|
Accounting policy Incremental costs directly attributable to the issue of ordinary shares, net of any tax effects, are recognised as a deduction from equity. When shares recognised as equity are repurchased, the amount of the consideration paid, which includes directly attributable costs, net of any tax effects, is recognised as a deduction from equity. Repurchased shares are classified as treasury shares and are presented in the treasury share reserve. When treasury shares are sold or reissued subsequently, the amount received is recognised as an increase in equity and the resulting surplus or deficit on the transaction is presented within share premium. |
19.1 Share capital
|
|
|
Ordinary shares (20¢) |
|
Deferred shares (£1.00) |
|
Total |
|
||||
|
|
|
Thousand |
|
$ million |
|
Thousand |
|
$ million |
|
$ million |
|
|
Authorised |
|
|
|
|
|
|
|
|
|
|
|
|
At 31 December 2015 |
|
1,223,591 |
|
245 |
|
50 |
|
– |
|
245 |
|
|
At 31 December 2016 |
|
1,223,591 |
|
245 |
|
50 |
|
– |
|
245 |
|
|
At 31 December 2017 |
|
1,223,591 |
|
245 |
|
50 |
|
– |
|
245 |
|
|
Allotted, issued and fully paid |
|
|
|
|
|
|
|
|
|
|
|
|
At 1 January 2015 |
|
917,942 |
|
184 |
|
50 |
|
– |
|
184 |
|
|
Share options |
|
1,855 |
|
– |
|
– |
|
– |
|
– |
|
|
Shares cancelled |
|
(4,350) |
|
(1) |
|
– |
|
– |
|
(1) |
|
|
At 31 December 2015 |
|
915,447 |
|
183 |
|
50 |
|
– |
|
183 |
|
|
Share options |
|
1,283 |
|
– |
|
– |
|
– |
|
– |
|
|
Shares cancelled |
|
(13,007) |
|
(3) |
|
– |
|
– |
|
(3) |
|
|
At 31 December 2016 |
|
903,723 |
|
180 |
|
50 |
|
– |
|
180 |
|
|
Share options |
|
655 |
|
– |
|
– |
|
– |
|
– |
|
|
Shares cancelled |
|
(13,523) |
|
(2) |
|
– |
|
– |
|
(2) |
|
|
At 31 December 2017 |
|
890,855 |
|
178 |
|
50 |
|
– |
|
178 |
|
The deferred shares were issued in 2006 in order to comply with English Company law. They are not listed on any stock exchange and have extremely limited rights and effectively have no value. These rights are summarised as follows:
|
- |
The holder shall not be entitled to participate in the profits of the Company; |
|
- |
The holder shall not have any right to participate in any distribution of the Company’s assets on a winding up or other distribution except that after the return of the nominal amount paid up on each share in the capital of the Company of any class other than the deferred shares and the distribution of a further $1,000 in respect of each such share there shall be distributed to a holder of a deferred share (for each deferred share held) an amount equal to the nominal value of the deferred share; |
|
- |
The holder shall not be entitled to receive notice, attend, speak or vote at any general meeting of the Company; and |
|
- |
The Company may create, allot and issue further shares or reduce or repay the whole or any part of its share capital or other capital reserves without obtaining the consent of the holders of the deferred shares. |
The Group’s objectives when managing capital are to ensure the Group has adequate funds to continue as a going concern and sufficient flexibility within the capital structure to fund the ongoing growth of the business and to take advantage of business development opportunities including acquisitions.
The Group determines the amount of capital taking into account changes in business risks and future cash requirements. The Group reviews its capital structure on an ongoing basis and uses share buy-backs, dividends and the issue of new shares to adjust the retained capital.
The Group considers the capital that it manages to be as follows:
|
|
|
2017 |
|
2016 |
|
2015 |
|
|
|
|
$ million |
|
$ million |
|
$ million |
|
|
Share capital |
|
178 |
|
180 |
|
183 |
|
|
Share premium |
|
605 |
|
600 |
|
590 |
|
|
Capital redemption reserve |
|
17 |
|
15 |
|
12 |
|
|
Treasury shares |
|
(257) |
|
(432) |
|
(294) |
|
|
Retained earnings and other reserves |
|
4,101 |
|
3,595 |
|
3,475 |
|
|
|
|
4,644 |
|
3,958 |
|
3,966 |
|
19.2 Treasury shares
Treasury shares represent the holding of the Company’s own shares in respect of the Smith & Nephew Employees’ Share Trust and shares bought back as part of the share buy-back programme. In 2017 the Group purchased a total of 3.2m shares for a cost of $52m as part of the ongoing programme to buy back an equivalent number of shares to those vesting as part of the employee share plans. During 2016, a total of 24.0m (2.7%) ordinary shares were purchased at a cost of $368m and 13.0m (1.5%) ordinary shares were cancelled. This included a $300m share buy-back programme following the sale of the Group’s Gynaecology business that completed in December 2016.
