TIDMHLMA
RNS Number : 7489S
Halma PLC
18 November 2021
Halma plc
HALF YEAR RESULTS 2021/22
Record first half results and continued dividend growth
Halma, the global group of life-saving technology companies focused
on growing a safer, cleaner and healthier future for everyone, every
day, today announces results for the 6 months to 30 September 2021.
Highlights
Change 2021 2020
Revenue +19% GBP737.2m GBP618.4m
Adjusted Profit before Taxation(1) +27% GBP154.9m GBP122.0m
Adjusted Earnings per Share(2) +25% 31.96p 25.54p
Statutory Profit before Taxation +74% GBP167.5m GBP96.3m
Statutory Earnings per Share +76% 35.83p 20.37p
Interim Dividend per Share(3) +7% 7.35p 6.87p
Return on Sales(4) 21.0% 19.7%
Return on Total Invested Capital(5) 14.9% 12.6%
Net Debt GBP280.2m GBP315.0m
* Record revenue and profit: revenue up 19%; 23% on an
organic constant currency(6) basis. Adjusted(1)
Profit before Taxation up 27%; 32% on an organic
constant currency(6) basis.
* High Return on Sales of 21.0% (2020/21: 19.7%) given
robust gross margins with a slower-than-expected
return of variable overhead costs.
* Statutory Profit before Taxation up 74%, including a
GBP34.0m gain on the disposal of Texecom.
* Strong organic constant currency(6) revenue and
profit growth in all sectors and major regions; very
strong growth in the UK and Asia Pacific, against
weaker comparatives.
* Increased returns and investment: ROTIC(5) of 14.9%,
and R&D expenditure up 20 %, representing 5.6% of
revenue.
* Ten acquisitions completed in the first half and one
further small acquisition completed since the period
end; a healthy acquisition pipeline across all
sectors.
* Solid cash conversion of 85% and a robust balance
sheet supporting sustained investment in organic
growth and acquisitions, and a 7% increase in the
interim dividend.
Andrew Williams, Group Chief Executive of Halma, commented:
"Halma made strong progress in the first half, delivering record
revenue, profit and interim dividend, with substantial growth
compared to both the first half of last financial year and 2019/20.
Our full year outlook is unchanged, despite variable overhead
costs returning and continued impacts on revenue, costs and working
capital from increased supply chain, logistics and labour market
disruption. In the second half of the year, we expect more typical
rates of revenue growth and Return on Sales, with the latter
more in line with historical levels.
Our Sustainable Growth Model continues to drive our success,
including its focus on global niche markets with long-term growth
drivers. Our strong purpose and culture, our portfolio and geographic
diversity, together with our agile business model enable us to
perform well in varied market conditions and sustain growth and
returns over the longer term."
Notes:
1 Adjusted to remove the amortisation of acquired intangible
assets, acquisition items and profit or loss on disposal of
operations, totalling GBP(12.6)m (2020/21: GBP25.7m). See
note 2 to the Condensed Interim Financial Statements for details.
2 Adjusted to remove the amortisation of acquired intangible
assets, acquisition items, profit or loss on disposal of operations
and the associated taxation thereon. See note 2 to the Condensed
Interim Financial Statements for details.
3 Interim dividend paid and declared per share.
4 Return on Sales is defined as Adjusted(1) Profit before Taxation
from continuing operations expressed as a percentage of revenue
from continuing operations.
5 Return on Total Invested Capital (ROTIC) is defined as post-tax
Adjusted(1) Profit as a percentage of average Total Invested
Capital.
6 Organic constant currency measures exclude the effect of movements
in foreign exchange rates on the translation of revenue and
profit(1) into Sterling, as well as acquisitions in the year
following completion and disposals.
7 Adjusted(1) Profit before Taxation, Adjusted(2) Earnings per
Share, organic growth rates, Return on Sales and ROTIC are
alternative performance measures used by management. See notes
2, 6 and 9 to the Condensed Interim Financial Statements for
details.
For further information, please contact:
Halma plc
Andrew Williams, Group Chief
Executive +44 (0)1494 721 111
Marc Ronchetti, Chief Financial
Officer
Charles King, Head of Investor
Relations +44 (0)7776 685948
MHP Communications
Andrew Jaques/Rachel Farrington +44 (0)20 3128 8572
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
NOTE TO EDITORS
1. Halma is a global group of life-saving technology companies,
focused on growing a safer, cleaner and 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 Improving food and water quality, and monitoring
air pollution.
-- Medical Meeting rising healthcare demand as growing
populations age and lifestyles change.
Halma 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 2021, Halma was named Britain's Most Admired Company
2020 by Management Today.
2. 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
.
3. This announcement contains certain forward-looking statements
which have been made by the Directors in good faith using information
available up until the date they approved the announcement.
Forward-looking statements should be regarded with caution
as by their nature such statements involve risk and uncertainties
relating to events and circumstances that may occur in the
future. Actual results may differ from those expressed in such
statements, depending on the outcome of these uncertain future
events .
Review of Operations
Record half year results
Halma made strong progress in the first half of the year,
reflecting the benefits of our Sustainable Growth Model with its
strong purpose and culture, and our leading positions in global
niche markets with long-term growth drivers. The benefits of a
diverse portfolio and the agility of our business model have
enabled our companies to respond rapidly to changing conditions in
their end markets and to increased supply chain, logistics and
labour market disruption.
We achieved record results, with strong growth across all our
sectors and all major regions. We delivered substantial growth in
revenue and profit compared to the weaker period in the first half
of the 2020/21 financial year, when we saw the largest impacts from
the COVID-19 pandemic, and the equivalent period in the 2019/20
financial year.
Revenue increased by 19%, to GBP737.2m (2020/21: GBP618.4m),
reflecting a substantial recovery in demand in those end markets
most impacted by lockdowns in the first half of last year.
Adjusted(1) Profit before Taxation grew even more strongly, by 27%
to GBP154.9m (2020/21: GBP122.0m), benefiting from robust gross
margins and a slower-than-expected return in variable overhead
costs.
As a result, Return on Sales(1) was above expectations, at 21.0%
(2020/21: 19.7%). This comprised an exceptionally strong
performance in the first quarter, with Return on Sales(1) of 22.5
%. Return on Sales(1) moderated to 19. 5 % in the second quarter ,
with variable overhead costs returning as COVID-related
restrictions eased. Variable overhead costs included expenditure of
approximately GBP1m in information technology upgrades. Investment
in these programmes in the full year is now expected to be around
GBP11m.
Statutory Profit before Taxation increased by 74% to GBP167.5m
(2020/21: GBP96.3m) and included a GBP34.0m gain on the disposal of
a Safety sector business in the period. Details of this are given
later in this review.
Revenue growth comprised organic constant currency(1) revenue
growth of 23%, a 2% positive contribution from acquisitions (net of
the effects of disposals) completed in this and the previous half
year, and a negative currency translation effect of 6%. This strong
growth compared with a decline of 11% on an organic constant
currency(1) basis in the first half of the last financial year.
The 27% increase in Adjusted(1) Profit before Taxation included
organic constant currency(1) growth of 32%, a 2% positive
contribution from acquisitions (net of the effects of disposals)
completed in this half year and the second half of last year, and a
negative currency translation effect of 7%. As with revenue, this
strong profit performance compared with an 11% decline on an
organic constant currency(1) basis in the first half of last
year.
We have a strong balance sheet and ended the period with net
debt of GBP280.2m, equivalent to 0.76 times the last 12 months'
EBITDA (31 March 2021: net debt of GBP256.2m; 0.76 times EBITDA). A
solid cash conversion of 85 % was lower than the exceptionally
strong 111% in the first half of last year, and reflected the
working capital required to support the strong growth in the
period. Our strong balance sheet and continued cash generation
underpin our ongoing investment in future organic growth, give us
substantial capacity for acquisitions, and support our progressive
dividend policy.
We made substantial investments in the first half, both
organically and through acquisitions, to support future growth.
R&D expenditure increased 20% to GBP41.3m, representing 5.6% of
Group revenue (2020/21: 5.6%). We made ten acquisitions, for a
maximum total consideration of GBP107m, while disposing of one
business for GBP65m. Since the period end, we have made one further
acquisition, of Clayborn Lab, for a maximum total consideration of
US$6m (GBP4.4m).
The Board has declared an increase of 7% in the interim dividend
to 7.35p per share (2020/21: 6.87p per share). The interim dividend
will be paid on 4 February 2022 to shareholders on the register on
24 December 2021.
Strong organic constant currency(1) growth in all major
regions
External revenue by destination
Half year 2021 Half year 2020
---------------- ----------------
% organic
growth
% of % of Change % at constant
GBPm total GBPm total GBPm growth currency(1)
------------------------- ------- ------- ------- ------- ------ ------- ------------
United States of America 280.9 38% 255.1 41% 25.8 10% 19%
Mainland Europe 146.6 20% 127.2 21% 19.4 15% 18%
United Kingdom 136.2 18% 87.6 14% 48.6 55% 46%
Asia Pacific 124.8 17% 100.0 16% 24.8 25% 30%
Other regions 48.7 7% 48.5 8% 0.2 1% 6%
------------------------- ------- ------- ------- ------- ------ ------- ------------
737.2 100% 618.4 100% 118.8 19% 23%
------------------------- ------- ------- ------- ------- ------ ------- ------------
Our growth in the period was broad-based, and revenue grew
strongly in all four major regions, both on a reported and organic
constant currency(1) basis. Growth rates in each region, were also
impacted to differing extents by acquisitions (net of disposals),
and a negative effect from foreign currency translation, given the
relative strength of Sterling.
The USA remains our largest sales destination and contributed
38% of total revenue. Revenue increased by 10%, or by 19% on an
organic constant currency(1) basis, with all sectors delivering a
strong organic constant currency(1) performance.
Reported revenue growth in the USA included the effect of the
acquisition of PeriGen and the disposal in the prior year of
Fiberguide Industries, as well as a negative effect from currency
translation. The strongest growth was in the Environmental &
Analysis sector, led by strong performances in Optical Analysis and
Gas Detection. The Safety sector also delivered strong organic
constant currency(1) growth, led by Fire Detection and Industrial
Access Control. Growth in the Medical sector reflected an increase
in demand for products and services related to elective healthcare
procedures, partly offset by a decline, from last year's
exceptionally high levels, in the demand for products and services
related to the diagnosis or treatment of COVID-19.
Mainland Europe revenue increased by 15%, or 18% on an organic
constant currency(1) basis, with strong performances across all
sectors. Reported revenue benefited from a number of acquisitions,
including Sensitron and Orca, partly offset by the disposal of
Texecom in August. There was a negative effect from currency
translation.
Revenue in the UK grew 55%, or 46% on an organic constant
currency(1) basis, with an exceptionally strong contribution from
the Safety sector, against a very weak comparative in the first
half of last year. The Environmental & Analysis sector also
grew strongly, while the smaller Medical sector revenues more than
tripled, benefiting from the prior year acquisition of Static
Systems.
Asia Pacific's revenue grew 25%, or 30% on an organic constant
currency(1) basis. Organic constant currency(1) growth reflected
very strong performances across all sectors, against a weaker
comparative in the first half of last year. This included a very
strong performance in China, as well as in a number of other
smaller markets in the region.
In other regions, which represent only 7% of Group revenue,
revenue was broadly flat, although growing 6% on an organic
constant currency(1) basis. There was modest growth in the Africa,
Near and Middle East territories, while revenue declined in Other
countries.
Substantial revenue and profit growth in all sectors
From 1 April 2021, we operate and report under three sectors,
Safety, Environmental & Analysis and Medical, aligned with our
purpose and our focus on safety, environmental and health
markets.
External revenue by sector
Half year Half year
2021 2020
--------- ---------
% organic
growth at
Change % constant
GBPm GBPm GBPm growth currency(1)
------------------------- --------- --------- ------ ------- ------------
Safety 320.2 268.6 51.6 19% 25%
Environmental & Analysis 209.5 178.0 31.5 18% 25%
Medical 208.0 172.4 35.6 21% 18%
Inter-segmental revenue (0.5) (0.6) 0.1
------------------------- --------- --------- ------ ------- ------------
737.2 618.4 118.8 19% 23%
------------------------- --------- --------- ------ ------- ------------
Profit by sector
Half year Half year
2021 2020
--------- ---------
% organic
growth at
Change % constant
GBPm GBPm GBPm growth currency(1)
------------------------- --------- --------- ------ ------- ------------
Safety 73.5 58.0 15.5 27% 32%
Environmental & Analysis 53.1 42.9 10.2 24% 31%
Medical 46.3 38.2 8.1 21% 20%
------------------------- --------- --------- ------ ------- ------------
Sector profit(2) 172.9 139.1 33.8 24% 28%
------------------------- --------- --------- ------ ------- ------------
Central administration
costs (14.0) (11.3) (2.7)
------------------------- --------- --------- ------ ------- ------------
Net finance expense (4.0) (5.8) 1.8
------------------------- --------- --------- ------ ------- ------------
Adjusted(1) profit
before taxation 154.9 122.0 32.9 27% 32%
------------------------- --------- --------- ------ ------- ------------
Safety sector
Revenue increased by 19% to GBP320.2m (2020/21: GBP268.6m) and
organic constant currency(1) revenue increased by 25%. There was a
positive contribution from acquisitions of 1%, and negative effects
from the disposal of Texecom of 3% and currency translation of
4%.
The sector delivered a strong performance across all major
regions, supported by the agility of our companies in successfully
responding to new opportunities in their markets and to the
substantial increases in customer demand following the easing of
lockdown restrictions. This agility also resulted in our companies
meeting the challenges arising in the period from supply chain and
logistics disruptions and in labour markets. For example, they
leveraged their close relationships with suppliers to ensure
continued delivery of materials and components, redesigned products
and used alternative materials where necessary, selectively
increased prices, and formed collaborative teams across functions,
companies and geographies to solve specific issues.
This strong performance was led by substantial growth in our
Fire Detection businesses. These businesses were affected in the
first half of last year by lockdown restrictions and the
furloughing of customer employees. This year they benefited from a
recovery in demand as construction activity resumed, from an
improvement in the ability to gain physical access to customer
sites, and from the return to work of previously furloughed
customer employees. The same dynamics also led to very strong
growth in our Elevator Safety business in the UK, and, together
with increasing regulation, our emergency communications business
in the USA.
Our People and Vehicle Flow businesses also performed strongly.
Significant road safety contracts in the UK and China drove very
strong growth at Navtech. BEA, which had delivered a resilient
performance in the first half of last year, also grew strongly, as
construction activity increased and demand for its touchless and
automated entry devices continued to grow to meet the changing
needs of our customers as a result of the pandemic.
We also saw benefits from increasing activity in several other
market segments and from the ability of our companies to swiftly
adapt and scale for changing customer needs. Examples included
meeting strong demand from logistics customers for our interlock
products in the Industrial Access Control segment and prioritising
those technologies which support the decarbonisation of our energy
sources in Pressure Management.
However, some business areas, such as those focused on larger
projects with longer lead times, such as in Safe Storage and
Transfer, are taking longer to recover from the effects of the
pandemic. Elsewhere, weakness in some specific markets, such as the
aerospace market within Fire Suppression, resulted in revenue
declines in a limited number of companies, principally smaller ones
within the sector.
The sector's revenue performance by geography reflected these
themes. The UK and Asia Pacific grew exceptionally strongly, with
organic constant currency(1) revenue growth of 69% and 25%
respectively, driven by strong growth in Fire Detection and People
and Vehicle Flow. The UK's lower revenue growth on a reported
basis, at 57%, reflected the net effect of acquisitions and the
disposal.
