Interim Results

RNS Number : 0242J

Halma PLC

27 November 2008

 



HALMA p.l.c. HALF YEAR REPORT FOR THE 26 WEEKS TO 27 SEPTEMBER 2008 27 NOVEMBER 2008 Strong revenue and profit growth  reflects Halma's diverse and resilient end markets

Halma, the leading safety, health and sensor technology group, today announces its half year results for the 26 weeks  to 27 September 2008.

Highlights include: Revenue from continuing operations up 19% to £221.7m (2007/08: £186.2m), including 14% organic revenue growth* (10% at constant currency). Pre-tax profit from continuing operations** up 17% to £39.0m (2007/08: £33.4m), including 13% organic profit growth* (8% at constant currency). Double digit growth in all three business sectors. Revenue outside our traditionally strong markets of the UK, USA and Mainland Europe now represents 21.5% (2007/08: 19%) of total revenue.  Adjusted earnings per share from continuing operations*** up 20% to 7.52p (2007/08: 6.28p). Statutory earnings per share 6.85p (2007/08: 5.94p). Strong margins and returns maintained with return on sales of 17.6% (2007/08: 17.9%) and operating profit** growth of 20%. ROTIC* improved to 14.7% (2007/08: 13.9%).   Strong financial position with modest net debt. Substantial headroom on bank facilities (now extended to 2013) to support acquisitive and organic growth plans. Good cash generation supports a 5% increase in the interim dividend, reflecting the Board's continuing confidence in Halma's long-term growth prospects whilst continuing to improve our dividend cover.
*	Organic growth rates, Return on capital employed (ROCE) and Return on total invested capital (ROTIC) are non-GAAP performance measures used by management in measuring the returns achieved from the Group's asset base. See note 9 for details.
**	Adjusted to remove the amortisation of acquired intangible assets of £3.4m (2007/8: £2.0m).
***	Adjusted to remove the amortisation of acquired intangible assets. See note 4 for details.

Commenting on the results, Andrew Williams, Chief Executive of Halma, said: 'I am pleased to report that we have delivered a strong performance in the six-month period to 27 September 2008, achieving record revenues and profits. Our strong performance over many years confirms the resilience of Halma during challenging macro-economic conditions. In previous times of economic challenge and rapid change, Halma's ability to adapt quickly to the changing market needs has enabled us to sustain growth and frequently gain market share. During the past 20 years or more, our Return on sales has remained high, at above 16%.   'Since 2005, our strategy has been not only to resume our excellent record of organic growth and successful acquisitions, but also to significantly increase investment in people development, emerging markets, manufacturing and new product innovation. While this increased investment moderated any potential margin expansion over this short period, I am confident that the returns from our investment combined with our strong financial resources will help now to ensure we continue to perform well, relative to markets as a whole.'

For further information, please contact:
Halma p.l.c. Andrew Williams, Chief Executive Kevin Thompson, Finance Director	[phone]
Hogarth Partnership Limited Rachel Hirst/Andrew Jaques	[phone]

NOTE TO EDITORS
1.	Halma develops and markets products used worldwide to protect life and improve the quality of life. The Group comprises three business sectors:

Infrastructure Sensors

We make products which detect hazards to protect people and property in public and commercial buildings.

Health and Analysis

We make components and products used to improve personal and public health. We also develop technologies and products which are used for analysis in safety, environmental and leisure related markets including Water.

Industrial Safety

We make products which protect property and people at work.

The key characteristics of Halma's businesses are that they are based on advanced technology and offer strong growth potential. Many Group businesses are a clear market leader in their specialist field and, in a number of cases, are the dominant world supplier.

2.	High resolution photos of Halma senior management, including Chief Executive Andrew Williams, and images illustrating Halma business activities can be downloaded from its website: www.halma.com. Click on the 'News' link, then 'Image Library'. Photo queries:  David Waller [phone], e-mail: [e-mail].

3.	You can view or download copies of this announcement and our latest Half year and Annual reports from our website at www.halma.com or request free printed copies by contacting [e-mail].

4.

This announcement contains certain forward-looking statements which have been made by the Directors in good faith using information available up until the date they approved the announcement. Forward-looking statements should be regarded with caution as by their nature such statements involve risk and uncertainties relating to events and circumstances that may occur in the future. Actual results may differ from those expressed in such statements, depending on the outcome of these uncertain future events.

