Halma Holdings Inc Annual Report 2023

FY2023 Annual Report · Halma Holdings Inc

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Halma plc | Annual Report and Accounts 2023

Growing a safer,
cleaner, healthier
future for everyone,
every day

Who we are

Halma is a global group
of life-saving technology
companies. Our companies
provide innovative solutions
to many of the key problems
facing the world today.

Our purpose
Our purpose is to grow a
safer, cleaner, healthier
future for everyone, every day.

Our Sustainable Growth Model
We deliver sustainable growth,
consistently high returns and
positive impact.

p20

Read more about
How we are structured

Our sectors
Our sector teams are the vital connection
between our companies and Growth
Enablers, and drive our M&A efforts.
They promote internal networks and
collaboration between companies,
enabling companies to capitalise on
broader sector trends.

Group teams
Group teams provide expertise in capital
management and control frameworks.
They support our companies through our
Growth Enablers, oversee our portfolio of
companies and the allocation of capital,
set our risk appetite, and ensure
compliance and good governance.

Continuous reinvestment
We maintain our strong market
and product positions by continuously
reinvesting in cash-generative R&D and
product innovation projects, which drive
future growth and maintain high returns.

Value-enhancing acquisitions
We make value-enhancing acquisitions
in core and adjacent niches, expanding
our growth opportunities, technology
capabilities and geographical reach.

Flexibility to invest and grow dividends
Our strong cash generation not only
supports continuous reinvestment
and value-enhancing acquisitions with
modest levels of financial leverage, but
also enables us to sustain a progressive
dividend policy for our shareholders.

We have a sustainable financial model
Our purpose drives our focus on growing
and acquiring businesses in global niches
in the safety, environmental, and
healthcare markets.

This market focus results in a highly
sustainable financial model with strong
organic growth and cash generation
allowing us to continuously reinvest in
future growth and acquisitions, as well as
increasing dividends to investors each year.

Strong organic growth and margins
The foundation of strong and consistent
organic revenue and profit growth is driven
by our disciplined focus on niches in global
markets which have resilient, long-term
growth drivers, and customer solutions
that offer consistently superior margins.

High returns and cash generation
We acquire and grow companies that
have relatively low capital intensity and
high returns on sales. This, together with
high rates of revenue growth and margins,
drives strong returns on capital and
high levels of cash generation.

Halma plc | Annual Report and Accounts 2023

Strategic
Report

Governance

Financial
Statements

Other
Information

We support our companies
through our Growth Enablers
Our Growth Enablers support our companies in delivering their growth strategies,
aligned with our purpose. These seven Growth Enablers leverage a unique set of skills
and expertise from across the Group, powered and coordinated by small central teams.

M&A
We acquire and grow businesses
sustainably over the long term in line
with our strategy, and sell or merge
businesses which are no longer aligned.

Digital Growth
We provide support to our companies
to accelerate their digital capabilities
and the technology to grow.

International Expansion
We assist our companies in growing their
business in key export markets, including
through our hubs in the USA, Brazil, UK,
India and China.

Innovation Network
We connect our companies globally
with each other and with experts to help
them learn faster, see new market trends
and establish strategic partnerships.

Op 1: Strat Comms
and Brand

Talent and Culture
We ensure Halma has world-class
teams and high-performance, inclusive
cultures across all three layers of our
operating model.

Strategic Communications and Brand
We enable our companies to reach all
stakeholders by helping them build their
brand, understand their market needs
and develop leading positions, using the
endorsement of the Halma brand where
it makes sense.

Finance, Legal and Risk
We give our leaders the insight to make
good decisions, through accurate, timely,
and actionable financial data, legal advice
and risk analysis.

We measure our achievements
and reward performance
We measure our achievements
through financial and non-financial key
performance indicators (KPIs), through
customer satisfaction and the delivery
of shareholder value.

We continue to review and develop
our financial and non-financial KPIs
to ensure they remain relevant to the
delivery of our strategy and to the
fulfilment of our purpose.

Rewarding our people
We reward our people for delivering
superior and sustainable growth and
returns, also holding them accountable
for delivering our strategy and complying
with our control frameworks. Short-term
incentives based on Economic Value
Added (profit growth, adjusted for a
charge for the use of any capital) are
balanced by longer-term incentives in
the form of Halma shares.

Setting challenging targets
We aspire to double our earnings every
five years while maintaining high returns,
and set targets for our growth, returns,
cash generation and investment KPIs.
We work hard to ensure that we have
the right culture, talent and diversity
and set challenging targets for employee
engagement, health and safety, training
and sustainability.

Closely monitoring performance
We closely monitor our companies’
performance, strategic plans and
forecasts. Twice a year, each company
certifies its compliance, with minimum
controls for finance, legal and IT; this
is complemented by independent
peer reviews of financial performance,
and internal and external audits.

Halma plc | Annual Report and Accounts 2023

Key performance indicators

We have a range of financial
and non-financial key
performance indicators
that we use to measure the
performance and success
of our business.

A number of financial key performance indicators are
alternative performance measures. See note 3 to the
accounts for reconciliations.

Halma plc | Annual Report and Accounts 2023

Organic profit growth (%)
(constant currency)

Acquisition profit growth (%)

EPS growth (%)

(adjusted earnings per share)

Organic revenue growth (%)

(constant currency)

3.1%

performance

≥5%

target (---)

2019

2020

2021

2022

2023

2019

2020

2021

2022

2023

2019

2020

2021

2022

2023

2019

2020

2021

2022

2023

Through careful selection of our market
niches and strategic investment, we aim
to achieve organic growth in excess of
our blended market growth rate, broadly
matching revenue and profit growth in
the medium term.

Organic profit growth at constant currency
was below our target, principally reflecting
a reduction in Return on Sales from the
exceptionally high level in 2022. Organic
growth over the last five years has averaged
6.5%, ahead of our target and in line with
our aspiration to double our profitability
every five years through a mixture of
organic and acquired growth.

Organic profit growth is calculated at
constant currency and measures the
change in adjusted profit achieved in
the current year compared with the prior
year from continuing Group operations.

The effect of acquisitions and disposals
made during the current or prior financial
year has been eliminated.

5.5%

performance

≥5%

target (---)

Pre interest

Post interest

16.6%

performance

≥10%

target (---)

10.2%

performance

≥5%

target (---)

(6)

We buy companies with business and

market characteristics similar to those

of existing Halma operations. Acquired

The measure of how successful we are in

Through careful selection of our market

growing our business organically and by

niches and targeted strategic investment,

acquisition coupled with strong financial

we aim to achieve organic growth in

businesses have to be a good fit with our

disciplines, including those related to tax

excess of our blended market growth

operating culture and strategy in addition

and capital allocation, is captured in the

rate, broadly matching revenue and

to being value enhancing financially.

Group’s adjusted earnings per share.

profit growth in the medium term.

Acquisition profit growth was ahead of our

Growth in adjusted earnings per share

Organic revenue growth at constant currency

target at 5.5% and 9.3% excluding financing

was above our KPI, reflecting organic

was substantially above our KPI, reflecting

costs. We completed seven acquisitions for

profit growth and a contribution from

widespread growth across all sectors and

a maximum total consideration of £397m,

acquisitions, as well as a substantial

a record spend. We have completed two

benefit from currency translation.

regions. Growth was substantially ahead

of our target in both halves of the year.

further acquisitions since the year end

Growth in adjusted earnings per share

Organic constant currency revenue growth

and have a healthy pipeline of M&A

over the past five years has averaged

has averaged 7.4% over the last five years,

opportunities.

11.1%, in line with our KPI.

ahead of our target.

Acquisition profit growth measures the

Adjusted earnings per share is calculated

Organic revenue growth is calculated

annualised profit (net of financing costs)

as earnings from continuing operations

at constant currency and measures the

from acquisitions made in the year,

measured at the date of acquisition,

expressed as a percentage of prior

year profit.

attributable to owners of the parent

before adjustments (as outlined on

change in revenue achieved in the current

year compared with the prior year from

page 198) and the associated taxation

continuing Group operations.

thereon, including the increase in the

UK’s corporation tax rate from 19% to

25% (2022 only), divided by the weighted

average number of shares in issue during

the year (net of shares purchased by the

Group and held as own shares).

The effect of acquisitions and disposals

made during the current or prior financial

year has been eliminated.

The Board has established a long-term
organic growth target of at least 5% pa,
slightly above the blended long-term
average growth rate of our markets.

Acquisitions must meet our demanding

We aim for the combination of organic

The Board has established a long-term

criteria and we continue to have a strong

and acquisition growth to exceed an

minimum organic revenue growth target

pipeline of opportunities to meet our

average of 10% pa over the long term.

of 5% pa, slightly above the blended long-

minimum 5% growth target.

term average growth rate of our markets.

The Directors consider that adjusted

earnings represent a more consistent

measure of underlying performance.

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Growth in organic profit is a key element
of the Economic Value Added (EVA)
performance which forms the basis of
the annual bonus plan for Group, sector
and company boards, requiring consistent
annual and longer-term growth, with
disciplined financial management.
See the Annual Remuneration Report
for details of the EVA calculation.

Growth in acquired profit is the second key

EPS provides a clear link to the aims of

Organic revenue drives earnings growth

element of the EVA performance which

the business growth strategy. It is a key

which contributes to the EVA performance.

forms the basis of the annual bonus plan

financial driver for our business and

This forms the basis of the annual bonus

for Group, sector and company boards,

provides a clear line of sight for our

requiring consistent annual and longer-

term growth, with disciplined financial

executives. EPS growth is 50% of the

performance condition attaching to

plan for Group, sector and company

boards, requiring consistent annual

and longer-term growth with disciplined

management.

the Executive Share Plan.

financial management.

3.1%

performance

≥5%

target (---)

Through careful selection of our market

niches and strategic investment, we aim

to achieve organic growth in excess of

our blended market growth rate, broadly

matching revenue and profit growth in

the medium term.

Organic profit growth at constant currency

was below our target, principally reflecting

a reduction in Return on Sales from the

exceptionally high level in 2022. Organic

growth over the last five years has averaged

6.5%, ahead of our target and in line with

our aspiration to double our profitability

every five years through a mixture of

organic and acquired growth.

Organic profit growth is calculated at

constant currency and measures the

change in adjusted profit achieved in

the current year compared with the prior

year from continuing Group operations.

The effect of acquisitions and disposals

made during the current or prior financial

year has been eliminated.

Strategic
Report

Governance

Financial
Statements

Other
Information

Organic profit growth (%)

(constant currency)

Acquisition profit growth (%)

EPS growth (%)
(adjusted earnings per share)

Organic revenue growth (%)
(constant currency)

5.5%

performance

≥5%

target (---)

Pre interest
Post interest

16.6%

performance

≥10%

target (---)

10.2%

performance

≥5%

target (---)

(6)

2019

2020

2021

2022

2023

2019

2020

2021

2022

2023

2019

2020

2021

2022

2023

2019

2020

2021

2022

2023

We buy companies with business and
market characteristics similar to those
of existing Halma operations. Acquired
businesses have to be a good fit with our
operating culture and strategy in addition
to being value enhancing financially.

The measure of how successful we are in
growing our business organically and by
acquisition coupled with strong financial
disciplines, including those related to tax
and capital allocation, is captured in the
Group’s adjusted earnings per share.

Through careful selection of our market
niches and targeted strategic investment,
we aim to achieve organic growth in
excess of our blended market growth
rate, broadly matching revenue and
profit growth in the medium term.

Acquisition profit growth was ahead of our
target at 5.5% and 9.3% excluding financing
costs. We completed seven acquisitions for
a maximum total consideration of £397m,
a record spend. We have completed two
further acquisitions since the year end
and have a healthy pipeline of M&A
opportunities.

Growth in adjusted earnings per share
was above our KPI, reflecting organic
profit growth and a contribution from
acquisitions, as well as a substantial
benefit from currency translation.
Growth in adjusted earnings per share
over the past five years has averaged
11.1%, in line with our KPI.

Organic revenue growth at constant currency
was substantially above our KPI, reflecting
widespread growth across all sectors and
regions. Growth was substantially ahead
of our target in both halves of the year.
Organic constant currency revenue growth
has averaged 7.4% over the last five years,
ahead of our target.

Acquisition profit growth measures the
annualised profit (net of financing costs)
from acquisitions made in the year,
measured at the date of acquisition,
expressed as a percentage of prior
year profit.

The Board has established a long-term

organic growth target of at least 5% pa,

slightly above the blended long-term

average growth rate of our markets.

Acquisitions must meet our demanding
criteria and we continue to have a strong
pipeline of opportunities to meet our
minimum 5% growth target.

Adjusted earnings per share is calculated
as earnings from continuing operations
attributable to owners of the parent
before adjustments (as outlined on
page 198) and the associated taxation
thereon, including the increase in the
UK’s corporation tax rate from 19% to
25% (2022 only), divided by the weighted
average number of shares in issue during
the year (net of shares purchased by the
Group and held as own shares).

We aim for the combination of organic
and acquisition growth to exceed an
average of 10% pa over the long term.
The Directors consider that adjusted
earnings represent a more consistent
measure of underlying performance.

Organic revenue growth is calculated
at constant currency and measures the
change in revenue achieved in the current
year compared with the prior year from
continuing Group operations.

The effect of acquisitions and disposals
made during the current or prior financial
year has been eliminated.

The Board has established a long-term
minimum organic revenue growth target
of 5% pa, slightly above the blended long-
term average growth rate of our markets.

Growth in organic profit is a key element

of the Economic Value Added (EVA)

performance which forms the basis of

the annual bonus plan for Group, sector

and company boards, requiring consistent

annual and longer-term growth, with

disciplined financial management.

See the Annual Remuneration Report

for details of the EVA calculation.

Growth in acquired profit is the second key
element of the EVA performance which
forms the basis of the annual bonus plan
for Group, sector and company boards,
requiring consistent annual and longer-
term growth, with disciplined financial
management.

EPS provides a clear link to the aims of
the business growth strategy. It is a key
financial driver for our business and
provides a clear line of sight for our
executives. EPS growth is 50% of the
performance condition attaching to
the Executive Share Plan.

Organic revenue drives earnings growth
which contributes to the EVA performance.
This forms the basis of the annual bonus
plan for Group, sector and company
boards, requiring consistent annual
and longer-term growth with disciplined
financial management.

Halma plc | Annual Report and Accounts 2023

Key performance indicators continued

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Return on Sales (%)

Cash generation (%)

International revenue growth (%)

ROTIC (%)

(Return on Total Invested Capital)

19.5%

performance

21.1

20.3 19.9

20.7

19.5

18-22%

target range (---)

16.1

15.3

14.4 14.6 14.8

104

14.8%

performance

12-17%

target range (---)

78%

performance

≥90%

target (---)

18%

performance

≥10%

target (---)

(3)

2019

2020

2021

2022

2023

2019

2020

2021

2022

2023

2019

2020

2021

2022

2023

2019

2020

2021

2022

2023

We choose to operate in market niches
which are capable of delivering growth and
high returns. The ability to sustain these
returns is a result of maintaining strong
market and product positions sustained by
continuing product and process innovation.

Return on Sales remained well above our
minimum target, at 19.5%, and within our
longer-term range of 18-22%, although
below the unusually high levels achieved in
2021 and 2022. Return on Sales remained
above our minimum target in each of our
three sectors. We expect Return on Sales in
the 2024 financial year to return to levels
similar to the average of the five years
prior to the pandemic of around 20%.

Return on Sales is defined as adjusted
profit before taxation from continuing
operations expressed as a percentage
of revenue from continuing operations.

We aim to achieve a Return on Sales within
the 18% to 22% range while continuing to
invest to sustain growth.

We choose to invest in high return on

Strong cash generation provides the

The safety, environmental and health

capital businesses operating in markets

Group with freedom to pursue its strategic

markets in developing regions are

which are capable of delivering growth and

goals of investment in organic growth,

evolving quickly. We continue to invest

high returns. The ability to sustain growth

acquisitions and progressive dividends

in establishing local selling, technical

and high returns is a result of maintaining

without becoming highly leveraged. Our

and manufacturing resources to meet

decentralised structure ensures that cash

this current and future need.

strong market and product positions

sustained by continuing product and

process innovation.

management is controlled at the individual

company level and then transferred to the

central treasury function.

ROTIC increased to 14.8% and remained

Our 2023 cash conversion was solid at

Revenue outside the UK, the USA and

within our target range, and substantially

78%. Cash conversion in the first half

Mainland Europe increased by 18%, well

above our Weighted Average Cost of

was below our target at 63%, primarily

ahead of our target. This comprised a

Capital of 8.9% (2022: 7.1%). The change

as a result of strategic inventory

compared to the prior year principally

investment to maintain supply chain

reflected a benefit from exchange rate

resilience and support a very strong

strong performance in Asia Pacific, with

revenue growth of 12.6%, despite only

modest growth in China as a result of

movements, offsetting the effect of a

order book. Cash conversion improved

continuing COVID-related disruption,

lower level of constant currency earnings

substantially in the second half to 90%.

and very strong growth in other regions,

growth than in the prior year.

We currently expect to deliver a strong

following a small decline in the prior year.

cash performance in 2024.

ROTIC is defined as the post-tax return

Cash generation is calculated using

from continuing operations before

adjusted operating cash flow as a

Total sales to markets outside the UK, the

USA and Mainland Europe compared with

adjustments (as outlined on page 199)

percentage of adjusted operating profit.

the prior year.

and the associated taxation thereon,

The target for this KPI was increased in

including the increase in the UK’s

2020 from 85% to 90%, to account for the

corporation tax rate from 19% to 25%

beneficial effect of the implementation of

(2022 only), as a percentage of average

IFRS 16, which increased cash conversion

Total Invested Capital.

by approximately 5 percentage points. We

have not restated historical comparatives

prior to 2020, which should be compared

to the previous 85% target.

A range of 12% to 17% is considered

The goal of Group cash inflow exceeding

The emphasis on international revenue

representative of the Board’s expectations

90% of profit has relevance at all levels of

growth at twice the rate of overall organic

over the long term to ensure a good

the organisation and aligns management

growth reinforces the importance of

balance between growth, investment,

action with Group needs. We ensure that

emerging markets and our strategy

and returns.

strong internal cash flow and availability

of establishing operations close to

of external funding underpin our strategic

our end markets.

goals of organic growth, acquisitions and

progressive dividends.

ROTIC performance, averaged over three

Strong cash generation is closely correlated

International markets are an important

financial years, is 50% of the performance

with high return on capital which is a key

component of organic growth which, in

condition attaching to the Executive

component of our EVA bonus plan and

turn, drives the year-on-year improvement

Share Plan.

our ROTIC Executive Share Plan

in EVA demanded by our Annual Bonus plan.

vesting measure.

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Return on Sales is a measure of the
value our customers place on our solutions
and of our operational efficiency. High
profitability supports the generation of
high economic value and cash generation.
We choose a range in order to maintain a
balance between short-term performance
and investment for longer-term growth.

Halma plc | Annual Report and Accounts 2023

Return on Sales (%)

19.5%

performance

18-22%

target range (---)

21.1

20.3 19.9

20.7

19.5

We choose to operate in market niches

which are capable of delivering growth and

high returns. The ability to sustain these

returns is a result of maintaining strong

market and product positions sustained by

continuing product and process innovation.

Return on Sales remained well above our

minimum target, at 19.5%, and within our

longer-term range of 18-22%, although

below the unusually high levels achieved in

2021 and 2022. Return on Sales remained

above our minimum target in each of our

three sectors. We expect Return on Sales in

the 2024 financial year to return to levels

similar to the average of the five years

prior to the pandemic of around 20%.

Return on Sales is defined as adjusted

profit before taxation from continuing

operations expressed as a percentage

of revenue from continuing operations.

We aim to achieve a Return on Sales within

the 18% to 22% range while continuing to

invest to sustain growth.

Return on Sales is a measure of the

value our customers place on our solutions

and of our operational efficiency. High

profitability supports the generation of

high economic value and cash generation.

We choose a range in order to maintain a

balance between short-term performance

and investment for longer-term growth.

Strategic
Report

Governance

Financial
Statements

Other
Information

ROTIC (%)
(Return on Total Invested Capital)

Cash generation (%)

International revenue growth (%)

16.1

15.3

14.4 14.6 14.8

14.8%

performance

12-17%

target range (---)

78%

performance

≥90%

target (---)

104

2019

2020

2021

2022

2023

2019

2020

2021

2022

2023

2019

2020

2021

2022

2023

18%

performance

≥10%

target (---)

2019

2020

(3)
2021

2022

2023

We choose to invest in high return on
capital businesses operating in markets
which are capable of delivering growth and
high returns. The ability to sustain growth
and high returns is a result of maintaining
strong market and product positions
sustained by continuing product and
process innovation.

Strong cash generation provides the
Group with freedom to pursue its strategic
goals of investment in organic growth,
acquisitions and progressive dividends
without becoming highly leveraged. Our
decentralised structure ensures that cash
management is controlled at the individual
company level and then transferred to the
central treasury function.

The safety, environmental and health
markets in developing regions are
evolving quickly. We continue to invest
in establishing local selling, technical
and manufacturing resources to meet
this current and future need.

ROTIC increased to 14.8% and remained
within our target range, and substantially
above our Weighted Average Cost of
Capital of 8.9% (2022: 7.1%). The change
compared to the prior year principally
reflected a benefit from exchange rate
movements, offsetting the effect of a
lower level of constant currency earnings
growth than in the prior year.

ROTIC is defined as the post-tax return
from continuing operations before
adjustments (as outlined on page 199)
and the associated taxation thereon,
including the increase in the UK’s
corporation tax rate from 19% to 25%
(2022 only), as a percentage of average
Total Invested Capital.

A range of 12% to 17% is considered
representative of the Board’s expectations
over the long term to ensure a good
balance between growth, investment,
and returns.

Our 2023 cash conversion was solid at
78%. Cash conversion in the first half
was below our target at 63%, primarily
as a result of strategic inventory
investment to maintain supply chain
resilience and support a very strong
order book. Cash conversion improved
substantially in the second half to 90%.
We currently expect to deliver a strong
cash performance in 2024.

Cash generation is calculated using
adjusted operating cash flow as a
percentage of adjusted operating profit.
The target for this KPI was increased in
2020 from 85% to 90%, to account for the
beneficial effect of the implementation of
IFRS 16, which increased cash conversion
by approximately 5 percentage points. We
have not restated historical comparatives
prior to 2020, which should be compared
to the previous 85% target.

The goal of Group cash inflow exceeding
90% of profit 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.

Revenue outside the UK, the USA and
Mainland Europe increased by 18%, well
ahead of our target. This comprised a
strong performance in Asia Pacific, with
revenue growth of 12.6%, despite only
modest growth in China as a result of
continuing COVID-related disruption,
and very strong growth in other regions,
following a small decline in the prior year.

Total sales to markets outside the UK, the
USA and Mainland Europe compared with
the prior year.

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.

ROTIC performance, averaged over three
financial years, is 50% of the performance
condition attaching to the Executive
Share Plan.

Strong cash generation is closely correlated
with high return on capital which is a key
component of our EVA bonus plan and
our ROTIC Executive Share Plan
vesting measure.

International markets are an important
component of organic growth which, in
turn, drives the year-on-year improvement
in EVA demanded by our Annual Bonus plan.

Halma plc | Annual Report and Accounts 2023

Key performance indicators continued

Research and development (%)
(% of revenue)

Employee engagement (%)

Health & Safety

(accident frequency rate)

(reduction in Scope 1 & 2 emissions from

(company board gender balance (%))

Diversity, Equity and Inclusion

5.5%

performance

≥4%

target (---)

5.2

5.4

5.3

5.6

5.5

76%

performance

74%

target (---)

0.09

0.08

2019

2020

2021

2022

2023

2019

2020

2021

2022

2023

2019

2020

2021

2022

2023

2020

2021

2022

2023

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.

Total R&D spend remained well above our
KPI target at 5.5% of revenue (2022: 5.6%).
In absolute terms, R&D expenditure in the
year increased by £17.4m to £102.8m.
This increasing investment reflected our
companies’ confidence in the growth
prospects of their respective markets.
In the medium term we expect R&D
expenditure to continue to increase
broadly in line with revenue growth.

Halma conducts an annual survey of its
employees to assess engagement across
the Group. This provides visibility of
engagement at the Group, sector
and company levels.

The baseline for our target was established
in 2017 when we ran our first global
employee engagement survey. We were
pleased to see the employee engagement
score remain strong this year, achieving
the same engagement score as last year.

Total research and development
expenditure in the financial year
(both that expensed and capitalised)
as a percentage of revenue from
continuing operations.

The engagement of employees as measured
through an externally facilitated survey over
nine dimensions: engagement, empowerment,
accountability, collaboration and teamwork,
communication, development, ethics and
fair treatment, innovation and leadership.

New products contribute strongly to
organic growth, maintaining high returns
and building strong market positions.

Our target remains to match or
beat the baseline achieved in 2017
of 74% engagement.

The 4% minimum investment target is
appropriate to the mix of product life
cycles and technologies within Halma.

Successful research and development
investment is a key component of
sustaining strong growth and returns
which, in turn, help to drive EVA, EPS and
ROTIC – all key elements of our annual
bonus and longer term incentive plans.

0.08

performance

<0.02

target (---)

0.06

0.02

Climate Change

2020 baseline (%))

-47%

performance

-42%

by 2030

target (---)

(35)%

(47)%

2020

2022

2023

29%

performance

40%

by 2024

target (---)

Health and safety is a top priority for

As part of our sustainability pillar of

the Group. Halma collects details of its

protecting our environment, reducing

supporting our people, diversity, equity

worldwide reported health and safety

our own emissions is a key focus area

and inclusion is a key focus area. Following

incidents and encourages all Group

for the Group as a whole and for each

our success in increasing gender diversity

companies to seek continuous

improvement in their health

and safety records and culture.

of our companies.

at the Halma and Executive Boards, our

current target is to increase gender

diversity on our company boards.

The Health & Safety AFR performance this

Scope 1 & 2 emissions have reduced by

This year we have 29% women on

year was 0.08 (2022: 0.09) representing a

47% since 2020, thereby exceeding our

company boards, increasing from 26%

decrease against last year. We continue

target, largely as a result of increasing

last year. Whilst this is an improvement,

to promote the importance of health and

renewable energy, alongside energy

we recognise we need to accelerate the

safety and review all reported incidents.

efficiency initiatives and other operational

pace of change to meet our target for

There are no specific underlying patterns

improvements. We have reported our 2020

all boards to be within a 40–60% gender

which cause concern.

Scope 3 baseline and are working towards

balanced range by 31 March 2024.

putting in place appropriate Scope 3 targets

while also reviewing our Scope 1 & 2 targets.

The year-to-date Accident Frequency Rate

The total reduction in global Scope 1 & 2

The total number of female board

(AFR) is the total number of reportable*

greenhouse gas emissions compared to our

members as a proportion of the total

incidents in the period divided by the

2020 baseline (as adjusted for acquisitions

number of Halma company board

number of hours worked in that period by

and disposals), with Scope 2 measured

directors (197 company directors as

employees (including temporary staff and

using a market-based approach that takes

at 31 March 2023).

any overtime) multiplied by 100,000 hours

account of contractual instruments for

(representing the estimated number of

renewable electricity. Full details of our

working hours in an employee’s work

definition and measurement are set

lifetime). The AFR figure represents an

out in our ESG Data Basis of Preparation

indication of how many incidents

at www.halma.com.

employees will have in their working lives.

The target is set at the lowest rate we have

The Group is targeting Net Zero Scope 1 & 2

All Halma company boards to be within

achieved as a Group and was re-set at

emissions by 2040. Our interim target for

a 40–60% gender balance range by

<0.02 in 2021.

2030, set in line with a 1.5 degree trajectory,

31 March 2024.

is to reduce Scope 1 & 2 emissions 42% from

our 2020 baseline.

5% of the maximum bonus opportunity

5% of the maximum opportunity of

of our Annual Bonus plan is related to

our Annual Bonus plan is related to the

achievement of an energy productivity

achievement of annual interim targets

target. This target was exceeded this year

which reflect our 31 March 2024 ambition

as outlined on page 145 of the Remuneration

of achieving 40-60% gender balance on

Committee Report. Energy productivity is a

our company boards. This applies to the

key action that can be remunerated on an

annual bonus for the Executive Directors

annual basis and underpins our achievement

and other senior leaders in the business –

of these Scope 1 & 2 targets. This applies to

across the Executive and sector boards

the annual bonus for the Executive Directors

and all MDs and Presidents of Halma

and other senior leaders in the business –

companies. The interim target of 33%

across the Executive and sector boards and

was not met this year. See page 145.

all MDs and Presidents of Halma companies.

* Specified major injury incidents are reportable

incidents which result in more than three

working days lost.

r
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Halma plc | Annual Report and Accounts 2023

(% of revenue)

5.5%

performance

≥4%

target (---)

5.2

5.4

5.3

5.6

5.5

76%

performance

74%

target (---)

We have maintained high levels of R&D

Halma conducts an annual survey of its

investment and spending on innovation.

employees to assess engagement across

The successful introduction of new

products is a key contributor to the

Group’s ability to build competitive

advantage and grow organically

and internationally.

the Group. This provides visibility of

engagement at the Group, sector

and company levels.

Total R&D spend remained well above our

The baseline for our target was established

KPI target at 5.5% of revenue (2022: 5.6%).

in 2017 when we ran our first global

In absolute terms, R&D expenditure in the

employee engagement survey. We were

year increased by £17.4m to £102.8m.

pleased to see the employee engagement

This increasing investment reflected our

score remain strong this year, achieving

the same engagement score as last year.

companies’ confidence in the growth

prospects of their respective markets.

In the medium term we expect R&D

expenditure to continue to increase

broadly in line with revenue growth.

Total research and development

expenditure in the financial year

The engagement of employees as measured

through an externally facilitated survey over

(both that expensed and capitalised)

nine dimensions: engagement, empowerment,

as a percentage of revenue from

accountability, collaboration and teamwork,

continuing operations.

communication, development, ethics and

fair treatment, innovation and leadership.

New products contribute strongly to

Our target remains to match or

organic growth, maintaining high returns

beat the baseline achieved in 2017

and building strong market positions.

of 74% engagement.

The 4% minimum investment target is

appropriate to the mix of product life

cycles and technologies within Halma.

Successful research and development

investment is a key component of

sustaining strong growth and returns

which, in turn, help to drive EVA, EPS and

ROTIC – all key elements of our annual

bonus and longer term incentive plans.

Research and development (%)

Employee engagement (%)

Health & Safety
(accident frequency rate)

Climate Change
(reduction in Scope 1 & 2 emissions from
2020 baseline (%))

Diversity, Equity and Inclusion
(company board gender balance (%))

Strategic
Report

Governance

Financial
Statements

Other
Information

0.08

performance

<0.02

target (---)

0.09

0.08

0.06

0.02

-47%

performance

-42%

by 2030
target (---)

2019

2020

2021

2022

2023

2019

2020

2021

2022

2023

2019

2020

2021

2022

2023

(35)%

(47)%

2020

2022

2023

29%

performance

40%

by 2024
target (---)

2020

2021

2022

2023

As part of our sustainability pillar of
supporting our people, diversity, equity
and inclusion is a key focus area. Following
our success in increasing gender diversity
at the Halma and Executive Boards, our
current target is to increase gender
diversity on our company boards.

This year we have 29% women on
company boards, increasing from 26%
last year. Whilst this is an improvement,
we recognise we need to accelerate the
pace of change to meet our target for
all boards to be within a 40–60% gender
balanced range by 31 March 2024.

The total number of female board
members as a proportion of the total
number of Halma company board
directors (197 company directors as
at 31 March 2023).

As part of our sustainability pillar of
protecting our environment, reducing
our own emissions is a key focus area
for the Group as a whole and for each
of our companies.

Scope 1 & 2 emissions have reduced by
47% since 2020, thereby exceeding our
target, largely as a result of increasing
renewable energy, alongside energy
efficiency initiatives and other operational
improvements. We have reported our 2020
Scope 3 baseline and are working towards
putting in place appropriate Scope 3 targets
while also reviewing our Scope 1 & 2 targets.

The total reduction in global Scope 1 & 2
greenhouse gas emissions compared to our
2020 baseline (as adjusted for acquisitions
and disposals), with Scope 2 measured
using a market-based approach that takes
account of contractual instruments for
renewable electricity. Full details of our
definition and measurement are set
out in our ESG Data Basis of Preparation
at www.halma.com.

The Group is targeting Net Zero Scope 1 & 2
emissions by 2040. Our interim target for
2030, set in line with a 1.5 degree trajectory,
is to reduce Scope 1 & 2 emissions 42% from
our 2020 baseline.

All Halma company boards to be within
a 40–60% gender balance range by
31 March 2024.

5% of the maximum bonus opportunity
of our Annual Bonus plan is related to
achievement of an energy productivity
target. This target was exceeded this year
as outlined on page 145 of the Remuneration
Committee Report. Energy productivity is a
key action that can be remunerated on an
annual basis and underpins our achievement
of these Scope 1 & 2 targets. This applies to
the annual bonus for the Executive Directors
and other senior leaders in the business –
across the Executive and sector boards and
all MDs and Presidents of Halma companies.

5% of the maximum opportunity of
our Annual Bonus plan is related to the
achievement of annual interim targets
which reflect our 31 March 2024 ambition
of achieving 40-60% gender balance on
our company boards. This applies to the
annual bonus for the Executive Directors
and other senior leaders in the business –
across the Executive and sector boards
and all MDs and Presidents of Halma
companies. The interim target of 33%
was not met this year. See page 145.

Halma plc | Annual Report and Accounts 2023

Health and safety is a top 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.

The Health & Safety AFR performance this
year was 0.08 (2022: 0.09) representing a
decrease against last year. We continue
to promote the importance of health and
safety and review all reported incidents.
There are no specific underlying patterns
which cause concern.

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
employees will have in their working lives.

The target is set at the lowest rate we have
achieved as a Group and was re-set at
<0.02 in 2021.

* Specified major injury incidents are reportable

incidents which result in more than three
working days lost.

Financial review

Financial review Part 2
This year, we have divided the financial review into two parts.

This Part 2 gives further detail on our financial performance and position,
including on our performance by region.

Please refer to the Chief Financial Officer’s review on pages 14 to 17
for commentary on the key financial metrics for the Group: revenue,
profit, cash generation, organic and inorganic investment, and returns.

Geographic revenue bridge (£m)

£1,852.8m

+21.5%

31.5%

1,852.8

12.6%

22.2%

4.4%

30.7%

Details of the performance of our individual sectors is given in each of
the sector reviews, on pages 38 to 55 of this Report.

1,525.3

Revenue growth in all regions
Our revenue performance by region reflected broadly-
based demand for the Group’s products and services,
with all regions delivering revenue growth on both a
reported and an organic constant currency basis.
Reported growth rates in each region were impacted
to differing extents by acquisitions (net of disposals),
and, outside the UK, positive effects from foreign
currency translation, given the relative weakness of
Sterling. On an organic constant currency basis,
there was strong growth in our two largest regions,
the USA and Mainland Europe, good growth in the
UK against a strong prior year comparative, and a
solid performance in Asia despite weakness in China
as a result of lockdowns. The smaller other regions
performed strongly.

Strong and broadly-based growth in the USA
Revenue in the USA increased by 30.7%, and the USA
remains our largest revenue destination, accounting for
42% of Group revenue, an increase of three percentage
points compared to the prior year. Reported revenue
included a 4.6% contribution from acquisitions (net of
disposals), and a positive effect of 14.0% from foreign
exchange translation. Organic constant currency
revenue increased 12.3%, with growth evenly spread
across the three sectors, reflecting good momentum
in the vast majority of subsectors.

2022

U S A

Euro pe

O ther

2023

U K

Asia P acifi c

Strong growth in Mainland Europe, led by Safety
and Healthcare Sectors
Mainland Europe revenue was 22.2% higher, or up
13.5% on an organic constant currency basis. Reported
revenue included a 5.0% contribution from acquisitions
(net of disposals), and a positive effect of 3.7% from
foreign exchange translation.

There was strong growth in the Safety Sector, led by the
two largest subsectors, Fire Safety and Urban Safety,
and in the Healthcare Sector, with a notably strong
performance in the ophthalmology market within
Therapeutic Solutions. Growth in the Environmental
& Analysis Sector was more modest, with a strong
performance in Environmental Monitoring partly offset
by weaker trends in Water Analysis and Treatment.

Good organic growth in the UK
UK revenue was 4.4% higher, or up 6.0% on an organic
constant currency basis. There was a negative effect
on reported revenue from the prior year disposal, which
was only partly offset by the benefit from acquisitions.
The largest sector, Safety, delivered good growth, led
by its largest subsector, Fire Safety. In the smaller Safety
subsectors, while there was only marginal growth in
Urban Safety following the end of a significant road
safety contract, there was strong momentum in the
Industrial Safety subsector. Healthcare grew strongly,
reflecting demand for our communication technologies
within the Healthcare Assessment & Analytics subsector.

Geographic revenue

United States of America

Mainland Europe

United Kingdom

Asia Pacific

Africa, Near and Middle East

Other countries

Halma plc | Annual Report and Accounts 2023

2023

% of
total

£m

597.2

308.1

267.0

250.8

53.6

48.6

2022

% of
total

Change
£m

183.6

68.3

11.9

31.6

10.0

22.1

£m

780.8

376.4

278.9

282.4

63.6

70.7

1,852.8

100

1,525.3

100

327.5

%
Change

30.7

22.2

4.4

12.6

18.6

45.7

21.5

% change
organic at
constant
currency

12.3

13.5

6.0

3.3

13.2

18.1

10.2

Strategic
Report

Governance

Financial
Statements

Other
Information

Adjusted1 profit increased by 10.9% in the first half
and by 17.5% in the second half. There was a first half/
second half split of Adjusted1 profit of 48%/52%,
compared to our typical 45%/55% pattern. Organic
profit at constant currency increased by 1.9% in the
first half, and by 4.3% in the second half, resulting
in growth of 3.1% for the year.

Central costs, which include our Growth Enabler
functions, increased from £30.9m in 2022 to £38.6m
below our previous guidance as a result of strong
cost control and revisions to the phasing of technology
project spend. The increase reflected investment in our
Growth Enabler teams, technology infrastructure and
talent to support our future growth, and investment in
reconnecting our Halma networks. In 2024, we expect
central costs to be approximately £44m, including the
revised phasing of technology spend referred to above.

Currency effects on reported revenue and profit
Halma reports its results in Sterling. Our other key
trading currencies are the US Dollar, Euro and to a
lesser extent the Swiss Franc, the Chinese Renminbi
and the Australian Dollar. Almost 50% of Group
revenue is denominated in US Dollars, approximately
26% in Sterling and approximately 12% in Euros.

The Group has both translational and transactional
currency exposure. Translational exposures are
not hedged, except for net investment hedges.
Transactional exposures, after matching currency
of revenue with currency costs wherever practical,
are hedged using forward exchange contracts for a
proportion (up to 75%) of the remaining forecast net
transaction flows where there is a reasonable certainty
of an exposure. We hedge up to 12 months forward.

Sterling weakened on average in the year, principally
in the first half. This gave rise to a positive currency
translation impact of 8.1% on revenue and 9.0%
on profit for the full year.

There was only modest growth within the Environmental
& Analysis Sector, given lower order intake from UK
utilities in Water Analysis and Treatment, and weaker
demand in Gas Detection.

Strong growth in other regions despite
weakness in China
Revenue from territories outside the UK/Mainland
Europe/the USA grew by 18.1%, which was ahead
of our 10% KPI growth target.

Asia Pacific revenue increased 12.6%, but by only 3.3%
on an organic constant currency basis. This reflected
an organic constant currency revenue decline in China,
our largest market in the region at approximately 6% of
Group revenue, mainly as a result of COVID lockdowns.
This was partly offset by strong growth in India and
Australasia, the second and third largest markets in
the region. Performance by sector was mixed, with
good organic constant currency growth in the Safety
Sector and a strong performance by the Environmental
& Analysis Sector. In Healthcare, however, organic
constant currency revenue declined. Reported revenue
included a 2.1% contribution from acquisitions (net of
the impact of disposals), and a positive effect of 7.2%
from foreign exchange translation.

Other regions, which represent 8% of Group revenue,
reported revenue 31.5% higher on a reported basis,
and up 15.6% on an organic constant currency basis
reflecting strong growth in all sectors.

First and second half profit performance
Revenue grew by 18.8% in the first half of the year and
by 24.0% in the second half, with second half revenue
11.6% higher than revenue in the first. Organic constant
currency revenue increased by 10.2%, comprising a 9.5%
increase in the first half and growth of 10.9% in the
second half. There was a positive effect of 8.3% from
currency translation in the first half, and of 7.9% in the
second half, giving a positive effect of 8.1% for the year
as a whole. Acquisitions (net of disposals) had a positive
effect of 3.2%, comprising a 1.0% positive effect in the
first half and 5.2% in the second half.

Currency effects

US$

Euro

Weighted average rates
used in the income statement

Exchange rates used to
translate the Balance sheet

First half

1.216

1.174

2023
Full Year

1.205

1.158

2022
Full year

1.367

1.176

2023
Year end

1.237

1.138

2022
Year end

1.315

1.183

Halma plc | Annual Report and Accounts 2023

Financial review continued

Based on the current mix of currency denominated
revenue and profit, a 1% movement in the US Dollar
relative to Sterling changes revenue by approximately
£9m and profit by approximately £2m. Similarly, a 1%
movement in the Euro changes revenue by approximately
£2m and profit by approximately £0.5m. If Sterling
weakens against foreign currencies, this has a positive
impact on revenue and profit as overseas earnings are
translated into Sterling.

If currency rates for the financial year to the end of
March 2024 were US Dollar 1.237/ Euro 1.138 relative
to Sterling respectively, and assuming a constant
mix of currency results, driven by the strengthening
of Sterling versus the US Dollar we would expect
approximately a £20m negative revenue and a £4m
negative profit impact compared to the financial year
to the end of March 2023, with the majority of the
impact in the first half of the year.

Solid cash generation
Halma’s operations have continually been cash
generative. Cash generated from operations in the year
was £325.2m (2022: £293.4m) and adjusted operating

cash flow, which excludes operating cash adjusting
items, and includes net cash capital expenditure, was
£293.2m (2022: £273.2m) which represented a cash
conversion of 78% (2022: 84%) of Adjusted operating
profit1. Cash conversion was 63% in the first half of
the year, reflecting strategic investment in inventory
to support supply chain resilience, but was stronger
at 90% in the second half of the year.

Overall, the strategic investment in inventory had an
impact on working capital, with an outflow of £95.7m,
comprising changes in inventory, receivables and
creditors (2022: outflow of £62.7m), which also reflected
the strong revenue growth in the period. These effects
would have been more significant were it not for the
continued good underlying control of working capital by
our companies. Adjusted operating cash flow is defined
in note 3 to the Accounts.

A summary of the year’s cash flow is shown in the tables
below. The largest outflows in the year were in relation
to acquisitions, dividends and taxation paid. Acquisition
of businesses including cash and debt acquired and fees
increased to £391.5m (2022: £164.4m), reflecting the

Operating cash flow summary

Operating profit

Acquisition items

Amortisation and impairment of acquisition-related acquired intangible assets

Adjusted operating profit

Depreciation and other amortisation

Working capital movements

Capital expenditure net of disposal proceeds

Additional payments to pension plans

Other adjustments

Adjusted operating cash flow

Cash conversion %

Non-operating cash flow and reconciliation to net debt

Adjusted operating cash flow

Tax paid

2023
£m

308.4

13.3

56.5

378.2

53.5

(95.7)

(27.1)

(15.2)

(0.5)

293.2

78%

2023
£m

293.2

(67.2)

2022
£m

278.9

3.1

42.7

324.7

49.1

(62.7)

(25.5)

(12.2)

(0.2)

273.2

84%

2022
£m

273.2

(56.0)

Acquisition of businesses including cash/debt acquired and fees

(391.5)

(164.4)

Purchase of equity investments

Disposal of businesses

Net finance costs and arrangement fees (excluding lease interest)

Net lease liabilities additions

Dividends paid

Own shares purchased

Adjustment for cash outflow on share awards not settled by own shares

Effects of foreign exchange

Movement in net debt

Opening net debt

Closing net debt

Halma plc | Annual Report and Accounts 2023

(6.7)

–

(18.0)

(34.1)

(73.3)

(22.3)

(4.5)

2.5

(321.9)

(274.8)

(596.7)

(0.7)

57.5

(5.7)

(21.5)

(68.7)

(19.3)

(7.1)

(5.9)

(18.6)

(256.2)

(274.8)

record M&A investment in the year. Dividends totalling
£73.3m (2022: £68.7m) were paid to shareholders in the
year. Taxation paid increased to £67.2m (2022: £56.0m).

Substantial funding capacity and liquidity;
financing cost well managed
The Group has access to competitively priced committed
debt finance, providing good liquidity. Group treasury
policy remains conservative and no speculative
transactions are undertaken.

We have a strong balance sheet and substantial available
liquidity. At the beginning of the 2023 financial year,
we refinanced our syndicated revolving credit facility.
The new facility remains at £550m. It now matures in
May 2028, following the exercise after the year end of
one of two one-year extension options. In addition,
we completed a new Private Placement issuance of
c.£330m in May 2022. The issuance consists of Sterling,
Euro, US Dollar and Swiss Franc tranches and matures
in July 2032, with an amortisation profile giving it a
seven year average life.

The financial covenants on these facilities are for
leverage (net debt /adjusted EBITDA) to not be more
than three and a half times and for adjusted interest
cover to be not less than four times. The Group continues
to operate well within its banking covenants with
significant headroom under each financial ratio.

At 31 March 2023, net debt was £596.7m, a combination
of £677.3m of debt, £87.9m of IFRS 16 lease liabilities and
£168.5m of cash held around the world to finance local
operations. Net debt at 31 March 2022 was £274.8m.

The gearing ratio at the year-end (net debt to
EBITDA) was 1.38 times (2022: 0.74 times). Net
debt represented 7% (2022: 3%) of the Group’s
year-end market capitalisation.

The net financing cost in the Income Statement of
£16.9m was higher than the prior year (2022: £8.4m).
This reflected a higher weighted average interest rate
in the year (see the “Average debt and interest rates”
table on page 36 for more information) and a higher
average level of indebtedness due to acquisitions. The
Private Placement issuance has resulted in an increased
proportion of fixed coupon debt on the Group’s balance
sheet (at 56% at 31 March 2023, compared to 30%
at 31 March 2022, excluding leases), which positions
us well ahead of any increases in interest rates, and
secures debt financing sufficient to meet the Group’s
likely medium-term requirements. We would expect
the net financing cost for the 2024 financial year to
be approximately £29m, if no further acquisitions were
to be made. This reflects higher average net debt and
a forecast higher weighted average interest rate in
the year.

The net pension financing impact under IAS 19 is included
in the net financing costs. This year the Group recognised
a gain of £1.1m (2022: charge of £0.3m).

Strategic
Report

Governance

Financial
Statements

Other
Information

Group tax rate decreased
The Group has major operating subsidiaries in a
number of countries and the Group’s effective tax
rate is a blend of these national tax rates applied
to locally generated profits.

The Group’s effective tax rate on adjusted profit was
lower than the prior year at 20.2% (2022: 21.6%) due
to one-off credits. Based on the latest forecast mix
of adjusted profits for the year to 31 March 2024 we
currently anticipate the Group effective tax rate to
be higher at approximately 22% of adjusted profits,
reflecting the increase in the UK corporation tax
rate to 25% from 1 April 2023.

On 2 April 2019, the European Commission (EC)
published its final decision that the UK controlled
Finance Company Partial Exemption (FCPE) constituted
State Aid. In common with many other UK companies,
Halma has benefited from the FCPE and had appealed
against the European Commission’s decision, as had
the UK Government. The EU General Court delivered
its decision on 8 June 2022. The ruling was in favour
of the European Commission but in August 2022 the
UK Government and the taxpayer have appealed this
decision. Following receipt of charging notices from
HM Revenue & Customs (HMRC) we made a payment
in February 2021 of £13.9m to HMRC in respect of tax,
and in May 2021 made a further payment of
approximately £0.8m in respect of interest.

Whilst the EU General Court was in favour of the EC,
our assessment is that there are strong grounds for
appeal and the appeal is expected to be successful.
As a result, and given the appeal process is expected
to take more than a year, we continue to recognise
a non-current receivable of £14.7m in the balance sheet.

Capital allocation and funding priorities
Halma aims to deliver high returns, measured by ROTIC²,
well in excess of our cost of capital. We invest to deliver
the future earnings growth and strong cash returns which
enable us to achieve this aim on a sustainable basis, and
our capital allocation priorities remain as follows:

• Investment for organic growth: Organic growth is our
first priority and is driven by investment in our existing
businesses, including through capital expenditure,
innovation in digital growth and new products,
international expansion and the development of
our people.

• Value-enhancing acquisitions: We supplement organic

growth with acquisitions in current and adjacent market
niches, aligned with our purpose. This brings new
technology, intellectual property and talent into the
Group and expands our market reach, keeping Halma
well-positioned in growing markets over the long term.

• Regular and increasing returns to shareholders: We

have maintained a progressive dividend policy for over
40 years and this is our preferred route for delivering
regular cash returns to shareholders without impacting
on our investment to grow our business.

Halma plc | Annual Report and Accounts 2023

Financial review continued

Continued investment for organic growth
All sectors continue to innovate and invest in new
products, with R&D spend determined by each individual
Halma company. R&D expenditure as a percentage of
revenue remained well above our KPI target of 4% at
5.5% (2022: 5.6%). In absolute terms, this meant that
R&D expenditure increased by £17.4m to £102.8m (2022:
£85.4m), and grew in line with revenue. This increasing
investment reflects our companies’ confidence in the
growth prospects of their respective markets. In the
medium term we expect R&D expenditure to continue
to increase broadly in line with revenue growth.

Under IFRS accounting rules we are required to capitalise
certain development projects and amortise the cost over
an appropriate period, which we determine as three
years. This year we capitalised £15.8m (2022: £13.4m),
impaired £0.5m (2022: £2.9m) and amortised £8.5m
(2022: £7.0m). The closing intangible asset carried on the
Consolidated Balance Sheet, after a £1.2m gain (2022:
£1.3m gain) relating to foreign exchange was £49.6m
(2022: £41.7m). All R&D projects requiring capitalisation
are subject to rigorous review and approval processes
by the relevant sector board and Group financial control.

Capital expenditure on property, plant, equipment and
vehicles, computer software and other intangible assets
was £30.1m (2022: £26.6m), with last year reflecting
a lower spend as a result of pandemic constraints.
Expenditure was principally on plant, equipment and
vehicles. We anticipate capital expenditure to increase
to approximately £40m in the coming year, reflecting
investment in the expansion of manufacturing facilities
and automation to support future growth.

Lease right-of-use asset additions and remeasurements
were £32.2m (2022: £23.0m). This included additions of
£9.3m as a result of acquisitions made in the year, and
the commencement of new leases and extensions or
renewals of existing leases.

Net debt to EBITDA

Adjusted operating profit

Depreciation and amortisation (excluding acquired intangible assets)

EBITDA

Net debt to EBITDA

Average debt and interest rates

Average gross debt (£m)

Weighted average interest rate on gross debt

Average cash balances (£m)

Weighted average interest rate on cash

Average net debt (£m)

Weighted average interest rate on net debt

Halma plc | Annual Report and Accounts 2023

Value-enhancing acquisitions and investments
Acquisitions and disposals are a key component of our
Sustainable Growth Model, as they keep our portfolio
of companies focused on markets which have strong
growth opportunities over the medium and long term.

In the year we made seven acquisitions at a cost of
£386.9m (net of cash acquired of £10.1m and including
acquisition costs). In addition, we paid £4.6m in
contingent consideration for acquisitions made in
prior years, giving a total spend of £391.5m. We also
made two small strategic minority investments totalling
£6.7m, including an incremental funding round for a
minority investment in the Safety Sector. We made
two further acquisitions following the year end, for a
maximum total consideration of approximately £57m.

Details of the acquisitions and investments made in the
year are given in the sector reviews on pages 38 to 55 of
the Report and in notes 25 and 14 to these Accounts.

Regular and increasing returns for shareholders
Adjusted earnings per share increased by 16.6% to
76.34p (2022: 65.48p). Statutory basic earnings per
share decreased by 3.9% to 62.04p (2022: 64.54p),
as the prior year included a gain on the disposal of
a Safety Sector business.

The Board is recommending a 7.0% increase in the
final dividend to 12.34p per share (2022: 11.53p per
share), which together with the 7.86p per share
interim dividend gives a total dividend per share
of 20.20p (2022: 18.88p), up 7.0% in total.

Dividend cover (the ratio of adjusted profit after
tax to dividends paid and proposed) is 3.78 times
(2022: 3.47 times).

2023
£m

378.2

53.5

431.7

1.38

2022
£m

324.7

49.1

373.8

0.74

2023

2022

602.5

2.74%

170.3

0.40%

432.2

3.67%

426.8

1.90%

143.1

0.16%

283.7

2.78%

Strategic
Report

Governance

Financial
Statements

Other
Information

The plans’ actuarial valuation reviews, rather than
the accounting basis, are used to evaluate the level
of any cash payments into the plan. This year these
contributions amounted to £15.6m. Following a triennial
actuarial valuation of the two UK pension plans in the
2021/22 financial year, the cash contributions were
agreed with the trustees aimed at eliminating
the deficit.

During the 2022/23 financial year the aggregate
payments made since the last triennial actuarial
valuation, coupled with the performance of the plan
assets and movement in the liabilities resulted in the
Halma Group Pension Plan being funded over the
trustees’ secondary funding target and close to the
expected current valuation on a solvency basis. As
a result, it has been agreed with the trustees of the
Halma Group Pension Plan that contributions will be
suspended until 1 April 2025, when they will either fall
due or be superseded by cash contributions agreed
with the trustees in respect of the latest triennial
actuarial valuation.

We therefore expect contributions to the schemes in
the 2023/24 financial year to be £4.2m. In the event that
these payments result in a surplus on winding up of the
schemes, the Group has an unconditional right to a
refund under the plan rules.

Steve Gunning
Chief Financial Officer

The final dividend for the financial year ended March
2023 is subject to approval by shareholders at the
Annual General Meeting on 20 July 2023 and, if approved,
will be paid on 18 August 2023 to shareholders on the
register at 14 July 2023.

We aim to increase dividends per share each year,
while maintaining a prudent level of dividend cover,
and declare approximately 35-40% of the anticipated
total dividend as an interim dividend. The Board’s
determination of the proposed final dividend increase
this year took into account the Group’s financial
performance, economic and geopolitical uncertainty,
the Group’s continued balance sheet strength and
medium-term organic constant currency growth.

Pensions update
The Group accounts for post-retirement benefits
in accordance with IAS 19 Employee Benefits. The
Consolidated Balance Sheet reflects the net accounting
surplus on our pension plans as at 31 March 2023 based
on the market value of assets at that date and the
valuation of liabilities using discount rates derived
from year end AA corporate bond yields. Lane Clark &
Peacock LLP assist the Company in setting assumptions,
and the valuation work is performed by Mercer Limited.

We closed the two UK defined benefit (DB) plans to new
members in 2002. In December 2014 we ceased future
accrual within these plans with future pension benefits
earned within the Group’s Defined Contribution (DC)
pension arrangements. These two plans represent over
95% of consolidated plan liabilities.

On an IAS 19 basis, before deferred taxes, the Group’s
DB plans at 31 March 2023 had a net surplus of £37.9m
(2022: £30.5m surplus). The value of plan assets
decreased to £284.7m (2022: £347.6m). Plan liabilities
decreased to £246.8m (2022: £317.1m) due to the
increase in the discount rate (2.80% to 4.75%) being
greater than the decrease in the long-term inflation
rate (3.6% to 3.3%). Mortality assumptions include
this year an assumption for post pandemic mortality
experience in line with market practices.

1 See Highlights

Halma plc | Annual Report and Accounts 2023

Safety case study

Diversifying into
high-growth markets

The global energy transition is picking
up speed as economies shift investment
towards a more sustainable future. Key
to making this shift happen is the move
towards renewable energy. But what about
the energy infrastructure that underpins
the move to a Net Zero future?

Upgrading the grid
To distribute electricity into our homes and businesses,
a technology called switchgear is used throughout
the transmission and distribution networks. This
technology helps protect against sudden surges
of electricity and also adjusts electricity to the
right voltage so it can be transported safely through
the powerlines. Switchgear components, such as
transformers and circuit breakers, are traditionally
insulated by a gas called SF6. This gas stops any
sparks from an electrical fault before they can
cause a fire or explosion.

environment. Historically, the company’s bigger
markets were in the oil and gas distribution,
and chemical processing industries. Spotting an
opportunity to grow, OsecoElfab is increasingly
diversifying to support the move to a greener future.

One example is in switchgear use for electricity
distribution. Clean air – with all its humidity and
impurities removed – is a far greener alternative to
SF6 for insulating switchgear technology. However,
to make it work as an effective insulator, it requires
specialised components.

However, SF6 is one of the most potent greenhouse
gases in existence. With a warming potential of
23,900 times that of CO2, SF6 can remain in the
atmosphere for up to 3,200 years. Although the gas
is slowly being phased out in electricity distribution,
there are technical challenges in safely replacing it.

Spotting new growth opportunities
OsecoElfab, a Halma company based in the US
and UK, designs and manufactures pressure safety
solutions to protect people, equipment and the

3,200 years

How long the greenhouse gas SF6
remains in the atmosphere*

* https://www.weforum.org/agenda/2019/10/

greenhouse-gas-emissions-climate-change-sf6/

By working closely with its customers, OsecoElfab
has customised its rupture disc technology to provide
a solution for switchgear insulated by clean air. Its
rupture discs are specialist pressure release devices
that activate in milliseconds to release heat and
pressure. This protects against dangerous surges
caused by electrical faults which could lead to fires
that damage the equipment or, worse, explosions
that endanger life. Thanks to OsecoElfab’s technology,
switchgear can now be designed that keep people
safe without the damaging SF6 gas being released.

As technology advances and regulations evolve in
support of a Net Zero future, OsecoElfab continues
to partner with industry leaders to solve their
problems and grow faster in support of a safer
and cleaner future.

Halma plc | Annual Report and Accounts 2023

Strategic
Report

Governance

Financial
Statements

Other
Information

1. Distribute energy
Transporting electricity from a
power station into our homes
at the right voltage.

2. Potential Risk
A short circuit and electrical
arc event occurs. This could lead
to catastrophic consequences.

3. Protection
Rupture disc releases excess
heat and pressure, keeping
people and equipment safe.

Halma plc | Annual Report and Accounts 2023

Business review

Growth within
Safety

Our Safety Sector companies protect
people, assets and infrastructure, enable
safe movement and enhance efficiency.
Their technologies are used in public
and commercial spaces and in
industrial and logistics operations.

Our markets

Fire Safety
Technologies that protect people and assets from
fire, including networked fire detection systems,
wired and wireless fire detection components,
and systems to automatically extinguish fires.

Power Safety
Technologies that increase the integrity
and safety of electrical systems in a range of
industries, including the aerospace, avionics,
rail and automotive sectors, as well as the
electricity grid itself.

Industrial Safety
Technologies that protect people and assets in
industrial environments, including systems to
manage the movement of people in high-risk
areas, real-time corrosion monitoring and valve
interlocking systems, and explosion protection
devices and systems.

Urban Safety
Technologies that protect people and assets in
urban environments, including: sensing solutions
for automatic door systems, access control, safety
and security; advanced radar systems to improve
transport safety and efficiency and protect
critical infrastructure; and elevator and
emergency communications systems.

Halma plc | Annual Report and Accounts 2023

Highlights

£745.6m

Revenue*
+16.2%

£152.5m

Adjusted operating profit1
+4.3%

• Strong revenue growth of 16%

(11% organic constant currency1).
• Profit1 performance constrained by
supply chain disruptions in a limited
number of smaller companies.

• Substantial investment supporting
future growth, including record
acquisition spend of £207m.

% of Group turnover

40%

* includes inter-segment sales

Strategic
Report

Governance

Financial
Statements

Other
Information

What the Safety Sector does
Our Safety Sector companies protect people, assets
and infrastructure and enable safe movement. Many
of their products also make the world cleaner and
enhance efficiency. Their technologies are used in
public and commercial spaces and in industrial
and logistics operations.

The Safety Sector comprises companies which provide
solutions to a number of fundamental and enduring
safety issues. These are: fire safety, through fire detection
and fire suppression solutions; safe movement in public,
commercial and industrial spaces; elevator safety;
communications in emergencies; control of access
in potentially hazardous industrial and commercial
environments; electrical safety; and the safe
management of pipelines and storage assets.

The Safety Sector has diverse end markets and a wide
range of customers. Its products and solutions are used
to enhance safety and efficiency in a broad spectrum
of applications and end markets including in: many
different types of commercial buildings, for example,
shops and restaurants, healthcare facilities, offices
and stadiums; industrial and logistics assets; public
spaces and critical infrastructure, including roads,
tunnels and transportation hubs; and aerospace,
rail and automotive applications.

The Safety Sector’s long-term growth drivers
The long-term growth of the sector continues to be
driven by increasing safety and environmental regulation,
and by growing, ageing and urbanising populations.
Increasing automation and accelerating demand for
connected industrial and infrastructure systems further
underpin the sector’s growth prospects, as its customers
have sought to benefit from the greater efficiency and
safety that can be derived from these innovations.

The increasingly urgent need to address the causes
and impacts of climate change continue to further
enhance the growth opportunities available to
Safety Sector companies. This includes, for example,
increased demand for automated access solutions
to both increase efficiency, including by minimising
heat loss in commercial and industrial premises.
Sector companies are also supporting the drive
towards renewable and cleaner energy sources and
uses, including through fire suppression in renewable
energy facilities, electrical testing of electric vehicles
(EVs) and mass transit systems, and increasing the
efficiency of industrial processes. They are also
repurposing technology towards areas such as
carbon capture and hydrogen energy sources in
sector businesses which serve industrial customers.

Sriya Varada
Sriiya is Sales Manager at Sentric

Halma plc | Annual Report and Accounts 2023

Business review continued

Safety continued

Safety Sector performance in the year
The Safety Sector delivered a solid performance. Revenue
growth was very strong. Return on Sales1 was however
lower than historic norms as a consequence of supply
chain impacts related to electronic components.
Investment in future growth continued, including
through increased R&D spend and acquisitions.

Revenue of £745.6m (2022: £641.4m) was 16.2% higher
than in the prior year. Year-on-year revenue growth on
an organic constant currency1 basis was strong at 11.2%,
with double digit growth in both halves of the year.
Growth was broadly spread, with all but two companies
delivering organic constant currency1 revenue growth.
Sector companies continued to be agile in responding
to customer demand while addressing supply chain
challenges, although disruptions in a number of
companies contributed to a small decline in Adjusted1
profit on an organic constant currency1 basis.

Revenue growth on an organic constant currency1
basis was broadly spread across all four subsectors,
with three achieving double-digit growth. Industrial
Safety’s performance reflected strong execution in
two subsector companies and Power Safety saw
strong demand for interlock products in the electrical
sector. Growth on a reported basis also benefited
from acquisitions including WEETECH Holding GmbH
(WEETECH) during the year. The largest subsector,
Fire Safety continued to grow strongly, having seen
substantial growth in the prior year, supported by
organic constant currency1 revenue growth in all
companies. Urban Safety organic constant currency1
revenue growth was good overall, although performance
was mixed with strong demand for automatic access
solutions and elevator systems partially offset by the
end of a significant road safety contract.

The sector’s revenue performance by geography
reflected these themes. There was strong growth in
the sector’s largest two geographies, the USA and
Mainland Europe, both on a reported and organic
constant currency1 basis. This included strong growth in
Industrial Safety in the USA, with Fire Safety and Urban
Safety performing strongly in Mainland Europe. The UK
saw good growth on an organic constant currency1 basis
led by its largest subsector, Fire Safety, and there was
strong momentum in Industrial Safety. Urban Safety
delivered a more mixed performance with the effect of
the end of the road safety contract mentioned above
offsetting good performance elsewhere. On a reported
basis, UK growth was lower, due to the non-recurrence
of revenue from a disposal in the prior year. Asia Pacific
also saw good growth on an organic constant currency1
basis, led by a strong performance in Fire Safety, which
more than offset a decline in Urban Safety principally as
a result of lockdowns, and a non-recurring road safety
contract in China.

Halma plc | Annual Report and Accounts 2023

Revenue by destination

£746m

USA
Mainland Europe

UK
Asia Pacific

Africa, Near and Middle East
Other countries

28%
29%
20%
15%
4%
4%

Profit1 grew by 4.3% to £152.5m (2022: £146.2m), and
decreased by 1.1% on an organic constant currency1
basis. Return on Sales1 decreased by 230 basis points to
20.5% (2022: 22.8%). This reflected a strong comparator,
which had benefited from cost savings made during the
pandemic, and supply chain disruptions in a number of
companies. These resulted in higher costs for electronic
components used in devices with current regulatory
approvals, and costs in recertifying devices to use
alternative components. We expect these disruptions
to ease over the current financial year. R&D expenditure
of £41.0m remained at a good level, representing 5.5%
of revenue (2022: £35.6m; 5.6% of revenue).

The sector made four acquisitions in the year for an
aggregate consideration of approximately £207m
(on a cash and debt free basis and excluding acquisition
costs). These included two new standalone companies
within the sector: WEETECH, which designs and
manufactures critical electrical testing technology,
purchased in October 2022; and FirePro Systems
Limited, a designer and manufacturer of aerosol-based
fire suppression systems, which was acquired shortly
before the financial year end. Sector companies also
made two bolt-on acquisitions: Apollo Fire Detectors
acquired Thermocable (Flexible Elements) Ltd, a
developer and manufacturer of linear heat detectors;
and Sentric purchased ZoneGreen Limited, a provider
of rail depot protection solutions.

The impact of acquisitions was a positive effect of 2.4%
on revenue and 2.3% on profit. The disposal of Texecom
in the first half of the prior year had a negative effect of
2.6% on revenue and 1.4% on profit. Currency exchange
movements had a positive effect of 5.2% on revenue
and 4.5% on profit.

1 See Highlights.

Strategic
Report

Governance

Financial
Statements

Other
Information

Case study

Growth driven by electrification

Ensuring the safety
of electric transport

The transport sector is responsible for 20% of global
carbon emissions. Supporting the electrification of
this sector is a crucial step towards creating a more
sustainable future. For the past few years, changes in
global regulatory standards for the safe electrification
of transport systems have not kept pace with demand,
but now governments across the world are catching
up fast as the trend for electrification accelerates.

Regulation underpinning long-term growth
As the world moves to a more sustainable future,
safety regulation will have an increasingly important
role to play. The Safety Sector’s acquisition of WEETECH
is part of a new strategic subsector focused on power
safety. This subsector has the potential to grow fast,
powered by the safety demands of the energy
transition, and is fully aligned with our purpose.

Making electric transport safer
With businesses and consumers looking to reduce their
carbon footprint, rapid technological advances have
been made to accelerate electrification in transport.
However, this brings a new set of technical challenges.
Modern electric trains need higher voltages to operate
increasingly complex electrical systems. Faulty wiring
or a malfunction can have disastrous consequences,
making testing of these systems critical to ensure
their safe operation.

In October 2022, Halma acquired WEETECH, a German
company that designs and manufactures electrical
testing technology to ensure high voltage systems
are safe to use and remain compliant with increasing
safety regulation. WEETECH provides customised
testing solutions for cabling harnesses – multiple
cables bound together to transmit electrical power
– ensuring they are fit for purpose while protecting
workers in these dangerous testing environments.

As the uptake in electric transport
accelerates, safety needs are driving
more regulations. WEETECH’s testing
technology ensures that greener modes
of transport can be used safely for
customers around the world. I am
pleased that WEETECH has joined
the Safety Sector – together we can
support the energy transition while
helping to protect workers in
dangerous testing environments.

Julie Eaton
Divisional Chief Executive, Safety Sector and
Chair of WEETECH

Halma plc | Annual Report and Accounts 2023

Environmental & Analysis case study

Growing through
partnerships

Two-thirds of the global population is
expected to live in urban areas by 2050.
While there are significant benefits to
urbanisation, it creates unintended
consequences, including air pollution.

Poor air quality severely impacts people’s long-term
health and wellbeing. Many European countries are
now developing clean air strategies to introduce
tighter regulations to protect people’s health.

Air quality monitoring
Smart technology is key in tackling the global
air quality issue and making sure new regulations
are met. With the help of monitoring solutions, air
quality can be measured to help identify levels and
sources of pollution. This enables city authorities to
make informed decisions about ways to improve it.

Sensit is a Halma gas detection company based in
the US, with 40 years of experience making products
that help detect leaks in gas pipes. Responding to the
rapid growth opportunity in the air quality monitoring
market in Europe, Sensit wanted to use its expertise to
develop a high-quality air monitoring solution. However,
it had limited experience of selling in the European
market and lacked the local regulatory knowledge,
which was far more complex than in the US.

Crowcon, a Halma company based in the UK,
specialises in gas detection technology that can
identify hazardous gases before they become a
problem. The company was keen to grow into the
air quality monitoring market in Europe but did not
have the right expertise to customise its technology.

They soon realised they could combine their
individual strengths and resources to seize
this growth opportunity.

Collaboration to tackle air pollution
Using Sensit’s product expertise and Crowcon’s
market knowledge, they joined forces to develop
a co-branded product, made by Sensit and sold by
Crowcon. The collaboration resulted in a new series
of air quality monitors sold into the European market
that provide real-time insights into the air we breathe.

One example is installed in Kent, UK. Sandwiched
between the busy port of Sheerness to the north
and the M2 motorway to the south, the area regularly
exceeds national limits for air pollution. The local
council has developed an Air Quality Action Plan
for improving air quality over the next few years.
As part of its plan, it has installed the Sensit by
Crowcon products to monitor air pollution.

Together these Halma companies have collaborated
to grow their businesses. By working together and
using each other’s strengths to solve a problem
they are helping to grow a safer, cleaner, future
for everyone, every day.

$8.3 billion

Size of global air quality monitoring market*

* https://www.fortunebusinessinsights.com/air-quality-monitoring-

system-market-105614

Halma plc | Annual Report and Accounts 2023

Strategic
Report

Governance

Financial
Statements

Other
Information

1. Urbanisation
Heavy traffic creating
air pollution.

2. Monitor impact
Technology helps identify levels
and sources of pollution.

3. Finding solutions
Making informed decisions
about ways to improve
traffic flow.

PM10

PM2.5

CO₂

NO₂

Halma plc | Annual Report and Accounts 2023

Business review

Growth within
Environmental
& Analysis

Our Environmental & Analysis Sector
companies provide technologies that
monitor the environment, ensure the
quality and availability of life-critical
resources, and analyse materials in
a wide range of applications.

Our markets

Optical Analysis
World-class optical, optoelectronic and spectral
imaging systems that use light to analyse materials
in applications including life sciences, bioprocessing,
food safety, research, and industrial process control.

Water Analysis and Treatment
Systems that assist communities and businesses
around the world to sustainably improve water
quality and availability.

Environmental Monitoring
Technologies that detect hazardous gases and
analyse air quality, gases and water to monitor the
quality of our environment and ensure that our
resource infrastructure operates efficiently.

Halma plc | Annual Report and Accounts 2023

Highlights

£552.1m

Revenue*
+24.7%

£134.2m

Adjusted operating profit1
+22.2%

• Strong reported revenue and

profit1 growth; up 9.1% and 7.1%
respectively on an organic
constant currency1 basis.

• Revenue growth in all subsectors on
an organic constant currency1 basis.

• Two acquisitions made in the

year, and a further two acquisitions
completed since the year end.

% of Group turnover

30%

* includes inter-segment sales

Palintest water testing technology
enables access to safe water
Credit: WaterAid /
Anindito Mukherjee

Strategic
Report

Governance

Financial
Statements

Other
Information

What the Environmental & Analysis Sector does
Our Environmental & Analysis Sector companies
provide high-technology solutions, that monitor the
environment and improve the quality and availability of
life-critical natural resources such as air, water and food,
and analyse materials in a wide range of applications.

Their valuable solutions are technically differentiated
through strong levels of application knowledge in
environmental monitoring, water and waste water
analysis and treatment, gas analysis and detection,
and optical analysis. They are supported by high
levels of customer responsiveness and often leverage
digital, optical and optoelectronic expertise.

They serve a wide variety of end markets with
applications across a very broad range of sectors and
customers. Their end markets include: water and waste
water management and treatment, including for water
utilities; gas analysis and detection; food, beverage,
medical and bio-medical; communications; aquaculture;
research and science; inspection and maintenance of
infrastructure in water, for example, dams and offshore
wind turbines; and a variety of industrial markets.

The Environmental & Analysis Sector’s
long-term growth drivers
The sector’s long-term growth is sustained by rising
demand for life-critical resources, the impact of climate
change, increasing environmental regulations and
worldwide population growth with rising standards of
living. It is underpinned by our ability to design, develop
and manufacture innovative, high-technology detection
and analysis solutions.

The increasingly urgent need to address climate change
is creating new opportunities in many of the sector’s
markets. It is driving new policies globally, including
initiatives to meet Net Zero commitments through
energy transition and sectoral decarbonisation plans,
as well as plans to increase adaptation and resilience.
Combined with the biodiversity crisis and an increasing
focus on plastics and waste, it is also driving new
regulatory initiatives to preserve life-critical resources.
These include initiatives such as, in the UK, Ofwat’s
investigations into waste water treatment and internal
sewer flooding to prevent environmental degradation.

These and similar initiatives are creating growing
long-term opportunities for our companies to help
their customers, for example, to prevent emissions,
detect leaks and analyse air and water quality, and
to support new technologies to address these issues,
such as renewable energy and storage, sustainable
food systems and mobility in cities.

Halma plc | Annual Report and Accounts 2023

Business review continued

Environmental & Analysis continued

Environmental & Analysis Sector
performance in the year
The Environmental & Analysis Sector delivered a good
performance. Revenue of £552.1m (2022: £442.9m)
was 24.7% higher than in the prior year, and up 9.1%
on an organic constant currency1 basis. Sector growth
was driven by increasing demand and supported by
strong execution, in particular from the sector’s
largest companies.

All subsectors grew revenue on an organic constant
currency1 basis. Organic constant currency1 growth
was led by Environmental Monitoring, where growth
on a reported basis also benefited from the acquisition
of Deep Trekker, Inc. (Deep Trekker) during the year.
Organic constant currency1 revenue growth was also
strong in our gas detection companies, supported
by increasing demand for products addressing the
minimisation of emissions. Both the Optical Analysis
and the Water Analysis & Treatment subsectors saw
good organic constant currency1 revenue growth, with
Photonics within Optical Analysis continuing to benefit
from increasing demand for technologies that support
the building of digital and data capabilities; and within
the Water Analysis & Treatment subsector, revenue
grew more strongly in the second half of the year
following a pick-up in project tenders from UK utilities,
which offset lower order intake in our water testing and
disinfection companies, principally relating to products
related to consumer discretionary end-markets.

By region, the USA accounts for half of the sector’s
revenue, and reported the highest organic constant
currency1 growth at 12%. Performance was strong
across all four subsectors, supported by further growth
in a continuing large photonics contract within Optical
Analysis, increased demand including larger customer
orders in our gas detection companies, in products
supporting the transition to new sources of energy in
Environmental Monitoring, and international expansion
from our water infrastructure companies within Water
Analysis & Treatment. Asia Pacific also grew strongly,
at 10% on an organic constant currency1 basis, driven
by substantial growth in the flow and pressure control
market within Environmental Monitoring in India and
China. Organic constant currency1 revenue growth
was more modest in the UK and Mainland Europe,
with growth reflecting strengthening UK water
project spend in the second half of the year, and
strong demand in our gas detection companies in
Mainland Europe.

Revenue by destination

£552m

USA
Mainland Europe

UK
Asia Pacific

Africa, Near and Middle East
Other countries

50%
12%
14%
18%
3%
3%

In the other regions which represent about 6% of
the sector’s revenue, our gas detection companies
continued to benefit from a recovery in the energy
sector, which drove strong organic growth in Africa,
Near & Middle East, and there was a good contribution
to reported revenue growth in the other smaller regions
from the acquisition of Deep Trekker.

Profit1 grew by 22.2% to £134.2m (2022: £109.8m), or by
7.1% on an organic constant currency1 basis. Return on
Sales1 decreased by 50 basis points to 24.3% (2022: 24.8%).
This reflected a return to a level similar to the years
before the pandemic. Gross margin was marginally
higher, driven by business mix and good management
of pricing. R&D expenditure of £28.6m was maintained
at a good level at 5.2% of revenue (2022: £22.8m;
5.1% of revenue).

The sector made one standalone acquisition during
the year for a consideration of approximately £38m:
Deep Trekker, which is a market-leading manufacturer
of remotely operated underwater robots used for
inspection, surveying, analysis and maintenance,
was purchased in April 2022. Ocean Insight also made
a small bolt-on acquisition. Since the year end, there
have been two further acquisitions in the sector for a
maximum total consideration of approximately £57m:
Sewertronics Sp. Z o.o., which designs and manufactures
equipment and associated consumables for wastewater
pipeline rehabilitation, was purchased as a standalone
company in May 2023; and Visual Imaging Resources LLC,
which distributes and services wastewater inspection
equipment in North America, was purchased in April
2023 as a bolt-on to Minicam. This good momentum
reflects the investment made in a dedicated M&A
team for the Environmental & Analysis Sector, and the
increasing ability of our individual companies to make
bolt-on acquisitions to enhance their technological
capabilities and market reach.

The impact of acquisitions during the year contributed
growth of 6.6% to revenue, and 5.9% to profit. Currency
exchange movements had a positive effect of 9.0% on
revenue and 9.2% on profit.

Halma plc | Annual Report and Accounts 2023

1 See Highlights.

Strategic
Report

Governance

Financial
Statements

Other
Information

Case study

New capabilities in environmental monitoring

A Deep Trekker
submersible robot

The global transition to renewable energy is creating
a new type of energy infrastructure. Hydroelectric
dams, solar farms and offshore wind farms are now
competing with power stations that use fossil fuels
to become the main energy source of the future.
The offshore wind farm industry alone is expected
to increase tenfold over the next decade and is on
track to supply 20% of global energy by 20301.

All energy systems require continuous inspection
and maintenance to ensure safe operation, and
clean energy is no different. However, many of
these renewable energy structures present new
challenges for monitoring teams. Offshore wind
farms in particular face a unique set of challenges,
due to critical infrastructure being submerged in deep
waters and subject to intense pressures from the sea.

The traditional method is to send a specialist dive
team. This can be costly, time-consuming, and,
most importantly, dangerous for the divers. As
a result, operators are looking for alternative
approaches that reduce the risk to life.

Remotely Operated Vehicles (ROVs) are unmanned
submersible devices deployed from a boat and
controlled remotely from the surface. They offer
a safer and more cost-effective alternative for
both routine operations and emergency
investigation response.

In April 2022 Halma acquired Deep Trekker, based
in Ontario, Canada, one of the largest underwater
robotics manufacturers in the world. Its submersible
robots monitor and maintain critical underwater
infrastructure, including offshore wind farms,
without putting human life at risk.

Deep Trekker is not only helping support the global
transition to clean energy but also plays a key role
in the efforts to maintain the health of our marine
environments. Its ROVs are used to examine the
health of sea and plant life and detect changes
in the underwater environment without having
to send a diver into the water or risk contamination
to the environment. It also enables ocean science
and research by offering a cost-effective underwater
research alternative.

The addition of Deep Trekker is aligned to Halma’s
purpose and is a valuable addition to our Environmental
& Analysis Sector. It adds exciting capabilities to our
environmental monitoring sector and expands our
growth opportunities in a fast-growing global niche.

Deep Trekker brings new capabilities
and complements our strong portfolio
in the Environmental & Analysis Sector.
Its technology not only improves the
safety of underwater inspections but
plays an important role in ensuring
a cleaner environment, which is well
aligned to our purpose.

Rob Lewis
Divisional Chief Executive for the Environmental &
Analysis Sector and Chair of Deep Trekker

1 Global Wind Energy Council, Global Wind Report 2023

Halma plc | Annual Report and Accounts 2023

Healthcare case study

1. Chronic illness
Patient with kidney
disease needs dialysis.

2. Better treatment
Specialist pump used for
dialysis reduces the risk
of contamination.

3. Increased Health
Patient enjoys a good quality
of life.

Halma plc | Annual Report and Accounts 2023

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Other
Information

Growing by
solving customer problems

Demand for healthcare is growing fast.
As global populations get older the need
for better testing, diagnosis and treatment
is increasing. In China alone, there will
be 400 million people over the age of 60
by 2040, almost double what it is today.

Longer Pump’s close relationship with the
customer, its understanding of the sector’s
regulatory requirements, and its ability to move
fast and adapt its existing technology meant that
it could provide a high-quality solution at speed.

Growing into new markets
Longer Pump’s deep application expertise and its
focus on solving customer problems has enabled
it to keep growing not just in its home market of
China, but also internationally.

Since joining Halma ten years ago, Longer Pump
has taken advantage of Halma’s Growth Enablers
to seize new opportunities and today it sells in more
than 130 markets, including the US and Europe.

850 million

People worldwide with chronic kidney disease*

* https://www.ncbi.nlm.nih.gov/pmc/articles/PMC9073222/

This huge demographic shift is being replicated in
countries all over the world and it is driving demand
for better healthcare to keep our ageing populations
healthier for longer.

Longer Pump is a Halma company based in Baoding
in northern China. Its innovative healthcare solutions
are helping to solve some of these global challenges.
The company makes pumps that can control the flow
of fluids with an accuracy a hundred times smaller
than a drop of water. These pumps go into a range of
healthcare applications, from dialysis machines that
clean a patient’s blood to In Vitro Diagnostics (IVD)
that analyse medical samples to detect disease.

Solving customer problems
Longer Pump was approached by a long-standing
customer, a large Chinese medical equipment
company, to help solve a problem. The company
needed a pump for its new dialysis machine that
could be custom-built while meeting the high
standards of the national healthcare regulator.

Longer Pump’s core technology enables the
continuous and precise transfer of fluids, without
the need for valves. This type of technology is
called a peristaltic pump, which uses compression
to squeeze and release tubing to create a gentle
and continuous movement of fluid. This was critical
for this customer’s requirements as it prevents
blood cells from getting damaged by the pumping
mechanism, which could harm the patient. It also
ensures the blood only touches the inner lining
of the tube, reducing the risk of contamination.

Halma plc | Annual Report and Accounts 2023

Business review

Growth within
Healthcare

Our Healthcare companies’ technologies and
digital solutions help providers improve the care
they deliver and enhance the quality of patients’
lives. They contribute to the discovery and
development of new cures, the diagnosis and
treatment of patient conditions, and the provision
of improved healthcare through data analysis.

Our markets

Life Sciences
Technologies and solutions to enable in-vitro
diagnostic systems and accelerate life-science
discoveries and development.

Healthcare Assessment & Analytics
Components, devices and systems that provide
valuable information and analytics so providers
can better understand patient health and make
decisions across the continuum of care.

Therapeutic Solutions
Technologies, materials and solutions that enable
treatment across key clinical specialties.

Halma plc | Annual Report and Accounts 2023

Highlights

£556.4m

Revenue*
+25.8%

£130.1m

Adjusted operating profit1
+30.8%

• Strong revenue growth, up 25.8%
(9.8% on an organic constant
currency1 basis).

• Profit1 up 30.8% (14.0% on an

organic constant currency1 basis).
• Return on Sales up 90 basis points

to 23.4%.

• Continued investment to support

future growth, including acquisition
of IZI for £151m.

% of Group turnover

30%

* includes inter-segment sales

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Statements

Other
Information

What the Healthcare Sector does
Our Healthcare Sector companies’ technologies and
digital solutions help providers improve the care they
deliver and enhance the quality of patients’ lives. Their
products and technologies are components, devices,
systems and therapies critical to delivering the required
standards of care for patients.

Our Healthcare Sector companies deliver advanced
technologies and solutions in high value niches. These
include: eye health, where they support both diagnostics
and surgical treatment; monitoring and support of vital
signs, including blood pressure and respiration; products
to assist with interventional radiology and oncology and
image guided surgery; synthetic bone grafts for clinical
applications; and artificial intelligence (AI) based early
warning systems and clinical decision support tools
for childbirth.

Sector companies also supply critical fluidic components
for diagnostic and analytical instruments, and sensor
technologies to track assets, increase efficiency, and
support patient and staff safety.

The Healthcare Sector operates across a wide range
of healthcare segments and settings, including
ophthalmology, dentistry, orthopedics, perinatal
care, surgical intervention, diagnostics and analytics.
Its customers range from individual healthcare
professionals to large healthcare systems and
medical device original equipment manufacturers.

The Healthcare Sector’s long-term growth drivers
The sector’s long-term growth is supported by
demographic trends, technological innovation, and
improving the standard of care and increased efficiency.

Most countries in the world are experiencing growth in
both the size of population and the proportion of older
people. By 2050, the world’s population of people aged
60 years and older is estimated to double to 2.1 billion.
The number of people aged 80 years or older is forecast
to triple by 2050 to reach 426 million. This is expected
to lead to an increased prevalence of chronic conditions,
driving demand for diagnostics and treatment. These
factors are key growth drivers for our Therapeutic Solutions
businesses, given their presence in the ophthalmic surgery,
respiratory therapy, bone replacement, interventional
radiology, oncology and image-guided surgery markets.

Technological innovations drive growth, by increasing
the capabilities of healthcare professionals to prevent,
diagnose and treat conditions, including remotely
through telemedicine. They contribute to improving
standards of care and increasing efficiency by enabling
better, earlier, faster and more cost-effective diagnosis
and treatment of patients. This in turn leverages the
skills and availability of increasingly scarce healthcare
staff. These factors are strong growth drivers for
our Patient Assessment & Analytics businesses, such
as PeriGen, whose AI-powered algorithms prevent

Halma plc | Annual Report and Accounts 2023

Thomas Kane
Thomas is a Sustaining Engineer
at SunTech

Business review continued

Healthcare continued

complications during childbirth, or CenTrak, whose
real-time location services improve safety, asset
utilisation and efficiency in healthcare facilities.

Rising patient demand, workforce shortages,
and disruptions as a result of the COVID pandemic
have created substantial backlogs of patients, which
are likely to persist for many years. Our Healthcare
companies, through their innovative technologies
and deep application knowledge, are helping to
address these global health challenges.

Healthcare Sector performance in the year
The Healthcare Sector delivered a strong performance.
Revenue of £556.4m (2022: £442.3m) was 25.8% higher,
and up 9.8% on an organic constant currency1 basis.
Sector growth continued to be supported by a strong
order book, reflecting high patient caseload levels
and order backlogs, and by generally strong execution
by sector companies, with all but three companies
delivering organic constant currency1 revenue growth,
and five achieving organic constant currency1 revenue
growth of 15% or more.

All subsectors grew revenue on an organic constant
currency1 basis. Growth was led by Healthcare
Assessment & Analytics, which benefited from demand
in vital signs monitoring, clinical ophthalmology, and
communication and software systems for healthcare
facilities. There was good organic constant currency1
growth in Therapeutic Solutions, supported by high
patient caseload levels in eye surgery; subsector growth
on a reported basis also benefited from the acquisition
of IZI Medical Products, LLC (IZI) during the year.
There was only marginal growth on an organic constant
currency1 basis in the smaller Life Sciences subsector,
however, principally reflecting the impact of lockdown
restrictions in China.

