REG - Halma PLC - Half Yearly Report <Origin Href="QuoteRef">HLMA.L</Origin> - Part 2
17/11/2015 07:01
- Part 2: For the preceding part double click ID:nRSQ9083Fa
- - (9,663) (9,663)
Effective portion of changes in fair value of cash flow hedges - - - - 4 - - - 4
Tax relating to components of other comprehensive income and expense - - - - (1) - - 1,865 1,864
Total other comprehensive income - - - - 3 (2,587) - (7,798) (10,382)
and expense
Share options exercised 58 770 - - - - - - 828
Dividends paid - - - - - - - (25,800) (25,800)
Share-based payments charge** - - - - - - 1,929 - 1,929
Deferred tax on share-based payment transactions - - - - - - (441) - (441)
Excess tax deductions related to share-based payments on exercised options - - - - - - - 1,022 1,022
Purchase of treasury shares** - - (3,042) - - - - - (3,042)
Performance share plan awards vested** - - 5,211 - - - (5,211) - -
At 27 September 2014 (unaudited) 37,960 23,548 (4,885) 185 126 11,653 (6,468) 435,537 497,656
* The presentation of the hedging and translation reserves, which were previously netted, has been amended to show the two reserves and their movements in the period separately. The comparatives have been adjusted to reflect this amended presentation. There has been no impact on Shareholders' funds in any period.
** The purchase of Employee Benefit Trust shares/treasury shares and performance share plan awards vested were shown net in Own shares in prior periods, as were the share based payments charge and performance share plan awards vested in Other reserves. The prior period comparatives have been adjusted to show these gross amounts. There has been no impact on Shareholders' funds in any period.
For the 52 weeks ended 28 March 2015
Share capital £000 Share premium account £000 Ownshares £000 Capital redemption reserve £000 Hedging reserve* £000 Translation reserve*£000 Other reserves £000 Retained earnings £000 Total £000
At 29 March 2014 (audited) 37,902 22,778 (7,054) 185 123 14,240 (2,745) 420,571 486,000
Profit for the period - - - - - - - 104,001 104,001
Other comprehensive income
and expense:
Exchange differences on translation - - - - - 30,900 - - 30,900
of foreign operations
Exchange losses transferred to Income Statement on disposal of operation - - - - - 189 - - 189
Actuarial losses on defined benefit pension plans - - - - - - - (34,795) (34,795)
Effective portion of changes in fair value of cash flow hedges - - - - 71 - - - 71
Tax relating to components of other comprehensive income and expense - - - - (23) - - 6,791 6,768
Total other comprehensive income - - - - 48 31,089 - (28,004) 3,133
and expense
Share options exercised 63 830 - - - - - - 893
Dividends paid - - - - - - - (43,399) (43,399)
Share-based payments charge** - - - - - - 3,828 - 3,828
Deferred tax on share-based - - - - - - 291 - 291
payment transactions
Excess tax deductions related to share-based payments on exercised options - - - - - - - 1,044 1,044
Purchase of treasury shares** - - (6,843) - - - - - (6,843)
Performance share plan awards vested** - - 5,447 - - - (5,447) - -
At 28 March 2015 (audited) 37,965 23,608 (8,450) 185 171 45,329 (4,073) 454,213 548,948
* The presentation of the hedging and translation reserves, which were previously netted, has been amended to show the two reserves and their movements in the period separately. The comparatives have been adjusted to reflect this amended presentation. There has been no impact on Shareholders' funds in any period.
** The purchase of Employee Benefit Trust shares/treasury shares and performance share plan awards vested were shown net in Own shares in prior periods, as were the share based payments charge and performance share plan awards vested in Other reserves. The prior period comparatives have been adjusted to show these gross amounts. There has been no impact on Shareholders' funds in any period.
