GN Store Nord A/S
Annual report/ annual accounts

Annual Report 2010 - The Year Ended on a Strong Note - 10% Organic Revenue Growth in Q4

Copenhagen, 2011-02-25 08:00 CET -- In 2010, GN delivered on the goals set out at the beginning of the year with focus on consolidating the company and delivering on the basics in all parts of the organization. The financial guidance was raised three times during the year and GN delivered on the new guidance.

GN’s Q4 results were in line with the updated and higher full-year guidance provided in the Q3 Interim Report on November 10, 2010.

Driven by an acceleration of the revenue growth in GN Netcom and the continued encouraging launch of ReSound Alera™, GN’s organic growth increased to 10% in Q4 2010 compared to Q4 2009. The Q4 EBITA increased significantly from DKK 26 million in Q4 2009 to DKK 208 million in Q4 2010.

Chairman of the Board of Directors Per Wold-Olsen says: “I am pleased to conclude that we have delivered on our targets for 2010. Not only did we raise the financial guidance three times during the year and delivered on the new guidance. We also delivered on our innovation objectives by re-positioning GN as a forceful competitor in the hearing aid, headset and Unified Communications segments. On top of that, we regained our position in the OMXC20 index. We are getting increasingly confident with GN’s development and we are now challenging ourselves to continued further improvement.”

Q4 2010 Results

• Total GN revenue was DKK 1,437 million corresponding to organic growth of 10%.
• EBITA was DKK 208 million, significantly above Q4 2009 (DKK 26 million).
• Revenue in GN Netcom was DKK 580 million and organic growth was 17%. Excluding Mobile OEM, organic growth was 20%. GN Netcom’s EBITA was DKK 96 million, significantly up from DKK (48) million in Q4 2009.
• Revenue in GN ReSound was DKK 855 million and organic growth was 5%. GN ReSound’s EBITA was DKK 128 million compared to DKK 87 million in Q4 2009.

Full-year 2010 Results

• Total GN revenue was DKK 5,145 million representing organic growth of 5% compared to (16)% in 2009. GN Netcom achieved organic growth of 9% (18% excluding Mobile OEM) whereas organic growth in GN ReSound was 2%.
• EBITA was DKK 2,595 million including DKK 2,126 million related to the award for phase 1 in the DPTG/TPSA arbitration case. Excluding the TPSA award, EBITA was DKK 469 million, up from DKK 8 million in 2009.
• The effective tax rate was 27% and net profit amounted to DKK 1,855 million against DKK (70) million in 2009.
• The free cash flow was DKK 196 million against DKK 566 million in 2009.
• Net interest-bearing debt ended at DKK 960 million (DKK 1,029 million at December 31, 2009) after having conducted a DKK 88 million share buyback program.

Additional Highlights

• At the general meeting, the Board of Directors will propose to the shareholders that a dividend of 15% of the net result (excluding TPSA) or DKK 40 million (DKK 0.19 per share) be paid for the financial year 2010.
• Based on the 2010 financial results and the outlook for 2011, GN will initiate a share buyback program of around DKK 200 million to be executed during 2011, if authorized to do so by the shareholders.
• In September 2010, the Austrian Arbitration Tribunal awarded DPTG DKK 2.9 billion for phase 1 of the arbitration case between DPTG and TPSA. TPSA, a subsidiary of France Telecom, has however chosen to disrespect the ruling. To ensure that the proceeds are paid in accordance with the ruling, DPTG has initiated enforcement proceedings against TPSA in Poland in November 2010 and subsequently in several other countries. In early 2011, DPTG filed a new claim amounting to DKK 2.4 billion for phase 2 (mid-2004 to 2009) in the arbitration case.
• In the appeal case regarding the prohibition of the sale of GN ReSound to Sonova, the German Federal Supreme Court ruled in favor of GN in April 2010, stating that the prohibition of the sale was unlawful. In light of the ruling, GN decided to consider all legal opportunities in order to claim compensation for the significant loss imposed on GN and its shareholders and in December 2010 GN filed a claim of around DKK 8.2 billion against the German Federal Cartel Office at the District Court (Landgericht) in Bonn, Germany.

Outlook for 2011

In the Q3 Interim Report 2010, GN released a preliminary guidance for 2011. GN is pleased to increase the revenue guidance for 2011 for GN Netcom from “more than 8% organic growth” to “more than 10% organic growth”. Apart from that, the preliminary guidance for 2011 is confirmed. GN expects that the financials for Q1 2011 will be somewhat softer than the remaining quarters.

Following the encouraging development in both GN Netcom and GN ReSound in 2010, EBITA is expected to improve from DKK 469 million (excluding the TPSA award) to DKK 675-775 million in 2011:

Revenue

• GN Netcom    More than 10% organic growth
• GN ReSound  More than 4% organic growth
• GN Total         More than 6% organic growth

EBITA

• GN Netcom     DKK 250-300 million
• GN ReSound  DKK 450-500 million
• Other               Around DKK (30) million
• GN Total          DKK 675-775 million

Amortization of intangible assets and financial items is expected to amount to approximately DKK (50) million and profit before tax is thus expected to be around DKK 625-725 million.

All guidance is based on an average DKK/USD exchange rate of 5.50.

Q4 2010 Segment Disclosures
The segment disclosures for Q4 2010 are included as an attachment to this company announcement.

Teleconference
A teleconference will be held on February 25, 2011 at 11.00 a.m. CET. Please see www.gn.com for dial-in details.

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