Halma Aktie

Good morning, and welcome to our full year '26 results presentation. I'm delighted to be here to present a very strong set of results for the year, results which once again demonstrate the quality of our businesses and the strength of our sustainable growth model, a model built on decades of disciplined choices around the markets we operate in, the companies we acquire and the leaders we trust to run them. And I'd like to start today by thanking everyone at Halma for their individual contributions to our record performance, a performance we should all be incredibly proud of. Together, we continue to make a meaningful difference by pursuing our purpose of growing a safer, cleaner, healthier future for everyone every day.

Carole will provide more insight into our financial performance shortly. But first, let me start with the highlights. It's fantastic to report our 23rd consecutive year of profit growth. And I'm really pleased to see these results underpinned by strong broad-based organic growth delivered across all 3 sectors. Our results include a premium growth contribution from the continued scaling of our Photonics business, more here from Carol shortly. We've delivered strong margins, high returns and good cash conversion. And this performance enabled us to reinvest at a record level well over GBP 600 million in the significant opportunities we see for future growth, including a record year for both R&D spend and M&A.

These results reflect the cumulative benefit of decades of disciplined choices and a model that enables a virtuous cycle of growth where strong performance funds further investment in innovation, talent and acquisitions. You'll recognize the core elements of our sustainable growth model on this slide. At our half year results in November, I shared how our model underpins my confidence in the long-term prospects for Halma. The strength of our model lies in the way its elements are interlinked and work together, allowing our businesses to respond with agility to new opportunities while remaining aligned to our group strategy of delivering sustainable compounding growth and returns.

Critical to this is the exceptional talent across Halma, which acts as a key enabler and a multiplier of performance. ensuring that as we invest, adapt and grow, we continue to compound value over the long term. In the second part of my presentation, I'll share the core elements of our continued investment. But first, let me hand over to Carole for more details on our financial performance in the year.

Thank you, Mark. Good morning, everyone. A very warm welcome, and thank you for joining us this morning. I'll be taking you through the detail behind this excellent set of results. First, let's take a look at our performance against our financial targets. It's been another year of strong financial performance, driven by broad-based growth, strong returns and healthy levels of cash generation. Throughout the presentation, I'll focus on the numbers, excluding the small one-off from the Newbonik transaction that we completed in the first half of the year.

First, we have delivered very strong revenue and profit growth, well ahead of our targets. Organic revenue up 16%, well above our 5% target, even excluding the premium Photonics growth, with EBIT growing an impressive 19%, resulting in an exceptionally strong EBIT margin of 22.7%, up 110 basis points towards the upper end of our target range. This means we've delivered EPS growth of 21%, far exceeding our KPI target of 10% -- our strong growth and returns enabled us to continue to invest for the long term with our companies investing GBP 123 million in R&D, representing 4.7% of group revenue.

Fantastic to see our M&A momentum driving acquisition profit growth of 8.3%, above our KPI target of 5%. We also achieved 93% cash conversion ahead of our KPI target of 90%. This reflects good cash management and working capital control across the group. And finally, given the strength of profit growth, ROTEC was 16.2%, up 120 basis points. Now let's look at our revenue growth in more detail. This slide bridges the year-on-year reported revenue growth of 14.4%. Organic revenue growth was very strong at 16.2%. This was broadly spread across all 3 sectors, with most of the growth volume driven with price increases a typical 1% to 2%.

Additionally, organic revenue benefited from the premium from our Photonics business, which accounted for around half of this growth. Acquisitions, including Lamadeinouri, Brown Line, EQS and Safeetech contributed 2.5% to growth. There was a currency headwind of 2.8%, primarily due to the depreciation of the U.S. dollar against 20.3% and a particularly strong 19% on an organic basis. This is ahead of revenue growth, reflecting the strength of the top line, focused operational delivery, targeted product and portfolio management and good overhead control, all combined with continued investment across our companies.

Acquisitions contributed 3.9% of profit, again ahead of revenue contribution, reflecting the quality of businesses we have acquired. Disposals were also modestly accretive to margins. The currency headwind was similar to that of revenue at 2.8%. Moving on to the sector commentary. Starting with the safety sector, where it's great to see further positive momentum following 2 years of double-digit profit growth. This broad-based performance was underpinned by growth in each of safety's 4 subsectors. Revenue grew by 6.5% on an organic constant currency basis.

Healthy levels of customer demand underpinned strong momentum in public safety and good levels of growth in fire and worker safety. Growth was further supported by the continued rollout of new products across the sector. Adjusted profit grew 16%, 13% on an organic basis, making our third year running of double-digit organic profit growth. Profit margin increased by 260 basis points to 26.8%. This is a historic high for the sector, driven by the sector's continued strong revenue growth, companies optimizing their products and portfolio mix, good cost control and the benefits of active portfolio management.

It's great to see our safety companies continuing to make substantial investments, investing ahead of revenue growth. R&D spend increased by 12% to GBP 56 million, which equates to 6% of sector revenue, reflecting the significant opportunities they've identified to deliver future growth. Safety has also had an active year for M&A, acquiring 2 great companies in the year. These were E2S, our largest acquisition to date for GBP 226 million and Safetech for GBP 64 million. Together, they broaden our fire safety portfolio and strengthen our position in industrial markets. Now turning to Environmental & Analysis.

On this slide, we have shown ENA's performance, excluding the Newbonik one-off. There's a slide in the appendix that shows the numbers, including this benefit. E&A sector delivered very strong organic revenue growth of 34.4%. It's good to see double-digit growth across all 3 subsectors with Photonics within optical solutions being particularly strong, which I'll return to shortly. In Environmental Monitoring & Measurement, growth was driven by demand in the U.S. and Asia for gas detection and management solutions. In Water Analysis & Treatment, growth benefited from strong demand for water infrastructure products and solutions in the U.S. and U.K.

Profit grew by 30% to GBP 241 million and by a similar amount on an organic basis. This reflected a profit margin, which was 40 basis points lower at 23.5%, which was mix driven. Like the safety sector, it's great to see the substantial growth opportunities ahead reflected in a healthy increase in R&D investment, which grew by 23% to GBP 35 million. As I noted at the half year, this is a lower spend as a percentage of sector revenue compared to the other sectors at 3.4%, reflecting the premium growth in Photonics, where R&D is part of the revenue we earn.

It's also pleasing to see a strong 4.3% profit contribution from acquisitions, including Brown Line and Mini cans bolt-on Heathorne. I'd now like to spend a moment on the Photonics premium growth, providing some additional color on what we do for this customer. As a reminder, we acquired Avo Photonics in 2011, a business that displays many characteristics that are typical of a high-quality Halma company. The company's exceptional ability to identify and capture growth opportunities has developed into a relationship of more than a decade with a large hyperscaler technology customer.

While the relationship remains commercially confidential, we can share a little more about the nature. It's characterized by a close technical collaboration, applying our customers' IP alongside our own expertise in the co-design and manufacture of optical switches. And we've been working with the customer on multiple generations of the technology for over a decade. In FY '26, the premium growth accounted for approximately 8 percentage points of the group's organic revenue growth, resulting in a Photonics growth rate of 52% -- this means the customer now accounts for 20% of group revenue.

This is an incredible success story and a testament to the strength of the local management team in delivering at scale, enabled by the support of the Halma model. Looking ahead, trends in this market are clearly dynamic, and there will always be technology choices in fast-growing markets and the pace of development and rates of growth shaped by various supply side constraints across the data center market. With a combination of strong customer demand and our continued scaling, we currently expect premium growth of approximately 5 percentage points of group in FY '27, implying a growth rate of a further 30%.

This builds on the exceptional growth already achieved with revenue having more than doubled over the past 2 years as the local management team has successfully and rapidly scaled the business. Now let's move on to our final sector, health care. Pleasing to see the continued recovery in health care with revenue up 6.3% on an organic basis and profit up 10%, with good levels of growth across all 3 subsectors.

This reflected good execution against the background of broad-based recovery in health care end markets, supported by improving customer confidence and demand for products and solutions to help facilitate patient diagnosis and treatment and greater efficiency for health care providers. You will notice that in this set of results, our health care sector companies have been recategorized into 3 new subsectors, better reflecting the patient's journey.

Discovery, Prevention and Diagnostics performed strongly, driven by good demand in vital signs monitoring and eye health diagnostics. There was broad-based organic revenue growth in Therapeutic Solutions with strong demand for our respiratory device and surgical instrument products. Performance in Healthcare Enablement was driven by demand for solutions which improve health care delivery efficiency.

Sector profit was 10% higher, delivering a margin, which was 100 basis points higher at 23.9% as a result of stronger revenue growth, continued discipline on pricing and product mix and good control of overheads. As with the other 2 sectors, our health care companies are well invested with R&D at 5.2% of revenue, reflecting their confidence in the growth opportunities in their end markets. There was also good profit contribution from acquisitions of 2.3%, reflecting the quality of businesses we have acquired.

I'll now talk about our cash flows and balance sheet and how we are investing for future growth. The cash-generative nature of our companies means we are in a position to invest well over GBP 600 million in the year to support future growth while maintaining a strong financial position. The group maintained good cash management and working capital control with working capital at 18% of revenue, in line with our normal range. Our first capital allocation priority is organic investment to support our long-term growth, represented here by investments through R&D and CapEx of GBP 179 million.

Together with good underlying working capital management, this delivered cash conversion of 93%. Our second capital allocation priority is continued value-enhancing acquisitions. This year, we invested a record GBP 475 million on acquisitions. And our third is a progressive return to shareholders through the dividend with GBP 90 million returned, representing our 47th consecutive year of dividend growth of 5% or more. And finally, our leverage is just over 1x net debt to EBITDA, reflecting the level of acquisitions made in the year and well within our operating range of up to 2x.

Moving on to my last slide, which is our guidance for this year. We've made a positive start to the 2027 financial year. And whilst the economic and geopolitical environment remains uncertain and our companies continue to experience varied conditions in their end markets, we expect to deliver low double-digit percentage organic constant currency revenue growth. This includes an expected premium growth of approximately 5 percentage points from our Photonics business. Adjusted EBIT margin is expected to be in line with FY '26, excluding the one-off from Newvonik. I will now hand you back to Marc.

Thanks, Carol. Fantastic to see the excellent performance delivering on all of our financial targets. In this section, as I mentioned earlier, I want to provide insight into how we think about continuous sustainable investment and why it's so important to our long-term growth. Our sustainable growth model enables us to invest for future growth while maintaining our organizational agility and entrepreneurial culture. This means we can keep scaling our model while retaining the core elements of our DNA.

As I've shared previously, we're also using this period of premium growth from our Photonics business in the same way to further invest in the opportunities we see ahead, ensuring we keep growing sustainably for decades to come. Before I take you through these areas of investment, let me put them in the context of our long-term track record. Looking at our track record on the slide, we've compounded revenue and profit at a double-digit growth rate over the last 20 years, revenue at 11% annually and profit at 12%. This reflects the quality and consistency of execution across our companies, each focused on the delivery of their own strategies in attractive niches and underpinned by long-term growth drivers. In recent years, our Photonics business has provided a tailwind to that growth.

That said, even if we were to exclude its contribution entirely, we would have still compounded at a double-digit growth rate over this period. Our decentralized model allows us to maximize the opportunity with our hyperscaler customer while remaining focused on our group strategy of sustainable compounding growth and returns over the long term. Importantly, our model ensures that this premium growth delivered through local execution doesn't distract our other portfolio companies and management teams. They remain fully focused on their own growth strategies, including continued sustainable investment for future growth.

And the broad-based growth we've shared in our results today being a great example of this in action. Looking ahead, as we focus on maximizing the Photonics opportunity in front of us, we do so with an understanding that its growth profile differs from that of the wider group in pace, scale and longevity and may result in growth at the group level being more front-end loaded -- but for clarity, our growth ambition long term. As I said, we're using this period of premium growth to do exactly that, reinvesting the premium cash flows to further strengthen the wider group, as I'll now take you through. You heard from Carol how we've continued to invest significantly in the year.

Let me break this down into 3 core areas. First, our companies continuously invest to grow. Second, we invest in talent, our network and new capabilities to help our companies grow faster. And third, we acquire purpose-aligned companies for the long term and actively manage our portfolio. Let me now provide a little more detail on these key areas of investment.

Firstly, and as you heard from Carol, our #1 capital allocation priority, investing in organic growth. Our companies are already great businesses when they join the group. Our role is to support their growth and continued ability to scale over the long term. A key driver of this being our company's ongoing investment in R&D and innovation. We invested GBP 123 million in R&D in this year, ensuring our businesses remain differentiated, relevant and well positioned in their niches and attractive long-term rather than being centrally mandated.

Ultimately, these investments reflect the confidence our leaders have in the opportunities they see in their markets and our commitment to supporting their long-term growth. Let me bring this to life with new market access, Suntech is a leader in clinical-grade motion-tolerant blood pressure monitoring. It's applied its expertise to animal care, extending its core capabilities into an adjacent faster-growing market.

A great example of exceptional agility in capturing a growth opportunity for a period of time whilst remaining focused on the long-term delivery in core markets. For new product development, BEA applied its automatic door sensor expertise to develop its EO loop product for automatic car barriers. It replaces the induction loops to improve efficiency and reduce installation time, supplementing organic growth in its core markets. In incremental R&D, Chroon has enhanced its gas detection IQ range by evolving an established product platform, extending capability and customer value within its existing markets.

The range simplifies gas detection with modular technology, fast servicing and smart connected insights, all without compromising safety or protection. So just 3 examples of how our companies are continuously investing for long-term growth. Moving to the second area of investment, talent. Talent is important in any business, but in a decentralized group like ours, it's vital. Our decentralized structure relies upon where their own. We take a purposeful long-term approach to developing leaders, combining internal development with external hires to build diverse, resilient and high-performing teams over the long term.

We're also making deliberate investments in building a pipeline of leaders through the group, which gives us agility and resilience. During the year, 20 leaders were promoted on to company boards. Nearly 300 leaders participated in our development programs. All of our most recent sector and divisional Chief Executive appointments were internal promotions. We're doubling our Catalyst graduate program and expanding our rotational placements to focus on AI in our tech team, a great example of strengthening our capabilities while developing the next generation of AI business leaders.

