Halma achieves record revenue for 19th consecutive year


Halma plc (LON:HLMA), the global group of life-saving technology companies focused on growing a safer, cleaner and healthier future for everyone, every day, has announced its full year results for the 12 months to 31 March 2022.


  Change 2022 2021
Adjusted Profit before Taxation1+14%£316.2m£278.3m
Adjusted Earnings per Share2+12%65.48p58.67p
Statutory Profit before Taxation+20%£304.4m£252.9m
Statutory Basic Earnings per Share+20%64.54p53.61p
Total Dividend per Share3+7%18.88p17.65p
Return on Sales4 20.7%21.1%
Return on Total Invested Capital5 14.6%14.4%
Net Debt £274.8m£256.2m

·           Record revenue, up 16%, and 17% on an organic constant currency6 basis.

·           19th consecutive year of record profit: Adjusted1 Profit before Taxation up 14%; 15% on an organic constant currency6 basis

·           Statutory Profit before Taxation up 20%; includes a £34.0m gain on the Texecom disposal.

·           Strong organic constant currency6 revenue and profit growth in all three sectors and all major regions.

·           Continued strong returns: Return on Sales4 of 20.7% and ROTIC5 of 14.6%

·           Substantially increased strategic investment to support our future growth:

o R&D expenditure up 21%, representing 5.6% of revenue

o 13 acquisitions completed in the year for a total maximum consideration of £164m; one further acquisition completed since the period end for £37m; a healthy acquisition pipeline across all sectors.

·           Solid cash conversion of 84% and a strong balance sheet, with net debt/EBITDA of 0.74x (2021: 0.76x), supporting investment in organic growth and acquisitions.

·           Total dividend per share for the year up 7%; 43rd consecutive year of dividend growth of 5% or more.

Andrew Williams, Group Chief Executive of Halma, commented:

“This was a year of notable achievements for Halma, with revenue exceeding £1.5bn and profit £300m for the first time. We delivered our 19th consecutive year of record profit, and our 43rd consecutive year of dividend growth of 5% or more, while substantially increasing strategic investment including further strengthening our leadership, teams and culture to support our future growth.

Halma’s Sustainable Growth Model enabled our companies to act with agility to address new market opportunities and to respond rapidly to the multiple operational and economic challenges they faced during the year. Our strong performance reflects huge credit on the dedication of our people across the business, and was underpinned by our empowering purpose and culture, our focus on niche markets with long-term, fundamental growth drivers and the high value of the solutions we provide to our customers.

We have made a positive start to the new financial year. We have a strong order book, and order intake in the year to date is ahead of revenue and in line with the very strong intake in the same period of the prior year. We expect to deliver continued growth and maintain high returns in the 2022/23 financial year, with good single digit percentage organic constant currency revenue growth and a Return on Sales similar to the second half of the 2021/22 financial year. We are well positioned to make further progress in the full year and in the longer-term.”


1Adjusted to remove the amortisation of acquired intangible assets, acquisition items and profit or loss on disposal of operations, totalling £11.8m (2020/21: £25.4m). See note 1 to the Results for details. 
2Adjusted to remove the amortisation of acquired intangible assets, acquisition items, profit or loss on disposal of operations and the associated taxation thereon and, in 2022, the increase in the UK’s corporation tax rate from 19% to 25%. See note 2 to the Results for details. 
3Total dividend paid and proposed per share, comprising interim dividend of 7.35p per share and proposed final dividend of 11.53p per share.
4Return on Sales is defined as adjusted1  profit before taxation from continuing operations expressed as a percentage of revenue from continuing operations 
5Return on Total Invested Capital (ROTIC) is defined as post-tax Adjusted1 Profit as a percentage of average Total Invested Capital. 
6Organic constant currency measures exclude the effect of movements in foreign exchange rates on the translation of revenue and profit1 into Sterling, as well as acquisitions in the year following completion and disposals. 
7Adjusted1 Profit before Taxation, Adjusted2 Earnings per Share, organic growth rates, Return on Sales and ROTIC are alternative performance measures used by management. See notes 1, 2 and 3 to the Results for details.

A copy of this announcement, together with other information about Halma, may be viewed on its website: www.halma.com.  The webcast of the results presentation will be available on the Halma website later today: www.halma.com 

You can view or download copies of this announcement and the latest Half Year and Annual Reports from the website at www.halma.com or request free printed copies by contacting halma@halma.com. 

Strategic Report

A year of notable achievements

This has been a year of notable achievements for Halma. We delivered record profit for the 19th consecutive year, our revenue exceeded £1.5 billion and profit £300 million for the first time, and our companies successfully addressed multiple economic and geopolitical challenges including the ongoing effects of the COVID pandemic and more recently the conflict in Ukraine. At the same time, we substantially increased investment in our digital and innovation activities while also making further progress on our Key Sustainability Objectives.

