INVESTOR PRESENTATION

March 2013

DISCLAIMER
This presentation may contain forward-looking statements including, but not limited to, projections of future performance of products, financial conditions, results of operations and cash flows. The statements are made on the basis of managements views and assumptions regarding future events and business performance as of the time the statements are made. Sonova cautions you that a number of important risks and uncertainties could cause actual results to differ materially from those discussed in the forward-looking statements. Such differences may result from the ability of Sonova to successfully develop and introduce new products and market existing products, changes in competitive conditions and regulatory developments as well as from changes in the economic conditions that may affect the performance of the operations of Sonova. Sonova undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. Therefore you should not place undue reliance on them. This presentation serves marketing purposes and constitutes neither an offer to sell nor a solicitation to buy any securities. This presentation does not constitute an offering prospectus within the meaning of Article 652a of the Swiss Code of Obligations nor a listing prospectus within the meaning of the listing rules of SIX Swiss Exchange.
March 2013 Page 2

VISION
AT SONOVA, WE ENVISION

A WORLD WHERE EVERYONE ENJOYS THE DELIGHT OF HEARING AND THEREFORE LIVES A LIFE WITHOUT LIMITATIONS

March 2013

Page 3

SONOVA GROUP
BROADEST OFFERING: HEARING INSTRUMENTS, COCHLEAR IMPLANTS HI Hearing Instruments CI Cochlear Implants
Cochlear implants Custom In-The-Ear hearing instruments (ITE)

Behind-The-Ear hearing instruments (BTE) FM systems

Hearing protection Wireless communication systems Earphones

Invisible extended-wear hearing instruments

AND PROFESSIONAL RETAIL SERVICES

March 2013 Page 4

BUSINESS CASE
CLEAR AND FOCUSED STRATEGY CUSTOMER DRIVEN INNOVATION
SONOVA: HEAR THE WORLD Key to our success Broadest product and service offering / portfolio - Our customers and our employees - Hearing instruments (Phonak, Unitron) - Cochlear implants (Advanced Bionics) - Professional services (Connect Hearing Group) Strong competitive positions - Leading position in hearing instruments - Strong contender on cochlear implants - Strong position in selected key retail markets Significant market share gain potential - High R&D spend fast product introduction - Differentiated multi-brand strategy - Optimized multi-channel approach Strong product pipelines Productivity / efficiency gains 5-year financial targets (at constant FX rates) - High innovation rate and rapid new product introduction - Leverage existing global infrastructure to expand margins - EBITA margin: return to mid-twenties - ROCE: expand to low-thirties
March 2013 Page 5

CONTENTS
1 MARKET PAGE 7

2 BUSINESS

PAGE 11

3 CORPORATE STRATEGY

PAGE 21

4 BUSINESS STRATEGIES

PAGE 31

5 FINANCIAL INFORMATION

PAGE 50

March 2013

Page 6

1. MARKET

MARKET
AROUND 15% OF PEOPLE HAVE SOME DEGREE OF HEARING IMPAIRMENT
CI HI
MODERATE

PROFOUND

HI

15%
MILD

HI

With hearing system

Without hearing system

END-USER MARKET PENETRATION* - Profound loss - Moderate loss - Mild loss

* Source: Several industry statistics, Sonova estimates

70% 50% 10%

LOW PENETRATION RATE AROUND 20% IN DEVELOPED COUNTRIES

March 2013 Page 8

MARKET
HEARING SOLUTIONS: INSTRUMENTS, IMPLANTS AND SERVICES

HEARING INSTRUMENTS HI - Market Size - Market CAGR - HI Size (units) CI HI COCHLEAR IMPLANTS CI - Market Size - Market CAGR - CI Size (units) TOTAL HEARING CARE MARKET Market Size Market CAGR HI Size (units) CI Size (units) ~ CHF 15 billion ~ + 3-5% ~ 10 million ~ 35 thousand ~ CHF 800 million ~ +10-15% ~ 35 thousand ~ CHF 4.2 billion ~ + 2-4% ~ 10 million

March 2013

Page 9

MARKET
SERVICE CHANNELS: KEY TO ACCESS END-USERS

HEARING INSTRUMENTS HI
HOSPITALS GOVERNMENT OTHERS BUYING GROUPS MULTISHOP LARGE RETAIL ACCOUNTS INDEPENDENTS

- Market Size - Market CAGR - HI Size (units)

~ CHF 4.2 billion ~ + 2-4% ~ 10 million

COCHLEAR IMPLANTS CI
GLOBAL KEY ACCOUNTS

- Market Size - Market CAGR - CI Size (units)

