20-F/A 1 dp137217_20fa.htm FORM 20-F/A

 

 SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 


FORM 20-F/A

Amendment No. 1


INFORMATION FOR SHAREHOLDERS (Mark One)

   
¨ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934

or

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 For the fiscal year ended December 31, 2019

or

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

or

¨ SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

Commission file number 1-14978


Smith & Nephew plc

(Exact name of Registrant as specified in its charter)


England and Wales

(Jurisdiction of incorporation or organization)

Building 5, Croxley Park, Hatters Lane, Watford, Hertfordshire WD18 8YE

(Address of principal executive offices)


Securities registered or to be registered pursuant to Section 12(b) of the Act:  

 

Title of each class   Trading Symbol   Name on each exchange on which registered

American Depositary Shares

Ordinary Shares of 20¢ each

  SNN  

New York Stock Exchange

New York Stock Exchange* 

 

*

Not for trading, but only in connection with the registration of American Depositary Shares, pursuant to the requirements of the Securities and Exchange Commission.

 

Securities registered or to be registered pursuant to Section 12(g) of the Act: None.  

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None.


Indicate the number of outstanding shares of each of the issuer’s class of capital or common stock as of the close of the period covered by the annual report: 885,207,373 Ordinary Shares of 20¢ each

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act    Yes  x    No  ¨ 

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934    Yes   ¨    No   x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days:    Yes   x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes  x    No  ¨ 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company.

     
Large Accelerated Filer  x Accelerated Filer  ¨ Non-accelerated filer   ¨
Emerging growth company   ¨    

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act. Yes   ¨    No  ¨

† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing.

¨ U.S. GAAP   x International Financial Reporting Standards as issued by the International Accounting Standards Board
    ¨ Other

If “Other” has been checked in response to the previous question indicate by check mark which financial statement item the registrant has elected to follow:     Item 17  ¨     Item 18  ¨ 

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨     No  x

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.     Yes  ¨     No  ¨

 

 

Explanatory Note

 

This Amendment No. 1 to the Annual Report on Form 20-F (this “Form 20-F/A”) is being filed solely to include the Chief Executive Officer’s and Chief Financial Officer’s conclusion regarding the effectiveness of Smith & Nephew plc’s (the “Registrant”) disclosure controls and procedures as required by Item 15(a) of Form 20-F, which was inadvertently not included in the Registrant’s Annual Report on Form 20-F for the fiscal year ended December 31, 2019 that was originally filed on March 2, 2020 (the “Original Form 20-F”).

 

This Form 20-F/A includes Item 15 from pages 78-79 the Original Form 20-F, as amended to include the above conclusion regarding effectiveness of disclosure controls and procedures. Item 15 is hereby amended and restated in its entirety. In addition, the Registrant is including Item 19 of Part III with this Form 20-F/A solely to file the certifications required under Sections 302 and 906 of the Sarbanes-Oxley Act of 2002.

 

This Form 20-F/A makes no changes to the financial statements of the Registrant included in the Original Form 20-F. Except as described above, this Form 20-F/A does not amend, update or restate the information in any other item of the Original Form 20-F or reflect any events that have occurred after the filing of the Original Form 20-F.

 

ITEM 15. CONTROLS AND PROCEDURES

 

Evaluation of internal controls

 

Management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a–15(f) and 15d–15(f) under the US Securities Exchange Act of 1934.

 

There is an established system of internal control throughout the Group and our country business units. The main elements of the internal control framework are:

 

– The management of each country and group function is responsible for the establishment, maintenance and review of effective financial controls within their business unit or function.

 

– The Group’s IT organisation is responsible for the establishment of effective IT controls within the core financial systems and underlying IT infrastructure.

 

– The Financial Controls & Compliance Group has responsibility for the review of the effectiveness of controls operating in the countries, functions and IT organisation, either by performing testing directly or reviewing testing performed in-country.

 

– The Group Finance Manual sets out financial and accounting policies, and is updated regularly. The Group’s Minimum Acceptable Practices (‘MAPs’) continued to be developed in 2019 including adding controls for leasing following the implementation of IFRS 16 and further alignment with our key Sarbanes-Oxley controls. The business is required to self-assess their level of compliance with the MAPs on a regular basis and remediate any gaps.

 

– MAPs compliance is validated through spot-checks conducted by the Financial Controls & Compliance Group and during both Internal Audit and external audit visits. Development of a technology solution to facilitate the real time monitoring of the operation and testing of controls has been undertaken in 2019, with a view to implementation in 2020.

 

– There are clearly defined lines of accountability and delegations of authority.

 

– The Internal Audit function executes a risk-based annual work plan, as approved by the Audit Committee.

 

– The Audit Committee reviews reports from Internal Audit on their findings on internal financial controls, including compliance with MAPs and from the SVP Group Finance and the heads of the Financial Controls & Compliance, Taxation and Treasury functions.

 

– The Audit Committee reviews regular reports from the Financial Controls & Compliance Group with regard to compliance with the Sarbanes-Oxley Act including the scope and results of management’s testing and progress regarding any remediation, as well as the aggregated results of MAPs self-assessments performed by the business.

