REG - Halma PLC - Final Results <Origin Href="QuoteRef">HLMA.L</Origin> - Part 4
16/07/2015 10:27
- Part 4: For the preceding part double click ID:nRSK8263Pc
and retention is a central objective. This focus ensures that intangible resources stay and grow within the business.- Operating businesses are actively encouraged to
develop and protect know-how in local jurisdictions.- Innovation is encouraged and fostered throughout the Group, inter alia, via the Halma Innovation Awards.
Going Concern Statement
The Group's business activities, together with the main trends and factors likely to affect its future development, performance and position, and the financial position of the Group, its cash flows, liquidity position and borrowing facilities, are set out herein.The Group has considerable financial resources (including a £360m five-year revolving credit facility, of which £220m was undrawn at 28 March 2015) together with contracts with a diverse range of customers and suppliers across different geographic
areas and industries. No one customer accounts for more than 2% of Group turnover. As a consequence, the Directors believe that the Group is well placed to manage its business risks successfully.After conducting a formal review of the Group's financial resources, the Directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. For this reason, they continue to adopt the going concern basis in preparing the
Annual Report and Accounts.
Responsibility Statement of the Directors
on the Annual Report and Accounts The responsibility statement below has been prepared in connection with the Company's full Annual Report and Accounts for the 52 weeks to 28 March 2015. Certain parts thereof are not included within these Results.We
confirm that to the best of our knowledge:
1. the financial statements (on which the Results are 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 11 June 2015 and is signed on its behalf by:
A J WilliamsChief Executive K J ThompsonFinance Director
Results for the 52 weeks to 28 March 2015
Consolidated Income Statement
52 weeks to 28 March 2015 52 weeks to 29 March 2014
Notes Beforeadjustments*£000 Adjustments* (note 2)£000 Total Beforeadjustments*£000 Adjustments*(note 2)£000 Total£000
£000
Continuing operations
Revenue 2 726,134 - 726,134 676,506 - 676,506
Operating profit 158,500 (21,437) 137,063 144,660 (1,089) 143,571
Share of results of associates 64 - 64 307 - 307
Profit/(loss) on disposal of operations 9 - 1,430 1,430 - (483) (483)
Finance income 3 167 - 167 622 - 622
Finance expense 4 (5,113) - (5,113) (5,340) - (5,340)
Profit before taxation 153,618 (20,007) 133,611 140,249 (1,572) 138,677
Taxation 5 (35,706) 6,096 (29,610) (32,685) 335 (32,350)
Profit for the year attributable to equity shareholders 2 117,912 (13,911) 104,001 107,564 (1,237) 106,327
Earnings per share 6
From continuing operations
Basic 31.17p 27.49p 28.47p 28.14p
Diluted 27.48p 28.13p
Dividends in respect 7
of the year
Paid and proposed (£000) 45,252 42,235
Paid and proposed per share 11.96p 11.17p
* Adjustments include the amortisation of acquired intangible assets; acquisition items; profit or loss on disposal of operations; the effects of closure to future benefit accrual of the defined benefit pension plans net of associated costs (prior year only); and the associated taxation thereon.
Consolidated Statement of Comprehensive Income and Expenditure
Notes 52 weeks to28 March2015£000 52 weeks to29 March2014£000
Profit for the year 104,001 106,327
Items that will not be reclassified subsequently to the Income Statement:
Actuarial (losses)/gains on defined benefit pension plans (34,795) 2,060
Tax relating to components of Other comprehensive income that will not be reclassified 6,791 (1,570)
Items that may be reclassified subsequently to the Income Statement:
Effective portion of changes in fair value of cash flow hedges 71 499
Exchange gains/ (losses) on translation of foreign operations and net investment hedge 30,900 (31,379)
Exchange losses transferred to Income Statement on disposal of operation 9 189 -
Tax relating to components of Other comprehensive income that may be reclassified (23) (129)
Other comprehensive income/(expense) for the year 3,133 (30,519)
Total comprehensive income for the year attributable to equity shareholders 107,134 75,808
The exchange gain of £30,900,000 (2014: loss of £31,379,000) includes gains of £862,000 (2014: losses of £2,200,000) which relate to net investment hedges as set out in the Annual Report and Accounts 2015.