~ CHF 800 million ~ +10-15% ~ 35 thousand

TOTAL HEARING CARE MARKET Market Size Market CAGR HI Size (units) CI Size (units) ~ CHF 15 billion ~ + 3-5% ~ 10 million ~ 35 thousand

March 2013

Page 10

2. BUSINESS

SONOVA GROUP
STRONG FINANCIAL TRACK RECORD
SALES
in CHF million

EBITA
in CHF million

EBITA
margin in %

2'000 1'800 1'600 1'400 1'200 1'000 '800 '600 '400 '200 '0 06/07 07/08 08/09 09/10 10/11 11/12 12/13
1H

'450 '400 '350 '300 '250 '200 '150 '100 '50 '0 06/07 07/08 08/09 09/10 10/11 11/12 12/13
2H

45% 40% 35% 30% 25% 20% 15% 10% 5% 0%

2007/08 Sales growth reported Sales growth in LC EBITA margin reported Basic EPS +12.3% +12.8% 28.2% 4.55

2008/09 +3.7% +10.8% 26.6% 4.35

2009/10 +20.1% +23.8% 28.0% 3.32

2010/11 +7.8% +13.3% 20.2% 3.50

2011/12 +0.2% +11.6% 19.5% 3.71

CAGR 5-year +8.6% +14.6%

1H 2012/13 +14.3% +7.9% +21.4% 2.24

FY 2007/08 Excluding one-off costs for the prohibited acquisition of the GN ReSound Group FY 2009/10 Restated based on finalization of the acquisition accounting of Advanced Bionics March 2013 Page 12

SONOVA GROUP
WELL ESTABLISHED GLOBAL INFRASTRUCTURE AND NETWORK
Stfa (CH) Kitchener (CAN)

Newark (USA)

Suzhou (CN)

Valencia (USA)

Murten (CH)

Ho Chi Minh City (VN)

Sonova & Phonak HQ & Centers Unitron Center Phonak Communications Center

AB Center InSound Center Operation Centers

WHS Group Companies Distributors

STRONG LOCAL PRESENCE SUPPORTING CUSTOMERS WORLDWIDE

March 2013 Page 13

SONOVA GROUP
EUROPE AND AMERICAS MAIN CONTRIBUTORS TO GROUP SALES
SALES
in CHF million

SALES
in CHF million

2'000 1'800 1'600 1'400 1'200 1'000 '800 '600 '400 '200 '0 06/07 07/08 08/09 09/10 10/11 11/12 12/13

2'000 1'800 1'600 1'400 1'200 1'000 '800 '600 '400 '200 '0 06/07 07/08 08/09 09/10 10/11 11/12 12/13 EU
2007/08 EU - Sales growth in LC AM - Sales growth in LC AP - Sales growth in LC +10.3% +13.9% +20.6% 2008/09 +6.4% +12.9% +22.3% 2009/10 +23.0% +26.0% +15.3% 2010/11 +11.3% +16.9% +2.7%

AM

AP
CAGR 5-year +13.3% +15.2% +17.2%

2011/12 +13.9% +7.8% +24.0%

March 2013

Page 14

MARKET POSITION
EXPANDING STRONG HI POSITION INTO LARGER HEARING CARE MARKET

HEARING INSTRUMENTS HI - Market Size - Market CAGR - HI Size (units) ~ CHF 4.2 billion ~ + 2-4 % ~ 10 million

COCHLEAR IMPLANTS CI - Market Size - Market CAGR - CI Size (units) TOTAL HEARING CARE MARKET Market Size Market CAGR HI Size (units) CI Size (units) ~ CHF 15 billion ~ + 3-5 % ~ 10 million ~ 35 thousand ~ CHF 800 million ~ +10-15 % ~ 35 thousand

March 2013

Page 15

MARKET POSITION
SOLID COMPETITIVE ADVANTAGES IN INSTRUMENTS, IMPLANTS AND SERVICES

HI: LEADING BRANDS Largest manufacturer in HI industry Most extensive product portfolio Multi-brand strategy Phonak / Unitron Solid financial performance

CI: RESPECTED No 2 BRAND RETAIL SERVICE CHANNELS Leading retail services provider Strong local presence in 8 key markets Superior shop offering and productivity Direct access to end-users / patients CI solution with strong performance CI solution with high reliability Technology synergy with HI business Distribution synergy with HI business

