Halma Regulatory News (HLMA)

HALMA plc

HalF YEAR RESULTS 2015/16

Record first half results and continued dividend growth

Halma, the leading safety, health and environmental technology group, today announces its half year results for the 27 weeks to 3 October 2015.

Financial Highlights

Change

2015

2014

Continuing Operations

Revenue

+ 11%

£379.7m

£340.9m

Adjusted Profit before Taxation1

+ 8%

£74.7m

£69.0m

Statutory Profit before Taxation

+ 5%

£64.2m

£61.2m

Adjusted Earnings per Share2

+ 8%

15.19p

14.05p

Statutory Earnings per Share

+ 6%

13.27p

12.57p

Interim Dividend per Share3

+ 7%

4.98p

4.65p

Return on Sales4

19.7%

20.2%

Return on Total Invested Capital5

14.7%

15.6%

Net Debt

£93.4m

£136.3m

●

Revenue increased 11% with Adjusted1 pre-tax profit up 8%. Organic constant currency growth5: revenue up 7%, profit up 4%.

●

Organic constant currency revenue growth5 in all major regions. Strong growth in the US and Europe; solid progress in UK and Asia Pacific.

●

Revenue growth in all sectors. Strong organic constant currency revenue and profit growth in Infrastructure Safety, Medical and Environmental & Analysis. Lower profit in Process Safety, reflecting a balance of tighter overhead control with a need to invest for market diversification.

●

Firetrace acquisition completed since half year end for £73m, in addition to one acquisition in May 2015. Acquisition pipeline becoming more balanced across all sectors.

●

Strong cash flow and increased financial capacity for investment in organic growth and acquisitions. Net debt of £93m (March 2015: £101m).

●

Interim dividend up 7% to 4.98p per share (2014/15: 4.65p).

Andrew Williams, Chief Executive of Halma, commented:

"Halma has made strong progress in the first half, achieving record revenue and profit in varied market conditions. The diversity of our products, customers and end market niches is a cornerstone of our success. Since the period end, order intake has continued to be ahead of revenue and order intake last year. We have also completed the purchase of Firetrace, demonstrating our ability to supplement organic growth with high quality acquisitions. Halma remains on track to make progress in the second half of the year in line with our expectations."

Pro-forma Information:

1

Adjusted to remove the amortisation of acquired intangible assets, acquisition items and profit or loss on disposal of operations of £10.4m charge (2014/15: £7.8m charge). See Note 2 to the Condensed Financial Statements for details.

2

Adjusted to remove the amortisation of acquired intangible assets, acquisition items, profit or loss on disposal of operations, and the associated tax thereon. See Note 6 to the Condensed Financial Statements 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 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. ROTIC is now calculated using the average Total Invested Capital. The prior period has been restated. See note 9 to the Condensed Financial Statements for details.

For further information, please contact:

Halma plcAndrew Williams, Chief ExecutiveKevin Thompson, Finance Director

+44 (0)1494 721 111

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 four business sectors:

· Process Safety

Products which protect assets and people at work.

· Infrastructure Safety

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

· Medical

Products used to improve personal and public health.

· Environmental & Analysis

Products and technologies for analysis in safety, life sciences and environmental markets.

The key characteristics of Halma's businesses are that they are based on specialist technology and application knowledge, offering strong growth potential. Many Group businesses are market leaders in their specialist field.

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 & Media' 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.

Review of Operations

Record half year results

Halma has made excellent progress during the first half of this year. Revenue for the half year increased by 11% to £380m (2014/15: £341m) including a positive currency translation impact of 3%. Organic revenue growth at constant currency was an impressive 7%.

Adjusted1 profit before taxation increased by 8% to £74.7m (2014/15: £69.0m) after a positive currency translation impact of 2%. Organic constant currency profit growth was 4%.

Profitability remained strong with Return on Sales1 of 19.7% (2014/15: 20.2%), well within our 18% to 22% target range. Gross margin (revenue less direct material and direct labour) also remained strong across the Group.

These results once again demonstrate Halma's ability to sustain growth and high returns. Demand for our products is underpinned by the long-term market growth drivers of increasing safety regulation, increasing demand for healthcare and increasing demand for life-critical resources. These external growth drivers are supplemented by a relentless commitment to increasing investment in innovation, international expansion and talent development enabling us to grow above our end-market rates.

7% dividend increase

The Board declares an increase of 7% in the interim dividend to 4.98p per share (2014/15: 4.65p per share). The interim dividend will be paid on 10 February 2016 to shareholders on the register on 4 January 2016. For the past 36 years we have increased our full year dividend by 5% or more each year.

Revenue growth in all major regions

The table below shows the pattern of revenue growth in each region including the underlying rates of organic growth at constant currency which are calculated by excluding the effect of currency, acquisitions and disposals. Despite varied market conditions we achieved revenue growth in all major regions. The USA performed very strongly and increased by 20% with Mainland Europe, the UK and Asia Pacific also showing good progress.

Revenue from outside our traditional home markets in the USA, Mainland Europe and the UK grew by 9%, contributing 26.0% of total revenue (2014/15: 26.5%). There was strong growth in Near and Middle East while revenue was lower in South America, mainly due to weakness in the energy markets impacting our Process Safety sector. In Asia Pacific, good growth in India, South Korea and China more than offset a weaker performance in Australasia.

