Last checked at 18 Nov 2014 07:00
HALMA plc
HalF YEAR RESULTS 2014/15
Record first half results and continued dividend growth
Halma, the leading safety, health and environmental technology group, today announces its half year results for the 26 weeks to 27 September 2014. |
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Financial Highlights | |
Change |
2014 |
2013 | |
Continuing Operations | |||
Revenue | + 2% | £340.9m | £333.1m |
Adjusted Profit before Taxation1 | + 6% | £69.0m | £65.1m |
Statutory Profit before Taxation | + 9% | £61.2m | £55.9m |
Adjusted Earnings per Share2 | + 8% | 14.05p | 12.99p |
Statutory Earnings per Share | + 11% | 12.57p | 11.28p |
Interim Dividend per Share3 | + 7% | 4.65p | 4.35p |
Return on Sales4 | 20.2% | 19.5% | |
Return on Total Invested Capital5 | 15.3% | 15.6% | |
Return on Capital Employed5 | 69.5% | 71.3% | |
Net Debt | £136.3m | £109.8m |
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Organic growth5 at constant currency: profit up 7%, revenue up 4%. |
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Growth with higher returns: adjusted1 pre-tax profit up 6%, revenue up 2%, with adverse currency translation impact of 5% on revenue and profit. Return on Sales4 increased to 20.2%. |
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Organic constant currency revenue growth in all regions. Good performance in the USA; steady progress in the UK, Asia Pacific and Europe. |
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Strong profit growth maintained in Process Safety, Infrastructure Safety and Medical. Lower profit in Environmental & Analysis with improvement expected in the second half of the year. |
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£87m net cash spend on three acquisitions. Acquisition pipeline remains healthy. One disposal completed at a small gain. |
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Strong cash flow and significant financial capacity for investment in organic growth and value-adding acquisitions. Net debt of £136m (March 2014: £74m). |
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Interim dividend up 7% to 4.65p. |
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New Executive Board structure operating well, with an initial focus on sector growth strategies and development of management talent. |
Andrew Williams, Chief Executive of Halma, commented:
"Halma has made strong progress in the first half, achieving record revenue and profit despite the varied market conditions and adverse currency translation impact. We are particularly pleased to report organic constant currency revenue growth across each of our regions. Order intake since the period end has continued to be ahead of revenue and order intake last year. Halma remains on track to make further progress in the second half of the year in line with our expectations."
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Notes:
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1 | Adjusted to remove the amortisation of acquired intangible assets, acquisition items, the effects of closure to future benefit accrual of the Defined Benefit pension plans net of associated costs, and profit or loss on disposal of operations of £7.8m charge (2013/14: £9.1m charge). See note 2 to the Condensed Financial Statements for details.
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2 | Adjusted to remove the amortisation of acquired intangible assets, acquisition items, the effects of closure to future benefit accrual of the Defined Benefit pension plans net of associated costs, profit or loss on disposal of operations, and the associated taxation thereon. See note 6 to the Condensed Financial Statements for details.
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3 | Interim dividend declared per share.
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4 | Return on Sales is defined as adjusted1 profit before taxation from continuing operations expressed as a percentage of revenue from continuing operations.
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5 | Organic growth rates, Return on Total Invested Capital and Return on Capital Employed are non-GAAP performance measures used by management in measuring the returns achieved from the Group's asset base. See note 9 to the Condensed Financial Statements for details. |
For further information, please contact: |
Halma plcAndrew Williams, Chief ExecutiveKevin Thompson, Finance Director
| +44 (0)1494 721 111 |
MHP CommunicationsRachel Hirst/Andrew Jaques | +44 (0)20 3128 8100 |
A copy of this announcement, together with other information about Halma, may be viewed on its website: www.halma.com.
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NOTE TO EDITORS |
1. | Halma develops and markets products used worldwide to protect life and improve the quality of life. The Group comprises four business sectors:
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· Process Safety | Products which protect assets and people at work.
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· Infrastructure Safety | Products which detect hazards to protect assets and people in public spaces and commercial buildings.
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· Medical | Products used to improve personal and public health.
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· Environmental & Analysis | Products and technologies for analysis in safety, life sciences and environmental markets. | |
The key characteristics of Halma's businesses are that they are based on specialist technology and application knowledge, offering strong growth potential. Many Group businesses are market leaders in their specialist field.
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2. | High resolution photos of Halma senior management, including Chief Executive Andrew Williams, and images illustrating Halma business activities can be downloaded from its website: www.halma.com. Click on the 'News' link, then 'Image Library'. Photo queries: David Waller +44 (0)1494 721111, e-mail: dwaller@halmapr.com.
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3. | 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.
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4. | 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.
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Review of Operations
Record half year results
Revenue for the half year increased by 2% to £341m (2013/14: £333m) after an adverse currency translation impact of 5%. Acquisition and disposal activity contributed 3% to revenue and therefore organic revenue growth at constant currency was 4%.
Adjusted1 profit before taxation increased by 6% to a record level of £69.0m (2013/14: £65.1m) also after an adverse currency translation impact of 5%. Organic constant currency profit growth was 7%.
Profitability increased with Return on Sales1 growing to 20.2% (2013/14: 19.5%), well within our 18% to 22% target range. Gross margin (revenue less direct material and direct labour) remained strong across the Group.
These results once again demonstrate Halma's ability to sustain growth and high returns with demand for our products underpinned by the long-term market growth drivers of increasing safety regulation, increasing demand for healthcare and increasing demand for life-critical resources such as energy and water.
7% dividend increase
The Board declares an increase of 7% in the interim dividend to 4.65p per share (2013/14: 4.35p per share). The interim dividend will be paid on 4 February 2015 to shareholders on the register on 30 December 2014. For the past 35 years we have increased our full year dividend by 5% or more each year.
Organic constant currency revenue growth in all regions
The table below shows the pattern of revenue growth in each region including the underlying rates of organic growth at constant currency which are calculated by excluding the effect of currency, acquisitions and disposals. Despite varied market conditions we achieved underlying revenue growth in all regions. The USA performed strongly and increased by 7% with Mainland Europe, the UK and Asia Pacific all showing steady progress.
Revenue from outside our traditional home markets in the USA, Mainland Europe and the UK increased to 26.5% of total revenue (2013/14: 25.2%) boosted by recent acquisitions, representing another step toward our target of 30% by 2015.
External revenue by destination | |||||||
Half year 2014/15 | Half year 2013/14 | ||||||
£m | % of total | £m | % of total | Change £m | %growth | % organic growth at constant currency | |
United States of America | 104.1 | 31% | 107.6 | 32% | (3.5) | (3%) | 7% |
Mainland Europe | 79.2 | 23% | 79.3 | 24% | (0.1) | - | 1% |
United Kingdom | 67.2 | 20% | 62.2 | 19% | 5.0 | 8% | 2% |
Asia Pacific | 56.3 | 16% | 56.0 | 17% | 0.3 | 1% | 2% |
Other countries | 34.1 | 10% | 28.0 | 8% | 6.1 | 22% | 9% |
340.9 | 100% | 333.1 | 100% | 7.8 | 2% | 4% | |
Sector performancesOur Process Safety, Infrastructure Safety and Medical sectors all achieved organic revenue growth at constant currency during the period with the Environmental & Analysis sector seeing a small decline. At the headline revenue level, the two Safety sectors benefited from M&A during the period, with the other two sectors being hardest hit by currency impacts due to the largest element of their operations being US-based.
External revenue by sector | |||||
Half year 2014/15 | Half year 2013/14 | ||||
£m | £m | Change £m | %growth | % organic growth at constant currency | |
Process Safety | 73.6 | 62.2 | 11.4 | 18% | 8% |
Infrastructure Safety | 112.7 | 107.3 | 5.4 | 5% | 6% |
Medical | 78.4 | 81.1 | (2.7) | (3%) | 4% |
Environmental & Analysis | 76.2 | 82.5 | (6.3) | (8%) | (2%) |
Total Group | 340.9 | 333.1 | 7.8 | 2% | 4% |
Process Safety revenue increased by 18% to £74m (2013/14: £62m) including 8% organic growth at constant currency. Profit2 improved by an impressive 27% to £20.4m (2013/14: £16.1m) including 17% organic growth at constant currency. Return on Sales improved to 27.8% (2013/14: 26.0%). The acquisition of Rohrback Cosasco Systems Inc. (RCS) in May 2014 further boosted a strong underlying performance, particularly in the USA where the oil and gas market continues to provide good opportunities. Excellent progress was also made in South America following the establishment of a commercial hub office for this sector in Brazil last year.
Infrastructure Safety revenue was up by 5% to £113m (2013/14: £107m) with organic constant currency growth of 6%. Profit2 growth was even healthier, increasing by 11% on last year to £22.8m (2013/14: £20.6m). Despite an adverse currency translation impact of 4%, strong organic constant currency profit growth of 12% and the acquisition of Advanced Electronics Limited in May 2014 ensured a very positive first half performance. Return on Sales improved to 20.3% (2013/14: 19.2%). This sector achieved organic constant currency revenue growth in all regions with an encouraging recovery in the UK market across almost all businesses. We expect to see a continuation of this sector's well-established balance between growth in developed and developing markets.
