Interim Results

HALMA p.l.c.

HALF YEAR REPORT FOR THE 26 WEEKS TO 27 SEPTEMBER 2008

27 NOVEMBER 2008

Strong revenue and profit growth 

reflects Halma's diverse and resilient end markets

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

to 27 September 2008.

Highlights include:

Revenue from continuing operations up 19% to £221.7m (2007/08: £186.2m), including 14% organic revenue growth* (10% at constant currency).

Pre-tax profit from continuing operations** up 17% to £39.0m (2007/08: £33.4m), including 13% organic profit growth* (8% at constant currency).

Double digit growth in all three business sectors. Revenue outside our traditionally strong markets of the UK, USA and Mainland Europe now represents 21.5% (2007/08: 19%) of total revenue. 

Adjusted earnings per share from continuing operations*** up 20% to 7.52p (2007/08: 6.28p). Statutory earnings per share 6.85p (2007/08: 5.94p).

Strong margins and returns maintained with return on sales of 17.6% (2007/08: 17.9%) and operating profit** growth of 20%. ROTIC* improved to 14.7% (2007/08: 13.9%).

Strong financial position with modest net debt. Substantial headroom on bank facilities (now extended to 2013) to support acquisitive and organic growth plans.

Good cash generation supports a 5% increase in the interim dividend, reflecting the Board's continuing confidence in Halma's long-term growth prospects whilst continuing to improve our dividend cover.

*

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

**

Adjusted to remove the amortisation of acquired intangible assets of £3.4m (2007/8: £2.0m).

***

Adjusted to remove the amortisation of acquired intangible assets. See note 4 for details.

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

"I am pleased to report that we have delivered a strong performance in the six-month period to 27 September 2008, achieving record revenues and profits. Our strong performance over many years confirms the resilience of Halma during challenging macro-economic conditions. In previous times of economic challenge and rapid change, Halma's ability to adapt quickly to the changing market needs has enabled us to sustain growth and frequently gain market share. During the past 20 years or more, our Return on sales has remained high, at above 16%.

"Since 2005, our strategy has been not only to resume our excellent record of organic growth and successful acquisitions, but also to significantly increase investment in people development, emerging markets, manufacturing and new product innovation. While this increased investment moderated any potential margin expansion over this short period, I am confident that the returns from our investment combined with our strong financial resources will help now to ensure we continue to perform well, relative to markets as a whole."

For further information, please contact:

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

+44 (0)1494 721111

Hogarth Partnership LimitedRachel Hirst/Andrew Jaques

+44 (0)20 7357 9477

NOTE TO EDITORS 

1.

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

Infrastructure Sensors

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

Health and Analysis

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

Industrial Safety

We make products which protect property and people at work.

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

2.

High resolution photos of Halma senior management, including Chief Executive Andrew Williams, and images illustrating Halma business activities can be downloaded from its website: www.halma.com. Click on the 'News' link, then 'Image Library'. Photo queries: David Waller +44 (0)20 8205 0038, e-mail: [email protected].

3.

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

4.

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

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

Financial highlights

Change

Unaudited

26 weeks to

27 September 2008

Unaudited  26 weeks to29 September 2007(5)

Continuing operations 

Revenue

+ 19%

£221.7m

£186.2m

Adjusted profit before taxation(1)

+ 17%

£39.0m

£33.4m

Statutory profit before taxation 

+ 13%

£35.6m

£31.4m

Adjusted earnings per share(2)

+ 20%

7.52p

6.28p

Statutory earnings per share 

+ 15%

6.85p

5.94p

Interim dividend per share

+ 5%

3.15p

3.00p

Return on sales(3)

17.6%

17.9%

Return on total invested capital(4)

14.7%

13.9%

Return on capital employed(4)

57.1%

58.5%

Pro-forma information:

(1)

Adjusted to remove the amortisation of acquired intangible assets of £3,399,000 (2007/08: £1,968,000).

(2)

Adjusted to remove the amortisation of acquired intangible assets. See note 4 for details.

(3)

Return on sales is defined as adjusted(1) profit before taxation from continuing operations expressed as a percentage of revenue from continuing operations.

