REG - Convatec Group PLC - Convatec FY25 Results
Tue 07:00
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RNS Number : 0838U Convatec Group PLC 24 February 2026
24 February 2026
Preliminary results for the year ended 31 December 2025
Strong delivery drives revenue growth, margin progress & mid-teens
adjusted EPS growth
Upgrading medium-term organic growth target to 6-8%
Key financial highlights for year ended 31 Dec Reported Adjusted(5)
FY 25 FY 24 Change FY 25 FY 24 Change CC
Revenue $2,439m $2,289m 6.5% $2,439m $2,289m 6.5% 5.0%
Operating profit $316m $325m (2.7)% $544m $485m 12.1% 10.2%
Operating margin 13.0% 14.2% (120) bps 22.3% 21.2% 110 bps 100 bps
Diluted EPS 8.6 cents 9.3 cents (7.1)% 17.6 cents 15.2 cents 16.0%
Free cash flow to equity(†) $362m $361m 0.1%
Dividend per share 7.244 cents 6.416 cents 13%
Percentage movements throughout this release are calculated on actual
unrounded numbers. (†) Free cash flow to equity has been redefined,
separating growth capex & certain non-cash items. On a comparable basis to
FY24, free cash flow to equity was $219m (2024: $302m; also see page 15).
FY 25 financial highlights: strong delivery, in line with our guidance
· Organic revenue excluding InnovaMatrix(®) up 6.4% (2024: 6.8%);
including InnovaMatrix(®) 4.8%(1); reported growth 6.5%
· Adjusted operating margin(2) up c.110 bps to 22.3%. Adjusted diluted
EPS(2) up 16.0%
· Strong cash generation funding re-investment & returns: $185m
capex, $140m dividend & $300m share buyback
Broad-based organic revenue growth across categories, geographies and products
· AWC(4): 4.1%(1) ex-InnovaMatrix(®), led by a growing contribution
from ConvaFoam(TM) and further Aquacel(®) Ag+ Extra(TM) growth.
InnovaMatrix(®3) revenue of $69m (<3% of Group), down 30% YoY
· OC(4): 4.5%(1) supported by new patient starts in the US and Europe,
Esteem Body(TM) launch and growth in GEM
· CC(4): 6.6%(1) driven by volume growth in the US, excellent customer
service and growing international sales
· IC(4): 12.5%(1) with continued strong demand for our infusion sets in
both diabetes and non-diabetes treatments
Innovative pipeline driving new product launches and winning share
· In AWC, ConvaFoam(TM) delivered excellent growth and is taking
segment share. We also achieved EU and UK regulatory approval for
ConvaNiox(TM), our highly innovative wound dressing powered by nitric oxide,
with revenue expected to grow from 2027
· In OC, Esteem Body(TM) performed very strongly and is ahead of our
plan. We also secured our first US Group Purchasing Organisation (GPO)
contract win in over 5 years, plus a further GPO win post-year end
· In CC, our compact catheter GentleCath Air(TM) for Women is winning
segment share, and we are progressing towards launch of the male version in
2026
· In IC, we achieved our fastest organic growth from new customers and
therapies, particularly Neria(TM) Guard for AbbVie's Parkinson's disease
treatment, where we have significantly extended our long-term supply contract
Confidence in FY26 outlook: another year of double-digit EPS(2) growth
· Group organic revenue growth excluding InnovaMatrix(®3) of 5-7%
(unchanged), with growth weighted to H2
· InnovaMatrix(®) revenue of c.$20m(3), representing a headwind of c.
2% of Group revenue in FY26 and c.3% in H1 26
· Adjusted Group operating margin(2) ≥23.0%, inclusive of c.20 bps of
incremental YoY tariff costs, all in H1
· Double-digit adjusted EPS(2) growth (unchanged)
· Capex of $200-$230m, including growth capex of $135-165m, as we
invest in all categories to meet rising demand
· Strong cash generation, with c.100% equity cash conversion(†)
Increasing medium-term organic revenue growth target
· Upgrading annual organic revenue growth target to 6-8% (previously
5-7%) from 2027. This acceleration follows successful implementation of our
strategy and will be driven by our rich innovation pipeline
· Mid-20s% (24-26%) adjusted operating margin(2) by 2027
· Sustainable double-digit adjusted annual EPS(2) growth and
double-digit free cash flow to equity CAGR
Jonny Mason, Chief Executive Officer, commented:
"Convatec performed strongly in 2025, demonstrating further resilient growth.
We delivered broad-based organic revenue growth across all categories,
supported by new product launches, operating margin expansion, mid-teens
growth in adjusted earnings per share and strong cash conversion.
"Looking ahead, we are increasing our medium-term revenue growth target to
6-8% from 2027. This acceleration follows the successful implementation of our
strategy and is underpinned by our rich innovation pipeline. These results are
also testament to our great team of Convatec colleagues who bring our promise
of forever caring to life daily for the millions of people around the world
who rely on our trusted medical solutions."
2025 financial summary
· Adjusted operating profit(2) up 12.1% to $544m. Reported operating
profit down 2.7% to $316m, including a $72m impairment of the Triad intangible
asset given the InnovaMatrix(®) CMS rate change (page 4)
· Adjusted operating margin(2) of 22.3%, up c.110 bps YoY. Reported
operating margin of 13.0%, down 120 bps YoY
· Adjusted diluted EPS(2) increased 16.0% to 17.6 cents. Net finance
costs decreased $10m YoY to $68m given lower average net debt; adjusted tax
rate unchanged at 24.0%. Reported diluted EPS 8.6 cents (2024: 9.3 cents)
· Record investment to support future growth, with growth capex of
$121m (2024: $59m) and operational capex of $64m (2024: $63m) (see page 3)
· Free cash flow to equity(5) before growth capex(†) of $362m (2024:
$361m), representing equity cash conversion(5) of 101% (2024: 116%). Equity
cash conversion on a comparable basis to the prior year was 61% (2024: 97%)
· Secured investment grade status with all three large credit agencies,
extended our financing maturity with new $500m ten-year senior unsecured note
· Returned $300m to shareholders via share repurchases
· Net debt of $1,330m (2024: $1,058m), representing an adjusted EBITDA
ratio of 2.0x (2024: 1.8x), in line with target
· As a sign of confidence in our outlook and strategy, the Board
recommends a final dividend of 5.367 cents, resulting in a full year dividend
of 7.244 cents, an increase of 13%. The payout ratio of 40% (2024: 42%) of
adjusted net profit is in the middle our target range of 35-45%
Investor and analyst presentation
The results presentation will be held at 09:00hrs (UK time) today. The event
will be simultaneously webcast and the link can be found here
(https://www.investis-live.com/convatec/696617bb7cc8c10017f61082/kuyh) . The
full text of this announcement and the presentation for the analysts and
investors meeting can be found on the 'Results centre' page of the Convatec
Investor Relations website (link here)
(https://www.convatecgroup.com/investors/results-centre/) .
Scheduled events
Convatec Capital Markets Day 2026 9 April 2026
AGM & trading update for the 4 months ending 30 April 2026 21 May 2026
Half-year results for the six months ending 30 June 2026 4 August 2026
Dividend calendar
Ex-dividend 16 April 2026 Payment date 28 May 2026
Record date 17 April 2026
About Convatec
Pioneering trusted medical solutions to improve the lives we touch: Convatec
is a global medical products and technologies company, focused on solutions
for the management of chronic conditions, with leading positions in Advanced
Wound Care, Ostomy Care, Continence Care, and Infusion Care. With over 10,000
colleagues, we provide products and services in around 90 countries, united by
a promise to be forever caring. Our solutions provide a range of benefits,
from infection prevention, treatment for hard to heal wounds, at-risk skin and
ulcerated tissue to supporting debilitating conditions, improved patient
outcomes and reduced care costs. Convatec's revenues in 2025 were over $2
billion. The company is a constituent of the FTSE 100 Index (LSE:CTEC). To
learn more please visit http://www.convatecgroup.com
(http://www.convatecgroup.com)
Contacts
Analysts & Investors David Phillips, Head of Investor Relations +44 (0) 7909 324994
Sheebani Chothani, Investor Relations Director ir@convatec.com (mailto:ir@convatec.com)
Media FGS Global Convatec-UK@fgsglobal.com (mailto:Convatec-UK@fgsglobal.com)
(1) Organic growth is calculated by applying the applicable prior period
average exchange rates to the Group's actual performance in the respective
period and excluding acquired and disposed/discontinued businesses.
Acquisitions and disposals added 20 bps to constant currency growth in 2025,
shown on page 5
(2) Consistent with prior years, management present adjustments to the
reported figures to produce more meaningful measures in monitoring the
underlying performance of the business. These are set out in the table on page
12
(3) In October 2025, Medicare Administrative Contractors announced a price
rate of $127/cm(2) for Skin Substitutes and Tissue-Based Products. As reported
at our H1 25 results
(https://www.convatecgroup.com/siteassets/investors/convatec-2025-interim-results_press-release.pdf)
and November 2025 trading update
(https://www.convatecgroup.com/siteassets/investors/convatec-10-month-2025-trading-update-press-release.pdf)
, we expect this will impact FY26 Group revenue by 2%. As a result of this
significant reduction in revenue, and in advance of returning to growth, we
have recorded a $72m impairment of the Triad Life Sciences acquisition
intangible asset (see Financial Review for further details). See page 4 for
more on InnovaMatrix(®).
(4) AWC is Advanced Wound Care; OC is Ostomy Care; CC is Continence Care and
IC is Infusion Care.
(5) Certain financial measures in this document, including adjusted results,
are not prepared in accordance with International Financial Reporting
Standards (IFRS). All adjusted measures are reconciled to the most directly
comparable measure prepared in accordance with IFRS in the Non-IFRS Financial
Information below pages 18 to 23.
Chief Executive Officer's review - strong delivery, in line with our guidance
Performance was strong in 2025, evidenced by 6.4% organic revenue growth
excluding InnovaMatrix(®) (4.8% including InnovaMatrix(®); reported 6.5%),
adjusted operating margin up c.110 bps to 22.3% and adjusted diluted EPS(5) up
16.0% to 17.6 cents (reported diluted EPS 8.6 cents). Growth was broad-based
across categories, geographies and products.
In 2025 we sold over 1 billion high-quality consumable products and are among
a small number of leaders in the categories in which we operate, and we are
market-leading in categories contributing over 60% of Group revenues. There
are notable synergies across the Convatec categories in areas such as product
and clinical development, automated manufacturing, polymer and biomaterial
sciences, adhesive technologies, sales & marketing and shared
mid-and-back-office processes.
Further growth in adjusted operating margin
Adjusted operating margin(2) increased by 110 bps to 22.3% (22.2% on a
constant FX basis; 13.0% reported). This was despite a $30m reduction in
InnovaMatrix(®) sales (see page 4), and c.$6m incremental tariffs YoY. Margin
growth was driven by further simplification and productivity in operations and
G&A, pricing and operational leverage.
Our simplification and productivity initiatives continued to progress well. In
Global Quality & Operations, we further increased automation in our
facilities and continued to optimise our plant network for scale and
efficiency. In commercial areas, our Centres of Excellence (CoE) in Global
Marketing & Sales, Pricing and Market Access & Reimbursement,
positively supported our delivery across each category.
We delivered further G&A savings by expanding Convatec Business Services
(CBS) beyond Finance, IT and HR activities and CBS will continue to expand in
2026, supported by ongoing adoption of AI and automation. Adjusted G&A(2)
was flat YoY at $166m, representing 6.8% of revenue (2024: 7.2%). Overall
adjusted operating expenses represented 38.4% of revenue (2024: 39.8%).
Adjusted operating margin has increased 460 bps since 2021 (+490 bps in
constant currency), despite high inflation in 2022/23. We are on track to
deliver our medium-term adjusted operating margin(2) target of mid-20s% by
2027. Overall, our resilient business model is highly scalable and is
well-positioned to deliver sustainable double-digit annual growth in adjusted
EPS(5).
Positively executing our capital allocation priorities to accelerate growth
Our strong cash generation supports both investment for growth and returns to
shareholders, consistent with our clear capital allocation priorities. These
are: 1) fund organic investment to drive future revenue growth and innovation;
2) pay an annual dividend consistent with 35-45% payout ratio; 3) conduct
focused M&A to strengthen competitive offering, and 4) any surplus capital
would be available for return to shareholders. Our target net debt to adjusted
EBITDA leverage remains 2.0x (2025: 2.0x).
Having transformed key areas of our production network in recent years, our
2025 focus was on expanding capacity and new product development. We have
further categorised capital expenditure. Growth capex develops new products
and creates or increases capacity, and in 2025 was $121m (2024: $59m).
Operational capex maintains our existing operations as well as improving
technology, capability and productivity and in 2025 was $64m (2024: $63m).
As evidence of our priorities in action, in addition to increased growth
capex, we grew our dividend by 13%, paid net earn-outs of $25m in respect of
historic M&A and completed a $300m share buyback.
Given the exciting product pipeline and high demand for our products, we have
identified further compelling organic investment opportunities to accelerate
growth. We expect total capex in 2026 of $200-$230m, including growth capex of
$135-$165m. We expect operational capex to run at c.2.5% of revenue
annually. Growth capex will flex to the opportunities available, consistent
with our clear capital allocation framework.
