Half Year results 2017/18 Andrew Williams Chief Executive Kevin - - PowerPoint PPT Presentation

Half Year results 2017/18

Andrew Williams – Chief Executive Kevin Thompson – Finance Director

Halma Half Year results – November 2017

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Financial Review

Halma Half Year results – November 2017

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Halma Half Year results – November 2017

Revenue growth

H1, 2017/18

Ø Organic constant currency growth 9% ØCurrency 5% ØAcquisitions 1% Ø Headline growth 15% % growth

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Halma Half Year results – November 2017

Profit* growth

H1, 2017/18

Ø Organic constant currency 8% * ØCurrency 5% ØAcquisitions

• Ø Headline growth

13% % growth

* Profit before amortisation and impairment of acquired intangibles, acquisition items, restructuring costs and profit or loss on disposal of operations

Halma Half Year results – November 2017

Currency

Ø Translation impact H1 17/18 v H1 16/17

Ø US$/£: D 6% stronger US$ Ø Euro/£: D 7% stronger € Ø Net positive impact: 5% revenue and profit

Ø At current Fx rates

Ø FY: ~ 1% positive

Ø More information in Appendix

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Halma Half Year results – November 2017

Substantial financial capacity

Ø Revolving Credit Facility

Ø £550m (from November 2016) Ø Extended to November 2022

Ø In addition to existing $250m USPP Ø Capacity for medium term growth Ø Half year gearing 0.8x, comfortable up to 2x

Halma Half Year results – November 2017

Financial KPI Summary 2017/18 Half Year

Target Achieved Organic revenue growth* > 5% 9% Organic profit growth* > 5% 8% Acquisition profit growth ** > 5%

• %

Revenue growth outside UK/Europe/USA > 10% 21% Return on Sales 18% - 22% 18.7% Return on Total Invested Capital >12% 13.4% Cash conversion > 85% 84% R&D investment (% of revenue) > 4% 5.4%

* at constant currency. ** annualised profit of acquisitions made in the year (net of finance cost) as % of prior year adjusted profit

Trading Review

Halma Half Year results – November 2017

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Strategy update

Halma Half Year results – November 2017

Halma Half Year results – November 2017

Sustainable competitive strengths

Long-term market growth drivers Global expansion expertise Innovation through collaboration Agile & close to customers Proven M&A capabilities Valuable application knowledge & technology Strategy-led talent management Innovation through collaboration

Halma Half Year results – November 2017

Sustainable competitive strengths

Long-term market growth drivers Global expansion expertise Innovation through collaboration Agile & close to customers Proven M&A capabilities Valuable application knowledge & technology Strategy-led talent management Innovation through collaboration

Halma Half Year results – November 2017

Sustainable competitive strengths

Long-term market growth drivers Global expansion expertise Innovation through collaboration Agile & close to customers Proven M&A capabilities Valuable application knowledge & technology Strategy-led talent management Innovation through collaboration

Halma Half Year results – November 2017

M&A Update: four acquisitions completed

Mini-Cam (Oct 17) Cardios (Aug 17) CASMED (Jul 17) Setco/Microkey (Nov 17)

Halma Half Year results – November 2017

Summary & Outlook

Ø Strong H1 and trading in line with FY expectations

Ø Good revenue momentum in all sectors Ø Order intake remains on track Ø Recent acquisitions, healthy acquisition pipeline

Ø Investor dinner early February 2018

“Growing a safer, cleaner and healthier future for everyone, every day”

Halma Half Year results – November 2017

Questions

Halma Half Year results – November 2017

Appendices

Halma Half Year results – November 2017

Currency impacts

$

% change

€

% change

Average rates 17/18 16/17 17/18 16/17

• H1 v £

1.29 1.37 6% 1.14 1.22 7%

• Full Year v £

1.31 1.19

• 1% change* (Annual

impact) $ (~ 45% of total) € (~15% of total) Revenue +/- £4.6m +/- £1.3m Profit +/- £0.9m +/- £0.2m

• At $1.30/€1.13 Average rates for the full year 2017/18, (assuming $1.31/€1.11 relative to

Sterling for balance of financial year), currency translation impact on revenue and profit would be approximately 1% positive compared with using 2016/17 Fx rates*.

* Based on H1 2017/18 currency mix

Halma Half Year results – November 2017

Pensions

Ø Discount rate increased to 2.6% (Year end 2017: 2.5%), decreasing liabilities Ø Closed UK DB pension plans to future accrual December 2014 Ø Annual contributions to pay off deficit : 2016/17: £10m, 2017/18: expected £11m Ø Next Triennial Actuarial valuations: Halma pension plan – December 2017, Apollo pension plan – April 2018

DB plans Deficit HY 2017/18 FY 17 £m £m Assets 265.2 265.0 Liabilities (332.0) (339.9) Deficit (66.8) (74.9)

Halma Half Year results – November 2017

2017/18 Full year

Notes Full year 17/18 forecast 16/17 Actual Capex 1 ~ £23m £24.4m Effective tax rate ~ 22.3% 21.5% Central costs 2 ~ £14.5m £10.5m Net finance expense 3 ~ £9.7m £9.3m

Notes: 1. Forecast capex of £23m versus £29m forecast at year end, includes lower property related spend in H1 in addition to deferral of two projects into 2018/19, leaving H2 forecast spend in line with H2 2016/17. 2. 2017/18 includes expenditure on the HITEx conference, cyber security and further investment in Digital development, communications and incentives. 3. Includes Mini-Cam and Setco acquisitions.

Halma Half Year results – November 2017

Annual contribution * HQ Month acquired Initial consideration £m Max earnout £m Revenue £m EBIT £m Casmed USA July 17 3.4 1.5 2.7 Cardios Brazil Aug 17 12.4 1.2 6.1 Mini-Cam UK Oct 17 62.0 23.1 5.2 Setco Spain Nov 17 15.1 _ 1.5

Acquisitions 2017/18

* As announced. Most recent full year results.

Halma Half Year results – November 2017

£m 13/14 14/15 15/16 16/17 17/18

Sector revenue Process Safety 62.2 73.6 77.8 76.7 88.8 Infrastructure Safety 107.3 112.7 122.4 148.0 167.9 Medical 81.1 78.5 92.3 118.7 133.3 Environmental & Analysis 82.6 76.2 87.2 98.8 116.5 Inter-segmental sales (0.1) (0.1)

• (0.1)

(0.2) Group revenue 333.1 340.9 379.7 442.1 506.3 Sector profit* Process Safety 16.1 20.4 19.1 17.4 20.2 Infrastructure Safety 20.6 22.8 24.6 32.0 35.7 Medical 19.6 20.9 24.6 28.9 28.7 Environmental & Analysis 15.0 11.9 14.7 16.0 21.8 Segment Profit 71.3 76.0 83.0 94.3 106.4 Central cost/net finance expense (6.2) (7.0) (8.3) (10.7) (11.9) Profit* 65.1 69.0 74.7 83.6 94.5

Sector history

* Profit before amortisation and impairment of acquired intangibles, acquisition items, restructuring costs and profit or loss on disposal of operations

Halma Half Year results – November 2017

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.