March 2013

Page 16

MARKET POSITION
SERVICE CHANNELS: STRONG PARTNER TO IND, LRA, BG AND GOVT

HEARING INSTRUMENTS HI
HOSPITALS GOVERNMENT OTHERS BUYING GROUPS MULTISHOP LARGE RETAIL ACCONTS INDEPENDENTS

- Market Size - Market CAGR - HI Size (units)

~ CHF 4.2 billion ~ + 2-4 % ~ 10 million

SOON Sales Split

COCHLEAR IMPLANTS CI
GLOBAL KEY ACCOUNTS

- Market Size - Market CAGR - CI Size (units)

~ CHF 800 million ~ +10-15 % ~ 35 thousand

TOTAL HEARING CARE MARKET Market Size Market CAGR HI Size (units) CI Size (units) ~ CHF 15 billion ~ + 3-5 % ~ 10 million ~ 35 thousand

March 2013

Page 17

BUSINESSES
BALANCED PORTFOLIO OF PROFITABLE GROWTH BUSINESSES

SONOVA Group
HEARING INSTRUMENT (HI) Segment IMPLANT (CI) Segment

HI RETAIL

HI UNITRON

HI PHONAK

CI ADVANCED BIONICS Business

Business

Business

Business

March 2013

Page 18

HI SEGMENT
SOLID GROWTH IN BOTH HEARING INSTRUMENT BRANDS AND RETAIL
SALES
in CHF million

EBITA
in CHF million

EBITA
margin in %

2'000 1'800 1'600 1'400 1'200 1'000 '800 '600 '400 '200 '0 06/07 07/08 08/09 09/10 10/11 11/12 12/13
1H

'450 '400 '350 '300 '250 '200 '150 '100 '50 '0 06/07 07/08 08/09 09/10 10/11 11/12 12/13
2H

45% 40% 35% 30% 25% 20% 15% 10% 5% 0%

2007/08 Sales growth reported Sales growth in LC EBITA margin reported +12.3% +12.8% 28.2%

2008/09 +3.7% +10.8% 27.2%

2009/10 +18.1% +21.7% 29.0%

2010/11 +4.8% +10.1% 24.1%

2011/12 -1.4% +9.7% 22.2%

CAGR 5-year +7.3% +13.1%

March 2013

Page 19

CI SEGMENT
STRONG AND RAPID EXPANSION OF IMPLANT BUSINESS
SALES
in CHF million

EBITA
in CHF million

EBITA
margin in %

'150 '125 '100 '75 '50 '25 '0 06/07 07/08 08/09 09/10 10/11 11/12 12/13
1H

'10 '0 -'10 -'20 -'30 -'40 -'50 06/07 07/08 08/09 09/10 10/11 11/12 12/13
2H

20% 0% -20% -40% -60% -80% -100%

2007/08 Sales growth reported Sales growth in LC EBITA margin reported ----

2008/09 ----

2009/10 ---32.0%

2010/11 +180.5% +202.1% -63.4%

2011/12 +36.0% +53.5% -25.0%

CAGR 5-year >> +100% >> +100%

March 2013

Page 20

3. CORPORATE STRATEGY

MISSION
WE STRIVE TO BE RECOGNIZED AS THE INNOVATION LEADER HI Hearing Instruments
Behind-The-Ear hearing instruments (BTE) FM systems

CI Cochlear Implants
Cochlear implants

Custom In-The-Ear hearing instruments (ITE)

Hearing protection Wireless communication systems Earphones

Invisible extended-wear hearing instruments

IN THE GLOBAL HEARING CARE MARKET

March 2013 Page 22

FINANCIAL TARGETS
LEVERAGE EBITA: DRIVE SALES GROWTH >> OPEX GROWTH
3'000 40%

Sales (CHF million)

2'000

30%

1'000

20%

0 06/07 07/08 08/09 09/10 10/11 11/12 12/13 13/14 14/15 15/16 16/17 Sales EBITA Margin (%) ROCE (%)

10%

LEVERAGE ROCE: DRIVE SALES GROWTH >> NET ASSET GROWTH

March 2013 Page 23

EBITA Margin / ROCE (%)

STRATEGY
SIX KEY STRATEGIES DRIVING CORE SALES AND EARNINGS GROWTH

CORPORATE STRATEGIES

BUSINESS STRATEGIES

1 INNOVATION 1 HI PHONAK 2 MARKET 2 HI UNITRON 3 PRODUCT 3 HI RETAIL 4 PORTFOLIO 4 CI ADVANCED BIONICS 5 RESOURCE 6 ACQUISITION

