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Acquisition prospects have been punctured since Johnson & Johnson found a target elsewhere, but backed by Smith's pounds 500m war chest for acquisitions, the shares should be held.. The outlook is for another couple of years with growth held to around 5 per cent in the area.But even if the US proves to be a relative drag in the short-term, Smith's artificial bone and cartilage products could provide plenty of excitement further out. Sales growth in these operations failed to come anywhere near the double-digit increases notched up in wound management (Elastoplast and the like) and casting and support. The problems lay in areas exposed to the US market, where healthcare is in the midst of a well- publicised upheaval. The impact of so-called healthcare management operations on big pharmaceutical groups is being paralleled in Smith's case by the concentration of hospital groups, notably the merger of Columbia and Hospital Corporation of America which created a buying group as big as the NHS.The increased power of customers hit businesses skewed to the US market, namely trauma, endoscopy and orthopaedic implants. Overall volume growth of 8 per cent, the best for some time, was boosted by the UK, where the establishment of a unified sales-force 18 months ago helped the rate of sales growth more than double to 12 per cent.Continental Europe, where the same "one company" strategy has been in place for some time, was up a handy 8 per cent. Integration costs of pounds 14.6m wiped out the pounds 8.7m contribution from acquisitions, mainly Acufex, the surgical instruments business, and Homecraft, a maker of aids for the old and disabled. But these were respectable results for a year in which medical budgets continued to face downward pressure - selling prices slipped by 0.5 per cent last year - and with the main European and US markets growing at a rather anaemic 3 per cent.

The market clipped 0.5p from the share price to 188p after underlying pre-tax profits advanced an unexciting 5 per cent to pounds 180m in 1995, after stripping out restructuring costs and disposals from both the last two years. But despite all this effort, the City still pigeon-holes Smith in the "sound but dull" sector of the market Yesterday's results only confirmed that view. Elastoplast to keyhole surgery group Smith & Nephew has worked hard to shift its unfocused conglomerate image and last year it completed its exit from pharmaceuticals and dumped surgeons' gloves, the last of its commodity-type businesses.

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"TransGas plans to sell 90 billion cubic metres of gas over 25 years," he said.He rejected reports there that British Gas will accept operating a loss- making operation in Chile to secure its place in the region.. He also cast doubt on GasAndes's ability to provide the assured volumes that he claimed his project could provide. It should be finished in May 1997, possibly before the British Gas/Tenneco line arrives and will provoke stiff competition and much-reduced prices.GasAndes is a joint venture between Chilgener, a Chilean power company, the Nova Corporation of Canada and other companies and has already announced initial deals to supply four gas-fired generation plants near the capital."I think GasAndes has stolen a big march on TransGas and I don't kow if they will be able to catch up", said one leading Chilean banker here yesterday.George Ferguson, local British Gas manager, told the Independent that contracts would soon be announced and that the TransGas line could be built faster than the rival line as TransGas goes over lower mountain altitudes.

The city of five million people is the capital of a country whose economy grew at around 8 per cent last year and where explosive economic growth is expected to lead to a doubling of electricity generation within the next 10 years.Although the pipeline plans were well known last year no important construction work has started on the line and British Gas has not announced any deals with potential customers in Chile.Building began last October on a much shorter $284m rival line, GasAndes, from the Argentine city of Mendoza, directly across the mountains from Santiago. HUGH O'SHAUGHNESSY Santiago British Gas's multi-billion-pound plans for expansion in Latin America are under severe pressure as its projects in Chile and Argentina are buffeted by competition and those in Bolivia, Brazil and Colombia by political and commercial uncertainties.British Gas has been working with a US partner Tenneco on the $865m TransGas scheme to bring gas across the Andes from Argentine Patagonia to southern Chile and eventally to Santiago. Mr Robb said: "The Government has an obligation to maximise sales value to taxpayers The board is in a different position We also have an obligation to the new owners.". He said that in a company such as British Energy, they could be awarded to those earning pounds 20,000 to pounds 30,000 per year and above.British Energy is still locked in battle with the Government over the financial structure of the company once it is sold, including the level of debt it will carry, the expected profitability and the value of the assets.

The amount put into the so-called segregated fund will be to cover costs stretching out over many years.The debate over the pounds 2.5bn privatisation took a further new twist when John Robb, British Energy's chairman, said he was in favour of share option schemes for directors and employees in spite of the recent rows over "fat cats" in private utilities.He said: "I am talking about pushing them right down the management chain."Mr Robb said that although no decisions have been taken "I have always found them a reasonable way of rewarding and motivating senior management". MARY FAGAN Industrial Correspondent A political row has erupted over the fund to be set up to cover future nuclear decommissioning costs in the soon-to-be-privatised industry. It has emerged that the annual payments made by British Energy, the company running the nation's most modern reactors, will be only pounds 15m - up to 50 per cent less than originally envisaged by the Government.John Battle, shadow energy spokesman, yesterday attacked the Government for playing a "sleight of hand game" with the privatisation at the expense of the public and said he would be demanding an immediate explanation from ministers."They are fattening the company up to make it a more attractive prospect for investors at the expense of taxpayers."What I fear is that in five years time the Public Accounts Committee will condemn this as having been a shabby deal for the public but by then it will be too late," he said.Mike Kirwan, British Energy's finance director, said that the "surprisingly small" annual payments can be explained by lower decommissioning costs and the Government actuaries' view of what an investment portfolio should achieve. The Bank is expected to introduce the lower rate either late on Thursday or on Friday morning.. It will not make any difference to what the Chancellor decides on Thursday," said Ian Shepherdson at HSBC Markets.However, Simon Briscoe, an economist at Nikko Europe, said: "Signs of consumer strength will lead to talk that this week's rate cut will be the last for some months."Chancellor Kenneth Clarke and Eddie George, Governor of the Bank of England, hold their monthly meeting on Thursday afternoon.