(4)

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

(5)

The comparative figures for 2007/08 as previously reported have been amended to account for the disposal of Post Glover Lifelink, Inc as a discontinued operation. See note 8 for details.

Chairman's statement 

Geoff Unwin, Chairman of Halma, said:

Halma has continued to perform well in uncertain times

Halma: what we do and our strategyOur business is to make products which protect lives and improve the quality of life for people worldwide. We do this through continuous innovation in market-leading products, which meet the increasing demands for improvements to health, safety and the environment. We build strong positions in markets where the demand is global. Our businesses are autonomous and highly entrepreneurial.

Results

For the first half, revenue from continuing operations increased 19% to £221.7m (2007/08: £186.2m) and adjusted* profit before tax from continuing operations increased 17% to £39.0m (2007/08: £33.4m). Statutory profit before tax increased by 13% to £35.6m. Organic revenue growth** was 14% and 10% at constant currency. Organic profit growth** was 13%; 8% at constant currency. Return on total invested capital** was 14.7% (2007/08: 13.9%).

We continue to invest strongly in products, people and market development. In September 2008 we announced the acquisition of Fiberguide Industries, which manufactures complex optical fibre cables and assemblies, for an initial cash consideration of $14.0m (£7.9m). In November 2008 we acquired the business and assets of Oerlikon Optics USA Inc's operation located in Golden, Colorado for $6.0m (£4.0m) in cash. The business designs and manufactures optical coatings and optomechanical assemblies.

Dividends

The Board declares an interim dividend of 3.15 pence per share, an increase of 5%, which will be paid on 4 February 2009 to shareholders on the register at 5 January 2009. This increase reflects the Board's confidence in Halma's long-term growth prospects whilst continuing to improve our dividend cover.

Progress

Across the Group, progress has again been good. Our subsidiary boards are much strengthened. There has been a high rate of growth in revenues outside our traditionally strong markets of the UK, USA and Mainland Europe, adding to the growth achieved within these markets.

We have a good pipeline of possible acquisition prospects. However, as we acquire in the private markets, it may take some time for price expectations to align themselves with those prevailing in public markets. Meanwhile we are taking a patient stance regarding the deployment of capital.

Outlook

At the time of writing, stock markets are jittery, as investors begin to see the smoke clearing somewhat from the banking crisis, only to see a weakening global economic perspective. Demand for our products is underpinned by long-term growth drivers and we therefore expect Halma to continue to perform well, relative to markets as a whole.

*   Before amortisation of acquired intangible assets of £3,399,000 (2007/08: £1,968,000)

**  See Financial highlights

Chief Executive's review

Andrew Williams, Chief Executive of Halma, said:

Our strong performance over many years confirms the resilience of Halma

A record performance

I am pleased to report that we have delivered a strong performance in the six-month period to 27 September 2008, achieving record revenues and profits. 

Revenue growth on continuing operations of 19% produced an increase in adjusted* profit (on continuing operations after financing costs) of 17%. Operating profit* growth was 20% demonstrating continued strong product margins and investment in strengthening our sales, technical and operational resources.

Currency movements were favourable, boosting revenue by 4% and adjusted* profit by 5%. Excluding the impact of currency and acquisitions made in the current and previous year, underlying organic revenue and profit growth were 10% and 8% respectively.

Growth in all three sectors

Infrastructure Sensors performed well, increasing revenue by 15% and profit by 18%, raising the Return on sales from 17.1% to 17.6%. This was all organic growth as our Fire Detection sub-sector continued its recent record of strong progress and the benefits of restructuring our Security Sensors business last year started to emerge as planned. Automatic Door Safety also grew revenue and profit whilst profits from our Elevator Safety business were marginally down on the same period last year.

Health and Analysis achieved profit growth of 21% and revenue growth of 25%. Despite good underlying revenue growth and the expected contribution from recent acquisitions, underlying profit growth was slightly disappointing. Product margins were steady, but overhead costs grew faster in absolute terms. Actions are underway to address the specific challenges within the relevant businesses to ensure increases in resources are productive and profitable.

