REG - Halma PLC - Final Results
16/06/2022 07:00
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RNS Number : 0608P Halma PLC 16 June 2022
HALMA plc
FULL YEAR RESULTS 2022
Record profit for 19(th) consecutive year
Halma, the global group of life-saving technology companies focused on growing
a safer, cleaner and healthier future for everyone, every day, today announces
its full year results for the 12 months to 31 March 2022.
Highlights
Change 2022 2021
Revenue +16% £1,525.3m £1,318.2m
Adjusted Profit before Taxation(1) +14% £316.2m £278.3m
Adjusted Earnings per Share(2) +12% 65.48p 58.67p
Statutory Profit before Taxation +20% £304.4m £252.9m
Statutory Basic Earnings per Share +20% 64.54p 53.61p
Total Dividend per Share(3) +7% 18.88p 17.65p
Return on Sales(4) 20.7% 21.1%
Return on Total Invested Capital(5) 14.6% 14.4%
Net Debt £274.8m £256.2m
· Record revenue, up 16%, and 17% on an organic constant
currency(6) basis.
· 19(th) consecutive year of record profit: Adjusted(1)
Profit before Taxation up 14%; 15% on an organic constant currency(6) basis
· Statutory Profit before Taxation up 20%; includes a
£34.0m gain on the Texecom disposal.
· Strong organic constant currency(6) revenue and profit
growth in all three sectors and all major regions.
· Continued strong returns: Return on Sales(4) of 20.7%
and ROTIC(5) of 14.6%
· Substantially increased strategic investment to support
our future growth:
o R&D expenditure up 21%, representing 5.6% of revenue
o 13 acquisitions completed in the year for a total maximum consideration of
£164m; one further acquisition completed since the period end for £37m; a
healthy acquisition pipeline across all sectors.
· Solid cash conversion of 84% and a strong balance
sheet, with net debt/EBITDA of 0.74x (2021: 0.76x), supporting investment in
organic growth and acquisitions.
· Total dividend per share for the year up 7%; 43(rd)
consecutive year of dividend growth of 5% or more.
Andrew Williams, Group Chief Executive of Halma, commented:
"This was a year of notable achievements for Halma, with revenue exceeding
£1.5bn and profit £300m for the first time. We delivered our 19(th)
consecutive year of record profit, and our 43(rd) consecutive year of dividend
growth of 5% or more, while substantially increasing strategic investment
including further strengthening our leadership, teams and culture to support
our future growth.
Halma's Sustainable Growth Model enabled our companies to act with agility to
address new market opportunities and to respond rapidly to the multiple
operational and economic challenges they faced during the year. Our strong
performance reflects huge credit on the dedication of our people across the
business, and was underpinned by our empowering purpose and culture, our focus
on niche markets with long-term, fundamental growth drivers and the high value
of the solutions we provide to our customers.
We have made a positive start to the new financial year. We have a strong
order book, and order intake in the year to date is ahead of revenue and in
line with the very strong intake in the same period of the prior year. We
expect to deliver continued growth and maintain high returns in the 2022/23
financial year, with good single digit percentage organic constant currency
revenue growth and a Return on Sales similar to the second half of the 2021/22
financial year. We are well positioned to make further progress in the full
year and in the longer-term."
Notes:
1 Adjusted to remove the amortisation of acquired intangible assets, acquisition
items and profit or loss on disposal of operations, totalling £11.8m
(2020/21: £25.4m). See note 1 to the Results for details.
2 Adjusted to remove the amortisation of acquired intangible assets, acquisition
items, profit or loss on disposal of operations and the associated taxation
thereon and, in 2022, the increase in the UK's corporation tax rate from 19%
to 25%. See note 2 to the Results for details.
3 Total dividend paid and proposed per share, comprising interim dividend of
7.35p per share and proposed final dividend of 11.53p per share.
4 Return on Sales is defined as adjusted(1) profit before taxation from
continuing operations expressed as a percentage of revenue from continuing
operations
5 Return on Total Invested Capital (ROTIC) is defined as post-tax Adjusted(1)
Profit as a percentage of average Total Invested Capital.
6 Organic constant currency measures exclude the effect of movements in foreign
exchange rates on the translation of revenue and profit(1) into Sterling, as
well as acquisitions in the year following completion and disposals.
7 Adjusted(1) Profit before Taxation, Adjusted(2) Earnings per Share, organic
growth rates, Return on Sales and ROTIC are alternative performance measures
used by management. See notes 1, 2 and 3 to the Results for details.
For further information, please contact:
Halma plc +44 (0)1494 721 111
Andrew Williams, Group Chief Executive
Marc Ronchetti, Chief Financial Officer
Charles King, Head of Investor Relations +44 (0)7776 685948
Clayton Hirst, Director of Corporate Affairs +44 (0)7834 796 013
MHP Communications +44 (0)20 3128 8404
Andrew Jaques/Rachel Farrington
A copy of this announcement, together with other information about Halma, may
be viewed on its website: www.halma.com (http://www.halma.com) . The webcast
of the results presentation will be available on the Halma website later
today: www.halma.com (http://www.halma.com)
NOTE TO EDITORS
1. Halma is a global group of life-saving technology companies, focused on
growing a safer, cleaner and healthier future for everyone, every day. Its
purpose defines the three broad market areas where it operates:
· Safety Protecting life as populations grow and protecting worker safety.
· Environment Addressing the impacts of climate change, pollution and waste, protecting
life-critical resources and supporting scientific research.
· Medical Meeting rising healthcare demand as growing populations age and lifestyles change.
Halma employs over 7,000 people in more than 20 countries, with major
operations in the UK, Mainland Europe, the USA and Asia Pacific. Halma is
listed on the London Stock Exchange (LON: HLMA) and is a constituent of the
FTSE 100 index.
In January 2022, Halma was named one of Britain's Most Admired Companies by
Management Today.
2. You can view or download copies of this announcement and the latest Half Year
and Annual Reports from the website at www.halma.com (http://www.halma.com) or
request free printed copies by contacting halma@halma.com
(mailto:halma@halma.com) .
3. This announcement contains certain forward-looking statements which have been
made by the Directors in good faith using information available up until the
date they approved the announcement. Forward-looking statements should be
regarded with caution as by their nature such statements involve risk and
uncertainties relating to events and circumstances that may occur in the
future. Actual results may differ from those expressed in such statements,
depending on the outcome of these uncertain future events.
Strategic Report
A year of notable achievements
This has been a year of notable achievements for Halma. We delivered record
profit for the 19th consecutive year, our revenue exceeded £1.5 billion and
profit £300 million for the first time, and our companies successfully
addressed multiple economic and geopolitical challenges including the ongoing
effects of the COVID pandemic and more recently the conflict in Ukraine. At
the same time, we substantially increased investment in our digital and
innovation activities while also making further progress on our Key
Sustainability Objectives.
Our achievements reflect the relevance of our purpose in addressing our
customers' needs and consequently many key challenges facing our planet and
society. They were enabled by Halma's Sustainable Growth Model, built on a
culture and organisational model which allows our companies to respond with
agility to changes in their markets and the wider world.
However, all of this is brought to life through the commitment of our
employees worldwide who rose to the challenges and lived Halma's purpose of
growing a safer, cleaner, healthier future for everyone, every day. I would
like to thank them for their dedication and their contributions over the past
year.
A strong financial performance
Revenue grew by 16% to £1,525.3m and Adjusted(1) profit before taxation
increased by 14% to £316.2m. Statutory profit before taxation increased by
20% to £304.4m.
Growth was broadly spread across our sectors, regions and companies. All
sectors delivered double digit rates of revenue and profit growth on an
organic constant currency basis. There was double digit organic constant
currency revenue growth in all major regions, and approximately 80% of our
companies delivered double digit organic constant currency revenue growth.
Returns remained strong, with Return on Sales(1) well within our target range
of 18-22% and Return on Total Invested Capital over double our estimated
weighted average cost of capital of 7.1%. Cash conversion was solid, which
reflected strong underlying cash generation and working capital control, but
also the effect of some selective working capital investment to support the
strong growth in the period. Our continued cash generation and strong balance
sheet underpin our investment in future organic growth, as well as providing
capacity to fund acquisitions and our progressive dividend policy.
The Board is recommending a 7% increase in the final dividend to 11.53p per
share (2021: 10.78p per share). Together with the 7.35p per share interim
dividend, this would result in a total dividend for the year of 18.88p (2021:
17.65p), up 7%, making this the 43rd consecutive year of dividend per share
growth of 5% or more.
Organisational model and DNA enable our strong performance
Our Sustainable Growth Model, and in particular our organisational model and
our DNA, have been critical in delivering our strong performance this year.
At its core is our purpose, which not only continues to motivate us, as
demonstrated by our high employee engagement scores, but is also proving
to be an important asset in attracting new talent.
Our organisational model gives our companies the resources, agility and
authority to respond to changes in their markets and the global operating
environment, led by their local management team. It also has inherent
scalability, allowing us to use M&A to expand our opportunities for
growth, without adding further complexity to our structures and decision
making or to divest when growth opportunities become more limited. As we have
grown, we have deliberately developed a more collaborative culture. This has
allowed our companies to address opportunities and solve common issues
together, benefiting from the Group's increasing scale, while still retaining
the advantages of being small, agile companies, close to their markets. This
has been crucial during the COVID pandemic and will continue to be so as we
address the further opportunities and challenges ahead.
Our organisational design and DNA means that companies have short spans of
control and the autonomy to act in their best interests without seeking
approval first. A good example of this in action has been the different
actions they have taken to address the wide range of operational challenges
they have faced during the past year. These include:
- introducing radically different shift patterns and increasing employee
engagement in response to increased demand and labour market shortages, which
has also added capacity and flexibility for further growth;
- collaborating to source alternative supplies, share component inventories or
leverage the Group's scale to address shortages and delays of critical
components in supply chains;
- rapidly redesigning products to use alternative components or making
components themselves, using
cross-functional groups to achieve fast times to market; and
- leveraging their close relationships with their customers to ensure that we
continue to deliver value to them as well as to address increasing costs by
price changes.
Increased strategic investment to support future growth
One of Halma's key strengths is the ability to deliver strong performance in
the shorter-term, while simultaneously making substantial investments to
support sustainable growth over the longer-term.
We invested over a quarter of a billion pounds in aggregate in this financial
year. This investment broadened our opportunities for growth both organically
and through acquisition, ensured our products continue to create value
for our customers and further strengthened our infrastructure across the
Group.
Increasing these investments reflects our confidence in the long-term growth
drivers we see in our markets. Our products and services have never been more
relevant than today, as health, safety and environmental regulations continue
to increase, demand for healthcare grows and the world addresses expanding
demands on life-critical resources including the urgent need to tackle climate
change, waste and pollution.
Increased strategic investment in new products and technology
Our companies increased investment in new product development above the rate
of revenue growth, reflecting their own confidence in their long-term growth
prospects. R&D expenditure grew by £15m to £85m, which represented 5.6%
of revenue, up from 5.3% in the prior year.
Investment in our technology infrastructure was £11m, to support future
growth and modernise ways of working across Halma. We are upgrading our
operational technologies to simplify the way in which central functions
collect the data required from our companies' systems, with the objectives of
increasing automation, improving accuracy and control, and facilitating deeper
data insights. We are largely complete in the rollout of our global Treasury
Management solution and have commenced implementation of our new Finance and
Talent Management platforms. We are also investing significantly in upgrading
our global security architecture, which has already brought the added benefits
of more secure connectivity between our companies and locations. We are
assisting each of our companies in considering how their core business
opportunities and challenges can be addressed through improved technology
solutions.
Our Digital and Technology teams have been active in supporting the
advancement of digital solutions across our companies' product portfolios.
Revenue from digital products and solutions increased by 15% in the year, and
represents over 40% of Group revenue, with revenue from IoT solutions and from
software and services both up by more than 40% year-on-year.
We are making steady progress in establishing a common technology core to
support our ongoing IoT product development, with companies trialling a number
of potential solutions addressing areas such as telemedicine, fire detection,
and critical asset tracking and management.
As our companies increasingly incorporate connected technologies into their
products, we are helping to accelerate their IoT / digital product development
through a number of initiatives. Examples include diagnostic and design
clinics which help companies devise their digital solutions; digital
incubators to help companies rapidly prototype and test their new concepts;
and strategic partnerships with third-party digital technology platforms and
software development partners to assist companies in scaling and launching
products to market.
These activities were supported by a range of initiatives which encourage
collaboration and by our innovation network. They included an Innovation
& Digital Summit, which brought together over 100 participants from across
the Group to share their experiences and learn from external experts, a
regular Innovation & Digital newsletter, and the release of a
self-learning resource through our Innovation & Digital
Champions Network.
13 acquisitions completed across all three sectors
Our M&A strategy is focused on acquiring businesses with valuable
intellectual property, which operate in market niches aligned with our
purpose of growing a safer, cleaner, healthier future for everyone, every day.
Our lean organisational model is scalable and gives us the ability to continue
acquiring small-to-medium sized businesses to add new capabilities and
supplement our underlying organic growth.
We are also able to sell and merge businesses relatively easily should market
dynamics change, enabling us to maintain a purpose-driven, growth-oriented
portfolio without it becoming significantly more complex to manage. The
benefit of this active portfolio management is reflected in the number of
companies within Halma remaining relatively stable, whilst we have grown and
maximised value for our shareholders. For example, in 2012, Halma had revenue
of £580m from 38 operating companies, and today we are delivering revenue
of over £1.5bn from only 44 operating companies.
We made 13 acquisitions in the year, for a maximum total consideration of
£164m, while disposing of one business for £65m. The acquisitions were
spread across our three sectors, with five acquisitions each in the
Environmental & Analysis and Medical sectors and three in the Safety
sector. They were broadly spread geographically, with acquisitions made
in the UK, the USA, a number of countries in Mainland Europe,
and in Australia.
It is particularly pleasing to see the acquisition momentum in the
Environmental & Analysis sector increasing, following the formation of the
new sector leadership team at the beginning of the year including a dedicated
M&A team.
Three of the acquisitions made in the year will be standalone companies within
the Group. They are:
- PeriGen, Inc., whose advanced technology protects mothers and their unborn
babies during childbirth by alerting doctors, midwives and nurses to potential
problems. PeriGen was acquired for a cash consideration of US$57.3m
(approximately £40.1m) on a cash and debt-free basis;
- The Ramtech group of companies, a UK-based supplier of wireless fire
systems for temporary sites, which was purchased for a cash consideration of
£15.7m, on a cash and debt-free basis; and
- Sensitron S.r.L., an Italian gas detection company, which was acquired for a
cash consideration of €20.1m (£17.1m), on a cash and debt-free basis.
An increasing number of our companies now have the size and capability to
grow their businesses through acquisition as well as organically, and 10 of
the acquisitions in the year were made by our companies as bolt-ons to enhance
their technologies and market reach. Details of these transactions are
contained in the notes to the Accounts.
Since the period end, we have acquired Deep Trekker, a market-leading
manufacturer of remotely operated underwater robots used for inspection,
surveying, analysis and maintenance. It will be a stand-alone company within
our Environmental & Analysis sector. It serves markets including
aquaculture, renewable energy and ocean science and research, and was acquired
for a cash consideration of C$60m (approximately £36.6m) on a cash and
debt-free basis.
We have also continued to develop our external partnerships through our Halma
Ventures programme, that offers Halma access to new technology and
capabilities via minority ownership, and have a good pipeline of further
potential opportunities. Since the year end, we have made one further
investment in VAPAR, whose AI technology enables faster and more accurate
condition assessment of wastewater infrastructure.
Talent and Executive Board changes
The quality and diversity of our leaders and teams is a critical component of
Halma's success, and their continued commitment to bringing our purpose to
life was reflected in our global engagement survey. This had a high response
rate of 85% and an engagement score of 76%, with improvements across all
dimensions compared to 2020. This result was supported by the ability of our
companies to act quickly to look after their employees' wellbeing in response
to events such as the ongoing pandemic and the invasion of Ukraine.
We are committed to maximising the quality of talent available to us by
ensuring that Halma is an inclusive organisation, thereby also ensuring a
diversity of voices and experiences within our leadership teams.
Diversity, Equity and Inclusion is one of our Key Sustainability Objectives,
and one measure of inclusion is gender diversity. We have introduced a target
of achieving 40-60% gender balance on all company boards by March 2024.
Although this is a stretching goal, we made progress towards it in the year,
increasing female representation from 22% last year to 26% at 31 March 2022.
We manage the development and diversity of our leadership teams to ensure that
we have robust succession plans for senior positions within the Group and
that we have the appropriate capabilities in our teams to support the Group's
future growth.
Since the beginning of the year, we have been operating and reporting as
three sectors, to better align with our purpose and our focus on safety,
health and environmental markets. Each sector team includes a Sector Chief
Executive, a Chief Financial Officer, a team to support M&A activity as
well as legal and talent management resource, to deliver its growth strategy.
The new dedicated sector team created for the Environmental & Analysis
sector has brought increased focus on the significant opportunities we see in
its markets. Its new M&A team, for example, has already benefited the
sector, with five acquisitions completed in the year, and Deep Trekker
acquired after the year end.
We are also investing in our leadership team in Asia-Pacific, reflecting the
substantial organic and inorganic growth potential in the region over the
longer term. This team is led by Aldous Wong, who was one of our Divisional
Chief Executives (DCEs), as President of Halma Asia Pacific and an advisor to
Halma's Executive Board. We made one further change to the Executive Board in
the year, with Steve Brown also being promoted from DCE to succeed Laura
Stoltenberg as the Sector Chief Executive for the Medical sector.
Good progress on our Key Sustainability Objectives
Following the introduction of our Sustainability Framework in the prior year,
each of our companies is creating its own plan to set out how they will
contribute to the Group's goals and ambitions for our Key Sustainability
Objectives (KSOs) - Climate Change, Diversity, Equity and Inclusion (DEI), and
Circular Economy. Achieving these objectives will add to the positive impact
delivered through our purpose-aligned growth.
In addition, we advanced our work to enable us to report against the
recommendations from the Task Force for Climate-related Financial Disclosures
(TCFD). This further highlighted not only the challenges but also the
significant opportunities for Halma arising from the transition to a lower
carbon world and from global efforts to address climate change. The ways in
which our companies can address these opportunities are diverse. These include
solutions to reduce greenhouse gas (GHG) emissions; helping customers in
energy-transitioning industries to increase safety and reduce costs; providing
products with a lower carbon footprint; and helping customers and societies
adapt to the worsening physical impacts of climate change. We will be
supporting our companies in identifying and assessing relevant opportunities
as part of their strategic growth plans, as well as continuing to assess these
opportunities as part of our M&A strategy.
We have several targets already in place for our Climate Change KSO. We have
made progress towards our 2040 Net Zero and 2030 1.5 degree aligned targets
for Scope 1 & 2 emissions, with a 35% reduction in GHG emissions from our
2020 baseline, compared to 14% reported revenue growth over those two years.
We have rapidly increased our use of renewable electricity from 8% of
consumption in 2020 to 42% in 2022, which is on the way to our target of 80%
renewable electricity by 2025. From FY23, we have also introduced a new target
of at least 4% annual growth in energy productivity to support our Scope 1
& 2 goals.
We recognise that Scope 1 & 2 is only a small portion of our total carbon
footprint and that we need to work towards Net Zero for our entire value
chain. We have made progress during the year in estimating our full Scope 3
footprint. We will be looking to show strong progress towards setting
appropriate Scope 3 goals and targets during the coming financial year.
Our new annual energy productivity metrics have been incorporated into our
executive remuneration for FY23, alongside the gender diversity targets
mentioned above. Performance against stretching annual targets is required
for participants to achieve 10% of the maximum annual bonus. We consider this
change in our remuneration as a good starting point; in the future we will
consider further metrics as well as evolving the scope and type of
sustainability-linked remuneration.
Summary and Outlook
Halma's Sustainable Growth Model enabled our companies to act with agility to
address new market opportunities and to respond rapidly to the multiple
operational and economic challenges they faced during the year. Our strong
performance reflects huge credit on the dedication of our people across the
business, and was underpinned by our empowering purpose and culture, our focus
on niche markets with long-term, fundamental growth drivers and the high value
of the solutions we provide to our customers.
We have made a positive start to the new financial year. We have a strong
order book, and order intake in the year to date is ahead of revenue and in
line with the very strong intake in the same period of the prior year. We
expect to deliver continued growth and maintain high returns in the 2022/23
financial year, with good single digit percentage organic constant currency
revenue growth and a Return on Sales similar to the second half of the 2021/22
financial year. We are well positioned to make further progress in the full
year and in the longer-term.
Andrew Williams
Group Chief Executive
(1) See Highlights
Financial Review
Record profit
Halma reported a strong financial performance in the period. We delivered
record profit for the 19th consecutive year, while substantially increasing
investment to support future growth. Our Sustainable Growth Model enabled our
companies to respond with agility to new opportunities in their end markets
and to benefit from recovery in a number of markets that had been affected by
the COVID pandemic. It also allowed them to act rapidly to address multiple
economic and geopolitical challenges including the ongoing effects of the
pandemic and, in the fourth quarter of the year, from the conflict in Ukraine.
The increased investment in the year was supported by the continued strength
of our financial position and solid cash flow, and will underpin our growth
over the longer term as our companies address the significant opportunities
in their markets.
Revenue for the year to 31 March 2022 was £1,525.3m (2021: £1,318.2m), up
15.7%, which principally reflected a strong organic performance. There was
also a benefit from recent acquisitions (net of the effect of a disposal in
the year), and a negative effect from currency translation. The increase in
Adjusted(1) profit before taxation of 13.6% to £316.2m (2021: £278.3m)
reflected the increase in revenue and the return of discretionary variable
overhead costs in the second half of the year as the effects of the pandemic
eased. It also included a net benefit of £3m, comprising a £5m release of a
centrally-held provision for the risk of customer bad debt as a result of the
COVID pandemic, offset in part by an increase of £2m in provisions
in relation to bad debt and contract risk relating to our decision to cease
trading with Russia. As a result of the continued strong performance, we were
able to increase investment to support future growth, including further
resources for our central Growth Enabler teams, and £7m increase in
expenditure to upgrade our information technology infrastructure. Statutory
profit before taxation increased by 20.4% to £304.4m (2021: £252.9m).
Revenue growth of 15.7% was driven by a 17.4% increase in organic constant
currency revenue. The contribution from acquisitions was a positive 4.8%
(1.6% net of disposals), and there was a negative effect from currency
translation of 3.3%. The 13.6% increase in Adjusted(1) profit comprised
a 15.4% increase in organic constant currency profit, a 3.6% contribution
from acquisitions (1.7% net of disposals), and a negative effect from
currency of 3.5%.
Statutory profit before taxation of £304.4m is calculated after charging the
amortisation of acquired intangible assets of £42.7m (2021: £42.3m), a
£34.0m gain on disposals (2021: £22.1m), and other items of a net £3.1m
(2021: £5.2m). Further detail on these items is given in note 1 to these
Accounts.
Cash conversion was solid at 84%, reflecting good underlying working capital
control, partially offset by selective investment by our companies in their
stock of components and raw materials to ensure continuity of production and
to manage price increases. Our financial position remained strong, despite
significant organic investment and acquisition spend, with net debt (on an
IFRS 16 basis which includes lease commitments) increasing by only £18.6m to
£274.8m, and representing gearing (net debt to EBITDA) of 0.74 times.
Strong revenue and profit performance
Revenue grew by 19.2% in the first half of the year and by 12.6% in the second
half, with second half revenue 6.9% higher than revenue in the first. Constant
currency organic revenue increased by 17.4%, comprising a 23.2% increase
in the first half and growth of 12.2% in the second half. There was a
negative effect of 6.2% from currency translation in the first half, and of
0.7% in the second half, giving a negative effect of 3.3% for the year as a
whole.
Adjusted(1) profit increased by 27.0% in the first half and grew by 3.2% in
the second half. This resulted in a first half/second half split of adjusted
profit of 49%/51%, compared to our typical 45%/55% pattern. Organic profit at
constant currency increased by 31.7% in the first half, and by 2.6% in the
second half, resulting in growth of 15.4% for the year. Growth in the second
half of the year included an investment of £6m in information technology
infrastructure (out of £7m in the year as a whole), and a net £3m benefit
from the release of provisions relating to the risk of customer bad debt
and our decision this year to cease trading with Russia
as described above.
Revenue and profit change
2022 2021 Change Total Organic Organic
£m £m £m % growth(2) growth(2)
% at constant currency %
Revenue 1,525.3 1,318.2 207.1 15.7 14.1 17.4
Adjusted(1) profit before taxation 316.2 278.3 37.9 13.6 11.9 15.4
Statutory profit before taxation 304.4 252.9 51.5 20.4 - -
( )
(1) In addition to those figures reported under IFRS, Halma uses alternative
performance measures as key performance indicators, as management believe
these measures enable them to better assess the underlying trading performance
of the business by removing non-trading items that are not closely related to
the Group's trading or operating cash flows. Adjusted profit excludes the
amortisation and impairment of acquired intangible assets; acquisition items;
restructuring costs and profit or loss on disposal of operations. All of these
are included in the statutory figures. Notes 1 and 3 to the Accounts give
further details with the calculation and reconciliation of adjusted figures.
