Orthopaedics Drives Strong Performance at Smith & Nephew.Business Editors/Health/Medical Writers LONDON--(BUSINESS WIRE)--July 31, 2003 Smith & Nephew NEPHEW, dom. rel. The son of a person's brother or sister. Amb. 514; 1 Jacob's Ch. R. 207. plc, the global medical devices company, announces its interim results for the half year ending June 28, 2003. Key Points: -- Underlying sales growth 11% -- Margin targets again achieved -- EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. growth 11% before goodwill amortization and exceptional items -- Excellent performance in Orthopaedics orthopaedics Orthopedics -- Outlook remains positive Dudley Eustace, Chairman, said: "Smith & Nephew continues to deliver a strong performance in attractive long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. growth markets. We are particularly pleased with the excellent results achieved by our Orthopaedics business, where our innovative technologies enabled us once again to make market share gains. We are confident that we can deliver sustainable sales growth and achieve our financial targets." A presentation for analysts will be held at the City Presentation Centre, 4 Chiswell Street, Finsbury Square, London EC1Y 4UP at 9:30am GMT (Greenwich Mean Time) See UTC. GMT - Universal Time 1 today. The meeting will be webcast live and will be available on demand shortly after the close of the meetings at http://www.smith-nephew.com/interims. The presentation may also be heard by dialing +44 (0)20 7984 7569 (for Europe); (913) 981 5507 (for US). The presentation can be found on our website: http://www.smith-nephew.com/interims. High resolution photographs are available to the media free of charge at www.newscast newscast Radio or television broadcast of news events. News gathering and broadcasting by the radio networks began in the mid-1930s and increased significantly during World War II. The television newscast began in 1948 with 15-minute programs that resembled movie newsreels. .co.uk. Smith & Nephew is a global advanced medical devices company with a highly successful track record in developing, manufacturing and marketing a wide variety of innovative and technologically advanced tissue repair products. These products are primarily in the areas of bone, joints, skin and other soft tissue. Smith & Nephew has extensive marketing and distribution capabilities, with established sales in more than 90 countries. Smith & Nephew ADRs, each equivalent to ten ordinary shares, trade on the New York Stock Exchange New York Stock Exchange (NYSE) World's largest marketplace for securities. The exchange began as an informal meeting of 24 men in 1792 on what is now Wall Street in New York City. under the symbol SNN SNN Samenwerkingsverband Noord-Nederland SNN Sanane Inc. SNN Schoolnet News Network (Canada) SNN Shannon, Ireland - Shannon (Airport Code) SNN Special Needs Network SNN Sarimanok News Network . Smith & Nephew ordinary shares trade on the London Stock Exchange London Stock Exchange London marketplace for securities. It was formed in 1773 by a group of stockbrokers who had been doing business informally in local coffeehouses. . Shares are quoted on the SEAQ SEAQ See: Stock Exchange Automated Quotation System System, and prices may be accessed on the Reuter Equities 2000 Service under the symbol SMN SMN Survival Motor Neuron SMN Servicio Meteorologico Nacional (Spanish: National Meteorological Service) SMN Santa Maria Novella (church and main train station, Florence, Italy) SMN Summoner .L, on Bloomberg Bloomberg A major global provider of 24-hour financial news and information including real-time and historic price data, financials data, trading news and analyst coverage, as well as general news and sports. under the symbol SNN, and on Quotron under the symbol SMU SMU Southern Methodist University SMU Solid (Waste) Management Unit SMU Saint Mary's University (Halifax, Nova Scotia; Philippines) SMU Singapore Management University SMU Saint Mary's University of Minnesota .EU. For further information, visit Smith & Nephew's website at http://www.smith-nephew.com. Trading results In the first half of 2003 Smith & Nephew continued to achieve double-digit underlying sales growth and turned in a particularly strong performance in its largest and fastest-growing business, Orthopaedics. Advanced Wound Management and Endoscopy endoscopy Examination of the body's interior through an instrument inserted into a natural opening or an incision, usually as an outpatient procedure. Endoscopes include the upper