Bucks Jun 18, 2019 (Thomson StreetEvents) — Edited Transcript of Halma PLC earnings conference call or presentation Tuesday, June 11, 2019 at 7:30:00am GMT
* Andrew J. Williams
* Marc A. Ronchetti
Andrew J. Williams, Halma plc – Group CEO, Member of Executive Board & Executive Director 
Well, good morning, everyone, and welcome to Halma’s full year results announcement. It’s a real pleasure to be presenting my 15th set of full year results and also to share the platform here with Marc, who is presenting his first set of full year results.
And as you see, we’ve had another year of excellent progress with strong financial performance and also increased strategic investment, which gives us continued confidence in sustaining that success into the future. What we’ll also convey through our results today is the way, which Halma continues to mature and evolve as an organization while at the same time protecting the qualities and the culture, which has underpinned our success in the past. However, I believe that culture, that maturity as an organization are going to be even more important as we drive our growth into the future. And as we go through the presentation, we’ll be bringing some of that to life for you, too.
It’s our 16th consecutive year of record revenue and profit with strong organic growth. Our revenue up by 13% to GBP 1.2 billion, and our profit up by 15% to GBP 246 million with return on sales of 20.3%, up on last year, and all 4 of our sectors above the 20% mark.
We’ve also increased our strategic investment across our 7 growth enablers. Really, that’s a combination of the individual company investments, for example, in R&D as well as the selective central investments that we do as a group to benefit across all of the group businesses.
R&D spend was up by 11% to GBP 63 million. That’s 5.2% of revenue, maintaining the levels we’ve seen in recent years. And our CapEx up by 31%. It’s GBP 29 million, which is a combination of fixed asset additions in the companies as well as some facilities expansion as businesses cope with the growth that they’ve been delivering over recent years.
And it’s been an active year with M&A. We’ve made 4 acquisitions, spending GBP 63 million, all 4 of those acquisitions in the safety sectors. And we also had a disposal in the first half of the year in our medical sector, and that all goes to show that we continue to actively manage the portfolio to ensure we’re still focused on markets with good long-term growth opportunities.
And finally, as usual, it’s been a really good year for cash performance, a strong cash performance to support our investment both organically and through acquisitions and also our dividends. So our cash flow up by — sorry, cash flow was 88% of adjusted operating profit, above our 85% KPI. And we’re proposing a final dividend increase of 7%, which, once approved, will be our 40th consecutive year of dividend per share increases of 5% or more. And finally, we finished with a net debt of GBP 182 million, providing us with significant capacity for future investment both organically and in acquisitions. So a really strong year even by Halma standards.
Now I’ve mentioned sustainable a number of times already, and I think these charts just start to illustrate what we mean by that. Because over the past decade, we’ve really shown good, sustainable revenue growth and profit growth. So over that period of time, our revenue has increased from around GBP 450 million to over GBP 1.2 billion with a compound growth rate of 10%, and our profit has improved from around GBP 80 million to almost GBP 250 million this year, which is a 12% compound growth rate.
I think that’s not just about selecting the right markets. It’s also about this relentless increased investment in the things that drive that growth and returns. And I think R&D has been a real story for us over the last decade of how we’ve managed to keep increasing that investment. Bear in mind, this is the operating companies’ individual decisions, increasing that investment as we’ve gone through the decade. So R&D spend has increased from GBP 23 million to around GBP 63 million this year, above 5% of revenue.
And our ability to sustain both growth and returns but also be really sensible with the way we deploy our capital, really effective with our capital allocation, is reflected in this return on total invested capital chart, which shows that our ROTIC has remained well above our WACC right the way through the decade and this year was up to 16.1%.
So what is it that enables us to maintain that long track record of sustainable value creation? And why will that continue to create value over the longer term? Well, I think there are 5 elements I’d like to take you through, which I think for Halma are really critical to our success, and they’re all related to one another and underpin our success.
