Smith+Nephew posts strong 2025 growth and cash surge
Smith+Nephew delivered a strong 2025, with revenue rising to $6,164 million from $5,810 million, an underlying growth of 5.3%.
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Form Type
6-K
Smith+Nephew delivered a strong 2025, with revenue rising to $6,164 million from $5,810 million, an underlying growth of 5.3%. Trading profit grew 15.5% to $1,211 million, lifting the trading margin to 19.7%, while operating profit increased 20.7% to $794 million.
Earnings improved sharply, with EPS up 52.8% to 72.1¢ and EPSA up 21.0% to 102.0¢. Free cash flow jumped 52.5% to $840 million, supporting a $500 million share buyback and a 4.3% dividend increase to 39.1¢ per share.
The company completed its 12-Point Plan, expanded adjusted ROIC to 8.3%, and launched its new RISE strategy with 2028 targets including 6–7% organic revenue CAGR and free cash flow above $1 billion. For 2026, it targets around 6% underlying revenue growth, trading profit of about $1.3 billion, free cash flow around $800 million, and adjusted ROIC above 10%, alongside integrating the $225 million Integrity Orthopaedics acquisition.
Positive
- Strong profit and cash growth: 2025 trading profit rose 15.5% to $1,211m, EPS increased 52.8% to 72.1¢, and free cash flow jumped 52.5% to $840m, comfortably above initial guidance.
- Margin and return expansion: Trading margin improved 160bps to 19.7% and adjusted ROIC increased 90bps to 8.3%, showing better operational efficiency and capital discipline.
- Shareholder returns and balance sheet: The company completed a $500m share buyback, raised the dividend 4.3% to 39.1¢ per share, and kept adjusted net debt/EBITDA leverage at 1.7x.
- Clear growth roadmap: New RISE strategy and 2028 targets outline 6–7% organic revenue CAGR, 9–10% trading profit CAGR, >$1bn free cash flow, and 12–13% adjusted ROIC.
Negative
- None.
Insights
Smith+Nephew posts broad-based growth, margin expansion and strong cash, with ambitious 2026–2028 targets.
Smith+Nephew delivered mid-single digit underlying revenue growth and double-digit profit expansion in 2025. Revenue reached $6,164 million with 5.3% underlying growth, while trading profit rose 15.5% to $1,211 million, lifting trading margin to 19.7% as 12-Point Plan efficiencies took hold.
Cash generation was a standout: free cash flow increased 52.5% to $840 million, supporting a $500 million buyback and a 4.3% dividend increase to 39.1¢ per share. Adjusted ROIC advanced to 8.3%, despite a portfolio rationalisation headwind, indicating improving capital efficiency across Orthopaedics, Sports Medicine & ENT and Advanced Wound Management.
Looking ahead, management’s RISE strategy targets 6–7% organic revenue CAGR, 9–10% trading profit CAGR, free cash flow above $1 billion, and adjusted ROIC of 12–13% by 2028. For 2026, guidance calls for around 6% underlying growth and trading profit near $1.3 billion, while absorbing tariffs, reimbursement changes and China VBP, and integrating the Integrity Orthopaedics acquisition.
FAQ
AI-generated questions and answers. How Rhea-AI works. Not financial advice.
How did Smith+Nephew (SNN) perform financially in full-year 2025?
Smith+Nephew delivered solid 2025 results, with revenue rising to $6,164 million and underlying growth of 5.3%. Trading profit increased 15.5% to $1,211 million, operating profit grew 20.7% to $794 million, and free cash flow climbed 52.5% to $840 million.
What happened to Smith+Nephew’s earnings per share and margins in 2025?
Earnings improved strongly, with basic EPS up 52.8% to 72.1¢ and adjusted EPSA up 21.0% to 102.0¢. Trading profit margin expanded from 18.1% to 19.7%, while trading gross margin increased 60bps to 70.9%, reflecting operating leverage and productivity gains.
How strong was Smith+Nephew’s cash generation and balance sheet in 2025?
Cash generation was very strong. Cash from operations rose 24.4% to $1,549 million and free cash flow reached $840 million. The company completed a $500 million share buyback and ended 2025 with adjusted net debt/EBITDA leverage of 1.7x and access to $4.1 billion in committed facilities.
What are Smith+Nephew’s 2026 outlook and key financial targets?
For 2026, Smith+Nephew targets around 6% underlying revenue growth and organic trading profit growth of about 8%. Including Integrity Orthopaedics, trading profit is expected to be around $1.3 billion, with free cash flow of about $800 million and adjusted ROIC above 10% excluding the acquisition impact.
What strategic plans and long-term targets has Smith+Nephew announced?
The company launched its RISE strategy, aiming to reach more patients, innovate, scale via strategic investment and execute efficiently. By 2028, it targets 6–7% organic revenue CAGR, 9–10% trading profit CAGR, free cash flow above $1 billion, and adjusted ROIC of 12–13%.
How did Smith+Nephew’s main business units perform in 2025?
All three business units grew above 5% underlying. Orthopaedics grew 5.1%, Sports Medicine & ENT 5.2%, and Advanced Wound Management 5.6%. Notably, Advanced Wound Devices delivered 9.8% underlying growth, while Other Reconstruction revenue, including CORI robotics, grew 33.8%.
What is the Integrity Orthopaedics acquisition and why is it important to SNN?
In January 2026, Smith+Nephew acquired Integrity Orthopaedics for an initial $225 million, plus up to $225 million in contingent payments. Integrity’s TENDON SEAM rotator cuff system complements REGENETEN, strengthens the Sports Medicine portfolio, and is expected to become accretive to trading profit by 2028.
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 6-K
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 under the
Securities Exchange Act of 1934
March
02, 2026
Commission
File Number 001-14978
SMITH & NEPHEW plc
(Registrant’s
name)
Building 5, Croxley Park, Hatters Lane
Watford, England, WD18 8YE
(Address
of principal executive office)
Indicate
by check mark whether the registrant files or will file annual
reports under cover of Form 20-F or Form 40-F.
Form
20-F ✔
Form 40-F
__
Smith+Nephew Fourth Quarter and Full Year 2025 Results
Strong finish to 12-Point Plan delivering step up in performance;
poised for acceleration in growth and returns
2 March 2026
Smith+Nephew (LSE:SN, NYSE:SNN), the global medical technology
business, reports results for the fourth quarter and full year
ended 31 December 2025:
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31 December
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31 December
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Reported
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Underlying
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2025
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2024
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growth
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growth
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$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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1,702
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1,571
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8.3
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6.2
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Full Year Results1,2
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Revenue
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6,164
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5,810
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6.1
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5.3
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Operating
profit
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794
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657
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20.7
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Operating
profit margin (%)
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12.9
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11.3
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EPS
(cents)
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72.1
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47.2
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52.8
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Cash
generated from operations
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1,549
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1,245
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24.4
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Trading
profit
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1,211
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1,049
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15.5
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Trading
profit margin (%)
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19.7
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18.1
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EPSA
(cents)
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102.0
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84.3
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21.0
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Free
cash flow
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840
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551
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52.5
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Deepak Nath, Chief Executive Officer, said:
"I am pleased that a strong fourth quarter helped us meet or exceed
our 2025 targets for revenue growth, profitability and cash
generation. During the year, newer products drove strong
broad-based performance, with underlying revenue growth above 5%
for all three business units, and we look forward to a strong
cadence of further new product introductions in 2026.
"This also marks the completion of our 12-Point Plan, through which
we have successfully transformed Smith+Nephew into a fundamentally
stronger business. Our new RISE strategy, launched in December, is
the start of an ambitious and achievable next phase of growth. It
is our roadmap to Reach more patients, unlock new categories of
Innovation, Scale through strategic investment, and Execute
efficiently. Together, it will allow us to step-up performance
towards new 2028 financial targets.
"2026 is the first step in that journey and we are confident in
delivering an acceleration in growth and returns. With our
strengthened foundations and new strategy, we are well set to
expand our leadership in healthcare innovation and realise
sustainable value for shareholders, while continuing to deliver for
customers, employees and communities into the future."
Strategic
Highlights1,2
●
12-Point
Plan transformation completed, strengthening operational
foundations, restoring performance in Orthopaedics, accelerating
Sports Medicine and Advanced Wound Management, improving
productivity, and embedding a culture of accountability, discipline
and continuous improvement
●
12-Point
Plan financial outcomes since 2022 include 5.7% reported revenue
Compound Annual Growth Rate (CAGR), plus 240bps of trading margin
expansion despite significant headwinds, fifteen-fold increase in
free cash flow, and 170bps increase in adjusted Return on Invested
Capital (ROIC) despite a -160bps headwind from the
portfolio rationalisation announced in December
2025
●
RISE,
Smith+Nephew's new strategy, launched, targeting new levels of
financial and operational performance to drive shareholder
value
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2028
financial targets announced, including significant acceleration in
revenue growth, trading profit, free cash flow, and adjusted
ROIC
●
Acquisition
of Integrity Orthopaedics completed, supporting RISE and our
ambition to become the global leader in Sports
Medicine
Full Year 2025
Highlights1,2
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2025
revenue was $6,164 million (2024: $5,810 million), with underlying
revenue growth of 5.3%. Reported growth of 6.1% was after 80bps FX
tailwind
●
Underlying
revenue growth excluding China was 7.0% (reported growth
7.8%)
●
Trading
profit up 15.5% to $1,211 million (2024: $1,049 million) with 19.7%
trading profit margin, up 160bps (2024: 18.1%).
Reported operating
profit improved 20.7% to $794 million (2024: $657
million)
●
Significant
improvements in cash generated from operations at $1,549 million
(2024: $1,245 million), trading cash flow at $1,236 million (2024:
$999 million) and trading cash conversion, at 102.0% (2024: 95.2%).
Free cash flow increased by 52.5% to $840 million, including
one-off $26 million benefit from a property transaction (2024: $551
million)
●
Adjusted
ROIC improved 90bps to 8.3% (2024: 7.4%) despite a -160bps headwind
from portfolio rationalisation
●
EPSA
up 21.0% to 102.0¢ (2024: 84.3¢) and EPS up 52.8% to
72.1¢ (2024: 47.2¢)
●
Reflecting
the strong cash generation and balance sheet, $500 million share
buyback completed in second half of 2025; adjusted net debt/EBITDA
leverage ratio for 2025 was 1.7x
●
Full
year dividend increased 4.3% to 39.1¢ per share (2024:
37.5¢ per share)
Q4 2025 Trading
Highlights1,2
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Q4
revenue of $1,702 million (2024: $1,571 million), with
underlying revenue growth of 6.2%, which includes the benefit
of one extra trading day offset by-100bps
headwind from China. Reported growth 8.3% after 210bps FX tailwind,
primarily reflecting strength of the Euro
●
Orthopaedics
delivered underlying revenue growth of 7.9% (reported growth 9.8%),
its strongest quarter of revenue growth for more than two
years
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Sports
Medicine & ENT delivered underlying revenue growth of 7.3%
(reported growth 9.5%) despite continuing China
headwinds
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Advanced
Wound Management underlying revenue growth was 2.8% (reported
growth 5.3%) reflecting a strong comparative period and weakness in
skin substitutes ahead of reimbursement changes in
2026
2026
Outlook1,2
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Building
on our momentum, for 2026 we are targeting further progress in
revenue growth, trading profit and ROIC, and sustained strong cash
generation
●
In
line with our provisional guidance issued in December 2025,
underlying revenue growth is expected to accelerate further to
around 6% for the full year
●
Trading
profit growth on an organic basis is expected to be around 8%, with
revenue leverage and operational savings offsetting headwinds from
inventory revaluation, tariffs, skin substitute reimbursement
changes, and ENT VBP in China
●
Since
providing our provisional guidance, we have also completed the
acquisition of Integrity Orthopaedics. This acquisition is expected
to be marginally dilutive to trading profit in 2026, broadly
neutral in 2027 and accretive in 2028. Including this dilution, we
expect trading profit to be around $1.3 billion
●
Free
cash flow is expected to be around $800 million
●
Adjusted
ROIC is expected to be greater than 10% excluding the impact of
Integrity Orthopaedics
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 2
March 2026, 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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Emily
Heaven
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+44
(0) 7811 919437
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Craig
Bijou
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+1
(475) 850-8282
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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 2024 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 35 to 41 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 same exchange
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, free cash
flow, adjusted ROIC, 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 35 to 41 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 2025
Results
2025 represents the culmination of work that began three years ago
under the 12-Point Plan: strengthening our operational foundations,
restoring performance in Orthopaedics, accelerating our Sports
Medicine and Advanced Wound Management businesses, improving
productivity, and embedding a culture of accountability, discipline
and continuous improvement across the Group.
Our 2025 financial results demonstrate clear operational progress
and a sustained step up in performance across each of our three
global business units.
Building on this progress, our new RISE strategy, launched in
December 2025, is designed to drive stronger returns by elevating
Smith+Nephew's financial and operational performance to new
levels.
