Full Year Results 2019/20
14 July 2020
Other new accounting standards and interpretations applied for the first time
The following Standards with an effective date of 1 January 2019 have been adopted without any significant impact on the amounts reported in these financial statements:
- Amendments to IAS 19: Plan amendment, Curtailment of Settlement
- Annual improvements 2015-2017 cycle
- IFRIC Interpretation 23: Uncertainty over Income Tax Treatments
- Amendments to IAS 28: Long-term Interests in Associates and Joint Ventures
New Standards and Interpretations not yet applied
At the date of authorisation of these financial statements, the following Standards and Interpretations that are potentially relevant to the Group, and which have not been applied in these financial statements, were in issue but not yet effective (and in some cases had not yet been adopted by the EU):
- Amendments to IFRS 3: Definition of a Business
- Amendments to IFRS 10 and IAS 28: Sale or Contribution of Assets between an Investor and its Associate or Joint Venture
- Amendments to IAS 1 and IAS 8: Definition of Material .
- Conceptual Framework: Amendments to References to the Conceptual Framework in IFRS Standards
The Directors anticipate that the adoption of these Standards and Interpretations in future periods will have no material impact on the financial statements of the Group.
Use of Alternative performance measures (APMs)
In the reporting of the financial information, the Group uses certain measures that are not required under IFRS, the Generally Accepted Accounting Principles (GAAP) under which the Group reports. The Directors believe that Return on Total Invested Capital (ROTIC), Return on Capital Employed (ROCE), Organic growth at constant currency, adjusted profit and earnings per share measures and adjusted operating cash flow provide additional and more consistent measures of underlying performance to shareholders by removing non-trading items that are not closely related to the Group’s trading or operating cash flows. These and other alternative performance measures are used by the Directors for internal performance analysis and incentive compensation arrangements for employees. The terms ROTIC, ROCE, organic growth at constant currency and ‘adjusted’ are not defined terms under IFRS and may therefore not be comparable with similarly titled measures reported by other companies. They are not intended to be a substitute for, or superior to, GAAP measures.
The principal items which are included in adjusting items are set out below in the Group’s accounting policy and in note 1. The term ‘adjusted’ refers to the relevant measure being reported for continuing operations excluding adjusting items. Definitions of the Group’s material alternative performance measures along with reconciliation to their IFRS equivalent measure are included in note 3.
Key accounting policies
Below we set out our key accounting policies, with a list of all other accounting policies thereafter.
Going concern
The Group’s business activities, together with the main trends and factors likely to affect its future development, performance and position, and the financial position of the Group as at 31 March 2020, its cash flows, liquidity position and borrowing facilities are set out in the Strategic Report. In addition, note 27 in the Annual Report and Accounts contains further information concerning the security, currency, interest rates and maturity of the Group’s borrowings.
The financial statements have been prepared on a going concern basis. In adopting the going concern basis the Directors have considered all of the above factors, including potential scenarios arising from the COVID-19 pandemic and from its other principal risks set out on pages [50] to [53]. Under the potential scenarios considered, which are severe but plausible, the Group remains within its debt facilities and the attached financial covenants for the foreseeable future and the Directors therefore believe, at the time of approving the financial statements, that the Company is well placed to manage its business risks successfully and remains a going concern. The key facts and assumptions in reaching this determination are summarised below.
Our financial position remains robust with committed facilities totalling approximately £750m which includes a £550m Revolving Credit Facility maturing in November 2023 of which £313.7m remains undrawn at the date of this report. The earliest maturity in these facilities is for £74m in January 2021, with the remaining maturities from January 2023 onwards. The financial covenants on these facilities are for leverage (net debt/adjusted EBITDA*) of not more than three times and for adjusted interest cover of not less than four times.
* net debt and adjusted EBITDA are on a pre-IFRS 16 basis for covenant purposes
Our base scenario has been prepared using forecasts from each of our Operating Companies, with each considering both the challenges and opportunities they are facing as a consequence of COVID-19. Whilst these are varied, we have made assumptions in the following key areas:
- The impact of government lockdown restrictions: physical lockdown of either our own or our suppliers, distributors or customers operations have a direct impact on our revenue. This has impacted the Safety Sectors in particular with the challenges of physical access and our customers’ ability to install products at end customer sites. We have assumed a gradual recovery of these sectors from Q2 with trading returning to more normal trading levels by the end of the year.
- The impact of the pandemic on elective surgery and discretionary ophthalmic diagnosis procedures: as health services have focussed on addressing the additional demand from the pandemic, certain businesses in the Medical sector have experienced reduced demand for their products in these end markets. We have assumed a gradual recovery from Q2 as healthcare systems normalise, returning to more normal trading levels by Q3.
- The effect on essential businesses: a number of our businesses are considered essential in nature either as they make products that are critical to life or protect critical infrastructure. A small number of these businesses have experienced an increase in demand as a result of global efforts to fight COVID-19. We have assumed that the current high demand in these businesses is short term and moderates over the coming months, returning to more normal levels by Q4.
- Mitigating actions assumed in the base case:
- Cost reductions which have already been implemented in Q1 of the 2021 financial year including temporary salary reductions, hiring freezes and a significant reduction in discretionary overhead spending. We have assumed appropriate and achievable further reductions in overheads where this is required for individual companies to “right size” their cost base for the medium term.
- Reduction of capital expenditure: we have assumed a reduction of non-essential capital expenditure for the rest of the year.
- Suspension of M&A activity: we have assumed that we will not make any acquisitions for the balance of FY21, resuming a normal level of activity during FY22.
Further severe but plausible downside sensitivities modelled include:
- a delay in the recovery of the impacted businesses from the effects of COVID-19;
- a second wave of COVID-19 infection and corresponding government restrictions in the second half of FY21;
A reverse stress test scenario has been modelled which is considered remote in likelihood of occurring, which includes a combination of these scenarios, with the addition of impacts from the Group’s other principal risks.
None of these scenarios result in a breach of the Group’s available debt facilities or the attached covenants and accordingly the directors believe there is no material uncertainty in the use of the going concern assumption.
Pensions
The Group makes contributions to various pension plans.
For defined benefit plans, the asset or liability recorded in the Consolidated Balance Sheet is the difference between the fair value of the plan’s assets and the present value of the defined obligation at that date. The defined benefit obligation is calculated separately for each plan on an annual basis by independent actuaries using the projected unit credit method.
Actuarial gains and losses are recognised in full in the period in which they occur and are taken to other comprehensive income.
Current and past service costs, along with the impact of any settlements or curtailments, are charged to the Consolidated Income Statement. The net interest expense on pension plans’ liabilities and the expected return on the plans’ assets is recognised within finance expense in the Consolidated Income Statement.
Contributions to defined contribution plans are charged to the Consolidated Income Statement when they fall due.
Business combinations and goodwill
Business combinations are accounted for using the acquisition method as at the acquisition date, which is the date on which control is transferred to the Group. The Group measures goodwill at the acquisition date as:
- the fair value of the consideration transferred; plus
- the recognised amount of any non-controlling interests in the acquiree measured at the proportionate share of the value of net identifiable assets acquired; plus
- the fair value of the existing equity interest in the acquiree; less
- the net recognised amount (generally fair value) of the identifiable assets acquired and liabilities assumed.
Costs related to the acquisition, other than those associated with the issue of debt or equity securities, are expensed as incurred. Any contingent consideration payable may be accounted for as either:
a) Consideration transferred, which is recognised at fair value at the acquisition date. If the contingent purchase consideration is classified as equity, it is not remeasured and settlement is accounted for within equity. Otherwise, subsequent changes to the fair value of the contingent purchase consideration are recognised in the Consolidated Income Statement; or
b) Remuneration, which is expensed in the Consolidated Income Statement over the associated period of service. An indicator of such treatment includes when payments to employees of the acquired company are contingent on a post-acquisition event, but may be automatically forfeited on termination of employment.
For acquisitions between 4 April 2004 (the date from which the financial statements were reported under IFRS) and 2 April 2010, goodwill represents the difference between the cost of the acquisition, including acquisition costs and the fair value of the net identifiable assets acquired. Goodwill has an indefinite expected useful life and is not amortised, but is tested annually for impairment.
Goodwill is recognised as an intangible asset in the Consolidated Balance Sheet. Goodwill therefore includes non-identified intangible assets including business processes, buyer-specific synergies, know-how and workforce-related industry-specific knowledge and technical skills. Negative goodwill arising on acquisitions would be recognised directly in the Consolidated Income Statement. On closure or disposal of an acquired business, goodwill would be taken into account in determining the profit or loss on closure or disposal.
As permitted by IFRS 1, the Group elected not to apply IFRS 3 ‘Business Combinations’ to acquisitions prior to 4 April 2004 in its consolidated accounts. As a result, the net book value of goodwill recognised as an intangible asset under UK GAAP at 3 April 2004 was brought forward unadjusted as the cost of goodwill recognised under IFRS at 4 April 2004 subject to impairment testing on that date; and goodwill that was written off to reserves prior to 28 March 1998 under UK GAAP will not be taken into account in determining the profit or loss on disposal or closure of previously acquired businesses from 4 April 2004 onwards.
Intangible assets
(a) Acquired intangible assets
An intangible resource acquired with a subsidiary undertaking is recognised as an intangible asset if it is separable from the acquired business or arises from contractual or legal rights, is expected to generate future economic benefits and its fair value can be measured reliably. Acquired intangible assets, comprising trademarks, technology and know-how and customer relationships, are amortised through the Consolidated Income Statement on a straight-line basis over their estimated economic lives of between four and twenty years.
(b) Product development costs
Research expenditure is written off in the financial year in which it is incurred.
Development expenditure is written off in the financial year in which it is incurred, unless it relates to the development of a new or substantially improved product, is incurred after the technical feasibility and economic viability of the product has been proven and the decision to complete the development has been taken, and can be measured reliably. Such expenditure is capitalised as an intangible asset in the Consolidated Balance Sheet at cost and is amortised through the Consolidated Income Statement on a straight-line basis over its estimated economic life of three years.
Impairment of trade and other receivables
The Group assesses on a forward-looking basis the expected credit losses associated with its trade and other receivables carried at amortised cost. The impairment methodology applied depends on whether there has been a significant increase in credit risk.
The Group applies the simplified approach permitted by IFRS 9, which requires expected lifetime losses to be recognised from initial recognition of the receivables. In order to estimate the expected lifetime losses, the Group categorises its customers into groups with similar risk profiles and determines the historic rates of impairment for each of those categories of customer. The Group then adjusts the risk profile for each group of customers by using forward looking information, such as the government risk of default for the country in which those customers are located, and determines an overall probability of impairment for the total trade and other receivables at the balance sheet date.
Critical accounting judgements and key sources of estimation uncertainty
The preparation of Group accounts in conformity with IFRS requires the Directors to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experiences and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.
The following areas of critical accounting judgement and key estimation uncertainty have been identified as having significant risk of causing a material adjustment to the carrying amounts of assets and liabilities:
Critical accounting judgements
Goodwill impairment CGU groups
Determining whether goodwill is impaired requires management’s judgement in assessing cash generating unit (CGU) groups to which goodwill should be allocated. Management allocates a new acquisition to a CGU group based on which one is expected to benefit most from that business combination. The allocation of goodwill to existing CGUs is generally straightforward and factual, however over time as new businesses are acquired and management reporting structures change management reviews the CGU groups to ensure they are still appropriate. During the current year, management has reviewed its CGU groups and made changes to the groups within the Medical and Environmental & Analysis sectors.
Changes to contingent consideration within 12 months of acquiring a business
Where the Group’s expectations of future profit levels on which contingent consideration provisions are based change within 12 months of acquiring a business, judgement is required to assess whether those changes reflect post-acquisition events or measurement period events. Changes in contingent consideration that are determined to be as a result of post-acquisition events in the first 12 months following the acquisition are recognised in the Consolidated Income Statement whereas changes related to events that were known at the acquisition date are measurement period events and should be adjusted against goodwill. For all acquisitions in the year made prior to 11 March 2020, the date on which COVID-19 was declared a pandemic, the Group has determined changes in expectations arising from COVID-19 to be post-acquisition events.
Provisions for taxation
In the current year, determining the provision for taxation requires management’s judgement in assessing the provision required in relation to group financing partial exemption applicable to UK controlled foreign companies as a result of the decision by the European Commission that this constitutes state aid. Management’s assessment is that this represents a contingent liability and no provision is required at this time. Further details are provided in note 12.
