Amersham-based Halma PLC has reported record year-on-year financial results.
This includes a 16 per cent increase in revenue, as well as an adjusted profit before tax of £316m an increase on 14 per cent. On an organic constant currency basis, which excludes period-over-period impact from currency fluctuations, acquisitions and divestitures, and other items, this becomes an increase of 17% and 15% respectively.
The reported dividend of 18.88p is a seven per cent increase on the prior year. This means Halma’s dividend has grown by at least five per cent for 43 consecutive years.
The company also announced the expected retirement of Andrew Williams, currently Group Chief Executive. He will be succeeded by Marc Ronchetti, currently Chief Financial Officer, who has been appointed Chief Executive Designate.
Charlie Huggins, Head of Equities at Wealth Club, the UK’s largest broker for high-net-worth and sophisticated investors, commented: “Halma is a true British success story, with a stunning track record of dividend growth. In a world focused on short-term noise, it’s worth taking a step back to look at how it’s been achieved.
“The playbook is simple. Use cash produced by existing businesses to buy new ones. Keep them largely separate to maintain their entrepreneurial spirit. Use the cash from these to buy more businesses, thus generating more cash. Rinse and repeat.
“Another key part of Halma’s strategy has been to focus on niche markets, like fire suppression, gas detection and oxygen monitoring. Niche sectors like these generally don’t offer the explosive growth opportunities that large, fast-growing markets can. But nor do they face the same competitive threats. Because Halma’s markets are quite small and typically dominated by a few key players, it’s difficult or unattractive for other competitors to enter.
“Of course it hasn’t all been plain sailing. Some of Halma’s acquisitions haven’t worked out. Some businesses have been sold off as their prospects have deteriorated. But that’s the advantage of a diverse group, focused on so many different end markets. If a few businesses are struggling, it shouldn’t bring the house down. Diversity has lent resilience to Halma, which has kept the dividends flowing.
“Put strong cash generation together with shrewd acquisitions, a focus on well-defined niches and a decentralised, entrepreneurial culture and the result has been nothing short of spectacular.”