Smith & Nephew Sustains Strong Growth.Business Editors/Health/Medical Writers LONDON--(BUSINESS WIRE)--Feb. 7, 2003 Smith & Nephew NEPHEW, dom. rel. The son of a person's brother or sister. Amb. 514; 1 Jacob's Ch. R. 207. plc (NYSE NYSE See: New York Stock Exchange : 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 ), the global medical devices company, today announced its preliminary results for the year ended December December: see month. 31, 2002. Key Points -- Underlying sales growth 14% -- Acquisitions add another 4% to sales growth -- Pre-goodwill amortization earnings per share up 15% (before exceptional items) -- Orthopaedics underlying growth at market leading 20% -- Outlook remains positive Dudley Dudley, city (1991 pop. 186,513) and metropolitan district, W central England. Dudley's famed iron, coal, and limestone industries began declining c.1870. Other industries include engineering works, steelworks, metallurgy, glass cutting, textiles, and leatherworking. Eustace Eustace may refer to the following : People:
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 , and Advanced Wound Management. We are pleased with our results, as innovation in our product offering and investment in our sales forces continues to deliver above-market sales growth. Market growth remains buoyant Buoyant The term used to describe a commodities market where the prices generally rise with ease when there are considerable signals of strength. Notes: These types of markets can be very volatile as the prices are rapid to rise and fall with investor sentiment. and demographics The attributes of people in a particular geographic area. Used for marketing purposes, population, ethnic origins, religion, spoken language, income and age range are examples of demographic data. and lifestyle trends are positive. Against this background, we believe that we can continue to deliver sustainable sales growth as well as improve our operating margins Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: ."
A presentation for analysts will be held simultaneously at the
City Presentation Center, 4 Chiswell Street, Finsbury Square, London
EC1Y 4UP at 2pm GMT today and the Sheraton in New Orleans at 8am CST.
The meetings will be webcast live and will be available on demand
shortly after the close of the meetings at
http://www.smith-nephew.com/prelims
The presentation may also be accessed via teleconference by
contacting Patrick Lyon of Taylor Rafferty on (212)889-4350 for
dial-in details.
Trading results In 2002 we achieved our targets within the Orthopaedics, Endoscopy, and Advanced Wound Management markets. Each of Smith & Nephew's businesses strengthened its positions in the markets in which it operates through a combination of sales growth, new products and technology acquisitions. Ongoing sales for the year rose a total of 15%, 14% from underlying sales growth, 4% from businesses acquired during the year, less 3% of adverse currency. Selling price increases accounted for approximately 1% of underlying sales growth. BSN BSN abbr. Bachelor of Science in Nursing Medical, our joint venture with Beiersdorf AG, and AbilityOne Corporation ("AbilityOne"), the rehabilitation rehabilitation: see physical therapy. business in which we hold a 21 1/2% interest, traded successfully. During the course of the year we acquired ORATEC Interventions, Inc., a leading radio frequency (RF) arthroscopy Arthroscopy Definition Arthroscopy is the examination of a joint, specifically, the inside structures. The procedure is performed by inserting a specifically designed illuminated device into the joint through a small incision. and spinal spinal /spi·nal/ (spi´n'l) 1. pertaining to a spine or to the vertebral column. 2. pertaining to the spinal cord's functioning independently from the brain. spi·nal adj. business. We also acquired the remaining half of our Dermagraft and TransCyte TransCyte® Surgery Biosynthetic temporary skin substitute wound covering for treating severe burn, protecting the wound bed, promoting healing and ↓ side effects of allografts. See Artificcial skin. joint arrangements from Advanced Tissue Sciences, Inc., ("ATS") and completed our restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). program by disposing of our rehabilitation business to AbilityOne. Profit before exceptional items and tax amounted to (pounds)192m, a 13% increase on 2001. This comprised (pounds)196m 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. from ongoing operations, before (pounds)18m of goodwill amortization, (pounds)2m profit from discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. , (pounds)25m profit from the BSN Medical joint venture and interest in AbilityOne, less (pounds)13m of interest costs. We achieved an ongoing operating margin before exceptional items of 16.5%, despite the dissynergies of the restructuring divestments of this and last year. The underlying margin increased by 0.7%. Before goodwill amortization the margin was 18.1%. 