Good morning, everyone. I'm Olivier Bohuon, and I'm the Chief Executive Officer of Smith & Nephew, and I welcome you to our third quarter results presentation. I will speak about our results for the third quarter and then hand over to Adrian to take you through the numbers. When Adrian is finished, I will come back and update you on the progress we are making against our new strategic priorities and the programs we are issuing to generate efficiencies and revert resources for investment to drive future growth. As usual, we'll take questions at the end of the formal presentation. The trending environment in the established market continues to be difficult. Despite this, Smith & Nephew has another strong quarter of revenue growth, and regained market share in many of our product franchises and geographies. Overall, our revenues were up 10% to just over $1 billion, an underlying improvement of 5%. Orthopaedic Reconstruction generated revenue growth above the market rate for the straight fifth quarter in a row. Endoscopy grew 7%, with a strong improved performance in Europe. Advanced Wound Management grew at more than double the market rate. This was driven by our Negative Pressure Wound Therapy franchise, and a steady flow of new products across our wound care range. Our trading profit -- and trading margin was 19.8%. Endoscopy and Advanced Wound Management delivered strong margin, and both achieved improvement year-on-year. The Orthopaedic margin was disappointing at 15.6%. Some of this was due to the continuing negative sales mix we highlighted in the first half, some is due to an unusually high level of periodic expenses on which Adrian will give more detail. However, a significant amount is due to Orthopaedic having a close base which is structurally too high, given the challenges and changes in the established…

Thank you, Olivier, and good morning, ladies and gentlemen. Turning firstly to Slide 9 in the presentation, the income statement. Revenue in the quarter was $1.032 billion. And as Olivier mentioned, this represents 5% underlying sales growth after adjusting for exchange rates on quarter 3 last year. Trading profit in the quarter was $205 million, an underlying reduction of 9%. The reported trading margin of 19.8% was 310 basis points lower than quarter 3 last year. This profit and margin were lower than we had expected. The progress in Wound and Endo was in line with or slightly ahead of our expectations, but progress in Ortho was not. I will give some more detail on this in a moment. Interest costs are down on last year mainly reflecting our lower debt. Moving to the next slide, Slide 10, and moving further down the income statement. We now expect a 30.2% tax rate for the full year, that is a slight reduction on the 30.8% rate we had been expecting. Accordingly, the rate in quarter 3 is 28.5% including an adjustment for the higher rates we had originally booked in Half 1. EPSA in quarter 3 were $0.162, essentially flat on last year but is stronger than trading profit growth due to the weaker dollar, the lower interest charge and the lower tax charge. Turning to the next slide, Slide 11, and the analysis of revenue by business segment. This slide shows the reported growth rates by division and the impact of currency movements on those growth rates. The impact of currency was quite material in the quarter and in quarter 3, the value of the U.S. dollar was 5% weaker year-on-year against the average of the currencies in which we operate. And as usual, the impact in Wound was slightly…

Thanks, Adrian. I would now like to remind you of that strategic priorities to drive growth as set out to Smith and Nephew last quarter and update you on the progress we have made in adding [indiscernible] these plans. Starting with the reminder of the 5 strategic priorities and framework. So in our establish market, we now have management teams focused on a small number of priorities. Firstly, is to optimize our sales and services in order to gain market share. Secondly, to deliver greater efficiencies. And thirdly, to support the emerging markets and tertiary market organizations through R&D, marketing and regulatory. In emerging markets, we'll allocate greater resources and focus to capture the growth opportunities here. This includes disrupting product portfolio specific to these countries. From the 4 largest emerging market countries, we have set our sale targets of delivering over $500 million of revenue by 2015. Innovation remains core. We'll increase our investment and ensure this focus in the areas which will offer greatest growth in value. In R&D, we have committed to spend additional $300 million dollars over the next 5 years. We will prioritize investments in developing a larger emerging market portfolio, patient match implants and insurance, minimally in those techniques and Negative Pressure Wound Therapy. We are simplifying and improving our pressure mode. This is to liberate resources to redirect them to the highest growth areas. We'll also become more agile and faster in execution. Finally, we'll supplement and accelerate our organic growth with appropriate acquisitions. As I said, I'm setting an ambitious, achievable agenda for growth, one which allows Smith & Nephew to deliver strong returns for its shareholder and benefit for its wider stakeholders. Turning to progress we have been making again these priorities. So what have we achieved since I spoke to…

We'll take our first question today from Mr. Ed Ridley of Bank of America.