HALMA p.l.c. Half year results for the 26 weeks to 27 September 2008 Financial highlights

	Change	Unaudited 26 weeks to 27 September 2008	Unaudited  26 weeks to 29 September 2007(5)
Continuing operations
Revenue	+ 19%	£221.7m	£186.2m
Adjusted profit before taxation(1)	+ 17%	£39.0m	£33.4m
Statutory profit before taxation	+ 13%	£35.6m	£31.4m
Adjusted earnings per share(2)	+ 20%	7.52p	6.28p
Statutory earnings per share	+ 15%	6.85p	5.94p
Interim dividend per share	+ 5%	3.15p	3.00p
Return on sales(3)		17.6%	17.9%
Return on total invested capital(4)		14.7%	13.9%
Return on capital employed(4)		57.1%	58.5%

Pro-forma information:
(1)	Adjusted to remove the amortisation of acquired intangible assets of £3,399,000 (2007/08: £1,968,000).
(2)	Adjusted to remove the amortisation of acquired intangible assets. See note 4 for details.
(3)	Return on sales is defined as adjusted(1) profit before taxation from continuing operations expressed as a percentage of revenue from continuing operations.
(4)	Organic growth rates, Return on capital employed (ROCE) and Return on total invested capital (ROTIC) are non-GAAP performance measures used by management in measuring the returns achieved from the Group's asset base. See note 9 for details.
(5)	The comparative figures for 2007/08 as previously reported have been amended to account for the disposal of Post Glover Lifelink, Inc as a discontinued operation. See note 8 for details.

Chairman's statement  Geoff Unwin, Chairman of Halma, said: Halma has continued to perform well in uncertain times 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. *     Before amortisation of acquired intangible assets of £3,399,000 (2007/08: £1,968,000) **   See Financial highlights

Chief Executive's review Andrew Williams, Chief Executive of Halma, said: Our strong performance over many years confirms the resilience of Halma A record performance I am pleased to report that we have delivered a strong performance in the six-month period to 27 September 2008, achieving record revenues and profits.  Revenue growth on continuing operations of 19% produced an increase in adjusted* profit (on continuing operations after financing costs) of 17%. Operating profit* growth was 20% demonstrating continued strong product margins and investment in strengthening our sales, technical and operational resources. Currency movements were favourable, boosting revenue by 4% and adjusted* profit by 5%. Excluding the impact of currency and acquisitions made in the current and previous year, underlying organic revenue and profit growth were 10% and 8% respectively.

Growth in all three sectors Infrastructure Sensors performed well, increasing revenue by 15% and profit by 18%, raising the Return on sales from 17.1% to 17.6%. This was all organic growth as our Fire Detection sub-sector continued its recent record of strong progress and the benefits of restructuring our Security Sensors business last year started to emerge as planned. Automatic Door Safety also grew revenue and profit whilst profits from our Elevator Safety business were marginally down on the same period last year. Health and Analysis achieved profit growth of 21% and revenue growth of 25%. Despite good underlying revenue growth and the expected contribution from recent acquisitions, underlying profit growth was slightly disappointing. Product margins were steady, but overhead costs grew faster in absolute terms. Actions are underway to address the specific challenges within the relevant businesses to ensure increases in resources are productive and profitable. Our Industrial Safety sector goes from strength to strength, increasing profits by 30% and revenues by 19% - almost all organic growth. Each of our four businesses (Gas Detection, Bursting Discs, Safety Interlocks and Asset Monitoring) grew revenue and profit whilst continuing to invest more in improving distribution in new markets.

Growth in all global regions Revenues increased to all geographic regions, but more substantially outside the UK and USA in accordance with our strategic objective. Progress was boosted by the contribution of Riester, particularly in Mainland Europe and South America. Halma businesses are aiming to increase their presence outside the UK, USA and Mainland Europe and it is pleasing to once again report significant revenue growth in the 'rest of the world' of 35% - now representing 21.5% of total Group sales. Order intake in the period was 14% ahead of last year and we entered the second half with a larger order book than last year. Unsurprisingly, order intake growth reduced slightly throughout the period in our US and UK companies, but held up well in the other world regions and currently remains within our expectations. This resilience in demand reflects the strengths we derive from operating in diverse geographies and markets and choosing to focus on market niches where long-term sustainable growth drivers underpin demand.

Strong balance sheet and cash flow  Cash flow was in line with our strong track record. Our current syndicated revolving credit facility of £165m, which we renegotiated in February 2008 on favourable terms for a further five years, gives us headroom to support organic growth and future acquisitions. We ended the period with net debt of £48m. Return on capital employed** remained high at 57.1% whilst our overall Group measure of Return on total invested capital** was an impressive 14.7%. The major risks and uncertainties facing Halma and what we are doing to identify, manage and mitigate them are covered in detail in our latest Annual report on page 14 (see also on www.halma.com). Clearly, recent financial and economic changes have raised the relative importance of treasury risks and risks to organic growth in the remainder of the financial year. Actions have been taken to ensure that we have sufficient headroom to continue with our strategic objectives.

