Designing for Life

AnnuAl RepoRt 2011

Designing for Life.

“Designing for Life” is an ambition that covers much more than product de-sign and treatment innovation. It ex-presses the principle upon which we have built our business. It permeates everything we do, from scientific dis-covery and clinical trials to product manufacturing and customer relations.

At Nobel Biocare, we are committed to improving the quality of life of every patient. Our customers – and their patients – can be confident that the solutions we provide for tooth restora-tion have been designed to provide fully functional, natural-looking results with the aspi ration to last a lifetime.

On the next pages, get to know some patients and find out how our solutions improved the quality of their lives.

the old treatments don’t work «I had radiation for skin cancer and lost all my teeth. At first, I had conventional dentures but I found it hard to chew and swallow food. Getting implants was the best thing I ever did. There was no pain. My husband loves how I look – so he’s getting them as well. Now we both agree – the old treatment style just doesn’t work for us!» Maria, 75

I realized I need my incisors «I love to play basketball. But I had an accident while playing and knocked out an incisor. At first, I had a wire bridge with a false tooth. This wasn’t stable – and it just didn’t look right. Before I lost my tooth, I never realized just how much I use my incisors! And I always felt that people were staring at my tooth. Now I have an implant and it looks and feels great.» Jimmy, 38

no more teeth in a glass «I lost six teeth to gum disease. I used to cover my mouth when I was laughing or smiling. It made me less willing to meet new people. But after my dentist gave me a lovely new smile, people say, ‘Haven’t you got nice teeth!’ And my partner loves waking up and not seeing my teeth in a glass.» Nancy, 44

I can kiss my boyfriend «I was born without front incisors. For years I wore braces with unreal-looking teeth. Now I have implants and a great smile. And best of all – I can kiss my boyfriend without worrying that my teeth will fall out.» Katharina, 16

now I don’t have to worry «I lost a tooth at the back of my mouth to gingivitis a few years ago. It felt uncomfortable – food always got lodged in the space, and I was worried people would notice the gap. I hesitated to get a replacement – I thought it would be a gold tooth and I’d look like a pirate! Now I have an implant and don’t have to think or worry about it.» James, 32

I feel free «Over the years, I lost all my teeth, so I got dentures. I have always been active, and I particularly love fencing. My dentures felt loose and I always worried they’d fall out. Then my dentist fixed new dentures on implants. Now I can do everything I want in life again. I feel free!» Marlen, 71

we look great « My wife got implants and she looked and felt great. So I decided to replace my dentures too. Now I can finally eat everything I want. But best of all, people keep telling us how great we both look!» Klaus, 73

I can do my job better «As a professional reader, speech is important to me. But a gap from an extracted tooth was affecting my work – and my life. Getting it replaced with an implant was the best thing I did. It was one gap in my life I could fill easily!» Barbara, 41

no more pain or problems «Some time ago, I had a root canal treatment, but that didn’t stop the pain. My dentist suggested an implant. Since then, I have had no more problems or pain. In fact, I was so impressed that I now have a second implant.» Christian, 57

the right to enjoy a healthy life «I was missing a few teeth due to an infection, and it was a logical decision to have them replaced. Why should anyone have missing teeth? I feel that everyone has the right to enjoy a healthy life, eat what they want and laugh with friends. I am worth it!» Tina, 39

my wife loves my new smile «I had a meal with my wife when my dentures fell out. She said she wanted back the man she married – a man with a winning smile. So I decided to get implants. I’m a surgeon, so finding the right dentist was important to me. When I found my dentist, I felt confident that he could give me back my smile, and he did – and now my wife is happy, too.» Al, 80

My wife thinks I look handsome «I used to have very bad teeth, and ended up losing most of them. My teeth used to hurt, and I stopped going out and socializing. Now I’ve had all teeth replaced. I can eat what I want, I go out often and I am much happier. And my wife thinks I look really handsome now!» Cheong Yim, 64

I’ve had implants for 23 years «I suffered from severe bone loss and gingivitis and lost most of my teeth. I’ve had implants now for 23 years. Because I replaced each missing tooth immediately, I never had to experience life with missing teeth. I have a serious condition, but thanks to implants my teeth were never a problem.» Pat, 69

I love food again «I love cooking and eating. But I had old-fashioned gold replacement teeth that never felt secure or comfortable. They spoiled my enjoyment. I decided to try implants instead. My new teeth feel fantastic and I love food again!» Elisabeth, 68

I can eat what is good for me «Ten years ago, my husband left me and I fell into a deep depression. I neglected myself and looked terrible. My teeth were so bad, I couldn’t leave the house without my snap-on false teeth. My mother helped me get out of my rut and get back on track – she paid for my new teeth. Now I’m socializing again, I take care of myself. I’ve become a nutritionist – and with my new teeth I can eat what I know is good for me.» Debra, 55

I have my life back «Because of a childhood phobia I never saw the dentist. My teeth were a disaster. But when I finally decided to get implants, my dentist gave me back more than my teeth – he gave me back my confidence and my life.» Martina, 43

I no longer feel handicapped «I lost all my teeth years ago. I love fruit, especially apples, but I couldn’t eat them for years. Worst of all, I’m a swimming instructor – but the water dissolved the adhesive on my dentures so they fell out. I felt handicapped. Now I’ve had implants, I can swim and I really enjoy food again. And best of all – I no longer feel handicapped.» Richard, 58

my life has changed 1000% «I neglected my teeth for years. They got so bad that I was too embarrassed to socialize or laugh in public. I was also afraid to speak in public and had to get others to speak for me. After my treatment with implants I couldn’t wait to go out and meet people. My life has changed 1000 %!» Manuel, 46

dinner the same evening «I’m a dental hygienist, so healthy teeth are important to me. But because of a cyst I still lost a front tooth. In my work I’d seen the great results that are possible with implants. And so I decided to try it for myself. The procedure was minimally invasive, so I could go for dinner the same evening.» Heidi, 38

a fantastic smile « How I look is important to me, but it took me a while to pluck up the courage to talk to my dentist about my damaged teeth. He told me implants could give me a fantastic smile, and he was right! My new teeth look perfectly natural.» Jutta, 44

I smile without thinking «Gum disease left me with missing teeth. I always felt self-conscious when I smiled. It felt great to see my dentist for the treatment: to walk in with a problem, and to walk out with it solved. Now, I smile without thinking twice.» Mike, 58

My life has really improved «I lost several teeth by the time I was 40. My missing teeth caused me all sorts of problems: pain, indigestion, speech problems, difficulty sleeping and eating. I stopped going for dinner with my friends and family. Now I’m 60, and I have all my teeth back – and I have no more problems. My life has really improved.» Miu Wing, 60

people think I’m a movie star «I’m a truck driver and I lost 11 teeth in a car accident. I had them all replaced with implants. My treatment experience was great and my new teeth changed my life: I feel more popular, more confident, I have more friends, and some people think I’m a movie star. I even have a new relationship!» Lee, 54

they look and feel so natural «I didn’t take care of my teeth, and eventually I had to have them all replaced. I tend to forget, because they look and feel so natural, as if they’d always been there. But best of all, the treatment was more affordable than I’d thought.» Nik, 58

Our mission.

Our customers – dental healthcare specialists across the globe – share with us a fundamental dedication to patient care and offering patients the best possible treatments.

We have assisted our customers in treating millions of patients. So we know that a better smile, better speech, better oral health – simply the ability to eat normally – dramatically improve a person’s life. Providing a high level of care enhances the pa-tient’s quality of life, and the profes-sional reputation of the clinician. For Nobel Biocare, patient care represents a long-term commitment to both our customers and their patients.

Explore this report to see what we are doing to achieve our mission.

Maria, 75

Lost many teeth to radiation for skin cancer and needed full-arch restorations. Treated with All-on-4 in mandible and maxilla. 8 NobelSpeedy Groovy implants, 2 NobelProcera implant bars overdenture and 12 NobelProcera Zirconia Copings used. Immediate loading. Treatment completed in 2010.

James, 32

Lost a mandibular molar to caries. Treated with 2 NobelReplace Select (one for each root). Treatment completed in 2008.

Klaus, 73

All teeth replaced due to continuous tooth loss over the years. Treated with implant-retained fixed-removable denture with CAD/CAM titanium implant bars. All-on-4 in the mandible. NobelRe-place Tapered RP implants. Treatment completed 2007

Nancy, 44

Lost most teeth to chronic advanced periodontal disease. Treated with 6 NobelReplace Groovy implants, NobelProcera bridges and NobelProcera abutments. Immediate loading. Treatment com-pleted in 2007.

Katharina, 16

Born missing 2 maxillary lateral incisors. Treated with 2 narrow-platform NobelActive implants and NobelProcera abutments and crowns. Treatment completed in 2010.

Marlen, 71

All teeth replaced due to periodontal and endodontic lesions in conjunction with a failing prosthetic restoration. Treated with implant-retained telescopic overdenture in the maxilla and man-dible. All-on-4 in the mandible. 10 Brånemark Mk III implants, NobelProcera abutments designed as primary telescopic copings. Immediate loading in mandible. Treatment completed 2005.

Jimmy, 38

Lost single incisor due to trauma during sports activity. Treated with NobelReplace Tapered Groovy implant and NobelProcera crown. Immediate loading. Treatment completed in 2011.

Barbara, 41

Lost a single tooth to decay and a failed root canal. Required si-nus grafting. Treated with a NobelReplace Tapered Groovy implant. Treatment completed in 2007.

Our contribution to these patients’quality of life.

Pat, 69

Lost all teeth to failed root canals, periodontal disease, bone resorption. Treated with 18 implants, NobelSpeedy Groovy and Brånemark Mk III, and 3 bridges in the maxilla and one in the mandible. Immediate loading. Treatment completed in 1995.

Christian, 57

Lost 2 teeth due to failed root canal and fracture. Treated with 2 Replace Select Tapered implants. Treatments completed in 2003 and 2010.

Al, 80

Fully edentulous maxilla and mandible. Treated with 15 Nobel-Speedy Groovy implants and screw-in full-arch bridges (8 in maxilla, 7 in mandible). Immediate loading. Treatment completed in 2006.

Debra, 55

Lost most of her teeth to neglect and infections. Treated with All-on-4 (4 NobelSpeedy Groovy) in maxilla and mandible, man-dible reinforced with NobelProcera Implant Bar Overdenture. Im-mediate loading. Treatment completed in 2011.

Martina, 43

Lost several teeth due to decay and infection. Treated with 9 Re-place Select Tapered implants, and 4 implant bridges. NobelGuide digital planning and guided surgery used. Treatment completed in 2010.

Tina, 39

Lost a tooth due to infection. Treated with Replace Select Straight implant and Procera abutment and crown. Treatment completed 2003.

Cheong Yim, 64

Lost all teeth to neglect. Treated with 10 NobelSpeedy Groovy implants in maxilla and mandible, and implant bridges. Treatment completed in 2008.

Elisabeth, 68

Lost multiple teeth over years due to infection. Treated with Brånemark Mk III and NobelSpeedy implants. NobelGuide used. Treatment completed in 2001.

Nik, 58

Lost all teeth in maxilla to chronic advanced periodontal disease. Treated with All-on-4. 4 NobelActive implants and milled Nobel-Procera implant bar overdenture used. NobelGuide used for plan-ning and guided surgery. Treatment completed in 2008.

Manuel, 46

Lost several teeth to neglect. Treated with All-on-4 in maxilla. 4 NobelSpeedy Groovy implants and NobelProcera prosthesis used. Immediate loading. Treatment completed in 2010.

Miu Wing, 60

Lost 3 single posterior teeth to neglect. Treated with 3 NobelActive implants and crowns. Treatment completed in 2009.

Jutta, 44

Lost 7 teeth to peridontitis. Treated with 3 NobelActive, 4 NobelReplace Straight implants, and NobelProcera crowns. Treatment completed 2011.

Richard, 58

Lost all teeth to neglect. Treated with 6 NobelReplace Select in maxilla and 5 in mandible, NobelProcera Implant Bridge Titanium with composite resin veneers in both jaws. NobelGuide used for planning, fabrication and issue of final prosthesis. Immediate loading. Treatment completed in 2011.

Mike, 58

Lost all teeth in maxilla to chronic advanced periodontal disease. Treated with All-on-4. 4 NobelActive implants and milled Nobel-Procera implant bar overdenture used. NobelGuide used for planning. Immediate loading. Treatment completed in 2010.

Lee, 54

Lost most of his teeth to trauma and neglect. Treated with implantbridge fixed by 4 NobelSpeedy Groovy and 1 Zygoma implant in maxilla, and All-on-4 (with 4 NobelSpeedy Groovy) in mandible. Immediate loading. Treatment completed in 2011.

Heidi, 38

Lost incisor due to infection and a cyst. Treated with a Nobel-Speedy implant and a NobelProcera crown. Treatment completed in 2010.

Dr Angsar C Cheng, Dr Erakat, Dr Roland Glauser, Dr Stefan Holst, Dr Neo Tee Khin, Dr Kenny Lau, Dr Wong Keng Mun, Dr Howard Popper, Dr Jason Popper, Dr Mo Rabah, Dr Ole Richter, Dr Ho Kok Sen, Dr Nik Sisodia, Prof Dr Werner Zechner, Malo Advanced Oral Rehabilitation Clinic, Specialist Dental Group, T32, Warren Dental Surgery, Moonlake Lee, Jeanne Lubben, Linda Tan, Stefan Knecht, Nobel Biocare teams in Austria, Germany, Hong Kong, Singapore, Switzerland, UK and USA.

nobelbiocare.com/patientstories

Special thanks goes to

Annual review 02Nobel Biocare at a glance 02Our strategy 042011 summary and key figures 05Letter from the Chairman of the Board 06Letter from the CEO 10Financial performance 14

Business overview 17 Markets and strategy 18 Patient care 24Our customers 26Innovation 30– Products and solutions 30– Research and development 36Organizational excellence 42– Operations 42 – Our people 46– Sustainability 50

Corporate Governance 55Corporate Governance report 56Board of Directors 63Executive Committee 77Remuneration report 80

Financial reporting 89Key figures 90 Financial review 91Risk management & ICS 94 Consolidated financial statements 100 Parent company accounts 152

Share information 171

Other 176Addresses 176Disclaimer 178

Contents.

Nobel Biocare is a focused and specialized leader in implant-based dental restorations – including implant systems, high-precision individual-ized prosthetics, CAD/CAM systems, diagnostics, treatment planning and guided surgery. We support customers throughout their professional and practice development. Nobel Biocare is headquartered in Zurich, Switzerland, listed at the SIX Swiss Exchange and included in the Swiss Leader Index.

Our brand The Nobel Biocare brand builds on a heritage going back to Alfred Nobel’s legacy. It represents a pioneering spirit, and is synonymous with scientific leadership and innovation.

Our heritage We draw on the industry’s longest heritage – 40 years – of original scientific research and innovation in restorative dentistry, starting with P.-I. Brånemark‘s discovery of osseo- integration. We produced the first dental implant and were the first to industrialize the commercial manufacture of dental implants and CAD/CAM-based prosthetics. Since then, we have introduced numerous advanced solutions to the market, many of which have become industry standards.

Innovation As the pioneer in our industry, we have a long tradition of innovation and clinical excellence. We provide a leading portfolio of products and solutions to help our customers treat their patients’ needs in the best possible way. Our wide range of top-quality products can restore missing or damaged teeth from crown to root.

The dental market Today, millions of people suffer from missing teeth. The penetration of implant-based tooth restorations is still very low, and such treatments offer sustainable growth potential. Furthermore, global market trends, such as changing demographics and patient demands, present attractive opportunities.

Our customers We serve dental healthcare professionals around the world, including oral surgeons, general practitioners, specialists, and laboratories. Our products, solutions and services enable them to treat and educate patients with any type of tooth loss. Our commitment to our customers is under pinned by a unique range of training, education and support programs to help them grow their business.

