Hello, welcome to today's Smith & Nephew Q1 trading report. My name is Bailey, and I'll be the moderator for today's call. All lines will be muted during the presentation portion of the call, with an opportunity for questions and answers at the end. If you would like to ask a question, please press star followed by one on your telephone keypad. Certain statements in this presentation are forward-looking statements. These statements are based on management's current expectations and are subject to uncertainty and changes in circumstances. Actual results may differ materially from those in those statements due to a variety of factors. Most information about these factors is contained in the company's filings with the Securities and Exchange Commission. I would now like to pass the conference over to Deepak Nath, Chief Executive Officer. Deepak, please go ahead. Thank you. Good morning, and welcome to the Smith & Nephew Q1 trading update. I'm Deepak Nath, Chief Executive Officer, and joining me is Chief Financial Officer, Anne-Françoise Nesmes. I'm pleased to report this quarter's numbers. We've maintained the growth momentum from the end of 2022. The 60% of our business in sports medicine and wound management continues to be consistently strong. In orthopedics, we've had another better quarter, with improvements in commercial execution and product availability, allowing us to take more advantage of the strong market. Revenue growth of almost 7% is a good first step towards our full year target. There does look to have been a stronger environment for elective procedures in the Q1, and Anne-Françoise will take you through the detail of what we've seen shortly. However, we're not relying on outside conditions for success. Our priority is to deliver on the 12-Point Plan to transform Smith & Nephew and position us for sustainably higher growth. In orthopedics, we've made further progress this quarter on the fundamental rewiring to improve our competitive position. Although we're still less than halfway through the two years of the plan. On innovation, our growth investments are producing a high cadence of new launches, including in robotics and sports medicine. We're working hard on productivity, including completing the detailed planning for the cost actions we announced with our full year results. I'll cover our progress in a moment, but for now, I'll hand you over to Anne-Françoise to take you through the detail of the quarter. Thank you, Deepak, good morning, everyone. Our Q1 revenue was $1.4 billion, with a 6.9% underlying growth. All the franchises contributed to growth and maintained a good momentum from the end of 2022. When we look at the revenue by region, the performance growth was driven by established markets, with our U.S. business growing at 11.8% underlying and other established markets growing at 7%. The significant factor was that healthcare systems across the Americas, Europe, and much of Asia Pacific, saw stronger elective procedures volume than anticipated. With improvements coming through from the 12-Point Plan, we were better able to take advantage of these conditions, which benefited our surgical businesses, particularly in the early part of the quarter. We were therefore able to offset the decline of 7.3% underlying in emerging markets, which reflected the expected slower quarter in China. VBP remained a headwind, with an additional effect from the renewed COVID wave that began late in 2022. This resulted in fewer surgeries and slower shipments into the channel for much of the quarter in China, with a recovery coming only late in March. Looking at the detail by franchises, orthopedics grew 3.9% underlying. Knees and hips are the parts of our business where we see the effects of VBP. As we move through the next quarter, we'll begin to lap the implementation, and the headwind should fall away entirely by the H2 of the year. Excluding China, growth was 12% in knees and 10% in hips, reflecting the strong procedure volume recovery that I just mentioned. Other reconstructions growth of 19.7%, sorry, was driven by accelerating the adoption of robotics. Around 20% of our U.S. knees are now implanted with robotic assistance. We also reached a development milestone in March with the first surgical procedure using the CORI Digital Tensioner. Deepak will talk more about the new device shortly, which is the first of a series of additions we have planned for CORI in 2023. The 0.8% decline in trauma and extremities reflects our exit from China. We'll fully analyze that in the Q2 of 2023 and also lap further exits in Europe during the H2. Growth would have been 1.8% without China and around 4% excluding all market exits and should therefore accelerate as the year progresses. The U.S. is already showing what our portfolio is capable of, with high single-digit growth in the quarter. More broadly, our work to build a portfolio in orthopedics around best-in-class and differentiated assets is ongoing, and we believe this will be a significant growth driver for the segment. This is most visible in knees today with cementless and CORI's revision capability and will be more evident in hips and trauma and extremities over time. Moving to our sports medicine and ENT franchise, which grew 10% in the quarter, despite some ongoing external supply chain challenges and the impact of the COVID wave in China. Joint repair grew 7.3% with strong performance across all procedure types. Developing new market segments and a steady stream of innovation have been key components of long-term growth in sports, and that was again the case in Q1. In biologics, REGENETEN continued to re-accelerate with strong double-digit growth in the quarter. We added a further growth driver in knee repair, showing our new solutions for ligament reconstruction at AAOS in March. AET grew 9.1% in the quarter. Core COBLATION and the ongoing ramp of FASTSEAL were the major contributors, along with a soft prior comparator from supply constraints in 2022. I know there is interest in the recent data collection process in China that includes some sports medicine products. We are in regular contact with the authorities to discuss future plans, no decisions have been taken yet on any next steps. To give you a sense of what is being looked at, the data request in China was limited in scope and covered only some joint repair categories in China, representing 1%-1.5% of those sales. Finally, ENT growth of 13.8% reflects the post-COVID recovery in tonsil and adenoid procedures. We expect moderation of the growth rate during 2023, and then markets approach more normalized levels, but ENT is an attractive growth area beyond this market recovery. Despite facing some ongoing supply challenges here too, Advanced Wound