Final Results

Halma PLC 20 June 2000 HALMA RECORD SALES AND PROFITS FOCUS ON MARKET LEADING ELECTRONICS BUSINESSES 20% DIVIDEND INCREASE FINANCIAL HIGHLIGHTS Turnover +7% to £233 million Overseas sales +12% to £151 million Profit before taxation, exceptional items and goodwill amortisation +5% to £43.8 million Earnings per share before exceptional items and goodwill amortisation +5% to 8.41p Ordinary dividends +20% to £14.4 million Net margin on sales * 18.7% Return on capital employed * 48.7% * Based on profit before taxation, exceptional items and goodwill amortisation Profit before taxation, exceptional items and goodwill amortisation increased to £43.8 million. Turnover increased by 7% to £233 million. Overseas sales increased by 12% and, at £151 million, now represent 65% of overall Group sales. Sales to other European countries, notwithstanding the weakness of the Euro, also increased by 5%. Earnings per share, before exceptionals and before amortisation of goodwill, increased by 5% to 8.41p. Each one of the preceding absolute figures is a new record for the Group. The Chief Executive, Mr Stephen O'Shea, said: 'Halma has again reported record sales and record profits. During the year we developed many new products and made a number of excellent acquisitions. Each of these has reinforced our market strength in our chosen sectors. We made further substantial progress towards our objective of simplifying our activities into a small number of specialist world class businesses. In each case these are globally organised, with widespread production and sales facilities heading up to a specialist senior executive. These changes and developments have created opportunities for further significant growth. 'Our specialist business groupings now are: Fire and Gas detection Water leak detection and UV treatment Elevator Electronics Bursting discs and sequential locking for Process Safety High power electrical Resistors Ophthalmic Optics 'For the first time the Group is reporting separate sales and profit figures for each sector. This segmental analysis is set out below. 'The key characteristics of the above business groupings are that they are predominantly electronics, they are based on advanced technology and offer strong potential for further growth. Each has built up national or international market leadership in its specialist field. 'These comments about the Group's global strength can conveniently be illustrated by taking one sector as an example. Halma is now substantially the largest world player in the rapidly growing field of elevator sensors and communications. All the Group's companies in this sector come under the direct control of one senior executive with many years' experience in this field. This business group performed very encouragingly with a profit increase of 14%. 'Memco, some years ago, was the originator of electronic sensors for elevator doors. These can detect the presence of an obstruction before the door closes onto it and are progressively replacing the more old fashioned mechanical sensors. Memco, with its fellow subsidiary Janus in the USA, has maintained overall leadership as the market has grown. During the year this position was further strengthened by the acquisition of T L Jones and the Group now supplies almost 50% of the total world market for this product. 'From this strong position the Group has also developed to become the world market leader in an allied product field, emergency telecommunications for use in elevators. New regulations have come into force requiring the use of these products in territories other than the USA. The Group was already strong in this field through Electronic Micro Systems and within the last twelve months has purchased two more specialists, E-Motive in Singapore and Vandal-Proof Products in the USA. 'Elevator Electronics is an excellent example of the Halma Group's current operating philosophy. Equally compelling examples of product strength and market dominance exist in each of the other business groupings and these are reviewed below. 'Fire and Gas, the largest product grouping, was the only one not to report a profit improvement during the year. A strong performance by fire detection companies was more than offset by a downturn within the gas detection companies. These suffered from a lack of large scale projects and in this context it is pleasing to report that Telegan has recently been awarded a £1.2 million contract from Centrica to equip its technicians with our newly-developed gas monitoring instruments. 'The water-related companies in aggregate recorded a 13% profit increase, with another exceptional performance from Palmer Environmental. This company is the world leader in advanced equipment for water leak detection and its new Permalog product is capturing substantial repeat orders. 