Further acquisition investment In September 2008 we acquired Fiberguide Industries based in New Jersey, USA for $14.0m.  We followed in November 2008 with the acquisition of the Colorado operations of Oerlikon Optics USA Inc for $6.0m which will become part of Ocean Optics Inc. These each add further product depth to our existing Photonics business within the Health and Analysis sector. Riester, the German Health Optics business acquired in December 2007, performed in line with our expectations and I am particularly pleased with the collaboration between it and other Halma Health Optics businesses. We are actively searching for more acquisitions and believe the wider economic uncertainty may create additional opportunities for us.

Continued investment to drive organic growth In China, our new manufacturing hub in Shanghai, to accommodate assembly operations for four Halma companies, is in the final phase of installation and will be operational by the end of the year. Our planned £2.5m investment in a joint venture in China to support development of our Fire Detection business did not proceed once it became clear that our respective objectives could be achieved without a formal JV arrangement. In India, our new Halma hub in Mumbai is operational and recruitment of local commercial and technical resources for Halma companies is underway. Investment in R&D increased broadly in line with revenue growth, representing 5% of Group revenues (2007/08: 5%). Our internal Halma Annual Innovation Awards for 2008 demonstrated the more active approach we have been taking towards improving not just our new product development activities but also our manufacturing operations. Around half of all entries were for process innovations. This year's award was won by Memco for their new Panachrome elevator door sensor with the runners up being the new 'click-n-seal' Fluid Technology connection product from Diba Industries and Volk Optical's new ophthalmic lens polishing manufacturing process. Capital expenditure during the period increased by 16% to £7.0m (2007/08: £6.0m). Projects included investments which gave businesses a 'step change' in their manufacturing capabilities and promise to drive growth in new market niches.

Outlook Our strong performance over many years confirms the resilience of Halma during challenging macro-economic conditions. During the past 20 years or more, our Return on sales has remained high, at above 16%.  In addition to the benefits of being in diverse markets with robust long-term growth drivers, we gain significant advantage from our decentralised operating structure. We have a clear strategic framework, a flat and simple reporting structure, autonomy and accountability at the subsidiary board level and high calibre people throughout our organisation. Decisions are made by those closest to our customers and markets, often resulting in major tactical changes being implemented without delay. In previous times of economic challenge and rapid change, Halma's ability to adapt quickly to the changing market needs has enabled us to sustain growth and frequently gain market share. Since 2005, our strategy has been not only to resume our excellent record of organic growth and successful acquisitions, but also to significantly increase investment in people development, emerging markets, manufacturing and new product innovation. While this increased investment moderated any potential margin expansion over this short period, I am confident that the returns from our investment combined with our strong financial resources will help now to ensure we continue to perform well, relative to markets as a whole.  *    Before amortisation of acquired intangible assets **  See Financial highlights

Responsibility statement We confirm that to the best of our knowledge:
(a)	these Condensed financial statements have been prepared in accordance with International Accounting Standard 34 'Interim Financial Reporting';
(b)	this Half year report includes a fair review of the information required by Disclosure and Transparency Rule (DTR) 4.2.7R (indication of important events during the period and description of principal risks and uncertainties for the remainder of the financial year); and
(c)	this Half year report includes a fair review of the information required by DTR 4.2.8R (disclosure of related party transactions and changes therein).

By order of the Board A J Williams Chief Executive 27 November 2008

K J Thompson Finance Director

HALF YEAR RESULTS FOR THE 26 WEEKS TO 27 SEPTEMBER 2008 Condensed financial statements
Consolidated income statement				£000
	Unaudited  26 weeks to 27 September 2008			Unaudited   26 weeks to 29 September 2007			Audited  52 weeks to   29 March  2008
	Before   acquired  intangibles   amortisation	Amortisation   of acquired   intangibles	Total	Before  acquired  intangibles  amortisation	Amortisation   of acquired   intangibles	Total	Total
Continuing operations
Revenue  (note 1)	221,704  _______	-  _______	221,704  _______	186,170  _______	-  _______	186,170  _______	395,061  _______
Operating profit	40,859	(3,399)	37,460	34,105	(1,968)	32,137	70,166
Finance income	4,277	-	4,277	4,017	-	4,017	8,159
Finance expense	(6,117) _______	-  _______	(6,117) _______	(4,764) _______	-  _______	(4,764) _______	(10,303) _______
Profit before taxation	39,019	(3,399)	35,620	33,358	(1,968)	31,390	68,022
Taxation  (note 3)	(10,925) _______	904  _______	(10,021) _______	(9,978) _______	705  _______	(9,273) _______	(19,688) _______
Profit for the period from continuing  operations	28,094	(2,495)	25,599	23,380	(1,263)	22,117	48,334
Discontinued operations
Net profit for the  period from discontinued  operations (note 8)	-  _______	-  _______	-  _______	133  _______	-  _______	133  _______	1,950  _______
Profit for the period  attributable to equity  shareholders  (note 1)	28,094  _______	(2,495) _______	25,599  _______	23,513  _______	(1,263) _______	22,250  _______	50,284  _______
Earnings per ordinary  share (note 4)
From continuing operations
Basic	7.52p		6.85p	6.28p		5.94p	12.97p
Diluted			6.83p			5.91p	12.90p
From continuing and  discontinued operations
Basic	7.52p		6.85p	6.31p		5.97p	13.49p
Diluted			6.83p			5.94p	13.42p
Dividends in respect of the  period (note 5)
Declared (£000)			11,786			11,190	28,187
Declared per share			3.15p			3.00p	7.55p

