Demant — Earnings Release 2010

Mar 9, 2011

Oticon Agil generates highest industry growth for the Group. Improvement of
profitability during 2010 driven by strong sales figures and improved product
mix.

Company Announcement no. 2011-01 9 March 2011

Today, the Board of Directors of William Demant Holding A/S adopted the
Company's Annual Report 2010. This announcement includes the highlights of the
annual report:

-- In 2010, consolidated revenues totalled DKK 6,892 million, matching a
strong growth rate of 21% of which acquisitions account for approx. 5
percentage points. The effect of exchange rate fluctuations was 4%.

-- The business activities Hearing Devices, Diagnostic Instruments and
Personal Communication generated organic revenue growth rates of 12%, 9%
and 9%, respectively. However, if we only look at wholesale of hearing
aids, the Group generated an organic growth rate of 15%.

-- In 2010. the Group generated operating profits (EBIT) in the amount of DKK
1,430 million and a net profit of DKK 988 million. Both EBIT and the net
profit have gone up by as much as 24%.

-- The reported profit ratio (EBIT margin) in 2010 rose by 0.5 percentage
point to 20.7%. However, after adjustment for a number of circumstances,
including currency factors, the Otix Global acquisition and an employee
share ownership plan, the consolidated profit margin was almost 2
percentage points higher.

-- In 2011, the Group foresees considerable growth in revenues and earnings.
If we disregard the acquisition of Otix Global, we thus expect a handsome
double-digit growth rate in operating profits (EBIT) and a continued rise
in the profit ratio compared with 2010.

"2010 was a epoch-making year for the William Demant Holding Group: we
recaptured the position as the fastest growing player in the hearing aid
industry and we succeeded in effectively exploiting our technological head
start to launch products that set new standards for sound quality and wireless
features. Our Group is in a very good position and this convincec me that also
in future, we will be able to generate handsome growth rates," says Niels
Jacobsen, President & CEO og William Demant Holding.

Hearing Devices

In 2010, corporate hearing device activities realised revenues totalling DKK
6,097 million, or a growth rate just under 21%. Overall, unit sales grew by
10%, and if we disregard sales to the National Health Service (NHS) in the UK,
we generated significant unit growth of just under 14%, whilst succeeding in
increasing the average selling price by slightly more than 5%, which is to a
very high degree due to the success we have experienced with the world's
best-selling high-end hearing aid, Oticon Agil, and the resulting improvement
in product, channel and country mixes. Global unit growth is thought to have
been 3% in the same period and with a declining average selling price in the
market by up to 2%, it is estimated that market growth in 2010 totalled 1-3% in
value. Thus, the Group generated growth rates that substantially exceed market
growth rates and captured market shares in all major geographical markets.

This handsome growth must be seen in the light of the successful introduction
of Oticon Agil and strong product portfolios in both Oticon and Bernafon.
Launched at the beginning of March 2010, Oticon Agil was, in a matter of weeks,
available not only on all markets, but also in no fewer than nine different
styles. Agil is based on Oticon's second-generation wireless platform, RISE 2,
which offers significant audiological improvements such as the unique Speech
Guard technology that gives Agil users unsurpassed advantages. The reception of
and response to Agil by end-users and dispensers alike have clearly
demonstrated the product's qualities, and in a very short amount of time, Agil
became a commercial success generating high sales. Although competing high-end
hearing aids have since then been released on the market, none has yet managed
to claim Agil's leading position. In October, Oticon introduced two more
product families based on the new RISE 2 platform, i.e. the mid-priced product
Oticon Acto and the Super Power instrument Oticon Chili. With the significant
strengthening of our product portfolio in 2010 and with the launch of Oticon
Ino targeted at the more price-conscious users at the beginning of February
2011, our product portfolio is very strong.

Diagnostic Instruments

In the period under review, Diagnostic Instruments generated revenues of DKK
535 million, or an increase of just under 30%. Of this, approx. 9 percentage
points derive from organic growth and the remainder can be attributed to the
acquisition of the US Grason-Stadler brand. As the underlying market growth is
believed to have grown approx. 5%, this means that Diagnostic Instruments has
again won significant market shares in 2010 and has reinforced its position as
the world's largest and leading provider of diagnostic equipment. Diagnostic
Instruments accounted for 8% of total consolidated revenues in 2010.

