Halma Regulatory News (HLMA)

HALMA p.l.c.

HALF YEAR REPORT FOR THE 26 WEEKS TO 1 OCTOBER 2011

22 NOVEMBER 2011

Record revenue and profit with increased returns

Halma, the leading safety, health and sensor technology group, today announces its half year results for the 26 weeks to1 October 2011.

Highlights include:

●

Pre-tax profit from continuing operations1 up 17% to £57.5m (2010/11: £49.3m) on revenue up 12% at £280m (2010/11: £249m). Adjusted earnings per share from continuing operations2 up 21% at 11.75p (2010/11: 9.75p). 

●

Organic growth3 at constant currency: Profit up 4.5%, Revenue up 5.8%.

●

High and increased level of returns achieved with Return on Sales4 of 20.5% (2010/11: 19.8%).

●

All three sectors increased revenue and profit with strong performances in Health & Analysis and Industrial Safety which both delivered pre-tax profit growth of 20% or more.

●

Order intake slightly ahead of revenue with a closing order book 5% higher than the start of the period.

●

Revenue outside the UK/Europe and USA increased to £65.5m, 23% of total revenue (2010/11: £58.1m), in line with our strategic objective of international expansion with a focus on Asia.

●

Statutory pre-tax profit up 8.5% to £51.3m (2010/11:£47.3m). Statutory earnings per share up 12% at 10.52p (2010/11: 9.38p).

●

Increase in the interim dividend of 7%.

●

Successful acquisition of Avo Photonics, Inc. for an initial payment of £5.7m and Kirk Key Interlock Company, LLC for £8.8m.

●

Strong balance sheet with significant headroom for acquisitions. Solid cash generation resulting in net debt of £56m. 

●

New £260m 5-year revolving credit facility in place, replacing previous £165m facility. 

Commenting on the results, Andrew Williams, Chief Executive of Halma, said:

"Halma remains on track to make further progress in the second half. The diversity of our niche end-markets and our operational structure of locally managed, agile businesses have proved to be major strengths during challenging circumstances. We will continue to focus on achieving growth and high returns in the short term whilst maintaining investment to support growth in the medium term."

Notes:

1

Adjusted to remove the amortisation of acquired intangible assets and acquisition costs (including transaction costs and movement on contingent consideration) of £6.2m (2010/11: £2.0m).

2

Adjusted to remove the amortisation of acquired intangible assets and acquisition costs, and the associated tax. See note 6 for details.

3

Organic growth rates are non-GAAP performance measures used by management to assess underlying performance. See note 9 for details.

4

Return on Sales is defined as adjusted1 profit before taxation from continuing operations expressed as a percentage of revenue from continuing operations.

For further information, please contact:

Halma p.l.c.Andrew Williams, Chief ExecutiveKevin Thompson, Finance Director

+44 (0)1494 721111

MHP CommunicationsRachel Hirst/Andrew Jaques

+44 (0)20 3128 8100

A copy of this announcement, together with other information about Halma, may be viewed on its website: www.halma.com.

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:

·; Health and Analysis

Products used to improve personal and public health. We develop technologies for analysis in safety, life sciences and environmental markets.

·; Infrastructure Sensors

Products which detect hazards to protect assets and people in public and commercial buildings.

·; Industrial Safety

Products which protect assets 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 clear market leaders 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)1494 721111, e-mail: dwaller@halmapr.com.

3.

You can view or download copies of this announcement and the latest Half Year and Annual Reports from the website at www.halma.com or request free printed copies by contacting halma@halma.com.

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 1 October 2011

Financial Highlights

Change

Unaudited

26 weeks to

1 October

2011

Unaudited

26 weeks to

2 October

2010

Continuing Operations

Revenue

+ 12%

£280.0m

£249.1m

Adjusted Profit before Taxation1

+ 17%

£57.5m

£49.3m

Statutory Profit before Taxation

+ 8%

£51.3m

£47.3m

Adjusted Earnings per Share2

+ 21%

11.75p

9.75p

Statutory Earnings per Share

+ 12%

10.52p

9.38p

Interim Dividend per Share3

+ 7%

3.79p

3.54p

Return on Sales4

20.5%

19.8%

Return on Total Invested Capital5

16.9%

15.5%

Return on Capital Employed5

68.8%

72.3%

Pro-forma information:

1

Adjusted to remove the amortisation of acquired intangible assets and acquisition costs (including transaction costs and movement on contingent consideration) of £6.2m (2010/11: £2.0m).

2

Adjusted to remove the amortisation of acquired intangible assets and acquisition costs, and the associated tax. See note 6 for details.

3

Interim dividend declared per share.

4

Return on Sales is defined as adjusted1 profit before taxation from continuing operations expressed as a percentage of revenue from continuing operations.

5

Organic growth rates, Return on Total Invested Capital (ROTIC) and Return on Capital Employed (ROCE) are non-GAAP performance measures used by management in measuring the returns achieved from the Group's asset base. See note 9 for details.

Chairman's Statement

Geoff Unwin, Chairman of Halma, said:

Halma remains on track

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 market niches where the demand is global. Our businesses are autonomous and highly entrepreneurial.

Results

For the first half, revenue from continuing operations of £280m was 12% up compared with the prior year (2010/11: £249m); organic revenue1 growth was 4.7% and, at constant currency, was 5.8%.

Adjusted1 profit before tax from continuing operations increased 17% to £57.5m (2010/11: £49.3m), with organic growth of 4.5% at constant currency. Statutory profit before tax increased by 8% to £51.3m.

