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
05, 2025
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 a
Form 40-F
__
\
Smith+Nephew Second Quarter and First Half 2025
Results
Strong revenue growth, trading margin expansion and free cash flow;
full year guidance unchanged; $500 million share buyback
announced
5 August 2025
Smith+Nephew (LSE:SN, NYSE:SNN), the global medical technology
company, reports results for the second quarter and first half
ended 28 June 2025:
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28 June
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29 June
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Reported
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Underlying
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2025
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2024
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growth
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growth
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$m
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$m
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%
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%
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Second Quarter Results1,2
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Revenue
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1,553
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1,441
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7.8
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6.7
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Half Year Results1,2
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Revenue
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2,961
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2,827
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4.7
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5.0
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Operating
profit
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429
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328
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30.6
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Operating
profit margin (%)
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14.5
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11.6
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EPS
(cents)
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33.5
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24.5
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36.6
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Cash
generated from operations
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568
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368
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54.3
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Trading
profit
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523
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471
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11.2
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Trading
profit margin (%)
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17.7
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16.7
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EPSA
(cents)
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42.9
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37.6
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14.1
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Free
cash flow
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244
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39
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528.3
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H1 Highlights1,2
● H1 underlying revenue growth was
5.0%. Reported revenue growth was 4.7% including -30bps FX
headwind. There were two fewer trading days in the period versus
the prior year
● Trading profit up 11.2% with
100bps of trading profit margin expansion to 17.7% (H1 2024:
16.7%), driven by revenue leverage and accelerated operational
savings. Operating profit increased by
30.6%
● Strong cash generation, with
trading cashflow of $487 million (H1 2024: $284 million)
and trading cash conversion up 33
percentage points to 93% (H1 2024: 60%), driven by favourable
working capital movements
● Free cash flow increased to $244
million (H1 2024: $39 million); lower restructuring charge of $8
million (H1 2024: $62 million)
● EPSA up 14.1% to 42.9¢ (H1
2024: 37.6¢); EPS up 36.6% to
33.5¢ (H1 2024:
24.5¢)
Q2 Trading
Highlights1,2
● Underlying revenue growth
accelerated to 6.7%. Reported growth was 7.8%
including 110bps FX tailwind. There was one fewer trading day in
the period versus the prior year
● All regions and all the three
business units grew ahead of Q1
● Orthopaedics underlying revenue
growth of 5.0% (reported growth 5.8%) with both Global and US Reconstruction
sequentially improving from Q1
● Sports Medicine & ENT
underlying revenue growth up 5.7% (reported growth 6.8%). Excluding
China, underlying revenue growth was 10.2% (reported growth
11.4%)
● Advanced Wound Management
underlying revenue growth of 10.2% (reported growth 11.4%),
including rebound in Advanced Wound Bioactives
Interim Dividend and Share Buyback
● Interim dividend up 4.2% to
15.0¢ (H1 2024: 14.4¢)
● Announcing additional return of
$500 million to shareholders via share buyback in the second half
of 2025, while retaining our leverage, and without compromising our
growth plans. This reflects strong cash generation and balance
sheet
Full Year 2025
Guidance Unchanged1,2
● Underlying revenue growth is
expected to be around 5.0% (reported growth 5.5%), and trading
profit margin is expected to expand to between 19.0% and
20.0%
● Continued higher cadence of
product launches and clinical evidence to underpin further
growth
● Unchanged outlook includes an
expected net impact of $15 to $20 million from tariffs in 2025,
based on announced measures, and mitigations, as previously
announced
Deepak Nath, Chief Executive Officer, said:
"I'm pleased with our strong performance in the first half of 2025.
We are delivering sustained higher revenue growth, increased
profitability and better cash generation. As expected, revenue
growth accelerated in the second quarter, with all regions and
business units contributing. We saw a quarter-on-quarter
improvement in our Orthopaedics business, and this was
the fourth
consecutive quarter of sequential improvement from US
Reconstruction & Robotics on
an average daily sales basis.
"Recent product launches are driving growth across all business
units, with US Hip Implants becoming another example of the
innovation driven growth that is central to our strategy. We
maintained our high cadence of launches in H1 with new products in
Knee Implants, Robotics, Trauma, Sports Medicine and Advanced Wound
Care. New products launched in the last five years accounted for
three-quarters of our first half growth.
"The operational improvements we have made under the 12-Point Plan
are increasingly translating into better financial performance. We
are on track for our full year revenue growth target, a significant
step-up in profitability and strong free-cash generation, and are
announcing a $500 million share buyback. There is more to be done,
but the transformation of Smith+Nephew is starting to deliver
substantial value."
Analyst conference call
An analyst conference call to discuss Smith+Nephew's second quarter
and first half results will be held today at 8.30am BST / 3.30am EDT, details
of which are available on the Smith+Nephew website
at https://www.smith-nephew.com/en/who-we-are/investors.
Enquiries
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Investors
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Cora McCallum
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+44 (0) 1923 477433
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Smith+Nephew
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Media
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Charles Reynolds
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+44 (0) 1923 477314
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Smith+Nephew
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Susan Gilchrist / Ayesha Bharmal
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+44 (0) 20 7404 5959
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Brunswick
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Notes
1.
Unless otherwise specified as 'reported' all
revenue growth throughout this document is 'underlying' after
adjusting for the effects of currency translation and including the
comparative impact of acquisitions and excluding disposals. All
percentages compare to the equivalent 2024 period.
'Underlying
revenue growth' reconciles to reported revenue growth, the most
directly comparable financial measure calculated in accordance with
IFRS, by making two adjustments, the 'constant currency exchange
effect' and the 'acquisitions and disposals effect', described
below. See Other Information on pages 30 to 35 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.
2.
Certain items included in 'trading results',
such as trading profit, trading profit margin, tax rate on trading
results, trading cash flow, trading profit to 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 35
and are reconciled to the most directly comparable financial
measures prepared in accordance with IFRS. Reported results
represent IFRS financial measures as shown in the Condensed
Consolidated Interim Financial Statements.
Smith+Nephew Second Quarter Trading and First Half 2025
Results
We
are pleased to report a strong first half performance. Our
transformation programme is delivering revenue growth consistently
above historical levels, improved trading profit margin and a
significant step-up in cash generation. This progress is built upon
the operational improvements made through the 12-Point Plan and our
consistent ability to successfully launch new innovation. While
there remains further opportunity to drive productivity and asset
efficiency, the first half puts us on track to meet our 2025
targets on revenue growth, profitability and cash-flow, enabling us
to return $500 million to shareholders through a share buyback in
the second half while maintaining our leverage, and without
compromising our growth plans.
Delivering higher revenue growth
First half revenue was $2,961 million (H1 2024: $2,827 million),
reflecting underlying revenue growth of 5.0%. Reported revenue
growth was 4.7%, including a -30bps headwind from foreign exchange.
There were two fewer trading days in the first half versus the
prior year.
Second quarter revenue was $1,553 million (Q2 2024: $1,441
million), reflecting underlying revenue growth of 6.7%. Reported
revenue growth was 7.8%, including a 110bps tailwind from foreign
exchange. The second quarter of 2025 comprised 63 trading days, one
fewer than the same period of 2024.
The second quarter performance included a sequential acceleration
across all the three business units and all regions. In
Orthopaedics, our Reconstruction business improved both in the US
and internationally. In Sports Medicine, we maintained our recent
good momentum across Sports Medicine Joint Repair and Arthroscopic
Enabling Technologies outside of China. In Advanced Wound
Management, we delivered double-digit growth led by Advanced Wound
Devices and a rebound in Advanced Wound Bioactives.
Improved profit margin, cash generation and capital
returns
Trading profit for the first half was up 11.2% to $523 million (H1
2024: $471 million). The trading profit margin was 17.7% (H1 2024:
16.7%), a 100bps improvement on the prior year. Operating profit
increased 30.6% to $429 million (H1 2024: $328
million).
We made significant progress to improve our cash flow in 2024, and
this continued in the first half of 2025. Cash generated from
operations was up 54.3% to $568 million (H1 2024: $368 million) and
trading cash flow was up 71.5% to $487 million (H1 2024: $284
million). The trading profit to cash conversion ratio improved 33
percentage points to 93% (H1 2024: 60%).
Restructuring costs reduced by $54 million to $8
million (H1
2024: $62 million) as we near completion of the 12-Point Plan. We
also brought down Day Sales of Inventory (DSI) by 46 days
year-on-year, a
$69 million reduction in inventory value on a constant currency
basis (reported reduction: $24 million including a foreign exchange
impact of $45 million). Free
cash flow increased to $244 million (H1 2024: $39
million).
This strong cash generation will enable us to undertake a share
buyback to return $500 million to shareholders in the second half
of 2025, while maintaining our leverage, and without compromising
our growth plans.
Driving growth through innovation
Innovation has been a major contributor in our transformation to a
higher growth business. Across 2023 and 2024 more than half of our
underlying revenue growth came from products launched in the
previous five years. This success continued in the first half, with
three-quarters of growth coming from products launched in the last
five years. We also introduced new products across all three global
business units, which we are confident will help us sustain our
improved revenue growth profile.
In Orthopaedics, new products included LEGION◊ medial
stabilised inserts, addressing a fast-growing category of inserts
now used in more than 30% of US knee replacement, and the
TRIGEN◊ MAX
Tibia Nailing System for stable and unstable fractures of the
tibia, which builds on more than two decades of proven performance
and industry-leading design from our TRIGEN Nails
portfolio.
We also continued to invest behind the recent launches of the
CATALYSTEM◊ Primary
Hip System and the AETOS◊ Shoulder
System, both of which were important growth drivers in the first
half. On our CORI◊ Surgical
System, we received FDA-clearance for CORIOGRAPH◊ Pre-Operative
Planning and Modelling Services in total shoulder replacement
during the second quarter, expanding the offering to now cover all
major joint replacement procedures - Knee, Hip and Shoulder.
Offering both image-free and image-based registration, CORIOGRAPH
is another element in our approach of supporting a range of
procedures and surgeon preferences on CORI.
In Sports Medicine, we continue to expand
the indication range for
our REGENETEN◊ Bioinductive
Implant. For the first time, Smith+Nephew is able to market
REGENETEN for extra-articular ligament injuries in the US, creating
opportunities to reach more patients with soft tissue injuries
around the body. The initial focus is hip capsule repair with
future expansion planned in other extra-articular ligament
repairs.
