Sonova : Jahresergebnis 2023/24

Annual Report

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1 Sonova Annual Report 2023/24

Table of content

Letter to shareholders

Our products and service offering

Corporate govenance

Compensation report

Financial review

5 year key figures

Consolidated financial statements

Financial statements of Sonova Holding AG

Investor Information

ESG Report

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58

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184

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LETTER TO SHAREHOLDERS

These challenges notwithstanding, our results for the year are solid and show improving sales momentum through the second half-year. We remain confident in the effectiveness of our strategy as a generator of profitable growth. You can find additional details in the strategy & businesses section of this report.

Innovation is a team effort: in this yearʼs feature story our employees share, in their own words, how they bring the delight of hearing to people worldwide through passion, experience, and dedication.

Hearing Instruments segment

Sales in the Hearing Instruments segment rose by 3.2% in local currencies, largely driven by the good performance of the Audiological Care business. Despite challenges in the first half of the year, the Hearing Instruments business saw solid growth in the second half, as we have solved our temporary operational issues. After strong growth in the previous year, performance in the Consumer Hearing business was impeded by generally weak demand in the consumer electronics market, along with the issue of inconsistent performance from some batteries provided by a now deselected external supplier for one of our key products.

The Hearing Instruments business further extended the reach of our Phonak Lumity platform, making the latest technology accessible to even more consumers. Among many new product launches were a battery-powered Audéo Lumity hearing aid, for those who prefer multi-day power to daily recharging; Terra and Terra+, offering quality hearing and connectivity for budget conscious consumers; and new entries in the Sky and Naída families, bringing the benefits of Lumity technology to children and to adults with severe-to-profound hearing loss. Unitronʼs new Vivante platform was launched in April and extended through the year. Hearing Instruments also made further strong progress on product reliability, in which the Phonak Lumity platform achieved a continued improvement compared to its already dependable predecessor.

The Audiological Care business saw positive development throughout the year, thanks both to organic growth and acquisitions. Good organic sales were enabled by continuous improvements in consumer care processes, versatile approaches to bringing people in-store, and close co­ operation with key stakeholders such as Ear, Nose, and Throat specialists (ENTs). We further expanded our network through bolt-on acquisitions and continued the successful integration of HYSOUND, a leading nationwide audiological care chain in China that we acquired in December 2022. HYSOUND has performed ahead of plan during its first full year with Sonova. China has attractive growth potential and we are convinced that this high quality business will allow us to further expand our presence there in the coming years.

The Consumer Hearing business saw negative sales development, for the reasons mentioned above. Integration, however, is complete and the focus is now on achieving sustained profitable growth by engaging consumers with premium products and reaching them early on their hearing journey. An important element of this was Sonovaʼs entry into the over-the-counter hearing instrument market with the US launch in June 2023 of the Sennheiser All-Day Clear, which targets mild to moderate hearing loss. In addition we launched a number of new audio products, such as our MOMENTUM True Wireless 4 earbuds, introduced in February 2024, which include more than a dozen improvements over their predecessor in connectivity, sound quality, and active noise cancellation.

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LETTER TO SHAREHOLDERS

Cochlear Implants segment

Sales for the Cochlear Implants segment, which conducts its business through the Advanced Bionics brand, rose by 3.6% in local currencies. System sales continued their year-on-year growth, while upgrade sales were down due to the lower remaining number of recipients awaiting an upgrade as the Marvel CI sound processor range enters its third post-launch year. Marvel CIʼs capabilities have been significantly enhanced by our Remote Programming solution, enabled through Phonakʼs unique universal Bluetooth® connectivity, which allows recipients to have their processors adjusted by their audiologists at a long distance via smartphone. This enables self- sufficiency for recipients while providing immediate, easy connection to professional support when necessary.

Financial performance

In the 2023/24 financial year, the Group achieved consolidated sales of CHF 3,626.9 million, an increase of 3.2% in local currencies (4.8% excluding the previously mentioned non-renewed large US hearing instruments contract). Continued and significant strengthening of the Swiss franc reduced reported sales by CHF 232.9 million, resulting in a sales decrease of 3.0% in Swiss francs. The main growth drivers were the strong performance of the Audiological Care business, both from organic and acquisition growth, and the acceleration of Hearing Instruments in the second half of the financial year.