Consolidated Balance Sheet
28 March 2015£000 29 March 2014£000
Non-current assets
Goodwill 406,190 335,278
Other intangible assets 138,691 112,754
Property, plant and equipment 86,303 74,417
Interests in associates 4,236 5,088
Deferred tax asset 28,596 20,677
664,016 548,214
Current assets
Inventories 79,734 71,034
Trade and other receivables 156,464 135,177
Tax receivable 20 172
Cash and bank balances 41,230 34,531
Derivative financial instruments 1,069 496
278,517 241,410
Total assets 942,533 789,624
Current liabilities
Trade and other payables 102,717 88,291
Borrowings 1,705 4,136
Provisions 11,746 4,482
Tax liabilities 12,405 11,340
Derivative financial instruments 636 167
129,209 108,416
Net current assets 149,308 132,994
Non-current liabilities
Borrowings 140,419 104,891
Retirement benefit obligations 66,790 36,849
Trade and other payables 3,756 3,564
Provisions 1,549 6,777
Deferred tax liabilities 51,862 43,127
264,376 195,208
Total liabilities 393,585 303,624
Net assets 548,948 486,000
Equity
Share capital 37,965 37,902
Share premium account 23,608 22,778
Treasury shares (8,450) (7,054)
Capital redemption reserve 185 185
Hedging and translation reserve 45,500 14,363
Other reserves (4,073) (2,745)
Retained earnings 454,213 420,571
Shareholders' funds 548,948 486,000
Consolidated Statement of Changes in Equity
Share capital Share premium account Treasury shares Capital redemption reserve Hedging and translation reserve Other reserves Retained earnings Total
£000 £000 £000 £000 £000 £000 £000 £000
At 29 March 2014 37,902 22,778 (7,054) 185 14,363 (2,745) 420,571 486,000
Profit for the year - - - - - - 104,001 104,001
Other comprehensive income
and expense:
Exchange differences on translation - - - - 30,900 - - 30,900
of foreign operations
Exchange losses transferred to Income Statement on disposal of operation - - - - 189 - - 189
Actuarial losses on defined benefit pension plans - - - - - - (34,795) (34,795)
Effective portion of changes in fair value - - - - 71 - - 71
of cash flow hedges
Tax relating to components of other comprehensive income - - - - (23) - 6,791 6,768
Total other comprehensive income - - - - 31,137 - (28,004) 3,133
and expense
Share options exercised 63 830 - - - - - 893
Dividends paid - - - - - - (43,399) (43,399)
Share-based payments - - - - - (1,619) - (1,619)
Deferred tax on share-based payment transactions - - - - - 291 - 291
Excess tax deductions related to share-based payments on exercised options - - - - - - 1,044 1,044
Net movement in treasury shares - - (1,396) - - - - (1,396)
At 28 March 2015 37,965 23,608 (8,450) 185 45,500 (4,073) 454,213 548,948
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 - - - - (31,379) - - (31,379)
of foreign operations
Actuarial gains on defined benefit pension plans - - - - - - 2,060 2,060
Effective portion of changes in fair value - - - - 499 - - 499
of cash flow hedges
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
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 28 March 2015 the number of treasury shares held was 1,371,785 (2014: 1,278,148) and their market value was £9,616,000 (2014: £7,394,000). The net increase in treasury shares of £1,396,000 (2014: increase of £2,520,000) comprises the purchase of treasury shares of £6,843,000 (2014: £7,515,000) offset by the transfer to Other reserves of £5,447,000 (2014:
£4,995,000).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 net credit of £202,000 (2014: credit of £123,000), 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 to 52 weeks to
28 March 2015 29 March 2014
£000 £000
Net cash inflow from operating activities 10 137,231 121,538
Cash flows from investing activities
Purchase of property, plant and equipment (22,164) (15,838)
Purchase of computer software (1,021) (1,529)
Purchase of other intangibles (382) -
Proceeds from sale of property, plant and equipment 1,411 1,708
Development costs capitalised (7,213) (5,196)
Interest received 134 252
Acquisition of businesses, net of cash acquired 8 (87,743) (16,685)
Disposal of operations, net of cash disposed 9 4,248 1,917
Net cash used in investing activities (112,730) (35,371)
Financing activities