If I could start just on the guidance, Adrian, that you've given. The guidance looking [ph] forward to 2012 in terms of saying your current expectation is that efficiency improvements will modestly exceed headwinds for next year. Does that relate to the full year number, the full year margin this year, or your sort of 24% long-term margin? So the follow-on question I had was particularly relating to looking at the cost savings that you have outlined today briefly, but also in your release. Can you give us a very rough idea of the sort of relative opportunities that you see in savings and COGS versus the sales force versus G&A, or is it too early to do so?

Yes, Ed. On the first one, the intention of the guidance that we were giving in respect to the 2012 margin was basically to say that absent some dramatic changes in the pricing structure, which we absolutely do not expect, then we would expect a modest improvement in the margin on the outset for 2011. The question was what should we see as the relatively bigger ones and which we see as the relatively smaller ones. Frankly, we see opportunities in all of them. In terms of -- perhaps the least one we see in terms of magnitude of cost savings per se is the sales force where Olivier has mentioned and repeated on several occasions, major changes to the sales force and the way they interface with customers is not part of our current focus. That doesn't mean to say that there's not a lot of effectiveness in improving the way the sales operates that's available. That's certainly a major focus. But in terms of the dollar reduction in sales spend, that is not our priority. The other 2 areas are both the cost of sales and the G&A, excluding SPAR [ph]. In terms of cost of sales, the themes we have been actually very successful in Wound over the last 3 or so years in local sourcing and what's been behind that. Frankly, we see more of the same across the business, and we do see significant opportunities in that area, important opportunities because obviously it's in established markets we see them on several occasions. Our core assumption is to see continued modest price pressure for a prolonged period. Well absolutely, it has to be a lot more efficient with cost of sales to deal with that. So we see -- by basically by reinvigorating and extending some of the same sorts of things we have been doing further in other parts of the business we see significant opportunity. But also, and perhaps even more so in the G&A area, part of those potential things do stem directly from putting together Ortho and Endo. I mean there are strategic opportunities in that, but it goes beyond that. I think you heard last quarter very clearly from Olivier that our focus is very different and going to be very different in established markets from growth markets. One needs to craft an organization, an organization mentality and an organization infrastructure in the established market that's appropriate for the established markets, and that's different from the one we have today. So this program really is about that reshaping. And in that reshaping, a question that comes significant and material cost savings -- cost reductions, no doubt about that.

Just one follow-up. Can you give us a rough idea of how much of our cost of sales you believe is in terms of your sourcing is from, should we say, low-cost emerging developing countries and how much is still from developed markets?

At the moment, we roughly think teens percent is from low-cost sourcing. I don't want to give you a fuzzy answer, but of course, you then depend on whether it's sourced, or is it in your own production, but roughly in the teens is what it is now from low-cost sources. And we do absolutely see potential to increase that.

We'll take our next question from Mike Jungling of Morgan Stanley.

I have 3 questions. Firstly, on the target savings of $150 million, can you give us a sense of how much of the savings will be realized already in 2011? And whether the $150 million in savings will hit 2012 in totality, or will it be more a proportion of it and then also how the savings will impact 2013. Question two, can you give us a sense of the -- what we should expect for the Q4 EBIT or the group EBITDA margin for the fourth quarter? And question number 3 is when you give guidance in 2012, with respect to the top line, will you need to reflect a tougher environment because of the incremental news about austerity measures in Europe and perhaps a more difficult environment in the United States?

Okay, Mike. So let me -- we are going to share the answer. Regarding the first question on the target of savings. We definitely have a significant improvement in Q4 and the action plan have started so we expect, as mentioned by Adrian, to have a quarter 4 which will be both 24%. Regarding then the timing of the $150 million, well this will be a speeding cruise of roughly $150 million of savings. So 2012 definitely we'll have a significant amount of savings, and then we expect onwards to have this amount of saving at least generated on a yearly basis.

Olivier, so 2013, will be the first year where you will have the full $150 million in savings?

I'm expecting more than $150 million of savings in 2013 actually. But yes, the speeding cruise will start really at the end of 2012.

Speeding cruise -- for those who don't speak French -- means cruising speed. But it will not all be there in 2012. That's the other way of putting it, Mike.