Our achievements reflect the relevance of our purpose in addressing our customers’ needs and consequently many key challenges facing our planet and society. They were enabled by Halma’s Sustainable Growth Model, built on a culture and organisational model which allows our companies to respond with agility to changes in their markets and the wider world.

However, all of this is brought to life through the commitment of our employees worldwide who rose to the challenges and lived Halma’s purpose of growing a safer, cleaner, healthier future for everyone, every day. I would like to thank them for their dedication and their contributions over the past year.

A strong financial performance

Revenue grew by 16% to £1,525.3m and Adjusted1 profit before taxation increased by 14% to £316.2m. Statutory profit before taxation increased by 20% to £304.4m.

Growth was broadly spread across our sectors, regions and companies. All sectors delivered double digit rates of revenue and profit growth on an organic constant currency basis. There was double digit organic constant currency revenue growth in all major regions, and approximately 80% of our companies delivered double digit organic constant currency revenue growth.

Returns remained strong, with Return on Sales1 well within our target range of 18-22% and Return on Total Invested Capital over double our estimated weighted average cost of capital of 7.1%. Cash conversion was solid, which reflected strong underlying cash generation and working capital control, but also the effect of some selective working capital investment to support the strong growth in the period. Our continued cash generation and strong balance sheet underpin our investment in future organic growth, as well as providing capacity to fund acquisitions and our progressive dividend policy.

The Board is recommending a 7% increase in the final dividend to 11.53p per share (2021: 10.78p per share). Together with the 7.35p per share interim dividend, this would result in a total dividend for the year of 18.88p (2021: 17.65p), up 7%, making this the 43rd consecutive year of dividend per share growth of 5% or more.

Organisational model and DNA enable our strong performance

Our Sustainable Growth Model, and in particular our organisational model and our DNA, have been critical in delivering our strong performance this year.

At its core is our purpose, which not only continues to motivate us, as demonstrated by our high employee engagement scores, but is also proving to be an important asset in attracting new talent.

Our organisational model gives our companies the resources, agility and authority to respond to changes in their markets and the global operating environment, led by their local management team. It also has inherent scalability, allowing us to use M&A to expand our opportunities for growth, without adding further complexity to our structures and decision making or to divest when growth opportunities become more limited. As we have grown, we have deliberately developed a more collaborative culture. This has allowed our companies to address opportunities and solve common issues together, benefiting from the Group’s increasing scale, while still retaining the advantages of being small, agile companies, close to their markets. This has been crucial during the COVID pandemic and will continue to be so as we address the further opportunities and challenges ahead.

Our organisational design and DNA means that companies have short spans of control and the autonomy to act in their best interests without seeking approval first. A good example of this in action has been the different actions they have taken to address the wide range of operational challenges they have faced during the past year. These include:

– introducing radically different shift patterns and increasing employee engagement in response to increased demand and labour market shortages, which has also added capacity and flexibility for further growth;

– collaborating to source alternative supplies, share component inventories or leverage the Group’s scale to address shortages and delays of critical components in supply chains;

– rapidly redesigning products to use alternative components or making components themselves, using

cross-functional groups to achieve fast times to market; and

– leveraging their close relationships with their customers to ensure that we continue to deliver value to them as well as to address increasing costs by price changes.

Increased strategic investment to support future growth

One of Halma’s key strengths is the ability to deliver strong performance in the shorter-term, while simultaneously making substantial investments to support sustainable growth over the longer-term.

We invested over a quarter of a billion pounds in aggregate in this financial year. This investment broadened our opportunities for growth both organically and through acquisition, ensured our products continue to create value for our customers and further strengthened our infrastructure across the Group.

Increasing these investments reflects our confidence in the long-term growth drivers we see in our markets. Our products and services have never been more relevant than today, as health, safety and environmental regulations continue to increase, demand for healthcare grows and the world addresses expanding demands on life-critical resources including the urgent need to tackle climate change, waste and pollution.

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Increased strategic investment in new products and technology

Our companies increased investment in new product development above the rate of revenue growth, reflecting their own confidence in their long-term growth prospects. R&D expenditure grew by £15m to £85m, which represented 5.6% of revenue, up from 5.3% in the prior year.

Investment in our technology infrastructure was £11m, to support future growth and modernise ways of working across Halma. We are upgrading our operational technologies to simplify the way in which central functions collect the data required from our companies’ systems, with the objectives of increasing automation, improving accuracy and control, and facilitating deeper data insights. We are largely complete in the rollout of our global Treasury Management solution and have commenced implementation of our new Finance and Talent Management platforms. We are also investing significantly in upgrading our global security architecture, which has already brought the added benefits of more secure connectivity between our companies and locations. We are assisting each of our companies in considering how their core business opportunities and challenges can be addressed through improved technology solutions.