(2) See Highlights.
Strong revenue and profit growth in all sectors
All sectors delivered strong revenue and profit growth, both on a reported
and organic constant currency basis, and all sectors grew revenue and profit
in both the first half and the second half of the year.
The Environmental & Analysis sector delivered the strongest performance.
Revenue increased 22.6% driven by strong organic constant currency growth of
24.5%, with all regions reporting growth on an organic constant currency
basis. Profit grew 23.0%, or by 23.3% on an organic constant currency basis.
The sector's strong revenue growth principally reflected a recovery in
customer demand, including a number of larger contracts, as the effects of the
COVID pandemic eased, and its operational agility in spite of supply chain
disruptions. Acquisitions, net of disposals, contributed growth of 1.6% to
revenue, and 3.5% to profit. Return on Sales was marginally higher at 24.8%
(2021: 24.7%). There was a reduction in gross margin as a result of product
mix, in addition to increased sector costs following the creation of a new
dedicated sector leadership team (rather than one shared with the Medical
sector, as in the previous year). These factors were mitigated by continued
strong overhead control. Absolute expenditure on R&D increased to £22.8m
(2021: £20.6m) although that represented a reduction in R&D expenditure
as a percentage of sales from 5.7% to 5.1%. Looking ahead, while there are
continued risks from supply chain disruptions and a robust comparative
(notably in the first half), we expect the sector to make further strong
progress, supported by a substantial order book and a contribution from recent
acquisitions.
The Medical sector also grew strongly, with revenue growth of 19.1%, including
an organic constant currency increase of 13.0% and a contribution from
acquisitions of 10.1%. Growth was broad-based across the sector, with the
majority of companies delivering double digit growth as a result of strong
increases in customer demand as the effects of the COVID pandemic abated and
healthcare systems began to normalise. This was partially offset by a small
number of companies which had seen significant increases in demand as a result
of the pandemic seeing a decline in sales. Profit grew 15.0% (10.5% on an
organic constant currency basis) and Return on Sales was 22.5% (2021: 23.3%).
This included a substantial increase in R&D expenditure to £26.9m,
representing 6.1% of revenue (2021: £18.8m; 5.1% of revenue), given an
intensification of new product development and new product launches in the
year. It also reflected the allocation of the full cost of a dedicated sector
leadership team following the creation of a separate team for the
Environmental & Analysis sector. These effects were partly offset by
strong control of overheads. While risks remain of further supply
chain disruptions and delays to customer orders, the sector is anticipated
to deliver good growth in the year ahead, supported by a strong order book.
The Safety sector also saw strong growth, with revenue increasing by 15.9% on
an organic constant currency basis. Reported revenue growth was 9.3% and
included negative effects of 5.2% from the disposal of Texecom in the first
half of the year and 2.7% from foreign exchange translation, which were
partly offset by a benefit from recent acquisitions of 1.3%. Sector growth was
driven by double digit revenue growth in all but two (smaller) subsectors,
reflecting our companies' agility in responding to the recovery in customer
demand as the effects of the COVID pandemic eased, and was achieved despite
increased supply chain, logistics and labour market disruption during the
year. Profit increased 8.1%, or 13.3% on an organic constant currency basis,
and Return on Sales was 22.8% (2021: 23.0%), reflecting higher technology
costs and an increase in R&D spend to 5.6% of revenue (2021: 5.2%), partly
offset by strong overhead control and the effect of the disposal of Texecom
during the year. While there are risks from continued inflationary,
operational and supply chain challenges, the sector is expected to deliver a
strong organic constant currency performance in the year ahead.
Central administration costs, which include our Growth Enabler functions,
increased to £30.9m. These had declined in 2021 to £22.9m from £26.3m in
2020, as a result of the discretionary cost reduction measures implemented at
the beginning of the COVID pandemic. The increase reflected the partial return
of discretionary variable overhead costs as our business activity recovered,
investment in our governance and compliance teams given the increased scale of
the Group and planned investment in technology and our Growth Enabler teams to
support our future growth. In 2023, we expect the same factors, principally
technology investment, to result in central administration costs being
approximately £40m.
Sector revenue change
2022 2021
£m % of total £m % of total Change £m % organic growth(2) at constant currency
% growth
Safety 641.4 42 587.0 45 54.4 9.3 15.9
Environmental & Analysis 442.9 29 361.1 27 81.8 22.6 24.5
Medical 442.3 29 371.3 28 71.0 19.1 13.0
Inter-segment sales (1.3) (1.2) (0.1)
1,525.3 100 1,318.2 100 207.1 15.7 17.4
Sector profit change
2022 2021
£m % of total £m % of total Change £m % growth % organic growth(2) at constant currency
Safety 146.2 41 135.3 43 10.9 8.1 13.3
Environmental & Analysis 109.8 31 89.3 29 20.5 23.0 23.3
Medical 99.5 28 86.6 28 12.9 15.0 10.5
Sector profit(3) 355.5 100 311.2 100 44.3
Central administration costs (30.9) (22.9) (8.0)
Net finance expense (8.4) (10.0) 1.6
Adjusted(4) profit before tax 316.2 278.3 37.9 13.6 15.4
( )
(3) Sector profit before allocation of adjustments. See Note 1 to the
Financial Statements.
(4) Adjusted profit excludes the amortisation and impairment of acquired
intangible assets; acquisition items; restructuring costs; and profit or loss
on disposal of operations. All of these are included in the statutory figures.
Note 3 to the Financial Statements gives further details with the calculation
and reconciliation of adjusted figures.
Strong revenue growth in all major regions
The Group's four major regions delivered a strong revenue performance on a
reported and organic constant currency basis, and all of them grew on an
organic constant currency basis.
Revenue in the USA increased by 17.4%, and the USA remains our largest revenue
destination, accounting for 39% of Group revenue, the same as in the prior
year. Organic constant currency revenue grew by 19.8%. All sectors performed
well, with the Environmental & Analysis sector reporting very strong
growth, driven by Environmental Monitoring and Optical Analysis. The Safety
sector also performed strongly, with a recovery in customer demand following
the pandemic resulting in strong growth in a number of subsectors including
emergency communication in Elevator Safety, Fire Detection, Pressure
Management and Industrial Access Control. The Medical sector performed well,
with many companies seeing substantial growth as elective procedure volumes
increased, together with a positive contribution from recent acquisitions,
principally PeriGen. This was partly offset, however, by a decline in demand
for products supporting the diagnosis or treatment of COVID.
Mainland Europe revenue was 11.6% higher, or 12.8% on an organic constant
currency basis. Reported revenue included a modest contribution from
acquisitions (net of the impact of disposals), and a negative effect from
foreign exchange translation. The Environmental & Analysis sector
delivered a very strong performance, driven by the Water Analysis and
Treatment subsector and also benefiting from the acquisition of Sensitron in
the year. Medical sector growth was also strong, reflecting momentum in the
Healthcare Assessment subsector. The Safety sector also performed well, with
strong performances in People and Vehicle Flow and Fire Detection, although
more mixed in the rest of the sector.
UK revenue was 25.0% higher, which included a small positive contribution from
acquisitions, including Static Systems and Ramtech, net of the disposal of
Texecom. Organic constant currency revenue growth was 24.8%. The Medical
sector saw strong organic constant currency growth following a sharp decline
in the prior year as a result of the COVID-19 pandemic, and additionally
benefited from the acquisition of Static Systems in the year. The
Environmental & Analysis sector saw good growth, driven by strong demand
for pipeline inspection and maintenance solutions in the Water Analysis and
Treatment subsector and good momentum in gas detection within Environmental
Monitoring. Growth in the Safety sector was strong, and reflected high rates
of organic growth, driven by a strong performance in Fire Detection, more
than compensating for the negative impact from the disposal.
Revenue from territories outside the UK/Mainland Europe/the USA grew by
10.4%, in line with our 10% KPI growth target. This comprised a strong
performance in Asia Pacific and a small decline in revenue in other regions.
Asia Pacific revenue increased 16.0%, or 18.3% on an organic constant currency
basis. Revenue in China, our largest market in the region at approximately 7%
of Group revenue, grew at a similar rate to the Asia Pacific region overall.
The Environmental & Analysis and Medical sectors delivered strong
performances, supported by our companies' alignment with the major elements of
the Chinese government's Five Year Plan. Elsewhere in the region, the other
larger markets of Australasia, India, Japan, South Korea and Singapore
delivered double digit revenue growth, and, in the smaller markets, only
Malaysia and Indonesia saw a decline. The net effect of acquisitions
and disposals was broadly neutral.
Other regions, which represent less than 7% of Group revenue, reported revenue
1.4% lower on a reported basis, principally as a result of foreign exchange
translation. There was a 2.1% increase on an organic constant currency basis,
which reflected modest organic growth in Africa, Near and Middle East and
a wide range of performances in other countries. There was a strong
performance in the Environmental & Analysis sector and good growth in
Medical, while Safety sector revenue was lower.
Geographic revenue
2022 2021
£m % of total £m % of total Change £m % change % organic growth at constant currency
United States of America 597.2 39 508.8 39 88.4 17.4 19.8
Mainland Europe 308.1 20 276.0 21 32.1 11.6 12.8
United Kingdom 267.0 18 213.6 16 53.4 25.0 24.8
Asia Pacific 250.8 16 216.1 16 34.7 16.0 18.3
Africa, Near and Middle East 53.6 4 54.1 4 (0.5) (0.9) 3.0
Other countries 48.6 3 49.6 4 (1.0) (2.0) 1.2
1,525.3 100 1,318.2 100 207.1 15.7 17.4
Currency effects
Weighted average rates used in the Income Statement Exchange rates used to translate the Balance Sheet
First half 2022 2022 2021
Full year 2021 Year end Year end
Full year
US$ 1.388 1.367 1.308 1.315 1.378
Euro 1.165 1.176 1.121 1.183 1.174
Continued high returns
Halma's Return on Sales(2) has exceeded 16% for 37 consecutive years. Our KPI
target is to deliver Return on Sales in the range of 18-22% and this year
Return on Sales was 20.7%, or 20.5% when the benefit of £3m from a net
decrease in customer bad debt and Russia-related provisions is excluded. This
compares to an unusually high level of 21.1% in 2021, which had benefited from
the stringent cost reduction measures we decided to take during the COVID-19
pandemic.
We successfully achieved our objective of continuing to invest in our
businesses while delivering growth and we maintained a high level of Return
on Total Invested Capital (ROTIC)(2), the post-tax return on the Group's
total assets including all historical goodwill. This year, ROTIC increased to
14.6% (2021: 14.4%), with the change principally reflecting the higher level
of constant currency growth in the year, partially offset by the negative
effect of currency movements. Our ROTIC remains well ahead of our KPI target
of 12% and more than double Halma's Weighted Average Cost of Capital (WACC),
estimated to be 7.1% (2021: 6.7%).
Currency effects well managed
Halma reports its results in Sterling. Our other key trading currencies are
the US Dollar, Euro and to a lesser extent the Swiss Franc, the Chinese
Renminbi and the Australian Dollar. Over 46% of Group revenue is denominated
in US Dollars, approximately 28% in Sterling and approximately 12% in Euros.
The Group has both translational and transactional currency exposure.
Translational exposures are not hedged. Transactional exposures, after
matching currency of revenue with currency costs wherever practical, are
hedged using forward exchange contracts for a proportion (up to 75%) of the
remaining forecast net transaction flows where there is a reasonable
certainty of an exposure. We hedge up to 12 months forward.
Sterling strengthened on average in the year, principally in the first half.
This gave rise to a negative currency translation impact of 3.3% on revenue
and 3.5% on profit for the full year.
Based on the current mix of currency denominated revenue and profit, a 1%
movement in the US Dollar relative to Sterling changes revenue by £7.1m and
profit by £1.6m. Similarly, a 1% movement in the Euro changes revenue by
£1.8m and profit by £0.4m.
If currency rates for the financial year to the end of March 2023 were US
Dollar 1.260/ Euro 1.190 relative to Sterling, and assuming a constant mix of
currency results, we would expect approximately a £59m positive revenue and a
£13m positive profit impact compared to financial year to the end of
March 2022, with the majority of the impact in the first half of the year.
Financing cost decreased
The net financing cost in the Income Statement of £8.4m was lower than the
prior year (2021: £10.0m). This principally reflected a lower weighted
average interest rate in the year (see the "Average debt and interest rates'"
table below for more information).
We expect the net financing cost for the 2023 financial year to be
approximately £14m, if no further acquisitions are made. This reflects a
forecast higher weighted average interest rate in the year, following the
completion of a new Private Placement issuance (for details, see the
"Substantial funding capacity and liquidity" section below). This issuance
results in an increased proportion of fixed coupon debt on the Group's balance
sheet, and secures debt financing sufficient to meet the Group's likely
medium-term requirements.
The net pension financing impact under IAS 19 is included within the net
financing cost. This year the Group recognised a charge of £0.3m (2021: gain
of £0.1m).
Group tax rate increased
The Group has major operating subsidiaries in a number of countries and the
Group's effective tax rate is a blend of these national tax rates applied to
locally generated profits.
The Group's effective tax rate on adjusted profit was higher than in the prior
year at 21.6% (2021: 20.1%). This was mainly due to changes in tax laws
reducing the benefits from intra-group financing arrangements. Based on the
latest forecast mix of adjusted profits for the year to 31 March 2023 we
currently anticipate the Group effective tax rate to be broadly stable at
approximately 22% of adjusted profits.
On 2 April 2019, the European Commission (EC) published its final decision
that the UK controlled Finance Company Partial Exemption (FCPE) constituted
State Aid. In common with many other UK companies, Halma has benefited from
the FCPE and had appealed against the European Commission's decision, as had
the UK Government. The EU General Court delivered its decision on 8 June 2022.
The ruling was in favour of the European Commission but the UK Government and
the taxpayer have the option to appeal this decision. Following receipt of
charging notices from HM Revenue & Customs (HMRC) we made a payment in
February 2021 of £13.9m to HMRC in respect of tax, and in May 2021 made a
further payment of approximately £0.8m in respect of interest.
Whilst the EU General Court was in favour of the EC, our assessment is that
there are strong grounds for appeal and we would expect such appeals to be
successful. As a result we continue to recognise a receivable of £14.7m in
the balance sheet.
Solid cash generation
Cash generation is an important component of the Halma model, underpinning
further investment in organic growth, supporting value-enhancing acquisitions
and funding an increasing dividend to shareholders.
Cash generated from operations was £293.4m (2021: £331.4m) and adjusted
operating cash flow, which excludes operating cash adjusting items, and
includes net cash capital expenditure, was £273.2m (2021: £300.3m) which
represented 84% (2021: 104%) of adjusted operating profit. While this was
below our cash conversion KPI target of 90%, it included the impact of
selective investment by our companies in their stock of components and raw
materials to ensure continuity of production and manage price increases. This
had an impact on working capital, with an outflow of £62.7m, comprising
changes in inventory, receivables and creditors (2021: inflow of £2.8m),
which also reflected the strong revenue growth in the period. These effects
would have been more significant were it not for the continued strong
underlying control of working capital by our companies. Adjusted operating
cash flow is defined in note 3 to the Accounts.
A summary of the year's cash flow is shown in the tables at the end of this
review. The largest outflows in the year were in relation to acquisitions,
dividends and taxation paid. Acquisition of businesses including cash and debt
acquired and fees increased to £164.4m (2021: £48.8m), reflecting the higher
levels of M&A activity in the year. Dividends totalling £68.7m (2021:
£63.7m) were paid to shareholders in the year. Taxation paid increased to
£56.0m (2021: £53.8m).
Capital allocation and funding priorities
Halma aims to deliver high returns, measured by ROTIC², well in excess of our
cost of capital. We invest to deliver the future earnings growth and strong
cash returns which enable us to achieve this aim on a sustainable basis, and
our capital allocation priorities remain as follows:
- Investment for organic growth: Organic growth is our first priority and is
driven by investment in our existing businesses, including through capital
expenditure, innovation in digital growth and new products, international
expansion and the development of our people.
- Value-enhancing acquisitions: We supplement organic growth with acquisitions
in current and adjacent market niches, aligned with our purpose. This brings
new technology, intellectual property and talent into the Group and expands
our market reach, keeping Halma well-positioned in growing markets over the
long term.
- Regular and increasing returns to shareholders: We have maintained a
progressive dividend policy for over 40 years and this is our preferred route
for delivering regular cash returns to shareholders without impacting on our
investment to grow our business.
Continued investment for organic growth
All sectors continue to innovate and invest in new products, with R&D
spend determined by each individual Halma company. R&D expenditure as a
percentage of revenue remained well above our KPI target of 4% at 5.6% (2021:
5.3%). In absolute terms, this meant that R&D expenditure increased by 21%
to £85.4m (2021: £70.3m), which was ahead of revenue growth. This increasing
investment reflects our companies' confidence in the growth prospects of their
respective markets. In the medium term we expect R&D expenditure to
continue to increase broadly in line with revenue growth.
Under IFRS accounting rules we are required to capitalise certain development
projects and amortise the cost over an appropriate period, which we determine
as three years. This year we capitalised £13.4m (2021: £15.4m), impaired
£2.9m (2021: £1.9m) and amortised £7.0m (2021: £7.9m). The closing
intangible asset carried on the Consolidated Balance Sheet, after a £1.3m
gain (2021: £2.0m loss) relating to foreign exchange was £41.7m (2021:
£38.9m). All R&D projects, and particularly those requiring
capitalisation, are subject to rigorous review and approval processes by the
relevant sector board.
Capital expenditure on property, plant, equipment and vehicles, computer
software and other intangible assets was £26.6m (2021: £26.4m), with both
years reflecting a lower spend as a result of pandemic constraints.
Expenditure was principally on plant, equipment and vehicles. We anticipate
capital expenditure to increase to approximately £34m in the coming year,
reflecting investment in the expansion of manufacturing facilities and
automation to support future growth.
We are also investing in automation and technology upgrades. Technology spend
totalled £11m in the 2022 financial year, reflecting increased investment of
£7m, and we expect expenditure in the financial year ending 31 March 2023 to
be approximately £20m. This Group-wide investment includes enhanced
security, improved data and analytics capabilities and support for our
companies in upgrading their operating technology and creating new digital
models in line with our Halma 4.0 growth strategy.
Lease right-of-use asset additions were £23.0m (2021: £24.3m). This included
additions of £4.6m as a result of acquisitions made in the year, and the
commencement of new leases and extensions or renewals of existing leases.
Value-enhancing acquisitions and investments
Acquisitions and disposals are a key component of our sustainable growth
strategy, as they keep our portfolio of companies focused on markets which
have strong growth opportunities over the medium and long term.
In the year we made 13 acquisitions at a cost of £154.3m (net of cash
acquired of £18.2m and including acquisition costs). In addition, we paid
£14.2m in contingent consideration and other payments for acquisitions made
in prior years, giving a total spend of £168.5m. We also divested Texecom
Limited, for £62.0m, net of disposal costs.
The acquisitions completed in the current and prior year contributed to
revenue this year in line with expectations overall, and we expect a good
performance from these acquisitions in the future.
Details of the acquisitions and investments made in the year are given in the
sector reviews in the Annual Report and Accounts 2022 and in note 8 to the
Financial Statements.
Since the year end, we have made one further acquisition, of Deep Trekker, a
market-leading manufacturer of remotely operated underwater robots used for
inspection, surveying, analysis and maintenance, for a cash consideration of
C$60m (approximately £36.6m), on a cash and debt-free basis.
Regular and increasing returns for shareholders
Adjusted earnings per share increased by 11.6% to 65.48p (2021: 58.67p) and
statutory basic earnings per share, which included a gain on disposal of
Texecom Limited, increased by 20.4% to 64.54p (2021: 53.61p).
The Board is recommending a 7.0% increase in the final dividend to 11.53p per
share (2021: 10.78p per share), which together with the 7.35p per share
interim dividend gives a total dividend per share of 18.88p (2021: 17.65p), up
7.0% in total.
Dividend cover (the ratio of adjusted profit after tax to dividends paid and
proposed) is 3.47 times (2021: 3.33 times).
The final dividend for the financial year ended March 2022 is subject to
approval by shareholders at the AGM on 21 July 2022 and, if approved, will be
paid on 18 August 2022 to shareholders on the register at 15 July 2022.
We aim to increase dividends per share each year, while maintaining a prudent
level of dividend cover, and declare approximately 35-40% of the anticipated
total dividend as an interim dividend. The Board's determination of the
proposed final dividend increase this year took into account the Group's
financial performance, economic and geopolitical uncertainty including the
effects of the COVID pandemic and the war in Ukraine, the Group's continued
balance sheet strength and medium-term organic constant currency growth.
Substantial funding capacity and liquidity
Halma's operations have continually been cash generative and the Group has
access to competitively priced committed debt finance, providing good
liquidity for the Group. Group treasury policy remains conservative and no
speculative transactions are undertaken.
We have a strong balance sheet, solid cash generation, and substantial
available liquidity. Shortly after the year end, we refinanced our syndicated
revolving credit facility. The new facility remains at £550m and matures in
May 2027, and there are two one-year extension options. In addition, we
completed a new Private Placement issuance of c.£330m in May 2022. The
issuance consists of Sterling, Euro, US Dollar and Swiss Franc tranches and
matures in July 2032, with an amortisation profile giving it a seven year
average life. Once the January 2023 tranche of our existing Private Placement
has matured this will give us additional funding capacity of £260m.
The financial covenants on these facilities are for leverage (net debt/
adjusted EBITDA) to not be more than three and a half times and for adjusted
interest cover to be not less than four times. The Group continues to operate
well within its banking covenants with significant headroom under each
financial ratio.
At 31 March 2022, net debt was £274.8m, a combination of £360.1m of debt,
£72.1m of IFRS 16 lease liabilities and £157.4m of cash held around the
world to finance local operations. Net debt at 31 March 2021 was £256.2m.
The gearing ratio at the year-end (net debt to EBITDA) was 0.74 times (2021:
0.76 times). Net debt represented 3% (2021: 3%) of the Group's year-end
market capitalisation.
Operating cash flow summary
2022 2021
£m £m
Operating profit 278.9 240.8
Net acquisition costs and contingent consideration fair value adjustments 3.1 5.2
Amortisation and impairment of acquisition-related acquired intangible assets 42.7 42.3
Adjusted operating profit 324.7 288.3
Depreciation and other amortisation 49.1 50.8
Working capital movements (62.7) 2.8
Capital expenditure net of disposal proceeds (25.5) (25.9)
Additional payments to pension plans (12.2) (13.0)
Other adjustments (0.2) (2.7)
Adjusted operating cash flow 273.2 300.3
Non-operating cash flow and reconciliation to net debt
2022 2021
£m £m
Adjusted operating cash flow 273.2 300.3
Tax paid (56.0) (53.8)
Acquisition of businesses including cash/debt acquired and fees (164.4) (48.8)
Purchase of equity investments (0.7) (3.4)
Disposal of businesses 57.5 26.1
Net finance costs and arrangement fees (excluding lease interest) (5.7) (7.0)
Net lease liabilities additions (21.5) (23.7)
Dividends paid (68.7) (63.7)
Own shares purchased (19.3) (16.2)
Adjustment for cash outflow on share awards not settled by own shares (7.1) (7.8)
Effects of foreign exchange (5.9) 17.1
Movement in net debt (18.6) 119.1
Opening net debt (256.2) (375.3)
Closing net debt (274.8) (256.2)
Net debt to EBITDA
2022 2021
£m £m
Adjusted operating profit 324.7 288.3
Depreciation and amortisation (excluding acquired intangible assets) 49.1 50.8
EBITDA 373.8 339.1
Net debt to EBITDA 0.74 0.76
Average debt and interest rates
2022 2021
Average gross debt (£m) 426.8 445.5
Weighted average interest rate on gross debt 1.90% 2.32%
Average cash balances (£m) 143.1 148.8
Weighted average interest rate on cash 0.16% 0.51%
Average net debt (£m) 283.7 296.7
Weighted average interest rate on net debt 2.78% 3.22%
Pensions update
The Group accounts for post-retirement benefits in accordance with IAS 19
Employee Benefits. The Consolidated Balance Sheet reflects the net accounting
surplus on our pension plans as at 31 March 2022 based on the market value of
assets at that date and the valuation of liabilities using discount rates
derived from year end AA corporate bond yields. Lane Clark & Peacock LLP
assist the Company in setting assumptions, and valuation work is performed by
Mercer Limited.
We closed the two UK defined benefit (DB) plans to new members in 2002. In
December 2014 we ceased future accrual within these plans with future pension
benefits earned within the Group's Defined Contribution (DC)
pension arrangements. These two plans represent over 95% of consolidated
plan liabilities.
