Summary of Halma p.l.c. Annual report and accounts 2007
Accounting Policies and Notes
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Another good year with continuing investment in people, innovation, market development and acquisitions.
The last financial year has again seen good progress for Halma. Revenue from continuing operations increased 14% to £354.6 million (£310.8 million in 2006) with underlying organic growth* of 8.1% despite adverse currency effects of 2.3% i.e. 10.4% at constant currency. Profit before tax and amortisation of acquired intangibles on continuing operations was £66.1 million (2006: £58.1 million) an increase of 14%, organic growth* at constant currency was 10.1%. This organic profit growth* compares with an equivalent figure of 14% in 2006 where we benefited from the rebound in the Water business, so in the year under review we faced slightly tougher comparables. Statutory profit before tax increased by 11% to £62.6 million. The Board is recommending a final dividend of 4.33p per share, an increase of 5% for the year and our 28th consecutive year of dividend increases of 5% or more. Our dividend cover has increased to 1.74 times (2006: 1.61 times). Return on total invested capital* was 14.0% (2006: 12.8%).
We have also made a number of acquisitions during the year: Mikropack, Baldwin Environmental and Labsphere in the Health and Analysis sector and Tritech and System Technologies in the Industrial Safety sector. In total we invested £27 million in acquisitions with a maximum potential of a further £5 million in deferred consideration. After the positive action taken in the previous year, no disposals were made during the period under review. At the end of the year our net debt was £7.7 million.
During the year we have seen a continuous flow of new products. We are also beginning to see results from our investments in China. During the year seven additional companies within the Group established a local presence there and during the coming year we expect several more to commence.
Our investment in people continues apace with enthusiastic attendance at our management training programmes and it is pleasing to see the energy with which attendees return to their companies, refreshed, invigorated, having learnt much, but more importantly, with a network of colleagues who actively support each other on all aspects of our business such as selling, innovation, technology and quality.
All of these investments, together with our investments in strengthening our selling and distribution resources, feed and support our strategy for healthy organic growth, so it is encouraging to see that this focus continues to bear fruit. This also gives us even more confidence that we can deliver significant value for shareholders from acquisitions that fit our strategic framework and meet our strict acquisition criteria. Furthermore we have significant financial resource at our disposal to do more.
In March, Andrew Walker stepped down from the Board and I should like to record our thanks for all his contribution during his four-year tenure as a non-executive Director of the Group and wish him well for the future.
On behalf of the Board, I should also like to thank all our employees for producing such a good performance.
In summary, another good year with continuing investment in people, innovation, market development and acquisitions. This, together with strong and effective leadership from our management team, gives us confidence for the future.
Geoff Unwin Chairman
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