Final Results

Halma PLC 19 June 2001 HALMA p.l.c. PRELIMINARY RESULTS FOR THE YEAR TO 31 MARCH 2001 19 JUNE 2001 Halma p.l.c., the leading safety and environmental technology group, today announced its results for the year to 31 March 2001. Highlights include: + Another record result, with sales up 15% to £268 million and profits before taxation* rising by 14% to £49.7 million + Organic growth of 12% + 48% return on capital employed + Free cash flow, after funding capital expenditure, working capital and tax, of £33 million + Net margin on sales exceeds 17% for the ninth consecutive year + Earnings per share* increases by 13% to 9.52p + Total dividend for the year of 4.593p, a 15% increase + The acquisitions of Wessex Electronics and Fire Fighting Enterprises further strengthened Halma's technology base; the integration of both businesses is complete + Continuous innovation driven by record levels of R&D * Before goodwill amortisation and exceptional items Commenting on the results, Stephen O'Shea, Chief Executive of Halma, said: 'The Group creates and markets unique products that save lives and protect health. There is a growing need for these products and demand expands as ever-increasing levels of public safety are required by governments all round the world. 'Our long-term record of high levels of free cash flow and high levels of return on investment provides us with opportunities to produce strong organic growth based on investment in unique intellectual assets. The stability and self-reliance of our company, and the way it is organised enable us to build and sustain high market shares in growing market sectors, many of which are relatively insensitive to consumer demand. The Group has improved its focus on these areas in the last year and is well positioned to grow strongly in the market sectors that we have chosen so carefully.' For further information, please contact: Stephen O'Shea, Chief Executive +44 (0)1494 721111 Kevin Thompson, Finance Director +44 (0)1494 721111 Hogarth Partnership +44 (0)20 7357 9477 Rachel Hirst/Andrew Jaques A copy of this announcement, together with other information about Halma, may be viewed on its website: www.halma.com A copy of the Annual Report and Accounts will be sent to shareholders on 2 July 2001 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. NOTE TO EDITORS Halma p.l.c. develops products used worldwide to enhance safety and to minimise hazards. The Group comprises six business groups: * 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 and Specialist technology The key characteristics of Halma's businesses are that they are based on advanced technology and offer strong growth potential. Each business group is a clear market leader in its specialist field and, in a number of cases, is the dominant world supplier. Group Results for the 52 weeks to 31 March 2001 Financial Highlights Turnover + 15% to £268 million Overseas sales + 21% to £182 million Profit before taxation* + 14% to £49.7 million Earnings per share * + 13% to 9.52p Dividends + 15% to £16.6 million Net margin on sales * 18.5% Return on capital employed ** 48.3% * Before goodwill amortisation and exceptional items ** Return on capital employed is defined as profit before taxation* expressed as a percentage of net tangible assets Financial Overview Pre-tax profits increased to £49.7 million, a 14% increase over the preceding year. Sales increased by 15% to £268 million. Overseas sales increased by 21% and now make up 68% of total Group sales. Earnings per share, before amortisation of goodwill and before exceptionals, increased by 13%, and assets per share increased by 14%. Each of the absolute figures referred to above represents a new record for the Group. Chief Executive's Review Stephen O'Shea, Chief Executive of Halma, said: 'I am pleased by the way our operating management teams have grasped the opportunities available to them and created new opportunities this year. They have achieved results which have exceeded market expectations, accelerating the Group's progress to make record sales of £268 million (15% increase over the previous record) and record profits before tax of £49.7 million (14% increase over the previous record). Every one of our business groups increased profits over last year. 'Success with a number of new products and the benefits from our recent strengthening of focus by moving from geographical to product-centred management has led to strong organic growth. Within the 14% overall profit increase 2% came from businesses acquired during 2000/2001 and a further 4% from businesses acquired during the previous year. The remaining 8% increase therefore is pure organic growth. We are able to grow acquisitions because of our stronger market positions, our wider routes to market, our ability to identify and invest in successful new products and our powerful and well proven management methods. All the growth has been entirely self-funded from cash generated within our businesses as a result of the remarkably high return on capital employed that we continuously achieve. 'One-third of sales and profits originate in the USA. Sales and profits have been growing strongly, and we consider that - even if there were to be a decline in consumer spending - there are continuing opportunities for growth in this market. These include the recovery in petrochemical markets, the opportunities arising from increased power generation capacity in the USA, our increasing exports from the USA, strengthening of safety legislation and the range of new products we are bringing to customers. 