On an IAS 19 basis, before deferred taxes, the Group's DB plans at 31 March
2022 had a surplus of £30.5m (2021: £22.5m deficit). The value of plan
assets increased to £347.6m (2021: £333.1m). Plan liabilities decreased to
£317.1m (2021: £355.6m) due to the increase in the discount rate (1.95% to
2.80%) being greater than the increase in the long-term inflation rate (3.2%
to 3.6%). Mortality assumptions have been aligned to updated actuarial
information.
The plans' actuarial valuation reviews, rather than the accounting basis,
determine any cash deficit payments. This year these contributions amounted to
£11.8m, slightly lower than expected due to a delay in agreement of the
revised schedule of contributions. Following a triennial actuarial valuation
of the two UK pension plans in this financial year, cash contributions
increasing at 7% per annum aimed at eliminating the deficit were agreed with
the trustee, and in FY23 we expect contributions to be £14.6m. In the
unlikely event that these payments result in a surplus on winding up of the
schemes, the Group has an unconditional right to a refund under the
plan rules.
Conclusion
We delivered a strong financial performance, despite the challenges arising
from economic and geopolitical uncertainty including the COVID pandemic and,
more recently, the conflict in Ukraine. We delivered record revenue and profit
and solid cash flow, while substantially increasing our investment in future
growth opportunities and maintaining a strong balance sheet. My colleagues in
our finance and risk teams have helped our companies to successfully respond
to the opportunities and challenges that have arisen in the year, through
actionable insights and strong control. I would like to thank them for their
hard work and commitment throughout the year.
Marc Ronchetti
Chief Financial Officer
Safety Sector Review
Sector overview and growth drivers
The Safety sector makes the world a safer place by protecting people, assets
and infrastructure and enabling safe movement in a wide range of environments,
including public and commercial spaces, and industrial and logistics
operations. Many of the sector's products and services also make the world
cleaner and improve efficiency.
The long-term growth of the sector continues to be driven by increasing safety
and environmental regulation, and growing, urbanising and ageing populations.
In recent years, increasing automation and accelerating demand for connected
industrial and infrastructure systems have further underpinned the sector's
growth prospects, as our customers have sought to benefit from the greater
efficiency and safety that can be derived from these innovations.
The COVID pandemic and the urgent need to address the causes and impacts of
climate change have further enhanced the opportunities available to our
companies. We are already seeing effects in a number of our businesses. For
example, we are seeing increasing demand for automated access solutions to
both increase efficiency, including by minimising heat loss in commercial and
industrial premises, and to enhance hygiene, for example through touchless
operation. We are also supporting the drive towards renewable and cleaner
energy sources, including through installing our fire suppression technology
in wind turbines, or increasing the efficiency of industrial processes and
repurposing technology towards areas such as carbon capture and hydrogen
energy sources in our businesses which serve industrial customers.
Performance in the year
The Safety sector delivered a strong performance, benefiting from the
substantial increase in customer demand following the easing of lockdown
restrictions, and the agility of its companies in successfully responding to
new opportunities in their markets whilst addressing supply chain and other
challenges. Growth was broadly spread across the majority of subsectors, with
most delivering double-digit revenue growth, and across all major regions.
Revenue of £641.4m (2021: £587.0m) was 9.3% higher than in the prior year,
and up 15.9% on an organic constant currency basis. This included a very
strong performance in the first half of the year (and particularly in the
first quarter), with organic constant currency growth of 25.3%, against a
weaker comparative. The second half of the year saw a more normal level of
revenue growth, with organic constant currency revenue increasing by 7.6%.
This strong performance was led by substantial growth in Fire Detection,
which had been most affected in the first half of last year by lockdown
restrictions and the furloughing of customer employees, with the subsector
benefiting from the easing of lockdown restrictions and the resumption of
construction activity.
People and Vehicle Flow also grew strongly. Continued demand for its
touchless and automated entry devices, driven by changing customer needs as a
result of the pandemic, supported good growth at BEA, and the successful
execution of significant road safety contracts drove strong growth
at Navtech. Elevator Safety also grew well, benefiting from a strong market
in emergency communication.
Growth in a number of other subsectors reflected our companies' ability to
respond rapidly to changing customer needs, for example identifying and
meeting strong demand from logistics customers for our interlock products in
Industrial Access Control, and prioritising technologies supporting the
decarbonisation of energy sources in Pressure Management.
Across the sector, the agility of our companies also enabled them to manage
ongoing disruption in their supply chains, through a range of initiatives
including diversifying supplies, redesigning products and selectively holding
higher inventory levels to ensure continued production.
The smaller Safe Storage and Transfer and Fire Suppression subsectors are,
respectively, seeing delays to larger infrastructure projects, and weakness in
specific markets such as aerospace (partly offset by solid growth in other
markets such as clean energy and critical infrastructure).
The sector's revenue performance by region reflected these themes. The UK saw
the strongest revenue growth, led by Fire Detection and People and Vehicle
Flow, which included the road safety contract mentioned above. Revenue growth
in the USA was also strong and broadly spread by sector, with the principal
drivers being Fire Detection, logistics within Industrial Access Control,
Pressure Management and emergency communication within Elevator Safety. Asia
Pacific also grew strongly, with organic constant currency revenue growth
across all subsectors, and very strong growth in People and Vehicle Flow and
in Industrial Access Control. Overall revenue growth in Mainland Europe was
good, although there was a more mixed performance by subsector, with strong
progress in Fire Detection and Industrial Access Control, more modest gains in
some other subsectors and declines in Safe Storage and Transfer and Fire
Suppression. Other regions, accounting for around 7% of sector revenue, saw a
decline, principally reflecting delays to some larger infrastructure projects
in the Middle East, a change in delivery location for a large customer, and
the continuing impact of the COVID pandemic in specific countries.
Profit grew by 8.1% to £146.2m (2021: £135.3m), or by 13.3% on an organic
constant currency basis. There was a modest decline in Return on Sales to
22.8% (2021: 23.0%). This reflected increased investment to support future
growth, in research and development, which rose to 5.6% of revenue (2021:
5.2% of revenue), and in technology (including ongoing enterprise systems at
some of the sector's larger companies), as well as a return of discretionary
variable overhead costs. These effects were partly offset by strong overhead
control and the effect of the disposal of Texecom, which had a lower margin,
in the year. Gross margin remained broadly unchanged compared to the prior
year.
There were three acquisitions in the year for an aggregate consideration of
approximately £16.5m: the Ramtech group of companies and two small bolt-on
acquisitions for Fortress Safety and Argus. In August 2021, Texecom, a
UK-based provider of electronic security systems, was sold for a total cash
consideration of £65m on a cash and debt-free basis. The impact of
acquisitions was a positive effect of 1.3% on revenue and 0.4% on profit,
while the disposal of Texecom had a negative effect of 5.2% on revenue and
3.3% on profit. Currency exchange movements had a negative effect of 2.7% on
revenue and 2.3% on profit.
Environmental & Analysis Sector Review
Sector overview and growth drivers
The Environmental & Analysis sector is focused on growing a safer, cleaner
and healthier future by improving the quality and availability of
life-critical natural resources such as air, water and food and by delivering
high-technology solutions in a wide variety of end markets based on our
digital, optical and optoelectronic expertise. The sector's valuable solutions
are technically differentiated through strong application knowledge, supported
by high levels of customer responsiveness.
The sector's long-term growth is sustained by rising demand for life-critical
resources, the impact of climate change, increasing environmental regulations
and worldwide population growth with rising standards of living. It is
underpinned by our ability to design, develop and manufacture innovative,
high-technology detection and analysis solutions with applications in a wide
range of sectors. These include water and waste water management and treatment
(including water utilities); gas analysis and detection; food, beverage,
medical and bio-medical; communications; research and science; and a variety
of industrial markets.
The increasingly urgent need to address climate change is creating new
opportunities in many of the sector's markets. It is driving new policies
globally, including national, state and city initiatives to meet Net Zero
commitments through energy transition and sectoral decarbonisation plans, as
well as plans to increase adaptation and resilience. Combined with the
biodiversity crisis and an increasing focus on plastics and waste, it is also
driving new regulatory initiatives to preserve life-critical resources. These
include initiatives such as, in the UK, Ofwat's investigations into wastewater
treatment and internal sewer flooding to prevent environmental degradation.
These and similar initiatives are creating growing long-term opportunities for
our companies to help their customers, for example, to prevent emissions,
detect leaks and analyse air and water quality, and to support new
technologies to address these issues, such as renewable energy and storage,
sustainable food systems and mobility in cities.
Performance in the year
The Environmental & Analysis sector delivered a very strong performance,
driven by a recovery in customer orders as the effects of the COVID pandemic
eased, and benefiting from its agility in executing these orders in spite of
supply chain disruptions. Growth was broadly spread, with all subsectors and
all regions delivering double digit revenue growth.
Revenue of £442.9m (2021: £361.1m) was 22.6% higher, and up 24.5% on an
organic constant currency basis. Acquisitions (net of disposals) contributed
1.6% to revenue growth. The sector's growth was led by a strong recovery in
gas detection within Environmental Monitoring, reflecting higher activity
(including some larger contracts) as the effects of the pandemic abated, and
an increasing customer focus on protecting the environment and scarce natural
resources. This also supported greater demand within Water Analysis &
Treatment, although revenue in clean water leak detection was lower, given an
absence of large project tenders from UK utilities.
Within Optical Analysis, photonics also performed strongly, as it continued
to benefit from increasing demand for technologies that support the building
of digital and data capabilities.
By region, the USA accounts for nearly half of the sector's revenue, and
reported the strongest organic constant currency growth, driven by further
growth in photonics within Optical Analysis, and in gas detection, which
benefited from post-pandemic recovery and large new customer orders in the
second half of the year. Asia Pacific also grew strongly, benefiting from
customer demand for products supporting new fuel cell technology, from
investment in talent to support the development of gas detection businesses,
and from recovery in the pharmaceutical and beverage markets. Mainland Europe
reported strong growth on an organic constant currency basis, driven by good
performances in Water Analysis and Treatment, and also benefited from
acquisitions, notably those of Sensitron, Orca and Dancutter. Strong growth in
Africa, Near and Middle East was mainly attributable to a post COVID recovery
in the oil and gas sector, which benefited our gas detection companies. The UK
reported the slowest growth given lower order intake in clean water
technologies from UK utilities, although this was partly offset by a larger
contract win in waste water infrastructure and the acquisition of Anton
Industrial Services within gas detection.
Profit grew by 23.0% to £109.8m (2021: £89.3m), or by 23.3% on an organic
constant currency basis, and Return on Sales was marginally higher at 24.8%
(2021: 24.7%). This reflected a reduction in gross margin as a result of
product mix offset by continued strong overhead control. While there was a
reduction in R&D expenditure as a percentage of sales from 5.7% to 5.1%,
this was in part driven by product mix, and absolute expenditure on R&D
increased to £22.8m (2021: £20.6m).
There were five acquisitions in the sector during the year, and a further
acquisition, of Deep Trekker, was made shortly after the year end. This good
momentum reflected the investment made in a dedicated M&A team, as part of
the new Environmental & Analysis sector team, and the increasing ability
of our individual companies to make bolt-on acquisitions to enhance their
technological capabilities and market reach. The acquisitions made in the year
were (all considerations were in cash and are given on a cash and debt-free
basis):
- Anton Industrial Services, Crowcon's UK flue gas analyser distribution
partner, for £1.9m;
- Sensitron S.R.L., an Italian gas detection company, for €20.1m
(approximately £17.1m), as a standalone company in the sector;
- Dancutter A/S, a Danis0h designer and manufacturer of trenchless pipeline
rehabilitation equipment, for €17.6m (approximately £15.0m), for Minicam;
- Orca GmbH, a German manufacturer of ultraviolet disinfection systems, for
€8.1m (approximately £7.0m), for the UV Group of companies; and
- International Light Technologies, a leading developer of technical lighting
sources and light measurement systems, for US$26.3m (approximately £19.4m),
for Ocean Insight.
Since the year end, there has been one further acquisition in the sector,
Deep Trekker, of C$60.0m (approximately £36.6m), which will be a stand-alone
company. Deep Trekker is a market-leading manufacturer of remotely operated
underwater robots used for inspection, surveying, analysis and maintenance.
Acquisitions (net of disposals) had a positive effect of 1.6% on revenue and
3.5% on profit. Currency exchange movements had a negative effect of 3.5% on
revenue and 3.8% on profit.
Medical Sector Review
Sector overview and growth drivers
The Medical sector is focused on growing a healthier future by enhancing the
quality of life for patients and improving the quality of care delivered by
healthcare providers. We serve niche applications in global markets providing
critical components, devices, systems and therapies which are embedded in the
standard of care. We look for markets where our products and technologies are
critical to the function or management of care, for example cataract surgery
or cardiac monitoring. We also often participate in niches where there is a
connection between medical conditions and chronic illnesses, thereby driving
potentially higher rates of demand on a sustained basis.
The sector's long-term growth is supported by demographic trends,
technological innovation, and aspirations to improve the standard of care and
increase efficiency.
The global population is expected to reach nearly 10 billion by 2050, an
increase of around 2 billion from current levels, and the proportion of the
world's population aged over 60 is forecast to increase from 12% to 22%. This
is expected to lead to an increased prevalence of chronic conditions, driving
demand for diagnosis and treatment of a wide variety of long-term illnesses.
These factors are key growth drivers for our Therapeutic Solutions
businesses, given their presence in the ophthalmic surgery device, respiratory
therapy and bone replacement markets.
Technological innovations are also driving growth. They are increasing the
capabilities of healthcare professionals to prevent, diagnose and treat
conditions. They are also helping healthcare providers to improve the
standards of care and increase efficiency, including by treating more people
remotely through telemedicine. These innovations are enabling better, earlier
and faster diagnosis and treatment of patients, providing healthcare providers
with new tools to tackle the backlog of conditions caused by the COVID
pandemic. At the same time, new products and services are enabling them to
provide more healthcare for less, and improving hygiene compliance. These
factors are strong growth drivers for our diagnostics businesses, and also for
businesses such as PeriGen, in helping to prevent complications during
childbirth, and CenTrak, with its real-time location services which improve
safety and efficiency in healthcare facilities.
Globally, we also see rising demand, from both patients and healthcare
providers, for improvements to the quality and responsiveness of healthcare
services. The COVID pandemic has shown the importance of robust healthcare
systems and the long-term benefits of investing in the health of populations.
It is still too early to predict the eventual outcomes of the pandemic on
healthcare spending, but increased utilisation of assets and rising demand
seem likely to support increases in the future.
From 16 June 2022, the sector has been renamed Healthcare, to reflect the
breadth of these growth drivers, and our wider aspiration to support patient
diagnosis and treatment, as well as healthcare providers in improving the
delivery of patient-centred care.
Performance in the year
The sector delivered a strong performance. Revenue of £442.3m (2021:
£371.3m) was 19.1% higher, and up 13.0% on an organic constant currency
basis. Acquisitions contributed 10.1% to revenue growth. Overall, sector
companies successfully responded to variations in customer demand and to
continuing operational challenges in their supply chains, in labour markets,
and in their ability to access customer premises. All but three sector
companies delivered double digit growth as a result of strong increases in
customer demand as the effects of the COVID pandemic abated and medical
systems began to normalise.
There was double digit revenue growth across all major regions. The USA
accounts for half of the sector's revenue. There was good growth in the region
on an organic constant currency basis, reflecting increased customer demand
and a strong order book. On a reported basis, there was also a benefit from
recent acquisitions, including PeriGen. A small number of companies which had
seen very strong demand through the COVID pandemic saw reduced customer
demand, and there was also some impact from continued delays to elective
surgeries.
Mainland Europe and Asia Pacific grew strongly, principally reflecting
recovery from the effects of the pandemic. The UK saw very strong growth,
particularly in ophthalmology, and also benefited from the acquisition of
Static Systems in the prior year, to reach just under 10% of sector revenue.
Other regions, which represent a small percentage of sector revenue, grew more
modestly.
Profit grew by 15.0% to £99.5m (2021: £86.6m), or by 10.5% on an organic
constant currency basis, and Return on Sales was 22.5% (2021: 23.3%). This
included a substantial increase in R&D expenditure to £26.9m,
representing 6.1% of revenue (2021: £18.8m; 5.1% of revenue), given an
intensification of new product development and new product launches in the
year. It also reflected the allocation of the full cost of a sector team
following the creation of a separate team for the Environmental & Analysis
sector. These effects were partly offset by an increase in gross margin as
most sector companies successfully managed pressures resulting from supply
chain disruptions, and by ongoing strong overhead control.
There were five acquisitions in the sector during the year. These comprised
PeriGen, which will be a new standalone company in the sector, and four
bolt-on acquisitions to enhance the capabilities of existing sector companies.
The acquisitions were:
- PeriGen, whose advanced technology protects mothers and their unborn babies
during childbirth, was acquired for a cash consideration of US$57.3m
(approximately £40.1m) on a cash and debt-free basis;
- Assets and intellectual property associated with RNK's digital stethoscope,
for Riester, for a consideration of US$3.0m (approximately £2.1m);
- Meditech Kft, a Hungarian manufacturer of ambulatory blood pressure monitors
and ECG Holter devices, for a maximum total consideration of €5.7m
(approximately £5.0m), which will be integrated with our SunTech business;
- Infinite Leap, a healthcare consulting and services provider for real-time
location technologies, which will enhance CenTrak's capabilities. The cash
consideration was US$30.8m (approximately £22.9m). There are additional
contingent earn-out considerations of up to an aggregate maximum of US$17m
(approximately £12.9m); and
- Clayborn Lab, a provider of custom heat tape solutions, for an initial cash
consideration of US$4.5m (approximately £3.3m) with an additional earn-out
consideration of US$1.5m (approximately £1.1m).
Acquisitions had a positive effect of 10.1% on revenue and 8.9% on profit.
Currency exchange movements had a negative effect of 4.0% on revenue and 4.4%
on profit.
Principal Risks and Uncertainties
1. Innovation & Digital
Risk Owner: Inken Braunschmidt
Gross risk level: High
Change: No Change
Risk appetite: Seeking
Growth enablers
· Digital Growth Engines
· Innovation Network
· M&A
· Strategic Communications and Brand
Risk and impact
· Failing to innovate to create new high-quality products to meet
customer needs, or failure to adequately protect intellectual property,
resulting in a loss of market share and poor financial performance.
How do we manage the risk?
· Product development is devolved to our companies who are closest to
the customer.
· Chief Innovation and Digital Officer supports sectors to promote and
accelerate innovation by our companies.
· Digital innovation strategy focuses on incubation and acceleration of
innovation. Supported by a champions network and partnerships.
· Education of our companies around customer centricity and voice of
the customer to feed our innovation and ideation.
· Promotion of active collaboration of ideas and best practices between
companies.
· Focus on talent and retention to ensure there is sufficient expertise
within the business.
· Review of R&D budgets and projects by sectors to ensure they are
being spent most effectively in the markets where we want to participate.
· Halma senior management approval of all large R&D projects to
ensure alignment with strategy.
· Companies are encouraged to develop and protect intellectual
property.
· Conferences and development programmes help spread ideas and best
practice across the Group. Innovation awards reward and encourage innovation.
· M&A activity is targeted to help address innovation and R&D
gaps, in line with sector specific initiatives.
· Monitoring of key R&D and innovation metrics to measure positive
impact.
· Regular promotion, training and monitoring of agile or lean start-up
ways of working in companies.
2. Talent and Diversity
Risk Owner: Jennifer Ward
Gross risk level: High
Change: Increased
Risk appetite: Open
Growth enablers
· Digital Growth Engines
· Innovation Network
· International Expansion
· Strategic Communications and Brand
· Talent & Culture
Risk and impact
· Not having the right talent and diversity at all levels of the
organisation to deliver our strategy, resulting in reduced financial
performance. The increased risk reflects retention risks emerging due to our
rapid escalation through the FTSE 100, increased profile and track record of
success. This risk includes the talent needed to effectively manage a
low-carbon transition.
How do we manage the risk?
· Annual Performance and Development Review process for Sector and
Executive Board members. Nomination Committee annual review of succession and
development plans.
· DE&I strategy in place and targets for Executive Board. Quarterly
review of diversity metrics (gender, ethnicity and nationality), used to drive
action plans at each level.
· Annual employee engagement survey to provide insight into employee
sentiment including alignment between strategy and objectives and clarity to
employees about their contribution towards achieving objectives.
· Comprehensive recruitment processes to recruit the best and brightest
talent.
· Ongoing climate related talent identification and upskilling.
· Development of talent and diversity across our companies, including
development programmes, to give us competitive advantage and ensure we have
motivated leaders to deliver our strategy.
· Annual strategic review of sector board and company leadership talent
to identify and develop future leaders. Defined competency and potential model
used.
· Future Leaders programme to develop graduates.
· Senior Management reward structure aligned with strategic priorities
of companies, sectors and Group. Work is continuing in this area to ensure
that our reward packages are competitive, reflect our high long-term growth
and are benchmarked to market.
3. Acquisitions and Investments
Risk Owner: Andrew Williams
Gross risk level: High
Change: No Change
Risk appetite: Open
Growth enablers
· Finance, Legal & Risk
· International Expansion
· M&A
· Strategic Communications and Brand
· Talent & Culture
Risk and impact
· Failing to achieve our strategic growth target for acquisitions and
investments due to insufficient opportunities being identified, poor due
diligence or poor integration, resulting in erosion of shareholder value. Our
three sectors are now aligned according to our purpose and reorganising the
sectors enabled us to increase our M&A team by 50%.
How do we manage the risk?
· Clear strategy and agile business model that allows us to take
advantage of new growth opportunities as they arise.
· Acquisition of companies in our existing or adjacent markets.
· Dedicated M&A Directors with Group Chief Executive, Chief
Financial Officer and plc Board oversight, scrutiny and approval of all
acquisitions.
· As our companies scale, they are now more able to take on bolt-on
acquisitions to accelerate their growth.
· Regular reporting of the acquisition pipeline to the Executive and
plc Boards.
· Careful due diligence by experienced staff who bring in specialist
expertise as required.
· Strategic transformation plans in place for new acquisitions to seek
to ensure they achieve their growth potential.
· Clear process in place to ensure successful integration from a
control and compliance perspective.
· Internal Audit review within 12 months of acquisition to review
minimum expected controls.
· Post-acquisition reviews are performed for all acquisitions after 12
months to ensure strategic objectives are being met and to identify learnings
for future acquisitions.
· Investment framework and model in place to capture process, approvals
and oversight for minority equity investments. Lessons learnt review following
each investment to improve future processes. Regular review by the Investment
Committee.
· A climate related low-carbon transition risk and opportunity review
has been built into our standalone M&A process.
4. Cyber
Risk Owner: Catherine Michel
Gross risk level: High
Change: Increased
Risk appetite: Averse
Growth enablers
· Digital Growth Engines
· Finance, Legal & Risk
· International Expansion
· Talent & Culture
Risk and impact
· Loss of digital intellectual property/data or ability to operate
systems or connected devices due to internal failure or external attack. There
is resulting loss of information or ability to continue operations, and
therefore financial and reputational damage. The continued increase in this
risk reflects the growing threat generally from cyber-crime around the world.
How do we manage the risk?
· Clear ownership of cyber risk, with Board level expertise.
· Cyber risk policies and procedures in place.
· Halma approved services available to all companies to help them
manage their cyber risks.
· Cyber threat reporting every two months for all parts of the Group.
· IT disaster recovery and back-up plans in place, required to be
tested regularly.
· Regular online IT awareness training provided for all employees who
use computers. Central and local IT expertise.
· Six monthly Internal Control Certifications submitted by companies
include the most critical IT controls.
· All employees are required to read and sign up to the IT Acceptable
Use policy.
· Periodic assurance reviews by Internal Audit.
· Crisis communications plan and access to cyber expertise should a
cyberattack occur.
5. Organic Growth
Risk Owner: Andrew Williams
Gross risk level: High
Change: No change
Risk appetite: Open
Growth enablers
· Digital Growth Engines
· Finance, Legal & Risk
· Innovation Network
· International Expansion
· Strategic Communications and Brand
· Talent & Culture
Risk and impact
· Failing to deliver desired organic growth, resulting in missed
expected strategic growth targets and erosion of shareholder value. Whilst the
overall gross risk level is unchanged, our companies have been managing supply
chain and labour shortage risks and well as inflationary pressures. The risk
includes potential impacts from the net zero transition on our supply chain
and operations.
How do we manage the risk?
· Clear Group strategy to achieve organic growth targets, supported by
detailed company strategies and seven Halma Growth Enablers with Executive
Board owners. Clear Halma DNA.
· Sector management ensure that the Group strategy is fulfilled through
ongoing review and chairing of companies.
· Regional hubs, for example in China and India, support local
strategic growth initiatives for all companies.
