Good morning, and welcome to our 1/2-year results presentation. I'm very pleased to report that Halma made good progress in the first half of the year, delivering strong growth and clearly demonstrating the enduring power of our sustainable growth model. We delivered record revenue, profit, and dividends. Not only delivered substantial growth against the strong first half last year, but also further sequential growth in both revenue and profit against the second half of last year. Our growth is broad-based. We have revenue growth in all regions and revenue and profit growth in all three of our sectors. We also delivered strong return on sales while increasing our strategic investment to enhance our future growth opportunities. This included two acquisitions, and organically, a substantial increase in investment in R&D, as well as operationally in increasing inventories to drive revenue growth and also mitigate any supply chain risk.
We've got good momentum going into 2023. The strong demand for our products and services was reflected in order intake, which remained ahead of revenue, but also the strong order intake we saw in the same period last year. We had a record order book at the start of the year, and that's remained well above our pre-COVID levels of around eight weeks of sales. We also have a promising pipeline of M&A opportunities across all three of our sectors, and broadly based across all regions. Therefore, although the operational environment remains challenging with a constant mix of challenges and opportunities, we look forward to future with confidence, and we remain on track to deliver further progress in the second half of the year and deliver a good full-year performance. This is the final time I'll be presenting Halma's results.
Our strong performance in such a challenging environment once again underlines the value of the fundamental building blocks of our sustainable growth model. Our clear and authentic purpose, the diversity and global reach of our portfolio, and most importantly, the agility of our business model. However, none of that's possible without the great people. I'd like to thank everyone at Halma for their commitment and their contribution to another record first half . One of the foundations of our success is our culture, which is built around giving our companies autonomy and accountability, yet at the same time, connecting them together to drive collaboration. I believe that our ability to create and foster those connections has been one of the most valuable evolutions in Halma's growth model over the past 18 years. Here's a short film explaining why our company leaders believe it's so important for them, too.
Every idea that changes the world starts with a human connection.
Connecting with people helps us share ideas.
It helps us innovate.
It's what can help us find those solutions that are gonna make a real difference to our planet.
Connecting is fun.
It's all about collaboration.
It helps us problem solve.
We're stronger together.
It really changes where we can go and what we can do as a business.
There are almost 500 million patients in the world and only 200,000 eye doctors. We want to change that by making the eye screening accessible to patients wherever they are. We knew we couldn't do that on our own.
Volk had a fundus camera. What CenTrak had was the IoT platform to take that image, bring it to the cloud, send it to a physician.
Doctors all around the world can view this information and diagnose the patients.
All this was possible because CenTrak was able to bring the internet technology and marry it with the Volk fundus cameras.
We believe that through this partnership with CenTrak, we are changing lives.
When you think about the similarity of the challenges that we all face, they're common challenges.
That's where I find the MD network really valuable.
This group is really fantastic because it's productive, and you get to share these problems and build these deep connections. There have been new innovations that have come out of this group.
A great example of that has been the four-day week that we took the lead on implementing in HWM. We've been able to share our experience of doing that with a number of other companies, that they've been able to take that away and tailor it to meet their business need and drive value from it, which has been fantastic.
Sensit and Crowcon have different product lines and different markets. However, we're both in the market of saving lives and protecting our environment.
We just talk every week because we've got so many similarities in our industry, so what we don't wanna do is do the same things twice. I knew you had some products, and you suggested we start collaborating, you know, to drive those products into U.K. and Europe.
Though it's early days, we have had our first commercial success. Because of the collaboration, we've been able to improve the product for sales all around the globe.
For every product that we put out there, the knowledge is growing, you know, our products really help save lives.
With the power of the Halma network, anything is possible.
Connection is a great thing.
Connections are the lifeblood of our business.
There's such an incredible diversity of experiences and backgrounds across the group. We have 45+ companies who we can tap into.
That's a lot of resources, a lot of opportunities to make that human connection.
One of the magical things about being in these businesses, it allows us to really give back more into the community and to create things that we couldn't do without the power of the group and without connecting with others.
