REG - Halma PLC - Half-year Report <Origin Href="QuoteRef">HLMA.L</Origin> - Part 4

HalmaAnnouncement

21/11/2017 07:05

- Part 4: For the preceding part double click  ID:nRSU0273Xc 

£6,447,000. 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 new technologies; andc)     the ability to exploit the Group's existing customer base. Acquisition costs totalling £367,000 were recorded in the Consolidated Income Statement.                                                                                                                                                                                                                               
 
 
 11   Retirement benefits The Group's significant defined benefit plans are for the qualifying employees of its UK subsidiaries. The defined benefit obligation at 30 September 2017 of £66,825,000 (1 October 2016: £94,024,000; 1 April 2017: £74,856,000) has been estimated based on the latest triennial actuarial valuations updated to reflect current assumptions regarding discount rates, inflation rates and asset values. The last triennial valuations were carried out at 1 December 2014 for the Halma Group      
 Pension Plan and 1 April 2015 for the Apollo Pension and Life Assurance Plan. The discount rate assumption was set at 2.6% (1 October 2016: 2.3%; 1 April 2017: 2.5%). All other assumptions are materially unchanged.  In addition, the defined benefit plan assets have been updated to reflect deficit reduction payments in the period totalling £5,400,000 (1 October 2016: £5,160,000; 1 April 2017: £10,700,000). The UK plans are closed to future accrual.                                                             
 
 
 12   Fair values of financial assets and liabilities As at 30 September 2017, with the exception of the Group's fixed rate loan notes, there were no significant differences between the book value and fair value (as determined by market value) of the Group's financial assets and liabilities. The fair value of floating rate borrowings approximate to the carrying value because interest rates are reset to market rates at intervals of less than one year. The fair value of the Group's fixed rate loan notes       
 arising from the United States Private Placement completed in January 2016 is estimated to be £180,087,000. The fair value of financial instruments is estimated by discounting the future contracted cash flow using readily available market data and represents a level 2 measurement in the fair value hierarchy under IFRS 7. As at 30 September 2017, the total forward foreign currency contracts outstanding were £26,396,000. The contracts mostly mature within one year and therefore the cash flows and resulting   
 effect on profit and loss are expected to occur within the next 12 months. The fair values of the forward contracts are disclosed as a £592,000 (1 October 2016: £135,000; 1 April 2017: £598,000) asset and £410,000 (1 October 2016: £1,920,000; 1 April 2017: £315,000) liability in the Consolidated Balance Sheet. Any movements in the fair values of the contracts are recognised in equity until the hedge transaction occurs, when gains/losses are recycled to finance income or finance expense.                     
 
 
 13   Subsequent events Revolving Credit Facility extensionEffective from November 2017, the Group extended its unsecured five-year £550,000,000 Revolving Credit Facility agreed in November 2016 for a further year to November 2022. Acquisition of Mini-Cam Enterprises Limited and subsidiariesOn 31 October 2017, the Group acquired the entire share capital of Mini-Cam Enterprises Limited and its subsidiary companies for cash consideration of £62,000,000, adjustable based on the closing date net assets and cash. 
 Maximum deferred contingent consideration is payable of £23,100,000 based on annualised profit growth to the period ended 31 March 2020.  Mini-Cam, headquartered in Lancashire, UK, specialises in pipeline inspection solutions for waste water systems in the UK and internationally. Mini-Cam's remotely-operated products and software enable utilities to identify leakages, blockages and potential ingress in waste water networks, thereby helping them to improve customer service levels and compliance with         
 environmental regulations. The management team of Mini-Cam will continue to operate the business out of its current locations. Mini-Cam will join the Group's Environmental & Analysis sector where it provides new opportunities for commercial and technical collaboration with the sector's existing water technologies. Acquisition of SetcoOn 9 November 2017, the Group acquired the entire share capital of Setco S.A. for E17,000,000 (£15,088,000), adjustable based on closing date net assets and cash. Setco, based 
 in Barcelona, Spain, will be a bolt-on for our global Elevator Safety business, Avire, and adds new wireless communications technology which is highly complementary to its existing product range and new product development roadmap. Setco will join the Infrastructure Safety sector.                                                                                                                                                                                                                                       
 
 
 14   Other matters SeasonalityThe Group's financial results have not historically been subject to significant seasonal trends. Equity and borrowingsIssues and repurchases of Halma plc's ordinary shares and drawdowns and repayments of borrowings are shown in the Consolidated Cash Flow Statement. Related party transactionsThere were no significant changes in the nature and size of related party transactions for the period to those reported in the Annual Report and Accounts 2017.  
 