· Annual strategic planning and budgeting process with rolling 12 month
forecasting and a focus on good P&L and balance sheet control.
· Remuneration of company executives and above is based on profit
growth.
· Continued investment in R&D to drive innovation and growth with
KPIs monitored at Board level.
· Innovation rewarded through Innovation Awards at leadership
conferences.
· Agile business model and culture of innovation to take advantage of
new growth opportunities as they arise.
· Potential new acquisitions, partnerships and investments assessed for
future organic growth prospects to align to strategy.
· Focus on having the best talent on board to deliver strategy and
therefore organic growth.
· Climate-risk and opportunity review processes and governance are in
place.
· Ongoing climate related upskilling of company and sector boards to
help us manage the low-carbon transition.
6. Business Model and its Communication
Risk Owner: Andrew Williams
Gross risk level: High
Change: No Change
Risk appetite: Open
Growth enablers
· Digital Growth Engines
· Finance, Legal & Risk
· International Expansion
· M&A
· Strategic Communications and Brand
Risk and impact
· Failing to clearly articulate or adapt our business model as Halma
grows through exploring and implementing additional or new business models,
resulting in missed growth opportunities and erosion of shareholder value.
This risk includes meeting increasing or shifting stakeholder expectations
around climate change.
How do we manage the risk?
· Clear communication of Halma's business model and any new
developments disclosed in the Annual Report and Accounts and at investor
events. Regular external and internal communications to reinforce business
model understanding.
· Comprehensive expert reviews of existing and potential new markets to
identify strategies with significant growth potential.
· Identification of companies with products or markets that would have
a good strategic fit for Halma. This includes start-ups, service and software
companies that could help accelerate the growth of existing companies.
· Monitoring of market trends, including customer preferences, emerging
technologies and competitors.
· Developing collaboration capabilities of every company to take
advantage of identified opportunities.
· Post-acquisition monitoring to ensure that the objective for
acquiring each business has been achieved and learning opportunities
identified.
· Strategic reviews of business model at Board level to consider the
strengths and weakness of the existing business model and alternative business
models.
· Sector and Executive Boards perform reviews to identify opportunities
which may require a new organisational approach.
· Sustainability governance and structure to accelerate action in
place.
· Continued development of climate and sustainability-related
information available to investors and stakeholders, including TCFD
disclosures.
7. Economic and Geopolitical Uncertainty
Risk Owner: Andrew Williams
Gross risk level: High
Change: Increased
Risk appetite: Cautious
Growth enablers
· Finance, Legal & Risk
· International Expansion
· Talent & Culture
Risk and impact
· Failure to anticipate or adapt to geopolitical changes or a
recession, resulting in a decline in financial performance and an impact on
the carrying value of goodwill and other assets. This risk remains elevated in
certain geographies due to the COVID pandemic and also other geopolitical
events such as the conflict in Ukraine and USA/ China trade relations.
How do we manage the risk?
· Diverse portfolio of companies across the sectors, in multiple
countries and in relatively non-cyclical global niche markets help to minimise
the impact of any single event operating in one market.
· Regular monitoring and assessment of potential risks and
opportunities relating to economic or geopolitical uncertainties.
· Identification of any wider trends by the Halma Executive Board that
require action.
· Risk managed at local company level and they have the autonomy to
rapidly adjust to changing circumstances.
· Financial strength and availability of pooled resources in Group as
well as robust credit management processes in place across the Group.
· Operations, cash deposits and sources of funding in uncertain regions
are kept to a minimum.
· Knowledge and monitoring of global regulatory requirements.
· Financial warning signs KPIs give earlier indications of potential
problems.
· Active reduction of key customer or market concentration through new
product and market diversification for both core and acquired businesses.
· Monitoring of any changes in corporate and government investment due
to macroeconomic factors.
· Periodic assessment of the carrying value of goodwill and other
assets.
8. Natural Hazards, including Climate Change
Risk Owner: Funmi Adegoke
Gross risk level: Medium
Change: No change
Risk appetite: Averse
Growth enablers
· Finance, Legal & Risk
· M&A
· International Expansion
· Strategic Communications and Brand
· Talent & Culture
Risk and impact
· There is a risk we are unable to respond to large scale disasters or
natural catastrophes such as hurricanes, floods, fires or pandemics, as well
as longer term changes to the climate such as increasing water scarcity and
temperatures, resulting in the inability of one or more of our businesses to
operate, causing financial loss and reputational damage. The impact of
physical climate change is likely to increase the risks to our operations and
supply chain due to increasingly severe and/or frequent weather events.
How do we manage the risk?
· Halma operates in end markets with strong long-term growth drivers
and lower risks of shocks due to natural hazards.
· Sustainability is a regular agenda item for the Executive and plc
Boards.
· A Sustainability Network is in place which raises the awareness of
sustainability issues, including climate change, in our companies.
· TCFD compliance work is helping to evaluate the potential impacts of
climate-related risks and opportunities and determine the appropriate
strategic actions.
· All parts of the Group are required to have business continuity plans
in place which are tailored to manage the specific risks they are most likely
to face and these are required to be tested periodically.
· The geographical diversity of Halma's companies reduces the impact of
any single event and Halma has manufacturing capability in multiple locations
which provides flexibility.
· There is a culture of support to affected businesses from other Halma
companies if the need arises.
· Group level oversight of IT communications infrastructure.
· A crisis management plan exists to manage communications and the
reputational risk for Halma and/or its companies.
· Business interruption insurance is in place where possible and
appropriate to limit any financial loss that may occur.
· Climate-risk and opportunity review processes and governance are in
place.
· Ongoing climate related upskilling of company and sector boards.
9. Product Failure or Non-compliance
Risk Owner: Andrew Williams
Gross risk level: Medium
Change: Increased
Risk appetite: Averse
Growth enablers
· Innovation Network
· Strategic Communications and Brand
· Talent & Culture
Risk and impact
· A failure of one of our products results in serious injury, death or
damage to property, including due to non-compliance with product regulations,
resulting in financial loss and reputational damage. The risk is increasing
due to a trend of increasing regulation and also the current pressures in the
supply chain around the world, leading to a greater number of alternative
sourcing solutions being required.
How do we manage the risk?
· The board of each company is accountable for complying with product
regulatory requirements.
· Analysis of market requirements, including safety, are made during a
product design phase to ensure compliance with all regulatory requirements and
customer needs.
· Companies have strict product development and testing procedures in
place to ensure product quality and regulatory compliance.
· Rigorous testing of products during development and also during the
manufacturing process.
· Clear requirements for suppliers, including those providing
alternative sourcing in the current climate, to ensure safety and quality.
· Checks are performed on product received from suppliers.
· Monitoring of defects and warranty returns to identify any potential
safety defect which can then be rectified.
· Traceability of product so that batches can be identified where
appropriate.
· Product compliance with regulations is checked as part of due
diligence for any acquisition.
· Terms and conditions of sale limit liability as much as practically
possible and liability insurance is in place.
· A crisis management plan exists to manage communications and the
reputational risk for Halma and/or its companies.
10. Non-compliance with Laws and Regulations
Risk Owner: Funmi Adegoke
Gross risk level: High
Change: No Change
Risk appetite: Averse
Growth enablers
· Finance, Legal & Risk
· International Expansion
· Strategic Communications and Brand
· Talent & Culture
Risk and impact
· We are not fully compliant with relevant laws and regulations,
resulting in fines, reputational damage and possible criminal liability for
Halma senior management.
How do we manage the risk?
· The board of each company is accountable for identifying and
monitoring what laws are relevant to their business, including any emerging or
changing legislation, and for ensuring commercial legal risks are
appropriately managed.
· Group Legal advises on legislative and regulatory changes relevant to
the Group as a listed company and that could have a material impact.
· An approved list of legal suppliers exists to ensure our companies
can access high quality legal advice directly.
· Group policies, procedures and guidance are in place, setting out the
Group's requirements from a compliance and regulatory perspective, and context
for the Group's risk appetite.
· All employees are required to sign to confirm that they have read and
understood the Halma Code of Conduct.
· Ongoing training and advisory programme for Group and companies.
· Appropriate levels of Group insurance cover are maintained.
· A third party whistleblowing hotline is in place and available for
use by all employees and third parties to raise any issues of concern or
non-compliance.
· Six monthly Internal Control Certifications submitted by companies
include the most critical legal and regulatory compliance controls.
· Deputy General Counsel sit on the sector boards and help facilitate
both formal and informal reviews of sector legal and regulatory compliance.
· Thorough legal due diligence and acquisition support process in
place.
· Claims and litigation risks are reported by all companies every six
months. Material legal issues and risks are reported to and discussed by the
plc board every quarter.
· A crisis management plan exists to manage communications and the
reputational risk for Halma and/or its companies.
· Periodic assurance reviews by Internal Audit.
11. Financial Controls
Risk Owner: Marc Ronchetti
Gross risk level: Medium
Change: No Change
Risk appetite: Averse
Growth enablers
· Finance, Legal & Risk
· International Expansion
· Talent & Culture
Risk and impact
· Failure in financial controls either on its own or via a fraud which
takes advantage of a weakness, resulting in financial loss and/or misstated
reported financial results.
How do we manage the risk?
· Local directors have legal, as well as operational, responsibility as
they are statutory directors of their companies. This fits with Halma's
decentralised model to ensure an effective financial control environment is in
place.
· Group policies, procedures and guidance are in place for expected
financial controls.
· Onboarding of new finance teams and members, together with ongoing
training of Halma's financial control framework and its implementation.
· Six monthly Internal Control Certifications submitted by companies
include the most critical financial compliance controls. These include
segregation of duties, delegation of authorities and financial accounts
preparation checks.
· Sector and Group Finance teams perform regular reviews of financial
reporting and indicators.
· Six monthly peer reviews of reported results for each company are
performed to provide independent challenge.
· Periodic assurance reviews by Internal Audit.
· A third party whistleblowing hotline is in place and available for
use by all employees and third parties to raise any issues of concern or
non-compliance.
12. Liquidity
Risk Owner: Marc Ronchetti
Gross risk level: Medium
Change: No change
Risk appetite: Averse
Growth enablers
· Finance, Legal & Risk
· International Expansion
Risk and impact
· There is a risk that the Group's cash/funding resources are
inadequate to support its activities or there is a breach of funding terms.
There continues to be some risk due to the impact of the COVID pandemic but
this is being managed effectively at Group and company level.
How do we manage the risk?
· A clear financial model and conservative balance sheet strategy
exists.
· The strong cash flow generated by the Group provides financial
flexibility, together with a revolving credit facility.
· Cash needs are monitored regularly through review of the Group cash
position and a 12 month rolling forecast.
· Liquidity forecasts are prepared covering the next three years and
are updated and reviewed at least every six months.
· Treasury policy and procedures provide comprehensive guidance to
companies on banking and transactions.
· Monthly monitoring of current and forecast covenant compliance.
· All drawdowns and all new or renewed sources of funding are subject
to approval by the Chief Financial Officer and Head of Group Treasury.
· The currency mix of debt is reviewed annually, and on acquiring or
disposing of a business.
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 as at 31 March 2022, its cash flows, liquidity
position and borrowing facilities are set out in the Strategic Report. In
addition, the Annual Report and Accounts 2022 contains further information
concerning the security, currency, interest rates and maturity of the Group's
borrowings.
The financial statements have been prepared on a going concern basis. In
adopting the going concern basis the Directors have considered all of the
above factors, including potential scenarios and its principal risks set out
above. Under the potential scenarios considered, which includes a severe but
plausible downside scenario, the Group remains within its debt facilities and
the attached financial covenants for the foreseeable future and the Directors
therefore believe, at the time of approving the financial statements, that the
Company is well placed to manage its business risks successfully and remains a
going concern. The key facts and assumptions in reaching this determination
are summarised below.
Our financial position remains robust with committed facilities at the balance
sheet date totalling approximately £670m which includes a £550m Revolving
Credit Facility (RCF). In May 2022 the RCF was refinanced and now matures in
May 2027 with two one-year extension options. During May 2022, the Group also
entered into a Note Purchase Agreement which provides access to loan notes
totalling £330m, to be drawn in various currencies in July 2022 subject to
certain conditions. The Group is confident that these conditions will be
satisfied and thus the £330m loan notes form part of the available facilities
in the Group's Going Concern and Viability assessments. The financial
covenants across the facilities are for leverage (net debt/adjusted EBITDA) of
not more than three and a half times and for adjusted interest cover of not
less than four times.
Our base case scenario has been prepared using forecasts from each of our
Operating Companies as well as cash outflows on acquisitions in line with pre
COVID-19 levels. In addition, a severe but plausible downside scenario has
been modelled showing a decline in trading for the year ending 31 March 2023
to below levels seen for the year ended 31 March 2022. This reduction in
trading could be caused by further significant, unexpected COVID-19 impacts or
another significant downside event. In mitigating the impacts of the downside
scenario there are actions that can be taken which are entirely discretionary
to the business such as acquisitions spend and dividend growth rates. In
addition, the Group has demonstrated strong resilience and flexibility during
the COVID pandemic in managing overheads which could be used to further
mitigate the impacts of the downside scenario. The scenarios modelled cover a
period of greater than 12 months from the date of the financial statements.
Neither the base case nor severe but plausible downside scenarios result in a
breach of the Group's available debt facilities or the attached covenants and,
accordingly, the Directors believe there is no material uncertainty in the use
of the going concern assumption and, therefore, deem it appropriate to
continue to adopt the going concern basis of accounting for at least the next
12-month period.
Viability Statement
During the year, the Board carried out a robust assessment of the principal
risks affecting the Group, including those that would threaten its business
model (as set out earlier in the Strategic Report), future performance,
solvency or liquidity. The principal risks and uncertainties, including an
analysis of the potential impact and mitigating actions are set out above.
The Board has assessed the viability of the Group over a three-year period,
taking into account the Group's current position and the potential impact of
the principal risks and uncertainties. While the Board has no reason to
believe that the Group will not be viable over a longer period, it has
determined that three years is an appropriate period. In drawing its
conclusion, the Board has aligned the period of viability assessment with the
Group's strategic planning process (a three-year period). The Board believes
that this approach provides greater certainty over forecasting and, therefore,
increases reliability in the modelling and stress testing of the Company's
viability. In addition, a three-year horizon is typically the period over
which we review our external bank facilities and is also the performance-based
period over which awards granted under Halma's share-based incentive plan are
measured.
In reviewing the Company's viability, the Board has identified the following
factors which they believe support their assessment:
1. The Group operates in diverse and relatively non-cyclical markets.
2. There is considerable financial capacity under current facilities and the
ability to raise further funds if required.
3. The decentralised nature of our Group ensures that risk is spread across
our businesses and sectors, with limited exposure to any particular industry,
market, geography, customer or supplier.
4. There is a strong culture of local responsibility and accountability
within a robust governance and control framework.
5. An ethical approach to business is set from the top and flows throughout
our business.
In making their assessment, the Board carried out a comprehensive exercise of
financial modelling and stress-tested the model with a downside scenario based
on the principal risks identified in the Group's annual risk assessment
process. The scenarios modelled used the same assumptions as for the going
concern review, as set out above. The base case reflects the latest forecasts
and strategic plans of the business. The downside scenario included a
reduction in trading for the year ending 31 March 2023 to below levels seen
for the year ended 31 March 2022, and also included a significant downside
event arising from the impacts of the Group's other principal risks such as
litigation or product failure. For the years ending 31 March 2024 and 31 March
2025 the downside scenario reflects expected base case revenue growth more
than halving with the growth rate applied to the 2023 downside scenario
revenue. In both scenarios, the effect on the Group's KPls and borrowing
covenants was considered, and significant headroom remained. Based on this
assessment, the Board confirms that they have a reasonable expectation that
the Group will be able to continue in operation and meet its liabilities as
they fall due over the three-year period to 31 March 2025.
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 year to 31 March 2022.
Certain parts thereof are not included within these Results.
Each of the Directors, whose names and functions are listed in the Annual
Report and Accounts 2022, confirm that, to the best of their knowledge:
· the Group financial statements, which have been prepared in accordance
with UK-adopted international accounting standards, give a true and fair view
of the assets, liabilities, financial position and profit of the Group;
· the company financial statements, which have been prepared in
accordance with United Kingdom Accounting Standards, comprising FRS 101, give
a true and fair view of the assets, liabilities and financial position of the
company; and
· the Strategic Report and the Directors' Report includes a fair review
of the development and performance of the business and the position of the
Group and company, together with a description of the principal risks and
uncertainties that it faces.
This responsibility statement was approved by the Board of Directors on 16
June 2022.
Andrew Williams Marc Ronchetti
Group Chief Executive Chief Financial Officer
Results for the year to 31 March 2022
Consolidated Income Statement
Year ended 31 March 2022 Year ended 31 March 2021
Notes Before Adjustments* Total Before Adjustments* Total
£m
adjustments* (note 1) adjustments* (note 1) £m
£m £m £m £m
Continuing operations
Revenue 1 1,525.3 - 1,525.3 1,318.2 - 1,318.2
Operating profit 324.7 (45.8) 278.9 288.3 (47.5) 240.8
Share of loss of associate (0.1) - (0.1) - - -
Profit on disposal of operations 9 - 34.0 34.0 - 22.1 22.1
Finance income 4 0.6 - 0.6 1.0 - 1.0
Finance expense 5 (9.0) - (9.0) (11.0) - (11.0)
Profit before taxation 316.2 (11.8) 304.4 278.3 (25.4) 252.9
Taxation 6 (68.3) 8.1 (60.2) (55.8) 6.2 (49.6)
Profit for the year 1 247.9 (3.7) 244.2 222.5 (19.2) 203.3
Attributable to:
Owners of the parent 244.4 203.4
Non-controlling interests (0.2) (0.1)
Earnings per share 2
From continuing operations
Basic 65.48p 64.54p 58.67p 53.61p
Diluted 64.42p 53.50p
Dividends in respect of the year 7
Paid and proposed (£m) 71.5 66.8
Paid and proposed per share 18.88p 17.65p
* Adjustments include the amortisation of acquired intangible assets;
acquisition items; significant restructuring costs, and profit or loss on
disposal of operations; and the associated taxation thereon. Note 3 provides
more information on alternative performance measures.
Consolidated Statement of Comprehensive Income and Expenditure
Notes Year ended Year ended
31 March 31 March
2022 2021
£m £m
Profit for the year 244.2 203.3
Items that will not be reclassified subsequently to the Consolidated Income
Statement:
Actuarial gains/(losses) on defined benefit pension plans 41.6 (30.6)
Tax relating to components of other comprehensive income that will not be 6 (9.6) 5.9
reclassified
Changes in the fair value of equity investments at fair value through other (1.7) -
comprehensive income
Items that may be reclassified subsequently to the Consolidated Income
Statement:
Effective portion of changes in fair value of cash flow hedges (1.5) 1.0
Deferred tax in respect of cash flow hedges accounted for in the hedging 6 0.4 (0.2)
reserve
Exchange gains/(losses) on translation of foreign operations and net 43.9 (72.7)
investment hedge
Exchange gains on translation of foreign operations recycled to the income - (2.8)
statement on disposal
Other comprehensive income/(expense) for the year 73.1 (99.4)
Total comprehensive income for the year 317.3 103.9
Attributable to
Owners of the parent 317.5 104.0
Non-controlling interests (0.2) (0.1)
The exchange gains of £43.9m (2021: losses of £72.7m) includes losses of
£8.6m (2021: gains of £19.9m) which relate to net investment hedges.
Consolidated Balance Sheet
31 March 31 March
2022 2021
£m £m
Non-current assets
Goodwill 908.7 808.5
Other intangible 325.2 290.0
assets
Property, plant and 194.0 180.8
equipment
Interest in associates and other 8.2 9.3
investments
Retirement benefit 31.1 -
asset
Tax 14.7 13.9
receivable
Deferred tax 2.4 1.3
asset
1,484.3 1,303.8
Current assets
Inventories 228.8 167.8
Trade and other 325.1 268.0
receivables
Tax receivable 0.7 2.5
Cash and bank balances 157.4 134.1
Derivative financial 0.7 1.7
instruments
712.7 574.1
Total assets 2,197.0 1,877.9
Current liabilities
Trade and other 242.7 186.7
payables
Borrowings 72.5 3.0
Lease 15.5 13.3
liabilities
Provisions 20.7 35.4
Tax liabilities 11.6 8.9
Derivative financial 0.9 0.7
instruments
363.9 248.0
Net current assets 348.8 326.1
Non-current liabilities
Borrowings 287.6 322.3
Lease 56.6 51.7
liabilities
Retirement benefit 0.6 22.5
obligations
Trade and other 19.0 16.8
payables
Provisions 7.7 8.4
Deferred tax 58.5 40.6
liabilities
430.0 462.3
Total liabilities 793.9 710.3
Net assets 1,403.1 1,167.6
Equity
Share 38.0 38.0
capital
Share premium account 23.6 23.6
Own shares (30.7) (20.9)
Capital redemption reserve 0.2 0.2
Hedging reserve (0.4) 0.7
Translation reserve 117.1 73.2
Other reserves (19.9) (13.6)
Retained earnings 1,274.8 1,065.8
Equity attributable to owners of the Company 1,402.7 1,167.0
Non-controlling interests 0.4 0.6
Total equity 1,403.1 1,167.6
The financial statements of Halma plc, company number 00040932, were approved
by the Board of Directors on 16 June 2022.
Andrew Williams Marc Ronchetti
Director
Director
Consolidated Statement of Changes in Equity
Share premium account Capital redemption Non- controlling interest
Share capital £m Own shares reserve Hedging reserve Translation Other reserves Retained earnings £m
£m £m £m £m reserve £m £m Total
£m £m
At 1 April 2021 38.0 23.6 (20.9) 0.2 0.7 73.2 (13.6) 1,065.8 0.6 1,167.6
Profit for the year - - - - - - - 244.4 (0.2) 244.2
Other comprehensive
income and expense - - - - (1.1) 43.9 (1.7) 32.0 - 73.1
Total comprehensive income and expense
- - - - (1.1) 43.9 (1.7) 276.4 (0.2) 317.3
Dividends paid - - - - - - - (68.7) - (68.7)
Share-based payment charge - - - - - - 12.2 - - 12.2
Deferred tax on share-based payment transactions - - - - - - (0.2) - - (0.2)
Excess tax deductions related to share-based payments on exercised awards - - - - - - - 1.3 - 1.3
Purchase of own shares - - (19.3) - - - - - - (19.3)
Performance share plan awards vested - - 9.5 - - - (16.6) - - (7.1)
At 31 March 2022 38.0 23.6 (30.7) 0.2 (0.4) 117.1 (19.9) 1,274.8 0.4 1,403.1
Share premium account Capital redemption Non- controlling interest
Share capital £m Own shares reserve Hedging reserve Translation Other reserves Retained earnings £m
£m £m £m £m reserve £m £m Total
£m £m
At 1 April 2020 38.0 23.6 (14.3) 0.2 (0.1) 148.7 (7.7) 949.2 (0.7) 1,136.9
Profit for the year - - - - - - - 203.4 (0.1) 203.3
Other comprehensive income and expense
- - - - 0.8 (75.5) - (24.7) - (99.4)
Total comprehensive income and expense
- - - - 0.8 (75.5) - 178.7 (0.1) 103.9
Dividends paid - - - - - - - (63.7) - (63.7)
Share-based payment charge
- - - - - - 11.9 - - 11.9
Deferred tax on share-based payment transactions
- - - - - - (0.4) - - (0.4)
Excess tax deductions related to share-based payments on exercised awards
- - - - - - - 1.6 - 1.6
Purchase of own shares - - (16.2) - - - - - - (16.2)
Performance share plan awards vested
- - 9.6 - - - (17.4) - - (7.8)
Adjustments to non- controlling interest arising on acquisition
- - - - - - - - 1.4 1.4
At 31 March 2021 38.0 23.6 (20.9) 0.2 0.7 73.2 (13.6) 1,065.8 0.6 1,167.6
Own shares are ordinary shares in Halma plc purchased by the Company and held
to fulfil the Company's obligations under the Group's share plans. At 31 March
2022 the number of shares held by the Employee Benefit Trust was 1,175,080
(2021: 891,622).
The market value of own shares was £29.5m (2021: £21.2m).
The Translation reserve is used to record the difference arising from the
retranslation of the financial statements of foreign operations. The Hedging
reserve is used to record the portion of the cumulative net change in fair
value of cash flow hedging instruments that are deemed to be an effective
hedge.
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 Group's equity-settled share plans.
