Corporate responsibility report Year ended 31July 2008 Protecting and enhancing value

2 Smiths Group plc Corporate responsibility report, year ended 31 July 2008 3 Smiths Group plc Corporate responsibility report, year ended 31 July 2008

Smiths Group: A global business

Smiths Group major manufacturing and service locations by division Smiths Detection John Crane Smiths Medical Smiths Interconnect Flex-Tek

Flex-Tek Piloting a new EHS programme in Tennessee, USA Flex-Tek business Tutco, based in Cookeville, Tennessee, is piloting a new Environment Health and Safety programme in a drive to become OHSAS 18001 certified. Smiths Detection The programme seeks Manufacturing expansion to eliminate injuries in Maryland, USA and reduce hazards in Smiths Detection has the workplace. The results expanded its are already encouraging as manufacturing capacity at the number of recordable its Edgewood site by 50% injuries has been reduced to fulfil increased demand to zero and recordable from the US Department incidents have reduced by of Defense Chemical 25%, while operating costs Biological Protection at the facility have also Shelters (CBPS) been cut. Smiths Medical Smiths Interconnect John Crane programme. CBPS Automation in New Opening up in Tunisia Servicing customers provides contamination Hampshire, USA Smiths Interconnect in Saudi Arabia free, environmentally Each year around 150 recently opened a new John Crane is expanding controlled working areas million safety needles are low-cost manufacturing its global service and for medical and combat produced at our Smiths facility in Tunisia to serve support network. In services personnel in Medical manufacturing its European customers. addition to opening new operational circumstances. facility in Keene. This is The facility consolidates facilities in Finland, Dubai largely thanks to an and expands manufacturing and Morocco, it has investment in advanced capacity for connectors inaugurated a new service high-speed automated which are deployed in centre and training facility robotics which has yielded military, commercial in Saudi Arabia for Middle record production rates, avionics, medical, space, East customers. helping to reduce back and test and measurement orders at the facility to zero. applications.

Group sales by destination % Location of assets % Divisional sales % Divisional headline operating profit % 9 9 6 21 22 13 22 11 48 50 27

Smiths Detection Smiths Detection North America North America John Crane John Crane 25 UK UK Smiths Medical 27 Smiths Medical 25 31 34 Europe other Europe other Smiths Interconnect Smiths Interconnect 14 Rest of World 6 Rest of World Flex-Tek Flex-Tek Analysis excludes cash and cash equivalents Analysis is based on revised operating structure for 2008/09 (as reported in Annual Report 2008) Analysis is based on revised operating structure for 2008/09 (as reported in Annual Report 2008) Percentage relates to headline operating profit before corporate costs 4 Smiths Group plc Corporate responsibility report, year ended 31 July 2008 5 Smiths Group plc Corporate responsibility report, year ended 31 July 2008

