Annual Report - Sonova Holding AG

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TABLE OF CONTENTS Chairman’s Foreword 2 CEO’s Comments 3 Financial Results 6 Markets 9 New Technologies and Products 12 Operations and Staff 14 Outlook 15 Corporate Governance 18 Sustainability 36 Consolidated Financial Statements 45 Financial Statements of Phonak <strong>Holding</strong> <strong>AG</strong> 91 Addresses 102 1
CHAIRMAN’S FOREWORD In 2005/06, the Phonak Group achieved excellent results that clearly exceeded our expectations. Both sales and profit rose to record highs. Our internal sales growth in local currencies of 23.8% was several times higher than the hearing instrument market growth. We achieved a disproportionately strong rise in both our operating profit and net profit. Operating profit (EBIT) as a percentage of sales rose by more than five percentage points to 24.4%. In addition to the very favorable share price performance, Phonak shareholders benefit from a new record dividend of CHF 0.50. This equals a growth rate of 67% after last year’s increase of 50% to CHF 0.30. I am especially pleased that we managed to achieve this record result while still making massive investments in our future. We increased our spending on research & development by 28.8%, and we expanded our global sales and marketing organization. Our plan to use our own distribution companies to directly serve the highly promising growth regions of Latin America and Eastern Europe delivered initial success. Today, the Phonak Group has one of the most competitive product portfolios in the hearing instrument industry. For the first time our customers are able to purchase a superior hearing system from Phonak in every price segment, as well as in every conceivable shape and size. We have now completed our transformation from a niche supplier of high-end hearing devices to a provider of comprehensive, innovative hearing solutions in all price segments. With the recently launched product lines Verve and microPower, Phonak has even carved out for itself two completely new, unique market segments. I have been particularly impressed by the speed and precision with which many new products have been developed and brought to market. This demonstrates how important it is to have optimized and expanded our organizational and management structures and also shows how the “people value” culture we have adopted leads to the creation of intellectual capital. This in turn results in continuous progress and increasingly sophisticated and more user-friendly hearing instruments. As we have evolved over the years from making analog 2 Chairman’s Foreword hearing devices to more and more sophisticated hearing systems, we have consistently applied our long-term vision in our plans and strategies, whether in the area of new platforms like PALIO or in the increasingly important field of wireless communication. Our superior hearing systems and our clear commitment to driving innovation forward in the hearing instrument industry have enabled us to significantly expand our client base. More and more customers realize that by choosing Phonak they have made the best choice of business partner. I would like to thank all who contributed to this success, in particular our highly motivated employees all over the world. Our success to date shows that we are on the right track and that our strategy is starting to produce results. Our task now is to consistently hold this course. As part of our ongoing improvement in the area of Corporate Governance, the annual report 2005/06 provides more detailed information of the Board of Directors’ activities and compensation. I am convinced that the hearing instrument market has enormous potential. The key factors for exploiting this potential more effectively are further improvements in hearing performance, increased customer satisfaction for end users, and a better public image for hearing instruments. Phonak is extremely well positioned to further expand its market position in 2006/07. It has the entrepreneurial flexibility and financial means to play an active role in shaping the market and to set new trends and standards in the hearing instrument industry. Therefore, I look to the future of the Phonak Group with great confidence. Andy Rihs Andy Rihs Chairman of the Board of Directors
Page 1 and 2: Annual Report 2005/06 Annual Report
Page 3: FIVE-YEAR KEY FIGURES (Consolidated
Page 7: Move with the melody
Page 10 and 11: digital entry-level product line, w
Page 12 and 13: MARKETS General market development
Page 15 and 16: NEW TECHNOLOGIES AND PRODUCTS Platf
Page 17 and 18: OPERATIONS AND STAFF Operations Wit
Page 19: Listen to life
Page 22 and 23: This report describes the principle
Page 24 and 25: Capital Structure Changes in capita
Page 26 and 27: Left to right: Robert F. Spoerry, D
Page 28 and 29: Andy Rihs (born in 1942) has been C
Page 30 and 31: Dr. Valentin Chapero Rueda (born in
Page 32 and 33: Share and option ownership of membe
Page 34 and 35: Highest total compensation The high
Page 36 and 37: Investor Relations Calendar July 6,
Page 39 and 40: SUSTAINABILITY Phonak’s managemen
Page 41 and 42: Our customers buy a better quality
Page 43 and 44: Corporate Governance Phonak’s Boa
Page 45: Push your performance
Page 49 and 50: Consolidated Income Statement 1,000
Page 51 and 52: Consolidated Statement of Cash Flow
Page 53 and 54: Notes to the Consolidated Financial
Page 55 and 56:
equity method, the investment in an
Page 57 and 58:
Short-term debts Short-term debts c
Page 59 and 60:
Employee benefit plans Phonak has v
Page 61 and 62:
5. Segment information Profit or lo
Page 63 and 64:
6. Consolidated Income Statement by
Page 65 and 66:
9. Financial income/(expenses), net
Page 67 and 68:
11. Earnings per share Basic earnin
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17. Inventories 1,000 CHF Raw mater
Page 71 and 72:
19. Investments in associates and j
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1,000 CHF Cost Balance April 1 Chan
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Among various other items, other pr
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27. Other long-term liabilities 1,0
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29. Acquisition of subsidiaries Dur
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30. Related-party transactions 1,00
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The amount recognized in the consol
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Summary of outstanding and exercisa
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35. Number of employees At March 31
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38. List of significant consolidate
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Cherish the cheers
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Income Statement 1,000 CHF Income M
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Notes to the Financial Statements 1
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3.4 List of significant investments
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Appropriation of Available Earnings
Page 103:
Launch a laugh
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Phonak AB Hornsbruksgatan 28 SE-117
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Impressum Concept Althaus & Weil AG
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Annual Report - Sonova Holding AG

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