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.

Comments by the President & CEO

"2016 was a strong year for William Demant where Oticon's game changer Opn and increased retail activities drove our very satisfactory growth. Overall, our activities resulted in a record year for our Group, and I am pleased that we continue to deliver consistently and at a steady pace on our hearing healthcare strategy. William Demant's presence in all product segments of hearing healthcare enables us to harvest synergies and obtain economies of scale. Leveraging on our R&D, global infrastructure and distribution network across the Group gives us a truly competitive edge. Furthermore, our long-term and extremely valuable relationship with our customers has once again proven to be essential for us in our endeavours to continue to develop our position and not least make a positive difference for people who live with a hearing loss," says Niels Jacobsen, President & CEO of William Demant Holding.

Lars Nørby Johansen Niels Jacobsen

Chairman of the Board President & CEO

The full Annual Report 2016 for William Demant Holding A/S totalling 132 pages is attached to this announcement.

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Further information:

Niels Jacobsen, President & CEO

Phone +45 3917 7300

www.demant.com

Other contacts:

René Schneider, CFO

Søren B. Andersson, VP IR

Mathias Holten Møller, IR Officer

Trine Kromann-Mikkelsen, Media Relations

	2016	2015	2014	2013	2012	Development 2015-2016
Key figures, DKK million
Revenue	12,002	10,665	9,346	8,959	8,555	13%
Gross profit	9,030	7,895	6,813	6,518	6,127	14%
Adjusted gross profit*	9,102	7,895	-	-	-	15%
Operating profit (EBIT)	1,942	1,878	1,761	1,736	1,653	3%
Adjusted operating profit (EBIT)*	2,130	1,902	-	-	-	12%
Net financial items	-101	-69	-70	-72	-132	46%
Profit before tax	1,841	1,809	1,691	1,664	1,521	2%
Profit for the year	1,464	1,439	1,327	1,286	1,151	2%
Assets	15,548	14,390	11,219	10,318	8,777	8%
Equity	6,966	6,500	5,584	5,056	4,059	7%
Cash flow from operating activities (CFFO)	1,679	1,592	1,495	1,282	1,272	5%
Adjusted cash flow from operating activities (CFFO)*	1,756	1,602	-	-	-	10%
Financial ratios
Gross profit margin	75.2%	74.0%	72.9%	72.8%	71.6%	-
Adjusted gross profit margin*	75.8%	74.0%	-	-	-	-
Profit margin (EBIT margin)	16.2%	17.6%	18.8%	19.4%	19.3%	-
Adjusted profit margin (EBIT margin)*	17.7%	17.8%	-	-	-	-
Earnings per share (EPS), DKK	5.5	5.3	4.8	4.5	4.0	4%
Return on equity	21.5%	23.7%	24.7%	28.0%	31.8%	-

Key figures and financial ratios for 2012 have not been adjusted to the changes in accounting policies from 2014. Earnings per share (EPS) is per share of nominally DKK 0.20.

* Adjusted for one-off costs related to restructuring activities.