Interim results for the half year to 1 October 2005
06 Dec 2005
Halma, the leading safety, health and sensor technology group, today announces its interim results for the 26 weeks to 1 October 2005.
Highlights include:
- A 9% increase in revenue from continuing operations at £152.4m (2004: £140.1m), with adjusted profit from continuing operations* up by 8% to £26.6m (2004: £24.6m)**
- Organic revenue and profit growth from continuing operations of 6%
- Recovery of Water and Resistors businesses going to plan
- Completion of two high-quality acquisitions, disposal of one non-core business and exit from unprofitable Resistor Transit contracts
- Progressive dividend policy maintained with 5% growth underpinned by strong cash generation
* before taxation and amortisation of acquired intangible assets
** under International Financial Reporting Standards (IFRS), with restated comparatives
Commenting on the results, Andrew Williams, Chief Executive of Halma, said:
"In my first operating review in our Annual Report 2005, I stated that my top priority for the Group was to generate organic growth. It is pleasing to report we have made a good start. During the first half we delivered underlying organic revenue and profit growth of 6%. It is important to note that profit growth has been driven by a healthy increase in revenues whilst strong product margins and effective control of our assets and costs have been maintained."
"I continue to be impressed by what is being achieved and can see a greater sense of common purpose across the Group. It is heartening to see actions starting to translate into improved financial results too. I believe the progress made so far this year already has put the Group in a stronger position to deliver organic growth on a more sustainable basis."
"I remain confident of the Group's prospects for the full year."
Photographs
High resolution photos of Halma senior management, including Chief Executive Andrew Williams, 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 and markets products used worldwide to protect life and improve the quality of life. The Group comprises three business sectors:
- Infrastructure Sensors
- Health and Analysis
- Industrial Safety
The key characteristics of Halma's businesses are that they are based on advanced technology and offer strong growth potential. Many Group businesses are a clear market leader in their specialist field and, in a number of cases, are the dominant world supplier.
HALMA p.l.c.
Interim Results for the 26 weeks to 1 October 2005
Financial Highlights
|
Change |
|
Unaudited
26 weeks to
1 October 2005 |
Unaudited
26 weeks to
2 October 2004
(restated) |
| Continuing operations: |
|
| Revenue: |
+9% |
to |
£152.4 million |
£140.1 million |
| Adjusted profit before taxation(1) |
+8% |
to |
£26.6 million |
£24.6 million |
| Statutory profit before taxation |
+8% |
to |
£26.4 million |
£24.4 million |
| Adjusted earnings per share(2) |
+6% |
to |
4.94p |
4.66p |
| Statutory earnings per share |
+6% |
to |
4.90p |
4.63p |
| Dividend per share |
+5% |
to |
2.71p |
2.58p |
| Return on sales(3) |
|
|
17.5% |
17.5% |
| Return on total invested capital(4) |
|
|
12.5% |
12.2% |
| Return on capital employed(4) |
|
|
50.8% |
46.9% |
The comparative figures for the 26 weeks to 2 October 2004 and the 52 weeks to 2 April 2005 have been restated to reflect the adoption of International Financial Reporting Standards. See Note 9 for details.
Pro-forma information:
(1) Adjusted to remove the amortisation of acquired intangible assets of £237,000 (2004: £175,000).
(2) Adjusted to remove the amortisation of acquired intangible assets. See Note 6 for details.
(3) Return on sales is defined as adjusted(1) profit before taxation from continuing operations expressed as a percentage of revenue from continuing operations.
(4) Organic growth rates, return on total invested capital and return on capital employed are non-GAAP performance measures used by management in measuring the returns achieved from the Group's asset base. See Note 8 for details.
Financial Overview
For the first half of this financial year, adjusted profit before tax from continuing operations was £26.6 million (2004: £24.6 million)*, up 8%. Revenue from continuing operations was up 9% at £152.4 million (2004: £140.1 million)*. We achieved organic revenue and profit growth of 6%.*
Return on total invested capital increased to 12.5% (2004: 12.2%)*.
During the period we made two acquisitions: Netherlocks Safety Systems B.V. and Radio-Tech Limited, and disposed of one non-core business, SEAC Limited.
The interim dividend will amount to 2.71 pence per share, an increase of 5%, and will be paid on 8 February 2006 to shareholders on the register at 6 January 2006.