Our Industrial Safety sector goes from strength to strength, increasing profits by 30% and revenues by 19% - almost all organic growth. Each of our four businesses (Gas Detection, Bursting Discs, Safety Interlocks and Asset Monitoring) grew revenue and profit whilst continuing to invest more in improving distribution in new markets.

Growth in all global regions

Revenues increased to all geographic regions, but more substantially outside the UK and USA in accordance with our strategic objective. Progress was boosted by the contribution of Riester, particularly in Mainland Europe and South America. Halma businesses are aiming to increase their presence outside the UK, USA and Mainland Europe and it is pleasing to once again report significant revenue growth in the 'rest of the world' of 35% - now representing 21.5% of total Group sales.

Order intake in the period was 14% ahead of last year and we entered the second half with a larger order book than last year. Unsurprisingly, order intake growth reduced slightly throughout the period in our US and UK companies, but held up well in the other world regions and currently remains within our expectations. This resilience in demand reflects the strengths we derive from operating in diverse geographies and markets and choosing to focus on market niches where long-term sustainable growth drivers underpin demand. 

Strong balance sheet and cash flow 

Cash flow was in line with our strong track record. Our current syndicated revolving credit facility of £165m, which we renegotiated in February 2008 on favourable terms for a further five years, gives us headroom to support organic growth and future acquisitions. We ended the period with net debt of £48m.

Return on capital employed** remained high at 57.1% whilst our overall Group measure of Return on total invested capital** was an impressive 14.7%.

The major risks and uncertainties facing Halma and what we are doing to identify, manage and mitigate them are covered in detail in our latest Annual report on page 14 (see also on www.halma.com). Clearly, recent financial and economic changes have raised the relative importance of treasury risks and risks to organic growth in the remainder of the financial year. Actions have been taken to ensure that we have sufficient headroom to continue with our strategic objectives.

Further acquisition investment

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

Continued investment to drive organic growth

In China, our new manufacturing hub in Shanghai, to accommodate assembly operations for four Halma companies, is in the final phase of installation and will be operational by the end of the year. Our planned £2.5m investment in a joint venture in China to support development of our Fire Detection business did not proceed once it became clear that our respective objectives could be achieved without a formal JV arrangement. In India, our new Halma hub in Mumbai is operational and recruitment of local commercial and technical resources for Halma companies is underway.

Investment in R&D increased broadly in line with revenue growth, representing 5% of Group revenues (2007/08: 5%). Our internal Halma Annual Innovation Awards for 2008 demonstrated the more active approach we have been taking towards improving not just our new product development activities but also our manufacturing operations. Around half of all entries were for process innovations. This year's award was won by Memco for their new Panachrome elevator door sensor with the runners up being the new 'click-n-seal' Fluid Technology connection product from Diba Industries and Volk Optical's new ophthalmic lens polishing manufacturing process.

Capital expenditure during the period increased by 16% to £7.0m (2007/08: £6.0m). Projects included investments which gave businesses a 'step change' in their manufacturing capabilities and promise to drive growth in new market niches.

Outlook

Our strong performance over many years confirms the resilience of Halma during challenging macro-economic conditions. During the past 20 years or more, our Return on sales has remained high, at above 16%. 

In addition to the benefits of being in diverse markets with robust long-term growth drivers, we gain significant advantage from our decentralised operating structure. We have a clear strategic framework, a flat and simple reporting structure, autonomy and accountability at the subsidiary board level and high calibre people throughout our organisation. Decisions are made by those closest to our customers and markets, often resulting in major tactical changes being implemented without delay. In previous times of economic challenge and rapid change, Halma's ability to adapt quickly to the changing market needs has enabled us to sustain growth and frequently gain market share.

Since 2005, our strategy has been not only to resume our excellent record of organic growth and successful acquisitions, but also to significantly increase investment in people development, emerging markets, manufacturing and new product innovation. While this increased investment moderated any potential margin expansion over this short period, I am confident that the returns from our investment combined with our strong financial resources will help now to ensure we continue to perform well, relative to markets as a whole. 

