Interim Results
Halma PLC
29 November 2007
HALMA p.l.c.
HALF YEAR REPORT FOR THE 26 WEEKS TO 29 SEPTEMBER 2007
29 NOVEMBER 2007
Fifth successive half year of strong organic growth
Halma, the leading safety, health and sensor technology group, today announces its half year results for the 26
weeks to 29 September 2007.
Highlights include:
• Fifth successive half year of strong organic growth* despite an adverse currency headwind.
Growth in all three business sectors and across all major geographic regions.
• Revenue from continuing operations up 12% to £187.9 million (2006/07: £167.5 million),
including 8% organic growth*. On a constant currency basis, organic revenue growth was 11%.
• Pre-tax profit from continuing operations** up 10% to £33.6 million (2006/07: £30.6 million),
including 5% organic growth*. On a constant currency basis, organic profit growth was 8%.
• Strong margins and returns maintained, with return on sales of 17.9% (2006/07: 18.3%), ROTIC*
of 13.9% (2006/07: 13.3%) and ROCE* of 58.5% (2006/07 59.0%).
• 5% increase in interim dividend reflects the Board's confidence in Halma's long-term growth
prospects whilst continuing to improve dividend cover.
• Acquisition of Sonar Research & Development further strengthens Halma's market leading position
in subsea applications. Substantial resources available for further investment in innovation and growth.
• Encouraging growth in China reflects Halma's strategy of accelerated business development in
the region.
* 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 7
for details.
** Adjusted to remove the amortisation of acquired intangible assets of £2.0 million (2006/07
£1.5 million).
Commenting on the results, Andrew Williams, Chief Executive of Halma, said:
We have made good progress during the first half of the year, achieving record revenue and profits.
Halma's diverse and carefully selected market mix has enabled the Group to deliver consistently good
short-term performances whilst also investing in growth for the future. We remain positive about our
prospects for making further progress this year and in the medium term.
For further information, please contact:
Halma p.l.c. +44 (0)1494 721111
Andrew Williams, Chief Executive
Kevin Thompson, Finance Director
Hogarth Partnership Limited +44 (0)20 7357 9477
Rachel Hirst/Andrew Jaques
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 +44 (0)20 8205 0038, e-mail:
dwaller@halmapr.com.
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 halma@halma.com.
HALMA p.l.c.
Half year results for the 26 weeks to 29 September 2007
Financial highlights
Unaudited Unaudited
26 weeks to 26 weeks to
Change 29 September 30 September
2007 2006
Continuing operations
Revenue + 12% £187.9m £167.5m
Adjusted profit before taxation(1) + 10% £33.6m £30.6m
Statutory profit before taxation + 8% £31.6m £29.2m
Adjusted earnings per share(2) + 10% 6.31p 5.73p
Statutory earnings per share + 9% 5.97p 5.46p
Interim dividend per share + 5% 3.00p 2.85p
Return on sales(3) 17.9% 18.3%
Return on total invested capital(4) 13.9% 13.3%
Return on capital employed(4) 58.5% 59.0%
Pro-forma information:
(1) Adjusted to remove the amortisation of acquired intangible assets of £1,968,000 (2006/07:
£1,452,000).
(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 7 for details.
Chairman's statement
Geoff Unwin, Chairman of Halma, said:
The Board continues to remain confident in the prospects for the full year.
Results
For the first half, revenue from continuing operations increased 12% to £187.9 million (2006/07: £167.5 million)
and adjusted* profit before tax from continuing operations increased 10% to £33.6 million (2006/07: £30.6
million). Statutory profit before tax increased by 8% to £31.6 million. Organic revenue growth** was 8% and 11%
at constant currency. Organic profit growth** was 5%, 8% at constant currency. Return on total invested capital
** was 13.9% (2006/07: 13.3%).
We continue to invest strongly in products, people and market development. An example of the latter is a modest
acquisition in China to manufacture low cost gas detectors to service the Asia Pacific market and to provide
components for elsewhere. On 1 October 2007 we acquired Sonar Research & Development Limited which manufactures
solid-state sonars for subsea applications which will complement the product range of Tritech International, our
existing subsea asset monitoring company.
Dividends
The Board declares an interim dividend of 3 pence per share, an increase of 5% which will be paid on 6 February
2008 to shareholders on the register at 4 January 2008. 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 been solid. We are seeing good management development and it is pleasing to see
an increase in the number of internal promotions to subsidiary Boards throughout the Group.