We're also investing ahead of need in talent platforms and tools that help our companies develop their own people and reinforcing accountability for talent and culture at a local level to maintain our agility. We further invested in our network. We held our annual Accelerate Senior Leadership Conference in April, and we've facilitated a number of in-person conferences for many of our functional networks, including finance, talent, supply chain and digital. These events enable leaders to connect to share experience and access expertise across Halma, helping them solve problems faster, spot opportunities earlier and scale proven ideas more effectively.

And as the group grows, the value of our network increases. there from our leaders talking about the network talking about Marcus talking about experts sharing their own market analysis work and Joe talking about the strength of connections and all of us as leaders learning something new. Just a few great examples of the importance of collaboration and talent at every level of our business, always such a fantastic and energizing event.

We've also further invested in our M&A capabilities through the addition of a small number of individuals to our sector M&A teams, our central functions supporting acquisitions and disposals and through the appointment of 2 new divisional Chief Executive roles. These investments increase our capacity and resources to engage and build relationships with potential acquisitions and support the managing our portfolio. As Carol highlighted, an excellent year for M&A with record investment in acquisitions.

Great to see a well-balanced mix of both acquisition sizes and types, including stand-alone and bolt-on transactions across all 3 sectors. Also positive to see the momentum continue since the year-end with 2 further bolt-ons completed for GBP 75 million. Alongside this, we continue to actively manage our portfolio. Our intent is to buy a business to own for decades. And when reviewing our portfolio, our approach starts with a simple question, would I buy this business today?

As a result, we completed 3 disposals in the last 12 months. AI in Safety, LabSphere in E&A and Cardios in health care. Having found great new homes for these companies, it allows us to redeploy capital into the opportunities where we see the strongest long-term potential. Our approach to acquisitions starts by mapping markets that we have an interest in, identifying niches supported by long-term growth drivers, including taking a view on emerging and accelerating megatrends.

We typically acquire companies that are adjacent to or in markets that we already know well. And we remain disciplined throughout, never feeling under pressure to do a deal, including walking away where appropriate. Let me highlight a few. E2S, Brownine and MSTs, bolt-ons, Altomed and Surgistar, all great examples of the quality of businesses our approach delivers. E2S, broadening our fire safety portfolio and strengthening our position in industrial end markets, driven by the need for critical infrastructure resilience and increasing regulation.

Brownline, underpinned by long-term growth drivers, urbanization, the requirement for resilient infrastructure, including water, electrification and the rollout of fiber networks in addition to the increasing use and benefits of trenchless technology. Ulted and Surgiistar, 2 bolt-ons for MST. Together, they broaden our surgical ophthalmology portfolio, strengthen our geographical reach and add manufacturing capability, all in a market underpinned by aging populations and growing demand for cataract and eye surgery.

Great to be able to welcome them to the group. The quality and pace of our M&A activity reflect the investments we've made in strengthening our teams. Our divisional Chief Executives lead acquisitions end-to-end, supported by our M&A teams. In addition, our company management teams are actively sourcing and delivering bolt-on opportunities in their markets. This reflecting the increased scale and capability within the portfolio, and it's an important way of compounding growth while retaining that local accountability.

Looking forward, we have a healthy pipeline across all 3 sectors, including both bolt-on and stand-alone targets, giving us confidence in our ability to continue to find and acquire high-quality businesses that meet our criteria. To wrap up, I want to voices -- some really powerful reflections tying together those themes of investment, the benefits of the network and why great companies choose to join Halma.

You heard from Arie at Centrack on the ability to remain independent while drawing on the wider strength of the group. from Andy at Ramtech and Brett at E2S, sharing how that support gives them the confidence and capability to grow faster, expand internationally and develop over the long term. While these companies have all joined Halma at different point with clear accountability for growth and they've gained the support capabilities and a long-term home that helps them go further faster.

So bringing it all together, you've heard today how we think about continuous sustainable investment across 3 areas. Firstly, how our companies invest to grow to ensure they remain differentiated and well positioned in attractive long-term markets. Secondly, how we invest in our talent, network and capabilities to help our companies grow faster and to ensure we can scale while maintaining our culture and agility.

And finally, how we acquire purpose-aligned companies for the long term and actively manage our portfolio. These are all key areas of investment to ensure we continue to deliver long-term compounding growth. Carole described the strength of our performance in 2026, another record year delivered in varied market conditions. This performance reflects the strength of our sustainable growth model and our continued investment in the areas that matter most. empowered to act with agility to capture near-term opportunities.

A model that enables a virtuous cycle of growth where strong performance funds continuous sustainable investment in innovation, talent and capabilities and purpose-aligned acquisitions. And while we remain mindful of the broader macroeconomic and geopolitical environment, the strength of our model underpins my confidence in our ability to continue delivering compounding growth and returns for decades to come. Okay. That's the end of the presentation. And now we have time for some questions. As ever, there's 2 ways you can ask questions.

[Operator Instructions] Carole and I will read out and then answer. So Max, let's come to you for our first question.

So look, the first question I'd like to ask is just around the margin performance. So obviously, excellent step-up this year in Safety and Healthcare margins. Maybe could you walk us through kind of what you think the kind of key successes have been around pushing those margins higher. Safety has continued to rise and rise. And I guess when we think about the margins going forward in those 2 divisions, do you really see them kind of at this point, firing on all cylinders? Or when you look at the sort of sub businesses within them, which of the divisions and maybe where would you see sort of room for further margin improvement within those 2 divisions?

Sure, Carole here. Thanks for your question. Yes, I mean, really pleased with the margins overall. The teams, once again, all of the companies, all the sectors have done a brilliant job. So shout out to all the hard work. I mean on the specifics, safety, as you know, has -- this is now the third year of double-digit profit growth. So very impressive. And as you cited, margins at record highs. I mean I think the best way to think about it is that what the team have done in a very sort of methodical and targeted way over the last few years is look for opportunities right through the P&L. So whether it's targeted efforts around pricing, new product development that you've heard Marc talk about in the presentation and some nice acquisitions, including bolt-ons. And then working through the P&L and identifying opportunities.

So I think the best way to think of safety margins now is that we've got them a good place, a lot of hard work. So don't assume that they'll push on from here. As you know, obviously, the intent is to drive long-term sustainable growth. That requires investment, which you've clearly heard about this morning. So I'd encourage you to use margins around the levels that they're at with the usual caveat of a plus or minus allowing for mix. Health care, as you know, has been on a recovery given where the health care end markets we're at with the overstocking.

So Steve and the team have done a great job over the last year in particular. And there's probably a little bit more in those margins from where we landed in FY -- but again, obviously, focused on the reinvestment angle, too. And then E&A in a good place, slightly down year-on-year, which is mix. So I would encourage you to use a similar level year-on-year. So in the round, hence, the guidance of similar margins for FY '27 to FY '26, we think we're in a good place with lots of hard work having gone into delivering it.

Okay. And maybe if I could have a quick follow-up on the Photonics business. So you've guided to 30% growth for this year. It's a bit below kind of what you generated last year at 50%. And I appreciate it's difficult to comment in too much detail. But I guess, look, some of the questions we've got this morning have centered around is this being driven by any design changes at the customer? Like it does -- but it does feel like you talk a lot about kind of co-designing with customers. Is this really your own factory constraints?

Is there supply chain issues? Or can you just not produce anymore and therefore, you're running up against limitations? Or is there an element of conservatism here? We obviously sort of started the year last year with 20% growth, and we finished at 50%. So just really trying to get a feel of, I think -- is there an element of conservatism in this guidance? And then to what extent are your own constraints, whether factory or supply chain driving that deceleration?

Yes. Thanks, Max. And just as you say, it's worth just a reminder to everyone before we sort of get into Q&A on Photonics that that business does remain subject to a customer confidentiality agreement. So great to have been able to share more detail today, which hopefully is helpful and covers some of the areas that we have been raised before, but there does remain limits to what we can disclose. I do recognize that this may be a little bit frustrating and slightly odds with our usual openness, but it's clearly commercially important and in the interest of all parties that we respect those boundaries. So just worth reminding everyone on that point.

And to your specific question, I guess our approach rightly so is that we're guiding based on what we can see in near-term visibility over the next 6 to 12 months rather than drawing any direct read across from hyperscaler CapEx or other companies in the ecosystem. So very much based on what we can see. Our outlook reflects customer demand. It reflects the wider market's ability to deploy around those big areas that you can all read about around land, power, water, in addition to our own ability to scale, but make that point that isn't capacity per se, probably more on the resource front in terms of as we continue to scale.

And then in addition to that, including our supply chain, you're asking for an entire ecosystem here to continue to scale in a fast-growing market. I mean it is worth putting that into context. We doubled in the last 2 years. The guidance we're giving today is for a further 30% growth on that. So a further GBP 160 million of revenue over the next 12 months to over GBP 500 million. So that equates to a 3-year compound average growth rate of around 40%. So in my mind, that is absolutely the definition of scaling at pace.

This is a highly complex and sophisticated precision manufacturing with the need of a high level of quality. So as I say, very much based on what we've got in front of us, it would be remiss of us to be coming out with guidance that didn't reflect our best view at this moment in time. Thanks, Max. Just looking at the hand up. So Andre, I'll come to you.

I just wanted to ask on growth a bit more broadly. Clearly, you're delivering across the whole portfolio. And I just wondered what is your assessment right now when you run through the divisions and the companies within that in terms of where are we still kind of lagging, where the cycle is still maybe a headwind or returning to growth and where are we firing on all the cylinders and hence, should not be expecting any improvement? And where do you see the balance kind of off that for the next couple of years?

Yes. Thanks, Andre. As you say, I mean, absolutely fantastic to have seen that broad-based growth across the wider portfolio over the last 12 months. And we're executing against the strategy that we laid out 2 years ago in terms of that delivery of the premium photonics growth, but at the same time, not being distracted and delivering the broad-based growth. So really pleased to see that. Of course, we're reinvesting back in the opportunities that we see, and there are plenty across the entire portfolio. In terms of outlook, clearly, we are operating in a volatile environment, a phrase that we've used many times before is that we're not immune. We're just more resilient.

There's always going to be challenges in a portfolio. Whilst it's a small exposure at the group level on the Middle East, some of our companies will be more exposed than others. We'll have pockets of automotive. We'll have pockets of maybe secondary impacts coming through from the wider issues in the Middle East. And of course, then there's always project-based businesses around infrastructure, all of those things, none of them being material. I think fundamentally, you have to come back to our choice of markets and the markets that we operate in. we're deliberately choosing those markets where we're focused on long-term drivers, where we're often small but critical components sold on value where the cost of not doing is so high, whether that be regulation or human life.

So being in those markets is a good start point. Then we overlay that with the agility in our companies where they're close to their customers, close to their markets and therefore, have that autonomy to make decisions and react quickly for what's required for that moment in time in their market in addition to access to wider group resources. So you put all of that together and fundamentally, I'd never sit here and say we haven't got pockets of challenge or pockets of opportunity. But across the portfolio, we've got a high degree of confidence in terms of being able to deliver in line with our KPIs over the medium term.

Great. And if I can invariably a question on Photonics. Thank you for extra details and also for the comment on how you guide for this business. I just wanted to kind of scroll back to a year ago when you started the year with indicating an expectation of, I think, about 20% growth for this business. And then Q1 was, I think, immediately a bit better. And then obviously, you printed 60% in first half, and that's been kind of the run rate. I just wondered how much visibility do you have on this business? And is this year looking different to how you had it last year in terms of that kind of visibility, customer indications, et cetera? Is it kind of a fuller guidance for this year than what proved to be a year ago, if that's possible, obviously, I appreciate you're subject to NDA, et cetera.

Yes. I don't think past experience can ever be a perfect example of what's going to happen in the future. Fundamentally come back to the point we made earlier. Here's a business that continues to scale. The team are doing a phenomenal job in terms of scaling up this business at the pace that they are at the level of sophistication and quality that's required for our customers. So really good to see that. What was different 12 months ago to now I guess we had a little less visibility in terms of our own ability to scale. We've proven that over the last 12 months.

So that gives us a level of confidence to be a little further ahead than maybe 12 months ago. But at the same time, I'll come back to all of those wider things that are happening across a market that is scaling at all levels. If one of your supply chain cannot keep up with the pace, and that's going to impact your ability to do so. So as I say, I'll come back to the point, I'm giving you an outlook that reflects our best estimate at this moment in time based on what we have in front of us. Andre. Let's go to Jonathan.

I just had 3 questions actually. Just following on the photonics theme, if I may. The first one was just in terms of your obviously disclosure of the product. Obviously, you talk about optical switches. I just wonder if you could just sort of delve a little bit deeper if possible on that in terms of what type of optical switches? Is it an optical circuit switch? Or is it a packet switch or so forth? Just some more color on the product there would be super helpful. In terms of the second question, I'll just go through all 3 questions at the same time. The second question was just on the margin of Avo.

Obviously, you talk about mix. Can you just talk about where we're seeing the margin of AVO right now? I think previously, you've guided it to be pretty much in line with the ENA average. Is that still the case? Or have we seen a little bit of a fall away or pullback in terms of profitability of that business? And then the third question, again, sorry, on Photonics, was just in terms of that customer relationship. I mean, is there any risk out there that the customer may dual source? Is there any sort of information, anything you can say on possibly that playing out through '27, please?

Yes. Thanks, Jonathan. Let me sort of pick up numbers 1 and 3, and then maybe Carol will just pick up on the margin point. Unfortunately, your first question is going to be one of those where I'm going to frustrate in that I cannot expand any further than what we've disclosed. Clearly, we've disclosed more than we have done previously in terms of multiple generations of an optical switch, but that is as far as I can go in terms of that level of disclosure. On the third point in terms of customer relationship.

And go back to the point that we've been working with this customer now for over 10 years. We've codeveloped and manufactured the optical switches using their IP over that time over multiple generations. So within that, you can read and as we've shared before, there's many different things that we're doing with the customer around stock management, also around the manufacturing and also around that co-development and R&D. So there's a very close relationship there. And I would point towards the fact that we have been able to disclose more again is a little bit of a reflection of just how strong that relationship is with the customer.

Sure. Jonathan. Yes, I mean, the margin, what we see is that it's in line with the group margin. We have previously spoken about E&A, but then it becomes a bit circular given the percentage is of E&A. So easier just to reference it to group. So similar to so neither accretive or dilutive. And then nothing to call out other than, I think, something that we probably referenced before that the way that we earn revenues, there's different buckets of revenue that we earn. So there's the R&D piece clearly that Marc's referenced. And we also manage the inventory as well for the broader supply chain and then clearly, the manufacturing, too. So any given year, depending on that mix, you might have a slightly different margin, but nothing to note.