Smiths divisions

Smiths Group has five divisions: Smiths Detection John Crane Smiths Medical Smiths Interconnect Flex-Tek Smiths Detection, John Crane, Smiths Medical, Smiths Interconnect and Flex-Tek. Our Smiths Detection is a world-leading John Crane is a world-leading Smiths Medical is a leading supplier Smiths Interconnect designs and Flex-Tek provides engineered businesses are highly competitive, designer and manufacturer of provider of products and services of specialist medical devices and manufactures specialised electronic components that heat and move with strong technology positions, sensors that detect and identify for the major process industries, equipment for global markets. and radio frequency products that fluids for the aerospace, medical, and operate in sectors with explosives, narcotics, weapons, these include the oil and gas, Our products are focused in the connect, protect and control critical industrial, construction and excellent opportunities for growth. chemical agents, biohazards chemical, pharmaceutical, pulp medication delivery, vital care and systems for the global wireless domestic markets. and contraband. and paper, and sectors. safety devices market segments. telecommunications, aerospace, Smiths has evolved substantially defence, space and medical markets. since its foundation. Now employing over 22,000 people in more than 50 countries, we serve a diverse range of global customers including governments Customers Customers Customers Customers Customers Our technology is John Crane serves oil and We estimate that around Smiths Interconnect Flex-Tek serves mainly and their agencies, petrochemical deployed at nearly 80% gas companies, refineries, three-quarters of our end supplies to multiple levels domestic appliance companies, hospitals, of the world’s commercial pump and compressor customers are hospitals of the supply chain and manufacturers and airports. Some 85% of manufacturers, chemical with the remainder its blue chip customers the US construction telecommunications companies sales are influenced and other process comprising the alternate include primes and service industry. Its large and manufacturers in a variety by more than 100 industries. Its main care market such as home providers, OEMs and customers include governments and their customers include BP, care and other surgery system suppliers, and Whirlpool, Trane, Pratt of sectors around the world. agencies globally, Chevron, China Petroleum, centres. We have a direct sub-system manufacturers. & Whitney, Carrier, including homeland ConocoPhillips, sales presence in 20 Amongst our largest Boeing, Electrolux, We bring technology to life. security authorities, ExxonMobil, Gazprom, countries with distribution customers are Raytheon, Respironics, GE customs authorities, Qatargas, Saudi Aramco, arrangements in many Finmeccanica, BAE Aerospace, Airbus, Contribution emergency responders Contribution Shell, Total, Dresser, Elliot, Contribution others. Contribution Systems, AAI/Textron, Contribution Panasonic, Hoover to 2008 sales* and the military. This to 2008 sales* Flowserve, GE Nuovo to 2008 sales* to 2008 sales* Northrop Grumman, to 2008 sales* and Dyson. Key strengths includes the US Pignone, ITT, Mitsubishi, Ericsson, Motorola, Sprint 22% 27% 31% • Consistent market 11% 9% Key strengths Department of Defense, Siemens, Solar turbines, Nextel, ZTE, GE Medical growth • Lean manufacturing Contribution to 2008 US Transportation Security Contribution to 2008 Sulzer, York, BASF, Bayer, Contribution to 2008 Contribution to 2008 and Alstom. Contribution to 2008 culture headline operating Administration (TSA), UK headline operating Dow, Koch Industries and headline operating • Global sales & marketing headline operating headline operating Key strengths profit*# Ministry of Defence, and profit*# Lyondell. profit*# network profit*# profit*# • Good performance • Technical differentiation airport operators such in markets other 22% 25% Key strengths 34% • Established brands 13% providing barriers to 6% as BAA in the UK. than US construction • Two-thirds of revenue with practitioner loyalty entry for competition market, civil and Key strengths from after-market Growth opportunities Growth opportunities Growth opportunities • Increasing roll-out Growth opportunities • Strong brands Growth opportunities military aircraft • Global market growth service • Bring new technologies • Creation of a single John • Ageing population and of new products • Expand globally from recognised by customers • Expand non-construction demand rising to market • Strong technology Crane customer-facing • Market leader in its field, increasing prosperity US base as partners and solution market activities eg • Focusing increased Employees positions organisation blue chip customer base providers aerospace and medical • Develop biological • Safety legislation and R&D investment on • Leverage market 2,400 and millimetre wave • Good access to growing • Expand technology • Largest segment is fast- regulation higher growth segments knowledge and customer • Excellent military • Exploit growth potential detection technology markets footprint through growing petrochemical and markets relationships throughout programme positions in Asian industrial and • Healthcare industry acquisitions industry the business appliance markets • Seek acquisitions • Investment in R&D productivity needs and Employees • Positive market increasing • Build new upstream • Good positions in key increasing use of IT 8,400 • Add new technologies dynamics in wireless • Further rationalise sites • Deliver efficiencies: services business that growth markets and territories through infrastructure and implement single Employees • Leverage global product uses existing global bolt-on acquisitions from defence enterprise wide software 2,300 Employees development process network fragmented sector system and smarter 6,400 and increase percentage Employees sourcing initiative • Increase original of sales from products • Rationalise 3,100 equipment sales and under three years old manufacturing and manufacturing capacity accelerate move to • Scope to reduce costs and extend global lower costs and improve margins customer service network

With governments seeking more In the petrochemical industry, In healthcare, our products help In communications, our Our engineered components advanced ways to counter terror our advanced mechanical seals prevent needlestick injuries and sophisticated technology helps to heat and move fluids in a wide threats, our world leading X-ray are deployed on oil and gas pipelines reduce the risk of cross infections, keep people and systems connected range of different industries screening equipment is continuously and refineries, helping to deliver while our revolutionary medication and protected. from aircraft and racing cars evolving to help keep passengers energy efficiently to millions of delivery equipment helps to ease to medical devices. safe across the globe. homes and businesses around patients’ pain and prevent accidental *Analysis is based on revised operating structure the world. overdoses. for 2008/09 (as reported in Annual Report 2008) #Percentage relates to headline operating profit before corporate costs 6 Smiths Group plc Corporate responsibility report, year ended 31 July 2008 7 Smiths Group plc Corporate responsibility report, year ended 31 July 2008

