Tenth Annual Sustainability Report - Smith & Nephew · 2010 Sustainability Report Smith & Nephew is...

Tenth Annual Sustainability Report

Contributing to sustainable development in healthcare

Contents

02 Overview and Highlights

• ChiefExecutive’sStatement • HighlightsoftheYear • AboutthisReport • ProfileofSmith&Nephew

08 EconomicPerformance

• Introduction

• FinancialPerformance

• HealthcareEconomics

- Orthopaedics

- Endoscopy

- AdvancedWoundManagement • MedicalEducation

• InnovationandNew ProductDevelopment

• IndependentAssessment ofSustainability

21 SocialPerformance

• PerformanceMeasures

• OtherMeasures2009

• CommunityRelationships

- Orthopaedics

- Endoscopy

- AdvancedWoundManagement

- BiologicsandClinicalTherapies

- EmergingMarkets - GroupHeadOffice

36 CorporateGovernance andBusinessIntegrity

• BoardGovernance

• BusinessIntegrity

39 HSEPerformance

• DatausedinthisReport • Energy,Waste, EmissionsandDischarges

• OtherEnvironmentalFactors

• HealthandSafety

• HSEAuditsandStandards

• MovingForward

53 LookingAhead

2010 Sustainability Report

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™ Trademark of Smith & Nephew. Certain marks registered US Patent and Trademark Office.


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Smith & Nephew’s overall vision remains to help improve people’s lives by repairing and healing the human body. This vision, and the responsibility which comes with being one of the leaders in our field, means that a sustainable approach to our business is not only expected, but essential. During 2009 we refined our Group business strategy and we have four strategic pillars for success:

• Customerled: outperforming our served markets by focusing on our customers; anticipating and innovating to deliver on their needs.

• Efficient:delivering operating margin improvement and freeing up resources to invest in the business, through streamlining process and systems re-engineering.

• Investingforgrowth: driving additional sales from new opportunities such as biologics, emerging markets and adjacent technologies.

• Aligned:aligning objectives across the business and developing our talent and organisation for consistent execution, through leveraging core functions and sharing best practices.

Within the detailed planning and execution of this strategy are the elements of our business which we discuss within this Report.

Looking back over the year I am proud of what we have achieved.

For example, in this Report you will find the evidence of how: we have continued to refine and strengthen our global compliance programmes; we now recycle more waste than ever – 32% of all we produce; our employee turnover rates have fallen; and we continue to innovate for the benefit of healthcare providers, both in terms of cost savings and providing medical education.

Although not covered by the period of this Report, the Group responded quickly to the aftermath of the Haiti earthquake. We provided nearly $5 million in orthopaedic and wound care products, together with significant cash donations from the Group and our employees to help those most in need.

Across the healthcare space the conflicting operational pressures have never been more intense: with governments recognising the need to substantially reduce budget deficits, while their populations are demanding greater access to better healthcare. At Smith & Nephew we believe that we are part of the solution: not by selling our innovative products at ever cheaper prices, but by helping the healthcare systems to be more efficient.

Chief Executive’s Statement

Welcome to our tenth annual Sustainability Report which describes our work to build value for patients, clinicians, healthcare providers/payers, employees, shareholders and the community.

Contents Overview and Highlights


Highlights of the Year

About this Report

Profile of Smith & Nephew

Economic Performance

Social Performance

Corporate Governance and Business Integrity

HSE Performance

Looking Ahead


Smith & Nephew is a member of the Dow Jones Sustainability Indices and FTSE4Good Index Series 3

We are focusing our innovation efforts not just on giving greater clinical benefit, but also on cost benefit, by providing products and techniques which answer questions such as: How can our products reduce operating room time? How can we improve patient recovery time? How do we reduce the frequency of changing dressings or replacing implants? In this way we help reduce the overall cost of the procedure – “being part of the solution”.

Smith & Nephew have always been one of the leaders among our peer group in sustainability or corporate social responsibility (CSR) and we are constantly reviewing what and how we report and what our stakeholders require. Three additional themes have been gaining ground over the last couple of years.

• Firstly,therehasbeenanincreaseinCSRrelated questions from our customers. Somehealthcareproviders,bothintheUS andEurope,nowrequireaminimumlevelof CSRcommitmentstoparticipateinproduct supplytenders,whilesomewholesalersarerequesting more details on the production and supply of the products we provide. We can seethistrendcontinuing,particularlyas governments seek to execute their own environmental and social agendas through purchasingdecisionsandCSRbecomesa mainstream element of many healthcare organisations.

• Secondly,inreportingonCSR,therehasbeen greater recognition that companies cannot, and maybe should not, try and do everything. There is an increasing trend for companies to focus on the major CSR issues that are most relevant for their organisation and their stakeholders and put their development and reporting effort into these areas, rather than only make small achievements in all areas. For Smith & Nephew this would include activities such as employee engagement, medical education, community support and healthcare economics.

• Thirdly,carbonemissionlegislationisnow being implemented in many countries as we seek to reduce the impact of climate change. This offers Smith & Nephew the opportunity both to demonstrate our climate change credentials and save money through carbon trading schemes. We have already made great progress in this area at our manufacturing plant in Hull, UK.

In the coming year we will invest further resource in discussing these developments with our stakeholders, considering their materiality and developing an appropriate response.

We are proud that every day our products help to improve people’s lives and we also recognise that we have a wider responsibility to the community, the environment and society at large. As a leader in our markets, we believe we should continue to be a leader in setting and meeting standards of sustainable development.

I hope you find our Sustainability Report useful. It reflects our commitment to running a sustainable business. If you have comments, please share them with us, as your feedback is integral to the further development of our strategy. DavidIllingworth Chief Executive June 2010




About this Report



Social Performance


HSE Performance

Looking Ahead


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EconomicPerformance

• Smith&Nephew’stradingprofitgrewby15%,whilstdistributing$1.3billiontoemployee, governmentandinvestorstakeholdersandinvesting$155millioninR&D.

• ContributedtomorecosteffectivesolutionsforhealthcaresystemsthroughtheintroductionofinnovativeproductssuchasVISIONAIRE™PatientMatchedInstrumentation,DYONICS™RFRadiofrequencySystem andALLEVYN™AgGentleBorder.

• Considerableinvestmentinmedicaleducation,includingproductandclinicaltrainingforover 100,000healthcareprofessionalsaroundtheworld.

SocialPerformance

• Averagevoluntarylabourturnoverrateduring2009was6.5%,adecreasefrom the2008equivalentrateof9%.

• In2009ourdirectdonationstocharitableandcommunityactivitiestotalled$1.9million, a25%increaseonthepreviousyear.

• Othercommunityprogrammesincludethedonationsofproductsandemployeesvolunteering time to a range of activities both locally and internationally.

CorporateGovernanceandBusinessIntegrity

• Wehaveenhancedourglobalcomplianceprogrammethroughnewpersonnel, world-wide employee training and certification and a refined Code of Conduct.

• OurBoardisledbyanon-executiveChairman,supportedbytwoexecutivedirectors and seven independent non-executive directors.

• Justlikeouremployees,theBoardundertookreviewsofitseffectivenessandthetraining and development needs of its members.

Health,Safety&EnvironmentalPerformance

• Wasterecycledrosefrom30%to32%,doublingoverthelastfiveyears.

• Absolutemeasuresofwaterusage,energyusageandCO2 emissions have remained broadly static, despite additional manufacturing sites.

• Thebroad‘OSHA’measureoflosttimeduetoaccidentscontinuestofall.




About this Report



Social Performance


HSE Performance

Looking Ahead


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The very nature of our business contributes to sustainable development in healthcare.

About This Report

Our tenth annual Sustainability Report gives an overview of the actions Smith & Nephew (the Group) have taken during 2009 (the Report) as we continue to improve the management of our corporate governance programmes and environmental, social and economic impact.

The Report concentrates on providing an update on our sustainability performance in the past year across all our main business units - Orthopaedics, Endoscopy and Advanced Wound Management - as well as some otherkeyareasofourbusinesssuchasourBiologicsandClinicalTherapiesactivities,EmergingMarketsunitand the Group Head Office.

The Report splits our performance into four areas: economic, social, corporate governance and business integrityandhealth,safetyandenvironmental(‘HSE’).Italsoprovidesaninsightintoourproductsand services and how the very nature of our business contributes to sustainable development in healthcare. This Report broadly follows the Global Reporting Initiative (GRI) guidelines for sustainability reporting. GRI is an international multi-stakeholder effort to create a common framework for voluntary reporting of the economic, environmental and social impact of an organisation.

Our ambition is for Smith & Nephew to continue as a strong and growing business long into the future. We believe that we can contribute to long-term sustainability by demonstrating:

• Economicresponsibility-providingcleareconomicbenefitstoshareholders,employees,suppliers and society. We contribute to society through the creation of shareholder value, payment of taxes, capital investment, employment opportunities and procurement, as well as the economic benefits of our products on both healthcare providers/payers and patients. Smith & Nephew’s products and treatments offer cost-effective solutions to healthcare professionals and providers and each new product launched aims to provide health economic benefits. Our products seek to reduce patients’ time in hospital and return them to health faster. In addition, the education of healthcare professionals in techniques related to our product range is an integral part of the service we provide.

• Socialresponsibility-providingsuitableworkplaceconditionsandensuringtheeffectivedevelopment of our employees and fostering relations with the communities in which we operate. Giving employees the opportunity to let us know how they feel about working for Smith & Nephew - and acting on what they tell us, investing in our people, investing in the communities in which we operate and providing opportunities for continuing professional development of healthcare professionals.




About this Report



Social Performance


HSE Performance

Looking Ahead

Picture: Shelby Farms Park is 4,500 acres of pure outdoor enjoyment in the heart of Shelby County, TN. Home to more than 20 bodies of water, paved and primitive trails, natural areas, and so much more. Shelby Farms receives about one millions visits per year.

Shelby Farms Park has seen turbulent times in the past but now is thriving under the care of the Shelby Farms Park Conservancy.

During a recent Earth Day celebration, Smith & Nephew associates, as well as family and friends, joined in to help plant more than 350 seedlings, part of the Conservancy’s overall vision of planting one million trees over the next 20 years.


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• CorporateGovernanceandBusinessIntegrity–ensuringthatappropriateprinciples,policiesand procedures are set and then used to manage our business with integrity and responsibility. ThisencompassestheresponsibilitiesoftheBoardofDirectorsandCodeofConductwhichgives the basic legal and ethical principles for carrying out our business.

• Health,SafetyandEnvironmentalresponsibility-byregardingourhealth,safetyandenvironmental performance as an important indicator of our overall business success. The health and safety of all our employees, and the environment as equally important wherever we operate throughout the world. All Smith & Nephew sites across the world are included in its reporting programme and all of its research and production sites are included in its Health, Safety and Environment audit programme. Third party suppliers to our manufacturing sites are vetted to ensure they subscribe to our values and employment ethics.

Our policies, principles and organisation governing our approach to sustainability and corporate responsibility appearinourcorporatewebsite(www.smith-nephew.com)under‘Sustainability’.

Smith & Nephew is measured by leading organisations that assess sustainable development. In 2009 the Group was included in the Dow Jones Sustainability Index (DJSI) for the eighth consecutive year. In the UK, Smith & Nephew is a member of FTSE4Good.

The numeric data contained in this Report primarily covers the year ending 31 December 2009. Previous Reports are available to download from our website in PDF format.




About this Report



Social Performance


HSE Performance

Looking Ahead


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About this Report



Social Performance


HSE Performance

Looking Ahead

Profile of Smith & Nephew Smith&NephewisaglobalmedicaltechnologybusinesswithgloballeadershippositionsinOrthopaedics;includingReconstruction, Trauma and Clinical Therapies; Endoscopy; including sports medicine; and Advanced WoundManagement.Smith&Nephewisagloballeader in arthroscopy and advanced wound managementandisoneoftheleadingglobalorthopaedics companies. The Company operates in32countriesaroundtheworld.Annualsales in2009werenearly$3.8billion.

Smith&Nephewisdedicatedtohelping improvepeople’slives,byrepairingandhealingthehumanbodywithadvancedtechnologyproductsallowingthemtolivelonger, healthier and more active lives. Our products contributetothetreatmentandrecoveryofpatients throughout the cycle of medical care. Thisisachievedbytheinnovativedesignofproductsandinstruments,thetrainingofmedicalprofessionals and the procedures used to provide treatmentandrecovery.Inparticular,Smith&Nephewoffersproductsthroughoutthecontinuumofcareforpatients,notonlywithosteoarthritis,from early intervention through primary joint replacementstorevisions,butalsointhewiderfieldofinjuriestoknee,hip,shoulderandoverallboneandskinrepair.

The Company prides itself on the strength of its relationships with its surgeons and professional healthcarecustomers,withwhomitsnameissynonymouswithhighstandardsofperformance,innovation and trust.