We have a strengthening list of possible acquisition prospects and so far the current liquidity squeeze does not
seem to have reduced the potential M&A activity within our chosen markets.
Outlook
The Board continues to remain confident in the prospects for the full year.
* Before amortisation of acquired intangible assets.
** See Financial highlights.
Chief Executive's review
Andrew Williams, Chief Executive of Halma, said:
Consistently good short-term performance whilst investing in growth for the future.
Fifth successive half year of strong organic growth
We have made good progress during the first half of the year, achieving record revenue and profits. Overall
revenue growth of 12% and profit* growth of 10% was achieved despite a negative currency impact of 3% (mainly US
Dollar). Organic revenue growth** was 8% (11% at constant currency) and organic profit growth** was 5% (8% at
constant currency).
Double digit revenue growth was achieved in all major geographic regions with the exception of the US where
adverse currency movements reduced growth from 16% at constant currency to 7%. Overall market conditions were
steady, as were our product margins. The energy market niche, in particular, continued to offer strong
opportunities for growth.
Cash generation in the first half of the year was satisfactory. We ended the period with net debt of £6.4
million.
Encouraging progress in China; further small investments being made
Following the creation of our Halma China hubs last year, we are seeing promising results already with revenue to
China up 38% to £4.3 million (2006/07: £3.1 million). To boost our efforts further, small investments to
establish new local businesses in Infrastructure Sensors (Fire sub-sector) and Industrial Safety (Gas sub-sector)
should start to bear fruit as we move into next year. Actions to establish additional manufacturing facilities
in China for certain other Group companies during the second half are proceeding to plan.
Strong growth in Fire drives Infrastructure Sensors forward; major strategic actions in Security
Infrastructure Sensors increased revenue by 8% to £80.4 million and profit by 1% to £13.8 million - all organic
growth. Our Fire detection business delivered an exceptional performance, driven by a strategic move towards
becoming a total fire solutions business by successfully adding complementary products to our existing line of
detectors. The growth of our Fire detection business reduced the cost impact of implementing the planned
strategic actions in our Security business designed to position this sector for global expansion. Examples
include gaining new national and international product approvals and improving the efficiency of the UK
manufacturing base. The benefits of these changes should start to emerge during the second half of the year and
should make a tangible positive impact on the sectoral performance in the next financial year.
Health and Analysis makes solid progress; increased investment in selling and R&D
Despite taking the brunt of the US Dollar currency effects, Health and Analysis grew revenue by 12% to
£62.7 million and profits by 7% to £12.0 million. Product margins remained steady and investment in sales and R&
D resources was increased. Balancing the tension between adding additional resources to secure sustainable
growth and delivering consistent profit increases in the short term is a constant management focus in these
higher growth markets. In this context, I am pleased with the progress made in the year to date.
Industrial Safety continues to prosper in good market conditions
Industrial Safety delivered another excellent performance in good market conditions - especially for those
businesses selling into the oil, gas and petrochemical markets. Revenue grew by 23% to £45.0 million and profit
by 27% to £9.0 million. Our Safety interlock sub-sector is performing particularly well having sought, in recent
years, to develop new sales, product development and manufacturing strategies. Their continued success over a
long period within the Group is pleasing to see.
Investment in innovation and people development increases further
Our commitment to building a culture which encourages innovation and prioritises people development is stronger
than ever. R&D expenditure increased by 28% to £9.4 million, from 4.4% to 5.0% of revenue, thereby reducing the
Group's overall return on sales margin slightly. However, this investment is necessary to ensure that organic
growth is sustained.
The Halma Annual Innovation Award for 2007 was won by a team from Crowcon Detection Instruments who developed a
new flue gas analyser, called Sprint V, which is already being used extensively by British Gas. The runners-up
were Ocean Optics, who created a new market niche for their products in science education and Klaxon Signals, who
developed the new Nexus sounder beacons for industrial and fire alarm applications.
We continue to reap the benefits of increasing our investment in developing talent within the Group. Our ability
to identify and target resources to meet the fast-changing needs of our business has improved tremendously.
Since the start of the year, two Executive Board positions have been filled through internal promotion. Most
recently Allan Stamper, previously a Divisional Managing Director of our Gas detection business, replaced Andy
Richardson, who left the Group in early October.