Consolidated balance sheet										£000
				Unaudited  27 September  2008		Unaudited  29 September  2007			Audited  29 March  2008
Non-current assets
Goodwill				164,723		129,207			161,230
Other intangible assets				35,980		14,953			33,252
Property, plant and equipment				59,930		50,287			57,452
Deferred tax assets				13,665  _______		9,717  _______			10,069  _______
				274,298  _______		204,164  _______			262,003  _______
Current assets
Inventories				47,879		39,789			44,267
Trade and other receivables				98,366		81,225			99,741
Cash and cash equivalents				22,210  _______		25,360  _______			28,118  _______
				168,455  _______		146,374  _______			172,126  _______
Total assets				442,753  _______		350,538  _______			434,129  _______
Current liabilities
Borrowings				4,882		31,752			7,035
Trade and other payables				62,928		55,935			69,420
Tax liabilities				10,977  _______		9,936  _______			8,273  _______
				78,787  _______		97,623  _______			84,728  _______
Net current assets				89,668  _______		48,751  _______			87,398  _______
Non-current liabilities
Borrowings				65,142		-			65,358
Retirement benefit obligations				48,804		34,703			35,957
Trade and other payables				2,670		2,538			2,874
Deferred tax liabilities				4,106  _______		2,581  _______			6,108  _______
				120,722  _______		39,822  _______			110,297  _______
Total liabilities				199,509  _______		137,445  _______			195,025  _______
Net assets				243,244  _______		213,093  _______			239,104  _______
Capital and reserves
Share capital				37,521		37,394			37,446
Share premium account				17,926		16,263			16,949
Treasury shares				(2,197)		(2,058)			(3,292)
Capital redemption reserve				185		185			185
Translation reserve				12,537		(5,035)			7,144
Other reserves				3,941		4,806			5,106
Retained earnings				173,331  _______		161,538  _______			175,566  _______
Shareholders' funds				243,244  _______		213,093  _______			239,104  _______

Consolidated statement of recognised income and expense								£000
				Unaudited  26 weeks to  27 September  2008		Unaudited  26 weeks to  29 September  2007		Audited  52 weeks to  29 March  2008
Exchange differences on translation of foreign operations				5,393		(763)		11,352
Exchange differences transferred to profit on disposal of foreign operations				-		-		64
Actuarial (losses)/gains on defined benefit pension plans				(15,146)		23		(3,886)
Tax on items taken directly to reserves				4,309  _______		(750) _______		343  _______
Net (loss)/profit recognised directly in reserves				(5,444)		(1,490)		7,873
Profit for the period				25,599  _______		22,250  _______		50,284  _______
Total recognised income and expense for the period				20,155  _______		20,760  _______		58,157  _______

Reconciliation of movements in shareholders' funds								£000
				Unaudited  26 weeks to  27 September  2008		Unaudited  26 weeks to  29 September  2007		Audited  52 weeks to  29 March  2008
Shareholders' funds brought forward				239,104		206,608		206,608
Profit for the period				25,599		22,250		50,284
Dividends paid				(16,997)		(16,139)		(27,329)
Exchange differences on translation of foreign operations				5,393		(763)		11,352
Exchange differences transferred to profit on disposal of foreign operations				-		-		64
Actuarial (losses)/gains on defined benefit pension plans				(15,146)		23		(3,886)
Tax on items taken directly to reserves				4,309		(750)		343
Issue of shares				1,052		1,106		1,844
Movement in treasury shares				1,095		(394)		(1,628)
Movement in other reserves				(1,165) _______		1,152  _______		1,452  _______
Total movement in shareholders' funds				4,140  _______		6,485  _______		32,496  _______
Shareholders' funds carried forward				243,244  _______		213,093  _______		239,104  _______

