Reshaping Smith & Nephew. Section 1 Overview 1. overview strategy and performance. Marketplace and. review. Sustainability. and Principal risks

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1 Reshaping Smith & Nephew Section 1 Overview 1 Smith & Nephew delivered good underlying revenue and profit growth and a strong trading profit margin in. There is no doubt that we are benefiting from implementing our Strategic Priorities. Our choices to invest in higher growth products, franchises and geographies are enabling us to drive greater value for our ompany and stakeholders. Olivier ohuon hief Executive Officer business SEGMENT orporate ccounts and

2 2 Smith & Nephew nnual Report Our business today Smith & Nephew is a global medical technology business dedicated to helping improve people s lives. Group $4.1bn +2% verage number of employees 3 10,477 Employees by geography 3 United States 1,651 Other Established markets 2,003 Emerging and International markets 483 United States 4,000 ontinental Europe 2,098 UK 1,706 D hina 801 E Other 1,872 D E Key Established markets Emerging markets International markets

3 We have leadership positions in Orthopaedic Reconstruction, dvanced Wound Management, Sports Medicine and Trauma. We group these product franchise areas into two global divisions; dvanced Surgical Devices and dvanced Wound Management. Section 1 Overview 3 Revenue by business division $bn dvanced Surgical Devices 3.1 dvanced Wound Management 1.0 dvanced Surgical Devices Smith & Nephew s dvanced Surgical Devices global business has leadership positions in Orthopaedic Reconstruction, Sports Medicine and Trauma. It is headquartered in the US in ndover, M and Memphis, TN. $3.1bn +2% : $3.3bn dvanced Wound Management Smith & Nephew s dvanced Wound Management global business is a leader in advanced wound care dressings, negative pressure wound therapy and other advanced wound management technologies. It is headquartered in Hull, UK. $1.0bn +4% : $1.0bn business SEGMENT Revenue by franchise $m Knee Implants 874 Hip Implants 666 Sports Medicine Joint Repair 521 D rthroscopic Enabling Technologies 409 E Trauma 462 F Other SD 176 D E F Revenue by franchise $m Infection management 127 Exudate management 269 Other WM 633 United States 1,449 Other Established markets 1,298 Emerging and International markets 361 United States 202 Other Established markets 705 Emerging and International markets 122 orporate Operating profit 2 Operating profit 2 $0.6bn +7% $0.7bn +8% $0.2bn nil% $0.2bn -1% : $0.6bn Employees 7,194-5% : 7,611 : $0.7bn : $0.2bn Employees 3 3,283 +5% : 3,132 : $0.2bn ccounts and 1 Explanations of these non-gp financial measures are provided on pages 44 to Underlying growth percentage after adjusting for the effect of currency translation and disposals. 3 Healthpoint was acquired in December. The average employee number does not include the 460 Healthpoint employees who joined us through this acquisition.

4 4 Smith & Nephew nnual Report Financial highlights +2% $4.137bn $965m +6% djusted earnings per share 1 (EPS) Trading profit margin cents +2% % +80bps Trading profit to cash conversion 104% Earnings per share (EPS) 81.3 cents +25% Operating profit 2 $846m +5% Dividend per share Operating profit margin cents +50% % Operating profit as a percentage of cash generated from operations 71% +20bps Research & development expenditure $171m +2% Explanations of these non-gp financial measures are provided on pages 44 to Underlying growth percentage after adjusting for the effect of currency translation and disposals.

5 hairman s statement Our financial strength and confidence in continued strategic progress enabled the oard to the dividend policy during the year. Section 1 Overview 5 Dear shareholder, Smith & Nephew made good progress in, both financially and strategically, as we delivered on our commitments to reshape the ompany. Our underlying revenues were up 2% to $4,137m, with reported revenue reflecting the successful transaction to create ioventus. Trading profit was up 6% underlying at $965m, giving an 80 basis points increase in trading profit margin, which was up at 23.3%. Free cash flow, at $637m, was again healthy, demonstrating the vitality of our business. This performance shows the effects of the major strategic programme announced last year to make Smith & Nephew fit and effective for the future. Throughout the year we made great progress driving efficiencies and liberating resources. This has allowed us to invest to realise the opportunities we see in our higher growth markets and sectors. We have achieved all this and maintained our commitment to health and safety, ethics and the environment. Enhanced returns for shareholders Our financial strength and confidence in continued strategic progress enabled the oard to the dividend policy during the year. s a result, we increased the level of the Interim Dividend payment by 50% to 9.9 per share. The oard is pleased to propose a Final Dividend for the year of 16.2 per share, also up 50% on. We intend to pursue a progressive dividend policy going forward. oard changes We were very pleased that Julie rown joined us as hief Financial Officer in February She brings top-level financial expertise, commercial experience and a deep knowledge of the healthcare sector. Julie replaces drian Hennah who left with our very best wishes and thanks for his significant contribution to Smith & Nephew. We have also welcomed two new Non-Executive Directors during. jay Piramal is one of India s most impressive businessmen and aroness ottomley brings a wealth of experience from her successful career across both private and public sectors. We said farewell to Rolf Stomberg and Geneviève erger, who we also thank for their valuable input. In pril, we shall welcome Michael Friedman to our oard who is renowned for his US healthcare expertise, in particular gained leading the prestigious ity of Hope cancer institution in alifornia. Thank you My oard colleagues and I visited a number of our global sites during the year. We welcome these opportunities to meet our employees, and would like to thank everyone at Smith & Nephew for their continued dedication to serving our customers. We are also fortunate to meet and hear from shareholders regularly, both institutional and private. Your support and feedback are both appreciated, and continue to inform our thinking. Smith & Nephew is evolving. We are already seeing the material benefits of our choices and actions. There is much more to come and we look forward to continuing to build ever more value for you into the future. Sir John uchanan hairman business SEGMENT orporate ccounts and