External revenue by destination

Half year 2015/16

Half year 2014/15

£m

% of total

£m

% of total

Change £m

%growth

% organic growth at constant currency

United States of America

124.5

33%

104.1

31%

20.4 

20% 

10%

Mainland Europe

85.2

22%

79.2

23%

6.0 

8% 

10%

United Kingdom

71.5

19%

67.2

20%

4.3 

6% 

5%

Asia Pacific

59.7

16%

56.3

16%

3.4 

6% 

1%

Other countries

38.8

10%

34.1

10%

4.7 

14% 

6%

379.7

100%

340.9

100%

38.8 

11% 

7%

Revenue growth in all four sectorsThe Infrastructure Safety and Medical sectors continued their well-established record of growth. Tough trading conditions in Process Safety were more than compensated for by the expected recovery in our Environmental & Analysis sector.

External revenue by sector

Half year 2015/16

Half year 2014/15

£m

£m

Change  £m 

%growth

% organic growth at constant currency

Process Safety

77.8

73.6

4.2 

6% 

(1%)

Infrastructure Safety

122.4

112.7

9.7 

9% 

8% 

Medical

92.3

78.4

13.9 

18% 

12% 

Environmental & Analysis

87.2

76.2

11.0 

14% 

10% 

379.7

340.9

38.8 

11% 

7% 

Process Safety revenue increased by 6% to £78m (2014/15: £74m) with positive contributions of 1% from currency translation and 6% from prior year acquisitions. Organic constant currency revenue declined by 1%, reflecting the tougher conditions in the oil and gas market, which contributes just under half of the sector revenue. Geographically, organic constant currency revenue growth was strongest in the USA and Near and Middle East with organic revenue decline in Asia Pacific and South America.

Profit2 was 7% lower at £19.1m (2014/15: £20.4m), including an organic constant currency decline of 14%. Despite this, Return on Sales remained strong at 24.5% (2014/15: 27.8%), with those businesses already serving diverse markets, such as Gas Detection and Trapped-Key Interlocks, performing well. We do not expect the oil and gas market to improve in the near future and therefore we are balancing tight control of overheads with the need to invest to further increase diversification both regionally and by end market.

Infrastructure Safety had a good first half with revenue up by 9% to £122m (2014/15: £113m) with organic constant currency growth of 8%. The Fire and Automatic Door Sensor businesses made good progress, while Elevator Safety and Security performed less well. Overall, the rates of organic constant currency growth were higher in the USA, Mainland Europe and the UK than the less mature markets, such as Asia Pacific and South America, although market conditions were stronger in Near and Middle East.

Profit2 improved by 8% to £24.6m (2014/15: £22.8m) including organic constant currency growth of 7%. Return on Sales was 20.1% (2014/15: 20.3%). The sector achieved volume growth while maintaining gross margins, reflecting the benefits of increasing investment in new product development. In addition to this, the recent acquisition of the fire suppression business, Firetrace (see below), gives us confidence for growth to continue in the second half.

The Medical sector performed strongly. Revenue grew by 18% to £92m (2014/15: £78m) including organic constant currency revenue growth of 12%. All three businesses (Ophthalmology, Vital Signs Monitoring and Fluidics) made excellent progress. There was revenue growth in all major geographic regions including double-digit growth in Mainland Europe, Asia Pacific and the USA, which represents almost half of sector revenue.

Profit2 rose by a very impressive 18% to £24.6m (2014/15: £20.9m) including an organic constant currency increase of 13%. Return on Sales was unchanged at 26.6% (2014/15: 26.6%) with a slight improvement in gross margins. This encouraging underlying trading momentum should enable our Medical sector to continue to make good progress in the second half.

Environmental & Analysis made an encouraging recovery after a tough time last year. Revenue increased by 14% to £87m (2014/15: £76m) including organic constant currency growth of 10%. The Water, Photonics and Environmental Monitoring businesses all increased revenue. There was also growth in all major geographic regions, with double-digit organic growth rates in the USA and Mainland Europe (at constant currency).

Profit2 increased by 25% to £14.8m (2014/15: £11.9m) including organic constant currency growth of 18%. As with revenue, there was a useful contribution from all three business segments even though the benefit from the UK water utilities beginning their next five-year investment cycle will not start to be felt until the second half of the year. Consequently, this sector is well placed to continue its encouraging recovery in the second half.

VAS LLC and Firetrace USA LLC acquisitions completed

In May 2015, we completed the purchase of Value Added Solutions, LLC (VAS), based in Connecticut, USA, which designs and manufactures fluidic assemblies for life sciences and analytical instruments. VAS has been integrated with one of our Medical sector companies, Diba Industries, which is also based in Connecticut, USA. The initial cash consideration was US$5m (£3m).

In October 2015, Halma acquired Firetrace USA, LLC, based near Phoenix, Arizona. Firetrace designs and manufactures customised fire suppression systems for confined spaces serving a range of end markets including transportation, process machinery, computer server hubs, defence and aerospace. This stand-alone addition to our Infrastructure Safety sector brings fire suppression technology to our long-standing and successful fire detection business. The initial consideration was US$110m (£73m).

These transactions demonstrate our ability to find attractive, high quality businesses within our existing sectors which fit both our financial and operating characteristics. Under the leadership of our four Sector Chief Executives, our acquisition pipeline is steadily becoming more balanced across all sectors. This more focused effort should strengthen further the current acquisition pipeline and ensure we continue to deliver this important component of our growth strategy.

Continued strategic investment for growth

Despite the varied and challenging trading environment, Halma has continued to deliver organic growth above the rate of its end markets for more than a decade through our businesses gaining market share, growing internationally and diversifying into new market niches. Achieving this sustained success over such a long period has required a relentless determination to increase strategic investment in innovation, international expansion and talent development both centrally and within individual sectors.