Return on Total Invested Capital1 was 16.9% (2010/11: 15.5%). Cash flow was solid in the half year and we completed two acquisitions for initial payments totalling £14.5m, including £1.1m of debt (2010/11: £nil). This contributed to net debt of £56m at the end of the period compared with £37m at 2 April 2011.

DividendsThe Board declares a 7% increase in the interim dividend to 3.79 pence per share, maintaining the higher rate of dividend increase established last year. This dividend will be paid on 8 February 2012 to shareholders on the register at 6 January 2012. This increase reflects the Board's continuing confidence in Halma's long-term growth prospects.

Progress

Halma's half year results reflect the continuing efforts of our employees to improve our effectiveness, controlling costs yet still delivering revenue growth. In addition, we have acquired businesses over the past year which have strong product, market and financial characteristics. This is demonstrated by the 0.7% improvement in the Group's half year Return on Sales1 to 20.5% (2010/11: 19.8%).

We invest strongly in products, markets and people and expect to continue to see the results of these investments, particularly in new products and in China, in the short to medium term.

Acquisitions

During the first half, Halma purchased Kirk Key Interlock Company, LLC for $14.5m (including $1.8m of debt) and Avo Photonics, Inc. for $9.1m (plus a contingent payment of up to $11m based on future profit growth). These businesses add to our existing strength in the Safety Interlocks and Photonics markets respectively.

Governance

I am delighted that Daniela Barone Soares has joined the Halma Board.

The Board continually keeps the appropriateness of its composition under review particularly in terms of relevant experience and diversity in its widest sense. Daniela's experience demonstrates this commitment threefold - geographically, in terms of gender and by way of executive experience. Daniela will certainly add to the Board's debate on value creation with her unique perspective.

OutlookAlthough there are significant global economic uncertainties, our structure of decentralised management and the underpinning of demand from fundamental growth drivers have proved to be resilient in difficult markets. Halma remains on track to make further progress in the second half.

1 See Financial Highlights

Chief Executive's Review

Andrew Williams, Chief Executive of Halma, said:

Record revenue and profit with increased returns

Halma made good progress during the first half year, achieving record revenue and profit in every sector. There was widespread growth geographically, with an especially strong performance in China where sales grew by 29%.

Revenue grew by 12% to £280m (2010/11: £249m) and adjusted1 profit by 17% to £57.5m (2010/11: £49.3m). The organic growth rates of 5.8% for revenue and 4.5% for profit (at constant currency), reflected increased investment in our three pillars of strategic growth: Innovation, International Expansion and People Development. Return on Sales1 increased to 20.5% (2010/11: 19.8%). It was pleasing to see order intake growth maintained, resulting in an order book at the end of the period 5% higher than at the start.

Return on Total Invested Capital1 was excellent at 16.9% (2010/11: 15.5%) whilst Return on Capital Employed1 was also strong at 69% (2010/11: 72%). Both these ratios reflect the good operational management by our subsidiary management teams as does the solid cash generation which continued throughout the period. We ended the first half with net debt of £56m (March 2011: net debt £37m).

Halma is in a strong financial position and we have acted to ensure that continues. In October 2011, we negotiated a new £260m syndicated revolving credit facility with a core group of well-established banks which runs to October 2016. It replaces the previous £165m facility which was due to end in February 2013.

Growth and higher returns in all three sectors

All three main sectors reported record revenue and profit and increased Return on Sales.

Health and Analysis saw revenue up by 17% to £121m (2010/11: £104m), and profit2 up by 26% to £28.0m (2010/11: £22.1m). Return on Sales improved to 23.1% (2010/11: 21.3%). Water, Photonics, Health Optics and Fluid Technology all reported revenue and profit growth with the latter benefiting significantly from the impact of acquisitions. Water had a particularly strong performance in the UK, due to increased investment in water network monitoring devices by the UK water utilities. In Fluid Technology, further customer consolidation and some changes in the market shares amongst the major OEM players in medical diagnostic systems had an adverse impact on our organic performance. We expect to see the impact of these factors ease as we move through 2012.

Infrastructure Sensors had another solid performance, growing revenue by 5% to £101m (2010/11: £96m) and profit2 by 8% to £19.4m (2010/11: £17.9m). Return on Sales was 19.2% (2010/11: 18.7%). Fire Detection and Automatic Door Sensors increased revenue whilst strengthening their global operations, particularly in Asia and the USA. Elevator Safety had flat revenue and Security Sensors reported revenue marginally lower than last year with tough conditions in Europe and the USA for both businesses.

Industrial Safety had a particularly impressive first half, increasing revenue by 17% to £58m (2010/11: £49m) and profit2 by 20% to £13.6m (2010/11: £11.3m). Return on Sales improved to 23.4% (2010/11: 22.9%). Gas Detection, Bursting Disks, Safety Interlocks and Asset Monitoring all achieved double-digit growth in revenue and profit.

Revenues increased in all major geographic regions

UK revenue was up by 18% whilst Mainland Europe also performed strongly with growth of 15%. The challenges faced by our Fluid Technology and Elevator Safety sub-sectors contributed to lower growth in the USA of 6%. China continued to make good progress, growing by 29%, despite lower growth in Automatic Door Sensors caused by the recent disruption to the state-sponsored High Speed Train investment programme.

Halma completed two acquisitions in the period

In May 2011, we acquired Kirk Key Interlock Company, LLC based in Ohio, USA for $14.5m (including $1.8m of debt) to give us a stronger presence in the US Safety Interlock market. In July 2011, we acquired Avo Photonics, Inc. based in Pennsylvania, USA for an initial consideration of $9.1m and a contingent payment of up to $11m based on profit growth achieved up to March 2012. Avo adds advanced design and manufacturing capabilities to Halma's successful Photonics businesses. The integration of both businesses into the Group has proceeded well.