Consolidated cash flow statement								£000
				Unaudited  26 weeks to  27 September  2008		Unaudited  26 weeks to  29 September  2007		Audited  52 weeks to  29 March  2008
Net cash inflow from operating activities (note 6)				29,927  _______		25,963  _______		58,401  _______
Cash flows from investing activities
Purchase of property, plant and equipment				(6,073)		(5,610)		(14,787)
Purchase of computer software				(928)		(438)		(952)
Proceeds from sale of property, plant and equipment				1,683		482		831
Development costs capitalised				(1,694)		(2,078)		(3,796)
Interest received				379		331		721
Acquisition of businesses				(8,064)		(1,212)		(46,537)
Disposal of businesses				309  _______		-   _______		2,405  _______
Net cash used in investing activities				(14,388) _______		(8,525) _______		(62,115) _______
Financing activities
Dividends paid				(16,997)		(16,139)		(27,329)
Proceeds from issue of share capital				1,052		1,106		1,844
Net purchase of treasury shares				(474)		(786)		(1,632)
Interest paid				(1,917)		(877)		(2,473)
(Repayment)/drawdown of borrowings				(3,809) _______		2,300  _______		37,796  _______
Net cash (used in)/from financing activities				(22,145) _______		(14,396) _______		8,206  _______
(Decrease)/increase in cash and cash equivalents (note 6)				(6,606)		3,042		4,492
Cash and cash equivalents brought forward				28,118		22,051		22,051
Exchange adjustments				698  _______		267  _______		1,575   _______
Cash and cash equivalents carried forward				22,210  _______		25,360  _______		28,118  _______

Notes to the condensed financial statements
1	Segmental analysis
	Sector analysis	£000
			Revenue
			Unaudited  26 weeks to  27 September  2008	Unaudited  26 weeks to  29 September  2007	Audited  52 weeks to  29 March  2008
	Infrastructure Sensors		92,298	80,423	167,262
	Health and Analysis		76,397	61,017	134,630
	Industrial Safety		53,325	44,978	93,731
	Inter-segmental sales		(316) _______	(248) _______	(562) _______
	Continuing operations		221,704	186,170	395,061
	Discontinued operations (note 8)		-  _______	1,698  _______	2,894  _______
	Revenue for the period		221,704  _______	187,868  _______	397,955  _______
	Inter-segmental sales are charged at prevailing market prices
			Profit
			Unaudited  26 weeks to  27 September  2008	Unaudited  26 weeks to  29 September  2007	Audited  52 weeks to  29 March  2008
	Infrastructure Sensors		16,248	13,765	28,504
	Health and Analysis		14,175	11,749	27,842
	Industrial Safety		11,740	9,030	19,355
	Central companies		(1,304) _______	(439) _______	(778) _______
	Continuing operations		40,859	34,105	74,923
	Discontinued operations		-	205	436
	Net finance expense		(1,840) _______	(747) _______	(2,144) _______
	Group profit before amortisation of acquired intangibles		39,019	33,563	73,215
	Amortisation of acquired intangible assets		(3,399)	(1,968)	(4,757)
	Profit on disposal of operations before tax (note 8)		-	-	1,669
	Taxation		(10,021) _______	(9,345) _______	(19,843) _______
	Profit for the period		25,599  _______	22,250  _______	50,284  _______

	Geographical analysis						£000
		Revenue by destination			Revenue by origin
		Unaudited  26 weeks to  27 September  2008	Unaudited  26 weeks to  29 September  2007	Audited  52 weeks to  29 March  2008	Unaudited  26 weeks to  27 September  2008	Unaudited  26 weeks to  29 September  2007		Audited  52 weeks to  29 March  2008
	United Kingdom	54,363	51,704	109,253	121,269	109,068		228,090
	United States of America	55,753	50,651	103,013	62,736	56,105		115,932
	Mainland Europe	63,957	48,516	107,883	43,791	26,617		61,709
	Asia Pacific and Australasia	26,306	19,301	42,859	11,475	9,331		19,422
	Africa, Near and Middle East	13,717	11,724	22,136	-	-		-
	Other countries	7,608	4,274	9,917	-	-		-
	Inter-segmental sales	-  _______	-  _______	-  _______	(17,567) _______	(14,951) _______		(30,092) _______
	Continuing operations	221,704	186,170	395,061	221,704	186,170		395,061
	Discontinued operations (note 8)	-  _______	1,698  _______	2,894  _______	-  _______	1,698  _______		2,894  _______
	Group revenue	221,704  _______	187,868  _______	397,955  _______	221,704  _______	187,868  _______		397,955  _______
	Inter-segmental sales are charged at prevailing market prices

								£000
					Profit by origin
					Unaudited  26 weeks to  27 September  2008		Unaudited  26 weeks to  29 September  2007	Audited  52 weeks to  29 March  2008
	United Kingdom				19,615		17,406	37,608
	United States of America				10,926		11,002	22,710
	Mainland Europe				9,358	4,697		12,597
	Asia Pacific and Australasia				960  _______		1,000  _______	2,008  _______
	Operating profit from continuing operations before amortisation of acquired intangibles				40,859		34,105	74,923
	Discontinued operations (note 8)				-		205	436
	Net finance expense				(1,840) _______		(747) _______	(2,144) _______
	Group profit before amortisation of acquired intangibles				39,019		33,563	73,215
	Amortisation of acquired intangible assets				(3,399)		(1,968)	(4,757)
	Profit on disposal of operations before tax (note 8)				-		-	1,669
	Taxation				(10,021)  _______		(9,345)  _______	(19,843)  _______
	Profit for the period				25,599  _______		22,250  _______	50,284  _______