Personal Communication

Personal Communications generated revenues amounting to DKK 259 million, or an
increase of just under 14%. Of this, approx. 9 percentage points derive from
organic growth and the remainder can be attributed to exchange rate
fluctuations. With their hand-free communication solutions, Sennheiser
Communications contributed to this development with a handsome double-digit
rate of organic growth, whereas Phonic Ear and FrontRow saw negative organic
growth due to more intense competition in the markets in which they operate. In
the past year, Personal Communication accounted for 4% of consolidated
revenues.

The year's result

The significant revenue growth resulted in an increase in our operating profit
(EBIT) of 24%, corresponding to a reported profit margin of 20.7% (20.2% in
2009). The development in the profit margin was hampered by a number of
circumstances, including currency factors, the Otix Global acquisition and the
employee share ownership plan offered to employees in our foreign companies,
which have all affected the profit margin adversely by 1.3 percentage points,
0.4 percentage point and 0.2 percentage point, respectively. After adjustment,
the profit margin is almost 2 percentage points higher. In 2010, we made
significant investments in our distribution activities, including the
continuous extension of our retail activities and the build-up of sales forces
dedicated to Oticon Medical and Veterans Affairs in the USA. Investments in
distribution will to a great extent increase our p0tential for future growth,
but have especially in the short term, curbed our profit margin, also in the
first half-year 2010. Thus, in the second half of 2010 the Group saw
improvement in the profit margin by as much as 1.4 percentage points compared
with the first half-year 2010. If we disregard the acquisition of Otix Global,
this improvement is, however, even higher.

Otix Global

The integration of the US company Otix Global at the end of November 2010 has
proceeded according to plan. The integration process in respect of
administration, finance and IT is in full swing, including the transfer of Otix
Global's US activities to a new domicile in New Jersey, USA. The existing
headquarters in Salt Lake City will be closed down in the second half-year
2011. Otix Global's entire former management have resigned and a new, strong
management team with lots of experience from the hearing aid industry have been
established. The strengthening of the product portfolio under the Sonic brand
is ongoing and now with access to William Demant Holding's unique technological
competencies, the Sonic brand will not only gain strength, but it will also
complement the Group's two existing brands. Going forward, the distribution
activities under the Hearing Life brand will be subject to the Group's existing
distribution activities. A properly carried out integration process will ensure
that considerable synergies will be realised within the next 12-15 months and
we expect that the acquired activities will in 2012 generate a profit margin
whcih is just a fraction below the profit margin for the Group (excluding
Otix).

In 2010, the takeover of Otix Global reduced the year's operating profits
(EBIT) by approx. DKK 20 million of which DKK 5 million related to operations
in December and DKK 15 million related to non-recurring costs in connection
with the completion of the transaction and the subsequent restructuring and
integration of the company.

Effect on operating profit (EBIT) as a result of the acquisition of Otix Global

DKK million Reported Effect from Otix acquisition Adjusted
2010

---

                       2009    2010     Operating    Non-recurring      2010
                                         expenses            costs

---

Revenue 5,701 6,892 33 6,859

Production costs -1,666 -1,934 -12 -1,921
--------------------------------------------------------
Gross profit 4,035 4,959 21 4,938
--------------------------------------------------------
Capacity costs -2,886 -3,529 -26 -15 -3,488
--------------------------------------------------------
Operating profit (EBIT) 1,149 1,430 -5 -15 1,450
--------------------------------------------------------

Gross margin 70.8% 71.9% 62.5% 72.0%
EBIT margin 20.2% 20.7% -14.8% 21.1%

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Other matters

In 2010, we carried through an employee share ownership plan for employees in
the Group's foreign companies. The employee share ownership plan included a
gift element recognised in the income statement of DKK 15 million of which the
main part is recognised under distribution costs.

Expectations

For 2011, we forecast substantial growth in both revenues and earnings, and the
improvement of corporate profitability that took place in 2010 is expected to
continue. If we exclude the acquisition of Otix Global and the associated
non-recurring costs, we forecast a continuous rise in our profit margin
compared with 2010 and a handsome double-digit rate of growth in operating
profits (EBIT) before recognition of Otix Global.

Unit growth in the global market for hearing aids is estimated at 2-4% in 2011,
whereas the average selling price on the market is thought to develop flatly or
slightly negatively. Organic growth in the Group's wholesale of hearing aids
for 2011 is expected to exceed market growth by 4-8 percentage points.
Excluding acquisitions, we expect our retail activities in 2011 to grow in step
with market trends.

