Feedback from the IDS 2013 in Cologne

Gina Francioli ([email protected]) 22 March 2013

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Premium players expected to increasingly expand into lower price segments Feedback from the IDS 2013 in Cologne

NOBEL BIOCARE STRAUMANN Bloomberg NOBN SW Bloomberg STMN SW Rating SELL Rating HOLD Price CHF 9.9 Price CHF 128 Price Target CHF 6.6 (6.6) Price Target CHF 116 (115)

The biennial International Dental Show (IDS), the world's leading trade fair for the dental sector took place from March 12-16 in Cologne. Approx. 125,000 visitors and 2,058 suppliers were present (vs. approx. 115,000 visitors and 1,956 suppliers at the IDS 2011). Conclusion: Low growth and price pressure require expansion of premium players into lower price segments

We view companies’ expectations of a return to high single-digit growth for the premium dental implant market as too bullish. We see a continuation of subdued growth in the lower single-digits, due to: 1) the sluggish economy, 2) increasing competition from value/discount players, 3) no breakthrough product innovations and consequent price increases, and 4) ongoing saturation of certain markets.

In the value/discount segment (approx. 40% of the overall global dental implant market in value), growth rates are expected to be higher and will be driven by increasing demand from price-conscious dentists in developed countries with economic difficulties.

We therefore see an expansion into lower price segments as the only viable alternative for premium players to achieve attractive growth rates going forward.

Currently, premium players still seem reluctant to expand into lower price segments on a larger scale, as they are afraid of cannibalizing their premium sales and diluting their Group margins by offering lower priced dental implant systems. We think that cannibalization can be kept at a low level, if the lower priced dental implants are clearly differentiated from the higher priced ones. If Selling & Marketing costs of the lower priced dental implant system can be kept at a low level, we do not necessarily see a dilution of the overall Group EBIT margin.

If premium players refrain from increasingly expanding into lower price segments, we think they will sooner or later be inclined to give more discounts on their premium implants (driven by increasing competitive pressure from the value/discount players) and will thereby risk their price premium and their high margins. We therefore consider the launch of a clearly differentiated, lower priced dental implant system, under the same brand, and using the existing sales force, a sensible strategy.

Instead of coming up with a long-term strategy on how to further expand into lower price segments, both companies, Nobel Biocare and Straumann, have started to cut costs, which will only support EBIT margins and share price in the short- to mid-term. As both companies do not yet seem to have a clear strategy regarding increasing expansion into lower price segments, we see downside potential for their share price.

We have left our estimates unchanged. The slight increase of the Straumann Price Target (from CHF 115 to CHF 116) is only due to the rolling forward of our valuation model.

Only little growth in the premium segment expected going forward

Since the financial crisis in 2008, the premium segment (consisting of the 5 premium dental implant manufacturers: Straumann, Nobel Biocare, Dentsply, Zimmer, and Biomet 3i; representing approx. 60% of the overall global dental implant market in value and approx. 40% in units) of the global dental implant market has shown negative to low single-digit growth.

As the value and particularly the discount segment of the dental implant market consist of many small, local and private companies, no detailed figures for these segments are available. It is though widely acknowledged that during the last few years, growth in these segments has been higher than in the premium segment.

Both Straumann and Nobel Biocare strongly defend their business against value/discount players. Straumann recently won a legal case against Medentis (German discounter), who misleadingly claimed its dental implants had a hydrophilic surface and must now retract this claim. At their IDS analyst and investor presentation, Nobel Biocare showed results of a study comparing a “premium” implant to a “discount” implant, showing that the low-price implant had a significantly higher failure rate than the higher priced implant (low-price implant: 8.2%, higher priced implant: 4.3%).

Most industry players, we talked to at IDS, agreed that there will only be little growth in the premium segment going forward. In the value/discount segment, growth rates are expected to be higher and will be driven by increasing demand from price-conscious dentists in developed countries with economic difficulties. We therefore see an expansion into lower price segments as the only viable alternative for premium players to achieve attractive growth rates going forward.


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Expansion into lower price segments seems inevitable for premium players

We see two alternatives for a premium player to enter lower price segments: 1) acquire an additional value/discount brand and sell the lower priced implant system through a dedicated sales force (multi-brand strategy) or 2) launch an additional, lower priced dental implant system under the existing premium brand, leveraging on the existing sales force.

So far, most premium players have opted for the first alternative and acquired value/discount brands with strong local presence in their respective home markets. Examples are: Nobel Biocare acquiring Alpha Bio-Tec (Israeli discount-player) in 2008, Dentsply acquiring a stake in DIO (South-Korean value-player) in 2010, Zimmer acquiring Exopro (Brazilian value-player) in 2012, and Straumann acquiring 49% of Neodent (Brazilian value-player) in 2012.

The most widely discussed topic at the IDS was the launch of Camlog’s new, lower priced dental implant system “iSy”. The price for the iSy implant system (EUR 109) is approx. EUR 100 below the price for the other dental implant systems that Camlog has offered to date (general implant prices: < EUR 100 for discount, EUR 100-200 for value, > EUR 200 for premium). Camlog (approx. 90% owned by US company Henry Schein) is a value player with headquarters in Switzerland, production in Germany, and sales in various countries, but a strong footprint only in Germany, where they are the number one or joint number two together with Straumann. As competitive pressure from the discount segment has increased (particularly from Medentis with their ICX-templant implant, running a strong publicity campaign), Camlog decided to expand into the discount segment. Most industry representatives regarded Camlog’s move as brave but also risky and especially considered the way Camlog differentiates the implant systems as smart: iSy is a simplified dental implant system for “standard” indications (“normally” hard bone, low-risk cases, no “complex” cases) that comes in only three different diameters, three different lengths, and with a reduced set of instruments.

Today, most premium players offer different implant systems at different prices, but mostly not outside of the premium segment. Those premium players that already offer implant systems in lower price segments, only do this in certain, defined regions and not on a global basis. Currently, premium players still seem reluctant to expand into lower price segments on a larger scale, as they are afraid of cannibalizing their premium sales and diluting their Group margins by offering lower priced dental implant systems (with similar production costs compared to higher priced implants).

We think that cannibalization can be kept at a low level, if the lower priced dental implants are clearly differentiated from the higher priced ones. As we think there will be an increasing demand for lower priced implants, we see an expansion into lower price segments as a possibility for premium players to: 1) prevent existing customers from switching to a competing value/discount player, and 2) increase their share with their existing customers by winning back this part of the business that their customers have already moved to a competing value/discount player.

If Selling & Marketing costs of the lower priced dental implant system can be kept at a low level (e.g. by leveraging on the existing sales force, selling through internet only, etc.), we do not necessarily see a dilution of the overall Group EBIT margin.

If premium players refrain from increasingly expanding into lower price segments, we think they will sooner or later be inclined to give more discounts on their premium implants (driven by increasing competitive pressure from the value/discount players) and will thereby risk their price premium and their high margins.

Competitive pressure in the CADCAM market brings prices down

In recent years, a lot of new players have entered the CADCAM market. The increasing competitive pressure has resulted in price decreases for scanners, CADCAM software, milling machines, and individualized prosthetics.

This trend is also highlighted by a change in strategy that both Straumannn and Nobel Biocare undertook in 2011/12. They significantly lowered the prices for their scanners and since then use the scanner business as an enabler for increased sales in prosthetics. As we expect more milling centers to open up in developing countries and to offer lower prices for individualized prosthetics, we do not expect capacity utilization of centralized milling centers (from Nobel Biocare, Straumann, Zfx, etc.) to increase.

All premium players (except Biomet 3i) offer CADCAM solutions, mostly through co-operation agreements with hardware manufacturers of intra-oral or desktop scanners (Align Technology, E4D, Sirona, Zfx, 3M ESPE, 3Shape, etc.), dental software companies (Dental Wings, E4D, Sirona, Zfx, 3Shape, etc.), and milling machine producers (E4D, Sirona, Zfx, 3M ESPE, etc.). The trend is clearly moving towards “open” CADCAM systems. “Front-end open” means that different scanners of different suppliers can be used with a respective CADCAM software. “Back-end open” means that individualized prosthetic elements (crowns, abutments), designed with a respective CADCAM software, can be produced by different dental laboratories and by different specialized central milling centers. Straumann’s CADCAM system is already open on the front- and the back-end and Nobel Biocare announced at the IDS the first step in opening up their CADCAM system.

