a5236e
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 6-K
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 under the
Securities Exchange Act of 1934
February
27, 2024
Commission
File Number 001-14978
SMITH & NEPHEW plc
(Registrant’s
name)
Building 5, Croxley Park, Hatters Lane
Watford, England, WD18 8YE
(Address
of principal executive office)
Indicate by check
mark whether the registrant files or will file annual reports under
cover of Form 20-F or Form 40-F.
Form 20-F
✓
Form 40-F __
Smith+Nephew
Fourth Quarter and Full Year 2023 Results
Strong revenue growth and improved trading profit margin in
2023
12-Point Plan on track and starting to deliver financial
outcomes
27 February 2024
Smith+Nephew (LSE:SN, NYSE:SNN), the global medical technology
business, reports results for the fourth quarter and full year
ended 31 December 2023:
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31 Dec
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31 Dec
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Reported
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Underlying
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2023
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2022
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growth
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growth
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$m
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$m
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%
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%
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Fourth Quarter Results1,2
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Revenue
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1,458
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1,365
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6.8
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6.4
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Full Year Results1,2
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Revenue
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5,549
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5,215
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6.4
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7.2
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Operating
profit
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425
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450
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Operating
profit margin (%)
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7.7
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8.6
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EPS
(cents)
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30.2
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25.5
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Trading
profit
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970
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901
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Trading
profit margin (%)
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17.5
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17.3
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EPSA
(cents)
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82.8
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81.8
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Q4 Trading
Highlights1,2
● Q4
revenue of $1,458 million (2022: $1,365 million), up 6.4% on
an underlying basis. Reported growth of 6.8% was after 40bps FX
tailwind
Full Year Financial
Highlights1,2
●
Revenue of $5,549
million (2022: $5,215 million), up 7.2% on an underlying basis,
ahead of guidance. Reported growth of 6.4% was after -80bps FX
headwind
o Orthopaedics
underlying growth up 5.7%, setting foundations for further
improvement
o Sports
Medicine & ENT underlying growth up 10.0%, including headwind
from slow China market
o Advanced
Wound Management delivered 6.4% underlying revenue growth,
maintaining momentum from prior year
●
Trading profit up
7.6% on a reported basis to $970 million (2022: $901 million) with
17.5% trading profit margin (2022: 17.3%), in line with guidance.
Reported operating
profit was $425 million (2022: $450 million)
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Cash generated from
operations of $829 million (2022: $581 million) with improved
trading cash flow of $635 million (2022: $444
million)
●
EPSA 82.8¢
(2022: 81.8¢), EPS 30.2¢ (2022:
25.5¢)
●
Full year dividend of
37.5¢ per share (2022: 37.5¢ per
share)
Strategic Highlights
● 12-Point
Plan on-track with progress starting to translate into financial
outcomes
● Innovation strategy driving
higher growth and delivering a strong pipeline of new
products
● Acquisition
of CartiHeal, strengthening leadership in Sports Medicine
biological healing
Outlook1,2
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Positive operating
leverage and 12-Point Plan benefits expected to more than offset
headwinds including continuing inflation, -70bps from China Volume
Based Procurement (VBP) within Sports Medicine Joint Repair, and
transactional foreign exchange
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2024 guidance:
underlying revenue growth expected in the range of 5.0% to
6.0% (4.6%
to 5.6% reported),
and trading profit margin expected to be at least
18.0%
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Midterm targets
unchanged
Deepak Nath, Chief Executive Officer, said:
"I am
pleased with our overall performance in 2023, as our actions to
transform Smith+Nephew have begun to translate into meaningful
financial outcomes. We delivered revenue growth ahead of guidance
for the full year and made important improvements to our trading
profit margin against a challenging macro-environment.
"Our
12-Point Plan is on track. While there is more to do to enhance our
performance in US reconstruction, our Orthopaedics business is
progressing along a clear improvement path. 2023 was another year
of good growth for our Sports Medicine & ENT and Advanced Wound
Management businesses.
"Our
investment in innovation continues to deliver, with almost half of
our 2023 growth coming from products launched in the last five
years. We were pleased to add major launches in robotics, shoulder
arthroplasty and negative pressure wound therapy to the portfolio
during the year.
"We
have entered 2024 as a fundamentally stronger business and look
forward to delivering another year of robust growth and further
margin expansion."
Analyst conference call
An analyst conference call to discuss Smith+Nephew's fourth quarter
and full year results will be held 8.30am GMT / 3.30am EST on 27
February 2024, details of which can be found on the Smith+Nephew
website at https://www.smith-nephew.com/en/about-us/investors.
Enquiries
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Investors
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Andrew Swift
Katharine
Rycroft
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+44 (0) 1923 477433
+44 (0) 7811 270734
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Smith+Nephew
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Media
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Charles Reynolds
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+44 (0) 1923 477314
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Smith+Nephew
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Susan Gilchrist / Ayesha Bharmal
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+44 (0) 20 7404 5959
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Brunswick
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Notes
1.
Unless otherwise specified as 'reported' all revenue growth
throughout this document is 'underlying' after adjusting for the
effects of currency translation and including the comparative
impact of acquisitions and excluding disposals. All percentages
compare to the equivalent 2022 period.
'Underlying
revenue growth' reconciles to reported revenue growth, the most
directly comparable financial measure calculated in accordance with
IFRS, by making two adjustments, the 'constant currency exchange
effect' and the 'acquisitions and disposals effect', described
below. See Other Information on pages 34 to 38 for a
reconciliation of underlying revenue growth to reported revenue
growth.
The
'constant currency exchange effect' is a measure of the
increase/decrease in revenue resulting from currency movements on
non-US Dollar sales and is measured as the difference between: 1)
the increase/decrease in the current year revenue translated into
US Dollars at the current year average exchange rate and the prior
revenue translated at the prior year rate; and 2) the
increase/decrease being measured by translating current and prior
year revenues into US Dollars using the prior year closing
rate.
The
'acquisitions and disposals effect' is the measure of the impact on
revenue from newly acquired material business combinations and
recent material business disposals. This is calculated by comparing
the current year, constant currency actual revenue (which includes
acquisitions and excludes disposals from the relevant date of
completion) with prior year, constant currency actual revenue,
adjusted to include the results of acquisitions and exclude
disposals for the commensurate period in the prior year. These
sales are separately tracked in the Group's internal reporting
systems and are readily identifiable.
2.
Certain items included in 'trading results', such as trading
profit, trading profit margin, tax rate on trading results, trading
cash flow, trading profit to trading cash conversion ratio, EPSA,
leverage ratio and underlying growth are non-IFRS financial
measures. The non-IFRS financial measures reported in this
announcement are explained in Other Information on
pages 34
to 38 and
are reconciled to the most directly comparable financial measure
prepared in accordance with IFRS. Reported results represent IFRS
financial measures as shown in the Condensed Consolidated Financial
Statements.
Smith+Nephew Fourth Quarter Trading and Full Year 2023
Results
Group revenue in 2023 was $5,549 million (2022: $5,215 million),
an increase of 7.2% on an underlying basis. This growth was
ahead of our full year guidance published in February 2023 for
growth between 5.0% to 6.0%, and reflects the strength of the
portfolio with all three business units delivering underlying
growth above 5% for the full year. Group reported growth of 6.4%
reflected a -80bps headwind from foreign exchange primarily due to
the strength of the US Dollar.
Our fourth quarter revenue was $1,458 million (2022: $1,365
million), up 6.4% on an underlying basis. Fourth quarter reported
revenue growth was 6.8% after a 40bps foreign exchange
benefit.
Trading profit for 2023 was up 7.6% on a reported basis to $970
million (2022: $901 million). The trading profit margin was 17.5%
(2022: 17.3%), an improvement on the prior year and in line with
our full year guidance. The operating profit was $425 million
(2022: $450 million).
The strong revenue growth and improved trading profit margin in
2023 were built upon the early benefits from our actions to
transform Smith+Nephew. The 12-Point Plan is on track, with
progress beginning to translate into financial outcomes, and our
innovation strategy is delivering a strong pipeline of new products
that we expect to drive future performance.
Delivering our Strategy for Growth and 12-Point Plan
Smith+Nephew's Strategy for Growth is based on three
pillars:
●
First, Strengthen the
foundations of Smith+Nephew. A solid base in commercial and
manufacturing will enable us to serve customers sustainably and
efficiently, and deliver the best from our core
portfolio.
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Second, Accelerate our
growth profitably, through more robust
prioritisation of resources and investment, and with continuing
customer focus.
●
Third, continue
to Transform
ourselves for higher long-term growth, through investment in
innovation and acquisitions.
In July 2022 we announced our 12-Point Plan to fundamentally change
the way Smith+Nephew operates, accelerating delivery of our
Strategy for Growth and transforming to a consistently
higher-growth company. The 12-Point Plan supports the first two
pillars of the Strategy for Growth and is focused on:
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Fixing
Orthopaedics,
to regain momentum across hip and knee implants, robotics and
trauma, and win share with our differentiated
technology;
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Improving
productivity,
to support trading profit margin expansion; and
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Further
accelerating growth in
our already well-performing Advanced Wound Management and Sports
Medicine & ENT business units.
Since inception we have measured our progress across the 12-Point
Plan through a set of internal KPIs to drive
accountability.
The 12-Point Plan is on track and starting to deliver financial
outcomes. Work will continue in 2024, with further financial
progress expected to follow across the year and in
2025.
Fixing Orthopaedics
We have made solid progress on fixing much of Orthopaedics, and
laid the foundations for further improvement. Overall,
2023 full year business unit growth was 5.7% underlying (4.8%
reported), strongly ahead of last year's growth, which was 1.9%
underlying (-2.0% reported). Performance
has improved in Hip and Knee Implants outside of the US, and
globally in Other Reconstruction (which includes robotics) and
Trauma & Extremities. Recovery has been slower to come through
in US Reconstruction, especially in US Knee
Implants.
Product availability has been central to these variances in
performance. By year end, across Orthopaedics, on the percentage of
customer order lines filled (measured by line-item fill rates
(LIFR)), we
had closed more than 95% of the gap between the low point and our
target of being in line with industry standard. Within this, in US
Reconstruction there are still some areas of inconsistent product
availability, which, together with slower
than anticipated set deployments and some expected impact from
sales force change, limited our ability to win new business.
Through the 12-Point Plan we are continuing to address
the factors
that have undermined performance
in US Reconstruction.
We are making headway on inventory through better sales and
operations planning, improving forecasting and bringing the mix of
what we manufacture into line with demand. By the end of 2023,
inventory levels for all business units were starting to come down
as we expanded recent product launches, consumed raw materials and
completed and deployed new instrument sets. We turned a corner in
2023, and brought Days Sales of Inventory down by
5% for the year, after several years of increase, and expect to
continue to drive improvement in 2024 and
beyond.
A significant driver of the overall Orthopaedics improvements has
been the new demand and supply planning process which has brought a
deeper level of specificity and collaboration between our
operations and commercial teams. We are also benefiting from our
actions to improve logistics and redeploy implants and instrument
sets from lower to higher-utilisation customers.
We have invested in improving our commercial execution. In 2023 we
repositioned our offering and undertook deeper sales training for
the Orthopaedics team, and enhanced our incentive plans to better
align reward with performance, sales mix, robotic placement and
implant pull-through.
These steps are expected to help us address the performance in Hip
and Knee Implants in the US, which remains a priority. At the same
time, they will also ensure we sustain the progress we have
delivered elsewhere.
In Trauma & Extremities, where we have successfully addressed
availability of product and instrument sets for our
EVOS◊ Plating
system, we are focused on maintaining the improved growth delivered
in the second half of 2023.
Improving Productivity
We have made good progress on our actions to improve productivity,
contributing around
160bps to our 2023 trading profit margin. Actions have included
updating and standardising pricing strategies across our portfolio
and reducing days sales outstanding. We are also making procurement
savings to help mitigate cost inflation and drive productivity.
During 2023 we deployed an enhanced supplier selection process to
identify and award business to suppliers that better align to the
global business unit strategies and long-term performance metrics,
and better aligned global category strategies to unlock the
Smith+Nephew buying power and leverage, helping to drive volume to
the most preferred suppliers and reduce cost.
In line with our plan, work on manufacturing optimisation is at an
early stage, with the benefits from network simplification and cost
and asset efficiencies expected to support our mid-term margin
improvement targets. The underlying work is progressing, with KPIs
tracking accordingly. For instance, conversion cost, which is total
direct and indirect cost to convert raw materials into finished
goods as a percentage of sales, started to come down in the second
half of 2023.
