REG - Halma PLC - Final Results <Origin Href="QuoteRef">HLMA.L</Origin> - Part 4
06/09/2014 02:14
- Part 4: For the preceding part double click ID:nRSL4050Jc
1. the financial statements (on which the Preliminary Statement is based), prepared in accordance with International Financial Reporting Standards as adopted by the EU, give a true and fair view of the assets, liabilities, financial position and profit or
loss of the Company and the undertakings included in the consolidation taken as a whole;
2. the strategic report includes a fair review of the development and performance of the business and the position of the Company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and
uncertainties that they face; and
3. the annual report and financial statements, taken as a whole, are fair, balanced and understandable and provide the information necessary for shareholders to assess the Company's performance, business model and strategy.
This responsibility statement was approved by the Board of Directors on 12 June 2014 and is signed on its behalf by:
A J WilliamsChief Executive K J ThompsonFinance Director
Preliminary Statement for the 52 weeks to 29 March 2014
Consolidated Income Statement
(Restated)*
52 weeks to 29 March 2014 52 weeks to 30 March 2013
Notes BeforeAdjustments**£000 Adjustments** Total£000 BeforeAdjustments**£000 Adjustments** Total£000
(note 2)£000 (note 2)£000
Continuing operations
Revenue 2 676,506 - 676,506 619,210 - 619,210
Operating profit 144,660 (1,089) 143,571 133,774 (16,477) 117,297
Share of results of associates 307 - 307 (352) - (352)
(Loss)/ profit on disposal of operations - (483) (483) - 8,070 8,070
Finance income 3 622 - 622 195 - 195
Finance expense 4 (5,340) - (5,340) (5,074) - (5,074)
Profit before taxation 140,249 (1,572) 138,677 128,543 (8,407) 120,136
Taxation 5 (32,685) 335 (32,350) (31,162) 4,632 (26,530)
Profit for the year attributable to equity shareholders 2 107,564 (1,237) 106,327 97,381 (3,775) 93,606
Earnings per share 6
From continuing operations
Basic 28.47p 28.14p 25.79p 24.79p
Diluted 28.13p 24.76p
Dividends in respect of the year 7
Paid and proposed (£000) 42,198 39,389
Paid and proposed per share 11.17p 10.43p
* Details of the restatement are disclosed in note 1 to the Preliminary Statement. ** Adjustments include the amortisation of acquired intangible assets; acquisition items; the effects of closure to future benefit accrual of the defined benefit pension schemes net of associated costs; profit or loss on disposal of operations; and the associated taxation thereon.
Consolidated Statement of Comprehensive Income and Expenditure
52 weeks to29 March2014£000 (Restated)*52 weeks to30 March2013£000
Profit for the year 106,327 93,606
Items that will not be reclassified subsequently to the Income Statement:
Actuarial gains/ (losses) on defined benefit pension schemes 2,060 (19,852)
Tax relating to components of Other Comprehensive Income that will not be reclassified (1,570) 4,292
Items that may be reclassified subsequently to the Income Statement:
Effective portion of changes in fair value of cash flow hedges 499 (504)
Exchange (losses)/ gains on translation of foreign operations and net investment hedge (31,379) 16,534
Tax relating to components of Other Comprehensive Income that may be reclassified (129) 130
Other comprehensive (expense)/ income for the year (30,519) 600
Total comprehensive income for the year attributable to equity shareholders 75,808 94,206
*Details of the restatement are disclosed in note 1 to the Preliminary Statement. The exchange loss of £31,379,000 (2013: gain of £16,534,000) comprises losses of £2,200,000 (2013: gains of £113,000) which relate to net investment hedges as set out in the Annual Report and Accounts 2014.