All right. And Adrian, a guidance sort of for Q4 group EBITDA margins. Is it 24% for the entire group or is it...

Yes, we're giving it 24% for the entire group, yes. For quarter 4, at least.

Regarding your question on 2012 top line, we do not foresee any type of additional austerity measures. So we believe, however, that what is happening will remain that mean we'll still have pricing pressure, we'll still have government pressure. But we do not see any deterioration of this situation.

If I still put 24% margins into the group EBITDA, that's a monster improvement in the fourth quarter. I mean how likely is that you could do 24%, or is it about 24% -- I mean, could it be 30 bps, 40 bps less than that?

Michael, I think you need to make your own judgments. We're quite clearly saying we expect to be at least 24%. I mean don't forget there is a seasonality in our business. Quarter 4 is always the strong margin. It's less than where we would have hoped to have been if you had been asking the question at the start of the year, materially so.

We'll take our next question today from Ingeborg Øie of Jefferies International. Ingeborg Øie - Jefferies & Company, Inc., Research Division: Two questions, if I may. Firstly, on the third quarter Orthopaedic margin, if I understood it correctly, it was about $10 million here which would be ongoing margin pressures that we shouldn't expect to have been any special effects in the quarter, which was the lower gross margin of the product mix and geographic mix, both a periodic cost and the other costs are not ongoing. Therefore, could you confirm that? And secondly, on the $150 million targeted savings, that looks to me like something like a 300 basis points margin improvement potentially to and given that the Wound Care and Endoscopy division seems to be making very good headwind already, I'm wondering if this 24% medium-term margin guidance will then include that 300 basis point improvement in the cost base is reflecting an expectation that the Orthopaedic division will have something like 600 basis points lower margins without these cost savings on an ongoing basis?

On the first question, and Adrian, you can take the second one if you want. I mean on the weak Ortho margin, you're right. Actually you have 3 main items here to explain the deterioration of the margin of the Orthopaedic business in Q3. The first one is the mix pressure which is around 200 basis points at $10 million, then some product mix or margin products like VISIONAIRE and VERILAST, geographic mix especially with emerging market growth in Eastern Europe. Then we have an unusual benching of periodic cost of about $10 million, both the normal level. And these are legal costs, royalties and IP settlements and some write-off of some slow-moving inventory. And then, as I was mentioning, there was definitely an inadequate execution of existing programs -- selling programs. So the cost base of Ortho is high, Endoscopy is about $10 million. So roughly, this is what we have to explain, the 15.4% margin of Q3.

And actually, only one of those 3 goes away immediately without doing anything. And that's the bunching of periodic costs. I mean we have these periodic costs, we just got an unusual number in quarter 3 annoyingly. That one, you should not expect to recur. I mean, the mix isn't going to go away over-night. That's the mix we got to deal and we've got to deal with it by running the business well and running the costs well. And the issue of the cost structure in Orthopaedics, you don't snap your fingers and it goes away. It needs working at and it will take time. It will go, it will be reduced for sure, but it isn't going to disappear overnight completely in quarter 4.

If I may on this one. We have had a good structure for a while, and we have been in this structure which was a good structure at the right time. But now, the market is what it is. The growth is not as strong as it was in the past as you know. So we need to adjust this. And we had a plan which was supposed to address this, and I don't think that we have managed this on the -- at appropriate basis. So that's why now, I here, I'll embrace that with the management team to be sure this will happen and actually that starts to move now.

Your second was on longer-term margins. No question if you divide 150 into our revenue, you're looking at north of 300 basis points. However, there are obviously other variables that play into where the margins going to be in the future. There is a price pressure that Michael pointed out in the previous question, and I don't have to make judgments about what that is. We're very clearly in the camp that they're not going away quickly. Although we don't -- in our core scenario, we don't see them increasing dramatically, we certainly don't see them going away. There's investments for growth and we are absolutely seeing growth potential geographically and in some segments of our business, technological investments in some of our business which needs to be invested, they must be invested and uptake that important. And also, there is on the positive side ongoing productivity. That doesn't necessarily bundle up and put in a program but is part of day to day operational management. All those come in as you think about the future longer-term margin, hence you need to make judgments for the set of variable, not just $150 million to make a judgment on the future margin. Ingeborg Øie - Jefferies & Company, Inc., Research Division: Okay, and just to follow-up. Is that mainly in Orthopaedics that you expect this, given that the margins have progressed very nicely in the 2 other divisions. And am I then right in assuming that suddenly now you're expecting a 600 basis point lower margin in Orthopaedics on an ongoing basis?

