We are pleased to report a good set of results for the first half of 2009 in the context of the worst economic downturn for decades and trading conditions have remained challenging. Sales in sterling increased in each geographic region and reporting segment, benefiting from favourable currency movements. Financial performance across the reporting segments was reasonably consistent, highlighting similar customer purchasing reactions to the global downturn. Currency movements favourably impacted both sales and profits.
Group sales in the half year were £251.6 million, up 5% from £238.7 million in 2008. At constant exchange rates, sales declined 8% against a comparatively strong first half of 2008.
Operating profit decreased 7% (26% at constant currency) from £40.8 million to £37.8 million in 2009. The operating profit margin was strong at 15.0%, as we benefited from favourable currency movements and pricing, which mitigated the impact of lower volume and higher material costs.
Net finance expense was £1.0 million compared with income of £0.8 million in the same period in 2008. As previously reported, there was a sharp decline in the expected return on pension fund assets (under IAS 19) following the fall in pension asset values in 2008. Our share of the after tax profits of our Associates in India and Mexico increased from £1.2 million to £1.4 million. Profit before tax was £38.2 million as against £42.7 million in 2008.
We have made good progress in reducing costs and the headcount is now down 6% this year. In these results, we have taken a one-off charge, excluded from the adjusted figures, of £7.0 million covering the full amount of severance costs, against which we still expect to generate £8 million of annual cost savings, effectively commencing in the second half. The profit before tax after deducting these severance costs and the amortisation of acquisition-related intangible assets was £30.2 million (2008: £41.9 million).
The tax charge, based on the profit excluding Associates, was 31% (2008: 33%) and the profit for the period was £26.6 million. Adjusted earnings per share fell by 8% from 38.0p to 34.9p.