Key sources of estimation uncertainty
Estimation of future cash flows
The Group uses estimates of future cash flows in a number of areas described below as required by IFRS. Estimates are made based on the latest available information by management closest to the related assets and end markets. The COVID-19 pandemic has increased the level of estimation uncertainty as the impact on countries and markets continues to be uncertain, however, the Group has modelled a range of scenarios to consider the impact on the carrying value of its assets as described in the going concern statement above and within each relevant note indicated below.
Contingent consideration changes in estimates
Determining the value of contingent consideration recognised as part of the acquisition of a business requires management to estimate the expected performance of the acquired business and the amount of contingent consideration that will therefore become payable. Initial estimates of expected performance are made by the management responsible for completing the acquisition and form a key component of the financial due diligence that takes place prior to completion. Subsequent measurement of contingent consideration is based on the Directors’ appraisal of the acquired business’s performance in the post-acquisition period and the agreement of final payments.
Intangible assets
IFRS 3 (revised) ‘Business Combinations’ requires that goodwill arising on the acquisition of subsidiaries is capitalised and included in intangible assets. IFRS 3 (revised) also requires the identification and valuation of other separable intangible assets at acquisition. The assumptions involved in valuing these intangible assets require the use of management estimates.
IAS 38 ‘Intangible Assets’ requires that development costs, arising from the application of research findings or other technical knowledge to a plan or design of a new or substantially improved product, are capitalised, subject to certain criteria being met. Determining the technical feasibility and estimating the future cash flows generated by the products in development requires the use of management estimates.The estimates made in relation to both acquired intangible assets and capitalised development costs include identification of relevant assets, future growth rates, expected inflation rates and the discount rate used. Management also make estimates of the useful economic lives of the intangible assets.
Goodwill impairment future cash flows
The value in use calculation used to test for impairment of goodwill involves an estimation of the present value of future cash flows of CGUs. The future cash flows are based on annual budgets and forecasts, as approved by the Board, to which management’s expectation of market-share and long-term growth rates are applied. The present value is then calculated based on management’s estimate of future discount and growth rates. The Board reviews these key assumptions (market-share, long-term growth rates, and discount rates) and the sensitivity analysis around these assumptions.
Defined benefit pension plan liabilities
Determining the value of the future defined benefit obligation requires estimation in respect of the assumptions used to calculate present values. These include future mortality, discount rate and inflation. Management determines these assumptions in consultation with an independent actuary.
Trade and other receivables impairment
Determining the provision for impairment of trade and other receivables requires estimation of the expected lifetime losses. Management makes these estimates using forward looking information to determine the overall probability of impairment. Details of the estimates made in calculating the provision for impairment of trade and other receivables are disclosed in note 8.
Other accounting policies
Basis of consolidation
The Group accounts include the accounts of Halma plc and all of its subsidiary companies made up to 31 March 2020, adjusted to eliminate intra-Group transactions, balances, income and expenses. The results of subsidiary companies acquired or discontinued are included from the month of their acquisition or to the month of their discontinuation.
Investments in associates
An associate is an entity over which the Group is in a position to exercise significant influence, but not control or joint control, through participation in the financial and operating policy decisions of the investee. Significant influence is the power to participate in the financial and operating policy decisions of the investee but without control or joint control over those policies.
The results and assets and liabilities of associates are incorporated in these financial statements using the equity method of accounting. Investments in associates are carried in the Consolidated Balance Sheet at cost as adjusted by post-acquisition changes in the Group’s share of the net assets of the associate, less any impairment in the value of individual investments. Losses of an associate in excess of the Group’s interest in that associate (which includes any long-term interests that, in substance, form part of the Group’s net investment in the associate) are recognised only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the associate.
Any excess of the cost of acquisition over the Group’s share of the fair values of the identifiable net assets of the associate at the date of acquisition is recognised as goodwill. The goodwill is included within the carrying amount of the investment and is assessed for impairment as part of that investment. Any deficiency of the cost of acquisition below the Group’s share of the fair values of the identifiable net assets of the associate at the date of acquisition (i.e. discount on acquisition) is credited in profit or loss in the year of acquisition.
Where a Group company transacts with an associate of the Group, profits and losses are eliminated to the extent of the Group’s interest in the relevant associate. Losses may provide evidence of an impairment of the asset transferred in which case appropriate provision is made for impairment.
Where the group disposes of its entire interest in an associate a gain or loss is recognised in the income statement on the difference between the amount received on the sale of the associate less the carrying value and costs of disposal.
Financial assets at fair value through other comprehensive income
Financial assets at fair value through other comprehensive income (FVOCI) comprise equity securities which are not held for trading, and which the Group has irrevocably elected at initial recognition to recognise as FVOCI. The Group considers this classification relevant as these are strategic investments.
Financial assets at FVOCI are adjusted to the fair value of the asset at the balance sheet date with any gain or loss being recognised in other comprehensive income and held as part of other reserves. On disposal any gain or loss is recognised in other comprehensive income and the cumulative gains or losses are transferred from other reserves to retained earnings.
Other intangible assets
(a) Computer software
Computer software that is not integral to an item of property, plant or equipment is recognised separately as an intangible asset, and is amortised through the Consolidated Income Statement on a straight-line basis over its estimated economic life of between three and five years.
(b) Other intangibles
Other intangibles are amortised through the Consolidated Income Statement on a straight-line basis over their estimated economic lives of between three and five years.
Impairment of non-current assets
All non-current assets are tested for impairment whenever events or circumstances indicate that their carrying value may be impaired. Additionally, goodwill and capitalised development expenditure relating to a product that is not yet in full production are subject to an annual impairment test.
An impairment loss is recognised in the Consolidated Income Statement to the extent that an asset’s carrying value exceeds its recoverable amount, which represents the higher of the asset’s fair value less costs to dispose and its value in use. An asset’s value in use represents the present value of the future cash flows expected to be derived from the asset or from the cash generating unit to which it relates. The present value is calculated using a pre-tax discount rate that reflects the current market assessment of the time value of money and the risks specific to the asset concerned.
Impairment losses recognised in previous periods for an asset other than goodwill are reversed if there has been a change in the estimates used to determine the asset’s recoverable amount, but only to the extent that the carrying amount of the asset does not exceed its carrying amount had no impairment loss been recognised in previous periods. Impairment losses in respect of goodwill are not reversed.
Segmental reporting
An operating segment is a distinguishable component of the Group that is engaged in business activities from which it may earn revenues and incur expenses, and whose operating results are reviewed regularly by the Chief Operating Decision Maker (the Group Chief Executive) to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available.
Reportable segments are operating segments that either meet the thresholds and conditions set out in IFRS 8 or are considered by the Board to be appropriately designated as reportable segments. Segment result represents operating profits and includes an allocation of Head Office expenses. Segment result excludes tax and financing items. Segment assets comprise goodwill, other intangible assets, property, plant and equipment & Right of Use assets (excluding land and buildings), inventories, trade and other receivables. Segment liabilities comprise trade and other payables, provisions and other payables. Unallocated items represent land and buildings (including Right of Use assets), corporate and deferred taxation balances, defined benefit plan liabilities, contingent purchase consideration, all components of net cash/borrowings, lease liabilities and derivative financial instruments.
Inventories
Inventories and work in progress are included at the lower of cost and net realisable value. Cost is calculated either on a ‘first in, first out’ or an average cost basis and includes direct materials and the appropriate proportion of production and other overheads considered by the Directors to be attributable to bringing the inventories to their location and condition at the year end. Net realisable value represents the estimated selling price less all estimated costs to complete and costs to be incurred in marketing, selling and distribution.
Revenue
The Group’s revenue streams are the sale of goods and services in the specialist safety, environmental technologies and health markets. The revenue streams are disaggregated into four sectors, that serve like markets. Those sectors are Process Safety, Infrastructure Safety, Environmental & Analysis and Medical.
Revenue is recognised to depict the transfer of control over promised goods or services to customers in an amount that reflects the amount of consideration specified in a contract with a customer, to which the Group expects to be entitled in exchange for those goods or services.
It is the Group’s judgement that in the majority of sales there is no contract until such time as the Company performs, at which point the contract becomes the supplier’s purchase order governed by the Company’s terms and conditions. Where there are Master Supply Arrangements, these are typically framework agreements and do not contain clauses that would result in a contract forming under IFRS 15 until a Purchase Order is issued by the customer.
Revenue represents sales, net of estimates for variable consideration, including rights to returns, and discounts, and excluding value added tax and other sales related taxes. The amount of variable consideration is not considered to be material to the Group as a whole.
Performance obligations are unbundled in each contractual arrangement if they are distinct from one another. There is judgement in identifying distinct performance obligations where the product could be determined to be a system, or where a combination of products and services are provided together. For the majority of the Group’s activities the performance obligation is judged to be the component product or service rather than the system or combined products and services. The contract price is allocated to the distinct performance obligations based on the relative standalone selling prices of the goods or services.
The way in which the Group satisfies its performance obligations varies by business and may be on shipment, delivery, as services are rendered or on completion of services depending on the nature of product and service and terms of the contract which govern how control passes to the customer. Revenue is recognised at a point in time or over time as appropriate.
Where the Group offers warranties that are of a service nature, revenue is recognised in relation to these performance obligations over time as the services are rendered. In our judgement we believe the associated performance obligations accrue evenly across the contractual term and therefore revenue is recognised on a pro-rated basis over the length of the service period.
In a small number of instances across the Group, products have been determined to be bespoke in nature, with no alternative use. Where there is also an enforceable right to payment for work completed, the criteria for recognising revenue over time have been deemed to have been met. Revenue is recognised on an input basis. This is not a material part of the Group’s business as for the most part, where goods are bespoke in nature, it is the Group’s judgement that the product can be broken down to standard component parts with little additional cost and therefore has an alternate use, or there is no enforceable right to payment for work performed. In these cases, the judgement is made that the requirements for recognising revenue over time are not met and revenue is recognised when control of the finished product passes to the customer.
Contract assets and liabilities
A contract asset is recognised when the Group’s right to consideration is conditional on something other than the passage of time, for example the completion of future performance obligations under the terms of the contract with the customer.
In some instances, the Group receives payments from customers based on a billing schedule, as established in the contract, which may not match with the pattern of performance under the contract. Where payment is received ahead of performance a contract liability will be created and where performance obligations are satisfied ahead of billing then a contract asset will be recognised.
Contract assets are recognised within Trade and other receivables and are assessed for impairment on a forward-looking basis using the expected lifetime losses approach, as required by IFRS 9 (‘Financial Instruments’).
Adjusting items
When items of income or expense are material and they are relevant to an understanding of the entity’s financial performance, they are disclosed separately within the financial statements. Such adjusting items include material costs or reversals arising from acquisitions or disposals of businesses, including acquisition costs, creation or reversals of provisions related to changes in estimates for contingent consideration on acquisition, amortisation of acquired intangible assets, and other significant one-off items that may arise.
Taxation
Taxation comprises current and deferred tax. Tax is recognised in the Consolidated Income Statement except to the extent that it relates to items recognised directly in Total equity, in which case it too is recognised in Total equity. Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the balance sheet date, along with any adjustment to tax payable in respect of previous years. Taxable profit differs from net profit as reported in the Consolidated Income Statement because it excludes items that are never taxable or deductible.
Deferred tax is provided on temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes and is accounted for using the balance sheet liability method, apart from the following differences which are not provided for: goodwill not deductible for tax purposes; the initial recognition of assets or liabilities that affect neither accounting nor taxable profit; and differences relating to investments in subsidiaries to the extent they will probably not reverse in the foreseeable future. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amounts of assets and liabilities, using tax rates and laws, which are expected to apply in the year when the liability is settled, or the asset is realised. Deferred tax assets are only recognised to the extent that recovery is probable.
Foreign currencies
The Group presents its accounts in Sterling. Transactions in foreign currencies are recorded at the rate of exchange at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are reported at the rates prevailing at that date. Any gain or loss arising from subsequent exchange rate movements is included as an exchange gain or loss in the Consolidated Income Statement.
Net assets of overseas subsidiary companies are expressed in Sterling at the rates of exchange ruling at the end of the financial year, and trading results and cash flows at the average rates of exchange for the financial year. Goodwill arising on the acquisition of a foreign business is treated as an asset of the foreign entity and is translated at the rate of exchange ruling at the end of the financial year. Exchange gains or losses arising on these translations are taken to the Translation reserve within Total equity.
