For many of us, bureaucrats obsessing about ‘elf ‘n’ safety’ are one of the great curses of the modern age, although you will not find Halma’s shareholders in agreement.
The company, based in the Buckinghamshire town of Amersham, entered the FTSE 100 just before Christmas last year at the ripe old age of 123 – and one of the key factors propelling it there is the growing importance of safety and protection.
Old City hands still use the shorthand ‘engineer’ to describe Halma’s activities. That is a rather broad-brush description these days.
The company itself prefers to call itself a “safety, health and environmental technology group” and, while the name may not necessarily be familiar, products made by Halma touch millions of lives every day.
These include sensors that control automatic doors, emergency telephones in lifts, security sensors, monitors that check for corrosion on pipelines, gas detection equipment, smoke detectors (in which it is the world’s second-largest player), equipment for medical assessment and diagnosis, equipment used in eye surgery and equipment that tests and disinfects water.
Today’s results, for the year to the end of March, highlight the demand for such products and services.
A decade ago, Halma reported full year sales of £395m and pre-tax profits of £68m.
Today it reported a 12% rise in sales to £1.08bn, the first time revenues have topped £1bn in a year, while adjusted pre-tax profits rose by 9% to £214m.
It represents the 15th consecutive year in which Halma has reported record sales and profits.
The company is also raising its dividend for the year by 7% – making this the 39th consecutive year in which the pay-out has been raised by more than 5%.
All four of the company’s divisions – Process Safety, Infrastructure Safety, Medical and Environmental & Analysis – enjoyed a rise in sales and profits, with the latter division the star performer.
Andrew Williams, the chief executive, sees strong growth prospects in coming years.
One example is fire safety. A growing world population and the trend for more people to live in cities means demand for such systems was rising anyway – but the Grenfell disaster last year has concentrated minds everywhere.
Image: Andrew Williams is the chief executive of Halma. Pic: Halma
The company noted today: “Tens of thousands of people worldwide die every year due to fire. Most of these deaths are preventable and employers and building owners are under increasing pressure to comply with stricter government laws and regulations to protect their workers.
“High-profile tragedies are driving welcome improvements in the fire safety of existing infrastructure and we expect to see more regulations coming into force to protect people’s lives in both commercial and residential property. Although standards and practices vary between countries, these standards are improving every year and becoming more closely aligned.”
Elsewhere, the company also expects the rising global population and increased urbanisation to boost growth in its Environmental & Analysis division, thanks to rising demand for energy, food and water.
It highlighted on Tuesday that 2.4 billion people across the world do not currently enjoy access to proper sanitation systems – a key cause of child mortality.
It added: “Only 26% of urban sanitation and wastewater services effectively prevent human contact with contaminants along the entire sanitation chain.
“Our water testing systems help identify the contaminants in these water networks and our inspection solutions monitor them to create standards-compliant inspection data to ensure integrity of the network.”
However, while this is a company whose growth prospects are clear, investors wanting to buy into that will have to pay up. The shares, which earlier today hit a record high, have risen by almost a third since the end of March and now trade at almost 30 times this year’s expected earnings – a rating twice that of the FTSE 100 itself.
That strong growth potential has been baked into the share price: this is a company the City now expects, routinely, to break its own records each year.
Central to that will be continued investment – the rate at which Halma is investing in research and development is significantly faster than most British companies – and on greater focus on the use of data and digital technology. It has just appointed its first chief innovation and digital officer.
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Mr Williams added: “There’s no room for complacency, we’ve got to keep pushing ahead and keep thinking about how we’ll maintain and accelerate that growth in the future.”
The millions of Britons who have indirectly become shareholders in this company by virtue of its promotion to the Footsie will be hoping it can.