Our companies increased R&D expenditure by 21% to £19.8m (2014/15: £16.4m) with increases in all sectors, and representing 5.2% of Group revenue. However, our investment in innovation is not restricted to new product development and we encourage our businesses to collaborate and share best practice in all areas of their businesses as we believe this is a very effective catalyst for broader business innovation. This is exemplified by the biennial Halma Innovation and Technology Exposition (HITE) event which was held in April this year in Barcelona.

Currency volatility

Halma reports its results in Sterling with approximately 40% of Group revenue denominated in US Dollars and 10% in Euros. In the half year, Sterling weakened on average by 8% relative to the US Dollar and strengthened 12% against the Euro, resulting in a 3% positive currency translation impact on revenue and 2% positive impact on profit as noted above. If exchange rates continue at current levels for the full year, we estimate that the currency translation impact will be broadly neutral year on year.

Funding capacity increased via US Private Placement

Cash generation remains strong. Cash conversion (adjusted operating cash flow as a percentage of adjusted operating profit) was 88% (2014/15: 87%), ahead of our 85% cash conversion target. Net debt at the end of the period reduced to £93m (March 2015: £101m) having continued organic investment, increased dividend and taxation payments and completed one acquisition. Capital expenditure of £9.0m (2014/15: £9.9m) showed a good underlying increase but was lower due to greater property expenditure in the prior year. Gross cash balances were untypically high at £134m due mainly to holding cash at the half year end for completion of the Firetrace acquisition immediately after.

On 2 November 2015 a US Private Placement was agreed for $250m, in a mix of Sterling, US Dollars, and Euros, at a weighted average interest rate of 2.5% over the outstanding borrowing period of five, seven and ten years. Funds will be drawn down in January 2016. This underpins Group funding with the diversification of term debt in addition to the existing syndicated bank facility of £360m which runs to November 2018.

Gearing (the ratio of net debt to EBITDA) at half year end was 0.5 times, increasing to 0.9 times following the Firetrace acquisition. We feel comfortable operating with up to 1.25 times gearing, and would be prepared to exceed this level temporarily if the timing of acquisitions required it.

Risks and uncertainties

A number of potential risks and uncertainties exist which could have a material impact on the Group's performance over the second half of the financial year and could cause actual results to differ materially from expected and historical results. The Group has in place processes for identifying, evaluating and managing key risks. These risks, together with a description of the approach to mitigating them, are set out on pages 28 to 31 of the 2015 Annual Report and Accounts, which is available on the Group's website at www.halma.com. The principal risks and uncertainties relate to operational, strategic, legal, financial, people and economic issues. See note 15 to the Condensed Financial Statements for further details.

The Directors do not consider that the principal risks and uncertainties have changed since the publication of the 2015 Annual Report and Accounts and confirm that they remain relevant for the second half of the financial year. As part of their ongoing assessment of risk throughout the period the Directors have considered the above risks in the context of the new Executive Board structure and the Group's delivery of its financial objectives. Macro-economic uncertainty and movements in foreign exchange rates continue to remain a risk to financial performance.

Going concern

After conducting a review of the Group's financial resources the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. For this reason they continue to adopt the going concern basis in preparing the Condensed Financial Statements.

The Directors have adopted the requirements of the updated UK Corporate Governance Code which are relevant for the first time for the current reporting period and will be reporting their first Viability Statement in the Annual Report and Accounts for the year ending 2 April 2016.

Board changes

Stephen Pettit retired from the Halma Board at our Annual General Meeting in July 2015. Stephen joined Halma in 2003 and served as our Senior Independent Director and Chairman of the Remuneration Committee. We would like to thank Stephen for his contribution over more than a decade, during which time our business has grown and changed substantially. His willingness to support both the Board and the businesses in any way he could is greatly appreciated. Tony Rice succeeds Stephen as Senior Independent Director and Remuneration Committee Chairman.

Outlook

Halma has made strong progress in the first half, achieving record revenue and profit in varied market conditions. The diversity of our products, customers and end-market niches is a cornerstone of our success. We continue to capitalise on this foundation by increasing our investment in innovation, international expansion and talent development every year. This, together with our agile organisational model, enables us to grow faster than our markets over the medium term for example by gaining market share or entering new market niches.

Since the period end, order intake has continued to be ahead of revenue and order intake last year. We have also completed the purchase of Firetrace, demonstrating our ability to supplement organic growth with high quality acquisitions. Halma remains on track to make progress in the second half of the year in line with our expectations.

Andrew Williams

Chief Executive

Kevin ThompsonFinance Director

1 See Financial Highlights.

2 See note 2 to the Condensed Financial Statements.

Half year results 2015/16

Condensed Financial Statements

Consolidated Income Statement

Unaudited 27 weeks to 3 October 2015

Unaudited 26 weeks to 27 September 2014

Audited 52 weeks to 28 March  2015

Notes

Before adjustments*£000 

Adjustments*(note 2)£000 

Total £000 

Before adjustments*£000 

Adjustments*(note 2)£000 

Total £000

Total £000

Continuing operations

Revenue

2

379,657 

- 

379,657 

340,903 

- 

340,903

726,134

Operating profit

77,657 

(11,004)

66,653 

71,425 

(9,275)

62,150

137,063

Share of results of associates

(79)

- 

(79)

65 

- 

65

64

Profit on disposal of operations

- 

592 

592 

- 

1,430 

1,430

1,430

Finance income

3

128 

- 

128 

64 

- 

64

167

Finance expense

4

(3,049)

- 

(3,049)

(2,536)

- 

(2,536)

(5,113)

Profit before taxation

74,657 

(10,412)

64,245 

69,018 

(7,845)

61,173

133,611

Taxation

5

(17,170)

3,143 

(14,027)

(15,874)

2,243 

(13,631)

(29,610)

Profit for the period attributable to equity shareholders

57,487 

(7,269)

50,218 

53,144 

(5,602)

47,542

104,001

Earnings per share

6

From continuing operations

Basic

15.19p 

13.27p 

14.05p 

12.57p

27.49p

Diluted

13.27p 

12.56p

27.48p

Dividends in respectof the period

7

Dividends paid and proposed (£000)

18,855 

17,599

45,229

Per share

4.98p 

4.65p

11.96p

*

Adjustments include the amortisation of acquired intangible assets, acquisition items, profit or loss on disposal of operations, and the associated taxation thereon.