Organizational excellence Nobel Biocare has the widest global spread in the industry. In manufacturing, we maintain two innovation centers, three implant and CAD/CAM prosthetics manufacturing sites, and two logistic distribution centers. We have sales, marketing and customer service centers in 34 markets. We employ more than 2’400 dedicated and skilled people from diverse professional and ethnic backgrounds across the globe. In many markets– established and emerging – we hold leading positions.

Nobel Biocare at a glance.

2 Nobel Biocare Annual Report 2011– Nobel Biocare at a glance

3Nobel Biocare Annual Report 2011– Nobel Biocare at a glance

Prosthetic frameworkNobelProcera provides a full range of CAD/CAM-based individualized dental prosthetics for every indication, froma single tooth to edentulous jaws, on natural teeth and implants.

Broad choice of materialsNobelProcera prosthetics are produced from biocompatible acrylic, alumina, zirconia, IPS e.max®, titanium and cobalt chromium – for optimal esthetics,strength and fit.

Prosthetic screwWe offer a comprehensive range of screw- and cement-retained solutions, to suit all patient needs.

Implant designOur implant portfolio includes a variety of body shapes, connections and a proprietary implant surface – for optimal treatment flexibility, osseointegration and soft tissue health.

AbutmentWe provide a full range of CAD/CAM-basedindividualized and standard temporary and final abutments.

Dental implantWe offer an extensive assortment of dental implants for all indications, bone types and surgical protocols, to satisfy every user expe-rience level and selected treatment concept.

4 Nobel Biocare Annual Report 2011– Our strategy

As a publicly listed company, a key goal is to create sustainable and long-term shareholder value. We envision a virtuous cycle of building market share – thus growing revenue profitably. We aim to achieve our goals by creating competitive advantage through three strategic value drivers:

Our strategy.

Customer care We strive to offer our customers an outstanding experience and clear value in all our interactions. In addition to offering industry-leading products and solutions, we support our customers in generating patient understanding, patient flow and treatment acceptance, as well as in growing their practices. We also provide and shape dental knowledge and dental professional education – to support them in their professional development.

Organizational excellence To provide our customers with outstanding customer service and experience, we continually improve our organi-zational effectiveness and efficiency. We strive to run the best operations in the industry, from order to delivery. We want our work and sales force to add value to our customers, in all interactions. And we want to drive inno-vation through our skills and resources. These aims are underpinned by our sustainable, ethical and responsible approach to everything we do.

Innovation Our research and development efforts always have our customers and their patients in mind. As such, we follow three design principles for our products and solutions: They must be patient-focused, clinically relevant and evidence-based. By this we mean that our products must meet the needs of patients, must provide excellent solutions for their indications, and must be rigorously tested and qualified. We currently have over 50 projects to deliver against patient and customer needs. Our pipeline is designed around several clear patient benefits. We want to offer patients solutions that are minimally invasive, last a lifetime, fit their individual needs and anatomy, look good, work well, and are affordable. Our pipeline is also designed around clear customer benefits, for easy-to-use and versatile solutions, state-of-the-art digital treatment planning, strong osseointegrative and soft tissue management qualities and leading solutions that meet the broad needs of edentulous patients.

5Nobel Biocare Annual Report 2011– Our strategy

2011 summary and key figures.

2011 posed challenges and brought changes to Nobel Biocare – and we have not yet achieved what we are capable of. Therefore we have realigned our business strategy with the aim of enhancing innovation, efficiency and customer care, and are energetically building on our strengths. Our effort is focused on creating shareholder value through profitable, sustainable and long-term revenue growth.

Organizational highlights 2011

Shaping a customer-focused organi zation: Creation of new Global Research, Products and Development department to manage products from idea to launch. Creation of new Customer and Sales Development department to add val- ue to the customer experience.

Value-adding workforce: Intro-duction of various programs and initiatives to increase workforce skill, effectiveness and customer service.

Product highlights 2011

NobelActive 3.0 NobelReplace Conical Connection NobelReplace Platform Shift NobelClinician Mac OS® X & Windows®

NobelProcera individualized abutmentsNobelProcera overdenture bars

Key financials overview in EUR million

2011 2010

Revenue 569.2 576.6

Gross profit 432.5 448.0

Profit from operations (EBIT) 72.1 84.9

Profit attributable to owners of Nobel Biocare 39.8 45.7

Cash and cash equivalents 1 107.5 239.5

Basic earnings per share 2 (EUR) 0.32 0.37

Dividend per share 2, 3 (CHF) 0.15 0.35

Share price at year-end 2 (CHF) 10.92 17.63

→ more information on page 34

Revenues 2011 (EUR million, % of total revenues)Revenues 2011 (EUR million, % of total revenues)

EMEA 41% 3

North America 35% 4

APAC 22% 2

LatAm/RoW 2% 1

1. EUR million 9.0 2. EUR million 123.6 3. EUR million 236.5 4. EUR million 200.1

1. Including bank overdraft2. Figures for 2008 adjusted to reflect the 2008 share split3. Proposed dividend for 2011

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Letter from the Chairman of the Board.

Dear Shareholder,

The healthcare industry faced many challenges in 2011 as the dynamics of the market and demand for its products and services changed around the world. The global economy remained fragile.

Although Europe is confronted with the risk of recession, Asia’s growth has proved surpris ingly impervious to headwinds from the West. Because of its extensive depen-dence on exports, however, Asia’s market strength may not be sustainable in the short term.

If the problems of European Monetary Union are not properly addressed this year, the economic and financial consequences will not only be severe for Europe, but also for much of the rest of the world. As economic uncertainty becomes more widespread in the developing world, potential patients in these countries may delay investment in dental treatment as they anticipate cuts in their disposable income.

To cope with uncertainties like these, Nobel Biocare is doing its utmost not only to defend and increase its market share, but also to expand its sales.

Today, Nobel Biocare is not where we want it to be. We have not yet completed the turnaround we consider essential, but under new executive leadership we are well under-way. The Board of Directors is convinced that the team we have assembled and the course we have chosen for Nobel Biocare will bring us back to the number one position, as this is where this company belongs.

Our new CEO, Richard Laube, joined the company in April 2011. We are pleased that this change at the top of our executive team took place smoothly. The Board is convinced that Richard Laube is the leader the company needs now, as we refocus our business on cus tomers who have a strong relationship with our brands and a professional affinity for our business philosophy. The extensive experience he brings to Nobel Biocare from previ-ous positions qualifies him to further develop and market our strong portfolio effectively.

Together with his management team, Richard has realigned the company’s business strategy to build future growth on what we do best: providing products and services for implant-based tooth restorations. This change in course is fully endorsed by the Board of Directors.

Nobel Biocare is an excellent company with the strongest product portfolio in the industry. Equally important, the company is supported by a loyal, well-positioned customer base, composed in large part of well-regarded opinion leaders. We expect Richard Laube and his team to build on these assets, delivering step-by-step improvements towards sustainable growth for the future, and thereby reinstating Nobel Biocare as the undisputed leader of our industry.

Nobel Biocare Annual Report 2011– Letter from the Chairman of the Board6

7Nobel Biocare Annual Report 2011– Letter from the Chairman of the Board

Rolf WatterChairman of the Board ad interim

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We will strengthen our position in the well-established markets we have built up over the years, while expanding new business in the emerging markets whenever we see attrac-tive growth potential.

Given the enormous need globally for the rehabilitative solutions we provide, and the demographic trends that are feeding this need, the potential market for our products continues to grow, even as general economic forecasts remain uncertain.

In everything we do, the Board of Directors strives to generate long-term, sustainable value for Nobel Biocare’s stakeholders. For patients, we are determined to provide the best options for restoring their missing teeth and thereby their quality of life. For cus-tomers, we will supply the best products, solutions and service to help them grow profes-sionally and exceed the high expectations of their patients. For employees, we will pro-vide an attractive, secure and rewarding working environment. For you, our shareholder, we will seek an appealing return on your investment.

Looking ahead to the Annual General Meeting on March 29, 2012, the Board of Directors intends to further strengthen its skills by adding three highly competent professionals in the fields of medical technology, dental medicine, information technology and manufactur-ing. We thus propose that you elect Michel Orsinger, Prof. Dr. Georg Watzek and Juha Räisänen to the Board of Directors.

Michel Orsinger, President & CEO of Synthes, brings with him a strong record in the con sumer goods and healthcare industries. He has led Synthes very successfully over the years and has an excellent reputation in the medical technology industry. After his election to the Board, he is to be named Chairman of the Board of Nobel Biocare. Prof. Dr. Georg Watzek, head of the Oral Surgery Department at the Vienna University of Medicine, is a renowned expert in the field of dental medicine and implantology. He is co-publisher of one of the most important journals of dental medicine, a member of several leading dental associations, and a recognized lecturer at dental conventions throughout the world. He will supplement the Board through his in-depth knowledge of the customer dimension of Nobel Biocare’s business. Juha Räisänen, Senior Vice President Manufacturing and Supply Chain at Kone Corporation, brings broad knowledge and a strong record in information technology and supply chain management, as well as the lean manufacturing and Six Sigma processes. His exper tise will help the company to further increase the effective-ness of its production value chain.

The excellent industry-specific and management competence of Michel Orsinger, Prof. Dr. Georg Watzek and Juha Räisänen will contribute significantly to the imple-mentation and achievement of our strategic goals. Their appointment represents both a crucial reinforcement of our Board of Directors and an important milestone on our path toward delivering sustainable growth at Nobel Biocare.

Nobel Biocare Annual Report 2011– Letter from the Chairman of the Board

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After six and seven years of service on the Board of Directors, Stig Eriksson and Robert Lilja will not stand for reelection. The Board would like to take this occasion to thank them sin cerely for their valuable contributions and strong dedication to Nobel Biocare.

For the 2011 financial year, the Board of Directors proposes a dividend distribution in the amount of CHF 0.15 per share. This will again be done in a way that will not incur withhold ing tax. Provided that this payout is approved at the annual shareholder meeting, the payout date will be April 5, 2012.

This year, for the first time, Nobel Biocare offers you an environmentally friendly, fast and simple way to communicate and participate in the annual shareholder meeting. You can now vote online and receive shareholder information by email. You will find details in your shareholder meeting invitation package and on our website.

Finally, on behalf of both the Board of Directors and the Executive Committee, I would like to thank you for your loyalty and the trust you place in our company. My thanks go also to our employees for the extraordinary effort and commitment they have shown in 2011. We all share a common interest in making Nobel Biocare the leading company in our industry. We’ll settle for nothing less.

Sincerely,

Rolf WatterChairman of the Board of Directors

Nobel Biocare Annual Report 2011– Letter from the Chairman of the Board

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Letter from the CEO.

Dear Shareholder,

Nobel Biocare is a special company. Over the past 40 years, we have established a tradi-tion of great accomplishments. We are the pioneer and have become the leader of our industry. We have repeatedly introduced innovations, setting the standards in the field of implant dentistry. We are widely respected for our achievements and expertise. And today, more than ever, we understand that the foundation of our success has been a deep passion to improve the lives of patients.

This Annual Report emphasizes this element of our success, and we want you, our share-holder, to understand that we are renewing our efforts to serve patients as never before. This mission – in fact this cause – is again at the heart of our new strategy. Our success as a company depends on our ability to cooperate with dental professionals, our custom-ers, to meet the needs of their patients with improved and superior treatment solutions.

Since April 2011, I have had the privilege to lead this special company. It is an exciting professional challenge, but our performance shows there is still much need for change and improvement.

Our strategy is now well-defined and it will require unwavering commitment. By looking objectively at the past, we can learn how to drive business improvements that lead to sustainable growth fuelled by superior patient treatments and increased patient flow. Our strategic objective is clear: to re-establish Nobel Biocare as the leader of our industry. Our strategy is anchored to our mission of serving patients, and supported by three pillars: innovation, customer care and our people. We are making the required changes as quickly as possible and we are renewing the very foundation of our business. There are no quick fixes – but our team is committed and determined, and we have clear evidence that we can succeed.

Innovation in serving patients is key. In November 2011, we announced the formation of a new Global Research, Products and Development organization. To be more productive in innovation, we have tightly integrated several departments to form a coherent and seam-less pipeline and innovation management process. This extends from the initial idea of serving patients to excellence in execution when launching new and superior products. The name of our innovation program is “Designing for Life” – which captures our ambition of improving the quality of patients’ lives and our products and treatments so they ideally last for the patients’ whole lives. We concentrate on three innovation principles: our solutions must have a clear patient focus, clinical relevance, and be evidence-based. We currently have over 50 established projects that are grouped into six innovation themes. We have increased our cooperation with the world’s leading scientists and practitioners to shape our program. Re-engineering an innovation program is no easy matter and it will not give short-term business results. But it is the key to extending our product superiority,

Nobel Biocare Annual Report 2011– Letter from the CEO

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future value creation and sustainable growth. It is returning to the foundation of what made Nobel Biocare the leader in our industry.

Customer care and helping customers treat more patients better is our second strategic pillar. Here, too, we have made important changes. In August 2011, we announced the formation of a Global Sales and Customer Development team whose mission is to trans-form our country commercial organizations from “merely” selling products to adding significant value for customers. The team has begun to reapply lessons, programs and successes from countries where we are building market share – USA, Italy, Belgium and China, to name a few – to all markets we serve. In 2011, we identified a number of activities where we can materially improve our customer relationships and their experi-

Nobel Biocare Annual Report 2011– Letter from the CEO

Richard T. LaubeChief Executive Officer

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ence with Nobel Biocare. We have begun to implement specific customer development plans, including training and education, study clubs, team efficiency programs – all designed to improve our customers’ practices and add value for them and their patients.

While results will not come immediately, we now know from experience that when these changes are put into place, our business will grow along with those of our customers’.

Nobel Biocare people are dedicated, bright and capable. They form our third pillar. We are developing our 2’472 talented and dedicated employees to perform both as individuals and within highly effective teams. We have started the change process by implementing indi-vidual performance and development plans. We have conducted new leadership programs and put into place a number of new human resource practices. This is a cultural change and will require people not only to deliver business objectives, but also to train and develop subordinates and all team members to deliver superior performance. To change the perfor-mance culture of Nobel Biocare, we have to start at the top with me and the leadership team. This is the surest way to deliver our first two pillars of innovation and customer care. Our team is fully committed, and change is happening quickly.

2011 will, unfortunately, be the fourth year of revenue decline, and our EBIT margin has also declined materially since 2007. This is clearly not acceptable performance and there is little I can write to convince you otherwise. I, too, am a shareholder. In May 2011, I bought 110’000 Nobel Biocare shares at CHF 18.61. I am the first among us to be dissatisfied with the performance. I see my investment as a long-term position, and we will do all we can to deliver healthy and sustainable revenue and profit growth. All great businesses have had periods where they have underperformed and Nobel Biocare is no exception. All the condi-tions are coming into place for us to perform again and re-emerge stronger than ever.

This confidence stems from analyzing our performance in 2011, where we see a year of split results. The first half experienced revenue declines of 1.4%, when revenue growth had been expected. The second half revenue was flat and stood at 0.0% versus a year ago. Importantly, we delivered on guidance for the first time in many years. Our EBIT delivery was also in line with guidance, indicating we understand our performance can grow from here.

Geographically and across product lines, the Nobel Biocare business performed unevenly, and there are many critical lessons we are learning and applying.

One key lesson is that countries that grew, such as the USA and China, are clearly further developed in adding value to customers. Also when we review several of our European countries, we see some countries that are building market share despite a decline in the overall market. Our challenge in 2012 is to learn from those markets that perform well, and

Nobel Biocare Annual Report 2011– Letter from the CEO

13

systematically and broadly add value to our customers in all countries where we compete. This ability to reapply lessons learned will help us grow market share broadly again.