2025 performance
Group revenue for 2025 was $6,164 million (2024: $5,810 million),
reflecting underlying revenue growth of 5.3%, ahead of our 2025
guided target of around 5%. Reported growth of 6.1% included an
80bps tailwind from foreign exchange, primarily due to the strength
of the Euro. Underlying revenue growth excluding China was 7.0%
(reported growth excluding China 7.8%). Each of our three global
business units delivered underlying revenue growth above
5%.
We achieved a good finish to the year, with fourth quarter revenue
of $1,702 million (2024: $1,571 million) representing underlying
revenue growth of 6.2%. Fourth quarter reported revenue growth was
8.3% after a 210bps foreign exchange tailwind, also primarily due
to the strength of the Euro. Orthopaedics delivered its best
quarter of growth for more than two years, Sports Medicine &
ENT delivered a strong performance outside China, while Advanced
Wound Management's solid growth reflected a strong comparable
period and weakness in skin substitutes ahead of reimbursement
changes in 2026.
Trading profit for 2025 was up 15.5% to $1,211 million (2024:
$1,049 million). The trading profit margin was 19.7% (2024: 18.1%),
a 160bps improvement on the prior year. Operating profit increased
20.7% to $794 million (2024: $657 million).
Cash generated from operations was up 24.4% to $1,549 million
(2024: $1,245 million) and trading cash flow, at $1,236 million
(2024: $999 million), was up 23.7%, with 102% trading cash
conversion (2024: 95%). Free cash flow increased by 52.5% to $840
million (2024: $551 million), including the benefit of a one-off
$26 million property transaction, well ahead of our initial 2025
guidance of more than $600 million.
We also improved adjusted ROIC, which was up 90bps to 8.3% despite
a -160bps headwind from the portfolio rationalisation programme
announced in December 2025. The improvement in adjusted ROIC
reflected our continued progress under the 12-Point Plan and the
stronger operational discipline now embedded across the
organisation.
Given our strong cash generation, and in line with our capital
allocation policy, we completed a share buyback in the second half
of 2025, returning $500 million to shareholders while maintaining
our leverage ratio, and without compromising our growth
plans.
Three years of stronger financial performance
Over the last three years we have significantly improved
Smith+Nephew's financial performance through the 12-Point Plan and
related initiatives, meeting our guidance each year.
Through our actions we have changed Smith+Nephew revenue growth
profile from an historically low single digit revenue growth
company to one consistently delivering mid-single digit growth,
with a reported CAGR of 5.7% over the last three
years.
We have expanded trading margin by 240bps, from 17.3% in 2022 to
19.7% in 2025, whilst also overcoming around 1,000bps of macro
challenges including from Volume Based Procurement in China,
foreign exchange and higher inflation. Operating profit margin has
expanded by 430bps from 8.6% in 2022 to 12.9% in 2025.
Our increased focus on cash and capital returns has yielded a
fifteen-fold increase in free cash flow, from $56 million in 2022
to $840 million in 2025. Following
our ongoing focus on improving this measure, adjusted ROIC has
increased 170bps to 8.3% (2022: 6.6%) despite the -160bps portfolio
rationalisation headwind.
12-Point Plan transformation
In 2022, Smith+Nephew initiated a 12-Point Plan to transform
performance. This plan had three pillars designed to fix our
underperforming Orthopaedics business, improve overall
productivity, and accelerate our leading Sports Medicine and Wound
businesses. We have made demonstrable progress across each of these
pillars, delivering a step-change in financial and operational
performance.
Within Orthopaedics, we have addressed supply issues and
right-sized capacity, returned Trauma and Hip Implants growth
to market levels or higher, and accelerated the underlying revenue
growth of our Orthopaedics business unit from 1.9% in 2022 to 5.1%
in 2025 (reported growth was -2.0% in 2022 and 5.7% in 2025). We
continue to prioritise improving performance in US Knee Implants,
which represents less than 9% of Group revenue. We expect the
launch of our new LANDMARK◊ Knee
System in the second half of the year. LANDMARK
will bring the proven clinical benefits of our knee portfolio into
a single platform that combines advanced kinematics with
personalisation, robotic enablement, and ease of implantation,
while unlocking capital efficiency by leveraging on existing
instrumentation. With it, we will be able to address key surgeon
preferences and participate in all key segments across all sites of
care. It will also feature best-in-class tray efficiency, making it
particularly suitable for Ambulatory Surgery
Centers.
We continued to deliver strong results from our faster growth,
higher margin Sports Medicine and Advanced Wound Management
businesses throughout the period.
Smith+Nephew's innovation pipeline has been a significant
contributor to our transformation. In 2025, more than 60% of
underlying revenue growth came from products launched in the last
five years, and we improved our portfolio with 15 new platforms and
product enhancements across all global business units.
Significantly strengthened the business
The 12-Point Plan was designed not only to deliver on specific
actions in the short-term, but also to embed fundamental, lasting
changes in our behaviours, operations and performance, and raise
the standard on how we deliver for our patients, customers and
shareholders.
In 2023, we moved our commercial operations from a complex
matrix-based model across franchises and regions to a simpler
global business unit structure, with vertical teams for each of
Orthopaedics, Sports Medicine & ENT and Advanced Wound
Management. This is driving greater accountability, faster decision
making and execution, and has allowed us to increase customer focus
across the portfolio.
We have also focused on improving cash, capital returns and
efficiency through a number of initiatives. The move to allocate
central costs attributable to business units to each business unit
is driving greater accountability and efficiency, with each having
full profit and loss and capital accountability. We also introduced
much greater rigour and discipline in capital allocation, improving
inventory set turn by deploying sets to more productive
accounts.
Portfolio rationalisation was an area of opportunity identified
through the 12-Point plan, in particular in Orthopaedics. An
initial 19 product families, mainly in knees and hips, were
identified for phase out in a gradual process to protect revenue
which we are about halfway through. During the fourth quarter of
2025, we commenced a second wave of rationalisation, identifying a
further 50 families to phase out, predominantly in Trauma. We
expect to complete this process over the next three to five years,
by which time we will have just 59 Orthopaedics product families, a
reduction of 54% since the beginning of the 12-Point Plan. We
anticipate that this second wave will reduce gross inventory by
about $500 million. To achieve this significant and on-going
reduction in the capital requirements, the Group recognised a $159
million non-cash excess and obsolescence provision in 2025 included
in legal and other items. This will leave our portfolio simpler,
easier for customers to understand, and puts the company in a
stronger position to drive growth, improve margins and improve
capital returns.
We are on track to deliver the $325 to $375 million of gross cost
savings we targeted by 2027, achieving $280 million in cumulative
savings to the end of 2025, with the largest savings coming from
manufacturing and procurement across the programme. As outlined in
December, we anticipate a further $150 million of savings to flow
through in 2026, with around half from 12-Point Plan and related
activities and half from new opportunities above and beyond
these.
Our new RISE strategy and 2028 financial targets
In December we announced RISE, our new strategy to elevate
Smith+Nephew. RISE builds on the progress made through the 12-Point
Plan and positions us for success over the next three
years.
RISE has four clear aims:
●
To REACH more
patients by driving adoption of our differentiated portfolio and
taking share across indications, settings and markets
worldwide.
●
To INNOVATE to
enhance the standard of care through accelerating new product
launches and rapidly scaling existing innovation
platforms.
●
To SCALE through
strategic investment, allocating capital to high return and high
growth opportunities aligned to our portfolio
priorities.
●
To EXECUTE efficiently,
driving enterprise productivity and asset efficiency to expand our
margins and returns.
The delivery of the RISE strategy will be built upon our purpose of
Life Unlimited and strong corporate culture. This culture is built
upon pillars of Care, Collaboration and Courage and drives our Way
to Win by being better, every day, through a continuous improvement
mindset and behaviours.
Alongside the RISE strategy we also announced 2028 financial
targets, including:
●
6-7%
Organic revenue CAGR,
●
9-10%
Trading profit CAGR,
●
Free
cash flow of more than $1 billion, and
●
Adjusted
ROIC of 12-13%.
These targets reflect both the strength of our core business and
the opportunity created through the transformation of the last
three years.
Acquisition of Integrity Orthopaedics
Within RISE, we see the opportunity for acquisitions to support our
strategy to scale by building on our areas of strength and
underpinned by our strong balance sheet.
This approach was demonstrated in January 2026 with the acquisition
of Integrity Orthopaedics, an important building block in our
ambition to become the global leader
in Sports Medicine.
Integrity Orthopaedics is a US-based
early-stage
commercial developer of TENDON SEAM◊,
an innovative rotator cuff repair (RCR) system designed to
significantly reduce re-tear
rates and improve
patient outcomes.
Tendon Seam strongly complements our REGENETEN Bioinductive
Implant, giving us a unique, differentiated and disruptive RCR
portfolio, and enhances our extensive shoulder offering, which
spans technologies for both replacement and repair.
The acquisition was completed for an initial cash payment of US$225
million plus additional performance-based payments of up to US$225
million over the next five years.
Fourth Quarter 2025 Trading Update
Our fourth quarter revenue was $1,702 million (2024: $1,571
million), with underlying revenue growth of 6.2% which includes the
benefit of one extra trading day offset by-100bps headwind from
China (reported growth of 8.3% after 210bps foreign exchange
tailwind primarily due to the strength of the Euro). There were 63
trading days in the quarter.
Geographically, our Established Markets underlying revenue growth
was 6.2% (reported growth 8.0%). Within this, the US underlying
revenue growth was 5.6% (reported growth 5.6%) and Other
Established Markets underlying revenue growth was 7.2% (reported
growth 12.8%). Emerging Markets revenue was up 6.4% (reported
growth 10.0%), as growth was tempered by the headwinds in China in
Sports Medicine & ENT.
Fourth Quarter Consolidated Revenue Analysis
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31 December
|
|
31 December
|
|
Reported
|
|
Underlying
|
|
Acquisitions
|
|
Currency
|
|
|
|
2025
|
|
2024(i)
|
|
growth
|
|
growth(ii)
|
|
/disposals
|
|
impact
|
|
Consolidated revenue by business unit by product
|
|
$m
|
|
$m
|
|
%
|
|
%
|
|
%
|
|
%
|
|
Orthopaedics
|
|
667
|
|
608
|
|
9.8
|
|
7.9
|
|
-
|
|
1.9
|
|
Knee
Implants
|
|
275
|
|
255
|
|
8.1
|
|
6.1
|
|
-
|
|
2.0
|
|
Hip
Implants
|
|
174
|
|
161
|
|
7.9
|
|
5.7
|
|
-
|
|
2.2
|
|
Other Reconstruction(iii)
|
|
43
|
|
30
|
|
43.2
|
|
40.8
|
|
-
|
|
2.4
|
|
Trauma
& Extremities
|
|
175
|
|
162
|
|
8.1
|
|
6.9
|
|
-
|
|
1.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sports Medicine & ENT
|
|
541
|
|
494
|
|
9.5
|
|
7.3
|
|
-
|
|
2.2
|
|
Sports
Medicine Joint Repair
|
|
302
|
|
267
|
|
13.2
|
|
10.9
|
|
-
|
|
2.3
|
|
Arthroscopic
Enabling Technologies
|
|
183
|
|
173
|
|
5.7
|
|
3.4
|
|
-
|
|
2.3
|
|
ENT
(Ear, Nose and Throat)
|
|
56
|
|
54
|
|
3.6
|
|
2.3
|
|
-
|
|
1.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Advanced Wound Management
|
|
494
|
|
469
|
|
5.3
|
|
2.8
|
|
-
|
|
2.5
|
|
Advanced
Wound Care
|
|
203
|
|
187
|
|
8.6
|
|
4.4
|
|
-
|
|
4.2
|
|
Advanced
Wound Bioactives
|
|
179
|
|
179
|
|
(0.2)
|
|
(0.5)
|
|
-
|
|
0.3
|
|
Advanced
Wound Devices
|
|
112
|
|
103
|
|
8.7
|
|
5.4
|
|
-
|
|
3.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
1,702
|
|
1,571
|
|
8.3
|
|
6.2
|
|
-
|
|
2.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated revenue by geography
|
|
|
|
|
|
|
|
|
|
|
|
|
|
US
|
|
931
|
|
881
|
|
5.6
|
|
5.6
|
|
-
|
|
-
|
|
Other Established Markets(iv)
|
|
510
|
|
453
|
|
12.8
|
|
7.2
|
|
-
|
|
5.6
|
|
Total Established Markets
|
|
1,441
|
|
1,334
|
|
8.0
|
|
6.2
|
|
-
|
|
1.8
|
|
Emerging
Markets
|
|
261
|
|
237
|
|
10.0
|
|
6.4
|
|
-
|
|
3.6
|
|
Total
|
|
1,702
|
|
1,571
|
|
8.3
|
|
6.2
|
|
-
|
|
2.1
|
(i) Robotics
consumables revenue has been reclassified from Other Reconstruction
to Knee and Hip implants.
(ii) Underlying
growth is defined in Note 1 on page 3
(iii) Other
Reconstruction includes robotics capital sales and bone
cement
(iv) Other
Established Markets are Europe, Japan, Australia, Canada and New
Zealand
Fourth Quarter Business Unit Performance
Orthopaedics
Our Orthopaedics business unit delivered underlying revenue
growth of 7.9% (reported growth 9.8%) in the
quarter.