In the event that an overseas subsidiary is disposed of or closed, the profit or loss on disposal or closure will be determined after taking into account the cumulative translation difference held within the Translation reserve attributable to that subsidiary. As permitted by IFRS 1, the Group has elected to deem the translation to be £nil at 4 April 2004. Accordingly, the profit or loss on disposal or closure of foreign subsidiaries will not include any currency translation differences which arose before 4 April 2004.
Interest bearing loans and borrowings
Interest bearing loans and borrowings are initially recognised in the balance sheet at fair value less directly attributable transaction costs and are subsequently measured at amortised cost using the effective interest rate method.
Trade payables
Trade payables are non interest-bearing and are stated at amortised cost.
Derivative financial instruments and hedge accounting
The Group enters into derivative financial instruments to manage its exposure to foreign exchange rate risk using forward exchange contracts. The group continues to apply the requirements of IAS 39 for hedge accounting.
Derivative financial instruments are classified as fair value through profit and loss (held for trading) unless they are in a designated hedge relationship.
Derivatives are initially recognised at fair value at the date a derivative contract is entered into and are subsequently remeasured to their fair value at each balance sheet date. The resulting gain or loss is recognised in the Consolidated Income Statement, unless the derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in the Consolidated Income Statement depends on the nature of the hedge relationship. The Group designates certain derivatives as hedges of highly probable forecast transactions or hedges of foreign currency risk of firm commitments (cash flow hedges), or hedges of net investments in foreign operations.
A derivative with a positive fair value is recognised as a financial asset whereas a derivative with a negative fair value is recognised as a financial liability. A derivative is presented as a non-current asset or a non-current liability if the remaining maturity of the instrument is more than 12 months and it is not expected to be realised or settled within 12 months. Other derivatives are presented as current assets or current liabilities.
Cash flow hedge accounting
The Group designates certain hedging instruments as cash flow hedges.
At the inception of the hedge relationship, the entity documents the relationship between the hedging instrument and the hedged item, along with its risk management objectives and its strategy for undertaking various hedge transactions. Furthermore, at the inception of the hedge and on an ongoing basis, the Group documents whether the hedging instrument has been or is expected to be highly effective in offsetting changes in fair values or cash flows of the hedged item.
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognised in other comprehensive income. The gain or loss relating to the ineffective portion as a result of being over hedged is recognised immediately in the Consolidated Income Statement.
Amounts previously recognised in other comprehensive income and accumulated in equity are reclassified to the Consolidated Income Statement in the periods when the hedged item is recognised in the Consolidated Income Statement. However, when the forecast transaction that is hedged results in the recognition of a non-financial asset or a non-financial liability, the gains and losses previously accumulated in equity are transferred from equity and included in the initial measurement of the cost of the non-financial asset or non-financial liability.
Hedge accounting is discontinued when the Group revokes the hedging relationship, the hedging instrument expires or is sold, terminated or exercised, or no longer qualifies for hedge accounting. Any gain or loss recognised in other comprehensive income at that time is accumulated in equity and is recognised, when the forecast transaction is ultimately recognised, in the Consolidated Income Statement. When a forecast transaction is no longer expected to occur, the gain or loss accumulated in equity is recognised immediately in the Consolidated Income Statement.
Net investment hedge accounting
The Group uses foreign currency denominated borrowings as a hedge against the translation exposure on the Group’s net investment in overseas companies. Where the hedge is fully effective at hedging, the variability in the net assets of such companies caused by changes in exchange rates and the changes in value of the borrowings are recognised in the Consolidated Statement of Comprehensive Income and accumulated in the Translation reserve. The ineffective part of any change in value caused by changes in exchange rates is recognised in the Consolidated Income Statement.
Employee share plans
Share-based incentives are provided to employees under the Group’s share incentive plan, the performance share plan and the executive share plan.
(a) Share incentive plan
Awards of shares under the share incentive plan are made to qualifying employees depending on salary and service criteria. The shares awarded under this plan are purchased in the market by the plan’s trustees at the time of the award, and are then held in trust for a minimum of three years. The costs of this plan are recognised in the Consolidated Income Statement over the three-year vesting period of the awards.
(b) Executive share plan
During the year ended 2 April 2016, Halma plc introduced the Executive Share Plan, in which executive Directors and certain senior employees participate. Grants under this Plan are in the form of Performance Awards or Deferred Share Awards.
Performance Awards are subject to non-market-based vesting criteria, and Deferred Share Awards are subject only to continuing service of the employee. Share awards are equity-settled. The fair value of the awards at the date of grant, which is estimated to be equal to the market value, is charged to the Consolidated Income Statement on a straight-line basis over the vesting period, with appropriate adjustments being made during this period to reflect expected and actual forfeitures. The corresponding credit is to other reserves within Total equity.
(c) Cash settled
For cash-settled awards, a liability equal to the portion of the services received is recognised at the current fair value determined at each balance sheet date.
Provisions and contingent liabilities
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that the Group will be required to settle that obligation and a reliable estimate can be made of the amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the balance sheet date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of the cash flows.
When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognised as an asset if it is virtually certain that reimbursement will be received, and the amount of the receivable can be measured reliably.
Contingent liabilities are disclosed where a possible obligation dependent on uncertain future events exists as at the end of the reporting period or a present obligation for which payment either cannot be measured or is not considered to be probable is noted. Contingent liabilities are not accrued for and no contingent liability is disclosed where the possibility of payment is considered to be remote.
Deferred government grant income
Government grant income that is linked to capital expenditure is deferred to the Consolidated Balance Sheet and credited to the Consolidated Income Statement over the life of the related asset. In addition, the Group claims research and development expenditure credits arising on qualifying expenditure in its UK-based subsidiaries and shows these ‘above the line’ in Operating profit. Where the credits arise on expenditure that is capitalised as part of internally generated capitalised development costs, the income is deferred to the Consolidated Balance Sheet and credited to the Consolidated Income Statement over the life of the related asset in line with the policy stated above.
Operating profit
Operating profit is presented net of direct production costs, production overheads, selling costs, distribution costs and administrative expenditure. Operating profit is stated after charging restructuring costs but before the share of results of associates, profit or loss on disposal of operations, finance income and finance costs.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances, deposits with an initial maturity of less than three months, and bank overdrafts that are repayable on demand.
Dividends
Dividends payable to the Company’s shareholders are recognised as a liability in the period in which the distribution is approved by the Company’s shareholders.
Property, plant and equipment
Property, plant and equipment is stated at historical cost less provisions for impairment and depreciation which, with the exception of freehold land which is not depreciated, is provided on a straight-line basis over each asset’s estimated economic life. The principal annual rates used for this purpose are:
| Freehold property | 2% |
| Leasehold properties and improvements: Long leases (more than 50 years unexpired) |
2% |
| Short leases (less than 50 years unexpired) | Period of lease |
| Plant, equipment and vehicles | 8% to 33.3% |
Leases
The Group recognises a right-of-use asset and a lease liability at the lease commencement date.
The right-of-use asset is initially measured at cost, comprising the initial amount of the lease liability plus any initial direct costs incurred and an estimate of costs to restore the underlying asset, less any lease incentives received. The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the asset or the end of the lease term.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the incremental borrowing rate. The lease liability is measured at amortised cost using the effective interest method by increasing the carrying amount to reflect interest on the lease liability and by reducing the carrying amount to reflect the lease payments made. The lease liability is remeasured when there is a change in future lease payments arising from a change in an index or a rate or a change in the Group’s assessment of whether it will exercise an extension or termination option. When the lease liability is remeasured, a corresponding adjustment is made to the right-of-use asset.
Payments associated with short-term leases or low-value assets are recognised on a straight-line basis as an expense in the Consolidated Income Statement. Short-term leases are leases with a lease term of 12 months or less. Low-value assets mostly comprise of IT equipment and small items of office furniture.
The Group has applied IFRS 16 using the modified retrospective approach and therefore the comparative information has not been restated and continues to be under IAS 17 ‘leases’. The accounting policy under IAS 17 is as disclosed in the Annual Report and Accounts 2019. A description of the changes impacting the Group has been disclosed above under New standards and interpretations applied for the first time.
Finance income and expenses
The Group recognises Interest income or expense using the effective interest rate method. Finance income and finance costs include:
- Interest payable on loans and borrowings
- Net interest charge on pension plan liabilities
- Amortisation of finance costs
- Interest receivable in respect of cash and cash equivalents
- Unwinding of the discount on provisions
- Fair value movements on derivative financial instruments
Notes to the Accounts
1 Segmental analysis and revenue from contracts with customers
Sector analysis and disaggregation of revenue
The Group has four reportable segments (Process Safety, Infrastructure Safety, Environmental & Analysis and Medical) which are defined by markets rather than product type. Each segment includes businesses with similar operating and marketing characteristics. These segments are consistent with the internal reporting reviewed each month by the Group Chief Executive.
During the current year, following an acquisition that has materially changed its customer focus, one of the operating companies has been moved from the Environmental & Analysis sector to the Medical sector. The prior year segmental disclosures have been restated to reflect this change which moved £19.1m of revenue, £6.3m of profit, £6.5m of assets and £1.2m of liabilities from Environmental & Analysis to Medical. There was no change in the total group revenue, profit or net assets from this change.
Nature of goods and services
The following is a description of the principal activities – separated by reportable segments, which are defined by markets rather than product type – from which the Group generates its revenue.
Further disaggregation of sector revenue by geography and by the pattern of revenue recognition depicts how economic factors affect the timing and uncertainty of the Group’s revenues.
Process Safety sector generates revenue from providing products that protect assets and people at work across a range of critical industrial and logistics operations. Products include: specialised interlocks that control critical processes safely; instruments that detect flammable and hazardous gases; and explosion protection and corrosion monitoring systems. Products are generally sold separately, with contracts less than one year. Warranties are typically of an assurance nature. Revenue is typically recognised as control passes on delivery or despatch.
Payment is typically due within 60 days of invoice, except where a retention is held for documentation.
Infrastructure Safety sector generates revenue from providing products that protect people, property and assets and enable safe movement in public spaces. Products include: fire detection systems, specialist fire suppression systems, elevator safety systems and people and vehicle flow technologies. Products are generally sold separately, with contracts less than one year. Warranties are typically of an assurance nature. Revenue is recognised as control passes on delivery or despatch.
Payment is typically due within 60 days of invoice.
Environmental & Analysis generates revenue providing products and technologies that monitor and protect the environment, ensuring the quality and availability of life-critical resources, and use optical and imaging technologies in materials analysis.. Products include: market-leading opto-electronic technology and sensors, flow gap measurement instruments and gas conditioning products, and solutions for environmental data recording, water quality testing, water distribution network monitoring, and UV water treatment. Products and services are generally sold separately. Warranties are typically of an assurance nature, but some companies offer extended warranties. Depending on the nature of the performance obligation, revenue may be recognised as control passes on delivery, despatch or as the service is delivered. Contracts are typically less than one year in length, but some companies have contracts where certain service related performance obligations are delivered over a number of years, this can result in contract liabilities where those performance obligations are invoiced ahead of performance.
Payment is typically due within 60 days of invoice.
Medical sector generates revenue from providing products and services that enhance the quality of life for patients and improve quality of care delivered by healthcare providers. Products include: critical fluidic components used by medical diagnostics and Original Equipment Manufacturers (‘OEMs’), laboratory devices and systems that provide valuable information to understand patient health and enable providers to make decisions across the continuum of care, and technologies that enable positive outcomes across clinical specialties. Products are generally sold separately, and warranties are typically of an assurance nature. Depending on the nature of the performance obligation, revenue is recognised as control passes on delivery or despatch or as the service is delivered. Contracts are typically less than one year in length, but a limited number of companies have contracts where certain service related performance obligations are delivered over a number of years, this can result in contract liabilities where those performance obligations are invoiced ahead of performance.
Payment is typically due within 60 days of invoice.