When analyzing our performance and learning along product lines, we have confirmation that when innovation is executed well, we grow rapidly. NobelActive has experienced 16 quarters of double-digit growth since its launch in 2007. Our launches in the fourth quar-ter of 2011, of NobelActive 3.0, NobelReplace Conical Connection and NobelReplace Platform Shift, are off to good early starts. These launches have been well executed and provide important lessons we can repeat successfully in the future. When we review our NobelProcera CAD/CAM business results, we see strong double-digit growth when we innovate effectively according to our strength of implant-based prosthetic components. We are seeing excellent growth in individualized abutments and complex components such as overdenture bars and implant bridges. This trend is, however, somewhat diluted by declines in copings and small-unit bridges where market pricing has deteriorated and chair-side milling is becoming more common. Despite challenges with some of our NobelProcera products, we are very well positioned in the rapidly changing field of dentistry with new planning tools and CAD/CAM technologies. We are succeeding in the right areas for future growth through innovation.

In closing, I wish to thank our team of 2’472 capable, bright and very engaged employees for their tireless effort during a difficult phase of our business. I wish to assure you, our shareholder, that we are keenly aware of the trust and expectations you place in us, and we look forward to improved results in the future to further earn that trust.

Sincerely,

Richard LaubeChief Executive Officer

Nobel Biocare Annual Report 2011– Letter from the CEO

14 Nobel Biocare Annual Report 2011– Financial performance

Financial performance.

Nobel Biocare generated slightly lower revenue in 2011, mainly due to a less favorable development in Europe and the tsunami in Japan. Operating profit was impacted by exceptional expenses related to Japan as well as to the CEO change. Profitability ex cluding currency impacts remained at the prior-year level, reflecting high cost discipline while maintaining investments in customer development programs and product inno vation projects.

In 2011, Nobel Biocare generated revenue of EUR 569.2 million, 1.3 percent below 2010. At constant exchange rates (CER), the decrease versus prior year was 0.7 percent. Operating profit (EBIT) was EUR 72.1 million, 15.1 percent less than in 2010, and the EBIT margin stood at 12.7 percent (2010: 14.7 percent). Excluding currency impact and exceptional expenses the EBIT margin was 14.9 percent. Net profit was EUR 39.8 million, or 12.9 percent lower than in 2010.

Operating cash flow was EUR 93.1 million compared with EUR 97.1 million in 2010. This reflects further improvements in working capital. At the end of 2011, Nobel Biocare held a cash position of EUR 107.5 million (2010: EUR 239.5 million), the decline of which was primarily due to the convertible bond redemption in the amount of EUR 246.9 million, which was only partially refinanced.

Revenue developmentAs in 2010, growth of the dental implant market in 2011 was modest. The overall market grew at a low- to mid-single-digit percentage at CER, driven mainly by strong growth in North America. On the other hand, continued economic challenges in many European markets persisted, and growth across the entire Europe, Middle East and Africa (EMEA) region is ex-pected to be flat to low-single-digit. In Asia/Pacific (APAC), growth in various developing markets has been rapid, but the overall region was affected by the economic consequences of the Japanese natural disasters in March as well as by mod-est growth in Australia.

In 2011, Nobel Biocare generated 35 percent of its global rev-enue in North America, while 41 percent were attributable to EMEA and 22 percent to Asia/Pacific. Due to this regional exposure, as well as Nobel Biocare’s specific business mix,

sales declined by 0.7 percent (CER), which remains below overall market growth.

In EMEA, Nobel Biocare has a high share of business in various southern European countries, which were increasingly affect-ed by the continued economic challenges. In contrast, Nobel Biocare’s position in Germany, which is probably the strongest European economy, is rather small and thus did not sufficient-ly compensate for the development in other countries. Revenue for the full year in EMEA was down 5.0 percent (CER).

In North America, Nobel Biocare has made significant progress in reinforcing its competitive position. Supported by strong underlying market fundamentals, it was increasingly effective in leveraging its highly innovative treatment solutions with value-adding activities aimed at helping customers to grow their own business. Strong growth was achieved in all four quarters and resulted in a 7.6 percent (CER) increase for the year, which also reflects the improved position in the world’s largest market.

In APAC, Nobel Biocare’s overall result was affected by the aforementioned calamities in Japan, a country that accounts for almost two-thirds of the regional revenue. Regional sales declined by 5.1 percent versus 2010. Excluding Japan, growth was 7.6 percent, mainly driven by high double-digit growth in China, a market that is becoming increasingly relevant for the overall performance of the region.

Alpha-Bio Tec, which was acquired in 2008 and targets custom-ers with simpler product and solution needs mainly in emerg-ing markets, grew at a double-digit rate in 2011. Alpha-Bio Tec sales are included in the above regional sales figures.

From a product group perspective, implant systems sales grew by 1.0 percent in 2011. While implant fixtures performed bet-ter, revenue from standardized abutments declined. Sales of individualized products declined by 9.0 percent. Revenue from individualized abutments, implant bridges and overdenture bars rose significantly in 2011. However, this was unable to offset lower sales from simple copings, small-unit bridges and scanners.

Profitability: gross profit and operating profitIn 2011, the gross profit margin decreased to 76.0 percent (2010: 77.7 percent). Following the strong NobelProcera man-ufacturing capacity increase, higher depreciation levels and lower manufacturing volumes (mainly copings) are the main

15Nobel Biocare Annual Report 2011– Financial performance

Key financials overview

in EUR million 2011 Change (in %) 2010 2009 2008

Revenue 569.2 –0.7 1 576.6 581.4 619.2

Gross profit 432.5 –3.5 448.0 467.9 493.6

Profit from operations (EBIT) 72.1 –15.1 84.9 128.6 132.9

Profit before tax 55.5 –44.8 100.4 137.3 159.4

Profit attributable to owners of Nobel Biocare 39.8 –12.9 45.7 105.8 109.7

Cash and cash equivalents 2 107.5 –55.1 239.5 240.7 163.4

Shareholders’ equity 281.5 –12.0 320.0 317.7 267.6

Basic earnings per share 3 (EUR) 0.32 –12.4 0.37 0.86 0.90

Dividend per share 3, 4 (CHF) 0.15 –57.1 0.35 0.55 0.55

Share price at year-end 3 (CHF) 10.92 –38.1 17.63 34.78 21.42

reasons for this decrease. In addition, higher input prices, lower selling prices and mix effects in the implant system business led to this decline.

In view of the uncertain overall economic situation and slow market recovery, Nobel Biocare continued its disciplined cost management and lowered its underlying operating costs (at CER) by about 3 percent versus 2010. However, exceptional costs were recorded in relation to Japan and the CEO change. Even with these adverse effects and a negative currency impact, reported operating costs in 2011 were lower than in 2010.

Despite the slightly lower top line and gross margin, very dis-ciplined operating cost management helped to keep the EBIT margin, at CER and excluding exceptional costs, in line with 2010 (14.9 percent versus 14.7 percent a year ago). The EBIT margin was 12.7 percent as reported, reflecting an operating profit of EUR 72.1 million. Negative currency translation effects on the EBIT margin level were gained back in the financial result, but were offset by exceptional hedging costs from spe-cial hedging against the rapidly falling euro, which abruptly reversed course with the pegging of the Swiss franc by the Swiss National Bank.

Net profitIn 2011, net profit was EUR 39.8 million (2010: EUR 45.7 mil-lion), 12.9 percent below 2010, mainly resulting from lower

operating profit, while the combined financial result and taxes were EUR 32.3 million (2010: EUR 39.2 million). The net profit margin was 7.0 percent (2010: 7.9 percent), and reported EPS was EUR 0.32 (2010: EUR 0.37).

Cash flow development and liquidityIn 2011, Nobel Biocare generated operating cash flow of EUR 93.1 million (2010: EUR 97.1 million). As in past years, this cash flow reflects prudent cash management and further working capital reductions. Including cash effects from investments, financing and related hedging needs, free cash flow was minus EUR 94.0 million versus EUR 32.6 million in 2010. A major reason for this change was the convertible bond redemption (EUR 246.9 million) and only a partial refinancing through a 5-year straight bond and drawdown of the syndicated credit facility. As a result of these transactions and the shareholder dividend of EUR 33.0 million, the cash position was 107.5 mil-lion at the end of 2011 (2010: EUR 239.5 million).

Dividend proposalThe Board of Directors will propose to the Annual General Meeting a dividend payment of CHF 0.15 be paid for each CHF 0.40 par value registered share (2010: CHF 0.35/share). This corresponds to a payout ratio of 38 percent (previous year: 75 percent), calculated on the basis of net profit. The intention is to pay this dividend to shareholders in a tax-advantaged form through the reduction of additional paid-in capital.

1 In local currencies2 Including bank overdraft3 Figures for 2008 adjusted to reflect the 2008 share split4 Proposed dividend for 2011

16 Nobel Biocare Annual Report 2011– Financial performance

Development of key financial figures.

CO2 per produced unit is calculated as a combination of electricity, paper and water consumption based on Elmix Sweden & USA (electricity conversion factors: Sweden 110 g; USA 800 g CO2 / kWh).

Revenue growth by region (2011 at CER)

–5.1

–5.0

7.6

–50 0 50

Asia/Pacific

North America

EMEA

Latin America/RoW 1.6

Revenue growth at CER (%)

–6.4

–0.7

–4.2

–7.7

–20 0 20

2011

2010

2009

2008

Operating (EBIT) margin (%)

14.7

12.7

21.5

22.1

0 15 30

2011

2010

2009

2008

Gross margin (%)

77.7

76.0

79.7

80.5

0 40 80

2011

2010

2009

2008

Employees worldwide

2433

2472

2541

2242

0 1’000 2’000

2011

2010

2009

2008

Personnel costs per employee (EUR ’000)

80.1

82.9

69.9

72.1

0 50 100

2011

2010

2009

2008

Return on average equity (%)

14.2

14.0

41.6

35.5

0 25 50

2011

2010

2009

2008

Cash flow from operations (EUR mn)

97.1

93.1

169.0

177.8

0 80 160

2011

2010

2009

2008

CO2 (kg) per produced unit 2011

0.66

1.02

0.62

0.80

0 0.4 0.8

2011

2010

2009

2008

Business overview.

Markets and strategy 18 Patient care 24Our customers 26Innovation 30– Products and solutions 30– Research and development 36Organizational excellence 42– Operations 42 – Our people 46– Sustainability 50

18 Nobel Biocare Annual Report 2011– Markets and strategy

growth. Market trends are to some extent countervailing a global economic downturn whose effects continue to be felt, particularly in Europe. For 2012, we remain cautiously optimis-tic. Our estimates for the tooth restoration market are a con-tinued low-single-digit growth in the coming year. Our objective is to return to growth in our markets as quickly as possible.

Market trends and opportunitiesClearly there are many people with gaps in their mouth or with traditional, cement-retained dentures. Neither situation is satisfactory for them – or for us. If we are to increase the penetration of dental implants, and therefore market share and revenues, we must address the concerns that are holding patients back.

Beside the low penetration, we have already discussed, and an increasing acceptance of implant-based tooth restorations, a key trend driving growth in the global market for implant-based tooth restorations is a demographic one. The world population is, broadly, ageing. That means, despite advances in dental hygiene and education, growing numbers of people are missing teeth. And, specifically, the number of patients missing all teeth in one or both jaws is increasing steadily. With our strategic goal of having a solution for every indication, and our strong portfolio of solutions for edentulous patients, this presents opportunities for Nobel Biocare.

Another trend is to maintain quality of life. As the Baby Boom-ers enter their sixth decade, they too are beginning to lose teeth. Yet they are used to having the best of everything. As so-called “golden agers”, they expect a good lifestyle, a lifestyle that allows them to be active, eat what they want, laugh and socialize with friends. Their consumer-orientated mindset will not disappear as they grow old. Instead they will continue to demand solutions from the market to meet their needs. That will extend to their teeth, both in terms of look and function.

There are regional variations, of course. In the developed in-dustrial countries – Western Europe, North America, Japan, parts of South East Asia – living standards have long enabled people to benefit from implant dentistry when they needed it. Now emerging markets, particularly the BRICs, are catching up. Furthermore, as implant treatments become more suc-cessful, their very presence in the market leads to greater acceptance among patients.

Challenges, tooWith these drivers of market expansion there are challenges too – but we recognize these and are working hard to over-

In a global market showing signs of growth and diversification, Nobel Biocare is ideally placed to exploit the demand for more and better implant-based tooth restorations. Our strategy is to provide solutions to help our customers treat every patient, and to support them at every stage of their profes-sional development.

Within the global healthcare market, the dental sector is very attractive. Implant dentistry, a segment within the dental sec-tor, offers many opportunities. Across the globe, people in-creasingly recognize the value of strong, healthy teeth. And with so many people missing teeth, for so many reasons, there are millions of potential patients who could benefit from im-plant-based tooth restorations.

An attractive global marketStudies estimate that the total addressable market across implant-based tooth restorations and CAD/CAM dentistry is between 5.5 and 6 billion euros. Within that broad picture, there is a key statistic that reflects both the challenge and the opportunity. Overall, penetration of the addressable market for dental implants stands at an estimated 10–15 percent. This leaves plenty of potential for growth in a business with attrac-tive profitability.

As a leading player in the implant-based tooth restoration mar-ket, one that offers all components to restore teeth from one source, we maintain a strong global position. In most major markets for implant-based tooth restoration, we occupy either the number one or number two position. In North America, Japan, France, and Australia, we head the table. In the EMEA region, we hold leading positions in most markets except Germany, where we are number four. We have established a strong presence in the key emerging markets, recording double-digit growth in China, Russia, and India.

We are confident about the prospects of our market, but the picture is mixed. We balance our optimistic sentiments with a pragmatic view of the global economy, which is still fragile. The cold wind of the 2008 global financial crisis blew through virtually all industries and markets, and as implant treatments are mostly paid for by patients themselves, implant dentistry was not immune to the chill. In 2009, for the first time, global implant sales slipped. Despite this, we believe the market is poised for recovery and there are already some signs of

Markets and strategy.

19Nobel Biocare Annual Report 2011– Markets and strategy

come them. Not all patients are aware of implants or see the benefit of implant treatments yet. Patient awareness and pa-tient treatment acceptance are often low. Too many patients are still afraid of the treatment as they lack proper information about dental implants. A challenge can also be the purchasing power of patients or the perceived value they see in such a treatment. And as global economic conditions get more diffi-cult, as wages and savings are all hit by tougher economic conditions, consumers are looking more carefully than ever before at the way they spend their money. In most markets, implants are a discretionary expenditure, with little or no sup-port from health insurers.

Not only patient awareness and acceptance, but also clinician awareness and capabilities can pose a challenge. Implant den-tistry is not necessarily a standard part of the curriculum for dentists in all markets, so there are varying levels of clinician awareness and ability. Most implant education takes place at the post-graduate level. This means that there are still many cases where conventional treatments are used because im-plant-based restorations aren’t offered by dentists or request-ed by patients.

This presents an opportunity for us, as a manufacturer, to offer dental professional education and support. We work with den-tal professionals at different stages of their careers. At the start of the scale, you may have an experienced general den-tist who is focusing on restoring dental implants and is now placing her first implant, perhaps a single posterior tooth, after having undertaken the necessary training. At the other end of the scale you have a maxillofacial reconstructive surgeon re-building patients’ jaws, perhaps after severe trauma. He will be using the full range of techniques including placing implants in the zygoma (cheekbone).

The sheer pace of change in new and more advanced solu-tions, where Nobel Biocare holds a leading position, demands constant innovation. And we must also work to comply with stringent local regulations – implants, after all, are part of an increasingly regulated industry. And the landscape is com-petitive – so although we hold dominant market positions in the segments where we operate, there is no room for com-placency. Our investment in innovations results in a constant flow of new solutions. But it also feeds down to imitations from low-cost competitors, unsupported by a customer service infrastructure or practitioner training, science-based research or focus on quality and longevity.