'Resistors had an outstanding year with a 16% profit increase. At the year end this business was very substantially strengthened by the acquisition of the resistor activities of Cutler-Hammer from Eaton Corporation. 'Bursting discs and locking systems increased profits by 7%, largely as a result of the acquisition of Oklahoma Safety Equipment Co. ('OSECO') in the USA. The sequential locking companies continued to be affected by a lack of petrochemical contracts but made good progress in their other markets. 'Optics and Specialist companies reported a 14% increase in profits. 'The fastest growing geographical sales territory was the USA with a 19% year on year gain. Despite the strength of Sterling, Far East and Australasia sales recovered from the previous year's downturn with a gain of 14% and European sales, excluding the UK, grew by 5%. 'During the year and since the year end we have made the following acquisitions to strengthen our key business groups. Elevator Electronics T L Jones based in New Zealand with a manufacturing base in China E-Motive Display based in Singapore Vandal-Proof Products based in the USA High Power Resistors Cutler-Hammer resistor business based in the USA and in the UK Bursting Discs OSECO based in the USA Water Hydreka based in France 'Four smaller businesses within the Group which offered insufficiently attractive long-term prospects were closed or sold during the year at a net cost well within the original estimate. 'The steady, persistent and determined growth of the Halma Group is sometimes under-estimated by the casual observer. It is worth noting that over the past five years, for example, we have spent almost £70m on acquisitions. These acquisitions, funded entirely by internally generated cash, have added very substantial intellectual capital to our carefully selected activities. 'These activities and our progressively increasing product strength are the means whereby we sustain our consistently high performance ratios. Over the past eight years the average net margin on sales has never been below 18% and the Group's overall return on capital employed has been in excess of 40% for 17 successive years. The strong cash flow resulting from this allows us to grow our businesses, to make acquisitions and to increase our dividend. I trust that the remarkable fundamental strengths of the Group will continue to be recognised by shareholders and will be increasingly reflected in our share price.' The Chairman, Mr David Barber, said: 'The Directors again recommend an increase of 20% in the dividend per share. The total dividend is covered 2.1 times by profit before exceptionals and amortisation of goodwill but after taxation and preference dividends. If approved this dividend, amounting to 2.423p per share, will be paid on 21 August 2000 to shareholders on the register at the close of business on 21 July 2000. 'Tremendous strides have been made in strengthening the Group and equipping it to be a formidable competitor in what is becoming an ever more demanding market place. We now have worldwide strengths in product development, material procurement, production and marketing. The management effort and financial cost of achieving this have been well spent. I believe that the current financial year will demonstrate very real progress towards our long-term goals.' OPERATING REVIEW FIRE AND GAS One of Halma's key strengths is detecting hazards to life and the Group is a world leader in electronic detectors that protect people from the twin dangers of fire and gas. APOLLO is the clear market leader in Europe for commercial quality fire detectors, and it has a significant share of the global market with sales to more than 70 countries. This year, the company sold record numbers of detectors, installed across the world in commercial, industrial and public buildings. This company has consolidated its European leadership with the launch of new, microprocessor-based 'intelligent' detectors, while an increasingly sophisticated range of electronic add-on products helped to expand its global presence. Halma reinforced its fire detection focus in March 1999 with the acquisition of AIR PRODUCTS AND CONTROLS. Several new products have enhanced this company's position as North America's leading brand of smoke detectors for air-conditioning ducts. Record sales and profits were achieved in its first full year in the Group. Toxic and flammable gases are a common threat to life and Halma companies specialise in instruments that detect gases, measure them and warn users of an immediate danger. Electronic gas detectors from CROWCON provide a vital early warning to personnel who may be exposed to gas hazards, such as firefighters, chemical workers and people in confined spaces. Excellent results in