Halma reported impressive results, even as its markets bottomed. Cost control was its primary tool - an 8 per cent headcount reduction pushed the adjusted profit margin up 150 basis points to 18.8 per cent. Cash generation was also strong, which not only funded the dividend boost - this is the 31st consecutive year that Halma has increased its dividend by 5 per cent or more - but also pushed the corporate bank balance into the black.
Self-help offset weak revenue growth. Halma makes safety devices, such as door sensors and fire detectors as well as monitoring instruments for the healthcare industry - so most of its markets are naturally defensive. But even they came under pressure - exclude currency effects and an acquisition and Halma's revenues actually shrank 3 per cent in the period.
But the outlook is more encouraging. The company finished the year with its order book up 14 per cent, has £100m to spend on acquisitions and boasts a fast-growing business in Asia. Following upgrades, JPMorgan Cazenove now expects adjusted pre-tax profits of £96m for 2011, giving EPS of 18.8p (£86m and 16.9p for 2010).
HALMA (HLMA) | ||||
|---|---|---|---|---|
| ORD PRICE: | 271p | MARKET VALUE: | £1.02bn | |
| TOUCH: | 270-271p | 12-MONTH HIGH: | 279p | LOW: 176p |
| DIVIDEND YIELD: | 3% | PE RATIO: | 17 | |
| NET ASSET VALUE: | 86p* | NET CASH: | £9m | |
| Year to 3 Apr | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2006 | 311 | 56.6 | 10.7 | 6.83 |
| 2007 | 351 | 62.2 | 11.8 | 7.18 |
| 2008 | 395 | 68.0 | 13.0 | 7.55 |
| 2009 | 456 | 72.8 | 14.1 | 7.93 |
| 2010 | 459 | 81.4 | 16.1 | 8.50 |
| % change | +1 | +12 | +14 | +7 |
Ex-div:21 Jul Payment:25 Aug *Including £229m or 61p of intangibles | ||||