>€ 5bn~10–15%

Total addressed market size 2011*

→ Low implant penetration → Demographics → Maintaining quality of life

→ Customer care and customer experience → Innovation → Our work force

→ Patient and treatment acceptance → Level of dental professional education → Regional differences

Market drivers

Our strategic pillars

Market challenges

Implant penetration

* Nobel Biocare estimates

↑ of the addressable market

20 Nobel Biocare Annual Report 2011– Markets and strategy

We are also aware that we cannot impose a “one-size-fits-all” model across all the markets in which we operate. There are noticeable differences in individual regional markets, and we must tailor our approach accordingly. For example, there are differences in the financial means of patients, insurance coverage of dental treatments, patient awareness, implant penetration and professional skills. Also, in the most developed markets we see a trend to large centers and practices offering a one-stop-shop dental service, from fillings and extractions to implant-based tooth restorations. Elsewhere, we see so-called “referral markets” where general dental practitioners and restorative dentists refer their patients to implant special-ists. All these differences require a tailored approach for each market.

Our strategy As with any healthcare problem, missing teeth do not have a single cause. We can lose a tooth, or several teeth, for many reasons. At the individual level, these are difficult and distress-ing experiences. Yet, each can be remedied with a solution from Nobel Biocare. Our customers restore not only teeth, but also quality of life.

Our strategy is to meet the needs of patients and dental professionals by offering the best solutions for implant-based tooth restoration. Implant systems are at the core of this strat-egy. CAD/CAM prosthetics, digital solutions and guided sur-gery – all the other components needed for dental restorations – extend our business. We offer basic components, like most competitors, and highly advanced, integrated and complete treatment solutions. By pursuing a philosophy of continuous innovation, we stay at the forefront of the market, constantly striving to offer better solutions and driving dentistry into the future. We rely on four strategic imperatives to drive our strategy – patient focus, customer care, innovation and operational excellence.

Patient focusA patient considering implant treatment has a number of con-cerns. How will my new teeth work? Will they hurt? Are they safe? Can I afford them? Will they look natural?

Thanks to advances in implant-based restorations, the patient can be reassured on all these counts. For patients with Nobel Biocare implants and prosthetics, their restorations are both highly effective and give them a natural-looking smile. The range of materials, implant systems and prosthetic solutions on offer means there truly is a solution for everyone.

We always consider patients’ needs: that means designing products and treatment solutions that support minimally inva-sive procedures with less pain and discomfort for the patient and shorter recovery times. It also means developing proce-dures that require less chair time, and provide new teeth that work and look just like natural teeth. By providing solutions at various price points, our customers can offer a range of afford-able options to their patients, meeting their financial needs.

Finally, we believe that teeth are a long-term investment, not a quick fix. We can report excellent longevity of all our implant-based solutions. Each implant and prosthetic compo-nent is milled from the highest quality materials, and engi-neered to last. Our implant success rate stands at >97.5% survival after five years. Also, we offer a lifetime guarantee on our implants and many years on our prosthetics. This we can do because our solutions are developed through a scientifi-cally rigorous R&D program involving clinical trials and long-term follow-up studies. So we can offer peace of mind to pa-tients and assure them that Nobel Biocare tooth restorations are truly safe and reliable.

Supporting our customersOur customers are dental professionals. They occupy a broad range of specialties, from restorative dentists, to oral surgeons, dental laboratories and maxillofacial surgeons. Their needs are our starting point. Serving our customers in the best possible way and exceeding their expectations is what we strive for.

We offer our customers not only the broadest range of clini-cally proven products, solutions and treatment concepts. We also offer them the entire range of products needed to replace missing teeth, all from one source, so they can provide effec-tive, safe and reliable treatments to their patients.

We believe that to stay at the forefront of our industry, we must also set ourselves apart from our competitors by offering our customers the best quality; treatment concepts that are very easy to use; effective treatments in terms of chair time; excel-lent functionality; and natural-looking esthetic outcomes.

As part of our service, we also support our customers through-out their careers. We help them advance their skills through our world-class training and education programs. And we sup-port them in growing their business and treating more patients through the various services we offer. Our strategic objective with our customers is long-term partnership offering them the best service, and the best value.

21Nobel Biocare Annual Report 2011– Markets and strategy

growing market Demand for dental implant procedures is growing globally. This growth is driven by various factors, including patient needs. Today’s patients are more aware of the possibilities offered by dental implants and they desire quality of life. What’s more, dental implants are, in the long-term, more cost-effective than conventional treatments. Increasing num-bers of clinicians performing implant surgeries and constant technology innova-tions are also strong drivers of growth.

22 Nobel Biocare Annual Report 2011– Markets and strategy

InnovationWe believe that innovation is the key to retaining a leading position within our fast-moving industry. We innovate to add value. We always keep the customer and patient perspective in mind – our innovations are designed to improve the patient experience and help our customers treat their patients more safely, more effectively and with a better outcome.

Nobel Biocare has a rich history of innovation that has con-stantly advanced the dental industry – from P.-I. Brånemark’s first dental implants to the introduction of CAD/CAM in den-tistry. We continue to push the boundaries of our industry, and also to enhance existing solutions. Our focus is on improving the osseointegration of implants in bone, achieving even bet-ter soft tissue results, offering entire treatment concepts, enabling more minimally invasive treatments and increasing the effectiveness of treatments.

Operational excellenceIn recent years, we have designed and implemented a series of projects that are transforming our operations at every level. Individually and collectively they have four goals: to make us more customer-centric so we can deliver better value to our customers, to become more efficient, to ensure the highest quality of products and services, and to reduce costs.

Our aim is operational excellence in all our business process-es: this includes the entire value chain from how we work with customers, to our production, logistics and procurement func-tions and supporting functions in the organization. The result is both a competitive edge in the market and further impetus to sustainable growth and profitability.

United in our strategyEvery business unit, every department, every member of staff plays a key role in executing our strategy. As you read further into this report, you will see how research and development, products and solutions, operations, marketing, sales, human resources and sustainability activities contribute to a company that is well-positioned to deliver on its customer commitments – and to pursue its long-term strategy of sustainable growth.

In the following chapters, you can read about our achievements this reporting period and our future plans toward implementing our strategy and achieving our goals.

Our solutions will focus on patients’ needs, such as treatment safety, less painful procedures, and teeth that work, last and look good. We will make implant-based tooth res-torations accessible to more people. And we will offer treatments at different price points so patients have more choice.

We will focus on serving our customers better and addressing their primary needs – superior products and solutions, improving patient knowledge about implant-based tooth restorations, professional growth opportunities through dental professional education, and practice improvements to increase growth.

We will continue building a commercially relevant pipeline. We will provide solutions that cater for edentulous indications, support minimally invasive procedures, immediate loading and soft and hard tissue health, are easy to use, look natural, work well and last a lifetime.

We will continue to improve our organization with the goal of superior quality in all we do. We will make our value chain more effective from the moment we receive an order to the moment we deliver the product. And we will add value for our customers by developing the best workforce in the industry, automating our business, and placing a strong focus on sustainable business practices with long-term shareholder value.

We launched several superior products that support implant stability and improved esthetic outcomes. We also launched a new generation of diagnostic and treatment planning software, facilitating treatments that are less invasive and more effective.

We strengthened our focus on customers and their needs. We created a new Sales and Customer Development organization whose goal is to align our market activities and support our customers as they develop their businesses. Accordingly we launched programs and services to support our customers generate patient flow and also to increase patients’ treatment acceptance.

In 2011, we further complemented our leading portfolio of products, solutions and treatment concepts by introducing three new implants, new prosthetic materials and the sole diagnostic and treatment planning software for both Windows® and Mac OS® X.

In 2011, we refined our company strategy, focusing on implant-retained tooth restorations. We aligned our organization more toward our customers and their needs, starting by deploying a set of value-adding programs and services. We are creating a leaner and more flexible manufacturing set-up; and we have invested in emerging markets.

23Nobel Biocare Annual Report 2011– Markets and strategy

Customer care

Innovation

Organizational excellence

Patient focus

2011 summary Future focus

Strategy outlook.

24 Nobel Biocare Annual Report 2011– Patient care

can read several patients’ stories in their own words that show just how varied their experiences of quality of life are.

Many patients still don’t receive treatmentWith dental implants now well established as the standard of care for treatment of missing teeth in many global markets, we have to ask – and answer – the critical question: why do so many patients still not benefit from dental implants? There are a few causes of doubt for patients considering treatment.

The first is awareness. In many markets, both developed and developing, there is still a lack of publicity about the exis-tence and benefits of implant-based tooth restoration as a treatment option. Also the consequences of not treating tooth loss, such as bone loss, are insufficiently known or understood. Patients are often unaware that if they don’t replace a missing tooth, this can lead to bone loss, the loss of other teeth, difficulties in eating and speaking and, ultimately, changes in facial appearance. The impact on an individual’s quality of life can be severe.

A second reason for not treating a missing tooth is treatment acceptance. Even when patients are aware of the benefits of implant-based restorations, they are often hesitant to accept them as a viable treatment. This is often due to anxiety and also not knowing enough about the treatment. Patients might be worried about long and painful treatments and discomfort. They may also be anxious about whether their new teeth will look natural and how well they will work.

Then there is the question of cost. Implant-based tooth re storations are not cheap. Yet when compared to a lifetime of purchasing dental adhesives and cleaners, and possibly pay-ing for new dentures when old ones wear out or no longer fit, the cost looks much more attractive as an investment. Nor are components the largest element of the overall cost of treat-ment – they only account for around 20%. The biggest cost-driver remains chair time at the dentist’s office. Patients in most markets still pay personally for most treatments, as health insurers usually do not cover implant-based treat-ments. Finally, there is the question of availability. A patient might be willing to pay for and undergo treatment, but cannot find access to dental surgeons who are qualified to carry out the surgery.

Offering solutions with a strong focus on patient needs At Nobel Biocare, we all share the same vision: to ensure that everyone who wants new, implant-retained teeth gets them.

As the pioneer in implant-based dental care, we are driven by the needs of patients to regain their quality of life. We develop new and better products and solutions so our customers can restore their patients’ teeth, no matter what they need.

Missing teeth do not have a single cause. Nor are they repre-sented by a single indication. One patient might be young and fit but through an accident has lost their front teeth. Another might be in middle age, living comfortably, yet through a genetic predisposition to gum disease has had to have sev-eral back teeth removed by their dentist. Still another has neglected their oral hygiene and now has no teeth at all in their lower jaw. All these stories are typical and repeated millions of times over around the world. As individual as the problems are, such patients can be helped. Our products and solutions allow dental professionals to provide each patient with a personalized treatment plan.

Missing teeth reduce quality of lifeAlthough global statistics are hard to assemble, there are num-bers revealing the scale of this health problem. Studies have shown that in the USA, 69% of 35–44 year-old adults have lost at least one tooth. By 74, 26% of adults have lost all their teeth1. The proportion of 65–74 year-olds with no teeth in 21 European countries varied from 12.8% in Italy to 69.6% in Iceland. And in five countries, more than 50% of the population aged 65–74 years was edentulous2.

Historically, missing teeth were seen as an inevitable conse-quence of ageing, or accident, but today’s patients have higher expectations. As soon as they lose a single tooth, let alone several or all of their teeth, they can experience a range of negative symptoms, from difficulties eating and speaking to social embarrassment and lack of self-confidence. Some pa-tients’ facial structures even change due to bone loss. So the desire to replace missing teeth has a strong and compelling motivation: to regain quality of life.

Of course, “quality of life” is hard to define. So much depends on the individual experiences of patients. For some it may be the ability to go out for meals with friends, family and col-leagues without anxiety. For others it is freedom from the discomfort caused by cement-retained dentures. It may be the simple act of smiling without a hand covering the mouth. To sum it up, quality of life is about self-esteem, general well-being, hobbies, friends. At the beginning of this report, you

Patient care.

25Nobel Biocare Annual Report 2011– Patient care

We also maintain a strong focus on patients when developing and designing new products and solutions. The most effective response to their needs is our broad portfolio of products and solutions.

We design every element of our products, from screw threads to connections, to minimize risk and maximize patient safety and comfort. Our solutions are built to last. Our products are designed to treat all indications, from a single missing tooth to a fully edentulous jaw. From a missing incisor where looks are paramount to a missing molar where function is key. From implant stability to soft tissue management, we provide everything that is crucial to a successful treatment outcome. We sum it up in the phrase, “solutions for all indications”. Our customers – restorative dentists, oral surgeons and den-tal technicians – can choose from a wide range of implant bodies, connections, abutments, prosthetics, specialist tools, materials, treatment concepts and CAD/CAM equipment to prescribe and deliver the right treatment for every single one of their patients.

To help improve treatment safety, comfort and outcome, we have developed a number of innovations that make treatments less invasive by allowing for flapless surgery, thereby reducing pain and discomfort for the patient. And we offer advanced diagnostic, treatment planning and guided surgery tools that help reduce chair time and also the number of visits to the dentist for each treatment. This because the dentist can diag-nose and plan the treatment without the patient being in the chair. Our immediate placement treatment procedure allows implants to be placed at a very early stage, restoring them with a temporary prosthetic solution. The patient can often leave the practice with a working tooth the same day.

But patients are also interested in functional, natural-looking and long-lasting teeth. This is our second focus. We work tirelessly to develop products that last for a lifetime and look and feel natural. Today, several million people are living with Nobel Biocare implants in their mouths that were placed there years ago.

Finally, it is also our aim to make our products and solutions available globally. We service our customers around the world through our direct subsidiaries and distributors. And in the unlikely case of an emergency or problem with our solutions, patients can find support around the world. We provide long-term support for every implant system we have ever offered, offering peace of mind to patients, and their dentists.

← of 35–44- year-olds have

lost at least one tooth

26%← of 74-

year-olds have lost all teeth

69%

1 The American Association of Oral and Maxillofacial Surgeons (AAOMS) http://www.aaoms.org/dental_implants.php

2 The World Health Organization (WHO)

http://whqlibdoc.who.int/bulletin/1998/Vol76-No4/bulletin_1998_76(4)_413-417.pdf 3 According to a study by the AAOMS

Many people suffer from reduced quality of life3

What patients want

What we offer

→ Treatments that take less time, cost less and are less painful → Teeth that feel good, work well, look great and last a lifetime

→ Large choice of treatment solutions to service every patient → Effective and efficient treatment procedures that are often minimally invasive → Lifetime warranty on implants and global patient support

26 Nobel Biocare Annual Report 2011– Our customers

Our customers are a diverse group of dental professionals, spread across the globe. They range from restorative dentists and periodon-tists to oral surgeons, maxillofacial surgeons and dental laboratories. Some are working in private practice, others in large dental clinics or universities; some are nearing the ends of their careers, others are only just embarking upon them.

We believe it is important to manage all these relation ships professionally and transparently. We consider our customers’ needs and views when developing our products and services. Accordingly we strive to add value for our customers through activities based around their patients, products, practice and profession.

Each of our customers has a unique set of needs to help them excel in their chosen professions. Their needs are our starting point. We focus on building strategic long-term partnerships with these dental professionals with the goal of serving patients safely and effectively. Working closely with our cus-tomers helps us gain a broader overview of customer and patient needs with a focus on implant-based tooth restorations. As a result, we can offer them the best range of products, solutions and services. Our aim is to exceed their expectations with the products and solutions we offer them and the way in which we do business. This approach aligns with our vision for personalized dental care and will improve customer serv -ice, identify additional opportunities and create efficiencies and cost savings. But it’s not enough simply to provide a range of excellent products.

At Nobel Biocare, we are committed to supporting our custom-ers along the entire implant-based value chain, and throughout the full span of their careers. All dentists want to do the best for their patients – and to develop their practice. We support our customers in both these complementary ambitions. We know dental professionals need the right skills, a sustainable level of patient flow, appropriate solutions for the indications presented by each patient, and effective service and support from us. In each of these areas, we have strategies in place to meet the needs of our customers.

Safe and effective productsInnovative, safe and effective products that provide lasting and natural-looking results are the backbone of our relationship

Our customers.

with our customers. We believe that to meet the needs of our customers, we must be able to offer them products and solu-tions that provide quality in all aspects; treatment concepts that are easy-to-use and offer clear benefits; effective treat-ments in terms of chair time; excellent functionality; and natural-looking outcomes. And we offer the most comprehen-sive portfolio of products, solutions, technologies and com-plete treatment concepts, all from one source. We provide customers with all the components needed to successfully restore a tooth, from the implant to the prosthetics. Our port-folio covers all indications from a single missing tooth to a complete dental restoration.