In 2011, Diagnostic Instruments is also expected to gain additional market
shares in a market estimated to show low single-digit growth rates. We
anticipate a high single-digit growth rate for the Group's activities in
Personal Communication for 2011.

Acquisitions will have a positive impact on consolidated revenues in 2011.
Based on the transactions carried through since early 2010, including the
takeover of Otix, we expect acquisitions to impact revenues by 6-7% in 2011. To
this should be added the effect of any acquisitions that may be made in the
remaining part of 2011.

Viewed in isolation, the acquisition of Otix Global on 30 November 2010 is
thought to contribute to consolidated revenues to the tune of DKK 350 million
in 2011 against DKK 33 million in 2010. Otix Global's effect on consolidated
operating profits (EBIT) before non-recurring costs is expected to be slightly
negative for 2011 despite the fact that we forecast improvements as the year
progresses. Non-recurring costs for the restructuring and integration of Otix
are estimated at DKK 30-50 million for 2011. Otix is thus expected to dilute
the consolidated profit margin in 2011 by 1.5-2.0 percentage points. In step
with the ongoing integration process, the profitability of the acquired
activities is expected to improve significantly. Activities for the 2012
financial year are expected to generate a profit margin just below that of the
Group (exclusive of Otix). Although the integration process is proceeding
satisfactorily, expectations of the acquired entities are, however, subject to
a higher degree of uncertainty than are expectations for the Group's other
activities.

Based on average exchange rates in February 2011, exchange rate movements in
2011 are assumed to have a neutral translation effect in respect of revenues as
well as operating profits (EBIT) compared with 2010. Gains or losses from
forward exchange contracts had a negative impact on consolidated revenues and
operating profits (EBIT) for 2010 of close on DKK 90 million.

Continuous investments in property, plant and equipment in 2011 are estimated
at DKK 225-250 million. To this amount should be added additional investments
worth just over DKK 100 million in 2011 in relation to the ongoing construction
of a new domicile for Oticon in the USA.

The Group's effective tax rate for 2011 is estimated at 25%, matching the
Danish corporation tax rate.

As mentioned in our Interim Report 2010, we strive to have an interest-bearing
net debt of about DKK 1.0-1.5 billion. With an interest-bearing debt in early
2011 of nearly DKK 1.9 billion and the prospect of substantial cash flows in
the next few months, we may during 2011 again be in a situation, where the
buyback of shares may be relevant. Cash flows from operating activities and the
extent of any acquisitions made in the particular period will determine when or
if such buyback will take place.

Lars Nørby Johansen Niels Jacobsen

Chairman of the Board of Directors President & CEO

The full Annual Report 2010 for William Demant Holding A/S totalling 72 pages
will be published immediately after this announcement.

                              ¨ ¨ ¨ ¨ ¨ ¨ ¨

Further information:

Phone +45 39 17 71 00

www.demant.com

Contact:

Niels Jacobsen, President & CEO

Other contacts:

Stefan Ingildsen, SVP Finance

Søren B, Andersson, VP IR

Morten Lehmann Nielsen, IR Officer

                               2006    2007    2008   2009   2010  Developme
                                                                          nt
                                                                   2009-2010

Key figures, DKK million

Revenue 5,085 5,488 5,374 5,701 6,892 20.9%

Gross profit 3,575 3,971 3,725 4,035 4,959 22.9%
Operating profit (EBIT) 1,271 1,268 1,042 1,149 1,430 24.5%
Net financials -61 -97 -139 -94 -116 23.4%
Profit before tax 1,209 1,171 903 1,055 1,314 24.5%
Profit for the year 901 894 682 795 988 24.3%
Total assets 3,123 3,714 3,914 4,626 6,786 46.7%
Equity 662 426 532 1,302 2,443 87.6%
Cash flows from operating 964 848 828 950 818 -13.9%
activities (CFFO)
Financial ratios

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Gross margin 70.3% 72.4% 69.3% 70.8% 71.9% -

Profit margin 25.0% 23.1% 19.4% 20.2% 20.7% -
Earnings per share (EPS), DKK 14.4 14.8 11.6 13.6 16.9 24.3%
Return on equity 114.7% 160.3% 162.9% 87.2% 49.5% -