Management grew 7.9% underlying. As in previous quarters, Advanced Wound Care delivered solid performance across most major regions, with underlying growth of 1% reflecting a strong prior year comparator. Bioactives grew 15.2% underlying. Shipment timings effect on SANTYL added some growth, but the primary driver here was double-digit growth in skin substitutes. The acquisition of Osiris in 2019 has been a good example of our tuck-in M&A strategy, both adding to the growth of the franchise and delivering attractive financial returns. A key valuation metric for M&A is ROIC exceeding WACC within a reasonable timescale, and Osiris passed that hurdle in 2022. Advanced Wound devices growth of 12.9% reflects the similar patterns to the previous quarter, with double-digit growth for single-use product PICO and significant contribution from traditional platform, RENASYS. Finally, I'll move to our full-year guidance, which is unchanged. We continue to target underlying revenue growth of 5%-6%. We expect continued above-market growth in Sports Medicine and Advanced Wound Management and improved Orthopedics performance compared to 2022. We'll deliver that through better commercial execution and growth from new products as we continue to implement the 12-Point Plan. Our growth in the Q1 is an encouraging start. The recent growth headwinds in China Orthopedics will ease as the year progresses. However, as I mentioned before, the Q1 also benefited from higher than expected surgery levels in established markets, which are 85% of our business. Our guidance did already assume some market strength in the H2. While the timing through the year has changed, the overall expectation has not. We do not assume that the end market strength at this level persists for the whole of 2023. Our guidance for the full-year trading margin is also maintained for at least 17.5%. As we have previously mentioned, we expect the trading margin to be H2 weighted, reflecting our historically normal margin seasonality together with the accumulating benefits of productivity improvement throughout the year. Now I'll hand you back to Deepak. Thank you, Francoise. I'm sure this slide is familiar to you by now, setting out the 12-Point Plan. This plan covers the biggest opportunities for the company around fixing Orthopedics, improving productivity throughout the value chain, and further accelerating Sports Medicine, Advanced Wound Management. The plan is central to how we'll deliver our midterm targets. We're continuing to drive these initiatives each quarter. We updated you in previous quarters on our work to redistribute instrument sets and on our progress on product supply with live orders and back orders on a path of recoveries toward our eventual targets. This is a wide-ranging plan with a lot to do. Today we can show progress in further areas around logistics, sales force delivery, robotics, and productivity. Last mile logistics is another important part of rewiring our commercial delivery for both better growth and greater asset efficiency. A project team has been working with our local distribution centers to standardize processes around fulfillment, inventory, and asset management, we're seeing some early wins. One example is kit cycle time, which is the time taken to process a set post-surgery and make it available for another procedure. We've reduced that by 40% in just a few months, which means better availability of sets to customers and better asset turns by reducing downtime. We've also made progress in kit health. The team has identified and reconstituted incomplete sets that were previously not turning at all. The number not ready for surgery is now down by more than 50% from the Q1 of 2022. In sales force delivery, we're moving our field force to a new digital platform that supports the full range of a rep's activity, from training and sales targeting to case scheduling and deal processing. We had some of these digital capabilities already, with more than 80% of reps already on the new platform, they should be used more consistently in the future. Importantly, we've also rolled out new sales incentive structures in the Q1, shifting from a historical emphasis that rewarded retention to growth. Finally, on orthopedics, we've continued to invest in our robotics platform and commercial approach, including the launch of the Digital Tensioner, which I'll touch more on in a moment. As Francoise mentioned, we're seeing a clear inflection point in utilization. In the category of improving productivity, we finalized the associated costs of our manufacturing network and go-to-market optimization work stream. As a reminder, we announced a package of productivity measures along with our full year 2022 results. It's broad ranging with cost levers across manufacturing, sales and marketing, and G&A. The plan is to deliver at least $200 million in annual cost savings by 2025, with the areas for savings shown on the slide. At that point, there was still some detail to be finalized on network optimization and potential market exits. The teams have completed this work, and we can now also say that we expect associated non-trading restructuring charges of around $275 million. Around three quarters will be cash costs and around half of the total P&L charges will be taken in 2023. Finally, I'll go a little more into our recent innovation. Returns on our R&D investments are one of the building blocks of our growth targets. We expect a higher cadence of launches than in the past. Those of you who could make it to AAOS will have seen the CORI Digital Tensioner for soft tissue balancing and knee replacement. It's the only tensioner for robotic-assisted surgery that can take measurements to inform the procedure plan before the surgeon starts cutting bones. The current standard practice uses less reliable methods like manual or mechanical tools. Case series data shows a 64% reduction in variability when using the CORI tensioner instead. This adds another point of differentiation for a robotics platform, and a point when all major players are marketing devices. In sports medicine, our focus has been on delivering a steady stream of innovation across procedures, and our new devices for ACL reconstruction are part of that approach. ACL reconstruction is one of the established major categories of knee repair, and the new guide system for graft harvesting, together with the expanded ULTRABUTTON family, supports an increasingly surgical preference for the quadriceps tendon. When I step back and look at the whole Sports Medicine portfolio, we now have a recently launched and high growth products across all of our shoulder repair, meniscus repair, ACL, biologics, and the tower. More broadly, innovation is a central element of our