The first one is we’ve got a strong purpose. We talk about growing a safer, cleaner, healthier future for everyone every day. And really, that means that we’re addressing long-term fundamental global needs and challenges. It also means that we’re attracting acquisitions, employees, strategic partners and investors that also share that goal.
We’ve got a clear strategy. We are looking to grow organically. We’re looking to grow through acquisition. We’re looking to target niche markets with global reach. And I think our disciplined focus, a very disciplined focus, of focusing on health, safety and environmental markets has ensured that we’ve continued to deliver on that strategy year in and year out. It also means that, from time to time, we sell businesses that no longer offer us those growth and those high returns that we’re looking for, or indeed, no longer fit our purpose.
We have a simple financial model. It’s that combination of strong organic growth with high returns, strong cash generation, which then allows us to invest in the business. It also allows us to make acquisitions, which, in turn, generates cash to do more of the same. It also enables us to pay progressive dividends to shareholders. And I think, importantly, for Halma, every company in the group is expected to contribute towards that financial model, towards that cash generation.
We set ourselves challenging targets. Just by setting those challenging targets, it does deliver higher levels of performance. So for example, the fact that we aspire to double the size of the group every 5 years means that we’re setting our aspirations at a high level both in terms of the investment that requires organically but also the amount of effort we have to put into making acquisitions. And we do that — we aim to do that while still maintaining very modest levels of financial gearing and also not seeking further injections of equity to sustain and drive that growth. And then finally, we have a robust organization and culture, and it’s been a real stable foundation of our success over the last 40 years. It acts as the glue that keeps the group on track while we go through periods of significant and constant change as markets evolve, as technology changes.
And I think the way that these 5 factors interrelate to one another really does drive that virtuous circle of sustainable value creation. I think, as we look forward and as we look at our business today, the fact that there’s so much innovation and disruption going on not just within our business but also outside our business means that, I think, particularly that organization and cultural point becomes more and more significant and indeed will become an increasing differentiator for Halma as we seek to sustain that success. So again, we’ll expand on that as we go through the presentation this morning.
Before I do that, I’d now like to hand over to Marc, who’s going to take you through the financial review.
Marc A. Ronchetti, Halma plc – Group CFO & Executive Director 
Thank you, Andrew. Good morning, everyone. A really pleasing set of full year results: record revenue, adjusted profits, high levels of cash generation with continued increased investment to support our future growth.
As Andrew stated, revenue grew 13% and profit grew 15% in the year, continuing our strong trend of year-on-year growth. And following an exceptionally strong first half with revenue up 16% and profit 19%, we delivered a good second half performance. Revenue grew 10% and profit increased by 11%, resulting in a strong performance for the full year.
So turning first to more detail on the revenue growth. As you can see, there was strong organic constant currency revenue growth of 10%. That’s double our 5% KPI. This benefited from double-digit revenue growth from 3 of our 4 sectors. The contributions from acquisitions was 3.1%, which included the purchases of Limotec, NavTech and RATH Communications in the year, while the disposal of Accudynamics was a small negative of 1%. There was a small positive effect from currency, with negative effect in the first half more than reversing in the second half as sterling weakened. And with the current volatility in exchange rates, we’ve included more detail in the appendices in terms of impacts going forward.
In terms of looking forward, the new financial year has started well. Order intake has continued at a good rate post-March, ahead of both revenue and order take for the comparable period last year.
Looking now at revenue by destination. So this is the revenue by destination with regional growth rates around the outside. As you can see, there was growth in all of our major regions both on a reported and organic basis with U.S.A., the U.K. and Europe performing strongly. The U.S.A. remains our largest sales destination at 37% of revenue. It was also our fastest-growing region with 18% on both reported and organic constant currency basis. This reflected double-digit percentage growth in all 4 sectors. The U.K. grew well at 11% organic constant currency, with all sectors, except medical, which accounts for only 7% of U.K. revenues, growing at double-digit percentage rate.