Knee Implants global
underlying revenue growth was 6.1% (reported growth 8.1%). In the
US, Knee Implants underlying revenue growth was 3.6% (reported
growth 3.6%), an improvement over the third quarter and driven by
our LEGION◊ Total
Knee System including the recently launched medial stabilized
inserts, and the LEGION CONCELOC◊ Cementless
Total Knee System. Outside the US, Knee Implants delivered strong
underlying revenue growth of 9.4% (reported growth 14.2%) also
driven by our LEGION platform.
Hip Implants global
underlying revenue growth was 5.7% (reported growth 7.9%). US Hip
Implants underlying revenue growth was 7.5% (reported growth 7.5%)
and growth outside the US was 3.2% (reported growth 8.4%). Hip
Implants growth was led by our R3◊ Acetabular
System, OR3O◊ Dual
Mobility System and recently launched CATALYSTEM◊ Primary
Hip System.
Other Reconstruction delivered
another good quarter of growth, with underlying revenue growth of
40.8% (reported growth 43.2%). This included strong growth from our
CORI Surgical System this year and from robotics service and
disposables. By the end of 2025 we had more than 1,100 CORIs
installed worldwide. We are pleased with the deployment in
Ambulatory Surgery Centers, increasing placement in Teaching
Institutes and with the percentage of CORIs deployed in competitive
accounts. In the US, we finished the year with 36% of knee implants
completed on a CORI and 63% overall utilisation, our strongest
levels to date. This is important as US knee implants growth is
significantly higher in CORI accounts than in non-CORI
accounts.
During the quarter we launched CORIOGRAPH◊ Pre-Operative
Planning and Modelling Services in total shoulder replacement,
expanding the offering to now cover knee, hip and shoulder joint
replacement procedures. Offering both image-free and image-based
registration, CORIOGRAPH is another element in our approach of
supporting a range of procedures and surgeon preferences on
CORI.
Trauma & Extremities underlying
revenue growth was 6.9% (reported growth 8.1%), reflecting
continued good growth from the EVOS◊ Plating System,
TRIGEN◊ MAX
Tibia and AETOS◊ Shoulder
System.
Sports Medicine & ENT
Our Sports
Medicine & ENT business unit delivered
underlying revenue growth of 7.3% including a -250bps headwind from
China (reported growth 9.5%). The overall headwind from China is
reducing as we lap the implementation of Volume Based Procurement
(VBP) in Sports Medicine Joint Repair. VBPs in Arthroscopic
Enabling Technologies and ENT are expected
in 2026, but we expect the headwinds to be much smaller given the
relative size of these businesses. We have taken actions to manage
our inventory ahead of implementation.
Sports Medicine Joint Repair underlying
revenue growth was 10.9% including a
-200bps headwind from China (reported growth 13.2%), with
double-digit growth from our shoulder repair portfolio led by
strong growth from the REGENETEN Bioinductive Implant. The launches
of our new Q-FIX KNOTLESS◊ All-Suture
Anchor for soft tissue-to-bone fixation and recently
acquired CARTIHEAL◊ AGILI-C◊ Cartilage
Repair Implant are
both going well.
During the quarter we announced new evidence and market updates
that highlight the clinical performance of the REGENETEN
Bioinductive Implant and support its further adoption including a
Strong Recommendation from the American Academy of Orthopaedic
Surgeons. We also announced that the American Medical Association
had established a Category I Current Procedural Terminology (CPT)
code for procedures involving the CARTIHEAL AGILI-C Implant,
effective January 1, 2027. The Category I CPT code will streamline
reimbursement processes for providers and payers, supporting its
integration into standard clinical practice.
Arthroscopic Enabling Technologies underlying
revenue growth was 3.4% including a -200bps headwind from China
(reported growth 5.7%), with good growth from
our WEREWOLF◊ FASTSEAL
6.0 Hemostasis Wand and our mechanical resection range offset by
performance in China where the sector is preparing for a VBP
process.
ENT underlying
revenue growth was 2.3% including a -530bps headwind from China as
this sector also prepares for VBP (reported growth 3.6%). Growth
was led by our nose business including strong double-digit growth
from the ARIS◊ COBLATION
turbinates wand, offsetting continued softness in the US tonsils
and adenoids market. China was a headwind in the quarter as the
sector prepares for VBP.
Advanced Wound Management
Our Advanced Wound
Management business unit
delivered underlying revenue growth of 2.8% (reported growth
5.3%).
Advanced Wound Care underlying
revenue growth was 4.4% (reported growth 8.6%) with good growth
outside the US across foam dressings, infection management and
films. In the US, we are at the early stages of launching the
ALLEVYN COMPLETE CARE Foam Dressing and announced new evidence
demonstrating its pressure injury prevention mechanism of action
and ability to absorb and dissipate friction and shear
forces.
Advanced Wound Bioactives delivered
underlying revenue decline of -0.5% (reported decline -0.2%). The
growth rate reflects a strong comparator period from the launch on
GRAFIX◊ PLUS
in Q4 2024 and softness in skin substitutes ahead of the
implementation of reimbursement changes in 2026, as previously
disclosed. We
delivered mid-single digit growth from SANTYL◊.
Advanced Wound Devices underlying
revenue growth was 5.4% (reported growth 8.7%),
also reflecting
a strong comparator period. Growth was driven
by our single-use PICO◊ Negative
Pressure Wound Therapy System (sNPWT) and the
LEAF◊ Patient
Monitoring System as we deliver on our pressure injury prevention
strategy. In the US our traditional RENASYS NPWT System continues
to be impacted by softness in the acute care channel, while
performance outside the US remained strong.
During the quarter we announced new evidence showing that PICO
sNPWT significantly reduces the risk of wound dehiscence, hospital
length of stay, and overall healthcare costs compared to a
competitor device.
Full Year Trading
Group revenue in 2025 was $6,164 million (2024: $5,810 million),
with underlying revenue growth of 5.3%. Reported growth of 6.1%
included an 80bps tailwind from foreign exchange primarily due to
the strength of the Euro.
Geographically, our Established Markets underlying revenue growth
was 5.9% (reported growth 6.8%). Within this, US underlying revenue
growth was 5.9% (reported growth 5.9%) and Other Established
Markets underlying revenue growth was 5.9% (reported growth 8.6%).
Emerging Markets underlying revenue growth of 2.5% (reported growth
2.4%) included the impacts of the China headwinds described
above.
Excluding China, 2025 Group underlying revenue growth was 7.0%
(reported growth 7.8%).
Full Year Consolidated Revenue Analysis
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31 December
|
|
31 December
|
|
Reported
|
|
Underlying
|
|
Acquisitions
|
|
Currency
|
|
|
|
2025
|
|
2024(i)
|
|
growth
|
|
growth(ii)
|
|
/disposals
|
|
impact
|
|
Consolidated revenue by business unit by product
|
|
$m
|
|
$m
|
|
%
|
|
%
|
|
%
|
|
%
|
|
Orthopaedics
|
|
2,437
|
|
2,305
|
|
5.7
|
|
5.1
|
|
-
|
|
0.6
|
|
Knee
Implants
|
|
1,011
|
|
977
|
|
3.5
|
|
2.9
|
|
-
|
|
0.6
|
|
Hip
Implants
|
|
641
|
|
619
|
|
3.5
|
|
2.9
|
|
-
|
|
0.6
|
|
Other Reconstruction(iii)
|
|
136
|
|
101
|
|
35.4
|
|
33.8
|
|
-
|
|
1.6
|
|
Trauma
& Extremities
|
|
649
|
|
608
|
|
6.7
|
|
6.3
|
|
-
|
|
0.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sports Medicine & ENT
|
|
1,934
|
|
1,824
|
|
6.0
|
|
5.2
|
|
-
|
|
0.8
|
|
Sports
Medicine Joint Repair
|
|
1,067
|
|
982
|
|
8.6
|
|
7.8
|
|
-
|
|
0.8
|
|
Arthroscopic
Enabling Technologies
|
|
647
|
|
632
|
|
2.4
|
|
1.6
|
|
-
|
|
0.8
|
|
ENT
(Ear, Nose and Throat)
|
|
220
|
|
210
|
|
4.8
|
|
4.4
|
|
-
|
|
0.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Advanced Wound Management
|
|
1,793
|
|
1,681
|
|
6.7
|
|
5.6
|
|
-
|
|
1.1
|
|
Advanced
Wound Care
|
|
766
|
|
735
|
|
4.3
|
|
2.6
|
|
-
|
|
1.7
|
|
Advanced
Wound Bioactives
|
|
621
|
|
581
|
|
6.9
|
|
6.8
|
|
-
|
|
0.1
|
|
Advanced
Wound Devices
|
|
406
|
|
365
|
|
11.1
|
|
9.8
|
|
-
|
|
1.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
6,164
|
|
5,810
|
|
6.1
|
|
5.3
|
|
-
|
|
0.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated revenue by geography
|
|
|
|
|
|
|
|
|
|
|
|
|
|
US
|
|
3,306
|
|
3,123
|
|
5.9
|
|
5.9
|
|
-
|
|
-
|
|
Other Established Markets(iv)
|
|
1,855
|
|
1,707
|
|
8.6
|
|
5.9
|
|
-
|
|
2.7
|
|
Total Established Markets
|
|
5,161
|
|
4,830
|
|
6.8
|
|
5.9
|
|
-
|
|
0.9
|
|
Emerging
Markets
|
|
1,003
|
|
980
|
|
2.4
|
|
2.5
|
|
-
|
|
(0.1)
|
|
Total
|
|
6,164
|
|
5,810
|
|
6.1
|
|
5.3
|
|
-
|
|
0.8
|
(i) Robotics
consumables revenue has been reclassified from Other Reconstruction
to Knee and Hip implants.
(ii) Underlying
growth is defined in Note 1 on page 3
(iii) Other
Reconstruction includes robotics capital sales and bone
cement
(iv) Other
Established Markets are Europe, Japan, Australia, Canada and New
Zealand
Full Year Business Unit Performance
Orthopaedics
Our Orthopaedics business unit delivered underlying revenue growth
of 5.1% (reported growth 5.7%) for the full year.
Knee Implants underlying
revenue growth was 2.9%
(reported growth 3.5%) and Hip
Implants underlying revenue growth
was 2.9% (reported growth 3.5%). Knee Implants growth was strongest
outside the US led by our JOURNEY II Total Knee System and ANTHEM
Total Knee System. Hip Implant performance was driven by the US
launch of the CATALYSTEM◊ Primary
Hip System and strong growth from OR30 Dual Mobility
System.
Other Reconstruction underlying
revenue growth was 33.8% (reported growth 35.4%) for the full year
reflecting sales of our CORI Surgical System and
consumables.
Trauma & Extremities underlying
revenue growth was 6.3% (reported growth 6.7%) for the full year as
this business continued to be a significant growth driver following
its turnaround in 2023. Growth was driven by the EVOS Plating
System, our patient-positioning portfolio and
the successful
launch of the AETOS Shoulder System.
Sports Medicine & ENT
Our Sports Medicine &
ENT business unit
delivered underlying revenue growth of 5.2% including a -400bps
headwind from China, where the implementation of VBP was a
headwind, as noted above (reported growth
6.0%).
Sports Medicine Joint Repair underlying
revenue growth was 7.8% including a
-480bps headwind from China (reported growth 8.6%). Outside of
China, Sports
Medicine Joint Repair had another strong year driven by our
shoulder repair portfolio and the REGENETEN Bioinductive
Implant.
Arthroscopic Enabling Technologies underlying
revenue growth was 1.6% (reported growth 2.4%) including good
growth from the
WEREWOLF◊ FASTSEAL
6.0 Hemostasis Wand and
patient-positioning portfolio offset by video
technologies.
ENT underlying
revenue growth was
4.4% (reported growth 4.8%). Growth was led by our
nose business
offset by some softness in the US tonsils and adenoids
market.
Advanced Wound Management
Our Advanced Wound
Management business unit
delivered underlying revenue growth of 5.6% (reported growth 6.7%)
in 2025.
Advanced Wound Care underlying
revenue growth was 2.6% (reported growth 4.3%) including good
growth in
foam dressings and films offsetting a weaker performance in
infection management.
Advanced Wound Bioactives underlying
revenue growth was 6.8%
(reported growth 6.9%). Performance was led by good growth from
SANTYL and a strong first half for our skins substitutes portfolio
ahead of the reimbursement changes referred to
above.
Advanced Wound Devices underlying
revenue growth was 9.8% (reported growth 11.1%). This was driven by
both our single-use PICO Negative Pressure Wound Therapy System and
traditional RENASYS◊ Negative
Pressure Wound Therapy System, as well as our LEAF Patient
Monitoring System.
