Sie sind auf Seite 1von 38

Full Year 2015 Results

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 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: economic and financial conditions in the markets we serve, especially
those affecting health care 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 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 dispositions, 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; 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, 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 forwardlooking 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.
2

Olivier Bohuon
Chief Executive Officer

Full year 2015 highlights


Key Comments

Full Year

Revenue

Trading profit

2015

2014

$m

$m

4,634

4,617

1,099

1,055

Underlying
growth
%

Revenues +4% underlying (+0%


reported)

Advanced Wound Care +8%

Recon +3% with Knees +5%

Sports Medicine Joint Repair +7%

Emerging Markets +11%


Five technology and distribution
acquisitions
Trading profit margin 23.7% (+80bps)

Trading Profit Margin

EPSA

23.7%

22.9%

85.1

83.2

EPSA 85.1 (+2% reported, +9% CER)


Full year dividend 30.8 (up 4%)

Progress on our Strategic Priorities in 2015

Emerging Markets

Innovation

Simplification

Acquisitions

Strong double digit growth ex China


Acquisitions in Russia, Colombia, mid-tier
Emerging markets growth story remains intact
Strong existing product portfolio and new models
Attractive pipeline, both internal and acquired
Creating single R&D function to focus pipeline development
Group optimisation plan delivering on benefits
Extending single MD model to US
Establishing Global Business Services

Shareholder Value

Established Markets

Strong US dynamic (AWM turn-around, Recon, Sports Med)


Europe stabilised
Increased focus on commercial excellence

Success of Arthrocare and Healthpoint acquisitions


Emerging market deals strengthening position
Attractive technologies - ZUK, Blue Belt Technologies
5

Driving commercial excellence and pioneering


innovation
Global
R&D

Commercial

Regional sales
organisations
Single MD model in all
Established and
Emerging countries

Global
commercial
organisation
Commercial strategy
Upstream marketing
Market access
Salesforce excellence
Pricing

Global
Operations

Business
support
functions

Finance
HR
Legal
Compliance
IT

Customer-facing
franchises
6

Pioneering innovative technologies and models


Sports
Medicine
TODAY:
Drive growth with
differentiated products

FUTURE:
Accelerate growth with
disruptive innovations
and solutions

Hip & Knee

Wound

VERILAST
technology
JOURNEY II family
ZUK uni knee

ALLEVYN Life
PICO
SANTYL

Rotator Cuff
Solution
WEREWOLF
Regenerative e.g.
BST-CarGel

Syncera model
NAVIO system
REDAPT revision
hip

RENASYS TOUCH
Solutions based
models

Segment-leading
growth

Segment-leading
growth

Segment-leading
growth

Leading knee , hip


and shoulder
portfolios
COBLATION &
DYONICS

Note: excludes mid-tier, ENT, GYN and Trauma & Extremities portfolios

Building a strong M&A track record

Enterprise Value: $0.8bn

Enterprise Value: $1.5bn

Three full years since acquisition

First full year since acquisition

Provided scale to our US wound


management business

Integration completed

Transaction delivered results ahead


of plan

Cost synergies achieved

3-year sales CAGR >20%


Year three ROCE exceeds WACC

Results tracking to plan


US Sports Medicine benefiting from
sales synergies
8

Q4 revenue growth of 5% underlying


Geographical growth

Revenue split

Product franchise growth

Sports Medicine
Joint Repair

9%

US

9%

Arthroscopic
Enabling Tech
Trauma &
Extremities
Other Surgical

3%

0%
13%
6%

Knees

2%

Est OUS

Hips

1%
4%

AWC

16%
2%
0%

Excluding China 15%

5%

10%

Underlying change (%)

15%

Emerging

AWB
AWD

14%
0%

10%

20%

Underlying change (%)

Note: Est OUS is Australia, Canada, Europe, Japan and New Zealand, Other Surgical includes Gynaecology and ENT.