the previous year were partly due to three major overseas contracts to equip telecoms engineers; a record achievement which has not been possible to repeat this year. Also, a downturn in the oil and gas industry has caused several customers to defer capital projects. Substantial orders for permanently installed fire and gas safety systems will be received later than expected. However, recent sales growth in the USA and two new products are expected to have significant impact in 2000/2001, when full profit recovery is expected. TELEGAN has recently won a major contract with Centrica, worth over £1 million, to supply all British Gas service engineers with a new instrument for checking the safety and measuring the energy efficiency of gas boilers. This prestige contract should provide a strong stimulus for sales to independent gas engineers. Record sales and profits were reported by PERMA PURE whose unique products remove unwanted moisture from gas samples. This success is due to continued growth in its core markets, which include instruments to monitor the breathing of intensive care patients in hospital. New products for bio-medical and fuel cell applications are expected to build on this success in the coming year. WATER Worldwide demand for clean drinking water is rising continuously due to economic development. At the same time, industrialisation and urbanisation are putting water resources under pressure through pollution and increased consumption. Halma companies specialise in water technologies that meet the global need for cleaner, safer water. The Group has world-class water technology products - electronic instruments for measuring water quality and locating leaking pipes, and water treatment systems based on ultraviolet light. In an increasing number of markets, growth in demand for water technology is reinforced by legislation. Improving water quality standards, and regulatory limits on pollution and tolerated wastage drive demand for Halma products. Regulation of wastewater discharged into rivers has created strong demand for instruments that accurately and quickly analyse water. PALINTEST, which produced record sales and profits, makes electronic instruments, advanced chemical sensors and test reagents for testing water quality and monitoring industrial effluents. In the past year, excellent growth was achieved in sales of its world-leading lead analysis system which has recently been approved by the US Environmental Protection Agency. New electronic sensors are being developed for measuring metal pollutants in water, anticipating increased regulation, particularly from the EU. Two Halma companies have developed an extremely strong position in the European market for ultraviolet light water treatment equipment. Demand for this technology is rising due to increasing pollution of water supplies and improving standards for drinking water and wastewater discharges. Market growth is also coming from high technology manufacturing processes, such as semi-conductors and pharmaceuticals, that require water of exceptional biological and chemical purity. BERSON, based in The Netherlands, launched several new patented products, including a wastewater treatment system. HANOVIA reported record order intake, record sales and record profits, supplying over 100 treatment systems to the electronics sector alone. There has been strong demand for a new treatment system that de-activates the Cryptosporidium organism in drinking water. Precise measurement and location of leaks in water pipes has important economic, environmental and health consequences and is a market in which Halma companies offer world-class technology. PALMER ENVIRONMENTAL is the global leader in advanced electronic instruments that detect and locate underground leaks and it reported record profits. Last year's launch of Permalog, a radically new leak detection product, has produced significant UK and overseas sales. This new product may transform leak location technology throughout the world. The purchase of HYDREKA (France) in March 2000 extends the Group's technology portfolio into water flow auditing. It also provides a marketing platform for the sale of Group products to the major international water utilities headquartered in France. ELEVATOR ELECTRONICS Elevators are the safest form of transport and Halma dominates the world market for elevator safety systems. The Group's primary products in this sector are the electronic devices that prevent elevator doors from closing onto passengers. These employ the latest developments in electronic infrared sensor technology. The most advanced systems sense passengers between doors or approaching an elevator. Demand patterns for these products depend primarily on building construction growth in national markets. However, worldwide