Additional resources allocated to support more acquisitions
In October 2007, we added to our Industrial Safety sector by acquiring Sonar Research & Development Limited (SRD)
for £2.6 million. SRD will add new technology to our existing subsea asset monitoring business, Tritech
International, and benefit from their stronger market distribution.
At a Group level we have appointed two of our more experienced subsidiary executives to work alongside our
Divisional Chief Executives to ensure we can generate greater momentum in our acquisition activities, whilst
ensuring our efforts to sustain organic growth are also maintained. We have substantial resources available for
further investment in innovation and growth.
Risks and uncertainties
Geographic expansion increases the exposure of the Group to different accounting bases and business cultures.
Strong and well trained local managers utilising our common reporting procedures and policies, together with
rigorous internal audit processes, help to mitigate this risk.
As experienced acquirers, we recognise that making acquisitions involves risk both at the time of acquisition and
during integration thereafter. Increased resources are being directed at both these pre-acquisition and
post-acquisition stages to ensure the businesses we acquire meet our demanding financial and growth criteria.
The Group does not use complex derivative financial instruments or undertake speculative treasury transactions
but is exposed to foreign currency risk. Payments and receipts are hedged at the time of invoice, significant
currency net assets are hedged, future currency profits are not. Our main currency risk is the US Dollar
relative to Sterling where a 1% shift impacts revenue by approximately £1 million and profits by approximately
£200,000 in a full year.
Summary
Halma's diverse and carefully selected market mix has enabled the Group to deliver consistently good short-term
performances whilst also investing in growth for the future. We remain positive about our prospects for making
further progress this year and in the medium term.
* 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 K J Thompson
Chief Executive Finance Director
29 November 2007
HALF YEAR RESULTS FOR THE 26 WEEKS TO 29 SEPTEMBER 2007
Condensed financial statements
Consolidated income statement
£000
Unaudited Unaudited Audited
26 weeks to 29 September 2007 26 weeks to 30 September 2006 52 weeks
to
31 March
2007
Before Before
acquired Amortisation acquired Amortisation
intangibles of acquired intangibles of acquired
amortisation intangibles Total amortisation intangibles Total Total
Continuing operations
Revenue (note 1) 187,868 - 187,868 167,522 - 167,522 354,606
Operating profit 34,310 (1,968) 32,342 31,469 (1,452) 30,017 64,462
Finance income 4,017 - 4,017 3,592 - 3,592 7,272
Finance expense (4,764) - (4,764) (4,434) - (4,434) (9,101)
Profit before 33,563 (1,968) 31,595 30,627 (1,452) 29,175 62,633
taxation
Taxation (note 3) (10,050) 705 (9,345) (9,397) 450 (8,947) (18,622)
Profit for the period 23,513 (1,263) 22,250 21,230 (1,002) 20,228 44,011
attributable to
equity shareholders
(note 1)
Earnings per ordinary
share (note 4)
From continuing operations
Basic 6.31p 5.97p 5.73p 5.46p 11.86p
Diluted 5.94p 5.44p 11.77p
Dividends in respect of the
period (note 5)
Declared and paid (£000) 11,187 10,614 26,753
Declared and paid per share 3.00p 2.85p 7.18p
Consolidated balance sheet £000
Unaudited Unaudited Audited
29 September 30 31 March
September 2007
2007 2006
Non-current assets
Goodwill 129,207 120,606 129,521
Other intangible assets 14,953 11,554 15,338
Property, plant and equipment 50,287 48,854 49,580
Deferred tax assets 9,717 14,550 11,178
204,164 195,564 205,617
Current Assets
Inventories 39,789 37,385 39,134
Trade and other receivables 81,225 71,185 81,650
Cash and cash equivalents 25,360 28,226 22,051
146,374 136,796 142,835
Total assets 350,538 332,360 348,452
Current liabilities
Borrowings 31,752 30,548 29,762
Trade and other payables 55,935 51,604 62,590
Tax liabilities 9,936 7,762 6,043
97,623 89,914 98,395
Net current assets 48,751 46,882 44,440
Non-current liabilities
Retirement benefit obligations 34,703 48,499 37,260
