SMITHS DETECTION HAS THE BROADEST RANGE OF TECHNOLOGIES AND WIDEST MARKET ACCESS OF ANY COMPANY IN ITS FAST-EVOLVING MARKET, GIVING IT A KEEN COMPETITIVE EDGE. SIGNIFICANT INVESTMENT CONTINUES TO EXPAND SMITHS DETECTION TECHNOLOGIES FOR EQUIPMENT TO DETECT AND IDENTIFY WEAPONS OF MASS DESTRUCTION, EXPLOSIVES, CONTRABAND, DEADLY SUBSTANCES AND ILLEGAL ITEMS. MARKETS SERVED ARE GROWING RAPIDLY IN TERMS OF BOTH GEOGRAPHY AND APPLICATIONS.

Demand for detection equipment broadened out during the year, with the military, critical infrastructures, ports and border controls, and event organisers increasingly balancing airports as sources of growth. While the race to meet an urgent deadline for US airport security provided an exceptional fillip to industry sales in the previous financial year, the basic growth trend remains positive, with industry-wide sales of new equipment expected to expand at a double digit rate annually.

Smiths Detection increased reported sales by 16% to £317m due largely to the inclusion of Heimann, the world leader in x-ray detection, for a full 12 months rather than just eight months in the previous year. Reported operating profit* fell by 21% to £55m, suffering from a relatively poor first half in comparison to 2003, which benefited from a one-off requirement to supply more than 3,000 Ionscan trace detection units.

Trading picked up in the second half, partly due to a number of Transport Security Administration (TSA) contracts, including a joint contract with The Boeing Company for the service and maintenance of Smiths' equipment at airports in North America. Further growth in service revenues is being targeted in the future. The TSA also selected Smiths to participate in three pilot programmes to screen rail passengers and their baggage for explosives.

A contract for anthrax detection at US mail sorting offices started to generate revenue in the second half. Detection has a highly competitive mail screening product, having developed a new and unique system that can detect biological and toxin agents.

Outside the United States, we are proud that the Greek Government selected Smiths Detection equipment for the critical task of security screening at the Athens Olympics, ordering more than 260 x-ray systems and 200 chemical agent detectors. Providing additional security support, we received an order to supply all international and regional airports in Greece with x-ray baggage inspection systems.