Final Results
Halma PLC
18 June 2002
HALMA p.l.c.
PRELIMINARY RESULTS FOR THE YEAR TO 30 MARCH 2002
18 JUNE 2002
Halma p.l.c. ('Halma'), the leading safety and environmental technology group,
today announced its results for the year to 30 March 2002.
Highlights include:
• Sales held at last year's record level with profit only marginally down
• US weaker but particularly strong sales in Europe
• 41% return on capital employed, 55% excluding cash
• Free cash flow, after funding capital expenditure, working capital and
tax, of £33 million
• Net margin on sales exceeds 17% for the tenth consecutive year
• Total dividend for the year of 5.283p, a 15% increase
• Record levels of R&D driving continuous innovation
Commenting on the results, Stephen O'Shea, Chief Executive of Halma, said:
'This year has seen a pause in our tradition of delivering record profit each
year. The scale of the short-term slowdown in the USA has exceeded the rate of
growth achieved in Europe and elsewhere. In each of our chosen sectors there are
long-term growth opportunities. We have considerably improved our sales into
Europe and have taken management actions to reduce costs. These factors will
assist future operating results, particularly in the second half of the year
ending in March 2003.
'We have substantial resources available to acquire complementary operations
that extend our market share or give us access to new or emerging technologies
with strong growth potential. Taken together with the fruits of our own R&D,
these opportunities provide a strong platform from which to return to our normal
pattern of record sales and record profits.'
For further information, please contact:
Stephen O'Shea, Chief Executive +44 (0)1494 721111
Kevin Thompson, Finance Director +44 (0)1494 721111
Hogarth Partnership Limited +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 web site: www.halma.com
A copy of the Annual Report and Accounts will be sent to shareholders on 1 July
2002 and will be available to the general public on written request to the
Company's registered office at: Misbourne Court, Rectory Way, Amersham, Bucks
HP7 0DE.
PHOTOGRAPHS
High resolution photos of Halma senior management, including Chief Executive
Stephen O'Shea, and images illustrating Halma business activities can be
downloaded from our web site: www.halma.com. Click on the 'News' link, then '
Image Gallery'. Photo queries: David Waller +44 (0)20 8205 0038, e-mail:
dwaller@halmapr.com
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 and Specialist technology
The key characteristics of Halma's businesses are that they are based on
advanced technology and offer strong growth potential. Each business group is a
clear market leader in its specialist field and, in a number of cases, is the
dominant world supplier.
HALMA p.l.c.
Group Results for the 52 weeks to 30 March 2002
Financial Highlights
Change
Turnover 0% to £267.6 million
Overseas sales + 1% to £183.3 million
Profit before taxation* - 3% to £ 48.3 million
Earnings per share * - 3% to 9.10p
Dividend per share +15% to 5.283p
Net margin on sales * 18.0%
Return on capital employed ** 41.1%
* Before goodwill amortisation
** Return on capital employed is defined as the profit before taxation*
expressed as a percentage of net tangible assets
Financial Overview
At £48.3 million, profit before taxation and goodwill amortisation was 3% (£1.4
million) below last year's record on similar turnover. Return on sales was 18%
and return on capital employed once again exceeded 40%. Overseas sales were
ahead of last year and are now at the record level of 68.5% of total Group
sales. Earnings per share before amortisation of goodwill fell by 3%, assets per
share increased by 16% and the dividend per share increased by 15%. The Group
finished the year with a record level of £30.6 million net cash.
Chief Executive's Review
Stephen O'Shea, Chief Executive of Halma, said:
'This year has seen a pause in our tradition of delivering record profit each
year. The scale of the short-term slowdown in the USA has exceeded the rate of
growth achieved in Europe and elsewhere. The Group's results are therefore
slightly below last year, as indicated in our April trading statement. We made
profit before tax and goodwill amortisation of £48.3 million (2001: £49.7
million) on sales at the same level as last year.
'Overall our operating companies continue to provide a high return on sales
together with an exceptionally good return on capital employed. This has meant
that not only were we fully self funded but also increased our cash balances to
record levels by the end of the year. Such a consistent performance across our
businesses is underpinned by continual innovation in production methods, systems
and new products. We have also continued to increase our R&D spend to record
levels, a key element in ensuring future growth.
'Efforts to reduce material costs and increase productivity have continued
throughout the year and are expected to show through in increased profits in
2002/03. The powerful positions we have built up over many years in
safety-related growth markets have provided considerable resilience in the Group
results.
'The USA has been a significant source of growth in sales and profits over a
considerable period. The difficulties in this market inevitably affected this
year's performance. Profits from the USA in 1999/00 were £12.3 million, in 2000/
01 were £16.3 million and this year were £13.8 million. Sales show a similar
pattern of reduction from last year's peak but growth over the previous record.