I think coming out of the pandemic, that Halma network has never been more powerful, more valuable, and I think under Marc's leadership, it will continue to power our growth into the future. I'll say more about this later on in the presentation, but for now, let's return to our first half performance. As I mentioned earlier, it was a record first half with strong growth returns. Our revenue was up by 19%, GBP 875 million, which included an 8% benefit from currency translation. Our adjusted profit was up by 11% to GBP 172 million. We also saw return on sales slightly ahead of our expectations at 19.6%, which was especially pleasing in the context of the inflationary pressures and of course that planned increase in discretionary overhead costs.
There was an increased strategic investment in the business. We completed two acquisitions in the first half of the year and made a further acquisition at the beginning of the second half , one in each of our sectors. We spent a maximum total consideration of GBP 188 million in the first half with another GBP 50 million spent since the period end. We've got a promising pipeline of potential opportunities looking ahead, each of them closely aligned with our purpose. Our R&D expenditure grew slightly ahead of revenue to GBP 50 million, which is 5.7% of sales. That just reflects our company's confidence in their long-term growth prospects. We continue to invest in technology.
We spent GBP 9 million in the half, which is on track as part of our projected spend of GBP 20 million for the full year. That technology investment included our cybersecurity program, which should complete in the early part of 2023, investment in operational technology, both within our companies and at the center, and increasingly focusing investment on digital growth, supporting that digital growth. Finally, we maintained a strong balance sheet to support investment and dividend growth. At the period end, our net debt to EBITDA was 1.2x, which is well within our typical operating range of up to 2x.
There was solid cash conversion of 63%, which included a larger than normal outflow in working capital as our companies continue to make strategic investments to mitigate supply chain risk and support the strong increases in their order books. That ability for our companies to temporarily leverage their balance sheets to gain competitive advantage is just another benefit of being part of Halma. Although, as Marc will explain later, we expect that cash conversion to be closer to our KPI by the end of the full year. This continued combination of growth, a strong balance sheet, and cash generation support an interim dividend increase of 7%, which maintains our long-term progressive dividend policy and reflects our confidence in the outlook. All in all, a good first half for Halma. I'm now gonna hand over to Marc, who'll give you details on our financial performance.
Thank you, Andrew. Good morning, everyone. As you've heard from Andrew, we've delivered a strong performance in the first half of the year, again, underlying the value of our sustainable growth model. One element of that model, which I've really continued to be impressed with, has been that agility and responsiveness that our companies have displayed in changing markets, in that changing operating environment. It's this underlying resilience that gives our companies that foundation to continue to invest, to continue to identify and take advantage of opportunities for continued growth. Looking now specifically at the last six months, let's start our review of the financials with the headline performance. Excellent to be reporting record 1/2 year revenue and adjusted profit, with revenue up 19% and profit up 11%.
This performance against a very strong comparative in the first half of last year, when we saw revenue up 19% and profit all regions. We estimate that price increases contributed around 4% of this growth. This is consistent across all three of the sectors, meaning that underlying volume growth was in line with historic averages at around 5%-6%. Next, we see a good contribution of 3.4% from current and prior year acquisitions, this including Deep Trekker completed in April. Whilst not contributing to the half, it was great to see that momentum in M&A continue with the acquisitions of IZI Medical at the end of the half year and WEETECH shortly after the period end, this partly offset by the effect of the disposal of Texecom in the first half of last year.
Finally, completing the bridge, there was a substantial positive effect of 8.3% from currency translation. This reflecting the weakness of sterling and strength of our business in U.S. dollar and euro-denominated countries. Turning now to our revenue performance by destination. You can see the chart on the left shows us reported revenue split by destination and reported growth in each region. The table on the right compares organic constant currency growth this year with the first half of last year. Let's start with that chart on the left-hand side. Pleasing to see growth across all regions on a reported basis. This reflecting widespread organic growth, particularly in the U.S.A. and Mainland Europe, and a healthy contribution from acquisitions, offset in part by the disposal in the prior year. Within this reported growth, there was also a substantial positive effect from currency translation.