No product innovations

In terms of product innovation, we have seen nothing new at IDS. We believe the times for breakthrough innovations and consequently price increases for dental implants are essentially over.

Going forward, we only see marginal product-improvements for dental implants, although these modest improvements will still require high expenses.


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Nobel Biocare: Will launch the Alpha-Bio Tec brand in China

In 2013, Nobel Biocare will further drive expansion into lower priced segments by launching Alpha-Bio Tec (ABT, Nobel Biocare’s discount brand, <5% of Nobel Biocare Group sales) in China. Nobel Biocare sells ABT dental implants in some markets where they are already present with their Nobel Biocare brand (e.g. France and Italy, where ABT is sold through distributors). However, during the FY-12 results presentation on February 19, CEO Richard Laube clearly stated that they will not launch ABT in the US, as they see a high risk of cannibalization to Nobel Biocare sales (the price of an ABT implant is approx. 25% of the price of a Nobel Biocare implant).

At the IDS, Nobel Biocare announced updates/changes to their Procera CADCAM system for later this year. The company will launch a second-generation 2G desktop scanner and will open up their CADCAM system for 3Shape users. Going forward, users of the competing 3Shape Dental System (intra-oral or desktop scanner and CADCAM software) will get access to Nobel Biocare’s centralized milling for individualized Procera abutments. This is Nobel Biocare’s first step in opening up their Procera system.

We remain cautious on Nobel Biocare shares. Nobel Biocare first needs to confirm that they can 1) sustainably increase operating efficiencies, 2) undertake the “strategic investments” in Sales & Marketing and R&D that are crucial for their mid-term sales growth, 3) grow at least in-line with the market (in all regions), and 4) improve the performance of their weak Procera business.

Given the currently rich valuation of P/E 18.6x 2014E, the many challenges that Nobel Biocare faces, and the continued uncertainty regarding dental implant market growth, we see downside potential for the share price.

Using a 24-month rolling forward EPS of CHF 0.55 on an implied P/E of 12x, we derive an unchanged Price Target of CHF 6.6 and reiterate our SELL rating.

Straumann: Will soon decide on further expansion of the Neodent brand

“Expansion into lower price segments” seems to be an important topic at Straumann. During the FY-12 results presentation on February 21, ad-interim CEO and Chairman Gilbert Achermann stated that a decision will soon be taken on whether Neodent (FY-12 sales: CHF 93m) will also be used as a second brand in those European countries with a big discount segment, such as Spain and Italy. He does not consider Neodent to be the right brand to conquer the Asian market, but would rather acquire a brand that is already well positioned in Asia (although he sees limited opportunities for such an acquisition).

At the IDS, Straumann mainly focused on the restorative field and promoted their recently launched CARES Visual 8.0 CADCAM software. With the new software, Straumann has completed the integration of its CADCAM system into the Dental Wings Open Software (DWOS) platform. Straumann’s CADCAM system is open on the front-end for different data input sources (desktop scanner or intra-oral scanner, so far from: Align Technology, 3M ESPE), and open on the back-end, meaning that individualized prosthetics can either be produced in Straumann’s own milling centers or alternatively in third party milling centers.

We remain cautious on Straumann shares. Straumann first needs to demonstrate that: 1) weak Q4-12 market growth in North America was only a temporary dip and that they can again outgrow the market going forward, 2) cost cutting can be performed as planned, and 3) they can undertake selective investments in growing markets such as the US, China, and Brazil to trigger their mid-term sales growth.

Given the currently rich valuation of P/E 18.2x 2014E, the challenges that Straumann faces, and the continued uncertainty regarding dental implant market growth, we see downside potential for the share price.

Using a 24-month rolling forward EPS of CHF 7.27 on an implied P/E of 16x, we derive a Price Target of CHF 116 (115) and reiterate our HOLD rating.

NOBEL BIOCARE ESTIMATES AS OF FEBRUARY 20, 2013/GF

KEY FIGURES

CHF MN EUR MN

MARKET CAPITALIZATION 1,224 1,002 PRICE ON MAR 22, 2013 IN CHF 9.9

ENTERPRISE VALUE 1,167 955 PRICE ON MAR 22, 2013 IN EUR 8.1

NET SALES 2013E 709 581 DIVIDEND YIELD 2013E IN % 2.0

NET PROFIT 2013E 58 48 DAILY TRADING VOL IN '000 717.0

EPS CAGR 2012-15E IN % 10.1 9.6 PAR VALUE IN CHF 0.4

SHAREHOLDERS' EQUITY 2013E 431 352 NUMBER OF SHARES IN MN 123.8

ACCOUNTING STANDARDS IFRS FREE FLOAT 100%

MAJOR SHAREHOLDERS

SILCHESTER INTERNATIONAL INVESTORS LLP 10.2%

FRANKLIN TEMPLETON 10.1%

GOVERNMENT OF SINGAPORE 5.5%

INVESCO LIMITED 5.0%

GOVERNANCE OF OWNERS LLP 3.2%

NEXT EVENT: Q1-2013 RESULTS APRIL 25, 2013 NORGES BANK 3.0%

RATIOS 2013E 2014E 2015E

P/E 20.9 18.6 16.5

PEG 2.1 1.8 1.6

P/SALES 1.8 1.7 1.7

P/NAV 2.8 2.6 2.4

EV/EBITDA 9.5 8.9 8.3

EV/SALES 1.7 1.7 1.6

EV/CAPITAL EMPLOYED 3.6 4.0 4.4

ROCE IN % 15.3 19.8 25.4

ROCE/WACC 1.5 2.0 2.6

FCF YIELD IN % 6.2 6.2 6.8

PER SHARE DATA (CHF) 2008 2009 2010 2011 2012 2013E 2014E 2015E

EARNINGS 1.34 1.27 0.46 0.39 0.45 0.47 0.53 0.60

- CHANGE IN % -40.1 -5.3 -63.3 -15.1 14.11)

5.3 12.4 12.7

EARNINGS before impairment & xo 1.28 1.40 0.46 0.43 0.45 0.47 0.53 0.60

- CHANGE IN % -42.5 9.6 -66.8 -8.2 5.61)

5.3 12.4 12.7

DIVIDEND 0.55 0.55 0.35 0.15 0.20 0.20 0.20 0.25

- PAYOUT IN % 41.1 43.4 75.3 38.1 44.5 42.2 37.6 41.7

NET ASSET VALUE 2.71 3.80 3.25 2.79 3.19 3.50 3.83 4.23

- CHANGE IN % -24.3 40.5 -14.5 -14.3 14.3 9.7 9.5 10.4

PER SHARE DATA (EUR) 2008 2009 2010 2011 2012 2013E 2014E 2015E

EARNINGS 0.90 0.85 0.37 0.32 0.37 0.39 0.44 0.49

- CHANGE IN % -33.4 -4.8 -56.5 -12.7 15.0 4.0 12.4 12.7

AVG. NO. OF SHARES (FULLY DILUTED) (MN) 122.3 123.9 123.0 122.8 123.1 123.1 123.1 123.1

CHF/EUR 0.67 0.67 0.80 0.82 0.83 0.82 0.82 0.82

1) Adjusted for exceptional FX loss of EUR -11.6m in FY-13, earnings would have decreased in FY-12. GINA FRANCIOLI

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SHARE PRICE EPS NOBEL BIOCARE HOLDING AG - IMPLIED P/E OF 12X

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Price Target: CHF 6.6 - SELL

Information herein is believed to be reliable, but BANK AM BELLEVUE does not guarantee its completeness or accuracy. Opinions and estimates constitute our judgement and are subject to change without notice. Past performance is not indicative of future results. This material is not intended as an offer or solicitation for the purchase or sale of any shares or other financial instruments. This material is intended solely for our clients and may not be reproduced, distributed or published without our prior consent.