March 2013

Page 24

INNOVATION STRATEGY
FOCUS ON CONTINUOUS INNOVATION TO GROW SALES AND EARNINGS

Q1 12

Q2 12

Q3 12

Q4 12

Q1 13

Q2 13

Q3 13

Q4 13

Q1 14

Q2 14

MARKETING

SALES & DISTRIBUTION

NEW PRODUCTS

PRODUCTIVITY & EFFICIENCY

RESOURCES & PROCESSES

CORE: DRIVE STRONG NEW PRODUCT PIPELINE R&D 7-8% OF SALES

March 2013 Page 25

MARKET STRATEGY
GROW MARKET POSITION ALONG 4 MAIN GROWTH VECTORS 1 Penetrate existing markets
WHS account development Dual-brand strategy Continuous product innovation

Expand accessible markets

BRIC markets New product formats

Integrate service channels

Retail network expansion Integration & productivity

Develop consumer base

Direct marketing Lead generation processes

FOCUS ON KEY INITIATIVES TO SUPPORT GROWTH STRATEGY

March 2013 Page 26

PRODUCT STRATEGY
PROVIDE COMPLETE CUSTOMER SOLUTIONS: HW, SW AND SERVICES

PLATFORM CONCEPT APPROACH TO SOLUTION DEVELOPMENT

March 2013 Page 27

PORTFOLIO STRATEGY
DEVELOP BALANCED PORTFOLIO OF PROFITABLE GROWTH BUSINESSES
INVEST Low ??? LYRIC MARKET GROWTH High RETURN

CI HI
FM Low High DOG MARKET SHARE COW

LEAD INNOVATION IN HEARING INSTRUMENTS AND IMPLANTS

March 2013 Page 28

Low

High

STAR

RESOURCE STRATEGY
LEVERAGE GLOBAL INFRASTRUCTURE TO EXPAND MARGINS

AMERICAS
200 150 100 50 0 200 150

EUROPE
200 150

APAC

SALES OPEX

100 50

SALES OPEX

100 50 0

SALES OPEX

2012

2016

2012

2016

2012

2016

RE-BALANCE GLOBAL OPEX BASE TO CREATE NATURAL HEDGE

March 2013 Page 29

ACQUISITION STRATEGY
INVEST TO LEVERAGE EXISTING CHANNELS AND PRODUCTS
3,000

,0 06/07 Channels HI CI
AB ISM

07/08

08/09

09/10

10/11

11/12

12/13

13/14

14/15

15/16

TARGETS: STRICT CRITERIA FOR STRATEGIC AND FINANCIAL FIT

March 2013 Page 30

4. BUSINESS STRATEGIES

PHONAK
SONOVA: BALANCED PORTFOLIO OF PROFITABLE GROWTH BUSINESSES

SONOVA Group
HEARING INSTRUMENT (HI) Segment IMPLANT (CI) Segment

HI RETAIL

HI UNITRON

HI PHONAK

CI ADVANCED BIONICS Business

Business

Business

Business

March 2013

Page 32

PHONAK
BUSINESS STRATEGY
PHONAK: LIFE IS ON Mission / value proposition Markets Products Product pipeline Productivity / efficiency Selected initiatives 2012/13 - Drive innovation leadership to expand market position - Cover broadest global (whole)sale, distribution & support network - Offer complete range across all form factors and performance levels - Drive high innovation rate and rapid new product introduction - Leverage global sales & production infrastructure to expand margins - B2B/B2C marketing campaign: Phonak engaging voices - New product launch Fall 2012 - New product launch Spring 2013 - Lyric 2 - DM (2.4 GHz) communication / connectivity - China market growth and expansion (lead) - etc.

March 2013

Page 33

PHONAK
MARKETS: COVER BROADEST GLOBAL SALES & SUPPORT NETWORK

AP AM EU

FURTHER PENETRATE AM AND EU EXPAND POSITIONS IN AP (CHINA)

March 2013 Page 34

PHONAK
PRODUCT PIPELINE: DRIVE HIGH INNOVATION & PRODUCT LAUNCH RATE
TIMELINE / CY
F1 F3

1H 11
F4

2H 11
F2

1H 12

2H 12
BTE Bolero

1H 13

2H 13

1H 14

2H 14

1H 15

2H 15

HI - Premium HI - Advanced HI - Standard

ITE Virto

F 3

F 4

F 5

F 1

F 2

F 3

F 4

F1

F5

HI - Essential/Basic HI - Platform HI - New EW Format Fitting Software

(TARGET) T 1.1 T 2.0

F1 / 4

SPICE (new HW / new DSP / 65nm)

Lyric2 T 2.1

QUEST (new HW / new core SW / 65nm)