Managing corporate responsibility and business ethics

The 12 principles outlined in the Code: The Code of Business Ethics Managing the Code Managing specific issues In 2004 we introduced a Code of Corporate Responsibility and Business The Code is approved by the Board of Directors of Smiths Group plc and Employees who have concerns or queries in relation to the Code are Ethics (‘the Code’) which sets out 12 broad principles for how Smiths is supported by the Chief Executive, the directors and the management encouraged to raise these through a number of routes: by raising the 1 Compliance with all applicable laws does business, based on common values of integrity, honesty, fairness of Smiths at all levels. issue with line management, or with the human resources or legal and transparency. It was acknowledged that the principles cannot support for their business or division, or by using the confidential ethics The Board has ultimate responsibility for the Code and its application and regulations address all areas or all circumstances, but they provide a framework helplines established across the Group. across Smiths businesses worldwide. for wider policies and programmes. Ethics Helplines are accessible by both phone and email to answer The Audit Committee of the Board has particular responsibility for In early 2008, Smiths retained the consultancy URS to conduct a queries relating to ethics issues, as well as to act as a confidential 2 Fair and vigorous competition in the monitoring the implementation of the Code, in addition to the benchmarking exercise of our Code of Corporate Responsibility and reporting line for concerns and allegations. These helplines are available programmes and functions that underpin compliance. marketplace Business Ethics against guidance on content and implementation from via toll-free numbers in over thirty countries where Smiths has the Institute of Business Ethics (IBE). We took the opportunity to The Code of Business Ethics Compliance Council (‘the Council’) is businesses, staffed by individuals who speak the local language. All 3 Integrity and ethical conduct as the benchmark against companies operating in similar segments, from responsible for reviewing issues, determining priorities and making issues are addressed promptly and referred, as required, to relevant both a product and an investor perspective, using publicly available recommendations to the Audit Committee. Members of the Council brief functions to enable proper investigation. If appropriate and possible, a standard individual and corporate materials. The purpose was to establish the comparative strengths, the Audit Committee periodically on ethical issues and suspected or report back is given to the caller. weaknesses and opportunities for development of our Code. actual breaches of the Code. Responsibility for managing specific issues business behaviour Information about the Ethics Helplines and other aspects of Code lies at different levels within Smiths Group, depending on the nature of Whilst URS highlighted many strengths, they helped us to identify the compliance are available to employees on the Smiths intranet. For the issue and how it can most effectively be managed: following changes that in the main describe areas covered by policies but employees who do not have access to Smiths Group electronic 4 Fair and honest treatment of suppliers, not previously set out explicitly in the Code: • health, safety and environment issues are managed through a Group- communication tools, posters are on display at Smiths sites, plus all wide steering committee, a technical implementation committee and employees are provided with a hard copy of the Code. business partners and customers • we have incorporated more references to the shareholders as a key local co-ordinators; group of stakeholders; In 2008 Smiths was awarded membership of the FTSE4Good Index • employee issues are managed through the human resources function which recognises companies that meet globally recognised corporate 5 Proper and respectful treatment • we have strengthened the non-retaliation language; and by line management; responsibility standards. Whilst we are not complacent about the of employees • we have made more explicit the principles in relation to confidential ongoing work required, we were pleased to receive this external • supplier and customer programmes are managed by each business; information and use of Smiths and third parties' assets (including IT recognition of our corporate responsibility initiatives and business and and communications equipment); ethics programme. 6 High standards for health, safety • community programmes are principally managed locally, although • we have included reference to protection from potential security there is also some Group-level activity. and security in the workplace threats; The Chief Executive and his leadership team actively champion the Code, • we have included references to payment of taxes and assessment securing its ongoing relevance and profile via several routes. These of risk; 7 Respect for the environment include: • we have expanded references to the availability of resources to support • the discussion of ethics issues and Code compliance at management the Code; and 8 Contributing to the communities meetings; • we have expanded provisions and advice for reporting issues, and have in which we live and work • the review of ethics issues in the performance review system for included, at the end of the Code, a section on governance which managers; and previously appeared on the website and intranet, but not in printed 9 Engaging appropriately with versions of the Code. • the examination of Code compliance issues in site-level internal audit reviews. government departments and agencies The revised Code, although expanded, retains the 12 core principles structure and has the simplified title ‘Code of Business Ethics’. It has Day-to-day responsibility for compliance with the Code has to rest with been produced in all of the main Smiths operating languages, and is each and every Smiths employee. 10 Respect for human rights available in both hard copy format for each employee and on Smiths intranet. 11 Prudent and transparent public In order to communicate the revised Code and provide training to individuals across the Group, we are working on an online training accounting and reporting module. The online training will be supported by training on CD-Roms, so that those employees without access to individual work email accounts, or whose native language is not available online, can be 12 A culture of compliance throughout trained in a classroom-style setting. the entire Smiths organisation embracing The new Code is available on the Smiths website (www.smiths.com). all employees 8 Smiths Group plc Corporate responsibility report, year ended 31 July 2008 9 Smiths Group plc Corporate responsibility report, year ended 31 July 2008