NOBEL BIOCARE ESTIMATES AS OF FEBRUARY 20, 2013/GF

INCOME STATEMENT (EUR MN) 2009 S% 2010 S% Q1 Q2 Q3 Q4 2011 S% Q1 Q2 Q3 Q4 2012 S% 2013E S% 2014E S% 2015E S%

SALES 581.4 576.6 143.5 142.9 128.2 154.6 569.2 147.6 149.0 131.0 153.0 580.5 559.1 574.0 595.5

- CHANGE IN % -6.1 -0.8 5.0 -7.8 -2.7 0.9 -1.3 2.8 4.2 2.2 -1.0 2.0 -3.7 2.7 3.7

- CHANGE IN LC IN % -7.7 -6.4 1.5 -3.9 0.2 -0.2 -0.7 -0.2 -2.2 -5.1 -3.4 -2.7 0.4 2.7 3.7

DENTAL IMPLANTS SALES (BBE) 1)

473.5 81 467.0 81 118.6 118.0 104.6 128.9 470.1 83 122.5 124.0 109.6 129.1 485.2 84 470.9 84 484.6 84 503.8 85

- CHANGE IN % -9.1 -1.4 4.2 -3.2 -1.3 2.1 0.7 3.3 5.0 4.8 0.2 3.2 -3.0 2.9 4.0

- CHANGE IN LC IN % -10.7 -6.9 0.7 0.7 1.6 1.0 1.0 0.0 -0.8 -2.9 -1.6 -1.3 1.1 2.9 4.0

PROCERA SALES (BBE) 1)

107.9 19 109.6 19 25.0 24.8 23.6 25.7 99.1 17 25.1 24.9 21.4 23.9 95.3 16 88.2 16 89.5 16 91.7 15

- CHANGE IN % 9.9 1.6 -8.5 -16.9 -4.0 -8.8 -9.6 0.6 0.2 -9.3 -7.0 -3.8 -7.4 1.4 2.5

- CHANGE IN LC IN % 8.3 -4.0 -12.0 -13.0 -1.1 -9.9 -9.0 -1.0 -9.0 -15.3 -12.4 -9.2 -3.4 1.4 2.5

COGS 113.5 20 128.6 22 34.4 32.9 32.0 37.4 136.7 24 36.3 36.6 31.9 38.3 143.0 25 137.2 25 139.7 24 143.7 24

GROSS PROFIT 467.9 448.0 109.1 110.0 96.2 117.2 432.5 111.3 112.4 99.1 114.7 437.5 421.9 434.3 451.8

- CHANGE IN % -5.2 -4.3 0.9 -9.5 -4.6 -0.2 -3.5 2.0 2.2 3.0 -2.1 1.2 -3.6 2.9 4.0

- GROSS MARGIN IN % 80.5 77.7 76.1 77.0 75.0 75.8 76.0 75.4 75.5 75.7 75.0 75.4 75.5 75.7 75.9

SELLING & MARKETING 2)

219.6 38 224.0 39 67.1 60.6 58.5 66.1 252.2 44 63.9 64.9 61.3 69.6 259.5 45 248.8 45 253.8 44 261.5 44

ADMINISTRATION 2)

94.7 16 107.4 19 19.7 19.8 19.5 20.1 79.2 14 19.1 17.1 17.6 20.5 74.3 13 69.8 12 70.0 12 70.8 12

RESEARCH & DEVELOPMENT 25.0 4 31.6 5 7.2 7.2 6.6 8.0 29.0 5 7.6 8.8 8.3 10.3 35.0 6 33.5 6 34.4 6 35.7 6

TOTAL OPEX 339.4 58 363.1 63 94.0 87.6 84.6 94.2 360.4 63 90.5 90.8 87.1 100.4 368.8 64 352.2 63 358.2 62 368.0 62

EBITDA 156.3 114.5 23.0 30.2 19.5 31.9 104.6 29.0 30.0 19.8 21.9 100.7 100.4 107.2 115.6

- CHANGE IN % -3.0 -26.7 -30.8 -19.5 22.3 15.0 -8.7 25.9 -0.7 1.2 -31.1 -3.7 -0.3 6.8 7.8

- EBITDA MARGIN IN % 26.9 19.9 16.1 21.1 15.2 20.6 18.4 19.6 20.2 15.1 14.3 17.4 18.0 18.7 19.4

DEPRECIATION & AMORT. & IMPAIRMENT 27.8 5 29.6 5 7.9 7.8 7.9 8.8 32.5 6 8.2 8.4 7.9 7.6 32.0 6 30.7 5 31.1 5 31.8 5

EBIT 128.6 84.9 15.1 22.4 11.6 23.0 72.1 20.8 21.6 11.9 14.3 68.7 69.7 76.1 83.8

- CHANGE IN % -3.3 -33.9 -43.0 -25.8 35.9 17.3 -15.1 37.5 -3.4 2.6 -37.9 -4.8 1.5 9.3 10.0

- EBIT MARGIN IN % 22.1 14.7 10.5 15.7 9.0 14.9 12.7 14.1 14.5 9.1 9.4 11.8 12.5 13.3 14.1

EXTRAORDINARY ITEMS (XO) 13.0 0.0 3.9 0.0 0.3 0.3 4.5 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

EBIT before xo 141.6 84.9 19.0 22.4 11.9 23.3 76.6 20.8 21.6 11.9 14.3 68.7 69.7 76.1 83.8

- CHANGE IN % -5.1 -40.0 -28.3 -25.8 39.4 18.8 -9.8 9.3 -3.4 0.0 -38.7 -10.4 1.5 9.3 10.0

- EBIT MARGIN IN % before xo 24.3 14.7 13.3 15.7 9.3 15.1 13.5 14.1 14.5 9.1 9.4 11.8 12.5 13.3 14.1

NET FINANCIAL RESULT 3)