This particularly in the U.SA., where it accounted for nearly half of the reported growth. Removing that impact of currency and acquisitions gives us the organic constant currency growth rates by region shown on the right-hand table. As you can see, there was strong double-digit growth rates in the U.S.A., Europe, and other regions, and solid increases in the U.K. and Asia Pacific. The main drivers of the difference in these growth rates were the strength of the prior year comparatives, particularly in the U.K. and Asia Pacific, with ongoing lockdowns in China further impacting APAC growth in the period. I'll give a little bit more detail on these regional trends when I review each of the individual sectors' performance. Switching now to adjusted profit. Excellent to have delivered record profit, with profit year-on-year and sequentially compared to the second half of last year.
Again, looking at that detail and working from left to right, organic constant currency profit was up 1.9%, this even including the increase as planned of discretionary variable overheads compared to the exceptionally low levels that we had in the first half of last year. There was a small contribution from acquisitions, which as is typical, includes that early investment that we make in recently acquired companies, and then finally a small dilution due to the disposal. As with revenue, there was a strong benefit from currency, and that completes our bridge to the headline profit growth of 10.9% and to profit of GBP 171.7 million. This profit represents a return on sales of 19.6%, a strong first half performance, which reflects return on sales marginally ahead of pre-COVID levels.
This, as Andrew mentioned, especially pleasing given the continued investments that we're making, the inflationary environment, and the operational disruption that our companies are continuing to face. Let's turn now to cash flow and net debt. Starting with cash conversion and working capital. Cash conversion was 63%, mainly resulting from a higher than usual working capital outflow of GBP 70 million, on which I'll give a little bit more detail on the next slide. As referenced earlier, great to see that continued momentum in M&A with net acquisition cash spend at GBP 180 million. This reflecting the acquisitions of Deep Trekker and IZI in the half, and earn out payments for past acquisitions.
With the other elements such as CapEx, tax, and dividend payments in line with expectations, net debt was GBP 500 million, which included an increase of GBP 27 million due to substantial F.X. movements in the period. Net debt at GBP 500 million represents a net debt to EBITDA ratio of 1.2x, well within our typical operating range of up to 2x gearing, and importantly, giving us substantial liquidity and capacity for future growth investment. As mentioned, given that impact in the period, I just thought worth sharing a little bit more detail in relation to working capital. Firstly, quick reminder with regard our organizational structure and the associated reporting model. This enables us to maintain a really granular view of working capital. We've got individual balance sheets at each of our companies, which is visible on a monthly basis.
These balance sheets are owned and managed to a local level of materiality by the individual company boards, whose performance is then measured on a growth and returns metric, again, at that specific company level. A really good example of that balance between autonomy and accountability. Turning to the data on the slide, the left-hand chart shows the split of the GBP 70 million increase between debtors, creditors, and inventory. As you can see, approximately 40% represents movement in debtor and creditor positions. Overall, these were well controlled with trade debtor and trade creditor days well within our normal range, therefore much more reflection of the growth of the group in the period. In fact, if inventory had grown in line with revenue, our cash conversion would have been in excess of 80%, a normal level for the first half of the year.
Turning to that inventory movement and the chart on the right-hand side, which shows the breakdown of the increase. You can see around 20% is accounted for by cost inflation, this consistent with a high single-digit annualized growth in the overall cost of inventory. Another 20% mainly includes inventories held to support increased new product development. Finally, the largest chunk there at around 60% or around GBP 25 million relates to additional targeted strategic and supply chain purchases. It is important to note here that these purchases aren't due to a top-down directive, nor is it happening in every single company. Our model allows our companies that freedom to take commercial decisions, to make selective purchases in line with their own specific circumstances.
In fact, these purchases have enabled our companies to manage longer lead times, to mitigate cost increases, and avoid shortages in addition to ensuring that continuity of supply, and in many cases, securing a competitive advantage. As Andrew mentioned, a good example of one of the many benefits our companies have of being a part of the Group. Looking forward into the second half of the year, I don't expect further material increases in inventory in excess of our growth. Therefore, with that continued strong control over debtors and creditors, I'd therefore expect our cash conversion to improve closer to our KPI of 90%. Turning now to a little bit more detail and looking through the sectors, and starting with Safety, where I'm pleased to report a strong performance across the largest regions and sub-sectors.
