Gn Store Nord A/s · OMXCOP:GN
Gn Store Nord A/s — Q3 2014 Earnings Presentation
50 slides from Gn Store Nord A/s's earnings presentation, November 2014
Slide 1: Interim Report Q3 2014
INTERIM REPORT Q3 2014 “Re | <6 — < J seashohe Aha yt y GN eas Novemb ey, my Jf wy
Slide 2: Agenda
AGENDA Group highlights Q3 2014 GN ReSound update GN Netcom update Financial outlook Slide 2 GNReSound GN Netcom GN
Slide 3: Group Financial Highlights Q3 2014
en GROUP FINANCIAL HIGHLIGHTS Q3 2014 - SOLID INCREASE IN EBITA IN BOTH OF THE OPERATING BUSINESSES Key highlights * During Q3 2014, GN continued to execute DKK million Q3 Q3 YTD YTD on the Strategy 2014 - 2016: INNOVATION 201420132014 2013 & GROWTH Revenue 1735 1609 5,220 4,931 * Continued strong f
Slide 4: Group Cash Flow
GROUP CASH FLOW - CONTINUED IMPROVEMENT IN THE CASH CONVERSION Key highlights * GN continued to improve the cash flow generation, delivering free cash flow (excl. M&A) of DKK 145 million in Q3 2014 * The cash conversion for the group has improved significantly in 2014 * GN Store Nord - 41% cash conv
Slide 5: Agenda
AGENDA Group highlights Q3 2014 GN ReSound update GN Netcom update Financial outlook Slide 5 GN Store Nord GN ReSound GN Netcom GN
Slide 6: GN ReSound Financial Highlights
en GN RESOUND FINANCIAL HIGHLIGHTS - EBITA INCREASED 18% (EXCL. FOREIGN EXCHANGE IMPACT) - 9% IN REPORTED FIGURES Key highlights * Another strong quarter with 8% organic growth driven by innovative technology Q3 @3 -YTD.~—s-YTD hnol dae is drivi fitabil DKK million 2014-2013, 20142013 Techno ogy cag
Slide 7: GN ReSound Business Highlights
GN RESOUND BUSINESS HIGHLIGHTS - HEARING INSTRUMENTS DELIVERING 9% ORGANIC GROWTH Key highlights Revenue Q3 2014 Business areas * The performance of ReSound LiINX™ and Beltone First™ continues to be strong across markets and geographies driving growth in Hearing Instruments * GN Otometrics’ revenue
Slide 8: Underlying Revenue Growth
UNDERLYING REVENUE GROWTH - STRONG TOTAL REVENUE GROWTH - UNDERLYING GROWTH EVEN STRONGER Comments Impact from three large customers * GN ReSound’s roll-out of ReSound LiINX™ and Beltone First™ generated accelerated underlying organic growth during the year * The strong growth has more than offset t
Slide 9: Market Development Q3 2014
en MARKET DEVELOPMENT Q3 2014 - SOLID MARKET GROWTH ACROSS ALL REGIONS Market comments Estimated Q3 2014 unit growth * The global hearing aid market developed solidly in Q3 2014 with estimated growth of 10% around 6% in units 6% 6% * North America delivered 6% unit 2% growth primarily driven by the
Slide 10: Extending the Most Innovative Offering
EXTENDING THE MOST INNOVATIVE OFFERING - NEW PRODUCTS LAUNCHED IN H2 2014 i O0c0ttt ReSound ENZO™ and Beltone Boost™ Introducing Smart super power hearing CO. Resound LiINX™ 5 and Beltone First™ 6 The most advanced mid- priced hearing aid ReSound Up Smart™ Designed especially for children 106 ReSoun
Slide 11: New Manufacturing Site in Malaysia
en NEW MANUFACTURING SITE IN MALAYSIA - RELENTLESS PURSUIT OF LOWER PRODUCTION COSTS Comments New plant in Malaysia * GN ReSound has initiated the establishment of a new plant in Malaysia * 5,000 m2 manufacturing and distribution facility * Limited CAPEX * Production start planned for summer 2015 .