In July, we announced the release of the Q-FIX◊ KNOTLESS
All-Suture Anchor for soft tissue-to-bone fixation indications
across multiple joint spaces including Shoulder, Hip, and Foot
& Ankle. This new option builds on the long-standing success
and performance of the best-in-class anchor fixation strength of
the Q-FIX Family.
In Advanced Wound Management, we initiated the US launch of
ALLEVYN◊ Ag+
SURGICAL, a new antimicrobial silver dressing which adds to the
established ALLEVYN family of foam dressings. ALLEVYN Ag+ SURGICAL
dressing features new ComfortSTAY◊ Technology
for gentle silicone adhesion and HighFLEX◊ Technology
to provide flexibility and comfort during patient
movement.
These new products are expected to have multi-year growth runways
ahead and we have an exciting pipeline of further launches and line
extensions planned in the second half of 2025 and
beyond.
Supporting adoption through clinical evidence
In addition to new products, we also announced a number of evidence
milestones during the first half of 2025, supporting the adoption
of key product families.
In Orthopaedics, the latest annual report from the Australian
Orthopaedic Association National Joint Replacement Registry
highlighted that the combination of our proprietary
OXINIUM◊ Technology
on highly cross-linked polyethylene has the highest survivorship
rate (94.1%) among all bearing combinations over a 20-year period
for total hip arthroplasty, corroborating similar findings in other
national registries. A recently published randomised controlled
trial (RCT) of Smith+Nephew's handheld robotic system demonstrated
the value for patients and surgeons of robotic-assisted total knee
replacement with JOURNEY◊ II
BCS. Patients experienced significantly better outcomes, including
reduced pain, improved function, and higher satisfaction, compared
to conventional surgery at one year. Also, JOURNEY II UK with
OXINIUM Technology demonstrated excellent early survivorship when
used with Smith+Nephew's handheld robotics, recording 100%
survivorship at one year in the UK National Joint
Registry.
In Sports Medicine, we expanded the evidence base for
REGENETEN◊ Bioinductive
Implant with an RCT showing that augmentation of medium and large
full-thickness rotator cuff repairs with REGENETEN resulted in
significantly lower re-tear rates at two years compared to repair
alone. Five-year results for CARTIHEAL AGILI-C◊ Cartilage
Repair Implant were presented at the American Orthopaedic Society
for Sports Medicine annual conference in July. The study showed
that CARTIHEAL AGILI-C maintained superior knee function compared
to the standard of care and reduced the long-term risk of total
knee arthroplasty or osteotomy.
In Advanced Wound Management, a comparative study involving over
10,000 Caesarean section patients showed that the
PICO◊ single-use
Negative Pressure Wound Therapy (sNPWT) system led to fewer
surgical site infections and complications, and cost savings
compared to an alternative sNPWT system.
Second quarter 2025 trading update
Consolidated revenue analysis for the second quarter
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28 June
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29 June
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Reported
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Underlying
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Acquisitions
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Currency
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2025
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2024(i)
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growth
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growth(ii)
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/disposals
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impact
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Consolidated revenue by business unit by product
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$m
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$m
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%
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%
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%
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%
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Orthopaedics
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615
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581
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5.8
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5.0
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-
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0.8
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Knee
Implants
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257
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247
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3.7
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2.9
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-
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0.8
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Hip
Implants
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162
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156
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4.2
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3.4
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-
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0.8
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Other Reconstruction(iii)
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35
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25
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42.4
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39.8
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-
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2.6
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Trauma
& Extremities
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161
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153
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5.0
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4.4
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-
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0.6
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Sports Medicine & ENT
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479
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448
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6.8
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5.7
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-
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1.1
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Sports
Medicine Joint Repair
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262
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239
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9.6
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8.4
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-
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1.2
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Arthroscopic
Enabling Technologies
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161
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155
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3.5
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2.3
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-
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1.2
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ENT
(Ear, Nose and Throat)
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56
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54
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4.1
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3.6
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-
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0.5
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Advanced Wound Management
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459
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412
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11.4
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10.2
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-
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1.2
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Advanced
Wound Care
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192
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183
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4.6
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2.6
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-
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2.0
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Advanced
Wound Bioactives
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165
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139
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18.5
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18.6
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-
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(0.1)
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Advanced
Wound Devices
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102
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90
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14.4
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12.7
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-
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1.7
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Total
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1,553
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1,441
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7.8
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6.7
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-
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1.1
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Consolidated revenue by geography
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US
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827
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760
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8.7
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8.7
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|
-
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-
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Other Established Markets(iv)
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470
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421
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11.6
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7.4
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-
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4.2
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Total Established Markets
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1,297
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1,181
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9.7
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8.2
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-
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1.5
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Emerging
Markets
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256
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|
260
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|
(1.2)
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(0.2)
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|
-
|
|
(1.0)
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|
|
Total
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1,553
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|
1,441
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|
7.8
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|
6.7
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|
-
|
|
1.1
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(i) Restated
for reclassification of robotics consumables revenue from Other
Reconstruction to Knee and Hip implants
(ii)
Underlying growth is defined in Note 1 on page 3
(iii) Other
Reconstruction includes robotics capital sales and
cement
(iv)
Other Established Markets are Europe, Japan, Australia, Canada and
New Zealand
Orthopaedics
Our Orthopaedics business unit delivered underlying revenue growth
of 5.0% (reported growth 5.8%) in the quarter.
Globally, Reconstruction delivered a sequential improvement on the
first quarter, with underlying revenue growth of 3.1% (reported
growth 3.9%) versus underlying revenue growth of 0.0% (reported
decline -1.6%) in the first quarter. Within
this, Knee
Implants underlying revenue growth
was 2.9% (reported growth 3.7%) and Hip
Implants underlying revenue growth
was 3.4% (reported growth 4.2%) for the second
quarter.
In the US, Reconstruction delivered
underlying and reported revenue growth of 2.0%, an acceleration
from 1.3% in the first quarter. Here, Knee
Implants declined -1.5%
and Hip Implants grew 7.4% in the second
quarter. On
an average daily sales (ADS) basis, which removes the effect of the
one fewer trading day year-on-year, second quarter revenue growth
was 0.1% in Knee Implants and 9.1% in Hip
Implants (see
Other Information on pages 30 to 35). US
knee performance reflects, in part, some slowing in procedures
towards the end of the quarter among our surgeon base, as well as
our on-going work to improve operational efficiency and increase
profitability by streamlining the portfolio and focusing on
higher-volume customers, supporting the 230bps trading profit
margin increase in the first half. The strong US hip performance
includes benefit from the new CATALYSTEM◊ Primary
Hip System as we continue to build the US launch. On an ADS basis,
this was the fourth
consecutive quarter of sequential improvement in revenue growth
from our US Reconstruction & Robotics
business.
Outside the US, Knee Implants benefitted from the timing of a
tender order in the Middle East. China
has been a headwind to Reconstruction growth in recent quarters due
to destocking at distributors. Inventory levels have continued to
come down, and were approaching more normal levels at the end of
the quarter.
Other Reconstruction underlying
revenue growth was 39.8% (reported growth 42.4%), including strong
growth from our CORI Surgical System with its recently expanded
range of features and applications, as described above. Growth was
across both existing customers and competitive accounts, and we
continued to make good progress placing CORIs in both Ambulatory
Surgery Centers (ASC) and Teaching Institutes.
Trauma & Extremities underlying
revenue growth was 4.4% (reported growth 5.0%). The
EVOS◊ Plating
System continues to be a key growth driver and revenue from the new
AETOS Shoulder System is steadily increasing as we invest behind
the roll-out.
Sports Medicine & ENT
Our Sports Medicine & ENT business unit delivered underlying
revenue growth of 5.7% (reported growth 6.8%) in the quarter.
Underlying revenue growth was 10.2% (reported growth 11.4%)
excluding China which is impacted by Volume Based Procurement
(VBP).
Sports Medicine Joint Repair underlying
revenue growth was 8.4% (reported growth 9.6%), including China
VBP, which we expect to begin to annualise from the third quarter
as we lap the start of implementation. Underlying revenue growth
outside of China was 13.7% (reported growth excluding China:
14.9%), led by our shoulder and hip repair portfolios. We delivered
strong double-digit growth from our REGENETEN Bioinductive Implant.
Recent product launches, including Q-FIX KNOTLESS All-Suture Anchor
and in foot and ankle repair, also contributed to the good
quarterly performance.
Arthroscopic Enabling Technologies delivered
underlying revenue growth of 2.3% (reported growth 3.5%).
Continuing the trend seen last quarter, performance reflects
headwinds in China where the sector is preparing for an expected
additional VBP process on mechanical resection blades and
COBLATION◊ wands
in the second half of 2025. Underlying revenue growth excluding
China was 6.6% (reported growth excluding China 7.8%), led by our
COBLATION and patient positioning business
lines.
ENT underlying
revenue growth was 3.6% (reported growth 4.1%), with good growth in
nose driven by our ARIS◊ COBLATION
turbinates business offset by some softness in the US tonsils and
adenoids market.
Advanced Wound Management
Advanced
Wound Management underlying revenue growth was 10.2% (reported
growth 11.4%), a step-up from the first quarter.
Advanced Wound Care underlying
revenue growth was 2.6% (reported growth 4.6%), with growth in
foams, films and skin care offset by a decline in infection
management.
Advanced Wound Bioactives underlying
revenue growth was 18.6% (reported growth 18.5%) reflecting strong
double-digit growth in skin substitutes, a sequential rebound in
SANTYL◊,
along with a weak comparator prior year period. Proposed
updates to Medicare reimbursement of skin substitutes in the
outpatient and physician office were announced during the quarter,
including moving to a single payment. Since no products were
excluded from participating in the market, it is unclear how
clinical practice will be impacted. While the details of the
proposal are yet to be finalised, we anticipate that this will be a
headwind to both Advanced Wound Management sales and profitability
in 2026, before any mitigating actions.
Advanced Wound Devices underlying
revenue growth was 12.7% (reported growth 14.4%) with double-digit
growth from our NPWT portfolio and LEAF◊ Patient
Monitoring System. During the quarter we were awarded a contract to
supply the RENASYS◊ TOUCH
Negative Pressure Wound Therapy system to the United States
Department of Defense for up to 10-years, succeeding in a
competitive tender process having demonstrated clinical efficacy
and operational fitness including portability, an intuitive
interface, and the ability to allow a range of therapy modes. This
contract is worth up to $75 million.