Acrosstheworld,healthcarebudgetsarecomingunder increasing pressure. Healthcare economic considerations are integrated into our product developmentprocesstoensurethatthebenefitsoftheGroup’snewproductsandlineextensionsnotonlyimprovepatientoutcomes,butprovidebettertreatmentandproceduresforbothclinicianandpatientandcontributetomorecosteffectivesolutions for healthcare services.

FulldetailsoftheGroup’svisionandvalues,strategy,thedynamicsofthemarketswe operatein,andfinancialperformancecanbefoundonourcorporatewebsite(www.smith-nephew.com)andinour2009AnnualReport.





Introduction

Financial Performance

Healthcare Economics

Medical Education

Innovation and New Product Development

Independent Assessment of Sustainability

Social Performance


HSE Performance

Looking Ahead

Smith and Nephew’s sustainable development depends ultimately on its ability to provide a satisfactory economic return

EconomicPerformance

TheGroupcontributeseconomicallyinthreeprincipleways:(i)itsfinancialperformancebringseconomicbenefitstoshareholders,employees,suppliersandgovernmentsandlocalauthorities;(ii)itaimstodeliveroverallcostsavingstohealthcaresystemsbyreducingthecostperepisodeofcare,and(iii)throughtheprovisionofmedicaleducationtosurgeonsandnurses.

Picture: VISIONAIRE™ Patent Matched Instrumentation





Introduction



Medical Education



Social Performance


HSE Performance

Looking Ahead

2005 2006 2007 2008 2009

FinancialHighlights

GroupRevenue($m) 2,552 2,779 3,369 3,801 3,772

ResearchandDevelopmentExpenses($m) 122 120 142 152 155

TradingProfit($m) 517 571 706 776 857

AdjustedEarningsperOrdinaryShare(¢)* 42.3 45.2 52.0 55.6 65.6

StakeholderReturns

StaffCosts($m) 680 718 835 959 936

TaxationIncomestatement($m) 126 156 153 187 198

Dividends,Paid($m) 91 96 105 109 120

FinancialPerformanceTheGroup’sbusinessstrategiesandpoliciesaredesignedtoachievelong-termsustainablegrowth andprofits,whichinturnbringcontinuedeconomicbenefitstoshareholders,employees,suppliers andlocalcommunities.Smith&Nephew’ssustainabledevelopmentdependsonitsabilitytoprovide a satisfactory economic return.

FulldetailsoftheGroup’svision,strategy,thedynamicsofthemarketsweoperatein,andfinancialperformancecanbefoundonourcorporatewebsite(www.smith-nephew.com)andinour2009 AnnualReport.Insummary:

*This is before: Restructuring and rationalisation expenses, amortisation of acquisition intangibles and impairments, acquisition related costs, the legal settlement (2007) net profit on disposal of the joint venture (2006) loss/gains on hedge of the sale proceeds of the joint venture (2006, 2005) and taxation thereon.





Introduction



Medical Education



Social Performance


HSE Performance

Looking Ahead

Smith&NephewTradingProfitGrowth

500

2005 2006 2007 2008

600

700

650

550

900

850

750

800

2009

Trad

ingprofit$m





Introduction



Medical Education



Social Performance


HSE Performance

Looking Ahead

Healthcare Economics Smith&Nephew’sfinancialperformanceisnottheonlywayitcontributestotheeconomyofthecountriesinwhich we operate.

Smith&Nephew’sinnovationisfocusedondesigningproducts,instrumentsandtechniqueswhichprovideclinicalandcostorefficiencybenefits.Efficiencybenefitsincludereducedfrequencyofdressingchanges,shorteroperatingroomortheatretimes,reducedlengthoftimespentinhospital,fasterrecoveryandreducedinfection rates.

Thecombinationofincreaseddemand,higherexpectationsandtechnologicaldevelopment,takentogetherwith constraints on the capacity of governments to fund higher levels of expenditure and current financial pressures,willbemetbyincreasingemphasisoncostcontainmentinthehealthcaresystemsinall major economies.

Manycountriesareactivelypursuingstrategiestoevaluatethecost-effectivenessofnewtechnologiesandreduce the cost per episode of care for existing treatments and to restrict the introduction of potentially expensivenewtechnologiestothosewhichcanbeshowntobecost-effective.Forexample,comparativeeffectivenessresearchaimedatestablishingcoveragepolicies,identifyingpreferredproducts,determiningwhichpatientgroupsbenefitmostandleastforanytechnologyorservice,andattemptingtoestablishavalue comparison among competing technologies. The aim is to use comparative effectiveness to decrease healthcare costs as well as to improve patient care.

ThisinitiativealreadyexistinmanycountriesinwhichSmith&Nephewoperates,forexampletheUnitedKingdom’sNationalInstituteforClinicalEffectiveness(NICE),Germany’sGermanInstituteforQualityandEfficiencyinHealthCare(IQWIG)andCanada’sCanadianAgencyforDrugs&TechnologiesinHealth(CADTH),anditisacorecomponentofthenewUSHealthcareReformbill.

The focus of our strategy is to seek solutions which improve the effectiveness of treatment and in that way reducetheoverallcostsofpatientcare.Thisallowsustocommandahighershareofcurrentepisodecosts,whilstatthesametimecontributingtoreducingcoststothehealthcaresystemoverall.Thisisadominantstrategyinthelightofexpectedfuturetrendsandbecauseoftheimportancetoourbusiness,wehaveadedicatedhealtheconomistonourstaff,ProfessorJohnPosnettwhoisarecognisedleaderinthisfield.

Healthcare economic considerations are integrated into the product development process to ensure that the benefitsfromtheGroup’sproductsimprovepatientoutcomes,treatmentsandproceduresforbothclinicianandpatient,andcreatecosteffectivesolutionsforhealthcareservices.





Introduction



Orthopaedics

Endoscopy

Advanced Wound Management

Medical Education



Social Performance


HSE Performance

Looking Ahead

Orthopaedics The progress Orthopaedics has made over the last12monthsinhealtheconomicsanalysesthatarecompleted,ongoingandplannedarebrieflydescribedbelow.

Productinnovation

• Inearly2010welaunchedtheTRIGEN™SURESHOT™DistalTargetingSystemwhichis designed to achieve proper distal screw placementduringtibialandfemoraltraumanail cases. This device not only can eliminate a significant amount of radiation exposure for thepatientandtraumastaff,butcanalsohelpincreaseefficiencybyreducingproceduretimecausedbythetimeittakestopreciselytarget and align the distal locking holes using thetraditionalradiation-emitting,fluoroscopic“c-arm” technique.

• WeintroducedVISIONAIRE™PatientMatchedInstrumentationin2009,apatientspecifictibialcuttingblockproductforkneereplacements.ThisutilisesanMRIscantoproducesurgicalinstruments and guides specific to the patient. This technology removes multiple steps from the traditionalsurgicaltechnique.Forthepatientthismayreducetimeunderanaesthesia,lessbloodloss,alowerriskofinfectionandaquickerrecovertime.Forthesurgeonandhealthcareprovideritmayshortenproceduretimebyeliminatingsizingandalignmentsurgicalsteps,hence improving productivity.

• TheBIRMINGHAMHIP™ResurfacingSystem(BHR™)economicmodelwascompletedduring2009,demonstratingasignificantcostandutilityadvantageofBHRovernon-surgicalmanagement of hip pain and early intervention withtotalhipreplacement(THR)inactivepatients.AnarticlehasbeenpublishedintheJournalofManagedCareMedicine,apeer-reviewedjournalpublishedintheUnitedStates.Thispublicationiswidelyreadbymanagedcaremedicaldirectorsandmostbenefitsmanagersfrom large employers who are self-insured. The articleconcludes,“Comparedwithnon-surgicalmethodsofpainmanagement,primaryhipresurfacing offers significant improvement in patientqualityoflife,whichiscomparabletotheimprovement achieved with primary total hip replacement.ForpatientswhoareatincreasedriskofTHRfailure,resurfacingisbothlesscostly and more effective than a conservative approachinvolvingdrugtreatmentfollowedbytotalhipreplacementatalaterdate.Typically,thesepatientarelikelytobeyounger,active,andingoodhealth,withmenbeingatgreaterrisk than women.”

We are currently carrying out clinical trials with economic endpoints for products suchasVISIONAIREPatientMatchedInstrumentationandtheTRIGENSURESHOTDistalTargetingSystem.





Introduction



Orthopaedics

Endoscopy


Medical Education



Social Performance


HSE Performance

Looking Ahead

Industrytrendsandplannedwork

Within Orthopaedics the general trends over the lasttwoyearshaveprogressedunabated. Forexample:

HealthcarereformwaspassedintheUS inearly2010.Severalprovisionswillhave significant impact on future cost efficiency initiativesandreimbursements:

• Anon-profitcorporationtoconduct comparative effectiveness research was granted$1.6billiondollarsoffunding. Coverageandreimbursementdecisionsareexplicitly excluded from consideration and it is expected that the impact of the researchwillbegreatestinthecommercialinsurance industry.

• ThelegislationalsocreatedanIndependentPaymentAdvisoryBoard(IPAB).Thisboard isappointedbythePresidentandhenceisapoliticalappointment.ItwillsetMedicarespending limits in any year in which per capita Medicaregrowthrateexceedsatarget growth rate. IPAB recommendations will becomelawunlessCongresspasses alternative spending that achieves the same levelofbudgetarysavings.

Asidefromthelegislation,severaldemonstrationprojectsconductedbytheCentersfor MedicareandMedicaid(CMS)maysignificantlyimpactreimbursement:

• TheAcuteCareEpisode(ACE)demonstrationisfundedbyCMSandhasbeenunderwayfor a year. The intent of the programme is to combinethehospitalandphysicianpaymentforahospitalisation,forexampleforjointreplacement. It is argued that a single payment alignstheincentivesofbothphysicianandhospital to reduce the cost of the procedure.

• TheAccountableCareOrganisation(ACO)isthe newest iteration of schemes that align provider incentivesdrivenbyasinglepayment.These are expected to proliferate in the commercial insurance market. The ACO will extend the episodeofcarebeyondasinglehospitalisationand will in future deal with chronic illness. Intheshortrun,anexampleanACOmightundertakewouldbeacceptingasinglepaymentforprovisionofallpatientcareforaperiodof2 weekspriortosurgeryand6monthspostsurgeryforajointreplacement.Abroadrange of issues may arise from this which could impact boththerelationshipsdrivingthechoice ofimplantandtheclinicalandcostbenefitsconsidered when making the decision.





Introduction



Orthopaedics

Endoscopy


Medical Education



Social Performance


HSE Performance

Looking Ahead

Endoscopy Smith&Nephew’sEndoscopybusinessprincipallyaddresses the market for minimally invasive arthroscopy procedures.

Thebeneficiariesofarthroscopyfallintotwobroadpopulationgroups:active,butagingpeoplewhoexpect to remain active later in life and athletes –professional,amateurorrecreational–whoseek minimally invasive treatment of joint injuries causedbyoveruseortrauma.

Abroadbodyofresearchsupportsthehealtheconomicuseofarthroscopicprocedures:

• In2009,anExecutiveSummaryor‘WhitePaper’ forArthroscopicManagementofFemoroacetabularimpingementoftheHip (FAI)byProfessorJohnPosnettshowsthe comparative and effectiveness of arthroscopy verses open surgical dislocation procedures forFAI.Resultsfrommorethan20studies over the past eight years show that arthroscopic surgery is effective in reducing pain and alleviatingsymptomsinpatientswithFAI.This WhitePaperisbeingreviewedtodetermine whetheritshouldbesubmittedforpublication.

• ResearchconductedbyOrthopaedicsurgeons atMassachusettsGeneralHospitaland HarvardMedicalSchoolshowedthatpatients who underwent surgery to repair shoulder instabilitysawcomparableresultswhether they had open or arthroscopic surgery. Thearthroscopicproceduretooklesstime, cost less and resulted in fewer recurrent dislocationsthanopensurgery,accordingto thestudy,whichwaspublishedinArthroscopy:TheJournalofArthroscopicandRelatedSurgeryinOctober2005.Thekeytothereducedcostwas the lack of a hospital stay.

• A2006study,publishedinArthroscopy: TheJournalofArthroscopicandRelatedSurgery inApril2007showedthatthevastmajority of patients perceive multiple advantages to arthroscopic shoulder surgery. The study surveyed202shouldersurgerycandidatesat twoUSorthopaedicpractices.88%ofthepatientsatonepracticeand96%atthesecondsaid they would prefer arthroscopy over opensurgery.Anaverageof20%ofthosepatients said they would forego surgery altogether if an open procedure were the only option.

Productinnovation

Productandtechniqueevolutioninmaterials,product mechanics and operating room equipment,havethepotentialtoprovidebothclinicalandcostbenefitstohealthcareproviders.Herearesomerecentexamples:

• TheDYONICS™RFRadiofrequencySystemis designed for arthroscopic surgeons who need torapidlyremovedamagedsofttissue, coagulatebleedingvessels,smoothrough cartilage,andshrinkinflamedsofttissuein weight-bearingjointssuchastheknee, shoulder and hip. It provides the opportunity of faster surgery times in high volume hospitals and surgery centres.