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. , tax, exceptional items and cash flow Earnings per share before exceptional items were 14.13p, an increase on 2001 of 10% and before goodwill amortization they were 16.02p, an increase of 15%. Adjusting for the dilutive effects Dilutive effect Result of a transaction that decreases earnings per common share (EPS). of the disposals, the underlying increase in earnings per share before exceptional items was 19%. Exceptional items include an (pounds)18m gain on the disposal of Rehabilitation, less (pounds)15m of rationalisation Noun 1. rationalisation - (psychiatry) a defense mechanism by which your true motivation is concealed by explaining your actions and feelings in a way that is not threatening rationalization and acquisition integration costs. Additionally, we wrote off the whole of our (pounds)17m holding of ATS shares following its filing for bankruptcy bankruptcy, in law, settlement of the liabilities of a person or organization wholly or partially unable to meet financial obligations. The purposes are to distribute, through a court-appointed receiver, the bankrupt's assets equitably among creditors and, in most . The net exceptional loss was therefore (pounds)14m on which there was a (pounds)4m tax charge because of the disposal gain. 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 (pounds)123m after (pounds)19m of rationalisation and acquisition integration outgoings, which is a profit to cash conversion ratio of 72% before those items. The proceeds of the divestments of (pounds)72m were predominantly pre·dom·i·nant adj. 1. Having greatest ascendancy, importance, influence, authority, or force. See Synonyms at dominant. 2. for Rehabilitation, which partly offset the total cost of acquisitions of (pounds)206m. Net debt closed at (pounds)277m. Dividend The Board recommends a final dividend of 3.00p, which together with the interim dividend of 1.80p, makes a total for the year of 4.80p. The dividend will be paid on May 16, 2003 to shareholders on the register at the close of business on April 22, 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. . Reporting To bring us in line with our peer group medical technology companies, most of which are in the US, we have commenced reporting operating profit before the amortization of goodwill and earnings per share before exceptional items and such amortization. We are also reporting operating profit segmented between our global business units on the same basis. This discloses operating margins at Orthopaedics of 21%, at Endoscopy of 18% and at Advanced Wound Management of 14%. Operating review Market growth remains buoyant and demographics and lifestyle trends remain positive industry indicators. Healthcare expenditure continues to grow in all our major markets. Technology is expanding the marketplace through the growth of less invasive invasive /in·va·sive/ (-siv) 1. having the quality of invasiveness. 2. involving puncture of the skin or insertion of an instrument or foreign material into the body; said of diagnostic techniques. and longer lasting surgical techniques and implants. With the introduction of new orthopaedic bearing materials, led by Oxinium from Smith & Nephew, surgeons are increasingly treating younger patient groups. New techniques continue to simplify and make procedures faster, and less invasive techniques in orthopaedics and endoscopy are taking hold as patients increasingly drive demand. Technology advancements in treating hard-to-heal wounds are driving strong growth in the active healing Healing See also Medicine. Achilles’ spear had power to heal whatever wound it made. [Gk. Lit.: Iliad] Agamede Augeas’ daughter; noted for skill in using herbs for healing. [Gk. Myth. sector of the advanced wound management market. Our strategy of innovation and differentiation within our product portfolio continues to drive sustainable sales growth. We also continue to invest in our sales forces. During the year Orthopaedics increased their sales force by 12%, Advanced Wound Management by 4%, while Endoscopy, including ORATEC, added 30%. We plan to continue to increase our sales forces on average by 10% each year for the foreseeable fore·see tr.v. fore·saw , fore·seen , fore·see·ing, fore·sees To see or know beforehand: foresaw the rapid increase in unemployment. future. To meet the demand created by sales growth in recent years, we completed two manufacturing projects in 2002. Orthopaedics enlarged its manufacturing facilities in Memphis, Tennessee For the ancient Egyptian capital, see . Memphis is a city in the southwest corner of Tennessee, and the county seat of Shelby County. Memphis rises above the Mississippi River on the 4th Chickasaw Bluff just below the mouth of the Wolf River. , by about a third with the building of a stand-alone knee manufacturing plant. Endoscopy increased manufacturing space in two factories and moved its headquarters to a new facility in Andover, Massachusetts Massachusetts (măsəch  `sĭts), most populous of the New England states of the NE United States. . In addition,