The other two larger regions, the USA and Mainland Europe, also
grew strongly, each increasing revenue by 18% on an organic
constant currency(1) basis. This included strong growth in Fire
Detection and in People and Vehicle Flow in Europe, and in the USA
in emergency communications, Industrial Access Control and Pressure
Management.
Revenue declines in the much smaller regions, of 9% in total (on
an organic constant currency(1) basis), principally reflected the
timing of project-based business and a continued shift away from
oil and gas-related business in these regions and the sector as a
whole.
Profit(2) was 27% higher at GBP73.5m (2020/21: GBP58.0m), and
included 32% organic constant currency(1) growth, and negative
effects of 1% from the Texecom disposal (net of a small
contribution from acquisitions) and 4% from currency translation.
Return on Sales(1) increased to 23.0% (2020/21: 21.6%), benefiting
from the slower-than-expected return of variable overhead costs in
the first quarter and a stable gross margin. R&D expenditure of
GBP18.0m remained at a good level, with a significant increase in
absolute investment representing 5.6% of revenue (2020/21:
5.5%).
Our current expectation is for the sector to make further
progress in the second half, against a stronger comparative
(notably at the profit level). Although risks remain in relation to
supply chain, logistics and labour market disruptions, it is
expected to deliver a strong full year performance.
Environmental & Analysis sector
Revenue increased by 18% to GBP209.5m (2020/21: GBP178.0m),
comprising 25% organic constant currency(1) growth, a 4%
contribution from acquisitions, and the negative effects of 4% from
last year's disposal of Fiberguide Industries and 7% from currency
translation.
While many sector companies experienced supply chain and labour
market challenges to varying degrees in the period, the sector
delivered strong revenue growth in all segments and regions, as our
companies responded to substantial increases in customer demand for
their products and services. This demand was driven by higher
activity as COVID-19 restrictions eased, and by increasing focus on
protecting the environment and scarce natural resources. These
trends supported a strong recovery in the Gas Detection subsector
and greater demand for wastewater solutions within our Water
Analysis & Treatment segment. Photonics also performed very
well on an organic constant currency(1) basis and continued to
benefit from increasing demand for technologies that support the
building of digital and data capabilities.
In the USA, revenue grew 27% on an organic constant currency(1)
basis, driven by further growth in a continuing large Photonics
contract, and in Gas Detection. The latter reflected its customers'
increasing focus on the minimisation of emissions of methane, a
potent greenhouse gas, and an ever-increasing desire to improve
public safety.
Asia Pacific revenue growth was also very strong, at 34% on an
organic constant currency(1) basis, including substantial revenue
growth in China, with several other smaller markets in the region,
such as India, Japan, Singapore and Australasia also performing
strongly. The Water Analysis and Treatment segment's continued
focus on the region led to increased market penetration, while the
recovery in industrial activity, as pandemic restrictions eased,
supported strong growth in the Optical Analysis segment.
Organic constant currency(1) revenue growth of 14% in the UK
reflected the continued focus of our customers on the integrity of
water and wastewater infrastructure, which supported a strong
performance in our pipeline inspection business. However, this was
partly offset by weakness in our water pressure and leak detection
business against a strong comparative in the first half of last
year, reflecting reduced demand from UK water utilities as they
focus more on addressing their wastewater challenges.
Mainland Europe delivered strong organic constant currency(1)
revenue growth and, on a reported basis, also benefited from the
acquisitions of Sensitron, Orca and Dancutter. Other regions, which
represent less than 10% of sector revenue, delivered a very strong
growth, led by Gas Detection.
Profit(2) increased by 24% to GBP53.1m (2020/21: GBP42.9m).
Organic constant currency(1) profit growth was 31% and there was a
3% contribution from acquisitions and negative effects of 2% from
prior year disposals and 8% from currency translation. Return on
Sales(1) improved from 24.1% to 25.4%, due to proactive overhead
management, despite a decline in gross margin driven by business
mix. Despite such strong revenue growth, R&D expenditure of
GBP10.3m was maintained at a good level at 4.9% of sales (2020/21:
5.8%).
The sector is currently expected to perform strongly over the
full year. In the second half, we expect strong revenue growth,
albeit with continued risks from supply chain, logistics and labour
market disruption. We expect a more typical level of Return on
Sales(1) given a more normal business mix and increased
investment.
Medical sector
Revenue increased by 21% to GBP208.0m (2020/21: GBP172.4m).
Organic constant currency(1) revenue growth was 18%, and there was
an 8% negative effect from currency translation and an 11% positive
contribution from acquisitions, primarily Static Systems and
PeriGen.
There was growth across all segments and geographies, reflecting
a gradual improvement in demand for elective surgeries and
discretionary ophthalmic diagnostic procedures as the effects of
the pandemic on healthcare systems moderated. As expected, this was
partly offset by a reduction in demand for products and services
related to the treatment of COVID-19 from the very high levels
experienced in the first half of last year. Sector companies have
successfully responded to these varying market conditions and to
continuing operational challenges. These include supply chain and
labour market disruption, and a varying ability to access hospitals
in Sensors & Analytics.
These trends were reflected in the performance of the individual
segments. Health Assessment saw the strongest growth, supported by
recent acquisitions. On an organic basis, the recovery in demand
for ophthalmic diagnostic procedures and growth in Sensors &
Analytics supporting care systems' focus on greater efficiency and
ensuring the effectiveness of hygiene protocols, were key growth
drivers. However, revenue from products focused on the monitoring
of vital signs declined. In Therapeutic Solutions, strong growth in
demand for products supporting elective surgeries was partly offset
by a reduction for products supporting the oxygenation of patients.
Life Sciences revenue also grew, notably in China, but growth was
more subdued in other regions which continue to be impacted by the
ongoing focus on COVID-19 testing and point-of-care
diagnostics.
The USA, the sector's largest region, grew revenue by 9% (12% on
an organic constant currency(1) basis). This was a good performance
when compared to the strong growth of 14% in the first half of last
year. On a reported basis, USA revenue also benefited from the
acquisition of PeriGen, although this was more than offset by the
negative effect of currency translation.
In the other major regions, Mainland Europe revenue grew
strongly, by 17% on an organic constant currency(1) basis, against
growth of 6% in the comparable period last year. Growth rates were
highest in the UK and Asia Pacific, at 52% and 32% respectively on
an organic constant currency(1) basis, reflecting a recovery in
demand and a weaker comparative in the first half of last year. On
a reported basis, UK revenue more than tripled, reflecting the
recent acquisition of Static Systems, as well as very strong
organic constant currency(1) growth off a small base.
Profit(2) increased by 21% to GBP46.3m (2020/21: GBP38.2m).
Return on Sales(1) increased to 22.3% (2020/21: 22.1%), reflecting
a benefit to gross margin from favourable product mix and a
slower-than-expected increase in overheads as customer-facing
employees began to return to normal activity. R&D spend of
GBP12.8m reflected a significant increase in investment in new
product development, with the increase to 6.2% of revenue (2020/21:
5.5%) being attributable to changes in business mix and investment
by recently acquired companies.
The Medical sector is currently expected to make further
progress in the second half, and to deliver a good performance for
the year as a whole.
Eleven acquisitions and one disposal completed to enhance our
growth opportunities
We continue to actively manage our portfolio of global
businesses to ensure that it is aligned with our purpose of growing
a safer, cleaner, healthier future for everyone, every day, and can
deliver strong and sustainable growth and returns. We have a
healthy acquisition pipeline across all three sectors and continue
to find attractive, high-quality businesses to enhance our existing
market strengths as well as to enter emerging market
opportunities.
We made 10 acquisitions in the period, for a maximum total
consideration of GBP107m (on a cash- and debt-free basis), in core
and adjacent markets to expand our future growth opportunities and
geographical reach. These were broadly spread across all three
sectors and our four major geographical regions. They comprised
three companies which will be standalone within the Halma group,
and seven bolt-on acquisitions which will strengthen the
technologies and capabilities of existing Halma companies.
In April and May 2021, we completed six acquisitions (including
five bolt-on acquisitions).
-- PeriGen, Inc., whose advanced technology protects mothers and
their unborn babies during childbirth by alerting doctors, midwives
and nurses to potential problems, was acquired for a cash
consideration of US$58m (approximately GBP41m) on a cash- and
debt-free basis.
-- Assets and IP associated with monitored safety valves were
purchased from FluidSentry Pty for A$0.6m (GBP0.3m), and added to
Fortress Interlocks.
-- Argus Security S.R.L. acquired its Italian distributor for EUR0.6m (GBP0.5m).
-- Anton Industrial Services, Crowcon's UK flue gas analyser
distribution partner, was purchased for GBP1.9m.
-- Orca GmbH, a German manufacturer of ultraviolet disinfection
systems, joined our UV Group of companies for a maximum
consideration of EUR8.7m (GBP7.6m), on a cash- and debt-free
basis.
-- Assets and IP associated with the US-based RNK's digital
stethoscope used in telemedicine and augmented tele-auscultation,
were purchased by Riester for a consideration of US$3.0m
(GBP2.3m).
In August 2021, we announced that we had completed a further
three acquisitions, as follows:
-- the Ramtech group of companies, a UK-based supplier of
wireless fire systems for temporary sites, was purchased for a cash
consideration of GBP15.5m, on a cash- and debt-free basis.
-- Dancutter A/S, a Danish designer and manufacturer of
trenchless pipeline rehabilitation equipment, was acquired for a
cash consideration of EUR17.6m (GBP15.0m), on a cash- and debt-free
basis.
-- Sensitron S.R.L., an Italian gas detection company, joined
Halma for a cash consideration of EUR20.1m (GBP17.2m), on a cash-
and debt-free basis.
In September 2021, we acquired Meditech Kft, a Hungarian
manufacturer of ambulatory blood pressure monitors and ECG Holter
devices, for a maximum total consideration of EUR6.4m
(approximately GBP5.5m). It will be integrated with our SunTech
business.
Since the period end, we have made one further acquisition, of
Clayborn Lab, a provider of custom heat tape solutions primarily
for heated sample lines in the environmental monitoring market.
Clayborn Lab will become part of our Perma Pure business and was
acquired for an initial cash consideration of US$4.5m (GBP3.3m)
with an additional earn-out consideration of US$1.5m (GBP1.1m),
payable in cash, subject to performance over the next two
years.
We also made one disposal in the period, demonstrating our
disciplined approach to portfolio management and supporting our
strategy of maintaining a growth-oriented portfolio of companies.
In August 2021, we sold Texecom, a UK-based provider of electronic
security systems, for a total cash consideration of GBP65m on a
cash- and debt-free basis. Texecom was acquired by Halma in 2005
for a consideration of GBP26m.
Further progress aligned with our Sustainability Framework
We seek to create sustainable value for our stakeholders through
our Sustainable Growth Model. This is focused on delivering
consistently strong growth and returns with a positive impact in
the markets we serve and beyond, consistent with our purpose of
growing a safer, cleaner, healthier future for everyone, every day.
Our Sustainability Framework, which we launched in June this year,
is designed to amplify this positive impact through purpose-aligned
growth. It prioritises three Key Sustainability Objectives (KSOs),
namely Climate Change, the Circular Economy, and Diversity, Equity
and Inclusion (DEI). These KSOs are, in turn, supported by policies
and metrics that we consider essential to growing our business
responsibly.
During this half year, we have developed programmes to support
our companies' existing sustainability initiatives while further
raising awareness of Halma's KSOs within our Group and companies'
management teams. We are helping our companies to deliver against
our KSOs through the creation of collaboration and best practice
networks and the provision of tools and resources to raise
awareness and address specific challenges. These include launching
a new "Inclusive Leadership" programme for our Divisional Chief
Executives and Managing Directors, a new collaboration with
EcoVadis to enable our companies to assess the sustainability
credentials of their key suppliers, and a revised car policy that
encourages and incentivises the adoption of zero emission
vehicles.
To ensure that sustainability and climate change risks and
opportunities are integrated into company board discussions and are
ultimately fully incorporated into each company's sustainable
growth strategies, we have asked each of our companies to nominate
a board member responsible for sustainability. Each company is also
creating a KSO Action Plan over the next 12 months, which will
include their detailed plans to contribute towards the Group's
Scope 1 & 2 greenhouse gas emissions goals of Net Zero by 2040,
including a 42% absolute emissions reduction from our 2020 baseline
by 2030. A number of our companies have already made good progress
towards creating their KSO Action Plans and are implementing
workstreams to reduce energy consumption, switch to renewable
energy, reduce waste and investigate more circular product
solutions.
At the Group level, we made further progress in assessing the
possible materiality, impacts and timescales of potential risks and
opportunities associated with climate change, to fulfil our
commitment to report in line with the Task Force on Climate-related
Financial Disclosures (TCFD) framework in our next Annual Report.
In addition, we have commenced work on quantifying our Scope 3
emissions to establish the full value chain commitments and targets
that will be most appropriate for Halma as part of our Climate
Change KSO.
In support of our Diversity, Equity and Inclusion KSO, we
refreshed our DEI strategy and this now includes a stretching
target to achieve 40-60% gender diversity on our company boards by
the end of March 2024 (compared to the current 23% female
representation).
One of Halma's challenges is to minimise the sustainability
reporting burden on our relatively small operating companies, while
improving the breadth and robustness of information available to
both monitor our progress and enhance our disclosure to our
stakeholders as a FTSE 100 group. As part of our technology
transformation project, we are working towards identifying
solutions to collect this information more efficiently. Alongside
this, we are planning to incorporate sustainability targets related
to some of our KSOs into remuneration for our senior executives,
with effect from 1 April 2022.
Negative currency effects on reported revenue and profit
We report our results in Sterling with 46% of Group revenue
denominated in US Dollars and 12% in Euros during the period.
Average exchange rates are used to translate results in the Income
Statement. Sterling strengthened against the US Dollar and the Euro
during the first half of 2021/22. This resulted in a 6% negative
currency translation effect on Group revenue and 7% on profit in
the first half of 2021/22 relative to 2020/21. If exchange rates
remain at current levels, we expect a further, although smaller,
negative currency translation effect in the second half of
2021/22.
Pension deficit reduced
On an IAS 19 basis the net deficit on the Group's defined
benefit plans at the half year end reduced to GBP5.3m (31 March
2021: GBP22.5m) before the related deferred tax asset. The plans'
liabilities increased due to a decrease in the discount rate used
to value those liabilities, but this was more than offset by
further employer contributions which, together with the return from
the plans' assets, resulted in the overall reduction in the plans'
deficit. The plans' actuarial valuation reviews, rather than the
accounting basis, determine any cash payments by the Group to
eliminate the deficit. We expect the aggregate cash contributions
in this regard for the two UK defined benefit plans in the 2021/22
financial year to be consistent with our previous guidance of
GBP14.2m.
Group tax rate higher as expected
The Group's effective tax rate on adjusted profit was 21.8%,
slightly higher than guidance, principally due to profit mix. This
is based on the forecast effective tax rate for the year as a whole
which, as expected, is higher than the prior year rate of
20.1%.
On 2 April 2019, the European Commission published its final
decision that the UK controlled Finance Company Partial Exemption
(FCPE) constituted State Aid. In common with many other UK
companies, Halma has benefited from the FCPE and has appealed
against the European Commission's decision, as has the UK
Government. Following receipt of charging notices from HM Revenue
& Customs (HMRC) we made a payment in February 2021 of GBP13.9m
to HMRC in respect of tax, and in May 2021 made a further payment
of approximately GBP0.8m in respect of interest. We expect these
payments to be refundable in the event of a successful appeal and
therefore have recognised a receivable of GBP14.7m in the balance
sheet.