Medical sector revenue was 3% lower than last year at £78m (2013/14: £81m) due to a 7% adverse currency impact. Underlying organic constant currency revenue growth was 4% with momentum improving as the period progressed. Profit2 improved by 6% from £19.6m to £20.9m with excellent organic constant currency growth of 12% more than offsetting a 7% adverse currency impact. Excellent operational cost control ensured that Return on Sales improved from 24.2% to 26.6%. A useful recovery in the US market contrasted with weaker performances in the UK and Mainland Europe. There was modest growth outside these three developed markets at constant currency.
Environmental & Analysis had a disappointing first half year, particularly in profitability terms. Revenue was 8% lower than last year at £76m (2013/14: £83m) with an organic constant currency decline of less than 2% and an adverse currency impact of 6%. Profit2 reduced to £11.9m from £15.0m, a reduction of 21% of which 15% represented an organic constant currency decline. Return on Sales was 15.6% (2013/14: 18.2%). As expected, there was lower demand from the UK water utilities as this is the final year of their five-year investment cycle; we expect this market to pick up as we progress through 2015. In addition, the final transfer of certain customer contracts into our new consolidated photonics coating facility in Florida from Colorado was delayed resulting in increased costs. This transfer is now complete and therefore we expect profitability to recover in the second half. The revenue decline in the USA, UK and Mainland Europe contrasted with a more encouraging 10% organic constant currency revenue growth outside these markets. Overall, based on management actions already taken, we expect significant improvement in the second-half performance, broadly in line with last year.
Significant currency impact
Halma reports its results in Sterling with approximately 40% of Group revenue denominated in US Dollars and 15% in Euros. In the half year, Sterling strengthened on average by 9% relative to the US Dollar and 6% against the Euro, resulting in a 5% adverse currency translation impact on revenue and profit as noted above. In recent weeks, the US Dollar has strengthened relative to Sterling. If exchange rates continue at current levels, our latest estimate is that there will be an adverse impact of 3% on full year revenue and profit.
Strong cash generation
Cash generation was very good with cash conversion (adjusted operating cash flow as a % of adjusted operating profit - see note 9 to the Condensed Financial Statements for details) of 87% (2013/14: 86%), ahead of our 85% target. Good control of working capital, increased organic investment, acquisition expenditure and increased dividend and taxation payments, resulted in net debt of £136m (March 2014: £74m) at the end of the period. We remain in a strong financial position with our £360m revolving credit facility in place until 2018 and we have good capacity to make further value-adding acquisitions as well as continuing investment in organic growth.
Three acquisitions and one disposal completed
In the first half we spent £87m (excluding £1m of loan notes issued and debt acquired) (2013/14: £17m) purchasing three new companies and also paying earn-outs of £6m (2013/14: £14m) for the growth of acquisitions made in current and prior years. We completed a small disposal continuing our active approach to portfolio management.
We are continuing to refine our M&A search efforts. In particular we are providing improved support to our Sector Chief Executives appointed in April 2014 to ensure that we have resources appropriately focused in each sector covering a wide range of key regional markets. The acquisition pipeline remains healthy.
All transactions during the half year were completed in May 2014:
· Plasticspritzerei AG, a strategic supplier to one of our businesses in the Medical sector, was acquired for a net cash consideration of CHF6m (£4m).
· Advanced Electronics Limited, a manufacturer of networked fire detection and control systems, was acquired for our Infrastructure Safety sector. We paid an initial consideration of £14m (excluding cash and debt acquired of £2m) and a contingent consideration of up to £10.1m is payable on earnings growth for the period to March 2015.
· Rohrback Cosasco Systems Inc. (RCS), a manufacturer of pipeline corrosion monitoring products and systems, was acquired for US$108m (£64m), net of cash acquired of US$9m (£5m). RCS adds valuable new technology and application know-how to the Process Safety sector.
We sold Monitor Elevator Products Inc., a business within the Infrastructure Safety sector, for a consideration of US$6m (£4m). A gain of £1m before tax resulted from the transaction. Monitor's narrow regional sales focus in the increasingly competitive US elevator maintenance market meant that we were no longer confident in its ability to sustain good growth and returns under Halma ownership.
Pension plan changes
Following consultation with all stakeholders, we announced in March 2014 that the Defined Benefit (DB) sections of the Group's UK pension plans will cease future accrual as at 1 December 2014. Members will earn future benefits within the Group's Defined Contribution (DC) section of the pension plan with agreed transitional arrangements. This change reduces Group risk for the future.
Strategic investment for growth
In April 2014, we reorganised our Executive Board to align it with our four reporting sectors and continued with strategic investment in talent development, innovation and international expansion. The new structure is operating well, with an initial focus on developing and communicating new sector growth strategies together with improving the ways we identify, attract and develop management talent. This streamlined board with clearer accountability is also starting to improve collaboration both within and between sector companies.
We continue to increase investment in line with our focus on sustained long-term growth and returns. Our companies increased R&D expenditure by 4% (when measured at constant currency) to £16.4m, representing 4.8% of revenue, which is well above our 4% KPI target. In addition, capital investment in operations increased by 26% to £9.9m (2013/14: £7.9m) in line with guidance given at the start of the year.
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 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 30 to 33 of the 2014 Annual Report and Accounts, which is available on the Group's website at www.halma.com. The principal risks and uncertainties relate to operational, strategic, legal, financial, people and economic issues. See note 14 to the Condensed Financial Statements for further details. The Directors do not consider that the principal risks and uncertainties have changed since the publication of the 2014 Annual Report and Accounts and confirm that they remain relevant for the second half of the financial year. As part of their ongoing assessment of risk throughout the period the Directors have considered the above risks in the context of the new Executive Board structure and the Group's delivery of its financial objectives. Macro-economic uncertainty and movements in foreign exchange rates continue to remain a risk to financial performance.
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 Financial Statements.
Board changes
Roy Twite, an executive director of IMI plc, was appointed as a non-executive Director effective 24 July 2014. Roy brings a wealth of relevant experience to the Board, having worked in all sectors of this multi-industry FTSE 100 company.
On 8 August 2014, we welcomed Tony Rice to the Board as a non-executive Director. Tony was formerly CEO of Cable & Wireless Communications plc and brings to us strong commercial, financial and international experience.
Outlook
Halma has made strong progress in the first half, achieving record revenue and profit despite varied market conditions and adverse currency translation impact. We are particularly pleased to report organic constant currency revenue growth across each of our regions. Order intake since the period end has continued to be ahead of revenue and order intake last year. Halma remains on track to make further progress in the second half of the year in line with our expectations.
