New reporting sectors

29 Nov 2005

Halma, the leading safety, health and sensor technology group, today issues a reconciliation of the Group's historic results under the three new reporting sectors for its business. This announcement is being made in advance of the Group's interim results for the six months to 1 October 2005 which will be announced on 6 December 2005.

New sectors defined by markets will support our growth strategy

As announced in our Trading Update of 27 October 2005, we will now be reporting our financial performance under three new sectors. These new groupings, defined by markets rather than product type, will make the Group simpler to understand by all stakeholders.

Each new sector includes businesses with similar operating and market characteristics. This will help us further develop our market-driven strategies and enable more proactive collaboration across the Group.

The fundamental Group philosophy of giving subsidiaries autonomy and freedom to operate independently remains firmly in place. However, we can do more to leverage the broader product and selling strengths that exist across those businesses operating in the same, or adjacent, markets.

Financial analysis shows full year and interim results for each sector

Appendix A gives a financial analysis restating Halma's last 3 years' full year and interim revenue and profit before taxation under the new sector headings, on a UK GAAP basis. It also includes a bridge between the UK GAAP and IFRS revenue and profit before taxation numbers for 2004/05. All of these schedules are unaudited but are based on the audited UK GAAP accounts for the relevant year.

For the first time, this analysis discloses individual sector profits at the interim stage. In addition, Group Central Company costs/income are disclosed separately, rather than incorporated into one of the sectors.

Central Companies provide services to the Group's operating businesses. Costs include those of centrally based executives and limited central resources. Income is generated via a 'cost of capital' charge based on the capital used in each business, reflecting their scale and complexity. In recent years central income has decreased mainly because the operating businesses have reduced their capital employed.

New sectors align with operational management

The new reporting sectors now align more closely with the operating responsibilities of our Divisional Chief Executives.

Appendix B gives an outline of the major growth drivers and operating characteristics common within each new sector.

Grouping together businesses that have similar operational and market characteristics will help senior management to identify and address major opportunities or threats at an earlier stage. Sharing knowledge of common customers or solutions to similar technical problems will enhance our ability to increase the pace of change across the business.

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APPENDIX A

Financial analysis and reconciliation by sector

New reporting sectors under UK GAAP:

Reconciliation of old to new sectors under UK GAAP/IFRS:

Notes:

1. The above figures are unaudited but the full financial year UK GAAP results are based on the Group's statutory accounts for the relevant period, which received an unqualified audit report.
2. IFRS adjustments complement the summary reconciliations given in the document 'Adoption of International Financial Reporting Standards', released by Halma on 2 September 2005, which includes the significant Group IFRS accounting policies and further explanation of the adjustments.

APPENDIX B

Growth drivers and market characteristics by sector

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New Reporting Sectors
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