population drift towards cities is forcing up land values making high-rise buildings viable and creating increasing demand for elevators. The new-build market consists of about 300,000 new elevator installations each year plus continual safety upgrading of the world's installed base of about 7 million elevators. The Group believes it commands almost 50% of the world market for elevator passenger protection systems. MEMCO is the world's largest manufacturer of elevator door safety systems. Access to new markets, through intragroup trading, should help to deliver profit growth this year. A unique product will soon be launched that will detect and stop anyone attempting to ride on the top of elevator cars, a growing problem known as 'elevator surfing'. In October 1999, the Group strengthened its dominant position in elevator safety with the purchase of T L JONES, a major supplier of safety systems to elevator constructors and contractors in Australasia, China and west coast USA. To extend market share in China, this company has recently opened a third sales office supported by an established production facility in Shanghai. Halma is also a global force in elevator emergency communication systems. The Group now enjoys market leadership in telecoms networks for elevator cars in the USA. ELECTRONIC MICRO SYSTEMS achieved record sales and profits. Demand for its electronic telecoms products is growing in most countries, and new European legislation requiring emergency communication systems should boost sales next year. The Group has recently bought VANDAL-PROOF PRODUCTS to extend its emergency telecoms range and enter new public access area markets like train stations, airports and college campuses. From a Singapore base, the Group also supplies high quality elevator visual displays and messaging systems though E-MOTIVE, purchased in July 1999. That company is extending sales beyond its home territories in south-east Asia through joint marketing activities with other Halma Group companies, benefiting from their well-established relationships with elevator manufacturers in North and South America and Europe. PROCESS SAFETY A common theme running through Halma Group activities is the detection of hazards and the protection of life. In the process safety sector, the Group is a world leader in systems that prevent workers from coming into contact with dangerous machines and in products which eliminate the risk of catastrophic explosions. Manufacturing processes are becoming faster and more complex. As a result, the potential risk of industrial workers being injured or killed continues to rise. Around the world, governments are imposing increasingly stringent safety regulations to reflect the rising dangers and changing social attitudes to acceptable risk. This background provides momentum for sales of products that protect people and prevent damage to industrial plant. While the global process safety sector has long-term growth potential, investment cutbacks in petrochemicals have adversely affected sales of safety control systems in that market. With an increase in the oil price and a restoration of processing capacity, sales to this sector should rise again. Halma's businesses dominate the world market in sequential locking systems, a principal area of process safety. These products control access to dangerous machinery. Because most production processes pose some risk to the operating staff, safe access control systems are essential throughout manufacturing industry. CASTELL SAFETY INTERNATIONAL is the world leader in this branch of industrial safety and maintained its historical level of profitability last year despite the impact of Sterling's strength on exports. OSECO, which was purchased in July 1999, achieved record sales and profits post-acquisition. This company is a major US manufacturer of process plant protection devices called bursting discs. These products are fitted to pressurised pipes in almost all chemical processing facilities in the world. Excessive pressure causes bursting discs to rupture in a safe and controlled way, avoiding the possibility of a devastating random explosion. ELFAB is the largest UK manufacturer of bursting discs and during the year launched a series of innovative new products. These combine electrical sensors for status reporting and new types of disc for use in hygienic processes, such as biotechnology and pharmaceutical production. RESISTORS The Group is a major international supplier of high power resistors. These products are used by many industries, and their role is to safely absorb excess electrical power or to control the quality of an electrical supply. They are widely used to protect electricity generating plants and power distribution networks from damage and also to prevent supply