2010 Full Year Results strong finish to the year...6 Financial highlights - 2010 and Q4 • Revenues – $3962m, 4% growth for the year – $1067m, +5% ADS • Margin – 24.5% for

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2010 Full Year Resultsstrong finish to the year

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Forward looking statementsThis document contains certain forward-looking statements that may or may not prove accurate. For example,statements regarding expected revenue growth and trading margins, market trends and our product pipeline areforward-looking statements. Phrases such as "aim", "plan", "intend", "anticipate", "well-placed", "believe", "estimate","expect", "target", "consider" and similar expressions are generally intended to identify forward-looking statements.Forward-looking statements involve known and unknown risks, uncertainties and other important factors that couldcause actual results to differ materially from what is expressed or implied by the statements. For Smith & Nephew,these factors include: economic and financial conditions in the markets we serve, especially those affecting healthcare providers, payors and customers; price levels for established and innovative medical devices; developments inmedical technology; regulatory approvals, reimbursement decisions or other government actions; product defects orrecalls; litigation relating to patent or other claims; legal compliance risks and related investigative, remedial orenforcement actions; strategic actions, including acquisitions and dispositions and our success in integratingacquired businesses; and numerous other matters that affect us or our markets, including those of a political,economic, business or competitive nature. Please refer to the documents that Smith & Nephew has filed with theU.S. Securities and Exchange Commission under the U.S. Securities Exchange Act of 1934, as amended, includingSmith & Nephew's most recent annual report on Form 20F, for a discussion of certain of these factors.

Any forward-looking statement is based on information available to Smith & Nephew as of the date of the statement.All written or oral forward-looking statements attributable to Smith & Nephew are qualified by this caution. Smith &Nephew does not undertake any obligation to update or revise any forward-looking statement to reflect any changein circumstances or in Smith & Nephew's expectations.

sustainable profitable growth

John BuchananChairman

4

Four years of successful delivery

2006 2010

• Revenues $2,779m $3,962m 5% underlying CAGR

• Trading profit $571m $969m 14% CAGR

• EPSA 45.2¢ 73.6¢ 13% CAGR

• Dividend 10.8¢ 15.8¢ 10% CAGR

• Cash conversion 64% 85%

much achieved and much more to come

Dave IllingworthChief Executive Officer


6

Financial highlights - 2010 and Q4

• Revenues– $3962m, 4% growth for the year– $1067m, +5% ADS

• Margin– 24.5% for the year, up 180 basis points

(23.9% and 120 excluding Blue Sky)– 26.0% for the quarter, up 220 basis

points• EPSA grew by 12% to 73.6¢ for the year

(Q4 up 6.0% and 21.6¢ )• Final dividend 9.82¢ , 15.82¢, for the year

in total up 10%• Debt reduced to $492m, $552m of free

cash flow in the year• Banking facilities re-organised• Strong finish to the year for all businesses


1,500

2,000

2,500

3,000

3,500

4,000

4,500

2006 2007 2008 2009 2010

Rev

enue

$m

at c

onst

ant c

urre

ncy

2010

avg

rate

18.0%

19.0%

20.0%

21.0%

22.0%

23.0%

24.0%

25.0%

Trad

ing

Mar

gin

Revenue Margin Excluding Blue Sky

Note: ADS – average days sales basis

7sustainable profitable growth

Business highlights - 2010 and Q4

• Orthopaedics– Reconstruction

• Strong momentum in second half• Knee growth above market rate globally for year +5%

• +10% ADS Q4 globally

– Trauma – Growth in every quarter• +10% ADS in Q4

– Clinical Therapies - $200m revenues FY

• Endoscopy– Arthroscopy +9% FY, Q4 +8% ADS– Sports Medicine repair at double digit growth FY

• Advanced Wound Management– Revenue growth consistently above market– NPWT momentum

BIORAPTOR™ Knotless Suture Anchor

VERILAST™

VISIONAIRE™

RENASYS™ GO

EXOGEN™

8

Advanced Wound Management – a transformation


ALLEVYN™ GENTLE BORDER

ALLEVYN™ AG

OPSITE™ POST OP VISIBLE

RENASYS™ EZ

Revenue $m 698 912

Revenue growth % 1 7

Trading Profit $m 114 233

Margin % 16.3 25.6

FY 2006 FY 2010

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Advanced Wound Management – review of 2010 and Q4