Andrew Williams Kevin ThompsonChief Executive Finance Director
1 See Financial Highlights.
2 See note 2 to the Condensed Financial Statements.
Half year results 2014/15
Condensed Financial Statements
Consolidated Income Statement | |||||||||
Unaudited 26 weeks to 27 September 2014 | (Restated)** Unaudited 26 weeks to 28 September 2013 | Audited 52 weeks to 29 March 2014 | |||||||
Notes | Before adjustments*£000 | Adjustments*(note 2)£000 | Total £000 | Before adjustments*£000 | Adjustments*(note 2)£000 | Total £000 | Total £000 | ||
Continuing operations | |||||||||
Revenue | 2 | 340,903 | - | 340,903 | 333,066 | - | 333,066 | 676,506 | |
Operating profit | 71,425 | (9,275) | 62,150 | 67,586 | (8,941) | 58,645 | 143,571 | ||
Share of results of associates | 65 | - | 65 | (215) | - | (215) | 307 | ||
Profit/(loss) on disposal of operations | - | 1,430 | 1,430 | - | (175) | (175) | (483) | ||
Finance income | 3 | 64 | - | 64 | 474 | - | 474 | 622 | |
Finance expense | 4 | (2,536) | - | (2,536) | (2,787) | - | (2,787) | (5,340) | |
Profit before taxation | 69,018 | (7,845) | 61,173 | 65,058 | (9,116) | 55,942 | 138,677 | ||
Taxation | 5 | (15,874) | 2,243 | (13,631) | (16,003) | 2,678 | (13,325) | (32,350) | |
Profit for the period attributable to equity shareholders | 53,144 | (5,602) | 47,542 | 49,055 | (6,438) | 42,617 | 106,327 | ||
Earnings per share | 6 | ||||||||
From continuing operations | |||||||||
Basic | 14.05p | 12.57p | 12.99p | 11.28p | 28.14p | ||||
Diluted | 12.56p | 11.27p | 28.13p | ||||||
Dividends in respectof the period | 7 | ||||||||
Dividends (£000) | 17,612 | 16,436 | 42,236 | ||||||
Per share | 4.65p | 4.35p | 11.17p | ||||||
*
** |
Adjustments include the amortisation of acquired intangible assets, acquisition items, the effects of closure to future benefit accrual of the Defined Benefit pension plans net of associated costs, profit or loss on disposal of operations, and the associated taxation thereon. In accordance with IAS 19 (revised) the Defined Benefit pension plan interest and expense have been shown net in finance expenses. Previously the gross interest income and expense were shown (see note 3 for further details). | ||||||||
Consolidated Statement of Comprehensive Income and Expenditure
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Unaudited 26 weeks to 27 September 2014 £000 | Unaudited 26 weeks to 28 September 2013 £000 | Audited 52 weeks to 29 March 2014 £000 | |
Profit for the period | 47,542 | 42,617 | 106,327 |
Items that will not be reclassified subsequently to the income statement: | |||
Actuarial (losses)/gains on Defined Benefit pension plans | (9,663) | 4,331 | 2,060 |
Tax relating to components of other comprehensive income that will not be reclassified | 1,865 | (2,138) | (1,570) |
Items that may be reclassified subsequently to the income statement: | |||
Effective portion of changes in fair value of cash flow hedges | 4 | 651 | 499 |
Exchange losses on translation of foreign operations | (2,587) | (18,874) | (31,379) |
Tax relating to components of other comprehensive income that may be reclassified | (1) | (157) | (129) |
Other comprehensive expense for the period | (10,382) | (16,187) | (30,519) |
Total comprehensive income for the period attributable to equity shareholders | 37,160 | 26,430 | 75,808 |
The exchange loss of £2,587,000 (26 weeks to 28 September 2013: loss of £18,874,000; 52 weeks to 29 March 2014: loss of £31,379,000) comprises gains of £103,000 (26 weeks to 28 September 2013: gains of £127,000; 52 weeks to 29 March 2014: losses of £2,200,000) which relate to net investment hedges. | |||
Consolidated Balance Sheet
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Unaudited 27 September 2014 £000 | (Restated)* Unaudited 28 September 2013 £000 |
Audited 29 March 2014 £000 | |
Non-current assets | |||
Goodwill | 385,593 | 341,586 | 335,278 |
Other intangible assets | 138,686 | 122,800 | 112,754 |
Property, plant and equipment | 78,359 | 75,421 | 74,417 |
Interests in associates | 4,216 | 4,571 | 5,088 |
Deferred tax asset | 22,020 | 24,886 | 20,677 |
628,874 | 569,264 | 548,214 | |
Current assets | |||
Inventories | 77,720 | 72,500 | 71,034 |
Trade and other receivables | 135,225 | 123,968 | 135,177 |
Tax receivable | 703 | 567 | 172 |
Cash and cash equivalents | 49,177 | 41,141 | 34,531 |
Derivative financial instruments | 622 | 499 | 496 |
263,447 | 238,675 | 241,410 | |
Total assets | 892,321 | 807,939 | 789,624 |
Current liabilities | |||
Trade and other payables | 85,004 | 77,355 | 88,291 |
Borrowings | 5,225 | 2,939 | 4,136 |
Provisions | 11,003 | 10,613 | 4,482 |
Tax liabilities | 12,382 | 13,419 | 11,340 |
Derivative financial instruments | 338 | 28 | 167 |
| 113,952 | 104,354 | 108,416 |
Net current assets | 149,495 | 134,321 | 132,994 |
Non-current liabilities | |||
Borrowings | 180,228 | 147,969 | 104,891 |
Retirement benefit obligations | 44,209 | 40,754 | 36,849 |
Trade and other payables | 3,335 | 2,914 | 3,564 |
Provisions | 1,631 | 13,944 | 6,777 |
Deferred tax liabilities | 51,310 | 45,491 | 43,127 |
| 280,713 | 251,072 | 195,208 |
Total liabilities | 394,665 | 355,426 | 303,624 |
Net assets | 497,656 | 452,513 | 486,000 |
Equity | |||
Share capital | 37,960 | 37,901 | 37,902 |
Share premium account | 23,548 | 22,762 | 22,778 |
Treasury shares | (4,885) | (5,264) | (7,054) |
Capital redemption reserve | 185 | 185 | 185 |
Hedging and translation reserve | 11,779 | 26,992 | 14,363 |
Other reserves | (6,468) | (5,120) | (2,745) |
Retained earnings | 435,537 | 375,057 | 420,571 |
Shareholders' funds | 497,656 | 452,513 | 486,000 |
* Contingent purchase consideration has been reclassified from Trade and other payables to Provisions.
Consolidated Statement of Changes in Equity
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For the 26 weeks ended 27 September 2014 | ||||||||
Sharecapital£000 | Sharepremiumaccount£000 | Treasury shares £000 | Capitalredemptionreserve£000 | Hedging and translation reserve £000 | Other reserves £000 | Retained earnings £000 | Total £000 | |
At 29 March 2014 (audited) | 37,902 | 22,778 | (7,054) | 185 | 14,363 | (2,745) | 420,571 | 486,000 |
Profit for the period | - | - | - | - | - | - | 47,542 | 47,542 |
Other comprehensive income and expense: | ||||||||
Exchange differences on translation of foreign operations | - | - | - | - | (2,587) | - | - | (2,587) |
Actuarial losses on Defined Benefit pension plans | - | - | - | - | - | - | (9,663) | (9,663) |
Effective portion of changes in fair value of cash flow hedges | - | - | - | - | 4 | - | - | 4 |
Tax relating to componentsof other comprehensive income | - | - | - | - | (1) | - | 1,865 | 1,864 |
Total other comprehensive incomeand expense | - | - | - | - | (2,584) | - | (7,798) | (10,382) |
Share options exercised | 58 | 770 | - | - | - | - | - | 828 |
Dividends paid | - | - | - | - | - | - | (25,800) | (25,800) |
Share-based payments | - | - | - | - | - | (3,282) | - | (3,282) |
Deferred tax on share-basedpayment transactions | - | - | - | - | - | (441) | - | (441) |
Excess tax deductions related to share-based payments on exercised options | - | - | - | - | - | - | 1,022 | 1,022 |
Net movement in treasury shares | - | - | 2,169 | - | - | - | - | 2,169 |
At 27 September 2014 (unaudited) | 37,960 | 23,548 | (4,885) | 185 | 11,779 | (6,468) | 435,537 | 497,656 |
For the 26 weeks ended 28 September 2013 | ||||||||
| Sharecapital£000 | Sharepremiumaccount£000 | Treasury shares £000 | Capitalredemptionreserve£000 | Hedging and translation reserve £000 | Other reserves £000 | Retained earnings £000 | Total £000 |
At 30 March 2013 (audited) | 37,888 | 22,598 | (4,534) | 185 | 45,372 | (1,484) | 353,242 | 453,267 |
Profit for the period | - | - | - | - | - | - | 42,617 | 42,617 |
Other comprehensive income and expense: | ||||||||
Exchange differences on translation of foreign operations | - | - | - | - | (18,874) | - | - | (18,874) |
Actuarial gains on Defined Benefit pension plans | - | - | - | - | - | - | 4,331 | 4,331 |
Effective portion of changes in fair value of cash flow hedges | - | - | - | - | 651 | - | - | 651 |
Tax relating to componentsof other comprehensive income | - | - | - | - | (157) | - | (2,138) | (2,295) |
Total other comprehensive incomeand expense | - | - | - | - | (18,380) | - | 2,193 | (16,187) |
Share options exercised | 13 | 164 | - | - | - | - | - | 177 |
Dividends paid | - | - | - | - | - | - | (24,049) | (24,049) |
Share-based payments | - | - | - | - | - | (3,316) | - | (3,316) |
Deferred tax on share-basedpayment transactions | - | - | - | - | - | (320) | - | (320) |
Excess tax deductions related to share-based payments on exercised options | - | - | - | - | - | - | 1,054 | 1,054 |
Net movement in treasury shares | - | - | (730) | - | - | - | - | (730) |
At 28 September 2013 (unaudited) | 37,901 | 22,762 | (5,264) | 185 | 26,992 | (5,120) | 375,057 | 452,513 |
For the 52 weeks ended 29 March 2014 | ||||||||
Sharecapital£000 | Sharepremiumaccount£000 | Treasury shares £000 | Capitalredemption reserve£000 | Hedging and translation reserve £000 | Other reserves £000 | Retained earnings £000 | Total £000 | |
At 30 March 2013 (audited) | 37,888 | 22,598 | (4,534) | 185 | 45,372 | (1,484) | 353,242 | 453,267 |
Profit for the period | - | - | - | - | - | - | 106,327 | 106,327 |
Other comprehensive incomeand expense: | ||||||||
Exchange differences on translation of foreign operations | - | - | - | - | (31,379) | - | - | (31,379) |
Actuarial gains on Defined Benefitpension plans | - | - | - | - | - | - | 2,060 | 2,060 |
Effective portion of changes in fair value of cash flow hedges | - | - | - | - | 499 | - | - | 499 |
Tax relating to components of other comprehensive income | - | - | - | - | (129) | - | (1,570) | (1,699) |
Total other comprehensive incomeand expense | - | - | - | - | (31,009) | - | 490 | (30,519) |