8.7 15.5 2.2 -1.3 -13.2 -4.4 -16.7 -2.0 -3.3 -1.9 -0.5 -7.7 -6.1 -4.7 -3.2

INCOME BEFORE TAXES 137.2 100.4 17.4 21.1 -1.6 18.7 55.5 18.8 18.4 10.0 13.8 61.0 63.6 71.5 80.5

TAXES 31.4 54.7 4.4 5.2 0.6 5.4 15.7 5.1 4.4 3.1 2.6 15.1 15.9 17.9 20.1

- TAX RATE IN % 22.9 54.5 25.4 24.8 -39.0 29.0 28.3 27.0 23.8 30.6 19.1 24.8 25.0 25.0 25.0

NET PROFIT 105.8 45.7 13.0 15.9 -2.2 13.3 39.8 13.7 14.0 7.0 11.2 45.8 47.7 53.6 60.4

- CHANGE IN % -3.6 -56.8 -66.5 -19.2 NM 156.7 -12.9 6.2 -11.7 NM -15.9 15.3 4.0 12.4 12.7

- NET MARGIN IN % 18.2 7.9 9.0 11.1 -1.7 8.6 7.0 9.3 9.4 5.3 7.3 7.9 8.5 9.3 10.1

NOPAT 112.5 52.7 14.6 14.8 -20.6 10.2 27.8 12.3 11.5 5.7 10.7 40.1 43.1 50.1 58.0

BALANCE SHEET (EUR MN) 2009 2010 Q1 Q2 Q3 Q4 2011 Q1 Q2 Q3 Q4 2012 2013E 2014E 2015E

LIQUID FUNDS 242 240 227 190 189 107 107 118 92 124 147 147 189 231 279

NET CASH (DEBT) 2 -13 -3 -61 -62 -28 -28 -13 -10 22 47 47 89 131 179

FINANCIAL DEBT 240 253 231 251 251 136 136 131 102 103 100 100 100 100 100

TOTAL ASSETS 723 771 738 683 671 592 592 593 575 583 601 601 610 627 651

- PORPERTY, PLANT & EQUIPMENT 76 90 85 85 86 86 86 81 80 77 71 71 52 34 15

- INTANGIBLE ASSETS 207 223 213 209 208 213 213 209 213 208 206 206 196 186 176

CURRENT ASSETS 423 427 410 362 346 268 268 278 257 274 303 303 341 385 438

- IN % OF TOTAL ASSETS 58.5 55.3 55.6 53.0 51.5 45.2 45.2 46.9 44.7 47.1 50.4 50.4 55.8 61.5 67.3

- RECEIVABLES 137 133 130 125 113 109 109 112 116 103 96 96 93 95 99

- INVENTORIES 20 23 21 21 21 24 24 21 20 20 20 20 20 20 21

CURRENT LIABILITIES 134 415 398 377 385 174 174 173 125 126 135 135 134 135 135

- TRADE PAYABLES 22 19 19 14 12 15 15 13 15 14 19 19 18 19 20

SHAREHOLDERS' EQUITY 318 320 304 270 249 282 282 282 303 316 325 325 352 386 426

- CHANGE IN % 18.6 0.7 -3.7 -17.3 -22.9 -12.0 -12.0 -7.4 12.3 26.9 15.5 15.5 8.4 9.5 10.4

- ROE IN % 36.1 14.3 4.2 5.3 -0.8 4.4 13.2 4.7 4.9 2.5 15.1 15.1 14.1 14.5 14.9

CAPITAL EMPLOYED 330 335 83 89 66 285 285 277 333 309 298 298 266 241 215

PERSONNEL (END OF PERIOD) 2,242 2,433 2,427 2,493 2,465 2,472 2,472 2,489 2,518 2,547 2,496 2,496 2,496 2,521 2,571

- CHANGE IN % -14 9 3 4 3 2 2 3 1 3 1 1 0 1 2

CASH FLOW STATEMENT (EUR MN) 2009 2010 Q1 Q2 Q3 Q4 2011 Q1 Q2 Q3 Q4 2012 2013E 2014E 2015E

NET PROFIT 106 46 13 16 -2 13 40 14 14 7 11 46 48 54 60

+ DEPR. & AMORT. & IMPAIRMENT 28 30 8 8 8 9 32 8 8 8 8 32 31 31 32

+/- OTHER NON-CASH ITEMS 18 5 -15 7 11 -1 1 -2 1 6 5 10 0 0 0

+ DECREASE IN WC /- INCREASE IN WC 26 17 -5 -7 18 14 20 -3 -5 11 13 15 4 -3 -4

OPERATING CASHFLOW 178 97 1 23 34 35 93 17 18 32 37 103 82 82 89

- CAPEX TANGIBLE -18 -23 -3 -7 -4 -3 -17 -2 -1 -2 -2 -8 -17 -17 -18

- CAPEX INTANGIBLE -2 -4 0 0 0 -1 -1 -1 0 -1 -1 -3 -3 -3 -3

FREE CASH FLOW 157 70 -3 16 30 32 75 14 16 29 34 93 62 62 68

- ACQUISITIONS/+ DIVESTMENTS -23 0 0 0 0 0 0 0 0 0 0 0 0 0 0

+/- FINANCING ACTIVITIES -10 -38 -2 -19 -31 -116 -169 -6 -28 4 -10 -40 0 0 0

- DIVIDENDS -45 -46 0 -33 0 0 -33 0 -15 0 0 -15 -20 -20 -20

+ SALE/- PURCHASE OF TREAS. SHARES -1 -5 -5 0 0 0 -5 2 0 0 0 2 0 0 0

CHANGE IN LIQUID FUNDS (EXCL. FX) 79 -19 -10 -36 -1 -85 -132 11 -27 32 24 40 42 42 48

1) Dental Implants and Procera figures disclosed as of 1H 2011, before: BBE. GINA FRANCIOLI

2) As of Q1-2011, certain expenses have been reclassified from "Administration" to "Selling & Marketing".

3) 2009: Exceptional FX gains of EUR 26.8m. 2010: Exceptional FX gains of EUR 30.0m. 2011: Exceptional FX loss of EUR -11.6m. High CF driven by unsustainably low Capex.

Guidance: FY-13: 12.3%-12.8% at CER FY-14: +50-100bps FY-15: +50-100bps


NOBEL BIOCARE - QUARTERLY SALES ESTIMATES AS OF FEBRUARY 20, 2013/GF

(EUR MN) 2009 S% 2010 S% Q1 S% Q2 S% Q3 S% Q4 S% 2011 S% Q1 S% Q2 S% Q3 S% Q4 S% 2012E S% 2013E S% 2014E S% 2015E S%

EMEA 261.1 45 248.3 43 63.2 44 62.5 44 48.0 37 63.2 41 237.0 42 60.6 41 60.6 41 46.8 36 62.1 41 230.1 40 225.6 40 229.0 40 235.4 40

- Change in % -9.8 -4.9 0.3 -6.2 -5.3 -7.1 -4.6 -4.1 -3.0 -2.5 -1.7 -2.9 -2.0 1.5 2.8

- Change in lc in % -7.4 -6.9 -1.2 -6.2 -5.3 -7.0 -4.9 -4.4 -3.6 -3.7 -2.7 -3.6 -1.2 1.5 2.8

Americas 206.3 35 202.7 35 52.0 36 51.7 36 48.2 38 56.8 37 208.6 37 55.4 38 57.9 39 54.2 41 61.0 40 228.5 39 228.2 41 239.4 42 252.3 42

- Change in % -6.4 -1.7 11.3 -6.3 -1.6 9.7 2.9 6.5 12.0 12.4 7.4 9.5 -0.1 4.9 5.4

- Change in lc in % -8.0 -7.4 8.8 4.1 6.5 9.9 7.2 2.7 1.3 0.3 2.8 1.8 3.2 4.9 5.4

Asia/Pacific 114.0 20 125.6 22 28.3 20 28.7 20 32.0 25 34.6 22 123.6 22 31.6 21 30.5 20 30.0 23 29.9 20 121.9 21 105.3 19 105.6 18 107.8 18

- Change in % 4.1 10.2 4.9 -13.6 0.3 3.2 -1.6 11.8 6.3 -6.2 -13.6 -1.4 -13.6 0.3 2.1

- Change in lc in % -5.1 -2.1 -4.8 -12.6 -0.8 -2.1 -5.1 3.8 -5.6 -15.5 -14.9 -8.6 -2.0 0.3 2.1

TOTAL GROUP SALES 581.4 100 576.6 100 143.5 100 142.9 100 128.2 100 154.6 100 569.2 100 147.6 100 149.0 100 131.0 100 153.0 100 580.5 100 559.1 100 574.0 100 595.5 100

- CHANGE IN % -6.1 -0.8 5.0 -7.8 -2.7 0.9 -1.3 2.8 4.2 2.2 -1.1 2.0 -3.7 2.7 3.7

- CHANGE IN LC IN % -7.7 -6.4 1.5 -3.9 0.2 -0.2 -0.7 -0.2 -2.2 -5.1 -3.4 -2.7 0.4 2.7 3.7

(EUR MN) 2009E 2010E Q1E Q2E Q3 Q4 2011 Q1 Q2 Q3 Q4 2012E 2013E 2014E 2015E

Dental Implants 1)

473.5 467.0 118.6 118.0 104.6 128.9 470.1 122.5 124.0 109.6 129.3 485.2 470.9 484.6 503.8

- Change in % -9.1 -1.4 4.2 -3.2 -1.3 2.1 0.7 3.3 5.0 4.8 0.3 3.2 -3.0 2.9 4.0

- Change in lc in % -10.7 -6.9 0.7 0.7 1.6 1.0 1.0 0.0 -0.8 -2.9 -1.6 -1.3 1.1 2.9 4.0

- In % of total sales 81 81 83 83 82 83 83 83 83 84 85 84 84 84 85

Procera 1)

107.9 109.6 25.0 24.8 23.6 25.7 99.1 25.1 24.9 21.4 23.7 95.3 88.2 89.5 91.7

- Change in % 9.9 1.6 -8.5 -16.9 -4.0 -8.8 -9.6 0.6 0.2 -9.3 -7.8 -3.8 -7.4 1.4 2.5

- Change in lc in % 8.3 -4.0 -12.0 -13.0 -1.1 -9.9 -9.0 -1.0 -9.0 -15.3 -12.4 -9.2 -3.4 1.4 2.5

- In % of total sales 19 19 17 17 18 17 17 17 17 16 15 16 16 16 15

- Prosthetics (BBE) 78.4 78.4 16.9 20.5 19.6 22.3 79.3 17.2 20.4 18.3 22.1 78.0 73.7 74.8 77.0

- Change in % 9.0 0.0 -13.5 -4.2 11.5 11.8 1.1 2.0 -0.6 -6.7 -0.8 -1.6 -5.5 1.5 3.0

- Change in lc in % 7.4 -5.6 -17.0 -0.3 14.4 10.7 1.7 -1.0 -7.0 -14.0 -3.1 -6.3 -1.5 1.5 3.0

- In % of Procera sales 73 72 68 82 83 87 80 69 82 85 93 82 84 84 84

- Equipment (BBE) 29.5 31.2 8.1 4.3 4.0 3.4 19.8 7.9 4.5 3.1 1.8 17.3 14.5 14.7 14.7

- Change in % 4.1 5.9 4.1 -48.9 -42.9 -57.3 -36.5 -2.4 3.9 -22.1 -47.6 -12.7 -16.0 1.0 0.0

- Change in lc in % 2.5 0.3 0.6 -45.0 -40.0 -58.3 -35.9 -5.4 -2.6 -29.4 -49.9 -17.4 -12.0 1.0 0.0

- In % of Procera sales 27 28 32 18 17 13 20 31 18 15 8 18 16 16 16

CURRENCIES 2009 2010 Q1 Q2 Q3 Q4 2011 Q1 Q2 Q3 Q4 2012 2013E 2014E 2015E

USD/EUR 0.72 0.76 0.73 0.69 0.71 0.74 0.72 0.77 0.78 0.80 0.77 0.78 0.75 0.75 0.75

- Change in % 5.9 5.0 1.1 -11.7 -8.5 0.7 -4.8 4.7 12.2 12.9 3.8 8.2 -3.7 0.0 0.0

1) Dental Implants and Procera figures disclosed as of 1H 2011, before: BBE. GINA FRANCIOLI

Guidance: "Modest sales growth".