*see Financial Highlights
Chairman's Statement
Geoff Unwin, Chairman of Halma, said:
"Andrew Williams, our new CEO, has made a good start in his first complete half-year with the Group reporting record profits and organic growth in both revenue and profit. He has re-focussed the business along three major divisions:
- Infrastructure Sensors
- Health and Analysis
- Industrial Safety.
Our two acquisitions and one disposal support this focus.
We are also seeing significant rejuvenation of management at all levels which is feeding through into an increased rate of progress within the Group. Pleasing to see.
The Board remains confident of the Group's prospects for the full year."
Chief Executive's Review
Andrew Williams, Chief Executive of Halma, said:
Organic growth of 6% achieved
"In my first operating review in our Annual Report 2005, I stated that my top priority for the Group was to generate organic growth. It is pleasing to report we have made a good start. During the first half, for our continuing activities we delivered revenue growth of 9%* on profit growth of 8%*. Statutory profit from continuing operations was £26.4 million (2004: £24.4 million). Underlying organic revenue and profit growth were both 6%*."
"There was strong growth in both our Industrial Safety and Health and Analysis sectors - each achieving double-digit revenue increases. The former showed the benefits of our vigorous actions to achieve recovery in our Resistors business and a strong performance from our Process Safety companies. The latter benefited from the planned recovery in Water and continued progress in Optics and Fluid Technology. Significantly, profit growth has been driven by a healthy increase in revenues whilst strong product margins and effective control of our assets and costs have been maintained."
"Infrastructure Sensors, incorporating our Fire, Elevator & Door Safety businesses continued to have a more challenging time with revenues only a fraction up and profits down by 12%. The profit decline was mainly a result of our decision to invest more in our sales and distribution internationally and make some organisational changes. We will continue to make these investments in the second half since I believe they are essential if we are to deliver worthwhile organic growth from this sector in the longer term."
*see Financial Highlights
Key strategic actions being implemented to drive sustainable growth
"The Group has responded to the growth challenge in impressive fashion. The overall energy level in the business has been raised by several notches and directed into selected areas.
"Since the start of the year we have;
- Recovered sales and profit growth in our Water businesses as planned.
- Exited the unprofitable Resistor Transit contracts as planned and delivered sales and profit growth in Resistors.
- Completed three acquisitions, one of them since the half year end, all of which strengthen the Group's technology and products in key areas.
- Through the purchase of Texecom in November, at a purchase price of £26 million the second largest in the Group's history, made a strategic move into the growing security sensor market.
- Disposed of a lower technology specialist business, SEAC.
- Merged two sets of businesses in the Industrial Safety and Infrastructure Sensors sectors.
- Established new manufacturing operations in Eastern Europe and North Africa.
- Established further sales offices in the US, Europe, China and India.
- Won new OEM contracts with major global companies in Health Analysis and Infrastructure Sensors.
- Formalised long-term debt facilities of up to £60 million.
"This list is not exhaustive but gives you an indication of the range and significance of our actions. I look forward to reporting further progress in our Annual Report."
New reporting sectors will add clarity externally and increase opportunities
"You will note in the following pages that we are now reporting our results under three sector headings. This is not merely a change to make the Group more readily understood, but one that will enable me, through the Divisional Chief Executives and the Subsidiary Executives, to continually develop and implement more coherent market-driven growth strategies. The new sectors group together businesses that have much in common, including market growth rates, market drivers, operating characteristics, distribution channels, technologies and customers."
Improving prospects for sustained organic growth
"None of this would be possible without the hard work, commitment and skill of the people at all levels of our organisation. As I travel around the Group I continue to be impressed by what is being achieved and can see a greater sense of common purpose across the Group. It is heartening to see actions starting to translate into improved financial results too."
"I believe the progress made so far this year already has put the Group in a stronger position to deliver organic growth on a more sustainable basis."
Further financial data (Consolidated Income Statement, Statement of Recognised Income and Expense, Reconciliation of Shareholders' Equity, Consolidated Balance Sheet, Consolidated Cash Flow Statement and Notes on the Interim Report) is available in a pdf file (600kB). To download, right click the red PDF symbol below and select 'Save target as'.
For further information, please contact:
Halma p.l.c.
Andrew Williams, 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 on 6 December 2005 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.
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Interim Results for the Half Year to 1 October 2005
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