All regions except Asia Pacific reported double digit
increases in revenue, on both a reported and organic
constant currency1 basis. On a reported basis, growth
was strongest in the USA, which accounts for more
than half of sector revenues. This was led by strong

Keeler is a market leader
in eye care

Revenue by destination

£556m

USA
Mainland Europe

UK
Asia Pacific

Africa, Near and Middle East

Other countries

54%
16%
9%
13%
3%
5%

organic growth in communication and software systems
for healthcare facilities, and the region also benefited
from the positive effect of currency translation and
the acquisition of IZI. There was also strong revenue
growth on an organic constant currency1 basis in
Mainland Europe and the UK, driven by a substantial
backlog of demand for eye surgery products and for
communication systems for healthcare facilities
respectively. However, revenue in Asia Pacific declined
on an organic constant currency1 basis, reflecting
lockdowns in China, which represents close to half
of the region’s revenues.

Profit1 grew by 30.8% to £130.1m (2022: £99.5m),
or by 14.0% on an organic constant currency basis.
Return on Sales1 improved by 90 basis points to
23.4% (2022: 22.5%). This reflected a stable gross
margin, which included a beneficial product mix
and good management of pricing and material costs,
and operational efficiencies. R&D expenditure increased
to £33.1m, representing 5.9% of revenue (2022: £26.9m;
6.1% of revenue), reflecting continued high levels of
investment in new product development.

The sector made one acquisition during the year: IZI
was purchased in September 2022 for a maximum
total consideration of £151m. IZI is a US-based designer,
manufacturer and distributor of medical consumable
devices which are mainly used by interventional
radiologists and surgeons in a range of acute,
hospital based diagnostic and therapeutic procedures.

Acquisitions had a positive effect of 4.7% on revenue
and 4.0% on profit. Currency exchange movements had
a positive effect of 11.3% on revenue and 12.8% on profit.

Halma plc | Annual Report and Accounts 2023

1 See Highlights.

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Case study

Improving patients’ lives every day

IZI Medical uses image –
guided surgery to treat patients

The World Health Organisation estimates that the
proportion of people over the age of 60 will nearly
double from 12% to 22% of the population by 2050.
This global trend towards an ageing population is
driving an increase in chronic illnesses, including one of
the most deadly – cancer. Cancer can develop at any
age, but its incidence rises dramatically at later stages
in life. Currently, half of all cancers diagnosed are in
people over 65.

One of the most successful ways to treat cancer
is through traditional surgery. However, medical
procedures on elderly people bring a higher risk of
complications. Advances in healthcare technology
mean that surgeons can now use new operating
techniques that are less damaging to patients
and improve their recovery time.

Image-guided surgery is an innovative technique that
allows surgeons to see in minute detail the area they
are operating on. This approach enables them to reach
difficult areas and remove even the smallest tumours
with speed and precision. This means less pain, shorter
hospital stays, fewer complications and quicker
recovery for patients, as well as reducing the risk
of the cancer returning.

In October 2022, Halma acquired IZI Medical, a
company based in Baltimore, USA. The company
manufactures medical devices used for minimally
invasive diagnosis and treatment of acute conditions,
principally cancer.

The company works closely with surgeons and
radiologists to develop advanced products that help
detect and treat health conditions with more accuracy
and less invasive damage, and so improving outcomes
for patients.

Increasing demand for healthcare as populations get
older is a key long-term growth driver for Halma’s
Healthcare Sector. The acquisition of IZI Medical is
well positioned to support this growth while helping
healthcare providers improve patients’ lives every day.

IZI Medical is an excellent addition
to our Healthcare Sector. The rising
demand for healthcare requires
innovative technology to help diagnose
and treat more complex health issues.
The company’s products enable earlier
treatment and reduce operating times
to improve the patient’s quality of life,
especially in an ageing population.

Bill Stoval
Divisional Chief Executive, Healthcare Sector and
Chair of IZI Medical

Halma plc | Annual Report and Accounts 2023

Our stakeholders

Engagement with our stakeholders

Maintaining strong stakeholder relationships
is essential to Halma’s long-term sustainable
growth and the fulfilment of our purpose.

Our people

Developing, attracting and
retaining high-quality talent is
a key driver of our success and
delivery of our strategy. We
strive to build leadership
teams which are diverse,
effective and engaged.

Their key matters
• Fair pay, terms and conditions.
• Inclusive, diverse and supportive

environment.

• Opportunities for development

and progression.
• Workforce policies.
• Collaboration and engagement

across the Group.

Further links:
• Our people and culture p66
• Corporate Governance Report p110
• Remuneration Report p142

How we engage
We foster an open and collaborative environment, which ensures
regular communication and engagement across our Group of over
8,000 employees. We engage with our employees through a number
of mechanisms, including, but not limited to, regular hybrid townhalls
and the annual employee engagement survey. At the company
level, our companies engage with their employees through company
newsletters; regular townhalls; digital platforms, including intranet
sites; employee forums; wellbeing initiatives; and organised
social events.

Our Board members greatly value engagement opportunities with
our colleagues, which take the form of both direct and indirect
engagement and consider the interests of employees when making
decisions. Details of Board engagement with employees during the
year is set out on page 118 of the Corporate Governance Report.

Outcomes and actions in the year
• Executive and non-executive Directors attended 65 company

site visits, meeting with a diverse range of colleagues.

• Achieved an 85% response rate and 76% overall engagement

rate to our annual employee engagement survey.

• Expanded our Employee Assistance Programme, a dedicated support
to help tackle workplace and mental health issues, so that it now
covers over 7,000 employees across the US, Europe and China.

• A range of initiatives were implemented across several of our

companies to help tackle the cost of living crisis and to ease the
impact it is having on our colleagues, including through increasing
salaries for lower paid employees, paying additional bonuses and
cost of living supplements, and implementing cost of living
campaigns and initiatives.

• Formalised a network of internal mentors and launched a

coaching platform.

• Saw a 62% increase in those contributing 5% or more a month
into their pension schemes in the US, and a substantial increase
in people saving for their retirement as a result of a simplified
and more competitive plan.

Halma plc | Annual Report and Accounts 2023

Our companies

Our decentralised model places
our companies close to their end
markets, under the management
of their own board of directors,
which empowers entrepreneurial
action. Our companies are vital
to the success of our growth
strategies – collectively
delivering our organic growth
and through selective asset
and bolt-on acquisitions,
deliver inorganic growth.

Their key matters
• Access to our Growth Enablers and
central expertise, skills and other
resources.

• Collaboration and interconnectivity.
• Operational and financial performance.
• R&D investment.
• Talent development.
• International expansion.

Further links:
• Business reviews p40
• Strategic Report p02

Customers

Our customers play a pivotal role
in the fulfilment of our purpose
by delivering our products and
services to the end market where
they serve to protect and improve
the quality of life.

Their key matters
• Innovative solutions.
• Competitive pricing.
• Long-term relationships.
• Stable supply chain.
• Service and support levels.

Further links:
• Business reviews p40
• Non-financial information statement

p99

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How we engage
The Board members engage and communicate with our companies
through business reporting, site visits, presentations and events,
such as the Accelerate conference (see case study on page 58),
which ensures alignment of the development and performance
of the companies with Halma’s growth strategy and culture.

The Board regularly receives sector and company updates directly
or via the Group Chief Executive and sector presentations are
scheduled into Halma’s annual Board agenda.

Outcomes and actions in the year
• Accelerate Halma conference held in October 2022.
• Continued progress made on the implementation of our Security
Upgrade Programme, which will greatly enhance our ability to
connect across companies, learn from one another and collaborate.

• Introduced three new leadership development programmes for
Managing Directors, Directors/Vice Presidents and leaders with
potential to achieve company board level.

• Supported the development of our companies’ products via our

Functional Networks, which enables collaboration, interconnectivity
and allows our companies to leverage their experiences and
knowledge from one another.

• Continued M&A activity, providing companies with access to new

products, know-how and end-markets.

How we engage
Our Divisional Chief Executives (DCEs) engage with our major
customers to ensure that we offer and develop innovative solutions
using our technology and deep application knowledge.

As a highly decentralised business our companies work closely
with their customers, which fosters close partnerships and
promotes open two-way communication and dialogue.

Outcomes and actions in the year
• Investment in our innovation and digital growth programmes
to explore new ways of providing value to customers through
digital products.

• During the year, an increasing number of our customers have

engaged with our companies on sustainability matters, for example:
– Companies including BEA, Medicel, Ocean Insight and Apollo
completed EcoVadis sustainability scorecards at the request
of their customers.

– Some of our Healthcare Sector companies, including Keeler
and Riester, regularly attend monthly procurement sessions
with the NHS where sustainability matters are discussed.

Halma plc | Annual Report and Accounts 2023

Our stakeholders continued

Case study

Accelerate Halma

In October 2022, we held our Accelerate Halma
conference in-person for the first time since the
COVID pandemic. The event brought together 350
of our colleagues across the business including the
Board, Executive Board, senior Group employees and
company board members. Accelerate Halma provided
opportunities for all attendees to engage, collaborate
and draw insights and knowledge from one another.

The theme of the event was “connected for growth”
and comprised of three days of plenary presentations
and break-out functional sessions and also included
charity initiatives to contribute to the local
community in Orlando, Florida.

Our non-executive Directors hosted a breakfast event
with a wider group of leaders across the Group and
our three sectors, which provided opportunities for
informal networking as well as highlighting the
benefits and experience that our companies
can leverage from our non-executive Directors.

Following the conference, an anonymous evaluation
was conducted which demonstrated the success of
the event. The feedback gathered highlighted that
the event had provided a better understanding of
the Group and connections between Halma’s growth
model, purpose and DNA, as well as an enhanced
feeling of connection to others, whilst providing
new connections through relationships built
during the conference.

The ability to network, share common
challenges, and look for synergies and
potential opportunities to leverage
common technology, tools, and people
across Halma companies was really great.

Company board member, Accelerate attendee

Halma plc | Annual Report and Accounts 2023

Suppliers

Developing strong relationships
with our suppliers is key to the
operational success of our
business and ensures that we have
agility to develop new and market
competitive solutions to meet our
customers’ needs, who play an
essential role in ensuring the
sustainable growth of the Group.

Their key matters
• Fair payment practices.
• General terms and conditions of

business.

• Social, ethical and environmental

impacts.

• Long term partnerships.

Further links:
• Sustainability p72
• Non-financial information statement

p99

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Other
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How we engage
As a highly decentralised business our companies work closely with
their suppliers. Our DCEs engage with our key suppliers to ensure
that we continue to deliver the best products and services for our
customers and have the infrastructure in place to respond to
market developments. DCEs report back to the Board periodically
on significant supplier contracts and arrangements, and the Board
maintain oversight of potential supply chain issues and mitigations.

Some of our companies have been engaging with suppliers through
our supplier sustainability platform, EcoVadis, to gain a broader
view of their sustainability credentials (see below). More broadly,
many of our companies have been engaging with suppliers on
sustainability matters and as part of reducing Scope 3 emissions
linked to our supply chain, we expect increased engagement from
our companies starting to develop decarbonisation plans with
key suppliers.

Our Halma Strength in Numbers (HSIN) team provides a strategic
purchasing function to our companies, offering collective economies
of scale and introduction of new vendors to serve a specific business
need. The HSIN team engage with key suppliers to develop proposals
and present options to our companies.

Our principal suppliers are subject to regular engagement, including
audits, and are encouraged to operate with the high ethical standards
that are set out in our Code of Conduct. The Board annually reviews
and approves our Modern Slavery Act statement.

Outcomes and actions in the year
• Approved our annual Modern Slavery Act statement and refreshed

our Code of Conduct, for roll-out in FY24.

• Engaged with suppliers on sustainability, for example:

– A number of our companies are utilising the EcoVadis platform
via Halma’s group-licence to gain a better understanding of
supplier sustainability credentials.

– Apollo held a supplier sustainability webinar to introduce

their sustainability goals and ongoing supplier expectations.

– Keeler has been engaging with some of its key suppliers

on logistics and packaging efficiencies.

• Held a supplier “Innovation Day”, hosted by a key supplier in Dallas
and attended by our technical teams. The objective of the day was
to provide a better understanding of the suppliers offering, their
pipeline for new product innovation and the potential benefits
of partnering for both Halma companies and the supplier.

• Held a “Halma Strategic Supplier” event (see page 60).

Halma plc | Annual Report and Accounts 2023

Our stakeholders continued

Case study

Halma Strategic Supplier event

In September 2022, the HSIN team conducted
their first Halma Strategic Supplier event, hosted in
Florida by Ocean Insight. The event brought together
key suppliers from across our supply chain with
operational leaders from our companies. Keynote
speakers provided talks and suppliers presented
to a panel of our companies, fielding questions
and providing networking opportunities.

The event encouraged an open dialogue between
companies and suppliers, facilitated the sharing
of best practices, provided opportunities for our
companies to work with developed partners among
our Group and identified strategic initiatives.

The event was highly beneficial to both suppliers
and companies and strengthened the bond with
key suppliers by showing how much we value
their commitment to Halma’s business, as well
as introducing our companies to existing HSIN
programmes. Additionally, it promoted
engagement between our companies,
seeking to solve similar problems.

The event was a great opportunity
to collaborate with other Halma
companies on how to overcome
challenges that we face in supply
chains. I also enjoyed collaborating
with our strategic preferred suppliers
and gaining additional knowledge.

Kate Dorse,
Supply Chain Manager, AAI

Halma plc | Annual Report and Accounts 2023

Acquisition prospects and
business partners

A key aspect of our sustainable
growth strategy is through
acquisitions and venture
partnerships and our companies
and sector M&A teams work
continuously to build relationships
with businesses that could
become an acquisition prospect
or a strategic business partner.

Their key matters
• Financial performance.
• R&D investment.
• Collaboration and interconnectivity.
• Delivery of initiatives.
• Mergers and acquisitions.
• International expansion.
• Cultural and ethical fit and alignment

with our purpose.

Further links:
• Strategic Report p02
• Business reviews p40

Society and community

We have a duty to conduct
business in a responsible and
sustainable way that aligns with
our purpose, our organisational
and cultural genes, and
supports the communities
in which we operate.

Their key matters
• Environmental and social impact.
• Improving quality of life.
• Protecting people.

Further links:
• Our people and culture p66
• Sustainability p72
• Non-financial information

statement p99

Strategic
Report

Governance

Financial
Statements

Other
Information

How we engage
Our Executive Directors are in dialogue with our business partners
and will meet with management at potential acquisition targets
as part of the due diligence process.

The Board receives regular reports on the M&A pipeline, which
allows for considered discussion and facilitates their decision-
making process.

Outcomes and actions in the year
• Continued to develop external partnerships, including making

minority investments through our Halma Ventures programme.
• Completed seven purpose-aligned acquisitions across our three

sectors throughout the year.

How we engage
The Directors regularly review our portfolio to consider how
our companies and their products align with our purpose.

The Sustainability team engages with stakeholders on
sustainability issues and reports to the Board on these matters.

At a more local level, our companies undertake a range of
initiatives with their local communities to provide engagement
and positive impact.

Outcomes and actions in the year
• Continued to fundraise and provide technology and support
for our group-wide charitable campaign, Water for Life, in
partnership with the international non-profit organisation
WaterAid, see page 68.

• Continued to support the humanitarian relief effort in support
of Ukraine by raising and matching employee donations and
providing online guides to help support our colleagues.

• Many of our companies have supported both local and global

communities and charities during the year, for example, PeriGen
has partnered with the Malawi Ministry of Health and Baylor
College of Medicine Children’s Foundation to implement AI-based
fetal heart monitoring in a major women’s health clinic in Malawi,
whilst Keeler has supported through donations to local senior
community centres and animal welfare charities.

Halma plc | Annual Report and Accounts 2023

Our stakeholders continued

Investors and debt holders

Investors and debt holders provide
the financial liquidity we require
to operate and continue our
sustainable growth, and are
key beneficiaries in the value
that we create. As investors in
our business, we are committed
to transparent and open
engagement with them.

Their key matters
• Strategy and implementation.
• Operational and financial performance.
• Capital structure, liquidity, capital
allocation and dividend policy.

• Risk management.
• M&A.
• Talent and succession planning.
• Environmental, social and

governance matters.

• Company culture.

Further links:
• Strategic Report p02
• Business reviews p40

How we engage
The Board recognises the value of engaging with all of our investors
and debt holders and gaining a diverse selection of shareholder and
stakeholder views from a range of geographies. We maintain an
annual programme of investor publications and key engagement
initiatives, and the Directors meet investors on a regular basis,
principally through investor roadshows, investor events and the
Annual General Meeting.

The Chair is accessible to shareholders and will invite the Company’s
largest equity shareholders to meet to discuss Company strategy,
direction and any other significant matters. The Senior Independent
Director provides an alternative channel for shareholders to raise
concerns, independent of executive management and the Chair.

The Head of Investor Relations, Head of Sustainability, the Company
Secretary and Group Treasurer maintain an ongoing dialogue with
shareholders, investor bodies, financial analysts and our lenders
regarding financial, operational, risk and environmental, social
and governance issues and provide regular reports to the Board
on these interactions.

Outcomes and actions in the year
• Held 200 investor meetings, with over 250 investors, attended
by a broad range of senior Halma management, including the
Group Chief Executive, Chief Financial Officer and members of
the Executive Board.

• Held roadshows focused on smaller investors and private

client brokers.

• Held a series of meetings with major shareholders and key debt

holders to introduce Steve Gunning, Chief Financial Officer.

• Held a series of meetings between our Chair, Dame Louise Makin,
and major shareholders, covering approximately 25% of our issued
share capital. Key discussions included Group Chief Executive and
Chief Financial Officer succession and transition, Board composition,
sustainability, governance and remuneration.

• Jo Harlow, non-executive Director and Chair of the Remuneration
Committee, led consultations with shareholders on remuneration
matters.

• Strong relationships with key debt holders led to a very successful

refinancing of our revolving credit facility at extremely competitive
rates and a very strong demand for our private placement issuance
in May 2022.

• Held our first fully in-person Annual General Meeting since 2019,
allowing for face-to-face interaction between Board members
and a range of investors.

Halma plc | Annual Report and Accounts 2023

Section 172(1) compliance statement

Strategic
Report

Governance

Financial
Statements

Other
Information

Throughout the year the Directors believe that they
have acted in a way that they considered, in good
faith, would be most likely to promote the success
of the Company for the benefit of shareholders,
and in doing so had regard, amongst other matters,
to S.172(1)(a) to (f) of the Companies Act 2006.

Further disclosures on each of the S.172(1) factors, found throughout this Report, are set out below.

S.172(1) element and their relevant disclosures

(a) the likely consequences
of any decision in the
long term

• Key decisions made in

the year p64

• Sustainable Growth Model p18
• Business reviews p40
• Strategic report p02

(b) the interest of the

company’s employees
• Our people and culture p66
• Our stakeholders p56
• Corporate Governance

Report p110

• Non-financial information

statement p99

• Remuneration Report p164

(c) the need to foster the
company’s business
relationships with suppliers,
customers and others
• Non-financial information

statement p99
• Sustainability p72
• Our stakeholders p56
• Business reviews p40

(d) the impact of the

company’s operations
on the community
and environment

• Sustainability p72
• TCFD Statement p80
• Our people and culture p66

(e) the desirability of the
company maintaining
a reputation for
high standards of
business conduct

• Sustainable Growth Model p18
• Risk management and internal

control p88

• Non-finanical information

statement p99

(f) the need to act fairly

as between members of
the company

• Our stakeholders p56
• Corporate Governance

Report p103

• Directors’ report p164

Halma plc | Annual Report and Accounts 2023

Considering stakeholders in our decision-making

Board decision-making
The principal decisions taken by the Board during the year, along with how the Directors considered stakeholder
interests when discharging their duties under S.172(1) are set out below.

Principal decision and
stakeholders considered

Group Chief Executive
and Chief Financial
Officer succession
• Shareholders and

investors.
• Our people.
• Our companies.
• Acquisition prospects
and business partners.

Capital allocation
• Our companies.
• Shareholders and

investors.
• Our people.
• Customers and suppliers.

Dividend
• Shareholders
and investors.

• Our people.
• Customers and suppliers.

Factors considered by the Board

Longer-term considerations

Strong talent and leadership is key to
Halma’s ongoing success and delivery
of strategy. Ensuring fulfilment of key
leadership roles will position Halma to
continue to produce strong returns and
growth for our shareholders and wider
stakeholders, whilst staying true to our
established Sustainable Growth Model.

Balancing investment for future
growth while considering shorter term
inflationary cost pressures and political
and economic risks.

That dividends are consistent with the
Company’s financial performance and
would not be detrimental to the strength
of the balance sheet and future
sustainable growth.

The Board considered a range of factors
during the succession planning process
for the positions of Group Chief
Executive and Chief Financial Officer,
including ongoing alignment with
the Group’s purpose, culture, and
Sustainable Growth Model. The Board
were mindful throughout their decision-
making process of the long-term impact
that such a decision would have on
the future success of the Company,
including through investor and
employee sentiment.

The Group’s Budget, approved by the
Board, sets the allocation of capital
to deliver our growth strategy through
investment in R&D, capital expenditure,
talent and acquisitions. The Board were
cognisant of the Group’s short to
medium term priorities in setting the
Group Budget whilst being mindful
of macroeconomic and geopolitical
circumstances, to ensure continued
delivery of growth and the safeguard
of shareholders’ interests, as well as
those of its wider stakeholders including
employees, customers and suppliers.

For its 44th consecutive year, the Board
took the decision to increase dividend
payments by more than 5%. As a high
growth company, the Board carefully
balanced the financial resources
required to execute our strategy,
including organic investment needs and
acquisition opportunities in line with our
Budget; the Group’s medium-term rate
of organic constant currency growth;
maintaining a prudent level of dividend
cover and moderate indebtedness; and
equitable treatment of our stakeholders
when taking this decision.

Halma plc | Annual Report and Accounts 2023

Strategic
Report

Governance

Financial
Statements

Other
Information

Principal decision and
stakeholders considered

Acquisitions
• Shareholders and

investors.

• Our companies.
• Our people.
• Acquisition prospects
and business partners.

Approved refreshed Code
of Conduct
• Our people.
• Shareholders
and investors.
• Our companies.
• Customers and suppliers.
• Acquisition prospects
and business partners.
• Society and Community.

Factors considered by the Board

Longer-term considerations

The Group completed seven acquisitions
during the year, five of which required
Board approval. The detailed acquisition
proposals from the Group Chief Executive
set out the long-term implications of the
acquisition and the effect on Halma’s
stakeholders. It is essential that each of
our companies aligns with our purpose
and the Board carefully balanced the
financial commitment required against
the risks and anticipated return, whilst
considering the strategic fit with our
purpose, the opportunities for geographic
or market growth (either organic or
through further M&A) and the talent
and know-how which would be acquired.

The Board considered any negative or
positive impact the refreshed Code of
Conduct would have on employees,
culture, the autonomous operating
model and the legal and compliance
framework. Investor expectations were
also considered and the Board satisfied
themselves that the refreshed Code of
Conduct had been benchmarked and
was aligned with all applicable laws
and regulations. The Board assessed the
alignment with our purpose and values
and concluded that these were aligned
and would improve compliance across
the Group.

Halma’s discipline in making acquisitions
which are aligned to our purpose and
which are in market niches with long-term
growth drivers are core to our strategy and
are critical to ensure that we can continue
to grow sustainably for the benefit of all
our stakeholders.

The refreshed Code sets out Halma’s
expectations for ethical behaviour and
corporate responsibility. It is rooted in
Halma’s purpose and cultural DNA
and goes beyond compliance with laws
and regulations, requiring a commitment
to just be a good person and operate
ethically and sustainably. The Code
highlights Halma’s approach, expected
behaviours and aspirations around key
environment, social and governance
themes as well in relation to key
compliance areas such as bribery and
corruption, competing fairly and data
ethics. It sets out the standards by which
we conduct business as well as setting out
our expectations of our business partners.

By promoting a culture of acting ethically
and sustainably, the Code will build trust
and strengthen our relationship with all
of our stakeholders as well as continue
to encourage the best talent to join, and
remain with Halma. It will also promote
Halma’s cultural DNA and help all to work
together to fulfil Halma’s purpose and
deliver on its strategy.

Halma plc | Annual Report and Accounts 2023

Our people and culture

Our people
and culture

Our DNA
The combination of our culture and our agile
organisational model is one of our unique strategic
assets and vital to delivering our purpose and growing
a sustainable and successful business. We call this
combination Halma’s DNA (see page 21), and both
strands are inextricably linked to enable our success.

We bet on talent
Our DNA drives our talent philosophy. One of the most
important aspects of our DNA is “We bet on talent”.
Due to our highly decentralised model, we need
exceptional people who are empowered and accountable
for making decisions close to their customers without
the need for complex reporting lines. It also encourages
diverse viewpoints on every team to ensure we don’t
miss a thing. Our agile model then enables our people
to respond quickly to their customers’ needs to capture
new growth opportunities. This means that finding the
right people, and then supporting and developing them
to grow, is central to how our companies think about
their growth strategies.

People at the heart of our growth strategy
Over the last year our people have faced a number of
global challenges that have impacted them at work
and at home. The ongoing war in Ukraine has led to a
rise in global energy prices and inflation pressures that
have resulted in a sharp increase in the cost of living.
In China the lockdowns in early 2022, followed by the
sudden lifting of restrictions later that year, also put
significant stresses on our local workforce.

Halma plc | Annual Report and Accounts 2023

Our leaders have been able to
navigate global challenges and
also seize new opportunities by
putting people at the heart of
their growth strategies.

Jennifer Ward
Group Talent, Culture and Communications Director

Our leaders have been able to navigate these challenges
and also seize new opportunities by putting people at
the heart of their growth strategies. Guided by our DNA
they have invested in our people in a number of ways,
knowing that the ability to attract, retain and engage
high-performing teams is vital to each company’s success.

Employee engagement
In 2023, we ran our seventh global employee engagement
survey. Once again, we had a strong response rate of
85% in line with the previous year and our overall
engagement score remained stable at 76%. This is
reassuring given all the pressures our people continued
to face. We saw our biggest improvement in companies
providing their people with opportunities to learn
and grow – which shows steady growth since 2020.

Our drive to build inclusive businesses continues to pay
dividends with high engagement scores on colleagues
feeling they are treated fairly and respectfully (83%)
and can be their authentic self at work (80%). These
are both trending upwards from 2022.

A new driver of engagement is sustainability, with
68% of colleagues telling us they feel good about the
efforts their company is making on sustainability. This is
encouraging to see given our purpose, and how strongly
sustainability features in the long-term growth drivers
that power our business.

The value colleagues place on community engagement
was shown by how they joined forces through our
two-year Water for Life campaign. In partnership
with WaterAid, the campaign aimed to share our
water-testing technology and to raise funds to
provide safe drinking water to 8,000 people in rural
India. We’re incredibly proud to have surpassed our
target of £200,000 which was doubled by Halma’s
match. Through our shared purpose, our passion,
and our expertise our colleagues have come together
to make long-lasting change for some of the most
vulnerable communities. See page 68.

Continued focus on diversity and inclusion
We see diversity and inclusion as a competitive
advantage that can help our businesses grow and meet
the challenges of the future. To achieve our purpose, we
must attract and retain a diverse workforce that helps
us spot and unlock new opportunities and innovate
to solve complex problems. This year we sustained our
focus on creating a more balanced and representative
employee population and cultivating an inclusive
environment where people feel empowered to contribute.

Gender balance
We have set a clear goal for all our company boards
to be within a 40–60% gender balanced range by the
end of March 2024. This year we have 29% women
on company boards, increasing from 26% last year.
Whilst this is an improvement, we recognise we need
to accelerate the pace of change. During the year we
took deliberate action in talent mapping to identify,
engage and nurture top female leaders which led
to several successful hires. We expanded our diverse
recruiter list and are already seeing the benefit of this
with a stronger pipeline of diverse candidates coming
through into senior roles. We developed toolkits to help
our companies with diverse sourcing strategies and
inclusive hiring practices. We also continued to shine a
spotlight on women leaders across functions through
our annual International Women’s Day celebration to
inspire the next generation to join us. In fact, our 2023
Halma Future Leaders cohort is 41% women ensuring
that we continue to build a strong pipeline of female
talent. We will build upon initiatives that have driven
positive change and identify new opportunities to
reach our overall objectives.

At the executive level, we’re pleased to have remained
within our 40–60% gender-balanced range, with
women representing 45% and 55% of Halma’s Board
and Executive Board, respectively. Our three sector
boards are also within our 40–60% gender balanced
range and 48% of all our senior roles (Executive Board,
Sector Chief Executives, Divisional Chief Executives)
are held by women. In acknowledgement of our efforts,
we were awarded a Balance in Business award in 2023
which recognises trail-blazing FTSE 350 organisations
leading the way in improving the representation of
women on boards and in leadership positions.

Strategic
Report

Governance

Financial
Statements

Other
Information

Our gender diversity

Figures at 31 March 2023

Board of Directors1

Executive Board

55%

45%

55%

45%

Other employees

Senior Management2

42%

29%

227

162

71%

3,418

8,223

4,805

58%

Men
Women

% Women on plc and Executive Boards

61% 59% 56%

54%

42% 42%

29%

31%

21%

2015

2016

2017

2018

2019

2020

2021

2022

2023

% Women on
company boards

29%

26%

22%

19%

Gender pay gap3

26%

20%

19%

2020

2021

2022

2023

2021

2022

2023

Includes non-executive Directors.

1
2 Defined as Executive Board members who are not appointed to the Board,

Divisional Chief Executives and Directors of our companies.

3 Mean Gender Pay Gap for all US and UK employees. Rounded to whole

percentage numbers.

Halma plc | Annual Report and Accounts 2023

Our people and culture continued

Case study

Living the purpose

“Live the purpose” is one of Halma’s cultural genes
and in the last two years we have seen colleagues
exemplify this across our companies. In 2020, Halma
launched Water for Life in partnership with WaterAid
(see page 13) to help raise awareness of the global
challenge of water accessibility and quality.

Thanks to our people’s fundraising efforts, Water for
Life has transformed the lives of over 10,000 people
in Northern India, giving them access to safe, clean
water, and water management training, so they
can continue to keep their water supply safe for
generations to come.

Through creative fundraising activities our companies
raised over £200,000, and Halma donated £200,000,
to support the building of new water infrastructure
and training volunteers in water quality management.

For example, Medicel, based in Switzerland, did a
2,500km bike-to-work fundraiser. Colleagues from
Minicam Group, based in the UK, did a sponsored
sky dive. Sofis, based in the Netherlands, organised an
online charity auction and started a recycling scheme
for employees to donate their glass bottles. CenTrak
held a gift basket raffle in their office in Pennsylvania,
US, and Florida-based Ocean Insight coordinated
several activities including a Valentine’s Day bake
sale, a barbecue, and a photo contest.

CenTrak raising funds
for Water for Life

Gender pay gap
We are pleased to be publishing a mean Gender Pay
Gap figure for all Halma employees in two of our largest
regions (UK and USA) for the third consecutive year.
We are also pleased to report a reduction from 20.1%
to 18.7% as at 31 March 2023. Although most Halma
companies (including Halma plc) do not directly employ
more than 250 employees – the UK statutory reporting
threshold – we are proud to publish this crucial metric.

While we continue to see an improvement in female
representation at senior levels, we still have more men
in our most senior leadership levels and higher paid
roles, as well as more women in hourly paid positions
and this is why we have the pay gap. However, it is
encouraging to see that our commitment to build
an inclusive culture in all parts of our organisation
continues to have an impact on helping to reduce
the gap as evidenced by the steady progress made
since we started publishing this figure in 2021, when
we reported a figure of 25.9%.

Our Global Parental Leave policy and Future of Work
philosophy, although aimed at supporting both men
and women, create better work-life balance whilst
reducing career impediments for mothers. Our Halma
Future Leaders Programme has a good gender ratio
helping to build the pipeline of women leaders for our
businesses. We continue to work towards our goal of
achieving gender balance on our company boards,

Halma plc | Annual Report and Accounts 2023

with a view to not only having a positive impact on
female talent recruitment and retention but also to
help to close the overall pay gap with more female
representation at this level.

While we have observed positive changes year-on-year,
we recognise that there is further progress to be made
and that some of the actions we are taking to close the
gap will take time to have impact. We are committed to
continuing to drive change and our aspiration is to make
ongoing, progressive improvement towards creating a
more diverse workforce and a more inclusive culture.

Race and ethnicity
Alongside gender equality, we’re building the foundations
for greater ethnic diversity across the business. Currently,
27% of our senior leadership team is from a diverse ethnic
background and 14% of all employees consider themselves
to be in an ethnic minority. We want to grow our ethnic
diversity relative to the markets we operate in and
remove barriers to leadership for ethnic minority groups.

In line with being a signatory to Change the Race Ratio,
we are committed to implementing its four key industry
actions towards racial equity. This year, we celebrated
Black History Month in both the UK and the US. This
provided opportunities to spotlight Black role models
in our businesses, educate colleagues on the importance
of challenging behaviours that are not inclusive and
equip them with resources to have conversations
on race.

At Board level, we will continue to meet the Parker
Review target this year to have at least one director
from an ethnic minority background on FTSE 100 boards
by 2021. In March 2023, the Parker Review announced
a new recommendation for FTSE 350 companies to set
a percentage target for senior management positions
that will be occupied by ethnic minority executives by
December 2027. This is aligned to our existing commitment
under Change the Race Ratio, and we fully support the
intent for transparency and accountability. However, as
a diversified group of around 45 autonomous small to
medium-sized businesses this presents unique challenges
in collecting and analysing consolidated data for our
global workforce. We’ve been implementing the
technology that will enable us to do so and we’re on
track to have a system in place by 2024. This first step
is aimed at establishing the baseline so we can set a
target next year and report on it with confidence.

Fostering inclusion
Our inclusive policies ensure a level playing field for
women and men and promote equity. Our gender-
neutral global parental leave policy is available to all
employees providing 14 weeks of fully paid leave for
births, adoption, or surrogacy. Since it was introduced
in October 2020, nearly 500 employees across the
Group have benefited from the policy. Beyond this,
our companies are spearheading initiatives to achieve
our ambition of truly inclusive businesses, as in the
case of Apollo’s new programme supporting women
experiencing menopause.

Strategic
Report

Governance

Financial
Statements

Other
Information

Case study

Supporting
menopause in
the workplace

Apollo is one of Halma’s largest companies and
shares in our ambition to build diverse and inclusive
businesses. The fire detector leader has been making
positive strides towards this ambition including a
more gender-balanced company board and leadership
team. A key initiative for last year was a focus on
menopause, which has a significant impact on
women, who represent 52% of their UK workforce.
28% of their female employees are in the age range
of the peri, menopausal, or post-menopausal stages.
Apollo launched a two-pronged initiative for its UK
and EMEA employees aiming to eliminate the stigma
attached to this normal transition in women’s lives
and to provide funding to access specialist medical
support currently not offered in private healthcare
plans. They now provide mandatory training for all
managers so they can better support their team
members and colleagues. They have also partnered
with Clinic51, a private women’s health and menopause
service, to provide their own menopause private
health package as well as subsidise medication to
manage the effects of hormonal therapy. Additionally,
Apollo covers the cost of Hormone Replacement
Therapy prescriptions and offers private health
consultations with menopause-trained general
practitioners through a third-party.

Menopause awareness
Mandy McPhail at Apollo
leads a session for employees

Halma plc | Annual Report and Accounts 2023

Our people and culture continued

Delivering on total wellbeing
Having an inclusive culture and supporting healthy
lifestyles leads to a more energised and productive
workforce. We recognise that health is not just
about physical wellbeing, and we are working to
help our people be emotionally, physically, socially,
and financially healthy. Our Employee Assistance
Programme is an independent and confidential
resource that employees in the US, UK and Europe
can tap into for support on a wide range of issues –
whether it is personal or work related —free of charge.
In October 2022 this was expanded to all colleagues
in China.

We also understand that the outlook for work-life
balance has changed dramatically, and employees are
looking for benefits to help foster a healthy integration
of work and family. In response, many of our companies
now have flexible working practices including a four-day
work week in production, diverse shift patterns, flexible
working hours and hybrid working for office staff.

Looking after the wellbeing of our people is critical
to our business and a key priority for all our leaders.
The Group’s Accident Frequency Rate (“AFR”) for
the year was 0.08. Whilst it is still relatively low
and represents a decrease against the AFR for 2022,
it is greater than our target of 0.02. We continue to
promote the importance of health and safety and
the role that everyone has to help maintain a safe
workplace. There were no work-related fatalities in
2023 or in prior years and details of both the number
of days lost to preventable work injuries and recorded
injuries during the year and the prior four years are set
out in the graphs. Despite the decrease in the AFR the
days lost to preventable work injuries has increased by
284 – this is largely attributable to two incidents in
2022 which led to days lost in 2023.

Maintaining a compelling employee value proposition
that each of our companies can use to attract and
retain talent locally remains a key priority for us. We
have focused our efforts on providing an increasingly
competitive, flexible and inclusive set of benefit offerings
around the globe. In the US, in light of the landmark
decision made by the US Supreme Court to overturn
Roe v. Wade, we quickly made several changes to our
medical plans. Namely, we expanded travel and lodging
benefits for employees and dependents making not
just reproductive health but also all types of healthcare
more accessible. We also added coverage for gender
affirmation and reassignment services and in 2023
implemented a fertility benefit.

Days lost to preventable
work injuries*

Total recorded injuries
to all employees

455

320

372

360

320

283

212

226

171

111

2019

2020

2021

2022

2023

2019

2020

2021

2022

2023

* Specified major injury incidents are reportable incidents which result in more

than three working days lost.

Beyond healthcare, we have made other enhancements
to simplify and increase the competitiveness of our
401(k) retirement savings and deferred compensation
plans. We increased Halma’s matching contribution
limit for employees participating in the 401(k) retirement
savings plan from 3% to 5% of salary and increased the
percentage of employer contributions to their retirement
from the moment they join our companies. The vesting
of employer contributions has also been improved, from
a three-year cliff to a percentage method with 100%
vesting at three years. This has resulted in a higher level
of employee participation in retirement planning and a
higher percentage of monies they are saving for their
future financial well-being. In recognition of our unique
offering, we have been shortlisted for an award in the
US as a Plan Sponsor of the Year.

We are proud that we continue to meet our commitment
to pay a Real Living Wage as all our UK companies are
paying wages in line with the levels set by the Living
Wage Foundation. We also recognise that the cost of
living continues to be an issue, and our companies are
taking measures to support our colleagues, as outlined
on page 71.

A collaborative culture
Our strong internal networks and collaborative culture
help us solve problems faster. As we have grown, we
have deliberately developed a more collaborative culture.
This has allowed our companies to address opportunities
and solve common issues together. For the first time
since the COVID pandemic our top leaders came
together in Orlando, Florida for the Accelerate conference
under the theme of “connected for growth”. They had
an opportunity to network in person to address some
of the challenges and opportunities ahead and to
celebrate innovation across our businesses. The
conference also reinforced why connection makes
such a tangible difference to our relationships and
to our ability to bring innovative ideas to reality.

Halma plc | Annual Report and Accounts 2023

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Case study

Supporting the increasing cost of living

With rising inflation and higher cost of living in many
countries we know colleagues are facing tough choices.
Our companies are taking a localised approach to
support them. For example, Sofis paid a one-off bonus
to employees in the US, UK, India, UAE, Germany, and
the Netherlands. In Tunisia, Sentric increased medical
cover for all employees as well as provided meal
vouchers. In the UK, Advanced provided a pay raise
outside of their standard pay review cycle for those
individuals hardest hit, taking its lowest paid employees
beyond “the real living wage”. Similarly, Fortress gave a
sizeable pay increase in addition to a Christmas bonus.
Palintest have also provided a one-time cost-of-living
supplement and voucher schemes. Crowcon offered a
free Health Cash Plan to meet the cost of everyday
health expenses and is subsidising annual bus passes
and train tickets.

To further facilitate collaboration and innovation we
have made several investments in the year. In India, we
invested in a new 42,000 square feet state-of-the-art
facility which adopts several environmentally-friendly
measures, as well as increasing collaboration with more
spaces for creativity and working together. In Shanghai,
we established a new office in December 2022 to provide
better facilities for our regional team and act as a hub
for companies operating in the region.

We are also two-thirds of the way through our Security
Upgrade Programme, which brings all Halma companies
into the same Microsoft environment. This will not only
increase our cyber-security across the Group, it will also
greatly enhance our ability to connect across companies,
learn from one another and collaborate. The
programme will complete in July 2023.

Professional growth and development
Developing our leaders to enable them to succeed is a
critical component of our talent philosophy. We invest
in them so that they have the skills required to lead
inclusively and operate as high-performing teams. In
2022 we introduced three new leadership development
programmes; for Managing Directors, for Directors/Vice
Presidents, and for high-potential leaders not yet on a
company leadership team who we want to invest in as
future talent. We reached over 200 leaders with face-to-
face learning events and have a population of 750
active online users, which is increasing steadily and has
doubled compared to the previous year. Lastly, we have
formalised a network of internal mentors and launched
a coaching platform.

Fortress acted fast
to support its people

Coupled with these incentives, many of our
companies are delivering financial guidance to
help educate employees on smarter savings and
spending, as well as organising several employee
engagement and wellbeing activities.

We know that the successful development of emerging
talent is key to the future of our companies. Halma’s
Future Leaders (HFL) Development Programme is a
unique opportunity for new graduates to develop
professionally and personally and make a positive
difference. Since 2012, we have had 132 graduate
trainees in the programme. We continue to build
a diverse pipeline of future leaders; with 41% of all
programme participants being female, 36% ethnically
diverse, and 22 different nationalities.

Our aim is to see these graduates on one of our company
boards within seven years of joining the programme.
Last year we continued to see their progression with 12
HFL alumni developed and promoted to company board
level. Seven within eight years, and five within five years
of joining Halma. Fifteen more have been developed
and promoted to senior leadership roles.

It is gratifying to see how our companies continue to
build inclusive businesses and support our people so they
can drive the growth of our businesses. This is testament
to our DNA, the unique combination of our culture and
organisation model, which continues to guide us and
will enable our future success. Many thanks to our
colleagues around the world for living our DNA every
day and putting it at the heart of everything you do.

Halma plc | Annual Report and Accounts 2023

Sustainability

Our approach to sustainability

Our sustainability approach
has three pillars:

Drive growth
in sustainability

• we invest in growth opportunities driven by our
purpose, long-term growth drivers and evolving
sustainability demands.

• we aim to increase and broaden the benefits
enabled by our products and services – from
improving lives to supporting the transition
to a greener economy.

Support
our people

• we support our employees, communities

and suppliers.

Protect our
environment

• we are focused on reducing our

environmental footprint.

Our growth strategy and sustainability approach
Sustainability has always been at the core of our
growth strategy.

We acquire and grow businesses in safety, environmental
and healthcare markets that solve real problems in
the world – enabling our customers to provide safer
environments, protect life-critical resources, and
deliver better healthcare.

Their agility means that they can respond to the
demands of their customers as the world changes,
which includes evolving their products and services
towards sustainability-related opportunities over time.

Similarly, our sector teams identify acquisitions in
markets driven by our purpose and long-term growth
drivers. This means that our portfolio is also evolving
towards greater and wider sustainability opportunities.

We are challenging ourselves by creating more focus
on sustainability as a core driver for growth, and
further investing in existing and new growth
opportunities driven by sustainability trends.

We believe our first sustainability pillar – driving growth
in sustainability – will allow us to accelerate our
progress and broaden the benefits that our companies
already enable through their products and services.

At the same time, our purpose and cultural DNA drives
our second sustainability pillar – to support our people
– including employees, suppliers and the communities
we operate in. Within this pillar, we have a key focus
area of diversity, equity and inclusion.

Finally, we are focused on our third pillar – to protect
our environment – both because it is the right thing for
us to do, and because it will support our future growth.
Within this pillar, we have a key focus area of sustainable
product design and reducing emissions.

For our companies, our three sustainability pillars
together translate into a challenge to “do more good”
and “do less harm”.

Halma plc | Annual Report and Accounts 2023

Sustainability governance
Our approach to sustainability governance across the
wider Group aligns with our decentralised organisational
model, which places our operational resources close
to our customers through locally-managed,
autonomous companies.

p03

Find out more about our decentralised
Group structure.

Our companies
Our Divisional Chief Executives (DCEs) work with the
MDs and local boards of each company to encourage
the consideration of sustainability opportunities and
risks in strategic planning, in a way that is relevant
and appropriate to the circumstances, markets and
capacity of each company.

Each of our companies also has a local board member
who is responsible, along with their company MD/CEO,
for developing and maintaining their company’s plans
to support people and protect the environment.

Halma Group
At the Group level, our Board is ultimately responsible
for approving our Sustainable Growth Model, which
has sustainability at its core and includes oversight
of climate-related risks and opportunities. Further
embedding sustainability into our business was one
of the Board’s key priorities for 2023.

Our sustainability agenda is led by our Group General
Counsel & Chief Sustainability Officer, who has principal
responsibility for our sustainability activities and policy.
She is a member of the Executive Board and a standing
invitee at the Board. She also chairs our Sustainability
Management committee, which is a cross-functional
team of Group and sector representatives which provide
direction and oversight of our sustainability initiatives
and implementation of our sustainability agenda.

p103

Read more about the Board’s key priorities.

p123

See the Board’s sustainability-related skill set.

p80

Read more about climate-related governance.

Read more about sustainability
governance at www.halma.com.

Remuneration
Since 2023, progress on reducing emissions (energy
productivity) and diversity, equity and inclusion
(gender balance on company boards) has been
incorporated into executive remuneration.

p136

More information about sustainability-
related remuneration.

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Ocean Insight spectrometers
help measure greenhouse
gases in the Italian Alps.
Credit: JB Hyperspectral

Evolving our approach

During 2023, much of our companies’ focus
was on our second and third sustainability pillars,
and our key focus areas within these two pillars.

These key focus areas – diversity, equity and
inclusion, and sustainable product design and
reducing emissions – were chosen in 2021 following
an informal strategic materiality assessment.

Each of our companies set their own bottom-up
targets and action plans for these areas, in the
context of the Group’s goals (see pages 76 to 79).
Our DCEs have been working with our companies
to challenge and further develop these plans.

In 2024, we are increasing internal focus on our
first pillar – driving growth in sustainability – while
maintaining progress on our goals to support our
people and protect our environment.

Read more about our sustainability
approach and strategic materiality
assessment at www.halma.com.

Evolving our disclosures

This year, we have produced a sustainability section
that allows us to share our progress on the key
elements of our sustainability agenda.

Further social and environmental metrics
and information on our progress can be
found in our ESG Data Supplement and
Emissions Reduction Report at
www.halma.com.

Halma plc | Annual Report and Accounts 2023

Sustainability continued

1. Drive growth in sustainability

Overview
Our commitment to drive growth in sustainability
will see us encouraging our sectors and companies to
understand and leverage existing and new sustainability-
related demands – both to grow their businesses and
broaden the benefits their products and services enable.

Our companies know their markets and customers best.
Therefore, progress will be delivered through a “bottom-
up” approach. The opportunities they identify will be in
markets that align with our purpose of growing a safer,
cleaner, healthier future for everyone, every day.

Our diversified portfolio means that each of our
companies will adopt a different approach to identifying
sustainability-related opportunities. For many companies,
leveraging innovation and digital technologies will be key
to solving sustainability challenges. It also means that
the outcomes will look different in each company.

At the Group level, we are excited by acquisitions
that deliver on our purpose and long-term growth
drivers and additionally have significant, long-term
sustainability growth opportunities. Our sector and
M&A teams continue to explore and acquire these
types of companies, and some examples are
highlighted on these pages.

We continue to develop various frameworks and internal
tools to support our progress. During 2023, sessions were
delivered to our sector boards on climate change and
circular economy trends. And at our global Accelerate
leadership conference in October 2022, we challenged
our company board members to come up with new
growth ideas for their businesses at the intersection
of sustainability and digital.

Case study

Driving growth in sustainability
through acquisitions

We are excited about the long-term growth
opportunities our companies can access by helping
their customers solve sustainability challenges. We
look for these sustainability-linked opportunities when
we make decisions about how to allocate capital, and
we challenge our DCEs to seek acquisitions that will
deliver strong long-term growth in a world transitioning
towards greener and fairer economies.

Our Group General Counsel and Chief Sustainability
Officer is a member of our Executive Board and is
encouraged by the sustainability-linked opportunities
in many of our recent acquisitions.

FirePro’s fire suppression
systems protecting a large
battery-powered ferry

Halma plc | Annual Report and Accounts 2023

As an example, she cites the recent acquisition
of FirePro, which produces a non-pressurised
condensed aerosol technology that is considered
a more sustainable alternative to established
pressurised gas fire suppression solutions.

Having discussed FirePro’s technology
in detail, we were delighted to
recommend the acquisition to the Board
for approval. It is a company that both
provides a more sustainable product¹
than other alternatives on the market,
but is also targeting markets – such
as lithium-ion battery power storage –
that we expect to grow as we transition
towards a greener, Net Zero future.

Funmi Adegoke
Group General Counsel
and Chief Sustainability Officer

1 See https://www.halma.com/news/press-releases/2023/halma-

acquires-firepro for more information

Driving growth in context –
our impact and UN SDG contribution
Our purpose and the agility of our companies in meeting
customer needs drives our Sustainable Growth Model.
At the same time, the societal and environmental
benefits we enable through our products and services
help us contribute towards the broad aims of many
UN Sustainable Development Goals (SDGs).

Our companies’ diversity means that the contribution
from our products and services is varied. Previously, we
identified four SDGs as highly aligned with our purpose
and our products and services (SDGs 3, 6, 9 and 11).
As we broaden the impact enabled by our products
and services, other SDGs such as SDG 7 (affordable
and clean energy) and SDG 8 (decent work and
economic growth) are becoming more relevant.

We aim to give some indicative examples of the benefit
enabled by our companies’ products and services, along
with relevant SDGs, as part of how we communicate our
purpose and our impact.

Please see page 5 and www.halma.com/
our-impact for examples and metrics
relating to our impact.

p38

p43

p44

p49

Case study: OsecoElfab is diversifying into
supporting the energy transition, including
by customising its rupture-disc technology
to support low greenhouse gas switchgear
in electricity distribution.

Case study: WEETECH, part of a new strategic
subsector for our Safety Sector focused on
power safety, supports the energy transition
while helping to protect workers in dangerous
testing environments.

Case study: Crowcon and Sensit are
partnering to meet growing demand
for air quality monitoring, supporting
air quality improvements.

Case study: Deep Trekker helps support the
global transition to clean energy and also plays
a key role in efforts to maintain the health of
our marine environments through their
unmanned Remotely Operated Vehicles.

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Case study

Improving lives and
delivering value to
society through better
hypertension diagnosis

Hypertension is a common but serious
cardiovascular disease in which blood vessels
have persistently raised pressure. It affects
over 1 billion adults worldwide and is a major cause
of premature death. SDG 3.4 aims to reduce the
mortality rate attributed to cardiovascular diseases
by one third by 2030.

Halma companies SunTech, Meditech and Cardios
offer Ambulatory Blood Pressure Monitors (ABPM)
as well as static devices. These are designed to be
worn by the patient over 24-48 hours, measuring
blood pressure every 20-30 minutes. Blood pressure
data from patients’ daily activities, including at night
time, provide valuable diagnostic information that
help doctors avoid misdiagnosis of hypertension.

Using third-party data and techniques, we have
broadly estimated the added value to society from
Halma’s ABPM technologies from avoided deaths due
to correct hypertension diagnoses and avoided health
costs from ensuring optimal treatment and reducing
unnecessary treatment. We estimate this annual
economic benefit to be greater than £6.5m globally.
This conservative estimation doesn’t include the
benefits of avoiding other cardiac events, such as
strokes and heart attacks, that don’t result in death.

Because ABPM are currently a very small proportion
of total blood pressure measurements, we expect
to increase this value to society over time.

Each year, we aim to quantify the value to society
from the benefits provided by at least one of our
diverse companies or products. For more information
on the methodology as well as examples from prior
years, please see www.halma.com.

>£6.5m p.a.

Value to society

Halma plc | Annual Report and Accounts 2023

Sustainability continued

2. Support our people

Key focus area:

Diversity, equity and inclusion

Relevant SDGs

Overview
Employees
Our DNA puts people at the heart of what we do.
Our inclusive policies and our focus on diversity, equity
and inclusion (DEI) aim to allow our employees to thrive.

p66

Read more about how we support employees
in the Our people and culture section.

Communities
We are proud of the work we do in our communities.
Our companies drive their own community engagement
programmes, and our global fundraising campaigns
build on the benefits our products deliver and provide
our products to underprivileged communities.

A recent example is our Water For Life campaign.

p13

p68

Read more about our
Water for Life campaign.

Suppliers
Our suppliers are a key part of our value chain, and
we expect them to act in line with our Code of Conduct
and our DNA. We are encouraging our companies to
work in partnership with their suppliers to deliver positive
outcomes for their customers and workforce, including
increasing engagement through programmes such as
our EcoVadis supply chain initiative outlined on page 102.

p59

Read more about how we engage with our
suppliers in the Stakeholders section.

Wider social metrics, including health and
safety, diversity and employee engagement,
can be found in our ESG Data Supplement
at www.halma.com.

Key focus area: diversity, equity and inclusion
Increasing diversity, equity and inclusion significantly
benefits our global societies and is fundamental to
achieving our purpose. It is therefore our current key
focus area.

As a group, we are working towards achieving targets in
DEI, the first of which is gender balance on our company
boards (see key target below). We continue to see strong
gender balance at the Group, Executive Board and
Board levels. Our people and culture section (pages 66
to 71) also sets out our plans for reporting additional
ethnicity data and updates on the progress we have
made in this area.

Key goals and targets

40-60%

Gender balance on company
boards by end 2024
End 2023: 29%

Progress

p66

We have made good progress against this
challenging target but recognise that we
have further to go.

Read more details on our DEI target and
progress in Our people and culture section.

For more information on how
we support our people please see:

Health and safety and other
employee-related matters:
• Our people and culture report – pages 66 to 71.
• www.halma.com

Other social, supply chain
and community matters:
• Stakeholders section – pages 56 to 62.
• Non-financial information statement

– pages 99 to 102.
• www.halma.com

Halma plc | Annual Report and Accounts 2023

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Case study

Investing in diversity, equity
and inclusion and the employee experience

Diversity, equity and inclusion will always
be a smart investment. We know that
diversity grows the bottom line and that
it’s better for business. We’re investing in
our culture and workplace to succeed in
the emerging talent market and position
us for continued growth.

Rob Sweitzer
President, SunTech Medical

SunTech Medical is the leading manufacturer of
high-performance, clinical-grade motion tolerant
blood pressure technology. It is headquartered in
North Carolina, in the largest science research
park in the US. Over the past two years, through a
combination of education and targeted recruitment,
SunTech has put people at the heart of its growth
strategy by increasing the diversity of its employees
and investing in the employee experience.

The benefits of this are now starting to come through,
with higher employee engagement, improved decision-
making, and better performance. Now the challenge
is to keep pace with growth, and ensure the employee
experience can continue to attract and retain
high-calibre talent to meet the future needs
of the business.

To support their growth strategy, SunTech has
recently relocated to an improved facility with
modern amenities to create a more open, inclusive
work environment. This includes an onsite fitness
centre, a wellness room which accommodates nursing
mothers, additional private areas for production staff,
as well as increased outdoor space. Along with this,
SunTech offers 14 weeks of paid parental leave to all
employees regardless of gender or sexual orientation,
a hybrid work schedule and has taken measures to
support their employees during the cost-of-living crisis.

Halma plc | Annual Report and Accounts 2023

Sustainability continued

3. Protect our environment

Key focus area:

Sustainable product design and reducing emissions

Relevant SDGs

Overview
Our purpose – to grow a safer, cleaner and healthier
future for everyone, every day – drives our commitment
to protect our environment for future generations.

Our companies see the commercial and environmental
benefit of more sustainable operations. This positions
them to meet their customers’ changing expectations
while potentially lowering their operating costs.

Further information about our wider
environmental impacts, including waste, water
and SASB disclosures, can be found in our
ESG Data Supplement at www.halma.com.

Key focus area: Sustainable product design
and reducing emissions
The majority of our environmental footprint arises
within our wider value chain, and is often embedded
in the design of our products and services. We are
also committed to reducing our own emissions while
supporting our companies to pursue climate-related
opportunities. Therefore, sustainable product design
and reducing emissions is our current key focus area.

We have 1.5 degree-aligned Group targets for Scope
1 & 2 emissions (aligned with guidance from the Science-
based Targets institute), and supporting targets for
renewables and energy productivity. Our companies
have now developed their initial emissions reduction
plans to support these targets where relevant. We have
made good progress towards these targets, and as at
the end of 2023 we have exceeded our 2030 Scope 1 & 2
target (see overleaf).

Estimating Scope 3 emissions
Our Scope 1 & 2 emissions are a small part of our
broader GHG emissions footprint and not where we can
drive the biggest impact. Therefore, we have reported
our 2020 Scope 3 baseline for the first time this year,

Case study

Sharing knowledge to create
more sustainable products

Halma’s Functional Networks bring our companies
together to share knowledge and solve common
problems – including those related to sustainability.

During 2023, a sub-group of our Technical Network,
comprising representatives from four Halma
companies, started creating a sustainable design
toolkit to “minimise environmental impact while
ensuring customer value”.

Palintest’s redesigned
Pooltester kit

Halma plc | Annual Report and Accounts 2023

To begin, they reviewed sustainable design principles
and incorporated these into a product design process
being used by many Halma companies. They aimed
to develop a practical and tailored approach to
enable engineers in our small businesses to engage
with sustainable design on existing product ranges.

Halma company Palintest tested this approach
with their Pooltester product range, which provides
simple and cost-effective pool and hot tub testing
for residential users. Overcoming several design
challenges, the range was relaunched using recycled
plastic cases and recyclable components. Palintest
estimates that virgin material was reduced by more
than 60%, while generating new customer interest.

The subgroup presented their approach and learnings
to the Technical Network and shared through our
sustainability networks. There is more to do on the
toolkit and not all Halma companies are yet ready to
apply this approach. However, encouraging learning
around the Group by sharing our leading companies’
challenges and breakthroughs is a key component of
our approach to this sustainability pillar.

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and will continue to work towards putting in place
appropriate targets on Scope 3 while also reviewing
our current Scope 1 & 2 targets.

Our work during the year confirmed that total Scope 3
emissions in 2020 were approximately 0.95 million
tonnes CO2e, or approximately 98% of our total 2020
greenhouse gas footprint. As expected, these emissions
are concentrated in the supply chain and in the use of
our products.

2020 emissions from our supply chain, including
upstream transport and distribution, were estimated at
approximately 0.34 million tonnes CO2e (c.35% of total
baseline emissions). In addition, most of our companies’
products use electricity, and therefore emissions from
our products’ use phase were estimated at around
0.58 million tonnes of CO2e (c.59% of baseline).
Approximately 60% of product use emissions relate to
one company, comprising approximately 1% of Group
revenue, which sells products which have high energy
usage to meet customer needs.

Further information about our Scope 1 & 2
emission sources, targets and progress; and
detailed Scope 3 baselines; can be found in
our Emissions Reduction Report at
www.halma.com.

Sustainable design and reducing Scope 3 emissions
For the majority of our companies, supply chain and
upstream transport emissions make up the bulk of
their Scope 3 footprint. They will need to concentrate
on sustainable product design and supply chain
engagement to reduce emissions (including through
our EcoVadis supply chain programme outlined on
page 102).

We’ve seen encouraging progress in a number of
companies already, including supplier engagement
programmes and an increasing focus on sustainable
design (see case study on page 78).

We are taking a considered approach to developing
further targets in this area, which reflects the need
to balance Group-led top down goals with bottom-up
actions that are most appropriate to each company,
while minimising reporting burden on our relatively
small companies.

Further information on our target calculation
and Scope 1, 2 & 3 reporting methodologies is
in our ESG Data Basis of Preparation at
www.halma.com.

Key goals and targets

42%

Reduction in Scope 1 & 2 emissions
by 2030, Net Zero by 20401
2023: 47%

80%

Renewable electricity by 20252

>4% p.a.

Increase in energy productivity3

2023: 62%

2023: 10%

We recognise the need to work towards Net Zero across our entire value chain

Progress

p80

Our reduction in Scope 1 & 2 emissions has been driven in large part by our companies switching to
renewable electricity, as well as energy efficiency and other operational changes. See our TCFD section.

Read more about these targets and our progress in our Emissions Reduction Report at
www.halma.com.

1 Market-based calculation of Scope 2 emissions. Aligned with guidance from

the Science-based Targets institute (SBTi): 2030 target is an absolute measure
aligned with the non-sector specific 1.5-degree emissions pathway. This target
has not been verified, as SBTi verification requires our target to include Scope 3.
We will reach Net Zero by reducing emissions as much as is feasible before
using carbon removal instruments.

2 Current year renewable % reflects the full-year impact of acquisitions

and disposals made during the period. Comparative and baseline figures
are not updated for the impact of acquisitions and disposals made in
subsequent periods.

3 Revenue/energy consumed. Annual straight-line increase from 2022. Due

to the inclusion of this metric in remuneration, it is calculated on a different
basis to Scope 1 & 2 emissions and renewable electricity percentage. Revenue
is adjusted to a constant currency basis, and both revenue and energy are
adjusted to exclude all acquisitions in the current and prior period. This target
was set using the EP100 initiative minimum commitment (to double energy
productivity over 25 years).

More details on our targets and methodologies can be found in our Emissions
Reduction Report and ESG Data Basis of Preparation at www.halma.com.

For more information on how we
protect our environment please see:

Other environmental matters, including supply
chain engagement:
• Stakeholders section – pages 56 to 62.
• Non-financial information statement

– pages 99 to 102.

• ESG Data Supplement (including SASB disclosures)

– www.halma.com

Halma plc | Annual Report and Accounts 2023

TCFD Statement

Our approach to climate change
The climate emergency is one of the biggest issues facing our society and our environment. The physical
impacts of climate change are of significant concern to all of us, as individuals and as businesses.

We believe that a robust and timely low-carbon transition in line with a 1.5-degrees Celsius trajectory is highly
aligned with Halma’s purpose to grow a safer, cleaner, healthier future for everyone, every day and therefore
a significant source of potential opportunities for Halma. Alongside this, climate change presents potential
transition and physical risks for Halma. However, as set out further in this Report, on balance we believe
that pursuing potential climate-related opportunities for Halma, which are highly aligned with our
purpose and long-term growth drivers, should be the focus of our strategic response.

Introduction
Our disclosures within this Annual Report and Accounts
are consistent with the four Task Force on Climate-
related Financial Disclosures (TCFD) recommendations
and the 11 recommended disclosures as required by
the Listing Rule.

In order to ensure our TCFD report is proportionate
with our overall strategic report and business risks
and opportunities, supplementary details which are
not material to our overall assessment or disclosures,
including additional details from our inaugural risk
and opportunity assessment process in 2022, are set
out in last year’s 2022 Annual Report and Accounts
on pages 89 to 95 (available on our website at
www.halma.com).

We wrote last year in our first mandatory TCFD Report
that we would continue to improve our disclosures
over time as best practice develops, and we remain
committed to this. In preparing our disclosures, we
have considered the TCFD additional guidance for
all sectors (2021 TCFD Annex).

This year, we have made progress in screening,
estimating and publishing baselines for all relevant
categories of Scope 3 emissions. While quantifying
our baselines has identified two main relevant
Scope 3 categories for Halma, it has also confirmed
our expectation that our Scope 3 emissions do not
represent a significant risk to our business model.

TCFD in the context of our business model
Our approach to sustainability, risk management
and climate aligns with our Sustainable
Growth Model.

We have a highly decentralised organisational
model that places our operational resources
close to our customers through locally-
managed, autonomous and agile companies.

Our companies operate in highly diverse markets
and none of our companies contribute more than
10% of Group revenue.

This business model enables our companies to
respond quickly to changing markets and events
and company boards are empowered to make
strategic decisions within Halma’s framework.

p03

Find out more about our decentralised
Group structure.

Governance
Our Group management structure is simple and lean,
with only three layers – companies, sectors, and Group
teams – all of which are focused on driving purpose-
aligned growth enabling fast decision-making and
minimising bureaucracy.

Further details of our Board and management structure,
including the connections between the management
structure and the Board governance structure, are set
out in the Corporate Governance Report on page 103.

This Governance section and diagram below shows how
our climate-related governance sits within our overall
governance structure. There have been no changes to
our climate-related governance during the year.

Halma plc | Annual Report and Accounts 2023

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a) Describe the Board’s oversight of
climate-related risks and opportunities.
The Board as a whole has ultimate oversight of and
responsibility for climate-related opportunities and risks
and is highly engaged on this topic. At least annually,
it reviews management’s Group-level assessment of
climate-related opportunities and risks; our performance
against our sustainability framework and our climate
change-related targets; approves any new or amended
climate-related targets; and reviews additional
information on relevant climate-related opportunities
and risks for standalone acquisition opportunities.

The Board also received a report on sustainability at
two thirds of scheduled Board meetings during 2023,
and receives an update on our progress on climate
change-related actions and targets at least annually.

The Audit Committee has responsibility for approving
our overall TCFD disclosures as part of the Annual
Report and Accounts process. During 2023, the
Remuneration Committee continued to oversee
the inclusion of climate-related targets in executive
remuneration, as set out in our Remuneration
Committee Report on page 136.

Halma's climate-related governance structure

Structure

Level & responsibility

Through Principal
Risk and additional
TCFD processes

Executive Board

Board
Includes Executive Board
Member Responsible for
Sustainability

Sustainability
Management
committee

Group risks
and opportunities

Oversight

Group risks
and opportunities

Identification
and management

Sector Chief Executives
Supported by Divisional
Chief Executives

Sector opportunities

Identification
and management

Through the
Enterprise Risk
Management
process

Sustainability networks
Sharing resources, tools,
best practice, support

Company boards
Includes Company Board
Member Responsible for
Sustainability

Company risks
and opportunities

Identification
and management

b) Describe management’s role in assessing and
managing climate-related risks and opportunities.
The Sustainability Management committee (SMC) is
responsible for identification and management of
climate-related opportunities and risks at the Group
level. It meets at least quarterly, and its decisions and
activities are relayed to and reviewed by the Executive
Board and Board via the SMC Chair, our Group General
Counsel and Chief Sustainability Officer. It brings
together a cross-functional team of Group and
Sector representatives.

During 2023, as part of our Principal Risks process, it
performed an annual review of the climate-related risks
identified in 2022, as well as reviewing the methodology
and assumptions used to determine our Scope 3 baselines
and our assessment on the potential significance of this
information on our climate-related risks. In addition, the
SMC input into the continued development and rollout
of our sustainability strategy, which encourages our
companies to pursue climate and sustainability-related
business opportunities.

The Sector Chief Executives are responsible for
identifying and pursuing opportunities at the
sector level. Sector-level climate-related risks
are not captured separately, but are captured
within the Group risk overview.

The SMC and Sector Chief Executives are informed
about and monitor climate-related issues through
informal updates and discussions, as relevant topics
arise, with the Sustainability function and/or
external advisers.

Each company board is responsible for identifying and
managing climate-related opportunities and risks at
the company level, reflecting our decentralised, agile
and autonomous business model. As explained further
in the Risk management section below, they are
continuing to develop their capabilities in this area.

Halma plc | Annual Report and Accounts 2023

TCFD Statement continued

Strategy
Like all businesses, Halma is exposed to potential
transition and physical risks associated with climate
change, as outlined further in this Report. However,
given the potential scale of climate-related opportunities,
our strategic response is primarily focused on developing
and pursing these opportunities over the short to
medium term.

a) Describe the climate-related risks and
opportunities the organisation has identified
over the short, medium and long term.
Time scales and significance
We use financial materiality (as set out on page 170)
to make decisions about the potential significance of
risks and opportunities and the appropriate level of
detail to include in our TCFD disclosures, considering
proportionality with the rest of the Annual Report and
Accounts and our Principal Risks. We assess this on a
“net basis” after consideration of mitigating factors
or actions in place.

We consider the following timeframes in assessing
climate-related risks and opportunities:

Short
term

Medium
term

0-3 years

3-10 years

Annual strategic planning process and
viability assessment.

Useful life of most premise leases and
assets. Timeframe for major product
and market shifts.

Long
term

10-30+ years Sustainable Growth Model and M&A
assessment timeframes.

Opportunities
We continue to believe that in aggregate, climate-
related product and market sub-opportunities (both
organic and inorganic) will become significant for the
Halma Group over the medium to longer term (3-30+
years). Given that these opportunities are only expected
to be significant in aggregate, not individually, we refer
to individual opportunities as “sub-opportunities” in this
Report for clarity.

This assessment, carried out in 2022, was supported
by top-down qualitative scenario analysis, which
identified multiple potential organic and inorganic
sub-opportunities within our existing Environmental &
Analysis and Safety Sector strategies. These included
new products and technologies, as well as greater
demand for existing product lines1.

A small selection of potential sub-opportunities, where
Halma already had a market presence as at 31 March
2022, are described in the table below in order to give
some detail on the types of potential sub-opportunities
that could be available to Halma companies. Given the
diversified nature of Halma’s business model and our
companies’ markets, and the bottom-up nature of
investigation and pursuit of sub-opportunities, these are
illustrative only, and significant financial impacts would
only be expected at an aggregated level (across multiple
sub-opportunities being pursued by multiple companies).

Examples of potential climate-related sub-opportunities over the medium to longer term2

Description

Most relevant scenarios

Clean water leak detection,
recycling and reuse

Stormwater and wastewater
management

All – physical climate change driving increasing water scarcity.

All – physical climate change driving increasing storm and flooding events.

Energy efficiency-related building
improvements and retrofits

1.5 degrees – increase in pace and scale of building retrofits required to meet
Net Zero targets.

Industrial refrigerant detection

1.5 degrees – phase out of HFC-based refrigerants and introduction of low
GHG potential refrigerants.

Methane detection and leakage
prevention

1.5 degrees – reducing methane emissions as a key lever to mitigate
near-term temperature rises.

Growth in hydrogen usage

1.5 degrees – increasing use of hydrogen in diverse applications, requiring
detection and management.

Growing renewable energy, energy
storage and other energy transition
and Net Zero related end markets

1.5 degrees – rapid expansion of renewable energy and electricity end
markets for existing Safety and Environmental & Analysis products, as well
as new markets.

Potential financial impact

Increased profits
from growing
revenues and/or
higher margin
opportunities
(organic and
inorganic).

In order to support our assessment that these sub-opportunities could be significant in aggregate, quantitative and qualitative data in relation to a number
of scenarios were considered internally for a selection of the sub-opportunities. However, we do not believe that it would be appropriate or practical to disclose
potential quantified financial impacts for the aggregate impact from climate-related opportunities. This is because there is a high degree of uncertainty about
which specific sub-opportunities will become most impactful, and our aggregate opportunity is likely to be distributed across a high volume of small sub-
opportunities. Given Halma’s dual organic and inorganic growth strategy, potential sub-opportunities to participate in the Net Zero transition could be highly
varied both in terms of the scale of the sub-opportunities, and the cost of accessing them. We continue to explore further sub-opportunities, including those
related to the Net Zero transition within our Healthcare sector.

2 This table is not exhaustive and may not represent the individual sub-opportunities which are likely to become most significant over time.

Halma plc | Annual Report and Accounts 2023

Strategic
Report

Governance

Financial
Statements

Other
Information

Nevertheless, we do not currently expect these risks to
become significant, as our business model is expected to
be resilient to climate-related risks, and highly exposed
to climate-related growth opportunities. Our resilience
stems from our highly diverse, agile and decentralised
business model (see page 80), as well as our ability
to provide products and operate in sectors expected
to thrive in a low-carbon economy.

Key mitigating factors which influenced our risk
assessment included the diversification of the Group’s
products, markets (including low exposure to highly
impacted markets), geographies and first tier supply
chains, the inherent resiliency of the Group’s business
model, our pricing resilience, and our asset-light model.
Fuller details are included in our 2022 Annual Report and
Accounts on page 93, and are not repeated here in the
interest of proportionate disclosures.

Taking the above factors into account, we have not
identified climate change as a standalone principal
risk for the Group, but have included the potential
impact of climate-related issues as drivers, modifiers
or accelerators to existing relevant principal risks,
as shown on pages 91 to 97 in the Principal risks
and uncertainties section3.

The table below shows the potential directional impacts
and key mitigating actions that are captured within our
principal risk processes for those three risk categories
that were considered to be the most potentially
impactful over the longer term compared to the other
climate-related risks assessed (although these are not
currently identified as significant risks in the context of
our risk management framework). Equivalent information
for all eight risk categories originally assessed is available
in our 2022 Annual Report and Accounts on pages 89
to 95. In the interest of proportionate disclosures, this
information has not been reproduced in this Report due
to the very low potential impact/likelihood of those risks
compared to our principal risks.

Risks
Like all businesses, Halma is exposed to both transition
and physical climate risks. During 2022, we assessed the
potential significance of eight risk categories identified
in 2021. These were

Transition risks:
• Supply chain
• Business model and communications
• Products and markets
• M&A and portfolio strategy
• Skills, talent and information
• Regulatory environment

Physical risks:
• Supply chain disruption
• Operational interruption

Our assessment included analysis of potential impacts
across different geographies and markets/sectors.

In 2023, we also reassessed the potential significance
of transition-related supply chain risks and product and
market risks as we screened and estimated baselines
for our Scope 3 emissions, which are set out in the
Metrics and Targets section. In particular, we noted
that approximately 60% of our product-in-use
emissions baseline is related to only one company
which contributes approximately 1% of Group revenue.
This company sells products which have high energy
usage to meet customer needs.

Our analysis in 2022 and 2023 concluded that there
were no significant individual risks arising in the short
to medium term (0-10 years). Over the longer-term
(10-30+ years), we identified physical and transition-
driven supply chain impacts, as well as business model
and communication risks, as potentially having the
highest impact on the business compared to the
other climate-related risks assessed, due to the
higher likelihood of underlying risk events under
transition scenarios.

Climate-related risks over the medium to longer term

Risk category & description

Physical supply chain disruption: Increasingly
severe extreme weather events could reduce
availability of materials and components
and/or interrupt transportation and logistics.

Transition-induced supply chain risks: Increased
costs (including from carbon pricing) and
constrained material/component availability
resulting from the low-carbon transition.

Business model and communications: Meeting
increasing or shifting stakeholder, regulatory
and reporting expectations within our
decentralised business model.

Potential financial impacts (not currently
expected to have a significant impact on
financial position or performance)

Key actions

• Increased costs
• Revenue disruption

• Our companies continue to manage their supply

chains, supported where appropriate by our
Group Growth Enablers.

• Our companies continue to manage their supply

chains, supported where appropriate by our
Group Growth Enablers.

• Scope 3 emission measurement and

target setting.

• Decreased valuation or

• Continued commitment to transparency

reduction in available capital

in our reporting.

• Increased costs or business

model changes

3 Despite our assessment that these risks are not likely to be significant, at 31 March 2023 we continued to subject balance sheet items to detailed review against our

climate-related risks, including goodwill, acquired intangible assets and PP&E. As set out in the Critical accounting judgements and key sources of estimation uncertainty
section of the Accounting Policies of the Accounts (page 185), there were no indicators of impairment identified or adjustments made as a result of these reviews.

Halma plc | Annual Report and Accounts 2023

TCFD Statement continued

As set out in the Risk Management section of these
disclosures, we continue to reassess the potential
impact of climate-related risks on an ongoing basis.

They may become more significant over time if new
information becomes available or we have significant
changes to our structure.

b) Describe the impact of climate-related risks
and opportunities on the organisation’s businesses,
strategy, and financial planning.
Opportunities
Our approach to climate-related opportunity
identification and pursuit reflects our Sustainable
Growth Model (see pages 18 to 25), and
the highly granular, diverse and early-stage nature
of sub-opportunities. Our approach contrasts with a
more centralised decision-making, prioritisation and
target setting approach which would not be
appropriate within our business model.

Sector and company level:
• Talented people throughout the organisation

seek and pursue most relevant sub-opportunities

• Autonomous and agile individual companies

can rapidly take advantage of sub-opportunities

• R&D and capital expenditure budgets are set

from the bottom up

Group level:
• Low-carbon transition and adaptation sub-

opportunities are considered in the development
of M&A strategies

• Standalone acquisitions’ level of alignment with
the low-carbon transition is explicitly considered

• Focus on increasing education and awareness around

low-carbon transition and adaptation across the Group

During 2023, we made three standalone acquisitions
(for our Safety and Environmental & Analysis Sectors)
which have market sub-opportunities aligned with a
low-carbon transition4. Please see the case studies on
WEETECH (page 43), Deep Trekker (page 49) and FirePro
(page 74) for more information.

Introductory sessions on climate change mitigation
and adaptation were delivered during 2023 to the
Safety and Environmental & Analysis Sector boards,
encouraging discussion of where companies may be
able to grow by enabling the Net Zero transition or
supporting adaptation. Similar sessions with the
Healthcare sector board focused on the circular
economy and resultant issues (including climate-
related issues).

Although climate opportunities/risks are not yet uniformly
incorporated into board discussions across companies, a
number of companies are actively investigating climate-
related sub-opportunities.

4 Our fourth standalone acquisition was in a niche of the Healthcare Sector

where climate-related opportunities were considered less significant.

Halma plc | Annual Report and Accounts 2023

Risks
As a result of the risk assessment mentioned above,
we do not outline additional details on our strategic
response to climate-related risks or risk-related metrics
and targets within this Report. In addition, we do not
expect to carry out quantitative scenario analysis on
these risks or disclose their quantified financial impacts,
unless our assessment of their significance changes as
a result of our ongoing risk management process.

Our plans to transition to a low-carbon economy
Halma operates globally and recognises the need
to work towards Net Zero for our entire value chain.
We are considering the developing guidance
from the UK Government around transition plans,
as well as the TCFD’s transition plan guidance.

While we have not identified our own emissions as a
significant risk to Halma, we have set interim and long-
term Scope 1 & 2 targets and have disclosed our Scope 3
baselines in order to set appropriate Scope 3 interim
and longer-term targets (see Metrics and Targets section
below). As such, we currently disclose some information
covering how we are planning to reduce Scope 1 & 2
emissions in our Emissions Reduction Report available
at www.halma.com, given this is not significant
information to include in our TCFD report. We will work
towards creating a full transition plan as we develop our
Scope 3 targets, taking into account our business model
(see page 80) where our companies are empowered to
develop their own sustainability and transition plans
from the bottom up.

c) Describe the resilience of the organisation’s
strategy, taking into consideration different
climate-related scenarios including a 2°C or
lower temperature scenario.
During 2022, we identified and assessed climate-
related opportunities and risks using the three high-level,
qualitative, narrative scenarios shown in the table below.

IPCC
alignment

SSP 1/
RCP 2.6

Approx temp
increase
(2100)

1.5
degrees

Scenario

Steady
Path to
Sustainability

Key narrative points

Globally coordinated
decarbonisation efforts from
the early 2020s through to
Net Zero emissions by 2050.

Late Policy
Action

SSP4/
RCP 4.5

Fossil-fuelled
Growth

SSP 5/
RCP 8.5

2 degrees Delayed disorderly transition

with individual states,
corporations and individuals
taking drastic but divergent
action to limit emissions.

4 degrees Extremely limited

decarbonisation efforts
leading to strongly increased
physical climate risks.

Given our assessment that climate-related risks are
unlikely to have a significant impact on the business,
and the significant diversity of opportunities available,
we will continue to review whether and in what contexts
quantitative scenario assessment might be able to
provide investor-useful additional information.

Strategic
Report

Governance

Financial
Statements

Other
Information

As explained above, our assessment showed that our
business strategy is expected to be resilient to climate-
related risks, and highly exposed to climate-related
growth opportunities.

Nevertheless, the “late policy action” scenario creates
the largest potential challenge for Halma over the
medium to long term, particularly in relation to
navigating rapid and divergent regulatory, disclosure
and stakeholder expectation changes within our
decentralised business model. In this scenario,
however, we would expect significant transition-
related growth opportunities.

Over the longer-term, a “fossil-fuelled growth” scenario
would create increasing operational and supply-chain
challenges, and fewer climate-related opportunities
for Halma. However, we believe this scenario is the
least likely outcome given increasing momentum and
commitments to a Net Zero future among governments,
businesses and other stakeholders – all of which support
Halma’s future growth.
Risk Management
a) Describe the organisation’s processes for
identifying and assessing climate-related risks;
b) describe the organisation’s processes for
managing climate-related risks; and c) describe
how processes for identifying, assessing and
managing climate-related risks are integrated
into the organisation’s overall risk management.
The Risk management and internal controls section
on pages 88 to 90 sets out our overall risk management
system in which climate-related risks are identified
and managed within both the “bottom-up risk
assessment” and the “top-down principal and
emerging risks” frameworks.

The Group’s existing risk management process enables
bottom-up, climate-related opportunities and risks
to be captured. As set out in the Risk management
and internal controls section on pages 88 to 90,
companies and functions identify opportunities and
risks on an ongoing basis and, more formally, as part
of their annual strategic reviews where they assess
how these are currently controlled and whether any
further actions are required.

We do not expect that our mostly small- to medium-
sized companies are yet sufficiently educated and
equipped to fully capture and manage transition
and physical risks, particularly over the medium to
longer term. For example, the companies do not
currently utilise climate scenario analysis. However,
we generally do not expect climate-related risks
arising at the individual company level to create a
significant risk to the Group as a whole, because of
the decentralised and diversified nature of Halma
(see page 80).

In 2022 we concentrated on identifying and assessing
the significance of potential climate-related opportunities
and risks as part of a standalone process, using scenario
analysis, at the Group level. This standalone assessment
is described in more detail in our 2022 Annual Report
and Accounts to conserve space for more relevant
and timely disclosures.

This year and going forward, the continued identification,
assessment and management of these Group-level risks
is integrated into our top-down principal risk process,
which includes a review of the emerging risks landscape
(see page 90). In addition, we are supporting our
companies to improve their ability to capture bottom-
up climate-related risks, by integrating climate-related
risks into the overall risk landscape in a more
prominent manner.

We assess the relative importance of climate-related
opportunities and risks at the Group level by comparing
qualitative potential impact and likelihood with the
same scales used to assess principal risks. This qualitative
process includes a high level, directional assessment of
financial impact as well as reputational, regulatory and
other impacts (including considering existing and
emerging regulatory requirements).
Metrics and Targets
a) Disclose the metrics used by the organisation
to assess climate-related risks and opportunities in
line with its strategy and risk management process.
We disclose total GHG emissions in line with the TCFD
cross-industry metric guidance, as set out below. Although
we have not identified our Scope 1 & 2 emissions as a
significant risk, 5% of executive bonuses are linked to an
energy productivity target that supports achievement
of our Scope 1 & 2 targets (outlined below), as set out
further in our Remuneration Report on page 136.

We do not consider that most of the other suggested
cross-industry metrics are currently appropriate for
our business model and the nature of our
opportunities and risks.

Given our assessment that climate-related risks do not
pose a significant risk to our business model, we do not
currently intend to disclose the amount or percentage
of assets or activities vulnerable to transition or physical
risks. We will continue to consider the use of an internal
carbon price, if relevant, as we develop our Scope 3
transition plan.

We do not currently use any central metrics to manage
climate-related opportunities, including the TCFD’s
suggested cross-industry metrics on opportunities or
capital deployment. Where individual businesses and
sectors identify climate-related opportunities, they may
use specific metrics to track their progress against these,
in line with our decentralised model and the granular,
diverse and early-stage nature of the sub-opportunities.

Halma plc | Annual Report and Accounts 2023

TCFD Statement continued

As our climate governance process evolves and we
increase centrally available climate-related information
over time, we may be able to disclose other climate-
relevant opportunity metrics such as taxonomy-aligned
revenues or product development where relevant.

b) Disclose Scope 1, Scope 2, and, if appropriate,
Scope 3 greenhouse gas (GHG) emissions and
the related risks.
Scope 1 & 2 emissions
Our Scope 1 & 2 emissions, calculated in accordance
with the GHG protocol, are disclosed in the SECR-
compliant table at the bottom of this Report. Our
Scope 1 & 2 emissions profile is fairly simple, and at
approximately 18 ktCO2e in our 2020 baseline year,
is small compared to the FTSE 100 average and only
c.2% of our total baseline greenhouse gas footprint.

We do not currently obtain assurance over our
Scope 1 & 2 emissions or related metrics, but are
reviewing what level of assurance may be appropriate
considering our business and the way we use these metrics.

Scope 3 emissions
During 2023, we worked with an external consultant
to estimate our Scope 3 baseline (2020) emissions.
Figures were calculated for all relevant categories in
accordance with the GHG protocol and using
acceptable Scope 3 methodologies, but as these figures
are heavily reliant on assumptions and estimates they
may be recalculated in the future as data availability
and accuracy improves. We estimate that 2020 Scope 3
emissions were approximately 0.95 million tonnes CO2e,
or c.98% of our total baseline greenhouse gas footprint.

The main components of this footprint are as follows:

• Supply chain (including upstream transport and
distribution): approximately 0.34 million tCO2e
(c.35% of total 2020 baseline emissions).

• Products’ use phase: approximately 0.58 million tCO2e
(c.59% of total baseline) – with approximately 60%
of these emissions relating to one company comprising
approximately 1% of Group revenue, which sells
products which have high energy usage to meet
customer needs.

Full details of all categories of baseline Scope 3 emissions
are available in our Emissions Reduction Report at
www.halma.com, given this is not significant
information to include in our TCFD report.

c) Describe the targets used by the organisation
to manage climate-related risks and opportunities
and performance against targets.
Scope 1 & 2 emissions
Despite not identifying our Scope 1 & 2 emissions as a
significant risk, we have targets in place to reduce our
emissions in line with stakeholder expectations. These
targets are outlined in the table below and include Net
Zero by 2040 and a 1.5 degree-aligned interim
2030 target.

During 2023, our company boards have focused on
creating their sustainability action plans. These include
their bottom-up Scope 1 & 2 emissions reduction plans
where relevant. A high level summary of performance
against our targets is included in the table below.
Full details on the definitions of our Scope 1 & 2 targets,
our current and historic performance against them,
and narrative discussion about key Scope 1 & 2 emission
sources, milestones, and key levers required to reach
our targets and our progress is disclosed in our Emissions
Reduction Plan available at www.halma.com. This
level of detail is not included in our strategic report in
the interests of proportionate disclosures, given the
low materiality of our emissions.

Scope 3 emissions
We have estimated and reported our 2020 Scope 3
baselines in order to confirm our assessment that
these do not constitute a significant risk. However,
we recognise the need for us to work towards Net
Zero for our entire value chain. We are now developing
our reporting plan and capabilities to be able to
update these figures on a more regular basis to meet
stakeholder expectations, and working towards setting
appropriate reduction targets. Halma companies are
also already investigating how they can reduce Scope 3
emissions from their supply chains.