The Smith & Nephew 2004 Employees’ Share Trust (Trust) was established to hold shares relating to long-term incentive plans. The Trust is administered by an independent professional trust company resident in Jersey and is funded by a loan from the Company. The cost of the Trust is charged to the income statement as it accrues. A dividend waiver is in place in respect of those shares held under the long-term incentive plans. The Trust only accepts dividends in respect of nil-cost options and deferred bonus plan shares. The waiver represents less than 1% of the total dividends paid.
The movements in Treasury shares and the Employees’ Share Trust are as follows:
|
|
|
|
|
Employees’ |
|
|
|
|
|
|
Treasury |
|
Share Trust |
|
Total |
|
|
|
|
$ million |
|
$ million |
|
$ million |
|
|
At 1 January 2016 |
|
264 |
|
30 |
|
294 |
|
|
Shares purchased |
|
368 |
|
– |
|
368 |
|
|
Shares transferred from treasury |
|
(18) |
|
18 |
|
– |
|
|
Shares transferred to Group beneficiaries |
|
(13) |
|
(27) |
|
(40) |
|
|
Shares cancelled |
|
(190) |
|
– |
|
(190) |
|
|
At 31 December 2016 |
|
411 |
|
21 |
|
432 |
|
|
Shares purchased |
|
52 |
|
– |
|
52 |
|
|
Shares transferred from treasury |
|
(19) |
|
19 |
|
– |
|
|
Shares transferred to Group beneficiaries |
|
(9) |
|
(17) |
|
(26) |
|
|
Shares cancelled |
|
(201) |
|
– |
|
(201) |
|
|
At 31 December 2017 |
|
234 |
|
23 |
|
257 |
|
|
|
|
Number |
|
Number |
|
Number |
|
|
|
|
of shares |
|
of shares |
|
of shares |
|
|
|
|
million |
|
million |
|
million |
|
|
At 1 January 2016 |
|
18.9 |
|
2.3 |
|
21.2 |
|
|
Shares purchased |
|
24.0 |
|
– |
|
24.0 |
|
|
Shares transferred from treasury |
|
(1.2) |
|
1.2 |
|
– |
|
|
Shares transferred to Group beneficiaries |
|
(0.9) |
|
(2.0) |
|
(2.9) |
|
|
Shares cancelled |
|
(13.0) |
|
– |
|
(13.0) |
|
|
At 31 December 2016 |
|
27.8 |
|
1.5 |
|
29.3 |
|
|
Shares purchased |
|
3.2 |
|
– |
|
3.2 |
|
|
Shares transferred from treasury |
|
(1.3) |
|
1.3 |
|
– |
|
|
Shares transferred to Group beneficiaries |
|
(0.6) |
|
(1.2) |
|
(1.8) |
|
|
Shares cancelled |
|
(13.5) |
|
– |
|
(13.5) |
|
|
At 31 December 2017 |
|
15.6 |
|
1.6 |
|
17.2 |
|
19.3 Dividends
|
|
|
2017 |
|
2016 |
|
2015 |
|
|
|
|
$ million |
|
$ million |
|
$ million |
|
|
The following dividends were declared and paid in the year: |
|
|
|
|
|
|
|
|
Ordinary final of 18.5¢ for 2016 (2015: 19.0¢, 2014: 18.6¢) paid 10 May 2017 |
|
162 |
|
170 |
|
166 |
|
|
Ordinary interim of 12.3¢ for 2017 (2016: 12.3¢, 2015: 11.8¢) paid 1 November 2017 |
|
107 |
|
109 |
|
106 |
|
|
|
|
269 |
|
279 |
|
272 |
|
A final dividend for 2017 of 22.7¢ per ordinary share was proposed by the Board on 8 February 2018 and will be paid, subject to shareholder approval, on 9 May 2018 to shareholders on the Register of Members on 6 April 2018. The estimated amount of this dividend is $198m. The Group pursues a progressive dividend policy, with the aim of increasing the US Dollar value of ordinary dividends over time broadly based on the Group’s underlying growth in earnings, while taking into account capital requirements and cash flows. Future dividends will be dependent upon future earnings, the future financial condition of the Group and the Board’s dividend policy. The Board reviews the appropriate level of total annual dividend each year at the time of the full year results. The Board intends that the interim dividend will be set by a formula and will be equivalent to 40% of the total dividend for the previous year. Smith & Nephew plc, the Parent Company of the Group, is a non trading investment holding company which derives its distributable reserves from dividends paid by subsidiary companies. The distributable reserves of the parent company approximate to the balance on the profit and loss account reserve, less treasury shares and exchange reserves, which at 31 December 2017 amounted to $2,569m.