growth model. More than 60% of revenue growth in 2022 came from products launched in the previous five years, and we expect the proportion to remain at least at 50% in 2023. I'm excited about the pipeline still to come, and we'll bring important launches across the franchises throughout 2023. In summary, we're pleased to have started 2023 with a solid Q1 of growth. We were able to take better advantage of higher elective surgery volumes, particularly early in the quarter, but we're also accumulating evidence of more sustainable progress in our 12-Point Plan improvement plan. Sports Medicine and Advanced Wound Management are delivering the consistent performance that we're aiming for. We're continuing to work through the fix of Orthopedics, and our growth investments are delivering, whether it's the acquired skin substitutes and bioactives or the high cadence of new launches from our R&D investment right across our portfolio. We remain focused on driving that transformation through the 12-Point Plan and look forward to updating you further as the year progresses. Now we can take your questions. Thank you. If you would like to ask a question, please press star one on your telephone keypad. If for any reason you would like to remove that question, please press star two. Again, to ask a question, please press star one. As a reminder, if you are using a speaker phone, please remember to pick up your handset before asking your question, and please do remember to unmute locally. Our first question today comes from the line of Jack Reynolds-Clark from RBC Capital Markets. Jack, please go ahead. Your line is now open. Hi there. Thank you for taking the questions. Had a few for me, please. First one is just around guidance for the year. Obviously, you talked about the outlook for the rest of the year, implying a deceleration of growth through the remaining quarters. Just wondering if you could provide some more detail around your assumptions here, kind of why you're expecting a slowdown, and kind of any visibility you have on revenues through the rest of the year. The next question is around the cost environment, how are you seeing that unfold so far, and how, again, are you expecting things to develop through the rest of the year? The last question was on kind of pricing. How much of the growth in the quarter so far, has been from pricing, both, I guess, in terms of price and easing of kind of deflation, and also your own kind of active initiatives to improve pricing? Good morning, Jack. I actually start with the Anne-Françoise here, obviously. I'll start with the question on pricing. If you recall, we saw a changing trend as we exited 2022. We've been very focused on pricing through the 12-Point Plan, both from a short-term perspective to offset some of the inflationary headwinds, but more longer term as well from a strategic pricing perspective. We, you know, we're continuing to see a positive trend in pricing. You know, we've moved away from the deflation we've seen or the historical price erosion we've seen on the past, in the past. That has continued in Q1. You know, I think it's important to say that this is not what drives our midterm guidance, and that's not a tailwind that we'll be building on. You want to take the? You want me to continue to talk on the? I'll come back to your first question then around the outlook and the implied deceleration. It is fair to say, that the Q1 has seen improvement in elective procedure. What we have assumed, our assumption is that overall the market growth and the market momentum for the full year will not change. There might be a phasing, difference compared to our initial assumptions, but we do not see the overall, momentum and market growth to be fundamentally different from our initial, assumptions. That's why we reiterate our guidance of 5%-6% revenue growth. I would also say, clearly that it, you know, it's one quarter, and you've heard me say it before, one quarter doesn't make a full year. There will always be variability. Then the second question around cost, clearly, if you, there's two elements that will drive the margin. Historically, we always have a margin that is higher in the H2, so that is more weighted to the H2, as you see the seasonality of the cost and the revenue. There's also this time as well, something to bear in mind, is the productivity improvement flowing through more into the H2. That's really, the point we made at year-end and the point we're reiterating today, sorry, around the 17.5% margin guidance, where you should expect to see a better H2. I think I've covered your three questions. Yeah, that's great. Thank you so much. Thank you. The next question today comes from the line of David Adlington from JP Morgan. Please go ahead, David. Your line is now open. Morning, guys. Thanks for the question. Firstly, just on the new incentive structures for the sales team, I just wondered if you could, you know, obviously that shift towards rewarding growth rather than retention. Just wondered how that had been taken by the sales force and how that's sort of changing behaviors already. Sort of slightly connected to that, just wondering, given the hotter market environment, I'm just wondering how you're seeing the competition for labor and therefore, wage inflation panning out from here. The second one, just on the technical guidance, obviously your associate numbers changed quite a lot since February. I just wondered what had changed so much in the last two months, and is that just Bioventus? Thanks. Great. So David, the headline answer is the sales force responded very well to the new incentive scheme. We had a chance to roll that out at the national sales meeting back in February. The response was good. There's increasing confidence. Obviously the confidence in our portfolio was always there, but the product availability and the improvements that the sales force feels has given them confidence to be able to achieve quota. Indeed, in the Q1, quota attainment was actually quite high, not only in terms of the overall sales force, but the distribution of quota attainment was also kind of in the range that we were targeting. Overall, good reception to the new incentive scheme, increasing confidence from the sales force, particularly on product availability. One quarter in, the quota attainment is where we expect it to net on this point in the year. Regarding your second question, and Francoise, you wanna take that? Indeed, you're right, David. It's the loss associated to BioVentus. We took a further our technical guidance reflect the loss we took in Q1 on the CartiHeal changes within BioVentus. Thanks. I suppose the follow-on question is, you know, how do you see that panning out beyond this year? At this