Mainland Europe’s growth benefited from good organic growth in Medical and Environmental & Analysis and from acquisitions, including Argus, Setco and Mini-Cam in 2017/’18 and NavTech in this financial year.
In Asia Pacific, we saw good growth in our largest markets in the region, including China, which grew 8% on an organic constant currency basis following very strong 20% growth last year, and Australasia, which grew 13%. The region’s overall growth rate reflected larger contract wins last year in China and South Korea and mixed performances in some smaller markets this year. We continue to see good growth potential in the APAC region by leveraging our growth hubs. Performance was more mixed in the rest of the world, with strong growth in some areas offset by challenging conditions elsewhere. And I’ll pick up on some specifics as I go through the sector reviews.
So switching to adjusted profit. Organic constant currency profit growth was strong at 11.1%, again, well above our 5% KPI. This was driven by the strong top line growth and margin improvement in 3 of our 4 sectors. Acquisitions contributed 3.2% to profit, reflecting good margins in the businesses we acquired in the last year, while the Accudynamics disposal also made a small contribution. As with revenue, there was a small positive effect from currency translation for the full year, and all of these factors contributed to headline profit growth of 15%.
I’ll now move on to looking at the performance in a little bit more detail at the sector level. And for your information, we’ve included the group summary split by sector and the 5-year track records in the appendix of the slides.
So turning first to Process Safety. Process Safety delivered good growth with revenue up by 7% both on a reported and organic constant currency basis. Revenue growth was slower in the second half, primarily due to less favorable conditions in the U.S. energy sector. Profit growth of GBP 2.1 million to GBP 46 million represented 5% reported growth and the same on an organic constant currency basis, which was below revenue growth given reorganizations in our Safety Interlocks and Pipeline Management businesses to improve their competitive position and performance in the future. There was no effects from acquisitions or disposals and only a small adverse effect from currency translation.
Looking at revenue by destination. There was strong growth in the U.S.A. despite the less favorable energy market conditions. This was supported by major logistics contract in our Safety Interlocks subsector. The U.K. also performed well with good progress in gas sensors and Safety Interlocks. And there was solid progress in Asia Pacific, and China grew very strongly while other regions declined, including energy-related markets in the Middle East.
In terms of the subsectors, the gas sensors and Safety Interlocks businesses performed strongly while Pressure Relief delivered flat revenue. Pipeline Management revenue declined during a period of reorganization.
Return on sales remained strong at 23% with the decline in the year driven by the one-off GBP 1.5 million reorganization costs. R&D spend was up 10% ahead of revenue. And with increased investment in innovation and marketing activity and the strength in leadership team, we’re aiming to deliver more consistent growth in the future, which is less sensitive to changes in Process Safety’s largest end market, oil and gas. Looking forward, we expect the sector to deliver further progress in the coming year.
Moving on to Infrastructure Safety, which had a really strong year, with revenue increasing by 17% and by 11% on an organic constant currency basis. Profit increased 21% to GBP 89 million, including 16% organic constant currency growth, with growth accelerating in the second half to 19%.
Acquisitions, including in the prior year Argus and Setco, and in the current year, Limotec, NavTech, RATH Communications and LAN Controls, added 5 percentage points to both revenue and profit growth.
There was growth in all regions, which was exceptionally strong in the U.S.A., partly reflecting our recovery from last year’s weaker performance. Both Mainland Europe, and to a lesser extent, the U.K., benefited from prior and current year acquisitions, while the U.K. also performed well on an organic constant currency basis, driven by good contribution from our Fire Detection and Security Sensors businesses.
Underlying performance in APAC and other regions was reasonably good against a tough comparative last year. We delivered double-digit percentage revenue growth from an organic constant currency basis in China and in Africa, Near and Middle East. All end-market segments delivered revenue and profit growth with the Fire, Security and Elevator Safety businesses performing strongly and good progress in People and Vehicle Flow.
