Q2 Interim report 2010: Continued Improvement in Revenue and EBITA

In Q2, GN continued to see clear results of the comprehensive restructuring
undertaken during 2009. Organic revenue growth was positive for the second
consecutive quarter and ended at 3%. EBITA improved from DKK 2 million in Q2
2009 to DKK 113 million. 

Fuelled by Unified Communications (UC), GN Netcom generated 8% organic revenue
growth compared to the same quarter last year. Excluding the OEM business in
Mobile Headsets, organic growth was 20%. Driven by the operational leverage
resulting from revenue growth and the successful restructuring, GN Netcom
reached a double-digit EBITA margin in Q2 at 10.5%. GN Netcom continues to
launch innovative products and during the next few months, GN Netcom will
expand the UC product portfolio with a UC-enabled speakerphone. 

GN ReSound generated flat organic revenue growth compared to the same quarter
last year and broke the negative organic growth seen during the last five
quarters. EBITA was DKK 63 million, up from DKK 54 million last year. Based on
the successful launch of the Surround Sound by ReSound™ featured products
ReSound Live™ and dot2 by ReSound™ in late 2009 combined with the ongoing
global launch of ReSound Alera™, GN ReSound expects to outgrow the market in
the second half of 2010. Initial customer response confirms that ReSound Alera™
is a groundbreaking advance in wireless hearing aids. 

The ongoing end-to-end transformation of the GN ReSound manufacturing and
supply chain is progressing as planned and, as announced, is expected to
deliver up to DKK 200 million in cost reductions as a run rate by the end of
2011, coupled with improved quality and increased customer service levels. 

Based on the performance of GN ReSound and GN Netcom during the first half of
the year and the current macroeconomic environment, GN confirms the revenue and
EBITA outlook provided in the Q1 Interim Report 2010. 

Highlights
• Total revenue was DKK 1,286 million corresponding to 3% organic growth
compared to Q2 2009. 

• Total EBITA was DKK 113 million, up DKK 111 million compared to Q2 2009.

• GN Netcom revenue was DKK 495 million equivalent to organic growth of 8% and
EBITA was DKK 52 million up from DKK (43) million last year. Excluding Mobile
OEM, organic growth was 20%. 

• GN ReSound's revenue was the highest since Q4 2008, DKK 789 million. Organic
growth was flat and in line with expectations. Above market growth is still
expected for the second half of 2010. EBITA was DKK 63 million, up from DKK 54
million last year. 

• In the DPTG/TPSA arbitration proceedings, GN is awaiting a decision from the
Arbitration Tribunal on DPTG's claim for phase 1 (1994 to mid-2004). The
parties to the DPTG/TPSA arbitration proceedings have been informed by the
Arbitration Tribunal in Vienna that a decision on the award will not be issued
before September 2010 due to logistical reasons. 

• On May 5, GN received the complete wording of the ruling in which the German
Federal Supreme Court declared the decision made by the German Federal Cartel
Office (Bundeskartellamt) on April 11, 2007 prohibiting the sale of GN ReSound
to Sonova unlawful. GN will file a claim against the German Federal Cartel
Office claiming compensation for the losses imposed on GN which as of July 2010
amount to around EUR 1 billion. 

• In May, GN announced and completed a DKK 88 million share buyback program.
The program was initiated in order to cover GN's long-term incentive program. 

• GN aims to pay out a dividend corresponding to 15-25% of the annual net
results and will initiate share buyback programs when deemed appropriate
subject to the authorization of the Annual General Meeting of shareholders. It
is GN's long-term target to maintain a capital structure consisting of a
combination of debt and equity, subject to a net interest-bearing debt of up to
a maximum of two times EBITDA. 

”UC is clearly taking off now, we have increased the revenue from UC enabled
products with more than 50% compared to Q2 2009 - although from a low base. We
are currently expanding our sales and marketing organization in selected areas
in order to capture this attractive opportunity,” says CEO GN Netcom, Mogens
Elsberg 

 “We expect to grow above the market in the second half of 2010. This
expectation is building on the successful introduction of the Surround Sound by
ReSound™ featured products ReSound Live™ and dot2 by ReSound™ in late 2009,
combined with the global launch of ReSound Alera™,” says CEO GN ReSound, Lars
Viksmoen