Sports Medicine, Trauma & OSB


Q4 Revenue performance

Sports Medicine Joint Repair +9% ($169m)

Arthroscopic Enabling Technologies (AET) +3% ($159m)

Trauma & Extremities +0% ($127m)

Other Surgical Businesses* +13% ($56m)

Commentary

both Joint Repair and AET benefitting from ArthroCare


integration

very strong US Joint Repair growth (+17%) led by shoulder

ENT and GYN generating good growth


Comprehensive Product
Offerings for Rotator Cuff Repair

10
* Other Surgical Businesses includes Gynaecology and ENT

Reconstruction
Q4 Revenue performance

Knees: global +6%*, US +7%*, OUS +4%* ($248m)

Hips: global +1%, US +0%, OUS +1% ($163m)

Commentary

continued strong growth in global Knees

ZUK sales ahead of guidance

Blue Belt Technologies acquisition completed and


integration off to a good start

* Excludes the effect of ZUK product acquisition

JOURNEY II BCS
Bi-Cruciate Stabilised
Knee System

11

Advanced Wound Management


Q4 Revenue performance

Advanced Wound Care +4% ($196m)

Advanced Wound Bioactives +16% ($96m)

Advanced Wound Devices +14% ($43m)

Commentary

sustainable improvement in AWC trend

AWB strong final quarter as expected

AWD benefitted from PICO growth

PICO
Single Use Negative Pressure Wound
Therapy

12

Julie Brown
Chief Financial Officer

Full Year Financial Highlights


Growth
2015

CER(1)

Underlying(2)

$4,634m

$4,617m

0%

8%

4%

Trading Profit

$1,099m

$1,055m

4%

10%

5%

23.7%

22.9%

85.1

83.2

2%

9%

Trading cash flow

$936m

$781m

Free cash flow

$672m

$308m

EPSA

(2)

Reported

Revenue

Trading Margin

(1)

2014

Constant exchange rates


Growth at constant exchange rates, adjusted for acquisitions and disposals

14

Q4 and Full Year Revenue growth


Q4 2015(1)

FY 2015(1)

Growth %

Growth %

Underlying

5%

Underlying

Acquisitions

2%

Acquisitions

4%

CER(2)

7%

CER(2)

8%

Currency

-6%

Currency

-8%

Reported

(1)
(2)

1%

Reported

4%

0%

Q4 2015 comprises 64 trading days (2014 63 trading days). Full year comprises 251 days (2014 251 days)
Constant exchange rates

15

Full year trading income statement


Full Year
2015

2014

$m

$m

Revenue

4,634

4,617

Cost of goods sold

(1,143)

(1,127)

Gross profit

3,491

3,490

Gross profit margin

75.3%

75.6%

Selling, general and admin

(2,170)

(2,200)

Research and development

(222)

(235)

Trading profit

1,099

1,055

Trading profit margin

23.7%

22.9%
16

Group trading margin 2015


Trading margin history

Selected 2015 margin drivers

23.7%
22.7%

Group optimisation

22.9%
ArthroCare synergies

Price, mix and exchange

RENASYS hold
2013

2014

2015
17

Full year IFRS profit adjusting items


Full Year
2015

2014

$m

$m

1,099

1,055

Acquisition related costs

(12)

(118)

Restructuring and rationalisation

(65)

(61)

Amortisation of acquisition intangibles

(204)

(129)

Legal and other items

(190)

IFRS Operating profit

628

749

Trading profit

18

Legal settlements
Metal on metal
Majority of US metal-on-metal hip claims settled
Insurance covered majority of settlement
$25m net cash cost (incl. insurance receivable to date)
Q4 accounting charge of $203m
Represents cost of US settlement, net of insurance, and present
value of all other current and anticipated claims, before insurance
Excludes future legal charges
Group carries considerable product liability insurance
19

Full year EPSA and EPS

Full Year

Growth

2015

2014

$m

$m

1,099

1,055

13

Interest payable

(47)

(28)

Other finance costs

(13)

(11)

(5)

(2)

1,040

1,027

(279)

(284)

Adjusted attributable profit

761

743

Number of shares million

894

893

Adjusted earnings per share ("EPSA")

85.1

83.2

Earnings per share ("EPS")

45.9

56.1

Trading profit
Interest receivable

Share of results from associate


Adjusted profit before tax
Taxation

* Full year rate on Trading results

Reported

4%

CER

10%

Tax rate* 26.8%

2%

9%

20

Full year free cash flow


Full Year
2015

2014

$m

$m

1,099

1,055

29

32

307

310

(358)

(375)

Movements in working capital

(141)

(241)