We remain focused on identifying acquisition opportunities that add value by strengthening our market positions and technological capabilities.

Increased investment in product innovation, international expansion and people development

R&D spend increased by 10% to £13.4m (2010/11: £12.2m) demonstrating our commitment to generating growth through product Innovation. As reported in our recent Annual Report, in May 2011 we held a successful Halma Innovation and Technology Exposition in Orlando, Florida, which gave all Halma companies the opportunity to share knowledge and technology. I am also encouraged by the steady increase in the number of products specifically designed for developing markets such as China. Our ability to tailor products for local markets is increasingly important in driving revenue growth and market share in developing regions.

Investment in our International Expansion strategic initiative continues apace with our five commercial offices in China now fully operational and our manufacturing hub in Shanghai attracting more Halma companies. Our headcount in India is growing steadily and we plan to move to larger offices in Mumbai with light assembly and technical support facilities in the second half. Two Halma sub-sectors now have a direct presence in South America, with a further four sub-sectors making progress towards that goal in 2012.

People Development is essential to our sustained success. We have launched new advanced training programmes for previous Halma Executive Development Programme delegates and we are increasing our focus on developing local management talent in Asia. We are making good progress towards the launch of the first Halma Graduate Development Programme in 2012. We are committed to increasing the diversity of our management talent and, in addition to our initiatives in Asia, we are identifying new ways in which we can encourage improvement in gender diversity.

Risks and uncertainties

There are no significant changes to the risks and uncertainties in the Annual Report and on our website, www.halma.com. These are summarised in note 12 of this Half Year Report.

Summary

Halma remains on track to make further progress in the second half. The diversity of our niche end-markets and our operational structure of locally managed, agile businesses have proved to be major strengths during challenging circumstances. We will continue to focus on achieving growth and high returns in the short term whilst maintaining investment to support growth in the medium term.

1 See Financial Highlights

2 See note 2 to the Condensed Financial Statements

Unaudited26 weeks to 1 October 2011

Unaudited26 weeks to 2 October 2010

Audited52 weeks to2 April2011

Notes

Beforeamortisationof acquiredintangibles andacquisitioncosts*£000

Amortisationof acquiredintangibles andacquisition costs*£000

Total£000

Beforeamortisationof acquiredintangibles andacquisitioncosts*£000

Amortisationof acquiredintangibles andacquisition costs*£000

Total£000

Total£000

Continuing operations

Revenue

2

279,997

-

279,997

249,080

-

249,080

518,428

Operating profit

58,158

(6,218)

51,940

49,645

(1,987)

47,658

99,449

Share of results of associates

(94)

- 

(94)

-

-

-

(59)

Finance income

3

4,919

- 

4,919

4,758

-

4,758

9,420

Finance expense

4

(5,482)

- 

(5,482)

(5,144)

-

(5,144)

(10,518)

Profit before taxation

57,501

(6,218)

51,283

49,259

(1,987)

47,272

98,292

Taxation

5

(13,258)

1,612

(11,646)

(12,561)

596

(11,965)

(25,858)

Profit for the period attributable to equity shareholders

44,243

(4,606)

39,637

36,698

(1,391)

35,307

72,434

Earnings per share

6

From continuing operations

Basic

11.75p

10.52p

9.75p

9.38p

19.23p

Diluted

10.50p

9.36p

19.19p

Dividends in respect of the period

7

Dividends (£000)

14,298

13,341

34,276

Per share

3.79p

3.54p

9.10p

Unaudited26 weeks to1 October2011£000

Unaudited26 weeks to2 October2010£000

Audited52 weeks to2 April2011£000

Profit for the period

39,637

35,307

72,434

Exchange differences on translation of foreign operations

3,384

(5,762)

(4,268)

Actuarial (losses)/gains on defined benefit pension plans

(11,440)

(8,396)

857

Effective portion of changes in fair value of cash flow hedges

244

137

(311)

Tax relating to components of other comprehensive income

2,529

1,836

(887)

Other comprehensive expense for the period

(5,283)

(12,185)

(4,609)

Total comprehensive income for the period attributable to equity shareholders

34,354

23,122

67,825

Unaudited1 October 2011£000

Unaudited2 October 2010£000

Audited2 April2011£000

Non-current assets

Goodwill

273,049

194,203

259,954

Other intangible assets

80,665

30,849

73,490

Property, plant and equipment

72,508

65,923

69,891

Interests in associates

1,914

-

1,989

Deferred tax asset

11,148

13,095

10,779

439,284

304,070

416,103

Current assets

Inventories

63,310

51,325

54,540

Trade and other receivables

109,029

96,901

110,456

Tax receivable

448

97

237

Cash and cash equivalents

41,674

41,210

42,610

Derivative financial instruments

108

320

327

214,569

189,853

208,170

Total assets

653,853

493,923

624,273

Current liabilities

Borrowings

2,051

517

-

Trade and other payables

86,304

71,095

85,511

Provisions

2,691

2,138

2,887

Tax liabilities

12,627

15,014

14,997

Derivative financial instruments

380

247

858

104,053

89,011

104,253

Net current assets

110,516

100,842

103,917

Non-current liabilities

Borrowings

95,649

13,054

79,688

Retirement benefit obligations

44,590

48,497

36,237

Trade and other payables

14,971

3,858

22,848

Provisions

2,108

1,897

1,593

Deferred tax liabilities

24,927

13,329

24,269

182,245

80,635

164,635

Total liabilities

286,298

169,646

268,888

Net assets

367,555

324,277

355,385

Equity

Share capital

37,841

37,802

37,824

Share premium account

21,993

21,426

21,744

Treasury shares

(3,665)