Greenhouse gas data and commentary
on greenhouse gas and energy performance

Scope 1 & 2 targets

Medium term: Reduce
Scope 1 & 2 emissions 42%
by 2030 from 2020 baseline
(aligned with 1.5 degree
Science-based Target
guidance)1

Short term: achieve 80%
renewable electricity
by 20252

2020
baseline

2022

2023 Commentary

-35%

-47% The reduction from our 2020 baseline is largely due to increasing renewable
electricity purchases, alongside energy efficiency measures and changes to
our companies’ operations. More detail is set out in our Emissions Reduction
Report at www.halma.com.

42%

62% Bottom-up company-led purchase and generation of renewables has

increased our total renewable electricity percentage. Approximately 94%
(2022: 92%) is local renewable tariffs (largely backed by Energy Attribute
Certificates (EACs)) or unbundled EACs. Onsite electricity generated
increased by 13% year-on-year, comprising approximately 6% of total
renewable electricity (2022: 8%).

Halma plc | Annual Report and Accounts 2023

Strategic
Report

Governance

Financial
Statements

Other
Information

Scope 1 & 2 targets

Annual: achieve at least
4% energy productivity
improvements3

2020
baseline

N/A

2022

N/A

2023 Commentary

10% During the year, we saw a c.10% increase in revenue (adjusted to remove the
effects of currency movements and acquisitions) while energy consumption
(adjusted on the same basis) remained relatively flat. Changes in energy
consumption reflected various operational changes and investments,
including premise moves and expansions, the impact of energy efficiency
measures at a number of our companies, and a number of elements outside
our control (i.e. warmer winters in some geographies). In our first year of
targeting energy productivity, we were pleased to see an increased focus
on this issue among most of our companies.

Long term: Net Zero by 20404

Market-based calculation of Scope 2 emissions. This target is aligned with guidance from the Science-based Targets initiative (SBTi) and is an absolute measure
aligned with the non-sector specific 1.5-degree emissions pathway. This target has not been verified, as SBTi verification requires our target to include Scope 3.

2 Current year renewable % reflects the full year impact of acquisitions and disposals made during the period. Comparative figures are not updated for the

impact of acquisitions and disposals made in subsequent periods.

3 Revenue/energy consumed. Annual straight-line increase from 2022. Due to the inclusion of this metric in remuneration, it is calculated on a different basis to

Scope 1 & 2 emissions and renewable electricity percentage. Revenue is adjusted to a constant currency basis, and both revenue and energy are adjusted to exclude
all acquisitions in the current and prior period. This target was set using the EP100 initiative minimum commitment (to double energy productivity over 25 years).
4 Market-based calculation of Scope 2 emissions. Our Net Zero target is aligned with guidance from the Science-based Targets initiative (SBTi). We will reach Net Zero

by reducing emissions as much as is feasible before using carbon removal instruments, as set out in our Emissions Reduction Report at www.halma.com.

CO2e emissions (tonnes) from:
Scope 11
Scope 2: Location-based2
Scope 2: Market-based2
Total: Location-based
Of which UK

Total: Market-based
Of which UK

Energy consumption in MWh used to calculate above emissions
Of which UK
Scope 3: Annually calculated categories3
Intensity ratio (market-based)4
Scope 3: Baseline estimate5

2023
(current year)

2022
(comparative
year)

20206
(baseline year)

4,059
10,032
5,500

14,091
2,926

9,559
1,621

55,687
17,266

14,975
13.1
N/A

4,451
10,516
7,209

14,967
3,434

11,660
3,052

54,028
17,920

11,170
14.8
N/A

5,156
12,748
12,906

17,904
3,992

18,062
3,955

60,470
18,042

17,716
NA
952,077

Reporting methodology and scope:
We have reported on all the emission sources required under the Companies (Directors’ Report) and Limited Liability Partnerships (Energy and Carbon Report)
Regulations 2018. We have employed the Operational Control definition to outline our carbon footprint boundary; included within that boundary are Scope 1 & 2
emissions from manufacturing sites and offices which we own and/or operate. Excluded from our footprint boundary are emissions from manufacturing sites and
offices which we do not own and/or operate and emissions considered non-material by the business. We have used the GHG Protocol Corporate Accounting and
Reporting Standard (revised edition) and the Environmental Reporting Guidelines (March 2019) including Streamlined Energy and Carbon Reporting (SECR) guidance
published by the UK’s Department for Business, Energy & Industrial Strategy (BEIS). Emission factors were sourced from the UK Government’s GHG Conversion Factors
for Company Reporting 2022 and the International Energy Agency’s Emissions Factors (2022 edition). For our Scope 2 market-based calculations, we used residual
emission factors where available from the Reliable Disclosure Organization (RE-DISS 2021 edition). Further information about our basis of preparation for all emissions
and energy data can be found on our website at www.halma.com.

Included in Scope 1 are GHG emissions from direct fuel combustion at our sites, refrigerants, and from fuel use in our company-owned or leased vehicle fleet.

1
2 Electricity purchased for our own use. Market-based is net of market instruments.
3 Business air travel, Well to Tank, grey fleet (private and hire cars used for business), waste generation. 2023 Scope 3 annually calculated emissions reflect the

continued recovery in business travel following restrictions during the pandemic.

4 Prior to 2021, we did not show market-based Scope 2 emissions. In line with our science-based target, which is calculated using the market-based approach,

we have transitioned to showing our intensity measure based on the market-based method. We do not show a recalculated intensity measure for our 2020 baseline.
5 Estimated as explained further in our TCFD report above, and in our Emissions Reduction Report and ESG Data Basis of Preparation document at www.halma.com.
6 Our Scope 1 & 2 (market-based) GHG emissions for the year ended 31 March 2020 form the baseline for our Science-based target. Given the acquisitive nature of
Halma, we have chosen to apply a 5% base year threshold for the structural change trigger of acquisitions and disposals. This year the impact of our acquisitions
and disposals did not reach the 5% threshold for a base year recalculation. We do not recalculate Scope 3 annually calculated emissions for acquisitions and disposals.

Examples of energy efficiency measures undertaken during the year by our companies included upgrades to more energy efficient equipment and premises, LED
lighting upgrades, retrofitting motion sensors, improving HVAC controls and processes, and improving monitoring, metering and energy awareness programmes.

Halma plc | Annual Report and Accounts 2023

Risk management and internal control

Managing risk and leveraging opportunities
to achieve our sustainable growth strategy

Our approach to risk management
Effective management of risks enables us to leverage
opportunities to achieve our strategic goals and provides
a solid foundation from which our businesses can grow.
Whilst there is a group-wide framework and approach
to risk management, as described in this section, our
decentralised business model empowers every employee
and every business at Halma to identify and manage
risks and take advantage of opportunities. Our risk
management approach is underpinned by a risk
awareness culture which allows management to make
better commercial decisions, deliver our sustainable
growth strategy and maximise the benefits of our
decentralised business model. During the year, the
responsibility of the risk management area has been
transitioned from the Director of Internal Audit &
Assurance to the newly created role of the Director
of Risk & Compliance.

The new structure has strengthened our governance
model by enhancing the independence between the
second and third line of defence, enabling enhanced
risk and compliance support to Halma companies, and
expanding the current independent assurance coverage.

The Director of Risk & Compliance is responsible
for ensuring that our Risk, Control and Compliance
Framework is continuously evolving in alignment
with the Group’s growth, strategy and DNA. A key
focus in 2023, which will continue in the upcoming
years, is on enhancing the quality of risk discussions
at the companies board level and increasing the
inclusion of opportunities within those discussions,
where appropriate.

Our risk and control governance framework
The graphic below illustrates the structure of our
governance framework. For more details on the role
and responsibility of the Board and its Committees,
refer to the Corporate Governance Report section
on page 110.

Board
Overall responsibility for risk/opportunities and for mitigating risk/opportunities to ensure Halma achieves its strategic objectives

Remuneration Committee
Executive and senior management
remuneration framework &
workforce remuneration policies

Audit Committee
Oversight and challenge of the
effectiveness of risk/opportunities
process and assurance activities

Nomination Committee
Board composition,
evaluation & succession

Executive Board
Executive Board
Accountability for the management of risk/opportunities and for mitigating risks/leveraging opportunities
Accountability for the management of risk/opportunities and for mitigating risks/leveraging opportunities

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assessment

Risk & Opportunities

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procedures and
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2nd line of defence

3rd line of defence

Halma plc | Annual Report and Accounts 2023

Strategic
Report

Governance

Financial
Statements

Other
Information

Risk management process
As in prior years, each company within Halma identifies
risks and opportunities as part of their annual strategic
reviews, assesses their likelihood and impact, evaluates
existing risk mitigations and assesses whether any
further actions are required. A similar exercise is
performed at sector and Group level as part of the
Group’s “bottom-up” risk assessment process.

Our “top-down” approach focuses on reviewing our
principal risks and takes into account the results of the
bottom-up risk assessment, the emerging risk review
and the Executive Board perspectives. The assessment
of the principal risks, the risk appetite, mitigating
actions, and the evaluation of potential emerging risks
are reviewed and approved by the Executive Board.
The Audit Committee reviews the effectiveness of the
process, whilst the Board reviews and approves the
principal risks, the risk appetite and evaluates whether
the risks are managed within the risk appetite assigned
to them.

Any actions to improve how we manage our principal
risks are captured and tracked to completion in our
integrated risk, control and assurance software. Risk
mitigations are periodically audited by the Internal
Audit & Assurance Team.

During the year, deep-dive risk analyses are performed
on specific areas to assist the Executive Board in their
strategic decision-making. These areas included specific
elements of emerging and principal risks, such as
climate-related risks (refer to our TCFD statement

section on page 80). The risk deep dives and their
outcome are integrated into the wider risk management
approach and process.

Risk Appetite
The risk appetite is a foundational element of our risk
framework as it provides guidance to management on
the amount and type of risk we seek to take in pursuing
our strategic objectives. For the purpose of identifying
the level of risk appetite we have towards our principal
risks, we defined four risk appetite categories, as follows:

• Averse: We have little appetite for risk and will seek
to minimise our exposure and avoid uncertainty.
• Cautious: We have an appetite for some risk but
prefer options that have a low degree of downside.
• Open: We are open to taking risks after considering

potential options, and will choose options that have a
greater likelihood of success and offer an acceptable
level of reward.

• Seeking: We are willing to proactively take risks and be
more innovative to achieve higher returns, despite the
higher inherent risks.

The risk appetite statements are approved by the Board,
which also reviews the level of risk appetite associated
with our principal risks annually, recognising that risk
appetite will change and evolve over time. Principal
risks are assessed against their risk appetite to evaluate
whether further risk mitigation actions should be taken
to ensure that the risk levels remain within the Board’s
risk appetite.

Case study

A proactive and agile approach to the fast-
changing geopolitical and economic landscape

In light of the rising complexity of the geopolitical
landscape and its repercussions on the economic
outlook, the Group carried out a deep dive assessment
to understand macro and geopolitical trends and their
potential impact on Halma.

The assessment was carried out with the support of
our external advisors which helped us to include the
perspective of external stakeholders into the analysis.
The exercise led to the setup of a comprehensive
framework to provide reassurance that we are
managing this risk appropriately within our
unique structure.

Internal monitoring networks were enhanced by
leveraging Halma’s Hubs regional presence to monitor
the developments of the geopolitical landscape and
gain on-the-ground insights. To ensure a consistent
and comprehensive monitoring, key leading indicators

of changes in macro and geopolitical risk have
been identified and are being regularly monitored
by the internal networks, which periodically update
the sectors and the Group.

The companies have embraced the insights of the
analysis and used them to inform the assessment
of their strategic and operational decisions, where
relevant. In line with Halma’s highly decentralised
and agile model, some of our companies have
implemented a range of initiatives to adjust to
the evolving geopolitical landscape, such as the
enhancement of a regionalised approach within
their global footprints or reassessments of their
supply chain setup.

Halma plc | Annual Report and Accounts 2023

Risk management and internal control continued

Emerging Risks
We consider emerging risks as part of our risk
management review process and as part of the
everyday management of the business. In addition to
the daily management of such risks, we conducted a
specific review to assess the emerging risks landscape
over the short (0 to 2 years), medium (3 to 5 years) and
long (6 to 10 years) periods. The review was informed by:

• emerging risk factors identified at company and sector

level during the bottom-up assessment process;
• leading external thought leaders’ views on global

emerging risks; and

• insights from Executive Board members on emerging

risks trends.

Whilst a number of potential emerging risks were
identified and assessed during the review this year, such
as social unrest, livelihood crisis, biodiversity loss, natural
resources crisis and other climate-related risks (see also
TCFD Statement section at page 80), currently, none of
these is expected to become future principal risks.

The outcomes of the emerging risk assessment have
been discussed with and reviewed by the Executive
Board and by the Board. We will continue to monitor
the evolution of emerging risks and reassess the
landscape at least on an annual basis.

Our risk profile and principal risks
Below is a visual representation of Halma’s risk profile,
showing the level of residual risk and the risk type for
each principal risk. We also use Halma’s risk profile as
a basis for our scenario analysis, including those used
in the long-term viability statement.

p80

Read more in our Viability statement

Halma risk profile

Type of risk
Strategic
Operational
Legal & Regulatory
Financial

Principal risk
01 Innovation & Digital
02 Talent and Diversity
03 Acquisitions and Investments
04 Cyber
05 Economic and Geopolitical Uncertainty
06 Non-compliance with Laws and Regulations
07 Natural Hazards, including Climate Change
08 Organic Growth
09 Business Model and its Communication
10 Product Failure or Non-compliance
11 Liquidity
12 Financial Controls

During the year, no new
principal risks were identified.

Very high risk

High risk

Medium risk

Low risk

Very low risk

Halma plc | Annual Report and Accounts 2023

Principal risks and uncertainties

Strategic
Report

Governance

Financial
Statements

Other
Information

01. Innovation & Digital

Risk Owner:
Chief Innovation and
Digital Officer

Inherent risk level:

Residual risk level:

Residual risk change:
Marginal increase

Risk appetite: Seeking

Risk and impact
Failing to innovate to create new
high-quality products to meet
customer needs whilst capturing
digital and sustainability growth
opportunities, or failure to adequately
protect intellectual property, resulting
in a loss of market share and poor
financial performance.

How do we manage the risk?
Halma's digital innovation strategy focuses on the education
of our companies around customer centricity and the incubation
and acceleration of innovation across the companies. This
includes regular promotion, training and monitoring of agile
or lean start-up ways of working in companies. As the I&D
team execute on their strategy over time, we expect that
the companies will develop greater capabilities on innovation
and digital as they drive their product strategies.

For more information on our innovation-
related target, see the “Research &
Development” KPI in the KPIs section.

Risk evolution
The risk score was minimally adjusted
during the year based on a new
estimate of the missed opportunity
of failing to innovate.

The strategy delivery is supported by an innovation champions
network and partnerships, conferences, development
programmes and innovation awards which help spread
and reward ideas across the Group. Sectors also play a key
role in promoting active collaboration between companies
to share ideas and experiences and reviewing R&D budgets
and projects to ensure that the spend effectively supports
the growth strategy in targeted markets. Sector M&A activity
is also targeted to help address innovation and R&D gaps, in
line with sector-specific initiatives. Key R&D and innovation
metrics are periodically reviewed to measure positive impact.

Product development is devolved to our companies who
are closest to the customer. Companies are encouraged to
develop and protect intellectual property, and focus on talent
and retention to ensure there is sufficient expertise within
the business.

How do we manage the risk?
We have comprehensive recruitment processes to recruit the
brightest talent, including the "Future Leaders" programme
to attract and develop graduates into future leadership roles.

The Senior Management reward structure is aligned with
strategic priorities of companies, sectors and Group and
DEI targets. Periodic review of reward packages to ensure
competitiveness, benchmark with the market and
alignment with high long-term growth.

An Annual Performance and Development Review process
is in place for sector and Executive Board members. The
Nomination Committee reviews succession and development
plans annually. A strategic review of sector board and company
leadership talent is performed annually to identify and develop
future leaders.

Programmes to develop talent and enhance skills (including
climate and sustainability-related skills) are in place across
our companies.

An annual employee engagement survey is carried out to
provide insight into employee sentiment, including alignment
between strategy and objectives and clarity to employees
about their contribution towards achieving objectives.

02. Talent and Diversity

Risk Owner:
Group Talent, Culture and
Communications Director

Inherent risk level:

Risk and impact
Not having the right talent and diversity
at all levels of the organisation to deliver
our strategy, resulting in reduced
financial performance.

Residual risk level:

Residual risk change:

No change

Risk appetite: Open

For more information on our talent
and diversity-related targets, see the
“Employee engagement”, “H&S” and
the “ Diversity, Equity & Inclusion”
KPIs in the KPIs section.

Risk evolution
During the year, a number of initiatives
started in 2022 were finalised and fully
implemented, such as a diversity, equity
and inclusion target for the Managing
Director level. The year saw the Group
Chief Executive and Chief Financial
Officer transitions, which, although
brings an inherent risk, have been
extensively planned, significantly
mitigating the risk. Overall the risk
level remains in line with the prior year.

Very high

Very low

Halma plc | Annual Report and Accounts 2023

Principal risks and uncertainties continued

03. Acquisitions and Investments

Risk Owner:
Group Chief Executive

Inherent risk level:

Residual risk level:

Residual risk change:

Increased

Risk appetite: Open

Risk and impact
Failing to achieve our strategic growth
target for acquisitions and investments
due to insufficient opportunities being
identified, poor due diligence or poor
integration, resulting in erosion of
shareholder value.

For more information on our inorganic
growth target, see the “Acquisition
profit growth” KPI in the KPIs section.

Risk evolution
During the year, the risk level rose
due to the increasingly challenging
macroeconomic (i.e. increased cost
of capital and debt) and geopolitical
environment. The highly volatile
external environment increases the
complexity of finding deals that are
able to deliver on our inorganic growth
strategy and are at the right level of
risk appetite. Given their role in the
acquisition strategy, we recognise
that the Group Chief Executive and
Chief Financial Officer combined
change might be seen as introducing
a certain level of risk. This potential risk
is adequately mitigated by the strength
of well established end-to-end M&A
processes led by experienced teams.
Furthermore, the Group Chief Executive
and the Group Financial Offer have
extensive M&A experience gained both
internally to Halma and externally,
which further mitigates this risk.

How do we manage the risk?
Acquisitions are a core element of Halma's sustainable growth
model; hence the Group has a clear strategy that allows us
to take advantage of new growth opportunities through the
acquisition of companies in our existing or adjacent markets.

Regular reporting of the acquisition pipeline to the Executive
Board and the Board. All acquisitions are reviewed and
approved by the Group Chief Executive, Chief Financial
Officer and Board.

Dedicated M&A Directors who support the sectors in their
acquisition strategy, from pipeline development to the delivery
of the acquisition. A robust due diligence process is carried
out for all acquisitions by experienced staff who bring in
specialist expertise as required, and low-carbon transition
risk and opportunity reviews are built into our standalone
M&A process.

Strategic transformation plans and clear processes are in
place for new acquisitions to enable them to achieve their
growth potential whilst integrating into the Group (including
from a control framework and compliance perspective).

Internal Audit reviews are performed within 12 months of
acquisition to assess the effectiveness of the required control
framework for standalone acquisitions. Post-acquisition
reviews are performed for all acquisitions after 12 months
to ensure strategic objectives are being met and to identify
learnings for future acquisitions.

Minority equity investments are assessed through the lenses
of Halma's investment framework and executed in line
with an established acquisition process which ensures an
appropriate level of assessment and oversight. Minority
investments are regularly reviewed by the Investment
committee, and "Lessons learnt reviews" are carried out
to improve the existing processes.

04. Cyber

Risk Owner:
Chief Technology Officer

Inherent risk level:

Residual risk level:

Residual risk change:
Marginal increase

Risk appetite: Averse

Risk and impact
Loss of digital intellectual property/
data or ability to operate systems
or connected devices due to internal
failure or external attack. There is
resulting loss of information or ability
to continue operations, and therefore
financial and reputational damage.

Risk evolution
The inherent risk level increased during
the year due to the continuously
evolving landscape of external cyber
threats, however it is mitigated by the
delivery of investments to upgrade the
cybersecurity defence. The finalisation
of the current initiatives is crucial to
keep the risk within the risk appetite.

How do we manage the risk?
Cyber risk is owned by the CTO at an executive level, who
periodically updates the Board and Audit Committee.

All employees are required to comply with the IT Acceptable
Use Policy. Regular online IT awareness training is provided
for all employees who use computers.

A group-wide IT framework is in place, periodically reviewed
and includes Cyber risk policies and procedures. Companies
confirm the effectiveness of their most critical IT controls
(including documented and tested disaster recovery plans
for critical systems and infrastructure) every six months
through the Internal Control Certification process. The
Internal Audit & Assurance Team periodically and
independently tests these controls.

There are central and local IT resources maintaining and
sharing updated technical knowledge. The central technology
resources are available to companies to help them better
manage cyber risk.

Cyber threats are monitored and reported upon every two
months for all parts of the Group.

Group-wide Incident Management Policy and Crisis
communications plans are in place. Access to cyber
expertise is available should a cyberattack occur.

Very high

Very low

Halma plc | Annual Report and Accounts 2023

Strategic
Report

Governance

Financial
Statements

Other
Information

05. Economic and Geopolitical Uncertainty

Risk Owner:
Group Chief Executive

Inherent risk level:

Residual risk level:

Residual risk change:

Increased

Risk appetite: Cautious

Risk and impact
Failure to anticipate or adapt to
macroeconomic and geopolitical
changes, resulting in a decline in
financial performance and an impact
on the carrying value of goodwill and
other assets. This risk remains elevated
in certain geographies due to geopolitical
events such as the conflict in Ukraine
and US/ China trade relations.

Risk evolution
During the year, the overall risk level
increased, triggered by the higher level of
inherent risk due to the macroeconomic
situation and increasing geopolitical
complexities. During the year, a deep
dive risk assessment was carried out
to assess the Group's exposure to
key macroeconomic and geopolitical
risks, which resulted in an enhanced
monitoring process for relevant
geopolitical risk factors. Halma remains
resilient to macroeconomic volatility
due to growth drivers linked to highly
regulated markets, demand for
healthcare and life-critical resources,
and growing efforts to address
climate change, waste and pollution.
See the case study on page 89 for
more information on the
assessment performed.

How do we manage the risk?
The diverse portfolio of companies across the sectors,
in multiple countries and in relatively non-cyclical global
niche markets with secular long-term growth drivers helps
to minimise the impact of any single event.

Monitoring mechanisms are established at Group,
sector and company levels, including:

• Regular monitoring and assessment of emerging trends

and potential risks and opportunities relating to economic
or geopolitical uncertainties.

• Monitoring of end market exposure and changes in key

end markets due to macroeconomic factors.

• Financial warning signs KPIs give earlier indications of

potential problems, and half-yearly assessments of the
carrying value of goodwill and other assets are performed.

In line with Halma's model, the risk is managed at the local
company level through decentralised decision-making and
autonomy to rapidly adjust to changing circumstances.
The companies have robust credit management processes
in place and operations, cash deposits and sources of
funding in uncertain regions are kept to a minimum.

The Group provides continuous support to company boards
and DCEs to navigate geopolitical changes (including when
these changes are triggered by disorderly low-carbon transition
scenarios). Halma's financial strength and availability of
pooled resources in the Group can be deployed, if needed,
to further mitigate the risk.

06. Non-compliance with Laws and Regulations

Risk Owner:
Group General Counsel &
Chief Sustainability Officer

Inherent risk level:

Residual risk level:

Residual risk change:
Marginal increase

Risk appetite: Averse

Risk and impact
We are not fully compliant with
relevant laws and regulations, resulting
in fines, reputational damage and
possible criminal liability for Halma
senior management.

Risk evolution
The marginal increase in the risk
likelihood is primarily driven by the
increasing complexity of the regulatory
environment and the growth of our
companies and the Group. Effective
mitigating controls are in place to
mitigate the current risk and take a
proactive approach to this increasingly
challenging context.

How do we manage the risk?
Legal compliance is owned by the Group General Counsel
& Chief Sustainability Officer at an executive level, who
periodically updates the Board and Audit Committee. Group
policies, procedures and guidance are in place, setting out
the Group's requirements from a compliance and regulatory
perspective. Companies confirm the effectiveness of their
most critical legal compliance controls every six months
through the Internal Control Certification process. The Internal
Audit & Assurance Team periodically and independently tests
these controls. Group Legal, Sustainability & Governance (LSG)
Team advises on legislative and regulatory changes relevant
to the Group as a listed company. All employees are required
to sign to confirm that they have read and understood the
Halma Code of Conduct. An ongoing compliance training
programme is in place for Group and its companies. A
whistleblowing hotline is available to all employees and
third parties to raise concerns over the lack of compliance
and misconduct. These are independently followed up and
investigated. The Group LSG Team resources, including the
Deputy General Counsels, who sit on the sector boards, and
a panel of high-quality external legal advisors, are available
to sectors and companies to help them better manage legal
compliance risks, including during due diligence processes.

The board of each company is accountable for identifying
and monitoring what laws are relevant to their business,
including any emerging or changing legislation, and for
ensuring commercial legal risks are appropriately managed.
Claims and litigation risks are reported to Group by all
companies every six months. Material legal issues and risks
are reported to and discussed by the Board every quarter.
Appropriate levels of Group insurance cover are maintained.
A crisis management plan exists to manage communications
and the reputational risk for Halma and/or its companies.

Halma plc | Annual Report and Accounts 2023

Principal risks and uncertainties continued

07. Natural Hazards, including Climate Change

Risk Owner:
Group General Counsel &
Chief Sustainability Officer

Inherent risk level:

Residual risk level:

Residual risk change:

No change

Risk appetite: Averse

Risk and impact
There is a risk we are unable to respond
to large scale disasters or natural
catastrophes such as hurricanes,
floods, fires or pandemics, as well as
longer term changes to the climate
such as increasing water scarcity and
temperatures, resulting in the inability
of one or more of our businesses to
operate, causing financial loss and
reputational damage. This risk
includes potential impacts from
physical climate change on our
supply chains.

Risk evolution
The reassessment of the climate-
related risks and opportunities
confirmed the risk level to be in line
with the prior year. More information
is available in our TCFD Statement on
page 80.

08. Organic Growth

Risk Owner:
Group Chief Executive

Inherent risk level:

Residual risk level:

Residual risk change:

No change

Risk appetite: Open

Risk and impact
Failing to deliver desired organic growth,
resulting in missed expected strategic
growth targets and erosion of
shareholder value.

This risk includes potential impacts
from the Net Zero transition on
our supply chain.

For more information on our
organic growth target, see the
“Organic revenue growth” and
“Organic profit growth” KPIs in
the KPIs section at page 26.

Risk evolution
During the year, the delivery of
the organic growth targets has
been continuously challenged by
the economic and geopolitical
environment, however the ability
to fulfil strategic growth targets
remains strong.

How do we manage the risk?
Halma operates in end markets with strong long-term growth
drivers contributing to a low-carbon economy and lower risks
of disruptions due to natural hazards. Our business model is
expected to be resilient to climate-related risks, due to Halma's
highly diversified portfolio of companies and agile business
model, which enable our companies to quickly address
challenges caused by natural hazards and climate change.

The geographical diversity of Halma's companies reduces
the impact of any single event, and the companies'
manufacturing capabilities can be leveraged, in case of
need, to provide flexibility to support the companies affected.

All companies are required to have business continuity and
disaster recovery plans in place which are tested periodically
and tailored to manage the specific risks they are most likely
to face. The Group has a crisis management plan to manage
communications and the reputational risk for Halma and/or
its companies.

Business interruption insurance is in place to mitigate any
financial loss that may occur from natural hazards. Climate
risk and opportunity review processes and governance are in
place, and we continue to work with our companies to help
them manage disruption risks within their supply chains.
More information on climate-related risks is available in
the TCFD Statement (page 80).

How do we manage the risk?
Halma has a clear Group strategy to achieve growth targets
through the organic growth of Halma's companies, which is
accelerated by the Halma Growth Enablers and the Halma
DNA. The remuneration of companies' executives and above
is based on profit growth.

Companies achieve organic growth through the continuous
focus on the development of an agile business model and a
culture of innovation to take advantage of new growth
opportunities as they arise.

Company strategies are reviewed and challenged by the sector
to ensure they are aligned with the Group strategy and organic
growth targets. Sector management ensures that the Group
strategy is fulfilled through ongoing review and chairing of
companies. Regional hubs, for example those located in
China and India, support local strategic growth initiatives for
all companies. Potential new partnerships and investments are
comprehensively assessed for future organic growth prospects.

Companies continuously focus on attracting and developing
the best talent to deliver Halma’s organic growth
strategy effectively.

At a Group level, the annual strategic planning process, the
annual budget and the monthly 12-month rolling forecast
enable a review of the effectiveness of the delivery of the
organic growth strategy through control over the Balance
Sheet and the Profit & Loss.

Climate risk and opportunity review processes and governance
are in place, ad we continue to work with our companies to
help them manage transition risks within their supply chains.
More information on climate-related risks is available in the
TCFD Statement (page 80).

Very high

Very low

Halma plc | Annual Report and Accounts 2023

09. Business Model and its Communication

Risk Owner:
Group Chief Executive

Inherent risk level:

Residual risk level:

Risk and impact
Failing to clearly articulate or adapt
our business model as Halma grows
through exploring and implementing
additional or new business models,
resulting in missed growth opportunities
and erosion of shareholder value.

Residual risk change:

No change

Risk appetite: Cautious

This risk includes meeting increasing
or shifting shareholder expectations
around climate change and
sustainability.

Risk evolution
During the year, the risk appetite has
been reassessed and reduced from
"Open" to "Cautious" to capture the
fact that although Halma's sustainable
growth model is constantly challenged
and fine-tuned to ensure that it enables
the companies to grow, these evolutions
are carefully thought through, and a
low level of risk is sought.

The inherent and residual risk level
remains in line with the prior year.

Strategic
Report

Governance

Financial
Statements

Other
Information

How do we manage the risk?
The Halma Sustainable Growth Model is at the core of the
Group strategy and a key success factor underpinning the
Group's ability to deliver returns for its stakeholders. More
information on our business model is available on page 24.

The sector and Executive Boards perform periodic reviews to
identify opportunities which may require a new organisational
approach or evolutions of the existing approach.

The current model is challenged through the lenses of the
learnings from past experience and through the continuous
search and exploration of innovative ideas and opportunities
to grow and scale the Group as the global economic
environment evolves.

The Board performs strategic reviews of the business model
to consider the strengths and weaknesses of the existing
model and the need to make changes.

The Group has a clear strategy to communicate its business
model to internal and external stakeholders, which is crucial
to the successful execution of the Group's sustainable
growth strategy.

Regular communications and updates on the business model
underpin the delivery of the communication strategy. These
target Group, sector and company boards throughout the
year and are integral to the recruiting and onboarding process.

Sustainability, including climate change, is integral to Halma’s
strategy at all levels. Sustainability strategies are regularly
reviewed and discussed in the companies, sectors and,
Executive Board as well as at the Board.

Sustainability networks are in place to share learnings and
promote awareness in our companies. There are central
growth-enabling resources with sustainability-related
knowledge which are available to sectors and companies
to help them better manage sustainability risks
and opportunities.

More information on climate-related risks is available in the
TCFD Statement (pages 80).

Halma plc | Annual Report and Accounts 2023

Principal risks and uncertainties continued

10. Product Failure or Non-compliance

Risk Owner:
Group Chief Executive

Inherent risk level:

Residual risk level:

Residual risk change:
Marginal increase

Risk appetite: Averse

11. Liquidity

Risk Owner:
Chief Financial Officer

Inherent risk level:

Residual risk level:

Residual risk change:

No change

Risk appetite: Averse

Risk and impact
A failure in one of our products,
including due to non-compliance
with product regulations, may result in
severe injuries, death, financial loss and
reputational damage, which might be
amplified in cases of large contracts.

How do we manage the risk?
Our companies manufacture and assemble a wide variety of
product types across different geographies and end markets.
They are, therefore, experts in their trade and carry the
responsibility for complying with relevant product safety
and quality requirements, obtaining relevant accreditations
and all necessary product certifications.

Risk evolution
During the year, the risk likelihood
saw a marginal increase to reflect the
current/historical cases' frequency and
the potential challenge posed by the
Medical Device Regulation (MDR) to
achieve regulatory compliance for
some of the products of our Healthcare
Sector companies produced for the
European market. MDR is a key focus
within the Healthcare Sector which is
coordinating several risk-mitigating
initiatives (e.g. regulatory monitoring,
knowledge sharing amongst
companies).

Halma's companies have adopted customised sets of controls
to achieve high-quality standards – these might include but
are not limited to:

• Strict product development and rigorous testing procedures.
• Clear requirements for suppliers to ensure safety and quality.
• Quality checks on products received from suppliers.
• Monitoring of defects and warranty returns.
• Traceability of product.
• Obtaining ISO 9001 certification, where relevant.
• Product compliance with regulations is checked as part

of due diligence for any new acquisition.

• Ensuring employees have appropriate quality-related skills.

Furthermore, potential liabilities are limited as much as
possible through terms and conditions of sale and liability
insurance cover.

Risk and impact
There is a risk that the Group's cash/
funding resources are inadequate
to support its activities or there is
a breach of funding terms.

For more information on our liquidity
target, see the “Cash generation”
KPI in the KPI section at page 29.

Risk evolution
Due to the strength of Halma’s
cash-generation model and the tight
controls over liquidity, the residual risk
remains low, in line with the prior year.
We renewed our syndicated credit
facility during the year, which remains
at £550m, and now matures in May
2028 and completed a new Private
Placement of £330m with a seven
year average life. More information
is given in Note 27 to the Accounts.

How do we manage the risk?
A clear liquidity management strategy is a core pillar of
the Halma financial model. More information is available
on page 24.

The strong cash flow generated by the Group provides
financial flexibility, together with a revolving credit facility.

Treasury policy and procedures provide comprehensive
guidance to the Group and companies on banking and
transactions, including required approvals for drawdowns
and all new or renewed sources of funding.

Cash needs and the Group cash position are monitored
regularly through the review of the 12-month rolling forecast,
of the three-years liquidity forecast and of current and
forecast covenant compliance. The currency mix of debt is
reviewed annually, and on acquiring or disposing of a business.

Very high

Very low

Halma plc | Annual Report and Accounts 2023

Strategic
Report

Governance

Financial
Statements

Other
Information

12. Financial Controls

Risk Owner:
Chief Financial Officer

Inherent risk level:

Residual risk level:

Residual risk change:

No change

Risk appetite: Averse

Risk and impact
Failure in financial controls either on
its own or via a fraud which takes
advantage of a weakness, resulting
in financial loss and/or misstated
reported financial results.

Risk evolution
No significant risk factors have been
identified at both inherent and residual
risk levels during the year.

We continuously challenge, review
and enhance our financial controls
and the processes across the Group,
which ensure these are effective whilst
we continue to closely monitor the
developments of the UK Corporate
Governance Code.

How do we manage the risk?
Group policies, procedures and guidance are in place,
setting out the Group's requirements for financial controls.
Companies confirm the effectiveness of their most critical
financial controls (including segregation of duties, delegation
of authorities and financial accounts reconciliations) every
six months through the Internal Control Certification process.
The Internal Audit & Assurance Team periodically and
independently tests these controls.

Sector and Group finance teams perform regular reviews of
financial reporting and indicators. Six-monthly peer reviews
of reported results for each company are performed to provide
an independent challenge.

Ongoing training of finance personnel (including finance
teams of newly acquired companies) on Halma's policies
and financial control framework.

Companies’ directors have legal and operational responsibilities
as they are statutory directors of their companies. This fits
with Halma's decentralised model and contributes to ensuring
an effective financial control environment is in place.

Halma plc | Annual Report and Accounts 2023

Viability statement

During the year, the Board carried out a robust
assessment of the principal risks affecting the Group,
including those that would threaten its business model,
future performance, solvency or liquidity. The principal
risks and uncertainties, including an analysis of the
potential impact and mitigating actions are set out
on pages 91 to 97 of the Strategic Report.

The Board has assessed the viability of the Group over
a three-year period, taking into account the Group’s
current position and the potential impact of the
principal risks and uncertainties. While the Board has
no reason to believe that the Group will not be viable

over a longer period, it has determined that three years
is an appropriate period. In drawing its conclusion, the
Board has aligned the period of viability assessment
with the Group’s strategic planning process (a three-
year period). The Board believes that this approach
provides greater certainty over forecasting and, therefore,
increases reliability in the modelling and stress testing of
the Company’s viability. In addition, a three-year horizon
is typically the period over which we review our external
bank facilities and is also the performance-based period
over which awards granted under Halma’s share-based
incentive plan are measured.

In reviewing the Company’s viability, the Board has identified
the following factors which they believe support their assessment:

The Group operates
in diverse and
relatively non-cyclical
markets with long
term growth drivers.

There is considerable
financial capacity
under current
facilities and the
ability to raise
further funds if
required.

The decentralised
nature of our Group
ensures that risk is
spread across our
businesses and
sectors, with limited
exposure to any
particular industry,
market, geography,
customer or supplier.

There is a strong
culture of local
responsibility and
accountability
within a robust
governance and
control framework.

An ethical approach
to business is set
from the top and
flows throughout
our business.

In making their assessment, the Board carried out a
comprehensive exercise of financial modelling and
stress-tested the model with a downside scenario based
on the principal risks identified in the Group’s annual risk
assessment process. The scenarios modelled used the
same assumptions as for the going concern review, as
set out on page 167, for the years ending 31 March 2024
and 31 March 2025 with further assumptions applied for
the year ending 31 March 2026. The base case reflects
the latest forecasts and strategic plans of the business.
The downside scenario included a reduction in trading
for the year to 31 March 2024 which could be caused
by a significant downside event with the addition of
impacts from other of the Group’s principal risks such
as litigation or product failure.

For the years ending 31 March 2025 and 31 March 2026
the downside scenario reflects growth at half the rate
modelled in the base case. In both scenarios, the effect
on the Group’s KPls and borrowing covenants was
considered, along with any mitigating factors. Based
on this assessment, the Board confirms that they have
a reasonable expectation that the Group will be able
to continue in operation and meet its liabilities as they
fall due over the three-year period to 31 March 2026.

Halma plc | Annual Report and Accounts 2023

Non-financial information statement

Strategic
Report

Governance

Financial
Statements

Other
Information

In compliance with the Non-Financial Reporting requirements contained in sections 414CA and 414CB of the
Companies Act 2006, the table set out below, and the information it refers to, is intended to help stakeholders
understand our position on key non-financial matters. The description of our business model can be found on
pages 20 to 25 and stakeholder engagement information can be found on pages 56 to 62.

Policies1

Environmental

Halma’s Environmental Policy2
and our Environmental
Commitment statement3
set out our guiding principles
and commitments for both
internal and external audiences.

Due diligence, implementation and outcomes

Halma’s Environmental Policy has been set by the Board, and our Group General Counsel & Chief
Sustainability Officer, who chairs our Sustainability Management committee, has principal
responsibility for coordinating and monitoring.

We encourage our companies and their suppliers to improve energy productivity, reduce water
consumption, waste and emissions and, in terms of materials, to reduce or make more efficient
use of them. Focusing on our sustainability pillar of Protecting our environment will help us limit
our key environmental impacts including energy consumption, GHG emissions and hazardous and
other waste production. Our energy use and emissions performance can be found in the TCFD
Statement on page 80 and in more detail in our ESG Data Supplement at www.halma.com.

More information on our programmes to reduce our environmental impact and data is available
in the Sustainability section on page 72 and on our website. Our assessment of and response to
climate-related risks and opportunities can be found in our TCFD Statement on page 80.

All Halma companies are encouraged to undertake an ISO 14001 environmental management
accreditation, where warranted. For the year to 31 March 2023, based on available data reported
by our companies, we estimate that approximately 20% of the Group’s sites, contributing
approximately 24% of revenue, were covered by an ISO 14001 accreditation (2022: 17% sites;
22% revenue).

Risk:
• Natural Hazards, including Climate Change

Non-financial KPIs:
• Reduction in Scope 1 & 2 emissions -

– page 94

page 31

Anti-bribery and corruption

Halma has a zero-tolerance
policy on bribery and corruption,
as set out in its Anti-Bribery
and Corruption Policy2,4, which
extends to all business dealings
and transactions in which the
Group is involved. This includes
a prohibition on making
political donations, offering or
receiving inappropriate gifts or
making undue payments to
influence the outcome of
business dealings.

Our policy and guidance in this area is well understood, routinely reviewed and compliance is
checked as part of the half year and year-end control process. There are set criteria for any
gifts, hospitality, entertainment and charitable donations including that any gifts, hospitality,
entertainment or charitable donations in excess of the thresholds set out in the policy must
receive set pre-approval and be recorded in the Gifts and Hospitality Register.

We require customers and suppliers who contract on our standard business terms to comply with
anti-corruption and anti-bribery laws and any suspected breaches of compliance with this policy
can be reported through the whistleblowing reporting service.

Online anti-bribery and corruption compliance training is mandatory for senior management,
all company board directors and other key business personnel. Over 600 employees completed
anti-bribery and corruption training during the year ended 31 March 2023.

Risk:
• Non-compliance with Laws and Regulations - page 93

Halma plc | Annual Report and Accounts 2023

Non-financial information statement continued

Policies1

Employees

The Code of Conduct3 (Code)
aims to ensure that Halma
maintains consistently high
ethical standards globally,
while recognising that our
companies operate in markets
and countries with cultural
differences and practices. It is
issued to all Halma employees
and published on our website.

Halma has a group-wide
Whistleblowing Policy2,4
which applies to all employees
and Halma operations as well
as joint venture partners,
suppliers, customers and
distributors relating to
our companies.

Our Health and Safety Policy2
requires companies to manage
their activities in a way which
avoids causing unnecessary or
unacceptable risks to health
and safety and provides clear
guidelines for our companies
on managing health and safety
risks to ensure a safe work
environment.

Our Diversity and
Inclusion Policy3 sets out
our commitment to building
inclusive and diverse companies.

Our Equal Opportunities
Policy2 is a Group policy which
promotes equal opportunity
for all employees and job
applicants and aims to create
a working environment in
which all individuals are able
to make the best use of their
skills, free from discrimination
or harassment.

Due diligence, implementation and outcomes

Code of Conduct
Each officer or employee who joins the Group is required to acknowledge that they have read
the Code and understood its importance. The Code was refreshed in 2023 and is being rolled out.
Please see page 65 for further details regarding the new Code.

Whistleblowing
All whistleblowing reports are appropriately investigated and concluded. The Audit Committee
receives details of any reports relating to financial misconduct and the Board receives an
overview of reports relating to people and culture.

We have an independent third-party reporting line, NavexGlobal, for individuals to raise
concerns that they are either not able to do so through other channels or would prefer to raise
anonymously. Details about the confidential reporting service are available in our Code (which is
available on our website, www.halma.com) and SharePoint sites, and are prominently displayed
on posters within all of our Group and company locations.

Health and Safety
The Board monitors health and safety performance, which is collected through the central
financial consolidation system, at every meeting.

In the event of any accident, the company in which the accident occurred is to review the relevant
root cause and ensure that preventative measures are taken, including further training and
education of their employees.

In line with Halma’s autonomous structure, operational responsibility for compliance with
local health and safety regulations, including that of suppliers, resides with the board of each
company. However, we routinely monitor health and safety performance across the Group and
companies are encouraged to seek continuous improvement and to promote a strong health
and safety culture. Companies are required to carry out an independent health and safety review
every three years to assess compliance and to ensure that there is a consistent and adequate
level of reporting and investigation of health and safety incidents across the Group. In addition,
our lead global insurer reviews employee and third-party safety and controls at four to five
properties per year as part of their rotational assessments.

During the year ended 31 March 2023 over 800 employees completed our Group online health
and safety training programmes.

Based on available data reported by our companies, approximately 17% (2022: 15%) of the
Group’s sites are covered by ISO 45001 or BS OHSAS 18001 accreditation, a minimum standard
for occupational health and safety management best practice. These sites currently contribute
approximately 17% (2022: 16%) of the Group’s revenue and we continue to encourage our
companies to certify to the ISO 45001 standard.

Diversity and Inclusion
We have identified Diversity, Equity and Inclusion (DEI) as a key societal issue in which Halma
can have a strong positive impact. DEI is one of our key focus areas within our Protecting our
people sustainability pillar.

Further information on health and safety, employee wellbeing and engagement, diversity and
inclusion, gender pay gap and training and development, including metrics, can be found in
the Our people and culture section on page 66.

Page 21 details Halma’s cultural genes and DNA.

Risk:
• Talent and Diversity – page 91

Non-financial KPIs:
• Accident Frequency Rate
• Employee Engagement %
• Company board gender balance

100

Halma plc | Annual Report and Accounts 2023

Policies1

Social

Halma has a group-wide Data
Protection Policy2 and
Guidance which requires our
companies to comply with six
key data protection principles,
which are Lawfulness, Fairness
and Transparency, Purpose
Limitation, Data Minimisation,
Accuracy, Storage Limitation
and Integrity and Confidentiality.

The Group has a policy on
Competition Law2 which is
applicable to all employees.

We have a Conflict Minerals
Policy2 which gives guidance
to all companies on how to
determine whether any of
the four minerals, or their
derivatives, classified by the
US government as “conflict
minerals” are contained in
any product.

Code of Conduct3,
as detailed above.

Strategic
Report

Governance

Financial
Statements

Other
Information

Due diligence, implementation and outcomes

Code of Conduct
We expect our external business partners and suppliers to be aware of the Code of Conduct
and apply similar ethical standards in their operations. Each of our companies is responsible
for monitoring the standards of their business partners and suppliers.

Data Protection
Under the Data Protection Policy, all companies are required to have their own Privacy Policy in
place which is tailored to their business and local law, relating to the categories of individuals
whose personal data they process. Privacy Policies and security measures are required to be
reviewed at least annually and tested where appropriate. Our companies are also required to
ensure appropriate and robust clauses are included in any contracts with third parties where
personal data will be disclosed.

Competition Law
Our companies must confirm that the relevant people in their business are familiar with
the Competition Compliance manual as part of the half year and year-end control process. Online
anti-competition compliance training is mandatory for senior management, all company board
directors and other key business personnel. Over 400 employees completed competition law
training during the year ended 31 March 2023.

Conflict Minerals
Our companies are responsible for managing their own supply chains, which includes complying
with conflict mineral due diligence requests from their customers where applicable, supported
by Group guidance to do so. A number of our companies already confirm that their supply chains
are conflict mineral-free, including a number of our largest companies. Historically, we have not
collated data on these policies or procedures centrally.

Product safety
Our companies take pride in the quality of their work and are committed to the highest levels
of quality and safety standards at every stage of the product life cycle. Given the significant
diversity of types of products and end markets, responsibility for complying with relevant product
safety and quality requirements and obtaining relevant accreditations and certifications sits with
the local, legally constituted company boards. For the year to 31 March 2023, based on available
data reported by our companies, we estimate that approximately 62% of the Group’s sites,
contributing approximately 75% of revenue, were covered by an ISO 9001 quality management
accreditation (2022: 60% of sites; 70% of revenue).

Further information on the positive role we play in society can be found in the following sections of
this Report.

• Sustainability - page 72.
• Our people and culture, including Water for Life global campaign - page 66.
• Business reviews - page 46.

Halma plc | Annual Report and Accounts 2023

101

Non-financial information statement continued

Policies1

Human rights

Halma is committed to
conducting its business ethically
and in line with all relevant
legislation including human
rights laws. Halma has
published seven Modern
Slavery Act Statements3 since
September 2016, which detail
the progressive steps taken
annually to tackle modern
slavery and human trafficking.

Halma’s Human Rights and
Labour Conditions Policy4
reflects the core requirements
of the Universal Declaration of
Human Rights and the Group
observes the International
Labour Organization (ILO)
Declaration on Fundamental
Principles and Rights at Work,
including the conventions
relating to forced labour, child
labour, non-discrimination,
freedom of association and
right to collective bargaining.

Due diligence, implementation and outcomes

The Group Chief Executive has overall responsibility for ensuring that human rights considerations
are integral to the way in which existing operations and new opportunities are developed and
managed. Compliance with, and respect for, these fundamental principles are integrated
throughout our organisation.

All companies have been provided with a detailed guidance note to raise awareness of the Modern
Slavery Act and the issue of modern slavery in business and supply chains. Each company is required
to consider the potential issue of modern slavery and human trafficking within their business and
supply chain and may take varying approaches, such as supplier due diligence, questionnaires and
the use of terms and conditions, according to their specific circumstances.

Online compliance training on the Modern Slavery Act has been rolled out to senior management,
all company board members and other relevant employees across the Group. Over 550 employees
have completed this training during the year ended 31 March 2023. This is an important tool in
assisting our business management in raising awareness of the issues and understanding their
responsibilities in their operations.

We have onboarded 35 suppliers onto the EcoVadis platform, which assesses suppliers against all
aspects of their treatment of their people, and will give additional support over time, particularly
to our smaller companies, as they continue to manage modern slavery risks going forward.

Our Modern Slavery Act Statement can be found at www.halma.com.

Managers and supervisors must provide leadership that promotes human rights as an equal priority
to other business issues. All employees are responsible for ensuring that their own actions do not
impair the human rights of others, and are encouraged to bring forward, in confidence, any
concerns they may have about human rights.

Risk:
• Non-compliance with Laws and Regulations – page 96

In addition to the Code of Conduct having been refreshed, the following policies referenced in this section have also been refreshed: Whistleblowing, Health and
Safety, Data Protection, Competition and Anti-Bribery and Corruption. The main changes have been to streamline and simplify the policies in order to enable easier
compliance by Halma’s companies, whilst also continuing to meet all applicable legal requirements. The updated policies will come into effect in FY24 at the same
time as the new Code of Conduct.

2 Available to all employees of Halma and our companies. Not published externally.
3 Available both on our website at www.halma.com and to employees of Halma and our companies.
4 Included within our Code of Conduct.

The Strategic Report was approved by the Board of Directors on 15 June 2023 and signed on its behalf by:

Marc Ronchetti
Group Chief Executive

Steve Gunning
Chief Financial Officer

Cautionary note: this Strategic Report has been prepared solely to assist shareholders to assess the Board’s strategies and their potential to succeed. It should not
be relied on by any other party, for other purposes. Forward looking statements have been made by the Directors in good faith using information available up until
the date that they approved the Report. Forward looking statements should be regarded with caution because of the inherent uncertainties in economic trends and
business risks.

102

Halma plc | Annual Report and Accounts 2023

Introduction to governance

Strategic
Report

Governance

Financial
Statements

Other
Information

Good governance supports
sustainable growth

Dame Louise Makin
Chair

Priorities for 2023/24
The Board’s priorities for 2023/24 are to:

• Embed Halma’s DNA throughout the Group,
aligning our culture through the refreshed
Executive Board, to maintain our collegiate,
purpose-led and growth-orientated
management teams.

• Keep supporting our companies to identify,
assess and capitalise on sustainability-linked
growth opportunities.

• Continue to review Growth Enabler investments
to ensure that they are appropriately utilised
by our companies and deliver strong returns.
• Revisit our APAC strategy to inform our capital

allocation priorities in the region.

• Maintain our focus on purpose-aligned M&A.
• Evolve our ongoing portfolio review to optimise
each component for long-term sustainable
value creation.

This Report outlines the governance framework within
which the Company operates, how it has supported
the Board’s strategic activities during the year and
how the Principles set out in the UK Corporate
Governance Code 2018 have been applied.

Last year the Board set the following priorities for
the year ahead:

• To keep the talent pipeline under review at
Executive Board level and one level below.

• Support M&A activity that is aligned to our purpose.
• Further embed sustainability into our business and
monitor progress against our non-financial targets.

• Refocus on the Medical Sector strategy, following

changes to the leadership structure.

I am pleased to report that we have made good
progress against all of these priorities, as follows:

• Appointed Marc Ronchetti as Group Chief Executive

from 1 April 2023, to succeed Andrew Williams.

• Appointed Steve Gunning as Chief Financial Officer

in January 2023, in place of Marc.

• Completed seven purpose-aligned acquisitions

in the year.

• Reviewed climate risks and opportunities and
performance against our non-financial KPIs.

• Reviewed the work undertaken to estimate

our Scope 3 emissions.

• Agreed our reporting as aligned to the Taskforce

for Climate Related Disclosure (TCFD) Framework.
• Renamed our Medical Sector to Healthcare, to more
closely align with our purpose and reflect our wider
growth ambitions.

Halma plc | Annual Report and Accounts 2023

103

Corporate governance statement
The Company reports against the Financial Reporting
Council’s (FRC) UK Corporate Governance Code 2018
(the Code), which is available at www.frc.org.uk.

The Board considers that it has applied all Principles,
and complied with all Provisions of the Code for the
year ended 31 March 2023, with the exception of
Provision 38, which requires that pension contribution
rates for Executive Directors, or payments in lieu, are
aligned to those available to the wider workforce. As
reported last year, the Company undertook a review
of its UK pension provision in 2021 and consulted with
employees. As a result, the pension offering moved
from a trust-based plan to a Master Trust arrangement
which offered members more competitive management
charges, more options at retirement and improved
member communications and retirement planning
tools. We also took this opportunity to improve the
employee and employer contribution structure which
meant that all UK employees could receive more for
lower employee contributions and all employees could
receive up to 10.5% of their salary as an employer
contribution. To align with the Code, the Executive
Directors voluntarily agreed for their cash-in-lieu of
pension to be reduced to 10.5% of salary from 1 January
2023, which equalises the pension offering across all
employees in the UK. Therefore, whilst we were not
fully compliant for the full financial year, we have been
compliant for the three month period to 31 March 2023
and will be fully compliant for the year to 31 March 2024.

Conclusion
I hope that you will find the information in this Report
helpful in understanding our approach to governance
and how we have applied the Principles of the Code.

We believe that our organisational structure and
governance framework enables our companies to
operate effectively and with agility – which means we
can continue to deliver value through our sustainable
growth, returns and positive impact for the benefit of
all of our stakeholders.

Dame Louise Makin
Chair

15 June 2023

Introduction to governance continued

Board changes
We announced in June 2022, that Andrew Williams
would be retiring as Group Chief Executive on 31 March
2023. Prior to Andrew’s formal decision to retire, the
Board, supported by the Nomination Committee, had
conducted a thorough selection process to identify
Andrew’s successor as Group Chief Executive. The
Board were delighted to announce Marc Ronchetti’s
appointment as CEO Designate and from 1 April 2023,
as Group Chief Executive. I would like to thank Andrew
for his tremendous contribution to Halma’s growth
during his 18-year tenure and congratulate Marc on
his appointment.

As part of the fulfilment of the executive succession
plans, and following a robust selection process led
by the Nomination Committee, Steve Gunning was
appointed as Chief Financial Officer on 16 January
2023. On behalf of the Board, I am delighted to
welcome Steve to Halma.

The planning and execution of these succession plans
have provided a smooth transition and continuity
in a year of change. As at 31 March 2023 the Board
comprised seven non-executive Directors and
four Executive Directors.

Shareholder engagement
Following the below 80% vote received on our
Remuneration Report and the below 80% vote
received on the reappointment of our Remuneration
Committee Chair, Jo Harlow, we engaged with our
major shareholders and the proxy agencies to better
understand the reasons for their votes (if it was against)
and any comments or concerns that they held on these
two resolutions. Further details on the Remuneration
Report vote can be found on page 138 of the
Remuneration Report but, from my engagement
with shareholders and proxy agencies on the specific
objection to the re-election of Jo, the reason that
a number of investors voted against her re-election
was simply as a result of her position as Chair of the
Remuneration Committee, which linked directly to
their concerns on the Remuneration Report for the
year ended 31 March 2022. I am confident that our
engagement – and in particular, an explanation of
the rationale for the remuneration decisions made in
2022 which could not refer to the imminent succession
plans that were to be executed – has addressed these
concerns. The Board is most appreciative of Jo’s
leadership of the Committee and engagement with
shareholders, and unanimously supported all decisions
that were made. I, along with my fellow Directors,
have absolutely no concerns on Jo’s performance as
a Director of the Company or in her role as Chair of
the Remuneration Committee.

104

Halma plc | Annual Report and Accounts 2023

Strategic
Report

Governance

Financial
Statements

Other
Information

The Company’s application of the Code

Links

Board Leadership and Company Purpose
Halma is a purpose-driven company – growing a safer, cleaner,
healthier future for everyone, every day – and is led by an effective
and entrepreneurial Board, whose objective is to promote the long-
term success of the Company by generating value for shareholders
and benefitting our wider stakeholders. The Group achieves this
through its autonomous, decentralised operating model and
maintains effective engagement channels with its stakeholders
to consider their needs and the impact of decisions when realising
strategic objectives.

The Board leads by example in promoting the desired culture,
values and purpose-aligned strategy and has put in place
policies and practices to support this.

The Board operates within a framework of prudent and effective
controls, which complements its autonomous structure. The Board
annually reviews and approves the Budget and monitors capital
allocation throughout the year.

Division of Responsibilities
The Board has clearly defined roles and responsibilities. The Chair,
who was independent on appointment, and continues to retain
objective judgement, monitors the effectiveness and independence
of Board members, whilst fostering an open culture of debate.

• Sustainable Growth Model p18
• Roles and Responsibilities p120
• Board Governance Structure p110
• Our stakeholders, s.172(1)

compliance statement and
Board decision-making p56-p65

• Company purpose, values

and culture p20

• Engagement with our people p56

• Resources, governance and control

frameworks p111

• Board Governance Structure p110
• Audit Committee Report p128
• Risk management and
internal control p88

• Roles and Responsibilities p120
• Board Governance Structure p110
• Board of Directors p166
• Independence and objective

judgement p121

Composition, Succession and evaluation
The Board, supported by the Nomination Committee, has an
established approach for succession and for evaluating candidates
for Board positions – which ensures that there is an appropriate
mix of diversity, skills and experience on the Board.

• Nomination Committee Report,
including Board and Committee
evaluations, skills matrix,
appointment and induction
processes and diversity p122

Audit, Risk and Internal Control
The Board confirms that there is an ongoing process for identifying,
evaluating and managing the emerging and principal risks faced
by the Group and for determining the nature and extent of the risks
it is willing to take in achieving its strategic objectives. The Board
has undertaken a robust assessment of the Group’s emerging and
principal risks during the year under review and up to the date of
this Report. The Board continues to improve and embed controls
and to keep systems under review to ensure that the internal
control and risk management framework remains fit for purpose.

Remuneration
The Board has established a Remuneration Committee which
has delegated responsibility for setting the policy for executive
remuneration, to support the strategy and long-term sustainable
growth of the Company. The Board exercises independent judgement
when authorising remuneration outcomes. The Remuneration
Committee Report describes the work of the Committee during
the year and sets out how executive remuneration is aligned to our
purpose and supports our strategy. The Report also describes how
the Committee has considered workforce remuneration and how
executive remuneration aligns with wider Group pay policies.

• Risk management and internal
control, including principal and
emerging risks p88

• Audit Committee Report, including
fair balanced and understandable
assessment p128

• Remuneration Committee

Report p136

Halma plc | Annual Report and Accounts 2023

105

Board of Directors

Dame Louise Makin
Chair

Appointed: February 2021
(July 2021 as Chair)

Louise is an experienced executive and
board director, having led businesses
across multiple sectors. She was the
Chief Executive Officer of BTG plc,
the international specialist healthcare
company, from 2004 to 2019. Louise
led the transformation of the company
through a combination of organic growth
and acquisitions, and significantly
increased its market capitalisation before
its sale in 2019. She previously served as a
non-executive Director of Premier Foods
plc, Woodford Patient Capital Trust plc
and Intertek Group plc, and as a director
of several not-for-profit organisations.
Louise brings a wealth of leadership and
international experience to the Board.

Marc Ronchetti
Group Chief Executive

Appointed: July 2018
(April 2023 as Group Chief Executive)

Marc joined Halma in 2016 as Group
Financial Controller. He was promoted
to the plc and Executive Board as Chief
Financial Officer in July 2018 and became
Group Chief Executive in April 2023.
Marc brings a proven ability to drive
business growth. He has played a vital
role in evolving the Groups Sustainable
Growth Model, purpose and culture and
has overseen a significant number of
acquisitions whilst supporting Halma’s
companies to grow. Marc was previously
Finance Director of the UK operations of
Wolseley plc (now Ferguson plc) and prior
to that held various group and divisional
roles at Inchcape plc.

Steve Gunning
Chief Financial Officer

Appointed: January 2023

Steve joined Halma in 2023 as Chief
Financial Officer. He was previously CFO
of International Airlines Group and prior
to that held several senior commercial and
finance roles within IAG, including CFO of
British Airways and Chief Executive of IAG
Cargo. Steve was also a non-executive
Director at FirstGroup plc. Earlier in his
career, Steve worked in range of finance
and audit roles in the UK and US
at PricewaterhouseCoopers.

Andrew Williams
Executive Director

Appointed: July 2004
(February 2005 as Group Chief Executive)

Andrew joined Halma in 1994 as
Manufacturing Director of a Halma
company, becoming its Managing Director
in 1997. He joined Halma’s Executive Board
in 2002 and served as Group Chief Executive
between February 2005 and March 2023.
Andrew has proven his ability to grow and
acquire companies globally while evolving
the Group portfolio for sustainable growth
and high returns. He brings clear strategic
leadership to the Board and has a deep
understanding of our companies and the
Group’s stakeholders. He is a Chartered
Engineer. Andrew served as a non-executive
Director of Capita plc from January 2015
until May 2021. Andrew will step down
from the Board on 30 June 2023.

Jennifer Ward
Group Talent, Culture and
Communications Director

Appointed: September 2016

Jennifer joined the Halma Executive Board
in March 2014 and has global responsibility
for talent and culture as well as internal
and external communications and brand
across Halma. She became a Board member
in September 2016. Prior to joining Halma
as Group Talent Director, Jennifer spent
over 15 years leading Human Resources,
Talent and Organisational Development
for divisions of PayPal, Bank of America
and Honeywell. Jennifer brings a wealth
of experience to the Board to ensure we
secure and develop talent ahead of our
growth needs and build a sustainable
culture of high performance.

External appointments:
Diploma plc

Tony Rice
Senior Independent Director

Appointed: August 2014
(July 2015 as Senior Independent Director)

Tony was Chief Executive Officer at
Cable & Wireless Communications plc and
Tunstall plc and held a number of senior
roles at BAE Systems plc. Tony was Chair
of Ultra Electronics Holdings plc, Dechra
Pharmaceuticals plc and served as a non-
executive Director of Spirit Pub Company
plc, where he was Senior Independent
Director and Remuneration Committee
Chair. Tony brings a wealth of board
level experience at UK listed companies,
internationally and in regulated industries
to his role as Senior Independent Director.

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Strategic
Report

Governance

Financial
Statements

Other
Information

Jo Harlow
Independent non-executive Director

Roy Twite
Independent non-executive Director

Dharmash Mistry
Independent non-executive Director

Appointed: October 2016

Appointed: July 2014

Appointed: April 2021

Jo has significant international experience,
gained most recently as Corporate Vice
President of the Phones Business Unit
at Microsoft. She previously worked at
Nokia as Executive Vice President of
Smart Devices. Before her move into
consumer electronics, Jo worked in
strategic marketing at Reebok and
Procter & Gamble. Jo brings a wealth
of expertise to the Board in digital,
technology, sales and marketing.
Jo was previously a Member of the
Supervisory Board at Ceconomy AG.

External appointments:
InterContinental Hotels Group plc
J Sainsbury plc
Chapter Zero

Roy is Chief Executive of IMI plc, having
been appointed to the IMI Board in
February 2007. During his career with IMI,
Roy has held several senior management
roles including Managing Director of IMI
Norgren UK (2001), President of IMI
Hydronic Engineering (2004), President
of Retail Dispense (2007) and President
of IMI Precision Engineering (2009) and
Divisional Managing Director of IMI Critical
Engineering (2011). Roy brings wide-ranging
knowledge of the engineering sector along
with extensive management and
operational experience.

External appointments:
IMI plc, Executive Director

Dharmash is an experienced technology
venture capitalist, entrepreneur and
non-executive director. He was formerly
a Partner at Balderton & Lakestar, an
executive at Emap PLC and worked earlier
in his career at The Boston Consulting
Group and as a Brand Manager at Procter
& Gamble. Dharmash was formerly a
founder of blow LTD, which he chaired,
and has served as a non-executive
Director at The British Business Bank,
BBC, Hargreaves Lansdown PLC and
Dixons Retail PLC.

External appointments:
The Premier League
Rathbones Group plc

Sharmila Nebhrajani OBE
Independent non-executive Director

Carole Cran
Independent non-executive Director

Appointed: December 2021

Appointed: January 2016

Carole was Chief Financial Officer of
Aggreko plc until December 2017, prior
to which she held a number of senior
finance roles within that group. Previously,
she worked at BAE Systems plc in a range
of senior financial positions, which included
four years in Australia. Carole commenced
her career in the audit division of KPMG
where she qualified as a Chartered
Accountant. Carole has extensive
financial experience and has a
strong focus on governance and risk.

External appointments:
Forth Ports Limited, Executive Director

Sharmila has sectoral specialisms in health,
media and sustainability. She served with
the BBC for 15 years, latterly as Chief
Operating Officer of BBC New Media,
and most recently was Chief Executive
of Wilton Park an ambassador level policy
development role in the UK Foreign and
Commonwealth Office focused on global
health, climate risk and national security.
Her other executive board positions include
Medical Research Council, the Association
of Medical Research Charities and the NHS
and she was appointed OBE for services to
medical research. She is a qualified
chartered accountant.

External appointments:
ITV plc
Severn Trent plc
Coutts & Co
National Institute for Health and
Care Excellence

Committee Membership
A Audit Committee
N Nomination Committee
R Remuneration Committee

Chair of Committee
Member of Committee

Note: unless otherwise stated all
external appointments are non-
executive roles.

Halma plc | Annual Report and Accounts 2023

107

Executive Board

01
Steve Gunning
Chief Financial Officer

See page 106 for biography

02
Jennifer Ward
Group Talent, Culture and
Communications Director

See page 106 for biography

Steve Brown
Sector Chief Executive, Healthcare

Steve joined Halma in 2015 and was
appointed to the Executive Board in
November 2021. Prior to his appointment,
Steve was Divisional Chief Executive of
Halma’s Environmental & Analysis Sector,
Divisional Chief Executive for the Safety
Sector and Managing Director of Apollo,
one of Halma’s largest companies.

Catherine Michel
Chief Technology Officer

Catherine joined Halma as its first Chief
Technology Officer in September 2019. She
has global responsibility for fostering the
digitalisation of our companies’ products
and our underlying business operations.

Constance Baroudel
Sector Chief Executive,
Environmental & Analysis

Constance was appointed to the Executive
Board in April 2021. She joined Halma as
Divisional Chief Executive, Medical &
Environmental in August 2018.

Funmi Adegoke
Group General Counsel &
Chief Sustainability Officer

Funmi joined Halma’s Executive Board
in September 2020. She has global
responsibility for the Group’s legal,
risk and compliance affairs, oversees
the company secretariat function
and has principal responsibility for
our sustainability activities.

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Strategic
Report

Governance

Financial
Statements

Other
Information

Aldous Wong
President of Halma Asia Pacific,
Adviser to the Executive Board

Aldous was appointed as President
of Halma Asia Pacific in January 2022,
becoming the senior leader for the region
and an adviser to the Executive Board.

Inken Braunschmidt
Chief Innovation and Digital Officer

Wendy McMillan
Sector Chief Executive, Safety

Inken joined Halma and was appointed
to the Executive Board in July 2017 and is
responsible for driving Halma’s Digital
and Innovation Strategy.

Wendy was appointed to the Executive
Board in April 2021. She joined Halma
as a Divisional Chief Executive in the
Safety Sector in February 2018.

Andrew Williams
Executive Director

See page 106 for biography

Marc Ronchetti
Group Chief Executive

See page 106 for biography

Please see our website,
www.halma.com,
for full biographies

Halma plc | Annual Report and Accounts 2023
Halma plc | Annual Report and Accounts 2023

109
109

Corporate Governance Report

Board Governance Structure

Board
Sets the Group’s purpose and provides strategic leadership to the Group within a framework of robust
corporate governance and internal control, monitors diversity, culture and the values that are embedded
throughout our business to deliver long-term sustainable growth for the benefit of our shareholders and
other stakeholders.

Board Committees

Nomination Committee
• Reviews the size, balance of skills
and diversity and composition
of the Board and Committees.

• Leads the Board’s succession
planning and keeps the senior
leadership needs of the Company
under review.

• Oversees the development of
a diverse succession pipeline.

• Oversees the Board and
Committee evaluations.

Audit Committee
• Monitors the integrity of financial
statements, including significant
financial judgements or estimates
and ensures that the Annual Report
is fair, balanced and understandable.

• Oversees the system of internal
control and risk management.
• Monitors the effectiveness of
the Internal Audit function.

• Reviews external Auditor

independence and performance.

• Leads the audit tender process.

Remuneration Committee
• Keeps under review the framework

and Policy on Executive Director and
senior management remuneration
(including benefit arrangements).

• Recommends to the Board the

design, targets and framework for
senior management performance-
related pay and share awards.
• Approves service contracts for

Executive Directors.

• Reviews workforce remuneration

policies and alignment with culture.

To learn more see page 122

To learn more see page 128

To learn more see page 140

Share Plans Committee
• Actions and administers share
award grants and vestings,
following approval by the
Remuneration Committee.

Bank Guarantees and
Facilities Committee
• Agrees and approves arrangements
for issuing guarantees, indemnities
or other support for bank loans
and other financing facilities.

Acquisitions and
Disposals Committee
• Reviews and approves the final

terms and structure of acquisitions
or disposals which have been
agreed in principle by the Board.

Management Committees

Executive Board
• Develops strategy and monitors
operational, financial and non-
financial performance – including
sustainability matters.

• Drives the strategic priorities across
all sectors and functional areas,
such as finance; talent, culture
and communications; legal and
compliance; innovation and
digital; technology and IT.
• Leads group-wide initiatives.
• Reinforces the Group’s operational
and governance structures and
acts as a forum for management
decisions.

• Reports back to the Board via
the Group Chief Executive.
• Biographical information for

each Executive Board member
is available on our website
www.halma.com

110

Halma plc | Annual Report and Accounts 2023

Sustainability
Management committee
• Provides oversight and strategic
and operational direction into
sustainability-related workstreams.

• Reviews and recommends
appropriate sustainability-
related governance.

• Takes primary responsibility for

identification and management
of climate-related risks and
opportunities at a Group level.

• Reports back to the Executive Board
via the Group General Counsel &
Chief Sustainability Officer.

Investment committee
• Provides governance, support

and challenge to Halma Ventures
and advises on Group strategy for
making minority investments and
other opportunities that offer
Halma access to new technology
and capabilities.

• Reviews and approves investment
proposals for up to £10m (being
the Group Chief Executive’s
delegated authority limit).

• Reviews financial performance

and strategic value of investments
against established criteria and
considers the exit or acquisition
strategy, as appropriate.

• Reports back to the Executive
Board via the Group Chief
Executive.

Corporate Governance Report
The role of the Board and value creation
The Board’s role is to provide entrepreneurial leadership,
within a framework of prudent and effective controls,
that promotes the interests of the Company over
the long term for the benefit of its stakeholders.
The Board sets the Group’s strategic goals and has
ultimate responsibility for its management, direction
and performance. The Company’s Articles of Association
set out the Board’s powers and the Board has adopted
a formal schedule of matters reserved solely for its
decision and certain decision-making and monitoring
activities are delegated to Board Committees or
management committees. The full list of matters
reserved for its decision can be found at
www.halma.com.

Halma has a primary duty to generate and preserve
value over the long-term for its shareholders whilst
considering its wider stakeholders and positively
contributing to society. Details of the Company’s
strategy and business model, together with its
stakeholder considerations can be found in the
Strategic Report. The activities of the Board during
the year are set out on the following pages.

Resources, governance and control frameworks
As a decentralised organisation, it is critical that
Halma’s governance and control framework is robust,
clearly defined, well communicated and operating
effectively to support the Company in the delivery
of its strategy. The Board has established three
principal Committees (Audit Committee; Nomination
Committee; Remuneration Committee) which review
and monitor specific areas on behalf of the Board and
make recommendations for its approval. Each Board
Committee operates under written terms of reference
which are approved by the Board and are made
available at www.halma.com. The Chair of each
Committee reports to the Board on their activities
after each meeting and once the minutes have been
approved by the Committee, they are circulated to
all Board members. Further information on the
composition, role and activities of each Committee
is set out in the respective Committee Reports.

There are additionally three topic specific committees,
typically chaired by the Group Chief Executive, to which
it has delegated certain powers to negotiate, review
and administer matters (Share Plans Committee;
Bank Guarantees and Facilities Committee; Acquisitions
and Disposals Committee) and three management
committees (Executive Board; Sustainability
Management committee; Investment committee)
which have been established to review and make
decisions on strategic and operational matters.

Strategic
Report

Governance

Financial
Statements

Other
Information

The Board sets the Company’s strategy, the execution
of which is delegated to the Executive Board, chaired
by the Group Chief Executive, which monitors progress
against the Group’s strategic objectives and reviews
operational and business performance. A summary of
the responsibilities of the Board, each Board Committee
and for each management committee is set out on
page 110.

The foundation of our business model is the autonomy
that our businesses enjoy. To support this autonomy,
while retaining oversight and control from a Group
perspective, companies must comply with Halma’s
suite of financial and non-financial policies and
procedures and provide confirmation of compliance
with key controls half yearly. The Group’s policies set
out our requirements in the areas of financial reporting
and internal control, health and safety, ethics, human
resources, IT, data privacy, and legal and compliance.
These policies are made available to all employees via
a dedicated SharePoint site.

An authority matrix sets out the matters that are
reserved for decision by the Board, those that can be
approved by the Group Chief Executive and the financial
authority that has been delegated to Executive Board
members, the Divisional Chief Executives (DCEs) and
to company managing directors. This approach ensures
that companies have a clear framework within which
they can operate and balances autonomy with the
need for oversight and control.

Each company in the Group has its own board of
directors which meets regularly to fulfil its legal duties
and to maintain operational and financial management
of the company’s affairs. Each DCE chairs the company
board in their subsector portfolio and meets with the
Executive Board at least three times per year. The
DCEs also provide a written report on the financial
and business performance, including areas such as
talent, culture, diversity and sustainability, to the
Executive Board members and Halma’s Chair on a
regular basis.

The Sector Chief Executives (SCEs) hold regular sector
board meetings, attended by the sector’s DCEs and
finance, legal, talent and M&A leads, which provide
a valuable forum for review of sector wide strategy,
financial and operational performance, talent and
culture, diversity, sustainability, M&A, and legal
and compliance. The governance structure of our
companies, sectors and Board is set out on page 3.

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111

Corporate Governance Report continued

Board operations and activities
The Board schedules six meetings per year but will
meet or pass resolutions, as required, to deal with
urgent matters and event-driven items such as
acquisitions and trading updates. All Directors receive
an agenda and meeting papers in the week prior
to the Board meeting. Papers are delivered via an
electronic board portal for security and efficiency.

Board meeting attendance
During the year, attendance by Directors at scheduled
Board meetings was as follows:

Board attendance

Dame Louise Makin

Marc Ronchetti¹

Steve Gunning²

Andrew Williams

Jennifer Ward

Carole Cran

Jo Harlow

Dharmash Mistry

Sharmila Nebhrajani OBE

Tony Rice

Roy Twite

Eligible

Attended

Timeline of key Board activities

2022

1 Marc was unable to attend one meeting as he was on the residential executive

programme at Stanford Graduate School of Business.

2 Steve joined the Board on 16 January 2023.

April
• Acquisition of
Deep Trekker.

June
• Full year results.
• Announcement of

retirement of Andrew
Williams and appointment
of Marc Ronchetti as
CEO Designate.

• Recommendation of

final dividend.

2023

January
• Steve Gunning

appointed as Chief
Financial Officer.

• Board and
Committee
evaluation
process agreed.

July
• Annual General Meeting.

September
• Strategy meeting.
• Trading update.
• Acquisition of IZI Medical.

November
• Half Year results.
• Declaration of

interim dividend.

October
• Acquisition of WEETECH.

February
• Acquisition of
Thermocable.

March
• Trading update.
• Annual Budget

approved.

• Board evaluation

feedback.

• Acquisition of FirePro.

May
• Acquisition of
Sewertronics.

June
• Full year results.
• Recommendation
of final dividend.

112

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Strategic
Report

Governance

Financial
Statements

Other
Information

How the Board supports our companies through our Growth Enablers
The Board supports the evolution of Halma’s growth strategy and the development of its Growth Enablers,
which help to allocate human and capital resources, to ensure that our sectors and companies continue
to invest organically and through acquisition to deliver sustainable growth over the long term.

Mergers and
Acquisitions (M&A)

• The Board sets a clear strategy which includes a significant growth element

being delivered through standalone M&A and bolt-on acquisitions to
our companies.

• Through the annual Budget process, key resources, both in terms of people

and financing, are made available by the Board to ensure that we can
deliver on this strategic priority.

• The M&A pipeline is reviewed at each Board meeting and all material

acquisitions (those with a maximum consideration in excess of £10m) are
subject to its approval. Prior to approval, the Board will review the proposed
value creation strategies and, post-acquisition, it receives insight on the
financial and operational performance of newly acquired businesses.

International
Expansion

• All major changes, material financial commitments or new business
developments – such as significant expansion into a new territory –
are considered by the Board and are matters reserved for its decision.

Talent and
Culture

Finance,
Legal and Risk

• The Board receives regular updates from Jennifer Ward, Group Talent, Culture
and Communications Director on areas including the talent pipeline, diversity,
equity and inclusion initiatives and employee engagement.

• Talent discussions are a key feature at each Nomination Committee meeting

and monitoring the Group’s culture, diversity, equity and inclusion is an
important role for the Board.

• The Board has established a clear and robust framework to control financial
investment, oversee financial performance and reporting, and to manage
risks and opportunities. It annually assesses risk management and internal
control systems.

• The Board has an established legal and compliance framework to enable
companies to maintain their autonomy and agility while leveraging the
scale of Halma to get consistent, quality advice at competitive rates
through a panel of preferred external law firms.

Digital Growth

• The Board takes a close interest in Halma’s desire to expand its digital
capability and supports R&D within our companies through Board
presentations and non-executive Director interactions with management.
Our companies can leverage the skills and experience from our non-executive
Directors with digital expertise.

Innovation
Network

• The Board share their deep and diverse knowledge and experience with senior
management and company personnel throughout the year, through both
formal and informal events and interaction – enabling our companies to
leverage the breadth of their network and obtain support, guidance and
contacts in areas which are new to them.

Strat Comms
and Brand

Strategic
Communications
and Brand

• A key focus in the Board’s Budget approval process is to allocate capital to

resource the central and sector teams to support our companies in developing
market-leading positions by connecting with customers through their brand,
marketing, product positioning and the effective use of all media channels.

Halma plc | Annual Report and Accounts 2023

113

Corporate Governance Report continued

Governance in action

Talent and
leadership

Strategy
and growth

In June 2022, we announced that after 18 years of
outstanding leadership, Andrew Williams would retire
as Group Chief Executive on 31 March 2023. Supported
by the Nomination Committee, the Board executed
its succession plans and, following a rigorous selection
process, appointed Marc Ronchetti as CEO Designate
and ultimately as Group Chief Executive from 1 April
2023. During the appointment process the Board
considered factors such as alignment with Group
culture and the evolution of Halma’s Sustainable
Growth Model, as well as the impact on employees,
investors and wider stakeholders.

The Board reviewed and considered significant
acquisition opportunities (those with a consideration
of over £10m) throughout the year, resulting in the
successful completion of five acquisitions, namely
FirePro, Thermocable, WEETECH, IZI Medical and Deep
Trekker, details of which can be found in the Strategic
Report. A further two acquisitions completed during
the year, which did not require Board approval. The
Board assessed the alignment of each target acquisition
with the Group’s purpose and strategy and, following
approval and completion, will continue to monitor
the integration of these companies into the Group.

The Board sets and approves its priorities at the start
of each financial year. The Board’s priorities for 2023
included M&A, talent, sustainability, investment in
R&D and infrastructure. These priorities are driven by
the Executive Board across all sectors and functional
areas and the Board monitors their progress at
each Board meeting.

In September 2022, the Directors attended the
Company’s annual strategy meeting, which brings
together the Board and Executive Board to undertake
an in-depth review of Company strategy, considering
both past performance, future trends and opportunities,
as well as macroeconomic and geopolitical influences.

To enable an orderly transition from the role of
Chief Financial Officer to Group Chief Executive,
Steve Gunning was appointed in January 2023
as Chief Financial Officer. Further details of the
appointment and induction process can be found
in the Nomination Committee Report.

The Directors attended the Accelerate Halma
conference in October 2022, which was held in
person for the first time since the COVID pandemic.
The conference brought together our top 350 leaders,
under the theme of “connected for growth”. The event
showcased our companies and provided opportunities
for our companies to understand our business model,
connect with other companies, leverage skills from
other leaders and explore challenges and
opportunities together.

Additionally, during the year, and as an output to
the 2022 Board evaluation, a targeted process to
facilitate the way in which our companies can access
and leverage the specialist skills of the non-executive
Directors was developed and implemented. This further
enhances the role the Board plays in supporting the
Innovation Network Growth Enabler.

114

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Strategic
Report

Governance

Financial
Statements

Other
Information

Risk, legal
and finance

The Board received regular reports on risk, finance and
legal matters throughout the year and, following the
appointment of the Director of Risk & Compliance,
and the subsequent separation of the Internal Audit
and Risk functions, closely monitored the evolution of
these responsibilities.

The Board received several risk updates and deep dives
throughout the year particularly in light of the current
geopolitical and macroeconomic environment, see page
89. Development of our Risk and Compliance function,
as well as details of our Internal Audit activities can be
found on page 134.

In discharging its duty to ensure adequate resources are
in place, the Board reviewed and approved the annual
Budget for 2024, and monitored progress against the
2023 Budget, ensuring capital allocation remained
appropriate against our strategic priorities.

Governance
and
stakeholders

The Board received regular updates on governance
practices and approved matters such as the Group’s
annual Modern Slavery Act statement, as well as
financial matters such as the Group’s going concern
and viability statement during the year. The Board
reviewed and approved a refreshed Code of Conduct
“Just be a good person” in March 2023, which is being
rolled-out across the Group.

The Board conducted its annual Board and Committee
evaluations by way of internal questionnaires and
discussed outputs and agreed actions for the year
ahead, whilst monitoring progress against actions
identified in the prior year. Full details of the Board
evaluation can be found in the Nomination Committee
Report and the Committee evaluations are covered
in their respective Reports. Additionally the Board’s
independence and conflicts of interest were
considered and approved in the year.

The Board places great importance on its relationships
and interactions with its various stakeholders, as
detailed on page 56. Board members held numerous
engagement sessions with shareholders during the
year and, having considered internal and external
factors and implications, has recommended a final
dividend for approval by shareholders at the Annual
General Meeting.

Halma plc | Annual Report and Accounts 2023

115

Corporate Governance Report continued

Company purpose, values and culture
Our strategy is powered by our purpose of growing a
safer, cleaner, healthier future for everyone, every day
and is focused on acquiring and growing businesses
in global niche markets, in the areas of safety, health
and the environment (further details are set out in
the Strategic Report).

Our corporate culture is an essential component of
our strategy and is embedded within Halma’s DNA
through our cultural and organisational genes. Our
inclusive culture across our business brings competitive
advantage to the Group and is encapsulated within
our Talent & Culture Growth Enabler. It is vital that
we protect the unique cultural genes that we have
in order to grow our business sustainably and deliver
on our purpose (see page 21 for more information on
Halma’s DNA and cultural and organisational genes).

It is essential that the Board and executive management
act in a constructive and respectful manner, exhibiting
the tone that we expect across our Group. We consider
that this culture promotes good governance across our
companies and empowers people to make good and
ethical business decisions.

Establishing and promoting culture
The Board ensures that the Company’s purpose and
DNA are aligned to its culture and strategic objectives.
Our employees are key to delivering our success and
by fostering a collaborative and inclusive culture our
people are unified by our purpose and aspire to
deliver our strategic ambitions. Our positive culture
is demonstrated through the 76% overall employee
engagement score achieved from our annual
engagement survey this year and the strong
leadership and talent at Halma.

Our robust risk and governance framework provides a
base from which our culture can be embedded across
all levels of our business and the Board periodically
reviews workforce policies and our Code of Conduct.

Our Code of Conduct is underpinned by our culture
and stipulates the expected behaviours and corporate
culture that we require all employees to display. It
provides a plain language summary on anti-bribery
and corruption, insider dealing, conflicts of interest,
modern slavery and human trafficking. It also sets
out information on how employees can raise concerns
via management or the independent third party
confidential reporting service, operated by NavexGlobal.
Halma’s Code of Conduct must be signed by every
employee when they join the company and signed again
periodically thereafter. We recently refreshed our Code
of Conduct, which was approved by the Board in March
2023, and is being rolled-out. The Code of Conduct is
available from our website at www.halma.com.

The Board takes health and safety matters very
seriously and accident statistics are reported to the
Board at each meeting. This enables the Board to
assess the effectiveness of health and safety practices
and behaviours within the Group. Health and safety
is one of our non-financial key performance indicators
(see page 31 for more information). The Board approved
a revised Health and Safety Policy, applicable to both
the Group and our companies in the year under review,
which is currently being rolled-out. The Directors made
a number of business site visits during the year, which
provides them with a first-hand experience of the
workplace environment and culture, particularly around
health and safety. Directors report their observations
from all site visits to the Board and the relevant Sector
Chief Executive and Divisional Chief Executive.

Find out more information on our website
www.halma.com/who-we-are

p66

Find out more information in the
Our people and culture section

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Strategic
Report

Governance

Financial
Statements

Other
Information

How the Board has engaged with employees to monitor culture

Engagement mechanism

How the Board monitored culture and insight gained

Outcomes in 2022/23

Company site visits
and employee events

Annual employee
engagement survey

Throughout the year our executive and non-executive Directors
have undertaken a total of 65 site visits to our companies, which
have provided invaluable insight into how our culture permeates
throughout our decentralised, autonomous structure. Directors
engaged with employees on matters such as executive and wider
workforce remuneration, company culture, purpose, health and
safety and diversity, equity and inclusion, and provided feedback
to the Board and management following each visit.

In October 2022 we held our first in-person Accelerate Halma
conference since the COVID pandemic. The event provided
an opportunity for our non-executive Directors to interact with
colleagues in an informal setting, which included a non-executive
Director hosted breakfast with company-wide employees.
Read more on page 58.

The Group’s annual engagement survey results are a good
indicator of sentiment across the Group and provide insights
at a company and Group function level. A summary of
the survey results is reviewed by the Board and areas for
improvement discussed. The results are shared and focus
sessions with employees are held to discuss the results and
gather feedback on areas for improvement - which helps
to shape and drive company/function specific action
plans. Employee engagement is one of our non-financial key
performance indicators (see page 30 for more information).

We developed a non-executive
Director company visit guidance
document, which sets out areas
which Directors might engage
on during their visit. This was
implemented and embedded
successfully during the year and
provided a useful framework
and objective to each site visit.

We were pleased to achieve a
76% overall engagement score
in 2023. Read more on the
outcomes of our employee
engagement survey on page 66.