Consolidated Cash Flow Statement
Notes Unaudited 27 weeks to 3 October 2015£000 Unaudited 26 weeks to27 September 2014£000 Audited 52 weeks to 28 March2015 £000
Net cash inflow from operating activities 8 61,886 61,924 137,231
Cash flows from investing activities
Purchase of property, plant and equipment (8,244) (9,419) (22,164)
Purchase of computer software (778) (473) (1,021)
Purchase of other intangibles (81) (268) (382)
Proceeds from sale of property, plant and equipment 468 543 1,411
Development costs capitalised (3,990) (3,239) (7,213)
Interest received 128 64 134
Acquisition of businesses, net of cash acquired 10 (12,902) (87,145) (87,743)
Disposal of business, net of cash disposed 11 908 4,221 4,248
Net cash used in investing activities (24,491) (95,716) (112,730)
Financing activities
Dividends paid (27,630) (25,800) (43,399)
Proceeds from issue of share capital - 828 893
Purchase of own shares (1,216) (3,042) (6,843)
Interest paid (1,589) (1,499) (3,118)
Proceeds from borrowings 87,000 152,435 68,962
Repayment of borrowings - (77,367) (35,341)
Net cash from/(used in) financing activities 56,565 45,555 (18,846)
Increase in cash and cash equivalents 93,960 11,763 5,655
Cash and cash equivalents brought forward 39,525 33,126 33,126
Exchange adjustments 231 (329) 744
Cash and cash equivalents carried forward 133,716 44,560 39,525
Unaudited 3 October 2015£000 Unaudited27 September 2014£000 Audited28 March 2015£000
Reconciliation of net cash flow to movement in net debt
Increase in cash and cash equivalents 93,960 11,763 5,655
Cash inflow from drawdowns of borrowings (87,000) (75,068) (33,621)
Net debt acquired - (468) (468)
Loan notes issued* (263) (608) (657)
Loan notes repaid* 368 2,731 2,731
Exchange adjustments 442 (130) (38)
7,507 (61,780) (26,398)
Net debt brought forward (100,894) (74,496) (74,496)
Net debt carried forward (93,387) (136,276) (100,894)
* £368,000 of the £657,000 loan notes issued in the prior period was converted at par into cash on 17 July 2015. The remaining loan notes are outstanding. Loan notes totalling £263,000 were issued on 15 April 2015 and 16 July 2015 as part of the consideration payable in relation to the acquisition of Advanced Electronics Limited on 14 May 2014. The loan notes, which attract interest of 1%, are convertible into cash by the holder at par on each anniversary of the acquisition date until 14 May 2019.
Notes to the Condensed Financial Statements
1 Basis of preparation General informationThe Half Year Report, which includes the Interim Management Report and Condensed Financial Statements for the 27 weeks to 3 October 2015, has not been audited or reviewed by the Group's Auditor and was approved by the Directors on 17 November 2015. The Report has been prepared in accordance with International Accounting Standard 34, applying the accounting policies and presentation that were applied in the preparation of the Group's statutory accounts for the 52
weeks to 28 March 2015. The figures shown for the 52 weeks to 28 March 2015 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 under International Financial Reporting Standards, 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. 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 Directors believe the Group is well placed to manage its business risks successfully. The Group's forecasts
and projections, taking account of reasonably possible changes in trading performance, show that the Group should be able to operate within the level of its current committed facilities, which includes a £360m five-year revolving credit facility due to expire in November 2018 and the recently agreed United States Private Placement of $250m which matures over intervals of five, seven and ten years up to 2026 with funds to be drawn in January 2016. With this in mind, the Directors have a reasonable
expectation that the Company and Group have adequate resources to continue in operational existence for the foreseeable future. Thus they continue to adopt the going concern basis in preparing the half year Condensed Financial Statements.
1 Basis of preparation
General information
The Half Year Report, which includes the Interim Management Report and
Condensed Financial Statements for the 27 weeks to 3 October 2015, has not
been audited or reviewed by the Group's Auditor and was approved by the
Directors on 17 November 2015. The Report has been prepared in accordance with
International Accounting Standard 34, applying the accounting policies and
presentation that were applied in the preparation of the Group's statutory
accounts for the 52 weeks to 28 March 2015. The figures shown for the 52 weeks
to 28 March 2015 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 under International Financial Reporting Standards, 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. 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
Directors believe the Group is well placed to manage its business risks
successfully. The Group's forecasts and projections, taking account of
reasonably possible changes in trading performance, show that the Group should
be able to operate within the level of its current committed facilities, which
includes a £360m five-year revolving credit facility due to expire in November
2018 and the recently agreed United States Private Placement of $250m which
matures over intervals of five, seven and ten years up to 2026 with funds to
be drawn in January 2016. With this in mind, the Directors have a reasonable
expectation that the Company and Group have adequate resources to continue in
operational existence for the foreseeable future. Thus they continue to adopt
the going concern basis in preparing the half year Condensed Financial
Statements.
