Higher profit but softer sales at Smith+Nephew (NYSE: SNN)
Smith+Nephew plc reported H1 2026 revenue of $3,097 million, up 4.6% on a reported basis and 2.3% underlying, with Q2 revenue of $1,597 million. Trading profit rose to $566 million and margin to 18.3%, while operating profit was $448 million. Adjusted EPS was 47.7¢ and basic EPS 35.6¢.
Free cash flow was $231 million after higher capital expenditure on a new UK wound factory and IT upgrades, and net debt stood at $3,019 million, a 1.8x adjusted net debt/EBITDA ratio. Sports Medicine & ENT grew strongly, Advanced Wound Management was constrained by US skin-substitute reimbursement changes, and Orthopaedics was broadly flat on an underlying basis.
The company increased its interim dividend 4.0% to 15.6¢ per share and is executing a $500 million share buyback, with $216 million settled by 3 August 2026. Full-year guidance now assumes around 4% revenue growth (from around 6%), but still targets around 8% trading profit growth excluding acquisitions, about $800 million free cash flow and more than 10% ROIC on an adjusted basis.
Positive
- Trading profitability and EPSA improved: H1 2026 trading profit rose to $566 million with margin up to 18.3% (60bps higher), and adjusted EPS increased 11.0% to 47.7¢, supported by $130 million of efficiency savings in the first half.
Negative
- Revenue outlook cut amid segment headwinds: Full-year underlying revenue growth guidance was reduced from around 6% to around 4%, while skin substitutes are now expected to create a headwind towards the upper end of the $20–$40 million range.
Filing Explained
The completed Integrity acquisition includes contingent payments, while the next disclosed debt maturities fall in the first half of 2027.
Smith+Nephew completed its acquisition of Integrity Orthopaedics on
At
The interim financial statements were prepared on a going-concern basis, and the directors stated that the company had sufficient funds to meet liabilities and continue operating for at least 12 months; the company also reported compliance with its private-placement leverage covenant as of
The acquisition’s contingent consideration is expected to be resolved through performance milestones over the next three years, while the next named reporting milestone is the Q3 Trading Report on
Key Figures
Revenue H1 2026: $3,097 million
Trading profit H1 2026: $566 million
Trading profit margin H1 2026: 18.3%
+5 more
8 metrics
Revenue H1 2026
$3,097 million
Half year revenue for the period ended 27 June 2026, up 4.6% reported and 2.3% underlying
Trading profit H1 2026
$566 million
Trading profit for H1 2026, up 8.1% year-on-year on a reported basis
Trading profit margin H1 2026
18.3%
Margin for the half year, 60bps higher than 17.7% in H1 2025
Adjusted EPS (EPSA) H1 2026
47.7¢
Adjusted earnings per share, up 11.0% from 42.9¢ in H1 2025
Free cash flow H1 2026
$231 million
Half year free cash flow after higher capex on the new UK wound factory and IT upgrades
Net debt
$3,019 million
Net debt as of 27 June 2026 with an adjusted net debt/EBITDA ratio of 1.8x
Share buyback programme
$500 million
Total share repurchase announced for completion within twelve months from 6 May 2026
2026 revenue growth guidance
around 4%
Revised full year underlying revenue growth outlook, reduced from around 6%
Key Terms
underlying revenue growth, trading profit, average daily sales, Adjusted Earnings per share ('EPSA'), +2 more
6 terms
underlying revenue growth financial
"H1 revenue was $3,097 million, with underlying revenue growth of 2.3%."
Growth in sales generated by a company’s core business after removing one-time events and outside influences such as acquisitions, major currency swings, or accounting changes. It shows the steady, repeatable increase in demand for the company’s products or services — like measuring a plant’s natural growth after ignoring added fertilizer or transplanted branches — and helps investors judge whether revenue gains are durable or just the result of temporary or external factors.
trading profit financial
"Trading profit was $566 million, up 8.1% on a reported basis."
average daily sales financial
"underlying revenue growth of 3.1% on an average daily sales (ADS) basis"
The average daily sales is the typical amount of sales a company makes per day over a chosen period, calculated by dividing total sales (in dollars or units) by the number of days in that period. Investors use it like checking a car's average speed to judge momentum: it smooths out one-off spikes or drops to show underlying demand, revenue run-rate and short-term cash flow trends, helping spot whether business activity is growing, steady or fading.
Adjusted Earnings per share ('EPSA') financial
"Adjusted earnings per share ('EPSA') up 11.0% to 47.7¢"
Adjusted return on invested capital ('Adjusted ROIC') financial
"more than 10% adjusted ROIC (excluding impact of Integrity Orthopaedics)"
Pillar Two financial
"OECD BEPS 2.0 - Pillar Two The Group estimates a Pillar Two current tax charge"
Pillar Two is an international tax framework that sets a global minimum tax rate for large multinational companies and requires extra payments when profits booked in low-tax locations fall below that floor. For investors, it matters because it raises the likely tax bill, reduces after-tax earnings and cash available for dividends or reinvestment, and can change company valuations—think of it as a tax “price floor” that limits how much a firm can lower its effective tax rate.
AI-generated analysis. How Rhea-AI works. Not financial advice.
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FAQ
How did Smith+Nephew (SNN) perform financially in H1 2026?
Smith+Nephew delivered H1 2026 revenue of $3,097 million, up 4.6% reported and 2.3% underlying. Trading profit reached $566 million with an 18.3% margin, while basic EPS rose to 35.6¢ and adjusted EPSA to 47.7¢.
What 2026 guidance did Smith+Nephew (SNN) provide for revenue, profit and cash flow?
The company now expects around 4% full-year underlying revenue growth, down from around 6%. It still targets around 8% trading profit growth excluding acquisitions, about $800 million free cash flow, and more than 10% ROIC on an adjusted basis.
How are Smith+Nephew (SNN) business units performing in H1 2026?
Sports Medicine & ENT grew 7.7% underlying to $1,017 million revenue. Advanced Wound Management was roughly flat underlying at $867 million, with Bioactives down 8.1%. Orthopaedics generated $1,213 million, with underlying revenue down slightly by 0.1%.
What efficiency savings did Smith+Nephew (SNN) achieve and plan for 2026?
Smith+Nephew realised $130 million of efficiency savings in H1 2026 and now expects around $200 million for the year, including an additional $50 million mainly from manufacturing, procurement, and sales and marketing initiatives under its 12-Point Plan and ZBB programmes.
What shareholder returns is Smith+Nephew (SNN) offering in 2026?
The interim dividend was increased 4.0% to 15.6¢ per share, consistent with a 35–40% EPSA payout policy. Smith+Nephew also launched a $500 million share buyback, with $216 million of repurchases settled as at 3 August 2026.
What is Smith+Nephew (SNN) leverage and liquidity position at mid-2026?
At 27 June 2026, net debt was $3,019 million with an adjusted net debt/EBITDA leverage ratio of 1.8x. The group held $750 million of cash and cash equivalents (net of overdrafts) and had access to $4.7 billion of committed facilities.
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
August
04, 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 Second Quarter and First Half 2026
Results
Strong H1 profit growth, on-track to meet trading profit, free cash
flow and ROIC guidance despite softer revenue growth
4 August 2026
|
|
|
|
|
|
|
|
|
|
|
|
|
27 June
|
|
28 June
|
|
Reported
|
|
Underlying
|
|
|
|
2026
|
|
2025
|
|
growth
|
|
growth
|
|
|
|
$m
|
|
$m
|
|
%
|
|
%
|
|
Second Quarter Results
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
1,597
|
|
1,553
|
|
2.8
|
|
1.6
|
|
|
|
|
|
|
|
|
|
|
|
Half Year Results
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
3,097
|
|
2,961
|
|
4.6
|
|
2.3
|
|
Operating
profit
|
|
448
|
|
429
|
|
4.3
|
|
|
|
Operating
profit margin (%)
|
|
14.5
|
|
14.5
|
|
|
|
|
|
EPS
(cents)
|
|
35.6
|
|
33.5
|
|
6.2
|
|
|
|
Cash
generated from operations
|
|
605
|
|
568
|
|
6.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trading
profit
|
|
566
|
|
523
|
|
8.1
|
|
|
|
Trading
profit margin (%)
|
|
18.3
|
|
17.7
|
|
|
|
|
|
EPSA
(cents)
|
|
47.7
|
|
42.9
|
|
11.0
|
|
|
|
Free
cash flow
|
|
231
|
|
244
|
|
(5.2)
|
|
|
(Financial Performance - H1 and Q2 2026 results unless otherwise
stated, growth % and commentary are given on an underlying basis as
defined on page 9 and are for the half and quarter ended
27 June 2026. In Q2 2026, the currency tailwind on reported growth
versus underlying growth primarily reflected strength of the
Euro and Australian dollar.)
Q2 Highlights
● Q2 revenue was $1,597 million, with
underlying revenue growth of 1.6%, and reported revenue growth of
2.8% including a 120bps FX tailwind
● Q2 performance driven by continued strength
in Sports Medicine offset by softness in US Orthopaedics and
Advanced Wound Bioactives
● Multiple product platforms delivering
double-digit or higher growth including
CATALYSTEM◊,
AETOS◊,
Q-FIX◊,
REGENETEN◊,
CARTIHEAL◊ AGILI-C◊,
FASTSEAL◊ and
LEAF◊
● High cadence of new product launches,
expansions and approvals including TESSA◊ Spatial
Surgery System
H1 Highlights
● H1 revenue was $3,097 million, with
underlying revenue growth of 2.3%. Reported growth of 4.6% was
after 230bps FX tailwind. Growth reflected one fewer trading day
versus the prior year, with underlying revenue growth of 3.1%
on an average daily sales (ADS) basis
● Strong trading profit growth driven by a
step-up in forecast efficiency savings, while tariff refunds
fully offset the forecast tariff headwind. Trading profit
was $566 million, up 8.1% on a reported basis
including 90bps dilution from the acquisition of Integrity
Orthopaedics. Trading profit margin up 60bps to
18.3%. Operating profit increased 4.3% on a reported basis to
$448 million
● Adjusted earnings per share ('EPSA') up
11.0% to 47.7¢ and basic earnings per share ('EPS') up 6.2% to
35.6¢
● Continued strong cash generation. H1 free
cash flow $13 million lower than H1 2025 includes a $51 million
increase in capex relating largely to the construction of our new
UK Wound factory and IT upgrades. This does not repeat in H2 when
cash generation is expected to be stronger versus H2
2025
● Building on our strong cash generation and
balance sheet, a $500 million share buyback was announced in May,
with $216 million settled as at 3 August. Adjusted net debt/EBITDA
leverage ratio at H1 2026 was 1.8x
● Interim dividend increased by 4.0% to
15.6¢ per share
Anticipated growth in full year revenue reduced from around 6% to
around 4%; trading profit, free cash flow and adjusted ROIC
guidance unchanged
● We expect second half revenue growth to be
in the range of 5.0% to 5.5%, a step up on the first
half, driven by multiple factors, including:
o In
Sports Medicine, continued momentum across segments including
strong growth in REGENETEN and FASTSEAL
o In
Advanced Wound Management, stabilisation in US skin substitutes, a
return to growth in SANTYL◊,
expansion of the European launch of ALLEVYN◊ COMPLETE
CARE, the launch of next-generation LEAF, and investment behind
PICO◊
o In
Orthopaedics, improving trajectory in US Knee Implants driven by
LEGION◊ MS
and the launch of the cementless version of
LANDMARK◊,
as well as a return to growth in US Hip Implants
following increased CATALYSTEM set
deployment
o An
extra trading day in the fourth quarter
● Despite the revised full year revenue
guidance, we continue to expect around 8% trading profit growth
excluding acquisitions (around $1.3 billion post-acquisition of
Integrity Orthopaedics), around $800 million free cash flow, and
more than 10% adjusted ROIC (excluding impact of Integrity
Orthopaedics)
o We
now anticipate the year-on-year impact of tariffs will be broadly
neutral to trading profit net of refunds
o The
headwind from skin substitutes is expected to be towards the upper
end of the previously guided $20 to $40 million
range
o We
expect to be able to offset the impact on trading profit of lower
revenue growth through an additional $50 million in efficiency
savings identified for 2026, taking total savings to around $200
million for the year
Deepak Nath, Chief Executive Officer, said:
"The Group navigated some challenges in the second-quarter. Sports
Medicine continued to perform strongly, but Orthopaedics was
impacted by temporary headwinds in US Hip Implants and ongoing
challenges in US Knee Implants ahead of new product introductions.