The combination of cost control and increased gross margin meant that return on sales increased by 80 basis points to 21.8%, even though there was a 22% increase in R&D investment to GBP 24.9 million. In summary, the sector had a very strong year with widespread organic growth and a strong contribution from prior and current year acquisitions, and we expect it to make continued good progress in the coming year.
Following last year’s outstanding performance, Environmental & Analysis delivered strong organic growth and benefited from last year’s acquisition of Mini-Cam. Revenue increased by 15% and 11% on an organic constant currency basis. Profit grew 21% to GBP 66 million with organic constant currency growth of 13%. The Mini-Cam acquisition contributed 3 percentage points of growth to revenue and 7 percentage points to profit. There was a small benefit to revenue and profit from currency of just under 1%. The sector delivered revenue growth in all major regions, and this included impressive growth in the U.S.A., the sector’s largest market, which benefited from some large Spectroscopy & Photonics projects, and in the U.K., notably, in Environmental Monitoring, with continued demand from U.K. water companies for flow, pressure and leak protection. Mainland Europe also grew well, while Asia Pacific’s growth of only 1% was up against a very tough comparative of 24% growth last year, which was driven by large consumer electronics contract. The sector’s underlying broad base of our Asia Pacific business demonstrated good growth.
All 3 subsectors delivered good revenue and profit growth, and there was particularly strong contribution from Environmental Monitoring, which delivered double-digit organic growth and benefited from the Mini-Cam acquisition. This strong performance was reflected in return on sales, which improved by 1 percentage point to 22.2%, with good cost control more than offsetting a small reduction in gross margin, which was driven by company profit mix. We’re continuing to invest in new opportunities in this sector. R&D grew 8% to GBP 19.2 million following a very strong 17% increase last year. Overall, this was a strong year for Environmental & Analysis. And with continued investment, the sector is expected to make further progress in the year ahead.
The Medical sector delivered a good performance with revenue growing 8% and 10% on an organic constant currency basis. Profit increased by 15% to GBP 77 million with organic constant currency growth of 13%. There was a small benefit to revenue and profit from acquisitions, which included last year’s acquisitions of Cardios and CasMed, while the Accudynamics disposal reduced revenue but benefited profit.
There was growth in all major regions and in all subsectors. The U.S.A., the sector’s largest geographical end market, performed strongly, with Mainland Europe and Asia Pacific also delivering good growth. There was solid revenue growth in the U.K., while other regions reported a small decline organically following a strong performance last year.
In terms of the subsectors, Diagnostics performed very well, while Ophthalmology delivered strong growth through international expansion. Sensor Technology continued its successful penetration of its core market of location, services and acute care facilities in the U.S.A.
Return on sales increased by 1.5 percentage points to 25.1%, with gross margin also increasing, helped by favorable product mix and the Accudynamics disposal. Excluding the effect of Accudynamics, R&D spend increased to GBP 11.3 million, representing 3.7% of revenue.
The sector is expected to make continued progress in the coming year by further international expansion into developing markets, continued product and service development and further investment in talent.
Looking now at the cash flow. Really pleased to report cash conversion is strong at 88%, ahead of our KPI target of 85%. Working capital was well controlled with a smaller outflow of GBP 16 million compared to GBP 24 million last year. This represented an 8% increase in working capital compared to a 13% increase in revenue in the period and reflects the continuing focus on returns whilst delivering both revenue and profit growth.
CapEx at GBP 29 million increased by 31%. This was mainly driven by investment in automation, facility upgrades and investment in IT and operating systems, all to support our continued short- and medium-term growth. Looking forward, we expect CapEx in the coming year to be around GBP 35 million as we continue to invest in automation and modernization in our companies to enhance agility and efficiency.
The effective tax rate decreased to 18.6%, largely as a result of a full 12-month impact of the U.S. tax reforms in addition to some one-off credits in the year. Looking forward, I expect the effective tax rate to increase by circa 1% during 2019/’20, driven by increased profits and static interest deductions in the U.S. and the impact of geographical profit mix, including our recent acquisitions.