DYONICSRFprobesofferarangeofanglesand electrodeconfigurations,withlargesurface areas,ensuringrapidtissueremoval. Powerfulhigh-flowsuctiononselectprobes quicklyremovesresectedandablatedtissue, bubbles,andfree-floatingdebris,providingan unobstructedimagethatletsthesurgeon concentrate on the procedure.





Introduction



Orthopaedics

Endoscopy


Medical Education



Social Performance


HSE Performance

Looking Ahead

Productinnovation(cont.)

• TheBIORAPTOR™KnotlessSutureAnchorisadeviceusedtorepairatornlabruminthehipandshoulder.Theease-of-useprovidedbythisknotless arthroscopic device provides surgeons with full control over suture tension – a critical element in procedure.

TheBIORAPTORKnotlessSutureAnchorincorporates a two-piece proprietary design thatenablesthesurgeontodeterminethefinal suture tension and tissue shift after implantation,whichisnotpossiblewithcompetitive anchors. By eliminating a traditional knot-tyingstep,surgeonswillalsosavetimewithlessproceduralstepsandbenefitfromasurgical solution that reduces the risk of intra-articulardamageduetoknotstacks,providingthebestopportunityforhealing.

Labralrepairsarenecessarywhenthelabrum,a meniscus-like cartilage ring that rims the jointsocket,tearsorbecomesstretchedduetoimpingementorinjury.Damagetothelabruminthehipmaybeasourceofchronicpainandmayalsocontributetoosteoarthritis.Intheshoulder,thisdamagecanleadtoinstabilitywherethehumerusorupperarmboneslipsoutofthesocket.Instandardprocedures,surgeonsreattachthelabrumtothebonysocketofthejoint using small anchors and suture.

• OtherrecentexamplesincludetheDYONICS™BONECUTTERELECTROBLADEResector,whichcombinestechnologiestoperformtheworkofthreeseparateresectiondevices,henceoften resulting in shorter procedures and the BICEPTOR™TenodesisSystemtore-attachthebicepstendonintheshoulderthereforesimplifying and shortening procedure times.

Industrytrendsandplannedwork

• Increasedacceptanceofarthroscopy.Clinicians seearthroscopyasmoreefficient,resultingin fewercomplications,thanks,inpart,toevolving technology.Patientsarebecomingmoreaware ofthebenefits,includingreducedtraumaand shorterrecoverytimes.Publicitysurroundingthe treatmentofeliteathletes’jointinjurieshasalso heightened awareness of arthroscopic techniques among the general population.

• AccesstoproceduresthroughAmbulatory SurgeryCenters(ASCs).Thenumberofsurgical sites–freestanding,surgeon-ownedcentres as well as hospital-sponsored outpatient surgeryfacilities–hasclimbedsteadilyasmore surgeons have adopted arthroscopy as a specialty.ThisisparticularlysointheUS,where in2007therewereabout5,700ASCs, comparedwith275in1980and1,450in1990. In2008,surgeonsin5,300ASC’sperformed approximately5millionoutpatientsurgeries.

TheAmbulatorySurgeryCentersAssociation forecaststhatthenumberofASCswillcontinue togrowinthecomingyears.IntheUS, increasesinreimbursementlevelsformany arthroscopicproceduresbetween2008and 2011willmakethoseproceduresmore profitableforoutpatientcentres.IntheUS,the MedicarePaymentAdvisoryCommission(Med Pac)recommendedtoCongressinMarch2009 thatASCsreceivea0.6%increaseinpayments for2010.

Paymentsformanyproceduresareincreasing, underthenewASCpaymentsystem, including orthopaedic procedures involving implanteddevices.Congress,throughMedPac’s recommendations,isreviewingpaymentsfor physicianservicesin2010toincreaseby1.1%. Effective1January2010thereimbursement rateforACLRepairsinanoutpatienthospital increasedby84%($3,251to$5,975) TherateASC’swillreceiveforanACLrepair increasedby123%($1,247to$2,785).

Advanced Wound Management DuetothenatureoftheAdvancedWoundManagementbusinessmoreworkhasbeencarried out in the area of health economics than ourotherbusinesses.Advancedwoundproductsare typically more expensive than traditional products,butitisimportanttofocusonthetotalcostofpatientcare,ratherthanonthecostsofindividual components of care. As a result it is essential to look at the overall wound healing programme from initial diagnosis to wound closure to make a strong case for application of our advanced wound healing range.

In wound care the cost of products typically representnomorethan10-20%oftotaltreatmentcost.Thedominantcostisthecostoflabour.Thus,thepracticalapplicationofourstrategicaim requires that we seek solutions which reduce overallcostsbysubstitutingthecostofwoundcare products for the cost of medical and nursing time.Inthenewparadigm,thecostofproductswill come to account for a higher share of the total cost of treating patients.

Numerouscasestudiessetoutinourwebsiteillustrate these principles.

Productinnovation

Therecentintroductionsby Smith&Nephewinclude:

• Negativepressurewoundtherapy(NPWT)is a modern wound healing technology which promotestheformationofgranulationtissue, improvesbloodflowandremovesinfectivematerial from the wound surface.

AppropriateuseofNPWT,inconjunctionwithmodernwounddressings,leadstofasterhealing and a lower incidence of wound complications.Forexample,arecentUKstudyreducedinpatientlengthofstayby21%andsavedsignificantcostthroughtheuseofNPWTtofacilitateearlypatientdischarge(WoundsUKconferenceinHarrogate,2009).

• Reducingtheincidenceofhealthcare- associated infections is a priority for healthcare providers.Forexample,surgicalinfectionis estimatedtodoublethelengthofpost-operative hospitalstay(CoelloR,CharlettA,WilsonJ, WardV,PearsonA,BorrielloP.(2005)).Recent productsintroducedbySmith&Nephewto combatsuchinfectionsincludesilver-based dressings,suchasALLEVYN™AgGentleBorder andACTICOAT™Flex,andvapour-permeable filmdressing,suchasOPSITE™Post-OpVisible. ALLEVYN™AgGentleBordercombinestheanti- microbialprotectionofsilverwiththegentleness of soft adhesives to minimise pain at dressing removal,whileACTICOATFlexprovides enhancedconformabilitytotheACTICOAT range.OPSITEPost-OpVisiblepermitsthe practitioner to monitor the wound site for signs ofinfection,withouttheneedtoremove the dressing.





Introduction



Orthopaedics

Endoscopy


Medical Education



Social Performance


HSE Performance

Looking Ahead

The true costs of wound care are hidden:

• Dressings&othermaterials Typically 15-20% of total cost

• Nursetime Typically 30-35% of total cost

• Hospitalisation Typically >50% of total cost





Introduction



Medical Education



Social Performance


HSE Performance

Looking Ahead

Medical EducationThe Group is committed to supporting the education and training of health care professionals to advance medical excellence; fromsurgeons,clinicianandnursestoresearchand graduate support. We provide a range of support from courses at our own dedicated trainingfacilities,aswellaspartneringwith world-classlearningcentres,tosponsoredcongresses.Theeducationofferedisboth directly associated with our products and more generallyapplicable,whichbuildsthebasisforfostering a peer-to-peer professional network.

MedicalEducationtraining

OurOrthopaedicsbusinessprovidesthe majority of its medical education through its KLEOS programme.

KLEOS is the medical education platform specifically designed to meet the needs of orthopaedic surgeons and medical professionals. KLEOS offers tailored educational options from hands-oncourses,fellowships,internationalmeetings,andinstructionalvideos,toacompletecoverage of the literature from news updates to the latest clinical findings across relevant therapeutic areas.TheglobalKLEOSprofessionalcommunityincludestheworld’stoporthopaedicspecialistsand opinion leaders and is open to all orthopaedic professionals,fromsurgeons,researchers,clinicalinvestigatorsandhospitalmanagerstoprofessors,residents and students.

Havingbeenlaunchedin2008,during2009KLEOSranover150coursesprovidingdirectproduct and clinical training to nearly 6,500surgeons.Thewidevarietyofcourses range from introductory courses for younger surgeons to the one-on-one Visiting Surgeon Program. Every year KLEOS organises internationalmeetings:forexampleinRome, Italyfocusingonthe‘ContinuumofCarein HipDiseases’andanotheroneinAustralia basedontheneedsofthesurgeonsforthe Asia-Pacificregion.KLEOScontinuestoexpand,offering its first trauma and arthroplasty courses in Latin America and first faculty development courseinAustralia,during2009.

KLEOSoffersanincreasingnumber ofsurgeonsenduringeducationalmaterial, (suchasproceduralvideos,lecturevideos,literatureservices),onlineonwww.kleos.md aswellasDVDsandprintedmaterials.

Our Biologics and Clinical Therapies team ran a range of programmes; training nearly 500healthcareprofessionalsandorganising events such as the well attended Biologics Science Summits.

Orthopaedicsalsocontributestoprovidinggrantsupportforresearch,graduatemedicaleducationfellowships and continuing medical education throughtheindependentOrthopaedicResearchandEducationFoundation.

Endoscopy trains surgeons in a variety of ways to meet the demanding schedules of surgeons andbringworldclasstrainingtolocalmarkets.Endoscopy supports fellowship education through grants and through the work of our in house ClinicalMarketingTeam.

Thisteam,alongwithdistinguishedfacultymembers,offersqualityarthroscopiceducation inalocalhands-onlabsetting.During2009over 200hundredcourseswereputonglobally, trainingover3,000sportsmedicinesurgeons.

InSeptember2009,Endoscopyhostedasuccessfultwo-dayfellowshipmeeting,“TheWiderScopeofArthroscopy,”thatinvolvedover100visitingsurgeons,includingFellowsfromsomeofthemostprestigiousprogrammesinNorthAmerica.ThiswasfollowedinApril2010, with a similar meeting.





Introduction



Medical Education



Social Performance


HSE Performance

Looking Ahead

MedicalEducation(cont.)

OurAdvancedWoundManagementbusinesstrainedover80,000nursesandcliniciansaroundthe world in the effective use of advanced woundcareproducts.Inaddition,itprovidesawiderangeofeducationandinformationaboutthetherapeutic area of wound management through itsGlobalWoundAcademy.

InSeptember2009,Smith&Nephewwasaplatinumsponsorforthe4thCongressoftheWorldUnionofWoundHealingSocietiesheldinYokohama,Japan,withthethemeof“bettercare,betterlife”.InFebruary2010,Smith&NephewsupportedtheInternationalNPWTExpertPanelinHamburg,Germany,aneducationinitiativeaimedatdevelopingacomprehensive,evidence-basedconsensusontheuseofNPWT.

Across the countries in our emerging markets businesswehelpedinthetrainingandeducationofover11,000healthcareprofessionals-thisincludessurgeons,nursesandpara-medics. The support was in the form of sponsorships and grantsforbothSmith&Nephewaswellasthirdparty programmes across all product lines.

MedicalEducationFacilities

Smith&Nephew’smedicaleducationprogrammeissupportedbystate-of-the-arttrainingfacilities.

During2009weopenedanewtrainingfacility inShanghai,China,wherewetrainedover 150surgeonsinthesecondhalfofthe2009. During2010wewillbeopeningfurtherfacilities in China – in Chengdu and Beijing – with more beingplanned.

InEurope,wehavepartneredwiththeAcademyofMedicalTrainingandSimulations,Lucerne,SwitzerlandandinMay2010wecompletedthebuildingofourSurgicalSkillsCentreinYork,UK.ThisisthefirstSmith&Nephewownedlab-basedtraining facility in Europe.

IntheUS,wehavecommencedconstructionofanewsurgeontrainingfacilityinMemphis,asapartof a new head office facility for our Orthopaedics business.Endoscopyexpandedthecapacity ofitsAndoverfacility,whichnowhasmorethan 20stationswhichcanberunsimultaneously,allowing for larger courses such as the annual fellowship meeting.

OrthopaedicsalsooperatesMOBILAB™,astateoftheartmobiletrainingcentreintheUS.MOBILABtakestheGroup’sadvancedtrainingfacilitiesdirecttohospitalsenablingsurgeonstotrainwiththeiroperating team on their own hospital site.

Endoscopy has launched an innovative program called,“LabinaBox”programme,allowingthesalesforcetoperformlabtrainingatalocalfacility.

Picture: SurgicalSkillsCentreinYork,UK,whichopenedinMay2010





Introduction



Medical Education



Social Performance


HSE Performance

Looking Ahead

Innovation and New Product DevelopmentInorderforSmith&Nephewtocontinuegrowingwemustgenerateasteadyflowofnewproducts andservices,whichprovideclinicalandcost-benefitforpatientsandhealthcareproviders.Wegeneratesuchnewinnovationsfromavarietyofsourcesincludingouremployees,externalleadingphysiciansandscientistsand acquiring or licensing products.