Consolidated Statement of Comprehensive Income and Expenditure

Unaudited

 27 weeks to

3 October

2015

£000

Unaudited

 26 weeks to

27 September

2014

£000

Audited

52 weeks to

28 March

2015

£000

Profit for the period

50,218

47,542

104,001

Items that will not be reclassified subsequently to the Income Statement:

Actuarial gains/(losses) on defined benefit pension plans

13,122

(9,663)

(34,795)

Tax relating to components of other comprehensive income that will not be reclassified

(2,625)

1,865

6,791

Items that may be reclassified subsequently to the Income Statement:

Effective portion of changes in fair value of cash flow hedges

(343)

4

71

Exchange (losses)/gains on translation of foreign operations and net investment hedge

(14,096)

(2,587)

30,900

Exchange losses transferred to Income Statement on disposal of operation

22

-

189

Tax relating to components of other comprehensive income that may be reclassified

80

(1)

(23)

Other comprehensive (expense)/income for the period

(3,840)

(10,382)

3,133

Total comprehensive income for the period attributable to equity shareholders

46,378

37,160

107,134

The exchange losses of £14,096,000 (26 weeks to 27 September 2014: losses of £2,587,000; 52 weeks to 28 March 2015: gains of £30,900,000) includes losses of £211,000 (26 weeks to 27 September 2014: gains of £103,000; 52 weeks to 28 March 2015: gains of £862,000) which relate to net investment hedges.

Consolidated Balance Sheet

Unaudited

3 October

2015

£000

Unaudited

27 September

2014

£000

Audited

28 March

2015

£000

Non-current assets

Goodwill

400,237

385,593

406,190

Other intangible assets

128,781

138,686

138,691

Property, plant and equipment

86,000

78,359

86,303

Interests in associates

3,763

4,216

4,236

Deferred tax asset

25,512

22,020

28,596

644,293

628,874

664,016

Current assets

Inventories

83,014

77,720

79,734

Trade and other receivables

143,144

135,225

156,464

Tax receivable

547

703

20

Cash and cash equivalents

133,716

49,177

41,230

Derivative financial instruments

173

622

1,069

360,594

263,447

278,517

Total assets

1,004,887

892,321

942,533

Current liabilities

Trade and other payables

90,721

85,004

102,717

Borrowings

-

5,225

1,705

Provisions

2,179

11,003

11,746

Tax liabilities

9,978

12,382

12,405

Derivative financial instruments

270

338

636

103,148

113,952

129,209

Net current assets

257,446

149,495

149,308

Non-current liabilities

Borrowings

227,103

180,228

140,419

Retirement benefit obligations

51,405

44,209

66,790

Trade and other payables

4,058

3,335

3,756

Provisions

2,534

1,631

1,549

Deferred tax liabilities

49,783

51,310

51,862

334,883

280,713

264,376

Total liabilities

438,031

394,665

393,585

Net assets

566,856

497,656

548,948

Equity

Share capital

37,965

37,960

37,965

Share premium account

23,608

23,548

23,608

Own shares*

(6,452)

(4,885)

(8,450)

Capital redemption reserve

185

185

185

Hedging reserve

(92)

126

171

Translation reserve

31,255

11,653

45,329

Other reserves

(8,387)

(6,468)

(4,073)

Retained earnings

488,774

435,537

454,213

Shareholders' funds

566,856

497,656

548,948

Consolidated Statement of Changes in Equity

For the 27 weeks ended 3 October 2015

Share

capital

£000

Share

premium

account

£000

Own

shares

£000

Capital

redemption

reserve

£000

Hedging

reserve*

£000

Translation

reserve*

£000

Other

reserves

£000

Retained

earnings

£000

Total

£000

At 28 March 2015 (audited)

37,965

23,608

(8,450)

185

171

45,329

(4,073)

454,213

548,948

Profit for the period

-

-

-

-

-

-

-

50,218

50,218

Other comprehensive income and expense:

Exchange differences on translation of foreign operations

-

-

-

-

-

(14,096)

-

-

(14,096)

Exchange losses transferred to Income Statement on disposal of operation

-

-

-

-

-

22

-

-

22

Actuarial gains on defined benefit pension plans

-

-

-

-

-

-

-

13,122

13,122

Effective portion of changes in fair value of cash flow hedges

-

-

-

-

(343)

-

-

-

(343)

Tax relating to components of other comprehensive income and expense

-

-

-

-

80

-

-

(2,625)

(2,545)

Total other comprehensive incomeand expense

-

-

-

-

(263)

(14,074)

-

10,497

(3,840)

Dividends paid

-

-

-

-

-

-

-

(27,630)

(27,630)

Share-based payments charge**

-

-

-

-

-

-

1,952

-

1,952

Deferred tax on share-basedpayment transactions

-

-

-

-

-

-

(575)

-

(575)

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

-

-

-

-

-

-

-

1,476

1,476

Purchase of Employee Benefit Trust shares**

-

-

(1,216)

-

-

-

-

-

(1,216)

Performance share plan awards vested**

-

-

3,214

-

-

-

(5,691)

-

(2,477)

At 3 October 2015 (unaudited)

37,965

23,608

(6,452)

185

(92)

31,255

(8,387)

488,774

566,856

*

The presentation of the hedging and translation reserves, which were previously netted, has been amended to show the two reserves and their movements in the period separately. The comparatives have been adjusted to reflect this amended presentation. There has been no impact on Shareholders' funds in any period.