A better aligned supply and demand process has enabled us to
critically assess our manufacturing capacity. From a network
perspective we
are reducing excess capacity, having exited
one small site in France and announced the closures of two more in
China and Germany. Over the last two years we have also reduced
hiring and our reliance on contingent workers.
Further accelerating growth in Advanced Wound Management and Sports
Medicine & ENT
The important third pillar of the 12-Point Plan is focused on
building on the consistent above-market performance of our Advanced
Wound Management and Sports Medicine & ENT business units.
Progress is also coming through across this
workstream.
Our negative pressure wound therapy business is benefitting from
focused additional resource behind our sales force, delivering
strong growth in 2023 across both our traditional
RENASYS◊ Negative
Pressure Wound Therapy System and our single-use
PICO◊ Negative
Pressure Wound Therapy System.
We are pleased with our progress across Ambulatory Surgical Centers
(ASCs), as we more than tripled the pace of cross-business unit
deals between our Orthopaedics and Sports Medicine businesses in
2023. Under the 12-Point Plan we have developed a coordinated
approach across these business units overseen by a dedicated
strategic sales team. We are building on the strong position
established by our Sports Medicine business, which is already the
preferred choice for a large proportion of the ASC market, and
successfully introducing our Orthopaedics portfolio. The CORI
Surgical System offers a
broad range of indications
and specialised tools to help accommodate the high growth of
outpatient/ASC hip and knee implant procedures, with around a
quarter of US placements of our CORI◊ Surgical
System in 2023 being with ASC customers.
Creating value through Innovation
Innovation through our R&D programme is central to our higher
growth ambitions. In 2023, approaching half of our full year
underlying revenue growth came from products launched in the last
five years. Encouragingly, some of our key growth platforms like
our robotics-enabled CORI◊ Surgical
System, our EVOS◊ trauma
plating platform and our REGENETEN◊ Bioinductive
Implant for biological healing are not only contributing to growth
today, but also have multi-year runways still ahead of them as we
expand applications and launch in new markets.
In 2023 we delivered a good cadence of new product launches,
completing 20 with development finished on a further two ahead of
launch in 2024.
We delivered a number of important enhancements to our
robotics-assisted CORI Surgical System. The CORI Digital Tensioner,
a proprietary device for soft tissue balancing in knee replacement,
and the only tensioner for robotics-assisted surgery, helps make
planning more objective and eliminates inconsistencies in surgery
from current manual or mechanical tools. Personalized Planning
powered by AI and the RI.INSIGHTS◊ Data
Visualization Platform gives surgeons a better understanding of how
pre-operative surgical plans and intra-operative decision-making
link to post-operative outcomes. A saw solution added versatility
to appeal to a broader range of surgeons, making CORI the only
solution to offer robotics-assisted burring and saw bone-cutting
options and an application for revision knee
surgery.
We introduced our AETOS◊ Shoulder
System, an important part of our growth plans for Trauma &
Extremities which will enable Smith+Nephew to compete effectively
in the $1.7 billion shoulder market, which, at around 9% CAGR, is
one of the fastest growing segments in
Orthopaedics.
In Advanced Wound Management, we are at the early stages of rolling
out the new RENASYS◊ EDGE Negative
Pressure Wound Therapy System. RENASYS EDGE brings an important new
option to customers looking for enhanced intuitiveness, simplicity
and durability, especially important for home-care
settings.
We also continued to invest behind our Sports Medicine portfolio,
for instance launching REGENETEN in China, India and
Japan.
Acquisition of
CARTIHEAL◊ AGILI-C◊ Cartilage
Repair Implant
Our M&A programme focuses on augmenting our R&D programmes
with acquisitions of exciting technologies to enhance the product
portfolio. During the year we announced the acquisition of
CartiHeal, the developer of the CARTIHEAL
AGILI-C Cartilage Repair Implant, a novel sports medicine
technology for cartilage regeneration in the knee. We announced the
completion of this acquisition on 10 January 2024, paying $180
million, with up to a further $150 million contingent on future
financial performance.
CARTIHEAL AGILI-C is an off-the-shelf one-step treatment for
osteochondral (bone and cartilage) lesions with a broader
indication than existing treatments. It is indicated to treat a
wide patient population, including those with lesions in knees with
mild to moderate osteoarthritis, a previously unaddressed
condition, as well as the approximately 700,000 patients that
receive cartilage repair annually in the US.
The combination of REGENETEN and CARTIHEAL
AGILI-C strengthens our leadership in Sports Medicine products
that enable biological healing. We expect to use our market
development and commercialisation expertise, including that built
through REGENETEN and our successful knee repair business, to
establish a new standard of care with this novel
technology.
Fourth Quarter 2023 Trading Update
Our fourth quarter revenue was $1,458 million (2022: $1,365
million), up 6.4% on an underlying basis (reported revenue growth
of 6.8% after 40bps foreign exchange tailwind). There were 60
trading days in the quarter, in-line with 2022.
Fourth Quarter Consolidated Revenue Analysis
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31 December
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31 December
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Reported
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Underlying
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Acquisitions
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Currency
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2023
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2022
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growth
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growth(i)
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/disposals
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impact
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Consolidated revenue by business unit by product
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$m
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$m
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%
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%
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%
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%
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Orthopaedics
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576
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549
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4.9
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4.9
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-
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-
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Knee
Implants
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242
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234
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3.6
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3.6
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-
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-
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Hip
Implants
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155
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150
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3.0
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3.6
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-
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(0.6)
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Other Reconstruction(ii)
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31
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26
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19.9
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19.0
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-
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0.9
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Trauma
& Extremities
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148
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139
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6.2
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5.8
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-
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0.4
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Sports Medicine & ENT
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462
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430
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7.3
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7.1
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-
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0.2
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Sports
Medicine Joint Repair
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256
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235
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8.9
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8.8
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-
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0.1
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Arthroscopic
Enabling Technologies
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161
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154
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4.0
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3.7
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-
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0.3
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ENT
(Ear, Nose and Throat)
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45
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41
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10.7
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10.7
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-
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-
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Advanced Wound Management
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420
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386
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9.0
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7.8
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-
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1.2
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Advanced
Wound Care
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185
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179
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3.3
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1.4
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-
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1.9
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Advanced
Wound Bioactives
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149
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133
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12.8
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12.5
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-
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0.3
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Advanced
Wound Devices
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86
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74
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16.1
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14.9
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-
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1.2
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|
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Total
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1,458
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1,365
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6.8
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6.4
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-
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0.4
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Consolidated revenue by geography
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US
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788
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742
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6.2
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6.2
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-
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-
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Other Established Markets(iii)
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420
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|
385
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9.0
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6.1
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-
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2.9
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Total Established Markets
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1,208
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1,127
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7.2
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6.2
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-
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1.0
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Emerging
Markets
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250
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|
238
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5.1
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7.6
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|
-
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(2.5)
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Total
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1,458
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1,365
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6.8
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6.4
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-
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0.4
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(i) Underlying
growth is defined in Note 1 on page 3
(ii) Other
Reconstruction includes robotics capital sales, our joint
navigation business and bone cement
(iii) Other
Established Markets are Europe, Canada, Japan, Australia and New
Zealand
Fourth Quarter Business Unit Performance
Orthopaedics
Our Orthopaedics business unit delivered revenue growth of 4.9%
underlying (4.9% reported) in the quarter.
Knee Implants grew
3.6% (3.6% reported) and Hip
Implants grew 3.6% underlying (3.0%
reported). Knee performance was led by our JOURNEY
II◊ Knee
System. Hip growth was led by our POLAR3◊ Total
Hip Solution and R3 Acetabular System. Double-digit growth in Knee
Implants in Europe and China was offset by performance in the US, a
decline of -3.8%, which reflected some
areas of inconsistent product availability, slower
than anticipated set deployments and the expected impact from sales
force change. In
Hip Implants we delivered double-digit growth in Europe offset by
1.1% growth in the US.
Other Reconstruction delivered
revenue growth of 19.0% underlying (19.9% reported) with strong
growth across robotics including a record quarter of placements of
our CORI Surgical System in the US and following the launch of CORI
in China last quarter.
Trauma & Extremities revenue
was up 5.8% underlying (6.2% reported) with double-digit growth in
the US as we
successfully drive greater adoption of the EVOS◊ Plating
System now availability has improved.
Sports Medicine & ENT
Our Sports Medicine &
ENT business unit
delivered underlying revenue growth of 7.1% (7.3% reported) in the
quarter. Excluding China, where the sector faces a headwind from
distributors reducing inventory in anticipation of the Volume Based
Procurement (VBP) programme, Sports Medicine & ENT grew 8.7% on
an underlying basis (9.1% reported).
Sports Medicine Joint Repair delivered
8.8% underlying revenue growth (8.9% reported) led by strong
double-digit growth from REGENETEN. Excluding China, Sports
Medicine Joint Repair grew 12.0% underlying
(12.5% reported).
Arthroscopic Enabling Technologies revenue
grew 3.7% underlying (4.0% reported), with good growth from our
COBLATION◊ resection
range and patient positioning portfolio.
ENT revenue
was up 10.7% underlying (10.7% reported) led by our tonsil and
adenoid business where we have seen a return to more normalised
procedure volumes after Covid.
Advanced Wound Management
Our Advanced Wound
Management business unit
delivered underlying revenue growth of 7.8% (9.0%
reported).
Advanced Wound Care revenue
grew 1.4% underlying (3.3% reported) with good growth across our
foam dressing and infection management portfolios offset by skin
care.
Advanced Wound Bioactives delivered
revenue growth of 12.5% underlying (12.8% reported), with strong
growth from SANTYL◊ as
our channel restocked following the temporary delay to shipments
reported last quarter.
Advanced Wound Devices revenue
was up 14.9% underlying (16.1% reported) driven by double-digit
growth from both our traditional RENASYS◊ Negative
Pressure Wound Therapy System and our single-use
PICO◊ Negative
Pressure Wound Therapy System.
Fourth Quarter Geographic Performance
Geographically, revenue from our Established Markets was up 6.2%
underlying (7.2% reported). Within this, the US was up 6.2%
underlying (6.2% reported) and Other Established Markets was up
6.1% underlying (9.0% reported). Emerging Markets revenue growth of
7.6% underlying (5.1% reported) included the impact of the VBP
headwind in Sports Medicine in China.
Full Year 2023 Consolidated Analysis
Smith+Nephew results for the year ended 31 December
2023:
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported
|
|
|
2023
|
|
2022
|
|
growth
|
|
|
$m
|
|
$m
|
|
%
|
Revenue
|
|
5,549
|
|
5,215
|
|
6.4
|
Operating profit
|
|
425
|
|
450
|
|
|
Acquisition
and disposal related items
|
|
60
|
|
4
|
|
|
Restructuring
and rationalisation costs
|
|
220
|
|
167
|
|
|
Amortisation
and impairment of acquisition intangibles
|
|
207
|
|
205
|
|
|
Legal
and other
|
|
58
|
|
75
|
|
|
Trading profit(i)
|
|
970
|
|
901
|
|
7.6
|
|
|
¢
|
|
¢
|
|
|
Earnings per share ('EPS')
|
|
30.2
|
|
25.5
|
|
18.2
|
Acquisition
and disposal related items
|
|
7.3
|
|
15.1
|
|
|
Restructuring
and rationalisation costs
|
|
20.7
|
|
15.8
|
|
|
Amortisation
and impairment of acquisition intangibles
|
|
18.6
|
|
18.4
|
|
|
Legal
and other
|
|
6.0
|
|
7.0
|
|
|
Adjusted Earnings per share ('EPSA')(i)
|
|
82.8
|
|
81.8
|
|
1.3
|
(i) See Other
Information on pages 34 to 38
Full Year 2023 Analysis
Our full year revenue was $5,549 million (2022: $5,215 million), up
7.2% on an underlying basis. Reported growth was 6.4% including a
foreign exchange headwind of -80bps.
The gross profit was $3,819 million (2022: $3,675 million) with
gross margin 68.8% (2022: 70.5%). Operating profit was $425 million
(2022: $450 million) after acquisition and disposal related items,
restructuring and rationalisation costs, amortisation and
impairment of acquisition intangibles and legal and other items
(see Other Information on pages 34 to 38).