Cash flow and funding
Cash conversion (adjusted operating cash flow as a percentage of
adjusted operating profit - see note 9) in the first half of the
year was 85%, which was below our annualised cash conversion target
of 90%. This was principally because of an increase in working
capital of GBP25.5m (2020/21: reduction of GBP6.4m) to fund the
Group's very strong growth, the full effects of which were partly
mitigated by continued strong working capital control.
Dividend payments increased to GBP40.8m (2020/21: GBP37.7m). Tax
payments were also higher at GBP27.6m, compared to GBP14.0m in the
first half of 2020/21, an unusually low level due to changes in the
timing of tax payments and one-off tax refunds.
Expenditure on acquisitions, which include acquisition costs and
contingent consideration for acquisitions made in prior years, plus
the net of proceeds from disposals, totalled GBP58.0m (2020/21:
GBP8.2m).
Capital expenditure (net of disposal proceeds) increased to
GBP14.2m, compared to GBP11.1m in the first half of 2020/21 when we
limited capital investment to essential projects and R&D only.
We continue to expect capital expenditure for the full year to be
around GBP30m.
Net debt at the end of the period was GBP280.2m (31 March 2021:
GBP256.2m). Gearing (the ratio of net debt to the last 12 months'
EBITDA) at half year end was 0.76 times (31 March 2021: 0.76
times), which is well within our typical operating range of up to
two times.
Board and senior leadership changes
As announced earlier this year and confirmed at our AGM in July
2021, Dame Louise Makin became Halma's Chair and Paul Walker, Adam
Meyers and Daniela Barone Soares retired from Halma's Board. The
Chair transition from Paul to Louise was completed smoothly and the
Board continues to work effectively.
Since the period end, we have announced the appointment of
Sharmila Nebhrajani OBE as an independent non-executive Director,
effective 1 December 2021. Sharmila brings a wealth of experience
gained across a variety of roles, spanning both the public and
private/NGO sectors, and has a particularly strong background in
sustainability and health.
Following the change to three sectors in April 2021, and the
promotion of Wendy McMillan and Constance Baroudel to the roles of
Sector Chief Executive (SCE) for the Safety and Environmental &
Analysis sectors respectively, Steve Brown has replaced Laura
Stoltenberg as SCE for our Medical sector. Steve has been a
Divisional Chief Executive since 2018, having previously served as
a successful Managing Director of one of our largest businesses,
Apollo Fire Detectors, since 2015. These appointments further
strengthen our Executive Board and demonstrate the strength of our
talent development and succession planning processes together with
our ambition for the future.
Principal risks and uncertainties
A number of potential risks and uncertainties exist, which could
have a material impact on the Group's performance over the second
half of the financial year and thereby cause actual results to
differ materially from expected and historical results.
The Group has processes in place for identifying, evaluating and
managing risk. As part of these processes, we are closely
monitoring and assessing the effects on revenue, costs and working
capital from the currently elevated levels of disruption in supply
chains, logistics and in labour markets. We expect that our
companies' agility, and the support they receive from across the
Group to share best practice in addressing these challenges, will
continue to mitigate any potential material effects.
Our principal risks, together with a description of our approach
to mitigating them, are set out on pages 78 to 83 of the Annual
Report and Accounts 2021, which is available on the Group's website
at www.halma.com. See note 17 to the Condensed Interim Financial
Statements for further details.
Going concern
After conducting a review of the Group's financial resources,
the Directors have a reasonable expectation that the Group has
adequate resources to continue in operational existence for the
foreseeable future. For this reason they continue to adopt the
going concern basis in preparing the Condensed Interim Financial
Statements.
Summary and Outlook
Halma made strong progress in the first half, delivering record
revenue, profit and interim dividend, with substantial growth
compared to both the first half of last financial year and
2019/20.
Our full year outlook is unchanged, despite variable overhead
costs returning and continued impacts on revenue, costs and working
capital from increased supply chain, logistics and labour market
disruption. In the second half of the year, we expect more typical
rates of revenue growth and Return on Sales, with the latter more
in line with historical levels.
Our Sustainable Growth Model continues to drive our success,
including its focus on global niche markets with long-term growth
drivers. Our strong purpose and culture, our portfolio and
geographic diversity, together with our agile business model enable
us to perform well in varied market conditions and sustain growth
and returns over the longer term.
Andrew Williams Marc Ronchetti
Group Chief Executive Chief Financial Officer
(1) See Highlights, page 1.
(2) See note 2 to the Condensed Interim Financial Statements.
Profit is Adjusted(1) operating profit before central
administration costs after share of associate.
Independent review report to Halma plc
Report on the Condensed Consolidated Interim Financial
Statements
Our conclusion
We have reviewed Halma plc's condensed consolidated interim
financial statements (the "interim financial statements") in the
Half Year Report of Halma plc for the 6 month period ended 30
September 2021 (the "period").
Based on our review, nothing has come to our attention that
causes us to believe that the interim financial statements are not
prepared, in all material respects, in accordance with UK adopted
International Accounting Standard 34, 'Interim Financial Reporting'
and the Disclosure Guidance and Transparency Rules sourcebook of
the United Kingdom's Financial Conduct Authority.
What we have reviewed
The interim financial statements comprise:
- the Consolidated Balance Sheet as at 30 September 2021;
- the Consolidated Income Statement and the Consolidated
Statement of Comprehensive Income and Expenditure - for the period
then ended;
- the Consolidated Cash Flow Statement for the period then ended;
- the Consolidated Statement of Changes in Equity for the period then ended; and
- the explanatory notes to the interim financial statements.
The interim financial statements included in the Half Year
Report of Halma plc have been prepared in accordance with UK
adopted International Accounting Standard 34, 'Interim Financial
Reporting' and the Disclosure Guidance and Transparency Rules
sourcebook of the United Kingdom's Financial Conduct Authority.
Responsibilities for the interim financial statements and the
review
Our responsibilities and those of the directors
The Half Year Report, including the interim financial
statements, is the responsibility of, and has been approved by the
directors. The directors are responsible for preparing the Half
Year Report in accordance with the Disclosure Guidance and
Transparency Rules sourcebook of the United Kingdom's Financial
Conduct Authority.
Our responsibility is to express a conclusion on the interim
financial statements in the Half Year Report based on our review.
This report, including the conclusion, has been prepared for and
only for the company for the purpose of complying with the
Disclosure Guidance and Transparency Rules sourcebook of the United
Kingdom's Financial Conduct Authority and for no other purpose. We
do not, in giving this conclusion, accept or assume responsibility
for any other purpose or to any other person to whom this report is
shown or into whose hands it may come save where expressly agreed
by our prior consent in writing.
What a review of interim financial statements involves
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, 'Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity' issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing (UK) and,
consequently, does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
We have read the other information contained in the Half Year
Report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the interim financial statements.
PricewaterhouseCoopers LLP
Chartered Accountants
Watford
18 November 2021
Condensed Interim Financial Statements
Consolidated Income Statement
Audited
Year
Unaudited Unaudited to
Six months to Six months to 31 March
30 September 2021 30 September 2020 2021
----------------------------------- ----------------------------------- ---------
Adjustments* Adjustments*
Before (note Before (note
adjustments* 2) Total adjustments* 2) Total Total
Notes GBPm GBPm GBPm GBPm GBPm GBPm GBPm
-------------------------- ----- ------------- ------------ ------ ------------- ------------ ------ ---------
Continuing operations
Revenue 2 737.2 - 737.2 618.4 - 618.4 1,318.2
-------------------------- ----- ------------- ------------ ------ ------------- ------------ ------ ---------
Operating profit 159.0 (21.4) 137.6 127.8 (25.7) 102.1 240.8
Share of results
of associates (0.1) - (0.1) - - - -
Gain on disposal
of operations 11 - 34.0 34.0 - - - 22.1
Finance income 3 0.6 - 0.6 1.0 - 1.0 1.0
Finance expense 4 (4.6) - (4.6) (6.8) - (6.8) (11.0)
-------------------------- ----- ------------- ------------ ------ ------------- ------------ ------ ---------
Profit before taxation 154.9 12.6 167.5 122.0 (25.7) 96.3 252.9
Taxation 5 (33.8) 2.0 (31.8) (25.1) 6.1 (19.0) (49.6)
-------------------------- ----- ------------- ------------ ------ ------------- ------------ ------ ---------
Profit for the period 121.1 14.6 135.7 96.9 (19.6) 77.3 203.3
-------------------------- ----- ------------- ------------ ------ ------------- ------------ ------ ---------
Attributable to:
Owners of the parent 135.8 77.3 203.4
Non-controlling interests (0.1) - (0.1)
Earnings per share
from continuing
operations 6
Basic and diluted 31.96p 35.83p 25.54p 20.37p 53.61p
Dividends in respect
of the period 7
Dividends paid and
proposed (GBPm) 27.8 26.1 66.8
Per share 7.35p 6.87p 17.65p
-------------------------- ----- ------------- ------------ ------ ------------- ------------ ------ ---------
* Adjustments include the amortisation and impairment of
acquired intangible assets; acquisition items; significant
restructuring costs; profit or loss on disposal of operations; and
the associated taxation thereon. Note 9 provides more information
on alternative performance measures.
Consolidated Statement of Comprehensive Income
and Expenditure
Unaudited Unaudited Audited
Six months Six months Year
to to to
30 September 30 September 31 March
2021 2020 2021
GBPm GBPm GBPm
------------------------------------------------------ ------------- ------------- ---------
Profit for the period 135.7 77.3 203.3
Items that will not be reclassified subsequently
to the Income Statement:
Actuarial gains/(losses) on defined benefit pension
plans 10.4 (46.3) (30.6)
Tax relating to components of other comprehensive
income that will not be reclassified (1.0) 8.8 5.9
Items that may be reclassified subsequently to
the Income Statement:
Effective portion of changes in fair value of cash
flow hedges (0.8) (0.6) 1.0
Deferred tax in respect of cash flow hedges accounted
for in the hedging reserve 0.2 0.1 (0.2)
Exchange gains/(losses) on translation of foreign
operations and net investment hedge 18.5 (14.9) (72.7)
Exchange gain on translation of foreign operations
recycled on disposal - - (2.8)
Other comprehensive income/(expense) for the period 27.3 (52.9) (99.4)
------------------------------------------------------ ------------- ------------- ---------
Total comprehensive income for the period 163.0 24.4 103.9
------------------------------------------------------ ------------- ------------- ---------
Attributable to:
Owners of the parent 163.1 24.4 104.0
Non-controlling interests (0.1) - (0.1)
------------------------------------------------------ ------------- ------------- ---------
The exchange gains of GBP18.5m (six months to 30 September 2020:
GBP14.9m loss; year to 31 March 2021: GBP72.7m loss) include losses
of GBP3.6m (six months to 30 September 2020: GBP4.2m gains; year to
31 March 2021: GBP19.9m gains), which relate to net investment
hedges.
Consolidated Balance Sheet
Unaudited Unaudited Audited
30 September 30 September 31 March
2021 2020 2021
Notes GBPm GBPm GBPm
---------------------------------------------- ----- ------------- ------------- ---------
Non-current assets
Goodwill 867.4 829.8 808.5
Other intangible assets 319.3 303.8 290.0
Property, plant and equipment 186.7 184.7 180.8
Interests in associates and other investments 9.9 4.8 9.3
Retirement benefit asset 13 4.8 - -
Tax receivable 14 14.7 - 13.9
Deferred tax asset 1.9 5.6 1.3
---------------------------------------------- ----- ------------- ------------- ---------
1,404.7 1,328.7 1,303.8
---------------------------------------------- ----- ------------- ------------- ---------
Current assets
Inventories 193.2 175.8 167.8
Trade and other receivables 279.2 245.3 268.0
Tax receivable 4.4 6.5 2.5
Cash and bank balances 131.1 125.5 134.1
Derivative financial instruments 12 0.6 0.4 1.7
---------------------------------------------- ----- ------------- ------------- ---------
608.5 553.5 574.1
---------------------------------------------- ----- ------------- ------------- ---------
Total assets 2,013.2 1,882.2 1,877.9
---------------------------------------------- ----- ------------- ------------- ---------
Current liabilities
Trade and other payables 206.1 158.7 186.7
Borrowings 3.0 76.1 3.0
Lease liabilities 14.2 13.0 13.3
Provisions 22.0 30.5 35.4
Tax liabilities 13.8 11.3 8.9
Derivative financial instruments 12 0.2 0.9 0.7
---------------------------------------------- ----- ------------- ------------- ---------
259.3 290.5 248.0
---------------------------------------------- ----- ------------- ------------- ---------
Net current assets 349.2 263.0 326.1
---------------------------------------------- ----- ------------- ------------- ---------
Non-current liabilities
Borrowings 340.7 300.0 322.3
Lease liabilities 53.4 51.4 51.7
Retirement benefit obligations 13 10.1 45.0 22.5
Trade and other payables 15.2 16.3 16.8
Provisions 6.3 14.3 8.4
Deferred tax liabilities 51.1 41.7 40.6
---------------------------------------------- ----- ------------- ------------- ---------
476.8 468.7 462.3
---------------------------------------------- ----- ------------- ------------- ---------
Total liabilities 736.1 759.2 710.3
---------------------------------------------- ----- ------------- ------------- ---------
Net assets 1,277.1 1,123.0 1,167.6
---------------------------------------------- ----- ------------- ------------- ---------
Equity
Share capital 38.0 38.0 38.0
Share premium account 23.6 23.6 23.6
Own shares (22.0) (5.2) (20.9)
Capital redemption reserve 0.2 0.2 0.2
Hedging reserve 0.1 (0.6) 0.7
Translation reserve 91.7 133.8 73.2
Other reserves (26.4) (18.9) (13.6)
Retained earnings 1,171.4 952.8 1,065.8
---------------------------------------------- ----- ------------- ------------- ---------
Equity attributable to owners of the Company 1,276.6 1,123.7 1,167.0
---------------------------------------------- ----- ------------- ------------- ---------
Non-controlling interests 0.5 (0.7) 0.6
---------------------------------------------- ----- ------------- ------------- ---------
Total equity 1,277.1 1,123.0 1,167.6
---------------------------------------------- ----- ------------- ------------- ---------
Consolidated Statement of Changes in Equity
For the six months to 30 September 2021
-----------------------------------------------------------------------------------------------
Share Capital
Share premium Own redemption Hedging Translation Other Retained Non-controlling
capital account shares reserve reserve reserve reserves earnings interest Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
-------------- ------- ------- ------ ---------- ------- ----------- -------- -------- --------------- -------
At 1 April
2021
(audited) 38.0 23.6 (20.9) 0.2 0.7 73.2 (13.6) 1,065.8 0.6 1,167.6
Profit for
the period - - - - - - - 135.8 (0.1) 135.7
Other
comprehensive
income and
expense:
-------------- ------- ------- ------ ---------- ------- ----------- -------- -------- --------------- -------
Exchange
differences
on
translation
of foreign
operations - - - - - 18.5 - - - 18.5
Actuarial
gains
on defined
benefit
pension
plans - - - - - - - 10.4 - 10.4
Effective
portion
of changes
in fair value
of cash flow
hedges - - - - (0.8) - - - - (0.8)
Tax relating
to components
of other
comprehensive
income and
expense - - - - 0.2 - - (1.0) - (0.8)
-------------- ------- ------- ------ ---------- ------- ----------- -------- -------- --------------- -------
Total other
comprehensive
income and
expense - - - - (0.6) 18.5 - 9.4 - 27.3
Dividends paid - - - - - - - (40.8) - (40.8)
Share-based
payments
charge - - - - - - 4.0 - - 4.0
Deferred tax
on
share-based
payment
transactions - - - - - - (0.5) - - (0.5)
Excess tax
deductions
related to
share-based
payments on
exercised
awards - - - - - - - 1.2 - 1.2
Purchase of
own shares - - (10.4) - - - - - - (10.4)
Performance
share plan
awards vested - - 9.3 - - - (16.3) - - (7.0)
-------------- ------- ------- ------ ---------- ------- ----------- -------- -------- --------------- -------
At 30
September
2021
(unaudited) 38.0 23.6 (22.0) 0.2 0.1 91.7 (26.4) 1,171.4 0.5 1,277.1
-------------- ------- ------- ------ ---------- ------- ----------- -------- -------- --------------- -------
Own shares are ordinary shares in Halma plc purchased by the
Company and held to fulfil the Company's obligations under the
Company's share plans. As at 30 September 2021 the number of shares
held by the Employee Benefit Trust was 870,370 (30 September 2020:
262,551 and 31 March 2021: 891,622).