The answer is no. Actually we plan to improve where we can obviously, and do not focus only on the recovery of the Ortho because we can improve and we can even improve margin in the other businesses also with obviously many factors.

Cost savings have to come from the whole business, an ongoing basis. There's no question about that.

Our next question today comes from David Adlington of JPMorgan. David Adlington - JP Morgan Chase & Co, Research Division: I just wanted to focus more on the margins, I'm afraid. On my math this morning, I think you're going to finish this year with about 22.2% margins and then you're guiding next year for modest improvements. When you're talking about a modest improvement, is that relative to the 22.2% and what do you mean by modest? And secondly, does that include any contribution for the $150 million that you talked about there in savings?

Well, I think we have said yes the modest improvement will be on the 22 point something. We said that it will be both 24%, so you made a calculation. So I do expect to have something around 22.2% and I expected both on 22.2%. So we will definitely have modest improvement in both this figure. This includes a part and I was talking about this cruising speed of $150 million in 2013. And definitely, this will have quite an impact in 2012 but certainly not for the total of $150 million of savings. David Adlington - JP Morgan Chase & Co, Research Division: Okay. And then maybe just a follow-up in terms of that $10 million cost base was too high in the third quarter. Was that in any way related to you investing ahead of an anticipated rebound in the recon market that didn't come through?

Not at all, absolutely not. I mean we talked about structure cost here, and it is not at all additional investment. So this is something which again -- and we see very clearly now that mixing the 2 divisions, the Orthopaedic division and the Endoscopy division helped us definitely to manage these. And that's why when I was saying in my talk that we have discussed savings plan as a part of the strategic priorities implementation, it is definitely what is happening. So it's not additional investments here, it is just something we need to address.

And our next question today comes from Lisa Clive of Sanford Bernstein. Lisa Bedell Clive - Sanford C. Bernstein & Co., LLC., Research Division: First question on Advanced Wound Management. You mentioned in particular that Spain and the U.K. were down pretty significantly. If we think about 2012, what are the markets that you are most concerned about? And perhaps, maybe if you could just comment on which markets have actually held up and whether you think they could at some point crack? Number two, again back on margins, you've mentioned VERILAST and VISIONAIRE are dilutive to gross margins. My understanding is those are 2 of your faster growing products. I'm just trying to understand how perhaps the gross margin progresses into next year with that as a backdrop on the product mix. And then lastly, Olivier, you had mentioned there will be costs associated with the restructuring. So when you say 24% medium-term margin, is this on an underlying basis? And perhaps it's a bit too early to give the guidance to us now but in February, will you be giving us guidance for the year both on a reported and on an underlying basis?

Okay, Lisa, let me address the first question first. When you were mentioning the Wound, you talked about the Wound Management here about the markets? Lisa Bedell Clive - Sanford C. Bernstein & Co., LLC., Research Division: Yes.

Okay. So in Wound, okay, I said that we have a phase in Q3, a pretty negative market. Actually, when you look at the market of Wound, the market is globally up 2% for the Wound business, okay? In the U.S., it's up 5%; outside the U.S., it's 1%; and in Europe, it's minus 2%. So you see that this minus percent is basically due to a very low market growth in a negative market growth in Spain and negative market growth in the U.K. and a low market in France also. So if you ask me, what are my worries for next year, I would say definitely Europe. That's something which is pretty clear. We do not see any type of strong recovery of the market in Europe for next year. The markets we are mentioning, it would be the same market then for next year and I don't foresee any bad news in the U.S. or in general more globally.