Consolidated Balance Sheet
29 March2014£000 (Restated)*
30 March2013£000
Non-current assets
Goodwill 335,278 351,785
Other intangible assets 112,754 134,457
Property, plant and equipment 74,417 76,725
Interests in associates 5,088 4,792
Deferred tax asset 20,677 28,749
548,214 596,508
Current assets
Inventories 71,034 69,713
Trade and other receivables 135,177 133,605
Tax receivable 172 69
Cash and bank balances 34,531 49,723
Derivative financial instruments 496 256
241,410 253,366
Total assets 789,624 849,874
Current liabilities
Trade and other payables 88,291 87,073
Borrowings 4,136 5,147
Provisions 4,482 16,276
Tax liabilities 11,340 11,331
Derivative financial instruments 167 796
108,416 120,623
Net current assets 132,994 132,743
Non-current liabilities
Borrowings 104,891 154,866
Retirement benefit obligations 36,849 47,172
Trade and other payables 3,564 2,993
Provisions 6,777 21,756
Deferred tax liabilities 43,127 49,197
195,208 275,984
Total liabilities 303,624 396,607
Net assets 486,000 453,267
Equity
Share capital 37,902 37,888
Share premium account 22,778 22,598
Treasury shares (7,054) (4,534)
Capital redemption reserve 185 185
Hedging and translation reserve 14,363 45,372
Other reserves (2,745) (1,484)
Retained earnings 420,571 353,242
Shareholders' funds 486,000 453,267
* The restatement incudes contingent purchase consideration being reclassified from Trade and other payables to Provisions and the application of IAS 19 (revised) as disclosed in note 1 to the Preliminary Statement.
Consolidated Statement of Changes in Equity
Sharecapital£000 Sharepremiumaccount£000 Treasuryshares£000 Capitalredemptionreserve£000 Hedging andtranslationreserve£000 Otherreserves£000 Retainedearnings£000 Total£000
At 30 March 2013 37,888 22,598 (4,534) 185 45,372 (1,484) 353,242 453,267
Profit for the year - - - - - - 106,327 106,327
Other comprehensive income and expense:
Exchange differences on translation of foreign operations - - - - (31,379) - - (31,379)
Actuarial gains on defined benefit pension schemes - - - - - - 2,060 2,060
Effective portion of changes in fair value of cash flow hedges - - - - 499 - - 499
Tax relating to components of other comprehensive income - - - - (129) - (1,570) (1,699)
Total other comprehensive income - - - - (31,009) - 490 (30,519)
and expense
Share options exercised 14 180 - - - - - 194
Dividends paid - - - - - - (40,485) (40,485)
Share-based payments - - - - - (1,556) - (1,556)
Deferred tax on share-based payment transactions - - - - - 295 - 295
Excess tax deductions related to share-based payments on exercised options - - - - - - 997 997
Net movement in treasury shares - - (2,520) - - - - (2,520)
At 29 March 2014 37,902 22,778 (7,054) 185 14,363 (2,745) 420,571 486,000
At 31 March 2012 37,856 22,177 (4,569) 185 29,212 1,346 311,905 398,112
Profit for the year (restated)* - - - - - - 93,606 93,606
Other comprehensive income and expense:
Exchange differences on translation of foreign operations - - - - 16,534 - - 16,534
Actuarial losses on defined benefit pension schemes (restated)* - - - - - - (19,852) (19,852)
Effective portion of changes in fair value of cash flow hedges - - - - (504) - - (504)
Tax relating to components of other comprehensive income (restated)* - - - - 130 - 4,292 4,422
Total other comprehensive income and expense (restated)* - - - - 16,160 - (15,560) 600
Share options exercised 32 421 - - - - - 453
Dividends paid - - - - - - (37,765) (37,765)
Share-based payments - - - - - (2,835) - (2,835)
Deferred tax on share-based payment transactions - - - - - 5 - 5
Excess tax deductions related to share-based payments on exercised options - - - - - - 1,056 1,056
Net movement in treasury shares - - 35 - - - - 35
At 30 March 2013 37,888 22,598 (4,534) 185 45,372 (1,484) 353,242 453,267
* Details of the restatement are disclosed in note 1 to the Preliminary Statement.
