This glossary explains some of the terms we use in shareholder communications. Use the Feedback Form if you have any queries.


Accretion is growth by gradual addition. A company is accretive if it increases in size organically at a steady rate of growth


An accrual is an accounting device for the recognition of income or expense in the financial statements in one period relating to income or costs that will be physically billed in a later period.

Adjusted Operating Profit

Operating profit after adding back acquisition costs and contingent consideration adjustments and amortisation of acquisition-related intangible assets.

Adjusted Operating Cash Flow

Net cash from operating activities (a required heading in the cash flow statement) after adding back taxes paid and the proceeds from the sale of property, plant and equipment and deducting capital expenditure.

ADR (American Depositary Receipt)

The form in which shares of foreign companies are traded on US stock markets. ADRs are issued by US banks and represent a bundle of shares of a foreign company held in custody overseas.

AGM (Annual General Meeting)

An annual meeting where shareholders vote on issues such as dividend payments and board appointments.


A systematic reduction in the book value of intangible assets with a definite useful life (as opposed to indefinite life assets such as goodwill) representing the consumption of the economic benefits associated with the asset over time. The same concept is applied to tangible assets (such as cars and machinery) but in this case is referred to as depreciation.


Finance professional who analyses company and economic data to make share trading recommendations.

Annual Report

A document prepared annually in compliance with applicable laws, regulations and accounting standards to provide a strategic and financial review of the company; an overview of the way the company is run (its ‘governance’); details of the company’s financial position (balance sheet), performance (income statement), changes in shareholder’s equity (statement of changes in equity) and cash flow (cash flow statement), these final four items being known collectively as the ‘financial statements’.

ASEAN (Association of South East Asian Nations)

A multinational body which aims to enhance economic progress and increase stability. Includes: Brunei, Cambodia, Indonesia, Laos, Malaysia, Burma, the Philippines, Singapore, Thailand and Vietnam.


Tangible or intangible items which convey actual or potential economic benefits to the owner. Assets are classified according to their varying degrees of liquidity (meaning convertibility into cash), cash being the most liquid asset and intangible assets such as goodwill being the least liquid. Assets are divided into two main groups on the balance sheet:

‘current assets’, which include cash, inventory and debtors


‘fixed assets’ which include plant and machinery (tangible fixed assets), intangible assets, investments and goodwill


Auditors review a company’s financial statements to ensure that they have been prepared in accordance with relevant company law, regulations and applicable accounting standards. The review is risk-focused and carried out to a specific financial threshold (referred to as ‘materiality’), which means that not every transaction or balance is tested or reviewed in detail. The overall aim of the audit is to provide an independent opinion of the financial statements, specifically, whether or not the statements provide a ‘true and fair view’ of the company’s affairs.

Auditor's Report

An auditor's report provides an opinion on whether or not the financial statements give a true and fair view of the company’s affairs and have been prepared in accordance with applicable accounting standards and relevant company laws and regulations. The report is required to state also whether the director’s report is consistent with the financial statements and if there is any information or explanation that was not provided when requested during the audit. Halma Reports have two Auditor's Reports, one for the company and one for the whole group.

Bad Debt

Bad debt represents amounts owed to the company that managers believe is unlikely to be paid.

Balance Sheet

A statement of a company's assets and liabilities, recorded at a point in time - normally at the end of a financial year or half-year. A standard balance sheet has three components: assets, liabilities and shareholders’ equity.

Boiler Room Operation

A scam to sell high risk or valueless stocks or securities. Also known as a bucket shop. Find out more on our Warning to Shareholders web page.

Bolt-on Acquisition

An acquired company that is merged with a subsidiary already owned by the acquiring business.

BRIC (Brazil, Russia, India and China)

An acronym for the fast-growing economies of Brazil, Russia, India and China.

CAGR (Compound Annual Growth Rate)

The year-on-year percentage growth rate of an investment over a given period of time.


The money needed to finance a company's fixed and operating assets, and the financial instruments, such as debt and equity, used to raise that money.

Capital Allowances

A deduction from corporation tax that is permitted in most tax jurisdictions for expenditure on capital items. Capital allowances replace deductions from profit (charges to the income statement) for depreciation and amortisation in the corporation tax computation as these deductions are based on individual company accounting policies and management estimations of asset lives.