During2009weinvested$155millioninresearchanddevelopment,4.1%ofourtotalsales,andreinforcingourreputationforinnovativenewproductdevelopmentwhichcontinuestobeevidencedwithastreamofnewproductslaunchedduring2009andearly2010.

Inaddition,eachofSmith&Nephew’sbusinessesworkcloselywiththeircustomersandkeyclinicalopinionleaderstogainagreaterappreciationoftheirclinicalneeds.Thisallowsustobebothmoreresponsivetotheircurrentrequirementsandbetterabletoanticipateandshapethefuturedirectionofclinicalpractice.

AnexampleofthisprocessinactionistheInVenturesBioSkillsLabatourEndoscopyfacilitiesinMassachusetts,whereourengineersworkedwithmorethan150surgeonsonnewproductideas. Thishelpsacceleratetheprogressofknee,shoulderandhipsurgerybyenablingsurgeonswhohave an idea or a new technique to develop the concept in our state-of-the-art facility.

Intermsofacquiringtechnology,inlate2009AdvancedWoundManagementacquiredsubstantiallyall theassetsofNucrystPharmaceuticalsCorp.,whichlicencesandmanufacturesourrangeofACTICOAT™ silverdressings,for$21millionplusthevalueoftheworkingcapital.





Introduction



Medical Education



Social Performance


HSE Performance

Looking Ahead

Independent Assessment of SustainabilitySmith&Nephew’sprogressismeasuredbyleadingorganisationsthatassesssustainabledevelopment.

In2009theGroupwasincludedintheDowJonesSustainabilityGroup(DJSI)indicesforbothEuropeand the world for the eighth year.

TheDowJonesSustainabilityGroupIndicestracktheperformanceofthetop10%ofthecompaniesintheDowJonesGlobalIndexthatleadthefieldintermsofsustainability.Thisindexisbasedonthreeevaluations-questionnaireassessment,publicinformationandverification.TheassessmentitselfcoversthethreeSustainableDevelopmenttopics-economic,socialandenvironmentalimpacts-withsome24criteriato besatisfied.

Adetailedreportshowingoursustainabilityperformanceagainsttheindustryleaderandtheindustry averageforeveryassessedcriteriaisavailableuponrequest.

IntheUK,Smith&NephewisamemberofFTSE4Goodindex.ThisisanindexcreatedtoprovideatoolforresponsibleinvestorstoidentifyandinvestincompaniesthatmeetgloballyrecognisedcorporateresponsibilitystandardsandtheassessmentisperformedinassociationwiththeEthicalInvestment ResearchService(EIRIS).





Social Performance

Performance Measures

Other Measures 2009

Community Relationships


HSE Performance

Looking Ahead

SocialPerformance

In many ways our long-term success depends upon how we manage our impact on society through our relationships with employees and the communities in which we operate.

Corporate citizenship is a social responsibility as well as good business policy

Picture: Arthritis affects more than 46 million Americans, and Smith & Nephew is a long standing supporter of the Arthritis Foundation.

Locally the Arthritis Walk is the most visible fundraiser. More than 100 Smith & Nephew employees and family members participated in a recent walk and raised almost $22,000 – more than any other participating team.





Social Performance


Other Measures 2009



HSE Performance

Looking Ahead

PerformanceMeasuresEmployeeEngagement PerformanceMeasures

We are currently concentrating on three key measuresthatwebelievegiveagoodindicationof employee engagement. We consider that employees who are fully engaged with the businessdeliverhigherandmorefocusedperformanceandimprovedresults:

• EmployeeOpinionSurvey:whichmeasures the level of employee engagement with the Group and its vision and values and their view of the effectiveness of the improvement activities actioned in response to scores and comments from the previous surveys.

• EmployeeDevelopment:inwhichweare measuringthenumberofinternalappointments intovacanciesandthenumberofemployees attending training courses.

• EmployeeRetention:inwhichwearemeasuring staffturnoverbothingeneral,andemployees leavingwithin2yearsofappointment.

In addition we are now monitoring the gender balanceinourmanagementlevelsinrelationtotheoverallmixwithinthebusinessand,wherewecan,wemonitorraceandgendermixtoensurethat we have a workforce that is representative of the locations in which we are situated. At present thisislimitedtotheUSwheretheresultsarealsosubmittedtothefederalgovernmentaspartofourresponsibilitiesasagovernmentsupplier.

We continue to investigate other useful measures whichoncedefinedandadoptedwillbeintroduced.

EmployeeSatisfaction

Smith&Nephewiscommittedtoprovidinga healthy and safe working environment and operatesasetofpoliciesthatensureflexible,family-friendly practices and non-discrimination. We aim to provide an open working environment basedonconstructiverelationshipsandregularand timely dissemination of Group information andencouragefeedbackandideas.Ournextemployeeglobalopinionsurveywillbeconductedin2011.Theseareusedasacatalystforimprovements and plans with all employees andrepresentativebodies.

The2008GlobalEmployeeOpinionSurveywascompletedtowardstheendof2008andtheresultsreportedtoemployeesinearly2009.AcrosstheGroup,theresponseratewasgoodwithnearly6,500(over70%)ofemployeestakingthesurvey.Overall,theresultswerepositiveand indicated continued high levels of employee engagement with the values and direction of the Group.ThefeedbackidentifiedseveralareaswheretheGroupneededtoimprove,includingthe alignment and enhancement of systems and processestoenablebetterexecutionofplansandgreatervisibilityofresults.

Anumberofactivitieshavebeeninitiatedacrossthebusinessin2009andwillcontinuein2010as a result of the survey results. This included therolloutofaglobalperformancemanagementsystemacrossthebusinesswhichhassignificantlyimprovedtransparencyofourbusinessgoalsandhasenabledabetterexecutionofplansandgreatervisibilityofresults.Inadditionthechangesto our internal communications had increased employeesknowledgeaboutthebusiness. Both of these initiatives are supporting the Groups strategyofa‘OneCompany’approachthatwillcontinue to deliver greater efficiencies.

Comment Measurements

InternalAppointments*In2009,westartedtomeasurespecificallythepercentageof senior management positions filled internally with a target of70%.Whileourtargetforallpositionsis40%,webelievethatthisisanimportantmeasureofourabilitytoattractanddevelop talent into our management. We have a policy of open advertising and providing opportunities for existing employees whereverpossible.

In2009,thepercentageofvacanciesfilledbyinternalapplicantsaveraged32%.Thetotalfornon-managementpositionswas29%andformanagementpositionswas51%.

Training

In2009,wehavestartedtocapturetrainingdataforemployees. We have intentionally focused our resources (budget,time,traininghours)towardsthedevelopmentofourpeoplemanagersandinthecorebusinessprocessesaroundmanaging the performance of others and developing our talent (eg,singleperformancemanagementplatform, talent review/planning process).

In2009,thenumbersofManagersattendingourrangeofManagementcourseswereasfollows:-

• AdvancedManagementCourses-486totaldelegates.

• ManagementExcellenceattendees-287totaldelegates.

Intheadditiontotheabove,wealsobelievethatitisimportantforourManagerstoshareexperiencesandlearnings from each other. We therefore establishedandfacilitatedpeer-to-peerWorkshopstoachievethis,withthemaintopicareabeingaroundournewperformance management process. In2009,2481delegatesattended.





Social Performance


Other Measures 2009



HSE Performance

Looking Ahead

Other Measures 2009Theremainingmeasuresarepresentedinthetablebelow.Eachmeasurehasbeendefinedsothatdatacollectedacrossthebusinesswillbeconsistent.ThedatabelowrelatestotheGroup’sUSandUKpopulation(approximately60%ofthetotalemployees)astheseregionshavethemostestablishedandrobustdatacollection processes in place.

* Note – Previously we have reported our junior management positions as part our management numbers. Having reviewed this we believe that it is a more accurate indicator not to include these positions in the future as part of our more senior management positions.


24

Comment Measurements

LabourTurnoverWemeasuregenerallabourturnoverasameasureofthesuccessinretainingstaffandabilitytoattractnewemployeesas needed. This level of turnover is within expected parameters duringaperiodinwhichwehavecarriedoutsomebusinessrestructuring,includingtheclosureofsomesitesandtransferofbusinessactivitiestoothers.

Theaveragevoluntarylabourturnoverrateduring2009was6.5%,adecreasefromthe2008equivalentrateof9%.Theaverageinvoluntarylabourturnoverratewas10.7%,whichmanagementbelievesisindicativeoftheGroup’scontinuing programme of efficiency improvements.

LabourTurnover<2YearsWe also measure turnover relating specifically to employees whohavebeenwiththebusinesslessthan2years.Thismeasure is an indication of how well we recruit and then retain ouremployeessothattheycanmakeacontributiontothebusiness.

The average voluntary turnover for employees leaving the Group within twoyearsofjoiningwas10.1%,adecreaseonthe2008equivalentratesof14%intheUSand11%intheUK.

GenderBalanceRatiosWe measure the ratio of males to females in our management positions compared to the overall male-female mix. Theindicationsarethattheratiosaregenerallyacceptable. We recognise that at senior level the ratios are not in line with the Group overall and we will continue to encourage more women to fill these positions. This year we have excluded thenumbersforourjuniorlevelmanagementpositionsaswebelievethatfocussingontheseniormanagementlevelsgives a more realistic figure.

Attheendof2009theratioswere asfollows:

Overall-Males61%, Females39%; Management–Males75%, Females25%

EthnicBackgroundBalanceIntheUSwemeasurethenumbersofeachethnicgroupwithinour workforce and compare this with the local population in the areas where we have sites. Any significant differences that are seen will then lead to an affirmative action plan designed to redress the situation without impacting on employee quality.

In2009wewereabletodemonstratethat our ratios met the Equal Employment Opportunity criteria. There were no affirmative action plans required in our Orthopaedics and Biologicsbusinesses.

Smith & Nephew is a member of the Dow Jones Sustainability Indices and FTSE4Good Index Series



Social Performance


Other Measures 2009



HSE Performance

Looking Ahead





Social Performance


Other Measures 2009


Orthopaedics

Endoscopy


Biologics and Clinical Therapies

Emerging Markets

Group Head Office


HSE Performance

Looking Ahead

CommunityRelationshipsWhether through innovative products that get patientsmovingagainorthroughcontributionsinlocalcommunitieswhereweworkandlive,weareproud to make a difference in the lives of others.

AtSmith&Nephew,corporatecitizenshipis socialresponsibilityaswellasgood businesspolicy.TheGroupisanactivememberof local communities where we live and work around the world. We show our commitment to good corporate citizenship in numerous ways from cashandin-kindcontributions,toencouragingemployee volunteerism through company- endorsedcommunityvolunteerprogrammes, tohavingemployeessharetheirbusinessexpertisebyservingonnon-profitboards.

Werecogniseastrongobligationtocontribute to the communities in which we operate. We encourage and support employees at alllevelswhoundertakecommunitywork, providing resources and paid time off to participate insuchprojects,whenbusinessneedsallow. Wesupportarangeofcharitablecauses, mainlyatlocallevel,bydonationsofmoney, gifts in kind and employee time.

In2009,directdonationstocharitableandcommunityactivitiestotalled$1,866,000,ofwhich$396,000wasgiventotheSmith&NephewFoundation.TheFoundationclosedduring2009.Smith&Nephewmadenopoliticalcontributionsin2009.

Smith&Nephew isdedicated tohelpingimprovepeople’slives

Picture: Through the US FIRST (For Inspiration and Recognition of Science and Technology) programme, Smith & Nephew engineers have mentored young robotics students from Fairley High School, located near the Brooks Road facility in Memphis.

US FIRST’s aim is to inspire a new generation of scientists and engineers through accessible and innovative programmes. Fairley High’s robotics team, under the guidance of Smith & Nephew engineers, built a robot designed to compete in a remote-controlled, three-on-three soccer game.





Social Performance


Other Measures 2009


Orthopaedics

Endoscopy



Emerging Markets

Group Head Office


HSE Performance

Looking Ahead

OrthopaedicsSmith&NephewOrthopaedicsisdedicatedtohelpingimprovepeople’slives.Goodcorporatecitizenshipandgivingbackisanintegralpartofourcompany’scorporateculture.Throughcharitablegiving,activevolunteerism,andlong-termcommitmentstonon-profitorganisationsthatshareourfocusonhealthandhumanservices,improvingaccesstoeducation,andmakingourcommunities,bothlocalandglobal,abetterplaceforfuturegenerations,wetrytoepitomisegoodcitizenshipeveryday.

ThisReportdoesnotcovertheactivityofourOrthopaedicsbusinessunitsoutsidetheUS.Theseunitshavetheir own community relations programmes tailored specifically to address the social and cultural needs of their respective countries and cultures.