We also saw softer-than-expected performance from SANTYL within
Bioactives, although we expect the product to return to growth in
the third quarter.
"The changes implemented through our 12-Point Plan have made the
Group more resilient and better able to respond to such challenges.
As a result, despite slower-than-expected revenue growth, we
delivered a strong first-half profit performance primarily driven
by a step-up in forecast efficiency savings.
"Importantly, that improved resilience gives us confidence in our
ability to deliver our full-year guidance for trading profit, free
cash flow and return on invested capital. The updated revenue
guidance reflects both the soft first half and our expectation for
a step-up in the second half. Orthopaedics
is not where we want it to be, but we expect growth to accelerate
as we fill portfolio gaps, starting later this year and continuing
into 2027. We have already made progress on Orthopaedics trading
profit margin ahead of these launches. We remain focused on capital
allocation and opportunities to enhance shareholder
returns."
Second quarter 2026 trading update
Our second quarter revenue was $1,597 million (Q2 2025: $1,553
million), reflecting underlying revenue growth of 1.6%, which was
lower than we anticipated. Reported revenue growth was 2.8%,
including 120bps tailwind from foreign exchange. The second quarter
of 2026 comprised 63 trading days, in line with the same period of
2025.
Sports Medicine & ENT
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27 June
|
|
28 June
|
|
Reported
|
|
Underlying
|
|
Acquisitions
|
|
Currency
|
|
|
Consolidated revenue by
|
|
2026
|
|
2025
|
|
growth
|
|
growth
|
|
/disposals
|
|
impact
|
|
|
business unit by product
|
|
$m
|
|
$m
|
|
%
|
|
%
|
|
%
|
|
%
|
|
|
Sports Medicine & ENT
|
|
527
|
|
479
|
|
10.0
|
|
8.6
|
|
-
|
|
1.4
|
|
|
Sports
Medicine Joint Repair
|
|
293
|
|
262
|
|
11.8
|
|
10.6
|
|
-
|
|
1.2
|
|
|
Arthroscopic
Enabling Technologies
|
|
178
|
|
161
|
|
10.6
|
|
8.8
|
|
-
|
|
1.8
|
|
|
ENT
(Ear, Nose and Throat)
|
|
56
|
|
56
|
|
(0.3)
|
|
(1.6)
|
|
-
|
|
1.3
|
|
Our Sports Medicine business unit continued to deliver robust
revenue growth, building on the continued momentum in the
franchise, driven by our differentiated portfolio, including new
product launches and recent acquisitions.
Sports Medicine Joint Repair growth
was led by shoulder repair, including double-digit growth from our
REGENETEN Bioinductive Implant and the Q-FIX KNOTLESS All-Suture
Anchor. The CARTIHEAL
AGILI-C Cartilage Repair Implant, acquired in 2024, delivered
strong growth as we continue to expand availability, including
completing first cases in Europe and Australia. The
integration of Integrity Orthopaedics, and its Tendon
Seam◊ technology
for rotator cuff repair, acquired at the start of the year, is
progressing well.
Arthroscopic Enabling Technologies performance
was driven by double-digit growth both from our
WEREWOLF◊ FASTSEAL
6.0 Hemostasis Wand and our service business. We again saw strong
demand in China where the Volume-Based Procurement (VBP) process
has been delayed and which we now expect to be implemented in the
second half of 2026.
ENT underlying
revenue decline was as expected and reflected continued actions in
China to reduce channel inventory ahead of the expected VBP process
in this segment. This offset the good performance across all other
regions, including double-digit growth in Other Established Markets
and Emerging Markets and from the ARIS◊ COBLATION◊ Turbinate
Reduction Wand and HALO◊ Wand
for tonsillectomy and adenoidectomy.
Advanced Wound Management
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27 June
|
|
28 June
|
|
Reported
|
|
Underlying
|
|
Acquisitions
|
|
Currency
|
|
|
Consolidated revenue by
|
|
2026
|
|
2025
|
|
growth
|
|
growth
|
|
/disposals
|
|
impact
|
|
|
business unit by product
|
|
$m
|
|
$m
|
|
%
|
|
%
|
|
%
|
|
%
|
|
|
Advanced Wound Management
|
|
456
|
|
459
|
|
(0.7)
|
|
(2.1)
|
|
-
|
|
1.4
|
|
|
Advanced
Wound Care
|
|
204
|
|
192
|
|
6.1
|
|
3.7
|
|
-
|
|
2.4
|
|
|
Advanced
Wound Bioactives
|
|
144
|
|
165
|
|
(12.5)
|
|
(12.7)
|
|
-
|
|
0.2
|
|
|
Advanced
Wound Devices
|
|
108
|
|
102
|
|
5.5
|
|
3.8
|
|
-
|
|
1.7
|
|
Advanced Wound Management performance
reflected continued headwinds in Advanced Wound Bioactives and
strong comparative periods in both Advanced Wound Bioactives and
Advanced Wound Devices.
Advanced Wound Care growth
was driven by our foam portfolio led by the recently launched
ALLEVYN COMPLETE CARE. The US launch is going well and during the
quarter we initiated the European launch, with good early traction
in Germany. We also delivered double-digit growth from ALLEVYN AG,
our absorbent antimicrobial foam dressing.
Advanced Wound Bioactives revenue
decline was driven
by the changes to reimbursement rules for skin substitutes which
took effect at the start of 2026 as well as by a soft quarter for
SANTYL following a strong Q1. In skin substitutes, while there was
a sequential improvement from the first quarter, the impact of the
reimbursement reset continued to drive a decline in both volumes
and pricing in non-surgical settings, particularly in mobile where
we have limited exposure. Despite these near-term dynamics, we
continue to believe in the long-term fundamentals of the skin
substitute segment
beyond this transition year, and remain well-positioned as market
conditions normalise.
Advanced Wound Devices performance
included double-digit growth from the LEAF Patient Monitoring
System, a key component of our pressure injury prevention strategy.
Our PICO single-use Negative Pressure Wound Therapy (NPWT) and
RENASYS◊ traditional
NPWT both performed strongly in Emerging Markets, as we continue to
expand geographically. PICO sales in Other Established Markets were
impacted by doctor strikes in Spain in the surgical sector and the
timing of tenders. In the US, sales of RENASYS continue to be soft
in the acute care channel, while performance in the post-acute
channel remained strong.
Orthopaedics
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27 June
|
|
28 June
|
|
Reported
|
|
Underlying
|
|
Acquisitions
|
|
Currency
|
|
|
Consolidated revenue by
|
|
2026
|
|
2025
|
|
growth
|
|
growth
|
|
/disposals
|
|
impact
|
|
|
business unit by product
|
|
$m
|
|
$m
|
|
%
|
|
%
|
|
%
|
|
%
|
|
|
Orthopaedics
|
|
614
|
|
615
|
|
(0.2)
|
|
(1.0)
|
|
-
|
|
0.8
|
|
|
Knee
Implants
|
|
247
|
|
257
|
|
(3.8)
|
|
(4.3)
|
|
-
|
|
0.5
|
|
|
Hip
Implants
|
|
165
|
|
162
|
|
1.4
|
|
0.5
|
|
-
|
|
0.9
|
|
|
Other
Reconstruction
|
|
36
|
|
35
|
|
2.0
|
|
0.8
|
|
-
|
|
1.2
|
|
|
Trauma
& Extremities
|
|
166
|
|
161
|
|
3.5
|
|
2.4
|
|
-
|
|
1.1
|
|
Our Orthopaedics business unit revenue declined
by -1.0% on an underlying basis (reported decline -0.2%) in the
second quarter, reflecting a number of factors in the US including
the ongoing issues in Knee Implants ahead of new product launches
and temporary headwinds in Hips Implants. Additionally, US Hip
Implants, Knee Implants outside the US and Other Reconstruction all
faced strong comparative periods.
US Knee Implants revenue
declined -7.2% on both an underlying and reported basis, a modest
improvement on Q1, as expected. As with recent quarters,
performance reflected the continuing and deliberate portfolio and
capital discipline, combined with an ongoing market shift towards
cementless, which continues to influence performance in the near
term. The sequential improvement was driven by strong uptake of
LEGION MS and continued double-digit growth from LEGION CONCELOC,
our cementless offering. LEGION MS now represents almost 20% of our
LEGION mix and is enhancing the competitiveness of our installed
base. Looking ahead, we continue to expect improvement through the
year, driven by increased LEGION MS set deployments in the second
half. This will remain the main contributor to momentum ahead of
launch of our new kinematic LANDMARK Knee System, with the
cementless version expected in the third quarter of
2026.
Following four consecutive quarters of above market
growth, US
Hip Implants revenue
declined -1.5% on both an underlying and reported
basis. The CATALYSTEM
Primary Hip System is still growing strongly, although Q2 was
impacted by some delay in set deployments and an increasing
proportion of retentions versus competitive conversions. We expect
the segment to return to growth for the remainder of the year
driven by increased CATALYSTEM set deployment, and as CATALYSTEM
moves into its third-year post-launch, we anticipate it continuing
to drive a healthy growth rate in US Hip Implants, albeit at a more
moderate level than during the early launch
phase.
Outside the US, Knee Implants declined -1.4% (reported decline
-0.3%) reflecting the impact of a large tender order in the Middle
East in the prior year which did not repeat. Hip
Implants delivered underlying revenue growth of 3.0% (reported
growth 5.2%) outside the US, led by the POLAR3◊ Total
Hip System, as well as strong performance in Japan where we have
recently launched CATALYSTEM.
Other Reconstruction underlying
revenue growth reflected the comparator period as well as contract
mix. We delivered double digit growth in CORI◊ Surgical
System installations globally.
Trauma & Extremities performance
was driven by the EVOS◊ Plating
System and IM Nails as well as strong double-digit growth from the
recently launched AETOS Shoulder System.
Performance by region
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27 June
|
|
28 June
|
|
Reported
|
|
Underlying
|
|
Acquisitions
|
|
Currency
|
|
|
Consolidated revenue by
|
|
2026
|
|
2025
|
|
growth
|
|
growth
|
|
/disposals
|
|
impact
|
|
|
geography
|
|
$m
|
|
$m
|
|
%
|
|
%
|
|
%
|
|
%
|
|
|
US
|
|
816
|
|
827
|
|
(1.2)
|
|
(1.3)
|
|
-
|
|
0.1
|
|
|
Other Established Markets(i)
|
|
489
|
|
470
|
|
4.0
|
|
1.7
|
|
-
|
|
2.3
|
|
|
Total Established Markets
|
|
1,305
|
|
1,297
|
|
0.6
|
|
(0.2)
|
|
-
|
|
0.8
|
|
|
Emerging
Markets
|
|
292
|
|
256
|
|
13.7
|
|
10.6
|
|
-
|
|
3.1
|
|
|
Total
|
|
1,597
|
|
1,553
|
|
2.8
|
|
1.6
|
|
-
|
|
1.2
|
|
(i)
Other Established Markets are Europe,
Japan, Australia, Canada and New Zealand
The US revenue decline reflected performance in Orthopaedics and
Advanced Wound Bioactives. Other Established Markets performance
was led by growth from Canada and Australia & New Zealand,
continuing the good momentum seen in the first quarter. Emerging
Markets performance included double-digit growth from China. We
continue to expect China to be broadly neutral to growth for the
full year.
