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 was level compared with the prior year (2009/10: £222.1m; 2008/09: £221.7m) and adjusted¹ profit before tax from continuing operations decreased 2% to £38.1m (2008/09: £39.0m). Statutory profit before tax decreased by 1% to £35.4m. Organic revenue¹ was 1% lower and 9% lower than the prior year at constant currency. Organic profit¹ was 3% lower; down 12% at constant currency. Return on total invested capital¹ was 12.6% (2008/09: 14.7%). Cash flow was very strong in the half year, reducing net debt to £21.4m from £51.2m at March 2009.

Dividends

The Board declares an interim dividend of 3.31 pence per share, an increase of 5%, which will be paid on 10 February 2010 to shareholders on the register at 8 January 2010. This increase reflects the Board’s confidence in Halma’s long-term growth prospects.

Progress

Despite the turbulent economic conditions the world has faced, Halma has performed well and relative to the market as a whole, even better. In part, this has been helped by favourable currency trends, particularly the weakness of Sterling against the major currencies. Internally we have worked hard to improve our effectiveness and are delivering against our stated objectives which are to deliver fixed cost savings of £15m on an annualised basis relative to our overhead base during the second half of 2008/09; and to achieve £5m of product cost savings – however we are not being penny-wise and pound-foolish, we continue to invest strongly in products, markets and people.

Outlook

Our visibility of short-term demand is better than 12 months ago but it is still too early to claim that our customers have anything like their normal levels of visibility and hence confidence for the medium term. Given this market uncertainty, our actions to reduce costs and maintain targeted investment give us even greater resilience as we go into the second half together with the opportunity for improving performance.

Geoff Unwin

Chairman

1. See Financial highlights