Cashsupporttocharitableandcommunityorganisations(USonly)

Health&HumanServices $308,133 48%

Education $191,101 30%

Civic/Community $124,534 19%

Arts/Culture $17,500 3%

In-Kind $2,295 -

TotalCashContributions(USOrthopaedicsonly) $643,563* 100%

Socialresponsibilityprogrammecosts:

Administration

$55,700

InventoryAssets:

Machinery&Equipment Products*

Notavailable $58,300(atcost)

* Note this number does not include over $5 million in research, fellowships, and medical education grants made through our Grants and Awards Programme and independent, third-party grant-making organisations Orthopaedic Research & Education Foundation (OREF) and Centre for Orthopaedic Trauma Advancement (COTA). This activity represents Smith & Nephew’s continuing commitment to supporting medical education in its broadest terms.

Wedonotcollectdetailsofstafftimespentonvolunteeringoncompanytimeaswebelieveinallowingemployeestocontributetothecommunitywithoutneedingtoaccountforthistime.

* Note that we calculate the cost of donated products based on the cost of manufacture not the retail price so this number represents a significant contribution to the recipients who would otherwise have to purchase at full retail price.





Social Performance


Other Measures 2009


Orthopaedics

Endoscopy



Emerging Markets

Group Head Office


HSE Performance

Looking Ahead

LeadershipbyExample

AtSmith&Nephewwerealisethattechnologiesand products designed to support the process of healing for physicians and their patients around theworldevolveatafastpace.Atthesametime,we recognise these advancements do not reach everyoneinatimelymanner.Untilsuchtimewheneveryonehasaccesstomodernmedicine, medical missions play a critical role in serving healthcare needs in developing areas of the world.

Smith&Nephewsupportsthesemissionsandthe healthcare professionals who volunteer their time to serve on them through our Humanitarian GrantsDonationProgramme(formerlyPROJECTAPOLLO),whichiscurrentlyadministeredbyHopeForceInternationaloutofBrentwood,Tennessee. Working through this agency and otheraidagenciesSmith&Nephewproductsandtechnologiesareabletoreachdisadvantagedpeople in critical need of medical services in many of the most remote parts of the world. Aspartofthisprogrammewealso,onoccasion, grant sponsorships to cover transportation costs for medical personnel involved and provide person-to-person support through employee volunteerism.

In2009Smith&Nephewsupportedanumber ofmedicalmissionstohelpimprovepeople’s livesincluding:

Ebeye,KwajaleinAtollinthe MarshallIslands

DuringamedicalmissionorganisedbyCanvasbackMissionsinCalifornia, Dr.RobertWells,asemi-retiredorthopaedicsurgeonfromPortland,Oregon,andamember ofthemission’sorthopaedicteam, performed eight knee replacement surgeries usingdonatedSmith&NephewPROFIXTotal KneeSystemsandinstruments,andcheckedon knee replacement patients from previous missions. Degenerativearthritisiscommonamong theEbeyeislanders.“Thepeopletendto bebow-legged,whichovertimeputsahugestressontheirknees.Theyjustwearout,” Dr.Wellsexplained.“There’sisnomedicalschoolintheMarshallIslands,andthere’sonlyonelocal

generalsurgeontoservethe50,000people.They are dependent on contracts with foreign-trained physicians and medical missions like this.” CanvasbackMissionswasfoundedin1981toserve remote Pacific islands with needed health care and health education.

NewZealand-VietnamHealthTrust

Fiveyearsago,NewZealandorthopaedic surgeonandSmith&Nephewcustomer Dr.SimonMcMahontravelledtoVietnam’sBinhDinhProvinceforwhathethoughtwasaone-timetrip as a favour to his father. But after developing compassion for the people and experiencing their third-worldconditionsfisthand,henowreturnsannually serving as a physician volunteer on medicalmissionssponsoredbytheNewZealand-Vietnam Health Trust.

Onhis2009trip,Dr.McMahontookexternalfixationproductsdonatedbySmith&Nephew.HewasjoinedbyorthopaedicsurgeonsDr.JohnRietveldandDr.JohnDunbaralsofromNewZealand.TheyspenttwoweeksinBinhDinhProvince helping local surgeons with fracture treatmentandsurgery,includingteaching externalfixationwiththeSmith&NephewILIZAROV™system.

TheNewZealand-VietnamHealthTrustwasfoundedinthemid-1990sbyagroupofdoctorsincludingDr.McMahon’sfather,ageneralsurgeon who served on one of the medical teams sent to Vietnam to treat the civilian population duringthewar.TheTrust’smissionistoassistwiththerebuildingofthecountry’shealthcareinfrastructure,whichiscriticaltothefutureofVietnam. “They have pretty third-world conditions inmosthealthcarefacilities.Mostoftheoperatingroomsdon’thaveanyimagingandprettybasicinstruments,”Dr.McMahonsaid.“Weareverygrateful for the generous assistance Smith&Nephewhasgivenuswiththisproject.”





Social Performance


Other Measures 2009


Orthopaedics

Endoscopy



Emerging Markets

Group Head Office


HSE Performance

Looking Ahead

MauaMethodistHospital,Kenya

Itwas‘ChristmasinJuly’forthegeneralsurgeonattheMauaMethodistHospitalinKenya–ashegoteverythingonhiswishlist,thankstoSmith&NephewandDr.SusanHillebert,apaediatricianfromMemphis.ForthelastthreeyearsDr.Hilleberthas led a team of volunteers from her church to the270-bedhospitalinruralnortheastKenya.TheMauaMethodistHospitaldistrictservesapproximately one million Kenyans. The amenities andservicesarebasic.Theyfrequentlyfillbeds,oftenplacingtwochildrenperbed.Primarily,theytreatthecommonailmentsofthearea:tuberculosis,malaria,infectionsandHIV/AIDS. But they also see a fair amount of orthopaedic injuries particularly of the hand and forearm.

Smith&Nephewdonatedseveralfullsetsofplatesandscrews,IMnailsandEx-FixSystems–enoughto treat a few hundred patients. “The donation fromSmith&Nephewwassosignificantbecauseitwasexactlywhatthesurgeonwasaskingfor,”Dr.Hillebertsaid.“Mostofthehandandforearminjuriescan’tberepairedwithoutpins.ThepeopleofMauaarefarmersandneedtousetheirhandsandarmsinordertosurvive.”Dr.HillebertandherteamwereinMauafortwoweeksdeliveringsupplies,helpinginthehospital,andbuildinghomesforthepeople.ThedonationfromSmith&Nephewwasneededandappreciated.“ItwasthefirsttimeI’dseenthesurgeonatMauaMethodistsmile,”shesaid.

Formoreinformationonthesemissionorganisations,visittheirwebsitesat

www.hopeforce.org www.canvasbackmissions.org www.nzaid.org

EmployeeSupportfortheCommunity

In difficult economic times corporate dollars continuetobecriticalinhelpingcommunitiesmeettheirsocialneeds.Ofequalimportance,webelieve,isourabilitytomotivateandenergiseemployeesthroughouttheorganisationtobecomesocialadvocates within their respective cultures. At Smith &Nephewweareveryfortunatetohave aworkforcethatembracesandenergetically participates in community outreach programs.

In2009,thecompany’sMemphis-basedemployees

personallycontributed/raisedapproximately$275,000through“company-endorsed”fundraisersforsuchorganisationsastheArthritisFoundationWalkandPokerRun,theKomenRacefortheCure, theUnitedWayEmployeeCampaignandothers.

“Company-endorsed” is the key to understanding that the dollar amount reported here is not a true reflection of the cumulative impact that our employees have on the community. Without a formal trackingsystem,it’simpossibleforustovaluethataccurately,butweestimatethatifwecouldtrackit,theimpactwouldbeatleastdoublethe$275,000reported herein.

Inaddition,manyofouremployeessharetheirtime and professional expertise serving on local andnationalnon-profitboardsandcommitteessuchastheArthritisFoundation,Alzheimer’sDayServices,MemphisBioWorksFoundation,MemphisTomorrow,MemphisRegionalChamberofCommerce,BaptistCollegeofHealthSciences,InMotionMusculoskeletalInstitute,AmericanAcademyofOrthopaedicSurgeons,MemphisAcademyofScienceandEngineering,andtheUnitedWayoftheMid-South,tonameafew.

Picture: Founded in 1995 by the Junior League of Memphis, Hope House is a loving nurturing and safe place for HIV/AIDS affected and infected children and their families. Originally a day care, it still maintains those roots, but now does so much more to help children and their caregivers live a quality, healthy life. Smith & Nephew employees have been involved with Hope House since the beginning, as donors, volunteers and board members.





Social Performance


Other Measures 2009


Orthopaedics

Endoscopy



Emerging Markets

Group Head Office


HSE Performance

Looking Ahead

CommunityOutreachthroughEducation

AtSmith&Nephewwebelievethatastrongeducational system is a major factor in any society’sfuture.And,ofcourse,asatechnology-drivenbusiness,wearealsoextremelyawareoftheneedforaskilled,confidentandqualityworkforce. These two concepts are what drive us to support programmes and organisations that contributetoinspiringandpreparingouryoungpeopletoachieveabetterlife.

InSeptember2009,wededicatedthe Smith&NephewResearchandTechnology ShopatJuniorAchievement’sBizTown. Theprogrammecombinessixweeksofin-classstudyofbasicbusinessconcepts-planning,budgeting,marketing,supplyanddemand,teamworketc,withaday-longvisittoareplicatedcity(BizTown)thathasacityhall,bank,newspaper,postoffice,broadcastcentre,wellnesscentre and several retail shops. BizTown is a well-designed,practicalandfunmodelforgettingstudentstothinkabouttheirfuturesatan early age.

JuniorAchievementisaninteractivelearningprogrammethatteachesfourth,fifth, andsixthgradestudentsworkreadiness,entrepreneurship and financial literacy. JABizTown™isopentoallMemphisand ShelbyCountySchoolsaswellasprivateandparochialschools.Approximately10,000 students and teachers will participate in the programme each year.

Also,throughtheUSFIRST(ForInspirationandRecognitionofScienceandTechnology)programmes,Smith&NephewengineersarementoringyoungroboticsstudentsatFairleyHighSchoolneartheMemphis-BrooksRoadfacility.USFIRST’saimistoinspire a new generation of scientists and engineers throughaccessibleandinnovativeprogrammes.TheFIRSTRoboticsteam,undertheguidanceofourengineers,builtarobotdesignedtocompeteinaremote-controlled,three-on-threesoccergame.Thisis our first year in this programme and we feel good aboutitsdirectionandimpactonthesestudents.

Smith&Nephewhasbeeninvolvedinthe MemphisCitySchool’sAdopt-a-Schoolprogramme,startingwithCentralHighSchoolalmost20yearsago.Severalyearsago,weadoptedtheMemphisAcademyofScienceandEngineering(MASE), aCharterschoolstartedbytheMemphisBioWorksFoundationtofocusonscienceandengineering.ThroughtheAdopt-a-Schoolprogramme,weare abletoprovideteacherswithteachingsupplies andsupport,andstudentswithlearningopportunitiesthroughmentoring,classroomengagement, sportsprogrammes,andmore.

Picture: In 2009, we dedicated the Smith & Nephew Research & Technology Shop at Junior Achievement’s BizTown, an interactive learning programme that teaches fourth – fifth and sixth grade students work readiness entrepreneurship and financial literacy. The programme combines six weeks of in-class learning with a daylong visit to a replicated city (BizTown) that also has a city hall, bank, newspaper, post office, broadcast centre, wellness centre and several retail shops. Smith & Nephew’s sponsorship is a continuation of a relationship between the two organisations that spans more than 20 years.





Social Performance


Other Measures 2009


Orthopaedics

Endoscopy



Emerging Markets

Group Head Office


HSE Performance

Looking Ahead

EndoscopyAsanindustryleader,Smith&NephewEndoscopy’scommitmenttohelpingpeopleregaintheirlivesgoesbeyondthesurgicaltoolsandtechniques we develop.

Itextendstothecommunities-local,nationalandglobal-ofwhichwearecorporatecitizens.Assuch,wehavecreatedanenvironmentwhereemployeesandstakeholderscancontributetimeand resources to fund-raising initiatives and non-profitorganisations,bothinourregionandinpartsoftheworldwheremedicalcareislessaccessiblethan in developed nations.

Working within the guidelines of our Code of Conduct,Smith&NephewEndoscopyprovidesmedicalequipment,surgicalinstrumentsandsurgeon training through these organisations at hospitals around the world.

Onaglobalscale,EndoscopyprovidedequipmentdonationstoclinicssupportedbySRIRamachandraMedicalCentreUniversity,CreightonUniversityInstituteforLatinAmericaConcern,FaithinPractice,PathologistsOverseas,Ortho-AidandtheInternationalMedicalEquipmentCollaborative.

The reach of our equipment donation programme in2009extendedtoGuatemala,India,Vietnam,MoroccoandSomaliland.