Share options exercised | 14 | 180 | - | - | - | - | - | 194 |
Dividends paid | - | - | - | - | - | - | (40,485) | (40,485) |
Share-based payments | - | - | - | - | - | (1,556) | - | (1,556) |
Deferred tax on share-basedpayment transactions | - | - | - | - | - | 295 | - | 295 |
Excess tax deductions related to share-based payments on exercised options | - | - | - | - | - | - | 997 | 997 |
Net movement in treasury shares | - | - | (2,520) | - | - | - | - | (2,520) |
At 29 March 2014 (audited) | 37,902 | 22,778 | (7,054) | 185 | 14,363 | (2,745) | 420,571 | 486,000 |
Consolidated Cash Flow Statement
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Notes | Unaudited 26 weeks to 27 September 2014 £000 | Unaudited 26 weeks to 28 September 2013 £000 | Audited 52 weeks to 29 March 2014 £000 | |
Net cash inflow from operating activities | 8 | 61,924 | 55,934 | 121,538 |
Cash flows from investing activities | ||||
Purchase of property, plant and equipment | (9,419) | (7,266) | (15,838) | |
Purchase of computer software | (473) | (585) | (1,529) | |
Purchase of other intangibles | (268) | (4) | - | |
Proceeds from sale of property, plant and equipment | 543 | 271 | 1,708 | |
Development costs capitalised | (3,239) | (2,447) | (5,196) | |
Interest received | 64 | 116 | 252 | |
Acquisition of businesses, net of cash acquired | 10 | (87,145) | (16,669) | (16,685) |
Disposal of business, net of cash disposed | 11 | 4,221 | 1,925 | 1,917 |
Net cash used in investing activities | (95,716) | (24,659) | (35,371) | |
| ||||
Financing activities | ||||
Dividends paid | (25,800) | (24,049) | (40,485) | |
Proceeds from issue of share capital | 828 | 177 | 194 | |
Purchase of treasury shares | (3,042) | (5,715) | (7,515) | |
Interest paid | (1,499) | (1,390) | (2,716) | |
Proceeds from borrowings | 152,435 | 7,434 | 7,498 | |
Repayment of borrowings | (77,367) | (15,329) | (57,791) | |
Net cash from/(used in) financing activities | 45,555 | (38,872) | (100,815) | |
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Increase/(decrease) in cash and cash equivalents | 11,763 | (7,597) | (14,648) | |
Cash and cash equivalents brought forward | 33,126 | 49,723 | 49,723 | |
Exchange adjustments | (329) | (1,193) | (1,949) | |
Cash and cash equivalents carried forward | 44,560 | 40,933 | 33,126 | |
| ||||
Unaudited 27 September 2014 £000 | Unaudited 28 September 2013 £000 | Audited 29 March 2014 £000 | ||
Reconciliation of net cash flow to movement in net debt | ||||
Increase/(decrease) in cash and cash equivalents | 11,763 | (7,597) | (14,648) | |
Cash (inflow)/outflow from (drawdowns)/repayment of borrowings | (75,068) | 7,895 | 50,293 | |
Net debt acquired | (468) | - | - | |
Loan notes issued* | (608) | (2,731) | (2,731) | |
Loan notes repaid* | 2,731 | 2,515 | 2,515 | |
Exchange adjustments | (130) | 441 | 365 | |
(61,780) | 523 | 35,794 | ||
Net debt brought forward | (74,496) | (110,290) | (110,290) | |
Net debt carried forward | (136,276) | (109,767) | (74,496) | |
* | The £2,731,000 loan note issued on 3 June 2013 was converted at par into cash on 2 June 2014. Loan notes totalling £608,000 were issued on 14 May 2014 and 3 September 2014 as part of the consideration payable in relation to the acquisition of Advanced Electronics Limited on 14 May 2014. These loan notes, which attract interest of 1%, are convertible into cash at par on each anniversary of the acquisition date until 14 May 2019. |
Notes to the Condensed Financial Statements |
1 Basis of preparation General information The Half Year Report, which includes the Interim Management Report and Condensed Financial Statements for the 26 weeks to 27 September 2014, has not been audited or reviewed by the Group's Auditor and was approved by the Directors on 18 November 2014.
The Report has been prepared in accordance with International Accounting Standard 34, applying the accounting policies and presentation that were applied in the preparation of the Group's statutory accounts for the 52 weeks to 29 March 2014.
The figures shown for the 52 weeks to 29 March 2014 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 under International Financial Reporting Standards, 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.
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 Directors believe the Group is well placed to manage its business risks successfully. The Group's forecasts and projections, taking account of reasonably possible changes in trading performance, show that the Group should be able to operate within the level of its current committed facilities, which includes a £360m five-year revolving credit facility due to expire in November 2018.
The Directors are aware of the requirements of the updated UK Corporate Governance Code. These apply to reporting periods beginning on or after 1 October 2014 and will impact the reporting of the Group's assessment of going concern and require the inclusion of a separate long-term viability statement in the Annual and Interim Reports issued for periods ending after that date. The Directors intend to incorporate the requirements, including the new viability statement, in the period ending 2 April 2016, the first period in which the updated guidance will apply to the Group.
In accordance with the UK Corporate Governance Code as it currently applies to the Group, the Directors have a reasonable expectation that the Company and Group have adequate resources to continue in operational existence for the foreseeable future. Thus they continue to adopt the going concern basis in preparing the Half Year Report. |
2 Segmental analysis
Sector analysis The Group has four main reportable segments (Process Safety, Infrastructure Safety, Medical and Environmental & Analysis), 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 Chief Executive. |
Segment revenue and results |
Revenue (all continuing operations) | |||
Unaudited 26 weeks to 27 September 2014 £000 | Unaudited 26 weeks to 28 September 2013 £000 | Audited 52 weeks to 29 March 2014 £000 | |
Process Safety | 73,579 | 62,173 | 126,704 |
Infrastructure Safety | 112,693 | 107,299 | 220,254 |
Medical | 78,464 | 81,062 | 163,181 |
Environmental & Analysis | 76,256 | 82,607 | 166,547 |
Inter-segmental sales | (89) | (75) | (180) |
Revenue for the period | 340,903 | 333,066 | 676,506 |
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 and has no material revenue derived from the rendering of services. |
Profit (all continuing operations) | |||
Unaudited 26 weeks to 27 September 2014 £000 | Unaudited 26 weeks to 28 September 2013 £000 | Audited 52 weeks to 29 March 2014 £000 | |
Segment profit before allocation of adjustments* | |||
Process Safety | 20,439 | 16,137 | 34,878 |
Infrastructure Safety | 22,821 | 20,608 | 44,445 |
Medical | 20,847 | 19,586 | 41,826 |
Environmental & Analysis | 11,861 | 15,005 | 31,740 |
75,968 | 71,336 | 152,889 | |
Segment profit after allocation of adjustments* | |||
Process Safety | 18,187 | 15,692 | 34,125 |
Infrastructure Safety | 23,165 | 20,399 | 45,010 |
Medical | 15,227 | 13,358 | 41,554 |
Environmental & Analysis | 11,590 | 12,771 | 27,574 |
Segment profit | 68,169 | 62,220 | 148,263 |
Central administration costs excluding the effects of closure to future benefit accrual of the Defined Benefit pension plan net of associated costs** | (4,478) | (3,965) | (7,922) |
Effects of closure to future benefit accrual of the Defined Benefit pension plan net of associated costs** | (46) | - | 3,054 |
Net finance expense | (2,472) | (2,313) | (4,718) |
Group profit before taxation | 61,173 | 55,942 | 138,677 |
Taxation | (13,631) | (13,325) | (32,350) |
Profit for the period | 47,542 | 42,617 | 106,327 |
* Adjustments include the amortisation of acquired intangible assets, acquisition items, the effects of closure to future benefit accrual of the Defined Benefit pension plan net of associated costs, and profit or loss on disposal of operations. ** The Defined Benefit plan referred to here is the Halma Group Pension Plan only, which is not practical to allocate by segment.
The accounting policies of the reportable segments are the same as the Group's accounting policies. For acquisitions after 3 April 2010, acquisition transaction costs and adjustments to contingent purchase consideration are recognised in the Consolidated Income Statement. Segment profit before these acquisition costs, the amortisation of acquired intangible assets and the profit or loss on disposal of continuing operations is disclosed separately above as this is the measure reported to the Chief Executive for the purpose of allocation of resources and assessment of segment performance.
These adjustments are analysed as follows: |
|
|
| For the 26 weeks ended 27 September 2014 | ||||
|
| Acquisition items |
|
|
|
| |
| Amortisation of acquired intangibles£000 | Transaction costs £000 | Adjustments to contingent consideration £000 | Total amortisation charge and acquisition items £000 | Disposal of operations (note 11)£000 | Effects of closure to future benefit accrual of Defined Benefit pension plans* £000 | Total £000 |
Process Safety | (1,344) | (908) | - | (2,252) | - | - | (2,252) |
Infrastructure Safety | (354) | (386) | - | (740) | 1,084 | - | 344 |
Medical | (5,962) | (4) | - | (5,966) | 346 | - | (5,620) |
Environmental & Analysis | (1,935) | - | 1,664 | (271) | - | - | (271) |
Total Segment | (9,595) | (1,298) | 1,664 | (9,229) | 1,430 | - | (7,799) |
Central administration costs | - | - | - | - | - | (46) | (46) |
Total Group | (9,595) | (1,298) | 1,664 | (9,229) | 1,430 | (46) | (7,845) |
* The loss of £46,000 relates to the closure to future benefit accrual of the Halma Group Pension Plan as decided in the prior period. | |||||||
The transaction costs arose on the acquisitions of Rohrback Cosasco Systems Inc., £908,000; Advanced Electronics Limited, £386,000; and Plasticspritzerei AG, £4,000.
