REG - Halma PLC - Half Year Results
17/11/2022 07:00
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RNS Number : 6930G Halma PLC 17 November 2022
Halma plc
HALF YEAR RESULTS 2022/23
Record first half results and continued dividend growth
Halma, the global group of life-saving technology companies focused on growing
a safer, cleaner, healthier future for everyone, every day, today announces
results for the 6 months to 30 September 2022.
Highlights
Change 2022 2021
Revenue +19% £875.5m £737.2m
Adjusted(1) Profit before Taxation +11% £171.7m £154.9m
Adjusted Earnings per Share(2) +12% 35.65p 31.96p
Statutory Profit before taxation (13)% £145.5m £167.5m
Statutory Earnings per Share (15)% 30.39p 35.83p
Interim Dividend per Share(3) +7% 7.86p 7.35p
Return on Sales(4) 19.6% 21.0%
Return on Total Invested Capital(5) 13.8% 14.9%
Net Debt £499.6m £274.8m(9)
Strong growth and returns; increased investment; on track for full year
· Record revenue and Adjusted(1) Profit: revenue up 19%;
Adjusted(1) Profit before Taxation up 11% compared to H1 2021/22; further
sequential growth from second half of 2021/22.
· Statutory Profit before Taxation down 13% principally due to the
gain on disposal of £34.0m in the first half of last year; up 9% excluding
this gain.
· Revenue and Adjusted(1) Profit growth on an organic constant
currency(6) basis: up by 9% and 2% respectively.
· Growth in all sectors and regions: revenue growth in all sectors
and regions; Adjusted(1) Profit growth in all sectors (including on an organic
constant currency(6) basis).
· Strong Return on Sales(4) of 19.6% (2021/22: 21.0%), above
pre-COVID levels(8) and reflecting the planned normalisation of overhead
costs.
· Increased strategic investment: R&D investment £50m, up 20%
(5.7% of revenue). Three acquisitions this financial year (two in H1);
consideration(10) of £238m.
· Cash conversion(11) 63%, below 90% target: includes strategic
inventory investment to maintain supply chain resilience and support a very
strong order book; continued good working capital control.
· Continued balance sheet strength: net debt/EBITDA of 1.2 times,
supporting future increased organic investment and acquisitions; a promising
acquisition pipeline.
· 7% interim dividend increase, continuing our progressive dividend
policy and reflecting the Board's continued confidence in the Group's
long-term growth prospects.
· Announced last week appointment of Steve Gunning as Chief
Financial Officer, effective 16 January 2023.
Andrew Williams, Group Chief Executive of Halma, commented:
"Halma made further good progress in the first half. We delivered record
revenue, Adjusted(1) Profit and interim dividend, with growth in all sectors
and regions. We maintained a strong balance sheet, while further enhancing our
growth opportunities through increased strategic investment to support future
growth, both organically and through acquisitions.
We saw strong demand for our companies' products and services in the period.
Our order book is exceptionally strong, having grown from the record level
seen at the start of the year. Order intake remained ahead of both revenue and
the very strong order intake in the comparable period last year.
Our Sustainable Growth Model continues to enable our success in varied market
conditions, demonstrating the value of the diversity and global reach of our
portfolio, our strong purpose and culture and our agile business model. The
operational environment presents both challenges and opportunities; we remain
on track to make further progress in the second half of the year, and deliver
another good full year performance."
Notes:
1 Adjusted to remove the amortisation of acquired intangible assets; acquisition
items; significant restructuring costs; and profit or loss on disposal of
operations, totalling £26.2m (2021/22: £(12.6)m). See note 2 to the
Condensed Interim Financial Statements for details.
2 Adjusted to remove the amortisation of acquired intangible assets, acquisition
items, significant restructuring costs, profit or loss on disposal of
operations and the associated taxation thereon. See note 2 to the Condensed
Interim Financial Statements for details.
3 Interim dividend declared 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 Adjusted Profit(1) into
Sterling, as well as acquisitions in the year following completion and
disposals. See note 9 to the Condensed Interim Financial Statements for
details.
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 2, 6 and 9 to the Condensed Interim Financial
Statements for details.
8 Defined as the average of the Return on Sales reported in the five first half
years prior to the COVID pandemic (19.3%).
9 As at 31 March 2022.
10 Maximum total consideration is on a cash- and debt-free basis.
11 Cash conversion is defined as adjusted operating cash flow as a percentage of
adjusted operating profit. See note 9 to the Condensed Interim Financial
Statements for details.
For further information, please contact:
Halma plc +44 (0)1494 721 111
Andrew Williams, Group Chief Executive
Marc Ronchetti, Group Chief Executive Designate and Chief Financial Officer
Charles King, Head of Investor Relations
Clayton Hirst, Director of Corporate Affairs +44 (0)7776 685948
+44 (0)7384 796013
MHP Communications +44 (0)20 3128 8572
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, healthier future for everyone, every day. Its
purpose defines the three broad market areas where it operates:
· Safety Protecting people's safety and the environment as populations grow, and
enhancing worker safety.
· Environment Addressing the impacts of climate change, pollution and waste, protecting
life-critical resources and supporting scientific research.
· Health Meeting the increasing demand for better healthcare as chronic illness rises,
driven by growing and ageing populations and lifestyle changes.
It 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.
For the past three years Halma has been 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.
Review of Operations
Halma made good progress in the first half of the year, achieving record
results in a challenging operational environment.
Our continued success is driven by our Sustainable Growth Model. At its core
is our purpose, which is our motivating ambition to deliver a positive impact
by helping to solve some of the world's most pressing issues, such as climate
change, waste and pollution, and increasing demands on healthcare systems and
life-critical resources.
Our DNA describes how we deliver on that purpose, embodying the core elements
of our organisation and culture, such as agility, collaboration,
entrepreneurialism, and our continuous investment in talent and innovation.
Our Sustainable Growth Model ensures that we maintain a diverse portfolio of
companies with leading positions in global niche markets which are exposed to
strong and fundamental long-term growth drivers. Each company is positioned to
deliver resilient growth, high returns and strong cash flows. This is further
supported by strategic investments, both within each company and in our
carefully selected Growth Enabler support functions at the centre, which
include digital innovation, international expansion and M&A.
For each Halma company, our Sustainable Growth Model gives the agility and
autonomy to respond rapidly to changes in their end markets and supply chains,
such as we again saw in the first half. Building connectivity between our
companies is an important element of our success; it supports a collaborative
culture which is driven by our companies' common aim to innovate in solving
critical challenges facing people and our planet. Since the year end, we have
increased investment to re-establish and deepen these connections at multiple
levels, following the disruption caused by the pandemic. This included a
number of formal events such as Accelerate Halma, which brought together our
senior leaders from across the Group.
The qualities embodied in our Sustainable Growth Model are becoming ever more
important and relevant in a world which is increasingly subject to rapid
change and greater economic and geopolitical uncertainty in the face of
challenges such as growing and ageing populations, climate change, resource
scarcity and the need for better healthcare, which are more urgent than ever
before. Our ability to address these challenges for our customers will support
our continued success over the long term.
Record first half results
Our results in the first half were driven by strong and broad-based demand for
our products and services, with organic constant currency(1) revenue and
Adjusted(1) Profit growth across all our sectors, and organic constant
currency(1) revenue growth in all regions. This growth was delivered not only
in a challenging operational environment, but also against a very strong
comparative period in the first half of last year, which had seen substantial
growth and unusually high margins as the impacts of the COVID-19 pandemic
receded.
Revenue increased by 19%, to £875.5m (2021/22: £737.2m), and included strong
organic constant currency(1) growth, as well as a substantial benefit from
currency translation as a result of the depreciation of Sterling. This
increase in revenue represented not only strong growth compared to the first
half of last year, but also further sequential growth of £87.4m, or 11%, from
the second half of last year.
Return on Sales(1) was 19.6%, a strong performance, and especially pleasing
given increased inflationary pressures and the substantial strategic
investments made in the period to support future growth. It compared to the
exceptionally high Return on Sales(1) of 21.0% in the first half of last year,
which had benefited from a slower return in variable overhead costs than in
revenue as the effects of the pandemic abated. It also compared to the average
first half Return on Sales(1) of 19.3% for the five years prior to the
pandemic. These variable overhead costs have returned to more normal levels
relative to revenue in the first half of this year and, as a result,
Adjusted(1) Profit before Taxation grew by 11% to £171.7m (2021/22:
£154.9m), compared to the 19% increase in revenue.
Statutory Profit before Taxation decreased by 13% to £145.5m (2021/22:
£167.5m). The prior half year included a £34.0m gain on the disposal of a
Safety sector business in the period, and, excluding this gain, Statutory
Profit before Taxation would have increased by 9%.
Revenue growth comprised organic constant currency(1) revenue growth of 9.5%,
a 1.0% positive contribution from acquisitions net of the effects of
disposals, and a benefit from currency translation of 8.3%. Investment in our
products and services to ensure they continue to address our customers' needs
enabled us to deliver a resilient price performance, which offset the majority
of cost increases, resulting in only a small decrease in gross margin. We
estimate that price increases accounted for approximately four percentage
points of our revenue growth, broadly evenly spread across the sectors.
The 11% increase in Adjusted(1) Profit before Taxation included organic
constant currency(1) growth of 1.9%, with the more modest level of growth
relative to revenue reflecting the variable overhead cost dynamics noted above
and comparing to the very strong 32% growth in Adjusted(1) Profit before
Taxation on an organic constant currency(1) basis in the first half of last
year. There was a small adverse effect of 0.2% from acquisitions net of the
effects of disposals; the contribution from acquisitions is expected to
improve in the second half of the year as they benefit from integration into
Halma and the support available to deliver their growth strategies. As with
revenue, there was a substantial benefit from currency translation of 9.2%.
It is a strength of Halma's business model that we are able to simultaneously
deliver a strong operating performance and maintain a strong balance sheet,
while making substantial strategic investments to support our future growth.
We further increased organic investment in the first half, for example through
a 20% increase in R&D expenditure to £49.6m, representing 5.7% of Group
revenue (2021/22: £41.3m; 5.6% of Group revenue), and through continued
investment in our technology infrastructure totalling £9m, which is on track
to reach our projected spend for the year of c.£20m. Our Digital and
Technology teams continued to be active in supporting the development of
digital solutions in our companies' portfolios, and we saw good growth in
revenue from digital products and solutions, which increased in line with
Group revenue growth, and continues to represent over 40% of Group revenues.
We also further expanded our opportunities for growth in markets highly
aligned to our purpose through investment in acquisitions, with two companies
(Deep Trekker Inc. and IZI Medical Products, LLC) purchased in the first half,
for an aggregate maximum total consideration of £187.5m on a cash- and
debt-free basis. We made one further acquisition, WEETECH Holding GmbH for
€57.5m (approximately £50m) on a cash- and debt-free basis following the
period end. Further details of these acquisitions are given later in this
review.