Dividends paid (43,399) (40,485)
Proceeds from issue of share capital 893 194
Purchase of treasury shares (6,843) (7,515)
Interest paid (3,118) (2,716)
Proceeds from borrowings 10 68,962 7,498
Repayment of borrowings 10 (35,341) (57,791)
Net cash used in financing activities (18,846) (100,815)
Increase/(decrease) in cash and cash equivalents 10 5,655 (14,648)
Cash and cash equivalents brought forward 33,126 49,723
Exchange adjustments 744 (1,949)
Cash and cash equivalents carried forward 39,525 33,126
2015 2014
£000 £000
Reconciliation of net cash flow to movement in net debt
Increase/(decrease) in cash and cash equivalents 5,655 (14,648)
Cash (inflow)/outflow from (drawdown)/repayment of borrowings (33,621) 50,293
Net debt acquired (468) -
Loan notes issued* (657) (2,731)
Loan notes repaid* 2,731 2,515
Exchange adjustments (38) 365
(26,398) 35,794
Net debt brought forward (74,496) (110,290)
Net debt carried forward (100,894) (74,496)
* The £2,731,000 loan note issued in the prior year was converted at par into cash on 2 June 2014. New loan notes were issued totalling £657,000 on 14 May 2014, 3 September 2014 and 26 November 2014 in respect of the acquisition of Advanced Electronics Limited (see note 8). These loan notes, which attract interest at 1%, are convertible into cash at par on each anniversary of the acquisition date until 14 May 2019.
Notes to the Results 1 Basis of preparationGeneral Information The Results are 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 2014. The accounting policies have been applied consistently throughout the years ended 29 March 2014 and 28 March 2015.The financial information set out in these Results does not constitute the Group's statutory accounts for the years ended 28 March 2015 and 29 March 2014 but is derived from those accounts. Statutory accounts for 2014 have been delivered to the Registrar of Companies and those
for 2015 will be delivered following the Company's Annual General Meeting. The auditor's reports on the 2014 and the 2015 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.The following Standards with an effective date of 1 January 2014 have been adopted without any significant impact on the amounts reported in these financial statements:IFRS 10
'Consolidated Financial Statements'IFRS 10, IFRS 12 and IAS 27 (amended) 'Investment Entities'IFRS 11 'Joint Arrangements'IAS 12 (amended) 'Deferred Tax: Recovery of Underlying Assets'IAS 27 (revised) 'Separate Financial Statements'IAS 28 (revised) 'Investments in Associates and Joint Ventures'IAS 32 (amended) 'Offsetting Financial Assets and Financial Liabilities'IAS 39 (amended) 'Novation of Derivatives and Continuation of Hedge Accounting'These Results were approved by the Board of Directors on 11 June
2015.
Notes to the Results
1 Basis of preparationGeneral Information The Results are 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 2014. The accounting policies have been applied consistently throughout the years ended 29 March 2014 and 28 March
2015.The financial information set out in these Results does not constitute the Group's statutory accounts for the years
ended 28 March 2015 and 29 March 2014 but is derived from those accounts. Statutory accounts for 2014 have been delivered
to the Registrar of Companies and those for 2015 will be delivered following the Company's Annual General Meeting. The
auditor's reports on the 2014 and the 2015 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.The following Standards with an effective date of 1 January 2014 have been adopted without any significant impact on
the amounts reported in these financial statements:IFRS 10 'Consolidated Financial Statements'IFRS 10, IFRS 12 and IAS 27
(amended) 'Investment Entities'IFRS 11 'Joint Arrangements'IAS 12 (amended) 'Deferred Tax: Recovery of Underlying
Assets'IAS 27 (revised) 'Separate Financial Statements'IAS 28 (revised) 'Investments in Associates and Joint Ventures'IAS
32 (amended) 'Offsetting Financial Assets and Financial Liabilities'IAS 39 (amended) 'Novation of Derivatives and
Continuation of Hedge Accounting'These Results were approved by the Board of Directors on 11 June 2015.