We place a strong focus on quality. Our products are reliable, safe and stringently tested, with long-term clinical studies monitoring their efficacy and safety over time. We use only the best materials, and invest heavily in product research and design. And when we’re happy with a new product and bring it to market, we’re so convinced of its quality that we offer it with a long-term or, in the case of implant systems, a lifetime, guarantee. This reassurance is essential to our customers. They want to be able to guarantee to their patients that the products they use are the ideal choice for the res-toration. And they also want peace of mind from the know l-edge that treating a patient is successful and without un-necessary difficulties.

We want to help our customers not only treat their patients, but also to offer them the best possible treatment outcomes and experience. We increasingly focus on providing and devel-oping treatments that offer benefits in four key areas: they support osseointegration for high initial stability; they are minimally invasive and require less chair time; they support soft tissue health for excellent esthetic outcomes; they are digitized for treatment predictability and efficiency; and, pos-sibly, they allow for immediate loading. These concepts not only improve the treatment experience for patients, they also help our customers to be more efficient and to deliver treat-ment outcomes that are more reliable.

Comprehensive training and educationPart of our role as a trusted business partner is to train dental professionals how to use our products and solutions properly. We recognize that dental professionals have different educa-tion and training needs. So we offer customers and potential customers comprehensive education programs to support them along their professional development. The majority of our training is peer-to-peer, and we enlist expert clinicians and lab technicians around the world to help us train our customers.

27Nobel Biocare Annual Report 2011– Our customers

They are supported by our own specialized training team, who have thorough knowledge of the dental industry and provide customized dental education programs for every stage of pro-fessional development.

Within any given regional market, we see dental practitioners at different stages of their professional careers. At the start of the scale, you may have a dentist who restores prosthetics on implants placed by a specialist. Then, you have a practitioner just starting out placing implants, after having undertaken the necessary training. At the other end of the scale you have a maxillofacial reconstructive surgeon rebuilding patients’ jaws, perhaps after severe trauma. He will be using the full range of techniques including placing implants in the zygoma (cheekbone).

In this reporting period, we further developed our training programs and introduced a new training and education (T&E) concept. The new concept is built around an indication-based curriculum that offers high-level continuing education programs and covers all dental professional needs. This cus-tomized educational approach addresses multiple indications, target audiences, and focus areas within esthetic and restor-ative dentistry.

The new Nobel Biocare T&E curriculum comprises four key tracks – Prosthetic, Surgical, Planning Software and Guided Surgery & Technical – that describe clear learning pathways. The concept is designed for both new and experienced den-tists and laboratories and the program is open to all dental professionals who would like to advance their skills in esthet-ic and restorative dentistry. Graduates of the new T&E pro-grams gain access to the latest information on materials, products, treatment concepts, technologies and best prac-tices in digital restorative dentistry and imaging. The new T&E concept is being rolled out worldwide in 34 countries. Cours-es are available in various languages. They are based on the latest dental knowledge and provide comprehensive support materials such as videos, case studies and photos. We have secured regulatory approval for all our courses.

The courses and programs are available on a dedicated T&E section of Nobel Biocare’s website, www.nobelbiocare.com. This features course programs, online registration and a wide array of related information. Nobel Biocare is also the sole dental company to offer a dedicated area within the iTunes U store. This comprises free educational content such as course lectures, language lessons, lab demonstrations and more.

Our customers are a key imperative of our strategy

Focus: building a customer-centric organization.

Supporting our customers

→ Leading products and solutions → Comprehensive and professional T&E → Practice development support → Patient awareness and treat- ment acceptance

New dental training and education curriculum

Four tracks of dental professional education describing a clear learning pathway:

20

Listening to our customers

↖ customers surveyed ↙ countries

>3’000

→ Prosthetic → Surgical → Planning software & guided surgery → Technical

28 Nobel Biocare Annual Report 2011– Our customers

Effective customer relationship managementTo gain the best understanding of the needs of our specific customer groups, we carry out comprehensive market re-search and analysis and run regular customer advisory meet-ings. In 2011, research conducted in 20 markets resulted in over 3’000 responses that provided helpful insight into our strengths and improvement opportunities. The research has shown that customers consider our comprehensive product portfolio to be one of our key strengths. Our strong portfolio and product efficacy are key drivers for customer loyalty and retention. Another key driver of customer retention was found to be our sales force knowledge and expertise.

As a consequence, and to better serve customers’ needs, we established a new Executive Committee function: Global Sales and Customer Development. The new team will coordinate our sales programs globally and initiate and coordinate new implant training programs for all employees. They will also align best practice in working with our customers to create cus-tomer support and development programs that yield mutually beneficial partnerships.

During this reporting period, we also launched Nobel Biocare News, a tool to create dialog and share expertise with our customers. The Nobel Biocare News showcases our heritage and spirit of innovation and our competence in implant-based tooth restoration. We expect the newsletter to help us attract, retain and grow customers while increasing our visibility in the market. Nobel Biocare News has a global reach and is pub-lished quarterly.

Then there is the service and support that we offer our custom-ers to grow their practices. We provide a set of programs and tools that help dental professionals generate patient flow and improve treatment acceptance. Understanding patient needs and concerns is critical for educating the patient properly. As part of our customer relationship, we share our expertise with our customers. We help them to build their restorative network and educate patients about the benefits of implant-based tooth restorations. We started to roll out some best practice programs that have proved to be effective in key mar-kets. The rollout of these programs will go into 2012 and be-yond, helping to create a durable, mutually beneficial relation-ship between us and customers that will last for the whole of their careers. And finally, we have a global customer support network that exists to help and support our customers, what-ever their needs may be.

Nobel Biocare Annual Report 2011– Our customers 29

standard of care Dental implants have revolutionized the way missing teeth are treated. They have become the standard of care, because they allow missing teeth to be restored to optimum function and ap-pearance – without damaging any other teeth. Long-term clinical evidence has proven that our implant-based tooth restorations deliver the quality, safety and reliability that our customers and their patients want.

30 Nobel Biocare Annual Report 2011– Innovation

Innovation:Products and solutions.

Innovative treatment technologiesIt is our philosophy to respect and satisfy the needs of patients and clinicians alike. Our strategy and portfolio are based on these needs. Patients judge the success of the treatment outcome by how well their teeth work, how natural they look, the perceived value they get for their investment, the duration of the treatment and any discomfort it may cause. For dental professionals, the critical factors of implant and treatment success are treatment efficacy, ease of use and patient satisfaction.

Promoting osseointegration… To serve patients and clinicians in the best possible way, we create products that integrate into effective concepts for successful implant treatments. For example, we focus on enhancing osseointegration, to deliver excellent functionality and long-term implant success. Our leading surface tech- nology, TiUnite, combined with special implant designs and features, delivers excellent implant stability. This is critical for long-term success. It also gives the patient tooth replace-ments that feel stable and work well – all within just a few treatment sessions.

…soft-tissue health…In addition to osseointegration we concentrate our efforts on supporting and promoting soft tissue health. Healthy soft tis-sue not only has an esthetic component, it also helps prevent bacterial infection. Furthermore, soft tissue supplies blood to the bone, so it supports stable bone levels after implant sur-gery. We support soft tissue health with advanced concepts such as platform shifting – which encourages soft tissue re-growth – and our ultra-tight conical connections that prevent micro-movements of the components and thereby minimize the risk of gum irritation. A further innovation is our range of individually produced CAD/CAM-based prosthetics. Milled from biocompatible materials, they fit perfectly with the other components to support soft tissue health.

…and minimally invasive surgeryA third area of focus for us is minimally invasive treatments. We invest in developing new tools for immediate function, flapless solutions, diagnostics, treatment planning and guided surgery – all with the goal of increasing treatment safety and reducing patient discomfort.

Today, the survival rate for our implants after five years is at over 97.5%. This measure includes more demanding treatment protocols such as one-stage surgical procedures.

Every tooth is unique. So is every restoration for patients with missing teeth: every treatment requires a specific and individual solution. With our versatile range of products, solutions and treatment concepts, we meet the needs of patients and dental profession-als alike. We support effective treatments and long-lasting, natural-looking outcomes.

The well-being of the patient is key for us and for our custom-ers. We provide products and solutions for every patient, tak-ing into consideration their clinical indications and individual needs. And we support our customers in fulfilling those indi-vidual needs, as they diagnose, prescribe and treat their pa-tients. To do that, we offer a wide and versatile portfolio of implant-based dental restorations. Our products use advanced materials and are manufactured using the latest technologies to provide top quality and precision. We provide all components necessary for successful and complete tooth restorations. Our implant systems, abutments, prosthetics and treatment soft-ware are combined in effective and clinically proven treatment concepts, designed to meet the highest standards in dentistry.

The foundation for a leading portfolioNobel Biocare has a rich history of innovation in implant-based restorations. For more than 40 years, we have led the dental industry with innovative products, materials, technologies and treatment concepts. Many of our innovations have gone on to become industry standards. We have pioneered several im-plant design innovations, CAD/CAM manufacturing for pros-thetics, treatment concepts such as immediate function, digital treatment planning and guided surgery in dentistry. To be at the forefront of implant dentistry is part of our culture. We not only maintain our own global research and innovation centers around the world, we also work closely with scientists and universities to evaluate and develop new ideas.

Our company has maintained a constant flow of innovations. Importantly, they all follow a stringent evaluation process and comprehensive clinical trials. Our products are backed by clinical studies and long-term scientific evidence. This approach guarantees that our customers and their patients receive safe and proven products and solutions they can trust. Every solu-tion we develop draws on our rich knowledge of dental im-plants and prosthetics. We see our record as a pioneer in our industry as an obligation to quality.

31Nobel Biocare Annual Report 2011– Innovation

Solutions for all indicationsFrom the restoration of a single tooth or several missing teeth, to fixed and fixed-removable solutions for edentulous jaws, we offer solutions for every indication. We provide dental pro-fessionals with the choice and flexibility to treat every indica-tion in the best possible way. We offer clinicians not only a wide selection of materials, products and treatment concepts they can combine into the ideal solution, but also support the complete treatment flow from 3D diagnostics to the final pros-thetic restoration.

Our indication-based solutions range from restoring a single tooth by a crown and an implant to complete overdenture solutions. Our crowns are individually CAD-designed according to patients’ needs and CAM-milled out of the best materials such as zirconia, alumina, titanium, acrylic, cobalt chrome or lithium disilicate. When more than one tooth needs to be re-placed, a bridge is an option. All our bridges are individually designed and manufactured following a highly precise milling process. They sit on two or more implants or are cemented onto healthy existing teeth. To restore edentulous arches, we provide a full range of fixed and removable dentures. Implant-retained dentures offer clear benefits over conventional den-tures: they are more stable, comfortable and look and feel natural – so patients are better able to speak, eat and smile. Our overdenture portfolio ranges from functional and more cost-effective to esthetics-focused solutions. Every one en-sures quality, safety and long-term treatment success.

A strong and versatile implant portfolioAt Nobel Biocare, we offer a versatile range of proven implants to accommodate the preference, chosen treatment and skill level of our customers. Our portfolio includes bone- and tissue-level implants made of high-performance, exceptionally strong CP4 cold-worked titanium. This material is produced through a special process that results in a significantly increased yield, tensile and fatigue strength. Owing to its strength, the mate-rial is also perfectly suited for small-diameter implants for res-torations in areas with limited space. Titanium is today recog-nized as the best material for implants, as it integrates with bone. All our implants are also available with the leading sur-face technology TiUnite for improved osseointegration. We offer dental professionals the choice of three implant-to-abut-ment connections: the internal tri-channel connection for maximum ease of use and excellent tactile feel, the internal conical connection for balanced load distribution and tight abut-ment fit, and the external hex connection with maximum ver-satility for prosthetic restorations.

Treatment concepts – guiding principles

Product launches in 2011

NobelReplace Conical Connection NobelReplace Platform Shift NobelActive 3.0 mm NobelClinician Mac OS® X & Windows®

→ Minimally invasive → Immediate function → Prosthetic esthetics and functionality → Edentulous solutions → Soft and hard tissue health → Ease-of-use

Brånemark System – the original implant, today the most documented in the industry

NobelReplace – most widely used implant system in dentistry

NobelActive – most innovative implant system

All implants made with CP4 cold-worked titanium – for exceptional strength

Leading implant systems

Implant survival rate after five years

> 97.5%↖ including demanding treatment protocols

32 Nobel Biocare Annual Report 2011– Innovation

Our implants are designed to simulate the natural tooth root and to deliver high initial stability. We provide them in various lengths and diameters. They can be used in all bone types and clinical situations. And they are suited for all surgical protocols including immediate, early or delayed loading as well as two-stage protocols. NobelReplaceThe NobelReplace implant system is the most widely used implant system in dentistry, with several million implants sold to date. We provide the NobelReplace implant with various body types and connections for greater treatment versatility. NobelReplace comes with a textured collar, but a machined collar is also available under the sub-brand Replace Select. In 2011, we launched two additions to the NobelReplace implant system: NobelReplace Conical Connection and NobelReplace Platform Shift. They expand the restorative options for the proven NobelReplace tapered implant body.

NobelActiveNobelActive is the latest and most innovative implant system in our portfolio. An implant for advanced users, it is designed to enhance initial stability and offers unique bone-cutting and bone-condensing as well as redirection features. Although it is one of the more expensive implants we produce, its success proves that there is a demand in the market for meaningful innovation with clear benefits. NobelActive was launched in 2007 and since then, sales have grown constantly at a double-digit rate – the most successful implant launch in the industry. The fast-growing NobelActive portfolio continued its success in 2011 with ~30% growth in volume and value for the year. In 2011, it has been augmented with the exceptionally strong NobelActive 3.0 mm small-diameter implant, for safe place-ment in areas with limited space at the front of the mouth.

NobelSpeedyNobelSpeedy is an implant designed for high initial stability. It comes with a slightly tapered tip and sharp cutting blades. NobelSpeedy is particularly suited for the All-on-4 treatment concept for edentulous arches or any indication where high initial stability is required. NobelSpeedy is offered with an internal tri-channel and an external hex connection, for treat-ment flexibility.

Brånemark SystemBrånemark System is the original endosseous implant system. It is a parallel-walled implant that was originally developed by Per-Ingvar Brånemark – and today it is the most-docu- mented in the industry, with over 20 years of clinical docu-mentation. It is considered the most versatile implant system in our portfolio.

CAD/CAM-based prosthetic solutions Nobel Biocare is a pioneer in CAD/CAM dentistry and builds on long experience in the design and production of individual-ized prosthetics. More than 20 years ago, we were the first company to offer fully automated industrial production of CAD/CAM-based prosthetics. So far, more than 10 million CAD/CAM restorations have been manufactured with NobelProcera. Today, our prosthetic portfolio builds on our extensive product and clinical expertise in this field. All our implant systems are complemented with a wide and versatile assortment of pros-thetic solutions. We offer dental professionals standardized and CAD/CAM-based individual prosthetics to deliver the best final restoration of missing teeth. Our prosthetic products and solutions guar-antee function and quality and range from temporary pros-thetic components for a single tooth to fixed or removable overdenture components to restore fully edentulous arches. Our prosthetic range is the most versatile on the market and accommodates an individual solution for every indication. The products provide ease-of-use, longevity and optimal esthetic results. We offer them for all our implant systems and a num-ber of competing implant systems.

NobelProcera customized prosthetic solutions are our preci-sion-milled restorations (PMR), produced with the latest CAD/CAM technology. NobelProcera prosthetics are designed to deliver functionality, enhanced soft tissue support, precise fit and, most importantly, natural-looking esthetics. Thanks to our centralized industrial production, we deliver a precision of fit for our CAD/CAM products that is nearly impossible to achieve with conventional or chair-side production. We offer a broad choice of biocompatible prosthetic materials and products to meet the individual demands of patients and dental profes-sionals. Our offering covers the full range of materials available on the market today, from high-end esthetic materials to more cost-effective options. It includes ceramics with zirconia in four shades and alumina, titanium, non-precious metals with cobalt-chromium, temporary acrylics and lithium disilicate glass ce-ramic with IPS e.max® CAD. We back our products with an extensive 5-year warranty, reflecting our confidence.