Atthelocallevel,thebusiness’scharitablecampaigns include an array of community agenciesincludingtheUnitedWay,MarchofDimes,EasterSeals,ArthritisFoundation, Pan-MassChallenge,CommunityHealthCharitiesofMassachusetts,MercyHealthCentreFoundation,WeokieFoundation,andTewksburyFoodBankamongothers.Intotal,over$14,000wascontributedbySmith&NephewEndoscopyandtheiremployeesin2009.

Throughouttheyear,theorganisationhostsblooddrivesandfoodcollectioneventstobenefitthelocalAmericanRedCrosschapterandChildren’sHospitalBoston,fooddrivestobenefitlocalfoodpantriesandmealcentres,aholidaytoydrivetobenefittheUSMarineCorpsToysforTotscampaignandaGivingTreeforNewEnglandPaediatric Care.

In2009,Endoscopypartneredwiththefamily ofthelateDonaldA.DiTulliotoawardthree $1,500scholarshipsinhismemory. Don,anEndoscopyemployee,diedon11September,2001.Theprogramme,opento childrenofSmith&NephewEndoscopy’s USemployees,isinitsfifthyear.

Picture: Smith & Nephew Endoscopy employees (and their families) from Mansfield volunteered to participate in the Great American Cleanup.





Social Performance


Other Measures 2009


Orthopaedics

Endoscopy



Emerging Markets

Group Head Office


HSE Performance

Looking Ahead

Advanced Wound ManagementInAdvancedWoundManagementweaimtomeet,andwherepossibleexceedexpectationsofcorporateresponsibilitythroughacombinationoffinancialsponsorshipandcharitabledonations,aswellasproductcontributions.Weencourageleadershipbyexample,andsupportingemployeeparticipation in volunteer activities that will make ourcommunityabetterplacetoliveandwork.Wedothisnotonlyoutofasenseofresponsibility,butalsobecausewefeelthatstrongcommunityrelationships serve to further our own progress and development as an organisation. We take the care of people very seriously; our products and employees help people regain their lives. This also extendsintothecommunitiesinwhichweoperate,particularlyinHull,wheretheGroupwasfoundedinthecityin1856.Oursupportofcommunitydevelopmentprogrammeshasbenefitedthousandsoflocalpeople,fromyoungchildren to the elderly.

Smith&NephewAdvancedWoundManagementHullsite’sCorporateSocialResponsibility(CSR)policyreflectsthewiderGroupstrategyandbrandvalues,withourprimaryfocusbeingonthekeyareasofSport,HealthCareandEducation.

Sport

WesponsortheHullCityfootballteam,theHullFCrugbyteamandtheHullKingstonRoversrugbyteam.Employeesbenefitfromtheabilitytopurchasediscountedticketsforbothfootballandrugbyhomematchgamesandthereceiptscollectedareusedtofurthersupportourcharitabledonations in the local community. Our sponsorship ofHullCityAFCincludessupportoftheclub’sFootballintheCommunityprogramme,includingcommunityactivitiesthattakeplaceacross40primary schools in the area.

OursponsorshipofHullKingstonRovers, (whoarebasedinaseparatestadium), supportstheCommunityDevelopmentteam with their healthy living and lifestyle school work thattakesplacethroughouttheyear,targetingchildrenbasedinourlocalcommunity.AswellasourdirectsponsorshipoftheHullFCrugbyteam,we are also the sponsors of the health pillar within theHullFCCommunityFoundation.TheHullFCFoundationisaregisteredcharityandexiststo‘Engage,EducateandInspire’peopleofallagesthroughoutHullandEastYorkshire.





Social Performance


Other Measures 2009


Orthopaedics

Endoscopy



Emerging Markets

Group Head Office


HSE Performance

Looking Ahead

HealthCare

We continually seek to identify and support initiatives and charities in this area.

TheintroductionoftheenhancedSmith&NephewCodeofConductmeansthatwehavetobecarefulaboutourdirectsupportofHealthCareProfessionals,butwecontinuetogivesupportinthis area where we can. We will continually seek proactiveopportunitiestocollaborateandpartnerwith local organisations/health care charities to maintain an ongoing commitment to supporting the health of those living and working in our local community.

Education

There are several compelling reasons for supportingeducation.Firstlytheeconomicimpactthat a well-educated citizenry generates and the attraction a good educational system has in recruiting new families and new industry to the local area.

Our educational support focuses on programmes and initiatives that support these underlying principles. An example of this is the Teacher of theYearAwards,introducedtoHullin2007by Smith&Nephew.Workinginpartnershipwithlocalradio(VikingFM)andthelocalCouncil’sChildren&YoungPeoplesService,theaimoftheAwardsis to promote teaching and education in the city in a positive light and reward those working with our city’schildren.

Theseawardsarenotonlymotivationalforbothstudentsandteachers,butsendoutapositivemessagetoourcommunitythatSmith&Nephewandourcollaborativebusinesssponsorsarecommittedtocelebratingsuccessinoureducationsystems and helping to raise the standards of educational achievement.

OtherorganisationscurrentlybeingsponsoredbySmith&Nephewinclude:ThePrincesTrustDevelopmentAwards(www.princes-trust.org.uk),YoungEnterpriseYorkshireandHumber (www.yeyh.org.uk),HullChildren’sUniversity (www.hullchildrensuniversity.com).

HullForward’sBondholderScheme (www.hull.co.uk)andArts&BusinessYorkshire(www.artsandbusinessyorkshire.org.uk).





Social Performance


Other Measures 2009


Orthopaedics

Endoscopy



Emerging Markets

Group Head Office


HSE Performance

Looking Ahead

BiologicsandClinical Therapies Education

Ourbusinessdevelopsadvanced,locallydeliveredbiologictherapiestopromotehealingandpainreliefforpatients.Atourpurpose-builtR&DfacilityinYork(UK),ourscientistsandstaffworkwiththelocalcommunitytoencourageabetterunderstanding of science and its importance to healthcare.

We provide workplace experience for students fromthelocalScienceCollege,ArchbishopHolgate’sSchool,whichcatersfor11to 16-year-olds.Thisenablesthemtolinktheirscientific studies with our work in developing innovative new medical technologies for Smith&Nephew.

OurResearch&ScienceteamalsosponsorsanumberofPhDstudentsatuniversitiesacross theUK,givingstudentsfinancialsupportandtechnicalguidance,inadditiontoprovidingopportunities for workplace secondments.

SupportingtheCommunity

EachyearouremployeesattheYorkResearchCentrechooseacharitytosupport.During2009theyarrangedanumberofactivitiestoraisenearly£2,000fortheUKcharity,MartinHouse Children’sHospice.ThesitealsosupportsaCharitiesCommittee,whichmeetsonaregularbasistoconsidersmallcompanydonationsto a range of local charities and good causes.

IntheUS,employeesatourHeadquartersinRaleigh/DurhamtookpartinaFoodDrivefortheFoodBankofCentral&EasternNorthCarolina.Morethan100lbsoffoodandothernecessitieswere collected to help local people in need.





Social Performance


Other Measures 2009


Orthopaedics

Endoscopy



Emerging Markets

Group Head Office


HSE Performance

Looking Ahead

Emerging Markets Helpingtogrowresponsiblebusinesses intheEmergingMarkets(EM)

Inallouremergingmarketsourstrategyistobuildtrust with local stakeholders and a reputation as aresponsiblebusinessthatensureitssupporttolocal laws and ethical standards in the countries we operate.

In2009alltheEMcountrieshadethicstraining,the aim of such training is to help employees make ethical decisions when the answers are unclear.

Intheworkplace,ouraimistobeanemployer ofchoice.Webelievethereisastrongcorrelationbetweeneffectivepeoplepracticesand businesssuccess.Wecanimprovetheperformanceofthebusinessbydevelopingouremployeestotheirfullpotential,bymotivating staff appropriately and through prudent successionplanning.OurHumanResourcesfunctionoperatesonadecentralisedstructure,mirroring the organisation of the Group. Thisreflectsourbeliefthatlocalisedteams,operatingundercommonprinciples,arebestequippedtodealwiththevaryingcultures,operating structures and geographic locations in which we operate. Each country office is encouraged to implement comprehensive employment policies designed to motivate employees and to determine ways in which knowledgeandskillscanbestcontributetowardsthesuccessofthebusiness.

SupportingtheCommunity

Someofthecharitabledonationsintheyearwere$7,000,madeduringtheyeartodifferentorganisations,suchas:CODERI,HospitaldelNiñodePR,AsociacióndelaPolicíadePR,MDA, UAEhumanitarianorganisationandtheHospital in Kuwait.

Smith&NephewChinadonatedRMB0.5milliontotheChineseMedicalDoctorAssociationforTrauma;andSmith&NephewIndiadonatedtwoArthroscopyWorkstationstotheSriRamachandraMedicalCollegeChennaifortrainingthestudentsin latest Orthopaedics surgical techniques.

WealsoestablishedatrainingcentreatoneofthestatehospitalsinSouthAfrica,donatedsomeproductsandsamplestothevalueof$28,000andsomemedicalstudentawardsandbursariestothevalueof$13,000andadonationof$5,000towards a humanitarian project.

Wealsorecogniseourresponsibilitiestothewider communities and environment in which ourbusinessesoperateandinmostmarketsweparticipate in programmes that would ensure a moresustainablefuture.





Social Performance


Other Measures 2009


Orthopaedics

Endoscopy



Emerging Markets

Group Head Office


HSE Performance

Looking Ahead

Group Head OfficeIn our Group Head Office the focus of our community involvement has revolved around the establishmentofanongoingrelationshipwith‘ConnectionatStMartins’.Thisorganisationprovides support to the homeless in the central London area.

Individuals at the Group Head Office have committed to providing interview training and practice in addition to mentoring for young people who are working towards taking up employment and we are looking to arrange similar programmes for2010.

Inpreviousyears,thishastakentheformofdeveloping and running training sessions for groups of people as part of a formal course and providing a work placement for individuals whohavebeenthroughacompetitiveinterviewprocess.Thisenablestheindividualstoexperiencetheinterviewprocess,applytheirlearningandreceiveusefulfeedbackandtipsthatthey can use in real life work situations. We are now exploring further ways where we can help the Connection in their work. We continue to provide financial support and gifts in kind from staff donations at Group events.

WealsocontinuetoworkwithMagicTaxi,anindependentcharitableorganisationresponsiblefor operating an internet search engine and works inthefollowingway:Everytimeanemployeeatourgroupheadofficeusesthesearchengine,acontributionismadetoournominatedcharities.

Ourthreecharitiesselectedare:

• ConnectionatStMartins-acharitysupporting the homeless in our area which we have helped in the past. They focus on young people and theirbaseisneartheGroupHeadOfficebuilding.

• FriendsofStThomas’sHospital-thisisourlocal hospital and this charity helps patients in need of support.

• HelptheAged-anationalcharitysupporting elderlypeopleinneed,asectionofthe population very relevant to our products.

Anumberofemployeesalsocommittofundraising activities for charities of their choice with the Company matching employee donations. In 2009suchsponsorshipeventsraisedinexcessof£3,000forcharitiessuchasCancerResearchUK,theProstrateCancerCharityandLondonCyrenians.





Social Performance


Board Governance

Business Integrity

HSE Performance

Looking Ahead

CorporateGovernanceandBusinessIntegrityTheCompanycomplieswiththerelevantprovisions/principlesoftheUKFinancialServicesAuthority(FSA)ListingRules,Disclosure&TransparencyRulesandtheCombinedCodeonCorporateGovernance(the“Code”)aswellastherulesoftheNewYorkStockExchangeandUSSecuritiesExchangeCommissionastheyapplytoforeignissuers.FurtherinformationcanbefoundintheCorporateGovernanceStatementwhichisincludedinthe2009AnnualReport.

TheBoardof Smith&Nephewplc iscommittedtothe higheststandards ofCorporateGovernance.

Picture: Cover image from Smith & Nephew’s 2009 Annual Report



Social Performance


BoardGovernance

Business Integrity

HSE Performance

Looking Ahead



BoardGovernance

TheBoardofdirectorsofSmith&Nephewcurrentlyconsistsofanon-executiveChairman,twoexecutivedirectors and seven independent non-executive directors. Two new non-executives were appointed on 5March2010andoneresignedon6May2010.TheBoardisresponsibleforthestrategicdirectionandoverall management of the Group and has a formal schedule of matters reserved for its decisions which includetheapprovalofcertainpolicies,budgets,financingplans,largecapitalexpenditureprojects,acquisitions,divestmentsandtreasuryarrangements.Otherwise,itdelegatestheexecutivemanagement oftheGrouptotheChiefExecutiveandcertainspecificresponsibilitiestoBoardCommittees,asdescribedonpages52to55ofthe2009AnnualReport.ItreviewsthekeyactivitiesandperformanceofthebusinessesandconsidersandreviewstheworkundertakenbytheCommittees.SuccessionplanningisregularlyreviewedandappropriatemeasuresaretakentoensuretheBoardhastheappropriatebalanceofskillsandexperiencenecessaryforamajorglobalmedicaldevicescompany.