 
Seasonality 
 
The Group's financial results have not historically been subject to
significant seasonal trends. 
 
Equity and borrowings 
 
Issues and repurchases of Halma plc's ordinary shares and drawdowns and
repayments of borrowings are shown in the Consolidated Cash Flow Statement. 
 
Related party transactions 
 
There were no significant changes in the nature and size of related party
transactions for the period to those reported in the Annual Report and
Accounts 2017. 
 
 15   Principal risks and uncertainties A number of potential risks and uncertainties exist that could have a material impact on the Group's performance over the second half of the financial year and could cause actual results to differ materially from expected and historical results. The Group has in place processes for identifying, evaluating and managing key risks. These risks, together with a description of the approach to mitigating them, are set out on pages 22 to 27 in the Annual Report and Accounts  
 2017, which is available on the Group's website at www.halma.com. The Directors do not consider that the principal risks and uncertainties have changed since the publication of the Annual Report and Accounts. The principal risks and uncertainties relate to: ·    Globalisation·    Competition·    Economic conditions·    Funding, treasury and pension deficit·    Cyber security/Information Technology/Business interruption/Natural disasters·    Acquisitions·    Laws and regulations·    Talent and diversity·    
 Research & Development and Intellectual Property strategy·    Product quality The UK referendum decision in June 2016 and the subsequent triggering of Article 50 in March 2017 mean that the UK is now scheduled to leave the European Union by the end of March 2019. This decision has created a new dimension to the uncertainties surrounding global economic growth. In 2016/17, approximately 10% of Group revenue came from direct sales between the UK and Mainland Europe.To date, the following Brexit risks have    
 been identified as having an actual and/or potential impact on our business: ·    Economic conditions: increased overall uncertainty including the specific impacts on growth, inflation, interest and currency rates·    Defined benefit pension liability: movements in bond yields affecting discount rates which may increase the liability·    Laws and regulations: potential changes to UK and EU-based law and regulation including product approvals, patents and import/export tariffs·    Talent: mobility of the    
 workforce Halma has an executive working group to assess and monitor the potential impact on us of Brexit, to communicate updates and support our businesses in preparing for the range of possible outcomes. Our decentralised model, with businesses in diverse markets and locations, will enable each Halma company to adapt quickly to changing trading conditions. This agility, together with the regulation driven demand for many of our products and services, will help us to mitigate any adverse impact and also   
 take advantage of the opportunities presented by the decision to leave the European Union. Movements in foreign exchange rates remain a risk to financial performance. Although the Group uses forward foreign exchange contracts to mitigate its transactional currency exposure risk, it does not hedge the translation of its currency profits. In the first half of the year, Sterling weakened on average by 6% relative to the US Dollar, and by 7% against the Euro, resulting in a 5% positive currency impact on       
 reported revenue and 5% on reported profit.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
 
 
 16   Responsibility statement We confirm that to the best of our knowledge:  
 
 
 a)  these Condensed Financial Statements have been prepared in accordance with International Accounting Standard 34 'Interim Financial Reporting' as adopted by the European Union;                                                                                                          
 b)  this Half Year Report includes a fair review of the information required by Disclosure Guidance and Transparency Rule (DTR) 4.2.7R (indication of important events during the period and description of principal risks and uncertainties for the remainder of the financial year); and  
 c)  this Half Year Report includes a fair review of the information required by DTR 4.2.8R (disclosure of related party transactions and changes therein).                                                                                                                                   
 
 
 By order of the Board   Andrew WilliamsChief Executive 21 November 2017  Kevin ThompsonFinance Director  
 
 
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