Performance by region
All regions delivered a sequential improvement in growth in the
second quarter. Established Markets delivered underlying revenue
growth of 8.2% (reported growth 9.7%). Underlying revenue growth
was 8.7% in the US (reported growth 8.7%) and 7.4% in Other
Established Markets (reported growth 11.6%). The Emerging Markets
underlying revenue decline of -0.2% (reported decline -1.2%)
reflected the weakening of the headwinds from China, as expected.
Emerging Markets underlying revenue growth excluding China was
12.2% (reported growth excluding China 10.4%).
First Half 2025 Consolidated Analysis
Smith+Nephew results for the first half ended 28 June
2025:
|
|
|
Half year
|
|
Half year
|
|
Reported
|
|
|
|
|
2025
|
|
2024
|
|
growth
|
|
|
|
|
$m
|
|
$m
|
|
%
|
|
|
Revenue
|
|
2,961
|
|
2,827
|
|
4.7
|
|
|
Operating profit
|
|
429
|
|
328
|
|
30.6
|
|
|
Acquisition
and disposal related items
|
|
9
|
|
-
|
|
|
|
|
Restructuring
and rationalisation costs
|
|
8
|
|
62
|
|
|
|
|
Amortisation
and impairment of acquisition intangibles
|
|
83
|
|
87
|
|
|
|
|
Legal
and other
|
|
(6)
|
|
(6)
|
|
|
|
|
Trading profit(i)
|
|
523
|
|
471
|
|
11.2
|
|
|
|
|
¢
|
|
¢
|
|
|
|
|
Earnings per share ('EPS')
|
|
33.5
|
|
24.5
|
|
|
|
|
Acquisition
and disposal related items
|
|
1.8
|
|
0.2
|
|
|
|
|
Restructuring
and rationalisation costs
|
|
0.6
|
|
5.8
|
|
|
|
|
Amortisation
and impairment of acquisition intangibles
|
|
7.3
|
|
7.8
|
|
|
|
|
Legal
and other
|
|
(0.3)
|
|
(0.7)
|
|
|
|
|
Adjusted Earnings per share ('EPSA')(i)
|
|
42.9
|
|
37.6
|
|
14.1
|
|
(i)
See Other Information on pages 30 to
35
First Half 2025 Analysis
Our first half revenue was $2,961 million (H1 2024: $2,827
million), representing underlying revenue growth of 5.0% and
reported revenue growth of 4.7% including a -30bps headwind from
foreign exchange. The first half comprised 125 trading days, two
days less than the equivalent period in 2024.
The gross profit was $2,091 million (H1 2024: $1,974 million) with
a gross profit margin of 70.6% (H1 2024: 69.8%).
We continued
to maintain strong gross profit margins whilst delivering revenue
growth, resulting in operating leverage. Operating
profit increased 30.6% on a reported basis to $429 million (H1
2024: $328 million).
Trading profit for the first half was up 11.2% on a reported basis
to $523 million
(H1 2024: $471 million). The trading profit margin strengthened by
100bps to 17.7% (H1 2024: 16.7%). This increase was driven by the
benefits of revenue leverage and manufacturing, distribution and
operating expense savings, some of which were brought forward from
the second half, partially offset by input cost inflation and China
VBP.
Orthopaedics first half trading profit margin increased 230bps to
12.7%, reflecting 12-Point Plan transformation initiatives including
inventory reduction, improved capital
efficiency, portfolio
rationalisation and our focus on higher volume accounts. Sports
Medicine & ENT trading profit margin declined 130bp to 23.1%,
reflecting the China VBP headwind. Advanced Wound Management
trading profit margin increased 160bps to 22.1%, driven by leverage
from the strong revenue growth. (see
Note 2 to the Interim Financial Statements for global business unit
trading profit).
Restructuring costs decreased year-on-year to $8 million (H1 2024:
$62 million), and included costs related to 12-Point Plan
efficiency and productivity work (see
Note 2 to the Financial Statements).
The net interest charge within reported results was $54 million (H1
2024: $61 million).
Our reported tax for the period ended 28 June 2025 was a charge of
$69 million
(H1 2024: $39 million). The first half tax rate on trading results
of 19.8% (H1 2024: 17.8%) 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 35 for further details on
taxation.
Adjusted earnings per share ('EPSA') increased by 14.1% to
42.9¢ (85.8¢ per ADS) (H1 2024: 37.6¢ per share).
Basic earnings per share ('EPS') was 33.5¢ (67.0¢ per
ADS) (H1 2024: 24.5¢ per share), reflecting acquisition and
disposal related items, restructuring costs, amortisation and
impairment of acquisition intangibles and legal and other items
incurred.
Cash generated from operations was up to $568 million (H1 2024:
$368 million) and trading cash flow was up to $487 million (H1
2024: $284 million) with the year on year increase primarily driven
by favourable working capital movement (see Other Information on
pages 30 to 35 for a reconciliation between cash generated from
operations and trading cash flow). As a result of the working
capital movement, the trading profit to cash conversion ratio
improved to 93% (H1 2024: 60%). Free cash flow improved to $244
million (H1 2024: $39 million).
We continued to make progress addressing our high-inventory,
reducing DSI by 46 days year-on-year, with DSI down across all
business units. The reduction in DSI delivered a $69 million
reduction in inventory value on a constant currency basis (reported
reduction: $24 million including a foreign exchange impact of $45
million). This remains an area of focus, with the new Sales,
Inventory & Operations Planning (SIOP) process, introduced
under the 12-Point Plan, bringing better alignment of production
plans and commercial delivery.
Group net debt as of 28 June 2025 was $2.7 billion (31 December
2024: $2.7 billion), with committed facilities of $4.2 billion (see
Note 6 to the Financial Statements). The net debt to adjusted
EBITDA ratio was 1.8x.
Interim Dividend and Share Buyback
Smith+Nephew's capital allocation framework prioritises the use of
cash and informs our investment decisions.
Our first priority is investing in the business to drive organic
growth and meet our sustainability targets.
The second priority is to invest in acquisitions, targeting new
technologies in high growth segments with a strong strategic fit
that meet our financial criteria.
The third priority is to maintain an optimal balance sheet and
appropriate dividend. Here we will continue to target investment
grade credit ratings with a target leverage ratio of around 2x net
debt to adjusted EBITDA. We have a progressive dividend policy and
from 2025 onwards we expect a payout of around 35% to 40% of EPSA.
The interim payment will be 40% of the prior full
year. The
interim dividend for 2025 is therefore 15.0¢ per share
(30.0¢ per ADS), a 4.2% increase year-on-year (2024:
14.4¢).
Our final priority is to return any surplus capital to
shareholders, subject to the above balance sheet metrics. Following
the 12-Point Plan transformation, Smith+Nephew has become strongly
cash generative. As a result, we are announcing a share buyback in
the second half of 2025 to return $500 million to shareholders
while maintaining our leverage, and without compromising our growth
plans.
Outlook
Our full year guidance for 2025 is unchanged as we target another
year of strong revenue growth and a significant step-up in trading
profit margin, notwithstanding the uncertainties around the
imposition of tariffs.
We expect underlying revenue growth to be around 5% (around 5.5%
based on exchange rates prevailing on 31 July 2025).
Full year trading profit margin is expected to be in the range of
19.0% to 20.0%. While some
cost savings initiatives were delivered earlier than expected,
benefiting the first half trading profit margin, we continue to
expect the margin
to be stronger in the second half as the impact of headwinds in
China reduce and other operational savings are
delivered.
Our unchanged outlook includes an expected net impact of around $15
to $20 million from tariffs in 2025, based on announced measures,
and mitigations, as previously announced.
We continue to expect to drive further margin expansion beyond 2025
through continued momentum and efficiency gains.
Forward calendar
The Q3 Trading Report will be released on 6 November
2025.
Capital Markets Day planned for early December, date to be
confirmed.
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 $5.8 billion in 2024.
Smith+Nephew is a constituent of the FTSE100 (LSE:SN, NYSE:SNN).
The terms 'Group' and 'Smith+Nephew' are used to refer to Smith
& Nephew plc and its consolidated subsidiaries, unless the
context requires otherwise.
For more information about Smith+Nephew, please
visit www.smith-nephew.com and follow
us on X, LinkedIn, Instagram or Facebook.
Forward-looking statements
This document may contain forward-looking statements that may or
may not prove accurate. For example, statements regarding expected
revenue growth and trading profit margins, market trends and our
product pipeline are forward-looking statements. Phrases such as
"aim", "plan", "intend", "anticipate", "well-placed", "believe",
"estimate", "expect", "target", "consider" and similar expressions
are generally intended to identify forward-looking statements.
Forward-looking statements involve known and unknown risks,
uncertainties and other important factors that could cause actual
results to differ materially from what is expressed or implied by
the statements. For Smith+Nephew, these factors include: conflicts
in Europe and the Middle East, economic and financial conditions in
the markets we serve, especially those affecting healthcare
providers, payers and customers; price levels for established and
innovative medical devices; developments in medical technology;
regulatory approvals, reimbursement decisions or other government
actions; product defects or recalls or other problems with quality
management systems or failure to comply with related regulations;
litigation relating to patent or other claims; legal and financial
compliance risks and related investigative, remedial or enforcement
actions; disruption to our supply chain or operations or those of
our suppliers; competition for qualified personnel; strategic
actions, including acquisitions and disposals, our success in
performing due diligence, valuing and integrating acquired
businesses; disruption that may result from transactions or other
changes we make in our business plans or organisation to adapt to
market developments; relationships with healthcare professionals;
reliance on information technology and cybersecurity; disruptions
due to natural disasters, weather and climate change related
events; changes in customer and other stakeholder sustainability
expectations; changes in taxation regulations; effects of foreign
exchange volatility; and numerous other matters that affect us or
our markets, including those of a political, economic, business,
competitive or reputational nature. Please refer to the documents
that Smith+Nephew has filed with the U.S. Securities and Exchange
Commission under the U.S. Securities Exchange Act of 1934, as
amended, including Smith+Nephew's most recent annual report on Form
20-F, which is available on the SEC's website at www. sec.gov, for
a discussion of certain of these factors. Any forward-looking
statement is based on information available to Smith+Nephew as of
the date of the statement. All written or oral forward-looking
statements attributable to Smith+Nephew are qualified by this
caution. Smith+Nephew does not undertake any obligation to update
or revise any forward-looking statement to reflect any change in
circumstances or in Smith+Nephew's expectations.
◊ Trademark
of Smith+Nephew. Certain marks registered in US Patent and
Trademark Office.