point, the financial exposure is very limited. Please note as well that it's a non-cash cost, but we, you know, we adjusted the value of Bioventus at the end of December 2022. The exposure is very limited, and it's not cash. Okay. Thanks. The biggest adjustment was at the end of 2022. Thank you. The next question today comes from the line of Kyle Rose from Canaccord. Please go ahead, Kyle. Your line is now open. Great. Good morning. Thank you for taking the questions. I appreciate the incremental color on the CORI business in the U.S. You know, it sounds like, you know, 20% of U.S. needs on CORI. Wondered if you could give us a similar metric on cementless needs in the U.S. and just how that rollout is trending. The secondarily is plans for the ENGAGE knee. When should we see that in the U.S. market? With respect to inventory improvements, glad to see that some of those headwinds are easing. Maybe you could just help us understand where are you still seeing headwinds out from an inventory perspective, and when should we expect those headwinds to alleviate as we move through the year? Thank you very much. Sure thing. In terms of CORI, we're pleased with the rollout, as you note. 20% of our procedures in the U.S. now are Revive enabled. In terms of our Porous knee, we continue to see good traction and uptake. Of course, in the United States, now a material part of our growth. We don't break out individual product sales. It's part of a broad portfolio of product. What the Porous knee offering has allowed us to do is get into competitive accounts in a way that we couldn't do prior to us having the offering. We have an initial offering with LEGION CONCELOC. Of course, there's further launches to come as we round out our cementless portfolio. We're very pleased with the uptake with LEGION CONCELOC today. We're very pleased with our ability to go into competitive situations in a way that we could not before. It is one element now of a more comprehensive portfolio in knees and hips. Overall, pleased with where we are with that. ENGAGE is another differentiated element of our portfolio around uni-compartmental knees. The early results are good. Yeah, we're going through a staged and careful market introduction for ENGAGE, but it's but one element of, again, a broad portfolio of innovations we bring to market. It's important to underscore that we're not depending on any one factor to drive growth, but it's really about the rounded portfolio. The third question was on inventory. As we've acknowledged, we've had high levels of inventory in orthopedics especially. That really started even before COVID and has persisted right through COVID. We've talked about steps we're taking to bring that inventory down. What we're trying to balance is make sure that there's we've got inventory to fuel growth and new product launches and make sure there's the product available to serve our customers. Equally, you know, in 2022, we called out the fact that there were understandable reasons for inventory increasing last year, particularly around strategic raw material buys in the context of supply chain disruptions, revaluation of inventory. These were known factors in 2022. We're undertaking deliberate steps to bring that inventory down. You know, truth is there are more aggressive ways than we're currently undertaking to bring that down. We believe that would compromise sales growth and our ability to serve our customers. There is a tension there, but I believe that the targets that we have around deals of sales of inventory at DSI takes into account these trade-offs. I'm, you know, pleased with the progress, the operational progress, what we're making, around that topic. Thank you. The next question today comes from the line of Sezgin Ozgener from HSBC. Sezgin, please go ahead. Your line is now open. Hi. Thanks for taking my questions. I have two, please. Ozgener from HSBC. Sezgin, please go ahead. Your line is now open. Hi. Thanks for taking my questions. I have two, please. First of all, the difference in terms of the cost actions. You detailed that you expect $275 million of one-off restructuring costs, total, which this year, and this of course changes from the change from the guidance earlier in February from in your guidance update, it rises from $70 million to $200 million, the restructuring costs that you advise for 2023. It would be good to hear the changes that you see, what were the moving parts. My second question relates to the expansion of CORI. We've seen higher other construction growth this quarter. Part of it, I presume is attributable to CORI. What do you see in terms of the expansion plans internationally as well for CORI? I know it's a very nascent subject, but it could be probably meaningful for the midterm. I'll stop there. Sezgin, just on your first point around restructuring, the buckets that we see are around our network optimization, our G&A and sales and marketing levers. Those buckets haven't fundamentally changed. We've gone through the work now to crystallize our plans in those areas, that gives us a better handle on what it's actually gonna take to deliver the $200+ million in annual cost savings. As I indicated, you know, a big chunk of those costs, in fact, are in network optimization as we strive to bring our capacity in line with demand on the back of improving asset efficiency. More than half the costs are actually related to that. We also broke out what are cash and non-cash costs associated with these. We want to flag that around half of those costs will be in 2023, with the remaining over 2024 and 2025. In terms of benefits, half the benefits will accrue in 2023, 2024, with the remaining half coming in 2025. We've got a better handle on the phasing of benefits and phasing of costs and also more clarity around what costs and expenses. That's your first question. The second one now is around CORI. CORI is really, it's not a global launch. It is global today. We've gotten traction not only in the United States, but in markets across Europe. It's about a global launch. It is global today. We've gotten traction not only in the United States, but in markets across Europe and Asia. We have a pretty good view as to where we want to go, where the priority markets are for us. As important as placements are, Seji, it's what we're actually more interested in is having the appropriate level of utilization. As you called out, other recon showed strong double-digit growth, and that reflects increasing uptake of CORI, not only in terms of placements, but also importantly, utilization of CORI. We cited the metric of roughly 20% of our knees currently today robotically enabled. Those are the different pieces in terms of how they come together. Thanks so much. If I may just