And then on your other 2 questions, Lisa, how do we see VISIONAIRE and VERILAST and products like that driving gross margin next year? Well, you're right, you've highlighted the mechanic that has been a powerful mechanic driver this year that they are higher margin, they are premium products, they do drive our sales they do help the top line, but they are lower gross margins so they depress our gross margin. That particular dynamic around those products, we don't see changing quickly. Slightly more broadly, we do still see the ability to put premium price in for premium products and that these careful margins make sure one puts in the appropriate price at the right place in the market. But nonetheless, clearly, it is a market with these austerity measures which is one where there is a higher degree of price and mix pressure than there have been for some time, and one has to be cognizant of that. And one has to deal -- in the established markets, one has to deal with one's cost base facing that reality. As regards the cost of the program, yes, there will be cost of the program. Yes, we do expect to describe them when we stand up with our full year results in February. Yes, the margins we are quoting are before incurring those costs we would expect to regard those costs as exceptional and beneath the line as it were in delivering those margins. And thank you for clarifying that. Lisa Bedell Clive - Sanford C. Bernstein & Co., LLC., Research Division: And actually then I guess if that will lower reported margins next year, is that something that you think would carry on into 2013 as well? I'm just trying to figure out when that 24% is actually going to be a reported figure.

Yes. We -- I mean, the reason we are well advanced on this program -- actions are happening. But we're not so advanced that we wanted to be able to put out to you guys today. And that includes the phasing of the expenditure and the detailed phasing of the benefit, although we have given you some sense which is where we believe it is now in terms of 2012 versus 2013. So therefore, I think I'd prefer to duck about giving you granularity until we stand up in March. You'll see it in February when we'll have it ready as a package.

We'll take our next question today from Veronika Dubajova of Goldman Sachs.

Veronika Dubajova here from Goldman Sachs. Three questions, if I can. One, I was hoping you can help us understand where exactly that $10 million reduction is coming from. Are we talking G&A? Is this selling and marketing, or is there something else that you're focusing on within Ortho to get the margin back to where you think it should be? Second, in terms of your commentary on like-for-like pricing pressure in Ortho, you're the first company to highlight deterioration in this quarter. I was hoping, Adrian, maybe you could give us a sense for how the U.S. versus Europe developed in the quarter and where is this kind of slight increase coming from that you're seeing? And lastly, on your medium-term 24% EBITDA margin. I just wanted to understand that progression. When you say medium term, we all have a different number in mind. So if I were to think about your business over the next 3 years, is this a end of 2012, end of 2013, end of 2014 target? Or can you give us some sense in terms of how the acceleration and expenditures offsets or combines with the reduction in spending and when we can expect you to hit that target, that will be great.

In terms of where was this $10 million reduction in quarter 3. I think the way to understand is, as I've said I hope quite clearly, that the programs have been in place, of course they've been in place to deal with the cost base, but they have not been executed as well as we would like them to have done. So the $10 million number in mathematical terms comes from the difference with where the plan we expected to being executed would have got us to and where it actually got us to. There are a number of types of expenditures between those 2. And across the G&A area, across people costs, more discretionary costs, it is a range of costs associated with the execution of that program. In terms of the like-for-like price deterioration, frankly, we're not singling anything major here. It was closer to 2 last quarter and for a couple of quarters before that. It's closer to 3 this quarter. In fact, the change have been broadly the same in the U.S. and Europe. It's not been a question of one standing out from the other. They both have been for us and slightly weaker. You're quite right, we've noticed also that others have been reporting broadly the same. But we don't think we're experiencing any real difference in there. In terms of what is the medium term, again Veronika, although we are well advanced into this program and that the program is positively being delivered, we don't want to package it up for you and give you a total view until February. I would, however, point out on 2013 specifically. Although we do expect pretty much the full benefits of $150 million per annum to be there in 2013, I would point out that 2013 is subject to legislative changes in the United States, there's a medical device levy coming in which of course is going to provide a margin headwind for everyone in this industry. But that's something which is -- we're guessing everyone is going to have to factor into their models, including us.

Okay, so just to clarify, Adrian. I'm sorry to be nitpicky about this, but the 24% number does not include the potential hit of the MedTech tax?

No, it doesn't.

And our next question comes from Martin Wales of UBS.

If I could get away from restructuring and Ortho for a second. Your performance in Endoscopy and Arthroscopy in particular seems to be very strong and you've seen a good recovery in blades. I guess the underlying driver of this is really your ability to penetrate x U.S. markets, which are growing faster than the U.S. How much more room is there for you to continue do well in these markets, and where can margins get to in this business?