Consolidated revenue analysis for the first half
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28 June
|
|
29 June
|
|
Reported
|
|
Underlying
|
|
Acquisitions
|
|
Currency
|
|
|
|
|
2025
|
|
2024(i)
|
|
growth
|
|
growth(ii)
|
|
/disposals
|
|
impact
|
|
|
Consolidated revenue by business unit by product
|
|
$m
|
|
$m
|
|
%
|
|
%
|
|
%
|
|
%
|
|
|
Orthopaedics
|
|
1,193
|
|
1,149
|
|
3.9
|
|
4.1
|
|
-
|
|
(0.2)
|
|
|
Knee
Implants
|
|
501
|
|
494
|
|
1.5
|
|
1.8
|
|
-
|
|
(0.3)
|
|
|
Hip
Implants
|
|
313
|
|
311
|
|
0.6
|
|
1.1
|
|
-
|
|
(0.5)
|
|
|
Other Reconstruction(iii)
|
|
64
|
|
45
|
|
43.3
|
|
42.8
|
|
-
|
|
0.5
|
|
|
Trauma
& Extremities
|
|
315
|
|
299
|
|
5.2
|
|
5.3
|
|
-
|
|
(0.1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sports Medicine & ENT
|
|
923
|
|
888
|
|
3.9
|
|
4.1
|
|
-
|
|
(0.2)
|
|
|
Sports
Medicine Joint Repair
|
|
509
|
|
483
|
|
5.4
|
|
5.6
|
|
-
|
|
(0.2)
|
|
|
Arthroscopic
Enabling Technologies
|
|
307
|
|
304
|
|
1.0
|
|
1.1
|
|
-
|
|
(0.1)
|
|
|
ENT
(Ear, Nose and Throat)
|
|
107
|
|
101
|
|
5.3
|
|
5.6
|
|
-
|
|
(0.3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Advanced Wound Management
|
|
845
|
|
790
|
|
6.9
|
|
7.1
|
|
-
|
|
(0.2)
|
|
|
Advanced
Wound Care
|
|
366
|
|
357
|
|
2.2
|
|
2.5
|
|
-
|
|
(0.3)
|
|
|
Advanced
Wound Bioactives
|
|
285
|
|
262
|
|
8.8
|
|
8.9
|
|
-
|
|
(0.1)
|
|
|
Advanced
Wound Devices
|
|
194
|
|
171
|
|
13.9
|
|
14.1
|
|
-
|
|
(0.2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
2,961
|
|
2,827
|
|
4.7
|
|
5.0
|
|
-
|
|
(0.3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated revenue by geography
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
US
|
|
1,586
|
|
1,493
|
|
6.2
|
|
6.2
|
|
-
|
|
-
|
|
|
Other Established Markets(iv)
|
|
897
|
|
841
|
|
6.7
|
|
6.2
|
|
-
|
|
0.5
|
|
|
Total Established Markets
|
|
2,483
|
|
2,334
|
|
6.4
|
|
6.2
|
|
-
|
|
0.2
|
|
|
Emerging
Markets
|
|
478
|
|
493
|
|
(3.1)
|
|
(0.9)
|
|
-
|
|
(2.2)
|
|
|
Total
|
|
2,961
|
|
2,827
|
|
4.7
|
|
5.0
|
|
-
|
|
(0.3)
|
|
(i)
Restated for reclassification of robotics consumables revenue from
Other Reconstruction to Knee and Hip implants
(ii)
Underlying growth is defined in Note 1 on page 3
(iii)
Other Reconstruction includes robotics capital sales and
cement
(iv)
Other Established Markets are Europe, Japan, Australia, Canada and
New Zealand
2025 HALF YEAR CONSOLIDATED INTERIM FINANCIAL
STATEMENTS
Unaudited Group Income Statement for the Half Year ended 28 June
2025
|
|
|
|
|
|
|
|
|
|
|
|
|
Half
year
|
|
Half
year
|
|
|
|
|
|
2025
|
|
2024
|
|
|
|
Notes
|
|
$m
|
|
$m
|
|
Revenue
|
|
2
|
|
2,961
|
|
2,827
|
|
Cost
of goods sold
|
|
|
|
(870)
|
|
(853)
|
|
Gross profit
|
|
|
|
2,091
|
|
1,974
|
|
Selling,
general and administrative expenses
|
|
|
|
(1,519)
|
|
(1,509)
|
|
Research
and development expenses
|
|
|
|
(143)
|
|
(137)
|
|
Operating profit
|
|
2
|
|
429
|
|
328
|
|
Interest
income
|
|
|
|
15
|
|
9
|
|
Interest
expense
|
|
|
|
(69)
|
|
(70)
|
|
Other
finance costs
|
|
|
|
(12)
|
|
(12)
|
|
Share
of results of associates
|
|
|
|
(1)
|
|
(2)
|
|
Profit before taxation
|
|
|
|
362
|
|
253
|
|
Taxation
|
|
3
|
|
(69)
|
|
(39)
|
|
Attributable profit for the periodA
|
|
|
|
293
|
|
214
|
|
Earnings per ordinary shareA
|
|
|
|
|
|
|
|
Basic
|
|
|
|
33.5
|
|
24.5
|
|
Diluted
|
|
|
|
33.3
|
|
24.5
|
Unaudited Group Statement of Comprehensive Income for the Half Year
ended 28 June 2025
|
|
|
|
|
|
|
|
|
Half
year
|
|
Half
year
|
|
|
|
2025
|
|
2024
|
|
|
|
$m
|
|
$m
|
|
Attributable profit for the periodA
|
|
293
|
|
214
|
|
Other comprehensive income
|
|
|
|
|
|
Items that will not be reclassified to income
statement
|
|
|
|
|
|
Remeasurement
of net retirement benefit obligations
|
|
4
|
|
9
|
|
Taxation
on other comprehensive income
|
|
(2)
|
|
(2)
|
|
Total
items that will not be reclassified to income
statement
|
|
2
|
|
7
|
|
|
|
|
|
|
|
Items that may be reclassified subsequently to income
statement
|
|
|
|
|
|
Cash
flow hedges - forward foreign exchange contracts
|
|
|
|
|
|
(Losses)/gains
arising in the period
|
|
(47)
|
|
33
|
|
Gains
recycled to income statement in the period
|
|
(5)
|
|
(18)
|
|
Exchange
differences on translation of foreign operations
|
|
193
|
|
(65)
|
|
Taxation
on other comprehensive income
|
|
9
|
|
(2)
|
|
Total
items that may be reclassified subsequently to income
statement
|
|
150
|
|
(52)
|
|
Other comprehensive loss for the period, net of
taxation
|
|
152
|
|
(45)
|
|
Total comprehensive income for the periodA
|
|
445
|
|
169
|
A
Attributable to the equity holders of the parent and wholly derived
from continuing operations.
Unaudited Group Balance Sheet as at 28 June 2025
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28 June
|
|
31 December
|
|
29 June
|
|
|
|
|
|
2025
|
|
2024
|
|
2024
|
|
|
|
Notes
|
|
$m
|
|
$m
|
|
$m
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
Non-current assets
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment
|
|
|
|
1,436
|
|
1,422
|
|
1,441
|
|
Goodwill
|
|
|
|
3,111
|
|
3,026
|
|
3,104
|
|
Intangible assets
|
|
|
|
962
|
|
1,032
|
|
1,112
|
|
Investments
|
|
|
|
29
|
|
9
|
|
9
|
|
Investments in associates
|
|
|
|
7
|
|
7
|
|
15
|
|
Other non-current assets
|
|
|
|
49
|
|
24
|
|
17
|
|
Retirement benefit assets
|
|
|
|
70
|
|
63
|
|
67
|
|
Deferred tax assets
|
|
|
|
401
|
|
350
|
|
319
|
|
|
|
|
|
6,065
|
|
5,933
|
|
6,084
|
|
Current assets
|
|
|
|
|
|
|
|
|
|
Inventories
|
|
|
|
2,467
|
|
2,387
|
|
2,491
|
|
Trade and other receivables
|
|
|
|
1,435
|
|
1,381
|
|
1,355
|
|
Current tax receivable
|
|
|
|
49
|
|
34
|
|
44
|
|
Cash and cash equivalents
|
|
6
|
|
676
|
|
619
|
|
568
|
|
|
|
|
|
4,627
|
|
4,421
|
|
4,458
|
|
TOTAL ASSETS
|
|
|
|
10,692
|
|
10,354
|
|
10,542
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
|
(48)
|
|
(66)
|
|
(82)
|
|
Other reserves
|
|
|
|
(347)
|
|
(497)
|
|
(457)
|
|
Retained earnings
|
|
|
|
5,121
|
|
5,018
|
|
4,934
|
|
Total equity
|
|
|
|
5,536
|
|
5,265
|
|
5,205
|
|
|
|
|
|
|
|
|
|
|
|
Non-current liabilities
|
|
|
|
|
|
|
|
|
|
Long-term borrowings and lease liabilities
|
|
6
|
|
3,297
|
|
3,258
|
|
3,275
|
|
Retirement benefit obligations
|
|
|
|
86
|
|
79
|
|
82
|
|
Other payables
|
|
|
|
96
|
|
95
|
|
96
|
|
Provisions
|
|
|
|
94
|
|
95
|
|
71
|
|
Deferred tax liabilities
|
|
|
|
42
|
|
31
|
|
36
|
|
|
|
|
|
3,615
|
|
3,558
|
|
3,560
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
|
Bank overdrafts, borrowings, loans and lease
liabilities
|
|
6
|
|
157
|
|
63
|
|
380
|
|
Trade and other payables
|
|
|
|
1,097
|
|
1,128
|
|
1,024
|
|
Provisions
|
|
|
|
58
|
|
108
|
|
152
|
|
Current tax payable
|
|
|
|
229
|
|
232
|
|
221
|
|
|
|
|
|
1,541
|
|
1,531
|
|
1,777
|
|
Total liabilities
|
|
|
|
5,156
|
|
5,089
|
|
5,337
|
|
TOTAL EQUITY AND LIABILITIES
|
|
|
|
10,692
|
|
10,354
|
|
10,542
|
Unaudited Group Cash Flow Statement for the Half Year ended 28 June
2025
|
|
|
|
|
|
|
|
|
Half
year
|
|
Half
year
|
|
|
|
2025
|
|
2024
|
|
|
|
$m
|
|
$m
|
|
Cash flows from operating activities
|
|
|
|
|
|
Profit
before taxation
|
|
362
|
|
253
|
|
Net
interest expense
|
|
54
|
|
61
|
|
Depreciation,
amortisation and impairment
|
|
273
|
|
273
|
|
Loss
on disposal of property, plant and equipment and
software
|
|
11
|
|
6
|
|
Share-based
payments expense (equity-settled)
|
|
21
|
|
20
|
|
Share
of results of associates
|
|
1
|
|
2
|
|
Pension
costs less cash paid
|
|
2
|
|
7
|
|
Increase
in inventories
|
|
-
|
|
(119)
|
|
Increase
in trade and other receivables
|
|
(49)
|
|
(44)
|
|
Decrease
in trade and other payables and provisions
|
|
(107)
|
|
(91)
|
|
Cash
generated from operations
|
|
568
|
|
368
|
|
Interest
received
|
|
14
|
|
6
|
|
Interest
paid
|
|
(75)
|
|
(65)
|
|
Income
taxes paid
|
|
(111)
|
|
(71)
|
|
Net
cash inflow from operating activities
|
|
396
|
|
238
|
|
|
|
|
|
|
|
Cash flows from investing activities
|
|
|
|
|
|
Acquisitions,
net of cash acquired
|
|
(8)
|
|
(186)
|
|
Capital
expenditure
|
|
(139)
|
|
(172)
|
|
Purchase
of investments
|
|
-
|
|
(1)
|
|
Investment
in associates
|
|
-
|
|
(1)
|
|
Proceeds
from disposal of property, plant and equipment
|
|
12
|
|
-
|
|
Net
cash used in investing activities
|
|
(135)
|
|
(360)
|
|
|
|
|
|
|
|
Cash flows from financing activities
|
|
|
|
|
|
Payment
of capital element of lease liabilities
|
|
(25)
|
|
(27)
|
|
Proceeds
from borrowings due within one year
|
|
27
|
|
-
|
|
Settlement
of borrowings due within one year
|
|
(13)
|
|
(400)
|
|
Proceeds
from borrowings due after one year
|
|
-
|
|
1,000
|
|
Proceeds
from own shares
|
|
1
|
|
1
|
|
Settlement
of currency swaps
|
|
(5)
|
|
-
|
|
Equity
dividends paid
|
|
(202)
|
|
(202)
|
|
Net
cash used in financing activities
|
|
(217)
|
|
372
|
|
|
|
|
|
|
|
Net increase in cash and cash equivalents
|
|
44
|
|
250
|
|
Cash
and cash equivalents at beginning of year
|
|
617
|
|
300
|
|
Exchange
adjustments
|
|
12
|
|
(5)
|
|
Cash and cash equivalents at end of periodB
|
|
673
|
|
545
|
B Cash
and cash equivalents at the end of the period is net of overdrafts
of $3m (29 June 2024: $23m).