we commenced a project to expand manufacture of our Advanced Wound
Management products in Largo, Florida Largo is the third largest city in Pinellas County, Florida, USA and is part of the Tampa Bay Area. Centrally located, it is the crossroads of the county. As of the 2000 census, the City had a total population of 69,371. As of 2004, the population recorded by the U.S. .We invested 5 1/2% of sales revenue in research and development across our businesses. In 2002, 18% of sales were from products introduced in the last three years. Our group focus on unique methods to repair and heal the human body has led to group wide research in three fields: bioresorbable bioresorbable, n the materials that can be broken down by the body and that do not require mechanical removal, such as sutures or the chlorhexidine chip. materials to facilitate healing and surgical reconstruction; tissue engineering to help replace, repair and regenerate re·gen·er·ate v. re·gen·er·at·ed, re·gen·er·at·ing, re·gen·er·ates v.tr. 1. To reform spiritually or morally. 2. To form, construct, or create anew, especially in an improved state. damaged tissue; and non-invasive Non-invasive A procedure that does not penetrate the body. Mentioned in: Multiple-Gated Acquisition Scan non-invasive 1. not penetrating the skin, e.g. a non-invasive test. 2. devices to stimulate tissue repair. Orthopaedics Orthopaedics sales rose by an underlying 20%, and its performance continued to outpace out·pace tr.v. out·paced, out·pac·ing, out·pac·es To surpass or outdo (another), as in speed, growth, or performance. outpace Verb [-pacing, the market. 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: implant implant /im·plant/ (im-plant´) to insert or to graft (tissue, or inert or radioactive material) into intact tissues or a body cavity. sales grew by an impressive 20%, boosted by continued surgeon response to the Oxinium knee products added to the portfolio in 2002. We once again recorded industry-leading growth in this sector, led by knee growth of 33%, 10% of which was contributed by the introduction of our joint fluid therapy product, Supartz. Hip sales grew strongly at 17% led by the continued growth in revision procedures, increased penetration of our cross linked polyethylene polyethylene (pŏl'ēĕth`əlēn), widely used plastic. It is a polymer of ethylene, CH2=CH2, having the formula (-CH2-CH2-)n liners liners, n the liquid material applied to teeth to protect them within a cavity preparation, to seal carious tissues, or to release beneficial chemicals such as fluoride. and continued strength in our platform hip systems including Synergy The enhanced result of two or more people, groups or organizations working together. In other words, one and one equals three! It comes from the Greek "synergia," which means joint work and cooperative action. and Echelon. Trauma grew at 10%. Sales pricing in Orthopaedics increased by 2%. The Oxinium knee has been an outstanding success since its launch in 2001. We have continued to invest in the Oxinium platform with a femoral femoral /fem·o·ral/ (fem´or-al) pertaining to the femur or to the thigh. fem·o·ral adj. Of or relating to the femur or thigh. hip head launched this week, and in computer assisted surgery where we have received regulatory approval for hip, knee and trauma applications. A unicompartmental knee made of Oxinium will also be introduced in the second half of 2003. We are creating two divisions within our orthopaedic business, Reconstruction and Trauma. This initiative is aimed at sustaining our industry leading performance by improving the focus on these separate market sectors. This structure will enable us to bring technology to market faster and increase our customer responsiveness and satisfaction. Each division will have responsibility for developing global strategy and its own product development, marketing and sales functions. They will share common manufacturing and support organizations. The sales forces in major US cities will be specialized spe·cial·ize v. spe·cial·ized, spe·cial·iz·ing, spe·cial·iz·es v.intr. 1. To pursue a special activity, occupation, or field of study. 