2016_Halma_ARA_160610_2

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Key Performance Indicators continued ACQUIRE ACQUIRE ACQUIRE GROW GROW GROW INNOVATE INNOVATE EMPOWER EMPOWER INNOVATE EMPOWER STRATEGIC FOCUS Strong cash generation provides the Group with freedom to pursue its strategic goals of organic growth, acquisitions and progressive dividends without becoming highly-leveraged. STRATEGIC FOCUS The safety, health and environmental markets in Asia and other developing regions are evolving quickly. We continue to invest in establishing local selling, technical and manufacturing resources to meet this current and future need. STRATEGIC FOCUS We have maintained high levels of R&D investment and spending on innovation. The successful introduction of new products is a key contributor to the Group’s ability to build competitive advantage and grow organically and internationally. Cash generation % International revenue growth % Research and development % 86% Performance ≥85% Target 7% Performance ≥10% Target 5.1% Performance ≥4% Target 86 85* 89 87 86 11 14 9 16 7 4.7 5.0 4.7 4.8 5.1 12 13 14 15 16 * After restatement KPI DEFINITION Cash generation is calculated using adjusted operating cash flow as a percentage of adjusted operating profit. COMMENT Cash generation of 86% (2015: 87%) was in excess of the 85% target in the current year with strong cash performances across the Group. 2017 TARGET The goal of Group cash inflow exceeding 85% of profit is a metric that has relevance at all levels of the organisation and aligns management action with Group needs. We ensure that strong internal cash flow and availability of external funding underpin our strategic goals of organic growth, acquisitions and progressive dividends. READ MORE • Chief Executive’s Strategic Review p4 • Financial Review p42 • Note 3 to the Accounts p122 12 13 14 15 16 KPI DEFINITION Total sales to markets outside the UK, USA and Mainland Europe compared with the prior year. This KPI replaces the previous International Expansion KPI which measured these sales as a percentage of total Group revenue. COMMENT Revenue outside the UK, USA and Mainland Europe increased by 7% which is below the KPI target with strong growth in developed markets. Good progress was made in Asia Pacific and Africa, Near and Middle East but tough economic conditions and a major contract to South America in the prior year contributed to declining revenue there. 2017 TARGET The emphasis on international revenue growth at twice the rate of overall organic growth reinforces the importance of emerging markets and our strategy of establishing operations close to our end markets. READ MORE • Chief Executive’s Strategic Review p4 • Financial Review p42 • Note 1 to the Accounts p118 12 13 14 15 16 KPI DEFINITION Total research and development expenditure in the financial year (both that expensed and capitalised) as a percentage of revenue from continuing operations. COMMENT Total spend in the year increased significantly by 19% to £41.2m (2015: £34.6m) and as a percentage of revenue increased to 5.1%. All sectors increased R&D expenditure, in particular, Medical. 2017 TARGET New products contribute strongly to organic growth, maintaining high returns and building strong market positions. The 4% minimum investment target is appropriate to the mix of product life cycles and technologies within Halma. READ MORE • Chief Executive’s Strategic Review p4 26 Halma plc Annual Report and Accounts 2016
INNOVATE GROW ACQUIRE EMPOWER STRATEGIC FOCUS Halma conducts an annual survey of its employees to assess how well the Group’s values are aligned with its employees’ current experiences and future aspirations. Values alignment (out of 10) 5 Performance ≥5 Target 6 5 5 6 5 INNOVATE GROW ACQUIRE EMPOWER STRATEGIC FOCUS Safety is critical and a major priority for the Group. Halma collects details of its worldwide reported health and safety incidents and encourages all Group companies to seek continuous improvement in their health and safety records and culture. Health & Safety (Accident Frequency Rate) 0.11 Performance 0.22 0.20 0.09 0.15 0.11 50% Target STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS 12 13 14 15 16 12 13 14 15 16 12 13 14 15 16 KPI DEFINITION The survey of Group employees looks for matching values in a comparison of the 10 current culture values with the equivalent 10 values employees want to see in their working culture. COMMENT The results indicate consistent alignment over each year, meeting or exceeding the target of five or more matching values. Numbers of participants in the survey have increased by 12% since last year. 2017 TARGET The goal for 2017 will be to continue to improve the Group’s communication of its values and to maintain the high rate of employee participation in such surveys. KPI DEFINITION The year-to-date Accident Frequency Rate (AFR) is the total number of reportable* incidents in the period divided by the number of hours worked in that period by employees (including temporary staff and any overtime) multiplied by 100,000 hours (representing the estimated number of working hours in an employee’s work lifetime). The AFR figure represents an indication of how many incidents an employee will have in his/her working life. COMMENT The Health & Safety AFR performance this year was 0.11 (2015: 0.15) representing an improvement on last year. We continue to review all reported incidents and there are no specific underlying patterns which cause concern. KPI DEFINITION Number of current employees having attended an in-house development programme compared with the estimated pool of qualifying participants. COMMENT We met our target, with 58% of our qualifying participants having attended one of our development programmes. The performance metric is influenced by the introduction of new courses and new eligible employees joining the Group through acquisitions. Overall we are pleased with our performance and progress. 2017 TARGET Our range of new programmes, and the refreshment of existing programmes, indicate our continued commitment to achieving this KPI. READ MORE • Chief Executive’s Strategic Review p4 • Sustainability p48 2017 TARGET The target is maintained at 0.09 to match the health and safety performance which was achieved in 2014, with a view to ultimately setting a reportable incident target rate of zero. READ MORE • Chief Executive’s Strategic Review p4 • Sustainability p48 READ MORE • Sustainability p48 * Specified major injury incidents are reportable incidents which result in more than three working days lost Halma plc Annual Report and Accounts 2016 27