We maintained a strong balance sheet and ended the period with net debt of
£499.6m, equivalent to 1.2 times annualised EBITDA (31 March 2022: net debt
of £274.8m; 0.7 times EBITDA). Our control of working capital remained
strong, with trade debtor and trade creditor days within historic ranges. Cash
conversion (adjusted operating cash flow as a percentage of adjusted operating
profit - see note 9) of 63% (2021/22: 85%) was below our annualised cash
conversion Key Performance Indicator (KPI) of 90%, and included incremental
targeted investment in inventory by a number of our companies to maintain
supply chain resilience, manage price increases and support their growth. We
estimate that, without this incremental investment, our cash conversion would
have been over 80%, in line with typical levels in the first half of the year.
We expect full year cash conversion to improve closer to our KPI of 90%. Our
strong balance sheet and continued cash generation underpin our ongoing
investment in future organic growth, give us substantial capacity for
acquisitions, and support our progressive dividend policy.
Return on Total Invested Capital(1) was 13.8%, well above our KPI of 12%. The
change from 14.9% in the comparative period principally reflects the rate of
organic and acquired profit growth relative to the increase in retained
earnings.
The Board has declared an increase of 7% in the interim dividend to 7.86p per
share (2021/22: 7.35p per share). The interim dividend will be paid on 3
February 2023 to shareholders on the register on 23 December 2022.
Organic constant currency(1) revenue growth in all regions
External revenue by destination
Half year 2022 Half year 2021
£m % of total £m % of total Change % % organic growth at constant currency(1)
£m
growth
United States of America 364.2 42% 280.9 38% 83.3 30% 11%
Mainland Europe 170.5 19% 146.6 20% 23.9 16% 12%
United Kingdom 137.2 16% 136.2 18% 1.0 1% 6%
Asia Pacific 142.1 16% 124.8 17% 17.3 14% 4%
Other regions 61.5 7% 48.7 7% 12.8 26% 15%
875.5 100% 737.2 100% 138.3 19% 9%
Our growth in the period was broad-based, and revenue grew in all regions,
both on a reported and organic constant currency(1) basis. Reported growth
rates in each region were impacted to differing extents by acquisitions (net
of disposals), and positive effects from foreign currency translation, given
the relative weakness of Sterling. Organic constant currency(1) growth rates
reflected good growth in all regions, as well as the strength of growth in the
comparative period, with the UK and Asia Pacific regions, for example, having
grown by 46% and 30% respectively on an organic constant currency(1) basis in
the first half of last year.
The USA remains our largest sales destination and contributed 42% of total
revenue. Revenue increased by 30%, or by 11% on an organic constant
currency(1) basis, with all sectors delivering a strong organic constant
currency(1) performance. Reported revenue growth in the USA included a
contribution of 4% from recent acquisitions, as well as a substantial positive
effect from currency translation of 15%. On an organic constant currency(1)
basis, the strongest growth was in the Safety sector, led by emergency
communications within the Elevator Safety subsector, and by strong
performances in Industrial Access Control and Pressure Management. The
Environmental & Analysis and Healthcare(3) sectors also delivered growth
in all subsectors on an organic constant currency(1) basis.
Mainland Europe revenue increased by 16%, or 12% on an organic constant
currency(1) basis, with strong reported revenue growth in all sectors.
Reported revenue benefited from a number of acquisitions, including Sensitron
in the Environmental & Analysis sector and Ramtech in the Safety sector,
but was partly offset by the disposal in the Safety sector. There was a net
acquisition contribution of 2% and also a positive effect from currency
translation of 2%. On an organic constant currency(1) basis there were strong
performances in Healthcare, led by good customer demand in the Therapeutic
Solutions subsector, and in the Safety sector, which saw strong growth in
People & Vehicle Flow and Industrial Access Control. However, the
performance of the Environmental & Analysis sector was more mixed, with a
broadly flat performance as a result of softening demand in some areas of the
Water Analysis & Treatment subsector.
Revenue in the UK grew 1%, or 6% on an organic constant currency(1) basis,
against exceptionally strong growth of 55% and 46% respectively in the first
half of last year. There was a negative effect on reported revenue from the
prior year disposal, which was only partly offset by a much smaller benefit
from acquisitions in the period. The Healthcare sector grew strongly on an
organic constant currency(1) basis, benefiting from good momentum at SSG
(Static Systems Group), while the Safety sector also grew well, supported by a
major People & Vehicle Flow contract. Revenue in the Environmental &
Analysis sector declined, principally as a result of weaker momentum in the
Water Analysis & Treatment subsector.
Asia Pacific's revenue grew 14%, which included a 9% benefit from currency
translation and 1% from acquisitions net of disposals, and by 4% on an organic
constant currency(1) basis. The region's organic constant currency(1) growth
reflected a strong performance in the Environmental & Analysis sector,
which included strong demand in the Environmental Monitoring and Optical
Analysis subsectors, while the Safety sector grew only modestly and Healthcare
revenue declined, both against very strong performances in the first half of
last year. Of the larger countries, on an organic constant currency(1) basis,
there was strong growth in India, notably in the flow and pressure control
market, and good growth in Australasia. These more than offset lower revenue
in China, which saw declines in the Healthcare and Safety sectors as a result
of ongoing COVID-19 lockdowns and the consequent effects on economic growth,
and budget reductions; however, there was continued growth in the
Environmental & Analysis sector, benefiting in part from products
supporting the energy transition.
In other regions, which represent only 7% of Group revenue, revenue grew
strongly, both on a reported and on an organic constant currency(1) basis.
This was supported by strong organic constant currency(1) growth in the Near
and Middle East and Canada, which together represent over 60% of the regions'
revenue. Reported revenue also benefited from the acquisition of Deep Trekker
in the period, as well as from currency translation effects.
Organic constant currency(1) revenue and Adjusted(1) Profit growth in all
sectors
External revenue by sector
Half year 2022 Half year 2021
£m £m Change % % organic growth at constant currency(1)
£m
growth
Safety 355.4 320.2 35.2 11% 10%
Environmental & Analysis 263.8 209.5 54.3 26% 9%
Healthcare 256.7 208.0 48.7 23% 9%
Inter-segmental revenue (0.4) (0.5) 0.1
875.5 737.2 138.3 19% 9%
Adjusted(1) Profit by sector
Half year 2022 Half year 2021
£m £m Change % % organic growth at constant currency(1)
£m
growth
Safety 75.4 73.5 1.9 3% 1%
Environmental & Analysis 65.4 53.1 12.3 23% 8%
Healthcare 56.4 46.3 10.1 22% 9%
Sector profit(2) 197.2 172.9 24.3 14% 5%
Central administration costs (19.3) (14.0)
Net finance expense (6.2) (4.0)
Adjusted(1) Profit before Taxation 171.7 154.9 16.8 11% 2%
Safety sector
Revenue increased by 11% to £355.4m (2021/22: £320.2m) and organic
constant currency(1) revenue increased by 10%. There was a positive
contribution from acquisitions of 1% and from currency translation of 5%, and
a negative effect from the disposal in the prior year of Texecom of 5%. Given
the substantial currency translation effects in the period, the revenue
commentary below is given on an organic constant currency(1) basis.
Revenue growth was broadly spread across the larger subsectors and the three
largest regions, the USA, Mainland Europe and the UK, and supported by
continued and well distributed growth in the sector's order book. While
operational and supply chain disruptions continue to impact sector companies,
their ability to be agile in addressing these challenges and to continue to
innovate thanks to our Sustainable Growth Model has given them a competitive
advantage in manufacturing and delivering the products that their customers
need.
Following very strong growth in the first half of last year, there were
healthy levels of revenue growth in the two largest subsectors, Fire Detection
and People & Vehicle Flow. Demand for interlock products in the logistics
and electrical sectors resulted in strong revenue growth in our Industrial
Access Control subsector, while Pressure Management grew strongly, driven by
growth in its chemical processing and general industrial segments. Elevator
Safety also saw good revenue growth, benefiting from strong regulatorily
driven demand for emergency communications products in the USA.
Performance in the two smallest subsectors, Fire Suppression and Safe Storage
and Transfer, was mixed, and revenues compared to the first half of last year
were broadly flat, reflecting operating challenges, including component
shortages and lower Asia Pacific revenues in Safe Storage and Transfer.
By region, the largest contributions to sector revenue growth came from the
USA and Mainland Europe, which grew 14% and 13% respectively, followed by the
UK which grew 8%, against revenue growth of 69% in the first half of last
year. The USA saw strong growth in Elevator Safety, Industrial Access Control
and Pressure Management, while People & Vehicle Flow was the largest
driver of growth in both Mainland Europe and the UK. Asia Pacific grew 1%,
reflecting the continued impact of lockdowns and slower economic growth; this
compared to 25% growth in the first half of last year, which had benefited
from a non-recurring road safety contract in China. Revenue in the Africa,
Near and Middle East and Other regions, which together represent 8% of sector
revenues, grew by 14%, compared to a decline of 9% in the first half of last
year.
Profit(2) was 3% higher at £75.4m (2021/22: £73.5m), and included 1% organic
constant currency(1) growth, a benefit of 5% from currency translation, and a
negative effect of 3% from the disposal in the prior year. Return on Sales(1)
decreased to 21.2% (2021/22: 23.0%), partly due to a reversion of overhead
costs to more normal levels. This follows an increase of 1.4 percentage points
in the first half of the prior year, reflecting the slower return of variable
overhead costs (relative to the increase in revenue) and a stable gross
margin. The movement in the period also reflected the increased cost of
procuring critical components, including for some of our largest companies,
which were compensated for in absolute terms by price increases, but resulted
in a decline in gross margin. R&D expenditure of £19.6m remained at a
good level, which, with an increase in absolute investment of £1.6m,
represented 5.5% of revenue (2021/22: 5.6%).
Environmental & Analysis sector
Revenue increased by 26% to £263.8m (2021/22: £209.5m), comprising 9%
organic constant currency(1) growth, a 7% net contribution from acquisitions,
and a positive effect of 10% from currency translation.
The sector's growth reflected its customers' continued focus on protecting the
environment and improving the availability and quality of life-critical
resources. It was also supported by the growing demand for products supporting
the transition to cleaner forms of energy and other high-technology solutions
based on digital, optical and opto-electronic expertise. These trends
supported strong growth in Gas Detection and in Environmental Monitoring and
continued growth in the Optical Analysis subsector.
In the USA, revenue grew 12% on an organic constant currency(1) basis, driven
by further growth in a continuing large Photonics contract, and in products
addressing the minimisation of emissions in Gas Detection and supporting the
transition to new sources of energy in Environmental Monitoring. There was a
good contribution to reported revenue growth from acquisitions, notably
International Light Technologies and Deep Trekker.