Trade and other payables 2,538 3,285 3,005
Deferred tax liabilities 2,581 2,720 3,184
39,822 54,504 43,449
Total liabilities 137,445 144,418 141,844
Net assets 213,093 187,942 206,608
Capital and reserves
Called up share capital 37,394 37,194 37,312
Share premium account 16,263 13,791 15,239
Treasury shares (2,058) (874) (1,664)
Capital redemption reserve 185 185 185
Translation reserve (5,035) (1,299) (4,272)
Other reserves 4,806 2,289 3,654
Retained earnings 161,538 136,656 156,154
Shareholders' funds 213,093 187,942 206,608
Statement of recognised income and expense £000
Unaudited Unaudited Audited
26 weeks to 26 weeks to 52 weeks to
29 September 30 September 31 March
2007 2006 2007
Exchange differences on translation of foreign operations (763) (7,243) (10,216)
Actuarial gains/(losses) on defined benefit pension schemes 23 (2,111) 7,084
Tax on items taken directly to reserves (750) 744 (2,122)
Net loss recognised directly in reserves (1,490) (8,610) (5,254)
Profit for the period 22,250 20,228 44,011
Total recognised income and expense for the period 20,760 11,618 38,757
Reconciliation of movements in shareholders' funds £000
Unaudited Unaudited Audited
26 weeks to 26 weeks to 52 weeks to
29 September 30 September 31 March
2007 2006 2007
Shareholders' funds brought forward 206,608 188,080 188,080
Profit for the period 22,250 20,228 44,011
Dividends paid (16,139) (15,308) (25,922)
Net loss recognised directly in reserves (1,490) (8,610) (5,254)
Net proceeds of shares issued 1,106 3,350 4,916
Treasury shares purchased (394) (495) (1,285)
Movement in other reserves 1,152 697 2,062
Total movement in shareholders' funds 6,485 (138) 18,528
Shareholders' funds carried forward 213,093 187,942 206,608
Consolidated cash flow statement £000
Unaudited Unaudited Audited
26 weeks to 26 weeks to 52 weeks to
29 September 30 September 31 March
2007 2006 2007
Net cash inflow from operating activities (note 6) 25,963 23,398 50,754
Cash flows from investing activities
Purchase of property, plant and equipment (5,610) (4,687) (10,053)
Purchase of computer software (438) (409) (847)
Proceeds from sale of property, plant and equipment 482 1,452 3,609
Development costs capitalised (2,078) (1,666) (3,893)
Interest received 331 572 1,035
Acquisition of businesses (1,212) (10,587) (27,499)
Net cash used in investing activities (8,525) (15,325) (37,648)
Financing activities
Dividends paid (16,139) (15,308) (25,922)
Proceeds from issue of share capital 1,106 3,350 4,916
Purchase of treasury shares (786) (874) (1,272)
Interest paid (877) (823) (1,894)
Drawdown of borrowings 2,300 - -
Net cash used in financing activities (14,396) (13,655) (24,172)
Increase/(decrease) in cash and cash equivalents (note 6) 3,042 (5,582) (11,066)
Cash and cash equivalents brought forward 22,051 35,826 35,826
Exchange adjustments 267 (2,018) (2,709)
Cash and cash equivalents carried forward 25,360 28,226 22,051
Notes to the condensed financial statements
1 Segmental analysis
Sector analysis £000
Revenue*
Unaudited Unaudited Audited
26 weeks to 26 weeks to 52 weeks to
29 September 30 September 31 March
2007 2006 2007
Infrastructure Sensors 80,423 74,762 154,830
Health and Analysis 62,715 56,168 119,970
Industrial Safety 44,978 36,626 79,940
Inter-segmental sales (248) (34) (134)
Revenue from continuing operations 187,868 167,522 354,606
Profit*
Unaudited Unaudited Audited
26 weeks to 26 weeks to 52 weeks to
29 September 30 September 31 March
2007 2006 2007
Infrastructure Sensors 13,765 13,660 27,975
Health and Analysis 11,954 11,129 24,445
Industrial Safety 9,030 7,093 15,998
Central companies (439) (413) (498)
Operating profit from continuing operations before 34,310 31,469 67,920
amortisation of acquired intangibles
Net finance expense (747) (842) (1,829)
Group profit before amortisation of acquired intangibles 33,563 30,627 66,091
Amortisation of acquired intangible assets (1,968) (1,452) (3,458)
Taxation (9,345) (8,947) (18,622)
Profit for the period 22,250 20,228 44,011
* The comparative figures for 26 weeks to 30 September 2006 have been restated to reflect the reclassification
of Radio-Tech Limited from the Health and Analysis sector to the Industrial Safety sector.
