Halma Plc · LSE:HLMA
Halma — H1 2015/16 Earnings Presentation
40 slides from Halma's earnings presentation, November 2015
Slide 1: Half Year Results 2015/16
Half Year Results 2015/16 Andrew Williams – Chief Executive Kevin Thompson – Finance Director Halma Half Year Results – November 2015
Slide 2: Summary Half Year 2015/16
Summary Half Year 2015/16 Growth & Revenue Profit ROS High +11% +8% 19.7% returns £380m £74.7m (LY: 20.2%) R&D spend ROW revenue Strategic investment +21% +9% £19.8m £99m Cash flow Dividend Net Debt Strong cash performance 88% +7% £93m of adjusted profit 4.98p £101m Mar 15 Halma Half Year Results –
Slide 3: Financial Review
Financial Review Halma Half Year Results – November 2015
Slide 4: Record results
Record results H1, 2015/16 £m Revenue Profit* 80 £75m 400 £380m 350 70 300 60 250 50 200 40 150 30 100 20 50 10 0 0 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015 * Profit before amortisation of acquired intangibles, acquisition items and profit or loss on disposal of operations Halma Half Year R
Slide 5: Revenue growth
Revenue growth H1, 2015/16 % growth Headline growth 11% Acquisitions (1%) Organic growth 10% Currency (3%) Organic constant currency growth 7% Halma Half Year Results – November 2015
Slide 6: Revenue by destination
Revenue by destination Revenue and revenue growth, H1 2015/16 USA UK +20% +6% 19% 33% £380m 22% Europe +8% 16% Asia Pacific 10% +6% Outside US/Europe/UK Other = 9% growth +14% Halma Half Year Results – November 2015
Slide 7: Revenue by destination: Organic constant currency
Revenue by destination: Organic constant currency Revenue and revenue growth, H1 2015/16 USA UK +10% +5% Europe +10% Asia Pacific +1% Other +6% Halma Half Year Results – November 2015
Slide 8: Profit growth
Profit* growth H1, 2015/16 % growth Headline growth 8% Acquisitions (2%) Organic growth 6% Currency (2%) Organic constant currency growth 4% * Profit before amortisation of acquired intangibles, acquisition items and profit or loss on disposal of operations Halma Half Year Results – Novemb
Slide 9: Currency
Currency Translation impact H1 15/16 v H1 14/15 US$/£: ∆ 8% stronger US$ Euro/£: ∆ 12% weaker € Net positive impact: 3% revenue, 2% profit At current Fx rates FY: broadly neutral* More information in Appendix * based on 14/15 results Halma Half Year Results – November 2015
Slide 10: Cash flow H1 2015/16
Cash flow H1 2015/16 0 Working capital: Outflow £5m £(20)m (H1, 2014/15: £4m) Acquisitions: Working Capex > £13m spend £(40)m Cash/(Debt) capital Depn including £10m earn-outs Tax Pensions £(60)m Acquisitions Effective tax rate: Disposal 23.0% (FY 2014/15: 23.2%) £(80)m Dividend: 7% increase Dividen
Slide 11: Funding
Funding USPP agreed $250m Weighted average interest rate of 2.5% £360m bank facility – 5 years to 2018 Comfortable with: net debt up to 1.25x EBITDA (H1: 0.5x) temporarily higher gearing Strong balance sheet with significant capacity Halma Half Year Results – November 2015
Slide 12: Trading Review
Trading Review Halma Half Year Results – November 2015
Slide 13: Sector performances
Sector performances Revenue Profit* Environmental & Process Environmental & Process Analysis Safety Analysis Safety +14% +25% (7)% 23% 21% +6% 18% 23% £380m £83m 46% 30% 24% 32% 29% Medical Infrastructure Medical Infrastructure +18% Safety +18% Safety +9% +8% * Profit before amortisation of acquired
Slide 14: Sector performances: Organic growth constant currency