Treasury shares are ordinary shares in Halma plc purchased by the Company and held to fulfil the Company's obligations under the performance share plan. At 29 March 2014 the number of treasury shares held was 1,278,148 (2013: 1,143,209) and their market value was £7,394,086 (2013: £5,921,823). The net increase in treasury shares of £2,520,000 (2013: reduction of £35,000) comprises the purchase of treasury shares of £7,515,000 (2013: £5,525,000) offset by the transfer to Other reserves of £4,995,000 (2013:
£5,560,000). The Hedging and translation reserve is used to record differences arising from the retranslation of the financial statements of foreign operations and the portion of the cumulative net change in the fair value of cash flow hedging instruments that are deemed to be an effective hedge. Other than a credit of £123,000 (2013: charge of £247,000), all amounts at year end relate to translation movements. The Capital redemption reserve was created on repurchase and cancellation of the Company's own
shares. The Other reserves represent the provision for the value of the equity-settled share option plans and performance share plan.
Consolidated Cash Flow Statement
Notes 52 weeks to29 March2014£000 (Restated)*52 weeks to30 March2013£000
Net cash inflow from operating activities 10 121,538 108,244
Cash flows from investing activities
Purchase of property, plant and equipment (15,838) (14,472)
Purchase of computer software (1,529) (1,044)
Purchase of other intangibles - (9)
Proceeds from sale of property, plant and equipment 1,708 917
Development costs capitalised (5,196) (5,443)
Interest received 252 195
Acquisition of businesses, net of cash acquired 8 (16,685) (145,641)
Acquisition of investments in associates - (3,187)
Disposal of business, net of cash disposed 9 1,917 19,608
Net cash used in investing activities (35,371) (149,076)
Financing activities
Dividends paid (40,485) (37,765)
Proceeds from issue of share capital 194 453
Purchase of treasury shares (7,515) (5,525)
Interest paid (2,716) (2,502)
Proceeds from borrowings 10 7,498 92,298
Repayment of borrowings 10 (57,791) (2,942)
Net cash (used in)/ from financing activities (100,815) 44,017
(Decrease)/ increase in cash and cash equivalents 10 (14,648) 3,185
Cash and cash equivalents brought forward 49,723 45,305
Exchange adjustments (1,949) 1,233
Cash and cash equivalents carried forward 33,126 49,723
2014£000 (Restated)*2013£000
Reconciliation of net cash flow to movement in net debt
(Decrease)/ increase in cash and cash equivalents (14,648) 3,185
Cash outflow/ (inflow) from repayment/ (drawdowns) of borrowings 50,293 (89,356)
Net debt acquired - (2,406)
Loan notes issued** (2,731) (2,515)
Loan notes repaid** 2,515 -
Exchange adjustments 365 (489)
35,794 (91,581)
Net debt brought forward (110,290) (18,709)
Net debt carried forward (74,496) (110,290)
* Details of the restatement are disclosed in note 1 to the Preliminary Statement. ** The £2,515,000 loan note issued in the prior period was converted at par into cash on 31 May 2013. A new loan note was issued for £2,731,000 on 3 June 2013. This is convertible to cash at par at any time between six and twelve months from date of issue.
Notes to the Preliminary Statement 1 Basis of preparationGeneral Information The Preliminary Statement is based on the Company's financial statements which are prepared in accordance with International Financial Reporting Standards (IFRS) adopted for use in the European Union (EU) and therefore comply with Article 4 of the EU IAS legislation and with those parts of the Companies Act 2006 that are applicable to companies reporting under IFRS.
With the exception of the new standards adopted in the year, as discussed below, there have been no significant changes in accounting policies from those set out in Halma plc's Annual Report and Accounts 2013. The accounting policies have been applied consistently throughout the years ended 30 March 2013 and 29 March 2014. IAS 19 (as revised in June 2011) 'Employee Benefits' has been adopted by the Group in the current financial year. The interest cost and expected return on defined-benefit pension scheme
assets used in the previous version of IAS 19 are replaced with a 'net interest' amount, which is calculated by applying a discount rate to the net defined benefit liability or asset. Furthermore, IAS 19 (revised) also introduces more extensive disclosures in the presentation of the defined benefit cost, including the separate disclosure of the schemes' administrative expenses. To aid comparison, the 52 weeks to 30 March 2013 have been restated as if IAS 19 (revised) had always applied during that year.