Well, I think that we definitely see an improvement in Europe as I was mentioning and we have had a very good growth in Europe in this business. We don't know about the market. As you know in Endoscopy, it's difficult to say. But we believe we are gaining share on this one. We believe there is a big space actually for improvement, whether it is a gain in the emerging markets portfolio and we're working on - as I said -- on redefining an appropriate portfolio for the emerging market. Again, a manufacturer at the right cost and sold at the right price because when I'm mentioning emerging market growth, I'm mentioning profitable growth in emerging market which is absolutely important for us. So yes, I do believe that we have some more space. We have space in cost of goods improvement, we have space in maximizing the growth in different geographies. I do believe we still have better things to do in the U.S. so we have invested also, as you know, and I was mentioning that in Q2 in the biomaterials. And this biomaterials are absolutely critical for the future. They will be part of the innovations of tomorrow. So I mean, I'm very confident that we can improve even on top of what we have now in the Endoscopy business.

And in Wound Management, if I did the calculation correctly, your negative pressure [indiscernible] deliver just under $30 million of sales in the quarter, I would estimate. I know you're not giving a precise number. That seems not much different to Q2. Should we expect that growth to accelerate again in Q4? Obviously, it's the first full quarter of PICO and it sort of implies that hasn't had much impact so far?

Martin, we are very comfortable with the growth of NPWT. We do get slight quarter-on-quarter variations to do with the timing of rental versus pump sales and the like. But underlying, there is no doubt in our mind at all that underlying NPWT -- I without PWT [ph] -- is doing extremely well, extremely well, across all geographies where we sell it, and PICO is on top of that. So we have absolutely no concern about the growth -- absolutely no concern about the growth rate of our NPWT range.

And sorry, one question just to understand your comments on this $150 million and the timeframe it's going to come through. 2014 is the first full year we should see the benefit on the basis of what you said, is that the correct interpretation?

No, sorry. If I was unclear, forgive me. 2013, we see the benefit of it. We were just pointing out that...

The full benefit is what I'm saying. So it's going to take you less than just over a year to execute on this.

Pretty much. Not 100%, maybe not. But certainly overwhelmingly, we're going to see it coming. We're going to see in 2013 the sort of stuff we are staring at is not -- the bulk of this is not very long lead time implementations. Some of it will take longer, but the majority we expect to see there in 2013. And again, we'll give you more flesh in February. But just in broad-brushed terms, we should think of 2013 the bulk being there. But why I was just being -- slightly caveating the last question from I think it was Inge, or whoever it was, no, Lisa -- no, Veronika. It was around -- don't forget there is this particular additional headwind for the whole industry in terms of margin in 2013 called the Medical Device Levy, and we're going to have to deal with that one way or another. As we get closer to time, we'll understand more about it and more about the business.

So we should think of it as some sort of a -- I'm sounding like a scientist -- a Sigmoid curve, i.e. a little bit -- or an "S" curve -- a little bit next year, the bulk of it 2013 and the absolute full benefit of '14.

Yes, that's a reasonable way. Thank you, Mr. Scientist Wales, yes.

And we'll take our next question from Matt Miksic of Piper Jaffray.

I've got -- I'm having some connectivity problems here so I apologize if I drop off here. The coverage is a little choppy where I am. But I had a follow-up question. I just want to make sure I understand your comments on knees and margins generally in Orthopaedics. As we hit, and I know you're not giving specifics here, but as we hit into the next couple of quarters or the changes that you're making expected to have an impact on the gross margin there, on the operating profit line there or both? Or is it going to take a longer period of time to start turning those margins up given what's going on in your hip and knee business?

You're going to see a bottom line effect, Matt. You'll see -- we expect and again, we'll give you more details. We're actually in this program, but it's not ready to be packaged for you guys yet. But absolutely, our feeling is you're going to see an earlier and quicker impact in SG&A. Cost of sales stuff just takes longer to deliver for a whole set of reasons. But we will ultimately see them both.

So faster on the operating line, not so fast on the gross margin line for those businesses? And then, and I'm not sure if I missed it, but your comments on the Visualisation side of sports medicine. Slightly better but still, it's kind of a tough market. In terms of capital or the capital exposure to that part of your business, can you help us understand maybe the trends that you're seeing getting into the end of the year?

Well, the capital is down to about 10% of our portfolio Endoscopy. And we are asked this question from time to time but frankly, we are not good people to have a perspective because we sell relatively low cost per unit capital and it's a relatively small part of our business. So we continue to see it being choppy, but I frankly don't think you should look at us for any significant insight in that area.

But in your business line specifically, that's something that's getting to be a less important part of your business. Is that the right way to read it?

