Life Unlimited
Annual Report
2025
1
These non-IFRS financial measures are explained and reconciled to the most directly comparable financial measure prepared
in accordance with IFRS on pages 285–292.
The images used throughout the report represent the ways that Smith+Nephew is taking the limits off living and helping
patients live Life Unlimited. Images used are not photographs of our patients unless expressly indicated.
Performance
Group revenue
Operating profit
Trading profit
1
Earnings per
share (EPS)
Adjusted Return on
Invested Capital (ROIC)
1
$6,164m
$794m
$1,211m
72.1¢
8.3%
+6.1%
Reported
+5.3%
Underlying
1
+20.7%
+15.5%
+52.8%
+90bps
Cash generated
from operations
Operating profit
margin
Trading profit
margin
1
Adjusted earnings
per share
1
(EPSA)
Dividend per share
$1,549m
12.9%
19.7%
102.0¢
39.1¢
+24.4%
+160bps
+160bps
+21.0%
+4.3%
Contents
Strategic Report
Our performance
0
At a glance
2
Chair’s statement
4
Chief Executive Officer’s review
6
Our marketplace
12
Our business model
14
Key Performance Indicators
16
Financial review
18
Together we are…
…Innovators
Research & Development
27
Manufacturing, Quality
& Regulatory Affairs
33
…Serving our customers
Our strong sales force
37
Orthopaedics
39
Sports Medicine & ENT
44
Advanced Wound Management
49
…Living without limits
Our patient case studies
54
…Building our Way to Win
Our cultural framework
59
…Working responsibly
ESG excellence
65
TCFD reporting
69
Risk report
78
Governance
Governance at a glance
98
Board leadership and
Company purpose
102
S172 statement
114
Our purpose and stakeholders
117
Nomination & Governance
Committee Report
127
Compliance & Culture
Committee Report
136
Audit Committee Report
141
Remuneration Committee Report
147
Directors’ Report
194
Accounts
Statement of Directors’
responsibilities
198
Independent auditor’s UK report
199
Group financial statements
211
Notes to the Group accounts
215
Company financial statements
266
Notes to the Company accounts
268
Other information
Group information
274
Cybersecurity risk management
and governance
274
Risk factors
275
Non-IFRS financial information
285
Shareholder information
293
Cross-reference to Form 20-F
299
SASB reporting
302
Glossary
304
Index
305
References from business unit sections
306
Financial calendar
312
Smith+Nephew
Annual Report 2025
Our purpose
Together we are delivering
Life Unlimited
Physical health is never just about our body.
It’s our mind, feelings and ambitions. When
something holds us back, it’s our whole life
on hold.
We’re here to change that, to use technology
to take the limits off living, and help other
medical professionals do the same.
So that patients can stare down fear, see
that anything is possible, then go on stronger.
Inspired by a simple promise. Two words that
bring together all we do…
Life Unlimited
To learn more about our
purpose, visit www.
smith-nephew.com
We are living without
limits see pages 53-57
1
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Annual Report 2025
STRATEGIC REPORT
GOVERNANCE
ACCOUNTS
OTHER INFORMATION
Sports Medicine
& ENT
Our Sports Medicine & ENT (Ear,
Nose and Throat) business unit offers
advanced products and instruments
used to repair or remove soſt
tissue. It serves growing markets
where unmet clinical needs provide
opportunities for procedural and
technological innovation.
Orthopaedics
Orthopaedics includes an innovative
range of hip, knee and shoulder
replacement systems, robotics-
assisted and digital enabling solutions
that empower surgeons, and Trauma &
Extremities products used to stabilise
severe fractures and correct hard
tissue deformities.
Advanced Wound
Management
Our Advanced Wound Management
business unit provides a
comprehensive set of products and
services to meet broad and complex
clinical needs across hard-to-heal
wounds, delivering on our mission to
shape what is possible in wound care.
We have three global business units
Supported by the technical knowledge of our highly trained sales force.
Smith+Nephew is a leading portfolio medical
technology company focused on the repair,
regeneration and replacement of soſt and hard tissue.
Through our purpose, ‘Life Unlimited’, we help people
return to health and live their lives to the fullest.
2025 in numbers
170
year history
~100
countries
served
$296m
invested in new
innovation
16,988
employees
15m
patients treated
with our products
15
new products
launched
$50bn+
We operate in growth markets worth
more than $50 billion per annum
1
See more on page 36
Share of Group revenue
29%
$1,793m
Share of Group revenue
31%
$1,934m
Share of Group revenue
40%
$2,437m
1
Data generated by Smith+Nephew based on publicly available sources and internal analysis and represents an indication of market shares and sizes.
2
Smith+Nephew
Annual Report 2025
Smith+Nephew at a glance
People
Creating a lasting positive impact on
our employees and communities.
Planet
Working to reduce our impact on
the environment.
Products
Innovating sustainably across the
value chain.
A responsible approach to drive a better future
Our ESG pillars focus on three areas:
See more on page 65
We have a new strategy and cultural framework for success
Our purpose
Our enabler
Our culture pillars
Our RISE strategy
See more on
pages 9 to 11
Care
Life Unlimited
Courage
Collaboration
I
Innovate to enhance the standard of care
S
Scale through strategic investment
E
Execute efficiently
R
Reach more patients
Our way to win
Be better, every day, through continuous improvement mindset behaviours
3
Smith+Nephew
Annual Report 2025
STRATEGIC REPORT
GOVERNANCE
ACCOUNTS
OTHER INFORMATION
and Advanced Wound Management
businesses; and to embed sustainable
improvements in operations and
performance to improve productivity and
support margin expansion. I am pleased to
say that these objectives have been largely
achieved by Deepak and his team.
Over the last three years, Smith+Nephew
has transformed from being a low growth
business to one which can deliver mid
single-digit revenue growth; trading
margin has significantly expanded despite
external headwinds; adjusted ROIC
1
has
improved by 170bps, and free cash flow
1
has improved from $56 million in 2022
to $840 million in 2025. These metrics
are evidence of a business which has
been materially improved by a process
of transformation.
At our Capital Markets Days in December,
management set out our strategy for
the next three years, which is called,
appropriately, “RISE”. It focuses on
Reach (expanding our product portfolio
and market penetration to reach more
patients); Innovation (accelerating
growth through innovation in products
and services); Scale through strategic
investment (shiſting capital allocation
to higher growth areas and investing in
market access and development); and
Executing efficiently (driving Group-wide
productivity improvements and further
operational savings).
Alongside these operational objectives,
management has set out ambitious but
achievable financial targets. Over the
next three years, the team believes it can
deliver organic revenue
1
compound annual
growth rate (CAGR) of 6-7%, trading profit
1
CAGR of 9-10%, and, in 2028, free cash
flow
1
of over $1 billion and adjusted ROIC
1
of 12-13%. Achieving these targets will
deliver significant value to shareholders.
Deepak covers RISE and the three-year
financial targets in greater detail in the
following pages.
An effective, energised Board
Over the last two and a half years, the Board
has seen much change in its membership:
a new Chair (me), a new Executive Director
(John Rogers, Chief Financial Officer) and
six new Non-Executive Directors, amongst
whom are a new senior independent
director (Thérèse Esperdy, who will
succeed Angie Risley at the AGM in May
2026); a new Chair of the Audit Committee
(Jez Maiden); and a new chair of the
Remuneration Committee (Sybella Stanley).
Dear Fellow Shareholder
Aſter three years of delivery,
we are now ready to RISE.
2025 performance
As in the two previous financial years
under Deepak’s leadership, the targets
we set at the beginning of the year were
met or exceeded, with revenue up 6.1% on
a reported basis which equates to 5.3%
on an underlying basis
1
and trading profit
margin and operating profit margin
1
both
up 160bps. Free cash flow
1
was up by
$289 million, with cash generated from
operations up $304 million and adjusted
return on invested capital (ROIC)
1
up
90bps including a -160bps headwind from
portfolio rationalisation. Adjusted earnings
per share
1
increased by 17.7¢ per share
(earnings per share up 24.9¢), and the
Board is recommending a final dividend of
24.1¢ per share. This is in addition to the
$500 million share buyback announced
and executed in the second half of 2025.
Together with the interim dividend of 15.0¢
per share, this will give a total distribution of
39.1¢ per share. Full details of our financial
performance are set out in the report, but
the final year of our 12-Point Plan clearly
underlines the extent of the operational
and financial transformation that the
Smith+Nephew management team has
delivered, and the 28% increase in the
share price during the year was pleasing
evidence that investors are beginning to
appreciate the progress we have made.
Strategy
Our 12-Point Plan, which was presented
to investors in 2022, set our priorities for
the three years to 2025. Its objectives
were: to improve the performance of the
Orthopaedics business; to accelerate
growth in our leading Sports Medicine
In managing this level of change on the
Board, we have been keen to balance
the skills and experience needed for a
complex, highly regulated business where
growth is driven by innovation in advanced
technologies; where product portfolio
management is a key contributor to
value; which has complex supply chains
and significant in-house manufacturing.
And it is also a business which faces many
of the same challenges as other listed
companies of similar scale, such as AI, IT
transformation and cyber defence, skills
and succession, turbulent geopolitics, M&A,
investor relations and capital markets.
Recent additions to our Board reflect
these diverse requirements. Both David
King and Garheng Kong are US-based
and bring deep knowledge of the
MedTech sector. David has been both
CEO and Chair of significant US MedTech
companies, and Garheng is by training a
physician, engineer and a scientist and a
highly successful investor in high-growth
MedTech companies. Thérèse Esperdy
is based in the US and has a long and
distinguished track record as the Chair
of one FTSE-50 company and as Senior
Independent Director of another, as well as
senior executive experience in investment
banking in Asia and the US. Sybella Stanley
has been Chair of the Remuneration
Committee at two other UK-listed
businesses and has wide experience of
M&A. I think that this combination of skills
and experience will serve the Board well in
the years ahead.
During 2025, Bob White stepped down
from our Board to serve as the CEO of
Olympus Corporation, and Angie Risley,
currently Senior Independent Director
and formerly Chair of the Remuneration
Committee, will step down at the May AGM
aſter nine years of service on our Board.
I am profoundly grateful for the service
of both of them, as they have brought
wisdom, judgement and common sense to
our proceedings. Marc Owen completes his
ninth year of service in September 2026,
but at the request of the Board has agreed
to stay on into 2027. His knowledge of both
MedTech and Smith+Nephew is deep and
his contribution to the Board is immense,
and I am grateful that he has agreed to
continue to serve on the Board a little
longer to support continuity.
4
Smith+Nephew
Annual Report 2025
Chair’s statement
I am pleased to say that by the end of
December 2025 we are close to the 40%
ambition of women on the Board and
through Board rotation and retirements we
will make further progress. Angie Risley will
be succeeded by Thérèse Esperdy as Senior
Independent Director, ensuring continued
gender diversity amongst the most senior
Board positions.
The Board also places strong emphasis on
supporting our communities and reducing
our impact on the planet and its resources.
During the year, we reviewed progress
across our sustainability strategy aligned
to the objectives and interests of our key
stakeholders. More information on our
progress against our sustainability targets,
including our roadmap to net zero, can
be found on pages 64 to 77 and in our
Sustainability Report.
The Board continues to welcome open
dialogue with our shareholders on topics
of interest and will continue to listen and
embed feedback to shape our approach.
The remuneration
journey continues
We cannot deliver our future strategy
and plans to create value for stakeholders
unless the Board has the ability to attract
and retain management who have the
skills, knowledge and experience to lead
Smith+Nephew to achieve its full potential.
The centre of gravity for the MedTech
industry is the US, and this is reflected in
the fact that we have an American citizen,
resident in the US, as our CEO, and 10 out
of 12 of the Group’s Executive Committee
are based in the US. Over 50% of our
revenues and 35% of our employees are
based in the US, compared to 4% and 7%,
respectively, in the UK.
To retain and recruit MedTech executives
of the capability expected by our
stakeholders to drive value creation,
the Board requires the flexibility to
offer compensation structures which
are competitive in the market in which
executive talent live and work, which in
Smith+Nephew’s case is likely to be the
US. Trying to persuade successful US-
based executives that they should leave
their current employment and and accept
substantially less money simply because
Smith+Nephew is UK listed is not likely to
be successful.
In 2023, we carried out a thorough
review of our Executive Directors’ pay,
and, as a consequence, we came to
shareholders in 2024 for approval out
of cycle for a Remuneration Policy for
US-based Executive Directors which
was more closely aligned to the norms of
employees living and working in the US,
the home of MedTech. We wish to thank
shareholders for their support of the 2024
policy at a time when our ambitions did
not fit squarely within the four corners of
established UK Corporate Governance
norms on remuneration. We also said at
the time that our request was the first
step in a journey to align our pay practices
with the markets from which we source
our executives.
In 2025, and to coincide with the launch of
our RISE strategy, we reviewed Executive
Director’s pay, and concluded that we had
to look again at this thorny issue for two
reasons. First, when we carried out the
first review in 2023, Deepak Nath was only
18 months into his first listed-company
CEO role; his pay was set at a level that
was at the time between Median and
Lower Quartile of a benchmark peer group,
which the Board felt was appropriate at
the time. By the time of this year’s AGM,
Deepak will have been in role for more
than four years and has shown himself to
be one of the most effective CEOs in the
MedTech industry. Under his leadership,
the financial and operational performance
of the business has been transformed,
and the Total Shareholder Return over the
last three years has far outperformed its
MedTech peer group (+22% vs -6% for peer
group), and the Board believes he should
be paid in line with peers in the industry.
The Board also need to have a Policy
which allows us to recruit someone else of
the same calibre to take Smith+Nephew
forward, should we need to do so.
Secondly, over the last two years
Executive Director pay amongst our
MedTech benchmark peer group has
increased very markedly, resulting in
current compensation being well below
Lower Quartile and around half that of
the Median in the peer group. We do not
believe this is a sustainable position for us
to be in, and in our Remuneration Report
we set out the changes we propose to
rectify the situation.
The decision to recommend a new policy
was taken aſter our Chair of Remuneration,
Sybella Stanley, and I had consulted with
investors holding approximately 70% of
our issued share capital over the last few
months, and the Board strongly believes
that making these changes is in the best
interests of all stakeholders.
Outlook: ambitious
and achievable
Since Smith+Nephew’s founding as a
pharmacy in 1856, we have delivered
innovation that has transformed patient
care. From our roots in Advanced Wound
Management we launched the
first mass-produced elastic adhesive
bandage, Elastoplast, in 1928 which
combined compression, fixation and
protection in a single product. In Sports
Medicine we were an innovator in
arthroscopic surgery and bio-inductive
regeneration. In Orthopaedics we have
pioneered advanced knee systems,
cementless hips and robotic surgery.
Over the last three years, Smith+Nephew
has continued that tradition of innovation,
and has been transformed into a strong,
agile, higher-growth company. The Board
is greatly encouraged by the progress
the Group has made, and is excited to
see the Company’s new strategy and the
ambitious financial and operational
targets which management is confident
it can deliver.
On behalf of the Board, I would like to
recognise and express our appreciation
to all our Smith+Nephew colleagues, who
remain focused on our purpose of Life
Unlimited, helping people to take the limits
off living and restore and promote health
and wellbeing. The Board is extremely
grateful for their hard work and is proud to
be part of the same team.
We look forward to welcoming
shareholders to our Annual General Meeting
in person in May and to updating you
further on our strategy and performance.
Yours sincerely,
Rupert Soames, OBE
Chair
1
These non-IFRS financial measures are explained and reconciled to the most directly
comparable financial measure prepared in accordance with IFRS on pages 285-292.
5
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Annual Report 2025
STRATEGIC REPORT
GOVERNANCE
ACCOUNTS
OTHER INFORMATION
6-7%
Organic revenue
1
CAGR
>$1bn
2028 free
cash flow
1
12-13%
adjusted ROIC
1
in 2028
9-10%
Trading profit
1
CAGR
2025 was a pivotal year
for Smith+Nephew
Dear Fellow Shareholder
We delivered a strong set of full year
results, including good revenue growth
and significant improvements in
profitability, cash generation and return
on invested capital. All three business
units contributed, as we offset meaningful
headwinds through disciplined execution
and cost control. We also maintained
a strong cadence of new product
launches and increased investment in
R&D to support an exciting pipeline of
future innovation.
We have now completed our three-year
12-Point Plan transformation, creating a
fundamentally stronger business and a
springboard for future growth. We have
significantly improved Smith+Nephew’s
financial performance, meeting our
commitments each year, and delivering
a step-change in revenue growth and
meaningful trading profit margin expansion
despite significant and unexpected
macro pressure.
Building on this progress, we launched our
new RISE strategy in December, marking
an ambitious but achievable next phase
for Smith+Nephew.
RISE is our roadmap to reach more patients,
unlock new categories of innovation, scale
through strategic investment, and execute
efficiently. Together, it will allow us to
step-up performance towards new 2028
financial targets. These include delivering
a 6-7% organic revenue
1
compound
annual growth rate (CAGR) and 9-10%
trading profit
1
CAGR. We expect continued
strong cash generation and to reach over
$1 billion free cash flow
1
by 2028, with
12-13% adjusted Return on Invested
Capital
1
(ROIC), significantly above our cost
of capital.
Over the next three years, we expect
every business unit to contribute uniquely
to our value creation. Sports Medicine,
Advanced Wound Management and ENT
are expected to drive above-market
growth through innovation and disciplined
execution, while Orthopaedics, operating
in a more mature segment, is expected
to return to delivering market-level
growth, supporting margin expansion, and
enhanced returns.
We expect to grow free cash flow,
enabling
ongoing investment in innovation and open
new strategic opportunities, and we intend
to empower our highly engaged workforce
with world-class tools and processes.
2026 is the first step in that journey
and we are confident in delivering an
acceleration in growth and returns.
With our strengthened foundations and
new strategy we are well set to expand
our leadership in healthcare innovation and
deliver sustainable value for shareholders,
customers, employees and communities
into the future.
Our 2028 ambition to
accelerate growth and
improve returns
6
Smith+Nephew
Annual Report 2025
Chief Executive Officer’s review
Fixing
Orthopaedics
Accelerating
Sports Medicine
& AWM
Improving
productivity
2025 performance
Group revenue for 2025 was $6,164 million
(2024: $5,810 million), reflecting underlying
revenue growth of 5.3%, ahead of
our 2025 guided target of around 5%.
Reported growth of 6.1% was aſter
incurring an 80bps tailwind from foreign
exchange, primarily due to the strength of
the Euro. Each of our three global business
units delivered underlying revenue growth
above 5%.
Trading profit
1
for 2025 was up 15.5%
to $1,211 million (2024: $1,049 million).
The trading profit margin
1
was 19.7%
(2024: 18.1%), a 160bps improvement on
the prior year. Operating profit
increased
20.7% to $794 million (2024: $657 million).
Cash generated from operations was
up 24.4% to $1,549 million (2024:
$1,245 million) and trading cash flow,
at $1,236 million (2024: $999 million),
was up 23.7%, with 102% trading cash
conversion (2024: 95%). Free cash flow
1
increased by 52.5% to $840 million (2024:
$551 million), including the benefit of a
one-off $26 million property transaction,
well ahead of our initial 2025 guidance
of more than $600 million.
We also improved adjusted ROIC
1
, which
was up 90bps to 8.3% including a -160bps
headwind from the portfolio rationalisation
programme announced in December
2025. The improvement in adjusted ROIC
1
reflected our continued progress under
the 12 Point Plan and the stronger
operational discipline now embedded
across the organisation.
Given our strong cash generation, and
in line with our capital allocation policy,
we completed a share buyback in the
second half of 2025, returning $500 million
to shareholders while maintaining our
leverage ratio, and without compromising
our growth plans.
Our 2025 financial results demonstrate
clear operational progress and a sustained
step up in performance across each of our
three global business units. It is the third
consecutive year of improved performance
and delivery against our commitments.
12-Point Plan transformation
Since I became CEO in 2022, my priority
has been executing the 12-Point Plan to
transform Smith+Nephew.
This plan had three pillars, designed to
fix our underperforming Orthopaedics
business, improve overall productivity, and
accelerate our leading Sports Medicine
and Wound businesses. We have made
demonstrable progress across these pillars,
delivering the step-change in financial
performance described above.
Within Orthopaedics, we have addressed
supply issues and right-sized capacity,
returned Trauma and Hip Implants growth
to market levels or higher, and accelerated
the underlying revenue growth of our
Orthopaedics business unit from 1.9% in
2022 to 5.1% in 2025 (reported growth
was -2.0% in 2022 and 5.7% in 2025).
We continue to prioritise improving
performance in US Knee Implants,
which represents less than 9% of Group
revenue. We expect the launch of our
new LANDMARK
◊
Knee System in the
second half of the year. LANDMARK will
bring the proven clinical benefits of our
knee portfolio into a single platform that
combines advanced kinematics with
personalisation, robotic enablement, and
ease of implantation, while unlocking
capital efficiency by leveraging on existing
instrumentation. With it, we will be able
to address key surgeon preferences and
participate in all key segments across all
sites of care. It will also feature best in
class tray efficiency, making it particularly
suitable for Ambulatory Surgery Centers.
We also continued to deliver strong results
from our faster growth, higher margin
Sports Medicine and Wound businesses
throughout the period.
Smith+Nephew’s innovation pipeline
has been a significant contributor to our
transformation. In 2025, more than 60%
of underlying revenue growth came from
products launched in the last five years,
and we improved our portfolio with 15
new platforms and product enhancements
across all global business units.
Delivered on the 12-Point Plan
Fixing Orthopaedics
–
Product availability
issues addressed
–
Capacity right-sized and Memphis
facility significantly improved
–
Operations re-wired
–
Commercial engine revamped
–
Accelerated hip, trauma and
robotics pipeline
Improving productivity
–
Productivity delivered – more than
offset additional headwinds
Accelerating Sports Medicine & AWM
–
Step-up in growth delivered
1
These non-IFRS financial measures are explained and reconciled to the most directly
comparable financial measure prepared in accordance with IFRS on pages 285–292.
7
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Annual Report 2025
STRATEGIC REPORT
GOVERNANCE
ACCOUNTS
OTHER INFORMATION
Significantly strengthened
the business
The 12-Point Plan was designed not only to
deliver on specific actions in the short term,
but also to embed fundamental, lasting
changes in our behaviours, operations and
performance, and raise the standard on
how we deliver for our patients, customers
and shareholders.
I’m pleased to confirm that we have
successfully embedded these changes,
thanks to the collective effort of every
Smith+Nephew employee. We have put
in place new processes to transform how
we work, bringing greater focus, rigour and
consistency to everything we do.
In 2023, we moved our commercial
operations from a complex matrix-based
model across franchises and regions to a
simpler global business unit structure, with
vertical teams for each of Orthopaedics,
Sports Medicine & ENT and Advanced
Wound Management. This is driving greater
accountability, faster decision making and
execution, and has allowed us to increase
customer focus across the portfolio.
Importantly, we have sharpened our focus
on cash and capital returns through a
number of initiatives, and aggressively
tackled the cost base. The move to
allocate central costs attributable to
each business unit is driving greater
accountability and efficiency, with each
business unit having full profit and loss and
capital accountability.
We are on track to deliver the $325 to
$375 million of gross cost savings we
targeted, with the largest savings coming
from manufacturing and procurement.
We also introduced much greater rigour
and discipline in capital allocation,
improving inventory set turn rates by
deploying sets to more productive
accounts. The resultant increase in free
cash flow
1
allowed us to step up our focus
on innovation and deliver a high cadence
of new products.
Stronger financial performance
Through the 12-Point Plan, we have moved
Smith+Nephew from an historically low
single-digit revenue growth company to
one consistently delivering mid single-digit
growth, with a reported CAGR of 5.7% over
the last three years.
We have expanded trading profit margin
1
by 240bps, from 17.3% in 2022 to 19.7%
this year, whilst also overcoming some
1,000bps of macro challenges from
Volume Based Procurement in China and
higher inflation.
Our increased focus on cash and capital
returns has yielded an impressive
fiſteen-fold increase in free cash flow
1
from $56 million in 2022 to $840 million
in 2025. Finally, adjusted ROIC
1
has
increased 170bps from 6.6% to 8.3%
including the -160bps headwind from
portfolio rationalisation.
I am proud of these achievements.
We have proven that we are capable
of executing on multiple high priority
imperatives at the same time. We have
emerged a stronger organisation as a
result. But this transformation is just the
beginning, not the limit of our ambition.
A simpler more
focused business
Moved to a business
unit-led structure
–
Simpler global structure
–
Greater accountability
–
Increased customer focus
New ways of working
–
Performance culture
–
Continuous improvement
–
Aligned performance measures
Increased focus on cash
and capital returns
–
Cost savings across the business
–
Zero-based budgeting
–
Disciplined capital allocation
1 These non-IFRS financial measures are
explained and reconciled to the most directly
comparable financial measure prepared in
accordance with IFRS on pages 285-292.
Low single-digit
to mid single-digit
revenue growth
240bps
Increase in trading
profit margin
1
170bps
Increase in
adjusted ROIC
1
Successfully improved
our financial performance
2022-25
15x
Increase in Free
Cash Flow
1
8
Smith+Nephew
Annual Report 2025
Chief Executive Officer’s review
continued
Introducing RISE –
our new strategy
“RISE is our bold new strategy
to elevate Smith+Nephew,
positioning us for success
over the next three years.”
Deepak Nath, PhD
Chief Executive Officer
Our cultural framework
We will build on our culture pillars and the behaviours embedded through the 12-Point Plan
RISE has four imperatives
Our way to win
Be better, every day, through continuous improvement mindset behaviours
See more on page 11
Execute efficiently
Drive enterprise productivity and asset
efficiency to expand margins and returns
E
Reach more patients
Drive adoption of differentiated portfolio and take
share across indications, settings and markets worldwide
R
Innovate to enhance the standard of care
Accelerate new product launches and rapidly
scaling existing innovation platforms
I
Scale through strategic investment
Allocate capital to high return and high growth
opportunities aligned to our portfolio priorities
S
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R
each more patients
We believe RISE will allow
Smith+Nephew to Reach more patients,
moving from the more than 15 million we
treat today to around 20 million in 2028.
Our rich portfolio contains several key
products, already launched, each with
significant growth potential. We are
sharpening our focus on these to maximise
the reach of our most highly differentiated
products through new market entry,
expanded indications to access new
patient populations, driving adoption
globally, and accessing high growth
channels and new care settings.
These products include:
–
REGENETEN
◊
where we are redefining
tendon and ligament repair with our
bioinductive implant
–
AGILI-C
◊
which is addressing unmet
needs in cartilage repair
–
PICO
◊
which transforms negative
pressure wound therapy in the
outpatient and home settings, and
where we see significant opportunity
to use for enhanced surgical wound
healing post surgical procedures
–
ALLEVYN
◊
Complete Care
which is our
unique five layer dressing, and
–
CORI
◊
with our differentiated approach
to robot-assisted orthopaedic surgery,
which is one platform for all joints.
Each of these products is a growth
engine in its own right – and together,
they represent a powerful portfolio that
will expand the market and take share.
Through these products, we can reduce
recovery times and re-admissions, get
people back to their daily lives and return
to work quicker – which is good for
patients and their families, for healthcare
systems and for economies.
S
cale through
strategic investment
We have demonstrated our ability to
generate significant cash through our
strengthened business and, going
forward, we intend to allocate this
capital to higher growth segments.
These initiatives will focus primarily on our
Sports Medicine and Advanced Wound
Management businesses, where we will
leverage our capabilities in market access
to develop compelling health economic
outcomes research whilst further
strengthening our commercial execution
and innovation by reinvesting productivity
gains back into these functions.
Accelerating our M-TECH platform
capabilities is a great example of the
opportunity we have to scale up solutions
that we can deploy across the Group
through targeted inorganic partnerships.
Within our Orthopaedics business, we
will be focused on allocating capital and
deploying inventory to those platforms
which have proven returns, such
as robotics.
We plan to deploy our increased free
cash flow into our high growth, high
return businesses and see opportunity
for acquisitions to support our strategy to
build on our areas of strength. Whilst there
are many opportunities in the MedTech
space, we will remain laser focused, only
pursuing those that fit our strategy.
This approach was clearly demonstrated
in January 2026 with the acquisition of
Integrity Orthopaedics, the developer of
an innovative rotator cuff repair system
designed to significantly reduce re-tear
rates and improve patient outcomes.
This acquisition demonstrates our strategy
in action and will be an important building
block in our ambition to become the global
leader in Sports Medicine. You can read
more about this new technology and how
it fits into our impressive shoulder portfolio
on page 32.
We are well positioned to take full
advantage of market shiſts, such as
the transition of joint replacement into
Ambulatory Service Centers from hospital
inpatient settings with our CORI system.
We intend to transform the standard of
care with disruptive products like TULA
◊
in ENT and increase participation in high-
growth emerging markets.
Through these actions, we expect to
achieve our clear ambition to move
from category to market leadership
in Sports Medicine and Advanced
Wound Management.
I
nnovate to enhance
the standard of care
In addition to these key products, we
expect to maintain our industry-leading
cadence of new product launches, with
more than 75 launches over the last
five years.
We are excited by the pipeline of products
we have coming in Orthopaedics over the
next 18 months, including the launch of
our new LANDMARK
Knee System, which is
expected to leapfrog ahead of competition
with its differentiating features.
We have a significant opportunity to
enhance standard of care with our scalable
biologics platform which we can accelerate
to deliver more highly differentiated
solutions across our business and the full
continuum of care. And with solutions like
TESSA
◊
, our first in industry spatial surgery
arthroscopic platform, we remain on the
cutting edge of care through procedural
advances to improve surgical outcomes.
Through our patient first approach, we
are focusing innovation where there is
the greatest unmet need, such as our
next-generation cloud-connected LEAF
◊
patient monitoring sensor to prevent
pressure injuries.
10
Smith+Nephew
Annual Report 2025
Chief Executive Officer’s review
continued
E
xecute efficiently
Through RISE we expect to continue
to improve our execution.
Actions include strengthening
our
Orthopaedics commercial engine discipline
through a programme called Ortho 360.
This programme includes revamped sales
incentives and targeted deployment of new
sets. We also intend to continue to reduce
the complexity of our overall portfolio by
exiting low-return categories and improve
inventory health by shiſting towards higher-
moving lines. This will enable better service
levels and lower working capital.
We plan to
adopt a single global Enterprise
Resource Planning (ERP) platform and
leverage analytics and artificial intelligence
(AI) to drive performance and productivity
across the Group. A single ERP system
is expected to drive simplification,
standardisation of processes and sharper
execution through tighter controls.
We also intend to employ AI, machine
learning and data analytics to drive
improvements in critical processes such
as supply chain, manufacturing, inventory
management and pricing. This is expected
to reduce our cost to serve and improve
demand and supply accuracy.
In commercial functions, we expect to
employ digital platforms to strengthen
customer engagement, expand virtual
training and service, and generate
evidence of value for providers.
Finally, we intend to continue to drive
Group-wide productivity improvements
and reinvest these gains back into
innovation and our commercial capabilities.
Taking Smith+Nephew
to the next level
The 12-Point Plan has delivered,
and we now have a much stronger
foundation from which to deliver
the next phase of our growth.
We have an ambitious but achievable
new strategy called RISE, through which
we expect to reach five million more
patients by 2028.
Through increased investment in
innovation and better execution, we are
targeting share gains in Sport Medicine,
Wound and ENT, while maintaining share
in Orthopaedics.
Our continued focus on productivity and
further operational efficiencies, particularly
in Orthopaedics, are expected to drive
profit growth. We aim to drive 300 to
400bps of Orthopaedics trading profit
margin¹ expansion by 2028, and expect to
exceed 20% by 2030, with a doubling of
adjusted ROIC¹. Our expected strong
cash generation will provide optionality
for strategic M&A to reinforce success.
I would like to thank the entire
Smith+Nephew team for their dedication
and focus through our transformation.
As we look ahead, I am excited by what we
can achieve together. Guided by our culture
pillars of Care, Courage and Collaboration,
we will deliver on our purpose of Life
Unlimited and be better every day for our
customers, their patients, and each other.
Yours sincerely
Deepak Nath, PhD
Chief Executive Officer
Our cultural framework
But actions can only take us so far,
our purpose and culture will support
successful delivery of our strategy.
Everyone at Smith+Nephew is united
by our Purpose, to allow our patients to
live Life Unlimited. This is supported by
a strong culture, which was developed
by our colleagues, characterised by
the three pillars of Care, Courage and
Collaboration. We are well prepared
for the years ahead as we focus on our
Way to Win by being better, every day,
through our continuous improvement
mindset and behaviours.
Each year, we measure our progress
strengthening our culture and
performance through a Global
Engagement Survey run by Gallup.
In 2025, we saw our highest ever
participation rate of 95%, with more
than 16,000 colleagues heard, and our
scores improved across all dimensions
of the survey. Our overall engagement
score has climbed to 4.33, bringing
us closer to the top quartile of global
companies and showing steady
improvement year-on-year. We were
also proud to receive the Gallup
Exceptional Workplace Award for the
second consecutive year.
I am also pleased with our progress
in creating long-term value through
environmental, social, and governance
(ESG) excellence. This year’s
achievements reflect our commitment
to sustainable growth, operational
efficiency and stakeholder value, core
elements of our new RISE strategy.
These areas are covered both in this
Annual Report and in further detail
in our Sustainability Report which is
available on our website.
16,000+
Colleagues heard – our highest
participation rate
Our overall engagement
score has climbed to
4.33
1 These non-IFRS financial measures are
explained and reconciled to the most directly
comparable financial measure prepared in
accordance with IFRS on pages 285-292.
11
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OTHER INFORMATION
Smith+Nephew operates in global markets
valued at more than $50 billion
1
annually.
Long-term growth drivers
Shaping the development
of innovative treatments
and the transformation of
healthcare delivery.
The medical technology sector is
supported by strong long-term growth
drivers that make it an attractive market.
Demographic shiſts, such as an ageing
population and increased physical activity
among older adults, continue to boost
demand for healthcare services and
medical technology products.
As the global population ages, there is a
corresponding rise in chronic and age-
related conditions that require consistent
medical attention. Additionally, the
growing incidence of lifestyle-related
health issues, like diabetes and obesity,
further drives this demand.
Technological advancements serve as
crucial catalysts for long-term growth in
healthcare. Innovations in areas such as
AI and biotechnology are yielding more
effective and personalised healthcare
solutions, which not only improve
patient outcomes but also create new
business opportunities for companies like
Smith+Nephew.
Emerging markets
Growing healthcare demand
presenting both opportunities
and challenges for providers.
In emerging markets, economic
development is enhancing long-term
growth factors, particularly through the
emergence of a prosperous middle class
seeking improved healthcare services and
products. As living standards rise, there
is an increasing demand for high-quality
healthcare, including advanced
treatments and medical technology.
Emerging markets are experiencing a
surge in digital health technologies,
including surgical robotics, telemedicine,
electronic health records, mobile
health apps, and wearable devices.
Artificial intelligence offers further
opportunities to help overcome resource
constraints in low and middle-income
countries. These innovations are bridging
gaps in healthcare access.
Emerging markets are attractive to
medical technology companies like
Smith+Nephew as they are oſten more
open to adopting new and cost-effective
healthcare approaches and technologies.
Decentralised care
Facilitating accessible care
outside traditional hospital
environments.
Evolving customer and market
dynamics are creating new high-
growth opportunities for medical
technology companies.
Many countries are shiſting towards more
decentralised care, with an increasing
number of procedures being performed in
outpatient settings such as Ambulatory
Surgery Centers (ASCs) in the US.
This trend has been particularly prominent
in Sports Medicine, and a growing
number of orthopaedic joint replacement
procedures are now also being carried
out in these settings, resulting in cost and
time efficiencies for healthcare providers.
The ASC care setting
is very different
from hospitals. ASC operating rooms are
smaller with limited capacity for sterile
reprocessing and storage. They usually
operate with leaner staffing models while
opting for higher efficiency and throughput.
Ongoing reimbursement changes are
expected to continue to drive even
higher procedural uptake, and ASCs
present a significant opportunity for
innovative businesses like Smith+Nephew
who have developed technologies
and services specifically targeted at
this growing segment (see page 38 for
more information).
1 Data generated by Smith+Nephew based on
publicly available sources and internal analysis
and represents an indication of market shares
and sizes.
12
Smith+Nephew
Annual Report 2025
Leading positions in attractive markets
Cost of healthcare
A global priority requiring
comprehensive strategies for
sustainable healthcare delivery.
Governments are focused on lowering
healthcare costs and are increasingly
price sensitive. In response, medical
technology companies are innovating and
providing evidence of both the clinical
and economic benefits associated with
their products.
Worldwide, countries are aiming to boost
domestic production in critical sectors,
including advanced technologies and life
sciences, through localisation policies and
export restrictions that can disrupt global
supply chains.
At the same time, many emerging markets
are implementing measures to reduce
healthcare costs and improve accessibility,
including price control policies in
government procurement. In China, this has
been seen in the introduction of Volume
Based Procurement (VBP) across various
segments. This has included Orthopaedics
and Sports Medicine, and a VBP process is
expected in ENT in 2026.
More details on risk can be found in the
Risk Report on pages 78–96
High regulation
Medical devices regulation is
essential for ensuring product
safety, efficacy and quality.
The medical device sector is among the
most heavily regulated globally, creating
significant barriers to entry for new
market participants. National regulatory
authorities oversee the design,
development, approval, manufacturing,
labelling, marketing and sale of healthcare
products, as well as reviewing supporting
data to seek to ensure safety and
performance. Most countries require
prior authorisation and/or registration of
products before market entry, which
must be maintained thereaſter.
Regulations and industry codes also
dictate how the industry interacts with
healthcare professionals and government
officials worldwide, including the AdvaMed
Code of Ethics and the MedTech Europe
Code of Ethical Business Practice.
Companies implement global compliance
programmes to assist employees and
third-party partners in adhering to laws,
regulations and industry standards,
oſten accompanied by their own codes
of conduct.
For more information on
our approach to compliance,
see page 35
Seasonality
Seasonality requires agile
business operations to meet
demand fluctuations during
the year.
There is typically a higher volume
of orthopaedic and sports medicine
procedures during winter months,
when accidents and sports-related injuries
are more common. Additionally, elective
procedures generally decline
in the summer due to vacations.
Advanced Wound Management is less
affected by seasonality due to the nature
of its procedures and products.
At Smith+Nephew, most of our operations
are in the northern hemisphere, with
approximately 50% of revenue generated
in the US and 20% in Europe.
In the US, out-of-pocket costs for health
insurance plans are tied to medical
expenses within a calendar year.
Consequently, households that reach their
annual deductible or out-of-pocket cap
before year end find it more cost-effective
to schedule necessary procedures later in
the year rather than postponing them until
the following year.
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OTHER INFORMATION
1
These non-IFRS financial measures are explained and reconciled to the most directly
comparable financial measure prepared in accordance with IFRS on pages 285–292.
2
For details of changes to our product-giving, please see page 66.
Through our business model and RISE strategy, we
strive to transform outcomes for more patients, as well
as for the clinicians and the healthcare systems we
support, for the Company and for our shareholders.
What we need to create value
Delivering value for stakeholders
19.7%
Trading profit
margin
1
+160bps
12.9%
Operating
profit margin
+160bps
$330m
Dividend
Distribution
increased by $3m
$1,211m
Trading profit
1
+15.5%
$794m
Operating profit
+20.7%
$6,164m
Group revenue
+6.1% reported
+5.3% underlying
1
Investors
Community
106,000+
Patients helped through
product donations
2
4.33
Gallup engagement
score
+0.09
15
New products
132,597
HCP training
sessions
Employees
Customers
People
A purpose-driven
culture based on
authentic values
committed to doing
business in the
right way.
R&D
Innovation is at the
heart of our business
and we invest in
priority products,
technologies
and services.
Financial
strength
A robust balance
sheet and Capital
Allocation Framework
balancing short,
medium and long-
term investment
and returns.
ESG
Addressing the
long-term needs
of our customers,
employees, investors,
communities and
other stakeholders
while aiming to
reduce our impact on
the environment.
Global
operations
Resilient
manufacturing
and supply chains
to ensure quality
and competitiveness.
14
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Annual Report 2025
Our business model
How we create value
Innovative
technology
We offer a broad portfolio
of differentiated products and
services that meet oſten-complex
clinical needs, including digital
and robotic technologies,
driving procedural innovation.
Go to market
Three global business units
set product strategy and
deliver global marketing to
drive demand in our markets,
supported by clinical evidence
to demonstrate efficacy.
2
Customer
feedback
Building close relationships with
customers to ensure a deep
understanding of unmet clinical
needs and changing financial and
sustainability priorities within
healthcare systems.
5
Expertise
and support
Our sales force supports
customers and works with
healthcare systems to
address complex business and
reimbursement requirements.
3
Medical
education
Through the Smith+Nephew
Academy, a network of
centres and online resources,
we provide medical education
programmes to support the
safe and effective use of our
products, skills development
and procedural innovation.
4
1
Product
development
and acquisition
R&D model that provides for
customer and business unit-
focused innovation and acquiring
technologies needing further
development and
commercialisation.
6
Serving customers
15
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OTHER INFORMATION
Smith+Nephew uses a number of financial and non-financial Key Performance
Indicators (KPIs) to track and evaluate performance and delivery against its
strategy and business plans. Those KPIs in the public domain are consolidated
below. A number of other KPIs are commercially sensitive and are not published,
but are used internally to drive sustainable performance and growth.
Revenue growth
Revenue growth allows management
and investors to measure our
relative performance.
6.1%
%
Reported revenue
growth
Reported revenue
growth includes a
foreign exchange
tailwind of 80bps.
2025 revenue was
$6,164 million.
5.3%
%
Underlying
revenue growth
1
The Group
is consistently
delivering strong
revenue growth
above historical
(pre-Covid) levels.
Profit margin
Profit margin allows management
and investors to determine our
relative performance.
12.9%
%
Operating profit margin
Reported profit margin
reflects acquisition
and disposal-related
items, restructuring
and rationalisation
costs, amortisation and
impairment of acquisition
intangibles, and legal
and other items.
19.7%
%
Trading profit margin
1
The 160bps year-on-
year increase reflects
operating leverage
and efficiency savings
from the 12-Point Plan
offsetting headwinds
from inflation and China.
Cash flow
Cash flow allows investors to evaluate
our financial stability, operational
efficiency and ability to pursue growth.
$1,549m
$m
Cash generated
from operations
Cash generated from
operations improved by
$304 million in 2025.
This measure refers to the
cash the business produces
from its core trading
activities, before financing
and investment decisions.
$840m
$m
Free cash flow
1
Free cash flow
increased by $289
million, reflecting
strong working
capital management
and reduced
restructuring costs.
Financial Key Performance Indicators
Adjusted Return on Invested Capital
1
Adjusted ROIC
1
allows management
and investors to measure the return
generated on capital invested, providing
a metric for long-term value creation.
8.3%
%
Adjusted ROIC
1
Adjusted ROIC¹
increased by 90bps
including a -160bps
headwind from a
portfolio rationalisation
programme announced
in December 2025.
Dividend per share
Dividend payments allow investors to
receive a cash return on their investment
in Smith+Nephew.
39.1¢
¢
Dividend per share
Total distribution of
39.1¢ per share, a 4.3%
increase from 2024.
1 These non-IFRS financial measures are
explained and reconciled to the most directly
comparable financial measure prepared in
accordance with IFRS on pages 285-292.
2023
5.9
2025
8.3
2024
7.4
2023
6.4
2025
6.1
2024
4.7
2023
7.2
2025
5.3
2024
5.3
2023
7.7
2025
12.9
2024
11.3
2023
829
2025
1,549
2024
1,245
2023
129
2025
840
2024
551
2023
17.5
2025
19.7
2024
18.1
2023
37.5
2025
39.1
2024
37.5
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Smith+Nephew
Annual Report 2025
Measuring our progress
Long-term sustainability targets
These KPIs allow management
and investors to measure progress
against our long-term sustainability
targets in the three focus areas of
People, Planet and Products.
Achieve net zero
Achieve net zero Scope 1 and
Scope 2 greenhouse gases (GHGs)
by 2040 and Scope 3 GHGs by
2045, beginning by achieving a 70%
reduction in Scope 1 and Scope 2
GHGs by 2025.
Scope 1 and 2 (market-based)^
71%
Reduction since 2019.
Less waste to landfill
95%
Total manufacturing waste
diverted from landfill.
Product donations
106,000+
Patients supported through
product donations
^
Please refer to pages 76-77 for our
emissions reporting methodology,
materiality and scope.
Investment in innovation
This KPI allows management and
investors to understand how much
is being invested in new, innovative
products designed to drive future revenue
growth and profit.
$296m
R&D investment
In 2025, more than
60% of revenue growth
came from products
launched in the last five
years, in line with 2024,
showing the consistent
value of our new
product programme.
15
New products in 2025
This KPI tracks the number of new products
either launched or ready for launch to
drive future revenue growth. Since 2021,
we have launched ~75 new products.
1
Acquisition in January 2026
This KPI tracks acquisitions that enhance
our portfolio and pipeline, including
technology that can change the
standard of care and assets in high-
growth categories.
In January 2026, we acquired Integrity
Orthopaedics, a US-based early-stage
commercial developer of an innovative
rotator cuff repair system for an
initial cash payment of $225 million,
plus additional performance-based
payments of up to $225 million over
the next five years. See page 32 for
further information.
Employee engagement
The Gallup Global Engagement
Survey allows management and
investors to assess how engaged our
employees are, which is a key driver of
business performance.
4.33
Engagement
Further improvement in our Grand
Mean score to 4.33 (2024: 4.24),
bringing us closer to the top quartile of
global companies. 95% of employees
participated in the survey, a record level.
Quality and safety
This KPI allows management and
investors to verify that we are operating
a safe working environment to
high standards.
Headline safety rate
We adopt the industry
standard OSHA system
to record incidents of
occupational injury and
ill health. Performance
is expressed as the
number of incidents per
200,000 hours worked.
Medical education
This KPI helps investors understand
how we support the safe and effective
use of our products through the
provision of medical education to
healthcare professionals.
132,597
Practitioner training sessions
Non-financial Key Performance Indicators
2023
339
2025
296
2024
289
2023
0.15
2025
0.11
2024
0.12
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STRATEGIC REPORT
GOVERNANCE
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OTHER INFORMATION
Dear Fellow Shareholder
It is a privilege to write to you in a year
that marks a defining moment for
Smith+Nephew - one in which we
completed a multi-year transformation,
delivered further improvements in
financial performance, and set out an
ambitious new strategy to accelerate
growth and returns.
A stronger business,
and a step-change in
financial ambition
2025 represents the culmination of
work that began three years ago under
the 12-Point Plan: strengthening our
operational foundations, restoring
performance in Orthopaedics, accelerating
our Sports Medicine and Wound
businesses, and embedding a culture of
accountability, discipline and continuous
improvement across the Group.
Our 2025 financial results demonstrate
clear operational progress and a sustained
step up in performance across our three
global business units.
Revenue increased to $6,164 million in
2025, up 6.1% on a reported basis and
5.3% on an underlying
1
basis excluding a
+80bps tailwind from foreign exchange
(2024: $,5,810 million), with all three global
business units delivering underlying¹
revenue growth above 5%.
Trading profit
1
grew to $1,211 million in
2025, up 15.5%, driven by strong operating
leverage, productivity gains and disciplined
cost control. Operating profit rose by 20.7%
to $794 million in 2025 demonstrating
consistent delivery of margin expansion.
Free cash flow
1
reached $840 million in
2025 (2024: $551 million), an increase of
52.5% evidencing strong working capital
discipline. Cash generated from operations
increased to $1,549 million (2024:
$1,245 million) .
During 2025, we continued to improve
inventory health, network efficiency
and commercial execution.
This foundation has enabled us to deliver
consistent higher revenue growth,
expanding margins, and significantly
stronger cash generation, positioning the
Group for the next stage of value creation
under our new strategic framework, RISE.
RISE strategy
In December 2025, we launched RISE, our
strategy for the next three years. RISE is
aimed to elevate performance by reaching
more patients with our differentiated
portfolio, innovating at a higher cadence
and scaling existing innovation platforms,
through investment in high return areas,
and executing efficiently through higher
productivity and asset efficiency to
accelerate margins and cash delivery.
Alongside RISE, we also announced 2028
financial targets, including:
–
6-7% organic revenue compound
annual growth rate (CAGR),
–
9-10% trading profit
1
CAGR,
–
Free cash flow
1
> $1 billion, and
–
Adjusted Return on Invested Capital
1
(Adjusted ROIC) of 12-13%.
These targets reflect both the strength
of our core business and the opportunity
created through the transformation of
the last three years.
52.5%
Free cash flow¹ growth from
$551 million to $840 million
in 2025
Cash generated from operations
increased by 24.4% in 2025 from
$1,245 million to $1,549 million
90bps
Increase in adjusted return
on invested capital
1
from 7.4%
to 8.3% in 2025
Return on invested capital
based on closest equivalent
IFRS measure increased
by 240bps from 4.9% to 7.3%
1 These non-IFRS financial measures are
explained and reconciled to the most directly
comparable financial measure prepared in
accordance with IFRS on pages 285-292.
Positioned for the
Next Chapter: RISE
18
Smith+Nephew
Annual Report 2025
Chief Financial Officer’s review
STRATEGIC REPORT
GOVERNANCE
ACCOUNTS
OTHER INFORMATION
Strong cash flow
Cash generation improved significantly
in 2025, driven by strong working capital
discipline and lower restructuring costs.
As a result, cash generated from operations
improved by 24.4% to $1,549 million in
2025 (2024: $1,245 million). This translated
into a significant improvement in free cash
flow¹ which was up 52.5% to $840 million
in 2025 (2024: $551 million), well ahead
of the $600 million guidance issued at the
beginning of the year. In 2025, free cash
flow also includes the benefit of a one-off
$26 million property transaction.
Stronger cash generation also supported
a further reduction in gearing, resulting in
a leverage position ahead of target and
reinforcing the Group’s financial resilience
as we execute against our strategic
priorities. It also supported the repurchase
of $500 million of shares, returning
additional value to shareholders.
Improving capital efficiency
through portfolio simplification
In 2025, we announced a Group-wide
inventory portfolio rationalisation
programme, as part of the RISE strategy,
aimed at structurally reducing inventory
levels and improving capital efficiency.
We expect that this rationalisation
programme will result in a material
reduction in gross inventory, and release
$500 million of capital employed over
time. This action will free up cash for
reinvestment into strategic growth
platforms and to support progress towards
the delivery of the RISE 2028 adjusted
ROIC
1
target of 12-13%.
As a result of this programme, the Group
recognised a $159 million non-cash excess
and obsolescence provision in 2025.
Improving accountability
and returns
ROIC improved significantly in 2025,
reflecting continued progress under the
12-Point Plan and the stronger operational
discipline now embedded across the
organisation. The allocation of directly
attributable central costs to business
units, introduced in 2024 to reinforce
ownership of performance, has enhanced
accountability and sharpened focus on
returns. Combined with higher trading
margins
1
, lower non-trading costs
1
and
improved capital efficiency, these actions
delivered a clear step-up in ROIC for
the year.
Looking ahead with confidence
We enter 2026 with strong momentum
and a clear roadmap. Despite extraordinary
headwinds relating to inventory
revaluation, tariffs, skin substitute
reimbursement changes and ENT VBP
in China, we expect continued revenue
acceleration and trading profit
1
growth..
Our ambition is clear: to deliver
sustainable, compounding value creation
for our shareholders while advancing
our commitment to helping patients live
Life Unlimited.
Outlook
In terms of outlook, for revenue, we expect
to deliver underlying¹ revenue growth to
accelerate to around 6%, which equates to
reported growth of around 7.8% based on
exchange rates prevailing on 24
February 2026. Trading profit
1
growth
is expected to be around 8%. See my
Financial Commentary below for important
disclosures on the details of our 2026
outlook including tax guidance.
Yours sincerely,
John Rogers,
Chief Financial Officer
Strengthening operational
discipline
During 2025, we continued to strengthen
the operational discipline established over
the past three years. Our focus remained
on driving sustainable improvements in
productivity, cost efficiency and asset
utilisation across the Group. This work
builds on the progress delivered through
the 12-Point Plan and reflects our ambition
under the RISE strategy to operate with
greater consistency, accountability
and efficiency.
Through the year, we further embedded
the zero-based budgeting approach
adopted in 2024, enabling us to identify
additional, durable savings. More than
40 initiatives across five workstreams
remained in active execution, with
the largest contributions driven by
manufacturing and procurement,
supported by efficiencies across
commercial and enabling functions.
These actions strengthened trading
margin
1
and operating leverage.
The foundations created through prior
network and organisational restructuring
also continued to underpin performance
in 2025.
Driving innovation to
support growth
Innovation remained a core driver of
performance in 2025, with more than 60%
of revenue growth coming from products
launched in the last five years.
This momentum is fully aligned with our
RISE strategy, which places Innovation at
the centre of elevating clinical outcomes
and accelerating financial performance.
As part of this strategy, we continue
to advance new product development
and scale existing innovation platforms,
supported by the adoption of technologies
such as AI to enhance productivity and
operational efficiency. As CFO, I believe
that this disciplined focus on innovation
will enable us to deliver sustained growth
in the years ahead.
You can read more about our strong
innovation track record and our AI agenda
on pages 27-32.
1
These non-IFRS financial measures are explained and reconciled to the most directly
comparable financial measure prepared in accordance with IFRS on pages 285-292.
19
Smith+Nephew
Annual Report 2025
2025 performance
Revenue grew by 6.1% to $6,164 million
in 2025 (2024: $5,810 million) on a
reported basis and 5.3% on an underlying¹
basis excluding a 80bps tailwind from
foreign exchange, with all business
units contributing to the year-on-year
growth. All three business units delivered
underlying
1
growth above 5%, contributing
to the overall year-on-year revenue growth.
We continued to make progress in
improving the commercial execution in
Orthopaedics resulting in the business unit
delivering acceleration in revenue growth.
Orthopaedics revenue grew by 5.7% on a
reported basis in 2025 (2024: 4.1%) and
5.1% on an underlying¹ basis (2024: 4.6%)
driven by strong performance in the US and
Other Established Markets
2
, partially offset
by headwinds in China resulting in lower
growth in emerging markets.
We maintained our leadership position in
Sports Medicine & ENT, delivering reported
revenue growth of 6.0% (5.2% underlying
1
),
supported by strong performance across
most markets outside China. The impact of
China’s Volume Based Procurement (VBP)
programme, introduced in May 2024, has
also begun to moderate.
Advanced Wound Management delivered
reported revenue growth of 6.7% (5.6%
underlying
1
), reflecting an acceleration
from the prior year supported by sustained
positive momentum throughout 2025.
2024 performance
In 2024, revenue grew by 4.7% to
$5,810 million (2023: $5,549 million) on a
reported basis and 5.3% on an underlying¹
basis excluding a -60bps headwind from
foreign exchange, exceeding our revenue
guidance of around 4.5% due to an
acceleration in growth towards the end
of the year.
Group performance
2025
2024
2023
Change
2025
Change
2024
$m
$m
$m
$m
$m
Revenue
6,164
5,810
5,549
354
261
Gross Profit
4,192
4,046
3,819
146
227
Operating profit
794
657
425
137
232
Trading profit
1
1,211
1,049
970
162
79
Profit before tax
779
498
290
281
208
Attributable profit
625
412
263
213
149
EPS
72.1¢
47.2¢
30.2¢
24.9¢
17.0¢
EPSA
1
102.0¢
84.3¢
82.8¢
17.7¢
1.5¢
Non-IFRS measures
The underlying
1
increase in revenue by market reconciles to reported growth, the most
directly comparable financial measure calculated in accordance with International
Financial Reporting Standards (IFRS), as follows:
Reconciling items
2025
2024
Reported
growth
Underlying
growth
Acquisition/
Disposals
Currency
impact
$m
$m
%
%
%
%
US
3,306
3,123
5.9
5.9
-
-
Other Established Markets
2
1,855
1,707
8.6
5.9
-
2.7
Total Established Markets
5,161
4,830
6.8
5.9
-
0.9
Emerging Markets
1,003
980
2.4
2.5
-
(0.1)
Total
6,164
5,810
6.1
5.3
-
0.8
Reconciling items
2024
2023
Reported
growth
Underlying
growth
Acquisition/
Disposals
Currency
impact
$m
$m
%
%
%
%
US
3,123
2,979
4.8
4.8
-
-
Other Established Markets
2
1,707
1,611
6.0
6.7
-
(0.7)
Total Established Markets
4,830
4,590
5.2
5.5
-
(0.3)
Emerging Markets
980
959
2.2
4.3
-
(2.1)
Total
5,810
5,549
4.7
5.3
-
(0.6)
Trading profit
1
reconciles to operating profit, the most directly comparable financial
measure calculated in accordance with IFRS, as follows:
2025
2025
2024
2024
2023
2023
$m
%
$m
%
$m
%
Operating profit
794
12.9
657
11.3
425
7.7
Acquisition and disposal
related items
32
0.5
94
1.6
60
1.1
Restructuring and
rationalisation costs
47
0.8
123
2.1
220
4.0
Amortisation and
impairment of acquisition
intangibles
176
2.9
187
3.2
207
3.7
Legal and other
162
2.6
(12)
(0.2)
58
1.0
Trading profit
1
1,211
19.7
1,049
18.1
970
17.5
1
These non-IFRS financial measures are explained and reconciled to the most directly
comparable financial measure prepared in accordance with IFRS on pages 285-292.
2
Other Established Markets are Europe, Japan, Australia, Canada and New Zealand.
20
Smith+Nephew
Annual Report 2025
Financial Review
STRATEGIC REPORT
GOVERNANCE
ACCOUNTS
OTHER INFORMATION
In 2024, revenue growth was driven by
most segments and markets. We made
good progress in improving the commercial
execution in Orthopaedics resulting in an
acceleration in revenue growth towards
the end of 2024. Orthopaedics revenue
grew by 4.1% on a reported basis (and 4.6%
on an underlying¹ basis) driven by strong
performance in Other Established Markets
2
as well as significant improvement in the
US as the year progressed, partially offset
by headwinds in China due to lower end
customer demand.
We continued to hold a leadership position
in Sports Medicine & ENT and delivered
reported revenue growth of 5.5% (6.2%
underlying
1
), despite the China VBP
headwinds, due to strong performance
across all categories.
Advanced Wound Management delivered
reported revenue growth of 4.7% (5.1%
underlying
1
) and maintained positive
momentum in 2024 with growth
accelerating towards the end of the year.
We exited 2024 in a strong position with
all three global business units contributing
with accelerating revenue growth in the
fourth quarter over the first nine months.
Improved profitability
The gross profit was $4,192 million
in 2025 (2024: $4,046 million, 2023:
$3,819 million) with gross profit margin
of 68.0% (2024: 69.6%, 2023: 68.8%).
We maintained strong gross profit margins
while delivering revenue growth, supported
by improvements in commercial execution
despite ongoing inflationary pressures and
$159 million excess and obsolescence
provision in relation to the inventory
portfolio rationalisation programme.
The reported operating profit for 2025 was
$794 million, a 20.7% increase from the
previous year primarily due to operating
leverage and productivity savings across
the Group.
Administrative expenses decreased by
$84 million mainly due to lower non-
trading costs
1
. Costs associated with
restructuring and rationalisation and
acquisition related costs decreased by
$71 million and $51 million respectively
with the majority of the strategic actions
under the 12-Point Plan were implemented
in 2024 and no acquisitions were made
in 2025. These decreases were partially
offset by a $86 million, or 3.8% increase,
in marketing, selling and distribution
expenses as a result of revenue growth.
Research and development expenses
increased by $7 million, or 2.4%, reflecting
a sustained innovation cadence.
The reported operating profit for 2024
was $657 million, a 55% increase from the
previous year primarily due to operating
leverage and productivity savings across
the Group. In addition, research and
development expenses decreased by
$50 million mainly due to a $20 million
reduction in legal and other items and
$18 million reduction in restructuring and
rationalisation incurred in 2023, partially
offset by a $58 million, or 2.6% increase,
in marketing, selling and distribution
expenses as a result of revenue growth.
The increase in reported operating
profit was also driven by lower non-
trading costs
1
. Costs associated with
restructuring and rationalisation and legal
and other costs decreased by $97 million
and $70 million respectively as a larger
proportion of strategic actions under the
12-Point Plan were implemented in 2023.
1
These non-IFRS financial measures are explained and reconciled to the most directly
comparable financial measure prepared in accordance with IFRS on pages 285-292.
2
Other Established Markets are Europe, Japan, Australia, Canada and New Zealand.
Profit margin expansion
In 2025, trading profit
1
was $1,211 million
(2024: $1,049 million, 2023: $970 million),
with trading profit margin
1
of 19.7%
(2024: 18.1%, 2023: 17.5%). We continue
to deliver year-on-year expansion in our
trading profit margin
1
reflecting operating
leverage, continued benefits from the
12-Point Plan and productivity savings
across the Group.
In 2025, the reported profit before tax
was $779 million (2024: $498 million,
2023: $290 million). In 2025 and 2024, the
reported profit before tax grew mainly due
to improvement in operating profit. In 2025,
reported profit before tax also grew
because of a $109 million reversal of an
impairment charge relating to Bioventus.
Taxation
The reported taxation charge in 2025
was $154 million (2024: $86 million, 2023:
$27 million). The increase in the reported
tax charge can principally be attributed
to the increases in profit before tax since
2023 and the jurisdictional profit mix.
Earnings per share
In 2025, Basic earnings per share (EPS)
were up 53% to 72.1¢ and adjusted
earnings per share
1
(EPSA) were up
21% to 102¢, reflecting improved
trading performance.
In 2024, Basic EPS were up 56.3% to
47.2¢ and EPSA
1
were up 1.7% to 84.3¢,
reflecting improved trading performance.
21
Smith+Nephew
Annual Report 2025
Taxation
The Group is subject to various taxes in
the many countries in which it operates.
Paying tax is an integral part of our
commitment to the societies in which
we operate and a critical element of our
commitment to grow in a sustainable,
responsible and transparent way.
The Group makes a significant economic
contribution to the countries where it
operates through taxation, either borne
or collected on behalf of and paid to the
relevant tax authorities, and through
employment of personnel, developing
workforce skills, purchasing goods and
services from local suppliers and making
capital investments.
We aim to submit accurate tax returns to
the relevant tax authorities on a timely
basis, and seek to pay the right amount of
tax in accordance with the tax laws in all
the territories in which we operate.
We manage tax risks and tax costs in
a manner consistent with regulatory
requirements and shareholders’ best
long-term interests, aſter taking into
account reputational and economic
factors as well as the interests of our other
stakeholders, including governments, our
people, customers and suppliers. We are
committed to transparent relationships
with all relevant tax authorities.
Our tax footprint extends beyond
corporate income tax, including significant
payments of employer social security
contributions. The Group also collects
taxes on behalf of governments (including
employee income taxes and social security
contributions, VAT and other sales taxes).
During 2025, we made global tax payments
of $964 million (2024: $888 million, 2023:
$833 million). This comprises $387 million
of taxes borne by Smith+Nephew and
$577 million of payroll and indirect
taxes collected.
Balance sheet
Overall goodwill and intangible assets
decreased by $68 million or 1.7% in 2025.
Intangible assets decreased by
$150 million mainly because of
amortisation and impairment of
$249 million being partially offset by
additions of $76 million and foreign
exchange movements of $22 million.
Goodwill increased by $82 million as a
result of foreign exchange movements.
Other non-current assets increased by
$489 million mainly due to an increase
of $216 million in property, plant and
equipment as a result of a transfer of
instruments not deployed of $137 million
from inventory to property, plant and
equipment to reflect their expected
deployment and a $85 million increase in
assets in course of construction mainly
on account of ongoing development of
a new manufacturing facility in Hull, UK.
Investment in associates increased by
$114 million mainly due to a $109 million
reversal of impairment of investment in
Bioventus. In addition, investments relating
to deferred compensation arrangements
amounted to $109 million, reflecting the
Group’s control of the underlying assets.
Current assets decreased by $318 million
mainly due to a $270 million decrease
in inventory as a result of $137 million
transfer of instruments not deployed
to property, plant and equipment as
noted above and $159 million excess
and obsolescence provision in relation
to the inventory portfolio rationalisation
programme. Inventory remains a key focus
area for us and we expect to significantly
reduce inventory over time as a result
of the inventory portfolio rationalisation
programme and offer a simpler and more
efficient offer to our customers.
Cash and cash equivalents decreased
by $62 million (refer to cash flow section
for details).
The decreases were partially offset
by a $32 million increase in trade and
other receivables.
The increase in trade and other receivables
is primarily due to an increase in trade
receivables of $97 million mainly due to
revenue growth and foreign exchange
movements of $47 million, excluding the
impact of foreign exchange movements,
trade receivables increased by less than
the revenue growth, reflecting sustained
momentum from the Order to Cash
initiatives implemented under the 12-Point
Plan. These increases were offset by a
decrease in other receivables due to a
$28 million decrease in derivative assets
and $27 million decrease in prepayments.
Non-current liabilities increased by
$15 million, primarily due to higher other
payables related to the Group’s deferred
compensation obligations. This was
partially offset by the reclassification of
$75 million of private placement notes to
current liabilities due to their repayment
in 2026.
Current liabilities increased by $64 million
primarily due to the reclassification of
$75 million of private placement notes
described above, partially offset by a
decrease in provisions by $34 million.
1
These non-IFRS financial measures are explained and reconciled to the most directly
comparable financial measure prepared in accordance with IFRS on pages 285-292.
22
Smith+Nephew
Annual Report 2025
Financial Review
continued
STRATEGIC REPORT
GOVERNANCE
ACCOUNTS
OTHER INFORMATION
In 2024, cash generated from operations
was $1,245 million aſter paying out
$151 million of restructuring and
rationalisation expenses, $36 million
for legal and other items and $3 million
of acquisition and disposal related
items. Trading cash flow
1
increased
by $364 million driven by a significant
improvement in working capital compared
to 2023.
In 2024, restructuring and rationalisation
cash outflows totalled $123 million,
including costs relating to efficiency
and productivity initiatives under the
12-Point Plan. This was a significant
reduction from 2023 when restructuring
and rationalisation cash outflows were
$220 million. We expect restructuring
and rationalisation cash outflows to
significantly decrease from 2025 onwards.
This was a driver behind the step-up in free
cash flow
1
to $551 million in 2024 (2023:
$129 million).
Cash flow
In 2025, cash generated from operations
was $1,549 million aſter paying out
$83 million of restructuring and
rationalisation expenses, $30 million of
acquisition and disposal related items and
$19 million for legal and other items.
Trading cash flow
1
increased by
$237 million driven by operating leverage
and improvement in working capital
compared to 2024.
Restructuring and rationalisation cash
outflows decreased by $68 million and
legal and other cash outflows decreased
by $17 million. These decreases were
partially offset by a $27 million increase in
acquisition and disposal related items.
In 2025, net cash used in investing
activities was $406 million, primarily due
to capital expenditure of $433 million.
Net cash used in financing activities
was $955 million, as a result of share
buyback of $502 million, dividends paid of
$330 million, repurchase of corporate bond
for $90 million and payment of capital
element of lease liabilities of $50 million.
Liquidity and capital resources
At 31 December 2025, the Group had
access to $553 million (2024: $617 million)
in cash net of bank overdraſts. The Group’s
debt facilities comprise:
–
USD $900 million corporate bond;
–
USD $650 million corporate bond;
–
EUR €500 million corporate bond;
–
USD $350 million corporate bond;
–
$1,000 million RCF; and
–
$625 million private placement debt.
The Group had committed available
facilities of $4,112 million at 31 December
2025 of which $3,112 million was drawn.
The Group’s net debt
2
, including lease
liabilities, increased from $2,709 million at
the beginning of 2025 to $2,759 million at
the end of 2025, representing an overall
increase of $50 million mainly as a result
of share buyback of $502 million and
$90 million repurchase of corporate bond
partially offset by $304 million increase
in cash generated from operations and
$177 million decrease in cash out flows
relating to acquisitions.
In 2025, the Group repurchased
$100 million of its $1.0 billion 2.032% USD
corporate bond for a consideration of
$90 million.
Adjusted leverage ratio
1
for 2025 was 1.7x,
better than our revised target adjusted
leverage ratio of 2x and the 1.9x for 2024,
mainly driven by improved profitability.
The leverage ratio using the closest
equivalent IFRS measures for 2025 was
5.3x (2024: 8.1x). The leverage ratio using
closest equivalent IFRS measures is not
based on measures used in the calculation
of debt covenants and is not used by
management internally.
On 9 February 2026, the Group amended
its $1000 million revolving credit
facility, increasing total commitments
to $1,125 million. The facility remains
undrawn and its maturity is unchanged.
2025
2024
2023
Change
2025
Change
2024
$m
$m
$m
$m
$m
Cash generated from operations
1,549
1,245
829
304
416
Trading cash flow
1
1,236
999
635
237
364
Free cash flow
1
840
551
129
289
422
2025
2024
Change
$m
$m
$m
Goodwill and intangible assets
3,990
4,058
(68)
Other non-current assets
2,364
1,875
489
Current assets
4,103
4,421
(318)
Total assets
10,457
10,354
103
Total equity
5,289
5,265
24
Non-current liabilities
3,573
3,558
15
Current liabilities
1,595
1,531
64
Total liabilities
5,168
5,089
79
Total equity and liabilities
10,457
10,354
103
Net debt
2
2,759
2,709
50
1
These non-IFRS financial measures are explained and reconciled to the most directly
comparable financial measure prepared in accordance with IFRS on pages 285-292.
2
Net debt including lease liabilities is reconciled in Note 15 to the Group accounts.
23
Smith+Nephew
Annual Report 2025
Return on Invested Capital
Return on Invested Capital (ROIC) is a
measure of the return generated on capital
invested by the Group. It encourages
compounding reinvestment within the
business and discipline around acquisitions.
Adjusted ROIC
1
increased from 7.4% in
2024 to 8.3% in 2025, despite a -160bps
headwind from the inventory portfolio
rationalisation programme, reflecting the
improvements delivered by the 12-Point
Plan. ROIC based on the closest equivalent
IFRS measures was 7.3% for 2025
(2024: 4.9%).
Going concern
The Directors have considered various
scenarios in assessing the future financial
performance and cash flows.
Throughout these scenarios, which
include a severe but plausible outcome,
the Group continues to have headroom
on its borrowing facilities and financial
covenants. The Directors have a reasonable
expectation that the Company and
the Group are well placed to manage
their business risks and to continue in
operational existence for a period of at
least 12 months from the date of approval
of the financial statements. Accordingly,
the Directors continue to adopt the going
concern basis in preparing the consolidated
financial statements.
Capital allocation framework
The appropriate use of capital on
behalf of shareholders is important to
Smith+Nephew. Our capital allocation
framework
prioritises the use of cash
and informs our investment decisions
as follows:
–
Invest in the business to drive
organic growth and meet our
sustainability targets.
–
Invest in acquisitions, targeting new
technologies in high growth segments
with a strong strategic fit that meets
our financial criteria.
–
Maintain an optimal balance sheet
and appropriate dividend. Here we will
continue to target investment grade
credit ratings with a target leverage
ratio of around 2x net debt to adjusted
EBITDA. We have a progressive dividend
policy and from 2025 onwards we
expect a payout of around 35% to
40% of EPSA.
–
Return surplus capital to shareholders,
subject to the above balance
sheet metrics.
Our first priority remains investing in the
business to drive organic growth and
meet our sustainability targets. We have
increased visibility and focus on improving
our Return on Invested Capital (ROIC) at
the business unit level through allocation
of central costs and our drive to improve
working capital. We will continue to
prioritise capital investment in those
areas where we expect to see the
highest incremental returns.
1
These non-IFRS financial measures are explained and reconciled to the most directly
comparable financial measure prepared in accordance with IFRS on pages 285-292..
2
Net debt including lease liabilities is reconciled in Note 15 to the Group accounts.
2027
490
140
75
2026
75
350
2028
60
60
2029
600
100
2030
1,995
1,000
95
2032
155
500
2034
650
155
900
650
Maturity by date
P
P
P
P
U
U
U
E
R
P
P
Available debt facilities by maturity date ($m)
E
EUR Bond
U
USD Bond
R
RCF Undrawn
P
Private placements
Total
24
Smith+Nephew
Annual Report 2025
Financial Review
continued
STRATEGIC REPORT
GOVERNANCE
ACCOUNTS
OTHER INFORMATION
The second priority is also unchanged, and
is to invest in acquisitions, targeting new
technologies in high growth segments
with a strong strategic fit that meet our
financial criteria. On 21 January 2026,
we completed the acquisition of Integrity
Orthopaedics, Inc, a US-based early stage
commercial developer of Tendon Seam™,
an innovative rotator cuff repair (RCR)
system designed to significantly reduce re-
tear rates and improve patient outcomes.
The acquisition represents a meaningful
step in delivering Smith+Nephew’s RISE
strategy to accelerate growth through
strategic investment and portfolio
leadership, and will be an important
building block in our ambition to become
the global leader in Sports Medicine.
The acquisition consideration comprised
of $225 million paid on completion, with
up to a further $225 million contingent on
future performance.
The third priority is to maintain an optimal
balance sheet and appropriate dividend.
Here we will continue to target investment
grade credit ratings. The adjusted
leverage ratio
1
is calculated using
metrics similar to those used in the debt
covenant calculation.
The 2024 final dividend of 23.1¢
(2023: 23.1¢) per ordinary share,
totalling $202 million (2023:
$202 million), was paid on 28 May 2025
(2023: 22 May 2024). The 2025 interim
dividend of 15.0¢ (2024: 14.4¢) per
ordinary share, totalling $128 million (2024:
$125 million), was paid on 7 November
2025 (2024: 4 November 2024).
Our final priority remains to return any
surplus capital to shareholders, via a share
buyback subject to the above balance
sheet metrics. During the second half of
2025, we completed the share buyback
of $500 million which was announced in
Q3 2025.
1
These non-IFRS financial measures are explained and reconciled to the most directly
comparable financial measure prepared in accordance with IFRS on pages 285-292.
For 2026 we are targeting further
progress in revenue growth, trading
profit¹ and adjusted ROIC¹, and
sustained strong cash generation, as
outlined in our provisional guidance
at our Capital Markets Day in
December 2025.
We continue to expect underlying¹
revenue growth to accelerate to around
6% for the full year. This is expected
to include continued good growth
in Orthopaedics, Sports Medicine
(excluding Arthroscopic Enabling
Technologies and ENT in China) and
Advanced Wound Management,
particularly in Advanced Wound
Care and Advanced Wound Devices.
Whilst we expect headwinds in our skin
substitutes business, we still expect
Advanced Wound Bioactives to grow,
supported by the ongoing strength of
SANTYL and growth in skin substitutes
outside of the physician office and
mobile channel. The guidance equates to
reported revenue growth of around 7.8%
based on exchange rates prevailing on
24 February 2026.
We continue to expect trading profit¹
growth on an organic basis of around
8%. As outlined in December, we
face a number of extraordinary profit
headwinds in 2026 including from
inventory revaluation, tariffs, the impact
of changes to reimbursement in our US
Advanced Wound Management business
and ENT VBP in China. There are no
changes to any of our assumptions
regarding these profit headwinds.
We still expect revenue leverage and
operational savings to more than offset
these headwinds to drive trading profit¹
growth ahead of revenue growth.
The acquisition of Integrity
Orthopaedics, which was completed
aſter we provided our provisional
guidance, is expected to be $20 to
$25 million dilutive to trading profit¹
in 2026, broadly neutral in 2027 and
$20 to 25 million accretive in 2028.
Including this dilution, we expect 2026
trading profit¹ to be $1.3 billion based on
current forecast exchange rates.
We expect around $800 million
in free cash flow and greater than
10% ROIC, excluding the impact of
Integrity Orthopaedics.
We expect a stronger second half to the
year compared to the first half for both
profit and sales growth, in keeping with
normal phasing.
The tax rate on trading¹ results for 2026
is forecast to be in the range of 19.0% to
20.0%, subject to any material changes
to tax law or other one-off items.
2026 Outlook
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Smith+Nephew
Annual Report 2025
Working to improve the quality of healthcare through our
investment in new technologies and services, clinical evidence
and efficient and resilient manufacturing and distribution.
Life Unlimited
01
Innovators
Together we are
Smith+Nephew
Annual Report 2025
26
Smith+Nephew’s R&D programme has
played an essential role in transforming
our revenue growth profile. In recent
years, we have delivered a steady
cadence of new products that have built
out our existing portfolio and oſten
transformed the standard of care.
In 2025, we launched 15 new products,
bringing our total to more than 75
products launched in the last five years.
As a result, more than 60% of our 2025
revenue growth came from new products
launched within the last five years.
Encouragingly, many of these new growth
platforms are driving growth today and
have multi-year runways still ahead
of them as we expand indication and
applications and launch in new markets.
That level of innovation comes with
a history of consistent investment.
We maintained our investment in R&D
through the 12-Point Plan, and invested
$296 million in 2025. We will be increasing
investment further in 2026, maintaining a
healthy average of over 5% of revenue.
Driving
growth
through
innovation
New platforms in
M-TECH and Biologics
At the heart of our new RISE strategy are
our two key innovation platforms that are
expected to deliver new products which
can be scaled across our business units.
The first we refer to as M-TECH, a term
we have created to define our innovation
across Musculoskeletal Technologies to
Enhance Care and Healing. Within M-TECH
we currently have our unique robotics-
assisted CORI
◊
Surgical System for
Orthopaedics, our new Spatial Surgery
system TESSA
◊
in Sports Medicine, which
is pending FDA De Novo, and our patient
monitoring system LEAF
◊
in Advanced
Wound Management.
The second platform is Biologics, where we
anticipate taking products like REGENTEN
◊
,
CARTIHEAL
◊
AGILI-C
◊
, SANTYL
◊
and
our skin substitutes into new areas and
indications, whilst adding new technologies
that have wide-ranging applications.
“We have a rich history of
delivering innovations that truly
matter, shaping clinical practice
and improving outcomes. We
will continue to deliver both
incremental and transformative
innovation, including across
our scalable enterprise-wide
innovation platforms of M-TECH
and Biologics, and maintain
a strong cadence of product
launches across all business units.”
Vasant Padmanabhan
President Research & Development,
ENT and Emerging Markets
Innovation that matters
Our engineers and scientists work
in partnership with our customers
to identify solutions to unmet needs
and to turn them into products.
Compelling
evidence of value
We create compelling evidence
of both clinical and economic value
to enable market access
and drive market adoption.
Seamless New Product
Development (NPD)
execution
We follow a disciplined
prioritisation process and work
with development partners across
the world to drive new products
to market.
Our innovation engine
Our approach to delivering
innovation is built upon three
key pillars:
Strong track record
of R&D investment
and productivity
$1.6bn
Total R&D
investment
2021-25
5.8%
Average R&D
spend as
proportion of
sales 2021-25
75+
New products
launched
2021-25
>60%
Revenue growth
in 2025 from
products launched
in last five years
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OTHER INFORMATION
Research & Development
From
evolution to
revolution:
new products
powering our
next phase
of growth
Orthopaedic implants
AETOS
◊
Total Shoulder System
– Meta Stem & Stemless
CATALYSTEM
◊
Primary
Hip System and Impactor
TRIGEN
◊
MAX Tibial Nailing System
LEGION
◊
Medical Stabilised Inserts
CORI Surgical
System – Robotic-
assisted revision
knee arthroplasty
Surgical planning powered by AI
CORIOGRAPH
◊
Pre-Op planning
CORI Adjustable Tibia Cut Guide
EVOS
◊
Patella Plates
Recent product launches
have been balanced
across incremental and
transformative innovations,
with some of our major
launches from 2023 to 2025
shown on these pages.
We have a broad portfolio, with
product launches spanning the
breadth of every business unit.
Orthopaedic
Enabling
Technology
CORI Digital Tensioner
28
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Annual Report 2025
Innovators
continued
Research & Development
continued
Advanced Wound Management
ALLEVYN
◊
AG+ and ALLEVYN
COMPLETE CARE
Next Gen RENASYS
◊
GRAFIX PLUS
◊
and BIOBRANE
◊
US
INTELLIO
◊
4K
ULTRABRIDGE
◊
and ULTRABRACE
◊
Kits
REGENETEN Implant expansion
Q-FIX
◊
KNOTLESS
All-Suture Anchors
INTELLIO Shiſt
CARTIHEAL
AGILI-C Implant
ENT: TULA
®
Building leadership
in M-TECH
The CORI Surgical System, with its
associated procedural applications, is the
key to unlock increased procedural growth
across reconstruction, and we are excited
by the possibilities of the third generation
product, CORI XT, which received FDA
510(k) clearance in December 2025.
TESSA Spatial Surgery (FDA De Novo
pending) is the first-of-a kind arthroscopic
video-based navigation that utilises
patient-specific, image-based planning
powered by AI algorithms with seamless
workflow integration, fast set-up and a
short learning curve, which we expect
to represent the next technological leap
for arthroscopy.
M-TECH also incorporates sensors to
enhance patient care, such as the LEAF
◊
Patient Monitoring System, acquired
in 2019, which is designed to monitor
and prevent pressure injuries. The next
generation LEAF Patient Monitoring
System, currently in development, will
be cloud-based to drive more efficient
installation and updates.
Sports Medicine & ENT
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OTHER INFORMATION
15 new products in 2025
In 2025, we expanded our portfolio with
15 major new platforms and product
enhancements across all global business
units that address unmet clinical needs.
Orthopaedics
In Orthopaedics, new products included
LEGION Medial Stabilised inserts,
addressing a fast-growing category of
inserts now used in more than 40% of
US knee replacements, and the TRIGEN
MAX Tibia Nailing System for stable and
unstable fractures of the tibia, which builds
on more than two decades of proven
performance and industry-leading design
from our TRIGEN Nails portfolio.
On our CORI
Surgical System, we launched
CORIOGRAPH Pre-Operative Planning
and Modelling Services in total shoulder
replacement, expanding the offering to
now cover all major joint replacement
procedures – knee, hip and shoulder.
Offering both image-free and image-based
registration, CORIOGRAPH is another
element in our approach of supporting
a range of procedures and surgeon
preferences on CORI.
Sports Medicine
In Sports Medicine, we continue to expand
the indication range for our REGENETEN
Bioinductive Implant to include extra-
articular ligament injuries in the US,
creating opportunities to reach more
patients with soſt tissue injuries around the
body. The initial focus is hip capsule repair,
with future expansion planned in other
extra-articular ligament repairs.
We also launched the Q-FIX KNOTLESS
All-Suture Anchor for soſt tissue-to-bone
fixation indications across multiple joint
spaces, including shoulder, hip, and foot &
ankle. This new option builds on the long-
standing success and performance of the
best-in-class anchor fixation strength of
the Q-FIX Family.
Advanced Wound Management
In Advanced Wound Management, we
launched ALLEVYN Ag+ SURGICAL in
the US. This is a new antimicrobial silver
dressing which adds to the established
ALLEVYN family of foam dressings.
ALLEVYN Ag+ SURGICAL dressing features
new ComfortSTAY
◊
Technology for
gentle silicone adhesion and HighFLEX
◊
Technology to provide flexibility and
comfort during patient movement.
ALLEVYN COMPLETE CARE
The future of foam dressings
Launched in the US in late 2025, ALLEVYN
COMPLETE CARE is our next-generation
five-layer foam dressing. In November,
we saw the first scientific data published
demonstrating its pressure injury
prevention mechanism of action and its
ability to absorb and dissipate friction and
shear forces.
In developing ALLEVYN COMPLETE
CARE Dressing we worked closely with
customers to understand the challenges
they faced, and it is these insights
that drove our product development.
ALLEVYN COMPLETE CARE Dressing
embodies our purposeful intention to
focus on the unmet need of customers and
patients alike. Actively providing such care
helps us strengthen our connection, make
meaningful impact, and create the change
that counts, because supporting better
outcomes drives everything we do.
Exciting pipeline
These new products across our business
units are expected to have multi-year
growth runways ahead, and we have
an exciting pipeline of further launches
and line extensions planned in 2026
and beyond. This includes the launch
of our new LANDMARK
◊
Total Knee
System, which is expected to leapfrog
the competition with its differentiating
features. LANDMARK brings proven
features and functions of our knee portfolio
into a single platform that combines
advanced kinematics with the next level
of personalisation, enhanced robotic
workflows, and ease of implantation,
alongside existing instrumentation.
30
Smith+Nephew
Annual Report 2025
Innovators
continued
Research & Development
continued
Supporting adoption through
clinical evidence
Clinical, scientific, and real-world evidence
continues to play a critical role in our go-
to-market strategy, with compelling and
differentiating data supporting key product
families in 2025.
In Orthopaedics, evidence shows that
JOURNEY
◊
II Total Knee Arthroplasty
(TKA), when paired with Smith+Nephew’s
handheld robotic system, resulted in
sustained improvements in clinical
outcomes and patient satisfaction at
two years compared to conventional
TKA.
1
Additionally, data confirms that our
OXINIUM
◊
Technology on highly cross-
linked polyethylene has the highest
survivorship rate among all bearing
combinations over a 20-year period for
total hip arthroplasty.
2
In Sports Medicine, we expanded
the evidence base for REGENETEN
Bioinductive Implant, showing that patients
have a three times lower re-tear rate
than with repair alone.
3
New five-year
results for CARTIHEAL AGILI-C Cartilage
Repair Implant showed how this recently
acquired product maintained superior
knee function compared to the standard
of care and reduced the long-term risk of
total knee arthroplasty or osteotomy.
4
In
ENT, Coblation Intracapsular Tonsillectomy
(CIT) was shown to be more cost-effective
than extracapsular techniques in paediatric
tonsillectomy, with lower complication
rates and reduced resource use.
5
In Advanced Wound Management, a
real-world study involving over 10,000
Caesarean section patients showed that
the PICO
◊
single-use Negative Pressure
Wound Therapy (sNPWT) system led to
significantly fewer surgical site infections
and complications, and resulted in cost
savings compared to an alternative
sNPWT system.
6
And the first scientific
data demonstrating the effectiveness
of our new ALLEVYN COMPLETE CARE
5-Layer Foam Dressing for pressure injury
prevention was published.
7
Our AI strategy
AI is increasingly important to
Smith+Nephew’s strategy, supporting our
growth ambitions through our innovation
programmes and our drive to improve
productivity. Strategic direction is set by
our Executive Committee, and our AI
needs are prioritised and enabled by
Enterprise AI Centres of Excellence (COE).
AI Champions across the business identify
opportunities both within their areas
and for potential application enterprise-
wide, and drive implementation and
adoption, supported by IT and Information
Security teams.
Our AI Working Group, comprising a
cross-functional team, including members
from Commercial, R&D, Audit, Information
Security, Privacy and Legal, oversees
governance to ensure that reviews are
undertaken to establish appropriate
controls across the Group, both for AI
projects and for AI use by employees in
their day-to-day work.
For customer-facing delivery of products
and services, we are strategically
positioning AI to enhance personalisation,
automation and overall care quality
for patients, developing solutions to
address unmet clinical needs and support
operational efficiencies.
We have two AI Centres of Excellence
that work together in close coordination.
The Enterprise AI COE is responsible for
enabling our employees with AI skills and
knowledge, initiating high value AI solutions
across the enterprise, governing ethical and
appropriate use of AI, and ensuring that
we track and register how AI is adopted
across our Company. Our R&D AI Centre
of Excellence evaluates opportunities
for generative AI (GenAI) and machine
learning to meet different needs related
to our products.
Our AI strategy addresses
opportunities in three areas:
Products, Enterprise and People.
1
Products:
AI brings advanced
capabilities that improve
surgical planning, procedures,
and customer outcomes.
Our CORI Surgical System
incorporates Personalised
Planning powered by AI
and RI.INSIGHTS
◊
Data
Visualization Platform, two
solutions that transform data
into contextual intelligence
by enabling surgeons to see
how pre-operative surgical
plans and intra-operative
decision making link to
post-operative outcomes.
2
Enterprise:
We leverage
agentic and generative AI
to automate and improve
workflows, improve
forecasting, and strengthen
commercial interactions.
For 2026, we are exploring
expanding our AI-enabled
solutions that augment our
customer service, improve
employee self-service,
and optimise inventory
across our distribution and
stocking network.
3
People:
We bring the power
of AI to our employees
to drive productivity and
quality. Generative AI
tools, including Microsoſt
Copilot Chat, are deployed
and supported by training,
communications, and skills-
building courses.
ALLEVYN COMPLETE CARE
For a full list of references
see page 306-311
31
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OTHER INFORMATION
Integrity
Orthopaedics –
scaling through
strategic investment
Strengthening our
shoulder repair portfolio
In January 2026, we were pleased to
acquire sports medicine business Integrity
Orthopaedics and its novel TENDON
SEAM™ rotator cuff repair technology.
Integrity Orthopaedics is a US-based
early-stage commercial developer of
TENDON SEAM, an innovative rotator
cuff repair (RCR) system designed to
significantly reduce re-tear rates and
improve patient outcomes.
The acquisition represents a meaningful
step in delivering Smith+Nephew’s RISE
strategy to accelerate growth through
strategic investment and portfolio
leadership, and will be an important
building block in our ambition to become
the global leader in Sports Medicine.
Rotator cuff repair is a substantial
and growing treatment area, with
approximately 500,000 procedures
performed annually in the US and an
estimated market value of $875 million.
8
Yet traditional surgical techniques have
historically suffered from high structural
failure rates, averaging 20–40%.
9
TENDON SEAM directly addresses
this unmet clinical need. Its patented
micro-anchors, continuous suture,
individually locked stitches, and
integrated implantation instrument are
designed to deliver stronger repairs,
accelerated patient recovery, lower
re-tear rates, and a simplified surgical
technique. Early clinical experience
indicates low re-tear rates, reduced sling
times and shorter procedures compared
with standard methods.
10
The system
received 510(k) clearance in 2023 and is
indicated for reattachment of soſt tissue
to bone, including tendons, ligaments, and
joint capsules.
Smith+Nephew acquired Integrity
Orthopaedics for an initial cash
payment of $225 million, plus additional
performance-based payments of up to
$225 million over the next five years.
The transaction is expected to be
accretive to Group trading profit margin
by 2028.
Smith+Nephew’s portfolio
for shoulder
TENDON SEAM enhances
Smith+Nephew’s extensive shoulder
repair offering, which spans technologies
for both replacement and repair.
This includes:
–
REGENETEN Bioinductive Implant
used in 200,000+ rotator cuff
procedures in the last decade, and
shown to support new tissue growth
and improved healing.
11,12
–
Q-FIX All-Suture Anchor
delivering
market-leading fixation strength with
a decade of clinical performance.
13-19
–
AETOS Shoulder System
launched in
2024, designed for both anatomic and
reverse total shoulder arthroplasty,
supporting a fast-growing US shoulder
replacement segment estimated at
250,000 procedures in 2025.
20
Together, these technologies provide
surgeons with one of the broadest and
most advanced portfolios for managing
shoulder pathology, spanning biological
enhancement, mechanical repair,
and replacement.
“Smith+Nephew now has an
unrivalled portfolio for shoulder,
including a powerful next-
generation rotator cuff repair
platform to complement market-
leading biological augmentation,
the newest shoulder arthroplasty
system, and proven solutions
across shoulder instability. We
welcome the Integrity team,
including those involved with
our prior successful acquisition
of Rotation Medical, and look
forward to working together
again to offer customers and their
patients this exciting technology.”
Scott Schaffner
President Sports Medicine
TENDON SEAM
For a full list of references
see pages 306-311
32
Smith+Nephew
Annual Report 2025
Innovators
continued
Research & Development
continued
Over the past several years, the
organisation has undertaken a
transformative journey to optimise its
manufacturing network and operational
efficiency. This began with the launch
of the 12-Point Plan in 2022, which set
ambitious targets for cost savings and
productivity improvements. The initial
$200 million savings programme was
expanded in 2024 through a zero-based
budgeting approach, identifying further
opportunities and setting a new target of
$325–375 million in gross cost savings,
with manufacturing and procurement
delivering the largest share.
Network optimisation and
footprint transformation
A major lever for change has been the
consolidation of manufacturing sites,
particularly in Orthopaedics. The network
was streamlined from eight core sites
to three, creating scale, simplifying
operations, and reducing variability.
Closing smaller manufacturing sites has
significantly lowered the fixed production
cost base and rebalanced production to
better align with demand.
Optimising
our network
and driving
operational
efficiency
We are on track to deliver our new
Advanced Wound Management
manufacturing site at Melton, near
to Hull in the UK. Building on our long
local heritage, Melton will focus on
manufacturing intermediates, the key
components of wound care products.
This major investment will start operations
in 2027 and will significantly contribute to
our sustainability goals.
Our new S+N Operating System has
established standard systems, processes
and programmes to deliver improved
manufacturing and quality throughout our
global network. The application of LEAN
principles has improved the capability
of our equipment and processes, while
providing greater agility and responsiveness
to meet demand requirements.
Operational productivity has been
improved through several initiatives that
have lowered costs, increasing efficiency,
and right-sized capacity. In addition to
closing facilities, we have also reduced
headcount and aligned supply and demand
more closely, supporting the Group’s
margin expansion.
$325–
375m
Target for gross cost savings,
with manufacturing and
procurement delivering
the largest share.
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OTHER INFORMATION
Manufacturing
Inventory management
and margin impact
In 2025 we continued to make progress
addressing our high inventory, reducing Day
Sales of Inventory (DSI) by 21 days year-
on-year, with DSI down across all business
units. As a result of the further Group-
wide inventory portfolio rationalisation
programme announced in December
2025, DSI decreased by 51 days year-on-
year. As stated above, we expect that
this programme will result in a material
reduction in gross inventory, and expect a
$500 million reduction in capital employed
over time. This action is designed to free up
cash for reinvestment into strategic growth
platforms and to support the delivery of
the 2028 adjusted ROIC target of 12-13%.
The biggest reduction in DSI came from
Orthopaedics, reflecting continued efforts
to reduce the number of units in inventory.
Here, prior to the 12-Point Plan, we had
128 major product families. We initially
identified 19 families to phase out in
a gradual process to protect revenue.
The majority of these families were in
knees and hips. In December 2025 we
announced a second wave identifying
a further 50 families to phase out,
predominantly in trauma. We expect to
complete this process over the next three
to five years, by which time we will have
just 59 product families, a reduction of
more than 50% since the beginning of the
12-Point Plan.
Technology and process
improvements
The adoption of AI, machine learning,
and data analytics is also helping to
drive improvements in supply chain,
manufacturing, inventory management,
and pricing. These technologies are
reducing the cost to serve and enhancing
capital efficiency. Modernisation efforts
include upgrading equipment, digitising
workflows, and rationalising the supplier
base. We are also upgrading our Enterprise
Resource Planning (ERP) soſtware system,
which will standardise our business process
and enhance our end-to-end connectivity.
Source materials
Smith+Nephew has successfully reduced
its direct material supplier base to below
1,000 active suppliers across the globe.
This reduction will allow for a more
dedicated focus and attention while
not impacting the resilience offered by
having supplier choice. These suppliers
provide products, raw materials and
services needed to drive production
of our end products. The performance
of these suppliers directly impacts our
manufacturing schedule, with further
implications for our commercial colleagues,
customers and patients.
In 2025, we continued to improve the
identification, selection, and management
of our suppliers. We continued to
evolve our criteria to be a supplier to
Smith+Nephew to better select the most
appropriate suppliers for our requirements.
Our ability to measure performance and
engage with our suppliers has continued
to improve. We continue to secure long-
term supply via updated agreements and
expectations where necessary.
Foundations for future gains
The progress made has established a
credible Global Operations platform
for future improvements. With deep
operational leadership, strengthened
Sales, Inventory & Operations Planning
(SIOP) discipline, and the maturing of the
S+N operating system, further operational
savings are expected. We also expect to
further reduce our inventory, with a 2028
target of having best-in-class DSI in key
business units and a 30%+ reduction in DSI
versus 2022.
“Global Operations has delivered
significant structural efficiencies
through footprint actions,
standard cost reductions, and
working capital improvements.
These foundations make the next
set of improvements repeatable
and scalable as we deliver the new
strategy.”
Paul Connolly
President, Global Operations
34
Smith+Nephew
Annual Report 2025
Innovators
continued
Manufacturing
continued
“We remain focused on improving
efficiency across the organisation,
and the strategic move of certain
functions to offshore teams
has strengthened our cost base
without compromising our
exemplary compliance record.”
Mizanu Kebede
Chief Quality and
Regulatory Officer
We have made good progress with our
respective submissions and have officially
closed our internal project with all files
submitted to the notified bodies, and 98%
of respective product lines have received
EU MDR certification. The Regulation
allows devices certified under previous
legislation (Medical Device Directive)
to continue to be placed on the market
in Europe until 31 December 2027 or
31 December 2028, dependent on
risk classification.
We closely monitor proposed changes
in the regulatory landscape, including, in
the EU, the world’s first comprehensive
AI law, with compliance for certain AI
devices (soſtware or integrated soſtware)
required by August 2027. Other significant
regulatory landscape changes include
changes in UK medical device legislation
and UKCA (UK Conformity Assessed)
marking. These changes allow CE-marked
devices to be placed on the market in Great
Britain until June 2030. Additionally, we are
closely monitoring international regulatory
trends that include an increased focus on
cybersecurity in medical technology.
Smith+Nephew participates in industry-
wide partnerships that address supply
chain risk evaluation and mitigation,
including MedTech Europe, AdvaMed
and regional industry trade associations
in geographies where we have a
market presence.
We follow responsible codes of conduct
for sales interactions, including the
AdvaMed Code of Ethics on Interactions
with Healthcare Professionals in the US
and the MedTech Europe Code of Ethical
Business Practice.
Quality & Regulatory Affairs
Our Quality & Regulatory Affairs
function supports full product life cycle
management of our global product
portfolio, from design and development
through manufacturing and post-
market surveillance. It establishes
appropriate processes and procedures
to facilitate compliance with complex
global regulations and laws that govern
the design, development, approval,
manufacture, labelling, marketing and sale
of healthcare products.
Throughout the year, our sites hosted 58
Health Authority audits and inspections,
resulting in no significant inspection
findings or regulatory actions.
The Quality & Regulatory Affairs teams
directly support expansion of our global
portfolio through the registration of
new products and existing products in
new markets.
The European Union Medical Device
Regulation (EU MDR) is a significant
regulatory change whereby medical
devices carrying a CE mark, confirming
conformity with relevant requirements,
now face greater scrutiny than ever before
to ensure they are effective and safe.
35
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STRATEGIC REPORT
GOVERNANCE
ACCOUNTS
OTHER INFORMATION
Our customers are healthcare professionals.
They range from orthopaedic surgeons to wound care
nurses, general practitioners and other clinicians, but
increasingly also economic stakeholders, such as purchasing
professionals in hospitals, and healthcare insurers.
Life Unlimited
02
Serving our
customers
Together we are
Smith+Nephew
Annual Report 2025
36
3,850+
S+N Academy programmes run
by Smith+Nephew in 2025
132,597
HCP training sessions in 2025
We serve our customers through three
global business units: Orthopaedics, Sports
Medicine & ENT, and Advanced Wound
Management. Through this model we
ensure that we have subject and market
experts leading specialist teams dedicated
to serving the specific requirements of
our customers.
Our business units are responsible for their
commercial strategy, determining which
products we take to market. They work
closely with R&D to ensure that we are
developing products that address unmet
needs, and with Global Operations to
ensure we have appropriate product
availability to meet customer needs.
Our sales force
Our sales representatives play a vital role
in supporting healthcare professionals by
leveraging their deep technical expertise.
In surgical specialties, they possess
comprehensive knowledge of both the
products and the instruments required
for implantation, and are well-versed
in the diverse surgical techniques
employed by clinicians. Aſter completing
rigorous training and certification, our
representatives dedicate most of their time
to working alongside customers – ensuring
the safe and effective use of our advanced
medical technologies, and proactively
engaging with new customers.
Within Advanced Wound Management,
our sales team continually expands their
understanding of clinical approaches to
wound prevention and treatment, while
also building their understanding of the
economic advantages our products offer
within established care protocols.
We are committed to delivering
exceptional service and invest significantly
in the development of our sales and
marketing teams. Through our Global
Commercial Training and Education
programme, we provide a standardised
curriculum and specialised commercial
training tailored to key markets, ensuring
our teams are equipped to meet the
evolving needs of our customers.
A portfolio business
Like many leading medical device
companies, Smith+Nephew operates
as a global portfolio business, which
offers several advantages in serving
our customers. This structure provides
significant scale, helping to manage costs
efficiently and enabling engagement with
customers across multiple business areas.
The portfolio approach also brings stability,
as diversification helps balance the natural
product cycles found throughout the
MedTech sector.
Additionally, our portfolio model supports
strategic capital allocation, allowing
us to invest in targeted categories that
might be more challenging for standalone
businesses. At the same time, our global
business unit structure ensures each area
benefits from focused leadership, clear
accountability, and the agility to respond
quickly to market needs.
We are
dedicated
to serving
the specific
requirements
of our
customers
37
Smith+Nephew
Annual Report 2025
STRATEGIC REPORT
GOVERNANCE
ACCOUNTS
OTHER INFORMATION
Medical education
We strive to be a world leader in
medical education, helping to improve
patient outcomes through interactive
learning to support appropriate
clinical decision making, and to build
trust in the safe and effective use of
Smith+Nephew technologies.
Every year, we provide tens of thousands of
surgeons and nurses with opportunities to
evaluate the latest clinical evidence, learn
innovative surgical techniques and advance
the effective use of our products through
medical education programmes run by our
business units.
Our medical education programmes deliver
globally consistent curriculums, using
interactive learning and on-site teaching
at our seven Academy centres in the US,
Singapore, Germany and the UK, as well
as through regional and local events in
an effort to remove barriers and provide
education where it is needed most.
Our programmes blend hands-on
experience with digital education through
our AI-enabled Academy Online, surgical
simulations, interactive eLearning, live
surgery transmission, virtual reality (VR)
and podcasts. We provide personalised
curriculum and programming specifically
designed to meet the needs of the
accomplished physician, resident, fellow
and allied health professional.
We are proud recipients of the Royal
College of Surgeons of England (RCSEng)
Centre Accreditation, awarded to
Smith+Nephew Academy. In 2025,
we received approval to have our VR
simulations accredited through RCSEng.
Portfolio strength
and procedural
leadership for
ASC growth
A major trend in our market is the
migration of musculoskeletal (MSK)
procedures from hospitals to Ambulatory
Surgery Centers (ASCs). There are
close to 4,000 ASCs in the US that
perform MSK-focused procedures,
with double-digit growth expected as
more procedures move to outpatient
settings. Out of these 4,000, over 60%
perform both sports medicine and
orthopaedic procedures.
ASCs differ from hospitals in their
smaller operating rooms, limited sterile
processing and storage, lean staffing,
and a strong focus on efficiency and
throughput. Regulatory changes,
such as new mandates for patient
outcome reporting, add complexity to
their operations.
Unique solutions to
elevate outcomes
Smith+Nephew is well positioned in
the ASC segment, with many years of
experience in serving sports medicine
customers in this setting. We are also
growing our Orthopaedic business,
with 35% of US CORI
◊
robotic systems
placed in ASCs in 2025. This success is
attributed to several factors:
Robotic form factor:
CORI’s compact,
mobile design suits ASC environments,
offering quick set up and lower
ownership costs compared to larger
systems. It supports a wide range of
procedures providing flexibility for
musculoskeletal-focused ASCs.
Tray efficiency:
Smith+Nephews’s
surgical tray configurations for knees,
hips and shoulders reduce the number
of trays needed by 50–70% compared
to industry averages, addressing
space and staffing constraints without
compromising surgical options.
Portfolio strength:
Our combined
Orthopaedic and Sports Medicine
offerings allow ASCs to access
differentiated technologies across
both arthroplasty and soſt tissue
repair procedures.
Optimising ASC performance
To help ASCs meet new US Centers for
Medicare & Medicaid Services (CMS)
reporting requirements, Smith+Nephew
has formed exclusive partnerships that
facilitate patient outcome tracking,
improve engagement, and provide
actionable analytics. These partnerships
enable real-time performance
metrics, connectivity across reporting
systems, and the generation of clinical
and economic data to personalise
care pathways.
Smith+Nephew has also restructured
its commercial approach, creating
a dedicated ASC sales team and
flexible financing models to deliver
turnkey solutions. Our focus on ASC
stakeholders, combined with its
technology and partnerships, positions
Smith+Nephew as a leader in this fast-
growing segment.
>4,000
US MSK ASCs
>10% CAGR
in ASC hip and knee
arthroplasty procedures
projected over three years
38
Smith+Nephew
Annual Report 2025
Serving our customers
continued
Driving procedural
innovation
Our Orthopaedics business unit offers
a leading portfolio of Hip and Knee
Implants, robotics and digital-enabling
technologies, driving procedural
innovation and a strengthened Trauma &
Extremities portfolio.
Smith+Nephew’s Orthopaedics vision is
to deliver innovative personalised solutions
to customers that enhance clinical and
economic outcomes in every care setting.
Our innovative implants are designed
to mimic natural movement and are
manufactured using materials with a track
record of longevity and performance.
The addition of our CORI Surgical System
robotics platform delivers accuracy,
performance and efficiency to the surgical
procedure. We are well positioned as the
orthopaedic partner of choice for surgeons
across the globe.
Orthopaedics includes an innovative range
of hip, knee and shoulder implants used to
replace diseased, damaged or worn joints,
robotics-assisted enabling technologies
that improve accuracy and facilitate
precision during the surgical procedure, and
trauma products used to stabilise fractures
and correct bone deformities.
In Orthopaedic Joint Reconstruction, which
includes our Hip and Knee Implants and
Other Reconstruction segments, we have
a broad, clinically proven and differentiated
portfolio that allows us to compete
effectively across a market worth around
$17.6 billion annually. This portfolio includes
our proprietary OXINIUM
◊
Technology and
our CORI Surgical System, which is strongly
positioned to take advantage of the trends
towards robotics-assisted surgery and
outpatient joint replacement seen across
the segment.
The Trauma & Extremities market is worth
over $15.7 billion annually, and we are well
positioned to compete effectively in this
segment. The simplicity and efficiency of
our complete EVOS
◊
Plating System gives
us an advantage in the largest segment
in Trauma, and our TRIGEN
◊
INTERTAN
◊
Intertrochanteric Nail is backed by the
clinical and economic data to position it as
the standard of care for hip fracture,
1,2
the
second-largest segment. In Extremities,
our portfolio features our next-
generation shoulder implant, the AETOS
◊
Shoulder System.
Orthopaedics global
market share
a
In our Orthopaedics business unit, we are
one of four leading players, competing
against US-based companies Stryker,
Zimmer Biomet and DePuy Synthes.
Hip and Knee Implants
$17.6bn
+5%
2024: $16.8bn +5%
A
Smith+Nephew
9%
B
Zimmer Biomet
31%
C
Stryker
26%
D
DePuy Synthes
b
18%
E
Others
16%
Trauma & Extremities
$15.7bn
+7%
2024: $14.6bn +7%
A
Smith+Nephew
4%
B
Stryker
25%
C
DePuy Synthes
b
23%
D
Zimmer Biomet
12%
E
Others
36%
“I am proud of the progress
we’ve made as a business
over the last three years.
As a result, we are in a
much stronger position
today, with a strong
platform and a springboard
for future growth.”
Craig Gaffin,
President Orthopaedics
For a full list of references,
see pages 306–311
9%
Hip and Knee Implants
global market share
a
In our Orthopaedics business unit,
we are one of four leading players
a
Data used in 2024 and 2025 estimates generated by Smith+Nephew are based on publicly
available sources and internal analysis and represent an indication of market shares and sizes.
b
A division of Johnson & Johnson.
39
Smith+Nephew
Annual Report 2025
STRATEGIC REPORT
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ACCOUNTS
OTHER INFORMATION
Orthopaedics
RISE strategy
Our Orthopaedics business unit has an
innovative portfolio that allows us to
compete in joint reconstruction, robotics-
enabled procedures and across Trauma &
Extremities markets. Our areas of focus
include advancing innovative surgical
solutions and optimising the use of
working capital.
Our initiatives are designed to drive growth
across the Orthopaedics business unit,
and support delivery of our RISE strategy.
We will Reach more patients through
strengthened commercial execution
that will fuel growth by capitalising on
our differentiated technologies through
targeted global expansion.
We will continue to Innovate across
our portfolio with specific call-out on
building out our products in Knees, with
the introduction of a new knee system
in 2026. We will continue to develop
CORI, our unique, procedurally-scaled
platform offering even greater value to
our customers.
We will Scale through disciplined capital
allocation, precise inventory placement,
and deliberate market-by-market
strategies that we will execute with intent.
With the continued shiſt of procedures to
Ambulatory Surgical Centers, we are well
positioned to drive growth in this channel.
Finally, Orthopaedics will Execute
efficiently as we drive Ortho 360, our
enhanced operational model, which is
now firmly embedded into our business.
This model will drive clear choices in
portfolio mix and go-to-market strategies,
leading to continued improvement in
inventory and portfolio optimisation.
2025 performance
Orthopaedics full year 2025 revenue
growth was 5.7% on a reported basis,
including an FX tailwind of +60bps. On an
underlying
1
basis, revenue growth was
5.1%. The business unit finished the year
strongly as we continued to make progress
delivering against the 12-Point Plan
priority to fix Orthopaedics.
Knee Implants growth was strongest
outside the US led by our JOURNEY
◊
II
Total Knee System and ANTHEM
◊
Total
Knee System. In the US, growth was held
back by our ongoing actions to rationalise
our portfolio performance and a widening
product gap as US market trends changed.
Performance
2025
Revenue
2024
Revenue
2
2023
Revenue
2025
Reported
growth
2024
Reported
growth
2
2023
Reported
growth
2025
Underlying
growth
1
2024
Underlying
growth
1,2
2023
Underlying
growth
1
Orthopaedics
$2,437m
$2,305m
$2,214m
5.7%
4.1%
4.8%
5.1%
4.7%
5.7%
Knee Implants
$1,011m
$977m
$940m
3.5%
3.9%
4.7%
2.9%
4.7%
5.5%
Hip Implants
$641m
$619m
$599m
3.5%
3.3%
2.5%
2.9%
3.8%
3.8%
Other Reconstruction
$136m
$101m
$111m
35.4%
-9.4%
27.8%
33.8%
-8.4%
28.0%
Trauma & Extremities
$649m
$608m
$564m
6.7%
7.9%
3.7%
6.3%
8.1%
4.4%
2025
2024
2023
2025
Reported
growth
2024
Reported
growth
Segment trading profit
$363m
$265m
$251m
36.9%
5.5%
1
These non-IFRS financial measures are explained and reconciled to the most directly comparable financial measure prepared in accordance with IFRS
on pages 285-292.
2
Robotics consumables revenue has been reclassified from Other Reconstruction to Knee and Hip implants.
We are accelerating development to
close that gap with a strong pipeline of
new product introductions over the next
18 months. Hip Implant performance
was driven by the US launch of the
CATALYSTEM
◊
Primary Hip System and
strong growth from the OR30 Dual
Mobility System.
Other Reconstruction performance was
driven by sales of our robotics-assisted
CORI Surgical System and consumables.
By the end of 2025 we had more than
1,100 CORIs installed worldwide.
Trauma & Extremities continued to be
a significant growth driver following its
turnaround in 2023. Growth was driven
by the EVOS
Plating System, our patient-
positioning portfolio and the successful
launch of the AETOS Shoulder System.
Orthopaedics trading profit
1
was up 36.9%
in 2025, with a 340bps increase in trading
profit margin
1
to 14.9%. This increase
reflected 12-Point Plan transformation
initiatives, including inventory reduction,
improved capital efficiency, portfolio
rationalisation and our focus on higher
volume accounts
With sustained improvement in execution,
a pipeline of new innovation and strong
cost control we expect to make further
progress on trading profit margin
1
between 2025 and 2028.
For a full list of references,
see pages 306–311
40
Smith+Nephew
Annual Report 2025
Orthopaedics
continued
Serving our customers
continued
OXINIUM Technology
The best performing bearing
surface at 20 years for total
hip arthroplasty
In 2025, the annual report from the
Australian Orthopaedic Association
National Joint Replacement Registry
(AOANJRR) highlighted the exceptional
performance of Smith+Nephew’s
proprietary OXINIUM on highly cross-
linked polyethylene. The data indicates
that this combination has the highest
survivorship rate (94.1%) among all
bearing combinations over a 20-year
period for total hip arthroplasty (THA).
8
The report on 20-year outcomes
corroborates similar findings and peer-
reviewed publications from the National
Joint Registry for England, Wales,
Northern Ireland and the Isle of Man
(NJR).
42
Four registries in total – including
the Italian Registry (RIPO; Register of
Orthopaedic Prosthetic Implants) and
the Dutch Arthroplasty Register (LROI) –
have now demonstrated that OXINIUM/
XLPE had a 35% lower risk of revision at
10 years versus other modular acetabular
implants.
8,42–45
Through a unique manufacturing
process, the OXINIUM alloy becomes
a ceramicised metal – a true material
transformation – rather than an applied
coating.
46
It is this material transformation that
provides OXINIUM with its ground-
breaking performance benefits
which include:
Unrivalled material science:
The
durability of metal, the wear resistance of
ceramic and corrosion resistance better
than both metal and ceramic.
46–57
Differentiated composition:
Virtually no
nickel, cobalt and chromium,
57
with a 30x
reduction in pro-inflammatory markers
for OXINIUM.
55,57
As such, OXINIUM
implants do not require declaration of
the presence of CMR (carcinogenic,
mutagenic, reprotoxic) substances on
the labelling.
Key products by segment
Reconstruction & Robotics
– Knee Implants
In Knee Implants, Smith+Nephew’s
specialised systems include leading
products for total primary replacement
and revision, as well as partial and
patellofemoral joint resurfacing procedures,
offering surgeons and patients the benefits
of many proprietary technologies.
These include a unique kinematic knee,
the JOURNEY II Total Knee Arthroplasty
System, which features our proprietary
OXINIUM Technology and has been
shown to replicate normal knee shape,
position and motion.
*3–7
In 2025, the
Australian Orthopaedic Association
National Joint Replacement Registry
(AOANJRR) highlighted the exceptional
performance of OXINIUM on highly cross-
linked polyethylene. The data indicates
that this combination has the highest
survivorship rate (94.1%) among all bearing
combinations over a 20-year period for
total hip arthroplasty (THA).
8
Our LEGION
◊
CONCELOC
◊
Cementless
Total Knee System uses innovative
3D-printed cementless technology
to achieve biological fixation, bringing
efficiency and versatility to the operating
room (OR).
9,10
In 2025, we introduced a new
medial stabilised insert for our LEGION
Total Knee System which is designed
to improve kinematics, stability and
procedural versatility. Medial stabilised
inserts are seeing a steep rise in
popularity, growing from 4% of Total Knee
Arthroplasty procedures in 2018 to 32%
in 2023.
11
2024 performance
Orthopaedics revenue increased 4.1%
on a reported basis in 2024, including a
-60bps headwind from foreign exchange.
Underlying revenue growth
1
was 4.7%.
Knee and Hip Implants growth was driven
by Other Established Markets and a
significant improvement in the US in 2024.
Other Reconstruction grew double digit
in 2024, principally reflecting sales of our
robotics-assisted CORI Surgical System
and consumables.
Orthopaedics trading profit
1
was up 5.5%
in 2024, with a 20bps increase in trading
profit margin
1
to 11.5%.
41
Smith+Nephew
Annual Report 2025
STRATEGIC REPORT
GOVERNANCE
ACCOUNTS
OTHER INFORMATION
Reconstruction & Robotics
– Hip Implants
The Hip Implants portfolio includes our
CATALYSTEM
◊
Primary Hip System.
Building on the clinical success of
our POLARSTEM
◊
Hip System,
12
the
CATALYSTEM System is designed to
address the changing demands of primary
hip surgery. The CATALYSTEM Primary
Hip System optimises performance
with patent-pending ACCUBROACH
◊
Technology for reproducible
13
implant
seating in just one modular tray. It is the
only cementless stem of its kind to feature
OXINIUM Technology bearing material.
Our POLAR3
◊
Total Hip Solution has
among the lowest revision rates in total
hip arthroplasty.
*14–18
OR3O
◊
Dual Mobility
System is the first system to use the
latest OXINIUM DH Advanced Bearing
Technology. Dual mobility hip implants
are used in primary as well as revision
procedures. In addition, we offer a full
breadth of stems to address surgical needs,
including the ANTHOLOGY
◊
Hip System.
For revisions, the REDAPT
◊
Revision Hip
System features CONCELOC
Technology.
Other Reconstruction
Our Other Reconstruction business
includes the CORI Surgical System, one
of the most advanced and efficient
***19
handheld robotics solutions. CORI is a
smaller,
****20
portable solution capable
of performing robotics-assisted knee
and computer-guided hip surgery on
a single platform. In robotics-assisted
knee procedures, CORI utilises handheld
precision milling which allows surgeons
to execute Total Knee Arthroplasty and
Unicondylar Knee Arthroplasty procedures
with reproducible accuracy.
*****21-25
The
proprietary smart mapping feature creates
a 3D image of the patient’s anatomy in
surgery, eliminating the time, costs and
radiation exposure
25
associated with
pre-operative CT scans.
The CORIOGRAPH
◊
pre-operative planning
and modelling service delivers the unique
surgical planning solution desired by some
surgeons. The proprietary soſtware of CORI
3.0 allows CORI to utilise our proven image-
free surface mapping and image-based
planning solutions for the right indications.
In 2025, we launched the CORIOGRAPH
Pre-Op Planning and Modeling Services for
total shoulder arthroplasty, now available
in the US.
This innovative soſtware offers image-
based planning capabilities that
enable surgeons to create a patient-
specific plan for shoulder replacement
procedures by using enhanced clinical
decision making through advanced
biomechanical simulation that accounts for
scapulothoracic motion.
26–31
For a full list of references,
see pages 306–311
A pre-operative planning
solution for each individual
knee arthroplasty patient
Optimising personalised surgery
with CORIOGRAPH pre-op planning
With our CORIOGRAPH Pre-Op Planning and
Modeling Services and the CORI Surgical
System’s image-agnostic solution, we offer
a pre-operative planning solution for each
individual knee arthroplasty patient.
Using our advanced simulation technologies
in hip arthroplasty allows a new dimension of
personalised planning and ultimately supports
the intra-operative surgical workflow.
With the addition of shoulder arthroplasty,
surgeons can now combine advanced planning
tools with their own preferences to achieve
a truly patient-specific approach.
42
Smith+Nephew
Annual Report 2025
Orthopaedics
continued
Serving our customers
continued
Next level nailing with TRIGEN MAX Tibia
Regardless of fracture complexity, the
TRIGEN MAX System’s side-specific
nails and anatomic screw trajectories,
combined with a variable angle locking
mechanism and low profile screws, are
designed to maximise fixation, optimise
fragment fixation, minimise soſt tissue
irritation and streamline the surgeon
experience.
33,34
The TRIGEN MAX Tibia Nailing System
aims to streamline operative procedures
and provide efficiency through surgeon-
centred design of components and
instrumentation, including:
–
Two-piece modular drop system to
help when using ancillary instruments
and aid visualisation.
–
12.5mm channel reamer for the tibia,
which is designed to preserve the
integrity of the entry point and provide
soſt tissue protection.
–
5.0mm Lag Screws that compress the
fracture in one screw insertion step,
creating a streamlined workflow.
58
Trauma & Extremities
Smith+Nephew’s portfolio includes
differentiated technology across the
major categories of Plates and Screws,
Intramedullary Nails, Hip Fracture,
Limb Restoration, Extremities, and
Shoulder Replacement.
Leading products include the EVOS Plating
System, which includes a wide range of
clinical indications from mini and small
to large fragment, periprosthetic, pelvic
and patella. Designed to offer surgeons an
all-inclusive, expansive plating portfolio,
EVOS provides the simplicity of logically
organised instrumentation with advanced
implant solutions that meet the demands
and expectations of trauma surgeons.
The portfolio also includes the TRIGEN
INTERTAN Hip Fracture System, which is
backed by many years of strong clinical
evidence.
2
In 2025, we launched our new
TRIGEN MAX Tibia Nailing System for
stable and unstable fractures of the tibia,
including the shaſt. It is the only system
to now offer trauma surgeons the choice
of side-specific (right and leſt) nails for
anatomic screw trajectories, which help to
optimise fragment fixation and minimise
soſt tissue irritation with headless and low-
profile screw options.
33,34
The TAYLOR SPATIAL FRAME
◊
External
Fixator is an advanced and versatile
35,36
circular fixator, designed to be minimally
invasive and allow stable fixation in small
fragments.
37
Its capabilities are increased
through the use of the SMART TSF
◊
Circular Fixator.
In our Upper Extremities portfolio, the
AETOS Shoulder System, indicated
for both anatomic and reverse total
shoulder arthroplasty, is designed to
restore patients’ range of motion
38–41
and help minimise arthritic shoulder
pain. It complements our market-leading
sports medicine shoulder repair and
biologics solutions.
Our Lower Extremities portfolio features
TOTAL ANKLE Patient-Matched Guides,
the LEOS
◊
Plating System and LEOS
Cannulated Screw System.
RI.HIP
◊
NAVIGATION further expands
indications on the CORI Surgical System.
When combined with Smith+Nephew Hip
Implants, like the CATALYSTEM Primary
Hip System, POLAR3 Total Hip Solution
and OR3O Dual Mobility System, as well as
complementary tools to assess spinopelvic
mobility (RI.HIP MODELER), RI.HIP on CORI
delivers a comprehensive solution for
navigated total hip arthroplasty. RI.HIP
NAVIGATION and RI.HIP MODELER are
designed to help maximise accuracy
and reproducibility by delivering patient-
specific component alignment.
32
The CORI Surgical System is currently the
only solution indicated for robotics-enabled
knee procedures across the full continuum
of care – partial, total and revision
knee arthroplasty.
In addition, Personalised Planning guided by
RI.INSIGHTS
◊
enables surgeons to set the
initial implant placement within the total
knee arthroplasty procedure based on AI-
guided reference values and the surgeon’s
planning preferences for specific implants
and patient-specific deformities.
43
Smith+Nephew
Annual Report 2025
STRATEGIC REPORT
GOVERNANCE
ACCOUNTS
OTHER INFORMATION
Changing the game
with innovative
procedural solutions
Smith+Nephew’s Sports Medicine &
ENT business unit leads with innovative
procedural solutions designed to
elevate the standard of care. With
comprehensive and differentiated
technologies backed by clinical evidence,
we help healthcare professionals get their
patients back to living their Life Unlimited.
Sports Medicine & ENT operates in growing
markets where unmet clinical needs
provide opportunities for procedural and
technological innovation. Smith+Nephew
holds a leadership position in the $7.0 billion
global sports medicine market, which
spans a broad patient population of
active adults from professional athletes
to recreational walkers – and everyone in
between. People are more active than ever
before, and when they seek treatment for
an injury or a degenerative condition, they
expect a fast recovery and rapid return
to activity. The surgeons who serve these
patients want to treat them as efficiently
and as minimally invasive as possible while
ensuring the best possible outcomes.
Smith+Nephew has a rich history of
product development in Sports Medicine,
and our technologies, instruments and
implants enable surgeons to perform
minimally invasive surgery, treating soſt
tissue injuries and degenerative conditions
of the shoulder, knee, hip and small joints.
Our growing ENT business unit is driven
by emerging therapies and changes in
the point of care, mainly to the office
setting, and increasing global access for
these procedures.
We offer a portfolio of technologies
focused on the unmet needs for both
common and advanced procedures
that general and paediatric ENT
surgeons perform today. These include
tonsillectomies, epistaxis (severe nose
bleeds) and tympanostomies (insertion
of ear tubes).
Sports Medicine global
market share
a,b
In Sports Medicine, Smith+Nephew
holds a leading position behind Arthrex,
and also competes against Stryker and
DePuy Synthes.
$7.0bn
+6%
2024: $6.6bn +6%
E
D
C
B
A
A
Smith+Nephew
25%
B
Arthrex
35%
C
Stryker
13%
D
DePuy Synthes
c
9%
E
Others
18%
RISE strategy
We have a strong Sports Medicine &
ENT business and are well positioned
for long-term leadership and success
by delivering our vision of advancing
standards of care. As we embark on our
new RISE strategy as a Group, we expect
our positive momentum to continue,
and we are confident we can accelerate
growth further.
Our customers and the patients we serve
will remain the centre of our attention.
We will Reach more of them by growing
our product portfolio across core segments
and expanding indications, driving wider
adoption globally.
Innovation will remain at the heart of what
we do. We will launch our first-in-class
TESSA
◊
Spatial Surgery platform, which,
combined with extended indications for
the REGENETEN
◊
Bioinductive implant
and CARTIHEAL
◊
AGILI-C
◊
Cartilage Repair
Implant, will help us achieve our ambition
to be the number one Sports Medicine
company in the world. In ENT we will
introduce our next generation COBLATION
◊
Technology platform.
“2025 saw us deliver
very strong growth in
Sports Medicine across
our Established Markets.
We look forward
to continuing this
momentum into 2026.”
Scott Schaffner,
President Global Sports Medicine
25%
Global market share
a,b
Smith+Nephew holds
a leading position in
Sports Medicine
For a full list of references,
see pages 306–311
a
Data used in 2024 and 2025 estimates generated by Smith+Nephew are based on publicly
available sources and internal analysis and represent an indication of market shares and sizes.
b
For 2025, the addressable market has been updated to include foot, ankle and cartilage repair.
Excluding these segments, Smith+Nephew’s market share was 28%, in line with 2024.
c
A division of Johnson & Johnson.
44
Smith+Nephew
Annual Report 2025
Sports Medicine & ENT
Serving our customers
continued
We will Scale our platform by investing
in market development efforts, including
medical education, value-generating
clinical evidence, digital marketing
and market access to expand market
penetration and continue to monitor and
act on inorganic opportunities that support
our strategy.
We will ensure our teams across all
functions are well equipped with the
proper tools and capabilities to Execute
consistently and efficiently. We will
strive to be better every day through our
continuous improvement mindset, and
we will reinvest productivity gains to fuel
future growth.
2025 performance
Sports Medicine & ENT full year 2025
revenue growth was 6.0% on a reported
basis, including an FX tailwind of +80bps.
On an underlying
1
basis, revenue growth
was 5.2%.
Excluding China, Sports Medicine & ENT
grew 10.0% on a reported basis, including
FX tailwind of +80bps, and 9.2% on an
underlying
1
basis. Here the implementation
of VBP was a headwind in Sports Medicine
Joint Repair.
VBPs in Arthroscopic Enabling Technologies
and ENT are expected in 2026, but we
expect the headwinds to be much smaller
given the relative size of the businesses.
We have taken actions to manage our
inventory ahead of implementation.
Outside of China, Sports Medicine Joint
Repair had another strong year driven
by our shoulder repair portfolio and
the REGENETEN Bioinductive Implant.
Excluding China, Sports Medicine Joint
Repair growth was 13.4% on a reported
basis and 12.6% on an underlying
a
basis.
Arthroscopic Enabling Technologies
performance included good growth from
our WEREWOLF
◊
FASTSEAL 6.0 Hemostasis
Wand and patient-positioning and patient-
positioning product lines. Growth was
impacted in the second half of the year as
the sector prepared for VBP.
ENT’s performance was led by our nose
business offset by some soſtness in the US
tonsils and adenoids market. Growth in
ENT was also impacted in the second half
of the year as the sector prepared for VBP.
Sports Medicine & ENT trading profit
1
was
up 5.6% in 2025, with a -20bps decline in
trading profit margin
1
to 23.8%, reflecting
the China VBP headwind.
2024 performance
Sports Medicine & ENT delivered 2024
revenue growth on a reported basis of
5.5%, including a -70bps headwind from
foreign exchange. Underlying growth
1
was 6.2%.
Excluding China, Sports Medicine & ENT
grew 9.3% on a reported basis, including
FX headwind of -70bps, and 10.0% on an
underlying
1
basis. In 2024, the sector faced
a headwind from the VBP programme,
which commenced in May 2024.
Sports Medicine Joint Repair full year
growth reflected the VBP headwind from
China. Outside of China, Sports Medicine
Joint Repair had strong year driven by our
knee repair portfolio and REGENETEN
Bioinductive Implant. Excluding China,
Sports Medicine Joint Repair growth was
10.6% on a reported basis and 11.3%
on an underlying
a
basis.
Sports Medicine & ENT trading profit
1
was up 11.0% in 2024, with a 120bps
increase in trading profit margin
1
to
24.0%, driven by operating leverage and
productivity improvements.
Performance
2025
Revenue
2024
Revenue
2023
Revenue
2025
Reported
growth
2024
Reported
growth
2023
Reported
growth
2025
Underlying
growth
1
2024
Underlying
growth
1
2023
Underlying
growth
1
Sports Medicine & ENT
$1,934m
$1,824m
$1,729m
6.0%
5.5%
8.8%
5.2%
6.2%
10.0%
Sports Medicine Joint Repair
$1,067m
$982m
$945m
8.6%
4.0%
8.7%
7.8%
4.8%
9.9%
Arthroscopic Enabling
Technologies
$647m
$632m
$588m
2.4%
7.4%
3.7%
1.6%
8.2%
4.7%
ENT
$220m
$210m
$196m
4.8%
6.9%
28.1%
4.4%
7.3%
29.8%
2025
2024
2023
2025
Reported
growth
2024
Reported
growth
Segment trading profit
$461m
$437m
$394m
5.6%
11.0%
1
These non-IFRS financial measures are explained and reconciled to the most directly comparable financial measure prepared in accordance with IFRS
on pages 285-292.
45
Smith+Nephew
Annual Report 2025
STRATEGIC REPORT
GOVERNANCE
ACCOUNTS
OTHER INFORMATION
Key products by segment
Sports Medicine Joint Repair
Our Sports Medicine Joint Repair business
offers advanced procedural solutions
for repairing soſt tissue injuries, including
systems of specialised implants and
instruments to facilitate arthroscopic
procedures across sports medicine for
knees, shoulders, hips and small joints.
For shoulder repair, we develop products
for rotator cuff repair (RCR) and
instability repair to help address pain and
restore function.
Advanced Healing Solutions for RCR
include the innovative REGENETEN
Bioinductive Implant. With at least 31
published clinical studies, including more
than 1,200 patients,
1–13
as well as 70
publications
1–13
the REGENETEN Implant
has been shown to change the course of
tear progression in studies,
14–17
aid return to
normal activity
12,18–20
and reduce re-tears
versus conventional surgery when used as
an augment in full thickness tears.
12
In 2025, new Clinical Practice Guidelines
from the American Academy of
Orthopaedic Surgeons (AAOS) issued a
strong, evidence-based recommendation
that supports the use of bioinductive
implants in rotator cuff repair (RCR).
Based on randomised controlled trial data
for the REGENETEN Bioinductive Implant,
the guidance supports the notion that
bioinductive implants can reduce the
risk of re-tears
21
and offer better patient
outcomes.
21
The HEALICOIL
◊
family of shoulder anchors
features an open architecture designed
to facilitate healing and is available in our
REGENESORB
◊
material, which can be
shown to be absorbed and replaced by
bone within 24 months.
*22–24
Further expanding our shoulder portfolio,
we continued to build on the best-in-class
anchor fixation strength
**
of our Q-FIX
◊
All-Suture Anchor with the introduction of
the Q-FIX KNOTLESS Suture Anchor.
25–29
Designed for multiple procedures, including
shoulder instability where anatomic space
is limited, the Q-FIX All-Suture Anchor
provides the benefits of a small, soſt
anchor with the fixation characteristics
of traditional anchor designs.
25,26,30,31
This
radially expanding anchor offers compact
size, high fixation strength,
***25,26,30,31
low
displacement
***25,26,32–35
and consistent
deployment.
29,36,37
Additionally, the
Q-FIX KNOTLESS All-Suture Anchor is
designed for controlled tensioning post
deployment.
31
Its suture lock feature allows
for best-in-class soſt tissue security
****31
and it offers streamlined suture shuttling.
31
The Q-FIX KNOTLESS All-Sutures Anchor
offers a versatile range of suture options
that include both single-loaded MINITAPE
◊
Suture Tape – which has a low profile
and coreless design to offer a lower, more
evenly distributed level of pressure*****
38–39
or ULTRABRAID
◊
#2 Suture that is 20%
stronger than its nearest competitor.
‡,40
In knee repair, arthroscopic techniques
have become more prevalent and widely
recognised for the treatment of meniscal
tears in recent years. Our All Tears, All
Repairs Meniscal Repair portfolio provides
surgeons with unsurpassed options and
possibilities for meniscal repair. Our FAST-
FIX
◊
FLEX Meniscal Repair System’s unique
ability to bend the needle and shaſt allows
surgeons the flexibility to access all zones
across the meniscus using a standard
anterior portal.
41
The CARTIHEAL AGILI-C Cartilage
Repair Implant is a novel Sports Medicine
technology for knee cartilage and
osteochondral defects. It is a porous,
biocompatible and resorbable
42–44
scaffold
which supports regeneration of the
articular cartilage and restoration of its
underlying subchondral bone.
42,43,45
In 2024,
a multicentre randomised controlled trial
treating knee cartilage defects showed
that patients treated with the CARTIHEAL
AGILI-C Implant have an 87% lower
relative risk of Total Knee Arthroplasty or
Osteotomy at four years
.††46
In 2025, the
American Medical Association (AMA) CPT
Editorial Panel established a Category I
Current Procedural Terminology (CPT) code
for procedures involving the CARTIHEAL
AGILI-C Implant, effective January 1, 2027.
CARTIHEAL AGILI-C
Cartilage Implant
INTELLIO 4K Solution
For a full list of references,
see pages 306–311
46
Smith+Nephew
Annual Report 2025
Serving our customers
continued
Sports Medicine & ENT
continued
We are also committed to redefining
healing potential in gluteus medius repair
and capsular augmentation through
the use of the REGENETEN Bioinductive
Implant
.†††
In line with our shoulder repair
offering, we have expanded hip labral repair
solutions with the launch of the Q-FIX
KNOTLESS Suture Anchor.
Our Foot and Ankle portfolio for soſt
tissue repair includes comprehensive
solutions, such as the ULTRABRACE
◊
and
ULTRABRIDGE
◊
Procedural Kits for ankle
instability and Achilles reconstruction,
respectively. Q-FIX with Needles
enables soſt tissue repair with integrated
needles for open procedures while
leveraging proven Q-FIX performance.
The ULTRABRACE Adjustable Ankle
Instability Technique incorporates core
Q-FIX technology, enabling consistent
deployment and proven strength
†††48–50
while allowing patient-specific adjustable
tension aſter anchor placement.
Additionally, the REGENETEN Implant
provides an innovative bioinductive option
for augmentation of both insertional and
midsubstance Achilles repairs.
†††
Arthroscopic Enabling Technologies
In Arthroscopic Enabling Technologies,
our products facilitate minimally invasive
surgical procedures, providing a strong
foundation of platforms and associated
consumables, including visualisation, fluid
management, COBLATION Technology,
and mechanical resection.
The INTELLIO
◊
Connected Tower Solution
unites high-definition imaging solutions,
energy-based and mechanical resection
platforms, fluid management, and access
technologies. The INTELLIO Tablet is a
durable medical-grade tablet incorporating
our proprietary soſtware,
51–54
for use in
conjunction with the INTELLIO Connected
Tower. From one centralised location,
operating room staff have the ability to
remotely control and adjust the INTELLIO
4K Surgical Imaging System, the DYONICS
◊
POWER II Control System, the WEREWOLF
COBLATION System and the DOUBLEFLO
◊
Inflow/Outflow Pump.
The INTELLIO 4K Surgical Imaging System
uses 4K ultra high definition (UHD)
image quality and network connectivity
in a three-in-one console for multi-
specialty environments.
We also offer a comprehensive portfolio
of advanced solutions to address the full
spectrum of ligament pathologies and
concomitant injuries. Building upon our
trusted legacy of data-driven solutions,
we continue to innovate in this space,
and since 2025 are able to market the
REGENETEN Bioinductive Implant for
extra-articular ligament injuries in the
US.
47
This new indication expansion offers
opportunities to reach more patients
with soſt tissue injuries throughout the
body. It will initially focus on hip capsule
repair with abundant opportunities for
future expansions in other extra-articular
ligament repairs.
Our hip preservation portfolio delivers a
comprehensive set of technologies and
techniques that position Smith+Nephew
as a leader and innovator in hip repair.
The CAP-FIX
◊
family, and newly launched
CAP-LIFT
◊
Cannula, address the full
continuum of capsular management—
from initial access through secure capsular
closure. Building on this foundation, CAP-
LIFT Cannula enhances capsular elevation,
improves procedural efficiency, and further
expands our ability to support surgeons
from access to closure in hip arthroscopy.
NEW: Partnership highlight
First-of-its-kind medical
education course for
treatment of injuries in
combat sport athletes
As the Preferred Sports Medicine
Technology Partner of UFC, together
we hosted the inaugural Smith+Nephew
UFC Combat Sports Medicine Course in
February 2025. The course was chaired
by Dr Michael Banffy from the Cedars-
Sinai Kerlan-Jobe Institute in Los Angeles,
California and featured a roster of world-
renowned medical experts who discussed
current trends and techniques for treating
combat sports injuries.
Through panel discussions and lectures,
attendees were able to enhance their
understanding of sports medicine
principles and practices specific to the
management and rehabilitation of injuries
in combat sports athletes.
The popularity of combat sports
continues to flourish globally, with
hundreds of millions of individuals
practising diverse disciplines, including
Mixed Martial Arts, Wrestling, Boxing,
Judo, Karate, and Tai-Chi among others.
The second Smith+Nephew UFC Combat
Sports Medicine Course took place in
Nevada in February 2026.
47
Smith+Nephew
Annual Report 2025
STRATEGIC REPORT
GOVERNANCE
ACCOUNTS
OTHER INFORMATION
Our WEREWOLF Controller enables
surgeons to remove soſt tissue
precisely
‡‡‡‡54,55
in a variety of arthroscopic
procedures. Using COBLATION Technology
for chondroplasty of the knee, patients
experienced significantly less pain post-
treatment and faster recovery.
†††††56
In mechanical resection, the DYONICS
PLATINUM Handpiece is designed
ergonomically with surgeon comfort in
mind; accommodating a range of grip
styles. Facilitating the removal of dense
bone and tissue in large joints, it features
improved torque between the working
range of 4,000-10,000 RPM, when
compared to the DYONICS POWERMAX
◊
ELITE Handpiece.
57
Ear, Nose and Throat (ENT)
In ENT, our COBLATION Plasma Technology,
which has been used to remove tonsils
and adenoids for over 20 years,
58,59
has an ability to remove tissue at low
temperatures with minimal damage to
surrounding tissue.
60–65
Evidence shows that with COBLATION
Intracapsular Tonsillectomy (CIT)
procedures, patients experience less pain,
quicker recovery and a decreased risk
of post-operative bleeding with similar
outcomes to total tonsillectomies.
66
Smith+Nephew offers a full portfolio of
COBLATION Wands for CIT procedures.
The ARIS
◊
COBLATION Turbinate Reduction
Wand utilises COBLATION Technology
to provide a minimally invasive way to
reduce hypertrophic turbinates. It provides
targeted hemostasis with a built-in bipolar
coagulation function.
67
Our TULA
®
Tympanostomy System
provides an in-office alternative to
traditional ear tube insertion procedures
using a local anaesthesia system and
an automated, one-click tube delivery
device.
68,69
As part of our comprehensive portfolio
of epistaxis (nosebleed) solutions,
RAPID RHINO
◊
Epistaxis Products are
inflatable tamponades which are easy to
insert and remove,
70-72
with an ultra-low
profile and self-lubricating hydrocolloid
fabric. In addition, we market a range of
dissolvable and removable post-operative
nasal dressings.
NEW: Partnership
highlight
Sponsoring select players
competing at Wimbledon,
highlighting advanced
solutions for joint repair
In 2025, we once again supported select
players during high profile matches at
The Championships, Wimbledon.
The world’s oldest and most prestigious
tennis tournament serves as a perfect
backdrop to showcase Smith+Nephew’s
purpose of ‘Life Unlimited’ making a
difference in patients’ lives through the
excellence of a diverse Sports Medicine
product portfolio and the application of
new technologies.
Smith+Nephew’s ENT COBLATION
Wands are designed for both tonsil
and adenoid procedures
48
Smith+Nephew
Annual Report 2025
Serving our customers
continued
Sports Medicine & ENT
continued
Shaping what’s
possible in wound care
Smith+Nephew’s Advanced Wound
Management vision remains consistent,
to ‘Shape What’s Possible in Wound Care.’
Through our broad portfolio, designed
to meet broad and complex clinical
needs, we help healthcare professionals
solve the challenges of preventing and
healing wounds.
The global wound care market is worth
around $13 billion per annum. Long-term
growth continues to be driven by the
needs of an ageing population and the
current prevalence of obesity, diabetes
and vascular disease. These conditions
are key drivers of wound prevalence and
contribute to the pressure on healthcare
spending. Healthcare systems need to do
more with less, such as enabling patients
to be treated faster, with fewer resources,
or moving them from acute to homecare
settings. The prevention of wounds is
also an important focus, with healthcare
systems increasingly working proactively
to avoid wounds, such as pressure injuries
and surgical site complications.
In Advanced Wound Management,
we seek to help healthcare systems
through innovation in products and
services, to prevent wounds or deliver
accelerated healing. We do this across
our three segments of Advanced Wound
Care, Advanced Wound Bioactives and
Advanced Wound Devices.
Advanced Wound Management
global market share
a,b
We operate in all three categories in
wound care, and have the second largest
business globally in terms of revenue.
In the Advanced Wound Care segment
we compete in dressings with Mölnlycke
(Sweden), Coloplast (Denmark) and
ConvaTec (UK). In Advanced Wound
Bioactives, we have leadership positions
in a number of our respective categories
and we have the only US Food and Drug
Administration (FDA) approved enzymatic
debrider. In Advanced Wound Devices,
we are the primary challenger to Negative
Pressure Wound Therapy incumbent
Solventum.
$13.1bn
+4%
2024: $12.5bn +6%
E
D
C
B
A
A
Smith+Nephew
14%
B
Solventum
14%
C
Mölnlycke
10%
D
ConvaTec
6%
E
Others
56%
RISE strategy
Through our vision of Shaping What’s
Possible in Wound Care and a strong
and broad portfolio, we believe we are
now well positioned to deliver our new
RISE strategy and accelerate growth to
become the global leader in Advanced
Wound Management.
We will Reach more patients by taking
our portfolio into high growth segments,
offering solutions across the full continuum
of care from prevention to treatment
and expanding our global reach in
emerging markets.
“We have one of the
broadest portfolios of
differentiated products,
a robust pipeline of future
innovation, and, following
the 12-Point Plan, an
invigorated business ready
to capture share and
expand the market.”
Rohit Kashyap,
President Advanced Wound
Management & Global
Commercial Operations
For a full list of references,
see pages 306–311
14%
Global market share
a,b
We operate in all three
categories in wound care,
and have the second largest
business globally in terms
of revenue.
a
Data used in 2024, and 2025 estimates generated by Smith+Nephew are based on publicly
available sources and internal analysis and represent an indication of market shares and sizes.
b
Market data excludes the estimated $10 billion Cellular and Tissue Products (CTP) market
which includes segments that are expected to undergo a significant reset following changes
to reimbursement that came into effect on 1 January 2026.
49
Smith+Nephew
Annual Report 2025
STRATEGIC REPORT
GOVERNANCE
ACCOUNTS
OTHER INFORMATION
Advanced Wound Management
We will step up our investment in
innovation to focus on areas like pressure
injury prevention, chronic wounds and
surgical site complications. We will support
innovation by increasing investment
in compelling clinical evidence to shiſt
adoption of these advanced therapies
by demonstrating lower cost of care and
better patient outcomes.
We will Scale by expanding our reach
and deploying capital into high-growth
segments where we can lead by adding
new channels and products.
We will Execute efficiently as we improve
further our commercial engine to deliver
sustainable growth above market.
We will leverage digital tools to improve
our productivity and effectiveness and
strengthen capabilities in pricing and
national accounts. We will build on
our foundational pillars of continuous
improvement and customer focus.
2025 performance
Advanced Wound Management full year
2025 revenue growth was 6.7% on a
reported basis, including an FX tailwind of
101bps. On an underlying
1
basis, revenue
growth was 5.6%.
Advanced Wound Care performance
included good growth in foam dressings
and films which offset a weaker
performance in infection management.
Advanced Wound Bioactives performance
was led by good growth from SANTYL
◊
and
a strong first half for our skins substitutes
portfolio. The full year growth rate was
impacted by a soſt fourth quarter due
to a strong comparator period from the
launch on GRAFIX PLUS
◊
in Q4 2024 and
soſtness in skin substitutes ahead of the
implementation of reimbursement changes
in 2026.
Advanced Wound Devices performance
was driven by both our single-use PICO
◊
Negative Pressure Wound Therapy System
and traditional RENASYS
◊
Negative
Pressure Wound Therapy System, as well
as our LEAF
◊
Patient Monitoring System
as we continued to expand the market in
pressure injury prevention.
Advanced Wound Management trading
profit
1
was up 12.0% in 2025, with a
120bps increase in trading profit margin
1
to 24.9%, driven by leverage from the
revenue growth.
Performance
2025
Revenue
2024
Revenue
2023
Revenue
2025
Reported
growth
2024
Reported
growth
2023
Reported
growth
2025
Underlying
growth
1
2024
Underlying
growth
1
2023
Underlying
growth
1
Advanced Wound Management
$1,793m
$1,681m
$1,606m
6.7%
4.7%
6.2%
5.6%
5.1%
6.4%
Advanced Wound Care
$766m
$735m
$725m
4.3%
1.4%
1.8%
2.6%
2.0%
2.1%
Advanced Wound Bioactives
$621m
$581m
$553m
6.9%
5.1%
6.3%
6.8%
5.1%
6.2%
Advanced Wound Devices
$406m
$365m
$328m
11.1%
11.5%
17.0%
9.8%
12.2%
17.6%
2025
2024
2023
2025
Reported
growth
2024
Reported
growth
Segment trading profit
$447m
$399m
$372m
12.0%
7.3%
1
These non-IFRS financial measures are explained and reconciled to the most directly comparable financial measure prepared in accordance with IFRS
on pages 285-292.
2024 performance
In 2024, Advanced Wound Management
delivered revenue growth on a reported
basis of 4.7%, including a -40bps headwind
from foreign exchange. Underlying growth
1
was 5.1%.
In 2024, Advanced Wound Care growth
was driven by good performances
in foam dressings and infection
management categories.
In Advanced Wound Bioactives, SANTYL
ointment delivered growth for the full year,
although we continued to see quarter-
to-quarter variability, a long-term feature
of this product. We delivered double-
digit growth from our skin substitutes
business following the launch of GRAFIX
PLUS membranes.
In 2024, Advanced Wound Devices
delivered strong revenue growth across
the year. This was driven by both our
traditional RENASYS Negative Pressure
Wound Therapy System and our single-use
PICO Negative Pressure Wound Therapy
System, as well as from our LEAF Patient
Monitoring System.
Advanced Wound Management trading
profit
1
was up 7.3% in 2024, with a 120bps
increase in trading profit margin
1
to
24.9%, driven by operating leverage and
productivity improvements.
For a full list of references,
see pages 306–311
50
Smith+Nephew
Annual Report 2025
Advanced Wound Management
continued
Serving our customers
continued
Key products by segment
Advanced Wound Care
Smith+Nephew started as a wound care
company, and through our Advanced
Wound Care business we have grown to be
a leader in the segment. Today our portfolio
includes products that are designed to
manage exudate and infection, protect the
skin and help prevent pressure injuries.
ALLEVYN
◊
Wound Dressings are a trusted
leader when it comes to providing an
optimal environment for healing. Our foam
dressings provide proven performance to
to absorb, protect, and be gentle on the
skin, as well as much more.
3-7
The ‘much more’ comes with ALLEVYN’s
extensive range of shapes and sizes, as well
as its unique technologies. ALLEVYN LIFE
Foam Dressing, for example, has ExuLOCK
◊
and ExuMASK
◊
technologies.
ExuLOCK hyper-absorbent lock-away
technology absorbs exudate and spreads
it laterally across the dressing to utilise the
entire dressing area while locking it in to
help prevent leakage and to help control
malodour.
8–9
ExuMASK change indicator technology
minimises the visual impact of absorbed
exudate and works as an indicator to
know when to change the dressing, which
helps minimise clinically unnecessary
changes.
10–14
The effectiveness of the ALLEVYN Dressing
range has been demonstrated across over
138 publications in 19 countries on over
12,000 patients and volunteers.
15
We also offer DURAMAX
◊
S and
DURAMAX N Superabsorbent Dressings.
Superabsorbers are one of the fastest-
growing categories of dressings in Europe.
16
Our antimicrobial dressing range includes
ACTICOAT
◊
Antimicrobial Barrier Dressings,
DURAFIBER
◊
Ag Pro Absorbent Gelling
Silver Fibrous Dressings, ALLEVYN Ag
Antimicrobial Foam Dressings, and
our range of IODOSORB
◊
Cadexomer
Iodine products.
17–27
Smith+Nephew
advocates usage to support the principles
of antimicrobial stewardship, helping
to reduce the spread of antimicrobial
resistance and protecting future patients.
Our new ALLEVYN Ag+ and Ag+ SURGICAL
antimicrobial foam dressings were recently
launched in the US, completing our
foam portfolio and supporting growth in
expanding market segments.
The future of pressure injury prevention
ALLEVYN COMPLETE
CARE and LEAF
Hospital-acquired pressure injuries remain
one of the most significant healthcare
challenges globally
65
and cost an
estimated 60,000 lives and $26.8 billion
in the US each year.
66–67
Smith+Nephew’s
ALLEVYN COMPLETE CARE Dressings,
LEAF Patient Monitoring System and
SECURA
◊
skincare products are aimed
at improving healthcare practices and
outcomes in pressure injury prevention.
In November 2025, Smith+Nephew
introduced ALLEVYN COMPLETE CARE
Foam Dressing into the US advanced
wound care market, supported by new
data published in the International
Wound Journal from Professor Amit
Gefen and his research group, which
showed a significant reduction in the
odds of pressure injury development by
66% when adding ALLEVYN five-layer
dressings to a pressure injury prevention
protocol compared to standard
care alone
68
.
ALLEVYN COMPLETE CARE Dressing
demonstrates a distinct mechanism of
action through layer-to-layer frictional
sliding to absorb and dissipate friction
and shear forces.
65
This mechanism of
action can help significantly reduce the
harmful stress concentrations that cause
pressure injuries.
The LEAF Patient Monitoring System uses
a wearable sensor to monitor patient
mobility and provides real-time turn
status updates, which have been shown
to reduce pressure injury risk up to 94%.
69
Visual alerts in the patient room and at
the nurses’ station make it easy to see
who needs to be turned and when.
70,71
LEAF System’s Integrated Positioning
Index™ is the first tool that measures
the quality and effectiveness of patient
turning, including patient turn frequency
and turn angle.
1-3 million
Number of people in the
US affected by pressure
injuries annually.
66
95%
Approximately 95%
of pressure injuries are
considered preventable.
72
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Advanced Wound Bioactives
Our Advanced Wound Bioactives
portfolio provides a unique approach to
debridement, dermal repair and tissue
substitutes, with considerable evidence
supporting their clinical application.
Collagenase SANTYL Ointment (250 units/
gram) is the only FDA-approved enzymatic
debridement agent indicated for debriding
both chronic dermal ulcers and severely
burned areas. It is available in the US, with a
unique mechanism of action that facilitates
removal of necrotic tissue and contributes
to the formation of granulation tissue and
subsequent epithelialisation of chronic
wounds and severely burned areas.
28–31
In our skin substitute product range,
GRAFIX
◊
Placental Membranes and
STRAVIX
◊
Umbilical Tissues retain the
extracellular matrix and native placental
components to support wound closure.
32,33
They are intended for application directly to
acute and chronic wounds and as a surgical
cover, wrap or barrier. In addition, we
offer OASIS
®*****
Matrix and OASIS MICRO
products, which are naturally derived
scaffolds of extracellular matrix, composed
of porcine small intestinal submucosa and
indicated for the management of a wide
range of acute and chronic wounds, burns
and surgical interventions.
34
Advanced Wound Devices
In Advanced Wound Devices, our portfolio
helps improve healing outcomes in
chronic wounds, reduce surgical site
complications and facilitate preventative
care for pressure injuries. Within the
Negative Pressure Wound Therapy (NPWT)
category, we offer single-use and
traditional (cannister-based) solutions,
offering customers a one-stop shop with
great flexibility.
PICO Single Use Negative Pressure Wound
Therapy System (sNPWT), with its unique
360° dressing technology,
35–41
provides
a ‘proactive therapy’, that has been
demonstrated to kick-start the healing
process in stalled wounds
**42
, and in the
reduction of surgical site complications
in closed incisions,
***43
in a highly portable
form that allows patients to continue with
their daily activities.
44-47
Our traditional RENASYS NPWT Systems
are easy-to-use platforms, with a range
of accessories to treat a wide variety
of wounds and patients across all care
settings.
48,49
The RENASYS portfolio’s
newest innovation, the RENASYS EDGE
pump, brings dignity back to NPWT. Quiet,
discreet and compact, the system helps
patients focus on living while they recover,
and has been shown to deliver higher
efficiency and utility for clinicians.
50–53
The VERSAJET
◊
Hydrosurgery System
provides controlled debridement and
facilitates precise excision of necrosis and
other unwanted material from the wound
surface, preserving viable tissues.
****54–64
The LEAF System monitors patient
movement and positions in bed,
upright or walking to help adherence to
turning schedules, supporting pressure
injury prevention.
Cost-effective and improved
outcomes with PICO
PICO Single Use Negative Pressure
Wound Therapy System (sNPWT)
was shown to be cost-effective
1
and to improve outcomes compared
with standard care to help prevent
surgical site complications in patients
with surgically closed incisions.
A systematic literature review and
meta-analysis of 19 studies involving
4,530 patients showed a 63%
reduction in the odds of developing
surgical site infections with the
prophylactic use of PICO sNPWT
compared with standard care.
2
RENASYS EDGE (top) and
PICO (above) Negative Pressure
Wound Therapy Systems
For a full list of references,
see pages 306–311
52
Smith+Nephew
Annual Report 2025
Advanced Wound Management
continued
Serving our customers
continued
03
We support healthcare professionals to
return their patients to health and mobility,
helping them to perform at their fullest potential.
Life Unlimited
Living
without
limits
Together we are
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OTHER INFORMATION
53
Smith+Nephew
Annual Report 2025
Neiser and Evelyn work at our Coyol site in
Costa Rica, supporting the manufacturing
and development of our ENT portfolio.
Evelyn is part of Production, while Neiser
works in Advanced Manufacturing
Engineering as part of the New Product
Development team. Together, they
have supported the development and
production of our ENT technologies for a
combined total of 31 years.
Last year, they experienced the positive
impact of our technologies in the most
personal way – through their own son.
Five-year-old Gael had been suffering
from sleep apnea and inflamed sinuses for
over two years. Regular infections, visits
to the doctor, difficulty breathing, and
poor sleep quality were leading to ongoing
medication and slowed development.
Aſter finding an ENT specialist, it became
clear that the most effective solution
for his symptoms would be surgery.
One of the recommended procedures
was turbinate reduction. For this, the
Smith+Nephew Turbinate Reduction
Wand was used; a product that Neiser
had previously worked on while it was
still in development.
“Every day that I do my job, I feel a lot of
responsibility. In the end, everything we
do helps to improve the quality of life for
someone. In this case, it’s so amazing for
me to think that a product that I worked
on has helped my son to regain a normal
life”, said Neiser.
Following successful procedures, Gael
has been able to focus more on playing
and less on breathing. His sleep quality
has improved dramatically.
For Gael’s parents, seeing their son regain
his childhood means everything.
A family journey:
bringing Life Unlimited home.
For Gael’s parents, seeing their son regain
his childhood means everything.
Ear, Nose and Throat
Sports Medicine
54
Smith+Nephew
Annual Report 2025
Living without limits
continued
Considered one of the greatest
lightweight mixed martial arts athletes
of all time, Dustin Poirier has enjoyed a
long and storied career as a UFC athlete
and champion. Hip pain was simply a
part of his life for as long as he could
remember. He just dealt with it – until he
no longer could.
“When you’re a young fighter and you
get injured, you want to just walk it off…
don’t show anybody that you’re hurt,”
said Dustin. “My hip had been bothering
me for a decade, and it kept getting
worse over the years. Even in my day-
to-day life, I was in pain. I knew I had to
do something.”
“It got to the point where the hip was
impeding his progress,” said Dr Judson
Penton, Orthopedic Surgeon.
He referred Dustin to Dr Marc Philippon,
a renowned sports medicine surgeon
specialising in hip arthroscopy.
Dr. Philippon helped reassure Dustin
and presented options for his hip repair,
using Smith+Nephew technology.
A successful surgery and dedicated
rehabilitation resulted in a full recovery,
and eventually Dustin’s return to the
Octagon – competing and winning at the
highest level.
Dustin retired from the UFC in July 2025
aſter his last fight. He said, “When I lay
down the gloves and go on to the next
chapter in my life, I’m going to do it with
a lot less pain. And I’m very thankful
for that. I feel great. If I had to do this
[surgery] again, I would 100% do it again.”
Redefining possibility:
strength to rise, heal,
and compete again.
Dustin Poirier’s story – athletic recovery
and return to potential.
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Orthopaedics
Craig Gaffin, President of Global
Orthopaedics at Smith+Nephew, knows
first-hand the life-changing impact
of MedTech innovation – not just as a
leader with many years in the industry,
but now also as a patient. As a former
college athlete, years of escalating
arthritic hip pain began to negatively
impact his active lifestyle.
“I was in pain and kept making excuses
for putting off the surgery, but I was
no longer able to enjoy spending time
outdoors with my family which is my
favourite thing to do,” he explains.
When everyday activities, like walking
through airport terminals during
frequent business trips, finally became
too unbearable, Craig knew it was time
to get the surgery. In November 2024,
Craig became the first patient in the
world to undergo a dual hip replacement,
using Smith+Nephew’s CORIOGRAPH
◊
Pre-Operative Planning Technology
and the CATALYSTEM
◊
Hip System with
an OXINIUM
◊
head using the direct
anterior surgical approach. His second
surgery was in March 2025 and Craig’s
recovery from both procedures was swiſt
and transformative.
Dr George Haidukewych, MD, Chief of
Joint Replacement Surgery at Orlando
Health, performed both surgeries and
explained that Craig was the ideal
candidate for this type of procedure.
“Craig is an active, healthy, young patient
who needed to bounce back quickly…
and he did!”
Craig returned to the active life he
loved, with a renewed appreciation
for the technologies that made it
possible. “Just six months aſter the
second hip replacement, I’m back to
doing everything I love – playing sports,
hiking, surfing, skiing and travelling.
I feel stronger than ever and I’ve got
my game back,” he says. “Experiencing
the patient journey from diagnosis to
rehabilitation gave me a new perspective
and appreciation for Smith+Nephew’s
purpose of Life Unlimited.”
Reclaiming movement:
when innovation empowers
the innovator.
Craig Gaffin’s story – innovation meets lived experience
You can learn more about Craig’s
patient journey on the Smith+Nephew
website: www.smith-nephew.com
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Annual Report 2025
Living without limits
continued
Across the ALLEVYN
◊
product portfolio,
wound dressings of many types serve the
many varied needs of different patients,
clinicians, care settings, wounds, and
skin types.
One example of the many ways
ALLEVYN long-wear advanced foam
dressings can be used is to treat skin
tears. ALLEVYN GENTLE BORDER Foam
Dressings – gentle and versatile, suitable
for fragile skin – provided a solution when
Evelyn, a 100-year-old resident at St.
Thomas Complex residential care home
in South Shields, England, suffered a skin
tear when she was getting out of bed.
Senior Care Staff at Evelyn’s residential
home, Nicola, praised the dressing’s
suitability for use with fragile, elderly skin.
“Aſter the fall, we reassured Evelyn,
we cleaned the wound and aligned the
skin back up to reduce scarring and then
dressed it. We use ALLEVYN GENTLE
BORDER because it’s really soſt on the
skin. And for elderly skin, that’s really
important because it doesn’t tear the
skin and is not going to cause any more
damage.” Evelyn agreed.
Nicola had taken part in a trial
programme, the Dressing Remedies
Scheme, which included additional
training that empowered her care-home
colleagues and her to manage skin tears,
enabling prompt care at the time of injury
and reducing the demand for district
nursing services.
Restoring confidence:
gentle care that extends
quality of life.
Evelyn’s story – fragile-skin care that brings
dignity, comfort and independence
Advanced Wound Management
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OTHER INFORMATION
At Smith+Nephew, our three pillars of Care,
Collaboration and Courage are the foundations on which
we build our unique culture and Way to Win.
Life Unlimited
04
Building our
Way to Win
Together we are
Smith+Nephew
Annual Report 2025
58
In 2025, we made significant strides
in employee wellbeing, learning and
development, strategic workforce
planning, operational effectiveness,
and inclusion initiatives.
Our purpose – Life Unlimited – resonates
deeply with our employees and guides
everything we do – our strategy, culture,
engagement, and performance. It aligns
our employees with shared objectives,
informs decision making processes, and
supports long-term success by imparting
purpose to our work. This approach
establishes a direct and significant link
between our actions and the value
we deliver.
Our cultural framework
for success
Over three years, the 12-Point Plan has
significantly strengthened both discipline
and accountability. We have strengthened
these behaviours by moving to a business
unit verticalised structure, where there are
clear points of accountability, and ensuring
that every people leader has objectives
and KPIs that are aligned to our strategy.
Fostering
a healthy,
inclusive,
and high-
performing
culture
KPI delivery is non-negotiable, as what
gets measured gets done. Objectives and
expected behaviours are cascaded
from the Executive Committee to every
employee, ensuring alignment and
connection which, in turn, results in higher
engagement and performance.
Clear objectives, cascaded to the
organisation with KPIs, have built rigour
and discipline and are instilling a
continuous improvement mindset
which we will further strengthen and
operationalise with our Way to Win as
an enabler of our RISE strategy.
Evolving our culture in alignment with
our business priorities and desired
customer outcomes and experiences is an
ongoing focus for Smith+Nephew. We are
passionate about creating the optimum
conditions for colleagues to feel
appreciated, empowered and engaged
at work, with a clear sense of direction
and understanding of organisational
priorities. Learning and development,
wellbeing, building people leader capability,
talent acquisition and strategic workforce
planning have been key areas of focus.
“As our business evolves, so does
our culture. And the next evolution
of this is our ‘Way to Win.’ Our
Purpose and Culture pillars will
remain unchanged, but through
our Way to Win, we will build and
strengthen the behaviours we’ve
developed over the 12-Point Plan
aligned with our culture pillars.
Our Way to Win is a programmatic
continuous improvement
framework, including the tools,
behaviour and mindset that allows
us to ‘be better’ every day for our
customers, their patients and
each other.”
Elga Lohler
Chief HR Officer
Life Unlimited
Care
Courage
Collaboration
I
Innovate
S
Scale
E
Execute
R
Reach
Our way to win
Be better, every day, through continuous improvement mindset behaviours
We have a new strategy…
and a culture framework for success
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A healthy culture
In 2025, we introduced new programmes
and initiatives designed to enhance
engagement and support employee
wellbeing. We introduced three new
wellbeing dimensions: Body, Mind & Life,
designed to focus on helping colleagues to
feel good, think great and live better – in
and out of work. This was underpinned
by a new digital wellbeing portal, making
it easier for colleagues to access tools,
resources and support available, including
our global wellbeing assistance, benefits
and recognition programmes. In addition,
we launched Boost – our global activity
challenges designed to help colleagues
improve overall physical health and, Reach
Your Peak – exclusive keynote speaker
webinars to inform and inspire.
Eyes on the future
In 2025, we made a conscious decision to
deepen our understanding of the skills and
capabilities we need to win – both now
and in the future. Central to this effort is
the elevated focus on strategic workforce
planning, supported by the onboarding of
a Strategic Workforce Planning Leader to
define and embed our global skills strategy,
framework, and approach. We defined our
five-year skills strategy and soſt-launched
our new Skills Framework and Career Hub
(Talent Marketplace) platform, connecting
colleagues to mentors and flexible projects
through skills data. The full roll-out,
planned for early 2026, will introduce
Career Path Builder, enabling employees
to explore potential career pathways
powered by skills insights.
We believe that learning is about building
on what you already know and finding
ways to grow in the direction you want.
Our approach to development is open
to all colleagues and tailored to their
individual needs and preferences. We have
introduced assessments to help identify
skill gaps, which allow for a personalised
learning journey, and we then connect
colleagues with targeted resources and
expert-led sessions that focus on the skills
that matter most to them. Our offering
covers leadership, interpersonal, technical,
and professional skills. Our newly launched
People Leader Academy ensures that
whether people leaders are stepping into
their first leadership role or advancing
to senior levels, they will be encouraged
to take part in leadership development
grounded in core leadership skills.
Life Unlimited does not stand on its own.
It is activated through our culture – a
culture which was co-created with our
employees to promote global ownership,
ensure sustained alignment on the ‘What’
and the ‘How’ throughout all strategic
decisions and daily activities and foster a
productive and engaged workplace.
We strive to create and nurture a
healthy, high performing, connected, and
inclusive culture for employees across the
organisation. We believe the customer
benefits when our employees feel able
to thrive at work and feel appreciated for
what they uniquely contribute.
Our culture pillars of Courage, Care
and Collaboration shine a light on the
behaviours and ways of working that are
most important to us in achieving the
best outcomes for our organisation, our
customers, and patients, and ultimately
are how we can all play our part in
delivering on our purpose, Life Unlimited.
–
Care:
A culture of empathy and
understanding for each other,
customers and patients
–
Collaboration:
A culture based on
mutual trust, respect and belonging
–
Courage:
A culture of continuous
learning, innovation and accountability.
“Our commitment to continuous
improvement and Our Way to
Win enables the Legal team to
deliver meaningful value for the
organisation. By applying LEAN
principles, we eliminate pain
points and reduce unnecessary
process steps; simplifying,
streamlining and automating
workflows to optimise risk, cost
and resource management. In
addition to organisational impact,
our initiatives received external
recognition in the FT Innovative
Lawyers Awards in 2025.”
Helen Barraclough,
Group General Counsel and
Company Secretary
60
Smith+Nephew
Annual Report 2025
Building our Way to Win
continued
Our offering combines self-paced learning,
collaborative workshops, and practical
experiences led by internal and external
experts to equip current and future
leaders with the skills to thrive and make
a meaningful impact at Smith+Nephew.
This year also saw us focus on evolving
our Talent Acquisition strategy and model
to ensure we are optimally placed to
source, attract, evaluate, and hire the best
candidates to meet our organisation’s
current and future workforce needs, from
early careers through executive-level hires.
Our regional recruitment centres, coupled
with local talent acquisition expertise in
key markets, are structured to enable
agility in meeting the organisation’s
existing requirements while our sourcing
teams build proactive talent pipelines for
high volume and critical roles.
In 2025, we restructured our regional
recruitment teams into recruitment
centres with key hubs in Costa Rica,
Poland and India.
We highlight our unique culture and
employer branding to attract and
nurture our candidate pipelines and
cultivate our talent community through
communications presenting important
events and patient stories, and featuring
our purpose of Life Unlimited.
We leverage our award-winning tech
stack to ensure efficiency and scale with
our in-house recruitment team, as well
as enabling a positive hiring manager
and candidate experience.
Data and analytics are at the forefront
of how we assess and enhance our
performance of key indicators, such as
our time to fill, stakeholder engagement,
candidate experience, and other
critical measures.
A key component of our talent acquisition
strategy is continuous improvement to
ensure we continue to be aligned to the
goals of the organisation and competitive
in attracting the best candidates to
Smith+Nephew.
Delighted to win
a 2025 Gallup
Exceptional
Workplace Award
for the second
year running
Just as we measure and continuously
improve our business performance, the
same is true for culture and engagement.
We prioritise measurement of our
employee engagement and culture as
part of our operational heartbeat.
Since 2019, we have used the Gallup
Q12 tool to measure employee
engagement through our annual Global
Engagement Survey. This year, 95%
of colleagues generously shared their
feedback with us through the annual
survey, the highest participation we
have ever experienced. We were
delighted to see an increase in our
engagement mean to 4.33 (2024: 4.24)
and to receive a Gallup Exceptional
Workplace award in recognition of the
progress we have made.
These awards shine a light on companies
that demonstrate commitment to
employee engagement by listening
and responding to colleague voices
and taking action on what is heard.
We believe our people leaders are
accountable for engagement within
their teams, and we work hard to
support them in stepping into this space
confidently and effectively and nurturing
environments where Courage, Care and
Collaboration are felt in the every day
experiences of all.
Engagement mean change (average from baseline)
Gallup Exceptional Workplace Award recipient
Note: Comparisons are based on Gallup’s (2022) Q12 Company-Level Change Analysis 2000-2021.
Gallup Clients Average is defined as 50th percentile change, and Top 25% Gallup Clients is defined
as 75th percentile change.
+0.06
2022
88%
+0.10
2023
89%
2021
88%
2024
92%
+0.05
2025
95%
Participation
A
Smith+Nephew
B
Top 25% Gallup clients
C
Gallup clients average
A
B
C
+0.08
+0.06
+0.05
+0.06
+0.10
+0.04
+0.08
+0.04
+0.09
4.08
4.33
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A Culture of Inclusion
At Smith+Nephew, we believe that
inclusion and belonging are essential to
creating a workplace where everyone feels
valued, supported, and able to succeed.
In 2025, we introduced a refreshed and
ambitious five-year global Inclusion &
Belonging strategy to further embed
belonging into every part of our culture.
The strategy focuses on building inclusive
leadership, strengthening policies and
practices, improving data and feedback,
aligning with evolving regulations, and
driving innovation through collaboration
and representation. With clear goals and
measurable outcomes, we are creating
lasting change – making inclusion and
belonging part of how we lead, connect,
and deliver together.
As part of our ongoing commitment to
listening to our employees and taking
action on what we hear, we have
held regular Board Listening sessions
with employees and Board members
throughout 2025. These have ranged in
topics from our business strategy and
sustainability through to performance
and recognition. Both Board members and
employees have found these sessions to be
both helpful and insightful.
Employee Inclusion Groups
(EIGs) and Life Councils
Our EIGs and Life Councils play a vital
role in ensuring a continuous dialogue
with employees and providing valuable
insight and feedback, they help us build
a workplace where everyone feels seen,
supported, and connected. They bring
colleagues together around shared goals
and experiences, creating opportunities for
collaboration, education, and community-
building. These communities are central to
how we embed inclusion and belonging into
everyday life at Smith+Nephew. This year,
our EIGs and Life Councils delivered
around 400 events worldwide, bringing
colleagues together for around 1,000 hours
of connection, learning, and celebration.
In total, these events reached more than
22,000 attendees, reflecting the strength
and reach of our global inclusion and
belonging community.
EIGs
EIGs are colleague-led communities
formed around shared experiences,
identities, or life circumstances.
Through awareness building, networking
events, and educational initiatives, EIGs
help to foster understanding, encourage
allyship, and amplify the voices of
underrepresented groups, driving
meaningful cultural change throughout
Smith+Nephew.
Life Councils (LCs)
Life Councils are site or region-based
groups made up of volunteers who work
together to strengthen community and
connection at a local level. With a focus
on social responsibility, volunteering,
networking, and engagement, Life Councils
bring our culture to life through inclusive
events and initiatives that reflect the spirit
and character of each location.
Mental Health and Wellbeing
Military Veterans
Young Professionals
LGBTQ+ Community
Disability, Chronic Illness, Neurodiversity
Women in the Workplace
Our EIGs:
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Smith+Nephew
Annual Report 2025
Building our Way to Win
continued
An ethical employer
Our commitment to ethics and integrity
is embedded in our culture pillars of Care,
Collaboration and Courage.
We strive to recruit, employ and promote
employees on the sole basis of the
qualifications and abilities needed for the
work to be performed. We do not tolerate
discrimination on any grounds and provide
equal opportunity for all employees.
Creating an environment where
colleagues feel safe and that fosters
innovation means building trust by
operating ethically and compliantly.
We have a continuous improvement
mindset and ensure that our programme
evolves in parallel with business changes
and emerging risks in the sector, and we
have a focus on business ownership and
accountability for compliance.
In 2025, we reviewed and refreshed
our fraud risk management and control
framework with enhanced policies, training
and third-party assessments. We also
continued to enhance our data privacy
programme – strengthening our privacy
by designing a framework and improving
alignment between our privacy and
security frameworks.
We have multiple levels of ethics and
compliance oversight, including a Board
Compliance & Culture Committee, to
ensure that managers, employees and
business partners act with integrity.
“Our commitment to ethics
and integrity is embedded
in our culture pillars of Care,
Collaboration and Courage. We
have a continuous improvement
mindset and ensure that our
programme evolves in parallel
with business changes and
emerging risks in the sector.”
Alison Parkes
Chief Compliance Officer
We ensure appropriate oversight of
significant interactions with healthcare
professionals or government officials, and
we comply with all national and state
transparency reporting laws which require
reporting of physician compensation.
All employees have a responsibility to
report violations of our Code. This may
be done via their manager, directly to
Compliance, HR or Legal functions, or
through an externally managed reporting
channel where anonymous reports may
be made.
Smith+Nephew gives individuals with
disabilities fair consideration for all
vacancies against the requirements of the
role. Where possible, for any employee who
has a disability or who becomes disabled
while working for us, we make reasonable
adjustments and provide appropriate
training to ensure that they are supported
in their career.
We are committed to providing equal
opportunities in recruitment, promotion
and career development for all employees,
including those with disabilities.
We do not use any form of forced,
compulsory or child labour. Smith+Nephew
supports the Universal Declaration of
Human Rights of the United Nations,
respecting the human rights, dignity
and privacy of individuals and their right
to freedom of association, freedom of
expression and the right to be heard.
As a global medical technology business,
we recognise our responsibility to take
a robust approach to preventing slavery
and human trafficking. Smith+Nephew is
committed to preventing such activities
in all of its corporate operations and in
its supply chains.
We comply with applicable laws and
regulations globally in terms of our
interactions with labour unions.
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05
Addressing the long-term needs of our customers,
employees, investors, communities and other
stakeholders while working to reduce our impact
on the environment.
Life Unlimited
Working
responsibly
Together we are
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Annual Report 2025
64
Environmental, Social and Governance (ESG)
Our ESG programme supports
our new RISE business
strategy and is built on our
purpose – Life Unlimited – and
our culture of Care, Courage
and Collaboration.
ESG at Smith+Nephew is an
embodiment of our corporate values:
–
We demonstrate Care by respecting
our global resources and striving to
protect the safety and wellbeing of
our employees.
–
We demonstrate Courage by setting
ambitious goals to increase our
positive impact.
–
We demonstrate Collaboration by
working together with our partners
who share our commitment, and
contributing to our communities.
Our ESG programme is fundamental to the
successful execution of Smith+Nephew’s
RISE strategy and to the long-term
value we create as a medical technology
company. By integrating environmental
stewardship, social impact, and strong
governance into our business model, we
are strengthening operational resilience,
improving efficiency, and managing risk
across our global footprint.
Our continued focus on decarbonisation,
responsible sourcing, and an inclusive,
high-performing culture supports the
disciplined growth and margin expansion
at the heart of RISE, while reinforcing trust
with patients, customers, employees,
and investors. Just as importantly,
our ESG commitments help guide
innovation – ensuring that the products
and technologies we bring to market
address unmet clinical needs responsibly
and sustainably.
Through RISE, we are building a stronger
Smith+Nephew by delivering growth that
is not only profitable, but also purposeful
and enduring.
Driving
change
across our
three ESG
pillars
People ESG pillar: Creating a lasting
positive impact on our employees
and communities
We believe that a healthy, inclusive
and engaged workforce is essential
to long-term success. Our employee
programmes foster pride and purpose
while strengthening relationships in
the communities where we operate.
This enhances employee engagement and
builds trust in markets that are critical to
our growth.
Planet ESG pillar: Working to reduce
our impact on the environment
We drive resilient, efficient business
operations and reduced costs through
energy efficiency on our journey towards
net zero emissions, zero-waste
manufacturing and water conservation.
Our efforts reduce environmental impact
in the regions we serve.
Product ESG pillar: Innovating
sustainably across the value chain
Our focus on sustainable product and
packaging design is calibrated to customer
ESG priorities. Our supplier ESG risk
mitigation programme helps ensure
ethical sourcing and compliance across
our supply chain.
Our objectives and progress
against our ESG pillars are
summarised on pages 66–68
Our ESG pillar alignment to the
UN Sustainable Development Goals
Our ESG pillars align with the United
Nations 2030 Agenda for Sustainable
Development, which sets out 17
Sustainable Development Goals (SDGs)
that aim to end poverty, protect the planet
and ensure prosperity for all. More detail
on our ESG programme’s alignment with
specific UN SDGs and metrics is included
in the 2025 Sustainability Report.
“We drive ESG progress through
our strategic pillars – People,
Planet and Products – ensuring
every initiative supports our
purpose of advancing Life
Unlimited.”
Katya Hantel
Vice President, ESG
For more information download
our 2025 Sustainability Report
from our website
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People
Creating a lasting
positive impact
on our employees
and communities
People are at the heart of our purpose –
Life Unlimited. Putting people first will
help us to achieve our vision of a world
where healthcare professionals are able
to help restore health to patients,
wherever they are.
Our objectives
Our progress in 2025
Inclusion and
belonging
Empower and promote the
inclusion of all.
3,000+
total group members across our
seven Global Employee Inclusion
Groups and sub-groups.
390+
impactful employee engagements
supporting inclusion and belonging.
Volunteering
We are committed to living our
culture in our communities by providing
eight hours of paid volunteer time to
all employees and enabling at least 50
impactful volunteer events
across our sites each year.
60
volunteering events
across our sites.
Giving
Improve patients’ lives through
product donations to
underserved communities.
106,000+
patients supported through
product donations.
1
Health, safety
and wellbeing
Support health, safety and wellbeing
by maintaining an annual Total
Incident Rate (TIR
2
) of less than
0.5 and Lost Time Injury Frequency
Rate (LTIFR
3
) of less than 0.1.
TIR
0.11
LTIFR
0.08
1
Patients supported estimate is based primarily on volume of Smith+Nephew products shipped
to International Health Partners (IHP) between February and August 2025 for donation and
distribution. Due to the reporting period noted above, the 2025 patients supported number is
not directly comparable to the prior year.
2
TIR = Total Incident Rate, calculated per industry standards as the number of OSHA recordable
incidents per hours worked, multiplied by 200,000.
3
LTIFR = Lost Time Injury Frequency Rate, calculated per industry standards as the number of
lost time injuries per hours worked, multiplied by 200,000.
Enabling access to vital healthcare
Operation Walk provides free surgical
treatment for people with disabling
arthritis or debilitating bone and joint
conditions in developing countries.
Smith+Nephew donates orthopaedic
products to bring mobility to people
with limited access to advanced
surgical solutions.
Smith+Nephew and Operation Walk
International carried out their fiſth
annual medical mission to Medellín,
Colombia. In a country where access
to life-changing orthopaedic surgery is
extremely limited, the Operation Walk
International team has committed to
restoring quality of life for patients from
disadvantaged groups.
For this mission, Smith+Nephew donated
a total of 30 hip and knee implants
that allowed the 17-member team of
surgeons, anaesthesiologists, nurses
and other health professionals to deliver
life-changing hip and knee replacement
surgery to 25 patients.
More information on People
in our 2025 Sustainability Report
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Planet
Working to
reduce our
impact on the
environment
We recognise the need to protect our
planet. We manage energy, waste and
water, reduce our greenhouse gas (GHG)
emissions, where possible, and are
mindful of the impact our decisions have
on the environment.
Our ESG strategy extends upstream to
our suppliers and downstream to our
customers. We are also working to deliver
products and services that have less
impact on the environment, and are taking
steps to better understand the extended
footprints of our products.
Our objectives
Our progress in 2025
Climate change
Achieve net zero Scope 1 and
Scope 2 GHG emissions by 2040
and Scope 3 GHG emissions
by 2045.
Achieve 70% reduction in Scope 1
and Scope 2 GHG emissions
by 2025.
Achieve 80% reduction in Scope 1
and Scope 2 GHG emissions
by 2030.
Scopes 1 and 2 (total) CO
2
e
emitted (market-based):
71%
reduction from 2019 baseline,
1
exceeding 2025 greenhouse
gas emissions reduction
milestone for Scope 1 and 2.
Scope 3 CO
2
e emitted:
60%
reduction from 2021 baseline.
Waste
Maintain zero waste to
landfill
2
for our total
manufacturing waste annually.
95%
of total manufacturing waste
diverted from landfill.
1
6
zero waste to landfill
manufacturing locations, based
on monthly diversion rate
throughout 2025.
Water
Conserve water throughout
our business processes.
6%
reduction in annual water use.
1
Data independently assured by ERM CVS, more details and the full assurance report are
available in the 2025 Sustainability Report on pages 56–57.
2
We define zero waste to landfill as a landfill diversion rate of 90% or greater.
World-class energy management in Costa Rica
In 2025, our Costa Rica facility formally
received the ISO 50001:2018 certification
for energy management. ISO 50001 aims
to help organisations improve energy
performance, increase energy efficiency
and reduce environmental impact.
It provides a framework for establishing
an energy management system (EMS)
that allows our site to track, analyse,
and improve its energy performance.
Beyond the environmental benefits,
ISO 50001 also helps improve operational
efficiency by identifying and eliminating
energy waste. This can lead to smoother
operations and help us make informed
decisions regarding energy use and
potential investments in energy-
saving technologies.
More information on Planet
in our 2025 Sustainability Report
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Products
Innovating
sustainably
across the
value chain
Manufacturing and supplying safe and
effective products is at the heart of our
business. Our people, processes and
technology, and supplier engagement are
structured to support progress towards
the objective of innovating sustainably.
Our objectives
Our progress in 2025
Product design
Include a sustainability review
in New Product Development
(NPD) for all new products
and product acquisitions.
100%
of sustainability reviews
complete for New Product
Development projects.
Sustainable
packaging
We are committed to reducing
our packaging, and designing
with reusable, recyclable and/or
renewable resources that are
sustainably sourced.
92%
of our in-scope packaging systems
incorporate at least one
recyclable component.
Supplier
engagement
Complete a focused Corporate
Social Responsibility (CSR)
risk-based due diligence of our
Tier 1 suppliers annually, including
risk-based analysis of sub-tier
suppliers, to assure compliance
with our sustainability
requirements.
100%
of supplier due diligence and
assessments completed according
to our risk-based procedure.
Smarter packaging for a smaller footprint
As part of our ongoing commitment
to sustainable product innovation,
Smith+Nephew has undertaken a
comprehensive redesign of the sterile
screw packaging system used in EVOS
◊
Plating System sterile screws and other
orthopaedic and sports product lines.
The highlight of this initiative reduced
the 80mm sterile screw packaging size
by approximately 50% and eliminated
packaging shrink wrap, while maintaining
‘double barrier’ sterility improvements
that support operating room safety.
The packaging redesign supports
healthcare facilities’ needs for space-
efficient medical device storage and
delivers a meaningful reduction in
material use and waste. The removal
of the outer shrink wrap further cut
the amount of single-use plastic in
the system.
More information on Products
in our 2025 Sustainability Report
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Task Force on Climate-
related Financial Disclosures
(TCFD) framework
Smith+Nephew’s disclosures, which are
consistent with the recommendations
of the TCFD framework, are set out
on pages 69–73. By this we mean
the four TCFD recommendations and
the 11 recommended disclosures set
out in Figure 6 of Section B of the
report entitled ‘Implementing the
Recommendations of the Task Force on
Climate-related Financial Disclosures’
published in October 2021 by the TCFD.
Smith+Nephew has complied with
the requirements of UKLR 6.6.6(8)R
by including climate-related financial
disclosures consistent with the TCFD
recommendations and recommended
disclosures. The climate-related financial
disclosures made by Smith+Nephew
comply with the requirements of the
Companies Act 2006 as amended
by the Companies (Strategic Report)
(Climate-related Financial Disclosure)
Regulations 2022.
Governance
The way in which we evaluate, manage and
embed sustainability within our business
and culture is directly linked to our Strategy
for Growth through a focus on People,
Planet and Products. Oversight of our ESG
strategy is one of the Matters Reserved
to the Board. The Board reviews the ESG
strategy, key risks and opportunities,
progress on a regular basis, approves the
Sustainability Report annually, and reviews
and approves the ESG, TCFD and SASB
reporting in the Annual Report.
Three Board Committees are also closely
involved in reviewing the elements
of sustainability that impact the key
areas of our business. All Committees
receive regular updates on ESG strategy,
implementation, objectives and targets,
and climate-related financial risks and
opportunities. The Committee Chairs
report to the Board at each Board meeting.
TCFD reporting
Board:
Audit Committee:
–
Oversight of ESG strategy and risk
management programme.
–
Oversight of the risk management
process and reviewing its
operating effectiveness.
–
Receives regular updates on ESG
and climate-related financial risks
and opportunities.
–
Assesses whether climate change
has a material impact on our
financial statements.
–
Ensures the Company reports in line
with the recommendations of the
TCFD framework.
Compliance & Culture Committee:
Remuneration Committee:
–
Oversight of ESG policy and
performance versus targets,
with reviews undertaken at each
committee meeting.
–
Receives regular updates on ESG
and climate-related risks and
opportunities, people and culture
objectives including IDE and
ethics, compliance, quality and
regulatory matters.
–
Oversight and review of ESG
metrics within Remuneration Policy,
and compensation and incentive
plans generally.
–
Approval of ESG percentage and
measures within short-term and
long-term incentive plans. For 2025,
the Committee approved that 5%
of the Annual Bonus Plan and 10%
of the Performance Share Plan for
Executive Directors and Executive
Officers are dependent on the
achievement of ESG objectives.
Executive Committee:
ESG Steering Committee:
–
Driven by the Chief Executive
Officer, determination and
management of ESG strategy,
with the President Global
Operations and Vice President
ESG accountable for leading
on implementation.
–
Ensures that ESG risks and
opportunities are included
in decision making as part of
each project, initiative and the
12-Point Plan.
–
Supports the Executive Committee
in the execution and delivery of the
ESG strategy.
–
Membership includes Global
Operations, ESG, Global
Manufacturing, Research &
Development, Global Procurement,
Public Policy & Government Affairs,
Finance and Human Resources.
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–
The Compliance & Culture Committee,
chaired by Marc Owen, assesses how
we implement our ESG strategy in
the core areas of People, Planet and
Products, encompassing the Group’s
impact on employees, the environment,
the local communities in which it
operates, customers, suppliers and other
key stakeholders. The Compliance &
Culture Committee also tracks progress
of the delivery on ESG objectives and
metrics, including a regular review of
our net zero emissions progress at each
Committee meeting.
–
The Audit Committee, chaired by Jez
Maiden, is responsible for ensuring
oversight of the process by which
risks and opportunities relating to the
Group and its operations are identified,
managed and reported. The Audit
Committee assesses the extent to which
climate change and other ESG risks are
likely to have a material impact upon our
financial statements by reviewing the
possible impact of different scenarios
related to climate change. The Audit
Committee also has oversight of the
TCFD reporting in the Annual Report.
–
The Remuneration Committee, chaired
by Sybella Stanley, is responsible
for ensuring that the Remuneration
Policy and related incentive schemes
incorporate ESG targets and metrics,
where appropriate to do so.
Our Chief Executive Officer sets strategy
together with the Executive Committee,
and the President Global Operations and
the Vice President ESG are responsible for
the implementation and report at least
quarterly on our progress to the Board, its
Committees and our Executive Committee.
Matters discussed at these quarterly
updates include: our ESG scorecard with
progress on public ESG objectives, including
net zero targets; methods to reduce
our GHG emissions; and stakeholders’
expectations related to Smith+Nephew’s
climate change programme. The ESG
Steering Committee implements and
executes our ESG strategy across all
business areas, reporting directly to the
Executive Committee which will continue
to drive our ESG strategy with oversight
from the Board and its Committees.
Smith+Nephew leaders consider ESG risks
and opportunities in their decision making.
For example, when evaluating options for
our new manufacturing site in Melton, UK,
an analysis of ESG requirements and risks is
being undertaken as part of the project and
decision making. Where appropriate, papers
submitted to the Board by management
for review include an analysis of ESG issues
and opportunities to enable the Board to
consider these factors in decision making
and to ensure effective Board oversight
on ESG strategy, risks and opportunities.
Information on our ESG risks can be found
within our principal risks on pages 83–94.
Strategy
Our ESG strategy is built on our purpose,
Life Unlimited, and our culture of Care,
Courage and Collaboration. Our five-
year ESG strategy was refreshed in 2025
and approved by the Board. More detail
on the ESG strategy is available in our
Sustainability Report.
The annual identification process for both
climate change risks and opportunities is
split between those affecting individual
site locations or Business Units and those
with the potential to impact the Group
as a whole. From an individual asset (or
location) viewpoint, we consider direct
factors at a local level, these could include
(but are not restricted to) those associated
with climate change such as abnormal
weather (including floods, earthquakes and
tornadoes), changes in our customer base
and the regulatory pathways governing the
sales of our products.
From a company-wide or Group level,
this process can drive reputational risk
and opportunities that could impact our
ability to deliver products and services to
customers. These risks and opportunities
are assessed both at a Group level by the
ESG Steering Committee and incorporated
into a series of business continuity plans
and objectives. The risks are also assessed
at a local (asset) level using knowledge
of the local environment and conditions.
This is performed by careful consideration
of the potential impact and likelihood.
At local (asset) level, the risks are reviewed
within wider Business Continuity and
Disaster Recovery Plans based on site-
specific risks.
A dedicated team of Health, Safety and
Environment, Facilities and Business
Continuity Practitioners meet quarterly
to review all risks and opportunities
associated with climate change and
share best practice. The criteria used to
determine priorities include the nature
and level of the anticipated risk and its
associated impact on the business. We also
prioritise improvement initiatives based on
the likely period of return on investment
and following best practice based on initial
benchmarking against peers.
Our principal risks capture our physical
and transitional climate-related risks in
our Enterprise Risk Management (ERM)
process.
We address climate-related risk primarily
through business strategies in our global
operations functions including facilities,
health and safety, business continuity
and global supply chain management.
Severe weather patterns as a result of
climate change may cause damage to
manufacturing or distribution facilities,
potentially impacting our ability to meet
customer demand over the long term.
Our mitigated severity is a qualitative
assessment based on our business
continuity plans and wider ESG efforts.
Refer to the risk management section
on page 79 and the Risk report on
page 78 for more details on our risk
management process.
Climate-related opportunities:
Climate-related opportunities are identified
and addressed through our ESG strategy
and programmes and monitored via our
ESG scorecard. Through this process, we
have identified a number of climate-related
opportunities relating to energy sourcing,
energy efficiency, on-site renewable
energy generation, supplier engagement
and packaging reduction initiatives.
Eight of our US locations source
electricity from renewable energy via
the procurement of renewable energy
certificates (RECs). In addition to sourcing
renewable energy via RECs, our Penang
(Malaysia) and Suzhou (China) facilities
feature photovoltaic (PV) panels generating
renewable energy on-site. All UK sites
source a green tariff for the supply of
electricity from renewable sources.
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Working responsibly
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Transition risks
Potential impact
Timeframe
Actions taken by management
Commercial execution
Inability to satisfy customers’ sustainability requirements and expectations.
Decline in
customer demand.
Lower prices to
remain competitive.
Medium
(3–7 years)
and long term
(>7 years)
Monitoring regulatory changes and
interpreting potential business impacts
of legislation.
Continued progress of ESG programme
and ongoing customer engagement to
monitor sustainability needs.
Legal and compliance
Failure to identify existing or new legal or regulatory requirements, including
sanctions programmes and ESG matters that result in non-compliance with
applicable laws and regulations, including carbon taxes and climate-
related regulations.
Fines and sanctions.
Short
(<3 years),
medium
(3–7 years)
and long term
(>7 years)
The ESG Steering Committee and our
Health, Safety and Environmental
Compliance function assess new and
enhanced regulations and reporting
requirements that may be climate-related
risks and work cross-functionally to
ensure compliance.
Failure to meet stakeholder expectations with regard to increasing sustainability
regulations and reporting requirements.
Increased costs
associated
with sustainability
improvements.
Medium
(3–7 years)
and long term
(>7 years)
Proactive sustainability improvements
across business and portfolio in
anticipation of regulations.
Data and IT system improvements to
improve availability of ESG data.
Pricing and reimbursement
Limited ability to pass on the cost of sustainability improvements, including
supplier compliance with sustainability regulations, including carbon taxes and
climate-related regulations.
Higher input costs.
Medium
(3–7 years)
and long term
(>7 years)
Operational and business
efficiency efforts.
Optimise portfolio mix and promote
differentiated products.
In 2021, we aligned with the
recommendations of the
Intergovernmental Panel on Climate
Change and published our commitment
to achieve net zero Scope 1 and Scope
2 GHG emissions by 2040 and Scope 3
GHG emissions by 2045, beginning by
achieving a 70% reduction in Scope 1
and Scope 2 GHG emissions by 2025.
We understand how important it is to
balance environmental initiatives with
business activities and strive to reduce
emissions through new technology.
We have conducted a review of our
current state and captured related
business risks in our risk register.
Two of our largest manufacturing sites
– Penang, Malaysia and Coyol, Costa
Rica – are certified to ISO 50001 energy
management systems, including annual
performance and compliance audits
around best practices in energy use.
In 2025, we conducted internal audits
on energy data and efficiency project
opportunities at four additional facilities in
the US, UK and Asia.
The new UK site at Melton, on the
outskirts of Hull, will be designed to have
a significant focus on energy and resource
efficiency. The site aims to generate on-site
renewable energy.
Scenario analysis:
The annual Group scenario analysis in
2025 was supported by a third party and
included approximately 30 locations.
Modelling focused on the material impacts
on our business and was based on our
current business activities and assumed no
mitigation. As outlined on pages 71–72, our
physical and transition risks are captured
in our ERM process. Refer to our Risk report
on page 78 for further details.
Based on the modelling undertaken,
the highest potential impact (without
mitigation) is in relation to global
temperature rise. The potential impact
of sea-level rise has decreased from the
prior year modelling with the announced
plans to build a new Advanced Wound
Management facility at Melton, on the
outskirts of Hull, which sits at a higher
elevation and is further inland than
the current facility. The Group closely
monitors climate-related physical risks
and is taking mitigating measures such
that the net impact to the business with
these measures in place is not expected to
be material.
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Physical risks
Scenario modelling
Based on the Intergovernmental Panel
on Climate Change’s (IPCC’s) sixth
assessment report, we modelled the
following scenarios out to 2030 and 2050:
Implication and mitigation
Potential severity
without
mitigation
with
mitigation
Global temperature rise
–
Low: Limit warming to 2°C
(IPCC scenario SSP1-2.6)
–
Medium: Limit warming to 3°C
(IPCC scenario SSP2-4.5)
–
High: Limit warming to 4°C
(IPCC scenario SSP3-7.0).
Extreme heat increases the demand for cooling and can
overwhelm power grid infrastructures.
Existing defences and business continuity plans are expected to
mitigate any near-term impacts and the longer-term impact is
being closely monitored by the ESG and operations teams.
High
Medium
Sea-level rise
–
Sea-level rise up to 5 metres
–
Distance from nearest coastline.
Rising sea levels impact manufacturing sites at coastal locations.
Existing flood defences and business continuity plans are
expected to mitigate any near-term impacts and the longer-term
impact on the Group’s manufacturing footprint is an area of focus
being considered in our manufacturing strategy. For example,
the announced relocation of our Advanced Wound Management
facility mitigates against the impact of sea-level rise and
accordingly reduces the potential impact.
Medium
Low
Extreme weather
– Precipitation
– Wind
– Drought.
Heavy precipitation events will make flooding more probable,
strong winds can damage roofs and compromise the building
envelope, and more intense or prolonged droughts can lead to
diminishing water resources and potentially more severe wildfires.
Existing weather defences and business continuity plans are
expected to mitigate any near-term impacts and the longer-term
impacts are considered in our manufacturing strategy.
Medium
Low
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Working responsibly
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Risk management
Climate-related risks are managed through
our comprehensive ERM process risk
governance framework. At the top of our
structure, the Board sets our risk appetite
and monitors the application of our risk
framework, including strategy, execution
and outputs of risk reviews by the business
and the Group Risk team. The Board
cascades our risk appetite throughout
our organisation through the Executive
Committee, the risk owner community
and our management group.
A formal ‘bottom-up’ exercise ensures
that risks are escalated back through the
process to our Board and are reflected
in our principal risks, as appropriate.
As part of this exercise, we maintain a
Sustainability Risk Register that captures
climate risks and how they link to the
Group’s principal risks. Each sustainability
risk has a control and mitigation strategy
to reduce the impact of the risk.
The Sustainability Risk Register is reviewed
by the ESG Steering Committee regularly.
ESG risks are raised to the Executive
Committee on a quarterly basis as part of
the ESG dashboard. Refer to page 70 for
more detail on climate-related risks.
Climate-related risks:
We identify climate-related risks based
on short, medium and long-term horizons.
We consider short term to be within one to
three years (in line with our annual budget
and three-year plan cycles), medium
term to be within three to seven years (in
line with scenario modelling to 2030 and
typical product life cycles) and long term
to be greater than seven years. Short-term
risks are captured in our financial planning
process; medium and long-term risks
are captured within our global footprint
planning process.
Our annual and five-year financial
planning, and our capital expenditure
planning processes require climate-
related risk information and specific
ESG considerations.
Metrics and targets
We have published an annual Sustainability
Report since 2001 detailing progress
against our global objectives. We have
objectives in each of our priority areas:
People, Planet and Products. Our key
climate-related metrics are GHG emissions
and waste to landfill. Our key objectives
in relation to these metrics are net zero
GHG emissions by 2045 and zero waste
to landfill at our strategic manufacturing
facilities by 2030. Detailed information
about our objectives and progress made
against those objectives can be found on
pages 66–68 of the Annual Report and in
our Sustainability Report.
For 2025, the Remuneration Committee
approved that 5% of the Annual Bonus Plan
and 10% of the Performance Share Plan for
Executive Directors and Executive Officers
are dependent on the achievement of
ESG objectives.
We have mapped our Scope 1 and 2
GHG emissions, and improved mapping
of our Scope 3 GHG emissions in order to
meet our objective of reducing total life
cycle GHG emissions to net zero by 2045.
We established and met our interim carbon
reduction objectives for 2025 to reduce
our Scope 1 and 2 GHG emissions by 70%,
and now aim to reduce Scope 1 and 2 GHG
emissions by 80% by 2030 vs. our 2019
baseline. See our 2025 Sustainability
Report for details on our Scope 1 and
Scope 2 net zero roadmap.
In 2022, we published our 2021 baseline
Scope 3 GHG emissions, including data
from eight of the 15 categories. In 2025, we
have reported data from all 15 categories.
We have carbon reduction roadmaps for
our Scope 1, 2 and 3 GHG emissions to
show our pathway to meet our objectives.
Our Scope 1, 2 and 3 GHG emissions
reduction data are provided on
page 77 of the Annual Report, with more
detailed information also available in our
Sustainability Report.
The following aligns to the non-
financial reporting requirements
contained in sections 414CA and
414CB of the Companies Act 2006.
Description of the business
model
–
Our business model
14
Environmental matters
– Environment
–
Climate-related financial
disclosures (TCFD)
67
69
Our employees
–
Our culture
–
Employee wellbeing
–
Inclusion and belonging
–
Board diversity
–
UK gender pay gap
59
60
62
99
187
Social matters
–
Access to healthcare
–
Health and safety
66
66
Human rights
–
Human rights
–
Working with third parties
63
118
Ethical business practices
–
Anti-bribery and corruption
–
Code of Conduct and
Business Principles
–
Reporting a concern
84
140
140
Policy, due diligence and
outcomes
–
Risk management
–
Principal risks
–
Audit Committee Report
78
83
141
Key performance indicators
(including non-financial)
–
Our 2025 performance
2
ESG Policies/Statements
–
Modern Slavery
–
Conflict Minerals
–
Health, Safety and
Environment Policy
Non-financial and
sustainability information
statement
Our policies are
available online at
www.smith-nephew.com
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Reducing operational
carbon emissions
In line with our net zero ambition, we
set a target to reduce our Scope 1 and
2 carbon emissions by 70% by the end
of 2025 compared to our 2019 baseline.
We achieved this target on time.
In accordance with the California Voluntary
Carbon Market Disclosures Act (AB1305),
detailed information is available on pages
28–32 of the 2025 Sustainability Report.
In 2025, the total market-based
Scope 1 and Scope 2 GHG emissions
footprint was 19,372 tonnes of CO
2
e.
This represents a reduction of 71%
against our 2019 baseline, marking the
successful achievement of our objective
to reach a 70% reduction by the end of
2025. This reduction was primarily a result
of energy efficiency projects, increases
in the renewable energy we source and
on-site energy generation. This target has
now been superseded by a new interim
objective to achieve a 80% reduction in
Scope 1 and Scope 2 GHG emissions by
2030 against our 2019 baseline.
Smith+Nephew’s Scope 1 and 2 carbon
reduction journey is supported by eco-
conscious building design principles such
as Leadership in Energy and Environmental
Design (LEED), one of the world’s most
widely-used green building rating systems.
LEED-certified sites include several
manufacturing sites and corporate offices
certified to the silver or gold level.
We extended our sourcing of renewable
energy to include our manufacturing sites
and larger commercial offices in the US.
We also continued to source hydroelectric
energy for our manufacturing locations in
Malaysia and China. They were achieved
through the purchase of renewable energy
certificates (RECs). From October 2023,
all our UK sites began sourcing 100%
renewable electricity from its supplier.
We have installed solar PV panels at our
Suzhou and Penang sites. Both systems
began operating in early 2023 and,
combined, the two solar-powered systems
continued to reduce our Scope 2 GHG
emissions by over 2,200 tonnes of CO
2
e
in 2025.
Sourcing renewable energy reduces our
market-based GHG emissions – that is, the
emissions from the electricity we purchase.
Net zero Scope 1 and 2 carbon emissions by 2040
Our strategy to achieve net zero Scope 1 and 2 carbon emissions by 2040 includes:
During 2025, we
procured energy
from wind, solar and
hydropower sources
via green energy
utility contracts
and renewable
energy certificates.
Renewable
energy sourcing
During 2025, our
manufacturing sites
in Suzhou, China, and
Penang, Malaysia,
generated
over
3.6GWh of renewable
solar energy.
On-site renewable
energy projects
During 2025, energy
efficiency measures
tied to manufacturing
site ISO 50001
energy management
certification drove an
11% energy efficiency
improvement relative
to production output in
Costa Rica.
Energy
efficiency
Our approach to cutting emissions
is three-fold: tackling energy efficiency,
generating our own renewable energy on
site and sourcing lower-carbon energy
through green tariffs and procuring
renewable energy certificates.
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Reducing our energy use and GHG emissions
Working responsibly
continued
Reducing value chain greenhouse gas emissions (Scope 3)
During 2025, we calculated our Scope 3 GHG emissions from all 15 categories.
Net zero Scope 3 carbon emissions by 2045
Our strategy to achieve net zero Scope 3 carbon emissions by 2045 includes:
Engaging with our
key suppliers via
the Smith+Nephew
Environmental
Disclosure programme
to monitor our
suppliers’ net zero
plans, and identify
mitigation actions
and collaboration
opportunities.
Supplier
engagement
Our new sustainable
product design
and development
programme
incorporates
considerations for
the carbon impacts
of a product and
its packaging.
Lower-carbon
product design
Encouraging fewer
transport miles
and using lower-
carbon modes of
transport across the
value chain – from
incoming materials to
site and warehouse
transportation
of goods.
Optimising upstream
and downstream
transportation
Our 2030
manufacturing zero
waste to landfill
objective helps drive
progress on our Scope
3 GHG emissions
reductions by
reducing the carbon
impacts of waste.
Reducing greenhouse
gas emissions
from waste
Encouraging fewer
employee travel miles
and lower-carbon
modes of transport,
such as cycling, public
transport, providing
on-site electric
vehicle charging
for employees and
visitors, and issuing a
company travel policy
that encourages
more efficient
transport planning.
Sustainable employee
and business travel
practices
More details can be found in the 2025
Sustainability Report on pages 28–32
www.smith-nephew.com
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We report the carbon footprint of our
Scope 1, Scope 2 and Scope 3 GHG
emissions in tonnes of CO
2
equivalent
from our business operations for the
year ended 31 December 2025. We
are including UK-specific energy
and emissions data to satisfy the
Streamlined Energy and Carbon
Reporting (SECR) requirements.
Our focus is on the areas of largest
environmental impact, including
manufacturing sites, warehouses,
R&D sites and offices.
Smaller locations representing fewer
than 2% of our overall emissions are not
included. Acquisitions completed before
2025 are included in the data, with
those completed during 2025, or more
recently, excluded. This is in line with our
established policy for the integration of
acquired assets.
Our GHG emissions reporting represents
our core business operations and
facilities that fall within the scope of
our consolidated financial statements.
Primary data from energy suppliers has
been used wherever possible. We report
our emissions in three scopes:
–
Scope 1:
Direct sources of emissions
which mainly comprise the fuels we use
on-site, such as gas and heating oil, and
fugitive emissions arising mainly from
the losses of refrigerant gases. We have
included UK vehicle emissions from
leased cars since 2020. Since 2023, we
included 14 European countries in our
leased vehicle reporting.
–
Scope 2:
Indirect sources of emissions
such as purchased electricity and steam,
that we use at our sites.
–
Scope 3:
Indirect emissions that occur
throughout the value chain as a result
of activities or processes not owned or
directly controlled by Smith+Nephew.
These can be divided into upstream and
downstream emissions across 15 defined
categories. In 2025, we are reporting
data from all 15 categories.
Energy efficiency and
carbon emissions reduction
In 2024, the principal energy efficiency
measures included targeting the use of
online real-time data to monitor energy
usage to make savings. We carried out a
programme to replace older, inefficient
equipment with highly efficient equipment,
such as compressors, chillers, pumps, fans
and motors.
During 2025, we continued our detailed
analysis of our energy usage data
and undertaking energy efficiency
projects. We also extended our internal
audit programme covering our ESG
energy metrics.
In 2025, our Costa Rica manufacturing
facility received the ISO 50001:2018
certification for energy management.
Energy efficiency measures tied to ISO
50001 energy management certification
in Costa Rica drove an 11% reduction in
energy use relative to production output.
This year, we also continued to convert
our company car fleet in Europe to
electric vehicles, where appropriate.
In 2025, we extended our sourcing
of renewable energy to include our
manufacturing sites and larger commercial
offices in the US. We also continued
to source hydroelectric energy for our
manufacturing locations in Malaysia and
China. These were achieved through the
purchase of renewable energy certificates
(RECs). Purchasing RECs gives buyers the
right to renewable energy and also makes
it possible to track ownership of it.
We have installed solar PV panels at our
Suzhou and Penang sites. Both systems
began operating in early 2023 and
combined the two solar-powered systems
continued to reduce our Scope 2
GHG emissions.
Throughout 2025, all our UK sites
continued to source renewable power.
Location-based emissions are calculated
in compliance with the WRI/WBCSD
GHG Protocol Corporate Accounting
and Reporting Standard and have been
calculated using carbon conversion
factors published by the UK Government
Department for Energy Security & Net Zero
(DESNZ) for 2025.
We have applied the emission factors
most relevant to the source data,
including DESNZ 2025 (for UK locations),
IEA 2023 (for overseas locations with
some preliminary 2024 emissions factors
applied where available), and for the US
we have used the most recently available
US EPA ‘Emissions & Generation Resource
Integrated Database’ (eGRID) for the
regions in which we operate. All other
emission factors for gas, oil, steam, other
fuels and fugitive emissions are taken from
DESNZ 2025.
In line with dual reporting, we also report
market-based emissions. These are
contractual or supplier-specific emission
factors that can be applied when procuring
low-carbon energy or siting facilities
in areas with lower emissions, but also
recognising that this might be higher
than the grid average in some cases.
Where market-based factors were not
available, we have used Residual Mix data
for the EU locations and IEA data for all
other countries, except for the remaining
US locations where the eGRID factors
were applied.
During 2025, we worked with a
sustainability partner to measure our
Scope 3 GHG emissions, and in order to
improve data source transparency, we
applied emission factors from databases
including: IEA, DESNZ, IPCC, ADEME,
ecoinvent and US EPA EEIO. For the 2025
Scope 3 GHG emissions assessment, input
data used were derived from financial-
based sources as well as activity data.
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Carbon emissions (CO
2
e) strategy,
reporting methodology, materiality and scope
Working responsibly
continued
2025
2024
2019 (baseline year)
UK
Global
(excluding
UK)
Total
UK
Global
(excluding
UK)
Total
UK
Global
(excluding
UK)
Total
CO
2
e emissions (tonnes) from:
Direct emissions (Scope 1)
1
5,939
7,667
13,606
2
5,038
7,756
12,794
3
4,747
5,141
9,888
4
Indirect emissions (Scope 2)
(location-based)
2,991
54,473
57,464
2
3,497
55,604
59,101
3
4,911
62,413
67,324
4
Total (location-based)
8,930
62,140
71,070
2
8,535
63,360
71,895
3
9,658
67,554
77,212
4
Indirect emissions (Scope 2)
(market-based)
0
5,766
5,766
2
0
11,868
11,868
3
5,072
52,080
57,152
4
Total (market-based)
5,939
13,433
19,372
2
5,038
19,624
24,662
3
9,819
57,221
67,040
4
Energy consumption to
calculate Scope 1 and 2
emissions (GWh)
1
49
183
232
43
186
229
45
168
213
Intensity ratio (market-based):
CO
2
e (t) per $m sales revenue
3.1
4.3
13.1
CO
2
e (t) per full-time employee
1.1
1.4
3.7
2025
2024
2021 (baseline year)
Other indirect emissions
(Total Scope 3)
5,6
647,532²
667,620
1,614,573
1
A total of 14 European countries were included in 2023, 2024 and 2025 Scope 1 vehicle data.
2
Data independently assured by ERM CVS; more details and the full assurance report are available in the 2025 Sustainability Report on pages 56–57.
3
Data independently assured by ERM CVS; more details and the full assurance report are available in the 2024 Sustainability Report on pages 46–47.
4
Data independently assured by ERM CVS;more details and the full assurance report are available in the 2022 Sustainability Report on pages 60–61.
5
Measurement of 2024 and 2025 Scope 3 GHG emissions from 14 categories in 2024 and 15 categories in 2025. Refer to ‘Reporting our Scope 3 emissions’
above for more details.
6
Total Scope 3 emissions reductions shown result from both business efficiency efforts and as a product of improvements to data quality, methodologies
applied and analyses undertaken by Smith+Nephew or third parties. See ‘Data disclosure in this report’ in the 2025 Sustainability Report on page 58
for additional notes.
2025 data includes recent acquisitions completed and new site openings during 2024.
Revenue: 2025: $6.2bn; 2024: $5.8bn; 2019: $5.1bn. Average full-time employee data: 2025: 17,530; 2024: 18,060; 2019: 18,030.
Reporting our
Scope 3 emissions
During 2025, we have worked with an
external consultant to measure our
Scope 3 GHG emissions using recognised
protocols. Our calculation of our 2025
Scope 3 GHG emissions was 647,532
tonnes of carbon dioxide equivalent from
the 15 categories that we measured.
Our data quality has improved, through
improved analysis and reporting within
each emissions category for Scope 3, and
by extending the number of categories that
we have reported. We also conducted our
third global commuting survey.
Our Scope 3 GHG emissions assessment
was made using the best available 2025
data. As expected, in line with our peer
group, purchased goods and services
contributes the most significant proportion
of our Scope 3 GHG emissions, at over
66%. Further details of the methodology
are available in the 2025 Sustainability
Report on page 54.
Independent assurance
In 2025, selected Scope 1 and
Scope 2 GHG emissions data were
independently assured by ERM CVS.
In accordance with ISAE 3000, a limited
assurance engagement was performed.
Previously the 2024, 2023, 2022 and 2019
baseline data were assured. In 2025, our
total Scope 3 GHG emissions value was
assured for the first time.
More details and the full limited
assurance report can be found in
the 2025 Sustainability Report on
pages 56–57
www.smith-nephew.
com/sustainability
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Group Risk Team
Internal Audit
Board of
Directors and
Board Committees
Executive Committee
Business Area and Function
Like all businesses, we face risks
and uncertainties. Smith+Nephew
has developed an Enterprise Risk
Management (ERM) framework,
together with supporting policies
and procedures, to support risk
management and value creation.
Successful identification and
management of existing and
emerging risks is critical to the
achievement of strategic objectives
and to the long-term success of any
business. Risk management is
therefore an integral component
of our corporate governance.
Our risk governance
framework
Our Board has responsibility for oversight
of risk management, setting risk appetite
and monitoring the application of our risk
framework including strategy, execution,
and outputs of risk reviews by the business
and Group Risk team. The Board cascades
its approved risk appetite throughout
our organisation through the Executive
Committee, risk owner community and
our Group management teams.
The Board assesses the effectiveness of
risk management and internal control
over financial reporting through the Audit
Committee who conduct regular reviews
of reporting on principal risks, the risk
management framework and internal
control processes. Further details of the
Audit Committee’s work in this area are
set out below on pages 80 to 82.
Our Risk Management Policy, endorsed by
our Chief Executive Officer, is supported
by an ERM Manual and the Group Risk
team providing training to Risk Champions
appointed for each of our global business
units and relevant functions. Risks continue
to be managed through a ‘top-down’ and
‘bottom-up’ process, with regular oversight
from the Executive Committee, quarterly
reports to the Audit Committee and
regular reports to the Board on any
specific areas of focus.
Our risk management life cycle
Board of Directors
and Board Committees
– The Board is responsible for
oversight of risk management, for
our annual strategic risk review and
for determining the risk appetite
the organisation is willing to take in
achieving its strategic objectives.
– The Board monitors risks through
Board processes (Strategy Review,
Disclosures, M&A, Investments,
Disposals) and Committees
(Audit and Compliance & Culture).
– The Audit Committee is responsible
for ensuring oversight of the
process by which risks relating to
the Company and its operations
are managed and for reviewing
the operating effectiveness of
the Group’s ERM process.
Executive Committee
– Identifies and ensures the
management of risks that would
prevent the Company from
achieving our strategic objectives.
– Appoints Risk Owners and Business
Area Risk Champions who are
accountable for applying the ERM
Policy and Framework to evaluate,
assess, monitor and mitigate
risks in their respective areas
of responsibility.
– Engages in discussions and reviews
external/internal environment
for emerging risks.
– Reviews risk register updates
from Risk Owners, facilitated by
information provided by Business
Area Risk Champions.
– Evaluates significant risks
identified through the ERM process
and assesses effectiveness of
mitigating actions.
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Risk Report
Our risk management process
Our ERM framework continues to be based on a holistic approach to risk management.
Our belief is that the strategic and operational benefits of proactively managing
risk are achieved when ERM is aligned with the strategic and operational goals of
the organisation.
What we review and actions we take when assessing our principal risks through
the ‘bottom up’ process:
1. Risk identification
Gain full understanding of any area of uncertainty the Group or business unit/
function faces which might create, prevent, accelerate or delay the achievement
of our strategy and/or business objectives. Articulate the risk in the relevant risk
register including the risk consequence and risk causes.
2. Gross (inherent) risk assessment
Measure the risk according to the Group’s impact and likelihood scoring methodology,
assuming there are no effective controls in place to manage the risk.
3. Current control identification
Identify what is currently being done or proposed to be done to reduce the
likelihood and/or impact should the risk occur.
4. Net (residual) risk assessment
Measure the risk according to the Group’s impact and likelihood scoring
methodology, taking account of the current controls in place and the assessment
of how effective they are, and proposed mitigation plans to the extent they are
not yet implemented.
5. Risk response planning
Assign an individual risk owner and determine whether additional mitigation is
required, taking into account the risk appetite for that risk. If further mitigation is
required, identify actions and action owners to achieve the additional identified
mitigation. Assign risk response, deadline, status and review dates.
6. Risk reporting
Risk Champions ensure that risk registers are completed and maintained.
These risk registers are reported to the Group Risk team on a quarterly basis.
The Group Risk team prepares a consolidated risk register and principal risk
heatmap which is reported to the Audit Committee on a quarterly basis.
7. Monitoring and review
Risk and response plans do not remain static and are managed on a rolling basis.
Risk management is an agenda item at regular management meetings and there
is a defined escalation process for out-of-cycle risk identification and/or material
change in risk management status. Risk Champions are also charged with
discussing the status of mitigation plans regularly with business owners.
Business area and function
Risk Champions
– Carry out day-to-day risk
management activities.
– Identify and assess risk.
– Implement strategy and
mitigating actions to treat risk
within Business Area.
– Lead regular risk register updates.
Group Risk team
–
Manages all aspects of the Group’s
approach to ERM, including design
and implementation of processes,
tools, and systems to identify,
assess, measure, manage, monitor,
and report risks. In 2026, the Group
Risk team will also seek to ensure
that the ethos of Continuous
Improvement as outlined in Our
Way to Win as part of the RISE
Strategy is implemented within
the ERM framework.
–
Facilitates implementation and
coordination through Risk Owners
and Business Area Risk Champions.
–
Provides resources and training
to support ERM process and
framework, including review
sessions with Business Area Risk
Champions on principal risks and
emerging risks for the enterprise.
–
Reports regularly on risk to the
Executive Committee.
–
Prepares Board and Group Risk
Committee reports.
Internal Audit
–
Provides independent assurance
to the Board and Audit Committee
on the effectiveness of the Group’s
Risk Management process.
–
Provides annual assessment of
effectiveness of ERM.
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OTHER INFORMATION
How we assess our principal risks
through the ‘top down’ process:
The Executive Committee review monthly
trends in operational risk in respect of each
of the principal risks. They also conduct
a formal ‘top down’ evaluation of risk,
including discussion and assessment of
both external and internal changes in
risk profile and the potential impact on
the enterprise, ‘grey swan’ scenarios and
a round-table discussion of significant
and emerging risks. The output of these
sessions is used to ensure that the bottom-
up risk registers align to the top-down
assessment of risks faced by the Group,
identify any required update to gross
and net risk scores, mitigation plans and
any required overarching changes to the
principal and emerging risks.
Emerging risks
We define emerging risks as risks that are
perceived to be potentially significant but
have not yet been fully understood and/
or assessed.
As part of the bottom-up risk management
process defined above, the emerging
risk identification process requires fresh
thinking on what new and emerging
risks may be relevant, using a variety of
techniques including review of external
thought leadership and geopolitical and
macroeconomic risk indicators and events,
risk identification interviews with key
stakeholders, including through ongoing
Executive Committee risk engagement,
and risk identification questionnaires on
identified topics relating to emerging risks.
Executive Committee risk owners also scan
the horizon for new and emerging risks as
part of the ‘top down’ risk management
process explained above and bring those
insights and discussions to the ExCo table.
Emerging risks identified through these
processes are reported up to the Executive
Committee via the Group Risk team and
ultimately to the Board as part of its annual
review of principal and emerging risks.
The following emerging risks were assessed
as relevant emerging risks in 2025:
–
Advances in Artificial Intelligence
(AI), machine learning, robotics, and
other emerging technologies create
opportunities for the Group when
supported by an appropriate governance
framework. These technologies can help
us to innovate to meet unmet patient
needs and earn and retain market
share through improved productivity
and customer service. The governance
framework around the use and
implementation of AI technologies is
designed to provide clear guidance on
usage and risk management in order
to mitigate the risk of employees or
third parties inadvertently disclosing
proprietary information or confidential
or sensitive data. As many AI tools
are limited by the information within
the data sets that they are trained on,
human oversight is required in order to
manage risk and avoid outputs that are
inherently biased or untrue. The Group
has an internal AI business use policy
that defines the governance and controls
required to ensure the use of AI is
appropriate, transparent, and properly
implemented and monitored and
training on this policy was delivered to
all employees in early 2026. In addition,
the AI Governance Working Group has
developed and reviewed appropriate
governance frameworks around the use
of AI within the organisation in order to
create value, mitigate risk and ensure
compliance within an increasingly
complex regulatory landscape, including
the EU AI Act.
–
Increased geopolitical uncertainty and
volatility: Ongoing shiſts in global trade
dynamics and trade policy coupled
with regional tensions and conflicts
including in Ukraine and the Middle
East continue to add complexity for
businesses navigating the geopolitical
landscape.
Our Executive Committee
and our Board continue to review and
consult as appropriate both internally
and externally on relevant developments
in order to ensure that scenario planning
and business continuity measures are
in place. This approach enables us to
continue to evaluate potential impacts
and align our strategic objectives with
an evolving global environment.
–
Our customers, investors and other
internal and external stakeholders
continue to focus on our approach to
Environmental, Social and Governance
(ESG) matters relevant to our business
and how we ensure that we align our ESG
strategy to the focus of our stakeholders
and consider ESG considerations aligned
to stakeholder needs in all relevant
areas of our business. We have a formal
ESG governance structure (please see
page 69), which flows through to the
Board and its Committees to ensure
that relevant ESG considerations are
taken into account in decision-making
processes and are reflected within each
of our principal risks as appropriate.
Internal Controls
Management is responsible for establishing
and maintaining adequate internal control
over financial reporting as defined in Rule
13a–15(f) and 15d–15(f) under the US
Securities Exchange Act of 1934. There is
an established system of internal control
throughout the Group and our global and
regional business units.
The main elements of the internal control
framework include:
–
Clearly defined lines of accountability
and delegations of authority in relation
to the establishment and monitoring
of internal controls.
–
Responsibility for internal controls is
held by relevant individuals in the Group
and local country management who
are accountable for establishing and
maintaining internal controls in their
respective business and functional areas.
–
The Group’s IT organisation is responsible
for the establishment of effective
IT controls within the core financial
systems and supporting IT infrastructure.
–
The Assurance, Controls & Compliance
Group has responsibility for the review
of the effectiveness of internal controls
over financial reporting including
financial, operational, and IT controls.
They fulfil this responsibility by either:
performing testing directly, reviewing
testing performed in-country, or utilising
a qualified third party to perform this
management testing on its behalf.
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continued
–
The Group Finance Manual sets out
financial and accounting policies and is
updated regularly. The Group’s Minimum
Acceptable Practices (MAPs) internal
control framework is updated annually
to adjust to changing business processes
or to leverage leading practices.
Identified control owners are required
to self-assess their level of compliance
with the MAPs on a regular basis and
remediate any gaps.
–
MAPs compliance is validated through
spot-checks conducted by the
Assurance, Controls & Compliance
Group and Internal Audit, as well as
during wider Internal Audit reviews
performed throughout the year.
We continue to leverage a technology
solution to facilitate the real time
monitoring of the operation and testing
of controls and have established KPIs
for control performance.
–
The Internal Audit function executes
a risk-based annual work plan, as
approved by the Audit Committee.
The Audit Committee reviews reports
from Internal Audit on their findings
on internal financial controls, including
compliance with MAPs and from the
SVP Group Finance and the heads of
the Assurance, Controls & Compliance,
Taxation and Treasury functions.
–
The Audit Committee reviews regular
reports from the Assurance, Controls
& Compliance Group with regard to
compliance with the SOX (Sarbanes
Oxley) Act.
–
Additional complementary elements
of our control environment include
the following:
–
Business continuity planning,
including preventative and
contingency measures, back-up
capabilities and the purchase
of insurance.
–
Risk management policies and
procedures including segregation
of duties, transaction authorisation,
monitoring, financial and managerial
review and comprehensive reporting
and analysis against approved
standards and budgets.
–
A treasury operating framework and
Group Treasury team, accountable
for treasury activities, which
establishes policies and manages
liquidity and financial risks, including
foreign exchange, interest rate
and counterparty exposures.
Treasury policies, risk limits and
monitoring procedures are reviewed
regularly by the Audit Committee or
the Finance & Banking Committee,
on behalf of the Board.
–
Our published Group tax strategy
which details our approach to tax risk
management and governance, tax
compliance, tax planning, the level
of tax risk we are prepared to accept
and how we deal with tax authorities,
which is reviewed by the Audit
Committee on behalf of the Board.
–
The Audit Committee reviews the
Group whistle-blower procedures to
ensure they are effective.
–
We have established a material
controls assurance programme to
maintain the Group’s material controls
for each principal risk aligned to our
current ERM framework to meet
the new requirements of Provision
29 of the UK Corporate Governance
Code 2024. In 2025, this programme
consisted of defining a risk and
control matrix to identify the material
financial, operational, reporting,
compliance and other risks and
controls across the Group’s functional
areas. These controls were then
evaluated to determine whether they
were placed in operation and operating
effectively in anticipation of the formal
review of effectiveness required from
1 January 2026. The Audit Committee
will incorporate regular reviews of
this material controls assurance
programme into its regular cadence
in 2026.
This system of internal control has been
designed to manage rather than eliminate
material risks to the achievement of our
strategic and business objectives and can
provide only reasonable, and not absolute,
assurance against material misstatement
or loss. Because of inherent limitation,
our internal controls over financial
reporting may not prevent or detect all
misstatements. In addition, our projections
of any evaluation of effectiveness in
future periods are subject to the risk that
controls may become inadequate because
of changes in conditions, or that the
degree of compliance with the policies or
procedures may deteriorate. Entities where
the Company does not hold a controlling
interest have their own processes of
internal controls.
Effectiveness of risk
management and internal
control
The Board is responsible overall for
reviewing and approving the adequacy
and effectiveness of the risk management
framework and the system financial,
operational (including quality management
and ethical compliance), reporting
and compliance controls operated by
the Group. The Board has delegated
responsibility for this review to the
Audit Committee.
Risk management
The Board is responsible for ensuring
oversight of strategic risks relating to the
Group, determining an appropriate level of
risk appetite, and monitoring risks through
a range of Board and Board Committee
processes. The Audit Committee is
responsible for ensuring oversight of the
processes by which operational risks,
relating to the Company and its operations
are managed and for reviewing financial
risks and the operating effectiveness of
the Group’s risk management process.
During the year, the Audit Committee
reviewed the risk management processes
and progress was discussed at its meetings
in February, April, July, and December.
The Audit Committee approved the
risk management programme for 2025
and monitored performance against
that programme, reviewing the work
undertaken by the Risk Champions across
the Group, identifying the risks which
could impact their areas of our business.
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Having received the report from
management, the Audit Committee
reports to the Board on the effectiveness
of controls. Deloitte, an independent
registered public accounting firm, audited
the financial statements included in
the 2025 Annual Report, containing the
disclosure required by this item.
Having evaluated the effectiveness of the
Company’s internal controls, the Audit
Committee has satisfied itself that the
Group is meeting the required standards
and that the Group’s internal control
are effective both for the year ended
31 December 2025 and up to the date of
approval of this Annual Report.
This process complies with the FRC’s
‘Guidance on Risk Management, Internal
Control and Related Financial and Business
Reporting’ under the Code and additionally
contributes to our compliance with the
obligations under the SOX Act and other
internal assurance activities. There has
been no change during the period covered
by this Annual Report that has materially
affected, or is reasonably likely to
materially affect, the Group’s internal
control over financial reporting.
2025 Risk management
development and 2026 risk
management plan
In 2025, we reviewed our risk champion
structure and made minor changes to the
functional division of responsibilities to
align with Executive Committee reporting
lines. We conducted quarterly risk
champion workshops focused on topics
including artificial intelligence, geopolitical
risks, business continuity, and training on
the role of risk management with respect
to UK corporate governance reform.
A
benchmarking exercise was conducted
among a subset of Risk Champions with
complementary areas of risk oversight to
ensure consistency of application of our risk
methodology. We continue to benchmark
our risk disclosures against peers as one
of many inputs into our assessment of
principal and emerging risk.
The output of these collective efforts
with the Risk Champions was reflected
in the bottom-up risk registers through
quarterly submissions.
Executive Committee risk owners
continued to report and discuss principal
risk monthly trends from an operational
perspective in Executive Committee
meetings which was valuable to evaluate
specific occurrences and trends within
operational risk profiles aligned to our
principal risks. For example, the monthly
review would evaluate the impact on the
principal risk on pricing and reimbursement
of any public announcements from CMS
and other regulators.
Our work will continue to evolve in 2026
with a particular focus on continuous
improvement efforts, including ongoing
reviews of near misses, lessons learned
and iterative enhancements. We will also
continue to monitor the following areas:
–
AI risks and opportunities aligned
to enterprise strategy;
–
Geopolitical risks and the potential
impacts on achievement of our
strategic objectives;
–
Cybersecurity and Cyber incident
risk mitigation; and
–
Business continuity and
resilience management.
This will include deep-dive sessions
facilitated by internal management team
leads and external consultants, where
appropriate, into specific risks with cross-
functional teams and our Risk Champions.
In 2026 the aforementioned material
controls assurance programme will expand
to include continued design reviews to
confirm the completeness of the material
controls defined in 2025 and periodic
surveillance of results from various internal
assurance providers.
The Group Risk team will also continue
to influence decision making through
effective challenge to risk owners and Risk
Champions in the quarterly review process.
Throughout the year, the Audit Committee
maintained oversight of our risk
management programme, and reviewed
the principal risks identified and the heat
maps prepared by management showing
how these risks were being managed.
The Audit Committee discussed the
reasons and justifications behind any
change in gross or net risk profile and
sought to determine the level of comfort
of the management team in respect
of the effectiveness of the mitigation
plans in place.
Since the year end, the Audit Committee
has reviewed a report from Internal
Audit into the effectiveness of the risk
management programme throughout
the year, considered the principal risks
and the actions taken by management to
review those risks as well as the Board risk
appetite in respect of each risk. The Audit
Committee concluded that there was an
effective risk management process in place
throughout 2025.
Internal control
The Audit Committee, reviewing the work
undertaken by the Internal Audit function,
reviews the adequacy and effectiveness
of internal control procedures and
identifies any significant weaknesses
and ensures these are remediated within
agreed timelines.
The latest review covered the financial
year to 31 December 2025 and included
the period up to the approval of this Annual
Report. The main elements of this review
are as follows:
–
The Chief Executive Officer and the
Chief Financial Officer evaluated the
effectiveness of the design and operation
of the Group’s disclosure controls and
procedures as at 31 December 2025.
Based upon the evaluation, the Chief
Executive Officer and Chief Financial
Officer concluded on 27 February
2026 that the disclosure controls
and procedures were effective as at
31 December 2025.
–
Management is responsible for
establishing and maintaining an
adequate internal control framework.
Based on their assessment, management
concluded and reported that, as at
31 December 2025, the Group’s internal
control including financial, operational
and compliance controls and risk
management processes were
effective based on those criteria.
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continued
Our Strategy for Growth
1
Strengthen
the
foundation to serve
customers sustainably
and simply
2
Accelerate
profitable
growth through
prioritisation and
customer focus
3
Transform
our
business through
innovation and
acquisition
A
Audit Committee
N
Nomination & Governance Committee
R
Remuneration Committee
C
Compliance & Culture Committee
B
Board
Increased risk
Reduced risk
No change
Risk Grouping
Risk oversight
Risk change from 2024
Risk key
Impact framework
We assess our principal risks in terms of their potential impact on our ability to deliver our business strategy. We have grouped our
principal risks into five categories: Compliance and reputation, External, Financial, Operational and People. The principal risks are
presented in alphabetical order according to their grouping below.
3
2
1
See pages 9 to 11 for information on our new RISE strategy. We have retained the mapping
of principal risks to our former Strategy for Growth to provide linkage to the strategy in
place for the majority of 2025; this will be mapped to the RISE strategy in 2026
Operational
– Cybersecurity
– Global
supply chain
–
Mergers and
acquisitions
–
New product
innovation,
design &
development
including
intellectual
property
–
Strategy and
commercial
execution
Compliance
and reputation
–
Legal and
compliance
–
Quality and
regulatory
External
– Political
and economic
Financial
–
Financial markets
–
Pricing and
reimbursement
People
– Talent
management
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2025 Principal Risks
Examples of risks
–
Failure to act in an ethical manner
consistent with our Code of Conduct
and Business Principles.
–
Violation of anti-corruption or
healthcare laws; breaches by employee
or third-party representatives.
–
Misuse or loss of personal information
of patients, employees, research
subjects, consumers or customers
resulting in violations of data privacy
laws and regulations in jurisdictions
in which we operate globally.
–
The development, manufacture and
sale of medical devices entails risk of
product liability claims or recalls.
–
Failure to identify new or changes
in legal or regulatory and reporting
requirements including trade
compliance, fraud and abuse,
information security, privacy and AI
which result in non-compliance with
applicable laws and regulations.
–
Failure to meet needs of stakeholders
relating to increased focus on and
regulation of complex reporting
requirements applicable to
our business.
–
Involvement in legal proceedings,
including mass tort litigation, that
could lead to significant financial and
reputational exposure.
Actions taken by management
–
Board Compliance & Culture
Committee oversees ethical
and compliance practices
and programmes.
–
Global compliance programme,
policies and procedures in place and
regularly updated to reflect changes
in global or market-related laws,
regulations and industry codes.
–
All employees required to undertake
training and certify compliance
with our Code of Conduct and
Business Principles annually.
–
Group Compliance monitoring and
auditing programmes in place with
reporting to Executive Committee
and Board/Committees.
–
Established confidential independent
reporting channels for employees
and third parties to report concerns.
–
Global trade compliance programme,
policies and procedures and training
programme. Global trade compliance
function partners with business units
in order to diligence commercial
models, new/developing regulations
and implementation of trade
compliance policies and procedures.
–
The Information Security team
develops and implements policies and
procedures and training programmes
to mitigate risk and monitors new and
amended regulatory frameworks.
–
The AI Working Group evaluates
governance frameworks for AI
enterprise strategic projects and
regulatory developments.
–
The ESG Steering Committee
assesses new and enhanced
regulations and reporting
requirements and works cross-
functionally to ensure compliance.
–
Monitoring new regulatory and
enforcement trends.
Legal and compliance
We are committed to doing business
with integrity and believe that ‘doing
the right thing’ is part of our mandate
to operate. We operate in multiple
countries, and regulatory authorities in
each jurisdiction enforce an increasingly
complex framework of laws and
regulations that govern the design,
development, approval, manufacture,
labelling, marketing, sale and operation
of both traditional and digital (including
connected and AI-enabled) healthcare
products and services.
Operating within this complex and
dynamic legal and compliance
environment, which includes regulations
on fraud, bribery and corruption, privacy,
sustainability and trade compliance,
increases the risk of fines, penalties,
and reputational damage. We mitigate
this through policies, procedures, training
and practices designed to prevent and
detect violations of law, regulations
and industry codes. We implement a
risk-based oversight framework and
programmes to monitor compliance
with our Code of Conduct and
associated policies.
Compliance and reputation risks
Oversight
C
Change from 2024
Link to Strategy
1. Strengthen
2. Accelerate
3. Transform
1
2
3
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continued
2025 Principal Risks
continued
Examples of risks
–
Time required by Notified Bodies to
review product submissions and site
quality systems’ certification time for
new products impacts ability to meet
customer demand.
–
Defects in design or manufacturing of
products supplied to, and sold by, the
Group could lead to product recalls or
product removal or result in loss of
life or major injury.
–
Significant non-compliance with
policy, regulations or standards
governing products and operations
regarding registration, design,
manufacturing, distribution, sales
or marketing.
–
Failure to obtain proper approvals
for products or processes.
–
Stringent local requirements
for clinical data across various
markets globally.
–
Failure to meet stakeholder
expectations with regard to
increasing sustainability regulations
and reporting requirements.
Actions taken by management
–
The Quality departments within
each Business Unit regularly monitor
activities to comply with new and
amended requirements.
–
Regular and proactive engagement
with Notified Bodies, MHRA and
regulatory representatives to monitor
regulatory changes and understand
interpretation of legislation.
–
Comprehensive and documented
product quality processes and
controls from design to customer
distribution in place, with the
addition of cybersecurity to new
product development projects for
relevant products.
–
Standardised monitoring and
compliance with quality management
practices through our Global Quality
and Regulatory Affairs organisation.
–
Incident management teams in
place to provide a timely response
in the event of an incident relating
to patient safety.
–
Governance framework in place
for reporting, investigating and
responding to instances of product
safety and complaints.
–
Local clinical evidence requirements
are included in global new product
development projects.
Quality and regulatory
Global regulatory bodies continue
to increase their expectations of
manufacturers and distributors of
medical devices not only in respect
of quality and regulation of products
but also in respect of sustainability
requirements. Our products are used in
the human body and therefore patient
safety is of paramount importance.
The European Medical Device Regulation
(EU MDR), and multiple other global
regulations and changes in standards
have increased the focus on clinical and
technical evidence, supplier controls
and product performance transparency.
Our customers and other stakeholders
also require us to explain our approach
to and demonstrate compliance with
increasing sustainability regulations
and reporting requirements.
Compliance and reputation risks
continued
Oversight
C
Change from 2024
Link to Strategy
1. Strengthen
2. Accelerate
1
2
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Examples of risks
–
Changing global regulatory and
health care financing policies that
increase compliance costs or reduce
reimbursement for our products.
–
Failure to pivot on business
strategy in light of changes in
trade policy, conflicts and sanction
programmes globally
–
Changes in localisation policies which
negatively impact multinational
participants, for example the volume
based procurement policies in China
and EU response.
–
Failure to implement changes to
operating model at pace to address
public policy shiſts in the US and
other key markets.
–
Global political and economic
uncertainty and conflict, including in
Ukraine and the Middle East.
–
Increases in tariffs and restrictions
on global trade.
–
Global or regional recession
and increasing macroeconomic
controls’ impact on customer
financial strength.
–
Increases in import and labour costs.
–
Inflationary pressures impacting raw
materials, freight, salaries and wages.
–
Failure to meet sustainability targets
and stakeholder expectations aligned
to strategy.
–
Potential for significant tax rate
changes and/or base broadening
measures in key jurisdictions where
we operate, including OECD proposals
and the potential for further US
tax legislation.
–
Impact of shiſts in geopolicy becomes
reflected in the workplace, making
global operation and collaboration
more challenging.
Actions taken by management
–
Actively horizon scan, monitor and
evaluate potential changes in public
policy and develop plans to mitigate
potential risk to operating models in
each market. The Group tax team
continually monitors developments
in tax policy and obtain external
advice where relevant.
–
Active participation in and
engagement with trade associations
to enhance education and advocacy
efforts with policymakers.
Ongoing monitoring and
engagement with policymakers
on localisation initiatives.
–
Continued engagement with
governments, administrations
and regulatory bodies to enhance
education and advocacy efforts
with policymakers.
–
Global trade compliance programme,
policies and procedures and training
programme. Global trade compliance
function partners with business units
in order to diligence commercial
models, new/developing regulations
and implementation of trade
compliance policies and procedures.
–
Business continuity plans in place
with alternative source options
identified for critical suppliers and
increased safety inventory levels
for critical products affected by the
conflict in Ukraine and disruptions
of travel caused by geopolitical and
environmental events.
–
Implement sustainability strategy
through our ESG Operating
Committee (including data, metrics
and monitoring of performance)
aligned to our purpose, business
strategy and culture pillars, and
track and benchmark targets within
the industry.
Political and economic
We operate a global business and are
exposed to the effects of political
and economic risks, changes in the
regulatory and competitive landscape,
trade policies and trade compliance
requirements, war, political upheaval,
changes in government policy regarding
healthcare priorities and sustainability
expectations, increasing inflationary
pressure, preference for local suppliers,
import quotas, economic sanctions and
terrorist activities.
External risks
Oversight
B
Change from 2024
Link to Strategy
1. Strengthen
2. Accelerate
1
2
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continued
2025 Principal Risks
continued
Examples of risks
–
Risk of adverse movement to
trading profit due to fluctuating
foreign currency exchange rates
between our main manufacturing
operations (the US, UK, Costa Rica,
Malaysia and China) and where our
products are sold.
–
The Group’s credit rating could
be downgraded if business
underperforms or increases the
leverage from capital allocation
decisions such as M&A investments,
in turn reducing access to
debt funding.
–
Potential for restriction to access to
the investment grade funding market
from time to time during periods of
global/financial crisis.
–
The cash and short-term
investments could reduce in value
in the event of an insolvency of a
financial counterparty.
–
The rate of interest paid on the
Group’s borrowings could increase
as a result of increased central bank
rates and also increased credit
charges required by investors.
Actions taken by management
–
A foreign exchange hedging
programme is operated and is
overseen centrally by the Group
Treasury team.
–
The Finance and Banking Committee
monitors movements in financial
markets and treasury management.
–
Liquidity risk is evaluated through
the Going Concern and Viability
Statement assessments.
–
Group funding comprises a variety
of public bonds, private placements,
and bank facilities with a balanced
maturity profile over the next 10
years. The Group works closely
with its relationship banks in the
revolving credit facility and maintains
relationships with public and private
debt markets and investors.
–
Maintaining significant undrawn debt
facilities, including for example the
revolving credit facility and cash to
manage liquidity risks.
–
Retaining an investment grade
credit rating and considering the
implications of capital allocation
decisions on the ratings.
–
Investing surplus funds in bank
deposit and money market fund
instruments with strong credit rated
institutions to manage counterparty
credit risk exposure while preserving
the value of the investments.
–
Actively balancing exposure to
interest rate movements through
the use of fixed rate borrowing
and derivatives.
Financial Markets
We operate a global business and
are therefore exposed to a variety of
external financial risks in relation to
exchange rate, interest rate and access
to funding markets. Volatility in rates
can impact our results and it may not be
possible to fully mitigate against them.
Financial risks
Oversight
A
Change from 2024
Link to Strategy
1. Strengthen
1
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Examples of risks
–
Limited ability to pass on increased
costs such as raw materials, freight,
sustainability improvements and
the cost of compliance with
regulations to our customers.
–
Reduced reimbursement levels
and increasing pricing pressures.
–
Localisation policies and volume-
based procurement in China and
other markets.
–
Impact of global trade policy changes
and implementation of tariffs on
standard cost and margin on pricing.
–
Lack of adequate health
economics data to support
reimbursement requests.
–
Systemic challenge on number of
elective procedures.
–
Unilateral price controls/reductions
imposed on medical devices.
–
Price-driven tendering/
procurement processes.
–
Limited access to non-clinical
decision makers.
Actions taken by management
–
Optimisation of market and portfolio
prioritisation and portfolio mix and
promotion of differentiated products.
–
Ongoing development of innovative
economic product and service
solutions based on unmet needs
and market requirements.
–
Ongoing focus on pricing strategy
and execution resulted in pricing
improvement in 2025. Continued
efforts to mitigate inflationary
impact embedded in business-as-
usual practices.
–
Incorporated health economic
components into the design and
development of new products.
–
Investing in clinical and health
education evidence to drive value-
based payment and access.
–
Sales execution and training to
improve capability to communicate
the clinical and economic value
proposition to non-clinical
decision makers.
–
Implementation of innovative
contracting models designed to
support adoption and coverage for
healthcare providers and payers.
–
Ongoing engagement with payer
bodies to influence reimbursement
mechanisms to reward innovation.
Pricing and reimbursement
Our success depends on our ability to
sell our products profitably, despite
increasing inflation and costs associated
with improving the sustainability of
our products, pricing pressures from
customers and the availability of and
access to adequate government funding
and reimbursement to meet increasing
demands for our products arising from
patient demographic trends. The prices
we charge are therefore impacted by
budgetary constraints and our ability to
persuade customers and governments
of the economic value of our products,
based on clinical data, cost, patient
outcomes and comparative effectiveness.
Market developments and localisation
policies such as China volume-based
procurement, consolidation of customers
into buying groups, inflation, increasing
professionalisation of procurement
departments and the commoditisation
of entire product groups continue to
challenge prices.
We aim to mitigate the impact of these
market developments by proving the
value and clinical outcomes of our
products, which may then allow us to
seek value-based pricing increases;
by ensuring a broad portfolio mix; and
by promoting differentiated products.
We may also seek price increases to
counteract the impact of inflation
where possible.
Financial risks
Oversight
B
Change from 2024
Link to Strategy
1. Strengthen
2. Accelerate
1
2
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continued
2025 Principal Risks
continued
Examples of risks
–
Loss or misuse of confidential or
sensitive information, intellectual
property and/or data privacy breach
resulting in both financial and
reputational harm.
–
Inadequate consideration of
cybersecurity in the design of new
products, systems and/or processes
increasing potential for vulnerabilities.
–
Disruption to business operations and
resultant financial and reputational
negative impact due to a significant
cybersecurity incident.
–
Enhanced changes in
regulatory environment and
increased enforcement and
reporting obligations.
–
Increase in sophistication of
bad actors/threat profile due to
geopolitical instability.
–
Increasing demand for cybersecurity
expertise could impact our
ability to attract and retain
cybersecurity talent.
–
Disruption to the business due to
critical system infrastructure and
applications being unavailable.
Actions taken by management
–
Executive Committee desktop
exercises and Board awareness
sessions on cybersecurity incidents/
ransomware attacks providing
updates on evolution of threat actors,
organisational maturity and key
improvement initiatives.
–
Third party advisory and consultancy
support for cyber incident response
with desktop and discussion sessions
for response teams.
–
The Chief Information Security Officer
(CISO) is also a member of several
industry groups, including the Threat
Intelligence and Information sharing,
Manufacturing, NHS Supply Chain
and Life Sciences trust groups which
have been built and delivered by the
UK National Cyber Security Centre
(NCSC), alongside the global industry-
focused Health Information Sharing
and Analysis Centre (H-ISAC),
participation in these environments
allows for networking and sharing of
cyber-related risks and issues to raise
cyber resilience across the sector.
–
Cybersecurity maturity programme
monitored by the Audit Committee;
development and implementation of
enhanced reporting framework on
cyber incidents.
–
Enhanced global security training
and awareness activities for
all employees including email
communications, intranet posts,
visuals, videos and email phishing
training activities.
–
Privileged Access Management tools
to control and govern administrative
access to critical IT systems.
–
Security information and event
management (SIEM) in place to
provide real-time analysis of security
alerts generated by applications
and network hardware.
–
Threat Intelligence monitoring
and management tools to provide
proactive threat mitigation, including
sign-up to the NCSC early warning
service, alongside several industry
threat feeds, improved security
posture, faster incident response, and
more efficient resource allocation.
–
Email Security tooling to reduce the
likelihood of cyber threats, including
business email compromise, phishing,
malware, and malicious internet
links, to ensure the confidentiality
of business and sensitive data.
–
Regular penetration testing
and frequent vulnerability
scanning undertaken.
–
Secure-by-design framework for all
product security aspects, to cover pre
and post market, ensuring alignment
and adherence to regulatory
requirements across the globe.
Cybersecurity
We depend on a wide variety of
information systems, programmes
and technology to run our business
effectively. We also develop and sell
certain digitally enabled products that
connect to proprietary and third-party
networks and/or the internet and
increasingly may incorporate certain
elements of AI functionality.
Our systems and the systems of third
parties and the entities we acquire
may be vulnerable to a cyber-attack,
theſt of intellectual property, malicious
intrusion, data privacy breaches or other
significant disruption. We have a layered
security approach in place to prevent,
detect and respond, to minimise the risk
and disruption of any intrusions and to
monitor our systems on an ongoing
basis for current or potential threats.
Operational risks
Oversight
A
Change from 2024
Link to Strategy
1. Strengthen
3. Transform
1
3
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OTHER INFORMATION
Examples of risks
–
Potential disruption resulting from
changes in global trade policies or
trade compliance which increase
cost and/or ability to ship products to
meet customer demand.
–
Disruption to manufacturing at
a single source facility (lack of
manufacturing redundancy), including
from natural disaster.
–
Manufacturing and supply
chain capacity not adequately
balanced to support growth and
Group profitability.
–
Supplier failure impacts ability to
meet customer demand (single
source supplier).
–
Inadequate sales and operational
planning impacts ability to meet
customer demand for product.
–
Excess inventory due to incorrect
demand forecasts, inaccurate
demand signals and unexpected
changes in demand.
–
Failure of suppliers and distribution
partners to achieve and maintain
regulatory compliance.
–
Increasing costs of raw materials,
freight, and salary/wages for
manufacturing and distribution
employees and contractors.
–
Severe weather patterns, global
temperature rise and sea-level
rise caused by climate change or
natural disaster causes damage
to manufacturing or distribution
facilities, impacting ability to meet
customer demand.
–
Disruption to the business due to
critical system infrastructure and
applications being unavailable.
–
Critical material shortages leading to
supply challenges.
–
Increased freight cycle times due to
geopolitical events, natural disasters,
weather events or
conflicts, resulting
in disruptions of operations.
–
Failure to transform to achieve our
sustainability targets.
Actions taken by management
–
Strategic review and scenario
planning and analysis on
implementation of tariff frameworks
and potential global impact to
the organisation.
–
Successful implementation of Global
SI&OP, Procurement, Manufacturing
& Supply Planning processes
to
improve product availability and
inventory, enhance procurement
and management of transportation
costs and optimisation of our
manufacturing network.
–
Adoption of S+N Operating System
and enhanced focus on lean
manufacturing and quality as part of
business-as-usual activities and drive
for continuous improvement in a high
performance culture.
–
Addressing capacity in the
network through site planning
(e.g. CARTIHEAL manufacturing
duplication in Mansfield MA., Penang
manufacturing ramp up, Melton UK
new manufacturing facility, Memphis
campus consolidation).
–
Ongoing implementation of
Global Operations transformation
programme to optimise
manufacturing and distribution
centres and reduce single
source limitations.
–
Ongoing risk-based review
programmes undertaken for
critical suppliers.
–
Implementation of global, regional
and local business continuity
and disaster recovery planning
programme to support crisis and
incident management at major
facilities and for key products and
key suppliers.
–
Comprehensive product quality
processes in place from design
to customer supply.
–
Supplier contract agreements
to achieve and manage
regulatory compliance.
–
ESG Steering Committee implements
and operationalises ESG strategy
and provides data and metrics to
monitor implementation.
Global supply chain
Our ability to make, distribute and
sell medical products to customers in
around 100 countries involves complex
manufacturing and supply chain
processes. Geopolitical and trade policy
shiſts increase complexity and the
need for agility to pivot at pace within a
global business.
Increased outsourcing, capacity
constraints, sophisticated materials,
and the speed of technological change
in an already complex manufacturing
process leads to greater potential
for disruption in our supply chain.
Lack of availability of raw materials and
components compound supply and
business disruption.
The regulatory environment, including
the increased focus on global regulation
of sustainability, increases our
exposure to supply chain disturbance.
Increasingly frequent climate events
increase the likelihood and impact of
disruptions to our supply chain.
Our business depends on our ability to
plan for both global network optimisation
and resilience over the longer term and
day-to-day resilience in the face of
events that threaten one or more of our
key locations.
Operational risks
continued
Oversight
B
Change from 2024
Link to Strategy
1. Strengthen
2. Accelerate
1
2
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continued
2025 Principal Risks
continued
Examples of risks
–
Failure to identify
appropriate acquisitions.
–
Failure to conduct effective
acquisition due diligence.
–
Failure to integrate newly acquired
businesses effectively, including
integration with Group standards,
policies and financial controls.
–
Failure to deliver on plans to achieve
the acquisition business case.
Actions taken by management
–
Acquisition activity aligned with
corporate strategy and prioritised
towards products, business units
and markets identified to have the
greatest long-term potential.
–
Clearly defined investment
appraisal process based on range
of valuation metrics, including return
on invested capital, in accordance
with Capital Allocation Framework
and comprehensive post-acquisition
review programme.
–
Detailed and comprehensive
cross-functional due diligence
undertaken prior to acquisitions by
experienced internal and external
experts (including the integration
management office).
–
Compliance and other risks included
as part of due diligence reviews,
integration plans and reporting
for acquisitions.
–
Integration committee review,
approval of integration plans and
monitoring of ongoing process.
–
Board undertakes post-deal review
sessions and specific deep dives
on acquisitions as appropriate.
Mergers and acquisitions
As the Group grows to meet the
needs of our customers and patients,
we recognise that we are not able to
develop all the products and services
required using internal resources and
therefore need to undertake mergers
and acquisitions in order to expand our
offering and to complement our existing
business. In other areas, we may divest
businesses or products which are no
longer core to our activities.
It is crucial for our long-term success
that we make the right choices around
acquisitions and divestments in order to
become a winner in MedTech.
Failure to identify appropriate
acquisition targets, to conduct
adequate due diligence or to integrate
them successfully or to deliver on the
acquisition business case would have
an adverse impact on our competitive
position and profitability, investor
credibility and reputation.
Operational risks
continued
Oversight
B
Change from 2024
Link to Strategy
3. Transform
3
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Examples of risks
–
Failure to develop, partner
or acquire a competitively
differentiated innovation at pace
with competition in the market.
–
Insufficient long-term planning to
respond to competitor and disruptive
entries into the marketplace.
–
Inadequate innovation due to
low Research & Development
(R&D) investment, R&D skills
gap or ineffective product
development execution.
–
Loss of market share due to critical
gaps in product portfolio not filled.
–
Loss of proprietary data due to
natural disasters or failure of
Product Lifecycle Management
(PLM) systems.
–
Competitors may assert patents
or other intellectual property
rights against the Group or fail to
respect the Group’s intellectual
property rights.
–
Failure to ensure sustainability
in new products.
Actions taken by management
–
Ongoing delivery of 12-Point Plan
initiatives to reposition our knee
and hip portfolio at pace.
–
Continued product and technology
acquisitions and product launches
and effective implementation of
new product launches.
–
Global R&D organisation and
governance framework providing
strategic direction for allocation
of R&D investment across all
businesses. Clear stage-gate
process to continually evaluate
R&D investment decisions and
development of new products.
–
Cross-functional new product
design and R&D processes focused
on identifying new products and
potentially disruptive technologies
and solutions.
–
Replacing global PLM systems.
–
Monitored external market trends
and collated customer insights to
develop product strategies.
–
Ongoing monitoring of competitor
patent portfolios post product
launch and enforcement and
monetisation of Group rights.
–
Ongoing intellectual property
training for business counterparts.
–
Sustainability criteria built into new
product development processes.
New product innovation,
design & development
including intellectual
property
Our product innovation pipeline
is becoming broader in scope and
increasingly complex, as we focus
our efforts on procedure innovation
using digital technologies such as
connectivity, machine learning, and
artificial intelligence. Our focus on high
growth and profitable markets requires
us to better understand unmet customer
needs, drivers of surgical efficiency
and patient outcomes, and new
country/regional regulations, including
requirements related to cybersecurity
and sustainability. Our innovation
pipeline needs to be sufficiently
differentiated from our competition
in order for us to deliver
our commercial ambition.
If Smith+Nephew fails to protect and
enforce its intellectual property rights
successfully, its competitive position
could suffer, which could impact
profitable, sustainable growth.
Operational risks
continued
Oversight
B
Change from 2024
Link to Strategy
3. Transform
3
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continued
2025 Principal Risks
continued
Examples of risks
–
Failure to transition from and embed
our 12-Point Plan framework, KPIs
and metrics in business-as-usual
objectives could slow progress in
achieving our strategic objectives.
–
Failure to execute our strategy
adequately from high-level ambition
to specific actions to make the
ambition a reality.
–
Inability to keep pace with significant
product innovation and technical
advances to develop commercially
viable products.
–
Failure to engage effectively with
our key stakeholders to meet their
evolving needs leading to loss
of customers.
–
Failure to manage distributors
effectively, leading to stocking and
compliance issues.
–
Inability to satisfy customers’
sustainability requirements
and expectations.
–
Limits on healthcare professional
access to medical education.
–
Failure to achieve potential
from acquisitions due to
integration challenges.
–
Failure to maintain credibility with
our investors due to failures to
implement a strategy aligned to
their objective of value creation.
–
Failure to effectively implement
core elements of business
change prevents our projects and
programmes achieving the intended
benefits and disrupts existing
business activities.
Actions taken by management
–
Continued enhancement of our
global business unit commercial
operating model to leverage
strengths in each vertical and focus
on flawless execution.
–
Enhanced implementation of
Sales Inventory and Operations
(SIOP) process to improve demand
and supply planning across all
business units.
–
Continued executive oversight of
changes to our commercial operating
model and focus on commercial
execution as part of business-as-
usual activities following delivery of
the 12-Point Plan.
–
Strategic planning process clearly
linked to business, operations and
Group risk.
–
Continued new product launches
and monitoring of innovation pipeline.
–
Enhanced accessible digital sales
information and training modules
for sales staff.
–
Enhanced virtual medical education
platforms and enhancement of
the education offerings of the
Smith+Nephew Academy.
–
Continued focus on product
and technology acquisitions
and product launches and
effective implementation of new
product launches.
–
Enhanced project management
governance, toolkits and project
steering committee oversight to
support successful execution of
programme and projects.
Strategy and
commercial execution
The long-term success of our business
depends on developing our vision and
strategy and setting the right strategic
priorities in our RISE strategy following
the successful conclusion of the
12-Point Plan in 2025.
Effective implementation of strategy
requires effective communication
and engagement both internally on a
cross-functional basis within our global
business unit organisational structure
and with our customers, suppliers
and other stakeholders. We must also
successfully embed the right governance
structures, accountability and
capabilities across the Group and ensure
we adjust and refine strategic priorities
and business models when necessary.
The pace and scope of our business
change initiatives, taken together
with geopolitical shiſts and trends,
may increase execution risk for the
change programmes as well as for our
business-as-usual activities. Failure to
execute on priorities will impact our
ability to continue to grow our business
profitably and sustainably and to serve
our customers.
Operational risks
continued
Oversight
B
Change from 2024
Link to Strategy
1. Strengthen
2. Accelerate
3. Transform
1
2
3
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Examples of risks
–
Loss of key talent, high attrition
and lack of appropriate succession
planning in context of required
skillsets for future business needs.
–
Lack of alignment of Company
reward strategies, including quantum
and structure to market needs
may lead to an inability to attract
and retain talent of the requisite
calibre for a high-performance
organisation leading to management
instability and impacting the ability
to drive value creation and deliver on
strategic objectives.
–
Loss of intellectual capital due to
poor retention of talent.
–
Lack of capability and skills in
exploring and adopting newly
available advanced technology
offerings within the organisation.
–
Failure to attract talented and
capable candidates.
–
Increased talent movement globally
due to shiſting personal work-life
balance priorities.
–
Failure to align to market
salary expectations.
Actions taken by management
–
Talent planning and people
development processes are well
established across the Group.
–
Talent strategy, management
and succession planning is
discussed twice yearly by the
Board and regularly by the
Executive Committee.
–
Utilising ‘Success Profiles’ that
have been created for our high
value roles to benchmark talent
against requirements needed for
success in critical roles.
–
Focusing on enhancing people
leader capabilities with development
programmes targeting future leaders.
–
Identification of high-value roles
and ensuring that these roles are
filled with our high-performance
individuals with strong succession
plans in place.
–
Embedded changes to our short
and long-term incentive plan
arrangements and updated pay
ranges for employees, with further
revisions scheduled to ensure we
remain market competitive to attract
and retain talent.
–
Provided employees with access to
tools and resources to manage their
emotional, physical, and mental
wellbeing, under three key pillars of
body, mind, life.
–
Continued focus on inclusion to
foster a culture of belonging within
the organisation and promote
engagement, attraction and
retention of top talent.
–
Enhanced functional expertise in
Reward, Wellbeing and Culture to
facilitate design and EVPs to attract,
retain and motivate employees
Talent management
Recruitment and retention of top talent
and minimising attrition requires a strong
engagement process. We recognise that
people leadership, effective succession
planning and the ability to engage,
retain and attract talent is a key lever
of success for our business, along
with seizing opportunities to identify,
implement, and utilise new technology
that will serve to enhance our operations
and improve employee experiences.
Failure to do so may impact our ability
to execute the Group strategy and to be
effective in the chosen market/discipline.
People
Oversight
C
Change from 2024
Link to Strategy
1. Strengthen
2. Accelerate
1
2
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Risk Report
continued
2025 Principal Risks
continued
How we assess our prospects
During the year, the Board has carried
out a robust assessment of the principal
risks affecting the Company, particularly
those which could threaten the business
model. These risks, and the actions being
taken to manage or mitigate them, are
explained in detail on pages 78–94 of
this Annual Report.
In reaching our Viability Statement
conclusion, we have undertaken the
following process:
–
The Audit Committee reviewed the
Risk Management process at their
meetings in February, April, July and
December, receiving presentations
from the Group Risk team, explaining
the processes followed by management
in identifying and managing risk
throughout the business.
–
The Executive Committee have reviewed
the 2025 principal risks (the top-down
risk review process). The Executive
Committee was asked to consider the
significant risks which they believed
could seriously impact the profitability
and prospects of the Group and the
principal risks that would threaten its
business model, future performance,
solvency or liquidity.
–
All Executive Committee members
nominated the Risk Champions and
have worked with them to prepare
and maintain risk registers. The Risk
Champions nominated by the Executive
Committee are senior employees and
sufficiently tenured with the organisation
to adequately identify and manage risk.
–
Using the outputs from the Business
Area ‘bottom-up’ risk identification
completed quarterly throughout the year
and following ‘top-down’ discussions
with the Executive Committee, the
most significant risks affecting our
organisation were presented to the
Executive Committee for approval in
November as the draſt 2025 principal
risks facing the Company and again in
January 2026 as final disclosures.
–
In assessing our TCFD risks we concluded
that climate-related risks are not
significant in our viability horizon of
three years. Nonetheless, the impact
of extreme weather events have
been considered in our operational
risk scenarios.
–
All relevant executives have attested
alignment to the Group’s Enterprise
Risk Management process as part of
the annual certification on governance,
risk, and compliance.
–
The Board debated and agreed the risk
appetite for each of the principal risks
in February 2026.
–
Final principal risks were presented to
the Audit Committee and the Board in
February 2026 for their consideration
and approval.
–
Throughout the year, a number of
reviews into different risks were
conducted by the Board, the Audit
Committee and the Compliance &
Culture Committee looking into the
nature of the risks and how they
were mitigated.
Assessment period
The MedTech sector is inherently
competitive, and being a global business,
the Group is subject to geopolitical
uncertainty and volatility. Accordingly, a
wide variety of time horizons are relevant
in managing the business, between 1 to
5 years.
The Board have determined that the
three-year period to December 2028
is an appropriate period over which to
provide its Viability Statement as they
believe such period strikes a balance
between the different time horizons which
are used to manage the business and is
a reasonable period for a shareholder to
expect a MedTech business of the Group’s
scale to be assessed over.
Scenario testing
To test the viability of the Company,
we have undertaken a robust scenario
assessment of the principal risks, which
could threaten the viability or existence
of the Group.
These have been modelled as follows:
–
In carrying out scenario modelling of
the principal risks on the following page
we have also evaluated the impact of
a severe but plausible combination of
these risks occurring over the three-
year period. We have considered and
discussed a report setting out the terms
of our current financing arrangements
in the event of one of the scenarios
modelled occurring.
–
We are satisfied that we have robust
mitigating actions in place as detailed
on pages 78-94 of this Annual Report.
We recognise, however, that the long-
term viability of the Group could also be
impacted by other, as yet unforeseen,
risks or that the mitigating actions we
have put in place could turn out to be
less effective than intended.
Viability Statement
Having assessed the Principal and
Emerging Risks, the Board has
determined that we have a reasonable
expectation that the Group will be
able to continue in operation and meet
its liabilities as they fall due over a
period of three years from 1 January
2026. In our long-term planning we
consider horizons of between five
and 10 years. However, as most of
our efforts are focused on the coming
three years, we have chosen this
period when considering our viability.
Our conclusion is based on the
Strategic Plan reviewed and approved
by the Board in December 2025.
We will continue to evaluate any
additional risks which might impact
the business model.
By order of the Board,
on 27 February 2026.
Helen Barraclough
Company Secretary
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ACCOUNTS
OTHER INFORMATION
Our Viability Statement
2025 Scenarios modelled
Scenario 1: Global economic downturn, operational risk and financial markets
Significant global economic recession, leading to sustained lower
healthcare spending across both public and private systems.
Action taken:
We have modelled 10% lower revenue throughout
2026 and 5% lower revenue throughout 2027.
Reduced reimbursement levels and increasing pricing pressures.
Action taken:
We have modelled annual price erosion of 1%
impacting all product lines, along with a full drop through impact
on profit in each of the periods 2026–2028.
Inability to keep pace with significant product, innovation,
and technical advances to develop commercially viable
products, losing significant market share to the competition.
Action taken:
We have modelled 1% lower growth than planned
for a key product range in the US, along with a full drop through
impact on profit in each of the periods 2026–2028.
Key supplier disruption – resulting in our inability to
manufacture and supply a few key products for a full year.
Action taken:
We have modelled an interruption to receiving
goods from a key supplier for a period of one year spanning across
2026-2027.
Increases in raw materials, freight and labour costs.
Action taken:
We have modelled an increase in our input costs
by an additional 5% in each of the periods 2026–2028, due to
continued inflationary pressures.
Risk of adverse trading margins due to fluctuating foreign
currency exchange rates across our markets.
Action taken:
We have modelled a reduction in profitability in 2027
and 2028 due to a weakening in other currencies relative to the
US Dollar.
Link to strategy
–
Strengthen the foundation to serve customers sustainably
and simply.
–
Transform our business through innovation and acquisition.
–
Accelerate profitable growth through prioritisation
and customer focus.
Link to principal risks
–
Strategy and commercial execution.
–
New product innovation, design & development including.
intellectual property.
–
Global supply chain.
–
Legal and compliance.
–
Political and economic.
–
Talent management.
–
Pricing and reimbursement.
–
Financial markets.
Scenario 2: Financial Markets, global supply chain, legal, regulatory and compliance risks and cybersecurity
Data privacy failure – giving rise to a significant fine or loss.
Action taken:
We have modelled a one-off significant fine from
regulator of 2% of revenue or loss resulting from a data privacy
issue in 2027.
Failure to obtain proper regulatory approvals for products
or quality issue is discovered which impacts our ability to
sell products.
Action taken:
We have modelled the complete loss of revenue
from a key product due to a quality issue effective in mid-2026
for two years, and returning to lower volumes in mid-2028.
Disruption to a Global Distribution Centre (GDC) preventing
our ability to supply our customers with all products from
the applicable GDC for one quarter.
Action taken:
We have modelled an inability to supply products
from one of our GDCs for one quarter of 2027.
Product liability claim.
Action taken:
We have modelled a group of product liability claims
resulting in a settlement agreement requiring cash payment in
each of the periods 2026–2028, without any insurance coverage.
Disruption to business operations due to a significant
cybersecurity incident.
Action taken:
We have modelled one of our key regions being
unable to invoice also affecting shipping and tracking of deliveries
for three months due to a disruption to our IT infrastructure in 2026.
Link to strategy
–
Strengthen the foundation to serve customers sustainably
and simply.
Link to principal risks
–
Legal and compliance.
–
Quality and regulatory.
–
Global supply chain.
– Cybersecurity.
In accordance with Companies Act 2006, the S172 Statement
included on pages 114 to 116 is incorporated into this Strategic
Report by reference. The Strategic Report set out on pages
IFC–96 was approved by the Board on 27 February 2026.
Deepak Nath, PhD
Chief Executive Officer
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Risk report
continued
Corporate governance
Governance at a glance
98
Compliance and culture
Board leadership and company purpose
Compliance & Culture Committee Report
136
Board of Directors
102
Our culture
140
Executive Committee
108
Audit, risk and internal control
Division of responsibilities
Audit Committee Report
141
Board activities and priorities
111
Remuneration
S172 statement
114
Remuneration Committee Report
147
Corporate governance framework
124
Directors’ Remuneration policy
152
How we are governed
125
Remuneration at a glance
172
Composition, succession and evaluation
Annual Remuneration Report
174
Nomination & Governance
Committee Report
127
Directors’ Report
194
97
STRATEGIC REPORT
GOVERNANCE
ACCOUNTS
OTHER INFORMATION
Smith+Nephew
Annual Report 2025
This report sets out the Company’s corporate governance
structure, our policies and practices, and explains how the
Board and its Committees ensure effective leadership
and high standards of corporate governance.
Board priorities
Strategy and
operational
excellence
Purpose and
culture
Capital
allocation
and cost
management
Innovation
and portfolio
Risk
management
and oversight
See more on pages 112 and 113
Our
shareholders
Customers
and
suppliers
Environment
and
communities
Governments
and
regulators
Our new strategy
Key stakeholders
The Board seeks to engage with and to build a relationship
of trust with our stakeholders.
Our new RISE strategy will elevate Smith+Nephew’s
performance, focused on generating significant value for all of
our stakeholders by reaching more patients through leading
innovation, scaling through strategic investment and
executing efficiently.
E
Execute
R
Reach
I
Innovate
S
Scale
Our
people
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Governance at a glance
Board diversity and tenure
*
Board experience
*
Board nationality
A
British
7
B
American
5
C
British/American
1
D
Polish/German
1
Board tenure
A
0-3 years
8
B
3-6 years
4
C
6+ years
2
Board gender diversity %
**
A
Female
36
B
Male
64
Board ethnicity
**
A
White British or White
(including minority
white groups)
11
B
Asian/Asian British
3
D
C
B
A
C
B
A
B
A
B
A
*
As at 31 December 2025.
** Disclosed in accordance with the UK Listing Rules requirements. See page 131 for more details.
.
Board meeting attendance
Board
Audit
Nomination
& Governance
Compliance
& Culture
Remuneration
99%
100%
100%
100%
98%
Employee
engagement
See more on page 130
See more on page 110
CEO
Financial
International
Healthcare/
medical devices
Emerging
markets
Cyber/
technology
ESG
UK governance
Remuneration
1
7
14
1
7
14
*
As at 31 December 2025.
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ACCOUNTS
OTHER INFORMATION
UK Corporate Governance Code 2024 (the Code):
2025 Statement of Compliance
The FRC published the Code on 22 January 2024, which has been applicable to the Company throughout the year ended
31 December 2025, except for provision 29, which is applicable from 1 January 2026. The Company complied with all the provisions
of the Code throughout the year ended 31 December 2025 and the Disclosure Guidance and Transparency Rules requirements to
provide a Corporate Governance Statement.
Board leadership and Company purpose
Board focus on the long-term sustainable success of the Company. It leads by example,
ensuring effective engagement with, and considering the interests of, stakeholders.
Key changes to principles and provisions
How we comply / Our response to key changes
Principle C:
Governance reporting to focus on Board decisions
and their outcomes in the context of the Company’s strategy
and objectives
We provide narrative and examples of key decisions made by the
Board during 2025 and how they link to our strategic priorities
in Board priorities, stakeholders and outcomes on pages 112
and 113.
Provision 2:
The board should assess and monitor Company
culture and how the desired culture has been embedded.
We provide details of how the Board monitors and embeds our
culture in the Compliance & Culture Committee Report on pages
136 to 139 and Our culture on page 140.
Division of responsibilities
Effective leadership, with the correct balance of Executive and Non-Executive Directors
with clear definition of the respective responsibilities of the Board and the executive leadership.
Key changes to principles and provisions
How we comply / Our response to key changes
No change
Composition, success and evaluation
Ensures an appropriate balance of skills, experience and knowledge. An effective
evaluation of Board performance and succession planning is crucial to this.
Key changes to principles and provisions
How we comply / Our response to key changes
Principle J:
Appointments to the Board should be subject to a
formal, rigorous and transparent procedure, and an effective
succession plan for the Board and senior management should
be maintained. Both appointments and succession plans should
be based on merit and objective criteria. They should promote
diversity, inclusion and equal opportunity.
We provide details in the Nomination & Governance Committee
Report on pages 127 to 135 of how the Board considers diversity
in its broadest sense as an integral part of the Board composition
review and appointments process.
Provision 23:
To describe the policy and any
initiatives in place on diversity and inclusion.
We provide details regarding inclusion and belonging initiatives in
Building our Way to Win on pages 59 to 63 and in the Nomination
& Governance Committee Report on pages 129 to 131.
How we have complied with the Code
The table below outlines how the Company has complied with the Code and responded to the key changes made to the Code’s
principles and provisions.
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UK Corporate Governance Code
US corporate governance rules compliance
The Company’s American Depositary Shares and bonds are listed on the New York Stock Exchange (NYSE), and, as a foreign
private issuer, we are therefore subject to the rules of the NYSE, as well as to US securities laws and the rules of the Securities and
Exchange Commission (SEC) applicable to foreign private issuers. We comply with the requirements of the NYSE and SEC and have
no significant differences to report between the US and UK corporate governance standards.
Audit, risk and internal control
With the oversight of the Board, the Audit Committee oversees the independence and effectiveness
of internal and external audit functions, satisfies itself on the integrity of financial and narrative
statements, and reviews the effectiveness of processes to manage risk and internal control.
Key changes to principles and provisions
How we comply / Our response to key changes
Principle O:
The Board to be responsible for maintaining
the effectiveness of risk management and the internal
control framework.
We provide details in the Risk report on pages 78 to 96 of how
the Board maintains the effectiveness of the risk management
and internal control framework.
Provision 29:
To describe how the Board has monitored
and reviewed the effectiveness of the framework.
A declaration of effectiveness of the material controls as
at the balance sheet date.
To describe any material controls that have not operated
effectively as at the balance sheet date.
In preparation for the requirements of Provision 29 becoming
effective as at 31 December 2026, we provide details of the
progress made to identify and define the Group’s material
controls. See the Audit Committee Report on pages 141 to 146
for more information.
Remuneration
Aims to ensure that the executive team is appropriately and fairly incentivised, and aligned with long-term,
sustainable strategic execution. We also monitor wider colleague remuneration across the business.
Key changes to principles and provisions
How we comply / Our response to key changes
Provision 37 and 38:
Director remuneration contracts/
agreements should include malus and clawback provisions.
Describe the malus and clawback provisions, including the
circumstances in which they could be used and whether they
have been used in the last reporting period.
We provide details of malus and clawback provisions in the
Directors’ Remuneration Report on page 165.
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OTHER INFORMATION
Rupert Soames OBE
Rupert Soames OBE
Chair
Appointed as an Independent
Non-Executive Director in April 2023
and as Chair in September 2023.
Key skills and competencies:
Rupert has extensive global leadership
experience, a proven track record of
delivering shareholder value and a deep
understanding of UK corporate governance.
Current external appointments:
Non-Executive Director of the
Confederation of British Industry. Trustee of
the Ditchley Foundation.
Previous experience:
Rupert stepped down in December 2022,
aſter nine years as Group Chief Executive,
from Serco Group plc, the specialist
services business in Health, Defence,
Transport and Immigration. Previously, he
was Chief Executive Officer of Aggreko
plc for 11 years, and prior to that Chief
Executive of Misys plc’s Banking and
Securities Division.
Rupert completed his two-year term
as Chair of the Confederation of British
industry in December 2025. He was
also Senior Independent Director and a
member of the Audit, Remuneration and
Nomination Committees for both DS Smith
and Electrocomponents plc (now RS Group)
from 2007 to 2016.
Nationality:
British
R
N
Deepak Nath
Chief Executive Officer
Appointed Chief Executive Officer
in April 2022.
Key skills and competencies:
Deepak brings global leadership and
risk management expertise, and has a
track record of driving growth at major
healthcare companies through delivering a
significant improvement in execution and
building a strong results-focused culture.
Current external appointments:
Director of AdvaMed and Director of MDIC.
Previous experience:
Deepak began his career as a scientist
in computational physics at Lawrence
Livermore National Laboratory and holds a
BSc and MSc in Mechanical Engineering and
a PhD in Theoretical Mechanics from the
University of California, Berkeley.
Prior to joining Siemens Healthineers, he
held roles at both Amgen and McKinsey
and spent 10 years at Abbott Laboratories,
Inc. culminating in his appointment as
President of Abbott Vascular.
At Siemens Healthineers (2018–2022), he
was President of the Diagnostics business
responsible for $6 billion of revenue and
15,000 employees.
Nationality:
American
Deepak Nath
Board and Committee Key
A
Member of the
Audit Committee
R
Member of the
Remuneration Committee
N
Member of the Nomination
& Governance Committee
C
Member of the Compliance
& Culture Committee
Committee Chair
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Board leadership and company purpose
Angie Risley
Senior Independent Director
Appointed Independent Non-Executive
Director in September 2017, and Senior
Independent Director in October 2024.
Key skills and competencies:
Angie has held both executive and non-
executive roles in a wide range of sectors,
including a regulated environment, ensuring
she is well placed to fulfil her obligations as
Senior Independent Director. This diversity
of experience is welcomed by the Board
and the Remuneration Committee. Angie is
also an additional resource and sounding
board for Smith+Nephew’s own internal
Human Resources function.
Current external appointments:
Non-Executive Director, Chair of the
Remuneration Committee and member of
the Responsible Business and Nominations
Committees at InterContinental Hotels
Group plc.
Previous experience:
From 2007 to 2013, Angie was the Group
HR Director for Lloyds Banking Group and
was Group HR Director of J Sainsbury plc,
and a member of their Operating Board
from January 2013 to May 2023.
Over the years, Angie has been a member
of the Low Pay Commission and has held
a number of Non-Executive Directorships
with Biffa plc, Arriva and Serco Group plc.
At Serco Group plc, she was the Chair
of the Remuneration Committee.
Previously, she attended the Remuneration
Committees of Whitbread plc and
Lloyds Bank.
Nationality:
British
R
N
Angie Risley
John Rogers
Chief Financial Officer
Appointed Chief Financial Officer
in April 2024.
Key skills and competencies:
John has extensive financial and
commercial leadership experience across
a range of sectors and on a global basis, as
well as a track record of delivering complex
international transformation programmes.
Current external appointments:
Non-Executive Director of Grab
Holdings Limited.
Previous experience:
John has served as the Chief Financial
Officer at WPP plc, where he successfully
led the implementation of their global
transformation programme. Prior to this,
he served as Chief Executive Officer of
Argos, Habitat and Sainsbury’s clothing
and general merchandise businesses, and
as Chief Financial Officer at J Sainsbury
plc. John also acted as Chair of the Audit
Committee for Travis Perkins.
Nationality:
British
John Rogers
Thérèse Esperdy
Independent Non-Executive Director
Appointed Independent Non-Executive
Director and Senior Independent Director
designate from December 2025.
Key skills and competencies:
Thérèse has significant experience across
financial services with deep knowledge
of banking and business. She is an
experienced board member of international
corporates, with valuable experience in
highly regulated industries.
Current external appointments:
Non-executive Chair of Imperial Brands
plc and Non-Executive Director of
Moody’s Corporation.
Previous experience:
Thérèse was previously senior independent
director of National Grid plc. In her
executive career at JP Morgan, Thérèse
was global chair of their Financial
Institutions Group, co-head of Asia-
Pacific Corporate & Investment Banking
and global head of Debt Capital Markets.
She began her career at Lehman Brothers
and joined Chase Securities in 1997
prior to the firm’s merger with JP Morgan
in 2000.
Nationality:
American
R
N
Thérèse Esperdy
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Jo Hallas
Independent Non-Executive Director
Appointed Independent Non-Executive
Director in February 2022.
Key skills and competencies:
Jo has extensive international experience
focused on business transformation
through both organic and acquisitive
growth in global industrial and consumer
sectors. She brings valuable expertise,
which will help Smith+Nephew build upon
and achieve our strategic ambitions.
Current external appointments:
None.
Previous experience:
Jo commenced her career at Procter
& Gamble based in Germany, the US,
Thailand and the Netherlands.
She then joined Bosch, where she held a
business unit leadership role in their Power
Tools division, followed by Invensys in 2009,
where she ran their global heating controls
business unit, including launching its first
smart home offer.
She then moved to Spectris plc, where she
had responsibility for a portfolio of global
industrial technology businesses, as well as
for the Group’s digital strategy.
From April 2019 to April 2023, Jo served
as Chief Executive Officer for Tyman plc,
where she made sustainability a core
foundation of the group’s strategy.
Jo was also previously Chair of the
Remuneration Committee for Norcros plc.
Nationality:
British
C
A
Garheng Kong
Independent Non-Executive Director
Appointed Independent Non-Executive
Director in September 2025.
Key skills and competencies:
Garheng has significant experience in the
healthcare and biopharma sectors and has
extensive investment, clinical and technical
experience, having served in both executive
and non-executive roles helping to create
and build high-growth and innovation-
based healthcare businesses. Garheng is
also a medical doctor with a PhD.
Current external appointments:
Managing partner and co-founder of
HealthQuest Capital, a healthcare venture
growth fund. Lead independent Director
of Laboratory Corporation of America
(LabCorp) and Non-Executive Director of
Xeris Biopharma Holdings Inc, Lunit Inc and
IKS Health.
Previous experience:
Garheng was previously managing general
partner of Sofinnova Investments, Inc and
general partner at Intersouth Partners.
He served as a Non-Executive Director
of Venus Concept, Inc, Alimera Sciences
and Avedro, Inc and as chair of Histogenics
Corporation. Garheng’s early career
included positions at GlaxoSmithKline,
McKinsey and TherOx before he started his
investing career.
Nationality:
American
A
Garheng Kong
David King
Independent Non-Executive Director
Appointed Independent Non-Executive
Director in July 2025.
Key skills and competencies:
David has extensive experience in the
healthcare and life sciences sectors in
executive and non-executive roles, helping
to transform and grow businesses in the US
and globally.
Current external appointments:
Executive Chair of Fortis Life Sciences.
He also serves as a Chair or Non-Executive
Director on the boards of several
healthcare companies, including Privia
Health, LGC and AmSurg Corporation.
David is Non-Executive Chair at PathGroup.
Previous experience:
David recently served as a Chair or Non-
Executive Director on the boards of ZimVie
(2022–2025) and VaxCare (2021–2025).
Prior to that he served as Executive Chair
and CEO for Laboratory Corporation of
America (LabCorp) from 2007 to 2019,
where he helped transform LabCorp from
a pure-play US testing laboratory into a
leading global life sciences company and
tripled its size through a combination of
organic growth and strategic acquisitions.
Before joining LabCorp, David was a
partner at Hogan & Hartson LLP (now
Hogan Lovells) where he was a key leader
in the firm’s healthcare fraud and abuse
practice, representing national healthcare
companies in investigations and litigation.
David was previously the Chair of Health
Channels and CEO of Fortis Life Sciences.
Nationality:
American
R
C
David King
Jo Hallas
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continued
Board leadership and company purpose
continued
John Ma
Independent Non-Executive Director
Appointed Independent Non-Executive
Director in February 2021.
Key skills and competencies:
John has an impressive track record
in medical device businesses and
his contribution provides value as
Smith+Nephew continues to develop
innovative ways to grow and serve our
markets with a focus towards Asia Pacific
regions. He is an established healthcare
leader and has strong experience of
driving market entry and growth within
Emerging Markets.
Current external appointments:
Founder, Chair and Chief Executive of
Ronovo Surgical.
Previous experience:
In 2000, John joined GE Healthcare and
became Vice President and General
Manager of their Global Product Company
in China.
John has also held a number of senior
positions as President of Asia Pacific
regions at Pentair Inc., Vice President of
Express Scripts Inc., and Global Partner
of Fosun Group. He initially joined Fosun
Pharma to lead their medical device
business and in 2014 became President
of Fosun Healthcare Holdings. He served
as a key member of their healthcare
investment committee which went on
to establish a global presence across
the US, Europe, Israel and China. In 2017,
John joined Intuitive Surgical as their
Senior Vice President of Strategic Growth
Initiatives. He has previously served
as a Non-Executive Director for both
Haier Electronics Group and Clinical
Innovations LLC.
Nationality:
American
C
John Ma
Simon Lowth
Independent Non-Executive Director
Appointed as Independent Non-Executive
Director in January 2024.
Key skills and competencies:
Simon has extensive experience in finance,
accounting, risk, corporate strategy, as
well as mergers and acquisitions, and
brings a wealth of expertise across a
wide range of sectors, including within
regulated industries. Having served as
the CFO in four FTSE 100 companies,
he has deep experience of capital
markets, implementing strategic change,
cost transformation and performance
improvement programmes as well as
understanding how technology can be
used to transform a business.
Current external appointments:
Group Chief Financial Officer of BT Group.
Previous experience:
Simon was previously Group Chief Financial
Officer at BG Group, AstraZeneca and
Scottish Power. Before joining Scottish
Power, he led the Industrial Practice of
McKinsey in the UK. He previously served
as a Non-Executive Director on the Board
of Standard Chartered.
Nationality:
British
A
N
Simon Lowth
Jez Maiden
Independent Non-Executive Director
Appointed Independent Non-Executive
Director and as a member of the Audit and
Remuneration Committees in September
2023. Appointed Chair of the Audit
Committee in March 2024.
Key skills and competencies:
Jez has extensive financial experience
across a diverse range of industries and
sectors. Jez brings more than 25 years of
global experience both as a FTSE Chief
Financial Officer and as a Non-Executive
Director on boards of companies,
addressing strategic and operational
challenges across a number of different
industries, including life sciences and
healthcare. He has had oversight of large
operations in the US, Europe and Asia in
highly regulated industries.
Current external appointments:
Senior Independent Director and Interim
Chair of the Remuneration Committee at
Travis Perkins plc. Non-Executive Director
and member of the Audit Committee at
Intertek Group plc.
Previous experience:
Jez retired in 2023 as Group Finance
Director at Croda International plc, the
FTSE 100 global speciality chemicals
company, and previously held similar roles
at National Express Group plc and Northern
Foods plc. He has served as the Senior
Independent Director at Synthomer PLC,
and at both PZ Cussons plc and Synthomer
PLC he chaired the Audit Committee and
served on the Remuneration Committee.
He is a fellow of the Chartered Institute of
Management Accountants.
Nationality:
British
A
R
Jez Maiden
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OTHER INFORMATION
Katarzyna Mazur-Hofsaess
Independent Non-Executive Director
Appointed Independent Non-Executive
Director in November 2020.
Key skills and competencies:
Katarzyna demonstrates a true passion
for customer focus and maintains
an impressive track record in senior
leadership within the MedTech industry.
She is a qualified medical doctor (PhD)
and has a wealth of experience in the
medical devices and orthopaedic sectors.
Her experience as Chief Executive Officer
of a global company and valuable industry
knowledge will help drive innovation and
ensure the continued development of
Smith+Nephew.
Current external appointments:
Trustee at Global Clubfoot Initiative, a UK-
based charity.
Previous experience:
Katarzyna commenced her corporate
career at Roche in Poland, was later
recruited by Abbott Laboratories to
manage their diabetes care division
in Poland and became Country
General Manager.
Her career progressed to General Manager
of Molecular Diagnostics Division for EMEA
and eventually to Divisional Vice President
Abbott Diagnostics for Europe. In 2010, she
became President EMEA region at Zimmer,
following the Biomet acquisition, and led
the integration in the region and served as
President EMEA for Zimmer Biomet, leading
the orthopaedic company. In 2018, she
joined Fresenius Medical Care, the renal
company, as CEO EMEA and Member of the
Management Board.
Effective January 2022, Katarzyna
took over responsibility for the globally
operating Care Enablement segment in
which Fresenius Medical Care AG has
Katarzyna Mazur-Hofsaess
Marc Owen
Independent Non-Executive Director
Appointed Independent Non-Executive
Director in October 2017 and held the
role of Senior Independent Director from
September 2022 to September 2024.
Key skills and competencies:
Marc is a proven leader with an astute
strategic vision, capable of building
significant international healthcare
businesses. He has strong commercial
healthcare expertise. Marc is responsible
for ESG through his role as Chair of the
Compliance & Culture Committee (CCC).
Current external appointments:
None.
Previous experience:
Marc commenced his healthcare and
technology career at McKinsey & Company,
where he progressed to senior partner and
eventually became a founding partner of
McKinsey’s Business Technology Office.
In 2001, Marc joined McKesson Corporation
and served as Executive Vice President and
member of their Executive Committee.
He delivered strategic objectives and led
over 40 acquisitions and divestments
over a 10-year period. In late 2011, he
headed McKesson Specialty Health,
which operates over 130 cancer centres
across the US and provides market
intelligence, supply chain services, patient
access to therapy, provider and patient
engagement and clinical trial support.
In 2014, he was appointed Chair of the
European Management Board at Celesio
AG. He retired in March 2017, once he had
improved operations, set the strategy and
recruited his successor.
Nationality:
British/American
C
N
A
R
Marc Owen
consolidated its €5.5 billion healthcare
products business into one MedTech
organisation. Her responsibility includes
research and development, quality and
regulatory, manufacturing, supply chain
and commercial operations.
From 31 December 2025, Katarzyna
stepped down from her role as Chief
Executive Officer, Care Enablement
(MedTech segment), at Fresenius
Medical Care AG and a member of the
Management Board.
Nationality:
German/Polish
C
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continued
Board of Directors
continued
Sybella Stanley
Independent Non-Executive Director
Appointed Independent Non-
Executive Director in February 2025.
Chair of the Remuneration Committee
from 30 June 2025.
Key skills and competencies:
Sybella brings broad international
executive and non-executive experience
of culturally diverse multinational
organisations and interactions with the
London Investment Community.
Current external appointments:
Director of Corporate Finance at RELX
Group, the global provider of information
and analytics, and Co-Chair of the
Development Board of Somerville College,
Oxford.
Previous experience:
Sybella retired in December 2024 from
the Board of Tate & Lyle plc, where she
served for nine years as an Independent
Non-Executive Director and was Chair of
the Remuneration Committee. She served
for nine years as an Independent Non-
Executive Director of Merchants Trust PLC
and as Senior Independent Director and
Chair of the Remuneration Committee until
her retirement in March 2024. She was a
member of the Industrial Development
Advisory Board of the Department for
Business, Energy & Industrial Strategy for
eight years. Sybella qualified as a barrister
and, before joining RELX Group, she was
a member of the M&A advisory teams at
Baring Brothers and Citigroup.
Nationality:
British
R
Sybella Stanley
Helen Barraclough
Group General Counsel and
Company Secretary
Appointed Company Secretary
in April 2022.
Key skills and competencies:
Helen is a qualified Solicitor admitted
in England & Wales and a Chartered
Governance Professional. She also
serves as the Chief Risk Officer for
Smith+Nephew.
Previous experience:
Helen started her career with Allen
& Overy LLP and, prior to joining
Smith+Nephew, held senior legal
roles at WPP plc and Nomura
International plc.
Nationality:
British
Helen Barraclough
Board members whose
tenure ceased during the year
Bob White stepped down from
the Board on 30 April 2025 prior
to taking an executive role at
Olympus Corporation.
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Scott Schaffner
Rohit Kashyap
Craig Gaffin
President Orthopaedics
Craig has held numerous commercial
leadership roles over the past 25 years with
leading Medical Device and Biotechnology
companies, such as Stryker and Amgen.
Craig has led through progressive
complexity, challenge and scale across
sales and marketing in both start-up
and established organisations. Craig is a
graduate of the University of Vermont and
the Olin School of Business at Washington
University in St. Louis.
Nationality:
American
Location:
Memphis, US
Rohit Kashyap
President Advanced Wound
Management and Global
Commercial Operations
Rohit brings more than 20 years’
experience across wound care, surgical
management, business development and
global commercial leadership.
Prior to joining Smith+Nephew, Rohit
worked at Acelity, a global advanced
wound care company, most recently
as President, Global Commercial and
at MIMEDX as President of the Wound
and Surgical business and as Chief
Commercial Officer.
Nationality:
American
Location:
Fort Worth, US
Vasant Padmanabhan
President Research & Development,
ENT and Emerging Markets
Vasant has over 25 years of global
MedTech leadership experience. Prior to
Smith+Nephew, Vasant held senior roles
at Thoratec Corporation and Medtronic
plc as Vice President of Connected Care
R&D and Operations and Vice President of
Product Development for the Implantable
Defibrillator business.
Nationality:
American
Location:
Andover, US
Scott Schaffner
President Sports Medicine
Scott has more than 30 years’
experience across the medical device
industry, including cardiac rhythm
management, neuromodulation, spine and
sports medicine.
Prior to moving into his current role, Scott
served as Executive Vice President, Global
Marketing and US Commercial, Sports
Medicine, Senior Vice President, Global
Marketing, Sports Medicine and Vice
President, Sports Medicine.
Nationality:
American
Location:
Austin, US
The CEO, with support from
the CFO, leads the Executive
Committee of Smith+Nephew,
which is responsible for the
day-to-day operational
management of the Group
and executing its strategy.
Craig Gaffin
Vasant Padmanabhan
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continued
Executive Committee
Helen Barraclough
Alison Parkes
Mizanu Kebede
Paul Connolly
Helen Barraclough
Group General Counsel
and Company Secretary
Prior to joining Smith+Nephew, Helen
started her career at Allen & Overy LLP,
and held senior roles at WPP plc and
Nomura International plc. She is a qualified
solicitor admitted in England & Wales and
a Chartered Governance Professional.
She also serves as the Chief Risk Officer for
Smith+Nephew.
Nationality:
British
Location:
Watford, UK
Paul Connolly
President Global Operations
Paul brings more than 30 years of
global manufacturing and supply
chain experience at multinational
companies, with a strong track record
in delivering operational excellence and
transformation programmes.
Prior to joining Smith+Nephew, Paul
held senior roles at Goodyear, DePuy,
Inc., and other Johnson & Johnson
family companies.
Nationality:
American/Irish
Location:
Andover, US
Ajay Dhankhar
Chief Strategy & Corporate
Development Officer, with additional
responsibility for Corporate Branding
and External Communications
Ajay has been a highly trusted strategic
adviser and investment banker to CEOs
and Boards at some of the world’s leading
healthcare companies over the past
~30 years and has global experience in
helping companies deliver industry-leading
shareholder value.
Prior to joining Smith+Nephew, Ajay
was Senior Partner at McKinsey for 25
years and held various leadership roles,
including Global Head of Strategy across
all industries. More recently, he served
as Managing Director and Global Head
of Medical Technology, Diagnostics and
Tools at Lazard, where he led multiple
high-impact transactions. Ajay was also
founder and Managing Director of Bluish
Capital, a novel private equity and M&A
advisory firm.
Ajay holds both a master’s degree and
a doctorate in Molecular Biophysics and
Biochemistry from Yale University.
Nationality:
American
Location:
Fort Worth, US
Mizanu Kebede
Chief Quality & Regulatory
Affairs Officer
Mizanu brings more than 25 years of
leadership experience in Quality and
Regulatory Affairs.
Prior to Smith+Nephew, Mizanu held senior
roles at Avanos Medical, Life Technologies
SETRIS Corporation and Johnson &
Johnson family companies.
Nationality:
American
Location:
Georgia, US
Elga Lohler
Ajay Dhankhar
Elga Lohler
Chief HR Officer
Prior to joining Smith+Nephew, Elga held
Human Resources roles at Transnet SOC
Ltd, Sensormatic (now Tyco International
plc) and Advanced Tissue Sciences, Inc.
(acquired by Smith+Nephew in 2002).
Nationality:
American/South African
Location:
Fort Worth, US
Alison Parkes
Chief Compliance Officer
Prior to moving into her current role,
Alison served in multiple roles across the
Company, including as the Compliance
Officer for the Global Advanced Wound
Management business, as the Compliance
Leader for APAC and Emerging Markets,
and establishing and leading the Global
Compliance Programme Effectiveness &
Improvement Team.
Nationality:
British
Location:
Hull, UK
Members who stepped down from
the Executive Committee during
the year
Phil Cowdy retired on 31 May 2025.
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OTHER INFORMATION
Board and Committee attendance
During 2025 there were seven scheduled Board meetings
Total meetings
Board
Nomination &
Governance
Compliance
& Culture
Audit
Remuneration
Attendees
Appointed
Committee
membership
7
5
4
7
9
Rupert Soames
April 2023
N
R
7/7
5/5
N/A
N/A
9/9
Deepak Nath
April 2022
7/7
N/A
N/A
N/A
N/A
John Rogers
April 2024
7/7
N/A
N/A
N/A
N/A
Angie Risley
1
September 2017
N
R
6/7
5/5
N/A
N/A
9/9
Jo Hallas
February 2022
A
C
7/7
N/A
4/4
7/7
N/A
David King
2
July 2025
C
R
4/4
N/A
2/2
N/A
3/3
Garheng Kong
3
September 2025
A
3/3
N/A
N/A
3/3
N/A
Simon Lowth
January 2024
A
N
7/7
5/5
N/A
7/7
N/A
John Ma
February 2021
C
7/7
N/A
4/4
N/A
N/A
Jez Maiden
September 2023
A
R
7/7
N/A
N/A
7/7
9/9
Katarzyna Mazur-Hofsaess
November 2020
C
7/7
N/A
4/4
N/A
N/A
Marc Owen
October 2017
A
C
N
R
7/7
5/5
4/4
7/7
3/3
Sybella Stanley
4
February 2025
R
7/7
N/A
N/A
N/A
9/9
Thérèse Esperdy
5
December 2025
N
R
1/1
1/1
N/A
N/A
1/1
Bob White
6
May 2020
C
R
2/2
N/A
2/2
N/A
2/3
1
Angie Risley stepped down as Chair of the Remuneration Committee on 30 June 2025 and did not attend the November Board meeting due to a prior
professional commitment. She provided her comments to the Chair prior to the meeting.
2
David King was appointed to the Board and became a member of the Compliance & Culture and the Remuneration Committees on 1 July 2025.
3
Garheng Kong was appointed to the Board and became a member of the Audit Committee on 1 September 2025.
4
Sybella Stanley was appointed to the Board and became a member of the Remuneration Committee on 1 February 2025 and became Chair of the
Remuneration Committee on 30 June 2025.
5
Thérèse Esperdy was appointed to the Board and became a member of the Nomination and Governance Committee and Remuneration Committee on
1 December 2025.
6
Bob White stepped down from the Board on 30 April 2025 and did not attend the March Remuneration Committee meeting due to a prior professional
commitment. He provided his comments to the Committee Chair in advance of the meeting.
Committee key
A
R
N
C
Member of the
Audit Committee
Member of the
Remuneration Committee
Member of the Nomination
& Governance Committee
Member of the Compliance
& Culture Committee
Committee
Chair
99%
Committee attendance
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Annual Report 2025
Board and Committee attendance
Board leadership and company purpose
continued
The following pages provide an overview
of the key topics reviewed, monitored,
considered and debated by the Board in
the year to 31 December 2025.
Board and Committee members also
have informal touchpoints, updates and
calls throughout the year, as needed.
Every full Board session includes:
–
A report from the CEO
–
Group finance report and outlook
–
A customised strategic and operational
presentation from a business unit and/
or function(s) aligned to key topics
of interest to the Board eg Global
Operations, Tariffs, Cybersecurity, AI etc.
–
Updates from Committee Chairs
on the most recent Committee meetings
and areas of interest
–
A report from Legal and Governance
–
A report on investor relations
–
Feedback from Board members on any
site visits they have attended
–
A closed session for the full Board
followed by a Non-Executive Director
closed-session discussion.
Where Board meetings take place at
the Croxley offices, a lunch in the office
canteen is scheduled for Board members
alongside Croxley employees.
January
Board Strategy Sub-Committee meeting, Chair
meetings with investors
February
Board Strategy Sub-Committee meeting, Geopolitical Risk
and Mapping Update (including Tariffs and horizon scanning),
review of MedTech landscape with case studies, approval of
Annual Report and Accounts and Sustainability Report; Annual
Risk Review including approval of risk appetite, approval of
full year results and dividend, Orthopaedics business review,
including Ortho360 strategic presentation
March
Board Strategy Sub-Committee meeting,
Site visit to India and Singapore by Chair
April
Board discussion on strategy and Business Continuity
deep-dives, MedTech landscape case studies, ROIC and
market rationalisation discussion, Annual General Meeting and
investor touchpoints, funding and liquidity update, Q1 trading
statement approval
June
Site visits to Costa Rica and Fort Worth with product
demonstrations, Advanced Wound Management strategic
overview and business update, review of innovation pipeline
and talent, MedTech industry review, customer presentation
on Ambulatory Surgical Centers (ASC), discussion on strategic
direction of travel prior to September Strategy discussions
July
Sports Medicine and ENT deep-dive, Greater China strategic
discussion, M&A review with new Chief Strategy and Corporate
Development Officer, Digital Transformation, Cyber and AI
updates, review of Global Business Shared Services, H1 trading
statement approval, approval of interim dividend and share buy-
back programme
September
Senior Independent Director presents internal Board Evaluation
(questionnaire and interviews conducted July – September);
Strategy and Five-Year Plan review, talent management strategy
review, approval of Sustainability strategy
November
Q3 trading statement approval, further discussion on
presentation of Strategy and Capital Markets Day
Final approval of 2026 budget and final presentation of new
RISE Strategy and Capital Markets Day presentations, investor
sentiment discussion, closed session for Succession planning
and people discussion, Emerging Markets business review, IT
transformation and Cybersecurity update
December
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OTHER INFORMATION
Board activities
Strategy and
operational excellence
Closure of 12 Point Plan and approval of
RISE Strategy, embedding the ethos of
continuous improvement and a high
performance culture through flawless
execution across all areas of the business
2025 activities and outcomes
–
Reviewing closure of 12-Point Plan and
progress and performance against KPIs,
strategy, budgets and business plans
–
Monitoring of Orthopaedics execution
and metrics aligned to the 12-Point
Plan and broader market developments,
including portfolio preferences and shiſts
in site of care
–
Approving half-year, full-year and
trading updates
–
Deep-dive sessions on Orthopaedics,
Sports Medicine, Advanced Wound
Management and ENT business units
and Greater China and Emerging
Markets regions, aligned to long-term
strategic initiatives
–
Review of ROIC, portfolio and market
optimisation aligned to strategy and
performance objectives
–
Monitoring Global Operations updates
and response to external and internal
shiſts in policy, regulation and social
purpose in line with key metrics
and deliverables
Areas of focus for 2026
–
Review of implementation of RISE
strategy to ensure alignment with
Purpose, Culture and strategic objectives
–
Monitoring of implementation of
Digital Transformation and AI strategy
and roadmap
–
Continued monitoring of regulatory
shiſts within the industry and globally
to understand impact on strategic
objectives and the global organisation
–
Continued monitoring of Cybersecurity
and other principal risks to
the organisation
Purpose and culture
Reviewing decision making in alignment
with the purpose of Life Unlimited and
culture pillars of Care, Courage
and Collaboration
2025 activities and outcomes
–
Review and approval of RISE five-year
strategy to ensure alignment to Life
Unlimited and culture pillars
–
Approval of the Code of Conduct and
Business Principles
–
Approval of sustainability strategy and
review of climate-related disclosures and
key performance metrics
–
Board listening sessions with
wider workforce
–
Review of initiatives to support Culture,
Workforce Planning and Performance
and Rewards
–
Review of Gallup results, employee
engagement and initiatives for the wider
workforce in terms of Performance
Culture, Rewards, Talent, Succession
and Development
–
Review of initiatives to strengthen
and embed a culture of inclusion
and belonging throughout the
Group, including receiving reports on
engagement with employee interest
groups at Board listening sessions
–
Overseeing succession planning at
Board and senior management level
and talent management strategy within
the organisation
Areas of focus for 2026
–
Monitoring implementation of RISE and
critical enablers, together with culture of
continuous improvement and the Way
to Win
–
Continued monitoring of implementation
of performance-based culture aligned
with Life Unlimited, culture pillars and
Code of Conduct
–
Continued focus on talent management
strategy and succession planning
1
2
3
5
4
1
2
3
5
4
Link to our strategic priorities
Link to stakeholder groups
People
Investors
Customers/Suppliers
Governments/Regulators
Environment/Communities
1
2
3
5
4
In 2025, the Board continued to
focus on its stated priorities:
3
2
1
Our investor presentations
are available to download
on our website
www.smith-nephew.com
1. Strengthen
2. Accelerate
3. Transform
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Board priorities, stakeholders and outcomes
Board leadership and company purpose
continued
Capital allocation
and cost management
Ensuring efficient and effective use of
Company resources and scrutiny of
implementation of capital allocation
2025 activities and outcomes
–
Setting priorities for capital investment
across the Group
–
Continuing to review structure and
cost management activities against
strategic plans including 12-Point
Plan and zero-based budgeting (ZBB)
initiatives in support of Group Strategy
–
Monitoring ROIC, cash and EPS key
metrics to drive shareholder value
creation. Approving annual budget,
financial plan, three-year strategic plan
–
Approving major borrowings and
finance and banking arrangements
–
Approving the $1 billion general
corporate purposes bond issue which
was used to repay private placements
and drawn amounts under the RCF
–
Determining the dividend policy
Areas of focus for 2026
–
Implementation of RISE strategy to
deliver on capital allocation objectives
outlined by management
–
Continued scrutiny of inventory levels,
revaluation and impact of tariffs
and other headwinds on delivery of
strategic objectives
Innovation and portfolio
Understanding the industry, competitor
landscape and innovation pipeline and
portfolio to drive value creation
2025 activities and outcomes
–
Review of portfolio aligned to strategy
and performance of the business units
–
Review of innovation pipeline aligned to
RISE strategy
–
Review of landscape and innovation
within MedTech industry to provide
insights into strategy
–
Receiving reports on progress in pipeline
and commercial launches in 2025
Areas of focus for 2026
–
Continued review of performance and
return on investment of acquisitions
and integration planning, with attention
to opportunities that strengthen our
differentiated platforms
–
Review of global innovation pipeline
and product portfolio, with a focus on
differentiation and delivery particularly
in MedTech and Biologics, which are
essential to advancing the Innovate and
Reach pillars of the RISE strategy
–
Emphasis on scaling digital surgery,
and biologic/regenerative solutions
that enhance standard of care, drive
customer value, and position the
business for above market growth in
priority segments
Risk management
and oversight
Evaluating strategy and decision making
within risk appetite and ongoing review
of the controls environment
2025 activities and outcomes
–
Overseeing the Group’s risk management
programme and related processes
–
Review and approval of principal risks
of the Group and adapting Board agenda
to reflect these accordingly
–
Review of the risk registers, risk
mapping exercises and annual review
of the Board appetite for risk
–
Ongoing consideration of key risks
within all Board discussions including
AI and IT strategy and investment,
cybersecurity and incident response,
business continuity and disaster
recovery and geopolitical events
–
Enhanced focus on geopolitical risk
mapping and crisis management
through updates on regulatory changes
and BRCM planning
–
Discussion at Board and Committee
meetings on key topics including
regulatory and reimbursement changes,
the impact of tariffs and supply chain
disruption, global talent outlook and,
MedTech landscape and trends
–
Review of investor perspectives and
sentiment throughout the year
–
Review of Board and executive
succession planning and changes to
the composition of the Board and
its Committees
Areas of focus for 2026
–
Continued focus on regulatory,
reimbursement and trade and other
policy changes which may impact the
achievement of strategic objectives
–
Continued focus on cyber resilience
and risks and opportunities within
digital transformation and AI strategy
through embedding the culture of
continuous improvement
–
First year of reporting on new Code
reporting requirements and enhanced
material controls framework
1
2
3
5
4
1
2
3
5
4
1
2
3
5
4
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OTHER INFORMATION
Board members are required to promote the
success of the Company for the benefit of our
stakeholders, including customers, investors,
employees, suppliers, regulators and our wider
communities. Details of our engagement with
our main stakeholder groups is set out on pages
117 to 123. This statement summarises how our
Directors addressed the matters set out in section
172(1) (a) to (f) of the Companies Act 2006.
The likely consequence of
any decision in the long term
Directors appreciate that assessing the
consequences of their long-term decisions,
particularly in the current political and
geopolitical environment, is complex and
oſten requires careful balancing of
competing stakeholder interests.
To support their decision making, Directors
are provided with information that describes
the long-term proposal under consideration
and how it aligns with, or otherwise impacts,
the Group’s strategy, budget and three-year
plan as well as our purpose of Life Unlimited.
Proposals for significant Board decisions
include a potential stakeholder impact
assessment covering employees, suppliers,
customers, government, regulators, local
communities, environment and investors.
Matters considered by the Board include:
–
Achievement of strategic objectives aligned
to Strategy and Purpose, which for 2025
aligned to the 12-Point Plan and which will
be aligned to our RISE Strategy in 2026
–
Global business unit reviews (Advanced
Wound Management, Sports Medicine
and ENT) aligned to 12-Point Plan in 2025,
which will be aligned to our RISE Strategy
in 2026
–
Innovation pipeline and portfolio review,
aligned to RISE in 2026
–
Capital allocation priorities and dividend
policy, aligned to RISE in 2026
–
Sustainability strategy aligned to
stakeholder interests and objectives
–
Succession planning and talent
management to support
organisational health
–
Consideration of these factors within our
ERM framework and principal risks.
For more details see our Business
Model on pages 14 and 15
Interests of our people
We are committed to cultivating
a high-performing, inclusive
workplace where everyone is valued
and respected, and feels a true
sense of belonging. We prioritise
creating a psychologically safe
environment that drives innovation,
fuels business success, and
enhances engagement and personal
fulfilment. Our three pillars of
Care, Courage and Collaboration
are the foundations on which we
build a robust, respectful and
accountable culture.
Papers relevant to the Directors’
assessment of how effectively this is
being achieved are normally provided
by the Chief HR Officer or Head of
Reward to enable the Directors to
monitor progress against priorities
and provide input and challenge
on proposed initiatives and actions
being taken to assess the potential
impacts on employees.
Matters considered by our Board
and its Committees include:
–
Alignment of Group strategy
to our Purpose of Life Unlimited
and cultural pillars of Care,
Courage and Collaboration
–
Efficacy of the Code of Conduct
and Business Principles and the
impact on organisational culture
–
Board listening sessions with
the wider workforce to hear
the employee voice
–
The continued progress
made on Gallup results and
employee engagement
–
Initiatives to support
talent attraction, retention
and development and
succession planning
–
Performance against health
and safety metrics.
For more information,
see our Building our Way to Win
section on pages 59 to 63
The impact of the Group’s operations
on the community and our environment
We recognise the need to reduce our
impact on our planet. We implement
initiatives to manage energy, waste
and water efficiently and reduce our
GHG where possible, and are mindful
of the impact our decision have on
the environment.
Papers relevant to the Directors’
assessment of how effectively we
are managing our impact on the
community and environment are
provided for input and challenge and
decision or awareness by Directors.
Matters considered by our Board
and its Committees include:
–
Our people and culture strategy
–
Sustainability strategy
–
Consideration of sustainability
within our ERM framework and
principal risks
–
Evaluation and measurement of
ESG performance against goals
and metrics
–
ESG-related measures for
executive remuneration plans
–
Emerging legislation which may
have impact in these areas.
For more information,
see the ESG Report
on pages 65 to 77
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S172 Statement
Board leadership and company purpose
continued
The importance of developing the Group’s business
relationships with suppliers, customers and others
A key priority for Directors as
custodians of a responsible business
is to ensure the Company develops
and maintains relationships with
customers, suppliers and other
stakeholders who support the
Group’s purpose of Life Unlimited
and the successful creation of
value through achievement of its
strategic objectives.
Our suppliers are expected to
adhere to our Third Party Code
and do business in accordance with
our Code of Conduct and Business
Principles, and maintain corporate
standards and behaviours consistent
with our own.
Papers relevant to the Directors’
assessment of how effectively these
relationships are being managed are
provided for input and challenge and
decision or awareness.
Matters considered by our Board
and its Committees include:
–
Sustainability strategy
–
Quality audits and
product governance
–
Third party guide to working
with Smith+Nephew
–
Supply chain and procurement
resilience and compliance
–
Modern Slavery Statements
–
Smith+Nephew Academy and
medical education initiatives to
support the safe and effective
use of our products
–
Consideration of these factors
within our ERM framework and
principal risks.
Our desire to maintain our reputation
for high standards of business conduct
Our strong culture pillars of Care,
Courage and Collaboration promote
good governance across our
business and are crucial to fostering
an environment of doing business
the right way. Directors have a
commitment to doing business
ethically, with integrity, honesty
and professionalism.
Papers relevant to the Directors’
assessment of how effectively we
are maintaining our high standards
of business conduct are provided for
input and challenge, and decision
or awareness.
Matters considered by our Board
and its Committees include:
–
Code of Conduct and
Business Principles
–
Ethics and compliance
programmes
–
Global data privacy compliance
–
Corporate governance framework
–
ERM framework and risk
management, controls
and compliance
–
Whistleblower policies,
investigations and
effectiveness review
–
Anti-bribery and corruption policy.
For more information,
see ‘How we are governed’
on pages 125 and 126 our
Risk Report on pages 78 to 94
and the Compliance & Culture
Committee Report on pages
136 to 139
Our aim to act fairly between
members of the Group
Directors seek to act fairly in the interests
of all shareholders. It is acknowledged that
shareholders oſten have differing views and
opinions and Directors seek to weigh up the
range of opinions to arrive at decisions that
promote the long-term success of the Group.
There is an extensive investor engagement
programme throughout the year, including
our Capital Markets Day events in
London and New York in December 2025.
Retail shareholders have access to Directors
at the AGMs, as well as through our
InvestorRelations.Global@ smith-nephew.
com email.
Papers relevant to this duty are provided
for input and challenge, and decision
or awareness.
Matters considered by our Board
and its Committees include:
–
Annual General Meeting
–
Capital Markets Day and other events
–
Group and individual shareholder meetings
–
Board discussions on investor sentiment
and feedback
–
Investor relations reports and planning.
For more information, see Our
shareholders on page 119
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STRATEGIC REPORT
GOVERNANCE
ACCOUNTS
OTHER INFORMATION
When making decisions, the Board
supports the Company’s objective
of working to improve the quality
of healthcare through investment
in new technologies and services,
industry-leading medical education
and evidence programmes, and
efficient and resilient manufacturing
and distribution, while balancing the
interests of all of our stakeholders.
Examples of how stakeholder
interests are taken into account in
Board decision making include:
Decision
How stakeholder interests were taken
into account
Stakeholder
groups
Development
of our RISE
Strategy
A number of discussions on direction of travel
in development of the new strategy were
discussed in detail at full Board and also with
individual Board members in the creation of
RISE; the key strategic elements of reaching
more patients, innovating to meet unmet needs,
scaling investment in high impact areas and
continued focus on execution were ones that
resonated with key stakeholders groups to form
part of the RISE Strategy, which was announced
in December 2025.
Investors,
patients,
customers,
employees,
communities
Investment
in innovation
Directors review the product development
pipeline and approve annual investment in
R&D through budget allocation review.
New product development is driven by
observation and engagement with customers
to identify unmet clinical needs. Our product
development follows a vigorous phase-gate
process to ensure that the product meets
the needs of customers, will contribute to
Smith+Nephew’s continued ambition to be
a higher-growth business, and integrates
sustainability principles into design
and packaging.
Patients,
customers,
investors
Digital
Transformation
and AI
Our Board and its Committees continue to review
and support the enhancement of our digital
transformation strategy and implementation
in order to ensure that the Company is both
creating value through transformation and
efficiency and effectively managing risk through
monitoring of AI governance. These discussions
are critical to strike the right balance to deliver
value to customers through connected products
and to employees and investors through
enhanced efficiencies while ensuring appropriate
safeguards are in place for customers,
employees, investors and regulators to support
data and information security and manage
AI risks.
Patients,
customers,
suppliers,
employees,
regulators,
investors
Cybersecurity
Our Board and its Committees continue to
review and support the enhancement of the
cybersecurity and information security strategy
and implementation/risk reports in order to
ensure that the Company is effectively managing
risk, both in terms of the opportunities to
enhance our governance and deliver value to
our patients and customers through connected
products and the risk management framework
that the Company adopts and implements in
order to develop a robust framework to protect
the data and interests of our stakeholders.
Patients,
customers,
suppliers,
regulators,
investors
116
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S172 Statement
continued
Board leadership and company purpose
continued
Our stakeholders
The Board considers the potential impact
on the Company’s key stakeholders
and takes their views and interests into
account when making decisions, as
outlined in our S172 statement.
The Board seeks to engage with and
build positive relationships with all
stakeholders and understands the
importance of ensuring that the views
and interests of all stakeholders are
considered in the delivery and oversight
of the Company’s strategy and culture.
The pages referenced in each of the
following sections provide examples
of our approach to stakeholder
engagement and how the Board
considers their views and the impact of
decisions on key stakeholder groups.
Our purpose is Life Unlimited – we exist to
restore people’s bodies and their self-belief.
We live our purpose through our culture
pillars of Care, Courage and Collaboration
to use technology to take the limits off
living, and help other medical professionals
do the same. Understanding stakeholder
views is critical to our Purpose.
Our ambition is to transform into a
structurally higher growth company
through our RISE Strategy:
Reach more patients:
Expand our impact
to 20 million patients by 2028.
Innovate to enhance the standard of care:
Launch new products, address unmet
needs, and lead in high-growth areas.
Scale through strategic investment:
Focus resources on high-return
opportunities, invest in market access,
and pursue strategic partnerships.
Execute efficiently:
Drive productivity,
invest in technology and AI, and optimise
our portfolio for sustainable growth.
The Board recognises that aligning the
interests of our stakeholders with our
Purpose, Strategy and Culture Pillars is
fundamental to sustainable growth.
The Board is committed to taking a long-
term view in order to deliver sustainable
value creation for shareholders and
other stakeholders.
Although members of the Board engage
directly with stakeholders as part of site
visits, listening sessions and informal
employee engagement touchpoints,
engagement with stakeholders mostly
takes place at an operational level
and the Board forms its views through
reports and information presented to it
by management. Management is asked
to outline and present the potential
impacts on stakeholders to the Board,
where appropriate, during discussions
and the decision making process.
See pages 54 to 57 for
more on Life Unlimited
See page 140 for
more on our culture
Read more in the Chief
Executive Officer’s Review
pages 6 to 11, and the
Governance report on the
Board activities on page 111
Read more about the Board’s
s172 duties on pages 114 to 116
Our People
Our
Shareholders
Governments
and regulators
Environment and
communities
Customers
and suppliers
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OTHER INFORMATION
Our purpose and stakeholders
Our customers and suppliers
Healthcare professionals and patients are central to all that we do. Effective engagement with our
suppliers ensures we have the right resources to support our growth and that those who partner with us
are committed to doing business in a way which is consistent with our Code of Conduct and our values.
Significant areas
of interest
–
Innovation and
improved outcomes
–
Ensuring product quality,
compliance with regulations
and doing business the
right way
–
Partnering with suppliers to
ensure business is done the
right way
– ESG
How we engage
–
The Board reviews the portfolio
strategy throughout the year, together
with acquisition pipeline for key assets
to accelerate innovation and respond
to customer and patient unmet needs.
–
The Board and CCC are provided with
updates on product quality, regulatory
matters, complaints, legal, compliance
and ethical matters.
–
Our customers continue to focus on
ensuring that ESG and sustainability
are taken into account in our decision
making aligned with their own policies
and procedures.
–
We work with third parties, who adhere
to our Code of Conduct, Business
Principles and health, safety, social and
environmental standards consistent
with our own. Our Third Party Guide to
working with Smith+Nephew sets out
our requirements for third parties based
on the laws, regulations and industry
codes that apply to Smith+Nephew.
The Board receives analyst reports,
reviews the share register and receives
reports on investor meetings at every
Board meeting, as well as investor
perceptions of the Company from
external advisers.
2025 outcome/impact
–
The Board and CCC received regular
reports on quality audits as part of
ongoing monitoring.
–
The CCC monitors the Company’s
response to new regulations impacting
our products, quality and regulatory
matters and FDA and other regulatory
engagement and reports to the Board at
each Board meeting.
–
Monitoring of supply chain and
procurement matters is reviewed
regularly by the Board, with a focus
on outcomes of the 12-Point Plan
initiatives and metrics.
–
The Board approved the Modern Slavery
Statement, available on our website.
–
Board review of our Sustainability
Strategy ensures a clear link to
stakeholders and issues of importance
to customers.
–
The Board and CCC receive reports at
each meeting on sustainability matters
which take into account the views and
requirements of our customers and in
turn impacts how we engage with our
suppliers to reflect customer approach.
–
See also Sustainability Report for
further details on how we plan
to continue to consider areas of
importance to our customers.
See pages 27 to 32 on
innovation highlighting
initiatives designed to support
unmet customer needs
See pages 65 to 77 of
our ESG Report, which
highlight our customer and
supplier focus
Our Third Party Guide
to working with Smith+Nephew
is available on our website
The Board approved the
Modern Slavery Statement
available on our website
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Our purpose and stakeholders
continued
Board leadership and company purpose
continued
Our shareholders
Our shareholders are the owners of our business. The Board seeks to engage with them
regularly throughout the year to understand their perspectives on performance, value,
risk and governance. See www.smith-nephew.com for our Investor presentations.
Significant areas
of interest
–
Strategy, business model
and performance
–
Capital allocation
and dividend
–
Cost management and
restructuring programmes.
– Remuneration
–
Leadership and
succession planning
– Sustainability
–
Inclusion and belonging
How we engage
–
Face-to-face engagement at our in-
person AGM at the Company’s Croxley
offices enables investors to have the
opportunity to engage with Board
members and management.
–
Our Remuneration Committee Chair
together with our Chair engaged
and communicated with investors,
comprising approximately 70% of
our issued share capital as part of
the consultation process on our 2026
Remuneration Policy.
–
Our Chair, CEO and CFO regularly
engage with investors during the year
on topics, such as strategy, financial
performance, operational excellence,
remuneration, talent management
and succession planning, sustainability
and diversity.
–
Our Chair and Senior Independent
Director engage with investors and
governance teams on topics of investor
interest including Board composition,
diversity and sustainability.
–
Our CEO and our CFO engage regularly
with investors as part of an ongoing
dialogue throughout the year as well as
through the post results roadshows and
Q&A sessions.
–
The Board receives analyst reports,
reviews the share register and receives
reports on investor meetings at every
Board meeting, as well as investor
perceptions of the Company from
external advisers.
2025 outcome/impact
–
The Chair, CEO and CFO engaged in
more than 145 investor meetings during
the year.
–
We hosted a two-day capital markets
event across London and New York
in December to launch our new RISE
strategy and three-year targets.
The event was also available as a
webcast for those investors unable to
attend in person.
–
A share buyback programme was
implemented on 5 August 2025 and
concluded on 7 October 2025 in order
to reduce the Company’s issued share
capital by returning surplus capital to
our shareholders.
–
Further to the extensive shareholder
consultation exercise conducted
regarding the 2026 Remuneration
Policy, the Board resolved to submit a
new Policy to shareholders for approval
at the 2026 AGM.
–
Recommended a final dividend for the
FY2025 of 24.1c per ordinary share
(48.2c per ADS) to shareholders for
approval at the 2026 AGM; and declared
an interim dividend for HY2025 of 15.0c
per ordinary share.
–
The Board and management regularly
discuss investor sentiment, perspectives
and expectations on performance
improvement, value creation and
cost management.
See pages 293 to 298 for
Shareholder information
www.smith-nephew.com/en/
who-we-are/investors
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Our people
Our employees are crucial to the success of our business. Creating a culture of belonging and
an environment that fosters innovation delivers business success and strengthens engagement.
Significant areas
of interest
–
Purpose, strategy and culture
–
Leadership and
succession planning
–
Talent, retention and
opportunities for
development and progression
–
Employee wellbeing and
cost of living
–
Inclusion and belonging
–
A healthy and safe
working environment
How we engage
–
Direct engagement led by a number of
Non-Executive Directors through Board/
employee listening sessions has been
an insightful way to understand more
about the Company culture, employee
engagement and inclusion and belonging.
–
Site visits and Board meetings at our
offices enable the Board to meet with
our employees for further engagement.
–
The ‘Direct to Deepak’ section of our
intranet and townhall sessions addresses
employee questions, comments
and feedback.
–
Review of the Gallup employee
engagement survey responses
and our Culture session at the CCC
provide insight into employee views
and sentiment.
–
Board inductions enable the Board to
hear directly from employees on
purpose, strategy and culture.
–
Engagement with our Employee Inclusion
Groups (EIGs) on site visits enables the
Board to engage with a wider cross
section of the employee community.
–
The Remuneration Committee and the
CCC receive updates at each meeting
on the activities of our EIGs, and enable
an ongoing review of programmes to
support the wider workforce.
–
The Board and its Committees are
provided with updates on leadership,
talent development and succession
planning for senior executives.
–
The Chair engaged with employees
during site visits in India and Singapore.
–
Marc Owen is our Non-Executive Director
who has responsibility for ensuring Board
engagement with the wider workforce
in his role as Chair of the CCC.
2025 outcome/impact
–
In 2025, the Company received the
Gallup Exceptional Workplace Award
for a second year in a row. In the
seventh year of running the Gallup
Engagement Survey, the Board noted
a 95% participant survey completion
rate and improved scores on most
questions, supporting the view that
employee engagement continues on a
positive trajectory.
–
The Board received valuable feedback
from the 2025 listening sessions, focusing
on several key topics, including Sports
Medicine and Orthopaedics Performance
and Strategic Direction, AWM Global
Vision and Performance, Sustainability
and Performance and Recognition.
–
The site visits to Singapore, Costa Rica,
Fort Worth in the US and China provided
an opportunity for informal employee
touchpoints, as well as more formal
presentations which enable the Board
to measure and monitor the culture of
the organisation.
–
Feedback from new Non-Executive
Directors has been positive on
the breadth and depth of the
induction programme.
2026 Focus
–
2026 listening sessions will focus on
our new RISE Strategy, Leadership
and Advanced Wound Management
Performance and Strategic Direction.
See pages 59 to 63 for Building
our Way to Win and pages 136
to 139 for the Compliance
& Culture Committee report
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Board leadership and company purpose
continued
Our purpose and stakeholders
continued
“Having recently joined the Board, it was
insightful to talk to our Sports Medicine
team members during the listening
session. Their passion about delivering
for and delighting our customers
brought to life the organisational culture
that I had learned about during my
orientation sessions. They also offered
positive comments on the change to a
global business unit model, particularly
its impact on creating an environment
which further drives commercial and
operational performance and closer
collaboration.
These sessions are extremely useful for
members of the Board to hear directly
from the team how the Company’s
strategy is implemented and how the
culture pillars of Care, Courage and
Collaboration are embedded within the
organisation.”
David King
Non-Executive Director
“The Board listening session with the
Orthopaedics business during the third
year of transformation was an excellent
opportunity to see the progress made
and the positive momentum and
dynamism within the team. In particular,
how the operations excellence that
was implemented by the Global
Orthopaedics team has yielded positive
improvements, reinforced our strengths
and provided more opportunities. It
provided valuable insight into how
our people are driving operational
excellence through active engagement
and collaboration.
These sessions enable the Board to
receive direct feedback from our
employees, which supports effective
governance, building trust and
alignment to our strategic objectives
as we continue to drive performance
together.”
Marc Owen
Independent Non-Executive Director
Board listening sessions
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See page 35 for Quality
& Regulatory Affairs
Governments and regulators
We focus on product safety, compliance and doing business the right way in order to achieve the full potential
of our portfolio. The Company reports regularly to the Board on its engagement with industry bodies and
similar organisations on key issues impacting the organisation and the MedTech industry more broadly.
Significant areas
of interest
–
Product safety
–
Compliance with
applicable legal and
regulatory requirements
–
Promotion of fair competition
–
Social and economic concerns
How we engage
–
The CEO and other senior leaders
engage through industry bodies such as
AdvaMed, MedTech Europe and similar
organisations in order to advocate for
and provide perspectives on core issues
which are of critical importance to the
MedTech industry.
–
Updates are provided on our Global
Compliance programme with applicable
metrics and monitoring at each
CCC meeting.
–
The Board and CCC receive updates on
product quality and regulatory matters
and compliance with applicable laws
and regulations.
–
The CEO and senior management meet
with governments and regulators,
as applicable.
2025 outcome/impact
–
The CEO, Global Business Unit
Presidents, Chief Quality and Regulatory
Officer, Group General Counsel, Chief
Compliance Officer, and other senior
leaders participated in a number of
industry meetings and interest groups
in order to drive issues of critical
importance to both the organisation
and the MedTech industry.
–
The CCC received reports on product
and regulatory audits which provide
comfort and confidence that product
quality and safety is being managed and
maintained effectively.
–
The CCC and Board also receive updates
from the Group General Counsel,
relating to any material legal matters
of which the Board should be aware.
–
The Board and its Committees are
provided with updates on new or
amended laws, regulations and
reporting requirements, such as the
revised UK Corporate Governance
Code, European Crime and Corporate
Transparency Act and the likely impact
of new regulations on the organisation.
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Board leadership and company purpose
continued
Our purpose and stakeholders
continued
Further information about our relationship with other stakeholders, including the local
communities in which we operate and the impact of climate change on our business,
can be found in the Sustainability Report on pages 14 and 28
Our environment and communities
People, Planet and Products are at the heart of our ESG strategy aiming to create a positive impact
on our communities, reduce the impact on our environment and enable us to innovate sustainably
Significant areas
of interest
–
Understanding how the
Company’s business impacts
local communities and
the environment
–
Company actions to further
sustainable healthcare and
address climate change via its
net zero journey
–
Managing compliance with
sustainability regulations
How we engage
–
The Board approves the ESG Strategy
annually and receives updates on ESG
initiatives and stakeholder feedback
at each meeting, as appropriate.
–
Updates on performance and progress
on key environmental and social metrics
are provided at each CCC meeting.
–
Updates on reporting and disclosures
are included at each Audit
Committee meeting.
–
Remuneration Committee determines
ESG metrics for remuneration purposes
liaising closely with the CCC to
ensure that metrics are quantifiable
and measurable.
–
The Chair, CEO and Company Secretary,
as well as other members of senior
management attend industry round
tables and panel discussions on ESG
matters which impact the Company.
–
ESG Steering Committee members
monitor and report stakeholder
feedback on ESG topics at each ESG
Steering Committee quarterly meeting.
–
ESG staff hold memberships in
healthcare-specific and cross-industry
ESG organisations to stay abreast of
stakeholder trends and best practices.
2025 outcome/impact
–
As part of strategic planning and
investment choices, the presentations
received by the Board for consideration
include analysis on the potential impact
of key projects on all stakeholder
groups, including the environment
and communities.
–
Remuneration Policy 2025 includes
ESG metrics for long-term
incentive plans.
–
We provide grants and donations
in accordance with our policies and
procedures to charitable or not-for-
profit organisations, medical institutions,
accredited educational programme
vendors, medical foundations and
professional societies.
–
We progressed metrics in our ESG Pillars
of People, Planet and Products.
Number of patients supported
through product donations
106,000+
Reduction in our Scope 1
and Scope 2 greenhouse
gas emissions since 2019
71%
Manufacturing waste kept
out of landfills
95%
In-scope packaging systems
incorporating at least one
recyclable component
92%
See pages 65 to 77
for our ESG report
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124
Finance & Banking Committee
A Committee comprising senior executives that approves
banking and treasury matters, guarantees and Group
structure changes relating to mergers, acquisitions
and disposals.
Disclosures Committee
A Committee comprising senior executives that oversees
and approves public announcements and communications
to investors and Stock Exchanges. Reviews communications
and reporting requirements in respect of market
sensitive information.
Audit Committee
Ensures the integrity of the
Company’s financial reporting,
systems and controls.
Oversight of risk management
process. Reviews and
monitors climate change
disclosures and related ESG
financial reporting obligations.
Monitors the Group’s
cyber resilience. Ensures
effectiveness of internal and
external audit functions.
See more on pages
141 to 146
Nomination &
Governance Committee
Reviews size, skills,
experience, knowledge
and composition of the
Board, succession
planning, diversity and
governance matters.
See more on pages
127 to 135
Remuneration Committee
Determines Remuneration
Policy and packages for
Executive Directors and
senior management, having
regard to pay across our
workforce. Ensures that the
reward strategy aligns with
our purpose, values and
long-term strategy.
See more on pages
147 to 193
Our Board
The Board is accountable to shareholders
for the performance and long-term
sustainable success of the Company.
It approves the strategy of the Group,
evaluates and monitors the management
of risk, and oversees the implementation
of strategy in order to achieve
sustainable growth.
The Board delegates certain matters to
the Audit, Remuneration, Nomination &
Governance and Compliance & Culture
Committees, which support the Board in
carrying out its responsibilities. From time
to time and where considered appropriate
to do so, the Board convenes Board
subcommittees that discuss and consider
specific matters. The subcommittees
report back to the full Board in order to
ensure efficient and effective oversight
on these specific matters. Full details of
the Matters Reserved to the Board can be
found on the Company’s website.
Executive Committee
The Board delegates the day-to-
day operational management and
implementation of Group strategy to
the CEO and Executive Committee.
The Executive Committee recommends
and, following Board approval,
implements the strategy, budget and
five-year strategic plan within the Group.
It ensures cross-functional alignment in
order to deliver on strategy and reviews
major investments, divestments and
capital expenditure proposals.
The Executive Committee also
focuses on people and organisational
culture, reviewing recruitment,
attrition and development initiatives
within the Company and developing
talent pipeline below Board level.
The Executive Committee meets at
least 10 times per year to review
commercial and operating results
against budget, key initiatives, KPIs
and performance metrics aligned to
delivering Group strategy.
The Executive Committee forms
subcommittees, including those
listed below:
–
Group Ethics & Compliance Committee
–
Business Resilience and Continuity
Management Steering Committee
–
Global Investment Board
–
New Product Development
Review Committee
–
Security & Privacy Steering Committee
–
ESG Steering Committee
–
AI Steering Committee
www.smith-nephew.com
See more on pages 108 to 109
*
The 12 Point Plan Steering Committee was formally retired in 2025 following closure of the majority of workstreams under the 12-Point Plan.
*
The Global Investment Board was implemented in 2025 to approve significant investments within the global business including mergers and acquisitions,
led by the CEO with CFO, Group General Counsel, President of Global Operations, Chief Strategy Officer and Global President R&D as members.
*
The Business Resilience and Continuity Management (BRCM) Steering Committee has oversight of the programmatic implementation and development of
BRCM globally and in partnership with IT, Legal and other functions supports Cyber Incident Response, IT Disaster Recovery and Global Crisis Management.
Compliance &
Culture Committee
Reviews, monitors and
has oversight of ethics
and compliance, quality
and regulatory, culture,
sustainability matters
and metrics, stakeholder
relationships and
related legal matters
across the Group.
See more on pages
136 to 139
Division of responsibilities
Corporate governance framework
Senior Independent Director
Angie Risley
–
Acts as a sounding board for the
Chair and as an intermediary for
other Directors and stakeholders,
as necessary.
–
As a member of the Nomination
& Governance Committee, leads
the Board evaluation process and
searches for Chair and Independent
Non-Executive Directors to ensure
effective succession.
–
Acts as an alternative contact
for stakeholders to raise
concerns (in addition
to the Chair and senior
management).
Chair
Rupert Soames
–
Responsible for the effective leadership
and operation of the Board and for
facilitating the review of its composition,
effectiveness and development.
–
Promotes effective Board relationships,
encouraging constructive challenge and
facilitating effective communication
between Board members and
supporting a culture of openness,
challenge and debate.
–
Ensures effective communication
and dialogue with the Company’s
stakeholders, while maintaining
an appropriate balance between
stakeholders’ interests.
–
Leads relations with shareholders in order
to understand their views on governance
and performance against strategy.
–
Responsible for promoting high
standards of governance by the
Board and its Committees.
–
Regularly reviews the
Board composition
and succession planning.
Chief Executive Officer
Deepak Nath
–
Responsible for delivering and
implementing Group strategy and
management of the organisation as
a whole. Provides information and
participates in Board discussions
regarding Group management and
operational matters.
–
Leads the Executive Committee and
ensures its effectiveness in managing
the overall operations and resources
of the Group.
–
Sets the tone at the top with
regard to culture, compliance and
sustainability matters.
–
Ensures the Chair and Board are updated
regularly regarding key matters and
maintains relationships with
shareholders, advising
the Board accordingly.
Independent Non-Executive Directors
Thérèse Esperdy, Jo Hallas, David King, Garheng Kong, Simon Lowth, John Ma,
Jez Maiden, Katarzyna Mazur-Hofsaess, Marc Owen and Sybella Stanley
–
Comprise more than half of Board
membership in order to meet the
independence criteria set out in the
Code. Ensure that no individual/
small group can dominate the Board’s
decision making.
–
Provide constructive challenge,
give strategic guidance, offer
specialist advice and hold executive
management to account.
Chief Financial Officer
John Rogers
–
Supports the CEO in developing
and implementing Group strategy.
–
Responsible for ensuring effective
financial reporting, investor relations,
tax, treasury and financial controls
are in place within the Group.
–
Provides information and participates
in Board discussions regarding
financial matters.
–
Leads the Global Finance function,
developing key finance talent
and succession planning.
Company Secretary
Helen Barraclough
–
Supports the Chair and ensures
Board members have access to the
information required to perform
their duties.
–
Advises the Board on legal and
corporate governance matters and
supports the Board in applying the
Code and complying with UK listing
obligations, and other statutory
and regulatory requirements.
–
Provides a channel for Board and
Committee communications
and a link between the Board
and management.
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How we are governed
At the close of each Board meeting, the
full Board meets for a short closed-session
discussion; this is followed by a closed
session for the Chair and Non-Executive
Directors in the absence of the Executive
Directors. The Chair also holds one-to-
one discussions with each Board member
throughout the year.
Independence of Directors
We require our Non-Executive Directors to
remain independent from management, so
that they are able to exercise independent
oversight and effectively challenge
management. The Board has determined
that all our Non-Executive Directors are
independent in accordance with both UK
and US requirements. None of our Non-
Executive Directors or their immediate
families has ever had a material
relationship with the Group. None of them
receive additional remuneration from
the Group apart from Directors’ fees, nor
do they participate in the Group’s share
plans or pension schemes. None of them
serve as directors of any companies or
affiliates in which any other Director
is a director. The Board considers all
external directorships prior to and during
appointment, reviewing any potential
conflict of interests and time commitment
for both Executive Directors and Non-
Executive Directors.
Management of
conflicts of interest
None of our Directors, or their connected
persons, has any family relationship with
any other Director or Officer, or has a
material interest in any contract to which
the Company or any of its subsidiaries are,
or were, a party during the year or up to
27 February 2026.
Each Director has a duty under the
Companies Act 2006 to avoid a situation
in which they have or may have a direct
or indirect interest that conflicts or might
conflict with the interests of the Company.
This duty is in addition to the existing
duty owed to the Company to disclose
to the Board any interest in a transaction
or arrangement under consideration by
the Company.
If any Director becomes aware of any
situation that might give rise to a conflict
of interest, they must, and do, inform
the rest of the Board immediately and
the Board is then permitted under the
Company’s Articles of Association to
authorise such conflict. This information is
then recorded in the Company’s Register of
Conflicts, together with the date on which
authorisation was given. In addition, each
Director certifies on an annual basis that
the information contained in the Register
of Conflicts is correct.
When the Board decides whether to
authorise a conflict, only the Directors
who have no interest in the matter are
permitted to participate in the discussion,
and a conflict is only authorised if the Board
believes that it would not have an impact
on the Board’s ability to promote the
success of the Company in the long term.
Additionally, the Board may determine
that certain limits or conditions must
be imposed when giving authorisation.
No actual conflicts have been identified
during the year, which have required
approval by the Board. However, the
situations that could potentially give rise to
a conflict of interest have been identified
and duly authorised by the Board and are
reviewed at least on an annual basis.
Outside directorships
We encourage our Executive Directors
to serve as Non-Executive Directors of
external companies. We believe that the
work they do as Non-Executive Directors
of other companies has benefits for their
executive roles with the Company, giving
them a fresh insight into the role of a Non-
Executive Director.
Deepak Nath is a Board member of
AdvaMed and MDIC, and John Rogers
is a Non-Executive Director of Grab
Holdings Limited.
Re-appointment of Directors
In accordance with the Code, all Directors
offer themselves to shareholders for
re-election annually, except those who
are retiring immediately aſter the AGM.
Each Director may be removed at any time
by the Board or the shareholders.
Board support
Together with the Executive Directors
and the Company Secretary, the Chair
ensures that the Board is kept properly
informed. Each Director has access to
the Company Secretary, who helps to
ensure that Board procedures and good
corporate governance practices are
followed. Directors are permitted to take
independent professional advice at the
Company’s expense, if required, in order
to enable them to fulfil their duties.
Each Director is covered by appropriate
directors’ and officers’ liability insurance
and there are also Deeds of Indemnity in
place between the Company and each
Director. These Deeds of Indemnity mean
that the Company indemnifies Directors
in respect of any proceedings brought by
third parties against them personally in
their capacity as Directors of the Company.
The Company would also fund ongoing
costs in defending a legal action as they
are incurred rather than aſter judgement
has been given. In the event of an
unsuccessful defence in an action against
them, individual Directors would be liable
to repay the Company for any damages
and to repay defence costs to the extent
funded by the Company.
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Division of responsibilities
continued
How we are governed
continued
Nomination & Governance Committee Report
Composition, succession and evaluation
Board changes in 2025
Over the past two years, Board changes
have included a new Chair, six new Non-
Executive Directors, one new Executive
Director, a new Senior Independent
Director (SID) and new chairs of the Audit
and Remuneration Committees.
Sybella Stanley joined as an independent
Non-Executive Director on 1 February
2025, and succeeded Angie Risley as
Chair of the Remuneration Committee
following a successful transition on
30 June 2025. The Board wishes to thank
Angie for the huge contribution that she
made during her time as Chair of the
Remuneration Committee.
Bob White stepped down from the Board
at the 2025 AGM due to his appointment
as Chief Executive Officer of Olympus
Corporation. The Board thanks Bob for his
support and valuable contributions during
his tenure, especially with regards to his
perspectives on the customer and US
MedTech environment.
Following Bob’s departure, we welcomed
David King on 1 July 2025 as a Non-
Executive Director and member of the
Compliance & Culture and Remuneration
Committees. David brings extensive
experience in the healthcare and life
sciences sectors, having helped transform
and grow MedTech businesses both in
the US and globally. His experience of the
US reimbursement landscape, market
access, quality and regulatory affairs and
healthcare compliance add further global
expertise and US experience to the Board.
On 1 September 2025, Garheng Kong was
appointed as a Non-Executive Director
and member of the Audit Committee.
Garheng brings investment and advisory
experience in the US and global MedTech
and biopharma sectors and has significant
clinical, technical and investment expertise
having served as an executive, non-
executive and as an investor, supporting
innovation and growth across a number
of successful businesses.
In addition, Thérèse Esperdy was appointed
as Senior Independent Director designate
effective 1 December 2025, and will
succeed Angie Risley as SID following our
2026 AGM when Angie completes her nine
years with the Board.
“The work of the Committee
in driving and facilitating
changes to the Board
over the past two years
reflects our commitment
to succession planning and
bringing together the right
talent, expertise, skills and
experience, and ensuring
the effective transition of
responsibilities.”
Rupert Soames
Chair of the Nomination
& Governance Committee
Committee roles
and responsibilities
–
Reviewing the structure, size and
composition of the Board and
recommending candidates to the
Board for appointment as Directors
or Company Secretary.
–
Monitoring the composition
and range of skills, knowledge,
experience, independence and
diversity of the Board.
–
Overseeing the annual Board
evaluation process, led either
externally or internally by the
Senior Independent Director.
–
Overseeing Board succession
plans, including engaging external
search consultancies and making
recommendations on appointments
to the Board.
–
Overseeing the induction process
for new Directors and the Board
development programme to
support the ongoing development
of all Board members.
–
Considering the continued
independence of the Non-Executive
Directors and any conflict
of interest.
–
Approving external directorships to
be held by the Board and reviewing
any conflicts of interest.
Our focus for 2026
–
Embedding feedback received
from Board members through
the Board Evaluation process and
Board meetings into Board agendas,
practice and governance in order to
support continuous improvement
and robust corporate governance.
–
Ongoing review of Board size and
composition aligned to our new RISE
strategy, with a view to continuing
to ensure that the Board can
demonstrate a strong balance of
skills, experience, knowledge and
diversity in its broadest sense and
to continue to evaluate potential
opportunities to increase diversity
within the Board and the timeline
for doing so.
The Terms of Reference for the Nomination
& Governance Committee describe the role
and responsibilities of this Committee more
fully and can be found on our website.
www.smith-nephew.com/en/
who-we-are/corporate-
governance#terms-of-reference
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1
Before any appointment is made,
the Committee evaluates the
balance of skills, knowledge,
experience, independence and
diversity on the Board.
4
The Committee evaluates the
shortlist of candidates on merit
and against objective criteria,
taking care to ensure that
appointees have sufficient time
to devote to the position in light
of their other commitments.
The Committee also assesses any
actual or potential conflicts of
interest as part of the process.
2
In light of this evaluation,
the Committee prepares a
description of the role and
capabilities required for a
particular appointment and
works with external advisers, as
appropriate, to compile a shortlist
of candidates based on the
role description.
5
Members of the Committee
interview key candidates from
the shortlist. Other Board
members are also involved in the
interview process, as appropriate.
For example, where a candidate
is required to have a requisite
level of financial expertise, the
Audit Committee Chair and
CFO would be involved in the
interview process.
3
The Committee (together with
external advisors*) then compiles
a shortlist including a broad slate
of candidates from a wide range
of backgrounds.
6
The Committee reviews and
considers the feedback provided
based on the interview process,
reference checks and due
diligence in arriving at a decision
on a candidate to recommend to
the Board.
*
Russell Reynolds was appointed as the search firm in respect of the appointment of
Garheng Kong and David King in the US. Egon Zehnder was engaged for the appointment
of Sybella Stanley and Thérèse Esperdy in the UK. These firms have no other connection
with the Company or individual Directors.
Sybella, David, Garheng and Thérèse bring
capabilities, skills and experience which
enhance the effectiveness of the Board
as a whole and we have been encouraged
by their engagement and intellectual
curiosity as they get up to speed rapidly on
the business.
With these changes, we continue our
commitment to fostering diversity in its
broadest sense and to ensuring that our
Board membership draws from a wide
range of backgrounds and cultures.
The Committee also approved and
recommended to the Board certain other
measures to support succession planning
while newer Non-Executive Directors gain
further experience of the organisation.
Marc Owen was appointed a member
of the Remuneration Committee on
23 September 2025 in order to support
the evaluation of the Remuneration Policy,
which we will submit to shareholders for
approval at our AGM (for more details,
please see pages 152 to 171). At the
request of the Board, Marc has also agreed
to submit himself for re-election at the
AGM in May for an additional 12 months
to support the transition to newer Board
members. Whilst we appreciate that
Marc’s ongoing appointment leads to
his appointment for longer than the
recommended nine-year tenure, we feel
it is important to ensure stability and
continuity for an additional short period as
we move to our RISE strategy in 2026.
Board appointment process
For our new Board appointments in
2025, the Committee followed the
process outlined below and considered
the shortlist of candidates for each
position, taking into account:
–
the Company’s strategic priorities
moving forward and the purpose,
values and culture of the business;
–
the core skills and experience
required on the Board and its
Committees in order to effectively
provide both support and scrutiny
for management, strategy and
operational excellence; and
–
the importance of diversity in its
broadest sense, taking into account
the need for specific skillsets to
complement Board composition.
In respect of the candidate longlists
and shortlists for all of our new
appointments, we took diversity
in its broadest sense into account.
In our appointments, we will always
ensure that we select the most
qualified candidate for the role in the
best interests of the organisation as
a whole.
New Director appointments and process
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Nomination & Governance Committee Report
continued
Board Diversity
The Committee believes that a Board
and management team which has a
range of diverse skills, backgrounds and
experience is best equipped to take the
decisions that will deliver sustainable
value to shareholders and other
stakeholders. Our Board and Committee
Diversity Policy is designed to support
these principles. As part of fulfilling the
objective of this policy, the Board seeks
membership and candidates from diverse
professional backgrounds, outlooks and
experiences through structured skills-gap
analysis. The Committee has activated
a transparent, meritocratic succession
framework designed to drive progress over
the coming years and ensure we continue
to have a Board which embraces diversity
in its broadest sense.
The Committee will continue to appoint
Board members on merit, valuing the
unique contribution that they will bring to
the Board, regardless of gender, ethnicity
or other specific diversity measure.
Our diversity statement is located on
our website: www.smith-nephew.com/
en/who-we-are/corporate-governance/
diversity-statements.
The Committee believes the Board’s
composition currently gives us the
necessary balance of diversity, skills,
experience, independence and knowledge
to ensure continued effectiveness in
running the business and delivery of
sustainable growth.
Rupert Soames, OBE
Chair of the Nomination
& Governance Committee
Board and Executive
succession planning
Succession planning is a key focus for
the Board from both a leadership and
governance perspective. The Committee
regularly discuss and review Board and
Committee composition and skillsets,
and succession planning in respect of
those elements, to ensure alignment with
the Company’s strategic objectives and
culture pillars and to drive value creation
for stakeholders.
As will have been noted with recent
appointments, the Committee starts
Board recruitment ahead of retirements,
understanding the competitiveness of the
market for high calibre candidates and
the reputational risks of overboarding.
Priorities for recruitment and succession
planning include the ability to respond
to the evolving strategic and operational
demands of the organisation, adding
and enhancing Board skills including in
the areas of healthcare and customer
perspectives, digital/cyber experience
and experience in respect of AI as the
organisation moves forward.
The Board discusses succession plans
with management for senior executives,
with two dedicated closed sessions for
the Non-Executive Directors with the
Chief Human Resources Officer on the
talent management strategy and also on
succession planning, the internal talent
pipeline and the development programmes
which support those initiatives. Pages 108
and 109 give details of the members
of the Executive Committee, 25% of
whom are female and 42% of whom are
ethnically diverse.
Highlights in 2025
–
Appointment of Sybella Stanley as
a Non-Executive Director effective
1 February 2025 and Chair of the
Remuneration Committee with effect
from 30 June 2025, transitioning the
Chair role from Angie Risley.
–
Appointments of David King, effective
1 July 2025 as Independent Non-
Executive Director and a member of the
Compliance & Culture and Remuneration
Committees and Garheng Kong as
Independent Non-Executive Director
and member of the Audit Committee on
1 September 2025, bringing additional
breadth and depth in terms of US
healthcare and global MedTech expertise
to the Board.
–
Reviewing areas of focus for 2025 and
areas of strength and for development
in 2026 through the Board internal
evaluation between July and September
2025 (see pages 132 and 133).
–
In-depth Non-Executive discussions to
close out each Board meeting on topics
such as strategic opportunities for value
creation, portfolio and returns, culture
and performance, talent management
strategy and succession planning.
–
Continued implementation of
comprehensive induction plans and
ongoing development programmes for
Board members (see page 134).
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Skills and experience matrix
Tenure
1
Employee
engagement
CEO
Financial
International
Healthcare/
Medical
Devices
Emerging
Markets
Cyber/
technology
ESG
UK
Governance
Remuneration
Executive Directors
Deepak Nath
3y 9m
John Rogers
1y 9m
Non-Executive Directors
Rupert Soames
2y 8m
Angie Risley
8y 3m
Thérèse Esperdy
2
0y 1m
Jo Hallas
3y 11m
David King
0y 6m
Garheng Kong
0y 4m
Simon Lowth
2y 0m
John Ma
4y 10m
Jez Maiden
2y 3m
Katarzyna
Mazur-Hofsaess
5y 2m
Marc Owen
8y 3m
Sybella Stanley
3
0y 11m
Bob White
4
5y 0m
1
Tenure based on data as at 31 December 2025.
2
Thérèse Esperdy will be appointed as Senior Independent Director at the 2026 Annual General Meeting, subject to shareholder approval
of her appointment to the Board.
3
Sybella Stanley became Chair of the Remuneration Committee on 30 June 2025.
4
Bob White stepped down from the Board on 30 April 2025.
Diversity reporting
Gender diversity
In 2025, the female representation in
senior management roles held steady at
around one-third of the total. We continue
to encourage and develop leaders
across all levels of management through
personalised development, bespoke
training and mentoring.
The percentage of female Board members
increased year on year and we are
approaching the 40% women on Boards
ambition following the appointments of
Sybella Stanley and Thérèse Esperdy as
Non-Executive Directors. Angie Risley will
step down from the Board at the Annual
General Meeting on 6 May 2026.
Ethnic diversity
In the UK, the proportion of ethnically
diverse managers, at 11%, is in line with
the overall employee group.
1
Senior managers and above includes all employees classed as Directors, Senior Directors, Senior Vice
Presidents and Executive Officers and includes all statutory directors and Directors of our subsidiary
companies at 31 December 2025.
2 As at 31 December 2025.
Senior managers and above
1
1,113
Female
34%
Male
66%
UK management
2
261
White
89%
Ethnically diverse
11%
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Nomination & Governance Committee Report
continued
Prepared in accordance with UK Listing
Rule 6.6.6(10) as at 31 December 2025
Board members
Senior
positions
on the
Board*
Executive
management
1
Number
%
Number
%
Gender representation: Board and executive management
Men
9
64
3
9
75
Women
5
36
1
3
25
Other categories
0
0
0
0
0
Not specified/prefer not to say
0
0
0
0
0
Ethnic background: Board and executive management
White British or other White
(including minority White groups)
11
79
3
7
58
Mixed/multiple ethnic groups
0
0
0
0
0
Asian/Asian British
3
21
1
4
34
Black/African/Caribbean/Black British
0
0
0
1
8
Other ethnic group, including Arab
0
0
0
0
0
Not specified/prefer not to say
0
0
0
0
0
1
Executive management is the Executive Committee (most senior executive body
below the Board).
*
Senior positions on the Board (CEO, CFO, SID and Chair).
Board and executive management diversity
Our reported ambition of 25% ethnic
diversity within global senior management
by 2027 and our reported current
percentage of 27% are calculated based
on the ethnicity definitions applicable to
senior management in the markets where
they live and work. For senior management
based in the UK, we use the Office for
National Statistics’ definition of ethnicity in
order to calculate the proportion of ethnic
diversity of senior management in the UK.
Based on the composition of our business
and the fact that the majority of our senior
management, operations and revenue
are based outside the UK, we feel it is
appropriate to continue to report against
a global measure in order to show our
global progress.
We currently provide information to
the Parker Review annually and meet
the recommendation to have at least
one director from an ethnic minority
background with Garheng Kong,
John Ma and Deepak Nath.
Additionally, in accordance with the Parker
Review, we track a UK senior leadership
ethnic diversity ambition of 10% by 2027.
Where there are opportunities to bring
senior managers into the UK organisation,
we will continue to consider a broad merit
slate of candidates in accordance with
our hiring policies and procedures. We will
continue to review and, where appropriate,
revise our UK and global commitments on
an annual basis.
We have numerous training courses in
Learning Unlimited, our internal learning
platform, for all employees on the topics of
allyship, inclusion, and belonging.
Employees are encouraged to disclose
missing gender, race/ethnicity, veterans
and disability data, and we have made
progress to ensure we have data sets
that are as complete as possible.
We respect the privacy rights of
individuals and comply with applicable
data privacy laws and regulations.
Explanation against LR 6.6.6(9)
The table above provides our Board
and executive management diversity
data as at 31 December 2025, our
chosen reference date, which has
been prepared in accordance with UK
Listing Rule 6.6.6. One of the four senior
positions on the Board (Chair, CFO, CEO
or SID) was held by a woman, our Board
composition included two Directors
from ethnic minority backgrounds and
we are approaching the 40% women on
Board ambition.
The Board is pleased that two of the
targets have been met but recognises
that it has not yet met the target of 40%
women on the Board. The overriding
priority across all Board appointments
remains identification of the strongest
candidate for the role, based on clear
search criteria. Further detail of the
focus by the Nomination & Governance
Committee on the continued
development of a diverse merit based
talent pipeline, and the work to oversee
external benchmarking to ensure
Smith+Nephew has the capabilities
needed for future growth, is set out on
page 129.
Source of data
Data concerning gender and ethnicity
representation on the Board and
Executive Committee is set out above.
This data was collected directly from
all the individual Board and Executive
Committee members.
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Board internal evaluation
The 2025 Board evaluation, which
sought to review key aspects of Board
effectiveness was conducted internally
by Angie Risley, the Senior Independent
Director, supported by the Company
Secretary. The next external Board
evaluation will be in 2027.
Overall, the Smith+Nephew Board
believes it is operating effectively as
assessed both holistically and against
the areas of focus for 2025:
–
The Board agenda in 2025 has been
shaped around the core areas of
innovation and portfolio, strategy
and operational excellence, cost
management and capital allocation,
and oversight of risk management
and controls to identify further
opportunities to drive longer-term
strategic value creation.
–
The Board has regularly evaluated
risks, opportunities and progress
on commercial and operational
transformation, including through
business unit strategic updates, a
deep-dive session on Greater China,
the transition from the 12-Point
Plan to business-as-usual activities,
reorganisation to a global business
unit structure and the zero-based
budgeting project.
–
The Board has had further discussions
on the macro challenges, regulations
and trends globally within healthcare
and MedTech. External experts have
provided further insights to enhance
understanding of the industry and
the frameworks which the Company
operates in.
–
The Board held additional talent
management strategy and succession
planning sessions on talent pipeline and
gap analysis at Board level, together with
a review of long-term people strategy
with an emphasis on developing strong
pipelines of senior leaders. The Board
and its Committees have monitored
employee engagement scores, the
internal talent pipeline and the
development framework, in particular
for high-value roles within the Company.
–
Closed sessions with the full Board
and also NEDs at each Board meeting
have facilitated transparent and
detailed discussion. Members of the
ExCo and their direct reports have
spent time over the year with Board
members during inductions, site visits
and strategic presentations fostering
constructive discussion.
Areas of focus for 2025
Outcomes/outputs
Industry landscape and portfolio
Ongoing review of strategy and
organisation, incorporating insights
around market and competitors.
Landscape sessions run by internal
teams and external advisers at Board
meetings in 2025 to highlight winning
MedTech strategies deployed within
the industry and areas of focus for S+N.
Ongoing focus on embedding and supporting performance culture
Celebration of examples of high
performance and flawless execution;
ongoing evaluation of learnings
to strengthen culture, iteratively
incorporating feedback from internal and
external sources, acknowledging areas
for improvement and making changes in
direction if necessary.
Recognition of presenting teams at
each Board session with feedback
provided to CEO and CHRO on
performance. Participation of CHRO
in Board sessions in order to support
evaluation and coaching/development
for presenters and their teams.
Review of lessons learned in key areas
of focus by Board and Committees
(eg IT/cyber, operations and business
resilience and continuity) with
support from internal teams and
external advisors as appropriate.
Board feedback provided at relevant
sessions recognising evolution and
progress and identifying areas for
further improvement.
Crisis management, response and recovery
Continued enhancement of the Board
programme to include ongoing threat
analysis (incorporating market insights
from external advisers as appropriate),
scenario planning and the role of
the Board.
Internal and external review and
benchmarking of S+N’s cyber posture
and response to external threat actors.
External presentation incorporating
role of the Board and scenario planning.
Talent development and tracking success
Ongoing succession planning and talent
strategy discussions to further refine
key competencies aligned with strategy,
leadership and diversity and mitigation
on risks.
Two dedicated, closed Board sessions
each year with CHRO and CEO on
talent management strategy and
succession planning.
–
The Board engaged in an AI strategic
priorities session and also participated
in a Cyber resilience session. The AI
session focused on driving adoption
of AI solutions to accelerate innovation,
increase productivity and create
value within an appropriate risk and
governance framework. The Cyber
session delivered by the CISO provided
an opportunity for the Board to address
Q&A and evaluate opportunities and
areas of continued focus for the Board
in 2026.
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Board effectiveness
Composition, succession and evaluation
continued
Areas of focus for 2026
Outcomes/outputs
Continued focus on operational excellence
Continued focus on evaluating and
monitoring operational excellence,
customer centricity and flawless
execution following completion of
the 12-Point Plan to demonstrate
continued improvement and credibility
to stakeholders.
Board agenda to be shaped to continue
to focus on evaluating and supporting
the transition to the RISE strategy.
Board agenda deep dives in key areas
of focus; reports to be provided to
Committees and reported to full
Board (as appropriate) in order to
manage Board time in a focused and
effective way.
Focus in business reviews aligned to
delivery on RISE objectives/KPIs with
business unit teams; operational review
sessions to be extended to 1.5 hours.
Evaluate and support bold ambitions for the
business to drive and create shareholder value
Continue to support and challenge
pathway to being a MedTech winner
aligned to the ambitions outlined in RISE.
Continue to evaluate optionality of bold
choices and actions for the business;
Board subcommittee structure to be
evaluated for use on key topics where
priority/urgency is required in order to
enable the Board to be positioned to
move at pace and respond quickly.
Talent development and capabilities required to deliver on strategy
Ongoing discussions on succession
planning and talent strategy to
understand key competencies required
to deliver on RISE.
At least two dedicated sessions with
CHRO and CEO on talent management
strategy, organisational capability
mapping to deliver on RISE and
succession planning.
Board touchpoints with Executive
Committee members and their
teams as part of site visits and
business reviews.
Cyber/AI
Continued focus on cybersecurity
resilience including cyber incident risk
mitigation and focus on AI risks and
opportunities to support the delivery
of RISE.
Seek opportunities to continue to
enhance and support Board awareness
to take advantage of efficiencies
through greater simplification
and automation of our systems
and processes.
Outputs, outcomes and feedback
from the internal Board evaluation
2025
Board effectiveness:
The Board operates
effectively, with strong relationships and
a constructive environment.
Leadership:
Recognition provided for the
Chair, CEO and CFO, of their openness and
ability to foster productive discussions.
Strategic focus:
Continued in-depth Board
review of strategy, market insights and
operational excellence.
Performance culture:
Ongoing focus on
high performance and flawless execution
was noted, with feedback loops on culture
through Board listening sessions and
site visits.
Board composition and succession
planning:
Continued emphasis on Industry
and People/HR experiences as priorities for
future Board appointments.
Organisational succession planning:
Need for deeper understanding
of high-potential talent and
organisational capability.
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Board induction and
development programme
During 2025, structured and customised
induction programmes were provided
for Sybella Stanley, David King, Garheng
Kong and we commenced the induction
programme for Thérèse Esperdy
who was appointed to the Board on
1 December 2025.
Our Board induction and development
programmes are customised to address
the specific needs and interests of each
of our Directors. We focus the induction
and development sessions on facilitating
a greater awareness and understanding
of our business, our stakeholders and
the regulatory frameworks in which
we operate.
Areas of strength and focus for 2026
On an ongoing basis, we provide our
Directors with both virtual and in-person
opportunities to understand more about
our business and the healthcare industry
and support engagement with our
teams and internal/external resources
as appropriate; for example:
–
A number of Board members have
enjoyed holding employee listening
sessions throughout the year, both
physically and virtually, where they
have talked with employees and heard
their views on what it means to work
for Smith+Nephew. These sessions are
discussed in more detail on page 140.
–
In December 2025, Board members
were invited to Capital Markets Day
sessions in both London and New York
in person and were able to attend
sessions virtually, which provided
further insight into the global product
innovation strategy across each of our
business units and our differentiated
product pipeline, together with the
opportunity to meet our investors.
–
All Board members have access
to a library of Board induction and
development internal materials within
our Board resource portal, as well
as recommendations on thought
leadership articles, materials, webinars
and other resources.
–
We have arranged sessions on external
perspectives on the healthcare
industry and macro trends/insights
on topics of interest/relevant to
the Board.
The Chair regularly reviews the
development needs of individual
Directors and the Board as a whole as
a part of closed wrap-up sessions for
Non-Executive Directors.
Induction programmes
Induction programmes are tailored to
each Board member’s individual skills
and experiences and their roles on the
Board and its Committees and include:
–
Written materials and in-person
presentations from our business teams
on the medical devices industry,
including high level information on
reimbursement, market access,
products and regulation.
–
One-to-one meetings with
senior executives to understand
the organisation, the roles and
responsibilities of our senior
employees and specifically how
we do things at Smith+Nephew.
–
Meetings with our external advisers
including brokers, external counsel,
remuneration consultants, auditors
and external counsel (as appropriate),
to explain the legal and regulatory
background to their role on our
Board and how these matters are
approached at Smith+Nephew.
–
Strategic presentations and site
visits tailored to Executive and Non-
Executive needs respectively in order
to provide a strong foundation to learn
about the organisation, its history,
current and future opportunities,
and challenges, and to give Board
members an opportunity to ask
questions and interact with our
wider workforce.
In 2025, the Non-Executive induction
programmes included:
–
A strategic overview and introduction
to MedTech and medical devices
coupled with an immersive
introduction to our purpose, culture
pillars and people
–
One-to-one sessions with each
member of the Executive Committee,
Investor Relations and Finance Global
Leadership Teams
–
Subject matter expert sessions on
medical device regulation, healthcare
compliance, ERM and inventory/
asset utilisation
–
Site visits to Ft Worth, Costa Rica and
Croxley together with any additional
site visits as may be requested
–
Informal office touchpoints with
employees at the UK Group Head
Office (Croxley)
–
Introductory sessions with
external advisers, auditors, brokers
and consultants
–
Additional internal and external
sessions upon request based
on interest.
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Board development
2
4
7
6
1
8
Site visits and Board Directors
who visited
4. Andover (US)
Rupert Soames
5. Pune (India)
Rupert Soames
6. Singapore
Rupert Soames
7. Austin (US)
Rupert Soames
8. Costa Rica
Rupert Soames, Jez Maiden,
Simon Lowth
9. Shanghai and Suzhou (China)
Rupert Soames and Jez Maiden
3. Suzhou (China)
The visit included a tour of the
manufacturing facilities, offices
and laboratories and engagement
with AWM employees at a Town
Hall meeting.
Board Directors who visited
Jez Maiden
2. Croxley (UK)
Board members toured the
Academy and surgeon centre and
had a hands-on experience and
product demonstrations.
Board Directors who visited
David King, Garheng Kong,
Thérèse Esperdy
1. Fort Worth (US)
The Board visited S+N’s Clearfork
offices in Ft Worth for a full day site visit
which included a presentation from the
AWM Global Leadership team on the
AWM Vision for 2030 and the drive for
market leadership through addressable
market opportunities. The Board had
a detailed presentation on product
portfolio, value proposition and US and
global acceleration through product
differentiation, market access, business
development and digital innovation.
The Board engaged in a broad discussion
on sustainability of market growth given
new market entrants, products and
go-to-market models, together with the
reimbursement environment and pricing
pressure on payors and the competitive
landscape. The Board enjoyed lunch in
a small group setting with a number
of our Life Council, EIG leads and
employees to hear the voice of the
employee and product demonstrations
including PICO, RENASYS, ALLEVYN,
LEAF, SANTYL and VERSAJET and joined
sales representatives to understand
more about their role and experiences
at Smith+Nephew, industry trends
and the view of the organisation from
a rep perspective. The Board also had
a tour of the Vickery site and heard
about the improvements made by the
Wound Operations and Quality teams
in accordance with their KPIs and the
implementation of the Smith+Nephew
Operating System (SNOS), contract
manufacturing and operational
resilience in accordance with the
network strategy and footprint.
Board Directors who visited
Rupert Soames, Deepak Nath,
John Rogers, Simon Lowth,
Jez Maiden, Jo Hallas, John Ma,
Katarzyna Mazur-Hofsaess,
Marc Owen, Angie Risley,
Sybella Stanley
3
9
5
2025 site visits were aligned to key
strategic and operational priorities
for the Board, with a focus on
Smith+Nephew’s Advanced Wound
Management business in Fort Worth,
and continued improvements in
Costa Rica, Croxley and our other
sites. In addition to the formal site
visits, our Non-Executive Directors
also visited various sites throughout
the year (see map) with customised
programmes providing on-the-ground
insights into Smith+Nephew’s global
business unit organisation, strategy,
operations, innovation, risk, people
and culture, regulators, government,
investors, local communities and
the environment.
Board site visits
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“Smith+Nephew continues
to strengthen employee
engagement, focus on
maintaining and improving
quality and safety standards
and enhancing its compliance
programmes in line with
its ethos of continuous
improvement, its purpose of
Life Unlimited and culture
pillars of Care, Courage and
Collaboration.”
Marc Owen
Chair of the Compliance
& Culture Committee
Committee roles and responsibilities
Ethics and compliance
–
Overseeing the effectiveness of
ethics and compliance programmes,
strategies and plans.
–
Monitoring ethics and compliance
process improvements
and enhancements.
–
Reviewing whistle-blower policies and
overseeing investigation reports.
–
Assessing compliance performance
based on monitoring, auditing,
and internal and external
investigations data.
–
Discussion of significant potential
compliance issues under privilege.
–
Receiving reports from the Chief
Compliance Officer on ethics and
compliance matters.
–
Reviewing implementation of the
global data privacy compliance
framework and other regulatory
developments which impact
our business.
Sustainability
–
Overseeing our ESG strategy and
its alignment to the priorities of
our stakeholders and reviewing
its performance against targets
and metrics through the use of our
ESG dashboard.
–
Reviewing sustainability initiatives
which are designed to support the
delivery of our business strategy and
purpose and assessing their alignment
with stakeholder’s requirements.
–
Receiving reports from the ESG
Steering Committee and updates on
stakeholder engagement to monitor
the progress of the ESG strategy.
Culture
–
Assessing organisational effectiveness
and reviewing and providing oversight
of how the Company’s culture is
embedded throughout the business
and aligned with our business strategy
and purpose.
–
Overseeing arrangements for Board
listening sessions with employees
which aim to proactively support
and reinforce our strategy and
shared purpose of Life Unlimited,
and our culture of Care, Courage and
Collaboration. These sessions provide
the Board with an opportunity to
engage directly with employees to
understand employee perspectives
on certain topics. The Committee
monitors and assesses the
outcomes to identify areas for future
enhancement and further embedding
of the Company’s culture.
–
Receiving and assessing performance
against purpose and culture
and engagement.
Quality and Regulatory Affairs
(QARA)
–
Reviewing and providing oversight
of the processes through which
regulatory and quality risks
are managed.
–
Monitoring trends and activities
relating to regulatory and quality
risks and events to ensure they are
aligned with our business strategy
and purpose.
–
Receiving and assessing regular
functional reports and presentations
from the Chief QARA Officer on QARA
strategy and operations.
The Terms of Reference for the Compliance
& Culture Committee describe the role
and responsibilities of this Committee more
fully and can be found on our website.
www.smith-nephew.com/en/
who-we-are/corporate-
governance#terms-of-reference
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Compliance & Culture
Our focus for 2026
–
Continued evaluation of the impact
of ethics and compliance, regulatory,
quality and cultural activities,
and trends to support the Group’s
business strategy and purpose.
–
Monitoring the Company’s progress
against our ESG strategy to ensure
it remains aligned with the Group’s
business strategy and purpose,
including measuring the impact of
actions taken against the strategy’s
objectives, such as the Company’s
commitment to its net zero roadmap
by 2045.
–
Continued oversight of stakeholder
engagement and interests aligned
with the Group’s ESG strategy.
–
Assessing the impact of Committee
and Board decision making on
our people, communities and
the environment.
–
Continue Board listening sessions
(with a key focus on the business
strategy and enhancing leadership
skills) to supplement the annual
employee engagement survey,
which is the primary mechanism
by which the Board gains insight
and understanding into the health
of the organisation and employee
perspectives on the Company.
–
Monitoring the actions taken by
management following the Board
employee listening sessions.
–
Review and approval of key
annual disclosures such as the
Sustainability Report and Modern
Slavery Statement.
–
Monitoring the continued
effectiveness of the Ethics &
Compliance Program.
–
Reviewing the evolution of the
Ethics & Compliance framework
in line with organisational and
external changes.
Committee meetings
In 2025, the Committee held four meetings.
The Chair, CEO, CFO, Group General
Counsel and Company Secretary, Chief
Compliance Officer, Chief QARA Officer,
Chief HR Officer, President of Global
Operations and VP ESG also attended all
or part of the meetings by invitation.
Ethics and compliance
As stated in the Code of Conduct, the
sustainability of our business depends on
doing business the right way and ensuring
that we work with third parties who
adhere to business principles consistent
with our own.
The Chief Compliance Officer provides
regular reports to enable the Committee
to evaluate the effectiveness of the Global
Compliance programme and understand
the audit, monitoring and continuous
improvement activities undertaken to
ensure that our ethics and compliance
programme continues to evolve aligned
to our business strategy and purpose.
The Committee is provided with updates
on potentially significant issues which are
raised through the Company’s hotline or to
our Compliance team and the Company’s
response to such matters. It also receives
an annual whistle-blower effectiveness
review as well as details of investigations,
actions taken to address substantiated
matters and developing trends.
The Committee receives updates on
potentially significant findings from
compliance audits and oversight actions,
including details of the mitigating actions
taken. On an annual basis the Committee
receives a trend analysis of audit findings
and root cause analysis with details of any
programme changes required to address
evolving trends. The Committee continues
to receive a report on the self-assessment
of the compliance programme against the
US Department of Justice Evaluation of
Corporate Compliance Programs guidance.
Reports to the Committee demonstrate
that the organisation has established
mature processes and controls over
compliance and ethics reporting and
investigations. The Company enhances its
framework and programmes to manage
risk within the evolving internal and
external environment in which it operates
and to take account of insights from across
the industry which may impact our ethics
and compliance programme.
Throughout the year the Committee
receives updates on topical compliance
developments affecting the Group.
In 2025, the Committee explored
focus topics including data privacy,
changes in the US landscape and the
evolution of the compliance framework
governing engagements with healthcare
professionals. The Committee also
received updates on internal process
enhancements, including changes designed
to improve accessibility to resources
and tools, and the launch of new policies
applicable to ethics risk factors.
Sustainability/ESG
The Committee received updates
throughout the year from the President
Global Operations and Vice President ESG
on our performance against People,
Planet and Products initiatives.
Utilising dashboards and strategy reporting
developed by the ESG Steering Committee,
the Committee monitors management
actions taken and tracks progress against
the organisation’s ESG objectives through
KPIs, metrics and leading stakeholder
indicators. The Committee reviewed
progress against the ESG strategy
throughout the year to assess its alignment
with the ESG priorities of the Company’s
stakeholders and its continued focus
on driving business value. Based on
stakeholder and industry best practice
assessments, the Committee confirmed
the Company’s ESG objectives.
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At each of its meetings the Committee was
provided with updates on Scope 1 and 2
Greenhouse Gas Emissions reductions and
renewable energy investments including
green certificates (Renewable Energy
Credits) to support emissions reductions.
In February 2025, the Committee
approved the 2024 Sustainability Report
and reviewed the approach for the 2025
Sustainability Plan. The Committee also
considered and approved the Modern
Slavery Statement which can be found on
the Smith & Nephew plc website.
During April 2025, the Committee was
updated about activities undertaken to
support customers with their own ESG
goals, including how customers’ feedback
regarding product sustainability was
incorporated into the sustainability review
process for new products. In particular,
the Committee noted that the feedback
would be used to identify areas of most
importance to customers and to track
performance against packaging reduction
and cost saving KPIs. The Committee
also monitored the changes proposed
to the timing and implementation and
scope of the EU’s CSRD sustainability
reporting framework.
In July 2025, the Committee received the
five-year ESG Strategic Plan which had
been developed to support the Company’s
2030 vision and focussed on key elements
related to customers, employees,
community and investors. The Committee
noted that the plan included enhanced
emphasis on achieving ‘net-zero’ carbon
emissions targets, improving product and
packaging sustainability, coordinating ESG
regulatory reporting and communicating
our ESG credentials to customers.
The Committee also reviewed our external
ESG ratings and a roadmap to meet the
Company’s 2040 and 2045 net zero carbon
emissions objectives and the actions being
taken to achieve them.
The Committee reviewed the Group’s
global health, safety and environment
(HSE) programme and monitored the
practices and processes used to ensure
the safety of our employees using industry
performance metrics including OSHA
Recordables and Lost Time Injuries.
The Committee reviewed management
reports and was satisfied with actions
taken to mitigate risk and the continued
development of new initiatives to enhance
our HSE programme.
In December 2025, the Committee
reviewed progress made against KPIs
to achieve reductions in materials used
for product packaging, including how
packaging was being redesigned to
respond to customers’ requirements for
better storage, to achieve cost savings
and improve environmental benefits
through reductions in single use plastics.
The Committee Chair continues to engage
with investors, governance teams and
other stakeholders on sustainability and
ESG topics.
QARA
Product safety and effectiveness
are fundamental to our business.
Regulatory authorities worldwide maintain
an increasingly complex and evolving
framework of laws and regulations
governing the design, development,
approval, manufacture, labelling,
marketing, and sale of healthcare products.
At each meeting, the Committee receives
summary reports and reviews the
Company’s performance against both
internal and external KPIs and metrics
to ensure that quality and regulatory
activities remain aligned with the
Company’s strategy and purpose.
The Committee receives regular
briefings from the Chief QARA Officer
on key quality and regulatory matters.
This includes reviews of outcomes from
external regulatory inspections and
audits conducted by the FDA and other
regulatory authorities, as well as updates
on continuous improvement programmes
and related activities.
In addition, the Committee reviews the
results of internal quality audits and
monitors key performance indicators
associated with critical quality and
regulatory compliance processes.
The Committee also receives updates
on the Company’s preparedness for
emerging and evolving regulatory
requirements applicable to the business,
including changes to the EU Medical
Device Regulation, MHRA post-market
surveillance requirements, and the EU
AI Regulation.
The Committee oversees the Group’s
post-market surveillance processes and
escalation pathways to ensure issues
are investigated and resolved promptly
through standardised procedures.
Trends are identified and assessed for
changes in risk profile. At each meeting,
the Committee receives detailed reports
on complaints data, including analysis of
complaint types, volumes, risk levels,
and regulatory reporting timeliness.
For more information download
our 2025 Sustainability Report
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continued
Compliance & Culture
continued
Culture
The Company’s core purpose of Life
Unlimited and the supporting culture
pillars of Care, Courage and Collaboration
continue to drive performance and
accountability throughout the organisation
globally. Our strategic objectives and
culture pillars provide alignment across our
business and stronger understanding by
employees of their role in supporting our
collective success.
At each meeting, the Committee received
briefings and updates on culture from the
Chief HR Officer demonstrating progress
in key areas of focus which centred
around initiatives to enhance and further
embed our culture including employee
experience; enhancing people leader
capabilities, organisational effectiveness
and embedding change.
As part of the focus on employee
experience the Committee reviewed the
Group’s approach to total reward and
employee wellbeing and discussed how it
had evolved to achieve its key objectives
to attract, motivate and retain employees.
The reward programme focused on
enhancing employee engagement,
encouraging the right behaviours and
rewarding high performance.
The Gallup Global Engagement Survey
is used to track progress on employee
engagement and associated internal
and external KPIs and metrics are used
to ensure the organisation is achieving
its objectives.
The 2025 survey results were shared
with the Committee, which allow
Smith+Nephew to benchmark against
similar companies in our industry.
In 2025 the employee participation rate
increased to 95% and engagement scores
improved across each area of the survey,
demonstrating how we are building
and embedding a culture where Care,
Courage, Collaboration, and continuous
improvement drive our success.
The Committee was pleased to celebrate
the Company receiving the Gallup
Exceptional Workplace Award for the
second year in a row in 2025 and noted
that the Company had displayed an
improvement trajectory above the
majority of other Gallup participants.
The Committee was made aware of the
positive impact of the 2025 wellbeing
events, including mental health awareness/
resilience, Pride events, a wide range of
events around International Women’s Day,
in-person volunteering events and cultural
networking events.
Board members met employees at the
Fort Worth site visit to help gain a
deeper understanding of our culture.
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The Board is committed to the purpose
of Life Unlimited and supporting and
embedding a strong culture within the
organisation. Our strong cultural pillars of
Care, Courage and Collaboration promote
good governance across our business and
are crucial to fostering an environment of
ethical performance. A key forum where
culture is at the top of the agenda is the
Compliance & Culture Committee, which
monitors and measures the ways in which
culture is embedded in the organisation.
Code of Conduct
The Code of Conduct is reviewed by
the Board annually and approves any
amendments. Our Code of Conduct
sets out the expected behaviours and
as such is a clear foundation of our
corporate culture.
Each Board member is required to
certify compliance with the Code of
Conduct annually.
Our Code of Conduct
is available to view at
www.smith-nephew.com/
en/compliance
Board, Committee,
Strategy meetings
Routine reporting at Board, Committee
and strategy meetings together with
senior employees’ attendance and
presentations provide valuable insight
into culture across the Group.
The Board effectively engages with
employees at site visits and meetings
held at the Company’s offices.
Employee Inclusion Groups
The Board recognises that a culture of
inclusivity is key to enable individuals
to thrive. Our EIGs are driven by our
employees and their passion to foster
an ethos of belonging and create
a community to discuss relevant
topics, knowing that their voice and
contributions matter.
Whistle-blowing
The Board has ensured that there is
a clear and accessible platform for
employees to confidentially raise any
concerns through the whistle-blowing
hotline. A report on whistle-blowing
matters including trends and monitoring
is presented to the Committee.
This information is a key alert to any
cultural issues and workforce concerns.
Board listening sessions
In 2025, Board members in addition
to Committee members engaged in
listening sessions and other touchpoints
with employees during their visits to
the Company’s facilities, enabling them
to experience the employee voice in
different ways.
Directors engaged with employees
across the globe during five Board
listening sessions in 2025. A wide variety
of matters were discussed, including how
to build a high performance culture, align
strategic priorities, improve customer
experience and enhance future
technology, including AI. These sessions
are a key opportunity for the Board to
monitor the cultural climate of the Group
and develop initiatives to further embed
and enhance our culture.
Employee annual
engagement survey
A positive and collaborative culture for
employees is key to enabling delivery
of organisational success. The annual
Global Engagement Survey is reviewed
by the Board and considered to be a
helpful indicator of culture across the
Group and provides insights at each level
of the business.
16,000+
95% of colleagues’ shared
their feedback
Outcomes of embedding
our culture
–
Improved employee participation
at 95%, overall evidence of higher
engagement and winner of the Gallup
Exceptional Workplace Award.
–
Developing and retaining talent.
–
Opportunities for employees to bring
their whole selves to work.
Five Board listening sessions were
held during 2025.
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Our culture
Compliance & Culture
continued
The Terms of Reference for the Audit Committee
describe the role and responsibilities of this
Committee more fully and can be found on
our website.
www.smith-nephew.com/en/
who-we-are/corporate-
governance#terms-of-reference
Committee roles
and responsibilities
–
Ensuring the integrity of the
Company’s financial reporting
to shareholders and any
announcements relating to the
Group’s financial performance.
–
Ensuring financial statements
comply with UK and US
statutory requirements.
–
Reviewing the content of the Annual
Report and advising the Board on
whether, taken as a whole, it is fair,
balanced and understandable, and
providing the information necessary
for shareholders to assess the
Company’s performance, business
model and strategy.
–
On behalf of the Board, reviewing
management’s assessment of and
reporting on the effectiveness of
internal controls, and compliance
with the 2024 UK Corporate
Governance Code (Code) and the
Sarbanes-Oxley Act 2002.
–
Ensuring the effectiveness and
independence of the Internal Audit
function, agreeing audit plans and
considering outcomes
of internal audits.
–
Reviewing the operation and
ensuring the effectiveness of the
Group’s risk management and
internal control framework.
–
On behalf of the Board, carrying out
a robust assessment of the principal
and emerging risks facing the Group.
–
Ensuring the effectiveness and
independence of the external
auditor, agreeing the scope of audits
(including materiality thresholds
and areas of risk for focus), and
the auditor’s fees and terms
of engagement.
–
Monitoring enhancements to fraud
assessment and considering any
reported frauds and any concerns
raised by the Company’s whistle-
blowing process.
–
Overseeing other matters, including
cybersecurity, IT governance, tax
and treasury.
Our focus for 2026
In delivering its responsibilities
in 2026, the Committee will prioritise
key areas, including:
Financial reporting and
external audit
–
Continued monitoring of a project
to report against the EU’s CSRD and
the UK’s sustainability reporting
standards and the wider impact on
the Group’s sustainability reporting.
–
Monitoring the Group’s readiness for
IFRS 18
Presentation and Disclosure
in Financial Statements
which will be
effective from 1 January 2027.
Internal controls
–
Reviewing transformation and
automation control initiatives to
decrease manual controls reliance.
–
Monitoring the design and
effectiveness of IT controls to ensure
financial reporting systems continue
to operate effectively.
–
Overseeing the implementation
of a material controls assurance
programme to meet the new
requirements of Provision 29 of the
Code from 1 January 2026.
Risk management
–
Assessing the impact of a
changing global environment
on the Group’s principal risks,
together with monitoring of
cyber resilience, as part of the
Group’s ongoing investment and
maturity programme.
Finance organisation
–
Overseeing the implementation
of changes to the way the finance
function delivers its services to the
Group, including the implementation
of a new single ERP system and
assessing the benefits realised.
–
Expanding the Committee’s
exposure to finance resource
across the Group, supporting
talent development.
“The Audit Committee has
maintained its focus on
supporting management to
deliver high quality financial
reporting, robust controls,
effective risk management
and a dynamic finance
organisation.”
Jez Maiden
Chair of the Audit Committee
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Audit Committee Report
Audit, Risk and Internal Control
Committee meetings
The Committee met seven times during
the year, with meetings timed to coincide
with the financial and reporting cycles of
the Company. In addition, the Committee
met with both the Company’s external
auditor and Group Head of Internal Audit
(GHIA) without management present.
The Committee Chair held individual
meetings with the external auditor, CFO,
GHIA, Group Financial Controller and the
Group Head of Financial Controls and
Compliance throughout the year.
All members of the Committee are
deemed to be Independent Directors
and I am the designated financial expert
under the SEC Regulations and, along
with Simon Lowth, we are the Committee
members with recent and relevant financial
experience in accordance with the Code.
2025 key activities
and highlights
As part of its responsibilities, set out
above, the Committee’s particular areas
of focus in 2025 included:
Financial reporting
and external audit
–
Assessing and challenging the
adequacy of the inventory excess and
obsolescence provision including the
incremental provision in relation to the
strategic review of the product portfolio.
–
Considering significant and other
financial matters which could impact
the financial statements, as set out on
pages 143 and 144.
–
Reviewing the appropriateness of
the disclosures made in the half year
financial report and the annual financial
statements and related announcements.
–
Supporting Deloitte during their second
audit in 2025 and reviewing actions
taken to improve the efficiency of the
audit through increased collaboration
with management and the enhanced
use of technology and data analytics.
–
Monitoring changes to the timing of the
implementation and scope of the EU’s
CSRD sustainability reporting framework
and the implications for the Group and
its EU subsidiaries and receiving regular
updates on management’s
development of reporting changes.
–
Supporting the Remuneration
Committee in its assessment of,
selection of and performance against
financial metrics in short-term and long-
term incentive schemes.
In September 2025, the Financial
Reporting Council (FRC) issued a comment
letter to the Group in relation to its Annual
Report and Accounts for the year ended
31 December 2024. The Committee
reviewed the proposed responses and
agreed a change to the future accounting
treatment of Orthopaedic instruments
provided to customers on consignment.
The FRC closed its review in January 2026.
Internal controls
–
Reviewing and challenging management
on the effectiveness of the system of
internal control, including considering
and responding to findings from external
audit, internal audit and management’s
own testing.
–
Reviewing the operation of financial
controls across the Group, including
delivery of continued improvement
in the financial control environment.
This includes initiatives to implement
continuous monitoring in certain
control areas and adapt other areas
to evolving risks.
–
Continued focus on monitoring
improvements in the scope and
maturity of IT controls, including
faster identification and remediation
of deficiencies using improved data
analysis, and the addition of four IT
systems for review.
–
Reflecting the new requirement under
Provision 29 of the Code, for the Board
to confirm the effectiveness of material
controls, the Committee reviewed
the Group’s material controls using a
risk-based approach reflecting the 11
principal risks. The Committee reviewed
testing of controls effectiveness and
agreed proposed assurance reviews
using existing internal resources.
Internal audit and
risk management
–
Confirming the continued operation of a
satisfactory control environment across
the Group, through monitoring of the
planning and delivery of an efficient,
high-quality internal audit programme,
focused on compliance, process and risk-
driven audits as set out under Internal
Audit on pages 145 and 146.
–
On behalf of the Board, monitoring the
Group’s ERM framework, including the
control and mitigation of principal risks
against agreed risk appetites.
–
Regular ‘deep dives’ into the Group’s
information and cyber security resilience,
including updates on incidents, threat
monitoring and controls, education
and awareness campaigns and
maturity posture.
The Committee has engaged in work
to confirm the effectiveness of all
material controls from 2026.
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Audit, Risk and Internal Control
continued
Valuation of inventories
A feature of the Orthopaedics business
unit (which accounts for approximately
68% of the Group’s total inventory and
approximately 79% of the total provision
for excess and obsolete inventory) is the
high level of product inventory required,
some of which is located at customer
premises and is available for customers’
immediate use. Complete sets of products,
including large and small sizes, have to be
made available in this way. These sizes
are used less frequently than standard
sizes and, towards the end of the product
life cycle, are inevitably in excess of
requirements. Adjustments to carrying
value are therefore required to be made
to orthopaedic inventory to anticipate this
situation. These adjustments are calculated
in accordance with a formula based on
levels of inventory compared with historical
usage. This formula is applied on an
individual product line basis and typically
is first applied when a product group
has been on the market for two years.
This method of calculation is considered
appropriate based on experience, but it
does involve management estimation
of customer demand, effectiveness of
inventory deployment, length of product
lives and phasing out of old products.
As noted above, the Group also undertook
a strategic review of its product portfolio in
2025 and identified a number of SKUs to be
rationalised. Management estimated the
demand and timing of phase-outs for these
SKUs and charged an incremental provision
for excess and obsolete inventory.
Our action
At each quarter end, we received reports
from, and discussed with, management the
level of inventory provisioning and material
areas at risk. The provisioning level was
26% at 31 December 2025 (2024: 20%).
We challenged the basis of the provisions
and concluded that the proposed
levels were appropriate and have been
consistently estimated.
We further challenged the assumptions
used in the incremental provision for
products that are being rationalised
to ensure the assumptions used
were appropriate.
IT systems
The Group’s IT systems form a key
component of the Group’s financial
reporting activities. The Group operates
key IT controls to monitor and mitigate
privileged access to key systems, and
prevent inappropriate changes being made
in relation to application integrity and
transactional processing. Given the reliance
placed on these systems, IT controls
testing is fundamental to Deloitte’s
audit approach.
Our action
We reviewed management’s reports
on the testing of IT general controls,
including the remediation of deficiencies.
The Committee noted significant
improvements in the number and speed
of resolution of IT control deficiencies.
Finance organisation
–
Received regular updates on plans for
the implementation in 2026 of initiatives
to transform the delivery of the finance
functions services including a new
integrated reporting system to enhance
the strategic insight that the finance
function provides to the business.
–
Reviewing treasury and tax operations,
including developments in relation to
US tax reforms and interaction with the
global tax system (‘Pillar 2’).
–
Monitoring and supporting management
changes in key finance roles, including a
new Group Financial Controller.
Significant matters related
to the financial statements
We considered the following key areas
of judgement in relation to the 2025
financial statements and at each
half year and quarterly trading report,
which we discussed in all cases with
management and the external auditor:
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Other matters related to
the financial statements
As well as the identified significant matters,
other matters that the Committee
considered during 2025 were:
Impairment
In carrying out impairment reviews of
goodwill and acquisition intangible assets,
a number of significant assumptions have
to be made when preparing cash flow
projections. These include the future rate of
market growth, discount rates, the market
demand for the products acquired, the
future profitability of acquired businesses
or products, levels of reimbursement
and success in obtaining regulatory
approvals. We reviewed and challenged
management’s key assumptions and their
sensitivity analysis and concluded that
no material impairments were required.
The Committee also reviewed and
supported the removal of impairment
of Orthopaedic goodwill assets as
a significant matter, following good
progress in improving the performance of
the business.
Going concern
The impact of a global economic downturn
has been considered as part of the
adoption of the going concern basis in
these financial statements. We reviewed
three-year projections as part of the
Group’s Strategic Plan, and also more
detailed cash flow scenarios for a period
of at least 12 months from the date of
approval of the financial statements, for
going concern purposes and concurred
with management that the continued
adoption of the going concern basis is
appropriate, as set out on page 146.
Taxation
The Group operates in numerous tax
jurisdictions around the world and
is subject to factors that may affect
future tax charges. We annually review
policies and approve the principles for
management of tax risks. We review
regular reports from management
evaluating the existing tax profile, tax risks
and tax provisions. Based on a thorough
report from management of tax liabilities
and our challenge of the basis of any tax
provisions recorded, we concluded that
the levels of provisions and disclosures
were appropriate.
Post-retirement benefits
The Group has post-retirement defined
benefit pension schemes, which require
estimation in setting the assumptions.
We received a report from management
setting out their proposed assumptions
for schemes in the UK, Switzerland and
Germany and concurred with management
that these assumptions were appropriate.
Non-IFRS financial information
The Group reports a number of non-
IFRS metrics to assess its performance.
The Committee annually reviews the non-
trading items policy and approves specific
items within the policy.
Liability provisioning
The Group has provisions for legal disputes
which require estimation. We received
regular updates from the Group
General Counsel & Company Secretary.
These updates form the basis for the
level of provisioning. We received detailed
reports from management, including the
actuarial model used to estimate the
provision for metal-on-metal hip claims,
and challenged the key assumptions.
We noted the continued reduction in
outstanding claims and concurred with
management that the proposed levels of
provisioning at year end of $107 million
included within ‘provisions’ in Note 17.1 in
2025 (2024: $123 million) were appropriate
in the circumstances.
Climate change
The impact of climate change has been
considered as part of our review of the
impairment testing of goodwill and
acquired intangible assets, and the going
concern assessment. We have also
considered the disclosures on climate
change and considered them appropriate.
Since the year end
We have reviewed the results for the full
year 2025 and the Annual Report 2025,
and have concluded that they are fair,
balanced and understandable. In coming
to this conclusion, we have considered the
description of the Group’s strategy and
key risks, the key elements of the business
model, which is set out on pages 14 and 15,
and the KPIs and their link to the strategy.
External auditor
Independence of external auditor
Deloitte LLP (Deloitte) was appointed
auditor of the Company with effect
from 1 January 2024, as approved by
shareholders at the AGM in May 2024.
We are satisfied that Deloitte is fully
independent from the Company’s
management and free from conflicts of
interest. Our Auditor Independence Policy,
which ensures that this independence is
maintained, forms part of the Committee’s
terms of reference and is available on the
Company’s website.
We believe that the implementation of this
policy helps ensure that auditor objectivity
and independence is safeguarded.
The policy also governs our approach when
we require our external auditor to carry out
non-audit services, and all such services
are strictly governed by this policy.
The Auditor Independence Policy also
governs the policy regarding audit partner
rotation, with the expectation that the
audit partner will rotate at least every five
years. Andrew Bond was appointed as our
senior lead audit partner on 1 May 2024.
The Committee confirms it has complied
with the provision of the Competition
and Markets Authority (CMA) Order 2014
and the FRC’s Minimum Standard for
Audit Committees.
Effectiveness of external auditor
We conducted a review into the
effectiveness of the external audit in 2025,
in line with previous years. We sought the
views of the Committee and key members
of the finance management team,
considered the feedback from this process
and shared it with management.
During the year, we also considered
the inspection reports from the Audit
Oversight Board in the UK and determined
that we were satisfied with the audit
quality provided by Deloitte.
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continued
Audit, Risk and Internal Control
continued
The Committee receives feedback
from Deloitte at each meeting where
management present their summary of
critical accounting estimates as at each
quarter end and during the Committee’s
private sessions with the auditors which
are held throughout the year.
The Committee noted that the greater
centralisation of the audit, increased use of
analytics to test 100% of transactions and
leveraging of existing control frameworks
had supported greater audit efficiency.
Overall, we concluded that Deloitte had
carried out their audit for 2025 effectively.
Appointment of external
auditor at AGM
Resolutions will be put to the AGM to be
held on 6 May 2026 for the re-appointment
of Deloitte LLP as the Company’s
auditor and authorising the Board to
determine their remuneration, on the
recommendation of the Committee in
accordance with the CMA Order 2014.
Disclosure of information
to the auditor
In accordance with section 418 of the
Companies Act 2006, the Directors
serving at the time of approving the
Directors’ Report confirm that, to the
best of their knowledge and belief, there
is no relevant audit information of which
the auditor, Deloitte, is unaware, and the
Directors also confirm that they have
taken reasonable steps to be aware of any
relevant audit information and, accordingly,
to establish that the auditor is aware of
such information.
Non-audit fees paid to the auditor
Non-audit fees are subject to approval
in line with the Auditor Independence
Policy, which is reviewed annually and
forms part of the terms of reference of
the Committee.
The Committee recognises the importance
of the independence of the external
auditor and ensures that the auditor’s
independence should not be breached.
The Committee ensures that the auditor
does not receive a fee from the Company
or its subsidiaries that would be deemed
large enough to impact its independence
or be deemed a contingent fee. The total
fees for permitted non-audit services shall
be no more than 70% of the average of
the fees paid in the last three consecutive
financial years for the statutory audits of
the Company and its subsidiaries.
Any pre-approved aggregate or individual
amounts up to $25,000 may be authorised
by the SVP Group Finance and amounts
up to $50,000 by the CFO. Any individual
amount over $50,000 must be pre-
approved by the Committee Chair and if
necessary, and to the extent determined
by the Committee Chair, the work will be
referred to the Committee. If unforeseen
additional permitted services are required,
or any which exceed the amounts
approved, again pre-approval by the
Chair of the Committee is required.
The following reflects the non-audit fees
incurred with Deloitte in 2025 and 2024,
which were approved in accordance with
the Auditor Independence Policy.
2025
$ million
2024
$ million
Audit-related
services
0.6
0.4
Assurance-related
services
–
–
Audit-related fees in 2025 primarily
consisted of routine services and were
deemed by the Committee not to infringe
upon auditor objectivity or independence.
Following a competitive tender process,
the Committee approved the selection
of Deloitte as the Company’s Corporate
Sustainability Reporting Directive (CSRD)
assurance provider, should this be required
for future reporting periods. Deloitte has
confirmed that assurance of CSRD will
be standalone from the financial audit
and the Committee concluded that the
appointment would not infringe upon
auditor objectivity or independence.
The ratio of non-audit fees to audit fees for
the year ended 31 December 2025 is 0.06.
The ratio of non-audit fees to audit fees
for the year ended 31 December 2024 was
0.04.
Full details are shown in Note 3.2 to the
Notes to the Group accounts.
Audit fees paid to the auditor
Fees for professional services provided by
Deloitte, the Group’s independent auditors
and other local statutory auditors in each
of the last two fiscal years, in each of the
following categories were:
2025
$ million
2024
$ million
Audit fees
9.4
9.1
Audit-related fees
0.6
0.4
Total
10.0
9.5
Internal audit
The Internal Audit team, which reports
functionally to the Committee, provides
independent and objective assurance
and consulting services, designed to
add value and to improve the Group’s
operations. It carries out risk-based
reviews across the Group that examine
the management of risks and controls over
financial, operational, commercial, IT and
transformation programme activities.
The Internal Audit team, led by the GHIA,
consists of appropriately qualified and
experienced employees. Third parties
may be engaged to support audit work
as appropriate.
The GHIA has direct access to, and has
regular meetings with, the Committee
Chair and prepares formal reports for
Committee meetings on the activities
and key findings of the function, together
with the status of management’s
implementation of recommendations.
The Committee has unrestricted access
to all internal audit reports, should it wish
to review them.
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OTHER INFORMATION
During the year, the team completed 33
audits and reviews across the Group.
These covered significant aspects
of all 11 principal risks and included:
financial controls effectiveness and
market reviews across the Group; IT and
programme assurance reviews, including
data security, Artificial Intelligence, and
cyber maturity. Group-level reviews
included ERM effectiveness, data privacy,
supplier master data, sales inventory and
operational process effectiveness, travel
and expenses and purchase cards controls,
and contingent worker management.
Reviews of US processes included field
inventory controls, rebates processes,
sales incentives controls, commercial
execution and accounts payable processes.
The team also performed reviews of the
China channel and distributor management
processes, and the integration of
CartiHeal. Management has taken swiſt
action to implement Internal Audit’s
recommendations. The team continues to
leverage data analytics combined with on-
site and remote audit work as appropriate.
The team carries out its work in
accordance with the Institute of Internal
Auditors’ International Professional
Practices Framework. Its performance
is annually assessed using a structured
questionnaire, allowing non-executive,
executive and senior management, plus
the external auditor, to comment on key
aspects of the function’s performance.
The Committee, which re-approved the
function’s charter in December 2025, has
satisfied itself that adequate, objective
internal audit standards and procedures
exist within the Group and that the
Internal Audit function is effective.
Risk management programme
The work the Committee has carried out
in respect of risk management and internal
controls is explained in the Risk Report
on pages 78 to 94.
Viability Statement
The Committee reviewed management’s
work in conducting a robust assessment
of those risks which would threaten
the business model and the future
performance or liquidity of the Company,
including its resilience to the threats of
viability posed by those risks in severe
but plausible scenarios.
Based on this analysis, the Committee
recommended to the Board that it could
approve and make the Viability Statement
on page 95.
Going concern
The Group’s business activities, together
with the factors likely to affect its future
development, performance and position,
are set out in the Financial Review on pages
18 to 25 and the principal risks on pages
83 to 94.
The financial position of the Group, its cash
flows, liquidity position and borrowing
facilities are described on pages 18 to
25. In addition, the Notes to the Group
accounts include: the Group’s objectives,
policies and processes for managing its
capital; its financial risk management
objectives; details of its financial
instruments and hedging activities; and its
exposure to credit risk and liquidity risk.
The Group has considerable financial
resources, and its customers and
suppliers are diversified across different
geographic areas. As a consequence,
the Directors believe that the Group is
well placed to manage its business risk
successfully despite the ongoing uncertain
economic outlook.
The Group has considered several
scenarios (refer to Viability Statement
on page 95) including the continued
uncertainty as to the future impact on
the financial performance
and cash flows of the Group as a result
of a global economic downturn as part
of the adoption of the going concern
basis in these financial statements.
The Directors have a reasonable
expectation that the Group has adequate
resources to continue in operational
existence for the foreseeable future.
Thus they continue to adopt the going
concern basis for accounting in preparing
the annual financial statements.
Management also believes that the
Group has sufficient working capital
for its present requirements.
Code of Ethics for Senior
Financial Officers
We have adopted a Code of Ethics for
Senior Financial Officers, which applies
to the CEO, the CFO, the Group Financial
Controller, and the Group’s senior financial
officers. There have been no waivers to any
of the Code’s provisions, nor have there
been any substantive amendments to the
Code during 2025 or up until 27 February
2026. A copy of the Code of Ethics for
Senior Financial Officers can be found on
our website.
In addition, every individual in the finance
function certifies to the CFO that they
have complied with the Finance Code
of Conduct.
Jez Maiden
Chair of the Audit Committee
The Committee continues to support
John Rogers, the CFO, in his Next
Generation Finance initiative,
improving the way finance support
is delivered to the business.
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continued
Audit, Risk and Internal Control
continued
“Our remuneration
arrangements are designed
to be closely aligned with
the delivery of our strategic
priorities, which include
sustainable value creation
and long-term growth.”
Sybella Stanley
Chair of the Remuneration Committee
Activities during 2025
–
Developed proposals to amend the
Remuneration Policy and conducted
extensive shareholder consultation to
share insights and obtain feedback
from key investors.
–
Ensured that remuneration
arrangements for Executive Directors
and Executive Committee members
aligned with, and incentivised,
the successful delivery of the
business strategy.
–
Reviewed competitiveness of reward
for Executive Directors, to understand
our ability to retain key talent and
attract successors when required.
–
Considered the remuneration
arrangements for the CFO as he
relocated from the UK to the US.
–
Set performance measures and
targets for both short-term and
long-term incentive plans.
–
Monitored and evaluated performance
against incentive plan targets.
–
Reviewed and updated incentive
plan arrangements for employees
below Board level.
–
Reviewed employee access to share
purchase plans.
–
Monitored pay and benefits across
the wider workforce.
–
Considered regulatory, market,
and best practice developments.
–
Reviewed and approved the
Committee’s Terms of Reference.
The Terms of Reference for the Remuneration
Committee describe the role and responsibilities
of this Committee more fully and can be found
on our website.
www.smith-nephew.com/en/
who-we-are/corporate-
governance#terms-of-reference
Committee roles
and responsibilities
The Committee’s role is to ensure
that our Remuneration Policy and
practices are aligned to the business
strategy and promote long-term
sustainable success. We confirm the
remuneration of Executive Directors and
the leadership team is aligned to the
Company’s purpose and values, is clearly
linked to the successful delivery of
business performance and drives value
creation. We engage with shareholders
as appropriate to ensure that the
Committee hears and understands
their views. The Committee finds this
engagement very valuable in shaping its
approach to remuneration.
Our focus areas for 2026
–
Oversee effective implementation of
our Remuneration Policy.
–
Monitor performance against our
short and long-term incentive
plan targets.
–
Oversee our approach to pay for
the wider workforce, including pay
gap reporting.
–
Set incentive plan performance
targets for the year ahead.
–
Continue to actively engage key
shareholders on remuneration
matters, as appropriate.
Chair’s letter
Dear fellow shareholder
I am pleased to present the Directors’
Remuneration Report for the year ended
31 December 2025. This is my first
report since assuming the role of Chair
of the Remuneration Committee in June
last year, and I would like to thank my
predecessor, Angie Risley, for her leadership
of the Committee.
This year, the Company has delivered
strong financial results across its key
performance measures, reflecting the
leadership of our CEO, Deepak Nath, and
CFO, John Rogers, and the entire executive
team. The results also reflect the collective
contribution of Smith+Nephew employees
in delivering value for shareholders and
improving outcomes for patients who rely
on our products.
This year has also been the final year of
our 12-Point Plan, which was launched by
Deepak following his appointment in 2022,
which has transformed Smith+Nephew
into a stronger, more agile, profitable,
and higher-growth company. We also
announced our new RISE strategy at our
Capital Markets Day in December. This
new strategy builds on the success of the
12-Point Plan and will support stronger
returns for shareholders by elevating
financial and operational performance
and will deliver better outcomes for
more patients with our continued focus
on innovation.
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Remuneration Committee Report
Directors’ Remuneration Report
At the heart of the Company’s
transformation over the past three
years has been our executive team, led
by Deepak. As we look forward to our
ambitious RISE strategy, a key priority
for the Committee is to ensure the
remuneration arrangements are aligned
to our new business strategy and the
Company can attract and retain the
critical talent it needs to drive the business
forward and build on the momentum now
established. As a result, during 2025, we
assessed the extent to which the current
Remuneration Policy (‘Policy’) supports this
objective and concluded that changes are
necessary to maintain competitiveness at
a key time for the organisation. Accordingly,
we decided to consult shareholders one
year earlier than the usual cycle with a
revised Policy.
Remuneration Policy review
As part of our last Policy review
undertaken in 2023, we began to address
the gap between Smith+Nephew’s
historical executive remuneration approach
and US market norms to reflect the fact
that the centre of gravity of the global
MedTech industry is in the US. Furthermore,
ten out of twelve of the Executive
Committee, including the CEO and CFO, are
based in the US, which is demonstrably the
core of our talent market. From a business
perspective, over 50% of our revenues
arise in the US, and only 4% in the UK.
In light of these facts, the principle of closer
alignment with US pay practice was widely
accepted by shareholders.
The changes made to our Policy two
years ago positioned our CEO’s pay
between lower quartile and median of our
benchmark pay peer group. At the time,
the Committee felt this pay positioning
was appropriate for a CEO who was
relatively new in post and new to being
a CEO. However, we also signalled to
shareholders at the time that these
changes represented a first step towards
stronger pay positioning and improved US
market competitiveness.
despite over 1,000bps of headwinds
from China and inflation;
–
Higher adjusted return on invested
capital
1
with an increase of 170bps over
the past three years;
–
A 15-fold increase in free cash flow
1
from $56 million in 2022 to $840 million
in 2025;
–
Resilient dividends and a share buyback
of $500 million;
–
In addition, the Orthopaedics business
has returned to growth; there has been
improved inventory management; and
successful R&D with 60% of growth
coming from new products launched
in the last five years.
We employ a successful, seasoned and
proven CEO, who is a US citizen, resident in
the US, and who has delivered a significant
turnaround and increased shareholder
value. Competition for his services is
entirely in the US and the Committee
believes it is not in shareholders’ interests
that we continue to take the risk of paying
him 15% below the lower quartile (or 56%
of the median) of his peers, particularly
when Smith+Nephew’s size is at or
above median relative to the same pay
peer group.
Smith+Nephew has experience of a US
CEO departure due to remuneration
considerations. Deepak is our fourth CEO
since 2018, with prior leadership changes
contributing to executive turnover and
organisational instability. Since Deepak’s
appointment in 2022, leadership stability
has enabled consistent operational
improvement and value creation.
Competitive remuneration is, therefore,
essential not only for retention, but for
safeguarding strategic continuity.
1 Non-GAAP measure
For our CFO, John Rogers, who relocated
to the US in September 2025 to be
closer to executive team colleagues and
customers, the gap between his current
pay level and an appropriate market level
is not large. However, since the last Policy
was introduced, the pay levels for MedTech
CEOs among our peer benchmark group
have increased substantially with the
median increasing by 40%, partly as a
result of numerous changes in leadership
across the sector.
This has resulted in our CEO pay once
again being meaningfully below the lower
quartile of the peer group, and at around
half the median level, which creates a risk
around retaining and attracting key talent.
In addition, as Deepak is now established
as a successful CEO with nearly four years’
experience running a global MedTech and
FTSE-50 company, such a disparity is not
considered appropriate by the Board or
the Committee.
The Board recognises that Deepak is one
of a limited number of proven CEOs in the
MedTech sector and that he has delivered
significant operational improvement
and increased shareholder value.
This performance is evidenced by:
–
Upper quartile total shareholder return
over the past three years of +22%
relative to the peer group median return
of -6%;
–
Consistent underlying revenue growth
1
:
+7.2% in 2023, +5.3% in 2024, +5.3%
in 2025;
–
Higher operating profit: $450 million in
2022, increasing to $794 million in 2025
(an increase of 76%);
–
Improved trading profit margin
1
with
an increase of over 240 bps since 2022
Relative TSR performance over the last three years
2
LQ
Lower quartile
M
Median
UQ
Upper quartile
Smith & Nephew
Peer group company
2
Performance relative to the 2023-25 PSP peer group. See page 181 for further details.
-60%
-40%
+115%
100%
80%
60%
40%
20%
0%
-20%
LQ
UQ
M
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continued
Directors’ Remuneration Report
continued
Smith+Nephew
Annual Report 2025
Given all of this context, the Committee
decided that a review of Executive
Director remuneration was again
necessary. The objective of the review
was to ensure our arrangements are
fully aligned with shareholder interests
by appropriately rewarding delivery of
sustained performance, while incentivising
delivery of our new RISE strategy, and
being appropriate to retain and/or attract
executive talent essential for long-term
value creation.
As part of the review, we consulted
extensively with nearly 50 shareholders,
representing approximately 70%
of Smith+Nephew’s voting rights.
Initially we consulted with our top 10
shareholders, and following input from
these shareholders we made changes to
our initial proposals. We then consulted
on this revised proposal with a broader
group of shareholders, which resulted
in further changes to our proposal (see
page 153 for further details). We also
consulted with proxy advisers, who were
most representative of our shareholder
base, being IA/IVIS, Glass Lewis, and ISS.
I would like to thank everyone with whom
we engaged for their valuable input during
this process, as the views and comments
shared helped us ensure that we were
considering all the issues and ultimately
enabled us to shape the final proposal.
Overall, the majority of shareholders
recognised the context that had shaped
our decisions, including the transformation
and performance of the business, and the
need for us to retain talent and compete in
a global talent market.
The full detail of our proposal, including
additional market context and benchmark
peer group data, is set out on pages
153 – 165, but at a high level the
proposed changes to our Policy include:
An increase in the Total Target Direct
Compensation (TTDC) of the CEO from
$8.3 million to $12.8 million. This increase
will be delivered solely through an increase
in the annual and long-term incentive plan
opportunities as the base salary will be
frozen for the duration of the Policy. The
Annual Incentive Plan (AIP) opportunity
will increase from 215% to 300% of base
salary, the annual Restricted Share Plan
(RSP) awards will increase from 125%
to 150% of base salary, and the annual
Performance Share Plan (PSP) awards
will increase from 300% to 650% of base
salary. These changes will re-position
the CEO’s pay from below lower quartile
to between lower quartile and median
relative to our pay benchmark peer group
(see page 154).
+50%
Annual Incentive Plan vesting
+100%
Restricted Share Plan Award vesting
+60%
Performance Share Plan Award vesting
Total Target Direct Compensation
is defined as Base Salary
From January 2027, if certain share
price performance conditions are met
during the Policy period a multiplier of
between 1.0x and 1.4x will apply to the
2027 and 2028 PSP awards at the time of
grant. If the maximum multiplier of 1.4x
is applied this would have the effect of
enhancing the CEO’s TTDC opportunity
from $12.8 million to $15.3 million for
that year. This would position the CEO
around the middle of our pay peer group,
which, given the experience and track
record of our CEO as well as the size
and scale of the organisation relative to
peers, the Committee believe would be
appropriate positioning.
It is important to highlight that the
earliest year in which the CEO may have
realised value from all elements of the
new policy arrangements will be 2031
when the 2026-28 PSP is released from
its post-vesting holding period. This is of
course subject to the award meeting the
stretching performance conditions set
by the Committee over the three-year
performance period. Further, it will not be
until 2032 that the CEO may potentially
realise any value from the PSP multiplier.
There are no changes to the AIP, PSP and
RSP award levels of the CFO. However,
the same PSP multiplier as applies to
the CEO will apply to the CFO, which
has the potential to increase the CFO’s
TTDC opportunity from $4.5 million to
$5.1 million in 2027 if certain share price
performance conditions are met over 2026.
The earliest year in which the CFO may
potentially realise any value from the PSP
multiplier will be 2032 when the 2027-
29 PSP is released from its post-vesting
holding period.
The shareholding requirement for the CEO
will increase from 500% to 900% of base
salary and for the CFO will increase from
200% to 300% of base salary. The CEO
shareholding requirement materially
exceeds that of our peer group but is
aligned to the peer group for the CFO
(see page 163). Once the CEO achieves
a shareholding of 600%, or the CFO
achieves a shareholding of 300%, which
we expect to take around five years, the
bonus deferral will reduce from 50%
to 20%. The Committee believes that
the combination of a high shareholding,
unvested RSPs, together with the two-year
post-vesting holding period on the PSP, is
sufficient to enable malus and clawback if
necessary and provides good shareholder
alignment making a 50% bonus deferral
no longer necessary. In addition, the
CEO is expected to continue to build his
shareholding towards 900% over the
longer term.
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We also acknowledge that the multiplier
on PSP awards from January 2027 is an
unusual approach, but the Committee
needed to find a way to step-up
our Executive Directors’ TTDC to a
market competitive level that is more
representative of our size and performance
relative to our peer group within the next
three years. The Committee believe that
linking the step-up in TTDC opportunity
to share price appreciation, from which all
shareholders will benefit, is a practical way
of doing so. The alternatives would be to
either leave compensation unchanged and
run the risk that we lose our existing CEO
and are unable to offer attractive levels of
pay to his replacement, or we immediately
go to a higher TTDC of around $15m
which would be more reflective of the CEO
pay at peer companies of a similar size.
The Committee does not consider either of
these options are in shareholders’ interests.
The Committee believes that the revised
Policy strikes an appropriate balance
between market competitiveness,
performance linkage, shareholder
alignment and governance. Indeed, the
revised Policy will strengthen the link
between pay, performance, and value
creation for shareholders through the
increases to long-term performance-based
pay, combined with an increase to the
shareholding requirements.
2025 incentive plan outcomes
The Company delivered strong financial
results across its key performance metrics.
Revenue
1
grew by 6.1% on a reported basis
(5.3% on an underlying¹ basis) and the
Company continued to deliver year-on-
year expansion in its trading profit margin
1
which increased from 18.1% to 19.7%.
Working capital and cash flow generation
also significantly improved, with free
cash flow
1
increasing from $551 million
to $840 million, and an improvement
in adjusted return on invested capital
1
(from 7.4% to 8.3%) compared to 2024.
These results reflect the benefits from the
12-Point Plan being realised.
In addition, the Committee strives
to maintain a clear link between pay
and performance, focusing on setting
stretching performance targets and
evaluating both company-wide and
individual achievements. In that context,
we believe that the payments outlined in
this report fairly reflect the performance
achieved and that the Remuneration Policy
operated as intended during the year.
Annual incentive
For Executive Directors, 85% of their
AIP bonus opportunity is tied to financial
performance, with the remaining 15%
tied to individual strategic objectives.
Based on our financial performance and
the achievement of individual objectives
over the year, the total bonus payable to
Deepak Nath is 82.2% of maximum (or
176.8% of base salary) and to John Rogers
is 81.0% of maximum (or 174.1% of base
salary). In line with the current Policy, 50%
of this bonus will be deferred in shares for
three years if the shareholding requirement
has not been met, otherwise 30% of the
bonus will be deferred in shares for three
years. More detail on the performance
against the annual targets is set out on
pages 177 to 178.
While we do not currently have any
Executive Directors based outside the
US, and expect our leadership to continue
to be based in the US for the foreseeable
future, we have defined as part of our
revised Policy the annual and long-
term incentive opportunities, as well as
shareholding requirements, that would
apply if we needed to hire Executive
Directors living outside the US in the future.
The opportunity levels are set below US
levels to reflect market differences and are
described further on page 163.
Finally, the Committee recognise that the
talent market is increasingly competitive
and a recruitment in the future may require
compelling packages to attract individuals
with the level of skill and experience
needed. The Committee believes that
the revised Policy will help with this,
but also wants to have the flexibility
to provide limited sign-on incentives
(beyond buy-outs) that are capped at
a maximum of 200% of base salary.
Any such awards would be structured with
robust performance conditions, deferral,
and clawback provisions, ensuring the
Committee has the flexibility to respond
pragmatically to talent market conditions
while maintaining strong governance.
We acknowledge that executive pay is
a topic that attracts strong and often
differing opinions among investors, and
the Committee fully understands that
financial performance and the creation of
long-term shareholder value are a focus for
investors. The Committee firmly believes
that the provisions of the revised Policy are
in the long-term interests of the Company
and will support the commitment to
deliver on financial performance and value
for shareholders.
1 Non-GAAP measure
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Remuneration Committee Report
continued
Directors’ Remuneration Report
continued
As a result of these changes, the
performance measures for 2026 will
focus on revenue growth (35% weighting),
trading profit (35% weighting), free cash
flow (15% weighting) and individual
strategic objectives (15% weighting).
In 2025, the Committee decided to reduce
the payout at Threshold from 15% of
maximum to zero and this will remain the
case for 2026. Further details are set out
on page 192.
The AIP awards for 2026 will be awarded
in line with our revised Policy, subject to
shareholder approval. Under the Policy,
50% of any 2026 bonus payment to
Executive Directors would be paid in March
2027 unless the Executive Director has
met the shareholding requirement, in which
case, 20% of the bonus would be deferred.
Long-term incentive plans
Long-term PSP awards will be granted in
2026 in line with our revised Policy and
under the Smith+Nephew Performance
Share Plan, in each case subject to
shareholder approval. Similarly, Restricted
Share Plan awards will be granted in
2026 in line with our revised Policy,
subject to shareholder approval, and
under the existing shareholder approved
Smith+Nephew Restricted Share Plan.
The performance measures for the 2026-
28 PSP award will include a combination
of earnings per share (30% weighting),
return on invested capital (30% weighting),
relative total shareholder return (30%
weighting) and ESG objectives (10%
weighting). Further details on the intended
awards, including the performance
measures and associated targets, are set
out on pages 192 to 193.
Long-term incentive
The Committee reviewed the performance
of PSP awards granted in 2023 against
the award performance conditions
and determined that, based on actual
performance over the three-year
performance period ended 31 December
2025, these 2023-2025 PSP awards will
vest at 36.2% of maximum opportunity
(72.5% of target) (see page 181 for
further details).
John joined the Company in December
2023, and so was not granted a 2023-2025
PSP award.
In addition, the Committee assessed
the reasonable judgement underpin that
applies to RSP awards granted in 2024 and
2025 that have a tranche vesting in 2025
and determined that it was appropriate for
these tranches to vest in full.
Discretion in relation to incentive
outcomes
The incentive outcomes above are
reflective of overall Company financial
and strategic performance, and the
Committee determined that no discretion
should be exercised to adjust the
formulaic outcomes.
The Committee also reviewed
Smith+Nephew’s share price performance
in determining the extent to which
the 2023-25 PSP award should vest
and concluded that no windfall gains
had occurred.
Applying the Remuneration
Policy in 2026
Base salary
The CEO’s salary will not increase in
2026. However, if the revised Policy is
not approved by shareholders and the
current Policy remains in force, the CEO’s
salary will increase in line with the wider
US workforce such that his salary will
be increased by 3.2% with effect from
1 April 2026.
The CFO’s salary will increase in line
with the wider US workforce, and so
will increase by 3.2% with effect from
1 April 2026.
Annual Incentive Plan
The Committee reviewed the choice of
performance measures and decided to
replace trading profit margin percentage
with absolute trading profit in dollars
to ensure incentives are aligned with
the Company’s current strategic phase.
Following the restoration of operational
discipline and the reversal of historic
margin erosion, the business has now
moved from a stabilisation phase to
a growth phase, and the Committee
wants management to be incentivised to
deliver absolute value creation. We are
not stepping back from margin discipline,
nor are we suggesting that margin
improvement is completed. Trading profit
margin performance remains a core
management focus and key performance
measure for the Board.
In addition, the Committee decided to
remove the 5% allocation to ESG objectives
within the AIP. This change removes
duplication as previously both the AIP and
long-term PSP had ESG objectives, and this
change also better reflects the fact that
the Committee anticipates ESG outcomes
to be delivered over a longer period. It also
enabled an increase in the bonus allocation
to individual strategic objectives (from 10%
to 15%), which will focus on our new RISE
strategy, without the need to reduce the
allocation to financial performance metrics.
We remain fully committed to long-term
sustainable business, as well as our ESG
goals and plan to continue to have ESG
performance measures included within
our PSP.
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This is a critical time for Smith+Nephew.
Through the delivery of the 12-Point
Plan, the business has demonstrated the
decisive actions taken to position itself
for future success. As we transition to
the next stage of our journey and the
implementation of our RISE Strategy,
it is vital that we have stability and
strength in leadership. The business is
well positioned to deliver sustainable and
profitable growth, supported by a very
strong innovation pipeline, continued
productivity and simplification initiatives,
and improving margins.
We are confident that the revised Policy
is necessary and appropriately aligns the
interests of executives and shareholders.
On behalf of the Committee, I would like
to extend my thanks to shareholders and
proxy advisers, who have given their time
and valuable insights over the past year,
which have helped shape our approach
to executive remuneration. I hope that
you will support our proposals at the
forthcoming AGM.
Sybella Stanley
Chair of the Remuneration Committee
While the performance measures are
the same as used in respect of the 2025
grant, following shareholder feedback,
the Committee has decided to make a
change to the total shareholder return
(TSR) measure. Historically the TSR
performance measure has been based
on the relative performance of two peer
groups, a global MedTech peer group and
a subset of the FTSE 100. For the 2026-28
PSP award, relative TSR will be measured
against the global MedTech peer group
only. This change will not only simplify the
measure, it will improve the relevance of
the relative performance measure as it
will now only consider global MedTech
companies against which we compete
and are assessed.
Share plan rules and approvals
During the year, the Company undertook a
review of the role of share plans within its
reward framework and the extent to which
employees can participate in, and benefit
from, the Company’s success as it delivers
on its RISE Strategy. As a result of this
review, the Company decided to introduce
new all-employee share plans designed to
broaden access and strengthen employee
alignment with the business strategy
and shareholders.
We believe that by enabling employees
at all levels to share in the outcomes
of the Company’s success, these plans
will support the business strategy of
attracting, motivating and retaining talent,
fostering engagement, and reinforcing
a culture focused on long-term growth
and performance.
The plan rules for the all-employee
Smith+Nephew Global Employee Share
Purchase Plan and Smith+Nephew UK
Share Incentive Plan will be submitted for
shareholder approval at our forthcoming
AGM alongside a new Smith+Nephew
Performance Share Plan that will replace
the existing Smith+Nephew Global Share
Plan as the vehicle for granting PSP awards.
Chair and Non-Executive
Director fees
The fees payable to the Chair of the Board
and Non-Executive Directors are reviewed
annually. In line with the increase in base
salaries for Executive Directors, the Chair
fee and Non-Executive Director base
fee will be increased by 3.2% for both
US-based and UK-based Non-Executive
Directors from 1 April 2026. The additional
fees for acting as a Chair of a Committee
were also reviewed (see page 164 for
further details).
2026 AGM
I hope that this year’s report provides
a clear and transparent account of the
Committee’s considerations and decisions,
including an explanation of the 2025
remuneration outcomes and why we feel
it is important to now evolve our Policy for
the future.
Compliance statement
We have prepared this Director’s remuneration report (the Report) in accordance with The Enterprise and Regulatory Reform Act 2012–2013 (clauses
81–84), sections 420–422 of the Companies Act 2006 and The Large and Medium-Sized Companies and Groups (Accounts and Reports) (Amendment)
Regulations 2013 (the Regulations), The Companies (Directors’ Remuneration Policy and Director’s remuneration report) Regulations 2019 and The
Companies (Miscellaneous Reporting) Regulations 2018. The Report also meets the relevant requirements of the Financial Conduct Authority (FCA)
Listing Rules. Pages 172 to 193 is the Annual report on remuneration (the Implementation Report). The Director’s Remuneration Policy, as set out on
pages 153 to 171 will be put to shareholders for approval at the Annual General Meeting on 6 May 2026, while the Implementation Report will be put
to shareholders for approval as an advisory vote at the same meeting. The Implementation Report explains how the current Remuneration Policy was
implemented during 2025. The following sections have been audited by Deloitte: The Single Figure Tables on Remuneration including related notes
(pages 175 to 182); details of awards made under the Performance Share Plan and Restricted Share Plan (page 182); Summary of Scheme Interests
during the year (page 183 to 184); Payments to former Directors (page 184); Directors’ interests in ordinary shares (pages 184 and 186) and Senior
Management Remuneration (page 191). All payments we make in relation to Directors of the Company will be in accordance with the relevant
shareholder approved Remuneration Policy. Trading Profit Margin, Trading Cash Flow Conversion, Free Cash Flow and ROIC are non-IFRS financial
measures used in the Directors’ Remuneration Report from page 177 to 193. They are explained and reconciled to the most directly comparable
financial measure prepared in accordance with IFRS on pages 285 to 292.
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Remuneration Committee Report
continued
Policy Review
Context for review
As outlined in the Chair’s statement,
in 2023, we began to address the gap
between Smith+Nephew’s historical
executive remuneration approach and
US market norms with closer alignment
in both structure and quantum with a
benchmark group of MedTech peers that
was heavily US weighted.
The 2024 Policy positioned our CEO at
around 14% above the lower quartile and
20% below the median of our pay peer
group, which the Committee felt was
appropriate for a CEO, who was relatively
new in post and new to being a CEO.
However, the Committee signalled at the
time that these changes were a first step in
the journey toward better pay positioning
and improved US market competitiveness.
As a matter of practicality and policy,
the Company aligns compensation of all
employees, including Executive Committee
members, to local market practices and
employs them on local contracts. We aim
to pay at a competitive level somewhere
between lower and upper quartile of a
suitable benchmark group. We believe
that given the experience and track record
of both our CEO and CFO as well as the
size and scale of the organisation they are
leading relative to our peer group (where
60% of peers are smaller as measured by
revenue), a pay position toward the middle
of the range would be appropriate.
Since the last Policy review, the median
CEO pay level within the MedTech pay
peer group has increased by 40%, driven
by competitive pressures for leadership
talent - eight peer group companies have
appointed new CEOs in the past two years.
This competitive landscape means that
our CEO is once again paid below the lower
quartile. The situation is different for our
CFO, whose pay sits closer to the median
level of our peer group.
The need to provide market competitive
pay to retain and attract talent means
the current CEO pay positioning needs to
be addressed. In addition, given Deepak’s
now proven track record as a CEO, and
the fact that he is now established as a
successful CEO with nearly four years’
experience running a FTSE-50 Company,
such a pay disparity relative to peers is
not appropriate, and creates a retention
risk. If we were to lose him, the current
Policy creates a material risk as we would
face significant difficulty in recruiting
a successor with the requisite and
comparable experience from within the
MedTech industry.
As a result, the objective of the current
Policy review is to ensure that our Policy is
fully aligned with shareholder interests by
continuing to reward delivery of sustained
performance, while incentivising delivery
of our new RISE business strategy, and
being appropriate to retain and/or attract
executive talent essential for long-term
value creation.
Engagement with shareholders
The Committee recognises the importance
of an open dialogue with investors on
executive remuneration and consulted
on the proposed policy extensively with
our top 50 shareholders, representing
approximately 70% of Smith+Nephew’s
voting rights. We also consulted with
proxy advisers, who were most
representative of our shareholder base,
being IA/IVIS, Glass Lewis, and ISS.
Initially we consulted with our top 10
shareholders, and following input from
these shareholders we made changes
to our initial proposals. These changes
included removing the award multiplier
from the RSP and retaining it on the
PSP only, and increasing the AIP and
PSP opportunity levels for the CEO.
We then consulted with a broader group
of shareholders, which resulted in further
changes including reducing the initial
proposed RSP award level, increasing the
PSP award level, introducing a share price
underpin to the PSP multiplier, reinstating
a bonus deferral of 20%, and increasing the
CEO shareholding requirement.
Wider workforce remuneration
When considering changes to Executive
Director remuneration, the Committee
considers a range of factors including those
relating to wider workforce remuneration
to ensure fairness, alignment, compliance
with governance expectations, and
sustainable remuneration practices.
This includes reviewing overall pay
structures, the gap between executive
pay and average employee pay, and how
rewards across the organisation compare
with leadership roles. We also look at pay
trends, cost-of-living pressures, and how
pay decisions affect morale, retention,
and culture.
Over the past year, we have provided
pay increases for the wider workforce
that are at least in line with the market
and made adjustments to keep key roles
competitively paid. We have also updated
our annual and long-term incentive plans
by increasing bonus opportunities for some
groups and extending eligibility for PSP and
RSP awards. In 2026, we plan to introduce
new global all-employee share plans to
give more employees the opportunity to
participate and to strengthen alignment
with our strategy and shareholders.
We also conduct Board listening sessions
with employees to understand their
perspectives, including on remuneration.
Through these sessions, employees have
shared that stable leadership matters
to them because it builds trust, provides
clear direction, and gives confidence in
the future. Employees also understand
the importance of paying key roles
at competitive market levels so the
organisation can attract and keep the
top talent needed to achieve its
strategy and purpose.
MedTech peer group
When determining the pay peer group
for the last and current Policy review,
the Committee started with companies
in the S&P Healthcare Equipment Select
Industry (XHE) Index with revenues over
$2bn and then included a number of
non-US companies within our industry to
reflect our geographic footprint. A filter
was then applied to exclude very large
revenue companies, and a further filter was
applied following a talent flows analysis.
The only difference in the pay peer group
between the last and current Policy review
is the addition of Solventum and Convatec.
Solventum is a wound care company and
key competitor that spun off from 3M
in 2024, and Convatec is the only other
UK-based MedTech company of scale.
Adding these companies did not materially
change the analysis, but the Committee
felt that given they are close peers they
should be included. Of the 23 companies
in the pay peer group, 15 are listed in the
US, six in Europe, one in the UK, and one
in Canada.
It is worth noting that the peer group used
by the Committee for pay benchmarking is
different to that used for TSR performance
purposes. The peer groups are similar, but
the pay peer group specifically excludes
very large companies within our industry
such as Medtronic and Stryker.
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Remuneration Policy Report
Remuneration in the context of peer relativity and our performance
Pay
However, our Executive Director Total
Target Direct Compensation
2
is below
median and in particular our CEO is below
lower quartile, which is not reflective of
our relative size or performance
Performance
Our relative TSR performance between
1 January 2023 and 31 December 2025
is above the upper quartile
1
1
2023-25 PSP peer group data used to determine performance.
2
Total Target Direct Compensation (TTDC) is determined as Base Salary plus Target AIP, plus Restricted Share Plan award, plus the expected value
of the Performance Share Plan Award.
2025 Pay Peer Group
–
Alcon Inc.
–
Bausch + Lomb Corporation
–
Baxter International Inc.
–
Becton, Dickinson & Co
–
Coloplast A/S
–
Convatec Group Plc*
–
Dentsply Sirona Inc.
–
Edwards Lifesciences Corporation
–
GE Healthcare Technologies Inc.
–
Intuitive Surgical, Inc.
–
Koninklijke Philips NV
–
ResMed Inc.
– Solventum*
–
Sonova Holding AG
–
Steris Plc
–
The Cooper Companies, Inc.
–
Zimmer Biomet Holdings, Inc.
–
Align Technology, Inc.
–
bioMérieux S.A.
–
Boston Scientific Corporation
–
Hologic, Inc.
–
IDEXX Laboratories, Inc.
–
QuidelOrtho Corporation
Company size
Our revenue and global employee
headcount place us at or above
median in the pay peer group
LQ
Lower quartile
M
Median
UQ
Upper quartile
Smith+Nephew
Pay peer group company
CEO
TSR performance
Revenue
Global employee headcount
$0bn
$5bn
$10bn
$15bn
$20bn
LQ
UQ
M
0
10,000
80,000
70,000
60,000
50,000
40,000
30,000
20,000
LQ
UQ
M
$0m
$5m
$10m
$15m
$20m
$27m
LQ
UQ
M
-60%
-40%
+115%
100%
80%
60%
40%
20%
0%
-20%
LQ
UQ
M
*
Addition relative to pay peer group used for last policy review.
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continued
Proposal to re-align pay with
company size and performance
Given the talent market and changes in pay
within the MedTech sector, as well as our
relative size and performance compared to
peers, and the performance and
experience of our CEO and CFO, the
Committee feel that it is appropriate, and
necessary, to adjust the pay level of our
Executive Directors, particularly that of
the CEO. The changes proposed will be
to the opportunity levels of our short and
long-term incentive plans, and as such will
be highly dependent upon performance
delivery. The base salary of the CEO will
remain unchanged for the duration of
the Policy.
The changes proposed will result in the
TTDC for both the CEO and CFO being
initially positioned between lower quartile
and median (the ‘Baseline’ level). However,
from January 2027 there will be an
opportunity for the TTDC of both the CEO
and CFO to be enhanced if certain share
price performance conditions are met over
the financial year prior to each annual PSP
award. If certain share price performance
conditions are met, the subsequent PSP
award granted to the CEO and CFO may be
multiplied by a factor of between 1.0x and
1.4x.
Baseline (no performance
multiplier on the PSP)
Changes to the Policy would see the
“Baseline” short and long-term incentives
increase for the CEO only, reflecting that
the CFO is already paid broadly in line
with median compared to the pay peer
group. This would increase the CEO TTDC
from $8.3 million to $12.8 million in 2026,
re-positioning the CEO’s pay from below
lower quartile to between lower quartile
and median. The TTDC of the CFO would
be unchanged from its current level of
$4.5 million.
CEO
$0m
$5m
$10m
LQ
UQ
M
Baseline
Enhanced (maximum performance
multiplier on PSP awards)
From 2027 onward, if certain share price
performance conditions are met over the
preceding financial year, a multiplier may
apply to the baseline PSP award (for US
based Executive Directors only) which
could increase the CEO’s TTDC up to a
maximum of $15.3 million and the CFO’s
TTDC up to a maximum of $5.1 million.
This positions both the CEO and CFO
target pay opportunity around median, but
only to the extent superior performance
is delivered year on year. Further details
on the PSP multiplier can be found in the
Policy table and accompanying notes on
pages 159 and 162.
CEO
$0m
$5m
$10m
LQ
UQ
M
Enhanced
Once granted, all PSP awards are subject to
stretching performance conditions relating
to EPS, ROIC, TSR and ESG performance
over a three-year period, and if they vest
will be subject to a two-year holding period.
CFO
$0m
$5m
$10m
$15m
$20m
$27m
LQ
UQ
M
Baseline
$0m
$5m
$10m
$15m
$20m
$27m
LQ
UQ
M
Enhanced
CFO
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Policy table for Executive Directors
Base salary
Changes: No changes proposed
Purpose
Core element of
remuneration, paid for doing
the expected day-to-day
job. Its purpose is to provide
a fair and competitive level
of base pay to recruit and
retain Executive Directors
of the calibre required to
deliver the Company’s
strategy.
Operation
Salaries are normally reviewed annually, with
any increase usually applying from 1 April.
Salary levels and increases take into account:
–
scope and responsibility of position;
–
skill/experience and performance of the
individual Executive Director;
–
general economic conditions in the relevant
geographical market;
–
average increases awarded across the
Company, with particular regard to increases
in the market in which the Executive Director
is based; and
–
market movements seen among relevant
peer companies.
Maximum opportunity
Increases will generally not exceed the average
increase for the wider employee population
within the Executive Director’s home country.
A higher increase may be made if there is an
increase in scope or responsibility of the
individual’s role; or to recognise development
of the individual in role.
A full explanation will be provided in the
Implementation Report should higher increases
be approved in exceptional cases.
In addition, where an Executive Director has
been appointed to the Board at a lower than
typical salary, larger increases may be awarded
to move them closer to market practice as their
experience develops.
For the duration of this Policy, it is not expected
that Deepak Nath will receive a salary increase.
Performance measures
Business and individual performance in the prior
year is one of the factors taken into account and
poor performance is likely to lead to a zero salary
increase.
Pension
Changes: No changes proposed
Purpose
Provide a market
competitive package to
recruit and retain Executive
Directors of the calibre
required to deliver the
Company’s strategy.
Operation
All Executive Directors will be eligible to
participate in a Company pension plan and/or
be paid a cash supplement in lieu of membership
in a pension plan.
Base salary is the only component of
remuneration that is pensionable.
Maximum opportunity
Executive Directors will be eligible to participate
in a Company pension to the same extent as the
wider workforce in their home country.
If provided, the maximum cash allowance
in lieu of participation will be no more than
the percentage the Company pays towards
pension in respect of the wider workforce in the
Executive Director’s home country.
The current pension contribution or cash
allowance for a US-based Executive Director is
7.5%, which is in line with that of the wider US
workforce.
Performance measures
No performance conditions apply.
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Benefits
Changes: No changes proposed
Purpose
Provide a market
competitive benefits
package to recruit and
retain Executive Directors
of the calibre required to
deliver the Company’s
strategy.
Operation
A wide range of benefits may be provided,
depending on the benefits provided for
comparable roles in the Executive Director’s
home country.
These benefits will include, as a minimum:
– healthcare cover;
– life assurance;
– long-term disability;
– annual medical examinations;
– all employee share plan; and
– company car or car allowance.
The Committee retains the discretion to provide
additional benefits, where necessary or relevant
in the context of the Executive Director’s location,
or, in connection with an Executive Director’s
recruitment, the country from which the
Executive Director is recruited.
Where applicable, relocation costs may be
provided in line with the Company’s relocation
policy for senior executives, which may include,
among other items:
– removal costs;
–
assistance with accommodation;
–
living expenses for self and family; and
–
financial, tax and/or legal consultancy advice.
In some cases, such payments may be grossed up.
Maximum opportunity
While no maximum level of benefits is prescribed,
they are set at an appropriate market
competitive level, considering a number of
factors, which include:
–
the level of benefits provided for other
employees within the Executive Director’s
home country; and
–
market practice for comparable roles within
appropriate pay comparators.
The actual amount payable will depend on the
cost of providing such benefits to an employee
in the location the Executive Director is based.
The Committee regularly reviews the benefit
policy and benefit levels.
Performance measures
No performance conditions apply.
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Annual Incentive Plan
Changes: Increase in maximum opportunity for CEO, plus the reduction in the bonus deferral aſter shareholding requirement met
Purpose
Incentivises delivery of the
business plan on an annual
basis. Rewards performance
against key financial and
non-financial performance
indicators that are critical to
the delivery of our business
strategy.
Operation
The Committee sets the performance measures
and targets for each financial year. At the end of
the year, the Committee determines the extent
to which they have been achieved.
Discretion and adjustments
The Committee retains discretion to adjust the
performance targets if there is a significant and/
or material event that causes the Committee
to believe the original targets are no longer
appropriate (e.g. to reflect material acquisitions
or disposals).
The Committee also retains discretion to amend
the level of annual bonuses determined by the
performance condition where the amount that
an Executive Director would/could receive under
an award would result in them receiving an
amount which the Committee considers cannot
be justified or which the Committee considers
to unfairly disadvantage or advantage an
Executive Director.
In exercising this discretion, the Committee may
consider all circumstances, including (but not
limited to):
–
the financial performance of the Company;
–
any changes in the Company’s share price; and
–
the performance, conduct and contribution
of the Executive Director.
Deferral
While an Executive Director is building their
shareholding requirement, 50% of any bonus will
be paid in cash and the remaining balance will be
deferred into shares for a three year period. No
further performance conditions apply to awards
under the Deferred Bonus Plan. Dividends that
accrue on the deferred shares during the vesting
period will be paid in either cash and/or shares
at the time of vesting.
Once a US-based CEO has achieved a
shareholding of 600%, or once other Executive
Directors have met their minimum shareholding
requirement, 20% of any bonus will be deferred
into shares for a period of three years and the
remainder paid in cash.
Malus and clawback
See details of our Malus and Clawback Policy
on page 165.
Maximum opportunity
The maximum opportunity for Executive
Directors is set out below.
CEO
CFO
US-based
300%
215%
Non-US based
260%
215%
Performance measures
At least 80% of the bonus will be based on
financial performance measures. The remainder
will be based on business objectives linked to
key areas of strategic focus. Bonuses are based
on the achievement of demanding financial and
non-financial targets.
The Committee may use different performance
measures and/or weightings for each
performance cycle as appropriate to reflect
the strategic needs of the business.
For 2026, the following performance measures
and weightings are proposed.
Revenue growth (%)
35%
Trading profit ($)
35%
Free cash flow ($)
15%
Strategic objectives
15%
Threshold performance will result in no
more than 15% of maximum payout, target
performance will result in 50% of maximum
payout and maximum performance will result
in 100% of maximum payout of the relevant
performance measure. Payouts will be on a
straight-line basis between threshold and target
and between target and maximum.
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Long-term Incentives
Changes: Increase in PSP and RSP opportunity for the CEO, plus the introduction of a PSP multiplier on awards granted aſter 1
January 2027; and different opportunity levels for non-US Executive Directors
Performance Share Plan Awards
Purpose
Long-term incentives are
designed to ensure that
executives take decisions
in the interest of the
longer-term success of the
Company and are aligned
with shareholder interests.
They also ensure the
Company can recruit and
retain Executive Directors
of the calibre required to
deliver the Company’s
strategy and long-term
success.
Operation
Awards are normally made in the form of
conditional share awards, but may be awarded
in other forms if appropriate. PSP awards
usually vest aſter three years, subject to the
achievement of stretching performance
targets linked to the Company’s strategy. The
performance period for performance conditions
linked to PSP awards is three years. Vested
shares are subject to a further two-year
holding period.
Dividends accrue on PSP awards during the
performance period and will be paid in either
cash and/or shares at the time of vesting.
Dividends also accrue on vested shares in the
holding period.
Discretion and adjustments
The Committee has the power to adjust the
annual award level (subject to the maximum
levels set out in the policy), and to adjust the
PSP performance multiplier, for example in the
event of a material fall in share price, as well as
the power to adjust the vesting level of an award
based on the underlying performance of the
Company.
The committee may adjust the performance
measure to reflect material changes (e.g.
significant acquisitions or disposals, share
consolidation, share buybacks or special
dividends). Any such change would be fully
explained to shareholders.
Further details are set out in the notes to this
table.
Malus and Clawback
See details of our malus and clawback policy
on page 165.
Maximum opportunity
CEO
CFO
Baseline Enhanced
Baseline Enhanced
US-based
650%
910%
300%
420%
Non-US based
400%
n/a
200%
n/a
Each year, the Committee will determine whether
a performance multiplier applies to the grant of the
PSP award, such that the Baseline award could be
increased up to the maximum Enhanced award
level based on the increase in the Company share
price over the preceding financial year.
The maximum enhanced award shown in the table
is the Baseline award multiplied by 1.4.
See Notes to the table for details of the conditions
for an enhanced award.
Performance measures
The Committee determines performance measures
and targets each year to ensure that measures
reflect business strategy and targets are stretching
and support value creation for shareholders, while
remaining motivational for management.
Threshold performance will result in 25% vesting
and maximum performance will result in 100%
vesting of the relevant performance measure.
Vesting between threshold and maximum will be
on a straight-line basis.
The following performance conditions are proposed
for the 2026 PSP award.
Adjusted Earnings per Share (EPSA)
30%
Relative Total Shareholder Return
1
30%
Adjusted Return on Invested Capital
(ROIC)
30%
Environmental, Social and
Governance (ESG) Objectives
10%
1 See Notes to table for TSR peer group
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Long-Term Incentives
Restricted Share Plan Awards
Purpose
Long-term incentives are
designed to ensure that
executives take decisions
in the interest of the
longer-term success of the
Company and are aligned
with shareholder interests.
They also ensure the
Company can recruit and
retain Executive Directors
of the calibre required to
deliver the Company’s
strategy and long-term
success.
Operation
Awards are normally made in the form of
conditional share awards, but may be awarded
in other forms, if appropriate. In line with US
practice, RSP awards usually vest in equal annual
tranches over a three year vesting period, subject
to a reasonable judgement underpin.
Dividends accrue on RSP awards during the
vesting period and will be paid in either cash and/
or shares at the time of vesting.
Discretion and adjustments
The Committee retains full discretion following
the grant of an award to make adjustments
to the vesting outcome if full vesting is not
considered to be appropriate.
In determining whether the reasonable
judgement underpin has been met, the
Committee will consider multiple factors
relating to the vesting period, including market
movements, shareholder experience, the
impact of the regulatory environment and
reputational factors.
Malus and clawback
See details of our Malus and Clawback Policy
on page 165.
Maximum opportunity
CEO
CFO
US-based
150%
125%
Non-US based
125%
75%
Performance measures
Awards under the RSP are not subject to
financial performance conditions and will vest
to the extent the Committee determines, in
its discretion, that the reasonable judgement
underpin has been met.
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Remuneration Policy Report
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Notes to the policy table for Executive Directors
Performance measure selection and target setting
Annual Incentive Plan
The performance measures used for our annual bonus have been chosen to support the Group’s strategy and the Committee continues
to believe it is appropriate to use a balance between financial targets and strategic objectives.
Performance targets are set by the Committee to be both stretching and achievable, taking into account the Group’s strategic priorities.
Financial performance targets under the AIP are set with reference to the prior year and to the budgets and business plans for the
coming year, ensuring the levels to achieve threshold, target or maximum payout are appropriately stretching. Commercial sensitivity
precludes the advance publication of the actual targets, but these will be retrospectively published in the Annual Report on
Remuneration for 2026.
Performance Share Plan
The Committee considers that the current measures used for Performance Share Plan awards, namely, CAGR in EPSA, relative TSR, ROIC
and ESG objectives, continue to be the most appropriate measures of long-term performance for the Company. The Committee reviews
the measures, weightings and targets for long-term incentive awards on an annual basis, to ensure their continued suitability and to
ensure they are sufficiently stretching.
Shareholding requirement
Changes: Increases proposed to shareholding requirement level
Purpose
To encourage Executive
Directors to build a
shareholding in the
Company and ensure the
interests of management
are aligned with those of
shareholders.
Operation
A US-based CEO is expected to build up a
shareholding of 600% over a reasonable period
of time (typically five years), and the remainder
(300%) over a longer period as determined by the
Chair of the Board (which is currently expected
to be ten years from the date of appointment).
Once the CEO’s shareholding is in excess of 600%,
the CEO may with the permission of the Chair of
the Board, choose to sell a proportion of vested
and otherwise unrestricted shares provided
that, in the reasonable opinion of the Chair, the
CEO is still likely to be able to achieve the 900%
shareholding requirement within the 10-year
period. All other Executive Directors are expected
to build up their shareholding requirements over
a reasonable period (typically five years).
Ordinary shares or ADRs that count towards
achieving these requirements include:
–
Beneficially owned shares held by an Executive
Director, or a person connected to them (as
recognised by the Remuneration Committee);
–
Unvested Deferred Bonus awards (on a net of
tax basis); and
–
PSP awards that have vested, and so are no
longer subject to performance conditions, but
are within a holding period.
Executive Directors are expected to hold 100%
of their minimum shareholding requirement
for two years post-departure. In cases where
the individual has not had sufficient time to
build up share ownership to meet the minimum
shareholding requirement, the post-employment
shareholding requirement will be based on their
actual level of shareholding on departure.
Shareholding requirements
Executive Directors are expected to build up
share ownership. The minimum shareholding
requirements applicable are below.
% of base salary
CEO
CFO
US-based
900%
300%
Non-US based
450%
225%
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PSP performance multiplier
Recognising that an increase of the TTDC to a level toward the middle of the peer group would imply a very significant increase in pay,
we propose a mechanism by which the higher levels of opportunity only become available to Executive Directors if shareholders benefit
directly as well. To achieve this, we propose that for PSP grants made in 2027 and 2028, the baseline value of the PSP awarded be
increased by a factor of between 1.0 and 1.4 (the multiplier) which can increase the value of the PSP opportunity. The multiplier applied
will be related to the increase in the share price in the previous year; if the share price increases by 5%, the value of the multiplier will be
1.0 and if the share price increases by 15% it will be 1.4, with the multiplier being determined on a straight-line basis between the two.
The share price increase would be calculated by dividing the average closing share price in December prior to the PSP award date by the
average closing share price in the preceding December. For example, for PSP awards granted in 2027, we would compare the average
closing share price from December 2026 against the average closing share price in December 2025 to determine whether a multiplier
should apply to the 2027-29 PSP award. An underpin will always apply to the denominator such that the preceding December share price
can never be less than the average closing share price in December 2025.
This test would be repeated each year, such that year over year share price increases must be delivered to maintain an enhanced PSP
award. As all PSP awards are subject to performance conditions, once granted the executive must continue to deliver performance over
the three year PSP award performance period to ultimately realise any value from the award, which would then be subject to a two year
holding period.
The purpose of this mechanism is two-fold: to enable Executive Directors to achieve pay more aligned with peers, but to align this with
the measurable delivery of shareholder value as reflected in share price growth.
Set out below are examples of how this multiplier may work for the CEO.
Award year
2027
2028
2029
Baseline average share price
£12.32 (Dec-25)
£13.24 (Dec-26)
£13.84 (Dec-27)
Average share price in December prior to PSP award
1
£13.24 (Dec-26)
£13.84 (Dec-27)
£15.92 (Dec-28)
Share price increase (Dec - Dec)
7.50%
4.50%
15%
PSP award multiplier
1.1
1
1.4
Award level (% of base salary)
715%
650%
910%
Award value (USD)
11,580,111
10,527,374
14,738,324
Performance vesting outcome (for illustrative purposes)
0%
100%
50%
Vesting value
2
(USD)
–
10,527,374
7,369,162
Vesting year
2030
2031
2032
End of post-vesting holding period
2032
2033
2034
1
An underpin will apply such that the baseline share price in all future years can be no less than £12.32, which is the average share price during the month of
December 2025.
2 Assuming constant share price.
As illustrated above, in a year where 5% share price increase is not delivered, the PSP award would return to the baseline level and where
an enhanced award has been granted, if the attached performance conditions have not been achieved then no value would be delivered
to the executive.
To determine the performance conditions for the multiplier, the Committee considered various factors, including what might be an
appropriate level to motivate the executives, and the share price change data across the PSP peer group over the three years to
December 2025. As shown below, a 5% change in average December share price has been at least median over the past three years and
15% has been around or above upper quartile.
2023
2024
2025
Lower quartile
(14.5%)
(11.7%)
(31.7%)
Median
2.3%
0.8%
(10.2%)
Upper quartile
18.0%
16.5%
5.1%
Percentile rank of 5% change
57.2%
55.2%
74.5%
Percentile rank of 15% change
72.6%
73.8%
90.2%
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Relative TSR comparator group
Under the current policy, TSR is measured against two peer groups, one based on the MedTech industry, and one based on a subset
of the FTSE100. We are proposing to simplify this in the new Policy and have only a peer group based on the MedTech industry.
The companies included in this peer group are:
–
Alcon Inc.
–
Bausch + Lomb Corporation
–
Baxter International Inc.
–
Becton, Dickinson & Co
–
bioMérieux S.A.
–
Coloplast A/S
–
Convatec Group Plc
–
Dentsply Sirona Inc.
–
Edwards Lifesciences Corporation
–
GE Healthcare Technologies Inc.
–
Intuitive Surgical, Inc.
–
Koninklijke Philips NV
–
ResMed Inc.
– Solventum
–
Sonova Holding AG
–
Steris Plc
–
Teleflex Incorporated
–
Zimmer Biomet Holdings, Inc.
–
Carl Zeiss Meditec Ag
–
Demant A/S
–
DiaSorin S.p.A.
–
Elekta AB
–
Enovis Corporation
–
Envista Holdings Corporation
–
Globus Medical, Inc.
–
Insulet Corporation
–
Integer Holdings Corporation
–
Integra Lifesciences
Holdings Corporation
–
Medtronic Public Limited Company
–
Straumann Holding Ltd
–
Stryker Corporation
–
The Cooper Companies, Inc.
The Committee may, in its absolute discretion, add or remove a company from the MedTech peer group where it determines that it is
appropriate to maintain the relevance of the peer group. Any changes to the peer group would be fully explained to shareholders.
Shareholding requirements
The new policy increases the standard shareholding requirements for the CEO and CFO to 900% and 300%, respectively. The CEO
shareholding requirement exceeds that of our peer group where 14 out of 21 CEOs have a 600% shareholding requirement, but is aligned
with our peer group for the CFO where 15 out of 21 CFOs have a 300% shareholding requirement.
Shareholding requirement
US-based CEO
(% of base salary)
US-based CFO
(% of base salary)
2025 Pay Peer Group median
600%
300%
Current S+N shareholding requirement
500%
200%
Proposed S+N shareholding requirement
900%
300%
Non-US based executives
The Committee recognises that executive pay tends to be very much lower outside the US, and to ensure that the policy does not
imply paying US-style compensation to non-US Board executives, we are proposing different variable pay opportunities outside the US.
Although, we do not expect to have Executive Director’s outside the US in the immediate future.
The Committee considered a FTSE peer group (20 FTSE 100 companies above and below Smith+Nephew’s market capitalisation,
excluding financial services), alongside other factors, including the positioning of other MedTech companies within the FTSE and Europe,
the complexities of leading a global business, internal equity where the majority of leadership will be based in the US, and the ability to
attract and retain high calibre talent that can lead a MedTech company. Given the factors noted above, the Committee believes it is
necessary to position the variable pay opportunities in the top quartile to be market competitive.
% of base salary
CEO
CFO
Annual Incentive Plan (at target)
Lower quartile
96%
75%
Median
100%
90%
Upper quartile
113%
100%
Proposed
130%
107.5%
Long-term incentive plan (at expected value
1
)
Lower quartile
150%
120%
Median
180%
150%
Upper quartile
240%
180%
Proposed
365%
195%
1 Expected value is calculated as 60% of maximum PSP vesting, plus 100% of RSP award level.
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Remuneration Policy for Non-Executive Directors
The policy for Non-Executive Directors remuneration is set out below.
Basic fee
Changes: Base fees will be paid fully in cash
Operation
Base fees are reviewed annually. Base fees will be paid fully in
cash.
Maximum opportunity
Increases will generally not exceed the average increase for the
wider employee population within the Non-Executive Director’s
home country. A higher increase may be made if there is an
increase in activity or time commitment. The total maximum
aggregate fee to Non-Executive Directors will not exceed the
limit set out in the Company’s Articles of Association.
Performance measures
No performance conditions apply.
Additional fee
Changes: No changes proposed
Operation
A fixed fee paid to reflect additional responsibilities, such as a
Committee Chair or Senior Independent Director (SID). The fee is
reviewed annually and will be paid fully in cash.
Maximum opportunity
The total maximum aggregate fee to Non-Executive Directors
will not exceed the limit set out in the Company’s Articles of
Association.
Performance measures
No performance conditions apply.
Intercontinental travel
Changes: No changes proposed
Operation
A fee to compensate for the time spent travelling to attend
meetings in another continent. The fee is reviewed annually and
paid fully in cash.
Maximum opportunity
The total maximum aggregate fee to Non-Executive Directors
will not exceed the limit set out in the Company’s Articles of
Association.
Performance measures
No performance conditions apply.
Shareholding requirement
Changes: No changes proposed
Operation
Non-Executive Directors are expected to build up share
ownership over a period of two to three years from appointment.
The expected shareholding requirement is 25% of the Non-
Executive Director’s annual fee.
Maximum opportunity
Not applicable.
Performance measures
No performance conditions apply.
The proposed application of the Remuneration Policy for the Chair of the Board and Non-Executive Directors in 2026 is as follows.
2025
2026
Chair of the Board
£467,500 ($606,348)
£482,460 ($625,751)
Basic fee
UK: £74,779 ($96,988)
US: $139,050
UK: £77,170 ($100,089)
US: $143,500
Senior Independent Director fee
UK: £21,500 ($27,886)
US: $37,500
UK: £25,000 ($32,425)
US: $43,500
Committee Chair fee
UK: £21,500 ($27,886)
US: $37,500
UK: £25,000 ($32,425)
US: $43,500
1
Fees set in GBP have been converted to USD using a 1 GBP:1.297 USD exchange rate.
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Remuneration Policy Report
continued
Note that all payments made to the Chair of the Board are determined by the Committee, while payments made to the Non-Executive
Directors are determined by those Directors, who are not themselves Non-Executive Directors, currently the Chair of the Board, Chief
Executive Officer, and Chief Financial Officer.
Discretion and judgement
The Committee retains the flexibility to apply discretion and judgement to ensure fair outcomes, as no remuneration policy or
framework, however well-designed, can anticipate every situation.
The Committee can exercise discretion in several areas when administering the Company’s incentive plans, in accordance with the
relevant plan rules. These include, but are not limited to:
–
Selection of participants.
–
The size of awards each year (subject to the limits outlined in the Remuneration Policy).
–
The performance measures and targets to be applied to each incentive award.
–
The level of payments, or vesting, based on achievement of the relevant performance conditions.
–
Determining individuals as good or ordinary leavers and the treatment of outstanding awards (in line with plan rules and
Remuneration Policy).
–
Managing outstanding awards and evaluating performance in the event of a change of control.
Additionally, if circumstances arise that lead the Committee to believe that a performance condition is no longer appropriate, they may
substitute, adjust, or waive the condition to ensure a fairer evaluation of performance.
Malus and clawback
The Board has a clawback policy which provides for the recovery of certain incentive-based remuneration from current and former
Executive Directors and Executive Officers of the Company in the event the Company is required to restate its financial statements filed
with the SEC in order to correct an error that is material to its financial statements. This policy is in addition to the rights granted to the
SEC under applicable legislation and the malus and clawback provisions set forth in the Company’s incentive plan rules.
Under the Company’s incentive plan rules, malus and clawback may be applied to AIP, deferred bonuses, PSP and RSP awards in
certain circumstances including:
–
Cases of fraud, negligence or gross misconduct by the Executive Director;
–
Material financial misstatement in the audited financial results;
–
Error in calculation; or
–
Other exceptional circumstances at the Committee’s discretion.
Cash bonuses will be subject to clawback, with deferred shares being subject to malus, over the deferral period. PSP and RSP awards
will be subject to malus over the vesting period and clawback from the vesting date to the third anniversary of the relevant vesting date.
These periods were chosen as it is practicable to enact clawback over these periods.
No malus or clawback was operated in 2025 in relation to Executive Directors.
Remuneration scenarios for 2026
Below is an illustration of the potential future remuneration that could be received by each Executive Director during 2026, both in
absolute terms and as a proportion of the total reward under different performance scenarios.
In developing the scenarios, the following assumptions have been made:
Below threshold
Fixed elements of remuneration (base salary, pension and benefits) plus 100% of RSP award
Threshold
Fixed remuneration plus 25% of PSP maximum opportunity plus 100% of RSP award
Target
Fixed elements of remuneration plus 50% of maximum bonus plus 60% of PSP maximum opportunity plus
100% of RSP award
Maximum
Fixed elements of remuneration plus 100% of maximum bonus plus 100% of PSP maximum opportunity plus
100% of RSP award
Maximum plus 50%
share price growth
Maximum plus a 50% share price growth on the PSP award and 100% of RSP award
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Composition of package (%)
0
10
20
30
40
50
60
70
80
90
100
Below threshold
Threshold
Target
Maximum
Maximum (incl 50%
share price growth)
A
B
B
C
C
C
CD
D
CD
F
E
E
E
E
F
F
F
F
G
H
A
A
A
A
John Rogers, CFO
Value of package ($m)
C
B
Below threshold
Threshold
Target
Maximum
Maximum (incl 50%
share price growth)
0
2
4
6
8
10
12
14
16
18
20
22
24
26
A
A
A
A
A
F
F
F
F
F
G
H
E
D
D
D
E
E
E
Deepak Nath, CEO
A
Base salary
B
Benefits
C
Pension
D
AIP
E
PSP
F
RSP
G
PSP (share price growth)
H
RSP (share price growth)
Composition of package (%)
0
10
20
30
40
50
60
70
80
90
100
A
B
C
BC D
E
F
H
Below threshold
Threshold
Target
Maximum
Maximum (incl 50%
share price growth)
B
C
CD
B
BCD
E
E
E
F
F
F
A
A
A
A
F
G
Below threshold
Threshold
Target
Maximum
Maximum (incl 50%
share price growth)
Value of package ($m)
C
B
A
E
D
D
D
E
E
E
F
F
F
F
G
H
A
A
A
A
0
2
4
6
8
10
12
14
16
18
20
22
24
26
F
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Reward strategy and application
Our reward approach is designed to be competitive across the diverse markets in which we operate, allowing us to attract and retain
top talent globally. In this context, the Remuneration Committee is responsible for setting the remuneration arrangements for Executive
Directors, ensuring alignment with the Company’s values and long-term business strategy. In doing so, the Committee also considers
the remuneration arrangements of the broader workforce, related policies, and the alignment of incentives and reward with culture.
The table below outlines the strategic rationale for each component of remuneration and how our remuneration structure applies to
different employee groups within Smith+Nephew.
Reward element and
strategic rationale
Executive
Directors
Executive
Committee
Senior
Executives
Senior
Managers
Managers
Wider
Workforce
Base salary
Fair and competitive
pay to attract and retain
employees.
Base salary is set with reference to the relevant local market and takes account of the
employee’s knowledge, experience, and contribution to the role. Base salaries are usually
reviewed annually and take into account local salary norms, local wage inflation and business
conditions. Increases in base salary for Executive Directors will take into account the level of
salary increases granted to all employees within the Group in the Executive Director’s home
country.
Base salary is
either subject
to negotiation
with local trade
unions or follows
the market pay
approach outlined
for managers.
Pensions and benefits
Support employees in the
performance of their role
and to ensure the package
is market competitive.
Employment and post-retirement benefits are offered in line with relevant home market.
Short-term Incentives
Nearly all employees are
eligible to participate in
an annual incentive plan.
The bonus opportunity
varies by role level. The
performance objectives
within the plans cascade
from the objectives set for
Executive Directors at the
start of the year to ensure
the performance of all
employees is linked to the
Company’s strategy.
Annual incentive
based on 85%
financial metrics,
plus 15% strategic
objectives.
Compulsory deferral
into shares for three
years.
Annual incentive
based on 80%
financial metrics,
plus 20% strategic
objectives.
Annual incentive based on 70% financial
metrics, plus 30% strategic objectives.
Certain employees within commercial or sales
roles participate in a sales incentive plan instead
of the annual incentive plan.
Annual incentive
is either subject
to negotiation
with local trade
unions; follows
the standard
annual incentive
framework for
managers with
60% financial
metrics and
40% strategic
objectives; is a
sales incentive
plan; or an
operational
effectiveness
incentive plan.
Long-term Incentives
Longer term reward,
predominantly in shares,
to recognise and reward
performance delivery and
create alignment with
shareholder interests.
PSP awards are
subject to a three-
year performance
period and a two-
year holding period.
PSP awards are subject to a three-year
performance period.
RSP awards vest in
three equal annual
instalments and are
subject to continued
employment
and a reasonable
judgement underpin.
RSP awards are awarded and vest in three equal annual
instalments subject to continued employment and good
standing.
The level of award granted to employees is dependent
on the role level, personal performance, and Company
performance conditions in the year prior to the award.
RSP awards may be granted as
special recognition or to motivate
and retain key talent. Awards
typically vest in three equal annual
instalments subject to continued
employment and good standing.
Eligible employees in the US can participate in a section 423 plan. Employees outside the US will be able to
participate in the new Smith+Nephew Global Employee Share Purchase Plan, launching in 2026.
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Link to business strategy
The strategy for growth was executed through a disciplined 12-Point Plan focused on productivity gains, enhanced commercial
execution, and organisational transformation. This delivery strengthened operational performance and created a solid platform for
the next phase of growth, based on the RISE strategy, which will focus on generating significant value for shareholders, customers
and communities by reaching more patients through leading innovation, raising the standard of care and delivering stronger
financial performance.
The alignment of each proposed measure to the RISE strategy is set out below.
AIP measures
Reach
Innovate
Scale
Execute
Revenue Growth
Trading Profit
Free Cash Flow
Strategic objectives
PSP measures
Reach
Innovate
Scale
Execute
Adjusted Earnings per Share
Return on Invested Capital
Relative TSR (Total Shareholder Return)
ESG objectives
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Remuneration Policy Report
continued
Approach to recruitment
The Recruitment Policy provides a suitable framework for attracting individuals with the necessary expertise to lead a company of our
size, scale, and complexity. The table below outlines the policy, for both internal and external recruitment, and the different elements
that may be included within a remuneration package for an Executive Director, along with the approach the Remuneration Committee
would take for each element.
Element
Policy and operation
Overall
The policy of the Board is to recruit the best candidate possible for any Board position and to structure pay and
benefits in line with the Remuneration Policy. The ongoing structure of a new recruit’s package would be the
same as for existing Directors, with the possible exception of an identifiable buy-out provision, as set out below.
Base salary
Base salary is positioned at a fair and appropriate level allowing for a range of factors, including the executive’s
current remuneration and experience, internal relativities, an assessment against relevant comparator groups
and cost. If a new Executive Director is initially appointed at a lower rate, the Committee retains the ability to
award larger increases in subsequent years to realign the salary over time as the individual develops in the role.
Pensions and
benefits
An Executive Director will be eligible for benefits and pension arrangements in line with the arrangements
offered to comparable roles in the country in which the Executive Director is based.
Annual incentive
The maximum level of opportunity is as set out in the Remuneration Policy. The Committee retains discretion
to set different performance targets for a new externally appointed Executive Director, or to adjust performance
targets and/or measures in the case of an internal promotion, to be assessed over the remainder of the financial
year. In this case, any bonus payment would be made at the same time as for existing Directors, such award to be
prorated for the time served in the performance period.
Long-term
incentive
The maximum level of opportunity is as set out in the Remuneration Policy. To achieve rapid alignment with
Smith+Nephew and shareholder interests, the Committee retains discretion to grant an award to a new
externally appointed Executive Director on, or soon aſter, appointment if they join outside of the normal grant
period.
Replacement or
buy-out awards
The Committee retains discretion to grant replacement buy-out awards (in cash or shares) to a new externally-
appointed Executive Director to reflect the loss of awards granted by a previous employer. Where this is the
case, the Committee will seek to structure the replacement award such that overall it is on an equivalent basis
to broadly replicate that foregone, using appropriate performance terms. If the Executive Director’s prior
employer pays any portion of the remuneration that was anticipated to be forfeited, the replacement awards
shall be reduced by an equivalent amount.
Sign-on incentives
The Committee retains discretion to grant a sign-on award (in cash or shares) to a new externally appointed
Executive Director to ensure a compelling remuneration package can be offered in a highly competitive
recruitment market. These awards would be capped at 200% of base salary and be subject to robust
performance conditions, deferral, and clawback. The Committee will explain the circumstances and rationale for
such awards to shareholders if they are used.
Other
If the Committee concludes that it is necessary and appropriate to secure an appointment, relocation-related
support and international mobility benefits may be provided, depending on the circumstances and in line with
the Group’s broader approach. In addition, where a new Executive Director requires legal or other professional
advice related to the appointment to understand the obligations, duties and legal and regulatory requirements
of the new role, the associated fees may be paid (or reimbursed) by the Company.
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STRATEGIC REPORT
GOVERNANCE
ACCOUNTS
OTHER INFORMATION
Service contracts and policy on payment for loss of office
Executive Directors
The following table sets out the principal provisions of the service contracts of Executive Directors and the treatment of payments
on termination of employment. The Executive Director service contracts (as well as the terms and conditions of appointment of the
Non-Executive Directors) are available for inspection at the Company’s registered office (Building 5, Croxley Park, Hatters Lane,
Watford, WD18 8YE, United Kingdom).
In exceptional circumstances, the Committee may authorise, where it considers it to be in the best interests of the Company and
shareholders, entering into contractual arrangements with a departing Executive Director, for example, a settlement, confidentiality,
restrictive covenant or other arrangement, pursuant to which sums not set out in the following table may become payable.
Full disclosure of the payments will be made in accordance with the remuneration reporting requirements.
Deepak Nath
John Rogers
Date of service agreement
1 April 2022
22 July 2025 (current US Agreement)
1 December 2023 (prior UK Agreement)
Date of appointment as director
1 April 2022
1 April 2024
Employing company
Smith+Nephew Inc
Smith+Nephew Inc
Contract duration
No fixed term
Notice period
No more than 12 months’ notice
Post-termination restrictions
The contracts of employment contain the following restrictions on the Director for 12 months
from the date of termination of employment:
–
Non-compete clause for employment
–
Non-dealing and non-solicitation of client/customers
–
Non-solicitation of suppliers and non-interference with supply chain
–
Non-solicitation of employees.
Summary termination –
payment in lieu of notice
The Company may, at its absolute discretion, terminate the employment of the Director with
immediate effect by giving written notice together with payment of a sum equivalent to the
Director’s base salary and the value of his contractual benefits as at the date such notice is given,
in respect of the Director’s notice period, less any period of notice worked. The Company may
elect to make this payment monthly or as a lump sum.
Termination payment –
change of control
The Company shall pay 12 months’ base salary, together with a sum equivalent to the value of the
Director’s contractual benefits, as at the date of termination within one year of change of control.
Reasonable outplacement costs will also be covered.
Termination – treatment of
annual incentive awards
Annual bonus awards are subject to performance conditions and made at the discretion of the
Remuneration Committee. Executive Directors will receive a bonus, pro rata to service for the
current performance year, unless the reason for leaving is resignation or misconduct, in which case
the awards will lapse on cessation of employment. Any prorated awards will ordinarily be paid
on their normal payment date and following the end of the relevant award performance period,
unless the Committee determines that awards should be paid following cessation of employment.
Performance will be tested at the end of the performance period unless the Committee
determines to test performance otherwise. Deferred bonus awards will vest on their normal vest
date in accordance with the plan rules.
Termination – treatment of
long-term incentive awards
PSP and RSP awards are made at the discretion of the Remuneration Committee. Executive
Directors will be eligible for PSP awards, pro rata to service for the performance period, unless
the reason for leaving is resignation or misconduct, in which case the awards will lapse on
cessation of employment. Similarly, Executive Directors eligible for RSP awards will receive
outstanding awards pro rata for service over the award vesting period. PSP awards will be tested
for performance at the end of the performance period, unless the Committee determines to test
performance otherwise. The reasonable judgement underpin on RSP awards will be tested at the
end of the vesting period.
Redundancy arrangements
12 months’ base salary and contractual benefits. Reasonable outplacement costs.
Holiday
Upon termination for any reason entitled to payment in lieu of accrued, but untaken holiday
entitlement (subject to overriding local law and regulation).
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Annual Report 2025
Directors’ Remuneration Report
continued
Remuneration Policy Report
continued
Chair and Non-Executive Directors
The Chair of the Board and each of the Non-Executive Directors have letters of appointment. The letters of appointment do not
contain any contractual entitlement to a termination payment and the Non-Executive Directors can be removed in accordance with
the Company’s Articles of Association. Directors are required to retire at each AGM and seek re-election by shareholders.
The details of the service contracts in relation to the Non-Executive Directors, who served during the year are set out in the table below.
Neither the Chair of the Board nor the Non-Executive Directors have provisions in their letter of appointment that relate to a change
of control of the Company.
Committee appointments
Date of appointment
Expiry of current term
Chair
Initial term of
appointment is for
36 months subject
to election/re-election
at each AGM. Thereaſter,
continuation of the
appointment is subject
to re-election at each
subsequent AGM.
Rupert Soames
N
R
24 April 2023
Non-Executive Directors
Angie Risley
N
R
18 September 2017
Thérèse Esperdy
N
R
1 December 2025
Jo Hallas
A
C
1 February 2022
David King
R
C
1 July 2025
Garheng Kong
A
1 September 2025
Simon Lowth
A
N
1 January 2024
John Ma
C
17 February 2021
Jez Maiden
A
R
14 September 2023
Katarzyna Mazur-Hofsaess
C
1 November 2020
Marc Owen
A
R
N
C
1 October 2017
Sybella Stanley
R
1 February 2025
Bob White¹
R
C
1 May 2020
30 April 2025
Committee key
A
R
N
C
Member of the
Audit Committee
Member of the
Remuneration Committee
Member of the Nomination
& Governance Committee
Member of the Compliance
& Culture Committee
Committee
Chair
1 Bob White stepped down from the Board on 30 April 2025.
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Annual Report 2025
STRATEGIC REPORT
GOVERNANCE
ACCOUNTS
OTHER INFORMATION
Delivery of our purpose and strategy drives our 2025 incentive outcomes
Our remuneration arrangements are designed to incentivise and reward the delivery
of sustainable value creation and long term-growth that enables us to achieve our
purpose of delivering a Life Unlimited for our patients.
We aim to:
Be competitive
Attract, retain and motivate top talent by offering a
competitive remuneration structure for the MedTech industry
Pay for performance
Create a direct link between pay and performance,
recognising both Company and individual performance
Align interests
Align executive interests with the long-term interests
of our shareholders
Be agile
Remain flexible enough to adapt to changing business needs
Be reasonable
Ensure remuneration is reasonable, affordable and
appropriate in the context of the MedTech industry
Life Unlimited:
We exist to
restore people’s
bodies and their
self-belief
Transform
Through innovation
and acquisition
Accelerate
Profitable growth
through prioritisation
and customer focus
Strengthen
The foundation to
serve customers
sustainably and simply
Revenue
Trading profit margin
Free cash flow
Return on
invested capital
Earnings per share
Relative total
shareholder return
Strategic objectives
(including ESG metrics)
Remuneration
outcomes in line
with performance
Purpose
Strategy
Incentive
measures
Pay for
performance
172
Smith+Nephew
Annual Report 2025
Remuneration at a glance
Directors’ Remuneration Report
continued
Annual Incentive Plan
Single figure
Executive Director 2025 Remuneration Outcomes
John Rogers
Chief Finance
Officer (CFO)
$2,815m
(2024: $2,000m)
Performance Share Plan 2023-2025
How we performed in 2025
$7,219m
(2024: $5,962m)
Deepak Nath
Chief Executive
Officer (CEO)
Weighting
A
Revenue
35.0%
B
Trading profit margin
35.0%
C
Free cash flow
15.0%
D
Strategic objectives (including ESG)
15.0%
D
C
B
A
Weighting
A
Cumulative group revenue
25.0%
B
Cumulative free cash flow
25.0%
C
Return on invested capital
25.0%
D
Relative Total Shareholder Return
(FTSE100)
12.5%
E
Relative Total Shareholder Return
(S&P 1200 Global Healthcare
Medical Devices
subset)
12.5%
E
D
C
B
A
Revenue
Actual: $6,117m
Threshold: $6,019m
Target: $6,080m
Maximum: $6,140m
Trading profit margin
Actual: 19.7%
Threshold: 18.9%
Target: 19.4%
Maximum: 19.9%
Free cash flow
Actual: $836m
Threshold: $531m
Target: $625m
Maximum: $719m
Strategic objectives (Including ESG) – Deepak Nath
Actual: 135%
Threshold: 0%
Target: 100%
Maximum: 200%
Strategic objectives (Including ESG) – John Rogers
Actual: 118%
Threshold: 0%
Target: 100%
Maximum: 200%
Remuneration summary
Target
Actual
Target
Actual
A
Base salary and benefits
B
Annual Incentive Plan
C
Performance Share Plan
D
Restricted Share Plan (incl. buy-out)
Cumulative group revenue
Actual: $17,625m
Threshold: $16,354m
Target: $17,776m
Maximum: $19,198m
Cumulative free cash flow
Actual: $1,511m
Threshold: $1,233m
Target: $1,541m
Maximum: $1,695m
Return on invested capital
Actual: 7.2%
Threshold: 8.5%
Target: 9.5%
Maximum: 10.5%
Relative Total Shareholder Return (FTSE100)
Actual: 21.9%
Threshold: Index return (28.1%)
Maximum: Index return +8% (61.4%)
Relative Total Shareholder Return
(S&P 1200 Global Healthcare Medical Devices subset)
Actual: 21.9%
Threshold: Index return (-5.8%)
Maximum: Index return +8% (18.7%)
A
1,179
B
1,011
A
1,179
B
1,636
A
1,771
B
1,728
C
2,442
D 836
A
1,771
B
2,842
C
1,770
D 836
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Annual Report 2025
STRATEGIC REPORT
GOVERNANCE
ACCOUNTS
OTHER INFORMATION
This section provides details on how the Directors’ Remuneration Policy was implemented during 2025 (the
Implementation Report
)
and how we intend to apply it in 2026.
About the Remuneration Committee
The members of the Remuneration Committee include Sybella Stanley (Chair), Angie Risley, Rupert Soames, Jez Maiden, David King,
Marc Owen and Thérèse Esperdy. Details of attendance at Committee meetings during the year are shown on page 110.
The Committee’s role is to ensure that our Remuneration Policy and practices are aligned with the business strategy and promote
long-term sustainable success. The Committee’s Terms of Reference can be found on our website. These terms include the
determination of fair remuneration for Director and the Chair of the Board (no individual participates in discussions about their own
remuneration). In addition, the Committee receives recommendations from the Chief Executive Officer on the remuneration of those
reporting to him, as well as advice from the Head of Reward and Chief HR Officer.
Advisers to the Committee
During the year under review, the Committee received material assistance and advice on remuneration policy from the Head of
Reward and Chief HR Officer. The Chief Executive Officer also provided advice that was of material assistance to the Committee.
The Committee appoints independent remuneration consultants who attend Committee meetings and provide independent advice
and information on corporate governance developments and market trends on pay and incentive arrangements.
The Committee appointed Willis Towers Watson as adviser to the Committee in 2023 following a competitive tender process.
The total fees paid to Willis Towers Watson in respect of its services to the Committee during the year were £109,980. The fees paid
are based on the standard market rates for remuneration committee advisory services. Willis Towers Watson is a signatory to the
Remuneration Consultants Group Code of Conduct.
Willis Towers Watson also provides consultancy services to the Company in relation to certain employee and benefit matters
applying to those below the Board. The Committee is satisfied that the advice provided by Willis Tower Watson was independent and
objective and that the provision of additional services did not compromise that independence. The Committee is also satisfied that the
team who provided advice do not have any connection to Smith+Nephew that may impair their independence and objectivity.
The work carried out by the Committee during the year is set out on page 147.
Statement of shareholder voting
We carefully monitor shareholder voting on our Remuneration Policy and its implementation. We recognise the importance of our
shareholders’ continued support for our remuneration arrangements.
The table below shows the results of the polls taken on the resolution to approve the Remuneration Policy at our AGM in 2024 and
the Director’s Remuneration Implementation Report, at our AGM in May 2025.
Resolution
Number of votes cast
For
Against
Votes withheld
Remuneration Policy
677,164,841
384,484,538
292,680,303
1,744,476
(56.78%)
(43.22%)
Directors’ Remuneration Report
(excluding Policy)
715,001,994
662,105,430
52,896,564
9,339,790
(92.6%)
(7.4%)
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Annual Report 2025
Annual report on remuneration
Directors’ Remuneration Report
continued
Remuneration for the year ended 31 December 2025
Our Remuneration Policy operated as intended over the year, and the table below sets out the single total figure of remuneration for
each Executive Director received in respect of qualifying service over 2025 together with comparatives for 2024. An explanation of how
the figures are calculated follows the table.
Executive Directors’ remuneration – Single figure of remuneration (audited)
Executive Directors
Deepak Nath
(appointed 1 April 2022)
John Rogers
(from 1 April 2024)
000s USD
2025
1
2024
2
2025
1
2024
2
Fixed pay
Base salary
1,607
1,560
927
3
695
Pension
121
117
99
83
Benefits
43
42
153
12
Total fixed pay
1,771
1,719
1,179
790
Annual variable pay
Annual Incentive Plan (AIP)
Cash
1,421
1,017
818
605
Deferred shares
1,421
1,017
818
605
Total AIP
2,842
2,034
1,636
1,210
Long Term Incentive Plans (LTIPs)
Performance Share Plan
1,770
4
1,167
5
–
–
Restricted Share Plan
787
6
–
7
–
–
Forfeited incentives
49
8
1,042
–
–
Total LTIPs
2,606
2,209
–
n/a
Total variable pay
5,448
4,243
1,636
1,210
Total single figure
7,219
5,962
2,815
2,000
1
All 2025 British Pounds amounts have been converted to US Dollars (our reporting currency) using a 12-month average exchange rate (£1 to $1.297).
2
All 2024 British Pounds amounts have been converted to US Dollars (our reporting currency) using a 12-month average exchange rate (£1 to $1.278).
3
Includes £2,165 ($2,808) for the payout of accrued and unused annual leave on relocation to the US and transition from a UK employment contract to a US
employment contract.
4
A total of 110,163 shares (102,830 performance shares plus an estimated 7,333 dividend shares) due to vest in March 2026 under the 2023-25 PSP award.
Dividend equivalent shares have been estimated based on an estimated total dividend per share over the vesting period of £0.8833 and a share price of
£12.385. The value is calculated using an estimated vest price of £12.385 ($16.06). Actual dividend shares will be calculated at vesting and the actual vesting
value will be reported in next year’s annual report.
5
A total of 83,938 shares (76,983 performance shares plus 6,955 dividend shares) vested on 20 May 2025. The value is calculated using the vest price of
£10.88 ($13.90).
6
A total of 44,921 shares (43,839 RSP shares plus 1,082 dividend shares) vested in August 2025 under the first tranche of the 2024 RSP award. The value is
calculated using the vest price of £13.51 ($17.52).
7
The full value at grant was reported in 2024.
However, as these awards are subject to forfeiture on leaving and a reasonable judgement underpin they should
be reported at vest so this has been restated from $1,966,000 to $0.
8
A total of 3,016 shares vested in November 2025 under the final tranche of the buy-out awards granted to Deepak Nath in respect of outstanding incentives
he forfeited on leaving his former company, Siemens Healthineers. Full details of the buy-out awards can be found in our 2021 Annual Report. The value is
calculated using the vest price of £12.57 ($16.31).
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STRATEGIC REPORT
GOVERNANCE
ACCOUNTS
OTHER INFORMATION
Base salary
Base salaries of Executive Directors are reviewed annually and allow for scope of role and the individual’s experience and time in role,
as well as their performance. The increases awarded were in line with the wider workforce within the country in which the Executive
Director is based.
000s
Annual base salary
1 April 2025
Annual base salary
1 April 2024
%
change
Executive Directors
Deepak Nath
$1,620
$1,572
3.0%
John Rogers
1,2
$973
(£750)
$940
(£725)
3.5%
1
John Rogers was based in the UK and paid in British Pounds until 29 September 2025, when he permanently relocated to the US. The figure in parenthesis
represents the value in local currency. On permanently relocating to the US, his salary was set at $875,000 (an 10% reduction from his UK salary).
2
All 2025 British Pounds amounts have been converted to US Dollars (our reporting currency) using a 12-month average exchange rate (£1 to $1.297).
Pensions
Executive Directors either participate in a defined contribution pension plan at a rate equivalent to that of the wider workforce in the
country in which they are based, or receive a cash allowance in lieu of membership of a pension plan.
Amount
’000s
Benefit
(% of base salary)
Executive Directors
Deepak Nath
1
$121
7.5%
John Rogers
UK
2,3
$87
(£67)
12%
US
4
$12
7.5%
John Rogers total
$99
1
The contribution paid is in line with the contribution paid to the wider workforce in the Executive Director’s home country.
2
Paid for his period of UK employment (1 January 2025 – 28 September 2025).
3
The figure in parenthesis represents the value in local currency. All British Pounds amounts have been converted to US Dollars (our reporting currency)
using a 12-month average exchange rate (£1 to $1.297).
4
Paid for his period of US employment (29 September – 31 December 2025).
Benefits
Executive Directors are provided with benefits that are competitive in their home country. This includes medical, life insurance,
transportation benefits, plus tax advice services.
Medical
Transportation
(car and fuel allowance)
Tax support services
Relocation services
000s
2025
2024
2025
2024
2025
2024
2025
2024
Executive Directors
Deepak Nath
$13
$13
$13
$13
$17
$16
–
–
John Rogers
UK
1
$22
(£17)
$1
(£1)
$11
(£9)
$11
(£9)
–
–
–
–
US
$1
–
$3
–
–
–
$116
–
John Rogers total
$23
$1
$14
$11
–
–
$116
–
1
John Rogers was based in the UK and paid in British Pounds until 29 September 2025, when he permanently relocated to the US. The figure in parenthesis
represents the value in local currency. All British Pounds amounts have been converted to US Dollars (our reporting currency) using a 12-month average
exchange rate (£1 to $1.297).
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Annual Report 2025
Directors’ Remuneration Report
continued
Annual report on remuneration
continued
Annual Incentive Plan (AIP)
The 2025 AIP is based on performance for the year ended 31 December 2025. The maximum bonus opportunity for Executive Directors
is 215% of Base Salary with 85% of the bonus opportunity tied to financial performance and the remaining 15% tied to strategic
objectives (including ESG objectives).
To the extent a bonus is payable, one-half is deferred into shares for three years without any matching. If the Executive Director has
met the minimum shareholding requirement at the award date, 30% rather than 50% of the bonus is deferred. The figures in the table
below represent the total annual bonus amount to be paid, including the amount deferred in shares.
The performance measures and weightings that applied to the 2025 Annual Incentive Plan were as follows:
2025 performance range and outcome
1
Weighted vested outcome (%)
Performance measure
Threshold
(0%)
Target
(100%)
Maximum
(200%)
% of target
Weighting
Deepak Nath
John Rogers
Financial
Revenue
$6,019m
$6,080m
$6,140m
Actual
$6,117m
161.2%
x
35%
=
56.4%
56.4%
Trading profit margin
18.9%
19.4%
19.9%
Actual
19.7%
165.0%
x
35%
=
57.8%
57.8%
Free cash flow
$531m
$625m
$719m
Actual
$836m
200.0%
x
15%
=
30.0%
30.0%
Strategic objectives (see page 178)
Deepak Nath
135.0%
x
15%
=
20.3%
–
John Rogers
118.3%
x
15%
=
–
17.7%
Total (% of target)
100%
164.4%
161.9%
x
x
Target bonus opportunity
(% of base salary)
107.5%
107.5%
x
x
2025 base salary
2
$1,607,836
$940,010³
=
=
2025 annual bonus
(of which 50% is deferred in shares for three years)
$2,842,171 $1,636,370
% of maximum bonus opportunity
82.2%
81.0%
% of base salary
176.8%
174.1%
1
For the purpose of incentive calculations, we are using constant currency rates.
2
Base salary for bonus purposes is determined based on the average base salary over the 12-month period ended 31 December 2025.
3
Base salary related to John Rogers UK employment has been converted from British Pounds to US Dollars using a 12-month average exchange rate
(£1 to $1.297).
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STRATEGIC REPORT
GOVERNANCE
ACCOUNTS
OTHER INFORMATION
Annual Incentive Plan (AIP)
continued
Strategic Objectives
Key strategic objectives represent 15% of the annual bonus opportunity. For 2025, these objectives focused on the delivery of the
Group’s strategy, our people and processes, customers and advancing our sustainability agenda.
Objective
Assessment
Weighting
Outcome
(% of target)
Deepak Nath
–
Create and embed a focused
and high performing culture
–
Continue to build a robust
talent pipeline for the
Executive Committee and High
Value roles
–
Define S+N operating system
scope and develop plan for
implementation
Continued to drive high levels of performance across the
Executive Committee and broader organisation with over
achievement of all financial targets for 2025.
Good progress has been made against our integrated
talent strategy, talent risks, and succession strength for
our Executive Committee and High Value roles.
The S+N operating system, designed to support
continuous improvement, was completed with
implementation across the organisation on track.
5%
135.0%
–
Set out enterprise vision and
strategy for 2026 to 2030
–
Continue to build and
strengthen innovation pipelines
in line with strategic plans
New three-year RISE strategy developed and presented
at Capital Markets Day. This strategy sets out a clear,
ambitious and achievable strategy for organic and
inorganic growth.
Thirteen new products developed ready for launch on
time and within budget, with good progress made on our
new product development and early innovation projects.
5%
–
Reduction in Scope 1 & Scope
2 greenhouse gas emissions
(relative to 2019 baseline)
–
Employee engagement score
A reduction of 71.1% in our Scope 1 and Scope 2 GHG
emissions (relative to our 2019 baseline) was achieved
which was slightly above our 2025 target (71%).
Our employee engagement (as measured by Gallup)
increased from 4.24 to 4.33 which puts us in the 68th
percentile (increased from 61st percentile in 2024).
5%
John Rogers
–
Build a high-performing team
–
Drive continued operational
efficiency
–
Improve capital performance,
and internal financial systems
and processes
Implemented new operating models for IT and GBS and
strengthened team capabilities to enable functional
transformation and operational improvements.
Good progress also made on the talent strategy, talent
risks, and succession strength within finance, IT and GBS.
Delivered cumulative zero-based budget savings
of c. $280 million by the end of 2025; $50 million of
procurement savings in 2025.
Working capital levels improved and inventory
levels reduced. Free cash flow significantly ahead
of 2025 targets, and improved return on invested
capital. Improved forecast accuracy and financial
headwind management.
10%
118.3%
–
Reduction in Scope 1 & Scope
2 greenhouse gas emissions
(relative to 2019 baseline)
–
Employee engagement score
A reduction of 71.1% in our Scope 1 and Scope 2 GHG
emissions (relative to our 2019 baseline) was achieved
which was slightly above our 2025 target (71%).
Our employee engagement (as measured by Gallup)
increased from 4.24 to 4.33 which puts us in the 68th
percentile (increased from 61st percentile in 2024).
5%
178
Smith+Nephew
Annual Report 2025
Directors’ Remuneration Report
continued
Annual report on remuneration
continued
Decision on 2025 AIP outcomes
The Committee strives to maintain a clear link between pay and performance, focusing on setting challenging performance targets and
evaluating both company-wide and individual achievements.
The performance has been assessed according to the extent to which the Executive Directors have met the expectations of the Board,
and how they have performed in respect of our culture pillars of Care, Collaboration and Courage. The Committee believes that the
payments outlined in this report fairly reflect the performance achieved, and leadership behaviours exhibited, and as such there was no
need to apply discretion. The Committee believes that the Remuneration Policy operated as intended during the year.
Performance Share Plan (PSP)
US Executive Directors are awarded annual PSP awards equal to 300% of base salary. PSP awards are subject to a three-year
performance condition, and vest on a straight-line basis between threshold and maximum. To the extent the performance conditions
are met, once sufficient shares have been sold to cover the tax liability, the remaining shares are subject to a two-year holding period.
For existing awards granted up to and including 31 December 2025, the following performance measures and weightings apply.
2023-25
PSP award
2024-26
PSP award
2025-27
PSP award
Performance measures
Performance
period
1 Jan 2023 to
31 Dec 2025
1 Jan 2024 to
31 Dec 2026
1 Jan 2025 to
31 Dec 2027
Revenue
25%
30%
Free cash flow
25%
Return on invested capital
25%
30%
30%
Total Shareholder Return
25%
30%
30%
CAGR earnings per share
30%
ESG objectives
10%
10%
The description of the performance conditions and targets for the 2023-2025 PSP (that vests in March 2026) and each outstanding
PSP award is shown below.
Metric
Description
Performance conditions
2023-25
PSP award
2024-26
PSP award
2025-27
PSP award
Revenue
The cumulative global revenue over the three-year
performance period on constant foreign exchange rates and
adjusted for any Board-approved M&A.
Threshold
$16,354m
-
n/a
Target
$17,776m
Commercially
Sensitive
n/a
Maximum
$19,198m
-
n/a
Free cash
flow
The cumulative free cash flow over the three-year
performance period on constant foreign exchange rates and
adjusted for any Board-approved M&A.
Threshold
$1,233m
n/a
n/a
Target
$1,541m
n/a
n/a
Maximum
$1,695m
n/a
n/a
Return on
invested
capital
The return earned on the total capital invested defined as:
Operating profit
1
less adjusted taxes
2
(Opening net operating assets + closing net operating assets)
3
÷ closing net operating assets)
3
÷ 2
1
Operating Profit is as disclosed in the Group income statement in the
Annual Report less amortisation of acquired intangible assets.
2 Adjusted taxes represents our taxation charge per the Group income
statement adjusted for the impact of tax on items not included in
Adjusted Operating Profit, notably amortisation of acquired intangible
assets, interest income and expense, other finance costs and share of
results of associates.
3 Net Operating Assets comprises net assets from the Group balance
sheet (total assets less total liabilities) excluding the following items:
accumulated amortisation of acquired intangible assets, investments,
investments in associates, retirement benefit assets and liabilities,
long-term borrowings, bank overdraſts, borrowings and loans, IFRS 16
lease liabilities and right-of-use assets, cash and cash equivalents.
Threshold
8.5%
8.5%
9.0%
Target
9.5%
9.5%
10.0%
Maximum
10.5%
10.5%
11.0%
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OTHER INFORMATION
Metric
Description
Performance conditions
2023-25
PSP award
2024-26
PSP award
2025-27
PSP award
Total
Shareholder
Return
Total Shareholder Return relative to two equally weighted
comparator groups.
1 FTSE 100 companies, excluding financial services,
commodities (basic materials and oil and gas). From the 2024-
26 PSP, food retail and utility companies were also excluded.
2 A sector peer group based on the S&P Global 1200
Healthcare subset, comprising medical devices, equipment
and supplies companies
1
. From the 2024-26 PSP, the S&P
1200 comparator group was replaced with a specific MedTech
industry peer group consisting of the following companies:
Threshold
Index
return
Index
return
Index
return
Alcon Inc.
Bausch + Lomb Corp.
Baxter International Inc.
Becton Dickinson & Co
bioMerieux SA
Carl Zeiss Meditec AG Corp.
Coloplast A/S
ConvaTec Group Plc
Demand A/S
Dentsply Sirona Inc
DiaSorin SpA
Edwards Lifesciences Corp
Elekta AB
Enovis Corp.
Envista Holdings Corp.
GE HealthCare Tech Inc.
Globus Medical Inc.
Hologic Inc.
Insulet Corp.
Integer Holdings Corp.
Integra Lifesciences Hold.
Intuitive Surgical Inc.
Koninklijke Philips NV
Resmed Inc.
Sonova Holding AG
Steris Plc
Straumann Holding AG
Stryker Corp.
The Cooper Companies Inc.
Zimmer Biomet Holdings Inc.
Maximum
Index
return +8%
Index
return +8%
Index
return +8%
CAGR
earnings
per share
The compound annual growth rate in adjusted earnings per share
over the three-year performance period on constant foreign
exchange rates and adjusted for any Board-approved M&A.
Threshold
n/a
n/a
8.0%
Target
n/a
n/a
10.5%
Maximum
n/a
n/a
13.0%
ESG
objectives
Consists of two equally weighted measures linked to our
sustainability agenda in relation to our transition to net zero,
and an increase in female people leader representation for
the 2024-26 award and a single measure in relation to our
transition to net zero for the 2025-27 award.
Reduction in Scope 1
and Scope 2 GHG
emissions
(relative to a
2019 baseline)
Threshold
n/a
70%
72%
Target
n/a
72%
74%
Maximum
n/a
75%
76%
Female people leader
representation
Threshold
n/a
35%
n/a
Target
n/a
35.5%
n/a
Maximum
n/a
36%
n/a
1
Official industry classification of ‘Health Care Equipment and Supplies, Life Sciences Tools & Services and Health Care Technology’.
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Annual report on remuneration
continued
Performance Share Plan (PSP)
continued
2023-25 PSP Award
The three year performance period of the 2023-2025 PSP award ended on 31 December 2025. The performance measures, targets,
weightings and achievement against the performance conditions are shown below.
Performance range against targets
1
Weighted
vested
outcome (%)
Performance measure
Threshold
(25% vesting)
Target
(50% vesting)
Maximum
(100% vesting)
% of target
vesting
Weighting
Cumulative revenue
Target
$16,354m
$17,776m
$19,198m
Actual
$17,625m
94.7%
x
25%
=
23.7%
Cumulative free cash flow
Target
$1,233m
$1,541m
$1,695m
Actual
$1,511m
95.1%
x
25%
=
23.8%
Return on invested capital
Target
8.5%
9.5%
10.5%
Actual
7.2%
0%
x
25%
=
0.0%
Total Shareholder Return
Index Return
Index Return
+8%
FTSE 100 comparator group
2
Target
28.1%
61.4%
Actual 21.9%
0%
x
12.5%
=
0.0%
S&P 1200 comparator group
3
Target
-5.8%
18.7%
Actual
21.9%
200%
x
12.5%
=
25.0%
Total (% of target vesting)
72.5%
Total (% of maximum vesting)
36.2%
1
All numbers have been rounded to the nearest decimal. For the purpose of incentive calculations, we are using constant currency rates.
2 FTSE 100 companies, excluding financial services, commodities (basic materials and oil and gas).
3 S&P Global 1200 Healthcare subset, comprising medical devices, equipment and supplies companies (official industry classifications of
‘Health Care Equipment and Supplies, Life Sciences Tools & Services and Health Care Technology’).
Decision on 2023-2025 PSP award outcome
Smith & Nephew delivered strong financial results in terms of revenue and free cash flow over the three-year period ended 31 December
2025. The 2025 growth in revenue of 6.1% on a reported basis (5.3% on an underlying basis) contributed towards delivering strong
cumulative revenue growth over the three-year performance period of the 2023-2025 PSP award. In addition, over the three-year
period, the adjusted return on invested capital increased by 170 basis point and free cash flow increased from $56 million to $840
million, both reflecting the progress made under the 12-Point Plan.
As well as considering the monetary outcome of the formulaic calculation of these awards, the Committee considered whether
discretion should be applied to override these formulaic outcomes and concluded that the monetary outcomes were aligned with the
financial performance of the Company during the performance period and the intention of the Remuneration Policy. As a result, the
Committee believes that the level of vesting for the 2023-2025 PSP award at 36.2% of maximum (72.5% of target) is appropriate.
2023-25 PSP awards
Shares
awarded
Shares
vesting
Shares
forfeit
Dividend
shares¹
Total shares
vesting
Value of
vesting
shares at
award price
2
($000s)
Share price
appreciation
3
($000s)
Total value
vesting
($000s)
(1)
(2)=(1)x72.48%
(3)=(1)-(2)
(4)
(5)=(2)+(4)
(6)
(7)
(8)=(6)+(7)
Executive Directors
Deepak Nath
141,874
102,830
39,044
7,333
110,163
1,728
42
1,770
John Rogers
4
–
–
–
–
–
–
–
–
Former Executive Directors
Anne-Françoise Nesmes
70,053
50,774
19,279
3,621
54,395
853
21
874
1
As the 2023-25 PSP award vests in March 2026, we have estimated the final dividend equivalent shares based on an estimated total dividend per share over
the vesting period of £0.8833 and a share price of £12.385.
2
The 2023-25 PSP award share price was £12.09 ($15.68, using an exchange rate of £1 to $1.297).
3
This represents the estimated impact of the share price change between the award date and the vesting date. The vest price for the 2023-25 PSP award has
been estimated using the closing share price on 31 December 2025 of £12.39 ($16.06). No discretion has been applied to the award outcome as a result of
the share price movement since award.
4
John Rogers joined in December 2023 and was appointed as CFO and an Executive Director on 1 April 2024 so does not have a 2023-25 PSP award.
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OTHER INFORMATION
Restricted Share Plan (RSP)
The first tranche of the 2024 RSP award made to Deepak Nath vested on 16 August 2025. This award was subject to a reasonable
judgement underpin. In assessing this underpin, the Committee considered Smith+Nephew’s overall financial performance, any material
ESG, safety or compliance issues and whether there has been any material damage to Smith+Nephew’s reputation. The Committee
determined that the underpin had been met and the award vested without alteration.
Details of the vest are below.
Shares
awarded
Dividend
shares
Total shares
vesting
Value of
vesting
shares at
award price
($000’s)
Share price
appreciation
($000’s)
Total value
vesting
($000’s)
Executive Directors
Deepak Nath
43,839
1,082¹
44,921
645
142
787
John Rogers
–
–
–
–
–
–
¹
Due to an administrative error, dividend equivalent shares were not added to the vested award. We have reported them as they should have been received
in 2025. The dividend shares will be released to Deepak Nath with the second tranche vesting of the 2024 award in August 2026.
Details of share awards granted to Executive Directors during 2025
Performance Share Plan¹
Restricted Share Plan
Deferred Bonus Plan
Shares
awarded
Value at
award price
’000s
Shares
awarded
Value at
award price
’000s
Shares
awarded
Value at
award price
’000s
Executive Directors
Deepak Nath
318,730
$4,785
2
264,321
$3,968
2
68,730
$1,032
2
John Rogers
3
172,246
$2,586
2
41,360
$723
3
40,900
$614
2
1
Awards are granted at maximum. Threshold performance will result in 25% of the award vesting, target performance will result in 50% of the award vesting
and maximum performance will result in 100% of the award vesting.
2
The 2025-27 PSP award, the 2025 RSP award for Deepak Nath and the 2025 DBP award share price was £11.575 ($15.013) and was based on the average
share price over the 10 working days following the 2024 results announcement.
3
The 2025 RSP award for John Rogers award share price was £13.48 ($17.48) and was based on the average share price over the 10 working days following
the half-year results announcement. This RSP was granted upon relocation and employment in the US and explained further in the RNS published on
30 September 2025.
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Annual report on remuneration
continued
Details of outstanding share awards granted to Executive Directors
The conditional share awards granted to Executive Directors that continue to be subject to performance or vesting conditions are
shown below.
Award type
Date of award
Number of shares
Date of vesting
Executive Directors
Deepak Nath
PSP
26 March 2025
318,730³
26 March 2028
16 August 2024
27,520³
8 March 2027
8 March 2024
151,365⁴
8 March 2027
9 March 2023
141,874⁴
9 March 2026
Total
639,489
RSP
1
26 March 2025
44,268
26 March 2026
26 March 2025
44,268
26 March 2027
26 March 2025
44,268
26 March 2028
16 August 2024
43,839
16 August 2026
16 August 2024
43,839
16 August 2027
Total
220,482
DBP
26 March 2025
68,730
26 March 2028
8 March 2024
72,005
8 March 2027
9 March 2023
26,014
9 March 2026
Total
166,749
John Rogers
PSP
26 March 2025
172,246³
26 March 2028
8 March 2024
91,666⁴
8 March 2027
Total
263,912
RSP
29 September 2025
13,786
26 March 2026
29 September 2025
13,786
26 March 2027
29 September 2025
13,788
26 March 2028
Total
41,360
DBP
26 March 2025
40,900
26 March 2028
Former Executive Directors
Anne-Françoise Nesmes
2
PSP
9 March 2023
70,053⁴
9 March 2026
DBP
8 March 2024
37,368
8 March 2027
9 March 2023
16,877
9 March 2026
Total
54,245
1
Following a majority shareholder vote in favour of changes to our Remuneration Policy at our AGM in May 2024, US Executive Directors are eligible to
receive an annual RSP award equal to 125% of base salary that will vest, subject to a reasonable judgement underpin, on the first, second and third
anniversaries of the award. This rateable vesting schedule is in line with US market practice for RSP awards.
2
Anne-Françoise Nesmes was CFO and an Executive Director up until 31 March 2024, when she stepped down from the Board and leſt the Company on
1 May 2024. Upon leaving, her outstanding PSP awards were prorated to reflect her service over the performance period. As a result, the number of
outstanding shares shown takes this prorating into account.
3 Granted at maximum.
4
Granted at target. Restated from 2024, where it was disclosed at maximum.
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OTHER INFORMATION
Executive Directors’ interests in ordinary shares
The table below shows the Executive Directors’ interests in the shares of the Company, together with unvested scheme interests,
effective 31 December 2025.
Ordinary shares
1
Share awards with
performance conditions
Share awards without
performance conditions
Performance
Share Plan awards
2
Deferred Bonus
Plan awards
Restricted Share
Plan awards³
Executive Directors
Deepak Nath
300,818
639,489
166,749
220,482
John Rogers
71,920
263,912
40,900
41,360
Former Executive Directors
Anne-Françoise Nesmes
43,978
70,053
54,245
-
1
Ordinary shares for Deepak Nath include 2,923 American Depository Shares (equivalent to 5,846 ordinary shares).
2
The PSP awards are subject to further performance conditions before they vest.
3
The RSP awards are subject to a reasonable judgement underpin before they vest.
The interests of each Executive Director shown in the table include any shares held by any connected person. The beneficial interest
of each Executive Director is less than 1% of the ordinary share capital of the Company.
Directors’ interests as at 27 February 2026 were unchanged from those listed above other than another 410 American Depository
Shares (equivalent to 820 ordinary shares) were purchased for Deepak Nath under the US section 423 plan.
Shareholding requirement
Executive Directors are required to establish and maintain a minimum shareholding over a reasonable period of time (expected to
be around five years) recognising that incentive plan vesting and differing international tax regimes may affect the pace at which the
shareholding may be met.
The adoption of the changes to our Remuneration Policy at our AGM in May 2024 resulted in the minimum shareholding requirement for
a US-based CEO increasing from 300% to 500% of base salary. The minimum shareholding requirement for the CFO is equal to at least
200% of base salary.
Where an Executive Director leaves employment for any reason, a post-cessation shareholding requirement will apply. The post-
cessation minimum shareholding requirement is equal to the requirement during employment and will apply for a period of two years
aſter cessation of employment.
Minimum Shareholding
requirement
(% of base salary)
Actual shareholding
(% of base salary)
Executive Directors
Deepak Nath
1
500%
392%
John Rogers
2
200%
176%
Former Executive Directors
Anne-Françoise Nesmes
3
200%
138%
1
Deepak Nath joined on 1 April 2022 and is gradually building his shareholding.
2
John Rogers joined on 1 December 2023 and is gradually building his shareholding. He purchased 71,920 shares on 19 December 2024.
3
Anne-Françoise Nesmes leſt the Company on 1 May 2024 and had not achieved her minimum shareholding requirement of 200% of base salary at that time.
The minimum shareholding requirement above represents Anne-Françoise’s actual holding upon leaving and so reflects her post-cessation
shareholding requirement.
Fees retained for external Non-Executive Directorships
Executive Directors may hold an external Non-Executive Director appointment and retain the fees paid for such a role.
Deepak Nath
served as a Director of MDIC and AdvaMed. John Rogers served as a Non-Executive Director of Grab Holdings Ltd (Singapore).
Payments to former Directors (audited)
There were no payments made to, or in respect of, any former Director that have not previously been disclosed in an annual report.
Payments for loss of office (audited)
There were no payments made to, or in respect of, any former Director for loss of office in 2025.
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Annual report on remuneration
continued
Chair and Non-Executive Directors – Single figure of remuneration (audited)
000s
Committee
Membership
Non-Executive
Director Fees
Intercontinental
Travel
Total
2025
2024
2025
2024
2025
2024
Chair
Rupert Soames
N
R
$599
(£462)
$575
(£450)
$5
(£4)
$4
(£3)
$604
(£466)
$579
(£453)
Non-Executive Directors
Angie Risley
N
R
$138
(£107)
$125
(£98)
$5
(£4)
$4
(£3)
$143
(£111)
$129
(£101)
Thérèse Esperdy¹
N
R
$10
–
$7
–
$17
–
Jo Hallas
A
C
$97
(£75)
$92
(£72)
$5
(£4)
$4
(£3)
$102
(£79)
$96
(£75)
David King²
C
R
$77
–
$21
–
$98
–
Garheng Kong
3
A
$42
–
$7
–
$49
–
Simon Lowth
A
N
$97
(£75)
$92
(£72)
$5
(£4)
–
$102
(£79)
$92
(£72)
John Ma
C
$139
$134
$42
$42
$181
$176
Jez Maiden
A
R
$125
(£96)
$112
(£88)
$5
(£4)
$4
(£3)
$130
(£100)
$116
(£91)
Katarzyna Mazer-Hofsaess
C
$97
(£75)
$92
(£72)
$5
(£4)
$4
(£3)
$102
(£79)
$96
(£75)
Marc Owen
A
C
N
R
$176
$170
$35
$28
$211
$198
Sybella Stanley
4
R
$104
(£80)
–
$5
(£4)
–
$109
(£84)
–
Former Non-Executive Directors
Bob White
5
C
R
$42
$134
$14
$35
$56
$169
1 Thérèse Esperdy was appointed to the Board on 1 December 2025.
2 David King was appointed to the Board on 1 July 2025.
3
Garheng Kong was appointed to the Board on 1 September 2025.
4
Sybella Stanley was appointed to the Board on 1 February 2025.
5 Bob White stepped down from the Board on 30 April 2025.
Committee key
A
R
N
C
Member of the
Audit Committee
Member of the
Remuneration Committee
Member of the Nomination
& Governance Committee
Member of the Compliance
& Culture Committee
Committee
Chair
Chair Fees
During December 2024, the Chair’s fee was reviewed by the Committee and the decision taken to apply an increase of 3.5% from
1 April 2025. This increase did not exceed the average increase applied to the broader UK workforce. While the Chair is a member
of the Remuneration Committee, he did not attend the meeting while his fee was being reviewed and discussed by the Committee.
The Chair is required each year to purchase shares worth at least 25% of his post-tax annual fee.
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OTHER INFORMATION
Non-Executive Director fees
The fee for Non-Executive Directors is periodically reviewed by the Chair of the Board and the Executive Directors. Following a review
in December 2024, it was decided to increase the base fee by 3.0% for Non-Executive Directors based in the US and by 3.5% for those
based in the UK. These increases did not exceed the average increase applicable to the broader workforce in these countries.
A proportion of the fee payable to Non-Executive Directors was paid in shares.
UK
1
US
2025
2024
2025
2024
Base fee
Cash
$84,944
(£65,493)
$83,700
(£65,493)
$124,827
$124,827
Shares
$12,044
(£9,285)
$8,635
(£6,757)
$14,223
$10,173
Total
$96,988
(£74,778)
$92,336
(£72,250)
$139,050
$135,000
Senior Independent
Director supplement
$27,886
(£21,500)
$26,582
(£20,800)
$37,500
$36,400
Committee Chair supplement
$27,886
(£21,500)
$26,582
(£20,800)
$37,500
$36,400
Intercontinental travel
2
$4,540
(£3,500)
$4,473
(£3,500)
$7,000
$7,000
1
Non-Executive Directors based in the UK are paid in British Pounds. For the purposes of comparison, the fees have been converted into our reporting
currency (US Dollars) at an exchange rate of £1 to $1.297.
2 A fixed fee is only payable when a Non-Executive Director is required to travel to attend meetings in another continent.
Non-Executive Director interests in ordinary shares
The interests of the Chair of the Board and Non-Executive Directors, who served during the year, in terms of shares of the Company
held as at 31 December 2025 or at date of separation as applicable, are as follows:
Number of shares
Chair
Rupert Soames
19,754
Non-Executive Directors
Angie Risley
6,301
Thérèse Esperdy
1
210
Jo Hallas
6,579
David King
2
5,600
Garheng Kong
3
6,000
Simon Lowth
655
John Ma
2,744
Jez Maiden
3,501
Katarzyna Mazer-Hofsaess
2,371
Marc Owen
17,610
Sybella Stanley
4
5,330
Bob White
5
8,376
1
Thérèse Esperdy was appointed to the Board on 1 December 2025.
2
David King was appointed to the Board on 1 July 2025.
3
Garheng Kong was appointed to the Board on 1 September 2025.
4
Sybella Stanley was appointed to the Board on 1 February 2025.
5
Bob White stepped down from the Board on 30 April 2025.
The interests of the Chair of the Board and Non-Executive Directors shown in the table include any shares held by any connected person.
The beneficial interest of the Chair of the Board and each Non-Executive Director is less than 1% of the ordinary share capital
of the Company.
There have been no other changes in the interests of the Chair or Non-Executive Directors in the shares of the Company between
31 December 2025 and 27 February 2026 (the latest practicable date for inclusion in this report).
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Annual report on remuneration
continued
Pay comparisons
Annual percentage change in Directors’ remuneration
The table below shows how the actual remuneration received by Executive Directors, the Chair of the Board and Non-Executives
has changed over the year ended 31 December 2025 and prior years compared to the average salary of other employees.
The average salary in 2025 of UK employees increased by 3.5%, and that of US employees increased by 3.0%.
% change 2025-2024
% change 2024-2023
% change 2023-2022
% change 2022-2021
% change 2021-2020
Salary
/Fees
Benefits
Annual
Bonus
Salary
/Fees
Benefits
Annual
Bonus
Salary
/Fees
Benefits
Annual
Bonus
Salary
/Fees
Benefits
Annual
Bonus
Salary
/Fees
Benefits
Annual
Bonus
Executive Directors
Deepak Nath
3
3
39.7
3.1
144
1.9
39.6
55.8
168.5
–
–55.5
44.9
–
–
–
John Rogers
1
32.9
160.6
35.2
100
100
100
–
–
–
–
–
–
–
–
–
Chair
Rupert Soames
2
2.6
–
–
219.7
–
–
100
–
–
–
–
–
–
–
–
Current Non-Executive Directors
Angie Risley
9.5
–
–
8.5
–
–
–
–
–
3.9
–
–
–
–
–
Thérèse Esperdy
3
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Jo Hallas⁴
4.4
–
–
2.9
–
–
7.8
–
–
272.8
–
–
–
–
–
David King
5
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Garheng Kong
6
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Simon Lowth
4,7
4.4
–
–
–
–
–
–
–
–
–
–
–
–
–
John Ma⁴
3.9
–
–
2.3
–
–
13.9
–
–
32.9
–
–
–
–
–
Jez Maiden
4,8
10.5
–
–
339.5
–
–
–
–
–
–
–
–
–
–
–
Katarzyna
Mazer-Hofsaess⁴
4.4
–
–
2.9
–
–
–
–
–
5.0
–
–
561.9
–
–
Marc Owen⁴
3.8
–
–
-4.3
–
–
11.3
–
–
8.2
–
–
–
–
–
Sybella Stanley
9
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Former Executive Directors
Anne-Françoise
Nesmes
10
–
–
–
-74.8
-74.7
-100
4.2
3.6
129.6
4.62
3.97
–29.5
–
–
–
Former Chair
Roberto Quarta
–
–
–
–
–
–
-22.5
–
–
0.8
–
–
0.4
–
–
Former Non-Executive Directors
Erik Engstrom
11
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Rick Medlock
12
–
–
–
-72
–
–
–
–
–
3.9
–
–
51.6
–
–
Bob White
13
-68.7
2.4
–
–
20.5
–
–
5.4
–
–
44.6
–
–
1
John Rogers was appointed Executive Director on 1 April 2024. The increase reflects the impact of comparing 9 months of salary from 2024 with 12 months
in 2025, in addition to the annual salary increase of 3.5%.
2
Rupert Soames joined the Board on 26 April 2023 and was paid part year.
3
Thérèse Esperdy was appointed to the Board on 1 December 2025.
4
The increase shown is greater than the reported fee increase due to the timing
of the award of shares related to the fee increase.
5
David King was appointed to the Board on 1 July 2025.
6
Garheng Kong was appointed to the Board on 1 September 2025.
7
Simon Lowth was appointed on 1 January 2024.
8
Jez Maiden was appointed on 14 September 2023.
9
Sybella Stanley was appointed to the Board on 1 February 2025.
10 Anne-Françoise Nesmes stepped down from the Board on 31 March 2024.
11 Erik Engstrom stepped down from the Board on 31 December 2023.
12 Rick Medlock stepped down from the Board on 30 April 2024.
13 Bob White stepped down from the Board on 30 April 2025.
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ACCOUNTS
OTHER INFORMATION
Chief Executive Officer pay ratio
The Committee is mindful of the relationship between the remuneration of the Chief Executive Officer and that of other employees more
generally. The table below compares the single total figure of remuneration for the Chief Executive Officer to the total pay and benefits
of full-time equivalent UK employees, who are ranked at the lower quartile, median and upper quartile across all UK employees.
The reporting regulations permit three different calculation methodologies for determining the pay ratio. The ratios shown in the
table below have been calculated using Option A, which calculates pay for employees on the same basis as the single figure for
remuneration calculated for Executive Directors. The period for which actual employee pay has been calculated is from 1 January 2025
to 31 December 2025. The single figure for remuneration for each full-time employee as at 31 December 2025 includes earned salary,
annual incentive bonus payments, allowances, pension and benefits. Part-time employees have been excluded for the purpose
of the calculations.
2025
2024
1,2
2023
1
2022
2021
2020
2019
Upper quartile (75th percentile)
58:1
56:1
46:1
70:1
32:1
19:1
51:1
Median (50th percentile)
87:1
84:1
72:1
107:1
49:1
29:1
81:1
Lower quartile (25th percentile)
127:1
119:1
102:1
160:1
71:1
42:1
116:1
1
In 2024 and 2023, the ratio was impacted by the vesting of the performance award under the 2022 buy-out award agreement made to Deepak Nath.
Excluding this one-off arrangement, the median ratio would have been 69:1 for 2024 and 55:1 for 2023.
2
The ratios have been updated to reflect the re-statement of 2024 RSP awards from $1,966,000 to $0 in the single figure table.
The total remuneration of our Chief Executive includes a substantial proportion of variable pay, and therefore, the single total figure will
vary considerably, depending on the level of performance against the measures driving the Annual Incentive Plan, Performance Share
Plan and Restricted Share Plan.
In contrast, employees in the calculation receive a higher proportion of their remuneration in the form of fixed pay. The ratios are
consistent with our market-based approach to reward, with the ratio increasing as the Chief Executive’s remuneration is compared
with that of more junior employees. The overall picture presented by the ratios is also consistent with our policies on pay, reward and
career progression.
The table below provides information on the salary and total pay and benefits paid to employees ranked at the lower quartile,
median and upper quartile.
2025
2024
Salary
total pay
and benefits
Salary
total pay
and benefits
Chief Executive Officer
$1,606,896
$7,218,445
$1,560,093
$5,962,000
1
Upper quartile
2
(75th percentile)
$95,835
(£73,890)
$124,969
(£96,352)
$70,371
(£55,064)
$107,146
(£83,839)
Median
2
(50th percentile)
$66,941
(£51,612)
$82,841
(£63,872)
$66,258
(£51,845)
$71,001
(£55,556)
Lower quartile
2
(25th percentile)
$48,737
(£37,577)
$56,677
(£43,698)
$50,382
(£39,422)
$50,123
(£39,220)
1
The 2024 single total figure for Deepak Nath has been updated to reflect the re-statement of 2024 RSP awards from $1,966,000 to $0 in the single figure table.
2
For the purposes of comparison the pay and benefits of UK employees have been converted into our reporting currency (US Dollars) at an exchange rate
of £1 to $1.297.
Gender pay ratio
The 2025 median gender pay gap for our UK organisation is 11.6% and our mean gender pay gap is 14.0%. This places Smith+Nephew
slightly below the ONS median gender pay gap of 12.8% for 2025. We continue our efforts to review and close the gaps through
consistent and unbiased global pay and incentive plans. Our internal pay practices and incentive plan designs are gender neutral and
our performance management reviews are undertaken based on objective criteria.
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Directors’ Remuneration Report
continued
Annual report on remuneration
continued
Total Shareholder Return (TSR) performance and Chief Executive Pay
The chart below shows the value as at 31 December 2025 of £100 invested in Smith+Nephew shares on 31 December 2015,
compared to £100 invested in the S&P 1200 Healthcare Medical Devices subset index on the same date. This index was chosen as it
consists of our most relevant performance peers so gives the best insight into our performance.
In addition to showing performance
over 10 years, we have shown the same information but over the 3-year period ended 31 December 2025.
Source: S&P Capital IQ
Medical Devices comparators that are still trading for awards made since 2012
Smith+Nephew
S&P Medical Devices
Ten-year Total Shareholder Return
(measured in US Dollars, based on monthly spot values)
Dec 2016
Dec 2015
Dec 2017
Dec 2018
Dec 2020
Dec 2021
Dec 2025
Dec 2023
Dec 2024
Dec 2022
Dec 2019
0
100
200
300
400
500
Three-year Total Shareholder Return
(measured in US Dollars, based on monthly spot values)
120
100
80
60
140
160
Source: S&P Capital IQ
Medical Devices comparators that are still trading for awards made since 2012
Smith+Nephew
S&P Medical Devices
Dec 2022
Dec 2023
Dec 2025
Dec 2024
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ACCOUNTS
OTHER INFORMATION
The table below details the CEO’s single total figure of remuneration and incentive outcomes over the period 1 January 2016 to
31 December 2025.
$000s
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
Chief Executive’s single total figure
Deepak Nath
1
5,955
4,658
5,962
7
7,219
Roland Diggelmann
2
266
1,698
3,102
603
Namal Nawana
3
2,883
4,489
Olivier Bohuon
4
3,333
5,117
2,384
3,333
5,117
5,267
4,755
1,698
3,102
6,558
4,658
5,962
7
7,219
Annual incentive (% of maximum)
Deepak Nath
1
32%
61%
61%
82%
Roland Diggelmann
2
0%
5
24%
Namal Nawana
3
69%
71%
6
Olivier Bohuon
4
30%
61%
63%
30%
61%
–
71%
0%
24%
32%
61%
61%
82%
Long-term incentives (% of maximum)
Deepak Nath
1
–
–
29.7%
36%
Roland Diggelmann
2
–
–
Namal Nawana
3
–
Olivier Bohuon
4
8%
54%
46.5%
8%
54%
46.5%
–
–
–
–
–
29.7%
36%
1 Appointed Chief Executive Officer on 1 April 2022.
2
Appointed Chief Executive Officer on 1 November 2019 and stepped down on 31 March 2022.
3 Appointed Chief Executive Officer on 7 May 2018 and resigned on 31 October 2019.
4 Retired as Chief Executive Officer on 7 May 2018.
5 Due to the impact of Covid upon the Chief Executive Officer’s financial targets, a cash award of 0% was achieved.
6 Calculated as 106.7% for Namal Nawana (disclosed on page 108 of the Company’s Annual Report for the year ended 31 December 2019),
divided by the maximum potential payout of 150%.
7
The 2024 single total figure for Deepak Nath has been updated to reflect the re-statement of 2024 RSP awards from $1,966,000 to $0 in the single figure table.
Relative importance of spend on pay
When considering remuneration arrangements for our Executive Directors and employees as a whole, the Committee also take into
account the overall profitability of the Company and the amounts spent elsewhere, particularly in returning profits to shareholders in the
form of dividends and share buybacks.
The chart below shows the relative importance of spend on pay compared to returns to shareholders and trading profit.
Total employee costs ($m)
0
200
400
600
800
1000
1200
1400
1600
1800
1,663
1,671
2025
2024
Return to shareholders ($m)
0
200
400
600
800
1000
1200
1400
1600
1800
327
330
2025
2024
*
Returns to shareholders comprise of dividends to ordinary shareholders only as there have been no share buybacks over the period
Attributable profit ($m)
0
200
400
600
800
1000
1200
1400
1600
1800
412
625
2025
2024
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continued
Annual report on remuneration
continued
Senior management remuneration
The Group’s administrative, supervisory and management body (senior management) comprises, for US reporting purposes, Executive
Directors, Non-Executive Directors, and Executive Officers. Details of the current Executive Directors, Non-Executive Directors and
Executive Officers are given on pages 102 to 109.
Remuneration paid to senior management in respect of 2022, 2023, 2024 and 2025, was as follows:
2025
2024
2023
2022
Total remuneration
$22,631,464
$20,526,132
$18,890,117
$17,211,000
Total remuneration for loss of office
–
$1,491,790
$1,659,101
–
Aggregate amounts provided to supplementary pension plans
$1,752,073
$1,552,480
$1,332,506
$1,626,000
The interests of senior management, who served during the year in terms of shares of the Company held as at 31 December 2025
are shown in the table below. For this purpose, senior management is defined as the Executive Directors, members of the Executive
Committee, including the Company Secretary, and their connected persons (or closely associated persons).
Ordinary
shares
American
Depositary
Shares
Share capital
of Company
Total for all senior management
1,083,290
31,055
0.1%
Senior management interests as at 27 February 2026 were unchanged from those listed above other than another 410 American
Depository Shares were purchased for Deepak Nath and 207 American Depository Shares were purchased for Craig Gaffin under the US
section 423 plan.
Details of share awards granted during the year to members of senior management and held as at 31 December 2025 are shown in
the table below.
Awards
Share awards
granted during
2025
Total share
awards held as at
31 December 2025
Deferred Share Plan
241,327
423,593
Restricted Share Plan
494,724
582,402
Performance Share Plan
1,349,672
2,675,989
Conditional awards
–
62,153
Sign-on awards
82,572
82,572
There have been no new awards or changes to awards held by senior management between 31 December 2025 and 27 February 2026
(the latest practicable date for inclusion in this report).
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OTHER INFORMATION
Implementing the Remuneration Policy for 2026
Selection of performance targets
Performance targets are set to be relevant, stretching and aligned to our business strategy. We also consider how performance is
delivered when determining incentive plan outcomes, with appropriate consideration given to any environmental, social and governance
risks to ensure that the performance delivered is sustainable and fully aligned with our Company values and culture. Malus and clawback
applies to all forms of variable pay.
Annual Incentive Plan (AIP)
Financial performance targets under the AIP are set by the Remuneration Committee with reference to the budgets and business plan
for the year ahead, as well as anticipated market conditions, ensuring that the levels to achieve threshold, target or maximum payout
are appropriately challenging.
The performance targets for 2026 are predominantly based on financial measures (85% of maximum opportunity). They include
revenue (35%), trading profit (35%), free cash flow (15%) and strategic objectives (15%).
Commercial sensitivity precludes the advance publication of the actual targets for our financial measures, but they will be
retrospectively published in our annual report on remuneration for 2026. The Committee considers the range of financial targets set
for 2026 to be similarly challenging to those set in prior years.
The strategic objectives are based on key deliverables that support our near and long-term strategy. The strategic objectives and
their outcome will be disclosed in our 2026 Annual Report.
Performance Share Plan (PSP)
The performance targets under the PSP are set to reflect the Company’s longer-term growth objectives at a level where the maximum
represents genuine outperformance. Market consensus is also considered when setting the performance range. The performance
measures for the 2026 award are adjusted earnings per share (EPSA), return on invested capital (ROIC), relative total shareholder return
(TSR),
and strategic objectives linked to our ESG agenda.
Measure
2026 performance targets
Earnings per share
(30% weighting)
Adjusted EPS (EPSA) is considered a simple and clear measure of absolute growth in line with
our business strategy. The EPSA targets that the Committee intends to set for the 2026-28 PSP
award are higher than those set in 2025 and are:
Threshold
Target
Maximum
EPSA
9.0%
11.0%
13.0%
Vesting
25%
50%
100%
Note: Vesting will be on a straight-line basis between threshold and target and between target and maximum.
Return on invested capital
(30% weighting)
Return on invested capital aligns with our focus to ensure we return value on investments for our
shareholders. The targets that the Committee intends to set for the 2026-2028 PSP award are
higher than those set in 2025 and are:
Threshold
Target
Maximum
ROIC
9.5%
10.5%
11.5%
Vesting
25%
50%
100%
Note: Vesting will be on a straight-line basis between threshold and target and between target and maximum.
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continued
Annual report on remuneration
continued
Measure
2026 performance targets
Relative Total Shareholder Return
(30% weighting)
Relative TSR is considered a simple and clear performance measure relative to a comparator
group. The Committee intends to measure TSR performance for the 2026-2028 PSP award,
relative to a MedTech industry peer group consisting of the companies below.
–
Alcon Inc.
–
Bausch + Lomb Corporation
–
Baxter International Inc.
–
Becton Dickinson and Co
–
bioMérieux S.A.
–
Carl Zeiss Meditec AG
–
Coloplast A/S
–
ConvaTec Group PLC
–
Demant A/S
–
Dentsply Sirona Inc.
–
DiaSorin S.p.A.
–
Edwards Lifesciences Corp.
–
Elekta AB
–
Enovis Corporation
–
Envista Holdings Corporation
–
GE HealthCare Technologies Inc.
–
Globus Medical, Inc.
–
Insulet Corporation
–
Integer Holdings Corporation
– Solventum
– Medtronic
–
Integra LifeSciences Hold. Corp.
–
Intuitive Surgical Inc.
–
Koninklijke Philips NV
–
Resmed Inc.
–
Sonova Holding AG
–
STERIS plc
–
Straumann Holding AG
–
Stryker Corp.
–
Teleflex Inc.
–
The Cooper Companies,
Inc.
–
Zimmer Biomet
Holdings Inc.
Performance Share Plan (PSP)
continued
In addition, the Committee have changed the performance condition such that it is now based on
quartile positioning relative to the peer group.
Threshold
Maximum
TSR
Median
Upper quartile
Vesting
25%
100%
Note: Vesting will be on a straight-line basis between threshold and maximum.
Strategic objectives
(10% weighting)
The strategic objectives consist of metrics related to our ESG and sustainability framework, namely a
reduction in our environmental impact (Scope 1 and Scope 2 greenhouse gas emissions relative to a 2019
baseline). The targets that the Committee intends to set for the 2026-2028 PSP award are higher than those
set in 2025 and are:
Threshold
Target
Maximum
Scope 1 and Scope 2 GHG
74%
76%
78%
Vesting
25%
50%
100%
Note: Vesting will be on a straight-line basis between threshold and target and between target and maximum.
Restricted Share Plan (RSP)
The conditions attached to RSP awards relate to continued employment and good standing. In addition, for US Executive Directors, the
award vesting is subject to a reasonable judgement underpin. If the Remuneration Committee is not satisfied that the underpin has been
met, the Committee may scale back the vesting (including to zero). In assessing the underpin, the Committee will consider the following:
–
A review of overall financial performance over the vesting period;
–
Whether there have been any sanctions or fines issued by a regulatory authority;
–
Whether there have been any material environmental, social or governance issues;
–
Whether a major safety incident has occurred; and
–
Whether there has been material damage to the reputation of the Company
This Remuneration Report was approved by the Board of Directors on 27 February 2026 and signed on its behalf by:
Sybella Stanley
Remuneration Committee Chair
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ACCOUNTS
OTHER INFORMATION
Index to principal Directors’ Report disclosures
The Directors present their report alongside the audited accounts for the year ended 31 December 2025.
Certain matters as set out in the table below are incorporated into this Directors’ Report by reference,
including information required in accordance with the Companies Act 2006 and UK Listing Rule 6.6.1:
Disclosure
Section in Annual Report
Page
Directors in office during the year
Board of Directors
102-107
Dividends/dividend policy
Chair’s Statement
4
Disclosure of information to auditor
Audit Committee Report
145
Qualifying third-party indemnity provisions for Directors
How we are governed
126
Charitable and political donations
Directors’ Report
196
Financial instruments – risk management objectives and policies
Risk Report
Audit Committee Report
Notes to the Accounts
78-82
141-146
242
Post balance sheet events
Notes to the Accounts
265
Likely future developments
Chair’s statement
Chief Financial Officer review
4-5
18-25
Research and development
Research and Development
27-32
Policies governing employment and opportunities for disabled persons
Building our Way to Win
63
Employee communication and engagement
Our purpose and stakeholders
117-123
How Directors have performed under section 172
Section 172 statement
114-116
How the Directors have had regard to the need to foster the Company’s
business relationships and effect on principal decisions
Section 172 statement
114-116
List of subsidiaries and branches outside of the UK
Notes to the Accounts
270-273
Structure of share capital including restrictions on the transfer of
securities, voting rights and interests in voting rights
Directors’ Report
Notes to the Accounts
195
259
Significant holdings of the Company’s securities
Directors’ Report
195-196
Rights attaching to shares under employee share schemes
Directors’ Report
195
Rules governing the appointment and replacement of Directors
Directors’ Report
196
Rules governing changes to the Company’s Articles of Association
Directors’ Report
195
Powers of the Directors
Directors’ Report
196
Significant agreements
Directors’ Report
196
Agreements relating to compensation for loss of office or employment
relating to a takeover
Directors’ Remuneration Policy
170
Greenhouse gas emissions
Carbon emissions (CO
2
e) strategy, reporting
methodology, materiality and scope
76-77
Corporate Governance Statement & Compliance with the Corporate
Governance Code
Governance at a glance
Directors’ Report
100
196
Internal control and risk management
Risk Report
78-82
Diversity policy
Nomination & Governance Committee Report
129
Payment policy
Directors’ Report
196
Board, Executive & senior management diversity reporting
Governance at a glance
Nomination & Governance Committee Report
99
130-131
Composition and operation of the Company’s administrative,
management and supervisory bodies and their committees
Corporate Governance Framework
124
Board’s activities to assess and monitor culture
Compliance & Culture Committee Report
Building our Way to Win
139-140
58-63
Purchase of own shares
Directors’ Report
196
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Directors’ Report
Directors’ Report disclosures
The Company’s Articles of Association
(Articles), adopted at the 2021 AGM and
governed by English law, set out the rights
of ordinary shareholders. This summary is
subject to the Companies Act 2006 (Act)
and the Articles.
Share capital
The Company’s share capital consists of
ordinary shares and deferred shares. As at
31 December 2025, the Company’s issued
share capital consisted of 877,724,845
ordinary shares of $0.2 each of which
849,761,705 carried voting rights and
27,963,140 ordinary shares were held in
treasury. Each share carries the right to one
vote at general meetings of the Company.
Rights attaching to ordinary shares
Dividends may only be paid from
distributable profits. Final dividends
require shareholder approval and cannot
exceed the Directors’ recommendation;
interim dividends may be declared by the
Board. Dividends may be paid in cash or
assets if authorised by ordinary resolution.
Unclaimed dividends aſter 12 years
revert to the Company, and shares may
be sold aſter reasonable tracing efforts.
No material changes to shareholder rights
occurred in 2025.
Voting rights
At any General Meeting, on a show of
hands, each shareholder who is present
in person has one vote and every proxy
present who has been duly appointed by a
shareholder entitled to vote on a resolution
has one vote. On a poll, every shareholder
who is present in person or by proxy shall
have one vote for every share of which they
are the holder. Polls may be demanded by
the Chair, five shareholders, holders of 10%
of voting rights, or holders of 10% of paid-
up capital. The Company typically votes
by poll at its Annual General Meetings.
Rights in a winding-up
Except as the Company’s shareholders
have agreed or may otherwise agree, upon
the Company’s winding-up, the balance
of assets available for distribution:
Aſter the payment of all creditors
including certain preferential creditors,
whether statutorily preferred creditors or
normal creditors;
–
Subject to any special rights attaching
to any other class of shares; and
–
Is to be distributed among the holders
of ordinary shares according to the
amounts paid up on the shares held
by them. This distribution is generally
to be made in US Dollars. A liquidator
may, however, upon the adoption of
any extraordinary resolution of the
shareholders and any other sanction
required by law, divide among the
shareholders the whole or any part
of the Company’s assets in kind.
Variation of rights
If, at any time, the Company’s share capital
is divided into different classes of shares,
the rights attached to any class may be
varied, subject to the provisions of the
Companies Act, with the consent in writing
of holders of three-quarters in nominal
value of the issued shares of that class or
upon the adoption of a special resolution
passed at a separate meeting of the
holders of the shares of that class. At every
such separate meeting, all the provisions
of the Articles of Association relating to
proceedings at a General Meeting apply,
except that the quorum is to be the
number of persons (which must be two
or more) who hold or represent by proxy
not less than one-third in nominal value of
the issued shares of the class, and at any
such meeting a poll may be demanded in
writing by any person or their proxy who
hold shares of that class. Where a person
is present by proxy or proxies, he or she
is treated as holding only the shares in
respect of which the proxies are
authorised to exercise voting rights.
Limitations on voting and shareholding
There are no restrictions under English
law or the Company’s Articles on
non-residents or foreign persons holding
or voting ordinary shares or ADSs, other
than those applying to all shareholders.
Transfers of shares
The Board may refuse to register transfers
of certificated shares that are unpaid,
not properly stamped or certified, lodged
without required documents, cover more
than one class, or name more than four
transferees. This discretion cannot be
used to prevent proper market dealings.
Deferred shares
Following the 2006 re-denomination of
share capital, a new class of £1 deferred
shares was created to comply with the
Companies Act. Fiſty thousand deferred
shares were issued and are now held by the
Company Secretary. These shares carry
no voting or dividend rights and, on
winding-up, only receive nominal value
aſter ordinary shareholders have received
their nominal value plus $1,000 each.
Rights attaching to shares under
employee share schemes
The Company has established an Employee
Trust with shares that have no special
rights and carry the same rights as any
other ordinary share. The trustee has
waived its right to vote and its right to
all dividends.
Amendments to the Company’s
Articles of Association
The Company does not have any special
rules about amendments to its Articles of
Association beyond those imposed by law.
General Meetings
Annual General Meetings must be
convened upon advance written notice of
21 days. Other General Meetings must be
convened upon advance written notice
of at least 14 clear days. Meetings are
convened by the Board. Members with
5% of the ordinary share capital of the
Company may requisition the Board to
convene a meeting. Any two members may
call a General Meeting in order to appoint
one or more additional Directors in the
event that there are insufficient Directors
to be able to call a General Meeting, or
where they are unwilling to do so.
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GOVERNANCE
ACCOUNTS
OTHER INFORMATION
Major shareholders
As at 17 February 2026, the Company
is not aware of any person who has a
significant direct or indirect holding of
securities in the Company, as defined in
the Disclosure and Transparency Rules
(DTRs) of the Financial Conduct Authority
(FCA), other than as shown below, and is
not aware of any persons holding securities
which may control the Company. There are
no securities in issue which have special
rights as to the control of the Company.
As at 31 December 2025 and the date of
this report, the Company had received
notifications in accordance with the FCA’s
Disclosure and Transparency Rule 5.1.2 of
the following interests in the voting rights
of the Company.
Shareholder
As at
31 December
2025
As at
17 February
2026
% of voting
rights over
ordinary
shares of
US20¢ each
% of voting
rights over
ordinary
shares of
US20¢ each
BlackRock, Inc.
7.17
7.17
Cevian Capital
II GP Limited
5.02
5.02
Authority to purchase own shares
At the 2025 AGM, the Directors were
granted authority under section 701 of
the Companies Act 2006 to repurchase
shares on the market. This authority will
remain in effect until the conclusion of the
upcoming AGM, when the Company will be
seeking a renewal of its current permission
to purchase up to 10% of its own shares.
Share Buyback
During the year, 27,411,845 ordinary
shares were purchased on the London
Stock Exchange in aggregate at a volume
weighted average price of $18.43 per
ordinary share for a total consideration
of $499.9 million. This represented
approximately 3.2% of the Company’s
issued share capital (excluding treasury
shares) as at 31 December 2025.
The Company held all shares purchased
in treasury. The buyback concluded on
7 October 2025.
Suppliers’ payment policy
Terms of payment are agreed with
individual suppliers prior to supply.
The Group aims to pay its creditors
promptly, in accordance with terms agreed
for payment. Further information can be
obtained from the government payment
practice reporting portal.
Charitable and political donations
The Group made no political donations
during the year (2024: $nil). Details of
charitable donations can be found on
page 123.
Directors
Details of the Directors’ shareholdings are
provided on pages 162 and 186.
Under the Company’s Articles, Directors
are prohibited from voting on any matter
in which they or a connected person
have a material interest, except in certain
cases such as indemnities for obligations
incurred on behalf of the Company or for
third-party obligations assumed under a
guarantee, offers of securities where the
Director acts as an underwriter, interests in
another company where the Director holds
less than 1% of any share class, employee
benefits shared equally with other
employees, and insurance purchased for
Directors in respect of actions undertaken
as officers of the Company. Directors who
are not entitled to vote cannot be counted
in the quorum for that resolution.
The Board has authority to borrow funds
up to a total of $8.5 billion aſter deducting
cash and current asset investments.
Appointment and retirement
of Directors
Any Director appointed since the last
Annual General Meeting holds office until
the next AGM and may stand for re-
election, and all Directors are subject to
annual re-election under the UK Corporate
Governance Code. A retiring Director
remains in office until a replacement is
appointed or until the Annual General
Meeting concludes.
Significant contracts
The only significant contracts to which
the Company is a party that take effect,
alter or terminate upon a change of control
are the $625m of outstanding private
placement notes due between January
2026 and March 2034, the Revolving
Credit Facility dated 20 October 2023,
the $1.9bn of outstanding USD bonds due
between March 2027 and March 2034 and
the €500m of outstanding EUR bond due
October 2029, which contain customary
prepayment, cancellation and default
provisions including repayment of principal
and interest on a change of control.
Corporate Governance Statement
A statement confirming compliance with
the UK Corporate Governance Code is set
out on page 100. The 2024 Code can be
found at www.frc.org.uk/library/standards-
codes-policy/corporate-governance/uk-
corporate-governance-code/.
Cautionary statement
The review of the business and its future
development in the Annual Report has
been prepared solely to provide additional
information to shareholders to assess
the Group’s strategies and the potential
for these strategies to succeed. It should
not be relied on by any other party for
any other purpose. The review contains
forward-looking statements which are
made by the Directors in good faith based
on information available to them at the
time of the approval of these reports
and should be treated with caution due
to the inherent uncertainties associated
with such statements. The Directors,
in preparing the Strategic Report, have
complied with s417 of the Companies
Act 2006.
Helen Barraclough
Company Secretary
196
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Annual Report 2025
Directors’ Report
Directors’ Report disclosures
continued
Accounts
Statement of Directors’ responsibilities
198
Independent auditor’s UK report
199
Group income statement
211
Group statement of
comprehensive income
211
Group balance sheet
212
Group cash flow statement
213
Group statement of changes in equity
214
Notes to the Group accounts
215
Company financial statements
266
Notes to the Company accounts
268
STRATEGIC REPORT
GOVERNANCE
ACCOUNTS
OTHER INFORMATION
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Statement of Directors’ responsibilities in respect
of the Annual Report and Financial Statements
–
For the Parent Company financial
statements, state whether applicable
UK Accounting Standards have been
followed, subject to any material
departures disclosed and explained in the
Parent Company financial statements;
–
Assess the Group and Parent Company’s
ability to continue as a going concern,
disclosing, as applicable, matters
related to going concern; and
–
Use the going concern basis of
accounting unless they either intend
to liquidate the Group or the Parent
Company or to cease operations, or
have no realistic alternative but to do so.
The Directors are responsible for keeping
adequate accounting records that are
sufficient to show and explain the Parent
Company’s transactions and disclose
with reasonable accuracy at any time the
financial position of the Parent Company
and enable them to ensure that its financial
statements comply with the Companies
Act 2006. They are responsible for such
internal control as they determine is
necessary to enable the preparation of
financial statements that are free from
material misstatement, whether due
to fraud or error, and have general
responsibility for taking such steps as
are reasonably open to them to safeguard
the assets of the Group and to prevent
and detect fraud and other irregularities.
Under applicable law and regulations,
the Directors are also responsible for
preparing a Strategic Report, Directors’
Report, Directors’ Remuneration
Report and Corporate Governance
Statement that comply with that
law and those regulations.
The Directors are responsible for
the maintenance and integrity of the
corporate and financial information
included on the Company’s website.
Legislation in the UK governing the
preparation and dissemination of
financial statements may differ from
legislation in other jurisdictions.
In accordance with Disclosure Guidance
and Transparency Rule (“DTR”) 4.1.16R, the
financial statements will form part of the
annual financial report prepared under DTR
4.1.17R and 4.1.18R. The auditor’s report
on these financial statements provides
no assurance over whether the annual
financial report has been prepared in
accordance with those requirements.
Responsibility statement
of the Directors in respect
of the Annual Report
We confirm that to the best of
our knowledge:
–
The financial statements, prepared
in accordance with the applicable set
of accounting standards, give a true
and fair view of the assets, liabilities,
financial position and profit or loss of
the Company and the undertakings
included in the consolidation taken
as a whole; and
–
The Strategic Report and Directors’
Report include a fair review of the
development and performance of the
business and the position of the issuer
and the undertakings included in the
consolidation taken as a whole, together
with a description of the principal risks
and uncertainties that they face.
The Strategic Report, which has been
prepared in accordance with the
requirements of the Companies
Act 2006, comprises pages IFC–96.
The Directors’ Report, prepared in
accordance with the requirements of the
Companies Act 2006 and the UK Listing
Authority’s Listing Rules, and Disclosure
Guidance and Transparency Rules, was
approved by the Board and signed on its
behalf. We consider, the Annual Report
and financial statements, taken as a whole,
are fair, balanced and understandable
and provide the information necessary
for shareholders to assess the Group’s
position and performance, business
model and strategy.
By order of the Board, on 27 February 2026.
Helen Barraclough
Company Secretary
The Directors are responsible for preparing
the Annual Report and Form 20-F and
the Group and Parent Company financial
statements in accordance with applicable
law and regulations.
Company law requires the Directors
to prepare Group and Parent Company
financial statements for each financial
year. Under that law they are required to
prepare the Group financial statements in
accordance with UK-adopted international
accounting standards and applicable
law and have elected to prepare the
Parent Company financial statements
in accordance with UK accounting
standards and applicable law, including
FRS 101 Reduced Disclosure Framework.
In addition, the Directors have also chosen
to prepare the Group financial statements
in accordance with IFRS Accounting
Standards as issued by the International
Accounting Standards Board (IASB).
Under company law, the Directors must
not approve the financial statements
unless they are satisfied that they give a
true and fair view of the state of affairs
of the Group and Parent Company and
of their profit or loss for that period.
In preparing each of the Group and
Parent Company financial statements,
the Directors are required to:
–
Select suitable accounting policies
and then apply them consistently;
–
Make judgements and estimates
that are reasonable, relevant, reliable
and prudent;
–
For the Group financial statements,
state whether they have been prepared
in accordance with UK-adopted
international accounting standards
and IFRS Accounting Standards as issued
by the IASB;
–
For the Group financial statements,
present information, including accounting
policies, in a manner that provides
relevant, reliable, comparable and
understandable information and provide
additional disclosures when compliance
with the specific requirements in IFRS
Accounting Standards are insufficient to
enable users to understand the impact
of particular transactions, other events
and conditions on the entity’s financial
position and financial performance;
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1. Opinion
In our opinion:
–
the financial statements of Smith & Nephew plc (the ‘parent company’) and its subsidiaries (the ‘group’) give a true and fair view
of the state of the group’s and of the parent company’s affairs as at 31 December 2025 and of the group’s profit for the year then
ended;
–
the group financial statements have been properly prepared in accordance with United Kingdom adopted international accounting
standards and IFRS Accounting Standards as issued by the International Accounting Standards Board (IASB);
–
the parent company financial statements have been properly prepared in accordance with United Kingdom Generally Accepted
Accounting Practice, including Financial Reporting Standard 101 “Reduced Disclosure Framework”; and
–
the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements which comprise the:
Group
Parent company
–
Group balance sheet as at 31 December 2025;
–
Group income statement for the year then ended;
–
Group statement of comprehensive income for the year
then ended;
–
Group statement of changes in equity for the year
then ended;
–
Group cash flow statement for the year then ended; and
–
Notes 1 to 23 to the group financial statements, which
includes the material accounting policy information.
–
Company balance sheet as at 31 December 2025;
–
Company statement of changes in equity for the year then
ended; and
–
Notes 1 to 9 to the company accounts, which includes the
material accounting policy information.
The financial reporting framework that has been applied in the preparation of the group financial statements is applicable law, United
Kingdom adopted international accounting standards and IFRS Accounting Standards as issued by the IASB. The financial reporting
framework that has been applied in the preparation of the parent company financial statements is applicable law and United Kingdom
Accounting Standards, including FRS 101 “Reduced Disclosure Framework” (United Kingdom Generally Accepted Accounting Practice).
2. Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable law.
Our responsibilities under those standards are further described
in the auditor’s responsibilities for the audit of the financial
statements section of our report.
We are independent of the group and the parent company in
accordance with the ethical requirements that are relevant to
our audit of the financial statements in the UK, including the
Financial Reporting Council’s (the ‘FRC’s’) Ethical Standard as
applied to listed public interest entities, and we have fulfilled
our other ethical responsibilities in accordance with these
requirements. The non audit services provided to the group
and parent company for the year are disclosed within the Audit
Committee Report within the Corporate Governance section of
the Annual Report and the related fee in Note 3.2 of the financial
statements. We confirm that we have not provided any non-
audit services prohibited by the FRC’s Ethical Standard to the
group or the parent company.
We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinion.
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ACCOUNTS
OTHER INFORMATION
Independent auditor’s report to the
members of Smith & Nephew Plc
3. Summary of our audit approach
Key audit matters
The key audit matters that we identified in the current year were:
–
Valuation of excess and obsolescence (E&O) provision for US orthopaedics inventory; and
–
IT systems which impact financial reporting.
Materiality
The materiality that we used for the group financial statements was $40 million
(2024: $35 million). We considered a number of metrics when determining group materiality,
including: revenue; trading profit; and profit before taxation. Our selected materiality, using
revenue as the primary benchmark, represents 0.65% (2024: 0.60%) of revenue, 3.30%
(2024: 3.34%) of trading profit and 5.24% (2024: 7.03%) of profit before taxation.
Scoping
We performed a significant proportion of our audit procedures centrally in the UK, in addition to
four global shared service centres and 13 reporting units.
Our audit scope addressed 72% (2024: 73%) of the group’s revenue, 73% (2024: 68%) of the
group’s profit before tax and 70% (2024: 82%) of the group’s total assets.
Significant changes in
our approach
The valuation of the orthopaedics cash generating unit (CGU) goodwill is no longer considered
to be a key audit matter in the current year. This is a result of improved trading profit margin
and improved trading margin forecasts leading to increased headroom and reduced estimation
uncertainty and audit risk.
4. Conclusions relating to going concern
In auditing the financial statements, we have concluded that
the directors’ use of the going concern basis of accounting in the
preparation of the financial statements is appropriate.
Our evaluation of the directors’ assessment of the group’s and
parent company’s ability to continue to adopt the going concern
basis of accounting included:
–
Testing controls over management’s going concern model,
including the review of the inputs and assumptions used in
the model;
–
Evaluating the key assumptions, including those relating to
the current macroeconomic uncertainty, and evaluating the
appropriateness of these assumptions and their consistency
with management’s presentations to the Board and
Audit Committee;
–
Comparing the forecasts within the going concern model
to recent historical financial information to assess historic
forecasting accuracy;
–
Testing the mechanical accuracy of the going concern model;
–
Testing the current and forecast covenant compliance
calculations and headroom thereof at the balance sheet
date, both under the group’s forecasts and in severe
downside scenarios;
–
Evaluating whether the EBITDA and Net Debt covenant
compliance calculations align with the definitions provided in
the private placement note agreements;
–
Confirming the existence and availability of financing facilities;
–
Evaluating the appropriateness of management’s sensitivity
analysis modelled under their most severe scenario,
including an evaluation of the mitigating actions available to
management; and
–
Evaluating the appropriateness of disclosures on going
concern in the financial statements.
Based on the work we have performed, we have not identified
any material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the
group’s and parent company’s ability to continue as a going
concern for a period of at least twelve months from when the
financial statements are authorised for issue.
In relation to the reporting on how the group has applied the UK
Corporate Governance Code, we have nothing material to add
or draw attention to in relation to the directors’ statement in the
financial statements about whether the directors considered it
appropriate to adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the directors with
respect to going concern are described in the relevant sections
of this report.
200
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Annual Report 2025
Independent auditor’s UK report
continued
5. Key audit matters
Key audit matters are those matters that, in our professional
judgement, were of most significance in our audit of the
financial statements of the current period and include the most
significant assessed risks of material misstatement (whether
or not due to fraud) that we identified. These matters included
those which had the greatest effect on: the overall audit
strategy; the allocation of resources in the audit; and directing
the efforts of the engagement team.
These matters were addressed in the context of our audit
of the financial statements as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on
these matters.
5.1. Valuation of excess and obsolescence (E&O) provision for US orthopaedics inventory
Key audit matter description
The group holds an E&O provision to reduce the carrying value of inventories on the balance sheet
to net realisable value to comply with the requirements of IAS 2: Inventories.
Within the provision
for orthopaedics inventory, an amount relates specifically to US orthopaedics finished goods.
The estimation of this provision is judgmental as it involves a number of key estimates, in particular as
it pertains to product groups where longer forecasting periods of future product demand are applied.
We identified the valuation of the E&O provision for US orthopaedics inventory as a key audit
matter due to the significant judgments made by the group to identify and assess excess or
obsolete inventory. This required a high degree of auditor judgment and an increased extent
of effort to evaluate the reasonableness of the group’s estimate related to forecasting future
product demand for US orthopaedics inventory.
The group’s total E&O provision is disclosed as an accounting estimate in note 1 of the group
financial statements with further disclosures provided in note 12. The matter is also discussed in
the Audit Committee report within the Corporate Governance section of the Annual Report.
How the scope of our audit
responded to the key audit
matter
We performed the following audit procedures relating to the forecasting of future product demand for
product groups within US orthopaedic finished goods where longer forecasting periods are applied:
–
Tested the effectiveness of controls related to management’s determination over product
demand forecasting.
–
Evaluated the appropriateness of the allocation of product groups where longer forecasting
periods are applied for the purposes of the provision calculation by:
a) Assessing whether all product groups have been considered as to whether the longer
demand forecast should be applied in the calculation of the provision.
b) Evaluating any changes compared with the prior year to the allocation of product groups
where the longer demand forecast is used.
c) Assessing the historical demand which management uses in its estimate of future demand.
d) Evaluating the results of this assessment to determine the reasonableness of management’s
product group allocation.
e) Obtaining management’s expected future product demand and challenging that
expectation against:
i) Recent demand for that product group;
ii) Evidence of any product discontinuation, including issues around product quality or
litigation; and
iii)Any other transactions or events that may impact the potential future demand.
–
Performed inquiries with individuals outside of finance to challenge demand forecasts
submitted, obsolete products/product groups identified, marketing strategy of the product
group or any expected or active litigative actions.
–
Recalculated the US orthopaedic finished goods provision based on the forecasting of future
product demand methodology applied, assessing whether it is applied accurately.
Key observations
We are satisfied that the valuation of the US orthopaedics E&O provision, including estimates of
product groups where longer forecasting periods of future product demand are applied, is acceptable
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STRATEGIC REPORT
GOVERNANCE
ACCOUNTS
OTHER INFORMATION
5.2. IT systems which impact financial reporting
Key audit matter description
The IT systems within the group form a key component of the group’s financial reporting
activities and impact all account balances.
We have identified IT systems which impact financial reporting as a key audit matter, given
the level of reliance placed on these systems by the group. Due to the planned significant level
of reliance on the IT systems underpinning our audit approach, a significant extent of auditor
effort was required to evaluate the large number of relevant IT systems, including key system
generated reports and automated business process application controls.
Key IT controls, in the context of our scope for the financial audit, primarily relate to:
–
Access security – Controls relating to the security configuration of the systems and the
restriction and administration of user access.
–
Change management – Controls relating to requesting, developing, testing and approving
changes to systems.
The purpose of such controls is to prevent inappropriate changes being made to IT systems
in relation to application functionality, transactional processing and direct changes to
underlying data.
The matter is also discussed in the Audit Committee Report within the Corporate Governance
section of the Annual Report.
How the scope of our audit
responded to the key
audit matter
We performed the following risk assessment and audit procedures to test IT controls over the IT
systems determined to be relevant for financial reporting purposes:
–
Obtained an understanding of the IT environment, including IT systems;
–
Identified the IT risks for each IT system based on our understanding of the flows of
transactions and the IT environment;
–
Determined whether each general IT control, individually or in combination with other controls,
is appropriately designed to address the associated IT risk; and
–
Tested the effectiveness of the relevant general IT controls.
Where IT control deficiencies were identified, we responded to these deficiencies through testing
Group management’s remediation activities, testing alternative controls or through performing
alternative procedures.
Key observations
We are satisfied that IT controls impacting the Group’s financial reporting activities are designed
and operating effectively and control risks identified were remediated by year end or mitigated
by alternative procedures or controls.
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Annual Report 2025
Independent auditor’s UK report
continued
6. Our application of materiality
6.1. Materiality
We define materiality as the magnitude of misstatement in the
financial statements that makes it probable that the economic
decisions of a reasonably knowledgeable person would be
changed or influenced. We use materiality both in planning the
scope of our audit work and in evaluating the results of our work.
Based on our professional judgement, we determined materiality
for the financial statements as a whole as follows:
Group financial statements
Parent Company financial statements
Materiality
$40.0 million (2024: $35.0 million)
$36.0 million (2024: $31.5 million)
Basis for
determining
materiality
We considered a number of metrics when determining
group materiality, including: revenue (primary
benchmark); trading profit (supporting benchmark); and
profit before taxation (supporting benchmark).
The definition of trading profit is explained in the
Non-IFRS financial information section within Other
Information in the Annual Report.
Our selected materiality represents 0.65% (2024: 0.60%)
of revenue, 3.36% (2024: 3.34%) of trading profit and
4.99% (2024: 7.03%) of profit before taxation.
The basis for materiality is total assets.
The materiality used represents 0.87%
(2024: 0.87%) of total assets and is capped at 90%
(2024: 90%) of group materiality.
Rationale
for the
benchmark
applied
We have determined that the primary benchmark
for the group was revenue because we consider this
measure to be the primary focus of users of the financial
statements and the Group’s profit before tax continues
to be volatile and below historic levels. We also
considered trading profit and profit before taxation as
relevant metrics to the users of the financial statements.
Due to the nature of the company as a parent entity
holding company, we consider total assets to be the
most appropriate basis for materiality.
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OTHER INFORMATION
6.2. Performance materiality
We set performance materiality at a level lower than materiality
to reduce the probability that, in aggregate, uncorrected and
undetected misstatements exceed the materiality for the
financial statements as a whole.
Group financial statements
Parent Company financial statements
Performance
materiality
70% of group materiality (2024: 70%)
70% of parent company materiality
(2024: 70%)
Basis and rationale
for determining
performance materiality
In determining performance materiality, we considered the following factors:
–
our understanding of the entity and its environment; and
–
our risk assessment, including our assessment of the group’s overall control environment.
6.3. Error reporting threshold
We agreed with the Audit Committee that we would report to
the Committee all audit differences in excess of $2.0 million
(2024: $1.75 million), as well as differences below that threshold
that, in our view, warranted reporting on qualitative grounds.
We also report to the Audit Committee on disclosure matters
that we identified when assessing the overall presentation of
the financial statements.
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Independent auditor’s UK report
continued
7. Audit scope and execution
7.1. Identification and scoping of components
The group is headquartered in the UK, with operations in
more than 100 countries across five continents, the largest
being the USA (Americas). The group has four shared service
centres to support both financial reporting and controllership
functions across a number of global key business processes.
The concentration of activity and controllership in the group,
including the centralisation of the finance function in the group’s
head office and shared service centres, enabled us to structure
the audit more centrally.
The identification of significant accounts, including the
identification and classification of risks of material misstatement
was performed by the group audit team, including scoping
of relevant IT systems and controls relevant to the audit.
For certain business processes where activities included
potential variation due to local-market factors, we involved
our component auditors in further localised risk-assessment
procedures to refine the scope of our audit.
Audit procedures undertaken at a group level and on the
parent company
We performed audit work on certain functions, predominantly
head office, at the group level. Further, we performed audit
work at the group level and on the parent company financial
statements, including but not limited to the consolidation of
the group’s results, the preparation of the financial statements,
certain disclosures within the directors’ remuneration report,
litigation provisions and exposures in addition to management’s
entity level and oversight controls relevant to financial reporting.
Audit procedures undertaken at a group level were performed
to group materiality, or, where tested at a component level, to
component performance materiality. The range of component
performance materialities used was $4.2 million – $11.2 million,
excluding the parent company.
Audit work performed at global shared service centres and
local reporting units
A significant amount of the group’s operational processes which
cover financial reporting are undertaken at the group’s shared
service centres. The group audit team exercised direction,
supervision and review over the audit work at the shared service
centres in scope for the group audit, so that we developed an
understanding of the end-to-end view of the key processes that
supported significant account balances, classes of transactions,
disclosures and controls.
Audit work was performed in all four shared service centres
located in India, Malaysia, Poland and Costa Rica. The work for
all shared service centres was conducted by the group audit
team, with support from component audit teams in India, Japan
and China.
For local-market activities where we identified risks of
material misstatement to the group financial statements, we
identified 14 reporting units located in the USA, Costa Rica, UK,
Netherlands, Germany, Malaysia, China, Japan and Australia
as in-scope components. The work relating to these reporting
units was split between the group team and the component
audit teams, applying component performance materiality.
Coverage and consideration of residual
Based on our group risk assessment, we determined whether
the audit procedures were sufficient to support the group audit
opinion through determining that the audit evidence gained was
reflective of the level of risk within each financial statement line
item. On a stand-back basis, we assessed the audit evidence
achieved over three metrics (being revenue, profit before tax and
gross assets).
At the group level we also carried out analytical procedures to
obtain further assurance that there were no significant risks of
material misstatement of the aggregated financial information
of the remaining account balances, transactions and disclosures
not subject to audit or specified audit procedures.
Revenue
A
Specified audit procedures
72%
B
Review at group level
28%
B
A
Profit before tax
A
Specified audit procedures
73%
B
Review at group level
27%
B
A
Total assets
A
Specified audit procedures
70%
B
Review at group level
30%
B
A
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OTHER INFORMATION
7.2. Use of technology
The Group has a complex IT environment, characterised by
multiple systems which form a key part of the Group’s financial
reporting activities. Our testing, using technology, is integrated
into our risk assessment so that we only test relevant controls
and exceptions identified. Through these procedures we
obtained reliable information used as audit evidence across our
substantive procedures, including but not limited to the key
audit matters identified above.
We embed technology throughout our audit to improve quality
and effectiveness, including in the areas of planning and
scoping, project management, risks and controls assessment,
substantive testing and reporting insights to management
and the Audit & Risk Committee. To support our iterative risk
assessment process, we have used web scanning technology
which assists with identifying additional information regarding
industry matters in the jurisdictions in with the Group operates.
We have factored the impact of this information into our risk
assessment and design of substantive procedures within the
relevant account balances and other aspects of the audit,
including going concern and post balance sheet events. Our data
analytical tools allow us to scrutinise large transactional data
sets for unusual trends, characteristics, outliers or transaction
flows to support our identification of audit risks.
We have continued to leverage process analytics to perform
substantive procedures on revenue at a Group level by
automatically matching key revenue data points across sales
orders, invoicing, shipping documents and cash receipts
generated during the revenue process.
7.3. Our consideration of the control environment
Based on our understanding of the control environment
gathered during our inquiries with control operators, inspecting
documents used in or the output of controls and inquiries of
those responsible for oversight of control, our audit approach
was to place reliance on management’s controls over all
business cycles affecting significant account balances,
transactions and disclosures, where possible.
We have outlined in our key audit matters above the work
performed to assess the operating effectiveness of general
IT controls and IT controls related to material and significant
account balances to the group audit, including the conclusions
relating to our reliance on IT controls and mitigating procedures
performed relating to any deficiencies identified in those
controls.
7.4. Our consideration of climate-related risks
In planning our audit, we have considered the potential
impact of climate change on the group’s business and its
financial statements.
The Group has assessed the risk and opportunities relevant to
climate change and the group’s Principal Risks capture physical
and transitional climate-related risks as determined in the
Enterprise Risk Management Process. The risks have also been
considered and embedded into the businesses as explained in
the Strategic Report.
As part of our audit procedures, we have obtained
management’s climate-related risk assessment and
held discussions with those charged with governance to
understand the process of identifying climate-related risks,
the determination of mitigating actions and the impact on the
group’s financial statements.
While management has acknowledged the risks posed by
climate change, they have assessed that climate change does
not create any further key sources of estimation uncertainty in
the financial statements as at 31 December 2025 as explained
in note 1.3 to the accounts.
We performed our own qualitative risk assessment of the
potential impact of climate change on the group’s account
balances and classes of transactions, with particular focus
on areas of judgement such as goodwill, and did not identify
any additional risks of material misstatement. We have also
evaluated management’s climate change risk assessment and
supporting scenario analyses. Our procedures include reading
disclosures included in the Annual Report to consider whether
they are materially consistent with the financial statements and
our knowledge obtained in the audit and assessing compliance
with TCFD recommendations.
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7.5 Working with other auditors
The group audit team are responsible for the scope and direction
of the audit process. To enable appropriate direction, supervision
and review activities over the shared service centre and in-
market component auditors, the group team:
–
Held global planning sessions with component teams covering
strategy and delivery;
–
Had a dedicated component oversight team, who engaged in
regular communication with component auditors, enabling
timely comparisons and challenge of outcomes across the
group and component audits;
–
Provided detailed referral instructions that were tailored for
each component auditor, and through regular engagement
refined those instructions during the audit as required;
–
Actively participated in all component team planning and
close meetings for each phase of work;
–
Performed virtual and in-person file reviews over the key risk
areas throughout the year; and
–
Varied the extent of our oversight of the component auditors
based on the risk-profiles of each reporting unit in scope.
8. Other information
The other information comprises the information included in
the annual report, other than the financial statements and our
auditor’s report thereon. The directors are responsible for the
other information contained within the annual report.
Our opinion on the financial statements does not cover the
other information and, except to the extent otherwise explicitly
stated in our report, we do not express any form of assurance
conclusion thereon.
Our responsibility is to read the other information and, in
doing so, consider whether the other information is materially
inconsistent with the financial statements or our knowledge
obtained in the course of the audit, or otherwise appears to be
materially misstated.
If we identify such material inconsistencies or apparent material
misstatements, we are required to determine whether this gives
rise to a material misstatement in the financial statements
themselves. If, based on the work we have performed, we
conclude that there is a material misstatement of this other
information, we are required to report that fact.
We have nothing to report in this regard.
9. Responsibilities of Directors
As explained more fully in the directors’ responsibilities
statement, the directors are responsible for the preparation of
the financial statements and for being satisfied that they give a
true and fair view, and for such internal control as the directors
determine is necessary to enable the preparation of financial
statements that are free from material misstatement, whether
due to fraud or error.
In preparing the financial statements, the directors are
responsible for assessing the group’s and the parent company’s
ability to continue as a going concern, disclosing as applicable,
matters related to going concern and using the going concern
basis of accounting unless the directors either intend to liquidate
the group or the parent company or to cease operations, or have
no realistic alternative but to do so.
10. Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about
whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error,
and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not
a guarantee that an audit conducted in accordance with ISAs
(UK) will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered
material if, individually or in the aggregate, they could reasonably
be expected to influence the economic decisions of users taken
on the basis of these financial statements.
A further description of our responsibilities for the audit of
the financial statements is located on the FRC’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms
part of our auditor’s report.
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11. Extent to which the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which
our procedures are capable of detecting irregularities, including fraud is detailed below.
11.1. Identifying and assessing potential risks related to irregularities
In identifying and assessing risks of material misstatement in
respect of irregularities, including fraud and non-compliance
with laws and regulations, we considered the following:
–
the nature of the industry and sector, control environment
and business performance including the design of the group’s
remuneration policies, key drivers for directors’ remuneration,
bonus levels and performance targets;
–
the group’s own assessment of the risks that irregularities
may occur either as a result of fraud or error that was
approved by the board on 5 February 2026;
–
results of our enquiries of management, internal audit,
the directors and the Audit Committee about their own
identification and assessment of the risks of irregularities,
including those that are specific to the group’s sector;
–
any matters we identified having obtained and reviewed
the group’s documentation of their policies and procedures
relating to:
–
identifying, evaluating and complying with laws and
regulations and whether they were aware of any instances
of non-compliance;
–
detecting and responding to the risks of fraud and
whether they have knowledge of any actual, suspected or
alleged fraud;
–
the internal controls established to mitigate risks of fraud or
non-compliance with laws and regulations;
–
the matters discussed among the audit engagement team
including component audit teams and relevant internal
specialists, including analytics, tax, valuations, impairment,
pensions, IT, sustainability, legal actuarial and fraud specialists
regarding how and where fraud might occur in the financial
statements and any potential indicators of fraud.
As a result of these procedures, we considered the opportunities
and incentives that may exist within the organisation for
fraud and identified the greatest potential for fraud in unusual
adjustments to revenue arising outside of the normal course of
business. In common with all audits under ISAs (UK), we are also
required to perform specific procedures to respond to the risk of
management override.
We also obtained an understanding of the legal and regulatory
frameworks that the group operates in, focusing on provisions
of those laws and regulations that had a direct effect on
the determination of material amounts and disclosures in
the financial statements. The key laws and regulations we
considered in this context included the Securities and Exchange
Commission rules, Securities Law in the UK and US, the UK
Listing Rules, the UK Companies Act, pensions legislation, and
tax legislation in the group’s various jurisdictions.
In addition, we considered provisions of other laws and
regulations that do not have a direct effect on the financial
statements but compliance with which may be fundamental
to the group’s ability to operate or to avoid a material penalty.
These included General Data Protection Requirements, US
Foreign Corrupt Practices Act, US Food and Drug Administration
Regulation, EU Medical Device Regulation, and the UK
Bribery Act.
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11.2. Audit response to risks identified
As a result of performing the above, we did not identify any
key audit matters related to the potential risk of fraud or non-
compliance with laws and regulations.
Our procedures to respond to risks identified included
the following:
–
reviewing the financial statement disclosures and testing
to supporting documentation to assess compliance with
provisions of relevant laws and regulations described as
having a direct effect on the financial statements;
–
enquiring of management, the Audit Committee and in-house
and external legal counsel concerning actual and potential
litigation and claims;
–
performing analytical procedures to identify any unusual or
unexpected relationships that may indicate risks of material
misstatement due to fraud;
–
reading minutes of meetings of those charged with
governance, reviewing internal audit reports and
correspondence with regulators;
–
in addressing the potential risk of fraud in unusual
adjustments to revenue arising outside of the normal course
of business, we used our data analytics tool to identify
whether there were any journal entries both at the entity level
and consolidation level that we deemed unusual and for which
further testing needed to be performed; and
–
in addressing the risk of fraud through management override
of controls, testing the appropriateness of journal entries and
other adjustments; assessing whether the judgements made
in making accounting estimates are indicative of a potential
bias; and evaluating the business rationale of any significant
transactions that are unusual or outside the normal course
of business.
We also communicated relevant identified laws and regulations
and potential fraud risks to all engagement team members
including internal specialists and component audit teams, and
remained alert to any indications of fraud or non-compliance
with laws and regulations throughout the audit.
Report on other legal and regulatory requirements
12. Opinions on other matters prescribed by the Companies Act 2006
In our opinion the part of the directors’ remuneration report to
be audited has been properly prepared in accordance with the
Companies Act 2006.
In our opinion, based on the work undertaken in the course of
the audit:
–
the information given in the strategic report and the directors’
report for the financial year for which the financial statements
are prepared is consistent with the financial statements; and
–
the strategic report and the directors’ report have been
prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the group
and the parent company and their environment obtained in
the course of the audit, we have not identified any material
misstatements in the strategic report or the directors’ report.
13. Corporate Governance Statement
The Listing Rules require us to review the directors’ statement
in relation to going concern, longer-term viability and that part
of the Corporate Governance Statement relating to the group’s
compliance with the provisions of the UK Corporate Governance
Code specified for our review.
Based on the work undertaken as part of our audit, we have
concluded that each of the following elements of the Corporate
Governance Statement is materially consistent with the
financial statements and our knowledge obtained during the
audit:
–
the directors’ statement with regards to the appropriateness
of adopting the going concern basis of accounting and any
material uncertainties identified set out on page 198;
–
the directors’ explanation as to its assessment of the group’s
prospects, the period this assessment covers and why the
period is appropriate set out on page 95;
–
the directors’ statement on fair, balanced and understandable
set out on page 198;
–
the board’s confirmation that it has carried out a robust
assessment of the emerging and principal risks set out on
page 95;
–
the section of the annual report that describes the review
of effectiveness of risk management and internal control
systems set out on page 81; and
–
the section describing the work of the Audit Committee set
out on page 141.
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OTHER INFORMATION
14. Matters on which we are required to report by exception
14.1 Adequacy of explanations received and accounting records
Under the Companies Act 2006 we are required to report to you
if, in our opinion:
–
we have not received all the information and explanations we
require for our audit; or
–
adequate accounting records have not been kept by the
parent company, or returns adequate for our audit have not
been received from branches not visited by us; or
–
the parent company financial statements are not in
agreement with the accounting records and returns.
We have nothing to report in respect of these matters.
14.2. Directors’ remuneration
Under the Companies Act 2006 we are also required to report if in our opinion certain disclosures of directors’ remuneration have
not been made or the part of the directors’ remuneration report to be audited is not in agreement with the accounting records
and returns.
We have nothing to report in respect of these matters.
15. Other matters which we are required to address
15.1. Auditor tenure
Following the recommendation of the Audit Committee, we were appointed by the shareholders at the Annual General Meeting on
1 May 2025 to audit the financial statements for the year ending 31 December 2025 and subsequent financial periods. The period of
total uninterrupted engagement including reappointments of the firm is 2 years, covering the years ending 31 December 2024 and
31 December 2025.
15.2. Consistency of the audit report with the additional report to the audit committee
Our audit opinion is consistent with the additional report to the Audit Committee we are required to provide in accordance with
ISAs (UK).
16. Use of our report
This report is made solely to the company’s members, as a body,
in accordance with Chapter 3 of Part 16 of the Companies Act
2006. Our audit work has been undertaken so that we might
state to the company’s members those matters we are required
to state to them in an auditor’s report and for no other purpose.
To the fullest extent permitted by law, we do not accept or
assume responsibility to anyone other than the company and
the company’s members as a body, for our audit work, for this
report, or for the opinions we have formed.
As required by the Financial Conduct Authority (FCA) Disclosure
Guidance and Transparency Rule (DTR) 4.1.15R – DTR 4.1.18R,
these financial statements will form part of the Electronic
Format Annual Financial Report filed on the National Storage
Mechanism of the FCA in accordance with DTR 4.1.15R – DTR
4.1.18R. This auditor’s report provides no assurance over
whether the Electronic Format Annual Financial Report has been
prepared in compliance with DTR 4.1.15R – DTR 4.1.18R.
Andrew Bond, FCA (Senior statutory auditor)
For and on behalf of Deloitte LLP
Statutory Auditor
London, United Kingdom
27 February 2026
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continued
Group income statement
Year ended
Year ended
Year ended
31 December
31 December
31 December
2025
2024
2023
Notes
$ million
$ million
$ million
Attributable profit for the year
1
Other comprehensive income:
Items that will not be reclassified to income statement
Remeasurement of net retirement benefit obligations
18
(89 )
Taxation on other comprehensive income
5
(1 )
(1 )
Total items that will not be reclassified to income statement
(71 )
Items that may be reclassified subsequently to income statement
Cash flow hedges – forward foreign exchange contracts
Gains arising in the year
Gains recycled to income statement in the year
(29 )
(1 )
(25 )
Exchange differences on translation of foreign operations
(124 )
Taxation on other comprehensive income
5
(5 )
Total items that may be reclassified subsequently to income statement
(92 )
Other comprehensive income/(loss) for the year, net of taxation
(77 )
(17 )
Total comprehensive income for the year
1
1
Attributable to equity holders of the Company and wholly derived from continuing operations.
Group statement of comprehensive income
The Notes on pages 215–265 are an integral part of these accounts.
Year ended
Year ended
Year ended
31 December
31 December
31 December
2025
2024
2023
Notes
$ million
$ million
$ million
Revenue
2
Cost of goods sold
(1,972 )
(1,764 )
(1,730 )
Gross profit
Selling, general and administrative expenses
3
(3,102 )
(3,100 )
(3,055 )
Research and development expenses
3
(296 )
(289 )
(339 )
Operating profit
2 & 3
Interest income
4
Interest expense
4
(140 )
(145 )
(132 )
Other finance costs
4
(16 )
(28 )
(7 )
Reversal of impairment charge and Share of results of associates
11
(10 )
(30 )
Profit before taxation
Taxation
5
(154 )
(86 )
(27 )
Attributable profit for the year
1
Earnings per ordinary share
1
6
Basic
Diluted
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ACCOUNTS
OTHER INFORMATION
Group financial statements
Group balance sheet
At
At
31 December
31 December
2025
2024
Notes
$ million
$ million
Assets
Non-current assets
Property, plant and equipment
7
Goodwill
8
Intangible assets
9
Investments
10
Investments in associates
11
Other non-current assets
13
Retirement benefit assets
18
Deferred tax assets
5
Current assets
Inventories
12
Trade and other receivables
13
Current tax receivable
Cash and cash equivalents
15
Total assets
Equity and liabilities
Equity attributable to owners of the Company
Share capital
19
Share premium
Capital redemption reserve
Treasury shares
19
(515 )
(66 )
Other reserves
(329 )
(497 )
Retained earnings
Total equity
Non-current liabilities
Long-term borrowings and lease liabilities
15
Retirement benefit obligations
18
Other payables
14
Provisions
17
Deferred tax liabilities
5
Current liabilities
Bank overdraſts, borrowings, loans and lease liabilities
15
Trade and other payables
14
Provisions
17
Current tax payable
Total liabilities
Total equity and liabilities
Rupert Soames, OBE
Deepak Nath, PhD
John Rogers
Chair
Chief Executive Officer
The Notes on pages 215–265 are an integral part of these accounts.
212
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Annual Report 2025
Group financial statements
continued
Group cash flow statement
The Notes on pages 215–265 are an integral part of these accounts.
Year ended
Year ended
Year ended
31 December
31 December
31 December
2025
2024
2023
Notes
$ million
$ million
$ million
Cash flows from operating activities
Profit before taxation
Net interest expense
4
Depreciation, amortisation and impairment
Loss on disposal of property, plant and equipment and intangible assets
Share-based payments expense (equity-settled)
22
Share of results of associates
11
(113 )
Pension costs less cash paid
Decrease/(increase) in inventories
(42 )
(178 )
Increase in trade and other receivables
(175 )
(81 )
(49 )
Increase/(decrease) in trade and other payables and provisions
(105 )
Cash generated from operations
Interest received
Interest paid
(142 )
(140 )
(104 )
Income taxes paid
(147 )
(140 )
(125 )
Net cash inflow from operating activities
Cash flows from investing activities
Acquisitions, net of cash acquired
21
(9 )
(186 )
(21 )
Capital expenditure
(433 )
(381 )
(427 )
Purchase of investments
(2 )
(1 )
Proceeds from disposal of property, plant and equipment
Investment in associate
11
(1 )
Net cash used in investing activities
(406 )
(569 )
(448 )
Cash flows from financing activities
Purchase of own shares
20
(502 )
Proceeds from own shares
20
Payment of capital element of lease liabilities
20
(50 )
(55 )
(52 )
Proceeds from borrowings due within one year
20
Settlement of borrowings due within one year
20
(39 )
(705 )
(151 )
Proceeds from borrowings due aſter one year
20
Settlement of borrowings due aſter one year
20
(90 )
Settlement of currency swaps
20
Equity dividends paid
19
(330 )
(327 )
(327 )
Net cash used in financing activities
(955 )
(86 )
(200 )
Net (decrease)/increase in cash and cash equivalents
(76 )
(40 )
Cash and cash equivalents at beginning of year
20
Exchange adjustments
20
(15 )
(4 )
Cash and cash equivalents at end of year
1
1
Cash and cash equivalents is net of bank overdraſts of $4 m (2024: $2 m, 2023: $2 m).
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OTHER INFORMATION
Group statement of changes in equity
The Notes on pages 215–265 are an integral part of these accounts.
Capital
Share
Share
redemption
Treasury
Other
Retained
Total
capital
premium
reserve
shares
2
reserves
3
earnings
4
equity
$ million
$ million
$ million
$ million
$ million
$ million
$ million
At 31 December 2022
(118 )
(459 )
Attributable profit for the year
1
Other comprehensive income
(71 )
(17 )
Total comprehensive income
Equity dividends declared and paid
(327 )
(327 )
Share-based payments recognised
Cost of shares transferred to beneficiaries
(24 )
At 31 December 2023
(94 )
(405 )
Attributable profit for the year
1
Other comprehensive income
(92 )
(77 )
Total comprehensive income
(92 )
Equity dividends declared and paid
(327 )
(327 )
Share-based payments recognised
Taxation on share-based payments
(1 )
(1 )
Cost of shares transferred to beneficiaries
(27 )
At 31 December 2024
(66 )
(497 )
Attributable profit for the year
1
Other comprehensive income
Total comprehensive income
Equity dividends declared and paid
(330 )
(330 )
Share-based payments recognised
Taxation on share-based payments
Purchase of own shares
(502 )
(502 )
Cost of shares transferred to beneficiaries
(41 )
At 31 December 2025
(515 )
(329 )
1
Attributable to equity holders of the Company and wholly derived from continuing operations.
2 Refer to Note 19.2 for further information.
3
Other reserves comprises gains and losses on cash flow hedges, foreign exchange differences on translation of foreign operations and net changes on fair
value of trade investments. The cumulative translation loss within other reserves at 31 December 2025 was $341 m (2024: $520 m, 2023: $396 m).
4
Within retained earnings is a non-distributable capital reserve of $2,266 m (2024: $2,266 m, 2023: $2,266 m) that arose as a result of the Group’s
reorganisation in 2008.
5
Issue of ordinary share capital in connection with the Group’s share incentive plans.
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Group financial statements
continued
Notes to the Group accounts
STRATEGIC REPORT
GOVERNANCE
ACCOUNTS
OTHER INFORMATION
Smith+Nephew
Annual Report 2025
215
Basis of preparation
means the Company and all its subsidiaries. The principal activities of the Group are to develop, manufacture, market and sell medical
its accounts in accordance with IFRS Accounting Standards as issued by the International Accounting Standards Board (IASB) effective
as at 31 December 2025 . IFRS as adopted in the UK differs in certain respects from IFRS Accounting Standards as issued by the IASB.
The preparation of accounts in conformity with IFRS requires management to use estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the accounts and the reported amounts
of revenues and expenses during the year. Material accounting policies, including those requiring management to use estimates and
assumptions, are disclosed in Notes 1-23 of the Notes to the Group accounts. Although these estimates are based on management’s
best knowledge of current events and actions, actual results ultimately may differ from those estimates. Estimates and underlying
assumptions are reviewed on an ongoing basis. Revisions to estimates are recognised prospectively.
environment have been considered as part of the Group’s adoption of the going concern basis in these financial statements, in which
context, the Directors reviewed cash flow forecasts prepared for a period of at least 12 months from the date of approval of these
financial statements. Having carefully reviewed those forecasts, the Directors concluded that it was appropriate to adopt the going
concern basis of accounting in preparing these financial statements for the reasons set out below.
The Group had access to $553m of cash and cash equivalents (net of bank overdraſts) at 31 December 2025. The Group’s net debt,
excluding lease liabilities, at 31 December 2025 was $2,543m with access to committed facilities of $4.1bn with an average maturity
of 4.7 years. At the date of approving these financial statements the funding position of the Group has remained materially unchanged
following the upfront payment of $225m for the acquisition of Integrity Orthopaedics, the repayment of $75m of maturing private
placement debt, and an increase of the Revolving Credit Facility by $125m to $1.125bn.
$625m of private placement debt is subject to financial covenants. The principal covenant on the private placement debt is a leverage
ratio of <3.5, which is measured on a rolling 12-month basis at half year and year end. There are no financial covenants in any of the
Group’s other facilities.
The Directors have considered various scenarios in assessing the impact of the economic environment on future financial performance
and cash flows, including the impact of a significant global economic downturn, leading to lower healthcare spending across both public
and private systems. Throughout these scenarios, which include a severe, but plausible outcome, the Group continues to have headroom
on its borrowing facilities and financial covenants.
The Directors have a reasonable expectation that the Company and the Group are well placed to manage their business risks,
have sufficient funds to continue to meet their liabilities as they fall due and to continue in operational existence for a period of at
least 12 months from the date of the approval of these financial statements. The financial statements have therefore been prepared
on a going concern basis.
Accordingly, the Directors continue to adopt the going concern basis (in accordance with the guidance ‘Guidance on the Going
Concern Basis of Accounting and Related Reporting (including Solvency and Liquidity Risks) ’ issued by the FRC) in preparing these
A number of new amendments to standards are effective from 1 January 2025, but they do not have a material effect on the Group’s
A number of new standards and amendments to standards are effective for annual periods beginning on or aſter 1 January 2026 and
earlier application is permitted; however, the Group has not adopted them early in preparing these financial statements.
IFRS 18 Presentation and Disclosure in Financial Statements was issued by the IASB in April 2024. The standard is effective for
annual reporting periods beginning on or aſter 1 January 2027, and also applies to comparative information. IFRS 18 will replace IAS
1 Presentation of Financial Statements and will have a pervasive impact on several aspects of financial statements presentation and
disclosure, particularly in the Group income statement and disclosure requirements for management-defined performance measures
(MPMs) within the financial statements.
Group financial statements
continued
Notes to the Group accounts
continued
1
Basis of preparation
continued
Smith+Nephew
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216
The Group has commenced an assessment of the standard’s full impact. Based on the preliminary analysis, the Group anticipates that
the standard will have the following potential impacts:
–
The classification of items of income and expense into categories defined in IFRS 18 will impact the presentation of the Group income
statement. Whilst the standard does not impact recognition or measurement, changes in classification will impact the reported
amounts for line items in the income statement. A new subtotal ‘Profit before financing and income tax’ will be included to separately
present the impact of investing and financing activities. Share of results of associates will be classified in the investing category,
interest income and expense in the financing category and other finance costs will be classified in the operating, investing or financing
category depending on the nature of the income or expense.
–
The Group is reassessing its aggregation and disaggregation principles to ensure they comply with the enhanced guidance in IFRS 18,
which aims to provide more detailed and useful information to users of the financial statements.
–
Mandatory new disclosures in relation to MPMs will be required within the financial statements.
–
Consequential presentational changes to statement of cash flows will be required and operating profit will be the new starting point
for reconciling cash flows from operating activities.
The Group will apply IFRS 18 from its mandatory effective date of 1 January 2027. Comparative information for the financial years
Consolidation
The Group accounts include the accounts of Smith & Nephew plc and its subsidiaries for the periods during which they were members
of the Group.
Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has rights to, variable returns
from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are
consolidated in the Group accounts from the date that the Group obtains control and continue to be consolidated until the date
that such control ceases. Intra-group balances and transactions, and any unrealised income and expenses arising from intra-
group transactions, are eliminated on consolidation. All subsidiaries have year ends that are coterminous with the Group’s, with the
exception of jurisdictions whereby a different year end is required by local legislation.
When the Group loses control over a subsidiary, it derecognises the assets and liabilities of the subsidiary and any related components
Critical judgements and estimates
The Group prepares its consolidated financial statements in accordance with IFRS Accounting Standards as issued by the IASB and IFRS
adopted in the UK, the application of which oſten requires judgements and estimates to be made by management when formulating the
Group’s financial position and results. Under IFRS, the Directors are required to adopt those accounting policies most appropriate to the
Group’s circumstances for the purpose of presenting fairly the Group’s financial position, financial performance and cash flows.
Management regularly reviews, and revises as necessary, the accounting judgements that significantly impact the amounts recognised
in the financial statements and the estimates that are considered to be critical estimates due to their potential to give rise to material
adjustments in the Group’s financial statements in the next financial year. The Group has determined that there are no critical
accounting judgements and no key sources of estimation uncertainty that have a significant risk of resulting in a material adjustment to
the carrying amounts of assets and liabilities within the next financial year.
The Group’s accounting policies are set out in Notes 1–23 of the Notes to the Group accounts. Management has considered the impact
1.3
Climate change considerations
The impact of climate change has been considered as part of the assessment of estimates and judgements in preparing the
Group accounts, particularly in the context of the risks identified in the TCFD disclosures on pages 69 to 72. The climate change
scenario analyses undertaken this year in line with TCFD recommendations did not identify any material financial impact. The following
considerations were made in respect of the financial statements:
–
The impact of climate change on the going concern assessment and the viability of the Group over the next three years.
–
The impact of climate change on the cash flow forecasts used in the impairment assessments of non-current assets,
including goodwill.
–
The impact of climate change on the carrying value and useful economic lives of property, plant and equipment.
While there is currently no material medium-term impact expected, the Group closely monitors climate-related risks given the changing
nature of these risks and management consider the impact of climate change as part of the decision making process and continue to
assess the impact on judgements and estimates, and on preparation of the consolidated financial statements.
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Foreign currencies
Transactions in foreign currencies are translated to the respective functional currencies of Group companies at exchange rates
at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are retranslated to the functional
Foreign operations
Balance sheet items of foreign operations, including goodwill and fair value adjustments arising on acquisition, are translated into US
Dollars on consolidation at the exchange rates at the reporting date. Income statement items and the cash flows of foreign operations
are translated at average rates as an approximation to actual transaction rates, with actual transaction rates used for large
one-off transactions.
Foreign currency differences are recognised in ‘Other comprehensive income’ and accumulated in ‘Other reserves’ within equity.
These include: exchange differences on the translation at closing rates of exchange of non-US Dollar opening net assets; the differences
arising between the translation of profits into US Dollars at actual (or average, as an approximation) and closing exchange rates; to the
extent that the hedging relationship is effective, the difference on translation of foreign currency borrowings or swaps that are used
to finance or hedge the Group’s net investments in foreign operations; and the movement in the fair value of forward foreign exchange
contracts used to hedge forecast foreign exchange cash flows.
The exchange rates used for the translation of currencies into US Dollars that have the most significant impact on the Group
results were:
2025 | 2024 | 2023 | |
Average rates | |||
Sterling | 1.32 | 1.28 | 1.24 |
Euro | 1.13 | 1.08 | 1.08 |
Swiss Franc | 1.20 | 1.14 | 1.11 |
Japanese Yen | 0.0067 | 0.0066 | 0.0071 |
Year end rates | |||
Sterling | 1.35 | 1.25 | 1.27 |
Euro | 1.17 | 1.04 | 1.10 |
Swiss Franc | 1.26 | 1.10 | 1.19 |
Japanese Yen | 0.0064 | 0.0064 | 0.0071 |
Business segment information
The Group’s operating structure is organised around four global business units (Orthopaedics, Sports Medicine, ENT and Advanced
Wound Management) and the chief operating decision maker monitors performance, makes operating decisions and allocates
resources on a global business unit basis. Business unit presidents have responsibility for upstream marketing, driving product portfolio
and technology acquisition decisions, full commercial responsibility and for the implementation of their business unit strategy globally.
Accordingly, the Group consists of four operating segments.
The Group has concluded that Sports Medicine and ENT meet the aggregation criteria and therefore, these operating segments have
been aggregated into a single operating segment. In applying the aggregation criteria prescribed by IFRS 8 Operating Segments,
management made certain judgements pertaining to the economic indicators relating to these operating segments, including those
relating to the similarities in the expected long-term market growth rates, the geographic and operational risks and the competitive
landscape that these segments operate in. Therefore, in accordance with IFRS 8, the Group has three operating segments which are
also reportable segments.
The Executive Committee (‘ExCo’) comprises the Chief Financial Officer (‘CFO’), the business unit presidents and certain heads of
function, and is chaired by the Chief Executive Officer (‘CEO’). ExCo is the body through which the CEO uses the authority delegated
to him by the Board of Directors to manage the operations and performance of the Group. All significant operating decisions regarding
the allocation and prioritisation of the Group’s resources and assessment of the Group’s performance are made by ExCo, and while
the members have individual responsibility for the implementation of decisions within their respective areas, it is at the ExCo level
that these decisions are made. Accordingly, ExCo is considered to be the Group’s chief operating decision maker as defined by IFRS 8
Operating Segments
.
Group financial statements
continued
Notes to the Group accounts
continued
2
Business segment information
continued
Smith+Nephew
Annual Report 2025
218
In making decisions about the prioritisation and allocation of the Group’s resources, ExCo reviews financial information for the business
units and determines the best allocation of resources to the business units. This information is prepared substantially on the same basis
as the Group’s IFRS financial statements aside from the adjustments described in Note 2.2. In 2024, the Group changed the segment
trading profit measure presented to the ExCo by allocating directly attributable corporate costs to business units. Financial information
for corporate costs relating to centralised infrastructure costs, such as compliance and group functions, is presented on a Group-
wide basis. The ExCo is not provided with total assets and liabilities by segment, and therefore these measures are not included in the
disclosures below. The results of the segments are shown below.
Revenue by business segment and geography
Revenue is recognised as the performance obligations to deliver products or services are satisfied and is recorded based on the
amount of consideration expected to be received in exchange for satisfying the performance obligations. Revenue is recognised
primarily when control is transferred to the customer, which is generally when the goods are shipped or delivered in accordance
with the contract terms, with some transfer of services taking place over time. Substantially all performance obligations are fulfilled
within one year. There is no significant revenue associated with the provision of services. Payment terms to our customers are based
on commercially reasonable terms for the respective markets while also considering a customer’s credit rating. Appropriate provisions
for returns, trade discounts and rebates are deducted from revenue. Sales returns are estimated based on historical sales and returns
information. These estimates are reviewed regularly and adjusted as necessary. The Group maintains an estimated refund liability
based upon the expected value method that is recorded as a reduction in revenue. Rebates primarily comprise chargebacks and
other discounts granted to certain customers. Chargebacks are discounts that occur when a third-party purchases products from a
wholesaler at its agreed price plus a mark-up. The wholesaler in turn charges the Group for the difference between the price initially
paid by the wholesaler and the agreed price. The provision for chargebacks is based on expected sell-through levels by the Group’s
The Group is applying the practical expedient in IFRS15.121 not to disclose the aggregate amount of the transaction price allocated
to performance obligations that are unsatisfied at the end of the reporting period as substantially all performance obligations are
fulfilled within one year.
Orthopaedics and Sports Medicine & ENT consists of the following businesses: Knee Implants, Hip Implants, Other Reconstruction,
Trauma & Extremities, Sports Medicine Joint Repair, Arthroscopic Enabling Technologies and ENT. Sales of inventory located
at customer premises and available for customers’ immediate use are recognised when notification is received that the product
has been implanted or used. Substantially all other revenue is recognised when control is transferred to the customer, which is
generally when the goods are shipped or delivered in accordance with the contract terms. Revenue is recognised for the amount
of consideration expected to be received in exchange for transferring the products or services.
In general, our business in Established Markets is direct to hospitals and Ambulatory Surgery Centers, whereas in the Emerging
Markets we generally sell through distributors.
Advanced Wound Management
Advanced Wound Management consists of the following businesses: Advanced Wound Care, Advanced Wound Bioactives and
Advanced Wound Devices. Substantially all revenue is recognised when control is transferred to the customer, which is generally
when the goods are shipped or delivered in accordance with the contract terms. Revenue is recognised for the amount of
consideration expected to be received in exchange for transferring the products or services. Appropriate provisions for returns,
trade discounts and rebates are deducted from revenue, as explained above.
The majority of our Advanced Wound Management business, and in particular products used in community and homecare facilities,
is through wholesalers and distributors. When control is transferred to a wholesaler or distributor, revenue is recognised accordingly.
Segment revenue reconciles to statutory revenues from continuing operations as follows:
2025 | 2024 | 2023 | |
$ million | $ million | $ million | |
Reportable segment revenue | |||
Orthopaedics | 2,437 | 2,305 | 2,214 |
Sports Medicine & ENT | 1,934 | 1,824 | 1,729 |
Advanced Wound Management | 1,793 | 1,681 | 1,606 |
Revenue from external customers | 6,164 | 5,810 | 5,549 |
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Disaggregation of revenue:
The following table shows the disaggregation of Group revenue by product by and business unit:
2025 | 2024 1 | 2023 | |
$ million | $ million | $ million | |
Revenue by product from continuing operations | |||
Knee Implants | 1,011 | 977 | 940 |
Hip Implants | 641 | 619 | 599 |
Other Reconstruction | 136 | 101 | 111 |
Trauma & Extremities | 649 | 608 | 564 |
Orthopaedics | 2,437 | 2,305 | 2,214 |
Sports Medicine Joint Repair | 1,067 | 982 | 945 |
Arthroscopic Enabling Technologies | 647 | 632 | 588 |
ENT (Ear, Nose and Throat) | 220 | 210 | 196 |
Sports Medicine & ENT | 1,934 | 1,824 | 1,729 |
Advanced Wound Care | 766 | 735 | 725 |
Advanced Wound Bioactives | 621 | 581 | 553 |
Advanced Wound Devices | 406 | 365 | 328 |
Advanced Wound Management | 1,793 | 1,681 | 1,606 |
Consolidated revenue from continuing operations | 6,164 | 5,810 | 5,549 |
1
The following table shows the disaggregation of Group revenue by geographic market and product category. The disaggregation of
revenue into the two product categories below reflects that in general the products in the Advanced Wound Management business
unit are sold to wholesalers and intermediaries, while products in the other business units are sold directly to hospitals, Ambulatory
Surgery Centers and distributors. The further disaggregation of revenue by Established Markets and Emerging Markets reflects that in
general our products are sold through distributors and intermediaries in the Emerging Markets while in the Established Markets, with the
exception of the Advanced Wound Care and Bioactives products, which are in general sold direct to hospitals and Ambulatory Surgery
Centers. The disaggregation by Established Markets and Emerging Markets also reflects their differing economic factors, including
volatility in growth and outlook.
2025 | 2024 | 2023 | |||||||
Established | Emerging | Established | Emerging | Established | Emerging | ||||
Markets 1 | Markets | Total | Markets 1 | Markets | Total | Markets 1 | Markets | Total | |
$ million | $ million | $ million | $ million | $ million | $ million | $ million | $ million | $ million | |
Orthopaedics, Sports Medicine | 3,606 | 764 | 4,370 | 3,366 | 763 | 4,129 | 3,184 | 759 | 3,943 |
& ENT | |||||||||
Advanced Wound Management | 1,555 | 239 | 1,794 | 1,464 | 217 | 1,681 | 1,406 | 200 | 1,606 |
Total | 5,161 | 1,003 | 6,164 | 4,830 | 980 | 5,810 | 4,590 | 959 | 5,549 |
1
Established Markets comprises the US, Australia, Canada, Europe, Japan and New Zealand.
Sales are attributed to the country of destination. US revenue for 2025 was $3,306m (2024: $3,123m, 2023: $2,979m), UK revenue for
2025 was $246m (2024: $226m, 2023: $201m)
and China revenue for 2025 was $128m (2024: $210m, 2023: $275m).
The nature of our products and services do not generally give rise to contract assets as we do not typically incur costs to fulfil a contract
before a product or service is provided to the customer. The Group generally satisfies performance obligations within one year from
the contract inception date. There was no material revenue recognised in the current reporting period that related to carried-forward
contract liabilities (deferred income) or performance obligations satisfied in the previous year. There is no material revenue that is
likely to arise in future periods from unsatisfied performance obligations at the balance sheet date. Therefore, there are no associated
significant accrued income and deferred income balances at 31 December 2025. The Group does not have any material contract assets
and contract liabilities comprise rebates. The accrual for rebates at 31 December 2025 was $114m (2024: $106m) with $405m being
Major customers
Group financial statements
continued
Notes to the Group accounts
continued
2
Business segment information
continued
Smith+Nephew
Annual Report 2025
220
2.2
Trading profit by business segment
The segment profit measure presented to the ExCo is the segment trading profit. The Group has identified the following items, where
material, as those to be excluded from operating profit when arriving at segment trading profit: corporate costs; acquisition and disposal-
related items; significant restructuring programmes; amortisation and impairment of acquisition intangibles; gains and losses arising from
legal disputes; and other significant items. Further detail is provided below and in Notes 2.3, 2.4, 2.5 and 2.6.
In 2024, the Group changed the segment trading profit measure presented to the ExCo by allocating directly attributable corporate
costs to business units except for corporate costs relating to centralised infrastructure costs, such as compliance and group functions.
Accordingly, 2023 operating segment results have been restated for comparative purposes.
Segment trading profit is reconciled to the statutory measure below:
2025 | 2024 | 2023 | |
$ million | $ million | $ million | |
Segment profit | |||
Orthopaedics | 363 | 265 | 251 |
Sports Medicine & ENT | 461 | 437 | 394 |
Advanced Wound Management | 447 | 399 | 372 |
Segment trading profit | 1,271 | 1,101 | 1,017 |
Corporate costs 1 | (60) | (52) | (47) |
Acquisition and disposal-related items 2 | (32) | (94) | (60) |
Restructuring and rationalisation expenses | (47) | (123) | (220) |
Amortisation and impairment of acquisition intangibles 2 | (176) | (187) | (207) |
Legal and other 2 | (162) | 12 | (58) |
Operating profit | 794 | 657 | 425 |
Interest income | 28 | 24 | 34 |
Interest expense | (140) | (145) | (132) |
Other finance costs | (16) | (28) | (7) |
Share of results of associates | 113 | (10) | (30) |
Profit before taxation | 779 | 498 | 290 |
1
Corporate costs include centralised infrastructure costs, such as compliance and group functions.
2
During 2025, the Group undertook a strategic review of its inventory portfolio and determined that certain product ranges would be phased out and
simplified. As a result, the Group recognised an excess and obsolescence charge of $159m within legal and other items. During 2024, the Group announced
its intention to close the Warwick manufacturing site that manufactures Birmingham Hip Resurfacing (BHR) products. As a result, a total of $68m of BHR
assets and liabilities were written off, which mainly includes goodwill of $63m (included in acquisition and disposal-related items). During 2023, management
evaluated the commercial viability of Engage products and concluded that they should be discontinued. A total of $109m of Engage’s assets and liabilities
were written off as a result of this action, which includes goodwill of $84m (included in acquisition and disposal-related items), intangible assets of $37m
(included in amortisation and impairment of acquisition intangibles), inventory of $21m (included in legal and other), partially offset by remeasurement of
contingent consideration of $33m (included in acquisition and disposal-related items).
Depreciation and amortisation included in the segment profit is presented below:
2025 | 2024 | 2023 | |
$ million | $ million | $ million | |
Depreciation and amortisation | |||
Orthopaedics | 227 | 213 | 194 |
Sports Medicine & ENT | 105 | 98 | 97 |
Advanced Wound Management | 69 | 62 | 56 |
2.3
Acquisition and disposal-related items
For the year ended 31 December 2025, costs primarily relate to charge relating to integration costs for prior year acquisitions and
disposal of certain products.
For the year ended 31 December 2024, costs primarily relate to impairment of BHR goodwill, disposal of certain products and integration
costs relating to CartiHeal.
For the year ended 31 December 2023, costs primarily relate to the acquisition of CartiHeal and impairment of Engage goodwill,
partially offset by credits relating to remeasurement of deferred and contingent consideration for prior year acquisitions.
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2.4
Restructuring and rationalisation costs
For the year ended 31 December 2025, 2024 and 2023, these costs include efficiency and productivity elements of the 12-Point Plan
and the Operations and Commercial Excellence programme. These costs primarily consist of severance, business advisory services,
asset write-offs, contractual terminations and integration and dual running costs.
Amortisation and impairment of acquisition intangibles
For the years ended 31 December 2025, 2024 and 2023, these costs relate to the amortisation and impairment of intangible assets
2.6
Legal and other
For the year ended 31 December 2025, the charge mainly relates to a $159m increase in the excess and obsolescence provision arising
from the Group’s portfolio simplification initiatives introduced under the 12-Point Plan and further developed in 2025 through the Ortho360
operating model and new RISE strategy. These actions include the planned discontinuation and simplification of certain product ranges which
will reduce the need for inventory and capital employed in the business, provide a simpler and more efficient offer to our customers, and will
also allow us to focus on migrating them to our latest technology products. Legal and other also includes $9m reduction in the provision
for ongoing metal-on-metal hip claims as a result of a decrease in the present value of the estimated costs to resolve all known and
anticipated metal-on-metal hip claims,
fully offset by legal expenses of $10m for ongoing metal-on-metal hip claims.
For the year ended 31 December 2024, the credit mainly relates to a $28m reduction in the provision for ongoing metal-on-metal hip
claims as a result of a decrease in the present value of the estimated costs to resolve all known and anticipated metal-on-metal hip
claims, partially offset by legal expenses for ongoing metal-on-metal hip claims.
For the year ended 31 December 2023, charges primarily relate to legal expenses for ongoing metal-on-metal hip claims partially offset
by a decrease of $8m in the provision that reflects the decrease in the present value of the estimated costs to resolve all other known
and anticipated metal-on-metal hip claims and by the release of a provision for an intellectual property dispute.
The years ended 31 December 2024 and 2023 also include costs for implementing the requirements of the EU Medical Device
Regulation which came into effect in May 2021 with a transition period to May 2024.
2.7
Non-current assets by geography
The following table presents the non-current assets of the Group based on their location:
2025 | 2024 | 2023 | |
$ million | $ million | $ million | |
United Kingdom | 608 | 465 | 525 |
United States of America | 3,426 | 3,517 | 3,692 |
Other | 1,909 | 1,538 | 1,397 |
Total non-current assets of the consolidated Group 1 | 5,943 | 5,520 | 5,614 |
1
Operating profit
Research and development
Research expenditure is expensed as incurred. Internal development expenditure is only capitalised if the recognition criteria in
IAS 38
Intangible Assets
have been satisfied. The Group considers that the regulatory, technical and market uncertainties inherent
in the development of new products mean that in most cases development costs should not be capitalised as intangible assets
until products receive approval from the appropriate regulatory body.
Payments to third parties for research and development projects are accounted for based on the substance of the arrangement.
If the arrangement represents outsourced research and development activities the payments are generally expensed except
in limited circumstances where the respective development expenditure would be capitalised under the principles established
in IAS 38. By contrast, the payments are capitalised if the arrangement represents consideration for the acquisition of intellectual
property developed at the risk of the third party.
Advertising costs
Group financial statements
continued
Notes to the Group accounts
continued
3
Operating profit
continued
Smith+Nephew
Annual Report 2025
222
2025 | 2024 | 2023 | |
$ million | $ million | $ million | |
Revenue | 6,164 | 5,810 | 5,549 |
Cost of goods sold 1 | (1,972) | (1,764) | (1,730) |
Gross profit | 4,192 | 4,046 | 3,819 |
Research and development expenses 2 | (296) | (289) | (339) |
Selling, general and administrative expenses: 3,4,5,6 | |||
Marketing, selling and distribution expenses | (2,362) | (2,276) | (2,218) |
Administrative expenses | (740) | (824) | (837) |
(3,102) | (3,100) | (3,055) | |
Operating profit | 794 | 657 | 425 |
1
2025 includes $161m charge relating to legal and other items, $13m charge relating to restructuring and rationalisation expenses and $2m charge relating to
acquisition and disposal-related items (2024 includes $6m charge relating to legal and other items, $20m charge relating to restructuring and rationalisation
expenses and $13m charge relating to acquisition and disposal-related items, 2023 includes $27m charge relating to legal and other items, $73m charge
relating to restructuring and rationalisation expenses and $3m charge relating to acquisition and disposal-related items).
2
2025 includes $2m charge relating to restructuring and rationalisation expenses (2024: nil, 2023: $18m), $nil relating to legal and other items (2024: $1m,
2023: $21m) and $nil charge relating to acquisition and disposal-related items (2024: $nil, 2023: $1m).
3
2025 includes $73m of amortisation and impairment of soſtware and other intangible assets (2024: $58m, 2023: $51m).
4
2025 includes $176m of amortisation and impairment of acquisition intangibles and $32m of restructuring and rationalisation expenses (2024 : $187m of
amortisation and impairment of acquisition intangibles and $103m of restructuring and rationalisation expenses, 2023 : $207m of amortisation and
impairment of acquisition intangibles and $129m of restructuring and rationalisation expenses).
5
2025 includes $1m charge relating to legal and other items (2024: $19m credit, 2023: $10m charge).
6
2025 includes $30m charge relating to acquisition and disposal-related items (2024: $81m charge, 2023: $56m charge).
2025 | 2024 | 2023 | |
$ million | $ million | $ million | |
Amortisation of intangible assets | 239 | 230 | 221 |
Impairment of intangible assets | 10 | 16 | 37 |
Impairment of goodwill 1 | – | 65 | 84 |
Impairment of property, plant and equipment (reversal)/ charge | (11) | 9 | 31 |
Fair value remeasurement of trade investments | 1 | – | 4 |
Restructuring and rationalisation costs | 47 | 123 | 220 |
Depreciation of property, plant and equipment 2 | 335 | 325 | 306 |
Loss on disposal of property, plant and equipment and intangible assets | 23 | 22 | 18 |
Advertising costs | 91 | 84 | 88 |
1
The 2024 impairment of goodwill includes BHR’s goodwill of $63m and 2023 includes impairment of Engage’s goodwill of $84m.
2
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Staff costs and employee numbers
Staff costs during the year amounted to:
2025 | 2024 | 2023 | ||
Notes | $ million | $ million | $ million | |
Wages and salaries | 1,671 | 1,663 | 1,683 | |
Social security costs | 255 | 244 | 242 | |
Pension costs (including retirement healthcare) | 18 | 94 | 95 | 95 |
Share-based payments | 22 | 43 | 40 | 39 |
2,063 | 2,042 | 2,059 |
Audit Fees – information about the nature and cost of services provided by the auditors
2025 | 2024 | 2023 | |
$ million | $ million | $ million | |
Audit services: | |||
Group accounts | 7.3 | 7.1 | 7.9 |
Local statutory audit pursuant to legislation | 2.1 | 2.0 | 2.1 |
Other services: | |||
Audit-related services | 0.6 | 0.4 | 0.3 |
Total auditor’s remuneration | 10.0 | 9.5 | 10.3 |
Arising: | |||
In the UK | 7.4 | 7.0 | 6.0 |
Outside the UK | 2.6 | 2.5 | 4.3 |
10.0 | 9.5 | 10.3 |
Interest and other finance costs
Interest income/(expense)
2025 | 2024 | 2023 | |
$ million | $ million | $ million | |
Interest income | 28 | 24 | 34 |
Interest expense: | |||
Bank borrowings | (5) | (8) | (10) |
Private placement notes | (19) | (29) | (38) |
Corporate bond | (104) | (89) | (46) |
Lease liabilities | (8) | (8) | (8) |
Other | (4) | (11) | (30) |
(140) | (145) | (132) | |
Net interest expense | (112) | (121) | (98) |
4.2
Other finance costs
2025 | 2024 | 2023 | ||
Notes | $ million | $ million | $ million | |
Retirement benefit net interest expense | 18 | (6) | (4) | (1) |
Unwinding of discount 1 | (33) | (19) | (6) | |
Investment income relating to deferred compensation arrangements | 14 | – | – | |
Gain on repurchase of bonds | 15 | 10 | – | – |
Other | (1) | (5) | – | |
Other finance costs | (16) | (28) | (7) |
1
Group financial statements
continued
Notes to the Group accounts
continued
Smith+Nephew
Annual Report 2025
224
Taxation
The charge for current taxation is based on the results for the year as adjusted for items which are non-assessable or non-deductible.
It is calculated using tax rates that have been enacted or substantively enacted as at the balance sheet date.
The Group operates in numerous tax jurisdictions around the world. At any given time, the Group typically is involved in tax audits
and other disputes and will have other tax returns potentially subject to audit. Significant issues may take several years to resolve.
In estimating the probability and amount of any tax charge, management takes into account the views of internal and external
advisers and updates the amount of tax provision where considered appropriate. The ultimate tax liability may differ from the
amount provided depending on factors including interpretations of tax law and settlement negotiations.
reporting purposes and the amounts used for taxation purposes.
Deferred tax is not recognised: for temporary differences related to investments in subsidiaries and associates where the Group is
able to control the timing of the reversal of the temporary difference and it is probable that this will not reverse in the foreseeable
future; on the initial recognition of non-deductible goodwill; and on the initial recognition of an asset or liability in a transaction that
is not a business combination and that, at the time of the transaction, does not affect the accounting or taxable profit.
Deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available against which they
can be used. Deferred tax assets are reviewed at each reporting date taking into account the recoverability of the deferred tax assets,
future profitability and any restrictions on use. The Group considers available evidence to assess future profitability over a reasonably
foreseeable time period, depending on the circumstances and typically a minimum of five years. Any material unrecognised deferred
tax assets are disclosed in Note 5.2.
Deferred tax is measured on an undiscounted basis, and at the tax rates that have been enacted or substantively enacted as at the
balance sheet date that are expected to apply in the periods in which the asset or liability is settled. It is recognised in the income
statement except when it relates to items credited or charged directly to other comprehensive income or equity, in which case
the deferred tax is also recognised within other comprehensive income or equity respectively.
Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority, the Group
intends to settle its current tax assets and liabilities on a net basis, offset is permissible according to the relevant jurisdiction’s
5.1
Taxation charge attributable to the Group
2025 | 2024 | 2023 | |
$ million | $ million | $ million | |
Current taxation: | |||
UK corporation tax at 25.0% (2024: 25.0%; 2023: 23.5%) | 23 | 13 | 15 |
Overseas tax | 147 | 182 | 165 |
Current income tax charge | 170 | 195 | 180 |
Adjustments in respect of prior periods | (41) | (37) | (45) |
Total current taxation | 129 | 158 | 135 |
Deferred taxation: | |||
Origination and reversal of temporary differences | 10 | (79) | (116) |
Changes in tax rates | (1) | – | (2) |
Adjustments to estimated amounts arising in prior periods | 16 | 7 | 10 |
Total deferred taxation | 25 | (72) | (108) |
Total taxation as per the income statement | 154 | 86 | 27 |
Taxation in other comprehensive income | (4) | 6 | (18) |
Taxation in equity | (4) | 1 | – |
Taxation charge attributable to the Group | 146 | 93 | 9 |
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The 2025, 2024 and 2023 net prior period adjustments of $25m, $30m and $35m respectively relate principally to provision releases
following the resolution of tax audits and other uncertain tax matters, and other one-off items.
The total taxation charge of $154m as per the income statement includes a $58m net credit (2024: $87m net credit, 2023: $113m net
credit) as a consequence of restructuring and rationalisation-related costs, acquisition and disposal-related items, amortisation and
impairment of acquisition intangibles and legal and other items.
Factors affecting future tax charges
The Group operates in numerous tax jurisdictions around the world and is subject to factors that may affect future tax charges, including
transfer pricing, tax rate changes, tax legislation changes, tax authority interpretation, expiry of statute of limitations, tax litigation,
and resolution of tax audits and disputes.
of which may take several years to resolve. Provisions are based on best estimates and management’s judgements concerning the
likely ultimate outcome of any audit or dispute. Management considers the specific circumstances of each tax position and takes
external advice, where appropriate, to assess the range of potential outcomes and estimate additional tax that may be due. Total tax
liabilities include $71m (2024: $95m) in relation to uncertain tax positions which relate to multiple issues across the jurisdictions in
which the Group operates. Other payables include $17m (2024: $14m) of interest on these provisions. There are $16m (2024: $34m)
The Group believes that it has made adequate provision in respect of additional tax liabilities that may arise from unagreed years, tax
audits and disputes, the majority of which relate to transfer pricing matters, as would be expected for a Group operating internationally.
However, the actual liability for any particular issue may be higher or lower than the amount provided, resulting in a negative or positive
effect on the tax charge in any given year. A reduction in the tax charge may also arise for other reasons such as an expiry of the relevant
statute of limitations. Depending on the final outcome of tax audits which are currently in progress, statute of limitations expiry, and
other factors, an impact on the tax charge could arise. While such an impact can vary from year to year, these releases depend on
factors which are uncertain, both as to outcome and timing. However, at the current time, we believe the possibility of a material impact
on the tax charge for 2026 is unlikely.
Pillar Two
The OECD Pillar Two GloBE Rules (Pillar Two) introduced a global minimum corporation tax rate of 15% applicable to multinational
enterprise groups with global revenue over €750m. The Pillar Two rules first applied to the Group for its accounting period commencing
1 January 2024.
On 23 May 2023, the International Accounting Standards Board (IASB) amended IAS 12 to introduce a mandatory temporary exception
to the accounting for deferred taxes arising from the jurisdictional implementation of the Pillar Two model rules. On 19 July 2023 the UK
Endorsement Board adopted the IASB amendments to IAS 12.
The Group has performed an assessment of its exposure to Pillar Two income taxes and the Pillar Two current tax charge for the period
ended 31 December 2025 is approximately $8m (2024:$8m).
The Group is adopting the mandatory temporary exception from the recognition and disclosure of deferred taxes arising the Pillar Two
model rules.
The Group does not meet the threshold for application of the Pillar One transfer pricing rules.
Group financial statements
continued
Notes to the Group accounts
continued
5
Taxation
continued
Smith+Nephew
Annual Report 2025
226
The UK standard rate of corporation tax for 2025 is 25.0% (2024: 25.0%, 2023: 23.5%). Overseas taxation is calculated at the rates prevailing
in the respective jurisdictions. The table below reconciles the expected tax charge at the UK statutory rate with the actual tax charge.
2025 | 2024 | 2023 | |
$ million | $ million | $ million | |
Profit before taxation | 779 | 498 | 290 |
Expected taxation at UK statutory rate of 25.0% (2024: 25.0%, 2023: 23.5%) | 195 | 125 | 68 |
Differences in overseas taxation rates 1 | (30) | (33) | (24) |
Innovation reliefs 2 | (9) | (10) | (7) |
Recognition of previously unrecognised temporary differences 3 | (10) | (8) | (14) |
Expenses not deductible for tax purposes 4 | 24 | 32 | 38 |
Pillar Two top up taxes 5 | 8 | 8 | – |
Change in tax rates | (2) | – | (2) |
Withholding tax | 3 | 2 | 3 |
Adjustments in respect of prior years 6 | (25) | (30) | (35) |
Total taxation charge as per the income statement | 154 | 86 | 27 |
1
Difference between profits taxed at UK tax rate and countries with a lower tax rate, partially offset by profits taxed in countries with a higher tax rate than the UK.
2
Innovation incentives relating to R&D expenditure and income arising from UK patents.
3
Deferred tax credit arising from reassessment of deferred tax asset recoverability using latest forecasts.
4
In 2025, this includes a $13m impact relating to non-tax deductible acquisition related costs, and other permanent differences where items are deductible
for accounting but not tax purposes (2024: $16m impact of non-tax deductible impairment on UK owned investments, 2023: $7m impact of non-tax
deductible impairment on UK owned investments).
5
Additional taxes arising from the implementation of Pillar Two legislation (see above) which was effective from 1 January 2024.
6
The adjustments in respect of prior years are explained on page 224.
Deferred taxation
Movements in the main components of deferred tax assets and liabilities were as follows:
Inventory, | ||||||
Accelerated | Retirement | Losses | provisions | |||
tax | benefit | and other | and other | |||
depreciation | Intangibles | obligations | tax credits | differences | Total | |
$ million | $ million | $ million | $ million | $ million | $ million | |
At 31 December 2023 | (91) | (138) | (6) | 198 | 302 | 265 |
Exchange adjustment | – | – | – | (1) | (7) | (8) |
Movement in income statement – current year | 7 | 22 | 4 | 32 | 14 | 79 |
Movement in income statement – prior years | (11) | – | – | – | 4 | (7) |
Movement in other comprehensive income | – | – | (1) | – | (5) | (6) |
Movement in equity | – | – | – | – | (1) | (1) |
Acquisitions | – | (19) | – | 16 | – | (3) |
At 31 December 2024 | (95) | (135) | (3) | 245 | 307 | 319 |
Exchange adjustment | (2) | – | (1) | 5 | 3 | 5 |
Movement in income statement – current year | (18) | 18 | (1) | (4) | (5) | (10) |
Movement in income statement – prior years | (16) | 17 | – | (7) | (10) | (16) |
Movement in other comprehensive income | – | – | – | – | 4 | 4 |
Changes in tax rate | – | – | (1) | – | 2 | 1 |
Movement in equity | – | – | – | – | 4 | 4 |
At 31 December 2025 | (131) | (100) | (6) | 239 | 305 | 307 |
Represented by:
2025 | 2024 | |
$ million | $ million | |
Deferred tax assets | 347 | 350 |
Deferred tax liabilities | (40) | (31) |
Net position at 31 December | 307 | 319 |
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The deferred tax asset of $305m (2024: $307m) relating to inventory, provisions and other differences comprises deferred tax relating
to inventory of $127m (2024: $92m), provisions and other short-term temporary differences of $169m (2024: $206m) and bad debt
provisions of $9m (2024: $9m).
The Group has gross unused tax losses and other credits of $1,368m (2024: $1,342m), gross unused research and development tax
credits of $24m (2024: $28m) and gross unused capital losses of $153m (2024: $142m), available for offset against future profits. $313m
of losses will expire within 3-7 years from the balance sheet date if not utilised.
A deferred tax asset of $239m (2024: $245m) has been recognised in respect of $1,112m (2024: $1,094m) of tax losses and other tax
credits and $12m (2024: $16m) of research and development tax credits. No deferred tax asset has been recognised on the remaining
unused tax losses as it is not probable that future taxable profits will be available against which they can be utilised.
Management will reassess the recoverability of deferred tax assets at each balance sheet date by taking into account all relevant and
available information. The Group assesses the likelihood of these being recovered within a reasonably foreseeable timeframe, being
typically a minimum of five years, taking into account the future expected profit profile and business model of each relevant company
or country, and any potential legislative restrictions on use. Short-term timing differences are generally recognised ahead of losses
Earnings per ordinary share
Earnings per share
Basic earnings per share is calculated by dividing the profit attributable to equity holders by the weighted average number of
ordinary shares in issue during the year, excluding shares held by the Company in the Employees’ Share Trust or as treasury shares.
Diluted earnings per share
Diluted earnings per share is calculated by adjusting the basic earnings per share for the effect of conversion to ordinary shares
The calculations of the basic and diluted earnings per ordinary share are based on the following attributable profit and numbers
of shares:
2025 | 2024 | 2023 | |
$ million | $ million | $ million | |
Earnings | |||
Attributable profit for the year | 625 | 412 | 263 |
The numerators used for basic and diluted earnings per ordinary share are the same. The denominators used for all categories of earnings
per ordinary share are as follows:
2025 | 2024 | 2023 | |
Number of shares (millions) | |||
Basic weighted number of shares | 867 | 873 | 871 |
Dilutive impact of share incentive schemes outstanding | 6 | 3 | 2 |
Diluted weighted average number of shares | 873 | 876 | 873 |
Earnings per ordinary share | |||
Basic | 72.1¢ | 47.2¢ | 30.2¢ |
Diluted | 71.6¢ | 47.0¢ | 30.1¢ |
Group financial statements
continued
Notes to the Group accounts
continued
Smith+Nephew
Annual Report 2025
228
Property, plant and equipment
Property, plant and equipment
Owned assets
Items of property, plant and equipment are stated at cost less accumulated depreciation and any accumulated impairment losses.
The Group manufactures orthopaedic instruments that are either deployed for use by customers under contractual arrangements or
sold outright to customers. The majority of these instruments are not sold but provided to customers for use in surgery.
At the time of manufacture, instruments are classified either as Property, Plant and Equipment or Inventory based on management’s
best estimate of expected deployment versus direct sales volumes. Instruments expected to be deployed for use by customers
over their useful economic lives of between three and seven years, are recognised initially as Property, Plant and Equipment.
Instruments expected to be sold outright to customers in the ordinary course of business are recognised as inventory. This estimate is
based on historical deployment and sales patterns, and future expectations, and is reassessed periodically.
Instruments are depreciated over their useful economic lives of between three and seven years once they are deployed.
the straight-line method over their estimated useful lives, and is ultimately recognised in profit or loss. Leased assets are depreciated
over the shorter of the lease term and their useful lives unless it is reasonably certain that the Group will obtain ownership by the end
of the lease term. Freehold land is not depreciated. The estimated useful lives of items of property, plant and equipment is 3–20 years
and for buildings is 20–50 years.
Finance costs relating to the purchase or construction of property, plant and equipment and intangible assets that take longer than
one year to complete are capitalised based on the Group weighted average borrowing costs. All other finance costs are expensed
as incurred.
The assessment of whether a contract is or contains a lease takes place at the inception of the contract. The assessment involves
whether the Group obtains substantially all the economic benefits from the use of that asset and whether the Group has the right
to direct the use of the asset. The Group allocates the consideration in the contract to each lease and non-lease component.
The non-lease component, where it is separately identifiable, is not included in the right-of-use asset.
The Group leases many assets including properties, motor vehicles and office equipment. The Group availed itself of the exemptions
for short-term leases and leases of low-value items for leases other than those for properties and motor vehicles. The use of these
exemptions does not have a material impact. The Group recognises a right-of-use asset and a lease liability at the commencement
of the lease. The right-of-use asset is initially measured based on the present value of lease payments that are not paid at the
commencement date plus initial direct costs less any incentives received. The lease payments are discounted using an incremental
borrowing rate which is country-specific and reflective of the lease term. The right-of-use asset is depreciated over the shorter
of the lease term or the useful life of the underlying asset.
Cash flows arising on lease interest payments are included in operating cash flows whereas cash flows arising on the capital
The carrying values of property, plant and equipment are reviewed for impairment when events or changes in circumstances
indicate the carrying value may be impaired. If any such indication exists, the recoverable amount of the asset is estimated in order
to determine the extent of impairment loss. Where it is not possible to estimate the recoverable amount of an individual asset,
the Group estimates the recoverable amount of the cash-generating unit to which it belongs.
An asset’s recoverable amount is the higher of an asset’s or cash-generating unit’s fair value less costs to sell and its value-in-use.
In assessing value-in-use, its estimated future cash flow is discounted to its present value using a pre-tax discount rate that reflects
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| Plant and equipment | Assets in | |||||
Land and | course of | |||||
buildings | Instruments 1 | Other | construction | Total | ||
Notes | $ million | $ million | $ million | $ million | $ million | |
Cost | ||||||
At 1 January 2024 | 795 | 1,844 | 1,433 | 170 | 4,242 | |
Exchange adjustment | (15) | (61) | (18) | – | (94) | |
Additions | 28 | 225 | 35 | 53 | 341 | |
Disposals | (25) | (84) | (69) | (7) | (185) | |
Impairment | – | – | – | (12) | (12) | |
Transfers | 6 | – | 68 | (82) | (8) | |
At 31 December 2024 | 789 | 1,924 | 1,449 | 122 | 4,284 | |
Exchange adjustment | 28 | 84 | 42 | 6 | 160 | |
Additions | 44 | 211 | 29 | 131 | 415 | |
Disposals | (91) | (96) | (93) | (5) | (285) | |
Impairment | – | – | (12) | 2 | (10) | |
Transfers | 8 | 166 | 39 | (49) | 164 | |
At 31 December 2025 | 778 | 2,289 | 1,454 | 207 | 4,728 | |
Depreciation and impairment | ||||||
At 1 January 2024 | 342 | 1,452 | 978 | – | 2,772 | |
Exchange adjustment | (8) | (51) | (12) | – | (71) | |
Charge for the year | 66 | 163 | 96 | – | 325 | |
Impairment | (5) | – | 2 | – | (3) | |
Disposals | (24) | (73) | (64) | – | (161) | |
At 31 December 2024 | 371 | 1,491 | 1,000 | – | 2,862 | |
Exchange adjustment | 14 | 69 | 32 | – | 115 | |
Charge for the year | 59 | 177 | 99 | – | 335 | |
Impairment | (12) | – | (9) | – | (21) | |
Disposals | (52) | (85) | (93) | – | (230) | |
Transfers | – | 29 | – | – | 29 | |
At 31 December 2025 | 380 | 1,681 | 1,029 | – | 3,090 | |
Net book amounts | ||||||
At 31 December 2025 | 398 | 608 | 425 | 207 | 1,638 | |
At 31 December 2024 | 418 | 433 | 449 | 122 | 1,422 | |
1
Instruments include $156m of assets not yet deployed, for which depreciation has not yet commenced.
Land and buildings includes land with a cost of $32m (2024: $37m) that is not subject to depreciation. Transfers from assets in course
of construction includes $2m (2024: $8m) of soſtware (refer to Note 9). Assets under construction in 2025 reflect that the Group’s
development of a new manufacturing facility in Hull, UK. Group capital expenditure relating to property, plant and equipment contracted
but not provided for amounted to $62m (2024: $15m). The amount of borrowing costs capitalised in 2025 and 2024 was immaterial.
Information about the Group’s right-of-use assets is outlined below:
| 2025 | 2024 | |||
Land and | Plant and | Land and | Plant and | |
buildings | equipment | buildings | equipment | |
$ million | $ million | $ million | $ million | |
Opening Balance | 137 | 36 | 157 | 28 |
Exchange Adjustment | 8 | 2 | (5) | (1) |
Additions | 43 | 15 | 25 | 22 |
Depreciation charge in the year | (35) | (14) | (41) | (13) |
Impairment | – | – | 1 | – |
Net book value at 31 December | 153 | 39 | 137 | 36 |
Group financial statements
continued
Notes to the Group accounts
continued
Smith+Nephew
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230
Goodwill
Goodwill is not amortised but is reviewed for impairment annually. Goodwill is allocated to the cash-generating unit (CGU) that is
expected to benefit from the acquisition. The goodwill is tested annually for impairment by comparing the recoverable amount to
the carrying value of the CGUs. The CGUs identified by management are at the aggregated product operating levels of Orthopaedics,
Sports Medicine, ENT and Advanced Wound Management, in the way the core assets are used to generate cash flows.
If the recoverable amount of the CGU is less than its carrying amount then an impairment loss is determined to have occurred.
Any impairment losses that arise are recognised immediately in the income statement and are allocated first to reduce the
carrying amount of goodwill and then to the carrying amounts of the other assets of the CGU.
When an acquired business included within a CGU ceases to operate permanently, then the acquired business no longer forms part
of the CGU and is therefore tested for impairment on a standalone basis. The portion of goodwill allocated to this acquired business
is measured based on its relative value within the CGU, unless another method is considered more appropriate.
In carrying out impairment reviews of goodwill, a number of significant assumptions have to be made when preparing cash flow
projections. These include the future rate of market growth, discount rates, the market demand for the products acquired, the
future profitability of acquired businesses or products, levels of reimbursement and success in obtaining regulatory approvals.
If actual results should differ, or changes in expectations arise, impairment charges may be required which would adversely
impact operating results.
When the composition of CGUs changed, goodwill would be allocated using a relative value approach at the date of the reorganisation
similar to that used when an operation within a CGU is disposed of or a method that could provide a better allocation of goodwill to
2025 | 2024 | ||
Notes | $ million | $ million | |
Cost and net book value | |||
At 1 January | 3,026 | 2,992 | |
Exchange adjustment | 82 | (47) | |
Impairment | – | (65) | |
Acquisitions | 21 | – | 146 |
At 31 December | 3,108 | 3,026 |
Management has identified five CGUs in applying the provisions of IAS 36
Impairment of Assets
: Orthopaedics, Sports Medicine, ENT,
Advanced Wound Care & Devices and Bioactives.
For the purpose of goodwill impairment testing, the Advanced Wound Care & Devices and Bioactives CGUs have been aggregated
(Advanced Wound Management), as this is the level at which goodwill is monitored and level at which the economic benefits relating
to the goodwill within these CGUs is realised.
During 2025, no impairment losses were recognised and no acquisitions were completed.
During 2024,the Group announced its intention to close the Warwick manufacturing site that manufactures Birmingham Hip Resurfacing
(BHR) products. As a result, goodwill of $63m relating to BHR was written-off. In addition, a $2m goodwill impairment charge was
recorded as a result of disposal of certain products.
Goodwill is allocated to the Group’s CGUs as follows:
2025 | 2024 | |
$ million | $ million | |
Orthopaedics | 877 | 807 |
Sports Medicine | 1,305 | 1,302 |
ENT | 287 | 287 |
Advanced Wound Management | 639 | 630 |
3,108 | 3,026 |
Impairment reviews were performed as of September 2025 and September 2024 by comparing the recoverable amount of each CGU
with its carrying amount, including goodwill. These were reviewed during December, taking into account any significant events that
occurred between September and December.
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The current challenging economic environment, including inflation, was considered in the goodwill impairment reviews. Additionally,
severe downside sensitivity analyses have been undertaken on the base case scenario.
For each CGU, the recoverable amounts are based on value-in-use which is calculated from pre-tax cash flow projections for
five years using data from the Group’s budget and strategic planning process, the results of which are reviewed and approved by the
Board. The terminal growth rate is based on long term GDP growth. The initial five-year period (2024: three-year period) is in line with
the Group’s strategic planning process. In determining the growth rates used in the calculations of the value-in-use, management
considered annual revenue growth. Projections are based on anticipated volume and value growth in the markets served by the Group
and assumptions as to market share movements. Each year the projections for the previous year are compared to actual results and
variances are factored into the assumptions used in the current year.
The discount rates used in the value-in-use calculations reflect management’s assessment of risks specific to the assets of each CGU.
Our determination of the discount rates is based on weighted average cost of capital (WACC) which includes a risk-free rate, based on
market participant’s cost of equity, an equity risk premium specifically adjusted to the medical technology industry and aſter-tax cost
of debt and reflects the risks inherent in the cash flows adjusted for CGU specific risk. The pre-tax rate is then calculated using WACC
as a starting point.
8.1
Orthopaedics CGU
The cash flows used in the value-in-use calculation for the Orthopaedics CGU, which includes the Reconstruction and Trauma
businesses, reflects management’s distinctive orthopaedic reconstruction strategy, which combines cutting-edge innovation,
disruptive business models and a strong Emerging Markets platform to drive our performance.
The weighted average growth rate used to extrapolate the cash flows beyond the five-year period (2024: five-year period) in calculating
the terminal value is 2.0% (2024: 2.0%). The pre-tax discount rate used in the Orthopaedics CGU value-in-use calculation reflects the
geographical mix of the revenues and is 11.4% (2024: 11.4%).
8.2
Sports Medicine CGU
The cash flows used in the value-in-use calculation for the Sports Medicine CGU reflects growth rates and cash flows consistent with
management’s strategy to maintain growth in Sports Medicine.
The weighted average growth rate used to extrapolate the cash flows beyond the five-year period (2024: five-year period) in calculating
the terminal value is 2.0% (2024: 2.0%). The pre-tax discount rate used in the Sports Medicine CGU value-in-use calculation reflects the
geographical mix of the revenues and is 11.3% (2024: 11.6%).
8.3
ENT CGU
The cash flow used in the value-in-use calculation for the ENT CGU reflects growth rates and cash flows consistent with
management’s strategy.
The weighted average growth rate used to extrapolate the cash flows beyond the five-year period (2024: five-year period) in calculating
the terminal value is 2.0% (2024: 2.0%). The pre-tax discount rate used in the ENT CGU value-in-use calculation reflects the geographical
mix of the revenues and is 11.3% (2024: 11.0%).
8.4
Advanced Wound Management CGU
The aggregated Advanced Wound Management CGU comprises the Advanced Wound Care & Devices and Bioactives CGUs.
In performing the value-in-use calculation for this combined CGU, management considered the Group’s focus across the wound
product, focusing on widening access to the customer, the higher added value sectors of healing chronic wounds and tissue repair using
bioactives, and by continuing to improve efficiency.
The weighted average growth rate used to extrapolate the cash flows beyond the five-year period (2024: five-year period) in calculating
the terminal value is 2.0% (2024: 2.0%). The pre tax discount rate used in the Advanced Wound Management CGU value-in-use
calculation reflects the geographical mix and industry sector and is 11.0% (2024: 11.3%).
The value in use for all CGUs indicated sufficient headroom such that a reasonably possible change to key assumptions is unlikely to
Group financial statements
continued
Notes to the Group accounts
continued
Smith+Nephew
Annual Report 2025
232
Intangible assets
Intangible assets
Intangible assets acquired separately from a business combination (including purchased patents, know-how, trademarks, licences
and distribution rights) are initially measured at cost. The cost of intangible assets acquired in a material business combination
(referred to as acquisition intangibles) is the fair value as at the date of acquisition. Following initial recognition, intangible assets are
carried at cost less any accumulated amortisation and any accumulated impairment losses. All intangible assets are amortised on a
straight-line basis over their estimated useful economic lives. The estimated useful economic life of soſtware ranges between three
and seven years. The estimated useful economic life of technology assets ranges between 6–20 years, product-related assets ranges
between 2–20 years, and customer and distribution assets ranges between 2–14 years. Internally-generated intangible assets are
expensed in the income statement as incurred. Expenditure on purchased soſtware and qualifying IT projects is recognised as an
intangible asset when it provides long-term benefits to the Group. Development costs for internally used applications are capitalised
only when the soſtware forms a key component of the Group’s IT systems and is controlled by the Group. Certain implementation
costs for cloud-based solutions are capitalised when the Group has control over the underlying soſtware. Soſtware that is integral to
computer hardware is capitalised as plant and equipment.
The carrying values of intangible assets are reviewed for impairment when events or changes in circumstances indicate the carrying
value may be impaired. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the
extent of impairment loss. Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates
the recoverable amount of the CGU to which it belongs. An asset’s recoverable amount is the higher of an asset’s or CGU’s fair value
less costs to sell and its value-in-use. In assessing value-in-use, its estimated future cash flow is discounted to its present value using
a pre-tax discount rate that reflects the current market assessments of the time value of money and the risks specific to the asset.
In carrying out impairment reviews of intangible assets, a number of significant assumptions have to be made when preparing cash
flow projections. These include the future rate of market growth, discount rates, the market demand for the products acquired,
the future profitability of acquired businesses or products, levels of reimbursement and success in obtaining regulatory approvals.
If actual results should differ, or changes in expectations should arise, impairment charges may be required which would adversely
impact operating results.
Intangible assets which are not yet available for use are tested for impairment annually. Any provision for impairment is charged to the
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Customer and | Assets | ||||||
Product- | distribution- | in course of | |||||
Technology | related | related | Soſtware | construction | Total | ||
Notes | $ million | $ million | $ million | $ million | $ million | $ million | |
Cost | |||||||
At 1 January 2024 | 582 | 2,273 | 236 | 547 | 178 | 3,816 | |
Exchange adjustment | (7) | (35) | (6) | (10) | (1) | (59) | |
Acquisitions | 21 | 81 | 3 | – | – | – | 84 |
Additions | – | 1 | 4 | 30 | 52 | 87 | |
Disposals | – | – | – | (9) | (1) | (10) | |
Transfers | 1 | (3) | – | 143 | (133) | 8 | |
At 31 December 2024 | 657 | 2,239 | 234 | 701 | 95 | 3,926 | |
Exchange adjustment | 15 | 62 | 6 | 21 | 4 | 108 | |
Additions | – | 2 | – | 5 | 69 | 76 | |
Disposals | – | – | – | (8) | (1) | (9) | |
Transfers | – | (2) | – | 67 | (63) | 2 | |
At 31 December 2025 | 672 | 2,301 | 240 | 786 | 104 | 4,103 | |
Amortisation and impairment | |||||||
At 1 January 2024 | 276 | 1,801 | 176 | 453 | – | 2,706 | |
Exchange adjustment | (3) | (33) | (5) | (9) | – | (50) | |
Charge for the year | 54 | 109 | 15 | 52 | – | 230 | |
Impairment | 15 | – | – | 1 | – | 16 | |
Disposals | – | – | – | (8) | – | (8) | |
At 31 December 2024 | 342 | 1,877 | 186 | 489 | – | 2,894 | |
Exchange adjustment | 9 | 59 | 5 | 13 | – | 86 | |
Charge for the year | 50 | 110 | 14 | 65 | – | 239 | |
Impairment | 10 | – | – | – | – | 10 | |
Disposals | – | – | – | (8) | – | (8) | |
At 31 December 2025 | 411 | 2,046 | 205 | 559 | – | 3,221 | |
Net book amounts | |||||||
At 31 December 2025 | 261 | 255 | 35 | 227 | 104 | 882 | |
At 31 December 2024 | 315 | 362 | 48 | 212 | 95 | 1,032 |
Transfers into soſtware and assets in course of construction includes $2m (2024: $8m) of soſtware transferred from property, plant and
equipment (refer to Note 7). Group capital expenditure relating to soſtware contracted but not provided for amounted to
$4m (2024: $4m).
Amortisation and impairment of acquisition intangibles is set out below:
2025 | 2024 | |
$ million | $ million | |
Technology | 61 | 69 |
Product-related | 105 | 108 |
Customer and distribution-related | 10 | 10 |
Total | 176 | 187 |
Group financial statements
continued
Notes to the Group accounts
continued
9
Intangible assets
continued
Smith+Nephew
Annual Report 2025
234
In 2025, the Group recognised an impairment charge of $10m in relation to immaterial technology assets in acquisition intangibles.
In 2024, the Group recognised an impairment charge of $15m in relation to immaterial technology assets in acquisition intangibles.
In 2023, the Group impaired $37m of Engage intangible assets as a result of the voluntary product discontinuation.
Management has assessed the acquisition intangible assets held by the Group to identify any indicators of impairment as of
September 2025. These were updated during December to take into account any significant events that occurred between September
and December. Where an impairment indicator has arisen, impairment reviews have been undertaken by comparing the expected
The table below provides further detail on the largest intangible assets and their remaining amortisation period:
Customer and | |||||
Product- | distribution- | Total | Remaining | ||
Technology | related | related | Carrying value | amortisation | |
$ million | $ million | $ million | $ million | period | |
Intangibles acquired as part of the CartiHeal acquisition | 66 | 3 | – | 69 | 8-9 years |
Intangibles acquired as part of the ArthroCare acquisition | 97 | 68 | – | 165 | 8-9 years |
Intangibles acquired as part of the Osiris acquisition | – | 80 | 26 | 106 | 2-3 years |
Intangibles acquired as part of the Healthpoint acquisition | 32 | 72 | 3 | 107 | 2 years |
Investments
Investments, other than those related to associates, are initially recorded at fair value on the trade date. Transaction costs relating
to investments are expensed as incurred. The Group has investments in unquoted entities and an entity that holds mainly unquoted
equity securities, which by their nature have no fixed maturity date or coupon rate. These investments are classed as fair value
through profit or loss. The fair value of these investments is based on the underlying fair value of the equity securities: marketable
securities are valued by reference to closing prices in the market; non-marketable securities are estimated considering factors
including the purchase price; prices of recent significant private placements of securities of the same issuer; and estimates of
2025 | 2024 | |
$ million | $ million | |
At 1 January | 9 | 8 |
Additions | 2 | 1 |
Transferred from receivables | 18 | – |
Fair value remeasurement | 1 | – |
At 31 December | 30 | 9 |
Investments in associates
Investments in associates, being those entities over which the Group has a significant influence and which is neither a subsidiary
nor a joint venture, are accounted for using the equity method, with the Group recording its share of the associates’ profit and loss
and other comprehensive income. The Group’s share of associates’ profit or loss is included in one separate income statement line
and is calculated aſter deduction of their respective taxes.
investment may be impaired or that a previously recognised impairment may have decreased. Where indicators exist, impairment is
taken to reflect the recoverable amount accordingly.
An impairment loss is recognised when the carrying amount exceeds the recoverable amount. Any subsequent reversal is recognised
only when supported by indicators and is limited, in accordance with IAS 36, so that the carrying amount aſter reversal does not
exceed the amount that would have been determined had no impairment been recognised (aſter equity-method movements).
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OTHER INFORMATION
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Annual Report 2025
235
At 31 December 2025, the Group holds 26.60% (2024: 27.13%) of Bioventus Inc. (Bioventus) which is the holding company of
Bioventus LLC. The decrease in the Group’s holding between 2025 and 2024 was because of the exercise of Bioventus employee share
options. The Company’s headquarters is located in Durham, North Carolina, US, and its medical product development is focused around
active healing therapies and the surgical performance of orthobiologics. The active healing therapies product line supports accelerated
and more complete healing of bone fractures, and treats the chronic pain associated with osteoarthritis.
The gain aſter taxation recognised in the income statement relating to Bioventus was $113m, includes reversal of impairment of $109m
(2024: $10m loss, 2023: $30m loss). The balance sheet carrying value relating to Bioventus is $119m (2024: $6m). The Group’s ability to
recover the value of its investment is dependent upon the ongoing clinical and commercial success of these products.
In 2022, the Group recognised an impairment charge of $109m on its investment in Bioventus due to a significant decline in share price
and the company has disclosed a substantial doubt about their ability to continue as a going concern. Since then, Bioventus returned to
profitability, resolved its liquidity constraints and materially improved operating performance through 2025, supported by restructuring
and divestment initiatives. These improvements were reflected in a sustained recovery and stabilisation of the share price, with market
indicators no longer suggesting distress.
Based on these developments, management performed an impairment review by comparing the fair value of Bioventus using its market
share price of $7.44 as at 31 December 2025 less carrying amount and concluded that the prior impairment loss of $109m should be
reversed (2024: $nil, 2023: $nil).
The amounts recognised in the balance sheet and income statement for associates are as follows:
2025 | 2024 | 2023 | |
$ million | $ million | $ million | |
Balance sheet | 121 | 7 | 16 |
Income statement gain/(loss) | 4 | (10) | (30) |
Reversal of impairment of interest in associate | 109 | – | – |
Summarised financial information for significant associates
Set out below is the summarised financial information for Bioventus, adjusted for differences with Group accounting policies.
2025 | 2024 | 2023 | |
$ million | $ million | $ million | |
Summarised statement of comprehensive income | |||
Revenue | 410 | 420 | 377 |
Attributable profit / (loss) for the year | 8 | (34) | (152) |
Group adjustments 1 | 9 | (2) | 46 |
Total comprehensive profit / (loss) | 17 | (36) | (106) |
Group share of gain / (loss) for the year at 26.60% (2024: 27.13%, 2023: 27.96%) | 5 | (10) | (30) |
2025 | 2024 | |
$ million | $ million | |
Summarised balance sheet | ||
Non-current assets | 421 | 471 |
Current assets | 281 | 299 |
Non-current liabilities | (333) | (371) |
Current liabilities | (162) | (211) |
Net assets | 207 | 188 |
Net equity attributable to owners | 207 | 188 |
Group’s share of net assets at 26.60% (2024: 27.13%) | 55 | 51 |
Group adjustments 1 | 64 | (45) |
Group’s carrying amount of investment at 26.60% (2024: 27.13%) | 119 | 6 |
1
Group adjustments include adjustments to align with Group policy.
The investment in Bioventus had a fair value less costs of disposal of $133m as at 31 December 2025 (2024: $186m).
During the year, the Group received a $nil (2024: $nil) cash distribution from its associates.
Group financial statements
continued
Notes to the Group accounts
continued
Smith+Nephew
Annual Report 2025
236
Inventories
Finished goods and work-in-progress are valued at factory cost, including appropriate overheads, on a first-in first-out basis.
Raw materials and bought-in finished goods are valued at purchase price. All inventories are reduced to net realisable value where
lower than cost. Inventory acquired as part of a business acquisition is valued at selling price less costs to sell and a profit allowance
for selling efforts.
Instruments expected to be sold outright to customers and distributors in the ordinary course of business are initially recognised as
inventory. Instruments not expected to be sold are recognised in property, plant and equipment (refer to note 7).
Risks and rewards of ownership of consignment inventory are transferred to the customer when the product is used in surgery.
A feature of the orthopaedic business is the high level of product inventory required, some of which is located at customer premises
and is available for customers’ immediate use (referred to as consignment inventory). Complete sets of product, including large and
small sizes, have to be made available in this way. These outer sizes are used less frequently than standard sizes and towards the
end of the product life cycle are inevitably in excess of requirements. Adjustments to carrying value are therefore required to be
made to orthopaedic inventory to anticipate this situation. These adjustments are calculated in accordance with a formula based on
levels of inventory compared with historical or forecast usage. This formula is applied on an individual product line basis and is first
applied when a product group has been on the market for two years. This method of calculation is considered appropriate based
on experience but it involves management judgements on effectiveness of inventory deployment, length of product lives, phase-out
2025 | 2024 | |
$ million | $ million | |
Raw materials and consumables | 412 | 469 |
Work-in-progress | 54 | 45 |
Finished goods and goods for resale | 1,651 | 1,873 |
2,117 | 2,387 |
The determination of the estimate of excess and obsolete inventory includes assumptions on the future usage of all different items of
finished goods. The provision has a high degree of estimation uncertainty given the range of products and sizes, with a potential range
of reasonable outcomes that could be material over the longer term (i.e, more than 12 months).
In 2025, the Group advanced its portfolio simplification initiatives introduced under the 12-point plan and further developed through
the Ortho 360 operating model and new RISE strategy. These actions include the planned discontinuation and simplification of certain
product ranges which will reduce the need for inventory and capital employed in the business, provide a simpler and more efficient offer
to our customers, and will also allow us to focus on migrating them to our latest technology products. As a result, the Group recognised
an excess and obsolescence charge of $159m (2024: $nil, 2023: $nil) within Cost of goods sold.
The determination of the provision
involves assumptions regarding timing of product discontinuation and future sales patterns.
Management has not changed their policy for calculating the excess and obsolete provision since 31 December 2024, in relation to
inventory that is not subject to the inventory portfolio rationalisation programme described above. The provision has increased from
$511m at 31 December 2024 to $644m at 31 December 2025 and includes a charge to the provision of $159m in relation to the
inventory rationalisation programme (2024: $nil) as noted above. Foreign exchange movements of $15m contributed to the increase in
provision. $231m was recognised as an expense within cost of goods sold resulting from inventory write-offs and provision movements
(2024: $120m, 2023: $106m) which included $159m arising from the inventory portfolio rationalisation programme (2024: $nil, 2023:
$nil).
In 2025, no inventory write-offs were recognised (2024: $17m) relating to the disposal of certain products and voluntary
product discontinuation.
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OTHER INFORMATION
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237
Trade and other receivables
Trade and other receivables are carried at amortised cost, less any allowances for uncollectable amounts. They are included
in current assets, except for maturities greater than 12 months aſter the balance sheet date when they are classified as
non-current assets.
The Group manages credit risk through credit limits which require authorisation commensurate with the size of the limit and
which are regularly reviewed. Credit limit decisions are made based on available financial information and the business case.
Significant receivables are regularly reviewed and monitored at Group level. The Group has no significant concentration of credit risk,
with exposure spread over a large number of customers and geographies. Furthermore, the Group’s principal customers are backed
by government and public or private medical insurance funding, which historically represent a lower risk of default. The maximum
exposure to credit risk at the reporting date is the carrying value of each class of receivable. The Group does not hold any collateral as
security. The Group applies the simplified approach and allowance losses are calculated by reviewing lifetime expected credit losses
using historic and forward-looking data on credit risk. The Group performed the calculation of expected credit loss rates separately
for customer groups which were segmented based on common risk characteristics such as credit risk grade and type of customer
2025 | 2024 | |
$ million | $ million | |
Current | ||
Trade receivables | 1,200 | 1,100 |
Less: loss allowance | (44) | (41) |
Trade receivables – net | 1,156 | 1,059 |
Derivatives 1 | 20 | 47 |
Other receivables 2 | 138 | 148 |
Prepayments | 99 | 127 |
1,413 | 1,381 | |
Non-current | ||
Derivatives 1 | 26 | 11 |
Investments relating to deferred compensation arrangements | 109 | – |
Other non- current assets | 29 | 13 |
164 | 24 |
1 Refer to note 16.6 for details of derivatives.
2
Other receivables include deposits, rebates, finance lease receivables and other items of a similar nature.
The
Group holds investments in financial assets in connection with deferred compensation and employee benefit arrangements
(refer to note 16.6). Refer to note 14 for details of deferred compensation obligations.
Other non-current assets primarily relate to long-term prepayments and finance lease receivables. Refer to note 16.2 for details of
interest rate contracts. Management considers that the carrying amount of trade and other receivables approximates the fair value.
The loss allowance expense for the year was $12m (2024: $1m, 2023: $3m).
The following table provides information about the ageing of and expected credit losses for trade receivables:
2025 Weighted | 2025 Gross | 2024 Weighted | 2024 Gross | |||
average loss | 2025 Loss | carrying | average loss | 2024 Loss | carrying | |
rate | allowance | amount | rate | allowance | amount | |
% | $ million | $ million | % | $ million | $ million | |
Not past due | -0.8% | (8) | 949 | -0.8% | (7) | 860 |
Past due not more than 3 months | -0.6% | (1) | 169 | -0.6% | (1) | 154 |
Past due more than 3 months | -9.7% | (3) | 31 | -7.7% | (2) | 26 |
Past due more than 6 months | -62.7% | (32) | 51 | -51.7% | (31) | 60 |
(44) | 1,200 | (41) | 1,100 | |||
Loss allowance | (44) | (41) | ||||
Trade receivables – net | 1,156 | 1,059 |
Group financial statements
continued
Notes to the Group accounts
continued
13
Trade and other receivables
continued
Smith+Nephew
Annual Report 2025
238
The Group’s expected credit loss accounting policy includes guidance on how the expected credit loss percentages should be
determined; it does not include present limits as the customer groups and risk profiles are not consistent across all of our markets.
Each market determines their own percentages based on historic experience and future expectations, and in line with the
general guidance in the Group’s policy.
Movements in the loss allowance were as follows:
2025 | 2024 | 2023 | |
$ million | $ million | $ million | |
At 1 January | 41 | 45 | 49 |
Exchange adjustment | 2 | (2) | 1 |
Net receivables provided during the year | 12 | 1 | 3 |
Utilisation of provision | (11) | (3) | (8) |
At 31 December | 44 | 41 | 45 |
Trade receivables include amounts denominated in the following major currencies:
2025 | 2024 | |
$ million | $ million | |
US Dollar | 502 | 518 |
Sterling | 38 | 36 |
Euro | 253 | 207 |
Other | 363 | 298 |
Trade receivables – net | 1,156 | 1,059 |
Trade and other payables
2025 | 2024 | |
$ million | $ million | |
Current | ||
Trade and other payables | 1,160 | 1,082 |
Derivatives 1 | 11 | 18 |
Acquisition consideration | 6 | 28 |
1,177 | 1,128 | |
Non-current | ||
Acquisition consideration | 101 | 77 |
Derivatives 1 | 6 | 16 |
Other payables | 83 | 2 |
190 | 95 |
1 Refer to note 16.6 for details of derivatives.
Other payables primarily comprises deferred compensation obligations. These relate to employee compensation earned but payable in
future periods.
The acquisition consideration includes $107m (2024: $84m) contingent upon future events.
The acquisition consideration due aſter more than one year is expected to be payable as follows: ($13m in 2029 and $88m in 2030
STRATEGIC REPORT
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OTHER INFORMATION
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Annual Report 2025
239
Cash and borrowings
Net debt
Net debt comprises borrowings and credit balances on currency swaps less cash and cash equivalents.
2025 | 2024 | |
$ million | $ million | |
Bank overdraſts, borrowings and loans - current | 83 | 2 |
Corporate bond | 2,478 | 2,498 |
Private placement notes | 550 | 625 |
Borrowings | 3,111 | 3,125 |
Cash and cash equivalents 1 | (557) | (619) |
Currency swaps | – | 1 |
(Asset)/liability balance on derivatives – interest rate swaps | (11) | 6 |
Net debt excluding lease liabilities | 2,543 | 2,513 |
Non-current lease liabilities | 149 | 135 |
Current lease liabilities | 67 | 61 |
Net debt | 2,759 | 2,709 |
1
In 2025, cash and cash equivalents include cash at bank of $457m (2024: $419m) and cash equivalents of $100m (2024: $200m).
Borrowings are repayable as follows:
Within | Between | Between | Between | Between | |||
one year or | one and | two and | three and | four and | Aſter | ||
on demand | two years | three years | four years | five years | five years | Total | |
$ million | $ million | $ million | $ million | $ million | $ million | $ million | |
At 31 December 2025 | |||||||
Bank overdraſts and loans | 8 | – | – | – | – | – | 8 |
Corporate bond | – | 349 | – | 591 | 897 | 641 | 2,478 |
Private placement notes | 75 | 140 | 60 | 100 | 95 | 155 | 625 |
Lease liabilities 1 | 67 | 53 | 38 | 27 | 17 | 24 | 226 |
150 | 542 | 98 | 718 | 1,009 | 820 | 3,337 | |
At 31 December 2024 | |||||||
Bank overdraſts | 2 | – | – | – | – | – | 2 |
Corporate bond | – | – | 348 | – | 527 | 1,623 | 2,498 |
Private placement notes | – | 75 | 140 | 60 | 100 | 250 | 625 |
Lease liabilities 1 | 61 | 46 | 36 | 23 | 17 | 24 | 207 |
63 | 121 | 524 | 83 | 644 | 1,897 | 3,332 |
1
The lease liabilities presented above of $226m (2024: $207m) are on an undiscounted basis. The lease liabilities on a discounted basis are $216m
Group financial statements
continued
Notes to the Group accounts
continued
15
Cash and borrowings
continued
Smith+Nephew
Annual Report 2025
240
Liquidity risk exposures
The Group has established a set of policies to manage funding and currency risks. The Group only uses derivative financial instruments
to manage the financial risks associated with underlying business activities and their financing. Liquidity risk is the risk that the Group is
not able to meet its obligations. The Group’s policy is to ensure that there are sufficient facilities in place to meet funding requirements.
The Group manages and monitors liquidity risk through preparation and review of short and medium-term cash forecasts, having
regard to the maturities of investments and borrowing facilities. The Group has available committed facilities of $4.1bn (2024: $4.1bn).
In 2025, the Group repurchased $100 million of its $1.0 billion 2.032% USD corporate bond to manage the maturity profile of the Group’s
borrowings. The repurchase consideration amounted to $90m and resulted in a gain of $10m in Other finance costs. During 2024, the
Group issued two corporate bonds of $350m and $650m (before expenses and underwriting discounts) of notes bearing an interest
rate of 5.15% and 5.40% repayable in 2027 and 2034. In 2024, the Group repaid $405m of private placement debt.
The interest payable on borrowings under committed facilities is either at fixed or floating rates. Euro floating rates are typically
based on EURIBOR and US Dollar rates are typically based on the Term Secured Overnight Financing Rate (Term SOFR). The Company
is subject to financial covenants under its private placement agreements. The principal covenant on the private placement debt is a
leverage ratio of <3.5 which is measured on a rolling 12-month basis at half year and year end using net debt excluding lease liabilities
as set out in note 15.1. The financial covenants are tested at the end of each half year for the 12 months ending on the last day of
the testing period. As of 31 December 2025, the Company was in compliance with these covenants. The facilities are also subject
to customary events of default, none of which are currently anticipated to occur. As the measure included in the financial covenants
represents net debt excluding lease liabilities, the Group also presents the net debt position to provide a complete and comprehensive
view of its financial position.
The Group’s $1.0 billion Revolving Credit Facility (“RCF”) maturity date was extended to 2030 during the year.
The Group’s committed facilities at 31 December 2025 and at 31 December 2024 are:
Facility 2025 | Date due |
$75 million 3.99% Senior Notes | January 2026 |
$350 million 5.15% US Corporate Bond | March 2027 |
$140 million 2.83% Senior Notes | June 2027 |
$60 million 2.90% Senior Notes | June 2028 |
$1.0 billion syndicated revolving credit facility | October 2030 |
$100 million 2.97% Senior Notes | June 2029 |
€500 million 4.565% EUR Corporate Bond | October 2029 |
$95 million 2.99% Senior Notes | June 2030 |
$900 million 2.032% USD Corporate Bond | October 2030 |
$155 million 3.09% Senior Notes | June 2032 |
$650 million 5.40% USD Corporate Bond | March 2034 |
Facility 2024 | Date due |
$75 million 3.99% Senior Notes | January 2026 |
$350 million 5.15% US Corporate Bond | March 2027 |
$140 million 2.83% Senior Notes | June 2027 |
$60 million 2.90% Senior Notes | June 2028 |
$1.0 billion syndicated revolving credit facility | October 2029 |
$100 million 2.97% Senior Notes | June 2029 |
€500 million 4.565% EUR Corporate Bond | October 2029 |
$95 million 2.99% Senior Notes | June 2030 |
$1.0 billion 2.032% USD Corporate Bond | October 2030 |
$155 million 3.09% Senior Notes | June 2032 |
$650 million 5.40% USD Corporate Bond | March 2034 |
STRATEGIC REPORT
GOVERNANCE
ACCOUNTS
OTHER INFORMATION
15
Cash and borrowings
continued
Smith+Nephew
Annual Report 2025
241
15.3
Year end financial liabilities by contractual maturity
The table below analyses the Group’s year end financial liabilities by contractual maturity date, including contractual interest payments
and excluding the impact of netting arrangements:
Within one | Between | Between | |||
year or on | one and | two and | Aſter | ||
demand | two years | five years | five years | Total | |
$ million | $ million | $ million | $ million | $ million | |
At 31 December 2025 | |||||
Non-derivative financial liabilities: | |||||
Bank overdraſts and loans | 8 | – | – | – | 8 |
Corporate bond | 90 | 426 | 1,682 | 773 | 2,971 |
Trade and other payables | 1,253 | – | 2 | – | 1,255 |
Private placement notes | 92 | 154 | 282 | 162 | 690 |
Acquisition consideration | 7 | – | 165 | – | 172 |
Derivative financial liabilities: | |||||
Currency swaps – outflow | 419 | – | – | – | 419 |
Currency swaps – inflow | (417) | – | – | – | (417) |
Forward foreign exchange contracts – outflow 1 | 401 | 279 | 91 | – | 771 |
Forward foreign exchange contracts – inflow 1 | (394) | (278) | (92) | – | (764) |
1,459 | 581 | 2,130 | 935 | 5,105 | |
At 31 December 2024 | |||||
Non-derivative financial liabilities: | |||||
Bank overdraſts and loans | 2 | – | – | – | 2 |
Corporate bond | 98 | 95 | 1,109 | 1,825 | 3,127 |
Trade and other payables | 1,082 | – | – | – | 1,082 |
Private placement notes | 19 | 92 | 335 | 263 | 709 |
Acquisition consideration | 28 | 5 | 165 | – | 198 |
Derivative financial instruments: | |||||
Currency swaps – outflow | 455 | – | – | – | 455 |
Currency swaps – inflow | (454) | – | – | – | (454) |
Forward foreign exchange contracts – outflow 1 | 2,415 | – | – | – | 2,415 |
Forward foreign exchange contracts – inflow 1 | (2,445) | – | – | – | (2,445) |
1,200 | 192 | 1,609 | 2,088 | 5,089 |
1
Refer to note 16.1 for details of foreign exchange risk management and the currencies being hedged.
The amounts in the tables above are undiscounted cash flows, which differ from the amounts included in the balance sheet where the
underlying cash flows have been discounted.
Liquidity and capital resources
The Group’s policy is to ensure that it has sufficient funding and facilities to meet foreseeable borrowing requirements.
At 31 December 2025, the Group held $553m (2024: $617m, 2023: $300m) in cash and cash equivalents net of bank overdraſts.
The Group had committed facilities available of $4.1bn (2024: $4.1bn) at 31 December 2025 of which $3.1bn (2024: $3.1bn) was drawn.
The $1bn (2024: $1bn) undrawn amount relates to the RCF.
The Group has sufficient liquidity to support all known or expected business requirements for 2026 such as dividend payments,
Group financial statements
continued
Notes to the Group accounts
continued
Smith+Nephew
Annual Report 2025
242
Financial instruments and risk management
Derivative financial instruments
Derivative financial instruments are initially recognised at fair value on the date a derivative contract is entered into and are
subsequently remeasured at their fair value at subsequent balance sheet dates. Changes in the fair value of derivative financial
instruments that are designated and effective as cash flow hedges of forecast transactions are recognised in other comprehensive
income until the associated asset or liability is recognised. Amounts taken to other comprehensive income are transferred to the
income statement in the period in which the hedged transaction affects profit and loss. Changes in the fair value of derivative financial
Financial
Instruments: Recognition and Measurement
. Changes in the fair values of hedging instruments that are designated and effective as
net investment hedges are matched in other comprehensive income against changes in value of the related net assets. Interest rate
derivatives transacted to fix interest rates on floating rate borrowings are accounted for as cash flow hedges and changes in the
fair values resulting from changes in market interest rates are recognised in other comprehensive income. Amounts taken to other
comprehensive income are transferred to the income statement when the hedged transaction affects profit and loss. Interest rate
derivatives transacted to convert fixed rate borrowings into floating rate borrowings are accounted for as fair value hedges and
changes in the fair values resulting from changes in market interest rates are recognised in the income statement. Any ineffectiveness
on hedging instruments and changes in the fair value of derivative financial instruments that do not qualify for hedge accounting
are recognised in the income statement within other finance costs as they arise.
Hedge accounting is discontinued when the hedged transaction expires or is sold, terminated or exercised, or no longer qualifies for
hedge accounting. At that point in time, any cumulative gain or loss on the hedging instrument recognised in other comprehensive
income is retained there until the forecast transaction occurs. If a hedged transaction is no longer expected to occur, the net
Foreign exchange risk management
The Group operates in many countries and, as a consequence, is exposed to movements in foreign exchange, giving rise to both
transaction and translation foreign exchange risk. Foreign exchange risk arises primarily from transactional foreign exchange exposures,
which are managed in line with the Group’s risk management framework, while the Group is also exposed to foreign exchange
translation risk on consolidation.
Transaction foreign exchange risk arises where forecast sales, purchases or other trading cash flows are denominated in currencies
other than the functional currency of the operating entity.
The Group is exposed to transactional foreign exchange risk as the majority
of its cost base is denominated in US Dollars while revenues are earned in US Dollars and other currencies.
Movements in exchange
rates may affect the Group’s operating profit, particularly in respect of non- US Dollar operating profits where the proportion of sales in
those currencies exceeds the proportion of costs. The Group’s policy is to hedge substantially all material transaction foreign exchange
exposures in order to reduce volatility in operating profit and cash flows.
The Group mitigates the impact of transaction related currency movements on operating profit through the use of forward foreign
exchange contracts, which are designated as cash flow hedges. These hedges are designated against forecast trading cash flows
that give rise to foreign exchange risk and impact the Group’s operating profit, reflecting differences between the currencies in which
revenues and costs are incurred versus the functional currencies of the respective operating entities. Such exposures are typically
hedged for periods of up to three years, with hedge coverage increased as the proximity to forecast transactions increases. The principal
currencies hedged using forward foreign exchanges contracts are Euro, Japanese Yen, Australian Dollar, Canadian Dollar and Korean
Won.
At 31 December 2025, the Group had outstanding forward foreign exchange contracts with a total notional principal amount of
$1.4 billion (2024: $2.4 billion) maturing across three years (2024: one year) from the balance sheet date.
As part of the Group’s ongoing risk management process, the portfolio of key foreign currency exposures designated for hedging is
reviewed regularly, and specific currencies hedged may vary from year to year based on the Group’s foreign exchange risk assessment.
During 2025, the Group refreshed its foreign exchange risk assessment through an updated Value at Risk analysis. As a result of this
review, the foreign exchange hedging programme was refined, including a reduction in the number of currencies designated for hedging
and an extension of the hedging horizon from one year to periods of up to three years. These changes are aligned with the Group’s risk
STRATEGIC REPORT
GOVERNANCE
ACCOUNTS
OTHER INFORMATION
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Annual Report 2025
243
All exchange rates are presented in accordance with standard Foreign exchange market quoting conventions.
Carrying | Hedge | ||||
Average | Nominal | value assets/ | ineffectiveness | ||
strike | amounts | (liabilities) | in profit or loss | ||
As at 31 December 2025 | rate | $ million | $ million | $ million | Balance Sheet classification |
Forward exchange contracts | |||||
Sell Euros | |||||
< 1 year | 1.17 | 390 | (4) | – | Current assets / current liabilities |
1 - 3 years | 1.20 | 390 | (1) | – | Non-current assets / non-current liabilities |
Sell Australian Dollars | |||||
< 1 year | 0.65 | 110 | (3) | – | Current assets / current liabilities |
1 - 3 years | 0.65 | 110 | (1) | – | Non-current assets / non-current liabilities |
Sell Canadian Dollars | |||||
< 1 year | 1.36 | 53 | – | – | Current assets / current liabilities |
1 - 3 years | 1.35 | 53 | – | – | Non-current assets / non-current liabilities |
Sell Japanese Yen | |||||
< 1 year | 140 | 131 | 14 | – | Current assets / current liabilities |
1 - 3 years | 140 | 131 | 10 | – | Non-current assets / non-current liabilities |
Sell South Korean won | |||||
< 1 year | 1,372 | 31 | 2 | – | Current assets / current liabilities |
1 - 3 years | 1,366 | 29 | 1 | – | Non-current assets / non-current liabilities |
Total cash flow hedges of | 1,428 | 18 | – | ||
foreign currency risk on | |||||
forecast transactions |
Carrying | Hedge | ||||
Average | Nominal | value assets/ | ineffectiveness | ||
strike | amounts | (liabilities) | in profit or loss | ||
As at 31 December 2024 | rate | $ million | $ million | $ million | Balance Sheet classification |
Forward exchange contracts | |||||
Sell Euros (net) for US Dollars | 1.10 | 570 | 10 | – | Current assets / current liabilities |
Buy Pound sterling (net) for | 1.24 | 438 | – | – | Current assets / current liabilities |
US Dollars | |||||
Sell Euros (net) for Pound | 0.85 | 335 | 2 | – | Current assets / current liabilities |
sterling | |||||
Sell Singapore Dollars (net) for | 1.32 | 174 | 4 | – | Current assets / current liabilities |
US Dollars | |||||
Buy Swiss Franc (net) for | 0.93 | 134 | – | – | Current assets / current liabilities |
Euros | |||||
Sell Australian Dollars (net) for | 0.87 | 122 | 3 | – | Current assets / current liabilities |
Singapore Dollars | |||||
Sell Japanese Yen (net) for | 110 | 101 | 3 | – | Current assets / current liabilities |
Singapore Dollars | |||||
Other currencies | 541 | 8 | – | Current assets / current liabilities | |
Total cash flow hedges of | 2,415 | 30 | – | ||
foreign currency risk on | |||||
forecast transactions |
Group financial statements
continued
Notes to the Group accounts
continued
16
Financial instruments and risk management
continued
Smith+Nephew
Annual Report 2025
244
The movement in cash flow hedge reserve is as follows:
Terminated hedges | Active hedges | Total | ||||
2025 | 2024 | 2025 | 2024 | 2025 | 2024 | |
$ million | $ million | $ million | $ million | $ million | $ million | |
Opening balance | (25) | – | (9) | 3 | (34) | 3 |
Gains recognised in OCI | 3 | – | (16) | (38) | (13) | (38) |
Amounts recycled to income statement | 20 | – | 9 | 1 | 29 | 1 |
At 31 December | (2) | – | (16) | (34) | (18) | (34) |
The Group designates forward foreign exchange contracts as cash flow hedges against the exchange rate fluctuation risk on certain
intercompany transactions associated with third-party sales and purchases. Amounts recycled to the consolidated income statement
are recognised within cost of sales when the third-party sales and purchases occur.
During the year, certain forward foreign exchange contracts relating to currency pairs that no longer form part of the Group’s updated
foreign exchange risk management strategy were early terminated. A portion of the cumulative gains and losses previously recognised
in the cash flow hedge reserve in respect of these instruments has been recycled to the consolidated income statement, in line with the
timing of the underlying hedged transactions.
At 31 December 2025, approximately $2m remains within the cash flow hedge reserve
relating to these discontinued hedging relationships, which is expected to be recycled to the income statement within the next twelve
months, in line with the timing of the underlying hedged items.
Based on the Group’s net borrowings as at 31 December 2025, if the US Dollar were to weaken against all currencies by 10%, the
Group’s net borrowings would increase by $45m (2024: $40m) principally due to the €500m Euro corporate bond which is designated as
a hedging instrument to hedge part of Group’s net investment in its Euro subsidiaries (refer to note 16.4 for details). The corresponding
impact on the income statement and other comprehensive income is illustrated in the table below. The other comprehensive income
impact relates to the Euro corporate bond.
| 2025 | 2024 | |||
Increase/ | Increase/ | |||
(decrease) in | Increase/ | (decrease) in | Increase/ | |
income | (decrease) in | income | (decrease) in | |
statement | OCI | statement | OCI | |
$ million | $ million | $ million | $ million | |
10% weakening of the US Dollar | 1 | (46) | – | (40) |
10% strengthening of the US Dollar | (1) | 46 | – | 40 |
If the US Dollar were to weaken by 10% against all other currencies, then the fair value of the forward foreign exchange contracts as
at 31 December 2025 would have been $144m lower (2024: $48m lower). Movements in the fair value of forward foreign exchange
contracts would be recognised in other comprehensive income or in the income statement as illustrated in the table below.
| 2025 | 2024 | |||
Increase/ | Increase/ | |||
(decrease) in | Increase/ | (decrease) in | Increase/ | |
income | (decrease) in | income | (decrease) in | |
statement | OCI | statement | OCI | |
$ million | $ million | $ million | $ million | |
10% weakening of the US Dollar | (6) | (138) | (7) | (41) |
10% strengthening of the US Dollar | 6 | 129 | 7 | 41 |
The Group is exposed to foreign exchange translation risk arising from the translation on consolidation of monetary assets and liabilities
denominated in currencies other than the functional currencies of the Group’s operating entities. It is the Group’s policy that operating
units do not hold material unhedged monetary assets or liabilities other than in their functional currencies. Movements in exchange rates
may affect reported revenue, profit and net assets but do not impact the Group’s underlying cash flows.
Hedge ineffectiveness is caused
by actual cash flows in foreign currencies varying from forecast cash flows.
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OTHER INFORMATION
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245
16.2
Interest rate risk management
The Group is exposed to interest rate risk on cash, borrowings and certain currency and interest rate swaps which are at floating
rates. The Group uses interest rate swaps to reduce the overall level of fixed rate debt, consistent with its policy of maintaining at
least 50% of gross debt at fixed rates. When used in this way, interest rate derivatives are accounted for as fair value hedges. The fair
value movement of the derivative is offset in the income statement against the fair value movement in the underlying fixed rate debt.
When required the Group uses interest rate derivatives to meet its objective of protecting borrowing costs within parameters set by the
Board. These interest rate derivatives are accounted for as cash flow hedges and, as such, changes in fair value resulting from changes in
market interest rates are recognised in other comprehensive income and accumulated in the hedging reserve, with the fair value of the
interest rate derivatives recorded in the balance sheet.
Based on the Group’s gross borrowings and cash as at 31 December 2025, if floating interest rates were to increase by 100 basis points
in all currencies, then the annual net interest charge would increase by $7m (2024: $5m). A decrease in interest rates by 100 basis points
in all currencies would have an equal but opposite effect to the amounts shown above.
The amounts relating to items designated as hedging instruments to manage the interest rate risk were as follows:
Derivatives - Interest rate swaps | |||||||||
Fixed rate debt | Fair value | ||||||||
Fair value | change used for | ||||||||
Cumulative | change used for | Group | recognising hedge | ||||||
fair value | Group | recognising hedge | Carrying amount | ||||||
Carrying | hedge | Balance | ineffectiveness | Balance | Nominal | ineffectiveness | |||
amount 1 | adjustments | Sheet | charge/(credit) | assets | liabilities | Sheet | amount | charge/(credit) | |
$ million | $ million | line item | $ million | $ million | $ million | line item | million | $ million | |
At 31 | |||||||||
December 2025 | |||||||||
US Dollar bond | (500) | (3) | Long-term | 20 | 4 | – | Other non- | (500) | (20) |
borrowings | current | ||||||||
Euro bond | (588) | 6 | and lease | (3) | 7 | – | assets | (500) | 3 |
liabilities | |||||||||
At 31 | |||||||||
December 2024 | |||||||||
US Dollar bond | (500) | (16) | Long-term | (16) | – | (16) | Other non- | (500) | 16 |
borrowings | current | ||||||||
Euro bond | (520) | 10 | and lease | 3 | 10 | – | assets/ | (500) | (3) |
liabilities | (liabilities) | ||||||||
1
The carrying amount relates to a hedge of the €500m EUR corporate bond ($588m translated at closing USD/EUR rate (2024: $520m)) and a hedge of
Credit risk management
The Group limits exposure to credit risk on counterparties used for financial instruments through a system of internal credit limits.
The financial exposure of a counterparty is determined as the total of cash and deposits, plus the risk on derivative instruments,
assessed as the fair value of the instrument plus a risk element based on the nominal value and the historic volatility of the market
value of the instrument. The Group does not anticipate non-performance of counterparties and believes it is not subject to material
concentration of credit risk as the Group operates within a policy of counterparty limits designed to reduce exposure to any
single counterparty.
The maximum credit risk exposure on derivatives at 31 December 2025 was $46m (2024: $56m), being the total debit fair values
on forward foreign exchange contracts, currency swaps and interest rate swaps. The maximum credit risk exposure on cash and cash
equivalents at 31 December 2025 was $557m (2024: $619m). The Group’s exposure to credit risk on cash is mitigated as the amounts
Group financial statements
continued
Notes to the Group accounts
continued
16
Financial instruments and risk management
continued
Smith+Nephew
Annual Report 2025
246
16.4
Net investment hedge
Part of the Group’s net investment in its Euro subsidiaries is hedged by €500m ($588m equivalent) of our EUR corporate bond which
mitigates the foreign currency risk arising from the subsidiaries’ net assets. The Bond is designated as a hedging instrument for
the changes in the value of the net investment that is attributable to changes in the EUR/USD spot rate.
Balance sheet classification | (Gains) / losses | |||||
Carrying value of | recognised in Other | Amounts reclassified | ||||
hedging instrument | Comprehensive Income | to income statement | ||||
2025 | 2024 | 2025 | 2024 | 2025 | 2024 | |
$ million | $ million | $ million | $ million | $ million | $ million | |
Long-term borrowings and lease liabilities | 588 | 520 | 68 | (33) | – | – |
To assess hedge effectiveness, the Group determines the economic relationship between the hedging instrument and the hedged item
by comparing changes in the carrying amount of the debt that is attributable to a change in the spot rate with changes in the investment
in the foreign operation due to movements in the spot rate (the offset method). The Group’s policy is to hedge the net investment only
to the extent of the debt principal. Hedge ineffectiveness occurs if the value of the Euro-denominated corporate bond exceeds the
value of the Euro subsidiaries.
Change in value used for | ||||||
Currency risk on foreign operations | Hedging | Balance in translation reserve | calculating ineffectiveness | |||
instrument | Continuing | Discontinued | Hedged | Hedging | Hedge | |
notional | hedges | hedges | item | instrument | ineffectiveness | |
million | $ million | $ million | $ million | $ million | $ million | |
At 31 December 2025 | 500 | 102 | 16 | 68 | 68 | – |
At 31 December 2024 | 500 | 34 | 16 | (33) | (33) | – |
16.5
Currency and interest rate profile of interest bearing liabilities and assets
Short-term receivables and payables are excluded from the following disclosures.
Currency and interest rate profile of interest bearing liabilities:
Fixed rate liabilities | ||||||||
Weighted | ||||||||
average | ||||||||
Interest | Weighted | time | ||||||
Gross | Currency | rate | Total | Floating | Fixed rate | average | for which | |
borrowings | swaps | swaps | liabilities | rate liabilities | liabilities | interest rate | rate is fixed | |
$ million | $ million | $ million | $ million | $ million | $ million | % | Years | |
At 31 December 2025 | ||||||||
US Dollar | (2,510) | (2) | – | (2,512) | (492) | (2,020) | 3.1 | 4.0 |
Euro | (591) | – | – | (591) | (591) | – | ||
Other | (10) | – | – | (10) | (10) | – | ||
Total interest bearing | ||||||||
liabilities | (3,111) | (2) | – | (3,113) | (1,093) | (2,020) | ||
At 31 December 2024 | ||||||||
US Dollar | (2,594) | (310) | (16) | (2,920) | (324) | (2,596) | 3.5 | 4.1 |
Euro | (527) | (130) | – | (657) | (130) | (527) | ||
Other | (4) | (14) | – | (18) | (18) | – | ||
Total interest bearing | ||||||||
liabilities | (3,125) | (454) | (16) | (3,595) | (472) | (3,123) | ||
STRATEGIC REPORT
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Annual Report 2025
247
In 2025, the Group also had liabilities due for deferred and contingent acquisition consideration (denominated in US Dollars and Euros)
totalling $107m (2024: $105m) on which no interest was payable (see Note 14). There were no other significant interest bearing or
non-interest bearing financial liabilities. Euro floating rates are typically based on EURIBOR and US Dollar rates are typically based on
Term SOFR. The weighted average interest rate on floating rate borrowings as at 31 December 2025 was 4.6% (2024: 5.1%). The Group
has entered into interest rate swap contracts to convert the interest payments on €500m and $500m debt from fixed rate to floating
rate basis.
Currency and interest rate profile of interest bearing assets:
Cash and cash | Currency | Interest rate | Floating | Fixed | ||
equivalents | swaps | swaps | Total assets | rate assets | rate assets | |
$ million | $ million | $ million | $ million | $ million | $ million | |
At 31 December 2025 | ||||||
US Dollar | 393 | 2 | 4 | 399 | 395 | 4 |
Euro | 26 | – | 7 | 33 | 33 | – |
Other | 138 | – | – | 138 | 138 | – |
Total interest bearing assets | 557 | 2 | 11 | 570 | 566 | 4 |
At 31 December 2024 | ||||||
US Dollar | 482 | 146 | – | 628 | 628 | – |
Euro | 9 | 37 | 10 | 56 | 56 | – |
Other | 128 | 270 | – | 398 | 398 | – |
Total interest bearing assets | 619 | 453 | 10 | 1,082 | 1,082 | – |
Floating rates on assets are typically based on the short-term deposit rates relevant to the currency concerned.
Fair value of financial assets and liabilities
Measurement of fair values
A number of the Group’s accounting policies and disclosures require the measurement of fair values, for both financial assets
and liabilities and non-financial assets acquired in a business combination (see Note 21).
When measuring the fair value of an asset or liability, the Group uses market observable data as far as possible. Fair values
are categorised into different levels in the fair value hierarchy based on the inputs used in the valuation techniques as follows:
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2: inputs other than quoted prices
included in Level 1 that are observable for the asset or liability, either directly (ie as prices) or indirectly (ie derived from prices);
and Level 3: inputs for the asset or liability that are not based on observable data (unobservable inputs).
The Group recognises transfers between the levels of the fair value hierarchy at the end of the reporting period during which
There has been no change in the classification of financial assets and liabilities, the method and assumptions used in determining fair
value and the categorisation of financial assets and liabilities within the fair value hierarchy from those disclosed in the Annual Report
for the year ended 31 December 2024.
The Group holds investments in relation to deferred compensation and employee benefit arrangements. These assets mainly comprise
investments in mutual funds and similar investment vehicles with quoted prices in active markets that the Group can access at the
reporting date. Fair value is therefore determined using unadjusted quoted market prices, and accordingly these investments are
classified as Level 1 within the fair value hierarchy. The assets are measured at fair value through profit or loss. The Group enters
into derivative financial instruments with financial institutions with investment grade credit ratings. The fair value of forward foreign
exchange contracts is calculated by reference to quoted market forward exchange rates for contracts with similar maturity profiles.
The fair value of interest rate swaps is determined by reference to quoted market interest rates. The fair value of currency swaps is
determined by reference to quoted market spot rates. As a result, foreign forward exchange contracts, interest rate swaps and currency
swaps are classified as Level 2 within the fair value hierarchy. For Level 2 instruments, the valuation method used is the discounted
cash flow technique, which estimates expected future cash flows or payoffs using observable market inputs and discounts them to
present value using market-derived discount factors. The changes in counterparty credit risk had no material effect on the hedge
effectiveness for derivatives designated in hedge relationships and other financial instruments recognised at fair value. The fair value of
investments is based upon third-party pricing models for share issues. As a result, investments are considered Level 3 in the fair value
hierarchy. There were no transfers between Levels 1, 2 and 3 during 2025 and 2024. For cash and cash equivalents, short-term loans and
receivables, overdraſts and other short-term liabilities which have a maturity of less than three months, the book values approximate the
fair values because of their short-term nature.
Group financial statements
continued
Notes to the Group accounts
continued
16
Financial instruments and risk management
continued
Smith+Nephew
Annual Report 2025
248
Long-term borrowings are measured in the balance sheet at amortised cost. The corporate bonds issued in October 2020, October
2022 and March 2024 are publicly listed and a market price is available. The Group’s other long-term borrowings are not quoted publicly,
their fair values are estimated by discounting future contractual cash flows to net present values at the current market interest rates
available to the Group for similar financial instruments as at the year end. The fair value of the private placement notes is determined
using a discounted cash flow model based on prevailing market rates.
There are no financial assets and liabilities that are subject to master netting or similar arrangements.
The following table shows the carrying amounts and fair values of financial assets and financial liabilities, including their levels in the
fair value hierarchy. It does not include fair value information for financial assets and financial liabilities not measured at fair value.
Carrying amount | Fair value | ||||||||
Fair value | |||||||||
Fair value – | Fair value | through | |||||||
hedging | Amortised | through | profit | ||||||
instruments | cost | OCI | or loss | Total | Level 1 | Level 2 | Level 3 | Total | |
At 31 December 2025 | $ million | $ million | $ million | $ million | $ million | $ million | $ million | $ million | $ million |
Financial assets measured | |||||||||
at fair value | |||||||||
Forward foreign exchange | |||||||||
contracts | 33 | – | – | – | 33 | – | 33 | – | 33 |
Investments | – | – | – | 30 | 30 | – | – | 30 | 30 |
Investments relating to deferred | |||||||||
compensation arrangements | – | – | – | 106 | 106 | 106 | – | – | 106 |
Interest rate swaps | 11 | – | – | – | 11 | – | 11 | – | 11 |
Currency swaps | – | – | – | 2 | 2 | – | 2 | – | 2 |
44 | – | – | 138 | 182 | |||||
Financial liabilities measured | |||||||||
at fair value | |||||||||
Acquisition consideration - | |||||||||
contingent | – | – | – | (107) | (107) | – | – | (107) | (107) |
Forward foreign exchange | |||||||||
contracts | (15) | – | – | – | (15) | – | (15) | – | (15) |
Currency swaps | – | – | – | (2) | (2) | – | (2) | – | (2) |
(15) | – | – | (109) | (124) | |||||
Financial assets not measured | |||||||||
at fair value | |||||||||
Trade and other receivables | – | 1,278 | – | – | 1,278 | ||||
Cash and cash equivalents | – | 557 | – | – | 557 | ||||
– | 1,835 | – | – | 1,835 | |||||
Financial liabilities not measured | |||||||||
at fair value | |||||||||
Bank overdraſts and loans | – | (8) | – | – | (8) | ||||
Corporate bond not in a hedge | |||||||||
relationship | – | (1,394) | – | – | (1,394) | ||||
Corporate bond in a hedge | |||||||||
relationship | – | (1,084) | – | – | (1,084) | ||||
Private placement debt not in a | |||||||||
hedge relationship | – | (625) | – | – | (625) | ||||
Trade and other payables | – | (1,243) | – | – | (1,243) | ||||
– | (4,354) | – | – | (4,354) | |||||
STRATEGIC REPORT
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OTHER INFORMATION
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Annual Report 2025
249
During the year ended 31 December 2025, acquisition consideration increased by $2m due to a $17m increase in relation to the
remeasurement of CartiHeal acquisition,
a $12m increase due to discount unwind, partially offset by $27m of payments for CartiHeal
and other acquisitions made in prior years. The fair value of contingent consideration is estimated using a discounted cash flow model.
The valuation model considers the present value of expected payment, discounted using a risk-adjusted discount rate. The expected
payment is determined by considering the possible scenarios, which relate to the achievement of established milestones and targets,
the amount to be paid under each scenario and the probability of each scenario. As a result, contingent consideration is classified as
Level 3 within the fair value hierarchy.
| Carrying amount | Fair value | |||||||
Fair value | ||||||||
Fair value – | Fair value | through | ||||||
hedging | Amortised | through | profit | |||||
instruments | cost | OCI | or loss | Total | Level 2 | Level 3 | Total | |
At 31 December 2024 | $ million | $ million | $ million | $ million | $ million | $ million | $ million | $ million |
Financial assets measured | ||||||||
at fair value | ||||||||
Forward foreign exchange | ||||||||
contracts | 46 | – | – | – | 46 | 46 | – | 46 |
Investments | – | – | – | 9 | 9 | – | 9 | 9 |
Interest rate swaps | 10 | – | – | – | 10 | 10 | – | 10 |
Currency swaps | – | – | – | 1 | 1 | 1 | – | 1 |
56 | – | – | 10 | 66 | ||||
Financial liabilities measured | ||||||||
at fair value | ||||||||
Acquisition consideration - | ||||||||
contingent | – | – | – | (84) | (84) | – | (84) | (84) |
Forward foreign exchange | ||||||||
contracts | (16) | – | – | – | (16) | (16) | – | (16) |
Interest rate swaps | (16) | – | – | – | (16) | (16) | – | (16) |
Currency swaps | – | – | – | (2) | (2) | (2) | – | (2) |
(32) | – | – | (86) | (118) | ||||
Financial assets not measured | ||||||||
at fair value | ||||||||
Trade and other receivables | – | 1,190 | – | – | 1,190 | |||
Cash and cash equivalents | – | 619 | – | – | 619 | |||
– | 1,809 | – | – | 1,809 | ||||
Financial liabilities not measured | ||||||||
at fair value | ||||||||
Acquisition consideration - | ||||||||
deferred | – | (21) | – | – | (21) | |||
Bank overdraſts | – | (2) | – | – | (2) | |||
Corporate bond not in a hedge | ||||||||
relationship | – | (1,492) | – | – | (1,492) | |||
Corporate bond in a hedge | ||||||||
relationship | – | (1,006) | – | – | (1,006) | |||
Private placement debt not in a | ||||||||
hedge relationship | – | (625) | – | – | (625) | |||
Trade and other payables | – | (1,084) | – | – | (1,084) | |||
– | (4,230) | – | – | (4,230) | ||||
The following table shows the book value and market value of corporate bonds and private placement debt.
| 2025 | 2024 | |||
Book | Market | Book | Market | |
value | value | value | value | |
$ million | $ million | $ million | $ million | |
2030 USD corporate bond | 897 | 810 | 995 | 836 |
2034 USD corporate bond | 641 | 672 | 628 | 642 |
2027 USD corporate bond | 349 | 354 | 348 | 352 |
2029 EUR corporate bond | 591 | 617 | 527 | 547 |
Private placement debt | 625 | 594 | 625 | 573 |
The fair value of investments is based upon third-party pricing models for share issues. As a result, investments are considered Level 3
in the fair value hierarchy.
The movements in 2025 and 2024 for financial instruments measured using Level 3 valuation methods are presented below:
2025 | 2024 | |
$ million | $ million | |
Investments | ||
At 1 January | 9 | 8 |
Additions | 2 | 1 |
Transferred from receivables | 18 | – |
Fair value remeasurement | 1 | – |
At 31 December | 30 | 9 |
Contingent consideration receivable | ||
At 1 January | – | 18 |
Transferred to receivables | – | (18) |
At 31 December | – | – |
Contingent acquisition consideration liability | ||
At 1 January | (84) | (32) |
Arising on acquisitions | – | (49) |
Payments | 6 | 6 |
Remeasurements | (29) | (9) |
At 31 December | (107) | (84) |
Provisions and contingencies
In the normal course of business the Group is involved in various legal disputes. Provisions are made for loss contingencies when it is
deemed probable that an adverse outcome will occur and the amount of the losses can be reasonably estimated. Where the Group is
the plaintiff in pursuing claims against third parties, legal and associated expenses are charged to the income statement as incurred.
The recognition of provisions for legal disputes is subject to a significant degree of estimation. In making its estimates, management
takes into account the advice of internal and external legal counsel. Provisions are reviewed regularly and amounts updated where
necessary to reflect developments in the disputes. The ultimate liability may differ from the amount provided depending on the
outcome of court proceedings or settlement negotiations or as new facts emerge. Insurance recoveries are recognised when the
inflow of benefits is virtually certain and are presented within other receivables.
A provision for onerous contracts is recognised when the expected benefits to be derived by the Group from a contract are lower
than the unavoidable cost of meeting its obligations under the contract.
A provision for restructuring and rationalisation is recognised when the Group has approved a detailed and formal restructuring plan
and the restructuring either has commenced or has been communicated to those affected. Restructuring provisions primarily include
severance costs and are expected to be utilised within one year. Future operating losses and costs associated with ongoing activities
Group financial statements
continued
Notes to the Group accounts
continued
16
Financial instruments and risk management
continued
Smith+Nephew
Annual Report 2025
250
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OTHER INFORMATION
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Provisions and contingencies
continued
Smith+Nephew
Annual Report 2025
251
17.1
Provisions
Restructuring | ||||
and | ||||
rationalisation | Legal and other | |||
provisions | Metal-on-metal | provisions | Total | |
$ million | $ million | $ million | $ million | |
At 1 January 2024 | 91 | 149 | 41 | 281 |
Charge to income statement | 123 | – | 12 | 135 |
Release to income statement | – | (28) | (2) | (30) |
Unwinding of discount | – | 6 | – | 6 |
Utilised | (153) | (14) | (20) | (187) |
Exchange adjustment | (2) | – | – | (2) |
At 31 December 2024 | 59 | 113 | 31 | 203 |
Charge to income statement | 49 | – | 15 | 64 |
Release to income statement | (2) | (9) | (7) | (18) |
Unwinding of discount | – | 4 | – | 4 |
Utilised | (86) | (11) | (2) | (99) |
Exchange adjustment | 2 | – | – | 2 |
At 31 December 2025 | 22 | 97 | 37 | 156 |
Provisions – due within one year | 22 | 25 | 27 | 74 |
Provisions – due aſter one year | – | 72 | 10 | 82 |
At 31 December 2025 | 22 | 97 | 37 | 156 |
Provisions – due within one year | 59 | 28 | 21 | 108 |
Provisions – due aſter one year | – | 85 | 10 | 95 |
At 31 December 2024 | 59 | 113 | 31 | 203 |
The principal elements within restructuring and rationalisation provisions relate to the Operations and Commercial Excellence
programme announced in February 2020 and the efficiency and productivity elements of the 12-Point Plan.
For the year ended 31 December 2025 and 2024, charges primarily include severance, asset write-offs and integration and dual
running costs.
The Group has estimated a provision of $97m (2024: $113m) relating to the present value at 31 December 2025 of the estimated costs
to resolve all other known and anticipated metal-on-metal hip claims globally. The estimated value of the provision has been determined
using an actuarial model. While the provision is based on a number of assumptions, including factors such as the number, outcome and
value of claims, a reasonable change in assumptions would not give rise to a material adjustment. The provision does not include any
possible further insurance recoveries on these claims or legal fees associated with defending claims.
The legal and other provisions mainly relate to various other product liability and intellectual property litigation matters. The Group
carries considerable product liability insurance, and will continue to defend claims vigorously.
All provisions are expected to be substantially utilised within five years of 31 December 2025 and none are treated as
financial instruments.
Group financial statements
continued
Notes to the Group accounts
continued
17
Provisions and contingencies
continued
Smith+Nephew
Annual Report 2025
252
Contingencies
The Company and its subsidiaries are party to various legal proceedings, some of which include claims for substantial damages.
The outcome of these proceedings cannot readily be foreseen, but except as described herein management believes none of them are
likely to result in a material adverse effect on the financial position of the Group. The Group provides for outcomes that are deemed to be
probable and can be reliably estimated. There is no assurance that losses will not exceed provisions or will not have a significant impact
17.3
Legal proceedings
Product liability claims
The Group faces claims from time to time for alleged defects in its products and has on occasion recalled or withdrawn products from
the market. Such claims are endemic to the medical device industry. The Group maintains product liability insurance subject to limits
and deductibles that management believes are reasonable. All policies contain exclusions and limitations, however, and there can be no
assurance that insurance will be available or adequate to cover all claims.
This includes matters raising concerns about possible adverse effects of hip implant products with metal-on-metal (MoM) bearing
surfaces for which the Group has incurred and will continue to incur expenses to defend claims in this area.
As of December 2025, approximately 192 such claims were pending with the Group around the world. Most claims relate to the Group’s
BHR product, including its two modular metal-on-metal components: the Birmingham Hip Modular Head (BHMH) and the optional metal
liner component of the R3
◊
Acetabular System (R3ML). The BHMH and R3ML are no longer on the market: the R3ML was withdrawn in
2012 and the BHMH was phased out in 2014. In 2015, the Group ceased offering smaller sizes of the BHR and restricted instructions for
BHR use in female patients. These actions were taken to ensure that the BHR is used only in those patient groups where it continues to
demonstrate strong performance.
Through the end of 2025, entities of the Group have entered several group, as well as individual, MoM related settlements without
admitting liability. The Group requested indemnity from its product liability insurers for most of these MoM hip implant settlements and
insurers have indemnified the Group to the limits of their respective applicable policies.
Litigation outcomes are difficult to predict and defence costs can be significant. The Group takes care to monitor the clinical evidence
relating to its products, including its metal hip implant products, to help ensure that its product offerings are designed to serve patients’
interests.
Intellectual property disputes
The Group engages, as both plaintiff and defendant, in litigation with various competitors and others over claims of patent infringement
and other intellectual property matters. These disputes are heard in courts in the US and other jurisdictions and also before agencies
that examine patents. Outcomes are rarely certain and costs are oſten significant. The Group provides for these types of matters when
and where appropriate.
17.4
Tax matters
At any given time the Group has unagreed years outstanding in various countries and is involved in tax audits and disputes, some of
which may take several years to resolve. Provisions are based on best estimates and management’s judgements concerning the likely
ultimate outcome of any audit or dispute. Management considers the specific circumstances of each tax position and takes external
advice, where appropriate, to assess the range of potential outcomes and estimate additional tax that may be due. The Group believes
STRATEGIC REPORT
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OTHER INFORMATION
Smith+Nephew
Annual Report 2025
253
Retirement benefit obligations
The Group sponsors defined benefit plans in a number of countries. A defined benefit pension plan defines an amount of pension
benefit that an employee will receive on retirement or a minimum guaranteed return on contributions, which is dependent on various
factors such as age, years of service and final salary. The Group’s obligation is calculated separately for each plan by discounting
the estimated future benefit that employees have earned in return for their service in the current and prior periods. The fair value
of any plan assets is deducted to arrive at the net liability.
The calculation of the defined benefit obligation is performed annually by external actuaries using the projected unit credit method.
Remeasurements arising from defined benefit plans comprise actuarial gains and losses and the return on the plan assets in excess
of the discount rate net of the costs of managing the plan assets. The Group recognises these immediately in other comprehensive
income (OCI) and all other expenses, such as service cost, net interest cost, administration costs and taxes, are recognised in the
income statement.
A number of key assumptions are made when calculating the fair value of the Group’s defined benefit pension plans. These
assumptions impact the balance sheet asset and liabilities, operating profit, finance income/costs and other comprehensive income.
The most critical assumptions are the discount rate, the rate of inflation and mortality assumptions to be applied to future pension
plan liabilities. The discount rate is based on the yield at the reporting date on bonds that have a credit rating of AA, denominated
in the currency in which the benefits are expected to be paid and have a maturity profile approximately the same as the Group’s
obligations. In determining these assumptions management takes into account the advice of professional external actuaries
and benchmarks its assumptions against external data.
The Group determines the net interest expense/income on the net defined benefit liability/asset for the period by applying the
discount rate used to measure the defined benefit obligation at the beginning of the annual period to the net defined benefit
liability/asset.
The Group also operates a number of defined contribution plans. A defined contribution plan is a pension plan under which the
Group and employees pay fixed contributions to a third-party financial provider. The Group has no further payment obligations
18.1
Retirement benefit assets and obligations
The Group’s retirement benefit assets/(obligations) comprise:
2025 | 2024 | |
$ million | $ million | |
Funded plans: | ||
UK Plan | 64 | 63 |
US Plan | – | – |
Other plans | (16) | (10) |
48 | 53 | |
Unfunded plans: | ||
Other plans | (59) | (60) |
Retirement healthcare | (9) | (9) |
(20) | (16) | |
Amount recognised on the balance sheet – liability | (84) | (79) |
Amount recognised on the balance sheet – asset | 64 | 63 |
The Group sponsors defined benefit pension plans for its employees or former employees in 12 countries and these are established
under the laws of the relevant country. Funded plans are funded by the payment of contributions and the assets are held by separate
trust funds or insurance companies. The provision of retirement and related benefits across the Group is kept under regular review.
Employees’ retirement benefits are the subject of regular management review. The Group’s defined benefit plans provide employees
with an entitlement to benefits, payable typically either as a lump sum or annuity, or a mixture of the two. Most plans are now closed
to future accrual. The level of entitlement is typically dependent on the salary and years of service of the employee, in line with local
practices. Pension benefits are generally limited to 66.7% of final salary in key markets.
Group financial statements
continued
Notes to the Group accounts
continued
18
Retirement benefit obligations
continued
Smith+Nephew
Annual Report 2025
254
The Groups two major defined benefit pension plans were in
UK and US. Both these plans were closed to new employees in 2003
and defined contribution plans are offered to new joiners. The US and UK Plans were closed to future accrual in March 2014 and
December 2016 respectively.
The UK Plan operates under trust law and responsibility for its governance lies with a Board of Trustees. This Board is composed of
representatives of the Group, plan participants and an independent trustee, who act on behalf of members in accordance with the
terms of the Trust Deed and Rules and relevant legislation. The UK Plan’s assets are held by the trust. Annual increases on benefits
in payment are dependent on inflation.
The 2018 and 2020 court cases in relation to Guaranteed Minimum Pensions do not impact the UK Plan as members were not
contracted out of the State Earnings-Related Pension Scheme (SERPS) between 1990 and 1997.
In June 2023, the Trustee with the support of the Company concluded a full buy-in of the Main Fund with Rothesay Life. The total
transaction value was £260m. The transaction completed the Main Fund and Executive Scheme de-risking journey which included
partial buy-in transactions in 2013, 2017, and 2022, whereby the liabilities of the scheme are now covered by a bulk annuity insurance
policy, that operate as investment assets, insuring all liabilities to pay all future defined benefit pensions for the remaining members
of the Fund. The bulk annuity policy matches the Trust’s cash flow benefit obligations to its members, removing longevity and other
demographic risks as well as investment, interest rate and inflation risks.
When the full UK Fund buy-in was concluded in June 2023 no decision on a future buy-out had been reached by the Company.
While the contract between the Life Insurer (Rothesay) and the Trustee allows for a buy-out, a number of steps would need to be
concluded before this could be achieved. The Trustee and the Company could not act unilaterally to move to a buy-out and the UK Fund
governance structure lays out a number of steps the Company would be required to conclude for a buy-out decision. The transaction
resulted in a $58m loss being recognised in OCI in 2023 with $nil cash impact.
The US Plan is governed by a US Pension Committee which comprises representatives of the Group. In the US, the Pension Protection
Act (2006) established both a minimum required contribution and a maximum deductible contribution. Failure to contribute at least
the minimum required amount will subject the Company to significant penalties, and contributions in excess of the maximum deductible
contribution have negative tax consequences. The minimum funding requirement is intended to fully fund the present value of accrued
benefits over seven years.
In October 2022, US Pension Plan members were notified that Smith & Nephew Inc. (SNI) would begin the termination process for the
US Plan. In December 2023, Fidelity & Guaranty Life was selected to take over responsibility for the remaining US Pension Plan obligation
and administration upon termination. A premium amount of $245m was paid in cash by the US Plan on 4 January 2024. Certain active
employees and terminated vested participants elected to receive a lump sum in exchange for their plan benefit of $80m. This resulted
in $4m settlement costs which were recognised in 2023, representing the difference between defined benefit obligation (DBO) and the
lump sums paid to members in December 2023. Following the US buyout, members move to having a direct relationship with Fidelity &
Guaranty Life with SNI no longer retaining any obligation for the settlement of accrued member benefits.
There is no legislative minimum funding requirement in the UK. The Trust Deed of the UK Plan and the Plan Document of the US Plan
provide the Group with a right to a refund of surplus assets assuming the full settlement of plan liabilities in the event of a plan wind-
up. Furthermore, in the ordinary course of business the UK Board of Trustees and US Pension Committee have no rights to unilaterally
wind up, or otherwise augment the benefits due to members of the Plans. Based on these rights, any net surplus in the UK and US Plans
is recognised in full.
STRATEGIC REPORT
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OTHER INFORMATION
18
Retirement benefit obligations
continued
Smith+Nephew
Annual Report 2025
255
18.2
Reconciliation of retirement benefit obligations and pension assets
The movement in the Group’s pension benefit obligation and pension assets is as follows:
| 2025 | 2024 | |||||
Obligation | Asset | Total | Obligation | Asset | Total | |
$ million | $ million | $ million | $ million | $ million | $ million | |
Amounts recognised on the balance sheet at | ||||||
beginning of the period | (625) | 609 | (16) | (961) | 942 | (19) |
Income statement expense: | ||||||
Current service cost | (7) | – | (7) | (7) | – | (7) |
Settlements | – | – | – | 255 | (250) | 5 |
Interest (expense)/income | (28) | 29 | 1 | (26) | 26 | – |
Administration costs and taxes | (7) | – | (7) | (4) | – | (4) |
Costs recognised in income statement | (42) | 29 | (13) | 218 | (224) | (6) |
Remeasurements: | ||||||
Actuarial (loss)/gain due to liability experience | (8) | – | (8) | (6) | – | (6) |
Actuarial gain due to financial assumptions | ||||||
change | 23 | – | 23 | 62 | – | 62 |
Actuarial (loss)/gain due to demographic | ||||||
assumptions | (2) | – | (2) | 1 | – | 1 |
Return on plan assets (less)/greater than | ||||||
discount rate | – | (8) | (8) | – | (41) | (41) |
Remeasurements recognised in OCI | 13 | (8) | 5 | 57 | (41) | 16 |
Cash: | ||||||
Employer contributions | – | 8 | 8 | – | (9) | (9) |
Employee contributions | (3) | 3 | – | (3) | 3 | – |
Benefits paid directly by the Group | 4 | – | 4 | 3 | – | 3 |
Benefits paid, taxes and administration costs | ||||||
paid from scheme assets | 48 | (52) | (4) | 41 | (45) | (4) |
Net cash | 49 | (41) | 8 | 41 | (51) | (10) |
Exchange movements | (55) | 51 | (4) | 20 | (17) | 3 |
Amount recognised on the balance sheet | (660) | 640 | (20) | (625) | 609 | (16) |
Amount recognised on the balance sheet – | ||||||
liability | (230) | 146 | (84) | (213) | 134 | (79) |
Amount recognised on the balance sheet – | ||||||
asset | (430) | 494 | 64 | (412) | 475 | 63 |
Represented by:
| 2025 | 2024 | |||||
Obligation | Asset | Total | Obligation | Asset | Total | |
$ million | $ million | $ million | $ million | $ million | $ million | |
UK Plan | (414) | 478 | 64 | (396) | 459 | 63 |
Other Plans | (246) | 162 | (84) | (229) | 150 | (79) |
Total | (660) | 640 | (20) | (625) | 609 | (16) |
The actuarial gain on obligation of $13m primarily relates to the increase in discount rates in 2025 compared to 2024 and the
actuarial loss from the return on plan assets of $8m is mainly due to the impact of the UK Plan.
All benefits are vested at the end of each reporting period. The weighted average duration of the defined benefit obligation at the
end of the reporting period is 13 years for the UK Plan.
18
Retirement benefit obligations
continued
18.3
Plan assets
The market value of the US, UK and Other Plans assets are as follows:
2025 | 2024 | 2023 | |
$ million | $ million | $ million | |
UK Plan: | |||
Assets with a quoted market price: | |||
Cash and cash equivalents | 56 | 56 | 61 |
Other bonds | 8 | 7 | – |
64 | 63 | 61 | |
Other assets: | |||
Insurance contract | 414 | 396 | 457 |
Market value of assets | 478 | 459 | 518 |
US Plan: | |||
Assets with a quoted market price: | |||
Cash and cash equivalents | – | – | 267 |
Market value of assets | – | – | 267 |
Other Plans: | |||
Assets with a quoted market price: | |||
Cash and cash equivalents | 8 | 2 | 7 |
Equity securities | 56 | 56 | 50 |
Government bonds – fixed interest | 6 | 6 | 5 |
Corporate and other bonds | 13 | 12 | 10 |
Insurance contracts | 19 | 18 | 23 |
Property | 24 | 25 | 28 |
Other quoted securities | 14 | 11 | 10 |
140 | 130 | 133 | |
Other assets: | |||
Insurance contracts | 22 | 20 | 24 |
Market value of assets | 162 | 150 | 157 |
Total market value of assets | 640 | 609 | 942 |
No plans invest directly in property occupied by the Group or in financial securities issued by the Group.
The UK Plan is comprised of annuity policies purchased by the Trustee. In 2024, following the US scheme termination,
the investment risks have been transferred to a US Life Insurer.
Smith+Nephew
Annual Report 2025
256
Group financial statements
continued
Notes to the Group accounts
continued
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OTHER INFORMATION
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Retirement benefit obligations
continued
Smith+Nephew
Annual Report 2025
257
18.4
Expenses recognised in the income statement
The total expense relating to retirement benefits recognised for the year is $94m (2024: $95m, 2023: $95m). Of this cost recognised
for the year, $81m (2024: $89m, 2023: $84m) relates to defined contribution plans and $13m (2024: $6m, 2023: $11m) relates to
defined benefit plans.
The cost charged in respect of the Group’s defined contribution plans represents contributions payable to these plans by the Group at
rates specified in the rules of the Plans. These were charged to operating profit in costs of goods sold, selling, general and administrative
expenses, and research and development expenses. There were $nil outstanding payments as at 31 December 2025 due to be paid
over to the Plans (2024: $nil, 2023: $nil).
Defined benefit plan costs comprise service cost which is charged to operating profit in selling, general and administrative expenses
and net interest cost and administration costs and taxes which are reported as other finance costs.
The defined benefit pension costs charged for the UK and US Plans are $nil (2024: $nil, 2023: $nil).
18.5
Principal actuarial assumptions
The following are the principal financial actuarial assumptions used at the reporting date to determine the UK and US defined benefit
obligations and expense.
2025 | 2024 | 2023 | |
% per annum | % per annum | % per annum | |
UK Plan: | |||
Discount rate | 5.5 | 5.5 | 4.5 |
Future salary increases | n/a | n/a | n/a |
Future pension increases | 2.8 | 3.0 | 3.0 |
Inflation (RPI) | 2.9 | 3.2 | 3.1 |
Inflation (CPI) | 2.4 | 2.7 | 2.5 |
US Plan: | |||
Discount rate | n/a | n/a | 5.0 |
Future salary increases | n/a | n/a | n/a |
Inflation | n/a | n/a | n/a |
Actuarial assumptions regarding future mortality are based on mortality tables. The UK uses the S3NA with projections in line with
the CMI 2024 table, which places partial weight on post pandemic experience. The Directors will continue to monitor any potential
future impact on the mortality assumptions used.
The current longevities underlying the values of the obligations in the defined benefit plans are as follows:
2025 | 2024 | 2023 | |
years | years | years | |
Life expectancy at age 60 | |||
UK Plan: | |||
Males | 26.9 | 26.6 | 26.9 |
Females | 29.6 | 29.5 | 29.7 |
US Plan: | |||
Males | n/a | n/a | 25.0 |
Females | n/a | n/a | 27.2 |
Life expectancy at age 60 in 20 years’ time | |||
UK Plan: | |||
Males | 28.5 | 28.1 | 28.4 |
Females | 31.0 | 30.9 | 31.1 |
US Plan: | |||
Males | n/a | n/a | 25.0 |
Females | n/a | n/a | 27.6 |
Group financial statements
continued
Notes to the Group accounts
continued
18
Retirement benefit obligations
continued
Smith+Nephew
Annual Report 2025
258
18.6
Sensitivity analysis
The calculation of the defined benefit obligation is sensitive to the assumptions used. The following table summarises the increase/
decrease on the UK defined benefit obligation and pension costs as a result of reasonably possible changes in some of the assumptions
while holding all other assumptions consistent. The sensitivity to the inflation assumption change includes corresponding changes to the
future pension increase assumptions. The analysis does not take into account the full distribution of cash flows expected under the Plan.
Increase/(decrease) in | Increase /(decrease) in | |||
pension obligation | pension cost | |||
$ million | +50bps/+1yr | -50bps/-1yr | +50bps/+1yr | -50bps/-1yr |
UK Plan: | ||||
Discount rate | (25.0) | 28.0 | – | – |
Inflation | 21.5 | (19.4) | – | – |
Mortality | 18.0 | (18.0) | – | – |
18.7
Risk
The pension plans expose the Group to the following risks:
Interest rate risk | Volatility in financial markets can change the calculations of the obligation significantly as the calculation |
of the obligation is linked to yields on AA rated corporate bonds. A decrease in the bond yield will increase | |
the measure of plan liabilities, although this will be partially offset by increases in the value of matching | |
plan assets such as bonds and insurance contracts. | |
The UK buy-in in June 2023 removed all remaining material pension liability exposure from the balance | |
sheet, hence, eliminating the interest rate risk for the UK Plan. Following the completion of the US buy-out | |
on 4 January 2024, no further interest risk is linked to the valuation of liability for the US Plan as no liability | |
remains in the Plan. | |
Inflation risk | The UK Plan is linked to inflation. A high rate of inflation will lead to a higher liability. This risk is managed |
by holding inflation-linked bonds and an inflation-linked insurance contract in respect of some of the | |
obligation. In the UK, the liability matching portfolio held in conventional and index-linked gilts was | |
transferred into liability driven investments in order to reduce inflation risk. | |
The UK Plan is closed to future accrual which reduces the exposure to this risk. The US Plan is also closed | |
to future accrual and has no other inflation-linkage thus eliminating the exposure to this risk. Following the | |
full UK Pension buy-in in 2023, the residual inflation risks associated with the UK Plan have been | |
transferred to the UK Plan’s Life Insurance Partners. | |
Investment risk | If the return on plan assets is below the discount rate, all else being equal, there will be an increase |
in the Plan deficit. | |
In the UK, following the full buy-in for the UK Plan, the investment risk has been transferred to the UK | |
Plan’s Life Insurer Partners. | |
The US Plan has a dynamic de-risking policy to shiſt plan assets from return-seeking (growth) assets to | |
liability matching assets over time. The US Pension Plan has an established glide path that is designed to | |
stabilise funding status by reducing the Plan’s exposure to return-seeking assets. Following the completion | |
of the US buy-out on 4 January 2024, no further investment risk is linked to the valuation of liability for the | |
US Plan as no liability remains in the Plan. | |
Longevity risk | The present value of the Plan’s defined benefit liability is calculated by reference to the best estimate |
of the mortality of the Plan participants both during and aſter their employment. An increase in the life | |
expectancy of plan participants above that assumed will increase the benefit obligation. | |
Following the full buy-in, the UK Plan has entered into insurance contract which covers all of the | |
pensioners’ obligations. | |
Following the completion of the US buy-out on 4 January 2024, there is no further longevity risk linked to | |
the valuation of liability for the US Plan as no liability remains in the Plan. |
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OTHER INFORMATION
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Retirement benefit obligations
continued
Smith+Nephew
Annual Report 2025
259
18.8
Funding
A full valuation is performed by actuaries for the Trustees/Pension Committee of each plan to determine the level of funding required.
Employer contribution rates, based on these full valuations, are agreed between the Trustees/Pension Committee of each plan and
the Group. The assumptions used in the actuarial valuations used for funding purposes may differ from the accounting assumptions
set out above.
UK Plan
The most recent full actuarial valuation of the UK Plan was undertaken as at 30 September 2023. Future accruals to the UK Plan ceased
as at 31 December 2016. Contributions to the UK Plan in 2025 were $nil (2024: $nil, 2023: $nil). This included supplementary payments
of $nil (2024: $nil, 2023: $nil).
Following the completion of the 30 September 2023 valuation, a dynamic contribution mechanism was agreed. The Fund was expected
to be in surplus at 30 September 2023, therefore no recovery plan was required.
The Fund will meet administrative and other running
costs from the surplus, with no expense contributions due from the Company.
In 2023, the Trustees concluded a full buy-in of the UK Defined Benefit Fund. The transaction resulted in a $58m loss being
recognised in OCI with $nil cash impact. Following the conclusion of the UK full buy-in, no further contributions are expected from the
sponsor company.
US Plan
The most recent full actuarial valuation of the US Plan was undertaken as at 1 January 2022. Future accruals to the US Plan ceased as
at 31 March 2014. Contributions to the US Plan were $nil (2024: $nil, 2023: $nil) which represented supplementary payments of $nil
(2024: $nil, 2023: $nil).
A premium amount of $245m was paid in cash by the US Plan on 4 January 2024 to settle the annuity purchase agreement with Fidelity
& Guaranty Life. $4m of settlement costs were accounted for in 2023 and are linked to the lump sum payments settled in December
2023 of $80m. A $2m credit was recorded in 2024 linked to the annuity purchase contract concluded with Fidelity & Guaranty Life
Equity
Incremental costs directly attributable to the issue of ordinary shares, net of any tax effects, are recognised as a deduction from equity.
costs, net of any tax effects, is recognised as a deduction from equity. Repurchased shares are classified as treasury shares and
are presented in the treasury share reserve. When treasury shares are sold or reissued subsequently, the amount received is
Share capital
Ordinary shares (20¢) | Deferred shares (£1.00) | Total | |||
Thousand | $ million | Thousand | $ million | $ million | |
Authorised | |||||
At 31 December 2023 | 1,223,591 | 245 | 50 | – | 245 |
At 31 December 2024 | 1,223,591 | 245 | 50 | – | 245 |
At 31 December 2025 | 1,223,591 | 245 | 50 | – | 245 |
Allotted, issued and fully paid | |||||
At 1 January 2023 | 877,650 | 175 | 50 | – | 175 |
Share options | 23 | – | – | – | – |
At 31 December 2023 | 877,673 | 175 | 50 | – | 175 |
Share options | 31 | – | – | – | – |
At 31 December 2024 | 877,704 | 175 | 50 | – | 175 |
Share options | 21 | – | – | – | – |
At 31 December 2025 | 877,725 | 175 | 50 | – | 175 |
Group financial statements
continued
Notes to the Group accounts
continued
19
Equity
continued
Smith+Nephew
Annual Report 2025
260
The deferred shares were issued in 2006 in order to comply with English Company law. They are not listed on any stock exchange
and have extremely limited rights and effectively have no value. These rights are summarised as follows:
–
The holder shall not be entitled to participate in the profits of the Company;
–
The holder shall not have any right to participate in any distribution of the Company’s assets on a winding-up or other distribution
except that aſter the return of the nominal amount paid up on each share in the capital of the Company of any class other than
the deferred shares and the distribution of a further $1,000 in respect of each such share there shall be distributed to a holder
of a deferred share (for each deferred share held) an amount equal to the nominal value of the deferred share;
–
The holder shall not be entitled to receive notice, attend, speak or vote at any general meeting of the Company; and
–
The Company may create, allot and issue further shares or reduce or repay the whole or any part of its share capital or other
capital reserves without obtaining the consent of the holders of the deferred shares.
The Group’s objectives when managing capital are to ensure the Group has adequate funds to continue as a going concern and
sufficient flexibility within the capital structure to fund the ongoing growth of the business and to take advantage of business
development opportunities including acquisitions.
The Group determines the amount of capital taking into account changes in business risks and future cash requirements. The Group
reviews its capital structure on an ongoing basis and uses share buybacks, dividends and the issue of new shares to adjust the
retained capital.
The Group considers the capital that it manages to be as follows:
2025 | 2024 | 2023 | |
$ million | $ million | $ million | |
Share capital | 175 | 175 | 175 |
Share premium | 615 | 615 | 615 |
Capital redemption reserve | 20 | 20 | 20 |
Treasury shares | (515) | (66) | (94) |
Retained earnings and other reserves | 4,994 | 4,521 | 4,501 |
5,289 | 5,265 | 5,217 |
Treasury shares
Treasury shares represent the holding of the Company’s own shares in respect of the Smith & Nephew Employees’ Share Trust and
shares bought back as part of the share buyback programme.
The Smith & Nephew 2004 Employees’ Share Trust (the Trust) was established to hold shares relating to the long-term incentive plans
referred to in the Directors’ Remuneration Report. The Trust is administered by an independent professional trust company resident
in Jersey and is funded by a loan from the Company. The cost of the Trust is charged to the income statement as it accrues. A dividend
waiver is in place in respect of those shares held under the long-term incentive plans. The Trust only accepts dividends in respect of nil-
cost options and deferred bonus plan shares. The waiver represents less than 1% of the total dividends paid.
STRATEGIC REPORT
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ACCOUNTS
OTHER INFORMATION
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Annual Report 2025
261
19
Equity
continued
The movements in Treasury shares and the Employees’ Share Trust are as follows:
Employees’ | |||
Treasury | Share Trust | Total | |
$ million | $ million | $ million | |
At 1 January 2024 | 53 | 41 | 94 |
Shares transferred to Group beneficiaries | (2) | (26) | (28) |
At 31 December 2024 | 51 | 15 | 66 |
Shares purchased | 502 | – | 502 |
Shares transferred to Group beneficiaries | (44) | (9) | (53) |
At 31 December 2025 | 509 | 6 | 515 |
Employees’ | |||
Treasury | Share Trust | Total | |
Number | Number | Number | |
of shares | of shares | of shares | |
million | million | million | |
At 1 January 2024 | 3.4 | 2.4 | 5.8 |
Shares transferred to Group beneficiaries | (0.1) | (1.5) | (1.6) |
At 31 December 2024 | 3.3 | 0.9 | 4.2 |
Shares purchased | 27.4 | – | 27.4 |
Shares transferred to Group beneficiaries | (2.7) | (0.5) | (3.2) |
At 31 December 2025 | 28.0 | 0.4 | 28.4 |
In August 2025, the Group announced a $500m share buyback programme
in order to return capital to shareholders. The Group
purchased 27,411,845 shares under the programme for a total cost of $502m inclusive of transaction costs of $2m that have been
Dividends
2025 | 2024 | 2023 | |
$ million | $ million | $ million | |
The following dividends were declared and paid in the year: | |||
Ordinary final of 23.1¢ for 2024 (2023: 23.1¢, 2022: 23.1¢) paid 28 May 2025 | 202 | 202 | 201 |
Ordinary interim of 15.0¢ for 2025 (2024: 14.4¢, 2023: 14.4¢) paid 7 November 2025 | 128 | 125 | 126 |
330 | 327 | 327 |
A final dividend for 2025 of 24.1 US cents per ordinary share was proposed by the Board on 26 February 2026 and will be paid, subject
to shareholder approval, on 27 May 2026 to shareholders on the Register of Members on 27 March 2026. The estimated amount of this
dividend is $204 m. The Group pursues a progressive dividend policy, with the aim of increasing the US Dollar value of ordinary dividends
over time broadly based on the Group’s underlying growth in earnings, while taking into account capital requirements and cash flows.
Future dividends will be dependent upon future earnings, the future financial condition of the Group and the Board’s dividend policy.
The Board reviews the appropriate level of total annual dividend each year at the time of the full-year results. Smith & Nephew plc ,
the Parent Company of the Group, is a non-trading investment holding company which derives its distributable reserves from dividends
paid by subsidiary companies. The distributable reserves of the Parent Company approximate to the balance on the profit and loss
Group financial statements
continued
Notes to the Group accounts
continued
Smith+Nephew
Annual Report 2025
262
Cash flow statement
In the Group cash flow statement, cash and cash equivalents includes cash at bank, other short-term liquid investments with original
maturities of three months or less and bank overdraſts. In the Group balance sheet, cash and cash equivalents includes cash at bank,
Analysis of net debt including lease liabilities
| Borrowings | ||||||||
Total | Net debt | |||||||
Net | Net | liabilities | Cash | including | ||||
Due within | Due aſter | currency | interest | - financing | and cash | lease | ||
Overdraſts | one year | one year | swaps | swaps | activities | equivalents | liabilities | |
$ million | $ million | $ million | $ million | $ million | $ million | $ million | $ million | |
At 1 January 2023 | (6) | (154) | (2,712) | – | (13) | (2,885) | 350 | (2,535) |
Net cash flow/debt movement | 8 | (604) | 429 | (4) | – | (171) | (48) | (219) |
Fair value changes including exchange | (4) | – | (39) | 3 | 20 | (20) | – | (20) |
adjustments | ||||||||
Corporate bond issuance expense | – | – | 1 | – | – | 1 | – | 1 |
IFRS 16 lease liabilities movement | – | (6) | 3 | – | – | (3) | – | (3) |
At 31 December 2023 | (2) | (764) | (2,318) | (1) | 7 | (3,078) | 302 | (2,776) |
Net cash flow/debt movement | 1 | 705 | (1,000) | – | – | (294) | 331 | 37 |
Fair value changes including exchange | (1) | – | 46 | – | (13) | 32 | (14) | 18 |
adjustments | ||||||||
Corporate bond issuance expense | – | – | 9 | – | – | 9 | – | 9 |
IFRS 16 lease liabilities movement | – | (2) | 5 | – | – | 3 | – | 3 |
At 31 December 2024 | (2) | (61) | (3,258) | (1) | (6) | (3,328) | 619 | (2,709) |
Net cash flow/debt movement | (2) | (4) | 90 | (1) | – | 83 | (74) | 9 |
Non cash changes including exchange | – | (75) | 8 | 2 | 17 | (48) | 12 | (36) |
adjustments | ||||||||
Corporate bond issuance expense | – | – | (3) | – | – | (3) | – | (3) |
IFRS 16 lease liabilities movement | – | (6) | (14) | – | – | (20) | – | (20) |
At 31 December 2025 | (4) | (146) | (3,177) | – | 11 | (3,316) | 557 | (2,759) |
In 2025, the Group repurchased $100 million of its $1.0 billion 2.032% USD corporate bond (refer to Note 15.2).
STRATEGIC REPORT
GOVERNANCE
ACCOUNTS
OTHER INFORMATION
20
Cash flow statement
continued
Smith+Nephew
Annual Report 2025
263
Reconciliation of net cash flow to movement in net debt including lease liabilities
2025 | 2024 | 2023 | |
$ million | $ million | $ million | |
Net cash flow from cash net of overdraſts | (76) | 332 | (40) |
Settlement of currency swaps | (1) | – | (4) |
Net cash flow from borrowings | 86 | (295) | (175) |
Change in net debt from net cash flow | 9 | 37 | (219) |
IFRS 16 lease liabilities | (20) | 3 | (3) |
Other non cash movements 1 | (36) | 18 | (20) |
Corporate bond issuance expense | (3) | 9 | 1 |
Change in net debt in the year | (50) | 67 | (241) |
Opening net debt | (2,709) | (2,776) | (2,535) |
Closing net debt | (2,759) | (2,709) | (2,776) |
1
In 2025, this also includes gain on repurchase of bond $10m, in addition to foreign exchange movements and fair value adjustments relating to
interest swaps.
For the purposes of the Group cash flow statement, cash and cash equivalents at 31 December 2025 comprise cash at bank and other
short-term liquid investments with original maturities of three months or less and bank overdraſts.
2025 | 2024 | 2023 | |
$ million | $ million | $ million | |
Cash at bank and other short-term liquid investments with original maturities of three | |||
months or less | 557 | 619 | 302 |
Bank overdraſts | (4) | (2) | (2) |
Cash and cash equivalents | 553 | 617 | 300 |
Cash outflows/(inflows) arising from financing activities
Repayment | Borrowing | Proceeds from | Repayment | Cash outflow/ | Proceeds from own | ||||
of bank | of bank | Corporate | of lease | (inflow) | Purchase of | shares/issue of | |||
loans 1 | loans 1 | Bond issue | liabilities | from other | Dividends | own shares | ordinary shares | Total | |
2025 | $ million | $ million | $ million | $ million | $ million | $ million | $ million | $ million | $ million |
Debt | 129 | (43) | – | 50 | (1) | – | – | – | 135 |
Equity | – | – | – | – | – | 330 | 502 | (12) | 820 |
Total | 129 | (43) | – | 50 | (1) | 330 | 502 | (12) | 955 |
2024 | |||||||||
Debt | 705 | – | (1,000) | 55 | – | – | – | – | (240) |
Equity | – | – | – | – | – | 327 | – | (1) | 326 |
Total | 705 | – | (1,000) | 55 | – | 327 | – | (1) | 86 |
2023 | |||||||||
Debt | 151 | (326) | – | 52 | (4) | – | – | – | (127) |
Equity | – | – | – | – | – | 327 | – | – | 327 |
Total | 151 | (326) | – | 52 | (4) | 327 | – | – | 200 |
1
Group financial statements
continued
Notes to the Group accounts
continued
Smith+Nephew
Annual Report 2025
264
Acquisitions
The Group accounts for business combinations using the acquisition method when control is transferred to the Group.
The consideration transferred in the acquisition is measured at fair value, as are the identifiable net assets acquired. Any goodwill
that arises is tested annually for impairment. Any gain on a bargain purchase is recognised in profit or loss immediately.
Transaction costs are expensed as incurred, except if related to the issue of debt or equity securities.
Any contingent consideration payable is measured at fair value at the acquisition date. If the contingent consideration is classified
as equity, then it is not remeasured and settlement is accounted for within equity. Otherwise, subsequent changes in the fair value
Year ended 31 December 2025
No acquisitions were completed in 2025.
Year ended 31 December 2024
On 9 January 2024, the Group completed the acquisition of 100% of the share capital of CartiHeal (2009) Ltd (CartiHeal), the
developer of CARTIHEAL
◊
AGILI-C
◊
, a novel Sports Medicine technology for cartilage regeneration in the knee. The acquisition of this
disruptive technology supports our strategy to invest behind our successful Sports Medicine & ENT business unit. The fair value of the
consideration amounted to $231m. This is comprised of contingent consideration of $49m, which represents the discounted value of
$150m of consideration contingent upon the achievement of a single future financial performance milestone in the next 10 years, and
initial cash consideration of $180m adjusted for cash acquired and other liabilities assumed, of which $18m was transferred in to escrow
to be released in equal instalments to the seller in 12 and 18 months from completion. The fair value of assets acquired and liabilities
assumed is set out below:
CartiHeal | |
(2009) Ltd | |
$ million | |
Intangible assets – Product-related and trade name | 84 |
Inventory | 1 |
Cash | 6 |
Other liabilities | (2) |
Trade and other payables | (1) |
Net deferred tax liability | (3) |
Net assets | 85 |
Goodwill | 146 |
Consideration | 231 |
The product-related intangible assets and trade name were valued using a relief-from-royalty methodology with the key inputs
being revenue, profit and discount rate. The cash outflow from acquisitions in 2024 was $186m (2023: $21m) comprises payments of
consideration of $177m net of cash acquired (2023: $nil) relating to acquisitions and payments of deferred and contingent consideration
of $9m (2023: $21m) relating to acquisitions completed in prior years.
The goodwill represents the control premium, acquired workforce and the synergies expected from integrating CartiHeal into the
Group’s existing business. The carrying value of goodwill increased from $2,992m at 31 December 2023 to $3,026m at 31 December
2024. The acquisition in the year ended 31 December 2024 increased goodwill by $146m, this was partially offset by goodwill
impairment of $65m and foreign exchange movements of $47m.
For the year ended 31 December 2024, the contribution from CartiHeal to the Group’s revenue and profit was immaterial. If the business
combination had occurred at the beginning of the year the contribution to revenue and profit would not have been materially different.
Year ended 31 December 2023
No acquisitions were completed in 2023. During 2023, management evaluated the commercial viability of Engage products and
STRATEGIC REPORT
GOVERNANCE
ACCOUNTS
OTHER INFORMATION
Smith+Nephew
Annual Report 2025
265
22
Other notes to the accounts
Share-based payments
The Group operates a number of equity-settled executive and employee share plans. For all grants of share options and awards,
the fair value at the grant date is calculated using appropriate option pricing models. The grant date fair value is recognised over
The Group operates the following equity-settled and employee shareplans: Smith & Nephew Global Share Plan 2010, Smith &
Nephew Global Share Plan 2020, Smith & Nephew Share Save Plan (2012) and Smith & Nephew International Share Save Plan (2012).
At 31 December 2025, 3,259,000 options (2024: 4,587,000, 2023: 5,138,000) were outstanding with a range of exercise prices from
843 to 1,235 pence.
At 31 December 2025, the maximum number of shares that could be awarded under the Group’s long-term incentive plans was
7,542,000 (2024: 9,899,000, 2023: 8,452,000). These include conditional share awards granted to senior employees and equity
and performance share awards granted to senior executives under the Global Share Plan 2010 and Global Share Plan 2020.
Related party transactions
Trading transactions
In the course of normal operations, the Group traded with its associates detailed in Note 11. The aggregated transactions,
which have not been disclosed elsewhere in the financial statements, are $nil (2024: $nil, 2023: $nil).
The remuneration of Executive Officers (including Executive Directors and Non-Executive Directors) during the year is
summarised below:
2025 | 2024 | 2023 | |
$ million | $ million | $ million | |
Short-term employee benefits | 23 | 22 | 21 |
Share-based payments expense | 15 | 10 | 9 |
Pension and post-employment benefit entitlements | 2 | 1 | 1 |
40 | 33 | 31 |
Retirement benefit schemes
Post balance sheet events
early-stage commercial developer of Tendon Seam™, an innovative rotator cuff repair (RCR) system designed to significantly reduce
re tear rates and improve patient outcomes. The acquisition represents a meaningful step in delivering Smith+Nephew’s RISE strategy
to accelerate growth through strategic investment and portfolio leadership, and will be an important building block in our ambition to
become the global leader in Sports Medicine. The acquisition consideration comprised of $225m paid on completion, with up to a further
$225m contingent on future performance.
The acquisition will be treated as a business combination under IFRS 3. The fair value assessment of the acquisition consideration,
identifiable assets acquired and liabilities assumed is ongoing. Given the proximity of the acquisition to the financial statements being
authorised for issue, it is not practicable at this stage to reasonably estimate the financial effect of the acquisition on the Group’s
consolidated financial statements. The Group expects to complete the purchase price allocation exercise under IFRS 3 in the first half of
Company balance sheet
At 31 December
At 31 December
2025
2024
Notes
$ million
$ million
Non-current assets
Investments
2
7,092
7,092
Debtors
3
2,472
2,408
9,564
9,500
Current assets
Debtors
3
369
733
Cash and cash equivalents
5
438
487
807
1,220
Total assets
10,371
10,720
Equity and liabilities
Equity attributable to owners of the Company
Share capital
175
175
Share premium
615
615
Capital redemption reserve
20
20
Capital reserve
2,266
2,266
Treasury shares
(515)
(66)
Exchange reserve
(52)
(52)
Profit and loss account
2,833
3,237
Total equity
5,342
6,195
Non-current liabilities
Borrowings
5
3,027
3,124
Other creditors
4&5
21
16
3,048
3,140
Current liabilities
Borrowings
5
78
2
Other creditors
4
1,903
1,383
1,981
1,385
Total liabilities
5,029
4,525
Total equity and liabilities
10,371
10,720
The attributable (loss)/profit for the year dealt with in the accounts of the Company is $(77)m (2024: $72m).
The accounts were approved by the Board and authorised for issue on 27 February 2026 and signed on its behalf by:
Rupert Soames, OBE
Deepak Nath, PhD
John Rogers
Chair
Chief Executive Officer
Chief Financial Officer
266
Smith+Nephew
Annual Report 2025
Company financial statements
Company statement of changes in equity
Capital
Total
Share
Share
redemption
Capital
Treasury
Exchange
Profit and
shareholders’
capital
premium
reserve
reserve
shares
reserve
loss account
funds
$ million
$ million
$ million
$ million
$ million
$ million
$ million
$ million
At 1 January 2024
175
615
20
2,266
(94)
(52)
3,479
6,409
Attributable profit for the year
–
–
–
–
–
–
72
72
Equity dividends paid in the year
–
–
–
–
–
–
(327)
(327)
Share-based payments recognised
1
–
–
–
–
–
–
40
40
Cost of shares transferred to beneficiaries
–
–
–
–
28
–
(27)
1
At 31 December 2024
175
615
20
2,266
(66)
(52)
3,237
6,195
Attributable loss for the year
–
–
–
–
–
–
(77)
(77)
Equity dividends paid in the year
–
–
–
–
–
–
(330)
(330)
Share-based payments recognised
1
–
–
–
–
–
–
44
44
Cost of shares transferred to beneficiaries
–
–
–
–
53
–
(41)
12
Treasury shares purchased
–
–
–
–
(502)
–
–
(502)
At 31 December 2025
175
615
20
2,266
(515)
(52)
2,833
5,342
1
The Company operates a number of equity-settled executive and employee share plans. For all grants of share options and awards, the fair value
as at the date of grant is calculated using an appropriate option pricing model and the corresponding expense is recognised over the vesting period.
Subsidiary companies are recharged for the fair value of share options that relate to their employees. The disclosure relating to the Company is detailed in
Note 22.1 of the Notes to the Group accounts.
Further information on the share capital of the Company can be found in Note 19.1 of the Notes to the Group accounts.
The total distributable reserves of the Company approximate to the balance on the profit and loss account reserve, less treasury
shares and exchange reserves, which at 31 December 2025 amounted to $2,266m (2024: $3,119m). In accordance with the exemption
permitted by Section 408 of the Companies Act 2006, the Company has not presented its own profit and loss account.
Fees paid to Deloitte for audit and non-audit services to the Company itself are not disclosed in the individual accounts because
Group financial statements are prepared which are required to disclose such fees on a consolidated basis. The fees for the consolidated
Group are disclosed in Note 3.2 of the Notes to the Group accounts.
267
Smith+Nephew
Annual Report 2025
STRATEGIC REPORT
GOVERNANCE
ACCOUNTS
OTHER INFORMATION
1
Basis of preparation
Smith & Nephew plc (the “Company”) is a public limited company incorporated in England and Wales.
The separate accounts of the Company are presented as required by the Companies Act 2006. These financial statements and
accompanying notes have been prepared in accordance with the Financial Reporting Standard 101
Reduced Disclosure Framework
(‘Reduced Disclosure Framework’) for all periods presented. The financial information for the Company has been prepared on the
same basis as the consolidated financial statements, applying identical accounting policies as outlined throughout the Notes to the
Group accounts. The Directors have determined that the preparation of the Company financial statements on a going concern basis
is appropriate as the Company receives dividend cash receipts from its subsidiary undertakings which enable it to meet its liabilities
as they fall due.
In applying these policies, management is required to make estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at the date of the accounts and the reported amounts of revenues
and expenses during the reporting period. Although these estimates are based on management’s best knowledge of current events
and actions, actual results ultimately may differ from those estimates.
In these financial statements, the Company has applied the exemptions available under FRS 101 in respect of the following disclosures:
–
A cash flow statement and related notes;
–
Comparative period reconciliations for share capital and tangible fixed assets;
–
Disclosures in respect of transactions with wholly-owned subsidiaries;
–
Disclosures in respect of capital management;
–
The effects of new but not yet effective IFRSs; and
–
Disclosures in respect of the compensation of key management personnel.
As the consolidated financial statements include the equivalent disclosures, the Company has also taken the exemptions under FRS 101
available in respect of the following disclosures:
–
IFRS 2
Share Based Payments
in respect of Group-settled share-based payments; and
–
Certain disclosures required by IFRS 13
Fair Value Measurement
and the disclosures required by IFRS 7
Financial Instrument Disclosures
.
The Company proposes to continue to adopt the Reduced Disclosure Framework of FRS 101 in its next financial statements.
The Company’s accounting policies do not include any critical judgements and estimates.
2
Investments
Accounting policy
Investments in subsidiaries are stated at cost less provision for impairment.
2025
2024
$ million
$ million
At 1 January and 31 December
7,092
7,092
Investments represent holdings in subsidiary undertakings. In accordance with Section 409 of the Companies Act 2006, a listing of all
entities invested in by the consolidated Group is provided in Note 8.
268
Smith+Nephew
Annual Report 2025
Notes to the Company accounts
Company financial statements
continued
3
Debtors
2025
2024
$ million
$ million
Current
Amounts owed by subsidiary undertakings
341
664
Prepayments and accrued income
–
6
Current asset derivatives – forward foreign exchange contracts
18
46
Current asset derivatives – forward foreign exchange contracts – subsidiary undertakings
8
16
Current asset derivatives – currency swaps
2
1
369
733
Non-current
Amounts owed by subsidiary undertakings
2,440
2,398
Non-current asset derivatives – forward foreign exchange contracts
15
–
Non-current asset derivatives – forward foreign exchange contracts – subsidiary undertakings
6
–
Non-current asset derivatives – interest rate swaps
11
10
2,472
2,408
Allowance losses on amounts owed by subsidiary undertakings are calculated by reviewing 12-month expected credit losses using
historic and forward-looking data on credit risk. The loss allowance expense for the year was de minimis (2024: de minimis).
4
Other creditors
2025
2024
$ million
$ million
Current
Amounts owed to subsidiary undertakings
1,847
1,286
Other creditors
28
33
Current liability derivatives – forward foreign exchange contracts
8
16
Current liability derivatives – forward foreign exchange contracts – subsidiary undertakings
18
46
Current liability derivatives – currency swaps
2
2
1,903
1,383
Non-current
Non-current liability derivatives – forward foreign exchange contracts
6
–
Non-current liability derivatives – forward foreign exchange contracts – subsidiary undertakings
15
–
Non-current liability derivatives – interest rate swaps
–
16
21
16
5
Cash and borrowings
Accounting policy
Financial instruments
Currency swaps are used to match foreign currency assets with foreign currency liabilities. They are initially recorded at fair value
and then for reporting purposes remeasured to fair value at exchange rates and interest rates at subsequent balance sheet dates.
Changes in the fair value of derivative financial instruments are recognised in the profit and loss account as they arise.
2025
2024
$ million
$ million
Bank loans, borrowing and overdraſts due within one year or on demand
78
2
Borrowings due aſter one year
3,027
3,124
Borrowings
3,105
3,126
Cash and cash equivalents
(438)
(487)
(Debit)/credit balance on derivatives – interest rate swaps
(11)
6
Net debt
2,656
2,645
All currency swaps are stated at fair value. These currency swaps have notional values of Gross US Dollar equivalents of $570m
(2024: $453m) receivable and $570m (2024: $455m) payable. Currency swaps comprise foreign exchange swaps and were used
in 2025 and 2024 to hedge intra-group loans.
269
Smith+Nephew
Annual Report 2025
STRATEGIC REPORT
GOVERNANCE
ACCOUNTS
OTHER INFORMATION
6
Contingencies
2025
2024
$ million
$ million
Guarantees in respect of subsidiary undertakings
–
–
The Company gives guarantees to banks to support liabilities and cross guarantees to support overdraſts.
The Company operated defined benefit pension plans in 2004 but at the end of 2005 its pension plan obligations were transferred to
Smith & Nephew UK Limited. The Company has provided guarantees to the trustees of the pension plans to support future amounts
due from participating employers (see Note 18 of the Notes to the Group accounts).
7
Deferred taxation
The Company has gross unused capital losses of $129m (2024: $120m) available for offset against future chargeable gains.
No deferred tax asset has been recognised on these unused losses as they are not expected to be realised in the foreseeable future.
8
Group companies
In accordance with Section 409 of the Companies Act 2006, a full list of subsidiaries, associates, joint arrangements, joint ventures and
partnerships are listed below as at 31 December 2025, including their country of incorporation. All companies are 100% owned, unless
otherwise indicated. The share capital disclosed comprises ordinary shares which are indirectly held by Smith & Nephew plc, unless
otherwise stated.
Company name
Country of
operation and
incorporation
Registered
Office
Smith & Nephew UK Limited
1,4
England & Wales
Watford
Smith & Nephew UK Pension Fund
Trustee Limited
2
England & Wales
Watford
Smith & Nephew USD Limited
1
England & Wales
Watford
Smith & Nephew USD One Limited
1
England & Wales
Watford
T.J.Smith and Nephew, Limited
England & Wales
Hull
The Albion Soap Company Limited
2
England & Wales
Watford
TP Limited
1
Scotland
Edinburgh
Rest of Europe
Smith & Nephew GmbH
Austria
Vienna
Smith & Nephew S.A.-N.V
Belgium
Zaventem
Smith & Nephew A/S
Denmark
Kobenhavn
Smith & Nephew Oy
Finland
Helsinki
Smith & Nephew France SAS
1
France
Neuilly-sur-
Seine
Smith & Nephew S.A.S.
France
Neuilly-sur-
Seine
Smith & Nephew Business Services GmbH
& Co. KG
1
Germany
Hamburg
Smith & Nephew Business Services
Verwaltungs GmbH
Germany
Hamburg
Smith & Nephew Deutschland (Holding)
GmbH
1
Germany
Hamburg
Smith & Nephew GmbH
Germany
Hamburg
Smith & Nephew Orthopaedics GmbH
Germany
Tuttlingen
Smith & Nephew Robotics GmbH
Germany
Munich
Smith & Nephew (Ireland) Trading Limited
Ireland
Dublin
Cartiheal (2009) Ltd
1
Israel
Kfar Saba
Smith & Nephew S.r.l.
Italy
Milan
Smith & Nephew International S.A.
1
Luxembourg
Luxembourg
Company name
Country of
operation and
incorporation
Registered
Office
UK
Additive Instruments Limited
England & Wales
Watford
Michelson Diagnostic Limited
3
(6.4%)
England & Wales
Nottingham
Neotherix Limited
3
(24.9%)
England & Wales
York
Smith & Nephew (Overseas) Limited
1,4
England & Wales
Watford
Smith & Nephew Beta Limited
2
England & Wales
Watford
Smith & Nephew China Holdings
UK Limited
1
England & Wales
Watford
Smith & Nephew Employees
Trustees Limited
2
England & Wales
Watford
Smith & Nephew ESN Limited
2
England & Wales
Watford
Smith & Nephew Extruded Films Limited
2
England & Wales
Hull
Smith & Nephew Finance
2
England & Wales
Watford
Smith & Nephew Finance Oratec
2
England & Wales
Watford
Smith & Nephew Healthcare Limited
2
England & Wales
Hull
Smith & Nephew Investment
Holdings Limited
1
England & Wales
Watford
Smith & Nephew Lilia Limited
2
England & Wales
Watford
Smith & Nephew Medical Fabrics Limited
2
England & Wales
Watford
Smith & Nephew Medical Limited
England & Wales
Hull
Smith & Nephew Nominee
Company Limited
2
England & Wales
Watford
Smith & Nephew Nominee Services Limited
2
England & Wales
Watford
Smith & Nephew Orthopaedics Limited
England & Wales
Watford
Smith & Nephew Pharmaceuticals Limited
2
England & Wales
Hull
Smith & Nephew Raisegrade Limited
1,2
England & Wales
Watford
Smith & Nephew Rareletter Limited
2
England & Wales
Watford
Smith & Nephew Trading Group Limited
1
England & Wales
Watford
Smith & Nephew UK Executive Pension
Scheme Trustee Limited
2
England & Wales
Watford
270
Smith+Nephew
Annual Report 2025
Notes to the Company accounts
continued
Company financial statements
continued
Company name
Country of
operation and
incorporation
Registered
Office
Smith & Nephew (Europe) B.V.
1
Netherlands
Amsterdam,
2132NP
Smith & Nephew B.V.
Netherlands
Amsterdam,
2132NP
Smith & Nephew Nederland CV
Netherlands
Amsterdam,
2132NP
Smith & Nephew Operations B.V.
Netherlands
Amsterdam,
2132NP
Serda B.V.
3
(48.66%)
Netherlands
Amsterdam,
1105BP
Smith & Nephew AS
Norway
Oslo
Smith & Nephew sp. z.o.o.
Poland
Warsaw
Smith & Nephew Lda
Portugal
Forte da Casa
S&N ORION PRIME, S.A.
Portugal
Coimbra
DC LLC
Russian
Federation
Puschino
Smith & Nephew LLC
Russian
Federation
Moscow
Smith & Nephew S.A.U
Spain
Barcelona
Smith & Nephew Aktiebolag
Sweden
Molndal
Lumina Adhesives AB
3
(1.59%)
Sweden
Gothenburg
Atracsys Sàrl
Switzerland
Puidoux
Naviswiss AG (0.17%)
Switzerland
Brugg
Plus Orthopedics Holding AG
1
Switzerland
Zug
Smith & Nephew Manufacturing AG
Switzerland
Aarau
Smith & Nephew Orthopaedics AG
1
Switzerland
Zug
Smith & Nephew Schweiz AG
Switzerland
Zug
Smith & Nephew AG
Switzerland
Zug
Smith & Nephew Orthopaedics AG
Aarau Branch
5
Switzerland
Aarau
US
Arthrocare Corporation
United States
Wilmington
Ascension Orthopedics, Inc.
United States
Wilmington
Austin Miller Trauma LLC
United States
Wilmington
Bioventus Inc.
3,6
(26.60%)
United States
Wilmington
Bioventus LLC
3,7
(26.60%)
United States
Wilmington
Blue Belt Technologies, Inc.
United States
Philadelphia
CartiHeal Inc.
United States
Wilmington
Ceterix Orthopaedics, Inc.
United States
Wilmington
Engage Uni LLC
United States
Wilmington
Integrated Shoulder Collaboration, Inc.
United States
Wilmington
IntraFuse LLC Investment
3
(42.16%)
United States
Utah
Leaf Healthcare Inc.
United States
Wilmington
Miach Orthopaedics, Inc
3
(8.25%)
United States
Dover GD
Osiris Therapeutics, Inc.
United States
Timonium
Rotation Medical, Inc.
United States
Wilmington
Sinopsys Surgical, Inc.
3
(1.44%)
United States
Wilmington
Smith & Nephew Consolidated, Inc.
1
United States
Wilmington
Smith & Nephew, Inc.
1
United States
Wilmington
Trice Medical Inc.
3
(0.5%)
United States
Wilmington
19808
Tusker Medical, Inc.
United States
Wilmington
Company name
Country of
operation and
incorporation
Registered
Office
Africa, Asia, Australasia and Other Americas
Smith & Nephew Pty Limited
Australia
Macquarie
Park
Smith & Nephew Surgical Holdings
Pty Limited
1,2
Australia
Macquarie
Park
Smith & Nephew Surgical Pty Limited
2
Australia
Macquarie
Park
Mesoblast Ltd (0.77%)
Australia
Melbourne
Smith & Nephew Comercio de Produtos
Medicos LTDA
Brazil
São Paulo
Smith & Nephew Comercio de Produtos
Medicos LTDA, Diadema Branch
5
Brazil
Diadema
Smith & Nephew Inc.
1
Canada
Ontario
Smith & Nephew Finance Holdings Limited
4
Cayman Islands
George Town
1104
TEAMfund, LP
3
(6.765%)
Cayman Islands
George Town
9008
Smith & Nephew Chile SpA
2
Chile
Chile
Plus Orthopedics (Beijing) Co. Limited
2
China
Shunyi
District,
Beijing
Smith & Nephew Medical (Shanghai) Limited
China
Shanghai
Ao Na Rd
Smith & Nephew Medical (Shanghai) Limited
Beijing Branch
5
China
Dong Cheng
Smith & Nephew Medical (Shanghai) Limited
Chengdu Branch
5
China
Wu Hou
Smith & Nephew Medical (Shanghai) Limited
Guangzhou Branch
5
China
Yue Xiu
Smith & Nephew Medical (Shanghai) Limited
Shanghai Branch
5
China
Jing’an
Smith & Nephew Medical (Shanghai) Limited
Shanghai Second Branch
5
China
Shanghai
Xin Jin Qiao Rd
Smith & Nephew Medical (Suzhou) Limited
China
Suzhou City
Smith & Nephew Orthopaedics
(Beijing) Co., Ltd
China
Ronghua
S&N Holdings SAS
1
Colombia
Bogota
Smith & Nephew Colombia S.A.S
Colombia
Bogota
ArthroCare Costa Rica Srl
Costa Rica
Alajuela
Smith & Nephew Curaçao N.V.
2
Curaçao
Willemstad
Smith & Nephew Beijing Holdings Limited
1
Hong Kong
Hong Kong
Smith & Nephew Limited
Hong Kong
Hong Kong
Smith & Nephew Suzhou Holdings Limited
1
Hong Kong
Hong Kong
Smith & Nephew GBS Private Limited
India
Pune
Smith & Nephew Healthcare Private Limited
India
Mumbai
Smith & Nephew KK
Japan
Tokyo
Smith & Nephew Chusik Hoesia
Korea,
Republic of
Seoul
Smith & Nephew Healthcare Sdn. Bhd
Malaysia
Kuala Lumpur
Smith & Nephew Operations Sdn. Bhd
Malaysia
Kuala Lumpur
Smith & Nephew Services Sdn. Bhd
Malaysia
Kuala Lumpur
Smith & Nephew S.A. de C.V.
Mexico
Mexico City
Smith & Nephew Limited
1
New Zealand
Auckland
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STRATEGIC REPORT
GOVERNANCE
ACCOUNTS
OTHER INFORMATION
Company name
Country of
operation and
incorporation
Registered
Office
Smith & Nephew Superannuation
Scheme Limited
New Zealand
Auckland
Smith & Nephew (Overseas) Limited
Philippines Branch
2,5
Philippines
Manila
Smith & Nephew Philippines, Incorporated
Philippines
Muntinlupa
Smith & Nephew, Inc.
Puerto Rico
San Juan
Smith & Nephew USD Limited Office for
Technical & Scientific Services
5
Saudi Arabia
Riyadh
Branch of Smith & Nephew Regional
Headquarter Company
5
Saudi Arabia
Riyadh
Smith & Nephew Asia Pacific Pte. Limited
1
Singapore
Singapore
Smith & Nephew Pte Limited
Singapore
Singapore
Smith & Nephew (Pty) Limited
1
South Africa
Westville
Smith & Nephew Pharmaceuticals
(Proprietary) Limited
2
South Africa
Westville
Smith & Nephew (Overseas) Limited
Taiwan Branch
5
Taiwan
Taipei
Smith & Nephew Limited
Thailand
Huai Khwang
District,
Bangkok
Smith ve Nephew Medikal Cihazlar Ticaret
Limited Sirketi
Turkey
Istanbul
Smith & Nephew FZE
United Arab
Emirates
Jebel Ali,
Dubai
Smith & Nephew FZE (DHCC Branch)
5
United Arab
Emirates
HealthCare
City, Dubai
The Representative Office Of Smith &
Nephew Asia Pacific Pte. Limited
Vietnam
Ho Chi Minh
City
Smith & Nephew Company Limited
Vietnam
Hanoi City
Smith & Nephew Pte Ltd. Foreign Trade
Representative Office
Indonesia
Kartini
1 Holding company.
2 Dormant company.
3 Not 100% owned by Smith & Nephew Group.
4 Directly owned by Smith & Nephew plc.
5 Branch of a company in Smith & Nephew Group.
6 Represents 26.60% voting rights and 7.5% economic interest.
7 Represents 9.3% economic interest.
Registered Office addresses
UK
Watford
Building 5, Croxley Park, Hatters Lane, Watford,
Hertfordshire, WD18 8YE
Nottingham
80 Mount Street , Cumberland Court, Nottingham ,
NG1 6HH.
York
25, Carr Lane, York, YO26 5HT
Hull
101 Hessle Road, Hull, HU3 2BN
Edinburgh
4th Floor, 115 George Street, Edinburgh, EH2 4JN
Rest of Europe
Vienna
Concorde Business Park, C3, 2320,
Schwechat, Austria
Zaventem
Ikaroslaan 45, 1930 Zaventem, Belgium
Kobenhavn
Kay Fiskers Plads 9, 1. 2300. Kobenhavn S, Denmark
Registered Office addresses
Helsinki
Lentäjäntie 1, 01530 Vantaa, Finland
Neuilly-sur-Seine
40-52, Boulevard du Parc, 92200 Neuilly-sur-Seine,
France
Hamburg
Van-der-Smissen-Strabe, 22767, Hamburg, Germany
Munich
Rosenheimer Straße 116, Munich, 81669, Germany
Tuttlingen
Alemannenstrasse 14, 78532, Tuttlingen, Germany
Dublin
9 Clare Street, Dublin 2, D02 HH30, Ireland
Kfar Saba
17 Atir Yeda St, Kfar Saba, 4464313, Israel
Milan
Sesto San Giovanni (MI) Viale T. Edison 110
CAP 20099 Italy
Luxembourg
1A, rue Jean Piret, L-2350, Luxembourg, Grand-Duchy
of Luxembourg, Luxembourg
Amsterdam 2132NP Bloemlaan 2, 2132NP, Hoofddorp, The Netherlands
Amsterdam 1105BP
Paasheuvelweg 25, 1105BP, Amsterdam,
The Netherlands
Oslo
Snaroyveien 36, FORNEBU, 1364, Norway
Warsaw
Ul Osmanska 12, 02-823, Warsaw, Poland
Forte da Casa
Rua do Parque Tejo, numbers 7, 7-A and 7-B 2625-437
Forte da Casa, Povoa de Santa Iria and Forte da Casa,
Vila Franca de Xira, Portugal
Coimbra
Rua Pedro Nunes, Instituto Pedro Nunes, Edificio IPN-D,
3030-199, Coimbra, Portugal
Moscow
2nd Syromyatnichesky Lane, 9
th
floor, Premises 1,
Room 1, Moscow, 105120, Russian Federation
Puschino
8/1 Stroiteley Street, 142290, City of Puschino,
Moscow Region, Russian Federation
Barcelona
Av. Baix Llobregat, Num 30, 3ª Planta, Campus
Barcelona, 08950 Esplugues de Llobregat, Spain
Molndal
Krokslatts fabriker 39 431 37 Molndal, Sverige, Sweden
Gothenburg
Varbergsgatan 2A/412 65 Göteborg, Sweden
Puidoux
Route du Verney 20, 1070, Puidoux, Switzerland
Brugg
Stahlrain 2, 5200, Brugg, Switzerland
Zug
Theilerstrasse 1A, 6300, Zug, Switzerland
Aarau
Schachenallee 29, 5000, Aarau, Switzerland
US
Wilmington
CT Corporation, 1209 Orange Street, Wilmington
DE 19801, USA
Philadelphia
CT Corporation 1515 Market Street, Philadelphia,
PA 19102, USA
Wilmington 19808
251 Little Falls Drive, Wilmington DE 19808, USA
Dover GD
160 Greentree Drive, Suite 101, Dover, DE, 19904, USA
Timonium
CT Corp. 2405 York Road, Suite 201, Lutherville
Timoniun, MD 21093, USA
Utah
P.O. Box 6008, North Logan, UT 84341, USA
Africa, Asia, Australasia and Other Americas
Buenos Aires
Maipu 1300, 13th Floor, Buenos Aires, Argentina
Macquarie Park
Suite 1.01, Level 1, Building B, Pinnacle Office Park,
4 Drake Avenue, Macquarie Park, NSW 2113, Australia
Melbourne
55 Collins Street, Level 38 Melbourne VIC 3000,
Australia
São Paulo
Av. das Nações Unidas, 14171- 23º andar –
Torre C-Crystal, Vila Gertrudes, São Paulo,
CEP 04794-000, Brazil
8
Group companies
continued
272
Smith+Nephew
Annual Report 2025
Notes to the Company accounts
continued
Company financial statements
continued
9
Subsidiary undertakings exempt from audit
The following UK subsidiaries will take advantage of the audit exemption set out within Section 479A of the Companies Act 2006
for the year ended 31 December 2025:
–
Additive Instruments Limited
(Registration number: 12323687)
–
Smith & Nephew China Holdings UK Limited
(Registration number: 9152387)
–
Smith & Nephew Investment Holdings Limited
(Registration number: 384546)
–
Smith & Nephew Trading Group Limited
(Registration number: 681256)
–
Smith & Nephew USD One Limited
(Registration number: 10428326)
–
TP Limited
(Registration number: SC005366)
Registered Office addresses
Diadema
Avenida Fagundes de Oliveira, 538, Piraporinha,
Mbigucci Diadema Business Park, Module B21 and B22,
City of Diadema São Paulo CEP 09950-300 Brazil
Ontario
1919 Minnesota Court, Suite 403, Mississauga
ON L5N 0C9
Chile
Alonso de Cordova 5320 OF 1401 PS14, Las Condes,
Rol 751-76, Santiago, Chile
Georgetown 1104
c/o Maples Corporate Services Limited, P.O. Box 309,
Ugland house, Grand Cayman, KY1-1104,
Cayman Islands
Georgetown 9008
Walkers Corporate Limited, Cayman Corporate Centre,
27 Hospital Road, George Town, Grand Cayman,
KY1-9008, Cayman Islands
Chao Yang District,
Beijing
Room 17-021, Internal B17 floor, B3-24th floor, No 3
Xin Yuan South Rd, Chao Yang District, Beijing, China
Shunyi District,
Beijing
22 Linhe Avenue, Linhe Economic Development Zone,
Shunyi District, Beijing, 101300, China
Shanghai Ao Na Rd
Part B, 4th Floor, Tong Yong Building, No 188 Ao Na Rd,
Shanghai Free Trade Test Zone, Shanghai, China
Dong Cheng District
Unit B1, 2/F, Tower A, East Gate Plaza No.9,
Dongshong Street Dong Cheng District, Beijing, China
Wu Hou District
No 5. 15th Floor, Unit 1, Building, 1 Li Bao Building,
No 62 North Ke Hua North Rd, Wu Hou District,
Chengdu, China
Yue Xiu District
Unit 50A, Level 17, Tower
2, Lumina International
Centre, 181 Yanjiang Xi Road, Yue Xiu District,
Guangzhou 510623, P.R.China
Jing’an District
Unit 09, Nominal Level 12 (Actual Level 11),
Central Section of Bohua Square Office Tower,
No. 669 Xinzha Road, Jing’an District, Shanghai, China
Shanghai Xin Jin
Qiao Rd
Room 102, Floor 1, Building 3 (B1), No. 1599,
Xin Jin Qiao Road China (Shanghai) Pilot Free Trade Zone,
Shanghai, China
Suzhou City
12, Wuxiang Road, West Area of Comprehensive
Bonded Zone, Suzhou Industrial Park, Suzhou City, SIP,
Jiangsu Province, China
Riyadh
7555- Muhammad AI Barwadi Qurtubah, Riyadh 2474-
13244, Unit Number 301, Kingdom of Saudi Arabia
Ronghua
Unit 1007B, 10th
Floor, Tower A, Courtyard 19,
Ronghua Middle Road, BDA, Beijing, China
Bogota
Calle 100 No. 7 – 33 to 1 P3, Bogota D.C., Colombia
Alajuela
Building B32, 50 meters South of Revisión Téchnica
Vehicular, Province de Alajuela, Canton Alajuela,
Coyol Free Zone, District San José, Costa Rica
Willemstad
Pietermaai 15, PO Box 4905, Curaçao
Hong Kong
Unit 813 – 816, 8/F, Delta House, 3 On Yiu Street,
Shatin, New Territories, Hong Kong
Registered Office addresses
Pune
Podium Floor Tower 4, World Trade Center S No1
Kharadi, Pune, Maharashtra-MH, 411014, India
Mumbai
501-B – 509-B Dynasty Business Park, Andheri Kurla
Road, Andheri East, Mumbai-59, Maharashtra, India
Tokyo
14th Floor, World Trade Center Building South Tower,
2-4-1 Hamamatsucho, Minato-ku, Tokyo, 105-5114,
Japan
Seoul
13th Floor, ASEM Tower, Gangnam-gu 13th Floor,
ASEM Tower, 159-1 Samsung-dong, Seoul, Korea
Kuala Lumpur
Level 25, Menara Hong Leong, NO. 6 Jalan Damanlela
Bukit Damansara Kuala Lumpur W.P. 50490
Kuala Lumpur, Malaysia
Mexico City
Av. Insurgentes Sur, numero 1602, Piso No.7,
Oficina 702, Colonia Credito, Constructor,
Delegacion Benito Juarez, C.P. 03940, Mexico
Auckland
621 Rosebank Road, Avondale, Auckland, 1026,
New Zealand
Manila
6/F Alfaro St, Salcedo Village, Makati City,
Metro Manila, Philippines
Muntinlupa
304 26th, Floor Axis Tower Filinvest Avenue Alabang ,
City Of Muntinlupa, Fourth District,
National Capital Region (Ncr),
San Juan
Edificio Cesar Castillo, Calle Angel Buonomo #361,
Hato Rey, 00917, Puerto Rico
Singapore
29 Media Circle, #06-05, Alice@Mediapolis, Singapore,
138565, Singapore
Westville
30 The Boulevard, Westway Office Park, Westville,
3629, South Africa
Taipei
9F-2, No. 50, Sec. 1, Xinsheng South Road, Zhongzheng
District Taipei City 10059, Taiwan
Huai Khwang
District, Bangkok
No. 33/4 Building A, The 9th Tower Grand Rama 9,
16th Floor, Rama 9 Road, Huai Khwang, Huai Khwang,
Bangkok, 10310, Thailand.
Istanbul
Mahmutbey Mahallesi, 2538. Sokak, Kısık Plaza Apt.
No:6/Z1, Istanbul, Bağcılar, Turkey
Jebel Ali, Dubai
PO Box 16993 LB02016, Jebel Ali, Dubai,
United Arab Emirates
HealthCare City,
Dubai
Floor 1, Building 52, Dubai Healthcare City, Dubai,
United Arab Emirates
Ho Chi Minh City
Room 02, 18th floor, TNR building, 180-192, Nguyen
Cong Tru street, Nguyen Thai Binh Ward, District 1,
Ho Chi Minh City, Vietnam
Hanoi City
R03 and R04, 20th floor, LPB Tower, 210 Tran Quang
Khai, Hoan Kiem Ward, Hanoi City, Vietnam
Kartini
Private Office, 10-133, South Quarter, Tower C, 10th
Floor, Jl. R.A. Kartini Kav. 8
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STRATEGIC REPORT
GOVERNANCE
ACCOUNTS
OTHER INFORMATION
Group information
Business overview and Group history
The Group has a history dating back almost
170 years to the family enterprise of
Thomas James Smith who opened a small
pharmacy in Hull, UK, in 1856. Following his
death in 1896, his nephew Horatio Nelson
Smith took over the management of
the business.
By the late 1990s, Smith+Nephew had
expanded into being a diverse healthcare
company with operations across the
globe, producing various medical
devices, personal care products and
traditional and advanced wound care
treatments. In 1998, Smith+Nephew
announced a major restructuring to focus
management attention and investment
on three global business units – Advanced
Wound Management, Endoscopy and
Orthopaedics – which offered high
growth and margin opportunities. In 2024,
Smith+Nephew announced its current
structure comprising three global business
units, Advanced Wound Management,
Sports Medicine and ENT and
Orthopaedics. You can read more about
our business units on pages 39 to 52.
Smith+Nephew was incorporated and
listed on the London Stock Exchange in
1937 and in 1999 the Group was also listed
on the New York Stock Exchange. In 2001,
Smith+Nephew became a constituent
member of the FTSE 100 index in the UK.
This means that Smith+Nephew is included
in the top 100 companies traded on the
London Stock Exchange measured in
terms of market capitalisation.
Today, Smith+Nephew is a public limited
company incorporated and headquartered
in the UK and carries out business around
the world. Smith+Nephew’s operations are
organised into three global business units:
Orthopaedics, Sports Medicine & ENT and
Advanced Wound Management.
Cybersecurity risk
management and governance
Cyber-attacks are acknowledged to be a
growing threat across all industries. There is
likely to be an increased risk of information
security or cybersecurity incidents,
including cyber-attacks as a result of
increased global tensions. The Group has
adopted a holistic strategy which seeks
to protect our data, people, products,
and customers through a combination
of people, processes, technology, and
governance. As we increasingly incorporate
AI functionality into our systems and
products, we recognise the importance
of robust governance frameworks to
ensure ethical, secure and compliant AI
deployment. We are investing in additional
technologies and engage third-party
expertise for added support. Our dedicated
cybersecurity team is led by a CISSP-
certified Chief Information Security Officer
(CISO) with over 25 years of experience.
We manage the risk of evolving threats
through proactive measures and continuous
updates to our defences. Our hybrid
security strategy covers potential entry
points, including networks, systems,
applications, and devices, which aims to
ensure protection for the Group and create
a resilient defence against cyber threats.
Cyber risk is a Board priority and the
CISO actively participates in Audit
Committee and Executive Committee
meetings. They are also responsible for
offering updates and oversight on the
information and cybersecurity strategy
and reporting material cybersecurity risks
and mitigation strategies to the Board
and its subcommittees. Additionally,
the CISO chairs the Security and Privacy
Steering Committee comprising business
stakeholders, including, but not limited to,
legal, compliance, finance, internal audit,
risk management and human resources.
The committee has overall approval and
sign-off of security and privacy policies,
which allows for focused discussions and
strategy alignment for both security and
privacy. The committee provides necessary
updates to the Board where required.
Related Party transactions
Except for transactions with associates (see Note 22.2 of Notes to the Group accounts),
no other related party had material transactions or loans with Smith+Nephew over the
last three financial years.
Properties
The table below summarises the main properties which the Group uses.
Manufacturing and office facilities in Memphis, Tennessee, US
Wound management manufacturing, research and office facility in Hull, UK
Surgical training and office facilities in Memphis, Tennessee, US
Manufacturing facility in Suzhou, China
Manufacturing facility in Penang, Malaysia
Manufacturing facility in Alajuela, Costa Rica
Manufacturing facility in Oklahoma City, Oklahoma, US
Manufacturing, Office facilities and laboratory space in Fort Worth, Texas, US
The Group Global Operations strategy includes ongoing assessment of the optimal facility footprint.
The Orthopaedics manufacturing facilities in Memphis are largely freehold, a portion of Tuttlingen and
the Advanced Wound Management facilities in Hull are freehold, while other locations are leasehold.
The Group has freehold and leasehold interests in real estate in other countries throughout the world,
but no other is individually significant to the Group. Where required, the appropriate governmental
authorities have approved the facilities.
274
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Annual Report 2025
Other information
The CISO is also a member of several
industry groups, including the Threat
Intelligence and Information sharing,
Manufacturing, NHS Supply Chain and
Life Sciences trust groups which have
been built and delivered by the UK
National Cyber Security Centre (NCSC),
alongside the global industry focused
Health Information Sharing and Analysis
Centre (H-ISAC). Participation in these
environments allows for networking and
sharing of cyber-related risks and issues to
raise cyber resilience across the sector.
The Group’s cybersecurity risk
management processes, including
identification, assessment, documentation
and mitigation, have been integrated into
our overall ERM system. This is achieved
through both the top-down process
driven by our Executive Committee
which have identified Cybersecurity as
one of our principal risks as well as the
bottom-up IT risk register maintained
by members of the cybersecurity team
(refer to page 79 for additional detail on
the Group’s risk management process).
Further, the cybersecurity function has
defined processes for handling information
security and cybersecurity incidents,
incorporating analysis and prioritisation
mechanisms aligned with enterprise risk
management. During an incident, the
information security team continuously
monitors and assesses the impact on
the organisation. Predefined thresholds
trigger the formation of a subcommittee,
bringing together a cross-functional
team which includes information
security, information technology, legal,
compliance and communications
expertise. This subcommittee manages the
assessment of materiality, invocation of
crisis management, Executive Committee
and Board engagement, and assessment of
requirements for regulatory notifications.
The Group’s cybersecurity risk
management processes include
assessment and oversight of AI systems,
ensuring that risks associated with AI
such as data privacy, algorithmic bias,
and unintended outcomes, are identified,
assessed and
documented, with mitigation
plans put in place in alignment with
governance processes. The cybersecurity
function collaborates with AI governance
leads to define processes for monitoring,
incident response, and regulatory
compliance specific to AI technologies.
In the event of a major cybersecurity
incident, including those with a material
impact on the Group, the CISO, supported
by internal and/or external legal advisers
and other third-party specialist advisers as
appropriate, coordinates the engagement
on the cyber incident response with the
executive and crisis management teams.
The CISO is also a key member of the
crisis management team who supports
on coordinating and communicating
with the Board.
Recognising cybersecurity and AI
governance as a multifaceted discipline,
the Group emphasises a continuous
improvement approach, measured
via annual security and AI governance
assessments, penetration testing,
vulnerability scanning and audits using
a dedicated 24x7 security platform
and monitoring through the internal
audit function.
The Group uses a wide variety of
information systems, programmes,
and technology to secure and manage
its business. The Group also develops
and sells digitally enabled products,
some of which connect to networks
and/or the internet. Layered security is
implemented to prevent, detect, and
respond to threats to minimise the risk
and disruption of intrusions. Access to
systems and services are protected using
multi-factor authentication over virtual
private networks (VPN) connected back
into the Group network to safeguard
remote access.
Robust governance practices are in place
across the information security and
cyber function, including an assessment
of suppliers’ and vendors’ security
and compliance posture prior to the
onboarding and activation of any service.
Active monitoring of third-party providers
is implemented on a 24x7 basis, by utilising
a dedicated service via a market-leading
third party, reducing the risk of supply
chain attacks.
The information and cybersecurity function
conducts an annual mandatory information
security awareness training programme
for Group employees, covering topics such
as physical security, email security, data
privacy, ransomware guidance, phishing,
AI governance, ethical AI use, responsible
data handling in AI-enabled environments,
and general online safety.
While the Group strives for effective
governance and measures, there is no
assurance against future interruptions
that could potentially disrupt business
operations, divert staff resources and
attention and materially adversely
affect the organisation’s performance.
Throughout 2025, there were no
cybersecurity incidents identified which
materially affected or are reasonably likely
to materially affect the Group’s business
strategy, results of operations or financial
condition and no incidents have been
reported to regulatory authorities during
this period.
It is not possible to eliminate all risks
from cybersecurity threats or provide
assurances that we have not experienced
an undetected cybersecurity incident.
For more information about these risks,
please see page 280 ‘Risk Factors –
Cybersecurity’ in this Annual Report.
Risk factors
There are known and unknown risks and
uncertainties relating to Smith+Nephew’s
business. The factors listed on pages
275 to 284 could cause the Group’s
business, financial position and results
of operations to differ materially and
adversely from expected and historical
levels. In addition, other factors not listed
here that Smith+Nephew cannot presently
identify or does not believe to be equally
significant could also materially adversely
affect Smith+Nephew’s business, financial
position or results of operations.
Global supply chain
The Group’s manufacturing production
is concentrated at several main facilities
including Memphis, Mansfield, Columbia
and Oklahoma City in the US, Hull in
the UK, Aarau in Switzerland, Suzhou in
China, Penang in Malaysia and Alajuela in
Costa Rica. If major physical disruption
or unavailability of critical system
infrastructure and applications took place
at any of these sites, it could adversely
affect the results of operations.
Disruptions to our supply chain, as a result
of geopolitical events such as changes in
trade policy, tariffs, conflicts such as those
in Ukraine and in the Middle East, and the
resulting change in access to and/or cost of
supply channels, freight, raw materials and
components have had and may continue
to have an adverse effect on the Group’s
results and operations.
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Physical loss and consequential loss
insurance carried to cover major physical
disruption to these sites is subject to limits
and deductibles, generally does not cover
pandemic or war-related disruptions, and
may not be sufficient to cover catastrophic
loss. Management, forecasting and
production planning for inventory is
complex and failures in operational
execution could lead to excess inventory
or individual product shortages. Further,
as the Group continues to transform its
supply chain network, warehousing and
distribution functions, there is a risk that,
if the transition, transformation and
ongoing operations do not go as planned,
the supply of products may be disrupted
and impact performance.
The Group is reliant on certain key
suppliers of raw materials, components,
finished products and packaging materials
and, in some cases, on a single supplier.
Disruptions in the supply chain and
operations of the Group’s suppliers,
increased freight costs and cycle times
due to disruptions to shipping routes could
result in a further increase in the Group’s
costs of production and distribution.
We cannot guarantee that third-party
manufacturers or suppliers will be able
to meet our near-term or long-term
manufacturing or supply requirements of
certain raw materials, including but not
limited to rare earth minerals, component
parts and products, which could result in
lost sales and have an adverse effect on
our business.
Ongoing shiſts in global trade dynamics
coupled with regional tensions and
conflicts, including in Ukraine and the
Middle East, continue to reshape the
geopolitical landscape and impact the
Group’s cost of production and distribution.
The pace of changing international relations
may continue to increase the potential for
further significant changes in trade policy,
sanctions and countersanctions, tariffs,
and import and export controls. We may
be exposed to risks arising from tariffs,
customs duties, trade remedies, import
and export controls, and other changes
in global trade policy, including retaliatory
measures between governments which
may negatively impact our global supply
chain. Governments may impose new
tariffs, duties or surcharges, or increase
existing ones, on finished medical devices,
sub-assemblies, raw materials, or key
components that we import or export.
These measures may apply broadly or
may be targeted at particular countries,
industries or product categories, including
medical devices and related technologies.
Such tariffs could increase our cost of
goods sold, particularly where we rely on
single-source or regionally concentrated
suppliers; reduce or eliminate existing
pricing advantages for certain products or
geographies; require us to absorb additional
costs, as our ability to pass tariff-related
increases on to customers may be limited
by contractual arrangements, competitive
pressures, reimbursement constraints or
regulatory pricing regimes; and negatively
impact our gross margins, operating
margins and cash flows. Even where tariffs
are initially announced as temporary or
subject to review, they may remain in effect
longer than expected, be expanded, or be
replaced with alternative trade restrictions
that have a similar economic effect.
We operate a complex global supply
chain involving multiple tiers of suppliers,
contract manufacturers and logistics
providers. Tariffs or other trade restrictions
may require us to reconfigure our sourcing,
manufacturing or distribution footprint,
including by relocating production,
qualifying alternative suppliers, or
redesigning products to comply with
country-of-origin rules.
These actions may require significant
capital investment, management
attention and time; lead to manufacturing
inefficiencies, duplication of facilities or
reduced economies of scale; result in
operational disruptions, quality issues or
delays while new suppliers or facilities
are qualified and approved by regulators;
and increase our exposure to other risks,
including labour availability, geopolitical
instability, currency volatility and local
regulatory complexity. There can be no
assurance that any mitigation strategies
we pursue will be successful, timely, or
cost-effective.
The Group will, from time to time,
including as part of ongoing continuous
improvements in Operations and
Commercial excellence, outsource or
insource the manufacture of components
and finished products to or from third
parties and will periodically relocate the
manufacture of product and/or processes
between existing and/or new facilities.
In addition, the transition or interaction
of the Group’s systems with third-party
supplier systems or the information
held by the supplier may be subject to
cybersecurity or privacy breach or attack
which may negatively impact the Group’s
financial performance and reputation.
Failure to effectively manage these
risks and execute on these programmes
may negatively impact the Group’s
performance, revenue and operating profit.
Natural disasters, weather and climate
change-related events and unavailability
of critical system infrastructure and
applications can also lead to manufacturing
and supply delays, product shortages,
excess inventory, unanticipated costs,
lost revenues and damage to reputation.
In addition, the pace of development
and expansion of environmental and
sustainability regulations globally,
coupled with more active enforcement
of regulations, can impact the Group’s
ability to manufacture, sterilise and
supply product. In addition, the Group’s
physical assets and supply chains are also
vulnerable to weather and climate change
(e.g. sea level rise, increased frequency and
severity of extreme weather events, and
stress on water resources). Where such
events impact a manufacturing facility,
the Group may be unable to manufacture
products. In this case, if there are
insufficient manufacturing alternatives
for the relevant products, the Group may
not be able to supply those products to
its customers.
The Group continues to be exposed to
fluctuations in salary and wage costs for
its employees and contractors due to
increased costs of living, market forces
and the impact of inflation in the markets
in which it operates. This, combined with
labour attrition and longer cycle times to
backfill roles, may adversely impact the
Group’s performance.
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Other information
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Regulation continues to move at pace
and requirements of global regulatory
agencies have become more stringent
in recent years and the Group expects
this to continue. There continues to be
significant capacity constraints in terms of
the responses to be provided by regulators,
notified bodies and other third parties to
the Group’s Quality and Regulatory Affairs
team to enable compliance with FDA and
MDR, given the reduction in workforce at
the FDA and the small number of notified
bodies certified under MDR. This could
continue to cause delays for medical device
approvals for the industry more broadly
and may result in delays for patients.
Suppliers must provide materials and
perform services in compliance with
legal and regulatory requirements and in
accordance with the Group’s standard
quality requirements. The increase in
regulation in the area of Environmental,
Social and Governance (ESG) matters in
many markets in which the Group operates
may also require suppliers to expend
additional resource in their business and
incur additional costs to provide required
data sets and implement additional policies
and procedures which could increase
the supplier’s cost of doing business and
subject the supplier to fines, penalties
and operational disruption for failure to
comply with applicable laws, regulations
and reporting requirements. A supplier’s
failure to comply with legal or regulatory
requirements or otherwise meet expected
quality standards could create reputational
harm and liability for the Group and
adversely affect Group sales.
The Group may be forced to pay higher
prices to obtain raw materials and/or to
sterilise its products and may not be able
to pass on those costs to its customers in
the form of increased prices for its finished
products. This risk is particularly relevant in
the medical devices sector due to complex
supply chains, increasing regulation
and enforcement and the potential for
healthcare budgets globally to be reduced,
or to grow at a slower rate than demand
for healthcare services. As certain raw
materials may become unavailable and/
or capacity for sterilisation services may
become increasingly constrained beyond
current capacity levels, in particular
due to supply challenges and increased
regulation and enforcement, there can
be no assurance that the Group will be
able to obtain suitable and cost-effective
substitutes. Interruption of supply
caused by these or other factors has had
and may continue to have a negative
impact on Smith+Nephew’s revenue and
operating profit.
The Group operates with a global remit
and the speed of technological change in
an already complex manufacturing process
leads to greater potential for disruption.
Additional risks to supply include failure
to implement appropriate sales and
operational planning and forecasting and
inadequate supply chain or manufacturing
capacity to support customer demand
and growth. Failure to appropriately
rightsize manufacturing capacity based on
forecasting failure and inaccuracy could
lead to unnecessary increases in inventory
levels and resultant costs for the business,
having a negative impact on Group
operating profit.
Widespread outbreaks of infectious
diseases or pandemics and related
restrictions on society and the operation of
the Group’s business, could have a negative
impact on the Group’s revenue, profit and
outlook. These include, but are not limited
to, declines in and cancellations of elective
procedures at medical facilities, reduction
in staffing and other support within
institutions, disruptions at manufacturing
facilities and disruptions in supply and
other commercial activities due to travel
restrictions and government restrictions
on exports.
The Group seeks to manage supply chain
risks through a combination of network
design, supplier management, operational
planning and continuity arrangements;
however, the complexity of the Group’s
global supply chain means that such
measures may not prevent or fully mitigate
the impact of disruption.
Strategy and commercial execution
Smith+Nephew launched its RISE strategy
in December 2025. Strong commercial
execution requires effective cross-
functional alignment, accountability,
engagement and communication
across the Group within embedded
governance structures and frameworks.
Effective engagement with customers,
suppliers and other stakeholders is
also a crucial factor to ensure strong
commercial execution. Failure to deliver
on customer requirements due to
inadequate commercial execution may
result in loss of market share and impact
the financial performance and reputation
of the Company. Failure to leverage the
advantages of cross-business unit selling
within the existing or new customer base
and institutions, failure to effectively
implement the Group’s programmes within
appropriate governance frameworks, or
failure to understand or take into account
customer, supplier and stakeholder needs
and requirements could adversely affect
the Group’s performance.
Failure to execute on Group strategy to
the satisfaction of the Group’s investors
could result in investor divestment of stock
and failure to obtain new investment.
Failure to deliver value creation in line with
shareholder expectations may also result
in additional shareholder pressure on the
Board and Executive Management to make
fundamental changes to the structure and
strategic focus of the organisation.
The Group’s business requires continuous
improvement and depends on its ability
to execute business change programmes
at pace and to embed continuous
improvement in business-as-usual
activities aligned to the RISE strategy,
retaining strong governance, KPIs and
metrics in order to hold management and
employees to account. The pace and scope
of the Group’s continuous improvement
initiatives may increase execution risk for
the programmes as well as for the Group’s
business-as-usual activities. The Group’s
business depends on its ability to plan for
and be resilient in the face of events that
threaten one or more of its key locations.
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Trade policy uncertainty could adversely
affect planning, forecasting and investment
decisions. Ongoing uncertainty regarding
trade negotiations, tariff regimes and
geopolitical relationships makes it more
difficult for the Group to plan, forecast
and allocate capital efficiently. Sudden or
unpredictable changes in trade policy could
require rapid strategic and operational
responses, impair long-term strategic
initiatives, or render existing investments
less attractive or uneconomic. In addition,
changes in trade policy may mean that the
Group’s strategy may need to develop to
mitigate other risks, including inflationary
pressures, foreign exchange fluctuations,
interest rate changes and broader
macroeconomic conditions, amplifying
their overall impact on our business.
Factors affecting results of
operations
Government economic, fiscal, monetary
and political policies are all factors that
materially affect the Group’s operation or
investments of shareholders. Other factors
include sales trends, currency fluctuations
and innovation. Each of these factors is
discussed further in the business unit
reviews on pages 39 to 52, the Financial
review on pages 18 to 25 and the Taxation
information for shareholders on pages 295
to 297.
Highly competitive markets
The Group competes across a diverse
range of geographic and product markets.
Each market in which the Group operates
contains a broad range of competitors,
including specialised and international
corporations. Failure to pivot in the event
of any significant in-market changes
in competitor activity or necessary
changes to our business model, whether
due to public policy, legal or regulatory
requirements or other factors, could have
a negative impact on the Group’s financial
performance and reputation.
Significant product innovations, technical
advances or the intensification of price
competition by competitors could
adversely affect the Group’s operating
results. Some competitors may have
greater financial, marketing and other
resources than Smith+Nephew due to
the size and scale of their businesses.
These competitors may be able to initiate
technological advances in the field, deliver
products on more attractive terms, more
aggressively market their products or
invest larger amounts of capital and
research and development (R&D) into
their businesses. Failure to differentiate
the Group’s product and service offerings
within each relevant market, and failure to
address and manage challenges related to
the size and scale of the Company could
impact the financial performance and
reputation of the Group.
Further consolidation of competitors
could adversely affect the Group’s ability
to compete with larger companies due
to insufficient financial resources. If any
of the Group’s businesses were to lose
market share or achieve lower than
expected revenue growth, there could
be a disproportionate adverse impact on
the Group’s share price and its strategic
options. Competition exists among
healthcare providers to gain patients on
the basis of quality, service and price.
There has been some consolidation in the
Group’s customer base and this trend is
expected to continue. Some customers
have joined group purchasing organisations
or introduced other cost containment
measures that could lead to downward
pressure on prices or limit the number of
suppliers in certain business areas, which
could adversely affect Smith+Nephew‘s
results of operations and hinder its
growth potential.
Tariffs and related trade actions may
lead to retaliatory measures by affected
countries, including tariffs on US, European,
Chinese or other foreign-origin medical
devices, procurement restrictions,
localisation requirements, or informal
barriers to market access. These measures
could make our products less competitive
on price relative to local or alternative
suppliers; result in lost tenders, reduced
order volumes or delayed purchasing
decisions by hospitals, distributors or
government customers; accelerate local-
for-local sourcing initiatives by customers
or governments that disadvantage
multinational suppliers; and reduce overall
market demand in affected regions due to
broader economic disruption or healthcare
budget pressures. The impact of such
measures may be difficult to predict and
may vary significantly by product line,
geography and customer segment.
Relationships with
healthcare professionals
We seek to maintain ethical working
relationships with respected physicians
and medical personnel in healthcare
organisations, such as hospitals and
universities, who assist in product R&D.
We rely on these professionals to assist
us in the development and improvement
of proprietary products. If we are unable
to maintain these relationships due to
regulatory considerations, hospital access
restrictions for non-patients or for other
reasons, our ability to develop, market and
sell new and improved products could be
adversely affected.
Customer and other stakeholder
sustainability expectations
The Group’s customers continue to develop
more stringent sustainability requirements
that they request or expect the Group
to implement or adhere to in addition to
the laws and regulations applicable to
the Group. A failure to meet customers’
requirements or expectations may
adversely impact the Group’s financial
performance, or result in the loss of a
prospective customer should they find
our sustainability efforts insufficient.
Increased investment related to customer
requests in this area may impact
operating profit.
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Other information
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Pricing and reimbursement
Dependence on government
and other funding
In most global markets, expenditure on
medical devices is ultimately controlled
to a large extent by governments and
healthcare systems. Funds may be made
available or withdrawn from healthcare
budgets depending on government policy.
The Group is therefore dependent on
future governments providing increased
funds commensurate with the increased
demand arising from demographic trends.
Pricing of many of the Group’s products
is governed in most markets by
governmental reimbursement authorities.
Increasing numbers of initiatives sponsored
by government agencies, legislative bodies
and the private sector to relieve the
pressure on healthcare budgets and limit
the growth of healthcare costs, including
price regulation on products or entire
procedures, value and volume-based
procurement initiatives, excise taxes and
competitive pricing are being implemented
at pace in markets where the Group
has operations. The Group is exposed
to government policies favouring locally
sourced or manufactured products in many
markets in which it operates, impacting its
ability to compete effectively and
gain share which can negatively impact
Group revenues and operating profit.
The Group is increasingly exposed to
changes in reimbursement policy, tax
policy and pricing, in large part as a result
of financial pressure on governments and
hospitals caused by recession and inflation
in its markets, which may have an adverse
impact on revenue and operating profit.
This includes, for example, the potential
for changes to US rules related to local
coverage determinations for the use of
skin substitutes in outpatient settings.
Reimbursement codes are increasingly
more widely interpreted to provide for
remote delivery of healthcare services
indicating a continued trend to shiſt site
of care and manage related healthcare
budgets away from traditional inpatient
treatment. There may also be an increased
risk of adverse changes to government
funding policies arising from deterioration
in macroeconomic conditions from time
to time in the Group’s markets.
The Group must adhere to the rules
laid down by government agencies that
fund or regulate healthcare, including
extensive and complex rules in the US.
Failure to do so could result in fines,
litigation, reputational damage and/or loss
of customers and future funding.
The rise in geopolitical uncertainty
over the past 12 months, including US
government announcements on tariffs
on products manufactured in several
jurisdictions including China, Mexico and
Canada, the trade dynamics between
global powers and the increased potential
for significant changes in public policy
and trade policy (including tariffs, import
and export controls), could result in a
significant negative impact on pricing
and reimbursement and the financial
performance of the Group. The US
government may in the future pause,
impose or increase tariffs, and countries
subject to such tariffs may impose
reciprocal tariffs or other restrictive trade
measures in response, which could increase
uncertainty and associated risks relating to
the Group’s global operations.
Procurement and supply chain
verification processes
Global economic and inflationary pressures
and the commoditisation of entire product
groups have led to an increase globally
in price-driven approaches to customer
procurement processes and tenders, such as
the value-based procurement programme
in China and further consolidation of
customer buying groups. Non-clinical staff
are oſten key decision makers in customers’
procurement processes, with access to
these decision makers being limited
for some customers. These factors can
adversely impact the pricing that the
Group achieves for its products.
Due to geopolitical conflicts and events
and increased regulation relating to
sustainability, supplier verification
and trade compliance, procurement
processes are now required to evaluate
and demonstrate the provenance of raw
materials, components and products
at many levels in the medical product
supply chain. Given the high level of
complexity and multiple tiers within the
industry supply chain, there is a risk that
the Group is unable to verify the ultimate
provenance of certain materials which
may result in fines, penalties, seizure of
goods, reputational harm and impact to
performance of the Group.
New product innovation, design
and development, including
intellectual property
Development and introduction
of new products
The medical devices industry has
a high level of innovation and new
product introduction. In order to remain
competitive, the Group must continue to
develop innovative products that satisfy
customer needs and preferences, meet
unmet needs, and/or provide cost or other
advantages. Developing new products is
a costly, lengthy and uncertain process.
The Group may fail to innovate due to
insufficient R&D investment, an R&D
skills gap or poor product development.
A potential product may not be brought to
market or not succeed in the market for
any number of reasons, including failure to
work optimally, failure to receive regulatory
approval, failure to be cost-competitive,
infringement of patents or other
intellectual property rights and changes
in consumer demand.
The Group’s products and technologies
are also subject to marketing and pricing
challenge by competitors as they develop
and promote products in the various
markets in which the Group operates.
If the Group’s new products do not remain
competitive with those of competitors, the
Group’s market share and revenue could
decline. The Group maintains reserves for
excess and obsolete inventory resulting
from the potential inability to sell its
products at prices in excess of current
carrying costs. Marketplace changes
resulting from the introduction of new
products or surgical procedures may cause
some of the Group’s products to become
obsolete. The Group makes estimates
regarding the future recoverability of
the costs of these products and records
a provision for excess and obsolete
inventories based on historical demand,
expiration of sterilisation dates and
expected future trends. If actual product
life cycles, product demand or acceptance
of new product introductions are less
favourable than projected by management,
additional inventory write-downs may
be required.
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All new products that the Group develops
need to be designed and manufactured in a
sustainable manner. A failure in this aspect
may impact the willingness of customers to
purchase the new products and adversely
impact the Group’s ability to continue
selling the product.
Where the Group has critical gaps in its
product portfolio that are not filled by new
products, there is a risk that the Group
will lose market share to competitors that
can offer a more innovative or broader
product portfolio.
Innovative products in the wider healthcare
industry have the potential to disrupt
the medical device industry, especially
as the pharmaceutical sector looks to
accelerate R&D through the use of AI.
Investor perception of, or the actual impact
of, compounds, such as glucagon-like
peptide-1 (GLP-1) receptor agonists, on
the medical device industry could have a
negative impact on the industry as a whole
as well as a potential negative impact on
the strategy and financial performance of
the Group.
Proprietary rights and patents
Due to the technological nature of medical
devices and the Group’s emphasis on
serving its customers with innovative
products, the Group has been subject to
patent infringement claims and is subject
to the potential for additional claims.
Claims asserted by third parties regarding
infringement of their intellectual property
rights, if successful, could require the
Group to expend time and significant
resources to engage in dispute resolution
and, if unsuccessful, pay damages, develop
non-infringing products or obtain licences
to the products which are the subject
of such litigation, affecting the Group’s
growth and profitability.
Smith+Nephew protects its intellectual
property and opposes third-party
patents and trademarks where it deems
appropriate. If Smith+Nephew fails
to protect and enforce its intellectual
property rights effectively, its competitive
position could suffer, which could
negatively impact performance. In addition,
intellectual property rights may not be
protectable or enforceable to the same
extent in all countries in which
the Group operates.
Cybersecurity
Reliance on information technology
and cybersecurity
The Group uses a wide variety of
information systems, programmes and
technology to manage its business.
The Group also develops and sells
certain products that are or will be
digitally enabled including connection
to networks and/or the internet.
The Group’s systems and the systems
of the entities it acquires are vulnerable
to a cyber-attack, theſt of intellectual
property, malicious intrusion, loss of data
privacy or other significant disruption.
Geopolitical instability may lead to an
increase in sophistication of bad actors/
threat profile. The Group’s systems have
been and will continue to be the target
of such threats, including as a result of
remote working. Inadequate consideration
of cybersecurity in the design of new
products, systems and/or processes would
increase the potential for vulnerabilities.
There is increasing government focus
on cybersecurity including changes in
the regulatory environment which may
lead to increased enforcement and
reporting obligations. Increasing demand
for cybersecurity expertise could impact
the Group’s ability to attract and retain
cybersecurity talent.
Cybersecurity is a multifaceted discipline
covering people, process and technology.
It is also an area where more can always be
done; it is a continually evolving practice.
There is no assurance that the Group’s
ongoing commitment to prevent, detect
and respond to cyber incidents and
potential threats will prove effective.
As a result, the Group could lose
customers, have disputes with healthcare
professionals, suffer regulatory sanctions
or penalties, experience increases in
operating expenses or an impairment in its
ability to conduct its operations, patients
or employees could be exposed to financial
or medical identity theſt or suffer a loss of
product functionality, and the reputation
and performance of the Group could be
materially adversely affected.
Although the Company maintains
insurance coverage for various business
continuity risks, all costs or losses incurred
would not be fully insured.
Artificial intelligence technologies
The Group has an enterprise strategy
for the use and deployment of AI which
is outlined on page 31. The regulatory
landscape for AI is rapidly evolving, and
various governments are exploring or
implementing frameworks to govern the
development, deployment, and use of
AI. Our AI Governance Group monitors
regulations and guidance for changes
to the regulatory landscape that may
be imposed on AI systems. We may
need to make material changes to our
technology, development or deployment
strategies to align to the developing
regulatory environment. Compliance with
AI regulations may be costly and could
significantly impact our operations,
financial condition, or our ability to offer
AI-driven products and services.
Our AI technologies rely on large volumes
of data, which must be accurate, current,
and free of biases to yield reliable results.
If our data is insufficient, outdated, or
biased, it could lead to unreliable outputs,
loss of customer trust, and potential
regulatory scrutiny. We may be subject
to liability if our AI tools inadvertently
yield biased results or impact certain
groups disparately, leading to legal and
reputational risks.
AI development and deployment
involves handling vast amounts of data,
including potentially sensitive or personal
information. Cyber-attacks, data breaches,
or accidental exposure of data could result
in substantial harm to our customers and
business, as well as regulatory penalties.
Non-compliance with data protection
laws, such as the General Data Protection
Regulation (GDPR) and the California
Consumer Privacy Act (CCPA), may
expose us to significant fines and legal
consequences, especially as we scale AI-
related activities.