Capital Expenditure (also Capex)

Expenditure on tangible fixed assets such as plant, equipment and machinery.

Capital Goods / Equipment

Fixed assets such as plant and machinery used to manufacture goods.


Coins, banknotes, cheques, short-term deposits and financial instruments that can be readily converted to cash (generally by giving less than 3 months’ notice).

Cash Flow

The actual cash inflows and outflows of the business usually represented formally in the cash flow statement. Cash inflows arise from sales of goods and services by the business, sales of assets and disposals of businesses and interest on deposits. Cash outflows arise from purchases of inventory and fixed assets, acquisitions of business and interest paid on borrowings.

Cash Generation

Adjusted operating cash flow as a percentage of adjusted operating profit.

Consolidated Balance Sheet and Income Statement

Balance sheet and Income Statement in which the assets and liabilities and results of a parent company and its subsidiaries are combined in a single reporting entity, with a view to presenting the combined financial position and performance of the Group as a whole.

Constant Currency

An exchange rate that is fixed in time to eliminate the effects of exchange rate fluctuations for the purposes of assessing organic growth (growth not attributable to exchange rate fluctuations over time).

Corporate Social Responsibility

How a company manages social and environmental concerns in its business operations and in its interactions with stakeholders. Find out more in our Corporate Responsibility section.

Corporation Tax

Tax payable by companies, based on the taxable profits of those companies. In a Group, corporation tax is chargeable to individual legal entities within the Group, rather than to the Group as a whole.

Current Assets

Assets that are relatively liquid (meaning that they can be converted into cash quickly, usually within a year). These include cash itself, cash equivalents, accounts receivable and inventories.

Cyclical Market

A market sensitive to economic cycles, where revenues tend to be higher in periods of economic growth and lower during economic downturns.

Defensive Stock

Investment stocks that carry lower risk than the overall stock market. Defensive stock businesses tend to operate in markets in which sales are less affected by cyclical economic cycles.


A systematic reduction in the book value of tangible assets representing the consumption of the economic benefits associated with the asset over time. The same concept is applied to intangible assets (such as capitalised development costs and brands) but in this case is referred to as amortisation.


A periodic payment of cash by a company to its shareholders on a per share basis usually linked to the company’s financial performance and the strength of its balance sheet.

Dividend Cover

Dividend cover is calculated by:

the company's profit after tax divided by the total dividends paid and proposed for the period


the Earnings per share divided by dividend per share

Dividend Yield

Dividend yield is calculated by:

the company's total annual dividend payments divided by its market capitalisation


the dividend per share, divided by the price per share

It is often expressed as a percentage.


The oil & gas industry is divided into three sectors: upstream, midstream and downstream. The downstream sector includes refining of petroleum crude oil, processing of raw natural gas, and the marketing and distribution of petrochemicals products.

DRIP (Dividend Reinvestment Plan)

A scheme in which shareholders elect to have dividends paid in shares instead of cash. More information on our Shareholder Information page.

Due Diligence

Detailed examination of the operations, financial position and management of an acquisition target to support estimations of its trading status and value.

EPS (Earnings per Share)

Net profit divided by the number of ordinary shares outstanding. EPS is a component of the P/E ratio (Price / Earnings ratio).

EBIT (Earnings before Interest and Tax)

Profits from a company's ordinary revenue-producing activities, calculated before taxes and interest costs. Also known as PBIT (profit before interest and tax), operating income or trading profit.

EBITDA (Earnings Before Interest, Tax, Depreciation and Amortisation)

A company’s earnings (or profit) before interest payments, tax, depreciation and amortisation. This measure is frequently used by analysts to estimate the ability of a company to generate cash returns for investors and to service the overall level of debt in the company.

EGM (Extraordinary General Meeting)

An unscheduled meeting of shareholders called to approve non-routine matters.

Emerging Markets

Emerging markets are developing countries such as China and India.


Equity represents the residual interest in a company’s assets that is held by shareholders after deducting all liabilities. The largest component of equity is typically the retained earnings balance, which represents the cumulative profit made by the company that has not already been returned to shareholders (through dividends).

Exchange Rate

The value of one country's currency expressed in terms of another.