gastrointestinal endoscope (for the esophagus, stomach, and duodenum), the colonoscope (for the experienced a slower start to the year but both businesses have gained momentum at the half year - a trend we expect to continue. Underlying sales growth for the half-year was 11%, with an additional 1% of sales arising from acquisitions, less 3% of adverse currency translation. This growth was fueled by the company's continued commitment to developing innovative new products and techniques that help the surgeon and clinical community get people back to their normal lives faster. Among operational highlights in the first half, the Orthopaedics business formed two separate divisions - Reconstructive re·con·struc·tive adj. 1. Relating to or characterized by reconstruction. 2. Serving to rebuild, restore, or correct the appearance and function of defective, damaged, or misshaped body structures or parts: Implants and Trauma. The Endoscopy business completed the integration of the radio frequency business, ORATEC Interventions, acquired last year. Advanced Wound Management integrated the Dermagraft venture acquired from Advanced Tissue Sciences, Inc., ("ATS") at the end of last year. Profit before goodwill amortization, exceptional items and tax amounted to GBP GBP In currencies, this is the abbreviation for the British Pound. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. 112m for the half-year, a 10% increase over first half 2002. This comprised GBP103m of operating profit Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. before goodwill amortization, GBP13m profit from our interests in BSN BSN abbr. Bachelor of Science in Nursing Medical and AbilityOne, less GBP4m of interest costs. EBITA EBITA Earnings Before Interest Taxes Amortization margins before exceptional items were maintained at 17.9% despite the increased cost of funding the pension deficit and the costs of Dermagraft, following the acquisition of ATS's half share last year. These two expenses impacted margins by 0.7% and 0.8% respectively. Orthopaedics improved its operating margins Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: by leveraging its sales growth together with operational improvements. Endoscopy produced a substantial improvement in its operating margins by accelerating the integration of ORATEC and a focus on expense controls as sales growth slowed in the US. Wound Management's margins were adversely impacted by the acquisition of the additional half of the Dermagraft joint venture and a disproportionate dis·pro·por·tion·ate adj. Out of proportion, as in size, shape, or amount. dis  pro·por share of the increased pension
funding.EPS, tax, exceptional items and cash flow After an ordinary tax charge of 29%, earnings per share before goodwill amortization and exceptional items were 8.59p, an increase on first half 2002 of 11%. Exceptional costs of GBP5m were incurred in the half year, principally on integrating ORATEC's production and development facilities. Operating cash flow Operating cash flow Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. was GBP53m, which is a profit to cash conversion ratio of 56% before rationalization rationalization, in psychology: see defense mechanism. and integration expenditure, compared to 49% a year ago. Net debt closed at GBP289m. Dividend To conform with the terms of our offers for Centerpulse AG and InCentive Capital AG, we have brought forward the record and payment date of our interim dividend. An interim dividend of 1.85p per share (2002: 1.80p) will be paid on September 12, 2003 to shareholders on the register at the close of business on August 15, 2003. Shareholders may participate in the company's dividend reinvestment plan Dividend Reinvestment Plan (DRP) Plan which provides for automatic reinvestment of shareholder dividends in more shares of a company's stock, often without commissions. Some plans provide for the purchase of additional shares at a discount to market price. . Offers for Centerpulse and InCentive Capital During the first half, we announced a recommended offer to combine our business with that of Centerpulse AG, along with a parallel offer to acquire its largest shareholder, InCentive Capital AG. Combining Smith & Nephew, one of the fastest growing and most innovative medical devices companies, with Centerpulse, the European European emanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. leader, would create the world's No. 3 orthopaedic implant implant /im·plant/ (im-plant´) to insert or to graft (tissue, or inert or radioactive