(3,163)

(5,016)

Capital redemption reserve

185

185

185

Hedging and translation reserve

38,078

33,388

34,511

Other reserves

(96)

2,261

3,634

Retained earnings

273,219

232,378

262,503

Shareholders' funds

367,555

324,277

355,385

Sharecapital£000

Share premium account£000

Treasuryshares£000

Capital redemptionreserve£000

Hedging and translationreserve£000

Other reserves£000

Retained earnings£000

Total£000

At 2 April 2011 (audited)

37,824

21,744

(5,016)

185

34,511

3,634

262,503

355,385

Profit for the period

-

-

-

-

-

-

39,637

39,637

Other comprehensive income andexpense:

Exchange differences on translationof foreign operations

-

-

-

-

3,384

-

-

3,384

Actuarial losses on defined benefitpension plans

-

-

-

-

-

-

(11,440)

(11,440)

Effective portion of changes in fairvalue of cash flow hedges

-

-

-

-

244

-

-

244

Tax relating to components of othercomprehensive income

-

-

-

-

(61)

-

2,590

2,529

Total other comprehensive incomeand expense

-

-

-

-

3,567

-

(8,850)

(5,283)

Share options exercised

17

249

-

-

-

-

-

266

Dividends paid

-

-

-

-

-

-

(20,935)

(20,935)

Share-based payments

-

-

-

-

-

(3,261)

-

(3,261)

Deferred tax on share-basedpayment transactions

-

-

-

-

-

(469)

-

(469)

Excess tax deductions related to share-based payments on exercised options

-

-

-

-

-

-

864

864

Net movement in treasury shares

-

-

1,351

-

-

-

-

1,351

At 1 October 2011 (unaudited)

37,841

21,993

(3,665)

185

38,078

(96)

273,219

367,555

Sharecapital£000

Share premium account£000

Treasuryshares£000

Capital redemptionreserve£000

Hedging and translationreserve£000

Other reserves£000

Retained earnings£000

Total£000

At 3 April 2010 (audited)

37,765

20,959

(2,581)

185

39,013

4,178

222,974

322,493

Profit for the period

-

-

-

-

-

-

35,307

35,307

Other comprehensive income andexpense:

Exchange differences on translationof foreign operations

-

-

-

-

(5,762)

-

-

(5,762)

Actuarial losses on defined benefitpension plans

-

-

-

-

-

-

(8,396)

(8,396)

Effective portion of changes in fairvalue of cash flow hedges

-

-

-

-

137

-

-

137

Tax relating to components of othercomprehensive income

-

-

-

-

-

-

1,836

1,836

Total other comprehensive incomeand expense

-

-

-

-

(5,625)

-

(6,560)

(12,185)

Share options exercised

37

467

-

-

-

-

-

504

Dividends paid

-

-

-

-

-

-

(19,550)

(19,550)

Share-based payments

-

-

-

-

-

(1,808)

-

(1,808)

Deferred tax onshare-based payment transactions

-

-

-

-

-

(109)

-

(109)

Excess tax deductions related toshare-based payments on exercised options

-

-

-

-

-

-

207

207

Net movement in treasury shares

-

-

(582)

-

-

-

-

(582)

At 2 October 2010 (unaudited)

37,802

21,426

(3,163)

185

33,388

2,261

232,378

324,277

Sharecapital£000

Share premium account£000

Treasuryshares£000

Capital redemptionreserve£000

Hedging and translationreserve£000

Otherreserves£000

Retained earnings£000

Total£000

At 3 April 2010 (audited)

37,765

20,959

(2,581)

185

39,013

4,178

222,974

322,493

Profit for the period

-

-

-

-

-

-

72,434

72,434

Other comprehensive income andexpense:

Exchange differences on translationof foreign operations

-

-

-

-

(4,268)

-

-

(4,268)

Actuarial gains on defined benefitpension plans

-

-

-

-

-

-

857

857

Effective portion of changes in fairvalue of cash flow hedges

-

-

-

-

(311)

-

-

(311)

Tax relating to components of othercomprehensive income

-

-

-

-

77

-

(964)

(887)

Total other comprehensive incomeand expense

-

-

-

-

(4,502)

-

(107)

(4,609)

Share options exercised

59

785

-

-

-

-

-

844

Dividends paid

-

-

-

-

-

-

(32,891)

(32,891)

Share-based payments

-

-

-

-

-

(764)

-

(764)

Deferred tax on share-based paymenttransactions

-

-

-

-

-

220

-

220

Excess tax deductions related toshare-based payments on exercisedoptions

-

-

-

-

-

-

93

93

Net movement in treasury shares

-

-

(2,435)

-

-

-

-

(2,435)

At 2 April 2011 (audited)

37,824

21,744

(5,016)

185

34,511

3,634

262,503

355,385

Unaudited26 weeks to1 October 2011£000

Unaudited26 weeks to2 October

2010£000

Audited52 weeks to2 April2011£000

Net cash inflow from operating activities (note 8)

36,571

49,460

95,064

Cash flows from investing activities

Purchase of property, plant and equipment

(7,658)

(5,906)

(14,399)

Purchase of computer software

(753)

(522)

(1,019)

Purchase of other intangibles

-

(17)

(6)

Proceeds from sale of property, plant and equipment

370

344

677

Development costs capitalised

(2,005)

(1,994)

(4,735)

Interest received

132

184

317

Acquisition of businesses, net of cash acquired (note 10)

(18,729)

(241)

(82,093)

Acquisition of investments in associates

-

-

(1,708)

Net cash used in investing activities

(28,643)

(8,152)

(102,966)

Financing activities

Dividends paid

(20,935)

(19,550)