**

The purchase of Employee Benefit Trust shares/treasury shares and performance share plan awards vested were shown net in Own shares in prior periods, as were the share based payments charge and performance share plan awards vested in Other reserves. The prior period comparatives have been adjusted to show these gross amounts. There has been no impact on Shareholders' funds in any period.

Own shares are ordinary shares in Halma plc purchased by the Company and held to fulfil the Company's obligations under the Company's share plans. As at 3 October 2015 the number of treasury shares held was 940,421 (27 September 2014: 853,631; 28 March 2015: 1,371,785) and the number of shares held by the Employee Benefit Trust was 89,198 (27 September 2014 and 28 March 2015: nil).

For the 26 weeks ended 27 September 2014

Share

capital

£000

Share

premium

account

£000

Own

shares

£000

Capital

redemption

reserve

£000

Hedging

reserve*

£000

Translation

reserve*

£000

Other

reserves

£000

Retained

earnings

£000

Total

£000

At 29 March 2014 (audited)

37,902

22,778

(7,054)

185

123

14,240

(2,745)

420,571

486,000

Profit for the period

-

-

-

-

-

-

-

47,542

47,542

Other comprehensive income and expense:

Exchange differences on translation of foreign operations

-

-

-

-

-

(2,587)

-

-

(2,587)

Actuarial losses on defined benefit pension plans

-

-

-

-

-

-

-

(9,663)

(9,663)

Effective portion of changes in fair value of cash flow hedges

-

-

-

-

4

-

-

-

4

Tax relating to components of other comprehensive income and expense

-

-

-

-

(1)

-

-

1,865

1,864

Total other comprehensive incomeand expense

-

-

-

-

3

(2,587)

-

(7,798)

(10,382)

Share options exercised

58

770

-

-

-

-

-

-

828

Dividends paid

-

-

-

-

-

-

-

(25,800)

(25,800)

Share-based payments charge**

-

-

-

-

-

-

1,929

-

1,929

Deferred tax on share-based payment transactions

-

-

-

-

-

-

(441)

-

(441)

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

-

-

-

-

-

-

-

1,022

1,022

Purchase of treasury shares**

-

-

(3,042)

-

-

-

-

-

(3,042)

Performance share plan awards vested**

-

-

5,211

-

-

-

(5,211)

-

-

At 27 September 2014 (unaudited)

37,960

23,548

(4,885)

185

126

11,653

(6,468)

435,537

497,656

*

The presentation of the hedging and translation reserves, which were previously netted, has been amended to show the two reserves and their movements in the period separately. The comparatives have been adjusted to reflect this amended presentation. There has been no impact on Shareholders' funds in any period.

**

The purchase of Employee Benefit Trust shares/treasury shares and performance share plan awards vested were shown net in Own shares in prior periods, as were the share based payments charge and performance share plan awards vested in Other reserves. The prior period comparatives have been adjusted to show these gross amounts. There has been no impact on Shareholders' funds in any period.

For the 52 weeks ended 28 March 2015

Share

capital

£000

Share

premium

account

£000

Own

shares

£000

Capital

redemption

reserve

£000

Hedging

reserve*

£000

Translation

 reserve*

£000

Other

reserves

£000

Retained

earnings

£000

Total

£000

At 29 March 2014 (audited)

37,902

22,778

(7,054)

185

123

14,240

(2,745)

420,571

486,000

Profit for the period

-

-

-

-

-

-

-

104,001

104,001

Other comprehensive incomeand expense:

Exchange differences on translationof foreign operations

-

-

-

-

-

30,900

-

-

30,900

Exchange losses transferred to Income Statement on disposal of operation

-

-

-

-

-

189

-

-

189

Actuarial losses on defined benefit pension plans

-

-

-

-

-

-

-

(34,795)

(34,795)

Effective portion of changes in fair value of cash flow hedges

-

-

-

-

71

-

-

-

71

Tax relating to components of other comprehensive income and expense

-

-

-

-

(23)

-

-

6,791

6,768

Total other comprehensive incomeand expense

-

-

-

-

48

31,089

-

(28,004)

3,133

Share options exercised

63

830

-

-

-

-

-

-

893

Dividends paid

-

-

-

-

-

-

-

(43,399)

(43,399)

Share-based payments charge**

-

-

-

-

-

-

3,828

-

3,828

Deferred tax on share-basedpayment transactions

-

-

-

-

-

-

291

-

291

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

-

-

-

-

-

-

-

1,044

1,044

Purchase of treasury shares**

-

-

(6,843)

-

-

-

-

-

(6,843)

Performance share plan awards vested**

-

-

5,447

-

-

-

(5,447)

-

-

At 28 March 2015 (audited)

37,965

23,608

(8,450)

185

171

45,329

(4,073)

454,213

548,948

*

The presentation of the hedging and translation reserves, which were previously netted, has been amended to show the two reserves and their movements in the period separately. The comparatives have been adjusted to reflect this amended presentation. There has been no impact on Shareholders' funds in any period.

**

The purchase of Employee Benefit Trust shares/treasury shares and performance share plan awards vested were shown net in Own shares in prior periods, as were the share based payments charge and performance share plan awards vested in Other reserves. The prior period comparatives have been adjusted to show these gross amounts. There has been no impact on Shareholders' funds in any period.