Full Year 2025 Consolidated Analysis
Smith+Nephew results for the year ended 31 December
2025:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported
|
|
|
|
2025
|
|
2024
|
|
growth
|
|
|
|
$m
|
|
$m
|
|
%
|
|
Revenue
|
|
6,164
|
|
5,810
|
|
6.1
|
|
Operating profit
|
|
794
|
|
657
|
|
20.7
|
|
Acquisition
and disposal related items
|
|
32
|
|
94
|
|
|
|
Restructuring
and rationalisation costs
|
|
47
|
|
123
|
|
|
|
Amortisation
and impairment of acquisition intangibles
|
|
176
|
|
187
|
|
|
|
Legal
and other
|
|
162
|
|
(12)
|
|
|
|
Trading profit(i)
|
|
1,211
|
|
1,049
|
|
15.5
|
|
|
|
¢
|
|
¢
|
|
|
|
Earnings per share ('EPS')
|
|
72.1
|
|
47.2
|
|
|
|
Acquisition
and disposal related items
|
|
(3.6)
|
|
11.2
|
|
|
|
Restructuring
and rationalisation costs
|
|
4.0
|
|
10.8
|
|
|
|
Amortisation
and impairment of acquisition intangibles
|
|
15.6
|
|
16.6
|
|
|
|
Legal
and other
|
|
13.9
|
|
(1.5)
|
|
|
|
Adjusted Earnings per share ('EPSA')(i)
|
|
102.0
|
|
84.3
|
|
21.0
|
(i) See Other
Information on pages 35 to 41
Full Year 2025 Analysis
Group revenue for 2025 was $6,164 million (2024: $5,810 million),
reflecting underlying revenue growth of 5.3%. Reported growth of
6.1% reflected an 80bps tailwind from foreign
exchange.
The gross profit was $4,192 million (2024: $4,046 million) with a
gross profit margin of 68.0% (2024: 69.6%), with the decrease
reflecting non-trading items, primarily a
$159 million non-cash excess and obsolescence
provision related
to the portfolio rationalisation programme (see Note 2 to the
Financial Statements). Trading gross profit, which excludes these
items, was $4,368 million (2024: $4,085 million), and trading gross
margin increased 60bps to 70.9% (2024: 70.3%).
Operating profit increased 20.7% on a reported basis to $794
million primarily
due to operating
leverage and productivity savings across the Group (2024: $657
million).
Trading profit was up 15.5% on a reported basis to $1,211 million
(2024: $1,049 million). A reconciliation of the $417 million (2024:
$392 million) of adjustments between operating profit and trading
profit is included in Other Information on pages 35
to 41.
We delivered a 160bps expansion in trading profit margin, which
increased to 19.7% (2024: 18.1%). We continued to deliver
year-on-year expansion in our trading profit margin, reflecting
operating leverage, continued benefits from the 12-Point Plan and
productivity savings across the Group, more than offsetting
headwinds including a $17 million impact from tariffs.
Orthopaedics trading profit was up 36.9% on a reported basis to
$363 million (2024: $265 million) and trading profit margin
increased 340bps to 14.9%, reflecting favourable price/mix and
12-Point Plan transformation initiatives including manufacturing
savings from network optimisation, ongoing productivity initiatives
and disciplined cost control. Sports Medicine & ENT trading
profit was up 5.6% on a reported basis to $461 million (2024: $437
million) and trading profit margin declined -20bps to 23.8% driven
by the China VBP headwind in ENT. Advanced Wound Management trading
profit was up 12.0% on a reported basis to $447 million (2024: $399
million) and trading profit margin increased 120bps to 24.9%,
driven by favourable product mix and productivity in
operations (see
Note 2 to the Financial Statements for global business unit trading
profit).
Reported profit before tax was $779 million (2024: $498 million),
reflecting the improvement in operating profit and a $109 million
reversal of an impairment charge relating to
Bioventus (see
Other Information on pages 35
to 41).
Reported tax for the year to 31 December 2025 was a charge of $154
million (2024: $86 million). The increase in the reported tax
charge can principally be attributed to the increases in profit
before tax since 2024 and the jurisdictional profit mix. The tax
rate on trading results was 19.4% (in line with our guidance of
19-20%) (2024: 19.1%) (see Note 3 to the Financial Statements and
Other Information on pages 35 to 41 for
further details on taxation). The
net interest charge was $112 million (2024: $121 million) mostly
reflecting higher cash balances.
Adjusted earnings per share ('EPSA') increased 21.0% to 102.0¢
(204.0¢ per ADS) (2024: 84.3¢ per
share), reflecting
improved trading performance. Basic earnings per share ('EPS')
increased 52.8% to 72.1¢ (144.2¢ per ADS) (2024:
47.2¢ per share), reflecting restructuring costs, acquisition
and disposal related items, amortisation and impairment of
acquisition intangibles and legal and other items
incurred.
Cash generation improved significantly in 2025, driven by strong
working capital discipline and lower restructuring costs. As a
result, cash generated from operations improved by 24.4% to $1,549
million (2024: $1,245 million) and trading cash flow was up 23.7%
at $1,236 million (2024: $999 million) (see Other Information on
pages 35
to 41 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 102% (2024:
95%). We delivered a significant improvement in free cash flow
which was up 52.5% to $840 million (2024: $551 million), including
a $26 million benefit from a property
transaction.
We continued to make progress addressing our high inventory,
reducing Day Sales of Inventory (DSI) by 21 days year-on-year, with
DSI down across all business units. As a result of the further
Group-wide inventory portfolio rationalisation programme announced
in December 2025, DSI decreased by 51 days
year-on-year.
2025 adjusted ROIC increased by 90bps to 8.3% despite the -160bps
portfolio rationalisation headwind (2024: 7.4%).
Each business unit contributed to the expansion in adjusted ROIC,
reflecting continued progress under the 12-Point Plan and the
stronger operational discipline now embedded across the Group.
Orthopaedics adjusted ROIC increased to 4.8% (2024: 3.1%), Advanced
Wound Management increased to 14.1% (2024: 11.6%) and Sports
Medicine & ENT was flat at 9.4% (2024: 9.4%). The impact
of the headwinds from the portfolio rationalisation programme was
most significant in Orthopaedics and Sports Medicine. The
allocation of directly attributable central costs to business
units, introduced in 2024 to reinforce ownership of performance,
has enhanced accountability and focus on returns. This action,
alongside a higher trading profit margin, lower non-trading costs
and improved capital efficiency contributed to the increase in
adjusted ROIC for the year. Group ROIC based on the closest
equivalent IFRS measures was 7.3% (2024: 4.9%).
The Group's net debt, including lease liabilities, was $2,759
million at 31 December 2025 (2024: $2,709 million), with access to
committed facilities of $4.1 billion (see Note 6 to the Financial
Statements). Our
adjusted net debt/EBITDA leverage ratio for 2025 was
1.7x.
Dividend
The Board is recommending a Final Dividend of 24.1¢ per share
(48.2¢ per ADS) (2024: 23.1¢ per share). Together with
the Interim Dividend of 15.0¢ per share (30.0¢ per ADS)
(2024: 14.4¢), this will give a total distribution of
39.1¢ per share (78.2¢ per ADS), a 4.3% increase from
2024. The 38% payout ratio is in line with the 35-40% indicated in
our capital allocation framework.
2026 Outlook
Building on our momentum, for 2026 we are targeting further
progress in revenue growth, trading profit and adjusted ROIC, and
sustained strong cash generation, as outlined in our provisional
guidance at our Capital Markets Day in December 2025.
We continue to expect underlying revenue growth to further
accelerate to around 6% for the full year. This is expected to
include continued good growth in Orthopaedics, Sports Medicine
(excluding Arthroscopic Enabling Technologies and ENT in China) and
Advanced Wound Management, particularly in Advanced Wound Care and
Advanced Wound Devices. In Orthopaedics, we expect to continue to
close the gap versus US Reconstruction market growth. We expect US
Hip Implants to track in line with or ahead of market growth and we
expect US knee performance to start with a softer first quarter,
reflecting our continuing and deliberate trade-offs to balance
growth and profit and asset efficiency. We will then build towards
market growth in Q4, supported by the launch of the cementless
version of our new LANDMARK Knee System in the second half of the
year. In Advanced Wound Management, whilst we expect headwinds in
our skin substitutes business, we still expect Advanced Wound
Bioactives to grow, supported by the ongoing strength of SANTYL and
growth in skin substitutes outside of the physician office and
mobile channel. The guidance equates to reported revenue growth of
around 7.8% based on exchange rates prevailing on 24 February
2026.
We expect trading profit growth on an organic basis of around 8%
despite the significant headwinds to profit in 2026, as outlined in
December. These include inventory revaluation, tariffs, the impact
of changes to reimbursement in our US Advanced Wound Management
business, and ENT VBP in China. There are no changes to any of our
assumptions regarding these headwinds. We still expect around $60
million impact from tariffs ($17 million in 2025) and $20 to $40
million incremental impact from changes to wound reimbursement. We
continue to expect revenue leverage and operational savings to more
than offset these headwinds to drive trading profit growth ahead of
revenue growth before acquisitions.
We expect a stronger second half to the year compared to the first
half for both revenue and profit growth, in keeping with normal
phasing. We have one fewer trading day in Q1 2026 versus 2025 and
one more in Q4. Trading days typically have a more pronounced
impact on our Orthopaedics business.
Since providing our provisional guidance we have completed the
acquisition of Integrity Orthopaedics. This acquisition is expected
to be marginally dilutive to trading profit in 2026, broadly
neutral in 2027 and accretive in 2028. Including this dilution, we
expect 2026 trading profit to be around $1.3 billion based on
current forecast exchange rates.
We expect around $800 million in free cash flow and greater than
10% adjusted ROIC, excluding the impact of Integrity
Orthopaedics.
The tax rate on trading results for 2026 is forecast to be in the
range of 19.0% to 20.0%, subject to any material changes to tax law
or other one-off items.
Forward calendar
The Q1 2026 Trading Report will be released on 6
May 2026.
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 17,000 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 around 100
countries, and generated annual sales of $6.2 billion in 2025.
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.
2025 CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Group Income Statement for the year ended 31 December
2025
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2025
|
|
2024
|
|
|
Notes
|
$m
|
|
$m
|
|
Revenue
|
2
|
6,164
|
|
5,810
|
|
Cost
of goods sold
|
|
(1,972)
|
|
(1,764)
|
|
Gross profit
|
|
4,192
|
|
4,046
|
|
Selling,
general and administrative expenses
|
|
(3,102)
|
|
(3,100)
|
|
Research
and development expenses
|
|
(296)
|
|
(289)
|
|
Operating profit
|
2
|
794
|
|
657
|
|
Interest
income
|
|
28
|
|
24
|
|
Interest
expense
|
|
(140)
|
|
(145)
|
|
Other
finance costs
|
|
(16)
|
|
(28)
|
|
Share
of results of associates
|
|
113
|
|
(10)
|
|
Profit before taxation
|
|
779
|
|
498
|
|
Taxation
|
3
|
(154)
|
|
(86)
|
|
Attributable profit for the yearA
|
|
625
|
|
412
|
|
Earnings per ordinary shareA
|
|
|
|
|
|
Basic
|
|
72.1
|
|
47.2
|
|
Diluted
|
|
71.6
|
|
47.0
|
Group Statement of Comprehensive Income for the year ended 31
December 2025
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2025
|
|
2024
|
|
|
|
$m
|
|
$m
|
|
Attributable profit for the yearA
|
|
625
|
|
412
|
|
Other comprehensive income
|
|
|
|
|
|
Items that will not be reclassified to income
statement
|
|
|
|
|
|
Remeasurement
of net retirement benefit obligations
|
|
5
|
|
16
|
|
Taxation
on other comprehensive income
|
|
(1)
|
|
(1)
|
|
Total
items that will not be reclassified to income
statement
|
|
4
|
|
15
|
|
|
|
|
|
|
|
Items that may be reclassified subsequently to income
statement
|
|
|
|
|
|
Cash
flow hedges - forward foreign exchange contracts
|
|
|
|
|
|
Gains
arising in the year
|
|
13
|
|
38
|
|
Gains
recycled to income statement in the year
|
|
(29)
|
|
(1)
|
|
Exchange
differences on translation of foreign operations
|
|
179
|
|
(124)
|
|
Taxation
on other comprehensive income
|
|
5
|
|
(5)
|
|
Total
items that may be reclassified subsequently to income
statement
|
|
168
|
|
(92)
|
|
Other comprehensive income/(loss) for the year, net of
taxation
|
|
172
|
|
(77)
|
|
Total comprehensive income for the yearA
|
|
797
|
|
335
|
A
Attributable to the equity holders of the Company and wholly
derived from continuing operations.