The effect of adopting IAS 19 (revised) was a net reduction to profit after tax of £1,610,000 for the 52 weeks ended 30 March 2013 comprising: a) an increase in administrative expenses of £1,070,000; b) a decrease in the expected return on pension scheme assets of £1,048,000; and c) a reduction in the tax charge of £508,000. The corresponding entries to a) and b) were to actuarial gains and to c) were to deferred tax taken to equity. The effect on basic, adjusted basic and diluted earnings per share of
the above changes was a reduction to all of 0.43p. The effect on non-GAAP measures is detailed in Note 11 to the Preliminary Statement. There was no net effect on net cash flow from operations as a result of the change in accounting policy. The financial information set out in this Preliminary Statement does not constitute the Group's statutory accounts for the years ended 29 March 2014 and 30 March 2013 but is derived from those accounts. Statutory accounts for 2013 have been delivered to the Registrar of
Companies and those for 2014 will be delivered following the Company's Annual General Meeting. The auditor's reports on the 2013 and the 2014 accounts were unqualified, did not draw attention to any matters by way of emphasis without qualifying their report and did not contain a statement under section 498(2) or (3) of the Companies Act 2006. IAS 1 (revised) requires that items of Other Comprehensive Income that may in future be recycled to the Income Statement are presented separately from those which
will not. This presentational change has been made to the Consolidated Statement of Comprehensive Income in the current year. The following Standards with an effective date of 1 January 2013 have been adopted without any significant impact on the amounts reported in these financial statements: - IFRS 1 (amended) 'Government Loans'- IFRS 7 (amended) 'Disclosures - Offsetting Financial Assets and Financial Liabilities'- IFRS 13 'Fair Value Measurement'- IAS 12 (amended) 'Deferred Tax Recovery of Underlying
Assets' The following standard with an effective date of 1 January 2014 has been adopted early without any significant impact on the amounts reported in these financial statements: - IAS 36 (amended) 'Recoverable Amount Disclosures for Non-financial Assets' This Preliminary Statement was approved by the Board of Directors on 12 June 2014.
Notes to the Preliminary Statement
1 Basis of preparationGeneral Information The Preliminary Statement is based on the Company's financial statements which
are prepared in accordance with International Financial Reporting Standards (IFRS) adopted for use in the European Union
(EU) and therefore comply with Article 4 of the EU IAS legislation and with those parts of the Companies Act 2006 that are
applicable to companies reporting under IFRS.
With the exception of the new standards adopted in the year, as discussed below, there have been no significant changes in
accounting policies from those set out in Halma plc's Annual Report and Accounts 2013. The accounting policies have been
applied consistently throughout the years ended 30 March 2013 and 29 March 2014. IAS 19 (as revised in June 2011) 'Employee
Benefits' has been adopted by the Group in the current financial year. The interest cost and expected return on
defined-benefit pension scheme assets used in the previous version of IAS 19 are replaced with a 'net interest' amount,
which is calculated by applying a discount rate to the net defined benefit liability or asset. Furthermore, IAS 19
(revised) also introduces more extensive disclosures in the presentation of the defined benefit cost, including the
separate disclosure of the schemes' administrative expenses. To aid comparison, the 52 weeks to 30 March 2013 have been
restated as if IAS 19 (revised) had always applied during that year. The effect of adopting IAS 19 (revised) was a net
reduction to profit after tax of £1,610,000 for the 52 weeks ended 30 March 2013 comprising: a) an increase in
administrative expenses of £1,070,000; b) a decrease in the expected return on pension scheme assets of £1,048,000; and c)
a reduction in the tax charge of £508,000. The corresponding entries to a) and b) were to actuarial gains and to c) were
