Annual Report 2010/11 - Sonova

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AdVANCEd BIoNICS RESUMES SAlES
In April 2011, Advanced Bionics received CE certification
from the European notified body TÜV for changes to the
manufacturing process of the CI HiRes 90k and approval to
resume distribution of the implant in European markets
and other selected countries. The implant will be reintroduced
in the United States market following pending
approval from the United States Food and drug Administration.
With the next product generation and the expansion
of the international presence of Advanced Bionics, Sonova
anticipates achieving above-market growth over the next
few years. In addition to the product-related and technological
advantages of leveraging Sonova’s hardware and
software platforms, Advanced Bionics will also benefit from
access to Sonova’s global sales organization and be in
a position to expand its international sales and service
capacity.
SUSTAINABlE INVESTMENT FoR THE FUTURE
operating free cash flow decreased in the year under
review, from CHF 324.8 million to CHF 221.5 million. during
the reporting period, Sonova invested heavily in the
future of the business, including the development of new
technologies, the market introduction of lyric outside
the United States and the global expansion of sales channels
and distribution capacities. Cash consideration
for acquisitions amounted to CHF 149.9 million, clearly
below the previous year’s level due to the acquisitions
of Advanced Bionics and InSound Medical in 2009/10, but
included the earn-out payment in 2010/11 of CHF 87.2
million related to InSound Medical. overall, the cash outflow
from investing activities went down to CHF 273.0
million in financial year 2010/11 compared to previous
year’s CHF 729.1 million, and included the completion
of several acquisitions and the construction of the new
high-tech pro duction facility in Stäfa. As a result, free
cash flow was CHF 71.6 million compared to CHF –301.4
million in the previous year.
The cash outflow from financing activities of CHF
236.1 million in the reporting period is mainly due to the
repayment of CHF 200 million in loans related to the
acquisition of Advanced Bionics. This loan is divided into
two tranches: an initial loan of CHF 240 million repayable
within maximum three years and a secondary loan of CHF
230 million with a five-year term. CHF 200 million of the
first loan has been repaid as of March 2011. The net debt of
Sonova has decreased by CHF 15 million. dividend payments
to shareholders totalled CHF 79.4 million (2009/10:
CHF 65.5 million).
Cash and cash equivalents decreased by CHF 170.8 million
to CHF 165.1 million.
loW NET dEBT ANd SolId BAlANCE SHEET
The capital invested by the Sonova Group has increased
from CHF 1,388.5 million (restated) in 2009/10 to CHF
1456.0 million in financial year 2010/11, mainly due to
increased intangible assets from acquisitions. Net
working capital relative to sales has increased due to
in creased inventory levels at the fiscal year end related
to the launch of new products on the Spice generation platform.
Average days sales outstanding for accounts re -
ceivable have remained consistent with the previous year.
As of March 31, 2011, the Group reported net debt of CHF
111.3 million compared to net debt of CHF 126.0 million
in the previous year. The Group’s equity increased to CHF
1,344.7 million. At 61.9%, the equity financing ratio
(equity as a percentage of total assets) remained at a high
level. The return on capital employed (RoCE) was 19.0%,
compared with 23.0% (restated) in 2009/10. The return on
equity (RoE), therefore, went from 18.9% in the previous
year to 17.7% in 2010/11.
Recognizing the solid performance and cash flow generation
of the core business during the 2010/11 year, as well as
the strong financial position of the Group, the Board of
directors will propose to the Annual General Shareholders’
Meeting on June 21, 2011 a distribution of CHF 1.20
per share, equal to the previous year’s dividend level, but
without withholding taxes this year.