* Before amortisation of acquired intangible assets

** See Financial highlights

Responsibility statement

We confirm that to the best of our knowledge:

(a)

these Condensed financial statements have been prepared in accordance with International Accounting Standard 34 'Interim Financial Reporting';

(b)

this Half year report includes a fair review of the information required by Disclosure and Transparency Rule (DTR) 4.2.7R (indication of important events during the period and description of principal risks and uncertainties for the remainder of the financial year); and

(c)

this Half year report includes a fair review of the information required by DTR 4.2.8R (disclosure of related party transactions and changes therein).

By order of the Board

A J Williams

Chief Executive

27 November 2008

K J Thompson

Finance Director

HALF YEAR RESULTS FOR THE 26 WEEKS TO 27 SEPTEMBER 2008

Condensed financial statements

Consolidated income statement

£000 

Unaudited  26 weeks to 27 September 2008 

Unaudited  26 weeks to 29 September 2007 

Audited  52 weeks to  29 March  2008 

Before  acquired intangibles  amortisation 

Amortisation  of acquired   intangibles 

Total 

Before acquired intangibles amortisation  

Amortisation  of acquired   intangibles 

Total 

Total 

Continuing operations

Revenue (note 1)

221,704 _______

- _______

221,704 _______ 

186,170 _______ 

- _______ 

186,170 _______ 

395,061 _______ 

Operating profit

40,859 

(3,399)

37,460 

34,105 

(1,968)

32,137 

70,166 

Finance income

4,277 

- 

4,277 

4,017 

- 

4,017 

8,159 

Finance expense

(6,117)_______ 

- _______ 

(6,117)_______ 

(4,764)_______ 

- _______ 

(4,764)_______ 

(10,303)_______ 

Profit before taxation

39,019 

(3,399)

35,620 

33,358 

(1,968)

31,390 

68,022 

Taxation (note 3)

(10,925)_______ 

904 _______ 

(10,021)_______ 

(9,978)_______ 

705 _______ 

(9,273)_______ 

(19,688)_______ 

Profit for the period

from continuing 

operations

28,094 

(2,495)

25,599 

23,380 

(1,263)

22,117 

48,334 

Discontinued operations

Net profit for the 

period from discontinued 

operations (note 8)

- _______ 

- _______ 

- _______ 

133 _______ 

- _______ 

133 _______ 

1,950 _______ 

Profit for the period 

attributable to equity 

shareholders (note 1)

28,094 _______ 

(2,495)_______ 

25,599 _______ 

23,513 _______ 

(1,263)_______ 

22,250 _______ 

50,284 _______ 

Earnings per ordinary 

share (note 4)

From continuing operations

Basic

7.52p 

6.85p 

6.28p 

5.94p 

12.97p 

Diluted

6.83p 

5.91p 

12.90p 

From continuing and 

discontinued operations

Basic

7.52p 

6.85p 

6.31p 

5.97p 

13.49p 

Diluted

6.83p 

5.94p 

13.42p 

Dividends in respect of the 

period (note 5)

Declared (£000)