Jonathan, I'll just pick up, Stefan, I see that you've written a couple of questions in. I think the first question we've covered, which is how conservative is your Photonics guidance. I think I covered that earlier. In terms then just going on the Arvo last one, I promise, please talk us through the capacities that you have at Arvo Photonics, particularly since it seems you've moved into a new larger facility. Again, I think I covered that with the comment that capacity isn't one of our challenges at this moment in time in the near future.

And then your third question is, please explain the rationale for divesting LabSphere and Cardios. You cleaned up your portfolio quite a bit in the past 2 years, AI divestment in FY '26. are there more divestments that we should expect? Or have you finalized your portfolio pruning? I guess just picking up on that one, we're always reviewing the portfolio. As I said in the presentation, every business that we buy is with the intent to keep for decades. But at the same time, it's absolutely appropriate to continue to review the portfolio. And we start with that simple question of would I buy this business today?

And I guess picking up specifically on LabSphere and Cardios, -- both of those have been a valued part of Halma over the years and been positive contributors to the group. But as part of that review, it's highlighted that the future growth opportunities for them, both are in markets that are not a focus for Halma, whether that be geographically, whether that be the type of spend or the type of market. So it was all about finding a better home for them where they can deliver against their own growth strategy.

So nothing more than that. And I guess in terms of how many are we doing, how many would you expect? I think the reality is, over the years, there used to be an opportunity cost to looking at divestments in that we had less resource. We had less divisional chief execs. And therefore, if you were putting the effort into a divestment of often growing businesses just so happens not aligned necessarily to our growth strategy, then you were distracting yourself from doing M&A. I think as we've scaled over the last 5 years, we've now got the the luxury of a single resource in the center that allows us just to either resource harder on integrations or in fact, if there's divestments to have that additional support.

So I don't think there's going to be an uptick in divestments. We'll continue reviewing as we have done. But where we see that it's appropriate to do so, then as we've shown over the last couple of years, we'll find great homes for those businesses and look to redeploy the capital in Hala-like businesses moving forward. Hopefully, Stefan, that answers your written questions. Do kind of write another question if I haven't answered. Going back then to the hands up to Chip, if we come to you next.

I have 2, please, but I'll take them one by one. My first question is simply a clarification on the organic revenue guide for next year. When you say low double digit, what sort of range are you expecting? And then perhaps the key drivers of the lower and the higher end of the range?

Yes. So we've obviously been explicit about the Photonics premium within that. And I think the best way to to think about the rest is, as you know, that we have our organic constant currency target of 5% and an ambition to be growing at 7.5%. And so an expectation somewhere in that range would be a sensible place to get to. And just worth adding that we would consider that to apply across the 3 sectors.

Okay. And then just on the margin guidance as well on next year. Guidance is obviously off a strong performance for this year, but I just wanted to understand why you're not expecting some expansion given the low double-digit organic growth guide.

Yes, sure. I'll take that, too. I mean it comes back to one of the questions earlier, so -- and also the theme of the whole presentation around reinvestment. And so that balance of making sure that we're investing for the long-term growth that we aim to deliver. And the margins, as you've already said, are already very strong. So we're not wanting to push them further, but rather to continue that reinvestment so that we can sustain at that level. And at any point in time, in any given year, there will be a bit of mix effect as well. So that's the basis of the guidance.

Let's now go to Christian.

I appreciate the commercial sensitivities obviously limit what can be discussed on the technology specifics in photonics. I'm not going to press on that. But you're forecasting a 30% growth. I understand your earlier comments to Max's question that your guidance is based on order visibility and maybe factoring in some potential supply chain challenges. But you pointed out, Marc, yourself, that 30% growth might seem low compared to the hyperscaler CapEx plans over the next 12 months, which on our math range from 49% to 77%.

So I've got really just 2 questions here. Is there a phasing dynamic to consider here in terms of the lag between CapEx spend on greenfield data center deployments and when you might see sales into the rack? And then maybe secondly, and again, no need to comment on tech specifics. Would you agree photonics applications represent a penetration growth opportunity in the data center more broadly?

Yes. Thanks, Christian. I guess in terms of kind of the phasing, I think we're a small but critical component here. I think it's pretty dangerous to start trying to take headline CapEx figures and trying to correlate them back. far better for us to be looking and speaking with our individual company that's close to the customer and having those conversations, hence, that being the baseline of our guidance. As I say, the customer demand remains strong. And as I say, the right way to think about it is that the outlook reflects the demand, our ability to scale and then the pace at which that broader system can deploy and absorb new technology and wider technology.

So I don't think it's appropriate for me to try and comment on the dynamic between our spend and what's being communicated is wider CapEx spend. On Photonics as a technology, absolutely. I think when you think about optics, when you think about the demands and needs, that need for speed, latency and efficiency, there's no doubt that optics can play a role in that, and that's pretty well documented out there. I guess guarding against that the other way is this is a pretty dynamic market. There's a lot of changes in technology. There's a lot of investment. There's a lot of customer choices to be made. So on the one hand, I absolutely see it as an opportunity from an optical perspective. But on the other hand, you've got to be appreciative of how dynamic the market is at this moment in time.

Maybe I can fit in a follow-on, and it's not on Photonics. But if we look at E&A ex Photonics and also ex the Nuvonik contribution, you grew 34% organically. That's 260 million of incremental revenue. You said Photonics growth was a bit over 50%, so 175 million of that EUR 267 million. That gives 92 million of incremental sales. And so I get to 21% organic for the rest of E&A, again, ex Photonics and Nuvoni. I know you've got good demand in gas detection and water analysis. But could you add some color on what's really driving that demand? Because clearly, it's well above the high single digit that you'd be usually looking for?

Yes, sure. Thanks, Christian, Carol here. And David, I think this addresses your question that we can see on the screen, too. So thank you for asking. So yes, I mean, the double digit, absolute your conclusion, Christian, that it's double-digit organic growth is right and well done to Consluence and the team for doing such a great job. I mean I think as we said at the half year point when it was strong too, there is a little bit more sort of project focus or emphasis within the E&A sector just by the nature of what the companies do. That said, it was very well spread across all of the companies. A little bit of recovery for some of the companies in there that had weaker comps. So I suppose bear that in mind.

But yes, well spread across across the patch, including actually for some of our more recent acquisitions as well in the last few years. I mean, going forward, coming back to one of the earlier questions, we wouldn't be guiding at those levels on a forward-looking basis. We would be more in the sort of 5% to 7.5% range that I referenced earlier, but not to take anything away from the phenomenal job that those companies have done within the sector last year.

Thank you, Christian. Rory, we'll come to you next.

It's Rory from Oxcap. I think there is still one on Photonics here. You talked about the different pieces of Avo Photonics revenue generation being sort of contract R&D, inventory management services and then the actual manufacturing of the optical switches themselves. If I just look at the revenue recognition note, in E&A, that's now more than 50% of that revenue is recognized over time versus a point in time, that's up from 41% last year. And if I think back a few years, it was maybe more in line with the group average, maybe slightly higher than the other sectors, but not quite to that level, right, to that point that there's a lot of project-based revenues going on here and certainly a lot of the growth has been in that bucket, right, in terms of revenue recognized over time?

And then just trying to square that with your comments, Marc, that capacity is not your issue in the near future. I guess how should we maybe think -- is there anything you can tell us this morning about how those 3 pieces within Avo Photonics may move over time? Because if we look at the kind of the long-term or the medium-term demand outlook for these products or what we think these products are doing and where they're going in the data center, then it may be a question of your medium-term capacity as sort of the R&D and the inventory management piece sort of go down relatively, but the manufacturing of components piece comes through in the next kind of 1, 2, maybe 3 years. Can you just -- am I talking sort of nonsense here? Or is there anything that you can help us with on that point?

I'll take the first bit in terms of the technicalities, Rory, thanks for your question. Yes, I mean it's -- unfortunately, without spending like too much of a technical geek, it's the vagaries of IFRS 15 that we're grappling with here. So the -- I mean, you're right to reference the increase. And obviously, as AO has grown over the years, those revenues earned over time have too. It is very much the way that the contract is constructed, Rory, and so it actually applies to each of the aspects of the revenue buckets that we earn. So whilst I've referenced a bit of mix effect, I wouldn't think that -- don't think of that as materially different over years.

And then the other piece actually just to note is that our most recent E&A acquisition, Brown by its nature of providing a service rather than selling products. Again, the accounting standards mean that those revenues fall into that bucket. So I suppose as far as how much R&D, how much inventory management and how much manufacturing in any given year, the inventory would tend to move in fair lockstep with the manufacturing with maybe a little bit of plus or minus depending on inventory being bought ahead. And then the R&D again might move a bit, but it's not a material difference in the mix year-on-year. So I don't know if there's anything sort of broader than the sort of technicalities on that, that you want to dig into, Rory, but that hopefully gives you a bit more color.

That's really helpful. I guess also for the market, today looking at this thinking, well, if it's -- if you've been involved in previous generations, there's a high chance it will be involved in future generations and part of that brings R&D spending, the R&D investment with it and then the manufacturing at some point as well. Obviously, the new AVO site might be -- might come in handy at some point in the near future, but that's great.

I guess, the only thing just to add because you mentioned immediate future and time lines is you and I might have different definitions. Remember, at Halma, we tend to think in decades. And then my immediate short term is probably the next 12, 18, 24, 36 months, whereas I think in your world, that might be the next quarter. I mean long term is 12 to 24 months. So we just need to be a little bit careful of us thinking in decades and maybe you guys thinking in quarterly in terms of how you define time lines moving forward. Okay. Fantastic. Thank you, Rory. So it looks like we don't have any written questions. Yes, we've got one hand gone up. Is that Bwin.

Just one on data centers, but just trying to focus on the other areas ex Photonics, just to kind of ask whether you have been able to get any products into the data center market outside of the photonics, especially when we look at your safety business, I think you have a good commercial exposure over there. So can you please give clarity on that part?

Of course, yes. Great question. As you say, it comes back to the fundamentals of the model in our businesses. They've got deep application knowledge of their technology in their core markets. And as I was talking in the presentation, they're always looking for opportunities in other markets to go and apply their expertise in terms of solving customer problems. So that would be exactly the same for data centers, whether that was in gas analysis, whether that was in safety in terms of access, whether that was all a multitude of areas, fire suppression, all of those types of areas, it's the way that our companies think.

So they're thinking, okay, I'm in a core market that's going to give me 3%, 4%, maybe 5% growth. How do I consistently find another 1% or 2% growth over the medium term. And the way I'm going to do that is to expand my addressable market. And if there's trends that are growing, if there's markets that are growing, then they're always looking for those opportunities. And that R&D spend that we've seen, I'm sure parts of that will be many of our businesses looking to get the benefits of growth and spend in those areas. So it's certainly not a material part of the group, but rightly so, it's an area that every one of our businesses will be looking commercially and thinking, is there something we can do with our deep expertise that applies to this level of spend and build-out over the next x years. Excellent.

So I don't see any further hands up. I think we've covered off David's written question. So I guess thank you from me. From our perspective, fantastic to have announced record results, that broad-based growth across all 3 sectors. record levels of investment, including R&D and M&A and having a model that's proven its agility and resilience over decades gives us all great confidence in what we can deliver going forward.

So thank you very much for your time, and no doubt we'll all speak soon.

Good morning, and welcome to our Half Year '26 Results Presentation. I'm pleased to be here to present a really strong set of results for the 6-month period, results which clearly demonstrate the enduring strength of our sustainable growth model and most importantly, the exceptional talent and commitment of our teams across the group. And I'd like to start by thanking everyone at Halma for their individual contributions that enable us to deliver consistent growth and positive impact. Carole will provide more insight into our financial performance shortly. But first, let me start with the highlights.

As I said, it's great to report another set of record half year results, and I'm really pleased to see these results underpinned by strong organic growth. And fantastic to see the strong performance across all three sectors in addition to the premium growth of our Photonics business. We've also delivered a very strong margin performance and continued high returns on capital, and this supporting further substantial investment in the significant opportunities we see for future growth. And these results put us on track to deliver our 23rd consecutive year of record profit. Delivery of this financial performance demonstrates the power of our sustainable growth model, a model which has supported strong compounding growth and returns over decades, and a model which when combined with the opportunities we see in our markets, underpins my confidence in our continued long-term success.

The strength of our model lies in the way that each of the elements are interlinked, aligned and complement each other. Together, they remain critical to the delivery of our performance, both in the short and long term, a topic which I'll come back to later in the presentation. But first, let me hand you over to Carole for more details on our financial performance.

Thank you, Marc. And a very warm welcome to everyone on the call. I'll be taking you through some of the detail behind this excellent set of results. First, let me give you the highlights. For me, these results are a great demonstration of what the Halma model can deliver. First, strong growth. We reported headline revenue growth of 15% and EBIT grew 27%. Excluding a one-off benefit in E&A that we've already flagged in our trading update, revenue grew 14% and EBIT 23%. And we delivered an exceptionally strong first half margin of 22.3%, up 160 basis points. I'll give you more detail of the drivers of this increase in the sector reviews.

A fantastic performance, and as you will see, driven by organic growth broadly spread across our sectors. At the same time, we've continued to make substantial strategic investments to support our future growth. We've invested GBP 300 million in the first half, including nearly GBP 60 million in R&D, around GBP 130 million in acquisitions, and over GBP 100 million in CapEx and working capital to support growth in a number of our companies. While this investment resulted in cash conversion being below our KPI at 79%, we expect it to be more in line with our 90% KPI at the full year. All in all, a substantial level of investment, reflecting the significant growth opportunities our companies see in their markets and our confidence in continuing to deliver strong growth and returns.

The strength of our financial model means that we've been able to make these investments while maintaining a strong balance sheet and delivering high returns. Net debt to EBITDA is essentially unchanged since the year-end at just over 1x, and returns have increased significantly, up 190 basis points to 16.2%, a very strong performance. All of this supporting a further increase in our dividend, putting us on track to deliver our 47th year of dividend increases of 5% or more.

Now let's look at our revenue growth in more detail. This slide bridges the year-on-year revenue growth of 15.2%. Organic revenue growth was very strong at 16.7%. This reflected healthy growth broadly spread across all three sectors and a continued benefit from premium growth in Photonics, which accounted for around half of the organic growth. Most of the growth was volume driven with price increases averaging between 1% and 2%. There was a modest contribution from acquisitions of 1.6%, reflecting the number of deals completed in the last year. This acquisition contribution was partly offset by the disposal of AAI, which we sold in July.