It’s also worth noting 2 one-off impacts on cash relating to tax in FY ’19/’20. Firstly, the U.K. government’s announcement to pull forward corporation tax payments will result in 6 payments being made in FY ’19/’20, the year of transition. We estimate the incremental one-off cash impact of circa GBP 5 million. Secondly, it’s likely we’ll have an additional tax payable of up to GBP 16 million relating to the recent European Commission ruling regarding U.K. Finance Company Partial Exemption constituting State Aid. Any cash payment would be refundable on successful appeal against the ruling, and I’ll update further at the half year.
The deficit on our defined benefit pension schemes reduced to GBP 39 million on an IAS 19 basis, down from GBP 54 million at last year-end. We made GBP 12 million of contributions in the year and agreed to make future cash contributions growing at a rate of 7% per annum aimed at eliminating the deficit on a technical provisions basis by December 2021.
We spent GBP 68 million on acquisitions in the year, including earnout payments from prior year acquisitions and acquisition costs. We’ve realized GBP 3 million from the Accudynamics disposal, and we also spent GBP 3 million on the purchase of assets from Awarepoint and Elpas for our Medical division.
The full year 2017/’18 and half year ’18/’19 dividends per share increased 7%, and we paid out GBP 57 million, continuing our policy of delivering progressive and sustainable dividends. With finance cost of GBP 8 million and currency and other movements of GBP 7 million, net debt at the year-end reduced by GBP 38 million to GBP 182 million. This represents a net debt-to-EBITDA ratio of 0.63x compared to 0.87x at the last year-end.
With the extension of our revolving credit facility by a further year to 2023, this gives us a very strong liquidity position with more than GBP 0.5 billion of liquidity available in our facilities and GBP 400 million of capacity within an operating range of up to 2x gearing.
Finally, just looking at our performance against our financial KPIs, an overall really strong year against the financial KPIs. However, it’s always good in a year where we’ve delivered to see that there are also some areas that we can further improve going forward.
So just picking up on a couple of those. Firstly, acquisition profit growth. At 3%, it was below our KPI despite 4 acquisitions in the year. And clearly, acquisitions are still a key part of our growth strategy. And Andrew will pick up a little bit more detail shortly.
That said, given our approach to acquisitions, which results in the less predictable timing of acquisitions, I did look back over the last 5 years, over which time we’ve averaged just under 4.5% of acquired profit. And of course, our combined organic and acquisition performance was well ahead of the combined growth KPI target of 10%.
Secondly, revenue growth from outside the U.K., U.S.A. and Europe was below our 10% KPI target at 3.2%. This does follow a very strong growth last year, and we continue to see good growth potential, and we’ll continue to invest in our international growth hubs.
Taking a step back and in summary, a really pleasing year. Record revenue and profit growth, increased returns, high levels of capacity in the balance sheet and significant investment for future growth, all of which gives me confidence in our ability to continue to deliver as we move forward.
I’ll now hand you back to Andrew for a strategy update.
Andrew J. Williams, Halma plc – Group CEO, Member of Executive Board & Executive Director 
Thanks, Marc. I’d just like to turn our attention now to the investments and actions that we are taking to sustain growth into the future. And it’s probably around 2 years now since we launched our expanded Halma growth strategy, and I have to say I’m really pleased with the transformation going on within our business to try and tackle some of those opportunities. And as I said earlier, I think that — and also growth in sustainable value creation. I think Halma’s ability to deliver strong performance, deliver record results whilst at the same time going through periods of substantial change, a real differentiator, a real important capability that we have. I think one of the reasons we can do that is that we’ve got a very clear understanding of what are the things we don’t want to change, what are the things that we actually want to protect and keep the same whilst we go through these periods of change. And I think I’d like to spend a few moments now talking about some of those core cultural organizational elements of our business that I think are really important to sustain and protect as we go forward.