Lyric3 T 3.0 T 3.1 T 3.2 T 3.3 T 4.0

NEXT PLATFORM

T 4.1

T 4.2

Communication

FM System (analog)

DM System (digital / 2.4 GHz)

Note: Subject to change

COMPLETE RANGE ACROSS ALL FORMATS AND PERFORMANCE LEVELS

March 2013 Page 35

F 5

F1

F2

F5

PHONAK PRODUCT PORTFOLIO

BTE product line Premium Advanced Standard Essential Basic Phonak Bolero Q90 Phonak Bolero Q70 Phonak Bolero Q50 Phonak Dalia* Milo*

Custom product line Phonak Virto Q90 Phonak Virto Q70 Phonak Virto Q50 Phonak Dalia* Milo*

RIC Audo S IX* Audo S V* Audo S III* Audo S I*

Power Nada S IX* Nada S V* Nada S III* Nada S I*

Pediatric Nios S V* / Nada S VII* Nios S III* / Nada S III*

* based on previous generation platforms

March 2013

Page 36

UNITRON
SONOVA: BALANCED PORTFOLIO OF PROFITABLE GROWTH BUSINESSES

SONOVA Group
HEARING INSTRUMENT (HI) Segment IMPLANT (CI) Segment

HI RETAIL

HI UNITRON

HI PHONAK

CI ADVANCED BIONICS Business

Business

Business

Business

March 2013

Page 37

UNITRON
BUSINESS STRATEGY
UNITRON: HEARING MATTERS Mission / value proposition Markets Products Product pipeline Productivity / efficiency Selected initiatives 2012/13 - Drive leadership in customer experience - Deeper penetration in core markets in Europe and NA - Offer flexible range across many form factors and all performance levels - Drive focused innovation and rapid new product introduction - Leverage Sonova technology & production platform to expand margins - B2B Marketing campaign favorite sound - UT customer experience initiatives - New product launch Fall 2012 - New product launch Spring 2013 - China market growth and expansion (complement Phonak initiative) - etc.

March 2013

Page 38

UNITRON
MARKETS: EXPAND GLOBAL NETWORK FROM STRONG BASE IN NA

AP AM EU

DEVELOP POSITIONS IN EU SUPPORT SONOVA EXPANSION IN AP (CHINA)

March 2013 Page 39

UNITRON
PRODUCT PIPELINE: DRIVE FOCUSED PRODUCT INNOVATION

TIMELINE / CY HI - Premium HI - Advanced

1H 11

2H 11

1H 12
M PRO Q PRO

2H 12
M FLEX 1

1H 13

2H 13

1H 14
M PRO Q PRO

2H 14

1H 15

2H 15

M FLEX 2

Q FLEX 1

Q FLEX 2

F 2

F 1

M1

HI - Standard HI - Essential/Basic

HI - Platform Fitting Software

(TRUEFIT) TF 1.0 TF 1.1

ERA (new HW / new DSP / 65nm)

TF 2.0 TF 2.1 TF 2.2 TF 2.3 TF 2.3

M2

Q1

Q2

NEXT PLATFORM
TF 4.0 TF 4.1

Note: Subject to change

FLEXIBLE RANGE ACROSS 3 FORMATS AND ALL PERFORMANCE LEVELS

March 2013 Page 40

F 3

UNITRON PRODUCT PORTFOLIO

BTE product line Premium Advanced Standard Essential Basic Quantum Pro Quantum 20 Quantum 12 Quantum 6 Quantum E Shine*

Custom product line Quantum Pro Quantum 20 Quantum 12 Quantum 6 Quantum E Shine*

RIC Moxi Pro Moxi 20 Moxi 12 Moxi 6 Moxi E

Power Max 20 Max 6 Max E

Flex Trial

Any Performance Level

* based on previous generation platforms

March 2013

Page 41

RETAIL
SONOVA: BALANCED PORTFOLIO OF PROFITABLE GROWTH BUSINESSES

SONOVA Group
HEARING INSTRUMENT (HI) Segment IMPLANT (CI) Segment

HI RETAIL

HI UNITRON Business

HI PHONAK

CI ADVANCED BIONICS Business

Business

Business

March 2013

Page 42

RETAIL
BUSINESS STRATEGY
RETAIL: YOUR HEARING CARE PROFESSIONAL Mission / value proposition Markets Business models / products Profitability / productivity Brand equity Selected initiatives 2012/13 - Secure market access and grow professional hearing care services - Build strong service positions / networks in key focus markets - Support new business concepts to increase store traffic and service - Standardize business systems and processes - Apply consistent store branding within key markets - Selected acquisitions and store openings - New store concepts - CHG Retail Business Solution (RBT) - Strategic branding approach - etc.