As a reminder, AAI's revenue last year was approximately GBP 42 million, so there will be a larger effect in the second half. There was also a translational currency headwind of 3.2%, primarily due to the weaker U.S. dollar. Based on latest currency rates, we expect a similar headwind for the year as a whole. Finally, the one-off benefit was equivalent to 0.9% growth. Excluding this, reported revenue growth was strong at 14.3%.

Let's now move from revenue to profit and margins. EBIT was up 22.8%, excluding the one-off and a very healthy 22.7% on an organic basis. This was ahead of revenue growth and reflects margin expansion across all three sectors. Acquisitions contributed 3.1%, again, ahead of revenue, reflecting the quality of the businesses we have bought, while disposals were also accretive to margins. The currency headwind was similar to revenue at 3.4% and the one-off benefit of 3.9% completes the bridge.

Moving on to the sector commentaries, starting with Safety. It was great to see further momentum in Safety following 2 years of double-digit growth. On an organic basis, revenue grew 6%, led by strength in the Public Safety and Worker Safety subsectors. This was partly offset by a mixed performance in the other two subsectors given some specific end market trends and customer project delays, notably in the U.S. Profit grew 16%, reflecting a 280 basis point margin increase to 27%. This is a historic high for the sector and was driven by four main factors: the sector's continued revenue growth; favorable portfolio and product mix; strong operational delivery and benefits from accretive acquisitions; and disposals. Our safety companies continue to invest at a good level to support their future growth, with R&D spend increasing by 11% to 6.1% of revenue.

Turning next to Environmental & Analysis. This slide shows E&A's performance excluding the one-off. There's a slide in the appendix, which shows performance including it. The sector delivered an exceptionally strong organic revenue and profit growth of 36% and 38%, respectively. And it's really pleasing to see this driven by growth across all subsectors. Strength in Water Analysis & Treatment was driven by water infrastructure demand in both the U.S. and U.K. A strong performance in Environmental Monitoring reflected growth in U.S. gas detection and gas management in Asia Pacific. And in Optical Analysis, we saw continued premium growth in Photonics, reflecting increased demand from our long-standing hyperscaler customer.

The profit increase of 38% on an organic basis included a 90 basis point increase in margin to 23.6%, driven by growth in all subsectors and continued cost discipline. At the same time, it was pleasing to see a good level of investment with R&D up 7%. Adjusting for Photonics, where development is part of the revenue we earn, R&D for the sector is at a healthy level at over 6% of revenue. And finally, it was good to see a strong 4.3% contribution from acquisitions, including Brownline and Minicam's bolt-on Hathorn.

Now let's turn to Healthcare, which delivered a stronger performance compared to last year, reflecting good execution against a background of steady recovery in health care markets. This was supported by improving customer confidence and demand for solutions, which improve our customers' efficiency given increasing health burdens and rising patient backlogs. This resulted in good levels of organic growth in both Therapeutic Solutions and Healthcare Assessment, which together account for over 90% of the sector's revenue.

Therapeutic Solutions saw strong performance in a number of surgical and respiratory device companies, although this was partly offset by continued softness in eye health therapeutics in Europe. Growth in Healthcare Assessment was broad-based with most companies in the subsector delivering solid organic growth. Sector profit was 10% higher and on a reported basis, up 8% organically. Margin increased 50 basis points to 21.3%, reflecting benefits from stronger revenue growth and improved pricing and mix. Our health care companies remain well invested with R&D at 5.4% of sales. Finally, there was a good contribution from acquisitions, reflecting the quality of businesses we recently acquired such as Lamidey Noury.

I'll now talk about our cash flow and the balance sheet and how we've allocated capital during the first 6 months. The cash-generative nature of our companies means that we've been able to make a substantial investment to support our future growth while maintaining a strong financial position. Our first capital allocation priority is organic investment to support our long-term growth, represented here by investment through R&D and CapEx of GBP 93 million. Our financial strength means that we have also been able to support a number of our companies in making strategic investments in working capital. This resulted in a larger-than-usual outflow of GBP 75 million. Together with higher CapEx investment, this was the driver behind our lower cash conversion in the half, and we expect it to drive a stronger position at the full year.

Our second priority is continued value-enhancing acquisitions, where we invested a net GBP 148 million. And our third is a progressive return to shareholders through the dividend, with GBP 53 million returned in this first half. In total, we've invested over GBP 300 million in the half to support future growth, both organically and through acquisitions. And our leverage has remained almost unchanged at just over 1x net debt to EBITDA.

So before I look at our financial KPIs, let me briefly describe the M&A investments we've made this half year. First, Brownline, which is a fantastic purpose-aligned acquisition, which extends our strength in the trenchless technology market. Its location services deliver pinpoint accuracy underground for operators of horizontal directional drilling equipment. This is increasingly vital as utilities and data providers look to improve resilience and safety by burying their pipelines and cables. At the same time, they also want to reduce the surface disruption of digging trenches while safely navigating increasingly congested underground spaces. Brownline's best-in-class technology and deep technical know-how make a great addition to Halma.

Next, Nu Perspectives, a small but strategic acquisition for our eye health assessment company, Keeler, enhancing its capability in cryogenic technology. This reflects a broader trend across Halma of our companies using bolt-ons to expand into adjacent markets and deepen their presence in existing nations. We also remain disciplined in managing our portfolio. The disposal of AAI reflects our commitment to continually assess our portfolio for strategic fit and to ensure each company contributes to our long-term ambitions for growth and returns. Looking forward, I'm confident we'll make further progress in 2026. We have a healthy pipeline of acquisitions and a good mix of deals by size and type, both bolt-ons and stand-alone acquisitions.

Now let's turn to our performance against our financial KPIs. It's clear that this half year represents a strong performance by any measure, driven by broad-based growth and strong returns across all three sectors, combined with premium growth from our Photonics business. We are substantially ahead of our targets for organic revenue and profit growth, and delivered margins and returns well into the upper quartile of our target ranges. And while acquisition profit and cash conversion were below our KPIs, this principally reflects the dynamics in this specific half year. Over the longer term, our performance is ahead of our targets. So all in all, a very pleasing half year, but one that I'm aware comes from an unusual combination of broad positive momentum in both revenue and margins across all three sectors. Taking a longer-term perspective, this half year provides another proof point of what the Halma model can deliver. And these KPIs frame our ambition to deliver strong and compounding growth and returns over the longer term and further extend our strong track record against our targets.

Moving on to my last slide on full year guidance. The strength of our first half performance across our portfolio, together with our current expectations for the remainder of the year means we have upgraded our full year guidance for the second time this year. While our companies continue to experience varied conditions in their end markets and the economic and geopolitical environment remains uncertain, we've made a good start to the second half of the year. For the year as a whole, we now expect to deliver mid-teens percentage organic constant currency revenue growth, including a continued benefit from premium growth in Photonics and an adjusted EBIT margin of around 22%.

I'll now hand you back to Marc.

Thanks, Carole. Fantastic to see the excellent performance against our financial KPIs and the further upgrade in our full year guidance. In this section, I wanted to take a step back from the results themselves and provide insight into the role of our sustainable growth model in driving our continued success. It's a model which has always been key to our past success, including in the first half of this year, and it underpins our ability to deliver compounding growth and high returns over the long term.

You'll recognize the core elements of our sustainable growth model. In June at our full year results, I looked back over the last 50 years and shared how our model has been tested and proven to be resilient in a wide range of environments. And this enabling us to continue to scale through many different geopolitical events, economic cycles, technological advancements and changing market dynamics. And while our model continues to evolve, its fundamental elements remain at its core. Today, I want to highlight how our model enables one of Halma's most important characteristics, our ability to combine a long-term view with short-term agility.

At Halma, we're guided by our clear and ambitious purpose and powered by long-term growth drivers that underpin our markets. And this enables us to think in decades and take a long-term view for determining the talent and capabilities we need or for the organizational model required to scale and when we're choosing the markets and opportunities in which to invest. If I take our markets as an example, we invest in markets with resilient, often regulatory-driven growth drivers that extend over decades. And our disciplined approach targets niches with high barriers to entry, strong societal benefit and sustainable demand, markets and niches where we enable our customers to tackle some of the biggest challenges we face today, better health care for everyone, clean air, clean water and how to keep us safe in our cities and in the places where we work. All of these fundamental challenges, which are intensifying, supporting our growth and returns for decades and giving us the confidence to invest ahead of the opportunity that's in front of us.

And thinking in decades also enables us to continuously scan the horizon to identify long-term trends and reshape our portfolio to align with those evolving markets and technologies. And at the same time, our decentralized model and the quality of our leaders means that we're able to seize new opportunities. Agility is embedded in Halma's DNA. It enables us to respond quickly to fast-changing challenges and opportunities without losing sight of our long-term goals. Our model puts our companies close to their customers and their end market. And this gives our entrepreneurial leaders who are not dependent on other parts of the organization, the freedom to innovate and adapt rapidly to changing market conditions. This means that while maintaining their core long-term focus, they can also look for opportunities to apply their deep technical expertise to those faster-growing end markets for a period of time.

Let me just bring that to life. Crowcon is applying its gas detection expertise into battery energy storage, detecting hazardous gases to protect these systems that provide critical backup power for sectors like health care. Sentric is applying its industrial interlock technology to keep assets and people safe in the fast-growing data center space. And Alicat's proven ability to apply its flow and pressure control expertise to many different fast-growing end markets. Just a few examples of how our companies are always looking to capture emerging additional growth opportunities. And this combination of long-term thinking and short-term agility is a powerful combination.

Let's look a little bit closer at how we can maintain our agility as we continue to scale. And this is why we insist on talented entrepreneurial leaders with the ambition to act quickly and to innovate. Our structure enables fast decision-making. And by having our companies close to our customers, they can anticipate and adapt their changing needs. And this focus on the long term alongside the importance of agility means that we're constantly balancing seemingly contradictory requirements at the group sector and the company level. At Halma, we see these as complementary. It's not either/or, we call it yes/and. It's embedded in our DNA and our sustainable growth model. It's part of our culture and a source of our strength.

Our leaders have the autonomy to grow their business in the way that's right for them, and they are held accountable for delivering that growth. Our leaders are focused on delivering this year's results, and they're focused on where the growth is going to come from 5 years from now. Our companies have the agility and speed of SMEs, and they get the benefits of being part of a global group. And it's this ability to combine the long-term and short-term agility that enables us to capture those fast-growing emerging opportunities with pace and invest ahead for future growth.

And it's this same approach that we're adopting through this period of premium growth in Photonics, a great example of everything that I've just said. When we first acquired the company in 2011, our long-term view recognize Photonics as an enabler of technologies across many end markets. We could also see how the company was showing exceptional agility in capturing growth opportunities by accessing new faster-growing markets, a consequence of great leaders and deep technical expertise. And one of these opportunities has led to a period of over 10 years of working closely with their hyperscaler customer. They're using their substantial application knowledge to support their customer with the development of a relatively small but critical component of a wider solution in data centers.

Our model allows us to maximize the opportunity with the customer while remaining focused on the continued delivery of our group strategy of sustainable compounding growth and returns. And this outstanding delivery in the short term through excellent local execution allows us also to reinvest for the long term to enable future organic and acquisition growth. Investments in innovative R&D at our companies in building out our teams for scalability, in our M&A capability and in the addition of great value-added acquisitions such as Brownline. As we heard from Carole, Brownline, another great example of a fantastic acquisition underpinned by long-term growth drivers. Urbanization, the need for resilient infrastructure, including water, electrification and the rollout of fiber and data networks. And this combination of a long-term view and short-term agility is critical in the continued delivery of our strategy.

Being invested in niche markets underpinned by long-term growth drivers and having that org model and culture that gives us the ability to operate with agility is a fantastic start point. However, it's our talent that is the enabler and the multiplier. We structure for growth and agility, but it requires leaders and a culture that can realize it. It's our entrepreneurial and ambitious leaders that maximize our potential. And the criticality and therefore, the focus on talent isn't new. It's been there since the beginning, embedded into Halma by our founders, David Barber and Mike Arthur. In fact, it remains such a critical element of our model that we brought together all our MDs and presidents for our Accelerate event last month. And we spent 2 days solely focused on how we, as a leadership team, can all become even better at spotting and developing talent to help maximize Halma's potential. A truly inspiring event and a demonstration of how our great individual leaders benefit from the power of our network. But don't take it from me, let's hear from some of our leaders on why talent is so important to their businesses.

[Presentation]

Some fantastic comments from our leaders in the video, illustrating just how important talent is at every level of our business, both Alex and Alan capturing why talent is critical to seizing those faster-growing opportunities. Robert picking up on the importance of accountability driving that ownership mentality, and Natalya on why we've been able to attract and retain fantastic talent and the ability for them to make an outsized impact at Halma.

As you heard from the video, we create a culture where leaders can thrive. This is what enables us to keep scaling and maintain our culture as we grow. And it's why we continue to invest in our people and our capabilities to support our future growth. For example, we've grown our M&A teams, and we've added two new Divisional Chief Executive roles over the last year. Our DCEs are critical to our growth. They're responsible for acquiring new companies and then they chair those companies once they join the group. So the strengthening of both of these teams gives us greater capabilities to find more companies and the ability to continue scaling.

We also continue to invest in our development programs and our graduate scheme, the Catalyst Program, both critical in enabling us to grow and develop our own future leaders, ensuring that we maintain our culture as we continue to scale. And it's really pleasing to see those investments bearing fruit. For example, we heard from Alan in the video, who's one of three company MDs that have come through our Catalyst Program. Also the continued strength of our organic growth, a direct result of our continuous investment in R&D and the acquisition of Brownline, a result of the targeted investment in setting up a dedicated E&A sector M&A team when we transitioned to our three sector structure 4 years ago.

So bringing it all together, Carole described the strength of our performance in the first half of 2026, another record result delivered in varied markets. You've heard how this continued success is enabled by our sustainable growth model, a model which enables us to take a long-term view, staying focused on and investing in capability needs and structural growth drivers, and a model which gives us that agility to capture emerging opportunities and mitigate risks. It's a model amplified by the exceptional talent at Halma, accountable to deliver long-term sustainable growth and empowered to act with agility to capture those short-term opportunities. A model that continues to deliver consistent, sustainable and compounding growth and returns. And a model that underpins my confidence in our ability to continue to deliver for decades to come.

