Halma interims

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).

Today Halma announced their interim results and as expected after a strong start to the year, commented on here, the results were good with revenue up in all geographic segments and in all product divisions.

Revenue from continuing operations increased by 11.7% to £333.1m and adjusted PBT up 9% at £65.1m.  On an organic basis growth was 8% for revenue and 5% for PBT, this is impressive since organic revenue growth for the first quarter was 6% and 3% for the whole of last year.

Geographic sales growth was:

Asia Pacific  +15%, including +32% in China;

USA  +15%;

UK  +9%;

Europe  +8%;

Adjusted EPS from continuing operations was up 7.2% to 12.99p and Statutory EPS down 12.8% to 11.27p as last year benefited from a gain on disposal; if we exclude this gain from last year statutory EPS is up 4.9%. 

An interim dividend of 4.35p per share was declared, up 7.1%.

Order intake since the period end has continued to be slightly ahead of revenue and in line with their expectations.  In their July IMS they stated that order intake was 3% ahead of revenue for the first quarter, so I'm reading into this that it might be slightly less for the six months. 

Free cash flow was £47.1m compared to £40.2m last year and net debt decreased slightly from £110.3m to £109.8m as the majority of free cash flow was spent on acquisitions (Talentum plus ear-out payments on prior year acquisitions) for £16.7m and £29.7m on dividends and share buy-backs.

Management state that the business "...remains on track to make further progress in the second half of the year..."

This is a good set of results by a well run company, so not surprising that at 584p the company is probably fully valued at 23.9x last year's earnings, 20.5x this year's and 19.5x next year's.  The forward yield is less than 2% and so although Halma is a quality business with a wide economic moat, at these prices its difficult to see value, but worth watching for any weakness in the SP.