Board, Committee
and strategy meetings

The Board receives reports throughout the year on whistleblowing,
talent and retention, employee engagement survey results, health
and safety matters as well inviting senior employees to present at
the Board or attend events with the Directors, all of which provide
insights into employee sentiment and culture.

The Board kept under review
talent and retention, employee
engagement, and concerns of
the workforce during the year.

Whistleblowing

Policies and practices

Investing in and
rewarding employees

The Board has put in place procedures for employees to confidentially
raise matters of concern, either with management or through our
dedicated confidential reporting hotline. All workforce concerns
that have been raised are reviewed at each Board meeting,
including updates on previous investigations and the action
that has been taken where reports are founded.

The Board have continued to
monitor all workforce concerns
raised throughout the year,
which provide useful insights
into the culture across the Group.

Our workforce policies and Code of Conduct are underpinned by
our values and culture. Each of our employees is required to read
and sign the Code of Conduct upon joining and to adhere to our
workforce policies. The Board periodically reviews these policies to
ensure they remain appropriate and aligned with our purpose,
values and culture.

The Remuneration Committee regularly considers wider workforce
remuneration, including gender pay gap data across the UK and
the US. A particular focus has been on how our companies are
supporting employees during the cost-of-living crisis (see further
details in the Remuneration Report).

Our employee share schemes and bonus/profit sharing plans
are designed to benefit the wider workforce and incentivise
our employees to contribute to the success and performance
of the Company.

Non-executive Directors engage with employees on areas
of executive remuneration at company visits, and continue
to offer employees the opportunity to discuss remuneration
matters further. Feedback from such visits is reported to
the Board for discussion.

During the year the Board
approved refreshed policies,
including the Code of Conduct
and Health and Safety Policy.

The Board received updates
on initiatives put in place locally
to assist employees in the cost
of living crisis and on the
implementation of the UK
Real Living Wage across our
UK companies.

Non-executive Directors engaged
with employees during the year,
on remuneration and other
matters, through site visits
and at the Accelerate
Halma conference.

Halma plc | Annual Report and Accounts 2023

117

Corporate Governance Report continued

Engagement with employees
The Code sets out three prescribed ways in which
the Board should engage with its workforce, or, where
one of these methods is not adopted, an explanation
must be provided on the alternative engagement
methods used and the reasons for adopting that
approach. Due to the Company’s decentralised
operating model and the geographic spread of
our companies, we have implemented alternative
engagement methods, which we believe are more
fitting, and effective, for our structure and culture –
as outlined below.

The Board utilises a number of different methods
of engagement, both directly and indirectly, with
employees to foster and promote a two-way dialogue
and to provide a critical means of monitoring culture,
as set out below.

There are frequent opportunities for the employee voice
to be relayed to the Board via company management,
the annual engagement survey, through site visits,
company events and reporting of workforce
concerns raised via the confidential reporting
service with NavexGlobal.

In addition, we consider that engagement by the local
company board with their own workforce, as well as the
engagement by the Board through these mechanisms,
provides an effective platform for clear and open
communication with our global employee base.
To support this, we have also put in place reporting
mechanisms such that concerns and feedback raised
at the company level is fed back to the Board.

The Board strongly believes that its mechanisms
for engaging with our employees are appropriate
for our decentralised structure and are an effective
means of bilateral engagement with our colleagues.

Engagement with other stakeholders
The Board considers its investors, debt holders
and other stakeholder groups in its decision-making
and our interaction with key stakeholders is set
out on pages 56 to 62 of the Strategic Report.

Our employee engagement framework

Board
The Board employs both direct and indirect methods of engagement with
employees, which include company site visits, attending employee events such as
Accelerate conference, DCE/company chair reports, presentations and reports to the
Board on matters such as workforce concerns and the employee engagement survey,
and regular updates from the Group Talent, Culture and Communications Director.

Executive Board and Sector Chief Executives (SCE)
The SCEs are Executive Board members with operational responsibility
for all of our companies. They provide a vital link between the
Board and our companies, by ensuring that there are close
channels of communication.

Halma companies and Divisional Chief Executives (DCE)
The DCEs chair their respective sub-sector company boards and meet with the
Executive Board at least three times per year and with the Board annually.
This facilitates regular dialogue on employee-related matters.

Employees
Through our established communication channels our employees
are able to effectively communicate with both their local company
board as well as directly and indirectly with the Board.

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Case study

Non-executive
Director site visit

In June 2022, our Senior Independent Director,
Tony Rice, visited Ramtech, based in Nottingham.
Ramtech joined the Group in August 2021 and sits
within the Safety Sector as a provider of wireless
solutions designed to save lives, protect assets
and gain insight.

Hosted by the Ramtech board of directors, Tony
received a tour of the offices, where he met with
colleagues, and gained insight into the day-to-
day operations and culture of the business.

Tony received presentations on growth, product
innovation and operations, following which he
facilitated a roundtable discussion, comprised
of a group of employees across HR, marketing,
engineering, logistics and customer services. The
group were keen to provide background to their
roles and life at Ramtech, and discuss wide-ranging
matters including the benefits of becoming part
of the Halma Group. Discussions were positive and
highlighted the alignment of vision, values, purpose
and culture between Ramtech and Halma, and,
as a recently acquired business, provided employees
with further background to Halma and how it can
offer support.

As is our usual process, following the event Tony
reported back to the Board on his visit to Ramtech
and noted that employees had been welcoming
and engaging and that the visit had presented an
excellent opportunity to experience first-hand the
cultural fit with Halma and a better understanding
of the business.

Strategic
Report

Governance

Financial
Statements

Other
Information

My visit to Ramtech was informative
and engaging, demonstrating the
strengths of the business and its
alignment with our vision, purpose,
values and culture. I look forward to
observing the capabilities that the
company will bring to the Group.

Tony Rice
Senior Independent Director

Halma plc | Annual Report and Accounts 2023

119

Corporate Governance Report continued

Roles and Responsibilities
The executive and non-executive responsibilities are clearly defined, set out in writing and are regularly reviewed
by the Board. The roles and responsibilities of Board members are set out below.

Chair’s responsibilities

Governance
• Promoting high standards of corporate

governance.

• Leading, chairing and managing

the Board.

• Ensuring all Board Committees are

properly structured and operate with
appropriate terms of reference.

• Regularly considering the composition
and succession planning of the Board
and its Committees.

• Ensuring that Board and Committee

performance is evaluated on a
regular basis.

• Ensuring adequate time is available for all
agenda items and that the Board receives
accurate, clear and timely information.

Group Chief Executive

Strategy
• Setting the strategy of the Group and
monitoring its progress against its
strategic objectives.

• Promoting open and constructive

debate in Board meetings.

• Ensuring effective implementation of

Board decisions with the support of the
Group Chief Executive.

• Ensuring that the Board manages

risk effectively.

• Consulting, where appropriate, with
the Senior Independent Director on
Board matters.

People
• Chairing the Nomination Committee.
• Identifying and meeting the induction
and development needs of the Board
and its Committees.

• Developing a strong working
relationship with the Group
Chief Executive.

• Ensuring a strong working relationship
between Executive and non-executive
Directors.

• Setting clear expectations concerning

the Company’s culture, values
and behaviours.

• Ensuring effective relationships are
maintained with key stakeholders.

• Providing coherent leadership and management of the Company.
• Developing objectives, strategy and performance standards to be agreed by the Board.
• Providing effective leadership of the Executive Board to achieve the agreed strategic priorities.
• Maintaining an Executive Board of the right calibre and expertise, ensuring that succession plans are available and reviewed annually

with the Chair and the non-executive Directors.

• Monitoring, reviewing and managing key risks and strategies with the Board.
• Ensuring that the assets of the Group are adequately safeguarded and maintained.
• Building and maintaining the Company’s communications and standing with shareholders, financial institutions and other

stakeholders and effectively communicating Halma’s investment proposition and purpose.

Executive Directors

• Implementing and delivering the strategy and operational decisions agreed by the Board.
• Making operational and financial decisions required in the day-to-day management of the Company.
• Providing executive leadership to senior management across the business.
• Championing the Group’s culture and values, reinforcing the governance and control procedures.
• Promoting talent management and diversity, equity and inclusion.
• Ensuring the Board is aware of the view of employees on issues of relevance to Halma.

Senior Independent Director

Independent non-
executive Directors

Company Secretary

• Acting as a sounding board for the Chair.
• Serving as a trusted intermediary for

the other Directors.

• Providing an alternative channel for
shareholders and employees to raise
concerns, independent of executive
management and the Chair.

• Contributing independent thinking and

• Acting as a sounding board for the

Chair and other Directors.

• Ensuring clear and timely information
flow to the Board and its Committees.

• Providing advice and support to

the Board and its Committees on
matters of corporate governance
and regulatory compliance.

judgement and providing external
experience and knowledge to the
Board’s agenda.

• Scrutinising the performance of
management in delivering the
Company’s strategy and objectives.

• Providing constructive challenge

to the Executive Directors.
• Monitoring the reporting of

performance and ensuring that
the Company is operating within
the governance and risk framework
approved by the Board.

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Independence and objective judgement
For the year ended 31 March 2023, the Board was
composed of 11 Directors, each bringing a variety of
skills, knowledge and experience, in addition to diverse
thinking. With four Executive Directors and seven
non-executive Directors (including the Chair), there
is a strong independent element to Halma’s Board
which ensures that the balance of power rests with
the non-executive members of the Board.

Dame Louise Makin was independent on appointment
as a non-executive Director in February 2021 and the
Board considers that she retains objective judgement.
To facilitate effective debate, the Chair ensures that no
Director or group of Directors dominate Board meeting
discussions and that the voice of all Directors is heard
and respected. Halma’s culture of openness and
transparency is apparent in how the Board members
interact individually and collectively. The Executives
genuinely value the insight, views and challenge that
the non-executive Directors bring and the transparent
reporting by the Executives ensures that all stakeholder
interests can be considered and well-informed,
collaborative decisions made.

The Board has reviewed the independence of each
non-executive Director and, following an assessment
of any relationships or circumstances which are likely
to affect a Director’s judgement, consider each to be
independent for the year ended 31 March 2023. While
non-executive Directors are not required to hold shares
in the Company, the Board believes that any Halma
shares held serve to align their interests with those of
shareholders and do not interfere with their independence.
Tony Rice was appointed Senior Independent Director in
July 2015 and is available as an alternative channel of
communication for shareholders, independent from
executive management and the Chair.

Strategic
Report

Governance

Financial
Statements

Other
Information

Time commitment
Director availability and time commitment to the
Company is essential for a properly functioning Board
and no issues have been experienced during the year.
In addition to the scheduled and ad hoc Board and
Committee meetings, Directors also attend the Annual
General Meeting and the annual strategy meeting.
Non-executive Directors are also encouraged to attend
our Accelerate conference and undertake company site
visits, both of which our Executive Directors attend. The
Board must approve all significant external appointments
prior to any Director accepting the position. Our
appointments policy permits Executive Directors to
accept one external appointment, provided that it is
beneficial to the Company and the development of the
individual. The Board must be satisfied that it does not
present a conflict of interest with the Group’s activities
or require a significant time commitment which could
interfere with the performance of their executive duties.

For non-executive Directors, the number of external
directorships is an important consideration when
recruiting and a preferred candidate must reassure
the Nomination Committee that they can allocate
sufficient time to the role (around 20 days per annum
is anticipated plus additional time if they Chair
a Committee) before they are recommended
for appointment.

Prior to the Board’s approval of an additional role, an
assessment is made of the combined time commitment
required by their existing roles plus that required in the
new role. If there is any concern over the time available
to fulfil their role at Halma, the Board would not approve
the appointment. However, where Directors are rotating
off or rebalancing their portfolio of roles, consideration
will be made of the sequence and timing of the roles
and a pragmatic approach is taken (as opposed to an
absolute numerical limit) in respect of any potential
over-boarding concerns, whether temporary or otherwise.
All Directors are subject to an annual review, at which
time commitment and their personal contribution is a
key focus.

Halma plc | Annual Report and Accounts 2023

121

Nomination Committee Report

Committee composition and attendance

Eligible

Attended

Dame Louise Makin (Chair)

Andrew Williams¹

Carole Cran

Jo Harlow

Dharmash Mistry¹

Sharmila Nebhrajani OBE

Tony Rice

Roy Twite

1 Andrew and Dharmash were unable to attend one Committee meeting,
which was called at short notice, due to pre-arranged commitments.

The Committee schedules three routine meetings a
year but will meet more often as the work requires.
Due to the level of activity during the year, the
Committee formally met seven times. Attendance
at each Committee meeting is set out in the
table above.

Committee composition
The Committee comprises the Chair and the six
independent non-executive Directors. For the year
to 31 March 2023, the Group Chief Executive, Andrew
Williams, was also a Committee member but since
1 April 2023, his successor, Marc Ronchetti, has not
been appointed as a member. Dame Louise Makin
chairs the Committee but she would not chair a
meeting which considers the appointment of
her successor.

Only Committee members are entitled to attend
meetings although the Group Chief Executive and
Group Talent, Culture and Communications Director
are regular attendees. External search consultants
are invited to attend and present on specific items,
when appropriate. Full biographical details of
members of the Committee can be found on
page 106.

Dame Louise Makin
Nomination Committee Chair

Principal role and responsibilities
• Reviewing the size, balance and composition

(including diversity) of the Board and its Committees,
ensuring that they have the appropriate skills,
knowledge and resources to fulfil their duties.
• Making recommendations to the Board on any
changes to the structure or composition of the
Board and its Committees.

• Leading the process for new Board appointments.
• Leading succession planning discussions for Board

and Executive Board positions, including the
identification and assessment of potential
candidates and making recommendations
to the Board for its approval.

• Keeping under review the leadership needs of the

Group, for both Executive Directors and other senior
executives, including any recommendations made
by the Group Chief Executive.

• Monitoring development and diversity at the
Executive Board level and one level below,
to maintain visibility of the pool of internal
candidates for Board and Executive
Board succession.

• Implementing and monitoring the Board’s

own diversity policy.

• Ensuring that all new Directors undertake
an appropriate induction programme.

• Reviewing the ongoing training needs for the Board.
• Assisting the Chair and the Senior Independent

Director with the annual Board evaluation
process and review of the time requirements
from non-executive Directors.

The Committee operates under written terms of
reference (available at www.halma.com) which
are reviewed at least annually.

122

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Strategic
Report

Governance

Financial
Statements

Other
Information

Activities during the year
• Reviewing the internal and external talent pipeline as
part of the Committee’s regular succession planning
activities at Board and Executive Board level, with a
key focus on Group Chief Executive and Chief Financial
Officer succession.

• Following a thorough selection process, recommending
to the Board the appointment of Marc Ronchetti as
CEO Designate and, from 1 April 2023, as Group
Chief Executive.

• Following a thorough selection process, recommending
to the Board the appointment of Steve Gunning as
Chief Financial Officer from 16 January 2023.

• Working with external search consultants, Lygon Group,
to commence a search for non-executive directors as
part of the Committee’s planning for non-executive
directors who are serving out their final term.
• Continuing the focus on increasing diversity

throughout the organisation.

• Updating the Board skills and experience matrix.
• Following the individual Director evaluations,

recommending the election and re-election of
Directors at the 2023 Annual General Meeting.

Board and Executive Board Composition
The Board comprises an independent Chair, six non-
executive Directors and four Executive Directors, each
of whom sit on the Executive Board. There is a strong
independent element to the Board which ensures that
the balance of power rests with the non-executive

Board – skills and experience

members of the Board and each Board member brings
a variety of skills, knowledge and experience, in addition
to diverse thinking. The Committee regularly reviews
the balance of skills, experience and knowledge on the
Board and its Committees – along with the diversity that
each member brings – in order to identify any gaps or
new skills and experience that would benefit the Group,
which helps inform Board succession planning.

The matrix below sets out the core skills and experience
that each Director has and also identifies where
particular Directors are considered to have expertise
in certain areas.

The Executive Board comprises the four Executive
Directors plus seven other executives who cover a range
of strategic, operational, financial and technical areas.

Further background on the skills and experience of the
Board and Executive Board is set out in the biographies
on pages 106 to 109 and full biographies are available
on our website at www.halma.com.

Roy Twite and Tony Rice will have served on the
Board for nine years this year (on 24 July and 8 August
respectively) but to assist the Company, and ensure
orderly Director succession, they will seek re-election
as non-executive Directors for a final term at the 2023
AGM. It is anticipated that Tony will step down before,
and Roy will step down at, the 2024 AGM. Having
considered the factors which could impair their
independence, the Board considers that they will both
remain independent during the period up to July 2024.

Dame Louise
Makin

Marc
Ronchetti

Steve
Gunning

Andrew
Williams

Jennifer
Ward

Carole Cran Jo Harlow

Dharmash
Mistry

Sharmila
Nebhrajani
OBE

Tony Rice

Roy Twite

Strategy and M&A

Finance & accounting

Risk management
and regulation

Digital and technology

Engineering
and science

Sustainability

Talent and
remuneration

International
experience

Listed CEO/CFO

Expert

Experience

Halma plc | Annual Report and Accounts 2023

123

Nomination Committee Report continued

Board and Executive Board diversity
Embracing diversity, in all its forms, enables individuals
to share their own perspective, which promotes
inclusivity and supports good decision-making by the
Board and Executive Board. The Board recognises the
many benefits of building a diverse leadership team
and the tables below set out gender, ethnic and age
diversity of the Board and Executive Board at the date
of this Report.

Our Board Diversity Policy was updated in March 2022
to reflect the new targets set by the FTSE Women
Leaders Review on gender diversity. The Policy also
affirms our commitments, on ethnic diversity, as a
signatory to the Change the Race Ratio. Halma has
maintained at least one ethnically diverse Director on
the Board since 2011, which is prior to the publication
of the Parker Review’s original report in October 2017.
We took the opportunity in our March 2022 Policy to
go beyond the Parker Review recommendation, by
committing to maintain our current composition
of two ethnically diverse Directors on the Board.

The Committee is supportive of the new FCA Listing Rules
and amendments to the Disclosure and Transparency
Rules, which came into effect for accounting periods
starting on or after 1 April 2022 and is pleased to report
that during the financial year ended 31 March 2023 and
up to the date of this Report, the Board had met the
three targets required under Listing Rule 9.8.6 R (9) as:

• at least 40% of the individuals on the Board

are women;

• the Chair is a women; and
• at least one individual on the Board is from a minority

ethnic background.

The Company has collected the diversity data used for
these purposes from each individual on a voluntary basis.

In March 2023, the Parker Review published an update
report entitled “Improving Ethnic Diversity in UK
Business” and have requested that Boards of FTSE 350
companies set their own target, by December 2023,
for the percentage of their senior management group
who self-identify as being in an ethnic minority. The
Board will be considering an appropriate target with
management over the coming months and will publish a
target by the end of 2023 and will report on our progress
from 2024 through to the target date in December 2027.

Board and Executive Board – Gender Diversity

Men

Women

Number of
Board Members

Percentage
of the Board

Number of senior
positions on the Board
(CEO, CFO, SID & Chair)

Number
in Executive
Management

Percentage
of Executive
Management

55%

45%

55%

Board and Executive Board – Ethnic Diversity

White British or other White
(including minority-white groups)

Mixed/Multiple Ethnic Groups

Asian/Asian British

Black/African/Caribbean/
Black British

Other ethnic group, including Arab

Board and Executive Board – Age Diversity

40 – 49

50 – 59

60 – 69

70 – 79

Number of
Board Members

Percentage
of the Board

Number of senior
positions on the Board
(CEO, CFO, SID & Chair)

Number in
Executive
Management

–

82%

–

18%

–

Percentage of
Executive
Management

73%

–

Number of
Board Members

Percentage of
the Board

Number of senior
positions on the Board
(CEO, CFO, SID & Chair)

Number in
Executive
Management

Percentage of
Executive
Management

18%

55%

18%

–

55%

45%

–

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Strategic
Report

Governance

Financial
Statements

Other
Information

Board and Committee Diversity Policy
Halma is committed to building a diverse and
inclusive culture throughout the Group. Diversity,
Equity and Inclusion is one of our sustainability key
focus areas as we believe it benefits the global
economy and creates a fairer future for everyone,
every day. The benefits of diversity across all levels
of the organisation are clear and the unique culture
that each of our businesses bring – through innate
differences in our people – is the foundation for
our success. Creating inclusive environments,
where everyone has equal access, opportunity
and treatment and can bring their full self to work,
is fundamental to accelerating our growth and
achieving our purpose.

The Board is committed that its composition,
and that of each Committee, should cover a
range of factors, such as gender, ethnicity, age,

sexual orientation, disability and socio-economic
background. The Board has agreed the following
commitments in relation to gender and ethnicity:

• to maintain gender balance at Board, Committee

and Executive Board level by ensuring that
representation of both men and women is
at or above a minimum 40% threshold;
• by 31 December 2025, ensure a minimum

representation of men or women one level below
the Executive Board is at or above a 40% threshold;
• to have at least one woman in the Chair or Senior

Independent Director role and/or one woman in the
Group Chief Executive or Chief Financial Officer role;
• to maintain at least two ethnically diverse Directors

on the Board and Committees; and

• as a signatory to Change the Race Ratio, to increase
racial and ethnic diversity at senior leadership level.

Board appointment process
The Board has an established approach for identifying
and evaluating suitable candidates for Board positions,
which was utilised most recently for the appointment of
Marc Ronchetti for the role of Group Chief Executive and
for Steve Gunning as Chief Financial Officer. The search
for new non-executive Directors also follows the
approach described below.

Prior to the Committee making a recommendation to
the Board for a Director appointment, it undertakes
the following steps:

• Agrees the skills, experience and knowledge required

for, and complementary to, the role.

• Approves the role specification.
• Selects an independent global executive search firm,

which understands Halma’s business model and
culture, to prepare a long list of diverse external
candidates and, for executive roles where there are
internal candidates that have been identified through
the Committee’s succession planning, to benchmark
those candidates. For the year ended 31 March 2023,
the Committee used the services of executive search
consultancy, Lygon Group – who are not connected to
the Company or any Halma Director – to benchmark
the internal candidates identified for the Group Chief
Executive role and to source external candidates for
the Chief Financial Officer role.

• Reviews the long list of candidate profiles and, based
on insight derived internally or from the search firm,
creates a shortlist of diverse candidates for interview.
• For non-executive positions, interviews are held with
members of the Committee (including the Chair),
the Group Chief Executive and the Group Talent,
Culture and Communications Director. For executive
positions, the Chair and non-executive Directors lead
the interview process and seek input from other
executives, as appropriate.

• The Committee members meet to share their feedback
on each candidate and will compare their assessment
against the role criteria, along with any reference
information provided by the search firm. Maintaining
a focus on gender and ethnic diversity, while ensuring
that other elements of diversity are not overlooked,
remains an important factor for the Committee.
Where elements of diversity will be lost when certain
Directors come to the end of their tenure, the
Committee aims to ensure that it will remain diverse
or will seek a replacement Director to maintain/
restore that element of diversity to the Board and
its Committees.

• A preferred candidate is selected by the Committee

and, following discussion with the candidate, a formal
decision is taken to recommend their appointment to
the Board.

• If the Board approves the recommended appointment,
then a regulatory news service announcement is issued.

Director induction process
Newly appointed Directors follow a tailored induction
programme, which includes dedicated time with each
Board and Executive Board member, the Company
Secretary, DCEs and functional experts. A bespoke
schedule of company visits across each of the three
sectors is arranged for the Director and they are
encouraged to attend the Accelerate conference
and other Company events throughout the year.
The induction aims for Directors to become swiftly
acquainted with Halma’s strategy, business model,
DNA (cultural and organisational genes) and
governance structure prior to them building their
understanding of each sector and our companies.
In addition, a briefing on statutory duties and listed
company regulation is provided to new Directors
and updated at least annually and presented at
the Board for the benefit of all Directors.

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125

Nomination Committee Report continued

Case study

Induction of Marc Ronchetti
as Group Chief Executive

Being Halma’s Chief Financial Officer since July 2018,
Marc’s understanding of the Group, its culture and
strategy was already well embedded – as were his
relationships with colleagues, external advisers
and significant shareholders. Therefore, the skills
and knowledge required for his transition into his first
CEO role required a tailored approach to his induction.
Importantly, the programme focused on meeting
and learning from a number of key internal and
external stakeholders:

Halma company colleagues: in the period June 2022
to April 2023, Marc visited over 50% of our companies
across all three sectors, with the remaining companies
scheduled through the year to 31 March 2024. These
visits enabled Marc to not only discuss the business
and strategy with the local board but also meet a
wider group of colleagues who work daily to fulfil
our purpose.

Group and sector colleagues: a critical element of
Marc’s induction was to shadow Andrew Williams
for 10 months to leverage his 18 years of experience
as Halma’s Group Chief Executive. Marc had regular
one-to-one meetings with the Chair, Company
Secretary, Executive Board members and Divisional
Chief Executives which have given him greater insight
into the role that each play in the Group and enabled
him to develop deeper relationships with the senior
leadership team. Marc attends the Group’s hybrid town
hall meetings, where Halma colleagues – from the UK,
the US, India and China – are updated on Company
news, recognise individual and team achievements and
have the opportunity to ask questions or share news.

Advisers and shareholders: while Marc had
established relationships with these stakeholders,
the focus of discussions and meetings were in
the context of his leadership of the Group.

Network: a key element of Marc’s professional
development was in the form of a residential executive
programme at Stanford Graduate School of Business.
This not only provided insights from the academics
and industry speakers in areas such as leadership,
accountability for results, and purpose and diversity
but the delegates themselves comprised of a diverse
and global network of executive leaders from which
to learn and share experiences.

The structure and breadth of my induction programme
has enabled me to transition seamlessly from Chief Financial
Officer into the Group Chief Executive role – while it was
an intense programme, it was incredibly rewarding and
struck the right balance for me to learn from others,
while permitting time and space for me to gather
my own thoughts and ideas.

Marc Ronchetti
Group Chief Executive

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Financial
Statements

Other
Information

Executive Directors may undertake tailored professional
development as part of their onboarding plan, such
as business management, personal development
or mentoring programmes.

2023 Committee evaluation
The Committee’s own evaluation for the year ended
31 March 2023 concluded that:

• The size and structure of the Committee, along

The Chair reviews the training and development needs
of the Board, and for each Director, at least annually.

with the frequency and duration of the meetings
was appropriate.

Annual Board and Committee evaluations
The Committee reviews the process and output from
the annual Board and Committee evaluations. The
formal evaluation process involves a review of the
performance of each Director through individual
meetings held with the Chair and for the Chair, an
appraisal is undertaken by the non-executive Directors
collectively and fed back via the Senior Independent
Director. The Board undertakes an evaluation of its
own performance and effectiveness, with the findings
and proposed actions being presented at the Board
by the Chair.

Each Committee undertakes its own evaluation and
the findings and proposed actions are formally reviewed
at the relevant Committee meeting. Progress against
agreed actions is monitored by the Company Secretary
throughout the year and a formal review is undertaken
ahead of the next evaluation cycle, to ensure that the
actions have been, or will be, appropriately closed out.
The results from the Audit Committee and Remuneration
Committee evaluations are discussed in the respective
Committee Reports and the results from the
Committee’s own evaluation are set out below.

Evaluation type
The Committee normally utilises an external evaluator
on a triennial basis and the Chair, with the support of
the Company Secretary, formulates a bespoke internal
questionnaire in the two years in between. The last
externally-facilitated evaluation was undertaken by
Independent Audit in 2021 and an internal evaluation
was undertaken for 2022 and 2023. The internal
evaluation exercise is thorough and allows directed
questions to be asked on areas particularly relevant
to Halma at that time or on topics that have been
raised during the year – examples of topics covered
over recent years include Board succession, Boardroom
dynamics, strategic progress in specific areas and the
level of challenge and support that has been provided
by the non-executive Directors. These questions are
supplemented by standing governance questions
on Board and Committee structure, Director skills,
experience and diversity, Board and Committee
effectiveness, strategy and risk. For the year ending
31 March 2024, an externally-facilitated evaluation
will be carried out and the results will be reported in
next year’s Report.

• The papers and presentations were of high quality.
• Meetings are chaired well.
• Overall the Committee was operating effectively,
with recognition that the Group Chief Executive
and Chief Financial Officer succession plans had
been well planned and well executed.

2023 Board evaluation
The Board’s 2023 evaluation questionnaire confirmed
that the Directors believe that:

• The Board is operating effectively.
• The papers are clear and of a high standard.
• The Board has healthy debates which lead to good

decision-making.

• Strong relationships have been formed amongst
the Board members, while independence of the
non-executives from management is maintained.

The main areas for focus over the coming year and
the proposed actions agreed are as follows:

• Rotational presentations from the Sector Chief

Executives will include more coverage on evolving and
potentially disruptive technology and business models,
in addition to the regular sector strategy update and
review of end-market trends.

• Insight on mega trends and the competitive landscape
in which our companies are operating will be topics for
fuller consideration at our annual strategy meeting.
• Following the success of the non-executive Director

and the Divisional Chief Executives interactions over the
past year, further opportunities for senior management
to gain exposure to the Directors will be sought.

• M&A proposals will include a summary of the Executive
Board’s appraisal of the opportunity, to provide further
context to the Board, and additional information on
the top M&A pipeline targets will provided at each
Board meeting.

Following the annual evaluation, and the individual
performance reviews undertaken by the Chair, all
Directors that are standing for election or re-election
are considered to be effective in their role, hold recent
and relevant experience applicable for Halma’s business
and they each continue to add value and demonstrate
commitment to their role. Accordingly, the Board is
recommending to shareholders the election or re-
election of the Directors standing at the 2023 AGM.

Dame Louise Makin
Committee Chair

For and on behalf of the Committee 15 June 2023

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127

Audit Committee Report

Carole Cran
Audit Committee Chair

Committee composition and attendance

Eligible

Attended

Carole Cran (Chair)

Jo Harlow

Dharmash Mistry¹

Sharmila Nebhrajani OBE¹

Tony Rice

Roy Twite

Risk management
• Reviewing and providing oversight of the processes

by which risks are managed.

• Reviewing the process undertaken, and the stress-
testing performed, to support the Group’s Viability
statement and Going Concern statement.

Compliance, fraud and whistleblowing
• Monitoring compliance with the UK Corporate

1 Dharmash and Sharmila were unable to attend one Committee meeting

Governance Code 2018.

due to prior commitments.

The Committee has four scheduled meetings per
year, to coincide with the key events in the corporate
reporting calendar and audit cycle. The attendance
at each Committee meeting is set out in the
table above.

Principal role and responsibilities
Financial reporting
• Reviewing significant financial reporting

judgements and estimates, and the application
of accounting policies, including compliance
with accounting standards.

• Ensuring the integrity of the financial statements

and compliance with UK company law and
regulation.

• Ensuring the Annual Report and Accounts are fair,

balanced and understandable.

• Monitoring the integrity of announcements

containing financial information.

• Assessing and approving disclosures made in respect

of the Task Force on Climate Related Financial
Disclosures (TCFD) framework.

Internal control
• Monitoring the adequacy and effectiveness of the

internal controls and processes.

• Reviewing the adequacy and effectiveness of

the Group’s compliance functions; monitoring the
processes in place to prevent and detect fraud and
receiving reports on fraud attempts or incidents;
reviewing the adequacy of arrangements in place
to enable employees to raise concerns in confidence.

Internal audit
• Reviewing and approving the audit work plan

and charter.

• Reviewing reports from audits and monitoring the

status of remedial actions; monitoring the structure,
composition and resourcing of the function.

• Reviewing the role and effectiveness of the function

and periodically engaging an independent third-
party review of internal audit’s effectiveness.

External audit
• Managing the relationship with the external Auditor.
• Monitoring and reviewing the independence and

performance of the Auditor and leading the tender
process or Senior Statutory Auditor change.

• Formally evaluating Auditor effectiveness.
• Reviewing the policy on non-audit services carried

out by the Auditor.

• Negotiating and approving Audit fees, the scope

of the audit and the terms of engagement.

• Making recommendations to the Board for the
appointment or reappointment of the Auditor.

The Committee operates under written terms of
reference (available at www.halma.com) which
are reviewed annually.

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Financial
Statements

Other
Information

Committee composition and appointment
The Committee comprises six independent non-executive
Directors. Carole Cran is Chair of the Committee
and≈continues to have recent and relevant financial
experience and competence in accounting,
see page 107 for her biography.

Only Committee members are entitled to attend
meetings, although the Committee Chair invites
the Board Chair, Executive Directors, Group Financial
Controller, Group General Counsel & Chief Sustainability
Officer, Director of Internal Audit & Assurance and
representatives from the external Auditor to regularly
attend meetings. Subject matter experts, including
on Risk, Tax, Treasury Sustainability and Sector Chief
Executives’ and Financial Officers’ are invited to present
on a cyclical basis to keep the Committee updated.

Appointments to the Committee are made by the
Board and the remuneration of the Committee
Chair reflects the additional responsibilities and
time commitment required in the role. As part of the
induction process for new members of the Committee,
they will meet separately with key individuals – including
the Committee Chair, the Chief Financial Officer, the
Director of Internal Audit & Assurance and the external
Auditor. While each non-executive Director will largely
manage their own continuing development, the
Committee receives relevant updates throughout
the year including from the external Auditor and other
professional advisers on matters relevant to financial
reporting, technical accounting and governance,
internal control, tax, audit and risk, and may
request additional information, as required.

The Committee as a whole has competence relevant
to the Group, with each member bringing valuable

experience, diversity of thought and independent
judgement. Biographies for each member of the
Committee are set out on pages 106 and 107.

Governance
The Committee, and independently the Committee
Chair, regularly meets with the Director of Internal Audit
& Assurance and separately with the external Auditor,
without any Executive Directors present. The Committee
Chair maintains regular contact with management,
particularly the Chief Financial Officer, Group Financial
Controller and the Company Secretary.

All members of the Committee further their internal
network and knowledge of the companies through
company visits, corporate events and the
Accelerate conference.

The Committee Chair sets the forward agenda for the
year but also allows for flexibility in the timing and the
schedule to ensure that new or unforeseen areas can
be appropriately reviewed. The agenda and meeting
papers are circulated in a timely manner, in
accordance with the terms of reference.

The Committee Chair reports to the Board after each
meeting on the key matters discussed. Minutes are
circulated to all Board members and the external Auditor
once they have been approved by the Committee.
Internal Audit reports that identify any significant control
or compliance weakness, or other risk that requires
immediate management attention, are circulated to the
Committee via the Company Secretary when the report
is issued. At the same time, commentary from the Chief
Financial Officer and Divisional Chief Executive on the
background to the weakness, any mitigating controls
and the actions being taken to address the findings is
shared with Committee members.

Activities during the year
The Committee has a wide-ranging remit, covering reviewing and monitoring the integrity of the financial
statements and other financial information, internal controls and risk management, the external and internal
audit process and compliance with laws, regulations and ethical codes of practice. The Committee discharged
its duties under its Terms of Reference for the year and key activities included:

• Reviewing the Half Year Report and Annual Report
and Accounts and considering the key accounting
judgements and estimates that affect the
application of the policies and reported values
and approving the Group’s going concern and
viability statements.

• Reviewing the risk and assurance processes.
• Monitoring the Group’s whistleblowing and
compliance procedures and reports raised.

• Considering emerging external audit and governance

topics.

• Reviewing the Group’s Principal and Emerging Risks.
• Considering the output of the annual Committee

evaluation and agreeing appropriate actions.

• Receiving presentations on the controls environment

in the Safety, Healthcare and Environmental &
Analysis Sectors.

• Undertaking its annual review of whistleblowing

• Agreeing the external Auditor fee and confirming

and bribery procedures.

their independence and effectiveness.

• Approving the Internal Audit Charter and work plan.
• Receiving updates on TCFD and the reporting

landscape from the Head of Sustainability, and
reviewing and approving TCFD disclosures.

• Reviewing the output of the Financial Reporting

Council report on Audit Quality Review.

• Considering the output of the Internal Audit

effectiveness review.

• Reviewing the Committee’s Terms of Reference

and Auditor Independence Policy.

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Financial statements and significant
accounting matters
During the year, and prior to the publication of the
Group’s results for the Half Year ended 30 September
2022 and the Full Year ended 31 March 2023, the
Committee considered the significant risks and
material issues, judgements and estimates made
in relation to the Group’s financial statements.

These issues were discussed with management
at various stages during the year and during the
preparation and finalisation of the financial statements.
After reviewing the presentations and reports from
management, the Committee is satisfied that the
financial statements appropriately address the critical
accounting judgements and key estimates, set out
below, both in respect of the amounts reported and the
disclosures made. The Committee is also satisfied that
the significant assumptions used for determining the
value of assets and liabilities have been appropriately
scrutinised, challenged and are sufficiently robust. The
Committee has discussed these issues with the Auditor
during the audit planning process and at the finalisation
of the year-end audit and is satisfied that its conclusions
are in line with those drawn by the Auditor in relation to
these issues.

Audit Committee Report continued

Committee evaluation
An evaluation of the Committee’s own effectiveness is
undertaken each year and the findings are reported
to the Board. In 2023, this evaluation took the form
of a tailored internal questionnaire. The feedback was
provided to the Committee Chair and a summary of
the output and proposed actions is reviewed by the
Committee. The 2023 evaluation demonstrated
that the Committee is working effectively and the
Committee members considered it to be exercising
good oversight of the reporting environment and
effectively supporting and overseeing the work of
the internal and external auditors. Some areas for
improvement were identified which the Committee
Chair discussed with the Chair, Group Chief Executive,
Chief Financial Officer and the external Auditor to
form a collective view on how best to address these
points. A proposal was presented at the June 2023
Committee meeting and the actions to address each
area were agreed. These included reviewing additional
training areas required in relation to the Committee’s
ongoing role in the changing regulatory landscape.

Financial Reporting Council review of 2021/22
Annual Report and Accounts
In November 2022, the Company received a letter from
the Financial Reporting Council (FRC) in connection with
their review of the Halma Annual Report and Accounts
for the year ended 31 March 2022. The Committee were
pleased to note that the FRC had no questions arising
from their review of this Report, and that they had
two areas of observation for consideration in our 2023
Annual Report and Accounts, relating to TCFD Scope 3
emissions disclosures and share-based payments
disclosures. Each of these observational areas have
been addressed in this Report. We have acknowledged
and thanked the FRC for their observations.

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Financial
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Other
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Significant risks and material issues,
judgements and estimates

Value of goodwill, due to the
significance of the amounts
recorded on the Consolidated
Balance Sheet, and the
judgements and estimates
involved in assessing goodwill
for impairment.

How the Committee addressed each area and conclusion

• Focusing on, monitoring regularly, and constructively challenging the reasonableness
of the assumptions used in impairment calculations by management, in particular
discount rates, growth rates, the level of aggregation of individual cash generating
units (CGUs) and methodology applied.

• Considering the appropriateness and reasonableness of stated judgements

and conclusions included in the disclosures in note 11 to the Accounts.

• In particular, during the year, considering the CGU groups to which the Group’s

seven acquisitions were attributed, the treatment of inflation within assumptions
given the significant increase seen and assessing the reasonable of sensitivities
applied and considered to be reasonably possible.

Carrying value of acquired
intangibles across the Group
and the adequacy of future
cash flows.

• Focusing on and challenging the assessment of the presence of impairment

indicators that warrant an impairment test of an asset.

• Constructively challenging the reasonableness of assumptions used in impairment

calculations by management, in particular discount rates and asset specific
growth rates.

Risk that acquisitions are
not accounted for correctly
in line with IFRS 3 “Business
combinations”.

Valuation of contingent
consideration arising on
acquisitions in current and
prior periods.

Judgements and estimates
involved in valuing defined
benefit pension plans.

• Challenging the appropriateness of assumptions used in determining the

fair value of the acquired intangible assets and residual goodwill identified,
and the reasonableness of the disclosures included in note 25 to the Accounts.

• The fair value of acquired intangible assets and carrying values arising on the

seven acquisitions in the year, particularly in relation to the acquisitions of FirePro,
WEETECH, IZI Medical and Deep Trekker.

• Assessing treatments of contingent consideration payment arrangements against

the requirements of IFRS 3 and IFRS 13.

• Considering assumptions made around forecasts used in calculations.
• In particular, at 31 March 2023, the treatment and valuation of the contingent
consideration provisions in relation to Visiometrics, IZI Medical and Infinite Leap.

• Assessing the assumptions in determining pension obligations, particularly given
market volatility, and determining whether key assumptions were reasonable,
particularly the assumptions around mortality, discount rate and inflation that
are most material to the Group’s plans and resulted in retirement benefit assets
being recognised for the Group at 31 March 2023.

• The recognition of the plan surpluses in accordance with IFRIC 14.

Compliance risks with existing
and evolving tax legislation,
and judgements around
uncertain tax positions
including the recoverability
of the tax receivable balances.

• Assessing the position taken with regards to tax judgements.
• The judgements around the carrying value of tax provisions and uncertainties,
in particular, the potential impact on the Group of the European Commission’s
decision against the UK Government relating to the UK Controlled Foreign
Company partial exemption being illegal State Aid.

• Understanding the evolving BEPS Pillar 2 and UK Transfer Pricing legislation

and the likely compliance impact on the Group.

Carrying value of investments
(Company only).

• Constructively challenging the reasonableness of the assumptions used in
impairment calculations by management, in particular discount rates and
future cashflows.

Going concern status of the
Group and any impact to
future viability.

• The evidence supporting the going concern basis of accounts preparation,
the Viability Statement and the risk management and internal control
disclosure requirements.

Task Force on Climate-Related
Financial Disclosures (TCFD)

• The work undertaken to continue to assess and manage the climate-related

risks and opportunities for the Group and the associated reporting in accordance
with the TCFD framework

In addition, the Committee considered the presence of any significant product failures in the period that would
warrant the inclusion of a significant warranty provision, and assessed the capitalisation and carrying value of
Capitalised Development Costs in line with the accounting policy and standards.

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Audit Committee Report continued

External Auditor
The external Auditor is appointed to give an opinion
on the Group and Company financial statements.
The audit includes the review and testing of the data
contained in the financial statements to the extent,
and materiality level necessary for expressing an audit
opinion as to whether they present a true and fair
view of the Group and parent company affairs as
at 31 March 2023.

Whilst the Committee remains satisfied that PwC
are effective and independent, the next external audit
tender will occur in 2026, with a recommendation put
to shareholders at the 2027 AGM. The proposed tender
date is in the best interests of shareholders and the
Company as PwC has a detailed knowledge of our
business, an understanding of our industry and
continues to demonstrate that it has the necessary
expertise and capability to undertake the audit.

The Committee monitors the effectiveness of the
external Auditor throughout the year and annually
conducts an evaluation of the external audit, by way
of a tailored online questionnaire, further details are set
out on page 133. The assessment highlighted no major
concerns and the insights from the questionnaires have
been discussed both internally and with PwC, to assist
with the planning of future work. The Committee
concluded that it was satisfied with the auditor’s
performance in discharging the Full Year audit and
the Half Year review; the independence and objectivity
of the auditor; the robustness of the audit process,
including how the auditor demonstrated professional
scepticism and challenged managements assumptions
and the quality of service and delivery of the audit.
Accordingly, the Committee recommends that PwC
are reappointed as Auditor at the 2023 Annual
General Meeting (AGM).

Audit tendering
The Committee has primary responsibility for
recommending to the Board the appointment or
reappointment of the external Auditor before it is
put to shareholders at the AGM. The Committee will,
at the appropriate time, lead the audit tender process.
This process will be carried out at least every 10 years
and, unless it is undertaken earlier, it is the Committee’s
policy to consider whether a tender is appropriate every
five years – to coincide with the change in Senior
Statutory Auditor.

Following a tender process, PwC were appointed Auditor
to the Company at the AGM in 2017. In accordance with
our Auditor Independence Policy, which requires us to
change our audit partner every five years, Christopher
Richmond was appointed Senior Statutory Auditor for
the financial period commencing 1 April 2022.

In 2021, prior to any decision on the rotation of the
Senior Statutory Auditor, the Committee considered
the possibility of re-tendering the external audit
function and concluded that it was satisfied that PwC
was effective and remained independent in accordance
with our Auditor Independence Policy and the FRC’s
Ethical Standard, and that a tender process was not
appropriate at that time.

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Statement of compliance
The Company confirms that it complied throughout
the year with the provisions of the Competition and
Markets Authority’s Statutory Audit Services for Large
Companies Market Investigation (Mandatory Use of
Competitive Tender Processes and Audit Committee
Responsibilities) Order 2014.

Auditor objectivity and independence
(including non-audit fees)
The Group has adopted a Policy on “Auditor
Independence and Services provided by the External
Auditor” which sets out the limited services that the
external Auditor can provide to Group companies,
which do not conflict with the Auditor’s independence.
The Policy was updated in 2020 to align with the FRC’s
revised Ethical Standard which applied from March 2020.
The Committee continues to monitor changes in
legislation related to auditor independence and
objectivity and annually reviews the Policy.

In addition to Halma’s Policy, the Auditor runs its own
independence and compliance checks, prior to accepting
any engagement, to ensure that all non-audit work is
compliant with the Ethical Standard in force and that
there is no conflict of interest.

During the year, three pieces of permitted audit-related
services work (in addition to the Half Year review) were
undertaken by PwC. These were in respect of a liquidity
test pertaining to a dividend distribution in Belgium,
which must be performed by an auditor, an annual tax
audit in India, which is a statutory requirement, and a
required audit for HWM-Water Limited relating to its
Queens Innovation Award, with total fees of c.£12,000.
It was deemed appropriate to use PwC in respect of
these three items of work given their understanding
of the business and involvement in the Group audit.
Additionally, PwC provided access to their technical
guidance toolkit, for a total fee of c.£1,000. All work
was pre-approved by the Committee Chair and
reported to the Committee in accordance with
our Policy.

The audit fees payable to PwC for the year ended
31 March 2023 were £2.5m (2022: £2.1m) and permitted
audit-related service fees were £0.1m (2022: £0.1m).
Other non-audit services totalled less than £0.1m
in both the current and preceding year. The total of
audit related and non-audit related services for the
year totalled c.6% of three year average audit fees,
significantly below the limit of 70% required by
the Policy.

Strategic
Report

Governance

Financial
Statements

Other
Information

• Interaction with Auditor – the Committee Chair, the
Chief Financial Officer and management have regular
communication with the Auditor throughout the year
and are able to raise issues and discuss key deliverables
as the year progresses. The Committee recognises that
PwC have appropriately challenged management on
key judgements and estimates throughout the year,
as detailed in the significant risks and material issues,
judgements and estimates table above.

• Audit tender and rotation – in accordance with our
Auditor Independence Policy, the Committee reviews
the appropriateness of tendering the external audit
function every five years and, in conjunction with this,
will rotate statutory audit partner at least every five
years, the most recent rotation of which took place in
2022, with a new audit partner in place for FY23.
• Annual internal effectiveness survey – a tailored
on-line questionnaire is circulated and completed by
Committee members, other senior management and
company CFO’s who are engaged in the audit process,
the outcomes of which are reported to the Committee
and the Board. A summary of the process and key
findings is set out below.

Evaluation of the effectiveness and
quality of the External Auditor
The effectiveness of the External Auditor is monitored
throughout the year, including through:

• FRC’s Audit Quality Inspection and Supervision

report 2021/22 – the Committee reviewed the results
of the FRC’s Audit Quality Inspection and Supervision
report 2021/22 during the year and noted an
improvement on rating from the prior year and that
good practice in respect of professional scepticism,
high quality reporting and audit documentation
had been highlighted.

• Progress against audit plan and strategy – the
Committee continually evaluated and monitored
progress against the agreed audit plan and strategy
and any issues or reasons for variation from the plan
were identified, discussed and agreed with the Auditor.
Additionally, the Committee reviewed, benchmarked
and latterly agreed to the auditors fees for the year
under review, which had primarily increased due to
the additional requirements under the revised auditing
standard ISA315 and inflationary increases.

• Auditor reports to the Committee – through PwC’s
formal reports to the Committee at each meeting the
Committee track and consider the work undertaken
by the Auditor during the year.

External audit evaluation process

Bespoke questionnaire covering

Questionnaire completed by

• External audit partner time commitment.
• Quality of the team.
• Accounting, technical and governance insight.
• Policies for compliance with the revised

Ethical Standards.

• Quality and timeliness of reporting.
• Clarity and authority of communications.

• Committee members.
• Group Chief Executive.
• Chief Financial Officer.
• Director of Internal Audit & Assurance.
• Company Secretary.
• Company CFOs.
• Sector CFOs.
• Group Financial Controller.

Results

Outcome

• Results of the questionnaire are collated centrally
by the Group Financial Controller and a summary
of the findings and the FRC’s AQR Report on
PwC as a firm, are provided to the Committee
and PwC.

• Following a review by the Committee of the
output from the 2023 questionnaire and the
AQR Report findings, the Committee confirmed
that PwC is effective as external Auditor to the
Company and recommended to the Board
their reappointment as Auditor be proposed
to shareholders at the 2023 AGM.

Halma plc | Annual Report and Accounts 2023

133

Audit Committee Report continued

Risk management and internal controls
The Committee maintains oversight of the risk
management and internal control framework and
systems (including financial, operational and compliance
controls) and monitors its effectiveness, reporting back
to the Board, who has ultimate responsibility to the
shareholders for the Group’s system of internal control
and risk management. While not providing absolute
assurance against material misstatements or loss, this
system is designed to identify and manage those risks
that could adversely impact the achievement of the
Group’s objectives. The Group’s risk management
structure and process is detailed on pages 88 and 89.
The Group’s emerging risks are detailed on page 90
and the principal risks and uncertainties are
detailed on pages 91 to 97.

The Committee regularly reviews the ongoing process
in place for identifying, evaluating and managing the
emerging and principal risks faced by the Group and
for determining the nature and extent of the risks it is
willing to take in achieving its strategic priorities. This
risk framework is in accordance with the Guidance
on Risk Management, Internal Control and Related
Financial and Business Reporting.

Our governance model was strengthened in 2022,
with the appointment of a new Director of Risk &
Compliance, separating the Risk and Internal Audit
functions and enhancing the assurance framework.
This enhancement of our risk management and
internal controls framework will allow each function
to continue to evolve and strengthen.

Regular reporting to the Committee by the Director of
Internal Audit & Assurance, as well as findings of internal
audits by circulation between meetings, ensures that
there is a good understanding of any non-compliance
that arises and the swift action being taken to close any
gaps. The Group’s external Auditor, PwC, has audited
the financial statements and has reviewed the financial
control framework to the extent considered necessary
to support the audit report.

The Committee is satisfied that the risk management
and internal control framework remains robust and
effective, while still allowing autonomous and agile
decision-making which is essential to Halma’s
decentralised structure and an integral part of Halma’s
growth strategy. No significant failings or weaknesses
have been identified in the internal controls.

Whistleblowing
The Committee has responsibility for reviewing the
adequacy and security of the Group’s arrangements
for employees and contractors to raise concerns about
possible improprieties in financial reporting, fraud or
other financial or ethical misconduct.

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Halma plc | Annual Report and Accounts 2023

Halma has appointed an external third-party provider,
NavexGlobal, to operate a confidential, multilingual,
telephone and web reporting service, 24/7, through
which concerns can be raised. Further details are set
out in the non-financial information statement on
page 99.

The Director of Risk & Compliance receives and reviews
all reports to ensure that they are appropriately
investigated and all allegations of fraud or financial
misconduct are reported to the Committee. In line
with many listed companies, most matters reported
through the NavexGlobal service relate to personnel/
HR matters and, while these are not areas for review by
the Committee, such matters are duly investigated in
the same manner and reported directly to the Board
in its role of monitoring culture and workforce concerns.

Following a review during the year, the Committee
is satisfied with the adequacy and security of the
arrangements in place for concerns to be raised.

Climate-related disclosures
The Committee has overall responsibility for approving
the disclosures made under the climate-related Listing
Rule 9.8.6R(8). The Committee has continued to receive
updates throughout the year on progress made against
reporting on the climate-related disclosures. These are
consistent with the TCFD recommendations and the 11
recommended disclosures under TCFD, as required by
the Listing Rules.

Internal Audit
The Internal Audit & Assurance function comprises the
Director of Internal Audit & Assurance and five audit
managers – two based in the UK, two in the US and one
in China. External co-source is also utilised for certain
specialist areas as required, such as Cyber risk. A risk-
based audit work plan is agreed by the Committee
annually and takes account of the rotational visits
undertaken by the external Auditor under their audit
programme. Progress against the work plan is reviewed
at each Committee meeting, in order that any changes
in priorities or resourcing can be discussed and agreed.
Pulse checks were successfully introduced as part of
the 2022/23 annual audit plan to provide an additional
assurance snapshot. These are shorter verbal assurance
touchpoints that take place mid-way between full
audits. Pulse checks are also used for companies
acquired and are performed six months after the
date of acquisition to check progress, followed by a
full audit at 12 months.

The Committee has oversight of the Internal Audit &
Assurance budget and resources available and it has
satisfied itself that the Internal Audit & Assurance
function has the appropriate level of resources and
funds available to undertake its role. All Internal
Audit reports are issued to management and the
external Auditor.

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Financial
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Other
Information

Any reports which contain high priority findings which
require immediate management action are circulated
to the Committee with commentary from the Chief
Financial Officer on the underlying issues and remedial
or mitigating actions being taken to address
the findings.

Evaluation of the effectiveness and quality of the
Internal Audit function
The effectiveness of the Internal Audit function is
monitored throughout the year, including through:

• Progress against the Internal Audit plan – the

Committee review and discuss progress made against
an agreed Internal Audit action plan at each meeting.

Internal audit evaluation process and outcome

• Internal Audit reports to the Committee –
Internal Audit reports are presented at each
Committee meeting for review and discussion.

• Annual review of the Internal Audit & Assurance

charter – the Committee annually review and approve
changes to the Internal Audit & Assurance charter.
• Annual internal effectiveness survey – a tailored
on-line questionnaire is circulated and completed by
Committee members and other senior management
who are engaged in the audit process, the outcomes
of which are reported to the Committee and the Board.
A summary of the process and key findings is set
out below.

Bespoke questionnaire covering

Questionnaire completed by

• The functions’ position and reporting lines.
• Internal audit scope and its relevance to

our business.
• Audit approach.
• Quality of the team.
• Reliability and quality of reporting.
• Use of technology and communication.

• Board members.
• Executive Board members.
• Sector CFOs.
• Group Financial Controller.
• Managing Director for Halma IT.
• Divisional Chief Executives.
• Company Secretary.
• PwC Audit Partner.

Results

Outcome

• The responses from the questionnaire are
collated centrally and a summary of the
findings is provided to the Committee to
consider the overall effectiveness of the
function and any action required.

• Following a review by the Committee of the

output from the 2023 questionnaires and direct
feedback from the Chief Financial Officer and
the Chair, the Committee concluded that the
quality, experience and expertise of the
Internal Audit function is effective.

Fair, balanced and understandable
To ensure that the report and accounts are fair,
balanced and understandable, the Committee considers
the output from a series of focused exercises that take
place during the Annual Report and Accounts production
process. These can be summarised as follows:

• A qualitative review, performed by the Group’s Finance
and Secretarial functions, of disclosures and a review of
internal consistency throughout the Annual Report and
Accounts. This review assesses the Annual Report and
Accounts against objective criteria drawn up for each
component of the requirement (individual criteria that
indicate ‘fairness’, ‘balance’ and ‘understandability’ as
well as criteria that overlap two or more components).
• A risk comparison review which assesses the consistency
of the presentation of risks and significant judgements
throughout the main areas of risk disclosure in the
Annual Report and Accounts.

• A formal review of all Board and Committee meeting
minutes by the Company Secretary to ensure that all
significant issues are appropriately reflected and
given due prominence in narrative reporting.

• Availability to the Committee of the key working

papers and results for each of the significant issues
and judgements considered by the Committee in
the period.

The Directors’ statement on a fair, balanced and
understandable Annual Report and Accounts is set
out on page 168.

Carole Cran
Committee Chair

For and on behalf of the Committee 15 June 2023

Halma plc | Annual Report and Accounts 2023

135

Remuneration Committee Report

Jo Harlow
Remuneration Committee Chair

Principal Role and Responsibilities
The Committee is appointed by the Board and
operates under written terms of reference, which
are available at www.halma.com.

The primary responsibilities of the Remuneration
Committee are to:

• Make recommendations to the Board on the
framework for Executive Director and senior
executive remuneration based on proposals
formulated by the Group Chief Executive.

• Determine and agree with the Board the policy and
framework for the remuneration of the Chair, Group
Chief Executive, other Executive Directors, members
of the Executive Board and the Company Secretary.
• Have oversight of the remuneration arrangements

of the management tier below Executive Board level.
• Ensure alignment between incentives and company

culture.

• Approve the design of, and determine targets for,
any performance-related pay plans operated by
the Company and agree the total annual payments
made under such plans.

• Review the design of all share incentive plans for
approval by the Board and shareholders, and
determine, each year, whether awards will be made,
and if so, the overall amount of such awards, the
individual awards to Executive Directors, other senior
executives and the performance targets to be set.

• Determine the policy for, and scope of, pension

arrangements for each Executive Director and other
senior executives.

Committee composition and attendance

Eligible

Attended

Jo Harlow (Chair)

Carole Cran

Dame Louise Makin

Dharmash Mistry¹

Sharmila Nebhrajani OBE¹

Tony Rice

Roy Twite

1 Dharmash and Sharmila were unable to attend one Committee meeting

due to prior commitments.

Committee Composition
The Committee schedules four routine meetings a
year but will meet more often, if required. Due to the
level of activity during the year, the Committee met
formally seven times. Attendance at each Committee
meeting is set out in the table above.

Only members of the Committee have the right
to attend Committee meetings. The Group
Chief Executive, the Group Talent, Culture and
Communications Director and Head of Total Rewards
attend Committee meetings by invitation but are not
present when their own remuneration is discussed.
The Committee also takes independent professional
advice as required.

The Committee comprises of the non-executive
Directors set out in the table above, with Jo Harlow
as Chair. All members of the Committee are
considered independent within the definition set
out in the Code. No member of the Committee has
any personal financial interest in Halma (other than
as shareholders), conflicts of interests arising from
cross directorships or day-to-day involvement in
running the business.

136

Halma plc | Annual Report and Accounts 2023

Strategic
Report

Governance

Financial
Statements

Other
Information

On behalf of the Board, I am pleased to present our
Directors’ Remuneration Report for the year ended
31 March 2023. This statement sets out the work of
the Committee during the year and provides context
for the decisions taken.

The context of remuneration in 2023
Our performance
Our Sustainable Growth Model (delivering sustainable
growth, consistently high returns and positive impact)
and in particular our DNA (combination of our
decentralised organisational model and culture),
continue to be critical in delivering our strong
performance, as Halma reports its 20th consecutive
year of profit growth, delivering 44 consecutive years
of dividend per share growth of 5% or more.

Over the last year, we delivered continued high returns
and strong growth. Revenue and adjusted profit grew
by 21% and 14% respectively and Adjusted earnings per
share increased by 17%. Return on Sales of 19.5% was
within our KPI target range of 18-22% and Return on
Total Invested Capital (ROTIC) of 14.8% remained well
above our Weighted Average Cost of Capital estimated
at 8.9%. Our total shareholder return has continued to
outperform the FTSE 100 index, with an investment of
£100 in Halma shares on 28 March 2013 worth £485.6
on 31 March 2023, compared to £174.1 for a similar
investment in the FTSE 100 index.

These results have been delivered despite challenging
markets, the continuing conflict in Ukraine and the
resulting energy crisis, demonstrating the resilience
of the Halma business model.

Our people
Halma’s people remain its most important asset and we
continue to believe that our people should be rewarded
appropriately. The Committee reviews various aspects
of the wider workforce’s remuneration and considers
such information when determining the approach to
executive pay. Many Halma employees have been, and
continue to be, impacted by inflationary pressures and
the cost-of-living crisis and we are proud of the support
that Halma companies have given their employees
during this time. Halma also continues to pay the Real
Living Wage across its UK operations and this will be the
third year that we have published details of our mean
gender pay gap for the employees across two of our
largest regions (the UK and the USA), with a reduction
to 18.7% from 20% disclosed last year. Examples of cost
of living support and details of Halma’s mean gender
pay gap can be found on pages 66 to 71 in the section
on Our people and culture.

As part of the Committee’s commitment to workforce
engagement, my non-executive Director colleagues and
I held sessions with a cross-section of employees on site
visits to some of our companies. A breakfast meeting
was also held with select employees at Accelerate
Halma, our group-wide leadership conference, held in
October 2022. At these sessions we had productive
conversations on the role of the Remuneration

Committee, executive and employee remuneration
and a range of other topics including job satisfaction
and company culture. Employees were candid and
constructive in their views which gave us insight into
the effectiveness of Halma’s approach to remuneration
and employee satisfaction.

Remuneration outcomes for 2023
Bonus
Bonuses for 2023 were based on three metrics below:

• Economic Value Added (EVA) – Performance against
a weighted average target of EVA for the past three
years, representing 90% of overall bonus opportunity.
• Diversity, Equity and Inclusion (DEI) – Gender balance

on the boards of individual Halma companies,
representing 5% of overall bonus opportunity.

• Climate Change – Annual improvement in

energy productivity (Revenue / energy consumed),
representing 5% of overall bonus opportunity.

The Committee considered the targets to be demanding,
appropriate and material to stakeholder value-creation.
The formulaic outcomes across all three metrics are set
out below, with one third of the total payout deferred
into shares which will become available after two years:

Metric
(Weighting)

2023 achievement as
a % of maximum
outcome for CEO

EVA
(90%)

DEI
(5%)

Climate
Change
(5%)

Total

71.8%

100%

69.7%

The Committee believes that the EVA formulaic
outcome was appropriate and payout reflects the
robust performance of the business through the
previous three years. The Committee also reviewed the
Climate Change outcome carefully and we are satisfied
that Halma’s underlying performance justifies the
payout in respect of this metric. There will be no payout
in respect of DEI. You will find further details of all the
performance metrics on page 145 of the report.

Executive Share Plan (ESP)
For the 2020 ESP award, the two performance metrics,
measured over a three-year period are:

• Growth in Adjusted earnings per share (EPS),

with a 50% weighting.

• Average Return on Total Invested Capital (ROTIC),

with a 50% weighting.

The targets were set to reflect the impact of the COVID
pandemic and details can be found on page 146.

The three-year performance for average ROTIC (14.67%)
and Adjusted EPS growth over the three-year period
(10.16%) have been strong and are reflected in
94.79% vesting.

Metric
(Weig h t i n g)

Vesting

Adjusted
EPS Growth
(50%)

ROTIC
(50%)

Total

50.00% 44.79% 94.79%

Halma plc | Annual Report and Accounts 2023

137

Remuneration Committee Report continued

The Committee reviewed the topic of windfall gains for
the 2020 grant and it determined that as a result of the
share price increase at the time of grant, there was no
windfall gain concern. It was therefore the view of the
Committee that the formulaic vesting should proceed
without any adjustments.

As has been highlighted since the 2020 grant, the
Committee considers the targets for this award to
be stretching.

In line with the 2018 Corporate Governance Code
(Code), the Committee reviewed the outcomes of the
individual incentive plans (annual bonus and ESP) as well
as the overall levels of remuneration to ensure that they
remained consistent with the underlying performance of
the business. The Committee is satisfied that the total
remuneration received by Executive Directors in respect
of the year ended 31 March 2023 is a fair reflection of
performance over the period and no use of discretion
is warranted.

Pension
The maximum employer pension contribution rate for
UK employees is 10.5% of salary, along with a generous
contribution structure that encourages our employees –
especially our lowest paid – to save for their retirement.
In line with prior commitments made by the Company,
company pension contributions for the Executive
Directors were reduced on 31 December 2022 to align
with the UK wider workforce rate of 10.5% of salary.

Executive Director changes
Andrew Williams stepped down as Group Chief
Executive on 31 March 2023. He will retire and step down
from the Board on 30 June and will continue to be paid
in line with the Remuneration Policy until his retirement.
On this basis, Andrew remains eligible to receive a bonus
payable in June 2023, in respect of the 2023 financial
year, that has just concluded. No bonus will be accrued
or paid for the 2024 financial year and he will not receive
an ESP award in June 2023. Further details of Andrew’s
leaving arrangements are set out on page 144.

Marc Ronchetti began his role as CEO Designate on
16 June 2022 and became Group Chief Executive
effective 1 April 2023 with a salary of £900,000. The
Committee’s decision on salary reflected that Marc’s
total remuneration for the next few financial years will
be substantially lower than Andrew Williams, had
Andrew remained in post, assuming the same level of
performance. This is the case as Marc’s inflight share
awards and deferred bonus shares are lower and
reflective of his previous Chief Financial Officer role.
Marc will also not be eligible to receive a salary increase
until June 2024. The Committee’s decision was discussed
with shareholders as part of the consultations outlined
below. They agreed the package was not excessive and
no concerns were raised. You can find details of his
package on pages 148 and 149.

Steve Gunning began employment with Halma
on 16 January 2023 as Chief Financial Officer
and he received an ESP award in February 2023.

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Halma plc | Annual Report and Accounts 2023

Steve’s package is set out on page 144. His annual bonus
and ESP opportunity are in line with our Policy, with the
annual bonus for 2023 pro-rated to reflect his period
of employment.

Salary
The table below sets out the position for the Executive
Directors over the 2023 financial year.

Executive Director

Group Chief Executive

CEO Designate

Chief Financial Officer

Base Salary

£900,000

£673,750

£600,000

Group Talent, Culture and Communications Director

£460,000

Chair and non-executive Director Fees
The Committee carried out a benchmarking review of
the Chair’s fees and the Committee was unanimous in
approving an inflationary increase of 3.2% and you will
find details of this on page 149.

Following a review, the Board agreed to leave the fees
for the non-executive Directors unchanged and you will
find more details of this on page 149. The next review will
be carried out in late 2023 and any change effective
from 1 January 2024.

Shareholder engagement
At the July 2022 Annual General Meeting (AGM), 67.14%
of shareholders voted in support of the Remuneration
Report resolution. In accordance with Code requirements,
as more than 20% of votes were cast against the Board
recommendation for this resolution, an interim update
was announced and we consulted with our shareholders
to understand the reasons behind the voting outcome.
I set out below further key points on that shareholder
consultation process:

• After the AGM, we wrote to shareholders representing
over 55% of issued share capital to understand their
perspectives on the AGM outcome. We met shareholders
representing circa 30% of the share capital. The
shareholders we met represented a cross-section
of investors – diverse by voting outcomes, size of
shareholding, geography and investor type (index funds
vs active managers), including a good number of ESG
focused funds. We are pleased that we saw a mix that
is broadly reflective of the types of holdings on our
wider register.

• At these meetings, we outlined Halma’s continuing
strong profit and valuation growth over the past
twenty years. We explained that succession risk was
an important part of the rationale for the variable pay
reset in the 2021 policy and salary reset implemented
over two years, in 2021 and 2022. We also shared details
of how the Committee’s decision-making, leading up to
the 2022 salary increase implementation, was informed
by the Executive Director succession planning process.
Specifically, the decisions made supported the
Committee’s need to ensure that Halma had the

Strategic
Report

Governance

Financial
Statements

Other
Information

necessary remuneration tools to recruit in the external
market and the urgency of this goal was not disclosable
to shareholders at the time.

• We discussed the use of the FTSE 100 (excluding

financial services) as the appropriate benchmark for
establishing a competitive pay offering. We highlighted
the difficulty of defining a specific comparator group
that would cover the Safety, Environmental & Analysis
and Healthcare sectors in which Halma competes for
business and talent. Positioning Halma Executive
Director remuneration at the median of the FTSE 100
(excluding financial services) continues to ensure Halma
maintains the level of pay that supports the current
talent retention needs as well as the company’s current
size and future growth ambitions.

• The outcome of having achieved market alignment on
pay in 2022 was that Halma was able to hire Steve
Gunning, an experienced FTSE 100 CFO to replace the
Chief Financial Officer role vacated by Marc Ronchetti.
Improving the competitiveness of executive pay was a
major factor in being able to execute an effective
Group Chief Executive and Chief Financial Officer
transition plan. The details of the remuneration of our
Group Chief Executive and Chief Financial Officer were
shared with shareholders. We highlighted that these
individuals would not receive salary increases in the
2024 financial year, with their next review effective
1 June 2024 (see table to the right), demonstrating
Halma’s return to restraint following the remuneration
reset. We also flagged that Marc’s total remuneration
for the next few financial years will be substantially
lower than Andrew Williams, had Andrew remained
in post, assuming the same level of performance.
Shareholders acknowledged that the remuneration
packages were competitive but not excessive and
appreciated the Company’s commitment to return to
restraint. No further concerns or suggested changes
were raised in relation to this.

• We had open and constructive conversations with

shareholders on the voting outcome. The shareholders
we spoke to were able to appreciate that succession risk
was best addressed by the two-year phased approach
we adopted to salary changes. The feedback received
was that the rationale was better understood and
shareholders were appreciative of the additional
context the Committee was able to provide in relation
to the Group Chief Executive succession process,
understanding that it was not possible to communicate
this to shareholders until the Group Chief Executive
succession was publicly announced in June 2022.

Remuneration arrangements for 2024
Salary
In line with our historically conservative approach to
remuneration and the timings of appointments, salaries
for our Group Chief Executive and Chief Financial Officer
will remain unchanged through the 2024 financial year.
A salary increase of 3% has been awarded to our Group
Talent, Culture and Communications Director, which is
lower than the average wider workforce increase.

Role

Current position

Position with
effect from
1 June 2023

Group Chief Executive

Chief Financial Officer

Group Talent, Culture and
Communications Director

£900,000

£600,000

£460,000

£473,800

Annual Bonus
Financial metrics – Halma is focused on sustaining
our companies’ growth and returns over the longer
term, while delivering strong performance in the
shorter term. As such, we will continue to use EVA as
the performance metric for the annual bonus as it is
aligned with our business model. This will represent
90% of the overall bonus opportunity.

Non-financial metrics – Positive impact is at the
heart of our business model and this is why we will
also continue to use Climate Change and DEI as non-
financial metrics, each representing 5% of the overall
bonus opportunity.

The Policy provides flexibility to include non-financial
measures in both the ESP and the annual bonus, with up
to 20% of the overall opportunity available to be utilised
for non-financial measures. Reflecting the continuing
development of our sustainability approach, we have
chosen to maintain the 10% weighting on these non-
financial metrics and we will continue to review this
over the financial year.

ESP
The 2024 ESP share awards will be granted as normal,
using Adjusted EPS growth and ROTIC as the performance
metrics based on stretching performance conditions.

We will continue to review whether sustainability-linked
remuneration can be extended to the ESP over time.

Closing remarks
The Committee’s performance was assessed as part
of the annual Committee evaluation. I am pleased to
report that the Committee is regarded as operating
effectively and that the Board takes assurance from
the quality of the Committee’s work.

In closing, I would like to thank the Committee for its
work and support during the year and our shareholders
for the level and quality of engagement over this last
year. Thanks also to our executive team for their decisive
leadership and continued efforts to deliver exceptional
value to our stakeholders. As Andrew retires on 30 June,
I would like to thank him for the invaluable support
he provided in my role as Committee Chair. He will
be greatly missed and I wish him the very best for
the future.

I hope that you find this report helpful and look forward
to your support of the Remuneration Report resolution
at the AGM.

Jo Harlow
Committee Chair

Halma plc | Annual Report and Accounts 2023

139

Remuneration at a glance

We have a strong pay for performance culture
that is aligned to our business model, focused
on sustaining our companies’ growth and
returns over the longer term, while delivering
strong performance in the shorter term.

The components of our Executive Remuneration

Fixed Pay

Short-term
incentive

Long-term
incentive

Total Pay

Salary, benefits & pension
• A fair, fixed remuneration
reflecting the size of the
executive’s responsibilities
which attracts and retains
high calibre talent
necessary for the delivery
of the Group’s strategy.

Annual Bonus
• To incentivise and focus
management on the
achievement of objective
annual targets, which are
set to support the short
to medium-term strategy
of the Group.

Executive Share Plan
• To incentivise executives to
achieve superior returns to
shareholders over a three-
year period rewarding them
for sustained performance
against challenging
long-term targets.

Our performance metrics

Short-term incentive

Long-term incentive

Economic
Value Added
(EVA)

• The use of EVA (profit less a charge for

capital employed) reinforces the Group’s
business objective to double every five
years through a mix of acquisitions and
organic growth. Performance is measured
against a weighted average target of EVA
for the past three years.

Diversity,
Equity
and Inclusion
(DEI)

• Our focus on DEI is the right thing to do
and a critical driver of growth. Following
our success in increasing gender diversity
at the Halma and Executive Boards, our
current focus is on increasing gender
diversity on our company boards.

Climate
Change

• Action on climate change is an important
part of us delivering on our purpose to
grow a safer, cleaner, healthier future for
everyone, every day. Reducing our own
emissions is a key priority for us with
year-on-year improvement in energy
productivity as our target.

Adjusted
EPS Growth

• EPS growth provides a disciplined focus

on increasing profitability and
thereby provides close shareholder
alignment through incentivising
shareholder value creation.

ROTIC

• ROTIC reinforces the focus on capital

efficiency and delivery of strong returns,
thereby further strengthening the
alignment of remuneration with the
Group strategy.

Maximum bonus opportunity: 200% of Salary
(Group Chief Executive), 180% of Salary
(Chief Financial Officer and GTCC Director)

Maximum award: 300% of Salary (Group Chief Executive),
250% of Salary (Chief Financial Officer),
200% of Salary (GTCC Director)

140

Halma plc | Annual Report and Accounts 2023

Strategic
Report

Governance

Financial
Statements

Other
Information

How actual performance compared to targets
Short-term incentive – Annual Bonus

Metric

Weighting

Threshold

Actual

Maximum

2023 CEO Achievement
(% of maximum)

Economic Value Added

90%

£281.7m

£317.8m

£327.7m

71.8%

DEI

Climate Change

33%

29%

10%

–

Overall annual bonus outcome (% of max)

100%

69.7%

Long-term incentive – Executive Share Plan

Metric

Weighting

Threshold

Actual

Maximum

2023 Achievement
(Vesting %)

Adjusted EPS growth over
a three-year period

50%

10.16%

10%

50.00%

Three-year average ROTIC

50%

9.5%

14.67%

15.5%

44.79%

Vesting percentage (2020 Award)

94.79%

Executive Directors’ earnings in 2023
The following charts set out the aggregate emoluments earned by the Executive Directors in the year ended
31 March 2023.

Element

Fixed Pay

Salary

Benefits

Pension supplement

Short-term incentive

Annual Bonus

Long-term incentive

Andrew Williams

Marc Ronchetti

Steve Gunning

Jennifer Ward

1,101

879

28
194

796

666

21
109

147

128

6
13

548

449

24
75

1,254

845

188

577

Executive Share Plan and Share Incentive Plan

1,249

694

476

Total Pay

3,604

2,335

335

1,601

Halma plc | Annual Report and Accounts 2023

141

Annual Remuneration Report

The Annual Remuneration Report sets out details of how the Policy was implemented in the year to 31 March 2023
and the proposed implementation for the next financial year.

Activities during the year
The Committee discharged its duties under its Terms of Reference for the year. During the year, the Committee
met formally seven times and the Committee’s main activities through the financial year are set out below:

• Reviewed the 2022 Directors’ Remuneration Report,

• Discussed shareholder consultation plans and

including narrative on the Real Living Wage,
Gender Pay Gap and the Chief Executive Pay ratio.

reviewed materials to be sent to proxy agencies
and shareholder organisations.

• Approved the 2022 remuneration elements –

• Reviewed details of performance award to be

annual bonus payout and ESP vesting.

• Approved 1 June 2022 merit increases for the

Executive Board.

• Approved the 2023 Remuneration elements –

Annual Bonus and ESP target-setting.

• Reviewed and confirmed the remuneration package
for the Chief Executive Designate and termination
package for Group Chief Executive.

• Reviewed the 2023 Remuneration elements –

annual bonus payout and ESP vesting estimates.

• Approved the US taxpayers schedule to the ESP.
• Confirmed the reduction in cash-in-lieu pension

supplement for the Executive Directors with effect
from 1 January 2023.

• Reviewed and confirmed the remuneration package

for the Chief Financial Officer.

made to Chief Financial Officer in February 2023.
• Discussed wider workforce remuneration, including
a cost of living update and non-executive Director
engagement with employees.

• Received executive remuneration governance
and market updates from our remuneration
consultants, WTW.

• Reviewed the Committee’s Terms of Reference.
• Discussed the 2024 annual bonus targets.
• Reviewed a draft of the Committee Chair’s letter.
• Considered the output of the Committee

effectiveness review.

• Commenced discussions on the 2024 Remuneration

Policy review.

• Discussed agenda items for the Committee
meetings to be held through to June 2024.

External advisers
In June 2020, after a thorough and competitive tender process, WTW was appointed by the Committee as the
independent remuneration adviser and continued in this capacity through the year.

WTW is a member of the Remuneration Consultants’ Group and voluntarily operates under the Remuneration
Consultants’ Group Code of Conduct in relation to executive remuneration consulting in the UK. This is based
upon principles of transparency, integrity, objectivity, competence, due care and confidentiality by executive
remuneration consultants. WTW has confirmed that it has adhered to that Code of Conduct throughout the
year for all remuneration services provided to the Company. Therefore, the Committee is satisfied that the advice
from WTW is independent and objective. The Remuneration Consultants’ Group Code of Conduct is available at
www.remunerationconsultantsgroup.com.

WTW’s fee for the year with respect to executive remuneration matters was £97,300 (2022: £120,766) based on an
agreed fee. WTW also provided services to the Company globally which comprise remuneration benchmarking and
other consultancy advice.

Compliance statement
This Report has been prepared in accordance with the requirements of the Companies Act 2006 and the Large and
Medium-Sized Companies and Groups (Accounts and Reports) Regulations 2008 and subsequent amendments.

The Report also meets the relevant requirements of the Listing Rules of the Financial Conduct Authority and
describes how the Board has applied the Principles relating to Directors’ remuneration in the UK Corporate
Governance Code. No changes are proposed to the Policy, which was approved at the 2021 Annual General
Meeting, but the Directors’ Remuneration Report will be subject to an advisory vote by shareholders at the
2023 Annual General Meeting.

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Report

Governance

Financial
Statements

Other
Information

Shareholder vote at 2021 and 2022 Annual General Meetings
The following table shows the results of the binding vote on the Policy at the 2021 Annual General Meeting held
on 22 July 2021 and the advisory vote on the Directors’ Remuneration Report at the 2022 Annual General Meeting.
The Policy can be found on pages 122 to 128 of the 2021 Annual Report and Accounts, which can be found on our
company website, www.halma.com and a summary is set out in this Report on pages 156 to 163.

Remuneration Policy (2021)

Total number of votes

% of votes cast

Directors’ Remuneration Report (2022)

Total number of votes

% of votes cast

For

Against

Total

Withheld

176,723,996

116,952,309 293,676,305

7,547,634

60.18%

39.82%

100%

196,844,865

96,326,858 293,171,723 12,719,326

67.14%

32.86%

100%

On pages 138 and 139, you will find details of the extensive shareholder engagement that was carried out in relation
to results of the 2022 vote on the Directors’ Remuneration Report. The feedback received was that the rationale
of the 2021 policy changes was better understood and shareholders were appreciative of the additional context
the Committee was able to provide in relation to the Group Chief Executive succession process. Shareholders
acknowledged that the remuneration packages were competitive but not excessive and appreciated the
Company’s commitment to return to restraint.

Remuneration for 2023
Single figure of total remuneration for Executive Directors (audited)
The table below sets out the single figure of total remuneration received by Executive Directors for the years
to 31 March 2022 and 31 March 2023.

Andrew Williams
£000

Marc Ronchetti1
£000

Steve Gunning1
£000

Jennifer Ward
£000

Salary

Benefits2

Pension3

Total Fixed Pay

Annual Bonus4

Executive Share Plan –
Awards5

Share Incentive Plan6

Total Variable Pay

2023

879

194

1,101

1,254

2022

759

197

983

1,553

1,245

826

2023

666

109

796

845

690

2022

482

592

887

458

2,503

2,382

1,539

1,348

Total Pay

3,604

3,365

2,335

1,940

2023

128

147

188

–

188

335

2022

–

2023

449

548

577

472

2022

386

483

711

313

1,053

1,027

1,601

1,510

1 Marc Ronchetti became Chief Executive Designate on 16 June 2022. Steve Gunning joined Halma as Group Chief Financial Officer on 16 January 2023.
2 Benefits: mainly comprises company car /car allowance and private medical insurance.
3 Pension: value based on the Company’s pension contribution, or cash supplement in lieu of pension, during the year.
4 Annual bonus: payment for performance during the year; two thirds is payable in cash and one third is deferred into shares which vest two years from award without

any performance conditions. Table shows total bonus including amounts to be deferred.

5 ESP: Figures relate to awards vesting based on performance to the years ended 31 March 2023 and 2022. For the award vesting for the year ended 31 March 2023,

as the share price on the date of vesting is currently unknown, the value shown is estimated using the average share price over the three-months to 31 March 2023
of 2156p. For the award vesting for the year ended 31 March 2022, these figures have been revised from last year’s report to reflect the actual share price on the
vesting date of 2011p. Table shows total vestings and dividend equivalents in 2023 and 2022 respectively for: Andrew - £37,349 and £20,477, Marc - £20,707 and
£11,352, Jennifer - £14,167 and £7,767.

6 SIP is based on the face value of shares at grant.

Payments to past Directors and payments for loss of office (audited)
No payments were made in the year.

On his retirement from the Board in July 2021, Adam Meyers retained the following interests under the ESP, which
vested during the year:

• 18,039 time pro-rated 2020 ESP shares vesting at 94.79% based on performance to 31 March 2023.
• 3,618 deferred bonus awards granted in 2021 will vest on 28 June 2023.

Halma plc | Annual Report and Accounts 2023

143

Annual Remuneration Report continued

Joining arrangements for Steve Gunning
Steve Gunning began employment with Halma on 16 January 2023 as Chief Financial Officer and details of his
remuneration, which are in line with our Remuneration Policy are set out below:

• He was granted a Performance Share Award in February 2023 under the ESP, which will vest in February 2026,

subject to performance conditions. The award is also subject to a two-year post-vesting holding period.
• His annual bonus for the 2023 financial year, that has just concluded is pro-rated to reflect his period of

employment and his deferred bonus award will be calculated as one-third of the bonus earned.

Leaving arrangements for Andrew Williams
Andrew Williams stepped down as Group Chief Executive on 31 March 2023 and he will retire and step down
from the Board on 30 June 2023 (“Retirement Date”). On this basis and in accordance with his service agreement,
Andrew Williams will continue to be paid in line with the Remuneration Policy until his retirement and he will:

• continue to be paid a salary of £900,000 until Retirement Date.
• remain eligible to receive a bonus payable in June 2023, in respect of the 2023 financial year, that has just

concluded with one-third granted as a deferred bonus award to vest in June 2025, with no attaching further
performance conditions.

• not be paid a bonus for the 2024 financial year.
• not receive an ESP award in June 2023.
• be treated as a good leaver as he is retiring and hence his outstanding ESP awards that are unvested in June 2023

will be time pro-rated to Retirement Date and vest, subject to performance, at their normal vesting date.
• have automatic good leaver reason under the Share Incentive Plan (SIP) rules and as such all SIP shares held

in trust will be transferred at retirement, free of tax and national insurance.

• continue to receive benefits through to the Retirement Date.
• be entitled to payment for any unused and accrued holiday days as at Retirement Date.
• remain subject to the post-cessation shareholding requirements.

Incentive outcomes for 2023 (audited)
Annual bonus in respect of 2023
In 2023, the maximum bonus opportunity for the Group Chief Executive was 200% and 180% of salary for the CEO
Designate, Chief Financial Officer and the Group Talent, Culture and Communications Director.

Annual bonus for all Executive Directors was linked to performance based on the three metrics below:

• Economic Value Added (EVA) – Performance against a weighted average target of EVA for the past three years,

representing 90% of overall bonus opportunity.

• Diversity, Equity and Inclusion (DEI) – Gender balance on the boards of Halma companies, representing 5% of overall

bonus opportunity.

• Climate Change – Annual improvement in energy productivity (Revenue / energy consumed), representing 5% of

overall bonus opportunity.

The Committee felt that the targets were demanding, appropriate and material to stakeholder value.

Operating company directors and other sector and central senior management participate in bonus arrangements
similar to those established for senior executives.

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Financial
Statements

Other
Information

EVA calculation:
Bonuses for the Executive Directors are calculated based on Group profit exceeding a target calculated from the
profits for the three preceding financial years after charging a cost of capital, including on the cost of acquisitions.
As the EVA for each year is utilised for a further three years in the comparator calculations, Executives must
consider the medium-term interests of the Group otherwise there is the potential for an adverse impact on
their capacity to earn a bonus.

Profit for
each year at
constant currency

Minus a
charge on cost
of acquisition

Minus a
charge on working
capital

Equals the EVA
for each year

DEI and Climate Change:
The DEI target is based on progress towards our goal of reaching female representation on the boards of Halma
companies of at least 40% by 31 March 2024. In 2023, maximum payout of 5% of bonus opportunity could have
been achieved with a gender balance figure of 33% or above and nil payout with a figure lower than 33%.

The Climate Change target is based on achieving a stretching range of annual improvement in Energy Productivity.
in 2023, there was a straight line payout between the minimum threshold of 4% (our published target) up to a
maximum threshold of 7%.

Details of both of our non-financial targets for the 2023 financial year are set out in the tables below:

Diversity, Equity and Inclusion

Gender balance on the boards of Halma Companies

Performance

≥ 33%

% payout for performance against target

100%

On / Off Target

Climate Change

Annual improvement in energy productivity

Performance

% payout for performance against target*

Threshold

Maximum

≥7%

* Straight line payout between thresholds and maximum

25%

100%

Details of the bonuses payable (cash and deferred share awards) and performance against all three targets are
provided in the tables below:

Metric

Weighting

Threshold

Actual

Maximum

2023 CEO Achievement
(% of maximum)

Economic Value Added

90%

£281.7m

£317.8m

£327.7m

DEI

Climate Change

33%

29%

10%

–

Overall annual bonus outcome (% of max)

71.8%

100%

69.7%

Halma plc | Annual Report and Accounts 2023

145

Annual Remuneration Report continued

The deferred bonus awards across all three metrics are calculated as one-third of the bonus earned. The number
of shares over which awards will be made will be determined by the share price for the five trading days prior to
the date of award. The value of each individual’s award, relative to their bonus has been fixed as follows:

Executive Director

Andrew Williams

Marc Ronchetti

Steve Gunning (joined the Board on 16 January 2023)

Jennifer Ward

Overall bonus
outcome
(% of salary)

Overall bonus
outcome

(% of maximum) Bonus for 2023

Cash-settled

Value of 2023
deferred
bonus award

139%

125%

31%

125%

69.7% £1,253,955

£835,970

£417,985

69.7% £844,852

£563,235

£281,617

17.4% £188,093

£125,395

£62,698

69.7% £576,819

£384,546

£192,273

Deferred bonus awards will be granted under the ESP in June 2023. These awards will not be subject to any further
performance conditions and will ordinarily vest in full on the second anniversary of the date of grant. Full details
will be provided in next year’s Annual Remuneration Report.