Segment revenue disaggregation (by location of external customer)
| Year ended 31 March 2020 Revenue by sector and destination (all continuing operations) |
|||||||
| United States of America £m |
Mainland Europe £m |
United Kingdom £m |
Asia Pacific £m |
Africa, Near and Middle East £m |
Other countries £m |
Total £m |
|
| Process Safety | 67.0 | 39.7 | 28.7 | 33.2 | 21.8 | 9.6 | 200.0 |
| Infrastructure Safety | 105.5 | 142.9 | 109.9 | 70.9 | 22.6 | 14.7 | 466.5 |
| Environmental & Analysis | 157.3 | 34.3 | 67.2 | 51.9 | 7.1 | 7.2 | 325.0 |
| Medical | 180.7 | 59.6 | 15.4 | 57.3 | 11.7 | 22.5 | 347.2 |
| Inter-segmental sales | (0.2) | (0.1) | – | – | – | – | (0.3) |
| Revenue for the year | 510.3 | 276.4 | 221.2 | 213.3 | 63.2 | 54.0 | 1,338.4 |
| Year ended 31 March 2019 Revenue by sector and destination (all continuing operations) Restated |
|||||||
| United States of America £m |
Mainland Europe £m |
United Kingdom £m |
Asia Pacific £m |
Africa, Near and Middle East £m |
Other countries £m |
Total £m |
|
| Process Safety | 61.3 | 42.1 | 32.6 | 29.6 | 23.2 | 8.7 | 197.5 |
| Infrastructure Safety | 87.8 | 131.2 | 101.4 | 48.6 | 28.4 | 11.2 | 408.6 |
| Environmental & Analysis | 117.6 | 38.0 | 53.6 | 58.2 | 6.0 | 6.6 | 280.0 |
| Medical | 176.8 | 55.0 | 13.4 | 47.6 | 13.2 | 19.2 | 325.2 |
| Inter-segmental sales | (0.3) | – | (0.1) | – | – | – | (0.4) |
| Revenue for the year | 443.2 | 266.3 | 200.9 | 184.0 | 70.8 | 45.7 | 1,210.9 |
Inter-segmental sales are charged at prevailing market prices and have not been disclosed separately by segment as they are not considered material. Revenue derived from the rendering of services was £53.1m (2019: £39.2m). All revenue was otherwise derived from the sale of products.
| Year ended 31 March 2020 | |||
| Revenue recognised over time £m |
Revenue recognised at a point in time £m |
Total Revenue £m |
|
| Process Safety | 0.7 | 199.3 | 200.0 |
| Infrastructure Safety | 1.6 | 464.9 | 466.5 |
| Environmental & Analysis | 67.3 | 257.7 | 325.0 |
| Medical | 13.0 | 334.2 | 347.2 |
| Inter-segmental sales | – | (0.3) | (0.3) |
| Revenue for the year | 82.6 | 1,255.8 | 1,338.4 |
| Year ended 31 March 2019 Restated |
|||
| Revenue recognised over time £m |
Revenue recognised at a point in time £m |
Total Revenue £m |
|
| Process Safety | – | 197.5 | 197.5 |
| Infrastructure Safety | 0.9 | 407.7 | 408.6 |
| Environmental & Analysis | 38.5 | 241.5 | 280.0 |
| Medical | 6.3 | 318.9 | 325.2 |
| Inter-segmental sales | – | (0.4) | (0.4) |
| Revenue for the year | 45.7 | 1,165.2 | 1,210.9 |
| Year ended 31 March 2020 | ||||
| Revenue from performance obligations entered into and satisfied in the year £m |
Revenue previously included as contract liabilities £m |
Revenue from performance obligations satisfied in previous periods £m |
Total Revenue £m |
|
| Process Safety | 199.3 | 0.7 | – | 200.0 |
| Infrastructure Safety | 465.3 | 1.2 | – | 466.5 |
| Environmental & Analysis | 320.8 | 4.1 | 0.1 | 325.0 |
| Medical | 336.2 | 11.0 | – | 347.2 |
| Inter-segmental sales | (0.3) | – | – | (0.3) |
| Revenue for the year | 1,321.3 | 17.0 | 0.1 | 1,338.4 |
| Year ended 31 March 2019 Restated |
||||
| Revenue from performance obligations entered into and satisfied in the year £m |
Revenue previously included as contract liabilities £m |
Revenue from performance obligations satisfied in previous periods £m |
Total Revenue £m |
|
| Process Safety | 196.7 | 0.8 | – | 197.5 |
| Infrastructure Safety | 406.2 | 2.4 | – | 408.6 |
| Environmental & Analysis | 273.0 | 6.8 | 0.2 | 280.0 |
| Medical | 315.1 | 9.8 | 0.3 | 325.2 |
| Inter-segmental sales | (0.4) | – | – | (0.4) |
| Revenue for the year | 1,190.6 | 19.8 | 0.5 | 1,210.9 |
The Group has unsatisfied (or partially satisfied) performance obligations at the balance sheet date with an aggregate amount of transaction price as follows. The time bands represented present the expected timing of when the remaining transaction price will be recognised as revenue.
| Aggregate transaction price allocated to unsatisfied performance obligations |
||||
| 31 March 2020 £m |
2021 £m |
2022 £m |
2023 and beyond £m |
|
| Process Safety | 1.9 | 1.8 | 0.1 | – |
| Infrastructure Safety | 4.0 | 3.8 | 0.2 | – |
| Environmental & Analysis | 15.2 | 6.1 | 2.4 | 6.7 |
| Medical | 5.8 | 4.9 | 0.7 | 0.2 |
| Inter-segmental sales | – | – | – | – |
| Total | 26.9 | 16.6 | 3.4 | 6.9 |
| Aggregate transaction price allocated to unsatisfied performance obligations |
||||
| 31 March 2019 £m |
2020 £m |
2021 £m |
2022 and beyond £m |
|
| Process Safety | 0.1 | 0.1 | – | – |
| Infrastructure Safety | 4.7 | 4.3 | 0.3 | 0.1 |
| Environmental & Analysis | 16.9 | 10.1 | 1.6 | 5.2 |
| Medical | 5.5 | 3.5 | 0.9 | 1.1 |
| Inter-segmental sales | – | – | – | – |
| Total | 27.2 | 18.0 | 2.8 | 6.4 |
Segment results
| Profit (all continuing operations) | ||
| Year ended 31 March 2020 £m |
Year ended 31 March 2019 Restated £m |
|
| Segment profit before allocation of adjustments* | ||
| Process Safety | 43.9 | 45.5 |
| Infrastructure Safety | 107.7 | 88.9 |
| Environmental & Analysis | 69.4 | 60.1 |
| Medical | 84.4 | 83.2 |
| 305.4 | 277.7 | |
| Segment profit after allocation of adjustments* | ||
| Process Safety | 38.6 | 41.5 |
| Infrastructure Safety | 83.4 | 79.1 |
| Environmental & Analysis | 62.6 | 53.8 |
| Medical | 77.9 | 66.4 |
| Segment profit | 262.5 | 240.8 |
| Central administration costs | (26.3) | (24.1) |
| Net finance expense | (12.1) | (10.0) |
| Group profit before taxation | 224.1 | 206.7 |
| Taxation | (39.7) | (36.9) |
| Profit for the year | 184.4 | 169.8 |
* Adjustments include in the current and prior year the amortisation of acquired intangible assets; acquisition items; significant restructuring costs and profit or loss on disposal of operations and in the prior year the effect of equalisation of pension benefits for men and women in the defined benefit plans, see overleaf for more details. Note 3 provides more information on alternative performance measures.
The accounting policies of the reportable segments are the same as the Group’s accounting policies. Acquisition transaction costs, adjustments to contingent consideration and release of fair value adjustments to inventory (collectively ‘acquisition items’) are recognised in the Consolidated Income Statement. Segment profit, before these acquisition items and the other adjustments, is disclosed separately on the previous page as this is the measure reported to the Group Chief Executive for the purpose of allocation of resources and assessment of segment performance. These adjustments are analysed as follows:
| Year ended 31 March 2020 | |||||||
| Acquisition items | |||||||
|
Amortisation of acquired intangible assets £m |
Transaction costs £m |
Adjustments to contingent consideration £m |
Release of fair value adjustments to inventory £m |
Total amortisation charge and acquisition items £m |
Disposal of operations and restructuring (note 11) £m |
Total £m |
|
| Process Safety | (4.2) | (0.7) | – | (0.4) | (5.3) | – | (5.3) |
| Infrastructure Safety | (11.0) | (2.3) | (8.2) | (2.8) | (24.3) | – | (24.3) |
| Environmental & Analysis | (9.2) | (0.2) | 2.6 | – | (6.8) | – | (6.8) |
| Medical | (13.9) | (2.7) | 8.1 | (0.9) | (9.4) | 2.9 | (6.5) |
| Total Segment & Group | (38.3) | (5.9) | 2.5 | (4.1) | (45.8) | 2.9 | (42.9) |
The transaction costs arose mainly on the acquisitions during the year. In Process Safety they related to the acquisition of Sensit (£0.7m). In Infrastructure Safety, they related to the acquisition of Ampac (£2.1m) and FireMate (£0.2m). In Environmental & Analysis, they related to the acquisition of Invenio (£0.1m) and Enoveo (£0.1m). In Medical, they mainly related to the acquisition of Infowave (£0.1m), NeoMedix (£0.1m), NovaBone (£1.7m), Spreo (£0.1m) and Maxtec (£0.3m).
The £2.5m adjustment to contingent consideration comprised: a debit in Infrastructure Safety of £8.2m arising from an increase in the estimate of the payable for Navtech; a credit of £2.6m in Environmental & Analysis arising from decreases in estimates of the payables for Mini-Cam (£2.6m) and Invenio (£0.1m), offset by an increase in estimates of the payable for Enoveo (£0.1m); and a credit of £8.1m in Medical arising from a decrease in estimates of the payables for NovaBone (£8.0m) and Infowave (£1.1m) offset by an increase in the estimate of the payable for NeoMedix (£1.0m).
The £4.1m release of fair value adjustments to inventory relates to Sensit (£0.4m) in Process Safety, Navtech (£0.4m) and Ampac (£2.4m) in Infrastructure Safety; and NeoMedix (£0.3m), NovaBone (£0.5m), and Maxtec (£0.1m) in Medical. All amounts have now been released in relation to Navtech, Ampac and NeoMedix.
| Year ended 31 March 2019 | ||||||||
| Acquisition items | ||||||||
|
Amortisation of acquired intangible assets £m |
Transaction costs £m |
Adjustments to contingent consideration £m |
Release of fair value adjustments to inventory £m |
Total amortisation charge and acquisition items £m |
Defined benefit pension charge £m |
Disposal of operations and restructuring £m |
Total £m |
|
| Process Safety | (4.0) | – | – | – | (4.0) | – | – | (4.0) |
| Infrastructure Safety | (6.8) | (0.4) | – | (2.6) | (9.8) | – | – | (9.8) |
| Environmental & Analysis | (9.1) | (0.1) | 3.0 | (0.1) | (6.3) | – | – | (6.3) |
| Medical | (15.7) | (0.6) | 0.5 | – | (15.8) | – | (1.0) | (16.8) |
| Total Segment | (35.6) | (1.1) | 3.5 | (2.7) | (35.9) | – | (1.0) | (36.9) |
| Unallocated | – | – | – | – | – | (2.1) | – | (2.1) |
| Total Segment & Group | (35.6) | (1.1) | 3.5 | (2.7) | (35.9) | (2.1) | (1.0) | (39.0) |
In the prior year, the transaction costs arose mainly on the acquisitions during that year. In Infrastructure Safety, they mainly related to LAN Control Systems Limited (£0.1m), Limotec (£0.1m), Navtech (£0.4m) and Business Marketers Group (trading as Rath Communications) (£0.1m) and a credit from a previous acquisition. In Environmental & Analysis, they related to the acquisition of FluxData in a previous year (£0.1m). In Medical, they mainly related to the acquisition of Visiometrics in a previous year (£0.5m).
The £3.5m adjustment to contingent consideration comprised: a credit of £3.0m in Environmental & Analysis arising from decreases in estimates of the payable for FluxData (£2.7m) and Mini-Cam (£0.3m); and a credit of £0.5m in Medical arising from an increase in estimate of the payable for CasMed NIBP (£0.1m) offset by a credit of £0.6m arising from exchange differences on the payable for Visiometrics which is denominated in Euros.
The £2.7m release of fair value adjustments to inventory related to Firetrace (£1.4m), Limotec (£0.3m), Navtech (£0.6m) and Rath (£0.3m) in Infrastructure and Safety; and Mini-Cam (£0.1m) within Environmental & Analysis. All amounts have been released in relation to Firetrace, Limotec, Rath and Mini-Cam.
The £2.1m defined benefit pension charge related to the estimate of Guaranteed Minimum Pension equalisation for men and women.
Information about major customers
No single customer accounts for more than 5% (2019: 3%) of the Group’s revenue.