Group Balance Sheet as at 31 December 2025
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2025
|
|
2024
|
|
|
Notes
|
$m
|
|
$m
|
|
ASSETS
|
|
|
|
|
|
Non-current assets
|
|
|
|
|
|
Property,
plant and equipment
|
|
1,638
|
|
1,422
|
|
Goodwill
|
|
3,108
|
|
3,026
|
|
Intangible
assets
|
|
882
|
|
1,032
|
|
Investments
|
|
30
|
|
9
|
|
Investments
in associates
|
|
121
|
|
7
|
|
Other
non-current assets
|
|
164
|
|
24
|
|
Retirement
benefit assets
|
|
64
|
|
63
|
|
Deferred
tax assets
|
|
347
|
|
350
|
|
|
|
6,354
|
|
5,933
|
|
Current assets
|
|
|
|
|
|
Inventories
|
|
2,117
|
|
2,387
|
|
Trade
and other receivables
|
|
1,413
|
|
1,381
|
|
Current
tax receivable
|
|
16
|
|
34
|
|
Cash
and cash equivalents
|
6
|
557
|
|
619
|
|
|
|
4,103
|
|
4,421
|
|
TOTAL ASSETS
|
|
10,457
|
|
10,354
|
|
|
|
|
|
|
|
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
|
|
(515)
|
|
(66)
|
|
Other
reserves
|
|
(329)
|
|
(497)
|
|
Retained
earnings
|
|
5,323
|
|
5,018
|
|
Total equity
|
|
5,289
|
|
5,265
|
|
|
|
|
|
|
|
Non-current liabilities
|
|
|
|
|
|
Long-term
borrowings and lease liabilities
|
6
|
3,177
|
|
3,258
|
|
Retirement
benefit obligations
|
|
84
|
|
79
|
|
Other
payables
|
|
190
|
|
95
|
|
Provisions
|
|
82
|
|
95
|
|
Deferred
tax liabilities
|
|
40
|
|
31
|
|
|
|
3,573
|
|
3,558
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
Bank
overdrafts, borrowings, loans and lease liabilities
|
6
|
150
|
|
63
|
|
Trade
and other payables
|
|
1,177
|
|
1,128
|
|
Provisions
|
|
74
|
|
108
|
|
Current
tax payable
|
|
194
|
|
232
|
|
|
|
1,595
|
|
1,531
|
|
Total liabilities
|
|
5,168
|
|
5,089
|
|
TOTAL EQUITY AND LIABILITIES
|
|
10,457
|
|
10,354
|
Group Cash Flow Statement for the year ended 31 December
2025
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2025
|
|
2024
|
|
|
|
$m
|
|
$m
|
|
Cash flows from operating activities
|
|
|
|
|
|
Profit
before taxation
|
|
779
|
|
498
|
|
Net
interest expense
|
|
112
|
|
121
|
|
Depreciation,
amortisation and impairment
|
|
573
|
|
645
|
|
Loss
on disposal of property, plant and equipment and
software
|
|
23
|
|
22
|
|
Share-based
payments expense (equity-settled)
|
|
43
|
|
40
|
|
Share
of results of associates
|
|
(113)
|
|
10
|
|
Pension
costs less cash paid
|
|
5
|
|
16
|
|
Decrease/(increase)
in inventories
|
|
208
|
|
(42)
|
|
Increase
in trade and other receivables
|
|
(175)
|
|
(81)
|
|
Decrease
in trade and other payables and provisions
|
|
94
|
|
16
|
|
Cash
generated from operations
|
|
1,549
|
|
1,245
|
|
Interest
received
|
|
25
|
|
22
|
|
Interest
paid
|
|
(142)
|
|
(140)
|
|
Income
taxes paid
|
|
(147)
|
|
(140)
|
|
Net
cash inflow from operating activities
|
|
1,285
|
|
987
|
|
|
|
|
|
|
|
Cash flows from investing activities
|
|
|
|
|
|
Acquisitions,
net of cash acquired
|
|
(9)
|
|
(186)
|
|
Capital
expenditure
|
|
(433)
|
|
(381)
|
|
Purchase
of investments
|
|
(2)
|
|
(1)
|
|
Proceeds
from disposal of property, plant and equipment
|
|
38
|
|
-
|
|
Investment
in associates
|
|
-
|
|
(1)
|
|
Net
cash used in investing activities
|
|
(406)
|
|
(569)
|
|
|
|
|
|
|
|
Cash flows from financing activities
|
|
|
|
|
|
Purchase
of own shares
|
|
(502)
|
|
-
|
|
Proceeds
from own shares
|
|
12
|
|
1
|
|
Payment
of capital element of lease liabilities
|
|
(50)
|
|
(55)
|
|
Proceeds
from borrowings due within one year
|
|
43
|
|
-
|
|
Settlement
of borrowings due within one year
|
|
(39)
|
|
(705)
|
|
Proceeds
from borrowings due after one year
|
|
-
|
|
1,000
|
|
Settlement
of borrowings due after one year
|
|
(90)
|
|
-
|
|
Settlement
of currency swaps
|
|
1
|
|
-
|
|
Equity
dividends paid
|
|
(330)
|
|
(327)
|
|
Net
cash used in financing activities
|
|
(955)
|
|
(86)
|
|
|
|
|
|
|
|
Net (decrease)/increase in cash and cash equivalents
|
|
(76)
|
|
332
|
|
Cash
and cash equivalents at beginning of year
|
|
617
|
|
300
|
|
Exchange
adjustments
|
|
12
|
|
(15)
|
|
Cash and cash equivalents at end of yearB
|
|
553
|
|
617
|
B Cash
and cash equivalents at the end of the year are net of bank
overdrafts of $4m (2024: $2m).
Group Statement of Changes in Equity for the year ended 31 December
2025
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital
|
|
|
|
|
|
|
|
|
|
|
|
Share
|
|
Share
|
|
redemption
|
|
Treasury
|
|
Other
|
|
Retained
|
|
Total
|
|
|
|
capital
|
|
premium
|
|
reserve
|
|
shares
|
|
reservesC
|
|
earningsD
|
|
equity
|
|
|
|
$m
|
|
$m
|
|
$m
|
|
$m
|
|
$m
|
|
$m
|
|
$m
|
|
At
1 January 2025
|
|
175
|
|
615
|
|
20
|
|
(66)
|
|
(497)
|
|
5,018
|
|
5,265
|
|
Attributable profit for the
yearA
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
625
|
|
625
|
|
Other comprehensive incomeA
|
|
-
|
|
-
|
|
-
|
|
-
|
|
168
|
|
4
|
|
172
|
|
Total
comprehensive income
|
|
-
|
|
-
|
|
-
|
|
-
|
|
168
|
|
629
|
|
797
|
|
Equity
dividends declared and paid
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(330)
|
|
(330)
|
|
Share-based
payments recognised
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
43
|
|
43
|
|
Taxation
on share-based payments
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
4
|
|
4
|
|
Purchase of own sharesC
|
|
-
|
|
-
|
|
-
|
|
(502)
|
|
-
|
|
-
|
|
(502)
|
|
Cost
of shares transferred to beneficiaries
|
|
-
|
|
-
|
|
-
|
|
53
|
|
-
|
|
(41)
|
|
12
|
|
At 31 December 2025
|
|
175
|
|
615
|
|
20
|
|
(515)
|
|
(329)
|
|
5,323
|
|
5,289
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital
|
|
|
|
|
|
|
|
|
|
|
|
Share
|
|
Share
|
|
redemption
|
|
Treasury
|
|
Other
|
|
Retained
|
|
Total
|
|
|
|
capital
|
|
premium
|
|
reserve
|
|
shares
|
|
reservesC
|
|
earningsD
|
|
equity
|
|
|
|
$m
|
|
$m
|
|
$m
|
|
$m
|
|
$m
|
|
$m
|
|
$m
|
|
At
1 January 2024
|
|
175
|
|
615
|
|
20
|
|
(94)
|
|
(405)
|
|
4,906
|
|
5,217
|
|
Attributable profit for the
yearA
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
412
|
|
412
|
|
Other comprehensive incomeA
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(92)
|
|
15
|
|
(77)
|
|
Equity
dividends declared and paid
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(327)
|
|
(327)
|
|
Share-based
payments recognised
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
40
|
|
40
|
|
Taxation
on share-based payments
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(1)
|
|
(1)
|
|
Cost
of shares transferred to beneficiaries
|
|
-
|
|
-
|
|
-
|
|
28
|
|
-
|
|
(27)
|
|
1
|
|
At 31 December 2024
|
|
175
|
|
615
|
|
20
|
|
(66)
|
|
(497)
|
|
5,018
|
|
5,265
|
A
Attributable to equity holders of the Company and wholly derived
from continuing operations.
C
Other reserves comprises gains and losses on cash flow hedges,
foreign exchange differences on translation of foreign operations
and net changes on fair value of trade investments. The cumulative
translation loss within other reserves at 31 December 2025 was
$341m (2024: $520m, 2023: $396m).
D Within
retained earnings is a non-distributable capital reserve of $2,266m
(2024: $2,266m, 2023: $2,266m) which arose as a result of the
Group's reorganisation in 2008.
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 2025. 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 2025. 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.
The
preparation of accounts in conformity with IFRS requires management
to use estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the accounts and the reported amounts of
revenues and expenses during the year. The accounting policies
requiring management to use significant estimates and assumptions
are discussed below. Although these estimates are based on
management's best knowledge of current events and actions, actual
results ultimately may differ from those estimates. Estimates and
underlying assumptions are reviewed on an ongoing basis. Revisions
to estimates are recognised prospectively.
The
uncertainties as to the future impact on the financial performance
and cash flows of the Group as a result of the current 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 $553m of cash and cash equivalents at 31
December 2025. The Group's net debt at 31 December 2025 was $2,759m
with access to committed facilities of $4.1bn with an average
maturity of 4.7 years. The funding position of the Group has
remained materially unchanged following the upfront payment of
$225m for the acquisition of Integrity Orthopaedics, the repayment
of $75m of maturing private placement debt, and an increase of the
Revolving Credit Facility by $125m to $1.125bn.
$625m
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, including the impact of a significant global economic
downturn, 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 2025 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 financial markets.
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 2025 or 2024 but is derived from those accounts. Statutory
accounts for 2024 have been delivered to the registrar of companies
and those for 2025 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 2025
A
number of new amendments to standards are effective from 1 January
2025 but they do not have a material effect on the Group's
financial statements.
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 2026 and earlier
application is permitted; however, the Group has not adopted them
early in preparing these financial statements.
IFRS
18 Presentation and Disclosure in Financial Statements was issued
by the IASB in April 2024. The standard is effective for annual
reporting periods beginning on or after 1 January 2027 and also
applies to comparative information. IFRS 18 will replace IAS 1
Presentation of Financial Statements and will have a pervasive
impact on several aspects of financial statements presentation and
disclosure, particularly in the Group income statement and
disclosure requirements for management-defined performance measures
(MPMs) within the financial statements.
The
Group has commenced an assessment of the standard's full impact.
Based on the preliminary analysis, the Group anticipates that the
standard will have the following potential impacts:
●
The
classification of items of income and expense into categories
defined in IFRS 18 will impact the presentation of the Group income
statement. Whilst the standard does not impact recognition or
measurement, changes in classification will impact the reported
amounts for line items in the income statement. A new subtotal
'Profit before financing and income tax' will be included to
separately present the impact of investing and financing
activities. Share of results of associates will be classified in
the investing category, interest income and expense in the
financing category and other finance costs will be classified in
the operating, investing or financing category depending on the
nature of the income or expense.
● The Group is reassessing its aggregation
and disaggregation principles to ensure they comply with the
enhanced guidance in IFRS 18, which aims to provide more detailed
and useful information to users of the financial
statements.
●
Mandatory new
disclosures in relation to MPMs will be required within the
financial statements.
●
Consequential presentational changes to statement of cash flows
will be required and operating profit will be the new starting
point for reconciling cash flows from operating
activities.
The
Group will apply IFRS 18 from its mandatory effective date of 1
January 2027. Comparative information for the financial years
ending 31 December 2026 and 31 December 2025 will be restated in
accordance with IFRS 18.
Critical judgements and estimates
The
Group prepares its consolidated 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.
Management
regularly reviews, and revises as necessary, the accounting
judgements that significantly impact the amounts recognised in the
financial statements and the estimates that are considered to be
critical estimates due to their potential to give rise to material
adjustments in the Group's financial statements in the next
financial year. The Group has determined that there are no critical
accounting judgements and no key sources of estimation uncertainty
that have a significant risk of resulting in a material adjustment
to the carrying amounts of assets and liabilities within the next
financial year.
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:
a.
The impact of climate change on the going concern assessment and
the viability of the Group over the next three years.
b.
The impact of climate change on the cash flow forecasts used in the
impairment assessments of non-current assets including
goodwill.
c.
The impact of climate change on the carrying value and useful
economic lives of property, plant and equipment.
While
there is currently no material medium term impact expected, the
Group closely monitors climate-related risks given the changing
nature of these risks and management consider the impact of climate
change as part of the decision making process and continue to
assess the impact on judgements and estimates, and on preparation
of the consolidated financial statements.
2. Business segment information
The
Group's operating structure is organised around four global
business units (Orthopaedics, Sports Medicine, ENT and Advanced
Wound Management) and the chief operating decision maker monitors
performance, makes operating decisions and allocates resources on a
global business unit basis. 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. Accordingly, the Group consists of four
operating segments.
The
Group has concluded that Sports Medicine and ENT meet the
aggregation criteria and therefore, these operating segments have
been aggregated into a single operating segment. In applying the
aggregation criteria prescribed by IFRS 8 Operating Segments,
management made certain judgements pertaining to the economic
indicators relating to these operating segments including those
relating to the similarities in the expected long-term market
growth rates, the geographic and operational risks and the
competitive landscape that these segments operate in. Therefore, in
accordance with IFRS 8, the Group has three operating segments
which are also reportable segments.
