Bernstein Strategic Decisions Conference Marcus Desimoni – CFO, GN Store Nord & GN Hearing, September 2019
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. 1
The GN Group at a glance – unique portfolio of medical, professional and consumer audio solutions GN Hearing GN Audio Innovation leader creating best-in-class Leading position in growing CC&O market hearing aid technology Sales DKK 5,833m Sales DKK 4,774m (% of total) (55%) (% of total) (45%) EBITA EBITA DKK 905m DKK 1,194m (margin) (19.0%) (margin) (20.5%) … a world class organisation Sales: DKK 10,607m . EBITA (1) : DKK Markets hearing aids and headsets in > DKK 900 million ~ 6,000 employees 1,956m (margin: 18.4%) 100 countries across the world R&D investment Source: Company information Note: Financials refer to FY 2018 (1) Includes Group Shared Services 2
We have delivered strongly… and will deliver again 2017 – 2019 ”Hear more, do more, be more” 2008 - 2009 2010 - 2013 2014 - 2016 • Innovation excellence • Commercial excellence “Innovation • People excellence & Growth” “SMART” February 5, 2020 Operations • Annual Report for 2019 “FAST” R&D focus 3
GN Hearing: Strong global markets driven by attractive megatrends ~3-5 % expected value CAGR in coming years… … driven by multiple attractive megatrends Global hearing aids market growth Ageing population +6% (Value based on wholesale ASP) 1 ~3-5% 791 • 65+ population 597 expected to grow ~4% significantly • Baby boomers 2013 2018E USD generation reaching retirement age ~5bn Polulation of 65+ years old (million) ‘07 ‘08 ‘09 ‘10 ‘11 ‘12 ‘13 ‘14 ‘15 ‘16 ‘17 ‘18 ’19E ’20E ’21E ‘22E Elderly with hearing loss 2 prevalence 35-40% GN Hearing market share development over time… (1) • Increase noise pollution drives prevalence of 60-65% hearing loss ~17% With hearing loss Without hearing loss ~ 2%-points ~15% Room for penetration Aided 3 Profound 8 years of positive organic growth growth, driven by innovative Severe • product launches Penetration still relatively Moderately low, especially for less severe Moderate severe hearing loss Mild 2010 2010 2016 2018 Source: Broker reports, internal GN figures (1) Market share is based on total units sold 4
GN Hearing’s innovation leadership towards natural hearing 6 th generation New chipset – brilliant sound experience: unprecedented Layers of Sound™ ReSound LiNX Quattro and world’s most advanced rechargeable solution 2018 5 th generation Unprecedented benefits across three key dimensions – Sound Quality, efficient ReSound LiNX 3D and convenient fitting and groundbreaking remote fine-tuning 2017 4 th generation Surround Sound by ReSound upgraded with Spatial Sense , helping the user ReSound LiNX 2 hear where sounds are coming from, leading to more natural sound experience 2015 3 rd generation The world’s first Made for iPhone hearing aid ReSound LiNX 2014 2 nd generation World’s first 2.4 GHz based ear -to-ear data exchange , Binaural Directionality, ReSound Verso enables users to decide which sound to focus on 2012 1 st generation World's first 2.4 GHz wireless system ReSound Alera 2010 5
Industry’s first CIC 2.4 GHz wireless hearing aid for direct streaming New Chipset Impulse Mix-in LAYERS OF SOUND Noise Streaming Control UNRIVALED FULL SPECTRUM OF STREAMING Increased New Input SUPPORT & Wireless Dynamic Radio PERSONALIZATION Range Extended High- Frequency Bandwidth 6
Growth through partnerships Partnering up with tech giants Exposure to fast-growing cochlear market Refraining from vertical integration 7
GN Audio is strongly positioned in a very attractive portfolio of markets CC&O Consumer Segment Call-centric Task-based BT stereo* (incl. sports) Characteristics “Calls for a living“ Office-based Preference for great calls, music (e.g., contact centers, customer service, traders) knowledge workers and an active lifestyle Jabra Evolve Jabra Engage Primary product Jabra Elite Jabra Speak offering Jabra PanaCast Market development ”True wireless” Relative market size** and market share** Small in fragmented Market position #2 #1 #3 market Gross margins** Replacement cycles** ~ 2 years ~ 5 years ~ 3-4 years Total relevant market of > DKK 60bn growing at close to 10% per year * Jabra Elite now accounts for the majority of the consumer business **Indicative 8
Jabra PanaCast – first step to position GN Audio in the fast-growing huddle room video conferencing market • In August 2019, Jabra started shipment of Jabra PanaCast , engineered to be the world’s first smart Panoramic -4k Plug- and-Play video solution • Jabra PanaCast’s leading-edge cameras and microphones, fourth-generation stitching technology and Intelligent Vision software work as one to ensure optimal performance • The solution is compatible with popular cloud-based solutions including Microsoft Teams, Skype, Zoom, Cisco WebEx, Slack, Substantial cost savings and Improving meeting Strong Google Hangouts, GoToMeeting, Unify carbon food print reduction efficiency growth Circuit, BlueJeans and more 9
Focusing on creating shareholder value Attractive megatrends of aging population and personal communication in industries with high entry barriers and currently low penetration Innovation leader – uniquely Lean business model and resilient positioned towards future technology trends with hearing aid and headset cash generation driving attractive expertise under one roof shareholder returns Strong board and Strategic agility, with no owned retail, management team with ensuring attractive positioning towards proven ability to drive a growth future distribution trends agenda Strong track record of strategic Synergistic M&A – channel access partnerships with leading and commercial excellence, technology channels and customers as well as leadership, streamlining activities with leaders in adjacent industries 10
Strict focus on capital allocation drives shareholder value GN capital allocation over the past 3 years Organic investments (% of aggregated cash flow) CAPEX ~5% 1 Synergistic M&A Share buy back ~45% R&D ~30% Annual dividend Share buybacks M&A ~15% Dividend ~5% 1: Investments in property, plant and equiptment 11
GN in a nutshell We deliver on our promises We drive customer satisfaction We pioneer our industry with leading edge technology We are lean and focused You benefit 12
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