quickly follow up on the cost actions. Yeah. networks optimization, imply additional exits as compared to what you previously, mentioned? Does this have growth implications over the mid and long run? No, really. Hi. Here it is effectively, incremental optimization of the network, particularly looking at the overcapacity that we have in orthopedics. You know, as we adjust our processes, clearly we're becoming more efficient, and that's what we're reflecting. You know, it's difficult to talk a little bit more. We working through, the details are not finalized. We need to engage with the team, et cetera. That's really reflecting the work we're doing around the orthopedics. The short answer to the question, around whether it's going to impact growth or not, key consideration in all of this is not to compromise, growth in any way. We feel confident in our ability to take out capacity while serving the needs of the market and importantly, fueling growth. Thanks very much, Deepak and Francoise. Much appreciated. Absolutely. Thank you. The next question today comes from the line of Christoph Gretler from Credit Suisse. Chris, please go ahead. Your line is now open. Thank you, operator. Good morning, Deepak, and Francoise. I have the first question I have now is respect to your emerging market business. I noticed that there was a substantial step down also in absolute dollar sales. Could you maybe discuss that business briefly? If you have maybe also a number of that business growing, excluding China, that would be great. Sure, Chris, good morning. The overwhelming effects of emerging markets, of course, in terms of the reported numbers is China. We'll get you the ex-China number momentarily. In terms of our ability to compete in those markets, we're actually pleased with the progress we're making in important markets, whether in India or other places. The traction we've gotten with exploring and other parts of our portfolio, we're actually pleased with. What's also important is to make sure we're able to compete effectively and not just drive growth, but actually profitable growth in these markets. There we're looking at where we're able to effectively compete. For example, we talked about trauma and ability to kind of drive profitable growth, and trauma made the decision strategically to exit. That's an important consideration in terms of how we effectively compete in these markets. We've got a broad portfolio. We're able to tailor our participation in these emerging markets to effectively capitalize on the opportunity there. In terms of the other factor with emerging markets, just to come back to the point that I started with. There's about a four-point growth headwind, just from FX, in emerging markets when you take the effect of China out of this, Chris. Okay. Maybe just the other question was now on your comment about the beginning of the year and the elective surgery procedure momentum. You know, is that solely a U.S. phenomena on, you know, the kind of, you know, the COVID base comp base, or did you observe this kind of pattern also in other developed countries? It's not just the U.S. We have seen that recovery actually in other markets as well as developed markets. We call that the effect in China as well, particularly in the last month of the quarter, post-COVID, we saw a recovery in procedures as well. There are a couple of different drivers for it, you know, whether it's amelioration of staff shortages, or actually pent-up demand, it's kinda hard to tease out the specific factors there. It's more than just the U.S. market. We've been better able to capitalize on that market recovery on the back of operation improvements that we've been making as part of the 12-Point Plan. Okay. Thank you. I appreciate your time. Thank you. Absolutely. Agree. On the back of operation improvements that we've been making as part of the 12-Point Plan. Okay. Thank you. I appreciate your time. Thank you. Absolutely. Thank you. The next question today comes from the line of Hassan Al-Wakeel from Barclays. Hassan, please go ahead. Your line is now open. Thank you for taking my questions. I have three, please. Firstly, can you talk about the progress you're making on cementless? Do you think you're closing the gap in terms of share losses versus peers overall here? We've only seen one of your peers report thus far, and the gap is still significant. And I wonder if you see any fundamental reason behind this or do you think it's more VBP driven where, you know, you would be overexposed to VBP. Secondly, could you talk about the request for information on China VBP for Sports Medicine? How likely a risk do you see this to be? I know it's early stages. How much of the sports medicine business in China do you think potentially could be impacted? What's your base case in terms of when we will get some clarity? Thirdly, I'd love to get an update in terms of pipeline of potential higher growth assets for M&A and how you're thinking about capital allocation. Thank you. First off, around cementless knees. You know, we don't break that out separately, but as I indicated in response to a previous question, I'm pleased with not only the sales of LEGION CONCELOC, but more importantly, our ability now to go after competitive accounts now that we have a cementless offering. It's important to note that there is more cementless products to come in the future. Equally as important is the portfolio that we have. The role of cementless in our portfolio is perhaps different from that of our other competitors. As I've always said, it's the portfolio, it's the various elements now that have come together for us to have a fuller offering than we've had in our past and closing important gaps that we previously had in our portfolio. It's about the portfolio that I'm looking at. In fact, the gap in U.S. knees, as we see it, has actually narrowed. Hassan, it's also important to note that we're less than halfway through our improvement journey in terms of the 12-Point Plan, particularly on fixing orthopedics. We had not, at this point in our improvement journey, targeted getting to market or above market. We've got some ways to go in terms of rewiring our business, continuing to address the fundamentals in order to be able to better capitalize on the opportunity before us. As I've indicated, both at full year 2022 results and also today, I am pleased with the progress we're making. I'm pleased with us achieving the interim targets that we've set out against the 12-Point Plan. We have some ways to go before we're gonna be at or above market in orthopedics. Second question regarding China VBP. We're still early in the engagement. As you know, a request for information covering a range of categories has gone out. We