". . . seeking acquisitions in key markets"

David Barber, Chairman

My statement in the Interim Report was made against the background of a troubled world situation, and I commented on the difficulty which this imposed on assessing our prospects. I therefore chose to express my confidence in terms of our performance relative to other companies, and in this context I believe that shareholders will agree that our performance has indeed been encouraging, despite the fact that the Group's pre-tax profit at £48.3 million was marginally below that of the previous year.

The USA is a major market for us, comprising one-third of our total sales. Inevitably, the downturn in this market during the year has held back our profit growth. This is graphically demonstrated by noting that our annual rate of growth in sales to the USA over the five years to March 2001 averaged 19% per annum compound. In contrast, during the year under review, our sales to the USA actually reduced by 4.5%.

The Group yet again demonstrated its cash generating abilities. After the expenditure of £8.1 million on capital investment and £2.6 million on businesses acquired for cash, the net cash balances at the year end amounted to £31 million, easily the largest in the Group's history.

We are continually seeking acquisitions to further strengthen our position in our key markets, and the existence of this strong cash balance I believe offers considerable potential for profit enhancement.

The Directors again recommend an increase of 15% in the final dividend per share. This is the twenty-fourth consecutive year in which the total dividend per share has been increased by 15% or more. The total dividend is covered 1.7 times by profit before amortisation of goodwill but after taxation. If approved, this dividend amounting to 3.206p per share will be paid on 19 August 2002 to shareholders on the register at the close of business on 19 July 2002.

On 30 April 2002, Clive Summerhayes retired as a Director of Halma p.l.c. Clive has been an invaluable member of the Halma Board, and we wish him every happiness in his retirement. Clive joined Halma in 1973 and during the past 29 years has made a very significant contribution to the Group's outstanding growth record. In addition to his own impact on our success, Clive has been outstanding as a developer of management talent within the Group, helping to build the very strong team we have today.