Smiths in the environment

Performance against targets We are committed to ensuring that, Water use Water consumption Total energy Total energy Having achieved the three-year goals to the end of July 2007, new goals (‘000m 3) (m 3/£m turnover) (‘000 MWh) (MWh/£m turnover) as far as is reasonably practicable, were established to further challenge our environmental performance. 600 300 350 200 Smiths has set itself the target of reducing water consumption by 9%, any detrimental effects of our activities, 306 waste generation by 9% (both normalised against sales) and to cap its 507 500 250 295 300 480 235 products and services upon the greenhouse gas emissions at FY 2006 – 2007 levels (absolute). These 150 250 142 goals are to be achieved by 31 July 2010. 400 207 200 environment are minimised. 127 Each of our key indicators shows improvement during the year and we 200 300 150 100 will report on further progress and initiatives towards our three-year 150 Organisational arrangements goals. 200 100 Smiths environment, health and safety (EHS) programmes start with 100 Our new data management system has been live for over a year now and 50 the EHS policy which was revised and endorsed by Philip Bowman in 100 50 January 2008 and is reproduced at the back of this report. has given us the ability to improve the quality and timeliness of the data 50 with monthly reporting and real time checking for errors. A greater The policy deployment process is hierarchical within the Group matrix. 0 0 0 0 number of Smiths businesses than ever before now report and it is 2007 2008 2007 2008 2007 2008 2007 2008 The Executive Committee develops policy and monitors performance. much easier to include or exclude acquired or divested businesses. The The EHS Steering Committee, which comprises senior group and 2007 data here has been adjusted to remove business disposals during divisional representatives, develops strategy and ensures progress. The the year and the 2008 data does not include recent acquisitions. Total non-recycled waste Total non-recycled waste CO 2 emissions CO 2 emissions EHS Technical Committee develops programmes that implement the There were very few environmental fines received this financial year and (‘000 Tonnes) (Tonnes/£m turnover) (‘000 Tonnes) (Tonnes/£m turnover) strategy, share best practices and provide training opportunities. 10 5 150 80 Regional co-ordinators and local EHS staff provide feedback on the largest related to a waste water discharge breach at the John Crane performance and issues. facility in Mexico. The breach occurred in October 2004 and the fine 8.59 126 had a total value of 10,114 Mexican pesos (£545). The non-compliance 8 3.98 4 122 Managing environmental impacts 58.49 60 was corrected. 6.85 100 52.68 All Smiths manufacturing facilities with more than 50 employees are 6 2.95 3 required to achieve certification to the international management 40 system standard ISO14001 and new acquisitions and sites that grow 4 2 above this threshold have two years to comply. Smiths Medical, One of Smiths goals is to reduce the total non-recycled waste and 50 Keene, USA where possible, packaging waste is 20 Currently we have five sites that fall into the latter category and are 2 1 minimised by the use of reusable and working on their programmes. We have seventy-seven sites already returnable packaging as introduced certified, providing an externally verified framework for continual here in Keene. 0 0 0 0 improvement, compliance assurance, emergency preparedness and 2007 2008 2007 2008 2007 2008 2007 2008 management review. 10 Smiths Group plc Corporate responsibility report, year ended 31 July 2008 11 Smiths Group plc Corporate responsibility report, year ended 31 July 2008