We are investing across all categories, but particularly in IC where we see
significant demand, and our growth is underpinned by long-term contracts. We
are also diversifying manufacturing across existing locations, further
increasing our resilience. In AWC, we are adding capacity in ConvaFoam(TM) and
investing to underpin three further product launches over the next two years
(ConvaNiox(TM), Aquacel(TM) ConvaFiber(TM) and ConvaVac(TM)). In OC, our
Esteem Body(TM) launch is delivering ahead of plan, and we are adding further
production capacity while also planning for the launch of Natura(®) Body in
2027. In CC, we are investing in the launch of GentleCath Air Pocket™ and
GentleCath Air Set™, our new compact catheter products. We expect all these
investments will be accretive to Group return on capital.
Accelerating organic revenue growth to 6-8% from 2027
2025 represented our fifth year of broad-based organic revenue growth within
our target 5-7% range (ex-InnovaMatrix(®)) and our fourth year of adjusted
operating margin progress.
We believe our growth is set to accelerate, driven by successful
implementation of our strategy, recent product launches and our rich product
pipeline. Faster growth will also be supported by higher growth capex. As a
result, we are increasing our organic revenue growth target from 5-7% to 6-8%,
from 2027.
Further information and our plans on how we will deliver faster growth will be
provided at our Capital Markets Day on 9 April in London.
Delivering for our patients, payors and customers
Our strategy focuses on 1) superior patient outcomes and choice; 2) value for
money for payors and 3) outstanding results for healthcare professionals
(HCPs). This enables sustainable growth, despite reimbursement dynamics.
We have the strongest product pipeline in our history, with eight products
launched in 2022-2025 and a further eight due to be launched in 2026-27. We
have also made significant progress in generating clinical evidence and
building market access capability.
Update on US reimbursement
In setting our medium-term guidance of 6-8% annual revenue growth, we assume a
certain level of reimbursement dynamics. We also consider the breadth of
revenues across categories, geographies and products, our innovation pipeline
and new product vitality index.
Ostomy & Catheters - proposed competitive bidding program
As previously reported, on 28 November 2025
(https://www.convatecgroup.com/media-articles/press-releases/2025/convatec-notes-cms-decision-on-medicare-competitive-bidding-program-in-the-united-states/)
Centers for Medicare & Medicaid Services (CMS) released a final rule
outlining updates for the 2026 Medicare Home Health payment system and the
Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS)
Competitive Bidding Program (CBP). Medicare beneficiaries currently enjoy
access to a wide range of personalised catheter and ostomy products, plus
significant support and advice. The proposed rule changes could impact the
choice and supply available to patients and providers. CMS will follow an
extensive process to implement the changes.
CMS has stated they are seeking 8-10 large, nationwide suppliers in each of
Continence and Ostomy, compared to several thousand suppliers today. Should
CMS proceed with CBP, we are well-placed to grow given our leading customer
service and loyalty, attractive segment positions and differentiated
portfolio. We continue to anticipate a 1-2% reduction in Group sales in the
year of implementation, which CMS has indicated will be 2028.
Changes to biologics sector reimbursement
On 31 October 2025
(https://www.convatecgroup.com/media-articles/press-releases/2025/convatec-notes-cms-payment-plans-for----skin-substitutes-in-the-united-states/)
, CMS published a decision outlining their revised payment rate of $127.28 per
sq cm for skin substitutes with effect from 1 January 2026. This payment rate
represented a significant price reduction for Convatec's InnovaMatrix(®)
product. On 24 December 2025
(https://www.convatecgroup.com/media-articles/press-releases/2025/convatec-welcomes-withdrawal-of-local-coverage-determinations-lcds-on-skin-substitutes/)
, CMS further announced that Local Coverage Determinations for skin
substitutes had been fully withdrawn. Convatec welcomed this decision, which
meant appropriate Medicare patients and their HCPs across the US can continue
to benefit from all InnovaMatrix(®) products, nationally.
InnovaMatrix(®) is a highly effective product with significant health
benefits to patients and HCPs. It has strong user feedback and real-world
clinical evidence. Our randomised controlled trials continue to progress
towards publication later this year.
In addition to strong clinical benefits, InnovaMatrix(®) has competitive
manufacturing costs. We are well positioned to support Medicare patients and
their HCPs across the United States with all InnovaMatrix(®) products, which
have generated strong user feedback and clinical evidence. We see
opportunities to gain volume in 2026, and believe we will deliver long-term,
profitable growth from InnovaMatrix(®).
This CMS decision represents an estimated headwind in 2026 of approximately 2%
of Group revenue, and therefore we expect InnovaMatrix(®) revenues in FY26 of
c.$20m (2025: $69m). As a result of the estimated impact on future forecasts,
we have recorded a $72m impairment in respect of the intangible asset
identified upon the acquisition of Triad Life Sciences in 2022 (see Financial
Review).
FY26 outlook: confidence in delivering our financial targets
· Reiterating our guidance for double-digit adjusted EPS(2) growth
(unchanged)
· Group organic revenue growth excluding InnovaMatrix(®3) of 5-7%
(unchanged). We expect revenue growth will be second half weighted as product
launches build
· We expect the following category growth:
o AWC(4): mid-single digit growth excluding InnovaMatrix(®).
InnovaMatrix(®) revenue of c.$20m
o OC(4): mid-single digit growth
o CC(4): mid-single digit growth
o IC(4): high-single digit growth
· Adjusted operating margin of ≥23.0%, including c.20 bps of
incremental tariff costs
· We expect H1 26 adjusted operating margin will grow slightly
versus H1 25, as the reduction in InnovaMatrix(®) revenue and incremental
tariff costs impact H1
· If current spot rates were to hold for the remainder of FY26, the
estimated tailwind to FY26 revenue growth would be c.180 bps, while the
adjusted operating margin headwind would be c.30 bps
· Adjusted net finance expense of $70-75m (2025: $68m), assuming no
material changes in US interest rates
· Adjusted book tax rate of c.24%, with the cash tax rate again
lower
· Total capex of $200-$230m (more on page 3). Within this, we
expect growth capex of $135-165m
· Opex R&D spend of $100-$110m; cash costs of adjusting items
of <$20m
· Working capital growth below revenue growth
Category review
Group revenue growth was broad-based across all categories, increasing by 4.8%
organic, 6.5% reported and 5.0% on a constant currency basis (net M&A
added c.20 bps). Organic revenue growth ex-Innovamatrix was 6.4%.
2025 2024 Reported growth / (decline) Foreign exchange impact Constant currency(2 )growth / (decline) Net M&A impact Organic(1 )growth
$m $m
Revenue by Category
AWC ex-InnovaMatrix(®) 684 644 6.2% 1.9% 4.3% 0.2% 4.1%
Ostomy Care 676 634 6.6% 1.6% 5.0% 0.5% 4.5%
Continence Care 537 501 7.1% 0.3% 6.8% 0.2% 6.6%
Infusion Care 473 411 15.1% 2.6% 12.5% - 12.5%
Group revenue excluding IMX 2,370 2,190 8.2% 1.6% 6.6% 0.2% 6.4%
InnovaMatrix(®) revenue 69 99 (29.7%) - (29.7%) - (29.7%)
Group revenue 2,439 2,289 6.5% 1.5% 5.0% 0.2% 4.8%
Advanced Wound Care
Revenue of $753m increased by 1.4% on a reported basis and decreased by 0.4%
on an organic basis. Excluding InnovaMatrix(®), AWC organic growth was 4.1%
(FY24: 4.2%). As expected, InnovaMatrix(®) declined by 30% to $69m given
market uncertainty around the now-withdrawn Local Coverage Determinations. As
noted on page 4, we expect InnovaMatrix(®) revenue of c.$20m in 2026 due to
the revised payment rate of $127.28 per sq cm for skin substitutes.
Growth was driven by good performance in North America and GEM. We saw an
excellent contribution from ConvaFoam(TM) which is taking share in the US and
Europe. Aquacel(®) Ag+ Extra(TM), our leading antimicrobial product,
continued to deliver good growth.
AWC key focus areas are:
· Building on strong positions and extending recent launches to new
markets:
o Continuing to grow our leading Hydrofiber(®) brand Aquacel(®) Ag+
Extra(TM)
o Ongoing launch and geographic expansion of ConvaFoam(TM), including new
capacity
o Further enhanced commercial execution and increasing sales per employee
· Continuing to develop new products and the AWC pipeline
o Generating clinical evidence from the ongoing European launch of
ConvaNiox(TM), our groundbreaking nitric oxide dressing, and planning for our
launch in the US (see below)
o Aquacel(TM) ConvaFiber(TM), our enhanced Hydrofiber(®) dressing, approved
in the EU & US, launching in H1 26
o ConvaVac(TM), our single-use negative pressure wound therapy product,
launching in H2 26
· Positioning InnovaMatrix(®) to win in US skin substitutes
o Progressing our RCTs, reorganising our sales team and optimising our
go-to-market strategy
o Gain volumes from high-cost competitors
o Building the foundations to deliver growth in 2027 and beyond
Update on ConvaNiox(TM)
We were delighted to receive regulatory approval
(https://www.convatecgroup.com/media-articles/press-releases/2025/convatec-receives-regulatory-approval-for-convaniox/)
in the EU and UK in April 2025 for ConvaNiox(TM), which combines advanced
dressing technology with multiple modalities including the antimicrobial and
antibiofilm power of nitric oxide. ConvaNiox(TM) delivers a significantly
improved healing environment (achieving 60% more DFUs healed and three times
faster wound area reduction compared to standard care in an RCT(1)). We have
commenced a limited market release in Europe. Feedback from healthcare
professionals is very encouraging and we continue to gather clinical evidence.
We will also initiate the US regulatory clearance process in 2026.
(1) Edmonds ME, et al. Multicenter, randomized controlled, observer-blinded study of a nitric oxide generating treatment in foot ulcers of patients with diabetes-ProNOx1 study. Wound Repair Regen. 2018;26(2):228-237
Ostomy Care
Revenue of $676m grew by 6.6% on a reported basis, by 5.0% in constant
currency and 4.5% on an organic basis.
Regionally, good growth in the US was supported by our Home Services Group
(HSG) with a continued increase in patient starts. Growth in Europe increased
and GEM was strong.
Esteem Body(TM), our one-piece soft convex product, delivered very strong
growth and is ahead of our expectations. Growth was also strong in our
Esenta™ accessory products, which represented c.20% of OC sales. Growth was
slower in Flexi-Seal™, our leading faecal management product, although we
are on track to launch our updated Flexi-Seal(TM) Air product in H1 26.
We were delighted to secure a place on the Captis Vizient US Group Purchasing
Organisation (GPO) contract for ostomy products in November 2025. This was our
first ostomy product GPO win in over five years. Additionally, in February
2026 we secured a further GPO win in OC with Premier Inc. and Premier
AscenDrive.
OC key focus areas are:
· Continuing to progress our innovation pipeline:
o Continuing to grow and win share with Esteem Body(TM)
o Launching Flexi-Seal(TM) Air, an evolution of our leading faecal management
system in the US in H1 26
o Developing Natura(®) Body, our two-piece soft convex product launching in
2027
· Further improving commercial execution across the continuum of care
(acute, post-acute and community):
o Driving US new patient starts through continued close collaboration with
HSG and strategic partners
o Enhancing patient engagement through Convatec's me+™ programme
(https://www.convatec.com/en-gb/stoma-care/campaigns/me-programme/) in key
geographies
o Increasing interactions with HCPs through our education programmes in
partnership with key stakeholders like the US Wound, Ostomy and Continence
Nurse Society(®)
Continence Care
Revenue of $537m grew by 7.1% on a reported basis, by 6.8% in constant
currency and 6.6% on an organic basis.
Performance was driven by US volume growth as we continued to gain share,
driven by our leading customer service. This was further supported by faster
growth in Convatec-manufactured products, which represented c.59% of revenues,
including strong growth in our GentleCath(TM) brands. Europe and GEM grew
strongly from a low base, again adding over 1 percentage point to CC growth,
and we are confident of adding at least one point to category growth again in
2026 from outside the US.
Our compact catheter GentleCath Air(TM) for Women continued to be well
received by HCPs and customers and is taking share.
CC key focus areas are:
· Rolling out launches to new markets:
o Further extending the launch of GentleCath Air(TM) for Women
internationally
o Introducing Cure(TM) products in Europe and GEM
o Developing GentleCath Air Pocket(TM) and GentleCath Air Set™ in 2026-27
· Further improving commercial execution globally:
o Continuing to build and strengthen commercial teams in Europe and GEM
o Increase the proportion of Convatec-manufactured products sold in our
revenue mix
o Providing the best-connected journey and experience for customers, HCPs
and payors
· Monitoring the situation around the proposed competitive bidding
program outlined on page 4
Infusion Care
Revenue of $473m grew by 15.1% on a reported basis, and by 12.5% on both a
constant currency and organic basis. Growth was driven by further strong
demand for Convatec infusion sets in both diabetes and non-diabetes therapies.
In diabetes, revenue growth was high single-digit as durable insulin pump
penetration grew led by increasing adoption of automated insulin delivery and
continuing pump innovation. Diversification of our products and customers
continued to progress very well, including mylife's YpsoPump, Beta Bionics
iLet and Tandem Mobi, plus our Extended Wear Infusion Set with Medtronic's
780G.