2	Basis of preparation
	The Half year report, which includes the Interim management report and Condensed financial statements for the 26 weeks to 27 September 2008, has not been audited or reviewed by the Group's auditors and was approved by the Directors on  27 November 2008. The report has been prepared in accordance with International Accounting Standard 34, applying the accounting policies and presentation that were applied in the preparation of the Group's statutory accounts for the 52 weeks to 29 March 2008. The figures shown for the 52 weeks to 29 March 2008 are based on the Group's statutory accounts for that period and do not constitute the Group's statutory accounts for that period as defined in section 240 of the Companies Act 1985. These statutory accounts, which were prepared under International Financial Reporting Standards, have been filed with the Registrar of Companies. They were unqualified and did not contain statements under sections 237(2) or (3) of the Companies Act 1985. The report has been prepared solely to provide additional information to shareholders as a body to assess the Board's strategies and the potential for those strategies to succeed. It should not be relied on by any other party or for any other purpose.

3	Taxation
	The total Group tax charge (including discontinued operations) for the 26 weeks to 27 September 2008 of £10,021,000  (26 weeks to 29 September 2007: £9,345,000; 52 weeks to 29 March 2008: £19,843,000) comprises a current tax charge of £10,516,000 (26 weeks to 29 September 2007: £9,195,000; 52 weeks to 29 March 2008: £19,688,000) and a deferred tax credit of £495,000 (26 weeks to 29 September 2007: charge of £150,000; 52 weeks to 29 March 2008: charge of £155,000).  The tax charge is based on the estimated effective tax rate for the year. The tax charge includes £6,580,000 (26 weeks to 29 September 2007: £5,227,000; 52 weeks to 29 March 2008: £10,046,000) in respect of overseas tax.

4	Earnings per ordinary share
	Basic earnings per ordinary share are calculated using the weighted average of 373,508,685 (September 2007: 372,554,066; March 2008: 372,769,853) shares in issue during the period (net of shares purchased by the Company and held as treasury shares). Diluted earnings per ordinary share are calculated using 374,816,680 (September 2007: 374,489,843; March 2008: 374,604,505) shares which includes dilutive potential ordinary shares of 1,307,995 (September 2007: 1,935,777; March 2008: 1,834,652). Dilutive potential ordinary shares are calculated from those exercisable share options where the exercise price is less than the average price of the Company's ordinary shares during the period. Adjusted earnings are calculated as earnings from continuing operations excluding the amortisation of acquired intangible assets after tax. The Directors consider that adjusted earnings represent a more consistent measure of underlying performance. A reconciliation of earnings and the effect on basic earnings per share figures is presented below:

			Unaudited  26 weeks to  27 September  2008  £000	Unaudited   26 weeks to  29 September  2007  £000	Audited  52 weeks to  29 March  2008  £000
	Earnings from continuing and discontinued operations		25,599	22,250	50,284
	Remove earnings from discontinued operations		-  _______	(133) _______	(1,950) _______
	Earnings from continuing operations		25,599	22,117	48,334
	Add back amortisation of acquired intangible assets after taxation		2,495  _______	1,263  _______	3,344  _______
	Adjusted earnings		28,094  _______	23,380  _______	51,678  _______
			Per ordinary share
			Unaudited  26 weeks to  27 September  2008  pence	Unaudited   26 weeks to  29 September  2007  pence	Audited  52 weeks to  29 March  2008  pence
	Earnings from continuing and discontinued operations		6.85	5.97	13.49
	Remove earnings from discontinued operations		-  _______	(0.03) _______	(0.52) _______
	Earnings from continuing operations		6.85	5.94	12.97
	Add back amortisation of acquired intangible assets after taxation		0.67  _______	0.34  _______	0.89  _______
	Adjusted earnings		7.52  _______	6.28  _______	13.86  _______

5	Ordinary dividends				Per ordinary share
					Unaudited  26 weeks to  27 September  2008  pence	Unaudited   26 weeks to  29 September  2007  pence			Audited  52 weeks to  29 March  2008  pence
	Amounts recognised as distributions to shareholders in the period
	Final dividend for the year to 29 March 2008 (31 March 2007)				4.55		4.33		4.33
	Interim dividend for the year to 29 March 2008				-  _______		-  _______		3.00  _______
					4.55  _______		4.33  _______		7.33  _______
	Dividends declared in respect of the period
	Interim dividend for the year to 28 March 2009 (29 March 2008)				3.15		3.00		3.00
	Final dividend for the year to 29 March 2008				-  _______		-  _______		4.55  _______
					3.15  _______		3.00  _______		7.55  _______