Our Digital and Technology teams have been active in supporting the advancement of digital solutions across our companies’ product portfolios. Revenue from digital products and solutions increased by 15% in the year, and represents over 40% of Group revenue, with revenue from IoT solutions and from software and services both up by more than 40% year-on-year.

We are making steady progress in establishing a common technology core to support our ongoing IoT product development, with companies trialling a number of potential solutions addressing areas such as telemedicine, fire detection, and critical asset tracking and management.

As our companies increasingly incorporate connected technologies into their products, we are helping to accelerate their IoT / digital product development through a number of initiatives. Examples include diagnostic and design clinics which help companies devise their digital solutions; digital incubators to help companies rapidly prototype and test their new concepts; and strategic partnerships with third-party digital technology platforms and software development partners to assist companies in scaling and launching products to market.

These activities were supported by a range of initiatives which encourage collaboration and by our innovation network. They included an Innovation & Digital Summit, which brought together over 100 participants from across the Group to share their experiences and learn from external experts, a regular Innovation & Digital newsletter, and the release of a self-learning resource through our Innovation & Digital Champions Network.

13 acquisitions completed across all three sectors

Our M&A strategy is focused on acquiring businesses with valuable intellectual property, which operate in market niches aligned with our purpose of growing a safer, cleaner, healthier future for everyone, every day.

Our lean organisational model is scalable and gives us the ability to continue acquiring small-to-medium sized businesses to add new capabilities and supplement our underlying organic growth.

We are also able to sell and merge businesses relatively easily should market dynamics change, enabling us to maintain a purpose-driven, growth-oriented portfolio without it becoming significantly more complex to manage. The benefit of this active portfolio management is reflected in the number of companies within Halma remaining relatively stable, whilst we have grown and maximised value for our shareholders. For example, in 2012, Halma had revenue of £580m from 38 operating companies, and today we are delivering revenue of over £1.5bn from only 44 operating companies.

We made 13 acquisitions in the year, for a maximum total consideration of £164m, while disposing of one business for £65m. The acquisitions were spread across our three sectors, with five acquisitions each in the Environmental & Analysis and Medical sectors and three in the Safety sector. They were broadly spread geographically, with acquisitions made in the UK, the USA, a number of countries in Mainland Europe, and in Australia.

It is particularly pleasing to see the acquisition momentum in the Environmental & Analysis sector increasing, following the formation of the new sector leadership team at the beginning of the year including a dedicated M&A team.

Three of the acquisitions made in the year will be standalone companies within the Group. They are:

– PeriGen, Inc., whose advanced technology protects mothers and their unborn babies during childbirth by alerting doctors, midwives and nurses to potential problems. PeriGen was acquired for a cash consideration of US$57.3m (approximately £40.1m) on a cash and debt-free basis;

– The Ramtech group of companies, a UK-based supplier of wireless fire systems for temporary sites, which was purchased for a cash consideration of £15.7m, on a cash and debt-free basis; and

– Sensitron S.r.L., an Italian gas detection company, which was acquired for a cash consideration of €20.1m (£17.1m), on a cash and debt-free basis.

An increasing number of our companies now have the size and capability to grow their businesses through acquisition as well as organically, and 10 of the acquisitions in the year were made by our companies as bolt-ons to enhance their technologies and market reach. Details of these transactions are contained in the notes to the Accounts.

Since the period end, we have acquired Deep Trekker, a market-leading manufacturer of remotely operated underwater robots used for inspection, surveying, analysis and maintenance. It will be a stand-alone company within our Environmental & Analysis sector. It serves markets including aquaculture, renewable energy and ocean science and research, and was acquired for a cash consideration of C$60m (approximately £36.6m) on a cash and debt-free basis.

We have also continued to develop our external partnerships through our Halma Ventures programme, that offers Halma access to new technology and capabilities via minority ownership, and have a good pipeline of further potential opportunities. Since the year end, we have made one further investment in VAPAR, whose AI technology enables faster and more accurate condition assessment of wastewater infrastructure.

Talent and Executive Board changes

The quality and diversity of our leaders and teams is a critical component of Halma’s success, and their continued commitment to bringing our purpose to life was reflected in our global engagement survey. This had a high response rate of 85% and an engagement score of 76%, with improvements across all dimensions compared to 2020. This result was supported by the ability of our companies to act quickly to look after their employees’ wellbeing in response to events such as the ongoing pandemic and the invasion of Ukraine.