The Translation reserve is used to record the difference arising
from the retranslation of the financial statements of foreign
operations. The Hedging reserve is used to record the portion of
the cumulative net change in fair value of cash flow hedging
instruments that are deemed to be an effective hedge.
The Capital redemption reserve was created on repurchase and
cancellation of the Company's own shares. The Other reserves
represent the provision for the value of the Group's equity-settled
share plans.
For the six months to 30 September 2020
---------------------------------------------------------------------------------------------
Share Capital Non-
Share premium Own redemption Hedging Translation Other Retained controlling
capital account shares reserve reserve reserve reserves earnings interest Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
-------------- ------- ------- ------- ---------- -------- ----------- -------- -------- ----------- -------
At 1 April
2020
(audited) 38.0 23.6 (14.3) 0.2 (0.1) 148.7 (7.7) 949.2 (0.7) 1,136.9
Profit for the
period - - - - - - - 77.3 - 77.3
Other
comprehensive
income and
expense:
-------------- ------- ------- ------- ---------- -------- ----------- -------- -------- ----------- -------
Exchange
differences
on
translation
of foreign
operations - - - - - (14.9) - - - (14.9)
Actuarial
gains
on defined
benefit
pension plans - - - - - - - (46.3) - (46.3)
Effective
portion
of changes in
fair value of
cash flow
hedges - - - - (0.6) - - - - (0.6)
Tax relating
to
components of
other
comprehensive
income and
expense - - - - 0.1 - - 8.8 - 8.9
-------------- ------- ------- ------- ---------- -------- ----------- -------- -------- ----------- -------
Total other
comprehensive
income and
expense - - - - (0.5) (14.9) - (37.5) - (52.9)
Dividends paid - - - - - - - (37.7) - (37.7)
Share-based
payments
charge - - - - - - 5.0 - - 5.0
Deferred tax
on
share-based
payment
transactions - - - - - - 0.4 - - 0.4
Excess tax
deductions
related to
share-based
payments on
exercised
awards - - - - - - - 1.5 - 1.5
Performance
share
plan awards
vested - - 9.1 - - - (16.6) - - (7.5)
-------------- ------- ------- ------- ---------- -------- ----------- -------- -------- ----------- -------
At 30
September
2020
(unaudited) 38.0 23.6 (5.2) 0.2 (0.6) 133.8 (18.9) 952.8 (0.7) 1,123.0
-------------- ------- ------- ------- ---------- -------- ----------- -------- -------- ----------- -------
For the year to 31 March 2021
-------------------------------------------------------------------------------------------
Share Capital Non-
Share premium Own redemption Hedging Translation Other Retained controlling
capital account shares reserve reserve reserve reserves earnings interest Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
---------------- ------- ------- ------ ---------- ------- ----------- -------- -------- ----------- -------
At 1 April 2020
(audited) 38.0 23.6 (14.3) 0.2 (0.1) 148.7 (7.7) 949.2 (0.7) 1,136.9
Profit for the
year - - - - - - - 203.4 (0.1) 203.3
Other
comprehensive
income and
expense:
---------------- ------- ------- ------ ---------- ------- ----------- -------- -------- ----------- -------
Exchange
differences
on translation
of foreign
operations
and net
investment
hedge - - - - - (72.7) - - - (72.7)
Exchange loss
on translation
of foreign
operations
recycled to
income
statement on
disposal - - - - - (2.8) - - - (2.8)
Actuarial loss
on defined
benefit
pension plans - - - - - - - (30.6) - (30.6)
Effective
portion
of changes in
fair value of
cash flow
hedges - - - - 1.0 - - - - 1.0
Tax relating
to components
of other
comprehensive
income and
expense - - - - (0.2) - - 5.9 - 5.7
---------------- ------- ------- ------ ---------- ------- ----------- -------- -------- ----------- -------
Total other
comprehensive
income and
expense - - - - 0.8 (75.5) - (24.7) - (99.4)
Dividends paid - - - - - - - (63.7) - (63.7)
Share-based
payments
charge - - - - - - 11.9 - - 11.9
Deferred tax
on share-based
payment
transactions - - - - - - (0.4) - - (0.4)
Excess tax
deductions
related to
share-based
payments on
exercised
awards - - - - - - - 1.6 - 1.6
Purchase of own
shares - - (16.2) - - - - - - (16.2)
Performance
share
plan awards
vested - - 9.6 - - - (17.4) - - (7.8)
Adjustments to
non-controlling
interest
arising
on acquisition - - - - - - - - 1.4 1.4
---------------- ------- ------- ------ ---------- ------- ----------- -------- -------- ----------- -------
At 31 March 2021
(audited) 38.0 23.6 (20.9) 0.2 0.7 73.2 (13.6) 1,065.8 0.6 1,167.6
---------------- ------- ------- ------ ---------- ------- ----------- -------- -------- ----------- -------
Consolidated Cash Flow Statement
Unaudited Unaudited Audited
Six months Six months Year
to to to
30 September 30 September 31 March
2021 2020 2021
Notes GBPm GBPm GBPm
------------------------------------------------- ----- ------------- ------------- ---------
Net cash inflow from operating activities 8 112.0 137.1 277.6
------------------------------------------------- ----- ------------- ------------- ---------
Cash flows from investing activities
Purchase of property, plant and equipment (13.7) (10.2) (22.8)
Purchase of computer software (0.5) (0.5) (2.8)
Purchase of other intangibles (0.4) (0.9) (1.2)
Proceeds from sale of property, plant and
equipment and capitalised development costs 0.4 0.5 0.9
Development costs capitalised (6.8) (7.0) (15.4)
Interest received 0.2 0.1 0.8
Acquisition of businesses, net of cash acquired 10 (105.0) (6.7) (46.4)
Disposal of business, net of cash disposed 57.5 - 26.1
Purchase of equity investments (0.7) - (3.4)
------------------------------------------------- ----- ------------- ------------- ---------
Net cash used in investing activities (69.0) (24.7) (64.2)
------------------------------------------------- ----- ------------- ------------- ---------
Cash flows from financing activities
Dividends paid 7 (40.8) (37.7) (63.7)
Purchase of own shares (10.4) - (16.2)
Interest paid (3.9) (5.7) (10.0)
Proceeds from bank borrowings 100.0 9.1 129.4
Repayments of bank borrowings (85.2) (52.7) (136.7)
Repayment of loan notes - - (72.2)
Repayment of lease liabilities (7.0) (7.1) (14.1)
------------------------------------------------- ----- ------------- ------------- ---------
Net cash used in financing activities (47.3) (94.1) (183.5)
------------------------------------------------- ----- ------------- ------------- ---------
(Decrease)/increase in cash and cash equivalents (4.3) 18.3 29.9
Cash and cash equivalents brought forward 131.1 105.4 105.4
Exchange adjustments 1.3 (0.3) (4.2)
------------------------------------------------- ----- ------------- ------------- ---------
Cash and cash equivalents carried forward 128.1 123.4 131.1
------------------------------------------------- ----- ------------- ------------- ---------
Unaudited Unaudited Audited
Six months Six months Year
to to to
30 September 30 September 31 March
2021 2020 2021
GBPm GBPm GBPm
---------------------------------------------------- ------------- ------------- ---------
Reconciliation of net cash flow to movement in
net debt
(Decrease)/increase in cash and cash equivalents (4.3) 18.3 29.9
Net cash (inflow)/outflow from (drawdown)/repayment
of bank borrowings (14.8) 43.6 7.3
Loan notes repaid - - 72.2
Lease liabilities additions (7.9) (11.9) (25.0)
Lease liabilities acquired (3.8) - (0.5)
Lease liabilities disposed of 2.1 - 1.8
Lease liabilities and interest repaid 8.1 8.2 16.4
Exchange adjustments (3.4) 2.1 17.0
---------------------------------------------------- ------------- ------------- ---------
(Increase)/decrease in net debt (24.0) 60.3 119.1
Net debt brought forward (256.2) (375.3) (375.3)
Net debt carried forward (280.2) (315.0) (256.2)
---------------------------------------------------- ------------- ------------- ---------
Notes to the Condensed Interim Financial Statements
1 Basis of preparation
General information
The Half Year Report, which includes the Interim Management
Report and Condensed Interim Financial Statements for the six
months to 30 September 2021, was approved by the Directors on 18
November 2021.
Basis of preparation
The Report has been prepared solely to provide additional
information to shareholders as a body to assess the Board's
strategies and the potential for those strategies to succeed. It
should not be relied on by any other party or for any other
purpose.
The Report contains certain forward-looking statements which
have been made by the Directors in good faith using information
available up until the date they approved the Report.
Forward-looking statements should be regarded with caution as by
their nature such statements involve risk and uncertainties
relating to events and circumstances that may occur in the future.
Actual results may differ from those expressed in such statements,
depending on the outcome of these uncertain future events.
The Report has been prepared in accordance with UK adopted
International Accounting Standard 34, 'Interim Financial Reporting'
and the Disclosure Guidance and Transparency Rules sourcebook of
the UK's Financial Conduct Authority. The Report should be read in
conjunction with the annual consolidated financial statements for
the year ended 31 March 2021 which were prepared in accordance with
international accounting standards in conformity with the
requirements of the Companies Act 2006 and IFRS adopted pursuant to
Regulation (EC) No 1606/2002 as it applies in the European Union.
The same accounting policies and presentation that were applied in
the preparation of the Group's statutory accounts for the year to
31 March 2021 have also been applied to the interim consolidated
financial statements with the exception of the policy for taxes on
income, which in the interim period is accrued using the estimated
effective tax rates for the year on profits before tax before
adjustments, with the tax rates applied to the adjustments being
established on an individual basis for each adjustment.
The figures shown for the year to 31 March 2021 are based on the
Group's statutory accounts for that period and do not constitute
the Group's statutory accounts for that period as defined in
Section 434 of the Companies Act 2006. These statutory accounts,
which were prepared in accordance with international accounting
standards in conformity with the requirements of the Companies Act
2006, have been filed with the Registrar of Companies. The audit
report on those accounts was not qualified, did not include a
reference to any matters to which the Auditor drew attention by way
of emphasis without qualifying the report, and did not contain
statements under Sections 498 (2) or (3) of the Companies Act
2006.
For the year to 31 March 2022 the annual financial statements
will be prepared in accordance with IFRS as adopted by the UK
Endorsement Board. This change in basis of preparation is required
by UK company law for the purposes of financial reporting as a
result of the UK's exit from the EU on 31 January 2020 and the
cessation of the transition period on 31 December 2020. This change
does not constitute a change in accounting policy but rather a
change in framework which is required to ground the use of IFRS in
company law. There is no impact on recognition, measurement or
disclosure between the two frameworks in the period reported.
Going concern
The Group's business activities, together with the main trends
and factors likely to affect its future development, performance
and position, and the financial position of the Group as at 30
September 2021, its cash flows, liquidity position and borrowing
facilities are set out on pages 2 to 7.
The financial statements have been prepared on a going concern
basis. In adopting the going concern basis the Directors have
considered all of the above factors, including potential scenarios
and its principal risks set out in note 17. Under the potential
scenarios considered, which includes a severe but plausible
downside scenario, the Group remains within its debt facilities and
the attached financial covenants for the foreseeable future and the
Directors therefore believe, at the time of approving the financial
statements, that the Company is well placed to manage its business
risks successfully and remains a going concern. The key facts and
assumptions in reaching this determination are summarised
below.
Our financial position remains robust with committed facilities
totalling approximately GBP656m which includes a GBP550m Revolving
Credit Facility maturing in November 2023 of which GBP315.8m
remains undrawn at the date of this Report. The earliest maturity
in these facilities is for GBP70.0m in January 2023. The financial
covenants on these facilities are for leverage (net debt/adjusted
EBITDA*) of not more than three times and for adjusted interest
cover of not less than four times.
* net debt and adjusted EBITDA are on a pre-IFRS 16 basis for covenant purposes
Our base case scenario has been prepared using forecasts from
each of our Operating Companies as well as cash outflows on
acquisitions in line with pre COVID-19 levels. In addition, a
severe but plausible downside scenario has been modelled showing
trading at similar levels to those in FY21. This reduction in
trading to that currently forecasted could be caused by further
significant, unexpected COVID-19 impacts or another significant
downside event. In mitigating the impacts of the downside scenario
there are actions that can be taken which are entirely
discretionary to the business such as acquisitions spend and
dividend growth rates. In addition, the Group has demonstrated
strong resilience and flexibility in the first half of the prior
year in managing overheads which could be used to further mitigate
the impacts of the downside scenario.
Neither of these scenarios result in a breach of the Group's
available debt facilities or the attached covenants and accordingly
the Directors believe there is no material uncertainty in the use
of the going concern assumption.
New accounting standards and policies
The following Standards, with an effective date of 1 January
2021 and 1 April 2021 respectively, have been adopted without any
significant impact on the amounts reported in these financial
statements:
- Interest Rate Benchmark Reform - Phase 2 - Amendments to IFRS
9, IAS 39, IFRS 7, IFRS 4 and IFRS 16
- Amendments to IFRS 16: COVID-19-Related Rent Concessions
2 Segmental analysis and revenue from contracts with
customers
Sector analysis
From 1 April 2021, the Group aligned its organisational
structure and financial reporting with its purpose and focus on
safety, environmental and health markets. The Group now has three
main reportable segments (Safety, Environmental & Analysis and
Medical), which are defined by markets rather than product type.
Each segment includes businesses with similar operating and market
characteristics. These segments are consistent with the internal
reporting as reviewed by the Group Chief Executive.
