Investor Presentation October - December 2020

Forward looking statements and non-IFRS measures

This document may contain forward-looking statements that may or may not prove accurate. For example, statements regarding expected revenue growth and trading profit margins, market trends and our product pipeline are forward-looking statements. Phrases such as "aim", "plan", "intend", "anticipate", "well-placed", "believe", "estimate", "expect", "target", "consider" and similar expressions are generally intended to identify forward-looking statements. Forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause actual results to differ materially from what is expressed or implied by the statements. For Smith+Nephew, these factors include: risks related to the impact of COVID-19, such as the depth and longevity of its impact, government actions and other restrictive measures taken in response, material delays and cancellations of elective procedures, reduced procedure capacity at medical facilities, restricted access for sales representatives to medical facilities, or our ability to execute business continuity plans as a result of COVID-19; economic and financial conditions in the markets we serve, especially those affecting health care providers, payers and customers (including, without limitation, as a result of COVID-19); 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 (including, without limitation, as a result of COVID-19); 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; relationships with healthcare professionals; reliance on information technology and cybersecurity; 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 forward-looking statements attributable to Smith+Nephew are qualified by this caution. Smith+Nephew does not undertake any obligation to update or revise any forward-looking statement to reflect any change in circumstances or in Smith+Nephew's expectations. The terms 'Group' and 'Smith+Nephew' are used for convenience to refer to Smith & Nephew plc and its consolidated subsidiaries, unless the context requires otherwise.

Certain items included in 'trading results', such as trading profit, trading profit margin, tax rate on trading results, trading cash flow, trading profit to cash conversion ratio, EPSA, leverage ratio, and underlying growth are non-IFRS financial measures. The non-IFRS financial measures in this announcement are explained and reconciled to the most directly comparable financial measure prepared in accordance with IFRS in our Second Quarter and First Half 2020

Results announcement dated 29 July 2020.

2

Our history

1856

1896

1914

Days after the outbreak of WW1,

Thomas James Smith

Horatio Nelson Smith

we received an order to provide

1856

opened a chemist shop in Hull,

entered into apartnership

surgical and field dressing

From50

UK and develops a new method

with his uncleforming

supplies to French

Smith+Nephew

for refining cod liver oil

TJSmith & Nephew

army within 5months

To1200

established

1986

During WW1, staff grew

from 50 to 1,200

Key acquisitions of Richards Medical Company

1937

in Memphis, specialists in orthopaedic products

and DYONICS, an arthroscopy specialists

We were listed on the

based in Andover

1953

London stock exchange

1928

1995

We developed a special low-temperatureplaster

We produced an

for the Everest climbers on the 1953 expedition.

experimental bandage

Acquired

It enabled them to send back their camera films, sealed

ElastoplastTM

Acufex Microsurgical Inc,

and airtight!. This same research led to the development

making us a market leader in

of importantindustrial products

arthroscopic surgicaldevices

2001

1999

We were listed on the New York Stock

OXINIUM, a new material that

Exchange and in 2001 became a constituent

improves performance and increases

member of the UK FTSE-100 index

the service life of total joint

replacement systems, firstintroduced

2014

2013

2011

Acquired ArthrocareCorp.

JOURNEY II BCS sets a new standardinknee

PICO, the first pocket-sized,single-use

to expand our sports

implant performance,designed

system, revolutionizes the negative

medicine portfolio

to empower patients to return

pressure wound therapymarket

17,500+

to an activelifestyle

2019

2020

We exist to restore people'sbodies and their self-belief

Expanding in technologies of the

We are proud of what we do

future, investing inOrthopaedics,

and value our 17,500 employees

by using technologies to take the limits off living.

