Summary of Halma p.l.c. Annual report and accounts 2007
Accounting Policies and Notes
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A summary of our progress and performance for all areas of corporate responsibility follows. Halma is developing meaningful key performance indicators (KPIs) that reflect the importance the Group places on corporate responsibility and will enable the Board to monitor the Group’s progress in meeting its objectives and responsibilities in these areas. Halma will report against these KPIs next year.
The biggest area of emphasis over the past year has been the transformation of the Group’s environmental policy into a Carbon Policy stating actual targeted reductions for the Group to achieve over a set timescale. Halma has an excellent health and safety record and a culture of safety is deeply embedded within the Group. We want to recognise the effort behind this exemplary record and will promote our safety culture more visibly over the coming year. Finally, the increased investment in management training continues to be valuable and we are exploring a number of key metrics to better communicate this to stakeholders.
Investing in Halma shares meets the criteria of many professional and private investors who base their decisions on environmental, ethical and social considerations. The Group is a world leader in several key environmental technologies and has a reputation for honesty and integrity in its relationships with employees, customers, business partners and shareholders.
Social conditions can be improved for all through the creation of wealth. Halma creates wealth responsibly allowing our employees, customers, business partners and shareholders to determine where this wealth is best distributed.
Halma’s policies reflect the core requirements of the Universal Declaration of Human Rights and the ILO Declaration on Fundamental Principles and Rights at Work. We do not tolerate practices which contravene these international standards.
Regulatory demands upon us vary considerably around the world, so in each of the following areas Halma establishes the core structure to ensure that Group companies fully comply with regulatory requirements while permitting them to tailor the solutions to their particular needs.
Within Halma, we have an excellent long-term record and a clear strategy for addressing environmental issues that affect our businesses and for developing products that protect the environment and improve safety at work and in public places.
Many of our innovative products play a very positive role in monitoring and improving the environment. Halma brands lead the world in a number of technologies which help to minimise environmental damage.
Our principal environmental technologies are water leakage detection, gas emissions monitoring, water and effluent analysis, UV water treatment and optical sensing. We tirelessly promote the use of UV water sterilisation which eliminates the need to use dangerous chemicals, as well as products that minimise the waste of clean water.
Our commitment to the development of equipment for measuring environmental changes and controlling the damaging impact of industrial activities is long term.
We make safety equipment for use at work, in public places and in transportation systems that contribute to increased personal safety by ensuring safe practice at work, protecting people from fire and making elevators and automatic doors safe and effective. We are the major world supplier in several of these areas.
The Group’s policy on carbon is published on our website and has been distributed and explained to all Halma business units.
A senior executive in each of our higher-impact business units is responsible for implementing the carbon policy at local level. The Group Finance Director, Kevin Thompson, has principal responsibility for coordinating and monitoring the policy.
We are committed to developing and implementing an environmental management system (EMS) throughout the Group to measure, control and, where practical, reduce our environmental impacts. We are developing performance indicators that will assist local management in implementing the policy and developing an EMS. The requirement for an EMS and the related reporting has been rolled out to all UK business units, which represent over 50% of Group production facilities in terms of external turnover. All Group companies are encouraged to undertake ISO 14001, the international environmental standard, accreditation where warranted, and during the year, Radcom (Technologies) Limited and Palmer Environmental Limited both obtained ISO 14001 approval. The requirement to implement an EMS will be extended to the rest of the Group in the medium term.
We support the concept of sustainability and recognise that, in common with all businesses, our activities have an environmental impact. Our strategy is not to have capital-intensive manufacturing processes, so the environmental effect of our operations is relatively low compared to manufacturers in other sectors. FTSE4Good has assessed Halma as having a low impact on the environment.
Nevertheless, Group companies are encouraged to improve energy efficiency, reduce waste and emissions and reduce the use of materials in order to reduce their environmental impact. The Group established baseline data in 2004/05 on emissions to air and water, water and energy consumption, and waste production, the results of which are updated on the website each year. The data collected for the past three years has enabled the Group to set comprehensive and quantifiable objectives for reducing its environmental impacts in those areas and to set targets for reduction in key areas.
The collected data confirms that the main areas of impact on the environment are energy consumption and solid waste disposal. The Group does not operate a fleet of distribution vehicles although we do own a number of company cars. From May 2007, we are implementing a cap on permissible CO2 emissions of all UK company vehicles and will extend this requirement to the rest of the world in the short term. This limit will be reduced annually so as to consistently reduce our vehicles’ environmental impact.
