Interim Results

Halma PLC 5 December 2000 HALMA p.l.c. INTERIM RESULTS FOR THE HALF YEAR TO 30 SEPTEMBER 2000 5 DECEMBER 2000 Halma p.l.c., the leading safety and environmental technology group, today announced its interim results for the half year to 30 September 2000. Highlights include: - Record results, with sales up 15% to £126.3 million and profits* rising by 11% to £22.4 million - Each business group reported organic sales growth - Two-thirds of sales now to overseas markets - Rapid integration of recent acquisitions made a positive contribution to Group profitability - Earnings per share increased by 10% to 4.28p - Interim dividend up 15% to 1.806p per share - Maintained record of high return on capital employed, in this period at an annual rate of 45% * Profits reported before taxation, goodwill amortisation and exceptional items Commenting on the results, Stephen O'Shea, Chief Executive of Halma, said: 'We continue to make strong progress towards our goal of building global businesses that can sustain leading positions in specialised markets, extending our presence through geographic expansion and new product innovation. 'Our record of consistently high returns has been maintained and we fully expect this strong performance to continue.' For further information, please contact: Stephen O'Shea, Chief Executive +44 (0)1494 721111 Kevin Thompson, Finance Director +44 (0)1494 721111 Hogarth Partnership (PR) +44 (0)20 7357 9477 Rachel Hirst/Andrew Jaques A copy of this announcement, together with other information about Halma, may be viewed on its website: www.halma.com Photographs are available to registered media users from www.newscast.co.uk A copy of the Interim Report will be sent to all shareholders and will be available to the general public on written request to the Company's registered office at: Misbourne Court, Rectory Way, Amersham, Bucks HP7 0DE. NOTE TO EDITORS Halma p.l.c. develops products used worldwide to enhance safety and to minimise hazards. The Group comprises six business groups: - Fire and Gas detection - Water leak detection and UV treatment - Elevator Electronics - Bursting discs and sequential locking for Process Safety - High power electrical Resistors - Ophthalmic Optics The key characteristics of Halma's businesses are that they are based on advanced technology and offer strong growth potential. Each business group is a clear market leader in its specialist field and, in a number of cases, is the dominant world supplier. GROUP RESULTS FOR THE 26 WEEKS TO 30 SEPTEMBER 2000 FINANCIAL HIGHLIGHTS Turnover +15% to £126.3 million Overseas sales +21% to £84.4 million Profit before taxation, goodwill amortisation and exceptional items +11% to £22.4 million Ordinary dividends +15% to £6.5million Earnings per share before goodwill amortisation and exceptional items +10% to 4.28p Net margin on sales * 17.7% Return on capital employed * (annualised) 45.3% * Based on profit before taxation, goodwill amortisation and exceptional items FINANCIAL OVERVIEW Pre-tax profits increased to £22.4 million and earnings per share increased by 10% to 4.28p. Both figures are expressed before goodwill amortisation and exceptional items. Turnover increased by 15% to £126.3 million. Overseas sales increased by 21% to £84.4 million and it is noteworthy that this is the first time that over two-thirds of total Group sales have been outside the UK. All of the preceding absolute figures are new records for the Group. CHIEF EXECUTIVE'S REVIEW Stephen O'Shea, Chief Executive of Halma, said: 'It is pleasing to report that the first benefits from our increased focus on building world market-leading businesses are showing in these record results, with sales increasing by 15% and profits by 11% compared with the same period last year. 