Asia Pacific revenue growth continued to be very strong, at 19% on an organic
constant currency(1) basis. This was driven by substantial growth in the flow
and pressure control market within Environmental Monitoring in India, while
growth in China was supported by the fulfilment of outstanding orders in
Optical Analysis and demand for products supporting the energy transition in
Environmental Monitoring.
Organic constant currency(1) revenue declined by 4% in the UK. This reflected
the phasing of customer project spending, including as a result of the UK
water regulatory cycle, supply chain constraints within Water Analysis &
Treatment, and inspection volumes in the consumer market within Gas Detection.
Mainland Europe revenue was flat on an organic constant currency(1) basis, but
grew by 20% on a reported basis, which included a benefit from acquisitions,
principally Sensitron.
In the other regions, the sector's Gas Detection companies continued to
benefit from a recovery in the oil and gas sector, which drove strong organic
growth in Africa, Near & Middle East.
Profit(2) increased by 23% to £65.4m (2021/22: £53.1m). Organic constant
currency(1) profit growth was 8% and there was a 6% contribution from
acquisitions and a positive effect of 10% from currency translation. Return on
Sales(1) was 24.8%, compared to 25.4% in the prior period which had benefited
from overheads lagging sales growth as companies scaled up post-COVID. Gross
margin improved slightly driven by business mix. R&D expenditure of
£13.6m was maintained at a good level at 5.2% of sales (2021/22: 4.9%).
Healthcare(3) sector
Revenue increased by 23% to £256.7m (2021/22: £208.0m). Organic constant
currency(1) revenue growth was 9%, with a 2% contribution from acquisitions,
and a positive contribution of 12% from currency translation.
There was revenue growth in all subsectors and all geographies, although
revenue growth was slower in Asia Pacific than in other regions as a result of
lockdown restrictions in China. Growth across the sector was supported by a
very strong order book, reflecting generally improved customer buying
patterns, high patient caseload levels and order backlogs and customer advance
ordering due to supply chain disruptions.
All subsectors grew revenue on an organic constant currency(1) basis.
Healthcare Assessment & Analytics saw the strongest growth, supported by
demand in vital signs monitoring, clinical ophthalmology and communication and
software systems for healthcare facilities. High patient caseload levels in
eye surgery also drove good growth in Therapeutic Solutions, while the smaller
Life Sciences subsector also grew well, despite a decline in China as a result
of lockdown restrictions.
The USA, the sector's largest region, grew revenue by 28%, or 10% on an
organic constant currency(1) basis driven by growth in Healthcare Assessment
& Analytics, and, to a lesser extent, Life Sciences. On a reported basis,
USA revenue also benefited from recent acquisitions, including Infinite Leap
Inc., and the positive effect of currency translation.
In the other regions, Mainland Europe revenue grew by 17% on an organic
constant currency(1) basis, following growth of 17% in the comparable period
last year, given strong growth in products for eye surgery within Therapeutic
Solutions. The UK also grew strongly, by 17% on an organic constant
currency(1) basis, driven by demand for SSG's integrated communication systems
and software solutions for care facilities. While Asia Pacific grew revenue on
a reported basis, on an organic constant currency(1) basis revenue declined by
7% as a result of lockdown restrictions in China, although there was an
improving performance trend during the course of the half year.
Profit(2) increased by 22% to £56.4m (2021/22: £46.3m), and by 9% on an
organic constant currency(1) basis. Return on Sales(1) decreased to 22.0%
(2021/22: 22.3%), principally reflecting a modestly lower gross margin as a
result of increased material costs and product mix. R&D spend
was £16.3m, representing 6.3% of revenue (2021/22: 6.2%) and included
substantial new product development and investment by recently acquired
companies.
Three acquisitions completed this financial year across all three sectors
We have completed three acquisitions in the year to date, for a maximum total
consideration of approximately £238m on a cash- and debt-free basis. These
have further expanded our capabilities and opportunities to supplement our
organic growth. Two of these acquisitions were made in the first half, and a
further acquisition has been made since the period end. The acquisitions were
spread across all three sectors and will be standalone companies within their
sectors. Two of the companies acquired were based in North America and one in
Mainland Europe.
We have a promising pipeline of potential acquisitions across all three
sectors, and continue to see good opportunities to acquire small- to
medium-sized businesses which are strongly aligned to our purpose of growing a
safer, cleaner, healthier future for everyone, every day.
In April 2022, our Environmental & Analysis sector acquired the Canadian
company Deep Trekker, a market-leading manufacturer of remotely operated
underwater robots used for inspection, surveying, analysis and maintenance. It
serves markets including aquaculture, renewable energy and ocean science and
research, and was acquired for a consideration of C$60m (£36.6m) on a cash-
and debt-free basis.
At the end of September 2022, our Healthcare sector acquired IZI Medical
Products, LLC (IZI), a USA-based designer, manufacturer and distributor of
medical consumable devices which are mainly used by interventional
radiologists and surgeons in a range of acute, hospital-based diagnostic and
therapeutic procedures. It was acquired for an initial consideration of
US$153.5m (£137.9m) on a cash- and debt-free basis. When adjusted for tax
benefits with a net present value of approximately US$11m (£9.9m), the net
initial consideration was approximately US$142.5m (£128.0m). An additional
consideration of up to US$14.5m (£13.0m) is payable in cash, based on IZI's
growth in the year to 31 March 2023.
In October 2022, our Safety sector acquired WEETECH Holding GmbH, a German
designer and manufacturer of safety-critical electrical testing technology
used to test the integrity of both high and low voltage electrical systems.
The consideration was €57.5m (approximately £50m) 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 equity ownership. In June 2022, we made an
investment in VAPAR, whose AI technology enables faster and more accurate
condition assessment of wastewater infrastructure.
Further progress on sustainability
We create sustainable value for our stakeholders through our Sustainable
Growth Model, and we support our companies in developing growth opportunities
from innovative solutions that address their customers' global sustainability
challenges.
Our companies already have a substantial positive impact through their
existing solutions. These are diverse and span a number of areas linked to our
long-term growth drivers. They include products and services which preserve
life-critical resources and improve water and air quality, enhance efficiency
by minimising the use of resources in industrial and commercial environments,
and improve patient outcomes as demand for healthcare grows. Recent
innovations include BEA's online "Thermotool" which enables their customers to
simulate how BEA's door sensing solutions can improve the energy efficiency of
industrial doors, and Volk's telemedicine offering with the "VistaView"
portable retinal camera and their partnering with NGOs to address the shortage
of eye doctors in countries such as Honduras.
We also amplify the positive impact of our purpose-aligned growth by reducing
the impact of our companies' operations and value chains. The majority of our
companies have now created their own bottom-up plans to contribute to the
Group's sustainability goals and ambitions on climate change, circular economy
and diversity, equity and inclusion. We are also driving our sustainability
progress with a refreshed focus on sustainability-related growth, driven by
innovation as a key lever (and with digital providing a connected opportunity)
for delivering this growth.
We continued to see good progress during the first half towards delivering
these plans, which included achieving a more balanced gender representation in
our companies' leadership teams. 28% of all Halma company boards are women (as
at 30 September 2022), which is up from 22% in 2021, a steady improvement
towards our target of 40%-60% by end of March 2024. At the Group level, we're
also making strides, having appointed four female sector leaders this year:
two Sector Chief Financial Officers and two Divisional Chief Executives.
At the Group level, in addition to our existing commitment to greenhouse gas
emissions reduction targets for Scope 1 & 2 emissions, we have also
continued to work towards better estimating and understanding our Scope 3
baselines.
Cash flow and funding
Cash conversion (adjusted operating cash flow as a percentage of adjusted
operating profit - see note 9) in the first half of the year was 63%(2021/22:
85%), which was below our annualised cash conversion KPI of 90%. This was
principally because of an increase in working capital of £70.2m (2021/22:
increase of £25.5m), driven by further strategic investment in inventory to
maintain supply chain resilience and support growth. Underlying working
capital controls were strong, with trade debtor days stable compared to prior
periods and trade creditor days within normal operating ranges.
Dividend payments increased to £43.6m (2021/22: £40.8m), and tax payments
were also higher at £31.2m, compared to £27.6m in the first half of 2021/22,
in line with expectations.
Expenditure on acquisitions, which includes acquisition costs and contingent
consideration for acquisitions made in prior years, totalled
£179.7m (2021/22: £58.0m).
Capital expenditure (net of disposal proceeds) increased to £15.6m, compared
to £14.2m in the first half of 2021/22. We continue to expect capital
expenditure for the full year to be around £34m.
Net debt at the end of the period was £499.6m (31 March 2022: £274.8m).
Gearing (the ratio of net debt to annualised EBITDA) at half year end was 1.2
times (31 March 2022: 0.7 times), which is well within our typical operating
range of up to two times.
As reported in our Annual Report and Accounts 2022, 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. Together, these will give us
additional funding capacity of £260m once the January 2023 tranche of our
existing Private Placement has matured.
Currency effects on reported revenue and profit
We report our results in Sterling with 50% of Group revenue denominated in US
Dollars and 11% in Euros during the period. Average exchange rates are used to
translate results in the Income Statement. Sterling weakened against the US
Dollar and the Euro during the first half of 2022/23. This resulted in a 8%
positive currency translation effect on Group revenue and 9% on profit in the
first half of 2022/23 relative to 2021/22. If exchange rates remain at current
levels, we expect a further positive currency translation effect in the second
half of 2022/23.
Pensions update
On an IAS 19 basis, the Group's defined benefit plans at the half year end had
a surplus of £43.2m (31 March 2022: surplus of £30.5m) before the related
deferred tax asset. The plans' liabilities decreased due to a substantial
increase in the discount rate used to value those liabilities, while there was
a smaller decrease in the plans' assets due to market volatility. Together,
these movements resulted in an overall increase in the plans' surplus. The
plans' actuarial valuation reviews, rather than the accounting basis,
determine any cash payments by the Group to eliminate the deficit. We expect
the aggregate cash contributions in this regard for the two UK defined benefit
plans in the 2022/23 financial year to be consistent with our previous
guidance of £14.6m (excludes a £1.3m contribution related to the disposal of
Texecom).
Group tax rate in line with prior year
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(1) Profit was 21.5% (six months to
30 September 2021: 21.8%; year to 31 March 2022: 21.6%).
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 in August 2022 the UK
Government and the taxpayer have appealed 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, and given the appeal process is expected to take more
than a year, we continue to recognise a receivable of £14.7m within
non-current assets in the balance sheet.
Chief Financial Officer appointment and Group Chief Executive transition
update
We were pleased to announce last week the appointment of Steve Gunning as
Chief Financial Officer (CFO). Steve will join Halma on 16 January 2023 and
will be appointed to Halma's Board at that time. He will succeed Marc
Ronchetti who, as previously announced, will become Group Chief Executive
(CEO) in April 2023, as Andrew Williams retires from that role.
Steve is a highly experienced FTSE 100 CFO. He was most recently CFO of
International Airlines Group, the Anglo-Spanish airlines group that was formed
through the merger of British Airways (BA) and Iberia and prior to that held
several senior commercial and finances roles in that group.