Sector performances: Organic growth constant currency Revenue Profit* Environmental & Process Environmental & Process Analysis Safety Analysis Safety +10% +18% (14)% (1)% 46% Medical Infrastructure Medical Infrastructure +12% Safety +13% Safety +8% +7% * Profit before amortisation of acquired intang
Slide 15: Process Safety: Trading performance
Process Safety: Trading performance (excluding disposal) Revenue: +6% Profit: (7)% £m £m Organic ccy: (1)% Organic ccy: (14)% 140 30 120 25 100 £19m 20 £78m 80 15 60 10 40 20 5 0 0 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015 Return on Sales: 24.5% Halma Half Year Results – November 2015
Slide 16: Process Safety: Revenue by destination
Process Safety: Revenue by destination % of sector & % growth USA USA +19% UK +8% UK +1% +0% 19% 28% As Organic reported ccy 21% Other 16% Other +10% 16% Europe (11)% Europe +0% (1)% Asia Pacific Asia Pacific (4)% (10)% Halma Half Year Results – November 2015
Slide 17: Process Safety: Revenue by end market
Process Safety: Revenue by end market % of sector 13% Energy/Res Process 16% 44% Utilities Others 27% Halma Half Year Results – November 2015
Slide 18: Infrastructure Safety: Trading performance
Infrastructure Safety: Trading performance (excluding disposal) Revenue: +9% Profit: +8% £m £m Organic ccy: +8% Organic ccy: +7% 140 30 £122m £25m 120 25 100 20 80 15 60 10 40 20 5 0 0 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015 Return on Sales: 20.1% Halma Half Year Results – November 2015
Slide 19: Infrastructure Safety: Revenue by destination
Infrastructure Safety: Revenue by destination % of sector & % growth 15% USA USA +21% +18% UK UK 19% Other +8% +7% 30% Other +31% +27% 9% As Organic reported ccy Asia Asia 14% Pacific Pacific 28% (4)% (1)% Europe Europe +1% +6% Halma Half Year Results – November 2015
Slide 20: Infrastructure Safety: Revenue by end market
Infrastructure Safety: Revenue by end market % of sector 3% Buildings (new & existing) 97% Others Halma Half Year Results – November 2015
Slide 21: Medical: Trading performance
Medical: Trading performance Revenue: +18% Profit: +18% £m £m Organic ccy: +12% Organic ccy: +13% 140 30 120 £25m 25 100 £92m 20 80 15 60 10 40 20 5 0 0 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015 Return on Sales: 26.6% Halma Half Year Results – November 2015
Slide 22: Medical: Revenue by destination
Medical: Revenue by destination % of sector & % growth UK UK +6% +4% USA USA +18% 6% Europe +8% Europe +28% +26% 23% 46% As Organic reported ccy 15% Asia Asia 10% Pacific Pacific +15% +11% Other Other +4% +7% Halma Half Year Results – November 2015
Slide 23: Medical: Revenue by end market
Medical: Revenue by end market % of sector 2% 6% Health/Medical Science/Env 92% Others Halma Half Year Results – November 2015
Slide 24: Environmental & Analysis: Trading performance
Environmental & Analysis: Trading performance Revenue: +14% Profit: +25% £m £m Organic ccy: +10% Organic ccy: +18% 140 30 120 25 100 £87m 20 80 £15m 15 60 10 40 20 5 0 0 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015 Return on Sales: 16.9% Halma Half Year Results – November 2015
Slide 25: Environmental & Analysis: Revenue by destination
Environmental & Analysis: Revenue by destination % of sector & % growth UK UK USA +8% USA +8% +20% 17% +10% 42% As Organic reported 15% ccy Europe Europe +8% +12% 7% 19% Other Asia Pacific Other Asia Pacific +10% +16% +6% +10% Halma Half Year Results – November 2015