'The Group is highly cash generative and is succeeding both in making targeted acquisitions and also in investing in the development of unique new products. This is improving balance sheet efficiency and generating new opportunities. Maximising self-funded growth is in the best interests of shareholders and our decision to increase the interim dividend by 15% allows us to continue our record of high dividend growth at the same time as increasing our investment in the organic development of our businesses. 'To assist in the understanding of the Group we have declared, for the first time at the interim stage, the sales of each of our six business groups. Each of these groups reported organic sales growth. Particularly strong growth was achieved in the Resistor, Elevator, Process Safety and Water business groups, supplemented in each case by successful acquisitions made during the past 15 months. 'The resistor business of Eaton Cutler-Hammer acquired in March 2000 has been integrated rapidly into our Resistors business group and is already contributing significantly to the profitability of this operation. 'Important product innovations include the development and marketing of NuVision, a new technology which improves the vision of certain people with failing eyesight, and a range of leading edge products for the fuel cell market which offers considerable growth potential. 'In March and September 2000, we acquired two additional companies which manufacture products for the detection and reduction of underground water leakage. In October 2000, we purchased Fire Fighting Enterprises, increasing the range of specialist fire and gas detection devices offered by the Group and strengthening our position in this important industrial sector. 'Despite adverse currency movements, sales into Europe rose by 8% and direct exports from the UK rose by 10%. The American market remains strong and sales to this area grew by 32% with a commensurate increase in profitability. 'The Group is becoming stronger and more focused, finding new opportunities from geographical expansion and from new product development. The Group consistently produces an exceptionally high return on capital employed, in this period at an annual rate of 45%, and commands substantial market share in each of its operating groups. We have moved forward significantly during this period.' CHAIRMAN'S REVIEW David Barber, Chairman of Halma, said: 'For many years the Group has had an enviable record of increasing its dividend consistently by 20% per annum. It has been widely anticipated that this rate of increase would be adjusted as inflation rates have declined over recent years. The interim dividend per share has therefore been increased by 15% and this interim dividend, which will amount to 1.806p per share, will be paid on 5 February 2001 to shareholders on the register at the close of business on 3 January 2001. 'It is encouraging that the predicted benefits of the active and focused acquisition programme carried out over the past few years are impacting positively on the operating results. This, together with the benefits which continue to arise from this year's organisational changes, support my ongoing confidence in the Group's future prospects.' CONSOLIDATED PROFIT AND LOSS ACCOUNT £000 Unaudited Unaudited Audited 26 weeks to 30 September 2000 26 weeks 52 weeks Before to to goodwill Goodwill 2 October 1 April Notes amortis'n amortis'n Total 1999 2000 TURNOVER 126,274 - 126,274 109,991 233,485 ======= ======= ======= ======= ======= OPERATING PROFIT BEFORE GOODWILL AMORTISATION 22,339 - 22,339 19,907 43,419 Goodwill amortisation 2 - (876) (876) (481) (1,283) _______ _______ _______ _______ _______ OPERATING PROFIT 22,339 (876) 21,463 19,426 42,136 EXCEPTIONAL ITEMS Costs of closure and sale of businesses - - - (3,302) (3,036) Related goodwill adjustment - - - (4,732) (4,732) _______ _______ _______ _______ _______ Loss on closure and sale of businesses - - - (8,034) (7,768) _______ _______ _______ _______ _______ 22,339 (876) 21,463 11,392 34,368 Interest 37 - 37 318 332 _______ _______ _______ _______ _______ PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION 22,376 (876) 21,500 11,710 34,700 Taxation 3 (6,959) - (6,959) (5,237) (12,693) _______ _______ _______ _______ _______ PROFIT FOR THE FINANCIAL PERIOD 15,417 (876) 14,541 6,473 22,007 _______ _______ _______ _______ _______ DIVIDENDS Preference dividends - (19) (21) Ordinary dividends (6,519) (5,681) (14,413) _______ _______ _______ PROFIT TRANSFERRED TO RESERVES 8,022 773 7,573 ======= ======= ======= ORDINARY DIVIDENDS PER SHARE 1.806p 1.570p 3.993p EARNINGS PER ORDINARY SHARE BEFORE GOODWILL AMORTISATION AND EXCEPTIONAL ITEMS 4.28p 3.90p 8.41p EARNINGS PER ORDINARY SHARE 4.03p 1.79p 6.08p DILUTED EARNINGS PER ORDINARY SHARE 4.03p 1.78p 6.07p CONSOLIDATED BALANCE SHEET £000 Unaudited Unaudited Audited 30 September 2 October 1 April Notes 2000 1999 2000 FIXED ASSETS Intangible assets 2 36,770 26,353 35,784 Tangible assets 43,625 40,486 42,214 _______ _______ _______ 80,395 66,839 77,998 _______ _______ _______ CURRENT ASSETS Stocks 39,003 33,745 35,842 Debtors 63,492 55,019 64,629 Cash and short-term deposits 16,263 27,835 21,900 _______ _______ _______ 118,758 116,599 122,371 _______ _______ _______ CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR Borrowings 7,676 6,646 14,700 Dividends payable 6,517 5,676 8,730 Current taxation 11,417 14,618 8,355 Creditors 36,499 32,220 38,728 _______ _______ _______ 62,109 59,160 70,513 _______ _______ _______ NET CURRENT ASSETS 56,649 57,439 51,858 _______ _______ _______ TOTAL ASSETS LESS CURRENT LIABILITIES 137,044 124,278 129,856 CREDITORS: AMOUNTS FALLING DUE AFTER ONE YEAR 1,559 3,374 4,317 _______ _______ _______ 135,485 120,904 125,539 ======= ======= ======= CAPITAL AND RESERVES Called up share capital 36,085 36,500 35,994 Share premium account 1,496 1,012 1,096 Other reserves 185 - 422 Profit and loss account 97,719 83,392 88,027 _______ _______ _______ SHAREHOLDERS' FUNDS (INCLUDING NON-EQUITY INTERESTS) 4 135,485 120,904 125,539 ======= ======= ======= CONSOLIDATED CASH FLOW STATEMENT £000 Unaudited Unaudited Audited 26 weeks 26 weeks 52 weeks to to to 30 September 2 October 1 April Notes 2000 1999 2000 CASH FLOW FROM OPERATING ACTIVITIES 5 22,960 22,042 47,369 RETURN ON INVESTMENTS AND SERVICING OF FINANCE Interest received 465 686 1,107 Interest paid (426) (318) (529) Preference dividends paid - (19) (21) _______ _______ _______ 39 349 557 _______ _______ _______ TAXATION Current taxation paid (4,537) (2,794) (16,317) _______ _______ _______ CAPITAL EXPENDITURE Purchase of tangible fixed assets (4,753) (3,762) (8,298) Sale of tangible fixed assets 397 645 1,118 _______ _______ _______ (4,356) (3,117) (7,180) _______ _______ _______ ACQUISITIONS AND DISPOSALS Acquisition of businesses (4,321) (11,981) (25,730) Cash and overdrafts acquired 188 192 377 Sale of businesses 46 949 1,107 Overdrafts sold - 313 313 _______ _______ _______ (4,087) (10,527) (23,933) _______ _______ _______ EQUITY DIVIDENDS PAID (8,732) (7,299) (12,977) _______ _______ _______ 1,287 (1,346) (12,481) _______ _______ _______ MANAGEMENT OF LIQUID RESOURCES Decrease in short-term deposits 6,840 2,336 10,509 FINANCING Issue of ordinary share capital 491 145 252 Purchase and repayment of shares - - (2,688) (Decrease)/increase in loans (8,028) (770) 6,257 _______ _______ _______ (7,537) (625) 3,821 _______ _______ _______ INCREASE IN CASH 5 590 365 1,849 ======= ======= ======= SEGMENTAL ANALYSIS £000 GEOGRAPHICAL ANALYSIS By destination By origin Unaudited Unaudited Unaudited Unaudited 26 weeks 26 weeks 26 weeks 26 weeks to to to to 30 September 2 October 30 September 2 October 2000 1999 2000 1999 TURNOVER United Kingdom 41,891 40,333 79,259 74,462 United States of America 41,120 31,047 41,668 31,030 Europe excluding UK 23,409 21,728 9,421 8,471 Far East and Australasia 10,851 10,342 4,743 3,619 Africa, Near and Middle East 4,312 2,858 - - Other 4,691 3,683 1,411 1,487 Inter-segmental sales - - (10,228) (9,078) _______ _______ _______ _______ 126,274 109,991 126,274 109,991 ======= ======= ======= ======= PROFIT BEFORE TAXATION United Kingdom 13,649 12,925 United States of America 7,702 5,627 Other countries 988 1,355 _______ _______ 22,339 19,907 Goodwill amortisation (876) (481) Exceptional items - (8,034) Interest 37 318 _______ _______ Profit on ordinary activities before taxation 21,500 11,710 ======= ======= SECTOR ANALYSIS Unaudited Unaudited 26 weeks 26 weeks to to 30 September 2 October 2000 1999 TURNOVER Fire and Gas 31,409 29,581 Water 15,417 12,829 Elevator Electronics 15,272 12,254 Process Safety 17,205 14,202 Resistors 15,966 11,161 Optics and Specialist 31,503 30,574 Inter-segmental sales (498) (610) _______ _______ 126,274 109,991 ======= ======= NOTES ON THE INTERIM REPORT £000 1 BASIS OF PREPARATION The interim report for the 26 weeks to 30 September 2000 is prepared on the basis of the accounting policies set out in the accounts for the 52 weeks to 1 April 2000, except for the adoption of accounting standards applicable since that date. The figures shown for the 52 weeks to 1 April 2000 are an abridged version of the Group's statutory accounts, which received an unqualified auditors' report and have been filed with the Registrar of Companies. 2 INTANGIBLE ASSETS Goodwill arising on acquisitions after 28 March 1998 is capitalised and is classified as an intangible asset in the Consolidated Balance Sheet. Capitalised goodwill is amortised through the Consolidated Profit and Loss Account on a straight line basis over 20 years. Goodwill arising on earlier acquisitions has not been restated. 3 TAXATION The tax charge for the 26 weeks to 30 September 2000 of £6,959,000 is based on the estimated effective tax rate for the year and includes £2,369,000 (1999: £1,139,000 after a tax credit of £877,000 which arose on the exceptional items) in respect of overseas tax. 4 RECONCILIATION OF SHAREHOLDERS' FUNDS Unaudited Unaudited Audited 26 weeks 26 weeks 52 weeks to to to 30 September 2 October 1 April 2000 1999 2000 SHAREHOLDERS' FUNDS BROUGHT FORWARD 125,539 116,159 116,159 Profit transferred to reserves 8,022 773 7,573 Net proceeds of shares issued 491 145 252 Cancellation and repayment of preference shares - - (656) Purchase of own shares - - (2,032) Goodwill adjustment on closure and sale of businesses - 4,732 4,732 Exchange adjustments 1,433 (905) (489) _______ _______ _______ SHAREHOLDERS' FUNDS CARRIED FORWARD 135,485 120,904 125,539 _______ _______ _______ The non-equity interest included within shareholders' funds is nil (1999: £344,000 11% cumulative preference share capital which was cancelled and repaid in October 1999). 5 NOTES ON CASH FLOW STATEMENT Unaudited Unaudited Audited 26 weeks 26 weeks 52 weeks to to to 30 September 2 October 1 April 2000 1999 2000 RECONCILIATION OF OPERATING PROFIT TO NET CASH INFLOW FROM OPERATING ACTIVITIES Operating profit 21,463 19,426 42,136 Depreciation 3,511 3,001 6,252 Goodwill amortisation 876 481 1,283 Loss/(profit) on sale of tangible fixed assets 149 (60) 11 Increase in stocks (2,071) (654) (878) Decrease/(increase) in debtors 2,813 5,053 (1,155) (Decrease)/increase in creditors (3,781) (4,752) 249 Net cash flow relating to exceptional items - (453) (529) _______ _______ _______ Net cash inflow from operating activities 22,960 22,042 47,369 _______ _______ _______ RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET CASH Increase in cash 590 365 1,849 Decrease in liquid resources (6,840) (2,336) (10,509) Short-term deposits acquired - 227 409 Loans acquired - (126) (604) Cash outflow/(inflow) from loans 8,028 770 (6,257) Exchange adjustments (391) 125 148 _______ _______ _______ 1,387 (975) (14,964) Net cash brought forward 7,200 22,164 22,164 _______ _______ _______ Net cash carried forward 8,587 21,189 7,200 _______ _______ _______

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