'Fire and Gas sales moved ahead by 13%, primarily from new products introduced recently. All British Gas technicians are now equipped with our new safety and boiler efficiency monitoring instruments. We also benefited from bringing the products of our recent acquisition, Fire Fighting Enterprises, to wider world markets. One element of our long-term value creation strategy is to build our influence over the market by producing a stream of new products, some relevant to a small group of customers, others that will be offered worldwide. This is an important tool in long-term customer retention. 'Sales of Elevator Electronics grew as the sector's market-leading position was reinforced. Research and development investment was increased to achieve two objectives. Firstly, equipment that is strong in local markets has been developed into world compatible products. An example of this would be the range of American style emergency telecommunications that has been developed to meet new European requirements. In addition, we are developing novel techniques to satisfy existing elevator safety applications. 'The Resistor business had an outstanding year. Excellent results were achieved, partly from a particularly successful integration of the Cutler-Hammer resistors operation we purchased in March 2000, but primarily from organic growth. This is likely to continue. Business with the major US train operating companies slowed. However, this was outweighed by organic growth arising from the early stages of the increased spend in the USA on power generation equipment. A major part of our sales in this sector is maintenance and replacement resistors for existing applications. 'Within our ophthalmic Optics and Specialist technology business, the equipment for ophthalmic surgeons and optometrists produced by Keeler has been a source of increased profits. Several new products that help the surgeon in carrying out laser treatments for eye disorders were launched. We have shortened our routes to market by closing our distribution business in Singapore such that sales are now made by the originating companies. 'In the Water sector our strength in the measurement and reduction or elimination of drinking water losses has been reinforced. We believe we now have the best range of products for this purpose in the world. This has been built up using innovative product development, supplemented by judicious acquisitions. Hydreka, bought in March 2000, is an example of this. As a result of joining the Group, it offers a new extended and improved range of products that is now being supplied to the French-located and French-managed water utilities worldwide. The sector is one of many examples of management both improving the focus of the Group and the proportion of electronic products we sell. Our water sterilisation operation made record profits. 'Our Process Safety business is developing well, with a 16% increase in profits. We continue to increase the market overall in sequential locking systems, a market which we dominate around the world. A large number of industries are supplied, and there is therefore some sensitivity to worldwide industrial capital expenditure. Our network encompasses production and service facilities in the UK, France, Holland, the USA and Australia. We have brought a pleasing number of new products to market which provide emergency pressure relief. Pharmaceutical and chemical companies experience safety related plant shutdowns and in the USA we are capturing new customers in these industries by providing a unique fast track service for vital safety components. 'The Group creates and markets unique products that save lives and protect health. There is a growing need for these products and demand expands as ever-increasing levels of public safety are required by governments all round the world. Our long-term record of high levels of free cash flow and high levels of return on investment provides us with opportunities to produce strong organic growth based on investment in unique intellectual assets. The stability and self-reliance of our company, and the way it is organised enable us to build and sustain high market shares in growing market sectors, many of which are relatively insensitive to consumer demand. The Group has improved its focus on these areas in the last year and is well positioned to grow strongly in the market sectors that we have chosen so carefully.' Finance Director's Review Kevin Thompson, Finance Director of Halma, said: 'Turning profits into cash through a strong focus on the management of working capital provides flexibility and finances growth. The Group has considerable success in this area but there is more that can be done. Free cash flow (the cash left over from our operating activities after funding capital expenditure, working capital and tax) was £33 million in the year. Dividends financed from this high cash flow increased by a further 15% and the Group once again finished the year with net cash. 'EBITDA is a key cash-related performance indicator and on this measure the Group grew by 14% to a figure of £57 million. 