If we start on the chart with the revenue growth, which was 11%, and including positive contributions of 1% from acquisitions and 5% from currency with a negative effect from disposals of 5%. Therefore, underlying that, a strong organic revenue performance of 10%. This driven by good growth in the two largest subsectors, fire detection and people and vehicle flow. A strong performance in industrial access control, driven by demand for its interlock products, and growth in pressure management, chemical processing, and general industrial markets. Switching then to the analysis by destination, it was really pleasing to see strong organic growth in the major western regions, including good momentum in the U.K., which as a reminder, had grown 69% on an organic constant currency basis in the first half of last year.
Asia Pacific's growth was lower, primarily reflecting the impact of lockdowns in China. Turning to profitability, having increased return on sales by a 100 and 40 basis points in the first half of last year, it decreased to 21.2% This 1/2 year. This reflecting the planned rise in variable overcosts and a lower gross margin as the percentage higher input costs were covered in absolute cash terms by our own price increases. Finally, great to see that continued investment, with R&D spend increasing to 20 million, broadly in line with revenue and reflecting an increasing appetite for digital innovation. So moving now on to environmental and analysis, which delivered another excellent revenue and profit performance, reflecting that continued growth and demand for our solutions, which improve the availability and quality of life, critical resources, and protect the environment.
If we look at the numbers and start with reported revenue, this grew 26% and included a 7% contribution from acquisitions being International Light Technologies last year and Deep Trekker this year, plus a 10% positive effect from currency translation. Organic revenue growth of 9% included strong increases in the U.S.A. and Asia Pacific. As can be seen in the central chart, the U.S.A. is half of the sector's revenues and the region saw broadly based growth, including a continuing large photonics contract in optical analysis, emission detection products in gas detection, and good growth in the gas analysis sub-sector. Also great to see growth in Asia Pacific, with environmental monitoring benefiting from customer demand for fuel cell technology and flow and pressure control products, as well as good momentum in optical analysis.
These positive trends were partly offset by a modest fall in U.K. revenue. This largely reflecting the phasing of customer project spending and the timing of some larger contracts in the prior year. Switching to profitability, the sector delivered a strong profit performance with organic growth of 8% and a 5% contribution from acquisitions. There was also a 10% positive effect from currency translation. Return on sales was slightly lower at 24.8%. This reflecting the return of the variable overheads, offset in part by an improvement in gross margin, largely driven by business mix. Finally, pleasing to see that investment was maintained at a good level, with R&D expenditure of GBP 13.6 million, representing an increase to 5.2% of sales.
To complete our review of the sectors, turning to healthcare, where revenue growth in all sub-sectors and geographies was supported by improved customer buying patterns, driven by higher patient caseload levels, as well as some customer advanced ordering to mitigate their own supply chain disruptions. Asia Pacific performance reflected lockdowns in China, although it is worth noting the performance improved during the course of the half year. From a sub-sector perspective, great to see organic constant currency revenue growth in all sub-sectors. Health assessments saw the strongest growth supported by demand in vital signs monitoring, software systems for healthcare facilities, and clinical ophthalmology and communication. High patient caseload levels in eye surgery also drove good growth in Therapeutic Solutions, while the smaller Life Sciences sub-sectors also grew well.
Profit growth closely matched revenue growth, resulting in return on sales very similar to last year at 22%. This included a modestly lower gross margin as a result of higher material costs and product mix, in addition to substantial new product development and investment by recently acquired companies, driving that increase in R&D spend to a record 6.3% of revenue. Looking now at our performance against our financial KPIs. As I said at the outset, a really pleasing performance in the first half . There was widespread growth across our sectors and regions. Organic revenue growth was substantially ahead of our KPI, and we delivered a robust profit performance with return on sales above historic levels for the first half. We saw continued positive increases to both our organic and inorganic investments during the period.