Having identified the main areas of impact, we are now committed to their reduction and minimisation. Using the baseline data the total Group carbon emissions for 2006/07 was calculated as being approximately 15,000 tonnes, an average of less than 50 tonnes per £million of revenues. We plan to reduce the Group’s total carbon emissions relative to revenues by 10% by 2010.
We are working with AEA, an international environment and energy consultancy, to facilitate this reduction by providing each subsidiary with the means to identify tailored initiatives for energy efficiency. This will be complemented by internal programmes, including the use of our own wireless communications technology to monitor energy usage and use of the Group intranet to allow for inter-company communication, reporting of data and feedback. We expect that this initiative will lead to cost savings for the Group as well as preparing us for compliance with anticipated climate change legislation.
The new Carbon Policy can be found on the Halma website. The Group’s environmental performance will continue to be reported in both the Annual report and on our website.
The Group is committed to examining the establishment of "green" procurement policies and increasing our use of recycled materials.
Halma operates an employment policy with the objective of ensuring equal opportunities and preventing harassment in the workplace. This gives us access to the widest labour market and enables us to secure the best employees for our needs.
Halma demonstrated that it is one of the UK’s most admired businesses again this year by another high ranking in Management Today magazine’s annual survey of corporate reputation. The awards are a peer review, distilling the opinions of directors who run many of the UK’s largest companies. This is a revealing survey based on the key elements that make companies succeed. Companies are, in effect, judged by their competitors, and the survey is unique in the UK.
Halma was ranked the 55th most admired company out of a list of 239 businesses. The awards are based on a survey by Nottingham Business School of the ten largest UK-based companies in each of 24 different sectors. Respondents rate companies in categories such as quality of management, financial soundness, quality of products, ability to attract, develop and retain talented managers, value as a long-term investment and capacity to innovate.
2006/07 was another successful year for the Halma Executive Development Programme (HEDP) which is based on our recognition of the fundamental part our people play in the success of the Group. HEDP is an integrated development plan for our senior people - including the next generation of Managing Directors and Divisional Chief Executives. Our objective is to provide these individuals with the tools and training to achieve more in their existing role and potentially to advance through the organisation if their achievements merit it.
HEDP is aimed squarely at employees already serving on subsidiary boards but we also encourage applications from senior managers who can demonstrate they already have equivalent responsibilities and will benefit from the programme.
The programme has been developed from a proven course structure and is specifically and continuously tailored to suit Halma’s needs, aligning the content to the Group’s four core values of Innovation, Achievement, Empowerment and Customer Satisfaction. It focuses strongly on strategic and leadership capabilities and developing personal attributes - commitment, determination and resilience. There is an emphasis on performance management and team development. It includes skill-based elements such as sales and marketing, management, project leadership, corporate governance, finance and innovation, but all are presented in a strategic context.
The first four programmes have now been completed and the success of the programme can be measured by the enthusiasm of the participants upon their return to their businesses, the achievements and promotion of a number of participants and their eagerness to coordinate further sessions to explore topics of particular interest to their programme group. The final week of the programme immerses the participants in an environment related to an emerging market or a market of significant opportunity. Participants have been to China, India, Argentina and Japan and had access to many local businesses and officials as well as local community programmes aimed at improving the quality of life of local children and young adults.
The Group recognises the necessity of safeguarding the health and safety of our own employees whilst at work and operates so as to provide a safe and comfortable working environment for employees, visitors and the public. The Group’s health and safety policy, which is set out on our website, is to manage our activities to avoid causing any unnecessary or unacceptable risks to health and safety. The policy is understood by all Group companies, and given the autonomous structure of the Group, operational responsibility for compliance with relevant local health and safety regulations is delegated to the board of directors of each Group company. We believe health and safety training is important and it is carried out within companies as appropriate. Adequate internal reporting exists in order that the Group Finance Director may monitor each company’s compliance with this policy.
The Group has collected details of its worldwide reported health and safety incidents which are available on our website at www.halma.com. We are pleased to report that there were no fatalities during 2006/07 or 2005/06, and we achieved a considerable decrease in both serious and minor injuries in comparison with low levels in 2005/06.
The Group culture is one of openness, integrity and accountability. Halma encourages its employees to act fairly in their dealings with fellow employees, customers, suppliers and business partners. We aim to have suppliers of high quality and operate to acceptable international standards. Halma operates a confidential "whistleblowing" policy, which enables all Group employees to raise any concerns they may have.
Halma has a zero-tolerance policy on bribery and corruption which extends to all business dealings and transactions in which we are directly involved. This includes a prohibition on making political donations, offering or receiving inappropriate gifts or making undue payments to influence the outcome of business dealings.