This characteristic is widespread across our six sectors. Only in our water
sector did sales grow in the USA as a result of effective selling into our niche
areas of the growing US water market. The US market is showing signs of
improvement. Recovery in America should lead into a recovery in profits from
this region in the second half of the coming year.
'In the Fire and Gas sector management was successful in growing sales into
mainland Europe to such an extent that declines in the USA and UK were fully
offset. Profit remained steady at last year's record level. Our success in
developing added value products through our commitment to R&D and our successes
in growing market shares and reducing costs have allowed margins to be held at
the former satisfactory levels.
'A substantial proportion of the world's elevator industry is based on the USA.
New York represents 20% of their national market. There has been therefore a
significant effect on our Elevator Electronics sector as a result of the
disaster of 11 September and from broader US economic effects. Although
worldwide sales equalled last year, profit margins were reduced. Some of our
biggest customers have been buying some of our smaller ones. This leads to a
degree of pricing pressure. Exports of emergency telecommunication equipment and
displays for elevators are growing to become a more significant part of our
operations. This should allow us to grow sales in other parts of the world
further assisted by a strong pipeline of new products.
'Right across the world our Process Safety products protect life and health at
work. Reductions in sales to the USA were more than offset by increased sales
into Europe and the Far East. Our machine guarding and interlocking activities
moved ahead well. Recently we have introduced a range of highly sensitive
pressure relief sensors that are the most reliable and predictable in the
industry according to independent tests. However in the year we earned less from
our emergency pressure relief operations. Total profits were close to last
year's level. We are working to increase our geographical coverage and bring a
wider range of products to each of our customers.
'Within our Water business Ultrapure water systems for the semiconductor
industry declined to a low level but we increased sales into the more
competitive municipal water cleansing market in the USA. We occupy a niche,
medium pressure closed systems, in this growing market and increased sales to
the USA by £3 million. The change in product mix caused a reduction in margins
and profit for the year.
'We are the world leaders in the high power Resistor market. This is a diverse
market and we supply products into telecoms, internet providers, transport,
power generation, heavy industry and mining. All of these industries have been
affected in the USA leading to a reduction in US sales of over £3 million. This
was only partially offset in other territories where sales grew by less than £1
million. Action was taken during the year to reduce staffing levels and cut some
costs. This is however still a highly successful sector and on a medium-term
growth track. Despite this the profit made in this sector has been exceeded only
once and that was last year. There are early signs of useful growth in our earth
fault control business. This is an area of increasing technology offering
valuable operating advantages to customers.
'Profits were increased in our Optics & Specialist sector. This was achieved by
selling an improved mix of products that earn higher margins. The division
increased its return on sales from 14.7% last year to 15.4% this year. One new
product that contributed to the improvement is a new automatic instrument for
measuring the fluid pressure inside the eye. This is an important diagnostic aid
in several forms of eye disease.
'It takes special people to create and develop market-leading businesses. Our
management team continuously achieves this and at the same time delivers an
extraordinarily consistent record of high return on sales and high return on
capital employed. Much of this talent is developed within the Group.
'There is no disguising the fact that this has been a challenging year for our
Executives in each subsidiary. However, once again, they have demonstrated their
talent by making the necessary decisions and implementing them successfully. As
a result, we have leaner, more productive companies. I would like to thank all
our employees for their efforts. As a result of their work, we have continued to
create wealth for our shareholders who will deservedly reap the rewards as we
return to our remarkable long-term growth track.
'In each of our chosen sectors there are long-term growth opportunities. We have
considerably improved our sales into Europe and have taken management actions to
reduce costs. These factors will assist future operating results, particularly
in the second half of the year ending in March 2003. We have substantial
resources available to acquire complementary operations that extend our market
share or give us access to new or emerging technologies with strong growth
potential. Taken together with the fruits of our own R&D, these opportunities
provide a strong platform from which to return to our normal pattern of record
sales and record profits.'
Finance Director's Review
Kevin Thompson, Finance Director of Halma, said:
'At £48.3 million, profit before taxation and goodwill amortisation was 3% (£1.4
million) below last year's record on similar turnover. The Group continues to
operate at a high rate of profitability with return on sales at 18%, having
exceeded a figure of 17% for 10 consecutive years.
'Costs continue to be well managed with materials purchase cost being driven
down, thereby maintaining gross margin levels, despite sales price pressure in
some markets. The overhead cost base has been reduced through the year, a
pattern accelerated in the second half, so that Group headcount finished the
year 9% below March 2001. As a result of changes to the cost base, approximately
£1.5 million of reorganisation costs were incurred and have been charged against
operating profit.