Trading cash flow

936

781

Trading cash conversion

85%

74%

Restructuring, rationalisation, acquisition & other

(91)

(195)

Operating cashflow after capital expenditure

845

586

Net interest paid

(36)

(33)

Taxation paid

(137)

(245)

Free cash flow

672

308

Trading profit
Share based payment

Depreciation and amortisation


Capital expenditure

21

Cash flow and capital allocation


Reinvest for
organic
growth

$m

0
(200)
(400)
(600)
(800)
(1,000)
(1,200)
(1,400)
(1,600)
(1,800)

Progressive
dividend
policy

Acquisition
in line with
strategy

Return
excess to
shareholders

(358)
(272)
(1,613)

1,030

Dec-14
Net Debt

FCF pre
capex

Capex

(71)

Dividends Acquisitions Share buy


back

(77)
Other

(1,361)
Dec-15
Net Debt

22

Our 2016 guidance


Established
Markets

Revenue growth

Emerging
Markets

Maintain good underlying growth

Innovation

Trading margin development

Simplification

Continued margin improvement;


more than offset by FX and Blue Belt

EPSA growth at CER

Optimising
Cash
Delivering
returns
through
capital
allocation
framework

Acquisitions
Continued tax rate improvement
23

Olivier Bohuon
Chief Executive Officer

Summary
2015 delivered acceleration in sales and improvement in profitability

sustained improvement in franchises and regions

strong execution of efficiency programmes

further strengthening through acquisitions

Outlook

continue the positive underlying revenue growth trend

in the medium term, we anticipate increasingly outperforming our markets

strategy continues to transform the profile of Smith & Nephew

25

Questions

Appendices

2016 Technical guidance


Guidance

Full year

Restructuring costs

c. $50m

Acquisition and integration costs

c. $10m

Amortisation of acquisition intangibles

c. $140m

Income from associates

Slightly negative

Interest payable(1)

~ 3%

Other finance costs


Tax rate on Trading result

(1)

c. $10m
26.5% or slightly lower

Long term borrowings were $1,434m at the end of 2015, pre Blue Belt.
28

Trading income statement - half and full year


H1

H2

Full Year

2015

2014

2015

2014

2015

2014

$m

$m

$m

$m

$m

$m

2,272

2,220

2,362

2,397

4,634

4,617

Cost of goods sold

(566)

(538)

(577)

(589)

(1,143)

(1,127)

Gross profit

1,706

1,682

1,785

1,808

3,491

3,490

Gross profit margin

75.1%

75.8%

75.6%

75.4%

75.3%

75.6%

(1,084)

(1,078)

(1,086)

(1,122)

(2,170)

(2,200)

Research and development

(110)

(120)

(112)

(115)

(222)

(235)

Trading profit

512

484

587

571

1,099

1,055

22.5%

21.8%

24.9%

23.8%

23.7%

22.9%

Revenue

Selling, general and admin

Trading profit margin

29

IFRS profit adjusting items half and full year


H1

H2

Full Year

2015

2014

2015

2014

2015

2014

$m

$m

$m

$m

$m

$m

Trading profit

512

484

587

571

1,099

1,055

Acquisition related costs

(13)

(58)

(60)

(12)

(118)

Restructuring and rationalisation

(19)

(19)

(46)

(42)

(65)

(61)

Amortisation of acquisition intangibles

(78)

(54)

(126)

(75)

(204)

(129)

Legal and other items

37

10

(227)

(8)

(190)

IFRS Operating profit

439

363

189

386

628

749

30

EPSA and EPS half and full year


H1

H2

Full Year

2015

2014

2015

2014

2015

2014

$m

$m

$m

$m

$m

$m

512

484

587

571

1,099

1,055

13

(23)

(11)

(24)

(17)

(47)

(28)

Other finance costs

(7)

(5)

(5)

(6)

(13)

(11)

Share of results from associate

(3)

(2)

(2)

(5)

(2)

Adjusted profit before tax

481

473

559

554

1,040

1,027

Taxation

(131)

(133)

(148)

(151)

(279)

(284)

Adjusted attributable profit

350

340

411

403

761

743

Number of shares million

894

893

894

893

894

893

Adjusted earnings per share ("EPSA")

39.1

38.1

46.0

45.1

85.1

83.2

Earnings per share ("EPS")

