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Halma exhibits purchasing power

Halma has impressive growth rates and a knack for acquisitions
November 20, 2018

Halma (HLMA) may have form when it comes to bolt-on acquisitions, but its first-half performance indicates the safety equipment manufacturer is not reliant on buying-in sales growth. Organic revenues were up 14 per cent as the group benefited from a regulatory clampdown in its core process safety, infrastructure safety, medical and environmental & analysis markets. 

IC TIP: Hold

An aggregate £3m was spent on three acquisitions during the period – which included online fire safety compliance management business LAN Control Systems – down on the £19m spent during the same period last year. Two post-period transactions included £21m for commercial radar manufacturer Navtech Radar. Revenue was up across all geographies and sectors. The US led the way, with organic growth of almost a quarter at constant currencies thanks to the phasing-in of some large orders gained during the latter part of last year. 

The return on sales improved to 19.3 per cent, from 18.7 per cent, despite the group's companies increasing investment research and development spend by 14 per cent, to £31.1m.  

Analysts at Investec expect adjusted pre-tax profits of £242m for the year to March 2019, giving EPS of 50.7p (from £214m and 45.3p in 2018). 

    HALMA (HLMA)    
ORD PRICE:1,348pMARKET VALUE:£5.12bn
TOUCH:1347-1349p12-MONTH HIGH:1,507pLOW: 1,136p
DIVIDEND YIELD:1.1%PE RATIO:31
NET ASSET VALUE:244p*NET DEBT:21%
Half-year to 30 SepTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
2017506.376.816.35.71
2018585.594.519.76.11
% change+16+23+21+7
Ex-div:27 Dec   
Payment:6 Feb   
Includes intangible assets of £886m, or 233p a share