We are committed to maximising the quality of talent available to us by ensuring that Halma is an inclusive organisation, thereby also ensuring a diversity of voices and experiences within our leadership teams.

Diversity, Equity and Inclusion is one of our Key Sustainability Objectives, and one measure of inclusion is gender diversity. We have introduced a target of achieving 40-60% gender balance on all company boards by March 2024. Although this is a stretching goal, we made progress towards it in the year, increasing female representation from 22% last year to 26% at 31 March 2022.

We manage the development and diversity of our leadership teams to ensure that we have robust succession plans for senior positions within the Group and that we have the appropriate capabilities in our teams to support the Group’s future growth.

Since the beginning of the year, we have been operating and reporting as three sectors, to better align with our purpose and our focus on safety, health and environmental markets. Each sector team includes a Sector Chief Executive, a Chief Financial Officer, a team to support M&A activity as well as legal and talent management resource, to deliver its growth strategy.

The new dedicated sector team created for the Environmental & Analysis sector has brought increased focus on the significant opportunities we see in its markets. Its new M&A team, for example, has already benefited the sector, with five acquisitions completed in the year, and Deep Trekker acquired after the year end.

We are also investing in our leadership team in Asia-Pacific, reflecting the substantial organic and inorganic growth potential in the region over the longer term. This team is led by Aldous Wong, who was one of our Divisional Chief Executives (DCEs), as President of Halma Asia Pacific and an advisor to Halma’s Executive Board. We made one further change to the Executive Board in the year, with Steve Brown also being promoted from DCE to succeed Laura Stoltenberg as the Sector Chief Executive for the Medical sector.

Good progress on our Key Sustainability Objectives

Following the introduction of our Sustainability Framework in the prior year, each of our companies is creating its own plan to set out how they will contribute to the Group’s goals and ambitions for our Key Sustainability Objectives (KSOs) – Climate Change, Diversity, Equity and Inclusion (DEI), and Circular Economy. Achieving these objectives will add to the positive impact delivered through our purpose-aligned growth.

In addition, we advanced our work to enable us to report against the recommendations from the Task Force for Climate-related Financial Disclosures (TCFD). This further highlighted not only the challenges but also the significant opportunities for Halma arising from the transition to a lower carbon world and from global efforts to address climate change. The ways in which our companies can address these opportunities are diverse. These include solutions to reduce greenhouse gas (GHG) emissions; helping customers in energy-transitioning industries to increase safety and reduce costs; providing products with a lower carbon footprint; and helping customers and societies adapt to the worsening physical impacts of climate change. We will be supporting our companies in identifying and assessing relevant opportunities as part of their strategic growth plans, as well as continuing to assess these opportunities as part of our M&A strategy.

We have several targets already in place for our Climate Change KSO. We have made progress towards our 2040 Net Zero and 2030 1.5 degree aligned targets for Scope 1 & 2 emissions, with a 35% reduction in GHG emissions from our 2020 baseline, compared to 14% reported revenue growth over those two years. We have rapidly increased our use of renewable electricity from 8% of consumption in 2020 to 42% in 2022, which is on the way to our target of 80% renewable electricity by 2025. From FY23, we have also introduced a new target of at least 4% annual growth in energy productivity to support our Scope 1 & 2 goals.

We recognise that Scope 1 & 2 is only a small portion of our total carbon footprint and that we need to work towards Net Zero for our entire value chain. We have made progress during the year in estimating our full Scope 3 footprint. We will be looking to show strong progress towards setting appropriate Scope 3 goals and targets during the coming financial year.

Our new annual energy productivity metrics have been incorporated into our executive remuneration for FY23, alongside the gender diversity targets mentioned above. Performance against stretching annual targets is required for participants to achieve 10% of the maximum annual bonus. We consider this change in our remuneration as a good starting point; in the future we will consider further metrics as well as evolving the scope and type of sustainability-linked remuneration.

Summary and Outlook

Halma’s Sustainable Growth Model enabled our companies to act with agility to address new market opportunities and to respond rapidly to the multiple operational and economic challenges they faced during the year. Our strong performance reflects huge credit on the dedication of our people across the business, and was underpinned by our empowering purpose and culture, our focus on niche markets with long-term, fundamental growth drivers and the high value of the solutions we provide to our customers.

We have made a positive start to the new financial year. We have a strong order book, and order intake in the year to date is ahead of revenue and in line with the very strong intake in the same period of the prior year. We expect to deliver continued growth and maintain high returns in the 2022/23 financial year, with good single digit percentage organic constant currency revenue growth and a Return on Sales similar to the second half of the 2021/22 financial year. We are well positioned to make further progress in the full year and in the longer-term.

Andrew Williams

Group Chief Executive

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