SLIDE 1
Capital Markets Day
Andrew Williams – Chief Executive Kevin Thompson – Finance Director Adam Meyers – Director
Strategic model
Halma Capital Markets Day – February 2013
Capital Markets Day 14 February, 2013 Andrew Williams Chief - - PowerPoint PPT Presentation
Capital Markets Day 14 February, 2013 Andrew Williams Chief - - PowerPoint PPT Presentation
Capital Markets Day 14 February, 2013 Andrew Williams Chief Executive Kevin Thompson Finance Director Adam Meyers Director Strategic model Active portfolio Long-term market drivers management Financial model Niche products
SLIDE 2
SLIDE 3
20 40 60 80 100 120 140
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
Sustained growth
100 200 300 400 500 600
72/73 75/76 78/79 81/82 84/85 87/88 90/91 93/4 96/7 99/0 02/3 05/6 08/9 11/12
Revenue Profit*
£m £m
Halma Capital Markets Day – February 2013
* Before tax, amortisation of intangibles, acquisition costs, movement on contingent consideration and profit on disposal of operations
SLIDE 4
5 10 15 20 25
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
High returns
% 2 4 6 8 10
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
Return on sales Dividend per share*
pence
Halma Capital Markets Day – February 2013
* Adjusted for scrip issues
SLIDE 5
Halma Capital Markets Day – February 2013
10 16 14 20 18 12 24 22 100 300 200 500 400
ROS % Revenue £m
26 600
Growth 2005 - 2012
area proportional to profit
SLIDE 6
Halma Capital Markets Day – February 2013
Industrial Safety Health & Analysis Infrastructure Sensors
10 16 14 20 18 12 24 22 50 150 100 250 200
ROS % Revenue £m
26 300
Sector growth 2005 - 2012
area proportional to profit
SLIDE 7
Halma Capital Markets Day – February 2013
Reporting Sector changes
Industrial Safety Infrastructure Sensors Health & Analysis Environmental & Analysis Medical Infrastructure Safety Process Safety
SLIDE 8
Halma Capital Markets Day – February 2013
New sectors: primary growth drivers
Health & Safety Healthcare Life-critical resources Process Safety Medical Environmental & Analysis Infrastructure Safety
SLIDE 9
Halma Capital Markets Day – February 2013
New sectors revenue and profit
HY 2012/13
Revenue Profit*
* Adjusted profit before finance expense and central costs
£298m £65m
Process Safety Infrastructure Safety Medical Environmental & Analysis
SLIDE 10
Halma Capital Markets Day – February 2013
50 100 150 200 Mar 2009 Mar 2010 Mar 2011 Mar 2012
Revenue trends
Full year revenue
£m
Process Safety Infrastructure Safety
50 100 150 200 Mar 2009 Mar 2010 Mar 2011 Mar 2012
Safety Health & Environmental
Medical Environmental & Analysis
£m
SLIDE 11
Halma Capital Markets Day – February 2013
New sectors: revenue by end-market
HY 2012/13 gross revenue
Environmental Medical Process Infrastructure
Buildings - new Scientific/Environmental Utilities Healthcare/Medical Process Industries Energy & Resources Buildings - existing Others
£62m £102m £60m £79m SAFETY HEALTH & ENVIRONMENT
SLIDE 12
Halma Capital Markets Day – February 2013
New sectors: revenue by region
HY 2012/13 external revenue
Environmental Medical Process Infrastructure SAFETY HEALTH & ENVIRONMENT £62m £101m £60m £75m
UK RoW USA EUR
SLIDE 13
Halma Capital Markets Day – February 2013
Acquisition pipeline: sectors
Process Environmental Medical Infrastructure
~500
SLIDE 14
Halma Capital Markets Day – February 2013
Acquisition pipeline: sectors and regions
Process Environmental Medical Infrastructure
~500
RoW US EUR UK RoW US EUR UK RoW US EUR UK RoW US EUR UK
SLIDE 15
Halma Capital Markets Day – February 2013
Summary
Proven strategy and financial model New sectors
Reflects sector growth trends Aligned with growth drivers Aligned with end-markets Simplifies reporting Simplifies investor proposition
SLIDE 16
Halma Capital Markets Day – February 2013
Active portfolio management ‘deep dive’
M&A model M&A track record & sustainability Case study: Health Optics division Q&A
SLIDE 17
Halma Capital Markets Day – February 2013
M&A model: disciplined decision-making
- Halma growth drivers
- Strong financial performance
- Technology we understand
- Markets we know
- Ambitious local management
MERGE SELL
[5 year view]
BUY
[15-20 year view]
SLIDE 18
Halma Capital Markets Day – February 2013
M&A model: primary focus is growth
Investment for growth
innovation, collaboration & market intelligence management development international expansion mitigate risk
Operational improvement
financial control and intelligence lean operations
SLIDE 19
Halma Capital Markets Day – February 2013
M&A model: DCEs drive the process
Resources Process HALMA EXTERNAL DCE* GAE** MDs Finance Broker Advisors Accountability Search Agreement Due diligence Completion Integration Cultivate 6 mths – 3 yrs 2 - 3 mths Typical Timeline 3 - 6 mths Future
* Divisional Chief Executive ** Group Acquisition Executive
SLIDE 20
Halma Capital Markets Day – February 2013
Summary of M&A activity since 2002/03
2
- 2
3 4 1 2 1 7 2 5
No.Acq’ns
- 8
- 1
- 1
1
No.Disp’ls
3
180 160 140 120 100 80 60 40 20 (40) (20) 50 4 14 40 21 105 141 24 31 35 (5) (2) (5) (proceeds) / Spend £m
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 To date
(15) (22) Year end
SLIDE 21
Halma Capital Markets Day – February 2013
Revenue and profit* 2003 – 2012
Subsidiaries in Group at March 2012 before finance expense and central costs
20 40 60 80 100 120 140 100 200 300 400 500 600 700
Revenue Profit*
Core Companies Acquired Companies
£m £m
* Excludes operations disposed of between 2003 and 2012
SLIDE 22
Halma Capital Markets Day – February 2013
Revenue progression* 2003 – 2012