Smiths in the workplace

We believe in providing our employees Communication Communication is crucial to helping employees engage with the Smiths Medical, Employees from Smiths and other Titeflex, Paris, France Einstein, for example, was a with the means to add value to business. At business unit level, we have a variety of channels including local companies have joined together philosopher and musician and Pascal Rockland, USA for a weekly skate at a local ice hockey Titeflex has enrolled in an innovative a writer, engineer and philosopher. team briefings, presentations, intranets and newsletters. Many arena. They have been able to field two themselves and the business they work project with a company which A talk on Leonardo da Vinci introduced teams consistently which provides a businesses have well-established forums for exchanging information arranges cultural activities to broaden him as an artist, philosopher, engineer, non-stop hour of intense action that in. We support our employees by investing and best practice as well as discussing current business issues the interests of employees by offering discoverer and a self-trained man. is nothing short of fun and a great including efficiency initiatives, training and development, and events outside of their usual This last detail particularly impressed cardio workout! environment. in improved safety in the workplace, environment, health and safety issues. workers, and the new expression on the ensuring their statutory rights are upheld, Quarterly activities include lunches shop floor is “let’s do it à la Leonardo”. In European Union (EU) countries we have workplace information and with guest speakers, and visits to Visiting the Museum of Perfume in castles, museums and other places of Versailles illustrated the challenge of treating our work colleagues fairly and consultation arrangements at our sites. These link to the Smiths interest to highlight that great scientists European Forum, through which employee representatives from across producing a consistent product every with respect, and developing our talent. were also writers and artists and that year. This was of interest to engineers, the EU meet annually to discuss transnational matters with Group discoveries were made by people with who meet the same challenge with executives. This year’s meeting was held in the UK and included a broad knowledge in various fields. our products. Employees presentation from Smiths Chief Executive, Philip Bowman, on the Smiths continues to be a diverse group of businesses and our people performance of Smiths and his expectations for enhancing the value of reflect that diversity. the Group’s businesses. Adding value Throughout Smiths people are taking action to achieve the best possible long-term performance for our shareholders. We invest in the skills and capabilities of our people and expect them to reflect that investment in their performance in terms of business results. Career progression As a global technology group, we offer a variety of roles to help our people progress their career within Smiths in line with their capabilities and performance. We identify potential future leaders and provide them For over 18 months, John Crane The ‘Across the Pond Walkathon’ was Smiths Medical, Twenty-six employees took part in John Crane, UK Smiths Medical, a 40-hour college course on ‘English with development tools and opportunities to support their career has been promoting self- planned and initiated in June of this Rockland, USA ambitions and the needs of the business. We also recognise the need to study through e-learning, resulting in Dublin, USA year and 60 people signed up to walk. as a Second Language’ with all of the creation of a CD-based There were eight teams, comprising the students passing their final balance internal development and promotion with external recruitment ‘Mechanical Seal Foundations’ course, members of various departments examination. The course contributed where this is necessary to fulfil our individual and team commitment to plus various intranet-based study promoting collaboration with people to their understanding of our add value. modules and other tools. who don’t usually sit together. environment, health and safety procedures and training, in addition A central implementation team has Prizes were awarded for the first team Diversity to complementing their own been developing a powerful e-learning to reach 100 miles, first team to reach personal education. We welcome diversity in our workforce, not only to adhere to our legal software platform called ‘Know-How’. 500 miles, individual with the most obligations but also because we believe that everyone needs to challenge This has been rolled out to a limited miles in a single week, and the team audience in India, enabling access to who walked the farthest in the sixth constructively and to contribute ideas from their own perspective to an induction curriculum containing and final week of the race. But, in a support the achievement of business performance objectives. basic courses on topics such as health wider sense, all who participated were & safety, IT policies, environmental winners, with benefits including weight Succession management policies and lean manufacturing, as loss, reconnecting the family unit by Smiths operates a systematic succession management process for well as introductions to mechanical walking together, and social interaction. leadership roles. Our businesses identify leadership talent and seals and couplings. development needs using common tools and a consistent language. Know-How will now be introduced to other locations in a phased roll-out Development plans are monitored by senior management to optimise programme which will gradually add effective succession opportunities. more users, courses and functionality. Developing talent Smiths has a number of development programmes designed to evaluate and enhance core leadership competencies. These development programmes are designed and tailored to address a wide range of learning styles, incorporating workshops, experiential learning, mentoring, team working and project experience. For employees to add value we have to ensure they are properly engaged Horizons Smiths continues to be actively involved Smiths Medical, Smiths Medical, with and committed to the business priorities. We provide not only the in all aspects of training and developing training and development opportunities that represent an investment in young people, including initiatives Fraureuth, Germany Kirchseeon, Germany designed to ease the transition from both their future and that of the business but also a safe and responsible school to work. For example, Horizons Smiths Medical Fraureuth A fitness studio, opposite the working environment that encourages mutual respect, provides is a two-year programme for newly encourages health and exercise company building, is fully certified opportunities for personal growth and rewards individual and team and recently appointed graduates and initiatives and employees have the and recognised as an excellent opportunity to spend one evening training unit by health insurance contributions that realise value for the business. those early in their career. It provides an understanding of the Group and every week together for exercise companies. An agreement is now the business world in general, and sport activities such as in place with a major insurer who and develops personal and team volleyball. This has become a will provide significant advantage working skills. popular fixture in which many schemes for employees who are employees take part. members of this fitness facility. 12 Smiths Group plc Corporate responsibility report, year ended 31 July 2008 13 Smiths Group plc Corporate responsibility report, year ended 31 July 2008