Reported operating profit before acquisition-related amortization (EBITA) was CHF 727.0 million, up by 3.6% in local currencies but down 9.3% in Swiss francs. Adjusted for restructuring, transaction, integration, and certain legal costs, EBITA was up 4.4% in local currencies but down 8.2% in Swiss francs at CHF 771.4 million. Adverse currency exchange-rate developments re­ duced the adjusted EBITA by CHF 106.1 million. This represents a margin of 21.3%, compared to 22.5% in the 2023/23 financial year. Excluding the currency exchange-rate effects, the operating margin was up by 0.3 percentage points. Compared to the 2022/23 figure of CHF 11.14, adjusted earnings per share (EPS) were up 6.4% in local currencies but down 9.6% in Swiss francs at CHF 10.06.

Returning cash to shareholders

At the Annual General Shareholdersʼ Meeting (AGM) in June 2024, the Board of Directors will propose a dividend of CHF 4.30 per share. This represents a stable payout ratio, in line with our total shareholder return strategy, of around 40%. Over the past ten years, the dividend has risen by a compound annual growth rate of 9.2%.

The Group intends to maintain a healthy balance sheet in line with our moderate leverage target ratio of 1.0 - 1.5x net debt to EBITDA. In the absence of any larger acquisitions and subject to the cashflow development in Swiss francs, Sonova expects to resume share buybacks under its current program during the second half of the 2024/25 financial year.

Environmental, social, and governance (ESG)

At the 2024 AGM, shareholders will for the first time have a vote on non-financial matters, presented in the Sonova ESG Report. During the 2023/24 financial year we continued to implement IntACT, our ESG strategy, which is delivering significant year-on-year improvements. For example, around two thirds of leadership positions were hired from within the organization, reflecting our drive to grow talent and build leadership internally. We also increased the share of women in senior management from 22.0% to 28.3% and middle management from 36.4% to 39.9%.

The Science Based Targets initiative (SBTi) officially approved Sonovaʼs greenhouse gas re­ duction targets for Group operations (scope 1 and 2) and value chain (scope 3) emissions. On a comparable basis, we have already achieved a 28% reduction of total scope 1-3 CO2 emissions since 2019.

We continued to receive consistently high ESG ratings in the 2023/24 financial year across the major ratings and indices, including the highest possible MSCI rating of AAA and a tenth consecutive year of inclusion in the Dow Jones Sustainability Index, ranking fourth out of 279 companies in the healthcare equipment and supplies industry.

You will find further and more detailed information in our ESG Report.

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LETTER TO SHAREHOLDERS

Changes to the Board of Directors and to the Management Board

Gilbert Achermann has been nominated by the Board of Directors for election at the 2024 AGM as a new independent Board member. From 2010 to April 2024, he served as Chair of the Board of Directors of the Straumann Group, a global dental industry leader, having previously served as its CFO and CEO for a very successful period of more than 12 years. In 2020 he became a member, and in 2022 Chair, of the Board of Directors at Ypsomed Group, a manufacturer of injection and infusion systems.

With his in-depth understanding of the medical technology sector and his successful track record as CEO as well as his experience as Chair of multiple company boards, we are confident he will make a significant contribution to Sonovaʼs future growth. The Board of Directors has made it clear that, as part of its commitment to medium-term succession planning, Gilbert Achermann will be nominated to succeed current Chair Robert Spoerry at the 2025 AGM.

After the end of the 2023/34 financial year, we announced the following appointments to the Management Board: Lilika Beck, Managing Director Connect Hearing Canada in Sonovaʼs Audiological Care business, was appointed GVP Consumer Hearing, after Martin Grieder passed away in a tragic accident at the beginning of April. Oliver Lux, Managing Director Audiological Care Germany, was appointed GVP Audiological Care, succeeding Christophe Fond, who will pursue an opportunity outside the hearing care industry after successfully leading the business for seven years. Both appointments are effective as of June 2024.

Alistair Simpson will join Sonova as GVP Cochlear Implants and succeed Victoria Carr-Brendel, who has decided to retire from executive roles for personal reasons after successfully leading the business since 2019. Alistair brings longstanding expertise in the medical device industry and has a successful track record in various senior leadership positions in the sector. His appointment will take effect as of July.

