GN Q1 Interim Report

Toon Bouten, President & CEOJens Due Olsen, EVP and CFO

May 3, 2007

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Safe harbor statement

The forward-looking statements in this interim report reflect management's current expectations of certain future events and financial results. Statements regarding 2007 are, of course, subject to risks and uncertainties which may result in material deviations from the outlook set forth. Furthermore, some of these expectations are based on assumptions regarding future events which may prove incorrect.

Factors that may cause actual results to deviate materially from expectations include –but are not limited to – general economic developments and developments in the financial markets, technological developments, changes and amendments to legislation and regulations governing GN’s markets, changes in the demand for GN's products, competition, fluctuations in sub-contractor supplies, closing conditions of the divestment of GN ReSound and the integration of company acquisitions.

Class action lawsuits are being brought in the United States against our American subsidiary and other Bluetooth headset manufacturers claiming failure to warn of 'noise induced hearing loss.' While we believe these suits are without merit, the costs to defend against them could be high and the outcome of litigation is not predictable.

This interim report, announcement or presentation should not be considered an offer to sell securities in GN Store Nord.

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• GN’s financial results for both its continuing and discontinuing operations were better than expected.

• Full-year revenue and EBITA guidance are unchanged for continuing operations.

• The German Federal Cartel Office has prohibited the sale of GN ReSound to Phonak. The decision has been appealed.

• No further developments regarding the TPSA arbitration.

GN at a glance

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Headset strategy plan is on track

Goals:1. Expand the leadership in the

headset market2. Achieve competitive

profitability and attractive return on capital employed

Reengineer:Build Scalable Business

Accelerate:Accelerate the Headset Businesses

Extend:Add New Activities

2007 2008 2009

Reengineer – build scalable business 1. Market-oriented Organization2. Operational Excellence3. Increase Productivity

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The Market-Oriented Organization is in place

Marketing

R&DSupplyChainSales

Services

Contact Center

Marketgrowth

currently2-4%

Profitmid 20%

Office

Marketgrowth

currently10-20%

Profitmid 10%

Premier

Marketgrowth

currently30%

Profitmid single

digits

Mainstream

Marketgrowth

currently30-40%

Profitlow single

digits

Toon Bouten, CEOJens Due Olsen, CFO

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Productivity Update

People• Sales per employee

Products• Sales per product/Platform development

Manufacturing• Sales per supplier

Customers and distribution• Sales per key account

Capital employed and cost structure• Working capital and cost in % of sales

• Market-Oriented organization is in place• No. of employees reduced from approx.

1,800 end of 2006 to approx. 1,650

• Two platforms ready end Q2• Some R&D activities will move from

Mobile into CC&O

• Plan to sign contract by the end of Q2 unchanged

• Preparation for set up of postponement centre in Europe has started

• Awarded two OEM programs expected to take effect from Q4 and into 2008

• OEM organization strengthened to grow existing and new global accounts

• Inventories reduced from DKK 316m end 2006 to DKK 222m.

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Key headset announcements in 2007

S5010 – Stereo speaker for music phones, MP3 players and PCs.

JX10 with Bluetooth hub –dual connection to desk phone and Bluetooth mobile phone.

JX10 Cara – Gold plated and stainless steel.

BT5010 – Sliding boom arm.

BT5020 – Behind the ear. Discreet and comfortable.

T5330 – Light weight headset (18g 0.63 oz). Acoustic shock protection. Discreet and comfortable.

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• Financial results were ahead of expectations

• Revenues declined to DKK 753 million from DKK 915 million in Q1 2006

• EBITA declined to DKK 8 million from DKK 57 million in Q1 2006

• In CC&O Headsets, excluding Hello Direct, organic revenue growthremained high at 9% and the EBITA-margin was 23.5%

• Hello Direct activity was profitable and the risk in the business model has been reduced

• As expected Mobile Headsets experienced negative organic growth

• GN continues the work to implement the strategy presented on February 22

• Continued progress in inventory management in Headsets

• Discontinuing operations recorded an EBITA of DKK 121 million and the Hearing Instrument division showed Y-o-Y EBITA margin improvements to 16.6% on flat revenues

First Quarter Highlights

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Profit and Loss

• The revenue decline was as expected and due to negative organic growth in Mobile Headsets and discontinued try-’n’-buy campaigns in Hello Direct.