Growth above market andcontinued momentum in NPWT

2010 achievements• Revenues grew at c. twice

market rate• NPWT gains momentum

and market share• Product launches

including ALLEVYN™ gentleborder range

• China factory increasesmargin

• ACTICOAT™ conversionmoved to Hull from Alberta

Advanced Wound Management

Revenues of $912m FY +7% and $251m Q4 +7% ADS

US revenues grew FY +11% Q4 +17%

Europe FY +5%, ROW FY +8%

ALLEVYN™ product line expansion

NPWT – revenue run – rate $100m

Margin FY 25.6% + 670bps, Q4 27.5% +830bps


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Orthopaedics – review of 2010 and Q4

Excellent finish to the year

Global revenues FY $2.2bn up 2%, Q4 $584m +5% ADSReconstruction revenues up 3% FY, Q4 +5% ADS• Global knees FY + 5%, Q4 +10% ADS• Global hips FY flat, Q4 +1% ADSTrauma global revenues up 3% FY, Q4 +10% ADSMargin 24.4% up 60bps in the year, 25.2% Q4 up 130bps

Orthopaedics

2010 achievements• VERILAST 30 year wear claim FDA

approved• VISIONAIRE™ exceeds 10,000

procedures - driving kneerevenues

• “Rediscover Your Go” campaigndelivers results

• Ceramicized metal data fromAustralia confirms OXINIUM™outperforms all metals for wear inhips

• Trauma sales force tenureenhances revenues

• Clinical Therapies delivers growth –EXOGEN™ and DURALANETM

perform well


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Endoscopy – review of 2010 and Q4

Investing in sports medicine –repair driving above

market growth

Endoscopy

Revenues $855m FY + 7%, Q4 $232m +6% ADS

Arthroscopy grows FY +9%, Q4 +8% ADS

Repair FY +11%, Q4 +5%

Resection FY +6%

Visualisation FY falls by 9%

Margin FY 23.3%, Q4 26.3% - as investment continues

2010 achievements• OUS revenues exceed $500m for

the year– Europe up 7%– ROW up 17%

• 5000+ surgeons trained including inChina

• US salesforce now two thirds direct• First arthroscopy sales contract from

US Healthcare Systems team• Hip arthroscopy revenues grow

rapidly and contribute to revenuegrowth

• Learning center network for Indialaunched

• Fast track project developmentyields 6 new platforms includingTWINFIX™ ULTRA PK


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2010 Summary

• Market conditions continued to be tough as expected

• Revenue growth‐ Advanced Wound Management - outgrows market - NPWT

momentum

‐ Reconstruction - knees great result, hips making good progress• Innovation - driving mix, offsetting price changes

‐ Trauma - strengthens as salesforce investment pays off

‐ Endoscopy – strong Sports Medicine growth

• Margin improvement enabled on-going investment

• Cash generation and working capital improvement


13much achieved and much more to come

2010 achievements

• FDA approval for 30 year wear claimfor VERILAST

• VISIONAIRE exceeds 10,000procedures

• TRIGEN™ SURESHOT™ demand strong• R3™ Acetabular System

full launch• KLEOS™ surgeon membership exceeds

7000• VERILAST with OXINIUM delivers

above market growth• Positive response to ‘Rediscover Your

Go’ DTC campaign for knees• Trauma sales force tenure increases

and strengthens performance• China revenues expanded• Traditional hips grow ahead of market• ScoliScore distribution agreement

signed for CT• EXOGEN specifically recommended by

NICE in the UK• Beijing factory opened and achieved

ISO 9001 accreditation• Chief Operating Officer appointed• Inventory control improves

• York Surgical Skills Centrecompleted and fully utilised

• RF resection penetratingcompetitor accounts

• New product developmentprogram delivers new productsincluding TWINFIX™ Ultra forrotator cuff and BIOSURE™ SYNCfor tibia/anterior cruciateligament

• 2/3 of US salesforce direct

• BIORAPTOR™ Knotless SutureAnchor supports shouldergrowth

• Hip arthroscopy revenues growrapidly and contribute torevenue growth from a smallbase

• On-line sales training launchedfor new reps OUS and drivessales growth

• New product introductionsincluding expanded ALLEVYNrange

• Blue Sky purchase agreementclosed out

• Suzhou, China producing over40% of global ALLEVYN demand

• Major IP win for NPWT inGermany and the US inOctober

• ACTICOAT™ conversion movedto Hull from Alberta

• PRO-FORE™ packaging moved toChina

• NO-STING SKIN-PREP™ andALLEVYN GB LITE™ announced

• Largo facility sold

• Global Ops appoints Chinaleader for all factories

Orthopaedics Endoscopy Advanced Wound Management

Adrian HennahChief Financial Officer


Fourth Quarter Full Year

2009 2010 Growth 2009 2010

$m $m Reported Underlying $m $m

Revenue 1,066 1,067 0% 0% 3,772 3,962

Trading profit 254 278 9% 9% 857 969

Restructuring and acquisition costs (24) (2) (68) (15)