'Good cash generation and consistently high returns were a feature of this year
as in previous years. Free cash flow (the cash left over from our operating
activities and interest but after funding capital expenditure, working capital
and tax) was £33 million, equalling the record achieved last year. We finished
the year with net cash in excess of £30 million. This strong cash generation
will finance a dividend increase of 15%, giving a total distribution to
shareholders of more than £19 million for the year.
'Return on capital employed is an excellent performance measure for the Group.
It combines profitability (return on sales) with efficiency (asset turns). The
Group's return on capital employed was over 40% for the nineteenth consecutive
year. If we exclude the high levels of cash (on which we earn a lower return)
from the calculation, the return is an exceptional 55%.
'The effective rate of tax on profit before goodwill amortisation was 31.5%.
Going forward, we expect the effective tax rate to be slightly higher as we
increasingly earn profits in higher tax jurisdictions.
'Three new Accounting Standards have become applicable in these accounts.
'FRS 17 (Retirement Benefits) requires extra disclosure. When FRS 17 is
implemented in full in 2004 the effect on profits is not expected to be
material. Under FRS 17 the Group's defined benefit pension schemes had an
aggregate deficit of £9 million net of tax at the end of March 2002. This is
primarily the result of the decline in interest rates and the fall in the world
stock markets, as well as the relatively prudent assumptions of FRS 17. To
protect the Group against future volatility in pension costs, the defined
benefit schemes will shortly be closed to new members and a defined contribution
scheme established.
'FRS 18 (Accounting Policies) required no adjustment to the Group accounts.
'FRS 19 (Deferred Tax) required full rather than partial provision for deferred
tax and caused an increase in the effective tax rate. A deferred tax provision
of £4 million is now included in the Consolidated Balance Sheet, also as a
result of the new Accounting Standard. Comparative figures have been restated
accordingly.
'We believe that it is vital for strong financial controls to be in place across
the Group and for a culture of openness, honesty and accountability to exist
within our highly autonomous structure. High quality finance executives resident
in each operating company oversee best practice. We do not use complex
derivative financial instruments nor complex tax planning schemes. Our balance
sheet is strong with no net debt or off balance sheet financing arrangements.
This straight-forward approach, together with our intensive management, protects
assets, controls liabilities and provides future opportunity.
'Through product and process improvements, tight management of costs and the
continuing strength of the balance sheet, the Group remains in very good shape.
We focus consistently on stable safety-related world markets and the creation of
value. The evidence for this is apparent in the cash generated and the excellent
returns earned year after year.'
Chairman's Review
David Barber, Chairman of Halma, said:
'The Directors again recommend an increase of 15% in the final dividend per
share. This is the twenty-fourth consecutive year in which the total dividend
per share has been increased by 15% or more. The total dividend is covered 1.7
times by profit before amortisation of goodwill but after taxation. If approved,
this dividend amounting to 3.206p per share will be paid on 19 August 2002 to
shareholders on the register at the close of business on 19 July 2002.
'The Group's dominance in its selected markets and its cash generating ability
continue to demonstrate its quite exceptional strength. Although the short-term
prospects are difficult to forecast with precision I am sure that the Group will
continue to deliver consistent and increasing value to its shareholders.'
Operating Review
Fire and Gas
Halma has maintained its role as a world leader in the manufacture of commercial
grade fire detectors and portable detectors for hazardous gases.
The global fire detector market is protected from new entrants and rapid
technological change, to a degree, by complex local and international standards
governing manufacture, installation codes and product certification. However,
this is a competitive sector with a small number of multinational players. While
effective marketing strategies are essential to sustaining growth in mature
business sectors, continuous product innovation is also vital to grow market
share and penetrate new application areas.
A primary aim of fire detector R&D is to develop sensors that outperform
competitive products in their ability to discriminate between a real fire threat
and a benign change in an environment. However, research also continues into
technical advances that reduce customers' cost of ownership during the whole
life of the product.
One of the Group's newest fire detector technologies has gained rapid acceptance
for use in technically sophisticated fire alarm systems. Available with dual
fire and smoke sensing capability, Discovery series detectors are being
installed in high occupancy, multi-use buildings such as universities, hospitals
and hotels.
While sales of fire products in the USA showed some decline, this was offset by
buoyant sales elsewhere, particularly in Europe, where the technical
requirements to meet product approval standards are becoming more difficult to
achieve. UK sales growth was helped by more stringent safety codes for sports
stadia. The fastest growing sales area for infrared wide-area smoke detection
equipment was the USA.