March 2013

Page 43

RETAIL
MARKETS: BUILD STRONG SERVICE POSITIONS IN KEY MARKETS

AP AM EU

FOCUS ON: US, CA, BR, UK, FR, BE, AT, AUS/NZ
March 2013 Page 44

ADVANCED BIONICS
SONOVA: BALANCED PORTFOLIO OF PROFITABLE GROWTH BUSINESSES

SONOVA Group
HEARING INSTRUMENT (HI) Segment IMPLANT (CI) Segment

HI RETAIL

HI UNITRON

HI PHONAK

CI ADVANCED BIONICS Business

Business

Business

Business

March 2013

Page 45

ADVANCED BIONICS
BUSINESS STRATEGY
ADVANCED BIONICS: PATIENTS ALWAYS FIRST Mission / value proposition Markets Products Product pipeline Productivity / efficiency Selected initiatives 2012/13 - Strive for performance leadership leverage AB and PH combination - Build global direct sales & support network - grow from strong US base - Expand innovative range of processors, implants and electrodes - Accelerate innovation rate synchronize with PH pipeline and platforms - Leverage PH technology & process platform to expand margins - AB Partner Program for retail: Think beyond Hearing Aids - AB / PH system & product pipeline - New product launches 2012/13 - China market entry - etc.

March 2013

Page 46

ADVANCED BIONICS
MARKETS: EXPAND GLOBAL NETWORK FROM STRONG BASE IN US

AP AM EU

GROW POSITIONS IN EU, BR, JP BUILD PLATFORM IN CHINA

March 2013 Page 47

ADVANCED BIONICS
PRODUCT PIPELINE: ACCELERATE INNOVATION RATE LEVERAGE PH

TIMELINE / CY CI - Electrodes CI - Implants CI - Processors

1H 11

2H 11

1H 12

2H 12

1H 13

2H 13

1H 14

2H 14

1H 15

2H 15
N El 3 N El 3

FDA CE
FDA CE FDA CE

N El 1 N El 1 N Imp 2 N Imp2 Neptune Neptune N Pro 1 N Pro 1

N El 2 N El 2 N Imp 2 N Imp 2 N ProN 2 Pro 2

N Imp 3 N Imp 3 N Pro 3 N Pro 3

CI - Platform Fitting Software

(SOUNDWAVE)

WOLVERINE / QUEST (new HW / new DSP / 65nm) SW 2.0 SW 3.0

NEXT PLATFORM SW 4.0

Note: Subject to change, timing dependent upon regulatory approvals

EXPAND RANGE OF INNOVATIVE PROCESSORS, IMPLANTS, ELECTRODES

March 2013 Page 48

ADVANCED BIONICS PRODUCT PORTFOLIO

Implant Electrodes Sound Processors Software

HiRes 90K HiFocus 1j, HiFocus Helix Harmony BTE, Neptune Sound Processor SoundWave 2.1

March 2013

Page 49

5. FINANCIAL INFORMATION

HALF-YEAR 2012/13
FINANCIAL HIGHLIGHTS
Solid growth in both sales and earnings both segments meeting expectations Gross profit margin of 68.9% up 0.5% pts., driven by positive currency effects OPEX growth of 3.4% in lc compared to 7.9% sales growth in lc EBITA margin increased to 21.4%; excluding FX impact: 20.1% R&D spend at CHF 56.5 million or 6.5% of sales (excluding capitalized development cost of CHF 15.4 million or 1.7%) Basic EPS of CHF 2.24, up by 43.6% Operating free cash flow up by 51.6% to CHF 127.1 million Equity ratio of 67.1%, up from 64.5% as of March 2012 ROCE last twelve months 21.8% (up from 14.0% in prior year)

March 2013

Page 51

HALF-YEAR 2012/13
SOLID FINANCIAL PERFORMANCE
In CHF million

1H 2011/12 763.0 522.1 68.4% 383.7 138.4 18.1% 83.8 1.56 14.0%

1H 2012/13 872.4 600.7 68.9% 413.7 187.0 21.4% 127.1 2.24 21.8%

Change 14.3% 15.1%

Change in lc 7.9% 7.6%

Sales Gross profit Gross profit margin OPEX EBITA EBITA margin Operating free cash flow EPS (in CHF) ROCE last 12 months