Unaudited Group Statement of Changes in Equity for the Half Year
ended 28 June 2025
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital
|
|
|
|
|
|
|
|
|
|
|
|
Share
|
|
Share
|
|
redemption
|
|
Treasury
|
|
Other
|
|
Retained
|
|
Total
|
|
|
|
capital
|
|
premium
|
|
reserve
|
|
shares
|
|
reservesC
|
|
earningsD
|
|
equity
|
|
|
|
$m
|
|
$m
|
|
$m
|
|
$m
|
|
$m
|
|
$m
|
|
$m
|
|
At 1 January 2025
|
|
175
|
|
615
|
|
20
|
|
(66)
|
|
(497)
|
|
5,018
|
|
5,265
|
|
Attributable profit for the periodA
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
293
|
|
293
|
|
Other comprehensive incomeA
|
|
-
|
|
-
|
|
-
|
|
-
|
|
150
|
|
2
|
|
152
|
|
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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital
|
|
|
|
|
|
|
|
|
|
|
|
Share
|
|
Share
|
|
redemption
|
|
Treasury
|
|
Other
|
|
Retained
|
|
Total
|
|
|
|
capital
|
|
premium
|
|
reserve
|
|
shares
|
|
reservesC
|
|
earningsD
|
|
equity
|
|
|
|
$m
|
|
$m
|
|
$m
|
|
$m
|
|
$m
|
|
$m
|
|
$m
|
|
At 1 January 2024
|
|
175
|
|
615
|
|
20
|
|
(94)
|
|
(405)
|
|
4,906
|
|
5,217
|
|
Attributable profit for the periodA
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
214
|
|
214
|
|
Other comprehensive incomeA
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(52)
|
|
7
|
|
(45)
|
|
Equity dividends declared and paid
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(202)
|
|
(202)
|
|
Share-based payments recognised
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
20
|
|
20
|
|
Cost of shares transferred to beneficiaries
|
|
-
|
|
-
|
|
-
|
|
12
|
|
-
|
|
(11)
|
|
1
|
|
At 29 June 2024
|
|
175
|
|
615
|
|
20
|
|
(82)
|
|
(457)
|
|
4,934
|
|
5,205
|
A
Attributable to the equity holders of the parent and wholly derived
from continuing operations.
C Other reserves comprises gains and losses on
cash flow hedges, foreign exchange differences on translation of
foreign operations and net changes on fair value of trade
investments. The cumulative translation loss within Other reserves
at 28 June 2025 was $327m (1 January 2025: $520m, 29 June 2024:
$461m).
D
Within retained earnings is a non-distributable capital reserve of
$2,266m (1 January 2025: $2,266m, 29 June 2024: $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 2024 which were
prepared in accordance with UK-adopted International Accounting
Standards. The Group has also prepared its accounts in accordance
with IFRS as issued by the International Accounting Standards Board
(IASB) effective as at 31 December 2024. IFRS as adopted in the UK
differs in certain respects from IFRS 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 28 June 2025, 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's net debt at 28 June 2025 was $2,747m (see Note 6) with
committed facilities of $4.2bn. No debt is due for repayment in the
second half of 2025 and $75m of private placement debt is due for
repayment in the first half of 2026. $625m 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, with the key judgement applied being the speed and
sustainability of the return to a normal volume of elective
procedures in key markets, including the impact of a significant
global recession, leading to lower healthcare spending across both
public and private systems. Throughout these scenarios, which
include a severe but plausible outcome, the Group continues to have
headroom on its borrowing facilities and financial covenants. The
Directors believe that the Group is well placed to manage its
financing and other business risks satisfactorily and have a
reasonable expectation that the Group has sufficient resources to
continue in operational existence for a period of at least 12
months from the date of approval of these Interim Financial
Statements period. Thus they continue to adopt the going concern
basis for accounting in preparing these Interim Financial
Statements.
The
financial information contained in this document does not
constitute statutory financial statements as defined in sections
434 and 435 of the Companies Act 2006. An unqualified opinion was
issued that did not contain a statement under section 498 of the
Companies Act 2006 on the Group's statutory financial statements
for the year ended 31 December 2024. The Group's statutory
financial statements for the year ended 31 December 2024 have been
delivered to the Registrar of Companies.
New accounting standards effective 2025
A
number of new amendments to standards are effective from 1 January
2025 but they do not have a material effect on the Group's
financial statements.
The
Group is adopting the mandatory temporary exception from the
recognition and disclosure of deferred taxes arising from the
jurisdictional implementation of the Pillar Two model rules which
took effect for the Group from 1 January 2024.
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 2025 and earlier
application is permitted; however, the Group has not early adopted
them in preparing these Interim Financial Statements.
Critical judgements and estimates
The
Group prepares its consolidated financial statements in accordance
with IFRS Accounting Standards as issued by the IASB and IFRS
adopted in the UK, the application of which often requires
judgements and estimates to be made by management when formulating
the Group's financial position and results. Under IFRS, the
Directors are required to adopt those accounting policies most
appropriate to the Group's circumstances for the purpose of
presenting fairly the Group's financial position, financial
performance and cash flows.
The
critical accounting estimates are consistent with those reflected
in the Group's consolidated financial statements for the year ended
31 December 2024.
Climate change considerations
The
impact of climate change has been considered as part of the
assessment of estimates and judgements in preparing the Group
accounts. The climate change scenario analyses undertaken this year
in line with TCFD recommendations did not identify any material
financial impact. The following considerations were made in respect
of the 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 (Orthopaedics, Sports Medicine, ENT and Advanced
Wound Management) and the chief operating decision maker monitors
performance, makes operating decisions and allocates resources on a
global business unit basis. Business unit presidents have
responsibility for upstream marketing, driving product portfolio
and technology acquisition decisions, full commercial
responsibility and for the implementation of their business unit
strategy globally. Accordingly, the Group consists of four
operating segments.
The
Group has concluded that Sports Medicine and ENT meet the
aggregation criteria and therefore, these operating segments have
been aggregated into a single operating segment. In applying the
aggregation criteria prescribed by IFRS 8 Operating Segments,
management made certain judgements pertaining to the economic
indicators relating to these operating segments including those
relating to the similarities in the expected long-term market
growth rates, the geographic and operational risks and the
competitive landscape that these segments operate in.
Accordingly, as described in Note 2 to the most recent annual
report, the Group has concluded that there are three reportable
segments.