Several Halma companies are developing products to improve evacuation of
buildings during a fire. Based on original research by scientists at Leeds
University, a new product has been developed that could reduce fire deaths. A
world first, this new device emits sounds at special frequencies that allow
people to tell the direction the sound is coming from. The directional sounders
guide people trapped in smoke-laden buildings to the nearest safe exit.
The Group's gas detector businesses are reaping the rewards of encouraging large
customers to make buying decisions on lifetime ownership costs, not just on
purchase price. This trend greatly benefits Halma companies because they lead
competitors in product reliability and service support. As large companies, such
as BP, de-man and outsource non-core activities, the Group is winning
substantial new business in equipment servicing. Last year's sale of 8,000
instruments to British Gas has been followed by a service contract for 600 units
per month.
Greater emphasis on worker health and safety usually follows economic and social
development. This trend is changing the global market for personal hazardous gas
detectors, with the emergence of a new 'compliance products' segment.
Essentially, these are low price, minimum specification products that meet the
needs of local employee safety regulations. Four new 'compliance' portable
detectors have been introduced to capture new business in this growth sector.
Within the Group's technology portfolio is a unique product that is used to
humidify hydrogen gas in fuel cells. Halma has applied for several patents in
this area that could prove valuable. These devices are predicted to replace
batteries and small-scale power generators during the next decade.
Water
In many parts of the world, water supplies for drinking, manufacture and
agriculture are reaching crisis point. Fresh water reserves are finite, yet
demand rises relentlessly due to population growth and economic development. By
2005, there will be 50 cities with populations of over 10 million. In parts of
China, Latin America and Southern Asia, ground water is being extracted at an
unsustainable rate.
Halma companies operating in the water sector are world leaders in their
specialist areas, supplying innovative, advanced technology products that help
to conserve, treat and analyse water.
Compounding the supply problem, fresh water reserves are continually being
degraded by air pollution, agricultural run-off and contamination from
wastewater. Competition for resources, rising water quality expectations and
environmental regulation are combining to stimulate demand for better
conservation strategies and more effective treatment processes. This creates
opportunities for new technological solutions, many coming from Halma companies,
that address the problems of water scarcity and contamination.
Singapore is a country with rising demand and limited fresh water resources. In
response, the Government is investing heavily in water conservation and
infrastructure. An imaginative water-recycling scheme has attracted world
attention. Called NEWater, this project has reduced the burden on drinking water
supplies by reusing treated sewage effluent in industrial processes. Following a
three-year pilot study at a NEWater test site, the Group has won contracts to
supply ultraviolet (UV) water disinfection systems to three new full-scale
plants.
In the USA, strict environmental pollution regulations now limit the amount of
chlorine disinfectant that can be discharged to rivers from sewage treatment
plants. This has stimulated demand for cost-effective, non-chemical effluent
disinfection techniques such as UV treatment.
Halma is a world leader in the UV disinfection process and is supplying two
large wastewater treatment systems in Cobb County, Georgia, valued at $5
million. As the world's largest UV wastewater facilities treating effluent
within enclosed pipework, these US plants represent a major technological
advance.
In the developed world, conservation is a vital element in water resource
management, and Halma is the world leader in instrumentation that finds leaks in
water pipes. A reduced UK market demand for leak location products was
compensated by overseas growth, particularly in the US and France. During the
past year, the Group has regained its market leadership for leak location
products in France and also in most French-speaking territories.
The phased worldwide launch of the revolutionary Permalog high-speed leak
monitoring system has been successfully completed. UK patents for Permalog were
granted in 2002 and international patent applications are pending.
Sales and profits from water analysis products reached new records in the period
under review. Growing acceptance among US pool and spa maintenance professionals
of the Group's instrument-based water analysis system led to record sales in
that territory.
Elevator Electronics
Halma has maintained leadership of the elevator safety products sector. The
Group remains the principal global manufacturer of electronic elevator door
safety controls, emergency communication systems and information display panels.
Our market position has been reinforced during the past year with the launch of
several innovative products and marketing initiatives.
The Group supplies over half of the worldwide market for elevator safety edges
and this delivers many competitive benefits. However, it also means that Halma
elevator products companies are sensitive to rapid changes in market conditions.
For the first six months, sales in this sector were ahead of the previous year.
However, a market downturn during the second half, particularly in the USA,
eliminated the previous gains. Restructuring actions, designed to compensate for
the downturn in demand, put a brake on the decline but had not restored profit
growth to its former rate by the year end.
Business drivers in this sector are primarily the rate at which new buildings
are constructed and old ones refurbished. There is also a continuing trend of
public safety legislation being upgraded and tightening of building controls
leading to increased demand for the Group's elevator products. EU regulations
are moving towards a requirement for all elevators, not just new build, to be
fitted with emergency communication equipment.