In non-diabetes therapies, revenue growth was high double-digit
as penetration of our Neria(TM) Guard infusion sets increased in the treatment
of pain management, immunoglobulin deficiency and Parkinson's disease. Our
fastest growth was in AbbVie's Parkinson's therapy, now approved in 35
countries, and we have significantly extended our long-term infusion set
supply contract. Non-diabetes therapies represented c.15% of IC revenue (2024:
c.10%). We are further diversifying customers with two other therapies for the
treatment of advanced Parkinson's, and we look forward to supporting new
partners with Neria(TM) Guard infusion sets.
Subsequent to the year end, on 3 February 2026
(https://www.convatecgroup.com/media-articles/press-releases/2026/update-relating-to-unomedical-following-united-states-food-and-drug-administration-fda-remote-regulatory-assessment/)
we announced that our subsidiary Unomedical Devices, S.A. de C.V (Unomedical)
had received a Warning Letter from the FDA, focused on reporting procedures
and protocols relating to the quality management system. Unomedical takes
these matters very seriously and is actively engaging with the FDA to resolve
the matters identified as soon as possible. The letter does not raise concerns
relating to product safety or place any restrictions on the production,
marketing, manufacturing or distribution of any Unomedical products. We
continue to expect our Infusion Care business to grow high single-digit
percentage in 2026.
IC key focus areas are:
· Addressing and resolving the concerns identified in the FDA Warning
Letter noted above
· Supporting customer innovation and expansion in diabetes:
o Medtronic's 780G extended wear, Tandem Mobi, Beta Bionics iLet and mylife
YpsoPump
o Increasing penetration of automated insulin delivery instead of multiple
daily injections
· Continuing to diversify outside diabetes:
o Supporting AbbVie's Parkinson's launch globally and Supernus in the US
o Increasing penetration of subcutaneous infusion for other therapies such
as pain management
o Developing our Neria(TM) Guard platform to work with other therapies
· Expanding our capacity and operations:
o To meet accelerating demand, our IC investments will significantly
increase our Inset(TM) & Neria(TM) Guard platforms capacity by 2028. A
material proportion of this is supported by long-term contracts
o Increasing our resilience and diversifying our manufacturing locations
FISBE strategy summary: further strong delivery in 2025
In its fifth year, our FISBE strategy continued to deliver.
Focus: we operate across four chronic care categories, with high recurring
revenue, across 12 key countries. Revenue growth was strong across these focus
areas, supported by new product launches and our deep focus on customers.
Innovation: we invested c.$103m in R&D opex in 2025. We have the strongest
new product pipeline in our history and continued to strengthen Technology
& Innovation capabilities. We have launched eight new products in the last
three years and are extending these launches across our focus markets. We are
also on track to launch a further eight in 2026-27. Our vitality index
continues to demonstrate high levels of innovation. As a reminder, products
launched since 2022 include:
- ConvaFoam(TM) in the US and key European markets
- ConvaNiox(TM) in selected European markets, including the UK
- Esteem Body(TM) in the US, Europe and GEM focus markets
- Extended Wear Infusion Set in US for the Medtronic 780G pump
- GentleCath Air(TM) for Women in the US and key European markets
- Infusion set for the new Beta Bionics iLet Bionic Pancreas
system
- InnovaMatrix(®) in the US and starting to launch in Latin
America
- Neria(TM) Guard Infusion set for AbbVie's Parkinson's therapy
Simplify: further good progress, evidenced by c.110 bps increase in adjusted
operating margin. We continued to realise the benefits of the network
optimisation completed in 2023-24, with more production capacity at our large
Slovakia site. Ongoing investments in automation are also driving improved
productivity (also see page 3).
Build: investments in R&D, capex and clinical knowledge are clear examples
of adding capability to Convatec. This includes our long-term R&D US and
UK R&D expansion commitment announced in October
(https://www.convatecgroup.com/media-articles/press-releases/2025/convatec-announces-plans-to-invest-more-than-$1-billion-in-rd-facilities---major-expansions-in-the-us-and-uk/)
. In the period we invested $121m of growth capex (2024: $59m). This included
a new high-speed line in Infusion Care (due to be in operation from 2027),
increased capacity for Esteem Body(TM) and ConvaFoam(TM) (both due in 2026)
and further packaging automation in AWC. Our Marketing & Sales Centre of
Excellence (CoE) launched a new global patient service platform in our me+
(https://www.convatec.com/en-gb/stoma-care/campaigns/me-programme/) (TM
(https://www.convatec.com/en-gb/stoma-care/campaigns/me-programme/) )
programme (https://www.convatec.com/en-gb/stoma-care/campaigns/me-programme/)
, which marked its tenth anniversary. To coincide, Convatec published a new
report
(https://www.convatecgroup.com/media-articles/press-releases/2025/stigma-not-condition-is-the-biggest-barrier-for-1-in-3-people-living-with-chronic-conditions/)
revealing that millions of people feel they need to hide their health
conditions in plain sight.
Execute: our Strategic Pricing CoE, in collaboration with categories,
supported the delivery of 30 bps improvement in pricing, included in our gross
margin. Our Market Access & Reimbursement CoE continued to support our
existing brands and new product pipeline. In clinical evidence, we made
significant progress across all categories, including in our ongoing
InnovaMatrix(®) Randomised Controlled Trials (RCTs), which we are on track to
publish in 2026.
We are committed to executing responsibly to create value. In line with our
goal to achieve net zero by 2045, we reduced Scope 1 and Scope 2 greenhouse
gas emissions by 6.9% in 2025. We continued to build an inclusive culture,
achieving a top decile employee engagement score. In 2025, over 210,000 HCPs
and patients participated in Convatec's educational programmes, and we
supported Partners In Health who reached over 250,000 people living with
chronic conditions in underserved communities.
Principal risks
The Board reviews and agrees our principal risks on a bi-annual basis, taking
account of our risk appetite together with our evolving strategy, current
business environment and any emerging risks that could impact the business.
Our system of risk management and internal controls continues to operate
effectively, and updates to the principal risks and mitigation plans are made
as required in response to changes in our risk landscape. Details of our
enterprise risk management framework are set out in the Group's 2025 Annual
Report and Accounts to be published in early March 2026.
The Board has reviewed the principal risks as at 31 December 2025. The
principal risks have been assessed against the context of the global economic
pressures that are impacting all businesses at present and the wider uncertain
geopolitical climate. Our principal risks are set out below and listed in
order of their potential impact on our ability to successfully deliver on our
strategy:
1. Operational Resilience & Quality; 5. Innovation & Regulatory;
2. Customer & Markets; 6. Legal, Compliance & Privacy;
3. Cyber & Information Security; 7. People; and,
4. Political & Economic Environment; 8. Environment & Communities
We continue to monitor and manage all principal risks to ensure they are
appropriately mitigated, and in 2025, we have elevated the following principal
risks:
· Operational Resilience & Quality - we continue to invest in
manufacturing resilience and production capacity improvements, enhancing
third-party partnerships and improving our quality management procedures and
systems; and
· Customer & Markets risk - global macroeconomic factors
continue to impose financial spending constraints impacting healthcare
pricing, reimbursement models and market growth.
In addition, we are closely monitoring the impact of global trade tensions and
the geopolitical environment on our Political & Economic Environment risk.
The Board assesses the overall risk profile of the Group to ensure it is
within our risk appetite. In making this assessment the Board considered the
impact of the broader risk landscape including inflation and interest rates,
supply chain pressures, the volatile geopolitical environment and ongoing
conflicts on the business and the effectiveness of our controls and mitigation
actions. We work to build further resilience in our operations and to ensure
that each principal risk remains within our risk appetite.
Forward Looking Statements
This document includes certain forward-looking statements with respect to the
operations, performance and financial condition of the Group. Forward-looking
statements are generally identified by the use of terms such as "believes",
"estimates", "aims", "anticipates", "expects", "intends", "plans", "predicts",
"may", "will", "could", "targets", continues", or their negatives or other
similar expressions. These forward-looking statements include all matters that
are not historical facts.
Forward-looking statements are necessarily based upon a number of estimates
and assumptions that, while considered reasonable by the Company, are
inherently subject to significant business, economic and competitive
uncertainties and contingencies that are difficult to predict and many of
which are outside the Group's control. As such, no assurance can be given that
such future results, including guidance provided by the Group, will be
achieved. Forward-looking statements are not guarantees of future performance
and such uncertainties and contingencies, including the factors set out in the
"Principal Risks" section of the Strategic Report in our Annual Report and
Accounts, could cause the actual results of operations, financial condition
and liquidity, and the development of the industry in which the Group
operates, to differ materially from the position expressed or implied in the
forward-looking statements set out in this document. Past performance of the
Group cannot be relied on as a guide to future performance.
Forward-looking statements are based only on knowledge and information
available to the Group at the date of preparation of this document and speak
only as at the date of this document. The Group and its directors, officers,
employees, agents, affiliates and advisers expressly disclaim any obligations
to update any forward-looking statements (except to the extent required by
applicable law or regulation).
Financial review
Revenue grew by 6.5% on a reported basis and 5.0% on a constant currency
basis. Organic revenue growth excluding InnovaMatrix® was 6.4%.
Adjusted operating profit margin was 22.3%, representing an increase of 110bps
over the previous year, driven by further simplification and positive
operational leverage. Adjusted operating profit margin has improved by 460bps
over the past four years due to productivity initiatives and commercial
discipline.
Adjusted diluted EPS increased by 16.0% to 17.6 cents per share (2024: 15.2
cents per share). Reported diluted EPS was 8.6 cents per share (2024: 9.3
cents per share). Net cash generated from operations improved by 5.1% to $605m
(2024: $576m), with free cash flow to equity of $362m consistent with the
prior year (2024: $361m). Equity cash conversion was 100.8% (2024: 115.6%).
For 2026, we expect further expansion of Group adjusted operating profit
margin to at least 23.0% and to deliver another year of double-digit growth in
adjusted diluted EPS. We are on track to deliver 5.0% -7.0% organic revenue
growth excluding InnovaMatrix®, driven by our broadening product portfolio
and focused commercial execution.
Reported and Adjusted results
The Group's financial performance, measured in accordance with IFRS, is set
out in the Condensed Consolidated Financial Statements and Notes thereto on
pages 24 to 39 and referred to in this Annual Report as "reported" measures.
The commentary in this Financial review includes discussion of the Group's
reported results and alternative performance measures (or adjusted measures)
(APMs). Management and the Board use APMs as meaningful measures in monitoring
the underlying performance of the business. These measures are disclosed in
accordance with the ESMA guidelines and are explained and reconciled to the
most directly comparable reported measures prepared in accordance with IFRS
on pages 18 to 23.
Revenue and revenue growth on constant currency and organic bases
are non-IFRS financial measures and should not be viewed as replacements of
IFRS reported revenue and revenue growth. Constant currency and organic growth
are defined in the Glossary to the Annual Report and Accounts.
All values are rounded to the nearest million ($m) except where otherwise
indicated. Percentage movements throughout this report are calculated on
actual unrounded numbers.
Group financial performance
Reported Reported Adjusted(1) Adjusted(1) Adjusted @ CC(2)
2025 2024 2025 2024 2025 Change
$m $m $m $m $m %
Revenue 2,439 2,289 2,439 2,289 2,404 5.0%
Gross profit 1,371 1,284 1,481 1,396
Operating profit 316 325 544 485
Operating profit margin % 13.0% 14.2% 22.3% 21.2%
Profit before income taxes 230 246 471 411
Net profit 175 191 358 312
Basic earnings per share 8.6¢ 9.3¢ 17.7¢ 15.3¢
(cents)
Diluted earnings per share 8.6¢ 9.3¢ 17.6¢ 15.2¢
(cents)
Dividend per share (cents) 7.244¢ 6.416¢
(1 )These non-IFRS financial measures are explained and reconciled to the
most directly comparable financial measures prepared in accordance with IFRS
on pages 18 to 23.
(2 )Adjusted 2025 at constant currency is calculated on 2025 adjusted results
translated at 2024 actual FX rates.
Revenue
2025 2024 Reported growth Foreign Constant currency growth Organic growth
exchange
impact
$m $m % % % %
Advanced Wound Care ex-InnovaMatrix 684 644 6.2% 1.9% 4.3% 4.1%
Ostomy Care 676 634 6.6% 1.6% 5.0% 4.5%
Continence Care 537 501 7.1% 0.3% 6.8% 6.6%
Infusion Care 473 411 15.1% 2.6% 12.5% 12.5%
Group revenue ex-InnovaMatrix 2,370 2,190 8.2% 1.6% 6.6% 6.4%
InnovaMatrix revenue 69 99 (29.7)% - (29.7)% (29.7)%
Group revenue 2,439 2,289 6.5% 1.5% 5.0% 4.8%
Group revenue for 2025 of $2,439m (2024: $2,289m) increased 6.5% year-on-year
on a reported basis and 5.0% on a constant currency basis.
Adjusting for foreign exchange and acquisition and divestiture-related
activities, Group revenue grew by 4.8% on an organic basis. Excluding
InnovaMatrix®, Group organic revenue growth was 6.4% and driven by
broad-based revenue growth across all categories. For more details about
category revenue performance, refer to the Operational reviews on pages 5 to
7.
