Smiths Group

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Smiths Group
The fundamental strengths which drive Smiths
strategy
Alan Thomson, Financial Director Speaking at the
Société Générale Premium Review
Paris, 1 December 2005
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Achieving strong growth across all activities

• m 2005 2004 reported growth
• Sales 3,017 2,678 13
• Operating profit 420 360 17
• Profit before tax 413 350 18
• Earnings per share 54.3p 45.9p 18
• Dividend 29.0p 27.0p 7.4

The dividend was increased for the 35th
consecutive year
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All four divisions contributed double-digit
growth in 2005
growth at constant currency
Sales (m) 2005 Aerospace 1,158 18 Detection 36
7 17 Medical 563 19 Specialty
Engineering 929 10 Total 3,017 16
Operating profit (m) Aerospace 118
22 Detection 67 21 Medical 108
23 Specialty Engineering 127
16 Total 420 20
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Strengthening the core with acquisitions
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Strengthening the core with acquisitions
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Investing in advanced technology
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Research Development the A380
RDreached almost 300m in 2005
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of sales(company customer funded)
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Research Development the F-35 (JSF)
RDreached almost 300m in 2005
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of sales(company customer funded)
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Research Development the Sentinel II detection
portal
RDreached almost 300m in 2005
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of sales(company customer funded)
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Research Development Smiths Medical
RDreached almost 300m in 2005
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of sales(company customer funded)
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Research Development the Cozmo insulin
delivery pump
RDreached almost 300m in 2005
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of sales(company customer funded)
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Improving operational efficiency
Long-established plants - US, Canada, Europe, UK

• Recently established plants in low-cost countries
  - Poland - Czech Republic - Mexico - China -
  Malaysia - India - Costa Rica

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Improving operational efficiency Production in
Tijuana, Mexico
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Improving operational efficiency Smiths
Aerospace plant at Suzhou near Shanghai, China
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Generating an attractive return on investment
1
Companys overall ROI (including goodwill)
2
Smiths investment criteria12after-tax
return on total investment
Acquisitions
Expected rate of return
12
8WACC
YEAR 1
YEAR 2
YEAR 3
date of acquisition
3
Research Development
4
Capital programmes
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Aerospace, Detection, Medical Specialty
Engineering
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Smiths Aerospace Commercial
Smiths Aerospace 2005 sales 1,158m
40
Global commercial market
of total sales
Actuals
Forecast
100
80
60
Aircraft production value bn
40
20
(Smiths projections)
0
commercial
2003
2004
2005
2006
2007
2008
2009
2002
2010
2011
2012
2001
Business jets
Regional transports
Commercial jets
Civil helicopters
Exec/Utility turboprops
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Smiths Aerospace supplying integrated systems
Systems supplied by Smiths for commercial aircraft
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Smiths Aerospace Military
Smiths Aerospace 2005 sales 1,158m
60
Global military market
of total sales
Actuals
Forecast
30
25
20
15
Aircraft production value bn
10
5
(Smiths projections)
0
military
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2001
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Smiths Aerospace supplying integrated systems
Systems supplied by Smiths for military aircraft
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Smiths Detection Growth is coming from the wide
range of market sectors
2005 sales 367m
Transportation Sentinel II Dual-use Ionscan
Critical infrastructure US Post Office
Military LCAD to UK ACADA to US
ServiceGrowingaftermarket
Ports Borders New mobileX-ray unit
Emergency Responders New gas analysers
Non-securityincl. pharma
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Smiths Detection
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Smiths Detection Military protection
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Smiths Detection wider market applications,
e.g Ports Borders
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Smiths Detection growing aftermarket Smiths
equipment already used in 3,500 out of the
worlds 4,000 airports
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Smiths Medical Healthcare costs and ageing
populations
Healthcare costs are rising
Healthcare costs as of GDP
1993 2003US 13 15France 9 10UK 7 8
And populations are ageing
of population over 65 years
2003 2025US 13 17France 16 22UK 15 20
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Global Medical device market
Insulin pumps
Airway/Respiratory
Spinals/Epidurals
Patient Warming
Pumps and Ports
Safety Devices
global market 7bn growing steadily at 5 per
annum
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Smiths Medical In specialised markets, with
strong niche positions
2005 sales 563m(product split is proforma 12
months of Medex)
Medication Delivery Performing strongly, helped
by Cozmo
Critical Care Benefiting from new products, and
integration of Medex
Safety Devices Conversion from conventional
devices sustains growth of combined Smiths/Medex
range
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Smiths Medical The Cozmo pump delivers insulin
automatically for Type 1 diabetics
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Smiths Medical NeedlePro helps prevent
needle-stick injury
PICTURE TO COME
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Specialty Engineering
2005 sales 929m
John Crane Rotating mechanical seals used in
pumping applications, incl. oil gas
Interconnect Protection and connection of
complex electronic circuits
Flex-Tek Ducting a hosing for industrial and
consumer durable products
Marine Radar displays and electronic charts for
shipping
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Specialty Engineering John Crane
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Specialty Engineering John Crane Market drivers
Market drivers
Oil and gas extraction Refining Chemicals
Demand growth
In excess of 500bn identified in10 years
Major investment
Migration to developing regions
Technology Investment
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Specialty Engineering Interconnect components
used in military communications
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Specialty Engineering Interconnectapplications
in telecoms
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Pursuing a strategy to reach full potential
Six fundamental strengths which drive Smiths
strategy
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Smiths Group
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