Sales decline of approx. -17% in Japan, due to negative media coverage.


NOBEL BIOCARE - DISCOUNTED CASH FLOW MODEL ESTIMATES AS OF FEBRUARY 20, 2013/GF

(EUR MN) 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E 2021E 2022E TV

NET SALES 559 574 596 621 648 675 702 728 754 779 787

- CHANGE IN % -3.7 2.7 3.7 4.3 4.3 4.1 3.9 3.7 3.5 3.3 1.0

- CHANGE IN LC IN % 0.4 2.7 3.7 4.3 4.3 4.1 3.9 3.7 3.5 3.3 1.0

EBIT 70 76 84 92 100 102 105 108 110 112 94

- CHANGE IN % 1.5 9.3 10.0 9.5 8.6 2.8 2.6 2.4 2.1 1.9 -15.6

- IN % OF SALES 12.5 13.3 14.1 14.8 15.4 15.2 15.0 14.8 14.6 14.4 12.0

+ DEPRECIATION & AMORTIZATION 31 31 32 31 31 31 30 30 30 29 4

- IN % OF SALES 5.5 5.4 5.3 5.1 4.8 4.6 4.3 4.2 4.0 3.7 0.5

- CHANGE IN % -4.2 1.3 2.3 -1.0 -1.3 0.3 -2.3 -0.4 -0.8 -3.8 -86.4

- IN % OF CAPEX 157.4 155.2 153.1 145.2 137.3 132.3 124.4 119.4 114.3 106.5 100.0

EBITDA 100 107 116 123 131 134 135 138 140 141 98

- CHANGE IN % -0.3 6.8 7.8 6.6 6.1 2.2 1.4 1.7 1.5 0.7 -30.2

- IN % OF SALES 18.0 18.7 19.4 19.8 20.2 19.8 19.3 18.9 18.6 18.1 12.5

./. TAXES PAID 16 20 20 22 24 24 24 25 25 25 21

- IN % OF EBITDA 22.8 26.4 24.0 23.8 23.6 23.4 23.2 23.0 22.8 22.6 22.4

./. NON-CASH ITEMS 0 0 0 0 0 0 0 0 0 0 0

./. NET INCREASE IN NET WORKING CAPITAL 4 -3 -4 -12 -13 -14 -14 -15 -15 -16 -8

- IN % OF SALES -0.6 0.4 0.6 2.0 2.0 2.0 2.0 2.0 2.0 2.0 1.0

./. CAPITAL EXPENDITURES (BEFORE ACQ.) -20 -20 -21 -22 -23 -24 -24 -25 -26 -27 -4

- IN % OF SALES 3.5 3.5 3.5 3.5 3.5 3.5 3.5 3.5 3.5 3.5 0.5

FREE CASH FLOW (BEFORE INTEREST) 69 64 71 67 72 73 73 73 73 73 65

- CHANGE IN % -31.6 -6.1 11.0 -5.9 6.4 1.3 0.1 0.7 0.5 -0.9 -10.2

WEIGHTED AVERAGE COST OF CAPITAL

RISK FREE INTEREST RATE IN % 3.0

MARKET RISK PREMIUM IN % 5.5

BETA VS. SMI 1.4

COST OF EQUITY IN % 10.7

AVG. INTEREST RATE ON DEBT IN % 4.0

TAX RATE IN % 20.0

COST OF DEBT (TAX ADJUSTED) IN % 3.2

DEBT IN % OF EV 10.4

WACC IN % 9.9

ENTERPRISE VALUE

NUMBER OF YEARS 0.8 1.8 2.8 3.8 4.8 5.8 6.8 7.8 8.8 9.8

DISCOUNT FACTOR 0.93 0.84 0.77 0.70 0.64 0.58 0.53 0.48 0.44 0.40

DISC. FREE OPERATING CASH FLOWS 63.7 54.4 54.9 47.0 45.5 41.9 38.2 35.0 32.0 28.8

SUM OF DCF 2013E - 2022E 441.3 60%

PERPETUAL GROWTH RATE IN % 1.0

TERMINAL VALUE 290.0 40%

EV = DISCOUNTED FREE CASH FLOWS 731.3

+ NET CASH (DEBT) 46.8

TOTAL VALUE (IN EUR) 778.1

NUMBER OF SHARES IN MN 123.8

VALUE PER SHARE (IN EUR) 6.3

VALUE PER SHARE (IN CHF) 7.7

- VALUATION GAP IN % (EQUITY VALUE PER SHARE / SHARE PRICE) -22.3

SENSITIVITY

SHARE PRICE AT VARIOUS TV EBITA MARGIN

EBITA MARGINS AND

TV GROWTH RATES 8 10 11 12 13 14 15

-1.0 6.7 6.9 7.2 7.4 7.6 7.8

-0.5 6.8 7.0 7.3 7.5 7.7 8.0

TV 0.0 6.9 7.2 7.4 7.6 7.9 8.1

GROWTH 0.5 7.0 7.3 7.5 7.8 8.0 8.3

RATE 1.0 7.1 7.4 7.7 7.9 8.2 8.5

1.5 7.3 7.6 7.9 8.1 8.4 8.7

2.0 7.4 7.7 8.0 8.3 8.6 8.9

2.5 7.6 7.9 8.3 8.6 8.9 9.2

SHARE PRICE AT VARIOUS WACC

WACC AND TV GROWTH RATES

8 8.9 9.4 9.9 10.4 10.9 11.4

-1.0 7.8 7.5 7.2 6.9 6.6 6.4

-0.5 8.0 7.6 7.3 7.0 6.7 6.4

TV 0.0 8.2 7.8 7.4 7.1 6.8 6.5

GROWTH 0.5 8.3 7.9 7.5 7.2 6.9 6.6

RATE 1.0 8.6 8.1 7.7 7.3 7.0 6.7

1.5 8.8 8.3 7.9 7.5 7.1 6.8

2.0 9.1 8.5 8.1 7.7 7.3 6.9

2.5 9.4 8.8 8.3 7.8 7.4 7.1

EUR/CHF 1.22 GINA FRANCIOLI


STRAUMANN ESTIMATES AS OF FEBRUARY 22, 2013/GF

KEY FIGURES

CHF MN

MARKET CAPITALIZATION 1,976 PRICE ON MARCH 22, 2013 IN CHF 128

ENTERPRISE VALUE 1,836 DIVIDEND YIELD 2013E IN % 2.9

NET SALES 2013E 677 DAILY TRADING VOL IN '000 72.7

NET PROFIT 2013E 100 PAR VALUE IN CHF 0.1

EPS CAGR 2012-15E IN % 21.7 NUMBER OF SHARES IN MN 15.41)

SHAREHOLDERS' EQUITY 2013E 673 FREE FLOAT 61.9%

ACCOUNTING STANDARDS IFRS MAJOR SHAREHOLDERS

THOMAS STRAUMANN 17.3%

GOVERNMENT OF SINGAPORE (GIC) 13.8%

RUDOLF MAAG 12.2%

SIMONE MAAG DE MOURA CUNHA 5.2%

PARVUS ASSET MANAGEMENT LLP 5.1%

GABRIELLA STRAUMANN 3.4%

NEXT EVENT: Q1-2013 SALES APRIL 30, 2013 SPRUCEGROVE INVESTMENT MGMT 3.0%

RATIOS 2013E 2014E 2015E2)