Trading profit was up 7.6% on a reported basis to $970 million
(2022: $901 million), with a trading profit margin of 17.5% (2022:
17.3%). The 20bps margin expansion reflects benefits of c. 160bps
from productivity improvements and c. 110bps from revenue growth
leverage offset by headwinds of c. -130bps from input
cost inflation and c.
-120bps from transactional foreign exchange (see
Note 2 to the Financial Statements for global business unit trading
profit).
Acquisition and disposal-related items primarily relate to the
acquisition of CartiHeal and impairment of Engage Surgical's
goodwill, partially offset by credits relating to remeasurement of
contingent consideration from prior year acquisitions. During 2023,
management evaluated the commercial viability of Engage's
partial knee system products
and concluded that they should be discontinued. A
total of $109 million of Engage's assets and liabilities were
written off as a result of this action (see Note 2 to the Financial
Statements).
Restructuring costs totalled $220 million, including costs related
to the efficiency and productivity work underway across the Group
under the 12-Point Plan. Overall,
incremental benefits of around $68 million were recognised during
the year.
The net interest charge within reported results was $98 million
(2022: $66 million) which reflects a full year of interest expense
on our debut €500 million Euro bond issued in October 2022
and higher drawings on the Group's revolving credit
facility.
Reported tax for the year to 31 December 2023 was a charge of $27
million (2022: charge of $12 million) with the low charge being
attributed to tax credits on non-trading items such as
restructuring and rationalisation expenses and amortisation of
acquisition intangibles. The tax rate on trading results for the
year to 31 December 2023 was 16.2% (2022: 16.3%) (see Note 4 to the
Financial Statements and Other Information on pages 34 to 38 for
further details on taxation).
Adjusted earnings per share ('EPSA') was 82.8¢ (165.6¢
per ADS) (2022: 81.8¢ per share). Basic earnings per share
('EPS') was 30.2¢ (60.4¢ per ADS) (2022: 25.5¢ per
share), reflecting restructuring costs, acquisition and disposal
related items, amortisation and impairment of acquisition
intangibles and legal and other items incurred.
Cash generated from operations was $829 million (2022: $581
million) and trading cash flow was $635 million (2022: $444
million). The increase was primarily driven by reduced working
capital outflow as inventory began to fall by year-end (see Other
Information on pages 34 to 38 for a reconciliation between cash
generated from operations and trading cash flow). As a result of
the working capital movement, the trading profit to cash conversion
ratio improved to 65% (2022: 49%).
In 2023 the Group concluded a refinancing of our $1 billion
revolving credit facility (RCF). The RCF maturity has been extended
to 2028 with options to extend to 2030. The Group also
repaid $130
million of private placement debt. $405 million of private
placement debt will mature in 2024. The Group's net debt, excluding
lease liabilities, at 31 December 2023 was $2,577 million with
committed facilities of $3.6 billion (see Note 6 to the Financial
Statements).
Dividend
The Board is recommending a Final Dividend of 23.1¢ per share
(46.2¢ per ADS) (2022: 23.1¢ per share). Together with
the Interim Dividend of 14.4¢ per share (28.8¢ per ADS),
this will give a total distribution of 37.5¢ per share
(75.0¢ per ADS), unchanged from 2022. Subject to confirmation
at our Annual General Meeting, the Final Dividend will be paid on
22 May 2024 to shareholders on the register at the close of
business on 2 April 2024.
Outlook
The Group is today providing guidance for 2024 and reconfirming its
midterm targets.
2024 Guidance
For 2024 we are targeting another year of strong revenue growth and
a further expansion of trading profit margin.
For revenue, we expect to deliver underlying revenue growth in the
range of 5.0% to 6.0%. Within this, we expect continued strong
growth from our Sports Medicine & ENT and Advanced Wound
Management business units, and further improvement in Orthopaedics
as we continue to execute on the 12-Point Plan. On a reported basis
the guidance equates to a range of around 4.6% to
5.6% based
on exchange rates prevailing on 21 February
2024.
In terms of phasing, we expect the first quarter revenue growth
rate to reflect the tough US comparator from the good start to
2023, as well as a slower quarter from Advanced Wound Bioactives
following the strong fourth quarter and one less trading day
year-on-year. We expect the business to return to higher growth
across the remainder of the year.
We expect to deliver a trading
profit margin of at least 18.0%. Within
this, headwinds are expected to include continuing inflation,
a -70bps
impact from China VBP within Sports Medicine Joint Repair, and
around -30bps from transactional foreign exchange, plus a small
impact from the acquisition of CartiHeal. We
expect to
more than offset these headwinds through positive
operating leverage from revenue growth and productivity
improvements and cost saving initiatives from the 12-Point
Plan.
As in prior years, we expect the trading profit margin to be higher
in the second half than in the first half, although with a less
marked step up than in 2023.
The tax rate on trading results for 2024 is forecast to be in the
range of 19% to 20%, subject to any material changes to tax law or
other one-off items.
Midterm targets
Our midterm targets are unchanged. The Group is focused on
delivering underlying revenue growth of consistently 5%+ and
expanding our trading profit margin.
We continue to target at least 20% trading profit margin in 2025.
While headwinds such as persistent inflation, foreign exchange
movements and China VBP in Sports Medicine Joint Repair make that a
demanding target, we do expect to see an increasing impact from the
12-Point Plan, including the benefits of our manufacturing
optimisation programme, which are expected to flow through strongly
in 2025.
Forward calendar
The Q1 2024 Trading Report will be released on 1 May
2024.
About Smith+Nephew
Smith+Nephew is a portfolio medical technology business focused on
the repair, regeneration and replacement of soft and hard tissue.
We exist to restore people's bodies and their self-belief by using
technology to take the limits off living. We call this purpose
'Life Unlimited'. Our 18,000 employees deliver this mission every
day, making a difference to patients' lives through the excellence
of our product portfolio, and the invention and application of new
technologies across our three global business units of
Orthopaedics, Sports Medicine & ENT and Advanced Wound
Management.
Founded in Hull, UK, in 1856, we now operate in more than 100
countries, and generated annual sales of $5.5 billion in 2023.
Smith+Nephew is a constituent of the FTSE100 (LSE:SN, NYSE:SNN).
The terms 'Group' and 'Smith+Nephew' are used to refer to Smith
& Nephew plc and its consolidated subsidiaries, unless the
context requires otherwise.
For more information about Smith+Nephew, please visit www.smith-nephew.com and
follow us on X, LinkedIn, Instagram or Facebook.
Forward-looking Statements
This document may contain forward-looking statements that may or
may not prove accurate. For example, statements regarding expected
revenue growth and trading profit margins, market trends and our
product pipeline are forward-looking statements. Phrases such as
"aim", "plan", "intend", "anticipate", "well-placed", "believe",
"estimate", "expect", "target", "consider" and similar expressions
are generally intended to identify forward-looking statements.
Forward-looking statements involve known and unknown risks,
uncertainties and other important factors that could cause actual
results to differ materially from what is expressed or implied by
the statements. For Smith+Nephew, these factors include: conflicts
in Europe and the Middle East, economic and financial conditions in
the markets we serve, especially those affecting healthcare
providers, payers and customers; price levels for established and
innovative medical devices; developments in medical technology;
regulatory approvals, reimbursement decisions or other government
actions; product defects or recalls or other problems with quality
management systems or failure to comply with related regulations;
litigation relating to patent or other claims; legal and financial
compliance risks and related investigative, remedial or enforcement
actions; disruption to our supply chain or operations or those of
our suppliers; competition for qualified personnel; strategic
actions, including acquisitions and disposals, our success in
performing due diligence, valuing and integrating acquired
businesses; disruption that may result from transactions or other
changes we make in our business plans or organisation to adapt to
market developments; relationships with healthcare professionals;
reliance on information technology and cybersecurity; disruptions
due to natural disasters, weather and climate change related
events; changes in customer and other stakeholder sustainability
expectations; changes in taxation regulations; effects of foreign
exchange volatility; and numerous other matters that affect us or
our markets, including those of a political, economic, business,
competitive or reputational nature. Please refer to the documents
that Smith+Nephew has filed with the U.S. Securities and Exchange
Commission under the U.S. Securities Exchange Act of 1934, as
amended, including Smith+Nephew's most recent annual report on Form
20-F, which is available on the SEC's website at www. sec.gov, for
a discussion of certain of these factors. Any forward-looking
statement is based on information available to Smith+Nephew as of
the date of the statement. All written or oral forward-looking
statements attributable to Smith+Nephew are qualified by this
caution. Smith+Nephew does not undertake any obligation to update
or revise any forward-looking statement to reflect any change in
circumstances or in Smith+Nephew's expectations.
◊ Trademark
of Smith+Nephew. Certain marks registered in US Patent and
Trademark Office.
Full Year Consolidated Revenue Analysis
|
|
31 December
|
|
31 December
|
|
Reported
|
|
Underlying
|
|
Acquisitions
|
|
Currency
|
|
|
2023
|
|
2022
|
|
growth
|
|
Growth(i)
|
|
/disposals
|
|
impact
|
Consolidated revenue by business unit by product
|
|
$m
|
|
$m
|
|
%
|
|
%
|
|
%
|
|
%
|
Orthopaedics
|
|
2,214
|
|
2,113
|
|
4.8
|
|
5.7
|
|
-
|
|
(0.9)
|
Knee
Implants
|
|
940
|
|
899
|
|
4.7
|
|
5.5
|
|
-
|
|
(0.8)
|
Hip
Implants
|
|
599
|
|
584
|
|
2.5
|
|
3.8
|
|
-
|
|
(1.3)
|
Other Reconstruction(ii)
|
|
111
|
|
87
|
|
27.8
|
|
28.0
|
|
-
|
|
(0.2)
|
Trauma
& Extremities
|
|
564
|
|
543
|
|
3.7
|
|
4.4
|
|
-
|
|
(0.7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sports Medicine & ENT
|
|
1,729
|
|
1,590
|
|
8.8
|
|
10.0
|
|
-
|
|
(1.2)
|
Sports
Medicine Joint Repair
|
|
945
|
|
870
|
|
8.7
|
|
9.9
|
|
-
|
|
(1.2)
|
Arthroscopic
Enabling Technologies
|
|
588
|
|
567
|
|
3.7
|
|
4.7
|
|
-
|
|
(1.0)
|
ENT
(Ear, Nose and Throat)
|
|
196
|
|
153
|
|
28.1
|
|
29.8
|
|
-
|
|
(1.7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Advanced Wound Management
|
|
1,606
|
|
1,512
|
|
6.2
|
|
6.4
|
|
-
|
|
(0.2)
|
Advanced
Wound Care
|
|
725
|
|
712
|
|
1.8
|
|
2.1
|
|
-
|
|
(0.3)
|
Advanced
Wound Bioactives
|
|
553
|
|
520
|
|
6.3
|
|
6.2
|
|
-
|
|
0.1
|
Advanced
Wound Devices
|
|
328
|
|
280
|
|
17.0
|
|
17.6
|
|
-
|
|
(0.6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
5,549
|
|
5,215
|
|
6.4
|
|
7.2
|
|
-
|
|
(0.8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated revenue by geography
|
|
|
|
|
|
|
|
|
|
|
|
|
US
|
|
2,979
|
|
2,764
|
|
7.8
|
|
7.8
|
|
-
|
|
-
|
Other Established Markets(iii)
|
|
1,611
|
|
1,504
|
|
7.1
|
|
7.3
|
|
-
|
|
(0.2)
|
Total Established Markets
|
|
4,590
|
|
4,268
|
|
7.5
|
|
7.6
|
|
-
|
|
(0.1)
|
Emerging
Markets
|
|
959
|
|
947
|
|
1.3
|
|
5.1
|
|
-
|
|
(3.8)
|
Total
|
|
5,549
|
|
5,215
|
|
6.4
|
|
7.2
|
|
-
|
|
(0.8)
|
(i)
Underlying growth is defined in Note 1 on page 3
(ii) Other Reconstruction
includes robotics capital sales, our
joint navigation business and bone cement
(iii)
Other Established Markets are Europe, Canada, Japan, Australia and
New Zealand
2023 CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Group Income Statement for the year ended 31 December
2023
|
|
|
|
|
|
|
|
|
|
|
2023
|
|
2022
|
|
|
Notes
|
|
$m
|
|
$m
|
Revenue
|
|
2
|
|
5,549
|
|
5,215
|
Cost
of goods sold
|
|
|
|
(1,730)
|
|
(1,540)
|
Gross profit
|
|
|
|
3,819
|
|
3,675
|
Selling,
general and administrative expenses
|
|
|
|
(3,055)
|
|
(2,880)
|
Research
and development expenses
|
|
|
|
(339)
|
|
(345)
|
Operating profit
|
|
2
|
|
425
|
|
450
|
Interest
income
|
|
|
|
34
|
|
14
|
Interest
expense
|
|
|
|
(132)
|
|
(80)
|
Other
finance costs
|
|
|
|
(7)
|
|
(8)
|
Share
of results of associates
|
|
|
|
(30)
|
|
(141)
|
Profit before taxation
|
|
|
|
290
|
|
235
|
Taxation
|
|
3
|
|
(27)
|
|
(12)
|
Attributable profitA
|
|
|
|
263
|
|
223
|
Earnings per shareA
|
|
|
|
|
|
|
Basic
|
|
|
|
30.2¢
|
|
25.5¢
|
Diluted
|
|
|
|
30.1¢
|
|
25.5¢
|
Group Statement of Comprehensive Income for the year ended 31
December 2023
|
|
|
|
|
|
|
2023
|
|
2022
|
|
|
$m
|
|
$m
|
Attributable profitA
|
|
263
|
|
223
|
Other comprehensive income
|
|
|
|
|
Items that will not be reclassified to income
statement
|
|
|
|
|
Remeasurement
of net retirement benefit obligations
|
|
(89)
|
|
30
|
Taxation
on other comprehensive income
|
|
18
|
|
(7)
|
Total
items that will not be reclassified to income
statement
|
|
(71)
|
|
23
|
|
|
|
|
|
Items that may be reclassified subsequently to income
statement
|
|
|
|
|
Exchange
differences on translation of foreign operations
|
|
56
|
|
(102)
|
Net
losses on cash flow hedges
|
|
(2)
|
|
(13)
|
Taxation
on other comprehensive income
|
|
-
|
|
2
|
Total
items that may be reclassified subsequently to income
statement
|
|
54
|
|
(113)
|
Other comprehensive loss for the year, net of taxation
|
|
(17)
|
|
(90)
|
Total comprehensive income for the yearA
|
|
246
|
|
133
|
A
Attributable to the equity holders of the parent and wholly derived
from continuing operations.