material) into intact tissues or a body cavity. company. Zimmer Holdings Zimmer Holdings Inc. NYSE: ZMH is the world leader in orthopedic implants. It is headquartered in Warsaw, Indiana. United States. Its products include knee, hip, shoulder and spinal implants along with fracture/trauma and orthopaedic surgical products. Inc. has also made offers to acquire Centerpulse and InCentive Capital, and the two companies' offers are running concurrently. Smith & Nephew remains convinced it is the best partner for Centerpulse and its shareholders and is currently reviewing its options. Operating review Orthopaedics Orthopaedics sales rose by an underlying 16%, and its growth continued to be among the best in the industry, with 26% of sales coming from new products. The divisionalization of the Orthopaedics business, announced earlier this year, is progressing smoothly and has enabled us to take further advantage of the opportunities within the reconstructive and trauma marketplaces. By the end of the year, we will have in place a dedicated trauma sales force of more than 60 to focus on key trauma centers trauma center n. A medical facility that is designated to treat severe physical trauma as a result of the specialized training of its staff and the availability of appropriate diagnostic and treatment tools. in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. . Reconstructive sales grew by an impressive 20% boosted by a strong performance by Oxinium products, where we continue to take both knee and hip market share. Knee sales are growing at 23% and hip sales 14%. Trauma sales grew 11% in the first half driven by external fixation external fixation n. The fixation of a fractured bone by a splint or plastic dressing. external fixation Orthopedics Open reduction, stabilization and use of external fixators to manage fracture bone fragments devices and the Exogen ultrasound ultrasound or sonography, in medicine, technique that uses sound waves to study and treat hard-to-reach body areas. In scanning with ultrasound, high-frequency sound waves are transmitted to the area of interest and the returning echoes recorded bone healing Bone healing or fracture healing is a proliferative physiological process, in which the body facilitates repair of Bone fractures. Physiology and process of healing and TriGen nail products. Response to our unique Oxinium range of products continues to be exceptional, with the use of Oxinium components in the US reaching 36% penetration of our sales in knees and 24% in hips, the latter only introduced in February. The unicompartmental knee incorporating Oxinium is being introduced this week and we are in the process of launching a dynamic direct-to-consumer marketing campaign for Oxinium implants in the US. We have also launched Accuris instrumentation instrumentation, in music: see orchestra and orchestration. instrumentation In technology, the development and use of precise measuring, analysis, and control equipment. for the unicompartmental knee, as well as instrumentation for minimally invasive surgery minimally invasive surgery Laparoscopic surgery, see there. See Laparoscopic cholecystectomy. for total knee replacement. We continue to make progress in the area of computer assisted surgery, and have partnered with GE Medical Systems to develop applications for reconstructive and trauma surgeries  This article or section needs copy editing for grammar, style, cohesion, tone and/or spelling.You can assist by [ editing it] now. . Endoscopy Strong sales growth of 14% outside the Americas allowed us to achieve underlying sales growth of 5% in the first half of the year - despite flat sales in the US. The acquisition of ORATEC last year added to this a further 5% of sales. The resection resection /re·sec·tion/ (-sek´shun) excision. root resection apicoectomy. transurethral resection of the prostate (TURP), transurethral prostatic resection blades business in the US has suffered a 4% sales decline in the first half due to a rise in the number of hospitals using reprocessed blades. Endoscopy sales to HealthSouth, both of consumables and capital equipment, were also disrupted dis·rupt tr.v. dis·rupt·ed, dis·rupt·ing, dis·rupts 1. To throw into confusion or disorder: Protesters disrupted the candidate's speech. 