Page 1 and 2: Halma plc Annual Report and Account
Page 3 and 4: Highlights Another record year of r
Page 5 and 6: Infrastructure Safety Products whic
Page 7 and 8: Revenue from outside the USA, UK an
Page 9 and 10: Our decentralised organisational st
Page 11 and 12: INCREASING HEALTH AND SAFETY REGULA
Page 13 and 14: INCREASING DEMAND FOR LIFE-CRITICAL
Page 15 and 16: Acquisition focus Insight Our marke
Page 17 and 18: Insight Trapped key interlocking is
Page 19 and 20: Insight Regulations around the worl
Page 21 and 22: Insight People are living longer th
Page 23 and 24: Insight Many processes rely on prec
Page 25 and 26: Resources and relationships Committ
Page 27: GROW INNOVATE ACQUIRE EMPOWER STRAT
Page 31 and 32: process and one which is subject to
Page 33 and 34: Mitigation Increased risk No change
Page 35 and 36: Mitigation Increased risk No change
Page 37 and 38: a considerable impact on the oil an
Page 39 and 40: towards the use of more sensors, no
Page 41 and 42: A third of American adults suffer f
Page 43 and 44: Today 1.8 billion people drink faec
Page 45 and 46: Adjusted profit bridge £m 160 155
Page 47 and 48: fell from 21% to 20% this year, and
Page 49 and 50: The Group accounts for post-retirem
Page 51 and 52: ENVIRONMENTAL MANAGEMENT SYSTEM (EM
Page 53 and 54: In return, we offer: • The opport
Page 55 and 56: Our intention is to create effectiv
Page 57 and 58: PEOPLE AND CULTURE I reported in la
Page 59 and 60: CAROLE CRAN NON-EXECUTIVE DIRECTOR
Page 61 and 62: Corporate Governance Report Leaders
Page 63 and 64: Board governance structure Board Pr
Page 65 and 66: October 2015 • Group strategic pe
Page 67 and 68: The Board and Committee evaluations
Page 69 and 70: Jane Aikman is in her final term, h
Page 71 and 72: Audit Committee COMMITTEE CHAIRMAN
Page 73 and 74: POLICY ON AUDITOR INDEPENDENCE AND
Page 75 and 76: Remuneration Committee COMMITTEE CH
Page 77 and 78: REMUNERATION POLICY The remuneratio
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Opportunity Maximum opportunity: 15
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EXECUTIVE DIRECTOR SERVICE CONTRACT
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NON-EXECUTIVE DIRECTORS Unless othe
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SINGLE FIGURE OF TOTAL REMUNERATION
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The three-year period over which th
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PERCENTAGE CHANGE IN CEO REMUNERATI
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Date of grant As at 28 March 2015 G
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Other Statutory Information ACTIVIT
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The Companies Act 2006 also require
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Directors’ Responsibilities The D
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Risk Impairment of the carrying val
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AN OVERVIEW OF THE SCOPE OF OUR AUD
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Respective responsibilities of dire
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Consolidated Statement of Comprehen
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Consolidated Statement of Changes i
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Consolidated Cash Flow Statement Co
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Accounting Policies continued KEY A
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Critical accounting judgements Good
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Segmental reporting An operating se
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Accounting Policies continued Cash
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Cash and cash equivalents Cash and
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Notes to the Accounts continued 1 S
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Notes to the Accounts continued 1 S
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Notes to the Accounts continued 3 N
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Notes to the Accounts continued 6 P
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Notes to the Accounts continued 9 T
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Notes to the Accounts continued 11
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26 FINANCIAL INSTRUMENTS continued
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26 FINANCIAL INSTRUMENTS continued
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Company Statement of Changes in Equ
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Notes to the Company Accounts conti
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C12 RESERVES The Capital redemption
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C14 EXPLANATION OF TRANSITION TO FR
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2009/10 £000 2010/11 £000 2011/12
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Principal locations Telephone E-mai
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Principal locations Telephone E-mai
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DIVIDEND REINVESTMENT PLAN The Comp
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