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Annual Report 2018 – Roadshow presentation, February, 2019
2
Safe Harbor Statement
The forward-looking statements in this report reflect the management's current expectations of certain future events and
financial results. Statements regarding the future are, naturally, subject to risks and uncertainties, which may result in
considerable deviations from the outlook set forth. Furthermore, some of these expectations are based on assumptions
regarding future events, which may prove incorrect.
Factors that may cause actual results to deviate materially from expectations include – but are not limited to – general
economic developments and developments in the financial markets, technological developments, changes and
amendments to legislation and regulations governing GN’s markets, changes in the demand for GN's products,
competition, fluctuations in sub-contractor supplies and developments in ongoing litigation (including but not limited to class
action and patent infringement litigation in the United States).
This presentation should not be considered an offer to sell or buy securities in GN Store Nord.
Agenda
3
Group highlights 2018
GN Hearing update
GN Audio update
Financial outlook
2017 2018
2017 2018
2017 2018
2017 2018
2017 2018
Delivering on promises
GN Hearing
• Strong organic growth of 7% – delivered on
guidance
• EBITA increased to DKK 1,194 million. EBITA margin
of 20.5% – delivered on guidance
GN Audio
• Very strong organic growth of 21% – delivered on
guidance
• EBITA increased to DKK 905 million. EBITA margin of
19.0% – delivered on guidance
GN Store Nord
• Effective tax rate of 22% – delivered on guidance
1) Including “Other”
GN Hearing revenue (DKKm) GN Hearing EBITA margin
Organic
growth
GN Store Nord effective tax rate (%)1)
5,8335,615
GN Audio EBITA margin
18.2%19.0%
3,970
4,774
GN Audio revenue (DKKm)
Organic
growth
22%25%
+0.8%p+21%
(3)%p
20.5% 20.5%+7%
0.0%p
4
Group financial highlights 2018
5
* EBITA (rolling four quarters) / avg. invested capital
Double digit organic growth drives strong EBITA
growth and 15% EPS growth
• Organic growth was 13%. Revenue growth was 11%
including an impact of around (3)% from FX and 1%
from M&A
• Continued solid gross profit increase driven by strong
business performance
• EBITA increased by 12%, driven by strong execution
across GN Hearing and GN Audio
• Net profit reached DKK 1,247 million, a 11% increase
compared to 2017
• EPS growth of 15%
• 3 percentage point increase in ROIC, driven by
increased earnings level as well as strict focus on
balance sheet during the last years
DKK million FY 2018 FY 2017 Growth
Revenue 10,607 9,585 +11%
Organic growth 13% 8%
Gross profit 6,574 6,008 +9%
Gross margin 62.0% 62.7% (0.7)%p
EBITA 1,956 1,744 +12%
EBITA margin 18.4% 18.2% +0.2%p
Profit before tax 1,606 1,504 +7%
Net profit 1,247 1,122 +11%
EPS 9.25 8.07 +15%
ROIC* 24% 21% +3%p
Free cash flow excl. M&A 1,110 1,134 (2)%
Cash conversion 57% 65% (8)%p
NIBD/EBITDA 1.5x 1.6x
GN’s strong focus on cash conversion continues
• GN Hearing’s free cash flow excl. M&A in 2018
reflects the launch of ReSound LiNX Quattro
impacting trade receivables and inventories
• Continued very strong free cash flow excl. M&A in
GN Audio
• Continued strong group cash conversion of 57% in
2018
• Focused and prudent management of net working
capital continues
• 3 year average cash conversion of 65%
Continued strong cash generation
6
Free cash flow excl. M&A (DKK million)
Cash conversion (FCF ex. M&A / reported EBITA)
GN Hearing GN Audio GN Store Nord
GN Hearing GN Audio GN Store Nord
866
574
FY 17 FY 18
-34%
481
798
FY 17 FY 18
66%1,134 1,110
FY 17 FY 18
-2%
FY 17
75%
FY 18
48%
-27%p
FY 17
67%
FY 18
88%
+21%p
FY 17 FY 18