And that's the end of the presentation. And now we have time for some questions.

As ever, there's two ways that you can ask your questions. You can either raise your hand using the tool at the bottom of your screen, and I'll invite you to ask your question verbally, or you can type the question which Carole and I will read out and then answer. So Bruno, let's come to you first.

The first question is just on the strong growth seen in E&A this half. And it relates to -- I guess, the growth in Photonics was good to see. But what was more surprising for us actually was the very strong implied growth in E&A outside of Photonics, which we calculate to be roughly around 17% to 18% on an estimated organic basis. Could you maybe just speak to the drivers of that a little bit more? So why was gas detection so strong in the U.S. and gas management solutions so strong in APAC and also the water infrastructure market?

Yes. Great. Thanks, Bruno. As you say, really pleasing to see that broad spread growth, not only in the E&A sector, but across the whole group. I think that really is the story of these results in this 6-month period. Picking up on the specifics of your question, again, really pleased to see growth across all subsectors within Environmental & Analysis. As you say, Optical Analysis, very strong with that exceptional growth from Photonics. Beyond that, spectroscopy was mixed. We saw some recovery in certain end markets around semiconductors, personal electronics and other OEM customers, but slightly weaker in areas such as biopharma. But again, no real read across there. It's a really small part and pretty specialist in terms of what we're doing.

Within Water Analysis & Treatment, yes, great to see the strength of the performance in Water Analysis. That was driven really by water infrastructure demand in the U.S. and the U.K. We also saw a recovery in water testing and disinfection. So again, there's still a bit of uncertainty certainly in the U.K. as we transition through the AMP cycles, but good to see the recovery come back and that underpin of the demand.

And then finally, to your point in Environmental Monitoring, strong across both Environmental Monitoring and gas detection and analysis. We've seen that really, as you say, notably in the U.S.A. There is a little bit here just in terms of the specific companies have got a few more projects in them. So there's a bit of phasing in terms of the number of the projects, but growth across all regions in gas analysis. So net-net, a really strong performance. Always worth just remembering within that, it is a 6-month period and some of those are a little bit more project-based. But strong underlying growth and also actually pretty unique to have all of the subsectors moving forward in the same 6-month period. But net-net, really pleased with the wider performance.

That's very clear. And I guess just a follow-up on Photonics. And I know you're limited in terms of what -- but I was wondering if you could help us understand the driver of acceleration in the half a little bit more. So more specifically, are volumes for Photonics simply scaling up with CapEx or investment like your customer? Or is it more complex than that and you're perhaps taking share of CapEx wallet at the same time? And then finally, maybe a little bit on how you expect this relationship to evolve in the coming years. Is the base case that you just, again, simply scale with investment at your customer? Or is it more complex than that? Is there a replacement angle that we should factor in or again, share gains in terms of customer wallet? Just some thoughts around that would be super useful.

Yes, I'll sort of pick up on the specifics. But I think before I do that, I mean, there's no doubt going to be a few questions on Photonics. As I said at the outset there, I think the big message from today is the wider performance of the group, really pleased in terms of what we've delivered. I guess for me, we're now here executing what we said we were going to do sort of 6, 9, 12 months ago, and that is we're maximizing the opportunity in front of us. So a phenomenal job by the team in the company in terms of execution and really scaling what is complex manufacturing. We're then continuing to deliver a strong performance in the rest of the portfolio and then using this period of premium growth to reinvest for future growth. So really good to see that coming through.

To your point then more specifically, we're going to get some questions on Photonics. So it's probably worth me just giving a few reminders, setting a bit of background and then coming back to your specific questions. Firstly, as a reminder. As you say, we have got customer confidentiality to work through here. So I'll be a little bit guarded. I think we have been increasing our disclosures, but we've got to be careful and adherent to the confidentiality. Again, as a reminder, a business we acquired back in 2011, around GBP 4 million of revenue at that point. And as I said in the presentation, we've recognize that Photonics had many use cases. We've recognized the quality of the team and the technical expertise. And our org design means that they've had the autonomy to look for those opportunities.

And then within the business, and we've talked about it before, the drivers of success and their core characteristics are largely the same as many other companies, if not all the companies in the group. So they've got that agile and entrepreneurial talent, still the founders, in fact, in this instance. They're very close to the customer. In fact, it's an embedded relationship. We work closely with all parts of the team with the customer, including the R&D team, and that's a relationship that's been embedded for over 10 years. And as I say, we've got significant technical skills. We're solving a really complex problem, and it's highly complex manufacturing of what is a small but critical component. So a bit of a reminder there in terms of the background. I've talked to how we're managing it in the group.

I guess taking a view at the wider market, which will feed in a little bit to your point in terms of how do you scale is it linked to CapEx. There's no doubt there's lots of commentary and a wide range of views across a number of topics in and around AI, in particular, whether that's valuations, economics of investment, timing and scale of investment. And there's no doubt there's a lot of investment going in and around and a lot of interest in and around AI. I guess we look through the short term there. And if you think about the adoption of AI, in particular, whether that's in our daily lives at home or at work through productivity, automation, innovation, all of that continues to happen. I think it's been referred to as transformative technology in the last week or so. And there's no doubt that we're aligned to that point around compute demand accelerating. So if you've got an underlying demand for compute, then underneath that, that shift is going to require infrastructure and investment. And that's where data warehouses come through.

So again, I'm sure lots of different views as there are out there around the absolute scale and timing of that build-out. But fundamentally, as I say, there needs to be a foundation in an infrastructure. And I guess if you take a more specific focus on data centers, there's that real focus at the minute on speed, on latency and more and more now on efficiency and energy consumption. So it's likely that Photonics can play a role in solving some of those problems. So net-net, and we can talk about kind of short-term forecast and all of those things, regardless of absolute scale, regardless of precise timing, we still see that medium-term demand in terms of the operations.

All of that said, we mustn't forget that it is a very dynamic market. Whether that's the technology, whether that's the demand cycles. And specifically, again, as a reminder, for our business, we are operating on that 10-year relationship. It's PO-based. We've got sort of 6, 12 months of visibility, but fundamentally, not a contract in place because of that embedded nature, because of the strength of the relationship. So a lot of information there, but hopefully, it just means that everyone on the call is in the same place.

Coming back then to your specific questions. As you know, we've been working with the customer for over 10 years. It's iterative in terms of the innovation. We continue to innovate with them. And we grow with them, to your point. So their CapEx investment, what they're investing, we're investing with the customer. In terms of the potential for replacement and upgrade, absolutely, that remains potential in fast-moving innovation, fast-moving technology. We haven't seen that as yet. But clearly, as you take a much longer-term view, there is that opportunity potentially. But again, I'd just come back to that thought around the dynamism in the market, the shifts in technology, et cetera. But certainly, as we sit here today, I think the team are doing a fantastic job locally of executing. And I think the rest of the group are doing an excellent job in terms of continuing to deliver that long-term growth and compounding returns.

Very much appreciate it. Maybe just a final one on Safety and the very strong margin that we saw in the first half. And I appreciate that a 6-month window is narrow when it comes to assessing profit margins. But I guess, could you just help us a little bit more with unpacking just why the margin was so strong? Were there any mix elements or anything else that we should be aware of? And just a little bit around how we should be thinking about the trajectory of the safety margin from here?

Bruno, Carole here. I hope you're well. Yes, I mean, as you say, I mean, first and foremost, across all three sectors, a brilliant job in the 6 months and great execution across the piece. As you rightly point out, it is a 6-month period. And so we would never be suggesting that you take 6 months as sort of inferring longer-term trends. And I think it's worth saying as well, it is actually quite unique that we have all three sectors growing with margin progression in a 6-month period.

To your specific point on Safety, I mean, as ever in these explanations, there's a number of factors and variables. I mean, as you know, Safety has come off the back of 2 years of double-digit growth. So there's continued momentum through the top line. There is a bit, as you alluded to around, product and portfolio mix in there. And I suppose as we look forward, taking those points. While Safety is well invested, the reality is that you don't grow at that rate without having to then step up your investment further to make sure that you can sustain that growth.

So as we look forward into the second half and beyond that, that's our thought process. And as we've said many times before, we're not in the business of chasing the margins higher. It's more that combination of keeping the margin strong whilst keeping the top line moving, too. So a couple of small examples for Safety. You heard Marc talk about two new DCEs in the group. One of those is Safety. You've heard Marc reference investment in M&A. Again, that's the sort of thing that Funmi and the team are thinking about.

So as you look forward, think about the need for that additional investment. And I think also worth saying and not something that we major on because it's not a big spend for us, but CapEx-wise, one of the bigger CapEx investments this year is in one of our biggest safety companies where because they've been growing strongly, they're needing to expand their facilities. So that same thought process and logic applies to some of our other safety companies, too.

Thanks, Bruno. So just looking at the list. Jonathan, we'll come to you, Jonathan Hurn.

First question is just coming back to Photonics, Marc and some of the comment or one of the comments you made there just in terms of the visibility. Obviously, you have visibility on the revenue, I think you alluded to through the second half of this year. Can you just talk about the revenue visibility into your next fiscal year? How much of it or how much visibility do you have on '27? And then also just maybe sort of following up on Photonics. Just in terms of the customer exposure, obviously, you've got one key hyperscaler customer. Have you made or are there any efforts within the Photonics business to widen that exposure, maybe get some more customers on board? Essentially, that's the first question. I know it's got certainly two parts.

Carole, do you want to pick up on the first point, and then I'll do the strategy on customers?

Yes, absolutely. Jonathan, I mean you've heard us reference, if we just take half 2 '26 first in terms of the visibility on Photonics. So we've spoken about the premium in the first half being about 8 percentage points of the group growth, and we're expecting similar for the second half. I mean beyond that, you heard Marc obviously articulate and remind everyone the whole position with this customer and how dynamic the market is. And whilst we do get a forward view from the customer for the next 12 months, I think it's fair to say that we would -- we consider that to be directional. And so I suppose coming back to Marc's description clearly, we'll guide for the whole group next June. But the way that I would sort of encourage you to think about the Photonics opportunity at the moment is that we would envisage it being a tailwind going into FY '27.

Thanks, Carole. And Jonathan, just picking up on that point around the customer. As you say, we've got that strong long-term relationship. At this moment in time, strategically, we think it's the right thing to continue with that relationship from a commercial viability perspective. As I say, it's more than just that transactional relationship, that embedded nature and insight from the R&D side, we believe, is a good place to be.

That said, both within the individual company, but also the sector in the group, clearly, we're looking at other opportunities to diversify. The reality is with the team and the scaling up, I mean, that is just a phenomenal job in the amount of time that takes -- that's proving difficult locally, but they have set up separate teams, and they'll continue to look. And then as you've heard today, we're doing a great job at the E&A sector of wider areas to look out. We saw Brownline coming in, and then the wider group continuing to grow. So as I say, strategically, today, it's maintained, that customer relationship, but options are always open as we go forward, and we're looking for other opportunities.

Great. Very clear. If I could just ask a second question, just on Healthcare, please. First part of it was just on Life Science. Obviously, a smaller part, probably sort of 10% of the division, but it's the one area that's struggling. Just your views there, when do you start to think that will recover? Do you think that's potentially going to come through in H2? And the second part was just on the margin really. Obviously, we're a long way from the peak in that. Can you just give us a feel for how you think that sort of margin develops for Healthcare going forward, please?

Yes, I'll pick up the first point around Life Sciences. As you say, it is a relatively -- well, it is a small part of the group, relatively small part of the Healthcare portfolio. And particularly, what we're doing there is mainly around specialist pumps, valves and manifolds. We've seen a mixed performance. We've actually seen pretty strong growth in the U.K. and Mainland Europe and then offset by a decline in wider Asia Pacific. But again, it's difficult to read anything into that fundamentally. I wouldn't do a read across anywhere in terms of other businesses in this arena. The reality is, again, we're starting to see a recovery. We're starting to see a bit of confidence in customers. I think we're through the destocking, but we're not at the stage that I'd want to say we were back to normal levels of demand just yet.

Carole, if you pick up on that?

Yes, sure. And then on the margin point, actually just picking up what Marc said there, Jonathan. So we're characterizing it as a continued recovery. And there's still some uncertainty clearly in some of the markets. So Steve Brown, our sector CEO and the team are doing a great job and in particular, in the more challenging period sort of last sort of couple of years or so have been quite measured in terms of investment, although not underinvesting. So I suppose in the mix of making sure that we're investing into the recovery and the growth, we would expect to see the margins continue to move forward back towards historic levels. But I think you should think of it as progressively getting towards that point.

Thanks, Jonathan. Just looking at the list. So, if we now go to Christian.

I want to start on Photonics, perhaps unsurprisingly. And apologies if this is a naive question, but you've mapped the macro. As we think about the actual product set, how do we think about useful life of what you sell? And is it a fair assumption to assume that effectively any of your sales are really greenfield data expansion rather than, say, upgrades in existing facilities?

Yes. I've got to be a little bit careful here, Christian, in terms of the confidentiality. I'll just come back to the point that I made to -- I think it was Jonathan's question. At this moment in time, we believe that a lot of that demand is CapEx and build-out. But we do believe that haven't seen it yet, but just by natural instance of the pace of change and the increase in innovation, there may be a replacement cycle. But as I say, we're not seeing that yet, and this is a dynamic market. So I certainly wouldn't want to pin any future definite guidance on that at all.

And maybe pivoting to the Safety business. I was interested in your regional growth commentary there, marginal growth in the U.S., which compared to good growth in the U.K. and it seems strongest growth in Mainland Europe. Curious what's driving that distinction. It seems to be a bit at odds with maybe broader macro trends.

Christian, Carole here. Yes, I mean, I think as you probably heard us say before, we don't particularly sort of focus on the explanations around the geographies. And you have heard us reference the particular strength in public sector and worker safety. So that's really what you're seeing coming through the geographies. So nothing that we would consider to be structural, I suppose. And yes, I mean, really sort of one of our bigger business, bigger safety businesses is doing particularly well, which is benefiting the European numbers.

And then in the U.S., for example, we talk about the other two subsectors being a little bit softer in Infrastructure Safety and Fire Safety. Some of that is in the comps where there was a couple of bigger projects last year. So I suppose in the round and I guess the genesis of your question about whether there's something more structural by geography, then no, we're not seeing any discernible trends that would indicate that.