Our cash conversion reflected investment in inventory to support that growth. With our underlying working capital control remaining strong, we expect this to land closer to our KPI at the full year end. ROIC remained well above our KPI and at a healthy premium to our weighted average cost of capital. Finally, we maintained a strong balance sheet and liquidity position, and that gives us substantial headroom to support future investment. With that, I'll now hand you back to Andrew for a strategy update.
Thanks, Marc. Now I want to give you an update on our strategic progress and also our priorities for the future. Over many years as Halma CEO, I think I've often talked about how our continuing success is driven by our purpose and our sustainable growth model. Although our business has continued to grow and our model continues to evolve, Halma is and always has been about sustainability. We've got a growth strategy which is based on choosing markets with resilient long-term growth drivers such as safety regulation, demand for healthcare, protecting the environment. We've got a financial model which ensures that we can invest as we grow. We can acquire new companies, we can pay increasing dividends while maintaining a strong balance sheet.
We've got an organizational model that can scale as we grow without becoming highly complex and a model which continues to foster a strong collaborative and entrepreneurial culture. Our company's products, therefore, are already solving many of the sustainability challenges facing people on the planet. However, we're seeing a new dimension to some of our growth enablers as we grow, and particularly the crucial intersection between innovation and digital technologies in solving these sustainability challenges. In safety, we're seeing digital technologies enabling our customers to remotely monitor systems to reduce energy costs, improve efficiency. In healthcare, we're helping to achieve better patient outcomes with the use of analytics and AI. Our environmental products are using data to help customers conserve scarce resources such as water.
Although sustainability digital innovation has been the basis of our purpose for many years, we see this as an increasingly strong growth opportunity for Halma. I now want to look at that from three perspectives. Firstly, the innovative products that our companies are developing, both organically and through external partnerships. Secondly, how it's increasingly a feature of some of the acquisitions that we make. Finally, as you saw in that opening film at the very start of this presentation, how the power of connections in the Halma model is driving collaboration and innovation to capture new growth opportunities. First, let's look at innovation in our companies. Each of these new digital products further amplify each company's existing strong connection with our purpose and the positive sustainability impact that they have by harnessing that power of digital technology.
BEA's ThermoTool is an online visualization tool that enables customers to see how they can improve energy efficiency of their industrial doors. By using a simple few parameters, including the door size, the opening speed, the frequency, and incorporating local environmental factors, it gives those customers a simple quantification of the energy savings they can make by using BEA's products. At Volk, one of our healthcare businesses, their VistaView product is a portable retinal camera that integrates Volk's high-quality optics with the benefits of smartphone technology. Now a health practitioner can take a high-quality image of the retina and instantly generate reports and patient images, which can then be assessed by ophthalmologists anywhere else in the world.
Again, as you saw in our opening film, you can see the benefits of increasing accessibility to healthcare and enabling more patients to receive the care they require, often in remote locations, while reducing those overall costs. Finally, a great example in Environmental and Analysis sector, and this one a good example of an external partnership, where Minicam has partnered with VAPAR, which is one of our Halma venture investments, to use AI-powered software to analyze CCTV footage from sewer networks, and through that, reduce blockages and reduce overspills. It achieves that by reducing the need for manual assessments, which often can be more error-prone, more costly, and indeed, more time-intensive. Those are the organic opportunities. What about acquisitions, where sustainability and digital innovation is starting to become more prevalent?
As an example, well, I'm gonna show you a short film about one of our latest deals, Deep Trekker, which is a Canadian company which joined our Environmental Analysis sector in April earlier this year.
It all started one night when I dropped a flashlight off my boat in Lake Huron, and I said, "You know what we really need is a robot to go get that." Started out as a bit of a joke, but then I really got interested in the concept and the idea of having it. We learned that a lot of suppliers of the components to build ROVs and underwater drones were really priced out of the market. We undertook to design every piece of the Deep Trekker DTG2 ourselves. This allowed us to make a low-cost but still high-quality product. Both of the ROVs are made of cast aluminum bodies, so they're really rugged, built to last. We were international out of the gate with our first purchase order coming from a fish farm supplier in Norway.