2. as a result of its financial difficulties. US blade sales will continue to experience some pressure in the second half; however, new product launches are expected to improve overall Endoscopy sales growth. While there is already a high level of penetration in the US market for arthroscopic knee surgery Arthroscopic knee surgery Surgery performed to examine or repair tissues inside the knee joint through a special scope (arthroscope). Mentioned in: Chondromalacia Patellae arthroscopic knee surgery , shoulder arthroscopic procedures and overall business growth outside the US remain robust. Our outstanding developments in cartilage cartilage (kär`təlĭj), flexible semiopaque connective tissue without blood vessels or nerve cells. It forms part of the skeletal system in humans and in other vertebrates, and is also known as gristle. and ligament ligament (lĭg`əmənt), strong band of white fibrous connective tissue that joins bones to other bones or to cartilage in the joint areas. The bundles of collagenous fibers that form ligaments tend to be pliable but not elastic. repair for both shoulders and knees continue to drive double digit Noun 1. double digit - a two-digit integer; from 10 to 99 integer, whole number - any of the natural numbers (positive or negative) or zero; "an integer is a number that is not a fraction" growth globally for these products. Advanced Wound Management Sales of Advanced Wound Management products grew an underlying 8%. The US grew strongly despite production start up delays, which have now been overcome. Europe had a slower start to the year, principally due to reimbursement Reimbursement Payment made to someone for out-of-pocket expenses has incurred. changes in Germany. We have now fully integrated the Dermagraft La Jolla La Jolla (lə hoi`yə), on the Pacific Ocean, S Calif., an uninc. district within the confines of San Diego; founded 1869. The beautiful ocean beaches, in particular La Jolla shores and Black's Beach, and sea-washed caves attract visitors and , California California (kăl'ĭfôr`nyə), most populous state in the United States, located in the Far West; bordered by Oregon (N), Nevada and, across the Colorado River, Arizona (E), Mexico (S), and the Pacific Ocean (W). , facility into the business. Our lead product Allevyn has again maintained strong sales growth of 18% and we are expanding its production in the US. Sales of Acticoat Acticoat™ Wound care A silver nitrate-based antibacterial burn dressing for wound protection. See Pressure ulcer. , the silver-based dressing, are up 50% and the product continues to gain acceptance globally. We are encouraged by the first half performance of Dermagraft, our bioengineered skin replacement for diabetic foot diabetic foot A foot with a constellation of pathologic changes affecting the lower extremity in diabetics, often leading to amputation and/or death due to complications; the common initial lesion leading to amputation is a nonhealing skin ulcer, induced by ulcers Ulcers (Digestive) Definition In general, an ulcer is any eroded area of skin or a mucous membrane, marked by tissue disintegration. In common usage, however, ulcer usually is used to refer to disorders in the upper digestive tract. , as well as TransCyte, used to treat burn patients. Reimbursement coverage for Dermagraft in the US is now virtually complete. BSN Medical BSN again improved operating margins as the program of manufacturing rationalization continues. New corporate brand Smith & Nephew is today introducing a new corporate brand, modernizing the previous identity which has been unchanged for over twenty years TWENTY YEARS. The lapse of twenty years raises a presumption of certain facts, and after such a time, the party against whom the presumption has been raised, will be required to prove a negative to establish his rights. 2. . The new brand reflects the energy and vitality vi·tal·i·ty n. 1. The capacity to live, grow, or develop. 2. Physical or intellectual vigor; energy. in today's Smith & Nephew that has come with the transformation of the company over the past four years. Adoption of the new Smith & Nephew brand identity throughout the group will result in heightened visibility and awareness of the company in the marketplace and increase the value of the Smith & Nephew brand. Outlook Smith & Nephew has again delivered a strong overall performance in attractive long-term growth markets. Our margin improvement programs continue to deliver positive results. Looking forward to the remainder of the year, we are confident that our innovative product technologies will allow us to sustain our strong growth rate in Orthopaedics. In Endoscopy, new product launches and stronger international sales are expected increasingly to offset weakening weak·en tr. & intr.v. weak·ened, weak·en·ing, weak·ens To make or become weak or weaker. weak  en·er n. sales in the US blades market. Advanced Wound Management has