Net profit
Adjusted gross profit increased by 6.1% to $1,481m (2024: $1,396m) whilst
adjusted gross profit margin decreased by 27bps to 60.7% (2024: 61.0%). The
Group delivered productivity and pricing improvements of 130bps and 30 bps
respectively, which were more than offset by the impact of inflationary
pressures of 110 bps and product mix headwinds of 80bps. On a reported basis,
gross profit increased by 6.8% to $1,371m (2024: $1,284m), with a reported
gross margin of 56.2% (2024: 56.1%).
Whilst adjusted operating expenses increased by $26m or 2.9% to $937m (2024:
$911m), this was significantly below revenue growth and has fallen as a
percentage of revenue to 38.4% (2024: 39.8%).
The increase in adjusted selling and distribution (S&D) expenses of $24m
to $668m (2024: $644m) was due to higher investment in the sales force
associated with growing the business. Reported S&D increased by $23m to
$668m (2024: $645m). Adjusted R&D of $103m (2024: $102m) remained
consistent year-on-year and, combined with an increase in R&D capital
expenditure, reflected the ongoing investment in our future pipeline of new
products. On a reported basis, R&D spend was in line with the prior year
at $111m (2024: $112m).
Adjusted G&A of $166m was similar to the previous year (2024: $165m).
Adjusted G&A as a percentage of revenue fell to 6.8% (2024: 7.2%) - we
have now successfully achieved the target set out at the 2022 Capital Markets
Day. Over the past four years, adjusted G&A expenses as a percentage of
revenue has fallen by 490bps. We have continued to standardise technology and
processes, build internal expertise and therefore reduce external third party
spend and expand the scope of our Convatec Business Services (CBS). Reported
G&A increased by 5.4% to $206m (2024: $195m) due to adjusting items which
are explained in the Alternative Performance Measures section of this report.
Reported other operating expenses increased by $63m to $70m (2024: $7m).
During the year, an impairment charge of $72m was recognised in respect of an
intangible asset - refer to commentary in the Alternative Performance Measures
section of this report.
A reconciliation between reported and adjusted operating expenses is provided
in the Non-IFRS financial information section on pages 18 to 23.
The Group delivered adjusted operating profit of $544m (2024: $485m),
representing an adjusted operating profit margin of 22.3% (2024: 21.2%).
Reported operating profit decreased by 2.7% to $316m (2024: $325m). Adjusted
net profit increased by 14.8% to $358m (2024: $312m), with the increase in
adjusted income tax expense (explained below) more than offset by the increase
in adjusted operating profit as explained above. Reported net profit decreased
by 8.1% to $175m (2024: $191m). Adjusting items are explained on pages 11 and
12.
Taxation
Year ended 31 December
2025 2024
$m Effective tax rate $m Effective tax rate
Reported income tax expense (55) 24.0% (55) 22.5%
Tax effect of adjustments (58) (41)
Other discrete tax items - (3)
Adjusted income tax expense (113) 24.0% (99) 24.0%
The Group's reported income tax expense was $55m (2024: $55m). The increase in
the reported effective tax rate was due to the 2024 rate benefit of a one-off
release of a tax liability relating to business restructuring.
The adjusted effective tax rate of 24.0% for the year ended 31 December 2025
(2024: 24.0%) was after reflecting the tax impact of items treated as
adjusting items (further details can be found in the Reconciliation of
reported earnings to adjusted earnings table in the Non-IFRS financial
information section on page 20). The adjusted effective tax rate was stable
due to an increase in uncertain tax positions being offset by an increase in
tax incentive benefits.
Earnings per share (EPS)
Adjusted basic EPS for 2025 was 17.7 cents (2024: 15.3 cents) and adjusted
diluted EPS was 17.6 cents (2024: 15.2 cents), representing increases of 16.1%
and 16.0% respectively.
Basic reported EPS was 8.6 cents (2024: 9.3 cents), reflecting the reported
net profit divided by the basic weighted average number of ordinary shares of
2,024,809,094 (2024: 2,047,643,498).
Alternative Performance Measures (APMs)
Management and the Board make adjustments to the reported figures, where
appropriate, to produce more meaningful measures in monitoring the underlying
performance of the business - APMs. These are also referred to as adjusting
items in the Annual Report and Accounts. The Group's APM policy can be found
in the Non-IFRS financial information section on pages 18 and 19 and the
following adjustments were made to derive adjusted operating profit and
adjusted net profit.
Operating profit Fair value movement of contingent consideration Non-operating income/(expense) Income tax
$m $m $m $m
2025 2024 2025 2024 2025 2024 2025 2024
Reported 316 325 (10) (5) (8) 4 (55) (55)
Amortisation of acquired intangibles 134 136 - - - - (32) (34)
Acquisitions and divestitures 4 2 10 5 3 - (4) (1)
Impairment of assets 72 - - - - - (17) -
Termination benefits and related costs 5 6 - - - - (1) (2)
Other adjusting items 13 16 - - - - (4) (4)
Other discrete tax items - - - - - - - (3)
Adjusted 544 485 - - (5) 4 (113) (99)
Adjustments made to derive adjusted operating profit in 2025 included the
amortisation of acquired intangibles of $134m (2024: $136m), of which $95m
(2024: $94m) resulted from intangible assets arising from the spin-out from
Bristol-Myers Squibb in 2008 and which will be fully amortised by mid-2026.
Acquisition and divestiture-related costs of $4m within operating profit and
$3m within non-operating expenses consisted of costs directly related to
potential and actual transactions which have been executed or aborted and the
write-off of a receivable that arose as a result of the hospital care exit in
2022.
Termination costs of $5m were in respect of one-off, fundamental
transformation projects in line with our simplification and productivity
initiatives. Other adjusting items reduced by $3m to $13m and included
payments made to Karim Bitar's estate following his death in service and the
settlement of a historic legal claim. The fair value movement of contingent
consideration largely related to the unwinding of discount.
On 31 October 2025, the Centers for Medicare & Medicaid Services (CMS)
published a decision outlining their revised payment rate of c.$127 per sq cm
for skin substitutes with effect from 1 January 2026. This payment rate
impacted Convatec's InnovaMatrix® product, which is a leading porcine
placental-derived extra-cellular matrix for the treatment of chronic, surgical
and trauma wounds. Management deemed that this constituted an indicator of
impairment in respect of the InnovaMatrix® product-related intangible asset
held on the balance sheet. Using management's best estimate of future cash
flow forecasts, a non-cash impairment charge of $72m was recognised. This has
been treated as an adjusting item in line with our APM policy.
Only $12m of the total $228m of adjusting items recognised within operating
profit (excluding tax impact) was cash-impacting in 2025. There was also a
cash outflow of $4m (2024: $11m) during the year in respect of adjusting items
recorded as accruals in the prior year. In 2026, the total cash impact of
adjusting items to be recognised within operating profit (including amounts
accrued in previous years), is currently expected to be similar to 2024. For
further information on Non-IFRS financial information, see pages 18 to 23.
The Board, through the Audit and Risk Committee, annually reviews the Group's
APM policy to ensure that it remains appropriate, aligns with regulatory
guidance and reflects the way in which the performance of the Group is
managed.
Dividends and shareholder returns
Dividends are distributed based on the realised distributable reserves of the
Company, which are primarily derived from the dividends received from
subsidiary companies and are not based directly on the Group's consolidated
retained earnings. The realised distributable reserves of the Company at 31
December 2025 were $1,811m (2024: $1,475m).
The Board declared an interim dividend of 1.877 cents per share in July 2025
and has recommended a final 2025 dividend of 5.367 cents per share, which
would bring the full-year dividend to 7.244 cents per share (2024: 6.416 cents
per share), an increase of 13% and a pay-out ratio when compared to adjusted
net profit of 40% (2024: 42%). Our stated policy is a pay-out ratio of 35% to
45% of adjusted net profit but this is interpreted flexibly over time to
reflect the underlying performance of the business and the Board's confidence
in its future growth prospects.
The Group announced a share buyback programme on 20 August 2025 to return up
to $300m of surplus capital to shareholders. The buyback was funded from
available cash reserves. This was completed in December 2025. 94,937,530
ordinary shares were bought back at a cost (inclusive of transaction costs) of
£226m ($301m) and were all held as treasury shares at the year end.
Cash Flow and Net Debt
Adjusted Adjusted
2025 2024
$m $m
Adjusted EBITDA(1) 661 591
Working capital (outflow)/inflow(1,6) (40) 7
Adjusting items(2) (16) (22)
Operational capex(3) (64) (63)
Operating cash flow(1) 541 513
Tax paid (54) (52)
Free cash flow to capital(1) 487 461
Net interest paid (79) (79)
Lease payments (27) (25)
Net cash inflow from lease incentives 13 -
Realised loss on settlement of FX derivatives relating to financing (32) -
Other(4) - 4
Free cash flow to equity(1) 362 361
Growth capex(3) (121) (59)
Dividends (140) (130)
Acquisitions and divestitures(5) (25) (90)
Purchase of own shares(7) (326) (11)
Non-cash movements(4) (22) -
Movement in net debt (272) 71
Net debt(1 )at 1 January (excluding lease liabilities) (1,058) (1,129)
Net debt(1) at 31 December (excluding lease liabilities) (1,330) (1,058)
1. These non-IFRS financial measures are explained and
reconciled to the most directly comparable financial measure prepared in
accordance with IFRS in the Non-IFRS financial information section on pages 18
to 23.
2. Details of adjusting items are provided in the adjusting
items cash movement table in the Non-IFRS financial information section on
page 23. Of the total cash outflow of $16m during the year, $4m related to
accruals recorded in the prior year.
3. Operational capex is cash spent to maintain our existing
operations/output. Growth capex develops new products and creates or increases
capacity.
4. In 2025, non-cash movements of $22m have been presented below
free cash flow to equity and consisted of net FX loss on cash and borrowings
of $19m and amortisation of deferred financing fees of 3m. The prior year
comparatives have not been restated on the basis they are not material.
5. Earnout payments of $27m were made in respect of past
acquisitions. This was offset by an inflow of $1m following the finalisation
of the working capital adjustment in respect of the 2024 acquisition of
Livramedom and $1m of proceeds arising from divestiture-related activities
related to the hospital care exit in 2022.
6. Excluding the impact of adjusting items of $16m (2024: $22m)
on adjusted EBITDA and adjusted working capital movements, EBITDA was $640m
(2024: $574m) and the reported working capital movement was a $33m outflow
(2024: $7m outflow).
Adjusted EBITDA
Adjusted EBITDA increased by $70m to $661m (2024: $591m), with the increase in
adjusted gross profit of $85m and depreciation & amortisation charges of
$6m more than offsetting the increases in adjusted operating expenses of $26m.
These are explained in the adjusted net profit commentary section. A
reconciliation of adjusted EBITDA to the closest IFRS measure is provided in
the Non-IFRS financial information section on pages 18 to 23.
Free cash flow to capital
The calculation of the cash flow measures 'Operating cash flow' and 'Free cash
flow to capital' have been redefined to exclude growth capex (as defined in
footnote 3 of the table above), and realised losses on settlement of certain
derivatives. Management considers that these changes result in improved
definition and calculation of operating cash flow and free cash flow to
capital. The comparative has been restated for the impact of growth capex, but
not for the exclusion of realised losses on settlement of certain derivatives
on the basis that this balance is not material.
Free cash flow to capital increased by $26m to $487m (2024: $461m), largely
driven by the increase in adjusted EBITDA of $70m being partially offset by
higher year-on-year working capital movements of $47m and $6m lower cash
impact from adjusting items.
The Group invested $185m (2024: $122m) in growth and operational capex to
increase manufacturing capacity and automation, develop new products, improve
information technology and digital tools and maintain current operations. Of
this, $121m (2024: $59m) related to growth capex, which has been excluded from
free cash flow to capital.
The adjusted working capital outflow of $40m (2024: $7m inflow) was due to a
combination of higher inventory levels of $39m and an increase in trade and
other receivables of $58m being partially offset by an increase in trade and
other payables of $59m (excluding capital accruals). Inventory levels have
increased primarily due to forecast demand and the strategic build of
inventory. The increase in trade and other receivables is largely due to a
combination of higher sales and timing of receipts whilst the increase in
trade and other payables is primarily driven by the timing of payments.
Free cash flow to capital is reconciled to its nearest IFRS measure in the
Non-IFRS financial information section - see page 22. The nearest IFRS measure
is net cash generated from operations, which has increased by $29m to $605m
(2024: $576m) and is derived from reported net profit of $175m (2024: $191m).
Operating cash conversion was 99.4% (2024: 105.6%). The reduction in the ratio
primarily reflected a higher working capital outflow. Refer to page 21 in the
Non-IFRS financial information section.
Free cash flow to equity
The calculation of the cash flow measure 'Free cash flow to equity' has been
redefined to exclude growth capex, as well as non-cash items such as net
foreign exchange gains or losses on cash and borrowings and the amortisation
of financing fees. Management considers that these changes result in improved
definition and calculation of free cash flow to equity. The comparative has
been restated for the impact of growth capex, but not for the exclusion of
non-cash items on the basis that this balance is not material.
Free cash flow to equity slightly increased by $1m to $362m (2024: $361m).
This was driven by an increase in free cash flow to capital of $26m as
explained above, largely offset by realised losses on foreign exchange
derivatives of $32m. On a comparable basis to FY24, free cash flow to equity
was $219m (2024: $302m).