Group Balance Sheet as at 31 December 2023
|
|
|
|
|
|
|
|
|
|
|
2023
|
|
2022
|
|
|
Notes
|
|
$m
|
|
$m
|
ASSETS
|
|
|
|
|
|
|
Non-current assets
|
|
|
|
|
|
|
Property,
plant and equipment
|
|
|
|
1,470
|
|
1,455
|
Goodwill
|
|
|
|
2,992
|
|
3,031
|
Intangible
assets
|
|
|
|
1,110
|
|
1,236
|
Investments
|
|
|
|
8
|
|
12
|
Investment
in associates
|
|
|
|
16
|
|
46
|
Other
non-current assets
|
|
|
|
18
|
|
12
|
Retirement
benefit assets
|
|
|
|
69
|
|
141
|
Deferred
tax assets
|
|
|
|
274
|
|
177
|
|
|
|
|
5,957
|
|
6,110
|
Current assets
|
|
|
|
|
|
|
Inventories
|
|
|
|
2,395
|
|
2,205
|
Trade
and other receivables
|
|
|
|
1,300
|
|
1,264
|
Current
tax receivable
|
|
|
|
33
|
|
37
|
Cash
at bank
|
|
6
|
|
302
|
|
350
|
|
|
|
|
4,030
|
|
3,856
|
TOTAL ASSETS
|
|
|
|
9,987
|
|
9,966
|
|
|
|
|
|
|
|
EQUITY AND LIABILITIES
|
|
|
|
|
|
|
Equity attributable to owners of the Company
|
|
|
|
|
|
|
Share
capital
|
|
|
|
175
|
|
175
|
Share
premium
|
|
|
|
615
|
|
615
|
Capital
redemption reserve
|
|
|
|
20
|
|
20
|
Treasury
shares
|
|
|
|
(94)
|
|
(118)
|
Other
reserves
|
|
|
|
(405)
|
|
(459)
|
Retained
earnings
|
|
|
|
4,906
|
|
5,026
|
Total equity
|
|
|
|
5,217
|
|
5,259
|
|
|
|
|
|
|
|
Non-current liabilities
|
|
|
|
|
|
|
Long-term
borrowings and lease liabilities
|
|
6
|
|
2,319
|
|
2,712
|
Retirement
benefit obligations
|
|
|
|
88
|
|
70
|
Other
payables
|
|
|
|
35
|
|
90
|
Provisions
|
|
|
|
48
|
|
84
|
Deferred
tax liabilities
|
|
|
|
9
|
|
36
|
|
|
|
|
2,499
|
|
2,992
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
Bank
overdrafts, borrowings, loans and lease liabilities
|
|
6
|
|
765
|
|
160
|
Trade
and other payables
|
|
|
|
1,055
|
|
1,098
|
Provisions
|
|
|
|
233
|
|
243
|
Current
tax payable
|
|
|
|
218
|
|
214
|
|
|
|
|
2,271
|
|
1,715
|
Total liabilities
|
|
|
|
4,770
|
|
4,707
|
TOTAL EQUITY AND LIABILITIES
|
|
|
|
9,987
|
|
9,966
|
Condensed Group Cash Flow Statement for the year ended 31 December
2023
|
|
|
|
|
|
|
2023
|
|
2022
|
|
|
$m
|
|
$m
|
Cash flows from operating activities
|
|
|
|
|
Profit
before taxation
|
|
290
|
|
235
|
Net
interest expense
|
|
98
|
|
66
|
Depreciation,
amortisation and impairment
|
|
701
|
|
628
|
Share
of results of associates
|
|
30
|
|
141
|
Share-based
payments expense (equity-settled)
|
|
39
|
|
40
|
Net
movement in post-retirement obligations
|
|
3
|
|
6
|
Movement
in working capital and provisions
|
|
(332)
|
|
(535)
|
Cash
generated from operations
|
|
829
|
|
581
|
Net
interest and finance costs paid
|
|
(96)
|
|
(66)
|
Income
taxes paid
|
|
(125)
|
|
(47)
|
Net
cash inflow from operating activities
|
|
608
|
|
468
|
|
|
|
|
|
Cash flows from investing activities
|
|
|
|
|
Acquisitions,
net of cash acquired
|
|
(21)
|
|
(113)
|
Capital
expenditure
|
|
(427)
|
|
(358)
|
Purchase
of investments
|
|
-
|
|
(2)
|
Distribution
from associate
|
|
-
|
|
1
|
Net
cash used in investing activities
|
|
(448)
|
|
(472)
|
Net
cash inflow/(outflow) before financing activities
|
|
160
|
|
(4)
|
|
|
|
|
|
Cash flows from financing activities
|
|
|
|
|
Proceeds
from issue of ordinary share capital
|
|
-
|
|
1
|
Proceeds
from own shares
|
|
-
|
|
5
|
Purchase
of own shares
|
|
-
|
|
(158)
|
Payment
of capital element of lease liabilities
|
|
(52)
|
|
(54)
|
Equity
dividends paid
|
|
(327)
|
|
(327)
|
Cash
movements in borrowings
|
|
175
|
|
(396)
|
Settlement
of currency swaps
|
|
4
|
|
3
|
Net
cash used in financing activities
|
|
(200)
|
|
(926)
|
|
|
|
|
|
Net decrease in cash and cash equivalents
|
|
(40)
|
|
(930)
|
Cash
and cash equivalents at beginning of year
|
|
344
|
|
1,285
|
Exchange
adjustments
|
|
(4)
|
|
(11)
|
Cash and cash equivalents at end of yearB
|
|
300
|
|
344
|
B Cash
and cash equivalents at the end of the period are net of bank
overdrafts of $2m (2022: $6m).
Group Statement of Changes in Equity for the year ended 31 December
2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital
|
|
|
|
|
|
|
|
|
|
|
Share
|
|
Share
|
|
redemption
|
|
Treasury
|
|
Other
|
|
Retained
|
|
Total
|
|
|
capital
|
|
premium
|
|
reserve
|
|
shares
|
|
reserves
|
|
earnings
|
|
equity
|
|
|
$m
|
|
$m
|
|
$m
|
|
$m
|
|
$m
|
|
$m
|
|
$m
|
At
1 January 2023
|
|
175
|
|
615
|
|
20
|
|
(118)
|
|
(459)
|
|
5,026
|
|
5,259
|
Attributable profitA
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
263
|
|
263
|
Other comprehensive incomeA
|
|
-
|
|
-
|
|
-
|
|
-
|
|
54
|
|
(71)
|
|
(17)
|
Equity
dividends paid
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(327)
|
|
(327)
|
Share-based
payments recognised
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
39
|
|
39
|
Cost
of shares transferred to beneficiaries
|
|
-
|
|
-
|
|
-
|
|
24
|
|
-
|
|
(24)
|
|
-
|
At 31 December 2023
|
|
175
|
|
615
|
|
20
|
|
(94)
|
|
(405)
|
|
4,906
|
|
5,217
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital
|
|
|
|
|
|
|
|
|
|
|
Share
|
|
Share
|
|
redemption
|
|
Treasury
|
|
Other
|
|
Retained
|
|
Total
|
|
|
capital
|
|
premium
|
|
reserve
|
|
shares
|
|
reserves
|
|
earnings
|
|
equity
|
|
|
$m
|
|
$m
|
|
$m
|
|
$m
|
|
$m
|
|
$m
|
|
$m
|
At
1 January 2022
|
|
177
|
|
614
|
|
18
|
|
(120)
|
|
(346)
|
|
5,225
|
|
5,568
|
Attributable profitA
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
223
|
|
223
|
Other comprehensive incomeA
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(113)
|
|
23
|
|
(90)
|
Equity
dividends paid
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(327)
|
|
(327)
|
Share-based
payments recognised
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
40
|
|
40
|
Taxation
on share-based payments
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(3)
|
|
(3)
|
Purchase of own sharesC
|
|
-
|
|
-
|
|
-
|
|
(158)
|
|
-
|
|
-
|
|
(158)
|
Cost
of shares transferred to beneficiaries
|
|
-
|
|
-
|
|
-
|
|
31
|
|
-
|
|
(26)
|
|
5
|
Cancellation of treasury sharesC
|
|
(2)
|
|
-
|
|
2
|
|
129
|
|
-
|
|
(129)
|
|
-
|
Issue
of ordinary share capital
|
|
-
|
|
1
|
|
-
|
|
-
|
|
-
|
|
-
|
|
1
|
At 31 December 2022
|
|
175
|
|
615
|
|
20
|
|
(118)
|
|
(459)
|
|
5,026
|
|
5,259
|
A
Attributable to the equity holders of the parent and wholly derived
from continuing operations.
C During
the year ended 31 December 2023, a total of nil ordinary shares was
purchased at a cost of $nil and nil ordinary shares were cancelled
(2022: 10.1m ordinary shares were purchased at a cost of $158m and
7.8m ordinary shares were cancelled).
Notes to the Condensed Consolidated Financial
Statements
1. Basis of preparation and accounting
policies
Smith
& Nephew plc (the 'Company') is a public limited company
incorporated in England and Wales. In these condensed consolidated
financial statements ('Financial Statements'), 'Group' means the
Company and all its subsidiaries. The financial information herein
has been prepared on the basis of the accounting policies as set
out in the Annual Report of the Group for the year ended 31
December 2023. The Group has prepared its accounts in accordance
with UK-adopted International Accounting Standards. The Group has
also prepared its accounts in accordance with International
Financial Reporting Standards (IFRS Accounting Standards) as issued
by the International Accounting Standards Board (IASB) effective as
at 31 December 2023. IFRS as adopted in the UK differs in certain
respects from IFRS Accounting Standards as issued by the IASB.
However, the differences have no impact for the periods presented.
Under IFRS, the Directors are required to adopt those accounting
policies most appropriate to the Group's circumstances for the
purpose of presenting fairly the Group's financial position,
financial performance and cash flows. In determining and applying
accounting policies, judgement is often required in respect of
items where the choice of specific policy, accounting estimate or
assumption to be followed could materially affect the reported
results or net asset position of the Group; it may later be
determined that a different choice would have been more
appropriate. The Group's significant accounting policies which
require the most use of management's estimation are: valuation of
inventories; liability provisioning; and impairment. There has been
no change in the methodology of applying management estimation in
these policies since the year ended 31 December 2022.