Biologics and Digital Surgery.

who make thispossible

We call this purpose "LifeUnlimited"

Trademark of Smith & Nephew, ©2020 Smith & Nephew

Over

Today

100

and growing

3

100

Smith+Nephew is a global Medical Device portfolio company, that has been trading for over 160 years, and operates in more

FTSE100

A constituent of the UK's FTSE100, with ADRs traded on the New York Stock Exchange

Shares

S&N has a progressive dividend policy, and has paid a dividend every year since 1937

than 100 countries

$5.1bn

~17,500

Annual sales in 2019

We have around 17,500

were $5.1 billion

employees globally

4

A portfolio medical device company

ALLEVYN LIFE

Advanced

Advanced Foam

Wound Dressings

Wound Care

Collagenase

Advanced

SANTYL Ointment

Wound

Enzymatic debrider

Bioactives

ENT

$5.1bn

Arthroscopic

Revenues

COBLATION

Enabling

(2019)

Wand

Technologies

REGENETEN

Sports Medicine

Bioinductive Implant

Joint Repair

Other Recon

Advanced

PICO

Negative Pressure

Wound Devices

Wound Therapy

JOURNEY II BCS

Bi-Cruciate

Stabilised

Knees

Knee System

POLAR3

Hips

Total Hip

Solution

EVOS SMALL

Trauma

Plating System

NAVIO

Surgical

System

5

Leading positions in stable growing markets

Hip & Knee Implants

$14.8bn market

(growth +3%)

Others

15%

Zimmer

Smith+

Biomet

Nephew

32%

12%

DePuy

Stryker

Synthes

22%

19%

#4 position

Sports Medicine

$5.3bn market

(growth +5%)

Others

17%

DePuy

Arthrex

Synthes

33%

13%

Stryker

Smith+

11%

Nephew

26%

#2 position

Advanced Wound Management

$9.4bn market

(growth +4%)

3M

19%

Others

51%Smith+

Nephew

14%

Molnlycke

Convatec 9%

7%

#2 position

1)

Data used in 2019 estimates generated by Smith & Nephew is based on publicly available sources and internal analysis and represents an indication of market shares

6

2)

DePuy Synthes is a division of Johnson & Johnson.

Our performance

Revenue

$5,138m +4.4%*

5138

4904

4634 4669 4765

2015 2016 2017 2018 2019

Adjusted earnings per share (EPSA)

102.2¢

+5% CAGR

85.1

82.6

94.5

100.9

102.2

2015 2016 2017 2018 2019

Trading profit

$1,169m

22.8% margin

1169

1099

1123

1020

1048

2015 2016 2017 2018 2019

Dividend per share

37.5¢

+5% CAGR

35.0

36.0

37.5

30.8

30.8

2015 2016 2017 2018 2019

Trading cash conversion

83%

85%

90%

85%

83%

75%

2015 2016 2017 2018 2019

Net debt

$1,600m

1361

1550

1600

1281

1104

2015 2016 2017 2018 2019

* Underlying growth percentage after adjusting for the effect of currency translation, acquisitions and disposals.

7

Our enterprise strategic imperatives

Achieve the full

Transform the business

Expand in high-growth

Strengthen talent and

Become the best owner

potential of our

through enabling

segments

capabilities

portfolio

technologies

GROW

TOGETHER

EFFECTIVELY

6%

4%

2%

0%

Year on year % underlying revenue growth

H1 2018

H2 2018

H1 2019

H2 2019

Performance improved over the course of the 2019, with 3.9% underlying revenue growth in the first half and 4.9% in the second half. All three global franchises delivered an improved revenue growth performance over the prior year

8

Meaningful new revenue growth drivers accumulating across the portfolio in 2020

New launches from internal R&D

CORI Surgical

INTELLIO Connected

COBLATION

System

Tower

HALO Wand

US launch

US launch

US launch

announced

announced

Q1 2020

July 2020

July 2020

+ pipeline

Adding growth through M&A

Tuck-ins in high growth areas

Extremity Orthopaedics business

Digital technology acquisitions

Adding value to recent acquisitions

CE Mark for

CE Mark for

Bioactives salesforce selling

REGENETEN

NOVOSTITCH PRO

Grafix/Stravix

9

Integra Orthopaedic Extremities acquisition - expanding in high growth segment

Comprehensive portfolio of

extremities assets

ShoulderAnkle

Titan Modular Shoulder

Cadence Total Ankle

System 2.5

System

Upper extremities

Lower extremities

Freedom Wrist

Panta 2 TTC Arthrodesis

Arthroplasty System

Nail System

US market estimated to grow 6-7% per annum

Deal benefits

  • Purchase price $240m
  • $90m sales in 2019
  • Accretive to S+N's weighted average market growth rate
  • Adds team of Extremities specialists with established distribution
  • Expect double digit revenue growth
  • Dilutive to trading profit 2021, 2022
  • ROIC to reach or exceed WACC in year 5