'Product innovation is a key driver of Halma's growth. Expenditure on research and development increased at a faster rate than turnover growth and now represents 3% of turnover. Investment in research and development in the Elevator Electronics business group doubled in the year. '£12 million was spent on acquisitions in the year bringing new Intellectual assets into the Group and further strengthening the technology base. 'The effective rate of tax on profit before goodwill amortisation was 30.9%, slightly above last year's figure. We expect this rate to increase in 2001/ 2002, partly due to the effect of an increasing proportion of profits earned in higher tax jurisdictions. Cash paid out for tax was below last year as the UK rules which accelerated these payments have a much reduced impact this year. 'Strong controls throughout the Group operating companies underpin the commercial freedom and entrepreneurial approach which generates Halma's exceptional returns. We consider it to be essential that such controls are embedded within the organisation. The Group culture is one of openness, honesty and accountability. We will report full compliance with the Turnbull guidelines which focus on the area of internal control and the identification, evaluation and management of significant risks. 'Return on capital employed calculated using pre-tax profits and including all historic goodwill is again over 20%, a figure which is broadly double any reasonable calculation of the Group's cost of capital. This highlights the Group's ability to generate substantial economic profit year after year.' Chairman's Review David Barber, Chairman of Halma, said: 'Following the 15% increase in the interim dividend, the Directors recommend an increase of 15% in the final dividend per share. The total dividend is covered 2.1 times by profit before amortisation of goodwill and exceptionals but after taxation. If approved, this dividend, amounting to 2.787p per share, will be paid on 20 August 2001 to shareholders on the register at the close of business on 20 July 2001. 'The Halma Group has continued to improve and refine what was already a very strong and competitive organisation. I believe that this ongoing strength will serve us well during the current year and I remain very confident of the Group's long-term growth prospects.' Operating Review Fire and Gas Apollo and Crowcon are two of Halma's world-class businesses whose fire and gas sensing products and customer service are industry benchmarks in many international markets. Record sales figures for all companies selling fire detection products have enhanced the Group's reputation as a major international supplier in the fire safety market. Sales to the USA reached record levels accounting for 20% of total fire products turnover. Fire Fighting Enterprises was acquired in October 2000 extending the Group's portfolio of fire protection technologies. This company is a world leader in infrared beam smoke detectors that monitor large open areas, such as warehouses. Its products are entirely complementary to Apollo's and the two companies benefit from shared market intelligence and collaborative marketing. An important factor affecting growth potential, in both the fire and gas hazard sectors, is the adoption of increasingly proscriptive safety legislation. A number of Group employees sit on the standards committees that advise legislators on health and safety regulations. Close monitoring of the drafting and implementation of new legislation enables the Group to introduce products and services that exactly match the needs of customers having to comply with changing safety laws. For example, in a growing number of countries, legislation is being enacted that protects workers from gas hazards in confined spaces such as tunnels. A trend in industrial hazard sensing is that customers are becoming increasingly responsive to benefits from new technology and software. As a result, fire and gas detector product life cycles are becoming shorter. The Group's continued success in fire and gas detection markets benefits from skilful investment in research and development to produce a constant stream of new and improved products. Over the past twelve months 30 new fire and gas products have been launched. A new system for monitoring fire and toxic or flammable gases, called Vortex, was launched mid-year. This has sophisticated digital controls and special features for operation in arduous conditions. High demand for this type of fixed gas detection system from the oil and gas industry gave second half sales a boost at Crowcon with significant orders from Nigeria, India and several Middle East countries. Carbon monoxide is a dangerous gas produced in homes by faulty heaters. British Gas service engineers are now equipped with 8,000 of our state-of-the-art instruments that optimise fuel efficiency, minimise pollution and greatly reduce the risk of carbon monoxide poisoning. Perma Pure is developing a strong position in the US fuel cell market where its gas treatment products regulate the amount of moisture in fuel gases. Fuel cells are widely predicted to become an important way of generating electricity in the future. The Group is working with the leading makers of residential fuel cell power generators. Patents will protect the Group's research in this area as it becomes commercially significant. Group sales of fire and gas detectors extend across