The
uncertainties as to the future impact on the financial performance
and cash flows of the Group as a result of the current challenging
economic environment have been considered as part of the Group's
adoption of the going concern basis in these financial statements,
in which context the Directors reviewed cash flow forecasts
prepared for a period of at least 12 months from the date of
approval of these financial statements. Having carefully
reviewed those forecasts, the Directors concluded that it was
appropriate to adopt the going concern basis of accounting in
preparing these financial statements for the reasons set out
below.
The
Group had access to $300m of cash and cash equivalents at 31
December 2023. The Group's net debt, excluding lease liabilities,
at 31 December 2023 was $2,577m with access to committed facilities
of $3.6bn with an average maturity of 5.2 years. At the date
of approving these financial statements the funding position
of the Group has remained unchanged and the cash position
is not materially different.
The
Group has $405m of private placement debt due for repayment in
2024. $1,030m of private placement debt is subject to financial
covenants. The principal covenant on the private placement debt is
a leverage ratio of <3.5 which is measured on a rolling 12-month
basis at half year and year end. There are no financial covenants
in any of the Group's other facilities.
The
Directors have considered various scenarios in assessing the impact
of the economic environment on future financial performance
and cash flows, with the key judgement applied being the speed
and sustainability of the return to a normal volume of elective
procedures in key markets, including the impact of a significant
global economic recession, leading to lower healthcare spending
across both public and private systems. Throughout these
scenarios, which include a severe but plausible outcome, the Group
continues to have headroom on its borrowing facilities and
financial covenants.
The
Directors have a reasonable expectation that the Company and the
Group are well placed to manage their business risks, have
sufficient funds to continue to meet their liabilities as they fall
due and to continue in operational existence for a period of at
least 12 months from the date of the approval of the financial
statements. The financial statements have therefore been prepared
on a going concern basis.
Accordingly,
the Directors continue to adopt the going concern basis (in
accordance with the guidance 'Guidance on Risk Management, Internal
Control and Related Financial and Business Reporting' issued by the
FRC) in preparing these financial statements.
The
principal risks that the Group is exposed to will be disclosed in
the Group's 2023 Annual Report. These are: strategy and commercial
execution; cybersecurity; global supply chain; legal and
compliance; mergers and acquisitions; new product innovation,
design and development including intellectual property; political
and economic; pricing and reimbursement; quality and regulatory;
talent management; and foreign exchange.
The
financial information contained in this document does not
constitute statutory financial statements as defined in sections
434 and 435 of the Companies Act 2006 for the years ended 31
December 2023 or 2022 but is derived from those accounts. Statutory
accounts for 2022 have been delivered to the registrar of companies
and those for 2023 will be delivered in due course. The auditor has
reported on those accounts; their report was (i) unqualified, (ii)
did not include a reference to any matters to which the auditor
drew attention by way of emphasis without qualifying their report
and (iii) did not contain a statement under section 498 (2) or (3)
of the Companies Act 2006.
New accounting standards effective 2023
A
number of new amendments to standards are effective from 1 January
2023 but they do not have a material effect on the Group's
financial statements except for Deferred Tax related to Assets and
Liabilities arising from a Single Transaction - Amendment to IAS
12, which the Group has adopted. The amendments narrow the scope of
the initial recognition exemption to exclude transactions that give
rise to equal and offsetting temporary differences such as
leases.
The
Group previously accounted for deferred tax on leases where the
deferred tax asset or liability was recognised on a net basis.
Following the amendments, the Group has recognised a separate
deferred tax asset in relation to its lease liabilities and a
deferred tax liability in relation to its right-of-use assets.
However, there is no impact on the balance sheet because the
balances qualify for offset under paragraph 74 of IAS 12. There was
also no impact on the opening retained earnings as at 1 January
2023 as a result of the change. The policy for recognising and
measuring income taxes is consistent with that applied in the
comparative years except for the changes outlined above as a result
of the Group's adoption of the amendments to IAS 12. The change in
accounting policy will also be reflected in the Group's condensed
consolidated financial statements for the year ended 31 December
2023.
Accounting standards issued but not yet effective
A
number of new standards and amendments to standards are effective
for annual periods beginning after 1 January 2024 and earlier
application is permitted; however, the Group has not adopted them
early in preparing these Financial Statements.
The
Group is adopting the mandatory temporary exception from the
recognition and disclosure of deferred taxes arising from the
jurisdictional implementation of the Pillar Two model rules which
will take effect for the Group from 1 January 2024.
Critical judgements and estimates
The
Group prepares its financial statements in accordance with IFRS
Accounting Standards as issued by the IASB and IFRS adopted in the
UK, the application of which often requires judgements and
estimates to be made by management when formulating the
Group's financial position and results. Under IFRS, the Directors
are required to adopt those accounting policies most appropriate to
the Group's circumstances for the purpose of presenting fairly
the Group's financial position, financial performance and cash
flows.
The
Group's accounting policies do not include any critical judgements.
The Group's accounting policies are set out in Notes 1-23
of the Notes to the Group accounts. Of those, the
policies which require the most use of management's estimation are
outlined below. The critical estimates are consistent with 31
December 2022. Management have considered the impact of the
uncertainties around the current challenging economic
environment below.
Valuation of inventories
A
feature of the Orthopaedics business unit (which accounts for
approximately 66% of the Group's total inventory and approximately
82% of the total provision for excess and obsolete inventory) is
the high level of product inventory required, some of which is
located at customer premises and is available for customers'
immediate use. Complete sets of products, including large and small
sizes, have to be made available in this way. These sizes are used
less frequently than standard sizes and towards the end of the
product life cycle are inevitably in excess of requirements.
Adjustments to carrying value are therefore required to be made to
orthopaedic inventory to anticipate this situation. These
adjustments are calculated in accordance with a formula based on
levels of inventory compared with historical usage. This formula is
applied on an individual product line basis and typically is first
applied when a product group has been on the market for two years.
This method of calculation is considered appropriate based on
experience, but it does require management estimate in respect of
customer demand, effectiveness of inventory deployment, length of
product lives and phase-out of old products.
Current
economic environment impact assessment: In assessing the increase
in provision for excess and obsolete inventory, management have
considered the impact of higher input cost inflation on increased
inventory levels. Management have not changed their accounting
policy since 31 December 2022, nor is a change in the key
assumptions underlying the methodology expected in the next 12
months. Primarily due to inventory growth, the provision has
increased from $504m at 31 December 2022 to $544m at 31 December
2023. The provision for excess and obsolete inventory is not
considered to have a range of potential outcomes that is
significantly different to the $544m at 31 December 2023
in the next 12 months. The provision has a high degree of
estimation uncertainty given the range of products and sizes, with
a potential range of reasonable outcomes that could be material
over the longer term.
Liability provisioning
The
recognition of provisions for legal disputes related to
metal-on-metal cases is subject to a significant degree of
estimation. Provision is made for loss contingencies when it is
considered probable that an adverse outcome will occur and the
amount of the loss can be reasonably estimated. In making
its estimates, management takes into account the advice of internal
and external legal counsel. Provisions are reviewed regularly
and amounts updated where necessary to reflect developments in the
disputes. The value of provisions may require future adjustment if
experience such as number, nature or value of claims or settlements
changes. Such a change may be material in 2024 or thereafter. The
ultimate liability may differ from the amount provided depending on
the outcome of court proceedings and settlement negotiations or if
investigations bring to light new facts.
Current
economic environment impact assessment: Management considered
whether there had been any changes to the number and value of
claims due to current challenging economic environment and to
date have not identified any significant changes in trends. If the
experience changes in the future, the value of provisions
may require adjustment.
Impairment
In
carrying out impairment reviews of intangible assets and goodwill,
a number of significant assumptions have to be made when preparing
cash flow projections. These include the future rate of market
growth, discount rates, the market demand for the products
acquired, the future profitability of acquired businesses or
products, levels of reimbursement and success in obtaining
regulatory approvals. If actual results should differ or changes in
expectations arise, impairment charges may be required which would
adversely impact operating results. There has been an increase in
the level of headroom in relation to goodwill impairment testing
for the Orthopaedics CGU which is sensitive to a reasonably
possible change in assumptions. In 2023, the Group impaired $84m of
goodwill and $37m of intangible assets related to Engage as a
result of the impairment review undertaken for the voluntary
product discontinuation.
For
other intangible assets and goodwill CGUs, this critical estimate
is not considered to have a significant risk of material adjustment
in 2024 or thereafter based on sensitivity analyses undertaken (as
outlined below).
Current
economic environment impact assessment: Management have assessed
the non-current assets held by the Group at 31 December 2023 to
identify any indicators of impairment as a result of current
economic environment. Where an impairment indicator has arisen,
impairment reviews have been undertaken by comparing the expected
recoverable value of the asset to the carrying value of the asset.
The recoverable amounts are based on cash flow projections using
the Group's base case scenario in its going concern models, which
was reviewed and approved by the Board.
Climate change considerations
The
impact of climate change has been considered as part of the
assessment of estimates and judgements in preparing the
Group accounts. The climate change scenario analyses
undertaken this year in line with TCFD recommendations did not
identify any material financial impact. The following
considerations were made in respect of the financial
statements:
●
The impact of climate change on the going concern assessment and
the viability of the Group over the next three years.
●
The impact of climate change on the cash flow forecasts used in the
impairment assessments of non-current assets including
goodwill.
●
The impact of climate change on the carrying value and useful
economic lives of property, plant and equipment.
2. Business segment information
The
Group's operating structure is organised around three global
business units and the chief operating decision maker monitors
performance, makes operating decisions and allocates resources on a
global business unit basis. Accordingly, the Group has concluded
that there are three reportable segments.
Business
unit presidents have responsibility for upstream marketing, driving
product portfolio and technology acquisition decisions, full
commercial responsibility and for the implementation of their
business unit strategy globally.
The Executive Committee ('ExCo') comprises the
Chief Financial Officer ('CFO'), the business unit presidents and
certain heads of function, and is chaired by the Chief Executive
Officer ('CEO'). ExCo is the body through which the CEO uses the
authority delegated to him by the Board of Directors to manage the
operations and performance of the Group. All significant operating
decisions regarding the allocation and prioritisation of the
Group's resources and assessment of the Group's performance are
made by ExCo, and whilst the members have individual responsibility
for the implementation of decisions within their respective areas,
it is at the ExCo level that these decisions are made. Accordingly,
ExCo is considered to be the Group's chief operating decision maker
as defined by IFRS 8 Operating
Segments.
In
making decisions about the prioritisation and allocation of the
Group's resources, ExCo reviews financial information for the three
business units (Orthopaedics, Sports Medicine & ENT, and
Advanced Wound Management) and determines the best allocation of
resources to the business units. Financial information for
corporate costs is presented on a Group-wide basis. The ExCo is not
provided with total assets and liabilities by segment, and
therefore these measures are not included in the disclosures below.
The results of the segments are shown below.
2a. Revenue by business segment and
geography
Revenue
is recognised as the performance obligations to deliver products or
services are satisfied and is recorded based on the amount of
consideration expected to be received in exchange for satisfying
the performance obligations. Revenue is recognised primarily when
control is transferred to the customer, which is generally when the
goods are shipped or delivered in accordance with the contract
terms, with some transfer of services taking place over time.
Substantially all performance obligations are fulfilled within one
year. There is no significant revenue associated with the provision
of services.
Payment
terms to our customers are based on commercially reasonable terms
for the respective markets while also considering a customer's
credit rating. Appropriate provisions for returns, trade discounts
and rebates are deducted from revenue. Rebates primarily comprise
chargebacks and other discounts granted to certain customers.
Chargebacks are discounts that occur when a third-party purchases
product from a wholesaler at its agreed price plus a mark-up. The
wholesaler in turn charges the Group for the difference between the
price initially paid by the wholesaler and the agreed price. The
provision for chargebacks is based on expected sell-through levels
by the Group's wholesalers to such customers, as well as estimated
wholesaler inventory levels.
Orthopaedics and Sports Medicine & ENT (Ear, Nose &
Throat)
Orthopaedics
and Sports Medicine & ENT consists of the following businesses:
Knee Implants, Hip Implants, Other Reconstruction, Trauma &
Extremities, Sports Medicine Joint Repair, Arthroscopic Enabling
Technologies and ENT. Sales of inventory located at customer
premises and available for customers' immediate use are recognised
when notification is received that the product has been implanted
or used. Substantially all other revenue is recognised when control
is transferred to the customer, which is generally when the goods
are shipped or delivered in accordance with the contract terms.
