Slide 1: Amplifon FY 2010 Results
Amplifon FY 2010 Results Milan - March 9, 2011
Slide 2: Agenda
Agenda 1. Opening Remarks – Franco Moscetti, CEO 2. FY 2010 Results – Ugo Giorcelli, CFO 3. NHC – Alberto Baroli, Chief Innovation & Development Officer 4. Dialogue Belgium – Wim Van De Putte, Market Director Belgium 5. Amplifon Italy – Riccardo Cattaneo, Market Director Italy 6. Final Remarks – Fra
Slide 3: FY 2010 Financial Results
FY 2010 Financial Results Ugo Giorcelli, CFO
Slide 4: FY 2010 Highlights
FY 2010 Highlights Strategic expansion into Asia Pacific region, a new geographic area with strong growth dynamic and significant potential for further expansion; acquisition accretive from day one to Group margin. FY 2010 revenue reached record level of €708,1 mln, growing by +7,8% over PY, of whic
Slide 5: Financial Highlights
Financial Highlights Non Non ∆ % on Thousands Euro FY 2010 recurrent FY 2010 FY 2009 recurrent FY 2009 recurrent recurrent recurrent Revenue 708.096 100,0% 708.096 657.032 100,0% 657.032 7,8% EBITDA 102.310 14,4% -5.421 96.889 87.189 13,3% 2.957 90.146 17,3% * EBITA 80.104 11,3% -5.421 74.683 65.445
Slide 6: Amplifon Revenue Breakdown
Amplifon Revenue Breakdown Thousands Euro FY 2010 % FY 2009 % ∆% ∆ FX OG% 4Q 2010 4Q 2009 ∆% ∆ FX OG% Italy 210.529 29,7% 194.118 29,5% 8,5% 8,5% 66.249 66.832 -0,9% -0,9% The Netherlands 96.294 13,6% 85.949 13,1% 12,0% 11,2% 29.432 26.611 10,6% 10,6% France 92.602 13,1% 93.079 14,2% -0,5% -1,0% 26.
Slide 7: Amplifon Continental Europe
Amplifon Continental Europe Solid sales growth reflected in recurrent profitability (pre-impact of one-off items) Euro mln FY 2010 % FY 2009 % ∆% 4Q 2010 % 4Q 2009 % ∆% Revenue 528,5 100% 486,8 100% 8,6% 159,6 100% 154,7 100% 3,2% EBITDA 83,2 15,7% 91,3 18,8% -8,9% 28,7 18,0% 34,8 22,5% -17,4% EBIT
Slide 8: Highlights by Country (1/3)
Highlights by Country (1/3) Amplifon Italy Solid and profitable revenue growth In Q4-2010 performance was flattish with respect to PY, due to the particularly challenging comparison base (+9% OG in Q4-09). FY 2010 revenue increased by +8,5% over PY, driven by the improved quality of product mix and
Slide 9: Highlights by Country (2/3)
Highlights by Country (2/3) Beter Horen, The Netherlands Strong sales momentum seen in record sales level Strong sales momentum, with FY revenue above PY by +12%, driven by favorable ASP trend (increasing due to focused training and mix improvement) and positive performances in other product lines (
Slide 10: Highlights by Country (3/3)
Highlights by Country (3/3) Amplifon Iberica Positive evolution despite difficult economic environment FY 2010 revenue grew by 4,5% vs PY confirming, once more, the resilience of this business in spite of the difficult economic environment and the absence of any kind of public/private reimbursement
Slide 11: Amplifon UK
Amplifon UK Profitability improvement driven by positive sales trend Euro mln FY 2010 % FY 2009 % ∆% 4Q 2010 % 4Q 2009 % ∆% Revenue 39,4 100% 36,4 100% 8,1% 9,9 100% 9,5 100% 4,2% EBITDA -4,3 -10,8% -5,1 -14,1% 16,8% -0,2 -2,0% -0,2 -2,6% 18,1% EBIT -8,2 -20,8% -9,4 -25,8% 13,0% -1,2 -12,3% -1,4 -14
Slide 12: Amplifon USA
Amplifon USA Strong focus on profitability sees Ebitda margin’s return to double digits Euro mln FY 2010 % FY 2009 % ∆% 4Q 2010 % 4Q 2009 % ∆% Revenue 129,2 100% 132,4 100% -2,4% 30,6 100% 33,4 100% -8,5% EBITDA 16,1 12,4% 3,8 2,9% 322,9% 6,2 20,1% 2,0 5,8% 214,7% EBIT 11,3 8,8% -2,0 -1,5% 670,0% 5,
Slide 13: Amplifon Asia – Pacific (NHC)
Amplifon Asia – Pacific (NHC) Consolidated for first time in December following the deal closing Euro mln FY 2010 % 4Q 2010 % Revenue 9,2 100,0% 9,2 100,0% EBITDA 1,6 17,2% 1,6 17,2% EBIT 0,8 8,5% 0,8 8,5% AUS$ mln FY 2010 % 4Q 2010 % Revenue 12,2 100,0% 12,2 100,0% EBITDA 2,1 17,2% 2,1 17,2% EBIT 1
Slide 14: FY 2010 Cash Flow
