Smith & Nephew 2008 Preliminary results - a year of sound progress Smith & Nephew plc (LSE :SN ) (NYSE :SNN ), the global medical technology business, announces its results for the fourth quarter ended 31 December 2008. 3 months* to 12 months to ------------------------- ------------------------- 31 Dec 31 Dec 31 Dec 31 Dec 2008 2007 Underlying 2008 2007 Underlying USDm USDm increase % USDm USDm increase % Revenue 960 967 7 3,801 3,369 6 Trading Profit(2) 222 222 8 776 706 6 Operating Profit(2)(5) 179 150 630 493 Trading margin (%) 23.2 23.1 20.4 21.0 EPSA (cents)(3) 16.6 16.6 55.6 52.0 EPS (cents)(5) 13.3 10.4 42.6 34.2 Business Unit Revenue(1) Orthopaedics 550 550 6 2,158 1,858 5 Endoscopy 206 201 9 800 732 8 Advanced Wound Management 204 216 7 843 779 7 * Q4 2008 comprises 63 trading days (2007 - 61 trading days) Q4 Commentary - Underlying Group revenue grew by 7% - Orthopaedics revenues increased by 6%, reflecting a strong US performance - Endoscopy delivered another good result growing revenues by 9% - Advanced Wound Management grew revenues by 7%, driven by a strong European and rest of the world performance - Trading margin of 23.2%, marginally up on last year, impacted by NPWT investment, Plus and compliance costs - EPSA was maintained at 16.6c Full Year Highlights - Group reported revenue up 13% to USD3.8 billion, underlying growth of 6% - Trading profit up 10% to USD776 million, up 6% underlying - EPSA increased 7% to 55.6c - Orthopaedics revenues grew at 5% (8% excluding Plus impact(4)) - Endoscopy finished the year with 8% growth. Our actions leading to an improving US performance trend - Advanced Wound Management, at 7% growth, delivered its best growth performance for 5 years - Trading margin at 20.4%, masking the longer term operating efficiency improvements we have made to our businesses - Second interim dividend up 10% to 8.12c per share Commenting on the full year, David Illingworth, Chief Executive of Smith & Nephew, said: "We finished the year in a positive frame of mind. We grew underlying sales for the year by 6%, with a similar increase in trading profit. All of our businesses reported underlying sales growth. These achievements are particularly notable against the backdrop of the slowdown in the global economy and a number of industry-wide and company specific issues. "We remain alert to any changes in the near-term outlook in our businesses and believe that our company-wide Earnings Improvement Programme, which we started two years ago, gives us a head start in dealing with any tougher operating climate. "We are focused on extending our track record of delivering innovative products, bringing clinical benefits to patients and economic benefits to healthcare providers. We put our customers first, listen to their needs and deliver on our promises. The Board has continued its policy of increasing, by 10%, the dividend which is declared in US dollars, creating a significant additional benefit for sterling-based shareholders. I am confident we will continue to deliver sustainable long-term growth for our shareholders." Analyst presentation and conference call An analyst presentation and conference call to discuss Smith & Nephew's fourth quarter results will be held at 9.00am GMT/4.00am EST today, Thursday 12 February. This will be broadcast live on the company's website and will be available on demand shortly following the close of the call at http://www.smith-nephew.com/Q408. A podcast will also be available at the same address. If interested parties are unable to connect to the web, a listen-only service is available by calling +44 (0) 20 8322 2048 in the UK or +1 866 432 7175 in the US. Analysts should contact Samantha Hardy on +44 (0)20 7960 2257 or by email at samantha.hardy@smith-nephew.com for conference details. Notes (1) Unless otherwise specified as 'reported', all revenue increases throughout this document are underlying increases after adjusting for the effects of currency translation and acquisitions. See note 3 to the financial statements for a reconciliation of these measures to results reported under IFRS. (2) A reconciliation from operating profit to trading profit is given in note 4 to the financial statements. The underlying increase in trading profit is the increase in trading profit after adjusting for the effects of currency translation and acquisitions. (3) Adjusted earnings per ordinary share ("EPSA") growth is as reported, not underlying, and is stated before restructuring and rationalisation costs, acquisition related costs, amortisation and impairment of acquisition intangibles, legal settlement (in 2007) and taxation thereon. See note 2 to the financial statements. (4) Adjusted for the impact of Plus sales lost following the harmonisation of sales practices in parts of Europe. (5) Operating profit and earnings per share for the comparative 3 months and 12 months ended 31 December 2007 have been adjusted for the finalisation of IFRS 3 acquisition accounting for Plus. See note 12 to the financial statements. (6) All numbers given are for the quarter ended 31 December 2008 unless stated otherwise. Enquiries Investors Liz Hewitt +44 (0) 20 7401 7646 Phil Cowdy Smith & Nephew Media Jon Coles +44 (0) 20 7404 5959 Justine McIlroy Brunswick - London Cindy Leggett-Flynn +1 (212) 333 3810 Brunswick - New York To view the full text of this press release, paste the following link into your web browser: http://www.rns-pdf.londonstockexchange.com/rns/1969N_1-2009-2-12.pdf This information is provided by RNS The company news service from the London Stock Exchange
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