11,786 

11,190 

28,187 

Declared per share

3.15p 

3.00p 

7.55p 

Consolidated balance sheet

£000 

Unaudited 27 September  2008 

Unaudited 29 September  2007 

Audited 29 March  2008 

Non-current assets

Goodwill

164,723 

129,207 

161,230 

Other intangible assets

35,980 

14,953 

33,252 

Property, plant and equipment

59,930 

50,287 

57,452 

Deferred tax assets

13,665 _______ 

9,717 _______ 

10,069 _______ 

274,298 _______ 

204,164 _______ 

262,003 _______ 

Current assets

Inventories

47,879 

39,789 

44,267 

Trade and other receivables

98,366 

81,225 

99,741 

Cash and cash equivalents

22,210 _______ 

25,360 _______ 

28,118 _______ 

168,455 _______ 

146,374 _______ 

172,126 _______ 

Total assets

442,753 _______ 

350,538 _______ 

434,129 _______ 

Current liabilities

Borrowings

4,882 

31,752 

7,035 

Trade and other payables

62,928 

55,935 

69,420 

Tax liabilities

10,977 _______ 

9,936 _______ 

8,273 _______ 

78,787 _______ 

97,623 _______ 

84,728 _______ 

Net current assets

89,668 _______ 

48,751 _______ 

87,398 _______ 

Non-current liabilities

Borrowings

65,142 

- 

65,358 

Retirement benefit obligations

48,804 

34,703 

35,957 

Trade and other payables

2,670 

2,538 

2,874 

Deferred tax liabilities

4,106 _______ 

2,581 _______ 

6,108 _______ 

120,722 _______ 

39,822 _______ 

110,297 _______ 

Total liabilities

199,509 _______ 

137,445 _______ 

195,025 _______ 

Net assets

243,244 _______ 

213,093 _______ 

239,104 _______ 

Capital and reserves

Share capital

37,521 

37,394 

37,446 

Share premium account

17,926 

16,263 

16,949 

Treasury shares

(2,197)

(2,058)

(3,292)

Capital redemption reserve

185 

185 

185 

Translation reserve

12,537 

(5,035)

7,144 

Other reserves

3,941 

4,806 

5,106 

Retained earnings

173,331 _______ 

161,538 _______ 

175,566 

_______ 

Shareholders' funds

243,244 _______ 

213,093 _______ 

239,104 _______ 

Consolidated statement of recognised income and expense

£000 

Unaudited 26 weeks to 27 September  2008 

Unaudited 26 weeks to 29 September  2007 

Audited 52 weeks to 29 March  2008 

Exchange differences on translation of foreign operations

5,393 

(763)

11,352 

Exchange differences transferred to profit on disposal of foreign operations

- 

- 

64 

Actuarial (losses)/gains on defined benefit pension plans

(15,146)

23 

(3,886)

Tax on items taken directly to reserves

4,309 _______ 

(750)_______ 

343 _______ 

Net (loss)/profit recognised directly in reserves

(5,444)

(1,490)

7,873 

Profit for the period

25,599 _______ 

22,250 _______ 

50,284 _______ 

Total recognised income and expense for the period

20,155 _______ 

20,760 _______ 

58,157 _______ 

Reconciliation of movements in shareholders' funds

£000 

Unaudited 26 weeks to  27 September  2008 

Unaudited 26 weeks to  29 September  2007 

Audited 52 weeks to  29 March  2008 

Shareholders' funds brought forward

239,104 

206,608 

206,608 

Profit for the period

25,599 

22,250 

50,284 

Dividends paid

(16,997)

(16,139)

(27,329)

Exchange differences on translation of foreign operations

5,393 

(763)

11,352 

Exchange differences transferred to profit on disposal of foreign operations

- 

- 

64 

Actuarial (losses)/gains on defined benefit pension plans

(15,146)

23 

(3,886)

Tax on items taken directly to reserves

4,309 

(750)

343 

Issue of shares 

1,052 

1,106 

1,844 

Movement in treasury shares 

1,095 

(394)

(1,628)

Movement in other reserves

(1,165)_______ 

1,152 _______ 

1,452 _______ 

Total movement in shareholders' funds

4,140 _______ 

6,485 _______ 

32,496 _______ 

Shareholders' funds carried forward

243,244 _______ 

213,093 _______ 

239,104 _______ 

Consolidated cash flow statement

£000 

Unaudited 26 weeks to  27 September  2008 

Unaudited 26 weeks to  29 September  2007 

Audited 52 weeks to  29 March  2008 

Net cash inflow from operating activities (note 6)

29,927 _______ 

25,963 _______ 

58,401 _______ 

Cash flows from investing activities

Purchase of property, plant and equipment

(6,073)

(5,610)

(14,787)

Purchase of computer software

(928)

(438)

(952)

Proceeds from sale of property, plant and equipment

1,683 

482 

831 

Development costs capitalised

(1,694)

(2,078)

(3,796)

Interest received

379 

331 

721 

Acquisition of businesses

(8,064)

(1,212)

(46,537)