Segment revenue disaggregation (by location of external
customer)
Unaudited Six months to 30 September 2021
Revenue by sector and destination (all continuing
operations)
-----------------------------------------------------------------------------
Africa,
United Near
States Mainland United and Middle Other
of America Europe Kingdom Asia Pacific East countries Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------------------- ----------- -------- -------- ------------ ----------- ---------- -----
Safety 77.7 89.7 77.5 51.9 15.1 8.3 320.2
Environmental & Analysis 99.0 24.7 38.9 37.3 5.2 4.4 209.5
Medical 104.7 32.2 19.8 35.6 5.7 10.0 208.0
Inter-segmental sales (0.5) - - - - - (0.5)
------------------------- ----------- -------- -------- ------------ ----------- ---------- -----
Revenue for the period 280.9 146.6 136.2 124.8 26.0 22.7 737.2
------------------------- ----------- -------- -------- ------------ ----------- ---------- -----
Unaudited Six months to 30 September 2020
Revenue by sector and destination (all continuing
operations)
Restated*
Africa,
Near
United and
States Mainland United Middle Other
of America Europe Kingdom Asia Pacific East countries Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------------------- ----------- -------- -------- ------------ ------- ---------- -----
Safety 71.0 78.5 49.3 42.6 16.4 10.8 268.6
Environmental & Analysis 88.3 19.7 32.9 29.6 4.4 3.1 178.0
Medical 96.2 29.0 5.6 27.8 4.0 9.8 172.4
Inter-segmental sales (0.4) - (0.2) - - - (0.6)
------------------------- ----------- -------- -------- ------------ ------- ---------- -----
Revenue for the period 255.1 127.2 87.6 100.0 24.8 23.7 618.4
------------------------- ----------- -------- -------- ------------ ------- ---------- -----
Audited year end 31 March 2021
Revenue by sector and destination (all continuing
operations)
Restated*
---------------------------------------------------------------------------
Africa,
Near
United and
States Mainland United Middle Other
of America Europe Kingdom Asia Pacific East countries Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------------------- ----------- -------- -------- ------------ ------- ---------- -------
Safety 143.7 170.8 124.9 90.9 34.1 22.6 587.0
Environmental & Analysis 165.1 44.2 70.1 65.9 9.2 6.6 361.1
Medical 200.6 61.0 19.2 59.3 10.8 20.4 371.3
Inter-segmental sales (0.6) - (0.6) - - - (1.2)
------------------------- ----------- -------- -------- ------------ ------- ---------- -------
Revenue for the period 508.8 276.0 213.6 216.1 54.1 49.6 1,318.2
------------------------- ----------- -------- -------- ------------ ------- ---------- -------
*Restated to reflect the new reporting segments.
Inter-segmental sales are charged at prevailing market prices
and have not been disclosed separately by segment as they are not
considered material. The Group does not analyse revenue by product
group. Revenue derived from the rendering of services was GBP28.8m
(six months to 30 September 2020: GBP21.3m; year to 31 March 2021:
GBP52.6m). All revenue was otherwise derived from the sale of
products.
The majority of the Group's revenue is recognised when control
passes at a point in time.
Segment results
Profit (all continuing
operations)
----------------------------------------
Unaudited Unaudited Audited
Six months Six months Year
to to to
30 September 30 September 31 March
2021 2020 2021
Restated* Restated*
GBPm GBPm GBPm
-------------------------------------------------- ------------- ------------- ----------
Segment profit before allocation of adjustments**
Safety 73.5 58.0 135.3
Environmental & Analysis 53.1 42.9 89.3
Medical 46.3 38.2 86.6
-------------------------------------------------- ------------- ------------- ----------
172.9 139.1 311.2
-------------------------------------------------- ------------- ------------- ----------
Segment profit after allocation of adjustments**
Safety 99.1 49.3 117.3
Environmental & Analysis 46.6 36.7 101.7
Medical 39.8 27.4 66.8
-------------------------------------------------- ------------- ------------- ----------
Segment profit 185.5 113.4 285.8
Central administration costs (14.0) (11.3) (22.9)
Net finance expense (4.0) (5.8) (10.0)
-------------------------------------------------- ------------- ------------- ----------
Group profit before taxation 167.5 96.3 252.9
Taxation (31.8) (19.0) (49.6)
-------------------------------------------------- ------------- ------------- ----------
Profit for the period 135.7 77.3 203.3
-------------------------------------------------- ------------- ------------- ----------
* Restated to reflect the new reporting segments.
** Adjustments include the amortisation and impairment of
acquired intangible assets; acquisition items; significant
restructuring costs; and profit or loss on disposal of operations.
Note 9 provides more information on alternative performance
measures.
The accounting policies of the reportable segments are the same
as the Group's accounting policies. Acquisition transaction costs,
adjustments to contingent consideration and release of fair value
adjustments to inventory (collectively 'acquisition items') are
recognised in the Consolidated Income Statement. Segment profit
before these acquisition items and other adjustments, is disclosed
separately above as this is the measure reported to the Group Chief
Executive for the purpose of allocation of resources and assessment
of segment performance.
These adjustments are analysed as follows:
Unaudited for the Six months to
30 September 2021
----------------- ------------------------------------------------------------------------
Acquisition items
----------------- ------------ ------------------------------------------ ------
Disposal
Release Total of
of amortisation operations
fair charge and
Amortisation Adjustments value and restructuring
of acquired Transaction to contingent adjustments acquisition (note
intangibles costs consideration to inventory items 11) Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
----------------- ------------ ----------- -------------- ------------- ------------- ---------------- ------
Safety (7.3) (0.5) - (0.6) (8.4) 34.0 25.6
Environmental &
Analysis (5.1) (0.7) 0.1 (0.8) (6.5) - (6.5)
Medical (8.4) (1.7) 3.8 (0.2) (6.5) - (6.5)
----------------- ------------ ----------- -------------- ------------- ------------- ---------------- ------
Total Segment &
Group (20.8) (2.9) 3.9 (1.6) (21.4) 34.0 12.6
----------------- ------------ ----------- -------------- ------------- ------------- ---------------- ------
The transaction costs arose mainly on the acquisitions during
the year. In Safety, they related to the acquisition of Ramtech
(GBP0.4m) and IBIT (GBP0.1m). In Environmental & Analysis, they
related to the acquisition of Dancutter (GBP0.3m), Sensitron
(GBP0.2m), Orca (GBP0.1m) and Anton (GBP0.1m). In Medical, they
related to the acquisition of PeriGen (GBP1.3m), Meditech (GBP0.1m)
and RNK (GBP0.1m), in the current year and the acquisition of
Visiometrics in a previous year (GBP0.2m).
The GBP3.9m adjustment to contingent consideration comprised of
a credit of GBP0.1m in Environmental & Analysis arising from a
decrease in the estimate of the payables for Invenio and a credit
of GBP3.8m in Medical arising from a decrease in estimates of the
payables for NovaBone (GBP1.2m), NeoMedix (GBP2.5m) and Spreo
(GBP0.1m) partially offset by an increase in the estimate of the
payable for Infowave (GBP0.1m) and a credit of GBP0.1m arising from
exchange differences on balances denominated in Euros.
The GBP1.6m release of fair value adjustments to inventory
related to Ramtech (GBP0.6m) in Safety; Dancutter (GBP0.1m), Orca
(GBP0.6m) and Sensitron (GBP0.1m) in Environmental & Analysis;
and Meditech (GBP0.2m) in Medical. All amounts have been released
in relation to Dancutter and Orca.
Unaudited for the Six months to
30 September 2020
Restated*
----------------- ------------------------------------------------------------------------
Acquisition items
----------------- ------------ ------------------------------------------ ------
Release Total
of amortisation Disposal
fair charge of
Amortisation Adjustments value and operations
of acquired Transaction to contingent adjustments acquisition and
intangibles costs consideration to inventory items restructuring Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
----------------- ------------ ----------- -------------- ------------- ------------- ---------------- ------
Safety (7.8) - (0.9) - (8.7) - (8.7)
Environmental &
Analysis (5.3) - - (0.9) (6.2) - (6.2)
Medical (8.5) (0.6) (0.2) (1.5) (10.8) - (10.8)
----------------- ------------ ----------- -------------- ------------- ------------- ---------------- ------
Total Segment &
Group (21.6) (0.6) (1.1) (2.4) (25.7) - (25.7)
----------------- ------------ ----------- -------------- ------------- ------------- ---------------- ------
* Restated to reflect the new reporting segments.
The transaction costs relate to the acquisition of Visiometrics
in a previous year.
The GBP1.1m adjustment to contingent consideration comprised: a
charge of GBP0.9m in Safety arising from an increase in estimates
of the payable for FireMate (GBP0.9m); and a charge of GBP0.2m in
Medical arising from an increase in estimate of the payable for
Infowave (GBP0.7m), a decrease in the estimate payable for NeoMedix
(GBP1.0m) and a charge of GBP0.5m arising from exchange differences
on balances denominated in Euros.
The GBP2.4m release of fair value adjustments to inventory
relates to Sensit (GBP0.9m) in Environmental & Analysis and
NovaBone (GBP1.3m) and Maxtec (GBP0.2m) in Medical.
Audited year
ended 31 March
2021 Restated*
-------------- ------------------------------------------
Acquisition items
------------------------------------------
Disposal
Total of
Release amortisation operations
Amortisation of charge and
of acquired Adjustments fair value and restructuring
intangible Transaction to contingent adjustments acquisition (note
assets costs consideration to inventory items 11) Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
---------------- -------------- ----------- -------------- ------------- ------------- ----------------- ------
Safety (15.6) - (2.4) - (18.0) - (18.0)
Environmental &
Analysis (10.2) - 1.3 (0.8) (9.7) 22.1 12.4
Medical (16.5) (1.9) 0.4 (1.8) (19.8) - (19.8)
---------------- -------------- ----------- -------------- ------------- ------------- ----------------- ------
Total Segment &
Group (42.3) (1.9) (0.7) (2.6) (47.5) 22.1 (25.4)
---------------- -------------- ----------- -------------- ------------- ------------- ----------------- ------
* Restated to reflect the new reporting segments.
The transaction costs arose on the acquisition of Static Systems
(GBP0.5m) during the year and costs relating to Visiometrics
(GBP1.4m), both in the Medical sector.
The GBP0.7m adjustment to contingent consideration comprised: a
charge of GBP2.4m in Safety arising from an increase in the
estimate of the payables for Navtech (GBP1.5m) and FireMate
(GBP0.9m); a credit of GBP1.3m in Environmental & Analysis
arising from a decrease in estimate of the payables for Invenio
(GBP0.8m) and Enoveo (GBP0.5m), and a credit of GBP0.4m in Medical
arising from a decrease in the estimated payable for NeoMedix
(GBP1.7m), offset by an increase in estimate of the payable for
Infowave (GBP0.9m) and Spreo (GBP0.2m), and a charge of GBP0.2m
arising from exchange differences on balances denominated in
Euros.
The GBP2.6m release of fair value adjustments to inventory
relates to Sensit (GBP0.8m) in Environmental & Analysis and
NovaBone (GBP1.3m), Maxtec (GBP0.2m) and Static Systems (GBP0.3m)
in Medical. All amounts have now been released in relation to
Sensit, NovaBone, Maxtec and Static Systems.
Segment assets and liabilities
Assets Liabilities
------------- ---------- ------------- -----------
Unaudited Audited Unaudited Audited
Before goodwill, interest in associates 30 September 31 March 30 September 31 March
and other investments and acquired intangible 2021 2021 2021 2021
assets are allocated to specific segment GBPm GBPm GBPm GBPm
assets/liabilities Restated* Restated*
----------------------------------------------- ------------- ---------- ------------- -----------
Safety 255.9 276.9 78.6 95.6
Environmental & Analysis 143.5 136.2 61.7 56.8
Medical 173.4 155.7 70.5 54.0
Total segment assets/liabilities excluding
goodwill, interest in associates and other
investments and acquired intangible assets 572.8 568.8 210.8 206.4
Goodwill 867.4 808.5 - -
Interest in associate and other investments 9.9 9.3 - -
Acquired intangible assets 271.3 241.7 - -
----------------------------------------------- ------------- ---------- ------------- -----------
Total segment assets/liabilities including
goodwill, interest in associates and other
investments and acquired intangible assets 1,721.4 1,628.3 210.8 206.4
----------------------------------------------- ------------- ---------- ------------- -----------
Assets Liabilities
------------------------- -------------------------
Unaudited Audited Unaudited Audited
After goodwill, interest in associates and 30 September 31 March 30 September 31 March
other investments and acquired intangible 2021 2021 2021 2021
assets are allocated to specific segment GBPm GBPm GBPm GBPm
assets/liabilities Restated* Restated*
-------------------------------------------- ------------- ---------- ------------- ----------
Safety 644.7 665.8 78.6 95.6
Environmental & Analysis 392.3 345.0 61.7 56.8
Medical 684.4 617.5 70.5 54.0
-------------------------------------------- ------------- ---------- ------------- ----------
Total segment assets/liabilities including
goodwill, interest in associates and other
investments and acquired intangible assets 1,721.4 1,628.3 210.8 206.4
Cash and bank balances/borrowings 131.1 134.1 343.7 325.3
Derivative financial instruments 0.6 1.7 0.2 0.7
Other unallocated assets/liabilities 160.1 113.8 181.4 177.9
============================================ ============= ========== ============= ==========
Total Group 2,013.2 1,877.9 736.1 710.3
-------------------------------------------- ------------- ---------- ------------- ----------
* Restated to reflect the new reporting segments.
Segment assets and liabilities, excluding the allocation of
goodwill, interest in associate and other investments and acquired
intangible assets, have been disclosed separately above as this is
the measure reported to the Group Chief Executive for the purpose
of monitoring segment performance and allocating resources between
segments. Other unallocated assets include land and buildings,
right-of-use assets, retirement benefit assets, deferred tax assets
and other central administration assets. Unallocated liabilities
include contingent purchase consideration, retirement benefit
obligations, deferred tax liabilities, lease liabilities and other
central administration liabilities.
3 Finance income
Unaudited Unaudited Audited
Six months Six months Year
to to to
30 September 30 September 31 March
2021 2020 2021
GBPm GBPm GBPm
-------------------------------------------------------- ------------- ------------- ---------
Interest receivable 0.2 0.1 0.8
Net interest credit on pension plan liabilities - - 0.1
Fair value movement on derivative financial instruments 0.4 0.9 0.1
-------------------------------------------------------- ------------- ------------- ---------
0.6 1.0 1.0
-------------------------------------------------------- ------------- ------------- ---------
4 Finance expense
Unaudited Unaudited Audited
Six months Six months Year
to to to
30 September 30 September 31 March
2021 2020 2021
GBPm GBPm GBPm
-------------------------------------------------------- ------------- ------------- ---------
Interest payable on loans and overdrafts 2.7 4.5 7.7
Interest payable on lease obligations 1.1 1.2 2.3
Amortisation of finance costs 0.3 0.3 0.7
Net interest charge on pension plan liabilities 0.2 - -
Other interest payable 0.1 - 0.1
-------------------------------------------------------- ------------- ------------- ---------
4.4 6.0 10.8
Fair value movement on derivative financial instruments 0.2 0.8 0.2
4.6 6.8 11.0
-------------------------------------------------------- ------------- ------------- ---------
5 Taxation
The total Group tax charge for the six months to 30 September
2021 of GBP31.8m (six months to 30 September 2020: GBP19.0m; year
to 31 March 2021: GBP49.6m) comprises a current tax charge of
GBP33.1m (six months to 30 September 2020: GBP22.0m; year to 31
March 2021: GBP53.9m) and a deferred tax credit of GBP1.3m (six
months to 30 September 2020: deferred tax credit GBP3.0m; year to
31 March 2021: deferred tax credit GBP4.3m). The tax charge is
based on the estimated effective tax rates for the year, applied to
profit before tax before adjustments. The tax rates applied to the
adjustments are established on an individual basis for each
adjustment.
The tax charge includes GBP21.4m (six months to 30 September
2020: GBP20.0m; year to 31 March 2021: GBP40.7m) in respect of
overseas tax.
The Finance Bill 2021 received Royal Assent on 10 June 2021 and
included the increase in the UK corporation tax rate from 19% to
25% from 1 April 2023. Accordingly, our UK deferred tax balances
have been restated to 25%, resulting in a GBP2.6m charge to the
profit and loss account, included as an adjusting item, and a
GBP1.1m credit to reserves.
