This excerpt taken from the SNN 20-F filed Mar 27, 2008.
Revenue increased by $90m, or 11%, to $919m of which 10% was underlying growth and 1% due to favourable currency translation movements. The principal factors in the underlying growth in revenue were the growth in the global orthopaedic reconstruction market which was estimated to be 8% in the year and the launch of new products in the US.
In the US, revenue increased by $44m to $514m (9%) all of which was underlying growth. The main factor was the launch of the LEGION knee in mid 2005 and the JOURNEY knee and BHR in 2006. These new products contributed $45m of incremental revenue.
Outside the US, revenue increased by $46m to $405m (13%), of which 12% was underlying growth and 1% due to foreign currency translation. Japan revenue grew by 24% of which 30% was underlying growth and 6% unfavourable currency translation. The main driver was the full year effect of the enlarged sales force following the acquisition of Leading Medical in 2005 which enhanced market coverage in Japan. Revenue growth in Europe was 11% of which 8% was underlying growth and 3% favourable currency translation.
Global knee revenue increased by $55m (11%) to $509m, of which 1% was due to foreign currency translation and 12% was underlying growth. This compares with the estimated global market growth of 8%. Global hip revenue increased by $35m to $378m (10%) all of which was due to underlying growth. The global hip market grew by an estimated 6%. Growth in other reconstruction products, mainly shoulder implants and cement was flat.
Trading profit rose by $27m (13%) from $206m in 2005 to $233m in 2006. This resulted in an increase in trading margin from 24.8% to 25.4%. The principal factors were sales leverage of administration and research and development expenses partly offset by new product launch and support costs and higher inventory provisions.
Operating profit increased by $4m of which $27m was trading profit less $20m due to the acquisition related costs in 2006 and $3m due to an increase in the charge for amortisation of acquisition intangibles.
This excerpt taken from the SNN 20-F filed Mar 28, 2007.
Revenue increased by $107m, or 15%, to $829m of which 14% was underlying growth and 1% arose from the full year effect of the revenues from MMT compared with nine months in the previous year. The principal factors in the growth in revenue were the growth in the global orthopaedic reconstruction market (excluding the spine sector) which was estimated to be 12% in the year and the 21% increase in the size of the global combined reconstruction and trauma and clinical therapies sales force from 1,260 to 1,532. The sales force was expanded in order to improve market coverage, particularly in the US, through the continuing strategy of creating specialist sales forces for each of the reconstruction, trauma and clinical therapies sectors.
In the US, revenue increased by $54m to $470m (13%) all of which was underlying growth. The main contributory factor in the underlying growth rate was the increase in the year of 25% in the size of the combined US sales force from 815 to 1,021 and the estimated market growth of 12%.
Outside the US, revenue increased by $53m to $359m (17%) of which 3% was due to the full year effect of the MMT acquisition and 14% was underlying growth. Revenue growth was driven by Japan at 36%, which comprised 40% underlying growth mainly, due to an increase of 25% in the combined sales force following the purchase of the business and assets of Leading Medical less 4% adverse foreign currency translation. UK revenue grew 29% and underlying growth was 31%; as it benefited from combining its business with MMT, resulting in increased numbers of sales representatives and greater access to surgeons and new customers; less 2% unfavourable currency translation. Australia/New Zealand revenue grew by 23% of which 4% was due to favourable foreign currency translation and 19% was underlying growth largely due to the purchase, in late 2004, of the rights to distribution of the BHR product.
Global knee revenue increased by $60m to $454m (15%) all of which was underlying growth. 4% of the underlying growth was due to growth in revenue of OXINIUM and the balance was due to sales force additions. This is a slower rate of growth than the 21% achieved in 2004 which is believed to reflect a reduction in the number of procedures in the US market and the fact that the Group launched fewer knee products during the year pending a number of new releases in 2006.
Global hip revenue increased by $47m to $343m (16%), of which the MMT acquisition accounted for 3% of growth and underlying growth was 13% which was due to the increased size of the sales force. The FDA Advisory Panel recommended conditional approval of the BHR product to the FDA for use in the US and it was expected that this product would be released during 2006.
Trading profit rose by $27m (15%) from $179m in 2004 to $206m in 2005. The trading profit margin remained constant at 24.8% between 2004 and 2005. An improvement in gross margin due to transactional currency and lower research and development expenditure was offset by increases in other expenses caused by ongoing sales force investment, higher costs of insurance and the cost of relocating and combining the UK business with MMT.
Operating profit increased by $177m of which $27m was trading profit, $154m was due to the macrotextured claim in 2004 less $4m due to an increase in amortisation of acquisition intangibles arising from the MMT acquisition.