Free cash flow to equity is reconciled to its nearest IFRS measure in the
Non-IFRS financial information section - see page 22.
Equity cash conversion was 100.8% (2024: 115.6%) - refer to page 21 in the
Non-IFRS financial information section.
Borrowings and net debt
2025 2024
$m $m
Senior notes(1) (990) (495)
Credit facilities drawn(1) (408) (628)
Lease liabilities (120) (79)
Total borrowings including lease liabilities (1,518) (1,202)
Cash and cash equivalents 68 65
Total borrowings including lease liabilities, net of cash (1,450) (1,137)
Net debt(2) excluding lease liabilities (1,330) (1,058)
Net debt(2) excluding leases/adjusted EBITDA(2) 2.0 1.8
1. Senior notes and credit facilities are stated net of
unamortised financing fees of $10m and $3m respectively (2024: $5m and $6m).
2. These non-IFRS measures are explained and reconciled to the
most directly comparable financial measures prepared in accordance with IFRS
on pages 18 to 23.
As at 31 December 2025, the Group's cash and cash equivalents were $68m (2024:
$65m) and total borrowings (net of deferred financing fees) were $1,398m
(2024: $1,123m).
During the year, the Group completed the issuance of senior unsecured notes of
$500m with a tenor of 10 years and at a coupon of 5.3%. This further
diversifies our capital structure, whilst expanding our debt headroom and
extending our debt maturity profile significantly. The proceeds were used to
fully repay the $250m term loan due to mature in 2027 and pay down a portion
of drawn debt on the revolving credit facility.
The Group's banking facility is a multicurrency revolving credit facility of
$950m maturing in 2028. The Group's senior unsecured notes of $500m each,
issued in October 2021 and 2025, mature in October 2029 and 2035 respectively.
As at 31 December 2025, $539m of the multicurrency revolving credit facility
remained undrawn.
The Group ended the period with total borrowings, including IFRS 16 lease
liabilities, of $1,518m (2024: $1,202m). Offsetting cash of $68m (2024: $65m)
and excluding lease liabilities, net debt was $1,330m (2024: $1,058m),
equivalent to 2.0x adjusted EBITDA (2024: 1.8x adjusted EBITDA). We continue
to target leverage of 2x over time but are comfortable to temporarily go above
or below this, dependent on M&A and other investment opportunities.
For further information on borrowings see Note 9 - Borrowings to the Condensed
Consolidated Financial Statements.
Covenants
At 31 December 2025, the Group was in compliance with all financial and
non-financial covenants associated with the Group's outstanding debt.
The Group has two financial covenants on its banking facilities, being net
leverage and interest cover, each of which is defined, where applicable,
within the borrowing documentation. Refer to Note 9 - Borrowings for details
of covenants in place on the senior notes. The table below summarises the
Group's most restrictive covenant thresholds and position as at 31 December
2025 and 2024.
Maximum covenant net leverage(1) Actual covenant net leverage(1) Minimum covenant interest cover(1) Actual covenant interest cover(1)
31 December 2025 3.50x 2.2x 3.5x 9.4x
31 December 2024 3.50x 1.9x 3.5x 7.6x
1.Interest cover is covenant-adjusted EBITDA/interest expense (net) and net
leverage is net debt/covenant adjusted EBITDA in accordance with the
definitions contained in underlying borrowing documentation and are not the
same as the definitions of these measures presented in the Non-IFRS financial
information section on pages 18 to 23 and applied in the commentary in this
Financial review.
Group financial position
2025 2024 Change
At 31 December $m $m $m
Intangible assets and goodwill 1,996 2,096 (100)
Other non-current assets 845 626 219
Cash and cash equivalents 68 65 3
Other current assets 872 728 144
Total assets 3,781 3,515 266
Current liabilities (616) (511) (105)
Non-current liabilities (1,647) (1,315) (332)
Equity (1,518) (1,689) 171
Total equity and liabilities (3,781) (3,515) (266)
Intangible assets and goodwill
Intangible assets and goodwill decreased by $100m to $1,996m (2024: $2,096m).
An increase in goodwill of $60m, driven by foreign exchange movements, was
more than offset by a reduction in intangible assets of $160m. This was
primarily driven by the in-year amortisation of intangible assets of $155m and
a $72m non-cash impairment in respect of the InnovaMatrix® platform (see
commentary in the Alternative Performance Measures section of this report),
partially offset by intangible asset additions of $51m.
No other triggers of impairment were identified during 2025.
Other non-current assets
Other non-current assets, including property, plant and equipment (PP&E),
right-of-use assets, investment in financial assets, deferred tax assets,
restricted cash and other assets increased by $219m to $845m (2024: $626m),
largely due to a net increase of $170m in PP&E (reflecting the continued
investment in our manufacturing facilities to maintain our existing operations
and increase capacity for existing and new product lines) and an increase in
deferred tax assets of $36m due to an increase in UK carry forward losses from
increased patent box benefit and the reduction in offsetting deferred tax
liabilities on intangible assets from amortisation.
Current assets excluding cash and cash equivalents
Current assets, excluding cash and cash equivalents, increased by $144m to
$872m (2024: $728m), primarily driven by increases in inventory of $67m and
trade and other receivables of $84m. During the year, the USD weakened
significantly - excluding foreign exchange impacts, inventory increased by
$39m and trade and other receivables increased by $58m. These are explained in
the free cash flow to capital commentary.
Current liabilities
Current liabilities increased by $105m to $616m (2024: $511m), largely due to
increases in trade and other payables of $111m and current tax liabilities of
$23m, offset by a decrease in contingent consideration of $21m. Excluding
foreign exchange impacts and including capital accruals, trade and other
payables increased by $89m (driven by timing of payments and increase in
capital investments). The amount in working capital excludes capital accruals.
Non-current liabilities
Non-current liabilities increased by $332m to $1,647m (2024: $1,315m). This
was primarily due to an increase in non-current borrowings of $275m, deferred
tax liabilities of $6m and lease liabilities of $37m (in line with our
announcement during the year of investing in a new state-of-the-art R&D
hub in Manchester that is set to open in 2027).
Going concern
In assessing going concern, the Directors considered available cash resources,
access to committed undrawn funding, financial performance and forecast
performance, including continued implementation of our strategy, together with
the Group's financial covenant compliance requirements and principal risks and
uncertainties.
The same severe but plausible downside scenarios utilised in the preparation
of the Viability statement were also applied in assessing going concern. Under
each scenario, the Group retained significant liquidity and covenant headroom
throughout the going concern period, i.e. 12 months from the date of this
report.
A reverse stress test, before corporate level mitigations, was also considered
to demonstrate what reduction in revenue would be required in the next 12
months to create conditions which may lead to a potential covenant breach. The
outcome of this test was considered implausible given the Group's strong
global market position, diversified portfolio of products and the corporate
mitigations available to the Board and management.
Accordingly, the Directors continue to adopt the going concern basis in
preparing the Consolidated Financial Statements.
Non-IFRS financial information
Non-IFRS financial information or alternative performance measures (APMs) are
those measures used by the Board and management on a day-to-day basis in their
assessment of profit and performance and comparison between periods. The
adjustments applied to IFRS measures reflect the effect of certain cash and
non-cash items that the Board believes distort the understanding of the
quality of earnings and cashflows as, by their size or nature, they are not
considered part of the core operations of the business. Adjusted measures also
form the basis of performance measures for remuneration, e.g. adjusted
operating profit.
It should be noted that the Group's APMs may not be comparable to other
similarly titled measures used by other companies and should not be considered
in isolation or as a substitute for the equivalent measures calculated and
presented in accordance with IFRS (our reported measures).
In determining whether an item should be presented as an allowable adjustment
to IFRS measures, the Group considers items which are significant either
because of their size or their nature and arise from events that are not
considered part of the core operations of the business. These tend to be
one-off events but may still cross more than one accounting period. Recurring
items may be considered, particularly in respect of the amortisation of
acquisition-related intangible assets. If an item meets at least one of these
criteria, the Board, through the Audit and Risk Committee, then exercises
judgement as to whether the item should be classified as an allowable
adjustment to IFRS performance measures.
The tax effect of the adjustments is reflected in the adjusted tax expense to
remove the tax impact from adjusted net profit and adjusted earnings per
share.
Amortisation of acquisition-related intangible assets
The Group's strategy is to grow both organically and through acquisition,
with acquisitions being targeted to strengthen our position in
key geographies and/or business categories or which provide access to new
technology. The nature of the businesses acquired includes the acquisition of
significant intangible assets, which are required to be amortised. The Board
and management regard the amortisation as a distortion to the quality of
earnings and it has no cash implications in the year. The amortisation also
distorts comparability with peer groups where such assets may have been
internally generated and, therefore, not reflected on their balance sheet.
Amortisation of acquisition-related intangible assets is, by its nature, a
recurring adjustment.
Acquisition-related activities
Costs directly related to potential and actual strategic transactions which
have been executed, aborted or are in-flight are deemed adjusting items.
Acquisition-related costs relate to deal costs, integration costs and earn-out
adjustments, including the discounting impact which are incurred directly as a
result of the Group undertaking or pursuing an acquisition. Deal costs are
wholly attributable to the deal, including legal fees, due diligence fees,
bankers' fees/commissions and other direct costs incurred as a result of the
actual or potential transaction. Integration costs are wholly attributable to
the integration of the target and based on integration plans presented at the
point of acquisition, including the cost of retention of key people where this
is in excess of normal compensation, redundancy of target staff and early
lease termination payments.
Adjusted measures in relation to acquisitions also include aborted deal costs.
Divestiture-related activities
Divestiture-related activities comprise the gains or losses resulting from
disposal or divestment of a business as a result of a sale, major business
change or restructuring programme. These include write-down of non-current
assets, provisions to recognise inventories at realisable value, provisions
for costs of exiting contracts and associated legal fees, and any other
directly attributable costs. Any income from the ultimate disposal of a
business or subsidiary is included in the gain or loss.
Adjusted measures in relation to divestitures also include aborted deal costs.
Impairment of assets
Impairments, write-offs and gains and losses from defined programmes and where
the Group considers the circumstances of such event are not reflective of
normal business trading performance or when transactions relate to
acquisition-related intangible assets where the amortisation is already
excluded from the calculation of adjusted measures.
Termination benefits and related costs
Termination benefits and other related costs arise from material, one-time
Group-wide initiatives to reduce the ongoing cost base and improve efficiency
in the business, including divestitures from non-strategic activities. The
Board considers each project individually to determine whether its size and
nature warrants separate disclosure. Qualifying items are limited to
termination benefits (including retention) without condition of continuing
employment in respect of major Group-wide change programmes. Where discrete
qualifying items are identified these costs are highlighted and excluded from
the calculation of adjusted measures. Due to their nature, these adjusted
costs may span more than one year.
Other adjusting items
Other adjusting items include items that do not fall within the above
categories but qualify as an APM in line with the Group's policy. Whilst
non-exhaustive, examples of other adjusting items could include significant
historic legal claims outside the normal course of business or one-time
initiatives which are part of the Group's strategy to improve productivity in
the business and optimise cash flows. The Board considers each item
individually to determine whether its size and nature warrants separate
disclosure. Qualifying costs are limited to directly attributable costs of the
initiatives and any realignment costs. Due to the nature of the initiatives,
these adjusted costs may span more than one year.
Revenue measures
Revenue growth on a constant currency basis represents reported revenue, as
determined under IFRS, and applying the applicable prior period average
exchange rates to the Group's actual performance in the respective period.
Organic revenue growth is calculated by adjusting this to exclude the impact
of acquisitions and divestitures. Organic revenue excluding InnovaMatrix® is
presented to reflect our 2025 guidance and to exclude InnovaMatrix® revenues
as the outlook was uncertain and is reconciled on page 10.
Cash flow measures
Operating cash flow is the net cash generated from operations, as determined
under IFRS, less operational capex. Operational capex is cash spent to
maintain our existing operations/output. Growth capex develops new products
and creates or increases capacity.
Free cash flow to capital is defined as operating cash flow less tax paid.
Free cash flow to equity reflects how effectively we are converting the profit
we generate into cash (after accounting for working capital, operational
capital spend, adjusting items, lease incentives, realised gains or losses on
foreign exchange derivatives, tax and interest). Refer to page 22 for details
on how these measures are calculated. Net debt and leverage ratio are two
other measures used and these are explained on page 23.