2 Earnings per ordinary share
Basic and diluted earnings per ordinary share are calculated using the weighted average of 379,086,833 shares in issue during the year (net of shares purchased by the Company and held as Own shares) (2019: 379,159,755). There are no dilutive or potentially dilutive ordinary shares.
Adjusted earnings are calculated as earnings from continuing operations excluding the amortisation of acquired intangible assets; acquisition items; restructuring costs; profit or loss on disposal of operations; in the prior year, the effect of equalisation of defined pension benefits for men and women; and the associated taxation thereon. The Directors consider that adjusted earnings, which constitute an alternative performance measure, represent a more consistent measure of underlying performance as it excludes amounts not directly linked with trading. A reconciliation of earnings and the effect on basic and diluted earnings per share figures is as follows:
| Per ordinary share | ||||
| Year ended 31 March 2020 £m |
Year ended 31 March 2019 £m |
Year ended 31 March 2020 pence |
Year ended 31 March 2019 pence |
|
| Earnings from continuing operations | 184.4 | 169.8 | 48.66 | 44.78 |
| Amortisation of acquired intangible assets (after tax) | 30.3 | 27.5 | 7.98 | 7.25 |
| Acquisition transaction costs (after tax) | 5.3 | 1.0 | 1.41 | 0.27 |
| Adjustments to contingent consideration (after tax) | (2.5) | (2.9) | (0.66) | (0.75) |
| Release of fair value adjustments to inventory (after tax) | 3.0 | 2.1 | 0.78 | 0.55 |
| Defined benefit pension charge (after tax) | – | 1.7 | – | 0.44 |
| Disposal of operations and restructuring (after tax) | (2.9) | 0.8 | (0.78) | 0.20 |
| Adjusted earnings | 217.6 | 200.0 | 57.39 | 52.74 |
3 Alternative performance measures
The Board uses certain alternative performance measures to help it effectively monitor the performance of the Group. The Directors consider that these represent a more consistent measure of underlying performance by removing non-trading items that are not closely related to the Group’s trading or operating cash flows. These measures include Return on Total Invested Capital (ROTIC), Return on Capital Employed (ROCE), organic growth at constant currency, Adjusted operating profit and Adjusted operating cash flow.
Note 1 provides further analysis of the adjusting items in reaching adjusted profit measures.
Return on Total Invested Capital
| 31 March 2020 £m |
31 March 2019 £m |
|
| Profit after tax | 184.4 | 169.8 |
| Adjustments1 | 33.2 | 30.2 |
| Adjusted profit after tax1 | 217.6 | 200.0 |
| Total equity | 1,136.9 | 981.4 |
| Add back net retirement benefit obligations | 5.2 | 39.2 |
| Less associated deferred tax assets | (0.5) | (7.0) |
| Cumulative amortisation of acquired intangible assets | 283.5 | 235.2 |
| Historical adjustments to goodwill2 | 89.5 | 89.5 |
| Total Invested Capital | 1,514.6 | 1,338.3 |
| Average Total Invested Capital3 | 1,426.5 | 1,245.7 |
| Return on Total Invested Capital (ROTIC)4, 5 | 15.3% | 16.1% |
Return on Capital Employed
| 31 March 2020 £m |
31 March 2019 £m |
|
| Profit before tax | 224.1 | 206.7 |
| Adjustments1 | 42.9 | 39.0 |
| Net finance costs | 12.1 | 10.0 |
| Lease interest | (2.1) | – |
| Adjusted operating profit1 after share of results of associates and lease interest | 277.0 | 255.7 |
| Computer software costs within intangible assets | 5.9 | 5.5 |
| Capitalised development costs within intangible assets | 36.1 | 33.1 |
| Other intangibles within intangible assets | 3.1 | 3.1 |
| Property, plant and equipment | 184.3 | 112.4 |
| Inventories | 170.6 | 144.3 |
| Trade and other receivables | 286.6 | 259.6 |
| Trade and other payables | (186.7) | (164.8) |
| Lease liabilities | (13.0) | – |
| Provisions | (28.0) | (25.4) |
| Net current tax receivable/(liabilities) | 1.3 | (13.2) |
| Non-current trade and other payables | (13.3) | (11.6) |
| Non-current provisions | (21.6) | (10.9) |
| Non-current lease liabilities | (48.5) | – |
| Add back contingent purchase consideration | 40.1 | 26.8 |
| Capital Employed | 416.9 | 358.9 |
| Average Capital Employed3 | 387.9 | 340.4 |
| Return on Capital Employed (ROCE)4, 5 | 71.4% | 75.1% |
1 Adjustments include in the current and prior year the amortisation of acquired intangible assets; acquisition items; significant restructuring costs and profit or loss on disposal of operations and, in the prior year only, the effect of equalisation of pension benefits for men and women in the defined benefit plans. Where after-tax measures, these also include the associated taxation on adjusting items. Note 1 provides more information on these items.
2 Includes goodwill amortised prior to 3 April 2004 and goodwill taken to reserves.
3 The ROTIC and ROCE measures are expressed as a percentage of the average of the current and prior year’s Total Invested Capital and Capital Employed respectively. Using an average as the denominator is considered to be more representative. The 1 April 2018 Total Invested Capital and Capital Employed balances were £1,153.0m and £321.9m respectively.
4 The ROTIC and ROCE measures are calculated as Adjusted profit after tax divided by Average Total Invested Capital and Adjusted operating profit after share of results of associates divided by Average Capital Employed respectively.
5 The ROTIC and ROCE measures as at 31 March 2020 are after the adoption of IFRS 16 whereas the measures at 31 March 2019 are on a pre-IFRS 16 basis. The impact on the Group balance sheet on adoption of IFRS 16 is insignificant (reduction in net assets of £4.0m), and as such there has been no significant impact in the measurement of ROTIC or ROCE.
Organic growth at constant currency
Organic growth measures the change in revenue and profit from continuing Group operations. This measure equalises the effect of acquisitions by:
a. removing from the year of acquisition their entire revenue and profit before taxation;
b. in the following year, removing the revenue and profit for the number of months equivalent to the pre-acquisition period in the prior year; and
c. removing from the year prior to acquisition any revenue generated by sales to the acquired company which would have been eliminated on consolidation had the acquired company been owned for that period.
The results of disposals are removed from the prior period reported revenue and profit before taxation.
Constant currency measures the change in revenue and profit excluding the effects of currency movements. The measure restates the current year’s revenue and profit at last year’s exchange rates.
Organic growth at constant currency has been calculated for the Group as follows:
Group
| Revenue | Adjusted*
profit before taxation |
|||||
| Year ended
31 March 2020 £m |
Year ended
31 March 2019 £m |
% growth | Year ended
31 March 2020 £m |
Year ended
31 March 2019 £m |
% growth | |
| Continuing operations | 1,338.4 | 1,210.9 | 10.5% | 267.0 | 245.7 | 8.7% |
| Acquired and disposed revenue/profit | (58.0) | (7.3) | (12.1) | (0.6) | ||
| Organic growth | 1,280.4 | 1,203.6 | 6.4% | 254.9 | 245.1 | 4.0% |
| Constant currency adjustment | (18.8) | – | (4.4) | – | ||
| Organic growth at constant currency | 1,261.6 | 1,203.6 | 4.8% | 250.5 | 245.1 | 2.2% |
Sector Organic growth at constant currency
Organic growth at constant currency is calculated for each segment using the same method as described above.
| Process Safety | Revenue | Adjusted*
segment profit |
||||
| Year ended
31 March 2020 £m |
Year ended
31 March 2019 £m |
% growth | Year ended
31 March 2020 £m |
Year ended
31 March 2019 £m |
% growth |
|
| Continuing operations | 200.0 | 197.5 | 1.2% | 43.9 | 45.5 | (3.5)% |
| Acquisition and currency adjustments | (5.8) | – | (1.2) | – | ||
| Organic growth at constant currency | 194.2 | 197.5 | (1.7)% | 42.7 | 45.5 | (6.1)% |
| Infrastructure Safety | Revenue | Adjusted*
segment profit |
||||
| Year ended
31 March 2020 £m |
Year ended
31 March 2019 |
% growth | Year ended
31 March 2020 £m |
Year ended
31 March 2019 £m |
% growth |
|
| Continuing operations | 466.5 | 408.6 | 14.2% | 107.7 | 88.9 | 21.0% |
| Acquisition and currency adjustments | (49.1) | (3.7) | (12.8) | – | ||
| Organic growth at constant currency | 417.4 | 404.9 | 3.1% | 94.9 | 88.9 | 6.6% |
| Environmental & Analysis | Revenue | Adjusted*
segment profit |
||||
| Year ended
31 March 2020 £m |
Year ended
31 March 2019** |
% growth | Year ended
31 March 2020 £m |
Year ended
31 March 2019** £m |
% growth |
|
| Continuing operations | 325.0 | 280.0 | 16.1% | 69.4 | 60.1 | 15.4% |
| Acquisition and currency adjustments | (7.0) | – | (1.5) | – | ||
| Organic growth at constant currency | 318.0 | 280.0 | 13.6% | 67.9 | 60.1 | 13.0% |
| Medical | Revenue | Adjusted*
segment profit |
||||
| Year ended
31 March 2020 £m |
Year ended
31 March 2019** |
% growth | Year ended
31 March 2020 £m |
Year ended
31 March 2019** £m |
% growth |
|
| Continuing operations | 347.2 | 325.2 | 6.8% | 84.4 | 83.2 | 1.5% |
| Acquisition and disposal and currency adjustments | (14.9) | (3.6) | (3.9) | (0.6) | ||
| Organic growth at constant currency | 332.3 | 321.6 | 3.3% | 80.5 | 82.6 | (2.6)% |
* Adjustments include in the current and prior year the amortisation of acquired intangible assets; acquisition items; significant restructuring costs and profit or loss on disposal of operations and in the prior year the effect of equalisation of pension benefits for men and women in the defined benefit plans.
** Sector growth rates are calculated using revenue and profit figures restated for the effect of moving an operating company from Environmental & Analysis to Medical. See note 1.
Adjusted operating profit
| Year ended
31 March 2020 £m |
Year ended
31 March 2019 £m |
|
| Operating profit | 233.4 | 217.8 |
| Add back: | ||
| Acquisition items (note 1) | 7.5 | 0.3 |
| Defined benefit pension charge | – | 2.1 |
| Amortisation of acquired intangible assets | 38.3 | 35.6 |
| Adjusted operating profit | 279.2 | 255.8 |
Adjusted operating cash flow
| Year ended
31 March 2020 £m |
Year ended
31 March 2019 £m |
|
| Net cash from operating activities (note 10) | 255.5 | 219.0 |
| Add back: | ||
| Net acquisition costs paid | 5.2 | 1.2 |
| Taxes paid | 52.4 | 40.6 |
| Proceeds from sale of property, plant and equipment | 1.9 | 1.6 |
| Share awards vested not settled by Own shares* | 6.0 | 4.9 |
| Less: | ||
| Purchase of property, plant and equipment | (31.2) | (26.4) |
| Purchase of computer software and other intangibles | (2.9) | (4.9) |
| Development costs capitalised | (14.7) | (10.8) |
| Adjusted operating cash flow | 272.2 | 225.2 |
| Cash conversion % (adjusted operating cash flow/adjusted operating profit) | 97% | 88% |
* See Consolidated Statement of Changes in Equity
4 Finance income
| Year ended
31 March 2020 £m |
Year ended
31 March 2019 £m |
|
| Interest receivable | 0.6 | 0.4 |
| Fair value movement on derivative financial instruments | – | 0.1 |
| 0.6 | 0.5 |
5 Finance expense
| Year ended
31 March 2020 £m |
Year ended
31 March 2019 £m |
|
| Interest payable on borrowings | 8.7 | 7.6 |
| Interest payable on lease obligations | 2.1 | – |
| Amortisation of finance costs | 0.7 | 0.9 |
| Net interest charge on pension plan liabilities | 0.8 | 1.2 |
| Other interest payable | 0.2 | 0.5 |
| 12.5 | 10.2 | |
| Fair value movement on derivative financial instruments | 0.2 | 0.2 |
| Unwinding of discount on provisions | – | 0.1 |
| 12.7 | 10.5 |
6 Taxation
|
|
Year ended
31 March 2020 £m |
Year ended
31 March 2019 £m |
| Current tax | ||
| UK corporation tax at 19% (2019: 19%) | 12.3 | 10.9 |
| Overseas taxation | 30.5 | 33.6 |
| Adjustments in respect of prior years | (2.9) | 0.2 |
| Total current tax charge | 39.9 | 44.7 |
| Deferred tax | ||
| Origination and reversal of timing differences | (0.4) | (7.4) |
| Adjustments in respect of prior years | 0.2 | (0.4) |
| Total deferred tax credit | (0.2) | (7.8) |
| Total tax charge recognised in the Consolidated Income Statement | 39.7 | 36.9 |
| Reconciliation of the effective tax rate: | ||
| Profit before tax | 224.1 | 206.7 |
| Tax at the UK corporation tax rate of 19% (2019: 19%) | 42.6 | 39.3 |
| Overseas tax rate differences | 6.1 | 9.4 |
| Effect of intra-group financing | (6.2) | (8.7) |
| Tax incentives, exemptions and credits (including patent box, R&D and High-Tech status) | (3.8) | (3.9) |
| Permanent differences | 3.7 | 1.0 |
| Adjustments in respect of prior years | (2.7) | (0.2) |
| 39.7 | 36.9 | |
| Effective tax rate | 17.7% | 17.9% |
| Year ended
31 March 2020 £m |
Year ended
31 March 2019 £m |
|
| Adjusted* profit before tax | 267.0 | 245.7 |
| Total tax charge on adjusted* profit | 49.4 | 45.7 |
| Effective tax rate | 18.5% | 18.6% |
* Adjustments include, in the current and prior year, the amortisation of acquired intangible assets; acquisition items; significant restructuring costs and profit or loss on disposal of operations and, in the prior year only, the effect of equalisation of pension benefits for men and women in the defined benefit plans. Note 3 provides more information on alternative performance measures.