First Half 2026 Consolidated Analysis
Smith+Nephew results for the first half ended 27 June
2026:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported
|
|
|
|
|
27 June 2026
|
|
28 June 2025
|
|
growth
|
|
|
|
|
$m
|
|
$m
|
|
%
|
|
|
Revenue
|
|
3,097
|
|
2,961
|
|
4.6
|
|
|
Operating profit
|
|
448
|
|
429
|
|
4.3
|
|
|
Acquisition
and disposal related items
|
|
21
|
|
9
|
|
|
|
|
Restructuring
and rationalisation costs
|
|
23
|
|
8
|
|
|
|
|
Amortisation
and impairment of acquisition intangibles
|
|
87
|
|
83
|
|
|
|
|
Legal
and other
|
|
(13)
|
|
(6)
|
|
|
|
|
Trading profit(i)
|
|
566
|
|
523
|
|
8.1
|
|
|
|
|
¢
|
|
¢
|
|
|
|
|
Earnings per share ('EPS')
|
|
35.6
|
|
33.5
|
|
|
|
|
Acquisition
and disposal related items
|
|
3.6
|
|
1.8
|
|
|
|
|
Restructuring
and rationalisation costs
|
|
2.1
|
|
0.6
|
|
|
|
|
Amortisation
and impairment of acquisition intangibles
|
|
8.1
|
|
7.3
|
|
|
|
|
Legal
and other
|
|
(1.7)
|
|
(0.3)
|
|
|
|
|
Adjusted Earnings per share ('EPSA')(i)
|
|
47.7
|
|
42.9
|
|
11.0
|
|
(i)
See
Other Information on pages 30 to 36
In the first half we delivered underlying revenue growth of 2.3%,
and reported revenue growth of 4.6% including a 230bps tailwind
from foreign exchange. There were 124 trading days, one day less
than the equivalent period in 2025, with underlying revenue growth
of 3.1% on an ADS basis.
Gross profit was $2,196 million (H1 2025: $2,091 million), a 5.0%
increase on a reported basis, and the gross profit margin increased
30bps to 70.9% (H1 2025: 70.6%). Trading
gross profit was $2,203 million (H1 2025: $2,087 million), a 5.5%
increase on a reported basis, and the gross profit margin increased
60bps to 71.1% (H1 2025: 70.5%) as we more than offset raw
materials inflation with price increases and efficiency measures in
manufacturing and procurement. Operating profit increased 4.3% on a
reported basis to $448 million (H1 2025: $429
million).
The changes implemented through our 12-Point Plan have made the
Group more resilient and, despite the softer than expected
revenue growth, we delivered good trading profit in the
first first-half, up
8.1% on a reported basis to $566 million (H1 2025: $523
million) including
90bps dilution from the acquisition of Integrity Orthopaedics. The
strong growth was driven by a step-up in forecast efficiency
savings. While we had previously forecast a tariff headwind in the
first half, the net impact of refunds received means the net impact
of tariffs was broadly neutral to profit
growth.
We continue
to make strong progress driving efficiency savings, with $130
million realised in the first half. Of these, $50
million came from 12-Point Plan and zero-based budgeting (ZBB)
activities, and $80
million from additional opportunities across procurement,
manufacturing, sales and marketing, and business support functions.
We have now achieved $330
million of cumulative 12-Point Plan and ZBB savings against
the targets set
out in August 2024 of $325 million to $375 million by 2027, with
further savings to come through in the second half of 2026 and
2027. We expect to achieve a further $70 million of savings in the
second half from both 12-Point Plan and ZBB and other
opportunities, taking total efficiency savings
for the
year up from around $150 million to around $200 million. This
includes an additional $50 million in savings primarily coming from
manufacturing, including from our ongoing footprint optimisation,
as well as procurement and sales and marketing.
As a result of these factors, the trading profit margin
strengthened by 60bps to 18.3% (H1 2025: 17.7%). A reconciliation
of adjustments between operating profit and trading profit is
included in Other Information on pages 30 to 36.
Sports Medicine & ENT trading profit margin increased 160bps to
24.7% (H1 2025: 23.1%) driven by operating leverage off the strong
revenue growth. Advanced Wound Management trading profit margin was
down 10bps to 22.0% (H1 2025: 22.1%) reflecting changes to
reimbursement in skin substitutes. Orthopaedics trading profit
margin was up 30bps to 13.0% (H1 2025: 12.7%) as we were able to
more than offset the headwind from inventory revaluation and softer
revenue growth with manufacturing savings from network
optimisation, ongoing productivity initiatives and disciplined cost
control (see
Note 2 to the Interim Financial Statements for global business unit
trading profit).
Reported profit before tax was up 5.0% to $380 million (2025: $362
million) (see Other Information on pages 30 to 36).
Reported tax was a charge of $77 million (H1 2025: $69 million).
The first half tax rate on trading results of 20.3% (H1 2025:
19.8%) was calculated using full year projections, applied to
trading profits for the first half and includes non-recurring tax
credits arising in this period. The applicable rate of corporate
income tax has been applied to the actual non-trading items in the
period on an item-by-item basis (see Note 3 to the Interim
Financial Statements and Other Information on pages 30 to 36 for
further details on taxation). The net interest charge within
reported results was $55 million (H1 2025: $54
million).
Adjusted earnings per share ('EPSA') increased by 11.0% to
47.7¢ (95.4¢ per ADS) (H1 2025: 42.9¢ per share).
Basic earnings per share ('EPS') was up 6.2% to 35.6¢
(71.2¢ per ADS) (H1 2025: 33.5¢ per share),
including restructuring
costs, acquisition and disposal related items, amortisation and
impairment of acquisition intangibles and legal and other items
incurred.
The Group continued to generate strong cash flow. The modest
reduction in first-half trading cash flow was driven by higher
capital expenditure, primarily related to construction of our new
UK Wound factory, which is due to open next year, and IT upgrades.
This year-on-year increase in investment is not expected to recur
in the second half, and we expect H2 cash generation to be stronger
than in H2 2025. The free cash flow reflected these factors
partially offset by reduced restructuring
costs and, for the same reasons, we expect this to also be stronger
in the second half versus H2 2025. Cash
generated from operations was up 6.9% to $605 million (H1 2025:
$568 million), trading cash flow was down -10.2% to $437 million
(H1 2025: $487 million), with trading profit to cash conversion
ratio of 77.3% (H1 2025: 93.0%), and free cash flow was $231
million (H1 2025: $244 million) (see Other Information on pages 30
to 36 for a reconciliation between cash generated from operations
and trading cash flow).
Net debt as of 27 June 2026 was $3,019 million (31 December 2025:
$2,759 million), with access to committed facilities of
$4.7 billion
(see Note 6 to the Financial Statements). The net debt to adjusted
EBITDA ratio was 1.8x.
Delivering our RISE strategy
We are two quarters into the RISE strategy to accelerate growth and
improve returns over the next three years, with progress across all
four pillars.
To REACH more patients, we are focused on driving
adoption of our portfolio by expanding into additional indications
and geographies. Highlights year to date include the first knee and
shoulder cases performed using the next-generation CORI XT Handheld
Robotics Platform, marking an important milestone in the clinical
introduction of our latest handheld robotics technology. We also
expanded CATALYSTEM into Japan and initiated the European launches
of our ALLEVYN COMPLETE CARE Foam Dressing, which offers a unique
five-layer construction with distinct mode of action capabilities
targeted towards both wound management and pressure ulcer
prevention, and of the RENASYS EDGE Negative Pressure Wound Therapy
System.
To INNOVATE and enhance the standard of care, we take a
patient-led approach to innovation, prioritising areas with the
potential to improve outcomes.
We have been granted De Novo classification by the US Food &
Drug Administration (FDA) for our TESSA Spatial Surgery System.
Utilising cutting-edge accelerated computing and AI technology, the
TESSA (Tracking Enabled Spatial Surgery Assistant) System brings
personalised planning, augmented reality, advanced imaging,
navigation, and real-time tracking to help transform arthroscopic
procedures. TESSA's first indication for use is femoral anterior
cruciate ligament reconstruction surgery of the knee.
New product launches year to date include the FLOW
FLEXTEND◊ COBLATION◊ Wand
which brings new functionality for hard-to-reach hip, knee and
shoulder anatomies, an extension to the EVOS Plating System with
EVOS Pelvic, the LYNX◊ COBLATION
Laryngeal Wand in ENT, and the next generation LEAF Patient
Monitoring System, a data-driven pressure injury prevention
platform designed to help health care providers tackle the growing
burden of hospital-acquired pressure injuries by strengthening
protocols and outcomes. We also continued to build out the evidence
base supporting our biologics portfolio, announcing new clinical
data supporting adoption of our REGENETEN and CARTIHEAL AGILI-C
implants.
To SCALE through strategic investment, we continue to
allocate capital to targeted categories and channels. This includes
the acquisition of Integrity Orthopaedics, announced in January.
Tendon Seam's biomechanical approach to rotator cuff repair further
expands our leading portfolio in shoulder pathology. The Group also
continues to invest behind its PICO single-use Negative Pressure
Wound Therapy system, expanding the salesforce. Our new Advanced
Wound Management manufacturing facility in Melton, UK, is on track
to open in 2027.
To EXECUTE efficiently, we are driving group-wide
productivity by being disciplined around cost control as well as
executing our Ortho 360 programme within Orthopaedics. Our Advanced
Wound Management manufacturing site in Suzhou, China, has been
awarded the Shingo Prize, one of the world's most respected
recognitions for organisational excellence reflecting more than a
decade of sustained improvement at the site.
Interim Dividend
Smith+Nephew has a progressive dividend policy and we expect our
shareholders to benefit from an annual payout of around 35% to 40%
of EPSA.
The interim payment is set at 40% of the prior full year and is
therefore 15.6¢ per share (31.2¢ per ADS) for 2026, a
4.0% increase year-on-year (2025: 15.0¢).
Share buy-back on track
On 6 May 2026, Smith+Nephew announced a share buyback of $500
million to be completed within twelve months. The buyback
demonstrates our commitment to disciplined capital allocation,
balancing investment in strategic growth with the return of surplus
capital to shareholders, in line with our
framework. We
had settled $216 million as at 3 August 2026.
Outlook
We expect second half revenue growth to be in the range of 5.0% to
5.5%, a step-up on the first half, driven by multiple factors,
including:
● In Sports Medicine, continued momentum
across segments including strong growth in REGENETEN and
FASTSEAL
● In Advanced Wound Management, stabilisation
in US skin substitutes, a return to growth in SANTYL, expansion of
the European launch of ALLEVYN COMPLETE CARE, the launch of
next-generation LEAF, and investment behind
PICO
● In Orthopaedics, improving trajectory in US
Knee Implants driven by LEGION MS and the launch of the cementless
version of LANDMARK, as well as a return to growth in US
Hip Implants following increased CATALYSTEM set
deployment
● An extra trading day in the fourth
quarter
Consequently, we now expect to deliver full year revenue growth of
around 4% (previously "around 6%").
On a reported basis, the guidance equates to second half revenue
growth to be in the range of 5.1% to 5.6% and full year revenue
growth of around 5.2% based on exchange rates prevailing on 31 July
2026.
Despite the revised full year revenue guidance, we continue to
expect around 8% trading profit growth excluding acquisitions
(around $1.3 billion post-acquisition of Integrity Orthopaedics),
around $800 million free cash flow, and more than 10% adjusted ROIC
(excluding impact of Integrity Orthopaedics).
With the benefit of tariff refunds, we now anticipate the net
year-on-year impact of tariffs to be broadly neutral to trading
profit. The headwind from skin substitutes is expected to be
towards the upper end of the previously guided $20 to $40 million
range. Given
the updated revenue guidance, we expect revenue leverage to be
lower, offset by the $50 million step-up in forecast efficiency
savings. As previously disclosed, the acquisition of Integrity
Orthopaedics is expected to be marginally dilutive to trading
profit in 2026, broadly neutral in 2027 and accretive from
2028.