(32,891)

Proceeds from issue of share capital

266

504

844

Purchase of treasury shares

(3,045)

(3,469)

(5,358)

Interest paid

(580)

(331)

(825)

Proceeds from borrowings

19,975

-

76,156

Repayment of borrowings

(4,305)

(8,348)

(18,152)

Net cash (used in)/from financing activities

(8,624)

(31,194)

19,774

(Decrease) /increase in cash and cash equivalents (note 8)

(696)

10,114

11,872

Cash and cash equivalents brought forward

42,610

31,006

31,006

Exchange adjustments

(240)

(427)

(268)

Cash and cash equivalents carried forward

41,674

40,693

42,610

1 Basis of preparation

General information

The Half Year Report, which includes the Interim Management Report and Condensed Financial Statements for the 26 weeks to 1 October 2011, has not been audited or reviewed by the Group's auditors and was approved by the Directors on 22 November 2011.

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 2 April 2011.

The figures shown for the 52 weeks to 2 April 2011 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 434 of the Companies Act 2006. These statutory accounts, which were prepared under International Financial Reporting Standards, have been filed with the Registrar of Companies. The audit report on those accounts was not qualified, did not include a reference to any matters for which the auditors drew attention by way of emphasis without qualifying the report, and did not contain statements under Sections 498 (2) or (3) of the Companies Act 2006.

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.

The 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 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.

The Directors believe the Group is well placed to manage its business risks successfully. The Group's forecasts and projections, taking account of reasonably possible changes in trading performance, show that the Group should be able to operate within the level of its current committed facilities (the existing £165 million loan facility was replaced by a £260 million loan facility on 20 October 2011). The Directors have a reasonable expectation that the Company and Group have adequate resources to continue in operational existence for the foreseeable future. Thus they continue to adopt the going concern basis in preparing the half-year Condensed Financial Statements.

2 Segmental Analysis

Sector analysis

The Group has three main reportable segments (Health and Analysis, Infrastructure Sensors and Industrial Safety), which are defined by markets rather than product type. Each segment includes businesses with similar operating and market characteristics. These segments are consistent with the internal reporting as reviewed by the Chief Executive Officer.

During the second half of the previous year, Radio-Tech Limited was moved from the Group's Industrial Safety segment to its Health and Analysis segment. The prior year segment analysis has therefore been restated to reflect this change and to ensure that the presentation is on a consistent basis.

These reportable segments remain unchanged from the 2 April 2011 consolidated accounts.

Segment revenue and results

Revenue (all continuing operations)

Unaudited26 weeks to1 October2011£000

(Restated)Unaudited26 weeks to2 October2010£000

Audited52 weeks to2 April2011£000

Health and Analysis

121,070

103,723

218,330

Infrastructure Sensors

101,102

96,008

197,209

Industrial Safety

58,007

49,463

103,058

Inter-segmental sales

(182)

(114)

(169)

Revenue for the period

279,997

249,080

518,428

Inter-segmental sales are charged at prevailing market prices and have not been disclosed separately by segment as they are not considered material. The Group does not analyse revenue by product group.

Profit (all continuing operations)

Unaudited26 weeks to1 October2011£000

(Restated)

Unaudited26 weeks to2 October2010£000

Audited52 weeks to2 April2011£000

Segment profit before allocation of amortisation of acquired intangible assets,acquisition and central administration costs

Health and Analysis

27,953

22,113

46,108

Infrastructure Sensors

19,364

17,911

39,023

Industrial Safety

13,596

11,341

24,435

60,913

51,365

109,566

Segment profit after allocation of amortisation of acquired intangible assetsand acquisition costs

Health and Analysis

22,024

20,405

40,170

Infrastructure Sensors

19,364

17,911

38,981

Industrial Safety

13,307

11,062

24,156

Segment profit

54,695

49,378

103,307

Central administration costs

(2,849)

(1,720)

(3,917)

Net finance expense

(563)

(386)

(1,098)

Group profit before taxation

51,283

47,272

98,292

Taxation

(11,646)

(11,965)

(25,858)

Profit for the period

39,637

35,307

72,434

The accounting policies of the reportable segments are the same as the Group's accounting policies. Segment profit before acquisition costs (comprising acquisition transaction costs and adjustments to contingent purchase consideration) and amortisation of acquired intangible assets is disclosed separately above as this is the measure reported to the Chief Executive Officer for the purpose of allocation of resources and assessment of segment performance.

The amortisation of acquired intangibles and acquisition costs (comprising acquisition transaction costs and adjustments to contingent purchase consideration, which includes any arising from foreign exchange revaluation) are analysed as follows:

Unaudited26 weeks to1 October2011£000

Unaudited26 weeks to2 October2010£000

Audited52 weeks to2 April2011£000

Amortisationof acquiredintangibles

Acquisition

costs*

Total

Amortisation

of acquired intangibles

Acquisition costs*

Total

Amortisation

of acquired intangibles

Acquisition costs*

Total

Health and Analysis

4,901

1,028

5,929

1,708

-

1,708

4,481

1,457

5,938

Infrastructure Sensors

-

-

-

-

-

-

-

42

42

Industrial Safety

244

45

289

279

-

279

279

-

279

Total Group

5,145

1,073

6,218

1,987

-

1,987

4,760

1,499

6,259

* Of the £1,073,000 (26 weeks to 2 October 2010: £nil; 52 weeks to 2 April 2011: £1,499,000) acquisition costs, £111,000 (26 weeks to2 October 2010: £nil; 52 weeks to 2 April 2011: £1,268,000) related to transaction costs, the remainder to changes in contingent purchase consideration and related foreign exchange.