• The decline in EBITA was mainly due to the lower revenue from Mobile Headsets at lower gross margins

• A number of new CC&O and Mobile headsets products were launched

• Results in GN ReSound were higher than expected

(DKK millions) 2005 Q1/2006 2006 Q1/2007

Revenue 3,533 915 3,413 753

Gross margin 41% 42% 36% 39%

EBITA before one-offs 322 57 70 8

EBITA margin before one-offs 9.1% 6.2% 2.1% 1.1%

EBITA 322 57 (120) 8

Discontinuing operations 572 35 403 97

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Balance Sheet (selected items)

* Pro forma** incl. discontinuing operations

• Further inventory reductions• Neither value from TPSA nor tax disputes included in balance sheet• Approx. DKK 400 million of tangible assets are new HQ

(DKK millions) End 2005*

End Q1/2006*

End 2006

End Q1/2007

Goodwill 502 489 455 450

Tangible assets 229 281 501 503

Inventories 427 378 316 222

Trade receivables 720 691 604 586

Asset held for sale 5,544 5,572 5,596 5,642

Equity 5,349 5,172 4,900 4,955

Trade payables 280 302 220 152

Liabilities held for sale 1,365 1,436 1,326 1,310

Total assets/liabilities 8,091 8,151 8,227 8,148

Net interest bearing debt** 720 909 1,387 1,397

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Cash Flow (selected items)

(DKK millions) 2005 Q1/2006 2006 Q1/2007

CFFO before working capital 498 95 67 82

Change in working capital (357) 91 185 (8)

Cash flow from operations 137 178 231 137

CFFI excl. HQ and disposals 156 (77) (201) (42)

Disposal of companies 1 0 49 0

Invest. in new HQ (20) (46) (306) (11)

Cash flow from investments (175) (123) (458) (53)

Free cash flow, continuing (38) 55 (227) 84

Free cash flow, discontinuing 112 (93) (4) (97)

• Inventory reductions offset by decrease in trade payables• Positive effect from tax payments between continuing and

discontinuing activities

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CC&O Headsets

• Organic growth excluding Hello Direct was 9% driven by EMEA of 18% and mitigated by North America of (5)%

• Hello Direct back to conventional business model and stabilized with margins of 7-8%

• The EBITA margin excluding Hello Direct increased from 19.9% to 23.5% Y-o-Y reflecting a further acceleration of sales in EMEA

(DKK millions) Q1 Q2 Q3 Q4 2006 Q1

Revenue 447 386 349 405 1,587 400

Growth 25% 4% (6%) (7%) 3% (6%)

Gross margin 64% 59% 59% 61% 61% 64%

EBITA before one-offs 79 48 21 86 234 82

EBITA margin before one-offs 17.7% 12.4% 6.0% 21.2% 14.7% 20.5%

EBITA 79 (7) (39) 70 103 82

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Mobile Headsets

• The revenue development is consistent with GN’s strategy of not accelerating sales until the business model has been improved

• The market shift from sales of Premier products towards Mainstream products continued

• The planned supply chain restructuring and new product platformsaim to improve margins in H2

(DKK millions) Q1 Q2 Q3 Q4 2006 Q1

Revenue 463 556 355 435 1,809 349

Growth 54% 15% (48%) (8%) (7%) (22%)

Gross margin 21% 18% 5% 9% 14% 10%

EBITA before one-offs (14) (18) (44) (49) (125) (66)

EBITA margin before one-offs (3.0%) (3.2%) (12.4%) (11.3%) (6.9%) (18.9%)

EBITA (14) (18) (84) (68) (184) (66)

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• The German Federal Cartel Office has prohibited the sale of GN ReSound to Phonak. The decision has been appealed

• A possible date of closing the sale of GN ReSound is postponed into the second half of 2007

• The results in GN ReSound were higher than expected

• The EBITA margin for Hearing Instruments was 16.6% compared to 6.5% in Q1 2006 or 13.7% exclusive of restructuring costs

• GN ReSound launched four new products at the AAA convention incl. Azure – the GN ReSound brand’s new flagship high-end hearing instrument

• A record of 12 product launches are planned in 2007 under the ReSound and Beltone brands

• GN Otometrics showed break-even results in Q1 2007 as expected

GN ReSound - Update

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Key hearing instrument introductions in April

ReSound Azure –click-on Bluetooth headset ReSound Azure –

charger for Azure BTE versions

ReSound Azure –natural directionality, natural convenience,natural sound and natural amplification

ReSound Pulse CRT –receiver in the ear solution

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(DKK millions - approximate figures)

Outlook for 2007 Comments

Continuing operations:RevenueContact Center & Office Headsets 1,300-1,400 Org. growth of app. 10%Hello Direct 250-300 Flat revenue at Q4 2006 run rateMobile Headsets 2,000-2,100 Org. growth of app. 15%GN Total 3.700

EBITA (before one-offs)Contact Center & Office Headsets 250Hello Direct minor, positiveMobile Headsets (50)-(75)Other (30)GN Total 150-175 2006 EBITA (excl. one-offs) = 70

Restructuring (one-offs) (50)-(100)

Amortization (10) & finance (40), net (50) Depending on timing of closing

Discontinuing operations:Profit from discontinuing operations 400-450 Full-year EAT excl. depreciationsProfit from sale of GN ReSound no guidance

CC&O normal seasonality with low

Q3. Mobile negative in H1; positive

in H2; with Q4 at 2-3%

Overall profitability highest in Q4

2007 guidance