the world with exports now accounting for approximately half the turnover. This provides some protection from national or regional downturns. However, the Group's competitive advantage from market leadership, combined with its ability to innovate and rapidly turn new technical ideas into practical products, should ensure continued profit growth. Water Halma recognised many years ago that global economic development, climate change and population increase would inevitably put water resources under pressure. A recent report revealed water shortages in 400 out of China's 668 cities, and even in the USA, Washington State has been declared a drought zone. To help meet constantly rising international demand for clean water, and also greater regulation of drinking water quality and wastewater discharges, the Group has developed core competencies in water treatment, conservation and testing. Halma's water technology businesses are world leaders in their specialist fields. Following the acquisition of Hydreka and Wessex, the Group now offers water utilities a comprehensive range of analysis technologies for conserving water in distribution networks. Water pipe networks can be audited to measure losses, and leaks can be located and pinpointed using unique instruments. In its first year within the Group, Hydreka delivered record sales and profits exceeding expectations at acquisition. The considerable research and development investment that led to Palmer Environmental's revolutionary Permalog system for identifying leaking water pipes produced an excellent return in the year under review. An evaluation by water utility Severn Trent showed that leak surveying with Permalog was eight times faster than before and they placed a second order worth over £2m. Thames Water also trialed Permalog and placed significant orders. Permalog is now being marketed overseas, already producing substantial sales in Spain and Hong Kong. New applications for the disinfecting power of ultra-violet light (UV), such as treatment of packaging to extend the shelf life of food, are continually being developed. The Group now supplies this type of UV equipment to the top three American makers of food packing machinery. Industries operating at the leading edge of applied science, such as electronics and pharmaceuticals, need extraordinarily pure water supplies. Pharmaceutical production processes, for example, require ultra-pure water with less than one part per billion of contamination, otherwise yields drop and costs rise. Halma companies have developed UV water treatment systems that meet these exacting requirements. Hanovia's technical pre-eminence in this area was recognised by the grant of a Queen's Award For Innovation for its development of SuperTOC(R). This is a unique technology that removes contaminants from ultra-pure water used in electronics manufacture. This product is now being evaluated in the USA and Canada for removal of industrial pollutants that contaminate drinking water. Both Aquionics and Hanovia achieved record sales and profits in the past year. Elevator Electronics Halma has become the world's leading manufacturer of electronic elevator safety products through a combination of organic growth and strategic acquisition to fill technology gaps or gain market presence. Today, the Group meets half of the global demand for infrared door sensors and emergency telecommunications networks for elevators. The Group's principal products in this sector are infrared sensors that stop doors from closing onto passengers, emergency voice communications systems and visual displays. Halma is constantly seeking new ways of applying electronics technology to elevators to make them safer, more secure and more reliable. The rate of new building construction worldwide is a primary demand driver for elevator safety devices. However, the buoyancy of the commercial property rental market is also very important. This is because owners of high-rise residential and office buildings upgrade facilities like elevators to compete for occupancy and to maximise rent income. Generally, both new build and refurbishment markets are continuing to grow. In many countries Group sales continue to benefit from increasing legislation designed to improve public and worker safety. In some markets disability access legislation also drives demand. This is particularly true of the impact of the 'Americans with Disabilities Act' on building codes in the USA. Management reorganisation has further integrated the Group companies operating in the elevator safety sector. This has enabled the companies to gain extra benefits from the synergy between their businesses. Mutual benefits are being achieved through co-ordinated selling activity to shared international customers, joint marketing activities, sharing market intelligence and increased inter-company sales. Sales in this sector moved ahead by 22%. Halma's elevator product companies invested heavily in research and development in the year. The principal focus has been to bring new technology to market and to transform products that are already successful in one market into world-class products with global impact. E-Motive and Electronic Micro Systems have used this technique to build new routes to world markets. Memco maintained its position as world leader in elevator door safety systems, achieving record turnover in