 Return on Sales: 24.3% Halma Half Year results – November 2016
Slide 21: Medical: Revenue by destination
Medical: Revenue by destination % of sector & % growth UK UK +5% USA 0% USA +43% 5% Europe +4% Europe +4% (7)% 19% 52% As Organic reported ccy 16% Asia Asia Pacific Pacific 8% +37% +23% Other Other +17% (0)% Halma Half Year results – November 2016
Slide 22: Environmental & Analysis: Trading performance
Environmental & Analysis: Trading performance Revenue: +13% Profit: +9% £m £m Organic ccy: +4% Organic ccy: (2)% 160 40 140 35 120 30 £99m 100 25 80 20 £16m 60 15 40 10 20 5 0 0 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 Return on Sales: 16.2% Halma Half Year results – November 2016
Slide 23: Environmental & Analysis: Revenue by destination
Environmental & Analysis: Revenue by destination % of sector & % growth UK UK USA (8)% USA (10)% +24% +10% 14% Europe Europe As 14% Organic 46% +5% (5)% reported ccy 20% 6% Asia Pacific Asia Pacific +19% +10% Other Other +8% (1)% Halma Half Year results – November 2016
Slide 24: Process Safety: Trading performance
Process Safety: Trading performance Revenue: (1)% Profit: (9)% £m £m Organic ccy: (6)% Organic ccy: (13)% 160 40 140 35 120 30 100 25 £77m 80 20 £17m 60 15 40 10 20 5 0 0 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 Return on Sales: 22.7% Halma Half Year results – November 2016
Slide 25: Process Safety: Revenue by destination
Process Safety: Revenue by destination % of sector & % growth USA USA (2)% UK (10)% UK (4)% (4)% 18% 28% As Organic reported ccy 22% Europe Europe 17% +3% (1)% Other 15% Other +3% (4)% Asia Pacific Asia Pacific (6)% (11)% Halma Half Year results – November 2016
Slide 26: Strategy
Strategy Halma Half Year results – November 2016
Slide 27: Strategic Investment: Innovation, International Expansion
Strategic Investment Innovation International Expansion Halma Half Year results – November 2016
Slide 28: Strategic Investment: Innovation, International Expansion, Talent, M&A
Strategic Investment Innovation International Expansion Talent M&A Halma Half Year results – November 2016
Slide 29: Summary & H2 Outlook
Summary & H2 Outlook Record first half year results widespread growth, strength in diversity continued investment for growth H2 remains in line with our expectations H2 order intake so far ahead of last year and revenue increased FX impact Longer term increased financial capacity b
Slide 30: Questions
Questions Halma Half Year results – November 2016
Slide 31: Appendices
Appendices Halma Half Year results – November 2016
Slide 32: Sector performances: Organic growth on weekly average basis
Sector performances: Organic constant currency growth on weekly average basis Revenue* Profit* Process Safety Infrastructure Process Safety Infrastructure (3)% Safety (10)% Safety +9% +21% 46% Env & Env & Analysis Analysis +7% Medical +2% Medical +8% +6% * Adjusted for the 27 weeks in the prior peri
Slide 33: Currency impacts
Currency impacts $ % € % change change Average rates 16/17 15/16 16/17 15/16 • H1 v £ 1.37 1.54 11.0% 1.22 1.39 12.2% • Full Year v £ 1.51 1.37 • 1% change* $ (~ 45% of total) € (~15% of total) (Annualised impact) Revenue +/- £4.0m +/- £1.0m Profit +/- £0.7m +/- £0.2m • At $1.31/€1.18 Average rates
Slide 34: Pensions
Pensions DB plans Deficit HY 2016/17 FY 16 £m £m Assets 254 221 Liabilities (348) (274) Deficit (94) (52) Discount rate decreased to 2.3% (Year end 2016: 3.4%), increasing liabilities Closed UK DB pension plans to future accrual December 2014 Contributions to pay off deficit : 2015/16: £8m, 20
Slide 35: Acquisition performance
Acquisition performance Acquisition run rates Actual ** Actual Annual 15/16 H1 16/17 £m £m £m Revenue 59 20 25 Operating Profit 15.6 4.4 3.2 Profit (net of financing 12.1 3.4 1.5 cost) Return on Sales * 26% 22% 13% The table above gives the results for Firetrace, Visiometrics and CenTrak acquired in
Slide 36: 2016/17 Full year
2016/17 Full year Notes Full year 16/17 15/16 Actual forecast Capex ~ £25m £24.1m Effective tax rate ~ 22.0% 21.9% Central costs 1 ~ £11.5m £8.9m Net finance expense 2 ~ £10.0m £7.1m Notes: 1. 2015/16 includes profit on property sale. 2016/17 includes further investment in international hubs, cyber
Slide 37: Sector history – Half year
Sector history – Half year £m 12/13 13/14 14/15 15/16 16/17 Sector revenue Process Safety 62.5 62.2 73.6 77.8 76.7 Infrastructure Safety 100.5 107.3 112.7 122.4 148.0 Medical 59.8 81.1 78.5 92.3 118.7 Environmental & Analysis 75.5 82.6 76.2 87.2 98.7 Inter-segmental sales (0.2) (0.1) (0.1) - - Group
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