6 Earnings per ordinary share
Basic and diluted earnings per ordinary share are calculated
using the weighted average of 378,763,653 (30 September 2020:
379,092,489; 31 March 2021: 379,157,495) shares in issue during the
period (net of shares purchased by the Company and held as Employee
Benefit Trust shares). There are no dilutive or potentially
dilutive ordinary shares.
Adjusted earnings are calculated as earnings from continuing
operations excluding the amortisation of acquired intangible
assets; acquisition items; significant restructuring costs; profit
or loss on disposal of operations; and the associated taxation
thereon.
The Directors consider that adjusted earnings represent a more
consistent measure of underlying performance as it excludes amounts
not directly linked to trading. A reconciliation of earnings and
the effect on basic earnings per share figures is as follows:
Unaudited Unaudited Audited
Six months Six months Year
to to to
30 September 30 September 31 March
2021 2020 2021
GBPm GBPm GBPm
-------------------------------------------------- ------------- ------------- ---------
Earnings from continuing operations attributable
to owners of the parent 135.8 77.3 203.4
Amortisation of acquired intangible assets (after
tax) 16.9 16.4 32.0
UK tax rate change (Note 5) 2.6 - -
Acquisition transaction costs (after tax) 2.7 0.5 1.6
Adjustments to contingent consideration (after
tax) (3.9) 1.0 0.7
Release of fair value adjustments to inventory
(after tax) 1.1 1.7 2.0
Disposal of operations and restructuring (after
tax) (34.0) - (17.1)
Adjusted earnings attributable to owners of the
parent 121.2 96.9 222.6
-------------------------------------------------- ------------- ------------- ---------
Per ordinary share
---------------------------------------
Unaudited Unaudited Audited
Six months Six months Year
to to to
30 September 30 September 31 March
2021 2020 2021
pence pence pence
-------------------------------------------------- ------------- ------------- ---------
Earnings per share from continuing operations
attributable to owners of the parent 35.83 20.37 53.61
Amortisation of acquired intangible assets (after
tax) 4.46 4.30 8.44
UK tax rate change 0.69 - -
Acquisition transaction costs (after tax) 0.70 0.14 0.43
Adjustments to contingent consideration (after
tax) (1.03) 0.27 0.20
Release of fair value adjustments to inventory
(after tax) 0.30 0.46 0.52
Disposal of operations and restructuring (after
tax) (8.99) - (4.53)
Adjusted earnings per share attributable to
owners of the parent 31.96 25.54 58.67
-------------------------------------------------- ------------- ------------- ---------
7 Dividends
Per ordinary share
---------------------------------------
Unaudited Unaudited Audited
Six months Six months Year
to to to
30 September 30 September 31 March
2021 2020 2021
pence pence pence
--------------------------------------------------- ------------- ------------- ---------
Amounts recognised as distributions and paid to
shareholders in the period
Final dividend for the year to 31 March 2021 (31
March 2020) 10.78 9.96 9.96
Interim dividend for the year to 31 March 2021 - - 6.87
--------------------------------------------------- ------------- ------------- ---------
10.78 9.96 16.83
--------------------------------------------------- ------------- ------------- ---------
Dividends in respect of the period
Proposed interim dividend for the year to 31 March
2022 (31 March 2021) 7.35 6.87 6.87
Final dividend for the year to 31 March 2021 - - 10.78
--------------------------------------------------- ------------- ------------- ---------
7.35 6.87 17.65
--------------------------------------------------- ------------- ------------- ---------
Unaudited Unaudited Audited
Six months Six months Year
to to to
30 September 30 September 31 March
2021 2020 2021
GBPm GBPm GBPm
--------------------------------------------------- ------------- ------------- ---------
Amounts recognised as distributions and paid to
shareholders in the period
Final dividend for the year to 31 March 2021 (31
March 2020) 40.8 37.7 37.7
Interim dividend for the year to 31 March 2021 - - 26.0
--------------------------------------------------- ------------- ------------- ---------
40.8 37.7 63.7
--------------------------------------------------- ------------- ------------- ---------
Dividends in respect of the period
Proposed interim dividend for the year to 31 March
2022 (31 March 2021) 27.8 26.0 26.0
Final dividend for the year to 31 March 2021 - - 40.8
--------------------------------------------------- ------------- ------------- ---------
27.8 26.0 66.8
--------------------------------------------------- ------------- ------------- ---------
8 Notes to the Consolidated Cash Flow Statement
Unaudited Unaudited Audited
Six months Six months Year
to to to
30 September 30 September 31 March
2021 2020 2021
GBPm GBPm GBPm
---------------------------------------------------- ------------- ------------- ---------
Reconciliation of profit from operations to net
cash inflow from operating activities
Profit on continuing operations before finance
income and expense, share of results of associates
and profit or loss on disposal of operations 137.6 102.1 240.8
Depreciation of property, plant and equipment 18.1 18.5 37.8
Amortisation of computer software 1.2 1.5 2.8
Amortisation of capitalised development costs
and other intangibles 4.7 3.7 8.3
Impairment of capitalised development costs 1.7 2.3 1.9
Amortisation of acquired intangible assets 20.8 21.6 42.3
Share-based payment expense less amounts paid (2.5) (2.0) 3.7
Payments to defined benefit pension plans net
of charge (7.0) (6.5) (13.1)
Loss on sale of property, plant and equipment
and computer software 0.1 0.1 0.7
---------------------------------------------------- ------------- ------------- ---------
Operating cash flows before movement in working
capital 174.7 141.3 325.2
Increase in inventories (22.1) (7.2) (6.7)
(Increase)/decrease in receivables (9.1) 36.5 4.3
Increase/(decrease) in payables and provisions 7.2 (20.6) 7.9
Revision to estimate of contingent consideration
payable less amounts paid in excess of payable
estimated on acquisition (11.1) 1.1 0.7
---------------------------------------------------- ------------- ------------- ---------
Cash generated from operations 139.6 151.1 331.4
Taxation paid (27.6) (14.0) (53.8)
---------------------------------------------------- ------------- ------------- ---------
Net cash inflow from operating activities 112.0 137.1 277.6
---------------------------------------------------- ------------- ------------- ---------
Unaudited Unaudited Audited
30 September 30 September 31 March
2021 2020 2021
GBPm GBPm GBPm
------------------------------------------------------------- ------------------ ------------------ --------------
Analysis of cash and cash equivalents
Cash and bank balances 131.1 125.5 134.1
Overdrafts (included in current borrowings) (3.0) (2.1) (3.0)
------------------------------------------------------------- ------------------ ------------------ --------------
Cash and cash equivalents 128.1 123.4 131.1
------------------------------------------------------------- ------------------ ------------------ --------------
At Cash Net Net (cash)/debt Lease Exchange At 30
31 flow cash/(debt) disposed liabilities adjustments September
March GBPm acquired GBPm additions GBPm 2021
2021 GBPm GBPm GBPm
GBPm
------------------------ ------- ------ ----------- ------------------ ------------------ -------------- -----------
Analysis of net debt
Cash and bank balances 134.1 (18.0) 18.2 (4.5) - 1.3 131.1
Overdrafts (3.0) - - - - - (3.0)
------------------------ ------- ------ ----------- ------------------ ------------------ -------------- -----------
Cash and cash
equivalents 131.1 (18.0) 18.2 (4.5) - 1.3 128.1
Loan notes falling due
after more than one
year (105.3) - - - - (0.7) (106.0)
Bank loans falling due
after more than one
year (217.0) (14.8) - - - (2.9) (234.7)
Lease liabilities (65.0) 8.1 (3.8) 2.1 (7.9) (1.1) (67.6)
------------------------ ------- ------ ----------- ------------------ ------------------ -------------- -----------
Total net debt (256.2) (24.7) 14.4 (2.4) (7.9) (3.4) (280.2)
------------------------ ------- ------ ----------- ------------------ ------------------ -------------- -----------
Overdrafts falling due within one year are included as current
borrowings in the Consolidated Balance Sheet. Loan notes and bank
loans falling due after more than one year are included as
non-current borrowings.
During the period the Group changed the presentation of the
proceeds from and the repayments of bank borrowings in the
Consolidated Cash Flow Statement. In the year ended 31 March 2021
these were presented as net repayments of GBP7.3m, which has been
updated to proceeds of GBP129.4m and repayments of GBP136.7m.
9 Alternative performance measures
The Board uses certain alternative performance measures to help
it effectively monitor the performance of the Group. The Directors
consider that these represent a more consistent measure of
underlying performance by removing non-trading items that are not
closely related to the Group's trading or operating cash flows.
These measures include Return on Total Invested Capital (ROTIC),
Return on Capital Employed (ROCE), organic growth at constant
currency, Adjusted operating profit, Adjusted operating cash flow
and Return on Sales.
Note 2 provides further analysis of the adjusting items in
reaching adjusted profit measures.
Return on Total Invested Capital (ROTIC)
Unaudited Unaudited Audited
Six months Six months Year
to to to
30 September 30 September 31 March
2021 2020 2021
GBPm GBPm GBPm
------------------------------------------------- ------------- ------------- ---------
Profit after tax 135.7 77.3 203.3
Adjustments(1) (14.6) 19.6 19.2
------------------------------------------------- ------------- ------------- ---------
Adjusted profit after tax(1) 121.1 96.9 222.5
------------------------------------------------- ------------- ------------- ---------
Total equity 1,277.1 1,123.0 1,167.6
Add back net retirement benefit obligations 5.3 45.0 22.5
Less associated deferred tax assets (0.8) (8.1) (4.0)
Cumulative amortisation of acquired intangible
assets 316.8 300.6 297.2
Historical adjustments to goodwill(2) 89.5 89.5 89.5
------------------------------------------------- ------------- ------------- ---------
Total Invested Capital 1,687.9 1,550.0 1,572.8
------------------------------------------------- ------------- ------------- ---------
Average Total Invested Capital(3) 1,630.4 1,532.3 1,543.7
------------------------------------------------- ------------- ------------- ---------
Return on Total Invested Capital (annualised)(4) 14.9% 12.6% 14.4%
------------------------------------------------- ------------- ------------- ---------
Return on Capital Employed (ROCE)
Unaudited Unaudited Audited
Six months Six months Year
to to to
30 September 30 September 31 March
2021 2020 2021
GBPm GBPm GBPm
----------------------------------------------------- ------------- ------------- ---------
Profit before tax 167.5 96.3 252.9
Adjustments(1) (12.6) 25.7 25.4
Net finance costs 4.0 5.8 10.0
Lease interest (1.1) (1.2) (2.3)
----------------------------------------------------- ------------- ------------- ---------
Adjusted operating profit(1) after share of results
of associates 157.8 126.6 286.0
----------------------------------------------------- ------------- ------------- ---------
Computer software costs within intangible assets 5.3 4.8 6.0
Capitalised development costs within intangible
assets 39.1 36.7 38.9
Other intangibles within intangible assets 3.6 3.8 3.4
Property, plant and equipment 186.7 184.7 180.8
Inventories 193.2 175.8 167.8
Trade and other receivables 279.2 245.3 268.0
Current trade and other payables (206.1) (158.7) (186.7)
Current lease liabilities (14.2) (13.0) (13.3)
Current provisions (22.0) (30.5) (35.4)
Net tax asset/(liabilities) 5.3 (4.8) 7.5
Non-current trade and other payables (15.2) (16.3) (16.8)
Non-current provisions (6.3) (14.3) (8.4)
Non-current lease liabilities (53.4) (51.4) (51.7)
Add back contingent purchase consideration provision 14.8 34.5 29.4
----------------------------------------------------- ------------- ------------- ---------
Capital Employed 410.0 396.6 389.5
----------------------------------------------------- ------------- ------------- ---------
Average Capital Employed(3) 399.8 406.8 403.2
----------------------------------------------------- ------------- ------------- ---------
Return on Capital Employed (annualised)(4) 78.9% 62.2% 70.9%
----------------------------------------------------- ------------- ------------- ---------
1 Adjustments include the amortisation of acquired intangible
assets; acquisition items; significant restructuring costs and
profit or loss on disposal of operations. Where after-tax measures,
these also include the associated taxation on adjusting items.
2 Includes goodwill amortised prior to 3 April 2004 and goodwill taken to reserves.
3 The ROTIC and ROCE measures are expressed as a percentage of
the average of the current period's and prior year's Total Invested
Capital and Capital Employed respectively. Using an average as the
denominator is considered to be more representative. The March 2020
Total Invested Capital and Capital Employed balances were
GBP1,338.3m and GBP358.9m respectively.
4 The ROTIC and ROCE measures are calculated as annualised
Adjusted profit after tax divided by Average Total Invested Capital
and annualised Adjusted operating profit after share of results of
associates divided by Average Capital Employed respectively.
Organic growth and constant currency
Organic growth measures the change in revenue and profit from
continuing Group operations. The measure equalises the effect of
acquisitions by:
a. removing from the year of acquisition their entire revenue and profit before taxation,
b. in the following year, removing the revenue and profit for
the number of months equivalent to the pre-acquisition period in
the prior year, and
c. removing from the year prior to acquisition any revenue
generated by sales to the acquired company which would have been
eliminated on consolidation had the acquired company been owned for
that period.
The resultant effect is that the acquisitions are removed from
organic results for one full year of ownership.
The results of disposals are removed from the prior period
reported revenue and profit before taxation.
Constant currency measures the change in revenue and profit
excluding the effects of currency movements. The measure restates
the current year's revenue and profit at last year's exchanges
rates.
Organic growth at constant currency has been calculated as
follows:
Revenue Adjusted profit* before
taxation
-------------------------------------- --------------------------------------
Unaudited Unaudited Unaudited Unaudited
Six months Six months Six months Six months
to to to to
30 September 30 September 30 September 30 September
2021 2020 2021 2020
GBPm GBPm % growth GBPm GBPm % growth
------------------------------------- ------------- ------------- -------- ------------- ------------- --------
Continuing operations 737.2 618.4 19.2% 154.9 122.0 27.0%
Acquired and disposed revenue/profit (27.6) (12.0) (4.4) (1.3)
------------------------------------- ------------- ------------- -------- ------------- ------------- --------
Organic growth 709.6 606.4 17.0% 150.5 120.7 24.7%
Constant currency adjustment 37.4 - 8.5 -
------------------------------------- ------------- ------------- -------- ------------- ------------- --------
Organic growth at constant
currency 747.0 606.4 23.2% 159.0 120.7 31.7%
------------------------------------- ------------- ------------- -------- ------------- ------------- --------
* Adjustments include the amortisation of acquired intangible
assets; significant acquisition items; restructuring costs; and
profit or loss on disposal of operations.
Sector organic growth at constant currency
Organic growth at constant currency is calculated for each
segment using the same method as described above.