FY 2010 Cash Flow Thousands Euro FY 2010 FY 2009 EBIT 65.178 59.851 1. Acceleration in D&A 31.711 30.295 Capex for store concept roll-out Other non cash adjustments and gains/losses on sale 8.207 15.434 Net financials -11.962 -15.693 2. Capital gain on sale of Service Taxes paid -16.924 -10.640 Ital
Slide 15: Capital Structure
Capital Structure Net Debt to Equity Net Debt (31/12/2010) (31/12/2010) Euro mln 448,9 381,4 381,4 Net debt Total Equity 57,5 344,8 -124,9 31/12/2010 Long- Short- Cash Net debt term debt term debt As at 31.12.2010 the company had approx. € 90 mln of undrawn credit lines of which € 25 mln are committ
Slide 16: Debt Maturity and Liquidity Margin
Debt Maturity and Liquidity Margin Private Bank Bank Gross Overdrafts Cash Debt Placement Loans Euro mln 173,4 55,2 58,9 506,3 50,7 40,8 7,4 16,1 10,7 0,2 67,1 7,5 18,5 -7,5 -16,1 -10,7 -0,2 -26,0 -40,8 -23,8 Cash 124,9 t 11 11 11 11 12 13 14 15 16 d eb an 3/ 6/ 9/ 2/ 2/ 20 20 20 20 D /0 /0 /0 /1 /1
Slide 17: FY 2010 Income Statement
FY 2010 Income Statement FY 2010 FY 2009 ∆% Thousand Euro 000 € % on Sales 000 € % on Sales Revenue 708.096 100,0% 657.032 100,0% 7,8% COGS (168.139) -23,7% (161.865) -24,6% 3,9% Labour Costs (204.122) -28,8% (186.219) -28,3% 9,6% Cost of services (235.693) -33,3% (224.670) -34,2% 4,9% * FY 2009 ope
Slide 18: Q4 2010 Income Statement
Q4 2010 Income Statement 4Q 2010 4Q 2009 ∆% Thousand Euro 000 € % on Sales 000 € % on Sales Revenue 209.645 100,0% 197.911 100,0% 5,9% COGS (46.748) -22,3% (45.646) -23,1% 2,4% Labour Costs (58.110) -27,7% (50.520) -25,5% 15,0% Cost of services (65.842) -31,4% (68.207) -34,5% -3,5% * Q4- Q4-09 opera
Slide 19: Balance Sheet
Balance Sheet Thousands Euro 31/12/2010 31/12/2009 Thousands Euro 31/12/2010 31/12/2009 Goodwill 544.276 249.916 Trade payables -109.238 -95.912 Other payables -114.791 -103.438 Provisions for contingency and Cust. lists, non-compet. agreem., -1.347 -647 124.394 51.927 obligations (current portion)
Slide 20: National Hearing Care: an on track integration
National Hearing Care: an on track integration Alberto Baroli, Chief Innovation & Development Officer
Slide 21: Deal Highlights & Rationale
Deal Highlights & Rationale Acquisition of 100% of National Hearing Care Group (NHC) – Leading hearing aid retailer in Australia and New Zealand Total purchase price of A$460m on a cash and debt free basis (€ 333 ml) – acquisition transaction costs for € 5,4 mln Consolidated as of December 2010 Accr
Slide 22: NHC Overview
NHC Overview Description FY10A Revenue: A$151m 210 audiology shops across Australia, New Zealand and India with strong brand recognition – Second largest retailer in Australia with 22% market New Zealand share and 107 shops 37% – Leader in New Zealand with 45% market share and 87 shops (Bay and NHC
Slide 23: Proprietary / Scalable Business Model
Proprietary / Scalable Business Model Unique business model based on Customer Contact Centre and focus on repeat customers High level of audiologist utilization and focused cost management Gradual & Geographic Specific organically grown portfolio of shops Demand generated by contact centre, campaign
Slide 24: NHC Standalone Financials
NHC Standalone Financials Consistently strong revenue growth… growth… Future Targets Revenue (A$m) % R of 28.0 en ue CAG 1 0 A Re v FY0 7 A – FY 144 151 120 Over 10% 92 69 growth FY 07A FY 08A FY 09A FY 10A FY 10A* …and high profitability Future Targets FY 10* EBITDA (A$m) & EBITDA margin ProForma r
Slide 25: Integration process status
Integration process status 10 DEC 9 MAR JUNE Pre-Closing Integration - 28/09 Strong process structuring and Company governance Binding agreement Connecting - 4/11 the Equity raising companies -10/12 Deal Closing Extracting local synergies & Working to export Australian model within the Group Plannin
Slide 26: Integration process status
Integration process status Integration process under strong management and control; Experienced management and key people retained and strongly committed to growth plans; Local and Group Synergies in line with what expected in value; Very limited impact from natural events; Monitoring regulatory imp