Slide 12: Agenda
AGENDA Group highlights Q3 2014 GN ReSound update GN Netcom update Financial outlook Slide 12 GN Store Nord GN ReSound GN Netcom GN
Slide 13: GN Netcom Financial Highlights
en GN NETCOM FINANCIAL HIGHLIGHTS - UNIFIED COMMUNICATIONS CONTINUES TO DRIVE GROWTH Key highlights * Solid organic growth of 7% - driven by 11% growth in UC-headsets Q3 Q3 YTD YTD DKK million 2014 2013 2014 2013 * CC&O organic growth of 16% year to date, driven by 36% growth in Revenue ©27/ 590 Bay
Slide 14: CC&O Revenue Development
en CC&O REVENUE DEVELOPMENT - SOLID UC GROWTH IS DELIVERED ON TOP OF A CHALLENGING COMPARISON BASE Key comments CC&O organic growth development * The CC&O business continued the mmm Quarterly organic growth —Yearly averages 26% strong growth trend generating an organic growth of 9% in Q3 2014 and 16
Slide 15: Jabra Evolve Office Headset
JABRA EVOLVE™ OFFICE HEADSET - ADDRESSING KEY CHALLENGES AMONG OFFICE WORKERS wo Boosting knowledge workers’ productivity The workspace iS changing the work ..impacting knowledge evolution... environment... workers Open offices More noise State that distractions 69% have a negative impact on their p
Slide 16: Jabra Evolve Office Headset
JABRA EVOLVE™ OFFICE HEADSET - BOOSTING PRODUCTIVITY AND DRIVING UC ADOPTION The Jabra Evolve™ series * Creates personal concentration zone that boosts focus and work satisfaction « Advanced noise-cancellation technologies * Busy lights effectively signal the user’s current availability to his or he
Slide 17: Mobile Revenue Development
MOBILE REVENUE DEVELOPMENT - POSITIVE ORGANIC GROWTH AND IMPROVEMENT OF THE PROFITABILITY Key comments Slide 17 * The Mobile business generated organic growth of 3% in Q3 2014 * Excl. declining sales in Russia in the wake of the geopolitical turmoil, the organic growth for the Mobile business was 8%
Slide 18: Jabra Sport Pulse Wireless
JABRA SPORT PULSE™ WIRELESS - THE WORLD’S ONLY WIRELESS EARBUDS WITH INTEGRATED HEART RATE MONITOR Jabra Sport Pulse™ Wireless Unique wireless all-in-one training solution with in-ear precision heart rate monitor, immersive Dolby® sound and personalized real-time voice coaching The Jabra Sport Life
Slide 19: Other New Mobile Offerings
OTHER NEW MOBILE OFFERINGS - NEW PRODUCTS LAUNCHED IN Q3 2014 ——= Jabra Move™ Wireless Jabra Storm™ Amazing sound and great talk time for any Experience the freedom to move . environment Jabra Streamer™ Jabra Step™ Wireless Stream music and voice wireless from your Wireless music on the go smartphon
Slide 20: All Set for a Strong Q4 2014
ALL SET FOR A STRONG Q4 2014 - STRONGLY POSITIONED FOR ACCELERATING GROWTH AND PROFITABILITY IN Q4 2014 * Continued strong prospects for future growth in UC-headsets and solid UC project pipeline in Q4 2014 * The launch of the key product series Jabra Evolve will have commercial effect from Q4 2014
Slide 21: Agenda
AGENDA Group highlights Q3 2014 GN ReSound update GN Netcom update Financial outlook Slide 21 GNReSound GN Netcom GN
Slide 22: 42% was captured by all other
• 42% was captured by all • other manufactures • • •
Slide 23: Safe Harbor Statement
en SAFE HARBOR STATEMENT ~ The forward-looking statements in this presentation reflect the management's current expectations of certain future events and financial results. Statements regarding the future are, of course, subject to risks and uncertainties which may result in material deviations from
Slide 24: Q&A
Q&A a, 4400S. cae I OOF Slide 24 GN
Slide 25: Appendix
APPENDIX Slide 25 GN
Slide 26: Upcoming Events
en UPCOMING EVENTS (— >) Date Event Location November 17, 2014 Q3 roadshow Copenhagen November 18, 2014 Q3 roadshow London November 19, 2014 Jefferies Global Healthcare Conference London November 19, 2014 Q3 roadshow New York November 20, 2014 Q3 roadshow Paris November 20, 2014 Q3 roadshow Boston N
Slide 27: GN Store Nord Group Structure
en GN STORE NORD GROUP STRUCTURE - Q3 2014 GN Store Nord | GN ReSound GN Netcom Hearing instruments and diagnostic equipment Hands free audio Hearing . Contact Center & . Instruments Otometrics Offices (CC&O) Mobile ~ 56% of revenue ~ 8% of revenue ~ 24% of revenue ~ 12% of revenue Slide 27 GNReSoun
Slide 28: GN Store Nord - Five Year Performance