 

– Following acquisition in April 2019, Osiris Therapeutics, Inc. (‘Osiris’) has been excluded from the scope of our assessment of internal controls as at 31 December 2019 as permitted by guidance provided by the staff of the U.S. Securities and Exchange Commission in the year of acquisition. Osiris represented 2% of the Group’s Revenue in 2019 and less than 1% of the Group’s Total Assets.

 

– Business continuity planning, including preventative and contingency measures, back-up capabilities and the purchase of insurance.

 

– Risk management policies and procedures including segregation of duties, transaction authorisation, monitoring, financial and managerial review and comprehensive reporting and analysis against approved standards and budgets.

 

– A treasury operating framework and Group treasury team, accountable for all treasury activities, which establishes policies and manages liquidity and financial risks, including foreign exchange, interest rate and counterparty exposures. Treasury policies, risk limits and monitoring procedures are reviewed regularly by the Audit Committee, or the Finance & Banking Committee, on behalf of the Board.

 

– Our published Group tax strategy which details our approach to tax risk management and governance, tax compliance, tax planning, the level of tax risk we are prepared to accept and how we deal with tax authorities, which is reviewed by the Audit Committee on behalf of the Board.

 

– The Audit Committee reviews the Group whistle-blower procedures to ensure they are effective.

 

– The Audit Committee continued to receive and review reports on the progress of the Finance Transformation element of the APEX programme during 2019 and the mitigation of the associated risks.

This system of internal control has been designed to manage rather than eliminate material risks to the achievement of our strategic and business objectives and can provide only reasonable, and not absolute, assurance against material misstatement or loss. Because of inherent limitation, our internal controls over financial reporting may not prevent or detect all misstatements. In addition, our projections of any evaluation of effectiveness in future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Entities where the Company does not hold a controlling interest have their own processes of internal controls.

 

We have reviewed the system of internal financial control and satisfied ourselves that we are meeting the required standards both for the year ended 31 December 2019 and up to the date of approval of this Annual Report. No concerns were raised with us in 2019 regarding possible improprieties in matters of financial reporting.

 

This process complies with the Financial Reporting Council’s ‘Guidance on Risk Management, Internal Control and Related Financial and Business Reporting’ on the UK Corporate Governance Code and additionally contributes to our compliance with the obligations under the Sarbanes-Oxley Act and other internal assurance activities. There has been no change during the period covered by this Annual Report that has materially affected, or is reasonably likely to materially affect, the Group’s internal control over financial reporting.

 

The Board is responsible overall for reviewing and approving the adequacy and effectiveness of the risk management framework and the system of internal controls over financial, operational (including quality management and ethical compliance) processes operated by the Group. The Board has delegated responsibility for this review to the Audit Committee. The Audit Committee, through its Internal Audit function, reviews the adequacy and effectiveness of internal control procedures and identifies any significant weaknesses and ensures these are remediated within agreed timelines. The latest review covered the financial year to 31 December 2019 and included the period up to the approval of this Annual Report. The main elements of this review are as follows:

 

– The Chief Executive Officer and the Chief Financial Officer evaluated the effectiveness of the design and operation of the Group’s disclosure controls and procedures as at 31 December 2019. Based upon this evaluation, the Chief Executive Officer and Chief Financial Officer concluded on 20 February 2020 that the disclosure controls and procedures were effective as at 31 December 2019.

 

– Management is responsible for establishing and maintaining adequate internal control over financial reporting. Management assessed the effectiveness of the Group’s internal control over financial reporting as at 31 December 2019 in accordance with the requirements in the US under section 404 of the Sarbanes-Oxley Act. In making that assessment, they used the criteria set forth by the Committee of Sponsoring Organisations of the Treadway Commission in Internal Control-Integrated Framework (2013). Based on their assessment, management concluded and reported that, as at 31 December 2019, the Group’s internal control over financial reporting was effective based on those criteria. Having received the report from management, the Audit Committee reports to the Board on the effectiveness of controls. KPMG, an independent registered public accounting firm, issued an audit report on the Group’s internal control over financial reporting as at 31 December 2019.

 

ITEM 19. EXHIBITS

 

The following exhibits are filed as part of this Amendment No.1:

 

Exhibit No. Description of Document Incorporated Herein by Reference To Filed
Herewith
12(a) Certification of Roland Diggelmann filed pursuant to Exchange Act Rule 13a -14(a)   X
       
    (b) Certification of Anne-Francoise Nesmes filed pursuant to Exchange Act Rule 13a -14(a)   X
       
13(a) Certification of Roland Diggelmann and Anne-Francoise Nesmes furnished pursuant to Exchange Act Rule 13a – 14(b)   X

 

 

SIGNATURE

 

The Registrant hereby certifies that it meets all of the requirements for filing its annual report on Form 20-F/A and has duly caused and authorized the undersigned to sign this Form 20-F/A on its behalf.

 

  Smith & Nephew plc  
  (Registrant)  
     
By:  /s/ Susan Swabey  
  Susan Swabey  
  Company Secretary  

Watford, England
September 25, 2020