Absolutely, Matt, and that's been our approach consistently over the last several years. We've been focusing our attention on capital to being capital more -- precisely connected or definitively connected to our minimally invasive business. Whereas a few years ago, we had a much broader focus and we've been doing in that in a very measured way to make sure customers get fully supported. And we're pretty much at the end of that focusing road, and we're now at the part of the capital which is very important to us. The business that's very close to the Arthroscopy business, imaging in particular where there's -- we see a great deal of interesting and exciting stuff going forward. And now, it's sort of reached pretty much the signs we see but these are relatively small that is not a large part of this. It's an important part, but it's not a huge part.

And one follow-up, if I might, for Olivier. It sounds like the next several quarters perhaps the next 1, 1.5 years, there'll be a certain amount of focus on this margin and restructuring that you've talked about. Can you talk a little bit about how you're thinking strategically about the business, in terms of pieces that you have in the portfolio, additions you might make to the portfolio, or is that something that because of the work you're doing gets pushed out say 6 to 12 months from where you are?

Okay, that's an interesting question. The focus -- yes, the core focus of the year to come and this has started actually when we have decided to implement this strategic priorities will be to capture the growth where we can capture the growth into other profitable growth. I do believe that on top of all this SG&A management, all this cost savings we have to improve our manufacturing footprint, we have to really optimize our cost of goods structure. So we have many things to do here, but it's not the only one. I think that what I -- I once said that I believe in this business that there is a very good dynamic, despite the fact that we are all claiming that the markets are difficult. Actually they are difficult, but they are, I would say, not very difficult. So we can still be good, we can still be strong, we can still generate a good margin in this business. It's a question of adapting the sail to the wind, and so that's what we are doing now. Now we -- going back to the second point, what do we want to do well. I'm not very keen in having a lot of diversification of our business. So I think it's important for us to reinforce our strengths and reinforce the feasible. We believe the future will be bright and again, I can tell you that I do believe in the Advanced Wound Management, especially in this Negative Pressure Wound Therapy and other parts of this business as well as the minimally invasive surgery, which is for the joints extremely important for us and where we see a bright future.

We'll take our next question today from Mr. Tom Jones of Berenberg Bank.

Sorry to hop back to it, but I have a few more questions about the $150 million. I was wondering if you could try and break it down for me in a slightly different way to how we can talk about so far. Of the $150 million, how much of it would you say is risk-free cost savings? And by that, I mean manufacturing, rationalization, cheaper paper clip supply, whatever it may be. And how much of the $150 million comes with some degree of business risk in sales force rationalizations, that kind of thing? Just trying to get a sense of the potential impact on revenues. We've seen many companies engage in cost cutting in MedTech. And what often happens is the top line just falls away as a result, so some comfort around that will be helpful.

Let me answer to you a simple way. First thing we have tried to do since the beginning actually and it's in the implementation of the strategic priorities is to avoid business disruption and keep on track with the growth that we have -- we used to have. So I'm very keen in minimizing the risk here, which means that and Adrian, I think, was mentioning this. On the savings part, we do not plan to significantly impact the sales force. So that's very important. So what we believe is we have structures which are pretty heavy. And again, we see that combining Ortho and Endo, and we see that there's mechanical improvement to do when we think about it's show. When think about some admin function, having 2 structure going to 1 structure makes a lot of positions [ph] . I give you an example, another example that we have announced recently. Europe. We now won out of Europe and obviously, the structure which was a mix of Endo structure and Ortho structure at management level are now just one structure. So I think it's important to see that the risk-free part, I think, is most important part of this cost-saving program, and I do not expect and I'd tell you I would be extremely cautious in avoiding any type of potential disruption in the implementation of this program.

Okay. And the second question maybe more for Adrian rather than Olivier because you weren't around at that time. But you spent the bulk of the 2006 to 2010 timeframe under EIP squeezing out cost savings and efficiencies. Now I'm sure many of the things that you found under this $150 million program, you also found under the EIP which sort of begs the question, if you found them under the EIP and decided not to do them, why have they suddenly become acceptable to do at the current time? What's changed? Is it the revenue growth outlook? What's different between now and then, or did you just miss them in the EIP program?