Consolidated Cash Flow Statement
Notes Year ended Year ended
31 March
31 March
2022 2021
£m £m
Net cash inflow from operating 10 237.4 277.6
activities
Cash flows from investing activities
Purchase of property, plant and equipment - owned (25.2) (22.8)
assets
Purchase of computer (0.9) (2.8)
software
Purchase of other (0.5) (1.2)
intangibles
Proceeds from sale of property, plant and equipment and capitalised 1.1 0.9
development costs
Development costs (13.4) (15.4)
capitalised
Interest received 0.2 0.8
Acquisition of businesses, net of cash 8 (152.8) (46.4)
acquired
Disposal of business, net of cash 9 57.5 26.1
disposed
Purchase of equity (0.7) (3.4)
investments
Net cash used in investing activities (134.7) (64.2)
Cash flows from financing activities
Dividends paid (68.7) (63.7)
Purchase of own shares (19.3) (16.2)
Interest paid (8.2) (10.0)
Proceeds from bank 10 161.4 129.4
borrowings
Repayment of bank 10 (132.5) (136.7)
borrowings
Repayment of loan 10 - (72.2)
notes
Repayment of lease liabilities, net of interest (14.6) (14.1)
Net cash used in financing activities (81.9) (183.5)
Increase in cash and cash 10
equivalents
20.8 29.9
Cash and cash equivalents brought forward 131.1 105.4
Exchange adjustments 4.8 (4.2)
Cash and cash equivalents carried 10 156.7 131.1
forward
Notes Year ended Year ended
31 March
31 March
2022 2021
£m £m
Reconciliation of net cash flow to movement in net debt
Increase in cash and cash equivalents 20.8 29.9
Net cash (inflow)/outflow from (drawdown)/repayment of bank 10 (28.9) 7.3
borrowings
Loan notes 10 - 72.2
repaid
Lease liabilities additions and accretion of interest (19.0) (25.0)
Lease liabilities acquired (4.6) (0.5)
Lease liabilities disposed of 2.1 1.8
Lease liabilities and interest 10 16.8 16.4
repaid
Exchange adjustments (5.8) 17.0
(Increase)/decrease in net debt (18.6) 119.1
Net debt brought forward (256.2) (375.3)
Net debt carried forward (274.8) (256.2)
Accounting Policies
Basis of presentation
On 31 December 2020, IFRS as adopted by the European Union at that date was
brought into UK law and became UK-adopted International Accounting Standards,
with future changes being subject to endorsement by the UK Endorsement Board.
Halma transitioned to UK-adopted International Accounting Standards in its
consolidated financial statements on 1 April 2021. This change constitutes a
change in accounting framework. However, there is no impact on recognition,
measurement or disclosure in the period reported as a result of the change in
framework.
The consolidated financial statements of Halma have been prepared in
accordance with UK-adopted International Accounting Standards and with the
requirements of the Companies Act 2006 as applicable to companies reporting
under those standards.
The principal Group accounting policies are explained below and have been
applied consistently throughout the years ended 31 March 2022 and 31 March
2021, other than those noted below.
The Group accounts have been prepared under the historical cost convention,
except as described below under the headings 'Derivative financial instruments
and hedge accounting', 'Financial assets at fair value through other
comprehensive income (FVOCI)', 'Pensions' and 'Business combinations and
goodwill'.
New Standards and Interpretations applied for the first time in the year ended
31 March 2022
The following Standards with an effective date of 1 January 2021 and 1 April
2021 respectively, have been adopted without any significant impact on the
amounts reported in these financial statements:
- Interest Rate Benchmark Reform - Phase 2 - Amendments to IFRS 9, IAS 39,
IFRS 7, IFRS 4 and IFRS 16
- COVID-19 Related Rent Concessions - Amendment to IFRS 16
In April 2021 the IFRS IC published its final agenda decision on Configuration
and Customisation ('CC') costs in a Cloud Computing Arrangement. The agenda
decision considers how a customer accounts for configuration or customisation
costs where an intangible asset is not recognised in a cloud computing
arrangement. The agenda decision impacts the Group in respect of the current
year with the updated policy for software costs included under the Other
intangible assets accounting policy below. There was no impact on the numbers
reported in the prior year.
New Standards and Interpretations not yet applied
At the date of authorisation of these financial statements, the following
Standards and Interpretations that are potentially relevant to the Group, and
which have not been applied in these financial statements, were in issue but
not yet effective (and in some cases had not yet been adopted by the UK):
- Reference to the Conceptual Framework - Amendments to IFRS 3
- Property, Plant and Equipment: Proceeds before intended use - Amendments to
IAS 16
- Onerous Contracts - Costs of Fulfilling a Contract - Amendments to IAS 37
- IFRS 17 Insurance Contracts
- Classification of Liabilities as Current or Non-current - Amendments to IAS
1
- Definition of Accounting Estimates - Amendments to IAS 8
- Disclosure of Accounting Policies - Amendments to IAS 1 and IFRS Practice
Statement 2
- Deferred Tax related to Assets and Liabilities arising from a Single
Transaction - Amendments to IAS 12
The Directors anticipate that the adoption of these Standards and
Interpretations in future periods will have no material impact on the
financial statements of the Group.
Use of Alternative performance measures (APMs)
In the reporting of the financial information, the Group uses certain measures
that are not required under IFRS, the Generally Accepted Accounting Principles
(GAAP) under which the Group reports. The Directors believe that Return on
Total Invested Capital (ROTIC), Return on Capital Employed (ROCE), Organic
growth at constant currency, Adjusted profit and earnings per share measures
and Adjusted operating cash flow provide additional and more consistent
measures of underlying performance to shareholders by removing non-trading
items that are not closely related to the Group's trading or operating cash
flows. These and other alternative performance measures are used by the
Directors for internal performance analysis and incentive compensation
arrangements for employees. The terms ROTIC, ROCE, organic growth at constant
currency and 'adjusted' are not defined terms under IFRS and may therefore not
be comparable with similarly titled measures reported by other companies. They
are not intended to be a substitute for, or superior to, GAAP measures.
The principal items which are included in adjusting items are set out below in
the Group's accounting policy and in note 1. The term 'adjusted' refers to the
relevant measure being reported for continuing operations excluding adjusting
items.
Definitions of the Group's material alternative performance measures along
with reconciliation to their IFRS equivalent measure are included in note 3.
Key accounting policies
Below we set out our key accounting policies, with a list of all other
accounting policies thereafter.
Going concern
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 as at 31 March 2022, its cash flows, liquidity
position and borrowing facilities are set out in the Strategic Report. In
addition, the Annual Report and Accounts 2022 contains further information
concerning the security, currency, interest rates and maturity of the Group's
borrowings.
The financial statements have been prepared on a going concern basis. In
adopting the going concern basis the Directors have considered all of the
above factors, including potential scenarios and its principal risks set out
above. Under the potential scenarios considered, which includes a severe but
plausible downside scenario, the Group remains within its debt facilities and
the attached financial covenants for the foreseeable future and the Directors
therefore believe, at the time of approving the financial statements, that the
Company is well placed to manage its business risks successfully and remains a
going concern. The key facts and assumptions in reaching this determination
are summarised below.
Our financial position remains robust with committed facilities at the balance
sheet date totalling approximately £670m which includes a £550m Revolving
Credit Facility (RCF). In May 2022 the RCF was refinanced and now matures in
May 2027 with two one-year extension options. During May 2022, the Group also
entered into a Note Purchase Agreement which provides access to loan notes
totalling £330m, to be drawn in various currencies in July 2022 subject to
certain conditions. The Group is confident that these conditions will be
satisfied and thus the £330m loan notes form part of the available facilities
in the Group's Going Concern and Viability assessments. The financial
covenants across the facilities are for leverage (net debt/adjusted EBITDA) of
not more than three and a half times and for adjusted interest cover of not
less than four times.
Our base case scenario has been prepared using forecasts from each of our
Operating Companies as well as cash outflows on acquisitions in line with pre
COVID-19 levels. In addition, a severe but plausible downside scenario has
been modelled showing a decline in trading for the year ending 31 March 2023
to below levels seen for the year ended 31 March 2022. This reduction in
trading could be caused by further significant, unexpected COVID-19 impacts or
another significant downside event. In mitigating the impacts of the downside
scenario there are actions that can be taken which are entirely discretionary
to the business such as acquisitions spend and dividend growth rates. In
addition, the Group has demonstrated strong resilience and flexibility during
the COVID pandemic in managing overheads which could be used to further
mitigate the impacts of the downside scenario. The scenarios modelled cover a
period of greater than 12 months from the date of the financial statements.
Neither the base case nor severe but plausible downside scenarios result in a
breach of the Group's available debt facilities or the attached covenants and,
accordingly, the Directors believe there is no material uncertainty in the use
of the going concern assumption and, therefore, deem it appropriate to
continue to adopt the going concern basis of accounting for at least the next
12-month period.
Business combinations and goodwill
Business combinations are accounted for using the acquisition method as at the
acquisition date, which is the date on which control is transferred to the
Group. The Group measures goodwill at the acquisition date as:
- the fair value of the consideration transferred; plus
- the recognised amount of any non-controlling interests in the acquiree
measured at the proportionate share of the value of net identifiable assets
acquired; plus
- the fair value of the existing equity interest in the acquiree; less
- the net recognised amount (generally fair value) of the identifiable assets
acquired and liabilities assumed.
Costs related to the acquisition, other than those associated with the issue
of debt or equity securities, are expensed as incurred. Any contingent
consideration payable may be accounted for as either:
a) Consideration transferred, which is recognised at fair value at the
acquisition date. If the contingent purchase consideration is classified as
equity, it is not remeasured and settlement is accounted for within equity.
Otherwise, subsequent changes to the fair value of the contingent purchase
consideration are recognised in the Consolidated Income Statement; or
b) Remuneration, which is expensed in the Consolidated Income Statement
over the associated period of service. An indicator of such treatment includes
when payments to employees of the acquired company are contingent on a
post-acquisition event, but may be automatically forfeited on termination of
employment.
For acquisitions between 4 April 2004 (the date from which the financial
statements were reported under IFRS) and 2 April 2010, goodwill represents the
difference between the cost of the acquisition, including acquisition costs
and the fair value of the net identifiable assets acquired. Goodwill has an
indefinite expected useful life and is not amortised, but is tested annually
for impairment.
Goodwill is recognised as an intangible asset in the Consolidated Balance
Sheet. Goodwill therefore includes non-identified intangible assets including
business processes, buyer-specific synergies, know-how and workforce-related
industry-specific knowledge and technical skills. Negative goodwill arising on
acquisitions would be recognised directly in the Consolidated Income
Statement. On closure or disposal of an acquired business, goodwill would be
taken into account in determining the profit or loss on closure or disposal.
As permitted by IFRS 1, the Group elected not to apply IFRS 3 'Business
Combinations' to acquisitions prior to 4 April 2004 in its consolidated
accounts. As a result, the net book value of goodwill recognised as an
intangible asset under UK GAAP at 3 April 2004 was brought forward unadjusted
as the cost of goodwill recognised under IFRS at 4 April 2004 subject to
impairment testing on that date; and goodwill that was written off to reserves
prior to 28 March 1998 under UK GAAP will not be taken into account in
determining the profit or loss on disposal or closure of previously acquired
businesses from 4 April 2004 onwards.
Payments for contingent consideration are classified as investing activities
within the Consolidated Cash Flow Statement, except for amounts paid in excess
of that estimated in the acquisition balance sheets which are recognised in
the net cash inflow from operating activities in the year together with
movements in contingent consideration provisions charged/credited to the
Consolidated Income Statement which is included as a reconciling item between
operating profit and cash inflow from operating activities.
Intangible assets
(a) Acquired intangible assets
An intangible resource acquired with a subsidiary undertaking is recognised as
an intangible asset if it is separable from the acquired business or arises
from contractual or legal rights, is expected to generate future economic
benefits and its fair value can be measured reliably. Acquired intangible
assets, comprising trademarks, technology and know-how and customer
relationships, are amortised through the Consolidated Income Statement on a
straight-line basis over their estimated economic lives of between four and 20
years. The carrying value of intangible assets is reviewed for impairment if
events or changes in circumstances indicate the carrying value may not be
recoverable.
(b) Product development costs
Research expenditure is charged to the Consolidated Income Statement in the
financial year in which it is incurred.
Development expenditure is expensed in the financial year in which it is
incurred, unless it relates to the development of a new or substantially
improved product, is incurred after the technical feasibility and economic
viability of the product has been proven and the decision to complete the
development has been taken, and can be measured reliably. Such expenditure,
meeting the recognition criteria of IAS 38 'Intangible Assets', is capitalised
as an intangible asset in the Consolidated Balance Sheet at cost and is
amortised through the Consolidated Income Statement on a straight-line basis
over its estimated economic life of three years.
Pensions
The Group makes contributions to various pension plans.
For defined benefit plans, the asset or liability recorded in the Consolidated
Balance Sheet is the difference between the fair value of the plan's assets
and the present value of the defined obligation at that date. The defined
benefit obligation is calculated separately for each plan on an annual basis
by independent actuaries using the projected unit credit method.
Actuarial gains and losses are recognised in full in the period in which they
occur and are taken to other comprehensive income.
Current and past service costs, along with the impact of any settlements or
curtailments, are charged to the Consolidated Income Statement. The net
interest expense on pension plans' liabilities and the expected return on the
plans' assets is recognised within finance expense in the Consolidated Income
Statement.
Contributions to defined contribution plans are charged to the Consolidated
Income Statement in the period the expense relates to.
Impairment of trade and other receivables
The Group assesses on a forward-looking basis the expected credit losses
associated with its trade and other receivables carried at amortised cost. The
impairment methodology applied depends on whether there has been a significant
increase in credit risk.
The Group applies the simplified approach permitted by IFRS 9, which requires
expected lifetime losses to be recognised from initial recognition of the
receivables. In order to estimate the expected lifetime losses, the Group
categorises its customers into groups with similar risk profiles and
determines the historic rates of impairment for each of those categories of
customer. The Group then adjusts the risk profile for each group of customers
by using forward looking information, such as the government risk of default
for the country in which those customers are located, and determines an
overall probability of impairment for the total trade and other receivables at
the balance sheet date.
Critical accounting judgements and key sources of estimation uncertainty
The preparation of Group accounts in conformity with IFRS requires the
Directors to make judgements, estimates and assumptions that affect the
application of policies and reported amounts of assets and liabilities, income
and expenses. The estimates and associated assumptions are based on historical
experiences and various other factors that are believed to be reasonable under
the circumstances, the results of which form the basis of making judgements
about carrying values of assets and liabilities that are not readily apparent
from other sources. Actual results may differ from these estimates.
In preparing the Consolidated Financial Statements management has considered
the impact of climate change, particularly in the context of the disclosures
included in the Strategic Report and the stated net zero ambitions. These
considerations did not have a material impact on the financial reporting
judgements and estimates in the current year. Climate change is not expected
to have a significant impact on the Group's going concern assessment as at
March 2022 nor the viability of the Group over the next three years.
The following areas of critical accounting judgement and key estimation
uncertainty have been identified as having significant risk of causing a
material adjustment to the carrying amounts of assets and liabilities:
Critical accounting judgements
Goodwill impairment CGU groups
Determining whether goodwill is impaired requires management's judgement in
assessing cash generating unit (CGU) groups to which goodwill should be
allocated. Management allocates a new acquisition to a CGU group based on
which one is expected to benefit most from that business combination. The
allocation of goodwill to existing CGU groups is generally straightforward and
factual, however over time as new businesses are acquired and management
reporting structures change management reviews the CGU groups to ensure they
are still appropriate. There have been no changes to the CGU groups in the
current year.
Recoverability of non-current taxation assets
In the current year, determining the recoverability of tax assets requires
management's judgement in assessing the amounts paid in relation to group
financing partial exemption applicable to UK controlled foreign companies as a
result of the decision by the European Commission that this constitutes state
aid. Management's assessment is that this represents a contingent liability
and that the £14.7m paid to HM Revenue & Customs (HMRC) in the current
and prior year, included within non-current assets on the Consolidated Balance
Sheet, will ultimately be recovered.
Key sources of estimation uncertainty
Contingent consideration changes in estimates
Determining the value of contingent consideration recognised as part of the
acquisition of a business requires management to estimate the expected
performance of the acquired business and the amount of contingent
consideration that will therefore become payable. Initial estimates of
expected performance are made by the management responsible for completing the
acquisition and form a key component of the financial due diligence that takes
place prior to completion. Subsequent measurement of contingent consideration
is based on the Directors' appraisal of the acquired business's performance in
the post-acquisition period and the agreement of final payments.
Intangible assets
IFRS 3 (revised) 'Business Combinations' requires that goodwill arising on the
acquisition of subsidiaries is capitalised and included in intangible assets.
IFRS 3 (revised) also requires the identification and valuation of other
separable intangible assets at acquisition. The assumptions involved in
valuing these intangible assets require the use of management estimates.
IAS 38 'Intangible Assets' requires that development costs, arising from the
application of research findings or other technical knowledge to a plan or
design of a new or substantially improved product, are capitalised, subject to
certain criteria being met. Determining the technical feasibility and
estimating the future cash flows generated by the products in development
requires the use of management estimates.
The estimates made in relation to both acquired intangible assets and
capitalised development costs include identification of relevant assets,
future growth rates, expected inflation rates and the discount rate used.
Management also make estimates of the useful economic lives of the intangible
assets. Management engages third party specialists to assist with the
valuation assumption in respect of acquired intangible assets.
Goodwill impairment future cash flows
The 'value in use' calculation used to test for impairment of goodwill
involves an estimation of the present value of future cash flows of CGU
groups. The future cash flows are based on annual budgets and forecasts of
CGUs, as approved by the Board, to which management's expectation of
market-share and long-term growth rates are applied. The present value is then
calculated based on management's estimate of future discount and growth rates.
The Board reviews these key assumptions (operating assumption, long-term
growth rates, and discount rates) and the sensitivity analysis around these
assumptions. Management believes that there is no reasonably possible change
in any of the key assumptions that would cause the carrying value of any CGU
group to exceed its recoverable amount.
Defined benefit pension plan liabilities
Determining the value of the future defined benefit asset/obligation requires
estimation in respect of the assumptions used to calculate present values of
plan liabilities. The significant assumptions utilised in the calculations are
future mortality, discount rate and inflation. Management determines these
assumptions in consultation with an independent actuary.
Other accounting policies
Basis of consolidation
The Group accounts include the accounts of Halma plc and all of its subsidiary
companies made up to 31 March 2022, adjusted to eliminate intra-Group
transactions, balances, income and expenses. The results of subsidiary
companies acquired or disposed are included from the month of their
acquisition or to the month of their disposal.
Segmental reporting
An operating segment is a distinguishable component of the Group that is
engaged in business activities from which it may earn revenues and incur
expenses, and whose operating results are reviewed regularly by the Chief
Operating Decision Maker (the Group Chief Executive) to make decisions about
resources to be allocated to the segment and assess its performance, and for
which discrete financial information is available.
Reportable segments are operating segments that either meet the thresholds and
conditions set out in IFRS 8 or are considered by the Board to be
appropriately designated as reportable segments. Segment result represents
operating profits and includes an allocation of Head Office expenses. Segment
result excludes tax and financing items. Segment assets comprise goodwill,
other intangible assets, property, plant and equipment and Right-of-Use assets
(excluding land and buildings), inventories, trade and other receivables.
Segment liabilities comprise trade and other payables, provisions and other
payables. Unallocated items represent land and buildings (including
Right-of-Use assets), corporate and deferred taxation balances, defined
benefit plan asset/obligation, contingent purchase consideration, all
components of net cash/borrowings, lease liabilities and derivative financial
instruments.
From 1 April 2021, the Group aligned its organisational structure and
financial reporting with its purpose and focus on safety, environmental and
health markets. The Group now has three main reportable segments (Safety,
Environmental & Analysis and Medical), which are defined by markets rather
than product type. Each segment includes businesses with similar operating and
market characteristics and are consistent with the internal reporting as
reviewed by the Group Chief Executive.
Revenue
The Group's revenue streams are the sale of goods and services in the
specialist safety, environmental technologies and health markets. The revenue
streams are disaggregated into three sectors, that serve like markets. Those
sectors are Safety, Environmental & Analysis and Medical.
Revenue is recognised at the point of the transfer of control over promised
goods or services to customers in an amount that reflects the amount of
consideration specified in a contract with a customer, to which the Group
expects to be entitled in exchange for those goods or services.
It is the Group's judgement that in the majority of sales there is no contract
until such time as the Operating Company satisfies its performance obligation,
at which point the contract becomes the Operating Company's terms and
conditions resulting from the supplier's purchase order. Where there are
Master Supply Arrangements, these are typically framework agreements and do
not contain clauses that would result in a contract forming under IFRS 15
until a Purchase Order is issued by the customer.
Revenue represents sales, net of estimates for variable consideration,
including rights to returns, and discounts, and excluding value added tax and
other sales related taxes. The amount of variable consideration is not
considered to be material to the Group as a whole. The transaction price is
allocated to each performance obligation on a relative standalone selling
price basis.
Performance obligations are unbundled in each contractual arrangement if they
are distinct from one another. There is judgement in identifying distinct
performance obligations where the product could be determined to be a system,
or where a combination of products and services are provided together. For the
majority of the Group's activities the performance obligation is judged to be
the component product or service rather than the system or combined products
and services. The contract price is allocated to the distinct performance
obligations based on the relative standalone selling prices of the goods or
services.
The way in which the Group satisfies its performance obligations varies by
business and may be on shipment, delivery, as services are rendered or on
completion of services depending on the nature of product and service and
terms of the contract which govern how control passes to the customer. Revenue
is recognised at a point in time or over time as appropriate.
Where the Group offers warranties that are of a service nature, revenue is
recognised in relation to these performance obligations over time as the
services are rendered. In our judgement we believe the associated performance
obligations accrue evenly across the contractual term and therefore revenue is
recognised on a pro-rated basis over the length of the service period.
In a small number of instances across the Group, products have been determined
to be bespoke in nature, with no alternative use. Where there is also an
enforceable right to payment for work completed, the criteria for recognising
revenue over time have been deemed to have been met. Revenue is recognised on
an input basis as work progresses. Progress is measured with reference to the
actual cost incurred as a proportion of the total costs expected to be
incurred under the contract. This is not a significant part of the Group's
business as for the most part, where goods are bespoke in nature, it is the
Group's judgement that the product can be broken down to standard component
parts with little additional cost and therefore has an alternate use, or there
is no enforceable right to payment for work performed. In these cases, the
judgement is made that the requirements for recognising revenue over time are
not met and revenue is recognised when control of the finished product passes
to the customer.
The Group applies the practical expedient in IFRS 15 (paragraph 63) and does
not adjust the promised amount of consideration for the effects of a
significant financing component if the Group expects, at contract inception,
that the period between the transfer of a promised good or service to a
customer and when the customer pays for that good or service will be one year
or less.
Operating profit
Operating profit is presented net of direct production costs, production
overheads, selling costs, distribution costs and administrative expenditure.
Operating profit is stated after charging restructuring costs but before the
share of results of associates, profit or loss on disposal of operations,
finance income and finance costs.
Adjusting items
When items of income or expense are material and they are relevant to an
understanding of the entity's financial performance, they are disclosed
separately within the financial statements. Such adjusting items include costs
or reversals arising from acquisitions or disposals of businesses, including
acquisition costs, creation or reversals of provisions related to changes in
estimates for contingent consideration on acquisition, amortisation of
acquired intangible assets, and other significant one-off items that may
arise.
Deferred government grant income
Government grant income that is linked to capital expenditure is deferred to
the Consolidated Balance Sheet and credited to the Consolidated Income
Statement over the life of the related asset. In addition, the Group claims
research and development expenditure credits arising on qualifying expenditure
and shows these 'above the line' in operating profit. Where the credits arise
on expenditure that is capitalised as part of internally generated capitalised
development costs, the income is deferred to the Consolidated Balance Sheet
and credited to the Consolidated Income Statement over the life of the related
asset in line with the policy stated above.
Finance income and expenses
The Group recognises interest income or expense using the effective interest
rate method. Finance income and finance costs include:
- Interest payable on loans and borrowings.
- Net interest charge on pension plan liabilities.
- Amortisation of finance costs.
- Interest receivable in respect of cash and cash equivalents.
- Unwinding of the discount on provisions.
- Fair value movements on derivative financial instruments.
Taxation
Taxation comprises current and deferred tax. Tax is recognised in the
Consolidated Income Statement except to the extent that it relates to items
recognised directly in Total equity, in which case it too is recognised in
Total equity. Current tax is the expected tax payable on the taxable income
for the year, using tax rates enacted or substantively enacted at the balance
sheet date, along with any adjustment to tax payable in respect of previous
years. Taxable profit differs from net profit as reported in the Consolidated
Income Statement because it excludes items that are never taxable or
deductible.
Deferred tax is provided on temporary differences between the carrying amounts
of assets and liabilities for financial reporting purposes and the amounts
used for taxation purposes and is accounted for using the balance sheet
liability method, apart from the following differences which are not provided
for: goodwill not deductible for tax purposes; the initial recognition of
assets or liabilities that affect neither accounting nor taxable profit; and
differences relating to investments in subsidiaries to the extent they will
probably not reverse in the foreseeable future. The amount of deferred tax
provided is based on the expected manner of realisation or settlement of the
carrying amounts of assets and liabilities, using tax rates and laws, which
are expected to apply in the year when the liability is settled, or the asset
is realised. Deferred tax assets are only recognised to the extent that
recovery is probable.