2 Segmental analysis Sector analysisThe Group has four main reportable segments (Process Safety, Infrastructure Safety, Medical and Environmental & Analysis), which are defined by markets rather than product type. Each segment includes businesses with similar operating and market characteristics. These segments are consistent with the internal reporting as reviewed by the Chief Executive.
Sector analysis
The Group has four main reportable segments (Process Safety, Infrastructure
Safety, Medical and Environmental & Analysis), which are defined by markets
rather than product type. Each segment includes businesses with similar
operating and market characteristics. These segments are consistent with the
internal reporting as reviewed by the Chief Executive.
Segment revenue and results
Revenue (all continuing operations)
Unaudited 27 weeks to 3 October 2015£000 Unaudited 26 weeks to 27 September 2014£000 Audited 52 weeks to 28 March2015 £000
Process Safety 77,773 73,579 158,372
Infrastructure Safety 122,411 112,693 234,063
Medical 92,297 78,464 169,333
Environmental & Analysis 87,243 76,256 164,412
Inter-segmental sales (67) (89) (46)
Revenue for the period 379,657 340,903 726,134
Inter-segmental sales are charged at prevailing market prices and have not been disclosed separately by segment as they are not considered material. The Group does not analyse revenue by product group and has no material revenue derived from the rendering of services.
Profit (all continuing operations)
Unaudited 27 weeks to 3 October 2015£000 Unaudited 26 weeks to 27 September 2014 £000 Audited 52 weeks to 28 March2015 £000
Segment profit before allocation of adjustments*
Process Safety 19,090 20,439 44,772
Infrastructure Safety 24,591 22,821 49,992
Medical 24,579 20,847 45,385
Environmental & Analysis 14,767 11,861 27,403
83,027 75,968 167,552
Segment profit after allocation of adjustments*
Process Safety 17,393 18,187 40,280
Infrastructure Safety 23,707 23,165 49,585
Medical 18,826 15,227 31,981
Environmental & Analysis 12,689 11,590 25,699
Segment profit 72,615 68,169 147,545
Central administration costs (5,449) (4,478) (8,988)
Costs to close the defined benefit pension plan to future accrual in the prior period - (46) -
Net finance expense (2,921) (2,472) (4,946)
Group profit before taxation 64,245 61,173 133,611
Taxation (14,027) (13,631) (29,610)
Profit for the period 50,218 47,542 104,001
* Adjustments include the amortisation of acquired intangible assets, acquisition items, and profit or loss on disposal of operations. The accounting policies of the reportable segments are the same as the Group's accounting policies. For acquisitions after 3 April 2010, acquisition transaction costs and adjustments to contingent purchase consideration are recognised in the Consolidated Income Statement. Segment profit before these acquisition costs, the amortisation of acquired intangible assets and
the profit or loss on disposal of continuing operations is disclosed separately above as this is the measure reported to the Chief Executive for the purpose of allocation of resources and assessment of segment performance. These adjustments are analysed as follows:
Unaudited for the 27 weeks ended 3 October 2015
Acquisition items
Amortisation of acquired intangibles£000 Transaction costs£000 Adjustments to contingent consideration£000 Total amortisation charge and acquisition items£000 Disposal ofoperations (note 11)£000 Total£000
Process Safety (1,697) - - (1,697) - (1,697)
Infrastructure Safety (411) (148) (325) (884) - (884)
Medical (6,217) (114) (14) (6,345) 592 (5,753)
Environmental & Analysis (2,078) - - (2,078) - (2,078)
Total Segment & Group (10,403) (262) (339) (11,004) 592 (10,412)
The transaction costs arose mainly on the acquisitions of Value Added Solutions LLC (see note 10) and Firetrace USA, LLC (Firetrace) (see note 13), which were acquired on 19 May 2015 and 5 October 2015 respectively. The £325,000 charge to contingent consideration related to the revision of the estimate of the remaining Advanced Electronics Limited payable. The payable was settled during the period. The £592,000 profit on disposal relates to the disposal of 8.8% of the Group's ownership interest in Optomed
Oy on 26 August 2015. See note 11 for further details.