More than half of Group sales in this sector come from North America. The
Greater New York City area is said to account for 20% of the total US market for
elevator systems. A combination of the recent economic decline and the impact of
the 11 September terrorism had a severe impact on sales. In the aftermath of 11
September, a surge in demand for refurbished office space was anticipated. In
the event, demand for offices in New York by displaced businesses was offset by
cutbacks and closures which created a large reservoir of unlet space.
Despite the overall downturn in this sector, several territories showed very
promising growth. The Group's third sales office established in China last year
has quickly proved successful. Halma is now the market leader in elevator door
detectors in Brazil, the South American centre of elevator manufacture.
Significant reductions in manufacturing costs have been achieved by relocating a
large proportion of European production to the Czech Republic. In Europe, the
Group is now marketing its motor control power resistors to elevator
manufacturers through its established elevator businesses.
Sales of electronic displays, which the Group manufactures in Singapore, rose
significantly, particularly in Europe and the US. A significant installation was
the Al Faisaliah building in Saudi Arabia, where the Group won a £100,000
contract for displays and electronic elevator monitoring systems. All passenger
elevators in this 267 metre tower are fitted with electronic displays that show
the location, direction of travel, floor number, and the outside temperature,
date and time.
The ageing of the global population is a long-term trend that should create
extra demand in the elevator sector. Despite population expansion, the United
Nations predicts that the elderly will grow in proportion to outnumber the youth
by 2050. The rate of population ageing in the developed countries is most rapid.
As a result, Halma companies have targeted the emerging market for safety
products in luxury private residence elevators as a new sales opportunity.
Process Safety
Halma is a world leader in specialist areas of industrial safety that protect
workers from hazardous machinery, and protect process plant and the environment
from catastrophic explosions.
Expenditure on industrial health and safety divides into regulatory costs, which
are essential for an organisation to operate within the law, and discretionary
spending. The latter provides better plant protection and employee safeguards
for humane or environmental reasons. Because safety performance can affect
recruitment, retention, productivity and morale, manufacturers are increasingly
making a connection between safety and profitability. This can lead to higher
discretionary safety spending on top of the rising spend required to satisfy
legislation, with the Group benefiting from both.
The Group's interlocking products are an ingeniously simple way of protecting
people at work from the risk of injury. These systems are designed to be
foolproof and protect workers even if they are negligent of their own safety.
The interlock businesses delivered good profit growth during the past year.
In the past, commitment to worker safety has often been higher among European
manufacturers than their counterparts in the USA. There are strong signs that
safety is becoming a more important issue to US manufacturing industries with
increased acceptance of the Group's well established and proven safety
technologies.
Despite the poor profitability of the global automotive industry, this sector
continues to invest heavily in new production facilities and offers growing
sales opportunities. Halma companies have developed safety products ideally
suited to controlling access to car production lines. These products have now
gained worldwide acceptance by the auto industry, including the Ford Motor
Company and its principal suppliers.
On the back of strengthening oil prices, increased capital spending in the
petrochemical sector pushed up demand for the Group's valve control safety
systems. Significant contracts have been won recently in Kazakhstan and
Colombia.
Sales of explosion-prevention bursting discs by the Group's UK and US businesses
were depressed by a global slump in capital spending by the chemical processing
industry. Our reaction to this downturn has been restructuring to reduce the
cost base together with changes to the sales operation that have improved
customer service and extended market penetration.
Several new products were developed in this sector. The most significant is a
unique bursting disc that will replace several existing products. Features of
its design and production method have been patented. Special products optimised
for process safety in pharmaceutical manufacture have gained rapid acceptance by
the market and attracted new customers. In the UK, expansion of customer support
services has opened up new sales opportunities in offshore oil and marine
applications.
In response to continuing globalisation of the customer base, worldwide sales
and marketing by the Group's bursting disc companies has become more unified. A
sharper focus on customer service has resulted in faster order-to-delivery times
and even greater competitiveness.
Resistors
The Group's six resistor businesses are world leaders in heavy-duty electrical
resistor technology. Throughout the world, power utilities rely on Halma
resistor systems to safeguard their electricity generation and distribution
infrastructure. Our resistors are also widely used to control powerful electric
motors and for speed control on trains.
Operating from the USA, Canada, the UK and Australia, Halma's resistor companies
market cooperatively worldwide, sharing technology, R&D advances, application
experience and market intelligence.
In the period under review, the principal resistor markets, power distribution
and locomotive braking, were significantly depressed. This was especially
evident in the USA, where Halma has a high market share in both sectors. To
offset the downturn in demand from existing customers, the Group responded by a
sharp reduction in the overhead cost base and an aggressive entry into new
markets. After restructuring, costs have been cut by 12%.