interruption. At first sight, the global market for power resistors appears to be mature. However, continued industrialisation and increasing electrical power generation will grow the size and value of this market for the foreseeable future. Allied to this, many industrial power consumers are demanding an improved quality of supply, in both electrical and continuity terms. In recent years, Halma companies have created entirely new markets and applications for power resistor technology. Fast response by POST GLOVER to an emerging market in the protection of electrical supplies for internet service providers ('ISPs'), where continuity of supply is crucial, has enabled them to dominate this new market. ISPs buy resistive systems to control electrical faults and allow equipment to operate during a fault condition until it is repaired. The company set new sales records last year and raised profits significantly after a decline the previous year. An important safety-critical power resistor application is in speed control of locomotives and mass transit vehicles, where our resistors are used for braking. In March 2000 the Group purchased from Eaton Corporation the CUTLER-HAMMER resistor business, which has facilities in the USA, the UK and Canada. Combined with Halma's existing market share, this acquisition makes the Group the key world supplier of locomotive braking resistors. When it was acquired in 1998, traction resistor specialist MOSEBACH had negligible earnings from exports. At the end of its first full year within the Group, the company had achieved exceptional results in growing its export business, to the extent that overseas sales made up over one third of turnover. Recovery in its key Latin American export market enabled IPC RESISTORS to report record profits and sales. New products that detect and signal electrical ground faults in industrial plants, already well received by the market, will create significant new sales opportunities. As a whole, the Group's resistor businesses made record sales and close to record profits last year. Prospects for exceeding these figures this year are very promising. A single order for braking resistors for the Long Island Railway (New York, USA) will be shipped this year valued at over £1 million. OPTICS AND SPECIALIST Today, Halma focuses its activities in six core markets, including optics. However, the Group also has several highly successful businesses operating in specialist sectors such as pharmaceuticals, biotech and life sciences. The Group is one of the world leaders in precision optical products for diagnosing and treating eye defects. An exciting new product currently being launched by KEELER uses miniaturised video technology to help the partially sighted to become more independent. VOLK is the US market leader in high precision ophthalmic lenses used by opticians and doctors. In the past year, the company reported a new sales record and launched VolkStore, the Group's first direct sales e-tailing web site. This company's research and development investment delivers a continuous stream of innovative new products, such as lenses for new types of laser treatment. Miniature, precision flow control devices are another of the Group's successful specialist products. These measure and control flows of very valuable or hazardous gases or liquids in biotechnology processes and scientific instruments. Halma's miniature valves are built into the gene sequencing machines used by scientists working on the human genome project. The Group's micro-pumps can also be found in blood analysis machines controlling antibiotic dosing, chemical reagents and aggressive solvents. SUMMARY This review has been illustrated with a few examples from Halma's large portfolio of world-class products. Overwhelmingly, the Group's products prevent injury and preserve human life. These products are often used in safety-critical applications where people's lives depend on them. Halma businesses mainly operate in sectors where they are, or can become, market leaders. The Group's successful approach to product development and innovation is to supplement original ideas generated by internal research and development with leading-edge technology bought in via acquisitions. Acquisition prospects are selected from businesses operating in the same markets as existing Group companies, or with closely complementary products and technologies. Using this strategy, Halma has established an ever-increasing range of valuable products focused in a narrow range of core markets, which puts the Group in a powerful position for both immediate and long-term growth. FURTHER INFORMATION The Report and Accounts for the period of 52 weeks to 1 April 2000 will be posted to shareholders on 3 July 2000 and will be available to the general public