Exceptional Item

Items that are material because of their size or their nature, or that are non-recurring, may be highlighted separately in the Income Statement. The separate reporting of exceptional items helps provide a better picture of the company’s underlying performance.


Shares bought after the ex-dividend date do not entitle the buyer to recently declared dividends. A buyer must be the ‘owner of record’ before the ex-dividend date to receive the dividend.

Final Dividend

A dividend paid to shareholders by a company at the end of its financial year and authorised by shareholders at the annual general meeting (AGM).

Financial Accounting Period

The period used for accounting purposes by a company. It can cover different periods of time, but is most usually either for twelve months or for a 52 or 53 week period which ends most closely to a prescribed date, for example March 31. It is also known as a fiscal year (US).

FSA (Financial Services Authority)

The Financial Services Authority was the regulatory body for the financial services industry in the United Kingdom which was abolished in 2013. Its powers have been split between 2 new agencies and the Bank of England.

FTSE 100 Index

A market capitalisation index of the 100 largest companies listed on the London Stock Exchange.

FTSE 250 Index

A market capitalisation index of the 101st to the 350th largest companies listed on the London Stock Exchange.

GAAP (Generally Accepted Accounting Principles)

GAAP refers to the standards and conventions that underpin accounting rules and the preparation of financial statements in a particular country.

GDP (Gross Domestic Product)

Gross domestic product is a measure of economic activity in a country made up of all services and goods produced in a year.


Goodwill is the value of an asset owned that is intangible but has a quantifiable value in a company, such as the knowledge and skill of the company’s workforce. In accounting terms, goodwill arising on the acquisition of a company is calculated as the difference between the fair value of the amount paid for an investment in that company and the fair value of the net assets acquired. Net assets include any assets newly identified that were previously unrecognised in the company being acquired, such as the value of customers.

Gross Profit

Gross profit is calculated as revenue less cost of sales (generally comprising direct materials and direct labour).


A strategy to reduce the risk of price fluctuations by making an investment in assets such as foreign currency.

Holding Company

A company or firm that owns other companies' outstanding stock or shares.

IASB (International Accounting Standards Board)

International Accounting Standards Board, an independent body that sets accounting standards accepted as a basis for accounting in many countries, including all member states of the European Union.

IFRS (International Financial Reporting Standard)

International Financial Reporting Standards (IFRS), issued by the IASB (International Accounting Standards Board). IFRS are designed as a common global language for business affairs so that company accounts are understandable and comparable across international boundaries. The accounts of all UK companies listed on the UK Stock Exchange must be reported under IFRS.

Income Statement

The name given, under IFRS, to describe the financial statement showing revenues, expenses, and profit within a financial period. It is also referred to as the Profit and Loss Account under some other GAAPs.

Institutional Investor

A financial institution, such as an insurance company, pension fund, investment trust or bank that invests large sums in stocks and shares on its own behalf or on behalf of its customers.

Intangible Assets

Assets without physical form but considered valuable business resources such as patents, trademarks, goodwill and brand names.

IP (Intellectual Property)

Intellectual property refers to designs and ideas that can be protected by patents, trademarks and copyright.

Interest Rate

The charge or the return on an asset or debt expressed as a percentage of the price or size of the asset or debt. It is usually expressed on an annual basis.

Interim Dividend

A dividend paid part way through a company's financial year. UK companies often pay an interim dividend half-way through the year and a final dividend at the end of the year.

Issued Capital

The share capital that has been issued to shareholders.

Key Performance Indicators (KPIs)

Metrics that help an organisation to measure performance against clearly defined goals over time. See Halma’s KPIs.


Leverage, also referred to as gearing, is the amount of debt a company has in proportion to its equity capital.


A debt or other form of payment obligation that is recognised in the company’s balance sheet.

Limited Liability

A legal concept in which an individual's financial liability is limited to a certain sum. Shareholders or other investors in limited liability companies and limited liability partnerships (LLP) are not personally liable for the debts of such companies.


The extent to which an asset or liability is readily convertible into cash or the extent to which a company as a whole can convert its assets and liabilities into a positive net cash balance.

Listed (Stock)

A company whose shares are traded on a stock exchange.


Machine to Machine (M2M) refers to technologies that allow both wireless and wired systems to communicate with other devices of the same type.

M&A (Mergers and Acquisitions)

Abbreviation of mergers and acquisitions.