Amortisation of acquisition intangibles (41) (9) (66) (34)

Operating profit 189 267 723 920

Net interest cost (10) (5) (40) (15)

Other finance costs (5) (4) (15) (10)

Share of results of associates 1 - 2 -

Profit before taxation 175 258 670 895

Trading margin % 23.8% 26.0% 220bps 22.7% 24.5%

Income statement Q4 2010

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Income statement Q4 2010

* Excluding restructuring and rationalisation costs, acquisition related costs, amortisation ofacquisition intangibles / impairments.


2009 2010 2009 2010

$m $m $m $m

Profit before taxation 175 258 670 895

Taxation (47) (76) Tax rate*28.6% (198) (280)

Attributable profit 128 182 472 615

Add back:Amortisation of acquisition intangibles / 41 9 66 34impairments

Restructuring & acquisition costs 24 2 68 15

Tax on excluded items (13) (1) (26) (10)

Adjusted attributable profit 180 192 580 654

Adjusted earnings per share ("EPSA") 20.3¢ 21.6¢ EPSA Growth 6% 65.6¢ 73.6¢

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Revenue growth by business segment Q4 2010

* Q4 2010 comprises 60 trading days (2009 – 64 trading days)

Reported Currency Underlying ADS% % % %

Quarter 4*

Orthopaedics (2) 1 (1) 5Endoscopy 1 (1) - 6Advanced Wound Management 3 1 4 7Group - - - 5

Full YearOrthopaedics 3 (1) 2Endoscopy 8 (1) 7Advanced Wound Management 8 (1) 7Group 5 (1) 4

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Underlying revenue growth by geography &business segment Q4 2010

US Growth Europe Growth ROW Growth Total Growth

Quarter 4 $m % $m % $m % $m %

Orthopaedics 311 (1) 160 (4) 113 3 584 (1)

Endoscopy 94 (4) 73 (3) 65 14 232 -

Advanced Wound Management 54 17 117 (1) 80 5 251 4

Group 459 - 350 (3) 258 6 1,067 -

Full Year

Orthopaedics 1,176 2 595 1 424 4 2,195 2

Endoscopy 353 1 266 7 236 17 855 7

Advanced Wound Management 178 11 454 5 280 8 912 7

Group 1,707 3 1,315 3 940 8 3,962 4

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Profitability by business segment Q4 2010Fourth Quarter Full Year

Revenue Trading Profit Margin Margin2010 $m $m % %

Orthopaedics 584 147 25.2 24.4

Endoscopy 232 62 26.3 23.3

Advanced Wound Management 251 69 27.5 25.6

Total 1,067 278 26.0 24.5

2009

Orthopaedics 593 142 23.9 23.8

Endoscopy 230 65 28.2 23.9

Advanced Wound Management 243 47 19.2 18.9

Total 1,066 254 23.8 22.7

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Free cash flow Q4 2010Fourth Quarter Full Year

2009 2010 2009 2010$m $m $m $m

Trading profit 254 278 857 969

Share based payment 3 4 18 21

Depreciation and amortisation 70 77 246 254

Capital expenditure (117) (107) (318) (307)

Movements in working capital and provisions 74 (30) (32) (112)

Trading cash flow 284 222 771 825

Restructuring, rationalisation & acquisition costs (18) (4) (54) (16)

Macrotextured claim (1) (2) (5) (5)

Operating cash flow 265 216 712 804

Net interest paid (10) (5) (41) (17)

Taxation paid (66) (61) (270) (235)

Free cash flow 189 150 401 552(492)

Closing Net Debt (943) (492)

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Outlook for 2011

• Revenue growth:

– Ortho: continued above market growth from recent launches andfrom focus on operational performance

– Endo: ahead of market in arthroscopy

– Wound: ahead of market, driven by NPWT

• Margin: continued significant efficiency improvement used to fundadditional investment and deal with modest price pressures

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Dave IllingworthChief Executive Officer

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Our consistent strategy has delivered resultsOrtho Endo AWM

Customer-led

Efficient

Investing for growth

Aligned


Outperform our markets through:

• Product innovation

• Medical education

• Customer service

Continued focus on operational margin and cashgeneration enabling increased investment in thebusiness

Company-wide objectives, aligned withcompensation plan that rewards results and integrity

Drive new revenues from new opportunities /Emerging Markets / Adjacent technologies