Our gratitude and appreciation go to Martin, Christophe and Vicky for their contributions to Sonovaʼs success, and we wish Lilika, Oliver and Alistair all the best in their new roles.

Our thanks

The unwavering dedication and enthusiasm of our employees carry us forward, surmounting challenges and achieving solid results; we are deeply grateful. We also thank our consumers, whose wish for better hearing inspires all our work, along with the professionals who bring them our solutions. Finally, we remain profoundly thankful for the trust of our shareholders, which provides the firm foundation for our strategy to deliver sustainable, profitable growth.

Outlook

Sonovaʼs solid and improving performance over this financial year confirms the strong fundamentals of our business and the soundness of our strategy. We are well positioned to accelerate growth and to engage with yet more consumers at more points on their hearing journey. The coming financial year will include further significant product launches that will elevate our industry-leading performance and drive growth, particularly in the second half-year. We therefore expect to see a year-on-year rise of 6 - 9% in consolidated sales, and of 7 - 11% in adjusted EBITA measured at constant exchange rates, with stronger momentum in both during the second half-year.

"I look forward to a significant year for us, continuing our momentum with exciting product launches in the coming months."

Arnd Kaldowski

Robert Spoerry	Arnd Kaldowski
Chair of the Board of Directors	CEO

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OUR PRODUCT AND SERVICE OFFERING

Our product and service offering

Sonova is a global leader in innovative hearing care solutions: from personal audio devices and wireless communication systems to audiological care services, hearing aids, and cochlear implants. Our product brands - Phonak, Unitron, Sennheiser (under license), and Advanced Bionics - create compelling new products to offer the optimal solution for an ever growing consumer base through our globally diversified sales and distribution channels, including our well established global audiological care business.

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OUR PRODUCT AND SERVICE OFFERING

Phonak

Expanding the Phonak Audéo™ Lumity platform

The Phonak Lumity hearing aid platform delivers an enlightening hearing experience. Over the past year, we broadened the Lumity portfolio to address the unique requirements of kids, teenagers and adults with severe-to-profound hearing loss, as well as individuals with unaidable hearing loss in one ear. People of all ages and hearing loss levels can now benefit from Lumity technology including improved speech understanding, universal connectivity, and outstanding sound quality.

Phonak SmartSpeech™ Technology is a collection of features that AutoSense OS™ 5.0 seamlessly adapts, each feature proven to provide either improved speech understanding or reduced listening effort in many listening environments. This technology not only highlights Phonakʼs dedication to providing the best possible solution for speech understanding but benefits your well-being as it has been shown from scientific literature to reduce listening effort that can free up cognitive resources.1)

1. Additional information available at: https://www.phonak.com/en-int/professionals/audiology-hub/evidence- library

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OUR PRODUCT AND SERVICE OFFERING

Unitron

Unitron Vivante™ platform portfolio grows

Unitronʼs successful Vivante™ platform introduced in April 2023 added four new products to the portfolio over the course of the year. By expanding the Vivante portfolio we have the opportunity to provide our latest technology to even more hearing aid wearers and help them live life to the fullest and enjoy all the sounds that come with it.

Moxi™ V-RS is an innovative rechargeable hearing aid that combines style, aesthetics and functionality and is a modern alternative to traditional hearing aids. Moxi V-312 is Unitronʼs smallest RIC in the Vivante portfolio with a traditional battery. Stride V-PR is a BTE that features a smooth seamless design with the convenience of rechargeability. Unitron also recently released the Stride V-UP which is the Ultra Power BTE designed specifically for those with severe-to- profound hearing loss. These launches further strengthen the Vivante portfolio, providing Unitronʼs best sound performance yet, Made For All connectivity, a style to fit consumersʼ life­ styles and needs and compelling technology at all levels to meet clients lifestyles and budgets. If their lifestyle, budget or hearing needs change, Unitronʼs unique FLEX:UPGRADE™ means their hearing instruments can evolve with them. From start to finish hearing aid wearers can feel good about the entire hearing care experience.

We also introduced our refreshed Unitron Remote Plus app that provides a modern, user-centric experience that allows for easy navigation for controlling and personalizing their hearing aids and two modes, a classic and an advanced mode to give wearers more choice with the level of their interaction.

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