Analyst conference call
An analyst conference call to discuss Smith+Nephew's second quarter
and first half results will be held today at 11.30am BST / 6.30am
EDT, details of which are available on the Smith+Nephew website
at https://www.smith-nephew.com/en/who-we-are/investors.
Forward calendar
The Q3 Trading Report will be released on 6 November
2026.
Investor contacts
|
|
|
|
Emily Heaven, Smith+Nephew
|
+44 (0) 7811 919437
|
|
Craig Bijou, Smith+Nephew
|
+1 (475) 850-8282
|
|
|
|
|
Media contacts
|
|
|
Charles Reynolds, Smith+Nephew
|
+44 (0) 1923 477314
|
|
Susan Gilchrist / Ayesha Bharmal,
Brunswick
|
+44 (0) 20 7404 5959
|
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.
Reporting definitions
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 2025 period.
'Underlying revenue growth' reconciles to reported revenue growth,
the most directly comparable financial measure calculated in
accordance with IFRS Accounting Standards as issued by the
International Accounting Standards Board (IASB), by making two
adjustments, the 'constant currency exchange effect' and the
'acquisitions and disposals effect', described below. See Other
Information on pages 30 to 36 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
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.
Certain items included in 'trading results', such as trading
profit, trading profit margin, tax rate on trading results, trading
cash flow, trading profit to cash conversion ratio, EPSA and
underlying growth are non-IFRS financial measures. The
non-IFRS financial measures reported in this announcement are
explained in Other Information on pages 30 to 36 and are reconciled to the most
directly comparable financial measures prepared in accordance
with IFRS Accounting Standards as
issued by the International Accounting Standards Board (IASB).
Reported results represent IFRS financial measures as shown in the
Unaudited Condensed Consolidated Interim Financial
Statements.
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.
Consolidated revenue analysis for the first half
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27 June
|
|
28 June
|
|
Reported
|
|
Underlying
|
|
Acquisitions
|
|
Currency
|
|
|
|
|
2026
|
|
2025
|
|
growth
|
|
growth
|
|
/disposals
|
|
impact
|
|
|
Consolidated revenue by business unit by product
|
|
$m
|
|
$m
|
|
%
|
|
%
|
|
%
|
|
%
|
|
|
Sports Medicine & ENT
|
|
1,017
|
|
923
|
|
10.2
|
|
7.7
|
|
-
|
|
2.5
|
|
|
Sports
Medicine Joint Repair
|
|
574
|
|
509
|
|
12.8
|
|
10.3
|
|
-
|
|
2.5
|
|
|
Arthroscopic
Enabling Technologies
|
|
340
|
|
307
|
|
10.7
|
|
7.8
|
|
-
|
|
2.9
|
|
|
ENT
(Ear, Nose and Throat)
|
|
103
|
|
107
|
|
(3.6)
|
|
(5.4)
|
|
-
|
|
1.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Advanced Wound Management
|
|
867
|
|
845
|
|
2.6
|
|
(0.1)
|
|
-
|
|
2.7
|
|
|
Advanced
Wound Care
|
|
398
|
|
366
|
|
8.8
|
|
4.3
|
|
-
|
|
4.5
|
|
|
Advanced
Wound Bioactives
|
|
263
|
|
285
|
|
(7.7)
|
|
(8.1)
|
|
-
|
|
0.4
|
|
|
Advanced
Wound Devices
|
|
206
|
|
194
|
|
6.2
|
|
2.8
|
|
-
|
|
3.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Orthopaedics
|
|
1,213
|
|
1,193
|
|
1.7
|
|
(0.1)
|
|
-
|
|
1.8
|
|
|
Knee
Implants
|
|
492
|
|
501
|
|
(1.8)
|
|
(3.6)
|
|
-
|
|
1.8
|
|
|
Hip
Implants
|
|
326
|
|
313
|
|
4.3
|
|
2.3
|
|
-
|
|
2.0
|
|
|
Other
Reconstruction
|
|
68
|
|
64
|
|
5.3
|
|
3.1
|
|
-
|
|
2.2
|
|
|
Trauma
& Extremities
|
|
327
|
|
315
|
|
4.0
|
|
2.4
|
|
-
|
|
1.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
3,097
|
|
2,961
|
|
4.6
|
|
2.3
|
|
-
|
|
2.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated revenue by geography
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
US
|
|
1,591
|
|
1,586
|
|
0.4
|
|
0.3
|
|
-
|
|
0.1
|
|
|
Other Established Markets(i)
|
|
958
|
|
897
|
|
6.7
|
|
1.4
|
|
-
|
|
5.3
|
|
|
Total Established Markets
|
|
2,549
|
|
2,483
|
|
2.7
|
|
0.7
|
|
-
|
|
2.0
|
|
|
Emerging
Markets
|
|
548
|
|
478
|
|
14.8
|
|
10.6
|
|
-
|
|
4.2
|
|
|
Total
|
|
3,097
|
|
2,961
|
|
4.6
|
|
2.3
|
|
-
|
|
2.3
|
|
(i) Other Established Markets are
Europe, Japan, Australia, Canada and New
Zealand
2026 HALF YEAR CONSOLIDATED INTERIM FINANCIAL
STATEMENTS
Unaudited Condensed Group Income Statement for the Half Year ended
27 June 2026
|
|
|
|
|
|
|
|
|
|
|
|
|
27 June
|
|
28 June
|
|
|
|
|
|
2026
|
|
2025
|
|
|
|
Notes
|
|
$m
|
|
$m
|
|
Revenue
|
|
2
|
|
3,097
|
|
2,961
|
|
Cost
of goods sold
|
|
|
|
(901)
|
|
(870)
|
|
Gross profit
|
|
|
|
2,196
|
|
2,091
|
|
Selling,
general and administrative expenses
|
|
|
|
(1,598)
|
|
(1,519)
|
|
Research
and development expenses
|
|
|
|
(150)
|
|
(143)
|
|
Operating profit
|
|
2
|
|
448
|
|
429
|
|
Interest
income
|
|
|
|
10
|
|
15
|
|
Interest
expense
|
|
|
|
(65)
|
|
(69)
|
|
Other
finance costs
|
|
|
|
(18)
|
|
(12)
|
|
Share
of results of associates
|
|
|
|
5
|
|
(1)
|
|
Profit before taxation
|
|
|
|
380
|
|
362
|
|
Taxation
|
|
3
|
|
(77)
|
|
(69)
|
|
Attributable profit for the periodA
|
|
|
|
303
|
|
293
|
|
Earnings per ordinary shareA
|
|
|
|
|
|
|
|
Basic
|
|
|
|
35.6
|
|
33.5
|
|
Diluted
|
|
|
|
35.2
|
|
33.3
|
Unaudited Condensed Group Statement of Comprehensive Income for the
Half Year ended 27 June 2026
|
|
|
|
|
|
|
|
|
27 June
|
|
28 June
|
|
|
|
2026
|
|
2025
|
|
|
|
$m
|
|
$m
|
|
Attributable profit for the periodA
|
|
303
|
|
293
|
|
Other comprehensive income
|
|
|
|
|
|
Items that will not be reclassified to income
statement
|
|
|
|
|
|
Remeasurement
of net retirement benefit obligations
|
|
(1)
|
|
4
|
|
Taxation
on other comprehensive income
|
|
-
|
|
(2)
|
|
Total
items that will not be reclassified to income
statement
|
|
(1)
|
|
2
|
|
|
|
|
|
|
|
Items that may be reclassified subsequently to income
statement
|
|
|
|
|
|
Cash
flow hedges - forward foreign exchange contracts
|
|
|
|
|
|
Gain/(loss)
arising in the period
|
|
27
|
|
(47)
|
|
Gain
recycled to income statement in the period
|
|
-
|
|
(5)
|
|
Foreign
currency translation of foreign operations
|
|
|
|
|
|
Exchange
(loss)/gain on translation of foreign operations
|
|
(45)
|
|
261
|
|
Exchange
gain/(loss) arising on hedging instruments
|
|
25
|
|
(68)
|
|
Taxation
on other comprehensive income
|
|
(5)
|
|
9
|
|
Total
items that may be reclassified subsequently to income
statement
|
|
2
|
|
150
|
|
Other comprehensive income for the period, net of
taxation
|
|
1
|
|
152
|
|
Total comprehensive income for the periodA
|
|
304
|
|
445
|
A
Attributable to the equity holders of the parent and wholly derived
from continuing operations.
Unaudited Condensed Group Balance Sheet as at 27 June
2026
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27 June
|
|
31 December
|
|
28 June
|
|
|
|
|
|
2026
|
|
2025
|
|
2025
|
|
|
|
Notes
|
|
$m
|
|
$m
|
|
$m
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
Non-current assets
|
|
|
|
|
|
|
|
|
|
Property,
plant and equipment
|
|
|
|
1,615
|
|
1,638
|
|
1,436
|
|
Goodwill
|
|
|
|
3,236
|
|
3,108
|
|
3,111
|
|
Intangible
assets
|
|
|
|
1,109
|
|
882
|
|
962
|
|
Investments
in associates
|
|
|
|
126
|
|
121
|
|
7
|
|
Investments
|
|
|
|
25
|
|
30
|
|
29
|
|
Other
non-current assets
|
|
|
|
197
|
|
164
|
|
49
|
|
Retirement
benefit assets
|
|
|
|
66
|
|
64
|
|
70
|
|
Deferred
tax assets
|
|
|
|
252
|
|
347
|
|
401
|
|
|
|
|
|
6,626
|
|
6,354
|
|
6,065
|
|
Current assets
|
|
|
|
|
|
|
|
|
|
Inventories
|
|
|
|
2,113
|
|
2,117
|
|
2,467
|
|
Trade
and other receivables
|
|
|
|
1,487
|
|
1,413
|
|
1,435
|
|
Current
tax receivable
|
|
|
|
33
|
|
16
|
|
49
|
|
Cash
and cash equivalents
|
|
6
|
|
754
|
|
557
|
|
676
|
|
|
|
|
|
4,387
|
|
4,103
|
|
4,627
|
|
TOTAL ASSETS
|
|
|
|
11,013
|
|
10,457
|
|
10,692
|
|
|
|
|
|
|
|
|
|
|
|
EQUITY AND LIABILITIES
|
|
|
|
|
|
|
|
|
|
Equity attributable to owners of the Company
|
|
|
|
|
|
|
|
|
|
Share
capital
|
|
|
|
175
|
|
175
|
|
175
|
|
Share
premium
|
|
|
|
615
|
|
615
|
|
615
|
|
Capital
redemption reserve
|
|
|
|
20
|
|
20
|
|
20
|
|
Treasury
shares
|
|
|
|
(733)
|
|
(515)
|
|
(48)
|
|
Other
reserves
|
|
8
|
|
(327)
|
|
(329)
|
|
(347)
|
|
Retained
earnings
|
|
|
|
5,430
|
|
5,323
|
|
5,121
|
|
Total equity
|
|
|
|
5,180
|
|
5,289
|
|
5,536
|
|
|
|
|
|
|
|
|
|
|
|
Non-current liabilities
|
|
|
|
|
|
|
|
|
|
Long-term
borrowings and lease liabilities
|
|
6
|
|
3,212
|
|
3,177
|
|
3,297
|
|
Retirement
benefit obligations
|
|
|
|
88
|
|
84
|
|
86
|
|
Other
payables
|
|
|
|
370
|
|
190
|
|
96
|
|
Provisions
|
|
|
|
72
|
|
82
|
|
94
|
|
Deferred
tax liabilities
|
|
|
|
40
|
|
40
|
|
42
|
|
|
|
|
|
3,782
|
|
3,573
|
|
3,615
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
|
Bank
overdrafts, borrowings, loans and lease liabilities
|
|
6
|
|
573
|
|
150
|
|
157
|
|
Trade
and other payables
|
|
|
|
1,249
|
|
1,177
|
|
1,097
|
|
Provisions
|
|
|
|
68
|
|
74
|
|
58
|
|
Current
tax payable
|
|
|
|
161
|
|
194
|
|
229
|
|
|
|
|
|
2,051
|
|
1,595
|
|
1,541
|
|
Total liabilities
|
|
|
|
5,833
|
|
5,168
|
|
5,156
|
|
TOTAL EQUITY AND LIABILITIES
|
|
|
|
11,013
|
|
10,457
|
|
10,692
|
Unaudited Condensed Group Cash Flow Statement for the Half Year
ended 27 June 2026
|
|
|
|
|
|
|
|
|
27 June
|
|
28 June
|
|
|
|
2026
|
|
2025
|
|
|
|
$m
|
|
$m
|
|
Cash flows from operating activities
|
|
|
|
|
|
Profit
before taxation
|
|
380
|
|
362
|
|
Net
interest expense
|
|
55
|
|
54
|
|
Depreciation,
amortisation and impairment
|
|
300
|
|
273
|
|
Loss
on disposal of property, plant and equipment and
software
|
|
12
|
|
11
|
|
Share-based
payments expense (equity-settled)
|
|
34
|
|
21
|
|
Share
of results of associates
|
|
(5)
|
|
1
|
|
Pension
costs less cash paid
|
|
2
|
|
2
|
|
Increase
in inventories
|
|
(6)
|
|
-
|
|
Increase
in trade and other receivables
|
|
(98)
|
|
(49)
|
|
Decrease
in trade and other payables and provisions
|
|
(69)
|
|
(107)
|
|
Cash
generated from operations
|
|
605
|
|
568
|
|
Interest
received
|
|
8
|
|
14
|
|
Interest
paid
|
|
(63)
|
|
(75)
|
|
Income
taxes paid
|
|
(100)
|
|
(111)
|
|
Net
cash inflow from operating activities
|
|
450
|
|
396
|
|
|
|
|
|
|
|
Cash flows from investing activities
|
|
|
|
|
|
Acquisitions,
net of cash acquired
|
|
(221)
|
|
(8)
|
|
Capital
expenditure
|
|
(190)
|
|
(139)
|
|
Proceeds
from disposal of property, plant and equipment
|
|
-
|
|
12
|
|
Net
cash used in investing activities
|
|
(411)
|
|
(135)
|
|
|
|
|
|
|
|
Cash flows from financing activities
|
|
|
|
|
|
Purchase
of own shares
|
|
(116)
|
|
-
|
|
Proceeds
from own shares
|
|
3
|
|
1
|
|
Payment
of capital element of lease liabilities
|
|
(29)
|
|
(25)
|
|
Proceeds
from borrowings due within one year
|
|
23
|
|
27
|
|
Settlement
of borrowings due within one year
|
|
(87)
|
|
(13)
|
|
Proceeds
from borrowings due after one year
|
|
578
|
|
-
|
|
Settlement
of currency swaps
|
|
(10)
|
|
(5)
|
|
Equity
dividends paid
|
|
(205)
|
|
(202)
|
|
Net
cash inflow/(used) in financing activities
|
|
157
|
|
(217)
|
|
|
|
|
|
|
|
Net increase in cash and cash equivalents
|
|
196
|
|
44
|
|
Cash
and cash equivalents at beginning of the period
|
|
553
|
|
617
|
|
Exchange
adjustments
|
|
1
|
|
12
|
|
Cash and cash equivalents at end of the periodB
|
|
750
|
|
673
|
B Cash
and cash equivalents at the end of the period is net of overdrafts
of $4m (28 June 2025: $3m).