Christian, I'd see you've got a written question. So maybe we just pick that one up as well. And if I just read that out to the Brownline acquisition sits among the top 3 deals by size over the last 20 years. Does this reflect an appetite to do more medium-sized acquisitions? Secondly, when we think about those M&A ambitions, does the increased concentration of sales from Photonics affect your preferences across the segments?

So I guess if I just pick up the second part of that first, not necessarily. We're open for business across all of our sectors, all geographies. So it isn't that we're looking to avoid certain areas or double down in certain areas. We're looking for those opportunities much through the lens as we always do with that disciplined approach that we have to M&A. From a deal size perspective, I guess the reality is as we continue to grow, we do get a higher level of confidence in our ability to bring value to larger companies. So those businesses at the top end of our portfolio around sort of that GBP 30 million, GBP 40 million, GBP 50 million of EBIT, they're still growing at the same rate as the rest of the group. So we've got confidence that we can bring value to those businesses.

All of that said, with our aspiration at 7.5% each year on M&A, take that on GBP 0.5 billion, we're looking to acquire GBP 40 million next year, double that in 5 years, double again. It's a long, long time before you have to do anything transformative. So I think we've got the opportunity, we've got the appetite. I think we've -- as we've seen before, we've got the opportunity to do even more bolt-ons as our companies get bigger by size and they use bolt-ons to deliver their own growth strategies. But at the same time, we've got that confidence to do bigger deals than maybe we have done historically. But I don't see it as a significant shift in strategy, it's much more aligned to us being clear on the value we bring and having confidence in those future cash flows.

No worries. Thanks, Christian. So is there anyone else just on the call? Dylan, I can see you've got your hand up. Dylan, on mute maybe.

Apologies for that. Can you hear me now?

Yes, perfect.

Just another follow-up on Photonics and obviously, being appreciative of the fact that you're limited somewhat to what you can say. But I'm just wondering if there -- along with product sales, there's also opportunities for service and maintenance sort of post sale, particularly with this hyperscaler sort of customer in the aftermarket that could potentially sort of help smooth the growth trajectory over time. Obviously, I understand that the market dynamics are incredibly favorable and they look favorable for the foreseeable future and perhaps getting a little bit or perhaps a little bit early to be thinking about this. But just sort of wondering what levers are within that Photonics business' control to sort of deliver a sort of steady return or normalized sort of growth rate in the longer time, sort of avoiding that sort of sharp drop off, if you will?

Yes. I think, unfortunately, what we're talking about here, Dylan, is kind of hypothetical in what is a very dynamic market. I guess I would just come back to three points there to think through. One is just the embedded nature in the long-term relationship. Two is the real -- and I just cannot undercommunicate the real expertise that we have in our company in terms of the use of photonics and the application in solving the problems. And then finally, I think coming back to that point I made earlier, if you think about kind of the need for increased speed, the need for increased energy efficiency, there's quite a bit of commentary out there that Photonics potentially has a role to play. So you put those things together, and I think you come back with hypothetically, but I certainly wouldn't want to be sitting here today making a call for something 10, 15, 20 years out.

No, I appreciate that. And one last question. I think you sort of guided for, obviously, the step-up in CapEx. You kind of alluded to there's a bit sort of going on in Safety, but also the sort of corporate cost line, I think you've guided to be just a little bit higher. Should we sort of think about that as the sort of recent investment in the M&A capabilities? Or is there some other investment going on in the sort of corporate cost line?

Dylan, I'll take those. Yes, and I'll pick up actually on your CapEx point as well, which is well made. Yes. So we've moved our CapEx guidance up by about GBP 5 million. So the majority of that actually relates to Brownline, which is obviously a good news story because it means that the prospects are good, and it's something that we envisaged in completing the deal. So that addresses the CapEx increase.

And then on the central costs, they tend to run around 2% of revenue and the slight increase is a bit of a mixture of things actually, a little bit more into the central costs that support M&A. So for example, we support centrally the integration activity of new acquisitions and also more specialist areas around tax advice and those sorts of costs. And then the broader sort of theme of technology, also make sure that we're well invested in the center around areas like AI that Marc has obviously been talking about and what that can mean for us as a group, and also the ever-present investment that is required in things like cybersecurity. So hopefully, that gives you a flavor of what's driving those.

Thanks, Carole. That nicely answered a written question from Rory as well. But Rory, put your hand up if it didn't cover it, but I think it did. So I think we've got time certainly for one more question. Bruno, is your hand up for a new question? Or is that a legacy of having the first question? You're on mute as well, I think.

Just a follow-up question really around reinvestment in the group. I was wondering how you think about reinvestment during a period of premium growth in one area and allocation across the portfolio of the group. So do areas outside of Photonics essentially disproportionately benefit during this period? And so does your confidence of strong growth in, say, Safety and Healthcare actually start to increase as you look towards the following years? Or is it that your investment plans remain largely unchanged regardless of where the premium growth is occurring?

Yes. It's a good question. I think the philosophy, certainly from an R&D expenditure is it's largely unchanged. That's very much bottom up. We've never restricted capital to the individual business. It's our #1 capital allocation priority in terms of R&D spend. So that doesn't necessarily change. We're not saying no to businesses. There's an opportunity there to invest. I do think to the point that Carole just alluded to, there's a bit of investment that we can do in the M&A teams. There's a bit of investment that we can do in the sector teams. And of course, the other opportunity, as we've talked to many times, is the opportunity to accelerate M&A, which, again, you make those investments, we cannot lose the discipline.

So I think net-net, absolutely, that's part of our strategy, how do we reinvest through this period of premium growth to give us that future compounding growth. But I don't think it is specifically to the point in R&D per se. It will be more around M&A and anything that we can do at the sector level because, as I say, the R&D is very much bottom up and open for everybody.

Got it. That's very clear. And just a small, I guess, clarification. When we speak around orders growing year-over-year and positive book-to-bill, does that hold for, I guess, Photonics and also outside of Photonics?

Yes, it does, Bruno.

Excellent. Thanks, Bruno. And thank you all. I don't see any other written questions, and I don't see any hands up. So many thanks, and have a great morning, and we will speak to you soon.

Good morning, and welcome to our full year '25 results presentation. It's great to be here to present a really strong set of results. In fact, overall, I'd say some of the best results that I've seen in my 9 years here at Halma. These are results which clearly demonstrate both the benefits of our sustainable growth model and the value of having exceptional talent and teams across the group.

And I'd like to start today by thanking everyone at Halma for their continued commitment to delivering our purpose and their contributions to our success over the last year, something we should all be extremely proud of. I'd also like to take this opportunity to introduce Carole, who joined as our CFO at the beginning of April. And it's been great to work with Carole over the last 9 years in her role as a Nonexecutive Director on our Board. And it's absolutely fantastic that she's now part of my leadership team. And I know that we'll all see the benefit of her significant experience as a finance leader and her passion for Halma's purpose and culture as we work together to deliver Halma's growth strategy.

In a few moments, Carole will give you some more insight into our financial performance in the last year. But first, let me start with some of the highlights. As I say, it's great to report another set of strong results with record revenue and profit, this now being our 22nd consecutive year of profit growth. And I'm really pleased to see that these results are underpinned by strong organic growth above our long-term average. We've also delivered increases to our margins and to returns on capital with both metrics now at the upper part of our target ranges. And once again, cash generation has been excellent, well above our KPI, enabling us to make continued substantial investments to support our future growth.

Delivery of this financial performance in varied and fast-changing market conditions further increases my confidence in our ability to continue to deliver strong and compounding growth and returns. And it's also a financial performance that supports a further dividend increase, making this the 46th consecutive year of dividend growth of 5% or more.

I'll share my thoughts on how we've delivered these excellent results later. However, before that, let me hand over to Carole for some more insights into our performance in the year.

Thank you very much, Marc. Good morning, everyone. I'm really pleased to be here today to present my first set of results as Halma's CFO. I'm now a couple of months into my new role after a successful handover period with Steve. This is the ideal opportunity to get out into the business and to spend time with my new colleagues. The last 9 years as a nonexec means that I have an understanding of the sustainable growth model and the company's people and culture that have delivered many years of success with revenues growing from GBP 700 million to GBP 2.2 billion over that time.

Five months spending time with my colleagues and visiting 11 of the companies have given me a fresh perspective. I'm looking forward to more trips planned in the summer and later this year. Two things have particularly struck me: one, the talent of our people and the inspiration and drive they get from our collective purpose; and two, that our people are passionate about what they do and solving problems for their customers. Today's results continue our track record of delivering long-term compounding growth and strong returns.

So let's look at the results in more detail. I'm pleased that we've delivered strong growth and increased our already strong margins and returns with revenue up 11% and EBIT up 15%. EBIT margin up 80 basis points to 21.6% and ROTIC up 60 basis points to 15%. Our strong growth and returns have enabled us to continue to invest for the long term. Our companies are well invested, GBP 108 million in R&D, which is 4.8% of group revenues. We made 7 acquisitions during the year, 2 stand-alones and 5 bolt-ons with a consideration of GBP 157 million. Acquisitions made in the year represented 3.5% of profit. This follows on from the 8 businesses we acquired last year. We have a healthy pipeline across all 3 sectors, and we will continue to maintain our discipline in acquiring only the best businesses. Our strong growth and high returns are demonstrated by the strength of our cash conversion and balance sheet. This means we have the funding for future investment and growth.

So let's look at the metrics. It's fantastic to see our cash conversion at 112% and well ahead of our target of 90%. Even with combined investment of more than GBP 300 million in the year, our cash-generative model means that our leverage reduced to just under 1. This gives us the firepower and flexibility to deliver on our M&A strategy. Finally, as you heard from Marc, this supports a dividend increase of 7%.

Now let's look at our revenue growth in more detail. This slide bridges the year-on-year revenue growth of 10.5% Organic growth was strong at 9.4%, and as Marc said, ahead of our long-term trend. This reflected good growth across Safety and E&A and includes a level of premium growth from Photonics. The majority of the growth was volume driven with a typical price increase of 1% to 2%. Acquisitions, including the most recent stand-alones, MK Test and Lamidey Noury, contributed to revenue growth of 3.1%. This was partially offset by the HYDREKA disposal completed in the first half of the year. Finally, there was a translational currency headwind of 1.6% due to the strengthening of sterling, primarily against the U.S. dollar. It's worth noting that based on latest currency rates, we expect a headwind of around 4% in FY '26.

Let's now move from revenue to profit and margins. EBIT was up 14.7% on a reported basis and a healthy 12.6% on an organic basis. This was ahead of revenue growth and reflects good operational delivery and mix with margin expansion across all 3 sectors, which I'll come back to. Acquisitions contributed 4.1% ahead of the revenue contribution, reflecting the quality of the businesses that we have acquired. The currency headwind was 1.9% Overall, it was good to see the EBIT margin increase 80 basis points to 21.6%, which is modestly above the middle of our target range of 19% to 23%.

Moving on to the sector commentaries. It is worth remembering that when we look at the sectors, while we show revenue by destination, the rate of growth in each region is driven by the strength of demand in a particular company as opposed to the geography. I'll start with the Safety sector. The Safety sector delivered another strong performance, building on the momentum of an excellent year in 2024 and good that it was broad-based. Revenue and profit grew across all subsectors. On an organic basis, revenue grew 8%. The sector delivered a double-digit increase in profit, up 14% on a reported basis and 12% organically. The margin increased 90 basis points to 24.2%, which is around our historic highs for the sector. The performance was driven by strong revenue growth, favorable product and portfolio mix and good operational delivery. Our Safety companies are well invested to support their future growth with R&D spend increasing to 5.6% of revenue. Finally, there was a solid contribution from acquisitions of 3.9%.

Turning next to the Environmental & Analysis sector. Fantastic to see the sector delivering strong revenue growth with reported growth of 18% and organic growth of 19%, which included very strong growth in the Optical Analysis subsector. The main driver for this was exceptional growth in Photonics, which continued to benefit from increased customer demand for digital and data capabilities. Marc will come back to this later in the presentation. Growth in this subsector was also supported by recovery in a number of spectroscopy markets. The exceptional growth in Photonics and recovery in spectroscopy are reflected in the very strong growth in the U.S.A., while this recovery is also coming through strongly in Asia Pacific. The environmental monitoring subsector also grew well. This reflected a strong performance in gas detection and analysis, which you can also see coming through in the U.S. and Asia Pacific numbers.

The Water Analysis and Treatment subsector had a mixed performance. We saw modest growth in water testing and disinfection, but this was more than offset by a decline in water infrastructure. Our companies experienced a slow start to utility companies' capital projects at the beginning of the U.K. AMP cycle. Profit increased by 26% on an organic basis. The profit margin was up 140 basis points to 23.9%, and was driven by the recovery in higher-margin spectroscopy, good cost discipline and leveraging the top line growth. At the same time, it was pleasing to see continuing investment. R&D was up 4%, noting that R&D as a percentage of revenue is lower than for the other sectors, with the growth in Photonics having a lower R&D intensity. And finally, there was a solid contribution from acquisitions, partially offset by the disposal of HYDREKA.

Now let's turn to the Healthcare sector. The Healthcare sector delivered a resilient performance given the subdued backdrop. That said, it was good to see a substantial improvement as the year progressed. All 3 subsectors delivered organic revenue and profit growth in the second half of the year. This is reinforcing our confidence in our Healthcare end markets and the long-term trends that support their growth. By subsector, there was modest revenue growth in Healthcare Assessment and Analytics and improved momentum in half 2. Performance in Therapeutic Solutions was mixed, however, also improving in half 2. There was strong growth in several of our surgical and respiratory devices companies. This was offset by a decline in eye health therapeutics in Europe coming off of 2 years of very strong growth.

Life Sciences delivered good growth following a significant slowdown in the prior year. Profit was 4% higher on a reported basis and marginally up on an organic basis. This reflected a decline in half 1 with strong recovery in half 2 coming through operating leverage from improved revenue growth. The margin increased 20 basis points in the year to 22.9%. Our Healthcare companies are well invested with R&D at 5.2% of sales. Finally, there was a good contribution from acquisitions, reflecting the quality of businesses we recently acquired.

I'll now talk about the strength of our cash flows and balance sheet and how we've allocated capital during the year. The cash-generative nature of our companies is represented by the dark green bar with strong organic growth self-funding more than GBP 300 million of investment that I mentioned for future growth. Within this, it's also great to see the impact of strong working capital management from our companies with inventory return to pre-COVID levels. And as always, we have the flexibility to support our companies to invest in working capital where it makes strategic sense to do so.