Executive Share Plan (ESP): 2020 Awards (vesting at the end of the year to 31 March 2023)
In July 2020, the Executive Directors received awards of performance shares under the ESP. The performance targets
for these ESP awards were set to reflect the impact of the COVID pandemic on business forecasts at the time of
grant and are set out below. The vesting criteria are 50% EPS-related and 50% ROTIC-related.

Performance conditions for these awards are as follows:

Metric

Adjusted EPS growth1

ROTIC2

Total vesting

Performance level:

% of award vesting3:

Performance level:

% of award vesting3:

1 Adjusted earnings per share growth over the three-year performance period.
2 Average ROTIC over the performance period.
3 There is straight line vesting in between threshold and maximum vesting.

Below Threshold

Threshold

Maximum

<2%

0.0%

<9.5%

0.0%

10% or more

12.5%

9.5%

12.5%

25%

50%

15.5% or more

50%

100%

The three-year period over which these two performance metrics are measured ended on 31 March 2023. Average
ROTIC was 14.67% (the average ROTIC for financial years 2021, 2022 and 2023) and adjusted EPS growth was 10.16%
per annum for the period from 1 April 2020 to 31 March 2023, resulting in vesting of 94.79% of the awards.

The estimated vesting value included in the 2023 single figure of Total Remuneration for Directors is detailed in the
table below:

Executive Director

Andrew Williams

Marc Ronchetti

Jennifer Ward

Interest
held

Face value
at grant

Vesting
%

59,083

32,756

22,411

1,335

740

506

94.79%

Three-month
average price
at year end

2156p

Interest
vesting

56,005

31,049

21,243

Estimated
vesting
value
£000

1,207

669

458

of which value
attributable to
share price
growth
£000

and value
attributable to
corporate
performance
£000

(58)

(33)

(22)

1,265

702

480

Vested awards are net settled, with the appropriate reduction in shares made to cover the employee tax and social
security liability at vesting. Awards normally lapse if they do not vest on the third anniversary of their award. These
awards are subject to a two-year post-vesting holding period. Dividend equivalents accrue over the vesting period
and are paid in cash at the end of the vesting period, and only on those shares that vest.

In line with regulations, the values disclosed above and in the single total figure of remuneration table on page 143
capture the number of interests vesting for performance to 31 March 2023. As the market price on the date of
vesting is unknown at the time of reporting, the values are estimated using the average market value over the
three-month period to 31 March 2023 of 2156p. The actual values at vesting will be trued-up in the next Annual
Remuneration Report.

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Financial
Statements

Other
Information

Incentive Awards granted during 2023 (audited)
Long-term incentive – Executive Share Plan: Performance Share Plan Awards
(granted during the year to 31 March 2023)
On 29 June 2022, the Executive Directors, excluding Steve Gunning were granted awards and on 27 February 2023,
Steve Gunning was granted an award under the ESP. All awards are subject to ROTIC and Adjusted EPS growth
performance over a three-year period measured from 1 April 2022 to 31 March 2025. Specifically, the ROTIC element
will be based on the average ROTIC for 2023, 2024 and 2025. The EPS element will be based on EPS growth from
1 April 2022 to 31 March 2025. These two elements are equally weighted at 50% each. The performance targets
applying to these awards are as set out in the table below:

Metric

Adjusted EPS growth1

ROTIC2

Total vesting

Performance level:

% of award vesting3:

Performance level:

% of award vesting3:

1 Adjusted earnings per share growth over the three-year performance period.
2 Average ROTIC over the performance period.
3 There is straight line vesting in between threshold and maximum vesting.

Below Threshold

Threshold

Maximum

<5%

0.0%

<11%

0.0%

12% or more

12.5%

11%

12.5%

25%

50%

17% or more

50%

100%

The awards vest on the third anniversary of the dates of grant (27 February 2026 for Steve Gunning and 29 June
2025 – For all other Executive Directors) and are subject to a two-year post-vesting holding period.

Executive Director

Andrew Williams

Marc Ronchetti

Steve Gunning (joined the Board on 16 January 2023)

Jennifer Ward

% of salary

300%

250%

200%

Awards
made during
the year

138,904

89,965

68,181

47,208

Five-day
average market
price at
award date
(p)

Face value at
award date
£000

1941

2200

1941

2,696

1,746

1,500

916

Long-term incentive – Deferred Share Awards (granted during the year to 31 March 2023)
On 29 June 2022, the Executive Directors excluding Steve Gunning were granted deferred share awards under the
ESP in respect of one third of the total bonus earned for the financial year ended 31 March 2022. Steve joined Halma
in January 2023 and as such he was not entitled to a bonus or deferred share award in respect of the 2022 financial
year. Awards are not subject to performance conditions as they are deferred awards relating to bonus earned for
the year ended 31 March 2022. Awards vest in full on the second anniversary of the date of grant (29 June 2024).

Executive Director

Andrew Williams

Marc Ronchetti

Jennifer Ward

Five-day
average market
price at
award date

1941p

Awards
made during
the year

26,667

15,237

12,208

Face value at
award date
£000

Bonus to
31 March 2022
£000

Proportion
awarded
in shares

518

296

237

1,553

887

711

33.3%

Halma plc | Annual Report and Accounts 2023

147

Annual Remuneration Report continued

Implementation of the Policy for the year to 31 March 2024
Base Salary, effective 1 June 2023
In line with our historically conservative approach to remuneration, salaries for our Group Chief Executive and
Chief Financial Officer will remain unchanged through the 2024 financial year, with next salary reviews carried out
with effect from 1 June 2024. A salary increase of 3% (lower than the wider workforce increase) has been awarded
to our Group Talent, Culture and Communications Director.

Andrew Williams retires and steps down from the Board on 30 June 2023.

Remuneration arrangements for Marc Ronchetti
Marc Ronchetti began his role as CEO Designate on 16 June 2022 on a salary of £700,000 and prior to that he was
on a salary of £574,000 as Chief Financial Officer. On 1 April 2023, he became Group Chief Executive on a salary
of £900,000 and he will not be eligible for a salary increase until June 2024.

The Committee’s decision on salary reflected the fact that Marc’s total remuneration for the next few financial
years will be substantially lower than Andrew Williams, had he remained in post, assuming the same level of
performance. Marc’s remuneration was discussed with shareholders as part of consultation. They agreed the
package was not excessive and no concerns were raised.

Executive Director

Andrew Williams (until 30 June 2023)

Marc Ronchetti

Steve Gunning (joined the Board on 16 January 2023)

Jennifer Ward

Salary for
2024

£900,000

£600,000

£473,800

Salary for
2023

£900,000

£673,7501

£600,000

£460,000

1 This is a prorated salary allowing for Marc’s role as Chief Financial Officer for 2.5 months and as Chief Executive Designate for 9.5 months of the 2023 financial year.

Pension and benefits
The maximum employer pension contribution rate for UK employees is 10.5% of salary, along with a generous
contribution structure, benefiting our lowest paid the most.

Pension cash supplements for Executive Directors will be 10.5% of salary in line with the maximum rate offered
to UK employees.

Annual bonus
The maximum annual bonus opportunity for 2024 is 200% of salary for the Group Chief Executive and 180% of
salary for the other Executive Directors. One third of the bonus earned will be deferred into a share award which
vests in full after two years. Bonus payments will be subject to malus and clawback during a period of three years
from the date of payment.

Bonuses for 2024 will be based on EVA performance against a weighted average target of EVA for the past three
years. We will also continue to use the two non-financial targets on Diversity, Equity and Inclusion (DEI) and Climate
Change. The weightings for EVA performance, DEI and Climate Change will be 90%, 5% and 5% respectively.

For DEI, we remain committed to our stretch target of achieving at least 40% gender balance on our company
boards by March 2024 and you can find more details on this on pages 67.

The Climate Change target is based on achieving a stretching range of Energy Productivity improvement, linked
to our published target of 4% straight line annual improvement from the 2022 financial year. The target requires
progress to be made from the 2023 result. Further details can be found on pages 78 and 79 of the Sustainability
section and page 87 of the TCFD Statement.

As financial targets are commercially sensitive, they are not disclosed at this time but will be in next year’s
Annual Report on Remuneration.

The Remuneration Committee must be satisfied that Halma’s underlying performance over the financial year
justifies the payout. When making this judgement the Committee has scope to consider such factors as it deems
relevant. The Committee believes that this approach will ensure fairness to both shareholders and participants.

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Financial
Statements

Other
Information

Long-term incentive – Executive Share Plan: Performance Share Awards (to be granted)
Under the ESP, performance share plan awards and deferred bonus awards will be made in June 2023, based on
the Policy. The number of shares over which awards will be made is determined by the average share price for
the five trading days prior to the date of award. The value of each performance share award is as follows:

Executive Director

Marc Ronchetti

Steve Gunning

Jennifer Ward

Salary for
2024

Performance
Share Award

Value of
Award

£900,000

£600,000

£473,800

300%

250%

200%

£2,700,000

£1,500,000

£947,600

The performance share awards will be subject to an Adjusted EPS growth performance target for 50% of the award
and a ROTIC target for 50% of the award measured over the three financial years 2023, 2024 and 2025. In line with
the current accounting treatment for Software as a Service (SaaS) investments under IAS 38, we will include the
SaaS costs within the calculations as they fall.

The full performance conditions are set out in detail below.

Metric

Adjusted EPS growth1

ROTIC2

Total vesting

Performance level:

% of award vesting3:

Performance level:

% of award vesting3:

1 Adjusted earnings per share growth over the three-year performance period.
2 Average ROTIC over the performance period.
3 There is straight line vesting in between threshold and maximum vesting.

Below Threshold

Threshold

<5%

0.0%

<9.5%

0.0%

12.5%

9.5%

12.5%

25%

Maximum

12% or more

50%

15.5% or more

50%

100%

Chair and non-executive Director fees
A review of the non-executive Directors’ fees was carried out in January 2023 and the Board made a decision not to
make any changes. A market review was carried out in respect of our Chair’s fee, which was subsequently increased
with effect from January 2023. Fees are subject to an annual review in January.

Fees

Chair

Base fee

Senior Independent Director

Audit Committee Chair

Remuneration Committee Chair

Committee Member

Annual fees for 2023

Annual fees for 2022

£419,000

£406,000

£75,000

£20,000

£nil

£75,000

£20,000

£nil

Halma plc | Annual Report and Accounts 2023

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Annual Remuneration Report continued

Single figure of total remuneration for non-executive Directors (audited)
The following table sets out the total remuneration for the Chair and the non-executive Directors for the year end
31 March 2023.

Non-executive Director1

Dame Louise Makin

Roy Twite

Tony Rice

Carole Cran

Jo Harlow

Dharmash Mistry

Sharmila Nebhrajani OBE

1 Fees have been rounded to the nearest £1,000

2023
£000

409

2022
£000

297

Group Chief Executive Pay ratio
The following table sets out our Group Chief Executive’s pay ratios as at 31 March 2023. All figures are calculated
using pay and benefits data for the year to 31 March 2023 and for part-time employees, the full-time equivalent
salary and benefits are used.

Year

2023

Method

Option A

25th Percentile:
pay ratio,
total pay and benefits,
(salary)

50th Percentile:
pay ratio,
total pay and benefits,
(salary)

75th Percentile:
pay ratio,
total pay and benefits,
(salary)

138:1

£26,155

(£23,360)

104:1

£34,781

(£30,882)

68:1

£53,343

(£46,789)

Historical Information

2022

2021

2020

Option A

145:1

141:1

183:1

110:1

139:1

70:1

68:1

86:1

25th Percentile:
pay ratio

50th Percentile:
pay ratio

75th Percentile:
pay ratio

Option A was chosen again this year as it is the most statistically accurate method, considered best practice by the
Government, in line with shareholder expectations and is directly comparable to the Chief Executive’s remuneration.
This method requires calculation of pay and benefits for all UK employees using the same methodology that is used
to calculate the Group Chief Executive’s single figure per the table on page 143.

Commentary
We are satisfied that the median pay ratio reported this year is consistent with our wider pay, reward and
progression policies for employees.

The Group Chief Executive is remunerated predominantly on performance-related elements (bonus and share awards),
based on the delivery of strong returns. Compared to last year, the Chief Executive’s single figure has increased as a
result of the higher base salary and vesting percentage for the 2020 award, compared to the 2019 award. However,
this increase has been partially offset by the lower bonus outturn. In contrast, there has been a higher increase of
employee total pay at the 25th, 50th and 75th percentiles, resulting in lower Group Chief Executive pay ratio figures
for the year, compared to last year.

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Financial
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Other
Information

Directors’ pensions (audited)
Andrew Williams is the only UK Executive Director who is a deferred member of the defined benefit section of the
Halma Group Pension Plan. This benefit is a funded final salary occupational pension plan registered with HMRC,
providing a maximum pension of two thirds of final pensionable salary after 25 or more years’ service at normal
pension age (60).

Up to 5 April 2006, final pensionable salary was the greatest salary of the last three complete tax years immediately
before retirement or leaving service. From 6 April 2011, final pensionable salary was capped at £139,185 and is
increased annually thereafter by the increase in CPI (£174,586 for 2023).

Bonuses and other fluctuating emoluments and benefits-in-kind are not pensionable nor subject to any pension
supplement. The Plan also provides a pension in the event of early retirement through ill-health and a dependant’s
pension of one-half of the member’s prospective pension.

Early retirement pensions, currently possible from age 55 with the consent of the Company and the trustees of
the Plan, are subject to actuarial reduction. Pensions in payment increase by 3% per annum for service up to
5 April 1997, by price inflation (subject to a maximum of 5%) through to 31 March 2007 and 3% thereafter.

The Company closed the Defined Benefit section to future accrual with effect from 1 December 2014 and, in
April 2014, Andrew Williams chose to cease future service accrual in the Plan in return for a pension supplement
on his base salary. This supplement was equivalent to a 20% employer contribution plus an additional 6%
compensatory payment, in line with the enhanced contribution rate offered to other members who were
in the Defined Benefit section when future accrual was ceased.

Marc Ronchetti and Jennifer Ward were not members of the Defined Benefit section but are entitled to join the
Defined Contribution section of the plan. However, until 31 December 2022, due to annual allowance and lifetime
allowance restrictions, both Jennifer and Marc opted to receive a pension supplement of 18.7% of salary, in lieu
of the 20% employer contribution that the Company would otherwise pay into their pension.

With effect from 1 January 2023, Executive Directors’ voluntarily lowered their pension supplements to 10.5%
of salary.

Steve Gunning, our new Chief Financial Officer is entitled to join the Defined Contribution section of the plan
but due to lifetime allowance restrictions, he receives a cash-in-lieu pension contribution of 10.5% of salary.

Andrew Williams accrued benefits under the Company’s defined benefit pension plan during the year as follows.

Executive Director

Andrew Williams

Years of
pensionable
service at
31 March
2023

Increase
in accrued
benefits
£000

Increase
in accrued
benefits net
of inflation
£000

Accrued
benefits at
31 March
2023
£000

0.8

–

Age at
31 March
2023

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Annual Remuneration Report continued

Percentage change in Directors’ remuneration versus employees
The table below shows the percentage change in the salary/fees, bonus outcomes and benefits of the Directors
for 2023, 2022 and 2021. This is compared to the average percentage change in remuneration for other Halma plc
employees over three financial years.

Other Halma plc
Employees

Executive Directors

Andrew Williams

Marc Ronchetti

Steve Gunning (joined the Board on 16
January 2023)

Jennifer Ward

Non-executive Directors

Dame Louise Makin1

Roy Twite

Tony Rice

Carole Cran

Jo Harlow

Dharmash Mistry

Sharmila Nebhrajani OBE

Salary / fees
(% change)

2023

2022

2021

16%

38%

–

19%

–

(5%)

–

2023

–

Benefits
(% change)

2022

Annual Bonus
(% change)

2021

2023

2022

2021

(2%)

(36)% 230%

(43%)

(13%)

(17%)

(6%)

(19%)

218%

41%

(5%)

187%

(40%)

–

16%

19%

(5%)

(3%)

(19%)

187%

(40%)

38% 3612%

19%

27%

20%

27%

20%

217%

13%

15%

13%

15%

–

(5%)

(16%)

(5%)

10%

–

1 Dame Louise Makin was appointed as non-executive Director on 9 February 2021 and became Chair at the AGM on 22 July 2021 as evidenced by the change in

percentage in financial year 2022.

Relative importance of spend on pay
The table below shows the percentage change in total employee pay expenditure and shareholder distributions
(i.e. dividends and share buybacks) from the financial year ended 31 March 2022 to the financial year ended
31 March 2023.

Distribution to shareholders

Employee remuneration (gross)

2023
£m

76.3

536

2022
£m

71.5

430

%
change

6.7%

24.7%

The Directors are proposing a final dividend for the year ended 31 March 2023 of 12.34p per share (2022: 11.53p).

Pay-for-performance
The 10-year graph on the next page shows the Company’s Total Shareholder Return (TSR) performance over the
10 years to 31 March 2023 as compared to the FTSE 100 index. Over the period indicated, the Company’s TSR was
386% compared with 74% for the FTSE 100. The table below the graph details the Group Chief Executive’s single
figure remuneration and actual variable pay outcomes over the same period.

The FTSE 100 has been selected because the Company believes that the constituent companies of this index are the
most appropriate for this comparison as they are affected by similar commercial and economic factors to Halma.

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Halma was a constituent of the FTSE 250 until December 2017 when it became a constituent of the FTSE 100.

Total Shareholder Return
Graph as rebased to 100

750

600

450

300

150

0
31 March
2013

% increase

386%

74%

31 March
2014

31 March
2015

31 March
2016

31 March
2017

31 March
2018

31 March
2019

31 March
2020

31 March
2021

31 March
2022

31 March
2023

Halma

FTSE 100

Andrew Williams’
single figure
remuneration (£000)

Annual bonus
outcome (% of
maximum)

ESP vesting outcome
(% of maximum)

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

£1,543

£2,006

£2,423

£2,337

£3,429

£3,954

£3,912

3,258

£3,365

£3,604

37%

53%

34%

89%

100%

81%

48%

100%

70%1

74%

78%

95%

92%

90%

91%

74%

61%

95%1

1 Rounded to whole percentage figures.

Directors’ interests in Halma shares(audited)
The interests of the Directors in office through the year ended 31 March 2023 (and their connected family members)
in the ordinary shares of the Company at the following dates were as follows:

Current Directors

Dame Louise Makin

Andrew Williams

Marc Ronchetti

Steve Gunning

Jennifer Ward

Roy Twite

Tony Rice

Carole Cran

Jo Harlow

Dharmash Mistry

Sharmila Nebhrajani OBE

31 March
2023

31 March
2022

10,000

763,286

736,199

67,225

15,731

44,590

4,000

20,000

2,000

2,563

–

51,621

–

33,412

4,000

16,939

2,000

–

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Annual Remuneration Report continued

Directors’ interests in Halma share plans (audited)
Details of Directors’ outstanding deferred share awards (DSA), conditional share awards (ESP) and free shares under
the SIP are outlined in the tables below:

Executive Share Plans

Andrew Williams

Marc Ronchetti

Steve Gunning

Jennifer Ward

Date of
grant

ESP

01-Jul-19

28-Jul-20

DSA

28-Jul-20

ESP

28-Jun-21

DSA 28-Jun-21

ESP

23-Jul-21

DSA 27-Jun-22

ESP

27-Jun-22

01-Jul-19

28-Jul-20

DSA

28-Jul-20

ESP

28-Jun-21

DSA 28-Jun-21

ESP

23-Jul-21

DSA 27-Jun-22

ESP

27-Jun-22

27-Feb-23

01-Jul-19

28-Jul-20

DSA

28-Jul-20

ESP

28-Jun-21

DSA 28-Jun-21

ESP

23-Jul-21

DSA 27-Jun-22

ESP

27-Jun-22

As at
1 April
2022

65,264

59,083

11,925

49,156

5,943

35,542

36,182

32,756

7,593

27,252

3,773

17,531

24,755

22,411

6,057

18,645

3,018

10,043

Granted/

(vested)

in the year

(40,072)

(11,925)

26,667

138,904

(22,215)

(7,593)

15,237

89,965

68,181

(15,199)

(6,057)

12,208

47,208

Five-day
average share
price on grant
(p)

2045.6

2259.6

2715.9

2787.8

1941.2

2045.6

2259.6

2715.9

2787.8

1941.2

2200.0

2045.6

2259.6

2715.9

2787.8

1941.2

As at
31 March
2023

–

59,083

–

49,156

5,943

35,542

26,667

138,904

–

32,756

–

27,252

3,773

17,531

15,237

89,965

68,181

–

22,411

–

18,645

3,018

10,043

12,208

47,208

The balance of ESP awards that did not vest during the year have lapsed.

The DSAs do not have any attaching performance conditions. The performance conditions attached to the 2019,
2021 and 2022 ESP awards are described earlier in this Report, on page 147. The 2020 ESP awards have the different
performance conditions as a result of the adjustment that was made (at the time of grant) to align targets with
the changes to the business forecasts due to the COVID pandemic and these are set out on page 146 of this Report.

Share Incentive Plan

Andrew Williams

Marc Ronchetti

Jennifer Ward

Date of
grant

01-Oct-20

01-Oct-21

01-Oct-22

01-Oct-20

01-Oct-21

01-Oct-22

01-Oct-20

01-Oct-21

01-Oct-22

As at
1 April
2022

150

127

150

127

150

127

Granted in the
year

Share price
on award
(p)

As at
31 March
2023

2397

2820

2011

2397

2820

2011

2397

2820

2011

179

150

127

179

150

127

179

150

127

179

The SIP shares are held in trust and become the employee’s, subject to the rules of the plan, after three years. There
are tax benefits for retaining the shares in the trust for at least five years from award date. Steve Gunning joined
Halma on 16 January 2023 and will be due SIP shares with effect from 1 October 2023.

There have been no variations to the terms and conditions for share awards during the financial year.

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Share Ownership Guidelines
Executive Directors are expected to build a holding in the Company’s shares to a minimum value broadly equivalent
to their ESP award maximum opportunity: 300% for Group Chief Executive, 250% for Group Chief Financial Officer
and 200% for other Executive Directors. In addition, Executive Directors are required to hold shares after cessation
of employment. The requirement is to hold shares to the value of the share ownership guidelines or actual
shareholding (if lower) for a period of two years post cessation of employment.

The Executive Directors, excluding Marc Ronchetti and Steve Gunning each meet the Share Ownership Guideline
of holding Company shares to the value of their award sizes. Until such time as this threshold is achieved, Steve
and Marc are required to retain no less than 50% of the net of tax value of any vested conditional share or deferred
share awards. There are no other non-beneficial interests of Directors. There were no changes in Directors’ interests
from 1 April 2023 to 15 June 2023.

Consideration of conditions elsewhere in the Group
The Committee considers the remuneration and employment conditions elsewhere in the Group when determining
remuneration for Executive Directors. In addition to the employee engagement detailed on page 66, we have
established a mean gender pay gap figure for our UK and US companies and the CEO pay ratio is available to
employees. As part of Committee/workforce engagement, our non-executive Directors held sessions with a cross-
section of employees on site visits to our companies. A breakfast meeting was also held with selected employees
at Accelerate Halma, our group-wide leadership conference, held in October 2022. At these sessions there were
productive conversations on the role of Remuneration Committee, executive and employee remuneration and a
range of other topics including job satisfaction and company culture.

Consideration of shareholder views
When determining remuneration, the Committee takes into account the views of our shareholders and ‘best practice’
guidelines set by shareholder representative bodies.

The Committee actively engaged with shareholders to understand the reasons behind our 2022 AGM voting
outcomes. Letters were sent to our major shareholders, proxy agencies and shareholder organisations. Meetings
were held with the shareholders representing circa 30% of share capital. A meeting was also held with Glass Lewis.
See pages 138 and 139 for further details on these discussions.

The Remuneration Committee also seeks ongoing advice from its external advisers on wider shareholder views,
to ensure that it is kept up to date with any changes in market practice and shareholder sentiment.

Jo Harlow
Committee Chair

For and on behalf of the Board

15 June 2023

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155

Directors’ Remuneration Policy

This section of the Report sets out our Policy in detail. The current Policy for Executive Directors came into effect
from 22 July 2021, the date of the 2021 AGM and remains unchanged. The Committee intends that the Policy will
operate for three years.

Principles underpinning our Policy
These principles are:

• A strong pay for performance culture, focusing on the long-term success of the organisation and the alignment

to business strategy.

• A balance of focus on growth and returns ensuring the creation of shareholder value.
• A dedication to attracting, retaining and motivating the right quality of talent, acknowledging the Halma DNA.
• A focus on being a good corporate citizen in line with our culture, the 2018 Corporate Governance code and market

best practice.

Policy Review Focus Areas
The areas which the Committee focused on in respect of the 2021 Policy review were:

Shareholder
alignment
• Increase to shareholding
guidelines aligned to
the increase in
incentive quantum.

• Introduction of a two-year

post-cessation shareholding
requirement and enhanced
Malus and Clawback terms.

Pension

Sustainability

Quantum reset

• Benefit improvement for

UK employees.

• Alignment of Executive
Director offering to the
wider workforce.

• No immediate change in
performance metrics.

• Flexibility incorporated into
the Annual Bonus and ESP
to introduce measures in
the future.

• Ensuring robust

succession planning.
• Addressing compression
and retention issues.

How the Policy addresses the factors set out in provision 40 of the 2018 UK Corporate Governance Code
The table below shows how the Policy addresses each of the factors set out in provision 40 of the 2018 UK Corporate
Governance Code.

Clarity

Simplicity

We ensure pay for performance and our policy is designed to be logical and transparent. We believe this is clearly
communicated to and understood by our stakeholders and participants.

Remuneration for Executive Directors is comprised of distinct elements: fixed pay, annual bonus award and the
long-term incentive award.

Risk

A number of features within the Remuneration Policy exist to manage different kinds of risks; these include:

• Malus and clawback provisions operating across all incentive plans.
• The introduction of a post-cessation shareholding requirement.
• Deferral of remuneration and holding periods.
• Remuneration Committee discretion to override formulaic outturns to ensure incentive pay-outs reflect

underlying business performance and shareholder experience.

• Limits on awards specified within the policy and plan rules.

Predictability

Target ranges and potential maximum payments under each element of remuneration are disclosed.

The Committee regularly reviews the performance of the inflight awards, so it understands the likely outcomes.

Proportionality

The Committee believes that poor performance should not be rewarded. Therefore, a significant portion of
remuneration is performance based and requires achievement against challenging performance targets.

Alignment
to Culture

Our business is performance orientated and our remuneration structure is appropriately aligned to our culture,
with performance measures for variable awards being aligned to the Company’s wider strategy.

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The Remuneration Policy table
The table below summarises the key components of the Policy:

Fixed Pay: Salary

Purpose and link
to strategy

A fair, fixed remuneration reflecting the size and scope of the executive’s responsibilities which attracts
and retains high calibre talent necessary for the delivery of the Group’s strategy.

Operation

Reviewed annually or following a material change in responsibilities. Salary is benchmarked to market median
levels periodically against appropriate comparators of a similar size and operating in a similar sector and is
linked to individual performance and contribution.

Maximum
Opportunity

Salary is the only element of remuneration that is pensionable.

Base salary increases will be applied in line with the outcome of annual reviews (normally with effect from
1 June). Salaries for the financial year under review (and the following year) are disclosed in the Annual Report
on Remuneration. Salary increases for Executive Directors will not normally exceed the average of the wider
employee population other than in exceptional circumstances. Where increases are awarded in excess of the
wider employee population, for example where there is a material change in the responsibility, size or complexity
of the role, the Committee will provide the rationale in the relevant year’s Annual Report on Remuneration.

Performance metrics Not Applicable.

Fixed Pay: Benefits

Purpose and link
to strategy

Operation

To provide benefits that are competitive within the relevant market.

Benefits are appropriate to the location of the Director and typically comprise (but are not limited to)
a company car, life insurance, permanent disability insurance, private medical insurance, relocation
and tax advice for international assignments.

Maximum
Opportunity

Benefits may vary by role, and the level is determined to be appropriate for the role and circumstances of
each individual Director. The maximum value will equate to the reasonable market cost of such benefits.

The Committee retains the discretion to approve a higher cost of benefits in exceptional circumstances
(eg. relocation expenses or an expatriation allowance on recruitment, etc) or in circumstances where
factors outside the Company’s control have changed materially (eg market increases in insurance costs).

The rationale behind the exercise of such discretion will be provided in the relevant year’s Annual Report
on Remuneration.

Performance metrics Not Applicable.

Fixed Pay: Pension

Purpose and link
to strategy

To provide competitive post-retirement benefits, or the cash allowance equivalent, to provide the
opportunity for executives to save for their retirement.

Operation

Executive Directors participate in a Group Defined Contribution pension plan.

Maximum
Opportunity

Cash supplements in lieu of Company pension contributions may be made to some individuals at a level
dependent upon seniority and length of service. Cash supplements may be reduced to reflect the additional
employer social costs thereon. To the extent the pension contributions exceed the local tax allowance, the
contributions may be paid to the executive, subject to taxes and social charges.

Some executives are deferred members of the Group Defined Benefit pension plan, which closed to future
accrual in December 2014

Defined Contribution: maximum contribution of 10.5%.

Cash supplement: Halma contributes up to 10.5% of salary. Defined Contribution/Money Purchase members
whose contributions exceed the local tax allowance are paid the excess contributions, on pensionable salary,
as a cash supplement, net of employer social costs.

Defined benefit: now closed to future accrual, but provides a maximum pension equivalent to two thirds of
final pensionable salary, up to a CPI-indexed cap: £169,337 for 2022 and £174,586 for 2023.

Performance metrics Not Applicable.

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Directors’ Remuneration Policy continued

Annual Bonus

Purpose and link
to strategy

To incentivise and focus management on the achievement of objective annual targets which are set to
support the short to medium-term strategy of the Group.

Operation

The structure of the Annual Bonus is reviewed at the start of the year to ensure that the performance measures
and their weightings remain appropriately aligned with the Group’s strategy and are sufficiently challenging.

Performance targets are calibrated and set at the start of the year, with reference to a range of relevant
reference points including the annual budget agreed by the Board. At the end of the year, the Committee
determines the extent to which these targets have been achieved.

Payment of one third of any bonus is in the form of an award of shares that is deferred for two years.

Dividend equivalents accrue over the vesting period. Dividend equivalents are paid in cash or shares at the
end of the vesting period.

Deferral into shares provides a link to the long-term strategy of the Group and enhances the retentiveness of
the policy. A recovery and withholding provision enables the Company to recoup overpayments either through
withholding future remuneration or requiring the executive to repay the requisite amount in the event of
misstatement, error or misconduct; serious reputational damage to the business by the individual; and/or
a breach of the company code of conduct.

Maximum
Opportunity

Maximum opportunity: 200% of salary for Group CEO, 180% for other Executive Directors. Bonus payable
at threshold: 0% of salary.

The Committee can exercise discretion to override the formulaic bonus outcome within the limits of the scheme
where it believes the outcome is not truly reflective of performance and to ensure fairness to both shareholders
and participants.

Performance metrics The bonus is based on the achievement of financial performance targets, including Economic Value Added

(EVA). Other financial measures may supplement EVA at the discretion of the Committee.

Such financial measures must comprise at least 80% of the overall bonus opportunity.

The balance of 20% may be utilised, at the Committee’s discretion, to support non-financial, but measurable,
strategic growth priorities.

Long Term incentive: Executive Share Plan (ESP)

Purpose and link
to strategy

Operation

To incentivise executives to achieve superior returns to shareholders over a three-year period rewarding
them for sustained performance against challenging long-term targets; to retain key individuals and align
interests with shareholders, reflecting the sustainability of the business model over the long term and the
creation of shareholder value.

Executive Directors are granted annual awards over Halma plc shares or a cash equivalent where required by
regulations as determined by the Committee; awards vest after a period of at least three years based on
Group performance.

Dividend equivalents accrue over the vesting period. Dividend equivalents are paid in cash or shares at the end
of the vesting period, and only on those shares which vest.

A recovery and withholding provision enables the Company to recoup overpayments either through withholding
future remuneration or requiring the executive to repay the requisite amount in the event of misstatement, error
or misconduct; serious reputational damage to the business by the individual; and/or a breach of the company
code of conduct.

A mandatory two-year holding period applies for awards granted after the 2018 AGM.

Maximum
Opportunity

Maximum opportunity: Up to 300% of salary for Group CEO, 250% of salary for Group CFO and 200% of salary
for other Executive Directors.

The Committee can exercise discretion to override the formulaic ESP outcome within the limits of the scheme
where it believes the outcome is not truly reflective of performance and to ensure fairness to both shareholders
and participants and will ensure formulaic outturns do not result in windfall gains.

Threshold performance will result in the vesting of 25% of the maximum award

Performance metrics Vesting of performance share awards is subject to continued employment and the Company’s performance

over a three-year performance period.

Financial measures must comprise at least 80% of the overall ESP opportunity.

The balance of 20% may be utilised, at the Committee’s discretion, to support non-financial, but measurable,
strategic growth priorities.

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Share Incentive Plan (SIP)

Purpose and link
to strategy

Operation

Maximum
Opportunity

To encourage share ownership across all UK-based employees using HMRC-approved schemes

The SIP is an HMRC-approved arrangement. It entitles all eligible UK-based employees to receive Halma shares
in a potentially tax advantageous manner.

Participation limits are in line with those set by HMRC from time to time.

Performance metrics Not applicable.

Share Ownership Guideline

Purpose and link
to strategy

Operation

Align Executive Directors’ interests with those of long-term interests of shareholders.

Executive Directors are expected to build a holding in the Company’s shares to a minimum value broadly
equivalent to their ESP award maximum opportunity: 300% for CEO, 250% for CFO and 200% for other
Executive Directors.

In addition, Executive Directors required to hold shares after cessation of employment. The requirement is
to hold shares to the value of the share ownership guidelines or actual shareholding (if lower) for a period
of two years post cessation of employment.

Maximum
Opportunity

Progress towards the share ownership guideline is monitored on an annual basis.

No maximum holding but requirement to build to minimum value.

Performance metrics Not applicable.

Notes to the Policy Table
Differences in remuneration for employees
The remuneration policy for the Executive Directors is more heavily weighted towards variable and share-based
pay than for other employees, to make a greater part of their pay conditional on the successful delivery of business
strategy. This aims to create a clear link between the value created for shareholders and the remuneration received
by the Executive Directors.

However, the pension arrangements for the current Executive Directors are currently in the process of being aligned
on the same terms as those offered to eligible UK employees. All UK-based employees have the opportunity to
participate in the Share Incentive Plan.

Payments from Existing Awards
The Committee will honour any commitment entered into, and Executive Directors will be eligible to receive payment
from any award made, prior to the approval and implementation of the Policy. Details of these awards are disclosed
in the Annual Report on Remuneration.

Selection of Performance Measures
The performance measures used in Halma’s executive incentives have been selected to ensure incentives are
challenging and reinforce the Group’s strategy and align executive interests closely with those of our shareholders.

In the annual bonus, the use of EVA, in summary, profit less a charge for capital employed (definition is provided
on page 145) reinforces the Group’s business objective to double every five years through a mix of acquisitions
and organic growth. Profit is a function of the extent to which the Company has achieved both its organic
growth target and its success in identifying appropriate acquisition targets in current and past years. Ensuring
that the cost of funding acquisitions is reflected in the bonus model means that executives share the benefit
of an acquisition that outperforms expectations, but equally bear the cost of overpaying for an acquisition.
Good or poor management of working capital is also reflected in the calculation of EVA.

Positive impact is at the heart of our business model and this is why we include Diversity, Equity and Inclusion and
Climate Change as non-financial metrics in our annual bonus. Following our success in increasing gender diversity
at the Halma and Executive Boards, our current focus is on increasing gender diversity on our company boards.
Action on climate change is an important part of us delivering on our purpose to grow a safer, cleaner, healthier
future for everyone, every day and reducing our own emissions is a key priority for us, with year-on-year
improvement in energy productivity as our target.

In the ESP, EPS provides a disciplined focus on increasing profitability and thereby provides close shareholder alignment
through incentivising shareholder value creation, and ROTIC reinforces the focus on capital efficiency and delivery of
strong returns, thereby further strengthening the alignment of remuneration with the Group strategy.

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159

Directors’ Remuneration Policy continued

Performance targets are set to be stretching yet achievable, considering the Company’s strategic priorities and the
economic environment in which it operates. Targets are calibrated considering a range of reference points but are
based primarily on the Group’s strategic plan.

Malus and Clawback
The Committee believes that it is appropriate for all variable pay awards to be subject to provisions that allow it to
recover any value delivered (or which would otherwise be delivered) in connection with any variable award including
annual incentive and ESP awards in exceptional circumstances, and where it believes that the value of those
variable pay awards is no longer appropriate.

Malus provisions apply before payment and clawback provisions are in place following payment of the annual
bonus (or vesting of any element of annual bonus deferred into an award over shares) or vesting of any ESP award.

The malus and clawback provisions can be used in certain scenarios. Such scenarios include but are not limited to:

• material misstatement of the Company’s financial accounts;
• a material failure of risk management by the Company or any Group company;
• an error in calculation of any awards based on false or misleading information;
• gross misconduct by the relevant participant; and
• any action or omission on the part of a participant resulting in serious reputational damage to the Company,
any member of the Group; a serious breach or non-observance of any code of conduct, policy or procedure
operated by the Group.

Illustrations of the application of the Policy
The following charts provide an estimate of the potential future rewards for Executive Directors, and the
potential split between different elements of pay, under three different performance scenarios: “Fixed”,
“On-target” and “Maximum”.

Andrew Williams retires and steps down from the Board on 30 June 2023 and as such his future rewards are not
included in the charts below.

Potential reward opportunities are based on the Policy, applied to salaries as at 1 June 2023. The projected values
exclude the impact of any share price movements and dividend equivalents.

The “Fixed” scenario shows base salary, pension and benefits only.

The “On-target” scenario shows fixed remuneration as above, plus a target level of 50% of the maximum under
the annual bonus and vesting of 50% of a single year’s award under the ESP.

The “Maximum” scenario reflects fixed remuneration, plus maximum level of annual bonus and ESP awards.

Fixed

On-target

Maximum

Fixed

On-target

Maximum

Fixed

On-target

Maximum

Percentages

100%

31%

18%

28%

41%

33%

Marc Ronchetti, Group Chief Executive

100%

35%

21%

27%

38%

33%

Steve Gunning, Chief Financial Officer

100%

38%

24%

29%

33%

36%

Amounts (£000)
1,023

3,273

49%

5,523

690

1,980

46%

3,270

548

1,449

40%

2,349

Jennifer Ward, Group Talent, Culture and Communications Director

Fixed Pay

Short-term incentive (Total incentive award)

Long-term incentive (Award vests)

160

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Governance

Financial
Statements

Other
Information

Impact of share price
Long-term incentive awards in the ESP are granted in shares and as such the value can vary significantly depending
on share price movement over the vesting and holding period. The table below shows how the maximum values
above would change as a result of a 50% change in the share price over the vesting and holding period:

Executive Director

Marc Ronchetti

Steve Gunning

Jennifer Ward

50% increase
in share price

6,873

4,020

2,823

External appointments
In the case of appointing a new Executive Director, the Committee may make use of any of the existing elements of
remuneration, as follows:

Component

Approach

Salary

The base salaries of new appointees will be determined by reference to relevant market data, experience and skills of the
individual, internal relativities and the current salary of any incumbent in the same role.
Where a new appointee has an initial base salary set below market, the Committee may make phased increases over a
period of several years to achieve the desired position, subject to the individual’s development and performance in the role.

Benefits New appointees will be eligible to receive benefits in line with the current Policy, as well as expatriation allowances

and any necessary expenses relating to an executive’s relocation on appointment.

Pension

New appointees will be eligible to participate in the Company’s defined contribution/money purchase arrangements,
receive a cash supplement or local equivalent.

Annual
bonus

The scheme as described in the Policy Table will apply to new appointees with the relevant maximum being pro-rated to
reflect the proportion of the year employed.

ESP

SIP

New appointees will be granted performance awards under the ESP on the same terms as other executives, as described
in the Policy Table.

New appointees in the UK will be eligible to participate on identical terms to other employees.

In addition to the elements of remuneration set out in the Policy Table, in exceptional circumstances the
Committee may consider it appropriate to grant an incentive award under a different structure in order to
facilitate the recruitment of an individual or to replace incentive arrangements forfeited on leaving a previous
employer. In making such awards, the Committee will look to replicate the arrangements being forfeited as
closely as possible and in doing so consider relevant factors including any performance conditions attached
to these awards, the payment mechanism, expected value and the remaining vesting period of these awards.

Internal Appointments
Remuneration for new Executive Directors appointed by way of internal promotion will similarly be determined in
line with the policy for external appointees, as detailed above. Where an individual has contractual commitments
made prior to their promotion to the Board, the Company will continue to honour those commitments. Incentive
opportunities for employees below Board level are generally no higher than for Executive Directors, and incentive
measures vary to ensure they are appropriate.

Executive Director service contracts and exit payment policies
It is the Company’s policy that Executive Directors should have contracts with an indefinite term providing
for a maximum of one year’s notice. The details of the Directors’ contracts are summarised in the table below.
Contracts will be available for inspection at the AGM and throughout the year at the Company’s registered office.

Executive Director

Marc Ronchetti

Steve Gunning

Jennifer Ward

Date of service contract

July 2018

January 2023

January 2014

Notice period

One year

The Company’s policy is to limit payments on cessation to pre-established contractual arrangements. In the event
that the employment of an Executive Director is terminated, any amount payable will be determined in accordance
with the terms of the service contract between the Company and the employee, as well as the rules of any incentive
plans. No predetermined amount is provided for in the Directors’ contracts. The UK Executive Director contracts
enable the Company to pay up to one year’s salary in lieu of notice, with no contractual entitlement to any other
benefits, and, under the rules, the Remuneration Committee may determine the individual’s leaving status for
share plan vesting purposes.

If the financial year end has passed, any bonus earned is payable to the individual.

Halma plc | Annual Report and Accounts 2023

161

Directors’ Remuneration Policy continued

When considering termination payments under incentive schemes, the Committee reviews all potential incentive
outcomes to ensure they are fair to both shareholders and participants. The table below summarises how the
awards under the annual bonus and share plans are treated in specific circumstances under the rules of the
relevant plan and the extent to which the Committee has discretion:

Annual bonus

Deferred bonus

Reason for leaving

Timing of payment/vesting

Calculation of payment/vesting

Death, injury or disability,
redundancy, retirement, or any
other reasons the Committee
may determine

After the end of the financial year,
although the Committee has
discretion to accelerate (eg in
relation to death)

Performance against targets will
be assessed at the end of the
year in the normal way and any
resulting bonus normally will be
pro-rated for time served during
the year

All other reasons

No bonus is payable

–

Death, injury or disability,
redundancy, retirement, or any
other reasons the Committee
may determine

All other reasons

On the second anniversary of the
Award

Awards vest in full

On the second anniversary of the
award (unless the Remuneration
Committee determines otherwise)

Awards vest in full

Share Plans

Injury or disability, redundancy,
or any other reason the
Committee may, at its
discretion, determine

On the third anniversary of
the award

Death

Immediately (unless otherwise
determined by the Committee
at its discretion)

Awards will normally be pro-rated
for time to the date of cessation
of employment and performance
metrics assessed as at the third
anniversary

Any outstanding awards normally
will be pro-rated for time and
performance up to the point
of death

All other reasons

Awards lapse

–

External directorships
The Committee acknowledges that Executive Directors may be invited to become independent non-executive
Directors of other listed companies which have no business relationship with the Company and that these roles
can broaden their experience and knowledge to Halma’s benefit.

Executive Directors are permitted to accept one such appointment with the prior approval of the Chair. Approval
will only be given where the appointment does not present a conflict of interest with the Group’s activities and the
wider exposure gained will be beneficial to the development of the individual. Where fees are payable in respect of
such appointments, these are retained by the Executive Director.

Chair and non-executive Directors’ remuneration policy

Chair and non-executive Director fees

Purpose and link
to strategy

Operation

Maximum
Opportunity

To attract and retain individuals with the requisite skills, experience and knowledge to contribute to the Board

Non-executive Director fees are determined by the Board and may comprise a base fee, committee chair
fee and Senior Independent Director fee. The Chair’s fee is determined by the Committee.
Travel and other expenses incurred in the performance of non-executive duties for the Company may be
reimbursed or paid for directly by the Company, as appropriate, including any tax due on the benefits.

Fees are normally reviewed annually. Increases are typically effective from 1 January.
The fee paid to the Chair is determined by the Committee and fees to non-executive Directors are determined
by the Board. The fees are calculated by reference to market levels and take account of the time commitment
and the responsibilities of the non-executive Directors.
These fees are the sole element of non-executive remuneration and they are not eligible for participation in
Group incentive awards, nor do they receive any retirement benefits.

Performance metrics Not applicable.

162

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Governance

Financial
Statements

Other
Information

Non-executive Directors’ letters of appointment
Unless otherwise indicated, all non-executive Directors have a specific three-year term of engagement, subject
to annual re-election at the AGM, which may be renewed for up to two further three-year terms if both the
Director and the Board agree. The remuneration of the Chair and the non-executive Directors is determined by
the Committee and the Board respectively, in accordance with the remuneration policy approved by shareholders.

The contract in respect of the Chair’s services provides for termination, by either party, by giving not less than six
months’ notice.

The non-executive Directors have contracts in respect of their services, which can be terminated without
compensation, by either party, by giving not less than three months’ notice. Contracts are available for
inspection at the AGM and throughout the year at the Company’s registered office. Summary details of
terms and notice periods for non-executive Directors are included below.

Non-executive Director

Date of appointment

Dame Louise Makin

Roy Twite

Tony Rice

Carole Cran

Jo Harlow

Dharmash Mistry

February 2021

July 2014

August 2014

January 2016

October 2016

April 2021

End of next term

No fixed term

July 2023

August 2023

January 2025

October 2025

April 2024

Sharmila Nebhrajani OBE

December 2021

December 2024

Notice period

6 months

3 months

Non-executive Director recruitment
In recruiting a new Chair or non-executive Director, the Committee will use the policy as set out above.

Halma plc | Annual Report and Accounts 2023

163

Directors’ Report

The Directors present their report on the affairs of
the Company, together with the audited financial
statements and Independent Auditors’ Report, for
the year ended 31 March 2023.

Activities
The Company’s principal activity is to act as a holding
company. The Company is incorporated and domiciled
in England and Wales. A list of its subsidiary companies
is set out on pages 245 to 250. Subsidiaries of the
Company have established branches in a number of
different countries in which they operate. As permitted
under section 414C (11) of the Companies Act 2006,
the information set out below, which forms part of this
Directors’ Report and is incorporated by reference, can
be located in the Strategic Report on pages 2 to 102:

• Future developments in the Group’s business.
• Activities of the Group in the field of research

and development.

• Environmental matters, including greenhouse

gas emissions.

Dividends
The Directors’ recommend a final dividend of 12.34p per
share and, if approved, the dividend will be paid on
18 August 2023 to ordinary shareholders on the register
at the close of business on 14 July 2023. Together with
the interim dividend of 7.86p per share already paid, this
will make a total dividend of 20.20p (2022: 18.88p) per
share for the financial year.

Political donations
In-line with our Group Anti-Bribery and Corruption
Policy, the Group did not make any political donations
or incur any political expenditure during the year.

Directors and Directors’ interests
The Directors of the Company as at the date of this
Report, together with their biographical details, are
shown on pages 106 and 107. The Remuneration Report
on page 153 provides details of the interests of each
Director in the shares of the Company.

Liability insurance and indemnities
The Company has agreed to indemnify, to the extent
permitted by law, each of the Company’s Directors
against any liability incurred in respect of acts or
omissions arising in the course of their office. Each
Director is covered by appropriate Directors’ and
Officers’ liability insurance, at the Company’s expense.

Financial risk management objectives and policies
Disclosures relating to financial risk management
objectives and policies are set out in note 27 to the
financial statements and along with exposures relating
to price risk, credit risk, liquidity risk and cash flow risk.

164

Halma plc | Annual Report and Accounts 2023

Share capital and capital structure
Details of the share capital, together with details of the
movements in the share capital during the year, are
shown in note 23 to the accounts. The Company has
one class of ordinary shares which carry no right to
fixed income. Each share carries the right to one vote
at general meetings of the Company.

There are no other classes of share capital. There are no
specific restrictions on the size of a holding nor on the
transfer of shares, with both governed by the general
provisions of the Company’s Articles of Association and
prevailing legislation. No person has any special rights of
control over the Company’s share capital and all issued
shares are fully paid.

Rights and obligations of ordinary shares
Holders of ordinary shares are entitled to attend and
speak at general meetings of the Company and to
appoint one or more proxies or, if the holder of shares
is a corporation, one or more corporate representatives.
On a show of hands, each holder of ordinary shares who
(being an individual) is present in person or (being a
corporation) is present by a duly appointed corporate
representative, not themselves being a member, shall
have one vote, as shall proxies (unless they are
appointed by more than one holder, in which case
they may vote both for and against the resolution in
accordance with the holders’ instructions). On a poll,
every holder of ordinary shares present in person or by
proxy shall have one vote for every share of which they
are the holder.

Electronic and paper proxy appointments and voting
instructions must be received not later than 48 hours
before the meeting.

A holder of ordinary shares can lose the entitlement to
vote at general meetings where that holder has been
served with a disclosure notice and has failed to provide
the Company with information concerning interests held
in those shares. Except as set out above and as permitted
under applicable statutes, there are no limitations on
voting rights of holders of a given percentage, number
of votes or deadlines for exercising voting rights.

The Company has established an Employee Benefit Trust
and the trustee has waived its right to vote and its right
to all dividends.

Restrictions on transfer of shares
The Directors may refuse to register a transfer of a
certificated share that is not fully paid, provided that
the refusal does not prevent dealings in shares in the
Company from taking place on an open and proper
basis or, where the Company has a lien over that share.
The Directors may also refuse to register a transfer of a
certificated share unless the instrument of transfer is:
(i) lodged, duly stamped (if necessary), at the registered
office of the Company or any other place as the Board
may decide accompanied by the certificate for the
share(s) to be transferred and/or such other evidence as
the Directors may reasonably require to show the right

Strategic
Report

Governance

Financial
Statements

Other
Information

of the transferor to make the transfer; (ii) in respect of
only one class of shares; (iii) in favour of a person who
is not a minor, infant, bankrupt or a person of unsound
mind; or (iv) in favour of not more than four
persons jointly.

Transfers of uncertificated shares must be carried out
using CREST and the Directors can refuse to register a
transfer of an uncertificated share in accordance with
the regulations governing the operation of CREST.

There are no other restrictions on the transfer of
ordinary shares in the Company except certain
restrictions which may from time to time be imposed
by laws and regulations (for example insider trading
laws); or where a shareholder with at least a 0.25%
interest in the Company’s certificated shares has been
served with a disclosure notice and has failed to provide
the Company with information concerning interests
in those shares. The Directors are not aware of any
agreements between holders of the Company’s shares
that may result in restrictions on the transfer of
securities or on voting rights.

Employees
An overview of the Board’s engagement with employees
along with the mechanisms for sharing information and
taking account of their views in decision making are
included on page 56 of the Strategic Report and page
118 of the Governance Report. Aligning the interests of
employees in the Company’s performance is achieved
through a variety of share and bonus schemes.

The Company gives full and fair consideration to
applications of employment from disabled people.
Training, career development and promotion
opportunities are equally applied for all our employees,
regardless of disability. In the event of an existing
employee becoming disabled, every effort will be
made to ensure that their employment with the Group
continues and that appropriate support is provided.

Halma has a group-wide diversity and inclusion policy
which sets out our commitment that all candidates are
considered fairly, regardless of their gender, race, age,
sexual orientation, professional or academic background
and it is our practice to ensure that there is a diverse
selection of candidates before we commence the
assessment process. While appointments are ultimately
based on merit – taking account of an individual’s
relevant skills and experience for the role – we recognise
the strong benefits that a diverse workforce brings.
Accordingly, we require recruiters to make diversity a
priority in their selection of potential candidates, which
ensures that we factor diversity and inclusion into our
process at the outset.

The work that Halma is doing to improve diversity across
the Group, along with our open and inclusive culture
ensures that all candidates are fairly considered for each
role. Last year, we included a DEI target within executive
remuneration to further align our drive for a diverse and
inclusive culture throughout the Group. Our Talent and

Culture Growth Enabler embodies the importance of DEI
to Halma’s sustainable growth strategy – see page 31
and page 66 for more information.

Stakeholder engagement
A description of how the Directors have had regard to
the need to foster the Company’s business relationships
with suppliers, customers and others, and the effect of
Director engagement with our stakeholders, is set out
on pages 56 to 62. Examples of how the Directors had
regard to stakeholder interests when making principal
decisions during the year are set out on pages 64 to 65.

Appointment and removal of Directors
With regard to the appointment and replacement of
Directors, the Company is governed by its Articles of
Association, the UK Corporate Governance Code, the
Companies Act and related legislation. Directors can
be appointed by the Company by ordinary resolution
at a general meeting or by the Board. If a Director is
appointed by the Board, such a Director will hold office
until the next Annual General Meeting (AGM) and
shall then be eligible for election at that meeting. In
accordance with the Articles of Association and UK
Corporate Governance Code, each of the Directors,
being eligible, will offer themselves for election or
re-election at this year’s AGM. The Company can
remove a Director from office, including by passing a
special resolution or by notice being given by all the
other Directors. The Articles themselves may be
amended by special resolution of the shareholders.

Powers of Directors
The powers of Directors are set out in the Articles of
Association and a full list of the matters reserved for
decision by the Board can be found on our website,
www.halma.com.

Contracts of significance and change of control
There are a number of agreements that take effect,
alter or terminate upon a change of control of the
Company, principally bank loan agreements, private
placement debt and employee share plans.

There are two significant agreements, in terms of the
likely impact on the business of the Group as a whole,
containing such provisions:

• The £550m syndicated Revolving Credit Facility which, if
after 30 days of a change of control notice to the loan
agent, can result in 30 days’ notice being given to the
Company by any Lender, for all amounts outstanding
to that Lender, to be immediately due and payable, at
which time the commitment of that Lender will be
cancelled. If all of the Lenders give this notice the whole
facility would be cancelled.

• The US$430m US Private Placement Note Purchase
Agreement under which, in the event of a change of
control, the Company is required (within 10 days of a
change of control) to make an offer to the holders
of the US Private Placement notes to prepay the
principal amount of the notes together with
interest accrued.

Halma plc | Annual Report and Accounts 2023

165

Director’s Report continued

The Group has contractual arrangements with a wide
range of suppliers. The Group is not unduly dependent
upon contractual arrangements with any particular
customer. While the loss or disruption to certain of
these arrangements could temporarily affect the
Group’s business, none are considered to be essential.

The Company’s share plans contain provisions as a result
of which awards may vest and become exercisable on a
change of control of the Company in accordance with
the rules of the plans.

There are no agreements between the Company, its
Directors or employees that provide for compensation
for loss of office or employment that occurs because
of a takeover bid.

Allotment authority
Under the Companies Act 2006 the Directors may only
allot shares if authorised by shareholders to do so. At
the AGM an ordinary resolution will be proposed which,
if passed, will authorise the Directors to allot and issue
shares up to an aggregate nominal value of £12,500,000
(up to 125,000,000 for ordinary shares of 10p each),
being just less than one third of the issued share
capital of the Company (excluding treasury shares)
as at 15 June 2023 (the latest practicable date prior
to the publication of the Notice of Meeting).

In accordance with the Directors’ stated intention to
seek annual renewal, the authority will expire at the
earlier of the conclusion of the AGM of the Company
in 2024 and 30 September 2024.

Passing this resolution will give the Directors flexibility
to act in the best interests of shareholders, when
opportunities arise, by issuing new shares. As at
15 June 2023, the Company had 379,645,332
ordinary shares of 10p each in issue.

The Companies Act 2006 also requires that, if the
Company issues new shares for cash or sells any treasury
shares, it must first offer them to existing shareholders
in proportion to their current holdings. At the AGM a
special resolution will be proposed which, if passed,
will authorise the Directors to issue a limited number
of shares for cash and/or sell treasury shares without
offering them to shareholders first.

The authority is for an aggregate nominal amount of
up to 10% of the aggregate nominal value of the issued
share capital of the Company as at 15 June 2023 of
£3,780,000. The resolution will also modify statutory
pre-emption rights to deal with legal, regulatory or
practical problems that may arise on a rights issue or
other pre-emptive offer or issue. The authority will expire
at the same time as the resolution conferring authority
on the Directors to allot shares. The Directors consider
this authority necessary in order to give them flexibility
to deal with opportunities as they arise, subject to the
restrictions contained in the resolution. There are no
present plans to issue shares.

166

Halma plc | Annual Report and Accounts 2023

Substantial shareholdings
As at 31 March 2023, the Company had been notified,
in accordance with DTR 5 of the Disclosure Guidance
and Transparency Rules, of the following interests in
voting rights in its shares.

Year ended 31 March 2023

No. of
ordinary
shares

Percentage of
voting rights
and issued

share capital No of holdings

The Capital Group
Companies, Inc.
BlackRock, Inc.

37,851,729
23,932,882

9.97
6.30

Indirect
Indirect

During the period between 31 March 2023 and
15 June 2023 (the latest practicable date prior to the
publication), no changes to substantial shareholdings
were disclosed to the Company.

Purchase of the Company’s own shares
The Company was authorised at the 2022 AGM to
purchase up to 37,900,000 of its own 10p ordinary shares
in the market. This authority expires at the earlier of the
conclusion of the AGM of the Company in 2023 and
30 September 2023. The Company did not purchase any
of its own shares under this authority during the year. In
accordance with the Directors’ stated intention to seek
annual renewal a special resolution will be proposed at
the AGM to renew this authority until the earlier of the
end of the Company’s 2024 AGM and 30 September
2024, in respect of up to 37,900,000 ordinary shares,
which is approximately 10% of the Company’s issued
share capital as at 15 June 2023.

Annual General Meeting
The Company’s AGM will be held on 20 July 2023.

The Notice of Meeting, together with an explanation of
the proposed resolutions, is enclosed with this Annual
Report and Accounts and is also available on the
Company’s website at www.halma.com.

Independent auditors
Each of the persons who is a Director at the date
of approval of this Annual Report and Accounts
confirms that:

• So far as the Director is aware, there is no relevant
audit information of which the Company’s Auditor
is unaware.

• The Director has taken all the steps that he/she ought
to have taken as a director in order to make himself/
herself aware of any relevant audit information and to
establish that the Company’s Auditor is aware of that
information.

This confirmation is given and should be interpreted in
accordance with the provisions of Section 418 of the
Companies Act 2006.

PricewaterhouseCoopers LLP (PwC) has expressed its
willingness to continue in office as Independent Auditor
and a resolution to appoint PwC will be proposed at the
forthcoming AGM.

Strategic
Report

Governance

Financial
Statements

Other
Information

Our financial position remains robust with
committed facilities at the balance sheet date
totalling approximately £931m which includes a
£550m Revolving Credit Facility (RCF). The undrawn
committed facilities as at 31st March 2023 amounted
to £255.7m. In May 2022, the RCF was refinanced and
now matures in May 2028, the first of two one-year
extension options having been exercised post year-end.
During May 2022, the Group also entered into a new
Note Purchase Agreement which provided access to
loan notes totalling £330m, which were drawn in various
currencies in July 2022. The financial covenants across
the facilities are for leverage (net debt/adjusted EBITDA)
of not more than three and a half times and for
adjusted interest cover of not less than four times

Post-balance sheet events
Events subsequent to the year-end are reported in note
32 to the Accounts on page 237.

Disclosure required under the Listing Rules and the
Disclosure Guidance and Transparency Rules
For the purposes of compliance with DTR 4.1.5 R(2), the
required content of the management report can be
found in this Directors’ Report and the Strategic Report,
including the sections of the Annual Report and
Accounts incorporated by reference.

Relevant disclosures required by LR 9.8.4 R can be
located as follows:

Details of long-term incentives
Contracts of significance
Shareholder waiver of dividends

Shareholder waiver of future dividends

Page
136
165
164

164

Corporate Governance Statement
The Company’s statement on corporate governance can
be found in the Corporate Governance Report on page
104. The Corporate Governance Report forms part of
this Directors’ Report and is incorporated into it by
cross-reference.

Mark Jenkins
Company Secretary

By order of the Board
15 June 2023

Going concern statement
The Group’s business activities, together with the
main trends and factors likely to affect its future
development, performance and position, and the
financial position of the Group as at 31 March 2023,
its cash flows, liquidity position and borrowing facilities
are set out in the Strategic Report. In addition, note 27
contains further information concerning the security,
currency, interest rates and maturity of the
Group’s borrowings.

The financial statements have been prepared on a going
concern basis. In adopting the going concern basis the
Directors have considered all of the above factors,
including potential scenarios and its principal risks set
out on page 91 to 97. Under the potential scenarios
considered, which includes a severe but plausible
downside scenario, the Group remains within its debt
facilities and the attached financial covenants for the
foreseeable future and the Directors therefore believe,
at the time of approving the financial statements, that
the Company is well placed to manage its business risks
successfully and remains a going concern. The key facts
and assumptions in reaching this determination are
summarised below.

The base case scenario has been prepared using
forecasts from each operating company as well as
cash outflows on acquisitions in line with pre COVID
pandemic levels. In addition, a severe but plausible
downside scenario has been modelled showing a
decline in trading for the year ending 31 March 2024.
This reduction in trading could be caused by events
such as a significant resurgence in the COVID pandemic
lockdowns beyond China or continued macroeconomic
volatility leading to further inflation and interest rate
increases. In mitigating the impacts of the downside
scenario there are actions that can be taken which are
entirely discretionary to the business such as reducing
acquisition spend and dividend growth rates. In addition,
the Group has demonstrated strong resilience and
flexibility to manage its overheads and adapt its supply
chains during the COVID pandemic and more recent
global economic uncertainty.

Neither the base case nor severe but plausible downside
scenarios result in a breach of the Group’s available debt
facilities or the attached covenants and, accordingly,
the Directors believe there is no material uncertainty
in the use of the going concern assumption and,
therefore, deem it appropriate to continue to adopt
the going concern basis of accounting for at least
the next 12-month period.

Halma plc | Annual Report and Accounts 2023

167

Statement of directors’ responsibilities in respect of the
financial statements

The directors are responsible for preparing the Annual
Report and the financial statements in accordance with
applicable law and regulation.

Company law requires the directors to prepare financial
statements for each financial year. Under that law the
directors have prepared the Group financial statements
in accordance with UK-adopted international accounting
standards and the company financial statements in
accordance with United Kingdom Generally Accepted
Accounting Practice (United Kingdom Accounting
Standards, comprising FRS 101 “Reduced Disclosure
Framework”, and applicable law).

Under company law, directors must not approve the
financial statements unless they are satisfied that they
give a true and fair view of the state of affairs of the
Group and company and of the profit or loss of the
Group for that period. In preparing the financial
statements, the directors are required to:

• select suitable accounting policies and then apply

them consistently;

• state whether applicable UK-adopted international

accounting standards have been followed for the Group
financial statements and United Kingdom Accounting
Standards, comprising FRS 101 have been followed for
the company financial statements, subject to any
material departures disclosed and explained in the
financial statements;

Directors’ confirmations
The directors consider that the Annual Report and
accounts, taken as a whole, is fair, balanced and
understandable and provides the information necessary
for shareholders to assess the Group’s and company’s
position and performance, business model and strategy.

Each of the directors, whose names and functions
are listed on pages 106 and 107 confirm that, to the best
of their knowledge:

• the Group financial statements, which have been

prepared in accordance with UK-adopted international
accounting standards, give a true and fair view of the
assets, liabilities, financial position and profit of
the Group;

• the company financial statements, which have

been prepared in accordance with United Kingdom
Accounting Standards, comprising FRS 101, give a
true and fair view of the assets, liabilities and financial
position of the company; and

• the Strategic Report and the Directors’ Report includes
a fair review of the development and performance
of the business and the position of the Group and
company, together with a description of the principal
risks and uncertainties that it faces.

In the case of each director in office at the date the
directors’ report is approved:

• make judgements and accounting estimates that are

• so far as the director is aware, there is no relevant

reasonable and prudent; and

• prepare the financial statements on the going concern
basis unless it is inappropriate to presume that the
Group and company will continue in business.

The directors are responsible for safeguarding the
assets of the Group and company and hence for taking
reasonable steps for the prevention and detection of
fraud and other irregularities.

The directors are also responsible for keeping adequate
accounting records that are sufficient to show and
explain the Group’s and company’s transactions and
disclose with reasonable accuracy at any time the
financial position of the Group and company and
enable them to ensure that the financial statements
and the Directors’ Remuneration Report comply with
the Companies Act 2006.

The directors are responsible for the maintenance
and integrity of the company’s website. Legislation
in the United Kingdom governing the preparation
and dissemination of financial statements may
differ from legislation in other jurisdictions.

audit information of which the Group’s and
company’s auditors are unaware;

• they have taken all the steps that they ought to have
taken as a director in order to make themselves aware
of any relevant audit information and to establish that
the Group’s and company’s auditors are aware of that
information; and

• the financial statements on pages 169 to 255 were
approved by the Board of Directors on 15 June 2023
and signed on its behalf by Marc Ronchetti and
Steve Gunning.

On behalf of the Board

Marc Ronchetti
Group Chief Executive

Steve Gunning
Chief Financial Officer

15 June 2023

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Strategic
Report

Governance

Financial
Statements

Other
Information

Financial
Statements

Contents

Independent Auditors’ Report

170
178 Consolidated Income Statement
Consolidated Statement
179
of Comprehensive Income
and Expenditure

180 Consolidated Balance Sheet
181

Consolidated Statement
of Changes in Equity
Consolidated Cash
Flow Statement

182

183 Accounting Policies
192 Notes to the Accounts
239 Company Balance Sheet
240

Company Statement
of Changes in Equity

241 Notes to the Company Accounts
254 Summary 2014 to 2023

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Independent auditors’ report to the members of Halma plc

Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (“ISAs (UK)”) and applicable law.
Our responsibilities under ISAs (UK) are further described in the
Auditors’ responsibilities for the audit of the financial statements
section of our report. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our
opinion.

Independence
We remained independent of the group in accordance with the
ethical requirements that are relevant to our audit of the financial
statements in the UK, which includes the FRC’s Ethical Standard,
as applicable to listed public interest entities, and we have fulfilled
our other ethical responsibilities in accordance with these
requirements.

To the best of our knowledge and belief, we declare that non-audit
services prohibited by the FRC’s Ethical Standard were not provided.

Other than those disclosed in note 6 to the financial statements,
we have provided no non-audit services to the company or its
controlled undertakings in the period under audit.

Report on the audit of the financial statements
Opinion
In our opinion:

• Halma plc’s group financial statements and company financial
statements (the “financial statements”) give a true and fair
view of the state of the group’s and of the company’s affairs
as at 31 March 2023 and of the group’s profit and the group’s
cash flows for the year then ended;

• the group financial statements have been properly prepared
in accordance with UK-adopted international accounting
standards as applied in accordance with the provisions
of the Companies Act 2006;

• the company financial statements have been properly

prepared in accordance with United Kingdom Generally
Accepted Accounting Practice (United Kingdom Accounting
Standards, including FRS 101 “Reduced Disclosure Framework”,
and applicable law); and

• the financial statements have been prepared in accordance

with the requirements of the Companies Act 2006.

We have audited the financial statements, included within
the Annual Report and Accounts (the “Annual Report”), which
comprise: the Consolidated and Company Balance Sheets as
at 31 March 2023; the Consolidated Income Statement and
Consolidated Statement of Comprehensive Income and
Expenditure, the Consolidated Cash Flow Statement, and the
Consolidated and Company Statement of Changes in Equity
for the year then ended; the accounting policies; and the
notes to the financial statements.

Our opinion is consistent with our reporting to the
Audit Committee.

Our audit approach
Overview

Audit Scope
• There were no individually significant components within the Group;
• We performed full scope audit procedures over 31 components;
• We performed specified procedures over all material balances for 14 components; and
• We performed risk based procedures over specific financial statement line items for 16 components.
• This provided coverage of 69% revenue, 72% profit before tax, and 87% net assets.

Key audit matters
• Acquisition accounting – valuation of acquired intangibles (group)
• Assessment of impairment of goodwill and other intangible assets (group)
• Impairment of investments and recoverability of intercompany receivables (parent)

Materiality
• Overall group materiality: £18,060,000 (FY22: £15,800,000) based on 5% of profit before tax and before adjustments.
• Overall company materiality: £16,200,000 (FY22: £13,400,000) based on 1% of total assets.
• Performance materiality: £13,540,000 (FY22: £11,850,000) (group) and £12,100,000 (FY22: £10,050,000) (company).

The scope of our audit
As part of designing our audit, we determined materiality
and assessed the risks of material misstatement in the
financial statements.

Key audit matters
Key audit matters are those matters that, in the auditors’
professional judgement, were of most significance in the audit
of the financial statements of the current period and include the
most significant assessed risks of material misstatement
(whether or not due to fraud) identified by the auditors,

including those which had the greatest effect on: the overall
audit strategy; the allocation of resources in the audit; and
directing the efforts of the engagement team. These matters,
and any comments we make on the results of our procedures
thereon, were addressed in the context of our audit of the
financial statements as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on
these matters.

This is not a complete list of all risks identified by our audit.

The key audit matters below are consistent with last year.

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Key audit matter
Acquisition accounting – valuation of acquired
intangibles (group)
Refer to Accounting Policies and note 25 for management
disclosures of the relevant judgements and estimates.

During the year ended 31 March 2023, the Group completed
seven business acquisitions with a combined total consideration
of £328.8m. Acquired intangibles recognised in these transactions
totalled £192.2m, with goodwill totalling £180.0m also being
recognised. There is a risk of material misstatement to the
financial statements from the application of IFRS 3 ‘Business
combinations’, and the related valuation of the assets acquired,
the liabilities assumed, and the consideration paid, including
contingent consideration. The risk of material misstatement is
inherently higher for the acquired intangible assets as a result of
the methodology and assumptions used in the valuation.

Management engaged third party valuation experts to assist
them in the valuation of acquired intangible assets for the five
largest acquisitions during the year. The total estimated
consideration including contingent consideration for the remaining
two acquisitions was £4.8m in aggregate and therefore does
not present a material valuation risk.

The key estimates and assumptions assessed were: the
completeness of the identified intangible assets which have been
recognised in the business combinations; the methodology and
assumptions used in the valuation; and management’s estimate
of the future forecast cash flows at the respective acquisition date.

Strategic
Report

Governance

Financial
Statements

Other
Information

How our audit addressed the key audit matter

We focused our audit procedures on the five largest acquisitions
which in aggregate led to the recognition of acquired intangible
assets totalling £190.9m and goodwill of £178.0m. In respect of
these five acquisitions we:

• Obtained and read key documentation and agreements relating

to these acquisitions together with the acquisition models,
internal management due diligence reports and the final
purchase price allocations performed by management’s experts.

• Agreed the appropriateness of the trade names, customer

relationships and technology recognised as separately identified
intangible assets in each of these acquisitions where relevant.
• Performed detailed testing of the opening balance sheet and

the related fair value adjustments for each acquisition based on
individually assigned materiality levels, which ranged from £1.0m
to £2.0m.

• Used our internal valuation experts to evaluate the methodology
used by management’s experts and confirmed that appropriate
income approach techniques had been utilised in valuing the
identified intangible assets. Our internal valuations experts
also evaluated the assumptions used by management’s
experts, including assessing discount rates, royalty rates
and attrition rates.

• Challenged the key assumptions used in these areas and
performed sensitivity or where rates differed from those
we might typically use.

• Examined the detailed acquisition cash flow forecasts and

confirmed that they reflect the nature of the businesses acquired
and management’s planned actions as at the acquisition date,
and that these actions align with those which could foreseeably
be achieved by another market participant. These were
compared to historic growth rates and margins and industry
reports where available.

• Reviewed the disclosures in the Annual Report, including in

note 25, and checked that these are consistent with our audit
work performed and the disclosure requirements of IFRS 3.

Based on the work performed, as summarised above, we
concluded the Group’s acquisition accounting is materially
appropriate and the recognised intangible assets have been
appropriately valued and disclosed.

Halma plc | Annual Report and Accounts 2023

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Key audit matter

How our audit addressed the key audit matter

Assessment of impairment of goodwill and other intangible
assets (group)
Refer to Accounting Policies for the disclosure of critical
accounting judgements and estimates around Goodwill and
acquired intangibles impairment future cash flows, Note 11 –
Goodwill and Note 12 - Other Intangible Assets of the
financial statements.

The Group holds significant goodwill and other intangible assets
balances totalling £1,120.5m (2022: £908.7m) and £472.3m (2022:
£325.2m) respectively as at 31 March 2023. The valuation of these
assets is judgemental and there is a risk they may be impaired.
Under IAS 36 ‘Impairment of Assets’, goodwill must be tested
for impairment at least annually and finite life intangible assets
tested to the extent there is any indication that an asset may
be impaired.

Management has performed an annual impairment review for
each of the 11 CGU groups, which is the lowest level at which
goodwill is monitored by the Group. The impairment reviews
performed by management contain a number of judgements
and estimates such as the forecast cash flows, growth rates
and discount rates.

They also include climate change related adjustments, such
as additional capital expenditure and specific reductions in the
growth rates where specific industries have been identified which
have the potential to be adversely impacted by climate change.

A change in the assumptions applied by management across the
assessment, could result in a material change in the valuation of
these assets, and as a result there is a risk that goodwill and other
intangible assets balances are no longer deemed to be recoverable
and hence should be impaired.

As per management’s impairment model, there is substantial
headroom in all CGU Groups. The CGU Group with the lowest
headroom percentage is the Healthcare Assessment CGU group,
where the assumptions used are more sensitive. We believe there
is a higher risk of an impairment in this CGU group and hence we
performed additional procedures to address this risk. For other
CGU Groups the impairment of goodwill has been assessed as
a normal audit risk.

Management also assessed whether there are any indications
that other intangible assets may be impaired. Where such
indications are identified, management has performed value
in use calculations to value the recoverable amount of these
assets and compares them to the carrying amounts. No
material impairment losses have been recognised as a result of
this assessment, however some impairment charges have been
booked for acquired intangibles held in relation to companies
where future cash flows estimated for the remaining useful
economic lives of the assets do not support the carrying
value of the assets at 31 March 2023.

The audit procedures we performed to address the risk around
the impairment of goodwill and other intangible assets were:

• Assessed the methodology and approach applied by

management in performing its impairment reviews, including
the identification of CGU groups and the allocation of businesses
and assets into the relevant CGU groups particularly for
acquisitions within the period, and ensured this is consistent
with the requirements of IAS 36 ‘Impairment of Assets’;
• Obtained management’s goodwill annual impairment

assessment for all 11 CGU groups and ensured the calculations
were mathematically accurate and the methodology used was
in line with the requirements of IAS 36 ‘Impairment of Assets’;
• Tested the underlying data on which the impairment assessment
is based. We evaluated the year one cash flows and assessed the
short and long-term growth rates applied to them to determine
the value in use. In doing so, we compared the cash flow
forecasts to the latest Board approved budgets and compared
prior years budgets to actual results, in order to assess the
accuracy of the forecasting process;

• Tested management’s climate change assumptions through
comparison to the strategic report and the TCFD analysis
including current year baselining of scope 3 emissions;

• Tested the growth rate assumptions by comparing them to
management’s strategic plans and previous sector growth
rates and industry reports where available;

• Performed sensitivity analysis of key assumptions and applied

our own independent sensitivities by replacing key assumptions
with alternative scenarios to ascertain the extent of change in
those assumptions that, either individually or collectively, would
be required for the assets to be impaired;

• For the Healthcare Assessment CGU group, we also used our

valuation experts to calculate an independent WACC rate and
long-term growth rate;

• Tested management’s other intangible assets impairment
assessment. We evaluated management’s approach and
ensured that the underlying cash flows within the trigger
assessment were appropriate and consistent with the
goodwill models;

• Where triggers were identified, reviewed managements value

in use calculations in line with the useful economic lives of those
assets and performed our own sensitivities based on discussions
of performance with sector and group management, along with
external expectations for the markets and industries to which
other intangibles relate; and

• Reviewed the adequacy of disclosures made in the financial

statements and assessed compliance with IAS 36.

Based on our work summarised above, we concluded that the
goodwill and other intangible assets balances are materially
appropriately stated at 31 March 2023 and that appropriate
disclosures have been made in the financial statements.

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Financial
Statements

Other
Information

Key audit matter

How our audit addressed the key audit matter

Impairment of investments and recoverability of intercompany
receivables (parent)
Refer to Statement of Accounting Policies and Note C5 - Shares in
Group Companies.

At 31 March 2023, the Company held investments in subsidiaries
with a carrying value of £576.8m (2022: £453.5m) and intercompany
receivables of £1,025.6m (2022: £801.2m). There is a risk that the
recoverable amount of investments held at 31 March 2023 falls
below their current carrying value. There is also a risk that the
intercompany receivables balance is not recoverable.

The investment amount consists of the direct ownership of all
UK subsidiaries in addition to investments in intermediary holding
companies which then hold direct investments in the Group’s
foreign subsidiaries.

The realisation of the carrying value of the investment is
dependent on the future performance of the trading entities
within the Group. The assessment therefore involves judgement,
particularly in accurately forecasting future cash flows.

Management initially prepared a trigger assessment to identify
those with impairment indicators, before preparing a Value in
Use (VIU) model reflecting the current year profit after tax into
perpetuity using a group discount rate, and assumptions over
the long term growth.

The key areas of audit focus were the key assumptions in the
VIU model including investment specific operating assumptions,
discount rates and growth rates used to extrapolate risk adjusted
cash flows beyond the forecast period. Through this assessment
management concluded that no impairment was required,
and similarly that no impairment was required in relation to
intercompany receivables.

How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed
enough work to be able to give an opinion on the financial
statements as a whole, taking into account the structure of
the group and the company, the accounting processes and
controls, and the industry in which they operate.

The Group is split into three sectors being Safety, Environmental
& Analysis and Healthcare. Each sector consists of a number
of businesses spread globally across more than 20 countries.
The businesses are further disaggregated into 290 reporting
components within the consolidation.

We did not identify any individually significant components within
the Group, with no single component providing more than 15%
of the Group’s external revenue or profit before taxation and
before adjustments. We determined the most efficient approach
to scoping was to perform full scope procedures over 30 reporting
components where statutory audits are already required in the
UK, Germany, Belgium, Australia, Switzerland, Singapore, China,
France and Italy. Full scope procedures were also performed in
relation to the component holding all consolidation adjustments.
In addition, specified audit procedures were performed over all
material balances for a further 14 components in the United
States. Additional audit procedures were performed on specific
financial statement line items for a further 16 components in
China, the UK, the United States, Canada, Germany and
Australia. This approach ensured that appropriate audit coverage
has been obtained across all financial statement line items.

The audit procedures we performed to address the risk around the
carrying value of investments in subsidiaries and recoverability of
intercompany receivables were:

• Discussed with management the basis of their impairment
review and, where triggers were identified, the cash flow
forecasts and terminal value determination;

• Tested all current year acquisitions and disposals back to the

supporting documentation and reconciled the closing positions
from management’s detailed schedules to the financial
statements at 31 March 2023;

• Supported by PwC valuations experts, reviewed management’s

independent discount rate calculation for appropriateness;
• Evaluated the appropriateness of management’s initial trigger

assessment and challenged management on the key
assumptions in the VIU model where this was required;

• Sensitised management’s assumptions in the VIU model in

particular around the forecast cash flow growth rates;
• Compared the total market capitalisation of the Group to

the carrying value of investments which did not identify any
impairment triggers; and

• In respect of intercompany receivables, we compared the net
assets and future cash flows of the companies to the total
intercompany receivables to ensure that the total balance
was recoverable.

Based on the work done, as summarised above, we did not
identify any material impairments in relation to investment
balances and intercompany receivables held by the Company
at 31 March 2023.

Where work was performed by component auditors, we
determined the appropriate level of involvement we needed
to have in that audit work to ensure we could conclude that
sufficient appropriate audit evidence had been obtained for
the Group financial statements as a whole. We issued written
instructions to all component auditors and had regular
communications with them throughout the audit cycle. We
have held remote meetings with members of each component
team during the planning phase of our work and reviewed all
significant matters reported. In addition, the Group Engagement
Leader visited a number of international and UK based reporting
components, as well as a senior member of the Group engagement
team visiting the US during the execution phase of the audit to
provide additional oversight to the US component teams. Working
paper reviews have also been performed for all components which
are individually material to the Group; that is exceeding 5% of the
Group’s profit before taxation or 3% of the Group’s revenue.

Based on the detailed audit work performed across the Group,
we have gained coverage of 69% of total revenue, 72% of profit
before tax, and 87% of net assets.

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Independent auditors’ report to the members of Halma plc continued

The impact of climate risk on our audit
As part of our audit we have made enquiries of management to
understand the process they adopted to assess the extent of the
potential impact of climate risk on the financial statements and
support the disclosures made in relation to climate risk within
the Strategic report, TCFD Report and Sustainability report.

In addition to enquiries with management, we also read
management’s experts screening report for scope 3 baselining.

We assessed the completeness of management’s climate risk
assessment by:

• reading external reporting made by management including

the Carbon Disclosure Project submissions to ensure
consistency with climate reporting; and

• challenging management’s climate impact assessment

including scope 3 baselining assessments with management’s
information and analysis.

The Board has made commitments to get to net zero carbon
emissions on Scope 1 and Scope 2 by 2040.

Management has assessed that there is no material impact on
the financial reporting judgements and estimates arising from
their considerations, consistent with previous assessments
made by the business.

Using our knowledge of the business, we evaluated management’s
risk assessment, its estimates as set out in Statement of Accounting
Policies and resulting disclosures where significant. In particular we
have considered how climate risk would impact the assumptions
made in the forecasts prepared by management used in their
impairment analyses, as referenced in the key audit matter in
relation to the impairment of goodwill and other intangible
assets above.

We also considered the consistency of the disclosures in relation
to climate change within the Strategic report, TCFD Report and
the Sustainability report with the financial statements and our
knowledge obtained from the audit.

Our procedures did not identify any material impact in the context
of our audit of the financial statements as a whole, or our key
audit matters, for the year ended 31 March 2023.

We have involved climate change specialists in reading the
disclosures made in relation to climate change in the other
information within the Annual Report, and consider these to
be materially consistent with the financial statements and our
knowledge from our audit.

Our responsibility over other information is further described in
the “Reporting on other information” section of our report. We
have not been engaged to provide assurance over the accuracy
of these disclosures.

Materiality
The scope of our audit was influenced by our application of
materiality. We set certain quantitative thresholds for materiality.
These, together with qualitative considerations, helped us to
determine the scope of our audit and the nature, timing and
extent of our audit procedures on the individual financial
statement line items and disclosures and in evaluating the
effect of misstatements, both individually and in aggregate
on the financial statements as a whole.

Based on our professional judgement, we determined materiality
for the financial statements as a whole as follows:

Overall materiality

£18,060,000 (FY22: £15,800,000).

£16,200,000 (FY22: £13,400,000).

How we determined it

5% of profit before tax and before adjustments

1% of total assets

Financial statements – group

Financial statements – company

Rationale for benchmark applied

Based on the benchmarks used in the Annual
Report, profit before tax and before adjustments
is considered as the primary measure used by
the shareholders in assessing the underlying
performance of the Group. This benchmark
excludes the impact of adjustments in respect
of amortisation and impairment of acquired
intangible assets, acquisition items, significant
restructuring costs and profit or loss on disposal
of operations.

We believe that a total asset benchmark is
appropriate given that the Company does not
generate revenues of its own.

In determining the performance materiality, we considered a
number of factors – the history of misstatements, risk assessment
and aggregation risk and the effectiveness of controls – and
concluded that an amount at the upper end of our normal
range was appropriate.

We agreed with the Audit Committee that we would report to
them misstatements identified during our audit above £903,000
(group audit) (FY22: £790,000) and £903,000 (company audit)
(FY22: £790,000) as well as misstatements below those amounts
that, in our view, warranted reporting for qualitative reasons.

For each component in the scope of our group audit, we allocated
a materiality that is less than our overall group materiality. The
range of materiality allocated across components was £0.1m
to £16.2m. Certain components were audited to a local
statutory audit materiality that was also less than our
overall group materiality.

We use performance materiality to reduce to an appropriately
low level the probability that the aggregate of uncorrected
and undetected misstatements exceeds overall materiality.
Specifically, we use performance materiality in determining
the scope of our audit and the nature and extent of our testing
of account balances, classes of transactions and disclosures,
for example in determining sample sizes. Our performance
materiality was 75% (FY22: 75%) of overall materiality,
amounting to £13,540,000 (FY22: £11,850,000) for the group
financial statements and £12,100,000 (FY22: £10,050,000)
for the company financial statements.

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Governance

Financial
Statements

Other
Information

Reporting on other information
The other information comprises all of the information in the
Annual Report other than the financial statements and our
auditors’ report thereon. The directors are responsible for the
other information. Our opinion on the financial statements
does not cover the other information and, accordingly, we do
not express an audit opinion or, except to the extent otherwise
explicitly stated in this report, any form of assurance thereon.

In connection with our audit of the financial statements, our
responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent
with the financial statements or our knowledge obtained in
the audit, or otherwise appears to be materially misstated.
If we identify an apparent material inconsistency or material
misstatement, we are required to perform procedures
to conclude whether there is a material misstatement of the
financial statements or a material misstatement of the other
information. If, based on the work we have performed, we
conclude that there is a material misstatement of this other
information, we are required to report that fact. We have
nothing to report based on these responsibilities.

With respect to the Strategic report and Directors’ Report, we also
considered whether the disclosures required by the UK Companies
Act 2006 have been included.

Based on our work undertaken in the course of the audit, the
Companies Act 2006 requires us also to report certain opinions
and matters as described below.

Strategic report and Directors’ Report
In our opinion, based on the work undertaken in the course of the
audit, the information given in the Strategic report and Directors’
Report for the year ended 31 March 2023 is consistent with the
financial statements and has been prepared in accordance
with applicable legal requirements.

In light of the knowledge and understanding of the group and
company and their environment obtained in the course of the
audit, we did not identify any material misstatements in the
Strategic report and Directors’ Report.

Directors’ Remuneration
In our opinion, the part of the Annual Remuneration Report to
be audited has been properly prepared in accordance with the
Companies Act 2006.

Conclusions relating to going concern
Our evaluation of the directors’ assessment of the group’s and the
company’s ability to continue to adopt the going concern basis of
accounting included:

• Testing the appropriateness of the underlying cash flow forecasts
and performing a retrospective review of actual performance to
the prior year model;

• Reviewing the debt agreements to confirm the terms and

conditions, including covenants. The covenants were consistent
with those used in management’s going concern assessment;

• Agreeing borrowings as at 31 March 2023 to third-party

confirmations and considered the Group’s available financing
and maturity profile. This supported the Directors’ conclusion
that sufficient liquidity headroom remained throughout the
assessment period;

• Testing the mathematical accuracy of the covenant calculations,

including confirming that the adjustments recorded to
determine proforma EBITDA;

• Reviewing management’s base case and severe but plausible
downside scenario, ensuring the directors have considered all
appropriate factors, including the cash flows, the liquidity
position of the Group, available borrowing facilities, the timing
of contractual debt repayments and the relevant financial
and non-financial covenants; and

• Performing sensitivity analysis to assess the impact of

movements in significant assumptions on the overall liquidity
headroom and the banking covenants.