65%57%
-8%p
8941,198 1,364 1,443
1,168
0
1,000
2,000
2014 2015 2016 2017 2018
Dividends Share buyback
Creating shareholder value through efficient capital structure
7
Shareholder distributionDKKm
NIBD / EBITDA developmentDKKm
• During 2018, GN has distributed DKK 1.2
billion to shareholders
• DKK 182 million dividend was paid out in
March 2018 (DKK 1.25 per share)
• DKK 986 million share buybacks
• End 2018, the net interest bearing debt was
1.5x EBITDA
• Annual General Meeting on March 21, 2019:
• GN will propose a dividend of DKK 1.35 per
share in respect of the fiscal year 2018, total
DKK 197 million
• New DKK 1 billion SBB program planned, to
be concluded no later than the AGM 2020 1,6312,212
3,377 3,035 3,234
1.1x 1.4x 1.9x 1.6x 1.5x0x
1x
2x
3x
4x
0
2,000
4,000
2014 2015 2016 2017 2018
NIBD NIBD/EBITDA
Earnings per share
4.61 4.79
7.348.07
9.25
4.0
6.0
8.0
2014 2015 2016 2017 2018
DKK
Diversified funding profile provides flexibility and de-risks balance sheet
2.0
0.1 0.1
0.6
1.7
0.7
2021
0.70.1
2018 20222019 2020 2023 2024 2025
~5.3*
2.4Total debt
NIB
RCF
EIB
CB
* Note: Total debt of DKK 3.9bn plus undrawn RCF of DKK 1.4bn
8
• Euro Commercial Paper Program of
up to EUR 250 million launched in
January 2019. Attractive margin with
new short-term, uncommitted, unsecured
financing source
• Diversified funding profile with mid-
term maturity that provides flexibility
based on very strong cash-generative
business
• Sufficient flexibility to absorb
acquisition of Altia Systems as well as
the ongoing share buyback programs
Maturity profile (DKKbn)
IFRS changes are insignificant
9
DKK million 2018
reported
IFRS 16
impact
2018 incl. IFRS 16
impact
EBITDA 2,148 +125 2,273
EBITA 1,956 +3 1,959
Financial items (203) (10) (213)
Profit before tax 1,606 (7) 1,599
Profit & loss impact
Balance sheet impact
Financial ratios impact
• IFRS 9 (Financial instruments) and IFRS 15 (Revenue
from Contracts with Customers) have been
implemented as of January 1, 2018
• IFRS 9 – review of the Group’s financial assets and
liabilities resulted in a minor impact on recognition and
measurement (DKK +16 million in total assets)
• IFRS 15 – new standard already in line with previous
practice, resulting in no changes
• IFRS 16 (Leases) will be implemented from January 1,
2019
• The effects are based on lease agreements as of
December 31, 2018 and are subject to uncertainties
• The table to the right shows estimated impacts on 2018
numbers
• Overall limited impact on financials for GN
DKK million 2018
reported
IFRS 16
impact
2018 incl. IFRS 16
impact
Invested capital 8,467 +475 8,942
NIBD 3,234 +475 3,709
2018
reported
IFRS 16
impact
2018 incl. IFRS 16
impact
NIBD/EBITDA 1.5x +0.1x 1.6x
ROIC 24% (2)%pts 22%
IFRS 16 estimated impact
Jakob Gudbrand – new CEO of GN Hearing
10
• Born: 1971
• Nationality: Danish
• Education: Bachelor’s degree in chemical engineering from the
Technical University of Denmark
• Professional experience:
• Thermo Fisher Scientific, Chromatography and Mass
Spectrometry, President (2016 – 2018)
• Thermo Fisher Scientific, Vice President and General
Manager (2011 – 2015)
• Thermo Fisher Scientific, Integration, Vice President (2010 –
2011)
• GN positions:
• CEO, GN Hearing and member of GN Store Nord’s
Executive Management
Agenda
11
Group highlights 2018
GN Hearing update
GN Audio update
Financial outlook
GN Hearing financial highlights 2018
Continued strong growth driven by ReSound LiNX 3D
and newly launched ReSound LiNX Quattro
• Organic growth of 7%, with 10% in Q4 2018. Revenue
growth of 4%, including impact of around (3)% from FX
and around 1% from M&A
• Gross margin in line with 2017
• The EBITA margin reached 20.5%, in line with 2017
and financial guidance, reflecting strong underlying