Segment
revenue reconciles to statutory revenue from continuing operations
as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Half year
|
|
Half year
|
|
|
|
2025
|
|
2024
|
|
|
|
$m
|
|
$m
|
|
Reportable segment revenue
|
|
|
|
|
|
Orthopaedics
|
|
1,193
|
|
1,149
|
|
Sports
Medicine & ENT
|
|
923
|
|
888
|
|
Advanced
Wound Management
|
|
845
|
|
790
|
|
Revenue
from external customers
|
|
2,961
|
|
2,827
|
|
|
|
|
|
|
2a. Disaggregation of revenue
The
following table shows the disaggregation of Group revenue by
product by business unit:
|
|
|
|
|
|
|
|
|
Half
year
|
|
Half
year
|
|
|
|
2025
|
|
2024(i)
|
|
|
|
$m
|
|
$m
|
|
Knee
Implants
|
|
501
|
|
494
|
|
Hip
Implants
|
|
313
|
|
311
|
|
Other
Reconstruction
|
|
64
|
|
45
|
|
Trauma
& Extremities
|
|
315
|
|
299
|
|
Orthopaedics
|
|
1,193
|
|
1,149
|
|
Sports
Medicine Joint Repair
|
|
509
|
|
483
|
|
Arthroscopic
Enabling Technologies
|
|
307
|
|
304
|
|
ENT
(Ear, Nose and Throat)
|
|
107
|
|
101
|
|
Sports Medicine & ENT
|
|
923
|
|
888
|
|
Advanced
Wound Care
|
|
366
|
|
357
|
|
Advanced
Wound Bioactives
|
|
285
|
|
262
|
|
Advanced
Wound Devices
|
|
194
|
|
171
|
|
Advanced Wound Management
|
|
845
|
|
790
|
|
Total
|
|
2,961
|
|
2,827
|
(i)
Restated for reclassification of robotics consumables revenue from
Other Reconstruction to Knee and Hip implants
The
following table shows the disaggregation of Group revenue by
geographic market and product category. The disaggregation of
revenue into the two product categories below reflects that in
general the products in the Advanced Wound Management business unit
are sold to wholesalers and intermediaries, while products in the
other business units are sold directly to hospitals, ambulatory
surgery centers and distributors. The further disaggregation of
revenue by Established Markets and Emerging Markets reflects that
in general our products are sold through distributors and
intermediaries in the Emerging Markets while in the Established
Markets, with the exception of the Advanced Wound Care and
Bioactives, products 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.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Half year 2025
|
|
Half year 2024
|
|
|
Established
MarketsE
|
|
Emerging
Markets
|
|
Total
|
|
Established
MarketsE
|
|
Emerging
Markets
|
|
Total
|
|
|
$m
|
|
$m
|
|
$m
|
|
$m
|
|
$m
|
|
$m
|
|
Orthopaedics,
Sports Medicine & ENT
|
1,752
|
|
364
|
|
2,116
|
|
1,647
|
|
390
|
|
2,037
|
|
Advanced
Wound Management
|
731
|
|
114
|
|
845
|
|
687
|
|
103
|
|
790
|
|
Total
|
2,483
|
|
478
|
|
2,961
|
|
2,334
|
|
493
|
|
2,827
|
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 $1,586m (H1 2024: $1,493m), China revenue for the
half year was $58m (H1 2024: $112m) and UK revenue for the half
year was $114m (H1 2024: $103m).
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, where
material, as those to be excluded from operating profit when
arriving at segment trading profit: corporate costs; acquisition
and disposal-related items; significant restructuring programmes;
amortisation and impairment of acquisition intangibles; gains and
losses arising from legal disputes; and other significant
items.
In
2024, the Group changed the segment trading profit measure
presented to the ExCo by allocating directly attributable corporate
costs to business units except for corporate costs relating to
centralised infrastructure costs such as compliance and group
functions. Accordingly, operating segment results for the half year
ended 29 June 2024 have been restated for comparative
purposes.
Segment
trading profit is reconciled to the statutory measure
below:
|
|
|
|
|
|
|
|
|
Half
year
|
|
Half
year
|
|
|
|
2025
|
|
2024
|
|
|
|
$m
|
|
$m
|
|
Segment profit
|
|
|
|
|
|
Orthopaedics
|
|
151
|
|
119
|
|
Sports
Medicine & ENT
|
|
213
|
|
217
|
|
Advanced
Wound Management
|
|
187
|
|
162
|
|
Segment
trading profit
|
|
551
|
|
498
|
|
Corporate costs1
|
|
(28)
|
|
(27)
|
|
Acquisition
and disposal related items
|
|
(9)
|
|
-
|
|
Restructuring
and rationalisation expenses
|
|
(8)
|
|
(62)
|
|
Amortisation
and impairment of acquisition intangibles
|
|
(83)
|
|
(87)
|
|
Legal
and other
|
|
6
|
|
6
|
|
Operating
profit
|
|
429
|
|
328
|
|
Interest
income
|
|
15
|
|
9
|
|
Interest
expense
|
|
(69)
|
|
(70)
|
|
Other
finance costs
|
|
(12)
|
|
(12)
|
|
Share
of results of associates
|
|
(1)
|
|
(2)
|
|
Profit
before taxation
|
|
362
|
|
253
|
|
|
|
|
|
|
1
Corporate costs include centralised infrastructure costs such as
compliance and group functions.
Depreciation
and amortisation included in segment profit is presented
below:
|
|
|
|
|
|
|
|
|
Half
year
|
|
Half
year
|
|
|
|
2025
|
|
2024
|
|
|
|
$m
|
|
$m
|
|
Depreciation and amortisation
|
|
|
|
|
|
Orthopaedics
|
|
112
|
|
105
|
|
Sports Medicine & ENT
|
|
51
|
|
47
|
|
Advanced Wound Management
|
|
34
|
|
30
|
Acquisition and disposal related items
For
the half year ended 28 June 2025, the charge included costs of
integration for prior year acquisitions.
For
the half year ended 29 June 2024, credits related to the
remeasurement of deferred and contingent consideration for prior
year acquisitions were offset by integration costs during that
period.
Restructuring and rationalisation 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.
For
the half year ended 29 June 2024, 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, business advisory services, asset
write-offs, contractual terminations and integration and dual
running costs.
Amortisation and impairment of acquisition intangibles
For
both the half years ended 28 June 2025 and 29 June 2024, charges
relate to the amortisation and impairment of intangible assets
acquired in material business combinations.
Legal and other
For
the half years ended 28 June 2025 and 29 June 2024, charges relate
to legal expenses for ongoing metal-on-metal hip
claims.
For
the half year ended 28 June 2025 these expenses were offset by a
release of $11m (half year ended 29 June 2024: release of $12m) 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.
The
half year ended 29 June 2024 also includes costs for implementing
the requirements of the EU Medical Device Regulation that was
effective from May 2021 with a transition period to May
2024.
3. Taxation
Tax rate
Our
reported tax for the period ended 28 June 2025 was a charge of
$69m, with an effective tax rate of 19.1% (H1 2024: $39m, effective
tax rate of 15.4%).
OECD BEPS 2.0 - Pillar Two
The
OECD Pillar Two GloBE Rules (Pillar Two) introduce a global minimum
corporate tax rate of 15% applicable to multinational enterprise
groups with global revenue over €750m and first applied to
the Group for its accounting period commencing 1 January
2024.
The
Group forecasts a Pillar Two current tax charge for the year ending
31 December 2025 of approximately $27m.
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
2024 final dividend totaling $202m was paid on 28 May 2025. The
2025 interim dividend of 15.0 US cents per ordinary share was
approved by the Board on 30 July 2025. This dividend is payable on
7 November 2025 to shareholders whose names appear on the register
at the close of business on 3 October 2025. 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 17 October
2025. Shareholders may participate in the dividend re-investment
plan and elections must be made by 17 October 2025.
5. Acquisitions
Half year ended 28 June 2025
No
acquisitions were completed in the half year ended 28 June
2025.
The
cash outflow from acquisitions in H1 2025 comprises payments of
deferred and contingent consideration of $8m for acquisitions
completed in prior periods.
The
carrying value of goodwill increased from $3,026m at 31 December
2024 to $3,111m at 28 June 2025 due to foreign exchange
movements.
Year ended 31 December 2024
On
9 January 2024, the Group completed the acquisition of 100% of the
share capital of CartiHeal (2009) Ltd (CartiHeal), the developer of
CARTIHEAL AGILI-C, a novel sports medicine technology for cartilage
regeneration in the knee. The acquisition of this disruptive
technology supports our strategy to invest behind our successful
Sports Medicine & ENT business unit.
The
fair value of the consideration amounted to $231m. This is
comprised of contingent consideration of $49m, which represents the
discounted value of $150m of consideration contingent upon the
achievement of a single future financial performance milestone in
the next 10 years, and initial cash consideration of $180m adjusted
for cash acquired and other liabilities assumed, of which $18m was
transferred in to escrow to be released in equal instalments to the
seller in 12 and 18 months from completion.
The
fair value of assets acquired and liabilities assumed are set out
below:
|
|
|
|
|
|
|
CartiHeal (2009) Ltd
|
|
|
|
$m
|
|
Intangible
assets - product-related and trade name
|
|
84
|
|
Inventory
|
|
1
|
|
Cash
|
|
6
|
|
Other
liabilities
|
|
(2)
|
|
Trade
and other payables
|
|
(1)
|
|
Net
deferred tax liability
|
|
(3)
|
|
Net
assets
|
|
85
|
|
Goodwill
|
|
146
|
|
Consideration
|
|
231
|
The
goodwill represents the control premium, acquired workforce and the
synergies expected from integrating CartiHeal into the Group's
existing business.
The
product-related intangible assets and the trade name were valued
using a relief-from-royalty methodology with the key inputs being
revenue, profit and discount rate.
For
the half year ended 29 June 2024, the contribution from CartiHeal
to the Group's revenue and profit was immaterial.
The
cash outflow from acquisitions in H1 2024 of $186m comprises
payments of consideration of $177m net of cash acquired relating to
acquisitions during that period and payments of deferred and
contingent consideration of $9m relating to acquisitions completed
in prior periods.
6. Net debt
Net
debt as at 28 June 2025 is outlined below. The repayment of lease
liabilities is included in cash flows from financing activities in
the cash flow statement.
|
|
|
|
|
|
|
|
|
|
|
28 June
|
|
31 December
|
|
29 June
|
|
|
|
2025
|
|
2024
|
|
2024
|
|
|
|
$m
|
|
$m
|
|
$m
|
|
Bank overdrafts, borrowings and loans - current
|
|
18
|
|
2
|
|
23
|
|
Corporate bond
|
|
2,603
|
|
2,498
|
|
2,518
|
|
Private placement notes
|
|
625
|
|
625
|
|
930
|
|
Borrowings
|
|
3,246
|
|
3,125
|
|
3,471
|
|
Cash at bank
|
|
(476)
|
|
(419)
|
|
(293)
|
|
Cash equivalents
|
|
(200)
|
|
(200)
|
|
(275)
|
|
Credit balance on derivatives - currency swaps
|
|
-
|
|
1
|
|
(1)
|
|
(Debit)/credit balance on derivatives - interest rate
swaps
|
|
(31)
|
|
6
|
|
-
|
|
Net debt excluding lease liabilities
|
|
2,539
|
|
2,513
|
|
2,902
|
|
Non-current lease liabilities
|
|
144
|
|
135
|
|
132
|
|
Current lease liabilities
|
|
64
|
|
61
|
|
52
|
|
Net debt
|
|
2,747
|
|
2,709
|
|
3,086
|
|
|
|
|
|
|
|
|
No debt is due for repayment in the second half of 2025 and $75m of
private placement debt is due for repayment in the first half of
2026.