Reconciliation of reported earnings to adjusted earnings for the years ended
31 December 2025 and 2024
Year ended 31 December 2025 Revenue Gross profit Operating costs Operating profit Finance expense, net Fair value movement of contingent consideration Non-operating expense, net PBT Income tax Net profit
$m $m $m $m $m $m $m $m $m $m
As reported 2,439 1,371 (1,055) 316 (68) (10) (8) 230 (55) 175
Amortisation of acquired intangibles – 109 25 134 – – – 134 (32) 102
Acquisitions & divestitures – – 4 4 – 10 3 17 (4) 13
Impairment of assets – – 72 72 – – – 72 (17) 55
Termination benefits and related costs – – 5 5 – – – 5 (1) 4
Other adjusting items – 1 12 13 – – – 13 (4) 9
Adjusted 2,439 1,481 (937) 544 (68) – (5) 471 (113) 358
Depreciation & Amortisation 91
Impairment of assets 2
Share-based payments 24
Adjusted EBITDA 661
Year ended 31 December 2024 Revenue Gross profit Operating costs Operating profit Finance expense, net Fair value movement of contingent consideration Non-operating income, net PBT Income tax Net profit
$m $m $m $m $m $m $m $m $m $m
As reported 2,289 1,284 (959) 325 (78) (5) 4 246 (55) 191
Amortisation of acquired intangibles – 109 27 136 – – – 136 (34) 102
Acquisitions & divestitures – (1) 3 2 – 5 – 7 (1) 6
Termination benefits and related costs – 1 5 6 – – – 6 (2) 4
Other adjusting items – 3 13 16 – – – 16 (4) 12
Other discrete tax items – – – – – – – – (3) (3)
Adjusted 2,289 1,396 (911) 485 (78) – 4 411 (99) 312
Depreciation & Amortisation 85
Impairment of assets 1
Share-based payments 20
Adjusted EBITDA 591
Refer to the Financial review on pages 11 and 12 for commentary on the Group's
adjusting items.
Adjusted operating profit margin of 22.3% (2024: 21.2%) is calculated as
adjusted operating profit of $544m (2024: $485m) divided by revenue of $2,439m
(2024: $2,289m). A reconciliation of adjusted operating profit to its closest
IFRS measure is shown in the table above.
Reconciliation of reported operating costs to adjusted operating costs for the
years ended 31 December 2025 and 2024
2025 2024
S&D G&A R&D Other Operating costs S&D G&A R&D Other Operating costs
$m $m $m $m $m $m $m $m $m $m
As reported (668) (206) (111) (70) (1,055) (645) (195) (112) (7) (959)
Amortisation of acquired intangibles – 17 8 – 25 1 18 8 – 27
Acquisition & divestitures – 4 – – 4 (1) 3 – 1 3
Impairment of assets – – – 72 72 – – – – –
Termination benefits and related costs – 5 – – 5 1 3 2 – 6
Other adjusting items – 14 – (2) 12 – 6 – 6 12
Adjusted (668) (166) (103) – (937) (644) (165) (102) – (911)
Reconciliation of reported basic and diluted earnings per share to adjusted
earnings per share for the years ended 31 December 2025 and 2024
2025 Adjusted 2025 2024 Adjusted 2024
$m $m $m $m
Net profit attributable to the shareholders of the Group 175 358 191 312
Number Number
Basic weighted average ordinary shares in issue(1) 2,024,809,094 2,047,643,498
Diluted weighted average ordinary shares in issue(1) 2,034,286,390 2,056,797,417
Cents Cents Cents Cents
Basic earnings per share 8.6 17.7 9.3 15.3
Diluted earnings per share 8.6 17.6 9.3 15.2
1. See Note 6 - Earnings per share in the Notes to the Condensed Consolidated
Financial Statements.
Adjusted diluted EPS has increased by 16.0% to 17.6 cents (2024: 15.2 cents).
This is calculated on actual unrounded numbers.
Cash flow conversion
Year ended 31 December
2025 2024
$m $m
Operating cash conversion(2) 99.4% 105.6%
Equity cash conversion(2) 100.8% 115.6%
1. Operating cash conversion is calculated by Operating cash flow/Adjusted
operating profit. Equity cash conversion is calculated by Free cash flow to
equity/Adjusted net profit. Operating cash flow and Free cash flow to equity
cash flow have been redefined as explained in footnotes 4 and 5 on the next
page.
Reconciliation of Operating cash flow, Free cash flow to capital, Free cash
flow to equity
Year ended 31 December
2025 2024
$m $m
Net cash generated from operations 605 576
Operational capex(3) (64) (63)
Operating cash flow(4) 541 513
Tax paid (54) (52)
Free cash flow to capital(4) 487 461
Net interest paid (79) (79)
Payment of lease liabilities (27) (25)
Net cash inflow from lease incentives 13 -
Financing fee amortisation - (3)
Foreign exchange gain/(loss) on cash and borrowings - 4
Proceeds from sale of PP&E - 3
Realised loss on settlement of FX derivatives relating to financing (32) -
Free cash flow to equity(5) 362 361
3. Operational capex is cash spent to maintain our existing
operations/output. Growth capex develops new products and creates or increases
capacity.
4. The calculation of the cash flow measures 'Operating cash
flow' and 'Free cash flow to capital' have been redefined to exclude growth
capex, and realised losses on settlement of certain derivatives. Management
considers that these changes result in improved definition and calculation of
operating cash flow and free cash flow to capital. The comparative has been
restated for the impact of growth capex, but not for the exclusion of realised
losses on settlement of certain derivatives on the basis that this balance is
not material.
5. The calculation of the cash flow measure 'Free cash flow to
equity' has been redefined to exclude non-cash items such as net foreign
exchange gains or losses on cash and borrowings and the amortisation of
financing fees as well as growth capex (as defined in footnote 3) and realised
losses on settlement of certain derivatives. Management considers that these
changes result in improved definition and calculation of free cash flow to
equity. The comparative has been restated for the impact of growth capex, but
not for the exclusion of non-cash items on the basis that this balance is not
material.
Free cash flow to equity has increased by 0.1% to $362m (2024: $361m). A
reconciliation of free cash flow to equity to its closest IFRS measure is
shown in the table above.
Reconciliation of reported and adjusted working capital movement
Year ended 31 December
2025 2024
$m $m
Reported working capital movement (33) (7)
(Decrease)/increase in respect of acquisitions and divestitures (1) 3
(Decrease)/increase in termination benefits (2) 4
(Decrease) in respect of other adjusting items (2) (2)
Realised (loss)/gain on settlement of FX derivatives held to manage foreign (2) 9
exchange risk in working capital(6)
Adjusted working capital movement (40) 7
6. Realised gains and losses arising from the settlement of FX derivatives
held to manage foreign exchange risk in our working capital have been included
in this reconciliation as management believe this provides a more accurate
view of the underlying movement in working capital.
Cash outflows from adjusting items
Year ended 31 December
2025 2024
$m $m
Acquisitions and divestitures (3) (4)
Termination benefits and related costs adjustments (3) (11)
Other adjusting items (10) (7)
Cash outflows from adjusting items (16) (22)
Net debt
Monitoring net debt is important to the Group as it is an indicator of the
Group's financial health and its available liquidity. It is an important
decision-making tool for investment decisions and strategic planning.
Net debt is calculated as borrowings less cash and excluding lease
liabilities.
2025 2024
$m $m
Senior notes(7) 990 495
Credit facilities(7) 408 628
Lease liabilities 120 79
Total borrowings including lease liabilities 1,518 1,202
Less: cash and cash equivalents (68) (65)
Less: lease liabilities(8) (120) (79)
Net debt excluding leases 1,330 1,058
7. See Note 9– Borrowings of the Condensed Consolidated Financial
Statements.
Reconciliation of acquisition of PP&E and intangible assets
Year ended 31 December
2025 2024
$m $m
Acquisition of property, plant and equipment (135) (92)
Acquisition of intangible assets (50) (30)
Total capital spend (185) (122)
Split as:
Growth capex (121) (59)
Operational capex (64) (63)
Leverage
Leverage is an important performance measurement metric for the Group as it is
an indicator of financial risk, credit worthiness and operational flexibility.
It is also an important consideration in strategic decision-making.
This is calculated as net debt excluding leases divided by adjusted EBITDA.
2025 2024
$m $m
Net debt excluding leases(8) 1,330 1,058
Adjusted EBITDA(9) 661 591
Leverage ratio x 2.0 1.8
8. Net debt excluding leases is defined and reconciled to the
closest IFRS measure in the Net debt table above.
9. Adjusted EBITDA is reconciled to the closest IFRS measure in
the Reconciliation of reported earnings to adjusted earnings table on page 20
of this section.
Condensed Consolidated Financial Statements
Consolidated Income Statement
For the year ended 31 December 2025
2025 2024
Notes $m $m
Revenue 2 2,439 2,289
Cost of sales (1,068) (1,005)
Gross profit 1,371 1,284
Selling and distribution expenses (668) (645)
General and administrative expenses (206) (195)
Research and development expenses (111) (112)
Other operating expenses 3 (70) (7)
Operating profit 316 325
Finance income 4 3 5
Finance expense 4 (71) (83)
Fair value movement of contingent consideration (10) (5)
Non-operating (expense)/income, net (8) 4
Profit before income taxes 230 246
Income tax expense 5 (55) (55)
Net profit 175 191
Earnings per share
Basic earnings per share (cents per share) 6 8.6¢ 9.3¢
Diluted earnings per share (cents per share) 6 8.6¢ 9.3¢
All amounts are attributable to shareholders of the Group and wholly derived
from continuing operations.
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2025
2025 2024
Notes $m $m
Net profit 175 191
Items that will not be reclassified subsequently to the Consolidated Income
Statement
Remeasurement of defined benefit pension plans, net of tax 1 –
Changes in fair value of equity investments (15) (6)
Items that may be reclassified subsequently to the Consolidated Income
Statement
Foreign currency translation 100 (48)
Effective portion of changes in fair value of cash flow hedges 15 (11)
Changes in fair value of cash flow hedges reclassified to the Consolidated (10) 2
Income Statement
Costs of hedging (1) 1
Other comprehensive income/(expense) 90 (62)
Total comprehensive income 265 129
All amounts are attributable to shareholders of the Group and wholly derived
from continuing operations.
Consolidated Statement of Financial Position
As at 31 December 2025
2025 2024
Notes $m $m
Assets
Non-current assets
Property, plant and equipment 673 503
Right-of-use assets 96 68
Intangible assets 7 646 806
Goodwill 1,350 1,290
Investment in financial assets 2 17
Deferred tax assets 59 23
Restricted cash 4 3
Other non-current receivables 11 12
2,841 2,722
Current assets
Inventories 416 349
Trade and other receivables 419 335
Current tax receivable 20 17
Derivative financial assets 10 18
Restricted cash 7 9
Cash and cash equivalents 68 65
940 793
Total assets 3,781 3,515
Equity and liabilities
Current liabilities
Trade and other payables 493 382
Lease liabilities 26 22
Current tax payable 55 32
Derivative financial liabilities 7 18
Contingent consideration 32 53
Provisions 3 4
616 511
Non-current liabilities
Borrowings 9 1,398 1,123
Lease liabilities 94 57
Deferred tax liabilities 89 83
Contingent consideration 27 17
Provisions 3 4
Other non-current liabilities 36 31
1,647 1,315
Total liabilities 2,263 1,826
Net assets 1,518 1,689
Equity
Share capital 251 251
Share premium 181 181
Own shares (303) (16)
Retained deficit (793) (828)
Merger reserve 2,099 2,099
Cumulative translation reserve (70) (170)
Other reserves 153 172
Total equity 1,518 1,689
Total equity and liabilities 3,781 3,515
Consolidated Statement of Changes in Equity
For the year ended 31 December 2025
Share capital Share premium Own shares Retained deficit Merger reserve Cumulative translation reserve Other reserves Total
Notes $m $m $m $m $m $m $m $m
At 1 January 2024 251 181 – (889) 2,099 (122) 173 1,693
Net profit – – – 191 – – – 191
Other comprehensive expense:
Foreign currency translation adjustment – – – – – (48) – (48)
Remeasurement of defined benefit pension plans, net of tax – – – – – – – –
Changes in fair value of cash flow hedges, net of tax – – – – – – (8) (8)
Changes in fair value of equity investments – – – – – – (6) (6)
Other comprehensive expense – – – – – (48) (14) (62)
Total comprehensive income/(expense) – – – 191 – (48) (14) 129
Dividends paid – – – (130) – – – (130)
Purchase of shares by Employee Benefit Trust – – (23) – – – – (23)
Share-based payments – – – – – – 20 20
Share awards vested – – 7 – – – (6) 1
Excess deferred tax benefit from share-based payments – – – – – – (2) (2)
Changes in fair value of cash flow hedges transferred to inventory – – – – – – 1 1
At 31 December 2024 251 181 (16) (828) 2,099 (170) 172 1,689
Net profit – – – 175 – – – 175
Other comprehensive income/(expense):
Foreign currency translation adjustment – – – – – 100 – 100
Remeasurement of defined benefit pension plans, net of tax – – – – – – 1 1
Changes in fair value of cash flow hedges, net of tax – – – – – – 4 4
Changes in fair value of equity investments – – – – – – (15) (15)
Other comprehensive income – – – – – 100 (10) 90
Total comprehensive income – – – 175 – 100 (10) 265
Dividends paid 8 – – – (140) – – – (140)
Purchase of shares by Employee Benefit Trust – – (25) – – – – (25)
Purchase of treasury shares – – (301) – – – – (301)
Share-based payments – – – – – – 28 28
Share awards vested – – 39 – – – (38) 1
Changes in fair value of cash flow hedges transferred to inventory – – – – – – 1 1
At 31 December 2025 251 181 (303) (793) 2,099 (70) 153 1,518
Consolidated Statement of Cash Flows
For the year ended 31 December 2025
2025 2024
Notes $m $m
Cash flows from operating activities
Net profit 175 191
Adjustments for:
Depreciation of property, plant and equipment 43 41
Depreciation of right-of-use assets 26 23
Amortisation of intangible assets 155 157
Income tax 5 55 55
Non-operating expense, net 6 5
Fair value movement of contingent consideration 10 5
Finance costs, net 4 68 78
Share-based payments 28 20
Impairment of intangible assets 72 1
Impairment of property, plant and equipment – 7
Change in assets and liabilities:
Inventories (38) 28
Trade and other receivables (58) (27)
Trade and other payables 62 1
Provisions (2) (10)
Other non-current payables 3 1
Net cash generated from operations 605 576
Interest received 3 5
Interest paid (82) (84)
Payment of contingent consideration arising from acquisitions (2) (48)
Income taxes paid (54) (52)
Net cash generated from operating activities 470 397
Cash flows from investing activities
Acquisition of property, plant and equipment(1) (135) (92)
Acquisition of intangible assets(1) (50) (30)
Proceeds from sale of property, plant and equipment – 3
Acquisitions, net of cash acquired 1 (14)
Payment of contingent consideration arising from acquisitions (25) (23)
Net cash inflow arising from divestitures 1 –
Investment in other financial assets – (5)
Net cash used in investing activities (208) (161)
Cash flows from financing activities
Repayment of borrowings (250) (98)
Proceeds from borrowings 504 –
Realised loss on settlement of FX derivatives (32) –
Payment of lease liabilities (27) (25)
Net cash inflow arising from lease incentives 13 –
Dividends paid 8 (140) (130)
Purchase of own shares (326) (11)
Net cash used in financing activities (258) (264)
Net change in cash and cash equivalents 4 (28)
Cash and cash equivalents at beginning of the year 65 98
Effect of exchange rate changes on cash and cash equivalents (1) (5)
Cash and cash equivalents at end of the year 68 65
(1.)The comparatives have been re-presented as outlined in Note 1.5 to the
Condensed Consolidated Financial Statements.