The £1,664,000 credit to contingent consideration related to the revision of the estimate of the remaining ASL Holdings Limited payable from £2,500,000 to £836,000, after payment of £1,000,000 in May 2014.
Within the Infrastructure Safety segment, the £1,084,000 profit relates to the disposal, on 30 May 2014, of Monitor Elevator Products, Inc. Within the Medical segment, the £346,000 profit comprises the disposal, on 2 May 2014, of the Group's 50% ownership interest in PSRM Immobilien AG (£131,000) and, on 14 July 2014, of 11% of its ownership interest in Optomed Oy (£215,000). See note 11 for further details. |
For the 26 weeks ended 28 September 2013 | ||||||
Acquisition items | ||||||
Amortisation of acquired intangibles £000 | Transactioncosts£000 | Adjustments to contingent consideration £000 | Total amortisation charge and acquisition items £000 | Disposal of operations (note 11)£000 | Total £000 | |
Process Safety | (309) | - | - | (309) | (136) | (445) |
Infrastructure Safety | (72) | (98) | - | (170) | (39) | (209) |
Medical | (6,402) | (2) | 176 | (6,228) | - | (6,228) |
Environmental & Analysis | (2,184) | (50) | - | (2,234) | - | (2,234) |
Total Group | (8,967) | (150) | 176 | (8,941) | (175) | (9,116) |
For the 52 weeks ended 29 March 2014 | |||||||
Acquisition items | |||||||
Amortisationof acquiredintangibles£000 | Transaction costs £000 | Adjustmentsto contingentconsideration£000 | Totalamortisationcharge andacquisitionitems£000 | Disposal of operations (note 11)£000 | Effects of closure to future benefit accrual of Defined Benefit pension plans* £000 | Total£000 | |
Process Safety | (598) | - | (17) | (615) | (138) | - | (753) |
Infrastructure Safety | (144) | (140) | - | (284) | (45) | 894 | 565 |
Medical | (12,530) | 102 | 12,456 | 28 | (300) | - | (272) |
Environmental & Analysis | (4,243) | (53) | 130 | (4,166) | - | - | (4,166) |
Total Segment | (17,515) | (91) | 12,569 | (5,037) | (483) | 894 | (4,626) |
Central administration costs | - | - | - | - | - | 3,054 | 3,054 |
Total Group | (17,515) | (91) | 12,569 | (5,037) | (483) | 3,948 | (1,572) |
* The effects of closure to future benefit accrual of Defined Benefit pension plans, which were gains of £894,000 and £3,054,000, arose on the closure of theApollo Pension and Life Assurance Plan and Halma Group Pension Plan respectively. It is not practical to apportion the latter gain by segment.
The £12,456,000 credit to contingent consideration related mainly to a revision in the estimate of the MST payable from US$25,000,000 to US$6,504,000.
The total assets of the Process Safety sector were £144,783,000 at 27 September 2014 (£68,423,000 at 28 September 2013; £68,428,000 at 29 March 2014) and of the Infrastructure Safety sector were £187,523,000 at 27 September 2014 (£169,356,000 at 28 September 2013; £170,540,000 at 29 March 2014). The increase in assets in the period for both sectors was primarily due to additional goodwill and acquired intangible assets arising from acquisitions (see note 10). The other two sectors' total assets have not been disclosed as there have been no material changes to those disclosed in the 2014 Annual Report and Accounts.
|
Geographical information
The Group's revenue from external customers (by location of customer) is as follows:
| |||
Revenue by destination | |||
Unaudited26 weeks to27 September 2014£000 | Unaudited26 weeks to28 September 2013£000 | Audited52 weeks to29 March 2014£000 | |
United States of America | 104,110 | 107,597 | 214,493 |
Mainland Europe | 79,216 | 79,304 | 163,707 |
United Kingdom | 67,225 | 62,215 | 127,877 |
Asia Pacific | 56,248 | 55,965 | 111,572 |
Africa, Near and Middle East | 19,055 | 16,219 | 33,037 |
Other countries | 15,049 | 11,766 | 25,820 |
Group revenue | 340,903 | 333,066 | 676,506 |
3 Finance income |
|
| |
Unaudited26 weeks to27 September2014£000 | (Restated)* Unaudited 26 weeks to 28 September 2013 £000 | Audited52 weeks to29 March2014£000 | |
Interest receivable | 64 | 116 | 252 |
Fair value movement on derivative financial instruments | - | 358 | 370 |
| 64 | 474 | 622 |
* The return and interest charge on pension plan assets and liabilities of £3,930,000 and £4,915,000 respectively, previously shown gross, are disclosed as a net £985,000 expense in note 4 in accordance with IAS 19 (revised). Further details regarding the IAS 19 restatement can be found on page 102 of the 2014 Annual Report and Accounts.
4 Finance expense | |||
Unaudited26 weeks to 27 September2014£000 | (Restated)* Unaudited26 weeks to28 September2013£000 | Audited52 weeks to29 March2014£000 | |
Interest payable on bank loans and overdrafts | 1,499 | 1,384 | 2,691 |
Amortisation of finance costs | 265 | 317 | 599 |
Net interest charge on pension plan liabilities | 701 | 985 | 1,875 |
Other interest payable | - | 4 | 25 |
2,465 | 2,690 | 5,190 | |
Fair value movement on derivative financial instruments | 49 | - | - |
Unwinding of discount on provisions | 22 | 97 | 150 |
2,536 | 2,787 | 5,340 |
* See note 3 for details regarding the restatement.
5 Taxation |
The total Group tax charge for the 26 weeks to 27 September 2014 of £13,631,000 (26 weeks to 28 September 2013: £13,325,000; 52 weeks to 29 March 2014: £32,350,000) comprises a current tax charge of £14,608,000 (26 weeks to 28 September 2013: £14,951,000; 52 weeks to 29 March 2014: £29,845,000) and a deferred tax credit of £977,000 (26 weeks to 28 September 2013: credit of £1,626,000; 52 weeks to 29 March 2014: charge of £2,505,000). The tax charge is based on the estimated effective tax rate for the year.
The tax charge includes £10,620,000 (26 weeks to 28 September 2013: £10,708,000; 52 weeks to 29 March 2014: £20,872,000) in respect of overseas tax. |
6 Earnings per ordinary share |
Basic earnings per ordinary share are calculated using the weighted average of 378,115,425 (28 September 2013: 377,750,281; 29 March 2014: 377,805,248) shares in issue during the period (net of shares purchased by the Company and held as treasury shares). Diluted earnings per ordinary share are calculated using 378,383,111 (28 September 2013: 378,101,945; 29 March 2014: 378,035,662) shares which includes dilutive potential ordinary shares of 267,686 (28 September 2013: 351,664; 29 March 2014: 230,414). Dilutive potential ordinary shares are calculated from those exercisable share options where the exercise price is less than the average price of the Company's ordinary shares during the period.