The analysis of economic trends that apply to a country’s entire economy or to the global economy.

Market Capitalisation

The total value of a company's shares as quoted on a stock exchange. It is calculated by multiplying the total number of shares in issue by the market price.


The oil & gas industry is divided into three sectors: upstream, midstream and downstream. The midstream sector comprises the transportation, storage, and wholesale marketing of crude or refined petroleum products.

MBO (Management Buyout)

A management buyout is the purchase of a company by its existing management. Net Assets A company's total assets minus its liabilities. Also known as net worth.

Net Earnings / Net Profit

The profit that remains after a company's taxes, interest and operating expenses have been paid for a given period (normally the accounting period). It is also known as the earnings that belong to the holders of ordinary shares in the company.

Nominee Account

An account in which securities owned by an investor are registered in another name, often the investor's broker.

OECD (Organisation for Economic Co-operation and Development)

Abbreviation for Organisation for Economic Co-operation and Development. A group of 30 developed and developing countries which promotes democratic government and the market economy.


Original Equipment Manufacturer (OEM) is a company that supplies equipment to other companies to resell or incorporate into another product using the reseller's brand name.

Operating Cash Flow

Cash generated from normal business operations less taxation and interest paid, investment income received and less dividends paid.

Operating Margin

The ratio of operating profit to revenue, expressed as a percentage. The same as return on sales. Operating Profit Profits from a company's ordinary revenue-producing activities, calculated before taxes and interest costs. Also known as PBIT (profit before interest and tax), EBIT (earnings before interest and tax), operating income or trading profit.


Ophthalmic describes things relating to the eye and its diseases.

Ordinary Shares

Shares in a company which entitle the holder to a share of the dividend declared (and a share of net assets on closure).

Organic Constant Currency

Organic constant currency revenue is restated to reflect the previous year’s average exchange rates and excludes contributions from acquisitions to enable clearer comparison of performance between different financial reporting periods.

Organic Profit Growth

A measure of the change in profit achieved in the current financial year, compared with the prior year, from a company’s continuing operations. Organic growth excludes growth from acquisitions in the current financial year.

Organic Revenue Growth

A measure of the change in revenue achieved in the current financial year, compared with the prior year, from a company’s continuing operations. Organic growth excludes growth from acquisitions in the current financial year.

Paid up Capital

Paid-up capital refers to shares issued by a company for which it has received the full nominal value in payment. PBIT (Profit before Interest and Tax) Profit from a company's ordinary revenue-producing activities, calculated before taxes and interest costs. Also known as EBIT.

P/E Ratio (Price / Earnings Ratio, PER)

P/E ratio or PER is a company's share price divided by its earnings per share (EPS), expressed as a number or as a multiple of EPS (P/E multiple). A high P/E suggests that investors are expecting higher earnings growth in the future compared to companies with a lower P/E.


Profit is the amount left after deducting total costs from total revenue. For accounting purposes it is normally defined more precisely such as operating profit or net profit.

Profit and Loss Account

Financial statement showing revenues, expenses, and profit within a financial period. Also referred to as the Income Statement under IFRS.

Profit Margin

Profit as a percentage of revenue. An indication of a company’s ability to control costs. Profit margins can be calculated at various levels of the profit and loss account: EBITDA margin; net margin; pre-tax margin.


A provision is a charge to the income statement and corresponding liability held on the balance sheet made to represent the company’s exposure to a probable cash outflow at an estimated future point in time. A common example is a warranty provision whereby a small proportion of goods sold may be returned at any time by a customer in a five year period (for example). A provision would be established based on management’s estimation of the likely pay-out expected to be required.

Real-Time Location Systems (RTLS)

Technologies that automatically identify and track the location of objects or people in real time, usually within a building.


Any outstanding debts, current or not, due to be paid to a company in cash.

ROS (Return on Sales)

The ratio of profit before taxation from continuing operations expressed as a percentage of revenue from continuing operations. Also called operating margin.

R&D (Research and Development)

A company’s activities focused on creation and improvement of products and processes, based on research, to satisfy the needs of the market.

Record Date

The date on which a shareholder must own shares to be entitled to a dividend.


The organisation responsible for keeping a record of a company's shareholders. Contact Computershare for details of the Halma registrar service.