to deferred tax taken to equity. The effect on basic, adjusted basic and diluted earnings per share of the above changes
was a reduction to all of 0.43p. The effect on non-GAAP measures is detailed in Note 11 to the Preliminary Statement. There
was no net effect on net cash flow from operations as a result of the change in accounting policy. The financial
information set out in this Preliminary Statement does not constitute the Group's statutory accounts for the years ended 29
March 2014 and 30 March 2013 but is derived from those accounts. Statutory accounts for 2013 have been delivered to the
Registrar of Companies and those for 2014 will be delivered following the Company's Annual General Meeting. The auditor's
reports on the 2013 and the 2014 accounts were unqualified, did not draw attention to any matters by way of emphasis
without qualifying their report and did not contain a statement under section 498(2) or (3) of the Companies Act 2006. IAS
1 (revised) requires that items of Other Comprehensive Income that may in future be recycled to the Income Statement are
presented separately from those which will not. This presentational change has been made to the Consolidated Statement of
Comprehensive Income in the current year. The following Standards with an effective date of 1 January 2013 have been
adopted without any significant impact on the amounts reported in these financial statements: - IFRS 1 (amended)
'Government Loans'- IFRS 7 (amended) 'Disclosures - Offsetting Financial Assets and Financial Liabilities'- IFRS 13 'Fair
Value Measurement'- IAS 12 (amended) 'Deferred Tax Recovery of Underlying Assets' The following standard with an effective
date of 1 January 2014 has been adopted early without any significant impact on the amounts reported in these financial
statements: - IAS 36 (amended) 'Recoverable Amount Disclosures for Non-financial Assets' This Preliminary Statement was
approved by the Board of Directors on 12 June 2014.
2 Segmental analysis Sector analysis The Group has four main reportable segments (Process Safety, Infrastructure Safety, Medical and Environmental & Analysis), which are defined by markets rather than product type. Each segment includes businesses with similar operating and marketing characteristics. These segments are consistent with the internal reporting as reviewed by the Chief Executive Officer.
Segment revenue and results Revenue (all continuingoperations)
52 weeks to29 March2014£000 52 weeks to30 March2013£000
Process Safety 126,704 125,656
Infrastructure Safety 220,254 205,315
Medical 163,181 136,054
Environmental & Analysis 166,547 152,448
Inter-segmental sales (180) (263)
Revenue for the year 676,506 619,210
Inter-segmental sales are charged at prevailing market prices and have not been disclosed separately by segment as they are not considered material. The Group does not analyse revenue by product group and has no material revenue derived from the rendering of services.
Profit (all continuingoperations)
52 weeks to29 March2014£000 (Restated)*52 weeks to30 March2013£000
Segment profit before allocation of adjustments**
Process Safety 34,878 32,310
Infrastructure Safety 44,445 41,523
Medical 41,826 35,934
Environmental & Analysis 31,740 30,385
152,889 140,152
Segment profit after allocation of adjustments**
Process Safety 34,125 39,848
Infrastructure Safety 45,010 41,469
Medical 41,554 24,146
Environmental & Analysis 27,574 26,282
Segment profit 148,263 131,745
Central administration costs excluding the effects of closure to future benefit accrual of the defined benefit pension scheme net of associated costs*** (7,922) (6,730)
Effects of closure to future benefit accrual of the defined benefit pension scheme net of associated costs*** 3,054 -
Net finance expense (4,718) (4,879)
Group profit before taxation 138,677 120,136
Taxation (32,350) (26,530)
Profit for the year 106,327 93,606
* Details of the restatement are disclosed in note 1 to the Preliminary Statement. ** Adjustments include the amortisation of acquired intangible assets; acquisition items; the effects of closure to future benefit accrual of the defined benefit pension schemes net of associated costs; and profit or loss on disposal of operations.
