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 mining 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