Safety
Revenue Adjusted* segment profit
-------------------------------------- --------------------------------------
Unaudited Unaudited Unaudited Unaudited
Six months Six months Six months Six months
to to to to
30 September 30 September 30 September 30 September
2021 2020 2021 2020
Restated** Restated**
GBPm GBPm % growth GBPm GBPm % growth
------------------------------------- ------------- ------------- -------- ------------- ------------- --------
Continuing operations 320.2 268.6 19.2% 73.5 58.0 26.6%
Acquisition and currency adjustments 9.0 (5.9) 2.0 (0.6)
------------------------------------- ------------- ------------- -------- ------------- ------------- --------
Organic growth at constant
currency 329.2 262.7 25.3% 75.5 57.4 31.6%
------------------------------------- ------------- ------------- -------- ------------- ------------- --------
Environmental & Analysis
Revenue Adjusted* segment profit
-------------------------------------- --------------------------------------
Unaudited Unaudited Unaudited Unaudited
Six months Six months Six months Six months
to to to to
30 September 30 September 30 September 30 September
2021 2020 2021 2020
Restated** Restated**
GBPm GBPm % growth GBPm GBPm % growth
------------------------------------- ------------- ------------- -------- ------------- ------------- --------
Continuing operations 209.5 178.0 17.7% 53.1 42.9 23.8%
Acquisition and currency adjustments 5.6 (6.1) 2.0 (0.7)
------------------------------------- ------------- ------------- -------- ------------- ------------- --------
Organic growth at constant
currency 215.1 171.9 25.1% 55.1 42.2 30.5%
------------------------------------- ------------- ------------- -------- ------------- ------------- --------
Medical
Revenue Adjusted* segment profit
-------------------------------------- --------------------------------------
Unaudited Unaudited Unaudited Unaudited
Six months Six months Six months Six months
to to to to
30 September 30 September 30 September 30 September
2021 2020 2021 2020
Restated** Restated**
GBPm GBPm % growth GBPm GBPm % growth
------------------------------------- ------------- ------------- -------- ------------- ------------- --------
Continuing operations 208.0 172.4 20.6% 46.3 38.2 21.3%
Acquisition and currency adjustments (4.9) - (0.4) -
------------------------------------- ------------- ------------- -------- ------------- ------------- --------
Organic growth at constant
currency 203.1 172.4 17.8% 45.9 38.2 20.2%
------------------------------------- ------------- ------------- -------- ------------- ------------- --------
* Adjustments include the amortisation of acquired intangible
assets; acquisition items; significant restructuring costs; and
profit or loss on disposal of operations.
** Restated to reflect the new reporting segments.
Adjusted operating profit
Unaudited Unaudited Audited
Six months Six months Year
to to to
30 September 30 September 31 March
2021 2020 2021
GBPm GBPm GBPm
------------------------------------------- ------------- ------------- ---------
Operating profit 137.6 102.1 240.8
Add back:
Acquisition items 0.6 4.1 5.2
Amortisation of acquired intangible assets 20.8 21.6 42.3
------------------------------------------- ------------- ------------- ---------
Adjusted operating profit 159.0 127.8 288.3
------------------------------------------- ------------- ------------- ---------
Adjusted operating cash flow
Unaudited Unaudited Audited
Six months Six months Year
to to to
30 September 30 September 31 March
2021 2020 2021
GBPm GBPm GBPm
--------------------------------------------------------- ------------- ------------- ---------
Net cash from operating activities (note 8) 112.0 137.1 277.6
Add back:
Net acquisition costs 2.9 1.5 2.4
Taxes paid 27.6 14.0 53.8
Proceeds from sale of property, plant and equipment 0.4 0.5 0.9
Share awards vested not settled by own shares* 7.0 7.5 7.8
Deferred consideration paid in excess of payable
estimated on acquisition 7.2 - -
Less:
Purchase of property, plant and equipment (13.7) (10.2) (22.8)
Purchase of computer software and other intangibles (0.9) (1.4) (4.0)
Development costs capitalised (6.8) (7.0) (15.4)
Adjusted operating cash flow 135.7 142.0 300.3
--------------------------------------------------------- ------------- ------------- ---------
Cash conversion % (adjusted operating cash flow/adjusted
operating profit) 85% 111% 104%
--------------------------------------------------------- ------------- ------------- ---------
* See Consolidated Statement of Changes in Equity.
Return on Sales
Group Return on Sales is defined as Adjusted Profit before
Taxation as a percentage of revenue. For the sectors, Return on
Sales is defined as Adjusted segment profit as a percentage of
segment revenue. Adjusted Profit before Taxation and Adjusted
segment profit is as defined in note 2.
10 Acquisitions
In accounting for acquisitions, adjustments are made to the book
values of the net assets of the companies acquired to reflect their
fair values to the Group. Other previously unrecognised assets and
liabilities at acquisition are included and accounting policies are
aligned with those of the Group where appropriate.
During the six months ended 30 September 2021, the Group made 10
acquisitions namely:
- Dancutter A/S;
- Orca GmbH;
- PeriGen, Inc.;
- Ramtech Electronics Limited;
- Sensitron S.R.L.;
- Meditech Kft;
- Anton Industrial Services Limited;
- Certain trade and assets of FluidSentry Pty;
- Certain trade and assets of RNK Products Inc.;
- Certain trade and assets of IBIT S.R.L.
Set out on the following pages are summaries of the assets
acquired and liabilities assumed and the purchase consideration
of:
a) the total of acquisitions;
b) Dancutter A/S;
c) Orca GmbH;
d) PeriGen, Inc.;
e) Ramtech Electronics Limited;
f) Sensitron S.R.L.;
g) Other acquisitions
Due to their contractual dates, the fair value of receivables
acquired (shown below) approximate to the gross contractual amounts
receivable. The amount of gross contractual receivables not
expected to be recovered is immaterial.
There are no material contingent liabilities recognised in
accordance with paragraph 23 of IFRS 3 (revised).
The acquisitions contributed GBP14.3m of revenue and GBP2.7m of
profit after tax for the six months ended 30 September 2021.
If these acquisitions had been held since the start of the
financial year, it is estimated that the Group's reported revenue
and profit after tax would have been GBP11.0m and GBP1.6m higher
respectively.
As at the date of approval of the financial statements, the
accounting for all current and prior year acquisitions is
provisional; relating to finalisation of the valuation of acquired
intangible assets, the initial consideration, which is subject to
agreement of certain contractual adjustments, and certain other
provisional balances.
a) Total of acquisitions
Unaudited
30 September
2021
GBPm
------------------------------------------------------- -------------
Non-current assets
Intangible assets 47.1
Property, plant and equipment 7.1
Deferred tax 5.2
Current assets
Inventories 8.3
Trade and other receivables 10.4
Tax 0.4
Cash and cash equivalents 18.2
------------------------------------------------------- -------------
Total assets 96.7
------------------------------------------------------- -------------
Current liabilities
Payables (14.8)
Borrowings and lease liabilities (0.5)
Provisions (0.1)
Tax (0.7)
Non-current liabilities
Borrowings and lease liabilities (3.3)
Deferred tax (12.6)
------------------------------------------------------- -------------
Total liabilities (32.0)
------------------------------------------------------- -------------
Net assets of businesses acquired 64.7
------------------------------------------------------- -------------
Initial cash consideration paid 106.5
Other adjustments 11.9
Retention and other amounts to be paid 1.3
Contingent purchase consideration estimated to be paid 0.5
------------------------------------------------------- -------------
Total consideration 120.2
------------------------------------------------------- -------------
Total goodwill 55.5
------------------------------------------------------- -------------
Analysis of cash outflow in the Consolidated Cash Flow
Statement
Unaudited Unaudited Audited
Six months Six months Year
to to to
30 September 30 September 31 March
2021 2020 2021
GBPm GBPm GBPm
---------------------------------------------------------- ------------- ------------- ---------
Initial cash consideration paid 106.5 - 37.0
Cash acquired on acquisitions (18.2) - (7.9)
Initial cash consideration adjustment on current
year acquisitions 11.9 - 6.9
Contingent consideration paid and loan notes repaid
in cash in relation to prior year acquisitions 12.0 5.7 10.4
Other amounts paid in relation to prior year acquisitions - 1.0 -
---------------------------------------------------------- ------------- ------------- ---------
Net cash outflow relating to acquisitions 112.2 6.7 46.4
---------------------------------------------------------- ------------- ------------- ---------
Included in cash flows from operating profit 7.2 - -
Included in cash flows from investing activities 105.0 6.7 46.4
---------------------------------------------------------- ------------- ------------- ---------
b) Dancutter A/S
Unaudited
30 September
2021
GBPm
---------------------------------- -------------
Non-current assets
Intangible assets 8.8
Property, plant and equipment 1.3
Current assets
Inventories 0.5
Trade and other receivables 0.5
Cash and cash equivalents 0.9
---------------------------------- -------------
Total assets 12.0
---------------------------------- -------------
Current liabilities
Payables (0.6)
Borrowings and lease liabilities (0.1)
Tax (0.1)
Non-current liabilities
Borrowings and lease liabilities (1.1)
Deferred tax (1.9)
---------------------------------- -------------
Total liabilities (3.8)
---------------------------------- -------------
Net assets of businesses acquired 8.2
---------------------------------- -------------
Initial cash consideration paid 15.0
Other adjustments 0.5
Retention amount 0.4
---------------------------------- -------------
Total consideration 15.9
---------------------------------- -------------
Total goodwill 7.7
---------------------------------- -------------
On 24 June 2021, the Group acquired the entire share capital of
Dancutter A/S and Repipe Lining Systems A/S (together 'Dancutter')
for consideration of EUR18.1m (GBP15.5m), which comprised the
purchase price of EUR18.0m (GBP15.4m) plus net cash/(debt)
adjustments of EUR0.6m (GBP0.5m) less a retention amount of EUR0.5m
(GBP0.4m). The retention amount, held in place of escrow balances,
is due 18 months from the date of acquisition. There is no
contingent consideration payable.
Dancutter, located in Denmark, is a designer and manufacturer of
trenchless pipeline rehabilitation equipment. This is used to
maintain and extend the life of wastewater networks, reducing
blockages and leakage and ultimately reducing environmental
contamination. Dancutter will be managed as part of Halma's MiniCam
business and will become part of Halma's Environmental &
Analysis sector. Key members of Dancutter's leadership team will
remain with the business and it will continue to operate in its
current facility.
The excess of the fair value of the consideration paid over the
fair value of the assets acquired is represented by customer
related intangibles of GBP6.4m ; trade name of GBP0.7 m and
technology related intangibles of GBP1.7 m ; with residual goodwill
arising of GBP7.7 m .
The goodwill represents:
a) the technical expertise of the acquired workforce;
b) the opportunity to leverage this expertise across some of
Halma's businesses through future technologies; and
c) the ability to exploit the Group's existing customer
base.
Dancutter contributed GBP0.9m of revenue and GBP0.3m of profit
after tax for the six months ended 30 September 2021. If this
acquisition had been held since the start of the financial year, it
is estimated that the Group's reported revenue and profit after tax
would have been GBP1.1m higher and GBP0.2m higher respectively.
Acquisition costs totalling GBP0.3m were recorded in the
Consolidated Income Statement.
The goodwill arising on this acquisition is not expected to be
deductible for tax purposes.
c) Orca GmbH
Unaudited
30 September
2021
GBPm
------------------------------------------------------- -------------
Non-current assets
Intangible assets 2.4
Property, plant and equipment 0.1
Current assets
Inventories 1.1
Trade and other receivables 0.4
Cash and cash equivalents 1.0
------------------------------------------------------- -------------
Total assets 5.0
------------------------------------------------------- -------------
Current liabilities
Payables (0.2)
Tax (0.5)
Non-current liabilities
Deferred tax (0.9)
------------------------------------------------------- -------------
Total liabilities (1.6)
------------------------------------------------------- -------------
Net assets of business acquired 3.4
------------------------------------------------------- -------------
Initial cash consideration paid 5.4
Other adjustments 0.5
Contingent purchase consideration estimated to be paid 0.4
------------------------------------------------------- -------------
Total consideration 6.3
------------------------------------------------------- -------------
Total goodwill 2.9
------------------------------------------------------- -------------
On 3 May 2021, the Group acquired the entire share capital of
Orca GmbH ('Orca'), for EUR6.8m (GBP5.9m), which comprised the
purchase price of EUR6.2m (GBP5.4m) plus net cash/(debt)
adjustments of EUR0.6m (GBP0.5m). The maximum contingent
consideration payable is EUR2.5m (GBP2.2m) based on profit-based
targets for the years ending 31 March 2022, 31 March 2023 and 31
March 2024.
Orca is a German manufacturer of ultraviolet disinfection
systems, primarily for the food and beverage sector. Orca has
joined the Group as part of UV Group, part of the Group's
Environmental & Analysis sector.
The excess of the fair value of the consideration paid over the
fair value of the assets acquired is represented by customer
related intangibles of GBP0.7m; trade name of GBP0.1m and
technology related intangibles of GBP1.6m; with residual goodwill
arising of GBP2.9m.
The goodwill represents:
a) the technical expertise of the acquired workforce;
b) the opportunity to leverage this expertise across some of
Halma's businesses through future technologies; and
c) the ability to exploit the Group's existing customer
base.
Orca contributed GBP1.5m of revenue and GBP0.3m of profit after
tax for the six months ended 30 September 2021. If this acquisition
had been held since the start of the financial year, it is
estimated that the Group's reported revenue and profit after tax
would have been GBP0.3m and GBP0.1m higher respectively.
Acquisition costs totalling GBP0.1m were recorded in the
Consolidated Income Statement.
The goodwill arising on the Orca acquisition is not expected to
be deductible for tax purposes.
d) PeriGen, Inc.
Unaudited
30 September
2021
GBPm
---------------------------------- -------------
Non-current assets
Intangible assets 17.1
Property, plant and equipment 2.0
Deferred tax 5.2
Current assets
Inventories 0.2
Trade and other receivables 3.9
Tax 0.2
Cash and cash equivalents 6.3
Total assets 34.9
---------------------------------- -------------
Current liabilities
Payables (7.4)
Borrowings and lease liabilities (0.2)
Non-current liabilities
Borrowings and lease liabilities (1.6)
Deferred tax (4.4)
---------------------------------- -------------
Total liabilities (13.6)
---------------------------------- -------------
Net assets of businesses acquired 21.3
---------------------------------- -------------
Initial cash consideration paid 40.6
Other adjustments 5.5
Total consideration 46.1
---------------------------------- -------------
Total goodwill 24.8
---------------------------------- -------------
On 27 April 2021, the Group acquired the entire share capital of
PeriGen, Inc., ('PeriGen') for an initial cash consideration of
US$58.0m (GBP40.6m). Additional amounts paid in respect of working
capital adjustments were determined to be US$7.8m (GBP5.5m).
PeriGen, based in North Carolina, USA offers innovative
perinatal software solutions, and its advanced technology protects
mothers and their unborn babies by alerting doctors, midwives and
nurses to potential problems during childbirth. The company
continues to run under its own management team and has become part
of the Group's Medical sector.
The excess of the fair value of the consideration paid over the
fair value of the assets acquired is represented by customer
related intangibles of GBP6.6m; trade name of GBP1.9m and
technology related intangibles of GBP8.6m; with residual goodwill
arising of GBP24.8m.
The goodwill represents:
a) the technical expertise of the acquired workforce;
b) the opportunity to leverage this expertise across some of
Halma's businesses through future technologies; and
c) the ability to exploit the Group's existing customer
base.
PeriGen contributed GBP6.5m of revenue and GBP1.4m of profit
after tax for the six months ended 30 September 2021. If this
acquisition had been held since the start of the financial year, it
is estimated that the Group's reported revenue and profit after tax
would have been GBP1.0m and GBP0.2m higher respectively.
Acquisition costs totalling GBP1.3m were recorded in the
Consolidated Income Statement.