His appointment will enable a seamless transition of the CFO and CEO roles and
ensure that Halma is well positioned to deliver continued success.
Principal risks and uncertainties
A number of potential risks and uncertainties exist, which could have a
material impact on the Group's performance over the second half of the
financial year and thereby cause actual results to differ materially from
expected and historical results.
The Group has processes in place for identifying, evaluating and managing
risk. As part of these processes, we are closely monitoring and assessing the
effects on revenue, costs and working capital from higher inflation and the
currently elevated levels of disruption in supply chains and labour markets.
We expect that our companies' agility, and the support they receive from
across the Group to share best practice in addressing these challenges, will
continue to mitigate any potential material effects.
Our principal risks, together with a description of our approach to mitigating
them, are set out on pages 98 to 101 of the Annual Report and Accounts 2022,
which is available on the Group's website at www.halma.com. See note 17 to the
Condensed Interim Financial Statements for further details.
Going concern
After conducting a review of the Group's business activities, financial
position and main trends and factors likely to affect its future development,
performance and position, and considering potential scenarios and principal
risks, the Directors 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. For this reason they deem it
appropriate to continue to adopt the going concern basis of accounting for at
least the next 12-month period. Further information is available in the
statement headed "Going concern" in the Condensed Interim Financial
Statements.
Summary and Outlook
Halma made further good progress in the first half. We delivered record
revenue, Adjusted(1) Profit and interim dividend, with growth in all sectors
and regions. We maintained a strong balance sheet, while further enhancing our
growth opportunities through increased strategic investment to support future
growth, both organically and through acquisitions.
We saw strong demand for our companies' products and services in the period.
Our order book is exceptionally strong, having grown from the record level
seen at the start of the year. Order intake remained ahead of both revenue and
the very strong order intake in the comparable period last year.
Our Sustainable Growth Model continues to enable our success in varied market
conditions, demonstrating the value of the diversity and global reach of our
portfolio, our strong purpose and culture and our agile business model. The
operational environment presents both challenges and opportunities; we remain
on track to make further progress in the second half of the year, and deliver
another good full year performance.
Andrew Williams
Marc Ronchetti
Group Chief Executive Group Chief
Executive Designate and Chief Financial Officer
( 1) See Highlights, above.
( 2) See note 2 to the Condensed Interim Financial Statements. Profit is
Adjusted(1) operating profit before central administration costs after share
of associate.
(3) From 16 June 2022, the Medical sector was renamed Healthcare.
Independent review report to Halma plc
Report on the Condensed Consolidated Interim Financial Statements
Our conclusion
We have reviewed Halma plc's condensed consolidated interim financial
statements (the "interim financial statements") in the Half Year Report of
Halma plc for the 6 month period ended 30 September 2022 (the "period").
Based on our review, nothing has come to our attention that causes us to
believe that the interim financial statements are not prepared, in all
material respects, in accordance with UK adopted International Accounting
Standard 34, 'Interim Financial Reporting' and the Disclosure Guidance and
Transparency Rules sourcebook of the United Kingdom's Financial Conduct
Authority.
The interim financial statements comprise:
- the Consolidated Balance Sheet as at 30 September 2022;
- the Consolidated Income Statement and the Consolidated Statement of
Comprehensive Income and Expenditure for the period then ended;
- the Consolidated Cash Flow Statement for the period then ended;
- the Consolidated Statement of Changes in Equity for the period then
ended; and
- the explanatory notes to the interim financial statements.
The interim financial statements included in the Half Year Report of Halma plc
have been prepared in accordance with UK adopted International Accounting
Standard 34, 'Interim Financial Reporting' and the Disclosure Guidance and
Transparency Rules sourcebook of the United Kingdom's Financial Conduct
Authority.
Basis for conclusion
We conducted our review in accordance with International Standard on Review
Engagements (UK) 2410, 'Review of Interim Financial Information Performed by
the Independent Auditor of the Entity' issued by the Financial Reporting
Council for use in the United Kingdom. A review of interim financial
information consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other review
procedures.
A review is substantially less in scope than an audit conducted in accordance
with International Standards on Auditing (UK) and, consequently, does not
enable us to obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do not express
an audit opinion.
We have read the other information contained in the Half Year Report and
considered whether it contains any apparent misstatements or material
inconsistencies with the information in the interim financial statements.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis for conclusion section of this report,
nothing has come to our attention to suggest that the directors have
inappropriately adopted the going concern basis of accounting or that the
directors have identified material uncertainties relating to going concern
that are not appropriately disclosed. This conclusion is based on the review
procedures performed in accordance with this ISRE. However, future events or
conditions may cause the group to cease to continue as a going concern.
Responsibilities for the interim financial statements and the review
Our responsibilities and those of the directors
The Half Year Report, including the interim financial statements, is the
responsibility of, and has been approved by the directors. The directors are
responsible for preparing the Half Year Report in accordance with the
Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's
Financial Conduct Authority. In preparing the Half Year Report, including the
interim financial statements, the directors are responsible for assessing the
group's ability to continue as a going concern, disclosing, as applicable,
matters related to going concern and using the going concern basis of
accounting unless the directors either intend to liquidate the group or to
cease operations, or have no realistic alternative but to do so.
Our responsibility is to express a conclusion on the interim financial
statements in the Half Year Report based on our review. Our conclusion,
including our Conclusions relating to going concern, is based on procedures
that are less extensive than audit procedures, as described in the Basis for
conclusion paragraph of this report. This report, including the conclusion,
has been prepared for and only for the company for the purpose of complying
with the Disclosure Guidance and Transparency Rules sourcebook of the United
Kingdom's Financial Conduct Authority and for no other purpose. We do not, in
giving this conclusion, accept or assume responsibility for any other purpose
or to any other person to whom this report is shown or into whose hands it may
come save where expressly agreed by our prior consent in writing.
PricewaterhouseCoopers LLP
Chartered Accountants
London
17 November 2022
Condensed Interim Financial Statements
Consolidated Income Statement
Unaudited Unaudited Audited
year to
six months to six months to
31 March 2022
30 September 2022
30 September 2021
Notes Before Adjustments* Total Before Adjustments* Total Total
£m
£m
£m
adjustments* (note 2) adjustments* (note 2)
£m
£m
£m £m
Continuing operations
Revenue 2 875.5 - 875.5 737.2 - 737.2 1,525.3
Operating profit 177.9 (26.2) 151.7 159.0 (21.4) 137.6 278.9
Share of results of associates - - - (0.1) - (0.1) (0.1)
Gain on disposal of operations 11 - - - - 34.0 34.0 34.0
Finance income 3 0.8 - 0.8 0.6 - 0.6 0.6
Finance expense 4 (7.0) - (7.0) (4.6) - (4.6) (9.0)
Profit before taxation 171.7 (26.2) 145.5 154.9 12.6 167.5 304.4
Taxation 5 (36.9) 6.2 (30.7) (33.8) 2.0 (31.8) (60.2)
Profit for the period 134.8 (20.0) 114.8 121.1 14.6 135.7 244.2
Attributable to:
Owners of the parent 115.0 135.8 244.4
Non-controlling interests (0.2) (0.1) (0.2)
Earnings per share from continuing operations 6
Basic 35.65p 30.39p 31.96p 35.83p 64.54p
Diluted 30.35p 35.77p 64.42p
Dividends in respect of the period 7
Dividends paid and proposed (£m) 29.7 27.9 71.5
Per share 7.86p 7.35p 18.88p
* Adjustments include the amortisation and impairment of acquired
intangible assets; acquisition items; significant restructuring costs; profit
or loss on disposal of operations; and the associated taxation thereon. Note 9
provides more information on alternative performance measures.
Consolidated Statement of Comprehensive Income
and Expenditure
Unaudited Unaudited Audited
six months to
six months to
year to
30 September
30 September
31 March
2022
2021
2022
£m
£m
£m
Profit for the period 114.8 135.7 244.2
Items that will not be reclassified subsequently to the Income Statement:
Actuarial gains on defined benefit pension plans 3.6 10.4 41.6
Tax relating to components of other comprehensive income that will not be (1.4) (1.0) (9.6)
reclassified
Changes in the fair value of equity instruments at fair value through other 9.3 - (1.7)
comprehensive income
Items that may be reclassified subsequently to the Income Statement:
Effective portion of changes in fair value of cash flow hedges (1.7) (0.8) (1.5)
Deferred tax in respect of cash flow hedges accounted for in the hedging 0.3 0.2 0.4
reserve
Exchange gains on translation of foreign operations and net investment hedge 162.1 18.5 43.9
Other comprehensive income for the period 172.2 27.3 73.1
Total comprehensive income for the period 287.0 163.0 317.3
Attributable to:
Owners of the parent 287.2 163.1 317.5
Non-controlling interests (0.2) (0.1) (0.2)
The exchange gains of £162.1m (six months to 30 September 2021: £18.5m gain;
year to 31 March 2022: £43.9m gain) include losses of £28.8m (six months to
30 September 2021: £3.6m losses; year to 31 March 2022: £8.6m losses), which
relate to net investment hedges.