2. into separate reconstructive and trauma units on a phased basis beginning in the first quarter of this year. Endoscopy Endoscopy sales grew at an underlying 10%, with strong growth coming from outside the US. The company acquired the ORATEC minimally invasive joint and spine business in the year, which added 9% to sales growth and has given us a leading position in radio frequency technology in arthroscopy. Knee and shoulder 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 products grew particularly strongly at 21%, making the group the market leader in arthroscopic repair. New repair products were launched during the year to strengthen our position in the arthroscopy market, including TwinFix, a specialized shoulder repair device, and FastFix, a meniscal repair technique. New bioresorbable screws for ligament fixation fixation: see psychoanalysis. also performed well. Electroblade has brought us a unique product that combines simultaneous mechanical resection resection /re·sec·tion/ (-sek´shun) excision. root resection apicoectomy. transurethral resection of the prostate (TURP), transurethral prostatic resection and radio frequency coagulation coagulation (kōăg'y lā`shən), the collecting into a mass of minute particles of a solid dispersed throughout a liquid (a sol), usually followed by the precipitation or of
soft tissue. We also introduced a bipolar (1) See bipolar transmission.(2) One of two major categories of transistor; the other is "field effect transistor" (FET). Although the first transistors and first silicon chips were bipolar, most chips today are field effect transistors wired as CMOS logic, which cutting and ablation ablation /ab·la·tion/ (-shun) 1. separation or detachment; extirpation; eradication. 2. removal or destruction, especially by cutting. ab·la·tion n. system for the Vulcan generator generator, in electricity, machine used to change mechanical energy into electrical energy. It operates on the principle of electromagnetic induction, discovered (1831) by Michael Faraday. platform and a thermal decompression decompression /de·com·pres·sion/ (de?kom-presh´un) removal of pressure, especially from deep-sea divers and caisson workers to prevent bends, and from persons ascending to great heights. catheter catheter /cath·e·ter/ (kath´e-ter) 1. a tubular, flexible surgical instrument that is inserted into a cavity of the body to withdraw or introduce fluid. 2. urethral c. for herniated herniated /her·ni·at·ed/ (her´ne-at?ed) protruding like a hernia; enclosed in a hernia. her·ni·at·ed adj. spinal discs. The Digital Operating Room operating room n. Abbr. OR A room equipped for performing surgical operations. concept continued to gain ground with installations in leading hospitals. Advanced Wound Management In its first full year of focus as an advanced wound management business, we strengthened our world-leading position in advanced treatments for hard-to-heal wounds. Underlying sales growth was 11%, with the Allevyn product range achieving 21%. We have successfully integrated into the business the advanced wound products of Beiersdorf and the Acticoat Acticoat™ Wound care A silver nitrate-based antibacterial burn dressing for wound protection. See Pressure ulcer. silver product for burns acquired in 2001, and these products are growing strongly. Towards the end of the year, we secured 100% ownership of the Dermagraft and TransCyte joint arrangement by acquiring ATS's 50% share. Reimbursement Reimbursement Payment made to someone for out-of-pocket expenses has incurred. for Dermagraft continues to progress well, with 88% of the outpatient outpatient /out·pa·tient/ (-pa-shent) a patient who comes to the hospital, clinic, or dispensary for diagnosis and/or treatment but does not occupy a bed. out·pa·tient n. population now covered in the US. Sales of Dermagraft in its US launch year achieved (pounds)3m. Outlook The markets on which we focus continue to demonstrate robust growth. Smith & Nephew is achieving sales growth that outpaces the industry, and is demonstrating its ability to grow share and position within the Orthopaedics, Endoscopy, and Advanced Wound Management markets. In 2003, we will see the impact of our strong ongoing sales and profit growth on our reported results without the impact of divestments. We have a leading range of technology and products that repair and heal the human body. We will maintain our progress by investing in new and differentiated technologies which bring benefits to patients, and in the specialist sales forces to bring these products to the medical community. We will continue to invest in our businesses by increasing sales force strength, adding manufacturing capacity and enhancing new product development to generate vigorous growth. We will also acquire businesses or technologies that strengthen our 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. prospects. We remain confident of delivering sustainable growth and believe we are well placed to achieve our mid-teens underlying pre-goodwill amortization EPS growth target going forward. 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. 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.