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 while 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
business units and determines the best allocation of resources to
the business units. This information is prepared substantially on
the same basis as the Group's IFRS financial statements aside from
the adjustments described in Note 2b. In 2024, the Group changed
the segment trading profit measure presented to the ExCo by
allocating directly attributable corporate costs to business units.
Financial information for corporate costs relating to centralised
infrastructure costs such as compliance and group functions 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:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2025
|
|
2024
|
|
|
|
$m
|
|
$m
|
|
Reportable segment revenue
|
|
|
|
|
|
Orthopaedics
|
|
2,437
|
|
2,305
|
|
Sports
Medicine & ENT
|
|
1,934
|
|
1,824
|
|
Advanced
Wound Management
|
|
1,793
|
|
1,681
|
|
Revenue
from external customers
|
|
6,164
|
|
5,810
|
|
|
|
|
|
|
Disaggregation of revenue
The
following table shows the disaggregation of Group revenue by
product by business unit:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2025
|
|
2024(i)
|
|
|
|
$m
|
|
$m
|
|
Knee
Implants
|
|
1,011
|
|
977
|
|
Hip
Implants
|
|
641
|
|
619
|
|
Other
Reconstruction
|
|
136
|
|
101
|
|
Trauma
& Extremities
|
|
649
|
|
608
|
|
Orthopaedics
|
|
2,437
|
|
2,305
|
|
Sports
Medicine Joint Repair
|
|
1,067
|
|
982
|
|
Arthroscopic
Enabling Technologies
|
|
647
|
|
632
|
|
ENT
(Ear, Nose and Throat)
|
|
220
|
|
210
|
|
Sports Medicine & ENT
|
|
1,934
|
|
1,824
|
|
Advanced
Wound Care
|
|
766
|
|
735
|
|
Advanced
Wound Bioactives
|
|
621
|
|
581
|
|
Advanced
Wound Devices
|
|
406
|
|
365
|
|
Advanced Wound Management
|
|
1,793
|
|
1,681
|
|
Total
|
|
6,164
|
|
5,810
|
(i) Robotics consumables revenue has been reclassified from Other
Reconstruction to Knee and Hip implants.
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.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2025
|
|
2024
|
||||||||
|
|
Established MarketsE
|
|
Emerging Markets
|
|
Total
|
|
Established MarketsE
|
|
Emerging Markets
|
|
Total
|
|
|
$m
|
|
$m
|
|
$m
|
|
$m
|
|
$m
|
|
$m
|
|
Orthopaedics,
Sports Medicine & ENT
|
3,606
|
|
764
|
|
4,370
|
|
3,366
|
|
763
|
|
4,129
|
|
Advanced
Wound Management
|
1,555
|
|
239
|
|
1,794
|
|
1,464
|
|
217
|
|
1,681
|
|
Total
|
5,161
|
|
1,003
|
|
6,164
|
|
4,830
|
|
980
|
|
5,810
|
E
Established Markets comprises the US, Australia, Canada, Europe,
Japan and New Zealand.
Sales
are attributed to the country of destination. US revenue for 2025
was $3,306m (2024: $3,123m, 2023: $2,979m), UK revenue for 2025 was
$246m (2024: $226m, 2023: $201m) and China revenue for 2025 was
$128m (2024: $210m, 2023: $275m).
No
single customer generates revenue greater than 10% of the
consolidated revenue.
2b. Trading profit by business
segment
The
segment profit measure presented to the ExCo is the segment trading
profit. The Group has identified the following items, where
material, as those to be excluded from operating profit when
arriving at segment trading profit: corporate costs; 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.
In
2024, the Group changed the segment trading profit measure
presented to the ExCo by allocating directly attributable corporate
costs to business units except for corporate costs relating to
centralised infrastructure costs such as compliance and group
functions.
Segment
trading profit is reconciled to the statutory measure
below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2025
|
|
2024
|
|
|
|
$m
|
|
$m
|
|
Segment profit
|
|
|
|
|
|
Orthopaedics
|
|
363
|
|
265
|
|
Sports
Medicine & ENT
|
|
461
|
|
437
|
|
Advanced
Wound Management
|
|
447
|
|
399
|
|
Segment
trading profit
|
|
1,271
|
|
1,101
|
|
Corporate costs1
|
|
(60)
|
|
(52)
|
|
Acquisition and disposal related
items2
|
|
(32)
|
|
(94)
|
|
Restructuring and rationalisation
expenses2
|
|
(47)
|
|
(123)
|
|
Amortisation
and impairment of acquisition intangibles
|
|
(176)
|
|
(187)
|
|
Legal and other2
|
|
(162)
|
|
12
|
|
Operating
profit
|
|
794
|
|
657
|
|
Interest
income
|
|
28
|
|
24
|
|
Interest
expense
|
|
(140)
|
|
(145)
|
|
Other
finance costs
|
|
(16)
|
|
(28)
|
|
Share
of results of associates
|
|
113
|
|
(10)
|
|
Profit
before taxation
|
|
779
|
|
498
|
|
|
|
|
|
|
1
Corporate costs include centralised infrastructure costs such as
compliance and group functions.
2
During 2025, the Group undertook a strategic review of its
inventory portfolio and determined that certain product ranges
would be phased out and simplified. As a result, the Group
recognised an excess and obsolescence charge of $159m within legal
and other items. During 2024, the Group announced its intention to
close the Warwick manufacturing site that manufactures Birmingham
Hip Resurfacing (BHR) products. As a result, a total of $68m of BHR
assets and liabilities were written off, which mainly includes
goodwill of $63m (included in acquisition and disposal-related
items).
Depreciation and
amortisation included in segment profit is presented
below:
|
|
|
|
|
|
|
|
|
2025
|
|
2024
|
|
|
|
$m
|
|
$m
|
|
Depreciation and amortisation
|
|
|
|
|
|
Orthopaedics
|
|
227
|
|
213
|
|
Sports Medicine & ENT
|
|
105
|
|
98
|
|
Advanced Wound Management
|
|
69
|
|
62
|
Acquisition and disposal-related items
For
the year ended 31 December 2025, costs primarily relate to charge
relating to integration costs for prior year acquisitions and
disposal of certain products.
For
the year ended 31 December 2024, costs primarily relate to
impairment of BHR goodwill, disposal of certain products and
integration costs relating to CartiHeal.
Restructuring and rationalisation costs
For
the year ended 31 December 2025 and 2024 these costs include
efficiency and productivity elements of the 12-Point Plan and the
Operations and Commercial Excellence programme. These costs
primarily consist of severance, business advisory services, asset
write-offs, contractual terminations and integration and dual
running costs.
Amortisation and impairment of acquisition intangibles
For
the years ended 31 December 2025 and 2024 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 2025, the charge
mainly relates to a $159m increase in the excess and obsolescence
provision arising from the Group's portfolio simplification
initiatives introduced under the 12-Point Plan and further developed in 2025 through
the Ortho 360 operating model and new RISE strategy. These actions
include the planned discontinuation and simplification of certain
product ranges which will reduce the need for inventory and capital
employed in the business, provide a simpler and more efficient
offer to our customers, and will also allow us to focus on
migrating them to our latest technology products. Legal and other
also includes $9m reduction in the provision for ongoing
metal-on-metal hip claims as a result of a decrease in the present
value of the estimated costs to resolve all known and anticipated
metal-on-metal hip claims, offset by legal expenses of $10m for
ongoing metal-on-metal hip claims.
For
the year ended 31 December 2024, the credit mainly relates to a
$28m reduction in the provision for ongoing metal-on-metal hip
claims as a result of a decrease in the present value of the
estimated costs to resolve all known and anticipated metal-on-metal
hip claims, partially offset by legal expenses for ongoing
metal-on-metal hip claims.
The
years ended 31 December 2024 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 2025 was a charge of $154m
(2024: $86m charge). The reported tax charge is higher than 2024
due to an increase in reported profits.
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. The Pillar Two rules
first applied to the Group for its accounting period commencing 1
January 2024.
The
Pillar Two current tax charge for the period ended 31 December 2025
is approximately $8m (2024: $8m).
The
Group is adopting the IAS12 mandatory temporary exception from the
recognition and disclosure of deferred taxes arising from the
Pillar Two rules.
The
Group does not meet the threshold for application of the Pillar One
transfer pricing rules.
4. Dividends
The
2024 final dividend of 23.1 US cents per ordinary share totalling
$202m was paid on 28 May 2025. The 2025 interim dividend of 14.4 US
cents per ordinary share totalling $128m was paid on 7 November
2025.
A
final dividend for 2025 of 24.1 US cents per ordinary share has
been proposed by the Board and will be paid, subject to shareholder
approval, on 27 May 2026 to shareholders whose names appear on the
Register of Members on 27 March 2026. The sterling equivalent per
ordinary share will be set following the record date. The
ex-dividend date is 26 March 2026 and the final day for currency
and dividend reinvestment plan ('DRIP') elections is 5 May
2026.
5. Acquisitions
Year ended 31 December 2025
No
acquisitions were completed in 2025.
Year ended 31 December 2024
On
9 January 2024, the Group completed the acquisition of 100% of the
share capital of CartiHeal (2009) Ltd (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.
The
fair value of the consideration amounted to $231m. This is
comprised of contingent consideration of $49m, which represents the
discounted value of $150m of consideration contingent upon the
achievement of a single future financial performance milestone in
the next 10 years, and initial cash consideration of $180m adjusted
for cash acquired and other liabilities assumed, of which $18m was
transferred in to escrow to be released in equal instalments to the
seller in 12 and 18 months from completion.
The
fair value of assets acquired and liabilities assumed is set out
below:
|
|
|
|
|
|
|
CartiHeal (2009) Ltd
|
|
|
|
$m
|
|
Intangible
assets - product-related and trade name
|
|
84
|
|
Inventory
|
|
1
|
|
Cash
|
|
6
|
|
Other
liabilities
|
|
(2)
|
|
Trade
and other payables
|
|
(1)
|
|
Net
deferred tax liability
|
|
(3)
|
|
Net
assets
|
|
85
|
|
Goodwill
|
|
146
|
|
Consideration
|
|
231
|
The
product-related intangible assets and the trade name were valued
using a relief-from-royalty methodology with the key inputs being
revenue, profit and discount rate.
The
cash outflow from acquisitions in 2024 of $186m comprises payments
of consideration of $177m net of cash acquired relating to
acquisitions in the current year and payments of deferred and
contingent consideration of $9m relating to acquisitions completed
in prior years.
The
goodwill represents the control premium, acquired workforce and the
synergies expected from integrating CartiHeal into the Group's
existing business. The carrying value of goodwill increased from
$2,992m at 31 December 2023 to $3,026m at 31 December 2024. The
acquisition in the year ended 31 December 2024 increased goodwill
by $146m, this was partially offset by goodwill impairment of $65m
and foreign exchange movements of $47m.
For
the year ended 31 December 2024, the contribution from CartiHeal to
the Group's revenue and profit was immaterial. If the business
combination had occurred at the beginning of the year the
contribution to revenue and profit would not have been materially
different.
6. Net debt
Net
debt comprises borrowings and credit balances on currency swaps
less cash and cash equivalents.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2025
|
|
2024
|
|
|
|
$m
|
|
$m
|
|
Bank overdrafts, borrowings and loans - current
|
|
83
|
|
2
|
|
Corporate bond
|
|
2,478
|
|
2,498
|
|
Private placement notes
|
|
550
|
|
625
|
|
Borrowings
|
|
3,111
|
|
3,125
|
|
Cash and cash equivalents1
|
|
(557)
|
|
(619)
|
|
Credit balance on derivatives - currency swaps
|
|
-
|
|
1
|
|
(Asset)/liability balance on derivatives - interest rate
swaps
|
|
(11)
|
|
6
|
|
Net debt excluding lease liabilities
|
|
2,543
|
|
2,513
|
|
Non-current lease liabilities
|
|
149
|
|
135
|
|
Current lease liabilities
|
|
67
|
|
61
|
|
Net debt
|
|
2,759
|
|
2,709
|
|
|
|
|
|
|
1 In 2025, cash and cash equivalents include cash at bank of $457m
(2024: $419m) and cash equivalents of $100m (2024:
$200m).
The
Group had access to $553m of cash and cash equivalents at 31
December 2025. The Group's net debt, excluding lease liabilities,
at 31 December 2025 was $2,543m with access to committed facilities
of $4.1bn with an average maturity of 4.7 years. The funding
position of the group remains materially unchanged following the
acquisition of Integrity Orthopaedics for $225m, the repayment of
$75m of maturating private placement debt, and an increase of the
Revolving Credit Facility by $125m to $1.125bn.
$625m
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.