en GN STORE NORD - FIVE YEAR PERFORMANCE DKK million 2009 2010 2011 2012 2013. Q3 YTD GN Store Nord Revenue 4,729 5,145 5,564 6,251 6,791 5,220 Organic growth (16)% 5% 9% 6% 13% 7% Gross profit margin* 54.4% 57.0% 59.2% 59.7% 60.6% 61.5% EBITA* 236 2,595 1,284 846 1,284 783 EBITA margin* 5.0% 50.4%
Slide 29: GN ReSound - Five Year Performance
en GN RESOUND - FIVE YEAR PERFORMANCE DKK million 2009 2010 2011 2012 2013. Q3 YTD GN ReSound Revenue 2,981 3,164 3,450 3,896 4,179 3,243 - Hearing Instruments 2,662 2,798 3,060 3,423 3,636 2,830 - Otometrics 319 366 390 473 543 Al3 Organic growth (6)% 2% 9% 6% 10% 8% - Hearing Instruments (7)% 1% 9
Slide 30: GN Netcom - Five Year Performance
en GN NETCOM - FIVE YEAR PERFORMANCE DKK million 2009 2010 2011 2012 2013. Q3 YTD GN Netcom Revenue 1,736 1,973 2,106 2,355 2,612 1,977 - CC&O 1,081 1,265 1,400 1,530 1,591 1,304 - Mobile 655 708 706 825 1,021 673 Organic growth (30)% 9% 9% 7% 18% 7% - CC&O (22)% 13% 12% 5% 12% 16% - Mobile (40)% 4%
Slide 31: GN ReSound Financial Targets for 2016
GN RESOUND FINANCIAL TARGETS FOR 2016 - GROWING SIGNIFICANTLY FASTER THAN THE MARKET AT TOP-TIER PROFITABILITY * GN ReSound targets an annual average organic growth that exceeds market value growth by more than 3 percentage points * The revenue growth target is deliberately open-ended as GN sees pot
Slide 32: GN Netcom Financial Targets for 2016
GN NETCOM FINANCIAL TARGETS FOR 2016 - GROWING ANNUAL REVENUE AT A DOUBLE-DIGIT LEVEL AND BUILDING SCALE FOR LONG TERM MARGIN IN LINE WITH MAIN COMPETITOR * GN Netcom targets an annual average organic growth of more than 10% from 2014 - 2016 * The revenue growth target is deliberately open-ended as
Slide 33: GN Store Nord Targets 2016
GN STORE NORD TARGETS 2016 Financial targets GN ReSound GN Netcom GN Store Nord Organic growth (2014 - 16 More than 3%-points above average) market growth More than 10% More than 18.6% More than 55% EBITDA Dividend payout ratio 15 - 25% Ne Based on current foreign exchange rates w, * During 2014 - 2
Slide 34: Strategic Initiatives
Markets Enablers Strategic initiatives • •
Slide 35: Innovations Drive Growth
en INNOVATIONS DRIVE GROWTH - RESOUND LINX TOOK THE TECHNOLOGY TO THE NEXT LEVEL WITH DIRECT CONNECTIVITY TO IPHONES /— GN ReSound organic growth Launch of Launch of 15% 5 ReSound Verso™| | ReSound LiNX™ Launch of 10% + ReSound Alera™ 5% | \ 0% - -5% - -10% ~ Slide 35 CRETE Ce GN
Slide 36: The Future Is Already Here - ReSound LiNX
en THE FUTURE IS ALREADY HERE - RESOUND LINX - BASED ON GN RESOUND INNOVATION The world’s best hearing aids Leveraging GN Cutting edge wireless Endless ReSound’s connectivity opportunities technological leadership, e.g. - SURROUND «YS SOUND SS” by ReSound 2.4 GHZ WIRELESS By Resour Slide 36 GN store
Slide 37: The ReSound LiNX App
en THE RESOUND LINX APP - MODERN AND INTUITIVE DESIGN FORA BEST IN CLASS USER EXPERIENCE = Outdoors Zz = Television = ReSound ReSound Simple and intuitive Adjust the sound of the Simple and intuitive Use the lphone’s GPS to start-menu to adjust the _ television as well as the program menu for find m
Slide 38: Diagnostics Equipment, Hearing Instruments
Diagnostics Hearing Instruments equipment • • • • • • • • •
Slide 39: Product Portfolio After Launches in H2 2014
en PRODUCT PORTFOLIO AFTER LAUNCHES IN H2 2014 - EXTENDING AND POWERING UP THE MOST INNOVATIVE HEARING AID OFFERING Premium a Ww 5 Cc o 7) m7) Lu Life style ReSound Unite™ Slide 39 LINX™ 9 ™ Verso™ 9 Verso QIIC LINX'™ 7 Verso 7 LEX™ 8 LINX™ 5 Lex™ 4 Verso™ 5 -TV2 - Remote control 2 GN Store Nord GN
Slide 40: Beltone's Product Portfolio
en BELTONE’S PRODUCT PORTFOLIO - THE MOST INNOVATIVE AND DISTINCT PRODUCT PORTFOLIO ON THE MARKET Segment Performance Sue sR Tinnitus Super power| Pediatrics /Design First™ 17 Micro-Invisa™ Promise™ 17 7 E First™ 9 Micro-Invisa™ 9 Boost™ oO =) Promise™ 9 Prime™ Plus : ) o) First™ 6 ; a Promise™ P Pr
Slide 41: GN Netcom and Jabra
GN NETCOM AND JABRA Entity name and brand Business areas LEGAL ENTITY: GN Netcom GNI Netcom | | CC&O (B2B) Mobile (B2C) BRAND NAME: ~66% of revenue ~34% of revenue Slide 41 GN Store Nord GN ReSound weet GNI
Slide 42: What Is Unified Communications?
