Summary of Halma p.l.c. Annual report and accounts 2007
Accounting Policies and Notes
This is a PDF - 0.15MB
To view the PDF you need either Adobe Acrobat software or the free Adobe Reader - Get Adobe Reader
To download the PDF, right click on the link, select 'Save Target As...', and then choose a folder to save the file in.
Record revenues and profits once again demonstrating our ability to deliver organic growth.
We have achieved record revenues and profits once again, demonstrating our ability to deliver organic growth which is the primary measure of our success. For continuing operations, total revenues increased by 14%, including 8% organic growth*, with total profits before amortisation of acquired intangibles also increasing by 14%, including 8% organic*.Impressively, these significant increases were achieved despite a 2% to 3% adverse currency impact during the year.
Return on sales* (2007: 18.6%; 2006: 18.7%), Return on capital employed* (2007: 60.1%; 2006: 56.9%) and Return on total invested capital* (2007: 14.0%; 2006: 12.8%) all remained strong or increased in accordance with our objective of generating growth without diluting the quality of our returns.
Cashflow was good and we ended the year with £7.7 million net debt having funded five acquisitions, significant organic growth and a further dividend increase of 5%.
The Group completed five acquisitions during the year. Two of these acquisitions, Mikropack (April 2006) and Baldwin Environmental (September 2006) added new products to two of our leading Health and Analysis businesses and were merged with these existing businesses immediately on completion. Of greater significance were Tritech/System Technologies (November 2006) and Labsphere (February 2007) who are world leaders in subsea asset monitoring (Industrial Safety) and light measurement (Health and Analysis) respectively. All five businesses have performed well since joining the Group. We have allocated more resources to our acquisition search activity as acquisitions continue to be an important element of our long-term growth plans.
Each of Halma's three business sectors achieved record revenues and profits.
Geographically, revenues and profits increased in each major territory. The UK and mainland Europe proved to be particularly strong and our Industrial Safety businesses benefited from continuing high investment in the oil, gas and petrochemical industries - especially in the Middle East.
Many of our products are used to protect or improve the environment which offers us exciting opportunities for growth. In addition, we recognise that we can do more to minimise the impact that our business activities have on the environment and believe we can do this by increasing efficiencies thereby creating further value for shareholders.
Revenues to Asia Pacific and Australasia grew by 7% and continue to represent around 10% of Group sales. Over the medium term, this region offers growth rates in excess of the Group average and, as announced previously, we created Halma "hubs" in Shanghai and Beijing in August 2006 to accelerate business development by our subsidiaries in the region.
This is a good example of how the Group can help our businesses to develop more quickly without compromising their autonomy and freedom. We regularly review the opportunities for similar Group initiatives in other regions, markets or functional areas.
We maintained a healthy level of investment in Research & Development (R&D) (4.3% of revenues) and capital expenditure. These investments are critical factors in our ability to sustain growth through increasing innovation in products and processes. Over 70 new products were launched by Halma companies during the year, providing encouragement for our future growth prospects. Some of these products resulted from collaboration amongst Group companies.
Developing and growing businesses already performing at a high level is a challenging task and I would like to thank each employee in every Halma company for their contribution to another successful year for the Group.
We have worked hard in recent years to change our culture from being too inwardly focussed on managing returns. This has included major people changes with over 65% of our subsidiary managers having joined the Group in the past four years.
Increased investment in training and development, including the flagship Halma Executive Development Programme (HEDP) launched 18 months ago, is translating into improved financial performance and greater strategic clarity throughout the Group. By the end of 2007, over 80 of our senior managers will have benefited from the HEDP.
This commitment to improving our people resources means that internal promotions are now a more realistic and frequent option. Accordingly, it was pleasing for me to promote Mark Lavelle to the Executive Board in April 2007 following five successful years as Managing Director of Keeler, one of our Health and Analysis businesses. This coincided with a change of divisional responsibilities in the Executive Board to ensure we continue to provide fresh insights and new approaches for our businesses.
Since 1970, Halma has increased revenue every year bar two. Today we have very modest net debt of £7.7 million having self-funded organic growth, acquisitions and paid dividends to shareholders over the years totalling £235 million, excluding the final dividend proposed for this year.
So what has changed over the past two years to give us a new confidence that we can attain even higher levels of success? Simply that our proven ability to choose sustainable growth markets is being boosted with greater ambition, customer focus, more innovation, new technologies and stronger management resources all driven with a clear strategy for each part of our business. These results demonstrate that we are making good progress and we remain positive about our prospects for the year and the longer term.
Andrew Williams Chief Executive
Back to Annual Reports