Halma: What we do and our strategy

Our business is to make products which protect lives and improve the quality of life for people worldwide. We do this through continuous innovation in market-leading products, which meet the increasing demands for improvements to health, safety and the environment. We build strong positions in markets where the demand is global. Our businesses are autonomous and highly entrepreneurial.

Results

For the first half, revenue from continuing operations increased 19% to £221.7m (2007/08: £186.2m) and adjusted* profit before tax from continuing operations increased 17% to £39.0m (2007/08: £33.4m). Statutory profit before tax increased by 13% to £35.6m. Organic revenue growth** was 14% and 10% at constant currency. Organic profit growth** was 13%; 8% at constant currency. Return on total invested capital** was 14.7% (2007/08: 13.9%).

We continue to invest strongly in products, people and market development. In September 2008 we announced the acquisition of Fiberguide Industries, which manufactures complex optical fibre cables and assemblies, for an initial cash consideration of $14.0m (£7.9m). In November 2008 we acquired the business and assets of Oerlikon Optics USA Inc’s operation located in Golden, Colorado for $6.0m (£4.0m) in cash. The business designs and manufactures optical coatings and optomechanical assemblies.

Dividends

The Board declares an interim dividend of 3.15 pence per share, an increase of 5%, which will be paid on 4 February 2009 to shareholders on the register at 5 January 2009. This increase reflects the Board’s confidence in Halma’s long-term growth prospects whilst continuing to improve our dividend cover.

Progress

Across the Group, progress has again been good. Our subsidiary boards are much strengthened. There has been a high rate of growth in revenues outside our traditionally strong markets of the UK, USA and Mainland Europe, adding to the growth achieved within these markets.

We have a good pipeline of possible acquisition prospects. However, as we acquire in the private markets, it may take some time for price expectations to align themselves with those prevailing in public markets. Meanwhile we are taking a patient stance regarding the deployment of capital.

Outlook

At the time of writing, stock markets are jittery, as investors begin to see the smoke clearing somewhat from the banking crisis, only to see a weakening global economic perspective. Demand for our products is underpinned by long-term growth drivers and we therefore expect Halma to continue to perform well, relative to markets as a whole.

Geoff Unwin

Chairman

* before amortisation of acquired intangible assets of £3,399,000 (2007/08: £1,968,000)
** See Financial highlights