2 Segmental analysis Sector analysisThe 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.
Segment revenue and results Revenue (all continuing operations)
52 weeks to28 March2015 £000 52 weeks to29 March2014£000
Process Safety 158,372 126,704
Infrastructure Safety 234,063 220,254
Medical 169,333 163,181
Environmental & Analysis 164,412 166,547
Inter-segmental sales (46) (180)
Revenue for the year 726,134 676,506
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 continuing operations)
52 weeks to 52 weeks to
28 March 2015 29 March 2014
£000 £000
Segment profit before allocation of adjustments*
Process Safety 44,772 34,878
Infrastructure Safety 49,992 44,445
Medical 45,385 41,826
Environmental & Analysis 27,403 31,740
167,552 152,889
Segment profit after allocation of adjustments*
Process Safety 40,280 34,125
Infrastructure Safety 49,585 45,010
Medical 31,981 41,554
Environmental & Analysis 25,699 27,574
Segment profit 147,545 148,263
Central administration costs excluding the effects of closure to future benefit accrual of the defined benefit pension plan net of associated costs** (8,988) (7,922)
Effects of closure to future benefit accrual of the defined benefit pension plan net of associated costs** - 3,054
Net finance expense (4,946) (4,718)
Group profit before taxation 133,611 138,677
Taxation (29,610) (32,350)
Profit for the year 104,001 106,327
* Adjustments include the amortisation of acquired intangible assets; acquisition items; profit or loss on disposal of operations; the effects of closure to future benefit accrual of the defined benefit pension plans net of associated costs (prior year only); and the associated taxation thereon.
** The defined benefit plan referred to here is the Halma Group Pension Plan only, which is not practical to allocate by sector.
The accounting policies of the reportable segments are the same as the Group's accounting policies. Acquisition transaction costs, release of fair value adjustments to inventory and adjustments to 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 for the purpose of allocation of resources
and assessment of segment performance.These adjustments are analysed as follows:
2015
Acquisition items
Amortisationof acquiredintangibleassets£000 Transactioncosts£000 Adjustmentsto contingentconsideration £000 Release offair valueadjustmentsto inventory £000 TotalAmortisationcharge andacquisitionitems£000 Disposal of operations (note 9) £000 Total£000
Process Safety (3,026) (928) - (538) (4,492) - (4,492)
Infrastructure Safety (765) (486) (102) (130) (1,483) 1,076 (407)
Medical (12,156) (21) (1,581) - (13,758) 354 (13,404)
Environmental & Analysis (4,007) - 2,303 - (1,704) - (1,704)
Total Segment & Group (19,954) (1,435) 620 (668) (21,437) 1,430 (20,007)
The transaction costs arose mainly on the acquisitions (see note 8) of Rohrback Cosasco Systems Inc. (RCS), Advanced Electronics Limited (Advanced) and Plasticspritzerei AG, which were acquired on 30 May 2014, 14 May 2014 and 2 May 2014 respectively. The charge of £1,581,000 to contingent consideration related mainly to a revision in the estimate of the remaining MST payable from $6,504,000 to $9,061,000. The £2,303,000 credit to contingent consideration related to a revision in the estimate of the
remaining ASL payable from £2,500,000 to £197,000. The release of fair value adjustments to inventory arises from revaluing the inventory of RCS and Advanced at acquisition.
2014
Acquisition items
Amortisationof acquiredintangibleassets £000 Transactioncosts Adjustmentsto contingentconsideration TotalAmortisationcharge andacquisitionitems £000 Disposal ofoperations (note 9)£000 Effects ofclosure tofuture benefit accrual of defined benefit pension plans*£000 Total£000
£000 £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 plans, 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 £12,456,000 credit to contingent consideration related mainly to a revision in the estimate of the MicroSurgical Technology, Inc. payable from US$25,000,000 to US$6,504,000.