Revenue is recognised for the amount of consideration expected to
be received in exchange for transferring the products or
services.
In
general, our business in Established Markets is direct to hospitals
and ambulatory surgery centers whereas in the Emerging Markets we
generally sell through distributors.
Advanced Wound Management
Advanced
Wound Management consists of the following businesses: Advanced
Wound Care, Advanced Wound Bioactives and Advanced Wound Devices.
Substantially all revenue is recognised when control is transferred
to the customer, which is generally when the goods are shipped or
delivered in accordance with the contract terms. Revenue is
recognised for the amount of consideration expected to be received
in exchange for transferring the products or services. Appropriate
provisions for returns, trade discounts and rebates are deducted
from revenue, as explained above.
The majority of our Advanced
Wound Management business, and in particular products used in
community and homecare facilities, is through wholesalers and
distributors. When
control is transferred to a wholesaler or distributor, revenue is
recognised accordingly. The proportion of sales direct to hospitals
is higher in our Advanced Wound Devices business in Established
Markets.
Segment
revenue reconciles to statutory revenue from continuing operations
as follows:
|
|
|
|
|
|
|
|
|
|
|
|
2023
|
|
2022
|
|
|
$m
|
|
$m
|
Segment revenue
|
|
|
|
|
Orthopaedics
|
|
2,214
|
|
2,113
|
Sports
Medicine & ENT
|
|
1,729
|
|
1,590
|
Advanced
Wound Management
|
|
1,606
|
|
1,512
|
Revenue
from external customers
|
|
5,549
|
|
5,215
|
|
|
|
|
|
Disaggregation of revenue
The
following table shows the disaggregation of Group revenue by
product by business unit:
|
|
|
|
|
|
|
2023
|
|
2022
|
|
|
$m
|
|
$m
|
Knee
Implants
|
|
940
|
|
899
|
Hip
Implants
|
|
599
|
|
584
|
Other
Reconstruction
|
|
111
|
|
87
|
Trauma
& Extremities
|
|
564
|
|
543
|
Orthopaedics
|
|
2,214
|
|
2,113
|
Sports
Medicine Joint Repair
|
|
945
|
|
870
|
Arthroscopic
Enabling Technologies
|
|
588
|
|
567
|
ENT
(Ear, Nose & Throat)
|
|
196
|
|
153
|
Sports Medicine & ENT
|
|
1,729
|
|
1,590
|
Advanced
Wound Care
|
|
725
|
|
712
|
Advanced
Wound Bioactives
|
|
553
|
|
520
|
Advanced
Wound Devices
|
|
328
|
|
280
|
Advanced Wound Management
|
|
1,606
|
|
1,512
|
Total
|
|
5,549
|
|
5,215
|
The
following table shows the disaggregation of Group revenue by
geographic market and product category. The disaggregation of
revenue into the two product categories below reflects that in
general the products in the Advanced Wound Management business unit
are sold to wholesalers and intermediaries, while products in the
other business units are sold directly to hospitals, ambulatory
surgery centers and distributors. The further disaggregation of
revenue by Established Markets and Emerging Markets reflects that
in general our products are sold through distributors and
intermediaries in the Emerging Markets while in the Established
Markets, with the exception of the Advanced Wound Care and
Bioactives products, which are in general sold direct to hospitals
and ambulatory surgery centers. The disaggregation by Established
Markets and Emerging Markets also reflects their differing economic
factors including volatility in growth and outlook.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2023
|
|
2022
|
|
|
Established
Markets (D)
|
|
Emerging Markets
|
|
Total
|
|
Established
Markets (D)
|
|
Emerging Markets
|
|
Total
|
|
|
$m
|
|
$m
|
|
$m
|
|
$m
|
|
$m
|
|
$m
|
Orthopaedics,
Sports Medicine & ENT
|
|
3,184
|
|
759
|
|
3,943
|
|
2,949
|
|
754
|
|
3,703
|
Advanced
Wound Management
|
|
1,406
|
|
200
|
|
1,606
|
|
1,319
|
|
193
|
|
1,512
|
Total
|
|
4,590
|
|
959
|
|
5,549
|
|
4,268
|
|
947
|
|
5,215
|
D
Established Markets comprises US, Australia, Canada, Europe, Japan
and New Zealand.
Sales
are attributed to the country of destination. US revenue for the
year was $2,979m (2022: $2,764m), China revenue for the year was
$275m (2022: $319m) and UK revenue for the year was $201m (2022:
$186m).
No
single customer comprises more than 10% of the Group's external
sales.
2b. Trading and operating profit by
business segment
Trading
profit is a trend measure which presents the profitability of the
Group excluding the impact of specific transactions that management
considers affect the Group's short-term profitability and the
comparability of results. The Group presents this measure to assist
investors in their understanding of trends. The Group has
identified the following items, where material, as those to be
excluded from operating profit when arriving at trading profit:
acquisition and disposal-related items; significant restructuring
programmes; amortisation and impairment of acquisition intangibles;
gains and losses arising from legal disputes; and other significant
items.
Segment
trading profit is reconciled to the statutory measure
below:
|
|
|
|
|
|
|
2023
|
|
2022
|
|
|
$m
|
|
$m
|
Segment profit
|
|
|
|
|
Orthopaedics
|
|
398
|
|
383
|
Sports
Medicine & ENT
|
|
503
|
|
472
|
Advanced
Wound Management
|
|
472
|
|
436
|
Segment
trading profit
|
|
1,373
|
|
1,291
|
Corporate
costs
|
|
(403)
|
|
(390)
|
Group
trading profit
|
|
970
|
|
901
|
Acquisition and disposal related
items1
|
|
(60)
|
|
(4)
|
Restructuring
and rationalisation expenses
|
|
(220)
|
|
(167)
|
Amortisation and impairment of acquisition
intangibles1
|
|
(207)
|
|
(205)
|
Legal and other1
|
|
(58)
|
|
(75)
|
Group
operating profit
|
|
425
|
|
450
|
|
|
|
|
|
1
During 2023, management evaluated the commercial viability of
Engage products and concluded that they should be discontinued. A
total of $109m of Engage's assets and liabilities were written off
as a result of this action, which includes goodwill of $84m
(included in acquisition and disposal related items), intangible
assets of $37m (included in amortisation and impairment of
acquisition intangibles), inventory of $21m (included in legal and
other), partially offset by the remeasurement of contingent
consideration of $33m (included in acquisition and disposal related
items).
Acquisition and disposal related items
For
the year ended 31 December 2023, costs primarily relate to the
acquisition of CartiHeal and impairment of Engage goodwill,
partially offset by credits relating to remeasurement of
contingent consideration for prior year acquisitions.
For
the year ended 31 December 2022, costs primarily relate to the
acquisition of Engage and prior year acquisitions, partially offset
by credits relating to remeasurement of deferred and
contingent consideration for prior year acquisitions.
Restructuring and rationalisation costs
For
the years ended 31 December 2023 and 2022, these costs include
efficiency and productivity elements of the 12-Point Plan and the
Operations and Commercial Excellence programme.
Amortisation and impairment of acquisition intangibles
For
the years ended 31 December 2023 and 2022, these costs relate to
the amortisation and impairment of intangible assets acquired in
material business combinations.
Legal and other
For
the year ended 31 December 2023, charges primarily relate to legal
expenses for ongoing metal-on-metal hip claims partially offset by
a decrease of $8m in the provision that reflects the decrease in
the present value of the estimated costs to resolve all other known
and anticipated metal-on-metal hip claims and by the release of a
provision for an intellectual property dispute.
For
the year ended 31 December 2022, charges primarily relate to legal
expenses for ongoing metal-on-metal hip claims. These charges in
the year to 31 December 2022 were partially offset by a credit of
$7m relating to insurance recoveries for ongoing metal-on-metal hip
claims.
The
years ended 31 December 2023 and 2022 also include costs for
implementing the requirements of the EU Medical Device Regulation
which came into effect in May 2021 with a transition period to May
2024.
3. Taxation
Reported
tax for the year ended 31 December 2023 was a charge of $27m (2022:
$12m charge). The reported tax charge is low due to tax credits on
significant non-trading items such as restructuring and
rationalisation expenses and amortisation of acquisition
intangibles.
Pillar Two
The
OECD Pillar Two GloBE Rules (Pillar Two) introduce a global minimum
corporation tax rate of 15% applicable to multinational enterprise
groups with global revenue over €750m. All participating OECD
members are required to incorporate these rules into national
legislation. The Pillar Two rules will apply to the Group for its
accounting period commencing 1 January 2024. On 23 May 2023, the
International Accounting Standards Board (IASB) amended IAS 12 to
introduce a mandatory temporary exception to the accounting for
deferred taxes arising from the jurisdictional implementation of
the Pillar Two model rules. On 19 July 2023 the UK Endorsement
Board adopted the IASB amendments to IAS 12.
The
Group has performed an assessment of its potential exposure to
Pillar Two income taxes based on 2023 financial data and considers
that the rules will result in an increase in the Group tax rate.
The main jurisdictions which would give rise to Pillar Two income
tax are Switzerland, Singapore and Costa Rica; all jurisdictions in
which the Group has substantial operations. It is estimated that
the Pillar Two income tax would increase the Group tax rate by
around 1.5%. The actual Pillar Two impact in 2024 will depend on
factors such as revenues, costs and foreign currency exchange rate
impacts by jurisdiction.
The
Group is adopting the mandatory temporary exception from the
recognition and disclosure of deferred taxes arising from the
jurisdictional implementation of the Pillar Two model
rules.
The
Group does not meet the threshold for application of the Pillar One
transfer pricing rules.
4. Dividends
The
2022 final dividend of 23.1 US cents per ordinary share totalling
$201m was paid on 17 May 2023. The 2023 interim dividend of 14.4 US
cents per ordinary share totalling $126m was paid on 1 November
2023.
A
final dividend for 2023 of 23.1 US cents per ordinary share has
been proposed by the Board and will be paid, subject to shareholder
approval, on 22 May 2024 to shareholders whose names appear on the
Register of Members on 2 April 2024. The sterling equivalent per
ordinary share will be set following the record date. The
ex-dividend date is 28 March 2024 and the final day for currency
and dividend reinvestment plan ('DRIP') elections is 30 April
2024.
5. Acquisitions
Year ended 31 December 2023
No
acquisitions were completed in the year ended 31 December
2023.
During
2023, management evaluated the commercial viability of Engage
products and concluded that they should be discontinued. Refer to
note 2b for further details.
Year ended 31 December 2022
On
18 January 2022, the Group completed the acquisition of 100% of the
share capital of Engage Uni, LLC (doing business as Engage
Surgical), owner of the only cementless unicompartmental (partial)
knee system commercially available in the US.
The
maximum consideration, all payable in cash, is $135m and the
provisional fair value consideration is $131m and includes $32m of
contingent consideration. The goodwill represents the control
premium, the acquired workforce and the synergies expected from
integrating Engage Surgical into the Group's existing business. The
majority of the consideration is expected to be deductible for tax
purposes.
The
fair value of assets acquired and liabilities assumed is set out
below:
|
|
|
|
|
Engage Surgical
|
|
|
$m
|
Intangible
assets - Product-related
|
|
44
|
Property,
plant & equipment
|
|
2
|
Inventory
|
|
2
|
Trade
and other payables
|
|
(1)
|
Net
assets
|
|
47
|
Goodwill
|
|
84
|
Consideration (net of $nil cash acquired)
|
|
131
|
The
product-related intangible assets were valued using a
relief-from-royalty methodology with the key inputs being revenue,
profit and discount rate.