CommitteesoftheBoard

TheBoardisassistedbytheAudit,Remuneration,NominationsandEthicsandComplianceCommittees, eachofwhichhasitsowntermsofreference,whichmaybefoundontheGroup’swebsiteat www.smith-nephew.com. The Company Secretary or her designate is secretary to each of the Committees. ForeachoftheCommitteestheChairmanoftheCommitteereportsorallytotheBoardandminutesofthemeetingsarecirculatedtoallmembersoftheBoard.

TheRoleofIndividualDirectors

Whilst the Chairman and Chief Executive collectively are responsible for the leadership of the Group, there is acleardivisionofrespectiveresponsibilitieswhichhavebeenagreedbytheBoard.TheChairman’sprimaryresponsibilityisleadingtheBoardincludingsettingitsagendaandensuringitseffectiveness.TheChiefExecutive is responsible for the performance, management and supervision of the Group in accordance withthestrategy,policies,budgetsandbusinessplansapprovedbytheBoard.

ManagementofConflictsofInterest

InaccordancewiththeCompaniesAct2006directorsinformtheBoardofanysituationswhichmaygiveriseto a conflict of interest as they arise and this information is recorded in the Company’s Register of Conflicts together with the date on which authorisation was given. The process in place to manage conflicts or potential conflicts of interest is outlined in the Corporate Governance Statement.

BoardDevelopmentProgramme

AnumberoftraininganddevelopmentopportunitieswereidentifiedfortheBoardduring2009.Asin previousyears,thetrainingfocusedmainlyonincreasingtheBoard’sunderstandingofthebusinessand marketsinwhichtheCompanyoperates.Throughouttheyear,eachGeneralBusinessUnit(GBU)presentedtotheBoardonitsbusinessandthecurrentchallengesitfacedandatleastoneBoardmeetingisheldatamajor business unit each year enabling directors to have a greater understanding of the business and to meet the management of these units. Tailored development programmes have also been developed to support new non-executive directors and those in specific roles.

ReviewintotheEffectivenessoftheBoard

Towardstheendof2009,theBoardappointedanindependentthirdpartytoundertakeareviewofitseffectiveness and the effectiveness of its key Committees. The review took the form of an online questionnaire followed by a series of detailed confidential interviews with each director and the Company Secretary. Overall,thereviewconcludedthattheBoardanditsCommitteesoperateeffectively,thatindividualdirectorsbringarangeofskillsandexperiencestotheBoardandthatthenon-executivedirectorsprovideeffectivechallengetotheExecutiveteam.TheBoardconcludedthatduringtheyear,progresshadbeenmadeinanumberofareasrelatingtotheeffectivenessoftheBoardprocessesandidentifiedfurtherareasforimprovement which could be made in 2010.





Social Performance


Board Governance

Business Integrity

HSE Performance

Looking Ahead

BusinessIntegrity

Smith & Nephew’s policy is to not give or receive improper financial inducements, either directly or indirectly, for business or financial gain. The Group’s policy is to comply with the industry standards set by regional bodies, such as Eucomed in Europe and AdvaMed in the US, in its relationships with customers. Accounting records and supporting documents are designed to accurately describe and reflect the business’s transactions and conform to International Financial Reporting Standards (IFRS).

Smith & Nephew aims to be honest and fair in all aspects of its business and expects the same from those with whom it does business. The Code of Conduct and related policies and procedures for employees, distributors and suppliers are subject to regular review and enhancement.

We have implemented an enhanced global compliance programme with the strong support of senior management and the efforts of a broad group of people from across the Group. We have strengthened the compliance organisation with new personnel in the role of Chief Compliance Officer and other compliance leadership positions as well as a network of independent business unit and regional compliance officers. We have launched and secured certifications on the Code of Conduct from employees’ world-wide and completed development of supporting Global Standard Operating Procedures. Training has been provided in face-to-face sessions to business managers in the markets, and through e-learning programmes, and an improved global compliance intranet site was launched to provide easy access to compliance resources. Auditing has been conducted globally to verify implementation of company standards.





Social Performance


HSE Performance

Data used in this Report

Energy, Waste, Emissions and Discharges

Other Environmental Factors

Health and Safety

HSE Audits and Standards

Moving Forward

Looking Ahead

HealthSafetyandEnvironmentPerformance

Data used in this ReportThekeyparametersincludedinthisreportarewaste,energy,waterusage,emissions,healthandsafety,accidentandOSHA(USOccupationalHealthandSafetyAdministration)recordableemissionswhichincludecertaincasesofoccupationalillhealth.TheparametersusedhavebeenchosentoreflecttheprincipalHealthSafetyandEnvironment(HSE)impactsofourbusiness.TheyreflecttheGroup’sEnvironmentalHealthandSafetyPolicieswhichsetsoutourHSEvision,aims,commitmentandoperatingprinciples.

Intheareaofclimatechangeandglobalwarmingtheimpactofourbusinessarisesprimarilyfromthe CO2 emissions associated with the energy we consume and from the transportation of our goods and businesstravel.Wearestrivingtoreduceourenergyconsumptionandhaveachievedsuccess, particularlywhentakingintoaccountourincreasedproductiondrivenbyincreasedsales.

GrouptargetsputforwardtotheBoardareincludedinthisReport.TheyaddresstheGroupsprincipalimpacts.Targetsforimprovementscoverhealthandsafetymeasures,energyconsumption,andtherefore CO2emissions,andmaterialwaste.

Smith&Nephewrecognises theimportanceofappropriate environmentalmanagementsystemswhicharebasedoninternationalstandards.





Social Performance


HSE Performance




Health and Safety


Moving Forward

Looking Ahead

Energy, Waste, Emissions and DischargesThe emphasis placed on our overall energy efficiency and corresponding reduction activities remains keytoourHSEperformancealongwiththecorrespondingbenefitsofwasteminimisation,reducedwaterconsumption and recycling.

ThetotalsreportedarefortheSmith&NephewGroupasawholefortheyear2009.Acquisitionsandchangestothebusinessaccountforthemajorchangesintheenvironmentalimpactsoverrecentyears.InitiativesatalocallevelwithineachGBUcontinuetohaveanunderlyingpositiveimpactonthefigures.During2009siteswereclosedinLargo,USandSanAntonio,USandoperationscommencedinSuzhou,ChinaandAlbertainCanada.FiguresforthenewsiteswillbereportedinthenextReportin2011.

TheresultsmayvaryslightlyfromthosequotedinthepreviousAnnualReport.ThisisbecausethedatabaseusedtocollatedataforthisReportiskeptliveandthemostuptodateinformationisusedoneachoccasion.Somesitescontinuedtoadddataandcorrectionsafterthereportingdeadlinehadpassed,hencethe small differences.

Absolutedataonkeyenvironmentalmeasureshasbeenprovidedtogivetheoverviewoftheactualenvironmentalimpactofourbusiness.However,thestructureofSmith&Nephewandtheprofileofthebusinesscontinuestochangeandthereforecomparisonsonanabsolutebasiswithpreviousyearsdonotshowthewholepicture.Therefore,thesameinformation,normalisedasafunctionofoutput,hasbeenprovided.Thistableprovidesanindexofthekeyenvironmentalfactorsusingabaselinefrom2005.ThedataisshownforthewholeGroupbycombiningthedatacollectedfromeachGBUoverthelastfiveyears.

Inmanyofthemeasuresbelowtheabsolutedatahasincreasedmarginally,whereasthenormaliseddatahasincreaseddisproportionately.Thisisforthreekeyreasons:

• ThedatanowincludesinformationfromtwoadditionalOrthopaedicmanufacturingsitesacquiredin2007,basedinSwitzerlandandChina.

• Thefigureusedtonormaliseforproductionlevel,istheannualcostofgoodsproducedbyeachmanufacturingsiteduringtheyear.AcrosstheGrouptherehasbeenanincreasedfocusonoperationalefficiencythroughtheuseofsuchpracticesas‘Leanmanufacturing’,‘SixSigma’and‘Kanban’.During2009theoverallefficiencythishasdriven(i.e.reductionincostofgoodsproduced)hasbeengreaterthanthereductioninthefactorsmeasuredbelow.Thisgivesrisetoanincreased‘normalised’measure,evenwheretheabsolutefigureshave,insomecases,decreased.

• Allmanufacturingsitesconsumeaminimumbaselevelofsomeresources,suchaselectricityandwater,whichdoesnotvarydirectlywithoverallproductionlevels.During2009,growthinproductionlevelsreducedinlinewithaslowinginsalesgrowthinourendmarkets.However,theuseofsomeresources didnotreduceasmuch,hencetheincreasesseenbelowinsomenormalisedlevels.Wecontinuetoworkat reducing these minimum levels.

Groupdata(Normalised)* 2005 2006 2007 2008 2009

Waste

Non-hazardousWaste 100 93 72 65 70

Hazardous Waste 100 79 59 86 100

WasteRecycled 100 103 123 141 179

Emissionstoair(CO2) 100 93 84 66 74

Total Energy 100 92 84 69 78

Water usage 100 101 85 59 70





Social Performance


HSE Performance




Health and Safety


Moving Forward

Looking Ahead

Groupdata(Absolute) 2005 2006 2007 2008 2009

Waste

Non-hazardousWaste(Tonnes) 4,685 4,759 4,016 4,640 4,456

HazardousWaste(Tonnes) 303 256 204 477 517

WasteRecycled(Tonnes) 1,012 1,189 1,496 2,167 2,335

Emissionstoair(CO2 tonnes) 65,186 68,662 68,510 74,119 74,090

TotalEnergy(GWh) 137 138 140 154 156

Waterusage(1,000cubicmetres) 480 562 542 596 617

* Note: For the normalised Group data 2005 is taken as the baseline year with an index value of ‘100’.


42



Social Performance


HSE Performance




Health and Safety


Moving Forward

Looking Ahead

Waste

PercentageofWasteRecycled

0

5

15

25

2005 2006 2007 2008 2009

10

20

30

35%

The Group has continued its efforts to separate waste streams and also find opportunities to recycle waste. Theoverallpercentageofwasterecycledhasimprovedfrom30%to32%.TheabsoluteGroupfigurefor non-hazardouswastefellby4%.However,whennormalisedforproductionbyusingtheoverallcost ofgoods,thisfigureroseslightlyasaresultofproportionallymoreefficienciesbeinggainedelsewhere in production. The hazardous waste figure rose over the past year due to including data from an additional Orthopaedics manufacturing facility which uses larger volumes of cutting fluids and the relative efficiency gains in overall production performance.





Social Performance


HSE Performance




Health and Safety


Moving Forward

Looking Ahead

EmissionstoairofCO2

EmissionstoAirNormalisedforProduction

Emissions of CO2toairaremainlyasaresultofburningfossilfuelstoproduceenergy.Thefiguresincludebothscope1emissions(directemissionsfromsiteboilersetc)andscope2emissions(emissionsfromutilitycompany power stations as a result of the electricity we consume). Hence the overall CO2 emissions figure islargelydrivenbythetotalenergyconsumedbytheGroupbusinesses.Howeverthelocationofeachsitedetermines the emission factor that is used to convert the energy into a measure of CO2 emissions.

Forthisreportallofthedatahasbeenrecalculatedbackto2005usingtheappropriateemissionfactor(EF) fortheelectricitybeingused(takingaccountoflocation)andaconstantconversionfactorhasbeenappliedforconsumption of natural gas.

In2009theseemissionlevelshaveremainedatasimilarlevelto2008.Whennormalisedforproduction tothe2005baselinetherehasbeenanapproximately11%increaseinemissions(overthepreviousyear). This is result of the minimum energy requirements of operating our manufacturing plants and the relative efficiencygainsinoverallproductionperformance.Thefiguresfortotalenergy,asexpected,followasimilartrendintermsoftheabsoluteandnormaliseddata.

0

2005 2006 2007

20

60

80

40

120

100

2008 2009

Inde

x(200

5=10

0)





Social Performance


HSE Performance




Health and Safety


Moving Forward

Looking Ahead

Energy conservation programmes throughout the Group led to a reduction in energy consumption within the EndoscopyandAdvancedWoundManagementbusinessesof20%and3%respectively.ThiswasoffsetbyanincreaseinconsumptionwithinOrthopaedicscausedbyanexpansioninpremisesasaresultofopeningtheOrthopaedicsGlobalDistributionCentreinMemphis.

TotalEnergy

TotalEnergyNormalisedforProduction

0

2005 2006 2007

20

60

80

40

120

100

2008 2009

Inde

x(200

5=10

0)





Social Performance


HSE Performance




Health and Safety


Moving Forward

Looking Ahead

WaterUsage

WaterUsageNormalisedforProduction

OrthopaedicsatMemphiscontinuestouseconsiderableamountsofwaterlargelyforairconditioningandsomeprocessingandisbyfarthegreatestconsumerofwaterwithintheGroup.Initiativeselsewhere, forexamplewithinEndoscopy,sawsomereductionsinwaterusageamountingto22%,howeveroverall withintheGrouptheactualwaterusageroseby4%.