33Nobel Biocare Annual Report 2011– Innovation

To provide patients with the best individual solution, we offer dental professionals a complete CAD/CAM system consisting of scanning, software design and advanced centralized man-ufacturing. Our scanners use unique conoscopic holography technology to capture precise 3D data. For implant bar over-dentures, we offer extremely precise in-lab scanning. For the ideal design of prosthetics, we provide easy-to-use software that comes with extensive design tools and enhanced func-tionality. To ensure our customers derive the maximum ben-efit from our CAD/CAM technology, we maintain a global network of experienced technical support specialists.

Diagnostic, treatment planning and guided surgeryDentistry is going digital. Digitization of the dental value chain is one of the key trends for the years to come. Labor-intensive, manual processes are being replaced or supplemented by CAD procedures that improve quality, predictability and treatment efficiency. New technologies allow dental professionals to deliver safer and minimally invasive treatments. Our Nobel-Guide and new NobelClinican planning and treatment tools are not only pioneering this trend but also building on our comprehensive expertise in the field of digital dentistry.

With the two concepts, we offer detailed 3D diagnostics so dental professionals can get the best view of the indication, while prosthetic-driven planning keeps the intended result in mind. With 3D treatment planning, dental professionals can plan the treatment in advance and evaluate the best treatment option without having the patient in the chair. The result is an improved outcome, reduced treatment costs, shortened treat-ment times and less treatment discomfort for the patient.

As patients seek maximum treatment comfort, this calls in-creasingly for minimally invasive treatment procedures. Guid-ed surgery is a further enabler for such treatments. Flapless surgery protocols are possible – the surgical template defines the exact position for implant placement, and clinicians can then place implants without cutting into soft tissue.

In 2011, we launched the latest generation of digital dentistry software: our multi-platform NobelClinician, the industry’s first diagnostic and treatment-planning software available for both Mac OS® X and Windows® operating systems. This soft-ware serves an increasing customer need in the dental com-munity, given that many dental professionals frequently use Apple devices in their dental practice.

34 Nobel Biocare Annual Report 2011– Innovation

2011 product highlights.

NobelReplace CC and NobelReplace PS – for beautiful final results.NobelReplace Conical Connection (CC) and NobelReplace Platform Shift (PS) are new additions to the popular NobelReplace implant system. Both combine biomechanical and prosthetic advantages. NobelReplace CC features the same internal conical connection as NobelActive to preserve marginal bone, and has integrated platform shifting to increase soft tissue volume. NobelReplace PS offers the proven, internal, tri-channel connection with tactile feedback for accurate and predictable abutment placement. It also features platform shifting to maximize soft tissue for natural-looking esthetics.

NobelClinician – diagnostic and treatment planning softwarefor Mac OS X® and Windows®.NobelClinician combines a patient’s clinical information with 3D radiographic data to create a sophisticated virtual environment in which clinicians can control every aspect of the treatment approach. Treatments are safer and more predictable. And minimally invasive surgery is possible, so patients experience less pain, swelling and shortened healing times. The Mac version serves an increasing demand from customers using Apple devices.

NobelActive 3.0 – for safe treatments in areas with limited space.NobelActive 3.0 is a small-diameter implant with exceptional strength designed specifically for areas where space is very tight. Ideal for placing single-unit maxillary lateral as well as mandibular and central incisors, it offers exceptional primary stability and maximum soft-tissue support for natural-looking teeth.

Nobel Biocare implant bars – an attractive option for implant-retained dentures. Implant bars, mounted on top of dental implants, provide a strong, stable and functional foundation for a prosthesis. In 2011, our implant bars continued to gain acceptance in the market and grew at a double-digit rate.1 Each high-precision bar is delivered polished and ready-to-use and is industrially milled from a solid block of high-grade titanium for optimum strength and stability.

35Nobel Biocare Annual Report 2011– Innovation

NobelProcera individualized abutments – superior fit and esthetics.NobelProcera offers a full range of individualized cement- and screw-retained abutments in zirconia and titanium. Using advanced production techniques, NobelProcera abutments are precision-milled and designed to connect safely and effectively to implants – both for Nobel Biocare and other major implant systems. As a result of high quality and esthetics, in 2010, NobelProcera was recognized as the leading producer of individual-ized abutments in the United States. This growth has carried over into 2011 with gains worldwide.2

All-on-4 – an efficient and effective restoration for edentulous patients.All-on-4 is a proven treatment concept for edentulous patients using only four implants to support an immediately loaded full-arch prosthesis. It offers a highly functional and good-looking solution. The treatment flow is also efficient, resulting in shorter treatment time. Nobel Biocare offers all com- ponents for the treatment, from implants to full-arch temporary and final prostheses. In 2011, All-on-4 experienced attractive growth in several key markets such as the US, Italy, UK and, increasingly, Germany.

Custom-made devices – a unique service for unique clinical situations.The unique Nobel Biocare custom-made device service solves unusual patient indications that require a special product. The products are made especially for a specific patient. We offer both custom-made surgical and prosthetic components. Nobel Biocare is the only company to offer custom-made devices in such a comprehensive way, building on 20 years of experience in this field.

Lifetime warranty – implants clinicians and patients can trust.Testifying to the superiority of our products, we have instituted a new lifetime warranty to cover all implants and prefabricated prosthetic components. We guarantee to replace, free of charge, any Nobel Biocare implant that fails to remain in the bone. We will also replace any Nobel Biocare restorative components placed on the implant. In addition, we offer a five-year warranty on NobelProcera individualized restorations – regardless of the implant platform.

1 According to Nobel Biocare Q2 and Q3 results 2 iData Research Inc., US Dental Implant and Final Abutment Market 2010

36

Nobel Biocare’s pipeline of products and solutions is backed by regular proofs of concept. We update our development pipeline constantly with new ideas that have the potential to achieve clear and real benefits for patients, customers and our company. That means developing products that maintain, and in some cases restore, crestal bone. It means facilitating collaborative working along the whole treatment value chain from diagnostics to implant placement to prosthetic res-toration. It means designing treatment protocols that reduce chair time, increase treatment predictability and improve patient comfort.

Regulatory affairs and intellectual propertyThe dental device industry is increasingly regulated. Regula-tory requirements are a key factor in determining whether products can be developed into marketable solutions. Nobel Biocare products and solutions are all cleared by the major regulatory agencies in the world, of which the Food and Drug Administration (FDA) in the US, the Ministry of Health in Japan and the state Food and Drug Administration in China are the most important.

In 2011, we obtained 88 significant regulatory product approv-als or clearances around the world. And we filed 102 new submissions. The most important clearances included our new implant systems and the introductions of some individualized products.

At Nobel Biocare, we protect the results of our R&D with patents. As we substantially invest in R&D, we also devote considerable resources to protecting our innovations so that we, and our investors, ultimately benefit. We manage a port-folio of several hundred patent families and are continuously filing new patents and weeding out non-productive ones. Our intellectual property portfolio comprises patents, designs, copyrights and trademarks. We vigorously defend them against infringements by third parties.

Science-based products and solutionsWe are committed to research at every level: basic, preclinical and clinical. We also apply high clinical standards for new prod-ucts, which means that before we launch a new product, we conduct high-standard clinical and technical studies to test and monitor its performance and safety. We also conduct thorough technical testing based on the ISO standards applied in the industry.

As the pioneer in our industry, we have a record of unmatched scientific and innova-tion capability. We focus our research and development areas where we can have the greatest medical and commercial impact – best meeting our customers’ and patients’ needs.

At the heart of our research and development (R&D) program is a simple goal: to improve patients’ quality of life. Since the early 1970s, our R&D effort has followed this goal and created a stream of innovative products, solutions and treatment con-cepts that improve patient quality of life and allow dental pro-fessionals to perform superior tooth restoration treatments more safely and effectively. Our R&D strategy is responding to the needs of patients and customers by striving to advance the science of implant-based tooth restorations. As part of this process, we collaborate with a global network of scientists, universities, and industry partners.

With dentistry advancing on all fronts, we are working col-laboratively with academic institutions and other leading com-panies in ways that allow us to share risk and gain access to new knowledge and technologies. We are involved in numer-ous clinical research collaborations with hospitals, private clin-ics and physicians. We are strengthening our internal programs to drive disciplined decision-making and portfolio governance, and aligning our R&D initiatives more closely with patient, customer and commercial benefits.

Next-generation products and treatment conceptsWe are driving an R&D strategy with the goal of delivering the next generation of products, solutions and treatment concepts that will provide better treatments for people with missing teeth. In this effort, we are concentrating on core research areas where we can deliver the greatest medical and com-mercial impact for the benefit of our customers and their pa-tients. We manage a pipeline of short- and long-term develop-ment projects designed to meet the future needs of patients and customers, and to provide growth opportunities for the business. Our R&D is focused on all key areas of implant-based dentistry, including implant osseointegration and surface tech-nologies, soft-tissue management, minimally invasive treat-ments and new and better treatment concepts. Our main R&D facilities are located in Gothenburg, Sweden, and Zurich, Switzerland. We maintain special R&D teams in Québec, Canada, for overdenture bar solutions, and in Mechelen, Bel-gium for digital dentistry.

Innovation:Research and development.

Nobel Biocare Annual Report 2011– Innovation

1’200

37Nobel Biocare Annual Report 2011– Innovation

Ongoing internal clinical studies 2011

60In basic research, we evaluate new materials for implants and prosthetics, biomechanical functionality of tooth restorations, new surface technologies, soft and hard tissue characteristics and new surgical treatment procedures. To document the safety and efficacy of our products and solutions, we conduct comprehensive clinical research, preferably long-term follow-up studies to document the success rate of our products.

Clinical trials are at the heart of our R&D effort. Wherever and whenever we conduct them, we do so in accordance with consistently applied, constantly reviewed ethical and patient safety standards. We run comprehensive preclinical studies plus clinical research and long-term in-market surveillance. Most studies run for several years with results published as extended abstracts, or as posters, at major international sci-entific congresses. Study results are published in internation-al scientific, peer-reviewed journals.

Most of our studies are conducted using demanding treat-ment protocols to measure how our products perform under the most rigorous conditions. We can report that, in these cir-cumstances, we achieve similar results with our products as competitors who tend to use more conservative treatment protocols such as two-stage protocols. We measure our prod-ucts and solutions against the high clinical and regulatory standards to document that they are both safe and effective. We cooperate with a number of independent investigators and universities who enroll patients in clinical trials. We see our role as being a prime mover in establishing industry-leading models for external collaboration.

In 2011, we had a total of 154 studies of all types in progress. Our clinical research activities focused on further documenting the efficacy of our TiUnite surface; the long-term success of our various implant systems; and the effectiveness of our im-plant connections and the new prosthetic materials we intro-duced. Overall, our mix of clinical projects is focusing increas-ingly on long-term implant success and soft-tissue management. The effectiveness of prosthetic materials is an area where we are conducting extensive testing and clinical follow-up studies. We have strong scientific expertise throughout and see great potential to make a significant contribution to the advancement of our industry.

↖ centers ↙ patients

Ongoing external clinical studies 2011

146 ↖ centers ↙ patients

>2’000

Implant Systems: 10 ongoing multi- center studies with more than 35 centers and >10’000 patients

NobelProcera: 3 ongoing multi-center studies with 23 centers and >175 patients

NobelGuide: 2 ongoing multi-center studies with 4 centers and > 40 patients

89 clinical studies and 50 in-vitro and pre-clinical studies

Implant Systems: 96 ongoing studies

NobelProcera: 34 ongoing studies

Other: 9 ongoing studies

38 Nobel Biocare Annual Report 2011– Innovation

In the reporting period, we formed new partnerships with the Karolinska Institute in Stockholm, Sweden, and the Chalmers University in Gothenburg, Sweden. In total, we now partner with 27 leading dental faculties across the globe. Our engage-ment with them includes basic research, clinical studies, edu-cation and testing – with the aim of advancing implant-based tooth restoration in close collaboration with academia.

Celebrating 10 years of our TiUnite implant surfaceOur innovative and patented implant surface TiUnite celebrat-ed its 10-year anniversary in 2011. TiUnite is a moderately rough titanium oxide (TiO2) surface that enhances the speed at which implants osseointegrate by stimulating rapid bone growth.1

Bone begins forming in the early phase of healing – so stabil-ity is higher during the critical early healing phase. This re-duces the risk of early implant failure.

X-rays of one of the first patients treated with TiUnite implants revealed marginal bone levels. Preclinical and clinical results up to 10 years demonstrate that TiUnite implants offer safe and predictable treatment outcomes, with cumulative sur-vival rates (CSR) in the upper ninetieth percentiles. Today, TiUnite is one of the most clinically documented implant sur-faces on the market.2 Nobel Biocare offers TiUnite implants with either textured or machined collars depending on the patient’s treatment specifications and the clinician’s prefer-ences. To date, several million patients have been success-fully treated with implants that have the TiUnite surface.

1 Compared to implants with machined surfaces (Glauser et al. 2001). 2 A complete list of clinical references is available upon request.

39Nobel Biocare Annual Report 2011– Innovation

proven solutions Nobel Biocare relies on science and innovation to develop products, solutions and treatment concepts for implant-based tooth restorations. Our solutions are the most comprehensive and docu-mented in the industry. We offer our dental implants with long-term evidence on their safety, predictability, clinical success, and longevity – some products have up to 40 years of documentation. Our focus on excellence in materials, quality and clinical follow-ups results in superior, effective and safe treatments.

40 Nobel Biocare Annual Report 2011– Innovation

Innovative concepts that minimize damage to the inside of the mouth while treating a clinical condition. The benefit for the patient is less trauma and scarring, which means faster recovery and return to normal activities.

Science-based treatment solutions where a ready-made restoration is placed after dental implants are inserted. The benefits for the patient are fewer visits and new teeth that look good and work straight away. The benefit for the clinician is reduced chair time, leading to higher productivity.

Implant- or tooth-based dental restorations that integrate high-quality precision components and materials. The benefits for patients are safe, natural-feeling teeth that look right, work right and last a long time.

Portfolio of treatment solutions that restore natural speech, chewing and looks for patients with no teeth. The concept includes solutions for fixed or fixed-removable res- torations customized to the patient’s expectations and budget.

Solutions that support healthy gums around implant restorations and the secure anchoring of implants in bone. Biocompatible, high-precision and high-quality materials support the patient in maintaining their long-term oral health.

All our treatment solutions must be easy to use. They are scientifically proven, intuitive, reliable and they use products and materials manufactured to unrivalled quality standards. The result: efficiency, predictability, and safety in everyday use – for the benefit of our customers and their patients.

Immediate function

Prosthetics/esthetics & function

Treatment of the edentulous

Soft and hard tissue health

Ease of use

Minimally invasive

Clinical themes guide our innovation

Clinical themes.

41Nobel Biocare Annual Report 2011– Innovation

Products/concepts Researchers Follow-up Number of implants/

frameworks

Cumulative

survival rate

(CSR) in %

Publication status

TiUnite implants Polizzi & GualiniGlauserDegidi et al.

up to 10 years7 years10 years

269102210

96.997.196.9

Presented at EAO 2011Clin Implant Dent Relat Res (epub ahead)Submitted

Groovy implants Tallarico et al. 6 months 61 100 Accepted by Quintessence Int.

All-on-4 Agliardi et al. up to 5 years 192 98.5 Submitted

Replace Select Pettersson 2 to 7 years 344 99.7% Clin Oral Implants Res 2011; 22: 961

NobelActive Babbush et al.Aspriello et al.Cherry et al.

up to 29 months2 years2 years

7089860

99.6100.098.3

J Oral Implantol. 2011 Aug; 37 (4): 431–45Presented at EAO 2011Presented at AO 2011, manuscript submitted

NobelReplace Famili et al.den Hartog et al.Tymstra et al.