*** The defined benefit scheme referred to here is the Halma Group Pension Plan only, which is not practical to allocate by Segment (see adjustments table below). The accounting policies of the reportable segments are the same as the Group's accounting policies. For acquisitions after 3 April 2010, acquisition transaction costs and movement on contingent consideration (collectively "acquisition items"), are recognised in the Consolidated Income Statement. Segment profit, before these acquisition items and
the other adjustments, is disclosed separately above as this is the measure reported to the Chief Executive Officer for the purpose of allocation of resources and assessment of segment performance. These adjustments are analysed as follows:
2014
Acquisition items
Amortisationof acquiredintangibles£000 Transactioncosts£000 Adjustments tocontingentconsideration£000 Totalamortizationcharge andacquisitionitems£000 Disposal ofoperations (note 9)£000 Effects of closure to future benefitaccrual ofdefined benefitpension schemes*£000 Total£000
Process Safety (598) - (17) (615) (138) - (753)
Infrastructure Safety (144) (140) - (284) (45) 894 565
Medical (12,530) 102 12,456 28 (300) - (272)
Environmental & Analysis (4,243) (53) 130 (4,166) - - (4,166)
Total Segment (17,515) (91) 12,569 (5,037) (483) 894 (4,626)
Central administration costs - - - - - 3,054 3,054
Total Group (17,515) (91) 12,569 (5,037) (483) 3,948 (1,572)
* The effects of closure to future benefit accrual of defined benefit pension schemes, which were gains of £894,000 and £3,054,000, arose on the closure of the Apollo Pension and Life Assurance Plan and Halma Group Pension Plan respectively. It is not practical to apportion the latter gain by Segment. The transaction costs arose mainly on the acquisition (see note 8) of ASL Holdings Limited and Talentum Developments Limited, which were acquired on 14 March 2013 and 11 April 2013 respectively. The credit in
the Medical Segment related mainly to the release of accrued fees arising on the MicroSurgical Technology, Inc. ("MST") acquisition in the prior year. The £12,456,000 credit to contingent consideration related mainly to a revision in the estimate of the MST payment from US $25,0000,000 to US $6,504,000.
2013
Acquisition items
Amortisation of acquired intangibles£000 Transactioncosts£000 Adjustments to contingentconsideration£000 Totalamortizationcharge andacquisitionitems£000 Disposal ofcontinuingoperations£000 Effects of closure to future benefitaccrual of defined benefit pensionschemes £000 Total£000
Process Safety (602) - (16) (618) 8,156 - 7,538
Infrastructure Safety - (54) - (54) - - (54)
Medical (9,947) (2,272) 517 (11,702) (86) - (11,788)
Environmental & Analysis (3,686) (417) - (4,103) - - (4,103)
Total Segment (14,235) (2,743) 501 (16,477) 8,070 - (8,407)
Central administration costs - - - - - - -
Total Group (14,235) (2,743) 501 (16,477) 8,070 - (8,407)
Geographical information The Group's revenue from external customers (by location of customer) is detailed below:
Revenue by destination
2014£000 2013£000
United States of America 214,493 194,990
Mainland Europe 163,707 151,631
United Kingdom 127,877 115,575
Asia Pacific 111,572 100,532
Africa, Near and Middle East 33,037 31,380
Other countries 25,820 25,102
676,506 619,210
3 Finance income
2014£000 (Restated)*2013£000
Interest receivable 252 195
Fair value movement on derivative financial instruments 370 -
622 195
* Details of the restatement are disclosed in note 1 to the Preliminary Statement.
4 Finance expense
2014£000 (Restated)*2013£000
Interest payable on bank loans and overdrafts 2,691 2,366
Amortisation of finance costs 599 634
Net interest charge on pension scheme liabilities 1,875 1,518
Other interest payable 25 90
5,190 4,608
Fair value movement on derivative financial instruments - 384
Unwinding of discount on provisions 150 82
5,340 5,074
* Details of the restatement are disclosed in note 1 to the Preliminary Statement.
5 Taxation As stated in note 1 to the Preliminary Statement, the prior year's results have been restated following the adoption of IAS19 (revised) from 31 March 2013. Consequently, the deferred tax charge in the Consolidated Income Statement and the tax credit recognised directly in the Consolidated Statement of Comprehensive Income have both been reduced by £508,000.
2014£000 (Restated)*2013£000
Current tax
UK corporation tax at 23% (2013: 24%) 9,465 8,081
Overseas taxation 20,872 19,046
Adjustments in respect of prior years (492) (178)
Total current tax charge
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