One of the most interesting new markets for the Group's resistor technology is
the elevator industry. Resistors safely control elevator speed by absorbing
excess power generated by the winding motors. Because this application is safety
critical, and requires products of exceptional reliability and longevity, it is
a natural market for the Group to enter. Working with the Group's elevator
electronics companies, the resistor businesses are now selling to the large
elevator manufacturers in North America and Europe. In the USA, Halma is now the
principal supplier of resistors to Otis Elevators.
A technology bought into the Group by the Cutler-Hammer acquisition in 2000 has
significantly contributed to growth in sales of resistors for locomotive and
mining truck applications. Since joining the Group, the transit resistor part of
the acquired business has been re-engineered with a new emphasis on product
quality and customer service. As a result, two major transit customers have
awarded the Group approved supplier status. Braking resistors with a contract
value of approximately £1.7 million are being supplied to Mitsubishi Electric
for the Long Island Rail Road in New York State, USA.
In May 2001 the Group extended its technology portfolio with the acquisition of
Schneider Canada's earth-fault relay business. These devices monitor industrial
power systems and protect them from damage in the event of an electrical surge.
Halma companies already market allied products called earth-fault resistors, and
there is great synergy between the two technologies. The Group can now provide
customers with an integrated approach to detecting, locating and preventing the
kind of major electrical failures that, unchecked, could bring a factory's
production to a standstill.
Optics and Specialist
The Group's activities in the Optics and Specialist sector principally cover the
manufacture of magnification and diagnostic products for professionals in the
optical and healthcare industries. However, the Group also has several highly
successful specialist businesses that make sensors, analytical products and cash
management systems.
Halma is a world leader in high precision optical instruments used by opticians
around the world to diagnose and treat eye conditions. The past year saw the
launch of a much improved and enhanced version of the Group's flagship product
in this market, the Pulsair Tonometer. This is a hand-held instrument that lets
opticians measure the pressure inside a patient's eyes without any physical
contact. Regular upgrades have maintained this instrument's market leadership in
many countries. The latest improvements in portability and usability have helped
to increase US sales despite a difficult economic climate.
The Group also has an international reputation as the premier designer and
manufacturer of precision lenses for the investigation of eye disorders and
laser surgery. Worldwide, the ophthalmic market showed little growth in the past
year. Lens sales were down in the USA, but higher export sales compensated.
Latest innovations include new lenses for surgery on the retina and inside the
eye cavity; their revolutionary optical design provides surgeons with greatly
improved visibility while allowing easier access to surgical tools.
Halma's business that formerly specialised in retail security products has now
undergone a comprehensive transition to focus on cash management and cash
handling systems. A new range of cash counting scales for use with the Euro
helped to double sales in Europe. The Group has been working with several large
UK retailers to develop techniques that cut the considerable costs involved in
handling and banking cash.
Recent European legislation governing the crash testing of new cars means that
it is now necessary to measure impact forces very accurately. The Group is now
one of the leading designers and manufacturers of the special sensor arrays
needed for vehicle crash testing. Halma has supplied systems to several car
makers as well as testing and certification organisations such as the Transport
Research Laboratory in the UK and UTAC in France.
The Group is one of only a handful of manufacturers of very high specification
miniature valves used for precise control of liquid and gas flow in scientific
instruments. An interesting new application is in portable biohazard
instruments. These have been developed in America to rapidly detect disease
organisms released into the environment by terrorists or sent in the mail.
Heightened global concern over bio-terrorism could prompt rapid growth in this
market and create significant opportunities for sales of our specialist valves.