Adjusted earnings are calculated as earnings from continuing operations excluding the amortisation of acquired intangible assets, acquisition items, the effects of closure to future benefit accrual of the Defined Benefit pension plans net of associated 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. A reconciliation of earnings and the effect on basic earnings per share figures is as follows: |
Unaudited26 weeks to27 September 2014£000 | Unaudited26 weeks to28 September 2013£000 | Audited52 weeks to29 March 2014£000 | |
Earnings from continuing operations | 47,542 | 42,617 | 106,327 |
Cessation of DB pension accrual (after tax) | 36 | - | (3,040) |
Amortisation of acquired intangible assets (after tax) | 6,801 | 6,249 | 11,820 |
Acquisition transaction costs (after tax) | 1,286 | 150 | 91 |
Adjustments to contingent consideration (after tax) | (1,664) | (136) | (8,104) |
(Profit)/loss on disposal of operations (after tax) | (857) | 175 | 470 |
Adjusted earnings | 53,144 | 49,055 | 107,564 |
Per ordinary share | |||
Unaudited26 weeks to27 September 2014pence | Unaudited26 weeks to28 September 2013pence | Audited52 weeks to29 March 2014pence | |
Earnings from continuing operations | 12.57 | 11.28 | 28.14 |
Cessation of DB pension accrual (after tax) | 0.01 | - | (0.80) |
Amortisation of acquired intangible assets (after tax) | 1.80 | 1.66 | 3.14 |
Acquisition transaction costs (after tax) | 0.34 | 0.04 | 0.02 |
Adjustments to contingent consideration (after tax) | (0.44) | (0.04) | (2.15) |
Profit/(loss) on disposal of operations (after tax) | (0.23) | 0.05 | 0.12 |
Adjusted earnings | 14.05 | 12.99 | 28.47 |
7 Dividends | |||
Per ordinary share | |||
Unaudited 26 weeks to 27 September 2014 £000 | Unaudited 26 weeks to 28 September 2013 £000 | Audited 52 weeks to 29 March 2014 £000 | |
Amounts recognised as distributions to shareholders in the period | |||
Final dividend for the year to 29 March 2014 (30 March 2013) | 6.82 | 6.37 | 6.37 |
Interim dividend for the year to 29 March 2014 | - | - | 4.35 |
| 6.82 | 6.37 | 10.72 |
Dividends in respect of the period | |||
Interim dividend for the year to 28 March 2015 (29 March 2014) | 4.65 | 4.35 | 4.35 |
Final dividend for the year to 29 March 2014 | - | - | 6.82 |
4.65 | 4.35 | 11.17 | |
Unaudited 26 weeks to 27 September 2014 £000 | Unaudited 26 weeks to 28 September 2013 £000 | Audited 52 weeks to 29 March 2014 £000 | |
Amounts recognised as distributions to shareholders in the period | |||
Final dividend for the year to 29 March 2014 (30 March 2013) | 25,800 | 24,049 | 24,049 |
Interim dividend for the year to 29 March 2014 | - | - | 16,436 |
| 25,800 | 24,049 | 40,485 |
Dividends in respect of the period | |||
Interim dividend for the year to 28 March 2015 (29 March 2014) | 17,612 | 16,436 | 16,436 |
Final dividend for the year to 29 March 2014 | - | - | 25,800 |
17,612 | 16,436 | 42,236 |
8 Notes to the Consolidated Cash Flow Statement |
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Unaudited 26 weeks to 27 September 2014 £000 | Unaudited 26 weeks to 28 September 2013 £000 | Audited 52 weeks to 29 March 2014 £000 | |||||
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)/loss on disposal of operations | 62,150 | 58,645 | 143,571 | ||||
Depreciation of property, plant and equipment | 6,822 | 6,761 | 13,625 | ||||
Amortisation of computer software | 568 | 595 | 1,168 | ||||
Amortisation of capitalised development costs and other intangibles | 2,829 | 1,860 | 4,002 | ||||
Amortisation of acquired intangible assets | 9,595 | 8,967 | 17,515 | ||||
Share-based payment expense in excess of amounts paid | 2,079 | 1,813 | 3,470 | ||||
Additional payments to pension plans | (3,250) | (3,072) | (5,892) | ||||
Profit on sale of property, plant and equipment and computer software | (114) | (54) | (26) | ||||
Effects of closure to future benefit accrual of Defined Benefit pension plans | - | - | (4,246) | ||||
Operating cash flows before movement in working capital | 80,679 | 75,515 | 173,187 | ||||
Increase in inventories | (3,037) | (4,973) | (5,127) | ||||
Decrease/(increase) in receivables | 6,073 | 4,458 | (9,111) | ||||
(Decrease)/increase in payables and provisions | (7,318) | (6,619) | 3,334 | ||||
Revision to estimate of contingent consideration payable | (1,664) | - | (12,394) | ||||
Cash generated from operations | 74,733 | 68,381 | 149,889 | ||||
Taxation paid | (12,809) | (12,447) | (28,351) | ||||
Net cash inflow from operating activities | 61,924 | 55,934 | 121,538 | ||||
Unaudited 27 September 2014 £000 | Unaudited 28 September 2013 £000 | Audited 29 March 2014 £000 | |
Analysis of cash and cash equivalents | |||
Cash and bank balances | 49,177 | 41,141 | 34,531 |
Overdrafts (included in current Borrowings) | (4,617) | (208) | (1,405) |
Cash and cash equivalents | 44,560 | 40,933 | 33,126 |
At 29 March 2014£000 | Cash flow£000 | Net cash/ (debt)acquired £000 | Loan notes issued£000 | Loan notes repaid£000 | Exchange adjustments£000 | At 27 September 2014£000 | ||
Analysis of net debt | ||||||||
Cash and bank balances | 34,531 | 5,356 | 9,619 | - | - | (329) | 49,177 | |
Overdrafts | (1,405) | (3,212) | - | - | - | - | (4,617) | |
Cash and cash equivalents | 33,126 | 2,144 | 9,619 | - | - | (329) | 44,560 | |
Loan notes falling due within one year* | (2,731) | - | - | (608) | 2,731 | - | (608) | |
Bank loans falling due aftermore than one year | (104,891) | (75,068) | (468) | - | - | 199 | (180,228) | |
Total net debt | (74,496) | (72,924) | 9,151 | (608) | 2,731 | (130) | (136,276) |
* The £2,731,000 loan note issued in the prior period was converted at par into cash on 2 June 2014. Loan notes totalling £608,000 were issued on 14 May 2014 and 3 September 2014 as part of the acquisition of Advanced Electronics Limited and are convertible at par into cash.
Cash flows attributable to bank loans falling due after more than one year comprise drawdowns of £152,435,000 and repayments of £77,367,000.
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9 Non-GAAP measures Return on Capital Employed (ROCE) | |||
Unaudited 26 weeks to 27 September 2014 £000 | Unaudited 26 weeks to 28 September 2013 £000 | Audited 52 weeks to 29 March 2014 £000 | |
Operating profit before adjustments*, but after shareof results of associates | 71,490 | 67,371 | 144,967 |
Computer software costs within intangible assets | 2,862 | 2,307 | 2,810 |
Capitalised development costs within intangible assets | 15,150 | 12,469 | 12,981 |
Other intangibles within intangible assets | 404 | 99 | 8 |
Property, plant and equipment | 78,359 | 75,421 | 74,417 |
Inventories | 77,720 | 72,500 | 71,034 |
Trade and other receivables | 135,225 | 123,968 | 135,177 |
Trade and other payables | (85,004) | (77,355) | (88,291) |
Provisions | (11,003) | (10,613) | (4,482) |
Net tax liabilities | (11,679) | (12,852) | (11,168) |
Non-current trade and other payables | (3,335) | (2,914) | (3,564) |
Non-current provisions | (1,631) | (13,944) | (6,777) |
Add back accrued contingent purchase consideration | 8,700 | 19,855 | 7,562 |
Capital employed | 205,768 | 188,941 | 189,707 |
Return on Capital Employed (annualised) | 69.5% | 71.3% | 76.4% |
* Adjustments include the amortisation of acquired intangible assets, acquisition items, the effects of closure to future benefit accrual of the Defined Benefit pension plans net of associated costs, and profit or loss on disposal of operations. |
Return on Total Invested Capital (ROTIC) | |||
Unaudited 26 weeks to 27 September 2014 £000 | Unaudited 26 weeks to 28 September 2013 £000 | Audited 52 weeks to 29 March 2014 £000 | |
Post-tax profit before adjustments* | 53,144 | 49,055 | 107,564 |
Total shareholders' funds | 497,656 | 452,513 | 486,000 |
Add back retirement benefit obligations | 44,209 | 40,754 | 36,849 |
Less associated deferred tax assets | (8,718) | (8,234) | (7,372) |
Cumulative amortisation of acquired intangible assets | 70,080 | 53,793 | 61,324 |
Historical adjustments to goodwill** | 89,549 | 89,549 | 89,549 |
Total invested capital | 692,776 | 628,375 | 666,350 |
Return on Total Invested Capital (annualised) | 15.3% | 15.6% | 16.1% |
* Adjustments include the amortisation of acquired intangible assets, acquisition items, the effects of closure to future benefit accrual of the Defined Benefit pension plans net of associated costs, and profit or loss on disposal of operations, and the associated taxation thereon. ** Includes goodwill amortised prior to 3 April 2004 and goodwill taken to reserves.
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Organic growth Organic growth measures the change in revenue and profit from continuing Group operations. The effect of acquisitions and disposals made during the prior financial period, and acquisitions made in the current financial period is equalised by adjusting the current period results for pro-rated contributions based on their revenue and profit before taxation at the dates of acquisition and disposal. The results of disposals made in the prior financial period are removed from the prior period reported revenue and profit before taxation. |
Adjusted operating profit | |||
Unaudited 26 weeks to27 September 2014£000 | Unaudited 26 weeks to28 September 2013£000 | Audited 52 weeks to 29 March 2014 £000 | |
Operating profit | 62,150 | 58,645 | 143,571 |
Add back: | |||
Acquisition items | (366) | (26) | (12,478) |
Effects of closure to future benefit accrual of Defined Benefit pension plans | 46 | - | (3,948) |
Amortisation of acquired intangible assets | 9,595 | 8,967 | 17,515 |
Adjusted operating profit | 71,425 | 67,586 | 144,660 |
Adjusted operating cash flow | |||
Unaudited 26 weeks to27 September 2014£000 | Unaudited 26 weeks to28 September 2013£000 | Audited 52 weeks to 29 March 2014 £000 | |
Net cash from operating activities (note 8) | 61,924 | 55,934 | 121,538 |
Add back: | |||
Taxes paid | 12,809 | 12,447 | 28,351 |
Proceeds from sale of property, plant and equipment | 543 | 271 | 1,708 |
Less: | |||
Purchase of property, plant and equipment | (9,419) | (7,266) | (15,838) |
Purchase of computer software and other intangibles | (741) | (589) | (1,529) |
Development costs capitalised | (3,239) | (2,447) | (5,196) |
Adjusted operating cash flow | 61,877 | 58,350 | 129,034 |
Cash conversion % (adjusted operating cash flow/adjusted operating profit) | 87% | 86% | 89% |
10 Acquisitions
In the provisional accounting, adjustments are made to the book values of the net assets of the companies acquired to reflect their provisional fair values to the Group. Acquired inventories are valued at fair value adopting Group bases and any liabilities for warranties relating to past trading are recognised. Other previously unrecognised assets and liabilities at acquisition are included and accounting policies are aligned with those of the Group where appropriate.