Let me answer quickly. It's Olivier again. I think it's a key question. And when you think about the structure and the cost base of the company, you need to adapt it. It's not a one shot, and the EIP was an extremely good program, very well managed, extremely well done. It's not sufficient because it's not done because the world is changing and we need to be fit, and we have to anticipate this. So even the $150 million cost savings, it's maybe not the end because I don't know what's with the future in the years to come. So I think a company today should be agile and ready to make the changes and anticipate the market changes. So I think that's important to assess [ph] Really and maybe you want to add something.

I was going to say exactly the same thing, Olivier. For us, the framework which Olivier articulated last quarter to you guys. In all emerging markets, we need to be fit, we have structures fit for serving emerging markets that are -- excuse me, on established markets that are appropriate for established markets and that reality of established markets today. And ones that are organizational structures that are appropriate for serving emerging markets where the growth is bigger. And also recognizing that even within established markets, some segments have got more potential going forward than others. You don't -- you got to make organizational changes to reflect those opportunities. They don't change automatically, and making them change are what these programs are about. So yes, it's fit for the future and making your organization fit is what it's about.

Ladies and gentlemen, I will take the last question, if we may.

Just the $8 million royalty, is that 100% drop fee through the P&L? There's no sub-royalty on that because that would I guess make another sort of 60, 70 basis points of difference to the Ortho margin. Is that -- am I thinking about right on that?

You're thinking spot on.

Ladies and gentlemen, we'll take our last question from Charles Weston of Numis.

Two themes to the question. First of all, on the top line just on the U.S. Orthopaedics business. In hips, there was a notable trend down in the growth rates even though obviously we started to see the BIRMINGHAM HIP and Metal-on-Metal issues well over a year ago now. And in the U.S., in knees, you mentioned in the press release about headwinds essentially sort of annualizing the product launch. Actually growth in the third quarter of last year wasn't particularly strong. Growth in the fourth quarter was very strong. So does that mean that we're likely to see a big step down in growth in U.S. knees next year because of this annualization of the launch? And that's on the sales side. On the margin side, Adrian, I know you love talking about quarterly margins, particularly by divisions. But I just wanted to get a feel, the unusual bunching of costs, where have they bunched from? Either they bunched from Q1 and Q2 this year, in which case you benefited from them and we can sort of think about unwinding that, or they're all taken from the fourth quarter in which case, we need to think about it that way.

Yes, fine. In terms of the U.S. Ortho hips, yes, you're absolutely right, Charles. You'd asked -- when you did and your colleagues did ask us a year ago, what do we think was the prognosis for BHR. We did expect that to be flattening in the second half of this year and it hasn't happened. We are continuing to see the rate of decline in BHR for some significant time. And frankly, the reason for that is the conflict now, the environment out there remains very negative to Metal-on-Metal. And while data on BHR continues to be extremely good, whether it's the new Australian registry data, whether it's in the United States or in the U.K., our product needs to be good. But the noise around the sector even including questions from within the U.S. Congress about Metal-on-Metal are just not helping. We are battling in that area certainly, but that's the way it is and it's a reality. In terms of U.S. knees, yes, you're quite right. The growth kicked up -- if I'm looking at this correctly -- U.S. knees -- It currently-- kicked up from...

5% in the third quarter and 15% in the fourth quarter, I think.

Yes, that's exactly right. So there is an impact there and yes, we do expect the annualization effect to be ongoing. I mean there are other dynamics at play. I mean not least obviously they're more competitors out there with their own patient matched instruments, and they're receiving good results and the whole class [ph] is growing extremely strongly. But yes, you're right in terms of the progressive nature of annualization. And the last question about -- apart from recording [ph] , I don't like talking about quarterly margins by divisions. I mean, the bunching, the sort of costs were small receivables write-offs associated with the most favorite country in Europe at the moment. A couple of small inventory writeoffs and couple of small legal provisions, the sort you have on an ongoing basis, these are the things you get on ongoing basis. We just had an unusually large number by -- we estimate around $10 million in quarter 3. And where did they come from? They came from the rest of the year. So yes, to some extent, there would have been a benefit earlier on. To some extent, we hope that there will be a benefit in quarter 4. It's just one of the things you can't really say where did they come from? These things come along and you just got to deal with them when they come along. It was an unusual number.

Thank you, Charles. So ladies and gentlemen, thank you all for your time today and I look forward to seeing many of you in person at the sell side meetings we have planned in the coming weeks. So thanks, and wish you a good day. Thank you.