We have such a spectrum of different people using it for different things I never even imagined when we first started the company. We have scientists out there collecting data with our ROVs. We sell to commercial and salvage divers, underwater archaeology, environmental agencies and research, and of course, we still sell to people who are just interested and curious about what's below the waves.
I think Deep Trekker's just a great example of a business that's aligned with our purpose and sustainability. It's safer by allowing customers to employ ROVs rather than divers in dangerous underwater locations. It's cleaner in that it focuses on sustainable end markets, such as improving aquaculture and offshore renewable energy installations. As we look forward, we can see how there'll be further opportunities to develop Deep Trekker's strong technology base through leveraging the digital expertise we have across our group. Turning now to the other two acquisitions that we've made in the half. First of all, in our healthcare sector, we acquired IZI, a manufacturer of markers and devices that support minimally invasive treatment, mainly for cancers, by radiologists and surgeons. Its products are already used in over 2,500 hospitals in the U.S.A. and 35 countries worldwide.
We can see, again, further opportunities for growth, this time through IZI expanding its product portfolio, particularly as there are developments in screening and diagnostic technology which enable earlier treatment of diseases. After the half-year end, we have WEETECH, an addition to our safety sector. WEETECH's safety-critical electrical testing technology supports the adoption of more efficient motor transport, particularly those that use high-voltage systems such as mass transit systems and electric vehicles. These have been developed in response to the challenges of the transition to greener forms of energy. It's been a really pleasing first seven months in M&A with three substantial acquisitions, all aligned with our purpose, one in each sector, and a maximum total consideration of GBP 238 million. As we look ahead, we continue to see strong M&A opportunities.
We've got a promising pipeline broadly based across geographies and all three of our sectors. To finish this update, I wanna go back to where I started and highlight the growing power of connections and collaboration within Halma in driving that innovation and growth. In my mind, there's no better place to start than our Accelerate Halma event, which took place a couple of weeks ago. Welcome everyone to Halma Accelerate. This event's all about connection.
There's one thing I hope you might remember after this conference, and that this is a great network you can tap into.
We need an open mindset so we can just clear that path to see the way forward. I believe that connections enable collaboration innovation. In Halma, that's really driven by our company's common ambition to solve major safety, health, and environmental challenges. We can look back over the last two or three years and see that these were really disrupted during the pandemic, particularly difficult for new joiners and new acquisitions. I think those connections have now only grown in importance as we've emerged from the pandemic. Therefore, this year we've invested heavily in reestablishing those connections, really making sure we fully reconnect our Halma network at all levels with more in-person meetings. Accelerate was just one example of that, and here are a few more.
The Halma Strengthen Members purchasing group hosted a strategic supplier day with key suppliers and partners. We held the first in-person finance leaders conference for the first time in four years. We relaunched our company MD leadership program, Compass, which helps to deepen those networks and relationship between our MDs. We also relaunched leadership programs for our top talent below board level with around 40 people attending so far. Our Halma Future Leaders program is now back to offering a full in-person global rotation program, with 14 graduates joining the program this year. It's been a really successful program for developing that next generation of leadership talent. We've now got one company MD and 11 company board members having come through the Future Leaders program.
To conclude, as you've heard, Halma has made further good progress in the half and has a strong platform for sustainable growth. We delivered record revenue, profit, an interim dividend with growth in all sectors in all regions. We maintained a strong balance sheet, and we also substantially increased our strategic investment to drive future growth. This was organically in digital innovation technology and greater R&D expenditure. It was in acquisitions where we also have a promising pipeline of opportunities for the future. In our organization to rebuild the Halma network, increase collaboration, and drive innovation. As we look forward, we remain confident that our sustainable growth model will continue to underpin our growth and resilience through our clear and authentic purpose, the diversity and global reach of our portfolio, and importantly, agility of our business model.
We expect the operational environment to continue to present both challenges and opportunities, and we remain on track to make further progress in the second half and deliver another good full-year performance. Thank you.