performance, but off-set with FX and ongoing
investments in future growth opportunities
• ROIC increased to 19% compared to 18% in 2017
• Cash conversion of 48%, with the successful launch of
ReSound LiNX Quattro impacting trade receivables
and inventories
• Strong momentum continues into 2019
12
* EBITA (rolling four quarters) / avg. invested capital
DKK million FY 2018 FY 2017 Growth
Revenue 5,833 5,615 +4%
Organic growth 7% 6%
Gross profit 4,034 3,895 +4%
Gross margin 69.2% 69.4% (0.2)%p
EBITA 1,194 1,153 +4%
EBITA margin 20.5% 20.5% -
ROIC* 19% 18% +1%p
Free cash flow excl. M&A 574 866 (34)%
Cash conversion 48% 75% (27)%p
13
The strong organic growth of 7% was driven across regions and countries
Leading technology and commercial excellence driving growth in 2018
GN Hearing has taken market shares 8 years in a row
Europe
Solid growth in Europe with
particularly strong performance in
France
North America
Double digit organic growth with
independents. Strong pick-up in
VA. Growth in Beltone below group
growth rate
Rest of World
Continued double digit organic
growth with China as the main
driver
ReSound LiNX Quattro roll-out
practically completed
• ReSound LiNX Quattro, and corresponding
Beltone Amaze, first shipped on August 31,
following announcement on August 13
• Global roll-out practically completed
• Available in almost 50 countries world-
wide (incl. US, UK, Germany, France,
Spain, Italy, Japan and Australia)
• Strong customer feedback focusing on
superior sound quality and a state-of-the-
art rechargeable solution
• Available in VA from November 1, 2018
14
ReSound LiNX Quattro –
New chip platform enables significant upgrades
• Brilliant sound experience with
unprecedented Layers of Sound™
• The world’s most advanced
rechargeable solution
30%More
Computing
Power
New chip,
with 6th gen
2.4 GHz tech
100%Increased
memory
25%Reduced power
consumption
100%Increased
speed
15
Strong initial
performance
• Continued strong demand for ReSound LiNX
Quattro – with less cannibalizations than seen
in earlier product launches
• Feedback continues to focus on superior
sound quality and state-of-the-art
rechargeable solution
• The positive trend continues into 2019
Positive ASP
development
• Strong global ASP increase like-for-like vs
ReSound LiNX 3D
• Customers willing to pay for superior technology
• Continued price point upselling with better mix
compared to earlier
LiNX2 LiNX 3D LiNX Quattro
Monthly development
Successful introduction of ReSound LiNX Quattro continuous
Strong ASP increase
like-for-like
16
ASP
Canibalization in the past Less canibalization
17
GN’s AI technology will allow hearing aid users to forget that they are wearing one
Personalized noise management
• Crowd-source data sharing for predictive noise reduction
Personalized user (patient) management
• Precision fitting to define best first fit for user
• Remote fine-tuning and learning to support in-situ adaptation in real-world environments
Intelligent Agent for Situated Learning (IASL)
Intelligent Agent for Big Data Learning (IABDL)
GN Hearing launches the world’s first hearing solutions that employ AI: “Just swipe” and “Just talk”
Agenda
18
Group highlights 2018
GN Hearing update
GN Audio update
Financial outlook
GN Audio financial highlights 2018
19
GN Audio delivered 21% organic growth in 2018, driven by
exceptionally strong performance in both the CC&O
business and the consumer business
• Organic growth of 21%, with 28% in Q4 2018. Revenue
growth of 20%, including impact of around (2)% from FX
and around 1% from M&A
• Strong performance across CC&O and consumer
• Gross margin in line with 2017
• EBITA increased 26% reflecting strong revenue growth
and operational leverage. EBITA margin of 19.0%
compared to 18.2% in 2017