Consolidated Balance Sheet
Notes Unaudited Unaudited Audited
30 September
30 September
31 March
2022
2021
2022
£m
£m
£m
Non-current assets
Goodwill 1,101.8 867.4 908.7
Other intangible assets 418.6 319.3 325.2
Property, plant and equipment 224.5 186.7 194.0
Interests in associates and other investments 19.8 9.9 8.2
Retirement benefit asset 13 43.9 4.8 31.1
Tax receivable 14 14.7 14.7 14.7
Deferred tax asset 2.8 1.9 2.4
1,826.1 1,404.7 1,484.3
Current assets
Inventories 308.8 193.2 228.8
Trade and other receivables 389.9 279.2 325.1
Tax receivable 1.9 4.4 0.7
Cash and bank balances 213.4 131.1 157.4
Derivative financial instruments 12 1.2 0.6 0.7
915.2 608.5 712.7
Total assets 2,741.3 2,013.2 2,197.0
Current liabilities
Trade and other payables 256.4 206.1 242.7
Borrowings 78.8 3.0 72.5
Lease liabilities 19.4 14.2 15.5
Provisions 26.5 22.0 20.7
Tax liabilities 15.8 13.8 11.6
Derivative financial instruments 12 3.4 0.2 0.9
400.3 259.3 363.9
Net current assets 514.9 349.2 348.8
Non-current liabilities
Borrowings 545.6 340.7 287.6
Lease liabilities 69.2 53.4 56.6
Retirement benefit obligations 13 0.7 10.1 0.6
Trade and other payables 21.4 15.2 19.0
Provisions 7.9 6.3 7.7
Deferred tax liabilities 69.2 51.1 58.5
714.0 476.8 430.0
Total liabilities 1,114.3 736.1 793.9
Net assets 1,627.0 1,277.1 1,403.1
Equity
Share capital 38.0 38.0 38.0
Share premium account 23.6 23.6 23.6
Own shares (46.3) (22.0) (30.7)
Capital redemption reserve 0.2 0.2 0.2
Hedging reserve (1.8) 0.1 (0.4)
Translation reserve 279.2 91.7 117.1
Other reserves (14.5) (26.4) (19.9)
Retained earnings 1,348.4 1,171.4 1,274.8
Equity attributable to owners of the Company 1,626.8 1,276.6 1,402.7
Non-controlling interests 0.2 0.5 0.4
Total equity 1,627.0 1,277.1 1,403.1
Consolidated Statement of Changes in Equity
For the six months to 30 September 2022
Share Share Own Capital Hedging Translation Other Retained Non-controlling interest Total
capital
premium
shares
redemption
reserve
reserve
reserves
earnings
£m
£m
£m
account
£m
reserve
£m
£m
£m
£m
£m
£m
At 1 April 2022 (audited) 38.0 23.6 (30.7) 0.2 (0.4) 117.1 (19.9) 1,274.8 0.4 1,403.1
Profit for the period - - - - - - - 115.0 (0.2) 114.8
Other comprehensive income and expense - - - - (1.4) 162.1 9.3 2.2 - 172.2
Total comprehensive income/(expense) - - - - (1.4) 162.1 9.3 117.2 (0.2) 287.0
Dividends paid - - - - - - - (43.6) - (43.6)
Share-based payments charge - - - - - - 7.8 - - 7.8
Deferred tax on share-based payment transactions - - - - - - (0.8) - - (0.8)
Purchase of own shares - - (22.3) - - - - - - (22.3)
Performance share plan awards vested - - 6.7 - - - (10.9) - - (4.2)
At 30 September 2022 (unaudited) 38.0 23.6 (46.3) 0.2 (1.8) 279.2 (14.5) 1,348.4 0.2 1,627.0
Own shares are ordinary shares in Halma plc purchased by the Company and held
to fulfil the Company's obligations under the Company's share plans. As at 30
September 2022, the number of shares held by the Employee Benefit Trust was
1,913,290 (30 September 2021: 870,370 and 31 March 2022: 1,175,080).
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 and fair value adjustments on
equity instruments held at fair value through other comprehensive income.
For the six months to 30 September 2021
Share Capital Non-
premium
redemption
Share
account Own
reserve Hedging Translation Other Retained controlling interest
capital
£m
shares
£m
reserve
reserve
reserves
earnings
£m
£m
£m
£m
£m
£m
£m Total
£m
At 1 April 2021 (audited) 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 period - - - - - - - 135.8 (0.1) 135.7
Other comprehensive income and expense - - - - (0.6) 18.5 - 9.4 - 27.3
Total comprehensive income/(expense) - - - - (0.6) 18.5 - 145.2 (0.1) 163.0
Dividends paid - - - - - - - (40.8) - (40.8)
Share-based payments charge - - - - - - 4.0 - - 4.0
Deferred tax on share-based - - - - - - (0.5) - - (0.5)
payment transactions
Excess tax deductions related to share-based payments on exercised awards - - - - - - - 1.2 - 1.2
Purchase of own shares - - (10.4) - - - - - - (10.4)
Performance share plan awards vested - - 9.3 - - - (16.3) - - (7.0)
At 30 September 2021 (unaudited) 38.0 23.6 (22.0) 0.2 0.1 91.7 (26.4) 1,171.4 0.5 1,277.1
For the year to 31 March 2022
Share Capital Non-
premium
redemption
Share
account Own
reserve Hedging Translation Other Retained controlling
capital
£m
shares
£m
reserve
reserve
reserves
earnings
£m
£m
£m
£m
£m
£m interest Total
£m
£m
At 1 April 2021 (audited) 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/(expense)
- - - - (1.1) 43.9 (1.7) 276.4 (0.2) 317.3
Dividends paid - - - - - - - (68.7) - (68.7)
Share-based payments 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 (audited) 38.0 23.6 (30.7) 0.2 (0.4) 117.1 (19.9) 1,274.8 0.4 1,403.1
Consolidated Cash Flow Statement
Notes Unaudited Unaudited Audited
six months to
six months to
year to
30 September
30 September
31 March
2022
2021
2022
£m
£m
£m
Net cash inflow from operating activities 8 95.1 112.0 237.4
Cash flows from investing activities
Purchase of property, plant and equipment (16.2) (13.7) (25.2)
Purchase of computer software (0.4) (0.5) (0.9)
Purchase of other intangibles (0.1) (0.4) (0.5)
Proceeds from sale of property, plant and equipment and capitalised 1.1 0.4 1.1
development costs
Development costs capitalised (7.1) (6.8) (13.4)
Interest received 0.2 0.2 0.2
Acquisition of businesses, net of cash acquired 10 (174.9) (105.0) (152.8)
Disposal of business, net of cash disposed - 57.5 57.5
Investment in associates and other equity investments (2.2) (0.7) (0.7)
Net cash used in investing activities (199.6) (69.0) (134.7)
Cash flows from financing activities
Dividends paid 7 (43.6) (40.8) (68.7)
Purchase of own shares (22.3) (10.4) (19.3)
Interest paid (6.4) (3.9) (8.2)
Loan arrangement fees (4.1) - -
Proceeds from bank borrowings 258.8 100.0 161.4
Repayments of bank borrowings (361.9) (85.2) (132.5)
Drawdown of loan notes 338.1 - -
Repayment of lease liabilities, net of interest (8.9) (7.0) (14.6)
Net cash from/(used in) financing activities 149.7 (47.3) (81.9)
Increase/(decrease) in cash and cash equivalents 45.2 (4.3) 20.8
Cash and cash equivalents brought forward 156.7 131.1 131.1
Exchange adjustments 9.7 1.3 4.8
Cash and cash equivalents carried forward 211.6 128.1 156.7
Unaudited Unaudited Audited
six months to
six months to
year to
30 September
30 September
31 March
2022
2021
2022
£m
£m
£m
Reconciliation of net cash flow to movement in net debt
Increase/(decrease) in cash and cash equivalents 45.2 (4.3) 20.8
Net cash inflow from drawdown of bank borrowings (235.0) (14.8) (28.9)
Lease liabilities additions (15.2) (7.9) (19.0)
Lease liabilities acquired (3.0) (3.8) (4.6)
Lease liabilities disposed of - 2.1 2.1
Lease liabilities and interest repaid 10.2 8.1 16.8
Exchange adjustments (27.0) (3.4) (5.8)
Increase in net debt (224.8) (24.0) (18.6)
Net debt brought forward (274.8) (256.2) (256.2)
Net debt carried forward (499.6) (280.2) (274.8)
Notes to the Condensed Interim Financial Statements
1 Basis of preparation
General information
The Half Year Report, which includes the Interim Management Report and
Condensed Interim Financial Statements for the six months to 30 September
2022, was approved by the Directors on 17 November 2022.
Basis of preparation
The Report has been prepared solely to provide additional information to
shareholders as a body to assess the Board's strategies and the potential for
those strategies to succeed. It should not be relied on by any other party or
for any other purpose.
The Report 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 Report. 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.
The Report has been prepared in accordance with UK adopted International
Accounting Standard 34, 'Interim Financial Reporting' and the Disclosure
Guidance and Transparency Rules sourcebook of the UK's Financial Conduct
Authority. The Report should be read in conjunction with the annual
consolidated financial statements for the year ended 31 March 2022 which were
prepared in accordance with UK-adopted international accounting standards and
with the requirements of the Companies Act 2006. The same accounting policies
and presentation that were applied in the preparation of the Group's statutory
accounts for the year to 31 March 2022 have also been applied to the interim
consolidated financial statements with the exception of the policy for taxes
on income, which in the interim period is accrued using the estimated
effective tax rates for the year on profits before taxation before
adjustments, with the tax rates applied to the adjustments being established
on an individual basis for each adjustment.
The figures shown for the year to 31 March 2022 are based on the Group's
statutory accounts for that period and do not constitute the Group's statutory
accounts for that period as defined in Section 434 of the Companies Act 2006.
These statutory accounts, which were prepared in accordance with international
accounting standards in conformity with the requirements of the Companies Act
2006, have been filed with the Registrar of Companies. The audit report on
those accounts was not qualified, did not include a reference to any matters
to which the Auditor drew attention by way of emphasis without qualifying the
report, and did not contain statements under Sections 498 (2) or (3) of the
Companies Act 2006.
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 30 September 2022, its cash flows,
liquidity position and borrowing facilities are set out below and on pages 2
to 7 of the Half Year Report.
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
in note 17. 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 totalling
approximately £1,013.4m which includes a £550m Revolving Credit Facility of
which £390.5m remained undrawn at 30 September 2022. The earliest maturity in
these facilities is for £76.0m in January 2023. 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 and reflects the current inflationary environment and supply
chain constraints being experienced. In addition, a severe but plausible
downside scenario has been modelled showing a decline in trading for the next
12 months to below levels seen for the preceding 12-month period, a reduction
in gross margin percentage and increasing overheads. The reduction in trading
could be caused by unexpected market conditions, such as further significant
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 reducing acquisition spend and
dividend growth rates. In addition, the Group has demonstrated strong
resilience and flexibility during the COVID-19 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.
New accounting standards and policies
The following standards, with an effective date of 1 January 2022, have been
adopted without any significant impact on the amounts reported in these
financial statements:
- 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.
The Group has not early adopted any standard, interpretation or amendment that
was issued but is not yet effective. The Group is assessing any potential
implication, but currently do not expect a material impact on the Group.
2 Segmental analysis and revenue from contracts with customers
Sector analysis
The Group has three main reportable segments (Safety, Environmental &
Analysis and Healthcare), 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 Chief Executive. From 16 June 2022, the Group renamed the
Medical segment Healthcare.
Segment revenue disaggregation (by location of external customer)
Unaudited six months to 30 September 2022
Revenue by sector and destination (all continuing operations)
United States of America Mainland Europe United Kingdom Asia Pacific Africa, Other Total
£m
£m
£m
£m
Near and Middle East
countries
£m
£m
£m
Safety 99.1 98.9 75.6 54.8 14.9 12.1 355.4
Environmental & Analysis 131.3 29.7 37.9 50.8 7.0 7.1 263.8
Healthcare 134.1 41.9 23.8 36.5 7.3 13.1 256.7
Inter-segmental sales (0.3) - (0.1) - - - (0.4)
Revenue for the period 364.2 170.5 137.2 142.1 29.2 32.3 875.5
Unaudited six months to 30 September 2021
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 77.7 89.7 77.5 51.9 15.1 8.3 320.2
Environmental & Analysis 99.0 24.7 38.9 37.3 5.2 4.4 209.5
Healthcare 104.7 32.2 19.8 35.6 5.7 10.0 208.0
Inter-segmental sales (0.5) - - - - - (0.5)
Revenue for the period 280.9 146.6 136.2 124.8 26.0 22.7 737.2
Audited year end 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
Healthcare 224.3 71.4 42.4 70.6 11.9 21.7 442.3
Inter-segmental sales (1.3) - - - - - (1.3)
Revenue for the period 597.2 308.1 267.0 250.8 53.6 48.6 1,525.3
Inter-segmental sales are charged at prevailing market prices and have not
been disclosed separately by segment as they are not considered material. The
Group does not analyse revenue by product group. Revenue derived from the
rendering of services was £41.4m (six months to 30 September 2021: £28.8m;
year to 31 March 2022: £69.9m). All revenue was otherwise derived from the
sale of products.