Unaudited for the 26 weeks ended 27 September 2014
Acquisition items
Amortisation of acquired intangibles£000 Transaction costs £000 Adjustments to contingent consideration £000 Total amortisation charge and acquisition items £000 Disposal of operations(note 11)£000 Effects of closure to future benefit accrual of Defined Benefit pension plans*£000 Total £000
Process Safety (1,344) (908) - (2,252) - - (2,252)
Infrastructure Safety (354) (386) - (740) 1,084 - 344
Medical (5,962) (4) - (5,966) 346 - (5,620)
Environmental & Analysis (1,935) - 1,664 (271) - - (271)
Total Segment (9,595) (1,298) 1,664 (9,229) 1,430 - (7,799)
Central administration costs - - - - - (46) (46)
Total Group (9,595) (1,298) 1,664 (9,229) 1,430 (46) (7,845)
* The £46,000 relates to the costs to close the defined benefit pension plan to future accrual in the prior period. The transaction costs arose on the acquisitions of Rohrback Cosasco Systems Inc., £908,000; Advanced Electronics Limited, £386,000; and Plasticspritzerei AG, £4,000. The £1,664,000 credit to contingent consideration related to the revision of the estimate of the remaining ASL Holdings Limited payable from £2,500,000 to £836,000, after payment of £1,000,000 in May 2014. Within the
Infrastructure Safety segment, the £1,084,000 profit relates to the disposal, on 30 May 2014, of Monitor Elevator Products, Inc. Within the Medical segment, the £346,000 profit comprises the disposal, on 2 May 2014, of the Group's 50% ownership interest in PSRM Immobilien AG (£131,000) and, on 14 July 2014, of 10.72% of its ownership interest in Optomed Oy (£215,000).
Audited for the 52 weeks ended 28 March 2015
Acquisition items
Amortisation of acquired intangibles£000 Transaction costs £000 Adjustments to contingent consideration £000 Release of fair value adjustments to inventory£000 Totalamortisationcharge andacquisitionitems£000 Disposal ofoperations(note 11)£000 Total £000
Process Safety (3,026) (928) - (538) (4,492) - (4,492)
Infrastructure Safety (765) (486) (102) (130) (1,483) 1,076 (407)
Medical (12,156) (21) (1,581) - (13,758) 354 (13,404)
Environmental & Analysis (4,007) - 2,303 - (1,704) - (1,704)
Total Segment & Group (19,954) (1,435) 620 (668) (21,437) 1,430 (20,007)
The £1,581,000 charge to contingent consideration in the Medical sector related mainly to the revision in the estimate of the MST payable from $6,504,000 to $9,061,000. The £2,303,000 credit to contingent consideration in the Environmental & Analysis sector related to the further revision of the estimate of the remaining ASL Holdings Limited payable. The total assets and liabilities of all four segments have not been disclosed as there have been no material changes to those disclosed in the 2015 Annual
Report and Accounts.
Geographic information The Group's revenue from external customers (by location of customer) is as follows:
Revenue by destination
Unaudited 27 weeks to 3 October 2015£000 Unaudited 26 weeks to 27 September 2014 £000 Audited 52 weeks to 28 March2015 £000
United States of America 124,415 104,110 223,374
Mainland Europe 85,190 79,216 167,363
United Kingdom 71,520 67,225 138,312
Asia Pacific 59,736 56,248 116,842
Africa, Near and Middle East 25,419 19,055 44,037
Other countries 13,377 15,049 36,206
Group revenue 379,657 340,903 726,134
3 Finance income
Unaudited 27 weeks to 3 October 2015£000 Unaudited 26 weeks to 27 September 2014 £000 Audited 52 weeks to 28 March2015 £000
Interest receivable 128 64 134
Fair value movement on derivative financial instruments - - 33
128 64 167
4 Finance expense
Unaudited 27 weeks to 3 October 2015 £000 Unaudited 26 weeks to 27 September 2014 £000 Audited 52 weeks to 28 March2015 £000
Interest payable on bank loans and overdrafts 1,580 1,499 3,090
Amortisation of finance costs 265 265 530
Net interest charge on pension plan liabilities 1,008 701 1,419
Other interest payable 9 - 28
2,862 2,465 5,067
Fair value movement on derivative financial instruments 187 49 -
Unwinding of discount on provisions - 22 46
3,049 2,536 5,113
5 Taxation
The total Group tax charge for the 27 weeks to 3 October 2015 of £14,027,000 (26 weeks to 27 September 2014: £13,631,000; 52 weeks to 28 March 2015: £29,610,000) comprises a current tax charge of £15,280,000 (26 weeks to 27 September 2014: £14,608,000; 52 weeks to 28 March 2015: £33,523,000) and a deferred tax credit of £1,253,000 (26 weeks to 27 September 2014: £977,000; 52 weeks to 28 March 2015: £3,913,000). The tax charge is based on the estimated effective tax rate for the year. The tax charge includes
£12,270,000 (26 weeks to 27 September 2014: £10,620,000; 52 weeks to 28 March 2015: £24,064,000) in respect of overseas tax.