Preliminary Results for the 52 weeks to 30 March 2002
Consolidated Profit and Loss Account £000
52 weeks to 30 March 2002
Restated*
Before 2001
goodwill Goodwill 52 weeks
amortisation amortisation Total Total
Turnover 267,597 - 267,597 268,322
======= ======= ======= =======
Operating profit before goodwill
amortisation 48,018 - 48,018 49,703
Goodwill amortisation - (2,297) (2,297) (1,935)
_______ _______ _______ _______
Operating profit 48,018 (2,297) 45,721 47,768
Interest 237 - 237 (5)
_______ _______ _______ _______
Profit on ordinary activities
before taxation 48,255 (2,297) 45,958 47,763
Taxation (note 2) (15,196) 395 (14,801) (15,641)
_______ _______ _______ _______
Profit for the financial year 33,059 (1,902) 31,157 32,122
_______ _______ _______ _______
Dividends
Ordinary dividends (note 3) (19,323) (16,580)
_______ _______
Profit transferred to reserves 11,834 15,542
======= =======
Earnings per ordinary share before
goodwill amortisation 9.10p 9.34p
Earnings per ordinary share 8.58p 8.91p
Diluted earnings per ordinary share 8.54p 8.90p
* Restated for the adoption of FRS 19 (Deferred Tax)
Consolidated Balance Sheet £000
Restated*
30 March 2002 31 March 2001
Fixed assets
Intangible assets 40,042 41,478
Tangible assets 43,860 44,754
_______ _______
83,902 86,232
Current Assets
Stocks 35,212 40,129
Debtors 67,993 69,713
Cash and short-term deposits 45,657 21,484
_______ _______
148,862 131,326
_______ _______
Creditors: amounts falling due within one year
Borrowings 15,047 7,758
Creditors 36,946 43,432
Current taxation 6,844 10,224
Dividends payable 11,712 10,062
_______ _______
70,549 71,476
_______ _______
Net current assets 78,313 59,850
_______ _______
Total assets less current liabilities 162,215 146,082
Creditors: amounts falling due after one year 491 1,730
Provisions for liabilities and charges 4,167 2,883
_______ _______
157,557 141,469
======= =======
Capital and reserves
Called up share capital 36,473 36,099
Share premium account 5,631 1,623
Other reserves 185 185
Profit and loss account 115,268 103,562
_______ _______
Shareholders' funds 157,557 141,469
======= =======
* Restated for the adoption of FRS 19 (Deferred Tax)
Statement of Total Recognised Gains and Losses £000
Restated*
52 weeks to 52 weeks to
30 March 2002 31 March 2001
Profit for the financial year 31,157 32,122
Other recognised gains and losses
Exchange adjustments (102) 4,258
Related corporation tax (26) (757)
_______ _______
(128) 3,501
_______ _______
Recognised gains and losses relating to the year 31,029 35,623
Prior year adjustment (3,411) -
_______ _______
Total recognised gains and losses 27,618 35,623
======= =======
Movements in Shareholders' Funds £000
Restated*
52 weeks to 52 weeks to
30 March 2002 31 March 2001
Shareholders' funds brought forward as originally stated 125,539
Prior year adjustment (3,745)
_______
Shareholders' funds brought forward (restated) 141,469 121,794
Profit for the financial year 31,157 32,122
Dividends (19,323) (16,580)
_______ _______
Profit transferred to reserves 11,834 15,542
Total other recognised gains and losses (128) 3,501
Net proceeds of shares issued 4,382 632
_______ _______
Increase in shareholders' funds 16,088 19,675
_______ _______
Shareholders' funds carried forward 157,557 141,469
======= =======
* Restated for the adoption of FRS 19 (Deferred Tax)
Consolidated Cash Flow Statement £000
52 weeks to 52 weeks to
30 March 2002 31 March 2001
Cash flow from operating activities (note 4) 55,860 55,493
Return on investments and servicing of finance
Interest received 770 713
Interest paid (522) (700)
_______ _______
248 13
Taxation
Current taxation paid (17,023) (14,489)
Capital expenditure
Purchase of tangible fixed assets (8,120) (9,441)
Sale of tangible fixed assets 1,667 1,161
_______ _______
(6,453) (8,280)
Acquisitions and disposals
Acquisition of businesses (2,571) (12,128)
Cash and overdrafts acquired - 144
Sale of businesses - 95
_______ _______
(2,571) (11,889)
Equity dividends paid (17,673) (15,248)
_______ _______
12,388 5,600
Management of liquid resources
(Increase)/decrease in short-term deposits (20,912) 3,189
Financing
Issue of ordinary share capital 4,382 632
Increase/(decrease) in loans 8,253 (9,278)
_______ _______
12,635 (8,646)
_______ _______
Increase in cash (note 4) 4,111 143
======= =======
Segmental Analysis £000
Geographical analysis
By destination By origin
Restated
52 weeks to 52 weeks to 52 weeks to 52 weeks to
30 March 2002 31 March 2001 30 March 2002 31 March 2001
Turnover
United Kingdom 84,338 86,491 168,483 167,586
United States of America 83,208 87,088 85,610 89,402
Europe excluding UK 55,755 51,887 20,949 19,771
Far East and Australasia 23,758 22,295 8,319 9,217
Africa, Near and Middle East 9,339 9,124 - -
Other 11,199 11,437 3,584 3,480
Inter-segmental sales - - (19,348) (21,134)
_______ _______ _______ _______
267,597 268,322 267,597 268,322