The Group made three acquisitions during the period: Rohrback Cosasco Systems Inc. (RCS); Advanced Electronics Limited (Advanced); and Plasticspritzerei AG (Plasticspritzerei). Below are summaries of the assets and liabilities acquired and the purchase consideration of:
a) The total of RCS, Advanced and Plasticspritzerei;
b) RCS, on a standalone basis;
c) Advanced, on a standalone basis; and
d) Plasticspritzerei, on a standalone basis.
(A) Total of RCS, Advanced and Plasticspritzerei | |||
Book value£000 | Fair value adjustments£000 | Total£000 | |
Non-current assets | |||
Intangible assets | 3,508 | 31,057 | 34,565 |
Property, plant and equipment | 2,286 | 187 | 2,473 |
Current assets | |||
Inventories | 5,340 | (1,075) | 4,265 |
Trade and other receivables | 9,777 | (1,613) | 8,164 |
Corporation tax | 251 | 89 | 340 |
Cash and cash equivalents | 9,515 | 104 | 9,619 |
Deferred tax | - | 453 | 453 |
Total assets | 30,677 | 29,202 | 59,879 |
Current liabilities | |||
Trade and other payables | (3,916) | 682 | (3,234) |
Provisions | (763) | (659) | (1,422) |
Corporation tax | (686) | 327 | (359) |
Non-current liabilities | |||
Provisions | - | (17) | (17) |
Bank loans | (468) | - | (468) |
Retirement benefit obligations | - | (234) | (234) |
Deferred tax | (28) | (9,626) | (9,654) |
Total liabilities | (5,861) | (9,527) | (15,388) |
Net assets of businesses acquired | 24,816 | 19,675 | 44,491 |
Initial consideration paid (RCS, Advanced and Plasticspritzerei)* | 91,286 | ||
Contingent purchase consideration paid (Advanced)* | 2,105 | ||
Contingent purchase consideration estimated to be paid (Advanced) | 3,949 | ||
Total consideration | 97,340 | ||
Goodwill arising on current year acquisitions | 52,849 |
* The initial and contingent purchase considerations paid in cash were £90,828,000 and £1,955,000 respectively. The remainder was satisfied by the issue of £608,000 of loan notes.
Due to their contractual dates, the fair value of receivables acquired (shown above) 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).
None of the goodwill arising on acquisitions in the year is expected to be deductible for tax purposes.
The three acquisitions in the year contributed £14,594,000 of revenue and £2,426,000 of profit after tax for the period ended 27 September 2014. If these acquisitions had been held since the start of the financial period, it is estimated the Group's reported revenue and profit after tax would have been £5,640,000 and £987,000 higher respectively.
The combined fair value adjustments made for each acquisition resulted in net adjustments to goodwill, which exclude acquired intangibles recognised and deferred taxation thereon, of £3,636,000.
As at the date of approval of this Report, the initial acquisition accounting for RCS, Advanced and Plasticspritzerei is provisional. It is common for certain provisions, inventory valuations, intangible asset valuations and deferred tax balances to be revised during the goodwill measurement period, which expires in May 2015 for all three acquisitions. Revisions are made only if new information about conditions existing at the acquisition date becomes available during the measurement period, as defined by IFRS 3 (revised) 'Business Combinations'. The accounting for all prior period acquisitions is completed.
Analysis of cash outflow in the Consolidated Cash Flow Statement | |||
Unaudited 26 weeks to 27 September 2014 £000 | Unaudited 26 weeks to 28 September 2013 £000 | Audited 52 weeks to 29 March 2014 £000 | |
Initial cash consideration paid | 90,828 | 3,315 | 3,315 |
Initial cash consideration adjustment (prior year acquisition) | - | (337) | (337) |
Cash acquired on acquisitions | (9,619) | (754) | (754) |
Contingent consideration paid in relation to current year acquisitions | 1,955 | - | - |
Contingent consideration paid and loan notes repaid in cash in relation to prior year acquisitions* | 3,981 | 14,445 | 14,461 |
Net cash outflow relating to acquisitions (per Consolidated Cash Flow Statement) | 87,145 | 16,669 | 16,685 |
* The £3,981,000 comprises £2,731,000 loan notes and £1,250,000 contingent purchase consideration paid in respect of prior period acquisitions, all of which had been provided in the prior year's financial statements.
(B) Rohrback Cosasco Systems Inc. | |||
Book value£000 | Fair value adjustments£000 | Total£000 | |
Non-current assets | |||
Intangible assets | 420 | 25,146 | 25,566 |
Property, plant and equipment | 441 | 204 | 645 |
Current assets | |||
Inventories | 4,098 | (891) | 3,207 |
Trade and other receivables | 4,191 | (142) | 4,049 |
Cash and cash equivalents | 5,441 | - | 5,441 |
Deferred tax | - | 453 | 453 |
Corporation tax | 251 | - | 251 |
Total assets | 14,842 | 24,770 | 39,612 |
Current liabilities | |||
Trade and other payables | (868) | (3) | (871) |
Provisions | (653) | (291) | (944) |
Non-current liabilities | |||
Deferred tax | (28) | (7,670) | (7,698) |
Total liabilities | (1,549) | (7,964) | (9,513) |
Net assets of businesses acquired | 13,293 | 16,806 | 30,099 |
Initial consideration (all cash) | 69,681 | ||
Total consideration | 69,681 | ||
Goodwill arising on acquisition | 39,582 |
The Group acquired the entire share capital of Rohrback Cosasco Systems Inc. and associated companies (RCS) on 30 May 2014 for an initial cash consideration of US$116,000,000 (£69,341,000). This was subsequently adjusted by an additional US$569,000 (£340,000) which was paid in July 2014 based on the final agreed value of the net tangible assets at the acquisition date.
RCS forms part of the Process Safety sector and specialises in the design, manufacture and sale of pipeline corrosion monitoring products and systems into diverse industries including oil, gas, petrochemical, pharmaceutical and utilities. The acquisition of RCS expands Halma's portfolio of critical safety products which are sold into the Energy and Utility markets to protect life and operational assets. The existing RCS management team remains in place and will continue to operate the business. 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 £14,697,000; marketing and technology related intangibles of £10,869,000; with residual goodwill arising of £39,582,000. The goodwill represents:
a) the technical expertise of the acquired workforce;
b) the opportunity to leverage this expertise across some of Halma's businesses; and
c) the ability to exploit the Group's existing customer base.
The RCS acquisition contributed £8,555,000 of revenue and £1,395,000 of profit after tax for the period ended 27 September 2014.
If this acquisition had been held since the start of the financial period, it is estimated that the Group's reported revenue and profit after tax would have been £4,426,000 and £772,000 higher respectively.
(C) Advanced Electronics Limited | |||
Book value£000 | Fair value adjustments£000 | Total£000 | |
Non-current assets | |||
Intangible assets | 3,088 | 5,911 | 8,999 |
Property, plant and equipment | 1,834 | (573) | 1,261 |
Current assets | |||
Inventories | 1,161 | (148) | 1,013 |
Trade and other receivables | 4,990 | (1,507) | 3,483 |
Corporation tax | - | 89 | 89 |
Cash and cash equivalents | 2,259 | 104 | 2,363 |
Total assets | 13,332 | 3,876 | 17,208 |
Current liabilities | |||
Trade and other payables | (2,759) | 703 | (2,056) |
Provisions | - | (364) | (364) |
Corporation tax | (582) | 582 | - |
Non-current liabilities | |||
Bank loans | (468) | - | (468) |
Deferred tax | - | (1,956) | (1,956) |
Total liabilities | (3,809) | (1,035) | (4,844) |
Net assets of businesses acquired | 9,523 | 2,841 | 12,364 |
Initial consideration | 15,927 | ||
Contingent purchase consideration paid | 2,105 | ||
Contingent purchase consideration estimated to be paid | 3,949 | ||
Total consideration | 21,981 | ||
Goodwill arising on acquisition | 9,617 |
The Group acquired the entire share capital of Advanced Electronics Limited (Advanced) on 14 May 2014 for an initial consideration of £15,927,000 (£458,000 of which was satisfied by loan notes). Contingent consideration is payable over a two-year period based on the profits of the company for the twelve months to April 2014 and eleven months to March 2015. The total estimated payable is £6,054,000, of which £1,955,000 has been paid in cash and £150,000 in loan notes in the period. A further £696,000 has been agreed and is due to be paid in November 2014 and the remainder, subject to actual performance, in July 2015. The maximum contingent consideration payable is £10,100,000 and the current provision represents management's best estimate of the likely payable based on performance observed to date.