A few other things that capture the real essence of what makes Halma a special business, what’s in our DNA, and I’m going to column our organizational genes just to sort of illustrate that point. So the first element to it, I think, is that we’ve — our purpose drives us. Many businesses talk about having a purpose. But for us, the purpose really does affect the decisions we make around organic growth, where we find organic growth and also our M&A decisions. So safer, cleaner, healthier really do inform those decisions. I think it also impacts upon the way which we behave, the way in which we operate and also the kind of partners that we want to work with to help us grow our business.
The second point is around agility. Agility is everything to Halma. I’m always impressed with the way in which our operating companies can see their markets changing very quickly, and then they are able to rapidly respond to that, whether it’s developing a new product, redirecting their sales effort, finding a small bolt-on acquisition. And even if you think about it at the group level, the way we’re structured allows us to move the portfolio around in the medium to long term to make sure we’ve always got a focus on good long-term growth markets with high returns. That flexibility in the portfolio is a real secret. Agility is a real secret to our success over the medium to long term.
We bet on talent. I think that’s always been true. Even when I joined the group, even when — I suppose I was a good example of that when I was made CEO 15 years ago. Our structure means that we really need a diverse group of exceptional leaders who are able to actually set and create strategy as well as deliver it, who want the autonomy but at the same time want to be held accountable for delivering against that. And we rely on that rather than having a very rigid operating system. We need that to generate the entrepreneurial kind of approaches that make our businesses successful.
The next one, I think, is really important. We are global niche specialists, which sounds like a bit of a contradiction, but we want to operate in global markets with long-term drivers because that gives us good growth opportunity. But at the same time, we find the niches where we can use our intellectual property or our application knowledge to not just deliver the growth but also deliver the high returns, which then sustain that cash generation and sustain that compounding growth model.
We invest for the future. Our diversity helps us take a long-term view in the investments that we can take. I think a great current example of that is the investment we’re making in digital because we’re delivering strong growth today, but we’re not yet getting the direct benefit of that investment we’ve made in digital capabilities. That’s still to come. And I think the exciting thing for me is that we have yet got the benefits of that. That’s still to come. And we know that that’s going to drive our growth in maybe 2 to 3 years’ time, but we’re making that investment today for the future.
And finally, we are structured for growth. Our decentralized structure is aligned with the markets that we operate in. We also supplement that with the central investment that we make in our growth drivers, in our expert teams. We also have a strong balance sheet. And all of that put together means that we’ve got the excess capacity we need not just to run the business today, but also be to taking action and thinking about where we need to be in the future. And I think that’s a really important element of how we operate.
And when you look at that — those 6 characteristics, I mean many businesses have many of these characteristics, but I think few businesses have the discipline and the patience to keep nurturing these over a long period of time while they’re going through constant periods of change. And as I go through what we’ve been doing strategically over the past year, the activity that’s been going on, I think these themes will start to come to life for you this morning.
So let’s turn to — now let’s turn to what we’ve been doing this past year, and I’m going to frame the conversation around our 7 growth enablers, which we’ve talked to you back at the half year about.
I think before I do that, it’s worth just mentioning that seeing our central costs have been increasing in line with revenue over the last 4 or 5 years since we launched the growth strategy, and I think one of the important things for me is around half of that central cost, half of those central costs are related to these growth enablers. They are the investments that we’re making to help drive the growth of the business, not just make sure the other half of the spend to make sure that things remain on track, we have good control and compliance and governance.
And during the year, we’ve had increased activity, increased investment across all 7 of these growth enablers. So for international expansion, we strengthened the leadership team in our international hubs, and we started to build a much broader support base, particularly in Asia Pacific, with a view to supporting M&A activity over the next 5 to 10 years. So far, most of our growth in Asia Pacific has been organic-led. We know that over the next 5 or 10 years there’s going to be good acquisition opportunities there.
