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Chief Executive's Statement

Contents

About This Report

HSE Performance

Social Performance

Economic Performance

Looking Ahead

ChiefExecutive'sStatement_SirChristopherO'Donnell

Welcome to our latest sustainability report. I hope you find it useful. It reflects our commitment to running a sustainable business.

Smith & Nephew is a medical technology company with a focus on helping people live longer, healthier and more active lives by repairing and healing the human body with advanced technology products. We specialise in the business areas of orthopaedic reconstruction and trauma, biologics and clinical therapies, endoscopy and advanced wound management. The company creates innovative cost-effective products and services that make healthcare more affordable and improve standards and patient comfort. We believe that strength, depth and breadth of our product range provides the relevant continuum of care for our customers and we are committed to working closer together so that we may better serve our customers so they can better serve their patients. We are proud that every day our products help improve people's lives.

Many healthcare systems find it difficult to meet demand for their services and the baby boomer generation has yet to impact all our business areas. Obesity is increasing the need for replacement hips and knees. The higher incidence of diabetes is leading to more diabetic foot ulcers, one of the most difficult of wounds to heal. More active lifestyles put greater strain on joints and increasing age makes us more prone to injury and less able to recover quickly. Patients are better informed about scientific and product developments and as a result there is greater demand for new developments and moor expectation.

We offers products that provide surgeons with advanced instrumentation and techniques which save healthcare systems time and deliver improved outcomes to patients. Advances in products and materials technology for some types of reconstructive surgery are enabling better treatment at an earlier age. Less invasive procedures are being used for hip, knee and trauma surgery. Our understanding of the treatment of chronic wounds and our comprehensive range of products are helping the medical profession heal more wounds, faster and with less nursing resource. Through our partnerships with the medical profession, including the development of education and training programmes which are as important as the products themselves, Smith & Nephew seeks to provide support to maximise the chance of success for every treatment.

We recognise that companies have a wide responsibility to the community, the environment and the quality of life enjoyed by society at large. As a leader in our markets, we believe we should also be a leader in setting and meeting standards of sustainable development. Our annual Sustainability Report is one way of demonstrating this.

David Illingworth
Chief Executive May 2008