Foreign currencies
The Group presents its accounts in Sterling. Transactions in foreign
currencies are recorded at the rate of exchange at the date of the
transaction. Monetary assets and liabilities denominated in foreign currencies
at the balance sheet date are reported at the rates prevailing at that date.
Non-monetary assets and liabilities denominated in foreign currencies are
measured in terms of historical costs using the exchange rate at the date of
the initial transaction. Any gain or loss arising on monetary assets and
liabilities from subsequent exchange rate movements is included as an exchange
gain or loss in the Consolidated Income Statement.
Net assets of overseas subsidiary companies are expressed in Sterling at the
rates of exchange ruling at the end of the financial year, and trading results
and cash flows at the average rates of exchange for the financial year.
Goodwill arising on the acquisition of a foreign business is treated as an
asset of the foreign entity and is translated at the rate of exchange ruling
at the end of the financial year. Exchange gains or losses arising on these
translations are taken to the Translation reserve within Total equity.
In the event that an overseas subsidiary is disposed of or closed, the profit
or loss on disposal or closure will be determined after taking into account
the cumulative translation difference held within the Translation reserve
attributable to that subsidiary. As permitted by IFRS 1, the Group has elected
to deem the translation to be £nil at 4 April 2004. Accordingly, the profit
or loss on disposal or closure of foreign subsidiaries will not include any
currency translation differences which arose before 4 April 2004.
Other intangible assets
(a) Computer software
Computer software that is not integral to an item of property, plant or
equipment is recognised separately as an intangible asset and is amortised
through the Consolidated Income Statement on a straight-line basis from the
point at which the asset is ready to use over its estimated economic life of
between three and five years.
Development costs that are directly attributable to the design and testing of
identifiable and unique software products controlled by the Group are
recognised as intangible assets where the following criteria are met:
- it is technically feasible to complete the software so that it will be
available for use;
- management intends to complete the software and use or sell it;
- there is an ability to use or sell the software;
- it can be demonstrated how the software will generate probable future
economic benefits;
- adequate technical, financial and other resources to complete the
development and to use or sell the software are available; and
- the expenditure attributable to the software during its development can be
reliably measured.
Where the Group enters into a SaaS cloud computing arrangement to access
software, there are limited cases for capitalisation of attributable
implementation costs. If the arrangement contains a lease as defined by IFRS
16, lease accounting rules apply including capitalisation of directly
attributable costs. Alternatively, directly attributable software costs can
create an intangible asset if the software can be controlled by the entity,
either through the option to be run on the entity's or a third-party's
infrastructure or where the development of the software creates customised
software that the entity has exclusive rights to.
(b) Other intangibles
Other intangibles are amortised through the Consolidated Income Statement on a
straight-line basis over their estimated economic lives of between three and
ten years.
Property, plant and equipment
Property, plant and equipment is stated at historical cost less provisions for
accumulated impairment and accumulated depreciation which, with the exception
of freehold land which is not depreciated, is provided on a straight-line
basis over each asset's estimated economic life. The principal annual rates
used for this purpose are:
Freehold property 2%
Leasehold improvements Shorter of 2% or period of lease
Plant, equipment and vehicles 8% to 33.3%
Investments in associates
An associate is an entity over which the Group is in a position to exercise
significant influence, but not control or joint control, through participation
in the financial and operating policy decisions of the investee. Significant
influence is the power to participate in the financial and operating policy
decisions of the investee but without control or joint control over those
policies.
The results and assets and liabilities of associates are incorporated in these
financial statements using the equity method of accounting. Investments in
associates are carried in the Consolidated Balance Sheet at cost as adjusted
by post-acquisition changes in the Group's share of the net assets of the
associate, less any impairment in the value of individual investments. Losses
of an associate in excess of the Group's interest in that associate (which
includes any long-term interests that, in substance, form part of the Group's
net investment in the associate) are recognised only to the extent that the
Group has incurred legal or constructive obligations or made payments on
behalf of the associate.
Any excess of the cost of acquisition over the Group's share of the fair
values of the identifiable net assets of the associate at the date of
acquisition is recognised as goodwill. The goodwill is included within the
carrying amount of the investment and is assessed for impairment as part of
that investment. Any deficiency of the cost of acquisition below the Group's
share of the fair values of the identifiable net assets of the associate at
the date of acquisition (i.e. discount on acquisition) is credited in profit
or loss in the year of acquisition.
Where a Group company transacts with an associate of the Group, profits and
losses are eliminated to the extent of the Group's interest in the relevant
associate. Losses may provide evidence of an impairment of the asset
transferred in which case appropriate provisioning is made for impairment.
Where the Group disposes of its entire interest in an associate a gain or loss
is recognised in the income statement on the difference between the amount
received on the sale of the associate less the carrying value and costs of
disposal.
Financial assets at fair value through other comprehensive income
Financial assets at fair value through other comprehensive income (FVOCI)
comprise equity securities which are not held for trading, and which the Group
has irrevocably elected at initial recognition to recognise as FVOCI. The
Group considers this classification relevant as these are strategic
investments.
Financial assets at FVOCI are adjusted to the fair value of the asset at the
balance sheet date with any gain or loss being recognised in other
comprehensive income and held as part of other reserves. On disposal any gain
or loss is recognised in other comprehensive income and the cumulative gains
or losses are transferred from other reserves to retained earnings.
Impairment of non-current assets
All non-current assets are tested for impairment whenever events or
circumstances indicate that their carrying value may be impaired.
Additionally, goodwill and capitalised development expenditure relating to a
product that is not yet in full production are subject to an annual impairment
test.
An impairment loss is recognised in the Consolidated Income Statement to the
extent that an asset's carrying value exceeds its recoverable amount, which
represents the higher of the asset's 'fair value less costs to dispose' and
its 'value in use'. An asset's 'value in use' represents the present value of
the future cash flows expected to be derived from the asset or from the cash
generating unit to which it relates. The present value is calculated using a
pre-tax discount rate that reflects the current market assessment of the time
value of money and the risks specific to the asset concerned.
Impairment losses recognised in previous periods for an asset other than
goodwill are reversed if there has been a change in the estimates used to
determine the asset's recoverable amount, but only to the extent that the
carrying amount of the asset does not exceed its carrying amount had no
impairment loss been recognised in previous periods. Such reversals are
recognised in the Consolidated Income Statement. Impairment losses in respect
of goodwill are not reversed.
Inventories
Inventories and work in progress are included at the lower of cost and net
realisable value. Cost is calculated either on a 'first in, first out' or an
average cost basis and includes direct materials and the appropriate
proportion of production and other overheads considered by the Directors to be
attributable to bringing the inventories to their location and condition at
the year end. Net realisable value represents the estimated selling price less
all estimated costs to complete and costs to be incurred in marketing, selling
and distribution.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances, deposits with an initial
maturity of less than three months, and bank overdrafts that are repayable on
demand.
Contract assets and liabilities
A contract asset is recognised when the Group's right to consideration is
conditional on something other than the passage of time, for example the
completion of future performance obligations under the terms of the contract
with the customer.
In some instances, the Group receives payments from customers based on a
billing schedule, as established in the contract, which may not match with the
pattern of performance under the contract. A contract liability is only
recognised on non-cancellable contracts that provide unconditional rights to
payment from the customer for products and services that the Group has not yet
completed providing or that it will provide in the near future. Where
performance obligations are satisfied ahead of billing then a contract asset
will be recognised.
Contract assets are recognised within Trade and other receivables and are
assessed for impairment on a forward-looking basis using the expected lifetime
losses approach, as required by IFRS 9 ('Financial Instruments').
Costs to obtain or fulfil a contract
The incremental costs of obtaining a contract with a customer are capitalised
as an asset if the Group expects to recover them. Costs such as sales
commissions may be incurred when the Group enters into a new contract. Costs
to obtain or fulfil a contract are presented in the Consolidated Balance Sheet
as assets until the performance obligation to which they relate has been met.
These assets are amortised on consistent basis with how the related revenue is
recognised.
The Group applies the practical expedient in IFRS 15 (paragraph 94) and
recognises incremental costs of obtaining a contract as an expense when
incurred if the amortisation period of the asset that the Group would
otherwise have recognised is one year or less.
Trade payables
Trade payables are non-interest bearing and are stated at amortised cost.
Interest bearing loans and borrowings
Interest bearing loans and borrowings are initially recognised in the
Consolidated Balance Sheet at fair value less directly attributable
transaction costs and are subsequently measured at amortised cost using the
effective interest rate method.
Provisions and contingent liabilities
Provisions are recognised when the Group has a present obligation (legal or
constructive) as a result of a past event, it is probable that the Group will
be required to settle that obligation and a reliable estimate can be made of
the amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration
required to settle the present obligation at the balance sheet date, taking
into account the risks and uncertainties surrounding the obligation. Where a
provision is measured using the cash flows estimated to settle the present
obligation, its carrying amount is the present value of the cash flows.
When some or all of the economic benefits required to settle a provision are
expected to be recovered from a third party, a receivable is recognised as an
asset if it is virtually certain that reimbursement will be received, and the
amount of the receivable can be measured reliably.
Contingent liabilities are disclosed where a possible obligation dependent on
uncertain future events exists as at the end of the reporting period or a
present obligation for which payment either cannot be measured or is not
considered to be probable is noted. Contingent liabilities are not accrued for
and no contingent liability is disclosed where the possibility of payment is
considered to be remote.
Derivative financial instruments and hedge accounting
The Group enters into derivative financial instruments to manage its exposure
to foreign exchange rate risk using forward exchange contracts. The Group
continues to apply the requirements of IAS 39 for hedge accounting.
Derivative financial instruments are classified as fair value through profit
and loss (held for trading) unless they are in a designated hedge
relationship.
Derivatives are initially recognised at fair value at the date a derivative
contract is entered into and are subsequently remeasured to their fair value
at each balance sheet date. The resulting gain or loss is recognised in the
Consolidated Income Statement, unless the derivative is designated and
effective as a hedging instrument, in which event the timing of the
recognition in the Consolidated Income Statement depends on the nature of the
hedge relationship. The Group designates certain derivatives as hedges of
highly probable forecast transactions or hedges of foreign currency risk of
firm commitments (cash flow hedges), or hedges of net investments in foreign
operations.
A derivative with a positive fair value is recognised as a financial asset
whereas a derivative with a negative fair value is recognised as a financial
liability. A derivative is presented as a non-current asset or a non-current
liability if the remaining maturity of the instrument is more than 12 months
and it is not expected to be realised or settled within 12 months. Other
derivatives are presented as current assets or current liabilities.
Cash flow hedge accounting
The Group designates certain hedging instruments as cash flow hedges.
At the inception of the hedge relationship, the entity documents the
relationship between the hedging instrument and the hedged item, along with
its risk management objectives and its strategy for undertaking various hedge
transactions. Furthermore, at the inception of the hedge and on an ongoing
basis, the Group documents whether the hedging instrument has been or is
expected to be highly effective in offsetting changes in fair values or cash
flows of the hedged item.
The effective portion of changes in the fair value of derivatives that are
designated and qualify as cash flow hedges is recognised in other
comprehensive income. The gain or loss relating to the ineffective portion as
a result of being over hedged is recognised immediately in the Consolidated
Income Statement.
Amounts previously recognised in other comprehensive income and accumulated in
equity are reclassified to the Consolidated Income Statement in the periods
when the hedged item is recognised in the Consolidated Income Statement.
However, when the forecast transaction that is hedged results in the
recognition of a non-financial asset or a non-financial liability, the gains
and losses previously accumulated in equity are transferred from equity and
included in the initial measurement of the cost of the non-financial asset or
non-financial liability.
Hedge accounting is discontinued when the Group revokes the hedging
relationship, the hedging instrument expires or is sold, terminated or
exercised, or no longer qualifies for hedge accounting. Any gain or loss
recognised in other comprehensive income at that time is accumulated in equity
and is recognised, when the forecast transaction is ultimately recognised, in
the Consolidated Income Statement. When a forecast transaction is no longer
expected to occur, the gain or loss accumulated in equity is recognised
immediately in the Consolidated Income Statement.
Net investment hedge accounting
The Group uses foreign currency denominated borrowings as a hedge against the
translation exposure on the Group's net investment in overseas companies.
Where the hedge is fully effective at hedging, the variability in the net
assets of such companies caused by changes in exchange rates and the changes
in value of the borrowings are recognised in the Consolidated Statement of
Comprehensive Income and accumulated in the Translation reserve. The
ineffective part of any change in value caused by changes in exchange rates is
recognised in the Consolidated Income Statement.
Leases
The Group assesses at contract inception whether a contract is, or contains, a
lease. That is, if the contract conveys the right to control the use of an
identified asset for a period of time in exchange for consideration. Where the
Group determines the contract is, or contains, a lease a right-of-use asset
and a lease liability is recognised at the lease commencement date.
The lease term is determined from the commencement date of the lease and
covers the non-cancellable term. If the Group has an extension option, which
it considers reasonably certain to exercise, then the lease term will be
considered to extend beyond that non-cancellable period. If the Group has a
termination option, which it considers it reasonably certain to exercise, then
the lease term will be considered to be until the point the termination option
will take effect. The group deem that it is not reasonably certain to exercise
an extension option or a termination option with an exercise date past the
planning horizon of five years.
The right-of-use asset is initially measured at cost, comprising the initial
amount of the lease liability plus any initial direct costs incurred and an
estimate of costs to restore the underlying asset, less any lease incentives
received. The right-of-use asset is subsequently depreciated using the
straight-line method from the commencement date to the end of the lease term
unless the right-of-use asset is deemed to have a useful life shorter than the
lease term. The Group has taken the practical expedient to not separate lease
and non-lease components and so account for both as a single lease component.
The right-of-use assets are also subject to impairment testing under IAS 36.
Refer to the previous section on Impairment of non-current assets for further
details.
The lease liability is initially measured at the present value of the lease
payments that are not paid at the commencement date, discounted using the
incremental borrowing rate. The lease payments include fixed payments
(including in-substance fixed payments) less any lease incentives receivable,
variable lease payments that depend on an index or a rate, and amounts
expected to be paid under residual value guarantees. Variable lease payments
that depend on an index or a rate, and amounts expected to be paid under
residual value guarantees are not material to the group. The lease payments
also include the exercise price of a purchase option reasonably certain to be
exercised by the Group and payments of penalties for terminating the lease, if
the lease term reflects the Group exercising the option to terminate. Variable
lease payments that do not depend on an index or a rate are recognised as
expenses (unless they are incurred to produce inventories) in the period in
which the event or condition that triggers the payment occurs. The lease
liability is measured at amortised cost using the effective interest method by
increasing the carrying amount to reflect interest on the lease liability and
by reducing the carrying amount to reflect the lease payments made. The lease
liability is remeasured when there is a change in future lease payments
arising from a change in an index or a rate or a change in the Group's
assessment of whether it will exercise an extension or termination option.
When the lease liability is remeasured, a corresponding adjustment is made to
the right-of-use asset.
Payments associated with short-term leases or low-value assets are recognised
on a straight-line basis as an expense in the Consolidated Income Statement.
Short-term leases are leases with a lease term of 12 months or less. Low-value
assets mostly comprise of IT equipment and small items of office furniture.
Lease payments for short-term leases, low-value assets and variable lease
payments not included in the measurement of the lease liability are classified
as cash flows from operating activities within the consolidated cash flow
statement. The Group has classified the principal and interest portions of
lease payments within financing activities.
Employee share plans
Share-based incentives are provided to employees under the Group's share
incentive plan, the performance share plan and the executive share plan.
(a) Share incentive plan
Awards of shares under the share incentive plan are made to qualifying
employees depending on salary and service criteria. The shares awarded under
this plan are purchased in the market by the plan's trustees at the time of
the award, and are then held in trust for a minimum of three years. The costs
of this plan are recognised in the Consolidated Income Statement over the
three-year vesting period of the awards.
(b) Executive share plan
Under the Executive share plan, awards of shares are made to Executive
Directors and certain senior employees participate. Grants under this plan are
in the form of Performance Awards or Deferred Share Awards.
Performance Awards are subject to non-market-based vesting criteria, and
Deferred Share Awards are subject only to continuing service of the employee.
Share awards are equity-settled. The fair value of the awards at the date of
grant, which is estimated to be equal to the market value, is charged to the
Consolidated Income Statement on a straight-line basis over the vesting
period, with appropriate adjustments being made during this period to reflect
expected and actual forfeitures. The corresponding credit is to Other reserves
within Total equity.
(c) Cash-settled
For cash-settled awards, a liability equal to the portion of the services
received is recognised at the current fair value determined at each balance
sheet date.
Dividends
Dividends payable to the Company's shareholders are recognised as a liability
in the period in which the distribution is approved by the Company's
shareholders.
Notes to the Accounts
1 Segmental analysis and revenue from contracts with customers
Sector analysis and disaggregation of revenue
From 1 April 2021, the Group aligned its organisational structure and
financial reporting with its purpose and focus on safety, environmental and
health markets. The Group now has three main operating and reportable segments
(Safety, Environmental & Analysis and Medical), which are defined by
markets rather than product type. Each segment includes businesses with
similar operating and market characteristics. These segments are consistent
with the internal reporting as reviewed by the Group Chief Executive.
Nature of goods and services
The following is a description of the principal activities - separated by
reportable segments, which are defined by markets rather than product type -
from which the Group generates its revenue.
Further disaggregation of sector revenue by geography and by the pattern of
revenue recognition depicts how economic factors affect the timing and
uncertainty of the Group's revenues.
Safety sector generates revenue from providing products that protect people,
property and assets and enable safe movement in public spaces. Products
include: fire detection systems; specialist fire suppression systems; elevator
safety systems; security sensors; people and vehicle flow technologies;
specialised interlocks that control critical processes safely; and explosion
protection and corrosion monitoring systems. Products are generally sold
separately, with contracts typically less than one year in length. Warranties
are typically of an assurance nature. Revenue is recognised as control passes
on delivery or despatch.
Payment is typically due within 60 days of invoice, except where a retention
is held for documentation.
Environmental & Analysis generates revenue providing products and
technologies that monitor and protect the environment, ensuring the quality
and availability of life-critical resources, and use optical and imaging
technologies in materials analysis. Products include: market-leading optical,
optoelectronic and spectral imaging systems; water, air and gases monitoring
technologies; instruments that detect hazardous gases and analyse air quality
and systems for water analysis and treatment. Products and services are
generally sold separately. Warranties are typically of an assurance nature,
but some companies within the Group offer extended warranties. Depending on
the nature of the performance obligation, revenue may be recognised as control
passes on delivery, despatch or as the service is delivered. Contracts are
typically less than one year in length, but some companies have contracts
where certain service-related performance obligations are delivered over a
number of years; this can result in contract liabilities where those
performance obligations are invoiced ahead of performance.
Payment is typically due within 60 days of invoice.
Medical sector generates revenue from providing products and services that
enhance the quality of life for patients and improve quality of care delivered
by healthcare providers. Products include: critical fluidic components used by
medical diagnostics and Original Equipment Manufacturers (OEMs), laboratory
devices and systems that provide valuable information to understand patient
health and enable providers to make decisions across the continuum of care;
technologies and solutions to enable in-vitro diagnostic systems and
life-science discoveries and development; and technologies that enable
positive outcomes across clinical specialties. Products are generally sold
separately, and warranties are typically of an assurance nature. Depending on
the nature of the performance obligation, revenue is recognised as control
passes on delivery or despatch or as the service is delivered. Contracts are
typically less than one year in length, but a limited number of companies have
contracts where certain service-related performance obligations are delivered
over a number of years; this can result in contract liabilities where those
performance obligations are invoiced ahead of performance.
Payment is typically due within 60 days of invoice.
Segment revenue disaggregation (by location of external customer)
Year ended 31 March 2022
Revenue by sector and destination (all continuing operations)
United States Mainland United Asia Pacific Africa, Other Total
of America Europe Kingdom £m Near and countries £m
£m £m £m Middle East £m
£m
Safety 164.6 180.0 147.0 101.8 29.4 18.6 641.4
Environmental & Analysis 209.6 56.7 77.6 78.4 12.3 8.3 442.9
Medical 224.3 71.4 42.4 70.6 11.9 21.7 442.3
Inter-segmental sales (1.3) - - - - - (1.3)
Revenue for the year 597.2 308.1 267.0 250.8 53.6 48.6 1,525.3
Year ended 31 March 2021
Revenue by sector and destination (all continuing operations)
Restated*
United States Mainland United Asia Pacific Africa, Other Total
of America Europe Kingdom £m Near and countries £m
£m £m £m Middle East £m
£m
Safety 143.7 170.8 124.9 90.9 34.1 22.6 587.0
Environmental & Analysis 165.1 44.2 70.1 65.9 9.2 6.6 361.1
Medical 200.6 61.0 19.2 59.3 10.8 20.4 371.3
Inter-segmental sales (0.6) - (0.6) - - - (1.2)
Revenue for the year 508.8 276.0 213.6 216.1 54.1 49.6 1,318.2
Inter-segmental sales are charged at prevailing market prices and have not
been disclosed separately by segment as they are not considered material.
Revenue derived from the rendering of services was £69.9m (2021: £52.6m).
All revenue was otherwise derived from the sale of products.
* Restated to reflect the new reporting segments
Year ended 31 March 2022
Revenue recognised at a point in time
Revenue recognised over time £m
£m Total Revenue
£m
Safety 8.2 633.2 641.4
Environmental & Analysis 99.8 343.1 442.9
Medical 49.6 392.7 442.3
Inter-segmental sales - (1.3) (1.3)
Revenue for the year 157.6 1,367.7 1,525.3
Year ended 31 March 2021
Restated*
Revenue recognised over time Revenue recognised at a point in time Total Revenue
£m £m £m
Safety 3.4 583.6 587.0
Environmental & Analysis 69.8 291.3 361.1
Medical 20.6 350.7 371.3
Inter-segmental sales - (1.2) (1.2)
Revenue for the year 93.8 1,224.4 1,318.2
* Restated to reflect the new reporting segments
Year ended 31 March 2022
Revenue from Revenue Revenue from Total
performance previously performance Revenue
obligations included as obligations £m
entered contract satisfied in
into and liabilities previous
satisfied £m periods
in the year £m
£m
Safety 638.1 3.3 - 641.4
Environmental & Analysis 436.3 6.6 - 442.9
Medical 432.8 5.6 3.9 442.3
Inter-segmental sales (1.3) - - (1.3)
Revenue for the year 1,505.9 15.5 3.9 1,525.3
Year ended 31 March 2021
Restated*
Revenue from Revenue Revenue from Total
performance previously performance Revenue
obligations included as obligations £m
entered contract satisfied in
into and liabilities previous
satisfied £m periods
in the year £m
£m
Safety 585.6 1.4 - 587.0
Environmental & Analysis 354.4 6.7 - 361.1
Medical 365.8 5.2 0.3 371.3
Inter-segmental sales (1.2) - - (1.2)
Revenue for the year 1,304.6 13.3 0.3 1,318.2
* Restated to reflect the new reporting segments
The Group has unsatisfied (or partially satisfied) performance obligations at
the balance sheet date with an aggregate amount of transaction price as
follows. The time bands represented present the expected timing of when the
remaining transaction price will be recognised as revenue.
Aggregate transaction price allocated to unsatisfied performance obligations
31 March Recognised < 1 year Recognised 1-2 years Recognised > 2 years
2022 £m £m £m
Total
£m
Safety 27.0 15.2 4.5 7.3
Environmental & Analysis 15.3 7.0 3.4 4.9
Medical 14.4 12.9 1.5 -
Inter-segmental sales - - - -
Total 56.7 35.1 9.4 12.2
Aggregate transaction price allocated to unsatisfied performance obligations
Restated*
31 March Recognised < 1 year Recognised 1-2 years Recognised > 2 years
2021 £m £m £m
Total
£m
Safety 18.0 13.3 0.5 4.2
Environmental & Analysis 15.6 6.6 3.0 6.0
Medical 6.7 6.3 0.4 -
Inter-segmental sales - - - -
Total 40.3 26.2 3.9 10.2
* Restated to reflect the new reporting segments
Segment results
Profit (all continuing operations)
Year ended Year ended
31 March 31 March
2022 2021
Restated**
£m £m
Segment profit before allocation of adjustments* Safety
Environmental & Analysis 146.2 135.3
Medical 109.8 89.3
99.5 86.6
355.5 311.2
Segment profit after allocation of adjustments*
Safety 163.5 117.3
Environmental & Analysis 96.9 101.7
Medical 83.3 66.8
Segment profit 343.7 285.8
Central administration costs (30.9) (22.9)
Net finance expense (8.4) (10.0)
Group profit before taxation 304.4 252.9
Taxation (60.2) (49.6)
Profit for the year 244.2 203.3
* Adjustments include the amortisation of acquired intangible assets;
acquisition items; and significant restructuring costs and profit or loss on
disposal of operations. Note 3 provides more information on alternative
performance measures.