Consolidated Cash Flow Statement

Notes

Unaudited

27 weeks to

 3 October

2015

£000

Unaudited

26 weeks to

27 September

 2014

£000

Audited

52 weeks to

28 March

2015

£000

Net cash inflow from operating activities

8

61,886

61,924

137,231

Cash flows from investing activities

Purchase of property, plant and equipment

(8,244)

(9,419)

(22,164)

Purchase of computer software

(778)

(473)

(1,021)

Purchase of other intangibles

(81)

(268)

(382)

Proceeds from sale of property, plant and equipment

468

543

1,411

Development costs capitalised

(3,990)

(3,239)

(7,213)

Interest received

128

64

134

Acquisition of businesses, net of cash acquired

10

(12,902)

(87,145)

(87,743)

Disposal of business, net of cash disposed

11

908

4,221

4,248

Net cash used in investing activities

(24,491)

(95,716)

(112,730)

Financing activities

Dividends paid

(27,630)

(25,800)

(43,399)

Proceeds from issue of share capital

-

828

893

Purchase of own shares

(1,216)

(3,042)

(6,843)

Interest paid

(1,589)

(1,499)

(3,118)

Proceeds from borrowings

87,000

152,435

68,962

Repayment of borrowings

-

(77,367)

(35,341)

Net cash from/(used in) financing activities

56,565

45,555

(18,846)

Increase in cash and cash equivalents

93,960

11,763

5,655

Cash and cash equivalents brought forward

39,525

33,126

33,126

Exchange adjustments

231

(329)

744

Cash and cash equivalents carried forward

133,716

44,560

39,525

Unaudited

 3 October

2015

£000

Unaudited

27 September

 2014

£000

Audited

28 March

2015

£000

Reconciliation of net cash flow to movement in net debt

Increase in cash and cash equivalents

93,960

11,763

5,655

Cash inflow from drawdowns of borrowings

(87,000)

(75,068)

(33,621)

Net debt acquired

-

(468)

(468)

Loan notes issued*

(263)

(608)

(657)

Loan notes repaid*

368

2,731

2,731

Exchange adjustments

442

(130)

(38)

7,507

(61,780)

(26,398)

Net debt brought forward

(100,894)

(74,496)

(74,496)

Net debt carried forward

(93,387)

(136,276)

(100,894)

*

£368,000 of the £657,000 loan notes issued in the prior period was converted at par into cash on 17 July 2015. The remaining loan notes are outstanding. Loan notes totalling £263,000 were issued on 15 April 2015 and 16 July 2015 as part of the consideration payable in relation to the acquisition of Advanced Electronics Limited on 14 May 2014. The loan notes, which attract interest of 1%, are convertible into cash by the holder at par on each anniversary of the acquisition date until 14 May 2019.

Notes to the Condensed Financial Statements

1 Basis of preparation

General information

The Half Year Report, which includes the Interim Management Report and Condensed Financial Statements for the 27 weeks to 3 October 2015, has not been audited or reviewed by the Group's Auditor and was approved by the Directors on 17 November 2015.

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 28 March 2015.

The figures shown for the 52 weeks to 28 March 2015 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 to which the Auditor 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, which includes a £360m five-year revolving credit facility due to expire in November 2018 and the recently agreed United States Private Placement of $250m which matures over intervals of five, seven and ten years up to 2026 with funds to be drawn in January 2016.

With this in mind, 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 four main reportable segments (Process Safety, Infrastructure Safety, Medical and Environmental & Analysis), 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.

Segment revenue and results

Revenue (all continuing operations)

Unaudited

27 weeks to

 3 October

2015

£000

Unaudited

26 weeks to

27 September

2014

£000

Audited

52 weeks to

28 March

2015

£000

Process Safety

77,773

73,579

158,372

Infrastructure Safety

122,411

112,693

234,063

Medical

92,297

78,464

169,333

Environmental & Analysis

87,243

76,256

164,412

Inter-segmental sales

(67)

(89)

(46)

Revenue for the period

379,657

340,903

726,134

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 and has no material revenue derived from the rendering of services.

Profit (all continuing operations)

Unaudited

27 weeks to

 3 October

 2015

£000

Unaudited

26 weeks to

 27 September

 2014

£000

Audited

52 weeks to

28 March

2015

£000

Segment profit before allocation of adjustments*

Process Safety

19,090

20,439

44,772

Infrastructure Safety

24,591

22,821

49,992

Medical

24,579

20,847

45,385

Environmental & Analysis

14,767

11,861

27,403

83,027

75,968

167,552

Segment profit after allocation of adjustments*

Process Safety

17,393

18,187

40,280

Infrastructure Safety

23,707

23,165

49,585

Medical

18,826

15,227

31,981

Environmental & Analysis

12,689

11,590

25,699

Segment profit

72,615

68,169

147,545

Central administration costs

(5,449)

(4,478)

(8,988)

Costs to close the defined benefit pension plan to future accrual in the prior period

-

(46)

-

Net finance expense

(2,921)

(2,472)

(4,946)

Group profit before taxation

64,245

61,173

133,611

Taxation

(14,027)

(13,631)

(29,610)

Profit for the period

50,218

47,542

104,001

* Adjustments include the amortisation of acquired intangible assets, acquisition items, and profit or loss on disposal of operations.

The accounting policies of the reportable segments are the same as the Group's accounting policies. For acquisitions after 3 April 2010, acquisition transaction costs and adjustments to contingent purchase consideration are recognised in the Consolidated Income Statement. Segment profit before these acquisition costs, the amortisation of acquired intangible assets and the profit or loss on disposal of continuing operations is disclosed separately above as this is the measure reported to the Chief Executive for the purpose of allocation of resources and assessment of segment performance.