10

2020 quarterly underlying sales development by region

US

Other established

Emerging markets

markets

  • Continued recovery in elective procedures
  • Elective procedure restrictions being relaxed in Texas; restrictions now lifted in all other states

Germany, France return to

Year-on-year growth in China,

growth

procedures >80% of normal

Australia, Japan procedures at

India, Latin America, South

~90% of normal in early Oct

Africa yet to show significant

recovery

11

Q3 recovery, visibility still limited

Quarterly Group underlying

revenue growth

COVID-19 significant uncertainty continues

- geographical variation and local restrictions

- most healthcare systems better prepared

- assuming impact continues into H1 2021

Full year 2020 guidance remains withdrawn

Focused on delivering growth, investments sustained

- R&D programme

- recent M&A (short-term dilution)

Negative operating leverage while volumes reduced

- reviewing operational efficiency plans

Transactional FX headwind

12

Q3 revenue:

$1,200m, -4.2% underlying, -3.7% reported

Revenue split

Franchise performance

Geographical performance

Orthopaedics

-2.8%

Knees

-9.5%

Hips

7.1%

Other Recon

-3.1%

Trauma

-1.4%

Sports Medicine, ENT

-4.5%

Sports Medicine Joint Repair

-2.7%

Arthroscopic Enabling Technologies

-1.6%

ENT

-24.8%

Advanced Wound Management

-6.1%

AWC

-6.9%

AWB

-4.5%

AWD

-6.9%

13

Updated APEX targets

Become the best owner

APEX - Jan 2018

APEX - 2020 update

Initial targets:

Updated targets:

Benefits of $160m p.a. by 2022

Benefits of $190m p.a.

Total one-off costs of $240m

Total one-off costs of $290m

~75% of benefits, >75% of costs by 2020

Closing in full by end of 2020

14

Excellence through the value chain

Become the best owner

Operations transformation

Commercial transformation

Key initiatives:

Key initiatives:

Optimised manufacturing network

Increasing share of direct distribution

Rollout of lean methodology

Sales training and excellence

Distribution network and supply

Enhancing professional education

chain opportunities

15

Appendices

16

Franchise revenue analysis

2019

2020

Q1

Q2

Q3

Q4

Full Year

Q1

Q2

Q3

Q3

Growth

Growth

Growth

Growth

Growth

Growth

Growth

Revenue

Growth

%

%

%

%

%

%

%

$m

%

Orthopaedics

3.9

3.6

3.4

5.1

4.0

(8.3)

(34.0)

512

(2.8)

Knee Implants

4.1

4.3

4.6

4.7

4.4

(10.6)

(46.9)

219

(9.5)

Hip Implants

2.4

2.9

2.6

0.7

2.1

(8.6)

(26.9)

156

7.1

Other Reconstruction

6.9

3.5

1.5

31.6

12.6

19.4

(51.5)

19

(3.1)

Trauma

4.8

2.8

2.2

7.0

4.3

(7.1)

(11.1)

118

(1.4)

Sports Medicine & ENT

5.3

5.6

6.9

10.1

7.0

(9.5)

(33.3)

350

(4.5)

Sports Medicine Joint Repair

11.0

11.9

12.2

14.0

12.3

(7.1)

(32.0)

186

(2.7)

Arthroscopic Enabling Technologies

(1.1)

(2.1)

0.8

5.1

0.8

(11.2)

(32.1)

136

(1.6)

ENT

4.2

6.3

5.3

10.7

6.7

(15.2)

(44.0)

28

(24.8)

Advanced Wound Management

4.1

1.2

2.1

1.9

2.2

(4.0)

(17.6)

338

(6.1)

Advanced Wound Care

2.4

(1.3)

(2.3)

0.4

(0.2)

(6.7)

(14.6)

163

(6.9)

Advanced Wound Bioactives

(0.7)

(1.9)

2.8

(1.9)

(0.4)

(8.6)

(18.7)

117

(4.5)

Advanced Wound Devices

16.6

16.3

15.4

15.4

15.9

13.0

(23.7)

58

(6.9)

Total

4.4

3.5

4.0

5.6

4.4

(7.6)

(29.3)

1,200

(4.2)

All revenue growth rates are on an underlying basis and without adjustment for number of selling days.