Geographical analysis £000
Revenue by destination Revenue by origin
Unaudited Unaudited Audited Unaudited Unaudited Audited
26 weeks to 26 weeks to 52 weeks to 26 weeks to 26 weeks to 52 weeks to
29 September 30 September 31 March 29 September 30 September 31 March
2007 2006 2007 2007 2006 2007
United Kingdom 51,704 45,024 96,556 109,068 93,591 199,859
United States of America 52,174 48,755 98,882 57,803 53,604 110,894
Mainland Europe 48,516 41,689 91,371 26,617 25,669 56,047
Asia Pacific and Australasia 19,301 17,000 35,484 9,331 9,348 18,277
Africa, Near and Middle East 11,740 9,892 22,279 - - -
Other countries 4,433 5,162 10,034 - - -
Inter-segmental sales - - - (14,951) (14,690) (30,471)
Revenue from continuing 187,868 167,522 354,606 187,868 167,522 354,606
operations
£000
Profit by origin
Unaudited Unaudited Audited
26 weeks to 26 weeks to 52 weeks to
29 September 30 September 31 March
2007 2006 2007
United Kingdom 17,406 15,116 32,626
United States of America 11,207 10,509 22,258
Mainland Europe 4,697 4,715 10,860
Asia Pacific and Australasia 1,000 1,129 2,176
Operating profit from continuing 34,310 31,469 67,920
operations before amortisation of acquired
intangibles
Net finance expense (747) (842) (1,829)
Group profit before amortisation of 33,563 30,627 66,091
acquired intangibles
Amortisation of acquired intangible assets (1,968) (1,452) (3,458)
Taxation (9,345) (8,947) (18,622)
Profit for the period 22,250 20,228 44,011
2 Basis of preparation
The Half year report, which includes the Interim management report and Condensed financial statements for the 26
weeks to 29 September 2007, has not been audited or reviewed by the Group's auditors and was approved by the
Directors on 29 November 2007.
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
31 March 2007.
The figures shown for the 52 weeks to 31 March 2007 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 for the 26 weeks to 29 September 2007 of £9,345,000 (26 weeks to 30 September 2006:
£8,947,000; 52 weeks to 31 March 2007: £18,622,000) comprises a current tax charge of £9,195,000 (26 weeks to
30 September 2006: £9,194,000; 52 weeks to 31 March 2007: £17,874,000) and a deferred tax charge of £150,000 (26
weeks to 30 September 2006: £247,000 credit; 52 weeks to 31 March 2007: £748,000 charge). The tax charge is
based on the estimated effective tax rate for the year.
The tax charge includes £6,549,000 (26 weeks to 30 September 2006: £5,159,000; 52 weeks to 31 March 2007:
£9,488,000) in respect of overseas tax.
4 Earnings per ordinary share
Basic earnings per ordinary share are calculated using the weighted average of 372,554,066 (September 2006:
370,287,369; March 2007: 371,221,629) 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 374,489,843 (September
2006: 372,168,717; March 2007: 374,036,077) shares which includes dilutive potential ordinary shares of 1,935,777
(September 2006: 1,881,348; March 2007: 2,814,448). 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 Unaudited Audited
26 weeks to 26 weeks to 52 weeks to
29 September 30 September 31 March
2007 2006 2007
£000 £000
£000
Earnings from continuing operations 22,250 20,228 44,011
Add back amortisation of acquired intangible assets 1,263 1,002 2,393
after taxation
Adjusted earnings 23,513 21,230 46,404
Per ordinary share
Unaudited Unaudited Audited
26 weeks to 26 weeks to 52 weeks to
29 September 30 September 31 March
2007 2006 2007
pence pence pence
Earnings from continuing operations 5.97 5.46 11.86
Add back amortisation of acquired intangible assets 0.34 0.27 0.64
after taxation
Adjusted earnings 6.31 5.73 12.50
5 Ordinary dividends Per ordinary share
Unaudited Unaudited Audited
26 weeks to 26 weeks to 52 weeks
29 September 30 September to
2007 2006 31 March
pence pence 2007
pence
Amounts recognised as distributions to shareholders in the period
Final dividend for the year to 31 March 2007 (1 4.33 4.12 4.12
April 2006)
Interim dividend for the year to 31 March 2007 - - 2.85
4.33 4.12 6.97