The total assets have not been disclosed as there have been no material changes to those disclosed in the 2011 Annual Report.

Geographical information

The Group's revenue from external customers (by location of customer) is as follows:

Revenue by destination

Unaudited26 weeks to1 October2011£000

Unaudited26 weeks to2 October2010£000

Audited52 weeks to2 April2011£000

United States of America

78,598

74,400

150,280

Mainland Europe

75,264

65,404

138,313

United Kingdom

60,638

51,220

106,131

Asia Pacific and Australasia

41,611

35,061

76,207

Africa, Near and Middle East

13,024

14,037

28,756

Other countries

10,862

8,958

18,741

Group revenue

279,997

249,080

518,428

3 Finance income

Unaudited26 weeks to1 October2011£000

Unaudited26 weeks to2 October2010£000

Audited52 weeks to2 April2011£000

Interest receivable

132

184

317

Expected return on pension assets

4,772

4,539

9,103

4,904

4,723

9,420

Fair value movement on derivative financial instruments

15

35

-

4,919

4,758

9,420

4 Finance expense

Unaudited26 weeks to1 October2011£000

Unaudited26 weeks to2 October2010£000

Audited52 weeks to2 April2011£000

Interest payable on bank loans and overdrafts

543

313

690

Interest charge on pension scheme liabilities

4,845

4,760

9,525

Other interest payable

37

18

135

5,425

5,091

10,350

Fair value movement on derivative financial instruments

-

-

121

Unwinding of discount on provisions

57

53

47

5,482

5,144

10,518

5 Taxation

The total Group tax charge for the 26 weeks to 1 October 2011 of £11,646,000 (26 weeks to 2 October 2010: £11,965,000; 52 weeks to 2 April 2011: £25,858,000) comprises a current tax charge of £11,457,000 (26 weeks to 2 October 2010: £12,245,000; 52 weeks to 2 April 2011: £25,110,000) and a deferred tax charge of £189,000 (26 weeks to 2 October 2010: credit of £280,000; 52 weeks to 2 April 2011: charge of £748,000). The tax charge is based on the estimated effective tax rate for the year.

The tax charge includes £7,903,000 (26 weeks to 2 October 2010: £7,202,000; 52 weeks to 2 April 2011: £14,154,000) in respect of overseas tax.

Deferred tax assets have been recognised at the rate at which they are expected to reverse. In the UK, this is at the standard rate of corporation tax, which from 1 April 2012 will reduce from 26% to 25%. This reduction in rate has resulted in a debit to deferred tax of £392,000, of which £446,000 was taken to Other Comprehensive Income and £54,000 credited to the Income Statement.

6 Earnings per ordinary share

Basic earnings per ordinary share are calculated using the weighted average of 376,659,210 (2 October 2010: 376,493,113; 2 April 2011: 376,608,974) 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 377,319,197 (2 October 2010: 377,361,172; 2 April 2011: 377,365,635) shares which includes dilutive potential ordinary shares of 659,987 (2 October 2010: 868,059; 2 April 2011: 756,661). 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 and acquisition costs 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:

Unaudited26 weeks to1 October2011£000

Unaudited26 weeks to2 October2010£000

Audited52 weeks to2 April2011£000

Earnings from continuing operations

39,637

35,307

72,434

Add back amortisation of acquired intangibles (after tax)

3,783

1,391

3,315

Acquisition transaction costs (after tax)

111

-

1,268

Adjustments to contingent consideration (after tax)

712

-

167

Adjusted earnings

44,243

36,698

77,184

Per ordinary share

Unaudited26 weeks to1 October2011pence

Unaudited26 weeks to2 October2010pence

Audited52 weeks to2 April2011pence

Earnings from continuing operations

10.52

9.38

19.23

Add back amortisation of acquired intangibles (after tax)

1.01

0.37

0.88

Acquisition transaction costs (after tax)

0.03

-

0.34

Adjustments to contingent consideration (after tax)

0.19

-

0.04

Adjusted earnings

11.75

9.75

20.49

7 Dividends

Per ordinary share

Unaudited26 weeks to1 October2011pence

Unaudited26 weeks to2 October2010pence

Audited52 weeks to2 April2011pence

Amounts recognised as distributions to shareholders in the period

Final dividend for the year to 2 April 2011 (3 April 2010)

5.56

5.19

5.19

Interim dividend for the year to 2 April 2011

-

-

3.54

5.56

5.19

8.73

Dividends in respect of the period

Interim dividend for the year to 31 March 2012 (2 April 2011)

3.79

3.54

3.54

Final dividend for the year to 2 April 2011

-

-

5.56

3.79

3.54

9.10

Unaudited26 weeks to1 October2011£000

Unaudited26 weeks to2 October2010£000

Audited52 weeks to2 April2011£000

Amounts recognised as distributions to shareholders in the period

Final dividend for the year to 2 April 2011 (3 April 2010)

20,935

19,550

19,550

Interim dividend for the year to 2 April 2011

-

-

13,341

20,935

19,550

32,891

Dividends in respect of the period

Interim dividend for the year to 31 March 2012 (2 April 2011)

14,298

13,341

13,341

Final dividend for the year to 2 April 2011

-

-

20,935

14,298

13,341

34,276

8 Notes to the Consolidated Cash Flow Statement

Unaudited26 weeks to1 October2011£000

Unaudited26 weeks to2 October2010£000

Audited52 weeks to2 April2011£000

Reconciliation of profit from operations to net cash inflow from operating activities

Profit from continuing operations before finance income and expense andshare of results of associates