The Group’s future Effective Tax Rate (ETR) will mainly depend on the geographic mix of profits and whether there are any changes to tax legislation in the Group’s most significant countries of operations.
In addition to the amount charged to the Consolidated Income Statement, the following amounts relating to tax have been recognised directly in the Consolidated Statement of Comprehensive Income and Expenditure:
| Year ended
31 March 2020 £m |
Year ended
31 March 2019 £m |
|
| Deferred tax | ||
| Retirement benefit obligations | 4.0 | 1.6 |
| Effective portion of changes in fair value of cash flow hedges | (0.1) | – |
| 3.9 | 1.6 |
In addition to the amounts charged to the Consolidated Income Statement and the Consolidated Statement of Comprehensive Income and Expenditure, the following amounts relating to tax have been recognised directly in equity:
| Year ended
31 March 2020 £m |
Year ended
31 March 2019 £m |
|
| Current tax | ||
| Excess tax deductions related to share-based payments on exercised awards | (1.4) | (1.5) |
| Deferred tax | ||
| Change in estimated excess tax deductions related to share-based payments | (0.5) | (0.9) |
| Impact of changes in accounting policies: IFRS 16 ‘Leases’ | (0.9) | – |
| (2.8) | (2.4) |
7 Dividends
Per ordinary share |
||||
| Year ended
31 March 2020 pence |
Year ended
31 March 2019 pence |
Year ended
31 March 2020 £m |
Year ended
31 March 2019 £m |
|
| Amounts recognised as distributions to shareholders in the year | ||||
| Final dividend for the year ended 31 March 2019 (31 March 2018) | 9.60 | 8.97 | 36.4 | 34.0 |
| Interim dividend for the year ended 31 March 2020 (31 March 2019) | 6.54 | 6.11 | 24.8 | 23.2 |
| 16.14 | 15.08 | 61.2 | 57.2 | |
| Dividends declared in respect of the year | ||||
| Interim dividend for the year ended 31 March 2020 (31 March 2019) | 6.54 | 6.11 | 24.8 | 23.2 |
| Proposed final dividend for the year ended 31 March 2020 (31 March 2019) | 9.96 | 9.60 | 37.7 | 36.4 |
| 16.50 | 15.71 | 62.5 | 59.6 | |
The proposed final dividend is subject to approval by shareholders at the Annual General Meeting on 4 September 2020 and has not been included as a liability in these financial statements.
8 Trade and other receivables
| 31 March
2020 £m |
31 March
2019 £m |
|
| Trade receivables | 249.8 | 226.7 |
| Allowance for doubtful debts | (12.7) | (5.0) |
| 237.1 | 221.7 | |
| Other receivables | 11.0 | 10.2 |
| Prepayments | 18.3 | 18.6 |
| Contract assets | 20.2 | 9.1 |
| 286.6 | 259.6 |
Other receivables comprise various financial assets across the Group, including sales tax receivables and other non-trade balances. In the prior year it also included acquisition consideration receivables and disposal consideration still to be received (note 11).
Receivables greater than 1 year comprise of £0.3m (2019: £0.4m) in trade receivables and £2.2m in other receivables (2019: £nil).
The movement in the allowance for doubtful debts in respect of trade receivables during the year was as follows:
| 31 March
2020 £m |
31 March
2019 £m |
|
| At beginning of the year | 5.0 | 4.6 |
| Restatement for adoption of IFRS 9 | – | (0.1) |
| Transfer to trade and other payables following adoption of IFRS 15 | – | (0.1) |
| Net impairment loss recognised | 8.3 | 1.4 |
| Amounts recovered against trade receivables previously written down/amounts utilised | (0.9) | (0.9) |
| Recognition of provisions for businesses acquired | 0.2 | – |
| Exchange adjustments | 0.1 | 0.1 |
| At end of the year | 12.7 | 5.0 |
The Group assesses on a forward-looking basis the expected credit losses associated with its trade and other receivables carried at amortised cost. As a result of the COVID-19 pandemic, the Group has assessed that there has been an increase in credit risk and this is the main reason for the increase in the allowance for doubtful debts in respect of trade receivables as at 31 March 2020.
The Group assessed that no provisions or impairments were required in relation to contract assets (2019: £nil).
The fair value of trade and other receivables approximates to book value due to the short-term maturities associated with these items. There is no impairment risk identified with regards to prepayments or other receivables where no amounts are past due.
The ageing of trade receivables was as follows:
Gross trade receivables |
Trade receivables |
|||
| 31 March
2020 £m |
31 March
2019 £m |
31 March
2020 £m |
31 March
2019 £m |
|
| Not yet due | 181.4 | 172.2 | 181.1 | 171.7 |
| Up to one month overdue | 34.6 | 28.5 | 34.3 | 28.5 |
| Between one and two months overdue | 10.5 | 8.8 | 10.5 | 8.8 |
| Between two and three months overdue | 5.0 | 5.0 | 4.5 | 5.0 |
| Over three months overdue | 18.3 | 12.2 | 6.7 | 7.7 |
| 249.8 | 226.7 | 237.1 | 221.7 | |
9 Acquisitions
In accounting for acquisitions, adjustments are made to the book values of the net assets of the companies acquired to reflect their fair values to the Group. Acquired inventories are valued at fair value adopting Group bases and any liabilities for warranties relating to past trading are recognised. Other previously unrecognised assets and liabilities at acquisition are included and accounting policies are aligned with those of the Group where appropriate.
During the year ended 31 March 2020, the Group made ten acquisitions namely:
- Invenio Systems Limited;
- Enoveo SARL;
- Ampac Group;
- Infowave Solutions Inc.;
- Certain trade and assets of NeoMedix Corporation;
- FireMate Software Pty. Ltd.;
- NovaBone Products, LLC;
- Sensit Technologies, LLC;
- Certain trade and assets of Spreo LLC;
- Maxtec, LLC.
Below are summaries of the assets acquired and liabilities assumed and the purchase consideration of:
- a) the total of acquisitions;
- b) Invenio Systems Limited and Enoveo SARL;
- c) Ampac Group;
- d) Infowave Solutions Inc. and certain trade and assets of Spreo LLC;
- e) Certain trade and assets of NeoMedix Corporation;
- f) FireMate Software Pty. Ltd.;
- g) NovaBone Products, LLC;
- h) Sensit Technologies, LLC;
- i) Maxtec, LLC;
- j) The aggregate adjustments arising on prior year acquisitions.
Due to their contractual dates, the fair value of receivables acquired (shown below) approximate to the gross contractual amounts receivable. The amount of gross contractual receivables not expected to be recovered is immaterial.
There are no material contingent liabilities recognised in accordance with paragraph 23 of IFRS 3 (revised).
The combined fair value adjustments made for the acquisitions above under IFRS 3, excluding acquired intangible assets recognised and deferred taxation thereon, increased the goodwill recognised by £2.7m (2019: £2.0m increase).
The acquisitions contributed £36.8m of revenue and £6.9m of profit after tax for the year ended 31 March 2020.
If these acquisitions had been held since the start of the financial year, it is estimated that the Group’s reported revenue and profit after tax would have been £53.7m higher and £6.9m higher respectively.
As at the date of approval of the financial statements, the acquisition accounting for all prior year acquisitions is complete. The accounting for all current year acquisitions is provisional; relating to finalisation of the initial consideration, which is subject to agreement of certain contractual adjustments, and certain other provisional balances.
- Total of acquisitions
| Total
£m |
|
| Non-current assets | |
| Intangible assets | 114.3 |
| Property, plant and equipment | 12.4 |
| Investments | 0.4 |
| Deferred tax | 0.4 |
| Current assets | |
| Inventories | 18.1 |
| Trade and other receivables | 13.2 |
| Cash and cash equivalents | 8.0 |
| Total assets | 166.8 |
| Current liabilities | |
| Trade and other payables | (11.4) |
| Lease liabilities | (1.3) |
| Provisions | (0.3) |
| Corporation tax | (0.1) |
| Non-current liabilities | |
| Lease liabilities | (6.9) |
| Provisions | (0.1) |
| Deferred tax | (13.8) |
| Total liabilities | (33.9) |
| Net assets of businesses acquired | 132.9 |
| Non-controlling interest | (0.7) |
| Initial cash consideration paid | 226.2 |
| Additional amounts paid in respect of cash acquired | 3.1 |
| Amounts owed to vendors* | 1.4 |
| Contingent purchase consideration estimated to be paid in respect of current year acquisitions | 25.8 |
| Total consideration | 256.5 |
| Goodwill arising on acquisitions (current year) | 122.5 |
| Goodwill arising on acquisitions (prior year) | 0.4 |
| Total goodwill | 122.9 |
* In respect of net tangible asset adjustments and various contractual adjustments relating to current year acquisitions of which £1.0m was paid in the current year.
Analysis of cash outflow in the Consolidated Cash Flow Statement
| Year ended
31 March 2020 £m |
Year ended
31 March 2019 £m |
|
| Initial cash consideration paid | 226.2 | 63.0 |
| Cash acquired on acquisitions | (8.0) | (5.3) |
| Initial cash consideration adjustment and other amounts paid to vendors on current year acquisitions | 4.1 | 5.7 |
| Initial cash consideration adjustment on prior year acquisitions | – | (0.1) |
| Contingent consideration paid and loan notes repaid in cash in relation to prior year acquisitions* | 10.5 | 3.7 |
| Net cash outflow relating to acquisitions (per Consolidated Cash Flow Statement) | 232.8 | 67.0 |
* The £10.5m comprises £0.1m loan notes and £10.4m contingent consideration paid in respect of prior period acquisitions all of which had been provided in the prior period’s financial statements.
- b) Invenio Systems Limited (‘Invenio’) and Enoveo SARL (‘Enoveo’)
| Total
£m |
|
| Non-current assets | |
| Intangible assets | 2.1 |
| Property, plant and equipment | 0.3 |
| Current assets | |
| Trade and other receivables | 1.1 |
| Cash and cash equivalents | 0.2 |
| Total assets | 3.7 |
| Current liabilities | |
| Trade and other payables | (0.6) |
| Non-current liabilities | |
| Deferred tax | (0.4) |
| Total liabilities | (1.0) |
| Net assets of businesses acquired | 2.7 |
| Initial cash consideration paid | 2.9 |
| Additional amounts paid in respect of cash acquired | 0.1 |
| Additional amounts owed to vendors* | 0.5 |
| Contingent purchase consideration estimated to be paid | 2.1 |
| Total consideration | 5.6 |
| Goodwill arising on acquisitions | 2.9 |
* Relates mainly to other receivables from third parties acquired which are due to the vendors under the terms of the sale and purchase agreement when these balances are received.