Disposal of businesses

309 _______ 

-  _______ 

2,405 _______ 

Net cash used in investing activities

(14,388)_______ 

(8,525)_______ 

(62,115)_______ 

Financing activities

Dividends paid

(16,997)

(16,139)

(27,329)

Proceeds from issue of share capital

1,052 

1,106 

1,844 

Net purchase of treasury shares

(474)

(786)

(1,632)

Interest paid

(1,917)

(877)

(2,473)

(Repayment)/drawdown of borrowings

(3,809)_______ 

2,300 _______ 

37,796 _______ 

Net cash (used in)/from financing activities

(22,145)_______ 

(14,396)_______ 

8,206 _______ 

(Decrease)/increase in cash and cash equivalents (note 6)

(6,606)

3,042 

4,492 

Cash and cash equivalents brought forward

28,118 

22,051 

22,051 

Exchange adjustments

698 _______ 

267 _______ 

1,575  _______ 

Cash and cash equivalents carried forward

22,210 _______ 

25,360 _______ 

28,118 _______ 

Notes to the condensed financial statements

 1

Segmental analysis

Sector analysis

£000 

Revenue 

Unaudited 26 weeks to  27 September  2008 

Unaudited 26 weeks to  29 September  2007 

Audited 52 weeks to  29 March  2008 

Infrastructure Sensors

92,298 

80,423 

167,262 

Health and Analysis

76,397 

61,017 

134,630 

Industrial Safety

53,325 

44,978 

93,731 

Inter-segmental sales

(316)_______ 

(248)_______ 

(562)_______ 

Continuing operations

221,704 

186,170 

395,061 

Discontinued operations (note 8)

- _______ 

1,698 _______ 

2,894 _______ 

Revenue for the period

221,704 _______ 

187,868 _______ 

397,955 _______ 

Inter-segmental sales are charged at prevailing market prices

Profit

Unaudited 26 weeks to  27 September  2008 

Unaudited 26 weeks to  29 September  2007 

Audited 52 weeks to  29 March  2008 

Infrastructure Sensors

16,248 

13,765 

28,504 

Health and Analysis

14,175 

11,749 

27,842 

Industrial Safety

11,740 

9,030 

19,355 

Central companies

(1,304)_______ 

(439)_______ 

(778)_______ 

Continuing operations

40,859 

34,105 

74,923 

Discontinued operations

- 

205 

436 

Net finance expense

(1,840)_______ 

(747)_______ 

(2,144)_______ 

Group profit before amortisation of acquired intangibles

39,019 

33,563 

73,215 

Amortisation of acquired intangible assets

(3,399)

(1,968)

(4,757)

Profit on disposal of operations before tax (note 8)

- 

- 

1,669 

Taxation

(10,021)_______ 

(9,345)_______ 

(19,843)_______ 

Profit for the period

25,599 _______ 

22,250 _______ 

50,284 _______ 

Geographical analysis

£000 

Revenue by destination 

Revenue by origin 

Unaudited 26 weeks to  27 September  2008 

Unaudited 26 weeks to  29 September  2007 

Audited 52 weeks to  29 March  2008 

Unaudited 26 weeks to  27 September  2008 

Unaudited 26 weeks to  29 September  2007 

Audited 52 weeks to  29 March  2008 

United Kingdom

54,363 

51,704 

109,253 

121,269 

109,068 

228,090 

United States of America

55,753 

50,651 

103,013 

62,736 

56,105 

115,932 

Mainland Europe 

63,957 

48,516 

107,883 

43,791 

26,617 

61,709 

Asia Pacific and Australasia

26,306 

19,301 

42,859 

11,475 

9,331 

19,422 

Africa, Near and Middle East

13,717 

11,724 

22,136 

- 

- 

- 

Other countries

7,608 

4,274 

9,917 

- 

- 

- 

Inter-segmental sales

- _______ 

- _______ 

- _______ 

(17,567)_______ 

(14,951)_______ 

(30,092)_______ 

Continuing operations

221,704 

186,170 

395,061 

221,704 

186,170 

395,061 

Discontinued operations (note 8)