on written request to the Company's registered office at: Misbourne Court, Rectory Way, Amersham, Bucks HP7 0DE. PRELIMINARY RESULTS FOR THE 52 WEEKS TO 1 APRIL 2000 CONSOLIDATED PROFIT AND LOSS ACCOUNT £000 52 weeks to 1 April 2000 Before except'l items and 1999 goodwill Except'l Goodwill 53 weeks amortis'n items amortis'n Total Total TURNOVER 233,485 - - 233,485 217,758 ======= ======= ======= ======= ======= OPERATING PROFIT BEFORE GOODWILL AMORTISATION 43,419 - - 43,419 40,777 Goodwill amortisation - - (1,283) (1,283) (276) _______ _______ _______ _______ _______ OPERATING PROFIT 43,419 - (1,283) 42,136 40,501 EXCEPTIONAL ITEMS (note 2) Costs of closure and sale of businesses - (3,036) - (3,036) - Related goodwill adjustment - (4,732) - (4,732) - _______ _______ _______ _______ _______ Loss on closure and sale of businesses - (7,768) - (7,768) - _______ _______ _______ _______ _______ 43,419 (7,768) (1,283) 34,368 40,501 Interest 332 - - 332 1,046 _______ _______ _______ _______ _______ PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION 43,751 (7,768) (1,283) 34,700 41,547 Taxation (note 3) (13,341) 648 - (12,693) (12,959) _______ _______ _______ _______ _______ PROFIT FOR THE FINANCIAL YEAR 30,410 (7,120) (1,283) 22,007 28,588 _______ _______ _______ _______ _______ DIVIDENDS Preference dividends (21) (38) Ordinary dividends (note 4) (14,413) (12,021) _______ _______ (14,434) (12,059) _______ _______ PROFIT TRANSFERRED TO RESERVES 7,573 16,529 ======= ======= EARNINGS PER ORDINARY SHARE BEFORE EXCEPTIONAL ITEMS AND GOODWILL AMORTISATION 8.41p 7.99p EARNINGS PER ORDINARY SHARE 6.08p 7.91p DILUTED EARNINGS PER ORDINARY SHARE 6.07p 7.88p CONSOLIDATED BALANCE SHEET £000 1 April 3 April 2000 1999 FIXED ASSETS Intangible assets 35,784 14,058 Tangible assets 42,214 40,644 _______ _______ 77,998 54,702 _______ _______ CURRENT ASSETS Stocks 35,842 34,790 Debtors 64,629 59,530 Cash and short-term deposits 21,900 29,894 _______ _______ 122,371 124,214 _______ _______ CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR Borrowings 14,700 7,730 Dividends payable 8,730 7,294 Current taxation 8,355 11,927 Creditors 38,728 33,639 _______ _______ 70,513 60,590 _______ _______ NET CURRENT ASSETS 51,858 63,624 _______ _______ TOTAL ASSETS LESS CURRENT LIABILITIES 129,856 118,326 CREDITORS: AMOUNTS FALLING DUE AFTER ONE YEAR 4,317 2,167 _______ _______ 125,539 116,159 ======= ======= CAPITAL AND RESERVES Called up share capital 35,994 36,473 Share premium account 1,096 894 Other reserves 422 - Profit and loss account 88,027 78,792 _______ _______ SHAREHOLDERS' FUNDS (INCLUDING NON-EQUITY INTERESTS) 125,539 116,159 ======= ======= STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES £000 52 weeks 53 weeks to to 1 April 3 April 2000 1999 PROFIT FOR THE FINANCIAL YEAR 22,007 28,588 OTHER RECOGNISED GAINS AND LOSSES Exchange adjustments (483) 1,210 Related corporation tax (6) (163) _______ _______ (489) 1,047 _______ _______ TOTAL RECOGNISED GAINS AND LOSSES 21,518 29,635 ======= ======= MOVEMENTS IN SHAREHOLDERS' FUNDS £000 52 weeks 53 weeks to to 1 April 3 April 2000 1999 PROFIT FOR THE FINANCIAL YEAR 22,007 28,588 Dividends (14,434) (12,059) _______ _______ Profit transferred to reserves 7,573 16,529 Total other recognised gains and losses (489) 1,047 Net proceeds of shares issued 252 334 Cancellation and repayment of preference shares (656) - Purchase of own shares (2,032) - Goodwill adjustment on closure and sale of businesses 4,732 - _______ _______ INCREASE IN SHAREHOLDERS' FUNDS 9,380 17,910 SHAREHOLDERS' FUNDS BROUGHT FORWARD 116,159 98,249 _______ _______ SHAREHOLDERS' FUNDS CARRIED FORWARD 125,539 116,159 ======= ======= CONSOLIDATED CASH FLOW STATEMENT £000 52 weeks 53 weeks to to 1 April 3 April 2000 1999 CASH FLOW FROM OPERATING ACTIVITIES (note 5) 47,369 42,972 RETURN ON INVESTMENTS AND SERVICING OF FINANCE Interest received 1,107 1,690 Interest paid (529) (632) Preference dividends paid (21) (57) _______ _______ 557 1,001 _______ _______ TAXATION Current taxation paid (16,317) (10,998) CAPITAL EXPENDITURE Purchase of tangible fixed assets (8,298) (6,960) Sale of tangible fixed assets 1,118 796 _______ _______ (7,180) (6,164) _______ _______ ACQUISITIONS AND DISPOSALS Acquisition of businesses (25,730) (14,622) Cash and overdrafts acquired 377 822 Sale of businesses 1,107 282 Overdrafts sold 313 - _______ _______ (23,933) (13,518) _______ _______ EQUITY DIVIDENDS PAID (12,977) (10,795) _______ _______ (12,481) 2,498 _______ _______ MANAGEMENT OF LIQUID RESOURCES Decrease/(increase) in short-term deposits 10,509 (7,282) FINANCING Issue of ordinary share capital 252 334 Purchase and repayment of shares (2,688) - Increase in loans 6,257 3,312 _______ _______ 3,821 3,646 _______ _______ INCREASE/(DECREASE) IN CASH (note 5) 