Annual Report 2010/11 - Sonova

The Asia/Pacific region also grew, but at a lower level,
reflecting the environmental catastrophes experienced in
this region in the last quarter of 2010/11.
dECREASE IN oPERATING PRoFIT BEFoRE
AMoRTIzATIoN ANd IMPAIRMENT
While Sonova increased its gross profit to a record
CHF 1,118.7 million (2009/10: CHF 1,058.6 million), the
gross profit margin reduced slightly to 69.2% (2009/10:
70.5%; restated: 70.6%). Savings in purchasing, economies
of scale and manufacturing efficiencies had a positive
effect, but were not able to entirely offset the negative ef fects
of the temporary recall of Advanced Bionics’ co chlear
implants and the strong Swiss franc.
In financial year 2010/11, Sonova posted an operating profit
before acquisition-related amortization and impairment
(EBITA) of CHF 326.6 million, down from CHF 420.1 million
reported a year earlier (restated: CHF 420.3 million).
Again, this decrease is mainly due to the voluntary recall
of Advanced Bionics cochlear implants in November 2010
and the immediate reduction in sales. In addition, the
negative currency effects impacted EBITA by approximately
CHF 35 million.
In addition, spending on sales and marketing and general
and administration has increased from 36.3% of total sales
in the previous year to 42.3%. This increase in costs can
be explained by the full-year effect of the acquisitions of
Advanced Bionics and InSound Medical as both companies
had only been consolidated into the figures for financial
year 2009/10 for three months. Additionally, Sonova
made investments for the roll-out of lyric in key markets
outside the USA, including Germany, France, Uk, Canada,
and Austria. Sonova also invested in the sales and dis tri bution
structures of subsidiaries around the world, especially
in the development and expansion of sales activities in em erging
markets. The general and administration ex pen ses
have increased to CHF 185.2 million, partly due to the onetime
costs related to the profit warning in March 2011
and the subsequent events, including the change in management.
FINANCIAl REVIEW
When excluding the one-time costs of CHF 8.1 million
re lated to the March 2011 events, the EBITA margin de -
creased to 20.7% (2009/10: 28.0%).
operating profit (EBIT) of CHF 270.8 million in 2010/11
reflects an impairment charge of CHF 35.5 million for previously
capitalized development costs by Phonak Acoustic
Implants. operating profit in 2009/10 was restated to CHF
251.4 million and reflects the goodwill impairment charge
of CHF 156.6 million for Advanced Bionics that was shown
in the 2009/10 restated figures.
INCREASE IN WoRkFoRCE To 7,800 PEoPlE
At the end of financial year 2010/11, the Group’s headcount
stood at 7,840 – 997 more than in the previous year.
A substantial part of the growth in headcount originates
from acquisitions; however, Sonova has also created new
jobs as a result of internal growth and in the context of
expanded marketing and sales acitivities.
INCREASE IN PRoFIT CoMPAREd To
RESTATEd 2009/10 RESUlTS
Income after taxes totaled CHF 231.1 million, up from
CHF 216.6 million as shown in the restated figures for the
previous year. Financial income increased due to gains
from remeasuring previously held equity investments to fair
value at the date of acquiring these companies, under
IFRS 3. on the other hand, financial expenses increased,
primarily due to the higher financing costs, unwinding of
discounted earn-out provisions and value adjustments for
loans for the completed acquisitions. Income taxes for the
financial year totaled CHF 29.0 million, consistent with the
level reported in the restated 2009/10 results. The tax
rate was reduced slightly to 11.2% (2009/10: 12.1%). In the
reporting period, basic earnings per share were CHF 3.50
(2009/10: CHF 5.41; restated to CHF 3.32). Excluding ac quisition-related
non-cash items, the cash-based earnings
per share amounted to CHF 4.27 (2009/10: CHF 5.60;
restated to CHF 5.61).
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