7.8% 35.1%

3.4% 19.3%

51.6% +43.6%

March 2013

Page 52

HALF-YEAR 2012/13
SOLID GROWTH IN KEY MARKETS IN LOCAL CURRENCIES
in CHF million

1H 2011/12
Sales in % Sales

1H 2012/13
in % Growth in lc

EMEA (excl. Switzerland) Switzerland USA Americas (excl. USA) Asia/Pacific Total sales

289 21 277 102 74 763

38% 3% 36% 13% 10% 100%

317 14 339 114 88 872

36% 2% 39% 13% 10% 100%

+8.6% -32.9% +9.2% +9.7% +9.7% 7.9%

March 2013

Page 53

HALF-YEAR 2012/13
SALES GROWTH ACROSS PRODUCT GROUPS
in CHF million

1H 2011/12
Sales in % Sales

1H 2012/13
in % Growth in lc

Premium HI Advanced HI Standard HI Wireless comm. Miscellaneous Hearing Instruments CI and accessories Total sales

173 174 233 34 110 724 39 763

23% 23% 31% 4% 14% 95% 5% 100%

192 212 240 31 126 801 71 872

22% 24% 28% 4% 14% 92% 8% 100%

+2.2% +9.8% +0.9% -14.4% +12.9% +4.5% +70.5% +7.9%

March 2013

Page 54

HALF-YEAR 2012/13
HI MARGINS INFLUENCED BY MIX CHALLENGES
Impact Sonova 1H Category Mix Effect Sales Growth
Country Switzerland: Reimbursement change effective in July 2011 Germany: Slowdown/product mix shift (upcoming reimbursement changes) France and Italy: High growth in prior year, market negative in 1H Product Highest growth in the Advanced segment Adverse intra-segment mix shift in the Standard category

Gross Margin

Sonovas broad product & country portfolio mitigates mix challenges Strong performance in the UK, Brazil, and Spain

March 2013

Page 55

HALF-YEAR 2012/13
STRONG LEVERAGE OPEX +3.4 % LC VS. TOP-LINE GROWTH OF 7.9% LC
in CHF million

1H 2011/12

1H 2012/13

Change in CHF

Change in lc

Sales Research & Development* in % of sales Sales & Marketing in % of sales General & Administration in % of sales Other expenses, net
Total OPEX

763.0 58.6 7.7% 237.1 31.1% 83.9 11.0% 4.1

383.7 50.3%

872.4 56.5

+14.3% -3.6%

+7.9% -6.0%

6.5% 266.5 +12.4% 30.5% 88.2 +5.1% 10.1% 2.6

413.7 +7.8% 47.4% +3.4%

+7.1%

+1.5%

* excluding capitalized development cost of 15.4m /1.7% of sales (prior year 6.5m / 0.9% of sales)
March 2013 Page 56

HALF-YEAR 2012/13
GROUP EBITDA DEVELOPMENT
187.0 +0.3 138.4 +26.4 165.1 +21.9

+26.7
+19.3% Margin: 18.1% Margin: 20.1%

+48.6
+35.1% Margin: 21.4%

Avg. FX Rates 1H 2012/13 1H 2011/12 USD/CHF EUR/CHF 0.95 1.20 0.85 1.21

EBITA YTD SEPT. 2011/12

Organic Growth

Acquisitions

EBITA YTD SEPT. 2012/13 const. FX

FX effect

EBITA YTD SEPT. 2012/13

EBITA IMPROVEMENT DRIVEN BY ORGANIC GROWTH AND FX

March 2013 Page 57

HALF-YEAR 2012/13
DETAILS BY BUSINESS SEGMENTS
In CHF million

1H 2011/12

1H 2012/13

Growth in lc

Organic Growth

External Growth

FX impact

Sales HI CI Group 723.8 39.2 763.0 801.2 71.2 872.4 +4.5% +70.5% +7.9% +2.4% +70.5% +5.9% +2.1% +2.0% +44.6 (+ 6.2%) +4.4 (+11.3%) + 49.0 (+6.4%)

EBITA HI CI Corporate Group 158.9 -20.6 138.4 187.6 2.0 -2.6* 187.0 +4.8% n/a n/a +19.3% +4.6% n/a n/a +19.1% +0.2% n/a n/a +0.2% +21.0 (+13.2%) +0.9 n/a +21.9 (+15.8%)