2 years18 months1 year

226240

100.098.4100

Submitted J Clin Periodontol 2011; 38: 186–194J Clin Periodontol 2011; 38: 74–85

NobelProcera Sorrentino et al. 6 years 48 100 Accepted by Clinical Oral Investigations

Edentulous / implant-supported overdentures

Thoolen & BrouwersTurkyilmaz et al.

3 years7 years

13248

99.2100

Presented at EAO 2011Clin Implant Dent Relat Res. 2011 (epub ahead)

Flapless Surgery Pozzi et al. 32 months 138 97.8 Presented at IADR 2011

NobelGuide Polizzi & CantoniVasak et al.

2–4 years1 year

138161

98.2098.8

Presented at AAO 2011Presented at EAO 2011

Selected publications on clinical trials 2011.

42 Nobel Biocare Annual Report 2011– Organizational excellence

Organizational excellence:Operations.

edge in the market and further impetus to sustainable growth and profitability.

For operations, we apply four key performance indicators (KPIs) that guide our decision-making and operational practice: customer service level, cost efficiency, capacity use and inventory turn. Customer service level is a combined measure of product, warehouse and transport quality. Cost efficiency looks at the sum of all costs in relation to the sum of all sales at standard transfer price. Capacity use measures used ca-pacity in relation to available capacity. And inventory turn measures the sum of all sales at standard transfer price in relation to total inventory at standard transfer price. Each department within operations takes these KPIs and derives area-specific KPIs from them that reflect their own particular goals and responsibilities.

Effective manufacturing and logistics for best qualityEffective processes and a focus on quality are the motivations that drive the entire Nobel Biocare workforce. It begins with nurturing a culture of quality throughout the entire value chain, in particular within our manufacturing and logistics teams.

We currently operate three implant and four CAD/CAM pros-thetic manufacturing sites across the world to provide best service to customers in 70 markets. To move and distribute products to our customers worldwide as fast and efficiently as possible, we maintain two regional logistic distribution cen-ters and work with selected global transportation providers. We produce our implant and standardized products at three facilities: in Karlskoga (Sweden), Yorba Linda (USA) and Tel Aviv (Israel). We manufacture the NobelProcera product range at four sites: in Stockholm (Sweden), Mahwah (USA) and Tokyo (Japan), as well as at the NobelProcera Innovation Center in Québec (Canada). Our software and NobelGuide creation is based in Mechelen (Belgium). And our logistics capacity is centered on our distribution centers in Belfeld (the Nether-lands) and Yorba Linda (USA).

In both our implant facilities in Karlskoga and Yorba Linda, we have now adopted a new digital manufacturing concept that makes extensive use of automation. The new concept means we can slash lead times while still guaranteeing high levels of quality and flexibility. And for our NobelProcera prod-uct lines, we operate a flexible manufacturing model: if produc-tion at a plant were disrupted, we could switch production to a sister site without any reduction in product quality or delivery times.

Our aim is to deliver operational excellence and quality, to ensure a positive customer experience from order to delivery. This is only possible if we implement smooth processes along the entire operations value chain.

We ensure that all our products are well-made and compliant, effectively manufactured and distributed to our customers when they, and their patients, need them. To do this, we oper-ate modern and innovative manufacturing sites around the world and maintain a global distribution network. Our custom-ers never see the effort and resources behind our products, solutions and treatments, but they experience, every day, the high performance of our worldwide operations. Operations are geared to supporting customers in their prac-tices through quality, efficiency and reliability. When customers are prescribing and planning a treatment, they want products of the highest quality delivered to the right place at the right time, every time. That calls for efficient manufacturing and logistics from the moment the customer places their order to the moment we deliver it to their lab or dental practice.

We are committed to producing our products to the highest standards, in compliance with applicable regulations, and to ensuring that they are available when needed. Our global manufacturing, logistics and supply network is complex and covers six core activities: process development, procurement, implant systems production, individualized production, supply chain and IT.

Continuous improvementIn the last couple of years, we have steadily embedded im-provements throughout our operational value chain. The initia-tives ranged from lean manufacturing to centralized procure-ment, from quality improvements to standardized IT systems. In 2011, we maintained momentum in all these areas, further refining and improving the way we produce, store and distrib-ute our products and solutions.

We have implemented a series of projects that are trans-forming our operations at every level. Individually and collec-tively, they have three goals: to make us more efficient, to ensure high quality and, ultimately, to deliver value to our customers – all with the aim of reinforcing the role of opera-tions as a key enabler of value creation within the business. Our aim is operational excellence and maximum efficiency of all our business processes: the result is both a competitive

43Nobel Biocare Annual Report 2011– Organizational excellence

Current initiativesIn the reporting period, we have made some changes to how we use our materials, effectively reducing titanium waste by 50%. In 2011, our implant sites had to master the launch of our three new implants – NobelReplace Conical Connection, NobelReplace Platform Shift and NobelActive 3.0 – and the entire range of related components. Key projects in our CAD/CAM sites in Stockholm, Mahwah, Chiba and Québec are the transition of our prosthetic manufacturing to centralized five-axis milling technology and the introduction of new products such as overdenture bars or new materials, such as IPS e.max®. Compared to chair-side milling, the five-axis process enables us to produce far more precise, advanced and complex pros-thetics with much tighter tolerances and correspondingly higher levels of accuracy and detail.

Throughout our supply chain, we are looking at ways to improve the quality of our processes, drive out cost and drive up value for customers. Areas we are working on include reliability of order taking, on-time shipping, and delivery tracking. We are also working on new initiatives that will simplify the ways our customers manage and replenish their inventory. For product delivery to customers, we have adopted a flexible approach with variable pricing, allowing customers to choose the level of service that suits their needs, with both road and air freight options.

All these initiatives require significant investment and resourc-es, as well as training of our people and partners. We ensure that there are both standard operating procedures and redun-dant systems in place to guarantee effective and high-quality output. In 2011, we made extensive efforts in our manufactur-ing and distribution sites, not only to improve manufacturing and logistics processes but also to train our people – thereby improving the performance and quality of our operations. We are also pushing ahead with a company-wide mission to make continuous improvement a core philosophy for every em-ployee. Each team holds regular meetings and every team member is encouraged to contribute ideas and suggestions. In the first eight months of 2011 alone, we received almost 700 proposals from our operations employees, all aligned with our key issues and KPIs. Each one of these ideas has the potential to make a small but significant improvement in the way we do things.

Operations KPIs

→ Customer service level → Cost efficiency → Capacity use → Inventory turn

Resources consumed in production

2011 operational highlights

→ Launch of five-axis milling in prosthetic manufacturing → Centralized procurement → No critical findings in quality audits

Our philosophy of continuous improvement

~700 Electricity, kWh Total: 18’887’161, per employee: 20’441 per produced unit: 2.34

Water, litersTotal: 28’995 m3, per employee: 31’380 liters, per produced unit: 3.59 liters

Paper, A4 sheetsTotal: 5’500’225, per employee: 5’953, per produced unit: 0.68

← improvements and changes

suggested by our employees in 2011

44 Nobel Biocare Annual Report 2011– Organizational excellence

Procurement and supply chain managementTo complement our internal manufacturing, we work with a network of external partners who help us provide materials and goods needed to provide the best products in the industry. We hold all internal and external manufacturing and supply contributors to our high standards of excellence, and we invest heavily in the people, processes and technology to guarantee the quality our customers expect from a Nobel Biocare prod-uct. We select our partners using a number of factors, includ-ing their ability to provide the quality we need at a competitive price. We work to make our manufacturing fast, flexible and innovative – and in accordance with demanding standards for quality, safety and environmental protection. We are com-mitted to using partners that demonstrate strong performance in the management of environmental, health and safety risks.

In 2011, we continued to centralize our procurement activities. By presenting a single face to the supplier market, we have greatly strengthened our negotiating and buying power. By enabling us to engage in more coordinated and strategic pur-chasing, this initiative has lowered costs, reduced risks and improved our ability to service and support our customers. As part of this strategy, we also implemented our General Supply Agreement with key suppliers, and simplified material flows from suppliers to both our central warehouses.

Fulfilling regulatory standardsAs a healthcare company, we operate in a regulated industry. We fully understand and support the roles of regulators in making certain that our products are manufactured to the highest standards. We not only meet, but exceed, regulatory standards, and we continually invest in upgrading and im-proving our manufacturing facilities and business processes. We comply with all relevant regional authorities, such as the Food and Drug Administration (FDA) in the US, or the BSI (British Standards Institution) in the UK, to secure the appro-priate official approvals we need to sell our products in their jurisdictions.

In 2011, our facilities went through audits and inspections from FDA and BSI without a single critical finding. We also maintain a dedicated quality assurance unit, which is staffed by experi-enced quality professionals. Our internal control of quality extends to the evaluation of manufacturing processes and onsite audits and reviews of our manufacturing sites. These ensure that we rigorously maintain standards, including manu- facturing, quality control, product packaging, logistics, em-ployee health and safety, as well as standards for environmen-tal protection. Other operational standards we have implemen- ted or attained include our own General Supply Agreement and ISO certification in all our manufacturing facilities.

In 2011, we moved closer to our operational goal of global standardization of our operational processes. We have now incorporated all our quality assurance processes into our operational management system (OMS). This system allows us to connect quality processes and activities across the company.

45

total quality Dedication to customer satisfaction is at the core of Nobel Biocare. We foster a culture of quality in all we do, from the moment we receive an order to the moment we deliver a product. We continuously automate and streamline our processes to boost quality, efficiency and safety. We ensure that we meet regulatory requirements. And we diligently check every single product that leaves our factories. This commitment to quality allows us to produce products that meet the highest standards – those of our customers and their patients.

Nobel Biocare Annual Report 2011– Organizational excellence

46

Attracting and hiring the best peopleDiversity, attractive career opportunities, a modern work envi-ronment and social commitment make Nobel Biocare a good place to work. To attract the best people, we continue to lever-age our strong and unique brand through comprehensive on-line information and personal relationships on a market level. We carefully and diligently search for and recruit candidates, and hire the best fit. We base our hiring and development decisions on experience, skills and behavior.

New staff members undergo thorough training to ensure a smooth and productive start. To attract the best talent and specialists in our industry, we expanded our internal recruiting capabilities and activities by hiring experts for this task within our HR function at headquarters. As a part of this initiative, we also kicked off an internal recruitment program that encour-ages our people to apply for open positions within the com-pany. Through this, and a new international assignments pro-gram, we want to ensure that if we already have the right skills in the company, we can transfer these to other positions. When we recruit externally, we do this carefully, diligently, and glob-ally, and according to defined processes. We aim to take a consistent, fair, and cost-effective approach to recruiting and selecting candidates. We see each open position as a key business decision, so our recruitment processes are geared to identifying the key skills, knowledge, motivation and atti-tudes required in the successful candidate. We actively con-sider all applicants regardless of their gender, ethnic origin, disability, sexual orientation, creed, or age. We then examine the longer-term effectiveness of our recruitment strategy and make amendments where necessary.

Measuring and improving performanceAchieving excellence and growing Nobel Biocare profitably and responsibly is part of our performance challenge. Our perfor-mance management process provides a framework for em-ployees to continually challenge and develop themselves and to achieve higher goals and levels of performance.

Employees generally meet with their line manager three times a year – for an initial goal-setting at the beginning of the year, a mid-year performance and goals review, and an end-of-year performance review. The goals are linked to overall company strategy and functional objectives supporting that strategy. We launched a new online performance management tool where agreed goals and performance reviews must be logged by line managers and then signed off by their managers. As part of this process, we encourage our employees to clarify objectives and to solicit feedback in order to grow and improve their

Dental healthcare today is a complex and challenging environment – so we depend on a strong workforce to help us achieve success. Our 2’400 people around the world are committed to doing their jobs to a high standard. We continue to build a culture of opportunity, accountability and inclusion with and for our people – to help them meet the needs of customers and their patients.

As a company dedicated to innovation, patient care and cus-tomer focus, we need to have the right skills in the right place. That calls for talented, motivated and committed employees. These are people who actively drive change with our custom-ers in mind, people who are dental or functional experts and have profound knowledge of their areas of responsibility. As our industry is a very specialized one, these people are difficult to find. And in an industry as fast-moving and competitive as ours, ensuring our leaders and people stay at the forefront requires constant development and learning.

We are a relationship-based and knowledge-driven business, so we need skilled and committed employees. But as a com-pany undergoing change in a highly competitive environment, we also face a relatively high company-wide attrition rate. In 2011, it stood at about 15%, a figure we clearly want to reduce in the future. These challenges demand a lot from our leaders and people. We therefore need leaders who have the capa-bilities to bring the company forward, drive the change and achieve our goals. Being the best means having the best people, and as we continue moving toward our goal to show leadership in our business, we have made two significant moves to consolidate that growth.

First, we invested substantially in improving our company as an employer. Second, and most importantly, we have redesigned our HR strategy to improve our ability to attract, develop, and hold on to skilled people. We want to offer our employees a great place to work by giving them the opportu-nity to grow and be recognized for their effort and achieve-ments. Our people strategy accompanies employees from before their very first contact with Nobel Biocare to their re tirement. Execution of this strategy is driven through each of our functions and markets and is the responsibility of the respective heads of business.

Organizational excellence:Our people.

Nobel Biocare Annual Report 2011– Organizational excellence

47Nobel Biocare Annual Report 2011– Organizational excellence

Building on a global team *

Employees by region in 2011

Women at Nobel Biocare

↖ employees worldwide in 2011

← jobs created in 2011

2’47239

performance. Ultimately, though, we see it as a leadership responsibility to create an environment in which every em-ployee is given the opportunity to maximize their potential and contribute to our company’s long- and short-term objectives. As such, we have also kicked off a series of annual workshops that help managers use the online portal and give, as well as receive, constructive feedback.

Developing peopleAs a multi-cultural company operating across the globe, our success depends on being able to apply the right resources wherever they are needed. In the long-term, our success will largely be determined by our ability to develop talents to meet the needs of the business, and also to transfer and exchange people between countries, regions and headquarters.

In 2011, we enhanced our support for employees to develop functional, professional and leadership skills. We provide com-pany information on development possibilities as well as con-ducting individual discussions with our people about their development needs as part of the goal setting and review discussions twice a year. We help employees grow, through internal and external education programs to enhance employee knowledge, performance monitoring, succession planning, and talent and leadership training. We also measure our lead-ers on their people development and team-building perfor-mance, as well as their business contribution. All these ac-tivities are outlined and supported by a comprehensive set of policies, guidelines and stringent HR governance.

Our leaders are critical pillars for our success. We expect them to be passionate for people and performance, show personal drive, inspire and motivate others and be accountable for ac-tions and results. To ensure their competence in these areas, we launched a leadership development program that includes learning programs for first-line and middle management levels as well as for senior and executive leaders. These programs were piloted in summer 2011 with over 50 participants from all functions and regions, including the entire Executive Com-mittee. The programs use a mix of Nobel Biocare leadership tools as well as personality tests and 360-degree question-naires that gather feedback from peers, supervisors and direct reports. These tools help the participants to understand their impact as leaders, identify key areas for development and drive their action plans.

To be competitive globally, we believe that international mobil-ity is essential. As such, we launched a new Long-Term As-signment Policy that sets out the guidelines for such interna-

24%↖ women in succession management pool

42.3%

Headquarters 8%

Asia/Pacific 16%

EMEA 46%

North America 30%

* As per 31 December 2011

↖ women in workforce

48 Nobel Biocare Annual Report 2011– Organizational excellence

tional transfers and exchanges. Such assignments will serve as a way of transferring specific know-how to a new location. Of course, they also foster career development as experience is gained in a different culture, market or function.

Finally, we initiated a talent pipeline and succession-planning program. This ensures that we are prepared if a key member of staff leaves the organization. Over the last year, we have created an overview of people who require successors, along with a list of potential successors. The current skill level of each potential successor has been assessed, and we will start implementing tailored development plans for each one to ensure that they acquire the necessary skills and experience over the next few years.