the momentum to deliver improved growth in the second half.Management will continue to focus on its successful margin improvement programs and we remain on track to achieve our financial targets. United States of America UNITED STATES OF AMERICA. The name of this country. The United States, now thirty-one in number, are Alabama, Arkansas, Connecticut, Delaware, Florida, Georgia, Illinois, Indiana, Iowa, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Mississippi, Missouri, New Hampshire, The offer for Centerpulse shares is being made in the United States only through a prospectus/offer to exchange, which is part of a registration statement filed with the SEC by Smith & Nephew Group. Centerpulse shareholders who are US persons or are located in the United States are urged to read the registration statement, including the prospectus/offer to exchange included therein, and the other documents filed, or to be filed, with the SEC by Smith & Nephew Group or Centerpulse relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the Centerpulse offer, because they contain important information about the Centerpulse offer. You may obtain a free copy of these documents from the SEC's Web site at www.sec.gov. You may also obtain this information from Morrow mor·row n. 1. The following day: resolved to set out on the morrow. 2. The time immediately subsequent to a particular event. 3. Archaic The morning. & Co., Inc., the US information agent for the Centerpulse offer, at (800) 607-0088, or by e-mail at centerpulse.info@morrowco.com SMITH & NEPHEW plc 2003 INTERIM RESULTS continued Unaudited Group Profit and Loss Account for the Half Year Ended June 28, 2003
Year
2002 2003 2002
GBPm Notes GBPm GBPm
Turnover 1
1,083.7 Continuing operations 577.3 531.9
26.2 Discontinued operations 2 - 26.2
----------- ------------------
1,109.9 Group turnover 577.3 558.1
155.0 Share of joint venture 81.0 79.3
----------- ------------------
1,264.9 658.3 637.4
=========== ==================
Operating profit 1
Continuing operations
- before goodwill amortization and
196.0 exceptional items 103.1 95.2
(17.5) - goodwill amortization* (9.4) (8.1)
(29.9) - exceptional items* 3 (4.3) (15.3)
----------- ------------------
148.6 89.4 71.8
2.1 Discontinued operations 2 - 2.1
----------- ------------------
150.7 89.4 73.9
Share of operating profit of the
joint venture
19.6 - before exceptional items 9.9 9.4
(2.6) - exceptional items* 4 (0.6) (1.3)
----------- ------------------
167.7 98.7 82.0
Share of operating profit of the
4.9 associated undertaking 3.4 1.4
----------- ------------------
172.6 102.1 83.4
Discontinued operations - net profit
18.0 on disposals* 2 - 19.0
----------- ------------------
Profit on ordinary activities before
190.6 interest 102.1 102.4
(12.7)Interest payable 5 (4.0) (6.3)
----------- ------------------
Profit on ordinary activities before
177.9 taxation 98.1 96.1
65.8 Taxation 6 30.9 45.5
----------- ------------------
112.1 Attributable profit 67.2 50.6
44.6 Ordinary dividends 7 17.2 16.7
----------- ------------------
67.5 Retained profit 50.0 33.9
=========== ==================
12.11p Basic earnings per ordinary share 8 7.23p 5.46p
12.02p Diluted earnings per ordinary share 8 7.19p 5.42p
*Results before goodwill amortization and
exceptional items
GBP209.9m Profit before taxation 9 GBP112.4mGBP101.8m
Adjusted basic earnings per ordinary
16.02p share 8 8.59p 7.76p
Adjusted diluted earnings per
15.89p ordinary share 8 8.54p 7.71p
SMITH & NEPHEW plc 2003 INTERIM RESULTS continued Abridged Group Balance Sheet as at June 28, 2003
Year 2002
2002 2003 Restated(B)
GBPm GBPm GBPm
317.2 Intangible assets 304.1 332.8
255.8 Tangible assets 259.5 248.9
115.0 Investment in joint venture(A) 120.9 112.4
8.5 Investment in associated undertaking 10.6 7.5
8.2 Investments 5.7 17.7
---------- --------------------
704.7 700.8 719.3
---------- --------------------
229.5 Stocks 241.4 241.6
280.7 Debtors 327.7 293.4
22.5 Cash 36.4 56.2
(315.9)Creditors (295.9) (333.5)
---------- --------------------
216.8 309.6 257.7
(316.1)Borrowings (348.7) (407.1)
(56.0)Provisions - deferred taxation (59.1) (54.8)
(32.1) - other (30.1) (37.2)
---------- --------------------
517.3 Shareholders' funds 572.5 477.9
========== ====================
(A) Investment in joint venture comprises goodwill GBP71.6
million, share of gross tangible assets GBP109.5 million less
share of gross liabilities GBP60.2 million.