Invenio
The Group acquired the entire share capital of Invenio Systems Limited (‘Invenio’) on 2 July 2019 for an initial cash consideration of £2.8m adjustable for cash acquired. The adjustment was determined to be £0.1m. The maximum contingent consideration payable is £3.0m.
The contingent purchase consideration recognised represents the estimated amount payable, based on profit-based targets, for each of the three annual earnout periods, commencing 1 April 2019.
Invenio, located in Durham, UK, is a market leader in customer-side leak detection, offering innovative, non-intrusive detection solutions for household leaks. Invenio has joined the Group as part of HWM, creating a global leader in leakage reduction within the Group’s Environmental & Analysis sector.
The excess of the fair value of the consideration paid over the fair value of the assets acquired is represented by technology related intangibles of £1.3m and customer relationship intangibles of £0.4m; with residual goodwill arising of £2.5m. The goodwill represents:
- a) the technical expertise of the acquired workforce;
- b) the opportunity to leverage this expertise across some of Halma’s businesses through future technologies; and
- c) the ability to exploit the Group’s existing customer base.
Invenio contributed £1.0m of revenue for the year ended 31 March 2020.
Acquisition costs totalling £0.1m were recorded in the Consolidated Income Statement.
The goodwill arising on the acquisition is not expected to be deductible for tax purposes.
Enoveo
The Group also acquired the entire share capital of Enoveo on 1 July 2019 for an initial cash consideration of €0.2m (£0.1m). The maximum contingent consideration payable is €1.0m (£0.9m).
Enoveo, based in Lyon, France, provides services and monitoring tools for natural, urban or industrial aquatic environments. Enoveo has joined the Group as a bolt-on to Hydreka within the Environmental & Analysis sector.
The excess of the fair value of the consideration paid over the fair value of the assets acquired is represented by acquired intangibles of £0.4m, with residual goodwill arising of £0.4m.
There is no material impact on the Group’s income statement for the year ended 31 March 2020 arising from the acquisition.
- b) Invenio Systems Limited (‘Invenio’) and Enoveo SARL (‘Enoveo’) continuted
Acquisition costs totalling £0.1m were recorded in the Consolidated Income Statement.
The goodwill arising on the acquisition is not expected to be deductible for tax purposes.
- c) Ampac Group
| Total
£m |
|
| Non-current assets | |
| Intangible assets | 33.7 |
| Property, plant and equipment | 5.8 |
| Deferred tax | 0.4 |
| Current assets | |
| Inventories | 7.4 |
| Trade and other receivables | 5.3 |
| Cash and cash equivalents | 6.6 |
| Total assets | 59.2 |
| Current liabilities | |
| Trade and other payables | (4.6) |
| Lease liabilities | (0.8) |
| Provisions | (0.1) |
| Corporation tax payable | (0.1) |
| Non-current liabilities | |
| Lease liabilities | (5.2) |
| Provisions | (0.1) |
| Deferred tax | (10.4) |
| Total liabilities | (21.3) |
| Net assets of business acquired | 37.9 |
| Initial cash consideration paid | 75.2 |
| Additional amounts paid in respect of cash acquired | 3.0 |
| Total consideration | 78.2 |
| Goodwill arising on acquisition | 40.3 |
On 15 July 2019, the Group acquired the Ampac group (‘Ampac’) for an initial cash consideration of A$135.0m (£75.2m), adjustable for cash acquired. The adjustment was determined to be A$5.4m (£3.0m). The acquisition comprised of the trade and assets of Ampac Technologies Pty Ltd, Ampac Distributors Pty Ltd and Ampac Pacific Ltd and the entire share capital of Ampac Europe Ltd and Cranford Controls Ltd.
Ampac, headquartered in Perth, Australia with offices in Australia, New Zealand and the UK is a leading fire and evacuation systems supplier in the Australian and New Zealand markets. The company continues to run under its own management team and has become part of the Group’s Infrastructure Safety sector.
The excess of the fair value of the consideration paid over the fair value of the assets acquired is represented by customer related intangibles of £19.0m; trade name of £6.9m and technology related intangibles of £7.3m; with residual goodwill arising of £40.3m. The goodwill represents:
- a) the technical expertise of the acquired workforce;
- b) the opportunity to leverage this expertise across some of Halma’s businesses through future technologies; and
- c) the ability to exploit the Group’s existing customer base.
Ampac contributed £24.3m of revenue and £4.6m of profit after tax for the year ended 31 March 2020.
If this acquisition had been held since the start of the financial year, it is estimated that the Group’s reported revenue and profit after tax would have been £8.8m higher and £1.2m higher respectively.
Acquisition costs totalling £2.1m were recorded in the Consolidated Income Statement.
The goodwill arising on the Ampac acquisition is not expected to be deductible for tax purposes.
- d) Infowave Solutions Inc. and certain trade and assets of Spreo LLC
| Total
£m |
|
| Non-current assets | |
| Intangible assets | 3.4 |
| Current assets | |
| Trade and other receivables | 0.5 |
| Cash and cash equivalents | 0.1 |
| Total assets | 4.0 |
| Current liabilities | |
| Trade and other payables | (1.1) |
| Non-current liabilities | |
| Deferred tax | (0.4) |
| Total liabilities | (1.5) |
| Net assets of businesses acquired | 2.5 |
| Initial cash consideration paid | 7.2 |
| Contingent purchase consideration estimated to be paid | 1.3 |
| Total consideration | 8.5 |
| Goodwill arising on acquisitions | 6.0 |
On 2 October 2019, the Group acquired the entire share capital of Infowave Solutions Inc. (‘Infowave’) for an initial cash consideration of US$8.3m (£6.8m). Maximum contingent purchase consideration payable is US$4.0m (£3.3m).
On 12 February 2020, the Group acquired certain trade and assets of Spreo LLC (‘Spreo’) for an initial cash consideration of US$0.5m (£0.4m). Maximum contingent consideration payable is US$5.0m (£3.8m).
Infowave, located in Indiana, USA, and certain trade and assets of Spreo have joined the Group as part of CenTrak within the Medical sector, complementing CenTrak’s hardware capabilities with software, data and navigation capabilities.
The current contingent consideration payable represents, for Infowave the fair value of the estimated amounts payable for each of two annual consecutive earnout periods, commencing 1 April 2020, and for Spreo the fair value of the estimated amounts payable for each of three annual consecutive earnout periods, commencing 1 April 2020. The earnout in each period is calculated by reference to the relevant earnings for the period compared to the target for the period.
The excess of the fair value of the consideration paid over the fair value of the assets acquired is represented by customer related intangibles of £1.2m; trade name of £0.4m and technology related intangibles of £1.8m; with residual goodwill arising of £6.0m. The goodwill represents:
- a) the technical expertise of the acquired workforce;
- b) the opportunity to leverage this expertise across some of Halma’s businesses through future technologies; and
- c) the ability to exploit the Group’s existing customer base.
Infowave and Spreo contributed £1.4m of revenue and £0.6m of profit after tax for the year ended 31 March 2020.
If these acquisitions had been held since the start of the financial year, it is estimated that the Group’s reported revenue and profit after tax would have been £2.2m higher and £0.5m higher respectively.
Acquisition costs totalling £0.2m were recorded in the Consolidated Income Statement.
The goodwill arising on these acquisitions is expected to be deductible for tax purposes.
- e) Certain trade and assets of NeoMedix Corporation
| Total
£m |
|
| Non-current assets | |
| Intangible assets | 10.6 |
| Current assets | |
| Inventories | 0.8 |
| Total assets | 11.4 |
| Non-current liabilities | |
| Deferred tax | (0.2) |
| Total liabilities | (0.2) |
| Net assets of business acquired | 11.2 |
| Initial cash consideration paid | 6.5 |
| Amounts owed to vendor* | 0.5 |
| Contingent purchase consideration estimated to be paid | 9.4 |
| Total consideration | 16.4 |
| Goodwill arising on acquisition | 5.2 |
* Relates to additional payments to the vendor under the contractual arrangements in the sale and purchase agreement.
On 4 October 2019, the Group acquired certain trade and assets of NeoMedix Corporation (‘NeoMedix’) for an initial cash consideration of US$8.0m (£6.5m). Maximum contingent consideration payable is US$17.0m (£14.0m).
The current contingent consideration payable represents the fair value of the estimated amounts payable for each of three annual consecutive earnout periods, commencing on the acquisition date. The earnout in each period is calculated by reference to the relevant revenue for the period compared to the target for the period, with the third earnout period only effective if the earnout for periods one and two exceed US$12.0m.
The glaucoma-related business and assets of NeoMedix were acquired by MicroSurgical Technology within the Medical sector to enhance the Company’s offering in this area of expertise.
The excess of the fair value of the consideration paid over the fair value of the assets acquired is represented by technology related intangibles of £10.6m; with residual goodwill arising of £5.2m. The goodwill represents the ability to exploit the Group’s existing customer base.
NeoMedix contributed £1.2m of revenue for the year ended 31 March 2020.
If this acquisition had been held since the start of the financial year, it is estimated that the Group’s reported revenue would have been £1.4m higher.
Acquisition costs totalling £0.1m were recorded in the Consolidated Income Statement.
The goodwill arising on this acquisition is expected to be deductible for tax purposes.
- f) FireMate Software Pty. Ltd.
| Total
£m |
|
| Non-current assets | |
| Intangible assets | 2.8 |
| Property, plant and equipment | 0.1 |
| Current assets | |
| Cash and cash equivalents | 0.6 |
| Total assets | 3.5 |
| Current liabilities | |
| Trade and other payables | (0.4) |
| Non-current liabilities | |
| Deferred tax | (0.8) |
| Total liabilities | (1.2) |
| Net assets of business acquired | 2.3 |
| Non-controlling interest | 0.7 |
| Initial cash consideration paid | 6.3 |
| Contingent purchase consideration estimated to be paid | 2.6 |
| Total consideration | 8.9 |
| Goodwill arising on acquisition | 5.9 |
On 13 January 2020, the Group acquired 70% of the share capital of FireMate Software Pty. Ltd. (‘FireMate’) for an initial cash consideration of A$11.8m (£6.3m). Maximum contingent consideration payable is A$6.4m (£3.3m). There is also an option for the Group to purchase the remaining 30% of FireMate, exercisable in the six months from 31 March 2025 based on a multiple of EBIT for the financial year ending 31 March 2025.
The current contingent consideration payable represents the fair value of the estimated amounts payable based on performance to 30 June 2022. The earnout is calculated by reference to the relevant monthly subscription revenue for the period compared to the target.
FireMate, located in Brisbane, Australia, provides cloud-based fire protection management software to fire contractors and will further strengthen the Group’s capabilities in connected and integrated fire systems internationally. The company will continue to run under its own management team and will become part of the Group’s Infrastructure Safety sector.
The excess of the fair value of the consideration paid over the fair value of the assets acquired is represented by customer related intangibles of £1.7m; trade name of £0.4m and technology related intangibles of £0.7m; with residual goodwill arising of £5.9m.
The goodwill represents:
- a) the technical expertise of the acquired workforce;
- b) the opportunity to leverage this expertise across some of Halma’s businesses through future technologies; and
- c) the ability to exploit the Group’s existing customer base.
There is no material impact on the Group’s income statement for the year ended 31 March 2020 arising from this acquisition.
If this acquisition had been held since the start of the financial year, it is estimated that the Group’s reported revenue would have been £1.3m higher.
Acquisition costs totalling £0.2m were recorded in the Consolidated Income Statement.
The goodwill arising on this acquisition is not expected to be deductible for tax purposes.
- g) NovaBone Products, LLC
| Total
£m |
|
| Non-current assets | |
| Intangible assets | 35.6 |
| Investments | 0.4 |
| Property, plant and equipment | 1.9 |
| Current assets | |
| Inventories | 3.2 |
| Trade and other receivables | 2.4 |
| Cash and cash equivalents | 0.1 |
| Total assets | 43.6 |
| Current liabilities | |
| Trade and other payables | (1.2) |
| Lease liabilities | (0.1) |
| Non-current liabilities | |
| Lease liabilities | (0.1) |
| Deferred tax | (0.6) |
| Total liabilities | (2.0) |
| Net assets of business acquired | 41.6 |
| Initial cash consideration paid | 73.6 |
| Amounts owed to vendor* | 0.4 |
| Contingent purchase consideration estimated to be paid | 10.4 |
| Total consideration | 84.4 |
| Goodwill arising on acquisition | 42.8 |
* In respect of an investment held on acquisition of £0.4m, sold in March 2020 and repaid to vendors in April 2020.