• Significant increase in ROIC from 46% in 2017 to 59% in
2018
• Cash conversion of 88% for 2018 driven by strict focus
on balance sheet items
* EBITA (rolling four quarters) / avg. invested capital
DKK million FY 2018 FY 2017 Growth
Revenue 4,774 3,970 +20%
Organic growth 21% 10%
Gross profit 2,540 2,113 +20%
Gross margin 53.2% 53.2% -
EBITA 905 721 +26%
EBITA margin 19.0% 18.2% +0.8%p
ROIC* 59% 46% +13%p
Free cash flow excl. M&A 798 481 +66%
Cash conversion 88% 67% +21%p
20
Strong and broad based organic growth in CC&O continues
Leading technology and commercial excellence drives growth across geographies in 2018
GN Audio’s professional business continues its strong momentum.The positive trend continues in 2019
Europe
Strong organic growth driven by a
portfolio of countries and a strong
public sector performance. Fastest
growing region in 2018
North America
Solid organic growth driven by GN
Audio’s strong professional
product portfolio
Rest of World
Strong organic growth across
several countries incl. India and
ANZ
GN Audio to acquire Altia Systems
21
• The acquisition, announced on 19 February, allows GN
Audio to expand into integrated audio and video UC
communication, offering solutions that increase
companies’ productivity and allow companies to
work smarter
• The acquisition gives GN Audio immediate access to
the highly attractive market of integrated audio and
video solutions for small collaboration rooms – so-called
huddle rooms
• The total purchase consideration is up to USD 125
million on a debt and cash free basis. As part hereof
around USD 12 million is linked to retention agreements
to be expensed by GN Audio during 2019-2021.
Transaction related costs of up to USD 7 million
• The acquisition will not have a material impact on GN
Store Nord or GN Audio’s underlying financials in
2019 – accretive to financials from 2020
• Founded in 2011
• Headquartered in Cupertino, California, USA
• Leading innovative developer of premium video communication solutions
PanaCast 2 PanaCast 3 (to come)
Strong strategic fit between GN Audio and Altia Systems
22
Altia Systems
delivers• World leading and most technically advanced multi-camera array video solution
GN Audio delivers
• Global audio technology leadership
• Sales & Marketing scale, Channel and End Customer reach and Product
Industrialization skills
Together we deliver• The most technically advanced intelligent full video and audio collaboration
solutions
Highly skilled R&D
resources
• Highly skilled and motivated to solve difficult challenges within audio and video
collaboration solutions
Strong presence in
Silicon Valley
• Silicon Valley can be used strategically to create a strong presence in the tech
environment as well as attract best-in-class talent
Cultural fit• Talented people, professional attitude and result driven wanting to Listen, Challenge and
Transform
Altia Systems is strongly positioned in highly attractive huddle room segment
23
Small room size,
low complexity
+$2,000
solutions
Up to
$1,300
Video conferencing market overview
Small / mid room size,
low complexity
Mid / large room size,
high complexity
Embedded
Embedded Systems
Growth: NA
Traditional VC Systems
Growth1: ~0%
Huddle Conference Cams
Growth1: ~35%
• Total video conferencing market worth USD
>2 billion1
• Huddle room video conferencing market
expected to grow >30% p.a.1
− Video conferencing to become a
significantly larger share of total online
conferences (today only 2% of huddle
conference rooms include video
conferencing)
− Increasing number of huddle rooms driven
by high growth in open offices, remote
work and team based collaboration
− Huddle room video conferencing
characterized by plug-and-play solutions
integrating into well established UC
solutions