The goodwill arising on the PeriGen acquisition is not expected
to be deductible for tax purposes.
e) Ramtech Electronics Limited
Unaudited
30 September
2021
GBPm
---------------------------------- -------------
Non-current assets
Intangible assets 4.7
Property, plant and equipment 1.3
Current assets
Inventories 3.2
Trade and other receivables 1.5
Cash and cash equivalents 3.9
---------------------------------- -------------
Total assets 14.6
---------------------------------- -------------
Current liabilities
Payables (2.5)
Non-current liabilities
Deferred tax (1.5)
---------------------------------- -------------
Total liabilities (4.0)
---------------------------------- -------------
Net assets of businesses acquired 10.6
---------------------------------- -------------
Initial cash consideration paid 15.5
Other adjustments 4.1
---------------------------------- -------------
Total consideration 19.6
---------------------------------- -------------
Total goodwill 9.0
---------------------------------- -------------
On 29 July 2021, the Group acquired the Ramtech group of
companies ('Ramtech'), for an initial cash consideration of
GBP15.5m, adjustable for cash acquired. Additional amounts paid in
respect of cash acquired and other adjustments were determined to
be GBP4.1m.
Ramtech is headquartered in Nottingham, UK and supplies wireless
fire systems for temporary sites, primarily in the construction and
leisure markets. The company continues to run under its own
management team and has become part of the Group's Safety
sector.
The excess of the fair value of the consideration paid over the
fair value of the assets acquired is represented by customer
related intangibles of GBP1.4m; trade name of GBP0.8m and
technology related intangibles of GBP2.5m; with residual goodwill
arising of GBP9.0m.
The goodwill represents:
a) the technical expertise of the acquired workforce;
b) the opportunity to leverage this expertise across some of
Halma's businesses through future technologies; and
c) the ability to exploit the Group's existing customer
base.
Ramtech contributed GBP1.9m of revenue and GBP0.2m of profit
after tax for the six months ended 30 September 2021. If this
acquisition had been held since the start of the financial year, it
is estimated that the Group's reported revenue and profit after tax
would have been GBP3.7m and GBP0.3m higher respectively.
Acquisition costs totalling GBP0.4m were recorded in the
Consolidated Income Statement.
The goodwill arising on the Ramtech acquisition is not expected
to be deductible for tax purposes.
f) Sensitron S.R.L.
Unaudited
30 September
2021
GBPm
--------------------------------- -------------
Non-current assets
Intangible assets 10.1
Property, plant and equipment 0.8
Current assets
Inventories 1.4
Trade and other receivables 3.0
Tax 0.2
Cash and cash equivalents 4.2
--------------------------------- -------------
Total assets 19.7
--------------------------------- -------------
Current liabilities
Payables (3.3)
Borrowings and lease liabilities (0.1)
Non-current liabilities
Borrowings and lease liabilities (0.6)
Deferred tax (2.9)
--------------------------------- -------------
Total liabilities (6.9)
--------------------------------- -------------
Net assets of business acquired 12.8
--------------------------------- -------------
Initial cash consideration paid 21.4
Total consideration 21.4
--------------------------------- -------------
Total goodwill 8.6
--------------------------------- -------------
On 29 July 2021, the Group acquired the entire share capital of
Sensitron S.R.L. ('Sensitron') for an initial cash consideration of
EUR25.0m (GBP21.4m).
Sensitron, located in Milan, Italy, is a gas detection company
whose devices, which include detectors for hazardous locations and
for new refrigerant gases, enhance safety by detecting the release
of gases harmful to people and the environment. Sensitron will
continue to run under its own management team and will become part
of Halma's Environmental & Analysis sector.
The excess of the fair value of the consideration paid over the
fair value of the assets acquired is represented by customer
related intangibles of GBP4.8m ; trade name of GBP1.3 m and
technology related intangibles of GBP4.0 m ; with residual goodwill
arising of GBP8.6 m .
The goodwill represents:
a) the technical expertise of the acquired workforce;
b) the opportunity to leverage this expertise across some of
Halma's businesses through future technologies; and
c) the ability to exploit the Group's existing customer
base.
Sensitron contributed GBP1.3m of revenue and GBP0.2m of profit
after tax for the six months ended 30 September 2021. If this
acquisition had been held since the start of the financial year, it
is estimated that the Group's reported revenue and profit after tax
would have been GBP3.6m and GBP0.6m higher respectively.
Acquisition costs totalling GBP0.2m were recorded in the
Consolidated Income Statement.
The goodwill arising on this acquisition is not expected to be
deductible for tax purposes.
g) Other acquisitions
Unaudited
30 September
2021
GBPm
-------------------------------------------------------------- -------------
Non-current assets
Intangible assets 4.0
Property, plant and equipment 1.6
Current assets
Inventories 1.9
Trade and other receivables 1.1
Cash and cash equivalents 1.9
-------------------------------------------------------------- -------------
Total assets 10.5
-------------------------------------------------------------- -------------
Current liabilities
Payables (0.8)
Borrowings and lease liabilities (0.1)
Provisions (0.1)
Tax (0.1)
Non-current liabilities
Deferred tax (1.0)
-------------------------------------------------------------- -------------
Total liabilities (2.1)
-------------------------------------------------------------- -------------
Net assets of businesses acquired 8.4
-------------------------------------------------------------- -------------
Initial cash consideration paid 8.6
Additional amounts paid in respect of cash acquired and other
adjustments 1.3
Retention and other amounts to be paid 0.9
Contingent purchase consideration estimated to be paid 0.1
-------------------------------------------------------------- -------------
Total consideration 10.9
-------------------------------------------------------------- -------------
Total goodwill 2.5
-------------------------------------------------------------- -------------
On 1 April 2021, Fortress Interlocks Pty Limited, an industrial
access control company in the Group's Safety sector, bought the
assets and IP associated with monitored safety valves from
FluidSentry Pty in Australia for consideration of A$0.6m
(GBP0.3m).
On 26 April 2021, Argus Security S.R.L., a fire safety company
in the Group's Safety sector, purchased the trade and assets of its
Italian distributor, IBIT, for total consideration of EUR0.6m
(GBP0.5m); this includes an amount of GBP0.4m payable six months
from the date of acquisition.
On 30 April 2021, the Group acquired Anton Industrial Services
Limited (Anton), the UK flue gas analyser distribution partner of
Crowcon Detection Instruments Limited, a company in the Group's
Environmental & Analysis sector, for consideration of GBP1.9m,
adjustable for cash acquired. Additional amounts paid in respect of
cash acquired and other adjustments was determined to be GBP1.3m.
The consideration includes a retention amount of GBP0.2m held in
place of escrow balances and is due 18 months from the date of
acquisition.
On 7 May 2021, Rudolf Riester GmbH, a company in the Group's
Medical sector acquired the trade and assets of RNK, a US-based
digital stethoscope company, for an initial consideration of
US$3.0m (GBP2.3m).
On 1 September 2021, the Group acquired Meditech Kft, a
Hungarian manufacturer of ambulatory blood pressure monitors and
ECG devices, for total consideration of EUR5.4m (GBP4.6m); this
includes an amount payable of EUR0.4m (GBP0.3m). The maximum
contingent consideration payable is EUR1.0m (GBP0.9m) based on
profit-based targets for one year post acquisition. The company has
become part of the Group's Medical sector.
In respect of these acquisitions, the excess of the fair value
of the consideration paid over the fair value of the assets
acquired is represented by customer related intangibles of GBP2.8m;
trade name of GBP0.1m and technology related intangibles of
GBP1.1m; with residual goodwill arising of GBP2.5m.
These acquisitions contributed GBP2.2m of revenue and GBP0.3m of
profit after tax cumulatively for the six months ended 30 September
2021. If these acquisitions had been held since the start of the
financial year, it is estimated that the Group's reported revenue
and profit after tax would have been GBP1.3m and GBP0.2m higher
respectively.
Acquisition costs totalling GBP0.4m were recorded in the
Consolidated Income Statement.
The goodwill arising on these acquisitions is not expected to be
deductible for tax purposes.
11 Disposal of operations
During the current year the Group recognised a profit on
disposal of operations of GBP34.0m (Six months to 30 September
2020: GBPnil; year to March 2021: GBP22.1m).
On 10 August 2021, the Group disposed of its entire interest in
Texecom Limited to a third party for proceeds of GBP64.8m. This
transaction resulted in the recognition of a gain in the
Consolidated Income Statement as follows:
Unaudited
GBPm
-------------------------------------- ---------
Proceeds of disposal 64.8
Less: net assets on disposal (19.0)
Less: allocation of goodwill disposed (9.0)
Less: costs of disposal (2.8)
Profit on disposal 34.0
-------------------------------------- ---------
Cash received on disposal of operations in the year of GBP57.5m
comprised proceeds from the sale of Texecom Limited of GBP64.8m,
less GBP4.5m of cash disposed and GBP2.8m of disposal costs.
In the prior year, in December 2020, the Group disposed of its
entire interest in Fiberguide Industries, Inc. to a third party for
sale proceeds of GBP27.6m less disposal costs of GBP1.1m. Disposal
costs of GBP0.4m relating to the spin-out and partial disposal of
OneThird B.V. were also paid.
12 Fair values of financial assets and liabilities
As at 30 September 2021, with the exception of the Group's fixed
rate loan notes, there were no significant differences between the
book value and fair value (as determined by market value) of the
Group's financial assets and liabilities.
The fair value of floating rate borrowings approximates to the
carrying value because interest rates are reset to market rates at
intervals of less than one year.
The fair value of the Group's fixed rate loan notes arising from
the United States Private Placement completed in January 2016 is
estimated to be GBP107.7m, against a carrying value of
GBP106.0m.
The fair value of financial instruments is estimated by
discounting the future contracted cash flow using readily available
market data and represents a level 2 measurement in the fair value
hierarchy under IFRS 7.
As at 30 September 2021, the total forward foreign currency
contracts outstanding were GBP52.2m. The contracts mostly mature
within one year and therefore the cash flows and resulting effect
on profit and loss are expected to occur within the next 12
months.
The fair values of the forward contracts are disclosed as a
GBP0.6m (30 September 2020: GBP0.4m; 31 March 2021: GBP1.7m) asset
and GBP0.2m (30 September 2020: GBP0.9m; 31 March 2021: GBP0.7m)
liability in the Consolidated Balance Sheet.
Any movements in the fair values of the forward contracts are
recognised in equity until the hedge transaction occurs, when
gains/losses are recycled to finance income or finance expense.
13 Retirement benefits
At 30 September 2021, the Group has IAS 19 Retirement benefit
net obligations totalling GBP5.3m (30 September 2020: net
obligation of GBP45.0m, 31 March 2021: net obligation of GBP22.5m).
The net obligation has decreased from 31 March 2021 primarily due
to returns on plan assets (excluding interest income) of GBP15.8m
and additional employer contributions made to the UK defined
benefit plans of GBP7.1m partially offset by changes in the
financial assumptions, with the largest impacts being the decrease
in discount rate and the increase in inflation rate in the UK
defined benefit plans from 1.95% and 3.20% at 31 March 2021 to
1.90% and 3.35% at 30 September 2021 respectively.
14 Contingent liability
Group financing exemptions applicable to UK controlled foreign
companies
On 24 November 2017, the European Commission ('EC') published an
opening decision that the United Kingdom controlled foreign company
('CFC') group financing partial exemption ('FCPE') constitutes
State Aid. On 2 April 2019, the EC's final decision concluded that
the FCPE rules, as they applied up to 31 December 2018, constitute
State Aid. As previously reported, the Group has benefited from the
FCPE with the total benefit for the periods from 1 April 2013 to 31
December 2018 being approximately GBP15.4m in respect of tax.
Appeals have been made by the UK government, the Group, and
other UK-based groups to annul the EC decision. Notwithstanding
these appeals, under EU law, the UK government is required to
commence collection proceedings. In January 2021, the Group
received a Charging Notice from HM Revenue & Customs ('HMRC')
for GBP13.9m assessed for the period from 1 April 2016 to 31
December 2018. The Group has appealed against the notice but as
there is no right of postponement the amount charged was paid in
full in February 2021. In February 2021, the Group received
confirmation from HMRC that it was not a beneficiary of State Aid
for the period from 1 April 2013 to 31 March 2016.
In April 2021, a Charging Notice for GBP0.8m was received. The
GBP0.8m comprised interest on the GBP13.9m assessment noted above
and the interest was paid in May 2021.
The final impact on the Group remains uncertain. However, based
on its current assessment, the Group considers that the appeal will
be successful and therefore GBP14.7m is included within non-current
assets on the Consolidated Balance Sheet to reflect the Group's
view that the amount paid will ultimately be recovered.
The Group's maximum potential exposure at 30 September 2021 in
respect of recoverability of non-current assets is GBP14.7m (30
September 2020: GBPNil, 31 March 2021: GBP13.9m).
The EU General Court hearing was held on Monday 18 October 2021
in Luxembourg. No indication of timing was given during the hearing
on when the Court would give its decision. However, we currently
expect this to be delivered some time in 2022.
Other contingent liabilities
The Group has widespread global operations and is consequently a
defendant in many legal, tax and customs proceedings incidental to
those operations. In addition, there are contingent liabilities
arising in the normal course of business in respect of indemnities,
warranties and guarantees. These contingent liabilities are not
considered to be unusual in the context of the normal operating
activities of the Group. Provisions have been recognised in
accordance with the Group accounting policies where required. None
of these claims are expected to result in a material gain or loss
to the Group.
15 Events subsequent to the end of the reporting period
On 26 October 2021, Perma Pure, a company in the Group's Medical
sector acquired certain trade and assets of Clayborn Lab, a
US-based provider of custom heat tape solutions, for an initial
consideration of US$4.5m (GBP3.3m). The maximum contingent
consideration payable is US$1.5m (GBP1.1m) determined by
revenue-based targets for the years ending 30 September 2022 and 30
September 2023. A detailed purchase price allocation exercise is
currently being performed to calculate the goodwill arising on
acquisition.
There were no other known material non-adjusting events which
occurred between the end of the reporting period and prior to the
authorisation of these financial statements on 18 November
2021.
16 Other matters
Seasonality
The Group's financial results have not historically been subject
to significant seasonal trends.
Equity and borrowings
Issues and repurchases of Halma plc's ordinary shares and
drawdowns and repayments of borrowings are shown in the
Consolidated Cash Flow Statement.
Related party transactions
There were no significant changes in the nature and size of
related party transactions for the period to those reported in the
Annual Report and Accounts 2021.
17 Principal risks and uncertainties
A number of potential risks and uncertainties exist that could
have a material impact on the Group's performance over the second
half of the financial year and could cause actual results to differ
materially from expected and historical results.
The Group has in place processes for identifying, evaluating and
managing key risks. These risks, together with a description of the
approach to mitigating them, are set out on pages 78 to 83 in the
Annual Report and Accounts 2021, which is available on the Group's
website at www.halma.com. The Directors do not consider that the
principal risks and uncertainties have changed since the
publication of the Annual Report and Accounts.
The principal risks and uncertainties relate to:
- Cyber
- Organic growth
- Acquisitions and investments
- Talent and diversity
- Innovation
- Economic and geopolitical uncertainty
- Climate change and natural hazards
- Business model and its communications
- Non-compliance with laws and regulations
- Financial controls
- Liquidity
- Product failure
18 Responsibility statement
The Directors confirm that these condensed interim financial
statements have been prepared in accordance with UK adopted
International Accounting Standard 34, 'Interim Financial Reporting'
and the Disclosure Guidance and Transparency Rules sourcebook of
the United Kingdom's Financial Conduct Authority and that the
interim management report includes a fair review of the information
required by DTR 4.2.7 and DTR 4.2.8, namely:
- an indication of important events that have occurred during
the first six months and their impact on the condensed set of
financial statements, and a description of the principal risks and
uncertainties for the remaining six months of the financial year;
and
- material related-party transactions in the first six months
and any material changes in the related-party transactions
described in the last annual report.
By order of the Board
Andrew Williams Marc Ronchetti
Group Chief Executive Chief Financial Officer
18 November 2021
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END
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