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
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2025
|
|
2024
|
|
2025
|
|
2024
|
|
Fair value
|
|
|
|
$m
|
|
$m
|
|
$m
|
|
$m
|
|
level
|
|
Financial assets measured at fair value
|
|
|
|
|
|
|
|
|
|
|
|
Forward foreign exchange contracts
|
|
33
|
|
46
|
|
33
|
|
46
|
|
Level 2
|
|
Investments
|
|
30
|
|
9
|
|
30
|
|
9
|
|
Level 3
|
|
Investments relating to deferred compensation
arrangements
|
|
106
|
|
-
|
|
106
|
|
-
|
|
Level 1
|
|
Interest rate swaps
|
|
11
|
|
10
|
|
11
|
|
10
|
|
Level 2
|
|
Currency swaps
|
|
2
|
|
1
|
|
2
|
|
1
|
|
Level 2
|
|
|
|
182
|
|
66
|
|
182
|
|
66
|
|
|
|
Financial assets not measured at fair value
|
|
|
|
|
|
|
|
|
|
|
|
Trade and other receivables
|
|
1,278
|
|
1,190
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
557
|
|
619
|
|
|
|
|
|
|
|
|
|
1,835
|
|
1,809
|
|
|
|
|
|
|
|
Total financial assets
|
|
2,017
|
|
1,875
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial liabilities measured at fair value
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition consideration - contingent
|
|
(107)
|
|
(84)
|
|
(107)
|
|
(84)
|
|
Level 3
|
|
Forward foreign exchange contracts
|
|
(15)
|
|
(16)
|
|
(15)
|
|
(16)
|
|
Level 2
|
|
Interest rate swaps
|
|
-
|
|
(16)
|
|
-
|
|
(16)
|
|
Level 2
|
|
Currency swaps
|
|
(2)
|
|
(2)
|
|
(2)
|
|
(2)
|
|
Level 2
|
|
|
|
(124)
|
|
(118)
|
|
(124)
|
|
(118)
|
|
|
|
Financial liabilities not measured at fair value
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition consideration - deferred
|
|
-
|
|
(21)
|
|
|
|
|
|
|
|
Bank overdrafts and loans
|
|
(8)
|
|
(2)
|
|
|
|
|
|
|
|
Corporate bond not in a hedge relationship
|
|
(1,394)
|
|
(1,492)
|
|
|
|
|
|
|
|
Corporate bond in a hedge relationship
|
|
(1,084)
|
|
(1,006)
|
|
|
|
|
|
|
|
Private placement debt not in a hedge relationship
|
|
(625)
|
|
(625)
|
|
|
|
|
|
|
|
Trade and other payables
|
|
(1,243)
|
|
(1,084)
|
|
|
|
|
|
|
|
|
|
(4,354)
|
|
(4,230)
|
|
|
|
|
|
|
|
Total financial liabilities
|
|
(4,478)
|
|
(4,348)
|
|
|
|
|
|
|
The
following table shows the book value and market value of corporate
bonds and private placement debt.
|
|
|
|
|
|
|
|
|
|
|
2025
|
|
2024
|
||
|
|
|
Book
|
Market
|
|
Book
|
Market
|
|
|
|
value
|
value
|
|
value
|
value
|
|
|
|
$ million
|
$ million
|
|
$ million
|
$ million
|
|
2030 USD corporate bond
|
|
897
|
810
|
|
995
|
836
|
|
2034 USD corporate bond
|
|
641
|
672
|
|
628
|
642
|
|
2027 USD corporate bond
|
|
349
|
354
|
|
348
|
352
|
|
2029 EUR corporate bond
|
|
591
|
617
|
|
527
|
547
|
|
Private placement debt
|
|
625
|
594
|
|
625
|
573
|
There
were no transfers between Levels 1, 2 and 3 during 2025 and 2024.
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, October 2022 and March 2024
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 forward foreign exchange contracts is calculated by
reference to quoted market forward exchange rates for
contracts with similar maturity profiles. The fair value of
interest rate swaps is determined by reference to quoted market
interest rates. The fair value of currency swaps is determined by
reference to quoted market spot rates. As a result, foreign forward
exchange contracts, interest rate swaps and currency swaps are
classified as Level 2 within the fair value hierarchy.
The
Group holds investments in relation to deferred compensation and
employee benefit arrangements. These assets mainly comprise
investments in mutual funds and similar investment vehicles with
quoted prices in active markets that the Group can access at the
reporting date. Fair value is therefore determined using unadjusted
quoted market prices, and accordingly these investments are
classified as Level 1 within the fair value hierarchy. The assets
are measured at fair value through profit or loss.
The
fair value of contingent 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 2025 and the year ended 31 December 2024 for financial
instruments measured using Level 3 valuation methods are presented
below:
|
|
|
|
|
|
|
|
|
|
2025
|
2024
|
|
|
$m
|
$m
|
|
Investments
|
|
|
|
At 1 January
|
9
|
8
|
|
Additions
|
2
|
1
|
|
Transferred from receivables
|
18
|
-
|
|
Fair value remeasurement
|
1
|
-
|
|
At 31 December
|
30
|
9
|
|
|
|
|
|
Contingent consideration receivable
|
|
|
|
At 1 January
|
-
|
18
|
|
Transferred to receivables
|
-
|
(18)
|
|
|
-
|
-
|
|
|
|
|
|
Contingent acquisition consideration liability
|
|
|
|
At 1 January
|
(84)
|
(32)
|
|
Arising on acquisitions
|
-
|
(49)
|
|
Payments
|
6
|
6
|
|
Remeasurements
|
(29)
|
(9)
|
|
At 31 December
|
(107)
|
(84)
|
7b. Retirement benefit obligations
The
discount rate applied to the future pension liabilities of the UK
plan is 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 UK discount rate has remains unchanged since 31
December 2024. The remeasurement gain of $5m recognised in Other
Comprehensive Income (OCI) was principally made up of a $3m gains
on remeasurement of plan obligations in the UK, Germany and
Switzerland.
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:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2025
|
|
2024
|
|
Average rates
|
|
|
|
|
|
Sterling
|
|
1.32
|
|
1.28
|
|
Euro
|
|
1.13
|
|
1.08
|
|
Swiss
Franc
|
|
1.20
|
|
1.14
|
|
Japanese
Yen
|
|
0.0067
|
|
0.0066
|
|
Year end rates
|
|
|
|
|
|
Sterling
|
|
1.35
|
|
1.25
|
|
Euro
|
|
1.17
|
|
1.04
|
|
Swiss
Franc
|
|
1.26
|
|
1.10
|
|
Japanese
Yen
|
|
0.0064
|
|
0.0064
|
9. Post balance sheet events
On
21 January 2026, the Group completed the acquisition of 100% of the
share capital of Integrity Orthopaedics, Inc., a US-based
early-stage commercial developer of Tendon Seam™, an
innovative rotator cuff repair (RCR) system designed to
significantly reduce re tear rates and improve patient outcomes.
The acquisition represents a meaningful step in delivering
Smith+Nephew's RISE strategy to accelerate growth through strategic
investment and portfolio leadership, and will be an important
building block in our ambition to become the global leader in
Sports Medicine. The acquisition consideration comprised of $225m
paid on completion, with up to a further $225m contingent on future
performance.
The
acquisition will be treated as a business combination under IFRS 3.
The fair value assessment of the acquisition consideration,
identifiable assets acquired and liabilities assumed is ongoing.
Given the proximity of the acquisition to the financial statements
being authorised for issue, it is not practicable at this stage to
reasonably estimate the financial effect of the acquisition on the
Group's consolidated financial statements. The Group expects to
complete the purchase price allocation exercise under IFRS 3 in the
first half of 2026, accordingly, provisional disclosures will be
included in the Group's 2026 interim results.
On
9 February 2026, the Group amended its $1bn revolving credit
facility, increasing total commitments to $1.125bn. The facility
remains undrawn and its maturity is unchanged.
Other
information
These financial statements include financial measures that are not
prepared in accordance with International Financial Reporting
Standards (IFRS). This additional information presented is not
uniformly defined by all companies including those in the Group's
industry. Accordingly, it may not be comparable with similarly
titled measures and disclosures by other companies. Additionally,
certain information presented is derived from amounts calculated in
accordance with IFRS but is not itself a measure defined under
IFRS. Such measures should not be viewed in isolation or as an
alternative to the equivalent GAAP measure. The non-IFRS
measures
discussed in this document are set out below.
|
|
|
|
|
|
|
Performance measures
|
||||
|
Non-IFRS measure
|
Purpose
|
Definition
|
Closest equivalent IFRS measure
|
Reconciled on
|
|
Underlying revenue growth
|
Underlying revenue growth is used to compare revenue in a given
year to the previous year on a like-for-like basis. This measure is
used by both management and the investor community.
|
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'.
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 same exchange
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.
|
Revenue growth
|
38
|
|
Trading profit
|
Trading profit is used in conjunction with operating profit to
assess the performance and profitability of the Group. It is a key
internal and external metric used by the investor community to
assess our performance. It is our segment performance measure in
accordance with IFRS 8 Operating Segments.
|
Trading profit is operating profit excluding the impact of
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 on a short-term or
one-off basis are excluded.
|
Operating profit
|
38
|
|
Trading profit margin
|
This measure is used to assess the performance and profitability of
the Group. It is a key external metric used by the investor
community to assess our performance.
|
Trading profit margin is trading profit divided by
revenue.
|
Operating profit margin
|
38
|
|
Performance measures (continued)
|
||||
|
Non-IFRS measure
|
Purpose
|
Definition
|
Closest equivalent IFRS measure
|
Reconciled on
|
|
Trading profit before tax
|
Trading profit before tax is used in conjunction with profit before
tax to assess performance and profitability of the Group. This
measure is intended to enable the users to assess the performance
of the Group by
excluding items that impact the
short-term profitability of the Group.
|
Trading profit before tax is profit before tax excluding impact of
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 on a short-term or
one-off basis are excluded.
|
Profit before tax
|
38
|
|
Trading taxation
|
Trading taxation is used in conjunction with taxation to assess
taxation that corresponds to trading profit before tax. This metric
is used by both management and the investor community.
|
Trading taxation is taxation excluding the impact of 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 on a short-term or
one-off basis are excluded.
|
Taxation
|
38
|
|
Trading attributable profit
|
This metric is used in the calculation of adjusted basic earnings
per share.
|
Trading attributable profit is attributable profit excluding the
impact of 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 on a
short-term or one-off basis are excluded.
|
Attributable profit
|
38
|
|
Adjusted earnings per share ('EPSA')
|
EPSA is a trend measure. The Group presents this measure to assist
investors in their understanding of trends.
|
Adjusted earnings per share is trading attributable profit divided
by the weighted average number of shares outstanding. This is the
same denominator used when calculating basic earnings per
share.
|
Basic earnings per share
|
38
|
|
Trading cash flow
|
Trading cash flow is used in conjunction with cash generated from
operations to assess the conversion of trading profit into cash. It
is key external metric used by the investor community and is a key
performance measure for management.
|
Trading cash flow is cash generated from operations excluding the
impact of acquisition and disposal related items arising in
connection with business combinations, including 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 cash
flows
on a short-term or one-off basis are excluded. Trading cash flow
includes payment of capital element of lease liabilities, proceeds
from disposal of property, plant and equipment and capital
expenditure as presented in the
Group cash flow statement.
|
Cash generated from operations
|
38
|
|
Trading cash conversion
|
This measure is used to assess the conversion of trading profit
into cash. It is a key external metric used by the investor
community and is a key performance measure for
management.
|
Trading cash conversion is trading cash flow divided by trading
profit.
|
Cash generated from operations
|
38
|
|
|
|
|
|
|
|
Other measures
|
||||
|
Non-IFRS measure
|
Purpose
|
Definition
|
Closest equivalent IFRS measure
|
Reconciled on
|
|
Free cash flow
|
Free cash flow is a measure of the cash generated for the Group to
use after capital expenditure according to its Capital Allocation
Framework. This metric is used by both management
and investor community.
|
Free cash flow is cash generated from operations less capital
expenditure, proceeds from disposal of property, plant and
equipment, payment of lease liabilities and cash flows from
interest and income taxes.
|
Cash generated from operations
|
40
|
|
Adjusted EBITDA
|
Adjusted EBITDA is used in the calculation of adjusted leverage
ratio.
|
Adjusted EBITDA is attributable profit excluding taxation, share of
results of associates, other finance costs, interest expense,
interest income, acquisition and disposal related items,
restructuring and rationalisation costs, amortisation and
impairment of acquisition intangibles, legal and other costs,
depreciation and impairment of property, plant and equipment and
amortisation and impairment of other intangible
assets.
|
Attributable profit
|
40
|
|
Adjusted leverage ratio
|
Adjusted leverage ratio is used in the calculation relating to
debt covenants.
|
We calculate adjusted leverage ratio by dividing net debt by
adjusted EBITDA. Net debt
is defined as total borrowings less cash and cash equivalents in
the statement of financial position. Total borrowings include bank
overdrafts, borrowings, loans and lease liabilities and long-term
borrowings and lease liabilities.
|
Leverage ratio(using IFRS measures)
|
40
|
|
Adjusted return on invested capital ('Adjusted ROIC')
|
Adjusted ROIC is a metric used by investor community and is a
measure of the return generated on capital invested by the Group.