24much achieved and much more to come

• SUPARTZ link to ‘Rediscover YourGo’ campaign for knees

• Co-located multi-discipline ‘Tigerteams’ for new productsdevelopment, supported by R&Dspend increase

• VISIONAIRE and VERILAST• Roll out of LEAN 100%

Growth drivers – 2011 and beyond

Orthopaedics

• In–house incubator collaborationfor product development withcustomers – INVENTURES

• New product development forChina and other Emerging Markets

• Healthcare Systems customerdevelopment program

Endoscopy

• NPWT product development,differentiation and scale upinvestments supporting uniquemarket opportunities

• Emerging Markets managementand infrastructure strengthening in2011, continued strong focus onChina and India

• Advanced Woundcare sales andmarketing investments in Europe

Advanced Wound Management

ClinicalEvidence

EmergingMarkets

Diabetes

Demographics

Osteoarthritis

EconomicValues

Re-imbursement& Funding

Obesity

Innovation

Activity Levels

25

Market and business outlook

• Healthcare systems globally facecontinued challenges

• Demographics drive underlying growth

• Emerging markets offer continuedpotential

• Customer proximity is the key toinnovation

• Great people executing our plans

• Investing for the longer term


Questions?

Appendices

Smith & Nephew Key Product Line Revenues in $m at Average Rates and Underlying Growth

* All revenue growths are on an underlying basis as previously reported, excluding the effects of acquisitions and currency translation

Quarterly revenues

Q1 Q2 Q3 Q4 Full Year Q1 Q2 Q3 Full YearGrowth* Growth* Growth* Growth* Growth* Growth* Growth* Growth* Revenue Growth* Growth*

% % % % % % % % $m % %Orthopaedics

Reconstruction Knees 5% 1% 2% 5% 3% 9% 3% 6% 219 4% 5% Hips 2% (1)% 2% 3% 1% 6% 0% 0% 181 (5)% 0%Traum a 6% 2% (5)% (2)% 0% 3% 2% 5% 116 4% 3%Clin ical therapies 2% (4)% (5)% (4)% (3)% 5% (6)% (5)% 57 (12)% (5)%

EndoscopyArthroscopy 3% 4% 8% 13% 7% 17% 11% 8% 196 2% 9%Visualisation (12)% (26)% (21)% (21)% (20)% 0% (2)% (19)% 31 (12)% (9)%

Advanced Wound ManagementExudate Managem ent 9% 3% 0% 10% 5% 7% 0% 3% 69 (2)% 2%Infection Managem ent 31% 13% 9% 14% 16% 7% 7% 5% 33 (5)% 3%

Smith & Nephew 4% 0% 1% 4% 2% 9% 4% 4% 1,067 0% 4%

2009 2010Q4

29

Exchange rates$:€ Q4/09 FY/09 Q1/10 Q2/10 Q3/10 Q4/10 FY/10

Period end 1.43 1.43 1.35 1.26 1.37 1.34 1.34

Average 1.48 1.39 1.38 1.27 1.30 1.36 1.32

$:£

Period end 1.61 1.61 1.52 1.52 1.58 1.57 1.57

Average 1.63 1.56 1.56 1.49 1.55 1.58 1.54

Percentage of Revenue by Geographic Market: Q4 FY% %

United States 43 43United Kingdom 7 7Other Europe 26 26Other 24 24

100 100

30

Analysis of restructuring and acquisition costs

* Target $125m

** Target $60-80m, plus $15m costs of investigating and resolving issues withthe vendors

P&L Charge Cash SpendQ4 Total to date Q4 Total to date$m $m $m $m

EIP- cash costs * 2 115 4 108- asset w/offs - 26 n/a n/a

Plus Integration- cash costs ** - 95 - 92- asset w/offs - 28 n/a n/a

31

Reconciliation of free cash flow to IAS 7net cash flow from operating activities


2009 2010 2009 2010$m $m $m $m

Free cash flow 189 150 401 552

Add back: capital expenditure 117 107 318 307

Net cash inflow from operating activities (IAS 7) 306 257 719 859

32

Business days per quarter

Q1 Q2 Q3 Q4 Full Year

2009 61 63 63 64 251

2010 64 64 63 60 251

2011 64 63 63 60 250

33

New Borrowing Facility

Commenced December 2010

Comprises 5 year revolving credit facility of $1bn

Existing term loan of $1bn maturing in May 2012 reduced to $500m

Cancellation of revolving credit facility of $1.5bn maturing in May2012

34

Documents

2010 Full Year Results strong finish to the year...6 Financial highlights - 2010 and Q4 • Revenues – $3962m, 4% growth for the year – $1067m, +5% ADS • Margin – 24.5% for