The majority of the Group's revenue is recognised when control passes at a
point in time.
Segment results
Profit (all continuing operations)
Unaudited Unaudited Audited
six months to
six months to
year to
30 September
30 September
31 March
2022
2022
2021
£m
£m
£m
Segment profit before allocation of adjustments*
Safety 75.4 73.5 146.2
Environmental & Analysis 65.4 53.1 109.8
Healthcare 56.4 46.3 99.5
197.2 172.9 355.5
Segment profit after allocation of adjustments*
Safety 67.1 99.1 163.5
Environmental & Analysis 58.4 46.6 96.9
Healthcare 45.5 39.8 83.3
Segment profit 171.0 185.5 343.7
Central administration costs (19.3) (14.0) (30.9)
Net finance expense (6.2) (4.0) (8.4)
Group profit before taxation 145.5 167.5 304.4
Taxation (30.7) (31.8) (60.2)
Profit for the period 114.8 135.7 244.2
* Adjustments include the amortisation and impairment of acquired
intangible assets; acquisition items; significant restructuring costs; and
profit or loss on disposal of operations. Note 9 provides more information on
alternative performance measures.
The accounting policies of the reportable segments are the same as the Group's
accounting policies. 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 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:
Unaudited six months to 30 September 2022
Amortisation Acquisition items
of acquired
intangibles
£m
Total
£m
Transaction Adjustments Release of Total Disposal of
costs
to contingent
fair value
amortisation
operations and restructuring
£m
consideration
adjustments
charge and
£m
£m
to inventory
acquisition
£m
items
£m
Safety (8.1) (0.2) - - (8.3) - (8.3)
Environmental & Analysis (6.2) (0.6) 0.2 (0.4) (7.0) - (7.0)
Healthcare (9.8) (1.9) 0.8 - (10.9) - (10.9)
Total Segment & Group (24.1) (2.7) 1.0 (0.4) (26.2) - (26.2)
The transaction costs arose mainly on the acquisitions during the period. In
Environmental & Analysis, they related to the acquisition of Deep Trekker
(£0.6m). In Healthcare, they mostly related to the acquisition of IZI Medical
Products (£1.8m), in the current year.
Adjustment to contingent consideration comprised of a credit of £0.2m in
Environmental & Analysis arising from a decrease in the estimate of the
payable for Orca. In Healthcare there was a credit of £0.8m arising from a
decrease in estimates of the payable for Infinite Leap (£0.6m) and a credit
arising from exchange differences on balances denominated in Euros (£0.6m),
partially offset by an increase in the estimate of the payable for Meditech
(£0.4m).
The £0.4m release of fair value adjustments to inventory related to Deep
Trekker (£0.3m) and ILT (£0.1m) in Environmental & Analysis. All amounts
have been released in relation to Deep Trekker and ILT.
Unaudited six months to 30 September 2021
Amortisation Acquisition items
of acquired
intangibles Total
£m
£m
Transaction Adjustments Release of Total Disposal of
costs
to contingent
fair value
amortisation
operations and restructuring (note 11)
£m
consideration
adjustments
charge and
£m
£m
to inventory
acquisition
£m
items
£m
Safety (7.3) (0.5) - (0.6) (8.4) 34.0 25.6
Environmental & Analysis (5.1) (0.7) 0.1 (0.8) (6.5) - (6.5)
Healthcare (8.4) (1.7) 3.8 (0.2) (6.5) - (6.5)
Total Segment & Group (20.8) (2.9) 3.9 (1.6) (21.4) 34.0 12.6
The transaction costs arose mainly on the acquisitions during the prior 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 (£0.2m), Orca (£0.1m) and Anton (£0.1m). In
Healthcare, they related to the acquisition of PeriGen (£1.3m), Meditech
(£0.1m) and RNK (£0.1m), in the prior year and the acquisition of
Visiometrics in a previous year (£0.2m).
The £3.9m 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 and a credit of £3.8m in Healthcare arising from
a decrease in estimates of the payables for NovaBone (£1.2m), NeoMedix
(£2.5m) and Spreo (£0.1m) partially offset by an increase in the estimate of
the payable for Infowave (£0.1m) and a credit of £0.1m arising from exchange
differences on balances denominated in Euros.
The £1.6m release of fair value adjustments to inventory related to Ramtech
(£0.6m) in Safety; Dancutter (£0.1m), Orca (£0.6m) and Sensitron (£0.1m)
in Environmental & Analysis; and Meditech (£0.2m) in Healthcare. All
amounts were released in relation to Dancutter and Orca.
Audited 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 11)
intangible £m to inventory acquisition £m
assets £m 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)
Healthcare (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 to
March 2022. 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 year and Deep Trekker (£0.5m) that was
acquired in April 2022. In Healthcare, 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 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 Healthcare 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
Healthcare. All amounts were released in relation to Dancutter, Ramtech, Orca
and Sensitron.
3 Finance income
Unaudited Unaudited Audited
six months to
six months to
year to
30 September
30 September
31 March
2022
2021
2022
£m
£m
£m
Interest receivable 0.3 0.2 0.2
Net interest on the net defined benefit asset 0.5 - -
Fair value movement on derivative financial instruments - 0.4 0.4
0.8 0.6 0.6
4 Finance expense
Unaudited Unaudited Audited
six months to
six months to
year to
30 September
30 September
31 March
2022
2021
2022
£m
£m
£m
Interest payable on loans and overdrafts 5.1 2.7 5.6
Interest payable on lease obligations 1.3 1.1 2.3
Amortisation of finance costs 0.3 0.3 0.7
Net interest on the net defined benefit liability - 0.2 0.3
Other interest payable - 0.1 0.1
6.7 4.4 9.0
Fair value movement on derivative financial instruments 0.3 0.2 -
7.0 4.6 9.0
5 Taxation
The total Group tax charge for the six months to 30 September 2022 of £30.7m
(six months to 30 September 2021: £31.8m; year to 31 March 2022: £60.2m)
comprises a current tax charge of £34.4m (six months to 30 September 2021:
£33.1m; year to 31 March 2022: £63.2m) and a deferred tax credit of £3.7m
(six months to 30 September 2021: deferred tax credit £1.3m; year to 31 March
2022: deferred tax credit £3.0m). The tax charge is based on the estimated
effective tax rates for the year, for profit before taxation before
adjustments. The tax rates applied to the adjustments are established on an
individual basis for each adjustment.
The tax charge includes £24.6m (six months to 30 September 2021: £21.4m;
year to 31 March 2022: £46.0m) in respect of overseas tax.
On 20 July 2022, the UK Government issued draft legislation applicable to
large multinational groups in relation to a new tax framework, which
introduces a global minimum effective tax rate of 15% effective for accounting
periods beginning on or after 31 December 2023. The Group is reviewing these
draft rules to understand the potential impacts on the Group.
6 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 prior 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
Unaudited Unaudited Audited
six months to
six months to
year to
30 September
30 September
31 March
2022
2021
2022
£m
£m
£m
Earnings from continuing operations attributable to owners of the parent 115.0 135.8 244.4
Amortisation of acquired intangible assets (after tax) 18.3 16.9 33.1
Acquisition transaction costs (after tax) 2.4 2.7 3.8
Adjustments to contingent consideration (after tax) (1.1) (3.9) (4.5)
Release of fair value adjustments to inventory (after tax) 0.3 1.1 2.6
Disposal of operations and restructuring (after tax) - (34.0) (34.0)
Impact of UK rate change - 2.6 2.6
Adjusted earnings attributable to owners of the parent 134.9 121.2 248.0
Weighted average number of ordinary shares in issue for basic earnings
per share, million 378.2 379.1 378.7
Per ordinary share
Unaudited Unaudited Audited
Six months to
Six months to
year to
30 September
30 September
31 March
2022
2021
2022
pence
pence
pence
Earnings per share from continuing operations attributable to owners of the 30.39 35.83 64.54
parent
Amortisation of acquired intangible assets (after tax) 4.84 4.46 8.73
Acquisition transaction costs (after tax) 0.62 0.70 0.99
Adjustments to contingent consideration (after tax) (0.29) (1.03) (1.19)
Release of fair value adjustments to inventory (after tax) 0.09 0.30 0.70
Disposal of operations and restructuring (after tax) - (8.99) (8.98)
Impact of UK rate change - 0.69 0.69
Adjusted earnings per share attributable to owners of the parent 35.65 31.96 65.48
Diluted earnings per share
Unaudited Unaudited Audited
six months to
six months to
year to
30 September
30 September
31 March
2022
2021
2022
£m
£m
£m
Earnings from continuing operations attributable to owners of the parent 115.0 135.8 244.4
Weighted average number of ordinary shares in issue for basic earnings
per share, million 378.2 379.1 378.7
Dilutive potential ordinary shares - share awards, million 0.5 0.6 0.7
Weighted average number of ordinary shares in issue for diluted earnings
per share, million 378.7 379.7 379.4
Per ordinary share
Unaudited Unaudited Audited
six months to
six months to
year to
30 September
30 September
31 March
2022
2021
2022
pence
pence
pence
Earnings per share from continuing operations attributable to owners of the 30.35 35.77 64.42
parent
7 Dividends
Per ordinary share
Unaudited Unaudited Audited
six months to
six months to
year to
30 September
30 September
31 March
2022
2021
2022
pence
pence
pence
Amounts recognised as distributions and paid to shareholders in the period
Final dividend for the year to 31 March 2022 (31 March 2021) 11.53 10.78 10.78
Interim dividend for the year to 31 March 2022 - - 7.35
11.53 10.78 18.13
Dividends in respect of the period
Proposed interim dividend for the year to 31 March 2022 (31 March 2021) 7.86 7.35 7.35
Final dividend for the year to 31 March 2023 - - 11.53
7.86 7.35 18.88
Unaudited Unaudited Audited
six months to
six months to
year to
30 September
30 September
31 March
2022
2021
2022
£m
£m
£m
Amounts recognised as distributions and paid to shareholders in the period
Final dividend for the year to 31 March 2022 (31 March 2021) 43.6 40.8 40.8
Interim dividend for the year to 31 March 2023 - - 27.9
43.6 40.8 68.7
Dividends in respect of the period
Proposed interim dividend for the year to 31 March 2022 (31 March 2021) 29.7 27.8 27.9
Final dividend for the year to 31 March 2023 - - 43.6
29.7 27.8 71.5
8 Notes to the Consolidated Cash Flow Statement
Unaudited Unaudited Audited
six months to
six months to
year to
30 September
30 September
31 March
2022
2021
2022
£m
£m
£m
Reconciliation of profit from operations to net cash inflow from
operating activities
Profit on continuing operations before finance income and expense, share 151.7 137.6 278.9
of results of associates and profit or loss on disposal of operations
Depreciation of property, plant and equipment 21.5 18.1 36.1
Amortisation of computer software 1.2 1.2 2.5
Amortisation of capitalised development costs and other intangibles 4.8 4.7 7.6
Impairment of capitalised development costs - 1.7 2.9
Amortisation of acquired intangible assets 24.1 20.8 42.7
Share-based payment expense less amounts paid 4.2 (2.5) 5.0
Payments to defined benefit pension plans net of service costs (8.7) (7.0) (11.7)
(Profit)/loss on sale of property, plant and equipment and computer software (0.2) 0.1 0.8
Operating cash flows before movement in working capital 198.6 174.7 364.8
Increase in inventories (42.5) (22.1) (51.9)
Increase in receivables (19.9) (9.1) (43.6)
(Decrease)/increase in payables and provisions (7.4) 7.2 36.1
Revision to estimate and exchange difference on contingent consideration (2.5) (11.1) (12.0)
payable less amounts paid in excess of payable estimated on acquisition
Cash generated from operations 126.3 139.6 293.4
Taxation paid (31.2) (27.6) (56.0)
Net cash inflow from operating activities 95.1 112.0 237.4
Unaudited Unaudited Audited
30 September
30 September
31 March
2022
2021
2022
£m
£m
£m
Analysis of cash and cash equivalents
Cash and bank balances 213.4 131.1 157.4
Overdrafts (included in current borrowings) (1.8) (3.0) (0.7)
Cash and cash equivalents 211.6 128.1 156.7
At Net cash/(debt) acquired Lease liabilities additions At 30 September
31 March
2022
2022 £m £m Exchange
£m
£m
adjustments
Cash flow
£m
£m
Analysis of net debt
Cash and bank balances 157.4 42.3 4.0 - 9.7 213.4
Overdrafts (0.7) (1.1) - - - (1.8)
Cash and cash equivalents 156.7 41.2 4.0 - 9.7 211.6
Loan notes falling due within one year (71.2) (5.3) - - - (76.5)
Loan notes falling due after more than one year (35.0) (332.8) - - (19.1) (386.9)
Bank loans falling due within one year (0.6) 0.1 - - (0.5)
-
Bank loans falling due after more than one year (252.6) 103.0 - - (9.1) (158.7)
Lease liabilities (72.1) 10.2 (3.0) (15.2) (8.5) (88.6)
Total net debt (274.8) (183.6) 1.0 (15.2) (27.0) (499.6)
Overdrafts falling due within one year are included as current borrowings in
the Consolidated Balance Sheet. Loan notes and bank loans falling due after
more than one year are included as non-current borrowings.