These adjustments are analysed as follows:

Unaudited for the 27 weeks ended 3 October 2015

Acquisition items

Amortisation

of acquired

intangibles

£000

Transaction

costs

£000

Adjustments

 to contingent

consideration

£000

Total

 amortisation

 charge and

acquisition

 items

£000

Disposal of

operations

 (note 11)

£000

Total

£000

Process Safety

(1,697)

-

-

(1,697)

-

(1,697)

Infrastructure Safety

(411)

(148)

(325)

(884)

-

(884)

Medical

(6,217)

(114)

(14)

(6,345)

592

(5,753)

Environmental & Analysis

(2,078)

-

-

(2,078)

-

(2,078)

Total Segment & Group

(10,403)

(262)

(339)

(11,004)

592

(10,412)

The transaction costs arose mainly on the acquisitions of Value Added Solutions LLC (see note 10) and Firetrace USA, LLC (Firetrace) (see note 13), which were acquired on 19 May 2015 and 5 October 2015 respectively.

The £325,000 charge to contingent consideration related to the revision of the estimate of the remaining Advanced Electronics Limited payable. The payable was settled during the period.

The £592,000 profit on disposal relates to the disposal of 8.8% of the Group's ownership interest in Optomed Oy on 26 August 2015. See note 11 for further details.

Unaudited for the 26 weeks ended 27 September 2014

Acquisition items

Amortisation

of acquired

intangibles

£000

Transaction

costs

£000

Adjustments

to contingent

consideration

£000

Total

amortisation

charge and

acquisition

items

£000

Disposal of

operations

(note 11)

£000

Effects of

closure to

future benefit

 accrual of

Defined

Benefit

pension

 plans*

£000

Total

£000

Process Safety

(1,344)

(908)

-

(2,252)

-

-

(2,252)

Infrastructure Safety

(354)

(386)

-

(740)

1,084

-

344

Medical

(5,962)

(4)

-

(5,966)

346

-

(5,620)

Environmental & Analysis

(1,935)

-

1,664

(271)

-

-

(271)

Total Segment

(9,595)

(1,298)

1,664

(9,229)

1,430

-

(7,799)

Central administration costs

-

-

-

-

-

(46)

(46)

Total Group

(9,595)

(1,298)

1,664

(9,229)

1,430

(46)

(7,845)

* The £46,000 relates to the costs to close the defined benefit pension plan to future accrual in the prior period.

The transaction costs arose on the acquisitions of Rohrback Cosasco Systems Inc., £908,000; Advanced Electronics Limited, £386,000; and Plasticspritzerei AG, £4,000.

The £1,664,000 credit to contingent consideration related to the revision of the estimate of the remaining ASL Holdings Limited payable from £2,500,000 to £836,000, after payment of £1,000,000 in May 2014.

Within the Infrastructure Safety segment, the £1,084,000 profit relates to the disposal, on 30 May 2014, of Monitor Elevator Products, Inc. Within the Medical segment, the £346,000 profit comprises the disposal, on 2 May 2014, of the Group's 50% ownership interest in PSRM Immobilien AG (£131,000) and, on 14 July 2014, of 10.72% of its ownership interest in Optomed Oy (£215,000).

Audited for the 52 weeks ended 28 March 2015

Acquisition items

Amortisation

of acquired

intangibles

£000

Transaction

costs

£000

Adjustments

to contingent

consideration

£000

Release of

 fair value

adjustments

to inventory

£000

Total

amortisation

charge and

acquisition

items

£000

Disposal of

operations

(note 11)

£000

Total

£000

Process Safety

(3,026)

(928)

-

(538)

(4,492)

-

(4,492)

Infrastructure Safety

(765)

(486)

(102)

(130)

(1,483)

1,076

(407)

Medical

(12,156)

(21)

(1,581)

-

(13,758)

354

(13,404)

Environmental & Analysis

(4,007)

-

2,303

-

(1,704)

-

(1,704)

Total Segment & Group

(19,954)

(1,435)

620

(668)

(21,437)

1,430

(20,007)

The £1,581,000 charge to contingent consideration in the Medical sector related mainly to the revision in the estimate of the MST payable from $6,504,000 to $9,061,000. The £2,303,000 credit to contingent consideration in the Environmental & Analysis sector related to the further revision of the estimate of the remaining ASL Holdings Limited payable.

The total assets and liabilities of all four segments have not been disclosed as there have been no material changes to those disclosed in the 2015 Annual Report and Accounts.