Dividends declared in respect of the period
Interim dividend for the year to 29 March 2008 (31 3.00 2.85 2.85
March 2007)
Final dividend for the year to 31 March 2007 - - 4.33
3.00 2.85 7.18
Unaudited Unaudited Audited
26 weeks to 26 weeks to 52 weeks
29 September 30 September to
2007 2006 31 March
£000 £000 2007
£000
Amounts recognised as distributions to shareholders in the period
Final dividend for the year to 31 March 2007 (1 16,139 15,308 15,308
April 2006)
Interim dividend for the year to 31 March 2007 - - 10,614
16,139 15,308 25,922
Dividends declared in respect of the period
Interim dividend for the year to 29 March 2008 (31 11,187 10,614 10,614
March 2007)
Final dividend for the year to 31 March 2007 - - 16,139
11,187 10,614 26,753
6 Notes to the consolidated cash flow statement £000
Unaudited Unaudited Audited
26 weeks to 26 weeks to 52 weeks to
29 September 30 September 31 March
2007 2006 2007
Reconciliation of profit from operations to net
cash inflow
from operating activities
Profit from continuing operations before taxation 32,342 30,017 64,462
Depreciation and amortisation of computer software 4,348 4,026 8,147
Amortisation of capitalised development costs 810 857 1,528
Amortisation of acquired intangible assets 1,968 1,452 3,458
Share-based payment expense in excess of amounts 1,064 655 1,317
paid
Pension plan payments in excess of current service (3,162) (1,833) (4,233)
cost
Profit on sale of property, plant and equipment and computer (498) (295) (314)
software
Operating cash flows before movement in working capital 36,872 34,879 74,365
Increase in inventories (927) (1,469) (1,648)
Decrease/(increase) in receivables 544 4,379 (3,673)
(Decrease)/increase in payables (5,232) (6,153) 1,215
Cash generated from operations 31,257 31,636 70,259
Taxation paid (5,294) (8,238) (19,505)
Net cash inflow from operating activities 25,963 23,398 50,754
Reconciliation of net cash flow to movement in net (debt)/cash
Increase/(decrease) in cash and cash equivalents 3,042 (5,582) (11,066)
Drawdown of borrowings (2,300) - -
Exchange adjustments 577 (258) (163)
1,319 (5,840) (11,229)
Net (debt)/cash brought forward (7,711) 3,518 3,518
Net debt carried forward (6,392) (2,322) (7,711)
7 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 Unaudited Audited
26 weeks to 26 weeks to 52 weeks to
29 September 30 September 31 March
2007 2006 2007
Return on capital employed
Operating profit from continuing operations before 34,310 31,469 67,920
amortisation of acquired intangibles
Operating return 34,310 31,469 67,920
Computer software costs within intangible assets 1,675 1,343 1,577
Capitalised development costs within intangible 7,380 4,592 6,115
assets
Property, plant and equipment 50,287 48,854 49,580
Inventories 39,789 37,385 39,134
Trade and other receivables 81,225 71,185 81,650
Trade and other payables (55,935) (51,604) (62,590)
Tax liabilities (9,936) (7,762) (6,043)
Non-current trade and other payables (2,538) (3,285) (3,005)
Add back retirement benefit accruals included 2,579 3,803 3,071
within payables
Add back deferred purchase consideration 2,830 2,237 3,559
Capital employed 117,356 106,748 113,048
Return on capital employed (annualised) 58.5% 59.0% 60.1%
Return on total invested capital
Profit from continuing operations before amortisation 23,513 21,230 46,404
of acquired intangibles after taxation
Return 23,513 21,230 46,404
Total shareholders' funds 213,093 187,942 206,608
Add back retirement benefit accruals included 2,579 3,803 3,071
within payables
Add back retirement benefit obligations 34,703 48,499 37,260
Less associated deferred tax assets (9,717) (14,550) (11,178)
Cumulative amortisation of acquired intangible 7,316 3,342 5,348
assets
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 337,523 318,585 330,658
Return on total invested capital (annualised) 13.9% 13.3% 14.0%
8 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 31 March 2007.
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.
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