Health and safety

Organisational arrangements Recordable Incident Rate See the environment section on page 8 for an outline of the Safety Technical Three safety technical workshops Tutco, Cookeville, USA Numbers are posted on the notice organisational arrangements for managing health and safety. were held in Europe and North America board each day and employees check Workshops with more than 100 representatives Safety Bingo is an innovative way of them off on their ‘Bingo’ cards until 5.00 Performance indicators from the major sites in attendance. raising health and safety awareness there is a winner. 4.63 Smiths tracks safety performance using the US Occupational Safety and The workshops had a shared agenda: in the workplace. The prize money starts at $50 and increases by $1 for each day without 3.75 Health Administration (OSHA) methods for lost time incident rate and • Hazard identification and risk a recordable incident. A winning card assessment recordable incident rate which express the number of incidents per 100 completes the game and everyone 2.75 employees per year. The US Bureau of Labour publishes industry • Legal compliance starts over, but the prize continues to 2.58 grow by $1 a day unless a recordable 2.50 comparisons each year allowing an approximate benchmark. • Incident investigation incident occurs and sends it back 1.96 As announced in August 2007, Smiths now requires all of its businesses • The OHSAS18001 certification down to $50. process to have a recordable incident rate better than 1.5 (per 100 employees 1.27 1.25 per year) by July 2010. • Smiths resources

OHSAS18001 0 ISO14001 has proven successful in driving continual improvement in 2004 2005 2006 2007 2008 environmental matters in Smiths and we now require the closest equivalent for health and safety – OHSAS18001 – at all manufacturing businesses with more than 50 employees. OHSAS18001 requires: Lost Time Incident Rate

• formal risk assessment and hazard identification 1.5

• legal compliance and assurance 1.25 1.15 • formal organisational arrangements 1.07 1.0 • training and competency 0.91 • internal audit Trak Microwave, Dynamic X-ray inspection methods are Tutco, Cookeville, USA Tutco were Smiths first North 0.57 • management review used routinely to verify the integrity of American facility to achieve certification 0.5 Dundee, Scotland solder joints and the internal efficacy to OHSAS18001 and their preparation • external verification. of components destined for deep included a comprehensive machine space missions and satellite guarding programme. Some Smiths businesses have already achieved certification and we are applications. Operated in a controlled 0 therefore able to use this experience to develop a Group-wide access area, machine interlocks and 2004 2005 2006 2007 2008 programme. Two sites – Trak Microwave, Dundee and Tutco, Cookeville, personal dosemeters ensure radiation Tennessee – were selected as pilots for the development of standard exposure is both minimised and continuously monitored. materials and understanding of the certification process. Data collection and analysis We invested in a bespoke worldwide data collection and reporting In total we now have 17 facilities, out of a 2010 target of 83, certified to system which was implemented in August 2007 and we now have an OHSAS18001. enhanced ability to review performance site by site in real time against Audit Group targets. An audit process has been developed and external auditors retained to Performance against targets conduct legal compliance audits. Facilities to be audited were chosen Last year we reported on three incidents that resulted in extended from across the Group based on size, complexity and past performance hospital stays for the injured parties. We are pleased to report that we and the audits were completed in March, April and May 2008. Each have had no incidents of the same severity this year. audited site now has a corrective action plan which will be reviewed on site later in 2008. Analysis of the findings from the audits suggests three Following a concerted effort, driven from the highest levels of the common areas of weakness: machine guarding, electrical safety and organisation, our safety performance, as measured through recordable emergency preparedness. These will be the focus of future programmes. incident and lost time incident rates, continues to improve. The improvements are supported by enhanced incident investigation and Targeting under-performers return to work programmes. The financial year that we have just Eight sites with historically weaker performance were selected for completed has been the safest on record for Smiths. additional attention involving: We are starting to see other positive indicators. Fines and violations are • monthly senior management reviews as low as we can remember. Smiths had no UK employer liability claims • performance goals in the financial year and US workers’ compensation direct costs are $300,000 lower than last year. These visible and tangible benefits exclude • agreed improvement programmes. the business costs and personal impacts associated with injury and Three of the eight sites have improved their performance sufficiently lost time. and alternative sites are currently being considered to replace them. The largest fine received this financial year related to two findings from an OSHA inspection of our Tubular Systems facility in Springfield MA, USA. The combined fine was US$1,487.50. The non-compliances have been corrected. 14 Smiths Group plc Corporate responsibility report, year ended 31 July 2008 15 Smiths Group plc Corporate responsibility report, year ended 31 July 2008