9 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, Adjusted operating cash flow and Return
on Sales.
Note 2 provides further analysis of the adjusting items in reaching adjusted
profit measures.
Return on Total Invested Capital (ROTIC)
Unaudited Unaudited Audited
six months to
six months to
year to
30 September
30 September
31 March
2022
2021
2022
£m
£m
£m
Profit after tax 114.8 135.7 244.2
Adjustments(1) 20.0 (14.6) 3.7
Adjusted profit after tax(1) 134.8 121.1 247.9
Total equity 1,627.0 1,277.1 1,403.1
(Less)/add back net retirement benefit (assets)/obligations (43.2) 5.3 (30.5)
Deferred tax liabilities/(assets) on retirement benefits 11.0 (0.8) 7.7
Cumulative fair value adjustments for investments at fair value through other (7.7) - 1.7
comprehensive income
Cumulative amortisation of acquired intangible assets 415.5 316.8 345.7
Historical adjustments to goodwill(2) 89.5 89.5 89.5
Total Invested Capital 2,092.1 1,687.9 1,817.2
Average Total Invested Capital(3) 1,954.7 1,630.4 1,695.0
Return on Total Invested Capital (annualised)(4) 13.8% 14.9% 14.6%
Return on Capital Employed (ROCE)
Unaudited Unaudited Audited
six months to
six months to
year to
30 September
30 September
31 March
2022
2021
2022
£m
£m
£m
Profit before tax 145.5 167.5 304.4
Adjustments(1) 26.2 (12.6) 11.8
Net finance costs 6.2 4.0 8.4
Lease interest (1.3) (1.1) (2.3)
Adjusted operating profit(1) after share of results of associates 176.6 157.8 322.3
Computer software costs within intangible assets 3.4 5.3 4.2
Capitalised development costs within intangible assets 48.3 39.1 41.7
Other intangibles within intangible assets 3.8 3.6 3.6
Property, plant and equipment 224.5 186.7 194.0
Inventories 308.8 193.2 228.8
Trade and other receivables 389.9 279.2 325.1
Current trade and other payables (256.4) (206.1) (242.7)
Current lease liabilities (19.4) (14.2) (15.5)
Current provisions (26.5) (22.0) (20.7)
Net tax receivable 0.8 5.3 3.8
Non-current trade and other payables (21.4) (15.2) (19.0)
Non-current provisions (7.9) (6.3) (7.7)
Non-current lease liabilities (69.2) (53.4) (56.6)
Add back contingent purchase consideration provision 19.5 14.8 15.2
Capital Employed 598.2 410.0 454.2
Average Capital Employed(3) 526.1 399.8 421.9
Return on Capital Employed (annualised)(4) 67.1% 78.9% 76.4%
1 Adjustments include the amortisation of acquired intangible assets;
acquisition items; significant restructuring costs and profit or loss on
disposal of operations. Where after-tax measures, these also include the
associated taxation on adjusting 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 period's 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 2021 Total Invested Capital and Capital
Employed balances were £1,572.8m and £389.5m respectively.
4 The ROTIC and ROCE measures are calculated as annualised Adjusted profit
after tax divided by Average Total Invested Capital and annualised Adjusted
operating profit after share of results of associates divided by Average
Capital Employed respectively.
Organic growth and constant currency
Organic growth measures the change in revenue and profit from continuing Group
operations. The 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 resultant effect is that the acquisitions are removed from organic results
for one full year of ownership.
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 exchanges rates.
Organic growth at constant currency has been calculated as follows:
Revenue Adjusted profit* before taxation
Unaudited Unaudited % growth Unaudited Unaudited % growth
six months to
six months to
six months to
six months to
30 September
30 September
30 September
30 September
2022
2021
2022
2021
£m
£m
£m
£m
Continuing operations 875.5 737.2 18.8% 171.7 154.9 10.9%
Acquired and disposed revenue/profit (24.8) (14.9) (1.9) (2.0)
Organic growth 850.7 722.3 17.8% 169.8 152.9 11.1%
Constant currency adjustment (60.1) - (14.0) -
Organic growth at constant currency 790.6 722.3 9.5% 155.8 152.9 1.9%
* Adjustments include the amortisation of acquired intangible assets;
significant acquisition items; significant restructuring costs; and profit or
loss on disposal of operations.
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
Unaudited Unaudited % growth Unaudited Unaudited % growth
six months to
six months to
six months to
six months to
30 September
30 September
30 September
30 September
2022
2021
2022
2021
£m £m £m £m
Continuing operations 355.4 320.2 11.0% 75.4 73.5 2.6%
Acquisition, disposal and currency adjustments (19.2) (14.6) (3.4) (2.0)
Organic growth at constant currency 336.2 305.6 10.1% 72.0 71.5 0.8%
Environmental & Analysis
Revenue Adjusted* segment profit
Unaudited Unaudited % growth Unaudited Unaudited % growth
six months to
six months to
six months to
six months to
30 September
30 September
30 September
30 September
2022
2021
2022
2021
£m £m £m £m
Continuing operations 263.9 209.5 25.9% 65.4 53.1 23.1%
Acquisition and currency adjustments (36.3) (0.3) (2.9) -
Organic growth at constant currency 227.6 209.2 8.7% 62.5 53.1 7.6%
Healthcare
Revenue Adjusted* segment profit
Unaudited Unaudited % growth Unaudited Unaudited % growth
six months to
six months to
six months to
six months to
30 September
30 September
30 September
30 September
2022
2021
2022
2021
£m £m £m £m
Continuing operations 256.7 208.0 23.4% 56.4 46.3 21.9%
Acquisition and currency adjustments (29.4) - (5.8) -
Organic growth at constant currency 227.3 208.0 9.3% 50.6 46.3 9.3%
* Adjustments include the amortisation of acquired intangible assets;
acquisition items; significant restructuring costs; and profit or loss on
disposal of operations.
Adjusted operating profit
Unaudited Unaudited Audited
six months to
six months to
year to
30 September
30 September
31 March
2022
2021
2022
£m
£m
£m
Operating profit 151.7 137.6 278.9
Add back:
Acquisition items 2.1 0.6 3.1
Amortisation of acquired intangible assets 24.1 20.8 42.7
Adjusted operating profit 177.9 159.0 324.7
Adjusted operating cash flow
Unaudited Unaudited Audited
six months to
six months to
year to
30 September
30 September
31 March
2022
2021
2022
£m
£m
£m
Net cash from operating activities (note 8) 95.1 112.0 237.4
Add back:
Net acquisition costs paid 3.4 2.9 4.1
Taxes paid 31.2 27.6 56.0
Proceeds from sale of property, plant and equipment and capitalised 1.1 0.4 1.1
development costs
Share awards vested not settled by own shares* 4.2 7.0 7.1
Deferred consideration paid in excess of payable estimated on acquisition 1.4 7.2 7.5
Less:
Purchase of property, plant and equipment (16.2) (13.7) (25.2)
Purchase of computer software and other intangibles (0.5) (0.9) (1.4)
Development costs capitalised (7.1) (6.8) (13.4)
Adjusted operating cash flow 112.6 135.7 273.2
Cash conversion % (adjusted operating cash flow/adjusted operating profit) 63% 85% 84%
* See Consolidated Statement of Changes in Equity.
Return on Sales
Group Return on Sales is defined as Adjusted Profit before Taxation as a
percentage of revenue. For the sectors, Return on Sales is defined as Adjusted
segment profit as a percentage of segment revenue. Adjusted Profit before
Taxation and Adjusted segment profit is as defined in note 2.
10 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 six months ended 30 September 2022, the Group made two acquisitions
namely:
- Deep Trekker Inc.; and
- IZI Medical Products, LLC.
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. Deep Trekker Inc.; and
c. IZI Medical Products, LLC.