the past year. A new sales office in Funabashi reinforced the Group's status as market leader in Japan. The growth in high-rise building construction in China, and other parts of Asia, is so rapid that this zone may soon represent 50% of total world elevator sales. A third sales office now established in China should strengthen the Group's dominance in the world's fastest growing elevator market. Process Safety Halma companies specialising in process safety are international leaders in the field of industrial safety and security. Group subsidiaries manufacture and distribute engineered products designed to eliminate the risks associated with hazardous machinery or manufacturing processes. The Group focuses on two core sectors of the industrial safety products market: sequential locking control systems, known as interlocks, and bursting discs. Both of these technologies protect workers from injury, prevent damage to capital plant and safeguard the environment. Halma companies are clear world leaders in sequential locking systems. Demand in this sector is influenced partly by the growth rate of industrial capital investment, but more significantly from wider adoption of worker safety legislation. Castell is the world leader in interlock products for machinery safety. In the past year it benefited from the continuous improvement in health and safety standards, with rising demand from machinery exporters in Southern Europe. The likelihood of more countries joining the EU and having to operate within its regulatory framework should drive European demand for industrial safety systems forward in the short-to-medium term. Following the stabilisation of oil prices in the second half, petrochemicals capital spending resumed. This has improved sales opportunities for Smith Flow Control, the world leader in valve control safety technology. As international oilfield projects are being brought to the construction stage demand for this company's safety systems is growing. Last year's market-focused management reorganisation unified the Group's interlock businesses. A co-ordinated bid centred on Fortress' unique modular safety products, helped the Group win significant orders in the USA from Ford at its Dearborn, Michigan, engine design centre. In France, both H F Securite and SERV won large orders for safety control equipment for high-speed TGV railway projects in South Korea and Spain, and tramways in six French cities. Oseco had an excellent year reporting record sales and profits. A new range of patented bursting discs was launched. These are designed to meet growing demand for this type of safe pressure control equipment in the biotechnology and pharmaceutical industries. A new sales office in Singapore is already profitable and enables the Group to sell into the growing SE Asia petrochemicals sector. Resistors Industry needs high power resistors to safely absorb excess electrical power. Power resistors also help maintain a continuous electricity supply even when faults occur in the power distribution network. Halma's position as a leading international supplier of high power resistor systems was reinforced by strong organic growth that produced record sales and profits in the past year. The Group also extended its customer base and enhanced its portfolio of resistor technologies through the acquisition of Cutler-Hammer in March 2000. This business, which had facilities in the USA, the UK and Canada, was successfully integrated into the Group's resistor companies in those three countries in the first half of the year. The key growth drivers in this sector during the past year were: increased competitiveness resulting from further integration of the separate businesses; electricity supply problems in a key market; and the imaginative adaptation of existing technologies to satisfy new customer needs. An integrated management structure and co-ordinated marketing provides Halma's US, Canadian, UK and Australian resistor businesses with a global presence in this sector that helps develop long-term relationships with multinational customers. Customers benefit from a partnership with a unified business possessing unrivalled international application experience and understanding of materials technology. At the same time, local manufacturing maintains the ability to satisfy unique regional demands. Rapid changes are occurring in the electric power industry, particularly in America. In California, for example, demand has recently exceeded supply causing power blackouts. The problem stems from escalating power costs combined with deregulation of the energy industry. This power crisis has created new sales opportunities that the Group's resistor companies have been quick to exploit. Many American businesses can no longer take electric power availability and reliability for granted. This has created rising demand for resistor systems that allow electrical equipment to operate even if power supplies vary in quality. The growing reliance on emergency power generators also creates demand for resistor systems. This trend benefited Post Glover which was very successful at selling equipment designed to safeguard power continuity into the internet and telecommunications sectors. Because the Group has a broader portfolio of power resistor technologies than any other supplier, it can enter new markets faster and solve new customer