51,940

47,658

99,449

Depreciation of property, plant and equipment

6,077

5,665

11,523

Amortisation of computer software

588

616

1,217

Amortisation of capitalised development costs and other intangibles

1,879

2,142

4,230

Retirement/disposals of capitalised development costs

-

30

83

Amortisation of acquired intangible assets

5,145

1,987

4,760

Share-based payment expense in excess of amounts paid

1,250

1,162

2,015

Additional payments to pension scheme

(3,160)

(3,191)

(6,399)

Profit on sale of property, plant and equipment and computer software

(64)

(114)

(55)

Operating cash flows before movement in working capital

63,655

55,955

116,823

Increase in inventories

(7,504)

(4,934)

(5,369)

Decrease /(increase) in receivables

3,140

(181)

(7,944)

(Decrease) /increase in payables

(9,553)

2,852

9,670

Cash generated from operations

49,738

53,692

113,180

Taxation paid

(13,167)

(4,232)

(18,116)

Net cash inflow from operating activities

36,571

49,460

95,064

Reconciliation of net cash flow to movement in net (debt)/cash

(Decrease)/increase in cash and cash equivalents

(696)

10,114

11,872

Cash (inflow)/outflow from (drawdowns)/repayment of borrowings

(15,670)

8,348

(58,004)

Bank loan acquired

(1,144)

-

-

Exchange adjustments

(1,438)

95

(28)

(18,948)

18,557

(46,160)

Net (debt)/cash brought forward

(37,078)

9,082

9,082

Net (debt)/cash carried forward

(56,026)

27,639

(37,078)

Analysis of net (debt)/cash

Cash and bank balances

41,674

41,210

42,610

Bank overdraft

-

(517)

-

Cash and cash equivalents

41,674

40,693

42,610

Bank loans falling due within one year

(2,051)

-

-

Bank loans falling due after more than one year

(95,649)

(13,054)

(79,688)

(56,026)

27,639

(37,078)

9 Non-GAAP measures

Return on Capital Employed

Unaudited26 weeks to1 October2011£000

Unaudited26 weeks to2 October2010£000

Audited52 weeks to2 April2011£000

Operating profit from continuing operations before amortisation of acquired intangible assets and acquisition costs, but after share of results of associates

58,064

49,645

105,649

Computer software costs within intangible assets

2,948

2,907

2,734

Capitalised development costs within intangible assets

9,823

8,997

9,653

Other intangibles within intangible assets

216

177

252

Property, plant and equipment

72,508

65,923

69,891

Inventories

63,310

51,325

54,540

Trade and other receivables

109,029

96,901

110,456

Trade and other payables

(86,304)

(71,095)

(85,511)

Provisions

(2,691)

(2,138)

(2,887)

Net tax liabilities

(12,179)

(14,917)

(14,760)

Non-current trade and other payables

(14,971)

(3,858)

(22,848)

Non-current provisions

(2,108)

(1,897)

(1,593)

Add back accrued contingent purchase consideration

29,142

5,047

27,037

Capital employed

168,723

137,372

146,964

Return on Capital Employed (annualised)

68.8%

72.3%

71.9%

Return on Total Invested Capital

Unaudited26 weeks to1 October2011£000

Unaudited26 weeks to2 October2010£000

Audited52 weeks to2 April2011£000

Post-tax profit before amortisation of acquired intangible assets and acquisition costs

44,243

36,698

77,184

Total shareholders' funds

367,555

324,277

355,385

Add back retirement benefit obligations

44,590

48,497

36,237

Less associated deferred tax assets

(11,148)

(13,095)

(9,422)

Cumulative amortisation of acquired intangible assets

31,663

23,723

26,642

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 3 April 1998

70,931

70,931

70,931

Total invested capital

522,209

472,951

498,391

Return on Total Invested Capital (annualised)

16.9%

15.5%

15.5%

Organic growth

Organic growth measures the change in revenue and profit from continuing operations. The effect of acquisitions and disposals during the current and prior financial periods has been equalised by adjusting for their contributions based on their revenue and profit at the dates of acquisition and disposal.

10 Acquisitions

The Group made two acquisitions during the period. Below are summaries of the assets and liabilities acquired and the purchase consideration of:

a) the total of both acquisitions and adjustments to prior year acquisitions;b) the two acquisitions, namely Kirk Key Interlock Company, LLC and Avo Photonics, Inc.

(A) Total of both acquisitions and adjustments to prior year acquisitions

Bookvalue£000

Provisionalfair value adjustments£000

Total£000

Non-current assets

Intangible assets

9

9,979

9,988

Property, plant and equipment

518

405

923

Current assets

Inventories

738

2

740

Trade and other receivables

1,564

(89)

1,475

Cash and cash equivalents

49

-

49

Deferred tax

-

2,054

2,054

Total assets

2,878

12,351

15,229

Current liabilities

Trade and other payables

(763)

(190)

(953)

Bank loans

(1,144)

-

(1,144)

Provisions

-

(245)

(245)

Corporation tax

(41)

(23)

(64)

Non-current liabilities

Deferred tax

-

(3,679)

(3,679)

Total liabilities

(1,948)

(4,137)

(6,085)

Net assets of businesses acquired

930

8,214

9,144

Cash consideration

13,383

Contingent purchase consideration (current year acquisitions)

6,464

Contingent purchase consideration (revisions to prior year estimates)

(96)

Total consideration

19,751

Goodwill arising on current year acquisitions

10,648

Goodwill arising on prior year acquisitions

(41)

Goodwill arising on acquisitions

10,607

Due to their contractual dates, the fair value of receivables acquired (shown above) approximates to the gross contractual amounts receivable. The amount of gross contractual receivables not expected to be recovered is immaterial.

There are no material contingent liabilities recognised in accordance with paragraph 23 of IFRS 3 (Revised).