Slide 27: Dialogue Belgium: a successful integration
Dialogue Belgium: a successful integration Wim Van De Putte, Market Director Belgium
Slide 28: Key Factors for Successful Integration
Key Factors for Successful Integration 1. EVOLUTION, No Revolution 2. Share best practices Internal communication OFFER, don’t impose Management Team commitment If ideas are good, they will be and alignment accepted without pushing. Implementing the changes Scientific Approach Local empowerment Meas
Slide 29: Unit Growth compared to Market growth
Unit Growth compared to Market growth 14.000 13.113 12.000 10.907 10.286 10.171 2002 10.000 9.285 2003 8.367 2004 8.000 7.266 2005 6.218 2006 6.000 5.176 2007 2008 4.000 2009 2010 2.000 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2006 2007 2008 2009 2010 Market growth 8% 11% 8% 12% 10% Dialogue g
Slide 30: Brand Migration: Timeline
Brand Migration: Timeline Opening 1st shop in Amplifon Launch shopconcept Brand Awareness GO LIVE Study brand Presenting results to migration Dialogue combined group in with bubble Milan campaign Preparing Introduction of pre-testing additionnal Implementation -TV Visits to bubble Improvemen launch
Slide 31: Historic ReSound
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Slide 32: Historic ReSound
istoric ReSound pan HOORCENTRA CENTRES AUDITIFS Dialogue na care la solttion \Vroeger had tk een hoorprobleem, eee ‘maar nu heb k een oplossing evonden bij Dialogue. Woche ‘qu'une solution auditive pouvait étre aussi discréte’ Lrexpertise Dialoque \gagement Dinlogue at patie go pe quent abner + taer
Slide 33: Implementation of 360° Approach
Implementation of 360° Approach CUSTOMERS TV NEW SHOPS ADS SiS OLD SHOPS WEBSITE 33
Slide 34: Before – After – Future
HOORCENTRA CENTRES AUDITIFS
Slide 35: Next Steps
Next Steps Increase TERRITORY COVERAGE Change DIALOGUE to AMPLIFON Increase BRAND AWARENESS Improve SALES MANAGEMENT => To Increase MARKET SHARE 23-25% in 2013 35
Slide 36: Amplifon Italia: a long lasting successful story
Amplifon Italia: a long lasting successful story Riccardo Cattaneo, Market Director Italy
Slide 37: High Potential Market
High Potential Market Age Groups(*) Potential Users(**) 0-44 32.041.421 1.111.708 3,5% Italy’s penetration is one of the 45-64 40% 16.092.437 1.988.679 12,4% 40% lowest in Europa. In France it is 65-84 10.611.515 3.016.031 28,4% 20% and in the UK and 60% over 85 1.594.955 797.478 50,0% Scandinavian
Slide 38: Market Coverage 2010
Market Coverage 2010 Competitors: 1.143 STORES > Maico: 155 > Audionova: 51 > Audika: 47 > Audibel: 46 > Gaes/Audium: 26 > Independents: 818 Amplifon: 427 STORES Ampl 30% New Concept ifon custo mplifon: distri mers Total A butio n 201 >1.000 Opticians 2.237 85% o 0 SPo mun f > 810 Pharmacies icipal
Slide 39: Italy Market Estimated Units Sold
Italy Market Estimated Units Sold 2009 2010 295.000 310.000 40% Market Share Amplifon 60% 40% 60% Other Competitors (*) Source: ANIFA 2010 39
Slide 40: Amplifon Italy Sales Growth 2005-2010
Amplifon Italy Sales Growth 2005-2010* Driven by improved quality of product mix 189 191 184 166 151 Sales (mln €) +10% +11% +2,7% +1% +9% 2005 2006 2007 2008 2009 2010 (*) Total sales without Biomedical sales and Ias reconciliation 40
Slide 41: Amplifon Hearing Aids Sales mix
Amplifon Hearing Aids Sales mix 2005 22% 2010 17% 11% 29% 11% 12% 54% 58% 20% 17% Free market Paid up market Social market 41
Slide 42: Consumer Proposition
Consumer Proposition Free Trial Customized Solution 42
Slide 43: Connectivity
A life without limits Connectivity 43
Slide 44: The Business Development System
THE BUSINESS DEVELOPMENT SYSTEM ENT 360°° Relationship communication To be th choice of Technology Team customers Points of Sale Service 44
Slide 45: Goals
