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3 August 2004

Smiths Group will announce its preliminary results for the year ended 31 July 2004 on Wednesday, 22 September. At the start of its close period, the company is issuing the following trading update.

At the interim results in March, Smiths indicated that delivering full year expectations depended on a second half recovery in Detection and continued progress in the other divisions. It is now clear that both objectives have been achieved.

The company expects 2004 pre-tax profit and earnings per share from continuing operations, before exceptionals and goodwill amortisation, to match those reported in 2003. On turnover very close to 2003 (continuing operations), operating profit is expected to be only modestly below last years performance, despite a 20m adverse currency translation effect this year from the weaker US dollar and the benefit in 2003 of a large, one-off order from the TSA.

At the divisional level, Smiths currently expects Aerospace sales to be steady year-on-year, with margins of 10%; Detection sales to be 20% up, with margins of 17%; Medical sales to be steady, with margins of 19%; and Specialty Engineering sales to be slightly lower, due to a number of small disposals, with margins of 13%.

Net interest expense will be lower than 2003. This reflects strong operating cash-flow, the phasing of the 220m acquisition spend late in the year and higher interest rates on sterling deposits versus stable dollar borrowing costs. Year end net debt is expected to be circa 300m.

Looking ahead to the next financial year, Keith Butler-Wheelhouse, Chief Executive commented: "Smiths has made good progress in the second half of the year just ended. We expect to achieve continued growth in all four divisions in the year ahead. The improvements will come in equal measure from underlying growth, recent acquisitions and the benefits of the restructuring already underway, with currency translation potentially the negative factor."

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