It provides a metric for long-term value creation and encourages
compounding reinvestment within the business and discipline around
acquisitions with low returns and long payback. Adjusted ROIC is a
key performance measure under the Performance Share
Program.
|
Adjusted ROIC is defined as operating profit (before amortisation
and impairment of acquisition intangibles) less adjusted
taxes/((opening net operating assets + closing net operating
assets)/2).
|
Return on invested capital ('ROIC') (using IFRS
measures)
|
41
|
Underlying revenue
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
|
|
|
|
2025
|
|
2024
|
|
growth
|
|
growth
|
|
& disposals
|
|
impact
|
|
|
|
$m
|
|
$m
|
|
%
|
|
%
|
|
%
|
|
%
|
|
Segment revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Orthopaedics
|
|
2,437
|
|
2,305
|
|
5.7
|
|
5.1
|
|
-
|
|
0.6
|
|
Sports
Medicine & ENT
|
|
1,934
|
|
1,824
|
|
6.0
|
|
5.2
|
|
-
|
|
0.8
|
|
Advanced
Wound Management
|
|
1,793
|
|
1,681
|
|
6.7
|
|
5.6
|
|
-
|
|
1.1
|
|
Revenue
from external customers
|
|
6,164
|
|
5,810
|
|
6.1
|
|
5.3
|
|
-
|
|
0.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
|
|
|
|
|
|
Profit
|
|
|
|
|
|
generated
|
|
|
|
|
|
Operating
|
|
before
|
|
|
|
Attributable
|
|
from
|
|
Earnings
|
|
|
|
profit1
|
|
tax2
|
|
Taxation3
|
|
profit4
|
|
operations5
|
|
per share6
|
|
|
|
$m
|
|
$m
|
|
$m
|
|
$m
|
|
$m
|
|
¢
|
|
2025 Reported
|
|
794
|
|
779
|
|
(154)
|
|
625
|
|
1,549
|
|
72.1
|
|
Acquisition
and disposal related items
|
|
32
|
|
(47)
|
|
15
|
|
(32)
|
|
30
|
|
(3.6)
|
|
Restructuring
and rationalisation costs
|
|
47
|
|
47
|
|
(13)
|
|
34
|
|
83
|
|
4.0
|
|
Amortisation
and impairment of acquisition intangibles
|
|
176
|
|
176
|
|
(40)
|
|
136
|
|
-
|
|
15.6
|
|
Legal and other7
|
|
162
|
|
142
|
|
(21)
|
|
121
|
|
19
|
|
13.9
|
|
Lease
liability payments
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(50)
|
|
-
|
|
Capital
expenditure
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(433)
|
|
-
|
|
Proceeds
from disposal of property, plant and equipment
|
|
-
|
|
-
|
|
-
|
|
-
|
|
38
|
|
-
|
|
2025 Non-IFRS
|
|
1,211
|
|
1,097
|
|
(213)
|
|
884
|
|
1,236
|
|
102.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
|
|
|
|
|
|
Profit
|
|
|
|
|
|
generated
|
|
|
|
|
|
Operating
|
|
before
|
|
|
|
Attributable
|
|
from
|
|
Earnings
|
|
|
|
profit1
|
|
tax2
|
|
Taxation3
|
|
profit4
|
|
operations5
|
|
per share6
|
|
|
|
$m
|
|
$m
|
|
$m
|
|
$m
|
|
$m
|
|
¢
|
|
2024 Reported
|
|
657
|
|
498
|
|
(86)
|
|
412
|
|
1,245
|
|
47.2
|
|
Acquisition and disposal related
items8
|
|
94
|
|
106
|
|
(9)
|
|
97
|
|
3
|
|
11.2
|
|
Restructuring and rationalisation
costs8
|
|
123
|
|
123
|
|
(29)
|
|
94
|
|
151
|
|
10.8
|
|
Amortisation
and impairment of acquisition intangibles
|
|
187
|
|
187
|
|
(42)
|
|
145
|
|
-
|
|
16.6
|
|
Legal and other7
|
|
(12)
|
|
(6)
|
|
(7)
|
|
(13)
|
|
36
|
|
(1.5)
|
|
Lease
liability payments
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(55)
|
|
-
|
|
Capital
expenditure
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(381)
|
|
-
|
|
2024 Non-IFRS
|
|
1,049
|
|
908
|
|
(173)
|
|
735
|
|
999
|
|
84.3
|
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 trading
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
2024, the Group announced its intention to close the Warwick
manufacturing site that manufactures Birmingham Hip Resurfacing
(BHR) products. As a result, a total of $68m of BHR assets and
liabilities were written off, which mainly includes goodwill of
$63m (included in acquisition and disposal-related
items).
Acquisition and disposal related items
For the year ended 31 December 2025, costs primarily relate to
disposal of certain products
and integration costs relating to acquisitions. Trading profit
before tax additionally excludes gains of $108m related to the
Group's shareholding in Bioventus and the remeasurement and
discount unwind for contingent consideration. This primarily
includes an impairment reversal of $109m and the Group's share of
gain recognised by Bioventus in its financial
statements.
For the year ended 31 December 2024, costs primary related to
impairment of BHR goodwill,
disposal of certain products and integration costs relating to
integration of CartiHeal. Trading profit before tax additionally
excludes losses related to the Group's shareholding in Bioventus.
This primarily includes the Group's share of loss recognised by
Bioventus in its financial statements.
Restructuring and rationalisation costs
For the year ended 31 December 2025, these costs include efficiency
and productivity elements of the 12-Point Plan to the Operations
and Commercial Excellence programme. These costs primarily consist
of severance, asset write-offs and integration and dual running
costs.
For the year ended 31 December 2024, these costs include efficiency
and productivity elements of the 12-Point Plan to the Operations
and Commercial Excellence programme. These costs primarily consist
of severance, asset write-offs and integration and dual running
costs.
Amortisation and impairment of acquisition intangibles
For the years ended 31 December 2025 and 2024, 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 2025, the charge mainly relates to a
$159m increase in the excess and obsolescence provision arising
from the Group's portfolio simplification initiatives introduced
under the 12-Point Plan and further developed in 2025 through the
Ortho 360 operating model and new RISE strategy. These actions
include the planned discontinuation and simplification of certain
product ranges which will reduce the need for inventory and capital
employed in the business, provide a simpler and more efficient
offer to our customers, and will also allow us to focus on
migrating them to our latest technology products.
Trading profit before tax additionally excludes $10m gain on
repurchase of corporate bonds, investment income relating to
deferred compensation arrangements of $14m, partially offset by $4m
of finance costs for the unwind of discount relating to the
provision for metal-on-metal hip claims.
For the year ended 31 December 2024, the credit mainly relates to a
$28m reduction in the provision for ongoing metal-on-metal hip
claims as a result of decrease in the present value of the
estimated costs to resolve all known and anticipated metal-on-metal
hip claims, partially offset by legal expenses for ongoing
metal-on-metal hip claims and costs of implementing
the
requirements of the EU Medical Device Regulation that was effective
from May 2021 with a transition period to May 2024.
In 2024, Trading profit before tax additionally excludes $6m of
finance costs for the unwind of discount relating to the provision
for metal-on-metal hip claims.
Free cash flow
A reconciliation from cash generated from operations, the most
comparable IFRS measure, to free cash flow is set out
below:
|
|
|
|
|
|
|
|
|
|
|
|
2025
|
|
2024
|
|
|
$m
|
|
$m
|
|
Cash generated from operations
|
1,549
|
|
1,245
|
|
Capital expenditure
|
(433)
|
|
(381)
|
|
Interest received
|
25
|
|
22
|
|
Interest paid
|
(142)
|
|
(140)
|
|
Payment of lease liabilities
|
(50)
|
|
(55)
|
|
Income taxes paid
|
(147)
|
|
(140)
|
|
Proceeds from disposal of property, plant and
equipment
|
38
|
|
-
|
|
Free cash flow
|
840
|
|
551
|
Adjusted leverage ratio
The calculation of the adjusted leverage ratio is set out below.
Adjusted leverage ratio is calculated using metrics similar to
those used in the debt covenant calculation.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2025
|
|
2024
|
|
|
|
$m
|
|
$m
|
|
Net debt including lease liabilities
|
|
2,759
|
|
2,709
|
|
|
|
|
|
|
|
Attributable
|
|
625
|
|
412
|
|
Taxation
|
|
154
|
|
86
|
|
Share of results of associates
|
|
(113)
|
|
10
|
|
Other finance costs
|
|
16
|
|
28
|
|
Interest expense
|
|
140
|
|
145
|
|
Interest income
|
|
(28)
|
|
(24)
|
|
Acquisition and disposal-related items
|
|
32
|
|
94
|
|
Restructuring and rationalisation costs
|
|
47
|
|
123
|
|
Amortisation and impairment of acquisition intangibles
|
|
176
|
|
187
|
|
Legal and other
|
|
162
|
|
(12)
|
|
Depreciation of property, plant and equipment
|
|
335
|
|
325
|
|
Impairment and amortisation of other intangible assets and
impairment of property, plant and equipment
|
|
61
|
|
67
|
|
Adjusted EBITDA
|
|
1,607
|
|
1,441
|
|
Adjusted leverage ratio
|
|
1.7
|
|
1.9
|
Leverage ratio (using closest equivalent IFRS
measures)
The leverage ratio using closest equivalent IFRS measures is not
based on measures used in the calculation of debt covenants and is
not used by management internally. This measure is not used for the
Company's covenant in its private placement debt.
|
|
|
|
|
|
|
|
|
2025
|
|
2024
|
|
|
|
$m
|
|
$m
|
|
Bank overdrafts, borrowings, loans and lease
liabilities
|
|
150
|
|
63
|
|
Long-term borrowings and lease liabilities
|
|
3,177
|
|
3,258
|
|
Total borrowings
|
|
3,327
|
|
3,321
|
|
|
|
|
|
|
|
Attributable profit
|
|
625
|
|
412
|
|
Leverage ratio
|
|
5.3
|
|
8.1
|
Adjusted return on invested capital
The calculation of adjusted return on invested capital and is set
out below:
|
|
|
|
|
|
|
|
|
2025
|
|
2024
|
|
|
|
$m
|
|
$m
|
|
Attributable profit
|
|
625
|
|
412
|
|
Share of results of associates
|
|
(113)
|
|
10
|
|
Other finance costs
|
|
16
|
|
28
|
|
Interest expense
|
|
140
|
|
145
|
|
Interest income
|
|
(28)
|
|
(24)
|
|
Amortisation and impairment of acquisition intangibles
|
|
176
|
|
187
|
|
Taxation adjustment1
|
|
(44)
|
|
(73)
|
|
Operating profit before amortisation and impairment of acquisition
intangibles less adjusted taxes
|
|
772
|
|
685
|
|
|
|
|
||
|
Total equity
|
|
5,289
|
|
5,265
|
|
Accumulated amortisation and impairment of acquisition intangibles
net of associated tax
|
|
1,679
|
|
1,470
|
|
Retirement benefit assets
|
|
(64)
|
|
(63)
|
|
Investments
|
|
(30)
|
|
(9)
|
|
Investments in associates
|
|
(121)
|
|
(7)
|
|
Right-of-use assets
|
|
(192)
|
|
(173)
|
|
Cash and cash equivalents
|
|
(557)
|
|
(619)
|
|
Long-term borrowings and lease liabilities
|
|
3,177
|
|
3,258
|
|
Retirement benefit obligations
|
|
84
|
|
79
|
|
Bank overdrafts, borrowings, loans and lease
liabilities
|
|
150
|
|
63
|
|
Net operating assets
|
|
9,415
|
|
9,264
|
|
Average net operating assets2
|
|
9,340
|
|
9,219
|
|
Adjusted return on invested capital
|
|
8.3%
|
|
7.4%
|
1 Being
the taxation on amortisation and impairment of acquisition
intangibles, interest income, interest expense, other finance costs
and share of results of associates.
2 (Opening
net operating assets + closing net operating
assets)/2.
Return on invested capital (using closest equivalent IFRS
measures)
The calculation of return on invested capital using closest
equivalent IFRS measures is set out below:
|
|
|
|
|
|
|
|
2025
|
|
2024
|
|
|
|
|
$m
|
|
$m
|
|
Attributable profit
|
|
625
|
|
412
|
|
Long term borrowings and lease liabilities
|
|
3,177
|
|
3,258
|
|
Bank overdrafts, borrowings, loans and lease
liabilities
|
|
150
|
|
63
|
|
Investments
|
|
(30)
|
|
(9)
|
|
Investments in associates
|
|
(121)
|
|
(7)
|
|
Retirement benefit assets
|
|
(64)
|
|
(63)
|
|
Retirement benefit obligations
|
|
84
|
|
79
|
|
Total equity
|
|
5,289
|
|
5,265
|
|
Invested capital at end of the period
|
|
8,485
|
|
8,586
|
|
Average invested capital for the period
|
|
8,536
|
|
8,441
|
|
Return on invested capital using IFRS measures
|
|
7.3%
|
|
4.9%
|
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:
March 02, 2026
|
By:
|
/s/
Helen Barraclough
|
|
|
|
Helen
Barraclough
|
|
|
|
Company
Secretary
|