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Page 7 dividing to conquer section states when you have to divide a number you round up any fractions.
Page 26 explains when moving sideways or backwards you halve your movement characteristic.
I have always played it that movement 5 models could move 2.5 inches sideways or backwards, but looking at the rules it would actually be 3 inches.
Have I been playing it wrong? Do you indeed round up this halved movement?

Yes, you round up.

Any fraction in WHFB or 40k is rounded up, unless otherwise stated.