Subsidiaries in Group at March 2012 600 500 400 300 200 100 50 193 31 35 2003 CORE CORE Organic Growth Acquired Companies Acquired Companies Growth 2012 TOTAL 133 162 88 576 £m
Total CAGR 11% Core Organic CAGR 6%
* Excludes operations disposed of between 2003 and 2012
SLIDE 23
Halma Capital Markets Day – February 2013
Profit progression* 2003 – 2012
Subsidiaries in Group at March 2012 before finance expense and central costs 150 100 50 50 37 33 36 20 126 £m 2003 CORE CORE Organic Growth Acquired Companies Acquired Companies Growth 2012 TOTAL
Total CAGR 13% Core Organic CAGR 7%
* Excludes operations disposed of between 2003 and 2012
SLIDE 24
Halma Capital Markets Day – February 2013
Optimal rate of growth has 3 key factors
SHAREHOLDER RETURN
Organic growth Dividend growth M&A multiples
SLIDE 25
Halma Capital Markets Day – February 2013
Acquisition spend for 15% pa total growth*
*assumes average multiple 8xEBIT; 7.5% organic growth; Net Debt <1.25xEBITDA
£m
20 40 60 80 100 120 140 160 180 200 2013 2014 2015 2016 2017 Annual spend Year
SLIDE 26
Halma Capital Markets Day – February 2013
Span of control is a critical factor to manage
20 40 60 80 100 120 140 20 40 60 80 100 120 140 Profit No Halma Companies
£m
2003 ‘04 ‘05 ‘06 ‘07 ‘08 ‘09 ‘10 ‘11 2012 Year
SLIDE 27
Halma Capital Markets Day – February 2013
Case Study: Health Optics division
Adam Meyers – Director
SLIDE 28
Halma Capital Markets Day – February 2013
Health Optics division: ophthalmic market
Cataract surgery Lenses & eye care Diagnostic Instruments Refractive surgery Pharmaceutical
£12Bn
SLIDE 29
Halma Capital Markets Day – February 2013
Excellent long term drivers – Healthcare demand
Aging global demographics Improving worldwide access Increasingly difficult global regulations
Well-established competitors Physician choice devices
Health Optics division: market characteristics
SLIDE 30
Halma Capital Markets Day – February 2013
Health Optics Health Optics division: what we make
Ophthalmology surgical Primary care diagnostics Ophthalmology diagnostics
SLIDE 31
Halma Capital Markets Day – February 2013
Health Optics division: evolution
MICROSURGICAL
TECHNOLOGY™
Revenue
£150m
2013 2011 2009 2007 Pre-2005
SLIDE 32
Halma Capital Markets Day – February 2013
$57M at closing with up to $43M contingent consideration “Typical” M&A process
MicroSurgical Technology Inc.
Ophthalmic surgical products, focusing on single-use devices in cataract surgery
SLIDE 33
Halma Capital Markets Day – February 2013
MicroSurgical Technology Inc.: next steps
Execute Integration Plan RoW coverage Collaborate with Medicel Explore Divisional synergies
Regulatory US surgical sales Capital investment
SLIDE 34
Halma Capital Markets Day – February 2013
Health Optics division – strong global presence
Principal operations Sales & support offices
SLIDE 35
Halma Capital Markets Day – February 2013 MICROSURGICAL TECHNOLOGY™
Ophthalmology Primary Care
Diagnostic Surgical OEM Physician OEM
Health Optics division: expanding opportunities
Core market Secondary market
SLIDE 36
Halma Capital Markets Day – February 2013
Summary M&A
Clear strategy, sustainable success
Disciplined M&A approach Buy good businesses we understand Primary focus is growth DCEs drive the process Organic growth/cash generation crucial Growth opportunities always increasing
SLIDE 37
Halma Capital Markets Day – February 2013
Location: Orlando, Florida Date: 29th/30th April, 2013
Investor Event 2013
SLIDE 38
Halma Capital Markets Day – February 2013
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, dividend policy, losses and future prospects; (ii) business and management strategies and the expansion and growth of Halma plc’s operations and potential synergies; and (iii) the effects of government regulation on business. These forward-looking statements are not guarantees of future performance. They have not been reviewed by the auditors of Halma plc. They involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of any such person to be materially different from any results, performance or achievements expressed or implied by such statements. They are based on numerous assumptions regarding the present and future business strategies of such persons and the environment in which each will operate in the future. All subsequent oral or written forward- looking statements attributable to Halma plc or any of its shareholders or any persons acting on its behalf are expressly qualified in their entirety by the cautionary statement above. All forward-looking statements included in this document speak only as of the date they were made and are based on information then available to Halma plc. Investors should not place undue reliance on such forward-looking statements, and Halma plc does not undertake any obligation to update publicly or revise any forward-looking statements. No representation or warranty, express or implied, is given regarding the accuracy of the information or opinions contained in this document and no liability is accepted by Halma plc or any of its directors, members, officers, employees, agents or advisers for any such information or opinions. This information is being supplied to you for information purposes only and not for any other purpose. This document and the information contained in it does not constitute or form any part of an offer of, or invitation or inducement to apply for, securities. The distribution of this document in jurisdictions other than the United Kingdom may be restricted by law and persons into whose possession this document comes should inform themselves about, and observe any such restrictions. Any failure to comply with these restrictions may constitute a violation of laws of any such other jurisdiction.