remain in active discussions with the authorities around our business, around the various categories there. Based on the scope of the data request, just to reiterate what Anne-Françoise mentioned, this covers roughly 1% to 1.5% of our group sales that it covers. We break out China in the H1 results and full year results in terms of overall sales. It's early going into... As far as your question around timing, we're not necessarily planning for this to be a 2023 impact. Likely into future years, but one don't wanna get too far ahead of where the government actually is at the moment. What you should know is we've bracketed roughly what the impact is likely to be on our business. It's still early going to say what the level of impact is going to be. There's been no decisions taken by the government. Once we have that, we'll obviously come back and characterize that for you. Hassan, if I may, just to be clear, as we mentioned in the presentation, this is a subset. The data request only concerns a subset of joint repair in China. You know, it's very narrowed, and as Deepak said, therefore, the data covered 1%-1.5% of revenue of group revenue. Yeah. Right. Finally, your third question around our M&A. As you can imagine, we have a robust program looking at the market, looking at opportunities for value creation in that. Obviously, I'm not gonna get into specific targets here on this call. Okay. Very helpful. Thank you. Thanks, Hassan. Thank you. The next question today comes from the line of Seb Jantet from Liberum. Please go ahead, Seb. Your line is now open. Good morning, and thank you for taking my questions. Two, if I may. First of all, just going back to the strength in Q1 in electives, I know in the comments that you said that it was particularly strong in the quarter. I guess what I'm wondering is, have you seen the sales growth during the quarter moderate? Is that what's kind of driving your cautious kind of guidance for the full year? Or are you expecting things to get worse from here? Second thing, question is around advanced wound care. Just looking at the kind of the growth there, I understand there were some tough comps, but can we give any more color on why the growth was quite so slow in this quarter? Thanks. Seb, as far as our outlook for the year, we had in our, in our guidance assumed that there would be market recovery in 2023. What we're flagging is, although we saw some of that in Q1, perhaps earlier than we had anticipated, we don't expect this kinda high level to persist throughout the year. What we're reflecting is that this market recovery we have assumed already in the guidance, and we don't see reason to get much more bullish than we had already incorporated to the guidance. That's what you're, that you're seeing. Do you wanna take the wound point as well? On the wound point, as I said, the only advanced wound care, the 1%, you know, the performance in that segment has been strong across all regions and products. Really it's a factor of the very strong prior comparator that you see here coming through. Okay. Thank you. Thank you. As a reminder, if you would like to ask a question, please press star followed by one on your telephone keypad. The next question today comes from the line of Graham Doyle from UBS. Graham, please go ahead. Your line is now open. Morning, thanks for taking my questions. Just two for me, please. It's obviously been pushed a few times around the guidance of the strong Q1. I suppose we've seen this with peers as well. Is there any reason to think that there's sort of a pull forward in demand, and that's why you have this kind of super strong Q1? Is it just, again, general caution as to why there's no change here? Just a follow-up on VBP, just a slightly different one. When does the actual ortho lapping event happen within Q2, just to get a sense of that? Would you be able to give us a sense as to how sports medicine within China itself has been growing, just to understand that as well? Thank you very much. I'll take the VBP, you know, the ortho VBP. Hi, Graeme. Sorry. I'll take the ortho VBP. We lap through Q2. I can't give a precise date, because if you'll recall, provinces implemented at different times. By the end of Q2, we'll have fully lapped it. You know, it will be throughout the quarter that we'll still see the impact depending on the various rollout and the provinces. In terms of the guidance for sports, sorry, on sports, again, I want to reiterate no decisions has been taken, and we are more overweight in sports in China than we were in ortho. As we said, we've narrowed, you know, the range of impact. When you look at the data that has been requested, it represent 1%-1.5% of group sales. Of course, whatever happens, but no decision has been made, we can mitigate some of that. In terms of the guidance, you know, I reiterate, it has been a strong Q1. We saw elective procedures coming back, particularly in the early part of the year. We, you know, we saw that particularly in the established markets. It is too early to tell. You know, the overall market growth, in our view for the full year does not change, and that's the basis for our guidance, remaining where it is. It's only 1 quarter. We remind again, people on the phone there are Q3 to go, there's no reason to believe the market growth will be higher than what we assume for the full year. Okay. That's super helpful. Let me just a quick follow-up. Because you, obviously, you keep pointing towards obviously three more quarters to go and a little bit of caution. It's early days in April, is there anything you've seen that has given you a sense of that we should be thinking about the Q2 is gonna be slightly different, or is, again, it's just a little bit too early to tell? We're taking a full view on the full year, so, you know, I'm not gonna comment on Q2 today. That's not the purpose of the call. My position is really on the full year view of the market growth. Okay. Look, thank you very much for your time. Thank you. Thank you. As a reminder, if you would like to ask a question, please press star followed by 1 on your telephone keypad. Next up, we have a follow-up question from Jack Reynolds-Clark from RBC Capital Markets. Please go ahead. Your line is now open. Hi there. Yeah, thanks. Just to follow up on CORI. I was wondering if you could give an update on your progress on kind of put those so that 300 placement target that you have through the for 2023. Just kind of bearing in mind what you what Deepak said about kind of the utilization being the most important point. Just could you just give some color around kind of what levers sales teams have to kind of drive that utilization in kind of placed accounts? Jack, we'll, you know, we have been committed