REG - Halma PLC - Trading Update

HalmaAnnouncement

21/09/2023 07:00

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RNS Number : 1335N  Halma PLC  21 September 2023

Trading update

 

Halma, the global group of life-saving technology companies focused on growing
a safer, cleaner and healthier future, today releases its scheduled trading
update ahead of its half year end on 30 September 2023.

Further progress in the first half and unchanged guidance for the full year

We have made further progress in the first half of this financial year despite
varied market conditions. Our guidance for the full year to March 2024, for
good organic constant currency(1) revenue growth and Return on Sales(2) of
approximately 20%, is unchanged from that given in our results announcement in
June(3).

We expect the balance of revenue and Adjusted profit before taxation(4)
between the first and second half of this financial year to be in line with
pre-COVID historical averages(5).

Accordingly, in the first half of the year, we expect good organic constant
currency(1) revenue growth against a strong comparative period last year, and
Return on Sales(2) towards the lower end of our target range.

Our cash performance is enabling continued investment, both organically and in
acquisitions, to expand our opportunities for growth over the medium to longer
term.

Continued progress in varied market conditions

We continue to benefit from the strength and relevance of our purpose, the
agility and entrepreneurialism which we derive from our Sustainable Growth
Model, and the diversity and global reach of our portfolio. These are enabling
us to deliver continued progress in varied market conditions.

Group order intake is ahead of the comparable period last year and close to
revenue in the year to date. Order intake in the Safety and Environmental
& Analysis sectors is in line with revenue; the Healthcare sector has
experienced slower order intake, with the effects of recovery from post-COVID
disruptions resulting in destocking by OEM customers and budgetary pressures
at healthcare providers.

Revenue by sector on an organic constant currency(1) basis reflects order book
trends, with stronger growth in the Safety and Environmental & Analysis
sectors, and similar revenue to the first half of last year in the Healthcare
sector. All sectors will benefit from recent acquisitions.

Return on Sales(2) in the Safety and Healthcare sectors is expected to be
higher in the first half of the year, relative to the comparable period last
year. The Environmental & Analysis sector's first half Return on Sales(2)
is expected to be lower due to mix effects.

By geography, the USA and Mainland Europe have delivered strong organic
constant currency(1) revenue growth, while the UK has grown modestly;
together, these account for nearly 80% of Group revenue. Organic constant
currency(1) revenue performance in Asia Pacific was negative, reflecting
declines in China, partially offset by a strong performance in Australasia.

The appreciation of Sterling is having a negative currency translation effect
on the Group's results; we expect this effect to continue in the second half
of the year(6).

Further progress in M&A; healthy acquisition pipeline

Following a record acquisition spend in the 2023 financial year, with seven
acquisitions completed for a maximum total consideration of £397m, we made
three acquisitions in the first half of this financial year for a maximum
total consideration of £80m. We have a healthy acquisition pipeline across
all three sectors.

We continue to actively manage our portfolio of global businesses to ensure
that it continues to deliver strong growth and returns and is aligned with our
purpose of growing a safer, cleaner, healthier future for everyone, every day.
We made one small disposal, of our 70% stake in FireMate Software Pty. Ltd.
(FireMate), for a total consideration of AUD8.4m (£4.3m), of which AUD2.1m
(£1.1m) is deferred. Halma will retain FireMate's Nimbus digital solution
that enables remote connectivity for fire and evacuation systems.

In our Environmental & Analysis sector, we acquired Visual Imaging
Resources LLC as a bolt-on to Minicam in April and Sewertronics Sp. Z o.o. as
a standalone company in May; details of these acquisitions were previously
reported in our Full Year 2023 results released in June. In August, we
acquired Lazer Safe Pty. Ltd., an Australia-based designer and manufacturer of
safety solutions for industrial press brake applications, for AUD45m
(approximately £23m) on a cash and debt free basis, as a standalone company
within the Safety sector.

Half Year Results

The results for the half year ending 30 September 2023 will be released on
Thursday 16 November 2023.

For further information, please contact:

Halma plc

Marc Ronchetti, Group Chief
Executive                         +44 (0)1494 721111

Steve Gunning, Chief Financial Officer

Charles King, Head of Investor
Relations                      +44 (0) 7776 685948

Clayton Hirst, Director of Corporate Affairs
+44 (0) 7384 796 013

MHP Communications

Oliver Hughes / Rachel Farrington / Ollie Hoare          +44 (0)20
3128 8622 / 8613 / 8276

Notes:

1. Organic constant currency measures exclude the effect of movements in
foreign exchange rates on the translation of revenue and profit into Sterling,
as well as acquisitions in the year following completion and disposals.

2. Return on Sales is defined as Adjusted profit before taxation(4) from
continuing operations expressed as a percentage of revenue from continuing
operations.

3. The following guidance was given in our Full Year 2023 results announcement
in June 2023: "Based on current market conditions, we expect to deliver good
organic constant currency(1) revenue growth in the year ahead, and Return on
Sales(2) to increase to approximately 20%."

4. Adjusted profit before taxation is before amortisation and impairment of
acquired intangible assets, acquisition items, and profit or loss on disposal
of businesses.

5. In the five financial years from 2016/17 to 2020/21, Halma delivered on
average 48% of its annual revenue in the first half of the year, and 45% of
its Adjusted profit before taxation(4).

6. Sterling has strengthened in the year relative to many currencies,
including the US Dollar and Euro. If current exchange rates continue
throughout the rest of the current financial year, the currency translation
impact on the Group's results is expected to be negative. Based on exchange
rates of Sterling/US Dollar 1:1.26 and Sterling/Euro 1:1.17, we would expect
approximately a £55m negative revenue effect and approximately a £13m
negative profit effect in the 2024 financial year, compared to the 2023
financial year, of which approximately 30% would occur in the first half of
the financial year.

7. This Trading Update is based upon unaudited management accounts
information. Forward-looking statements have been made by the Directors in
good faith using information available up until the date that they approved
this statement. Forward-looking statements should be regarded with caution
because of the inherent uncertainties in economic trends and business risks.

8. A copy of this announcement, together with other information about Halma,
may be viewed on its website at www.halma.com (http://www.halma.com) .

About Halma

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.

Halma employs over 8,000 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.

Halma has been named as one of Britain's Most Admired Companies for the past
five years.

For more information www.halma.com (http://www.halma.com/)

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