Geographic information

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

Revenue by destination

Unaudited

 27 weeks to

 3 October

2015

£000

Unaudited

26 weeks to

 27 September

2014

£000

Audited

52 weeks to

28 March

2015

£000

United States of America

124,415

104,110

223,374

Mainland Europe

85,190

79,216

167,363

United Kingdom

71,520

67,225

138,312

Asia Pacific

59,736

56,248

116,842

Africa, Near and Middle East

25,419

19,055

44,037

Other countries

13,377

15,049

36,206

Group revenue

379,657

340,903

726,134

3 Finance income

Unaudited

 27 weeks to

 3 October

2015

£000

Unaudited

26 weeks to

 27 September

2014

£000

Audited

52 weeks to

28 March

2015

£000

Interest receivable

128

64

134

Fair value movement on derivative financial instruments

-

-

33

128

64

167

4 Finance expense

Unaudited

27 weeks to

3 October

2015

£000

Unaudited

26 weeks to

27 September

2014

£000

Audited

52 weeks to

28 March

2015

£000

Interest payable on bank loans and overdrafts

1,580

1,499

3,090

Amortisation of finance costs

265

265

530

Net interest charge on pension plan liabilities

1,008

701

1,419

Other interest payable

9

-

28

2,862

2,465

5,067

Fair value movement on derivative financial instruments

187

49

-

Unwinding of discount on provisions

-

22

46

3,049

2,536

5,113

5 Taxation

The total Group tax charge for the 27 weeks to 3 October 2015 of £14,027,000 (26 weeks to 27 September 2014: £13,631,000; 52 weeks to 28 March 2015: £29,610,000) comprises a current tax charge of £15,280,000 (26 weeks to 27 September 2014: £14,608,000; 52 weeks to 28 March 2015: £33,523,000) and a deferred tax credit of £1,253,000 (26 weeks to 27 September 2014: £977,000; 52 weeks to 28 March 2015: £3,913,000). The tax charge is based on the estimated effective tax rate for the year.

The tax charge includes £12,270,000 (26 weeks to 27 September 2014: £10,620,000; 52 weeks to 28 March 2015: £24,064,000) in respect of overseas tax.

6 Earnings per ordinary share

Basic earnings per ordinary share are calculated using the weighted average of 378,390,374 (27 September 2014: 378,115,425; 28 March 2015: 378,328,541) shares in issue during the period (net of shares purchased by the Company and held as treasury and Employee Benefit Trust shares). Diluted earnings per ordinary share are calculated using 378,390,374 (27 September 2014: 378,383,111; 28 March 2015: 378,475,804) shares which includes dilutive potential ordinary shares of nil (27 September 2014: 267,686; 28 March 2015: 147,263). 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, acquisition items, profit or loss on disposal of operations, and associated taxation thereon.

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 as follows:

Unaudited

27 weeks to

 3 October

2015

£000

Unaudited

26 weeks to

 27 September

2014

£000

Audited

52 weeks to

28 March

2015

£000

Earnings from continuing operations

50,218

47,542

104,001

Costs to close the defined benefit pension plan to future accrual (after tax)

-

36

-

Amortisation of acquired intangible assets (after tax)

7,351

6,801

14,121

Acquisition transaction costs (after tax)

171

1,286

1,423

Release of fair value adjustments to inventory (after tax)

-

-

474

Adjustments to contingent consideration (after tax)

339

(1,664)

(1,162)

Profit on disposal of operations (after tax)

(592)

(857)

(945)

Adjusted earnings

57,487

53,144

117,912

Per ordinary share

Unaudited

27 weeks to

 3 October

2015

pence

Unaudited

26 weeks to

 27 September

2014

pence

Audited

52 weeks to

28 March

2015

pence

Earnings from continuing operations

13.27

12.57

27.49

Costs to close the defined benefit pension plan to future accrual (after tax)

-

0.01

-

Amortisation of acquired intangible assets (after tax)

1.94

1.80

3.73

Acquisition transaction costs (after tax)

0.05

0.34

0.38

Release of fair value adjustments to inventory (after tax)

-

-

0.13

Adjustments to contingent consideration (after tax)

0.09

(0.44)

(0.31)

Profit on disposal of operations (after tax)

(0.16)

(0.23)

(0.25)

Adjusted earnings

15.19

14.05

31.17

7 Dividends

Per ordinary share

Unaudited

27 weeks to

 3 October

2015

£000

Unaudited

26 weeks to

 27 September

2014

£000

Audited

52 weeks to

28 March

2015

£000

Amounts recognised as distributions to shareholders in the period

Final dividend for the year to 28 March 2015 (29 March 2014)

7.31

6.82

6.82

Interim dividend for the year to 28 March 2015

-

-

4.65

7.31

6.82

11.47

Dividends in respect of the period

Interim dividend for the year to 2 April 2016 (28 March 2015)

4.98

4.65

4.65

Final dividend for the year to 28 March 2015

-

-

7.31

4.98

4.65

11.96

Unaudited

27 weeks to

 3 October

2015

£000

Unaudited

26 weeks to

 27 September

2014

£000

Audited

52 weeks to

28 March

2015

£000

Amounts recognised as distributions to shareholders in the period

Final dividend for the year to 28 March 2015 (29 March 2014)

27,630

25,800

25,800

Interim dividend for the year to 28 March 2015

-

-

17,599

27,630

25,800

43,399

Dividends in respect of the period

Interim dividend for the year to 2 April 2016 (28 March 2015)

18,855

17,599

17,599

Final dividend for the year to 28 March 2015

-

-

27,630

18,855

17,599

45,229

8 Notes to the Consolidated Cash Flow Statement

Unaudited

27 weeks to

 3 October

2015

£000

Unaudited

26 weeks to

 27 September

2014

£000

Audited

52 weeks to

28 March

2015

£000

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

Profit on continuing operations before finance income and expense, share of results of associates and profit on disposal of operations

66,653

62,150

137,063

Depreciation of property, plant and equipment

7,387

6,822

14,005

Amortisation of computer software

610

568

1,211

Amortisation of capitalised development costs and other intangibles

2,347

2,829

5,505

Impairment of capitalised development costs

-

-

236

Amortisation of acquired intangible assets

10,403

9,595

19,954

Share-based payment expense (less than)/in excess of amounts paid

(1,052)

2,079

3,803

Additional payments to pension plans

(3,241)

(3,250)

(6,560)

Loss/(profit) on sale of property, plant and equipment and computer software

35

(114)

(590)

Operating cash flows before movement in working capital

83,142

80,679

174,627

Increase in inventories

(4,525)

(3,037)

(1,097)

Decrease/(increase) in receivables

11,661

6,073

(10,656)

(Decrease)/increase in payables and provisions

(12,398)