to providing you quarterly placement numbers, so we'll come back later in the year, update you on our progress towards the 300 number. Yeah, I am pleased with the kind of uptake that we're seeing in the market, the kind of reception in the market. The funnel that we have building, the quality of the funnel, not only United States but also around the world, I am very pleased with. Overall, good progress at this point in the year. It is a back after the year weighted thing as many of our improvement programs are. lot of the placements are going to come in the Q3, Q4 timeframe. The funnel is developing very nicely on that point. Regarding utilization, just wanted to cover that it, you know, it's important, the strategy we're following with CORI is not to place CORI everywhere, but rather to be strategic about where we take it and to place it where we have fully trained surgeons, where there's high embrace for the product and where we expect to see high utilization. That's what I wanted to cover, which is it's not just placements for the sake of placements, but really placements with a high level of interest and high level of adoption is what we're targeting with CORI. The number around 20% utilization reflects that strategy. We're pleased with where we've placed CORI so far and the kind of use that it's getting where we've placed it. That's good. What we're also pleased with is the kind of enthusiasm we see from customers for those who've had exposure to CORI, the kind of differentiation in functionality that we offer. We talked about the Digital Tensioner. We've done the first cases with this. Already the reception's been very good around that. Prior to that, I've also indicated that we are the only robotic platform to have a revision indication. That's been really well received by the market. When I look at the pipeline that's coming with planned fruition in 2023 and in the early part of 2024, a very, very robust program there. Very exciting things already that have come onto CORI, high level of differentiation, and actually even more exciting things to come as I look at the rest of the year in 2024. Thank you. The next question today comes from the line of Veronika Dubajova from Citi. Please go ahead, Veronika. Your line is now open. Hi, guys. Good morning, and thank you for squeezing me in. I had some technical issues. Two questions from me, please. The first one is just, Deepak and Anne-Françoise, so I would love to get your thoughts on why you think the market has started off so well. I guess, you know, do you think this is pent-up demand? Do you think this is staffing? Maybe just remind us as you look at the sort of 2022 baseline, in particular in the US, I'm thinking, you know, which in your minds last year were the worst quarters, just so we can kinda think about some of the strength that you're seeing and what's driving it and how it might translate into the remainder of the year. My second question, to kind of push you a little bit, Anne-Françoise, as well, a little bit on the margin commentary. I mean, if indeed your assumption here is correct, which this is a pull forward of strength that you had expected in the H2 of the year, should we be starting to have a different view on that margin phasing H1 to H2? Just trying to reconcile those two comments given where the Q1 organic came out. If you can comment to that'd be great. Thanks. Sure. Hi, Veronika. In terms of the factors driving the market recovery, I think it's pull forward relative to the assumptions that we had made. From what we can tell, there's some level of pent-up demand, although from the visibility that we have, it's hard to tell, you know, whether the procedure is really a reason for due to pent-up demand or just normal course demand. It's kinda hard to parse that, but there is absolutely a factor in that. The second piece of this is staff shortages. I think you've seen some of the commentary, from our customers around improvement in staff shortages reliant on contract labor versus salaried employees and other things, that are causing an improvement in surgical capacity that's translating into perhaps a more seamless way to do elective procedures such as, knee and hip replacement. I think what we're seeing is perhaps earlier improvement on that front than we had anticipated. In terms of, you know, impact from margins, there is historical seasonality in our business, based on when procedures get done and also spending patterns in accounts. What we're seeing is that, you know, kind of things going back to normal levels in terms of when pro-promotional activities occur, and kind of the pace of sales activity. In that sense, we're looking for 2023 to have that normal seasonality. In terms of the drop-through of this growth into margins, you know, fundamentally, we expect the same pattern of a stronger H2 than the H1. Also I wanna bring back a point that Anne-Françoise mentioned in terms of the accumulating benefits of productivity as part of the 12-Point Plan. As I mentioned, you know, we're less than halfway through our two-year plan of improvement around operational improvements around 12-Point Plan. Those benefits will accrue in the H2 of the year. I wanna caution us in saying that we're likely to see that ahead of where we've targeted. We have a pretty good view as to what we targeted in terms of the operational improvements. We are right on track to achieving those interim targets, and we expect that in the H2, a lot of those improvements will come to fruition that will enable us to drop the growth and impact the growth to the bottom line. I wouldn't wanna get too far ahead of where we actually are in terms of the operational improvements that we're on track. Okay. Understood. Thanks, Deepak. I think David had asked this question, and apologies if I missed the answer, but just the cost development year-to-date, I'm asking in particular about some of the inflationary impacts, both on raw materials, freight, and wages. How do those track against the expectations you had at the outset when you gave guidance? Yeah. Sorry. I, Jack, apologies, I didn't get to that question, but thank you, Veronika, for reminding us. Relative to our expectations, we're right on target relative to both the assumption of inflation, the level of inflation, and how we thought that was going to play out. Three months into the year, I would say we are right on track relative to our assumptions. Terrific. Thank you, guys. Absolutely. Thank you. The next question today comes from the line of Robert Davies from Morgan Stanley. Robert, please go ahead. Your line is now open. Thanks for taking my questions. I had a few. One was on just your comments around if potential VBP impacts came through in the Sports Med division. You highlighted, I think, some options to have some additional cost takeout or some offsets against that. I I was just kind of wondering if you could flash out a few more details of what you were thinking along those lines. The second one was just around the supply chain, sort of balancing the supply chain against product availability against last mile logistics. Can you just give us a bit more color in terms of where you are in that journey and I guess the kind of data points that we can get along the way? 