** Restated to reflect the new reporting segments.
Acquisition transaction costs, adjustments to contingent consideration and
release of fair value adjustments to inventory (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 Group Chief Executive
for the purpose of allocation of resources and assessment of segment
performance. These adjustments are analysed as follows:
Year ended 31 March 2022
Acquisition items
Transaction Adjustments Release of Total Disposal of Total
Amortisation Costs to contingent fair value amortisation operations and restructuring £m
of acquired £m consideration adjustments charge and (note 9)
intangible £m to inventory £m acquisition £m
assets items
£m £m
Safety (14.9) (0.5) - (1.3) (16.7) 34.0 17.3
Environmental & Analysis (10.3) (1.6) 0.1 (1.1) (12.9) - (12.9)
Medical (17.5) (2.1) 4.4 (1.0) (16.2) - (16.2)
Total Segment & Group (42.7) (4.2) 4.5 (3.4) (45.8) 34.0 (11.8)
The transaction costs arose mainly on the acquisitions during the year. In
Safety, they related to the acquisition of Ramtech (£0.4m) and IBIT (£0.1m).
In Environmental & Analysis, they related to the acquisition of Dancutter
(£0.3m), Sensitron (£0.4m), Orca (£0.1m), Anton (£0.1m) and ILT (£0.2m)
in the current year and Deep Trekker (£0.5m) that was acquired in April 2022.
In Medical, they related to the acquisition of PeriGen (£1.4m), Infinite Leap
(£0.3m), Clayborn Lab (£0.1m), Meditech (£0.1m) and RNK (£0.1m), in the
current year and the acquisition of Visiometrics in a previous year (£0.1m).
The £4.5m adjustment to contingent consideration comprised of a credit of
£0.1m in Environmental & Analysis arising from a decrease in the estimate
of the payables for Invenio (£0.3m) offset by an increase in the estimate of
the payable for Orca (£0.2m) and a credit of £4.4m in Medical arising from a
decrease in estimates of the payables for NovaBone (£1.3m), NeoMedix (£3.0m)
and Spreo (£0.1m) partially offset by an increase in the estimate of the
payable for Infowave (£0.3m) and a credit of £0.3m arising from exchange
differences on balances denominated in Euros.
The £3.4m release of fair value adjustments to inventory related to Ramtech
(£1.3m) in Safety; Dancutter (£0.1m), Orca (£0.6m) Sensitron (£0.2m) and
ILT (£0.2m) in Environmental & Analysis; and Meditech (£1.0m) in
Medical. All amounts have been released in relation to Dancutter, Ramtech,
Orca and Sensitron.
Year ended 31 March 2021
Restated*
Acquisition items
Transaction Adjustments Release of Total Disposal of Total
Amortisation Costs to contingent fair value amortisation operations and restructuring £m
of acquired £m consideration adjustments to inventory charge and (note 9)
intangible £m £m acquisition £m
assets items
£m £m
Safety (15.6) - (2.4) - (18.0) - (18.0)
Environmental & Analysis (10.2) - 1.3 (0.8) (9.7) 22.1 12.4
Medical (16.5) (1.9) 0.4 (1.8) (19.8) - (19.8)
Total Segment & Group (42.3) (1.9) (0.7) (2.6) (47.5) 22.1 (25.4)
* Restated to reflect the new reporting segments
In the prior year, the transaction costs arose on the acquisition of Static
Systems (£0.5m) during the year and costs relating to Visiometrics (£1.4m),
both in the Medical sector.
The £0.7m adjustment to contingent consideration comprised: a charge of
£2.4m in Safety arising from an increase in the estimate of the payables for
Navtech (£1.5m) and FireMate (£0.9m); a credit of £1.3m in Environmental
& Analysis arising from a decrease in estimate of the payables for Invenio
(£0.8m) and Enoveo (£0.5m), and a credit of £0.4m in Medical arising from a
decrease in the estimated payable for NeoMedix (£1.7m), offset by an increase
in estimate of the payable for Infowave (£0.9m) and Spreo (£0.2m), and a
charge of £0.2m arising from exchange differences on balances denominated in
Euros.
The £2.6m release of fair value adjustments to inventory relates to Sensit
(£0.8m) in Environmental & Analysis and NovaBone (£1.3m), Maxtec
(£0.2m) and Static Systems (£0.3m) in Medical. As at the prior year end all
amounts had been released in relation to Sensit, NovaBone, Maxtec and Static
Systems.
Information about major customers
No single customer accounts for more than 10% (2021: 10%) of the Group's
revenue.
2 Earnings per ordinary share
Basic earnings per share amounts are calculated by dividing the net profit for
the year attributable to the equity shareholders of the parent by the weighted
average number of ordinary shares outstanding during the year.
Diluted earnings per share amounts are calculated by dividing the net profit
attributable to the ordinary equity shareholders of the parent by the weighted
average number of ordinary shares outstanding during the year plus the
weighted average number of ordinary shares that would be issued on the
conversion of all the dilutive potential ordinary shares into ordinary shares.
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 and the associated taxation thereon
and in the current year the increase in the UK's corporation tax rate from 19%
to 25%. The Directors consider that adjusted earnings, which constitute an
alternative performance measure, represent a more consistent measure of
underlying performance as it excludes amounts not directly linked with
trading. A reconciliation of earnings and the effect on basic and diluted
earnings per share figures is as follows:
Basic earnings per share
Per ordinary share
Year ended Year ended Year ended Year ended
31 March 31 March 31 March 31 March
2022 2021 2022 2021
£m £m pence pence
Earnings from continuing operations attributable to owners of the parent 244.4 203.4 64.54 53.61
Amortisation of acquired intangible assets (after tax) 33.1 32.0 8.73 8.44
Acquisition transaction costs (after tax) 3.8 1.6 0.99 0.43
Adjustments to contingent consideration (after tax) (4.5) 0.7 (1.19) 0.20
Release of fair value adjustments to inventory (after tax) 2.6 2.0 0.70 0.52
Disposal of operations and restructuring (after tax) (34.0) (17.1) (8.98) (4.53)
Impact of UK rate change 2.6 - 0.69 -
Adjusted earnings attributable to owners of the parent 248.0 222.6 65.48 58.67
Weighted average number of ordinary shares in issue for basic earnings per
share, million
378.7 379.2
Diluted earnings per ordinary share
Per ordinary share
Year ended Year ended Year ended Year ended
31 March 31 March 31 March 31 March
2022 2021 2022 2021
£m £m pence pence
Earnings from continuing operations attributable to owners of the parent
244.4 203.4 64.42 53.50
Weighted average number of ordinary shares in issue for basic earnings per
share, million
378.7 379.2
Dilutive potential ordinary shares - share awards, million 0.7 0.8
Weighted average number of ordinary shares in issue for diluted earnings per
share, million
379.4 380.0
3 Alternative performance measures
The Board uses certain alternative performance measures to help it effectively
monitor the performance of the Group. The Directors consider that these
represent a more consistent measure of underlying performance by removing
non-trading items that are not closely related to the Group's trading or
operating cash flows. These measures include Return on Total Invested Capital
(ROTIC), Return on Capital Employed (ROCE), Organic growth at constant
currency, Adjusted operating profit and Adjusted operating cash flow. Note 1
provides further analysis of the adjusting items in reaching adjusted profit
measures.
Return on Total Invested Capital
31 March 31 March
2022 2021
£m £m
Profit after tax 244.2 203.3
Adjustments1 3.7 19.2
Adjusted profit after tax1 247.9 222.5
Total equity 1,403.1 1,167.6
(Less)/add back net retirement benefit (assets)/obligations (30.5) 22.5
Deferred tax (liabilities)/assets on retirement benefits 7.7 (4.0)
Investment fair value adjustments through other comprehensive income 1.7 -
Cumulative amortisation of acquired intangible assets 345.7 297.2
Historical adjustments to goodwill2 89.5 89.5
Total Invested Capital 1,817.2 1,572.8
Average Total Invested Capital3 1,695.0 1,543.7
Return on Total Invested Capital (ROTIC)4 14.6% 14.4%
Return on Capital Employed
31 March 31 March
2022 2021
£m £m
Profit before tax 304.4 252.9
Adjustments(1) 11.8 25.4
Net finance costs 8.4 10.0
Lease interest (2.3) (2.3)
Adjusted operating profit(1) after share of results of associates and lease 322.3 286.0
interest
Computer software costs within intangible assets 4.2 6.0
Capitalised development costs within intangible assets 41.7 38.9
Other intangibles within intangible assets 3.6 3.4
Property, plant and equipment 194.0 180.8
Inventories 228.8 167.8
Trade and other receivables 325.1 268.0
Current trade and other payables (242.7) (186.7)
Current lease liabilities (15.5) (13.3)
Current provisions (20.7) (35.4)
Net tax receivable 3.8 7.5
Non-current trade and other payables (19.0) (16.8)
Non-current provisions (7.7) (8.4)
Non-current lease liabilities (56.6) (51.7)
Add back contingent purchase consideration 15.2 29.4
Capital Employed 454.2 389.5
Average Capital Employed(3) 421.9 403.2
Return on Capital Employed (ROCE)4 76.4% 70.9%
1 Adjustments include the amortisation of acquired intangible assets;
acquisition items; and significant restructuring costs and profit or
loss on disposal of operations. Where after-tax measures, these also include
the associated taxation on adjusting items. Note 1 provides more
information on these items.
2 Includes goodwill amortised prior to 3 April 2004 and goodwill taken to
reserves.
3 The ROTIC and ROCE measures are expressed as a percentage of the average of
the current and prior year's Total Invested Capital and Capital
Employed respectively. Using an average as the denominator is considered to be
more representative. The 1 April 2020 Total Invested Capital and
Capital Employed balances were £1,514.6m and £416.9m respectively.
4 The ROTIC and ROCE measures are calculated as Adjusted profit after tax
divided by Average Total Invested Capital and Adjusted
operating profit after share of results of associates and lease interest
divided by Average Capital Employed respectively.
Organic growth at constant currency
Organic growth measures the change in revenue and profit from continuing Group
operations. This measure equalises the effect of acquisitions by:
a. removing from the year of acquisition their entire revenue and profit
before taxation;
b. in the following year, removing the revenue and profit for the number of
months equivalent to the pre-acquisition period in the prior year; and
c. removing from the year prior to acquisition, any revenue generated by sales
to the acquired company which would have been eliminated on consolidation had
the acquired company been owned for that period.
The results of disposals are removed from the prior period reported revenue
and profit before taxation.
Constant currency measures the change in revenue and profit excluding the
effects of currency movements. The measure restates the current year's revenue
and profit at last year's exchange rates.
Organic growth at constant currency has been calculated for the Group as
follows:
Group
Revenue Adjusted* profit before taxation
Year ended Year ended % growth Year ended Year ended % growth
31 March 31 March 31 March 31 March
2022 2021 2022 2021
£m £m £m £m
Continuing operations 1,525.3 1,318.2 15.7% 316.2 278.3 13.6%
Acquired and disposed revenue/profit (63.5) (37.4) (9.9) (4.6)
Organic growth 1,461.8 1,280.8 14.1% 306.3 273.7 11.9%
Constant currency adjustment 42.1 - 9.5 -
Organic growth at constant currency 1,503.9 1,280.8 17.4% 315.8 273.7 15.4%
Sector Organic growth at constant currency
Organic growth at constant currency is calculated for each segment using the
same method as described above.
Safety
Revenue Adjusted* segment profit
Year ended Year ended % growth Year ended Year ended % growth
31 March 31 March 31 March 31 March
2022 2021 2022 2021
Restated** Restated**
£m £m £m £m
Continuing operations 641.4 587.0 9.3% 146.2 135.3 8.1%
Acquisition and currency adjustments 7.2 (27.2) 2.4 (4.1)
Organic growth at constant currency 648.6 559.8 15.9% 148.6 131.2 13.3%
Environmental & Analysis
Revenue Adjusted* segment profit
Year ended Year ended % growth Year ended Year ended % growth
31 March 31 March 31 March 31 March
2022 2021 2022 2021
Restated** Restated**
£m £m £m £m
Continuing operations 442.9 361.1 22.6% 109.8 89.3 23.0%
Acquisition and currency adjustments (6.0) (10.2) (0.4) (0.5)
Organic growth at constant currency 436.9 350.9 24.5% 109.4 88.8 23.3%
Medical
Revenue Adjusted* segment profit
Year ended Year ended % growth Year ended Year ended % growth
31 March 31 March 31 March 31 March
2022 2021 2022 2021
£m £m £m £m
Continuing operations 442.3 371.3 19.1% 99.5 86.6 15.0%
Acquisition and currency adjustments (22.6) - (3.9) -
Organic growth at constant currency 419.7 371.3 13.0% 95.6 86.6 10.5%
* Adjustments include in the current and prior year the amortisation of
acquired intangible assets; acquisition items and significant restructuring
costs and profit or loss on disposal of operations.
** Restated to reflect the new reporting segments
Adjusted operating profit
Year ended Year ended
31 March 31 March
2022 2021
£m £m
Operating profit 278.9 240.8
Add back:
Acquisition items (note 1) 3.1 5.2
Amortisation of acquired intangible assets 42.7 42.3
Adjusted operating profit 324.7 288.3
Adjusted operating cash flow
Year ended Year ended
31 March 31 March
2022 2021
£m £m
Net cash from operating activities 237.4 277.6
Add back:
Net acquisition costs paid 4.1 2.4
Taxes paid 56.0 53.8
Proceeds from sale of property, plant and equipment and capitalised 1.1 0.9
development costs
Share awards vested not settled by own shares 7.1 7.8
Deferred consideration paid in excess of payable estimated on acquisition 7.5 -
Less:
Purchase of property, plant and equipment (excluding Right of use assets) (25.2) (22.8)
Purchase of computer software and other intangibles (1.4) (4.0)
Development costs capitalised (13.4) (15.4)
Adjusted operating cash flow 273.2 300.3
Cash conversion % (adjusted operating cash flow/adjusted operating profit) 84% 104%
4 Finance income
Year ended 31 March Year ended 31 March
2022 2021
£m £m
Interest receivable 0.2 0.8
Net interest credit on pension plan liabilities - 0.1
Fair value movement on derivative financial instruments 0.4 0.1
0.6 1.0
5 Finance expense
Year ended 31 March Year ended 31 March
2022 2021
£m £m
Interest payable on borrowings 5.6 7.7
Interest payable on lease obligations 2.3 2.3
Amortisation of finance costs 0.7 0.7
Net interest charge on pension plan liabilities 0.3 -
Other interest payable 0.1 0.1
9.0 10.8
Fair value movement on derivative financial instruments - 0.2
9.0 11.0
6 Taxation
Recognised in the Consolidated Income Statement
Year ended 31 March Year ended 31 March
2022 2021
£m £m
Current tax
UK corporation tax at 19% (2021: 19%) 16.7 11.5
Overseas taxation 46.0 40.7
Adjustments in respect of prior years 0.5 1.7
Total current tax charge 63.2 53.9
Deferred tax
Origination and reversal of timing differences (5.7) (4.4)
Adjustments in respect of prior years 0.1 0.1
Changes in tax rates - UK 2.6 -
Total deferred tax credit (3.0) (4.3)
Total tax charge recognised in the Consolidated Income Statement 60.2 49.6
Reconciliation of the effective tax rate:
Profit before tax 304.4 252.9
Tax at the UK corporation tax rate of 19% (2021: 19%) 57.8 48.1
Profit on disposal of business (6.5) -
Overseas tax rate differences 6.2 6.3
Effect of intra-group financing - (6.5)
Tax incentives, exemptions and credits (including patent box, R&D and (4.2) (4.4)
High-Tech status)
Changes in tax rates - UK 2.6 -
Permanent differences 3.7 4.3
Adjustments in respect of prior years 0.6 1.8
Total tax charge recognised in the Consolidated Income Statement 60.2 49.6
Effective tax rate 19.8% 19.6%
Year ended 31 March Year ended 31 March
2022 2021
£m £m
Adjusted* profit before tax 316.2 278.3
Total tax charge on adjusted* profit 68.3 55.8
Effective tax rate 21.6% 20.1%
* Adjustments include the amortisation of acquired intangible assets,
acquisition items, significant restructuring costs and profit or loss on
disposal of operations. Note 3 provides more information on alternative
performance measures.
The Group's future Effective Tax Rate (ETR) will mainly depend on the
geographic mix of profits and whether there are any changes to tax legislation
in the Group's most significant countries of operations. The Finance Bill 2021
received Royal Assent on 10 June 2021 and included the increase in the UK
corporation tax rate from 19% to 25% from 1 April 2023. Accordingly, our UK
deferred tax balances have been restated to 25%, resulting in a £2.6m charge
to the profit and loss account, included as an adjusting item.
Recognised in the Consolidated Statement of Comprehensive Income and
Expenditure
Year ended 31 March Year ended 31 March
2022 2021
£m £m
Current tax
Retirement benefit obligations Deferred tax (2.3) (2.5)
Retirement benefit obligations
Effective portion of changes in fair value of cash flow hedges 11.9 (3.4)
(0.4) 0.2
9.2 (5.7)
Recognised directly in equity
Year ended 31 March Year ended 31 March
2022 2021
£m £m
Current tax
Excess tax deductions related to share-based payments on exercised awards (1.3) (1.6)
Deferred tax
Change in estimated excess tax deductions related to share-based payments 0.2 0.4
(1.1) (1.2)
7 Dividends
Per ordinary share
Year ended 31 March Year ended 31 March Year ended 31 March Year ended 31 March
2022 2021 2022 2021
pence pence £m £m
Amounts recognised as distributions to shareholders in the year
Final dividend for the year ended 31 March 2021 (31 March 2020) 10.78 9.96 40.8 37.7
Interim dividend for the year ended 31 March 2022 (31 March 2021) 7.35 6.87 27.9 26.0
18.13 16.83 68.7 63.7
Dividends declared in respect of the year
Interim dividend for the year ended 31 March 2022 (31 March 2021) 7.35 6.87 27.9 26.0
Proposed final dividend for the year ended 31 March 2022 (31 March 2021) 11.53 10.78 43.6 40.8
18.88 17.65 71.5 66.8
The proposed final dividend is subject to approval by shareholders at the
Annual General Meeting on 21 July 2022 and has not been included as a
liability in these financial statements.
8 Acquisitions
In accounting for acquisitions, adjustments are made to the book values of the
net assets of the companies acquired to reflect their fair values to the
Group. Other previously unrecognised assets and liabilities at acquisition are
included and accounting policies are aligned with those of the Group where
appropriate.
During the year ended 31 March 2022, the Group made 13 acquisitions namely:
- Dancutter A/S;
- Orca GmbH;
- PeriGen, Inc.;
- Ramtech Electronics Limited;
- Sensitron S.R.L.;
- Infinite Leap Inc.;
- International Light Technologies Inc.;
- Meditech Kft;
- Anton Industrial Services Limited;
- Certain trade and assets of FluidSentry Pty;
- Certain trade and assets of RNK Products Inc.;
- Certain trade and assets of IBIT S.R.L.;
- Certain trade and assets of Clayborn Lab.
Set out on the following pages are summaries of the assets acquired and
liabilities assumed and the purchase consideration of:
a) the total of acquisitions;
b) Dancutter A/S;
c) Orca GmbH;
d) PeriGen, Inc.;
e) Ramtech Electronics Limited;
f) Sensitron S.R.L.;
g) Infinite Leap Inc.;
h) International Light Technologies Inc.;
i) Other acquisitions.
Due to their contractual dates, the fair value of receivables acquired (shown
below) approximate to the gross contractual amounts receivable. The amount of
gross contractual receivables not expected to be recovered is immaterial.
There are no material contingent liabilities recognised in accordance with
paragraph 23 of IFRS 3 (revised).
The acquisitions contributed £39.9m of revenue and £7.4m of profit after tax
for year ended 31 March 2022.
If these acquisitions had been held since the start of the financial year, it
is estimated that the Group's reported revenue and profit after tax would have
been £23.0m and £3.3m higher respectively.
As at the date of approval of the financial statements, the accounting for all
current year acquisitions is provisional; relating to finalisation of the
valuation of acquired intangible assets, the initial consideration, which is
subject to agreement of certain contractual adjustments, and certain other
provisional balances.
a) Total of acquisitions
Total
£m
Non-current assets
Intangible assets 67.8
Property, plant and equipment 8.2
Deferred tax 5.3
Current assets
Inventories 10.0
Trade and other receivables 15.5
Tax 0.4
Cash and cash equivalents 18.2
Total assets 125.4
Current liabilities
Payables (19.3)
Borrowings and lease liabilities (0.7)
Provisions (0.2)
Tax (0.8)
Non-current liabilities
Borrowings and lease liabilities (3.9)
Deferred tax (12.3)
Total liabilities (37.2)
Net assets of businesses acquired 88.2
Initial cash consideration paid 151.2
Other adjustments 13.1
Other amounts to be paid 0.3
Contingent purchase consideration including retentions estimated to be paid 3.8
Total consideration 168.4
Total goodwill 80.2
Analysis of cash outflow in the Consolidated Cash Flow Statement
Year ended 31 March Year ended 31 March
2022 2021
£m £m
Initial cash consideration paid 151.2 37.0
Cash acquired on acquisitions (18.2) (7.9)
Initial cash consideration adjustment on current year acquisitions 13.1 6.9
Contingent consideration paid and loan notes repaid in cash in relation to 14.2 10.4
prior year acquisitions
Net cash outflow relating to acquisitions 160.3 46.4
Included in cash flows from operating activities 7.5 -
Included in cash flows from investing activities 152.8 46.4
Contingent consideration included in cash flows from operating activities
reflect amounts paid in excess of that estimated in the acquisition balance
sheets.
b) Dancutter A/S
£m
Non-current assets
Intangible assets 8.8
Property, plant and equipment 1.3
Current assets
Inventories 0.5
Trade and other receivables 0.5
Cash and cash equivalents 0.9
Total assets 12.0
Current liabilities
Payables (0.5)
Borrowings and lease liabilities (0.1)
Provisions (0.1)
Tax (0.1)
Non-current liabilities
Borrowings and lease liabilities (1.1)
Deferred tax (1.9)
Total liabilities (3.8)
Net assets of businesses acquired 8.2
Initial cash consideration paid 15.0
Other adjustments 0.5
Retention amount 0.4
Total consideration 15.9
Total goodwill 7.7
On 24 June 2021, the Group acquired the entire share capital of Dancutter A/S
and Repipe Lining Systems A/S (together 'Dancutter') for consideration of
€18.1m (£15.5m), which comprised the purchase price of €18.0m (£15.4m)
plus net cash/(debt) adjustments of €0.6m (£0.5m) less a retention amount
of €0.5m (£0.4m). The retention amount, held in place of escrow balances,
is due 18 months from the date of acquisition. There is no contingent
consideration payable. The maximum total cash consideration, excluding cash
and debt acquired, is £15.0m.
Dancutter, located in Denmark, is a designer and manufacturer of trenchless
pipeline rehabilitation equipment. This is used to maintain and extend the
life of wastewater networks, reducing blockages and leakage and ultimately
reducing environmental contamination. Dancutter will be managed as part of
Halma's MiniCam business and will become part of Halma's Environmental &
Analysis sector. Key members of Dancutter's leadership team will remain with
the business and it will continue to operate in its current facility.
The excess of the fair value of the consideration paid over the fair value of
the assets acquired is represented by customer related intangibles of £6.4m;
trade name of £0.7m and technology related intangibles of £1.7m; with
residual goodwill arising of £7.7m.
The goodwill represents:
a) the technical expertise of the acquired workforce;
b) the opportunity to leverage this expertise across some of Halma's
businesses through future technologies; and
c) the ability to exploit the Group's existing customer base.
Dancutter contributed £2.7m of revenue and £0.4m of profit after tax for the
year ended 31 March 2022. If this acquisition had been held since the start of
the financial year, it is estimated that the Group's reported revenue and
profit after tax would have been £1.1m higher and £0.2m higher respectively.
Acquisition costs totalling £0.3m were recorded in administrative expenses in
the Consolidated Income Statement.