Unaudited Condensed Group Statement of Changes in Equity for the
Half Year ended 27 June 2026
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 2026
|
|
175
|
|
615
|
|
20
|
|
(515)
|
|
(329)
|
|
5,323
|
|
5,289
|
|
Attributable profit for the
periodA
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
303
|
|
303
|
|
Other comprehensive incomeA
|
|
-
|
|
-
|
|
-
|
|
-
|
|
2
|
|
(1)
|
|
1
|
|
Total comprehensive income
|
|
-
|
|
-
|
|
-
|
|
-
|
|
2
|
|
302
|
|
304
|
|
Equity
dividends declared and paid
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(205)
|
|
(205)
|
|
Share-based
payments recognised
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
34
|
|
34
|
|
Taxation
on share-based payments
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
5
|
|
5
|
|
Purchase of own sharesC
|
|
-
|
|
-
|
|
-
|
|
(250)
|
|
-
|
|
-
|
|
(250)
|
|
Cost
of shares transferred to beneficiaries
|
|
-
|
|
-
|
|
-
|
|
32
|
|
-
|
|
(29)
|
|
3
|
|
At 27 June 2026
|
|
175
|
|
615
|
|
20
|
|
(733)
|
|
(327)
|
|
5,430
|
|
5,180
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
periodA
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
293
|
|
293
|
|
Other comprehensive incomeA
|
|
-
|
|
-
|
|
-
|
|
-
|
|
150
|
|
2
|
|
152
|
|
Total comprehensive income
|
|
-
|
|
-
|
|
-
|
|
-
|
|
150
|
|
295
|
|
445
|
|
Equity
dividends declared and paid
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(202)
|
|
(202)
|
|
Share-based
payments recognised
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
21
|
|
21
|
|
Taxation
on share-based payments
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
6
|
|
6
|
|
Cost
of shares transferred to beneficiaries
|
|
-
|
|
-
|
|
-
|
|
18
|
|
-
|
|
(17)
|
|
1
|
|
At 28 June 2025
|
|
175
|
|
615
|
|
20
|
|
(48)
|
|
(347)
|
|
5,121
|
|
5,536
|
A
Attributable to the equity holders of the parent and wholly derived
from continuing operations.
C
Refer to Note 8 for further information.
D Within retained
earnings is a non-distributable capital reserve of $2,266m (1
January 2026: $2,266m, 28 June 2025: $2,266m) which
arose as a result of the Group's reorganisation in
2008.
Notes to the Condensed Consolidated Interim 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
interim financial statements ('Interim Financial Statements'),
'Group' means the Company and all its subsidiaries.
These
Interim Financial Statements have been prepared in accordance with
IAS 34 Interim Financial Reporting as adopted for use in the UK. As
required by the Disclosure Guidance and Transparency Rules of the
Financial Conduct Authority, these Interim Financial Statements
have been prepared applying the accounting policies and
presentation that were applied in the preparation of the Company's
annual accounts for the year ended 31 December 2025 which were
prepared in accordance with UK-adopted International Accounting
Standards. The Group has also prepared its accounts in accordance
with IFRS Accounting Standards as issued by the International
Accounting Standards Board (IASB) effective as at 31 December 2025.
IFRS Accounting Standards 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
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 for its Interim Financial Statements for
the period ended 27 June 2026, 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 Interim 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 Interim Financial
Statements for the reasons set out below.
The
Group has access to $750m of cash and cash equivalents (net of
overdrafts) at 27 June 2026.The Group's net debt at 27 June 2026
was $3,019m (see Note 6) with committed facilities of $4.7bn. No
debt is due for repayment in the second half of 2026. A $350m US
Corporate Bond and $140m of private placement debt is due for
repayment in the first half of 2027. $550m of private placement
debt is subject to financial covenants. The principal covenant on
the private placement debt is a leverage ratio of <3.5x 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 these 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 the Going Concern Basis
of Accounting and Related Reporting (including Solvency and
Liquidity Risks)' issued by the FRC) in preparing these financial
statements.
New accounting standards effective 2026
A
number of new amendments to standards are effective from 1 January
2026 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 2027 and earlier
application is permitted; however, the Group has not early adopted
them in preparing these Interim 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 year ending 31
December 2026 and period ending 27 June 2026 will be restated in
the Interim Financial Statements for the period ending 26 June 2027
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 Accounting
Standards, 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.
Consistent
with the Group's consolidated financial statements for the year
ended 31 December 2025, 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 12
months.
Climate change considerations
The
impact of climate change has been considered as part of the
assessment of estimates and judgements in preparing the Interim
Financial Statements. 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 interim financial
statements:
a.
The impact of climate change on the going concern
assessment;
b.
The impact of climate change on the cash flow forecasts used in the
impairment assessments of non-current assets including goodwill;
and
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 (Sports Medicine, ENT, Advanced Wound Management and
Orthopaedics) 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.
Accordingly, as described in Note 2 to the most recent annual
report, the Group has concluded that there are three operating
segments which are also reportable segments.
Segment
revenue reconciles to statutory revenue from continuing operations
as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27 June
|
|
28 June
|
|
|
|
2026
|
|
2025
|
|
|
|
$m
|
|
$m
|
|
Reportable segment revenue
|
|
|
|
|
|
Sports
Medicine & ENT
|
|
1,017
|
|
923
|
|
Advanced
Wound Management
|
|
867
|
|
845
|
|
Orthopaedics
|
|
1,213
|
|
1,193
|
|
Revenue
from external customers
|
|
3,097
|
|
2,961
|
|
|
|
|
|
|
2a. Disaggregation of revenue
The
following table shows the disaggregation of Group revenue by
product by business unit:
|
|
|
|
|
|
|
|
|
27 June
|
|
28 June
|
|
Revenue by product from continuing operations
|
|
2026
|
|
2025
|
|
|
|
$m
|
|
$m
|
|
Sports
Medicine Joint Repair
|
|
574
|
|
509
|
|
Arthroscopic
Enabling Technologies
|
|
340
|
|
307
|
|
ENT
(Ear, Nose and Throat)
|
|
103
|
|
107
|
|
Sports Medicine & ENT
|
|
1,017
|
|
923
|
|
Advanced
Wound Care
|
|
398
|
|
366
|
|
Advanced
Wound Bioactives
|
|
263
|
|
285
|
|
Advanced
Wound Devices
|
|
206
|
|
194
|
|
Advanced Wound Management
|
|
867
|
|
845
|
|
Knee
Implants
|
|
492
|
|
501
|
|
Hip
Implants
|
|
326
|
|
313
|
|
Other
Reconstruction
|
|
68
|
|
64
|
|
Trauma
& Extremities
|
|
327
|
|
315
|
|
Orthopaedics
|
|
1,213
|
|
1,193
|
|
Total
|
|
3,097
|
|
2,961
|
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 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.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27 June 2026
|
|
28 June 2026
|
||||||||
|
|
Established MarketsE
|
|
Emerging Markets
|
|
Total
|
|
Established MarketsE
|
|
Emerging Markets
|
|
Total
|
|
|
$m
|
|
$m
|
|
$m
|
|
$m
|
|
$m
|
|
$m
|
|
Orthopaedics,
Sports Medicine & ENT
|
1,810
|
|
420
|
|
2,230
|
|
1,752
|
|
364
|
|
2,116
|
|
Advanced
Wound Management
|
739
|
|
128
|
|
867
|
|
731
|
|
114
|
|
845
|
|
Total
|
2,549
|
|
548
|
|
3,097
|
|
2,483
|
|
478
|
|
2,961
|
E
Established Markets comprises US, Australia, Canada, Europe, Japan
and New Zealand.
Sales
are attributed to the country of destination. US revenue for the
half year was $1,591m (H1 2025: $1,586m) and UK revenue for the
half year was $115m (H1 2025: $114m).
No
individual customer comprises more than 10% of the Group's external
sales.
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 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.
Segment
trading profit is reconciled to the statutory measure
below:
|
|
|
|
|
|
|
|
|
27 June
|
|
28 June
|
|
|
|
2026
|
|
2025
|
|
|
|
$m
|
|
$m
|
|
Segment profit
|
|
|
|
|
|
Sports
Medicine & ENT
|
|
251
|
|
213
|
|
Advanced
Wound Management
|
|
191
|
|
187
|
|
Orthopaedics
|
|
158
|
|
151
|
|
Segment
trading profit
|
|
600
|
|
551
|
|
Corporate costs1
|
|
(34)
|
|
(28)
|
|
Acquisition
and disposal related items
|
|
(21)
|
|
(9)
|
|
Restructuring
and rationalisation expenses
|
|
(23)
|
|
(8)
|
|
Amortisation
and impairment of acquisition intangibles
|
|
(87)
|
|
(83)
|
|
Legal
and other
|
|
13
|
|
6
|
|
Operating
profit
|
|
448
|
|
429
|
|
Interest
income
|
|
10
|
|
15
|
|
Interest
expense
|
|
(65)
|
|
(69)
|
|
Other
finance costs
|
|
(18)
|
|
(12)
|
|
Share
of results of associates
|
|
5
|
|
(1)
|
|
Profit
before taxation
|
|
380
|
|
362
|
|
|
|
|
|
|
1
Corporate costs include centralised infrastructure costs such as
compliance and group functions.