Simply put, our capital allocation priorities are: Firstly, organic investment to support our long-term growth, represented here by the organic investment through R&D and CapEx of GBP 154 million; second, continued value-enhancing acquisitions, which as you can see through our net acquisition spend of GBP 162 million. And finally, a progressive return to shareholders through the dividend with GBP 84 million returned this year. Our continued balance sheet strength gives us the flexibility and firepower to support our healthy pipeline.

Now let's turn to our financial KPIs and how we performed against them. This is a really strong set of results across the board and credit to everyone in Halma for delivering this. We are well within range or have exceeded all our KPI targets, except one. We delivered strong growth and increased our already strong EBIT margins. This while we continued to invest for sustainable long-term growth, both organically and through acquisitions. While the in-year spend was below our KPI this year at 3.5%, over the last 5 years, our acquisition profit KPI has averaged 6%, above our 5% target. This reflecting the timing and nature of the acquisitions we make. Cash conversion was very strong and well ahead of our KPI target, noting that with the unwind of inventory to more normal levels, we would expect cash conversion to be more in line with our target of 90% going forward. Fantastic to see ROTIC improving to 15%, now in the upper half of our target range, reflecting strong revenue growth and margin progression. Our performance across our KPIs shows that we continue to create significant value for our shareholders.

Turning to my next slide, which I think speaks for itself. The consistency of growth we have delivered over the last 10 years at the revenue and EBIT level, both compounding at 12%, a performance that we have delivered through economic cycles and the global events of our time. Our track record demonstrates the benefits of the diversity and agility that we derive from our sustainable growth model and reinforces our confidence to continue to deliver strong growth and returns.

Moving now to my last slide, which is on guidance for FY '26. We've made a positive start to 2026 financial year with a strong order book and the order take ahead of revenue in last year. While the geopolitical and economic environment remain uncertain, we currently expect to deliver upper single-digit percentage organic revenue growth in this financial year. This includes a premium from further very strong growth in Photonics within the Environmental & Analysis sector. Adjusted EBIT margin is expected to be modestly above the middle of our target range of 19% to 23%.

I will now hand you back to Marc.

Thanks, Carole. And great to see that growth in revenue and profit further extending our strong track record of compounding growth and returns. This time last year, I spoke about how our growth over the last 50 years has been underpinned by the principles which form our sustainable growth model. This is a model that's been tested and proven to be resilient. And whilst it continues to evolve, the fundamentals have remained. The continuous interaction of the elements you see on this slide have been critical in enabling our performance over many years, including the strong growth in returns in the last year that Carole has just described.

Our model also underpins my belief that we can continue to generate strong growth, high margins and returns well above our cost of capital for decades to come. Today, I'm going to take a closer look at 3 critical aspects of the model. What makes a great Halma company and a great Halma leader? How our companies benefit from being a part of Halma? And finally, how our organizational design enables our companies to maintain close relationships with their customers, which in turn informs the many opportunities they see to provide innovative solutions to their critical needs?

So let's look first at the qualities of a Halma company and a Halma leader, 2 fundamentals of our model. And unsurprisingly, there's a high level of overlap between the 2. For both our companies and leaders, alignment with our purpose and cultural fit are critical. We want our companies and our people to be ambitious, entrepreneurial and focused on creating opportunities to grow our positive impact. We want them to do that by leveraging the power of networks and teams in their companies and across Halma. For both our companies and for our leaders, agility is key. We want to be able to respond with pace to opportunities and to challenges in each of our markets. And this is why we focus on niche products in markets where growth is supported by long-term growth drivers.

These are markets where our leaders can be close to their customers and understand their challenges. And as part of our organizational model, we give our leaders the autonomy to react rapidly to provide high-value critical solutions to complex problems. And in turn, this means our leaders need to be diverse thinkers, intellectually capable and inquisitive, entrepreneurial and agile in their thinking. They also need to be comfortable with the accountability that comes with their autonomy. And at the same time, we want them to harness the power of teams and networks to create ever better solutions for our customers, requiring our leaders to have a low ego and be willing to celebrate success through others.

So how does this work in practice when we're selecting the companies that we wish to buy? These are the acquisitions that we made in 2025. All acquisitions which have increased the diversity of our portfolio, further broadening our market presence across all 3 of our sectors. As I look forward, I'm confident in further progress in 2026. We've got a healthy pipeline of potential acquisitions, and we've made further investments in our M&A capabilities, adding further skilled resources in our sector and dedicated M&A teams. And it's been great to see a really high level of activity in these teams alongside our continued discipline in selecting only companies that fit with Halma.

Let me try and bring this approach to life by looking at one of this year's acquisitions, MK Test Systems. Ensuring the safety of workers and critical assets has always been a focus for Halma. It was one of the first markets that we entered back in 1971 through the purchase of Castell, which is now part of CenTrak (sic) [ Halma ]. And over the years, this has broadened to include solutions for new end markets, examples including renewable energy installations and data centers. With our knowledge of safety needs in manufacturing and transportation, we identified a further market niche in testing the integrity and safety of electrical systems. And this led us to the acquisition of WEETECH in Germany in 2022. And then in May last year to MK Test.

So why did we choose MK Test? First, it's strongly aligned to our purpose, not only to safety, but also it offers opportunities to support electrification as part of green energy use. Second, we see very strong long-term drivers underpinning its growth. Electrical systems are getting ever more complex and more hazardous with increasing use of high voltage. And as a result, regulation is increasing to protect workers and users. And in turn, that means that manufacturers have a greater need to automate electrical testing to fulfill regulatory requirements more efficiently.

And in MK Test, we saw a company that had that specialist technology to help its customers. It also had strong customer relationships with companies such as Airbus and Daimler Truck, resulting in a deep understanding of their developing needs. And really importantly, we also saw that MK Test has an entrepreneurial culture with an ambitious and growth-focused leadership team that would fit well within Halma. And all of these elements giving us the confidence that MK Test can continue to deliver strong and superior growth, margins and returns for many years to come.

So why would a successful business such as MK Test want to join us here at Halma? Simply put, I believe it's because we can offer them what I see is the best of both worlds, the advantages of retaining their entrepreneurial agility while being part of a large FTSE 100 global group. Our model helps them to overcome the barriers to growth that many SMEs experience; how to attract and retain the best talent, how to internationalize their business, how to grow through M&A, and how to leverage the best technology, including in AI and cybersecurity. In addition, and for me of real value, it gives them the opportunity to network and share learnings with other companies in the group. All of this while also benefiting from the capital and resources that Halma has to offer. But don't take it from me. Let's hear from some of our companies.

[Presentation]

Some fantastic comments there. Oli highlighting the freedom she has to set CenTrak's growth strategy. Steve and Graham focusing on the power of the Halma network and the support they get from the group, and all of them clearly demonstrating how they act as entrepreneurial owners of their companies with autonomy and clear accountability. And it's in this context that I'd like to spend a few moments on the significant growth that we've seen in Photonics.

And just to remind you, there are some limits to what I can say, given the confidentiality agreement that we've got in place with our customer. That said, Photonics is a growth story driven by the success of one of our companies, which demonstrates many of the same elements which drive success across our portfolio; significant technical skills, in this case, substantial application expertise in the use of Photonics, the ability to identify a new market opportunity, specifically supporting a hyperscaler technology company, as it develops its data center capabilities; a business built on long-term customer relationships here over 10 years, meaning that we've got that deep understanding of our customer needs, supporting our customer with a small but critical component of a wider solution, agile and entrepreneurial leadership with the autonomy to lead the company whilst leveraging the benefits of being part of Halma. And of course, a financial track record that's seen revenue grow from under GBP 10 million in 2011 to around 15% of group revenue today.

Of course, we also recognize that this level of growth is exceptional. Frankly, we celebrate that success. After all, we're looking to maximize the potential in every one of our portfolio companies. We also recognize some of the more unique characteristics, such as the fact that the majority of that growth has come from a single customer. So how are we managing this premium growth and diversifying revenue in the context of our broader portfolio? Well, first, we support our companies in delivering this growth, helping them maintain the close customer relationships that they've built over many years, and supporting them in scaling their company to meet their customers' demand in areas including talent and their facilities.

Second, helping our companies develop wider sources of long-term growth, in this case, by developing alternative uses for Photonics technology through establishing separate teams focused on diversifying revenue streams with new customers in a variety of end market applications. And third, our devolved and autonomous model allows us to again have the best of both worlds as a portfolio to benefit from the strong growth being delivered by Photonics and at the same time, to use this period of premium growth to increase our investment, both organically and in M&A to support the excellent and continuing long-term growth opportunities in the rest of the group.

As you've heard, a core component of the success in Photonics has been the ability to develop close customer relationships. And this is a consistent theme across our portfolio. So let's hear from 2 of our other companies, how they are delivering growth based on their long-term customer relationships.

[Presentation]

Two further fantastic examples of how we create opportunities to deliver growth from BEA, which has been part of Halma for more than 20 years, and IZI, which has been part of the group only since 2022. So three companies with different histories operating in very different markets, but using that same approach. They have entrepreneurial leadership who are driving purpose aligned growth in markets with long-term growth opportunities. They're maintaining close customer relationships. They're acting with agility to seize opportunities and respond to changes in their markets. Companies ensure they have the capabilities to deliver strong growth and returns over the long term.

So bringing it all together, Carole has described the strength of our performance in 2025, delivered in varied markets, another record year for the group. And while the broader environment remains uncertain, we expect to deliver another successful year in 2026. You've heard how this continued success is enabled by our sustainable growth model, a proven model whose fundamental strengths have sustained our track record of compounding growth and returns over more than half a century. And a model whose strengths support my confidence that we're well positioned to make further progress in this year and over the longer term.

That's the end of the presentation, and now we've got time for some questions. [Operator Instructions].

So our first question today comes from Andre.

I've got a couple of questions. I'll just go one at a time. Firstly, going through kind of the portfolio and clearly very strong results delivered across the board. I just wanted to ask about Safety, the kind of the organic growth acceleration there, the margins now, I think, all-time highs. How do you view that performance in 2026 and maybe now 2 years? Is it sustainable? Can we push on even further from here?

Yes. Thanks, Andre. And I would say, really pleased with the wider results and in particular, Safety. We're clearly coming off the back of 2 strong years, which is great to see. We've got momentum, the order intake and the order books there. Really great job by the teams in terms of the margin. A lot of that is real focus both on gross margin, on the mix of business and, of course, on just managing overhead, but making sure that we continue that investment. So 2 great years. As we look forward, clearly, we are coming up against a stronger comparator. And I think with any of our businesses, it's always fair to say that whilst not material, we're not immune to some of the challenges in the end markets. But the portfolio gives us that diversity to give us a level of confidence that FY '26 will be another good year for the sector.

Great. And maybe a question on guidance. There's something coming we got this morning. Clearly, full year guidance is for high single-digit growth, margin middle of the range. How would you expect that to pan out between the first half and second half, if you can already comment at this stage?

Yes. Sure. Andre, Carole here. Yes, pretty similar to what we've seen historical, Andre, on the revenue and the profit. So revenue probably sort of 48-52 split. And then typically, the profit comes through a sort of 45-55. So yes, based on what we're seeing and hearing from the businesses at the moment, that's what we're expecting for this year too.

So next, let's go to Max.

And yes, great to see the growth sort of broadening out into some of the other areas from the results. But I think what I'd really like to focus on just first would be actually on the M&A side? And I guess we're always interested to hear how you're investing in your M&A capabilities and how you kind of continue to enhance that process. So maybe sort of, firstly, any examples or investments that you've made, particularly in the process, people, or how you go about doing M&A to sort of continue to develop that very successful process going forward?

Yes. Thanks, Max. And as you say, really good progress on M&A. And as you know, because of our approach to M&A in terms of ultimately buying businesses that aren't for sale. In a 1-year period, you tend to get a few ups and downs. But if we look at our progress over the last 5 years, including COVID, we're still at a really healthy 5.9%. But that said, to your point, we're never resting on our laurels. We're always thinking about where are the opportunities, where can we invest to maintain that real focus on good quality assets. And in the last 12, 18 months, we've invested both in our sector teams at the DCE level.

As you know, they're responsible ultimately for bringing in M&A to the group. They'll then be responsible for delivery of the results in those businesses. So we've added DCEs to give us scalability moving forward. And we've also made investments in the dedicated M&A team, small teams, but there to focus and really help us think through the market mapping, finding those niches, finding those markets with the long-term growth drivers. So targeted investment. And as I said on the presentation, really pleased to see the level of activity. And we've got a healthy pipeline, and I think importantly, across all sectors and a really nice mix between stand-alone and bolt-ons. So yes, looking forward to what's to come on the M&A side.

Great. And maybe just my second question is around the Healthcare business. It looked like kind of that turned a corner in the second half of the year. I guess maybe when we look at sort of what's happening in the U.S. around some of the regulatory debate, maybe if you could just talk a little bit about how your customer conversations are evolving? Are you finding any sort of caution across your U.S. customers? And any sort of the helm of portfolios that may be kind of more or less sensitive due to their business models in any of these particular areas? But any context around that would be great.

Yes. Thanks, Max. I mean, first thing to say, as you pointed out, it's really, really pleasing to see the H2 recovery. And I think a real testament to the teams in terms of keeping that closeness to the markets, taking the appropriate actions, but also a really good example of how the wider portfolio enabled us to continue to invest over the last couple of years. And as we've talked before, we're not immune. We're more resilient to some of those wider challenges that we've seen in healthcare.

As we sit here today, there's clearly a number of developments that you refer to, particularly in the U.S., whether that be around Medicaid, whether that be around NIH spending. The reality is, because of the types of businesses that we're in, i.e., the markets that we operate in are largely nondiscretionary in terms of those disease states, whether that's around cancer diagnostics or acute therapeutics. So you've got an underlying demand there. It's nondiscretionary. In addition to that other end markets that we're in of high importance around ophthalmology and eye health. So that certainly helps.

In addition, most of the time we're sort of a relatively cheap part of the wider system. So all of those things give us the resilience. We do have a low exposure to academia. And then to your point, we're in good markets. It then comes back to the model, and this is where we've got fantastic people leading our companies close to their customers, with real deep knowledge that allows them to react accordingly. So we're keeping a close eye in terms of what we're seeing on order take. We're keeping close to our customers. And that's led us to give the group guidance. So I'm certainly not expecting a heroic recovery into FY '26, but certainly expect to see a continuation of that momentum that we've seen in the second half of this year.

