Interim results for the half year to 2 October 2004
07 Dec 2004
Halma, the leading safety and environmental technology group, today announced its interim results for the half year to 2 October 2004.
Highlights include:
- Pre-tax profit* increased to £24.6m (2003: £24.4m)
- Margins remained strong with ROCE** reaching its highest ever level at 65%
- The Group remains ungeared and strongly cash generative despite funding two significant acquisitions from its own resources
- Acquisitions of Ocean Optics and Diba Industries living up fully to the Board's expectations
- Progressive dividend policy maintained with 6% growth
* before goodwill amortisation of £2.7m (2003: £2.1m
** ROCE (Return on Capital Employed) is defined as the annualised profit before taxation* expressed
as a % of net tangible assets
Commenting on the results, Stephen O'Shea, Chief Executive of Halma, said:
"There are some excellent features of the Group's performance over the last six months including underlying sales growth in our ongoing businesses, two valuable acquisitions, continued high profitability and good cash flow. Whilst we grew profits less than we had hoped in the first half, we expect the full year to be within the range of the Board's expectations."
"We have strengthened the Group's businesses and there are opportunities for volume growth. Currency translation would have had less impact on profits in the second half than the first, however the US Dollar is currently weakening further. Our people are committed to consistent growth in sales and profits and are finding routes to achieve these goals."
For further information, please contact:
Halma p.l.c.
Stephen O'Shea, Chief Executive, +44(0)1494 721111.
Kevin Thompson, Finance Director, +44(0)1494 721111.
Hogarth Partnership Limited
Rachel Hirst/Andrew Jaques, +44 (0)20 7357 9477.
A copy of the Interim Report will be sent to shareholders and will be available to the general public on written request to the Company's registered office at: Misbourne Court, Rectory Way, Amersham, Bucks HP7 0DE.
Photographs
High resolution photos of Halma senior management, including Chief Executive Stephen O'Shea, and images illustrating Halma business activities can be downloaded from its website: www.halma.com. Click on the 'News' link, then 'Image Library'. Photo queries: David Waller +44 (0)20 8205 0038, email: dwaller@halmapr.com
Note to editors:
- Halma develops products used worldwide to enhance safety and to minimise hazards. The Group comprises six business sectors:
- Fire and Gas detection
- Water leak detection and UV treatment
- Elevator and Door Safety
- Bursting discs and sequential locking for Process Safety
- High power electrical Resistors
- Optics and Specialist technology
The key characteristics of Halma's businesses are that they are based on advanced technology and offer strong growth potential. Each business group is a clear market leader in its specialist field and, in a number of cases, is the dominant world supplier.
HALMA p.l.c.
Interim Results for the 26 weeks to 2 October 2004
Financial Highlights
| Turnover |
- 2% |
to |
£144.1 |
million |
| Overseas sales |
+ 1% |
to |
£104.6 |
million |
| Profit before taxation(1) |
+ 1% |
to |
£ 24.6 |
million |
| Earnings per share(2) |
+ 1% |
to |
4.59p |
|
| Earnings per share - statutory |
- 2% |
to |
3.91p |
|
| Dividend per share |
+ 6% |
to |
2.58p |
|
| Return on sales(3) |
|
|
17.1% |
|
| Return on capital employed(4) |
|
|
65.1% |
|
(1) Before goodwill amortisation of £2,667,000 (2003: £2,116,000).
(2) Before goodwill amortisation of 0.68p (2003: 0.53p) per share.
(3) Return on sales is defined as profit before taxation(1) expressed as a % of turnover.
(4) Return on capital employed is defined as the annualised profit before taxation(1) expressed as a % of net tangible assets.
Financial Overview
For the first half of this financial year, we earned profits before tax of a record £24.6m marginally ahead of last year's £24.4m and earnings per share were up 1% at 4.59p. Both figures are before goodwill amortisation*. Turnover was down 2% at £144.1m however adjusting for currency, disposals and acquisition impacts we did make organic growth of around 3%.
Return on capital employed* reached its highest ever level of 65%, allowing us to self-fund two excellent acquisitions - Ocean Optics and Diba - and still remain debt free.
*see Financial Highlights
Chairman's Review
Geoff Unwin, Chairman of Halma, said:
"In line with our progressive dividend policy, the interim dividend will amount to 2.58 pence per share an increase of 6% and will be paid on 8 February 2005 to shareholders on the register at 7 January 2005."
"We are making significant progress within the Group in terms of developing our management, improving our sales effectiveness and creating a stream of new product innovations, all of which add to the strength and resilience of the Group."
Chief Executive's Review
Stephen O'Shea, Chief Executive of Halma, said:
Summary
"There are some excellent features of the Group's performance over the last six months including underlying sales growth in our ongoing businesses, two valuable acquisitions, continued high profitability and good cash flow."
"Five of our six sectors grew in local currency terms but the weakness of the US Dollar affected both sales and profits when translated into Sterling. Our sales to the Far East grew at the fastest rate and we also demonstrated increased sales in Europe, the UK and the Middle East. The growth is based primarily on new products either developed in-house or obtained by acquisition."
Continued strong ratios
"The management of our input costs and our productivity resulted in us succeeding in reaching a return on sales of 17.1% and return on capital employed* of 65%. This is a strong performance even though we would be willing to accept a return to more typical ratios as a route to greater growth. We completed the half year, having paid £22 million for two acquisitions and a record £14 million dividend, with net cash in the Group."
Process development
"We are determined to deliver a regular pattern of growth. Ultimately this is based on the development of our people and improvement in our processes. Sales process reviews have been completed right across the Group and opportunities for improvement have been found. We have been working to secure the transfer of best practice wherever it is found in the Group."
Sectoral development
"The strong growth in Optics and Specialist is a combination of three factors. The sale of under-performing companies during the prior financial year, growth of existing companies and two strong acquisitions all contributed. These acquisitions will contribute more in the second half."
"Our Water sector sales were 14% lower than in the first half of the prior year as this sector, in common with the Elevator and Door Safety sector, experienced delays in municipal contracts in the USA. Resistors, who have been having a difficult time, are working hard on improvement but is the sector most affected by the substantial rises in stainless steel prices."
Focus on sales
"Much of our growth has come and, in the future, will come from retaining our typical ratios and increasing turnover. We have been moving resource from other areas into strengthening our selling teams. We are creating new and better products to help them with their task. This also opens up new territories for us to attack. Once again we spent 4% of our sales on research and development. The work we have been doing for some time to help US subsidiaries to export shows up in an increase, in US Dollar terms, of 21% in sales for US companies whilst sales into customers in the USA rose 12%."
Outlook
"Whilst we grew profits less than we had hoped in the first half, we expect the full year to be within the range of the Board's expectations."
"We have strengthened the Group's businesses and there are opportunities for volume growth. Currency translation would have had less impact on profits in the second half than the first, however the US Dollar is currently weakening further. Our people are committed to consistent growth in sales and profits and are finding routes to achieve these goals."
*see Financial Highlights
Further financial data (Consolidated Profit and Loss Account, Consolidated Balance Sheet, Consolidated Cash Flow Statement and Segmental Analysis) is available in a pdf file (138KB), see below. To download, right click red PDF symbol and select 'Save target as'.
For further information, please contact:
Stephen O'Shea, Chief Executive, Tel +44 (0)1494 721111
Kevin Thompson, Finance Director, Tel +44 (0)1494 721111
Rachel Hirst/Andrew Jaques, Hogarth Partnership Limited, Tel +44 (0)20 7357 9477
File Download
Interim Results For The Half Year to 2 October 2004
(138KB PDF)