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 £5.9m of revenue and £0.6m of profit after tax
for the six months ended 30 September 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 £14.3m and £3.1m higher respectively.
As at the date of approval of the financial statements, the accounting for
all current and prior year acquisitions from 1 October 2021 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
Unaudited
30 September
2022
£m
Non-current assets
Intangible assets 80.3
Property, plant and equipment 4.7
Deferred tax 0.4
Current assets
Inventories 13.1
Trade and other receivables 6.3
Tax 0.1
Cash and cash equivalents 4.0
Total assets 108.9
Current liabilities
Payables (5.1)
Borrowings and lease liabilities (1.0)
Provisions (0.1)
Tax (0.2)
Non-current liabilities
Borrowings and lease liabilities (2.0)
Deferred tax (5.1)
Total liabilities (13.5)
Net assets of business acquired 95.4
Initial cash consideration paid 174.5
Other adjustments 3.0
Other amounts to be paid 0.3
Contingent purchase consideration estimated to be paid 6.2
Total consideration 184.0
Total goodwill 88.6
Analysis of cash outflow in the Consolidated Cash Flow Statement
Unaudited Unaudited Audited
six months to
six months to
year to
30 September
30 September
31 March
2022
2021
2022
£m
£m
£m
Initial cash consideration paid 174.5 106.5 151.2
Cash acquired on acquisitions (4.0) (18.2) (18.2)
Initial cash consideration adjustment on current year acquisitions 3.0 11.9 13.1
Contingent consideration paid and loan notes repaid in cash in relation to 2.8 12.0 14.2
prior year acquisitions
Net cash outflow relating to acquisitions 176.3 112.2 160.3
Included in cash flows from operating activities 1.4 7.2 7.5
Included in cash flows from investing activities 174.9 105.0 152.8
Contingent consideration included in cash flows from operating activities
reflect amounts paid in excess of that estimated in the acquisition balance
sheets.
b) Deep Trekker Inc.
Unaudited
30 September
2022
£m
Non-current assets
Intangible assets 14.9
Property, plant and equipment 2.2
Deferred tax 0.4
Current assets
Inventories 3.5
Trade and other receivables 1.2
Cash and cash equivalents 2.7
Total assets 24.9
Current liabilities
Payables (2.1)
Borrowings and lease liabilities (0.4)
Provisions (0.1)
Tax (0.2)
Non-current liabilities
Borrowings and lease liabilities (1.2)
Deferred tax (4.0)
Total liabilities (8.0)
Net assets of businesses acquired 16.9
Initial cash consideration paid 36.6
Other adjustments 1.6
Other amounts to be paid 0.3
Total consideration 38.5
Total goodwill 21.6
On 13 April 2022, the Group acquired the entire share capital of Deep Trekker
Inc. (Deep Trekker) for C$63.1m (£38.5m), which comprised the purchase price
of C$60.0m (£36.6m), net cash/(debt) adjustments of C$2.6m (£1.6m) and
additional amounts payable in respect of working capital adjustments of C$0.5m
(£0.3m). There is no contingent consideration payable.
Deep Trekker, based in Ontario, Canada, 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.
On acquisition acquired intangibles were recognised relating to customer
related intangibles (£2.8m); trade name (£3.5m) and technology related
intangibles (£8.6m).
The residual goodwill of £21.6m 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.
Deep Trekker contributed £5.9m of revenue and £0.6m of profit after tax for
the six months ended 30 September 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 higher and £0.1m
higher respectively.
Acquisition costs totalling £0.6m were recorded in the Consolidated Income
Statement.
The goodwill arising on this acquisition is not expected to be deductible for
tax purposes.
c) IZI Medical Products, LLC
Unaudited
30 September
2022
£m
Non-current assets
Intangible assets 65.4
Property, plant and equipment 2.5
Current assets
Inventories 9.6
Trade and other receivables 5.1
Tax 0.1
Cash and cash equivalents 1.3
Total assets 84.0
Current liabilities
Payables (3.0)
Borrowings and lease liabilities (0.6)
Non-current liabilities
Borrowings and lease liabilities (0.8)
Deferred tax (1.1)
Total liabilities (5.5)
Net assets of business acquired 78.5
Initial cash consideration paid 137.9
Other adjustments 1.4
Contingent purchase consideration estimated to be paid 6.2
Total consideration 145.5
Total goodwill 67.0
On 30 September 2022, the Group acquired the entire share capital of IZI
Medical Products, LLC (IZI), for US$155.0m (£139.3m), which comprised the
purchase price of US$153.5m (£137.9m) plus net cash/(debt) adjustments of
US$1.5m (£1.4m). The maximum contingent consideration payable is US$14.5m
(£13.0m) based on profit-based targets for the year ending 31 March 2023.
IZI, based in Baltimore, Maryland, USA, is a leading designer, manufacturer
and distributor of medical devices used across a range of diagnostic and
therapeutic procedures. IZI will continue to be run under its own management
team and will be part of Halma's Healthcare sector.
On acquisition acquired intangibles were recognised relating to customer
related intangibles (£20.4m); trade names (£2.7m) and technology related
intangibles (£42.3m).
The residual goodwill of £67.0m 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.
As IZI was acquired on the last day of the period it did not contribute to the
Group's reported revenue or profit after tax. 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 £14.0m and £3.0m
higher respectively.
Acquisition costs totalling £1.8m were recorded in the Consolidated Income
Statement.
The goodwill arising on the IZI acquisition is expected to be deductible for
tax purposes.
11 Disposal of operations
In the prior year, in August 2021, the Group disposed of its entire interest
in Texecom Limited to a third party. Cash received on disposal of operations
in the prior year of £57.5m comprised proceeds from the sale of £64.8m, less
£4.5m of cash disposed and £2.8m of disposal costs. The Group recognised a
profit on disposal of operations of £34.0m.
12 Fair values of financial assets and liabilities
As at 30 September 2022, 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 approximates to the carrying value
because interest rates are reset to market rates at intervals of less than
one year.
In May 2022, a new Private Placement of £330m was completed. The issuance
consists of Sterling, Euro, US Dollar and Swiss Francs tranches and matures in
July 2032, with an amortisation profile giving it a seven year average life.
Further information on the refinancing can be found in the Annual Report and
Accounts 2022 note 27.
The fair value of the Group's fixed rate loan notes arising from the United
States Private Placement completed in January 2016 and the Private Placement
completed in May 2022 is estimated to be £426.2m, against a carrying value
of £463.4m.
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 2022, the total forward foreign currency contracts
outstanding were £65.8m. 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 £1.2m (30
September 2021: £0.6m; 31 March 2022: £0.7m) asset and £3.4m (30 September
2021: £0.2m; 31 March 2022: £0.9m) liability in the Consolidated Balance
Sheet.
Any movements in the fair values of the forward contracts are recognised in
equity until the hedge transaction occurs, when gains/losses are recycled to
finance income or finance expense.
The fair value of equity investments held at fair value through other
comprehensive income is based on the latest observable price where available.
Where there are no recent observable prices, adjustments are made based on
qualitative indicators, such as the financial performance of the entity,
performance against operational milestones and future outlook. This represents
a level 3 measurement in the fair value hierarchy under IFRS 7.
The fair values of the equity instruments held at fair value through other
comprehensive income at 30 September 2022 were £17.6m (30 September 2021:
£8.6m; 31 March 2022: £6.9m). The fair value adjustment recognised in other
comprehensive income for the six months to 30 September 2022 was a gain of
£9.3m (six months to 30 September 2021: £Nil; year to 31 March 2022: loss of
£1.7m).
13 Retirement benefits
At 30 September 2022, the Group has IAS 19 Retirement benefit net surplus
totalling £43.2m (30 September 2021: net obligation of £5.3m, 31 March 2022:
net surplus of £30.5m). The net asset has increased from 31 March 2022
primarily due to changes in the financial assumptions reducing the obligations
by £100.4m and additional employer contributions made to the UK defined
benefit plans of £8.7m, partly offset by losses on plan assets (excluding
interest income) of £85.3m and experience assumptions increasing obligations
by £11.5m. The financial assumption with the largest impact was the increase
in discount rate in the UK defined benefit plans from 2.80% at 31 March 2022
to 5.35% at 30 September 2022.
14 Contingent liability
Group financing exemptions applicable to UK controlled foreign companies
On 2 April 2019, the European Commission (EC) published its final decision
that the United Kingdom controlled Foreign Company Partial Exemption (FCPE)
constitutes State Aid. As previously reported, the Group has benefited from
the FCPE, which amounts to £15.4m of tax for the period from 1 April 2013 to
31 December 2018.
Appeals had been made by the UK Government, the Group and other UK-based
groups to annul the EC decision. On 8 June 2022, the EU General Court
delivered its decision in favour of the EC. In August 2022, the UK Government
appealed this decision.
Notwithstanding this appeal, 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 with a further £0.8m of interest
paid in May 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 the amounts paid are expected to be fully recovered, and given
the appeal process is expected to take more than a year, the Group continues
to recognise a receivable of £14.7m (30 September 2021: £14.7m, 31 March
2022: £14.7m) on the Consolidated Balance Sheet within non-current assets.
Other contingent liabilities
The Group has widespread global operations and is consequently a defendant in
many 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 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.
15 Events subsequent to the end of the reporting period
On 4 October 2022, the Group acquired the entire share capital of WEETECH
Holding GmbH (WEETECH), based in Wertheim, Germany for a cash consideration of
€57.5m (approximately £50m) on a cash- and debt free-basis. WEETECH designs
and manufactures safety-critical electrical testing technology, to test the
integrity of both high and low voltage electrical systems. WEETECH will be
part of Halma's Safety sector. A detailed purchase price allocation exercise
is currently being performed to calculate the goodwill arising on acquisition.
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 17 November 2022.
16 Other matters
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 2022.
17 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 98 to 101 in the Annual Report and Accounts 2022,
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:
- Cyber
- Organic growth
- Acquisitions and investments
- Talent and diversity
- Innovation
- Economic and geopolitical uncertainty
- Climate change and natural hazards
- Business model and its communications
- Non-compliance with laws and regulations
- Financial controls
- Liquidity
- Product failure
18 Responsibility statement
The Directors confirm that these condensed interim financial statements have
been prepared in accordance with UK adopted International Accounting Standard
34, 'Interim Financial Reporting' and the Disclosure Guidance and Transparency
Rules sourcebook of the United Kingdom's Financial Conduct Authority and that
the interim management report includes a fair review of the information
required by DTR 4.2.7 and DTR 4.2.8, namely:
- an indication of important events that have occurred during the
first six months and their impact on the condensed set of financial
statements, and a description of the principal risks and uncertainties for the
remaining six months of the financial year; and
- material related party transactions in the first six months and any
material changes in the related party transactions described in the last
annual report.
By order of the Board
Andrew Williams Marc Ronchetti
Group Chief Executive Group Chief Executive Designate
and Chief Financial Officer
17 November 2022
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