					Unaudited  26 weeks to  27 September  2008  £000	Unaudited   26 weeks to  29 September  2007  £000			Audited  52 weeks to  29 March  2008  £000
	Amounts recognised as distributions to shareholders in the period
	Final dividend for the year to 29 March 2008 (31 March 2007)				16,997		16,139		16,139
	Interim dividend for the year to 29 March 2008				-  _______		-  _______		11,190  _______
					16,997  _______		16,139  _______		27,329  _______
	Dividends declared in respect of the period
	Interim dividend for the year to 28 March 2009 (29 March 2008)				11,786		11,190		11,190
	Final dividend for the year to 29 March 2008				-  _______		-  _______		16,997  _______
					11,786  _______		11,190  _______		28,187  _______

6	Notes to the consolidated cash flow statement								£000
					Unaudited  26 weeks to  27 September  2008		Unaudited  26 weeks to  29 September  2007		Audited  52 weeks to  29 March  2008
	Reconciliation of profit from operations to net cash inflow from operating activities
	Profit from continuing operations before taxation				37,460		32,137		70,166
	Profit from discontinued operations before taxation				-		205		436
	Depreciation and amortisation of computer software				5,038		4,348		9,142
	Amortisation of capitalised development costs				1,295		810		1,981
	Amortisation of acquired intangible assets				3,399		1,968		4,757
	Share-based payment expense in excess of amounts paid				472		1,064		1,997
	Additional payments to pension scheme				(3,162)		(3,162)		(6,352)
	Profit on sale of property, plant and equipment and computer software				(27) _______		(498) _______		(1,186) _______
	Operating cash flows before movement in working capital				44,475		36,872		80,941
	Increase in inventories				(1,825)		(927)		(2,278)
	Decrease/(increase) in receivables				2,292		544		(9,605)
	(Decrease)/increase in payables				(7,172) _______		(5,232) _______		6,970  _______
	Cash generated from operations				37,770		31,257		76,028
	Taxation paid				(7,843) _______		(5,294) _______		(17,627) _______
	Net cash inflow from operating activities				29,927  _______		25,963  _______		58,401  _______

	Reconciliation of net cash flow to movement in net debt
	(Decrease)/increase in cash and cash equivalents				(6,606)		3,042		4,492
	Repayment/(drawdown) of borrowings				3,809		(2,300)		(37,796)
	Exchange adjustments				(742) _______		577  _______		(3,260) _______
					(3,539)		1,319		(36,564)
	Net debt brought forward				(44,275) _______		(7,711) _______		(7,711) _______
	Net debt carried forward				(47,814) _______		(6,392) _______		(44,275) _______

7	Acquisitions
	On 5 September 2008 the Group acquired the assets and liabilities of Fiberguide Industries, Inc, which, together with the aggregate of consideration, is summarised below. The contribution of the acquired business to the Group's revenue and profit before tax and amortisation of acquired intangible assets for the period was £299,000 and £35,000 respectively. If the acquisition had taken place at the beginning of the period it is estimated that Group reported revenue would have been £2,176,000 higher and profit before tax and amortisation of acquired intangible assets for the period would have been £221,000 higher. Adjustments have been made to the book value of the net assets of the company to reflect their provisional fair value to the Group. The allocation of goodwill is also provisional since certain elements of the purchase consideration are conditional on future profitability.
									£000
									Unaudited  26 weeks to  27 September  2008
					Book value		Fair value  adjustments		Total
	Non-current assets
	Intangible assets				-		5,147		5,147
	Property, plant and equipment				677		-		677
	Current assets
	Inventories				943		(172)		771
	Trade and other receivables				653  _______		(1) _______		652  _______
	Total assets				2,273		4,974		7,247
	Current liabilities
	Trade and other payables				(240) _______		(163) _______		(403) _______
	Net assets of business acquired				2,033  _______		4,811  _______		6,844  _______
	Cash consideration, including costs								8,174
	Deferred purchase consideration								496  _______
	Total consideration								8,670  _______
	Goodwill arising on current period acquisition								1,826
	Goodwill arising on prior period acquisitions								(1,640) _______
	Goodwill arising on acquisition								186  _______
	The adjustment to goodwill arising on prior period acquisitions relates mainly to additional fair value adjustments on the acquisition of PP Medizintechnik GmbH and its subsidiaries (including Rudolf Riester GmbH & Co. KG), and a revision to the estimated deferred purchase consideration on the acquisition of Tritech International /System Technologies. On 24 November 2008 the Group acquired the Golden, Colorado business, assets and liabilities of Oerlikon Optics USA Inc for cash consideration of $6,025,000 (£3,990,000). Due to the proximity of the acquisition date to the date of approval of the Half year report, it is impracticable to provide further information.