Based on the work we have performed, we have not identified
any material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the
group’s and the company’s ability to continue as a going concern
for a period of at least twelve months from when the financial
statements are authorised for issue.

In auditing the financial statements, we have concluded that
the directors’ use of the going concern basis of accounting in
the preparation of the financial statements is appropriate.

However, because not all future events or conditions can be
predicted, this conclusion is not a guarantee as to the group’s
and the company’s ability to continue as a going concern.

In relation to the directors’ reporting on how they have applied the
UK Corporate Governance Code, we have nothing material to add
or draw attention to in relation to the directors’ statement in the
financial statements about whether the directors considered it
appropriate to adopt the going concern basis of accounting.

Our responsibilities and the responsibilities of the directors with
respect to going concern are described in the relevant sections
of this report.

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Corporate governance statement
The Listing Rules require us to review the directors’ statements in
relation to going concern, longer-term viability and that part of
the corporate governance statement relating to the company’s
compliance with the provisions of the UK Corporate Governance
Code specified for our review. Our additional responsibilities
with respect to the corporate governance statement as other
information are described in the Reporting on other information
section of this report.

Based on the work undertaken as part of our audit, we have
concluded that each of the following elements of the corporate
governance statement is materially consistent with the financial
statements and our knowledge obtained during the audit, and we
have nothing material to add or draw attention to in relation to:

• The directors’ confirmation that they have carried out a robust

assessment of the emerging and principal risks;

• The disclosures in the Annual Report that describe those principal
risks, what procedures are in place to identify emerging risks and
an explanation of how these are being managed or mitigated;

• The directors’ statement in the financial statements about
whether they considered it appropriate to adopt the going
concern basis of accounting in preparing them, and their
identification of any material uncertainties to the group’s
and company’s ability to continue to do so over a period of
at least twelve months from the date of approval of the
financial statements;

• The directors’ explanation as to their assessment of the group’s
and company’s prospects, the period this assessment covers
and why the period is appropriate; and

• The directors’ statement as to whether they have a reasonable

expectation that the company will be able to continue in
operation and meet its liabilities as they fall due over the period
of its assessment, including any related disclosures drawing
attention to any necessary qualifications or assumptions.

Our review of the directors’ statement regarding the longer-term
viability of the group and company was substantially less in
scope than an audit and only consisted of making inquiries and
considering the directors’ process supporting their statement;
checking that the statement is in alignment with the relevant
provisions of the UK Corporate Governance Code; and considering
whether the statement is consistent with the financial statements
and our knowledge and understanding of the group and company
and their environment obtained in the course of the audit.

In addition, based on the work undertaken as part of our audit,
we have concluded that each of the following elements of the
corporate governance statement is materially consistent with
the financial statements and our knowledge obtained during
the audit:

• The directors’ statement that they consider the Annual Report,
taken as a whole, is fair, balanced and understandable, and
provides the information necessary for the members to assess
the group’s and company’s position, performance, business
model and strategy;

• The section of the Annual Report that describes the review of

effectiveness of risk management and internal control systems;
and

• The section of the Annual Report describing the work of the

Audit Committee.

We have nothing to report in respect of our responsibility to
report when the directors’ statement relating to the company’s
compliance with the Code does not properly disclose a departure
from a relevant provision of the Code specified under the Listing
Rules for review by the auditors.

Responsibilities for the financial statements and the audit
Responsibilities of the directors for the financial statements
As explained more fully in the Directors’ responsibilities, the
directors are responsible for the preparation of the financial
statements in accordance with the applicable framework and
for being satisfied that they give a true and fair view. The directors
are also responsible for such internal control as they determine is
necessary to enable the preparation of financial statements that
are free from material misstatement, whether due to fraud
or error.

In preparing the financial statements, the directors are responsible
for assessing the group’s and the company’s ability to continue
as a going concern, disclosing, as applicable, matters related to
going concern and using the going concern basis of accounting
unless the directors either intend to liquidate the group or the
company or to cease operations, or have no realistic alternative
but to do so.

Auditors’ responsibilities for the audit of the
financial statements
Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an
auditors’ report that includes our opinion. Reasonable assurance
is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists. Misstatements can arise
from fraud or error and are considered material if, individually or
in the aggregate, they could reasonably be expected to influence
the economic decisions of users taken on the basis of these
financial statements.

Irregularities, including fraud, are instances of non-compliance
with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements
in respect of irregularities, including fraud. The extent to which our
procedures are capable of detecting irregularities, including fraud,
is detailed below.

176

Halma plc | Annual Report and Accounts 2023

Based on our understanding of the group and industry, we
identified that the principal risks of non-compliance with laws
and regulations related to Employment regulation, Health and
safety regulation, Data Protection regulations, Task Force on
Climate-Related Financial Disclosures and Streamlined Energy and
Carbon Reporting (SECR), and we considered the extent to which
non-compliance might have a material effect on the financial
statements. We also considered those laws and regulations that
have a direct impact on the financial statements such as The
Listing Rules, applicable tax legislation, Pensions legislation,
The UK Corporate Governance Code 2018, and Companies Act
2006. We evaluated management’s incentives and opportunities
for fraudulent manipulation of the financial statements (including
the risk of override of controls), and determined that the principal
risks were related to posting inappropriate journal entries, either in
the underlying books and records or as part of the consolidation
process, and management bias in accounting estimates. The
group engagement team shared this risk assessment with the
component auditors so that they could include appropriate audit
procedures in response to such risks in their work. Audit procedures
performed by the group engagement team and/or component
auditors included:

• Discussions with management and the Group’s legal team,
including consideration of known or suspected instances of
non-compliance with laws and regulations and fraud;
• Review of selected component auditors’ working papers;
• Challenging assumptions and judgements made by

management in their significant accounting judgements and
estimates that involve considering future events that are
inherently uncertain or that may be subject to management
bias. In particular, we focused our work on impairment of
goodwill and other intangible assets, valuation of acquired
intangible assets, defined benefit pension liabilities and the
valuation of contingent consideration;

• Identifying and testing journal entries, in particular any journal
entries posted with unusual account combinations or those
posted by unexpected users; and

• Testing all material consolidation adjustments to ensure these

were appropriate in nature and magnitude.

There are inherent limitations in the audit procedures described
above. We are less likely to become aware of instances of non-
compliance with laws and regulations that are not closely related
to events and transactions reflected in the financial statements.
Also, the risk of not detecting a material misstatement due to
fraud is higher than the risk of not detecting one resulting from
error, as fraud may involve deliberate concealment by, for
example, forgery or intentional misrepresentations, or
through collusion.

Strategic
Report

Governance

Financial
Statements

Other
Information

Our audit testing might include testing complete populations of
certain transactions and balances, possibly using data auditing
techniques. However, it typically involves selecting a limited
number of items for testing, rather than testing complete
populations. We will often seek to target particular items for
testing based on their size or risk characteristics. In other cases,
we will use audit sampling to enable us to draw a conclusion
about the population from which the sample is selected.

A further description of our responsibilities for the audit of
the financial statements is located on the FRC’s website at:
www.frc.org.uk/auditorsresponsibilities. This description
forms part of our auditors’ report.

Use of this report
This report, including the opinions, has been prepared for and only
for the company’s members as a body in accordance with Chapter
3 of Part 16 of the Companies Act 2006 and for no other purpose.
We do not, in giving these opinions, accept or assume responsibility
for any other purpose or to any other person to whom this report
is shown or into whose hands it may come save where expressly
agreed by our prior consent in writing.

Other required reporting
Companies Act 2006 exception reporting
Under the Companies Act 2006 we are required to report to you if,
in our opinion:

• we have not obtained all the information and explanations we

require for our audit; or

• adequate accounting records have not been kept by the

company, or returns adequate for our audit have not been
received from branches not visited by us; or

• certain disclosures of directors’ remuneration specified by law

are not made; or

• the company financial statements and the part of the Annual
Remuneration Report to be audited are not in agreement with
the accounting records and returns.

We have no exceptions to report arising from this responsibility.

Appointment
Following the recommendation of the Audit Committee, we were
appointed by the members on 20 July 2017 to audit the financial
statements for the year ended 31 March 2018 and subsequent
financial periods. The period of total uninterrupted engagement is
6 years, covering the years ended 31 March 2018 to 31 March 2023.

Other matter
In due course, as required by the Financial Conduct Authority
Disclosure Guidance and Transparency Rule 4.1.14R, these
financial statements will form part of the ESEF-prepared
annual financial report filed on the National Storage Mechanism
of the Financial Conduct Authority in accordance with the ESEF
Regulatory Technical Standard (‘ESEF RTS’). This auditors’ report
provides no assurance over whether the annual financial report
will be prepared using the single electronic format specified in
the ESEF RTS.

Christopher Richmond (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
London

15 June 2023

Halma plc | Annual Report and Accounts 2023

177

Consolidated Income Statement

Continuing operations
Revenue

Operating profit
Share of loss of associate
Profit on disposal of operations
Finance income
Finance expense

Profit before taxation
Taxation

Profit for the year

Attributable to:
Owners of the parent
Non–controlling interests

Earnings per share
From continuing operations
Basic
Diluted

Dividends in respect of the year
Paid and proposed (£m)
Paid and proposed per share

Year ended 31 March 2023

Year ended 31 March 2022

Adjusted*

£m

Adjustments*
(note 1)

£m

Total
£m

Adjusted*

£m

Adjustments*
(note 1)

£m

Notes

Total
£m

1,852.8

–

1,852.8

1,525.3

–

1,525.3

14
30
4
5

6
9

378.2
–
–
1.8
(18.7)

361.3
(72.9)

288.4

(69.8)
–
–
–
–

(69.8)
15.7

(54.1)

308.4
–
–
1.8
(18.7)

291.5
(57.2)

234.3

234.5
(0.2)

324.7
(0.1)
–
0.6
(9.0)

316.2
(68.3)

247.9

(45.8)
–
34.0
–
–

(11.8)
8.1

(3.7)

76.34p

62.04p
61.86p

65.48p

76.3
20.20p

278.9
(0.1)
34.0
0.6
(9.0)

304.4
(60.2)

244.2

244.4
(0.2)

64.54p
64.42p

71.5
18.88p

* Adjustments include the amortisation and impairment of acquired intangible assets; acquisition items; significant restructuring costs, and profit or loss on disposal

of operations; and the associated taxation thereon. Note 3 provides more information on alternative performance measures.

178

Halma plc | Annual Report and Accounts 2023

Financial
Statements
Consolidated Statement of Comprehensive Income and Expenditure

Strategic
Report

Governance

Other
Information

Profit for the year
Items that will not be reclassified subsequently to the Consolidated Income Statement:
Actuarial (losses)/gains on defined benefit pension plans
Tax relating to components of other comprehensive income that will not be reclassified
Unrealised changes in the fair value of equity investments at fair value through other
comprehensive income
Items that may be reclassified subsequently to the Consolidated Income Statement:
Effective portion of changes in fair value of cash flow hedges
Deferred tax in respect of cash flow hedges accounted for in the hedging reserve
Exchange gains on translation of foreign operations and net investment hedge

Other comprehensive income for the year

Total comprehensive income for the year

Attributable to
Owners of the parent
Non-controlling interests

Notes

29
9

27
9

Year ended
31 March
2023
£m

Year ended
31 March
2022
£m

234.3

244.2

(8.8)
1.2

41.6
(9.6)

6.1

(1.7)

1.3
(0.3)
45.1

44.6

(1.5)
0.4
43.9

73.1

278.9

317.3

279.2
(0.3)

317.5
(0.2)

The exchange gains of £45.1m (2022: gains of £43.9m) includes losses of £7.4m (2022: losses of £8.6m) which relate to net investment
hedges as described in note 27.

Halma plc | Annual Report and Accounts 2023

179

Consolidated Balance Sheet

Non-current assets
Goodwill
Other intangible assets
Property, plant and equipment
Interest in associates and other investments
Retirement benefit asset
Tax receivable
Deferred tax asset

Current assets
Inventories
Trade and other receivables
Tax receivable
Cash and bank balances
Derivative financial instruments

Total assets

Current liabilities
Trade and other payables
Borrowings
Lease liabilities
Provisions
Tax liabilities
Derivative financial instruments

Net current assets

Non-current liabilities
Borrowings
Lease liabilities
Retirement benefit obligations
Trade and other payables
Provisions
Deferred tax liabilities

Total liabilities

Net assets

Equity
Share capital
Share premium account
Own shares
Capital redemption reserve
Hedging reserve
Translation reserve
Other reserves*
Retained earnings*

Equity attributable to owners of the parent

Non-controlling interests

Total equity

Notes

31 March
2023
£m

31 March
2022
£m

11
12
13
14
29
31
22

15
16

17
19
28
20

19
28
29
21
20
22

1,120.5
472.3
222.9
21.0
38.4
14.7
3.0

908.7
325.2
194.0
8.2
31.1
14.7
2.4

1,892.8

1,484.3

312.4
410.7
1.5
169.5
1.5

895.6

228.8
325.1
0.7
157.4
0.7

712.7

2,788.4

2,197.0

280.7
1.0
19.2
21.0
18.4
0.9

341.2

554.4

677.3
68.7
0.5
21.9
9.7
70.2

848.3

1,189.5

242.7
72.5
15.5
20.7
11.6
0.9

363.9

348.8

287.6
56.6
0.6
19.0
7.7
58.5

430.0

793.9

1,598.9

1,403.1

38.0
23.6
(46.1)
0.2
0.6
162.3
4.4
1,415.8

38.0
23.6
(30.7)
0.2
(0.4)
117.1
(1.7)
1,256.6

1,598.8

1,402.7

0.1

0.4

1,598.9

1,403.1

*See footnote to the Consolidated Statement of Changes in Equity on page 181.

The financial statements of Halma plc on pages 239 to 253, company number 00040932, were approved by the Board of Directors on
15 June 2023.

Marc Ronchetti
Director

Steve Gunning
Director

180

Halma plc | Annual Report and Accounts 2023

Strategic
Report
Consolidated Statement of Changes in Equity

Governance

Financial
Statements

Other
Information

At 1 April 2022
Profit for the year
Other comprehensive
income and expense

Total comprehensive income
and expense
Dividends paid
Share-based payment charge
Deferred tax on share-based
payment transactions
Excess tax deductions related
to share-based payments on
vested awards
Purchase of own shares
Performance share plan
awards vested
At 31 March 2023

At 1 April 2021
Transfer between reserves*

Restated at 1 April 2021
Profit for the year
Other comprehensive income
and expense

Share
capital
£m

38.0
–

Share
premium
account
£m

23.6
–

Own
shares
£m

(30.7)
–

Capital
redemption
reserve
£m

Hedging
reserve
£m

Translation
reserve
£m

Other
reserves
£m

Retained
earnings
£m

Non-
controlling
interest
£m

Total
£m

0.2
–

(0.4)
–

117.1
–

(1.7) 1,256.6
234.5

–

0.4 1,403.1
234.3
(0.2)

–

–
–
–

–

–
–

–

–
–
–

–

–
–

–
38.0

–
23.6

Share
capital
£m

38.0
–

Share
premium
account
£m

23.6
–

–

–
–
–

–

–
–

–

–
–
–

–

–
–

–

–
–
–

–

–
(22.3)

6.9
(46.1)

Own
shares
£m

(20.9)
–

–

–
–
–

–

–
(19.3)

9.5

–

–
–
–

–

–
–

1.0

45.2

1.0
–
–

–

–
–

45.2
–
–

–

–
–

6.1

6.1
–
–

–

–
–

(7.6)

(0.1)

44.6

226.9
(73.3)
17.7

(0.7)

–
–

(0.3)
–
–

278.9
(73.3)
17.7

–

–
–

(0.7)

–
(22.3)

–
0.2

–
0.6

–
162.3

–

(11.4)
4.4 1,415.8

–

(4.5)
0.1 1,598.9

Capital
redemption
reserve
£m

0.2
–

Hedging
reserve
£m

Translation
reserve
£m

Other
reserves
£m

Retained
earnings
£m

Non-
controlling
interest
£m

Total
£m

0.7
–

73.2
–

(13.6) 1,065.8
(13.6)
13.6

– 1,052.2
244.4
–

0.6
–

1,167.6
–

0.6
(0.2)

1,167.6
244.2

–

–
–
–

–

–
–

–

(1.1)

43.9

(1.7)

32.0

–

73.1

(1.1)
–
–

43.9
–
–

(1.7)
–
–

–

–
–

–

–
–

–

–
–

–

276.4
(68.7)
12.2

(0.2)

1.3
–

(16.6)

(0.2)
–
–

–

–
–

–

317.3
(68.7)
12.2

(0.2)

1.3
(19.3)

(7.1)

At 31 March 2022

38.0

23.6

(30.7)

0.2

(0.4)

117.1

(1.7) 1,256.6

0.4

1,403.1

Own shares are ordinary shares in Halma plc purchased by the Company and held to fulfil the Company’s obligations under the Group’s
share plans.

The market value of own shares was £42.4m (2022: £29.5m).

The Capital redemption reserve was created on repurchase and cancellation of the Company’s own shares. The Hedging reserve is used
to record the portion of the cumulative net change in fair value of cash flow hedging instruments that are deemed to be an
effective hedge.

The Translation reserve is used to record the difference arising from the retranslation of the financial statements of foreign operations,
offset by net investment hedges with a carrying value of £33.9m (2022: £26.5m). The Other reserves represent the cumulative fair value
adjustments on equity instruments held at fair value through other comprehensive income.

* Effective for the year ended 31 March 2022, the share-based payment reserve, which was previously presented in Other reserves has been amalgamated with

Retained earnings, in the Consolidated Statement of Changes in Equity and the Consolidated Balance Sheet as permitted by IFRS 2. This resulted in the £13.6m
debit in brought forward Other reserves at 1 April 2021 being transferred to Retained earnings. There is no change in Total equity from this change, nor the amounts
charged or credited to the reserves during the period, which represents a change in presentational accounting policy only.

Halma plc | Annual Report and Accounts 2023

181

Consolidated Cash Flow Statement

Net cash inflow from operating activities

Cash flows from investing activities
Purchase of property, plant and equipment – owned assets
Purchase of computer software
Purchase of other intangibles
Proceeds from sale of property, plant and equipment and capitalised development costs
Development costs capitalised
Interest received
Acquisition of businesses, net of cash acquired
Disposal of business, net of cash disposed
Purchase of equity investments

Net cash used in investing activities

Cash flows from financing activities
Dividends paid
Purchase of own shares
Interest paid
Loan arrangement fees
Proceeds from bank borrowings
Repayment of bank borrowings
Repayment of acquired debt on acquisition
Drawdown of loan notes
Repayment of loan notes
Repayment of lease liabilities, net of interest

Net cash from/(used in) financing activities

Increase in cash and cash equivalents
Cash and cash equivalents brought forward
Exchange adjustments

Cash and cash equivalents carried forward

Reconciliation of net cash flow to movement in net debt
Increase in cash and cash equivalents
Net cash inflow from bank borrowings and loan notes
Net debt acquired
Lease liabilities additions and accretion of interest
Lease liabilities acquired
Lease liabilities disposed of
Lease liabilities and interest repaid
Exchange adjustments

Increase in net debt

Net debt brought forward

Net debt carried forward

182

Halma plc | Annual Report and Accounts 2023

Year ended
31 March
2023
£m

Year ended
31 March
2022
£m

258.0

237.4

Notes

13
12
12

25
30
14

26
26
26
26
26

(29.0)
(0.8)
(0.3)
3.1
(15.8)
0.7
(320.1)
–
(6.7)

(368.9)

(73.3)
(22.3)
(17.5)
(4.1)
451.8
(394.2)
(65.1)
338.1
(74.4)
(18.0)

121.0

10.1
156.7
1.7

168.5

(25.2)
(0.9)
(0.5)
1.1
(13.4)
0.2
(152.8)
57.5
(0.7)

(134.7)

(68.7)
(19.3)
(8.2)
–
161.4
(132.5)
–
–
–
(14.6)

(81.9)

20.8
131.1
4.8

156.7

Year ended
31 March
2023
£m

Year ended
31 March
2022
£m

Notes

26
26

10.1
(256.1)
(65.1)
(24.9)
(9.3)
–
20.9
2.5

(321.9)

(274.8)

(596.7)

20.8
(28.9)
–
(19.0)
(4.6)
2.1
16.8
(5.8)

(18.6)

(256.2)

(274.8)

Accounting Policies

Strategic
Report

Governance

Financial
Statements

Other
Information

Basis of presentation
The consolidated financial statements of Halma are prepared in accordance with UK-adopted International Accounting Standards
and with the requirements of the Companies Act 2006 as applicable to companies reporting under those standards.

The principal Group accounting policies are explained below and have been applied consistently throughout the years ended
31 March 2023 and 31 March 2022, other than those noted below.

The Group accounts have been prepared under the historical cost convention, except as described below under the headings
‘Derivative financial instruments and hedge accounting’, ‘Financial assets at fair value through other comprehensive income (FVOCI)’,
‘Pensions’ and ‘Business combinations and goodwill’.

New Standards and Interpretations applied for the first time in the year ended 31 March 2023
The following Standards with an effective date of 1 January 2022, have been adopted without any significant impact on the amounts
reported in these financial statements:

• Reference to the Conceptual Framework – Amendments to IFRS 3
• Property, Plant and Equipment: Proceeds before Intended Use – Amendments to IAS 16
• Onerous Contracts – Costs of Fulfilling a Contract – Amendments to IAS 37
• Annual Improvements to IFRS 2018– 2020

New Standards and Interpretations not yet applied
At the date of authorisation of these financial statements, the following Standards and Interpretations that are potentially relevant to
the Group, and which have not been applied in these financial statements, were in issue but not yet effective (and in some cases had
not yet been adopted by the UK):

• IFRS 17 Insurance Contracts
• Classification of Liabilities as Current or Non-current – Amendments to IAS 1 – Not yet endorsed by the UK
• Definition of Accounting Estimates – Amendments to IAS 8
• Disclosure of Accounting Policies – Amendments to IAS 1 and IFRS Practice Statement 2
• Deferred Tax related to Assets and Liabilities arising from a Single Transaction – Amendments to IAS 12
• Lease Liability in a Sale and Leaseback – Amendments to IFRS 16
• Classification of Liabilities as Current or Non-current and Non-current Liabilities with Covenants - Amendments to IAS 1 –

Not yet endorsed by the UK

• Amendments to IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments: Disclosures – Not yet endorsed by the UK
• Amendments to IAS 12 International Tax Reform Pillar Two Model Rule - Not yet endorsed by the UK

The Directors anticipate that the adoption of these Standards and Interpretations in future periods will have no material impact on the
financial statements of the Group.

Use of Alternative performance measures (APMs)
In the reporting of the financial information, the Group uses certain measures that are not required under IFRS, the Generally Accepted
Accounting Principles (GAAP) under which the Group reports. The Directors believe that Return on Total Invested Capital (ROTIC), Return
on Capital Employed (ROCE), Organic growth at constant currency, Adjusted profit and earnings per share measures, net debt, cash
conversion and Adjusted operating cash flow provide additional and more consistent measures of underlying performance to
shareholders by removing items that are not closely related to the Group’s trading or operating cash flows. These and other alternative
performance measures are used by the Directors for internal performance analysis and incentive compensation arrangements for
employees. The terms ROTIC, ROCE, organic growth at constant currency and ‘adjusted’ are not defined terms under IFRS and may
therefore not be comparable with similarly titled measures reported by other companies. They are not intended to be a substitute for, or
superior to, GAAP measures.

The principal items which are included in adjusting items are set out below in the Group’s accounting policy and in note 1.
The term ‘adjusted’ refers to the relevant measure being reported for continuing operations excluding adjusting items.

Definitions of the Group’s material alternative performance measures along with reconciliation to their IFRS equivalent measure are
included in note 3.

Key accounting policies
Below we set out our key accounting policies, with a list of all other accounting policies thereafter.

Going concern
The Group’s business activities, together with the main trends and factors likely to affect its future development, performance and
position, and the financial position of the Group as at 31 March 2023, its cash flows, liquidity position and borrowing facilities are set out
in the Strategic Report. In addition, note 27 contains further information concerning the security, currency, interest rates and maturity of
the Group’s borrowings.

The financial statements have been prepared on a going concern basis. In adopting the going concern basis the Directors have
considered all of the above factors, including potential scenarios and its principal risks set out on pages 91 to 97. Under the potential
scenarios considered, which includes a severe but plausible downside scenario, the Group remains within its debt facilities and the
attached financial covenants for the foreseeable future and the Directors therefore believe, at the time of approving the financial
statements, that the Company is well placed to manage its business risks successfully and remains a going concern. The key facts and
assumptions in reaching this determination are summarised below.

The base case scenario has been prepared using forecasts from each Operating Company as well as cash outflows on acquisitions in line
with pre COVID pandemic levels. In addition, a severe but plausible downside scenario has been modelled showing a decline in trading
for the year ending 31 March 2024.

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Accounting Policies continued

Key accounting policies continued
This reduction in trading could be caused by events such as a significant resurgence in the COVID pandemic lockdowns beyond China or
continued macroeconomic volatility leading to further inflation and interest rate increases. In mitigating the impacts of the downside
scenario there are actions that can be taken which are entirely discretionary to the business such as reducing acquisition spend and
dividend growth rates. In addition, the Group has demonstrated strong resilience and flexibility to manage its overheads and adapt
its supply chains during the COVID pandemic and more recent global economic uncertainty.

Neither the base case nor severe but plausible downside scenarios result in a breach of the Group’s available debt facilities or the
attached covenants and, accordingly, the Directors believe there is no material uncertainty in the use of the going concern assumption
and, therefore, deem it appropriate to continue to adopt the going concern basis of accounting for at least the next 12-month period.

Our financial position remains robust with committed facilities at the balance sheet date totalling approximately £931m which includes
a £550m Revolving Credit Facility (RCF). The undrawn committed facilities as at 31 March 2023 amounted to £255.7m. In May 2022,
the RCF was refinanced and now matures in May 2028, the first of two one-year extension options having been exercised post year-end.
During May 2022, the Group also entered into a new Note Purchase Agreement which provided access to loan notes totalling £330m,
which were drawn in various currencies in July 2022. The financial covenants across the facilities are for leverage (net debt/adjusted
EBITDA) of not more than three and a half times and for adjusted interest cover of not less than four times.

Business combinations and goodwill
Business combinations are accounted for using the acquisition method as at the acquisition date, which is the date on which control
is transferred to the Group. The Group measures goodwill at the acquisition date as:

• the fair value of the consideration transferred; plus
• the recognised amount of any non-controlling interests in the acquiree measured at the proportionate share of the value of net

identifiable assets acquired; plus

• the fair value of the existing equity interest in the acquiree; less
• the net recognised amount (generally fair value) of the identifiable assets acquired and liabilities assumed.

Costs related to the acquisition, other than those associated with the issue of debt or equity securities, are expensed as incurred.
Any contingent consideration payable may be accounted for as either:

a) Consideration transferred, which is recognised at fair value at the acquisition date. If the contingent purchase consideration is

classified as equity, it is not remeasured and settlement is accounted for within equity. Otherwise, subsequent changes to the fair
value of the contingent purchase consideration are recognised in the Consolidated Income Statement; or

b) Remuneration, which is expensed in the Consolidated Income Statement over the associated period of service. An indicator of such
treatment includes when payments to employees of the acquired company are contingent on a post-acquisition event, but may be
automatically forfeited on termination of employment.

For acquisitions between 4 April 2004 (the date from which the financial statements were reported under IFRS) and 2 April 2010, goodwill
represents the difference between the cost of the acquisition, including acquisition costs and the fair value of the net identifiable assets
acquired. Goodwill has an indefinite expected useful life and is not amortised, but is tested annually for impairment.

Goodwill is recognised as an intangible asset in the Consolidated Balance Sheet. Goodwill therefore includes non-identified intangible
assets including business processes, buyer-specific synergies, know-how and workforce-related industry-specific knowledge and
technical skills. Negative goodwill arising on acquisitions would be recognised directly in the Consolidated Income Statement.

On closure or disposal of an acquired business, goodwill would be taken into account in determining the profit or loss on closure
or disposal.

As permitted by IFRS 1, the Group elected not to apply IFRS 3 ‘Business Combinations’ to acquisitions prior to 4 April 2004 in its
consolidated accounts. As a result, the net book value of goodwill recognised as an intangible asset under UK GAAP at 3 April 2004
was brought forward unadjusted as the cost of goodwill recognised under IFRS at 4 April 2004 subject to impairment testing on that
date; and goodwill that was written off to reserves prior to 28 March 1998 under UK GAAP will not be taken into account in
determining the profit or loss on disposal or closure of previously acquired businesses from 4 April 2004 onwards.

Payments for contingent consideration are classified as investing activities within the Consolidated Cash Flow Statement, except for
amounts paid in excess of that estimated in the acquisition balance sheets which are recognised in the net cash inflow from operating
activities in the year together with movements in contingent consideration provisions charged/credited to the Consolidated Income
Statement which is included as a reconciling item between operating profit and cash inflow from operating activities.

Intangible assets
(a) Acquired intangible assets
An intangible resource acquired with a subsidiary undertaking is recognised as an intangible asset if it is separable from the acquired
business or arises from contractual or legal rights, is expected to generate future economic benefits and its fair value can be measured
reliably. Acquired intangible assets, comprising trademarks, technology and know-how and customer relationships, are amortised
through the Consolidated Income Statement on a straight-line basis over their estimated economic lives of between three and 20 years.
The carrying value of intangible assets is reviewed for impairment if events or changes in circumstances indicate the carrying value may
not be recoverable.

(b) Product development costs
Research expenditure is charged to the Consolidated Income Statement in the financial year in which it is incurred.

Development expenditure is expensed in the financial year in which it is incurred, unless it relates to the development of a new or
substantially improved product, is incurred after the technical feasibility and economic viability of the product has been proven and the
decision to complete the development has been taken, and can be measured reliably. Such expenditure, meeting the recognition criteria
of IAS 38 ‘Intangible Assets’, is capitalised as an intangible asset in the Consolidated Balance Sheet at cost and is amortised through the
Consolidated Income Statement on a straight-line basis over its estimated economic life of three years.

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Key accounting policies continued
Pensions
The Group makes contributions to various pension plans.

For defined benefit plans, the asset or liability recorded in the Consolidated Balance Sheet is the difference between the fair value of
the plan’s assets and the present value of the defined obligation at that date. The defined benefit obligation is calculated separately
for each plan on an annual basis by independent actuaries using the projected unit credit method.

Actuarial gains and losses are recognised in full in the period in which they occur and are taken to other comprehensive income.

Current and past service costs, along with the impact of any settlements or curtailments, are charged to the Consolidated Income
Statement. The net interest expense on pension plans’ liabilities and the expected return on the plans’ assets is recognised within
finance expense in the Consolidated Income Statement.

Contributions to defined contribution plans are charged to the Consolidated Income Statement in the period the expense relates to.

Impairment of trade and other receivables
The Group assesses on a forward-looking basis the expected credit losses associated with its trade and other receivables carried at
amortised cost. The impairment methodology applied depends on whether there has been a significant increase in credit risk.

The Group applies the simplified approach permitted by IFRS 9, which requires expected lifetime losses to be recognised from initial
recognition of the receivables. In order to estimate the expected lifetime losses, the Group categorises its customers into groups with
similar risk profiles and determines the historic rates of impairment for each of those categories of customer. The Group then adjusts
the risk profile for each group of customers by using forward looking information, such as the government risk of default for the country
in which those customers are located, and determines an overall probability of impairment for the total trade and other receivables at
the balance sheet date.

Critical accounting judgements and key sources of estimation uncertainty
The preparation of Group accounts in conformity with IFRS requires the Directors to make judgements, estimates and assumptions that
affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated
assumptions are based on historical experiences and various other factors that are believed to be reasonable under the circumstances,
the results of which form the basis of making judgements about carrying values of assets and liabilities that are not readily apparent
from other sources. Actual results may differ from these estimates.

In preparing the Consolidated Financial Statements management has considered the impact of climate change, particularly in the
context of the disclosures included in the Strategic Report and the stated Net Zero ambitions. These considerations did not have a
material impact on the financial reporting judgements and estimates in the current year. Climate change is not expected to have a
significant impact on the Group’s going concern assessment as at March 2023 nor the viability of the Group over the next three years.

The following areas of critical accounting judgement and key estimation uncertainty have been identified as having significant risk of
causing a material adjustment to the carrying amounts of assets and liabilities:

Critical accounting judgements
Goodwill impairment CGU groups
Determining whether goodwill is impaired requires management’s judgement in assessing cash generating unit (CGU) groups to which
goodwill should be allocated. Management allocates a new acquisition to a CGU group based on which one is expected to benefit most
from that business combination. The allocation of goodwill to existing CGU groups is generally straightforward and factual, however
over time as new businesses are acquired and management reporting structures change, management reviews the CGU groups to
ensure they are still appropriate. Further details are provided in note 11. There have been no changes to the CGU groups in the
current year.

Recoverability of non-current taxation assets
In the current year, determining the recoverability of tax assets requires management’s judgement in assessing the amounts paid in
relation to group financing partial exemption applicable to UK controlled foreign companies as a result of the decision by the European
Commission that this constitutes state aid. Management’s assessment is that this represents a contingent liability and that the £14.7m
paid to HM Revenue & Customs (HMRC) in previous years, included within non-current assets on the Consolidated Balance Sheet, will
ultimately be recovered. Further details are provided in note 31.

Key sources of estimation uncertainty
Contingent consideration changes in estimates
Determining the value of contingent consideration recognised as part of the acquisition of a business requires management to estimate
the expected performance of the acquired business and the amount of contingent consideration that will therefore become payable.
Initial estimates of expected performance are made by the management responsible for completing the acquisition and form a key
component of the financial due diligence that takes place prior to completion. Subsequent measurement of contingent consideration
is based on the Directors’ appraisal of the acquired business’s performance in the post-acquisition period and the agreement of final
payments. See notes 20 and 27 for details of the changes in estimates made in the year and the sensitivity of contingent consideration
payables to further changes.

Intangible assets
Intangible assets IFRS 3 (revised) ‘Business Combinations’ requires that goodwill arising on the acquisition of subsidiaries is capitalised
and included in intangible assets. IFRS 3 (revised) also requires the identification and valuation of other separable intangible assets at
acquisition. The assumptions involved in valuing these intangible assets require the use of management estimates.

IAS 38 ‘Intangible Assets’ requires that development costs, arising from the application of research findings or other technical
knowledge to a plan or design of a new or substantially improved product, are capitalised, subject to certain criteria being met.
Determining the technical feasibility and estimating the future cash flows generated by the products in development requires the
use of management estimates.

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Accounting Policies continued

Critical accounting judgements and key sources of estimation uncertainty continued
The estimates made in relation to both acquired intangible assets and capitalised development costs include identification of relevant
assets, future growth rates, expected inflation rates and the discount rate used. Management also make estimates of the useful
economic lives of the intangible assets. Management engages third party specialists to assist with the valuation of acquired intangible
assets for significant acquisitions. Depending on the nature of the assets the Group uses different valuation methodologies to arrive at
the fair value including the excess earnings method, the relief from royalty method and the cost savings method. Financial projections
are based on market participants' expectations and are discounted to their present value using rates of return which reflects the risk of
the investment and the time value of money. Further details on intangible assets are disclosed in note 12.

Goodwill and acquired intangibles impairment future cash flows
The ‘value in use’ calculation used to test for impairment of goodwill and acquired intangibles involves an estimation of the present
value of future cash flows. For annual impairment testing of goodwill, the future cash flows of the CGU Group are based on annual
budgets and forecasts of each relevant CGU, as approved by the Board, to which management’s expectation of market-share and
long-term growth rates are applied. The present value is then calculated based on management’s estimate of future discount and
growth rates. The Board reviews these key assumptions (operating assumptions, long-term growth rates, and discount rates) and the
sensitivity analysis around these. Management believes that there is no reasonably possible change in any of the key assumptions that
would cause the carrying value of any CGU group to exceed its recoverable amount. Further details are provided in note 11.

Acquired intangibles are assessed each reporting period for any indicators of impairment, both qualitative and quantitative, including as
a result of our assessments of climate-related risks. If there are deemed to be any indicators of impairment a ‘value in use’ calculation is
performed over the remaining useful life of the asset to identify if any impairment is needed. Where required, in calculating the ‘value in
use’, future cash flows are based on annual budgets and forecasts for the relevant business. The present value is then calculated based
on management’s estimate of future discount and growth rates. The Board and management reviews these key assumptions (operating
assumptions, growth rates, and discount rates) and the sensitivity analysis around these.

Defined benefit pension plan liabilities
Determining the value of the future defined benefit asset/obligation requires estimation in respect of the assumptions used to calculate
present values of plan liabilities. The significant assumptions utilised in the calculations are future mortality, discount rate and inflation.
Management determines these assumptions in consultation with an independent actuary. Details of the estimates made in calculating
the defined benefit asset/obligation, including sensitivity analysis, are disclosed in note 29.

Other accounting policies
Basis of consolidation
The Group accounts include the accounts of Halma plc and all of its subsidiary companies made up to 31 March 2023, adjusted to
eliminate intra-Group transactions, balances, income and expenses. The results of subsidiary companies acquired or disposed are
included from the month of their acquisition or to the month of their disposal.

Segmental reporting
An operating segment is a distinguishable component of the Group that is engaged in business activities from which it may earn
revenues and incur expenses, and whose operating results are reviewed regularly by the Chief Operating Decision Maker (the Group
Chief Executive) to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete
financial information is available.

Reportable segments are operating segments that either meet the thresholds and conditions set out in IFRS 8 or are considered by the
Board to be appropriately designated as reportable segments. Segment result represents operating profits and includes an allocation
of Head Office expenses. Segment result excludes tax and financing items. Segment assets comprise goodwill, other intangible assets,
property, plant and equipment and Right-of-Use assets (excluding land and buildings), inventories, trade and other receivables.

Segment liabilities comprise trade and other payables, provisions and other payables. Unallocated items represent land and buildings
(including Right-of-Use assets), corporate and deferred taxation balances, defined benefit plan asset/obligation, contingent purchase
consideration, all components of net cash/borrowings, lease liabilities and derivative financial instruments.

From 1 April 2022, the Group aligned its organisational structure and financial reporting with its purpose and focus on safety,
environmental and health markets. The Group now has three main operating and reportable segments (Safety, Environmental &
Analysis and Healthcare), which are defined by markets rather than product type. Each segment includes businesses with similar
operating and market characteristics and are consistent with the internal reporting as reviewed by the Group Chief Executive.

Revenue
The Group’s revenue streams are the sale of goods and services in the specialist safety, environmental technologies and health markets.
The revenue streams are disaggregated into three sectors, that serve like markets. Those sectors are Safety, Environmental & Analysis
and Healthcare.

Revenue is recognised at the point of the transfer of control over promised goods or services to customers in an amount that reflects the
amount of consideration specified in a contract with a customer, to which the Group expects to be entitled in exchange for those goods
or services.

It is the Group’s judgement that in the majority of sales there is no contract until such time as the Operating Company satisfies its
performance obligation, at which point the contract becomes the Operating Company’s terms and conditions resulting from the
supplier’s purchase order. Where there are Master Supply Arrangements, these are typically framework agreements and do not contain
clauses that would result in a contract forming under IFRS 15 until a Purchase Order is issued by the customer.

Revenue represents sales, net of estimates for variable consideration, including rights to returns, and discounts, and excluding value
added tax and other sales related taxes. The amount of variable consideration is not considered to be material to the Group as a whole.
The transaction price is allocated to each performance obligation on a relative standalone selling price basis.

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Performance obligations are unbundled in each contractual arrangement if they are distinct from one another. There is judgement
in identifying distinct performance obligations where the product could be determined to be a system, or where a combination of
products and services are provided together. For the majority of the Group’s activities the performance obligation is judged to be
the component product or service rather than the system or combined products and services. The contract price is allocated to
the distinct performance obligations based on the relative standalone selling prices of the goods or services.

The way in which the Group satisfies its performance obligations varies by business and may be on shipment, delivery, as services
are rendered or on completion of services depending on the nature of product and service and terms of the contract which govern
how control passes to the customer. Revenue is recognised at a point in time or over time as appropriate.

Where the Group offers warranties that are of a service nature, revenue is recognised in relation to these performance obligations
over time as the services are rendered. In our judgement we believe the associated performance obligations accrue evenly across
the contractual term and therefore revenue is recognised on a pro-rated basis over the length of the service period.

In a small number of instances across the Group, products have been determined to be bespoke in nature, with no alternative use.
Where there is also an enforceable right to payment for work completed, the criteria for recognising revenue over time have been
deemed to have been met. Revenue is recognised on an input basis as work progresses. Progress is measured with reference to the
actual cost incurred as a proportion of the total costs expected to be incurred under the contract. This is not a significant part of the
Group’s business as for the most part, where goods are bespoke in nature, it is the Group’s judgement that the product can be broken
down to standard component parts with little additional cost and therefore has an alternate use, or there is no enforceable right to
payment for work performed. In these cases, the judgement is made that the requirements for recognising revenue over time are not
met and revenue is recognised when control of the finished product passes to the customer.

The Group applies the practical expedient in IFRS 15 (paragraph 63) and does not adjust the promised amount of consideration for
the effects of a significant financing component if the Group expects, at contract inception, that the period between the transfer
of a promised good or service to a customer and when the customer pays for that good or service will be one year or less.

Operating profit
Operating profit is presented net of direct production costs, production overheads, selling costs, distribution costs and administrative
expenditure (see note 6). Operating profit is stated after charging restructuring costs but before the share of results of associates,
profit or loss on disposal of operations, finance income and finance costs.

Adjusting items
When items of income or expense are material and they are relevant to an understanding of the entity’s financial performance,
they are disclosed separately within the financial statements. This provides additional and more consistent measures of underlying
performance to shareholders by removing items that are not closely related to the Group’s trading or operating cash flows. Such
adjusting items include costs or reversals arising from acquisitions or disposals of businesses, including acquisition costs, creation or
reversals of provisions related to changes in estimates for contingent consideration on acquisition, amortisation and impairment of
acquired intangible assets, and other significant one-off items that may arise.

Deferred government grant income
Government grant income that is linked to capital expenditure is deferred to the Consolidated Balance Sheet and credited to the
Consolidated Income Statement over the life of the related asset. In addition, the Group claims research and development expenditure
credits arising on qualifying expenditure and shows these ‘above the line’ in operating profit. Where the credits arise on expenditure that
is capitalised as part of internally generated capitalised development costs, the income is deferred to the Consolidated Balance Sheet
and credited to the Consolidated Income Statement over the life of the related asset in line with the policy stated above.

Finance income and expenses
The Group recognises interest income or expense using the effective interest rate method. Finance income and finance costs include:

• Interest payable on loans, borrowings and lease obligations.
• Net interest charge on pension plan liabilities.
• Amortisation of finance costs.
• Interest receivable in respect of cash and cash equivalents.
• Unwinding of the discount on provisions.
• Fair value movements on derivative financial instruments.

The Group has classified interest income and expenses within financing activities in the Consolidated Cash Flow Statement.

Taxation
Taxation comprises current and deferred tax. Tax is recognised in the Consolidated Income Statement except to the extent that it relates
to items recognised directly in Total equity, in which case it too is recognised in Total equity. Current tax is the expected tax payable on
the taxable income for the year, using tax rates enacted or substantively enacted at the balance sheet date, along with any adjustment
to tax payable in respect of previous years. Taxable profit differs from net profit as reported in the Consolidated Income Statement
because it excludes items that are never taxable or deductible.

Deferred tax is provided on temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes
and the amounts used for taxation purposes and is accounted for using the balance sheet liability method, apart from the following
differences which are not provided for: goodwill not deductible for tax purposes; the initial recognition of assets or liabilities that affect
neither accounting nor taxable profit; and differences relating to investments in subsidiaries to the extent they will probably not reverse
in the foreseeable future. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the
carrying amounts of assets and liabilities, using tax rates and laws, which are expected to apply in the year when the liability is settled,
or the asset is realised. Deferred tax assets are only recognised to the extent that recovery is probable.

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Accounting Policies continued

Other accounting policies continued
Foreign currencies
The Group presents its accounts in Sterling. Transactions in foreign currencies are recorded at the rate of exchange at the date of
the transaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are reported at the rates
prevailing at that date. Non-monetary assets and liabilities denominated in foreign currencies are measured in terms of historical costs
using the exchange rate at the date of the initial transaction. Any gain or loss arising on monetary assets and liabilities from subsequent
exchange rate movements is included as an exchange gain or loss in the Consolidated Income Statement.

Net assets of overseas subsidiary companies are expressed in Sterling at the rates of exchange ruling at the end of the financial
year, and trading results and cash flows at the average rates of exchange for the financial year. Goodwill arising on the acquisition of
a foreign business is treated as an asset of the foreign entity and is translated at the rate of exchange ruling at the end of the financial
year. Exchange gains or losses arising on these translations are taken to the Translation reserve within Total equity.

In the event that an overseas subsidiary is disposed of or closed, the profit or loss on disposal or closure will be determined after taking
into account the cumulative translation difference held within the Translation reserve attributable to that subsidiary. As permitted by
IFRS 1, the Group has elected to deem the translation to be £nil at 4 April 2004. Accordingly, the profit or loss on disposal or closure of
foreign subsidiaries will not include any currency translation differences which arose before 4 April 2004.

Other intangible assets
(a) Computer software
Computer software that is not integral to an item of property, plant or equipment is recognised separately as an intangible asset and is
amortised through the Consolidated Income Statement on a straight-line basis from the point at which the asset is ready to use over its
estimated economic life of between three and five years.

Development costs that are directly attributable to the design and testing of identifiable and unique software products controlled by
the Group are recognised as intangible assets where the following criteria are met:

• it is technically feasible to complete the software so that it will be available for use;
• management intends to complete the software and use or sell it;
• there is an ability to use or sell the software;
• it can be demonstrated how the software will generate probable future economic benefits;
• adequate technical, financial and other resources to complete the development and to use or sell the software are available; and
• the expenditure attributable to the software during its development can be reliably measured.

Where the Group enters into a SaaS cloud computing arrangement to access software, there are limited cases for capitalisation of
attributable implementation costs. If the arrangement contains a lease as defined by IFRS 16, lease accounting rules apply including
capitalisation of directly attributable costs. Alternatively, directly attributable software costs can create an intangible asset if the
software can be controlled by the entity, either through the option to be run on the entity’s or a third-party’s infrastructure or where
the development of the software creates customised software that the entity has exclusive rights to.

(b) Other intangibles
Other intangibles are amortised through the Consolidated Income Statement on a straight-line basis over their estimated economic
lives of between three and ten years.

Property, plant and equipment
Property, plant and equipment is stated at historical cost less provisions for accumulated impairment and accumulated depreciation
which, with the exception of freehold land which is not depreciated, is provided on a straight-line basis over each asset’s estimated
economic life. The principal annual rates used for this purpose are:

Freehold property

Leasehold buildings and improvements

Plant, equipment and vehicles

Shorter of 2% or period of lease

8% to 33.3%

Investments in associates
An associate is an entity over which the Group is in a position to exercise significant influence, but not control or joint control, through
participation in the financial and operating policy decisions of the investee. Significant influence is the power to participate in the
financial and operating policy decisions of the investee but without control or joint control over those policies.

The results and assets and liabilities of associates are incorporated in these financial statements using the equity method of accounting.
Investments in associates are carried in the Consolidated Balance Sheet at cost as adjusted by post-acquisition changes in the Group’s
share of the net assets of the associate, less any impairment in the value of individual investments. Losses of an associate in excess of
the Group’s interest in that associate (which includes any long-term interests that, in substance, form part of the Group’s net
investment in the associate) are recognised only to the extent that the Group has incurred legal or constructive obligations or made
payments on behalf of the associate.

Any excess of the cost of acquisition over the Group’s share of the fair values of the identifiable net assets of the associate at the
date of acquisition is recognised as goodwill. The goodwill is included within the carrying amount of the investment and is assessed
for impairment as part of that investment. Any deficiency of the cost of acquisition below the Group’s share of the fair values of the
identifiable net assets of the associate at the date of acquisition (i.e. discount on acquisition) is credited in profit or loss in the year
of acquisition.

Where a Group company transacts with an associate of the Group, profits and losses are eliminated to the extent of the Group’s interest
in the relevant associate. Losses may provide evidence of an impairment of the asset transferred in which case appropriate provisioning
is made for impairment.

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Where the Group disposes of its entire interest in an associate a gain or loss is recognised in the income statement on the difference
between the amount received on the sale of the associate less the carrying value and costs of disposal.

Financial assets at fair value through other comprehensive income
Financial assets at fair value through other comprehensive income (FVOCI) comprise equity securities which are not held for trading,
and which the Group has irrevocably elected at initial recognition to recognise as FVOCI. The Group considers this classification relevant
as these are strategic investments.

Financial assets at FVOCI are adjusted to the fair value of the asset at the balance sheet date with any gain or loss being recognised
in other comprehensive income and held as part of other reserves. On disposal any gain or loss is recognised in other comprehensive
income and the cumulative gains or losses are transferred from other reserves to retained earnings.

Impairment of non-current assets
All non-current assets are tested for impairment whenever events or circumstances indicate that their carrying value may be impaired.
Additionally, goodwill and capitalised development expenditure relating to a product that is not yet in full production are subject to an
annual impairment test.

An impairment loss is recognised in the Consolidated Income Statement to the extent that an asset’s carrying value exceeds its
recoverable amount, which represents the higher of the asset’s ‘fair value less costs to dispose’ and its ‘value in use’. An asset’s ‘value
in use’ represents the present value of the future cash flows expected to be derived from the asset or from the cash generating unit to
which it relates. The present value is calculated using a pre-tax discount rate that reflects the current market assessment of the time
value of money and the risks specific to the asset concerned.

Impairment losses recognised in previous periods for an asset other than goodwill are reversed if there has been a change in the
estimates used to determine the asset’s recoverable amount, but only to the extent that the carrying amount of the asset does
not exceed its carrying amount had no impairment loss been recognised in previous periods. Such reversals are recognised in the
Consolidated Income Statement. Impairment losses in respect of goodwill are not reversed.

Inventories
Inventories and work in progress are included at the lower of cost and net realisable value. Cost is calculated either on a ‘first in, first out’
or an average cost basis and includes direct materials and the appropriate proportion of production and other overheads considered by
the Directors to be attributable to bringing the inventories to their location and condition at the year end. Net realisable value represents
the estimated selling price less all estimated costs to complete and costs to be incurred in marketing, selling and distribution.

Cash and cash equivalents
Cash and cash equivalents comprise cash balances, deposits with an initial maturity of less than three months, and bank overdrafts
that are repayable on demand.

Contract assets and liabilities
A contract asset is recognised when the Group’s right to consideration is conditional on something other than the passage of time,
for example the completion of future performance obligations under the terms of the contract with the customer.

In some instances, the Group receives payments from customers based on a billing schedule, as established in the contract, which may
not match with the pattern of performance under the contract. A contract liability is only recognised on non-cancellable contracts that
provide unconditional rights to payment from the customer for products and services that the Group has not yet completed providing
or that it will provide in the near future. Where performance obligations are satisfied ahead of billing then a contract asset will
be recognised.

Contract assets are recognised within Trade and other receivables and are assessed for impairment on a forward-looking basis using
the expected lifetime losses approach, as required by IFRS 9 (‘Financial Instruments’).

Costs to obtain or fulfil a contract
The incremental costs of obtaining a contract with a customer are capitalised as an asset if the Group expects to recover them. Costs
such as sales commissions may be incurred when the Group enters into a new contract. Costs to obtain or fulfil a contract are presented
in the Consolidated Balance Sheet as assets until the performance obligation to which they relate has been met. These assets are
amortised on a consistent basis with how the related revenue is recognised.

The Group applies the practical expedient in IFRS 15 (paragraph 94) and recognises incremental costs of obtaining a contract as an
expense when incurred if the amortisation period of the asset that the Group would otherwise have recognised is one year or less.

Trade payables
Trade payables are non-interest bearing and are stated at amortised cost.

Interest bearing loans and borrowings
Interest bearing loans and borrowings are initially recognised in the Consolidated Balance Sheet at fair value less directly attributable
transaction costs and are subsequently measured at amortised cost using the effective interest rate method.

Provisions and contingent liabilities
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that
the Group will be required to settle that obligation and a reliable estimate can be made of the amount of the obligation.

The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the balance
sheet date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash
flows estimated to settle the present obligation, its carrying amount is the present value of the cash flows.

When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a
receivable is recognised as an asset if it is virtually certain that reimbursement will be received, and the amount of the receivable
can be measured reliably.

Halma plc | Annual Report and Accounts 2023

189

Accounting Policies continued

Other accounting policies continued
Contingent liabilities are disclosed where a possible obligation dependent on uncertain future events exists as at the end of the reporting
period or a present obligation for which payment either cannot be measured or is not considered to be probable is noted. Contingent
liabilities are not accrued for and no contingent liability is disclosed where the possibility of payment is considered to be remote.

Derivative financial instruments and hedge accounting
The Group enters into derivative financial instruments to manage its exposure to foreign exchange rate risk using forward exchange
contracts. Further details of derivative financial instruments are disclosed in note 27. The Group continues to apply the requirements
of IAS 39 for hedge accounting.

Derivative financial instruments are classified as fair value through profit and loss (held for trading) unless they are in a designated
hedge relationship.

Derivatives are initially recognised at fair value at the date a derivative contract is entered into and are subsequently remeasured to
their fair value at each balance sheet date. The resulting gain or loss is recognised in the Consolidated Income Statement, unless the
derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in the Consolidated Income
Statement depends on the nature of the hedge relationship. The Group designates certain derivatives as hedges of highly probable
forecast transactions or hedges of foreign currency risk of firm commitments (cash flow hedges), or hedges of net investments in
foreign operations.

A derivative with a positive fair value is recognised as a financial asset whereas a derivative with a negative fair value is recognised as a
financial liability. A derivative is presented as a non-current asset or a non-current liability if the remaining maturity of the instrument is
more than 12 months and it is not expected to be realised or settled within 12 months. Other derivatives are presented as current assets
or current liabilities.

Cash flow hedge accounting
The Group designates certain hedging instruments as cash flow hedges.

At the inception of the hedge relationship, the entity documents the relationship between the hedging instrument and the hedged item,
along with its risk management objectives and its strategy for undertaking various hedge transactions. Furthermore, at the inception of
the hedge and on an ongoing basis, the Group documents whether the hedging instrument has been or is expected to be highly
effective in offsetting changes in fair values or cash flows of the hedged item.

Note 27 sets out details of the fair values of the derivative instruments used for hedging purposes and the movements in the Hedging
reserve in equity.

The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognised in
other comprehensive income. The gain or loss relating to the ineffective portion as a result of being over hedged is recognised
immediately in the Consolidated Income Statement.

Amounts previously recognised in other comprehensive income and accumulated in equity are reclassified to the Consolidated Income
Statement in the periods when the hedged item is recognised in the Consolidated Income Statement. However, when the forecast
transaction that is hedged results in the recognition of a non-financial asset or a non-financial liability, the gains and losses previously
accumulated in equity are transferred from equity and included in the initial measurement of the cost of the non-financial asset or
non-financial liability.

Hedge accounting is discontinued when the Group revokes the hedging relationship, the hedging instrument expires or is sold,
terminated or exercised, or no longer qualifies for hedge accounting. Any gain or loss recognised in other comprehensive income
at that time is accumulated in equity and is recognised, when the forecast transaction is ultimately recognised, in the Consolidated
Income Statement. When a forecast transaction is no longer expected to occur, the gain or loss accumulated in equity is recognised
immediately in the Consolidated Income Statement.

Net investment hedge accounting
The Group uses foreign currency denominated borrowings as a hedge against the translation exposure on the Group’s net investment
in overseas companies. Where the hedge is fully effective at hedging, the variability in the net assets of such companies caused by
changes in exchange rates and the changes in value of the borrowings are recognised in the Consolidated Statement of Comprehensive
Income and accumulated in the Translation reserve. The ineffective part of any change in value caused by changes in exchange rates is
recognised in the Consolidated Income Statement.

Leases
The Group assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the right to
control the use of an identified asset for a period of time in exchange for consideration. Where the Group determines the contract is,
or contains a lease, a right-of-use asset and a lease liability is recognised at the lease commencement date.

The lease term is determined from the commencement date of the lease and covers the non-cancellable term. If the Group has
an extension option, which it considers reasonably certain to exercise, then the lease term will be considered to extend beyond that
non-cancellable period. If the Group has a termination option, which it considers reasonably certain to exercise, then the lease term will
be considered to be until the point the termination option will take effect. The Group deem that it is not reasonably certain to exercise
an extension option or a termination option with an exercise date past the planning horizon of five years.

The right-of-use asset is initially measured at cost, comprising the initial amount of the lease liability plus any initial direct costs
incurred and an estimate of costs to restore the underlying asset, less any lease incentives received. The right-of-use asset is
subsequently depreciated using the straight-line method from the commencement date to the end of the lease term unless the
right-of-use asset is deemed to have a useful life shorter than the lease term. The Group has taken the practical expedient to not
separate lease and non-lease components and so account for both as a single lease component.

The right-of-use assets are also subject to impairment testing under IAS 36. Refer to the previous section on Impairment of non-current
assets for further details.

190

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Strategic
Report

Governance

Financial
Statements

Other
Information

Other accounting policies continued
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date,
discounted using the incremental borrowing rate. The lease payments include fixed payments (including in-substance fixed payments)
less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under
residual value guarantees. Variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual
value guarantees are not material to the Group. The lease payments also include the exercise price of a purchase option reasonably
certain to be exercised by the Group and payments of penalties for terminating the lease, if the lease term reflects the Group exercising
the option to terminate. Variable lease payments that do not depend on an index or a rate are recognised as expenses (unless they are
incurred to produce inventories) in the period in which the event or condition that triggers the payment occurs. The lease liability is
measured at amortised cost using the effective interest method by increasing the carrying amount to reflect interest on the lease
liability and by reducing the carrying amount to reflect the lease payments made. The lease liability is remeasured when there is a
change in future lease payments arising from a change in an index or a rate or a change in the Group’s assessment of whether it will
exercise an extension or termination option. When the lease liability is remeasured, a corresponding adjustment is made to the right-of-
use asset.

Payments associated with short-term leases or low-value assets are recognised on a straight-line basis as an expense in the
Consolidated Income Statement. Short-term leases are leases with a lease term of 12 months or less. Low-value assets mostly comprise
of IT equipment and small items of office furniture. Lease payments for short-term leases, low-value assets and variable lease payments
not included in the measurement of the lease liability are classified as cash flows from operating activities within the Consolidated Cash
Flow Statement. The Group has classified the principal and interest portions of lease payments within financing activities.

Employee share plans
Share-based incentives are provided to employees under the Group’s share incentive plan, the performance share plan and the executive
share plan.

(a) Share incentive plan
Awards of shares under the share incentive plan are made to qualifying employees depending on salary and service criteria. The shares
awarded under this plan are purchased in the market by the plan’s trustees at the time of the award, and are then held in trust for a
minimum of three years. The costs of this plan are recognised in the Consolidated Income Statement over the three-year vesting period
of the awards.

(b) Executive share plan
Under the Executive share plan, awards of shares are made to Executive Directors and certain senior employees. Grants under this plan
are in the form of Performance Awards or Deferred Share Awards.

Performance Awards are subject to non-market-based vesting criteria, and Deferred Share Awards are subject only to continuing service
of the employee. Share awards are equity-settled. The fair value of the awards at the date of grant, which is estimated to be equal to
the market value, is charged to the Consolidated Income Statement on a straight-line basis over the vesting period, with appropriate
adjustments being made during this period to reflect expected and actual forfeitures. The corresponding credit is to Retained earnings
within Total equity. Effective for the year ended 31 March 2022, the share-based payment reserve, which was previously presented as
Other reserves has been amalgamated with Retained earnings, in the Consolidated Statement of Changes in Equity and the Consolidated
Balance Sheet as permitted by IFRS 2. This resulted in the £13.6m debit in brought forward Other reserves at 1 April 2021 being transferred
to Retained earnings. There is no change in Total equity from this change, nor the amounts charged or credited to the reserves during
the period, which represents a change in presentational accounting policy only.

(c) Cash-settled
For cash-settled awards, a liability equal to the portion of the services received is recognised at the current fair value determined at each
balance sheet date.

Dividends
Dividends payable to the Company’s shareholders are recognised as a liability in the period in which the distribution is approved by the
Company’s shareholders.

Halma plc | Annual Report and Accounts 2023

191

Notes to the Accounts

1 Segmental analysis and revenue from contracts with customers
Sector analysis and disaggregation of revenue
The Group has three main operating and reportable segments (Safety, Environmental & Analysis and Healthcare), which are defined by
markets rather than product type. Each segment includes businesses with similar operating and market characteristics. These segments
are consistent with the internal reporting as reviewed by the Group Chief Executive.

Nature of goods and services
The following is a description of the principal activities – separated by reportable segments, which are defined by markets rather than
product type – from which the Group generates its revenue.

Further disaggregation of sector revenue by geography and by the pattern of revenue recognition depicts how economic factors
affect the timing and uncertainty of the Group’s revenues.

Safety sector generates revenue by providing products that protect people, assets and infrastructure, enabling safe movement
and enhancing efficiency. The technologies are used in public and commercial spaces and in industrial and logistics operations.
Markets include: Fire Safety Technologies that protect people and assets from fire; Power Safety Technologies that increase the
integrity and safety of electrical systems in a range of industries; Industrial Safety Technologies that protect people and assets
in industrial environments; and Urban Safety Technologies that protect people and assets in urban environments. Products are
generally sold separately, with contracts typically less than one year in length. Warranties are typically of an assurance nature.
Revenue is recognised as control passes on delivery or despatch.

Payment is typically due within 60 days of invoice, except where a retention is held for documentation.

Environmental & Analysis generates revenue by providing products and technologies that monitor the environment, that ensure
the quality and availability of life-critical resources, and analyse materials in a wide range of applications. Markets include: Optical
Analysis Technologies that provide world-class optical, optoelectronic and spectral imaging systems that use light to analyse materials
in a wide range of applications; Water Analysis and Treatment Systems to sustainably improve water quality and availability; and
Environmental Monitoring Technologies that detect hazardous gases and analyse air quality, gases and water to monitor the quality
of our environment. Products and services are generally sold separately. Warranties are typically of an assurance nature, but some
companies within the Group offer extended warranties. Depending on the nature of the performance obligation, revenue may be
recognised as control passes on delivery, despatch or as the service is delivered. Contracts are typically less than one year in length,
but some companies have contracts where certain service-related performance obligations are delivered over a number of years;
this can result in contract liabilities where those performance obligations are invoiced ahead of performance.

Payment is typically due within 60 days of invoice.

Healthcare sector generates revenue by providing products and services that help providers improve the care they deliver and enhance
the quality of patients’ lives. Markets include: Life Sciences technologies and solutions to enable in-vitro diagnostic systems and
accelerate life-science discoveries and development; Healthcare Assessment & Analytics components, devices and systems that provide
valuable information and analytics so providers can better understand patient health and make decisions across the continuum of care;
and Therapeutic Solutions Technologies, materials and solutions that enable treatment across key clinical specialties. Products are
generally sold separately, and warranties are typically of an assurance nature. Depending on the nature of the performance obligation,
revenue is recognised as control passes on delivery or despatch or as the service is delivered. Contracts are typically less than one year
in length, but a limited number of companies have contracts where certain service-related performance obligations are delivered over
a number of years; this can result in contract liabilities where those performance obligations are invoiced ahead of performance.

Payment is typically due within 60 days of invoice.

192

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Report

Governance

Financial
Statements

Other
Information

1 Segmental analysis and revenue from contracts with customers continued

Year ended 31 March 2023
Revenue by sector and destination (all continuing operations)

United States
of America
£m

Mainland
Europe
£m

205.1
277.0
298.8
(0.1)

780.8

217.1
67.3
92.0
–

376.4

United
Kingdom
£m

151.4
79.5
49.2
(1.2)

278.9

Asia Pacific
£m

112.7
96.7
73.0
–

282.4

Africa,
Near and
Middle East
£m

33.2
15.5
14.9
–

63.6

Other
countries
£m

26.1
16.1
28.5
–

70.7

Total
£m

745.6
552.1
556.4
(1.3)

1,852.8

Year ended 31 March 2022
Revenue by sector and destination (all continuing operations)

United States
of America
£m

Mainland
Europe
£m

164.6
209.6
224.3
(1.3)

597.2

180.0
56.7
71.4
–

308.1

United
Kingdom
£m

147.0
77.6
42.4
–

267.0

Asia Pacific
£m

101.8
78.4
70.6
–

250.8

Africa,
Near and
Middle East
£m

29.4
12.3
11.9
–

53.6

Other
countries
£m

18.6
8.3
21.7
–

48.6

Total
£m

641.4
442.9
442.3
(1.3)

1,525.3

Safety
Environmental & Analysis
Healthcare
Inter-segmental sales

Revenue for the year

Safety
Environmental & Analysis
Healthcare
Inter-segmental sales

Revenue for the year

Inter-segmental sales are charged at prevailing market prices and have not been disclosed separately by segment as they are not
considered material. Revenue derived from the rendering of services was £105.4m (2022 re-presented: £81.1m). The 2022 comparative
has been re-presented to reflect £11.2m of service revenue previously classified as product revenue. All revenue was otherwise derived
from the sale of products.

Safety
Environmental & Analysis
Healthcare
Inter-segmental sales

Revenue for the year

Safety
Environmental & Analysis
Healthcare
Inter-segmental sales

Revenue for the year

Year ended 31 March 2023

Revenue
recognised
at a point
in time
£m

738.5
430.6
489.3
(1.3)

Total
Revenue
£m

745.6
552.1
556.4
(1.3)

1,657.1

1,852.8

Year ended 31 March 2022

Revenue
recognised
at a point
in time
£m

633.2
343.1
392.7
(1.3)

Total
Revenue
£m

641.4
442.9
442.3
(1.3)

Revenue
recognised
over time
£m

7.1
121.5
67.1
–

195.7

Revenue
recognised
over time
£m

8.2
99.8
49.6
–

157.6

1,367.7

1,525.3

Halma plc | Annual Report and Accounts 2023

193

Notes to the Accounts continued

1 Segmental analysis and revenue from contracts with customers continued
Segment revenue disaggregation continued

Safety
Environmental & Analysis
Healthcare
Inter-segmental sales

Revenue for the year

Safety
Environmental & Analysis
Healthcare
Inter-segmental sales

Revenue for the year

Year ended 31 March 2023

Revenue from
performance
obligations
entered into
and satisfied
in the year
£m

Revenue
previously
included as
contract
liabilities
£m

Revenue from
performance
obligations
satisfied in
previous
periods
£m

741.7
545.0
542.8
(1.3)

1,828.2

3.9
7.1
13.4
–

24.4

–
–
0.2
–

0.2

Total
Revenue
£m

745.6
552.1
556.4
(1.3)

1,852.8

Year ended 31 March 2022

Revenue from
performance
obligations
entered into
and satisfied
in the year
£m

Revenue
previously
included as
contract
liabilities
£m

Revenue from
performance
obligations
satisfied in
previous
periods
£m

638.1
436.3
432.8
(1.3)

3.3
6.6
5.6
–

1,505.9

15.5

–
–
3.9
–

3.9

Total
Revenue
£m

641.4
442.9
442.3
(1.3)

1,525.3

The Group has unsatisfied (or partially satisfied) performance obligations at the balance sheet date with an aggregate amount of
transaction price as follows. The time bands represented present the expected timing of when the remaining transaction price will be
recognised as revenue.

Aggregate transaction price allocated
to unsatisfied performance obligations

Recognised
< 1 year
£m

Recognised
1-2 years
£m

Recognised
> 2 years
£m

9.6
8.5
20.8
–

38.9

2.8
3.5
0.8
–

7.1

7.3
4.9
–
–

12.2

Aggregate transaction price allocated
to unsatisfied performance obligations

Recognised
< 1 year
£m

Recognised
1-2 years
£m

Recognised
> 2 years
£m

15.2
7.0
12.9
–

35.1

4.5
3.4
1.5
–

9.4

7.3
4.9
–
–

12.2

31 March
2023
Total
£m

19.7
16.9
21.6
–

58.2

31 March
2022
Total
£m

27.0
15.3
14.4
–

56.7

Safety
Environmental & Analysis
Healthcare
Inter-segmental sales

Total

Safety
Environmental & Analysis
Healthcare
Inter-segmental sales

Total

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Strategic
Report

Governance

Financial
Statements

Other
Information

1 Segmental analysis and revenue from contracts with customers continued
Segment results

Segment profit before allocation of adjustments*
Safety
Environmental & Analysis
Healthcare

Segment profit after allocation of adjustments*
Safety
Environmental & Analysis
Healthcare

Segment profit
Central administration costs
Net finance expense

Group profit before taxation
Taxation

Profit for the year

Profit (all continuing operations)

Year ended
31 March
2023
£m

Year ended
31 March
2022
£m

152.5
134.2
130.1

416.8

123.9
121.5
101.6

347.0
(38.6)
(16.9)

291.5
(57.2)

234.3

146.2
109.8
99.5

355.5

163.5
96.9
83.3

343.7
(30.9)
(8.4)

304.4
(60.2)

244.2

* Adjustments include the amortisation and impairment of acquired intangible assets; acquisition items; significant restructuring costs; profit or loss on disposal of

operations. Note 3 provides more information on alternative performance measures.

Halma plc | Annual Report and Accounts 2023

195

Notes to the Accounts continued

1 Segmental analysis and revenue from contracts with customers continued
Segment results continued
Acquisition transaction costs, adjustments to contingent consideration and release of fair value adjustments to inventory (collectively
‘acquisition items’), amortisation and impairment of acquired intangible assets and profit on disposal of operations are recognised in the
Consolidated Income Statement. Segment profit, before these acquisition items and the other adjustments, is disclosed separately on
the previous page as this is the measure reported to the Group Chief Executive for the purpose of allocation of resources and assessment
of segment performance. These adjustments are analysed as follows:

Acquisition items

Year ended 31 March 2023

Amortisation
and impairment
of acquired
intangible
assets
£m

(25.1)
(11.4)
(20.0)

(56.5)

Transaction
costs
£m

Adjustments
to contingent
consideration
£m

Release of
fair value
adjustments
to inventory
£m

Total
amortisation
and impairment
charge and
acquisition
items
£m

(3.1)
(0.9)
(1.9)

(5.9)

–
0.2
(3.9)

(3.7)

(0.4)
(0.6)
(2.7)

(3.7)

(28.6)
(12.7)
(28.5)

(69.8)

Disposal of
operations and
restructuring
(note 30)

£m

–
–
–

–

Total
£m

(28.6)
(12.7)
(28.5)

(69.8)

Safety
Environmental & Analysis
Healthcare

Total Segment & Group

The transaction costs arose mainly on the acquisitions during the year. In Safety, they related to the acquisition of FirePro (£1.6m),
WEETECH (£1.0m), Thermocable (£0.4m) and Zonegreen (£0.1m). In Environmental & Analysis, they related to the acquisition of
Deep Trekker (£0.5m) in the current year and Sewertronics (£0.4m) that was acquired in May 2023. In Healthcare, they related to
the acquisition of IZI (£1.6m) in the current year, and the acquisition of Visiometrics in a previous year (£0.3m).

The £3.7m adjustment to contingent consideration comprised of a credit of £0.2m in Environmental & Analysis arising from a decrease in
the estimate of the payables for Orca (£0.2m) and a debit of £3.9m in Healthcare arising from an increase in estimates of the payables
for Infinite Leap (£2.7m), IZI (£1.4m) and Meditech (£0.3m), partially offset by a decrease in the estimate of the payable for Clayborn Lab
(£0.3m) and Spreo (£0.2m).

The £3.7m release of fair value adjustments to inventory related to WEETECH (£0.3m) and Thermocable (£0.1m) in Safety; Deep Trekker
(£0.3m) and International Light Technologies (£0.3m) in Environmental & Analysis; and IZI (£2.7m) in Healthcare. All amounts have been
released in relation to International Light Technologies and Deep Trekker.

Acquisition items

Year ended 31 March 2022

Amortisation
of acquired
intangible
assets
£m

(14.9)
(10.3)
(17.5)

(42.7)

Transaction
costs
£m

Adjustments
to contingent
consideration
£m

(0.5)
(1.6)
(2.1)

(4.2)

–
0.1
4.4

4.5

Release of
fair value
adjustments
to inventory
£m

Total
amortisation
charge and
acquisition
items
£m

(1.3)
(1.1)
(1.0)

(3.4)

(16.7)
(12.9)
(16.2)

(45.8)

Disposal of
operations and
restructuring
(note 30)

£m

34.0
–
–

34.0

Total
£m

17.3
(12.9)
(16.2)

(11.8)

Safety
Environmental & Analysis
Healthcare

Total Segment & Group

The transaction costs arose on the acquisitions made in the prior year. In Safety, they related to the acquisition of Ramtech (£0.4m)
and IBIT (£0.1m). In Environmental & Analysis, they related to the acquisition of Dancutter (£0.3m), Sensitron (£0.4m), Orca (£0.1m),
Anton (£0.1m), International Light Technologies (£0.2m) in the year and Deep Trekker (£0.5m) that was acquired in April 2022.
In Healthcare, they related to the acquisition of PeriGen (£1.4m), Infinite Leap (£0.3m), Clayborn Lab (£0.1m), Meditech (£0.1m)
and RNK (£0.1m) in the year, and the acquisition of Visiometrics in a previous year (£0.1m).

The £4.5m adjustment to contingent consideration comprised of a credit of £0.1m in Environmental & Analysis arising from a decrease
in the estimate of the payables for Invenio (£0.3m) offset by an increase in the estimate of the payable for Orca (£0.2m) and a credit
of £4.4m in Healthcare arising from a decrease in estimates of the payables for NovaBone (£1.3m), NeoMedix (£3.0m) and Spreo
(£0.1m) partially offset by an increase in the estimate of the payable for Infowave (£0.3m) and a credit of £0.3m arising from exchange
differences on balances denominated in Euros.

The £3.4m release of fair value adjustments to inventory related to Ramtech (£1.3m) in Safety; Dancutter (£0.1m), Orca (£0.6m),
Sensitron (£0.2m) and International Light Technologies (£0.2m) in Environmental & Analysis; and Meditech (£1.0m) in Healthcare.
All amounts have been released in relation to Dancutter, Ramtech, Orca and Sensitron.

196

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Report

Governance

Financial
Statements

Other
Information

1 Segmental analysis and revenue from contracts with customers continued

Before goodwill, interest in associates and other investments and acquired intangible
assets are allocated to specific segment assets/liabilities

Safety
Environmental & Analysis
Healthcare

Total segment assets/liabilities excluding goodwill, interest in associates
and other investments and acquired intangible assets
Goodwill
Interest in associate and other investments
Acquired intangible assets

31 March
2023
£m

378.1
225.8
258.6

862.5
1,120.5
21.0
416.1

Assets

31 March
2022
£m

295.9
176.6
196.1

668.6
908.7
8.2
275.7

31 March
2023
£m

122.8
85.5
91.1

299.4
–
–
–

Liabilities

31 March
2022
£m

101.1
74.0
73.0

248.1
–
–
–

Total segment assets/liabilities including goodwill, interest in associates
and other investments and acquired intangible assets

2,420.1

1,861.2

299.4

248.1

After goodwill, interest in associates and other investments and acquired intangible
assets are allocated to specific segment assets/liabilities

Safety
Environmental & Analysis
Healthcare

Total segment assets/liabilities including goodwill, interest in associates and other
investments and acquired intangible assets
Cash and bank balances/borrowings
Derivative financial instruments
Other unallocated assets/liabilities

31 March
2023
£m

971.3
527.3
921.5

2,420.1
169.5
1.5
197.3

Assets

31 March
2022
£m

684.5
440.5
736.2

1,861.2
157.4
0.7
177.7

31 March
2023
£m

122.8
85.5
91.1

299.4
678.3
0.9
210.9

Total Group

2,788.4

2,197.0

1,189.5

Liabilities

31 March
2022
£m

101.1
74.0
73.0

248.1
360.1
0.9
184.8

793.9

Segment assets and liabilities, excluding the allocation of goodwill, interest in associate and other investments and acquired intangible
assets, have been disclosed separately above as this is the measure reported to the Group Chief Executive for the purpose of monitoring
segment performance and allocating resources between segments. Other unallocated assets include land and buildings, right-of-use
assets, retirement benefit assets, deferred tax assets and other central administration assets. Unallocated liabilities include contingent
purchase consideration, retirement benefit obligations, deferred tax liabilities, lease liabilities and other central administration liabilities.

Other segment information

Safety
Environmental & Analysis
Healthcare

Total segment additions/depreciation, amortisation and impairment
Unallocated

Total Group

Additions to
non-current assets

Depreciation, amortisation
and impairment

31 March
2023
£m

225.3
48.1
144.0

417.4
34.4

451.8

31 March
2022
£m

30.1
70.3
82.6

183.0
31.5

214.5

31 March
2023
£m

39.6
19.3
28.2

87.1
22.8

109.9

31 March
2022
£m

29.0
19.3
24.7

73.0
18.8

91.8

Non-current asset additions comprise acquired and purchased goodwill, other intangible assets, property, plant and equipment,
interests in associates and other investments.

During the year impairment losses of £8.4m were recognised on Property, plant and equipment and other intangible assets, of
which £8.0m was recognised in Safety, £0.1m was recognised in Environmental & Analysis and £0.3m was recognised in Healthcare
(2022: £3.2m comprising £1.0m in Safety, £1.7m in Environmental & Analysis, £0.5m in Healthcare). Impairment losses mainly related
to acquired intangible assets, due to changes in expected future cash flows, and to capitalised development costs recorded as a result
of changes in the expected outcome of projects.

Halma plc | Annual Report and Accounts 2023

197

Notes to the Accounts continued

1 Segmental analysis and revenue from contracts with customers continued
Geographic information
The Group’s non-current assets by geographic location are detailed below:

United States of America
Mainland Europe
United Kingdom
Asia Pacific
Other countries

Non-current assets

31 March
2023
£m

893.5
489.1
290.7
119.3
44.1

31 March
2022
£m

758.9
290.1
255.7
122.6
8.8

1,836.7

1,436.1

Non-current assets comprise goodwill, other intangible assets, interest in associate and other investments, and property, plant
and equipment.

Information about major customers
No single customer accounts for more than 10% (2022: 10%) of the Group’s revenue.

2 Earnings per share
Basic earnings per share amounts are calculated by dividing the net profit for the year attributable to the equity shareholders of
the parent by the weighted average number of shares outstanding during the year.

Diluted earnings per share amounts are calculated by dividing the net profit attributable to the equity shareholders of the parent by the
weighted average number of shares outstanding during the year plus the weighted average number of shares that would be in issue on
the conversion of all the dilutive potential shares.

The weighted average number of shares used to calculate both basic and diluted earnings per share exclude shares held in the employee
benefit trust.

Adjusted earnings are calculated as earnings from continuing operations excluding the amortisation and impairment of acquired
intangible assets; acquisition items; significant restructuring costs, profit or loss on disposal of operations and the associated taxation
thereon and in the prior year the increase in the UK’s corporation tax rate from 19% to 25%. The Directors consider that adjusted
earnings, which constitute an alternative performance measure, represent a more consistent measure of underlying performance as
it excludes amounts not directly linked with trading. A reconciliation of earnings and the effect on basic and diluted earnings per share
figures is as follows:

Basic earnings per share

Earnings from continuing operations attributable to owners of the parent
Amortisation and impairment of acquired intangible assets (after tax)
Acquisition transaction costs (after tax)
Adjustments to contingent consideration (after tax)
Release of fair value adjustments to inventory (after tax)
Disposal of operations and restructuring (after tax)
Impact of UK tax rate change

Adjusted earnings attributable to owners of the parent

Weighted average number of shares in issue for basic earnings
per share, million

Diluted earnings per share

Year ended
31 March
2023
£m

Year ended
31 March
2022
£m

Year ended
31 March
2023
pence

234.5
42.3
5.3
3.8
2.7
–
–

288.6

244.4
33.1
3.8
(4.5)
2.6
(34.0)
2.6

248.0

62.04
11.19
1.41
1.00
0.70
–
–

76.34

378.0

378.7

Year ended
31 March
2023
£m

Year ended
31 March
2022
£m

Year ended
31 March
2023
pence

Per share

Year ended
31 March
2022
pence

64.54
8.73
0.99
(1.19)
0.70
(8.98)
0.69

65.48

Per share

Year ended
31 March
2022
pence

Earnings from continuing operations attributable to owners of the parent

Adjusted earnings attributable to owners of the parent

Weighted average number of shares in issue for basic earnings per share, million

Dilutive potential shares – share awards, million

234.5

288.6

378.0

1.1

244.4

248.0

378.7

0.7

Weighted average number of shares in issue for diluted earnings per share,
million

379.1

379.4

61.86

64.42

198

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Strategic
Report

Governance

Financial
Statements

Other
Information

3 Alternative performance measures
The Board uses certain alternative performance measures to help it effectively monitor the performance of the Group. The Directors
consider that these represent a more consistent measure of underlying performance by removing items that are not closely related to
the Group’s trading or operating cash flows. These measures include Return on Total Invested Capital (ROTIC), Return on Capital
Employed (ROCE), Organic growth at constant currency, net debt, Adjusted operating profit, cash conversion and Adjusted operating
cash flow.

Note 1 provides further analysis of the adjusting items in reaching adjusted profit measures. Net debt is defined as Borrowings plus Lease
liabilities net of Cash and bank balances, note 26 provides an analysis of net debt for the year.

Return on Total Invested Capital

Profit after tax
Adjustments1

Adjusted profit after tax1
Total equity
Less net retirement benefit assets
Deferred tax liabilities on retirement benefits
Cumulative fair value adjustments on equity investments through other comprehensive income
Cumulative amortisation and impairment of acquired intangible assets
Historical adjustments to goodwill2

Total Invested Capital

Average Total Invested Capital3

Return on Total Invested Capital (ROTIC)4

Return on Capital Employed

Profit before tax
Adjustments1
Net finance costs
Lease interest

Adjusted operating profit1 after share of results of associates and lease interest
Computer software costs within other intangible assets
Capitalised development costs within other intangible assets
Other intangibles within other intangible assets
Property, plant and equipment
Inventories
Trade and other receivables
Current trade and other payables
Current lease liabilities
Current provisions
Net tax (payable)/receivable
Non-current trade and other payables
Non-current provisions
Non-current lease liabilities
Add back contingent purchase consideration

Capital Employed

Average Capital Employed3

Return on Capital Employed (ROCE)4

31 March
2023
£m

234.3
54.1

288.4

1,598.9
(37.9)
9.6
(4.4)
418.1
89.5

2,073.8

1,945.5

14.8%

31 March
2023
£m

291.5
69.8
16.9
(2.9)

375.3

3.2
49.6
3.4
222.9
312.4
410.7
(280.7)
(19.2)
(21.0)
(2.2)
(21.9)
(9.7)
(68.7)
16.4

595.2

524.7

31 March
2022
£m

244.2
3.7

247.9

1,403.1
(30.5)
7.7
1.7
345.7
89.5

1,817.2

1,695.0

14.6%

31 March
2022
£m

304.4
11.8
8.4
(2.3)

322.3

4.2
41.7
3.6
194.0
228.8
325.1
(242.7)
(15.5)
(20.7)
3.8
(19.0)
(7.7)
(56.6)
15.2

454.2

421.9

71.5%

76.4%

1 Adjustments include the amortisation and impairment of acquired intangible assets; acquisition items; and significant restructuring costs and profit or loss on

disposal of operations. Where after-tax measures, these also include the associated taxation on adjusting items. Note 1 provides more information on these items.

2 Includes goodwill amortised prior to 3 April 2004 and goodwill taken to reserves.
3 The ROTIC and ROCE measures are expressed as a percentage of the average of the current and prior year’s Total Invested Capital and Capital Employed

respectively. Using an average as the denominator is considered to be more representative. The 1 April 2021 Total Invested Capital and Capital Employed balances
were £1,572.8m and £389.5m respectively.

4 The ROTIC and ROCE measures are calculated as Adjusted profit after tax divided by Average Total Invested Capital and Adjusted operating profit after share of

results of associates and lease interest divided by Average Capital Employed, respectively.

Halma plc | Annual Report and Accounts 2023

199

Notes to the Accounts continued

3 Alternative performance measures continued
Organic growth at constant currency
Organic growth measures the change in revenue and profit from continuing Group operations. This measure equalises the effect of
acquisitions by:

a. removing from the year of acquisition their entire revenue and profit before taxation;

b. in the following year, removing the revenue and profit for the number of months equivalent to the pre-acquisition period in the prior

year; and

c. removing from the year prior to acquisition, any revenue generated by sales to the acquired company which would have been

eliminated on consolidation had the acquired company been owned for that period.

The results of disposals are removed from the prior period reported revenue and profit before taxation.

Constant currency measures the change in revenue and profit excluding the effects of currency movements. The measure restates the
current year’s revenue and profit at last year’s exchange rates.

Organic growth at constant currency has been calculated for the Group as follows:

Group

Revenue

Adjusted* profit before taxation

Continuing operations
Acquired and disposed revenue/profit

Organic growth
Constant currency adjustment

Year ended
31 March
2023
£m

1,852.8
(65.6)

1,787.2
(122.9)

Year ended
31 March
2022
£m

1,525.3
(14.9)

1,510.4

% growth

21.5%

18.3%

Organic growth at constant currency

1,664.3

1,510.4

10.2%

Year ended
31 March
2023
£m

Year ended
31 March
2022
£m

361.3
(9.0)

352.3
(28.3)

324.0

316.2
(2.0)

314.2

% growth

14.2%

12.1%

314.2

3.1%

Sector Organic growth at constant currency
Organic growth at constant currency is calculated for each segment using the same method as described above.

Safety

Continuing operations
Acquisition and currency adjustments

Organic growth at constant currency

Environmental & Analysis

Continuing operations
Acquisition and currency adjustments

Organic growth at constant currency

Healthcare

Continuing operations
Acquisition and currency adjustments

Organic growth at constant currency

Revenue

Adjusted* segment profit

Year ended
31 March
2023
£m

Year ended
31 March
2022
£m

745.6
(48.6)

697.0

641.4
(14.6)

626.8

% growth

16.2%

11.2%

Year ended
31 March
2023
£m

Year ended
31 March
2022
£m

152.5
(9.9)

142.6

146.2
(2.0)

144.2

% growth

4.3%

(1.1)%

Revenue

Adjusted* segment profit

Year ended
31 March
2023
£m

Year ended
31 March
2022
£m

552.1
(69.3)

482.8

442.9
(0.4)

442.5

% growth

24.7%

9.1%

Year ended
31 March
2023
£m

Year ended
31 March
2022
£m

134.2
(16.6)

117.6

109.8
–

109.8

% growth

22.2%

7.1%

Revenue

Adjusted* segment profit

Year ended
31 March
2023
£m

Year ended
31 March
2022
£m

556.4
(70.7)

485.7

442.3
–

442.3

Year ended
31 March
2023
£m

Year ended
31 March
2022
£m

130.1
(16.7)

113.4

99.5
–

99.5

% growth

25.8%

9.8%

% growth

30.8%

14.0%

* Adjustments include in the current and prior year the amortisation and impairment of acquired intangible assets; acquisition items; significant restructuring costs

and profit or loss on disposal of operations.