Depreciation
and amortisation included in segment profit is presented
below:
|
|
|
|
|
|
|
|
|
27 June
|
|
28 June
|
|
|
|
2026
|
|
2025
|
|
|
|
$m
|
|
$m
|
|
Depreciation and amortisation
|
|
|
|
|
|
Sports Medicine & ENT
|
|
55
|
|
51
|
|
Advanced Wound Management
|
|
37
|
|
34
|
|
Orthopaedics
|
|
115
|
|
112
|
Acquisition and disposal related items
For
the half year ended 27 June 2026, the charge included integration
costs relating to the acquisition of Integrity Orthopaedics and
prior year acquisitions.
For
the half year ended 28 June 2025, the charge included costs of
integration for prior year acquisitions.
Restructuring and rationalisation costs
For
the half year ended 27 June 2026, these costs primarily relate to
the efficiency and productivity elements of the 12-Point
Plan and the Operations and Commercial Excellence programme.
These costs primarily consist of severance, integration and dual
running costs.
For
the half year ended 28 June 2025, these costs primarily relate to
the efficiency and productivity elements of the 12-Point
Plan and the Operations and Commercial Excellence programme.
These costs primarily consist of severance, integration and dual
running costs, partially offset by gains on disposal of property,
plant and equipment.
Amortisation and impairment of acquisition intangibles
For
both the half years ended 27 June 2026 and 28 June 2025, charges
relate to the amortisation and impairment of intangible assets
acquired in material business combinations.
Legal and other
For
the half year ended 27 June 2026, charges relate to legal expenses
for ongoing metal-on-metal hip claims. These expenses were offset
by a release of $21m in the provision that reflects the decrease in
the present value of the estimated costs to resolve all other known
and anticipated metal-on-metal hip claims.
For
the half year ended 28 June 2025, charges relate to legal expenses
for ongoing metal-on-metal hip claims. These expenses were offset
by a release of $11m in the provision that reflects the decrease in
the present value of the estimated costs to resolve all other known
and anticipated metal-on-metal hip claims.
3. Taxation
Tax rate
Our
reported tax for the period ended 27 June 2026 was a charge of
$77m, with an effective tax rate of 20.3% (H1 2025: $69m, effective
tax rate of 19.1%).
OECD BEPS 2.0 - Pillar Two
The
Group estimates a Pillar Two current tax charge for the year ending
31 December 2026 of $19m (2025: $8m).
The
Group is adopting the IAS12 mandatory temporary exception from the
recognition and disclosure of deferred taxes arising from the
jurisdictional implementation of the Pillar Two model
rules.
4. Dividends
The
2025 final dividend totaling $205m was paid on 27 May 2026. The
2026 interim dividend of 15.6 US cents per ordinary share was
approved by the Board on 29 July 2026. This dividend is payable on
6 November 2026 to shareholders whose names appear on the register
at the close of business on 2 October 2026. The sterling equivalent
per ordinary share will be set following the record date.
Shareholders may elect to receive their dividend in either Sterling
or US Dollars and the last day for election will be 16 October
2026. Shareholders may participate in the dividend re-investment
plan and elections must be made by 16 October 2026.
5. Acquisitions
Half year ended 27 June 2026
On
21 January 2026, the Group completed the acquisition of 100% of the
share capital of Integrity Orthopaedics Inc. (Integrity), 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
fair value of the consideration amounted to $390m. This comprises
contingent consideration of $165m, representing the discounted
value of future payments contingent upon the achievement of
specified financial performance milestones in the next 3 years, and
initial cash consideration of $225m adjusted for cash acquired and
other liabilities assumed.
The
purchase price allocation remains provisional as of the date on
which the financial statements were approved by the Board,
principally because of the ongoing assessment of historic tax
losses recognised by Integrity prior to the acquisition. The
provisional fair values of assets acquired, and liabilities assumed
are set out below:
|
|
|
|
|
|
|
Integrity
|
|
|
|
$m
|
|
Intangible
assets - technology-related
|
|
321
|
|
Inventory
|
|
1
|
|
Cash
|
|
5
|
|
Other
Assets
|
|
2
|
|
Other
liabilities
|
|
(7)
|
|
Trade
and other payables
|
|
(1)
|
|
Net
deferred tax liability
|
|
(71)
|
|
Net
assets
|
|
250
|
|
Goodwill
|
|
140
|
|
Consideration
|
|
390
|
The
goodwill represents the control premium, acquired workforce and the
synergies expected to arise from integrating Integrity into the
Group's existing operations.
The
technology-related intangible assets were valued using an
income-based valuation approach, with key inputs including forecast
revenue, profitability and discount rates over the expected life of
the technology.
The
contribution of Integrity Orthopaedics to the Group's revenue and
profit for the period following acquisition is not material
relative to the Group's overall performance.
The
cash outflow from acquisitions in H1 2026 was $221m comprising
consideration of $220m net of cash acquired of $5m relating to
acquisitions in the current period, and payments of deferred and
contingent consideration of $1m for acquisitions completed in prior
periods.
The
carrying value of goodwill increased from $3,108m at 31 December
2025 to $3,236m at 27 June 2026. The Integrity
Orthopaedics acquisition during the period increased goodwill
by $140m, this was partially offset by foreign exchange movements
of $12m.
Year ended 31 December 2025
No
acquisitions were completed in 2025.
The
cash outflow from acquisitions in H1 2025 comprises payments of
deferred and contingent consideration of $8m for acquisitions
completed in prior periods.
6. Net debt
Net debt as at 27 June 2026 is outlined below.
The repayment of lease liabilities is included in cash flows from
financing activities in the cash flow statement.
|
|
|
|
|
|
|
|
|
|
|
27 June
|
|
31 December
|
|
28 June
|
|
|
|
2026
|
|
2025
|
|
2025
|
|
|
|
$m
|
|
$m
|
|
$m
|
|
Bank overdrafts, borrowings and loans - current
|
|
508
|
|
83
|
|
18
|
|
Corporate bond1
|
|
2,670
|
|
2,478
|
|
2,603
|
|
Private placement notes
|
|
410
|
|
550
|
|
625
|
|
Borrowings
|
|
3,588
|
|
3,111
|
|
3,246
|
|
Cash and cash equivalents2
|
|
(754)
|
|
(557)
|
|
(676)
|
|
Asset balance on derivatives - interest rate swaps
|
|
(12)
|
|
(11)
|
|
(31)
|
|
Net debt excluding lease liabilities
|
|
2,822
|
|
2,543
|
|
2,539
|
|
Non-current lease liabilities
|
|
132
|
|
149
|
|
144
|
|
Current lease liabilities
|
|
65
|
|
67
|
|
64
|
|
Net debt
|
|
3,019
|
|
2,759
|
|
2,747
|
|
|
|
|
|
|
|
|
1 Corporate bond includes fair
value adjustment relating to interest swaps.
2 In H1 2026, cash and cash
equivalents include cash at bank of $504m (31 December 2025: $457m,
28 June 2025: $476m) and cash equivalents of $250m (31 December
2025: $100m, 28 June 2025: $200m).
No debt is due for repayment in the second half of 2026. A $350m US
Corporate Bond and $140m of private placement debt is due for
repayment in the first half of 2027.
In June 2026, the Group issued a corporate bond of €500m
(before expenses and underwriting discounts) bearing an interest
rate of 4.25% repayable in 2038. Part of the Group's net investment
in its Euro subsidiaries is hedged by the two EUR Corporate Bonds
of €500m each issued in 2022 and 2026 which mitigates the
foreign currency risk arising from the subsidiaries' net assets.
The €500m Bond issued in 2026 has been designated as a
hedging instrument for the changes in the value of the net
investment that is attributable to changes in the EUR/USD spot
rate.
The Group may, at any time and from time to time, seek to retire,
repay or repurchase its outstanding debt, including through cash
tender offers, open-market repurchases, privately negotiated
transactions or otherwise. Any such transactions, if undertaken,
would be on terms and at prices determined by the Group and would
depend on prevailing market conditions, liquidity requirements,
contractual restrictions and other relevant factors.
The Company is subject to financial covenants under its private
placement agreements. 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 using net debt
excluding lease liabilities as set out below. The financial
covenants are tested at the end of each half year for the 12 months
ending on the last day of the testing period. As of 27 June 2026,
the Company was in compliance with these covenants. The facilities
are also subject to customary events of default, none of which are
currently anticipated to occur. As the measure included in the
financial covenants represents net debt excluding lease
liabilities, the Group also presents the net debt position to
provide a complete and comprehensive view of its financial
position.
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
|
|
|
||||||||
|
|
|
27 June
|
|
31 December
|
|
28 June
|
|
27 June
|
|
31 December
|
|
28 June
|
|
|
|
|
|
2026
|
|
2025
|
|
2025
|
|
2026
|
|
2025
|
|
2025
|
|
Fair value
|
|
|
|
$m
|
|
$m
|
|
$m
|
|
$m
|
|
$m
|
|
$m
|
|
level
|
|
Financial assets measured at fair value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forward foreign exchange contracts
|
|
54
|
|
33
|
|
2
|
|
54
|
|
33
|
|
2
|
|
Level 2
|
|
Investments
|
|
25
|
|
30
|
|
29
|
|
25
|
|
30
|
|
29
|
|
Level 1 & 3
|
|
Investments relating to deferred compensation
arrangements
|
|
120
|
|
106
|
|
-
|
|
120
|
|
106
|
|
-
|
|
Level 1
|
|
Interest rate swaps
|
|
15
|
|
11
|
|
31
|
|
15
|
|
11
|
|
31
|
|
Level 2
|
|
Currency swaps
|
|
1
|
|
2
|
|
-
|
|
1
|
|
2
|
|
-
|
|
Level 2
|
|
|
|
215
|
|
182
|
|
62
|
|
215
|
|
182
|
|
62
|
|
|
|
Financial assets not measured at fair value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade and other receivables
|
|
1,354
|
|
1,278
|
|
1,296
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
754
|
|
557
|
|
676
|
|
|
|
|
|
|
|
|
|
|
|
2,108
|
|
1,835
|
|
1,972
|
|
|
|
|
|
|
|
|
|
Total financial assets
|
|
2,323
|
|
2,017
|
|
2,034
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial liabilities measured at fair value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition consideration - contingent
|
|
(286)
|
|
(107)
|
|
(89)
|
|
(286)
|
|
(107)
|
|
(89)
|
|
Level 3
|
|
Forward foreign exchange contracts
|
|
(8)
|
|
(15)
|
|
(36)
|
|
(8)
|
|
(15)
|
|
(36)
|
|
Level 2
|
|
Interest rate swaps
|
|
(3)
|
|
-
|
|
-
|
|
(3)
|
|
-
|
|
-
|
|
Level 2
|
|
Currency swaps
|
|
(1)
|
|
(2)
|
|
-
|
|
(1)
|
|
(2)
|
|
-
|
|
Level 2
|
|
|
|
(298)
|
|
(124)
|
|
(125)
|
|
(298)
|
|
(124)
|
|
(125)
|
|
|
|
Financial liabilities not measured at fair value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition consideration - deferred
|
|
-
|
|
-
|
|
(9)
|
|
|
|
|
|
|
|
|
|
Bank overdrafts and loans
|
|
(19)
|
|
(8)
|
|
(17)
|
|
|
|
|
|
|
|
|
|
Corporate bond not in a hedge relationship
|
|
(1,395)
|
|
(1,394)
|
|
(1,493)
|
|
|
|
|
|
|
|
|
|
Corporate bond in a hedge relationship
|
|
(1,624)
|
|
(1,084)
|
|
(1,110)
|
|
|
|
|
|
|
|
|
|
Private placement debt not in a hedge relationship
|
|
(550)
|
|
(625)
|
|
(625)
|
|
|
|
|
|
|
|
|
|
Trade and other payables
|
|
(1,208)
|
|
(1,243)
|
|
(1,060)
|
|
|
|
|
|
|
|
|
|
|
|
(4,796)
|
|
(4,354)
|
|
(4,314)
|
|
|
|
|
|
|
|
|
|
Total financial liabilities
|
|
(5,094)
|
|
(4,478)
|
|
(4,439)
|
|
|
|
|
|
|
|
|
The
following table shows the book value and market value of corporate
bonds and private placement debt.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27 June 2026
|
|
31 December 2025
|
|
28 June 2025
|
|
|||
|
|
|
Book
|
Market
|
|
Book
|
Market
|
|
Book
|
Market
|
|
|
|
|
value
|
value
|
|
value
|
value
|
|
value
|
value
|
|
|
|
|
$ million
|
$ million
|
|
$ million
|
$ million
|
|
$ million
|
$ million
|
|
|
2030 USD corporate bond
|
|
897
|
802
|
|
897
|
810
|
|
996
|
875
|
|
|
2034 USD corporate bond
|
|
635
|
659
|
|
641
|
672
|
|
648
|
659
|
|
|
2027 USD corporate bond
|
|
349
|
351
|
|
349
|
354
|
|
348
|
354
|
|
|
2029 EUR corporate bond
|
|
571
|
594
|
|
591
|
617
|
|
611
|
623
|
|
|
2038 EUR corporate bond
|
|
567
|
580
|
|
-
|
-
|
|
-
|
-
|
|
|
Private placement debt
|
|
550
|
516
|
|
625
|
594
|
|
625
|
589
|
|
In
January 2026, the Group transferred an investment with a fair value
of $20m from Level 3 to Level 1 following the expiration of a value
protection arrangement, after which the fair value was determined
by reference to quoted market prices. There were no transfers
between Levels 1 and 2 during the period. There were no transfers
between Levels 1, 2 and 3 during the year ended 31 December 2025.
