GN Store Nord Divestment of GN ReSound. Copenhagen, October

Transcription

1 GN Store Nord Divestment of GN ReSound Copenhagen, October

2 Safe harbor statement The forward-looking statements in this presentation reflect management's current expectations for certain future events and financial results. Statements regarding 2006 are, of course, subject to risks and uncertainties which may result in material deviations from the outlook set forth. Furthermore, some of these expectations are based on assumptions regarding future events which may prove incorrect. As a matter of course, all Q3 figures are preliminary and therefore subject to uncertainty. Q3 figures and full-year estimates have not been consolidated. Factors that may cause the 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 the integration of company acquisitions. This presentation should not be considered an offer to buy or sell securities in GN Store Nord. Page 2

3 Agenda Results of Strategic Review Chairman of the Supervisory Board, Mogens Hugo Jørgensen Return of Proceeds Chairman of the Supervisory Board, Mogens Hugo Jørgensen Management Structure Chairman of the Supervisory Board, Mogens Hugo Jørgensen Preliminary Results and Full Year Outlook EVP & CFO, Jens Due Olsen GN Going Forward Chairman of the Supervisory Board, Mogens Hugo Jørgensen and President & CEO, Toon Bouten Page 3

4 Results of Strategic Review Mogens Hugo Jørgensen Chairman of the Supervisory Board

5 Consolidation of Six Smaller HI Players Company: Danavox ReSound Corp Viennatone Beltone and Philips HI INTERTON Acquired by GN in: GN ReSound and GN Otometrics Revenue EBITA DKK millions DKK millions GN Store Nord (2001 incl. NetTest) Revenue EBITA DKK millions DKK millions HI ADE EBITA GN Store Nord EBITA ADE revenue included in HI revenue in 2001 Page 5

6 Transaction Background and Process GN ReSound has played a leading role in consolidating the hearing instrument industry Constantly growing demand for more frequent and faster product launches in all price segments raising pressure for consolidation On July 5, GN announced plans to investigate the strategic options for GN s hearing instrument business A group of strategic and financial investors were invited to submit indicative offers A limited group of interested parties were short-listed and given the opportunity to carry out due diligence and submit binding offers Page 6

7 Conclusion of Strategic Review (1) The divestment to Phonak is the most attractive option for GN s shareholders as an alternative to retaining the operations under GN s ownership The transaction value exceeds the value that can be achieved on a stand-alone basis with organic growth supported by minor acquisitions Price reflects competitive process and large potential for synergies Fairness opinion from JP Morgan plc Page 7

8 Conclusion of Strategic Review (2) The combined operations of GN ReSound and Phonak will have a leading position in an industry defined by increasing economies of scale Exciting opportunities for employees of the combined entity Mogens Hugo Jørgensen proposed for Phonak board Strong business, cultural and geographic match Phonak will retain GN ReSound s brands, sales organization and competency centers Beltone One Metrix Power Metrix Mini Beltone Linq Page 8

9 Divestment of GN ReSound to Phonak GN has signed an agreement to sell GN ReSound to Phonak for a total consideration of DKK 15.5bn in cash on a debt and cash free basis Divestment comprises all assets and liabilities of the hearing instrument business including the affiliated activities in GN Otometrics Transaction is subject to approval by competition authorities and subject to Phonak issuance of shares to fund the acquisition In the event that Phonak does not complete the share issuance by August , GN has the right to receive consideration consisting of cash and Phonak shares Closing is expected in the first half of 2007 GN s after-tax profit is expected to be at least DKK 10bn Page 9

10 Return of Proceeds Mogens Hugo Jørgensen Chairman of the Supervisory Board

11 Return of Proceeds The Board intends to return a significant part of the proceeds from the divestment as soon as reasonably possible, taking into account that GN will retain a net cash position of DKK 1bn reflecting GN s future capital requirements Immediately after closing, the Board will call for an extraordinary general meeting to decide on a reduction of GN s share capital Page 11

12 Management Structure Mogens Hugo Jørgensen Chairman of the Supervisory Board Page 12

13 Changes in Management The Supervisory Board will be changed to best handle GN s new challenges and consumer electronics focus CEO Jørn Kildegaard has decided to resign given the material changes to the nature of his job after the divestment of GN ReSound EVP Jesper Mailind retires from the Executive Management and will move with GN ReSound to Phonak Hans Henrik Lund, President of the headset division, will leave his position after completing an appropriate handover to the new CEO Page 13