6 Earnings per ordinary share
Basic earnings per ordinary share are calculated using the weighted average of 378,390,374 (27 September 2014: 378,115,425; 28 March 2015: 378,328,541) shares in issue during the period (net of shares purchased by the Company and held as treasury and Employee Benefit Trust shares). Diluted earnings per ordinary share are calculated using 378,390,374 (27 September 2014: 378,383,111; 28 March 2015: 378,475,804) shares which includes dilutive potential ordinary shares of nil (27 September 2014: 267,686; 28
March 2015: 147,263). Dilutive potential ordinary shares are calculated from those exercisable share options where the exercise price is less than the average price of the Company's ordinary shares during the period. 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 associated taxation thereon. The Directors consider that adjusted earnings represent a more
consistent measure of underlying performance. A reconciliation of earnings and the effect on basic earnings per share figures is as follows:
Unaudited 27 weeks to 3 October 2015£000 Unaudited 26 weeks to 27 September 2014 £000 Audited 52 weeks to 28 March2015 £000
Earnings from continuing operations 50,218 47,542 104,001
Costs to close the defined benefit pension plan to future accrual (after tax) - 36 -
Amortisation of acquired intangible assets (after tax) 7,351 6,801 14,121
Acquisition transaction costs (after tax) 171 1,286 1,423
Release of fair value adjustments to inventory (after tax) - - 474
Adjustments to contingent consideration (after tax) 339 (1,664) (1,162)
Profit on disposal of operations (after tax) (592) (857) (945)
Adjusted earnings 57,487 53,144 117,912
Per ordinary share
Unaudited 27 weeks to 3 October 2015pence Unaudited 26 weeks to 27 September 2014 pence Audited 52 weeks to 28 March2015 pence
Earnings from continuing operations 13.27 12.57 27.49
Costs to close the defined benefit pension plan to future accrual (after tax) - 0.01 -
Amortisation of acquired intangible assets (after tax) 1.94 1.80 3.73
Acquisition transaction costs (after tax) 0.05 0.34 0.38
Release of fair value adjustments to inventory (after tax) - - 0.13
Adjustments to contingent consideration (after tax) 0.09 (0.44) (0.31)
Profit on disposal of operations (after tax) (0.16) (0.23) (0.25)
Adjusted earnings 15.19 14.05 31.17
7 Dividends
Per ordinary share
Unaudited 27 weeks to 3 October 2015£000 Unaudited 26 weeks to 27 September 2014 £000 Audited 52 weeks to 28 March2015 £000
Amounts recognised as distributions to shareholders in the period
Final dividend for the year to 28 March 2015 (29 March 2014) 7.31 6.82 6.82
Interim dividend for the year to 28 March 2015 - - 4.65
7.31 6.82 11.47
Dividends in respect of the period
Interim dividend for the year to 2 April 2016 (28 March 2015) 4.98 4.65 4.65
Final dividend for the year to 28 March 2015 - - 7.31
4.98 4.65 11.96
Unaudited 27 weeks to 3 October 2015£000 Unaudited 26 weeks to 27 September 2014 £000 Audited 52 weeks to 28 March2015 £000
Amounts recognised as distributions to shareholders in the period
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