On 24 January 2020, the Group acquired the entire members’ interests of NovaBone Products, LLC (‘NovaBone’) for an
initial cash consideration of US$96.5m (£73.6m). The initial cash consideration comprised the purchase price of US$97.0m (£74.0m) plus the purchase of freehold property of US$1.7m (£1.3m) less working capital adjustments of US$0.5m (£0.4m) and US$1.7m (£1.3m) held as holdback amounts in place of escrow balances. Maximum contingent consideration payable is US$40.0m (£30.5m) plus the holdback amounts.
The current contingent consideration payable (excluding holdback amounts) represents the fair value of the estimated amounts payable for each of two annual consecutive earnout periods, commencing 1 April 2020. The earnout in each period is calculated by reference to the relevant earnings for the period compared to the target for the period.
NovaBone, located in Florida, USA, produces products that are used to accelerate bone regeneration, primarily for orthopaedic and dental surgical procedures in the USA. It has strong technology and knowhow within the fast-growing biologics segment, developing biomaterials that harness the body’s natural healing process to accelerate bone growth. The company continues to run under its own management team and has become part of the Group’s Medical sector.
The excess of the fair value of the consideration paid over the fair value of the assets acquired is represented by customer related intangibles of £8.9m; trade name of £3.0m and technology related intangibles of £23.7m; with residual goodwill arising of £42.8m. The goodwill represents:
- a) the technical expertise of the acquired workforce;
- b) the opportunity to leverage this expertise across some of Halma’s businesses through future technologies; and
- c) the ability to exploit the Group’s existing customer base.
NovaBone contributed £2.3m of revenue and £0.5m of profit after tax for the year ended 31 March 2020.
If this acquisition had been held since the start of the financial year, it is estimated that the Group’s reported revenue and profit after tax would have been £12.3m higher and £3.1m higher respectively.
Acquisition costs totalling £1.7m were recorded in the Consolidated Income Statement.
The goodwill arising on this acquisition is expected to be deductible for tax purposes.
- h) Sensit Technologies, LLC
| Total
£m |
|
| Non-current assets | |
| Intangible assets | 18.3 |
| Property, plant and equipment | 2.2 |
| Current assets | |
| Inventories | 4.4 |
| Trade and other receivables | 2.0 |
| Cash and cash equivalents | 0.4 |
| Total assets | 27.3 |
| Current liabilities | |
| Trade and other payables | (1.6) |
| Lease liabilities | (0.2) |
| Provisions | (0.1) |
| Non-current liabilities | |
| Lease liabilities | (0.8) |
| Deferred tax | (0.5) |
| Total liabilities | (3.2) |
| Net assets of business acquired | 24.1 |
| Initial cash consideration paid | 39.2 |
| Total consideration | 39.2 |
| Goodwill arising on acquisition | 15.1 |
On 4 February 2020, the Group acquired the entire members’ interests of Sensit Technologies, LLC (‘Sensit’) for an initial cash consideration of US$51.5m (£39.2m). There is no contingent consideration.
Sensit, located in Indiana, USA, manufactures products that enable natural gas utilities to detect leaks in their pipes, reducing climate change effects by minimising emissions of methane, protecting workers in the natural gas distribution industry, and ensuring compliance with regulatory standards. Its technologies are also used in emergency response situations by firefighters entering burning buildings to ensure that they do not face explosion risk due to leaking natural gas. The company continues to run under its own management team and has become part of the Group’s Process Safety sector.
The excess of the fair value of the consideration paid over the fair value of the assets acquired is represented by customer related intangibles of £6.6m; trade name of £2.9m and technology related intangibles of £8.5m; with residual goodwill arising of £15.1m.
The goodwill represents:
- a) the technical expertise of the acquired workforce;
- b) the opportunity to leverage this expertise across some of Halma’s businesses through future technologies; and
- c) the ability to exploit the Group’s existing customer base.
Sensit contributed £3.9m of revenue and £0.5m of profit after tax for the year ended 31 March 2020.
If this acquisition had been held since the start of the financial year, it is estimated that the Group’s reported revenue and profit after tax would have been £14.5m higher and £1.6m higher respectively.
Acquisition costs totalling £0.7m were recorded in the Consolidated Income Statement.
The goodwill arising on this acquisition is expected to be deductible for tax purposes.
- i) Maxtec, LLC
| Total
£m |
|
| Non-current assets | |
| Intangible assets | 7.8 |
| Property, plant and equipment | 2.1 |
| Current assets | |
| Inventories | 2.3 |
| Trade and other receivables | 1.9 |
| Total assets | 14.1 |
| Current liabilities | |
| Trade and other payables | (1.9) |
| Lease liabilities | (0.2) |
| Provisions | (0.1) |
| Non-current liabilities | |
| Lease liabilities | (0.8) |
| Deferred tax | (0.1) |
| Total liabilities | (3.1) |
| Net assets of business acquired | 11.0 |
| Initial cash consideration paid | 15.3 |
| Total consideration | 15.3 |
| Goodwill arising on acquisition | 4.3 |
On 20 February 2020, the Group acquired the entire members’ interests of Maxtec, LLC (‘Maxtec’) for an initial cash consideration of US$20.0m (£15.3m). There is no contingent consideration payable.
Maxtec, located in Utah, USA, is a leader in the design, manufacture and distribution of oxygen analysis and delivery products for use in medical and non-medical applications. Maxtec specialises in innovative products for respiratory care, including in oxygen sensors and analysers for use in hospital acute care units. Maxtec has joined Perma Pure within the medical sector, whose medical dehydration products are also used in acute care units. Key members of Maxtec’s leadership team remain with the business and it continues to operate in its current facility.
The excess of the fair value of the consideration paid over the fair value of the assets acquired is represented by customer related intangibles of £3.7m; trade name of £1.5m and technology related intangibles of £2.5m; with residual goodwill arising of £4.3m.
The goodwill represents:
- a) the technical expertise of the acquired workforce;
- b) the opportunity to leverage this expertise across some of Halma’s businesses through future technologies; and
- c) the ability to exploit the Group’s existing customer base.
Maxtec contributed £2.1m of revenue and £0.3m of profit after tax for the year ended 31 March 2020.
If this acquisition had been held since the start of the financial year, it is estimated that the Group’s reported revenue and profit after tax would have been £12.7m higher and £0.7m higher respectively.
Acquisition costs totalling £0.3m were recorded in the Consolidated Income Statement.
The goodwill arising on this acquisition is expected to be deductible for tax purposes.
- j) Adjustments in respect of prior year acquisitions
| Total
£m |
|
| Non-current liabilities | |
| Deferred tax | (0.4) |
| Total liabilities | (0.4) |
| Net adjustments to assets of businesses acquired in prior years | (0.4) |
| Adjustment to goodwill | 0.4 |
In finalising the acquisition accounting for the prior year acquisitions of Navtech, adjustments of £0.4m were made to increase the deferred tax liability resulting in a corresponding increase in goodwill of £0.4m.
The adjustment was not material and as such the comparative balance sheet was not restated; instead the adjustments have been made through the current year.
10 Notes to the Consolidated Cash Flow Statement
| Year ended
31 March 2020 £m |
Year ended
31 March 2019 £m |
|
| Reconciliation of profit from operations to net cash inflow from operating activities: | ||
| Profit on continuing operations before finance income and expense, share of results of associate and loss on disposal of operations |
233.4 | 217.8 |
| Financial instruments at fair value through profit or loss | 0.1 | (0.1) |
| Depreciation of property, plant and equipment | 35.8 | 20.0 |
| Amortisation of computer software | 2.2 | 1.8 |
| Amortisation of capitalised development costs and other intangibles | 8.4 | 8.8 |
| Impairment of capitalised development costs | 5.2 | 0.7 |
| Amortisation of acquired intangible assets | 38.3 | 35.6 |
| Share-based payment expense in excess of amounts paid | 4.8 | 4.7 |
| Payments to defined benefit pension plans net of charge | (12.5) | (9.3) |
| Profit on sale of property, plant and equipment and computer software | (0.1) | (0.6) |
| Operating cash flows before movement in working capital | 315.6 | 279.4 |
| Increase in inventories | (5.1) | (9.2) |
| Increase in receivables | (9.0) | (15.3) |
| Increase in payables and provisions | 8.9 | 8.2 |
| Revision to estimate of, and exchange differences arising on, contingent consideration payable | (2.5) | (3.5) |
| Cash generated from operations | 307.9 | 259.6 |
| Taxation paid | (52.4) | (40.6) |
| Net cash inflow from operating activities | 255.5 | 219.0 |
| Year ended
31 March 2020 £m |
Year ended
31 March 2019 £m |
|
| Analysis of cash and cash equivalents | ||
| Cash and bank balances | 106.3 | 81.2 |
| Overdrafts (included in current borrowings) | (0.9) | (9.1) |
| Cash and cash equivalents | 105.4 | 72.1 |
| 1 April
2019 £m |
Restatement for changes in accounting standards
IFRS 16 £m |
Restated as at
1 April 2019 £m |
Cash flow
£m |
Net cash/
(debt) acquired £m |
Loan notes
repaid £m |
Reclassification and additions
£m |
Exchange
adjustments £m |
31 March
2020 £m |
|
| Analysis of net debt | |||||||||
| Cash and bank balances | 81.2 | – | 81.2 | 16.6 | 8.0 | – | – | 0.5 | 106.3 |
| Overdrafts | (9.1) | – | (9.1) | 8.2 | – | – | – | – | (0.9) |
| Cash and cash equivalents | 72.1 | – | 72.1 | 24.8 | 8.0 | – | – | 0.5 | 105.4 |
| Loan notes falling due within one year | (0.1) | – | (0.1) | – | – | 0.1 | (74.2) | – | (74.2) |
| Loan notes falling due after more than one year | (179.3) | – | (179.3) | – | – | – | 74.2 | (3.5) | (108.6) |
| Bank loans falling due after more than one year | (74.4) | – | (74.4) | (156.4) | – | – | – | (5.6) | (236.4) |
| Lease liabilities | – | (50.3) | (50.3) | 15.8 | (8.2) | – | (18.1) | (0.7) | (61.5) |
| Total net debt | (181.7) | (50.3) | (232.0) | (115.8) | (0.2) | 0.1 | (18.1) | (9.3) | (375.3) |
The net increase in cash and cash equivalents of £32.8m comprised cash inflow of £24.8m and cash acquired of £8.0m.
The net cash inflow from bank loans of £156.4m comprised drawdowns of £308.1m offset by repayments of £151.7m.
The net cash outflow from loan notes relates to £0.1m repayment of existing loan notes issued in relation to the previous acquisition of Advanced Electronics Limited.
Reconciliation of movements of the Group’s liabilities from financing activities
Liabilities from financing activities are those for which cash flows were, or will be, classified as cash flows from financing activities in the Consolidated Cash Flow Statement.
| 1 April
2019 £m |
Restatement for changes in accounting standards
IFRS 16 £m |
Changes from
financing cash flows £m |
Acquisition of subsidiaries
£m |
Other
changes* £m |
Effects of
foreign exchange £m |
31 March
2020 £m |
|
| Loan notes falling due within one year | 0.1 | – | (0.1) | – | 74.2 | – | 74.2 |
| Overdraft | 9.1 | – | – | – | (8.2) | – | 0.9 |
| Lease liabilities | – | 10.7 | (15.8) | 1.3 | 16.8 | – | 13.0 |
| Borrowings and lease liabilities (current) | 9.2 | 10.7 | (15.9) | 1.3 | 82.8 | – | 88.1 |
| Loan notes falling due after more than one year | 179.3 | – | – | – | (74.2) | 3.5 | 108.6 |
| Bank loans falling due after more than one year | 74.4 | – | 156.4 | – | – | 5.6 | 236.4 |
| Lease liabilities | – | 39.6 | – | 6.9 | 1.3 | 0.7 | 48.5 |
| Borrowings and lease liabilities (non-current) | 253.7 | 39.6 | 156.4 | 6.9 | (72.9) | 9.8 | 393.5 |
| Total liabilities from financing activities | 262.9 | 50.3 | 140.5 | 8.2 | 9.9 | 9.8 | 481.6 |
| Trade and other payables: falling due within one year | 164.8 | – | (9.0) | 11.4 | 19.0 | 0.5 | 186.7 |
* Other changes include movements in overdraft which is treated as cash, interest accruals, reclassifications from non-current to current liabilities and other movements in working capital balances.