(B) Half year 2002 comparative figures have been restated for the
reclassification of currency swap assets and liabilities from
cash and borrowings to debtors and creditors respectively.
Abridged Movement in Shareholders' Funds
for the Half Year Ended June 28, 2003
-------------------------------------------------
Year
2002 2003 2002
GBPm GBPm GBPm
404.6 Opening shareholders' funds 517.3 404.6
112.1 Attributable profit 67.2 50.6
(44.6)Dividends (17.2) (16.7)
9.1 Exchange adjustments 2.9 6.0
30.0 Goodwill on disposals - 30.0
(2.3)Movements relating to the QUEST - (0.4)
8.4 Issue of shares 2.3 3.8
---------- ----------------------
517.3 Closing shareholders' funds 572.5 477.9
========== ======================
SMITH & NEPHEW plc 2003 INTERIM RESULTS continued Abridged Group Cash Flow for the Half Year Ended June 28, 2003
Year
2002 2003 2002
GBPm GBPm GBPm
150.7 Operating profit 89.4 73.9
94.4 Depreciation and amortization(C) 37.2 43.9
(35.8)Working capital and provisions (44.7) (38.9)
----------- --------------------
Net cash inflow from operating
209.3 activities(D) 81.9 78.9
Capital expenditure and financial
(86.1) investment (29.2) (41.2)
----------- --------------------
123.2 Operating cash flow 52.7 37.7
3.9 Joint venture dividend 2.7 2.2
(10.2)Interest (2.6) (5.2)
(52.3)Taxation (23.3) (29.7)
(43.5)Dividends (27.9) (26.8)
(206.3)Acquisitions (3.6) (193.5)
- Centerpulse transaction costs (15.6) -
71.8 Disposals - 71.8
5.7 Joint venture formation - 5.7
6.1 Issues of ordinary share capital 2.3 3.4
----------- --------------------
(101.6)Net cash outflow (15.3) (134.4)
68.2 Exchange adjustments 3.7 27.8
(243.5)Opening net debt (276.9) (243.5)
----------- --------------------
(276.9)Closing net debt (288.5) (350.1)
=========== ====================
54% Gearing 50% 73%
(C) Comparative figures include GBP8.0 million exceptional write-
down of the group's equity investment in Advanced Tissue
Sciences, Inc. at the half year and GBP17.5 million for full
year 2002.
(D) After GBP5.3 million (GBP9.1 million at the half year and
GBP19.3 million for full year 2002) of outgoings on
rationalization, acquisition integration and divestment costs.
Net debt includes GBP23.8 million of net currency swap assets
(GBP0.8 million at the half year and GBP16.7 million for full year
2002).
Statement of Total Recognized Gains Recognized Gain The amount of gain reported for income tax purposes. Notes: You can defer recognizing some gains until the following year(s). See also: Capital Gain, Capital Loss, Deferred Income Tax, Drought Sale, Exempt Income, Exemption, Gain, Recognized Loss and Losses for the Half Year Ended June 28, 2003
Year
2002 2003 2002
GBPm GBPm GBPm
112.1 Attributable profit 67.2 50.6
Currency translation differences on
9.1 foreign currency net investments 2.9 6.0
------------ ---------------------
121.2 Total recognized gains and losses 70.1 56.6
============ =====================
SMITH & NEPHEW plc NOTES TO THE 2003 INTERIM RESULTS
Segmental performance for the half year ended June 28,
1. 2003 was as follows:
Group turnover by business segment
Year
2002 2003 2002 Underlying
GBPm GBPm GBPm sales
growth
470.2 Orthopaedics 260.0 235.8 16%
291.8 Endoscopy 148.8 141.7 5%
321.7 Advanced Wound Management 168.5 154.4 8%
----------- ------------------------------
1,083.7 Continuing operations 577.3 531.9 11%
=========== ==============================
Group operating profit by business segment
Year
2002 2003 2002
GBPm GBPm GBPm
98.2 Orthopaedics 58.4 51.2
53.8 Endoscopy 27.9 21.4
44.0 Advanced Wound Management 16.8 22.6
---------- ------------------------
196.0 103.1 95.2
(17.5) Goodwill amortization (9.4) (8.1)
(29.9) Exceptional items (4.3) (15.3)
---------- ------------------------
148.6 Continuing operations 89.4 71.8
========== ========================
Group turnover by geographic market
Year
2002 2003 2002 Underlying
GBPm GBPm GBPm sales
growth
318.7 Europe(1) 182.0 155.6 9%
610.5 America 312.6 303.1 12%
154.5 Africa, Asia and Australasia 82.7 73.2 11%
------------ -----------------------------
1,083.7 Continuing operations 577.3 531.9 11%
============ =============================