33.0

26.8

12.9

29.3

45.9

56.1

Trading profit
Interest receivable

Interest payable

31

Free cash flow half and full year


H1

H2

Full Year

2015

2014

2015

2014

2015

2014

$m

$m

$m

$m

$m

$m

512

484

587

571

1,099

1,055

13

16

16

16

29

32

Depreciation and amortisation

148

140

159

170

307

310

Capital expenditure

(161)

(161)

(197)

(214)

(358)

(375)

Movements in working capital

(130)

(222)

(11)

(19)

(141)

(241)

Trading cash flow

382

257

554

524

936

781

Trading cash conversion

75%

53%

94%

92%

85%

74%

36

(37)

(127)

(158)

(91)

(195)

Operating cash flow

418

220

427

366

845

586

Net interest paid

(17)

(12)

(19)

(21)

(36)

(33)

Taxation paid

(72)

(136)

(65)

(109)

(137)

(245)

Free cash flow

329

72

343

236

672

308

Trading profit
Share based payment

Restructuring, rationalisation,
acquisition & other

32

Franchise revenue analysis


2014
Q1

Q2

Q3

2015
Q4

Growth Growth Growth Growth

Full
Year

Growth

Q1

Q2

Q3

Q4

Growth Growth Growth Growth

Full year

Revenue Growth

$m

1,881

11

606

(2)

(1)

(2)

(2)

573

(1)

497

Other Surgical Businesses*

23

18

10

11

10

13

205

10

Reconstruction

1,487

Knee Implants

883

Hip Implants

(1)

(2)

604

Advanced Wound Management

(1)

(2)

(1)

1,266

Advanced Wound Care

(6)

(8)

(3)

(1)

(4)

12

755

Advanced Wound Bioactives

21

14

16

15

16

344

Advanced Wound Devices

13

(17)

(27)

(9)

(27)

(9)

17

14

167

(3)

Group

4,634

Sports Medicine, Trauma &


OSB
Sports Medicine Joint Repair
Arthroscopic Enabling
Technologies
Trauma & Extremities

All revenue growth rates are on an underlying basis


* Other Surgical Businesses includes Gynaecology and ENT

33

Regional revenue analysis


2014
Q1

Q2

Q3

2015
Q4

Growth Growth Growth Growth

Full
Year
Growth

Q1

Q2

Q3

Q4

Growth Growth Growth Growth

Full year
Revenue Growth

$m

(2)

2,217

Other Established Markets

(3)

(2)

(1)

(1)

(2)

1,702

Established Markets

(1)

3,919

Emerging Markets

17

20

18

17

22

14

715

11

Group

4,634

Geographic regions
US

Other Established Markets is Australia, Canada, Europe, Japan and New Zealand.
All revenue growth rates are on an underlying basis

34

Analysis of restructuring costs


P&L Charge

Cash Spend

Previous
Total to Date

FY

Total to date

Previous
Total to Date

FY

Total to date

Group Optimisation
Plan

$m

$m

$m

$m

$m

$m

Cash costs

48

57

105

39

45

84

n/a

n/a

n/a

Asset w/offs

Total

48

57

105

39

45

84

Structural Efficiency
Programme

$m

$m

$m

$m

$m

$m

Cash costs

141

149

139

146

Asset w/offs

21

21

n/a

n/a

n/a

Total

162

170

139

146

Of the $57m total charged in the full year, all $57m are reflected in selling, general and administrative expenses and nothing in
cost of goods sold in the Group Income Statement.
Structural Efficiency target of $160m cash costs and $40m asset write-offs.
Group Optimisation target of $150m total costs.

35

Business days per quarter


Q1

Q2

Q3

Q4

Full Year

2014

62

63

63

63

251

2015

61

63

63

64

251

2016

64

64

63

60

251

36

Exchange rates
Q4/14

FY/14 Q1/15 Q2/15 Q3/15

Q4/1
5

FY/15

$:
Period end

1.21

1.21

1.09

1.12

1.12

1.09

1.09

Average

1.25

1.33

1.13

1.11

1.11

1.10

1.11

Period end

1.56

1.56

1.49

1.57

1.52

1.48

1.48

Average

1.58

1.65

1.51

1.53

1.55

1.52

1.53

$:

37