6. Net debt
Net
debt as at 31 December 2023 is outlined below. The repayment of
lease liabilities is included in cash flows from financing
activities in the cash flow statement.
|
|
|
|
|
|
|
2023
|
|
2022
|
|
|
$m
|
|
$m
|
Cash at bank
|
|
302
|
|
350
|
Long-term borrowings
|
|
(2,175)
|
|
(2,565)
|
Bank overdrafts, borrowings and loans due within one
year
|
|
(710)
|
|
(111)
|
Net currency swap (liabilities)/assets
|
|
(1)
|
|
-
|
Net interest rate swap assets/(liabilities)
|
|
7
|
|
(13)
|
Net debt
|
|
(2,577)
|
|
(2,339)
|
Non-current lease liabilities
|
|
(144)
|
|
(147)
|
Current lease liabilities
|
|
(55)
|
|
(49)
|
Net debt including lease liabilities
|
|
(2,776)
|
|
(2,535)
|
|
|
|
|
|
Reconciliation of net cash flow to movement in net debt including
lease liabilities
|
|
|
|
|
Net cash flow from cash net of overdrafts
|
|
(40)
|
|
(930)
|
Settlement of currency swaps
|
|
(4)
|
|
(3)
|
Net cash flow from borrowings
|
|
(175)
|
|
396
|
Change in net debt from net cash flow
|
|
(219)
|
|
(537)
|
IFRS 16 lease liabilities
|
|
(3)
|
|
1
|
Exchange adjustment
|
|
(20)
|
|
47
|
Corporate bond issuance expense
|
|
1
|
|
3
|
Change in net debt in the year
|
|
(241)
|
|
(486)
|
Opening net debt
|
|
(2,535)
|
|
(2,049)
|
Closing net debt
|
|
(2,776)
|
|
(2,535)
|
The Group has available committed facilities of $3.6bn
(2022: $3.7bn). In Q4 2023, the Group refinanced its $1bn
Revolving Credit Facility, which extends the facility maturity to
2028, with options to extend the maturity to 2030.
During 2022, the Group issued its debut EUR Corporate Bond, in the
form of a €500m (before expenses and underwriting discounts)
of notes bearing an interest rate of 4.565% repayable in
2029.
The Group has $405m of private placement debt due for repayment in
2024.
7a. Financial instruments
The
following table shows the carrying amounts and fair values of
financial assets and financial liabilities, including their levels
in the fair value hierarchy.
|
|
|
|
|
|
|
|
|
|
|
|
|
Carrying amount
|
|
Fair value
|
|
|
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
Fair value
|
|
|
$m
|
|
$m
|
|
$m
|
|
$m
|
|
level
|
Financial assets at fair value
|
|
|
|
|
|
|
|
|
|
|
Forward foreign exchange contacts
|
|
25
|
|
46
|
|
25
|
|
46
|
|
Level 2
|
Investments
|
|
8
|
|
12
|
|
8
|
|
12
|
|
Level 3
|
Contingent consideration receivable
|
|
18
|
|
18
|
|
18
|
|
18
|
|
Level 3
|
Currency swaps
|
|
2
|
|
1
|
|
2
|
|
1
|
|
Level 2
|
Interest rate swaps
|
|
7
|
|
-
|
|
7
|
|
-
|
|
Level 2
|
|
|
60
|
|
77
|
|
60
|
|
77
|
|
|
Financial assets not measured at fair value
|
|
|
|
|
|
|
|
|
|
|
Trade and other receivables
|
|
1,163
|
|
1,123
|
|
|
|
|
|
|
Cash at bank
|
|
302
|
|
350
|
|
|
|
|
|
|
|
|
1,465
|
|
1,473
|
|
|
|
|
|
|
Total financial assets
|
|
1,525
|
|
1,550
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial liabilities at fair value
|
|
|
|
|
|
|
|
|
|
|
Acquisition consideration
|
|
(32)
|
|
(78)
|
|
(32)
|
|
(78)
|
|
Level 3
|
Forward foreign exchange contracts
|
|
(25)
|
|
(42)
|
|
(25)
|
|
(42)
|
|
Level 2
|
Currency swaps
|
|
(3)
|
|
(1)
|
|
(3)
|
|
(1)
|
|
Level 2
|
Interest rate swaps
|
|
-
|
|
(13)
|
|
-
|
|
(13)
|
|
Level 2
|
|
|
(60)
|
|
(134)
|
|
(60)
|
|
(134)
|
|
|
Financial liabilities not measured at fair value
|
|
|
|
|
|
|
|
|
|
|
Acquisition consideration
|
|
(4)
|
|
(14)
|
|
|
|
|
|
|
Bank overdrafts
|
|
(2)
|
|
(6)
|
|
|
|
|
|
|
Bank loans
|
|
(303)
|
|
-
|
|
|
|
|
|
|
Corporate bond not in a hedge relationship
|
|
(995)
|
|
(994)
|
|
|
|
|
|
|
Corporate bond in a hedge relationship
|
|
(555)
|
|
(516)
|
|
|
|
|
|
|
Private placement debt not in a hedge relationship
|
|
(1,030)
|
|
(1,160)
|
|
|
|
|
|
|
Trade and other payables
|
|
(1,026)
|
|
(1,040)
|
|
|
|
|
|
|
|
|
(3,915)
|
|
(3,730)
|
|
|
|
|
|
|
Total financial liabilities
|
|
(3,975)
|
|
(3,864)
|
|
|
|
|
|
|
At
31 December 2023, the book value and market value of the USD
corporate bond were $995m and $826m respectively (2022: $994m
and $783m), the book value and market value of the EUR Corporate
bond were $555m and $586m respectively (2022: $516m and $531m). The
book value and fair value of the private placement debt were
$1,030m and $959m respectively (2022: $1,160m and
$987m).
There
were no transfers between Levels 1, 2 and 3 during the year ended
31 December 2023 and the year ended 31 December 2022. For cash and
cash equivalents, short-term loans and receivables, overdrafts and
other short-term liabilities which have a maturity of less than
three months, the book values approximate the fair values because
of their short-term nature. Long-term borrowings are measured in
the balance sheet at amortised cost. The corporate bonds issued in
October 2020 and October 2022 are publicly listed and a market
price is available. The Group's other long-term borrowings are not
quoted publicly, their fair values are estimated by discounting
future contractual cash flows to net present values at the current
market interest rates available to the Group for similar financial
instruments as at the year end. The fair value of the private
placement notes is determined using a discounted cash flow model
based on prevailing market rates. The fair value of currency swaps
is determined by reference to quoted market spot rates. As a
result, foreign forward exchange contracts and currency swaps are
classified as Level 2 within the fair value hierarchy.
The
fair value of contingent acquisition consideration is estimated
using a discounted cash flow model. The valuation model considers
the present value of expected payment, discounted using a
risk-adjusted discount rate. The expected payment is determined by
considering the possible scenarios, which relate to the achievement
of established milestones and targets, the amount to be paid under
each scenario and the probability of each scenario. As a result,
contingent acquisition consideration is classified as Level 3
within the fair value hierarchy.
The
fair value of investments is based upon third party pricing models
for share issues. As a result, investments are considered Level 3
in the fair value hierarchy. The movements in the year ended 31
December 2023 and the year ended 31 December 2022 for financial
instruments measured using Level 3 valuation methods are presented
below:
|
|
|
|
2023
|
2022
|
|
$m
|
$m
|
Investments
|
|
|
At 1 January
|
12
|
10
|
Additions
|
-
|
2
|
Fair value remeasurement
|
(4)
|
-
|
|
8
|
12
|
|
|
|
Contingent consideration receivable
|
|
|
At 1 January
|
18
|
20
|
Receipts
|
-
|
(2)
|
|
18
|
18
|
|
|
|
Acquisition consideration liability
|
|
|
At 1 January
|
(78)
|
(84)
|
Arising on acquisitions
|
-
|
(32)
|
Payments
|
13
|
20
|
Remeasurements
|
33
|
19
|
Discount unwind
|
-
|
(1)
|
|
(32)
|
(78)
|
7b. Retirement benefit obligations
The
discount rates applied to the future pension liabilities of the UK
and US pension plans are based on the yield on bonds that have a
credit rating of AA denominated in the currency in which the
benefits are expected to be paid with a maturity profile
approximately the same as the obligations. The actuarial loss on
obligation of $25m primarily relates to the decrease in discount
rates since 31 December 2022 by 30bps to 4.5% and 5.0% for the UK
Plan and US Plan respectively. There is also an actuarial loss from
the return on plan assets of $64m mainly due to the impact of UK
Plan buy-in.
In
June 2023, the Trustee with the support of the Company concluded a
full buy-in of the Main Fund with Rothesay Life. However, no
decision on a future buy-out had been reached by the Company yet.
Whilst the contract between the Life Insurer (Rothesay) and the
Trustee allows for a buy-out, a number of steps would need to be
concluded before this could be achieved. Not least, the conclusion
of the due diligence process with the Life Insurer is expected to
continue into the second half of 2024. Thereafter, the Trustee and
the Company could not act unilaterally to move to a buy-out and the
UK Fund governance structure lays out several steps the Company
would be required to conclude for a buy-out decision. The
transaction resulted in a $58m loss being recognised in OCI with
$nil cash impact.
In
October 2022, US Pension plan members were notified that Smith
& Nephew Inc. (SNI) would begin the termination process for the
plan. In December 2023, Fidelity & Guaranty Life was selected
to take over responsibility for the remaining US pension plan
obligation and administration upon termination. A premium amount of
$245m was paid in cash by the US Plan on 4 January 2024. Certain
active employees and terminated vested participants elected to
receive a lump sum in exchange for their plan benefit of $80m. This
resulted in a $4m settlement costs which were recognised in 2023,
representing the difference between the Defined Benefit Obligations
and the lump sums paid to members in December 2023. Following this
transaction, members move to have a direct relationship with
Fidelity & Guaranty Life with SNI no longer retaining an
obligation for the settlement of accrued member benefits following
short administrative transition and due diligence
process.
8. Exchange rates
The
exchange rates used for the translation of currencies into US
Dollars that have the most significant impact on the Group results
were:
|
|
|
|
|
|
|
2023
|
|
2022
|
Average rates
|
|
|
|
|
Sterling
|
|
1.24
|
|
1.23
|
Euro
|
|
1.08
|
|
1.05
|
Swiss
Franc
|
|
1.11
|
|
1.05
|
Period end rates
|
|
|
|
|
Sterling
|
|
1.27
|
|
1.21
|
Euro
|
|
1.10
|
|
1.07
|
Swiss
Franc
|
|
1.19
|
|
1.08
|
9. Subsequent events
On 9 January 2024, the Group completed the
acquisition of 100% of the share capital of CartiHeal, the
developer of CARTIHEAL◊ AGILI-C◊, a novel sports medicine technology for
cartilage regeneration in the knee. The acquisition of this
disruptive technology supports our strategy to invest behind our
successful Sports Medicine & ENT business unit. Smith+Nephew
paid $180m in cash on completion, with up to a further $150m
contingent on future financial performance.
This
acquisition will be treated as a business combination under IFRS 3.
The provisional value of acquired net tangible assets is not
material and is not expected to have material fair value
adjustments. The remaining consideration will be allocated between
identifiable intangible assets (product-related) and goodwill, with
the majority expected to be goodwill representing the control
premium, the acquired workforce and the synergies expected from
integrating CartiHeal into the Group's existing
business.
In
October 2022, US Pension plan members were notified that Smith
& Nephew Inc. would begin the termination process for the plan.
In December 2023, Fidelity & Guaranty Life was selected to take
over responsibility for the remaining US pension plan obligation
and administration upon termination. A premium amount of $245m was
paid in cash by the US Plan on 4 January 2024 to settle the annuity
purchase agreement with Fidelity & Guaranty Life. Certain
active employees and terminated vested participants elected to
receive a lump sum in exchange for their plan benefit of $80m. This
resulted in $4m of settlement costs which were recognised in 2023,
representing the difference between defined benefit obligation
(DBO) and the lump sums paid to members in December 2023. A $2m
credit will be recorded in 2024 linked to the annuity purchase
contract concluded with Fidelity & Guaranty Life on 4 January
2024.
Other
information
Definitions of and reconciliation to measures included within
adjusted "trading" results
These Financial Statements include financial measures that are not
prepared in accordance with IFRS. These measures, which include
trading profit, trading profit margin, trading profit before tax,
adjusted attributable profit, tax rate on trading results (trading
tax expressed as a percentage of trading profit before tax),
Adjusted Earnings Per Ordinary Share (EPSA), trading cash flow,
trading profit to trading cash conversion ratio, leverage ratio,
and underlying revenue growth, exclude the effect of certain cash
and non-cash items
that Group management believes are not related to the underlying
performance of the Group. These non-IFRS financial measures are
also used by management to make operating decisions because they
facilitate internal comparisons of performance to historical
results.