200

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Strategic
Report

Governance

Financial
Statements

Other
Information

3 Alternative performance measures continued
Adjusted operating profit

Operating profit
Add back:

Acquisition items (note 1)
Amortisation and impairment of acquired intangible assets (note 1)

Adjusted operating profit

Adjusted operating cash flow

Net cash from operating activities (note 26)
Add:

Net acquisition costs paid
Taxes paid
Proceeds from sale of property, plant and equipment and capitalised development costs
Share awards vested not settled by own shares (note 24)
Deferred consideration paid in excess of payable estimated on acquisition

Less:

Purchase of property, plant and equipment (excluding Right of use assets)
Purchase of computer software and other intangibles
Development costs capitalised

Adjusted operating cash flow

Cash conversion % (adjusted operating cash flow/adjusted operating profit)

4 Finance income

Interest receivable
Net interest credit on pension plan assets
Fair value movement on derivative financial instruments

5 Finance expense

Interest payable on borrowings
Interest payable on lease obligations
Amortisation of finance costs
Net interest charge on pension plan liabilities
Other interest payable
Fair value movement on derivative financial instruments

Year ended
31 March
2023
£m

Year ended
31 March
2022
£m

308.4

278.9

13.3
56.5

378.2

3.1
42.7

324.7

Year ended
31 March
2023
£m

Year ended
31 March
2022
£m

258.0

237.4

4.6
67.2
3.1
4.5
1.7

(29.0)
(1.1)
(15.8)

293.2

78%

4.1
56.0
1.1
7.1
7.5

(25.2)
(1.4)
(13.4)

273.2

84%

Year ended
31 March
2023
£m

Year ended
31 March
2022
£m

0.7
1.1
–

1.8

0.2
–
0.4

0.6

Year ended
31 March
2023
£m

Year ended
31 March
2022
£m

14.5
2.9
0.8
–
0.1
0.4

18.7

5.6
2.3
0.7
0.3
0.1
–

9.0

Halma plc | Annual Report and Accounts 2023

201

Notes to the Accounts continued

6 Profit before taxation
Profit before taxation comprises:

Revenue

Direct materials/direct labour
Production overhead
Selling costs
Distribution costs
Administrative expenses

Operating profit
Share of loss of associate
Profit on disposal of operations
Net finance expense

Profit before taxation

Year ended
31 March
2023
£m

Year ended
31 March
2022
£m

1,852.8

1,525.3

(784.3)
(145.6)
(174.5)
(35.6)
(404.4)

308.4
–
–
(16.9)

291.5

(640.3)
(121.4)
(137.4)
(30.6)
(316.7)

278.9
(0.1)
34.0
(8.4)

304.4

Included within administrative expenses are the amortisation and impairment of acquired intangible assets, transaction costs,
and adjustments to contingent consideration. Included within direct materials/direct labour is the release of fair value adjustments
to inventory.

Profit before taxation is stated after charging/
(crediting):
Depreciation
Amortisation
Impairment of other intangible assets
Impairment of property, plant and equipment
Net impairment loss on trade receivables
(reversed)/recognised (note 16)
Research costs*
Foreign exchange gain
Profit on disposal of operations (note 30)
(Profit)/loss on sale of property, plant and equipment
and computer software
Cost of inventories recognised as an expense
Staff costs (note 7)
Auditors’ remuneration

Audit services to the Company
Audit of the Company’s subsidiaries

Total audit fees
Audit related fees – interim review
Other services**

Total non-audit fees

Total fees

* A further £15.8m (2022: £13.4m) of development costs has been capitalised in the year. See note 12.
** Refer to the Audit Committee Report on pages 128 - 135 for further details.

Year ended
31 March
2023
£m

Year ended
31 March
2022
£m

41.4
60.1
8.3
0.1

(0.4)
87.0
(0.4)
–

(0.8)
929.9
535.5
0.6
1.9

2.5
0.1
–

0.1

2.6

35.8
52.8
2.9
0.3

(4.1)
72.0
(1.2)
(34.0)

0.8
761.7
429.7
0.5
1.6

2.1
0.1
–

0.1

2.2

202

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Governance

Financial
Statements

Other
Information

7 Employee information
The average number of persons employed by the Group (including Directors) by entity location was:

United States of America
Mainland Europe
United Kingdom
Asia Pacific
Other countries

The monthly average number of persons employed by the Group (including Directors) by employee location was:

United States of America
Mainland Europe
United Kingdom
Asia Pacific
Other countries

Group employee costs comprise:

Wages and salaries
Social security costs
Pension costs (note 29)
Share-based payment charge (note 24)

Year ended
31 March
2023
Number

Year ended
31 March
2022
Number

2,754
1,475
2,478
1,219
215

8,141

2,418
1,283
2,425
1,284
112

7,522

Year ended
31 March
2023
Number

Year ended
31 March
2022
Number

2,702
1,518
2,409
1,232
280

8,141

2,368
1,310
2,427
1,249
168

7,522

Year ended
31 March
2023
£m

Year ended
31 March
2022
£m

438.5
59.2
18.2
19.6

535.5

350.6
50.3
14.2
14.6

429.7

8 Directors’ remuneration
The remuneration of the Directors is set out on pages 136 to 163 within the audited sections of the Annual Remuneration Report,
which forms part of these financial statements.

Directors’ remuneration comprises:

Wages, salaries and fees
Pension costs
Share-based payment charge

Year ended
31 March
2023
£m

Year ended
31 March
2022
£m

5.8
–
3.8

9.6

5.7
0.1
3.0

8.8

Halma plc | Annual Report and Accounts 2023

203

Notes to the Accounts continued

9 Taxation
Recognised in the Consolidated Income Statement

Current tax
UK corporation tax at 19% (2022: 19%)
Overseas taxation
Adjustments in respect of prior years

Total current tax charge

Deferred tax
Origination and reversal of timing differences
Adjustments in respect of prior years
Changes in tax rates – UK

Total deferred tax credit

Total tax charge recognised in the Consolidated Income Statement

Reconciliation of the effective tax rate:
Profit before tax
Tax at the UK corporation tax rate of 19% (2022: 19%)
Profit on disposal of business
Overseas tax rate differences
Tax incentives, exemptions and credits (including patent box, R&D and High-Tech status)
Changes in tax rates – UK
Permanent differences
Adjustments in respect of prior years

Total tax charge recognised in the Consolidated Income Statement

Effective tax rate

Adjusted* profit before tax
Total tax charge on adjusted* profit

Effective tax rate

Year ended
31 March
2023
£m

Year ended
31 March
2022
£m

14.8
61.9
(3.0)

73.7

(17.5)
1.0
–

(16.5)

57.2

291.5
55.4
–
9.0
(6.8)
–
1.6
(2.0)

57.2

16.7
46.0
0.5

63.2

(5.7)
0.1
2.6

(3.0)

60.2

304.4
57.8
(6.5)
6.2
(4.2)
2.6
3.7
0.6

60.2

19.6%

19.8%

Year ended
31 March
2023
£m

361.3
72.9

20.2%

Year ended
31 March
2022
£m

316.2
68.3

21.6%

* Adjustments include the amortisation and impairment of acquired intangible assets, acquisition items, significant restructuring costs and profit or loss on disposal

of operations. Note 3 provides more information on alternative performance measures.

The Group’s future Effective Tax Rate (ETR) will mainly depend on the geographic mix of profits and whether there are any changes to
tax legislation in the Group’s most significant countries of operations. The Finance Bill 2021 received Royal Assent on 10 June 2021 and
included the increase in the UK corporation tax rate from 19% to 25% from 1 April 2023.

On 23 March 2023, the UK Government issued further draft legislation applicable to large multinational groups in relation to a new tax
framework (part of the Organisation for Economic Co-operation and Development (OECD) BEPS initiative), which introduces a global
minimum effective tax rate of 15% effective for accounting periods beginning on or after 31 December 2023. The Group monitors income
tax developments in the territories in which it operates, as well as the applicable accounting standards, to understand their potential
future impacts.

204

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Governance

Financial
Statements

Other
Information

9 Taxation continued
Recognised in the Consolidated Statement of Comprehensive Income and Expenditure
In addition to the amount charged to the Consolidated Income Statement, the following amounts relating to tax have been recognised
directly in the Consolidated Statement of Comprehensive Income and Expenditure:

Current tax
Retirement benefit obligations
Deferred tax (note 22)
Retirement benefit obligations
Effective portion of changes in fair value of cash flow hedges

Year ended
31 March
2023
£m

Year ended
31 March
2022
£m

(1.8)

(2.3)

0.6
0.3

(0.9)

11.9
(0.4)

9.2

Recognised directly in equity
In addition to the amounts charged to the Consolidated Income Statement and the Consolidated Statement of Comprehensive Income
and Expenditure, the following amounts relating to tax have been recognised directly in equity:

Current tax
Excess tax deductions related to share-based payments on vested awards
Deferred tax (note 22)
Change in estimated excess tax deductions related to share-based payments

10 Dividends

Amounts recognised as distributions to shareholders in the year
Final dividend for the year ended 31 March 2022 (31 March 2021)
Interim dividend for the year ended 31 March 2023 (31 March 2022)

Dividends declared in respect of the year
Interim dividend for the year ended 31 March 2023 (31 March 2022)
Proposed final dividend for the year ended 31 March 2023 (31 March 2022)

Year ended
31 March
2023
£m

Year ended
31 March
2022
£m

–

0.7

(1.3)

0.2

(1.1)

Per ordinary share

Year ended
31 March
2023
pence

Year ended
31 March
2022
pence

Year ended
31 March
2023
£m

Year ended
31 March
2022
£m

11.53
7.86

19.39

7.86
12.34

20.20

10.78
7.35

18.13

7.35
11.53

18.88

43.6
29.7

73.3

29.7
46.6

76.3

40.8
27.9

68.7

27.9
43.6

71.5

The proposed final dividend is subject to approval by shareholders at the Annual General Meeting on 20 July 2023 and has not been
included as a liability in these financial statements.

Halma plc | Annual Report and Accounts 2023

205

Notes to the Accounts continued

11 Goodwill

Cost
At beginning of year
Additions (note 25)
Adjustments to prior years (note 25)
Disposals (note 30)
Exchange adjustments

At end of year

Provision for impairment
At beginning and end of year

Carrying amounts

31 March
2023
£m

31 March
2022
£m

908.7
180.0
0.3
–
31.5

1,120.5

808.5
80.2
–
(9.0)
29.0

908.7

–

1,120.5

908.7

The Group identifies cash generating units (CGUs) at the operating company level as this represents the lowest level at which cash
inflows are largely independent of other cash inflows. However, often the goodwill which arises as a result of a business acquisition, will
benefit more than one CGU and so at acquisition, goodwill is allocated to the groups of CGUs that are expected to benefit from that
business combination.

Where goodwill has been allocated to a cash-generating unit (CGU) group and part of the operation within that group is disposed
of, the goodwill associated with the disposed operation must be included in the carrying amount when determining the gain or loss
on disposal. The amount included is measured on the basis of the relative values of the operation disposed of and the portion of the
CGU group that is retained.

Before recognition of any impairment losses, the carrying amount of goodwill has been allocated to CGU groups as follows:

31 March
2023
£m

31 March
2022
£m

187.6
107.3
95.4
9.4

399.7

107.6
82.1
14.1
26.2

126.8
104.0
58.5
8.8

298.1

85.2
76.6
13.3
24.9

230.0

200.0

41.1
243.3
206.4

490.8

1,120.5

39.9
231.5
139.2

410.6

908.7

Safety
Fire
Doors, Security and Elevators
Safety Interlocks and Corrosion Monitoring
Bursting Discs

Environmental & Analysis
Water
Analysis
Environmental Monitoring
Gas Detection

Healthcare
Life Sciences
Healthcare Assessment
Therapeutic Solutions

Total Group

206

Halma plc | Annual Report and Accounts 2023

Strategic
Report

Governance

Financial
Statements

Other
Information

11 Goodwill continued
Impairment testing
Goodwill values have been tested for impairment by comparing them against the ‘value in use’ in perpetuity of the relevant CGU group.
The ‘value in use’ calculations were based on projected cash flows, derived from the latest budgets prepared by management and
strategic plans approved by the Board, discounted at CGU group specific, risk adjusted, discount rates to calculate their net
present value.

Key assumptions used in ‘value in use’ calculations
The calculation of ‘value in use’ is most sensitive to the following assumptions:

• CGU specific operating assumptions that are reflected in the budget period for the financial year to March 2024;
• Discount rates; and
• Growth rates used to extrapolate risk adjusted cash flows beyond the forecast period.

CGU specific operating assumptions applicable to the forecasted cash flows for the year to March 2024 relate to revenue forecasts,
expected project outcomes, forecast operating margins and fixed asset and working capital requirements. The relative value ascribed to
each assumption will vary between CGUs as the forecasts are built up from the underlying operating companies within each CGU group.
Consideration has been given to inflation and future cash flows reflect expectations for cost and price increases.

A short-term growth rate is applied to the March 2024 budget to derive the cash flows arising in the years to March 2025 and March
2026 based on the average growth rate calculated in the relevant sector strategic plan. A long-term rate is applied to these values for
the year to March 2027 and onwards capped at the weighted average GDP growth rates of the markets into which that CGU group
sells. Each year the results of ongoing climate and emerging risk reviews are considered and any potential impact of climate change is
included in the long-term growth rates where relevant. For example, since April 2021, where any CGU group has exposure to customers
in the oil and gas industry a reduction to the long-term growth rate has been applied. In the year to 31 March 2023, no additional
changes were made to the long-term growth rates as a result of these reviews. Immaterial additional capital expenditure to meet the
Group’s emission targets and physical risks have also been factored into future cash flow estimates. No further significant adjustments
to future cash flows from climate change are expected and therefore have not been recognised in the calculations.

Discount rates are based on estimations of the assumptions that market participants operating in similar sectors to Halma would make,
using the Group’s economic profile as a starting point and adjusting appropriately. The methodology for calculating the discount rate
has not changed year on year and the market economic data sources are consistent with prior years. The Group has calculated the
discount rate to be 11.43% (2022: 9.22%). Consistent with previous years this is a notional discount rate, calculated using externally
published global market assumptions. The discount rate, which is pre-tax and based on short-term variables, may differ from the
Weighted Average Cost of Capital (WACC). Discount rates are adjusted for economic risks that are not already captured in the specific
operating assumptions for each CGU group. This results in the impairment testing using discount rates ranging from 10.58% to 13.96%
(2022: 8.33% to 11.85%) across the CGU groups.

Significant CGU groups
CGU groups to which 10% or more of the total goodwill balance is allocated are deemed to be significant. In addition to the operating
assumptions, the assumptions used to determine ‘value in use’ for these CGU groups are:

Fire
Healthcare Assessment
Therapeutic Solutions

Risk adjusted discount rate

Short-term growth rates

Long-term growth rates

31 March
2023

13.96%
13.94%
12.98%

31 March
2022

11.73%
11.92%
10.77%

31 March
2023

11.68%
8.17%
8.17%

31 March
2022

10.06%
9.96%
9.96%

31 March
2023

3.61%
3.79%
3.23%

31 March
2022

2.49%
2.18%
2.59%

Sensitivity to changes in assumptions
The Directors believe that no reasonably possible change in any of the above key assumptions would cause the carrying value of any
CGU group to exceed its recoverable amount.

Halma plc | Annual Report and Accounts 2023

207

Notes to the Accounts continued

12 Other intangible assets

Acquired intangible assets

Customer
and supplier
relationship1
£m

Technical
know-how2
£m

Trademarks,
brands and
patents3
£m

Internally
generated
capitalised
development
costs4
£m

Total
£m

Computer
software
£m

Other
intangibles5
£m

Total
£m

319.9

141.1

78.0

539.0

113.3

24.2

5.2

681.7

Cost
At 1 April 2021
Assets of
businesses acquired
Assets of business sold
Additions at cost
Disposals and retirements
Exchange adjustments
At 31 March 2022
Assets of businesses
acquired (note 25)
Additions at cost
Disposals and retirements
Transfers
Exchange adjustments

36.3
(5.6)
–
–
12.8
363.4

87.6
–
–
–
14.1

25.3
(1.4)
–
–
5.9
170.9

87.3
–
–
–
3.3

6.1
–
–
–
3.0
87.1

17.3
–
–
–
3.2

At 31 March 2023

465.1

261.5

107.6

Accumulated
amortisation &
impairment
At 1 April 2021
Charge for the year
Assets of business sold
Impairment
Disposals and retirements
Exchange adjustments

At 31 March 2022
Charge for the year
Impairment
Disposals and retirements
Transfers
Exchange adjustments

At 31 March 2023

Carrying amounts

At 31 March 2023

At 31 March 2022

202.1
23.5
(5.6)
–
–
8.5

228.5
24.5
5.4
–
–
10.8

269.2

195.9

134.9

50.3
13.7
(1.4)
–
–
2.4

65.0
18.2
2.1
–
–
2.7

88.0

173.5

105.9

44.9
5.5
–
–
–
1.8

52.2
6.0
0.3
–
–
2.4

60.9

46.7

34.9

67.7
(7.0)
–
–
21.7
621.4

192.2
–
–
–
20.6

834.2

297.3
42.7
(7.0)
–
–
12.7

345.7
48.7
7.8
–
–
15.9

418.1

416.1

275.7

–
(2.9)
13.4
(2.2)
2.4
124.0

–
15.8
(2.8)
–
3.4

140.4

74.4
7.0
(2.1)
2.9
(1.0)
1.1

82.3
8.5
0.5
(2.7)
–
2.2

90.8

49.6

41.7

0.1
(0.5)
0.9
(2.4)
0.4
22.7

0.2
0.8
(1.7)
(0.4)
0.9

22.5

18.2
2.5
(0.5)
–
(2.1)
0.4

18.5
2.2
–
(1.6)
(0.4)
0.6

19.3

3.2

4.2

–
–
0.5
(0.1)
0.3
5.9

–
0.3
–
–
0.2

6.4

1.8
0.6
–
–
(0.2)
0.1

2.3
0.7
–
–
–
–

3.0

3.4

3.6

67.8
(10.4)
14.8
(4.7)
24.8
774.0

192.4
16.9
(4.5)
(0.4)
25.1

1,003.5

391.7
52.8
(9.6)
2.9
(3.3)
14.3

448.8
60.1
8.3
(4.3)
(0.4)
18.7

531.2

472.3

325.2

1 Customer and supplier relationship assets are amortised over their useful economic lives estimated to be between 3 and 20 years. Within this balance individually

significant balances relate to: CenTrak: £12.0m (2022: £12.7m); IZI: £17.2m; WEETECH: £10.4m; Ampac: £11.0m (2022: £12.7m); and FirePro £44.8m.

The remaining amortisation periods for these assets are 8 years, 14 years, 10 years, 10 years and 15 years respectively.
2 Technical know-how assets are amortised over their useful economic lives, estimated to be between 3 and 18 years. Within this balance individually material

balances relate to: IZI £36.2 m; FirePro £28.9m; and NovaBone £19.8m (2022: £20.2m).

The remaining amortisation periods for these assets are 14 years, 18 years and 12 years respectively.
3 Trademarks, brands and patents (which include protected intellectual property) are amortised over their useful economic lives estimated to be between 3 and

20 years. There are no individually material items within this balance.

4 Internally generated capitalised development costs are amortised over their useful economic lives estimated to be three years from the date of product launch.

There are no individually material items within this balance, which comprises capitalised costs arising from the development phase of the R&D projects undertaken
by the Group.

5 Other intangibles comprise licence and product registration costs, and customer lists, amortised over their useful economic lives, estimated to be between 3 and

5 years.

None of the intangible assets have been pledged as security.

208

Halma plc | Annual Report and Accounts 2023

13 Property, plant and equipment

Cost
At 1 April 2021
Transfer between category
Assets of businesses acquired
Assets of business sold
Additions at cost
Disposals and retirements
Exchange adjustments

At 31 March 2022
Transfer between category
Assets of businesses acquired (note 25)
Additions at cost
Remeasurements
Disposals and retirements
Exchange adjustments

At 31 March 2023

Accumulated depreciation
At 1 April 2021
Transfer between category
Charge for the year
Impairment
Assets of business sold
Disposals and retirements
Exchange adjustments

At 31 March 2022
Transfer between category
Charge for the year
Impairment
Assets of business sold
Disposals and retirements
Exchange adjustments

At 31 March 2023

Carrying amounts

At 31 March 2023

At 31 March 2022

Strategic
Report

Governance

Financial
Statements

Other
Information

Right-of-use
assets
(Note 28)

£m

Freehold land
and buildings
£m

Leasehold
buildings and
improvements
£m

Plant,
equipment
and vehicles
£m

Owned assets

106.9
(0.1)
4.6
(3.9)
18.4
(1.8)
4.2

128.3
–
9.3
18.7
4.2
(3.6)
3.8

160.7

47.3
(0.1)
14.6
–
(1.6)
(0.8)
1.9

61.3
–
18.4
–
–
(3.6)
1.6

77.7

83.0

67.0

63.6
0.1
2.6
–
1.8
–
1.2

69.3
(0.1)
0.9
1.1
–
(1.2)
2.3

72.3

16.4
–
1.2
–
–
–
0.3

17.9
(0.1)
1.4
–
–
(0.5)
0.6

19.3

53.0

51.4

21.1
–
–
(0.6)
2.5
(0.2)
0.8

23.6
(0.2)
0.1
3.2
–
(1.3)
0.7

26.1

13.0
–
2.0
–
(0.5)
(0.2)
0.4

14.7
(0.2)
2.4
–
–
(1.3)
0.6

16.2

9.9

8.9

Total
£m

396.6
(0.6)
8.2
(13.6)
43.6
(16.8)
10.7

428.1
–
14.4
47.4
4.2
(20.4)
13.0

487.0

215.8
(0.6)
35.8
0.3
(7.3)
(15.1)
5.2

234.1
–
41.4
0.1
–
(18.3)
6.8

264.1

205.0
(0.6)
1.0
(9.1)
20.9
(14.8)
4.5

206.9
0.3
4.1
24.7
–
(14.3)
6.2

227.9

139.1
(0.5)
18.0
0.3
(5.2)
(14.1)
2.6

140.2
0.3
19.2
0.1
–
(12.9)
4.0

150.9

77.0

66.7

222.9

194.0

Note 28 Leases contains further details of the Group’s right-of-use assets. None of the property, plant and equipment has been pledged
as security.

Halma plc | Annual Report and Accounts 2023

209

Notes to the Accounts continued

14 Interest in associate and other investments

Interest in associate
Financial assets at fair value through other comprehensive income
– Equity instruments

Interest in associate

At beginning of the year
Additions in the year
Group’s share of loss of associate

At end of year

31 March
2023
£m

2.1

18.9

21.0

31 March
2022
£m

1.3

6.9

8.2

31 March
2023
£m

31 March
2022
£m

1.3
0.8
–

2.1

1.4
–
(0.1)

1.3

In the prior year, OneThird B.V., issued further new shares to external investors that reduced the Group’s ownership from 35.3% to 30.0%.
There was a gain of £0.0m on disposal. During the year, One Third B.V. issued a £1.6m (US$2.0m) convertible loan note, and the Group
took up 50% of the issue at £0.8m (US$1.0m). In February 2023, following a further funding round, the loan notes were converted
increasing the Group’s equity in the associate with ownership increasing to 31%. The Group have committed to participating in a
future funding round subject to the company meeting certain performance criteria, this will result in the dilution of the
investment to 29%.

One Third B.V has its registered office at Almelosestraat 19, 7495 TG Ambt Delden, Netherlands. The Group owns 20,921 preferred
A3 shares which represents 37% of the total preferred A3 shares issued. The Group also owns 30,000 ordinary shares which is 60%
of the ordinary shares issued. The company has A2 preference shares in issue of which the Group do not have a holding.

Aggregated amounts relating to associate
Non-current assets
Current assets
Current liabilities

Net assets

Group’s share of net assets of associate

Revenue

Loss

Group’s share of loss of associate

Financial assets at fair value through other comprehensive income (FVOCI)
Movements in equity investments at FVOCI comprise the following:

Unlisted securities

At beginning of the year
Additions in the year
Changes in fair value recognised in other comprehensive income

At end of year

31 March
2023
£m

31 March
2022
£m

1.9
2.0
(0.1)

3.8

1.2

0.2

(0.1)

–

–
1.6
(0.1)

1.5

0.5

–

(0.3)

(0.1)

31 March
2023
£m

31 March
2022
£m

6.9
5.9
6.1

18.9

7.9
0.7
(1.7)

6.9

Unlisted securities comprise of investments in Owlytics Healthcare Limited, Valencell Inc., Oxbotica Limited and VAPAR Innovation
PTY Ltd. Further information on methods and assumptions used in determining fair value is provided in note 27.

210

Halma plc | Annual Report and Accounts 2023

Strategic
Report

Governance

Financial
Statements

Other
Information

15 Inventories

Raw materials and consumables
Work in progress
Finished goods and goods for resale

The above is stated net of provision for slow-moving and obsolete stock, movements of which are shown below:

At beginning of the year
Write downs of inventories recognised as an expense
Recognition of provisions for businesses acquired
Derecognition of provisions for businesses disposed
Utilisation and amounts reversed against inventories previously impaired
Exchange adjustments

At end of the year

31 March
2023
£m

185.8
31.5
95.1

312.4

31 March
2022
£m

131.8
21.5
75.5

228.8

31 March
2023
£m

31 March
2022
£m

36.1
6.0
5.0
–
(3.5)
0.9

44.5

30.5
4.7
1.2
(0.7)
(0.7)
1.1

36.1

In the year ended 31 March 2023, previous write-downs against inventory were reversed as a result of increased sales in certain markets
or where previously written down inventories have been disposed.

There is no material difference between the original cost of inventories and their cost of replacement. None of the inventory has been
pledged as security.

16 Trade and other receivables

Trade receivables
Allowance for doubtful debts

Other receivables
Prepayments
Contract assets (note 18)

31 March
2023
£m

330.2
(6.9)

323.3
18.7
30.0
38.7

410.7

31 March
2022
£m

259.8
(6.6)

253.2
16.6
23.9
31.4

325.1

Other receivables comprise various assets across the Group, including sales tax receivables and other non-trade balances.

The movement in the allowance for doubtful debts in respect of trade receivables during the year was as follows:

At beginning of the year
Net impairment loss reversed
Amounts recovered against trade receivables previously written down/amounts utilised
Recognition of provisions for businesses acquired
Exchange adjustments

At end of the year

31 March
2023
£m

31 March
2022
£m

6.6
(0.4)
(0.4)
0.8
0.3

6.9

11.2
(4.1)
(0.8)
0.2
0.1

6.6

The Group assesses on a forward-looking basis the expected credit losses associated with its trade and other receivables carried at
amortised cost.

The Group assessed that no provisions or impairments were required in relation to contract assets (2022: £nil).

The fair value of trade and other receivables approximates to book value due to the short-term maturities associated with these items.
There is no impairment risk identified with regards to other receivables where no amounts are past due.

Halma plc | Annual Report and Accounts 2023

211

Notes to the Accounts continued

16 Trade and other receivables continued
The ageing of trade receivables was as follows:

Not yet due
Up to one month overdue
Between one and two months overdue
Between two and three months overdue
Over three months overdue

17 Trade and other payables: falling due within one year

Trade payables
Other taxation and social security
Other payables
Accruals
Contract liabilities (note 18)
Deferred government grant income

Gross trade receivables

Trade receivables net

of doubtful debts

31 March
2023
£m

250.8
45.4
14.3
5.0
14.7

330.2

31 March
2022
£m

196.5
35.4
10.3
4.7
12.9

259.8

31 March
2023
£m

250.3
45.4
14.2
4.8
8.6

323.3

31 March
2023
£m

116.9
12.7
7.7
107.3
35.9
0.2

280.7

31 March
2022
£m

196.1
35.3
10.0
4.5
7.3

253.2

31 March
2022
£m

102.5
10.2
6.5
97.5
25.5
0.5

242.7

Other payables comprise various balances across the Group including share-based payments related amounts of £0.9m (2022: £1.1m),
deferred R&D expenditure tax credits and other non-trade payables. These comprise £6.8m of financial liabilities and £0.9m of non-
financial liabilities.

18 Contract balances

Contract costs

Contract assets (note 16)

Contract liabilities current (note 17)
Contract liabilities non-current (note 21)

Total contract liabilities

31 March
2023
£m

31 March
2022
£m

1.8

38.7

35.9
17.1

53.0

0.6

31.4

25.5
14.6

40.1

Contract costs represent an asset the Group has recognised in relation to costs to fulfil long-term contracts. This is presented within
other receivables in the balance sheet.

Amounts included in contract balances at the beginning of the year
Transfers to receivables during the year
Performance obligations arising in the current reporting year
Increases as a result of billing ahead of performance
Decreases as a result of revenue recognised in the year
Increases as a result of performance in advance of billing
Amounts arising through business combinations
Exchange movements

Amounts included in contract balances at the end of the year

Contract assets

Contract liabilities

31 March
2023
£m

31.4
(32.3)

–
–
37.9
–
1.7

38.7

31 March
2022
£m

14.3
(14.1)

–
–
30.6
–
0.6

31.4

31 March
2023
£m

(40.1)
–

(36.1)
24.4
–
(0.5)
(0.7)

31 March
2022
£m

(27.0)
–

(28.2)
16.2

(0.8)
(0.3)

(53.0)

(40.1)

In some cases, the Group receives payments from customers based on a billing schedule, as established in our contracts. The contract
assets relate to revenue recognised for performance in advance of scheduled billing and has increased as the Group has provided more
services ahead of the agreed payment schedules for certain contracts. The contract liability relates to payments received in advance of
performance under contract and varies based on performance under these contracts.

212

Halma plc | Annual Report and Accounts 2023

Strategic
Report

Governance

Financial
Statements

Other
Information

19 Borrowings

Loan notes falling due within one year
Overdrafts
Unsecured bank loans falling due within one year

Total borrowings falling due within one year

Unsecured loan notes falling due after more than one year
Unsecured bank loans falling due after more than one year

Total borrowings falling due after more than one year

Total borrowings

31 March
2023
£m

31 March
2022
£m

–
1.0
–

1.0

376.9
300.4

677.3

678.3

71.2
0.7
0.6

72.5

35.0
252.6

287.6

360.1

The loan notes falling due within one year at 31 March 2022, related to the second repayment under the United States Private Placement
completed in November 2015, these were settled in January 2023.

In the current year, the loan notes falling due after more than one year relate to United States Private Placement completed in May 2022
and the remainder of the United States Private Placement completed in November 2015.

Information concerning the security, currency, interest rates and maturity of the Group’s borrowings is given in note 27.

20 Provisions
Provisions are presented as:

Current
Non-current

At 31 March 2022
Additional provision in the year
Arising on acquisition (note 25)
Utilised during the year
Released during the year
Exchange adjustments

At 31 March 2023

31 March
2023
£m

21.0
9.7

30.7

31 March
2022
£m

20.7
7.7

28.4

Contingent
purchase
consideration
£m

Dilapidations
£m

Product
warranty
£m

Legal,
contractual
and other
£m

15.2
4.4
1.5
(4.6)
(0.7)
0.6

16.4

2.8
0.9
–
–
(0.3)
–

3.4

7.6
3.8
0.4
(0.7)
(3.5)
0.1

7.7

2.8
1.7
–
(1.0)
(0.4)
0.1

3.2

Total
£m

28.4
10.8
1.9
(6.3)
(4.9)
0.8

30.7

Halma plc | Annual Report and Accounts 2023

213

Notes to the Accounts continued

20 Provisions continued
Contingent purchase consideration
The provision at the beginning of the year comprised £15.2m, of which £13.2m was payable within one year, included amounts based on
actual results for the final earnout period for Infowave and Invenio. It also included estimates for the final earnout period for
Visiometrics, for the year ended 31 December 2018, which is subject to final agreement.

The £4.4m additional provision in the year related to revisions to the estimate of Infinite Leap (£2.7m increase), IZI (£1.4m increase) and
Meditech (£0.3m increase).

The £4.6m utilised during the year related to the third and final earnout period for Infowave (£1.7m) and Invenio (£0.1m), the first and
final earnout period for Meditech (£0.4m), the first earnout period for Orca (£0.4m) and the second earnout period for Spreo (£0.2m). In
addition, retention payment amounts were settled for NovaBone (£0.8m), Dancutter (£0.4m), Anton (£0.2m) and Clayborn Lab (£0.4m).

The £0.7m released during the year related to the revisions to the estimate of Orca (£0.2m reduction), Clayborn Lab (£0.3m reduction)
and Spreo (£0.2m reduction).

The closing total provision of £16.4m, of which £13.2m is payable within one year, includes amounts based on actual results for the final
earnout period for IZI, Spreo and for the second earnout period for Infinite Leap. It also includes estimates for the final earnout period for
Visiometrics, for the year ended 31 December 2018, which is subject to final agreement.

The balance due after more than one year of £3.2m comprises the estimated future earnout for Infinite Leap.

The total contingent purchase consideration payable in future for the existing acquisitions is a minimum of £2.8m with a maximum
possible payable of £57.6m.

Contingent consideration amounts paid in excess of that estimated in the acquisition balance sheet is included in cash flows from
operating activities.

The basis for the calculation of each contingent consideration arrangement is set out on page 229 in note 27, including sensitivity of the
estimation of the liabilities to changes in the assumptions.

Dilapidations
The dilapidations provisions are for the continuing obligations under leases in respect of property dilapidation and reinstatement
provisions. The provisions comprise the Directors’ best estimates of future payments to restore the fabric of buildings to their original
condition where it is a condition of the leases, prior to return of the properties.

These commitments cover the period from 2023 to 2036 though they predominantly fall due within five years.

Product warranty
Product warranty provisions reflect commitments made to customers on the sale of goods in the ordinary course of business and
included within the Group companies’ standard terms and conditions. The warranties represent assurance type warranties within the
definition of IFRS 15. Warranty commitments cover a period of between one and five years and typically apply for a 12-month period.
The provision represents the Directors’ best estimate of the Group’s liability based on past experience.

Legal, contractual and other
Legal, contractual and other provisions comprise mainly amounts reserved against open legal and contractual disputes. The Company
has on occasion been required to take legal or other actions to defend itself against proceedings brought by other parties. Provisions are
made for the expected costs associated with such matters, based on past experience of similar items and other known factors, taking
into account professional advice received, and represent Directors’ best estimate of the likely outcome. The timing of utilisation of these
provisions is frequently uncertain reflecting the complexity of issues and the outcome of various court proceedings and negotiations.
Contractual and other provisions represent the Directors’ best estimate of the cost of settling future obligations. Unless specific evidence
exists to the contrary, these reserves are shown as current.

However, no provision is made for proceedings which have been or might be brought by other parties against Group companies
unless the Directors, taking into account professional advice received, assess that it is more likely than not that such proceedings
may be successful.

Management’s assessment of the potential impacts of climate change, as well as the Group’s climate strategy as laid out on pages 72
to 87, has not resulted in the recognition of any additional provisions or disclosure of any contingent liabilities.

21 Trade and other payables: falling due after one year

Other payables
Other taxation and social security
Accruals
Contract liabilities (note 18)
Deferred government grant income

214

Halma plc | Annual Report and Accounts 2023

31 March
2023
£m

31 March
2022
£m

3.0
–
0.6
17.1
1.2

21.9

2.4
–
0.9
14.6
1.1

19.0

Strategic
Report

Governance

Financial
Statements

Other
Information

Retirement
benefit
obligations
£m

Acquired
intangible
assets
£m

Accelerated
tax
depreciation
£m

Short-term
timing
differences
£m

Share-based
payment
£m

Goodwill
timing
differences
£m

Capitalised
R&D
£m

Total
£m

(7.7)

(71.8)

(6.7)

7.8

5.2

17.1

–

(56.1)

(1.3)

14.6

(0.1)

(0.4)

1.2

(8.1)

10.6

16.5

(0.6)
–

–
–

(9.6)

–
–

(39.4)
(1.2)

(97.8)

–
–

(0.2)
(0.4)

(7.4)

(0.3)
–

–
0.5

7.6

–
(0.7)

–
–

5.7

Retirement
benefit
obligations
£m

Acquired
intangible
assets
£m

Accelerated
tax
depreciation
£m

Short-term
timing
differences
£m

Share-based
payment
£m

4.0

(58.7)

(6.0)

0.2

6.6

(0.3)

(11.9)
–
–

–
–

–
–
(17.5)

–
(2.2)

–
–
–

(0.1)
(0.3)

(6.7)

2.8

1.1

0.4
–
3.0

0.1
0.4

7.8

5.2

0.2

–
(0.2)
–

–
–

5.2

–
–

15.3
(0.3)

24.0

Goodwill
timing
differences
£m

13.4

(4.8)

–
–
7.5

–
1.0

17.1

–
–

–
(0.3)

10.3

Capitalised
R&D
£m

–

–
–
–

–
–

(0.9)
(0.7)

(24.3)
(1.7)

(67.2)

Total
£m

(39.3)

3.0

(11.5)
(0.2)
(7.0)

–
(1.1)

(56.1)

22 Deferred tax

At 1 April 2022
Credit/(charge) to
Consolidated
Income Statement
Credit/(charge) to
Consolidated Statement
of Comprehensive Income
and Expense
Charge to equity
Arising on acquisition
(note 25)
Exchange adjustments

At 31 March 2023

At 1 April 2021
Credit/(charge) to
Consolidated
Income Statement
Credit/(charge) to
Consolidated Statement
of Comprehensive Income
and Expense
Charge to equity
Arising on acquisition
Deferred tax of
business sold
Exchange adjustments

At 31 March 2022

(7.7)

(71.8)

Deferred taxes in the prior year were restated following the increase in the UK corporation tax rate from 19% to 25%, resulting in a £2.6m
charge to profit and loss, included as an adjusting item.

Certain deferred tax assets and liabilities have been offset. The following is the analysis of the deferred tax balances (after offset) for
financial reporting purposes:

Deferred tax liability
Deferred tax asset

Net deferred tax liability

Deferred tax balances expected to unwind in less than one year are insignificant.

Movement in net deferred tax liability:

At beginning of year
(Charge)/credit to Consolidated Income Statement:
UK
Overseas
Charge to Consolidated Statement of Comprehensive Income
Charge to equity
Arising on acquisition (note 25)
Deferred tax of business sold (note 30)
Exchange adjustments

At end of year

31 March
2023
£m

(70.2)
3.0

(67.2)

31 March
2022
£m

(58.5)
2.4

(56.1)

31 March
2023
£m

(56.1)

31 March
2022
£m

(39.3)

(2.7)
19.2
(0.9)
(0.7)
(24.3)
–
(1.7)

(67.2)

(0.2)
3.2
(11.5)
(0.2)
(6.8)
–
(1.3)

(56.1)

It is likely that the unremitted earnings of overseas subsidiaries would qualify for the UK dividend exemption such that no UK tax would
be due upon remitting those earnings to the UK. However, £123.7m (2022: £112.6m) of those earnings may still result in a tax liability,
principally as a result of the dividend withholding taxes levied by the overseas jurisdictions in which those subsidiaries operate.

Halma plc | Annual Report and Accounts 2023

215

Notes to the Accounts continued

22 Deferred tax continued
These deferred tax liabilities of £8.5m (2022: £7.9m) have not been recognised as the Group is able to control the timing of the reversal of
these temporary differences and it is probable that they will not reverse in the foreseeable future. Temporary differences in connection
with the interest in associate are insignificant.

At 31 March 2023, deferred tax assets of £0.4m and £4.9m (£2022: £0.4m and £2.5m) in respect of unused capital tax losses and other
tax losses have not been recognised.

23 Share capital

Ordinary shares of 10p each

Issued and fully paid

31 March
2023
£m

38.0

31 March
2022
£m

38.0

The number of ordinary shares in issue at 31 March 2023 was 379,645,332 (2022: 379,645,332), including shares held by the Employee
Benefit Trust of 1,901,415 (2022: 1,175,080); this represents 0.5% of called up share capital (2022: 0.3%). The number of own shares
purchased during the year was 1,000,000 (2022: 682,000) with a nominal value of £0.0m (2022: £0.0m).

24 Share-based payments
The total cost recognised in the Consolidated Income Statement in respect of share-based payment plans (the ‘employee share plans’)
was as follows:

Share incentive plan
Executive share plan

Year ended 31 March 2023

Year ended 31 March 2022

Equity-settled
£m

Cash-settled
£m

Total
£m

Equity-settled
£m

Cash-settled
£m

1.3
18.0

19.3

–
0.3

0.3

1.3
18.3

19.6

1.1
12.5

13.6

–
1.0

1.0

Total
£m

1.1
13.5

14.6

Share incentive plan
Shares awarded under this Plan are purchased in the market by the Plan’s trustees at the time of the award and are held in trust until
their transfer to qualifying employees; vesting is conditional upon completion of three years’ service. Forfeited shares are reallocated
in subsequent grants. The costs of providing this Plan are recognised in the Consolidated Income Statement over the three-year
vesting period.

Executive share plan (ESP)
Under the ESP, in which Executive Directors and certain senior employees participate, deferred share awards are made as either
performance awards or deferred awards. Performance awards vest after three years based on Earnings Per Share and Return on Total
Invested Capital (ROTIC) targets, and after two or three years for deferred share awards based on continuing service of the employee
only. Awards which do not vest lapse on the second or third anniversary of their grant. Shares awarded under this Plan are purchased in
the market by the Plan’s trustees and are held as own shares until their transfer to qualifying employees. Under the terms of the trust
deed, Halma is required to provide the trust with the necessary funds to purchase the shares ahead of vesting. Dividends accrue on
unvested awards and are settled in cash on vesting.

The following table shows the number of deferred shares granted and outstanding at the beginning and end of the reporting period for
the ESP:

Outstanding at beginning of year
Granted during the year
Vested during the year (pro–rated for ‘good leavers’)
Lapsed during the year

Outstanding at end of year

Exercisable at end of year

2023
Number
of shares
awarded

2022
Number
of shares
awarded

1,722,706
1,554,197
(487,593)
(127,210)

1,806,330
759,832
(660,019)
(183,437)

2,662,100

1,722,706

–

Included in Retained earnings are accumulated credits of £26.9m (2022: £19.2m) representing the provision for the value of unvested
awards under the Group's equity settled share plans.

The performance shares outstanding at 31 March 2023 had a weighted average remaining contractual life of 18 months (2022:
16 months). The weighted average share price at the date of exercise of vested shares during the year was 2,265p (2022: 2,705p).

The fair value of the awards was calculated using an appropriate simulation method, with the inputs below:

Expected life (years)
Share price on date of grant (p)
Option price (p)
Fair value per option (%)
Fair value per option (p)

216

Halma plc | Annual Report and Accounts 2023

2023

2022

2021

2 or 3
2,060.0
Nil
100%
2,060.0

2 or 3
2,732.0
Nil
100%
2,732.0

2 or 3
2,260.0
Nil
100%
2,260.0

Strategic
Report

Governance

Financial
Statements

Other
Information

24 Share-based payments continued
Cash-settled
Awards under the above plans are normally settled in shares but may be settled in cash at the Board’s discretion or where required by
local regulations. Cash-settled awards follow the same vesting conditions as the plans under which they are awarded.

Net settlement feature for withholding tax obligations
On vesting, a debit is recognised to Retained earnings at a weighted average cost of the shares purchased and held for this purpose.
Shares are transferred from own shares to the qualifying employee. The deferred shares granted under the ESP include a net settlement
feature under which shares are withheld in order to settle the employee's tax obligations. The Group withholds an amount for an
employee’s tax obligation associated with a share-based payment and transfers that amount in cash to the relevant tax authority
on the employee’s behalf.

Where permitted by local regulations, the Group is settling the deferred share grant on a net basis by withholding the number of shares
with a fair value equal to the monetary value of the employee’s tax obligation and only issuing the remaining shares on completion of
the vesting period. An amount of £4.5m was withheld and paid to the taxation authority in relation to the deferred shares that vested
during the year (2022: £7.1m).

25 Acquisitions
In accounting for acquisitions, adjustments are made to the book values of the net assets of the companies acquired to reflect their fair
values to the Group. Other previously unrecognised assets and liabilities at acquisition are included and accounting policies are aligned
with those of the Group where appropriate.

During the year ended 31 March 2023, the Group made seven acquisitions namely:

• Deep Trekker Inc.;
• IZI Healthcare Products, LLC;
• WEETECH Holdings GmbH;
• Certain trade and assets of Rigaku Corporation;
• Thermocable (Flexible Elements) Limited;
• Zonegreen 2013 Ltd; and
• FirePro Group.

Set out on the following pages are summaries of the assets acquired and liabilities assumed and the purchase consideration of:

a) the total of acquisitions;

b) Deep Trekker Inc.;

c) IZI Healthcare Products, LLC;

d) WEETECH Holding GmbH;

e) Thermocable (Flexible Elements) Limited;

f) FirePro Group;

g) Other acquisitions; and

h) adjustments arising on prior year acquisitions.

Due to their contractual dates, the fair value of receivables acquired approximate to the gross contractual amounts receivable. The
amount of gross contractual receivables not expected to be recovered is immaterial.

There are no material contingent liabilities recognised in accordance with paragraph 23 of IFRS 3 (revised). The acquisitions contributed
£41.0m of revenue and £7.9m of profit after tax for year ended 31 March 2023.

If these acquisitions had been held since the start of the financial year, it is estimated that the Group’s reported revenue and profit after
tax would have been £51.6m and £14.9m higher respectively.

As at the date of approval of the financial statements, with the exception of Deep Trekker, the accounting for all other current year
acquisitions is provisional; relating to the finalisation of the valuation of acquired intangible assets, the initial consideration, which is
subject to agreement of certain contractual adjustments, and certain other provisional balances.

Halma plc | Annual Report and Accounts 2023

217

Notes to the Accounts continued

25 Acquisitions continued
a) Total of acquisitions

Non-current assets
Intangible assets
Property, plant and equipment
Deferred tax
Current assets
Inventories
Trade and other receivables
Cash and cash equivalents

Total assets

Current liabilities
Payables
Borrowings
Lease liabilities
Tax liabilities
Non-current liabilities
Lease liabilities
Provisions
Deferred tax liabilities

Total liabilities

Net assets of businesses acquired

Initial cash consideration paid
Other adjustments to consideration
Contingent purchase consideration including retentions estimated to be paid

Total consideration

Total goodwill

Total
£m

192.4
14.4
1.1

23.1
19.9
10.1

261.0

(10.4)
(65.1)
(1.5)
(1.9)

(7.8)
(0.4)
(25.4)

(112.5)

148.5

321.0
6.3
1.5

328.8

180.3

Total goodwill of £180.3m comprises £180.0m relating to current year acquisitions and £0.3m relating to the prior year acquisition of
International Light Technologies Inc..

Analysis of cash outflow in the Consolidated Cash Flow Statement

Initial cash consideration paid
Cash acquired on acquisitions
Initial cash consideration adjustments on current year acquisitions
Contingent consideration paid

Net cash outflow relating to acquisitions

Included in cash flows from operating activities
Included in cash flows from investing activities

Year ended
31 March
2023
£m

Year ended
31 March
2022
£m

321.0
(10.1)
6.3
4.6

321.8

1.7
320.1

151.2
(18.2)
13.1
14.2

160.3

7.5
152.8

Other adjustments are primarily adjustments for acquired working capital once balances are fully reconciled, forming part of the
contractual payment mechanisms.

Contingent consideration included in cash flows from operating activities reflect amounts paid in excess of that estimated in the
acquisition balance sheets.

218

Halma plc | Annual Report and Accounts 2023

25 Acquisitions continued
b) Deep Trekker Inc.

Non-current assets
Intangible assets
Property, plant and equipment
Deferred tax
Current assets
Inventories
Trade and other receivables
Cash and cash equivalents

Total assets

Current liabilities
Payables
Borrowings

Lease liabilities

Tax liabilities
Non-current liabilities
Lease liabilities
Deferred tax liabilities

Total liabilities

Net assets of business acquired

Initial cash consideration paid
Other adjustments to consideration

Total consideration

Total goodwill

Strategic
Report

Governance

Financial
Statements

Other
Information

£m

14.9
2.2
0.6

3.3
1.1
2.7

24.8

(2.1)
(4.7)

(0.4)

(0.2)

(1.2)
(3.9)

(12.5)

12.3

31.9
1.9

33.8

21.5

On 13 April 2022, the Group acquired the entire share capital of Deep Trekker Inc. (Deep Trekker) for total consideration £33.8m (C$55.5m),
which comprised initial cash consideration of £31.9m (C$52.4m) and net cash/debt adjustments and working capital adjustments of
£1.9m (C$3.1m). The initial consideration reflects a gross purchase price of £36.6m (C$60.0m) less debt acquired of £4.7m (C$7.6m)
which was settled immediately post-acquisition. There is no contingent consideration payable.

Deep Trekker, based in Ontario, Canada, is a market-leading manufacturer of remotely operated underwater robots used for inspection,
surveying, analysis and maintenance. Deep Trekker continues to run under its own management team and has joined the Environmental
& Analysis sector.

On acquisition, acquired intangibles were recognised relating to customer related intangibles (£2.8m); trade name (£3.5m) and
technology related intangibles (£8.6m). The residual goodwill of £21.5m represents:

a) the technical expertise of the acquired workforce;

b) the opportunity to leverage this expertise across some of Halma’s businesses through future technologies; and

c) the ability to exploit the Group’s existing customer base.

Deep Trekker contributed £15.1m of revenue and £2.1m of profit after tax for the year ended 31 March 2023. If this acquisition had been
held since the start of the financial year, it is estimated that the Group’s reported revenue and profit after tax would have been £0.3m
higher and £0.0m higher respectively.

Acquisition costs totalling £0.5m were recorded in the Consolidated Income Statement.

The goodwill arising on this acquisition is not expected to be deductible for tax purposes.

Halma plc | Annual Report and Accounts 2023

219

Notes to the Accounts continued

25 Acquisitions continued
c) IZI Healthcare Products, LLC

Non-current assets
Intangible assets
Property, plant and equipment
Deferred tax
Current assets
Inventories
Trade and other receivables
Cash and cash equivalents

Total assets

Current liabilities
Payables
Borrowings

Lease liabilities

Tax liabilities
Non-current liabilities
Lease liabilities
Deferred tax liabilities

Total liabilities

Net assets of business acquired

Initial cash consideration paid
Other adjustments to consideration
Deferred contingent purchase consideration

Total consideration

Total goodwill

£m

64.4
5.6
0.4

9.9
5.3
1.3

86.9

(2.9)
(53.8)

(0.6)

(0.1)

(3.9)
(2.4)

(63.7)

23.2

84.1
1.9
1.5

87.5

64.3

On 30 September 2022, the Group acquired the entire share capital of IZI Medical Products, LLC (IZI), for total consideration of £87.5m
(US$97.4m). The initial consideration of £84.1m comprised a gross price of £137.9m (US$153.5m) less debt acquired of £53.8m (US$59.9m)
which was settled immediately on acquisition. Other adjustments to consideration reflected adjustments for acquired working capital
of £1.9m (US$2.1m). For the acquisition the maximum contingent consideration payable was £13.0m (US$14.5m) based on profit-based
targets for the year ending 31 March 2023, of which £1.5m (US$1.8m) was estimated as the payable at the acquisition date.

IZI, based in Baltimore, Maryland, USA, is a leading designer, manufacturer and distributor of medical devices used across a range of
diagnostic and therapeutic procedures. IZI continues to run under its own management team and has joined the Healthcare sector.

On acquisition, acquired intangibles were recognised relating to customer related intangibles (£19.9m); trade names (£2.6m) and
technology related intangibles (£41.9m).

The residual goodwill of £64.3m represents:

a) the technical expertise of the acquired workforce;

b) the opportunity to leverage this expertise across some of Halma’s businesses through future technologies; and

c) the ability to exploit the Group’s existing customer base.

IZI contributed £15.1m of revenue and £3.2m of profit after tax for the year ended 31 March 2023. If this acquisition had been held since
the start of the financial year, it is estimated that the Group’s reported revenue and profit after tax would have been £14.2m and £2.5m
higher respectively.

Acquisition costs totalling £1.6m were recorded in the Consolidated Income Statement.

The goodwill arising on the IZI acquisition is expected to be deductible for tax purposes.

220

Halma plc | Annual Report and Accounts 2023

25 Acquisitions continued
d) WEETECH Holding GmbH

Non-current assets
Intangible assets
Property, plant and equipment
Deferred tax
Current assets
Inventories
Trade and other receivables
Cash and cash equivalents

Total assets

Current liabilities
Payables
Borrowings

Lease liabilities

Tax liabilities
Non-current liabilities
Lease liabilities
Deferred tax liabilities

Total liabilities

Net assets of business acquired

Initial cash consideration paid
Other adjustments to consideration

Total consideration

Total goodwill

Strategic
Report

Governance

Financial
Statements

Other
Information

£m

17.8
2.2
0.1

3.0
6.4
2.3

31.8

(2.4)
(6.6)

(0.1)

(1.1)

(1.1)
(5.1)

(16.4)

15.4

46.1
0.9

47.0

31.6

On 4 October 2022, the Group acquired the entire share capital of WEETECH Holding GmbH (WEETECH), for total consideration of
£47.0m (€53.8m), which comprised initial cash consideration of £46.1m (€52.8m) and subsequent working capital adjustments of £0.9m
(€1.0m). The initial consideration of £46.1m reflects a gross purchase price of £50.2m (€57.5m) less debt acquired of £6.6m (€7.6m)
which was settled immediately post-acquisition plus other debt-like adjustments of £2.5m (€2.9m). There is no contingent
consideration payable.

WEETECH, headquartered in Wertheim, Germany, designs and manufactures safety-critical electrical testing technology for the
aviation, rail, automotive and engineering sectors. Its products ensure high and low voltage electric systems remain compliant
with increasing safety regulation. WEETECH continues to run under its own management team and has joined the Safety sector.

On acquisition, acquired intangibles were recognised relating to customer related intangibles (£10.9m); trade names (£2.1m) and
technology related intangibles (£4.6m).

The residual goodwill of £31.6m represents:

a) the technical expertise of the acquired workforce;

b) the opportunity to leverage this expertise across some of Halma’s businesses through future technologies; and

c) the ability to exploit the Group’s existing customer base.

WEETECH contributed £8.7m of revenue and £1.8m of profit after tax for the year ended 31 March 2023. If this acquisition had been
held since the start of the financial year, it is estimated that the Group’s reported revenue and profit after tax would have been £9.3m
and £1.4m higher respectively.

Acquisition costs totalling £1.0m were recorded in the Consolidated Income Statement.

The goodwill arising on the WEETECH acquisition is not expected to be deductible for tax purposes.

Halma plc | Annual Report and Accounts 2023

221

Notes to the Accounts continued

25 Acquisitions continued
e) Thermocable (Flexible Elements) Limited

Non-current assets
Intangible assets
Property, plant and equipment
Current assets
Inventories
Trade and other receivables
Cash and cash equivalents

Total assets

Current liabilities
Payables
Tax liabilities
Non-current liabilities
Deferred tax liabilities

Total liabilities

Net assets of business acquired

Initial cash consideration paid
Other adjustments to consideration

Total consideration

Total goodwill

£m

13.0
1.2

1.8
0.7
0.8

17.5

(0.6)
(0.2)

(3.6)

(4.4)

13.1

22.0
0.5

22.5

9.4

On 31 January 2023, the Group acquired the entire share capital of Thermocable (Flexible Elements) Limited (Thermocable) for £22.5m,
which comprised the purchase price of £22.0m and net cash/debt adjustments of £0.5m. There is no contingent consideration payable.

Thermocable, based in Bradford, UK, is a leading developer and manufacturer of Linear Heat Detectors (LHDs). LHDs are temperature
sensitive cables, installed in areas at risk of overheating and fire, which trigger an alert when they detect a change of temperature.
Thermocable has joined the Group as part of the Safety sector fire detection business, Apollo.

On acquisition, acquired intangibles were recognised relating to customer related intangibles (£8.7m); trade name (£1.6m) and
technology related intangibles (£2.7m). The residual goodwill of £9.4m represents:

a) the technical expertise of the acquired workforce;

b) the opportunity to leverage this expertise across some of Halma’s businesses through future technologies; and

c) the ability to exploit the Group’s existing customer base.

Thermocable contributed £1.3m of revenue and £0.5m of profit after tax for the year ended 31 March 2023. If this acquisition had been
held since the start of the financial year, it is estimated that the Group’s reported revenue and profit after tax would have been £5.3m
higher and £1.5m higher respectively.

Acquisition costs totalling £0.4m were recorded in the Consolidated Income Statement.

The goodwill arising on this acquisition is not expected to be deductible for tax purposes.

222

Halma plc | Annual Report and Accounts 2023

25 Acquisitions continued
f) FirePro Group

Non-current assets
Intangible assets
Property, plant and equipment
Current assets
Inventories
Trade and other receivables
Cash and cash equivalents

Total assets

Current liabilities
Payables
Lease liabilities
Tax liabilities
Non-current liabilities
Lease liabilities
Deferred tax liabilities

Total liabilities

Net assets of business acquired

Initial cash consideration paid
Other adjustments to consideration

Total consideration

Total goodwill

Strategic
Report

Governance

Financial
Statements

Other
Information

£m

81.0
2.9

4.3
6.0
1.9

96.1

(1.8)
(0.4)
(0.3)

(1.5)
(10.1)

(14.1)

82.0

132.0
1.2

133.2

51.2

On 27 March 2023, the Group acquired the FirePro Group (FirePro) for total consideration of £133.2m (€151.3m), which comprised the
cash and debt-free purchase price of £132.0m (€150.0m) and other adjustments of £1.2m (€1.3m). There is no contingent consideration
payable. Directly or through another company acquired, the acquisition comprised the entire share capital of Skyterra Investments Ltd,
Nisolio Investments Ltd, P.J.K.A Investments Ltd, FirePro Systems Ltd, Celanova Limited and I.D. Infinity Developments Cyprus Ltd.

FirePro, based in Cyprus, is a leading designer and manufacturer of aerosol-based fire suppression systems. FirePro continues to run
under its own management team and has joined the Safety sector.

On acquisition, acquired intangibles were recognised relating to customer related intangibles (£44.9m); trade name (£7.1m) and
technology related intangibles (£29.0m). The residual goodwill of £51.2m represents:

a) the technical expertise of the acquired workforce;

b) the opportunity to leverage this expertise across some of Halma’s businesses through future technologies; and

c) the ability to exploit the Group’s existing customer base.

FirePro contributed £0.4m of revenue and £0.1m of profit after tax for the year ended 31 March 2023. If this acquisition had been held
since the start of the financial year, it is estimated that the Group’s reported revenue and profit after tax would have been £19.8m higher
and £9.2m higher respectively.

Acquisition costs totalling £1.6m were recorded in the Consolidated Income Statement.

The goodwill arising on this acquisition is not expected to be deductible for tax purposes.

Halma plc | Annual Report and Accounts 2023

223

Notes to the Accounts continued

25 Acquisitions continued
g) Other acquisitions

Non-current assets
Intangible assets
Property, plant and equipment
Current assets
Inventories
Trade and other receivables
Cash and cash equivalents

Total assets

Current liabilities
Payables
Lease liabilities
Non-current liabilities
Lease liabilities
Provisions
Deferred tax liabilities

Total liabilities

Net assets of business acquired

Initial cash consideration paid
Other adjustments to consideration

Total consideration

Total goodwill

£m

1.3
0.3

0.8
0.4
1.1

3.9

(0.6)
–

(0.1)
(0.1)
(0.3)

(1.1)

2.8

4.9
(0.1)

4.8

2.0

On 21 November 2022, Ocean Optics Inc., a photonics technology company in the Group’s Environment and Analysis sector, bought the
assets and IP associated with laser-induced breakdown spectroscopy from Rigaku Analytical Devices Inc., and Rigaku Americas Holding
Inc., in the United States for consideration of £1.0m (US$1.1m).

On 8 March 2023, the Group acquired the entire share capital of Zonegreen 2013 Ltd and its subsidiary company, Zonegreen Ltd, for total
cash consideration of £3.8m. Zonegreen, based in Sheffield, is renowned for its Rail Depot Personnel Protection System (DPPS™) and has
joined the Group company Sentric, within the Safety sector.

In respect of these acquisitions, the excess of the fair value of the consideration paid over the fair value of the assets acquired is
represented by customer related intangibles of £0.3m; trade name of £0.3m and technology related intangibles of £0.7m; with residual
goodwill arising of £2.0m.

These acquisitions contributed £0.4m of revenue and £0.2m of profit after tax cumulatively for the year ended 31 March 2023. If these
acquisitions had been held since the start of the financial year, it is estimated that the Group’s reported revenue and profit after tax
would have been £2.7m and £0.3m higher respectively.

Acquisition costs totalling £0.2m were recorded in administrative expenses in the Consolidated Income Statement. The goodwill arising
on these acquisitions is not expected to be deductible for tax purposes.

h) Adjustments arising on prior year acquisitions

Non-current liabilities
Provisions

Total liabilities

Net adjustment to assets of business acquired in prior years

Adjustment to goodwill

£m

(0.3)

0.3

In finalising the acquisition accounting for the prior year acquisition of International Light Technologies Inc., an adjustment of £0.3m was
made to include a provision for sales tax on pre-acquisition sales. This resulted in an increase in goodwill of £0.3m.

The adjustment is not material and as such the comparative balance sheet was not restated; instead, the adjustments have been made
through the current year.

224

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Strategic
Report

Governance

Financial
Statements

Other
Information

26 Notes to the Consolidated Cash Flow Statement

Reconciliation of profit from operations to net cash inflow from operating activities:
Profit on continuing operations before finance income and expense, share of results of associate and profit
on disposal of operations
Non-cash movement on hedging instruments
Depreciation and impairment of property, plant and equipment
Amortisation and impairment of computer software
Amortisation of capitalised development costs and other intangibles
Impairment of capitalised development costs
Amortisation of acquired intangible assets
Impairment of acquired intangible assets
Share-based payment expense in excess of amounts paid
Payments to defined benefit pension plans net of service costs
(Profit)/loss on sale of property, plant and equipment, capitalised development costs and computer software

Operating cash flows before movement in working capital
Increase in inventories
Increase in receivables
Increase in payables and provisions
Revision to estimate and exchange difference on contingent consideration payable less amounts paid in
excess of payable estimated on acquisition

Cash generated from operations
Taxation paid

Net cash inflow from operating activities

Analysis of cash and cash equivalents
Cash and bank balances
Overdrafts (included in current borrowings)

Cash and cash equivalents

Analysis of net debt
Cash and bank balances
Overdrafts

Cash and cash equivalents
Loan notes falling due within one year
Loan notes falling due after more than one year
Bank loans falling due within one year
Bank loans falling due after more than one year
Lease liabilities

31 March
2022
£m

Cash flow
£m

157.4
(0.7)

156.7
(71.2)
(35.0)
(0.6)
(252.6)
(72.1)

0.3
(0.3)

_
74.4
(338.1)
65.7
(58.1)
20.9

Total net debt

(274.8)

(235.2)

Net
cash/(debt)
acquired
£m

Additions and
reclassifications

£m

–
–

–
–
–
–
–
(24.9)

(24.9)

10.1
–

10.1
–
–
(65.1)
–
(9.3)

(64.3)

Year ended
31 March
2023
£m

Year ended
31 March
2022
£m

308.4
0.1
41.5
2.2
9.2
0.5
48.7
7.8
12.9
(15.1)
(0.8)

415.4
(54.9)
(52.4)
15.1

2.0

325.2
(67.2)

258.0

278.9
–
36.1
2.5
7.6
2.9
42.7
–
5.0
(11.7)
0.8

364.8
(51.9)
(43.6)
36.1

(12.0)

293.4
(56.0)

237.4

Year ended
31 March
2023
£m

Year ended
31 March
2022
£m

169.5
(1.0)

168.5

157.4
(0.7)

156.7

Exchange
adjustments
£m

31 March
2023
£m

1.7
–

1.7
(3.2)
(3.8)
–
10.3
(2.5)

2.5

169.5
(1.0)

168.5
–
(376.9)
–
(300.4)
(87.9)

(596.7)

The net increase in cash and cash equivalents of £10.1m comprised net cash inflow of £nil and cash acquired of £10.1m.

The movement in bank loans in the year represents the proceeds and repayments of bank borrowings and the borrowings acquired as a
result of acquisition.

Halma plc | Annual Report and Accounts 2023

225

Notes to the Accounts continued

26 Notes to the Consolidated Cash Flow Statement continued
Reconciliation of movements of the Group’s liabilities from financing activities
Liabilities from financing activities are those for which cash flows were, or will be, classified as cash flows from financing activities in the
Consolidated Cash Flow Statement.

At 1 April 2021
Cash flows from financing activities
Acquisition/disposal of subsidiaries
Exchange adjustments
Other changes**

At 31 March 2022

Cash flows from financing activities
Acquisition/disposal of subsidiaries
Exchange adjustments
Other changes**

At 31 March 2023

Borrowings*
£m

322.3
28.9
–
8.2
–

359.4

256.1
65.1
(3.3)
–

677.3

Leases
£m

65.0
(16.8)
2.5
2.4
19.0

72.1

(20.9)
9.3
2.5
24.9

87.9

Total liabilities
from financing
activities
£m

Overdraft
£m

3.0
–
–
–
(2.3)

0.7

–
–
–
0.3

1.0

390.3
12.1
2.5
10.6
16.7

432.2

235.2
74.4
(0.8)
25.2

766.2

Trade
and other
payables
falling
due within
one year
£m

186.7
(5.9)
11.7
7.3
42.9

242.7

(14.4)
8.7
12.7
31.0

280.7

* Excluding overdrafts
** Other changes include movements in overdraft which is treated as cash, interest accruals, reclassifications from non-current to current liabilities, lease additions and

other movements in working capital balances.

27 Financial instruments

Policy
The Group’s treasury policies seek to minimise financial risks and to ensure sufficient liquidity for the Group’s operations and strategic
plans. No complex derivative financial instruments are used and derivative transactions are only entered into to hedge known exposures,
and no trading or speculative transactions in financial instruments are undertaken. Where the Group does use financial instruments,
these are mainly to manage the currency risks arising from normal operations and its financing. Operations are financed mainly through
retained profits and, in certain geographic locations, bank borrowings. Foreign currency risk is the most significant aspect for the Group
in the area of financial instruments. It is exposed to a lesser extent to other risks such as interest rate risk and liquidity risk. The Board
reviews and agrees policies for managing each of these risks and these policies are summarised below. The Group’s policies have
remained unchanged since the beginning of the financial year.

Details of the significant accounting policies and methods adopted (including the criteria for recognition, the basis of measurement and
the bases of recognition of income and expenses) for each class of financial asset, financial liability and equity instrument are disclosed
in the Accounting Policies note.

Capital risk management
The Group manages its capital to ensure that entities in the Group will be able to continue as going concerns while maximising the
return to stakeholders through the optimisation of the debt and equity balance. The capital structure of the Group consists of debt,
which includes the borrowings disclosed in note 19 to the Financial statements, cash and cash equivalents and equity attributable to
equity holders of the parent, comprising issued capital, reserves and retained earnings as disclosed in the Consolidated Statement of
Changes in Equity.

The Group is not subject to externally imposed capital requirements.

Foreign currency risk
The Group is exposed to foreign currency risk as a consequence of both trading with foreign companies and owning subsidiaries located
in foreign countries.

The Group earns a significant proportion of its profit in currencies other than Sterling. This gives rise to translational currency risk, where
the Sterling value of profits earned by the Group’s foreign subsidiaries fluctuates with the strength of Sterling relative to their operating
(or ‘functional’) currencies. The Group does not hedge this risk, so its reported profit is sensitive to the strength of Sterling, particularly
against the US Dollar and Euro. The Group also has transactional currency exposures. These arise on sales or purchases by operating
companies in currencies other than the companies’ operating (or ‘functional’) currency. Significant sales and purchases are matched
where possible and a proportion of the net exposure is hedged by means of forward foreign currency contracts.

The Group has significant investments in overseas operations in the US and EU, with further investments in Australia, New Zealand,
Singapore, Switzerland, Brazil, China and India. As a result, the Group’s balance sheet can be affected by movements in these
jurisdiction’s exchange rates. Where significant and appropriate, currency denominated net assets are hedged by currency borrowings.
These currency exposures are reviewed regularly.

Interest rate risk
The Group is exposed to interest rate fluctuations on its borrowings and cash deposits. Where bank borrowings are used to finance
operations they tend to be short-term with floating interest rates. Longer-term funding is provided by the Group’s bank loan facilities
which are at floating rates, or by the Group’s fixed rate United States Private Placements completed in November 2015 and May 2022.

Surplus funds are placed on short-term fixed rate deposit or in floating rate deposit accounts.

226

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Report

Governance

Financial
Statements

Other
Information

27 Financial instruments continued
Credit risk
Credit risk is defined as the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group.
The Group has adopted a policy of only dealing with creditworthy counterparties as a means of mitigating the risk of financial loss
from defaults. Credit ratings are supplied by independent agencies where available, and if not available, the Group uses other publicly
available financial information and its own trading records to rate its major customers. Credit exposure is controlled by counterparty
limits that are reviewed regularly.

Trade receivables consist of a large number of customers, spread across diverse industries and geographic areas. Ongoing credit
evaluation is performed on the financial condition of accounts receivable and, where appropriate, credit guarantee insurance cover
is purchased.

The carrying amount of trade, tax and other receivables, contract assets, derivative financial instruments and cash of £567.9m
(2022: £474.7m) represents the Group’s maximum exposure to credit risk as no collateral or other credit enhancements are held.

The credit risk on liquid funds and derivative financial instruments is limited because the counterparties are banks with high credit
ratings assigned by international credit-rating agencies. There have been no changes to the credit ratings of these counterparties in
the last financial year.

Liquidity risk
The Group has a syndicated multi-currency revolving credit facility of £550m. The facility, in Sterling, US Dollar, Euro, Australian Dollar
and Swiss Franc, currently runs to May 2027 with two one-year extension options. Since the end of the year, the first one-year extension
has been exercised, with the subsequent maturity date of May 2028.

In May 2023, a new United States Private Placement of £330m was completed, and £35m of the November 2015 United States Private
Placement remains. These facilities are the main sources of long-term funding for the Group with further detail below in the borrowing
facilities section.

The financial covenants on the facilities at year-end are for leverage (net debt/adjusted EBITDA) of not more than 3.5 times and for
adjusted interest cover of not less than four times. All covenants have been complied with.

The Group has a strong cash flow and the funds generated by operating companies are managed regionally based on geographic location.

Funds are placed on deposit with secure, highly-rated banks. For short-term working capital purposes, some operating companies utilise
local bank overdrafts. These practices allow a balance to be maintained between continuity of funding, security and flexibility.

Currency exposures
Translational exposures
It is estimated, by reference to the Group’s US Dollar and Euro denominated profits, that a one per cent change in the value of the US
Dollar relative to Sterling would have had a £2.0m (2022: £1.6m) impact on the Group’s reported profit before tax; and a one per cent
change in the value of the Euro relative to Sterling would have had a £0.5m (2022: £0.4m) impact on the Group’s profit before tax for
the year ended 31 March 2023.

Transactional exposures
The Group has net foreign currency monetary assets and liabilities that are assets and liabilities not denominated in the functional
currency of the underlying company. These comprise cash and overdrafts as well as certain trade receivable and payable balances.
These foreign currency monetary assets and liabilities give rise to the net currency gains and losses recognised in the Consolidated
Income Statement as a result of movement in exchange rates. The exposures are predominantly US Dollar and Euro. Group policy
is for a significant portion of foreign currency exposures, including sales and purchases, to be hedged by forward foreign exchange
contracts in the company in which the transaction is recorded.

Interest rate risk profile
The Group’s financial assets which are subject to interest rate fluctuations comprise interest-bearing cash equivalents which totalled
£3.0m at 31 March 2023 (2022: £1.4m). These comprised Sterling denominated bank deposits of £1.0m (2022: £0.3m), and Euro, US Dollar
and Renminbi bank deposits of £2.0m (2022: £1.1m) which earn interest at local market rates. Cash balances of £166.5m (2022: £156.0m)
earn interest at local market rates.

The financial liabilities which are subject to interest rate fluctuations comprise bank loans and overdrafts which totalled £301.4m at
31 March 2023 (2022: £253.9m). Bank loans bear interest at floating rates based either on the EURIBOR or risk-free overnight rates of
the currency in which the liabilities arise plus a margin. Bank overdrafts bear interest at local market rates. Where interest is based on
EURIBOR rates the fixed period can be up to six months.

The loan notes related to the United States Private Placement attract interest at a weighted average fixed rate of 2.90%.

Halma plc | Annual Report and Accounts 2023

227

Notes to the Accounts continued

27 Financial instruments continued
The Group’s weighted average interest cost on net debt for the year was 3.67% (2022: 2.78%). Excluding IFRS 16 lease liabilities, the
weighted average interest cost on net debt for the year was 3.71% (2022: 2.23%).

Analysis of interest-bearing financial liabilities
Sterling denominated bank loans
US Dollar denominated bank loans
Euro denominated bank loans
Australian Dollar denominated bank loans
Swiss Franc denominated bank loans
Brazilian Reais denominated bank loans

Total bank loans
Overdrafts (principally Sterling and US Dollar denominated)
Sterling denominated loan notes
US Dollar denominated loan notes
Euro denominated loan notes
Swiss Franc denominated loan notes

Total interest-bearing financial liabilities

31 March
2023
£m

31 March
2022
£m

45.0
80.8
143.6
–
31.0
–

300.4
1.0
120.0
80.8
140.6
35.5

678.3

28.0
125.9
65.1
15.5
18.2
0.5

253.2
0.7
59.0
23.5
23.7
–

360.1

For the year ended 31 March 2023, it is estimated that a general increase of one percentage point in interest rates would have reduced
the Group’s profit before tax by £1.7m (2022: £2.6m).

Maturity of financial liabilities
The gross contractual maturities of the Group’s non-derivative financial liabilities that are neither current nor on demand are as follows.

At 31 March 2023
Accruals
Other payables
Contingent purchase consideration
Bank loans
Loan notes
Lease liabilities

At 31 March 2022
Accruals
Other payables
Contingent purchase consideration
Bank loans
Loan notes
Lease liabilities

One to
two years
£m

Between
two and
five years
£m

After more
than
five years
£m

Gross
maturities
£m

Effect of
discounting/
financing rates
£m

0.3
1.6
3.2
–
10.8
18.9

34.8

0.1
0.1
–
300.4
158.3
38.4

497.3

0.2
1.3
–
–
263.5
21.0

286.0

0.6
3.0
3.2
300.4
432.6
78.3

818.1

–
–
–
–
(55.7)
(9.6)

(65.3)

One to
two years
£m

Between
two and
five years
£m

After more
than
five years
£m

Gross
maturities
£m

Effect of
discounting/
financing rates
£m

0.4
1.1
1.4
252.6
1.1
17.2

273.8

0.1
0.1
0.6
–
37.1
37.5

75.4

0.4
1.2
–
–
–
14.6

16.2

0.9
2.4
2.0
252.6
38.2
69.3

365.4

–
–
–
–
(3.2)
(12.7)

(15.9)

Total
£m

0.6
3.0
3.2
300.4
376.9
68.7

752.8

Total
£m

0.9
2.4
2.0
252.6
35.0
56.6

349.5

The Group’s bank loans are revolving credit facilities and the amount and timing of future payments and drawdowns is unknown. It is
therefore not possible to calculate the interest arising on these loans and we have therefore not disclosed the maturity of the gross cash
flows (including interest) in relation to these liabilities.

228

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Strategic
Report

Governance

Financial
Statements

Other
Information

27 Financial instruments continued
Borrowing facilities
The Group’s principal sources of long-term funding are its unsecured five-year £550m Revolving Credit Facility, its £330m United States
Private Placement completed in May 2023 and £35m of United States Private Placement completed in November 2015.

The Revolving Credit Facility was refinanced in May 2022 and matures in May 2027 with two one-year extension options. Since the end
of the year, the first one-year extension has been exercised, with the subsequent maturity date of May 2028.

The United States Private Placement of £330m was completed in May 2022. The unsecured loan notes were drawn on 12 July 2022 as
£85m, €160m, US$100m and CHF40m at a weighted average fixed interest rate of 2.81%. The loan notes have yearly maturities from
year four to year ten, with the first tranche of £48m maturing in July 2026. Interest is payable half yearly. Unsecured loan notes of
£35m drawn on 6 January 2016 at a fixed interest rate of 3.05% remain outstanding and mature in January 2026.

The Group’s undrawn committed facilities available at 31 March 2023 were £249.6m (2022: £297.4m) which matures between two and
five years.

The Group has an additional short-term unsecured and committed US bank facility of £6.1m maturing in November 2023. The facility
was undrawn at 31 March 2023.

Other short-term operational funding is provided by cash generated from operations and by local bank overdrafts. These overdraft
facilities are uncommitted and are generally renewed on an annual or ongoing basis and hence the facilities expire within one year
or less.

As part of our cash pooling arrangements UK companies have cross-guaranteed net overdraft facilities of £13.2m (2022: £13.2m). Total
net overdrafts relating to cash pooling as at 31 March 2023 were £nil (2022: £nil). Total overdrafts for the Group as at 31 March 2023 were
£1.0m (2022: £0.7m).

Fair values of financial assets and financial liabilities
With the exception of the Group’s fixed rate loan notes, there were no significant differences between the book value and fair value
(as determined by market value) of the Group’s financial assets and liabilities.

The fair value of floating borrowings approximates to the carrying value because interest rates are reset to market rates at intervals of
less than one year.

The fair value of the Group’s fixed rate loan notes arising from the United States Private Placement completed in May 2022 is estimated
to be £349.6m. The fair value is estimated by discounting the future contracted cash flow using readily available market data and
represents a level 2 measurement in the fair value hierarchy under IFRS 7.

The fair value of derivative financial instruments is estimated by discounting the future contracted cash flow, using readily available
market data, and represents a level 2 measurement in the fair value hierarchy under IFRS 7.

The fair value of equity investments held at fair value through other comprehensive income is based on the latest observable price
where available. Where there are no recent observable prices, adjustments are made based on qualitative indicators, such as the
financial performance of the entity, performance against operational milestones and future outlook. This represents a level
3 measurement in the fair value hierarchy under IFRS 7.

The fair value of deferred contingent consideration arising on acquisitions is calculated by estimating the possible future cash flows for
the acquired company identified as best, base and worst-case scenarios, using probability weightings of 25%, 50% and 25% respectively.
These scenarios are based on management’s knowledge of the business and how the current economic environment is likely to impact
it. The relevant future cash flows are dependent on the specific terms of the sale and purchase agreement.

Those terms are as follows:

• Spreo – Based on 30% of qualifying healthcare revenue for the 18-month period from 1 April 2022 to 30 September 2023 up to a

maximum earnout of US$2.0m (£1.6m).

• Orca – For the periods ending 31 March 2023 and 31 March 2024 based on 3 times multiple of EBIT above the higher of the target

threshold of €0.9m (£0.8m) or prior year EBIT. Subject to a maximum overall earnout of €2.5m (£2.1m).

• Clayborn Lab –For the year ended 30 September 2023 equal to revenue in excess of the higher of an annual revenue target of US$3.5m

(£2.7m) or the prior period revenue, subject to a maximum of US$1.0m (£0.8m).

• IZI – Based on 14 times multiple of EBIT between the minimum threshold of US$11.0m (£8.9m) and the maximum threshold of US$12.0m

(£9.7m) for the period ending 31 March 2023. Subject to a maximum overall earnout of US$14.5m (£11.7m).

• Infinite Leap – Based on a split of the business between Enterprise Solutions and Prompt Health. For Enterprise Solutions for the year

ended 30 September 2023 based on 4 times multiple of gross margin above the higher of a target threshold of US$6.1m or the prior year
gross margin, subject to a maximum of US$6.0m. For Prompt Health for the year ended 30 September 2023 based on 2.3 times
multiple of gross margin from recurring revenue above the higher of a target threshold of US$4.3m or the prior year gross margin,
subject to a maximum of US$7.5m. For Prompt Health for the year ended 30 September 2024 based on 2 times multiple of gross margin
from recurring revenue above the prior year gross margin subject to a maximum of US$4.0m.

Halma plc | Annual Report and Accounts 2023

229

Notes to the Accounts continued

27 Financial instruments continued
This calculation represents a level 3 measurement in the fair value hierarchy under IFRS 7. The fair value is sensitive to the weighting
assigned to the expected future cash flows. For those earnouts where the payable is based on expectations of future cash flows, a
change in weighting of 10 percentage points towards the best-case scenario would result in an increase in the estimate of future cash
flows as follows:

Spreo
Orca
Clayborn Lab
Infinite Leap

Current
expected
future
cash flow
£m

10 pp shift
in weighting
towards upside
expectation
£m

0.1
–
–
4.9

0.1
–
–
0.2

Classification of financial assets and liabilities
All financial assets and liabilities, with the exception of financial assets at fair value through other comprehensive income, derivatives
and contingent purchase consideration, are classified as amortised cost for accounting purposes.

Derivatives in a hedging relationship are classified as cash flow hedging instruments. Derivatives not in a hedging relationship are
classified as fair value through profit or loss.

Contingent purchase consideration is classified as fair value through profit or loss.

Hedging
The Group’s policy is to hedge significant sales and purchases denominated in foreign currency using forward currency contracts.
These instruments are initially recognised at fair value, which is typically £nil, and subsequent changes in fair value are taken to the
Consolidated Income Statement, unless hedge accounted.

The following table details the foreign currency contracts outstanding as at the year end, which mostly mature within one year and,
therefore, the cash flows and resulting effect on profit and loss are expected to occur within the next 12 months:

Average exchange rate/£

Foreign currency

Contract value

31 March
2023

31 March
2022

31 March
2023
m

31 March
2022
m

31 March
2023
£m

31 March
2022
£m

31 March
2023
£m

Fair value

31 March
2022
£m

Forward contracts
not in a designated
cash flow hedge
US Dollars
Euros
Other currencies

Forward contracts
in a designated
cash flow hedge
US Dollars vs GBP
Euros vs GBP
Other trades

Total forward
contracts
US Dollars
Euros
Other currencies

1.21
1.13
–

1.20
1.13
–

–
–
–

1.37
1.18
–

4.5
0.6
–

17.6
29.0
–

22.1
31.2
–

–
–
–

10.1
18.6
–

3.7
0.5
6.7

10.9

13.4
25.5
6.6

45.5

17.1
26.0
13.3

56.4

–
–
3.4

3.4

7.4
15.8
7.9

31.1

7.4
15.8
11.3

34.5

Amounts recognised in the Consolidated Income Statement
Amounts recognised in the Consolidated Statement of Comprehensive Income and Expenditure

(0.1)
–
(0.1)

(0.2)

0.7
–
0.1

0.8

0.6
–
–

0.6

(0.3)
0.9

0.6

–
–
0.2

0.2

(0.3)
–
(0.1)

(0.4)

(0.3)
–
0.1

(0.2)

0.2
(0.4)

(0.2)

230

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27 Financial instruments continued
The fair values of the forward contracts are disclosed as a £1.5m (2022: £0.7m) asset and £0.9m (2022: £0.9m) liability in the Consolidated
Balance Sheet. Of the £6.7m (2022: £3.4m) of open contracts for other currencies not in a designated cash flow hedge £5.0m (2022: £nil)
relates to a Swiss Franc contract for expected repayment of intercompany loan balances.

Any movements in the fair values of the contracts in a designated cash flow hedge are recognised in equity until the hedged transaction
occurs, when gains/losses are recycled to finance income or finance expense.

Analysis of movement in the Hedging reserve
Amounts removed from Consolidated Statement of Comprehensive Income and Expenditure and included
in Consolidated Income Statement during the year
Amounts recognised in the Consolidated Statement of Comprehensive Income and Expenditure

Net movement in the Hedging reserve in the year in relation to the effective portion of changes in fair
value of cash flow hedges

31 March
2023
£m

31 March
2022
£m

0.4
0.9

1.3

(1.1)
(0.4)

(1.5)

Hedge effectiveness is determined at the inception of the hedge relationship, and through periodic prospective effectiveness
assessments to ensure that an economic relationship exists between the hedged item and hedging instrument.

There was no ineffectiveness arising with regards to net investment hedges or forward contracts in a designated cash flow hedge.

The foreign currency forwards are denominated in the same currency as the highly probable future transactions. With the exception
of currency exposures, the disclosures in this note exclude short-term receivables and payables.

Market risk
The Group’s activities expose it primarily to the financial risks of changes in foreign currency exchange rates. The Group enters into
financial instruments to manage its exposure to foreign currency risk, including:

• forward foreign exchange contracts to hedge the exchange rate risk arising on the export of goods to and from the USA, Mainland

Europe and the UK; and

• foreign exchange loans to hedge the exchange rate risk arising on translation of the Group’s investment in foreign operations which

have the Euro, US Dollar, Australian Dollar and Swiss Franc as their functional currencies.

Bank loans and loan notes with a carrying value set out in the table on page 228 as well as non-GBP intercompany loans are used as
net investment hedges for foreign currency net assets with carrying value of €323.4m (2022: €105.0m), US$200.0m (2022: US$196.5m),
CHF75.0m (2022: CHF22.1m) and NZ$11.7m (2022: NZ$11.3m). The hedging ratio was 1:1. The change in the carrying value of the
borrowings that was recognised in other comprehensive income was a loss of £7.4m (2022: loss of £8.6m).

Market risk exposures are measured using sensitivity analysis as described below.

There has been no change to the Group’s exposure to market risks or in the manner in which these risks are managed and measured.

Foreign currency sensitivity analysis
The Group is mainly exposed to the currency of the US (US Dollar) and the currency of Mainland Europe (Euro).

The carrying amount of the Group’s US Dollar and Euro denominated monetary assets and monetary liabilities at the reporting date are
as follows:

US Dollar
Euro

31 March
2023
£m

1,275.4
541.5

Assets

31 March
2022
£m

1,058.0
296.1

31 March
2023
£m

331.5
374.6

Liabilities

31 March
2022
£m

300.7
144.6

If Sterling increased by 10% against the US Dollar and the Euro, profits before taxation and other equity would decrease as follows:

Profit
Other equity

31 March
2023
£m

17.8
85.8

US Dollar

31 March
2022
£m

14.4
68.8

31 March
2023
£m

3.7
15.2

Euro

31 March
2022
£m

3.3
13.8

The profit sensitivity arises mainly from the translation of overseas profits earned during the year. 10% is the sensitivity rate which
management assesses to be a reasonably possible change in foreign exchange rates. The Group’s profit sensitivity has increased against
the US Dollar because more of the Group’s profits is earned in this currency.

Halma plc | Annual Report and Accounts 2023

231

Notes to the Accounts continued

28 Leases
The Group has lease contracts for land and buildings, as well as various items of plant, machinery, vehicles and other equipment used in
its operations. The Group also has certain leases of machinery with lease terms of 12 months or less and leases of office equipment with
low value. The Group applies the ‘short-term lease’ and ‘lease of low-value assets’ recognition exemptions for these leases.