_______ _______ _______ _______
Profit before taxation
United Kingdom 29,327 29,844
United States of America 13,841 16,284
Other countries 4,850 3,575
_______ _______
48,018 49,703
Goodwill amortisation (2,297) (1,935)
Interest 237 (5)
_______ _______
Profit on ordinary activities before taxation 45,958 47,763
_______ _______
Sector analysis Restated
52 weeks to 52 weeks to
30 March 2002 31 March 2001
Turnover
Fire and Gas 70,414 69,218
Water 34,051 32,709
Elevator Electronics 33,097 33,009
Process Safety 36,704 36,050
Resistors 31,461 34,261
Optics and Specialist 62,462 64,004
Inter-segmental sales (592) (929)
_______ _______
267,597 268,322
_______ _______
Profit before taxation
Fire and Gas 14,792 14,803
Water 7,728 7,835
Elevator Electronics 5,642 6,092
Process Safety 6,247 6,369
Resistors 4,033 5,183
Optics and Specialist including holding companies 9,576 9,421
_______ _______
48,018 49,703
Goodwill amortisation (2,297) (1,935)
Interest 237 (5)
_______ _______
Profit on ordinary activities before taxation 45,958 47,763
_______ _______
Notes on the Preliminary Announcement
1 Basis of preparation
The above results for the 52 weeks to 30 March 2002 are an abridged
version of the Group's statutory accounts for that period, which received
an unqualified auditors' report but which have not yet been filed with the
Registrar of Companies. These results are prepared on the basis of the
accounting policies set out in the accounts referred to above, and these
policies are consistent with those applied in the Group's statutory
accounts for the 52 weeks to 31 March 2001, except for the adoption of
accounting standards applicable since that date. The figures shown for the
52 weeks to 31 March 2001 are an abridged version of the Group's statutory
accounts for that period, restated as necessary to comply with Financial
Reporting Standard 19 (Deferred Tax).
2 Taxation £000
Restated
52 weeks to 52 weeks to
30 March 2002 31 March 2001
Current tax
UK corporation tax at 30% (2001: 30%) 9,199 9,724
Overseas taxation 4,871 5,321
Adjustments in respect of prior years (268) (114)
_______ _______
Total current tax 13,802 14,931
_______ _______
Deferred tax
Origination and reversal of timing differences 1,039 710
Adjustments in respect of prior years (40) -
_______ _______
Total deferred tax charge 999 710
_______ _______
14,801 15,641
_______ _______
Reconciliation of effective tax rate on profit on ordinary activities
before goodwill amortisation % %
UK corporation tax rate 30.0 30.0
Higher tax rates on overseas profits 2.5 2.3
Adjustments in respect of prior years (0.7) (0.2)
Other timing differences (0.3) 0.1
_______ _______
Effective tax rate before goodwill amortisation 31.5 32.2
_______ _______
Following the adoption of FRS 19 (Deferred Tax) during the current year,
comparative figures have been restated in the Consolidated Profit and Loss
Account, Consolidated Balance Sheet and in the notes. The effect on the
Group's previously reported results has been to reduce the profit after tax
for the year ended 31 March 2001 by £681,000 and to reduce net assets by
£3,411,000. If the previous policy had been adopted in the current year's
results, the effect would have been to increase profit after tax by
£971,000.
3 Ordinary dividends
52 weeks to 52 weeks to 52 weeks to 52 weeks to
30 March 2002 31 March 2001 30 March 2002 31 March 2001
p p £000 £000
Interim paid 2.077 1.806 7,564 6,517
Final proposed 3.206 2.787 11,712 10,062
Balance of final dividend - - 47 1
_______ _______ _______ _______
5.283 4.593 19,323 16,580
_______ _______ _______ _______
If approved at the Annual General Meeting, the final dividend for 2002 will
be paid on 19 August 2002 to shareholders on the register at the close of
business on 19 July 2002.
4 Notes on cash flow statement £000
Restated
52 weeks to 52 weeks to
30 March 2002 31 March 2001
Reconciliation of operating profit to net cash inflow from operating
activities
Operating profit 45,721 47,768
Depreciation 7,371 7,022
Goodwill amortisation 2,297 1,935
Loss on sale of tangible fixed assets 48 90
Increase in SSAP24 pension prepayment (126) -
Decrease/(increase) in stocks 5,097 (2,348)
Decrease/(increase) in debtors 1,825 (1,385)
(Decrease)/increase in creditors (6,373) 2,411
_______ _______
Net cash inflow from operating activities 55,860 55,493
_______ _______
Reconciliation of net cash flow to movement in net cash
Increase in cash 4,111 143
Increase/(decrease) in liquid resources 20,912 (3,189)
Short-term deposits acquired - 861
Cash (inflow)/outflow from loans (8,253) 9,278
Exchange adjustments 114 (567)
_______ _______
16,884 6,526
Net cash brought forward 13,726 7,200
_______ _______
Net cash carried forward 30,610 13,726
_______ _______
This information is provided by RNS
The company news service from the London Stock Exchange
Friday, 10th January 2025
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