SMITH & NEPHEW plc
2002 PRELIMINARY RESULTS continued
Group Profit and Loss Account for the Year Ended December 31, 2002
Notes 2002 2001
(pounds)m (pounds)m
Turnover 1
Ongoing operations 1,083.7 943.0
Operations contributed to the joint
venture 2 - 35.3
------------------------------
Continuing operations 1,083.7 978.3
Discontinued operations 3 26.2 103.4
Group turnover 1,109.9 1,081.7
Share of joint venture 155.0 123.6
------------------------------
1,264.9 1,205.3
==============================
Operating profit 1
Ongoing operations
-before goodwill amortization
and exceptional items 196.0 170.8
-goodwill amortization (1) (17.5) (10.4)
-exceptional items (2) 5 (29.9) (19.3)
------------------------------
148.6 141.1
Operations contributed to the joint
venture
-before exceptional items - 3.6
-exceptional items(2) 5 - (1.8)
------------------------------
Continuing operations 148.6 142.9
Discontinued operations 3 2.1 11.1
------------------------------
150.7 154.0
Share of operating profit of the
joint venture
-before exceptional items 19.6 12.8
-exceptional items(2) 6 (2.6) (5.0)
------------------------------
167.7 161.8
Share of operating profit of the
associated undertaking 4.9 -
------------------------------
172.6 161.8
Discontinued operations - net
profit on disposals(2) 3 18.0 49.2
------------------------------
Profit on ordinary activities
before interest 190.6 211.0
Interest payable 7 (12.7) (17.4)
------------------------------
Profit on ordinary activities
before taxation 177.9 193.6
Taxation 8 65.8 64.0
------------------------------
Attributable profit for the year 112.1 129.6
Ordinary dividends 9 44.6 42.9
------------------------------
Retained profit for the year 67.5 86.7
==============================
Basic earnings per ordinary share 10 12.11p 14.07p
Diluted earnings per ordinary share 10 12.02p 13.95p
Profit before exceptional items (2) (pounds)192.4m (pounds)170.5m
Profit before goodwill amortization
and exceptional items (1)(2) 11 (pounds)209.9m (pounds)180.9m
Basic earnings per ordinary share
before exceptional items (2) 14.13p 12.83p
Basic earnings per ordinary share
before goodwill amortization and
exceptional items (1)(2) 16.02p 13.96p
SMITH & NEPHEW plc
2002 PRELIMINARY RESULTS continued
Abridged Group Balance Sheet as at December 31, 2002
2002 2001
(pounds)m (pounds)m
Intangible fixed assets 317.2 187.8
Tangible fixed assets 255.8 245.0
Investment in joint venture (3) 115.0 114.0
Investment in associated undertaking (4) 8.5 -
Investments 8.2 25.7
--------------------
704.7 572.5
--------------------
Stocks 229.5 232.2
Debtors 280.7 266.8
Cash 22.5 26.4
Creditors (315.9) (342.8)
--------------------
216.8 182.6
Borrowings (316.1) (255.2)
Provisions - deferred taxation (56.0) (55.4)
- other (32.1) (39.9)
--------------------
Shareholders funds 517.3 404.6
====================
Currency swap assets and liabilities previously reported within
cash and borrowings have been reclassified to debtors and creditors
respectively and comparative figures have been restated.
(3) Investment in joint venture comprises goodwill (pounds)70.3
million, share of gross tangible assets (pounds)106.2 million less
share of gross liabilities (pounds)61.5 million.
(4) Investment in associated undertaking comprises goodwill
(pounds)15.4 million less share of net liabilities (pounds)6.9
million.