P/E 19.8 18.2 15.9

P/E before xo (impairment & restructuring) 19.8 18.2 15.9

PEG 0.9 0.8 0.7

P/SALES 2.9 2.8 2.3

P/NAV 2.9 2.7 2.1

EV/EBITDA 12.3 11.7 11.3

EV/SALES 2.7 2.6 2.1

EV/CAPITAL EMPLOYED 8.2 8.8 4.5

ROCE IN % 43.0 50.8 40.4

ROCE/WACC 5.1 6.0 4.8

FREE CASH FLOW YIELD IN % 5.6 5.7 7.5

PER SHARE DATA (CHF) 2008 2009 2010 2011 2012 2013E 2014E 2015E2)

EARNINGS 0.52 9.38 8.36 4.54 2.36 6.45 7.05 8.04

- CHANGE IN % -95.4 1692.4 -10.9 -45.7 -48.1 173.7 9.3 14.0

EARNINGS before xo (imp. & restructuring) 11.60 9.38 8.36 7.12 4.45 6.45 7.05 8.04

- CHANGE IN % 3.0 -19.2 -10.9 -14.8 -37.4 44.9 9.3 14.0

DIVIDEND 3.75 3.75 3.75 3.75 3.75 3.75 3.75 3.75

- PAYOUT IN % 716.5 40.0 44.9 82.6 159.1 58.1 53.2 46.7

NET ASSET VALUE 34.51 40.09 44.36 42.96 40.84 43.54 46.84 59.70

- CHANGE IN % -13.6 16.2 10.7 -3.1 -4.9 6.6 7.6 27.5

AVG. NO. OF SHARES (FULLY DILUTED) (MN) 1)

15.6 15.6 15.7 15.6 15.5 15.5 15.5 15.5

1) Excluding treasury shares. GINA FRANCIOLI

2) 2015E: Including Neodent (fully consolidated).

64

100

150

200

250

300

350

400

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 4.0

5.0

10.0

15.0

20.0

25.0

SHARE PRICE EPS STRAUMANN HOLDING AG - IMPLIED P/E OF 16X

STMN SW Equity EPS

Price Target: CHF 116 (115) - HOLD


STRAUMANN ESTIMATES AS OF FEBRUARY 22, 2013/GF

INCOME STATEMENT (CHF MN) 2009 S% 2010 S% H1 S% H2 S% 2011 S% H1 S% H2 S% 2012 S% 2013E S% 2014E S% 2015E1)

S%

SALES 736.4 737.6 367.3 326.3 693.6 361.7 324.6 686.3 677.0 696.8 864.0

- CHANGE IN % -5.4 0.2 -6.4 -5.5 -6.0 -1.5 -0.5 -1.1 -1.4 2.9 24.0

- CHANGE IN LC IN % -2.1 4.6 4.8 1.8 4.1 -0.2 -3.2 -1.6 -0.7 2.9 24.0

COGS 149.5 20 150.6 20 77.0 21 88.1 27 165.0 24 83.3 23 71.5 22 154.7 23 150.6 22 154.0 22 192.1 22

GROSS PROFIT 586.9 587.0 290.3 238.2 528.5 278.4 253.1 531.5 526.4 542.8 671.9

- CHANGE IN % -7.1 0.0 -7.7 -12.6 -10.0 -4.1 6.3 0.6 -1.0 3.1 23.8

- GROSS MARGIN IN % 79.7 79.6 79.0 73.0 76.2 77.0 78.0 77.5 77.8 77.9 77.8

OTHER INCOME 2.4 2.8 1.1 1.6 2.7 0.9 0.9 1.8 1.8 1.8 1.8

SELLING & ADMINISTRATION 384.8 52 385.1 52 233.4 64 178.9 55 412.3 59 203.5 56 220.1 68 423.6 62 369.0 55 375.5 54 464.7 54

RESEARCH & DEVELOPMENT 39.1 5 40.5 5 19.1 5 19.9 6 39.0 6 22.5 6 26.1 8 48.7 7 43.4 6 44.5 6 50.4 6

TOTAL OPEX 421.5 57 422.7 57 251.4 68 197.2 60 448.6 65 225.1 62 245.4 76 470.5 69 410.6 61 418.2 60 513.3 59

- CHANGE IN % -28.7 0.3 16.5 -4.7 6.1 -10.4 24.4 4.9 -12.7 1.9 22.7

EBITDA 218.4 211.9 98.3 59.0 157.4 69.7 47.7 117.4 148.7 157.0 214.9

- CHANGE IN % -20.3 -3.0 -20.0 -33.7 -25.7 -29.1 -19.1 -25.4 26.7 5.5 36.9

- EBITDA MARGIN IN % 29.7 28.7 26.8 18.1 22.7 19.3 14.7 17.1 22.0 22.5 24.9

DEPRECIATION 30.4 4 27.0 4 11.8 3 13.7 4 25.5 4 12.5 3 14.9 5 27.4 4 25.9 4 25.5 4 27.1 3

EBITA 188.0 184.9 86.5 45.4 131.9 57.2 32.8 90.0 122.8 131.5 187.8

- CHANGE IN % -21.9 -1.6 -20.9 -40.0 -28.7 -33.9 -27.6 -31.7 36.5 7.1 42.8

- EBITA MARGIN IN % 25.5 25.1 23.5 13.9 19.0 15.8 10.1 13.1 18.1 18.9 21.7

AMORTIZATION 22.6 3 20.7 3 7.3 2 4.4 1 11.7 2 3.9 1 3.6 1 7.5 1 7.1 1 7.0 1 29.2 3

IMPAIRMENT 2)

0.0 0.0 40.2 0.0 40.2 0.0 21.5 21.5 0.0 0.0 0.0

EBIT 165.4 164.3 38.9 40.9 79.9 53.3 7.7 61.0 115.8 124.5 158.6

- CHANGE IN % 309.4 -0.7 -60.6 -37.5 -51.3 36.8 -81.1 -23.7 89.7 7.6 27.3

- EBIT MARGIN IN % 22.5 22.3 10.6 12.5 11.5 14.7 2.4 8.9 17.1 17.9 18.4

RESTRUCTURING 17.5 17.5

EBIT before xo (impairment & restructuring) 165.4 164.3 79.2 40.9 120.2 53.3 46.2 99.5 115.8 124.5 158.6

- CHANGE IN % -22.4 -0.7 -19.8 -37.5 -26.8 -32.7 12.9 -17.2 16.3 7.6 27.3

- EBIT MARGIN IN % before xo 22.5 22.3 21.6 12.5 17.3 14.7 14.2 14.5 17.1 17.9 18.4

NET FINANCIAL RESULT 7.8 -4.6 -1.8 -0.5 -2.3 0.6 0.0 0.6 0.7 1.2 1.1

CONTRIBUTION FROM ASSOCIATES 0.0 0.0 0.0 0.2 0.2 -1.6 -4.2 -5.7 3.7 5.5 0.9

INCOME BEFORE TAXES 173.2 159.6 37.1 40.5 77.6 52.3 3.6 55.9 120.1 131.3 160.6

TAXES -26.8 -28.6 1.4 -8.0 -6.7 -8.6 -10.9 -19.5 -20.4 -22.3 -28.1

- TAX RATE IN % 15.5 17.9 -3.7 19.8 8.6 16.4 305.8 34.8 17.0 17.0 17.5

NEODENT MINORITIES -8.2

NET PROFIT 146.4 131.1 38.5 32.5 71.0 43.8 -7.3 36.4 99.7 109.0 124.2

- CHANGE IN % NM -10.5 -53.1 -33.9 -45.9 13.7 -122.5 -48.6 173.7 9.3 14.0

- NET MARGIN IN % 19.9 17.8 10.5 10.0 10.2 12.1 -2.3 5.3 14.7 15.6 14.4

NET PROFIT before xo (imp. & restructuring) 146.4 131.1 78.7 32.5 111.2 43.8 25.1 68.8 99.7 109.0 124.2

- CHANGE IN % NM -10.5 -4.0 -33.9 -15.2 -44.4 -22.7 -38.1 44.9 9.3 14.0

- NET MARGIN IN % 19.9 17.8 21.4 10.0 16.0 12.1 7.7 10.0 14.7 15.6 14.4

NOPAT 153.0 127.3 36.6 32.1 68.8 44.3 13.7 57.9 100.3 109.9 125.2

Details to Neodent Acquisition:

Neodent-related amort. of inventory step-up 0.0 8.0 8.0 0.0 0.0

Neodent-related amort. of intangibles 2.3 3.3 5.5 9.5 9.5

Neodent profit attributable to STMN 0.6 6.6 7.2 12.4 14.2

BALANCE SHEET (CHF MN) 2009 2010 H1 H2 2011 H1 H2 2012 2013E 2014E 2015E1)

LIQUID FUNDS 262 350 325 377 377 117 141 141 192 248 354

NET CASH (DEBT) 260 349 325 375 375 116 140 140 192 248 352

FINANCIAL DEBT 1 1 1 2 2 1 0 0 0 0 1

TOTAL ASSETS 803 854 790 811 811 815 773 773 809 859 957

- PROPERTY, PLANT & EQUIPMENT 138 123 115 111 111 107 97 97 86 76 72

- INTANGIBLE ASSETS 178 152 98 101 101 98 76 76 69 62 248

- INVESTMENTS IN ASSOCIATES 0 0 6 7 7 257 -7 249 253 259 17

CURRENT ASSETS 445 539 530 556 556 317 317 317 368 429 580

- IN % OF TOTAL ASSETS 55.4 63.1 67.1 68.5 68.5 39.0 41.0 41.0 45.4 50.0 60.6

- RECEIVABLES 110 111 125 110 110 132 104 104 104 107 134

- INVENTORIES 72 73 72 67 67 64 64 64 63 66 83

CURRENT LIABILITIES 123 111 98 111 111 136 107 107 106 110 136

- TRADE AND OTHER PAYABLES 83 91 82 90 90 124 94 94 93 97 121

MINORITIES 47

SHAREHOLDERS' EQUITY 626 696 662 671 671 648 631 631 673 724 923

- CHANGE IN % 16.4 11.2 5.8 -3.5 -3.5 -2.0 -5.9 -5.9 6.6 7.6 27.5

- ROE IN % 25.2 19.8 6.0 4.8 10.4 6.7 -1.1 5.6 15.3 15.6 15.1

CAPITAL EMPLOYED 375 353 320 279 279 269 242 242 224 209 410

PERSONNEL (YEAR-END) 2,170 2,361 2,413 2,452 2,452 2,555 2,517 2,517 2,405 2,405 3,211

- CHANGE IN % -1 9 6 4 4 6 3 3 -4 0 34

CASH FLOW STATEMENT (CHF MN) 2009 2010 H1 H2 2011 H1 H2 2012 2013E 2014E 2015E1)

NET PROFIT 146 131 38 32 71 44 -7 36 100 109 124

+ DEPR. & AMORT. & IMPAIRMENT 53 48 59 18 77 16 40 56 33 32 56

+/- OTHER NON-CASH ITEMS 25 2 -13 1 -12 -5 11 5 0 0 0

- CONTRIBUTION FROM ASSOCIATES 0 0 0 0 0 2 4 6 -4 -6 -1

+ MINORITIES 0 0 0 0 0 0 0 0 0 0 8

+ DECREASE IN WC/- INCREASE IN WC 21 -5 -27 31 4 -26 37 11 0 -3 -19

OPERATING CASH FLOW 245 176 58 83 140 30 84 115 129 133 169

- CAPEX TANGIBLE -23 -18 -8 -6 -14 -9 -7 -15 -15 -15 -16

- CAPEX INTANGIBLE -8 -4 -3 -3 -6 -2 -3 -4 -4 -4 -5

FREE CASH FLOW 214 154 47 74 121 20 75 95 110 113 148

- ACQUISITIONS -7 0 -6 0 -6 -218 -48 -266 0 0 -120

+/- FINANCING ACTIVITIES -33 -1 1 0 1 -2 1 -1 0 0 0

- DIVIDENDS -58 -59 -59 0 -59 -58 0 -58 -58 -58 -58

+ SALE/- PURCHASE OF TREAS. SHARES 3)

3 3 -3 -29 -32 0 -5 -5 0 0 0

+/- OTHERS -4 -9 -4 7 3 -3 1 -2 0 0 0

CHANGE IN LIQUID FUNDS 114 88 -24 52 27 -260 24 -237 52 55 -29

1) 2015E: Including Neodent (fully consolidated). GINA FRANCIOLI

2) 2011: Impairment of CHF 40.2m intangible assets related to acquisition of Japanese distributor in 2007.

3) 2011/12: Share buyback between September 1, 2011 and August 31, 2012. Shares were not canceled. FY-11: 164,500 shares bought back. FY-12: 49,470 shares bought back.

Acquisitions: - 49% of Neodent: CHF 261m - 14% of Dental Wings: CHF 5m

Acquisition of additional 26% of Neodent.

Including Neodent (fully consolidated).

(13.4) (13.4) Lower amortization charges due to higher goodwill.

FY-13 EBIT: Incl. CHF 25m, i.e. +370bps from cost cutting program FY-14 EBIT: Incl. CHF 37m, i.e. +530bps from cost cutting program


STRAUMANN - QUARTERLY SALES ESTIMATES AS OF FEBRUARY 22, 2013/GF

(CHF MN) 2009 S% 2010 S% Q1 S% Q2 S% Q3 S% Q4 S% 2011 S% Q1 S% Q2 S% Q3 S% Q4 S% 2012 S% 2013E S% 2014E S% 2015E1)

S%

Europe 462.4 63 444.9 60 113.9 60 105.4 59 84.4 56 100.7 57 404.4 58 106.5 58 95.6 54 82.3 52 93.7 56 378.1 55 365.9 54 367.3 53 373.9 43

- Change in % -7.6 -3.8 -8.8 -9.7 -8.7 -9.2 -9.1 -6.5 -9.2 -2.5 -7.0 -6.5 -3.2 0.4 1.8

- Change in lc in % -2.2 3.2 2.2 0.3 1.7 -3.4 0.2 -2.1 -7.0 -5.3 -6.3 -5.1 -4.5 0.4 1.8

North America 155.3 21 164.7 22 40.1 21 37.9 21 35.2 23 42.4 24 155.6 22 44.7 24 43.8 25 42.0 27 43.3 26 173.7 25 180.3 27 192.6 28 206.9 24

- Change in % -2.3 6.1 -3.7 -13.2 -7.9 2.8 -5.5 11.3 15.6 19.4 2.1 11.7 3.8 6.8 7.4

- Change in lc in % -1.4 8.7 8.0 9.6 11.3 12.0 10.2 14.0 7.0 5.1 0.0 6.4 4.6 6.8 7.4

Asia/Pacific 95.2 13 100.5 14 25.5 14 26.2 15 24.0 16 25.0 14 100.7 15 25.0 14 28.9 16 25.6 16 24.4 15 103.9 15 99.4 15 103.5 15 109.1 13

- Change in % -1.3 5.5 0.0 0.0 -2.4 3.0 0.2 -1.9 10.2 6.3 -2.1 3.2 -4.3 4.1 5.4

- Change in lc in % -4.6 2.1 2.2 8.9 5.2 5.7 5.5 -2.4 4.2 -2.4 -1.0 -0.3 2.5 4.1 5.4

RoW 23.4 3 27.5 4 8.9 5 9.4 5 7.1 5 7.5 4 32.9 5 8.9 5 8.3 5 6.9 4 6.4 4 30.5 4 31.4 5 33.3 5 174.2 20

- Change in % 1.6 17.4 24.8 39.2 9.2 4.7 19.6 0.2 -11.9 -2.6 -14.9 -7.3 2.9 6.3 422.5

- Change in lc in % 8.0 12.3 26.9 48.5 18.1 11.1 26.0 4.3 -7.4 1.4 -10.4 -3.0 5.0 6.3 422.5

TOTAL GROUP SALES 736.4 100 737.6 100 188.4 100 178.9 100 150.7 100 175.6 100 693.6 100 185.1 100 176.6 100 156.8 100 167.8 100 686.3 100 677.0 100 696.8 100 864.0 100