- _______ 

1,698 _______ 

2,894 _______ 

- _______ 

1,698 _______ 

2,894 _______ 

Group revenue

221,704 _______ 

187,868 _______ 

397,955 _______ 

221,704 _______ 

187,868 _______ 

397,955 _______ 

Inter-segmental sales are charged at prevailing market prices

£000 

Profit by origin 

Unaudited 26 weeks to  27 September  2008 

Unaudited 26 weeks to  29 September  2007 

Audited 52 weeks to  29 March  2008 

United Kingdom

19,615 

17,406 

37,608 

United States of America

10,926 

11,002 

22,710 

Mainland Europe 

9,358 

4,697 

12,597 

Asia Pacific and Australasia

960 _______ 

1,000 _______ 

2,008 _______ 

Operating profit from continuing operations before amortisation

of acquired intangibles

40,859 

34,105 

74,923 

Discontinued operations (note 8)

- 

205 

436 

Net finance expense

(1,840)_______ 

(747)_______ 

(2,144)_______ 

Group profit before amortisation of acquired intangibles

39,019 

33,563 

73,215 

Amortisation of acquired intangible assets

(3,399)

(1,968)

(4,757)

Profit on disposal of operations before tax (note 8)

- 

- 

1,669 

Taxation 

(10,021) _______ 

(9,345) _______ 

(19,843) _______ 

Profit for the period

25,599 _______ 

22,250 _______ 

50,284 _______ 

 2

Basis of preparation

The Half year report, which includes the Interim management report and Condensed financial statements for the 26 weeks to 27 September 2008, has not been audited or reviewed by the Group's auditors and was approved by the Directors on 27 November 2008.

The report has been prepared in accordance with International Accounting Standard 34, applying the accounting policies and presentation that were applied in the preparation of the Group's statutory accounts for the 52 weeks to 29 March 2008.

The figures shown for the 52 weeks to 29 March 2008 are based on the Group's statutory accounts for that period and do not constitute the Group's statutory accounts for that period as defined in section 240 of the Companies Act 1985. These statutory accounts, which were prepared under International Financial Reporting Standards, have been filed with the Registrar of Companies. They were unqualified and did not contain statements under sections 237(2) or (3) of the Companies Act 1985.

The report has been prepared solely to provide additional information to shareholders as a body to assess the Board's strategies and the potential for those strategies to succeed. It should not be relied on by any other party or for any other purpose.

 3

Taxation

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

The tax charge includes £6,580,000 (26 weeks to 29 September 2007: £5,227,000; 52 weeks to 29 March 2008: £10,046,000) in respect of overseas tax.

 4

Earnings per ordinary share

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

Unaudited  26 weeks to  27 September  2008  £000 

Unaudited 26 weeks to  29 September  2007  £000 

Audited 52 weeks to  29 March  2008 

£000 

Earnings from continuing and discontinued operations

25,599 

22,250 

50,284 

Remove earnings from discontinued operations

- _______ 

(133)_______ 

(1,950)_______ 

Earnings from continuing operations

25,599 

22,117 

48,334 

Add back amortisation of acquired intangible assets after taxation

2,495 _______ 

1,263 _______ 

3,344 _______ 

Adjusted earnings

28,094 _______ 

23,380 _______ 

51,678 _______ 

Per ordinary share 

Unaudited  26 weeks to  27 September  2008  pence 

Unaudited 26 weeks to  29 September  2007 pence 

Audited 52 weeks to  29 March  2008 pence 

Earnings from continuing and discontinued operations

6.85 

5.97 

13.49 

Remove earnings from discontinued operations

- _______ 

(0.03)_______ 

(0.52)_______ 

Earnings from continuing operations

6.85 

5.94 

12.97 

Add back amortisation of acquired intangible assets after taxation

0.67 _______ 

0.34 _______ 

0.89 _______ 

Adjusted earnings

7.52 _______ 

6.28 _______ 

13.86 _______ 

 5

Ordinary dividends

Per ordinary share 

Unaudited 26 weeks to  27 September  2008  pence 

Unaudited  26 weeks to  29 September  2007 pence 

Audited 52 weeks to  29 March  2008 pence 

Amounts recognised as distributions to shareholders in the period

Final dividend for the year to 29 March 2008 (31 March 2007)