'Cause that's a pretty common question we get from investors, is just how do we sort of, you know, kind of see progress as you go along, on that sort of, on that journey and just how you're sort of balancing the sort of last mile logistics against product availability. The last one was just really on market share positions. This is another one that's come up every now and again. Just how do you see your market share developing across your kind of, key franchises? Are there areas you're willing to sort of give up, or sort of step away, if they're not sort of high enough growth areas? I'd just be kinda curious to hear your thoughts on that. Thank you. Hi, Robert. I'll take the sports VBP. I'll reiterate, we do not... you know, discussions have started with the government. It's simply a data request at this point, so we try to frame to give you a feel for what the data request represent. As we said, it's about 1% to 1.5% of our revenue, and therefore it's too early to talk about impact. You can refer back to the orthopedics VBP, where we were able to take action. Again, we do not know if it will be similar to the orthopedics VBP. It could take a different shape. It's far too early to jump the bridge and draw conclusions in terms of what needs to be done. As of today, we framed for you the revenue that is under consideration. Just to build on that point, even if the levels get to kindopedics levels of VBP, we don't see this as a reason to change our midterm guidance, 'cause the range of impact that we see are within the range of risks and opportunities that we consider in building our guidance. We don't see a reason to change our guidance as a result of the VBP impact. That's important to underscore on this call, even if the VBPs get to sports VBP price levels get to orthopedics levels of price reductions. Second, on your point around product availability, let me parse this with orthopedics versus kind of the rest of it. In orthopedics, our product availability challenges have only partially to do with broader supply chain challenges. As you've kind of suggested, implied in your questions, there's a lot around last mile logistics that we haven't gotten right that has resulted in low product availability, even as we are having high levels of inventory. On that, we called out improvements At the full year 2022 earnings or the full year 2022 call. One quarter in, we've only improved upon that position in SOFR. We didn't necessarily cite the number for you, in fact, at the end of Q1, we're in even better position around SOFR than we were at the end of Q4. Continued improvements in our processes that's leading to better availability for sets. We've got a better cadence around replenishment. We've called out some highlights for you in our commentary around that. We've got more work to do there yet to get to where the industry is around kind of SOFR. We'll take another three quarters or so to get to, I would say, industry levels of product availability in orthopedics. I'm actually very pleased with the kind of improvements we're making operationally to get there. Ultimately, where we're looking to get to is really better asset efficiency, right? Bring inventory levels down at the same time that we're improving SOFR or product availability. We're well along that journey there. The backdrop, though, is around broader supply chain interruptions that's really impacted our sports business and ENT. We're able to power through that and post, you know, impressive growth numbers in sports and ENT despite those supply chain challenges. Those are day-to-day, continue to be day-to-day. There's some improvements in some areas and not enough in others. It is very much a kinda hand-to-mouth kinda thing. You know, the categories haven't changed. It's semiconductors, it's resins, it's polymers, various electromechanical components. The specifics vary month to month, but we're very much not out of the woods there in terms of getting at the steady state. We had a little bit of that impact also in orthopedics, particularly related to polymer in the first couple months of the quarter, but we were able to kind of work through that. Just wanted to call that out as a point of distinct from broader availability. In terms of market share position, as I mentioned, in orthopedics on the back of the rewiring, the improvements in operations, improvements in commercial kinda operations improvements or the new incentive scheme we've rolled out, we do expect that to translate into at or above market growth over time. We're just not at that point in time yet. We've laid the groundwork, we've made some important steps. The building blocks are in place, but we've got to let that kinda play through before it translates into market share gains for the category. In sports and in ENT, we continue to set the pace. Pleased with the level of progress there and even relative to market. We've been in a good place, and we've consistently delivered over the course of time. We expect to do that into the future. In terms of looking at are we willing to step away from places, I think, the most salient example has come up a couple times on this call today, is trauma in China. You know, it's an area where we could have gone for growth at the expense of margin. We decided that we would be cautious there and go for a more disciplined, profitable growth. There are other markets we've called out China, but there are also smaller markets where in particular product lines, particular businesses we've chosen, to step away rather than just go for growth alone, right? We are prepared to do that. We have done that. Trauma is one of those places. We are looking to do that in other places as well. At the end of the day, we're focused on growth, but actually more important than just growth alone is profitable growth. Thank you. This concludes today's question and answer session. I'd like to pass the conference back over to Deepak Nath for any closing remarks. Please go ahead. Great. Thank you for all of your interest and the questions. We look forward to coming back to you with our half year results in three months' time. This concludes today's conference call. Thank you all for your participation. You may now disconnect your lines.