needs more effectively than most competitors. Considerable opportunities exist for increasing resistor sector profit from growth in existing markets, materials and technology advances and new applications. Significant global markets such as power generation/transmission and passenger trains will see increased capital investment for the foreseeable future and the Group is well placed to meet the evolving needs of energy utilities and train operators worldwide. Optics and Specialist The Group's Keeler business, which has its main operations in the UK and USA, makes and sells instruments for opticians and ophthalmologists. An integrated approach to international sales and marketing combined with effective pooling of technical and sales resources delivered a substantial profit increase in this sector. The USA showed most growth with instrument sales rising by 36%. A combination of advanced new products, sales growth from further integration, and a focus on capital employed should deliver further profit growth. Volk is a world leader in the manufacture of specialist lenses used by ophthalmologists. Last year the company applied its unique lens-making technology to a new series of lenses for the diagnosis and treatment of glaucoma. This is a common eye disorder that can cause blindness. Compared to competitors' plastic lenses, Volk's new glass lenses deliver clearer images for diagnosis and greater precision when used in laser treatment. The sales and profits from the Group's Singapore sales office, which marketed Group products to South East Asia, were redistributed back to its principals as part of a worldwide product group reorganisation completed this year. Klaxon performed strongly and won significant orders for a special type of safety sounder it has developed for fitting on the outside and interior of train carriages. These sounders, which tell blind people when train doors are opening and closing, are a new requirement of disability access legislation in the UK. The buoyancy of the US life sciences instrumentation market provided sales opportunities for Omnifit and also for Bio-Chem Valve which reported record profits and sales of its miniature, high precision valves. Life science research is a primary growth market for these companies because it demands components of the very highest technical quality and reliability. Preliminary Results for the 52 weeks to 31 March 2001 Consolidated Profit and Loss Account £000 52 weeks to 31 March 2001 Before 2000 goodwill Goodwill 52 amortisation amortisation Total weeks Total Turnover 268,322 - 268,322 233,485 ======= ======= ======= ======= Operating profit before goodwill amortisation 49,703 - 49,703 43,419 Goodwill amortisation - (1,964) (1,964) (1,283) _______ _______ _______ _______ Operating profit 49,703 (1,964) 47,739 42,136 Exceptional items Costs of closure and sale of - - - (3,036) businesses Related goodwill adjustment - - - (4,732) _______ _______ _______ _______ Loss on closure and sale of - - - (7,768) businesses _______ _______ _______ _______ 49,703 (1,964) 47,739 34,368 Interest (5) - (5) 332 _______ _______ _______ _______ Profit on ordinary activities before taxation 49,698 (1,964) 47,734 34,700 Taxation (note 2) (15,379) 448 (14,931)(12,693) _______ _______ _______ _______ Profit for the financial year 34,319 (1,516) 32,803 22,007 _______ _______ _______ _______ Dividends Preference dividends - (21) Ordinary dividends (note 3) (16,580)(14,413) _______ _______ (16,580)(14,434) _______ _______ Profit transferred to reserves 16,223 7,573 ======= ======= Earnings per ordinary share before goodwill amortisation and exceptional items 9.52p 8.41p Earnings per ordinary share 9.10p 6.08p Diluted earnings per ordinary 9.08p 6.07p share Consolidated Balance Sheet £000 31 March 2001 1 April 2000 Fixed assets Intangible assets 42,006 35,784 Tangible assets 44,754 42,214 _______ _______ 86,760 77,998 Current Assets Stocks 40,129 35,842 Debtors 69,713 64,629 Cash and short-term deposits 21,484 21,900 _______ _______ 131,326 122,371 _______ _______ Creditors: amounts falling due within one year Borrowings 7,758 14,700 Dividends payable 10,062 8,730 Current taxation 10,224 8,355 Creditors 43,432 38,728 _______ _______ 71,476 70,513 _______ _______ Net current assets 59,850 51,858 _______ _______ Total assets less current liabilities 146,610 129,856 Creditors: amounts falling due after one year 1,730 4,317 _______ _______ 144,880 125,539 ======= ======= Capital and reserves Called up share capital 36,099 35,994 Share premium account 1,623 1,096 Other reserves 185 422 Profit and loss account 106,973 88,027 _______ _______ Shareholders' funds 144,880 125,539 ======= ======= Statement of Total Recognised Gains and Losses £000 52 weeks to 52 weeks to 31 March 2001 1 April 2000 Profit for the financial year 32,803 22,007 Other recognised gains and losses Exchange adjustments 3,243 (483) Related corporation tax (757) (6) _______ _______ 2,486 (489) _______ _______ Total recognised gains and losses 35,289 21,518 ======= ======= Movements in Shareholders' Funds £000 52 weeks to 52 weeks to 31 March 2001 1 April 2000 Profit for the financial year 32,803 22,007 Dividends (16,580) (14,434) _______ _______ Profit transferred to reserves 16,223 7,573 Total other recognised gains and losses 2,486 (489) Net proceeds of shares issued 632 252 Cancellation and repayment of