4.55 

4.33 

4.33 

Interim dividend for the year to 29 March 2008

- _______ 

- _______ 

3.00 _______ 

4.55 _______ 

4.33 _______ 

7.33 _______ 

Dividends declared in respect of the period

Interim dividend for the year to 28 March 2009 (29 March 2008)

3.15 

3.00 

3.00 

Final dividend for the year to 29 March 2008

- _______ 

- _______ 

4.55 _______ 

3.15 _______ 

3.00 _______ 

7.55 _______ 

Unaudited 26 weeks to  27 September  2008  £000 

Unaudited  26 weeks to  29 September  2007 £000 

Audited  52 weeks to 29 March  2008 £000 

Amounts recognised as distributions to shareholders in the period

Final dividend for the year to 29 March 2008 (31 March 2007)

16,997 

16,139 

16,139 

Interim dividend for the year to 29 March 2008

- _______ 

- _______ 

11,190 _______ 

16,997 _______ 

16,139 _______ 

27,329 _______ 

Dividends declared in respect of the period

Interim dividend for the year to 28 March 2009 (29 March 2008)

11,786 

11,190 

11,190 

Final dividend for the year to 29 March 2008

- _______ 

- _______ 

16,997 _______ 

11,786 _______ 

11,190 _______ 

28,187 _______ 

 6

Notes to the consolidated cash flow statement

£000 

Unaudited 26 weeks to  27 September  2008 

Unaudited 26 weeks to  29 September  2007 

Audited 52 weeks to  29 March  2008 

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

Profit from continuing operations before taxation

37,460 

32,137 

70,166 

Profit from discontinued operations before taxation

- 

205 

436 

Depreciation and amortisation of computer software

5,038 

4,348 

9,142 

Amortisation of capitalised development costs

1,295 

810 

1,981 

Amortisation of acquired intangible assets

3,399 

1,968 

4,757 

Share-based payment expense in excess of amounts paid

472 

1,064 

1,997 

Additional payments to pension scheme

(3,162)

(3,162)

(6,352)

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

(27)_______ 

(498)_______ 

(1,186)_______ 

Operating cash flows before movement in working capital

44,475 

36,872 

80,941 

Increase in inventories

(1,825)

(927)

(2,278)

Decrease/(increase) in receivables

2,292 

544 

(9,605)

(Decrease)/increase in payables

(7,172)_______ 

(5,232)_______ 

6,970 _______ 

Cash generated from operations

37,770 

31,257 

76,028 

Taxation paid

(7,843)_______ 

(5,294)_______ 

(17,627)_______ 

Net cash inflow from operating activities

29,927 _______ 

25,963 _______ 

58,401 _______ 

Reconciliation of net cash flow to movement in net debt

(Decrease)/increase in cash and cash equivalents

(6,606)

3,042 

4,492 

Repayment/(drawdown) of borrowings

3,809 

(2,300)

(37,796)

Exchange adjustments

(742)_______ 

577 _______ 

(3,260)_______ 

(3,539)

1,319 

(36,564)

Net debt brought forward

(44,275)_______ 

(7,711)_______ 

(7,711)_______ 

Net debt carried forward

(47,814)_______ 

(6,392)_______ 

(44,275)_______ 

 7

Acquisitions

On 5 September 2008 the Group acquired the assets and liabilities of Fiberguide Industries, Inc, which, together with the aggregate of consideration, is summarised below. The contribution of the acquired business to the Group's revenue and profit before tax and amortisation of acquired intangible assets for the period was £299,000 and £35,000 respectively. If the acquisition had taken place at the beginning of the period it is estimated that Group reported revenue would have been £2,176,000 higher and profit before tax and amortisation of acquired intangible assets for the period would have been £221,000 higher.

Adjustments have been made to the book value of the net assets of the company to reflect their provisional fair value to the Group. The allocation of goodwill is also provisional since certain elements of the purchase consideration are conditional on future profitability.

£000