(1) Includes United Kingdom sales of GBP46.2 million (GBP40.8 million at the half year and GBP87.3 million for full year 2002). Underlying sales growth is sales growth adjusted to eliminate the effects of translational currency, acquisitions and disposals. SMITH & NEPHEW plc NOTES TO THE 2003 INTERIM RESULTS continued 2. Discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. in 2002 represent the results and net profit on disposal of the rehabilitation rehabilitation: see physical therapy. business to AbilityOne. 3. Operating exceptional items within continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the comprise GBP4.3 million of acquisition integration costs (2002 half year GBP4.2 million; full year GBP8.4 million) and in half year 2002 GBP8.0 million write down against the group's equity investment in Advanced Tissue Sciences, Inc. (full year GBP17.5 million) and GBP3.1 million costs of rationalization consequent con·se·quent adj. 1. a. Following as a natural effect, result, or conclusion: tried to prevent an oil spill and the consequent damage to wildlife. b. on the contribution of businesses to BSN Medical and manufacturing rationalization (full year GBP4.0 million). 4. The group's share of exceptional items of the joint venture relates to manufacturing rationalization costs of BSN Medical. 5. Interest includes GBP0.9 million (2002 half year GBP0.8 million; full year GBP1.6 million) in respect of the group's share of the net interest charge of BSN Medical and GBP0.5 million (2002 half year GBP0.3 million; full year GBP0.9 million) in respect of the group's share of the net interest charge of AbilityOne. 6. Taxation of GBP32.6 million (2002 half year GBP29.9 million; full year GBP61.6 million) arises on the profit before goodwill amortization and exceptional items, an estimated effective rate of 29% on the full year's results before exceptional items and goodwill amortization and a credit of GBP1.7 million arises in respect of the net exceptional items. Of the total, GBP32.3 million relates to overseas taxation, GBP2.5 million relates to the group's share of the tax of BSN Medical and GBP1.2 million relates to the group's share of the tax of AbilityOne. 7. An interim dividend of 1.85 pence pence n. Chiefly British A plural of penny. pence Noun a plural of penny USAGE: Since the decimalization of British currency and the introduction of the abbreviation p, per ordinary share (2002 - 1.80 pence per ordinary share) will be paid on September 12, 2003 to all shareholders on the register at the close of business on 15 August 2003. Shareholders may participate in the dividend reinvestment plan. 8. The basic average number of ordinary shares in issue was 929 million (2002 - 926 million). The diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. average number of ordinary shares in issue was 934 million (2002 - 933 million). 9. Results before goodwill amortisation Noun 1. amortisation - the reduction of the value of an asset by prorating its cost over a period of years amortization reduction, step-down, diminution, decrease - the act of decreasing or reducing something 2. and exceptional items states profit on ordinary activities before taxation before charging goodwill amortization and exceptional items and before the net profit on the disposal of discontinued dis·con·tin·ue v. dis·con·tin·ued, dis·con·tin·u·ing, dis·con·tin·ues v.tr. 1. To stop doing or providing (something); end or abandon: operations. Earnings per ordinary share before goodwill amortization and exceptional items is based on the attributable profit before accounting for these items and taxation on the exceptional items. 10. On 23 June 2003 the 5 1/2% GBP1.00 cumulative preference shares in Smith & Nephew plc were cancelled resulting in a reduction in share capital of GBP268,501. In consideration, preference shareholders were paid GBP1.38 per share on 7 July 2003. 11. The interim financial information has been prepared on the basis of the accounting policies set out in the full annual accounts of the group for the year ended December 31, 2002. The financial information contained in this interim statement does not constitute statutory accounts as defined in Section 240 of the Companies Act 1985. 