Smiths in the community

In addition to providing employment Education Smiths Medical, Last year, 16 employees, drawn from Smiths Detection, There was a lunchtime group walk Education is vital for people to achieve their potential. Smiths supports opportunities, we focus on community Germany, Austria and Switzerland, around the Egdewood business park, a host of initiatives both centrally and within individual businesses that Germany, Austria completed a 24-hour cycle race Edgewood, MD USA with pink balloons and a cake to involvement through charitable giving, and Switzerland in Munich. celebrate the day. The local ‘Race for provide educational opportunities. Smiths Detection in Edgewood, the Cure’ representative provided For each of the 1,275 kilometres community activities and health and Maryland (USA) held a day for Breast literature and other materials to share. Smiths Technology Education Programme (STEP) completed Smiths made a donation Cancer Awareness in October 2007. Smiths is in its second year of collaboration with the UK Royal Academy of €1 to the German Bone Marrow Smiths bought ‘pink ribbon’ bagels and The proceeds (nearly $5,000) went to education initiatives. Our charitable Donation Association, raising a total offered them for a $1 donation. Smiths the Susan G. Komen Foundation. of Engineering in the STEP programme. STEP is an initiative to assist of €1,275. The cyclists plan to repeat managers matched every $5 donation able students from any background, facing economic or social barriers, donations and community initiatives this initiative in 2008. from employees and provided a raffle to a career in technology. ticket for the chance to win a prize. facilitate projects around the globe that, Each year, 20 students who are studying for advanced level qualifications like our products, seek to help make the in mathematics or science have the opportunity to attend a ‘Head-Start’ summer school in engineering and technology, run by the Royal world a safer, healthier and more Academy of Engineering. Five of these alumni are then selected to productive place. receive a Smiths bursary of £1,000 per year towards the cost of a university course in engineering or technology.

Charitable Donations and Community Initiatives Here are some examples of charitable and community initiatives from Smiths businesses around the world.

John Crane, Employees and their partners John Crane, Brazil For the third year running, the HR Smiths Medical, Smiths Medical’s Services Centre Smiths Detection, USA better prepare them for a wide variety attended the annual John Crane department of John Crane Brazil in Dublin, Ohio, has been supporting of jobs and the skills needed for Czech Republic Company Ball where 30,000 K e˘ organised and managed a multi- Dublin, USA the Leukemia and Lymphoma Society Smiths Detection sites in the USA take specific professions. (£1,000) was raised in a charity raffle disciplinary team for their charitable (LLS) through ‘Light the Night’ since part in ‘Take Your Sons & Daughters to Small breakout sessions are arranged for a local centre which cares for Christmas appeal. This project the sister of one of their employees Work’, an annual national event which with various departments. This year disabled children. The money was involved donations of food from was diagnosed with Non-Hodgkins encourages employees to bring their for example: used to improve facilities at the centre employees and their families to Lymphoma five years ago. children, aged six and over, to work. where employees give their support help needy children and the elderly. • Finance hosted a ‘how to budget A ‘can castle’ event was organised The children are given a tour of the by joining them for seasonal events. Employees from each region for a party’ workshop. to collect food for the Plain City Food facility and spend the day learning represented by John Crane Brazil Pantry. Four teams competed and over about Smiths Detection and how their • HR orchestrated games such selected specific organisations 1600 cans, boxes and other items, were parents contribute to our organisation. as ‘Safety Jeopardy’ and ‘Are you to receive their donations. collected. Castles were judged on size This day of fun education has activities Smarter than a Fifth Grader?’ and creativity. The Customer Service designed to demonstrate that their where parents and their children Data Center won with their medieval studies in subjects such as science, challenged each other. castle made of over 700 cans, and maths, english and business will donated the equivalent cost of their prize to the ‘Toys for Tots’ charity. Employees also volunteer for ‘Corporate Meals on Wheels’ during their lunch breaks, delivering meals to people who can not otherwise get meals on their own.