− ~75% of conference rooms are used for
meetings with three to five people
1 Frost & Sullivan (2018)
24
GN Audio is strongly positioned in a very attractive portfolio of markets
Call-centric
Enterprise (~80% of revenue) Consumer (~20% of revenue)
Task-based BT stereo* (incl. sports)
“Calls for a living“
(e.g., contact centers, customer
service, traders)
Office-based
knowledge workersPreference for great calls, music
and an active lifestyle
#2Small in fragmented
market#1
Segment
Characteristics
Market development
Relative
market size
(indicative) and market
share (indicative)
Market position
Total relevant market of > DKK 40bn growing at close to 10% per year
Primary product
offering
Jabra EngageJabra Evolve
Jabra Speak
PanaCast
Jabra Elite
* Jabra Elite now accounts for the majority of the consumer business
”True wireless”
#3
Powered by
Sound+
Calls & Music
like never before including
Active Noise Cancellation
and superior battery life
SmartSound. Audio that adapts
automatically to surroundings
based on Artificial Intelligence
Engineered for the best wireless calls and music
experience with SmartSound
Introducing Jabra Elite 85h
100% Hands-free
Voice Assitant Control
Repositioning of the consumer business driven by relentless customer focus
26
Solemate Revo
SportVox
Style
Stealth Motion
Solemate Max
Elite 65hElite Sport
Elite 65t Active
Elite 65tElite 85h
• Specialized segment: Music and calls
• High exposure to decreasing mono BT market
• Competing head-to-head with superior brands
• Limited R&D synergies with CC&O business
• Focus on technology leadership within sound
processing, wireless capabilities and AI
• High exposure to growing markets
• Leverage R&D synergies across GN Audio
2016 – 2019 product launches2012 – 2015 product launches
Agenda
27
Group highlights 2018
GN Hearing update
GN Audio update
Financial outlook
22%25%
22%~23%
2016 2017 2018 2019
Financial guidance for 2019
GN Hearing
• Organic growth is expected to be around 7%
• The EBITA margin is expected to be more than 20%. GN
Hearing will continue to invest in future growth
opportunities, as described in the strategy for 2017-2019
GN Audio
• Organic growth is expected to be more than 15% with
particularly strong growth in the first half of 2019, reflecting
comparison base
• The EBITA margin is expected to be more than 19%
before extraordinary one-off costs related to the Altia
acquisition. GN Audio expects continued operational
leverage, however partly offset by continued investments
in future growth opportunities
GN Store Nord
• EBITA in Other expected to be DKK (150) million related
to Group Functions, continued investments in new
business opportunities and research projects on a
corporate level
• GN expects an effective tax rate around 23%
• GN Store Nord targets a double digit percent increase
in earnings per share (EPS)1) Including “Other”
GN Hearing revenue (DKKm) GN Hearing EBITA margin
GN Store Nord tax rate (%)1)
GN Audio EBITA marginGN Audio revenue (DKKm)
0.0%p
US tax reform net of related items (3.1%pts)
(0.1)%p
+0.8%p
7%6%
21%10%
(3)%p+3%p
Organic growth ~7%
Organic growth >15%
28
5,156 5,615 5,833
2016 2017 2018 2019
20.6% 20.5% 20.5% >20%
2016 2017 2018 2019
3,495 3,9704,774
2016 2017 2018 2019
17.1%18.2% 19.0% >19%
2016 2017 2018 2019
GN Store Nord EPS1)
7.348.07
9.25
2016 2017 2018 2019
+1.1%p
+10% +15% >10%
Save the date – AAA 2019
29
Investor and analyst meeting
AAA 2019
Columbus, Ohio
9.30 am (local time), March 28, 2019
30
Q&Awww.gn.com
E-mail: investor@gn.com
Peter Justesen, VP, IR & Treasury, Tel.: +45 4575 8716
Rune Sandager, Senior IR Manager, Tel.: +45 4575 9257
31
Appendix
GN Hearing’s strategic focus areas 2017 – 2019
Innovation excellence focusing on
user needs, core technology and time
to market optimization