In Finance & Risk, Marc has a new vision for this function, which isn’t just based on the foundations of good control, good compliance, but also building that capability and the function to build — to bring real business insight to the companies to enable them to make better decisions to grow better into the future.
In Strategic Communications, today, we’re launching a new group, brand design. And then next week, we’ll be launching a new global website. And I think all of this just provides us with a better foundation to tell the impactful stories to all the audiences out there in terms of not just how we’re delivering against our growth strategy, but also how we’re fulfilling our purpose.
So let’s look at the next 4 growth enablers in a little bit more detail, and we’ll start off with M&A. Overall, we continue to see a good pipeline of acquisition opportunities across all 4 of our sectors. And as Marc mentioned, this year, we completed 4 acquisitions. And in fact, all 4 of these acquisitions were in the Infrastructure Safety sector. Marc also mentioned that, in the Medical sector, we made 2 smaller asset purchases for our sensor business, CenTrak, and also 1 disposal, Accudynamics. All but 1 of the 4 transactions on the slide here we completed in the first half of the year. And just to remind you of that, we had LAN Controls, which brought new cloud-based solutions, and also Limotec, which brought a stronger EU presence, both for our Fire businesses. And then we have NavTech, which has brought us both new radar technology but also a new market niche involved in road safety.
In January, we acquired RATH Communications as a bolt-on for our Elevator Safety business, Avire. And that brings Avire new capabilities and new growth opportunities. For example, it brings a stronger presence in the U.S. market. It brings it new communication technologies, stronger e-commerce marketing capabilities, but also, again, a new market niche. RATH are involved in the safety regulated market in the U.S. called area of refuge communications, which is, if you like, a safe haven in buildings so that people who need to contact the emergency services can do so safely outside the structure of the building. And I think the reason I’ve highlighted that, I think it’s a great example, RATH and Avire is a great example of how the M&A growth enabler can help a Halma company that is maybe in a position where it’s facing more challenging market conditions to really broaden out its growth opportunities into new areas.
5 years ago, Avire was a business — an Elevator Safety business that was really struggling to maintain strong growth and returns because it was selling elevator door sensors to the global elevator OEMs. And today, by the acquisition of RATH, but also by the acquisition of Setco Microkey a couple of years ago, it’s now able to sell a much broader base of high-tech safety solutions to the Elevator Safety market but also to some of these new niches that RATH brings it to. So a great example of our agility and a great example of how the M&A growth enabler can help Halma businesses grow.
Next, I want to talk about digital and innovation. And I must say I’m really pleased with how the companies are embracing this and how they’ve used our support programs to accelerate their collaboration, their innovation and also build their digital capabilities. I think the other point is it’s really raised just the overall ambition and innovation across the group whether or not people have been involved in these programs or not.
We’ve got 3 programs which are very much aligned with our growth strategy. So we got programs lined up for core growth, helping individual businesses build digital capabilities in their existing markets. We’ve got a convergence accelerator, which is all about creating new business opportunities by combining capabilities of 2 or more businesses. And we’ve got an edge accelerator, which is very much focused on creating totally new digital business models in areas that are aligned with our purpose.
I thought I’d give you just a few examples of that. If we take the core digital accelerator, our gas detector business has added or built their digital capabilities, built their communications technologies. And just now, they’ve been awarded their first-ever hardware and data service contract with a major global brewer which gives the customer not just the hardware to monitor gas safety but also real-time visibility to ensure that they’ve got visibility of the health and safety risks that their operatives are facing day in, day out in the field.
The convergence accelerator, a couple of examples there. We’ve got 4 businesses across 3 of our sectors who are working together to develop a new platform to improve warehouse safety. And they’ve already got a trial partner set up to start testing that system in the coming months. We’ve got 3 Fire businesses that are working together to develop a dynamic fire escape system to guide people safely out of buildings. And again, they’ve got product demonstrations just about to start or underway with major companies on that, too. So we’re starting to get some traction with some of those new ideas.