The goodwill arising on this acquisition is not expected to be deductible for
tax purposes.
c) Orca GmbH
£m
Non-current assets
Intangible assets 2.4
Property, plant and equipment 0.1
Current assets
Inventories 1.1
Trade and other receivables 0.4
Cash and cash equivalents 1.0
Total assets 5.0
Current liabilities
Payables (0.2)
Tax (0.5)
Non-current liabilities
Deferred tax (0.9)
Total liabilities (1.6)
Net assets of business acquired 3.4
Initial cash consideration paid 5.4
Other adjustments 0.5
Contingent purchase consideration estimated to be paid 0.4
Total consideration 6.3
Total goodwill 2.9
On 3 May 2021, the Group acquired the entire share capital of Orca GmbH
('Orca'), for €6.8m (£5.9m), which comprised the purchase price of €6.2m
(£5.4m) plus net cash/(debt) adjustments of €0.6m (£0.5m). The maximum
contingent consideration payable is €2.5m (£2.1m) based on profit-based
targets for the years ending 31 March 2022, 31 March 2023 and 31 March 2024.
The maximum total consideration, excluding cash and debt acquired, is £7.0m.
Orca is a German manufacturer of ultraviolet disinfection systems, primarily
for the food and beverage sector. Orca has joined the Group as part of UV
Group, part of the Group's Environmental & Analysis sector.
The excess of the fair value of the consideration paid over the fair value of
the assets acquired is represented by customer related intangibles of £0.7m;
trade name of £0.1m and technology related intangibles of £1.6m; with
residual goodwill arising of £2.9m.
The goodwill represents:
a) the technical expertise of the acquired workforce;
b) the opportunity to leverage this expertise across some of Halma's
businesses through future technologies; and
c) the ability to exploit the Group's existing customer base.
Orca contributed £2.7m of revenue and £0.5m of profit after tax for the year
ended 31 March 2022. If this acquisition had been held since the start of the
financial year, it is estimated that the Group's reported revenue and profit
after tax would have been £0.3m and £0.1m higher respectively..
Acquisition costs totalling £0.1m were recorded in administrative expenses in
the Consolidated Income Statement.
The goodwill arising on the Orca acquisition is not expected to be deductible
for tax purposes.
d) PeriGen, Inc.
£m
Non-current assets
Intangible assets 16.5
Property, plant and equipment 2.0
Deferred tax 5.0
Current assets
Inventories 0.2
Trade and other receivables 5.2
Tax 0.4
Cash and cash equivalents 6.2
Total assets 35.5
Current liabilities
Payables (8.3)
Borrowings and lease liabilities (0.3)
Non-current liabilities
Borrowings and lease liabilities (1.6)
Deferred tax (4.3)
Total liabilities (14.5)
Net assets of businesses acquired 21.0
Initial cash consideration paid 40.6
Other adjustments 5.4
Other amounts to be paid 0.3
Total consideration 46.3
Total goodwill 25.3
On 27 April 2021, the Group acquired the entire share capital of PeriGen,
Inc., ('PeriGen') for an initial cash consideration of US$58.0m (£40.6m).
Additional amounts determined in respect of working capital adjustments were
determined to be US$8.2m (£5.7m). The maximum total consideration, excluding
cash and debt acquired, is £40.1m.
PeriGen, based in North Carolina, USA offers innovative perinatal software
solutions, and its advanced technology protects mothers and their unborn
babies by alerting doctors, midwives and nurses to potential problems during
childbirth. The company continues to run under its own management team and has
become part of the Group's Medical sector.
The excess of the fair value of the consideration paid over the fair value of
the assets acquired is represented by customer related intangibles of £6.4m;
trade name of £1.8m and technology related intangibles of £8.3m; with
residual goodwill arising of £25.3m.
The goodwill represents:
a) the technical expertise of the acquired workforce;
b) the opportunity to leverage this expertise across some of Halma's
businesses through future technologies; and
c) the ability to exploit the Group's existing customer base.
PeriGen contributed £14.7m of revenue and £4.1m of profit after tax for the
year ended 31 March 2022. If this acquisition had been held since the start of
the financial year, it is estimated that the Group's reported revenue and
profit after tax would have been £1.0m and £0.2m higher respectively.
Acquisition costs totalling £1.4m were recorded in administrative expenses in
the Consolidated Income Statement.
The goodwill arising on the PeriGen acquisition is not expected to be
deductible for tax purposes.
e) Ramtech Electronics Limited
£m
Non-current assets
Intangible assets 4.6
Property, plant and equipment 1.4
Current assets
Inventories 3.2
Trade and other receivables 1.5
Cash and cash equivalents 3.9
Total assets 14.6
Current liabilities
Payables (2.5)
Non-current liabilities
Deferred tax (1.5)
Total liabilities (4.0)
Net assets of businesses acquired 10.6
Initial cash consideration paid 15.5
Other adjustments 4.1
Total consideration 19.6
Total goodwill 9.0
On 29 July 2021, the Group acquired the Ramtech group of companies
('Ramtech'), for an initial cash consideration of £15.5m, adjustable for cash
acquired. Additional amounts paid in respect of cash acquired and other
adjustments were determined to be
£4.1m. The maximum total consideration, excluding cash and debt acquired, is
£15.7m.
Ramtech is headquartered in Nottingham, UK and supplies wireless fire systems
for temporary sites, primarily in the construction and leisure markets. The
company continues to run under its own management team and has become part of
the Group's Safety sector.
The excess of the fair value of the consideration paid over the fair value of
the assets acquired is represented by customer related intangibles of £1.4m;
trade name of £0.8m and technology related intangibles of £2.4m; with
residual goodwill arising of £9.0m.
The goodwill represents:
a) the technical expertise of the acquired workforce;
b) the opportunity to leverage this expertise across some of Halma's
businesses through future technologies; and
c) the ability to exploit the Group's existing customer base.
Ramtech contributed £7.3m of revenue and £0.6m of profit after tax for the
year ended 31 March 2022. If this acquisition had been held since the start of
the financial year, it is estimated that the Group's reported revenue and
profit after tax would have been £3.7m and £0.3m higher respectively.
Acquisition costs totalling £0.4m were recorded in administrative expenses in
the Consolidated Income Statement.
The goodwill arising on the Ramtech acquisition is not expected to be
deductible for tax purposes.
f) Sensitron S.R.L.
£m
Non-current assets
Intangible assets 9.5
Property, plant and equipment 0.6
Deferred tax 0.1
Current assets
Inventories 1.4
Trade and other receivables 2.9
Cash and cash equivalents 4.3
Total assets 18.8
Current liabilities
Payables (3.4)
Borrowings and lease liabilities (0.1)
Tax (0.1)
Non-current liabilities
Borrowings and lease liabilities (0.3)
Deferred tax (2.7)
Total liabilities (6.6)
Net assets of business acquired 12.2
Initial cash consideration paid 21.4
Total consideration 21.4
Total goodwill 9.2
On 29 July 2021, the Group acquired the entire share capital of Sensitron
S.R.L. ('Sensitron') for a cash consideration of €25.0m (£21.4m). The
maximum total consideration, excluding cash and debt acquired, is £17.1m.
Sensitron, located in Milan, Italy, is a gas detection company whose devices,
which include detectors for hazardous locations and for new refrigerant gases,
enhance safety by detecting the release of gases harmful to people and the
environment. Sensitron will continue to run under its own management team and
will become part of Halma's Environmental & Analysis sector.
The excess of the fair value of the consideration paid over the fair value of
the assets acquired is represented by customer related intangibles of £4.2m;
trade name of £1.3m and technology related intangibles of £4.0m; with
residual goodwill arising of £9.2m.
The goodwill represents:
a) the technical expertise of the acquired workforce;
b) the opportunity to leverage this expertise across some of Halma's
businesses through future technologies; and
c) the ability to exploit the Group's existing customer base.
Sensitron contributed £5.9m of revenue and £0.8m of profit after tax for the
year ended 31 March 2022. If this acquisition had been held since the start of
the financial year, it is estimated that the Group's reported revenue and
profit after tax would have been £3.5m and £0.6m higher respectively.
Acquisition costs totalling £0.4m were recorded in administrative expenses in
the Consolidated Income Statement.
The goodwill arising on this acquisition is not expected to be deductible for
tax purposes.
g) Infinite Leap Inc.
£m
Non-current assets
Intangible assets 11.9
Deferred tax 0.1
Current assets
Trade and other receivables 3.0
Total assets 15.0
Current liabilities
Payables (2.8)
Total liabilities (2.8)
Net assets of business acquired 12.2
Initial cash consideration paid 22.3
Other adjustments 0.6
Contingent purchase consideration estimated to be paid 2.0
Total consideration 24.9
Total goodwill 12.7
On 18 November 2021, the Group acquired the entire share capital of Infinite
Leap Inc. ('Infinite Leap') for an initial cash consideration of $30.0m
(£22.3m). The maximum contingent consideration payable is $17.0m (£12.9m)
based on profit-based targets for the financial periods ending 30 September
2022 and 30 September 2023. The maximum total consideration, excluding cash
and debt acquired, is £35.8m.
Infinite Leap has joined the Group as part of CenTrak, part of the Group's
Medical sector. Infinite Leap is a healthcare consulting and services provider
for real-time location technologies, based in Fargo, North Dakota, USA, which
is also developing unique new hardware and software solutions for applications
adjacent to CenTrak's core market.
The excess of the fair value of the consideration paid over the fair value of
the assets acquired is represented by customer related intangibles of £10.0m;
trade name of £0.1m and technology related intangibles of £1.8m; with
residual goodwill arising of £12.7m.
The goodwill represents:
a) the technical expertise of the acquired workforce;
b) the opportunity to leverage this expertise across some of Halma's
businesses through future technologies; and
c) the ability to exploit the Group's existing customer base.
Infinite Leap contributed £1.8m of revenue and £0.3m of profit after tax for
the year ended 31 March 2022. If this acquisition had been held since the
start of the financial year, it is estimated that the Group's reported revenue
and profit after tax would have been £2.6m and £0.2m higher respectively.
Acquisition costs totalling £0.3m were recorded in administrative expenses in
the Consolidated Income Statement.
The goodwill arising on this acquisition is expected to be deductible for tax
purposes.
h) International Light Technologies Inc.
£m
Non-current assets
Intangible assets 8.4
Property, plant and equipment 1.2
Deferred tax 0.1
Current assets
Inventories 1.4
Trade and other receivables 0.8
Total assets 11.9
Current liabilities
Payables (0.7)
Borrowings and lease liabilities (0.2)
Non-current liabilities
Borrowings and lease liabilities (0.9)
Total liabilities (1.8)
Net assets of business acquired 10.1
Initial cash consideration paid 19.6
Other adjustments (0.2)
Total consideration 19.4
Total goodwill 9.3
On 18 February 2022, the Group acquired the entire share capital of
International Light Technologies Inc. ('ILT') for a cash consideration of
$26.6m (£19.6m) on a cash and debt free basis. The maximum total
consideration, excluding cash and debt acquired, is £19.4m.
ILT has joined the Group as a subsidiary of Ocean Insight, part of the Group's
Environmental & Analysis sector. ILT, based in Peabody, Massachusetts,
USA, is a leading developer of technical lighting sources and light
measurement systems, which are used in biomedical, environmental,
agricultural, food and beverage, and industrial applications. The excess of
the fair value of the consideration paid over the fair value of the assets
acquired is represented by customer related intangibles of £4.0m; trade name
of £0.9m and technology related intangibles of £3.5m; with residual goodwill
arising of £9.3m. The goodwill represents:
a) the technical expertise of the acquired workforce;
b) the opportunity to leverage this expertise across some of Halma's
businesses through future technologies; and
c) the ability to exploit the Group's existing customer base.
ILT contributed £0.9m of revenue and £0.2m of profit after tax for the year
ended 31 March 2022. If this acquisition had been held since the start of the
financial year, it is estimated that the Group's reported revenue and profit
after tax would have been £7.6m and £1.4m higher respectively.
Acquisition costs totalling £0.2m were recorded in administrative expenses in
the Consolidated Income Statement.
The goodwill arising on this acquisition is expected to be deductible for tax
purposes.
i) Other acquisitions
£m
Non-current assets
Intangible assets 5.7
Property, plant and equipment 1.6
Current assets
Inventories 2.2
Trade and other receivables 1.2
Cash and cash equivalents 1.9
Total assets 12.6
Current liabilities
Payables (0.9)
Provisions (0.1)
Tax (0.1)
Non-current liabilities
Deferred tax (1.0)
Total liabilities (2.1)
Net assets of businesses acquired 10.5
Initial cash consideration paid 11.4
Additional amounts paid in respect of cash acquired and other adjustments 2.2
Contingent purchase consideration including retentions estimated to be paid 1.0
Total consideration 14.6
Total goodwill 4.1
On 1 April 2021, Fortress Interlocks Pty Limited, an industrial access control
company in the Group's Safety sector, bought the assets and IP associated with
monitored safety valves from FluidSentry Pty in Australia for consideration of
A$0.6m (£0.3m).
On 26 April 2021, Argus Security S.R.L., a fire safety company in the Group's
Safety sector, purchased the trade and assets of its Italian distributor,
IBIT, for consideration of €0.6m (£0.5m).
On 30 April 2021, the Group acquired Anton Industrial Services Limited
(Anton), the UK flue gas analyser distribution partner of Crowcon Detection
Instruments Limited, a company in the Group's Environmental & Analysis
sector, for consideration of £1.9m, adjustable for cash acquired. Additional
amounts paid in respect of cash acquired and other adjustments was determined
to be £1.3m. The consideration includes a retention amount of £0.2m held in
place of escrow balances and is due 18 months from the date of acquisition.
The maximum total consideration, excluding cash and debt acquired, is £1.9m.
On 7 May 2021, Rudolf Riester GmbH, a company in the Group's Medical sector
acquired the trade and assets of RNK, a US-based digital stethoscope company,
for consideration of US$3.0m (£2.1m).
On 1 September 2021, the Group acquired Meditech Kft, a Hungarian manufacturer
of ambulatory blood pressure monitors and ECG devices, for total consideration
of €5.6m (£4.8m); this includes an amount paid for working capital
adjustments of €0.4m (£0.3m). The maximum contingent consideration payable
is €1.0m (£0.8m) based on profit-based targets for one year post
acquisition. The company has become part of the Group's Medical sector. The
maximum total consideration, excluding cash and debt acquired, is £5.0m.
On 26 October 2021, Perma Pure, a company in the Group's Medical sector
acquired certain trade and assets of Clayborn Lab, a US-based provider of
custom heat tape solutions, for an initial consideration of US$4.5m (£3.3m).
The consideration includes a retention amount of US$0.5m (£0.4m) held in
place of escrow balances and is due 15 months from the date of acquisition.
The maximum contingent consideration payable is US$1.5m (£1.1m) determined by
revenue-based targets for the years ending 30 September 2022 and 30 September
2023. The maximum total consideration, excluding cash and debt acquired, is
£4.4m.
In respect of these acquisitions, the excess of the fair value of the
consideration paid over the fair value of the assets acquired is represented
by customer related intangibles of £3.5m; trade name of £0.3m and technology
related intangibles of £1.9m; with residual goodwill arising of £4.1m.
These acquisitions contributed £3.7m of revenue and £0.5m of profit after
tax cumulatively for the year ended 31 March 2022. If these acquisitions had
been held since the start of the financial year, it is estimated that the
Group's reported revenue and profit after tax would have been £2.8m and
£0.3m higher respectively.
Acquisition costs totalling £0.5m were recorded in administrative expenses in
the Consolidated Income Statement.
The goodwill arising on these acquisitions are not expected to be deductible
for tax purposes.
9 Disposal of operations
During the current year the Group recognised a profit on disposal of
operations of £34.0m (2021: £22.1m), which comprised the following:
On 10 August 2021, the Group disposed of its entire interest in Texecom
Limited to a third party for proceeds of £64.8m. This transaction resulted in
the recognition of a gain in the Consolidated Income Statement as follows:
£m
Proceeds of disposal 64.8
Less: net assets on disposal (19.0)
Less: allocation of goodwill disposed (9.0)
Less: costs of disposal (2.8)
Profit on disposal 34.0
The carrying amounts of assets and liabilities at the date of the sale were
£m
Non-current assets
Intangible assets 0.8
Property, plant and equipment 6.3
Current assets
Inventories 7.3
Trade and other receivables 10.6
Cash and cash equivalents 4.5
Total assets 29.5
Current liabilities
Payables (8.4)
Lease liabilities (0.3)
Non-current liabilities
Lease liabilities and dilapidation provision (1.8)
Total liabilities (10.5)
Net assets of business disposed 19.0
Cash received on disposal of operations in the year of £57.5m comprised
proceeds from the sale of Texecom Limited of £64.8m, less £4.5m of cash
disposed and £2.8m of disposal costs.
In the prior year, in December 2020, the Group disposed of its entire interest
in Fiberguide Industries, Inc. to a third party for sale proceeds of £27.6m
less disposal costs of £1.1m. Disposal costs of £0.4m relating to the
spin-out and partial disposal of OneThird B.V. were also paid.
10 Notes to the Consolidated Cash Flow Statement
Year ended 31 March Year ended 31 March
2022 2021
£m £m
Reconciliation of profit from operations to net cash inflow from operating
activities:
Profit on continuing operations before finance income and expense, share of
results of associate and profit on disposal of operations
278.9 240.8
Depreciation and impairment of property, plant and equipment 36.1 37.8
Amortisation and impairment of computer software 2.5 2.8
Amortisation of capitalised development costs and other intangibles 7.6 8.3
Impairment of capitalised development costs 2.9 1.9
Amortisation of acquired intangible assets 42.7 42.3
Share-based payment expense in excess of amounts paid 5.0 3.7
Payments to defined benefit pension plans net of service costs (11.7) (13.1)
Loss on sale of property, plant and equipment, capitalised development costs 0.8 0.7
and computer software
Operating cash flows before movement in working capital 364.8 325.2
Increase in inventories (51.9) (6.7)
(Increase)/decrease in receivables (43.6) 4.3
Increase in payables and provisions 36.1 7.9
Revision to estimate and exchange difference on contingent consideration
payable less amounts paid in
excess of payable estimated on acquisition (12.0) 0.7
Cash generated from operations 293.4 331.4
Taxation paid (56.0) (53.8)
Net cash inflow from operating activities 237.4 277.6
Year ended 31 March Year ended 31 March
2022 2021
£m £m
Analysis of cash and cash equivalents
Cash and bank balances 157.4 134.1
Overdrafts (included in current borrowings) (0.7) (3.0)
Cash and cash equivalents 156.7 131.1
Net cash/(debt) Net (cash)/debt disposed
31 March acquired £m Additions and reclassifications Exchange adjustments 31 March
2021 Cash flow £m £m £m 2022
£m £m £m
Analysis of net debt
Cash and bank balances 134.1 4.8 18.2 (4.5) - 4.8 157.4
Overdrafts (3.0) 2.3 - - - - (0.7)
Cash and cash equivalents 131.1 7.1 18.2 (4.5) - 4.8 156.7
Loans notes falling due within one year - - - - (71.2) - (71.2)
Loan notes falling due after more than one year (105.3) - - - 71.2 (0.9) (35.0)
Bank loans falling due within one year - - - - (0.6) - (0.6)
Bank loans falling due after more than one year (217.0) (28.9) - - 0.6 (7.3) (252.6)
Lease liabilities (65.0) 16.8 (4.6) 2.1 (19.0) (2.4) (72.1)
Total net debt (256.2) (5.0) 13.6 (2.4) (19.0) (5.8) (274.8)
The net increase in cash and cash equivalents of £20.8m comprised cash inflow
of £7.1m, cash acquired of £18.2m and cash disposed of £4.5m.
During the period, the Group changed the presentation of the proceeds from and
the repayments of bank borrowings in the Consolidated Cash Flow Statement. In
the year ended 31 March 2021, these were presented as net repayments of
£7.3m, which has been updated to proceeds of £129.4m and repayments of
£136.7m.
Reconciliation of movements of the Group's liabilities from financing
activities
Liabilities from financing activities are those for which cash flows were, or
will be, classified as cash flows from financing activities in the
Consolidated Cash Flow Statement.
Borrowings Leases Overdraft Total liabilities from financing activities Trade and other payables falling due with one year
£m £m £m £m £m
At 1 April 2020 419.2 61.5 0.9 481.6 186.7
Cash flows from financing activities (79.5) (16.4) - (95.9) (7.8)
Acquisition/disposal of subsidiaries - (1.3) - (1.3) 2.7
Exchange adjustments (17.4) (3.8) - (21.2) (5.2)
Other changes* - 25.0 2.1 27.1 10.3
At 31 March 2021 322.3 65.0 3.0 390.3 186.7
Cash flows from financing activities 28.9 (16.8) - 12.1 (5.9)
Acquisition/disposal of subsidiaries - 2.5 - 2.5 11.7
Exchange adjustments 8.2 2.4 - 10.6 7.3
Other changes* - 19.0 (2.3) 16.7 42.9
At 31 March 2022 359.4 72.1 0.7 432.2 242.7
* Other changes include movements in overdraft which is treated as cash,
interest accruals, reclassifications from non-current to current liabilities,
lease additions and other movements in working capital balances.
11 Contingent liabilities
Group financing exemptions applicable to UK controlled foreign companies
On 24 November 2017, the European Commission (EC) published an opening
decision that the United Kingdom controlled foreign company (CFC) group
financing partial exemption (FCPE) constitutes State Aid. On 2 April 2019, the
EC's final decision concluded that the FCPE rules, as they applied up to 31
December 2018, constitute State Aid. As previously reported, the Group has
benefitted from the FCPE with the total benefit for the periods from 1 April
2013 to 31 December 2018 being approximately £15.4m in respect of tax.
Appeals had been made by the UK government, the Group and other UK-based
groups to annul the EC decision. The EU General Court delivered its decision
on 8 June 2022. The ruling was in favour of the European Commission but the UK
Government and the taxpayer have the option to appeal this decision.
Notwithstanding these appeals, under EU law, the UK government is required to
commence collection proceedings. In January 2021, the Group received a
Charging Notice from HM Revenue & Customs (HMRC) for £13.9m assessed for
the period from 1 April 2016 to 31 December 2018. The Group has appealed
against the notice but as there is no right of postponement the amount charged
was paid in full in February 2021. In February 2021, the Group received
confirmation from HMRC that it was not a beneficiary of State Aid for the
period from 1 April 2013 to 31 March 2016.
Whilst the EU General Court was in favour of the EC, our assessment is that
there are strong grounds for appeal and we would expect such appeals to be
successful. As a result, we continue to recognise a receivable of £14.7m on
the Consolidated Balance Sheet within non-current assets to reflect the
Group's view that the amount paid will ultimately be recovered.
In April 2021, a Charging Notice for £0.8m was received. The £0.8m comprised
interest on the £13.9m assessment noted above and the interest was paid in
May 2021.
The Group's maximum potential exposure at 31 March 2022 in respect of
recoverability of non-current assets is £14.7m (31 March 2021: £13.9m).
Other contingent liabilities
The Group has widespread global operations and is consequently a defendant in
legal, tax and customs proceedings incidental to those operations. In
addition, there are contingent liabilities arising in the normal course of
business in respect of indemnities, warranties and guarantees. These
contingent liabilities are not considered to be unusual or material in the
context of the normal operating activities of the Group. Provisions have been
recognised in accordance with the Group accounting policies where required.
None of these claims are expected to result in a material gain or loss to the
Group.
12 Events subsequent to end of reporting period
On 13 April 2022, the Group acquired the entire share capital of Deep Trekker
Inc. (Deep Trekker), based in Ontario, Canada for a cash consideration of
C$60.0m (£36.6m) on a cash and debt free basis. Deep Trekker is a
market-leading manufacturer of remotely operated underwater robots used for
inspection, surveying, analysis and maintenance. Deep Trekker will be part of
Halma's Environmental & Analysis sector. A detailed purchase price
allocation exercise is currently being performed to calculate the goodwill
arising on acquisition.
In May 2022, the Revolving Credit Facility was refinanced. The new facility
remains at £550m and matures in May 2027 with two one-year extension options.
In addition, in May 2022, a new Private Placement of £330m was completed. The
issuance consists of Sterling, Euro, US Dollar and Swiss Franc tranches and
matures in July 2032, with an amortisation profile giving it a seven year
average life.
There were no other known material non-adjusting events which occurred between
the end of the reporting period and prior to the authorisation of these
financial statements on 16 June 2022.
13 Remuneration of key management personnel
The remuneration of the Directors and Executive Board members, who are the key
management personnel of the Group, is set out below in aggregate for each of
the categories specified in IAS 24 'Related Party Disclosures'. Further
information about the remuneration of individual Directors is provided in the
audited part of the Annual Remuneration Report in the Annual Report and
Accounts 2022.
Year ended 31 March Year ended 31 March
2022 2021
£m £m
Wages and salaries 11.9 6.1
Pension costs 0.1 0.1
Share-based payment charge 5.0 4.4
17.0 10.6
Cautionary note
These Results contain certain forward-looking statements which have been made
by the Directors in good faith using information available up until the date
they approved the announcement. Forward-looking statements should be regarded
with caution as by their nature such statements involve risk and uncertainties
relating to events and circumstances that may occur in the future. Actual
results may differ from those expressed in such statements, depending on the
outcome of these uncertain future events.
LEI number: 2138007FRGLUR9KGBT40
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