Notes to the accounts

1 Segment information

Analysis by business segments

For management purposes, the Group is organised into three continuing business segments – Detection, Medical and Specialty Engineering. These business segments are the basis on which the Group reports its primary segment information. For reporting purposes Specialty Engineering is analysed into two segments: John Crane and Specialty – Other.

	Period ended 31 July 2007
			Specialty Engineering
	Detection £m	Medical £m	John Crane £m	Specialty - Other £m	Total £m
Revenue	437.5	690.6	532.4	500.4	2,160.9
Headline operating profit	78.6	127.3	75.3	66.4	347.6
Exceptional operating items (note 4)	(13.0)	(9.6)	(73.2)	(2.4)	(98.2)
Amortisation of acquired intangible assets	(0.4)	(11.5)	(0.6)	(2.3)	(14.8)
Financing losses	(0.1)	(0.2)	(0.2)	(1.0)	(1.5)
	65.1	106.0	1.3	60.7	233.1
Profit on sale of financial assets					24.0
Operating profit					257.1
Net finance costs					(0.6)
Share of post-tax (losses)/profits of associated companies	(1.1)		0.6		(0.5)
Profit before taxation					256.0
Taxation					(53.1)
Profit for the period – continuing operations					202.9

	Period ended 5 August 2006
			Specialty Engineering
	Detection £m	Medical £m	John Crane £m	Specialty - Other £m	Total £m
Revenue	411.8	737.0	518.4	513.1	2,180.3
Headline operating profit	74.3	133.3	66.4	70.8	344.8
Exceptional operating items (note 4)	5.4	(17.2)	5.6	(6.6)	(12.8)
Amortisation of acquired intangible assets	(0.4)	(11.2)	(0.3)	(1.1)	(13.0)
Financing losses	(0.3)	(0.6)	(0.4)	(0.5)	(1.8)
	79.0	104.3	71.3	62.6	317.2
Impairment of financial assets					(325.0)
Operating loss					(7.8)
Net finance costs					(28.4)
Share of post-tax (losses)/profits of associated companies	(1.5)		0.4		(1.1)
Loss before taxation					(37.3)
Taxation					(65.4)
Loss for the period – continuing operations					(102.7)

The Group’s revenue is analysed as follows:

	Period ended 31 July 2007 £m	Period ended 5 August 2006 £m
Sale of goods	1,965.2	2,044.1
Construction contracts	98.4	72.2
Services	97.3	64.0
	2,160.9	2,180.3

The non-cash expenditure included in operating costs by division is shown below:

	Period ended 31 July 2007				Period ended 5 August 2006
	Deprec- iation £m	Amortis- ation £m	Goodwill and other asset impairments £m	Other non-cash expenses (excluding impairments) £m	Deprec- iation £m	Amortis- ation £m	Goodwill and other asset impairments £m	Other non-cash expenses (excluding impairments) £m
Detection	6.2	2.5		1.8	6.6	1.9		1.9
Medical	18.3	18.9		3.6	24.2	15.5	1.8	3.4
Specialty Engineering:
John Crane	8.3	2.1		2.6	10.0	1.2		2.4
Specialty – Other	11.0	2.4	10.3	2.4	7.2	1.6		2.6
Continuing operations	43.8	25.9	10.3	10.4	48.0	20.2	1.8	10.3
Discontinued operations	8.4	3.8		3.5	31.2	19.4		6.0
Total	52.2	29.7	10.3	13.9	79.2	39.6	1.8	16.3

Included in goodwill and other asset impairments is £8.1m (2006: £nil) relating to disposal group impairment of assets on re-measurement to fair value less costs of sale. The table above excludes £nil (2006: £325m) of impairment charges not allocated to divisions.

Capital expenditure

	Period ended 31 July 2007 £m	Period ended 5 August 2006 £m
Detection	25.9	10.9
Medical	42.5	37.9
Specialty Engineering:
John Crane	17.3	17.1
Specialty – Other	14.7	17.1
Continuing operations	100.4	83.0
Discontinued operations	127.7	169.9
	228.1	252.9

Included in discontinued operations for the period ended 31 July 2007 is capital expenditure of £90.9m, incurred during the period after being classified as a disposal group.

Balance sheet

	2007 £m	2006 £m
Assets
Detection	604.8	558.0
Medical	899.9	885.8
Specialty Engineering:
John Crane	336.0	265.4
Specialty – Other	357.6	376.3
Operating assets by segment – continuing operations	2,198.3	2,085.5
Discontinued operations		1,248.8
Unallocated corporate assets*	393.7	316.8
Cash and cash equivalents	186.2	120.6
Total assets	2,778.2	3,771.7
Liabilities
Detection	164.2	143.9
Medical	136.2	120.0
Specialty Engineering:
John Crane	253.4	141.2
Specialty – Other	93.2	109.0
Operating liabilities by segment	647.0	514.1
Discontinued operations		410.2
Unallocated corporate liabilities*	448.7	437.2
Borrowings	779.2	1,047.3
Total liabilities	1,874.9	2,408.8

*Unallocated corporate assets and liabilities comprise assets and liabilities not directly attributable to the operating activities.

Analysis by geographical location

The Group's revenue by destination is shown below:

	Period ended 31 July 2007 £m	Period ended 5 August 2006 £m
United Kingdom	134.6	144.2
North America	1,038.4	1,099.4
Europe	546.2	505.2
Other overseas	441.7	431.5
	2,160.9	2,180.3

The following analysis shows the carrying amounts of the Group’s assets, and additions to intangible assets and property, plant and equipment.

	Segment assets		Additions to intangible assets and property, plant and equipment
	2007 £m	2006 £m	Period ended 5 August 2007 £m	Period ended 5 August 2006 £m
United Kingdom	583.6	831.3	76.9	68.5
North America	1,276.4	2,096.2	118.8	164.1
Europe	554.0	568.3	13.3	11.4
Other overseas	178.0	155.3	19.1	8.9
	2,592.0	3,651.1	228.1	252.9
Cash and cash equivalents	186.2	120.6
	2,778.2	3,771.7	228.1	252.9

Included in segment assets above were the following in relation to discontinued operations: United Kingdom £nil (2006: £387.6m), North America £nil (2006: £836.4m), Europe £nil (2006: £6.0m), and Other overseas £nil (2006: £18.8m).

Included in additions to intangible assets and property, plant and equipment above were the following in relation to discontinued operations: United Kingdom £53.4m (2006: £49.7m), North America £66.7m (2006: £116.5m), Europe £0.6m (2006: £1.0m), and Other overseas £7.0m (2006: £2.7m). Of the additions relating to discontinued operations in 2007, the following amounts were incurred during the period after being classified as a disposal group: United Kingdom £37.5m, North America £47.0m, Europe £nil, and Other overseas £6.4m.

Smiths Group divisions:
Smiths Detection, Smiths Medical, Smiths Specialty Engineering