Better outcomes Supporting healthcare professionals for over 150 years

SMITH & NEPHEW ANNUAL REPORT 2015 OVERVIEW OUR BUSINESS Smith & Nephew supports healthcare professionals in more than 100 countries in their daily efforts to improve the lives of their patients. We do this by taking a pioneering approach to the design of our advanced medical products and services, by securing wider access to our diverse technologies for more customers globally, and by enabling better outcomes for patients and healthcare systems. Front cover image The ACCU-PASS- DIRECT was designed with size in mind, allowing surgeons to suture through the smallest tissues To keep the operative...

SMITH & NEPHEW ANNUAL REPORT 2015 What’s in this report CHAIRMAN’S STATEMENT SMITH & NEPHEW ANNUAL REPORT 2015 OVERVIEW CHIEF EXECUTIVE OFFICER’S REVIEW SMITH & NEPHEW ANNUAL REPORT 2015 CHIEF FINANCIAL OFFICER’S REVIEW SMITH & NEPHEW ANNUAL REPORT 2015 OVERVIEW SMITH & NEPHEW ANNUAL REPORT 2015 Products from our nine franchises are used by healthcare professionals in more than 100 countries. We support healthcare professionals in their daily efforts to improve the lives of their patients We manage our business through global functions and regional selling businesses, meeting the distinct needs...

SMITH & NEPHEW ANNUAL REPORT 2015 OVERVIEW CHAIRMAN’S STATEMENT A strong performance, demonstrating our actions are translating into positive outcomes Dear Shareholder, I am delighted to present Smith & Nephew’s 2015 Annual Report. During the year the Group made good financial and strategic progress. The increase in underlying revenue growth, trading profit margin and adjusted earnings year-on-year reflect management’s actions to improve both our commercial performance and operational efficiency. We have continued to pursue the same strategy as in previous years, building a strong position in...

SMITH & NEPHEW ANNUAL REPORT 2015 FINANCIAL HIGHLIGHTS Board succession planning We continued the work we started in 2014 in refreshing the Board following the retirement of some longer-serving directors. Vinita Bali joined the Board at the end of 2014. She was followed by Erik Engstrom in January 2015 and Robin Freestone in September 2015. After the changes to Board composition made over the past two years, we are confident that we now have a Board with the appropriate balance of skills, experience and diversity to lead Smith & Nephew through the next stage of our history. TRADING PROFIT OPERATING...

4 SMITH & NEPHEW ANNUAL REPORT 2015 www.smith-nephew.com 2015 was a good year These strong results demonstrate the anticipated positive effects of our actions coming through across the Group. Where we have invested to improve existing businesses we are beginning to reap the benefits. Dear Shareholder, Smith & Nephew delivered an improved performance in 2015 through focused innovation, better commercial execution and greater efficiency. We began to reap the benefits of our investments and operational improvements across the Group as we continued to deliver against our strategic priorities. A...

SMITH & NEPHEW ANNUAL REPORT 2015 We are further strengthening our commercial platform by aligning under a newly created role of Chief Commercial Officer tasked with driving commercial excellence across the organisation globally. We are also bringing all of our US Orthopaedic Reconstruction, Sports Medicine, Trauma and Advanced Wound Management businesses under one leader, completing the roll-out of our ‘single managing director’ model globally. Focused on innovation We continue to innovate for value. Through our Research and Development (‘R&D’) strategy we deliver pioneering products and services,...

6 SMITH & NEPHEW ANNUAL REPORT 2015 www.smith-nephew.com Re-inv'gorating Smith & Nephew Striving to achieve ever greater efficiencies is an important element of Smith & Nephew’s strategy. It liberates resources for investment, and benefits our margin. Dear Shareholder, Group revenue in 2015 was $4,634 million (2014 - $4,617 million), an increase of 4% on an underlying basis and flat on a reported basis. Foreign exchange movements reduced revenue by 8% partially offset by acquisitions, which added 4% to the reported growth rate. Revenue growth was 5% in the US, 1% across our Other Established...

SMITH & NEPHEW ANNUAL REPORT 2015 www.smith-nephew com 7 Legal settlement and provision During the fourth quarter of 2015, Smith & Nephew settled the majority of US metal-on-metal hip claims, without admitting liability with the net cash cost after insurance recoveries being $25 million. These claims principally related to Smith & Nephew's portfolio of modular metal-on-metal hip products (such as the R3 metal liner), which are no longer on the market. We have taken an accounting charge of $203 million to cover both this net cost and also the present value of the estimated costs to resolve...

SMITH & NEPHEW ANNUAL REPORT 2015 OVERVIEW Smith & Nephew is a leading global medical technology business MAP KEY Group head office Global manufacturing Group distribution Regional head offices • Commercial offices (by country) We continue to invest in acquisitions that provide opportunities to supplement organic growth, strengthen our technology and product portfolios and further establish our business in the Emerging Markets. TECHNOLOGY ACQUISITION COLOMBIA ACQUISITION RUSSIA ACQUISITION Acquisition of Blue Belt Technologies, securing a leading position in the fast-growing area of orthopaedic...

SMITH & NEPHEW ANNUAL REPORT 2015 Products from our nine franchises are used by healthcare professionals in more than 100 countries. We manage our business through global functions and regional selling businesses, meeting the distinct needs of both our Established and Emerging Markets. THE PRODUCTS WE TAKE TO MARKET REVENUE KNEE IMPLANTS UNITED STATES The United States is the Group’s largest market. Due to its commercial importance to the Group its revenue is reported separately. The United States is also home to a number of manufacturing facilities. $604m SPORTS MEDICINE JOINT REPAIR OTHER ESTABLISHED...