1,849 (1,138) ======= ======= SEGMENTAL ANALYSIS £000 GEOGRAPHICAL ANALYSIS By destination By origin 52 weeks 53 weeks 52 weeks 53 weeks to to to to 1 April 3 April 1 April 3 April 2000 1999 2000 1999 TURNOVER United Kingdom 82,758 83,569 154,262 154,673 United States of America 67,650 56,949 67,463 55,329 Europe excluding UK 45,525 43,312 17,582 18,702 Far East and Australasia 22,975 20,221 10,448 4,457 Africa, Near and Middle East 6,517 7,041 - - Other 8,060 6,666 2,798 2,048 Inter-segmental sales - - (19,068) (17,451) _______ _______ _______ _______ 233,485 217,758 233,485 217,758 _______ _______ _______ _______ PROFIT BEFORE TAXATION United Kingdom 27,600 30,082 United States of America 12,164 8,280 Other countries 3,655 2,415 _______ _______ 43,419 40,777 Exceptional items (7,768) - Goodwill amortisation (1,283) (276) Interest 332 1,046 _______ _______ Profit on ordinary activities before taxation 34,700 41,547 _______ _______ SECTOR ANALYSIS TURNOVER Fire and Gas 61,299 59,103 Water 27,118 26,671 Elevator Electronics 27,150 21,952 Process Safety 31,293 26,245 Resistors 23,079 22,981 Optics and Specialist 64,627 62,358 Inter-segmental sales (1,081) (1,552) _______ _______ 233,485 217,758 _______ _______ PROFIT BEFORE TAXATION Fire and Gas 12,345 13,219 Water 7,423 6,573 Elevator Electronics 6,078 5,345 Process Safety 5,476 5,108 Resistors 3,554 3,063 Optics and Specialist including holding companies 8,543 7,469 _______ _______ 43,419 40,777 Exceptional items (7,768) - Goodwill amortisation (1,283) (276) Interest 332 1,046 _______ _______ Profit on ordinary activities before taxation 34,700 41,547 _______ _______ The above segmental figures are analysed for the first time by specialist business groupings. Comparative figures are restated accordingly. NOTES ON THE PRELIMINARY ANNOUNCEMENT 1 BASIS OF PREPARATION The above results for the 52 weeks to 1 April 2000 are an abridged version of the Group's statutory accounts for that period, which received an unqualified auditors' report but which have not yet been filed with the Registrar of Companies. These results are prepared on the basis of the accounting policies set out in the accounts referred to above, and these policies are consistent with those applied in the Group's statutory accounts for the 53 weeks to 3 April 1999, except for the adoption of accounting standards applicable since that date. 2 EXCEPTIONAL ITEMS Exceptional items arose on the closure and sale of parts of the business of Marathon Monitors Inc., the sale of the business of American Tech Manufacturing Corporation and the shoe machinery business of Standard Cressall Limited, and the sale of the entire share capital of Tradinco Instrumenten-Apparaten B.V. 3 TAXATION £000 52 weeks 53 weeks to to 1 April 3 April 2000 1999 UK corporation tax at 30% (1999: 31%) 8,890 9,937 Overseas taxation 3,878 3,254 _______ _______ 12,768 13,191 Adjustments in respect of prior years (75) (232) _______ _______ 12,693 12,959 _______ _______ In respect of the exceptional items UK corporation tax is stated net of a tax credit of £14,000 and overseas taxation is stated net of a tax credit of £634,000. 4 ORDINARY DIVIDENDS 52 weeks 53 weeks 52 weeks 53 weeks to to to to 1 April 3 April 1 April 3 April 2000 1999 2000 1999 p p £000 £000 Interim paid 1.570 1.308 5,679 4,723 Final proposed 2.423 2.019 8,730 7,294 Balance of final dividend - - 4 4 _______ _______ ________ _______ 3.993 3.327 14,413 12,021 _______ _______ _______ _______ If approved at the Annual General Meeting, the final dividend for 2000 will be paid on 21 August 2000 to shareholders on the register at the close of business on 21 July 2000. 5 NOTES ON CASH FLOW STATEMENT £000 52 weeks 53 weeks to to 1 April 3 April 2000 1999 RECONCILIATION OF OPERATING PROFIT TO NET CASH INFLOW FROM OPERATING ACTIVITIES Operating profit 42,136 40,501 Depreciation 6,252 5,748 Goodwill amortisation 1,283 276 Loss on sale of tangible fixed assets 11 58 Increase in stocks (878) (2,632) (Increase)/decrease in debtors (1,155) 294 Increase/(decrease) in creditors 249 (582) Net cash flow relating to exceptional items (529) (691) _______ _______ Net cash inflow from operating activities 47,369 42,972 _______ _______ RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET CASH Increase/(decrease) in cash 1,849 (1,138) (Decrease)/increase in liquid resources (10,509) 7,282 Short-term deposits acquired 409 - Loans acquired (604) (281) Cash inflow from loans (6,257) (3,312) Exchange adjustments 148 (242) _______ _______ (14,964) 2,309 Net cash brought forward 22,164 19,855 _______ _______ Net cash carried forward 7,200 22,164 _______ _______ Contact for further information: Mr Stephen O'Shea Chief Executive, Halma p.l.c. Tel: +44 (0)1494 721111

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