preference shares - (656) Purchase of own shares - (2,032) Goodwill adjustment on closure and sale of - 4,732 businesses _______ _______ Increase in shareholders' funds 19,341 9,380 Shareholders' funds brought forward 125,539 116,159 _______ _______ Shareholders' funds carried forward 144,880 125,539 ======= ======= Consolidated Cash Flow Statement £000 52 weeks to 52 weeks to 31 March 2001 1 April 2000 Cash flow from operating activities (note 4) 55,493 47,369 Return on investments and servicing of finance Interest received 713 1,107 Interest paid (700) (529) Preference dividends paid - (21) _______ _______ 13 557 Taxation Current taxation paid (14,489) (16,317) Capital expenditure Purchase of tangible fixed assets (9,441) (8,298) Sale of tangible fixed assets 1,161 1,118 _______ _______ (8,280) (7,180) Acquisitions and disposals Acquisition of businesses (12,128) (25,730) Cash and overdrafts acquired 144 377 Sale of businesses 95 1,107 Overdrafts sold - 313 _______ _______ (11,889) (23,933) Equity dividends paid (15,248) (12,977) _______ _______ 5,600 (12,481) Management of liquid resources Decrease in short-term deposits 3,189 10,509 Financing Issue of ordinary share capital 632 252 Purchase and repayment of shares - (2,688) (Decrease)/increase in loans (9,278) 6,257 _______ _______ (8,646) 3,821 _______ _______ Increase in cash (note 4) 143 1,849 ======= ======= Segmental Analysis £000 Geographical analysis By destination By origin 52 weeks to 52 weeks to 52 weeks to 52 weeks to 31 March 2001 1 April 2000 31 March 2001 1 April 2000 Turnover United Kingdom 86,491 82,758 167,586 154,262 United States of America 87,088 67,650 89,402 67,463 Europe excluding UK 51,887 45,525 19,771 17,582 Far East and Australasia 22,295 22,975 9,217 10,448 Africa, Near and Middle 9,124 6,517 - - East Other 11,437 8,060 3,480 2,798 Inter-segmental sales - - (21,134) (19,068) _______ _______ _______ _______ 268,322 233,485 268,322 233,485 _______ _______ _______ _______ Profit before taxation United Kingdom 29,844 27,600 United States of America 16,284 12,164 Other countries 3,575 3,655 _______ _______ 49,703 43,419 Goodwill amortisation (1,964) (1,283) Exceptional items - (7,768) Interest (5) 332 _______ _______ Profit on ordinary activities before taxation 47,734 34,700 _______ _______ Sector analysis Turnover Fire and Gas 69,218 61,299 Water 32,709 27,118 Elevator Electronics 33,009 27,150 Process Safety 36,050 31,293 Resistors 34,261 23,079 Optics and Specialist 64,004 64,627 Inter-segmental sales (929) (1,081) _______ _______ 268,322 233,485 _______ _______ Profit before taxation Fire and Gas 14,803 12,345 Water 7,835 7,423 Elevator Electronics 6,092 6,078 Process Safety 6,369 5,476 Resistors 5,183 3,554 Optics and Specialist including holding companies 9,421 8,543 _______ _______ 49,703 43,419 Goodwill amortisation (1,964) (1,283) Exceptional items - (7,768) Interest (5) 332 _______ _______ Profit on ordinary activities before taxation 47,734 34,700 _______ _______ Notes on the Preliminary Announcement 1 Basis of Preparation The above results for the 52 weeks to 31 March 2001 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 52 weeks to 1 April 2000, except for the adoption of accounting standards applicable since that date. 2 Taxation £000 52 weeks to 52 weeks to 31 March 2001 1 April 2000 UK corporation tax at 30% (2000:30%) 9,724 8,890 Overseas taxation 5,321 3,878 _______ _______ 15,045 12,768 Adjustments in respect of prior years (114) (75) _______ _______ 14,931 12,693 _______ _______ The prior year UK corporation tax is stated net of a tax credit of £ 14,000 and the prior year overseas taxation is stated net of a tax credit of £634,000 in respect of the exceptional item. On a full potential liability basis the unprovided deferred taxation in respect of the year would be a credit of £45,000 (2000: charge of £ 43,000). 3 Ordinary dividends 52 weeks to 52 weeks to 52 weeks to 52 weeks to 31 March 1 April 31 March 1 April 2001 2000 2001 2000 p p £000 £000 Interim paid 1.806 1.570 6,517 5,679 Final proposed 2.787 2.423 10,062 8,730 Balance of final - - 1 4 dividend _______ _______ _______ _______ 4.593 3.993 16,580 14,413 _______ _______ _______ _______ If approved at the Annual General Meeting, the final dividend for 2001 will be paid on 20 August 2001 to shareholders on the register at the close of business on 20 July 2001. 4 Notes on cash flow statement £000 52 weeks 52 weeks to to 31 March 1 April 2001 2000 Reconciliation of operating profit to net cash inflow from operating activities Operating profit 47,739 42,136 Depreciation 7,022 6,252 Goodwill amortisation 1,964 1,283 Loss on sale of tangible fixed assets 90 11 Increase in stocks (2,348) (878) Increase in debtors (1,385) (1,155) Increase in creditors 2,411 249 Net cash flow relating to exceptional items - (529) _______ _______ Net cash inflow from operating activities 55,493 47,369 _______ _______ Reconciliation of net cash flow to movement in net cash Increase in cash 143 1,849 Decrease in liquid resources (3,189) (10,509) Short-term deposits acquired 861 409 Loans acquired - (604) Cash outflow/(inflow) from loans 9,278 (6,257) Exchange adjustments (567) 148 _______ _______ 6,526 (14,964) Net cash brought forward 7,200 22,164 _______ _______ Net cash carried forward 13,726 7,200 _______ _______ Ends

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