14 Toon Bouten New President & CEO Graduate from the University of Technology in Eindhoven, 1984 Dutch national; 47 years old, lives in Germany : Executive VP, Philips Consumer Electronics EMEA; activities in 48 countries Comprehensive redesign of business; focus on profitability ( ) and growth (2006) Significant results achieved in international consumer electronics and technology groups : Director, Philips Consumer Electronics : VP, Compaq Consumer Group EMEA : CEO, Jobline International AB : Consultant, temporary CEO of AND International Publishers N.V. and Plaut AG Page 14

15 New Management Structure Supervisory Board Mogens Hugo Jørgensen Chairman EXECUTIVE MANAGEMENT Toon Bouten President & CEO Jens Due Olsen EVP & CFO Jesper Mailind GN ReSound and GN Otometrics Headset Operations Support Functions Page 15

16 Preliminary Results and Full Year Outlook Jens Due Olsen EVP & CFO

17 Revised Forecast for Headset Business (1) Continued improvement in CC&O Headsets (excluding Hello Direct); Q3 growth of approx. 12% Accelerated growth in Europe and Asia-Pacific; growth continues to be modest in the US Q3 EBITA excluding Hello Direct largely as expected at DKK around 30-35m Additional provisions of DKK 60m related to Hello Direct Try n Buy campaigns on top of the DKK 55m expensed at June 30 Terry Flynn, head of Hello Direct, leaves the company Page 17

18 Revised Forecast for Headset Business (2) Lower than expected revenue of DKK m from the Jabra brand in Q3 Growth in the entry level segment due to bundling and in-box activities Stronger momentum for Jabra in September; growing trend for Q4 order intake in the US OEM revenue dropped to DKK m in Q3, mainly due to postponement of orders by a major OEM customer Unsatisfactory EBITA of around DKK (85)m, of which DKK (40)m was attributable to write-downs Revised full year outlook mobile headsets: revenue of DKK bn and EBITA of DKK (150)m Page 18

19 Revised 2006 Guidance DKK millions New 2006 guidance Prev guidance 2005 CC&O Headsets Revenue EBITA margin excl. HD EBITA margin incl. HD 1,600-1,700 Approx. 18% 6% Approx. 1, % 13-15% 1, % Mobile Headsets Revenue EBITA margin Approx. 1,700-1,800 (8-9)% Approx. 2, % 1,960 3,1% Continuing Activities Revenue EBITA, Headsets 3,300-3,500 (50) GN consolidated forecast EBITA, continuing activities EBITA, discontinuing activities Approx. (100)m Approx. 525m Page 19

20 GN Going Forward Mogens Hugo Jørgensen Toon Bouten

21 GN is Leading Wireless Headset Innovation Long list of industry firsts GN 9010 Bluetooth headset v1.0 GN Satellite Analog wireless headset Jabra BT250 Bluetooth headset v1.1 GN 9020 Digital truly wireless headset Jabra BT500 Bluetooth headset v1.2 GN 9120 Truly wireless headset Jabra JX10 Bluetooth headset v2.0 GN 6210 Bluetooth headset for both mobile phone and fixed line GN 9350 wireless headset for traditional & IP telephony Page 21

22 And Innovation Continues The latest significant Jabra products BT620s Bluetooth stereo headset BT125 Bluetooth headset C820s Bluetooth stereo music headphones BT325s Bluetooth stereo headset Page 22

23 Market Opportunities As the world s largest independent manufacturer of headsets, GN enjoys significant economies of scale The office market is expected to generate annual growth rates of about 25% in the years ahead The contact centre market is expected to produce stable single-digit growth rates in the next few years While growing strongly, Bluetooth headset penetration remains low in the mobile market Page 23

24 Immediate Action Points The Jabra brand will be introduced in all channels across the converging mobile and office markets More products introductions and increased differentiation The focus on sales channels and end users will be intensified sharply, and know how in key account management and support will be strengthened The cost structure will be brought in line with the business needs across the value chain Page 24

25 Initial Message From Toon Bouten The financial model will be aligned with the focused business needs across the value chain by increased revenues, improved margins, adequate cost levels and better cash flows Get a better return on the products by intensified marketing and sales activities GN has the leading brand in the CC&O business and will focus on solidifying its position. GN is very competitive in Bluetooth headsets for the fast growing consumer market and will strengthen its leading position with innovative products, leveraging the strong Jabra brand in the consumer channels and with the right competences Together with the management team I will refine the future strategy and present the details early next year Page 25

26 Q&A Session