Abridged Movement in Shareholders' Funds
for the Year Ended December 31, 2002
2002 2001
(pounds)m (pounds)m
Opening shareholders funds 404.6 268.0
Attributable profit 112.1 129.6
Dividends (44.6) (42.9)
Exchange adjustments 9.1 (8.8)
Goodwill on disposals/operations contributed to
the joint venture 30.0 17.9
Unrealized gain on formation of the joint venture - 31.8
Movements relating to the QUEST (2.3) (2.1)
Issue of shares 8.4 11.1
--------------------
Closing shareholders' funds 517.3 404.6
====================
SMITH & NEPHEW plc
2002 PRELIMINARY RESULTS continued
Abridged Group Cash Flow for the Year Ended December 31, 2002
2002 2001
(pounds)m (pounds)m
Operating profit 150.7 154.0
Depreciation, amortization and exceptional write-
off (1) 94.4 60.3
Working capital and provisions (35.8) (22.4)
--------------------
Net cash inflow from operating activities (2) 209.3 191.9
Capital expenditure and financial investment (86.1) (72.6)
--------------------
Operating cash flow 123.2 119.3
Joint venture dividend 3.9 -
Interest (10.2) (16.5)
Taxation (52.3) (76.2)
Dividends (43.5) (42.0)
Acquisitions (206.3) (69.3)
Disposals 71.8 61.7
Joint venture formation 5.7 12.6
Issues of ordinary share capital 6.1 9.0
--------------------
Net cash outflow (101.6) (1.4)
Exchange adjustments 68.2 (5.8)
Opening net debt (243.5) (236.3)
--------------------
Closing net debt (276.9) (243.5)
====================
Gearing 54% 60%
(1) Includes goodwill amortization of (pounds)17.5 million (2001 - (pounds)10.4 million) and (pounds)17.5 million write-off Write-Off A reduction in the value of an asset or earnings by the amount of an expense or loss. Companies are able to write off certain expenses that are required to run the business, or have been incurred in the operation of the business and detract from retained revenues. of the group's equity investment in Advanced Tissue Sciences, Inc. (2) After (pounds)19.3 million (2001 - (pounds)23.5 million) of outgoings on rationalisation, acquisition integration and divestment divestment to strip one's investment from an entity. costs. Net debt includes (pounds)16.7m of net currency swap Currency Swap A swap that involves the exchange of principal and interest in one currency for the same in another currency. Notes: Currency swaps were originally done to get around the problem of exchange controls. assets (2001 - net currency swap liabilities of (pounds)14.7m)
Statement of Total Recognized Gains and Losses
for the Year Ended December 31, 2002
2002 2001
(pounds)m (pounds)m
Attributable profit 112.1 129.6
Unrealized gain on formation of the joint venture - 31.8
Currency translation differences on foreign
currency net investments 9.1 (8.8)
--------------------
Total recognized gains and losses 121.2 152.6
====================
SMITH & NEPHEW plc
NOTES TO THE 2002 PRELIMINARY RESULTS
1. Segmental performance for the year ended December 31, 2002 was
as follows:
Group turnover by business segment
Underlying
2002 2001 sales
(pounds)m (pounds)m growth
Orthopaedics 470.2 404.6 20%
Endoscopy 291.8 252.8 10%
Advanced Wound
Management 321.7 285.6 11%
--------- --------- ---------
Ongoing
operations 1,083.7 943.0 14%
========= ========= =========
Group operating profit by business segment
2002 2001
(pounds)m (pounds)m
Orthopaedics 98.2 87.9
Endoscopy 53.8 46.8
Advanced
Wound
Management 44.0 36.1
--------- ---------
196.0 170.8
Goodwill
amortization (17.5) (10.4)
Exceptional
items (29.9) (19.3)
--------- ----------
Ongoing
operations 148.6 141.1
========= ==========
Group turnover by geographic market
Underlying
2002 2001 sales
(pounds)m (pounds)m growth
Europe(5) 318.7 268.4 12%
America 610.5 534.9 15%
Africa, Asia
and
Australasia 154.5 139.7 16%
--------- --------- ---------
Ongoing
operations 1,083.7 943.0 14%
========= ========= =========
(5) Includes United Kingdom sales of (pounds)87.3 million (2001 - (pounds)77.5 million). Underlying sales growth is sales growth adjusted to eliminate the effect of translational currency, acquisitions and disposals.
SMITH & NEPHEW plc
NOTES TO THE 2002 PRELIMINARY RESULTS continued
2. On April 1, 2001, the casting and bandaging and traditional
woundcare businesses were contributed to a joint venture with
Beiersdorf AG called BSN Medical in return for a 50% equity
interest. The results of these businesses prior to contribution
represent operations contributed to the joint venture in the group
profit and loss account.
