Trading update

RNS Number : 6634F

Halma PLC

23 March 2022

 

Trading update

Halma, the global group of life-saving technology companies focused on growing a safer, cleaner and healthier future, today releases its scheduled trading update, for the period from 1 October 2021 to date.

Good progress in the second half and substantial growth in the year as a whole

Halma has made good progress in the second half of the financial year to date. We continue to benefit from our strong purpose, our diverse portfolio, and our resilient, long-term growth drivers. These strategic qualities, together with the essential nature of many of our products and services, have underpinned increasing demand across the Group. The Board expects Adjusted profit before taxation for the year ending 31 March 2022 to be in line with market consensus expectations (see notes 1 and 2).

The Group is expected to deliver a further sequential improvement in revenue in the second half of the year and substantial revenue growth in the year as a whole. Order intake has continued to be ahead of both revenue this year and order intake for the same period last year.

As planned, we increased strategic investment in talent, new product development, information technology and cybersecurity, to support our growth over the longer term. We also saw a return of discretionary overhead costs to support our current strong growth. Therefore, as guided at the half-year, full year return on sales is anticipated to be more in line with historical levels.

The agility of our business model has enabled our companies to respond effectively to the range of operational challenges caused by COVID-19 and, more recently, the effects of Russia's invasion of Ukraine (see note 4).

The Group has a strong financial position, which enables continued investment, both organically and by acquisition, to support continued growth. Cash generation was solid, and reflected the strong growth in the period and investment to maintain resilience in our supply chain.

Organic constant currency revenue growth in all sectors and major geographic regions

There was further organic constant currency revenue growth across all sectors in the period, following a strong first half. There was widespread growth geographically in the period, with the strongest performances (on an organic constant currency basis) in the USA and the UK, and good growth in Mainland Europe and Asia Pacific.

The Environmental & Analysis sector has continued to deliver strong organic constant currency revenue growth. This reflects ongoing high demand for its products and services, particularly for technologies that support the building of digital and data infrastructure, and for gas monitoring products.

The Safety and Medical sectors are expected to report good organic constant currency revenue growth, also against a strong comparative. On a reported basis, the Medical sector's revenue growth will also benefit from recent acquisitions, while the Safety sector's progress will see the impact of the disposal of Texecom made in the first half of the year.

The strength of Sterling is having a negative currency translation effect on the Group's results (see note 5).

Further progress in M&A; healthy acquisition pipeline

We have made three further acquisitions in the second half of the financial year, bringing the total number of acquisitions made in the year to date to 13 for an aggregate maximum consideration of £166 million (see note 6).

Our acquisition pipeline remains healthy across all three sectors. We continue to actively manage our portfolio of global businesses to ensure that it continues to deliver strong growth and returns over the long term and is aligned with our purpose of growing a safer, cleaner, healthier future for everyone, every day.

Full Year Results

The results for the full year ending 31 March 2022 will be released on Thursday 16 June 2022.

For further information, please contact:

Halma plc

Andrew Williams, Group Chief Executive  [phone]

Marc Ronchetti, Chief Financial Officer

Charles King, Head of Investor Relations  [phone]

Clayton Hirst, Director of Corporate Affairs  [phone] 

MHP Communications

Andrew Jaques / Rachel Farrington           [phone]

A copy of this announcement, together with other information about Halma, may be viewed on its website:  www.halma.com

About Halma

Halma is a global group of life-saving technology companies, focused on growing a safer, cleaner, healthier future for everyone, every day.

Its purpose defines the three broad market areas where it operates:

· Safety: protecting life as populations grow and protecting worker safety.

· Environment: addressing the impacts of climate change, pollution and waste, protecting life-critical resources and supporting scientific research.

· Health: meeting rising healthcare demand as growing populations age and lifestyles change.

It employs over 7,000 people in more than 20 countries, with major operations in the UK, Mainland Europe, the USA and Asia Pacific. Halma is listed on the London Stock Exchange (LON: HLMA) and is a constituent of the FTSE 100 index.

In January 2022, Halma was named one of Britain's Most Admired Companies by Management Today.

Notes:

1: Adjusted profit before tax is before amortisation and impairment of acquired intangible assets, acquisition items, restructuring costs and profit or loss on disposal of businesses.

2. The Board believes current market forecasts for Adjusted profit before tax for the year ending 31 March 2022 to be in the range of £300.7m to £313.4m, with a consensus of £306.5m.

3. This Trading Update is based upon unaudited management accounts information. Forward-looking statements have been made by the Directors in good faith using information available up until the date that they approved this statement. Forward-looking statements should be regarded with caution because of the inherent uncertainties in economic trends and business risks.

4. Our direct operational exposure to Russia and Ukraine is low. All Halma group companies have ceased sales into Russia following its invasion of Ukraine and we have no companies, facilities or direct employees in either country. In the current financial year, sales to Russia have represented less than 0.5% of group revenues, with revenue in Ukraine being insignificant. We have no significant dependency on direct supplies of components or materials from either Russia or Ukraine and, where we do have suppliers, we are finding alternative sources.

Our thoughts are with everyone whose lives have been affected by the Russian invasion of Ukraine. W e are supporting the employees in our companies whose families are affected, as well as matching any donations made by our companies and colleagues to the International Committee of the Red Cross.

5. Sterling has strengthened in the year relative to many currencies, including the US Dollar and Euro. If current exchange rates continue throughout the rest of the current financial year, the currency translation impact on the Group's results is expected to be negative. Based on exchange rates of Sterling/US Dollar 1:1.37 and Sterling/Euro 1:1.18, we would expect approximately a £41m negative revenue effect and approximately a £9m negative profit effect, compared to the 2021 financial year.

6. We made ten acquisitions and a disposal in the first half of the financial year, details of which are contained in our Half Year Results announcement, which was released on 18 November 2021.

We have completed three acquisitions in the second half of the year to date:

· Clayborn Lab, a provider of custom heat tape solutions primarily for heated sample lines in the environmental monitoring market, for an initial cash consideration of US$4.5m (£3.3m) with an additional earn-out consideration of US$1.5m (£1.1m);

· Infinite Leap, a healthcare consulting and services provider for real-time location technologies, for an initial cash consideration of US$30m (approximately £22m), on a cash and debt free basis, and additional earn-out considerations of up to an aggregate maximum of US$17m (approximately £13m);

· International Light Technologies, Inc., a leading developer of technical lighting sources and light measurement systems for US$26.6m (approximately £19.5m) on a cash and debt free basis.

7. A copy of this announcement, together with other information about Halma, may be viewed on its website at www.halma.com .

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