Statements

Annual Report 2012 Smiths Group plc *** Smiths Group is a global business listed on the London Stock Exchange. We develop advanced technologies that meet our customers’ evolving needs. *** –  A charge of £55m for the establishment of a provision to resolve potential future claims alleging product liability in Titeflex Corporation (2011: nil) *** …Capital employed comprises total equity adjusted for goodwill recognised directly in reserves, post-retirement benefit assets and liabilities net of tax, litigation provisions relating to exceptional items net of tax, and net debt. In the light of the recognition of the Titeflex litigation provision, the Board decided at the interim results to restate capital employed to exclude significant litigation provisions (see note 1 to the accounts). *** …The adoption of new standards has not materially affected reported financial position or performance. In addition, following the inclusion of net expenditure relating to Titeflex Corporation litigation in exceptional items the description of the relevant category of exceptional items has been amended from… *** …In recent years Titeflex Corporation, a subsidiary of the Group in the Flex-Tek division, has received a number of claims from insurance companies seeking recompense on a subrogated basis for the effects of damage allegedly caused by lightning strikes in relation to its flexible gas piping product. *** In the light of the recognition of the Titeflex litigation provision in 2012, the board has decided to exclude significant litigation provisions from the definition of capital employed. *** Litigation
– provision for Titeflex Corporation subrogation claims (note 22) – provision for John Crane, Inc. asbestos litigation (note 22)……………………. £54.5m *** A charge of £54.5m has been made by Titeflex Corporation in respect of the estimated cost of future claims from insurance companies seeking recompense for damage allegedly caused by lightning strikes (see note 22). *** In recent years Titeflex Corporation, a subsidiary of the Group in the Flex-Tek division, has received a number of claims from insurance companies seeking recompense on a subrogated basis for the effects of damage allegedly caused by lightning strikes in relation to its flexible gas piping product… Equivalent third-party products in the US marketplace face similar challenges with the profile of legal activity appearing to increase in recent times. The continuing progress of claims and the pattern of settlement, together with the recent market place activity, now provide sufficient evidence to recognise a liability in the accounts… A charge of £54.5m has been made by Titeflex Corporation in respect of the estimated cost of future claims from insurance companies seeking recompense for damage allegedly caused by lightning strikes (see note 22)."