Innovation is a critical ingredient for Halma’s growth. Continually refreshing our intellectual property leads to new products and processes and helps us to maintain the strong market positions held by many of our companies. Innovation is not just the responsibility of the R&D department but is integral to all commercial activities within the business. Innovative ideas can range from a novel way to enter a new or remote market to administration process improvements speeding the delivery of products to customers. All employees within the Group have the opportunity to deliver innovative ideas to help their company and the Group achieve the growth objectives.
The Group continued the successful Halma Annual Innovation Awards, launched in 2004/05, which recognise the major product and process innovations during the past year. The 2006/07 Gold Award of £20,000 was presented at the annual CEO Conference by Geoff Unwin to Brian Back and Inder Panesar of Radio-Tech for their Rail Temperature Monitor system, a radio telemetry system that enables rail temperatures to be monitored constantly, anywhere on the network, providing early warning of the risk of track buckling. The Silver Award of £10,000 was awarded to Jim Lane, Phil Buchsbaum, Cliff Batchelder, Greg Williamson and Steve Mattessich of Ocean Optics Thin Films Division for the SeaChanger xG Color Engine, a revolutionary colour filter system for spotlights. It can be used to produce dramatic lighting effects in theatres and large venues such as museums and churches. The Bronze Award of £5,000 was awarded to Emmanuel Eubelen, Thierry Jongen, Marc Meyers and Jean-Michel Bechet of BEA for the 4Safe, a new type of safety sensor, specifically designed to prevent anyone from being trapped or injured in automatic revolving or swing doors.
Dr Srilakshmi Sharma from Bristol Eye Hospital is this year's winner of the highly prestigious Keeler Scholarship for research into ocular inflammatory disease. Worth £20,000, the scholarship is funded by Keeler, Halma’s world leader in high precision optical instruments. It allows the winner to spend up to two years undertaking research into ophthalmology.
"I'm very pleased to have won this Scholarship," she said. "It will be a fantastic experience which will allow me to conduct research at an internationally acclaimed medical ophthalmology clinic."
The Keeler Scholarship is awarded every two years and is designed to advance the science and practice of ophthalmology by enabling the winner to study, research or acquire special skills, knowledge or experience for a minimum period of six months. The award is administered through the Royal College of Ophthalmologists.
The development of new UV technologies is a perfect example of an industry investing to meet market demand for an effective, low cost, and environmentally friendly way to disinfect wastewater for reuse.
Potential applications for wastewater reuse are extremely wide-ranging and include any instance where water is needed for non-potable use. The most popular and widespread use is for agricultural irrigation, with California and Florida leading the way in the US and a number of Australian states also making significant progress. Other irrigation uses include landscape and recreational applications such as golf courses, parks, and lawns.
Founded less than ten years ago Anthem, a town just north of Phoenix, Arizona, now has a population of over 40,000. As part of its rapid expansion the town recently installed three closed chamber medium pressure UV systems from Berson UV-techniek to disinfect its wastewater. This allows the town to not only meet increased demands in its water and wastewater treatment capacity, but also to exceed the output quality standards.
Fortress Interlocks has won the prestigious "Green" Innovation Award at this year's innovation & Design Excellence Awards (iDEA) against strong competition. The award was for Fortress' eGard, a unique new product which combines both machine safety and control modules in one flexible unit.
The iDEAs, organised by Eureka, New Electronics and Cranfield School of Management, recognised that the innovation behind eGard opens up a new, large market sector for Fortress. The award also recognised that Fortress designed and manufactured eGard along environmental principles taking into account the whole life-cycle of the product.
Fortress decided to make the housing from polymer using the same material throughout to make recycling more efficient. Other parts are made of stainless steel. In addition, the housing has no fixings or adhesive; parts are clipped together or ultrasonically welded. This reduces component count and also makes recycling much easier.
In April 2007, Halma held a prize draw for its monthly innovation award, Eureka! The lucky winner, Steve Jansen of Texecom was randomly picked from over 150 names who had submitted innovation ideas during the year and won a car to the value of £9,000. Steve is Procurement Manager and entered two innovation ideas over the year that he has put into practice at the company, one for a small circuit board which reduced assembly times of the company's bell boxes by around 50% and another for the company’s packaging which has also significantly increased the production rate. Eureka! is simply looking for the actual birth of the idea, the creative spark that heralds the start of an original thought process which will bring new benefit to a Group business. A prize is also awarded for the most creative innovation idea submitted during any one month.
In April 2007, following the year end, Fortress Interlocks, one of our UK-based Industrial Safety businesses was awarded a prestigious Queen’s Award for Enterprise: Innovation in recognition of their mGard safety interlock product. This is the 10th Queen’s Award received by one of our companies since the inception of the Queen's Award scheme.
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