And then finally, with the edge accelerator, as we see here, we’ve got 2 new projects which are currently being developed, which are focused on addressing the real needs of food waste — reducing food waste, and also one of our Medical businesses improving vital signs monitoring. So good progress across all 3 of those growth areas.
And then finally, we give our businesses a real insight into some of the disruptive new technologies that are out there, for example, by arranging visits to some innovation hotspots in areas such as Israel and Tel Aviv and Singapore and also by creating strategic partnerships with businesses that maybe have a capability that really could help us, like artificial intelligence, for example, but which we may not seek to acquire 100% ourselves. And so this is helping our businesses build relationships with start-ups, scale up some of their digital business ideas, and at the same time, as I say, give them real visibility of some of the potentially disruptive technologies that are out there that we may be able to embrace and use to grow our business in the future.
So again, really pleased with the progress we’re seeing across the year. We started to see some of these new solutions being launched as well as seeing the benefit of the overall improvement in collaboration and innovation across the business, and again, I think a really good example of how we are investing for the future.
And then finally, we continue to really focus on talent and culture. And I think, for me, there are 2 main ways in which we do this. It combines developing and creating the capabilities for our future needs but at the same time protecting the important elements of our organizational genes I mentioned earlier on that keep us on track today.
Firstly, as I say, we continue to attract talent ahead of the curve, especially in our leadership roles. And it was reinforced to me at our leadership conference in Rome in April this year, where we get all the Halma leaders together from all the operating companies. And over 40% of the people there this year were not at the same meeting 2 years previously. So we continue to really drive that change and evolution at the leadership level. And it just shows how important doing that is for even a growing business like Halma.
In terms of specific activity at Executive Board level, we’ve obviously successfully completed the CFO succession with Marc taking over from Kevin during the year. We’ve also successfully transitioned from the 4 sector CEOs to 2 sector CEOs, and that’s really operating well. We’ve upgraded — continued to upgrade our divisional chief executives who are chairing the operating companies as well as the Managing Director across the group. And those of you I know who are at the Medical sector’s investor event back in February would’ve had the opportunity to meet some of the great new people we’ve had joining the group as well as those who’ve come up through the organization.
And finally, I’m really pleased to see Halma future leaders from our graduate program starting to now be appointed on to our company board. We launched that program back in 2012. It’s great to see some of those individuals coming through. And as I said at the beginning, we bet on talent, and this is a really good example of that happening in practice across the group.
And secondly, we’re protecting our legacy, and a lot of that comes down to just articulating what’s in our DNA, what is it that we want to protect to maintain our entrepreneurial culture that gives people autonomy and at the same time hold them accountable for delivering growth and returns in the future. So we make sure that’s incorporated into all of our induction programs, our training and development programs. And again, a great opportunity for me back in April to be able to really give that important message to the new leaders so that they understand not just where we’re going, but where we’ve come from and what are the things that make our business successful into the future.
So you can see from all of our activity across all the growth enablers that, whilst we continue to grow, we also continue to keep investing and find new ways to invest in our business so that we can build our business for the future and sustain that success into the future.
So in conclusion, what have you heard today? Well, we’ve had a successful year. We’ve delivered another strong financial performance, extending our record of strong value creation with our 16th consecutive year of record revenue and profit as well as our 40th consecutive year of dividend growth of 5% or more.
We’ve also increased our investment across all of our growth enablers, very much aligned with our purpose and strategy. And we’ve also continued to reinforce the importance of nurturing the critical elements of Halma’s organization and culture that’s not only sustained success in the past but will deliver success in the future.
Looking to the year ahead, as Marc said earlier, the new financial year has started well with order intake ahead of revenue and also ahead of order intake for the same period last year. And given all of these factors, we expect the group to make good progress in the year ahead.
Well, that concludes this morning’s presentation. And I’d now like to hand over to you for any questions. As always, there’s a mic with all you there. If you can give your name and where you come from and then we’ll do our best to answer them.