0

2005 2006 2007

20

60

80

40

120

100

2008 2009

Inde

x(200

5=10

0)





Social Performance


HSE Performance




Health and Safety


Moving Forward

Looking Ahead

Other Environmental FactorsWhilsttheprincipalenvironmentalimpactoftheGBUscomesfromenergy,waste,dischargesand CO2emissions,werecogniseotherwaysinwhichouroperationsaffecttheenvironment.

BiodiversityandContamination

Researchhasshownthatdiverseecosystemsarebetteratsupplyingamenitieslikefoodandcleanwater.Industryandmanufacturingcanhaveadirecteffectonourbiologicalresources.Theseincludefossilfuels,buildingmaterialsandothernaturalresources.Thelossofbiodiversityisincreasinglyrecognisedasasignificantriskfactorinbusinessdevelopment.

Climatechangewillposeanincreasingthreattobiodiversityincomingdecadesandalthoughbiodiversityisn’talwaysoftangiblebenefittohumans,despitebeingvitaltousall,concernaboutglobalbiodiversitylosshasemergedasaprominentandwidespreadpublicissue.

AtSmith&NephewourHSEstaffworktoprotectandpreserveareasnearouroperationsandsharetheirbestpractices through the regular meetings of the HSE Practitioners Group.

Priortoembarkingonexpansionoffacilitiesthoroughsurveysareundertakentoestablishwhatcontaminationexistsandweensurewetakecaretotakeanyremedialactiontoensurethatourlandisnotblightedbyconcernsaboutcontamination.Thiswillcontinuetobeofprimaryconcerntothebusinessnowandin the future.

Transport

Werecognisethatthetransportofourproductsandstafftravelmakeasignificantcontributiontoour CO2emissions.Weareconstantlyseekingtoimproveourreportingofcarbonemissionsbyincludingtheseelements and identifying ways of minimising this effect.

Transportandtravelarearrangedthroughserviceproviderswithwhomwecontinuetoworktoobtainreliabledata on the miles travelled and consequential CO2 emissions. We are working with service providers to make thisinformationavailableinthefuture.Weaimtostarttoreportingsomebusinessairtravelnextyear.

Decisionsregardingthemodesoftransportsusedforshippinggoodsaremadefollowingcarefulconsiderationandpayingregardtothenatureoftheproductsandthelikelyenvironmentalimpact.Formanybusinessareasinwhichweoperate,suchasOrthopaedicsandEndoscopy,theproductsaresmallvolumebutofhighvalue.Theyareusedinthesurgicalprocessesanddeliveredtoorderforpatientsand,astheyarerequiredwithoutdelay,theyareusuallysentbyair.AdvancedWoundManagementproductsarelargevolume,lowervalueandsuppliedfromstock.Theseproductsareusuallysentbyseaandtruck.Wehopetoprovideadditional detail on the impact of transporting our products in the future.

Stafftravelisnecessaryandinevitableinaglobalbusiness.However,werecognisethattravelcanbelimitedbyusingmoderntelecommunicationssuchasteleconferencing,livemeetingandvideoconferencingorensuringthattripsaremadewhichcombinemorethanonepurpose.





Social Performance


HSE Performance




Health and Safety


Moving Forward

Looking Ahead

Health and SafetyManyofouremployeeshaveaccesstoOccupationalHealthprovisions–providingworkrelatedhealth advice and medicals. We recognise that the Group has a role to play in providing health information and supportinghealth-relatedcampaigns,e.g.nosmokingdays,breastcancerawareness,allergyawareness and similar initiatives. Individual sites will tailor their health promotion campaigns to the needs of their localemployees.Otherexamplesdrawnfromprogrammesandinitiativesacrossourmainbusiness sitesinclude:

• Vaccinationsofferedatnochargetoemployees.

• HealthFair/WellnessDays(visionscreen,bloodpressure,screeningbodycompositionanalysis) at no charge to employees.

• Fitnessclasses.

• Healthyheartdays.

• FirstAidCPR(cardiopulmonaryresuscitation)training.

• EmployeeAssistanceprogramme-serviceavailabletoallemployeesincludingcounselling andinterventionoffamily,marital,financial,andotherworkorpersonalissues.

• Healthadviceand,insomeinstances,medicalkitsfortravellers.

• Generalhealthawarenessinformationinlinewithnationalprogrammes.

Ourconcernforthehealthofouremployeesisalsoaddressedinourstaffrestaurants,wherewemakeaspecialefforttoprovidehealthyeatingoptions.Regularhealthscreeningofemployeeswhomaybeatspecialrisk is standard practice as is the provision of specialist protective equipment where required.





Social Performance


HSE Performance




Health and Safety


Moving Forward

Looking Ahead

LostTimeAccidentFrequencyRate

ThelosttimeaccidentfrequencyrateforthelastfiveyearsfortheGroupandindividualbusinessunitsis setoutbelow.

Groupdata 2005 2006 2007 2008 2009

Group 0.58 0.50 0.56 0.47 0.57

Notes

• LostTimeAccidentFrequencyRate(LTAFR)isbasedonthenumberoflosttimeaccidentsper200,000 hours worked, the basis commonly used in the USA. Many LTAFR figures quoted in the UK are based on 100,000 hours worked so these figures above should be halved when making comparisons with companies in the UK.

• AllpartsoftheGroupareusingacommondefinitionoflosttimeaccidentwhichisoneinwhichtheinjured person is unable to report for work on the day/shift following the accident.

TheGroup’slosttimeaccidentfrequencyrateincreasedgivingrisetoadeclineintheoverallperformance.AdvancedWoundManagementhad11losttimeaccidentscomparedto6duringthepreviousyear. However,reassurancewasgainedfromarecenthealthandsafetyauditinOctober2009,whichgaveHull ascoreof93%andtheirperformanceisnotconsideredtobeindicativeofanyunderlyingdeteriorationinhealth and safety standards.

Otherdeteriorationsinperformancearisesfrom7losttimeaccidentsinSpainand4inSouthAfrica,investigations of which did not reveal any systematic issues.

0

2005 2006 2007

0.1

0.3

0.4

0.2

0.6

0.5

2008 2009

per2

00,000

hoursworked


Contents• AboutThisReport

• HSEPerformance

• SocialPerformance

• EconomicPerformance

• LookingAhead

49Smith & Nephew is a member of the Dow Jones Sustainability Indices and FTSE4Good Index Series



Social Performance


HSE Performance




Health and Safety


Moving Forward

Looking Ahead

AccidentSeverityRate

Themeasureofaccidentseverityistheaveragenumberofdayslostperlosttimeaccident.

Thismeasureremainsinthelowtomidteens,asithasoverthelastfewyears.

Groupdata 2006 2007 2008 2009

Group 17 12 16 11

0

2006 2007

5

15

20

10

2008 2009aver

age

days

lost

per

lost

tim

e ac

cide

nt


Contents• AboutThisReport

• HSEPerformance

• SocialPerformance

• EconomicPerformance

• LookingAhead

50



Social Performance


HSE Performance




Health and Safety


Moving Forward

Looking Ahead

OSHARecordableIncidents

ForreportingpurposestheGrouphasadoptedtheUSOSHAsystemforrecordingincidentswhichresultinlosttime,thoserequiringmorethanfirstaidonsiteornecessitatingaperson’sworktobemodifiedinsomewaytoaccountfortheirinjury.Itisthereforeconsideredabroadermeasurethanlosttimeaccidentsalone and includes all cases of occupational ill health.

TheoverallGroupOSHArecordableincidentratefellby3%.

Groupdata 2005 2006 2007 2008 2009

Group 1.90 1.40 1.70 1.24 1.20

1.0

2005 2006 2007

1.25

1.75

2.0

1.5

2008 2009

per2

00,00ho

ursworked





Social Performance


HSE Performance




Health and Safety


Moving Forward

Looking Ahead

HSE Audits and StandardsSmith&Nephewrecognisestheimportanceoftheintroductionandmaintenanceofappropriateenvironmentalmanagementsystemswhicharebasedoninternationalstandards,forexamples ISO14001(InternationalStandardonEnvironmentalManagementSystems).Thedecisionastowhichmanagementsystemstoadoptisdecidedbythesitemanagementanddependsontheircomplexityandpotentialenvironmentalimpact.WearepleasedthatourAdvanceWoundManagementsiteatHullandourOrthopaedicmanufacturingsitesinMemphisandTuttlingenretainedaccreditationtoISO14001fortheirenvironmental management systems.

Allmanufacturingandresearchsitesaresubjecttoaninternalhealth,safetyandenvironmentalauditeverytwo years to ensure that the management systems in place are constantly improving. The fourth two-year cycleofHSEAuditscontinuedwithauditsofHull,UKandYork,UK.

AuditswerecarriedoutagainstaseriesofsetperformancecriteriabyteamscomprisingtwoHSEprofessionalsdrawnfromelsewhereintheGroup.Theapproachreducessubjectivity,encouragesimprovement and provides consistency in audit performance. All sites re-audited exceeded the target for improvement.AnewsystemofauditingisbeingdiscussedattheHSEPractitionersmeetinginearly2010.





Social Performance


HSE Performance




Health and Safety


Moving Forward

Looking Ahead

MovingForwardThe Group will continue to strive to improve its health and safety performance and environmental impact. Each part of the Group will continue to pursue a local improvement programme suited to its needs. In addition therearecommonthemesanddirectionssetforallsitesassummarisedbelow.

• AGroup-wideteamofHSEpractitionerswillcontinuetomeettosharebestpracticeandfurther promote a range of initiatives.

• TheGroupwillfocusonreducingitsenvironmentalimpactbyimplementingcampaignstoreduceour CO2emissions,theamountofwaterweconsumeandtheeffectoftravel.Leanmanufacturingprocesseswillcontributetothereductionofwasteatsourceandtherewillberenewedeffortstodriverecyclingofwaste and reducing the volume of waste going to landfill.

Thefollowing2010targetshavebeenrecommendedtotheBoard:

Target

OSHARecordableIncidents 10%Reduction

Lost Time Accidents 5%ReductioninLTAFRandSeverityRate

Energy 5%Reduction

MaterialWaste Each site to institute a tailored programme leading toa5%reductioninmaterialwaste

HSE Training 95%adherencetotrainingschedule





Social Performance


HSE Performance

Looking Ahead

We are committed to consistently improving our sustainabilityperformance and reporting

LookingAhead

Smith&Nephew’svisionistobethebestinhelpingpeopleregaintheir livesbyimprovingandhealingthehumanbody.TheGroupbelievesthatitcanachievethisbysettingandmeetingambitiousperformancetargets, byconstantinnovationinproductsandservicesandbyearningthetrustofitsstakeholders.Inallitsbusinessactivities,thedrivetowardssustainabilityisanongoingprocessandSmith&Nephewiscommittedtomaintainingaconsistent effort to improve.

Wecontinuallymonitorthebusinessdriversofsustainableinitiatives.Inadditionweenterintodialoguewithourstakeholders-betheycustomers,employees,suppliers,investorsorthebroadercommunitiesinwhichweoperate-tounderstandtheirconcernsandissuesincorporatesocialresponsibility.Thishelpsdrivebothwhatwedoandwhatandhowwereporttheinformation.During2010wearereviewingourreportingofsustainability,focusingonmaterialityandtheareaswhichmatterthemosttoourstakeholders.

Inaddition,during2010weintendtocontinueworkingwithsuppliersinexaminingwaysofextendingourreportingofcarbonfootprintmeasurement,aswellasgreatermonitoringofthecommitmentofourthirdpartydistributorsandsupplierstooursustainabilitystandards.Intheareaofsocialresponsibilityweaimtoreportadditional information on training as we implement a new human resources reporting system. In economic healthcare,weaimtoincreaseourdisclosureofoursignificantcommitmenttomedicaleducation.

TheGroupisfulfillinganimportantroleinthehealthcaresector.Increaseddemandsarebeingplacedonhealthcaresystemsbythedemographictrendsofanagingpopulation.Moreactivelifestylesandtheincreasedincidenceofdiabetes,andotherdiseases,alsoincreasethedemandforSmith&Nephew’sproducts.Inaddition,developingandnewlyindustrialisedcountriesareincreasingtheirdemandforadvancedproductsdrivenbysimilardemographicandhealthissuesasdevelopednations.

Inreportingoncorporateresponsibilityandsustainability,Smith&Nephewiscommittedtoimproving themonitoringofitsperformanceinitsdevelopmentasasustainablebusiness.

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Tenth Annual Sustainability Report - Smith & Nephew · 2010 Sustainability Report Smith & Nephew is...

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