* Out-of-court settlement with Deminor

March 2013 Page 58

HALF-YEAR 2012/13
FINANCIAL RESULTS AND INCOME TAXES
in CHF million

1H 2011/12 138.4 -15.3 123.1

16.1%

1H 2012/13 187.0 -12.6 174.4

20.0%

Comments

EBITA Amortization/Impairment Operating profit (EBIT)

in % of sales

No impairment in 1H 2012/13 vs. impairment of CHF 4.9m in 1H 2011/12

Financial result Income before taxes Income taxes Income after taxes
in % of sales

-3.5 119.6 -15.9 103.7

13.6%

-2.1 172.3 -23.1 149.2

17.1%

Lower net debt level, higher income from associates/JVs

Tax rate 13.3% (PY 13.4%) Growth of + 43.9%

March 2013

Page 59

HALF-YEAR 2012/13
SIGNIFICANT INCREASE IN FREE CASH FLOW
in CHF million

1H 2011/12

1H 2012/13

Cash flow before changes in net working capital Changes in net working capital Operating cash flow
in % of sales

169.7 -57.4 112.3

14.7%

218.5 -51.4 167.1

19.2%

Cash flow from investing activities (excl. acquisitions) Operating free cash flow
in % of sales

-28.5 83.8
11.0%

-40.0 127.1
14.6%

Free cash flow Cash flow from financing activities Changes in cash
March 2013

47.3 -105.8 -61.4

86.3 -79.2 8.5

Page 60

HALF-YEAR 2012/13
BALANCE SHEET: SOUND FINANCIAL POSITION
in CHF million

31 Mar 2012

30 Sep 2012

Comments

Net working capital Days sales outstanding (DSO) Days inventory outstanding (DIO) Capital employed Net debt Equity Equity in % of total assets

163.4 72 122 1,540 64.5 1,476 64.5%

207.4 73 140 1,647 51.4 1,596 67.1%

Higher inventory, lower payables and FX effect

New HI platform launch and timing of larger government tender delivery in CI FX effect Higher net working capital Considers dividend payment of CHF 79.9 m

March 2013

Page 61

OUTLOOK
GUIDANCE IN LOCAL CURRENCIES CONFIRMED
Guidance FY 2012/13* Sales Sales growth in lc thereof acquisition related growth FX-impact Total sales growth in CHF EBITA EBITA growth in lc FX-impact Total EBITA growth in CHF
* Unchanged compared to guidance issued in May 2012

Half-Year (actuals) 2012/13

7%-9% approx. 1%-2% n/a n/a

7.9% 2.0% 6.4% 14.3%

15%-20% n/a n/a

19.3% 15.8% 35.1%

March 2013

If todays currency situation remains unchanged, positive FX impact will continue to add to the y-o-y growth Currency benefit likely to be less significant in 2H
Page 62

OUTLOOK
FX IMPACT ON SALES AND MARGINS
USD/CHF
1.00 0.95 0.95 0.90 0.90 0.85 0.85 0.80 0.80 0.75 0.75 0.70 0.70 Apr Apr-11 Ma Jun-11 Jun Jul- Aug-11 Au Se Oct-11 Oct Oct Dec-11 No De Feb-12 Jan Fe Apr-12 Ma Apr Jun-12 Ma Jun Aug-12 Jul- Au Oct-12

EUR/CHF
1.35 1.30 1.25 1.20 1.15 1.10 1.05 1.00 Aug-11 Aug-12 Jun-11 Dec-11 Jun-12 Apr-11 Oct-11 Apr-12 Feb-12 Oct-12
Page 63

USD

Avg FY 11/12

Avg 1H 12/13

EUR

Avg FY 11/12

Avg 1H 12/13

Rate USD/CHF EUR/CHF +/- 5% +/- 5%

Sales +/- CHF 34 million +/- CHF 25 million

EBITA +/- CHF 11 million +/- CHF 15 million

March 2013

BUSINESS CASE
CLEAR AND FOCUSED STRATEGY CUSTOMER DRIVEN INNOVATION
SONOVA: HEAR THE WORLD Key to our success Broadest product and service offering / portfolio - Our customers and our employees - Hearing instruments (Phonak, Unitron) - Cochlear implants (Advanced Bionics) - Professional services (Connect Hearing Group) Strong competitive positions - Leading position in hearing instruments - Strong contender on cochlear implants - Strong position in selected key retail markets Significant market share gain potential - High R&D spend fast product introduction - Differentiated multi-brand strategy - Optimized multi-channel approach Strong product pipelines Productivity / efficiency gains 5-year financial targets (at constant FX rates) - High innovation rate and rapid new product introduction - Leverage existing global infrastructure to expand margins - EBITA margin: return to mid-twenties - ROCE: expand to low-thirties
March 2013 Page 64

THANK YOU VERY MUCH