Thanks, Max. So if we next go, Rory, I see you've got your hand up, so we'll go to Rory. And then we'll pick up, Jonathan, your typed questions next.

It's Rory from Oxcap. Marc, I appreciate the strength across the portfolio here, but I think the shares are really up so much this morning based on the strength of the upgrade. And clearly, that's driven by Photonics. So maybe if we can just talk about that for a little bit. The first question there is what outlook are you willing to give beyond 2026 for that kind of premium growth that's adding the 2 percentage points to the group top line?

Yes. Certainly, I think, Rory, just worth a bit of a step back on Photonics. As you know, I very much rightly view the group as a portfolio of businesses, and I think of our performance as such. I don't think it is appropriate to exclude high-performing parts of the portfolio in any given period. And I also don't think it's appropriate to exclude those at the other end of the spectrum. But as you've heard today, we also operationally treat our Photonics business in the same way as all others, albeit we are getting rightly a number of questions and interest. We acknowledge the period of exceptional growth. And as I said in the presentation, the fact that we've got a single customer. So what we're trying to do is give a little bit more insight, whilst keeping to that principle of a portfolio performance.

It's also just worth reminding everyone that we do have that confidentiality. So I've got to be a little bit careful in what I can disclose. So given that we're thinking of it in the wider portfolio performance, that's where that reference is coming to premium growth. And I guess to try and bring that to life, I'm starting with the assumption that Photonics grows in line with the group's long-term organic growth rate of around 7%. And then any growth that we see over and above that, that's what we're calling the premium growth and then using that level to determine the impact on the group's revenue in the period. So that's the context. And hopefully, you'll appreciate that little bit of color that we've given also in the presentation.

In terms of looking forward, I think I've talked before, on the positive side, we've got a really strong relationship with the customer over 10 years, and we're really embedded with the customer. We're embedded with our R&D team. We're managing the supply chain. And of course, we're able to fulfill the complex manufacturing at scale to meet their needs. So good news there. We're also a critical component of the wider solution. But on the flip side, we've all got to appreciate that this is a really dynamic market. There's rapid development, there's technology change, but all of that means that we're well positioned.

Final point then on looking forward. We've had the conversation before, and we've shared that we don't have a long-term contract in place. But instead, what we do have is visibility of purchase orders. And it's based on that, that we've given the visibility for FY '26 and inclusion in the guidance. But I come back again to that point on the dynamic market that we're operating in. Beyond that, clearly, there's a bit of a short-term driver in terms of the build-out of that data center capability. But as I look forward, I believe there will be an element of upgrade. I believe there will be an element of maintenance. So I trust the team and I trust the relationship, and we'll keep updating you as our visibility becomes clearer.

That's brilliant. Can I just follow up there on the sort of capital implications? I noticed the CapEx guidance has nudged up for '26 a little bit, GBP 45 million to GBP 50 million. And just thinking back to H2 last year when we thought that the growth or certainly the guidance around Photonics was for the growth to kind of peter out or level out. If anyone cared to look on the Avo Photonics website, there was a comment around expanding that facility. I noticed this morning that's no longer there. Is that just a sort of sanitization point? Or how are we thinking about any potential investment that's needed to meet that growth?

Rory, Carole here. Yes, I mean, on the broader CapEx point and that slight tick up for the guidance, I mean, that's generally across the sectors where we're expanding capacity. And in fact, the particular step-up is for one of our safety businesses that have been in the group actually for a couple of decades, and they're actually bringing 3 of their facilities together just to get better efficiency. So most of the increase actually relates to them. There is a bit that relates to Photonics capacity as well. But in the round, that guidance for CapEx is pretty well spread. And as you know, we're not a capital-intensive business. So it sort of take it in the round really.

Thank you, Rory. As I said, I'll just go to Jonathan's question. If I read them out and then we'll divvy them up between us. The first question there is, can you elaborate on the reasons for the decline in Healthcare R&D spend year-on-year in FY '25? The 2 other divisions saw growth. That's the first question.

Second question, Healthcare saw a big step in margin in the second half. Is this level of profitability sustainable? And then the third question, water infrastructure in E&A has been mixed. When do you think spend from AMP 8 in the U.K. starts to feed through to Halma?

So if I just pick up the first question, Carole can pick up the bit on the margin, and then I'll come back to the question on water. I think the point there on R&D spend in FY '25 is much more around phasing. We had high levels in the last couple of years. As you know, our organic investment in growth through R&D is bottom-up in the business. Because we remunerate on growth, it means that we can have really good conversations with our businesses every year in terms of the level of investment that they need to sustain that compounding growth for decades to come. So nothing to read into that apart from a little bit of phasing. We certainly haven't reined back in the R&D spend in Healthcare.

I'll take the second one. Jonathan, just on your second question on the Healthcare H2 margins. I mean, as you know, obviously, the market backdrop for Healthcare has been quite challenging as we've seen the unwind of the overstocking. So it's fair to say that Steve Brown, the Sector Chief Exec, and his team have done an excellent job managing cost. And so when we saw the revenue starting to recover in H2, then that dropped through nicely to the bottom line. Looking forward, I think the general comment we'd make is clearly, if we can continue to see recovery, that will help margins. That said, Steve and the team will make sure that perhaps where they've been more cautious on their overhead addition, then it gives them an opportunity to start to reinvest maybe in some of those more discretionary elements. So great progress by the team. And hopefully, we'll see that recovery continue.

Jonathan, just picking up on the third point as a reminder, just around water infrastructure and E&A and the timing of the AMP cycle. Yes, I guess the last 12 months have been a little bit mixed. I think you had the end of the U.K. AMP cycle in addition to some of the wider challenges in Thames water and the like. So a subdued year. What we are seeing is that, that need for the investment continues. The level of investment is there, and we're starting to see that feed through. But again, I just think worth giving a little bit of context is that we're not dependent on any one market to drive the growth, and about 1/3 of our U.K. water revenue is from the AMP cycle. So putting that into context, it's approximately 1% of the group's revenue. But to answer the question, we're starting to see that come through in the first half of this year.

So now just going back to the calls. Alex, we'll come to you.

Well done on a strong set of results. Just had a couple. The first one is just on the very strong cash conversion. Obviously, that was kind of driven by very strong inventory management and a lower working capital absorption kind of down to 17% from 21%. Should we think about working capital absorption being around 17% going forward? Or is that kind of level sustainable? That's the first one.

Sure. Yes, Carole, obviously. Alex, yes, I mean, as you rightly pointed out, the companies have done a brilliant job. We strategically invested into inventory through the supply chain crisis. And then progressively, under Steve Gunning's leadership, been refocusing on the working capital management. So it's great actually to see it back to what we would consider, I suppose, more normal levels. So to your question, if you look back in time, that is more normal levels. I suppose the only caveat I would put around that, and I made the comment in the presentation, is that if it makes sense to do so in the current climate, then we will, on a targeted basis, support the companies in investing into inventory. But in the round, really pleased with the hard work and attention that's been put into delivering that cash conversion number.

Perfect. No, that's super helpful, really. The next question is probably a slightly, I guess, new point. Obviously, very strong results today. I think I'm just trying to get my head around something. Just looking kind of at the level of acquisitions in '24 was 8 and then there were 7 in '25, and obviously, kind of lower consideration was paid. I noticed that the other acquisition items, kind of exceptional costs stepped up quite significantly. I mean it's still only GBP 20 million. But I was wondering if you could kind of help me to understand the relationship between those other acquisition costs and the level of acquisitions being made/consideration?

Yes, sure, Alex. And I applaud you in going through to that level of detail so quickly. I mean, something that comes through there is the movement in the contingent consideration. So for some of our acquisitions, there will be a contingent element. So the timing of that is obviously slightly different to the initial consideration. And then there's an element of that increase that relates to transaction costs as well. So you're right, it's quite a marked step-up, but nothing unusual as it were, it just reflects those 2 components and the timing of them relative to the transactions themselves.

Next, I'll go to David. David Farrell.

My questions are slightly kind of interlinked. Just on the topic of M&A. Haven't been any transactions since, I think, November. Just kind of looking back through history, bar COVID, that probably is the longest period where you haven't had any deals. Could you just give us a bit of an update in terms of what you're seeing in the market? I did sense that you referenced that you were being very disciplined in M&A. So are there being some things which have been closed and perhaps you've decided not to progress with?

Thanks, David. As you say, I think we've got to be a little bit careful with the M&A and our approach to M&A of looking at individual 6-month period. It's very much about relationship build and think of it in some ways is we're trying to buy businesses that aren't for sale. It's built on strong relationships. There will be factors that bring things to market. There will be factors that mean that maybe they're delayed. So the wider market at this moment in time, as I alluded to, I'm really pleased with the pipeline that we've got. It's got a nice mix of stand-alone and bolt-ons. It's across all sectors.

The wider environment, what are we seeing? I think there's no doubt from the private owners a little bit of all of the volatility in the world. You're seeing two camps. On the one hand, you're seeing those business owners that are thinking there's a lot going on. This is hard work. I would love to find a fantastic home for my business that can support me in reaching our potential over the next X years. But on the other hand, you've got those business owners that are thinking actually the current performance isn't reflective of our true value. And therefore, can we keep in contact, can we keep the relationship going and revisit in 6, 12 months' time. So certainly nothing to read into there.

I guess the other dynamic is just around private equity. You've seen we've actually made a couple of acquisitions from private equity in the last few years. What we're seeing there is a number of funds are looking at exiting some of their businesses. But they're really keen to get certainty on timing, they're keen to get certainty on price, they're keen to go to a good home, and that makes us in a good position to get into a one-to-one relationship. So nothing to read into that point on discipline. We always maintain our discipline. We want Halma-like businesses that are going to give us that growth for decades to come.

Okay. And I guess kind of it might be linked and might not be, but I guess ROTIC went up nicely year-on-year, I think kind of 15%. How can you drive that higher? Clearly, this year, margins have helped. But do you see kind of a scenario where that can continue to recover and go higher?

I'll take that one, David. Yes. I mean what you've seen in FY '25 is that, that sweet spot, as it were of strong top line growth, combined with the strength of the margins. So it comes back fundamentally to what we always say about capital allocation and first and foremost, investing organically to drive that top line and then all the good work around the margin. So we don't give guidance on ROTIC. But if you're thinking about it, then that combination is what moves that metric forward.

Okay. I guess I was just trying to understand how impacted the improvement in ROTIC might have been from the absence of M&A? And whether or not M&A is initially dilutive to the ROTIC?

No. I mean, strangely in terms of ROTIC itself, there's no direct impact from M&A because in the denominator, you've either got the cash/net debt or you've got the assets and the goodwill. So you don't see that impact. I think the wider point for me is we're not here trying to keep driving our ROTIC up. This is very much about how do we maintain a level of ROTIC that's a premium to our cost of capital and keep delivering that growth as we have done in the last 12 months.

So let's go to Maggie.

I just have one. I was very interested in your comments on taking the Photonics capabilities and starting to think about how to broaden those out across other end markets and sectors. So could you give us possibly some areas we should be thinking, be it defense or other environmental monitoring areas, or where you think those end markets will provide above-market growth trends that we should be thinking you would be focusing on to leverage that technology?

Yes. I mean the great news is that with the level of technical expertise that we've got in the teams, the world is our oyster in some ways in terms of the applications. And certainly, I think the use of Photonics globally in many industries will continue to grow going forward. So it's really down to our businesses to identify those opportunities. The same actually in spectroscopy. I mean, the use of light more generally. And the use cases we've got there are many and varied, whether that be in metal sorting, whether that be in consumer products, whether that be in the areas that we talked through already in Photonics. So many, many opportunities. The beauty is that we've got a team with that deep knowledge. We've got a team with that autonomy to make the right decisions, and I look forward to the opportunities that they're able to identify.

Sorry, if I can squeeze one more in. And ex Photonics and E&A, I know you've talked about the U.K. infrastructure. But within E&A, are you seeing more uptick in other areas, particularly in Water Analysis with things like PFAS detection coming in, in the U.S. If there's any color you could give us on the ex Photonics drivers and ex Water Infrastructure that we should be thinking about as well?

Yes. We -- and good for you. Thank you, Maggie, for looking beyond Photonics in the sector, because there's been some really strong growth in other parts. And certainly, in environmental monitoring, which includes our gas detection businesses, we saw some really good growth this year. And I guess what's that driven by? There's a larger number of projects in our gas and air quality businesses. And we've seen that notably in the U.S., driven by a number of larger projects. But we're also seeing some growth in new markets in Asia Pacific and a number of our businesses. So it's been exciting to see the investment. It's been exciting to see the growth. And thank you for recognizing other subsectors in the sector that have delivered a great performance.

Sorry, Marc, but you're a victim of your own success, I guess. So thank you very much. I appreciate it.

Thanks, Maggie. So last hand that I've got is Martin. We'll come to you, Martin.

Just coming back to acquisitions and the cadence of deals there and how we might think about that globally. There's a lot of things happening in the U.S. at the moment, including also potentially a change to taxation, which I know is not finalized, but it might make multinationals buying in the U.S. sort of less appealing than it has been in the past. Is that causing you to change how you're thinking about regionally where you're looking at acquisitions? Obviously, there's offsets elsewhere with Germany and infrastructure and so forth. But just how you're thinking about internationally, how you're looking at where some of those acquisitions could come from?

Yes. Thanks, Martin. I think the start point, and I guess the headline for us is that we see great opportunities across the globe and across all the markets that we operate in today and in fact, in new markets moving forward. It's all about where do we see those long-term cash flows. So there's been no change in terms of mindset in terms of what we're looking at, where we're looking to invest. Clearly, some of the areas such as Section 899 are in draft. We're monitoring them. I think our understanding today, and Carole will correct me if I'm wrong, a lot of the focus is on repatriation. So of course, our business model where we're investing in markets that are often vocal for local means that a large amount of the cash that we're generating in any region, we're reinvesting. So we certainly don't see that as a barrier today, but it's an area that we'll continue to monitor. Anything on that, Carole?

No, you've covered it well.

Is that okay, Martin?

Yes, that's great. Thank you very much.

Excellent. So just looking at the screen, it doesn't look as if we've got any further questions. So thank you for your time. As I said at the outset, a really pleasing set of results. I think, a real reflection of the benefits of our model, and we're excited by what lays ahead. Have a great day. Thank you.