Retained Earnings

Accumulated profit not paid out as dividends but held in reserves and available for reinvestment in assets.


The amount of goods or services sold by a company in a given period. Also called sales or turnover.

Revolving Credit

A line of borrowing credit from a bank that is renewed automatically after the whole sum, or an agreed portion, has been repaid.

Rights Issue

An offer of new shares to existing shareholders in proportion to the shares they already own.

ROCE (Return on Capital Employed)

The operating profit from continuing operations before amortisation of acquired intangible assets, acquisition transaction costs, movement on contingent consideration and profit on disposal of operations, as a percentage of capital employed. Also called return on investment (ROI).

ROI (Return on Investment)


ROTIC (Return on Total Invested Capital)

The post-tax return from continuing operations before amortisation of acquired intangible assets, acquisition transaction costs, movement on contingent consideration and profit on disposal of operations, as a percentage of adjusted shareholders’ funds.


Goods or services sold by a company in a given period. Also called revenue or turnover.

Scrip Issue

A free issue of shares to shareholders in proportion to their holding.

Segmental Reporting

Reporting revenue, profit, cash flow, assets and liabilities for the principal market segments served by a company. Also referred to as ‘sectoral’ reporting.

Share Based Payments

Shares or options over shares granted to employees as performance incentives that are usually linked to a period of service (typically three or more years) and performance of the company as a whole.

Share Capital

Total cash contributed to a company by its shareholders.

Share Options

Options that give the holder the right, but not the obligation, to buy or sell a stock or share at a particular price on or before a certain date. There may be performance conditions (for example profit or TSR growth) which must be met before the holder is entitled to the stock or shares.


An individual or financial institution that holds shares or stock in an organisation or company.

Shareholders' Funds

The total of share capital and reserves in a company balance sheet.

Shareholder Value

The value generated for shareholders in terms of share price increase and dividend payments.

Smart Building

A house or commercial building with central computer control of its environment such as heating and air conditioning, lighting, fire safety and security. Also known as an 'intelligent building' or a 'smart home.'

Solar PV

Solar photovoltaics (PV), also known as solar panel electricity systems, capture the sun's energy using photovoltaic cells.

Statement of Changes in Equity

One of the primary financial statements showing movements in equity during the financial period. Common movements recorded in this statement will be profits for the period (which will increase equity/shareholder’s funds), dividends paid (which reduce equity/shareholder’s funds as equity is returned to shareholders in the form of a cash payment) and issues of shares (including share based payments).

Statement of Cash Flow

A financial account that shows the cash flow generated by a company's operations, investments and financing activities.

Statement of Comprehensive Income and Expense

A financial statement reporting realised and unrealised income and expense as part of a statement of changes in equity under the IASB system.

Statement of Total Recognised Gains and Losses

A financial statement reporting changes in equity under the UK Accounting Standards Board system.

Subsidiary Company

Company in a Group which is controlled (typically more than 50% of the shares are owned) by a parent company.

Tangible Assets

Physical assets, such as plant and equipment.

Tangible Fixed Assets

Physical assets such as land, machinery and furniture that are purchased for use over a period of years and are not purchased for sale in the ordinary course of business. They are also known as Property, Plant and Equipment under IFRS

Ticker Symbol

Letters that identify a stock traded on a stock exchange. Halma's LSE ticker symbol is HLMA.

TSR (Total Shareholder Return)

A metric which compares the performance of listed companies by combining any share price increase and dividends paid to show the total return to the shareholder. See Halma’s 5-year TSR performance on the Investment Proposition page.


The oil & gas industry is divided into three sectors: upstream, midstream and downstream. The upstream oil sector is also known as the exploration and production sector where oil companies search for potential underground or underwater crude oil and natural gas fields, drilling exploratory wells, and drilling and operating production wells.

WACC (Weighted Average Cost of Capital)

Measurement of the cost of a company’s capital over time, weighted by the proportion of equity and debt.

Wireless Technology

Battery-powered products like fire and security detectors, process safety devices and water network monitoring sensors that use radio waves to transmit and receive data.

Working Capital

Finance to support the short-term assets of the company (stocks and debtors) to the extent that these are not financed by short-term creditors. Calculated as current assets minus current liabilities.

Year End

The end of a company's accounting year.