Commercial excellence through
expansion in the open market,
continuation of successful partnerships
and engaging users digitally
People excellence by empowering
leaders to deliver on strategy,
implement GN values and develop
talents
Hear more,
Do more,
Be more
Innovation
excellence
Commercial
excellence
People
excellence
32
People
excellence
Commercial
excellence
Innovation
excellence
GN Audio’s strategic focus areas 2017 – 2019
33
Hear More, Do More, Be More
• Accelerate the call-centric category
• Expand Unified Communication (UC) strength for office
• Grow share in focus markets
• Cloud & digital first
• Grow consumer profitably
Strong profitable growth to continue in coming years
34
Revenue development (DKKm)1)
EBITA development (DKKm)1)
2011
5,174
8,651
20192016
+6-8% +6-9%
Financial targets 2017 - 2019
CAGR:
+11% CAGR:
+11%
CAGR:+11%
2011
6432)
1,583
20192016
CAGR:+20%
Margin:
20-22%
Margin:
17-19%
Financial targets 2017 - 2019
1) Excl. income received from the legal dispute with Telekomunikacja Polska (TPSA) 2) All numbers excluding Otometrics
GN Store Nord – five-year performance
35
* Free cash flow excluding M&A / reported EBITA
DKK million 2014 2015 2016 2017 2018
GN Store Nord
Revenue 6,763 7,755 8,651 9,585 10,607
Organic growth 9% 6% 6% 8% 13%
Gross margin 62.4% 61.2% 62.4% 62.7% 62.0%
EBITA 1,196 1,383 1,583 1,744 1,956
EBITA margin 17.7% 17.8% 18.3% 18.2% 18.4%
Operating profit 1,132 1,149 1,445 1,558 1,796
Financial items -80 -138 -52 -60 -203
Profit before tax 1,057 1,016 1,395 1,504 1,606
Effective tax rate 29% 26% 22% 25% 22%
Net profit 749 747 1,086 1,122 1,247
ROIC (EBITA/Invested capital) 19% 20% 20% 21% 24%
Free cash flow excl. M&A 561 607 1,179 1,134 1,110
Cash conversion* 47% 44% 74% 65% 57%
EPS 4.61 4.79 7.34 8.07 9.25
GN Hearing – five-year performance
36
* Excl. SMART restructuring costs ** Free cash flow excluding M&A / reported EBITA
DKK million 2014 2015 2016 2017 2018
GN Hearing
Revenue 3,892 4,526 5,156 5,615 5,833
Organic growth 8% 9% 6% 6% 7%
Gross margin* 68.8% 67.4% 69.0% 69.4% 69.2%
EBITA* 833 921 1,062 1,153 1,194
EBITA margin* 21.4% 20.3% 20.6% 20.5% 20.5%
ROIC (EBITA/Invested capital) 16% 16% 17% 18% 19%
Free cash flow excl. M&A 368 456 704 866 574
Cash conversion** 44% 50% 66% 75% 48%
GN Audio – five-year performance
37
* Free cash flow excluding M&A / reported EBITA
DKK million 2014 2015 2016 2017 2018
GN Audio
Revenue 2,871 3,229 3,495 3,970 4,774
Organic growth 11% 2% 7% 10% 21%
Gross margin 53.6% 52.6% 52.7% 53.2% 53.2%
EBITA 521 540 597 721 905
EBITA margin 18.1% 16.7% 17.1% 18.2% 19.0%
ROIC (EBITA/Invested capital) 57% 47% 41% 46% 59%
Free cash flow excl. M&A 340 271 523 481 798
Cash conversion* 65% 50% 88% 67% 88%
Share price development (5 years)
Financial calendar
GN Store Nord share overview
38
Share information
• GN has a share capital of DKK 582,736,856, which is consisting
of 145,684,214 shares, each carrying four votes. GN has one
share class, and there are no restrictions on ownership or
voting rights
• GN is, among others, included in the C25 and Large Cap
indexes on Nasdaq Copenhagen as well as the Stoxx Europe
600 index
• Ticker symbols: GN:DC (Bloomberg) and GN.CO (Reuters)
• Number of registered shareholders: Around 25,000 (2018)
• Treasury shares: 13,107,872. 9.0% of share capital (2018)
• Market cap: DKK 32 billion (2018)
• Largest shareholders:
• APG Asset Management N.V. (>5%)
• NN Group N.V. (>5%)
• Marathon Asset Management (>5%)
Date Event
March 21, 2019 Annual general meeting
May 1, 2019 Q1 2019
August 22, 2019 Q2 2019
November 7, 2019 Q3 2019
Index: 30-12-2013 = 100
80
130
180
230
30-12-2013 30-12-2014 30-12-2015 30-12-2016 30-12-2017
GN C20 CAP Stoxx 600
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