Notes to the accounts

26 Share capital

	Number of shares	Issued capital £m	Consideration £m
Ordinary shares
At 5 August 2006	567,328,353	141.8
Exercise of share options	10,693,635	2.8	77.7
Effect of share consolidation	(192,523,715)
At 31 July 2007	385,498,273	144.6

B shares
Issued	577,571,145	5.8
Converted to deferred shares	(348,205,433)	(3.5)
Purchased and cancelled	(224,439,118)	(2.2)
At 31 July 2007	4,926,594	0.1

Deferred shares
Issued	348,205,433	3.5
Purchased and cancelled	(348,205,433)	(3.5)
At 31 July 2007

Share capital classified as equity at 31 July 2007	385,498,273	144.6
Share capital classified as debt at 31 July 2007	4,926,594	0.1
Total share capital at 31 July 2007	390,424,867	144.7

During the year the Group issued £5.8m of B shares out of the share premium account. The B shares could be: converted into deferred shares with a negligible value in return for a dividend of 365p; redeemed for 365p per share in cash; or retained. £4.2m of associated costs were charged to the share premium account.

572.6 million B shares were redeemed on 25 June 2007, including 348.2 million B shares which had been converted into deferred shares and, as a result, £5.7m was transferred from retained earnings to a capital redemption reserve.

It is currently expected that JPMorgan Cazenove, acting as principal, will make a final purchase offer to acquire any retained B shares for 365p each, free of all dealing expenses and commissions, on or around 17 April 2008, although there can be no guarantee that such an offer will be made. Until they are redeemed the B shares carry annual interest of 75% of 12 month LIBOR, payable in arrears in April. Smiths may redeem and cancel the remaining B shares at any time between May and November 2008 for a consideration of 365p per share.

The following creditor relating to the outstanding B shares has been included in net debt:

		2007 £m
B shares
Nominal value		0.1
Expected redemption premium		17.9
Accrued interest		0.1
B shares included in short-term borrowings		18.1

After the allotment of the B shares a capital reorganisation was undertaken. Existing 25p ordinary shares were subdivided and consolidated so that shareholders received two new 37.5p ordinary shares for every three existing 25p ordinary shares.

The authorised capital at 31 July 2007 consisted of:

533,333,333 (2006: 800,000,000) ordinary shares of 37.5p (2006: 25p) each; and 533,333,333 (2006: 800,000,000) ordinary shares of 37.5p (2006: 25p) each; and
600,000,000 (2006: nil) non-cumulative B shares of 1p each. 600,000,000 (2006: nil) non-cumulative b shares of 1p each.

At 31 July 2007 all of the issued share capital was in free issue. All issued shares are fully paid.

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