Halma Regulatory News (HLMA)

Halma today releases its scheduled trading update, for the period from 1 October 2019 to date.

The Group has made good progress during the period, although given the COVID-19 outbreak in the fourth quarter now expects adjusted profit before tax for the year ending 31 March 2020 to be in a range of approximately £265 million to £270 million. This compares to an average of current market forecasts of £275.5 million (see notes 1 and 2). Risks remain given the evolving and uncertain situation; the Board will continue to monitor the impact of the COVID-19 outbreak closely and take mitigating actions as appropriate.

The Group's financial position remains robust, with committed facilities totalling approximately £750 million (at current exchange rates), of which around 60% are drawn. The earliest maturity in these facilities is for £77 million (at current exchange rates) in January 2021, with the remaining maturities from 2023 onwards.

Order intake is currently ahead of revenue and ahead of the same period last year. We have continued to benefit in the period from the long-term growth drivers in our markets, the breadth of our portfolio and the resilience of our business model.

To date, the Group has delivered revenue growth in all four major regions and all sectors:

- The USA grew strongly and benefited from positive contributions from recent acquisitions. There was good growth in the UK and more moderate growth in Mainland Europe, while strong growth in Asia Pacific was driven by recent acquisitions.

- The Environmental & Analysis sector delivered strong organic growth in the period, with Infrastructure Safety delivering a strong performance, driven by positive contributions from recent acquisitions and solid organic growth. The Medical sector delivered solid revenue growth, although profit growth was lower. Although Process Safety's performance in the second half was affected by weaker oil and gas markets, the sector is expected to deliver a satisfactory performance for the full year.

The currency translation effect on the Group's results in the second half of the year is expected to be broadly neutral, resulting in a positive impact for the year ending 31 March 2020 as a whole (see note 3).

This has been a strong year for M&A activity, with ten acquisitions completed across all four sectors, for a total initial consideration of £227 million. We made seven acquisitions in the second half (see note 4 to this announcement, and our website www.halma.com). The integration of all acquisitions made during the year is currently progressing well.

The Group's next scheduled update on trading will be the announcement of its results for the year ending 31 March 2020, which will be released on 11 June 2020.

About Halma

Halma is a global group of life-saving technology companies, focused on growing a safer, cleaner and healthier future for people worldwide. Our innovative products and solutions address many of the key issues facing the world today. We operate in four sectors: Process Safety, Infrastructure Safety, Medical and Environmental & Analysis. We employ over 6,000 people in more than 20 countries, with major operations in Europe, the USA and Asia-Pacific. We target global niche markets where sustainable growth and high returns are supported by long-term drivers. Halma is listed on the London Stock Exchange and has been a member of the FTSE 100 index since December 2017.

Notes

1. Adjusted profit before tax is before amortisation and impairment of acquired intangible assets, acquisition items, restructuring costs and profit or loss on disposal of businesses.

2. The Board believes that current market forecasts for adjusted profit before tax for the year ending 31 March 2020 are in the range of £272.0 million to £278.3 million, with an average of £275.5 million.

3. Sterling has weakened in the financial year relative to many currencies, including the US Dollar and Euro and the currency translation impact on the Group's results for the financial year ending 31 March 2020 is expected to be positive. Based on the mix of currency denominated revenue and profit for the 2020 financial year, a 1% movement in the US Dollar changes full year revenue by £6.3 million and profit by £1.4 million. Similarly, a 1% movement in the Euro changes full year revenue by £1.6 million and profit by £0.3 million. The weighted average exchange rates relative to Sterling used to translate revenue and profit for the year ended 31 March 2019 were: US Dollar 1.31, Euro 1.14.

4. We made seven acquisitions in the second half of the current financial year.

In October 2019, we acquired the Trabectome and Goniotome product platforms from NeoMedix Inc., to enter the fast-growing minimally-invasive glaucoma surgery market. The initial cash consideration was US$8.1 million (£6.6 million) on a cash- and debt-free basis. Further earn-out considerations, capped at a total of US$17 million (£14.0 million) are payable in cash, dependent on performance in the three years to October 2022. In the same month, we also acquired Infowave Solutions Inc., a location sensing and software solutions provider, for CenTrak, to further expand its addressable market and enhance its technological and data capabilities. The initial consideration for Infowave was US$8.3 million (£6.8 million) with further earn-out considerations, payable in cash, of up to US$4 million (£3.3 million) in total, payable dependent on performance in each of the financial years ended March 2021 and March 2022.

In January 2020, we acquired NovaBone Products, LLC, a designer and manufacturer of US FDA-approved synthetic bone graft products, for US$97.0 million (£74.0 million). We also purchased a 70 per cent holding in FireMate Software Pty. Ltd, which provides cloud-based fire protection maintenance software to fire contractors, for an initial consideration of A$11.8 million (£6.2 million) and a further A$6.4 million (£3.3 million) contingent on performance to 30 June 2022. We have an option to purchase the remaining 30% of FireMate, exercisable in the six months from 31 March 2025.

In February 2020, we acquired Sensit Technologies, LLC, a gas leak detection company, for US$51.5 million (£39.6 million); Maxtec, LLC, a leader in the design, manufacture and distribution of oxygen analysis and delivery products, for US$20.0 million (£15.3 million); and Spreo, an indoor positioning and mapping platform company, to further enhance CenTrak's capabilities, for an initial consideration of US$0.6 million (£0.4 million) and contingent consideration of US$2.0 million (£1.5 million).

5. This Trading Update is based upon current management accounts information. Forward-looking statements have been made by the Directors in good faith using information available up until the date that they approved this statement. Forward-looking statements should be regarded with caution because of the inherent uncertainties in economic trends and business risks, including the effects of the current COVID-19 outbreak.

6. A copy of this announcement, together with other information about Halma, may be viewed on our website www.halma.com