12. The financial information for the year ended December 31, 2002 has been extracted from the full annual accounts of the group which have been filed with the Registrar of Companies The introduction to this article provides insufficient context for those unfamiliar with the subject matter. Please help [ improve the introduction] to meet Wikipedia's layout standards. You can discuss the issue on the talk page. . The auditors' report on those accounts was unqualified. SMITH & NEPHEW plc NOTES TO THE 2003 INTERIM RESULTS continued 13. In April 2003, Smith & Nephew made a public offer to purchase Centerpulse AG, a listed medical devices company incorporated under the laws of Switzerland, along with a parallel offer to acquire its largest shareholder, InCentive Capital AG. In June 2003, Zimmer Holdings Inc. made counter offers to purchase Centerpulse AG and InCentive Capital AG. The offers and counter offers are still open. Until the offers are resolved transaction costs Transaction Costs Costs incurred when buying or selling securities. These include brokers' commissions and spreads (the difference between the price the dealer paid for a security and the price they can sell it). relating to the offers to acquire Centerpulse AG and InCentive Capital AG will be included in debtors. As at June 28, 2003 the amount was GBP15.6 million. Independent Review Report to Smith & Nephew plc Introduction We have been instructed by the company to review the financial information for the six months ended June 28, 2003 which comprises the Group Profit and Loss Account, Abridged Group Balance Sheet, Abridged Movement in Shareholders' Funds, Abridged Group Cash Flow Statement, Statement of Total Recognized Gains and Losses and the related notes 1 to 13. We have read the other information contained in the interim report and considered whether it contains any apparent misstatements or material inconsistencies with the financial information. This report is made solely to the company in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with guidance contained in Bulletin 1999/4 'Review of interim financial information' issued by the Auditing Practices Board. To the fullest extent permitted by the law, we do not accept or assume responsibility to anyone other than the company, for our work, for this report, or for the conclusions we have formed. Directors' Responsibilities The interim report, including the financial information contained therein, is the responsibility of, and has been approved by the directors. The directors are responsible for preparing the interim report in accordance with the Listing Rules of the Financial Services Authority The Financial Services Authority ("FSA") is an independent non-departmental public body and quasi-judicial body that regulates the financial services industry in the United Kingdom. Its main office is based in Canary Wharf, London, with another office in Edinburgh. which require that the accounting policies and presentation applied to the interim figures should be consistent with those applied in preparing the preceding annual accounts except where any changes, and the reasons for them, are disclosed. Review Work Performed We conducted our review in accordance with guidance contained in Bulletin 1999/4 'Review of interim financial information' issued by the Auditing Practices Board for use in the United Kingdom. A review consists principally of making enquiries of group management and applying analytical procedures Analytical Procedures is one of financial audit skill which help an auditor understand the client's business and changes in the business, to identify potential risk areas and to plan other audit procedures. to the financial information and underlying financial data, and based thereon there·on adv. 1. On or upon this, that, or it. 2. Archaic Following that immediately; thereupon. Adv. 1. thereon - on that; "text and commentary thereon" on it, on that , assessing whether the accounting policies and presentation have been consistently applied, unless otherwise disclosed. A review excludes audit procedures such as tests of controls and verification of assets, liabilities and transactions. It is substantially less in scope than an audit performed in accordance with United Kingdom Auditing Standards and therefore provides a lower level of assurance than an audit. Accordingly we do not express an audit opinion on the financial information. Review Conclusion On the basis of our review we are not aware of any material modifications that should be made to the financial information as presented for the six months ended June 28, 2003. Ernst & Young LLP LLP - Lower Layer Protocol London July 31, 2003 |
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