Company announcement no 2017-01 23 February 2017
Publication of Annual Report 2016

Strong revenue growth of 13% driven by successful Oticon Opn^TM and retail activities
Record-high EBIT of DKK 2,130 million supported by a strong finish to the year

This announcement includes the highlights from the Annual Report 2016:

• Consolidated revenue totalled DKK 12,002 million, matching a growth rate of 13% in local currencies of which organic and acquisitive growth accounted for 6 and 7 percentage points, respectively. Exchange rates had a minor negative impact on revenue of less than 1%.

• Driven by the very successful launch of the Oticon Opn^TM hearing aid, the Group saw 6% organic growth in the wholesale of hearing aids. Our retail business saw very satisfactory revenue growth of 30% in local currencies of which 8 percentage points can be attributed to organic growth. While Europe was the main contributor to growth, which consists of a combination of organic growth and growth due to the acquisition of Audika, our US retail activities delivered below expectations.

• Our hearing implants business delivered 7% organic growth, despite a slower-than-expected uptake of the Neuro cochlear implant and adverse market conditions in several oil-dependent markets. Performance by the hearing implants business in the second half-year was significantly better than in the first half-year, as momentum improved.

• Even though our Diagnostic Instruments business activity delivered modest 3% growth in local currencies - mainly due to an economic slowdown in a number of oil-dependent markets - we cemented our leading position in the market for diagnostic equipment.

• Supported by a strong finish to the year, operating profit (EBIT) increased by 12% to a record-high DKK 2,130 million before restructuring costs of DKK 188 million, which compares favourably to our expectations of an EBIT in the lower half of the EBIT range of DKK 2-2,300 million. EBIT in the second half-year amounted to DKK 1,238 million before restructuring costs, corresponding to an EBIT margin of 20.0% (full-year EBIT margin of 17.7%). The reported EBIT in 2016 was DKK 1,942 million.

• Cash flow from operating activities (CFFO) increased by a solid 10% to DKK 1,756 million before restructuring costs (reported CFFO of DKK 1,679 million).

• In 2017, we expect to generate solid growth in our three business activities, and we are guiding for an EBIT in the range of DKK 2.2-2.5 billion before the announced restructuring costs of around DKK 200 million. Free cash flow after acquisitions will be spent on buying back shares, and we aim at a target gearing multiple of 1.5-2.0 measured as net interest-bearing debt (NIBD) relative to EBITDA.