Slide 26: Environmental & Analysis: Revenue by end market
Environmental & Analysis: Revenue by end market % of sector Science/Env 19% Utilities 40% 7% Health/Medical 11% Process 23% Others Halma Half Year Results – November 2015
Slide 27: Strategic Investment
Strategic Investment Innovation International Expansion Talent M&A Halma Half Year Results – November 2015
Slide 28: Firetrace Acquisition
Firetrace Acquisition The Firetrace acquisition video can be viewed on the Halma website at: http://www.halma.com/news/video/acquisitions.aspx Halma Half Year Results – November 2015
Slide 29: Firetrace Acquisition: Summary
Firetrace Acquisition: Summary privately owned, ‘not-for-sale’ niche technology, simple & rugged solution safety regulation/risk market demand driver growth potential: new applications international market expansion collaboration with Halma safety businesses Halma Half Year Results – N
Slide 30: Summary & Outlook
Summary & Outlook Record first half year results revenue growth in all sectors and major regions strong returns and cash generation continued investment for growth Good start to second half year FireTrace acquisition increased financial capacity order intake ahead of last year and re
Slide 31: Questions
Questions Halma Half Year Results – November 2015
Slide 32: Slide 32
Slide 33: Appendices
Appendices Halma Half Year Results – November 2015
Slide 34: Currency impacts
Currency impacts $ % € % change change Average rates 15/16 14/15 15/16 14/15 • H1 v £ 1.54 1.68 8.3% 1.39 1.24 (12.1%) • Full Year v £ N/A 1.61 N/A 1.27 • 1% change* (Annual $ (~ 40% of total) € (~10% of total) impact) Revenue +/- £3.1m +/- £0.8m Profit +/- £0.6m +/- £0.2m • At $1.54/€1.39 Average r
Slide 35: Pensions
Pensions DB plans Deficit Sept 15 March 15 £m £m Assets 212.9 224.8 Liabilities (264.3) (291.6) Deficit (51.4) (66.8) Discount rate increased to 3.75% (March 2015: 3.25%), reducing liabilities Closed UK DB pension plans to future accrual December 2014 Contributions to pay off deficit : 2014/15
Slide 36: Acquisitions 2015/16
Acquisitions 2015/16 Sector Consideration Maximum 2015/16 Acquisitions Acquired Initial Earn out Revenue* EBIT* £m £m £m £m First Half: VAS Medical May 15 3 1 1.5 0.3 Second half to date: Firetrace Infrastructure Safety Oct 15 73 - 25.8 7.4 76 1 * At acquisition run-rate Halma Half Year Results – No
Slide 37: Impact of M&A
Impact of M&A Revenue * Actual Expected Expected £m H1 15/16 H2 15/16 Full Year 15/16 Acquisitions 14/15 5 - 5 Disposal 14/15 (1) - (1) Acquisitions 15/16 1 14 15 Net 5 14 19 Profit after financing costs * Actual Expected Expected £m H1 15/16 H2 15/16 Full Year 15/16 Acquisitions 14/15 1.2 - 1.2 Acq
Slide 38: 2015/16 Full year
2015/16 Full year Notes Full year 15/16 14/15 Actual forecast Capex 1 ~ £25.7m £23.2m Effective tax rate ~ 23.0% 23.2% Central costs 2 ~ £11.0m £9.0m Net finance expense 3 ~ £6.4m £4.9m Notes: 1. 15/16 capex includes £5m for a Swiss property purchase (2014/15: £5m) 2. Additional cost in 2015/16 for
Slide 39: Sector history
Sector history £m 11/12 12/13 13/14 14/15 15/16 Sector revenue Process Safety 58.0 62.5 62.2 73.6 77.8 Infrastructure Safety 101.1 100.5 107.3 112.7 122.4 Medical 48.6 59.8 81.1 78.5 92.3 Environmental & Analysis 72.5 75.5 82.6 76.2 87.2 Inter-segmental sales (0.2) (0.2) (0.1) (0.1) - Group revenue
Slide 40: 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