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, March 2024
and June 2026 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.
Fair
value of investments relating to deferred compensation arrangements
is determined using unadjusted quoted market prices, and
accordingly these investments are classified as Level 1 within the
fair value hierarchy. The fair value of forward 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
fair value of contingent acquisition consideration is estimated
using a discounted cash flow model. The valuation model considers
the present value of expected payment, discounted using a
risk-adjusted discount rate. The expected payment is determined by
considering the possible scenarios, which relate to the achievement
of established milestones and targets, the amount to be paid under
each scenario and the probability of each scenario. As a result,
contingent acquisition consideration is classified as Level 3
within the fair value hierarchy.
Fair
value of quoted investments is determined using unadjusted quoted
market prices, and accordingly these investments are classified as
Level 1 within the fair value hierarchy. The fair value of unquoted
investments is based upon third party pricing models for share
issues. As a result, unquoted investments are considered Level 3 in
the fair value hierarchy. The movements in the half year ended 27
June 2026 and the year ended 31 December 2025 for financial
instruments measured using Level 3 valuation methods are presented
below:
|
|
|
|
|
|
27 June
|
31 December
|
|
|
2026
|
2025
|
|
|
$m
|
$m
|
|
Investments
|
|
|
|
At 1 January
|
30
|
9
|
|
Transferred to Level 1
|
(20)
|
-
|
|
Additions
|
2
|
2
|
|
Transferred from receivables
|
-
|
18
|
|
Fair value remeasurement
|
-
|
1
|
|
|
12
|
30
|
|
|
|
|
|
Contingent acquisition consideration liability
|
|
|
|
At 1 January
|
(107)
|
(84)
|
|
Arising on acquisitions
|
(165)
|
-
|
|
Payments
|
1
|
6
|
|
Remeasurements
|
(15)
|
(29)
|
|
|
(286)
|
(107)
|
7b. Retirement benefit obligations
The
discount rates applied to the defined benefit pension liabilities
of the UK, Germany and Switzerland pension plans are determined
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.
Since
31 December 2025, the discount rate for UK has increased by 50
basis points to 6.0%, the discount rate for Germany has increased
by 20 basis points to 4.6% and the discount rate for Switzerland
has decreased by 5 basis points to 1.15%.
A
remeasurement loss of $1m was recognised in Other Comprehensive
Income (OCI) during the first half of 2026, reflecting actuarial
movements in the present value of the pension obligations in the
UK, Germany and Switzerland.
8. Equity
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. Cumulative fair
value loss on trade investments within other reserves at 27 June
2026 was $11m (1 January 2026: $11m, 28 June 2025: $11m). The
movement in the cash flow hedge reserve and foreign currency
translation reserve is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27 June
|
|
28 June
|
|
|
|
2026
|
|
2025
|
|
Foreign currency translation reserve
|
|
$m
|
|
$m
|
|
At 1 January
|
|
(341)
|
|
(520)
|
|
Exchange (loss)/gain on translation of foreign
operations
|
|
(45)
|
|
261
|
|
Exchange gain/(loss) arising on hedging instruments
|
|
25
|
|
(68)
|
|
|
|
(361)
|
|
(327)
|
|
|
|
|
|
|
|
|
|
27 June
|
|
28 June
|
|
|
|
2026
|
|
2025
|
|
Cash flow hedge reserve
|
|
$m
|
|
$m
|
|
At 1 January
|
|
18
|
|
34
|
|
Gain/(loss) arising in the period
|
|
27
|
|
(47)
|
|
Gain recycled to income statement in the period
|
|
-
|
|
(5)
|
|
Taxation
|
|
-
|
|
9
|
|
|
|
45
|
|
(9)
|
|
|
|
On 6 May 2026, the Group announced a $500m share buyback programme
in order to return capital to shareholders. The Group purchased
9,076,588 shares under the programme for a total cost of $137m and
has an obligation to purchase additional shares amounting to $113m
at 27 June 2026. The total cost of $250m has been deducted from
equity. Of this amount, $116m was settled during the period ended
27 June 2026. Transaction costs relating to the shares purchased
were immaterial. This new buyback follows the $500m buyback
completed in 2025.
|
9. 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:
|
|
|
|
|
|
|
|
|
|
|
27 June
|
|
31 December
|
|
28 June
|
|
|
|
2026
|
|
2025
|
|
2025
|
|
Average rates
|
|
|
|
|
|
|
|
Sterling
|
|
1.35
|
|
1.32
|
|
1.30
|
|
Euro
|
|
1.17
|
|
1.13
|
|
1.09
|
|
Swiss
Franc
|
|
1.27
|
|
1.20
|
|
1.16
|
|
Japanese
Yen
|
|
0.0063
|
|
0.0067
|
|
0.0067
|
|
Period end rates
|
|
|
|
|
|
|
|
Sterling
|
|
1.32
|
|
1.35
|
|
1.37
|
|
Euro
|
|
1.14
|
|
1.17
|
|
1.17
|
|
Swiss
Franc
|
|
1.24
|
|
1.26
|
|
1.26
|
|
Japanese
Yen
|
|
0.0062
|
|
0.0064
|
|
0.0069
|
10. Contingencies
The
Company and its subsidiaries are party to various legal
proceedings, some of which include claims for substantial damages.
The outcome of these proceedings cannot readily be foreseen, but
except as described herein management believes none of them is
likely to result in a material adverse effect on the financial
position of the Group. The Group provides for outcomes that are
deemed to be probable and can be reliably estimated. There is no
assurance that losses will not exceed provisions or will not have a
significant impact on the Group's results of operations in the
period in which they are realized.
11. Subsequent events
There
have been no events between the balance sheet date, and the date on
which the financial statements were approved by the Board, which
would require adjustment to the financial statements or any
additional disclosures.
12. Principal risks and
uncertainties
The
principal risks and uncertainties that the Group is exposed to are
consistent with those as at 31 December 2025. The principal risks
and uncertainties continue to be: legal and compliance; quality and
regulatory; political and economic; financial markets; pricing and
reimbursement; cybersecurity; global supply chain; mergers and
acquisitions; new product innovation, design and development
including intellectual property; strategy and commercial execution;
and talent management. Further detail on these risks can be found
in the 2025 Annual Report of the Group on pages 83-94.
Directors' Responsibilities Statement
The
Directors confirm that to the best of their knowledge:
● this set of condensed consolidated Interim
Financial Statements has been prepared in accordance with IAS
34 Interim Financial
Statements as adopted for
use in the UK and IAS 34 Interim Financial
Statements as issued by
the International Accounting Standards Board;
and
● that the interim management report herein
includes a fair review of the information required
by:
a. DTR
4.2.7R of the Disclosure and Transparency Rules, being an
indication of important events that have occurred during the first
six months of the financial year and their impact on the condensed
set of financial statements; and a description of the principal
risks and uncertainties for the remaining six months of the year;
and
b. DTR
4.2.8R of the Disclosure and Transparency Rules, being related
party transactions that have taken place in the first six months of
the current financial year and that have materially affected the
financial position or performance of the enterprise during that
period, and any changes in the related party transactions described
in the last annual report that could do so.
The Directors of Smith & Nephew plc are listed
in the Smith & Nephew plc Annual Report for 31 December 2025. A
list of current Directors is maintained on the Smith & Nephew
plc website: www.smith-nephew.com.
The
Directors are responsible for the maintenance and integrity of the
Group's website. Legislation in the United Kingdom governing the
preparation and dissemination of Financial Statements may differ
from legislation in other jurisdictions.
|
|
|
|
|
By order of the Board:
|
|
|
|
|
|
|
|
Deepak Nath
|
Chief Executive Officer
|
3 August 2026
|
|
John Rogers
|
Chief Financial Officer
|
3 August 2026
|
|
|
|
|
INDEPENDENT REVIEW REPORT TO SMITH & NEPHEW PLC
Conclusion
We have been engaged by the company to review the condensed set of
financial statements in the interim financial report for the
half-year ended 27 June 2026 which comprises the Condensed Group
Income Statement, the Condensed Group Statement of Comprehensive
Income, the Condensed Group Balance Sheet, the Condensed Group Cash
Flow Statement, the Group Statement of Changes in Equity and
related notes 1 to 12.
Based on our review, nothing has come to our attention that causes
us to believe that the condensed set of financial statements in the
interim financial report for the half-year ended 27 June 2026 is
not prepared, in all material respects, in accordance with United
Kingdom adopted International Accounting Standard 34 and the
Disclosure Guidance and Transparency Rules ("the DTR") of the
United Kingdom's Financial Conduct Authority ("the UK
FCA").
Basis for Conclusion
We conducted our review in accordance with International Standard
on Review Engagements (UK) 2410 "Review of Interim Financial
Information Performed by the Independent Auditor of the Entity"
issued by the Financial Reporting Council for use in the United
Kingdom (ISRE (UK) 2410). A review of interim financial information
consists of making inquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures. A review is substantially less in scope than an
audit conducted in accordance with International Standards on
Auditing (UK) and consequently does not enable us to obtain
assurance that we would become aware of all significant matters
that might be identified in an audit. Accordingly, we do not
express an audit opinion.
As disclosed in note 1, the annual financial statements of the
group are prepared in accordance with United Kingdom adopted
international accounting standards. The condensed set of financial
statements included in this interim financial report has been
prepared in accordance with United Kingdom adopted International
Accounting Standard 34, "Interim Financial Reporting".
Conclusion Relating to Going Concern
Based on our review procedures, which are less extensive than those
performed in an audit as described in the Basis for Conclusion
section of this report, nothing has come to our attention to
suggest that the directors have inappropriately adopted the going
concern basis of accounting or that the directors have identified
material uncertainties relating to going concern that are not
appropriately disclosed.