Geographic information The Group's revenue from external customers (by location of customer) is detailed below:
Revenue by destination
2015 2014
£000 £000
United States of America 223,374 214,493
Mainland Europe 167,363 163,707
United Kingdom 138,312 127,877
Asia Pacific 116,842 111,572
Africa, Near and Middle East 44,037 33,037
Other countries 36,206 25,820
726,134 676,506
Non-current assets comprise goodwill, other intangible assets, investments in associates and property, plant and equipment.
3 Finance income
2015 2014
£000 £000
Interest receivable 134 252
Fair value movement on derivative financial instruments 33 370
167 622
4 Finance expense 2015 2014
£000 £000
Interest payable on bank loans and overdrafts 3,090 2,691
Amortisation of finance costs 530 599
Net interest charge on pension plan liabilities 1,419 1,875
Other interest payable 28 25
5,067 5,190
Unwinding of discount on provisions 46 150
5,113 5,340
5 Taxation 2015 2014
£000 £000
Current tax
UK corporation tax at 21% (2014: 23%) 9,397 9,465
Overseas taxation 24,064 20,872
Adjustments in respect of prior years 62 (492)
Total current tax charge 33,523 29,845
Deferred tax
Origination and reversal of timing differences (4,075) 2,626
Adjustments in respect of prior years 162 (121)
Total deferred tax (credit)/charge (3,913) 2,505
Total tax charge recognised in the Consolidated Income Statement 29,610 32,350
Reconciliation of the effective tax rate:
Profit before tax 133,611 138,677
Tax at the UK corporation tax rate of 21% (2014: 23%) 28,058 31,896
Overseas tax rate differences 8,047 5,665
Permanent differences (6,719) (4,598)
Adjustments in respect of prior years 224 (613)
29,610 32,350
Effective tax rate after adjustments* 22.2% 23.3%
2015 2014
£000 £000
Profit before tax and adjustments* 153,618 140,249
Total tax charge on profit before adjustments* 35,706 32,685
Effective tax rate 23.2% 23.3%
* Adjustments include the amortisation of acquired intangible assets; acquisition items; profit or loss on disposal of operations; the effects of closure to future benefit accrual of the defined benefit pension plans net of associated costs (prior year only).
6 Earnings per ordinary share Basic earnings per ordinary share are calculated using the weighted average of 378,328,541 shares in issue during the year (net of shares purchased by the Company and held as treasury shares) (2014: 377,805,248). Diluted earnings per ordinary share are calculated using the weighted average of 378,475,804 shares (2014: 378,035,662), which includes dilutive potential ordinary shares of 147,263 (2014: 230,414). Dilutive potential ordinary shares are calculated from those
exercisable share options where the exercise price is less than the average price of the Company's ordinary shares during the year.Adjusted earnings are calculated as earnings from continuing operations excluding the amortisation of acquired intangible assets; acquisition items; profit or loss on disposal of operations; the effects of closure to future benefit accrual of the defined benefit pension plans net of associated costs (prior year only); and the associated taxation thereon. The Directors consider
that adjusted earnings represent a more consistent measure of underlying performance. A reconciliation of earnings and the effect on basic earnings per share figures is as follows:
Per ordinary share
2015 2014 2015 2014
£000 £000 pence pence
Earnings from continuing operations 104,001 106,327 27.49 28.14
Cessation of DB pension accrual - (3,040) - (0.80)
Amortisation of acquired intangible assets (after tax) 14,121 11,820 3.73 3.14
Acquisition transaction costs (after tax) 1,423 91 0.38 0.02
Release of fair value adjustments to inventory (after tax) 474 - 0.13 -
Adjustments to contingent consideration (after tax) (1,162) (8,104) (0.31) (2.15)
(Profit)/loss on disposal of operations (after tax) (945) 470 (0.25) 0.12
Adjusted earnings 117,912 107,564 31.17 28.47
7 Dividends Per ordinary share
2015 2014 2015 2014
pence pence £000 £000
Amounts recognised as distributions to shareholders in the year
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