In March 2024 the Group issued two corporate bonds: $650m (before
expenses and underwriting discounts) of notes bearing an interest
rate of 5.4% repayable in 2034; and $350m (before expenses and
underwriting discounts) of notes bearing an interest rate of 5.15%
repayable in 2027.
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 28 June 2025,
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
|
|
|
|
|
|
28 June
|
|
31 December
|
|
29 June
|
|
28 June
|
|
31 December
|
|
29 June
|
|
|
|
|
|
2025
|
|
2024
|
|
2024
|
|
2025
|
|
2024
|
|
2024
|
|
Fair value
|
|
|
|
$m
|
|
$m
|
|
$m
|
|
$m
|
|
$m
|
|
$m
|
|
level
|
|
Financial assets measured at fair value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forward foreign exchange contacts
|
|
2
|
|
46
|
|
34
|
|
2
|
|
46
|
|
34
|
|
Level 2
|
|
Investments
|
|
29
|
|
9
|
|
9
|
|
29
|
|
9
|
|
9
|
|
Level 3
|
|
Contingent consideration receivable
|
|
-
|
|
-
|
|
18
|
|
-
|
|
-
|
|
18
|
|
Level 3
|
|
Interest rate swaps
|
|
31
|
|
10
|
|
7
|
|
31
|
|
10
|
|
7
|
|
Level 2
|
|
Currency swaps
|
|
-
|
|
1
|
|
1
|
|
-
|
|
1
|
|
1
|
|
Level 2
|
|
|
|
62
|
|
66
|
|
69
|
|
62
|
|
66
|
|
69
|
|
|
|
Financial assets not measured at fair value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade and other receivables
|
|
1,296
|
|
1,190
|
|
1,214
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
676
|
|
619
|
|
568
|
|
|
|
|
|
|
|
|
|
|
|
1,972
|
|
1,809
|
|
1,782
|
|
|
|
|
|
|
|
|
|
Total financial assets
|
|
2,034
|
|
1,875
|
|
1,851
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial liabilities measured at fair value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition consideration - contingent
|
|
(89)
|
|
(84)
|
|
(78)
|
|
(89)
|
|
(84)
|
|
(78)
|
|
Level 3
|
|
Forward foreign exchange contracts
|
|
(36)
|
|
(16)
|
|
(16)
|
|
(36)
|
|
(16)
|
|
(16)
|
|
Level 2
|
|
Interest rate swaps
|
|
-
|
|
(16)
|
|
(7)
|
|
-
|
|
(16)
|
|
(7)
|
|
Level 2
|
|
Currency swaps
|
|
-
|
|
(2)
|
|
-
|
|
-
|
|
(2)
|
|
-
|
|
Level 2
|
|
|
|
(125)
|
|
(118)
|
|
(101)
|
|
(125)
|
|
(118)
|
|
(101)
|
|
|
|
Financial liabilities not measured at fair value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition consideration - deferred
|
|
(9)
|
|
(21)
|
|
(20)
|
|
|
|
|
|
|
|
|
|
Bank overdrafts
|
|
(3)
|
|
(2)
|
|
(23)
|
|
|
|
|
|
|
|
|
|
Bank loans
|
|
(14)
|
|
-
|
|
-
|
|
|
|
|
|
|
|
|
|
Corporate bond not in a hedge relationship
|
|
(1,493)
|
|
(1,492)
|
|
(1,491)
|
|
|
|
|
|
|
|
|
|
Corporate bond in a hedge relationship
|
|
(1,110)
|
|
(1,006)
|
|
(1,027)
|
|
|
|
|
|
|
|
|
|
Private placement debt not in a hedge relationship
|
|
(625)
|
|
(625)
|
|
(930)
|
|
|
|
|
|
|
|
|
|
Trade and other payables
|
|
(1,060)
|
|
(1,084)
|
|
(999)
|
|
|
|
|
|
|
|
|
|
|
|
(4,314)
|
|
(4,230)
|
|
(4,490)
|
|
|
|
|
|
|
|
|
|
Total financial liabilities
|
|
(4,439)
|
|
(4,348)
|
|
(4,591)
|
|
|
|
|
|
|
|
|
At 28 June 2025, the book value and market value of the $1bn
2020 USD corporate bond were $996m and $875m respectively (31
December 2024: $995m and $836m, 29 June 2024: $995m and $826m), the
book value and market value of the $650m 2024 USD corporate bond
maturing in 2034 were $648m and $659m respectively (31 December
2024: $628m and $642m, 29 June 2024: $637m and $639m),the book
value and market value of the $350m 2024 USD corporate bond
maturing in 2027 were $348m and $354m respectively (31 December
2024: $348m and $352m, 29 June 2024: $347m and $348m), the book
value and market value of the €500m Corporate bond were
$611m and $623m respectively (31 December 2024: $527m and $547m, 29
June 2024: $539m and $555m).
At 28 June 2025, the book value and fair value of the private
placement debt were $625m and $589m respectively (31 December 2024:
$625m and $573m, 29 June 2024: $930m and $857m).
There were no transfers between Levels 1, 2 and 3 during the half
year ended 28 June 2025 and the year ended 31 December 2024. For
cash and cash equivalents, short-term loans and receivables,
overdrafts and other short-term liabilities which have a maturity
of less than three months, the book values approximate the fair
values because of their short-term nature.
Long-term borrowings are measured in the balance sheet at amortised
cost. The corporate bonds issued in October 2020, October 2022 and
March 2024 are publicly listed and a market price is available. The
Group's other long-term borrowings are not quoted publicly, their
fair values are estimated by discounting future contractual cash
flows to net present values at the current market interest rates
available to the Group for similar financial instruments as at the
year end. The fair value of the private placement notes is
determined using a discounted cash flow model based on prevailing
market rates.
The fair value of forward 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.
The fair value of investments is based upon third party pricing
models for share issues. As a result, investments are considered
Level 3 in the fair value hierarchy. The movements in the half year
ended 28 June 2025 and the year ended 31 December 2024 for
financial instruments measured using Level 3 valuation methods are
presented below:
|
|
|
|
|
|
28 June
|
31 December
|
|
|
2025
|
2024
|
|
|
$m
|
$m
|
|
Investments
|
|
|
|
At 1 January
|
9
|
8
|
|
Additions
|
-
|
1
|
|
Transferred from receivables
|
18
|
-
|
|
Fair value remeasurement
|
2
|
-
|
|
|
29
|
9
|
|
|
|
|
|
Contingent consideration receivable
|
|
|
|
At 1 January
|
-
|
18
|
|
Transferred to receivables
|
-
|
(18)
|
|
|
-
|
-
|
|
|
|
|
|
Contingent acquisition consideration liability
|
|
|
|
At 1 January
|
(84)
|
(32)
|
|
Arising on acquisitions
|
-
|
(49)
|
|
Payments
|
5
|
6
|
|
Remeasurements
|
(10)
|
(9)
|
|
|
(89)
|
(84)
|
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 2024, the discount rate for UK has increased by 10 basis
points to 5.6%, the discount rate for Germany has increased by 30
basis points to 3.8% and the discount rate for Switzerland has
increased by 30 basis points to 1.2%.
A remeasurement
gain of $4m was recognised in Other Comprehensive Income (OCI)
during the first half of 2025, reflecting actuarial movements in
the present value of the pension obligations in the UK, Germany and
Switzerland.
8. Exchange
rates
The exchange
rates used for the translation of currencies into US Dollars that
have the most significant impact on the Group results
were:
|
|
|
|
|
|
|
|
|
|
|
Half year
|
|
Full year
|
|
Half year
|
|
|
|
2025
|
|
2024
|
|
2024
|
|
Average rates
|
|
|
|
|
|
|
|
Sterling
|
|
1.30
|
|
1.28
|
|
1.26
|
|
Euro
|
|
1.09
|
|
1.08
|
|
1.08
|
|
Swiss
Franc
|
|
1.16
|
|
1.14
|
|
1.12
|
|
Japanese
Yen
|
|
0.0067
|
|
0.0066
|
|
0.0066
|
|
Period end rates
|
|
|
|
|
|
|
|
Sterling
|
|
1.37
|
|
1.25
|
|
1.27
|
|
Euro
|
|
1.17
|
|
1.04
|
|
1.07
|
|
Swiss
Franc
|
|
1.26
|
|
1.10
|
|
1.11
|
|
Japanese
Yen
|
|
0.0069
|
|
0.0064
|
|
0.0062
|
9.
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 realised.
10. Subsequent events
In
August 2025, the Group announced its intention to repurchase shares
amounting to $500m during the second half of 2025. Other than that,
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.
11. Principal risks and
uncertainties
The
principal risks and uncertainties that the Group is exposed to are
consistent with those as at 31 December 2024. 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 2024 Annual Report of the Group on pages 83-93.
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 2024. 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
|
4 August 2025
|
|
John Rogers
|
Chief Financial Officer
|
4 August 2025
|
|
|
|
|
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 period
ended 28 June 2025 which comprises the Group Income Statement, the
Group Statement of Comprehensive Income, the Group Balance Sheet,
the Group Cash Flow Statement, the Group Statement of Changes in
Equity and related notes 1 to 11.
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 period ended 28 June 2025 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
4 August 2025
Other
information
These Interim Financial Statements include financial measures that
are not prepared in accordance with International Financial
Reporting Standards (IFRS). This additional information presented
is not uniformly defined by all companies including those in the
Group's industry. Accordingly, it may not be comparable with
similarly titled measures and disclosures by other companies.
Additionally, certain information presented is derived from amounts
calculated in accordance with IFRS but is not itself a measure
defined under IFRS. Such measures should not be viewed in isolation
or as an alternative to the equivalent GAAP measure. The non-IFRS
measures discussed in this document are set out below.
|
|
|
|
|
|
|
Performance measures
|
|
Non-IFRS measure
|
Purpose
|
Definition
|
Closest equivalent IFRS measure
|
Reconciled on
|
|
Underlying revenue growth
|
Underlying revenue growth is used to compare revenue in a given
period to the previous period on a like-for-like basis. This
measure is used by both management and the investor
community.
|
Underlying revenue growth reconciles to reported revenue growth,
the most directly comparable financial measure calculated in
accordance with IFRS, by making two adjustments, the 'constant
currency exchange effect' and the 'acquisitions and disposals
effect'.