This Conclusion is based on the review procedures performed in
accordance with ISRE (UK) 2410; however future events or conditions
may cause the entity to cease to continue as a going
concern.
Responsibilities of the directors
The directors are responsible for preparing the interim financial
report in accordance with the DTR of the UK FCA.
In preparing the interim financial report, the directors are
responsible for assessing the group's ability to continue as a
going concern, disclosing as applicable, matters related to going
concern and using the going concern basis of accounting unless the
directors either intend to liquidate the company or to cease
operations, or have no realistic alternative but to do
so.
Auditor's Responsibilities for the review of the financial
information
In reviewing the interim financial report, we are responsible for
expressing to the company a conclusion on the condensed set of
financial statements in the interim financial report. Our
Conclusion, including our Conclusion Relating to Going Concern, are
based on procedures that are less extensive than audit procedures,
as described in the Basis for Conclusion paragraph of this
report.
Use of our report
This report is made solely to the company in accordance with ISRE
(UK) 2410. Our work has been undertaken so that we might state to
the company those matters we are required to state to it in an
independent review report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility
to anyone other than the company, for our review work, for this
report, or for the conclusions we have formed.
Deloitte LLP
Statutory Auditor
London, United Kingdom
3 August 2026
Other
information
These Interim Financial Statements include financial measures that
are not prepared in accordance with IFRS Accounting Standards as
issued by the International Accounting Standards Board (IASB). 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 Accounting Standards but is not itself a measure defined under
IFRS Accounting Standards. 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 Accounting Standards, 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
|
34
|
|
Average daily sales
|
Average daily sales is used to assess underlying revenue growth by
removing the effect of different trading days between periods. This
is a key metric used by management to assess the performance of the
Group.
|
Average daily sales is calculated by dividing revenue at a constant
exchange rate by the number of trading days in a given period.
Trading days refer to the days on which the Group generates its
revenue.
|
Revenue
|
n/a
|
|
|
|
|
|
|
|
Performance measures (continued)
|
||||
|
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
|
34
|
|
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
|
34
|
|
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
|
34
|
|
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
|
34
|
|
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
|
34
|
|
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
|
34
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance measures (continued)
|
|
|
||
|
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
|
34
|
|
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
|
34
|
|
|
|
|
|
|
|
|
|
|
|
|
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 net cash inflow from operating activities less
capital expenditure, proceeds from disposal of property, plant and
equipment and payment of lease liabilities.
|
Net cash inflow from operating activities
|
35
|
|
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
|
36
|
|
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)
|
36
|
|
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)
|
n/a
|
Underlying revenue
Reported revenue growth, the most directly comparable financial
measure calculated in accordance with IFRS Accounting Standards as
issued by the International Accounting Standards Board (IASB),
reconciles to underlying revenue growth as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciling Items
|
||
|
|
|
27 June
|
|
28 June
|
|
Reported
|
|
Underlying
|
|
Acquisitions
|
|
Currency
|
|
|
|
2026
|
|
2025
|
|
growth
|
|
growth
|
|
& disposals
|
|
impact
|
|
|
|
$m
|
|
$m
|
|
%
|
|
%
|
|
%
|
|
%
|
|
Segment revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sports
Medicine & ENT
|
|
1,017
|
|
923
|
|
10.2
|
|
7.7
|
|
-
|
|
2.5
|
|
Advanced
Wound Management
|
|
867
|
|
845
|
|
2.6
|
|
(0.1)
|
|
-
|
|
2.7
|
|
Orthopaedics
|
|
1,213
|
|
1,193
|
|
1.7
|
|
(0.1)
|
|
-
|
|
1.8
|
|
Revenue
|
|
3,097
|
|
2,961
|
|
4.6
|
|
2.3
|
|
-
|
|
2.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
|
|
|
|
|
|
Profit
|
|
|
|
|
|
generated
|
|
|
|
|
|
Operating
|
|
before
|
|
|
|
Attributable
|
|
from
|
|
Earnings
|
|
|
|
profit1
|
|
tax2
|
|
Taxation3
|
|
profit4
|
|
operations5
|
|
per share6
|
|
|
|
$m
|
|
$m
|
|
$m
|
|
$m
|
|
$m
|
|
¢
|
|
Half year 2026 Reported
|
|
448
|
|
380
|
|
(77)
|
|
303
|
|
605
|
|
35.6
|
|
Acquisition
and disposal related items
|
|
21
|
|
35
|
|
(6)
|
|
29
|
|
20
|
|
3.6
|
|
Restructuring
and rationalisation costs
|
|
23
|
|
24
|
|
(6)
|
|
18
|
|
24
|
|
2.1
|
|
Amortisation
and impairment of acquisition intangibles
|
|
87
|
|
87
|
|
(19)
|
|
68
|
|
7
|
|
8.1
|
|
Legal and other7
|
|
(13)
|
|
(19)
|
|
5
|
|
(14)
|
|
-
|
|
(1.7)
|
|
Lease
liability payments
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(29)
|
|
-
|
|
Capital
expenditure
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(190)
|
|
-
|
|
Proceeds
from disposal of property, plant and equipment
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
Half year 2026 Non-IFRS
|
|
566
|
|
507
|
|
(103)
|
|
404
|
|
437
|
|
47.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
|
|
|
|
|
|
Profit
|
|
|
|
|
|
generated
|
|
|
|
|
|
Operating
|
|
before
|
|
|
|
Attributable
|
|
from
|
|
Earnings
|
|
|
|
profit1
|
|
tax2
|
|
Taxation3
|
|
profit4
|
|
operations5
|
|
per share6
|
|
|
|
$m
|
|
$m
|
|
$m
|
|
$m
|
|
$m
|
|
¢
|
|
Half year 2025 Reported
|
|
429
|
|
362
|
|
(69)
|
|
293
|
|
568
|
|
33.5
|
|
Acquisition
and disposal related items
|
|
9
|
|
20
|
|
(4)
|
|
16
|
|
7
|
|
1.8
|
|
Restructuring
and rationalisation costs
|
|
8
|
|
8
|
|
(2)
|
|
6
|
|
52
|
|
0.6
|
|
Amortisation
and impairment of acquisition intangibles
|
|
83
|
|
83
|
|
(19)
|
|
64
|
|
-
|
|
7.3
|
|
Legal and other7
|
|
(6)
|
|
(4)
|
|
1
|
|
(3)
|
|
12
|
|
(0.3)
|
|
Lease
liability payments
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(25)
|
|
-
|
|
Capital
expenditure
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(139)
|
|
-
|
|
Proceeds
from disposal of property, plant and equipment
|
|
-
|
|
-
|
|
-
|
|
-
|
|
12
|
|
-
|
|
Half year 2025 Non-IFRS
|
|
523
|
|
469
|
|
(93)
|
|
376
|
|
487
|
|
42.9
|
1
Represents a reconciliation of
operating profit to trading profit.
2 Represents
a reconciliation of 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.
Acquisition and disposal related items
For
the half year ended 27 June 2026, the charge included integration
costs relating to the acquisition of Integrity Orthopaedics and
prior year acquisitions.
For
the half year ended 28 June 2025, the charge included costs of
integration for prior year acquisitions.
Adjusted
profit before tax for the half year ended 27 June 2026 and 28 June
2025 also excludes the remeasurement and discount unwind for
contingent consideration.
Restructuring and rationalisation costs
For
the half year ended 27 June 2026, these costs primarily relate to
the efficiency and productivity elements of the 12-Point
Plan and the Operations and Commercial Excellence programme.
These costs primarily consist of severance, integration and dual
running costs.
For
the half year ended 28 June 2025, these costs primarily relate to
the efficiency and productivity elements of the 12-Point
Plan and the Operations and Commercial Excellence programme.
These costs primarily consist of severance, integration and dual
running costs, partially offset by gains on disposal of property,
plant and equipment.
Adjusted
profit before tax for the half year ended 27 June 2026 additionally
excludes restructuring costs related to the Group's shareholding in
Bioventus.
Amortisation and impairment of acquisition intangibles
For
both the half years ended 27 June 2026 and 28 June 2025, charges
relate to the amortisation and impairment of intangible assets
acquired in material business combinations.
Legal and other
For
the half year ended 27 June 2026, charges relate to legal expenses
for ongoing metal-on-metal hip claims. These expenses were offset
by a release of $21m in the provision that reflects the decrease in
the present value of the estimated costs to resolve all other known
and anticipated metal-on-metal hip claims. Trading profit before
tax additionally excludes $8m gain relating to deferred
compensation arrangements, partially offset by $1m of finance costs
for the unwind of discount relating to the provision for
metal-on-metal hip claims.
For
the half year ended 28 June 2025, charges relate to legal expenses
for ongoing metal-on-metal hip claims. These expenses were offset
by a release of $11m in the provision that reflects the decrease in
the present value of the estimated costs to resolve all other known
and anticipated metal-on-metal hip claims. Trading profit before
tax additionally excludes $2m of finance costs for the unwind of
discount relating to the provision for metal-on-metal hip
claims.
Free cash flow
A reconciliation from net cash inflow from operating activities,
the most comparable IFRS measure, to free cash flow is set out
below:
|
|
|
|
|
|
|
27 June
|
|
28 June
|
|
|
2026
|
|
2025
|
|
|
$m
|
|
$m
|
|
Net cash inflow from operating activities
|
450
|
|
396
|
|
Capital expenditure
|
(190)
|
|
(139)
|
|
Payment of lease liabilities
|
(29)
|
|
(25)
|
|
Proceeds from disposal of property, plant and
equipment
|
-
|
|
12
|
|
Free cash flow
|
231
|
|
244
|
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.
|
|
|
|
|
|
|
|
|
27 June
|
|
31 December
|
|
|
|
2026
|
|
2025
|
|
|
|
$m
|
|
$m
|
|
Net debt
|
|
3,019
|
|
2,759
|
|
|
|
|
|
|
|
Attributable profit for the period
|
|
635
|
|
625
|
|
Taxation
|
|
162
|
|
154
|
|
Share of results of associates
|
|
(119)
|
|
(113)
|
|
Other finance costs
|
|
22
|
|
16
|
|
Interest expense
|
|
136
|
|
140
|
|
Interest income
|
|
(23)
|
|
(28)
|
|
Acquisition and disposal-related items
|
|
44
|
|
32
|
|
Restructuring and rationalisation costs
|
|
62
|
|
47
|
|
Amortisation and impairment of acquisition intangibles
|
|
180
|
|
176
|
|
Legal and other
|
|
155
|
|
162
|
|
Depreciation of property, plant and equipment
|
|
340
|
|
335
|
|
Impairment and amortisation of other intangible assets and
property, plant and equipment
|
|
75
|
|
61
|
|
Adjusted EBITDA1
|
|
1,669
|
|
1,607
|
|
Adjusted leverage ratio1
|
|
1.8
|
|
1.7
|
1 Adjusted
leverage ratio for the half year 2026 has been calculated based on
adjusted EBITDA for the rolling 12 months ended 27 June
2026.
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.
|
|
|
|
|
|
|
|
|
27 June
|
|
31 December
|
|
|
|
2026
|
|
2025
|
|
|
|
$m
|
|
$m
|
|
Bank overdrafts, borrowings, loans and lease
liabilities
|
|
573
|
|
150
|
|
Long-term borrowings and lease liabilities
|
|
3,212
|
|
3,177
|
|
Total borrowings
|
|
3,785
|
|
3,327
|
|
|
|
|
|
|
|
Attributable profit
|
|
635
|
|
625
|
|
Leverage ratio1
|
|
6.0
|
|
5.3
|
1 Leverage
ratio for the half year 2026 has been calculated based on
attributable profit for the rolling
12 months ended 27 June 2026.
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:
04 August, 2026
|
By:
|
/s/
Helen Barraclough
|
|
|
|
Helen
Barraclough
|
|
|
|
Company
Secretary
|