Designs, manufactures & markets equipment for process safety, infrastructure safety, medical and environmental & analysis. Typical products include - fire detectors, gas detectors, water treatment systems, ophthalmic instruments and machine safety systems. I have a holding in my income portfolio (epic code: HLMA)
Announced full year results today and, as indicated in their earlier updates, were in line with market expectations. This has been a common theme over the years from an extremely well run company.
Full year revenue increased by 7% to £619.2m, with organic growth of 2% and 3% using constant currency. Adjusted PBT increased by 8% to £130.7m, organic growth was 4% which was 5% using constant currency. Excluding businesses sold during the current and prior years, revenue grew by 9% and PBT was up by 10%. Order intake in the second half remained slightly ahead of revenue ensuring that they made a positive start to the 2013/14 financial year. Adjusted EPS increased by 7.2% to 26.22p and statutory EPS increased by 9.6% with the higher acquisition related expense being more than offset by the £8.1m profit on disposal of Tritech. Total dividend for the year is 10.43p up 7.1% and represents the 34th year that dividend increases have been 5% or greater.
The company operates in markets that have solid long-term growth drivers - increasing health and safety regulations, increasing demand for healthcare and increasing demand for life critical resources such as energy and water.
Operating in these markets Halma delivers high double digit operating margins and ROE; owners' earnings (book value growth and dividends) have delivered 21% pa over the past 5 years, backed up by a free cash flow return of 20%.
When I first purchased Halma back in 2007 they were offering a yield of 3%, today unfortunately they yield just 2.1% (although 4.5% on my original price). This is the main reason that in 2011 I sold a large part of my holding, to reinvest in higher yielding stock that were also growing their dividends - Reckitt Benckiser and Unilever.
Very rarely are these shares offered at a cheap price, but as Warren Buffett said“It’s far better to buy a wonderful company at a fair price, than a fair company at a wonderful price.”
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