Non-IFRS financial measures are presented in these Financial
Statements as the Group's management believe that they provide
investors with a means of evaluating performance of the business
segments and the consolidated Group on a consistent basis, similar
to the way in which the Group's management evaluates performance,
that is not otherwise apparent on an IFRS basis, given that certain
non-recurring, infrequent, non-cash and other items that management
does not otherwise believe are indicative of the underlying
performance of the consolidated Group may not be excluded when
preparing financial measures under IFRS. These non-IFRS measures
should not be considered in isolation from, as substitutes for, or
superior to financial measures prepared in accordance with
IFRS.
Underlying revenue growth
'Underlying revenue growth' is used to compare the revenue in a
given period to the comparative period on a like-for-like basis.
Underlying revenue growth reconciles to reported revenue growth,
the most directly comparable financial measure calculated in
accordance with IFRS, by making two adjustments, the 'constant
currency exchange effect' and the 'acquisitions and disposals
effect', described below.
The 'constant currency exchange effect' is a measure of the
increase/decrease in revenue resulting from currency movements on
non-US Dollar sales and is measured as the difference between: 1)
the increase/decrease in the current year revenue translated into
US Dollars at the current year average exchange rate and the prior
year revenue translated at the prior year rate; and 2) the
increase/decrease being measured by translating current and prior
year revenues into US Dollars using the prior year closing
rate.
The 'acquisitions and disposals effect' is the measure of the
impact on revenue from newly acquired material business
combinations and recent material business disposals. This is
calculated by comparing the current year, constant currency actual
revenue (which includes acquisitions and excludes disposals from
the relevant date of completion) with prior year, constant currency
actual revenue, adjusted to include the results of acquisitions and
exclude disposals for the commensurate period in the prior year.
These sales are separately tracked in the Group's internal
reporting systems and are readily identifiable.
Reported revenue growth, the most directly comparable financial
measure calculated in accordance with IFRS, reconciles to
underlying revenue growth as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciling Items
|
|
|
|
|
|
|
Reported
|
|
Underlying
|
|
Acquisitions
|
|
Currency
|
|
|
2023
|
|
2022
|
|
growth
|
|
growth
|
|
& disposals
|
|
impact
|
|
|
$m
|
|
$m
|
|
%
|
|
%
|
|
%
|
|
%
|
Segment revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
Orthopaedics
|
|
2,214
|
|
2,113
|
|
4.8
|
|
5.7
|
|
-
|
|
(0.9)
|
Sports
Medicine & ENT
|
|
1,729
|
|
1,590
|
|
8.8
|
|
10.0
|
|
-
|
|
(1.2)
|
Advanced
Wound Management
|
|
1,606
|
|
1,512
|
|
6.2
|
|
6.4
|
|
-
|
|
(0.2)
|
Revenue
from external customers
|
|
5,549
|
|
5,215
|
|
6.4
|
|
7.2
|
|
-
|
|
(0.8)
|
Trading profit, trading profit margin, trading cash flow and
trading profit to trading cash conversion ratio
Trading profit, trading profit margin (trading profit expressed as
a percentage of revenue), trading cash flow and trading profit to
trading cash conversion ratio (trading cash flow expressed as a
percentage of trading profit) are trend measures, which present the
profitability of the Group. The adjustments made exclude the impact
of specific transactions that management considers affect the
Group's short-term profitability and cash flows, and the
comparability of results. The Group has identified the following
items, where material, as those to be excluded from operating
profit and cash generated from operations, the most directly
comparable IFRS measures, when arriving at trading profit and
trading cash flow, respectively: acquisition and disposal related
items arising in connection with business combinations, including
amortisation of acquisition intangible assets, impairments and
integration costs; restructuring events; and gains and losses
resulting from legal disputes and uninsured losses. In addition to
these items, gains and losses that materially impact the Group's
profitability or cash flows on a short-term or one-off basis are
excluded from operating profit and cash generated from operations
when arriving at trading profit and trading cash flow. The cash
contributions to fund defined benefit pension schemes that are
closed to future accrual are excluded from cash generated from
operations when arriving at trading cash flow. Payment of lease
liabilities is included within trading cash flow.
Adjusted earnings per ordinary share ('EPSA')
EPSA is a trend measure which presents the profitability of the
Group excluding the post-tax impact of specific transactions that
management considers affect the Group's short-term profitability
and comparability of results. The Group presents this measure to
assist investors in their understanding of trends. Adjusted
attributable profit is the numerator used for this measure and is
determined by adjusting attributable profit for the items that are
excluded from operating profit when arriving at trading profit and
items that are recognised below operating profit that affect the
Group's short-term profitability. The most directly comparable
financial measure calculated in accordance with IFRS is basic
earnings per ordinary share ('EPS').
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
|
|
|
|
|
|
|
Profit
|
|
|
|
|
|
generated
|
|
|
|
|
|
|
Operating
|
|
before
|
|
|
|
Attributable
|
|
from
|
|
Earnings
|
|
|
Revenue
|
|
profit1
|
|
tax2
|
|
Taxation3
|
|
profit4
|
|
operations5
|
|
per share6
|
|
|
$m
|
|
$m
|
|
$m
|
|
$m
|
|
$m
|
|
$m
|
|
¢
|
2023 Reported
|
|
5,549
|
|
425
|
|
290
|
|
(27)
|
|
263
|
|
829
|
|
30.2
|
Acquisition and disposal related
items8
|
|
-
|
|
60
|
|
78
|
|
(14)
|
|
64
|
|
16
|
|
7.3
|
Restructuring
and rationalisation costs
|
|
-
|
|
220
|
|
223
|
|
(42)
|
|
181
|
|
124
|
|
20.7
|
Amortisation and impairment of acquisition
intangibles8
|
|
-
|
|
207
|
|
207
|
|
(45)
|
|
162
|
|
-
|
|
18.6
|
Legal and other7,8
|
|
-
|
|
58
|
|
64
|
|
(12)
|
|
52
|
|
145
|
|
6.0
|
Lease
liability payments
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(52)
|
|
-
|
Capital
expenditure
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(427)
|
|
-
|
2023 Adjusted
|
|
5,549
|
|
970
|
|
862
|
|
(140)
|
|
722
|
|
635
|
|
82.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
|
|
|
|
|
|
|
Profit
|
|
|
|
|
|
generated
|
|
|
|
|
|
|
Operating
|
|
before
|
|
|
|
Attributable
|
|
from
|
|
Earnings
|
|
|
Revenue
|
|
profit1
|
|
tax2
|
|
Taxation3
|
|
profit4
|
|
operations5
|
|
per share6
|
|
|
$m
|
|
$m
|
|
$m
|
|
$m
|
|
$m
|
|
$m
|
|
¢
|
2022 Reported
|
|
5,215
|
|
450
|
|
235
|
|
(12)
|
|
223
|
|
581
|
|
25.5
|
Acquisition
and disposal related items
|
|
|
|
4
|
|
162
|
|
(31)
|
|
131
|
|
22
|
|
15.1
|
Restructuring
and rationalisation costs
|
|
-
|
|
167
|
|
168
|
|
(30)
|
|
138
|
|
120
|
|
15.8
|
Amortisation
and impairment of acquisition intangibles
|
|
-
|
|
205
|
|
205
|
|
(45)
|
|
160
|
|
-
|
|
18.4
|
Legal and other7
|
|
-
|
|
75
|
|
82
|
|
(21)
|
|
61
|
|
133
|
|
7.0
|
Lease
liability payments
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(54)
|
|
-
|
Capital
expenditure
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(358)
|
|
-
|
2022 Adjusted
|
|
5,215
|
|
901
|
|
852
|
|
(139)
|
|
713
|
|
444
|
|
81.8
|
1
Represents a
reconciliation of operating profit to trading
profit.
2
Represents a
reconciliation of reported profit before tax to trading profit
before tax.
3
Represents a
reconciliation of reported tax to trading tax.
4
Represents a
reconciliation of reported attributable profit to adjusted
attributable profit.
5
Represents a
reconciliation of cash generated from operations to trading cash
flow.
6
Represents a
reconciliation of basic earnings per ordinary share to adjusted
earnings per ordinary share (EPSA).
7
The ongoing funding
of defined benefit pension schemes that are closed to future
accrual is not included in management's definition of trading cash
flow as there is no defined benefit service cost for these
schemes.
8
During 2023,
management evaluated the commercial viability of Engage products
and concluded that they should be discontinued. A total of $109m of
Engage's assets and liabilities were written off as a result of
this action, which includes goodwill of $84m (included in
acquisition and disposal related items), intangible assets of $37m
(included in amortisation and impairment of acquisition
intangibles), inventory of $21m (included in legal and other),
partially offset by the remeasurement of contingent consideration
of $33m (included in acquisition and disposal related
items).
Acquisition and disposal related items
For the year ended 31 December 2023, costs primary related to the
acquisition of CartiHeal and impairment of Engage goodwill,
partially offset by credits relating to remeasurement of contingent
consideration for prior year acquisitions. Adjusted profit before
tax additionally excludes losses of $18m related to the Group's
shareholding in Bioventus.
For the year to 31 December 2022, costs primarily relate to the
acquisition of Engage and prior year acquisitions, partially offset
by credits relating to remeasurement of deferred and
contingent consideration for prior year acquisitions. Adjusted
profit before tax additionally excludes losses of $158m related to
the Group's shareholding in Bioventus. This primarily relates to an
impairment charge of $109m and the Group's share of impairment
recognised by Bioventus in its financial
statements.
Restructuring and rationalisation costs
For the year ended 31 December 2023, these
costs primarily relate to the efficiency and productivity elements
of the 12-Point Plan and the Operations and Commercial Excellence
programme that was announced in February 2020. Adjusted profit
before tax additionally excludes $3m restructuring costs related to
the Group's shareholding in Bioventus.
For the year ended 31 December 2022, these costs include efficiency
and productivity elements of the 12-Point Plan and Operations and
Commercial Excellence programme announced in February 2020. For the
year ended 31 December 2022 adjusted profit before tax additionally
excludes $1m of restructuring costs related to the Group's share of
results of associates.
Amortisation and impairment of acquisition intangibles
For the years ended 31 December 2023 and 2022, these costs relate
to the amortisation and impairment of intangible assets acquired in
material business combinations.
Legal and other
For the year ended 31 December 2023, charges primarily relate to
legal expenses for on-going metal-on-metal hip claims partially
offset by a $8m decrease in the provision that reflects the present
value of the estimated cost to resolve all other known and
anticipate metal-on-metal hip claims and by the release of a
provision for an intellectual property dispute.
For the year ended 31 December 2022, charges primarily relate to
legal expenses for ongoing metal-on-metal hip claims and an
increase of $19m in the provision that reflects the present value
of the estimated costs to resolve all other known and anticipated
metal-on-metal hip claims. These charges in the year to 31 December
2022 were partially offset by a credit of $7m relating to insurance
recoveries for ongoing metal-on-metal hip claims.
For the years ended 31 December 2023 and 2022, charges also include
the costs for implementing the requirements of the EU Medical
Device Regulation that was effective from May 2021 with a
transition period to May 2024.
Leverage ratio
The leverage ratio is net debt including lease liabilities to
adjusted EBITDA. Net debt is reconciled in Note 6 to the Financial
Statements. Adjusted EBITDA is defined as trading profit before
depreciation and impairment of property, plant and equipment and
amortisation and impairment of other intangible assets, goodwill
and trade investments. The
calculation of the leverage ratio is set out
below:
|
|
|
|
|
|
|
|
2023
|
|
2022
|
|
|
|
$m
|
|
$m
|
|
Net debt including lease liabilities
|
|
2,776
|
|
2,535
|
|
|
|
|
|
|
|
Trading profit
|
|
970
|
|
901
|
|
Depreciation of property, plant and equipment
|
|
306
|
|
319
|
|
Amortisation of other intangible assets, impairment of goodwill and
trade investments
|
|
139
|
|
56
|
|
Impairment of property, plant and equipment
|
|
31
|
|
30
|
|
Impairment of other intangible assets
|
|
-
|
|
7
|
|
Adjustment for items already excluded from trading
profit
|
|
(119)
|
|
(31)
|
|
Adjusted EBITDA
|
|
1,327
|
|
1,282
|
|
Leverage ratio (x)
|
|
2.1
|
|
2.0
|
|
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
|
|
|
|
|
Smith & Nephew plc
|
|
|
(Registrant)
|
|
|
|
|
|
|
Date:
February 27, 2024
|
By:
|
/s/
Helen Barraclough
|
|
|
Helen
Barraclough
|
|
|
Company
Secretary
|