en WHAT IS UNIFIED COMMUNICATIONS? - TRADITIONAL OFFICE STRUCTURE Technology Technology platform platform plat : Soft & hardware Soft & hardware : Soft & hardware Soft & hardware Technology Technology Technology platform platform platform Soft & hardware Soft & hardware Soft & hardware YOU'RE ON Sli
Slide 43: UC Integrates Communication Platforms
UC INTEGRATES COMMUNICATION PLATFORMS - SIGNIFICANT COST REDUCTIONS AND PRODUCTIVITY GAINS Technology platform Soft & hardware Slide 43 GN Store Nord GN ReSound Jabra’ GN YOU'RE ON
Slide 44: UC adoption phases
• Users Number of licenses Number of headsets Phase 1 Phase 2 Phase 3 Time • •
Slide 45: CC&O Market Projections
CC&O MARKET PROJECTIONS - UC IS EXPECTED TO DRIVE SIGNIFICANT MARKET GROWTH — CC&O market projections . . The growth prospects in the CC&O business are attractive UC ma Traditional CC&O The leading UC-providers indicate attractive market prospects: DKK billion Market conditions remain favorable with
Slide 46: ROIC Development
ROIC DEVELOPMENT GN ReSound ROIC* GN Netcom ROIC* 80% 18% 64.7% 16% 16.1% 60% | 14% 10% 40% | 10% 20% | 8% 6% 0% 6.6% ae y NY, 2% -20% | -24.3% 5 0% -40% + 2012 2013 Q3 2014 12m rol. 2008 2009 2010 2011 GN ReSound underlying performance 2008 2009 2010 2011 2012 2013 Q3 2014 12m rol. GN Netcom underl
Slide 47: Anders Hedegaard
ANDERS HEDEGAARD - CEO, GN RESOUND Resume * Born: 1960 * Nationality: Danish * Education: Master’s degree in chemical engineering from the Technical University of Denmark + Professional experience: * Bavarian Nordic A/S, President & CEO (2007 - 2014) + ALK-Abellé A/S, Executive Vice President (2002
Slide 48: Niels Svenningsen
en NIELS SVENNINGSEN - CEO, GN NETCOM Resume * Born: 1964 * Nationality: Danish * Education: BSc in Economics, Copenhagen Business School + Professional experience: + Hitachi Data Systems, SVP & GM EMEA (2011-2013) * Hitachi Data Systems, VP (2007 - 2011) * Dansk Bredband, CEO (2006 - 2007) « ATEA,
Slide 49: Anders Boyer
en ANDERS BOYER - CFO, GN STORE NORD Resume * Born: 1970 * Nationality: Danish * Education: MSc Finance and Accounting, Copenhagen Business School * Professional experience: * Member of the board of directors of Pandora A/S, Chairman of the audit committee (Q1] 2012) * ISS, Regional Director (2005 -
Slide 50: IR Contact
IR CONTACT Michael Bjergby Vice President, CSR & Treasury Dir. +45 45 75 02 92 Mob. +45 2157 8144 E-mail: mbjergby@gn.com Investor Relations, Communications, Dir. +45 45 75 92 56 Mob. +45 40 49 70 53 ] E-mail: ahjort@gn.com Anders Hjort Manager, Investor Relations, Communications, CSR & Treasury Sli