Advanced forms part of the Infrastructure Safety sector and specialises in the manufacture of networked fire detection and control systems. Advanced's controllers can be integrated into system solutions using field devices and products from a broad spectrum of suppliers, meeting the increasingly diverse regulatory requirements across the world. Its main manufacturing facility is located near Newcastle in the UK with a dedicated electronics and software development facility in Barnsley. It has additional commercial offices in the UK, the USA and Dubai. Advanced brings to Halma complementary products that help capture the international growth opportunity in the increasingly regulated Fire market. 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 £5,306,000; marketing and technology related intangibles of £1,463,000; with residual goodwill arising of £9,617,000. Included in the £5,911,000 fair value adjustment to intangible assets shown above is a reduction of £858,000 to the carrying value of capitalised development costs resulting from the application of Halma accounting policies to the acquisition date balance. The residual goodwill represents:
a) the technical expertise of the acquired workforce;
b) the opportunity to leverage this expertise across some of Halma's businesses; and
c) the ability to exploit the Group's existing customer base.
The Advanced acquisition contributed £6,039,000 of revenue and £660,000 of profit after tax for the period ended 27 September 2014. If this acquisition had been held since the start of the financial period, it is estimated that the Group's reported revenue and profit after tax would have been £1,214,000 and £163,000 higher respectively.
(D) Plasticspritzerei AG | |||
Book value£000 | Fair value adjustments£000 | Total£000 | |
Non-current assets | |||
Property, plant and equipment | 11 | 556 | 567 |
Current assets | |||
Inventories | 81 | (36) | 45 |
Trade and other receivables | 596 | 36 | 632 |
Cash and cash equivalents | 1,815 | - | 1,815 |
Total assets | 2,503 | 556 | 3,059 |
Current liabilities | |||
Trade and other payables | (289) | (18) | (307) |
Provisions | (110) | (4) | (114) |
Corporation tax | (104) | (255) | (359) |
Non-current liabilities | |||
Provisions | - | (17) | (17) |
Retirement benefit obligations | - | (234) | (234) |
Total liabilities | (503) | (528) | (1,031) |
Net assets of businesses acquired | 2,000 | 28 | 2,028 |
Initial cash consideration | 5,678 | ||
Total consideration | 5,678 | ||
Goodwill arising on acquisition | 3,650 |
On 2 May 2014 the Group acquired Plasticspritzerei AG (Plasticspritzerei), located in Wolfhalden, Switzerland at the same facility as another Group company, Medicel AG (Medicel). Initial consideration paid for the trade and assets of the business was CHF8,403,000 (£5,678,000) including the consideration of CHF917,000 (£620,000) received for the Group's disposal of its 50% ownership interest in its associate PSRM Immobilien AG (PSRM). The Group then immediately sold the industrial segment of Plasticspritzerei for CHF2,673,000 (£1,806,000) to a third party, resulting in a net cash cost to the Group of CHF4,813,000 (£3,252,000) (CHF5,730,000 (£3,872,000) excluding the proceeds from the PSRM disposal). These transactions have resulted in the Group owning only those assets which support Medicel's business. Plasticspritzerei will be operated by Medicel's management within Halma's Medical sector, further expanding the Group's manufacturing excellence in ophthalmic diagnostic and surgical instrumentation.
No customer relationship intangibles were recognised as part of this transaction because Medicel is the sole customer for the Plasticspritzerei business acquired and the fair value of any customer relationship is therefore eliminated from a Group perspective. Goodwill of £3,650,000 was recognised as part of this transaction, representing the excess of the fair value of consideration transferred over the fair value of the assets acquired and is attributable to:
a) the technical expertise of the acquired workforce;
b) the opportunity to secure and advance the supply chain of Medicel AG; and
c) the ability to exploit the Group's existing customer base.
The Plasticspritzerei acquisition resulted in intercompany sales to Medicel of £971,000 for the period ended 27 September 2014 and contributed £371,000 to profit after tax for the Group for the same period. If this acquisition had been held since the start of the financial period, it is estimated that the Group's reported revenue and profit after tax would have been £nil and £52,000 higher respectively.
11 Disposal of subsidiary and interests in associates
On 30 May 2014, the Group disposed of Monitor Elevator Products, Inc. (Monitor) from its Infrastructure Safety sector. The total consideration was US$6,243,000 (£3,716,000), of which US$5,514,000 (£3,282,000) was received in cash at completion, and subsequently reduced by US$171,000 (£102,000) for the final agreed closing net asset value. The remaining US$900,000 was retained in escrow to be released to Halma on the second anniversary of the transaction subject to any valid warranty/indemnity claims being made by the purchaser. The Directors estimate that the entire US$900,000 held in escrow will be received.
The profit on disposal was US$1,821,000 (£1,084,000), which is net of £189,000 of cumulative foreign exchange losses reclassified to the Income Statement and £294,000 of disposal costs. Net assets disposed were US$3,610,000 (£2,149,000). No goodwill was disposed of or impaired as a result of this transaction.
On 14 July 2014 the Group disposed of 28,570 shares in Optomed Oy (Optomed), representing 11% of its shareholding in the associate. Consideration received was €876,000 (£695,000). This transaction, after disposal costs of £8,000 resulted in a profit on disposal of £215,000. The Group's residual interest in Optomed is 34%. As one of the largest shareholders, the Group continues to exercise significant influence, but not control, over the company and so continues to apply the equity method of accounting for its interest in Optomed.
The Group's disposal of its 50% ownership interest in PSRM Immobilien AG (PSRM) for CHF917,000 (£620,000) resulted in a fair value gain being recognised in the Income Statement of £131,000. This represented the excess of the fair value of the Group's interest in the associate over its carrying value.
The £4,221,000 cash inflow on disposal of businesses shown in the Consolidated Cash Flow Statement represents the £695,000, £620,000 and £3,180,000 proceeds from the sale of the shares in Optomed, PSRM and Monitor respectively plus the £28,000 overdraft in Monitor less the combined disposal costs of £302,000.
The total profit on disposal of operations shown in note 2 of £1,430,000 comprises £1,084,000 for the disposal of Monitor, £215,000 for the partial disposal of shares in Optomed and £131,000 for the fair value gain recognised in relation to the disposal of PSRM.
In the prior period the loss on disposal relates to the disposal by the Group, in 2012, of its Asset Monitoring businesses, comprising Tritech Holdings Limited and its subsidiary Tritech International Limited, and Volumatic Limited. Further details are provided on page 143 of the 2014 Annual Report and Accounts.
12 Fair values of financial assets and liabilities
As at 27 September 2014 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 and fixed rate borrowings approximate to the carrying value because interest rates are reset to market rates at intervals of less than one year.
The fair value of derivative 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 27 September 2014, the total forward foreign currency contracts outstanding were £17,728,000. 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 £622,000 (28 September 2013: £499,000; 29 March 2014: £496,000) asset and £338,000 (28 September 2013: £28,000; 29 March 2014: £167,000) liability in the Consolidated Balance Sheet.
Any movements in the fair values of the contracts are recognised in equity until the hedge transaction occurs, when gains/losses are recycled to finance income or finance expense.
13 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 2014 Annual Report and Accounts.
14 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 30 to 33 of the 2014 Annual Report and Accounts, which is available on the Group's website at www.halma.com.
The principal risks and uncertainties relate to:
· Remoteness of operations and globalisation
· Competition
· Economic conditions
· Funding, treasury and pension deficit
· Cyber security/Information Technology/Business interruption
· Acquisitions
· Laws and regulations
· Succession planning and staff quality
· Research & Development and Intellectual Property strategy
The Directors consider that the principal risks and uncertainties noted above continue to be relevant to the Group. As part of their ongoing assessment of risk throughout the period the Directors have considered the above risks in the context of the new Executive Board structure and the Group's delivery of its financial objectives. Movements in foreign exchange rates also remain a risk to financial performance. We mitigate the risk to demand by operating in markets underpinned by regulatory drivers (where customer spending is often non-discretionary), maintaining a diverse product portfolio and targeting continued growth in developing markets. In addition, Halma's model of autonomy allows local management to change strategy quickly when reacting to variable market conditions.
Although the Group uses forward foreign exchange contracts to mitigate its transactional currency exposure risk, it does not hedge the translation of its currency profits. In the first half of the year, the US Dollar, Euro and Swiss Franc were 9%, 6% and 4% weaker respectively relative to Sterling than in the first half of the previous year. The net result was a 5% negative impact on reported profit.
15 Responsibility statement
We confirm that to the best of our knowledge:
a) | these Condensed Financial Statements have been prepared in accordance with International Accounting Standard 34 'Interim Financial Reporting' as adopted by the European Union;
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b) | this Half Year Report includes a fair review of the information required by Disclosure and Transparency Rule (DTR) 4.2.7R (indication of important events during the period and description of principal risks and uncertainties for the remainder of the financial year); and
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c) | this Half Year Report includes a fair review of the information required by DTR 4.2.8R (disclosure of related party transactions and changes therein). |
By order of the Board
Andrew Williams Chief Executive
18 November 2014 |
Kevin Thompson Finance Director |