(
)
1. Basis of preparation
1.1 General information
Convatec Group Plc (the Company) is a public limited company incorporated in
the United Kingdom under the Companies Act of 2006. The Company's registered
office is 7th Floor, 20 Eastbourne Terrace, London, W2 6LG, United Kingdom.
The Company and its subsidiaries (collectively, the Group) are a global
medical products and technologies group focused on therapies for the
management of chronic conditions, with leading market positions in advanced
wound care, ostomy care, continence care and infusion care.
The announcement is based on the Group's Consolidated Financial Statements
which have been prepared in accordance with United Kingdom adopted
international accounting standards and IFRS Accounting Standards as issued by
the International Accounting Standards Board (IASB).
The Financial Statements are presented in US dollars (USD), reflecting the
profile of the Group's revenue and operating profit, which are primarily
generated in US dollars and US dollar-linked currencies. All values are
rounded to the nearest million (previously $0.1m) except where otherwise
indicated. Comparatives have been adjusted accordingly. Financial ratios are
calculated using unrounded numbers.
The financial information set out in this announcement does not constitute the
Group's statutory accounts for the year ended 31 December 2025 and 2024 but is
derived from those accounts. Statutory accounts for 2024 have been delivered
to the Registrar of Companies and those for 2025 will be delivered following
the Company's Annual General Meeting. The auditor's reports on the 2025 and
2024 accounts were unqualified, did not draw attention to any matters by way
of emphasis without qualifying their report and did not contain a statement
under section 498(2) or (3) of the Companies Act 2006.
1.2 Critical accounting judgements and key sources of estimation uncertainty
The preparation of financial statements, in conformity with United Kingdom
adopted international accounting standards and International Financial
Reporting Standards (IFRS), requires management to make judgements, estimates
and assumptions that affect the application of accounting policies and the
reported value of assets and liabilities, income and expense. Actual results
may differ from these estimates or judgements of likely outcome. Management
regularly reviews, and revises as necessary, the accounting judgements that
significantly impact the amounts recognised in the Consolidated Financial
Statements and the sources of estimation uncertainty that are considered to be
key estimates due to their potential to give rise to material adjustments in
the Group's Consolidated Financial Statements within the next financial year.
In preparing the Consolidated Financial Statements, no critical accounting
judgements have been identified.
Management have identified one key source of estimation uncertainty in respect
of the InnovaMatrix® platform. During the year, an impairment of $72m has
been recognised (see Note 7 - Intangible assets to the Condensed Consolidated
Financial Statements for further information). Following the impairment, the
carrying amount of the intangible asset was $40m at 31 December 2025. On 31
October 2025, the Centers for Medicare & Medicaid Services (CMS) published
a decision outlining their revised payment rate of $127.28 per sq cm for skin
substitutes with effect from 1 January 2026. As the implementation takes
effect, with a resultant change to the shape of the US market share for skin
substitutes and given the uncertainties inherent in forecasting the entry to
new markets outside the US, this could result in further impairments (or
reversals of the existing impairment charge) of the intangible asset.
The underlying drivers of the recoverable amount are cash flows derived from
financial forecasts up to 2036 and discounted to present value. Actual
performance may differ from these forecasts depending on the amounts or timing
of product revenues.
The following reasonably possible changes in assumptions upon which the
recoverable amount was estimated, would lead to the following changes in the
recoverable amount of this asset:
(Decrease)/ Increase in recoverable amount
$m
Increase in operating profit of 25% 17
Decrease in operating profit of 25% (17)
Increase in revenue of 20% 15
Decrease in revenue of 20% (11)
The range of reasonably possible outcomes within the next financial year would
result in the carrying value of the asset being $24m to $57m.
1.3 Going concern
As discussed in the Financial review on pages 9 to 17, the overall financial
performance of the business remains very strong with a robust liquidity
position.
In preparing their assessment of going concern, management and the Board have
considered available cash resources, actual financial performance, forecast
performance from the Board approved 2026 budget and longer-term strategic plan
and exposure to the Group's principal and emerging risks.
As at 31 December 2025, the Group had total liquidity of $607m (2024: $631m),
comprising cash and cash equivalents of $68m (2024: $65m) and $539m (2024:
$566m) undrawn of the multi-currency revolving credit facility maturing in
2028. The Group also had borrowings of $1,398m (2024: $1,123m) which, net of
unamortised financing fees of $13m (2024: $11m), comprised of the drawn
element of the multi-currency revolving credit facilities of $411m maturing in
2028, senior unsecured notes of $500m maturing in 2029 and senior unsecured
notes of $500m maturing in 2035 (see Note 9 - Borrowings).
Management and the Board considered severe but plausible downside scenarios
linked to the Group's principal risks and also performed a reverse stress test
against the base forecast to determine the performance levels that would
result in a breach of covenants. The outcome of this test was considered
implausible given the Group's strong global market position.
As a result, management and the Board have a reasonable expectation that the
Group and Company will have adequate liquid resources to meet their respective
liabilities as they become due for a period of at least 12 months from the
date that the Financial Statements have been authorised and therefore believe
that it is appropriate to adopt the going concern basis of accounting in
preparing the Group's Consolidated Financial Statements.
1.4 Accounting standards
New standards, interpretations and amendments applied for the first time
On 1 January 2025, the Group adopted the following amendments which are
mandatorily effective for the period beginning 1 January 2025:
· Lack of exchangeability - Amendment to IAS 21
The adoption during the year of the amendment to IAS 21 has not had a material
impact on the Consolidated Financial Statements. Apart from these changes, the
accounting policies set out in the notes have been applied consistently to
both years presented in these Consolidated Financial Statements.
New standards, interpretations and amendments not yet effective
At the date of authorisation of these financial statements, the Group has not
applied the following new and revised IFRS Accounting Standards that have been
issued but are not yet effective:
* Amendments to the Classification and Measurement of Financial Instruments -
Amendment to IFRS 9 and IFRS 7 (effective for the period beginning 1 January
2026)
* IFRS 18 - Presentation and Disclosures in Financial Statements (effective for
the period beginning 1 January 2027)
* IFRS 19 - Subsidiaries without Public Accountability: Disclosures (effective
for the period beginning 1 January 2027)
The amendments to IFRS 9 and IFRS 7 are not expected to have a material impact
on the Group's financial statements. As the Group's equity instruments are
publicly traded, it is not eligible to elect to apply IFRS 19 for the purposes
of the Consolidated Financial Statements of the Group.
The Group is currently finalising the expected impact of IFRS 18 on the
Group's Consolidated Financial Statements, which is effective for annual
periods beginning on or after 1 January 2027. Retrospective application is
required, so the comparative information for the financial year ending 31
December 2026 will be restated in accordance with IFRS 18.
Whilst the recognition and measurement of items in the Consolidated Financial
Statements will not be impacted, the presentation and disclosure of certain
items within the Consolidated Income Statement will be affected. To date, the
following potential impacts have been identified:
* Foreign exchange gains and losses currently aggregated within non-operating
expenses will be disaggregated into operating, financing and investing in
accordance with the underlying nature of the transaction. Any foreign exchange
gains and losses not designated as financing or investing, will be classified
as operating
* Fair value movement of contingent consideration will be reclassified to be
shown within operating
* A new subtotal called 'Profit or loss before financing and income taxes' to be
included in the Consolidated Income Statement
Potential impacts identified to date on the Consolidated Statement of Cash
Flows include:
* Operating profit will become the starting point for calculating cash flows
from operating activities
* Interest paid will be reclassified from operating cash flows to financing cash
flows
* Interest received will be reclassified from operating cash flows to investing
cash flows
A new disclosure will be required to disaggregate functional expenses by
nature (depreciation of property, plant and equipment and right-of-use assets,
amortisation of intangible assets, employee benefits, impairment
losses/reversals and inventory write-downs).
Other interpretations and amendments
In addition to these issued standards, there are a number of other
interpretations, amendments and annual improvement project recommendations
that have been issued but not yet effective that have not been adopted by the
Group because application is not yet mandatory, or they are not relevant for
the Group.
1.5 Prior year re-presentations
Within the Consolidated Statement of Cash Flows, cash flows associated with
the acquisition of property, plant and equipment and acquisition of intangible
assets have been disaggregated to provide greater clarity, and accordingly,
the corresponding 2024 comparative amounts have been re-presented for
consistency and comparability between periods. Acquisition of property, plant
and equipment of $92m and acquisition of intangible assets of $30m for the
year ended 31 December 2024 have been presented separately. There is no impact
on cash flows, or any other subtotals presented previously.
2. Revenue and segmental information
Convatec's Executive Leadership Team (CELT) is the Group's Chief Operating
Decision Maker (CODM). The CODM is the function that allocates resources and
evaluates the Group's global product portfolios on a revenue basis and
evaluates profitability and associated investment on an enterprise-wide basis
due to shared infrastructures and support functions between the categories.
Group financial information is provided to CELT for decision-making purposes
with revenue included by category as disclosed below. Resources are allocated
on a Group-wide basis, with a focus on both category and the key markets but
primarily based on the merits of individual proposals.
Revenue by category
The Group generates revenue across four major product categories. The
following table sets out the Group's revenue for the year ended 31
December by category:
2025 2024
$m $m
Advanced Wound Care(1) 753 743
Ostomy Care 676 634
Continence Care 537 501
Infusion Care 473 411
Total 2,439 2,289
1. Advanced Wound Care includes InnovaMatrix® revenue of $69m (2024:
$99m).
Geographic information
Geographic markets
The following table sets out the Group's revenue by geographic market in which
third party customers are located:
2025 2024
$m $m
North America 1,358 1,296
Europe 723 661
Rest of World (RoW)(2) 358 332
Total 2,439 2,289
2. Rest of World (RoW) comprises all countries in Asia Pacific, Latin
America (including Mexico and the Caribbean), the Middle East (including
Türkiye) and Africa.
3. Other operating expenses
Other operating expenses were as follows:
2025 2024
$m $m
Impairment of intangible assets 72 1
Impairment (reversal)/charge of property, plant and equipment and right-of-use (2) 6
assets
Other operating expenses 70 7
Other operating expenses in the year of $70m consisted of impairment charge of
$72m in respect of the InnovaMatrix® product-related intangible asset (refer
to Note 7 - Intangible assets) offset by an impairment reversal of $2m in
respect of property, plant and equipment.
4. Finance income and expense
Finance costs, net for the year ended 31 December were as follows:
2025 2024
$m $m
Finance income
Interest income on cash and cash equivalents 3 5
Total finance income 3 5
Finance expense
Interest expense on borrowings (66) (76)
Other financing-related fees(1) (9) (9)
Interest expense on interest rate derivatives (1) –
Interest expense on lease liabilities (5) (4)
Capitalised interest(2) 10 6
Total finance expense (71) (83)
Finance costs, net (68) (78)
1. Other financing-related fees include the amortisation of
deferred financing fees associated with the multicurrency revolving credit
facilities, term loan facilities and senior notes.
2. Capitalised interest was calculated using the Group's
weighted average interest rate over the year of 5.2% (2024: 6.0%) and will be
treated as tax deductible.
5. Income taxes
5.1 Taxation
The Group's income tax expense is the sum of the total current and deferred
tax expense:
2025 2024
$m $m
Current tax
UK corporation tax 3 2
Overseas taxation 81 66
Adjustment to prior years 2 (4)
Total current tax expense 86 64
Deferred tax
Origination and reversal of temporary differences (23) (5)
Change in tax rates - 3
Adjustment to prior years (8) (7)
Total deferred tax benefit (31) (9)
Income tax expense 55 55
5.2 Reconciliation of effective tax rate
The effective tax rate for the year ended 31 December 2025 was 24.0% (2024:
22.5%).