The 'constant currency exchange effect' is a measure of the
increase/decrease in revenue resulting from currency movements on
non-US Dollar sales and is measured as the difference between: 1)
the increase/decrease in the current year revenue translated into
US Dollars at the current year average exchange rate and the prior
year revenue translated at the prior year rate; and 2) the
increase/decrease being measured by translating current and prior
year revenues into US Dollars using the same exchange
rate.
The 'acquisitions and disposals effect' is the measure of the
impact on revenue from newly acquired material business
combinations and recent material business disposals. This is
calculated by comparing the current year, constant currency actual
revenue (which includes acquisitions and excludes disposals from
the relevant date of completion) with prior year, constant currency
actual revenue, adjusted to include the results of acquisitions and
exclude disposals for the commensurate period in the prior year.
These sales are separately tracked in the Group's internal
reporting systems and are readily identifiable.
|
Revenue growth
|
33
|
|
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
|
|
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
|
33
|
|
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
|
33
|
|
Performance measures (continued)
|
|
Non-IFRS measure
|
Purpose
|
Definition
|
Closest equivalent IFRS measure
|
Reconciled on
|
|
Trading profit before tax
|
Trading profit before tax is used in conjunction with profit before
tax to assess performance and profitability of the Group. This
measure is intended to enable the users to assess the performance
of the Group by excluding items that impact the short-term
profitability of the Group.
|
Trading profit before tax is profit before tax excluding impact of
acquisition and disposal related items arising in connection with
business combinations, including amortisation of acquisition
intangible assets, impairments and integration costs; restructuring
events; and gains and losses resulting from legal disputes and
uninsured losses. In addition to these items, gains and losses that
materially impact the Group's profitability on a short-term or
one-off basis are excluded.
|
Profit before tax
|
33
|
|
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
|
33
|
|
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
|
33
|
|
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
|
33
|
|
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
|
33
|
|
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
|
33
|
|
|
|
|
|
|
|
Other measures
|
|
Non-IFRS measure
|
Purpose
|
Definition
|
Closest equivalent IFRS measure
|
Reconciled on
|
|
Free cash flow
|
Free cash flow is a measure of the cash generated for the Group to
use after capital expenditure according to its Capital Allocation
Framework. This metric is used by both management and investor
community.
|
Free cash flow is cash generated from operations less capital
expenditure, proceeds from disposal of property, plant and
equipment, payment of lease liabilities and cash flows from
interest and income taxes.
|
Cash generated from operations
|
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
|
35
|
|
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)
|
35
|
|
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, reconciles to
underlying revenue growth as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciling Items
|
|
|
|
Half year
|
|
Half year
|
|
Reported
|
|
Underlying
|
|
Acquisitions
|
|
Currency
|
|
|
|
2025
|
|
2024
|
|
growth
|
|
growth
|
|
& disposals
|
|
impact
|
|
|
|
$m
|
|
$m
|
|
%
|
|
%
|
|
%
|
|
%
|
|
Segment revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Orthopaedics
|
|
1,193
|
|
1,149
|
|
3.9
|
|
4.1
|
|
-
|
|
(0.2)
|
|
Sports
Medicine & ENT
|
|
923
|
|
888
|
|
3.9
|
|
4.1
|
|
-
|
|
(0.2)
|
|
Advanced
Wound Management
|
|
845
|
|
790
|
|
6.9
|
|
7.1
|
|
-
|
|
(0.2)
|
|
Revenue
from external customers
|
|
2,961
|
|
2,827
|
|
4.7
|
|
5.0
|
|
-
|
|
(0.3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
items8
|
|
9
|
|
20
|
|
(4)
|
|
16
|
|
7
|
|
1.8
|
|
Restructuring
and rationalisation costs
|
|
8
|
|
8
|
|
(2)
|
|
6
|
|
52
|
|
0.6
|
|
Amortisation and impairment of acquisition
intangibles8
|
|
83
|
|
83
|
|
(19)
|
|
64
|
|
-
|
|
7.3
|
|
Legal and other7,8
|
|
(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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
|
|
|
|
|
|
Profit
|
|
|
|
|
|
generated
|
|
|
|
|
|
Operating
|
|
before
|
|
|
|
Attributable
|
|
from
|
|
Earnings
|
|
|
|
profit1
|
|
tax2
|
|
Taxation3
|
|
profit4
|
|
operations5
|
|
per share6
|
|
|
|
$m
|
|
$m
|
|
$m
|
|
$m
|
|
$m
|
|
¢
|
|
Half year 2024 Reported
|
|
328
|
|
253
|
|
(39)
|
|
214
|
|
368
|
|
24.5
|
|
Acquisition and disposal related
items8
|
|
-
|
|
1
|
|
-
|
|
1
|
|
1
|
|
0.2
|
|
Restructuring
and rationalisation costs
|
|
62
|
|
63
|
|
(13)
|
|
50
|
|
88
|
|
5.8
|
|
Amortisation and impairment of acquisition
intangibles8
|
|
87
|
|
87
|
|
(19)
|
|
68
|
|
-
|
|
7.8
|
|
Legal and other7,8
|
|
(6)
|
|
(5)
|
|
-
|
|
(5)
|
|
26
|
|
(0.7)
|
|
Lease
liability payments
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(27)
|
|
-
|
|
Capital
expenditure
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(172)
|
|
-
|
|
Half year 2024 Non-IFRS
|
|
471
|
|
399
|
|
(71)
|
|
328
|
|
284
|
|
37.6
|
1 Represents
a reconciliation of operating profit to trading
profit.
2 Represents
a reconciliation of reported profit before tax to trading profit
before tax.
3 Represents
a reconciliation of reported tax to trading
tax.
4 Represents
a reconciliation of reported attributable profit to trading
attributable profit.
5 Represents
a reconciliation of cash generated from operations to trading cash
flow.
6 Represents
a reconciliation of basic earnings per ordinary share to adjusted
earnings per ordinary share (EPSA).
7 The
ongoing funding of defined benefit pension schemes that are closed
to future accrual is not included in management's definition of
trading cash flow as there is no defined benefit service cost for
these schemes.
Acquisition and disposal related items
For the half year ended 28 June 2025, the charge included costs of
integration for prior year acquisitions.
For the half year ended 29 June 2024, credits related to the
remeasurement of deferred and contingent consideration for prior
year acquisitions were offset by integration costs during that
period.
Adjusted profit before tax for the half years ended 28 June 2025
and 29 June 2024 additionally excludes disposal items related to
the Group's shareholding in Bioventus.
Adjusted profit before tax for the half year ended 28 June 2025
also excludes the remeasurement and discount unwind for contingent
consideration.
Restructuring and rationalisation 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.
For the half year ended 29 June 2024, 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, business advisory services, asset
write-offs, contractual terminations and integration and dual
running costs.
Adjusted profit before tax for the half year ended 29 June 2024
additionally excludes restructuring costs related to the Group's
shareholding in Bioventus.
Amortisation and impairment of acquisition intangibles
For both the half years ended 28 June 2025 and 29 June 2024,
charges relate to the amortisation and impairment of intangible
assets acquired in material business combinations.
Legal and other
For the half years ended 28 June 2025 and 29 June 2024, charges
relate to legal expenses for ongoing metal-on-metal hip
claims.
For the half year ended 28 June 2025 these expenses were offset by
a release of $11m (half year ended 29 June 2024: release of $12m)
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.
The half year ended 29 June 2024 also includes costs for
implementing the requirements of the EU Medical Device Regulation
that was effective from May 2021 with a transition period to May
2024.
Free cash flow
A reconciliation from cash generated from operations, the most
comparable IFRS measure, to free cash flow is set out
below:
|
|
|
|
|
|
|
Half year
|
|
Half year
|
|
|
2025
|
|
2024
|
|
|
$m
|
|
$m
|
|
Cash generated from operations
|
568
|
|
368
|
|
Capital expenditure
|
(139)
|
|
(172)
|
|
Proceeds from disposal of property, plant and
equipment
|
12
|
|
-
|
|
Interest received
|
14
|
|
6
|
|
Interest paid
|
(75)
|
|
(65)
|
|
Payment of lease liabilities
|
(25)
|
|
(27)
|
|
Income taxes paid
|
(111)
|
|
(71)
|
|
Free cash flow
|
244
|
|
39
|
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.
|
|
|
|
|
|
|
|
|
Half year
|
|
Full year
|
|
|
|
2025
|
|
2024
|
|
|
|
$m
|
|
$m
|
|
Net debt including lease liabilities
|
|
2,747
|
|
2,709
|
|
|
|
|
|
|
|
Attributable profit for the period
|
|
491
|
|
412
|
|
Taxation
|
|
116
|
|
86
|
|
Share of results of associates
|
|
9
|
|
10
|
|
Other finance costs
|
|
28
|
|
28
|
|
Interest expense
|
|
144
|
|
145
|
|
Interest income
|
|
(48)
|
|
(24)
|
|
Acquisition and disposal-related items
|
|
103
|
|
94
|
|
Restructuring and rationalisation costs
|
|
69
|
|
123
|
|
Amortisation and impairment of acquisition intangibles
|
|
183
|
|
187
|
|
Legal and other
|
|
(12)
|
|
(12)
|
|
Depreciation of property, plant and equipment
|
|
331
|
|
325
|
|
Impairment and amortisation of other intangible assets and
impairment of property, plant and equipment
|
|
81
|
|
67
|
|
Adjusted EBITDA1
|
|
1,495
|
|
1,441
|
|
Adjusted leverage ratio1
|
|
1.8
|
|
1.9
|
1 Adjusted
leverage ratio for the half year 2025 has been calculated based on
adjusted EBITDA for the
rolling 12 months
ended 28 June 2025.
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.
|
|
|
|
|
|
|
|
|
Half year 2025
|
|
Full year 2024
|
|
|
|
$m
|
|
$m
|
|
Bank overdrafts, borrowings, loans and lease
liabilities
|
|
157
|
|
63
|
|
Long-term borrowings and lease liabilities
|
|
3,297
|
|
3,258
|
|
Total borrowings
|
|
3,454
|
|
3,321
|
|
|
|
|
|
|
|
Attributable profit for the period1
|
|
491
|
|
412
|
|
Leverage ratio1
|
|
7.0
|
|
8.1
|
1 Leverage
ratio for the half year 2025 has been calculated based on
attributable profit for the rolling
12 months ended 28 June 2025.
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:
August 05, 2025
|
By:
|
/s/
Helen Barraclough
|
|
|
|
Helen
Barraclough
|
|
|
|
Company
Secretary
|