Smiths Detection, Employees from Smiths Detection, Smiths Medical, Smiths Medical St Paul sponsored Smiths Medical, undergoing clinical trials and Germany annually donate a Health and Wellness week for regulatory assessments. If approved, Wiesbaden, Germany approximately €3,000 to help support St Paul, USA employees and organised blood drives Mount Everest Study it will for the first time enable patients a local hospice near its facility in throughout the year which provided with chronic breathing difficulties to Wiesbaden. The hospice cares for 153 pints of blood for the local Red Smiths Medical is currently developing stay active whilst receiving treatment, the terminally ill in two units and the Cross. Funds of over $52,000 were a revolutionary breathing circuit. It was greatly improving their chances of donation is divided equally between the also raised in a Juvenile Walk for tested on Mount Everest as part of a recovery. It could prove to be a major children’s unit ‘Baerenherz’, and the Diabetes and a large supply of clothing groundbreaking medical study breakthrough for patients with COPD adult unit, ‘Advena’. and food was collected for a local undertaken in collaboration with Great (Chronic Obstructive Pulmonary homeless shelter for Christmas 2007. Ormond Street Hospital and University Disease). College and the system is 16 Smiths Group plc Corporate responsibility report, year ended 31 July 2008 17 Smiths Group plc Corporate responsibility report, year ended 31 July 2008

Smiths in the community continued Environment, health and safety policy

Smiths Group (‘the Company’) is committed to achieving excellence John Crane, China The first Scholarship Awarding John Crane, Egypt John Crane in Egypt is forging an in environment, health and safety (EHS) performance. Ceremony was held in January important link with the world of In autumn 2007, John Crane China and was attended by college faculty education through a seminar The Chief Executive has overall responsibility for EHS matters in the launched a three-year scholarship and visitors from other universities. presented to an audience largely Group and the Group Human Resources Director is responsible for its project with Tianjin University, which Representatives from John Crane composed of students and professors is available to 10 full-time graduate and awarded the scholarships, promoted from the Mechanical Engineering effective administration and implementation. Strategic direction and postgraduate students of the Chemical the programme, and answered Department of the Faculty of performance monitoring is undertaken by the EHS Steering Committee and Mechanical Engineering Colleges. questions from students keen Engineering at Alexandria University, and the EHS Technical Committee which have representation from all Practical experience within John Crane to participate. considered to be one of the finest Smiths divisions. is also arranged for students and engineering colleges in Egypt. Tianjin University encourages them As the most prominent supplier of The most senior manager in each division has overall responsibility for to seek internships upon graduation. sealing solutions in Egypt, John Crane EHS matters within their business and for implementing organisational was approached by the Department’s professors to introduce students to the arrangements to ensure compliance with this policy. subject of sealing solutions. All 300 attendees received a CD which Smiths employees, at all levels, have a personal responsibility to follow contained the material presented in EHS rules and to take due care. They also have a responsibility to warn the seminar, plus extra information others if they see potential hazards, either physical or behavioural. on John Crane products. As a result of the seminar the University’s Failure to fulfil these responsibilities may lead to disciplinary action. Turbomachinery Division has begun working with John Crane to develop The Company conducts its business in accordance with the following a sealing technology training key EHS principles which are supported by effective management programme. systems: • Commitment to meeting or exceeding all relevant legal and other requirements to which the Company is subject and monitoring performance through periodic assessment. • Continual improvement in EHS performance, including prevention of pollution, hazard reduction and the protection of human health. John Crane, The partnership went a stage further Smiths Medical, theoretical study at a business school. recently as John Crane committed to This education is completed with an • Robust training systems to ensure that all persons working for Czech Republic assist the high school in a special EU Germany and examination and degree from the or on behalf of the company are competent to fulfil their EHS educational project. Employees will be Switzerland Chamber of Commerce. responsibilities. For the past seven years John Crane co-operating with, and participating in, has partnered with a local high school Successful graduates are encouraged the process of textbook modification, Smiths Medical is running an in its ‘Pathway Study Programme’ to apply for available positions within • Clearly defined objectives and targets. applying practical and up-to-date apprenticeship programme offering which is geared towards mechanics Smiths Medical. information from the manufacturing nine places (five in Kirchseeon, three and machinists. Students undergo • Regular assessment of the EHS impacts and interactions of all new environment, so as to share this in Fraureuth and one in Switzerland) their annual work experience at the and existing business activities, products and services. knowledge and experience with which are combined with practical and John Crane factory and the best the students. students are honoured each year after • Promotion of the efficient use of energy and other resources graduation. Many of the current John to minimise environmental impact. Crane employees graduated from this school. • Promotion of the health and wellness of our employees. The local Training and Lean Co- ordinator, Viktor Mensik, is responsible • Consideration of EHS issues during acquisitions and divestitures. for the students on work experience and was honoured this year by the • Selection of competent contractors who commit to comply with Smiths school for his hard work and high EHS standards. dedication. John Crane used this opportunity to support the school in • Communication with all persons working for or on behalf of the a joint press promotion, advertising Company and other stakeholders regarding the EHS impacts and the school’s curriculum and career objectives of its operations and to seek to engage them in the possibilities with John Crane. commitment to continual improvement. Philip Bowman Chief Executive January 2008

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