goals • Consolidate market leadership • Create differentiation between Amplifon and other competitors • Increase territory coverage : 450 Stores plus Amplifon Point • Import and Export Best Practices • Continue to focus on Key Pillars (Marketing, People, IT) • Promote social responsibility projects
Slide 46: Equity Story
Equity Story
Slide 47: Amplifon global presence
Amplifon global presence Worldwide leader with 9% of global market share 18 Countries over 3.100 stores 1.600 USA network affiliates over 2.200 Amplifon points 5.000 professionals worldwide on payroll 4.000 franchisee & agents 708 mln € revenue in 2010 47
Slide 48: The Worldwide Leader
The Worldwide Leader Global leading player in the highly fragmented hearing aid retail market; Dominant market shares enable strong purchasing power and qualified relationship with global suppliers; High brand recognition and awareness driven by significant investments in marketing and advertising.
Slide 49: Amplifon Distribution Network
Amplifon Distribution Network The Group operates through two main distribution channels: Corporate / Direct point of sales, in which the sales relationship is between Amplifon and the end-users (corporate stores and service centers); Non-corporate / indirect point of sales, through which Amplifon se
Slide 50: Amplifon performance 2000-2010
Amplifon performance 2000 -2010 Growth and profitability 800 Sales CAGR: +10,2% 708,1 19,0% (2000/2010) 700 667,9 657,0 Ebitda CAGR: +14,6% 641,4 (2000/2010) 613,1 17,0% 17,1% 600 547,1 499,9 17,1% 15,0% 500 13,7% 443,4 14,5% 391,9 13,7% 13,0% 400 13,6% 13,8% 360,8 11,6% 12,6% 11,0% 300 267 11,2% 9,
Slide 51: Amplifon Group Strategy
Amplifon Group Strategy Maintain/ Maintain/ Consolidate Consolidate Group Strategy leadership leadership Rank Cluster 1 IT Creation of long lasting competitive advantage Leader NHC/ BAY Consolidate global market Cluster 2 NL USA -ME leadership Gain Gain Market Market CH Share/ Share/ Move Move Roll
Slide 52: Growing and Under-Penetrated market
Growing and Under-Penetrated market POPULATION 65+ World Demographic trends: Developed marketss Population Growth Emerging Longer life expectancy markets Emerging markets Increasing noise pollution ex China Underdeveloped markets Source: GFK estimates on United Nations statistics Rapid growth of new
Slide 53: Industry Value Chain
Industry Value Chain The Retail business in which Amplifon operates as a leading player is the largest segment of the industry; Components Hearing Aid Wholesale Retail Manufactures Distributors END USER ASP per 10 - 50 € 200 - 700 € 400 - 700 € 600 – 3.000 € Unit − Diagnosis − Pre & post-sale assist
Slide 54: Annexes
| se rh Annexes
Slide 55: Regulatory Environment
Regulatory Environment % of Amplifon Sales Force Medical Country System of reimbursement revenues from Qualification Prescription reimbursement Average reimbursement of € 600 per hearing aid (which covers the basic device ITALY Audiologists/ 3 years Mandatory cost) depending on level of impairment.
Slide 56: Amplifon USA Strategy
Amplifon USA Strategy Strengthen Miracle Ear franchised network and value proposition in retail segment; Focus Sonus brand on medical segment moving towards a franchisee distribution model and attracting audiologists through the Sonus value proposition; Adapt the organization to the requirements com
Slide 57: The new Franchise Value Proposition
The new Franchise Value Proposition Territory Marketing • Exclusive territory • National/ Regional Marketing fund contributed by members • Minimum Performance Target • TV investments • A broad-reach media plan Referrals Quality/Training • HearPo will continue to • Training to implement the prioritiz
Slide 58: Disclaimer
Disclaimer The information contained herein and other material discussed during the analysts’ presentation, particularly the ones regarding any possible or assumed future performance of the Amplifon Group, are or may be forward looking statements and in this respect they involve some risks and uncer