£3,108,000 of the goodwill arising on acquisitions in the year is expected to be deductible for tax purposes.

Together, both acquisitions contributed £3,655,000 of revenue and £790,000 of profit after tax for the 26 weeks ended1 October 2011. If these acquisitions had been held since the start of the financial year, it is estimated the Group's reported revenue and profit after tax would have been £1,755,000 and £222,000 higher respectively.

Adjustments were made to the book values of the net assets of the companies acquired to reflect their provisional fair valuesto the Group. Acquired inventories were valued at the lower of cost and net realisable value adopting Group bases and any liabilities for warranties relating to past trading were recognised. Other previously unrecognised assets and liabilities at acquisition were included and accounting policies were aligned with those of the Group where appropriate.

Adjustments to prior year acquisitions resulted in reductions to net assets and contingent consideration payable of £55,000 and £96,000 respectively leading to a reduction in goodwill of £41,000.

Analysis of cash outflow in the Consolidated Cash Flow Statement

Unaudited26 weeks to1 October2011£000

Unaudited26 weeks to2 October2010£000

Audited52 weeks to2 April2011£000

Cash consideration in respect of current period acquisitions

13,383

236

82,063

Cash acquired on acquisitions

(49)

-

(2,672)

Contingent consideration paid in relation to prior year acquisitions*

5,395

5

2,702

Net cash outflow relating to acquisitions (per cash flow statement)

18,729

241

82,093

Bank loans acquired

1,144

-

-

Net cash outflow, including repayment of acquired bank loans

19,873

241

82,093

* Of the £5,395,000 (26 weeks to 2 October 2010: £5,000; 52 weeks to 2 April 2011: £2,702,000) contingent purchase consideration payment £5,395,000 (26 weeks to 2 October 2010: £5,000; 52 weeks to 2 April 2011: £1,122,000) has been provided in the prior year's financial statements.

(Bi) Kirk Key Interlock Company, LLC

Bookvalue£000

Provisionalfair value adjustments£000

Total£000

Non-current assets

Intangible assets

9

5,555

5,564

Property, plant and equipment

290

410

700

Current assets

Inventories

598

(77)

521

Trade and other receivables

738

1

739

Cash and cash equivalents

47

-

47

Deferred tax

-

2,054

2,054

Total assets

1,682

7,943

9,625

Current liabilities

Trade and other payables

(443)

(103)

(546)

Bank loans

(1,144)

-

(1,144)

Provisions

-

(42)

(42)

Non-current liabilities

Deferred tax

-

(2,111)

(2,111)

Total liabilities

(1,587)

(2,256)

(3,843)

Net assets of businesses acquired

95

5,687

5,782

Cash consideration

7,679

Contingent purchase consideration

-

Total consideration

7,679

Goodwill arising on acquisition

1,897

On 9 May 2011, the Group acquired 100% of the issued share capital of Kirk Key Interlock Company, LLC [Kirk]. Kirk is based in Ohio, USA and manufactures interlocking systems to protect personnel and equipment in industrial applications. Kirk forms part of the Industrial Safety sector and was acquired to give Halma greater market strength in the USA. The excess of the fair value of the consideration paid over the fair value of the assets acquired is represented by customer related intangibles of £4,571,000 and brand intangibles of £984,000 with residual goodwill arising of £1,897,000. The goodwill represents the value of the acquired workforce, cross-selling opportunities and the ability to exploit the Group's existing distribution arrangements, particularly in the Americas.

The initial consideration was US$12,583,000 (US$14,458,000 including repayment of US$1,875,000 bank loans). There are no contingent consideration payment arrangements.

The Kirk acquisition contributed £2,558,000 of revenue and £534,000 of profit after tax for the 26 weeks ended 1 October 2011.

(Bii) Avo Photonics, Inc.

Bookvalue£000

Provisionalfair value adjustments£000

Total£000

Non-current assets

Intangible assets

-

4,424

4,424

Property, plant and equipment

228

(5)

223

Current assets

Inventories

140

50

190

Trade and other receivables

826

(68)

758

Cash and cash equivalents

2

-

2

Total assets

1,196

4,401

5,597

Current liabilities

Trade and other payables

(320)

(25)

(345)

Provisions

-

(203)

(203)

Corporation tax

(41)

(23)

(64)

Non-current liabilities

Deferred tax

-

(1,568)

(1,568)

Total liabilities

(361)

(1,819)

(2,180)

Net assets of businesses acquired

835

2,582

3,417

Cash consideration

5,704

Contingent purchase consideration

6,464

Total consideration

12,168

Goodwill arising on acquisition

8,751

On 8 July 2011, the Group acquired 100% of the issued share capital of Avo Photonics, Inc. (Avo). Avo, based in Pennsylvania, USA, designs and manufactures advanced, miniaturised photonic components and subsystems for OEM customers serving a wide range of end-markets. Avo forms part of the Health and Analysis sector and was acquired to give Halma's Photonics businesses access to additional technologies and manufacturing processes. The excess of the fair value of the consideration paid over the fair value of the assets acquired is represented by customer related intangibles of £4,424,000 with residual goodwill arising of £8,751,000. The goodwill represents the engineering expertise of the acquired workforce, the opportunity to leverage this expertise across all Halma's Photonics businesses and the ability to exploit the Group's existing customer base.

The initial consideration was US$9,126,000 followed by contingent consideration payable on or around June 2012 of between US$nil and US$11,000,000 dependent on the profits of the acquired business for the year up to March 2012. The Directors estimate that contingent consideration of US$10,341,000 will be paid.

The Avo acquisition contributed £1,097,000 of revenue and £256,000 of profit after tax for the 26 weeks ended 1 October 2011.