CEO’S COMMENTSIn <strong>2005</strong>/<strong>06</strong>, we made major progress towards our goal oftransforming the Phonak Group into the most successful companyin the hearing instrument industry. Once again, we managedto significantly expand our market share and set new standardswith our innovative hearing systems. Our excellent businessperformance is to a large extent due to the consistent executionof our strategy to promote product innovation and to expandour global distribution network. In addition, we have deliveredmuch stronger financial results, so that we are already closeto achieving the mid-term targets we set out in <strong>2005</strong>.Starting from the record level of last year, we again increasedsales by another 31.2% to CHF 866.7 million. Internalgrowth – measured in local currencies and without takinginto account acquisitions – came to 23.8%. As a result of improvedproduct mix and operational efficiencies, our grossprofit margin climbed by 3.3 percentage points to reach 66.6%.In addition, the operating profit (EBIT) increased by 68.3%.The EBIT margin was increased to 24.4% compared to 19.0% inthe previous financial year, underlining the overproportionalprofit growth. Assisted by a positive financial result anda lower tax rate, earnings per share (on a diluted basis)climbed 79.1% to a record level of CHF 2.57.The importance of product innovation for our commercialsuccess was once again demonstrated by the overwhelmingmarket acceptance of our new Savia product line, which wascomplemented by the launch of microSavia in January 20<strong>06</strong>.This success had a positive impact on two other product launches:eXtra, the new digital economy product line, and Eleva in themid price segment. These two lines will generate further growthin the coming financial year. In 20<strong>06</strong>/07, three very promisinghearing instruments have been introduced into the market:Verve, microPower, and Indigo.During <strong>2005</strong>/<strong>06</strong>, we continued to expand our existing salesorganizations and develop new markets. Our purchase of acontrolling interest in CAS Produtos Médicos Ltda., the Brazilianmarket leader in hearing instrument distribution, significantlyboosted our market presence in Latin America. In Eastern Europewe acquired our previously independent distribution partner inPoland. In 20<strong>06</strong>/07, the Phonak Group has further strengthenedits market position by acquiring Canada’s leading distributor ofhearing devices, Island Hearing Services.In the future, we expect further sales growth, increasedmarket share, improved financial strength, and attractivereturns on investments. The Phonak Group is in excellent shape:we have the strongest product portfolio of the hearing instrumentindustry and can rely on a full product pipeline. In addition,we will continue to work hard to further develop the Group inthe areas of human resources, organization and processes, therebybuilding a strong base for sustained growth. To accomplishthese objectives, we will focus on the continuous improvementof product functionality and increased customer benefits. Otherpriorities include further strengthening of our distributionchannels.The great success of the Phonak Group is mainly the resultof the dedication, commitment, and great team spirit of ouremployees. We have a unique corporate culture that has enabledus to smoothly complete the fast transformation process ofrecent years. Our clear, sustainable strategy is supported by highlyskilled and motivated staff and creates the foundation for avery promising future. I would like to thank each one of our employeesfor their hard work, commitment, and loyalty to thecompany. Without them, such excellent results would have beenimpossible.I also want to express my thanks to all our customers,suppliers, partners, and shareholders for their important contributionto the success of the Phonak Group.Dr. Valentin Chapero RuedaCEOCEO’s Comments3
Move with the melody
- Page 1 and 2: Annual Report 2005/06Annual Report
- Page 3 and 4: FIVE-YEAR KEY FIGURES(Consolidated)
- Page 5: CHAIRMAN’S FOREWORDIn 2005/06, th
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- Page 24 and 25: Capital StructureChanges in capital
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- Page 39 and 40: SUSTAINABILITYPhonak’s management
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- Page 43 and 44: Corporate GovernancePhonak’s Boar
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Short-term debtsShort-term debts co
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Employee benefit plansPhonak has va
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5. Segment informationProfit or los
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6. Consolidated Income Statement by
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11. Earnings per shareBasic earning
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17. Inventories1,000 CHFRaw materia
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GoodwillSoftwareIntangiblesrelating
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Among various other items, other pr
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27. Other long-term liabilities1,00
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29. Acquisition of subsidiariesDuri
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30. Related-party transactionsManag
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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 employeesAt March 31,
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38. List of significant consolidate
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Cherish the cheers
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Income Statement1,000 CHFIncomeMana
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Notes to the Financial Statements1.
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3.4 List of significant investments
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Appropriation of Available Earnings
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