3. On March 27, 2002, the rehabilitation business was disposed of to
AbilityOne Corporation (AbilityOne) for (pounds)71.3 million cash
and a 21.5% equity interest in the combined business. AbilityOne
is accounted for as an associated undertaking under the net equity
method. The results of rehabilitation prior to disposal represent
discontinued operations. The net profit on disposals of
(pounds)18.0 million is stated after deducting (pounds)30.0
million of goodwill previously written off to reserves on
acquisition. Discontinued operations in 2001 also include the
results and net profit on disposal of the ear, nose and throat
business.
4. On March 28, 2002, ORATEC Interventions, Inc., a company that
applies radio frequency energy to treat joint and spine disorders,
was acquired for a net cost of (pounds)191.2 million. The fair
value of assets acquired was (pounds)25.5 million and goodwill
arising was (pounds)165.7 million. On November 27, 2002, the group
acquired the remaining 50% interest in the Dermagraft joint
arrangements it held with Advanced Tissue Sciences, Inc.
5. Operating exceptional items within ongoing operations comprise a
(pounds)17.5 million write down against the group's trade
investment in Advanced Tissue Sciences, Inc., (pounds)4.0 million
costs of rationalization consequent on the contribution of
businesses to BSN Medical and manufacturing rationalisation (2001
- (pounds)10.4 million) and (pounds)8.4 million for the
acquisition integration costs relating to Oratec and Dermagraft
(2001 - (pounds)8.9 million). Operating exceptional items within
operations contributed to the joint venture in 2001 represented
manufacturing rationalisation costs.
6. The group's share of exceptional items of the joint venture
relates to manufacturing rationalization costs of BSN Medical.
7. Interest includes (pounds)1.6 million (2001 - (pounds)0.9 million)
in respect of the group's share of the net interest charge of BSN
Medical and (pounds)0.9 million (2001 - nil) in respect of the
group's share of the net interest charge of AbilityOne.
8. Taxation of (pounds)61.6 million (2001 - (pounds)52.3 million)
arises on the profit before goodwill amortization and exceptional
items, an effective rate of 29% (2001 - 29%) of which (pounds)5.7
million (2001 - (pounds)3.9m) arises in BSN Medical and
(pounds)1.0 million (2001 - nil) arises in AbilityOne. Taxation on
the net gain on disposal is (pounds)16.9 million (2001 -
(pounds)17.7 million) and tax relief of (pounds)12.7 million (2001
- (pounds)6.0 million) arises as a consequence of the exceptional
costs of rationalization and acquisition integration of which
(pounds)0.6 million (2001 - (pounds)1.4 million) is in BSN
Medical.
9. A final dividend of 3.0 pence per ordinary share is recommended
(2001 - 2.9 pence per ordinary share) which, together with the
interim dividend of 1.8 pence per share (2001 - 1.75 pence) paid
on November 15, 2002, makes a total for the year of 4.8 pence
(2001 - 4.65 pence). The final dividend is payable on May 16, 2003
to shareholders whose names appear on the register at the close of
business on April 22, 2003. Shareholders may participate in the
dividend re-investment plan.
SMITH & NEPHEW plc
NOTES TO THE 2002 PRELIMINARY RESULTS continued
10. The basic average number of ordinary shares in issue was 926
million (2001 - 921 million). The diluted average number of
ordinary shares in issue was 933 million (2001 - 929 million).
11. Profit before goodwill amortisation and exceptional items states
profit on ordinary activities before taxation before charging
goodwill amortisation and exceptional items and before the net
profit on the disposal of discontinued operations. Earnings per
ordinary share before goodwill amortisation and exceptional items
is based on the attributable profit before accounting for these
items and taxation on the exceptional items.
12. This financial statement does not constitute the statutory
accounts. It has been extracted from the statutory accounts of
Smith & Nephew plc on which the auditors have given an unqualified
report but which have not yet been filed with the Registrar of
Companies.
|
|
||||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion