SOURCE: Smith & Nephew PLC

February 09, 2006 06:12 ET

Smith & Nephew PLC announces Final Results

London, UK -- (MARKET WIRE) -- February 9, 2006 --Smith & Nephew reports improved Q4 - 11% revenue growth

9 February 2006

Smith & Nephew plc (LSE: SN, NYSE: SNN), the global medical technology business, announces its results for the fourth quarter and full year ended 31 December 2005.

                                                                     
  Q4 Highlights                                                       
                                      Full Year Highlights            
  * Group revenue GBP385m, up 11%*    * Group revenue GBP1,407m, up   
  * Orthopaedics revenue GBP191m,     11%*                            
  up 15%*                             * Trading margin improves to    
  * Endoscopy revenue GBP94m, up      20.6%                           
  9%*                                 * Trading profit GBP290m, up    
  * Advanced Wound Management         16%                             
  revenue GBP100m, up 6%*             * Adjusted EPS up 14%** to      
  * Trading profit GBP89m, up 19%     23.74p                          
  * Adjusted EPS up 15%** to 7.11p                                    

Commenting on the results for 2005 and the outlook for 2006, Sir Christopher O'Donnell, Chief Executive of Smith & Nephew, said:

"I am pleased to be able to report that we have closed the year with an improved quarter, despite tighter market conditions. Through solid sales growth and improved margins, we have again achieved mid teens earnings growth in the quarter and in the year."

"The fundamentals for each of our businesses are strong and we continue to bring innovative new products to market that provide better clinical outcomes for patients and save costs for healthcare providers. These are the key factors for success that drive our industry and we believe they will remain in place for the long-term. 2006 is the 150th anniversary of the founding of our company and we start 2006 with growing markets and one of the best new product programmes we have ever had."

"The organisational changes to our business we are announcing today will position us to capture the opportunity and deliver the next phase of Smith & Nephew's growth. We face the future with confidence."

A presentation and conference call for analysts to discuss the company's fourth quarter results will be held at 1.00pm GMT / 8.00am EST today. The conference call will be broadcast live on the web. A recording will be available on demand as both a streaming file and a podcast shortly following the close of the meeting at http://www.smith-nephew.com/Prelims05. At that time a copy of the Finance Director's comments made during the presentation will be on the website. If interested parties are unable to connect to the web, a listen-only service is available by calling +44 (0)20 7365 1850 in the UK or 718 354 1152 in the US. Analysts should contact Samantha Hardy on +44 (0) 20 7960 2257 or by email at samantha.hardy@smith-nephew.com for conference call details.

* Unless otherwise specified as 'reported', all revenue increases throughout this document are underlying increases after adjusting for the effects of currency translation and the acquisition of MMT in Q1 2004. See note 3 for a reconciliation of these measures to results reported under IFRS.

** EPSA is stated before restructuring and rationalisation costs and related tax relief, amortisation of acquisition intangibles and the fair value gain made on hedging the anticipated proceeds from the disposal of the joint venture operations. See note 2.

Enquiries

                                                                 
       Investors                                                 
       Peter Hooley                        +44 (0) 20 7401 7646  
       Smith & Nephew                                            
       Finance Director                                          
                                                                 
       Investors / Media                                         
       Liz Hewitt                          +44 (0) 20 7401 7646  
       Smith & Nephew                                            
       Group Director Corporate Affairs                          
                                                                 
       Financial Dynamics                                        
       David Yates - London                +44 (0) 20 7831 3113  
       Jonathan Birt - New York            +1 (212) 850 5634     
 

Introduction

We generated total revenues of GBP1,407m for the year, an underlying 11% increase over 2004. Orthopaedics achieved 15% revenue growth in the last quarter despite tighter market conditions. Endoscopy and Advanced Wound Management both increased their revenue growth rates on the previous quarter, with the distortions that impacted Advanced Wound Management earlier in the year largely abated. The fourth quarter is our strongest revenue quarter and this came through at the profit line with a further improved margin.

In December 2005 we announced the disposal of our 50% interest in BSN medical, for approximately GBP330m. Subject to regulatory approvals for this transaction we expect to complete it shortly. The gain on disposal will be around GBP170m pre-tax and will be accounted for in 2006.

Board Changes

Dudley Eustace has been our Chairman since January 2000 and will be retiring at the AGM in April 2006. Dudley has made a substantial contribution to Smith & Nephew, particularly in guiding it through its restructuring phase. John Buchanan, Deputy Chairman, has been appointed as Chairman of the board with effect from the AGM in April 2006.

Peter Hooley has been Finance Director since April 1991 and has decided to retire this year. Peter has played a major role in making Smith & Nephew what it is today, as well as establishing its strong present financial position. Adrian Hennah, currently Chief Financial Officer of Invensys plc, has been appointed to the board as Finance Director with effect from June this year.

Our Orthopaedics business has grown strongly in the last five years, with performance consistently ahead of its markets. To develop this business further, we are now identifying two separate business units, Orthopaedic Reconstruction and Orthopaedic Trauma (including Clinical Therapies). This change is at the heart of our strategy to focus our businesses on the markets and customers that they serve.

The board has appointed David Illingworth, currently President of Orthopaedics, as Chief Operating Officer with immediate effect. David will take responsibility for leading the growth of our four business units and report to Chris O'Donnell, Chief Executive, who has particular responsibility for strategy and business development.

Fourth Quarter Results

Revenue growth in the quarter was 11% relative to the same quarter last year. Translational currency added 5% to revenue growth, resulting in reported fourth quarter revenue increasing by 16% to GBP385m.

Trading profit in the quarter was GBP89m, a trading margin of 23.2%, and interest and finance costs were GBP1m. Tax thereon amounted to GBP26m, an effective tax rate of 291/2%. The share of after tax results of the BSN joint venture was GBP4m, resulting in attributable profit of GBP66m, before restructuring and rationalisation costs and related tax relief, amortisation of acquisition intangibles and the fair value gain.

Restructuring and rationalisation costs in the quarter were GBP23m associated with the exit from DERMAGRAFT* and its related products. Attributable profit after restructuring and rationalisation costs and related tax relief, the amortisation of acquisition intangibles and the fair value gain was GBP50m.

Earnings per share, before restructuring and rationalisation costs and related tax relief, amortisation of acquisition intangibles and the fair value gain ("EPSA"), was 7.11p (35.55p per American Depositary Share, "ADS"), a 15% increase on the fourth quarter last year. Reported earnings per share was 5.34p (26.70p per ADS).

Orthopaedics

Orthopaedics revenues grew by 15%, inside and outside the US, relative to the fourth quarter last year, to GBP191m. This was achieved against a background in the US of the reconstruction market slowing to around 10% growth in the second half of 2005.

Knee revenues grew 12%, 10% in the US and 15% outside the US. In the US we launched a new OXINIUM* revision knee (LEGION*) in the quarter, and we plan to launch a second OXINIUM* product, an anatomic knee (JOURNEY*) in early 2006. We expect these new products will help us to gain further share in the knee market.

Hip revenues grew by 13%, 9% in the US. Outside the US revenue growth was 18%, well ahead of the market, with the BHR* hip resurfacing product continuing to provide momentum to hip revenues outside the US. Following an Advisory Panel conditional recommendation for the use in the US of the BHRa product, we are waiting for final approval from the FDA to bring this important product to market.

Trauma revenue growth was 16%. Within the US trauma revenues increased by 20%, reflecting the continued benefit of having established a dedicated sales force and launching earlier in the year the PERI-LOC* locking compression plate system for lower extremities. Outside the US, trauma revenue growth was 10%.

Clinical Therapy revenues, comprising the EXOGEN* ultrasound bone healing and SUPARTZ* joint fluid therapy products, continued to benefit from sales force investment and grew 31%.

Orthopaedics has grown strongly in the last five years, with performance consistently ahead of its markets. In order to align this business more closely with its customers and markets, Orthopaedics has been divided into two global businesses, Orthopaedic Reconstruction and Orthopaedic Trauma. Scott Flora and Mark Augusti have each been respectively promoted from Senior Vice-President and General Manager to President of these two business units.

Endoscopy

Endoscopy revenues grew by 9% to GBP94m. US revenue growth was 6% and growth outside the US was 12%, with just under half of revenues now outside the US.

Knee and shoulder repair revenues continued to grow strongly at 20%, reflecting procedural demand and the strength of our product offering. Visualisation and digital operating room, blades and access revenues grew between 7 and 8% and radio frequency, including spine, grew 6%, all benefiting from product introductions.

The project to rationalise Endoscopy's US manufacturing facilities is progressing to schedule.

Advanced Wound Management

Advanced Wound Management revenues grew 6% in the quarter and exceeded GBP100m for the first time. US revenue growth was 8% reflecting the abatement of the effects of the reductions in intermediate product sales and distributor inventories experienced earlier in the year. Outside the US revenue growth increased by 5%, a solid performance given healthcare spending pressures in parts of Europe.

Following the exit from DERMAGRAFT* and its related products, minimal sales of these products are expected in 2006. As a result, revenues in 2006 are expected to be adversely affected by around GBP12m, but trading profits should benefit by around GBP7m in 2006 from the elimination of losses associated with this product range.

Jim Dick, President of Advanced Wound Management, has decided to retire this year. Joe Woody, Vice President and General Manager of the Clinical Therapies division of Orthopaedics, has been appointed as his successor.

Full Year Results

Underlying revenue growth for the full year was 11%. After 2% of positive translational currency, full year reported revenue growth increased by 13% to GBP1,407m.

Trading profit for the year was GBP290m, a 16% increase, with trading margins 0.6% ahead of a year ago at 20.6% and interest income less finance costs was GBP2m positive. Taxation thereon amounted to GBP86m, an effective tax rate of 291/2 %. The share of the after tax results of the BSN joint venture was GBP17m, resulting in attributable profit of GBP223m before restructuring and rationalisation costs and related tax relief, amortisation of acquisition intangibles and the fair value gain.

Restructuring and manufacturing rationalisation costs of GBP47m comprise GBP8m for the rationalisation of manufacturing facilities at Endoscopy and GBP39m of asset impairment and restructuring costs associated with the exit from DERMAGRAFT* and its related products.

Attributable profit after restructuring and rationalisation costs and related tax relief, the amortisation of acquisition intangibles and the fair value gain was GBP187m.

EPSA was 23.74p (118.70p per ADS) for the full year, an increase of 14% on last year. Reported earnings per share was 19.90p (99.50p per ADS).

Operating cash flow, defined as cash generated from operations less capital expenditure, was GBP94m. This is a trading profit to cash conversion ratio of 60%, before GBP49m of special contributions to improve the funding of our UK and US defined benefit pension schemes, GBP26m of settlement payments to patients in respect of macrotextured revisions, which are not being reimbursed by insurers, and GBP4m of restructuring and rationalisation expenditure. It compares with a 58% conversion ratio a year ago.

This is the first year our results have been reported under International Financial Reporting Standards ("IFRS"). Comparative figures have been restated and reconciliations from UK GAAP are provided in Appendix A to this announcement.

Dollar reporting

The redenomination of the share capital of the company into US dollars has been put into effect. This aligns the capital base of the Group with its effective functional currency. Trading results and the state of affairs will be reported in US dollars from the beginning of 2006. Dividends will in future be declared in US dollars. However, dividend payments to UK residents will continue to be made in sterling. The Group's shares will continue to be listed on the London Stock Exchange, priced in sterling, and on the NYSE, priced in dollars.

A restatement of this year's, and last year's, quarterly results and Balance Sheets as if they had been consolidated in US dollars at the average exchange rates then prevailing is given in Appendix B to this announcement. For the fourth quarter, and the full year, reported revenues and adjusted earnings per ADS under dollar reporting would have been as follows:

                                                                      
                              Fourth Quarter           Full Year      
  Reported revenues            $670m        +6%     $2,552m     +11%
  Adjusted earnings per        $0.62        +5%      $2.15      +12%  
  ADS                                                                 

Dividend

This is the first occasion when a dividend is being declared in US dollars and follows the redenomination of the share capital of the company into US dollars. Instead of recommending a final dividend for 2005 the directors have declared a second interim dividend. This enables the company to meet the hedging requirements of IFRS in respect of the sterling amount of the dividends payable to UK residents.

The second interim dividend has been declared in the amount of 6.10 cents per share (30.50 cents per ADS) and will be paid on 12 May 2006 to shareholders on the register at the close of business on 21 April 2006. For UK resident shareholders, and those other shareholders who elect to receive their dividends in sterling, the sterling payable amount will be 3.50 pence per share. Together with the interim dividend of 2.10 pence this makes a total of 5.60 pence for the year 2005, a 10% increase.

Outlook

The fundamentals for each of our businesses are strong and we view the future positively, with product launches and sales force investment underpinning revenue growth in 2006 and beyond.

Orthopaedic Trauma is expected to grow revenues in the mid-teens range whilst Orthopaedic Reconstruction is expected to be slightly below this, reflecting tighter market conditions. Revenue growth at Endoscopy is expected to improve to just into double digits as it benefits from its new product programme. Advanced Wound Management expects revenue growth from continuing products in mid-single digits, reducing to low-single digits after taking into account the exit from DERMAGRAFT*.

Group revenue growth, combined with margin enhancement of around 11/2% from ongoing cost and efficiency savings and from exiting DERMAGRAFT*, is expected to deliver high teens growth in trading profit for 2006.

Earnings for 2006 will be affected by a number of specific factors. As previously announced, the divestment of BSN medical will dilute earnings by around 4%. Additionally, a loss of favourable interest rate differentials between the US and the UK, coupled with the move of the Group's functional currency to US dollars, is expected to dilute earnings by between 3 and 4%. After taking into account those factors, interest/finance income is expected to be around $9m for 2006. We foresee the tax charge increasing by around 1% for the next three years, and this will further dilute 2006 earnings by 11/2%. After the effect of these specific factors, EPSA growth of around 7 - 8% is expected for 2006, before translational currency.

For the first quarter of 2006 revenue growth is expected to be in high single digits reflecting the current tighter market conditions and the timing of product launches this year. As a consequence margin expansion is expected to be around 1/2% leading to flat EPSA growth, before currency, in the first quarter. At today's currency rates the adverse impact of translation would be around 3% in the first quarter.

About us

Smith & Nephew is a global medical technology business, specialising in Orthopaedics, Endoscopy and Advanced Wound Management products. Smith & Nephew is a global leader in arthroscopy and advanced wound management and is the fastest growing global orthopaedics company.

Smith & Nephew is dedicated to helping improve people's lives. The company prides itself on the strength of its relationships with its surgeons and professional healthcare customers, with whom its name is synonymous with high standards of performance, innovation and trust. The company has over 8,500 employees and operates in 33 countries around the world generating annual sales of $2.6 billion.

Forward-Looking Statements

This press release contains certain "forward-looking statements" within the meaning of the US Private Securities Litigation Reform Act of 1995. In particular, statements regarding expected revenue growth and operating margins discussed under "Outlook" are forward-looking statements as are discussions of our product pipeline. These statements, as well as the phrases "aim", "plan", "intend", "anticipate", "well-placed", "believe", "estimate", "expect", "target", "consider" and similar expressions, are generally intended to identify forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors (including, but not limited to, the outcome of litigation, claims and regulatory approvals) that could cause the actual results, performance or achievements of Smith & Nephew, or industry results, to differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements. Please refer to the documents that Smith & Nephew has filed with the U.S. Securities and Exchange Commission under the U.S. Securities Exchange Act of 1934, as amended, including Smith & Nephew's most recent annual report on Form 20F, for a discussion of certain of these factors.

All forward-looking statements in this press release are based on information available to Smith & Nephew as of the date hereof. All written or oral forward-looking statements attributable to Smith & Nephew or any person acting on behalf of Smith & Nephew are expressly qualified in their entirety by the foregoing. Smith & Nephew does not undertake any obligation to update or revise any forward-looking statement contained herein to reflect any change in Smith & Nephew's expectation with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

* Trademark of Smith & Nephew. Certain names registered at the US Patent and Trademark Office.

SMITH & NEPHEW plc

2005 QUARTER FOUR AND FULL YEAR RESULTS

Unaudited Group Income Statement for the 3 months and year ended 31 December 2005

 

                                                                      
                                                       Year       Year
         3   3 Months                    Notes        Ended      Ended
    Months      2005                                  2005     2004 A 
   2004 A                                                             
     GBPm       GBPm                                  GBPm       GBPm 
                                                                      
    332.2      384.8   Revenue           3         1,407.1    1,248.5 
   (88.4)     (98.3)   Cost of goods               (361.1)    (334.8) 
                       sold                                           
  (151.5)    (177.5)   Selling,                    (688.6)    (597.6) 
                       general and                                    
                       administrative                                 
                       expenses                                       
   (17.0)     (19.7)   Research and                 (67.1)     (66.4) 
    _____      _____   development                   _____      _____ 
                       expenses                                       
     75.3       89.3   Trading profit    4           290.3      249.7 
        -     (23.2)   Restructuring     5          (47.0)          - 
                       and                                            
                       rationalisation                                
                       costs                                          
   (80.0)          -   Macrotextured     6               -     (80.0) 
                       claim                                          
    (1.3)      (1.4)   Amortisation of               (6.0)      (4.4) 
    _____      _____   acquisition                   _____      _____ 
                       intangibles                                    
    (6.0)       64.7   Operating         4           237.3      165.3 
                       profit                                         
      1.8        1.4   Interest                       15.3       16.8 
                       receivable                                     
    (0.5)      (0.9)   Interest                     (10.7)     (13.0) 
                       payable                                        
    (0.5)      (1.7)   Other finance                 (2.7)      (1.8) 
                       costs                                          
        -        0.9   Fair value of                   0.9          - 
    _____      _____   hedge of                      _____      _____ 
                       anticipated                                    
                       sale proceeds                                  
                       of joint                                       
                       venture                                        
    (5.2)       64.4   Profit before                 240.1      167.3 
                       taxation                                       
      5.8     (18.6)   Taxation          7          (70.3)     (44.6) 
    _____      _____                                 _____      _____ 
      0.6       45.8   Profit from                   169.8      122.7 
                       continuing                                     
                       operations                                     
      4.1        4.3   Discontinued      8            16.9       15.5 
    _____      _____   operations:                   _____      _____ 
                       share of                                       
                       results of the                                 
                       joint venture                                  
      4.7       50.1   Attributable                  186.7      138.2 
    _____      _____   profit                        _____      _____ 
                                                                      
                       Earnings per      2                            
                       share                                          
                       Including                                      
                       discontinued                                   
                       operations:                                    
    0.50p      5.34p   Basic                        19.90p     14.78p 
    0.48p      5.33p   Diluted                      19.80p     14.67p 
                                                                      
                       Excluding                                      
                       discontinued                                   
                       operations:                                    
    0.06p      4.88p   Basic                        18.10p     13.12p 
    0.05p      4.86p   Diluted                      18.00p     13.03p 
 

A As restated for the effect of the transition to International Financial Reporting Standards ("IFRS") - see Note 1.

In order to provide a trend measure of underlying performance, attributable profit is adjusted to exclude items which management consider will distort comparability, either due to their significant non-recurring nature or as a result of specific accounting treatments.

                                                                      
                                                        Year      Year
   3 Months         3                                  Ended     Ended
    2004 A     Months                     Notes        2005    2004 A 
                2005                                                  
      GBPm      GBPm                                   GBPm      GBPm 
                                                                      
       4.7      50.1   Attributable                   186.7     138.2 
                       profit                                         
                       Adjustments:                                   
         -      23.2   Restructuring                   47.0         - 
                       and                                            
                       rationalisation                                
                       costs                                          
      80.0         -   Macrotextured                      -      80.0 
                       claim                                          
       1.3       1.4   Amortisation of                  6.0       4.4 
                       acquisition                                    
                       intangibles                                    
         -     (0.9)   Fair value of                  (0.9)         - 
                       hedge of                                       
                       anticipated sale                               
                       proceeds of                                    
                       joint venture                                  
    (28.0)     (7.1)   Taxation on                   (16.1)    (28.0) 
     _____     _____   excluded items                 _____     _____ 
      58.0      66.7   Adjusted           2           222.7     194.6 
     _____     _____   attributable                   _____     _____ 
                       profit                                         
 

Unaudited Group Balance Sheet as at 31 December 2005

                                                                      
                                       Notes                          
                                                    2005    2004 A, B 
                                                    GBPm         GBPm 
  ASSETS                                                              
  Non-current assets                                                  
  Property, plant and equipment                    343.1        290.3 
  Intangible assets                                391.4        375.3 
  Investment in joint venture                          -        120.7 
  Investments                                        5.8          4.9 
  Non-current receivables                            0.3          1.2 
  Non-current asset derivatives                        -         24.4 
  Deferred tax assets                               76.7         67.6 
                                                   _____        _____ 
                                                   817.3        884.4 
  Current assets                                                      
  Inventories                                      355.3        284.9 
  Trade and other receivables                      360.7        298.2 
  Current asset derivatives                          5.9         22.0 
  Cash and bank                                     88.4         32.6 
                                                   _____        _____
                                                   810.3        637.7 
                                                   _____        _____ 
  Held for sale - investment in                    126.5            - 
  joint venture                                    _____        _____ 
  TOTAL ASSETS                                   1,754.1      1,522.1 
                                                   _____        _____
                                                                      
  EQUITY AND LIABILITIES                                              
  Equity attributable to equity                                       
  holders of the parent                                               
  Called up equity share capital                   114.9        114.5 
  Share premium account                            169.7        159.6 
  Own shares                                       (2.0)        (4.2) 
  Other reserves                                    13.8          1.4 
  Retained earnings                                566.4        430.7 
                                                   _____        _____ 
  Total equity                         10          862.8        702.0 
                                                                      
  Non-current liabilities                                             
  Long-term borrowings                             122.6        152.6 
  Retirement benefit obligation                    110.6        146.8 
  Other payables due after one year                  9.1         13.7 
  Provisions - due after one year                   28.1         31.8 
  Non-current liability derivatives                    -          2.1 
  Deferred tax liabilities                          31.0         40.9 
                                                   _____        _____ 
                                                   301.4        387.9 
  Current liabilities                                                 
  Trade and other payables                         263.4        231.5 
  Bank overdrafts and loans due                    132.1         32.3 
  within one year                                                     
  Provisions - due within one year                  52.6         49.9 
  Current liability derivatives                     17.5         12.7 
  Current tax payable                              124.3        105.8 
                                                   _____        _____ 
                                                   589.9        432.2 
                                                   _____        _____ 
  Total liabilities                                891.3        820.1 
                                                   _____        _____ 
  TOTAL EQUITY AND LIABILITIES                   1,754.1      1,522.1 
                                                   _____        _____ 
 

A As restated for the effect of the transition to IFRS. B Before adjustment for the effects of IAS 32 and 39.

Unaudited Condensed Group Cash Flow Statement for the 3 months and year ended 31 December 2005


                                                                      
                                                       Year       Year
   3 Months   3 Months                                Ended      Ended
    2004 A       2005                                 2005     2004 A 
      GBPm       GBPm                                 GBPm       GBPm 
                                                                      
                        Net cash inflow                               
                        from operating                                
                        activities                                    
     (6.0)       64.7   Operating profit             237.3      165.3 
      25.1       23.0   Depreciation,                 99.8       71.6 
                        amortisation and                              
                        impairment                                    
       1.5        1.5   Share based payment            7.4        6.1 
                        expense                                       
      58.8     (42.2)   Movement in working        (139.9)     (15.7) 
     _____      _____   capital and                  _____      _____ 
                        provisions C                                  
      79.4       47.0   Cash generated from          204.6      227.3 
                        operations                                    
       1.3        0.5   Net interest                   4.6        3.8 
                        received                                      
    (13.0)     (18.9)   Income taxes paid           (61.9)     (37.9) 
     _____      _____                                _____      _____ 
      67.7       28.6   Net cash inflow              147.3      193.2 
                        from operating                                
                        activities                                    
                                                                      
                        Cash flows from                               
                        investing activities                          
     (7.4)      (4.1)   Acquisitions                (13.9)     (36.7) 
         -          -   Cash acquired on                 -        1.8 
                        acquisition                                   
       8.2        7.7   Dividends received            13.9       14.1 
                        from the joint                                
                        venture E                                     
    (33.2)     (27.1)   Capital expenditure        (110.3)    (101.1) 
     _____      _____                                _____      _____ 
    (32.4)     (23.5)   Net cash used in           (110.3)    (121.9) 
                        investing                                     
                        activities                                    
                                                                      
      35.3        5.1   Cash flow before              37.0       71.3 
                        financing activities                          
                                                                      
       2.6        4.2   Proceeds from issue           10.5        8.0 
                        of ordinary share                             
                        capital                                       
     (1.7)      (0.2)   Own shares                   (0.2)      (4.1) 
                        purchased                                     
    (17.8)     (19.7)   Equity dividends            (49.7)     (46.7) 
                        paid                                          
    (29.3)       23.8   Increase/(decrease)           19.5     (60.6) 
                        in borrowings and                             
                        finance leases                                
       8.5        0.6   Settlement of                (1.7)       39.8 
     _____      _____   currency swaps               _____      _____ 
    (37.7)        8.7   Net cash used in            (21.6)     (63.6) 
                        financing                                     
                        activities                                    
                                                                      
     (2.4)       13.8   Net                           15.4        7.7 
                        increase/(decrease)                           
                        in cash and cash                              
                        equivalents                                   
      24.4       23.6   Cash and cash                 22.3       14.4 
                        equivalents at                                
                        beginning of period                           
       0.3        0.6   Exchange                       0.3        0.2 
     _____      _____   adjustments                  _____      _____ 
      22.3       38.0   Cash and cash                 38.0       22.3 
     _____      _____   equivalents at end           _____      _____ 
                        of period D                                   

A As restated for the effect of the transition to IFRS. C After GBP49.4 million (2004 - nil) of special pension fund contributions, GBP25.7 million (2004 - GBP17.2 million) unreimbursed by insurers relating to macrotextured knee revisions and GBP3.7 million (2004 - GBP2.2 million) of outgoings on rationalisation and acquisition integration costs in the year. D Cash and cash equivalents at the end of the period are net of overdrafts of GBP50.4 million (2004 - GBP10.3 million). E Discontinued operations accounted for GBP13.9 million (2004 - GBP14.1 million) of net cash flow from investing activities.

Unaudited Group Statement of Recognised Income and Expense

for the 3 months and year ended 31 December 2005

 

                                                                      
                                                      Year        Year
     3 Months    3 Months                            Ended       Ended
      2004 A        2005                             2005      2004 A 
        GBPm        GBPm                             GBPm        GBPm 
                                                                      
         4.7        50.1   Attributable             186.7       138.2 
       _____       _____   profit                   _____       _____ 
         0.4         5.9   Translation               10.8         0.1 
                           differences on                             
                           foreign currency                           
                           net investments                            
           -         0.9   Gains on cash flow         9.1           - 
                           hedges                                     
      (14.6)       (8.9)   Actuarial losses        (10.3)      (14.6) 
                           on defined benefit                         
                           plans                                      
         4.6         1.3   Taxation on items          2.0         4.6 
       _____       _____   taken directly to        _____       _____ 
                           equity                                     
       (9.6)       (0.8)   Net                       11.6       (9.9) 
                           income/(expense)                           
                           recognised                                 
                           directly in equity                         
           -           -   Restatement for          (5.5)           - 
       _____       _____   the effects of IAS       _____       _____ 
                           32 and 39 B                                
       (4.9)        49.3   Total recognised         192.8       128.3 
       _____       _____   income and expense       _____       _____ 
 

A As restated for the effect of the transition to IFRS. B As detailed in Note 1, on 1 January 2005 the balance sheet was restated for the effects of IAS 32 and 39.

NOTES

1. Smith & Nephew plc has previously prepared its primary financial statements under UK generally accepted accounting principles ("UK GAAP"). From 2005 the Group is required to prepare its consolidated financial statements in accordance with IFRS as adopted by the European Union ("EU"). For the purposes of this document the term IFRS includes International Accounting Standards ("IAS").

These results represent the first annual financial statements the Group has prepared in accordance with its accounting policies under IFRS. A description of how the Group's reported performance and financial position are affected by this change, including reconciliations from UK GAAP to IFRS for prior year results and the revised summary of significant accounting policies under IFRS, is published under Report and Results in the Investors section of the corporate website at www.smith-nephew.com/investors/reports_results.html. If required, printed copies are available from the Company Secretary.

The Group is required to apply all relevant standards in force at its first reporting date of 31 December 2005.

As permitted under IFRS 1, First Time Adoption of International Financial Reporting Standards, management has elected not to restate comparative information for the Financial Instrument Standards IAS 32 and IAS 39. A restatement of the opening balance sheet at 1 January 2005 to present the Group's 2005 opening position under IAS 32 and 39 was included within the interim financial statements for Quarter 1 2005. Appendix A reconciles attributable profit for the three months and year ended 31 December 2004, as previously reported under UK GAAP to IFRS.

The financial information contained in this document does not constitute statutory accounts as defined in section 240 of the Companies Act 1985. The financial information for the year ended 31 December 2005 and 2004 have been extracted from the unaudited financial statements of Smith & Nephew plc which will be delivered to the Registrar of Companies in due course. The auditors have issued an unqualified opinion on the Group's statutory financial statements under UK GAAP for the year ended 31 December 2004, which have been filed with the Registrar of Companies.

2. Adjusted earnings per share ("EPSA") has been calculated by dividing adjusted attributable profit of GBP222.7 million (2004 - GBP194.6 million) by the weighted (basic) average number of ordinary shares in issue of 938 million (2004 - 935 million). The diluted weighted average number of ordinary shares in issue is 943 million (2004 - 942 million).

                                                                      
                                               Year Ended     Year Ended
   3 Months 2004    3 Months 2005                   2005            2004 
                                                                      
                                                                      
   6.20p    7.11p   Adjusted basic earnings per      23.74p    20.81p 
                    share                                             
   6.14p    7.09p   Adjusted diluted earnings per    23.62p    20.66p 
                    share                                             
3. Revenue by segment to 31 December 2005 was as follows:

                                                                      
                                    Year      Year                    
      3       3                    Ended     Ended  Underlying growth
 Months  Months                    2005      2004      in revenue     
   2004   2005                                                        
                                                                  
  GBPm    GBPm                     GBPm      GBPm                   % 
                                                     3 Months    Year 
                 Revenue by                                           
                 business                                             
                 segment
  156.9  190.5   Orthopaedics     698.3     588.7          15      16 
                                                                      
  82.7    94.1   Endoscopy        334.2     304.8           9       8 
  92.6   100.2   Advanced         374.6     355.0           6       4 
  _____  _____   Wound            _____     _____       _____   _____ 
                 Management                                           
  332.2  384.8                  1,407.1   1,248.5          11      11 
  ______ _____                    _____     _____       _____   _____ 
                                                                
                                                                      
                                                                      
                 Revenue by                                           
                 geographic                                           
                 market                                               
  108.6  116.3   Europe F         440.7     409.7           7       6 
                                                                      
  160.3  194.5   United           694.2     608.5          12      12 
                 States                                               
  63.3    74.0   Africa,          272.2     230.3          16      15 
  _____  _____   Asia,            _____     _____       _____   _____ 
                 Australasia,                                         
                 other                                                
                 America                                              
  332.2  384.8                  1,407.1   1,248.5          11      11 
  _____  _____                    _____     _____       _____   _____ 
                                                                

F Includes United Kingdom 12 months revenue of GBP131.2 million (2004 - GBP122.5 million) and 3 months revenue of GBP34.4 million (2004 - GBP27.7 million).

Underlying revenue growth is calculated by eliminating the effects of translational currency and acquisitions. Reported growth reconciles to underlying growth as follows:


                                                                      
                                   Foreign                            
                    Reported      currency                  Underlying
                      growth   translation   Acquisitions    growth in
                          in       effect         effect      revenue 
                    revenue                                           
                          %             %              %            % 
  Year                                                                
  Orthopaedics           19           (2)            (1)           16 
  Endoscopy              10           (2)              -            8 
  Advanced Wound          5           (1)              -            4 
  Management          _____         _____          _____        _____ 
                         13           (2)              -           11 
                      _____         _____          _____        _____ 
  3 Months                                                            
  Orthopaedics           21           (6)              -           15 
  Endoscopy              14           (5)              -            9 
  Advanced Wound          8           (2)              -            6 
  Management          _____         _____          _____        _____ 
                         16           (5)              -           11 
                      _____         _____          _____        _____ 
 

4. Trading and operating profit by segment to 31 December 2005 was as follows:

                                                                      
                                                      Year        Year
      3 Months     3 Months                          Ended       Ended
         2004         2005                           2005        2004 
         GBPm         GBPm                           GBPm        GBPm 
                             Trading Profit                           
                             by business                              
                             segment                                  
         39.8         48.6   Orthopaedics           167.0       137.7 
         19.9         23.4   Endoscopy               69.9        61.3 
         15.6         17.3   Advanced Wound          53.4        50.7 
        _____        _____   Management             _____       _____ 
         75.3         89.3                          290.3       249.7 
        _____        _____                          _____       _____ 
                                                                      
                             Operating Profit                         
                             by business                              
                             segment                                  
       (41.2)         47.4   Orthopaedics           161.7        54.3 
         19.6         23.2   Endoscopy               60.8        60.3 
         15.6        (5.9)   Advanced Wound          14.8        50.7 
        _____        _____   Management             _____       _____ 
        (6.0)         64.7                          237.3       165.3 
        _____        _____                          _____       _____ 
 

5. Restructuring and rationalisation costs comprise a charge against Advanced Wound Management of GBP38.6 million relating to the decision to exit DERMAGRAFT* and related products and GBP8.4 million for the rationalisation of Endoscopy manufacturing facilities.

6. In 2004, the macrotextured claim of GBP80.0 million represented provision for the amount due from excess layer insurers who had declined insurance coverage for claims relating to macrotextured knee revisions together with an estimate for the cost of settlements with patients likely to arise in the future and assuming that insurance cover remained unavailable.

The cumulative number of revisions of the macrotextured knee product was 955 on 31 December 2005 compared with 923 at the end of Quarter Three 2005. This represents 32% of the total implanted. Settlements with patients have been achieved in respect of 771 (Quarter Three 685 settlements) revisions. Costs of GBP45.9 million (2004 - GBP13.4 million) are in dispute with insurers and are provided in full. GBP43.6 million of provision (2004 - GBP66.6 million) remains to cover future settlement costs. At 27 January 2006 the cumulative number of revisions was 961.

7. Taxation of GBP86.4 million (2004 - GBP72.6 million) for the year on the profit before amortisation of acquisition intangibles, the macrotextured claim, restructuring and rationalisation costs, the fair value of hedge of anticipated sale proceeds of joint venture and discontinued operations is at the effective rate of 29.6% (2004 -28.8%). A taxation benefit of GBP16.1 million arises on the restructuring and rationalisation costs (2004 - GBP28.0 million on the macrotextured claim). Of the GBP70.3 million (2004 - GBP44.6 million) taxation charge GBP56.3 million (2004 - GBP31.2 million) relates to overseas taxation.

8. In December 2005 the Group agreed the sale of its 50% interest in the BSN joint venture. Following the Group announcing its intention to sell this interest it ceased to equity account for the joint venture results from 1 October 2005. The share of results of the joint venture is after interest payable of GBP1.1 million (2004 - GBP1.4 million) and taxation of GBP6.3 million (2004 - GBP6.9 million) in the nine months to 1 October 2005 and a dividend in Quarter Four 2005 of GBP4.3 million. The Group's share of revenue of the joint venture for the nine months to 1 October 2005 is GBP127.4 million (2004 - GBP165.9 million for the year). The Group's discontinued operations earnings per share for the year is: basic 1.80p (2004 - 1.66p) and diluted 1.80p (2004 - 1.64p).

9. An interim dividend for 2005 of GBP19.7 million being 2.1 pence per ordinary share (2004 - 1.9 pence per ordinary share) was paid on 11 November 2005. A second interim dividend of 6.1 US cents per ordinary share has been declared by the Board (2004 - final dividend of 3.2 pence per ordinary share). UK shareholders will receive 3.5 pence per ordinary share. This is payable on 12 May 2006 to shareholders whose names appear on the register at the close of business on 21 April 2006. Shareholders may participate in the dividend re-investment plan.

10. The movement in total equity for the year was as follows:

                                                                     
                                                       2005      2004 
                                                       GBPm      GBPm 
                                                                      
  Opening equity as at 1 January                      702.0     610.4 
  Restatement for the effects of IAS 32 and           (5.5)         - 
  39                                                  _____     _____ 
  Restated opening equity as at 1 January             696.5     610.4 
  Attributable profit for the period                  186.7     138.2 
  Equity dividends paid                              (49.7)    (46.7) 
  Exchange adjustments                                 10.8       0.1 
  Gains on cash flow hedges                             9.1         - 
  Actuarial losses on defined benefit plans          (10.3)    (14.6) 
  Share based payment recognised in the                 7.4       6.1 
  income statement                                                    
  Taxation on items taken directly to equity            2.0       4.6 
  Issue of ordinary share capital                      10.5       8.0 
  Own shares purchased                                (0.2)     (4.1) 
                                                      _____     _____ 
  Closing equity                                      862.8     702.0 
                                                      _____     _____ 
 
11.     Net debt as at 31 December 2005 comprises: 
 

                                                                      
                                                      2005       2004 
                                                      GBPm       GBPm 
                                                                      
  Cash and bank                                       88.4       32.6 
  Long-term borrowings                             (122.6)    (152.6) 
  Bank overdrafts and loans due within one         (132.1)     (32.3) 
  year                                                                
  Net currency swap (liabilities)/ assets           (11.6)       31.6 
                                                     _____      _____ 
                                                   (177.9)    (120.7) 
                                                     _____      _____ 
 
The movements in the year were as follows: 
 

                                                                      
  Opening net debt as at 1 January                 (120.7)    (136.7) 
  Cash flow before financing activities               37.0       71.3 
  Loan notes issued on acquisition                       -     (50.3) 
  Proceeds from issue of ordinary share               10.5        8.0 
  capital                                                             
  Own shares purchased                               (0.2)      (4.1) 
  Equity dividends paid                             (49.7)     (46.7) 
  Exchange adjustments                              (54.8)       37.8 
                                                     _____      _____ 
  Closing net debt                                 (177.9)    (120.7) 
                                                     _____      _____ 
 

APPENDIX A - Unaudited Reconciliation of Attributable Profit for the 3 months and year ended 31 December 2004

 

                                                                      
                                                Accounting            
                            As          Joint       policy            
                      reported        venture      changes            
                      under UK   presentation       under    Restated 
                       GAAP G       change H       IFRS I        IFRS 
  Year                   GBPm           GBPm         GBPm        GBPm 
                                                                      
  Revenue             1,248.5              -            -     1,248.5 
  Cost of goods       (334.8)              -            -     (334.8) 
  sold                                                                
  Selling,            (595.8)              -        (1.8)     (597.6) 
  general and                                                         
  administrative                                                      
  expenses                                                            
  Research and         (66.4)              -            -      (66.4) 
  development           _____          _____        _____       _____ 
  expense                                                             
  Trading profit        251.5              -        (1.8)       249.7 
  (i)                                                                 
  Macrotextured        (80.0)              -            -      (80.0) 
  claim                                                               
  Amortisation of      (20.5)              -         16.1       (4.4) 
  acquisition           _____          _____        _____       _____ 
  intangibles                                                         
  (ii)                                                                
  Operating profit      151.0              -         14.3       165.3 
  Interest               16.8              -            -        16.8 
  receivable                                                          
  Interest             (13.7)            1.4        (0.7)      (13.0) 
  payable (iii)
  Other finance             -              -        (1.8)       (1.8) 
  costs (iv)            _____          _____        _____       _____ 
  Profit before         154.1            1.4         11.8       167.3 
  taxation                                                            
  Taxation (v)         (52.7)            6.9          1.2      (44.6) 
                        _____          _____        _____       _____ 
  Profit from           101.4            8.3         13.0       122.7 
  continuing                                                          
  operations
  Discontinued           23.8          (8.3)            -        15.5 
  operations:           _____          _____        _____       _____ 
  share of                                                            
  results of the                                                      
  joint venture                                                       
  Attributable          125.2              -         13.0       138.2 
  profit                _____          _____        _____       _____ 
 

                                                                      
  3 Months                                                            
                                                                      
  Revenue                          332.2        -        -      332.2 
  Cost of goods sold              (88.4)        -        -     (88.4) 
  Selling, general and           (150.8)        -    (0.7)    (151.5) 
  administrative expenses                                             
  Research and development        (17.0)        -        -     (17.0) 
  expense                          _____    _____    _____      _____ 
  Trading profit (i)                76.0        -    (0.7)       75.3 
  Macrotextured claim             (80.0)        -        -     (80.0) 
  Amortisation of acquisition      (5.2)        -      3.9      (1.3) 
  intangibles (ii)                 _____    _____    _____      _____ 
  Operating profit                 (9.2)        -      3.2      (6.0) 
  Interest receivable                1.8        -        -        1.8 
  Interest payable (iii)           (0.7)      0.4    (0.2)      (0.5) 
  Other finance costs (iv)             -        -    (0.5)      (0.5) 
                                   _____    _____    _____      _____ 
  Profit before taxation           (8.1)      0.4      2.5      (5.2) 
  Taxation (v)                       3.8      1.8      0.2        5.8 
                                   _____    _____    _____      _____ 
  Profit from continuing           (4.3)      2.2      2.7        0.6 
  operations                                                          
  Discontinued operations:           6.3    (2.2)        -        4.1 
  share of results of the          _____    _____    _____      _____ 
  joint venture                                                       
  Attributable profit                2.0        -      2.7        4.7 
                                   _____    _____    _____      _____ 
 

G The order and description of items presented as "reported under UK GAAP" have been amended to enable a direct comparison with IFRS presentation.

H Under IFRS the Group's share of the after tax results of the joint venture is included as a single line item after the Group's post tax results.

I The accounting policy changes are as follows: (i) the trading profit reduction in the year relates to share based payment costs of GBP4.4 million (GBP1.2 million in the three months) and other costs of GBP1.0 million (GBP0.5 million in the three months) partially offset by GBP3.6 million (GBP1.0 million in the three months) benefits on pension current service costs; (ii) there is no goodwill amortisation; (iii) interest payable is increased due to reclassification of a lease; (iv) finance costs represent pension financing; and (v) certain of these adjustments have a consequential deferred tax effect.

APPENDIX B - Unaudited Restatement to US $

Income statement

 
                                                                      
                                     2005                        2004 
                      Q1       Q2       Q3       Q4     Year     Year 
                      $m       $m       $m       $m       $m       $m 
                                                                      
  Revenue:                                                            
  Orthopaedics       313      320      302      332    1,267    1,085 
  Endoscopy          151      150      141      164      606      562 
  Advanced Wound     164      172      169      174      679      654 
  Management       _____    _____    _____    _____    _____    _____ 
                     628      642      612      670    2,552    2,301 
                   _____    _____    _____    _____    _____    _____ 
                                                                      
  Trading                                                             
  Profit:                                                             
  Orthopaedics        75       77       66       85      303      254 
  Endoscopy           30       30       25       42      127      114 
  Advanced Wound      19       22       26       30       97       92 
  Management       _____    _____    _____    _____    _____    _____ 
                     124      129      117      157      527      460 
                                                                      
  Restructuring        -        -     (44)     (40)     (84)        - 
  and                                                                 
  rationalisation                                                     
  costs                                                               
  Macrotextured        -        -        -        -        -    (154) 
  claim                                                               
  Amortisation       (3)      (3)      (2)      (3)     (11)      (8) 
  of acquisition                                                      
  intangibles                                                         
  Net interest         3        2        -      (2)        3        4 
  and other                                                           
  finance costs                                                       
  Fair value of        -        -        -        2        2        - 
  hedge of         _____    _____    _____    _____    _____    _____ 
  anticipated                                                         
  sale proceeds                                                       
  of joint                                                            
  venture                                                             
  Profit before      124      128       71      114      437      302 
  taxation                                                            
  Taxation          (38)     (39)     (18)     (34)    (129)     (80) 
                   _____    _____    _____    _____    _____    _____ 
  Profit from         86       89       53       80      308      222 
  continuing                                                          
  operations                                                          
  Profit from          7        8        9        7       31       28 
  discontinued     _____    _____    _____    _____    _____    _____ 
  operations                                                          
  Attributable        93       97       62       87      339      250 
  profit           _____    _____    _____    _____    _____    _____ 
                                                                      
  Basic earnings    9.9c    10.4c     6.6c     9.3c    36.2c    26.7c 
  per share                                                           
                                                                      
  Adjusted                                                            
  earnings per                                                        
  share                                                               

In order to provide a trend measure of underlying performance, attributable profit is adjusted to exclude items which management consider will distort comparability, either due to their significant, non-recurring nature or as a result of specific accounting treatments. Adjusted earnings per share ("EPSA") has been calculated by dividing adjusted attributable profit by the weighted (basic) average of ordinary shares.

 
                                                                      
                                     2005                        2004 
                       Q1       Q2      Q3       Q4     Year     Year 
                       $m       $m      $m       $m       $m       $m 
                                                                      
  Attributable         93       97      62       87      339      250 
  profit                                                              
  Adjustments:                                                        
  Macrotextured         -        -       -        -        -      154 
  claim                                                               
  Restructuring         -        -      44       40       84        - 
  and                                                                 
  rationalisation                                                     
  costs                                                               
  Amortisation          3        3       2        3       11        8 
  of acquisition                                                      
  intangibles                                                         
  Fair value of         -        -       -      (2)      (2)        - 
  hedge of                                                            
  anticipated                                                         
  sale proceeds                                                       
  of joint                                                            
  venture                                                             
  Tax on                -        -    (17)     (12)     (29)     (54) 
  excluded items    _____     ____    ____     ____     ____     ____ 
  Adjusted             96      100      91      116      403      358 
  attributable       ____     ____    ____     ____     ____     ____ 
  profit                                                              
                                                                      
  Adjusted basic    10.2c    10.7c    9.7c    12.4c    43.0c    38.3c 
  earnings per                                                        
  share                                                               
                                                                      
  Average rate                                                        
  in the period                                                       
  GBP to $           1.90     1.83    1.80     1.73     1.81     1.84 
  euro to $          1.30     1.24    1.23     1.18     1.24     1.25 
 
 
Balance Sheet 
 

                                                                      
                                         2005                    2004 
                               Q1       Q2       Q3       Q4     Year 
                               $m       $m       $m       $m       $m 
  ASSETS                                                              
  Non-current assets                                                  
  Property, plant and         565      578      579      589      557 
  equipment                                                           
  Intangible assets           709      695      673      672      721 
  Investment in joint         221      218      228        -      232 
  venture                                                             
  Investments                  10       10       10       10        9 
  Non-current                   2        1        1        1        2 
  receivables                                                         
  Non-current asset            11        -        -        -       47 
  derivatives                                                         
  Deferred tax assets         129      143      138      132      130 
                            _____    _____    _____    _____    _____ 
                            1,647    1,645    1,629    1,404    1,698 
                                                                      
  Current assets                                                      
  Inventories                 593      611      633      610      547 
  Trade and other             597      583      572      619      573 
  receivables                                                         
  Current asset                46       10       24       10       42 
  derivatives                                                         
  Cash and bank               143       96      120      152       62 
                            _____    _____    _____    _____    _____ 
                            1,379    1,300    1,349    1,391    1,224 
  Held for sale -               -        -        -      217        - 
  investment in joint       _____    _____    _____    _____    _____ 
  venture                                                             
  TOTAL ASSETS              3,026    2,945    2,978    3,012    2,922 
                            _____    _____    _____    _____    _____ 
                                                                      
  EQUITY AND LIABILITIES                                              
  Equity attributable to    1,424    1,373    1,429    1,482    1,348 
  equity holders of the                                               
  parent                                                              
                                                                      
  Non-current                                                         
  liabilities                                                         
  Long-term borrowings        197      207      186      210      293 
  Retirement benefit          279      292      256      190      282 
  obligation                                                          
  Other payables due            7        7        6       16       26 
  after one year                                                      
  Provisions - due after       58       47       50       48       61 
  one year                                                            
  Non-current liability         -        -        -        -        4 
  derivatives                                                         
  Deferred tax                 79       74       57       53       79 
  liabilities               _____    _____    _____    _____    _____
                              620      627      555      517      745 
                                                                      
  Current liabilities                                                 
  Trade and other             466      447      471      452      444 
  payables                                                            
  Bank overdrafts and         215      206      208      227       62 
  loans due within one
  year                                                                
  Provisions - due             81       78       67       90       96 
  within one year                                                     
  Current liability             4       12       22       30       24 
  derivatives                                                         
  Current tax payable         216      202      226      214      203 
                            _____    _____    _____    _____    _____ 
                              982      945      994    1,013      829 
                            _____    _____    _____    _____    _____ 
  Total liabilities         1,602    1,572    1,549    1,530    1,574 
                            _____    _____    _____    _____    _____ 
  TOTAL EQUITY AND          3,026    2,945    2,978    3,012    2,922 
  LIABILITIES               _____    _____    _____    _____    _____ 
                                                                      
  Exchange rate at end                                                
  of period                                                           
  GBP to $                   1.89     1.77     1.77     1.72     1.92 
  euro to $                  1.30     1.20     1.21     1.18     1.36 
                                                                      
  Net Debt                                                            
  Cash and bank               143       96      120      152       62 
  Long-term borrowings      (197)    (207)    (186)    (210)    (293) 
  Bank overdrafts and       (215)    (206)    (208)    (227)     (62) 
  loans due within one                                                
  year                                                                
  Net currency swap            53      (2)        2     (20)       61 
  assets/(liabilities)      _____    _____    _____    _____    _____ 
                            (216)    (319)    (272)    (305)    (232) 
                            _____    _____    _____    _____    _____ 


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