- CHANGE IN % -5.4 0.2 -5.4 -7.4 -6.7 -4.4 -6.0 -1.8 -1.2 4.0 -4.4 -1.1 -1.4 2.9 24.0

- CHANGE IN LC IN % -2.1 4.6 4.3 5.2 5.1 1.8 4.1 1.6 -2.1 -2.0 -4.2 -1.6 -0.7 2.9 24.0

Dental Implants (BBE) 670.3 91 665.1 90 167.7 89 159.2 89 134.1 89 156.3 89 617.3 89 162.8 88 160.0 91 142.1 91 152.4 91 617.3 90 614.4 91 630.0 90 787.1 91

- Change in % -6.7 -0.8 -7.2 -2.9 0.5 5.9 -2.5 0.0 -0.5 2.5 24.9

- Change in lc in % -3.3 3.7 2.9 0.5 -0.4 -0.1 -2.2 -0.5 0.2 2.5 24.9

Digital Solutions (CAD/CAM) (BBE) 40.0 5 46.0 6 13.4 7 12.8 7 10.7 7 12.5 7 49.4 7 14.5 8 9.0 5 7.8 5 8.1 5 39.4 6 30.3 4 30.9 4 33.9 4

- Change in % 3.9 15.0 7.5 7.6 -29.1 -27.0 -35.6 -20.3 -23.1 2.0 9.6

- Change in lc in % 7.2 19.4 17.6 11.0 -30.0 -33.0 -35.4 -20.9 -22.5 2.0 9.6

Regeneratives (BBE) 26.1 4 26.5 4 7.3 4 6.9 4 5.8 4 6.8 4 26.8 4 7.8 4 7.5 4 6.9 4 7.3 4 29.5 4 32.3 5 35.8 5 43.0 5

- Change in % 18.1 1.6 1.0 7.1 8.9 18.0 7.8 10.1 9.4 11.0 20.0

- Change in lc in % 21.4 6.0 11.1 10.5 8.0 12.0 8.0 9.6 10.0 11.0 20.0

CURRENCIES 2009 2010 Q1 Q2 Q3 Q4 2011 Q1 Q2 Q3 Q4 2012 2013E 2014E 2015E

EUR/CHF 1.51 1.38 1.29 1.25 1.16 1.23 1.23 1.21 1.20 1.20 1.21 1.21 1.23 1.23 1.23

- Change in % -4.9 -8.6 -11.8 -10.6 -13.1 -6.9 -10.7 -6.1 -4.0 4.1 -1.8 -2.2 2.0 0.0 0.0

USD/CHF 1.09 1.04 0.94 0.87 0.82 0.91 0.89 0.92 0.94 0.96 0.93 0.94 0.93 0.93 0.93

- Change in % 0.2 -4.0 -10.5 -21.5 -20.0 -6.3 -14.9 -2.0 7.7 16.8 2.0 5.8 -0.7 0.0 0.0

1) 2015E: Including Neodent (fully consolidated). GINA FRANCIOLI

Including Neodent (fully consolidated).

Further declining markets in Italy, Spain, Germany.

Temporary dip due to: - no more iTero sales - hurricane Sandy - fiscal/political uncertainty

Including -1.0%lc from transferred and discontinued businesses.


STRAUMANN - DISCOUNTED CASH FLOW MODEL ESTIMATES AS OF FEBRUARY 22, 2013/GF

(CHF MN) 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E 2021E 2022E TV

SALES 1)

677 697 724 760 797 834 871 909 946 982 992

- CHANGE IN % -1.4 2.9 4.0 4.9 4.9 4.7 4.5 4.3 4.1 3.9 1.0

- CHANGE IN LC IN % -0.7 2.9 4.0 4.9 4.9 4.7 4.5 4.3 4.1 3.9 1.0

EBIT 116 125 131 141 151 156 162 167 172 176 119

- CHANGE IN % 89.7 7.6 5.0 7.8 7.1 3.6 3.4 3.1 2.9 2.7 -32.5

- IN % OF SALES 17.1 17.9 18.0 18.5 18.9 18.7 18.5 18.3 18.1 17.9 12.0

+ DEPRECIATION & AMORTIZATION 33 32 32 32 32 32 31 31 30 29 5

- CHANGE IN % -5.5 -1.6 -0.8 -0.2 -0.5 -0.9 -1.4 -2.0 -2.6 -3.2 -82.8

- IN % OF SALES 4.9 4.7 4.4 4.2 4.0 3.8 3.6 3.4 3.1 2.9 0.5

- IN % OF CAPEX 172.0 164.4 156.8 149.2 141.6 134.0 126.4 118.9 111.3 103.7 100.0

EBITDA 149 157 163 173 183 188 193 197 201 205 124

- CHANGE IN % 26.7 5.5 3.8 6.2 5.7 2.8 2.5 2.3 2.1 1.8 -39.5

- IN % OF SALES 22.0 22.5 22.5 22.8 23.0 22.5 22.1 21.7 21.3 20.9 12.5

./. TAXES PAID 20 22 23 24 25 26 26 27 28 28 17

- IN % OF EBITDA 13.7 14.2 13.9 13.7 13.7 13.7 13.7 13.7 13.7 13.7 13.7

./. NON-CASH ITEMS 0 0 -1 0 0 0 0 0 0 0 0

./. NET INCREASE IN NET WORKING CAPITAL 0 -3 -4 -4 -4 -4 -4 -5 -5 -5 -5

- IN % OF SALES 0.0 0.4 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5

./. CAPITAL EXPENDITURES (BEFORE ACQ.) -19 -20 -21 -22 -23 -24 -25 -26 -27 -28 -5

- IN % OF SALES 2.8 2.8 2.8 2.8 2.8 2.8 2.8 2.8 2.8 2.8 0.5

FREE CASH FLOW (BEFORE INTEREST) 109 112 115 124 131 134 137 140 142 144 97

- CHANGE IN % 15.5 2.7 2.9 7.5 5.9 2.4 2.2 1.9 1.7 1.4 -32.7

WEIGHTED AVERAGE COST OF CAPITAL

RISK FREE INTEREST RATE IN % 3.0

MARKET RISK PREMIUM IN % 5.5

BETA VS. SMI 1.0

COST OF EQUITY IN % 8.5

AVG. INTEREST RATE ON DEBT IN % 4.0

TAX RATE IN % 17.0

COST OF DEBT (TAX ADJUSTED) IN % 3.3

DEBT IN % OF EV 0.0

WACC IN % 8.5

ENTERPRISE VALUE

NUMBER OF YEARS 0.8 1.8 2.8 3.8 4.8 5.8 6.8 7.8 8.8 9.8

DISCOUNT FACTOR 0.94 0.86 0.80 0.73 0.68 0.62 0.57 0.53 0.49 0.45

DISC. FREE OPERATING CASH FLOWS 102.4 96.9 91.9 91.0 88.8 83.8 78.9 74.1 69.5 64.9

SUM OF DCF 2013E - 2022E 842.2 59%

PERPETUAL GROWTH RATE IN % 1.0

TERMINAL VALUE 582.5 41%

EV = DISCOUNTED FREE CASH FLOWS 1,424.7

+ NET CASH (DEBT) 140

+ CONTRIBUTION FROM NEODENT (@ avg. P/E 16x) 227

TOTAL VALUE (CHF) 1,791.8

NUMBER OF SHARES IN MN 15.4

VALUE PER SHARE (CHF) 116

- VALUATION GAP IN % (EQUITY VALUE PER SHARE / SHARE PRICE) -9.3

SENSITIVITY

SHARE PRICE AT VARIOUS TV EBITA MARGIN

EBITA MARGINS AND

TV GROWTH RATES 116 10 11 12 13 14 15

-1.0 103 105 108 111 113 116

-0.5 104 107 110 113 115 118

TV 0.0 106 109 112 115 117 120

GROWTH 0.5 107 111 114 117 120 123

RATE 1.0 109 113 116 119 123 126

1.5 112 115 119 122 126 129

2.0 114 118 122 126 130 133

2.5 117 121 125 130 134 138

SHARE PRICE AT VARIOUS WACC

WACC AND TV GROWTH RATES

116 8 8.0 8.5 9.0 9.5 10.0

-1.0 117 112 108 104 101 97

-0.5 120 114 110 106 102 98

TV 0.0 122 117 112 107 103 100

GROWTH 0.5 125 119 114 109 105 101

RATE 1.0 129 122 116 111 106 102

1.5 132 125 119 113 108 104

2.0 137 129 122 116 110 106

2.5 143 133 125 119 113 108

1) Estimates excluding Neodent. GINA FRANCIOLI



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