Right-of-use assets by asset category
Set out below are the carrying amounts of right-of-use assets recognised and the movements during the period, split by asset category:

Cost, net of accumulated depreciation and accumulated impairment
At 1 April 2022
Assets of businesses acquired
Additions
Remeasurements
Depreciation charge for the year
Exchange adjustments

At 31 March 2023

At 31 March 2023
Cost
Accumulated depreciation and accumulated impairment

Net carrying amount

Land and
buildings
£m

Plant,
equipment
and vehicles
£m

64.5
9.0
16.5
4.2
(17.1)
2.2

79.3

154.2
(74.9)

79.3

2.5
0.3
2.2
–
(1.3)
–

3.7

6.5
(2.8)

3.7

Total
£m

67.0
9.3
18.7
4.2
(18.4)
2.2

83.0

160.7
(77.7)

83.0

Lease liabilities
Set out below are the carrying amounts of lease liabilities included under current and non-current liabilities and the movements during
the period:

Year ended
31 March
2023
£m

Year ended
31 March
2022
£m

72.1
22.0
2.9
(20.9)
9.3
–
2.5

87.9

19.2
68.7

87.9

65.0
16.8
2.2
(16.8)
4.6
(2.1)
2.4

72.1

15.5
56.6

72.1

Year ended
31 March
2023
£m

Year ended
31 March
2022
£m

18.4
–
2.9
0.3

21.6

14.6
–
2.3
0.3

17.2

At 1 April 2022
Additions and remeasurements
Accretion of interest
Payments
Liabilities of business acquired (note 25)
Liabilities of business disposed
Exchange adjustments

At 31 March 2023

Current
Non-current

At 31 March 2023

The maturity analysis of lease liabilities is disclosed in note 27.

The following are the amounts recognised in Consolidated Income Statement:

Depreciation expense of right-of-use assets
Impairment expense of right-of-use assets
Interest expense on lease liabilities
Expense relating to short-term leases and leases of low-value assets

Total amount recognised in Consolidated Income Statement

The Group had total cash outflows for leases of £20.9m in the year (2022: £16.8m).

232

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28 Leases continued
Extension options
Some leases of buildings contain extension options exercisable by the Group before the end of the non-cancellable contract period.
Where practical, the Group seeks to include extension options in new leases to provide operational flexibility. The extension options held
are exercisable only by the Group and not the lessors. For extension options exercisable within five years of commencement the Group
assesses at lease commencement whether it is reasonably certain to exercise the extension options. For options that are exercisable
more than five years from commencement the Group assesses whether it is reasonably certain to exercise the option when this option
becomes exercisable within five years. The Group will also reassess whether it is reasonably certain to exercise the option where there
is a significant event or change in circumstances within its control.

As at 31 March 2023, potential future cash outflows of £12.6m (undiscounted) (2022 restated: £13.7m) have not been included in the
lease liability because it is not reasonably certain that the leases will be extended. During the current year the financial effect of revising
lease terms to reflect the exercising of extension and termination options was an increase in recognised lease liabilities and right-of-use
assets of £0.0m (2022: £0.1m). No other lease modifications occurred during the year.

The future cash outflows relating to leases that have not yet commenced are £0.7m (2022: £0.0m).

29 Retirement benefits
Group companies operate both defined benefit and defined contribution pension plans. The Halma Group Pension Plan and the Apollo
Pension and Life Assurance Plan (both UK) have defined benefit sections with assets held in separate trustee administered funds. Both
of these sections had already closed to new entrants in 2002/03 and closed to future benefit accruals from December 2014. From that
date, the former defined benefit members could join the defined contribution section within the Halma Group Pension Plan (which has
now been superseded by a defined contribution Master Trust with Aegon).

Overseas subsidiaries have adopted mainly defined contribution plans, with the exception of small defined benefit plans in the Swiss
entities of Medicel AG and Robutec AG.

Total pension costs of £18.2m (2022: £14.2m) recognised in employee costs (note 7), comprise £17.7m (2022: £13.7m) related to defined
contribution plans and £0.5m (2022: £0.5m) related to defined benefit plans, including administration expenses of £nil (2022: £nil).

Defined contribution plans
The amount charged to the Consolidated Income Statement in respect of defined contribution plans was £17.7m (2022: £13.7m) and
represents contributions payable to these plans by the Group at rates specified in the rules of the plans. The assets of the plans are
held separately from those of the Group in funds under the control of asset managers or trustees.

Defined benefit plans
The Group’s significant defined benefit plans were for qualifying employees of its UK subsidiaries. Under the plans, members are entitled
to retirement benefits of up to two-thirds of final pensionable salary on attainment of a retirement age of 60, for former members
of the Executive Board, and 65, for all other qualifying employee members. No other post-retirement benefits are provided. The plans
are funded plans.

The most recent actuarial valuation of the Halma Group Pension Plan was carried out for the Trustees of the Plan as at 30 November
2020 by Mr M Whitcombe, Fellow of the Institute and Faculty of Actuaries, of Mercer Limited. The present value of the liabilities was
measured using the Projected Unit method. This method is an accrued benefits valuation method in which the plan liabilities include
an allowance for projected earnings.

The most recent actuarial valuation of the Apollo Pension and Life Assurance Plan was carried out for the Trustees of the Plan as at
1 April 2021 by Mr M Whitcombe, Fellow of the Institute and Faculty of Actuaries, also of Mercer Limited. The same Projected Unit
method was used.

The plans’ triennial actuarial valuation reviews, rather than the accounting basis, are used to evaluate the level of any cash payments
into the plan. Based on these valuations, the Trustees of the UK plans, having consulted with the Group, agreed past service deficit
recovery payments to be made for the immediate future with the objective of funding the plans in excess of the Technical Provisions
valuation. During the year ended 31 March 2023, the aggregate payments made since the last triennial actuarial valuation, coupled
with the performance of the plan assets and movement in the liabilities resulted in the Halma Group Pension Plan being funded over
the trustees’ secondary funding target and closer to the expected current valuation on a solvency basis. As a result, it has been agreed
with the trustees of the Halma Group Pension Plan that contributions will be suspended until April 2025, when they will either fall due or
be superseded by cash contributions agreed with the trustees in respect of the latest triennial actuarial valuation. As a result, we expect
contributions to the UK plans in the 2024 financial year to be £3.6m, relating specifically to the Apollo Pension and Life Assurance Plan.

An alternative to the Projected Unit method is a valuation on a solvency basis, which is an estimate of the cost of buying out benefits
with a suitable insurance company. This amount represents the amount that would be required to settle the plan liabilities rather than
the Group continuing to fund the ongoing liabilities of the Plans. Following the last triennial actuarial valuation the estimate of the
solvency liability was £106.1m as at 30 November 2020 for the Halma Group Pension Plan and £44.1m as at 1 April 2021 for the Apollo
Pension and Life Assurance Plan.

Halma plc | Annual Report and Accounts 2023

233

Notes to the Accounts continued

29 Retirement benefits continued

Key assumptions used (UK plans):
Discount rate
Expected return on plan assets
Pension increases LPI 2.5%
Pension increases LPI 3.0%
Inflation – RPI
Inflation – CPI

31 March
2023

31 March
2022

31 March
2021

4.75%
4.75%
2.10%
2.45%
3.30%
2.50%

2.80%
2.80%
2.20%
2.55%
3.60%
2.85%

1.95%
1.95%
2.10%
2.40%
3.20%
2.40%

Mortality assumptions
The base mortality tables utilised are consistent with those used in the last completed triennial valuations. The latest published CMI
mortality projection tables (CMI2021) have been used with a long-term improvement rate of 1.25% pa and a w2021 parameter of 10%.
The assumed life expectations on retirement at age 65 are:

Retiring today:
Males
Females
Retiring in 20 years:
Males
Females

31 March
2023
Years

31 March
2022
Years

31 March
2021
Years

22.3
24.7

23.8
26.2

22.4
24.8

23.9
26.2

22.4
24.3

24.2
26.2

The sensitivities regarding the principal assumptions used to measure the UK plan liabilities are set out below:

Assumption

Discount rate
Rate of inflation
Rate of mortality

Change in assumption

Impact on plan liabilities

Increase/decrease by 0.5%
Increase/decrease by 0.5%
Increase by one year

Decrease by 6.5%/increase by 7.3%
Increase by 4.2%/decrease by 4.2%
Increase by 2.8%

These sensitivities have been calculated to show the impact on the plan liabilities in isolation and assume no other changes in market
conditions at the reporting date. This may not be representative of the actual change as the changes in assumptions would likely not
occur in isolation – for example, a change in discount rate is unlikely to occur without any movement in the value of the assets held by
the Group’s Schemes.

Amounts recognised in the Consolidated Income Statement in respect of the UK and Swiss defined benefit plans are as follows:

Current service cost
Net interest (credit)/charge on pension plan assets/
liabilities

31 March 2023

31 March 2022

UK defined
benefit plans
£m

Other defined
benefit plans
£m

–

(1.1)

0.5

–

0.5

Total
£m

0.5

(1.1)

(0.6)

UK defined
benefit plans
£m

Other defined
benefit plans
£m

–

0.3

0.4

–

0.4

Total
£m

0.4

0.3

0.7

Actuarial gains and losses have been reported in the Consolidated Statement of Comprehensive Income and Expenditure. The actual
return on plan assets was a loss of £70.2m (2022: gain of £12.2m).

The cumulative amount of actuarial losses recognised in the Consolidated Statement of Comprehensive Income and Expenditure since
the date of transition to IFRS is £57.1m (2022: £48.3m).

The amount included in the Consolidated Balance Sheet arising from the Group’s asset/obligations in respect of its defined benefit
retirement plans is as follows:

Present value of defined benefit obligations
Fair value of plan assets

Net retirement benefit asset/(obligation)

Plans with net retirement benefit assets
Plans with net retirement benefit obligations

31 March 2023

31 March 2022

UK defined
benefit plans
£m

Other defined
benefit plans
£m

Total
£m

UK defined
benefit plans
£m

Other defined
benefit plans
£m

(237.2)
275.6

38.4

38.4
–

(9.6)
9.1

(0.5)

–
(0.5)

(246.8)
284.7

(308.7)
339.8

37.9

38.4
(0.5)

31.1

31.1
–

(8.4)
7.8

(0.6)

–
(0.6)

Total
£m

(317.1)
347.6

30.5

31.1
(0.6)

234

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29 Retirement benefits continued
Movements in the present value of the UK and Swiss defined benefit obligations were as follows:

At beginning of year
Service cost
Interest cost
Remeasurement gains/(losses):
Actuarial gains arising from changes in financial assumptions
Actuarial losses arising from experience adjustments
Contributions from plan members
Benefits paid
Exchange adjustments

At end of year

Movements in the fair value of the UK and Swiss plan assets were as follows:

At beginning of year
Interest income
Actuarial (losses)/gains excluding interest income
Contributions from the sponsoring companies
Contributions from plan members
Benefits paid
Exchange adjustments

At end of year

Year ended
31 March
2023
£m

(317.1)
(0.5)
(8.6)

Year ended
31 March
2022
£m

(355.6)
(0.5)
(6.7)

87.2
(16.1)
(0.4)
9.2
(0.5)

44.2
(8.4)
(0.2)
10.7
(0.6)

(246.8)

(317.1)

Year ended
31 March
2023
£m

Year ended
31 March
2022
£m

347.6
9.7
(79.9)
15.6
0.4
(9.2)
0.5

284.7

333.1
6.4
5.8
12.2
0.2
(10.7)
0.6

347.6

The cash contributions of £15.6m include a £1.3m contribution related to Texecom in respect of obligations under section 75 of the
Pensions Act 1995 following its disposal in the prior year (Note 30).

The net movement on actuarial gains and losses of the UK and Swiss plans was as follows:

Defined benefit obligations
Fair value of plan assets

Net actuarial (losses)/gains

The analysis of the UK plan assets and the expected rate of return at the balance sheet date were as follows:

Fair value of UK plan assets

Equity instruments
Quoted
Debt instruments
Quoted
Unquoted
Property/infrastructure
Unquoted
Cash and cash equivalent
Quoted

Year ended
31 March
2023
£m

Year ended
31 March
2022
£m

71.1
(79.9)

(8.8)

35.8
5.8

41.6

31 March
2023
£m

31 March
2022
£m

10.1

101.1

166.7
38.3

180.7
12.7

20.0

37.1

40.5
275.6

8.2
339.8

The assets of the schemes are primarily held in pooled investment vehicles which are unquoted. The pooled investment vehicles hold
both quoted and unquoted investments. Scheme assets include neither direct investments in the Company’s ordinary shares, nor any
property assets occupied by Group companies, nor other assets used by the Group.

Equity instruments include UK and Overseas equity funds. Debt instruments include corporate, government and private debt funds.
Property/Infrastructure includes private infrastructure funds and managed property funds. Cash and cash equivalent includes cash at
bank and a liquidity fund.

Halma plc | Annual Report and Accounts 2023

235

Notes to the Accounts continued

29 Retirement benefits continued

Equity instruments
Debt instruments
Property/infrastructure/cash

Expected rate of return

31 March
2023
%

31 March
2022
%

4.75
4.75
4.75

4.75

2.80
2.80
2.80

2.80

Assets in the non-UK plans are primarily insurance assets.

In conjunction with the trustees, the Group conducts asset-liability reviews for its defined benefit pension plan. The results of these
reviews are used to assist the trustees and the Group to determine the optimal long-term asset allocation with regard to the structure
of the liabilities of the plan. They are also used to assist the trustees in managing the volatility in the underlying investment performance
and risk of a significant decrease in the defined benefit asset by providing information used to determine the plan’s investment strategy.

As a consequence, the Group is progressively giving more emphasis to a closer return matching of plan assets and liabilities, both to
ensure the long-term security of its defined benefit commitment and to reduce earnings and balance sheet volatility.

Based on the most recent actuarial valuations and agreements with the plan trustees, the estimated amount of contributions expected
to be paid to the UK and Swiss plans during the year ended 31 March 2024 is £4.2m.

The levels of contributions are based on the current service cost and the expected future cash flows of the defined benefit pension plans.
The Group estimates the plan liabilities on average to fall due over 20 and 25 years, respectively, for the Halma and Apollo plans.

The Group has considered the requirements of IFRIC 14 with respect to the UK plans and has determined that it has an unconditional
right to a refund under the plans and therefore IFRIC 14 does not have any practical impact on the plans and so no allowance for it
(and, in particular, no allowance for the asset ceiling) has been made in the calculated figures.

The expected maturity analysis of the undiscounted pension obligation for the next 10 years is as follows:

At 31 March 2023
Halma
Apollo

Less than
one year
£m

Between
one and
two years
£m

Between
two and
five years
£m

Between
five and
ten years
£m

8.2
1.3

8.4
1.3

26.9
4.2

50.5
8.0

Total
£m

94.0
14.8

236

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30 Disposal of operations
In the prior year, in August 2021, the Group disposed of its entire interest in Texecom Limited. Cash received on disposal of operations
in the prior year of £57.5m comprised proceeds from the sale of £64.8m, less £4.5m of cash disposed and £2.8m of disposal costs.
The Group recognised a profit on disposal of operations of £34.0m.

31 Contingent liabilities
Group financing exemptions applicable to UK controlled foreign companies
On 2 April 2019, the European Commission (EC) published its final decision that the United Kingdom controlled Foreign Company Partial
Exemption (FCPE) constitutes State Aid. As previously reported, the Group has benefited from the FCPE, which amounts to £15.4m of
tax for the period from 1 April 2013 to 31 December 2018.

Appeals had been made by the UK Government, the Group and other UK-based groups to annul the EC decision. On 8 June 2022,
the EU General Court delivered its decision in favour of the EC. In August 2022, the UK Government appealed this decision.

Notwithstanding this appeal, under EU law, the UK Government is required to commence collection proceedings. In January 2021,
the Group received a Charging Notice from HM Revenue & Customs (HMRC) for £13.9m assessed for the period from 1 April 2016 to
31 December 2018. The Group appealed against the notice but, as there is no right of postponement, the amount charged was paid in
full in February 2021 with a further £0.8m of interest paid in May 2021. In February 2021, the Group received confirmation from HMRC
that it was not a beneficiary of State Aid for the period from 1 April 2013 to 31 March 2016.

Whilst the EU General Court was in favour of the EC, the Group's assessment is that there are strong grounds for appeal and the appeal
is expected to be successful. As the amounts paid are expected to be fully recovered, and given the appeal process is expected to take
more than a year, the Group continues to recognise a receivable of £14.7m (31 March 2022: £14.7m) on the Consolidated Balance Sheet
within non-current assets.

Other contingent liabilities
The Group has widespread global operations and is consequently a defendant in legal, tax and customs proceedings incidental to those
operations. In addition, there are contingent liabilities arising in the normal course of business in respect of indemnities, warranties and
guarantees. These contingent liabilities are not considered to be unusual or material in the context of the normal operating activities of
the Group. Provisions have been recognised in accordance with the Group accounting policies where required. None of these claims are
expected to result in a material gain or loss to the Group.

32 Events subsequent to end of reporting period
On 24 April 2023, Minicam Inc., a company in the Group’s Environmental & Analysis sector purchased its US service and distribution
partner, Visual Imaging Resources LLC, for initial consideration of c.£2.3m (US$2.8m), and an earnout based on gross margin of a
maximum of £1.0m (US$1.2m) per year for three years.

On 4 May 2023, completing on 11 May 2023, the Group acquired the entire share capital of Sewertronics Sp. Z o.o. (Sewertronics),
based in Rzeszów, Poland for a cash consideration of c.£36m (€41m) on a cash and debt-free basis. Additional consideration of up to
c.£16m (€18m) may be payable in cash, based on the fulfilment of certain conditions. Sewertronics' technology repairs and rehabilitates
wastewater pipelines without the need to dig a trench, by inserting a lining into the pipe, which is then cured using its innovative and
patented ultraviolet (UV) LED technology. Sewertronics will be part of Halma’s Environmental & Analysis sector. As part of the
acquisition a drawdown was made from the Group’s Revolving Credit Facility of £26.7m (€30.3m).

A detailed purchase price allocation exercise is currently being performed to calculate the goodwill arising on these acquisitions.

There were no other known material non-adjusting events which occurred between the end of the reporting period and prior to the
authorisation of these financial statements on 15 June 2023.

Halma plc | Annual Report and Accounts 2023

237

Notes to the Accounts continued

33 Related party transactions
Trading transactions

Associated companies
Transactions with associated companies
Sales to associated companies
Balances with associated companies
Amounts due from associated companies

Other related parties
Balances with other related parties
Amounts due to other related parties

Year ended
31 March
2023
£m

Year ended
31 March
2022
£m

–

All the transactions above are on an arm’s length basis and on standard business terms.

Remuneration of key management personnel
The remuneration of the Directors and Executive Board members, who are the key management personnel of the Group, is set out
below in aggregate for each of the categories specified in IAS 24 ‘Related Party Disclosures’. Further information about the remuneration
of individual Directors is provided in the audited part of the Annual Remuneration Report on pages 136 to 163.

Wages and salaries
Pension costs
Share-based payment charge

Year ended
31 March
2023
£m

Year ended
31 March
2022
£m

10.8
–
6.7

17.5

11.9
0.1
5.0

17.0

34 Commitments
Capital commitments
Capital expenditure relating to the purchase of equipment authorised and contracted at 31 March 2023 but not recognised in these
accounts amounts to £2.1m (2022: £1.5m).

238

Halma plc | Annual Report and Accounts 2023

Company Balance Sheet

Strategic
Report

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Financial
Statements

Other
Information

Fixed assets
Intangible assets
Tangible assets
Investments
Retirement benefit asset
Tax receivable

Current assets
Debtors
Short-term deposits
Tax receivable
Cash at bank and in hand

Creditors: amounts falling due within one year
Borrowings
Tax payable
Creditors

Net current assets

Total assets less current liabilities

Creditors: amounts falling due after more than one year
Borrowings
Creditors
Deferred tax

Net assets

Capital and reserves
Share capital
Share premium account
Own shares
Capital redemption reserve
Profit and loss account*

Total equity

Notes

C3
C4
C5
C13

C7
C9
C10

C11

31 March
2023
£m

31 March
2022
£m

0.3
7.4
576.8
28.7
14.7

627.9

1,033.6
0.1
–
6.9

1,040.6

2.5
2.2
99.6

104.3

936.3

0.6
7.7
453.5
26.7
14.7

503.2

807.3
0.1
6.6
15.1

829.1

75.2
–
122.7

197.9

631.2

1,564.2

1,134.4

677.3
13.9
5.6

867.4

38.0
23.6
(46.1)
0.2
851.7

867.4

287.6
13.4
5.4

828.0

38.0
23.6
(30.7)
0.2
796.9

828.0

* Effective for the year ended 31 March 2022, the share-based payment reserve, which was previously presented as Other reserves has been amalgamated with the

Profit and loss account in the Company Statement of Changes in Equity and the Company Balance Sheet as permitted by IFRS 2. This resulted in the £40.6m debit
in brought forward reserves at 1 April 2021 being transferred to the Profit and loss account. There is no change in Total equity from this change, nor the amounts
charged or credited to the reserve during the period, which represents a change in presentational accounting policy only.

The Company reported a profit for the financial year ended 31 March 2023 of £97.4m (2022: £218.8m).

The financial statements of Halma plc, company number 00040932, were approved by the Board of Directors on 15 June 2023.

Marc Ronchetti
Director

Steve Gunning
Director

Halma plc | Annual Report and Accounts 2023

239

Company Statement of Changes in Equity

At 1 April 2022
Profit for the year
Other comprehensive income and expense:
Actuarial losses on defined benefit pension plan
Tax relating to components of other comprehensive
income and expense

Total other comprehensive expense for the year
Dividends paid
Share-based payment charge
Capital contribution to subsidiaries for share-based
payment awards (note C5)
Deferred tax on share-based payment transactions
Excess tax deductions related to exercised share awards
Purchase of own shares
Performance share plan awards vested

At 31 March 2023

At 1 April 2021 (restated)*
Profit for the year
Other comprehensive income and expense:
Actuarial gains on defined benefit pension plan
Tax relating to components of other comprehensive
income and expense

Total other comprehensive income for the year
Dividends paid
Share-based payment charge
Deferred tax on share-based payment transactions
Excess tax deductions related to exercised share
awards
Purchase of own shares
Performance share plan awards vested

Share
capital
£m

38.0
–

Share
premium
account
£m

23.6
–

Own
shares
£m

(30.7)
–

Capital
redemption
reserve
£m

Profit and loss
account
£m

0.2
–

796.9
97.4

Total
£m

828.0
97.4

–

–
–
–

–
–
–
–
–

–

–
–
–

–
–
–
–
–

38.0

38.0
–

23.6

23.6
–

–

–
–
–
–

–
–
–

–

–
–
–
–

–
–
–

–

–
–
–

–
–
–
(22.3)
6.9

(46.1)

(20.9)
–

–

–
–
–
–

–
(19.3)
9.5

(30.7)

–

–
–
–

–
–
–
–
–

0.2

0.2
–

–

–
–
–
–

–
–
–

0.2

(9.4)

1.7

(7.7)
(73.3)
9.5

40.3
(0.1)
0.1
–
(11.4)

851.7

634.6
218.8

1.7

(7.7)
(73.3)
9.5

40.3
(0.1)
0.1
(22.3)
(4.5)

867.4

675.5
218.8

27.6

(6.5)

21.1
(68.7)
6.9
(0.2)

1.0
–
(16.6)

796.9

(6.5)

21.1
(68.7)
6.9
(0.2)

1.0
(19.3)
(7.1)

828.0

At 31 March 2022

38.0

23.6

* Effective for the year ended 31 March 2022, the share-based payment reserve, which was previously presented as Other reserves has been amalgamated with the

Profit and loss account, in the Company Statement of Changes in Equity and the Company Balance Sheet as permitted by IFRS 2. This resulted in the £40.6m debit
in brought forward reserves at 1 April 2021 being transferred to the Profit and loss account. There is no change in Total equity from this change, nor the amounts
charged or credited to the reserve during the period, which represents a change in presentational accounting policy only.

240

Halma plc | Annual Report and Accounts 2023

Notes to the Company Accounts

Strategic
Report

Governance

Financial
Statements

Other
Information

C1 Accounting policies
Corporate Information
Halma plc (the Company) is a public limited company incorporated and domiciled in England, United Kingdom (registration number
00040932). The registered address of the Company is Misbourne Court, Rectory Way, Amersham, Buckinghamshire, HP7 0DE,
United Kingdom.

Basis of preparation
The separate Company financial statements are presented as required by the Companies Act 2006 and have been prepared on the
historical cost and going concern basis, and in accordance with Financial Reporting Standard 101 ‘Reduced Disclosure Framework’ except
for the revaluation of certain financial instruments, pension assets and contingent purchase consideration at fair value as permitted by
the Companies Act 2006.

The principal accounting policies have been applied consistently in both the current and prior year.

Financial reporting standard 101 – reduced disclosure exemptions

The Company has taken advantage of the following disclosure exemptions under FRS 101:

• the requirements of paragraphs 45(b) and 46–52 of IFRS 2 Share-based payment;
• the requirements of IFRS 7 Financial Instruments: Disclosures;
• paragraph 79(a)(iv) of IAS 1;
• paragraph 73(e) of IAS 16 Property, Plant and Equipment;
• paragraph 118(e) of IAS 38 Intangible Assets;
• the requirements of paragraphs 10(d), 10(f), 16, 38A, 38B, 38C, 38D, 40A, 40B, 40C, 40D,111 and 134–136 of IAS 1 Presentation of

Financial Statements;

• the requirements of paragraph 52, the second sentence of paragraph 89, and paragraphs 90, 91 and 93 of IFRS 16 Leases;
• the requirements of paragraph 58 of IFRS 16;
• the requirements of IAS 7 Statement of Cash Flows and related notes;
• the effects of new but not yet effective IFRS;
• the requirements of paragraphs 30 and 31 of IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors;
• the requirements in IAS 24 Related Party Disclosures to disclose related party transactions entered into between two or more members

of a group, provided that any subsidiary which is a party to the transaction is wholly owned by such a member; and

• paragraph 17 of IAS 24, ‘Related party disclosures’ (key management compensation).

New Standards and Interpretations applied for the first time in the year ended 31 March 2023
The following Standards and Interpretations applied for the first time, with effect from 1 January 2022, and have been adopted in the
preparation of these Company Accounts;

None of the above mentioned new Standards and Interpretations have affected the Company’s results.

Significant accounting judgements and estimates
In preparing the financial statements, management has made judgements, estimates and assumptions that affect the application of
the Company’s accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from
these estimates. Estimates and assumptions are reviewed on an ongoing basis and are based on historical experience and various other
factors that are believed to be reasonable under the circumstances.

Significant accounting estimates are used in determining the value of the future defined benefit obligation which requires estimation in
respect of the assumptions used to calculate present values. These include future mortality, discount rate and inflation. Management
determines these assumptions in consultation with an independent actuary. Details of the estimates made in calculating the defined
benefit obligation are disclosed in note 29 to the Group accounts, specifically page 234.

The Company’s investments are assessed each reporting period for any indicators of impairment, both qualitative and quantitative. If
there are deemed to be any indicators of impairment a ‘value in use’ calculation is performed. Where required, the ‘value in use’
calculation requires the Company to estimate the future cash flows expected to arise from the investments and apply suitable discount
rates in order to calculate present values.

There are no significant judgements used by management in preparing the Company’s financial statements.

Summary of significant accounting policies
Foreign currencies
Transactions in foreign currency are recorded at the rate of exchange at the date of the transaction. Monetary assets and liabilities
denominated in foreign currencies at the balance sheet date are reported at the rates prevailing at that date. Any gain or loss arising
from subsequent exchange rate movements is included as an exchange gain or loss in the Profit and Loss Account.

Financial Instruments
The Company recognises financial instruments when it becomes a party to the contractual arrangements of the instrument. Financial
instruments are de-recognised when they are discharged or when the contractual terms expire. The Company’s accounting policies in
respect of financial instruments transactions are explained below:

Halma plc | Annual Report and Accounts 2023

241

Notes to the Company Accounts continued

C1 Accounting policies continued
Financial assets
The Company recognises its financial assets into one of the categories discussed below, depending on the purpose for which the asset
was acquired.

Other than the financial assets in a qualifying hedging relationship, the Company’s accounting policy for each category is as follows:

Fair value through profit or loss – Derivative financial instruments are carried in the balance sheet at fair value with changes in fair value
recognised in the Profit and Loss Account.

Amortised costs – Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in
an active market. They arise principally through the provision of goods and services to customers (other group companies), but also
incorporate other types of contractual monetary asset. They are initially recognised at fair value plus transaction costs that are directly
attributable to their acquisition or issue and are subsequently carried at amortised cost using the effective interest rate method, less
provision for impairment.

The Company’s receivables relate entirely to balances due from other group companies. Where the intercompany receivable is payable
on demand the Company determines whether any impairment provision is required by assessing the Company’s ability to repay the
loan. Where it is considered that the Company does not have the capacity to repay the loan or the loan is not repayable on demand,
an expected credit loss model is used to calculate the impairment provision required.

Financial liabilities
The Company classifies its financial liabilities into one of the categories discussed below, depending on the purpose for which the liability
was acquired.

Fair value through profit or loss – These comprise out-of-the-money derivatives and contingent purchase consideration. They are carried
in the balance sheet at fair value with changes in fair value recognised in the Profit and Loss Account.

At amortised cost – Financial liabilities at amortised cost including bank borrowings are initially recognised at fair value. Such interest-
bearing liabilities are subsequently measured at amortised cost using the effective interest rate method.

Interest bearing loans and borrowings
Interest bearing loans and borrowings are initially recognised in the balance sheet at fair value less directly attributable transaction costs
and are subsequently measured at amortised cost using the effective interest rate method.

Share-based payments
The cost of the equity-settled transactions with employees of other Group companies is measured by reference to the fair value at the
date at which equity instruments are granted and, where it is not recharged to a Group company, is recognised as a capital contribution
in investments in subsidiary undertakings over the vesting period, which ends on the date on which the employees become fully entitled
to the award. A corresponding credit is recognised within equity. This credit is not distributable.

Investments
Investments are stated at cost less provision for impairment. In respect of IFRS 2 ‘Share-based payments’, the Company records an
increase in its investment in subsidiaries to reflect the share-based compensation recorded by its subsidiaries.

Fixed assets and depreciation
Fixed assets are stated at cost less provisions for impairment and depreciation which, with the exception of freehold land which is not
depreciated, is provided on all fixed assets on the straight-line method, each item being written off over its estimated life. The principal
annual rates used for this purpose are:

Freehold property

Plant, equipment and vehicles

8% to 33.3%

Pensions
The Company makes contributions to defined contribution pension plans, which are charged against profits when they become payable.
The Company also operates a UK defined benefit pension plan. For defined benefit plans, the asset or liability recorded in the Company
Balance Sheet is the difference between the fair value of the plan’s assets and the present value of the defined obligation at that date.
The defined benefit obligation is calculated separately for the plan on an annual basis by an independent actuary using the projected
unit credit method.

Actuarial gains and losses are recognised in full in the year in which they occur, and are taken to other comprehensive income.

Current and past service costs, along with the impact of settlements or curtailments, are charged to profit and loss. The unwinding of
the discounting on the net liability is recognised within finance income or expense as appropriate.

Taxation
Tax on the profit or loss for the year comprises both current and deferred tax. Tax is recognised in the Profit and Loss Account except to
the extent that it relates to items recognised either in other comprehensive income or directly in equity.

Current tax is the expected tax payable, on the taxable income for the year, using tax rates enacted, or substantively enacted, at the
balance sheet date, and any adjustments to tax payable in respect of previous years.

Deferred taxation is provided on taxable temporary differences between the carrying amounts of assets and liabilities in the financial
statements and their corresponding tax bases. Deferred tax is measured at the tax rates that are expected to apply in the periods in
which the temporary differences are expected to reverse, based on tax rates and laws that have been enacted or substantively enacted
by the balance sheet date. Deferred tax assets are only recognised if recovery is considered more likely than not on the basis of all
available evidence.

The recognition of deferred tax assets is dependent on assessments of future taxable income.

242

Halma plc | Annual Report and Accounts 2023

Strategic
Report

Governance

Financial
Statements

Other
Information

C2 Result for the year
As the Company is included in the consolidated financial statements, made up to 31 March each year, it is not required to present a
separate profit and loss account as permitted by Section 408(3) of the Companies Act 2006, as such the Profit and Loss Account of
Halma plc is not presented as part of these accounts. The Company has reported a profit after taxation for the financial year of £97.4m
(2022: £218.8m).

Auditors’ remuneration for audit services to the Company was £0.6m (2022: £0.5m). Total employee costs (including Directors) were:

Wages and salaries
Social security costs
Pension costs

Included within wages and salaries are share-based payment charges under IFRS 2 of £8.2m (2022: £4.7m).

Year ended
31 March
2023
£m

Year ended
31 March
2022
£m

32.7
4.0
0.7

37.4

27.2
4.2
0.6

32.0

Year ended
31 March
2023
Number

Year ended
31 March
2022
Number

Monthly average number of employees (UK)

Monthly average number of employees (Mainland Europe)

Monthly average number of employees

114

120

Details of Directors’ remuneration are set out on pages 136 to 163 within the Annual Remuneration Report and form part of these
financial statements.

C3 Fixed assets – intangible assets

Cost
At 1 April 2022

At 31 March 2023

Accumulated amortisation
At 1 April 2022
Charge for year

At 31 March 2023

Carrying amounts

At 31 March 2023

At 31 March 2022

Computer
software
£m

Other
intangibles
£m

2.2

1.7
0.3

2.0

0.2

0.5

0.1

–
–

–

0.1

100

104

Total
£m

2.3

1.7
0.3

2.0

0.3

0.6

Halma plc | Annual Report and Accounts 2023

243

Notes to the Company Accounts continued

C4 Fixed assets – tangible assets

Cost
At 1 April 2022
Additions at cost
Disposals

At 31 March 2023

Accumulated depreciation
At 1 April 2022
Charge for the year
Disposals

At 31 March 2023

Carrying amounts

At 31 March 2023

At 31 March 2022

C5 Investments
Shares in Group companies

At cost less amounts written off at beginning of year
Increase in investments
Contributions to subsidiary undertakings relating to share-based payments
Decrease in investments

At cost less amounts written off at end of year

Freehold
properties
£m

Plant,
equipment
and vehicles
£m

8.0
–
–

8.0

1.1
0.2
–

1.3

6.7

6.9

2.0
0.1
(0.1)

2.0

1.2
0.2
(0.1)

1.3

0.7

0.8

Total
£m

10.0
0.1
(0.1)

10.0

2.3
0.4
(0.1)

2.6

7.4

7.7

31 March
2023
£m

453.5
83.0
40.3
–

576.8

31 March
2022
£m

347.5
132.6
–
(26.6)

453.5

The increase of £83.0m in the year comprises additions from the acquisition of Thermocable (Flexible Elements) Limited of £22.5m and
Zone Green 2013 Ltd of £3.9m and additional investments into existing subsidiaries Halma Euro Trading Limited of £52.1m and Halma
Ventures Limited of £4.5m.

In the prior year, the increase £132.6m comprised additions from the acquisition of Anton Industrial Services Limited of £3.2m and Ashton
Lister Investments Limited (parent of Ramtech Electronics Limited) of £19.6m and additional investments into existing subsidiary Halma
Euro Trading Limited of £109.8m.

Capital contributions to subsidiary undertakings of £40.3m were recorded in the year pertaining to the current year and previous
periods. These capital contributions arise where equity-settled share awards in the Company were granted to employees of subsidiary
undertakings and no recharge was made to that subsidiary. More detail on the Company’s share plans can be found in note 24 to the
Consolidated Accounts. Capital contributions are not realised profits and so are non-distributable retained earnings for the Company
until such time as they are realised either through impairment of the investment or sales of the relevant subsidiary. The contribution in
the year of £40.3m comprises £32.0m in relation to prior years which management do not consider quantitively or qualitatively material
in the context of the Company’s distributable reserves and so has not been recognised as a prior year adjustment.

244

Halma plc | Annual Report and Accounts 2023

Strategic
Report

Governance

Financial
Statements

Other
Information

C5 Investments
Subsidiaries
Details of the Company’s subsidiaries at 31 March 2023 are below.

Name

Registered Address

Country

Class

Group %

A & G Security Electronics Limited

(1)

United Kingdom

Ordinary shares

100*

Accutome, Inc.

ADI Holdings, LLC

Adler Diamant BV

3222 Phoenixville Pike, Malvern, Philadelphia, 19355

United States

Ordinary shares

240 Kenneth Welch Drive, Lakeville, MA 02347

United States

Ordinary shares

Simon Homburgstraat 21, 5431 NN Cuijk

Netherlands

Ordinary shares

100

Advanced Electronics Limited

The Bridges, Balliol Business Park, Newcastle Upon
Tyne, Tyne and Wear, NE12 8EW

United Kingdom

Ordinary shares

100*

Advanced Fire Systems Inc.

100 South Street, Hopkinton MA 01748

United States

Common stock

Alicat Scientific BV

Geograaf 24, 6921EW Duiven

Netherlands

Ordinary shares

Alicat Scientific India Private Limited

Plot No. A/147, Road No. 24, Wagle Industrial Estate,
Thane West, Thane 400064, Maharashtra, THANE
400064

India

Ordinary shares

Alicat Scientific, Inc.

7641 N Business Park Drive, Tucson, AZ 85743

United States

Common stock

Ampac Europe Limited

Ampac NZ Limited

Unit 2, Waterbrook Estate, Waterbrook Road, Alton,
Hampshire, GU34 2UD

United Kingdom

Ordinary shares

c/o MinterEllisonRuddWatts, 125 The Terrace,
Wellington Central, Wellington, 6011

New Zealand

Ordinary shares

100

Ampac Pty Limited

7, Ledgar Road, Balcatta, Western Australia, 6021

Australia

Ordinary shares

Analytical Development Company
Limited

(1)

United Kingdom

Ordinary shares

Anton Industrial Services Limited

172 Brook Drive, Milton Park, Oxfordshire, OX14 4SD

United Kingdom

Ordinary shares

Apollo (Beijing) Fire Products Co. Ltd

Block A5, Jinghai Industrial Park, No. 156 Jinghai
Fourth Road, BDA Beijing

China

Ordinary shares

Apollo America, Inc.

25 Corporate Drive, Auburn Hills MI 48326

United States

Common stock

Apollo Fire Detectors Limited

36 Brookside Road, Havant, Hampshire, PO9 1JR

United Kingdom

Ordinary & Deferred
shares

Apollo GmbH

Aquionics, Inc.

Argus Italy SRL

Argus Security S.r.l.

Am Anger 31, D-33332 Gütersloh

Germany

Ordinary shares

4215, Suite E, Stuart Andrew Boulevard, Charlotte,
NC, 28217

United States

Ordinary shares

14, Via Del Canneto, Muggia, Trieste

Via Maurizio Gonzaga no. 7, Milan, 20123

Italy

Ordinary shares

Quotas

Ashton Lister Investments Limited

ASL Holdings Limited

Ramtech House, Castlebridge Office Village,
Castle Marina Road, Nottingham, NG7 1TN

Ty Coch House, Llantarnam Park Way, Cwmbran,
WW, NP44 3AW

United Kingdom

Ordinary shares

United Kingdom

Ordinary shares

100*

Avire Elevator Technology India Private
Limited

Plot A/147, Road No. 24, Wagle Industrial Estate,
Thane West, 400604

India

Ordinary &
Preference shares

Avire Elevator Technology Shanghai Ltd 4 Floor, Buling 75, No.1066, Qinzhou Road, Shanghai,

China

Ordinary shares

200233

Avire Global Pte Ltd

80 Raffles Place, #32-01 UOB Plaza, 048624

Singapore

Ordinary shares

Avire Limited

Avire s.r.o.

Avire Trading Limited

Unit 1, The Switchback, Gardner Road, Maidenhead,
Berkshire, SL6 7RJ,

United Kingdom

Ordinary shares

Okružní 2615, České Budějovice, 370 01,

Czech Republic

Ordinary shares

Unit 1 The Switchback, Gardner Road, Maidenhead,
Berkshire, SL6 7RJ

United Kingdom

Ordinary shares

Avo Photonics (Canada) Inc.

20 Mural Street, Unit 7, Richmond Hill, Ontario,
L4B 1K3

Canada

A & B shares

Avo Photonics, Inc.

120, Welsh Road, Horsham, PA, PA 19044

United States

A & B Preferred Stock
& Common Stock

B.E.A. Holdings, Inc.

100 Enterprise Drive, Pittsburgh, PA, 15275

United States

Ordinary shares

B.E.A. Inc.

100 Enterprise Drive, Pittsburgh, PA, 15275

United States

Ordinary shares

B.E.A. Investments, Inc.

Baoding Longer Precision Pump Co.,
Ltd

BEA Electronics (Beijing) Co Ltd

100 Enterprise Drive, RIDC Park West, Pittsburgh,
PA 15275

Building A, Chuangye Center, Baoding National
High-Tech Development Zone, Baoding, Hebei,
071051

Room 5959, Shenchang Building, No.51, Zhichun
Road, Haidian District, Beijing

United States

Ordinary shares

China

Ordinary shares

China

Ordinary shares

100

Halma plc | Annual Report and Accounts 2023

245

100

100*

100

100*

100

100*

100

100*

100

100*

100

Notes to the Company Accounts continued

C5 Investments continued
Subsidiaries continued
Name

BEA Electronics Singapore Pte. Ltd.

Registered Address

16 Raffles Quay, #38-03, Hong Leong Building,
Singapore, 048581

BEA Japan KK

154-0012 Komazawa, Setagaya-ku 3-28-11, Tokyo

Beijing Ker’Kang Instrument Limited
Company

Unit 316, Area 1 Tower B, Chuangxin Building,
12 Hongda North Rd, Beijing, 100176

Country

Singapore

Japan

China

Class

Group %

Ordinary shares

Berson Milieutechniek BV

PO Box 90, 5670 AB Nuenen

Netherlands

Ordinary shares

Bio-Chem Fluidics, Inc.

85 Fulton Street, Boonton, New Jersey 07005

United States

Ordinary shares

Bureau d’Electronique appliquée S.A.

Allée des Noisetiers 5, Liege Science Park, B-4031
LIEGE-Angleur

Belgium

Ordinary shares

Business Marketers Group, Inc.

N56 W24720 N. Corporate Circle, Sussex, WI, 53089

United Kingdom

Ordinary shares

Cardio Dinâmica Ltda

Avenida Paulista, 509, 1º e 2º andares, conjuntos 201,
212, 213 e 214, Bela Vista, São Paulo, Estado de São
Paulo, CEP 01311-910

Brazil

Quotas

Cardio Sistemas Comercial e Industrial
Ltda

Avenida Paulista nº 509, 16º andar, conjuntos 1601 e
1602, São Paulo, Estado de São Paulo, CEP 01311-910-0

Brazil

Quotas

Castell Interlocks, Inc.

Castell Locks Limited

150, 865, N Michigan Avenue, Chicago, Illinois, 60601 United States

Ordinary shares

(1)

United Kingdom

Ordinary shares

Castell Safety International Limited

217 Kingsbury Road, London, NW9 9PQ

United Kingdom

Ordinary shares

Castell Safety Technology Limited

(1)

United Kingdom

Ordinary shares

CEF Safety Systems BV

Delftweg 69, 2289 BA Rijswijk

Netherlands

Ordinary shares

Celanova Limited

CenTrak, Inc.

8 Faleas Street, Agios Athanasios, 4101, Limassol

Cyprus

Common stock

826, Newtown-Yardley Road, Newtown, PA, 18940

United States

Common stock

Cosasco Middle East - FZE - Dubai

Dubai Silicon Oasis Office, Dubai

United Arab Emirates Common stock

Cosasco Middle East (FZE), Sharjah

PO Box 8186, SAIF Zone, Sharjah

United Arab Emirates Common stock

Cranford Controls Limited

Unit 2, Waterbrook Estate, Waterbrook Road, Alton,
Hampshire, GU34 2UD

United Kingdom

Ordinary shares

Crowcon Detection Instruments
Limited

Dancutter A/S

Deep Trekker Inc.

Deep Trekker SpA

172 Brook Drive, Milton Park, Oxfordshire, OX14 4SD

United Kingdom

A & Ordinary shares

100*

Livøvej 1A, 8800 Viborg

830 Trillium Drive, Kitchener, Ontario, N2R 1K4

Denmark

Canada

Ordinary shares

Unlimited Common
Shares

Ruta 5 Sur Km. 1025 Bodega 5 – Megacentro 1,
Puerto Montt, Región de Los Lagos

Chile

Common shares

Diba Industries Limited

2 College Park, Coldhams Lane, Cambridge, CB1 3HD United Kingdom

Ordinary shares

Diba Industries, Inc.

4 Precision Road, Danbury, CT, 06810

United States

Common stock

E&C Medical Intelligence, Inc.

100, Regency Forest Dr Ste 200, Cary, NC 27518

United States

Common stock

Eco Rupture Disc Limited

(1)

United Kingdom

Ordinary shares

Eiffel APAC Pte. Ltd

Eiffel Holdings Limited

Eiffel Investments UK Limited

Elfab Hughes Limited

Elfab Limited

4, Shenton Way, #15-01, SGX Centre II

Singapore

Ordinary shares

(1)

Alder Road, West Chirton Industrial Estate,
North Shields, Tyne & Wear, NE29 8SD

United Kingdom

Ordinary shares

United Kingdom

Ordinary shares

United Kingdom

Ordinary shares

United Kingdom

Ordinary shares

F.I.R.E. Panel, LLC

8435 N. 90th St., Suite 2, Scottsdale AZ 85258

United States

Common stock

Fabrication de Produits de Sécurité
SaRL

21 Rue du Cuir, ZI Sidi Rezig, Mégrine, 2033

Tunisia

Ordinary shares

FFE B.V

J. Keplerweg 14, 2408AC Alphen aan den Rijn

Netherlands

Ordinary shares

FFE Holdings Limited

(1)

United Kingdom

Deferred A &
Ordinary shares

FFE Limited

9 Hunting Gate, Hitchin, Herts, SG4 0TJ

United Kingdom

Ordinary shares

Fire Fighting Enterprises Limited

(1)

Firemate Limited

FireMate Software Pty Ltd

Chelsea House, Chelsea Street, New Basford,
Nottingham, Nottinghamshire, NG7 7HP

Level 11, 301 Coronation Drive, Milton Queensland
4064

United Kingdom

Ordinary shares

United Kingdom

Ordinary shares

Australia

Ordinary shares

246

Halma plc | Annual Report and Accounts 2023

100

100*

100

100*

100

100*

100

100*

100

100*

C5 Investments continued
Subsidiaries continued
Name

FirePro Eng. Co. Limited

Strategic
Report

Governance

Financial
Statements

Other
Information

Registered Address

Country

Class

Group %

1400, Hyeeum-ro, Gwangtan-myeon, Paju-Si,
Gyeonggi-do

Republic of Korea

Common stock

100

100*

100

100*

100

100*

100

100*

100

100*

FirePro Systems Limited

8 Faleas Street, Agios Athanasios, 4101, Limassol

Cyprus

Common stock

Firetrace Aerospace, LLC

8435, Suite 7, N. 90th St., Scottsdale, AZ, 85258

United States

Ordinary shares

Firetrace International Asia Pte. Ltd

16 Collyer Quay, #11-01, Hitachi Tower, Singapore,
049318

Singapore

Ordinary shares

Firetrace USA, LLC

8435, Suite 7, N. 90th St., Scottsdale, AZ, 85258

United States

Ordinary shares

Fluid Conservation Systems, Inc.

502, Suite B, Technecenter Drive, Milford, OH, 4150

United States

Ordinary shares

FluxData Incorporated

Fortress Interlocks Limited

Fortress Interlocks Pty Ltd

Halma (China) Group

176, Suite F304, Anderson Avenue, Rochester, NY,
14607

United States

Ordinary shares

2 Inverclyde Drive, Wolverhampton, West Midlands,
WV4 6FB,

United Kingdom

Ordinary & Preferred
shares

100*

Ross Wadeson Accountants, Unit 13, 20-30 Malcolm
Road, Braeside, VIC, 3195

Australia

Ordinary shares

Block 1, 3rd Floor, No. 123, Lane 1165, Jindu Road,
Minghang District, Shanghai, 201108

China

Ordinary shares

Halma Australasia Holdings Limited

(1)

United Kingdom

Ordinary shares

Halma Australasia Pty Limited

7, Ledgar Road, Balcatta, Western Australia, 6021,

Australia

Halma Do Brasil – Equipamentos De
Segurança Ltda

Av. Tancredo Neves 620, Salas 1003/1004,
Caminho das Árvores, Salvador, Bahia, 41.820-020

Brazil

Ordinary shares

Halma Euro Trading Limited

(1)

United Kingdom

Ordinary shares

100*

Halma Europe DS B.V.

J Keplerweg 14, 2408 AC Alphen aan den Rijn

Netherlands

Ordinary shares

Halma Financing Limited

(1)

United Kingdom

Ordinary shares

Halma Holding GmbH

PO Box 35, Bruckstrasse 31, D-72417 Jungingen

Germany

Ordinary shares

Halma Holdings Inc.

535 Springfield Avenue, Suite 110, Summit, NJ 07901

United States

Ordinary shares

Halma India Private Limited

Prestige Shantiniketan’, Gate 2, Tower C, 7th Floor,
Whitefield Main Road, Mahadevapura, Bengaluru,
Bangalore, Karnataka, 560048

India

Ordinary shares

100

Halma International BV

De Huufkes 23, 5674TL Nuenen

Netherlands

Ordinary shares

100

Halma International Limited

Halma Investment Holdings Limited

Halma IT Services Limited

(1)

United Kingdom

A & Ordinary shares

100*

United Kingdom

Ordinary shares

United Kingdom

Ordinary shares

Halma Japan KK

1-23-5 Higashi-azabu, Minato-ku, Tokyo

Japan

Ordinary shares

Halma Overseas Funding Limited

Halma PR Services Limited

Halma Resistors Unlimited

Halma Safety Limited

(1)

United Kingdom

Ordinary shares

United Kingdom

Ordinary shares

United Kingdom

Ordinary shares

United Kingdom

Ordinary shares

Halma Saúde e Otica do Brasil -
Importação, Exportação e
Distribuição Ltda

Avenida Marcos Penteado de Ulhoa Rodrigues, n. 1119,
11th Floor, Suite 1102, Tambore, Barueri/São Paulo,
06.460-040

Brazil

Ordinary shares

Halma Services Limited

Halma UK DS Limited

(1)

United Kingdom

Ordinary shares

United Kingdom

Ordinary shares

Halma US, Inc.

535 Springfield Avenue, Suite 110, Summit, NJ 07901

United States

Common Stock

Halma Ventures Limited

(1)

Hanovia Limited

HFT Shanghai Co., Ltd

HWM-Water Limited

780/781 Buckingham Avenue, Slough, Berkshire,
SL1 4LA

Floor 2, No. 1 Factory Building, No. 123, Lane 1165,
Jindu Road, Minghang District, Shanghai, 201108

Ty Coch House, Llantarnam Park Way, Cwmbran,
Gwent, NP44 3AW

United Kingdom

Ordinary shares

United Kingdom

Ordinary shares

China

Ordinary shares

100

United Kingdom

Ordinary shares

100*

Hydreka SAS

51, Avenue Rosa Parks, 69009, Lyon

France

Ordinary shares

Hyfire Wireless Fire Solutions Limited

B12a Holly Farm Business Park, Honiley, Kenilworth,
Warwickshire, CV8 1NP

United Kingdom

Ordinary shares

I.D. Infinity Development Cyprus
Limited

8 Faleas Street, Agios Athanasios, 4101, Limassol

Cyprus

Common stock

Ilumark GmbH

Hohenlindner Str. 11 c, 85622 Feldkirchen, Bavaria

Germany

Ordinary shares

100

100*

100

Halma plc | Annual Report and Accounts 2023

247

Notes to the Company Accounts continued

C5 Investments continued
Subsidiaries continued
Name

Registered Address

Country

Class

Group %

Infinite Leap, Inc.

1022 5th St N, Fargo, ND 58102

United States

Common stock

Infowave Solutions Inc.

11495, N. Pennsylvania Street, Suite 240, Carmel, IN,
46032

United States

Common stock

InPipe GmbH

Jagerwinkel 1a, 6991 Riezlern

Instituto Cardios de Ensino e Pesquisa
em Eletrocardiologia Não Invasiva e
M.A.P.A.

Avenida Paulista, 509, 3º andar, conjuntos 308,
309 e 310, Sao Paulo

Austria

Brazil

Ordinary shares

International Light Technologies, Inc.

10 Technology Drive, Peabody, MA 01960

United States

Ordinary shares

Invenio Systems Limited

Ty Coch House Llantarnam Park Way, Cwmbran,
NP44 3AW

United Kingdom

Ordinary shares

Iso-Lok Limited

(1)

IZI Medical Products LLC

Corporation Trust Center, 1209 Orange Street,
Wilmington, Delaware 19801

United Kingdom

Ordinary shares

United States

Ordinary shares

Keeler Instruments, Inc.

3222, Phoenixville Pike, Malvern, PA, 19355

United States

Ordinary shares

Keeler Limited

Clewer Hill Road, Windsor, Berks, SL4 4AA

United Kingdom

Ordinary shares

Kirk Key Interlock Company, LLC

9048, Meridian Circle NW, North Canton, OH, 44720 United States

Ordinary shares

Labsphere, Inc.

231 Shaker Street, P. O. Box 70, North Sutton, NH,
03260

United States

Ordinary shares

Langer Instruments Corporation

7461, N. Business Park Drive, Tucson, AZ, 85743

United States

Ordinary shares

Limotec Besloten Vennootschap (BV)

Bosstraat 21, 8570 Anzegem (Vichte)

Belgium

Ordinary shares

Maxtec, LLC

2305, South 1070 West, Salt Lake City, UT, 84119

United States

Common stock

Meadowbridge Holdings Limited

(1)

United Kingdom

Ordinary shares

Medicel AG

Dornierstrasse 11, CH – 9423 Altenrhein

Switzerland

A & B Preference & C
Ordinary shares

MEDITECH Egészségügyi Szolgáltató,
Műszerfejlesztő és Kereskedelmi Kft.

MicroSurgical Technologies Germany
GmbH

1184, Budapest, Mikszáth Kálmán utca 24, 1184

Hungary

Ordinary shares

73, Neuenhaus Platz, Erkath, 40699

Germany

Ordinary shares

MicroSurgical Technology, Inc.

8415 154th Avenue NE, Redmond, WA, 98052

United States

Common stock

100

100*

100

100*

100

100*

100

100*

Mini-Cam Enterprises Limited

Mini-Cam Holdings Limited

Minicam Inc.

Minicam Limited

Unit 33, Ravenscraig Road, Little Hulton, Manchester,
M38 9PU

251, Little Falls Drive, Wilmington, New Castle
County, DE, 19808

United Kingdom

Ordinary shares

United Kingdom

Ordinary shares

100*

United States

Common stock

100

Unit 33, Ravenscraig Road, Little Hulton, Manchester,
M38 9PU

United Kingdom

Ordinary shares

100*

Mistura Systems Limited

(1)

Morley Electronics Limited

Navtech Radar Limited

The Bridges, Balliol Business Park, Newcastle Upon
Tyne, Tyne and Wear, NE12 8EW

Home Farm, Ardington, Wantage, Oxfordshire,
OX12 8PD

United Kingdom

Ordinary shares

United Kingdom

Ordinary shares

100*

100

United Kingdom

Ordinary shares

100*

NB Products, Inc.

1551, Suite 105, Atlantic Blvd, Jacksonville, FL, 32207

United States

Common stock

Nisolio Investments Limited

8 Faleas Street, Agios Athanasios, 4101, Limassol

Cyprus

Common stock

NovaBone Products, LLC

13510, NW US Highway 441, Alachua, FL, 32615

United States

Common stock

Ocean Optics (Shanghai) Co., Ltd

Ocean Optics Asia LLC

Ocean Optics BV

Ocean Optics, Inc.

Block B, 3rd Floor, No. 123, Lane 1165, Jindu Road,
Minghang District, Shanghai

Suite 601, Kirin Tower, 666 Gubei Road, Shanghai,
200336

China

Ordinary shares

Common stock

Geograaf 24, 6921EW Duiven

Netherlands

Ordinary shares

8060 Bryan Dairy Road, Largo, FL, 33777

United States

Ordinary shares

Oklahoma Safety Equipment Co, Inc.

1701, West Tacoma, P.O. Box 1327, Broken Arrow, OK,
74013

United States

Ordinary shares

Orca GmbH

1d, Hungenbach, Kuerten, 51515

Germany

Ordinary shares

P.J.K.A Investments Limited

8 Faleas Street, Agios Athanasios, 4101, Limassol

Cyprus

Common stock

Palintest Limited

Kingsway, Team Valley, Gateshead, Tyne & Wear,
NE11 0NS

United Kingdom

Ordinary & Deferred
shares

100

100*

248

Halma plc | Annual Report and Accounts 2023

100*

100

100*

Strategic
Report

Governance

Financial
Statements

Other
Information

Registered Address

Country

Class

Group %

(1)

United Kingdom

Ordinary shares

United Kingdom

A & Ordinary shares

245, Victoria, Suite 600, Montreal, PQ, H3Z 2M6

Canada

2, Azrieli Rishonim, Nim Boulevard, POB 110, Rishon
LeZion, 7510002

Israel

Ordinary shares

C5 Investments continued
Subsidiaries continued
Name

Palmer Environmental Limited

Palmer Environmental Services Limited

PeriGen (Canada) Ltd

PeriGen Solutions Ltd

PeriGen, Inc.

100, Regency Forest Dr Ste 200, Cary, NC 27518

United States

Common stock

Perma Pure India Private Limited

Plot No. A/147, Road No. 24, Wagle Industrial Estate,
Thane West, Thane 400064, Maharashtra, THANE
400064

India

Ordinary shares

Perma Pure, LLC

Pixelteq, Inc.

1001 New Hampshire Ave, Lakewood, NJ, 08701

United States

Ordinary shares

8060, Bryan Dairy Road, Largo, FL, 33777

United States

Ordinary shares

Power Equipment Limited

(1)

United Kingdom

Preference &
Ordinary shares

Radcom (Technologies) Limited

RadioMed Corporation

Ty Coch House, Llantarnam Park Way, Cwmbran,
Gwent, NP44 3AW

Corporation Trust Center, 1209 Orange Street,
Wilmington, Delaware 19801

United Kingdom

Ordinary shares

100*

United States

Common stock

100

Radio-Tech Limited

(1)

Ramtech Electronics Limited

Ramtech House, Castlebridge Office Village,
Castle Marina Road, Nottingham, NG7 1TN

United Kingdom

Ordinary shares

United Kingdom

Ordinary shares

Ramtech North America, Inc.

5126, Royal Atlanta Drive, Tucker, GA 30084

United States

Ordinary shares

Ramtech Overseas Limited

Ramtech House, Castlebridge Office Village,
Castle Marina Road, Nottingham, NG7 1TN

United Kingdom

Ordinary shares

RCS Corrosion Services Sdn. Bhd

Level 21, Suite 21.01, The Garden South Tower,
Mid Valley City, Lingkaran Syed Putra, Kuala Lumpur,
Wilayah Persekutuan, 59200

Malaysia

Ordinary shares

RCS International Limited

(1)

Repipe Lining Systems A/S

Livøvej 1A, 8800 Viborg

Research Engineers Limited

Reten Acoustics Limited

Riester USA, LLC

(1)

507 Airport Boulevard, Suite 113, Morrisville, NC,
27560

United Kingdom

Ordinary shares

Denmark

Ordinary shares

United Kingdom

Ordinary shares

United Kingdom

Ordinary shares

United States

Ordinary shares

Robutec AG

Dornierstrasse 11, CH – 9423 Altenrhein

Switzerland

Ordinary shares

Rohrback Cosasco International
Limited

OIL (Offshore Inc Limited) PO Box 957, Offshore
Incorporations Centre, Road Town, Tortola

British Virgin Islands Ordinary shares

Rohrback Cosasco System China
Corporation

No. A, Apartment 15F, Building 1, Tianchen Plaza,
Yi-12 Chaoyangmen North Street, Chaoyang District,
Beijing, 100020

China

Common stock

Rohrback Cosasco Systems LLC

Gulf Consulting House

Rohrback Cosasco Systems Pte Ltd

Ardent Business Advisory, 146, Robinson Road, #12-01,
Singapore, 068909

Saudi Arabia

Common stock

Singapore

Ordinary shares

Rohrback Cosasco Systems Pty Ltd

Unit 5, 17 Caloundra Road, Clarkson

Australia

Ordinary shares

Rohrback Cosasco Systems UK Limited

(1)

United Kingdom

Ordinary shares

Rohrback Cosasco Systems, Inc

11841, Smith Avenue, Santa Fe Springs, CA, 90670

United States

Common stock

Rudolf Riester GmbH

Bruckstrasse 31, D-72417 Jungingen

Germany

Ordinary shares

S.E.R.V. Trayvou Interverrouillage SA

1 Ter, Rue du Marais Bat B, 93106 Montreuil, Cedex

France

Ordinary shares

SCP IR Acquisition LLC

Corporation Trust Center, 1209 Orange Street,
Wilmington, Delaware 19801

United States

Common stock

Sensit Technologies EMEA S.r.l.

Via Tortona n. 33, Milano, 20144

Italy

Ordinary shares

Sensit Technologies, LLC

851, Transport Dr., Valparaiso, IN, 46383

United States

Common stock

Sensitron SRL

Cornaredo (MI) Viele Della Repubblica 48, Cap, 20007 Italy

Ordinary shares

Sensorex Corporation

11751 Markon Drive, Garden Grove, CA, 92841

United States

Common stock

Sensorex s.r.o.

Rudolfovská tř., 149/64, České Budějovice 4,
370 01 České Budějovice

Czech Republic

Ordinary shares

Sentric Safety Group Limited

(1)

Setco S.A.U.

56, Miquel Romeu, Hospitalet del Llobregat,
Barcelona province

United Kingdom

Ordinary shares

Spain

Ordinary shaes

100*

100

100*

100

100*

100

100*

100

Halma plc | Annual Report and Accounts 2023

249

Notes to the Company Accounts continued

C5 Investments continued
Subsidiaries continued
Name

Registered Address

Shanghai Labsphere Optical
Equipments Co., Ltd

Block 1, No. 123, Lane 1165, Jindu Road, Minhang
District, Shanghai, 201108

Skyterra Investments Limited

8 Faleas Street, Agios Athanasios, 4101, Limassol

Smart Process Safety China Ltd

Floor 2, Building 63, No. 421 Hongcao Road,
Xuhui District, Shanghai

Country

China

Cyprus

China

Smith Flow Control Limited

(1)

United Kingdom

Ordinary shares

J Keplerweg 14, 2408 AC Alphen aan den Rijn

Netherlands

Ordinary shares

Hahnenkammstrasse 12, 63811 Stockstadt

Germany

Ordinary shares

Sofis BV

Sofis GmbH

Sofis Limited

Sofis, Inc.

Unit 7B, West Station Business Park, Spital Road,
Maldon, CM9 6FF, England

13105, Northwest Freeway, Suite 1120, Houston, TX,
77040

Sonar Research & Development Limited (1)

Static Systems Group Limited

Static Systems Holdings Limited

Heath Mill Road, Wombourne, Wolverhampton,
WV5 8AN

Class

Group %

Ordinary shares

Common stock

Ordinary shares

100

100*

100

100*

United Kingdom

Ordinary shares

United States

Ordinary shares

100

United Kingdom

Ordinary shares

United Kingdom

Ordinary shares

100*

100

United Kingdom

Ordinary shares

100*

SunTech Group EB Trustee Limited

(1)

United Kingdom

Ordinary shares

SunTech Medical (USA), LLC

507 Airport Boulevard, Suite 117, Morrisville, NC, 27560 United States

Common stock

SunTech Medical Devices (Shenzhen)
Co. Ltd

2-3/F, Block A, Jinxiongda Technology Park, Guanlan,
Bao’an District, Shenzhen, Guangdong, 518110

China

Ordinary shares

SunTech Medical Group Limited

(1)

SunTech Medical Ltd (Hong Kong)

8th Floor, Gloucester Tower, The Landmark,
15 Queen’s Road Central

United Kingdom

Ordinary shares

Hong Kong

Ordinary shares

SunTech Medical, Inc.

507 Airport Boulevard, Suite 117, Morrisville, NC, 27560 United States

Common stock

T.L. Jones Limited

BDO Christchurch Limited, 287-293 Durham Street,
Christchurch Central, Christchurch, 8013

New Zealand

Ordinary shares

Talentum Developments Limited

9 Hunting Gate, Hitchin, Herts, SG4 0TJ

United Kingdom

Ordinary shares

Telegan Gas Monitoring Limited

(1)

Thermocable (Flexible Elements) IRE
Limited

Ground Floor, 71 Lower Baggot Street, Dublin, D02
P593,

United Kingdom

Ordinary shares

Ireland

Ordinary shares

Thermocable (Flexible Elements)
Limited

Thinketron Precision Equipment
Company Limited

Pasture Lane, Clayton, Bradford, BD14 6LU

United Kingdom

Ordinary, Ordinary A
& Ordinary B shares

402, Jardine House, 1 Connaught Place, Central

Hong Kong

Ordinary shares

Value Added Solutions LLC

4 Precision Road, Danbury, CT, 06810

United States

Common stock

Visiometrics SL

Visual Performance Diagnostics, Inc.

Argenters, 8. Edifici 3, Parc Tecnològic del Vallès,
08290 Cerdanyola

26895, Aliso Creek Rd, Suite B223, Aliso Viejo, CA,
92656

Spain

Ordinary shares

United States

Common stock

Volk Optical Inc.

WatchChild, LLC

7893 Enterprise Drive, Mentor, OH, 44060

United States

Common stock

100, Regency Forest Dr Ste 200, Cary, NC 27518

United States

Common stock

WEETECH Asia Pte. Ltd

205 Balestier Road, #02-06, The Mezzo, (329682)

Singapore

Ordinary shares

WEETECH B.V.

WEETECH China Ltd

WEETECH GmbH

WEETECH Inc.

WEETECH SRL

Eindstraat 53 B, 5151 AE Drunen

Netherlands

Common stock

Room 265, Building 8, No.509, Huajing Road,
Xuhui District, Shanghai

China

Ordinary shares

Hafenstraße 1, 97877 Wertheim

Germany

Ordinary shares

1300 North Skokie HWY, Ste 100, Gurnee, IL 60031

United States

Common stock

Viale Abruzzi, 94, Milan (20131)

Italy

Common stock

100

100*

100

100*

100

Wilkinson & Simpson Limited

(1)

United Kingdom

Deferred & Ordinary
shares

100*

United Kingdom

Ordinary shares

100*

Zonegreen 2013 Limited

Zonegreen Limited

Sir John Brown Building Davy Industrial Parl, Prince
of Wales Road, Sheffield, South Yorkshire, S9 4eX

United Kingdom

Ordinary A & C
shares

100

* Directly held by the Company.
(1) Misbourne Court, Rectory Way, Amersham, Buckinghamshire HP7 0DE.

250

Halma plc | Annual Report and Accounts 2023

C6 Debtors

Amounts falling due within more than one year:
Amounts due from Group companies
Amounts falling due within one year:
Amounts due from Group companies
Other debtors
Prepayments

Strategic
Report

Governance

Financial
Statements

Other
Information

31 March
2023
£m

31 March
2022
£m

1.0

1.2

1,024.6
0.2
7.8

1,033.6

800.0
0.7
5.4

807.3

Amounts owed by Group undertakings are unsecured, interest free, have no fixed date of repayment and are repayable on demand.

C7 Borrowings

Falling due within one year:

Overdrafts
Unsecured loan notes

Falling due after more than one year:
Unsecured loan notes
Unsecured bank loans

Total borrowings

31 March
2023
£m

31 March
2022
£m

2.5
–

2.5

376.9
300.4

677.3

679.8

4.0
71.2

75.2

35.0
252.6

287.6

362.8

The Company has two sources of long-term funding, which comprise:

• an unsecured five-year £550m Revolving Credit Facility, which expires in May 2027 and is therefore classified as expiring within two to

five years (2022: within two to five years). Since the end of the year, the first one-year extension has been exercised, with the subsequent
maturity date of May 2028. At 31 March 2023, £249.6m (2022: £297.4m) remained committed and undrawn, and

• unsecured loan notes completed in May 2022 and drawn on 12 July 2022 in a mix of Sterling, US Dollars, Euro and Swiss Francs with a 10
year final maturity, amortising from year four to year ten and an average maturity of seven years. In addition, unsecured loan notes of
£35m completed in November 2015 and drawn on 6 January 2016 remain outstanding and mature in January 2026. At 31 March 2023,
the outstanding loan notes totalled £376.9m (2022: £106.2m). The next tranche of loan notes is due in January 2026, as such all loan
notes are classified as falling due after more than one year.

The bank overdrafts, which are unsecured, at 31 March 2023 and 31 March 2022 were drawn on uncommitted facilities which all
expire within one year and were held pursuant to a Group pooling arrangement which offsets them against credit balances in
subsidiary undertakings.

As part of our cash pooling arrangements UK companies have cross-guaranteed net overdraft facilities of £13.2m (2022: £13.2m).
Total net overdrafts relating to cash pooling as at 31 March 2023 were £nil (2022: £nil). Total overdrafts for the Group as at 31 March 2023
were £1.0m (2022: £0.7m).

C8 Creditors: amounts falling due within one year

Trade creditors
Amounts owing to Group companies
Other taxation and social security
Other creditors
Provision for contingent consideration
Accruals

31 March
2023
£m

31 March
2022
£m

0.7
73.7
0.6
0.9
–
23.7

99.6

2.5
96.4
1.5
1.1
0.2
21.0

122.7

Amounts owed to Group undertakings are unsecured, interest free, have no fixed date of repayment and are repayable on demand.

Halma plc | Annual Report and Accounts 2023

251

Notes to the Company Accounts continued

C9 Creditors: amounts falling due after more than one year

Amounts owing to Group companies
Other creditors

These liabilities fall due as follows:
Within one to two years
Within two to five years
After more than five years

31 March
2023
£m

31 March
2022
£m

12.7
1.2
13.9

1.2
–
12.7

12.7
0.7
13.4

0.7
–
12.7

Amounts owed to Group undertakings are unsecured, interest free, have no fixed date of repayment and are repayable on demand.

C10 Deferred tax asset/(liability)

At 1 April 2022
(Charge)/credit to Profit and Loss account
Charge to comprehensive income
Charge to equity

At 31 March 2023

At 1 April 2021
(Charge)/credit to Profit and Loss account
Charge to comprehensive income
Charge to equity

At 31 March 2022

C11 Share capital

Ordinary shares of 10p each

Retirement
benefit
obligations
£m

Short–term
timing
differences
£m

(6.7)
(0.2)
(0.3)
–

(7.2)

1.6
(0.4)
(7.9)
–

(6.7)

1.3
0.4
–
(0.1)

1.6

1.3
0.2
–
(0.2)

1.3

Total
£m

(5.4)
0.2
(0.3)
(0.1)

(5.6)

2.9
(0.2)
(7.9)
(0.2)

(5.4)

Issued and fully paid

31 March
2023
£m

38.0

31 March
2022
£m

38.0

The number of ordinary shares in issue at 31 March 2023 was 379,645,332 (2022: 379,645,332), including shares held by the Employee
Benefit Trust of 1,901,415 (2022: 1,175,080).

C12 Reserves
The Capital redemption reserve was created on the repurchase and cancellation of the Company’s own shares. Own shares are ordinary
shares in Halma plc purchased by the Company and held to fulfil its obligations under the Group’s share plans. Profits available for
distributions are reduced by the value of Own shares.

Included in the profit and loss account are accumulated credits of £26.9m (2022: £19.2m) representing the provision for the value of
unvested awards under the Group's equity settled share plans.

C13 Retirement benefits
The Company participates in, and is the sponsoring employer of, the Halma Group Pension Plan. The plan closed to new entrants in
2002/03 and to future benefit accrual in 2014/15. From that date, the former defined benefit members joined the Company’s existing
defined contribution plan (which has now been superseded by a defined contribution Master Trust with Aegon).

There is no contractual agreement or stated policy for charging the net defined benefit cost within the Group. In accordance with
IAS 19 (Revised 2011), the Company contribution made to the defined benefit plan during the year ended 31 March 2023 was £4.4m
(2022: £3.1m).

Net interest income on pension plan liabilities/assets of £0.9m (2022: net interest charge of £0.1m) was recognised in the Profit and Loss
Account in respect of the Company defined benefit plan.

The net movement on actuarial gains and losses of the plan reported in the Company Statement of Comprehensive Income and
Expenditure was as follows:

Defined benefit obligations
Fair value of plan assets

Net actuarial (losses)/gains

The actual return on plan assets was a loss of £53.9m (2022: gain of £8.4m).

252

Halma plc | Annual Report and Accounts 2023

Year ended
31 March
2023
£m

Year ended
31 March
2022
£m

52.1
(61.5)

(9.4)

24.3
3.3

27.6

Strategic
Report

Governance

Financial
Statements

Other
Information

C13 Retirement benefits continued
The amount included in the Company Balance Sheet arising from the Company’s obligations in respect of its defined benefit retirement
plan is as follows:

Present value of defined benefit obligations
Fair value of plan assets

Asset recognised in the Company Balance Sheet

Movements in the present value of the defined benefit obligation were as follows:

At beginning of year
Interest cost
Remeasurement gains/(losses):

Actuarial gains arising from changes in financial assumptions
Actuarial losses arising from experience adjustments

Benefits paid

At end of year

Movements in the fair value of the plan assets were as follows:

At beginning of year
Interest income
Actuarial (losses)/gains, excluding interest income
Contributions from the sponsoring companies
Benefits paid

At end of year

31 March
2023
£m

(188.5)
217.2

28.7

31 March
2022
£m

(241.8)
268.5

26.7

Year ended
31 March
2023
£m

(241.8)
(6.7)

Year ended
31 March
2022
£m

(268.7)
(5.2)

65.4
(13.3)
7.9

29.4
(5.1)
7.8

(188.5)

(241.8)

Year ended
31 March
2023
£m

Year ended
31 March
2022
£m

268.5
7.6
(61.5)
10.5
(7.9)

217.2

260.4
5.1
3.3
7.5
(7.8)

268.5

The cash contributions of £10.5m include a £1.3m contribution related to Texecom in respect of obligations under section 75 of the
Pensions Act 1995 following its disposal in the prior year (see Note 30 to the Consolidated Accounts).

The plan's triennial actuarial valuation review, rather than the accounting basis, is used to evaluate the level of any cash payments into
the plan. Based on this valuation, the Trustees having consulted with the Company, agreed past service deficit recovery payments to be
made for the immediate future with the objective of funding the plans in excess of the Technical Provisions valuation. During the year
ended 31 March 2023 the aggregate payments made since the last triennial actuarial valuation, coupled with the performance of the
plan assets and movement in the liabilities resulted in the Halma Group Pension Plan being funded over the trustees’ secondary funding
target and closer to the expected current valuation on a solvency basis. As a result, it has been agreed with the trustees of the Halma
Group Pension Plan that contributions will be suspended until April 2025, when they will either fall due or be superseded by cash
contributions agreed with the trustees in respect of the latest triennial actuarial valuation.

Further details of Halma Group Pension Plan, including all disclosures required under FRS 101, are contained in note 29 to the
Group accounts.

C14 Events subsequent to end of reporting period
On 4 May 2023, completing on 11 May 2023, Halma International Limited, a direct subsidiary of the Company, acquired the entire share
capital of Sewertronics Sp. Z o.o. (Sewertronics), based in Rzeszów, Poland for a cash consideration of c.£36m (€41m) on a cash- and
debt-free basis. Additional consideration of up to c.£16m (€18m) may be payable in cash, based on the fulfilment of certain conditions.
As part of the acquisition a drawdown was made from the Company’s Revolving Credit Facility of £26.7m (€30.3m).

There were no other known material non-adjusting events which occurred between the end of the reporting period and prior to the
authorisation of these financial statements on 15 June 2023.

Halma plc | Annual Report and Accounts 2023

253

Summary 2014 to 2023

Revenue (note 1)
Overseas sales (note 1)
Profit before taxation, and adjustments (note 2)

Net tangible assets/capital employed
Borrowings (excluding overdrafts)
Cash and cash equivalents (net of overdrafts)
Number of employees (note 1)

Basic earnings per share (note 1)
Adjusted earnings per share (note 2)
Year-on-year increase in adjusted earnings per share
Return on Sales (notes 1 and 3)
Return on Capital Employed (restated – note 4)
Return on Total Invested Capital (restated – note 4)
Year-on-year increase in dividends per ordinary share (paid and proposed)
Ordinary share price at financial year end
Market capitalisation at financial year end

2013/14
£m

676.5
548.6
140.2

189.7
107.6
33.1
4,999

28.14p
28.47p
10.4%
20.7%
76.6%
16.7%
7%
579p
2,192.6

2014/15
£m

726.1
587.8
153.6

219.1
140.4
39.5
5,328

27.49p
31.17p
9.5%
21.2%
77.6%
16.3%
7%
701p
2,661.3

(Note 5)
2015/16
£m

807.8
663.0
166.0

258.6
296.2
49.5
5,604

28.76p
34.26p
9.9%
20.6%
72.4%
15.6%
7%
912p
3,462.4

2016/17
£m

961.7
806.7
194.0

302.2
262.1
65.6
5,771

34.25p
40.21p
17.4%
20.2%
72.5%
15.3%
7%
1024p
3,887.6

All years are presented under IFRS.

Notes:
1 Continuing and discontinued operations.
2 Adjusted to remove the amortisation and impairment of acquired intangible assets and acquisition transaction costs, release of fair value adjustments to inventory,
adjustments to contingent consideration (collectively ‘acquisition items’), significant restructuring costs and profit or loss on disposal of operations. IFRS figures
include results of operations up to the date of their sales or closure but exclude material discontinued and continuing profits on sales or closures of operations.
In 2013/14 only, the effects of closure to future benefit accrual of the defined benefit pension plans have also been removed. In 2018/19, the adjustments also
include the effect of equalising pension benefits for men and women in the Group’s defined benefit pension plans.

3 Return on Sales is defined as profit before taxation, the amortisation and impairment of acquired intangible assets; acquisition items; restructuring costs, profit

or loss on disposal of operations; the effect of equalising pension benefits for men and women in the defined benefit pension plans (2018/19 only); and the effects
of closure to future benefit accrual of the defined benefit pension plans net of associated costs (2013/14 only) expressed as a percentage of revenue.

4 See note 3 to the Report and Accounts for the definitions of ROCE and ROTIC. The ROCE and ROTIC measures were restated in 2014/15 and for all prior years

to use an average Capital Employed and Total Invested Capital respectively. This measure is considered to be more representative. From 2019/20 the measures
include the impact of adopting IFRS 16 ‘Leases’. There is no material impact on either measure from its inclusion.

5 The 2015/16 figures were restated in 2016/17, as required by IFRS 3 (revised) ‘Business Combinations’, for material changes arising on the provisional accounting

for acquisitions in 2014/15.

2017/18

£m

1,076.2

902.9

213.7

322.0

290.0

69.7

6,113

40.69p

45.26p

12.6%

19.9%

71.6%

15.2%

1179p

4,476.0

2018/19

£m

1,210.9

1,010.0

245.7

358.9

253.8

72.1

6,508

44.78p

52.74p

16.5%

20.3%

75.1%

16.1%

1672p

6,347.7

2019/20

£m

1,338.4

1,117.2

267.0

416.9

419.2

105.4

6,992

48.66p

57.39p

8.8%

19.9%

71.4%

15.3%

1921p

7,293.0

2020/21

£m

1,318.2

1,104.6

278.3

389.5

322.3

131.1

7,120

53.61p

58.67p

2.2%

21.1%

70.9%

14.4%

2374p

9,012.8

2021/22

£m

1,525.3

1,258.2

316.2

454.2

359.4

156.7

7,522

64.54p

65.48p

11.6%

20.7%

76.4%

14.6%

2510p

9,529.1

2022/23

£m

1,852.8

1,575.0

361.3

595.2

677.3

168.5

8,141

62.04p

76.34p

16.6%

19.5%

71.5%

14.8%

2229p

8,462.3

254

Halma plc | Annual Report and Accounts 2023

Strategic
Report

Governance

Financial
Statements

Other
Information

Revenue (note 1)

Overseas sales (note 1)

Profit before taxation, and adjustments (note 2)

Net tangible assets/capital employed

Borrowings (excluding overdrafts)

Cash and cash equivalents (net of overdrafts)

Number of employees (note 1)

Basic earnings per share (note 1)

Adjusted earnings per share (note 2)

Year-on-year increase in adjusted earnings per share

Return on Sales (notes 1 and 3)

Return on Capital Employed (restated – note 4)

Return on Total Invested Capital (restated – note 4)

2013/14

£m

676.5

548.6

140.2

189.7

107.6

33.1

4,999

28.14p

28.47p

10.4%

20.7%

76.6%

16.7%

579p

2014/15

£m

726.1

587.8

153.6

219.1

140.4

39.5

5,328

27.49p

31.17p

9.5%

21.2%

77.6%

16.3%

701p

(Note 5)

2015/16

£m

807.8

663.0

166.0

258.6

296.2

49.5

5,604

28.76p

34.26p

9.9%

20.6%

72.4%

15.6%

912p

2016/17

£m

961.7

806.7

194.0

302.2

262.1

65.6

5,771

34.25p

40.21p

17.4%

20.2%

72.5%

15.3%

1024p

3,887.6

2017/18
£m

1,076.2
902.9
213.7

322.0
290.0
69.7
6,113

40.69p
45.26p
12.6%
19.9%
71.6%
15.2%
7%
1179p
4,476.0

2018/19
£m

1,210.9
1,010.0
245.7

358.9
253.8
72.1
6,508

44.78p
52.74p
16.5%
20.3%
75.1%
16.1%
7%
1672p
6,347.7

2019/20
£m

1,338.4
1,117.2
267.0

416.9
419.2
105.4
6,992

48.66p
57.39p
8.8%
19.9%
71.4%
15.3%
5%
1921p
7,293.0

2020/21
£m

1,318.2
1,104.6
278.3

389.5
322.3
131.1
7,120

53.61p
58.67p
2.2%
21.1%
70.9%
14.4%
7%
2374p
9,012.8

2021/22
£m

1,525.3
1,258.2
316.2

454.2
359.4
156.7
7,522

64.54p
65.48p
11.6%
20.7%
76.4%
14.6%
7%
2510p
9,529.1

2022/23
£m

1,852.8
1,575.0
361.3

595.2
677.3
168.5
8,141

62.04p
76.34p
16.6%
19.5%
71.5%
14.8%
7%
2229p
8,462.3

Year-on-year increase in dividends per ordinary share (paid and proposed)

Ordinary share price at financial year end

Market capitalisation at financial year end

2,192.6

2,661.3

3,462.4

Halma plc | Annual Report and Accounts 2023

255

Shareholder Information

Financial calendar

Annual General Meeting
2022/23 Final dividend payable
2023/24 Half year end
2023/24 Half year results
2023/24 Interim dividend payable
2023/24 Year end
2023/24 Final results

Dividend history

Interim
Final
Total

* Proposed.

Investor information
Visit our website, www.halma.com, for investor information
and Company news. In addition to accessing financial data, you
can view and download Annual and Half Year Reports, analyst
presentations, find contact details for Halma senior executives
and subsidiary companies and access links to Halma subsidiary
websites. You can also subscribe to an email news alert service to
automatically receive an email when significant announcements
are made.

Shareholding information
Please contact our Registrar, Computershare, directly for all
enquiries about your shareholding. Visit their Investor Centre
website www.investorcentre.co.uk for online information
about your shareholding (you will need your shareholder
reference number which can be found on your share certificate
or dividend confirmation), or telephone the Registrar direct
using the dedicated telephone number for Halma shareholders:
+44 (0)370 707 1046.

Dividend mandate
Shareholders can arrange to have their dividends paid directly
into their bank or building society account by completing a
bank mandate form. The advantages to using this service are:
the payment is more secure than sending a cheque through
the post; it avoids the inconvenience of paying in a cheque
and reduces the risk of lost, stolen or out-of-date cheques.

20 July 2023
18 August 2023
30 September 2023
16 November 2023
February 2024
31 March 2024
June 2024

2023

2022

2021

2020

2019

7.86p
12.34p*
20.20p

7.35p
11.53p
18.88p

6.87p
10.78p
17.65p

6.54p
9.96p
16.50p

6.11p
9.60p
15.71p

A mandate form can be obtained from Computershare or you will
find one on the reverse of your last dividend confirmation.

Dividend reinvestment plan
The Company operates a dividend reinvestment plan (DRIP) which
offers shareholders the option to elect to have their cash dividends
reinvested in Halma ordinary shares purchased in the market.
You can register for the DRIP online by visiting Computershare’s
Investor Centre website (as above) or by requesting an application
form direct from Computershare.

Shareholders who wish to elect for the DRIP for the forthcoming
final dividend, but have not already done so, should return a DRIP
application form to Computershare no later than 28 July 2023.

Electronic communications
All shareholder communications, including the Company’s Annual
Report and Accounts, are made available to shareholders on the
Halma website and you may opt to receive email notification that
documents and information are available to view and download
rather than to receive paper copies through the post. Using
electronic communications helps us to limit the amount of
paper we use and assists us in reducing our costs.

If you would like to sign up for this service, visit Computershare’s
Investor Centre website. You may change the way you receive
communications at any time by contacting Computershare.

Registered office
Misbourne Court
Rectory Way
Amersham
Bucks HP7 0DE
Tel: +44 (0)1494 721111
halma@halma.com
Web: www.halma.com

Registered in England and
Wales, No 040932

Investor relations
Charles King
Head of Investor Relations
Halma plc
Misbourne Court
Rectory Way
Amersham
Bucks HP7 0DE
Tel: +44 (0)1494 721111
investor.relations@halma.com

Registrar
Computershare Investor
Services PLC
The Pavilions
Bridgwater Road
Bristol BS99 6ZZ
Tel: +44 (0)370 707 1046
www.investorcentre.co.uk

Advisers
Auditor
PricewaterhouseCoopers LLP
40 Clarendon Road
Watford
Hertfordshire WD17 1JJ

Brokers
Credit Suisse International
One Cabot Square
London E14 4QJ

Investec Investment Banking
30 Gresham Street
London EC2V 7QN

Corporate solicitors
Ashurst LLP
London Fruit & Wool Exchange
1 Duval Square
London E1 6PW

Financial PR
MHP Group
4th Floor
60 Great Portland Street
London W1W 7RT
Tel: +44 (0)20 3128 8100
halma@mhpc.com

Financial advisers
Lazard & Co., Limited
50 Stratton Street
London W1J 8LL

Credit Suisse International
One Cabot Square
London E14 4QJ

256

Halma plc | Annual Report and Accounts 2023

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Halma plc
Misbourne Court
Rectory Way
Amersham
Bucks HP7 0DE

+44 (0)1494 721111
www.halma.com