20-Nov-20

17

The 2019 growth rates for the Advanced Wound Care, Advanced Wound Bioactives and Advanced Wound Devices franchises have been re-presented in order to present consistent analysis to the 2020 results.

There has been no change in growth for the Advanced Wound Management franchise or the total Group in any period for 2019.

Regional revenue analysis

2019

2020

Q1

Q2

Q3

Q4

Full Year

Q1

Q2

Q3

Q3

Growth

Growth

Growth

Growth

Growth

Growth

Growth

Revenue

Growth

%

%

%

%

%

%

%

$m

%

US

4.0

2.3

2.7

4.2

3.3

(4.7)

(31.8)

630

0.9

Other Established Markets(1)

(0.1)

(1.3)

(0.3)

2.4

0.2

(6.3)

(30.8)

372

(6.2)

Established Markets

2.2

0.9

1.5

3.5

2.1

(5.4)

(31.4)

1,002

(1.8)

Emerging Markets

15.3

16.2

16.0

16.6

16.1

(17.9)

(20.2)

198

(14.5)

Total

4.4

3.5

4.0

5.6

4.4

(7.6)

(29.3)

1,200

(4.2)

(1) Other Established Markets' are Australia, Canada, Europe, Japan and New Zealand.

All revenue growth rates are on an underlying basis and without adjustment for number of selling days

18

H1 trading income statement

2020

2019

$m

$m

Revenue

2,035

2,485

Cost of goods sold

(640)

(646)

Gross profit

1,395

1,839

Gross profit margin

68.5%

74.0%

Selling, general and admin

(1,089)

(1,178)

Research and development

(134)

(129)

Trading profit

172

532

Trading profit margin

8.5%

21.4%

19

H1 EPSA and EPS

2020

2019

Growth

$m

$m

%

Trading profit

172

532

(68%)

Net interest payable

(21)

(25)

Other finance costs

(7)

(6)

Share of results from associate

(3)

(3)

Adjusted profit before tax

141

498

(72%)

Taxation on trading result

(24)

(98)

Adjusted attributable profit

117

400

Weighted average number of shares (m)

874

874

Adjusted earnings per share ("EPSA")

13.4¢

45.8¢

(71%)

Earnings per share ("EPS")

11.5¢

35.3¢

(67%)

Dividend per share

14.4¢

14.4¢

0%

H1 2020 tax

rate(1): 17.0%

20

  1. Tax rate on trading result

Trading days per quarter

Q1

Q2

Q3

Q4

Full year

2019

63

63

63

62

251

2020

62

63

63

64

252

2021

64

64

63

60

251

21

Sustainability Targets

PeoplePlanet

Products

Creating a lasting positive impact on our communities

Between 2020 and 2030, contribute 1 million volunteer hours to the communities in which we live and work.

Empower and promote the inclusion of all.

A medical technology business with a positive impact

Achieve an 80% absolute reduction in total life cycle greenhouse gas emissions by 2050, beginning by implementing 100% renewable electricity (e.g. solar or wind) plans at our facilities in Memphis (US) and Malaysia by 2022, and at all of our strategic manufacturing facilities by 2025.

Achieve zero waste to landfill at our facilities in Memphis (US) and Malaysia by 2025 and at all of our strategic manufacturing facilities by 2030.

Innovating sustainably

By 2022, include sustainability review in New Product Development phase reviews for all new products and product acquisitions.

By 2025, incorporate at least 30% post-consumer recycled content into all packaging materials.

By 2025, complete supply chain assessment of all suppliers and subsequent tier levels to assure compliance with our sustainability requirements.

22

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Smith & Nephew plc published this content on 20 November 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 20 November 2020 18:04:01 UTC