". . . remarkable progress over thirty-year period"

David Barber, Chairman

My normal pattern in these statements, as our long-term shareholders will recognise, has been to focus very specifically on the Group’s such a way that readers can easily and accurately measure our progress within the year under review. However, this will be my last Statement as Chairman of Halma. With this in mind, I have chosen not to comment on the on our immediate prospects. These are all covered in sufficient detail elsewhere within this Annual Report.

My first Statement as Chairman of Halma was written thirty years ago, in 1973, against a political and financial background dramatically different to the one we now see. Halma was then a tiny and unknown company. I trust that shareholders will forgive me if I use this particular Statement to review the whole of that thirty- year span and give one or two examples of what has been achieved by the Group over that period.

I have been privileged throughout my time as Halma Chairman to lead a quite outstanding body of people. This team has changed and developed over the years. Some are now retired. However, the increasing size of the Group means that most are still with us and still have many years of service ahead of them. To all of this team is due the credit and the praise for what has been achieved.

Out of many possible examples of Halma's year period I have selected the following:

• A consistently high rate of return on capital employed. The year-end rate of return has been in excess of 40% throughout the whole of the last twenty years, and, during the year under review, it rose to 54%.
  
  
• The compound growth rate in earnings per share over the whole of the thirty years since 1972/73 now averages 19% per annum. Few, if any, UK companies can match this record.
  
  
• Halma's growth has been virtually adjusted for scrip issues and for issues under the share option schemes, the total number of Halma shares in issue has increased by less than 1.3% per annum.
  
  
• Meanwhile, profit before taxation has risen by a compound increase of 20% per annum.
  
  
• The Group has a record of unbroken dividend growth since the whole of a twenty-year period to March 2000, the dividend per share was increased by not less than 20% per annum, possibly the longest such sequence ever recorded by any UK quoted company.
  
  
• £10,000 invested in Halma shares at the average share price obtaining during 1974, 1975 or 1976, including gross dividend income, would be worth, as at the end of March 2003, over £4.8 million.
  
  
• It is interesting to illustrate this by way of example. Jack Welch, on his retirement from GE, was very proud to claim that during his twenty-year tenure as Chief Executive their share price increased by 2,876%. It would be folie de grandeur for me to compare Halma with GE, one of the most successful companies in the world in recent decades. Nonetheless, it is worthy of note that, taking our 1974, 1975 or 1976 share price as a base, the share price of Halma (as at end March 2003) has increased by 37,850%.
  
  

In the interim accounts I reported the resignation of Hamish Ritchie after his distinguished service as a non-executive Director. Then in May 2003 we were shocked and saddened by the sudden death of another non-executive Director, Lord McGowan. Duncan was a quite exceptional individual, a delightful colleague, wise and well-loved. Our deepest sympathies go out to his widow and to his family.

We will very much miss the contribution and companionship of both Duncan and Hamish. I am very pleased, therefore, that Andrew Walker, who has a wealth of relevant Boardroom experience, joined us in May 2003, and we warmly welcome him to the Board. Action is, of course, already in hand to recruit a further additional non-executive Director to bring us back to full strength.

I have left until last the pleasurable task of welcoming Geoff Unwin as my successor as Chairman of the Halma Group. I need hardly comment on the crucial importance of this succession, especially in a Group like Halma which has had a consistent management team over many years. Geoff, of course, joined us aftera brilliant executive career, latterly as the Chief Executive of Cap Gemini, one of the world's largest and most successful has worked very closely with me during the past twelve months, and I have had ample opportunity to observe his skills and his ability.

With this background and with my own, I believe unique, appreciation of the qualities needed for this position, I can assure shareholders that we have a Chairman with exactly the right combination of experience, sensitivity and drive and who I believe can provide us with a future of consistent and substantial growth. I wish him every good fortune.

In conclusion, may I thank everyone in the Halma Group and all of our shareholders for their unfailing support and friendship to me over the years. It has been an exciting and immensely satisfying experience for me, and I trust that, as the song says, the best is yet to come.