As AI becomes more integral to our
business, the potential for unexpected
outcomes, including unintended or harmful
consequences, increases. For example,
erroneous predictions or recommendations
made by our AI systems – if not adequately
overseen by a human review – could
negatively impact our clients or end-
users. These risks could result in litigation,
reputational harm and liability, particularly
if such outcomes are deemed preventable
or foreseeable.
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Other information
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AI is an intensely competitive field with
rapid innovation and technological
advancements. Protecting any AI-related
intellectual property will be challenging,
as new developments may quickly
render existing protections obsolete.
Competitors may also develop similar
or superior AI capabilities, impacting our
market position and revenue.
The effective development and
deployment of AI requires skilled personnel
and infrastructure investment. An inability
to attract or retain qualified individuals
could hinder our ability to innovate or scale
our AI efforts. Additionally, failures in AI
infrastructure or operational shortcomings
could disrupt business functions, impair
performance and damage our competitive
standing, leading to both financial and
reputational risk and harm.
Reliance on third-party AI tools and
external vendors introduces compliance
and security risks, as insufficient
transparency or inadequate controls in
their systems could lead to regulatory
breaches or data exposure. Vendor non-
compliance with emerging AI regulations
or contractual obligations may result in
operational disruptions, financial penalties,
and reputational harm for the Group.
These risk factors are inherently uncertain,
and the potential impacts outlined above
may vary based on future technological
developments, regulatory actions, and
market conditions. There is no guarantee
that our AI-related initiatives will be
successful or that we will be able to
mitigate the risks associated with AI
technologies effectively.
Legal and compliance risks including
international regulation, product
liability claims and loss of reputation
Global regulation
The Group operates globally and is
subject to extensive complex legislation,
regulation, and reporting requirements,
including without limitation in respect
of fraud, anti-bribery and corruption,
data protection, trade compliance and
corporate governance and sustainability in
each country in which the Group operates.
The Group’s global operations are governed
by the UK Bribery Act and the US Foreign
Corrupt Practices Act which prohibit
the Group or its representatives from
making or offering improper payments to
government officials and other persons
or accepting payments for the purpose of
obtaining or maintaining business.
The Group’s international operations
which operate through distributors and
agents increase our Group exposure
to these risks. In this regard, the Group
is investigating allegations of possible
violations of anti-corruption laws, including
in India, and responding to related requests
for information from the United States
Securities and Exchange Commission (SEC).
It is not possible to predict the nature,
scope (or possible involvement of other
governmental authorities), or outcome of
the investigations, including the extent
to which, if at all, this could result in any
liability to the Group.
The Group undertakes investigations into
allegations of possible violations of laws
and regulations, supported by external
counsel where appropriate. It is not
possible to predict the nature, scope or
outcome of investigations, including the
extent to which, if at all, this could result
in any liability or reputational harm to
the Group.
The Group is required to comply with
the requirements of data privacy laws
and regulations in the markets in which
it operates regarding the handling of
personal information. The complexity
of legal, regulatory, risk and governance
issues associated with the use and
implementation of AI technologies being
developed at pace, together with the likely
increase in regulation of AI technologies
poses additional legal, compliance and
regulatory challenges for the Group to
navigate. As privacy and AI continue to
be a focus for regulators and consumers
particularly in respect of health information
and healthcare technologies, new and
enhanced privacy and AI laws and
regulations and enforcement frameworks
continue to develop globally.
Increase in geopolitical tensions and
events, such as conflict in Ukraine and
the Middle East, have led to an increase
in sanctions and trade compliance
programmes which the Group is required
to comply, and which oſten require
evaluation and implementation at
pace. Regulatory and compliance risks
may increase as trade policies become
increasingly complex. An evolving and
fragmented global trade environment
increases the complexity of compliance
with customs, export controls, sanctions
and related regulations. Failure, or
perceived failure, to comply with these
requirements could result in fines,
penalties, seizures or delays of shipments;
increased scrutiny from customs and
regulatory authorities; reputational harm;
and diversion of management resources.
Compliance costs may increase as we are
required to implement additional controls,
monitoring systems and personnel to
address these risks.
Ensuring compliance with all evolving laws,
regulations, and reporting requirements
on a global basis may require the Group
to change or develop its current business
models and practices and may increase its
cost of doing business. Despite efforts to
manage and mitigate legal and compliance
risk across the organisation, there is a risk
that the Group may be subject to fines and
penalties, litigation and reputational harm
in connection with its activities where
breaches are found to have occurred.
Failure to comply with the requirements
of laws, regulations and reporting
requirements could adversely affect the
Group’s business, reputation, financial
condition or results of operations.
Operating in multiple jurisdictions also
subjects the Group to local laws and
regulations, including without limitation
relating to tax, pricing, reimbursement,
regulatory requirements, product
safety, and varying levels of protection
of intellectual property. This exposes
the Group to additional risks and
potential costs.
Continued stakeholder focus from
customers, suppliers, investors, regulators
and governments on ESG matters means
that the Group is required to evaluate and
ensure compliance with laws, regulations
and reporting requirements in these
areas and balance any competing or
conflicting interests between stakeholders
in order to ensure stakeholder needs and
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OTHER INFORMATION
requirements are met. Failure to do so
could subject the Group to regulatory fines
and penalties, including potential loss of
eligibility as a US government contractor,
and expose the Group to reputational risk.
Product liability claims and loss
of reputation
The development, manufacture and sale
of medical devices entails risk of product
liability claims or recalls. Design and
manufacturing defects with respect
to products sold by the Group or by
companies it has acquired could damage
or impair the repair of body functions.
The Group may become subject to liability,
which could be substantial, because of
actual or alleged defects in its products.
In addition, product defects could lead to
the need to recall from the market existing
products, which may be costly and harmful
to the Group’s reputation. There can be no
assurance that customers, particularly in
the US, the Group’s largest geographical
market, will not bring product liability or
related claims that would have a material
adverse effect on the Group’s financial
position or results of operations in the
future, or that the Group will be able to
resolve such claims within insurance limits.
The Group may also be subject to legal
proceedings which may involve mass tort
lawsuits. The outcome of any such lawsuit
is inherently uncertain but, if the claimants
are successful, awards for damages may
be significant.
As at 31 December 2025, a provision of
$97m is recognised relating to the present
value of the estimated costs to resolve all
unsettled known and unknown anticipated
metal-on-metal hip implant claims globally.
See Note 17 to the Group accounts for
further details.
Financial reporting, compliance
and control
The Group’s financial results depend on its
ability to comply with financial reporting
and disclosure requirements, comply
with tax laws, appropriately manage
treasury activities and avoid significant
transactional errors and customer
defaults. Failure to comply with the
Group’s financial reporting requirements
or relevant tax laws can lead to litigation
and regulatory penalties and sanction,
and ultimately to potential material loss to
the Group. Potential risks include failure
to report accurate financial information
in compliance with accounting standards
and applicable legislation, failure to comply
with current tax laws, failure to manage
treasury risk effectively and failure to
operate adequate financial controls over
business operations.
Political and economic
World economic conditions
Demand for the Group’s products is driven
by demographic trends, including the
ageing population and the incidence of
osteoporosis and obesity. Supply of, use
of and payment for the Group‘s products
are also influenced by world economic
conditions which could place increased
pressure on demand and pricing,
adversely impacting the Group’s ability
to deliver revenue and operating profit
growth. The conditions could favour
larger, better capitalised groups, with
higher market shares and margins. As a
consequence, the Group’s prosperity is
linked to general economic conditions
and there is a risk of deterioration of the
Group’s performance and finances during
adverse macroeconomic conditions.
Economic slowdowns may reduce elective
surgeries and delay hospital capital
purchases, adversely impacting sales.
The impact of geopolitical conditions
such as the conflicts in Ukraine and the
Middle East on global economies and
financial markets may trigger a recession or
slowdown in various markets in which the
Group operate which would significantly
reduce customer capital spending and
customer financial strength.
Economic conditions worldwide continue
to create several challenges for the
Group, including the US government’s
approach to trade policy, tariffs, increased
global sanctions and countersanctions
in response to local or global conflicts,
heightened inflation and pricing pressure
(arising across the costs of raw materials,
freight and employee salaries and wages),
increasing tax rates, significant declines
in capital equipment expenditures at
hospitals and increased uncertainty over
the collectability of government debt.
These factors could have an increased
impact on growth in the future.
The Group is increasingly seeing
sustainability targets and public policies
being promulgated in the markets in
which the Group operates as well as
by its customers, suppliers and other
stakeholders. A failure to meet these
targets and policies could impact the
Group’s sales and growth in those markets
through limited access to tenders and/or
reduced market share.
Political uncertainties
The Group operates on a worldwide basis
and has distribution channels, agents and
purchasing entities in over 100 countries.
Political upheaval in some of those
countries or in surrounding regions may
impact the Group’s results of operations.
Political changes in a country could prevent
the Group from receiving remittances
of profit from a member of the Group
located in that country or from selling its
products or investments in that country.
Furthermore, changes in government policy
regarding preference for local suppliers,
tariffs, import quotas, taxation or other
matters could adversely affect the Group’s
revenue and operating profit.
Conflicts such as those in Ukraine and the
Middle East, economic sanctions, terrorist
activities or other conflict could also
adversely impact the Group whether in
terms of increased compliance resources
and cost to serve, increased freight cycle
times, market exit, disruption to operations
and/or reputational damage.
The scope, duration and ultimate impact
of tariffs and other trade measures
depend on factors that are inherently
uncertain and largely outside our
control, including political developments,
international negotiations, and actions
taken by governments or supranational
bodies. While we actively monitor trade
developments and may take steps to
mitigate adverse effects, we may not be
able to fully offset the impact of tariffs or
related trade restrictions on our business,
results of operations or financial condition.
Financial Markets
The Group has financial indebtedness
which could reduce business flexibility.
Deterioration of business performance or
global economic conditions could restrict
access to adequate debt funding and/
or cause a deterioration in credit rating.
This could also increase the cost of funding
and reduce access to liquidity. Failure to
maintain strong investment grade ratings
would adversely affect the Group’s cost of
funding and could adversely affect liquidity
and access to capital markets.
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Risk factors
continued
Other information
continued
Taxation
The Group operates a global business and
is therefore required to comply with tax
legislation in multiple jurisdictions. There is
the potential for an adverse impact on
the Group’s financial performance due to
significant tax rate changes, or broadening
of the tax base, in key jurisdictions in which
the Group operates. These include OECD
Pillar Two (as outlined on page 225) and
the potential for further US tax legislation.
These external factors may require the
Group to adjust its operating model.
Quality and regulatory
Regulatory standards and compliance
in the healthcare industry
Business practices in the healthcare
industry are subject to regulation and
review by various government authorities.
In general, the trend in many countries in
which the Group does business is towards
higher expectations and increased
enforcement activity by governmental
authorities. While the Group is committed
to doing business with integrity and
welcomes the trend to higher standards
in the healthcare industry, the Group and
other companies in the industry have
been subject to investigations and other
enforcement activity that have incurred,
and may continue to incur, significant
expense. Under certain circumstances,
if the Group were found to have violated
the law, its ability to sell its products to
certain customers may be restricted.
Regulatory approval
The international medical device industry is
highly regulated. Regulatory requirements
are a major factor in determining whether
substances and materials can be developed
into marketable products and the amount
of time and expense that should be allotted
to such development. National regulatory
authorities administer and enforce a
complex series of laws and regulations that
govern the design, development, approval,
manufacture, labelling, marketing and sale
of healthcare products. They also review
data supporting the safety and efficacy of
such products. Of particular importance
is the requirement in many countries that
products be authorised or registered prior to
manufacture, marketing or sale and that such
authorisation or registration be subsequently
maintained. The trend in increased
regulation of AI in respect of products,
data and business more broadly will
require additional time, resource, skills and
expertise in order to navigate successfully.
The major regulatory agencies for
Smith+Nephew’s products include the
Food and Drug Administration (FDA) in the
US, the Medicines and Healthcare products
Regulatory Agency in the UK, the Ministry
of Health, Labour and Welfare in Japan, the
National Medical Products Administration
in China and the Australian Therapeutic
Goods Administration. At any time, the
Group is awaiting a number of regulatory
approvals which, if not received, could
adversely affect results of operations.
Following the entry into force in May 2017
of the EU Medical Devices Regulation
(MDR), the increase in the time required
by notified bodies to review product
submissions and site quality systems’
certification time has had, and may
continue to have, an adverse impact on the
Group’s ability to meet customer demand.
The trend is towards more stringent
regulation and higher standards of
technical appraisal, and there are
increasingly stringent local requirements
for clinical data across many of the
markets globally in which the Group
operates. Such controls have become
increasingly demanding to comply with
and management believes that this trend
will continue. Privacy, environmental and
sustainability laws and regulations have
also been developed and implemented
at pace globally and have become
more stringent, supported by enhanced
enforcement frameworks and resources.
There is also an increase in regulation
relating to labelling and reporting in the
markets in which the Group operates,
which results in increased resourcing and
cost to the Group. Regulatory requirements
may also entail inspections for compliance
with appropriate standards, including those
relating to Quality Management Systems or
Good Manufacturing Practices regulations.
All manufacturing and other significant
facilities within the Group are subject to
regular internal and external audit for
compliance with national medical device
regulation and Group policies. Payment for
medical devices may be governed by
reimbursement tariff agencies in a number
of countries. Reimbursement rates and
coverage decisions may be set in response
to perceived economic value of the
devices, based on clinical and other data
relating to cost, patient outcomes and
comparative effectiveness.
They may also be affected by overall
government budgetary considerations.
The Group believes that its emphasis on
innovative products and services should
contribute to success in this environment.
Failure to comply with these regulatory
requirements could have a number
of adverse consequences, including
withdrawal of approval to sell a product
in a country, temporary closure of a
manufacturing facility, fines and potential
damage to Company reputation.
Mergers and acquisitions
A key element of the Group’s RISE strategy
for strategic investment to scale and
continued growth is to make acquisitions
or alliances to complement its existing
business. Failure to identify appropriate
acquisition targets or failure to conduct
adequate due diligence or to integrate
them successfully would have an adverse
impact on the Group’s competitive position
and profitability. This could result from
the diversion of management resources
from the acquisition or integration process,
challenges of integrating organisations of
different geographic, cultural and ethical
backgrounds, as well as the prospect
of taking on unexpected or unknown
liabilities. In addition, the availability of
global capital and increased interest rates
may make financing less attainable or more
expensive. The Group typically has access
to the investment grade funding market,
however this can become restricted from
time to time, for example during periods
of financial crisis. The Group’s credit rating
could be downgraded if the business
underperforms or increases leverage from
capital allocation decisions such as M&A
investments. This in turn could reduce
access to debt funding. Cash and short-
term investments could reduce in value
in the event of an insolvency of a financial
counterparty. As a result, the Group
could fail in its strategic aim of growth by
acquisition or alliance.
Challenges in integration of new
acquisitions may arise following completion
of the deal, including external macro
factors and geopolitical events. This may
lead to the Group not achieving the
planned synergies and results from
the acquisition.
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Talent management
The Group’s continued ability to deliver
business objectives depends on its ability to
hire, successfully engage and retain highly
skilled talent with particular expertise
and knowledge in each business unit and
market in which it operates. This is critical,
particularly in general management, new
product development and in data analytics
and insights. Employee priorities around
work-life balance continue to evolve,
resulting in increased global movement of
talent and higher requirement for flexibility
from both our current talent and external
candidates. Attracting and retaining talent
efforts continue across all disciplines and
geographies to ensure that we mitigate
potential impacts on revenue and
operating profits.
Failure to ensure effective transfer
of knowledge and orderly transitions
involving exiting employees could result
in a negative impact on our business
and the Group’s ability to execute on
strategy. In the event that the Company’s
remuneration strategies, quantum and
structure, particularly in terms of long-
term incentives for US executives, are not
adequately addressed to better align to
local market norms, the Company may not
be able to effectively compete for, attract
and retain talent, which may impact
management stability, internal talent
pipeline development and the ability for
management to drive value creation.
Additionally, if the Group’s talent
management practices prove inadequate,
this could adversely impact succession
planning, rendering the Group unable to
meet its strategic business objectives, and
causing us to lose competitive advantage
and intellectual capital. This includes, as an
example, the lack of capability and skills
in exploring and adopting newly available
advanced technology offerings within the
organisation (e.g. artificial intelligence).
Environment and sustainability
Climate change and sustainability-related
risks have the potential to impact the
Group’s business model and performance.
The impacts of climate change on
the Group’s business may arise from
new regulations and requirements to
obtain certain sustainability standards,
international sustainability accords and
agreements, and changing business
practices and trends to accommodate
climate change risks. Implementation of
environmental goals, initiatives and
regulatory and reporting compliance
requires increasing levels of investment
and may depend on third-party
performance or data that is oſten difficult
to obtain, or is outside the control of
the organisation. Further, the Group will
be exposed to the physical impacts of
climate change, which may impact the
manufacture of its products and the
supply chain to deliver them to its markets.
The Group may need to adapt its business
model and processes to accommodate
the changes brought about by climate-
related issues and differing focus levels and
regulation of sustainability requirements
by governments, regulators, customers,
investors and other stakeholders. If the
Group does not achieve the climate
change and sustainability targets and
objectives set by the Group, or set by the
governments and regulators in the markets
where it operates, or by its customers,
there may be an impact on the Group’s
performance and ability to grow.
Foreign exchange
The Group operates a global business and
is therefore exposed to exchange rate
volatility in the global markets in which
it operates. There is the potential for an
adverse impact on the Group’s financial
performance due to currency fluctuations.
Smith+Nephew’s results of operations
are affected by transactional exchange
rate movements in that they are subject
to exposures arising from revenue in a
currency different from the related costs
and expenses. The Group‘s manufacturing
cost base is situated principally in the US,
the UK, China, Costa Rica, Malaysia and
Switzerland, from which finished products
are exported to the Group’s selling
operations worldwide. Thus, the Group
is exposed to fluctuations in exchange
rates between the US Dollar, Sterling
and Swiss Franc and the currency of the
Group’s selling operations, particularly the
Euro, Chinese Yuan, Australian Dollar and
Japanese Yen.
If the US Dollar, Sterling or Swiss Franc
should strengthen against the Euro,
Australian Dollar and the Japanese Yen, the
Group’s operating profit could be adversely
affected. The Group manages the impact
of exchange rate movements on operating
profit by a policy of transacting forward
foreign currency contracts when firm
commitments exist for up to one year.
However, the Group is still exposed to
medium to long-term adverse movements
in the strength of currencies compared to
the US Dollar. The Group uses the US Dollar
as its reporting currency. The US Dollar is
the functional currency of Smith & Nephew
plc. The Group’s revenues, profits and
earnings are also affected by exchange rate
movements on the translation of results
of operations in foreign subsidiaries for
financial reporting purposes. See ‘Liquidity
and capital resources’ on page 241.
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Risk factors
continued
Other information
continued
Non-IFRS financial information – adjusted measures
The annual report includes financial measures that are not prepared in accordance with International Financial Reporting Standards (IFRS).
This additional information presented is not uniformly defined by all companies including those in the Group’s industry. Accordingly, it may
not be comparable with similarly titled measures and disclosures by other companies. Additionally, certain information presented is derived
from amounts calculated in accordance with IFRS but is not itself a measure defined under IFRS. Such measures should not be viewed in
isolation or as an alternative to the equivalent GAAP measure. The non-IFRS measures discussed in this document are set out below.
Performance measures
Non-IFRS
measure
Purpose
Definition
Closest
equivalent
IFRS
measure
Reconciled
on
Underlying
revenue
growth
Underlying revenue growth is used
to compare revenue in a given year
to the previous year on a like-for-
like basis. This measure is used
by both management and the
investor community.
Underlying revenue growth reconciles to reported revenue growth, the most
directly comparable financial measure calculated in accordance with IFRS,
by making two adjustments, the ‘constant currency exchange effect’ and
the ‘acquisitions and disposals effect’.
The ‘constant currency exchange effect’ is a measure of the increase/
decrease in revenue resulting from currency movements on non-US Dollar
sales and is measured as the difference between: 1) the increase/decrease
in the current year revenue translated into US Dollars at the current year
average exchange rate and the prior year revenue translated at the prior year
rate; and 2) the increase/decrease being measured by translating current
and prior year revenues into US Dollars using the same exchange rate.
The ‘acquisitions and disposals effect’ is the measure of the impact on
revenue from newly acquired material business combinations and recent
material business disposals. This is calculated by comparing the current year,
constant currency actual revenue (which includes acquisitions and excludes
disposals from the relevant date of completion) with prior year, constant
currency actual revenue, adjusted to include the results of acquisitions and
exclude disposals for the commensurate period in the prior year. These sales
are separately tracked in the Group’s internal reporting systems and are
readily identifiable.
Revenue
growth
287-288
Trading
profit
Trading profit is used in conjunction
with operating profit to assess
the performance and profitability
of the Group. It is a key internal
and external metric used by the
investor community to assess our
performance. It is our segment
performance measure in accordance
with IFRS 8 Operating Segments.
Trading profit is operating profit excluding the impact of acquisition and
disposal related items arising in connection with business combinations,
including amortisation of acquisition intangible assets, impairments and
integration costs; restructuring events; and gains and losses resulting from
legal disputes and uninsured losses. In addition to these items, gains and
losses that materially impact the Group’s profitability on a short-term or
one-off basis are excluded.
Operating
profit
288-289
Trading
profit
margin
This measure is used to assess the
performance and profitability of the
Group. It is a key external metric used
by the investor community to assess
our performance.
Trading profit margin is trading profit divided by revenue.
Operating
profit
margin
288-289
Trading
profit
before tax
Trading profit before tax is used in
conjunction with profit before tax to
assess performance and profitability
of the Group. This measure is intended
to enable the users to assess the
performance of the Group by
excluding items that impact the
short-term profitability of the Group.
Trading
profit before tax is profit before tax excluding impact of acquisition
and disposal related items arising in connection with business combinations,
including amortisation of acquisition intangible assets, impairments and
integration costs; restructuring events; and gains and losses resulting from
legal disputes and uninsured losses. In addition to these items, gains and
losses that materially impact the Group’s profitability on a short-term or
one-off basis are excluded.
Profit
before tax
288-289
Trading
taxation
Trading taxation is used in conjunction
with taxation to assess taxation
that corresponds to trading profit
before tax. This metric is used
by both management and the
investor community.
Trading taxation is taxation excluding the impact of acquisition and disposal
related items arising in connection with business combinations, including
amortisation of acquisition intangible assets, impairments and integration
costs; restructuring events; and gains and losses resulting from legal
disputes and uninsured losses. In addition to these items, gains and losses
that materially impact the Group’s profitability on a short-term or one-off
basis are excluded.
Taxation
288-289
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Other measures
Non-IFRS
measure
Purpose
Definition
Closest
equivalent
IFRS
measure
Reconciled
on
Free cash
flow
Free cash flow is a measure of
the cash generated for the Group
to use aſter capital expenditure
according to its Capital Allocation
Framework. This metric is used
by both management and
investor community.
Free cash flow is cash generated from operations less capital expenditure,
proceeds from disposal of property, plant and equipment, payment of
lease liabilities and cash flows from interest and income taxes.
Cash
generated
from
operations
290
Adjusted
EBITDA
Adjusted EBITDA is used in
the calculation of adjusted
leverage ratio.
Adjusted EBITDA is attributable profit excluding taxation, share of results
of associates, other finance costs, interest expense, interest income,
acquisition and disposal related items, restructuring and rationalisation
costs, amortisation and impairment of acquisition intangibles, legal
and other costs, depreciation and impairment of property, plant and
equipment and amortisation and impairment of other intangible assets.
Attributable
Profit
290
Adjusted
leverage
ratio
Adjusted leverage ratio is used
in the calculation relating to
debt covenants.
We calculate adjusted leverage ratio by dividing net debt by adjusted
EBITDA. Net debt is defined as total borrowings less cash and cash
equivalents in the statement of financial position. Total borrowings include
bank overdraſts, borrowings, loans and lease liabilities and long-term
borrowings and lease liabilities.
Leverage
ratio
(using IFRS
measures)
290
Performance measures
continued
Non-IFRS
measure
Purpose
Definition
Closest
equivalent
IFRS
measure
Reconciled
on
Trading
attributable
profit
This metric is used in the
calculation of adjusted earnings
per share.
Trading attributable profit is attributable profit excluding the impact of
acquisition and disposal related items arising in connection with business
combinations, including amortisation of acquisition intangible assets,
impairments and integration costs; restructuring events; and gains and
losses resulting from legal disputes and uninsured losses. In addition
to these items, gains and losses that materially impact the Group’s
profitability on a short-term or one-off basis are excluded.
Attributable
profit
288-289
Adjusted
earnings per
share (EPSA)
EPSA is a trend measure. The Group
presents this measure to assist
investors in their understanding
of trends.
Adjusted earnings per share is trading attributable profit divided by
the weighted average number of shares outstanding. This is the same
denominator used when calculating basic earnings per share.
Basic
earnings
per share
288-289
Trading
cash flow
Trading cash flow is used in
conjunction with cash generated
from operations to assess the
conversion of trading profit into
cash. It is key external metric used
by the investor community and
is a key performance measure
for management.
Trading cash flow is cash generated from operations excluding the
impact of acquisition and disposal related items arising in connection
with business combinations, including integration costs; restructuring
events; and gains and losses resulting from legal disputes and uninsured
losses. In addition to these items, gains and losses that materially impact
the Group’s cash flows on a short-term or one-off basis are excluded.
Trading cash flow includes payment of capital element of lease liabilities,
proceeds from disposal of property, plant and equipment and capital
expenditure as presented in the Group cash flow statement.
Cash
generated
from
operations
288-289
Trading cash
conversion
This measure is used to assess the
conversion of trading profit into
cash. It is a key external metric
used by the investor community
and is a key performance measure
for management.
Trading cash conversion is trading cash flow divided by trading profit.
Cash
generated
from
operations
288-289
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Non-IFRS financial information – adjusted measures
continued
Other information
continued
Reported revenue growth, the most directly comparable financial measure calculated in accordance with IFRS, reconciles to underlying
revenue growth as follows:
Reconciling items
2025
Reported growth
Underlying growth
Acquisitions/
disposals
Currency impact
Consolidated revenue by business unit
%
%
%
%
Knee Implants
3.5
2.9
–
0.6
Hip Implants
3.5
2.9
–
0.6
Other Reconstruction
35.4
33.8
–
1.6
Trauma & Extremities
6.7
6.3
–
0.4
Orthopaedics
5.7
5.1
–
0.6
Sports Medicine Joint Repair
8.6
7.8
–
0.8
Arthroscopic Enabling Technologies
2.4
1.6
–
0.8
ENT (Ear, Nose and Throat)
4.8
4.4
–
0.4
Sports Medicine & ENT
6.0
5.2
–
0.8
Advanced Wound Care
4.3
2.6
–
1.7
Advanced Wound Bioactives
6.9
6.8
–
0.1
Advanced Wound Devices
11.1
9.8
–
1.3
Advanced Wound Management
6.7
5.6
–
1.1
Total
6.1
5.3
–
0.8
Other measures
continued
Non-IFRS
measure
Purpose
Definition
Closest
equivalent
IFRS
measure
Reconciled
on
Adjusted
return on
invested
capital
(‘Adjusted
ROIC’)
Adjusted ROIC is a metric used
by investor community and is a
measure of the return generated
on capital invested by the Group.
It provides a metric for long-term
value creation and encourages
compounding reinvestment within
the business and discipline around
acquisitions with low returns and
long payback. Adjusted ROIC is a
key performance measure under
the Performance Share Program.
Adjusted ROIC is defined as operating profit (before amortisation and
impairment of acquisition intangibles) less adjusted taxes/((opening net
operating assets + closing net operating assets)/2).
Return on
invested
capital
(‘ROIC’)
(using IFRS
measures)
291
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Reconciling items
2024
Reported growth
Underlying growth
Acquisitions/
disposals
Currency impact
Consolidated revenue by business unit
%
%
%
%
Knee Implants
0.7
1.3
–
(0.6)
Hip Implants
3.2
4.0
–
(0.8)
Other Reconstruction
18.2
18.5
–
(0.3)
Trauma & Extremities
7.9
8.1
–
(0.2)
Orthopaedics
4.1
4.6
–
(0.5)
Sports Medicine Joint Repair
4.0
4.8
–
(0.8)
Arthroscopic Enabling Technologies
7.4
8.2
–
(0.8)
ENT (Ear, Nose and Throat)
6.9
7.3
–
(0.4)
Sports Medicine & ENT
5.5
6.2
–
(0.7)
Advanced Wound Care
1.4
2.0
–
(0.6)
Advanced Wound Bioactives
5.1
5.1
–
–
Advanced Wound Devices
11.5
12.2
–
(0.7)
Advanced Wound Management
4.7
5.1
–
(0.4)
Total
4.7
5.3
–
(0.6)
Operating
Profit
before
Attributable
Cash generated
Earnings
profit
1
tax
2
Taxation
3
profit
4
from operations
5
per share
6
$ million
$ million
$ million
$ million
$ million
¢
2025 Reported
794
779
(154)
625
1,549
72.1
Acquisition and disposal related items
32
(47)
15
(32)
30
(3.6)
Restructuring and rationalisation costs
47
47
(13)
34
83
4.0
Amortisation and impairment of acquisition intangibles
176
176
(40)
136
–
15.6
Legal and other
7
162
142
(21)
121
19
13.9
Lease liability payments
–
–
–
–
(50)
–
Capital expenditure
–
–
–
–
(433)
–
Proceeds from disposal from property, plant and
equipment
–
–
–
–
38
–
2025 Non-IFRS
*
1,211
1,097
(213)
884
1,236
102.0
* These Non-IFRS measures are defined on pages 285-287.
Acquisition and disposal-related items
: For the year ended 31 December 2025, costs primarily relate to disposal of certain products
and integration costs relating to prior year acquisitions. Trading profit before tax additionally excludes gains of $108m related to the
Group’s shareholding in Bioventus and the remeasurement and discount unwind for contingent consideration. This primarily includes an
impairment reversal of $109m and the Group’s share of gain recognised by Bioventus in its financial statements.
Restructuring and rationalisation costs:
For the year ended 31 December 2025, these costs include efficiency and productivity elements
of the 12-Point Plan to the Operations and Commercial Excellence programme. These costs primarily consist of severance, asset write-
offs and integration and dual running costs.
Amortisation and impairment of acquisition intangibles:
For the year ended 31 December 2025, charges related to the amortisation and
impairment of intangible assets acquired in material business combinations.
Legal and other:
For the year ended 31 December 2025, the charge mainly relates to a $159m increase in the excess and obsolescence
provision arising from the Group’s portfolio simplification initiatives introduced under the 12-Point Plan and further developed in 2025
through the Ortho 360 operating model and new RISE strategy. These actions include the planned discontinuation and simplification
of certain product ranges which will reduce the need for inventory and capital employed in the business, provide a simpler and more
efficient offer to our customers, and will also allow us to focus on migrating them to our latest technology products. Legal and other
also includes $9m reduction in the provision for ongoing metal-on-metal hip claims as a result of a decrease in the present value of the
estimated costs to resolve all known and anticipated metal-on-metal hip claims, offset by legal expenses of $10m for ongoing metal-on-
metal hip claims.
288
Smith+Nephew
Annual Report 2025
Non-IFRS financial information – adjusted measures
continued
Other information
continued
Trading profit before tax additionally excludes $10m gain on repurchase of corporate bonds, investment income relating to deferred
compensation arrangements of $14m, partially offset by $4m of finance costs for the unwind of discount relating to the provision for
metal-on-metal hip claims.
Lease liability payments and capital expenditure:
For the year ended 31 December 2025, trading cash flow includes payment of capital
element of lease liabilities and capital expenditure as presented in the Group cash flow statement.
Operating
Profit
before
Attributable
Cash generated
Earnings
profit
1
tax
2
Taxation
3
profit
4
from operations
5
per share
6
$ million
$ million
$ million
$ million
$ million
¢
2024 Reported
657
498
(86)
412
1,245
47.2
Acquisition and disposal related items
8
94
106
(9)
97
3
11.2
Restructuring and rationalisation costs
8
123
123
(29)
94
151
10.8
Amortisation and impairment of acquisition intangibles
187
187
(42)
145
–
16.6
Legal and other
7
(12)
(6)
(7)
(13)
36
(1.5)
Lease liability payments
–
–
–
–
(55)
–
Capital expenditure
–
–
–
–
(381)
–
2024 Non-IFRS
*
1,049
908
(173)
735
999
84.3
* These Non-IFRS measures are defined on pages 285-287.
Acquisition and disposal-related items
: For the year ended 31 December 2024, costs primarily relate to impairment of BHR goodwill,
disposal of certain products and integration costs relating to integration of CartiHeal. Trading profit before tax additionally excludes
losses related to the Group’s shareholding in Bioventus. This primarily includes the Group’s share of loss recognised by Bioventus in its
financial statements.
Restructuring and rationalisation costs:
For the year ended 31 December 2024, these costs include efficiency and productivity
elements of the 12-Point Plan to the Operations and Commercial Excellence programme. These costs primarily consist of severance,
asset write-offs and integration and dual running costs.
Amortisation and impairment of acquisition intangibles:
For the year ended 31 December 2024, charges related to the amortisation
and impairment of intangible assets acquired in material business combinations.
Legal and other:
For the year ended 31 December 2024, the credit mainly relates to a $28m reduction in the provision for ongoing
metal-on-metal hip claims as a result of decrease in the present value of the estimated costs to resolve all known and anticipated
metal-on-metal hip claims, partially offset by legal expenses for ongoing metal-on-metal hip claims and
costs of implementing the
requirements of the EU Medical Device Regulation that was effective from May 2021 with a transition period to May 2024. Trading profit
before tax additionally excludes $6m of finance costs for the unwind of discount relating to the provision for metal-on-metal hip claims.
Lease liability payments and capital expenditure:
For the year ended 31 December 2024, trading cash flow includes payment of capital
element of lease liabilities and capital expenditure as presented in the Group cash flow statement.
1
Represents a reconciliation of operating profit to trading profit.
2
Represents a reconciliation of reported profit before tax to trading profit before tax.
3
Represents a reconciliation of reported tax to trading tax.
4
Represents a reconciliation of reported attributable profit to trading attributable profit.
5 Represents a reconciliation of cash generated from operations to trading cash flow.
6 Represents a reconciliation of basic earnings per ordinary share to adjusted earnings per share (EPSA).
7
The ongoing funding of defined benefit pension schemes that are closed to future accrual is not included in management’s definition of trading cash flow
as there is no defined benefit service cost for these schemes.
8
During 2024, the Group announced its intention to close the Warwick manufacturing site that manufactures Birmingham Hip Resurfacing (BHR) products.
As a result, a total of $68m of BHR assets and liabilities were written off, which mainly includes goodwill of $63m (included in acquisition and disposal-
related items).
289
Smith+Nephew
Annual Report 2025
STRATEGIC REPORT
GOVERNANCE
ACCOUNTS
OTHER INFORMATION
Free cash flow
A reconciliation from cash generated from operations, the most comparable IFRS measure, to free cash flow is set out below:
2025
2024
2023
$ million
$ million
$ million
Cash generated from operations
1
1,549
1,245
829
Capital expenditure
(433)
(381)
(427)
Interest received
25
22
8
Interest paid
(142)
(140)
(104)
Payment of lease liabilities
(50)
(55)
(52)
Income taxes paid
(147)
(140)
(125)
Proceeds from disposal of property, plant and equipment
38
–
–
Free cash flow
840
551
129
1 See Group cash flow statement on page 213.
Adjusted Leverage ratio
The calculation of the adjusted leverage ratio and leverage ratio is set out below.
Adjusted leverage ratio is calculated using metrics
similar to those used in the debt covenant calculation.
2025
2024
$ million
$ million
Net debt
2,759
2,709
Attributable profit
625
412
Taxation
154
86
Share of results of associates
(113)
10
Other finance costs
16
28
Interest expense
140
145
Interest income
(28)
(24)
Acquisition and disposal-related items
32
94
Restructuring and rationalisation costs
47
123
Amortisation and impairment of acquisition intangibles
176
187
Legal and other
162
(12)
Depreciation of property, plant and equipment
335
325
Impairment and Amortisation of other intangible assets and Property, plant and equipment
61
67
Adjusted EBITDA
1,607
1,441
Adjusted leverage ratio
1.7
1.9
The Leverage ratio using closest equivalent IFRS measures is not based on measures used in the calculation of debt covenants and is not
used by management internally. This measures is not used for the Company’s covenant in its private placement debt.
2025
2024
$ million
$ million
Bank overdraſts, borrowings, loans and lease liabilities
150
63
Long-term borrowings and lease liabilities
3,177
3,258
Total borrowings
3,327
3,321
Attributable profit
625
412
Leverage ratio
5.3
8.1
290
Smith+Nephew
Annual Report 2025
Non-IFRS financial information – adjusted measures
continued
Other information
continued
Adjusted Return on invested capital
The calculation of Adjusted return on invested capital and is set out below:
2025
2024
2023
$ million
$ million
$ million
Attributable profit for the year
625
412
263
Share of results of associates
(113)
10
30
Other finance costs
16
28
7
Interest expense
140
145
132
Interest income
(28)
(24)
(34)
Amortisation and impairment of acquisition intangibles
176
187
207
Taxation adjustment
1
(44)
(73)
(77)
Operating profit before amortisation and impairment of acquisition intangibles less adjusted taxes
772
685
528
Total equity
5,289
5,265
5,217
Accumulated amortisation and impairment of acquisition intangibles net of associated tax
1,679
1,470
1,365
Retirement benefit assets
(64)
(63)
(69)
Investments
(30)
(9)
(8)
Investments in associates
(121)
(7)
(16)
Right-of-use assets
(192)
(173)
(185)
Cash and cash equivalents
(557)
(619)
(302)
Long-term borrowings and lease liabilities
3,177
3,258
2,319
Retirement benefit obligations
84
79
88
Bank overdraſts, borrowings, loans and lease liabilities
150
63
765
Net operating assets
9,415
9,264
9,174
Average net operating assets
2
9,340
9,219
8,907
Adjusted return on invested capital
8.3%
7.4%
5.9%
1
Being the taxation on amortisation and impairment of acquisition intangibles, interest income, interest expense, other finance costs and share of results
of associates.
2
(Opening net operating assets + closing net operating assets)/2.
291
Smith+Nephew
Annual Report 2025
STRATEGIC REPORT
GOVERNANCE
ACCOUNTS
OTHER INFORMATION
Return on invested capital (using closest equivalent IFRS measures)
The calculation of Return on invested capital using closest equivalent IFRS measures is set out below:
2025
2024
2023
$ million
$ million
$ million
Attributable profit
625
412
263
Long term borrowings and lease liabilities
3,177
3,258
2,319
Bank overdraſts, borrowings, loans and lease liabilities
150
63
765
Investments
(30)
(9)
(8)
Investments in associates
(121)
(7)
(16)
Retirement benefit assets
(64)
(63)
(69)
Retirement benefit obligations
84
79
88
Total Equity
5,289
5,265
5,217
Invested Capital at end of the year
8,485
8,586
8,296
Average Invested Capital for the year
8,536
8,441
8,149
Return on invested capital using IFRS measures
7.3%
4.9%
3.2%
292
Smith+Nephew
Annual Report 2025
Non-IFRS financial information – adjusted measures
continued
Other information
continued
Shareholder
information
Ordinary shareholders
Registrar
All general enquiries concerning
shareholdings, dividends, changes to
shareholders’ personal details and the
Annual General Meeting (the ‘AGM’)
should be addressed to:
Computershare Investor Services plc,
The Pavilions, Bridgwater Road,
Bristol, BS99 6ZZ.
Tel: 0370 703 0047
Tel: +44 (0) 117 378 5450
from outside the UK*
www.investorcentre.co.uk
*
Lines are open from 8:30 am to 5:30 pm
Monday to Friday, excluding public holidays
in England and Wales.
Shareholder communications
We make quarterly financial
announcements, which are made
available through Stock Exchange
announcements and on the Group’s
website (www.smith-nephew.com).
Copies of recent Annual Reports, press
releases, institutional presentations
and audio webcasts are also available
on the website.
We send paper copies of the Notice of
Annual General Meeting and Annual
Report only to those shareholders and
ADS holders who have elected to receive
shareholder documentation by post.
Electronic copies of the Annual Report
and Notice of Annual General Meeting
are available on the Group’s website at
www.smith-nephew.com. Both ordinary
shareholders and ADS holders can request
paper copies of the Annual Report, which
the Company provides free of charge.
The Company will continue to send to
ordinary shareholders by post the Form
of Proxy notifying them of the availability
of the Annual Report and Notice of Annual
General Meeting on the Group’s website.
If you elect to receive the Annual Report
and Notice of Annual General Meeting
electronically you are informed by email
of the documents’ availability on the
Group’s website. ADS holders receive the
Form of Proxy by post, but will not receive
a paper copy of the Notice of Annual
General Meeting.
Investor communications
The Company maintains regular dialogue
with individual institutional shareholders,
together with results presentations.
To ensure that all members of the Board
develop an understanding of the views
of major investors, the Executive Directors
review significant issues raised by
investors with the Board. Non-Executive
Directors are sent copies of analysts’ and
brokers’ briefings. There is an opportunity
for individual shareholders to put their
questions to the Directors at the Annual
General Meeting. The Company regularly
responds to letters from shareholders
on a range of issues.
UK capital gains tax
For the purposes of UK capital gains
tax, the price of the Company’s ordinary
shares on 31 March 1982 was 35.04p.
Smith & Nephew plc share price
The Company’s ordinary shares are
quoted on the London Stock Exchange
under the symbol SN. The Company’s
share price is available on the Group’s
website (www.smith-nephew.com) and
at www.londonstockexchange.com
where the live financial data is updated
with a 15-minute delay.
American Depositary Shares (ADSs)
and American Depositary Receipts
(ADRs)
In the US, the Company’s ordinary shares
are traded in the form of ADSs, evidenced
by ADRs, on the New York Stock Exchange
under the symbol SNN. Each American
Depositary Share represents two ordinary
shares. J.P. Morgan Chase Bank N.A.
is the authorised depositary bank for
the Company’s ADR programme.
ADS enquiries
All enquiries regarding ADS holder
accounts and payment of dividends
should be addressed to:
EQ Shareowner Services
P.O. Box 64504
St Paul, MN 55164-0504
US toll free phone: +1-800-990-1135
Online: visit www.shareowneronline.com
and select ‘Contact Us’.
Smith & Nephew plc ADS price
The Company’s ADS price can be obtained
from the official New York Stock Exchange
website at www.nyse.com and the Group’s
website (www.smith-nephew.com) where
the live financial data is updated with
a 15-minute delay, and is quoted daily
in the Wall Street Journal.
Persons depositing or
withdrawing shares must pay
For
$5.00 (or less) per 100 ADSs
(or portion of 100 ADSs)
$0.05 (or less) per ADS
Issuance of ADSs, including issuances
resulting from a distribution of shares or
rights or other property
Cancellation of ADSs for the purpose
of withdrawal, including if the deposit
agreement terminates
Any cash distribution to ADS registered
holders, including payment of dividend
$0.05 (or less) per ADS per calendar year
Registration or transfer fees
Depositary services
Transfer and registration of shares on
our share register to or from the name of
the depositary or its agent when shares
are deposited or withdrawn
Taxes and other governmental charges
the depositary or the custodian have
to pay on any ADS or share underlying an
ADS, for example, stock transfer taxes,
stamp duty or withholding taxes
As necessary
Any charges incurred by the depositary
or its agents for servicing the
deposited securities
As necessary
ADS payment information
293
Smith+Nephew
Annual Report 2025
STRATEGIC REPORT
GOVERNANCE
ACCOUNTS
OTHER INFORMATION
Other information
continued
ADS payment information
The Company hereby discloses ADS
payment information for the year ended
31 December 2025 in accordance with
the Securities and Exchange Commission
rules 12.D.3 and 12.D.4 relating to Form
20-F filings by foreign private issuers.
The depositary collects its fees for
delivery and surrender of ADSs directly from
investors depositing shares or surrendering
ADSs for the purpose of withdrawal or
from intermediaries acting for them.
The depositary collects fees for making
distributions to investors, including
payment of dividends by the Company by
deducting those fees from the amounts
distributed or by selling a portion of
distributable property to pay the fees.
The depositary may collect its annual
fee for depositary services by deductions
from cash distributions or by directly billing
investors or by charging the book-entry
system accounts of participants acting for
them. The depositary may generally refuse
to provide fee-attracting services until its
fee for those services is paid.
During 2025, a fee of 1.5 US cent per ADS
was collected by J.P. Morgan Chase Bank
N.A. on the 2024 final dividend paid in May
2025 and a fee of 1.5 US cent per ADS was
collected on the 2025 interim dividend paid
in November. In the period 1 January 2025
to 17 February 2026, the total programme
payments made by J.P. Morgan Chase Bank
N.A. was $928,743.68.
Dividend history
Smith & Nephew plc has paid dividends
on its ordinary shares in every year since
1937. Following the capital restructuring
and dividend reduction in 2000, the
Group adopted a policy of increasing its
dividend cover (the ratio of EPSA, as set
out in the ‘Selected financial data’, to
ordinary dividends declared for the year).
This was intended to increase the financing
capability of the Group for acquisitions
and other investments. From 2000
to 2004, the dividend increased in line
with inflation and, in 2004, dividend
cover stood at 4.1 times. Having achieved
this level of dividend cover the Board
changed its policy, from that of increasing
dividends in line with inflation, to that
of increasing dividends for 2005 and aſter
by 10%. Following the redenomination
of the Company’s share capital into US
Dollars, the Board reaffirmed its policy
of increasing the dividend by 10% a year
in US Dollar terms.
On 2 August 2012, the Board announced
its intention to pursue a progressive
dividend policy, with the aim of increasing
the US Dollar value of ordinary dividends
over time broadly based on the Group’s
underlying growth in earnings, while
taking into account capital requirements
and cash flows.
At the time of the full-year results, the
Board reviews the appropriate level of
total annual dividend each year. The Board
intends that the interim dividend will be
set by a formula and will be equivalent to
40% of the total dividend for the previous
year. Dividends will continue to be declared
in US Dollars with an equivalent amount
in Sterling payable to those shareholders
whose registered address is in the UK,
or who have validly elected to receive
Sterling dividends.
An interim dividend in respect of each fiscal
year is normally declared in July or August
and paid in October or November.
A final dividend will be recommended by
the Board of Directors and paid subject to
approval by shareholders at the Company’s
Annual General Meeting.
Future dividends of Smith & Nephew plc
will be dependent upon: future earnings;
the future financial condition of the
Group; the Board’s dividend policy; and
the additional factors that might affect
the business of the Group set out in
‘Special note regarding forward-looking
statements’ and ‘Risk Factors’.
Dividends per share
The table below sets out the dividends
per ordinary share in the last five years.
Dividends below £500 per tax year are
tax free for UK income tax purposes and
dividends above £500 per tax year are
subject to UK personal income tax for the
2024/25 tax year at the rate of 8.75% for
basic rate taxpayers (increasing to 10.75%
from 6 April 2026), 33.75% for higher rate
taxpayers (increasing to 35.75% from
6 April 2026) and 39.35% for additional
rate taxpayers. If you need to pay UK tax,
how you pay depends upon the amount
of dividend income you receive in a year.
If your dividend income is up to £10,000
you can request HMRC to change your
tax code so that the tax will be taken
from your wages or pension or you can
complete a self-assessment tax return.
If your dividend income is over £10,000 in
the tax year, you will need to complete a
self-assessment tax return. This will apply
to both cash and dividend reinvestment
plan (‘DRiP’) dividends, although dividends
paid on shares held within pensions and
ISAs will be unaffected, remaining tax free.
Since the second interim dividend for 2005,
all dividends have been declared in US
cents per ordinary share.
In respect of the proposed final dividend
for the year ended 31 December 2025
of 24.1 US cents per ordinary share, the
record date will be 27 March 2026 and
the payment date will be 27 May 2026.
The Sterling equivalent per ordinary share
will be set following the record date.
Dividends per share
Years ended 31 December
2025
2024
2023
2022
2021
Pence per share:
Interim
11.26
11.10
11.89
12.91
10.50
Final
17.85
1
17.48
18.49
18.38
18.40
Total
29.11
28.58
30.38
31.29
28.90
US cents per share:
Interim
15.00
14.40
14.40
14.40
14.40
Final
24.10
23.10
23.10
23.10
23.10
Total
39.10
37.50
37.50
37.50
37.50
1
Translated at the Bank of England rate on 17 February 2026.
294
Smith+Nephew
Annual Report 2025
Shareholder information
continued
Other information
continued
Shareholders may elect to receive their
dividend in either Sterling or US Dollars
and the last day for election will be
5 May 2026. The ordinary shares will trade
ex-dividend on both the London and New
York Stock Exchanges from 26 March 2026.
The proposed final dividend of 24.1 US
cents per ordinary share, which together
with the interim dividend of 15.0 US cents,
makes a total for 2025 of 39.1 US cents.
Shareholdings
As at 17 February 2026, to the knowledge
of the Group, there were 10,407 registered
holders of ordinary shares, of whom 85
had registered addresses in the US and
held a total of 182,743 ordinary shares
(0.02% of the total issued). Because certain
ordinary shares are registered in the names
of nominees, the number of shareholders
with registered addresses in the US is not
representative of the number of beneficial
owners of ordinary shares resident in
the US.
As at 17 February 2026, 25,480,585
ADSs
equivalent to 50,961,170 ordinary shares,
or approximately 6% of the total ordinary
shares in issue, were outstanding and
were held by 82 registered ADS holders.
Exchange controls and other
limitations affecting security holders
There are no UK governmental laws,
decrees or regulations that restrict the
export or import of capital or that affect
the payment of dividends, interest or
other payments to non-resident holders
of Smith & Nephew plc’s securities, except
for certain restrictions imposed from time
to time by His Majesty’s Treasury of the
United Kingdom pursuant to legislation,
such as the United Nations Act 1946
and the Emergency Laws Act 1964,
against the Government or residents of
certain countries.
There are no limitations, either under
the laws of the UK or under the Articles
of Association of Smith & Nephew plc,
restricting the right of non-UK residents
to hold or to exercise voting rights in
respect of ordinary shares, except that
where any overseas shareholder has not
provided to the Company a UK address
for the service of notices, the Company is
under no obligation to send any notice or
other document to an overseas address.
as part of a hedging, conversion or other
integrated transaction or US Holders
whose functional currency for US federal
income tax purposes is other than the US
Dollar. In addition, the comments below
do not address the potential application of
the provisions of the US Internal Revenue
Code known as the Medicare contribution
tax, any minimum tax consequences, any
US federal tax other than income tax or
any US state, local or non-US (other than
UK) taxes. The summary deals only with
US Holders who hold ADSs or ordinary
shares as capital assets for tax purposes.
The summary is based on current UK and
US law and practice which is subject to
change, possibly with retroactive effect.
US Holders are recommended to consult
their tax advisers as to the particular tax
consequences to them of the ownership
of ADSs or ordinary shares.
The Company believes, and this discussion
assumes, that the Company was not a
passive foreign investment company for
its taxable year ended 31 December 2025.
This discussion assumes that each
obligation under the deposit agreement
and any related agreement will be
performed in accordance with its terms.
For purposes of US federal income tax
law, US Holders of ADSs will generally be
treated as owners of the ordinary shares
represented by the ADSs.
Taxation of distributions
in the UK and the US
The UK does not currently impose a
withholding tax on dividends paid by a
UK corporation, such as the Company.
For US federal income tax purposes,
distributions paid by the Company will
generally be foreign source dividends to the
extent paid out of the Company’s current
or accumulated earnings and profits as
determined for US federal income tax
purposes. Because the Company does
not maintain calculations of its earnings
and profits under US federal income tax
principles, it is expected that distributions
generally will be reported to US Holders
as dividends. Such dividends will not
be eligible for the dividends-received
deduction generally allowed to corporate
US Holders.
It is, however, the current practice of the
Company to send every notice or other
document to all shareholders regardless
of the country recorded in the register of
members, with the exception of details of
the Company’s dividend reinvestment plan,
which are not sent to shareholders with
recorded addresses in the US and Canada.
Taxation information
for shareholders
The comments below are of a general
and summary nature and are based on
the Group’s understanding of certain
aspects of current UK and US federal
income tax law and practice relevant to
the ADSs and ordinary shares not in ADS
form. The comments address the material
US and UK tax consequences generally
applicable to a person who is the beneficial
owner of ADSs or ordinary shares and who,
for US federal income tax purposes, is a
citizen or resident of the US, a corporation
(or other entity taxable as a corporation)
created or organised in or under the
laws of the US (or any State therein or
the District of Columbia), or an estate or
trust the income of which is included in
gross income for US federal income tax
purposes regardless of its source (each
a US Holder). The comments set out
below do not purport to address all tax
consequences of the ownership of ADSs
or ordinary shares that may be material
to a particular holder and in particular do
not deal with the position of US Holders
who directly, indirectly or constructively
own 10% or more of the Company’s
issued ordinary shares. This discussion
does not apply to (i) US Holders whose
holding of ADSs or ordinary shares is
effectively connected with or pertains to
either a permanent establishment in the
UK through which a US Holder carries on
a business in the UK or a fixed base from
which a US Holder performs independent
personal services in the UK, or (ii) US
Holders whose registered address is inside
the UK. This discussion does not apply
to certain US Holders subject to special
rules, such as certain financial institutions,
tax-exempt entities, insurance companies,
broker-dealers and traders in securities
that elect to use the mark-to-market
method of tax accounting, partnerships
or other entities treated as partnerships
for US federal income tax purposes, US
Holders holding ADSs or ordinary shares
295
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STRATEGIC REPORT
GOVERNANCE
ACCOUNTS
OTHER INFORMATION
Dividends paid to certain non-corporate
US Holders of ordinary shares or ADSs
may be subject to US federal income tax
at lower rates than those applicable to
other types of ordinary income if certain
conditions are met. Non-corporate
US Holders should consult their own
tax advisers to determine whether they
are subject to any special rules that
limit their ability to be taxed at these
favourable rates.
Taxation of capital gains
US Holders, who are not resident for tax
purposes in the UK, will not generally
be liable for UK capital gains tax on any
capital gain realised upon the sale or other
disposition of ADSs or ordinary shares
unless the ADSs or ordinary shares are held
in connection with a trade carried on in the
UK through a permanent establishment
(or in the case of individuals, through
a branch or agency). Furthermore, UK
resident individuals who acquire ADSs
or ordinary shares before becoming
temporarily non-UK residents may remain
subject to UK taxation of capital gains
on gains realised while non-resident.
For US federal income tax purposes, gains
or losses realised upon a taxable sale or
other disposition of ADSs or ordinary shares
by US Holders generally will be US source
capital gains or losses and will be long-
term capital gains or losses if the ADSs or
ordinary shares were held for more than
one year. The amount of a US Holder’s
gain or loss will be equal to the difference
between the amount realised on the sale
or other disposition and such holder’s
tax basis in the ADSs, or ordinary shares,
each determined in US Dollars.
Inheritance and estate taxes
HM Revenue & Customs imposes
inheritance tax on capital transfers which
occur on death and in the seven years
preceding death. HM Revenue & Customs
considers that the US/UK Double Taxation
Convention on Estate and Giſt Tax (the
'Convention') applies to inheritance tax.
Consequently, a US citizen who is domiciled
in the US and is not a UK national or
domiciled in the UK in each case for the
purposes of the Convention will not be
subject to UK inheritance tax in respect of
ADSs and ordinary shares.
A UK national who is domiciled in the
US for the purposes of the Convention
will be subject to UK inheritance tax (to
the extent it applies) but will be entitled
to a credit for any US federal estate tax
charged in respect of ADSs and ordinary
shares in computing the liability to UK
inheritance tax.
Special rules apply where ADSs and
ordinary shares are business property
of a permanent establishment of an
enterprise situated in the UK.
The above discussion reflects current
UK tax law. US Holders who may be
impacted by the tax laws discussed above
should consult with their tax advisers
as necessary.
US information reporting and backup
withholding
Payments of dividends on, or proceeds
from the sale of, ADSs or ordinary shares
that are made within the US or through
certain US-related financial intermediaries
generally will be subject to US information
reporting, and may be subject to backup
withholding, unless a US Holder is an
exempt recipient or, in the case of
backup withholding, provides a correct
US taxpayer identification number and
certain other conditions are met.
Any backup withholding deducted may
be credited against the US Holder’s US
federal income tax liability, and, where
the backup withholding exceeds the
actual liability, the US Holder may obtain
a refund by timely filing the appropriate
refund claim with the US Internal
Revenue Service.
US Holders who are individuals or certain
specified entities may be required to
report information relating to securities
issued by a non-US person (or foreign
accounts through which the securities
are held), subject to certain exceptions
(including an exception for securities held
in accounts maintained by US financial
institutions). US Holders should consult
their tax advisers regarding their reporting
obligations with respect to the ADSs or
ordinary shares.
UK stamp duty and stamp duty
reserve tax
UK stamp duty is charged on documents
and in particular instruments for the
transfer of registered ownership of ordinary
shares. Transfers of ordinary shares in
certificated form will generally be subject
to UK stamp duty at the rate of ½% of the
consideration given for the transfer with
the duty rounded up to the nearest £5.
UK stamp duty reserve tax (SDRT) arises
when there is an agreement to transfer
shares in UK companies ‘for consideration
in money or money’s worth’, and so an
agreement to transfer ordinary shares
for money or other consideration may
give rise to a charge to SDRT at the rate
of ½% (rounded up to the nearest penny).
The charge of SDRT will be cancelled, and
any SDRT already paid will be refunded,
if within six years of the agreement
an instrument of transfer is produced
to HM Revenue & Customs and the
appropriate stamp duty paid.
Transfers of ordinary shares into CREST
(an electronic transfer system) are
exempt from stamp duty so long as the
transferee is a member of CREST who
will hold the ordinary shares as a nominee
for the transferor and the transfer is in a
form that will ensure that the securities
become held in uncertificated form within
CREST. Paperless transfers of ordinary
shares within CREST for consideration
in money or money’s worth are liable to
SDRT rather than stamp duty. SDRT on
relevant transactions will be collected by
CREST at ½%, and this will apply whether
or not the transfer is effected in the UK
and whether or not the parties to it are
resident or situated in the UK.
296
Smith+Nephew
Annual Report 2025
Shareholder information
continued
Other information
continued
About Smith+Nephew
The Smith+Nephew Group (the Group)
is a portfolio medical technology business
with leadership positions in Orthopaedics,
Advanced Wound Management and Sports
Medicine, and revenue of approximately
$6.2bn in 2025. Smith & Nephew plc
(the Company) is the Parent Company of
the Group. It is an English public limited
company with its shares listed on the
premium list of the UK Listing Authority
and traded on the London Stock Exchange.
Shares are also traded on the New York
Stock Exchange in the form of American
Depositary Shares (ADSs).
This is the Annual Report of Smith
& Nephew plc for the year ended
31 December 2025. It comprises, in a
single document, the Annual Report and
Accounts of the Company in accordance
with UK requirements and the Annual
Report on Form 20-F in accordance
with the regulations of the United States
Securities and Exchange Commission (SEC).
The information in this document will be
updated and supplemented at the time
of filing with the SEC or later amended
if necessary.
Smith+Nephew operates on a worldwide
basis and has distribution channels in
over 100 countries. The Group is engaged
in a single business activity, being the
development, manufacture and sale of
medical technology products and services.
In 2023, Smith+Nephew’s operations
were organised into three global business
units (Orthopaedics, Sports Medicine &
ENT, and Advanced Wound Management)
within the medical technology industry.
Smith+Nephew’s corporate website,
www.smith-nephew.com, gives additional
information on the Group, including an
electronic version of this Annual Report.
Information made available on this website,
or other websites mentioned in this Annual
Report, are not and should not be regarded
as being part of, or incorporated into,
this Annual Report.
The terms ‘Group’ and ‘Smith+Nephew’
are used to refer to Smith & Nephew plc
and its consolidated subsidiaries, unless
the context requires otherwise.
For the convenience of the reader, a
Glossary of terms used in this document
is included on page 304.
The product names referred to in this
document are identified by use of
capital letters and the ◊ symbol (on first
occurrence on a particular page) and
are trademarks owned by or licensed
to members of the Group.
Presentation
The Group’s fiscal year end is 31 December.
References to a particular year in this
Annual Report are to the fiscal year, unless
otherwise indicated. Except as the context
otherwise requires, ‘ordinary share’ or
‘share’ refer to the ordinary shares of
Smith & Nephew plc of 20 US cents each.
The Group Accounts of Smith & Nephew
plc in this Annual Report are presented
in US Dollars. Solely for the convenience
of the reader, certain parts of this Annual
Report contain translations of amounts
in US Dollars into Sterling at specified
rates. These translations should not be
construed as representations that the US
Dollar amounts actually represent such
Sterling amounts or could be converted
into Sterling at the rate indicated.
Unless stated otherwise, the translation
of US Dollars and cents to Sterling and
pence in this Annual Report has been made
at the Bank of England exchange rate on
the date indicated. On 17 February 2026,
the latest practicable date for this Annual
Report, the Bank of England rate was
US$1.3503 per GBP£1.00.
The results of the Group, as reported in
US Dollars, are affected by movements
in exchange rates between US Dollars
and other currencies.
The Group applied the average exchange
rates prevailing during the year to
translate the results of companies with
functional currency other than US Dollars.
The currencies which most influenced
these translations in the years covered
by this report were Sterling, Swiss Franc
and the Euro.
The Accounts of the Group in this Annual
Report are presented in millions (m)
unless otherwise indicated.
UK legislation provides for a charge to
stamp duty or SDRT to be payable at an
enhanced rate of 1.5% of the consideration
(or, in some cases, the value of the shares
concerned) where ordinary shares are
transferred to the depositary or to certain
persons providing a clearance service
(or their nominees or agents) for the
conversion into ADRs and will generally
be payable by the depositary or person
providing clearance service. In accordance
with the terms of the Deposit Agreement,
any tax or duty payable by the depositary
on deposits of ordinary shares will be
charged by the depositary to the party to
whom ADRs are delivered against such
deposits. However, such transfers to the
depository or to certain persons providing
a clearance service (or their nominees or
agents) will not attract stamp duty or SDRT
where they satisfy the conditions of an
exemption, including exemptions which can
apply to certain capital raising or qualifying
listing arrangements. Specific professional
advice should be sought before paying
the 1.5% SDRT or stamp duty charge in
any circumstances.
No liability for stamp duty or SDRT will
arise on any transfer of, or agreement to
transfer, an ADS or beneficial ownership
of an ADS, provided that the ADS and
any instrument of transfer or written
agreement to transfer remains at all times
outside the UK, and provided further that
any instrument of transfer or written
agreement to transfer is not executed in
the UK and the transfer does not relate
to any matter or thing done or to be done
in the UK (the location of the custodian
as a holder of ordinary shares not being
relevant in this context). In any other case,
any transfer of, or agreement to transfer,
an ADS or beneficial ownership of an ADS
could, depending on all the circumstances
of the transfer, give rise to a charge to
stamp duty or SDRT.
Any UK stamp duty or SDRT imposed
upon transfers of ADSs or ordinary shares
will not be treated as a creditable foreign
tax for US federal income tax purposes.
US Holders should consult their tax
advisers regarding whether any such UK
stamp duty or SDRT may be deductible
or reduce the amount of gain (or increase
the amount of loss) recognised upon a
sale or other disposition of the ADSs or
ordinary shares.
297
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STRATEGIC REPORT
GOVERNANCE
ACCOUNTS
OTHER INFORMATION
Insider trading policies
Our Board of Directors adopted insider
trading policies and procedures governing
the purchase, sale, and other dispositions
of our securities by directors, senior
management, and employees that
are reasonably designed to promote
compliance with applicable insider trading
laws, rules, and regulations, and any listing
standards applicable to the Group.
Special note regarding
forward-looking statements
The Group’s reports filed with, or
furnished to, the US Securities and
Exchange Commission (SEC), including
this document and written information
released, or oral statements made, to
the public in the future by or on behalf
of the Group, contain ‘forward-looking
statements’ within the meaning of the
US Private Securities Litigation Reform
Act of 1995, that may or may not prove
accurate. For example, statements
regarding expected revenue growth and
trading profit margins discussed in the
‘Strategic Report’, 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:
global supply chain; risks related to factors
such as the conflicts in Ukraine and the
Middle East; economic and financial
conditions in the markets we serve,
especially those affecting healthcare
providers, payers and customers; price
levels for established and innovative
medical devices; developments in
medical technology; regulatory approvals,
reimbursement decisions or other
government actions; product defects or
recalls or other problems with quality
management systems and loss of
reputation or failure to comply with related
regulations; litigation relating to patent or
other claims; legal and financial compliance
risks and related investigative, remedial
or enforcement actions; disruption to our
supply chain or operations or those of
our suppliers; competition for qualified
personnel; talent management; 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; disruptions
due to natural disasters, weather and
climate change related events; changes
in customer and other stakeholder
sustainability expectations; changes in
taxation regulations; effects of foreign
exchange volatility; and numerous other
matters that affect us or our markets,
including those of a political, economic,
business, competitive or reputational
nature; relationships with healthcare
professionals; reliance on information
technology and cybersecurity; artificial
intelligence technologies and disruptor
products. Specific risks faced by the Group
are described under ‘Risk factors’ on pages
275-284 of this Annual Report.
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.
Product data
Product data and product share estimates
throughout this report are derived from
a variety of sources including publicly
available competitors’ information,
internal management information and
independent market research reports.
Documents on display
It is possible to read and copy documents
referred to in this Annual Report at
the Registered Office of the Company.
Documents referred to in this Annual
Report that have been filed with the
Securities and Exchange Commission
in the US may be read and copied at the
SEC’s public reference room located at
450 Fiſth Street, NW, Washington DC
20549. Please call the SEC at 1-800-SEC-
0330 for further information on the public
reference rooms and their copy charges.
The SEC also maintains a website at
www.sec.gov that contains reports and
other information regarding registrants
that file electronically with the SEC.
Annual Reports on Form 20-F and some of
the other information submitted by the
Group to the SEC may be accessed through
the SEC website.
Corporate headquarters
and registered office
The corporate headquarters is in the
Smith & Nephew plc,
Hatters Lane, Watford,
Hertfordshire, WD18 8YE,
Registered in England and Wales
No. 324357.
Tel. +44 (0)1923 477 100
www.smith-nephew.com
298
Smith+Nephew
Annual Report 2025
Shareholder information
continued
Other information
continued
Cross-reference to Form 20-F
The information in this document that is referenced in the following table will be included in our Annual Report on
Form 20-F for 2025 filed with the SEC (the ‘2025 Form 20-F’). The information in this document will be updated and
supplemented at the time of filing with the SEC or later amended if necessary. No other information in this document
is included in the 2025 Form 20-F or incorporated by reference into any filings by us under the Securities Act.
Part 1
Form 20-F caption
Location in this document
Page
Item 1
Identity of Directors, Senior Management and Advisers
Not applicable
–
Item 2
Offer Statistics and Expected Timetable
Not applicable
–
Item 3
Key Information
A – (Reserved)
Not applicable
–
B – Capitalisation and Indebtedness
Not applicable
–
C – Reason for the Offer and Use of Proceeds
Not applicable
–
D – Risk Factors
Risk factors
275–284
Item 4
Information on the Company
A – History and Development of the Company
Corporate Headquaters and Regional Office
298
Note 1 ‘Basis of preparation’
215
Group Information
274
About Smith+Nephew
297
Note 21 ‘Acquisitions’
264
Capital allocation framework
24-25
Note 7 ‘Property, plant and equipment’
228-229
Note 9 ‘Intangible assets
232-234
Note 15 ‘Cash and borrowings’
239-241
Documents on display
298
B – Business Overview
Smith+Nephew at a glance
2-3
Orthopaedics Segment
39-43
Sports Medicine & ENT Segment
44-48
Wound Segment
49-52
Chair’s statement
4-5
Chief Executive Officer’s review
6-11
Leading positions in attractive markets
12-13
Our business model
14-15
Innovators
26-35
Serving our customers
36-52
Disaggregation of revenue
219
Seasonality
13
Source materials
34
2025 Principal Risks
83-94
Note 12 ‘Inventories’
236
Risk factors
275-284
Accelerating Sports Medicine and AWM
7
Our sales force
37
Note 3 ‘Operating profit’
221-223
Note 9 ‘Intangible assets
232-234
Our purpose and stakeholders
117-123
Compliance and Culture Committee Report
136-140
C – Organisational Structure
Note 8 ‘Group companies’
270-273
Group Information
274
D – Property, Plants and Equipment
Note 7 ‘Property, plant and equipment’
228-229
Group Information
274
Item 4A
Unresolved Staff Comments
None
–
Item 5
Operating and Financial Review and Prospects
A – Operating Results
Chair’s statement
4-5
Chief Executive Officer’s review
6-11
Measuring our progress
16-17
Chief Financial Officer's review
18-25
299
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STRATEGIC REPORT
GOVERNANCE
ACCOUNTS
OTHER INFORMATION
Part 1
Form 20-F caption
Location in this document
Page
A – Operating Results continued
Research & Development
27-32
Orthopaedics Performance
40-41
Sports Medicine & ENT Performance
45
Advanced Would Management Performance
50
Group financial statements
211-265
B – Liquidity and Capital Resources
Liquidity and capital resources
23
Note 15 ‘Cash and borrowings’
239-241
Note 20 ‘Cash flow statement’
262-263
C – Research and Development, Patents and Licences, etc.
Chief Executive Officer’s review
6-11
Research & Development
27-32
Note 3 'Operating profit'
221-223
New product innovation, design and development,
including intellectual property
279-280
D – Trend Information
Chief Executive Officer’s review
6-11
Delivering value for stakeholders
14-15
2026 Outlook
25
Innovators
26-35
Serving our customers
36-52
Risk factors
275-284
E – Critical Accounting Estimates
Note 1.2 ‘Critical judgements and estimates’
216
Item 6
Directors, Senior Management and Employees
A – Directors and Senior Management
Board of Directors
102-107
Executive Committee
108-109
B – Compensation
Remuneration Committee Report
147-193
Note 18 'Retirement and benefit obligations'
254-259
C – Board Practices
Board of Directors
102-107
Corporate Governance
124-128, 132-193
D – Employees
Our People
120
Note 3.1 ‘Staff costs and employee numbers’
223
An ethical employer
63
E – Share Ownership
Share capital
194-196
Note 6 ‘Earnings per ordinary share’
227
Directors’ interests in ordinary shares
183-185
Note 19 ‘Equity’
259-261
Note 22.1 ‘Share-based payments’
265
Performances Share Plan
179–182
Shareholder information
293–298
F –
Disclosure of a Registrant’s Action to Recover Erroneously
Awarded Compensation
Not applicable
–
Item 7
Major Shareholders and Related Party Transactions
A – Major Shareholders
Major shareholders
196
Shareholder information
293-298
B – Related Party Transactions
Note 22.2 ‘Related party transactions’
265
C – Interests of Experts and Counsel
Not applicable
–
Item 8
Financial Information
A – Consolidated Statements and Other Financial Information
Statement of Directors’ responsibilities in respect
of the Annual Report and Financial Statements
198
Independent auditor’s report to the members of
Smith & Nephew Plc
199-210
Group financial statements
211-265
Legal Proceedings
Note 17.3 ‘Legal proceedings’
252
Dividends
Shareholder information
293-298
Item 9
The Offer and Listing
A – Offer and Listing Details
UK Corporate Governance Code 2024 (“the Code”):
2025 Statement of Compliance
100-101
Share Capital
194-197
Business overview and Group history
274
Shareholder information
293-298
300
Smith+Nephew
Annual Report 2025
Cross-reference to Form 20-F
continued
Other information
continued
Part 1
Form 20-F caption
Location in this document
Page
B – Plan of Distribution
Not applicable
–
C – Markets
UK Corporate Governance Code 2024 (“the Code”):
2025 Statement of Compliance
100–101
Share capital
194–196
Business overview and Group history
274
Shareholder information
293–298
D – Selling Shareholders
Not applicable
–
E – Dilution
Not applicable
–
F – Expenses of the Issue
Not applicable
–
Item 10
Additional Information
A – Share Capital
Not applicable
–
B – Memorandum and Articles of Association
Articles of Association
195
C – Material Contracts
Not applicable
–
D – Exchange Controls
Exchange controls and other limitations affecting
security holders
295
E – Taxation
Taxation information for shareholders
295–297
F – Dividends and Paying Agents
Not applicable
–
G – Statement by Experts
Not applicable
–
H – Documents on Display
Documents on display
298
I
– Subsidiary Information
Group companies
270–273
J
– Annual report to security holders
Annual report to security holders
To be filed as
exhibit to Form 6-K
Item 11
Quantitative and Qualitative Disclosure about Market Risk
Note 16 ‘Financial instruments and
risk management’
242–250
Item 12
Description of Securities other than Equity Securities
A – Debt Securities
Not applicable
–
B – Warrants and Rights
Not applicable
–
C – Other Securities
Not applicable
–
D – American Depositary Shares
Shareholder information
293–298
Part 2
Form 20-F caption
Location in this document
Page
Item 13
Defaults, Dividend Arrearages and Delinquencies
Not applicable
–
Item 14
Material Modifications to the Rights of Security Holders and
Use of Proceeds
Not applicable
–
Item 15
Controls and Procedures
Risk report
78–82
Audit Committee Report
141–146
Independent auditor’s report to the members of
Smith & Nephew Plc
199–210
Item 16
(Reserved)
Not applicable
–
A – Audit Committee Financial Expert
How we assess our prospects
95–96
Committee meetings
142
B – Code of Ethics
Code of Ethics for Senior Financial Officers
146
C – Principal Accountant Fees and Services
Non-audit fees paid to the auditor
145
Audit fees paid to the auditor
145
Note 3.2 ‘Audit Fees – information about the
nature and cost of services provided by the auditor’
223
D – Exemptions from the Listing Standards for Audit Committees
Not applicable
–
E –
Purchases of Equity Securities by the Issuer and
Affiliated Purchasers
Major shareholders
196
Authority to purchase own shares on behalf of
the Company
196
Share Buyback
196
F – Change in Registrant’s Certifying Accountant
Not applicable
–
G – Corporate Governance
Governance at a glance
98–101
H – Mine Safety Disclosure
Not applicable
–
I
– Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable
–
J – Insider Trading Policies
Insider trading
298
K – Cybersecurity
Cybersecurity risk management and governance
274–275
Part 3
Form 20-F caption
Location in this document
Page
Item 17
Financial Statements
Not applicable
–
Item 18
Financial Statements
Group Financial Statements
211–265
Item 19
Exhibits
301
Smith+Nephew
Annual Report 2025
STRATEGIC REPORT
GOVERNANCE
ACCOUNTS
OTHER INFORMATION
Topic
Metric
2025 Reporting
Code
Affordability
and pricing
Ratio of weighted average rate of
net price increases (for all products)
to the annual increase in the US
Consumer Price Index.
Not reported.
HC-MS-240a.1
Description of how price information
for each product is disclosed to
customers or to their agents.
Smith+Nephew uses several methods
to disseminate price information to
customers, including quotes, agreements,
responses to requests for proposal,
tender bid submissions, discount
and rebate reporting and through
large group purchasing organisation/
integrated delivery network customers to
their members.
HC-MS-240a.2
Product safety
Number of recalls issued, total
units recalled.
In 2025, Smith+Nephew reported seven
voluntary recalls globally: 0 Class I , 2
Class II and 5 Class III. A total of 1,222
units were impacted. All recalls during
FY2025 were voluntary and were not
the result of FDA enforcement actions or
mandatory recall orders.
HC-MS-250a.1
List of products listed in the
FDA’s MedWatch Safety
Alerts for Human Medical
Products database.
Smith+Nephew reports all
data as required by FDA.
The MedWatch database is available at
https://www.fda.gov/safety/medwatch-
fda-safety-information-and-adverse-
event-reporting-program
HC-MS-250a.2
Number of fatalities related to
products as reported in the FDA
Manufacturer and User Facility
Device Experience (MAUDE).
Smith+Nephew reports all
data as required by FDA.
The FDA MAUDE database is available at
https://www.accessdata.fda.gov/scripts/
cdrh/cfdocs/cfmaude/search.cfm
HC-MS-250a.3
Number of FDA enforcement
actions taken in response to
violations of current Good
Manufacturing Practices (cGMP),
by type.
In 2025, Smith+Nephew received:
–
0 Form 483 (0 observations in total).
–
0 Warning letters.
–
0 Seizures.
–
0 Mandatory recalls.
–
0 Consent decrees.
HC-MS-250a.4
Ethical marketing
Description of code of ethics
governing promotion of off-label use
of products.
See the Product Promotion and
Scientific Disclosures section of
our Code of Conduct and Business
Principles (Compliance (smith-nephew.
com)) and the Business Ethics section
of our Sustainability Report for
additional information.
HC-MS-270a.2
302
Smith+Nephew
Annual Report 2025
SASB reporting
Other information
continued
Topic
Metric
2025 Reporting
Code
Product design and
lifecycle management
Discussion of process to assess and
manage environmental and human
health considerations associated
with chemicals in products, and meet
demand for sustainable products.
Sustainability reviews are incorporated
in New Product Development phase
reviews for new products and acquisitions.
Additionally, regulatory changes regarding
chemicals in products are tracked and
actioned, as appropriate.
See our Sustainability Report for
more information.
HC-MS-410a.1
Total amount of products accepted
for takeback and reused, recycled, or
donated, broken down by:
(1) devices and equipment and
(2) supplies.
Smith+Nephew operates takeback
schemes where required by law.
Smith+Nephew does not measure the
amount of products reused or recycled for
our business purposes.
See the People section of our
Sustainability Report for information
on product donations.
HC-MS-410a.2
Supply chain
management
Percentage of (1) entity’s facilities
and (2) Tier 1 suppliers’ facilities
participating in third-party audit
programmes for manufacturing and
product quality.
All Smith+Nephew direct manufacturing
locations participate in the Medical Device
Single Audit Program (MDSAP).
All Smith+Nephew direct and third-party
manufacturing locations are certified to
ISO 13485. Additionally, all Tier 1 material
suppliers are compliant with ISO 13485.
HC-MS-430a.1
Description of efforts to
maintain traceability within the
distribution chain.
All Smith+Nephew products are labelled
with either Unique Device Identifiers or
HIBC barcodes to maintain traceability.
HC-MS-430a.2
Description of the management
of risks associated with the use of
critical materials.
Supply chain risks are captured
within Smith+Nephew’s Enterprise
Risk Management process and global
supply chain is identified as one of our
principal risks.
See our Risk Report on page 78 and our
Conflict Minerals Disclosure Report on our
website (www.smith-nephew.com) for
additional information.
HC-MS-430a.3
Business ethics
Total amount of monetary losses as a
result of legal proceedings associated
with bribery or corruption.
In 2025, Smith+Nephew did not have
monetary losses due to legal proceedings
associated with bribery or corruption.
HC-MS-510a.1
Description of code of ethics
governing interactions with
healthcare professionals.
See our website
(www.smith-nephew.com) for our Code
of Conduct and Business Principles,
our Anti-Bribery Policy, our Annual
Report, and also the Business Ethics
section of our Sustainability Report for
additional information.
HC-MS-510a.2
Activity metric
Number of units sold by
product category.
Not reported.
HC-MS-000.A
You can learn more about our sustainability targets and strategy in our
2025 Sustainability Report at www.smith-nephew.com/sustainability
303
Smith+Nephew
Annual Report 2025
STRATEGIC REPORT
GOVERNANCE
ACCOUNTS
OTHER INFORMATION
Term
Meaning
ADR
In the US, the Company’s ordinary shares are traded
in the form of American Depositary Shares evidenced
by American Depositary Receipts (ADRs).
ADS
In the US, the Company’s ordinary shares are traded in the
form of American Depositary Shares (ADSs).
Arthroscopic
Enabling
Technologies
(AET)
A product group which includes a variety of technologies
such as fluid management equipment for surgical access,
high definition cameras, digital image capture, scopes,
light sources and monitors to assist with visualisation
inside the joints, radio frequency, electromechanical and
mechanical tissue resection devices, and hand instruments
for removing damaged tissue.
Advanced
Wound
Bioactives
(AWB)
A product group which includes biologics and other
bioactive technologies that provide unique approaches
to debridement and dermal repair/regeneration, and
regenerative medicine products including skin, bone graſt
and articular cartilage substitutes.
Advanced
Wound Care
(AWC)
A product group which includes products for the treatment
and prevention of acute and chronic wounds, including
leg, diabetic and pressure ulcers, burns and post-
operative wounds.
Advanced
Wound Devices
(AWD)
A product group which includes traditional and single-use
Negative Pressure Wound Therapy, a patient monitoring
system for pressure injury prevention and patient mobility
monitoring, and hydrosurgery systems.
AGM
Annual General Meeting of the Company.
Arthroscopy
Endoscopy of the joints is termed ‘arthroscopy’, with the
principal applications including the knee and shoulder.
ASC
Ambulatory Surgery Center.
Basis Point
One hundredth of one percentage point.
Chronic
wounds
Chronic wounds are those with long or unknown healing
times including leg ulcers, pressure sores and diabetic
foot ulcers.
Company
Smith & Nephew plc or, where appropriate, the Company’s
Board of Directors, unless the context otherwise requires.
Companies Act
Companies Act 2006, as amended, of England and Wales.
Emerging
Markets
Emerging Markets include Latin America, Asia (excluding
Japan), Middle East, Africa and Russia.
EPSA
Adjusted earnings per ordinary share as defined on page
288-289.
Endoscopy
Through a small incision, surgeons are able to see inside
the body using a monitor and identify and repair defects.
ENT
Ear, Nose and Throat.
Established
Markets
Established Markets are United States of America, Europe,
Australia, New Zealand, Canada and Japan.
Euro or €
References to the common currency used in the majority
of the countries of the European Union.
FDA
US Food and Drug Administration.
Financial
statements
Refers to the consolidated Group Accounts
of Smith & Nephew plc.
FTSE 100
Index of the largest 100 listed companies on the London
Stock Exchange by market capitalisation.
Group or
Smith+Nephew
Used for convenience to refer to the Company and
its consolidated subsidiaries, unless the context
otherwise requires.
Health
economics
A branch of economics concerned with issues related
to efficiency, effectiveness, value and behaviour in the
production and consumption of health and healthcare.
Hip Implants
A product group which includes specialist products for
reconstruction of the hip joint.
IFC
Inside Front Cover.
Term
Meaning
IBC
Inside Back Cover.
IFRS
International Financial Reporting Standards issued by the
International Accounting Standards Board.
Knee implants
A product group which includes an innovative range of
products for specialised knee replacement procedures.
LSE
London Stock Exchange.
MDR
Medical Device Regulation.
MHRA
The Medicines and Healthcare products Regulatory
Agency in the UK.
Negative
Pressure
Wound Therapy
(NPNT)
A technology used to treat chronic wounds such as
diabetic ulcers, pressure sores and post-operative wounds
through the application of sub-atmospheric pressure to an
open wound.
NHS
The UK National Health Service.
NYSE
New York Stock Exchange.
Orthopaedic
products
Orthopaedic reconstruction products include joint
replacement systems for knees, hips and shoulders and
support products such as computer-assisted surgery and
minimally invasive surgery techniques. Orthopaedic
trauma devices are used in the treatment of bone fractures
including rods, pins, screws, plates and external frames.
Other
Reconstruction
A product group which includes robotics-assisted surgery,
bone cement and accessory products.
OXINIUM
OXINIUM material is an advanced load bearing technology.
It is created through a proprietary manufacturing process
that enables zirconium to absorb oxygen and transform
to a ceramic on the surface, resulting in a material that
incorporates the features of ceramic and metal.
Management believes that OXINIUM material used in
the production of components of knee and hip implants
exhibits unique performance characteristics due to its
hardness, low-friction and resistance to roughening
and abrasion.
Parent
Company
Pound Sterling,
Sterling, £,
pence or p
References to UK currency. 1p is equivalent to one
hundredth of £1.
SEC
US Securities and Exchange Commission.
Sports
Medicine
Joint Repair
Sports Medicine Joint Repair includes instruments,
technologies and implants necessary to perform
minimally invasive surgery of joints.
Trading
results
Trading profit, trading profit margin (trading profit
expressed as a percentage of revenue), trading cash flow
and trading profit to trading cash conversion ratio (trading
cash flow expressed as a percentage of trading profit)
are trend measures, which present the profitability of
the Group. The adjustments made exclude the impact
of specific transactions that management considers
affect the Group’s short-term profitability and cash flows,
and comparability of results. Refer to page 287-288 for
further information.
Trauma &
Extremities
A product group which includes internal and external
devices used in the stabilisation of severe fractures
and deformity correction procedures.
UK
United Kingdom of Great Britain and Northern Ireland.
Underlying
growth
Growth aſter adjusting for the effects of currency
translation and the inclusion of the comparative impact
of acquisitions and exclusion of disposals.
US
United States of America.
US Dollars, $,
or cents or ¢
References to US currency. 1 cent is equivalent to one
hundredth of US$1.
Unless the context indicates otherwise, the following terms have the meanings shown below:
304
Smith+Nephew
Annual Report 2025
Glossary
Other information
continued
Accounting policies
214–265
Accounts presentation
297
Acquisitions
10, 15, 16, 20–21, 23, 24–25, 32,
68, 76–77, 83, 91–93, 96, 113, 118,
144, 215, 220–221, 232–234, 265
Acquisition and disposal related items
16, 23, 220–222, 225, 288–289
American Depositary Shares
293
Articles of Association
195–196
Audit fees
145, 223
Board
102–107
Business overview
2-5, 274
Business segment information
39–53, 217–221
Cash and borrowings
239–241
Chair’s statement
4-5
Chief Executive Officer’s review
6–11
Company balance sheet
266
Company notes to the accounts
268–273
Contingencies
250–253, 270
Critical judgements and estimates
216
Cross-reference to Form 20-F
299–301
Currency fluctuations
284
Currency translation
217
Deferred taxation
224–227
Directors’ Remuneration Report
147–193
Directors’ responsibility statement
198
Dividends
14, 16, 25, 260–261, 294
Earnings per share
16, 227,
Employee share plans
265
Executive team
108–109
Factors affecting results of operations
278
Financial instruments
242–251
Financial review
18–25
Free cash flow
23, 25, 147–193, 290
Glossary of terms
304
Goodwill
230–231
Group balance sheet
212
Group cash flow statement
213
Group companies
270–273
Group history
297
Group income statement
211
Group notes to the accounts
215–265
Group overview
2-5, 274
Group statement of changes in equity
214
Group statement of comprehensive income
211
Independent auditor’s report
199–210
Intangible assets
232–234
Intellectual property disputes
252
Interest and other finance costs
223
Inventories
236
Investments
234
Investment in associates
234–235
Key Performance Indicators
16–17
Legal and other
16, 20–23, 220–222, 251, 288–289
Legal proceedings
252
Leverage ratio
290
Liquidity and capital resources
23, 241
Manufacturing and quality
32–35
Net debt
263
New accounting standards
215–216
Operating profit
221–222
Other finance costs
223
Our approach to stakeholders
114–120
Our global markets
39, 44, 49
Outlook and trend information
5, 19, 275–284
People/Employees
59–63
Post balance sheet events
265
Provisions
250–252
Property, plant and equipment
228–229
Regulation
35, 62–63, 69–71, 84–92, 118,
122–123, 131–132, 138, 198
Related party transactions
265, 274
Research & development
27–32, 221–222
Restructuring and rationalisation expenses
23, 222
Retirement benefit obligations
144, 253–259
Return on invested capital (ROIC)
16, 19, 24–25, 287, 291–292
Risk factors
275–284
Risk report
78–96
SASB reporting
302–303
Share-based payments
265
Share capital
194–195
Shareholder information
293–298
Staff costs and employee numbers
223
Stakeholder statement
114–116
Statement of compliance
100
Strategy for Growth
9
Sustainability
64–77
Taxation
224–227
Taxation information for shareholders
295–297
TCFD reporting
69–72
Total shareholder return
179
Trade and other payables
238
Trade and other receivables
237–238
Treasury shares
260–261
305
Smith+Nephew
Annual Report 2025
STRATEGIC REPORT
GOVERNANCE
ACCOUNTS
OTHER INFORMATION
Index
References from Research & Development
(pages 27-32)
1
Coenen R, Peeters A, Nathwani D, Albelooshi A,
Ettinger M, Verheyden F, Mievis J, Meshram P,
Schotanus M, Bollars P. Improved Clinical
Outcomes with Imageless Robotic-Assisted vs
Conventional Total Knee Arthroplasty: 2-year
RCT Results. Presented at: EKS Open Meeting,
18-19 June 2025; Copenhagen, Denmark
2
Australian Orthopaedic Association National
Joint Replacement Registry (AOANJRR) Hip,
Knee & Shoulder Arthroplasty: 2025 Annual
Report Adelaide; AOA, 2025:1-727. Available at:
https://aoanjrr.sahmri.com/annual-
reports-2025. Accessed October 2, 2025 (see
page 306)
3
Ruiz Ibán MA, García Navlet M, Moros Marco S, et
al. Augmentation of a Posterosuperior Cuff
Repair With a Bovine Bioinductive Collagen
Implant Shows a Lower Retear Rate but Similar
Outcomes Compared With No Augmentation:
2-Year Results of a Randomized Controlled Trial.
Arthroscopy. 2025;41(10):3869-3879.
doi:10.1016/j.arthro.2025.03.057
4
Sherman SL. Aragonite-Based Scaffold Versus
Microfracture and Debridement for the
Treatment of Knee Chondral and Osteochondral
Lesions: Results of a Multicentre Randomized
Controlled Trial at 5 Years Follow-up. Oral
presentation at: American Orthopaedic Society
for Sports Medicine; July 10–12, 2025; Nashville,
TN, USA.
5
Chorney SR, Johnson RF, Mitchell RB. Cost-utility
analysis of intracapsular and extracapsular
techniques for paediatric tonsillectomy.
Laryngoscope. Published online July 23, 2025.
6
Orlova D, Orlov A, Gefen A. The protective
efficacy of a new soſt silicone multi-layer
dressing in reducing the heel pressure ulcer risk.
Int Wound J. 2025;22(1):e70764.
7
Vilkins A, Nherera L, Searle R, Welsh T.
Prophylactic negative pressure wound therapy
for caesarean section: a real world evidence
study. Wounds. 2025;37(4):152–157.
8
SmartTRAK, 2025, Shoulder Soſt Tissue Fixation,
2025 BioMedGPS — SmartTRAK.
9
Hein J, et al. Arthroscopy. 2015;31(11):2274-
2281.
10 Data on File at Integrity Orthopaedics.
11 Camacho Chacón JA, Roda Rojo V, Martin
Martinez A, Cuenca Espierrez J, Garcia Calvo V,
Calderón Meza JM, Martin Hernandez C. An
isolated bioinductive repair vs. sutured repair for
full-thickness rotator cuff tears: 2-year results of
a double blinded, randomized controlled trial. J
Shoulder Elbow Surg, 2024.
12 Ruiz Ibán M, García Navlet M, Moros Marco S,
Diaz Heredia J, Hernando Sánchez A, Ruiz Díaz R,
Vaquero Comino C, Rosas Ojeda ML, Del Monte
Bello G, Ávila Lafuente JL. Augmentation of a
Transosseous-Equivalent Repair in
Posterosuperior Nonacute Rotator Cuff Tears
With a Bioinductive Collagen Implant Decreases
the Retear Rate at 1 Year: A Randomized
Controlled Trial. Arthroscopy 40(6): 1760, 2024.
13 ArthroCare Corporation 2017. Report: Design
Verification, 1.8mm Q-FIX MINI Soſt Suture
Anchor. P/N 49190-03 Rev. B.
14 Barber FA, Herbert MA. All-Suture Anchors:
Biomechanical Analysis of Pullout Strength,
Displacement, and Failure Mode. Arthroscopy.
2017;33(6):1113-1121.
15 Douglass NP, Behn AW, Safran MR. Cyclic and
Load to Failure Properties of All-Suture Anchors
in Synthetic Acetabular and Glenoid Cancellous
Bone. Arthroscopy. 2017;33(5):977-985 e975.
16 Ruder JA, Dickinson EY, Peindl RD, Habet NA,
Trofa DP, Fleischli JE. Cyclic and Load-to-Failure
Properties of All-Suture Anchors in Human
Cadaveric Shoulder Glenoid Bone. Arthroscopy.
2019;35(7):1954-1959 e1954.
17 Smith+Nephew 2023. Q-FIX with MINITAPE
Claims Report. Internal Report. 10090792-
Revision B.
18 Smith+Nephew 2024 Internal Report, 10144423
Rev B.
19 Ergun S, Akgun U, Barber A, Karahan M. The
Clinical and Biomechanical Performance of
All-Suture Anchors: A Systematic Review.
Arthroscopy. 2020; 2(3): e263-e275.
20 SmartTRAK Report, 2023.
References from Orthopaedics (pages 39-43)
1
Smith+Nephew. Evidence Outcomes Report
EO.TRA. PCS001.v1. 2021.
2
Quartley M, Chloros G, Papakostidis K,
Saunders C, Giannoudis PV. Stabilisation of AO
OTA 31-A unstable proximal femoral fractures:
Does the choice of intramedullary nail affect
the incidence of post-operative complications?
A systematic literature review and meta-
analysis. Injury. 2022;53(3):827–840.
3
Iriuchishima T, Ryu K. A Comparison of Rollback
Ratio between Bicruciate Substituting Total
Knee Arthroplasty and Oxford
Unicompartmental Knee Arthroplasty. J Knee
Surg. 2018;31(6):568–572.
4
Murakami K, Hamai S, Okazaki K, et al. Knee
kinematics in bi-cruciate stabilized total knee
arthroplasty during squatting and stair climbing
activities. J Orthop. 2018;15(2):650–654.
5
Carpenter RD, Brilhault J, Majumdar S, Ries MD.
Magnetic resonance imaging of in vivo
patellofemoral kinematics aſter total knee
arthroplasty. Knee. 2009;16(5):332-336.
6
Grieco TF, Sharma A, Dessinger GM, Cates HE,
Komistek RD. In Vivo Kinematic Comparison of
a Bicruciate Stabilized Total Knee Arthroplasty
and the Normal Knee Using Fluoroscopy.
J Arthroplasty. 2018;33(2):565-571.
7
Smith LA, Nachtrab J, LaCour M, et al. In Vivo
Knee Kinematics: How Important Are the Roles
of Femoral Geometry and the Cruciate
Ligaments? J Arthroplasty. 2021;36:1445-1454.
8
Australian Orthopaedic Association National
Joint Replacement Registry (AOANJRR) Hip,
Knee & Shoulder Arthroplasty: 2024 Annual
Report Adelaide; AOA, 2024:1–629. Available at:
https://aoanjrr.sahmri.com/annual-reports-2024.
Accessed December 11, 2024
9
Yayac M, Harrer S, Hozack WJ, Parvizi J,
Courtney M. The use of cementless components
does not significantly increase procedural costs
in total knee arthroplasty. J Arthroplasty.
2020;35:407–712.
10 Watson J, Jordan J. LEGION
◊
Primary Knee
System for total knee arthroplasty: Design
rationale and early results. Bone & Joint Science.
2015;5(1):1-8.
11 American Joint Replacement Registry (AJRR)
2024 Annual Report.
12 Smith + Nephew 2024. Internal Report.
10143423 Rev A.
13 Smith + Nephew 2024. Internal Report.
10144794. 13.Smith+Nephew 2020. NAVIO
Technical Specification Comparison. March
2020. Internal Report ER0488 REVB.
14 National Joint Registry for England, Wales,
Northern Ireland and the Isle of Man: 20th
Annual Report. 2023.
15 Australian Orthopaedic Association National
Joint Replacement Registry (AOANJRR).
Hip, Knee & Shoulder Arthroplasty:
2024 Annual Report. Adelaide: AOA, 2024.
16 Peters RM, Van Steenbergen LN, Stevens M,
Rijk PC, Bulstra SK, Zijlstra WP. The effect of
bearing type on the outcome of total hip
arthroplasty. Acta Orthop. 2018:89;163–169
17 Atrey A, Ancarani C, Fitch D, Bordini B. Impact
of bearing couple on long-term component
survivorship for primary cementless total hip
replacement in a large arthroplasty registry.
Poster presented at: Canadian Orthopedic
Association; June 20–23, 2018; Victoria,
British Columbia, Canada.
18 Davis ET, Pagkalos J, Kopjar B. Bearing surface
and survival of cementless and hybrid total hip
arthroplasty in the National Joint Registry of
England, Wales, Northern Ireland and the
Isle of Man. JBJS OA. 2020;5:e0075.
19 Smith+Nephew 2020. NAVIO Technical
Specification Comparison. March 2020.
Internal Report ER0488 REVB.
20 Smith+Nephew 2020. Comparison of operating
room footprint for robotic-assisted knee
arthroplasty systems. Internal Report. EO.REC.
PCS015.002.v1.
21 Gregori A, Picard F, Bellemans J, Smith JR,
Simone A. Handheld Precision Sculpting Tool
for Unicondylar Knee Arthroplasty. A Clinical
Review. Poster presented at: 15th EFORT
Congress; 4–6 June, 2014; London, UK.
22 Bollars P, Boeckxstaens A, Mievis J, Janssen D.
The Learning Curve and Alignment Assessment
of an Image-Free Handheld Robot in TKA: The
First Patient Series in Europe. Poster presented
at: 19th Annual Meeting of the International
Society for Computer Assisted Orthopaedic
Surgery 2019; New York, USA.
23 Kopjar B, Schwarzkopf R, Chow J, et al. NAVIO
Robotic Assisted Surgical System for Total Knee
Arthroplasty Using JOURNEY II Guided-Motion
Total Knee System. Poster presented at: ISTA
2–5 October, 2019; Toronto, Canada.
306
Smith+Nephew
Annual Report 2025
References from business unit sections
Other information
continued
57 Hallab NJ, McAllister K, Jacobs JJ, and Pawar,
V. Zirconium-Alloy and Zirconium-Oxide Particles
Produce less Toxicity and Inflammatory
Cytokines than Cobalt-Alloy and Titanium-Alloy
Particles In Vitro, in Human Osteoblasts,
Fibroblasts and Macrophages. 2012 Annual
Meeting of the Orthopaedic Research Society.
Poster no. 0971.
58 Smith+Nephew 2023. Internal Report 10140753.
I20-4GEN-A TRIGEN MAX Tibia Validation Lab
59 Smith+Nephew 2023. Internal Report.
ER-04-0990-0019. 41.Smith+Nephew 2023.
Internal Report. ER-04-0990-0020. 42.
Smith+Nephew 2022. Optimus TKA
Tensioner Gap
60 Smith + Nephew 2023. Cadaver Validation
of the CATALYSTEM Total Hip System.
Internal Report. OR-23-106.
61 Smith+Nephew 2023.
Internal Report. ER-04-0990-0020.
62 Smith + Nephew 2024.
Internal Report. 10143591.
63 Smith + Nephew 2024.
Internal Report. OR-24-025.
64 Smith + Nephew 2024.
Internal Report. 10142796. 36.
Smith+Nephew 2024.
Internal Report. 10142827.
65 Smith+Nephew 2024. Internal Report.
TM-24-034.
66 37. Smith+Nephew 2024.
Internal Report. TM-24-034. 38.
Smith+Nephew 2024.
Internal Report. 10143458 Rev A.
67 Smith+Nephew 2024.
Internal Report. 10143458 Rev A.
*
Based on BSC evidence.
**
We thank the patients and staff of all the
hospitals in England, Wales and Northern Ireland
who have contributed data to the National Joint
Registry. We are grateful to the Healthcare
Quality Improvement Partnership (HQIP), the
NJR Steering Committee and staff at the NJR
Centre for facilitating this work. The views
expressed represent those of the authors and
do not necessarily reflect those of the National
Joint Registry Steering Committee or the Health
Quality Improvement Partnership (HQIP) who do
not vouch for how the information is presented.
*** Compared to NAVIO™ Handheld Robotics.
**** Compared to Mako and ROSA.
***** With use of handpiece.
† Compared to a competitive shoulder system.
24 Geller JA, Rossington A, Mitra R, Jaramaz B,
Khare R, Netravali NA. Rate of learning curve and
alignment accuracy of an image-free handheld
robot for total Knee Arthroplasty. European
Knee Society Arthroplasty Conference; 2019;
Valencia, Spain.
25 Ponzio DY, Lonner JH. Preoperative Mapping in
Unicompartmental Knee Arthroplasty Using
Computed Tomography Scans Is Associated
with Radiation Exposure and Carries High Cost.
J Arthroplasty. 2015;30(6):964–967.
26 Smith+Nephew 2025. 10152295 REVA.
Shoulder Modeler TR - Session Management
& Notifications/Warnings/Errors
27 Smith+Nephew 2025. 10152290 REVA.
Shoulder Modeler TR - CORIOGRAPH Plan Page
28 Smith+Nephew 2025. 10152289 REVA.
Shoulder Modeler TR - General Features
29 Smith+Nephew 2025. 10152294 REVA.
Shoulder Modeler TR - Report Page
30 Smith+Nephew 2025. 10152293 REVA.
Shoulder Modeler TR - Implant Planning
31 Smith+Nephew 2025. 10152196 REVB.
CORIOGRAPH Modeler Unit Test
Execution Report
32 Naito Y, et al. BMC Muscoskeletal Disorders.
2021:1:1-8.
33 Smith+Nephew 2023. Internal Report 10092864
Ver A.7. I20-4GEN-A Verification Activity -
TRIGEN MAX Tibial Nail
34 Smith+Nephew 2023. Internal Report 10092852
Ver A. I20-4GEN-A Verification Activity -
Screw Prominence]
35 Rampurada A, et al. Eur J Orthop Surg Traumatol.
2008;18:521-524.
36 Ashfaq K, et al. J Knee Surg. 2012;25:375-384.
37 Catagni MA, et al. Medicalplastic; 1994:5.
38 Smith+Nephew 2023. AETOS Inlay Design
Features. Internal Report. ER-04-0990-0017.
39 Arenas-Miquelez A, Murphy R, Rosa A, Caironi D,
Zumstein M. Impact of humeral and glenoid
component variations on range of motion in
reverse geometry total shoulder arthroplasty.
A standardised computer model study. (8214).
Swiss Medical Weekly. 2020;150(SUPPL 244):2S.
40 Kalouche I, Sevivas N, Wahegaonker A,
Sauzieres P, Katz D, Valenti P. Reverse shoulder
arthroplasty: Does reduced medialisation
improve radiological and clinical results? Acta
Orthopaedica Belgica. 2009;75(2):158–166.
41 Lädermann A, Tay E, Collin P, et al. Effect of
critical shoulder angle, glenoid lateralization,
and humeral inclination on range of movement
in reverse shoulder arthroplasty. Bone Joint Res.
2019;8(8):378–386.
42 National Joint Registry for England, Wales and
Northern Ireland: 21st Annual Report. 2024.
Available at: NJR 21st Annual Report 2024_Hips.
pdf. Accessed January 06, 2025.
43 Whitehouse MR, Patel R, French JMR, et al.
The association of bearing surface materials with
the risk of revision following primary total hip
replacement: A cohort analysis of 1,026,481 hip
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45 Atrey A, Ancarani C, Fitch D, Bordini B. Impact of
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46 Hunter G, Dickinson J, Herb B, et al. Creation of
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47 Long M, Riester L, Hunter G. Nano-hardness
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48 Parikh A, Hill P, Hines G, Pawar V. Wear of
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49 Parikh A, Hill P, Pawar V, Sprague J. Long-term
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50 Papannagari R, Hines G, Sprague J, Morrison M.
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51 Smith+Nephew 2010. OR-10-155.
52 Aldinger P, Williams T, Woodard E. Accelerated
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53 Smith+Nephew 2016. OR-16-127.
54 2005 ASM International Engineering Materials
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55 Dalal A, Pawar V, McAllister K, Weaver C,
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56 ASTM F2384-24 (May 2024). Standard
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Other information
continued
43 Kon E, Di Matteo B, Verdonk P, et al. Aragonite-
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49 Smith+Nephew 2023. Verif, Q-FIX with Needles
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50 Smith+Nephew 2023. Competitive Claims,
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51 Smith+Nephew 2022. ANAKIN Shock and
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52 Smith+Nephew 2022. INTELLIO 4K CCU
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53 Smith+Nephew 2022. ANAKIN Expected
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54 TUV Rheinland 2022. SNE LENS 4K 60601-1
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63 Smith+Nephew 2010. PROcise XP Comparative
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*Demonstrated clinically and in-vivo.
** As compared to competitive devices in fixation/
pull-out benchtop testing.
*** As demonstrated in benchtop testing.
**** As compared to the competitive device in
cyclic benchtop testing.
***** Compared to traditional #2 suture.
† Testing performed in 2025.
†† At the 48-month follow-up, 1.2% (n=2) of
patients in the scaffold group and 9.5% (n=8)
of patients in the control group (microfracture
or debridement) had undergone a knee
replacement or osteotomy (p=0.003).
††† The REGENETEN Implant is cleared for use on
any tendon where there is not substantial loss
of tendon tissue.
†††† The REGENETEN Implant is cleared for use on
any tendon where there is not substantial loss
of tendon tissue.
REGENETEN Bone Anchors are only indicated for use
in rotator cuff repair. Published clinical outcomes
are for rotator cuff. The REGENETEN Implant is
currently approved for use in treating Gluteus
Medius and Achilles tears only in the US.
††††† As compared to mechanical debridement for
knee chondroplasty; n=60; p<0.001.
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AWM.PCS230.001.v2.
40 Loveluck J, Copeland, T., Hill, J., Hunt, A., and
Martin, R., . Biomechanical Modeling of the
Forces Applied to Closed Incisions During
Single-Use Negative Pressure Wound Therapy.
ePlasty. 2016;16:183-195.
41 Casey C. Consistent delivery of therapeutic
negative pressure levels by a single use negative
pressure wound therapy system (sNPWT)*
in a wound model. Paper presented at: EWMA;
2019; Gothenburg, Sweden.
42 Dowsett C, Hampton K, Myers D, Styche T.
Use of PICO
◊
to improve clinical and economic
outcomes in hard-to-heal wounds. Wounds
International. 2017;8(2):52-58.
43 Saunders C, Nherera LM, Horner A, Trueman P.
Single-Use negative-pressure wound therapy
versus conventional dressings for closed surgical
incisions: systematic literature review and
meta-analysis. BJS Open. 2021;0(0):1–8.
44 Gilchrist B, Robinson M, Jaimes H. Performance,
safety, and efficacy of a single use negative
pressure wound therapy system for surgically
closed incision sites and skin graſts: A
prospective multi-centre follow-up study.
Paper presented at: SAWC; 2020; Virtual.
45 Hurd T, Trueman P, Rossington A. Use of a
portable, single-use negative pressure wound
therapy device in home care patients with low
to moderately exuding wounds: A case series.
Ostomy Wound Manage. 2014;60(3):30-36.
46 Smith & Nephew 2018. PICO 14 Pump weight
and dimensions. Internal report. RD/18/137.
47 Smith & Nephew March 2018. Kendal PICO 7Y
– pump eight and dimensions. Internal report.
DS.18.066.R.
48 Forlee M, van Zyl L, Louw V, Nel J, Fourie N,
Hartley R. A randomised controlled trial to
compare the clinical efficacy and acceptability
of adjustable intermittent and continuous
Negative Pressure Wound Therapy (NPWT) in
a new portable NPWT system. Paper
presented at: EWMA; 2018; Krakow, Poland.
49 Forlee M, Richardson J, Rossington A,
Cockwill J, Smith J. An interim analysis of device
functionality and usability of RENASYS TOUCH
– a new portable Negative Pressure Wound
Therapy (NPWT) system. Paper presented at:
Wounds UK; 2016; Harrogate, UK.
50 Smith+Nephew 2022. RENASYS EDGE System
Human Factors Summative Report Summary.
Internal Report. CSD. AWM.22.071.
51 Smith+Nephew 2022. Summary of footprint,
portability, wearability, weight and audible
noise for the RENASYS EDGE system.
Internal Report. CSD.AWM.22.067.
52 Smith+Nephew 2022. Summary of RENASYS
EDGE pump mechanical and electronic reliability
testing. Internal Report. CSD.AWM.22.069.
53 Smith+Nephew 2022. Summary of RENASYS
EDGE pump cleaning, self-test and maintenance.
Internal Report. CSD. AWM.22.068
310
Smith+Nephew
Annual Report 2025
References from business unit sections
continued
Other information
continued
54 Rennekampff HA, Schaller H-E, Wisser D, et al.
Debridement of burn wounds with a water
jetsurgical tool. Burns. 2006 Feb;32(1):64 - 69.
55 Hyland EJ, D’Cruz R, Menon S, et al. Prospective,
randomised controlled trial comparing
Versajet
®
hydrosurgery and conventional
debridement of partial thickness paediatric
burns. Burns. 2015;41(4):700-707.
56 Rees-Lee JE, Burge T. The indication for Versajet
®
hydrosurgical debridement in burns. European
Journal of Plastic Surgery. 2008;31(4):165-170.
57 Matsumura H, Nozaki M, Watanabe K, et al.
The Estimation of Tissue Loss During Tangential
Hydrosurgical Debridement. Annals Plast Surg.
2012;69(5):521-525.
58 Caputo WJ, Beggs DJ, DeFede JL, et al.
A prospective randomised controlled clinical
trial comparing hydrosurgery debridement with
conventional surgical debridement in lower
extremity ulcers. International Wound Journal.
2008;5(2):288-294.
59 Granick MS, Posnett J, Jacoby M, et al. Efficacy
and cost-effectiveness of a high-powered
parallel waterjet for wound debridement.
Wound Repair and Regeneration. 2006
Jul-Aug;14(4):394-397.
60 Mosti G, Mattaliano V. The debridement of
chronic leg ulcers by means of a new, fluidjet-
based device. Wounds. 2006;18(8):227-237.
61 Mosti G, Iabichella ML, Picerni P, et al. The
debridement of hard to heal leg ulcers by
means of a new device based on Fluidjet
technology. International Wound Journal.
2005;2(4): 307-314.
62 Murray F. Paper presented at: European Wound
Management Association (EWMA); 2007;
Glasgow.
63 Granick MS, Jacoby M, Noruthrun S, et al.
Clinical and economic impact of hydrosurgical
debridement on chronic wounds. Wounds.
2006;18(2):35-39.
64 Smith + Nephew 2005. The use of VERSAJET™
in the limb salvage following failure of minor
amputation in diabetic foot. Internal Report.
65 Marche C, Creehan S, Gefen A. The frictional
energy absorber effectiveness and its impact
on the pressure ulcer prevention performance
of multilayer dressings. Int Wound J.
2024;21(4):e14871.
66 Wassel C, Delhougne G, Gayle J et al. Risk of
readmissions, mortality, and hospital-acquired
conditions across hospital-acquired pressure
injury (HAPI) stages in a US National Hospital
discharge database. Int Wound J. 2020; 1–11.
67 Delarmente BA. The national cost of hospital-
acquired pressure injuries in the United States.
Int Wound J. 2019;16(3):634-640.
68 Orlova A, Orlov, Gefen A. The protective efficacy
of a new soſt silicone multi-layer dressing in
reducing the heel pressure ulcer risk. Int Wound
J. 2025;22(10): e70764.
69 Nherera L. Meta-analysis shows patient
wearable sensor reduces incidence of hospital
acquired pressure injuries in critically ill patients.
Poster presented at: Symposium on Advanced
Wound Care Fall 2022; October 14–16 2022;
Las Vegas, NV, USA.
70 Stone A. Preventing Pressure Injuries in
Nursing Home Residents Using a Low-Profile
Alternating Pressure Overlay: A Point-of-Care
Trial. Adv Skin Wound Care. 2020;33(10):533-9.
71 Klaeb M, Kra K, Walters B, Lowe J, Cooley A.
The Influence of Wearable Technology on
Nursing Attitudes and Adherence to Patient
Turning and Repositioning. Poster presented at:
Patient Handling and Mobility Annual
Conference; March 5–March 7, 2019;
Orlando, Florida, USA.
72 Atkinson L, Costa B. Pressure injury prevention
with a unique multi-layer foam dressing: a
systematic review and meta-analysis of
randomized controlled trials. Poster presented
at: European Wound Management Association
(EWMA); May 1–3, 2024; London, UK.
*
Based on ALLEVYN Dressings actual sales in
2023 and shipment of product to our primary
distribution warehouses.
**
Compared to baseline trajectory, n=52 wounds;
p=0.006.
*** Compared to standard of care.
**** Compared to sharp debridement.
***** OASIS
®
is a trademark of Cook Biotech
Incorporated. This device is derived from a
porcine source and should not be used in
patients with known sensitivity to porcine
materials. This device is not indicated for use
in third degree burns.
References from Case Studies (pages 53-57)
1
Moore Z, Coggins T (2021) Clinician attitudes
to shared-care and perceptions on the current
extent of patient engagement in wound care:
Results of a clinician survey. Wounds
International 12(1): 48–53.
2
Moore Z, et al. Wounds International.
2022;13(2):32–38.
3
Smith+Nephew 2023. S+N video. 2023. 39451.
311
Smith+Nephew
Annual Report 2025
STRATEGIC REPORT
GOVERNANCE
ACCOUNTS
OTHER INFORMATION
Financial calendar
Annual General
Meeting
The Company’s Annual General
Meeting (AGM) will be held on
Wednesday, 6 May 2026 at
12:00 pm at Smith+Nephew
Academy London, Building 5,
Croxley Park, Hatters Lane,
Watford, Hertfordshire,
WD18 8YE.
Please refer to the Notice of Meeting
for detailed information on how to
vote and submit your questions.
The meeting will commence at
12:00 pm with doors opening from
11:00 am. Registered shareholders
have been sent either a Notice of
AGM or notification of availability
of the Notice of AGM.
2026
Annual General Meeting
6 May
First quarter Trading Report
6 May
Payment of 2025 final dividend
27 May
Half-year results announced
4 August¹
Third quarter Trading Report
4 November
Payment of 2026 interim dividend
6 November
2027
Full year results announced
February¹
Annual Report available
February/March
Annual General Meeting
April/May
1 Dividend declaration dates.
312
Smith+Nephew
Annual Report 2025
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