Tax reconciliation to UK statutory rate
The table below reconciles the Group's profit before income taxes at the UK
statutory rate to the Group's total income tax expense:
2025 2024
$m $m
Profit before income taxes 230 246
Profit before income taxes multiplied by rate of corporation tax in 58 62
the UK of 25.0% (2024: 25.0%)
Non-deductible/non-taxable items (9) 5
Movement in provision for uncertain tax positions 13 4
Other(1) (7) (16)
Income tax expense and effective tax rate 55 24.0% 55 22.5%
1. 2025 included a $6m impact in respect of prior year filings.
In 2024, this included the release of a $3m tax liability relating to
restructuring activities in Switzerland and the $11m impact of prior year
corporate income tax filings.
The Group has worldwide operations and therefore is subject to several factors
that may affect future tax charges, principally the levels and mix of
profitability in different tax jurisdictions, transfer pricing regulations,
tax rates imposed and tax regime reforms. The calculation of the Group's tax
expense involves a degree of estimation and judgements in respect of certain
items for which the tax treatment cannot be finally determined until
resolution has been reached with the relevant tax authority, specifically in
relation to open tax and transfer pricing matters. Due to the high volume of
intercompany transactions, the Group's evolving business model and the
increasing complexity in interaction between multiple tax laws and
regulations, transfer pricing requires judgement in determining the
appropriate allocation of profits between jurisdictions. The Group assessed
the impact of ongoing changes to the Group's operating model, the supporting
documentation for the tax and transfer pricing positions, existing tax
authority challenges, and the likelihood of new challenges by tax authorities.
The Group continues to believe it has made adequate provision for uncertain
tax positions on open issues in accordance with IFRIC 23 Uncertainty over
Income Tax Treatments. The ultimate liability for such matters may vary from
the amounts provided and is dependent upon the outcome of discussions with
relevant tax authorities or, where applicable, appeal proceedings. The
movement includes resolutions of uncertain tax positions in the year.
The Group has applied the temporary exemption as detailed in the IASB
announcement "International Tax Reform - Pillar Two Model Rules", which
amended IAS 12 Income Taxes, and therefore has not recognised nor disclosed
information about deferred tax assets and liabilities related to Pillar Two
income taxes.
6. Earnings per share
2025 2024
Net profit attributable to the shareholders of the Group ($m) 175 191
Basic weighted average ordinary shares in issue (number) 2,024,809,094 2,047,643,498
Dilutive impact of share awards (number) 9,477,296 9,153,919
Diluted weighted average ordinary shares in issue (number) 2,034,286,390 2,056,797,417
Basic earnings per share (cents per share) 8.6¢ per share 9.3¢ per share
Diluted earnings per share (cents per share) 8.6¢ per share 9.3¢ per share
The calculation of diluted earnings per share for 2025 and 2024 did not
contain any share options that were non-dilutive for the year, because the
average market price of the Group's ordinary shares exceeded the exercise
price.
7. Intangible assets
The movement in the carrying value of each major category of intangible assets
is as follows:
Product-related(1) Capitalised software(2) Customer relationships and non-compete agreements Trade names Assets under construction Total
$m $m $m $m $m $m
Cost
1 January 2024 2,281 174 332 263 31 3,081
Additions 1 4 – – 27 32
Arising from acquisitions – – 1 – – 1
Write-offs (13) – – – – (13)
Transfers 11 25 – – (36) –
Foreign exchange (14) (2) (6) – (1) (23)
31 December 2024 2,266 201 327 263 21 3,078
Additions 1 2 – – 48 51
Transfers 1 10 – – (11) –
Foreign exchange 57 6 12 2 2 79
31 December 2025 2,325 219 339 265 60 3,208
Accumulated amortisation
1 January 2024 1,776 109 249 12 – 2,146
Amortisation 118 20 19 – – 157
Write-offs (13) – – – – (13)
Impairment – – 1 – – 1
Foreign exchange (13) – (6) – – (19)
31 December 2024 1,868 129 263 12 – 2,272
Amortisation 118 21 16 – – 155
Impairment 72 – – – – 72
Foreign exchange 48 3 12 – – 63
31 December 2025 2,106 153 291 12 – 2,562
Net carrying amount
31 December 2024 398 72 64 251 21 806
31 December 2025 219 66 48 253 60 646
1. The comparatives and policy for product related and
development costs have been combined and re-presented as one category labelled
product related. This is due to the similar nature of the assets within each
category.
2. Capitalised software is in respect of purchased and
internally generated software.
On 31 October 2025, the Centers for Medicare & Medicaid Services (CMS)
published a decision outlining their revised payment rate of $127.28 per sq cm
for skin substitutes with effect from 1 January 2026. This payment rate
impacted Convatec's InnovaMatrix® product, which is a leading porcine
placental-derived extra-cellular matrix for treatment of chronic, surgical and
trauma wounds. Management deemed that this announcement constituted an
indicator of impairment in respect to the InnovaMatrix® platform intangible
asset held on the balance sheet and calculated the recoverable amount of the
asset.
As a result, an impairment loss of $72m was recognised in the year. Prior to
the impairment, the asset had a carrying amount of $112m. Following the
recognition of the impairment loss, the asset's carrying amount at 31 December
2025 was $40m. The asset continues to have a remaining useful life of ten
years. The recoverable amount of the asset was determined to be its fair value
less costs of disposal (being the higher of its value in use and fair value
less cost of disposal). The excess earnings method has been used to measure
fair value less costs of disposal.
In line with IFRS 13, Fair Value Measurement, the fair value measurement of
the asset has been classified as Level 3 in the fair value hierarchy as its
measurement is derived from significant unobservable inputs requiring
significant management judgement. Key assumptions used in determining the fair
value less costs of disposal include:
* discounted cash flows derived from financial forecasts up to 2036, which
represents the end of the asset's remaining useful economic life. Cash flow
projections reflect management's best estimates based on historical
performance and future conditions and have been appropriately risk adjusted.
* A post-tax discount rate of 9.0% was used and reflects the current market
assessment of the time value of money and risks specific to the Advanced Wound
Care CGU.
A key source of estimation uncertainty has been recognised in respect of the
carrying amount of this intangible asset - refer to Note 1 - Basis of
Preparation. This includes sensitivity to reasonably possible changes in key
assumptions.
8. Dividends
Dividends paid and proposed were as follows:
Pence per share Cents per share Total
$m
Final dividend 2023 3.517 4.460 91
Interim dividend 2024 1.422 1.822 39
Paid in 2024 4.939 6.282 130
Final dividend 2024 3.639 4.594 101
Interim dividend 2025 1.399 1.877 39
Paid in 2025 5.038 6.471 140
Final dividend 2025 proposed 3.973 5.367 105
The final dividend proposed for 2025 is to be distributed on 28 May 2026 to
shareholders on the register at the close of business on 17 April 2026 and is
subject to shareholder approval at the Annual General Meeting on 21 May 2026.
The dividend will be declared in US dollars and will be paid in Sterling at
the chosen exchange rate of $1.351/£1.00 determined on 23 February 2026.
The interim and final dividends for 2025 give a total dividend for the year of
7.244 cents per share (2024: 6.416 cents per share).
9. Borrowings
The Group's borrowings as at 31 December were as follows:
2025 2024
Year of Face value Face value
Currency maturity $m $m
Revolving Credit Facility(1) USD/Euro 2028 411 384
Term Loan USD 2027 – 250
Senior Notes USD 2029 500 500
Senior Notes USD 2035 500 –
Interest-bearing borrowings 1,411 1,134
Financing fees(2) (13) (11)
Total carrying value of borrowings 1,398 1,123
Current portion of borrowings – –
Non-current portion of borrowings 1,398 1,123
1. Included within the Revolving Credit Facility was €106m
($125m) and £128m ($173m) at 31 December 2025, representing 30.2% of RCF debt
denominated in Euros, 41.9% of RCF debt denominated in GBP and 27.9%
denominated in US dollars. As at 31 December 2024, this was €106m ($110m)
and £7m ($9m), representing 28.6% of RCF debt denominated in Euros, 2.3% of
RCF debt denominated in GBP and 69.1% denominated in US dollars.
2. Financing fees of $13m (2024: $11m) related to the remaining
unamortised fees incurred on the credit facilities and on the senior notes.
In September 2025, the Group issued senior unsecured notes of $500m -
diversifying its debt structure, lengthening its debt maturity and reducing
its refinancing risk. The Group continuously reviews its debt structure,
seeking opportunities to optimise profile and pricing. The notes have a tenor
of 10 years and priced at a coupon of 5.3%, demonstrating the attractiveness
of the sector and confidence in Convatec's credit profile. The proceeds were
partially used to prepay existing bank debt (with $7m of discount and issuance
costs incurred and to be amortised over the life of the senior notes).
As at 31 December 2025, the Group had $411m of unsecured bank debt maturing in
2028, senior unsecured notes of $500m maturing in October 2029 and $500m
maturing in 2035. This new debt profile will support the Group's continued
investment and growth. As at 31 December 2025, $539m (2024: $566m) of the
multicurrency revolving credit facility remained undrawn. The Group ended the
period with total borrowings, net of financing fees, of $1,398m (2024:
$1,123m).
Financial covenants
The principal financial covenants are based on a permitted net debt to
covenant-adjusted EBITDA(1) ratio and interest cover test as defined in the
credit facilities agreement. Testing is required on a semi-annual basis, at
June and December, based on the last 12 months' financial performance. At 31
December 2025, the permitted net debt to covenant-adjusted EBITDA(1) ratio was
a maximum of 3.5 times and the interest cover a minimum of 3.5 times, terms as
defined by the credit facilities agreement. In accordance with the credit
facilities agreement, the net debt to covenant-adjusted EBITDA(1) ratio can
increase to a maximum 4.0 times for permitted acquisitions or investments.
The Group was in compliance with all financial and non-financial covenants at
31 December 2025, with significant available headroom on the financial
covenants (in excess of $837m debt headroom (2024: $888m) on net debt to
covenant-adjusted EBITDA(1) and $408m covenant-adjusted EBITDA(1) headroom
(2024: $303m) on interest cover). Excluding the impact of interest rate swaps,
the weighted average interest rate on borrowings for the year ended 31
December 2025 was 5.2 % (2024: 6.0%).
1. Covenant-adjusted EBITDA is calculated based on terms as
defined in the credit facilities agreement. This is different to adjusted
EBITDA, which is an alternative performance measure ("APM") as disclosed on
pages 18 to 23.
Senior notes
The senior unsecured notes maturing in 2029 are subject to an interest cover
financial covenant as defined in the indentures which is a minimum of 2 times,
with testing required annually at 31 December on the last 12 calendar months'
financial performance. There are no financial covenants attached to the senior
notes maturing in 2035.
Borrowings measured at fair value
The senior notes are listed and their fair value at 31 December 2025 of $986m
(2024: $457m) has been obtained from quoted market data and therefore
categorised as a Level 1 measurement in the fair value hierarchy under IFRS
13, Fair Value Measurements. For the Group's other borrowings, the fair value
is based on discounted cash flows using a current borrowing rate and is
categorised as a Level 2 measurement. At 31 December 2025, the estimated fair
value of the Group's other borrowings was $375m (2024: $679m).
10. Commitments and contingencies
Capital commitments
At 31 December 2025, the Group had non-cancellable commitments for the
purchase of property, plant and equipment, capitalised software and
development of $131m (2024: $43m).
Contingent liabilities
The Company and its subsidiaries are party to various legal claims and
disputes which arise in the normal course of business. Provisions are
recognised for outcomes that are deemed probable and can be reliably
estimated. Management believe that any material liability in respect of legal
actions and claims not already provided for, is remote.
11. Subsequent events
The Group has evaluated subsequent events through to 23 February 2026, the
date the Consolidated Financial Statements were approved by the Board of
Directors.
On 23 February 2026, the Board proposed the final dividend in respect of 2025
subject to shareholder approval at the Annual General Meeting on 21 May 2026,
to be distributed on 28 May 2026. See Note 8 - Dividends to the Condensed
Consolidated Financial Statements for further details.
12. Responsibility Statement of the directors on the Annual Report
The Responsibility Statement below has been prepared in connection with the
2025 Annual Report. Certain parts thereof are not included within this
announcement.
We confirm to the best of our knowledge:
* The Financial Statements, prepared in accordance with United Kingdom adopted
international accounting standards and IFRS Accounting Standards as issued by
the International Accounting Standards Board (IASB), give a true and fair view
of the assets, liabilities, financial position and profit and loss of the
Company and the undertakings included in the consolidation taken as a whole;
* The Strategic Report includes a fair review of the development and performance
of the business and the position of the Company and the undertakings included
in the consolidation taken as a whole, together with a description of the
principal risks and uncertainties they face; and
* The Annual Report and Financial Statements, taken as a whole, are fair,
balanced and understandable and provide the information necessary to assess
the Group's and Company's performance, business model and strategy.
This Responsibility Statement was approved by the Board of Directors on 23
February 2026 and is signed on its behalf by:
Jonny Mason
Fiona Ryder
Chief Executive Officer
Chief Financial Officer
23 February 2026
23 February 2026
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