8	Discontinued operations
	The discontinued operations relate to Post Glover Lifelink, Inc (PGL) which is incorporated in the USA and formed part of the Health and Analysis sector. PGL was sold in January 2008 for gross proceeds of £3,035,000 which resulted in a profit on disposal before and after taxation of £1,669,000. At the date of disposal PGL had net assets of £1,005,000. There were no transactions associated with PGL in the 26 weeks ended 27 September 2008. The revenue associated with PGL in the 26 weeks ended 29 September 2007 was £1,698,000 (52 weeks ended 29 March 2008: £2,894,000); the operating profit in the 26 weeks ended 29 September 2007 was £205,000 (52 weeks ended 29 March 2008: £436,000); and the profit after taxation in the 26 weeks ended 29 September 2007 was £133,000 (52 weeks ended 29 March 2008: £281,000). The comparatives to 29 September 2007 as previously reported have been amended to reflect the transfer of these amounts to discontinued operations.

9	Non-GAAP measures
	Organic growth Organic growth measures the change in revenue and profit from continuing Group operations. The effect of acquisitions made during the current or prior financial period has been equalised by subtracting from the current period results a pro-rated contribution based on their revenue and profit at the date of acquisition.
													£000
				Unaudited  26 weeks to  27 September  2008			Unaudited  26 weeks to  29 September  2007				Audited  52 weeks to  29 March  2008
	Return on capital employed
	Operating profit from continuing operations before amortisation of acquired intangibles					40,859				34,105			74,923
	Operating profit from discontinued operations in prior period before amortisation of acquired intangibles					-  _______				205  _______			-  _______
	Operating return					40,859  _______				34,310  _______			74,923  _______
	Computer software costs within intangible assets					2,521				1,675			1,911
	Capitalised development costs within intangible assets					8,784				7,380			8,240
	Property, plant and equipment					59,930				50,287			57,452
	Inventories					47,879				39,789			44,267
	Trade and other receivables					98,366				81,225			99,741
	Trade and other payables					(62,928)				(55,935)			(69,420)
	Tax liabilities					(10,977)				(9,936)			(8,273)
	Non-current trade and other payables					(2,670)				(2,538)			(2,874)
	Add back retirement benefit accruals included within payables					1,595				2,579			2,087
	Add back accrued deferred purchase consideration					603  _______				2,830  _______			1,189  _______
	Capital employed					143,103  _______				117,356  _______			134,320  _______
	Return on capital employed (annualised)					57.1%  _______				58.5%  _______			55.8%  _______
	Return on total invested capital
	Post-tax profit from continuing operations before amortisation of acquired intangibles					28,094				23,380			51,678
	Post-tax profit from discontinued operations in prior period before amortisation of acquired intangibles					-  _______				133  _______			-  _______
	Return					28,094  _______				23,513  _______			51,678  _______
	Total shareholders' funds					243,244				213,093			239,104
	Add back retirement benefit accruals included within payables					1,595				2,579			2,087
	Add back retirement benefit obligations					48,804				34,703			35,957
	Less associated deferred tax assets					(13,665)				(9,717)			(10,069)
	Cumulative amortisation of acquired intangible assets					13,597				7,316			10,112
	Goodwill on disposals					5,441				5,441			5,441
	Goodwill amortised prior to 3 April 2004					13,177				13,177			13,177
	Goodwill taken to reserves prior to 28 March 1998					70,931  _______				70,931  _______			70,931  _______
	Total invested capital					383,124  _______				337,523  _______			366,740  _______
	Return on total invested capital (annualised)					14.7%  _______				13.9%  _______			14.1%  _______

10	Other matters
	Seasonality The Group's financial results have not historically been subject to significant seasonal trends. Equity and borrowings Issues and repurchases of Halma p.l.c.'s ordinary shares and drawdowns and repayments of borrowings are shown in the Consolidated cash flow statement. Related party transactions There were no significant changes in the nature and size of related party transactions for the period to those reported in the Annual report and accounts for the 52 weeks to 29 March 2008. Events after the balance sheet date On 24 November 2008 the Group acquired the Golden, Colorado business, assets and liabilities of Oerlikon Optics USA Inc for $6,025,000 (£3,990,000).

Cautionary note The Half year report contains certain forward-looking statements which have been made by the Directors in good faith using information available up until the date they approved the report. Forward-looking statements should be regarded with caution as by their nature such statements involve risks and uncertainties relating to events and circumstances that may occur in the future. Actual results may differ from those expressed in such statements, depending on the outcome of these uncertain future events.

 

END

 

 

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