Engaging employeesEmployee engagement drives the implementation of Nobel Biocare’s strategy. So continuously promoting and developing the skills of our employees is a key aim of HR. Listening and acting on our employees’ needs and opinions will become part of our dialog with our employees. As such, we now regularly conduct global employee surveys. We gained valuable infor-mation and ideas in this area from our second global employ-ee survey, which we conducted in October 2010. 76% of our employees in all countries and areas of the company took part in the survey and shared their views of the strategy, culture and working conditions at Nobel Biocare. Based on their feed-back, we have started to take specific action in areas where employees’ responses to the survey revealed scope for im- provement. Initial activities included workshops at our head-quarters and subsidiaries to discuss the findings with our em- ployees and discuss concrete actions to address the headline issues. We then committed to an engagement plan that iden-tified regional and market-level engagement champions to drive the action plans coming out of the engagement work-shops. In two years, the third employee survey will take place. We expect that it will clearly reflect the fruition of our current efforts.

Building a strong ethical foundationNobel Biocare prizes diversity, including diversity in visible dif-ferences such as gender, age, ethnicity and ability, as well as underlying characteristics such as thinking styles, religious or national identity and education. We have a long-standing com-mitment to conducting our business in compliance with all applicable laws and regulations and in accordance with the highest ethical principles. Our Code of Conduct is one of many tools we provide our employees to help them meet our legal and ethical obligations. It is comprehensive in scope, covering

business practice, corporate governance, patient health and safety, conflicts of interest, insider information, competition laws, bribery, gifts and donations, property, equality, records, confidentiality, intellectual property and environmental law. All employees must sign and abide by the Code, which is available in various languages. In addition to the Code of Conduct, our actions are guided by various other policies, including an en-vironmental policy, a quality policy and a staffing policy. In 2011, we launched a global staffing policy and an employee handbook for our HQ in Switzerland.

The Nobel Biocare brand stands for excellence. We therefore also strive for excellence in our conduct. We foster openness, honesty, tolerance, fairness and responsibility in all matters. We treat each individual fairly, and recruit, select, train, pro-mote, and compensate based on experience, performance, behaviors pertaining to our values and other criteria. We comply with laws governing fair employment and labor prac-tices. We do not discriminate against any applicant for employ-ment or any employee in any aspect of their employment because of age, race, religion, gender, disability, sexual orien-tation, pregnancy, or national origin. We do not tolerate any form of harassment.

We believe in the principle of taking personal and profes sional responsibility – this requires not only that people avoid doing harm to others but that they exhibit courteous behavior and uphold the standards expected of all our employees. They are expected to protect the rights of others and respect the diversity of cultures and peoples. Those well-positioned to assert their rights have a reciprocal duty to exercise care toward those who depend on them for their well-being. This principle involves stewardship of assets, resources and the environment.

In case of any conflicts and issues, we expect staff to discuss these with HR or their line manager. Where this is not possible, we have provided a confidential and anonymous ethics hotline. All staff can contact an independent advisor via telephone or an online portal, and ask for impartial advice, or use it to report behavior they suspect is illegal, unethical, or unprofessional. Our legal and internal audit functions carefully assess every report; if they decide it is necessary they will escalate a case as appropriate.

49Nobel Biocare Annual Report 2011– Organizational excellence

Fair compensation and recognizing performanceAs a leader in our industry, and in order to attract and retain the best talent, we are constantly reviewing our compensation and benefits plans to ensure that they are competitive. Com-pensation at Nobel Biocare is based on a globally standardized system that ensures transparent and performance-oriented remuneration and incentives for all employees. Regular bench-marking against competitors and industry helps in setting base salaries in line with the demands and responsibilities of each position. Our base compensation is based on the scope of the individual role, influenced by internal and external relativities. It takes into consideration aspects of the role, individual expe-rience and the market. Our bonus schemes reward outstand-ing results that support our strategic objectives. Bonuses reflect both individual and overall business performance. These are supplemented by attractive performance-related compen-sation components and ancillary benefits. You will find further details of our compensation and benefits schemes in the Re-muneration section of this report. We are working on a global compensation strategy that will ensure our company stays competitive and creates value for all stakeholders.

For employees on an individual, performance-related bonus plan, an online portal now supports their performance review process. From objective setting to final appraisals and bonus calculations, the system facilitates the entire process, to make it more transparent, objective and efficient.

Operational health and safetyWe care about the health, safety and well-being of our people. We maintain policies to ensure that working conditions are safe and conform to business purpose and needs. We comply with regional health and safety legislation, and continuously work on minimizing the incidence of work-related accidents. In 2011, no serious work-related accidents were reported on any of our global sites.

Employee representationTrusting relationships with our employees and employee rep-resentatives are important to us. We support unions wher-ever they are present in Nobel Biocare operations. In compli-ance with Swedish legislation, two employee representatives are on the Board of Nobel Biocare AB in Sweden and are regularly invited to participate in Board meetings of Nobel Biocare Holding AG.

50

that supports employees’ individual growth – and ultimately that of our business.

We strive to work in the best possible way to produce products of the best possible quality. We have a long-standing commit-ment to conducting our business in compliance with applicable laws and regulations and in accordance with the highest ethical principles. We closely monitor our actions to ensure that compliance. And we foster a culture of ethical behavior in everything we do. We believe in fair treatment of everyone that comes in contact with our business – employees, custom-ers, patients, suppliers, all other stakeholders and society at large.

Quality…Quality is central to our business. If we want to provide qual-ity of life, we have to provide quality and safety in how we work and what we produce. We exceed regulatory standards and continually invest in upgrading and improving our manu-facturing facilities and business processes. We comply with all relevant regional authorities, and maintain a dedicated qual-ity assurance unit, staffed by experienced quality professionals. We rigorously maintain standards in manufacturing, quality control, product packaging, logistics, employee health and safety, as well as standards for environmental protection. Other operational standards we have implemented or secured include our own General Supply Agreement and ISO certifica-tion in all our manufacturing facilities. In 2011, we can report that no major complaints were lodged in any audits or re-views.

Before we launch a new product or solution, we conduct stringent clinical studies to test and monitor its performance and safety, preferably long-term follow-up studies to document the success rate of our products. Most studies run for several years with interim results published as extended abstracts, or as posters, at major international scientific congresses. Study results are published in international scientific, peer-reviewed journals.

…and equalityAs a company, we foster openness, honesty, tolerance, fairness and responsibility in all matters. We do not discrimi-nate, we do not tolerate any form of harassment, we do not engage in any form of forced or child labor. Our Code of Conduct is one of many tools we provide employees to assist them in meeting our legal and ethical obligations – all must abide by the Code. You can read more about our ethical stance as an employer in the Employees chapter of this report.

At Nobel Biocare, we aim to create value through the benefits of the products and solutions we provide. For us, “advancing implant-based tooth restorations” extends from our products, solutions and services to our actions as a responsible corporate citizen working ethically, sustainably and in an environmentally responsible manner.

Being a good corporate citizen is embedded in our philosophy. As a healthcare company focused on providing quality of life to patients, we see corporate responsibility and sustainability as key business objectives. Our vision is of a commercially sustainable business that both increases the accessibility of our products globally and acts as a responsible organization. We are committed to addressing social, environmental and economic challenges to ensure the health of our business and the society in which we operate.

Our impact on quality of life goes beyond the patients treated with our products. We work to continuously integrate corporate responsibility in every area of our organization through our corporate responsibility framework. It encompasses the way we do business, our influence on the environment and how we can put our expertise to use for the good of society. In practice, we focus on three areas: business ethics, caring for the environment, and philanthropic activities that help people in need, particularly in the area of oral healthcare.

In order to become a better corporate citizen and also to ensure that our business practices are sustainable, we are starting to use the Global Reporting Initiative (GRI) framework as a refer-ence for our Annual Report, and will develop our reporting toward a full GRI report in the coming years.

Conducting business ethically and transparentlyProviding quality of life and being a responsible corporate citizen go hand-in-hand with conducting business ethically. As a global leader in our industry, we work hard to cultivate strong and trusting relationships with our customers, employ-ees, suppliers, the general public, and other stakeholders. Patients must have confidence in our solutions, dental pro fessionals in the safety of our products and solutions, investors in how the company is managed, our employees in their management. For us, this means acting according to the highest ethical standards and communicating openly and trans parently. It also means fostering a work environment

Organizational excellence: Sustainability.

Nobel Biocare Annual Report 2011– Organizational excellence

51

Reducing our environmental footprintAs a globally operating company, we respect the resources we need to conduct business. We commit to being respon-sible in how we bring our products and services to market, how we use natural resources, and how we conserve energy and eliminate waste. We are taking action to preserve a healthy environment and are working on a road map to guide our progress, from reducing our environmental footprint in the short-term to continuously improving our value chain. As a global company with various manufacturing facilities and many office locations, we are aware that our business activities have an environmental impact. We strive to keep this impact to a minimum – a healthy and clean environment contributes to people’s health and quality of life.

In terms of supply chain and manufacturing, we keep an eye on our environmental footprint through a global monitoring process. But we also aim to keep reducing that footprint by improving the way we work. Our global environmental objec-tives are three-fold: to reduce waste, energy, water, raw ma-terials; to reduce our CO2 emissions; and to raise environmen-tal consciousness within the organization. Our greenhouse gas emissions result mainly from energy use. Through im-proved manufacturing processes, we’ve reduced titanium waste by 50% in the last reporting period. We work with a global network of transportation partners that have a strong environmental focus and provide more eco-friendly transport options. And we train our employees on environmental issues. Our Environmental Management System (EMS) helps us achieve our goals for the environment while delivering con-tinual feedback on environmental impact and other parameters. As part of our ISO 14001 certification, all production sites un-dergo regular third-party environmental audits.

We try to keep international travel to a minimum. Of course, face-to-face meetings will always be necessary, but we use online meeting technology that reduces the need for travel.

Community engagementWe consider lack of access to treatments and lack of aware-ness about the consequences of untreated tooth loss as key challenges for the global community. We have an important role to play in addressing these challenges. As a responsible corporate citizen, we also believe we should give back to our communities and to people in need. We are proud to be part of various community engagement activities.

We see it as part of our responsibility to support philanthrop-ic projects, some globally, some locally. Our donation programs

Nobel Biocare Annual Report 2011– Organizational excellence

Our three areas of focus

CO2 per produced unit is calculated as a combination of electricity, paper and water consumption based on Elmix Sweden & USA (electricity conversion factors: Swe-den 110 g; USA 800 g CO2 / kWh).

CO2 (kg) per produced unit 2011

0.66

1.02

0.62

0.80

0.40 0.8

2011

2010

2009

2008

→ Business ethics → Caring for the environment → Philanthropy

Philanthropic engagements

30% of International Dental Show (IDS) proceeds donated to help Japanese tsunami victims

1’800 treatments a year sponsored at the P-I Brånemark Institute Bauru in Brazil

Donation to the Academy of Osseointe-gration Foundation to research osseo-integration

Reduction in titanium waste for the reporting period

50%

52 Nobel Biocare Annual Report 2011– Organizational excellence

aim to give back to communities in areas where we can provide expertise in addition to financial support. Principles and priorities are set at a group level and implemented locally by the business.

We support the P-I Brånemark Institute Bauru in Brazil, a non-profit organization that treats patients with missing teeth and often severe maxillofacial defects, in most cases free of charge. The institute was founded by Professor Per-Ingvar Brånemark, the Swedish orthopedic surgeon whose pioneer-ing work on osseointegration laid the scientific roots for Nobel Biocare. Through our financial backing, the institute is able to restore quality of life for several hundred people a year – a substantial contribution to the 1’800 procedures the institute currently carries out annually. In November 2010, Nobel Biocare announced a new five-year agreement, worth about 2.5 million euros, that will enable continued clinical treatment, follow-up teaching and training.

When the tsunami hit Japan in early 2011, we, as a company, greatly felt the effects. Japan is our biggest Asian market, and we have both an office and a production plant there. Our em-ployees, customers and their patients on the spot were huge-ly affected by this tragedy, many of them losing homes and practices. We pledged to help with rebuilding efforts by donat-ing 30% of our sales from the IDS trade show to the victims of the catastrophe. These funds are administered by our Jap-anese organization to help our customers and their families rebuild their lives.

We made a 5-year, 2.5 million US dollar pledge to the Academy of Osseointegration (AO) Foundation. The AO uses these funds to support research and leadership in the field of osseointegra-tion – a topic on which we are strongly focused.

We support leading dental societies in their efforts to promote dental education, enforce professional and business best prac-tices and encourage involvement in science and innovation. We partner with dental universities worldwide by sharing prod-uct knowledge and treatment expertise. We also cultivate an active dialog with dental organizations and other dental stake-holders and support them where appropriate.

And in some cases, where patients suffer from an excep-tional problem and cannot afford treatment, we support pro bono treatments by providing products free of cost.

Global Reporting InitiativeThis year, for the first time, we have used the Global Reporting Initiative (GRI) 3.1 as a reference framework for our Annual Report. In the near-term, we aim to publish a report that fully follows the GRI indicator protocols.

The GRI is a network-based organization that produces a com-prehensive sustainability reporting framework used widely around the world. GRI’s core goals include making disclosure on environmental, social and governance performance part of mainstream corporate reporting.

You can find all the GRI-related topics that are contained in this report in the index table to the right.

53Nobel Biocare Annual Report 2011– Organizational excellence

GRI reference Subject Page

Strategy and profile

1.1

1.22.1–2.103.1–3.43.5–3.134.1–4.104.11–4.134.14–4.17

Statement from the most senior decision-maker ofthe organizationDescription of key impacts, risks and opportunitiesOrganizational profile, structures, marketsReport profileReport scope, boundary and assuranceGovernanceCommitments to external initiativesStakeholder engagement

6

18–22, 942–5, 18–23, 30n.a. n.a.56–8750–522, 18–23, 24–29, 37, 46–49

Economic Performance Indicators

Management approachEC1EC3EC4EC8EC9

Direct economic value generated and distributedCoverage of benefit plan obligationsSignificant financial assistance received from government Development and impact of investments for public benefitIndirect economic impacts

18–234, 50–5280–87 n.a. 50–52 50–52

Environmental Performance Indicators

Management approachEN16–EN20

EN22EN26–EN27EN29

Emissions (greenhouse gas, ozone-depleting substances, NOx, SOx, air emissionsWasteProducts and servicesTransport

16, 50–52

42–46, 50–5246–4946–49

Social Performance Indicators

Labor practices and decent work

Management approachLA1-LA3, LA15LA4, LA5LA6-LA9LA10-LA12LA13LA14

EmploymentLabor/Management RelationsOccupational health and safetyTraining, education and career developmentDiversity and equal opportunity Equal remuneration

4, 42–45, 46–4946–494949–5046–4948, 5048, 50

Human rights

Management approachHR4 Non-discrimination

50–5250

Society

Management approachSO1, SO9, SO10SO2-SO4

Local communitiesCorruption

50–5251–5248, 50

Product responsibility

Management approachPR1-PR2PR5PR9

Consumer health and safetyCustomer satisfactionCompliance

4, 24–25, 26–29, 30–35. 36–41, 42–444, 24–25, 26–29, 30–35, 36–41, 42–444, 18–23, 26–2942–44

Sustainability reporting 2011.

Corporate Governance.

Corporate Governance report 56Board of Directors 63Executive Committee 77Remuneration report 80

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Shareholders’ meeting

Internal Audit Board of Directors

Chief Executive Officer

Richard T. Laube

Global Research, Products & Development

Hans Geiselhöringer

Global Customer & Sales Development

Rolf Melker Nilsson

Chief Financial Officer

Dirk W. Kirsten

Legal & Compliance

Jörg von Manger-Koenig

Global Communications

Nicolas Weidmann

Business Development & Strategic Planning

Petra Rumpf

Global Operations

Ernst Zaengerle

Executive Committee

Nobel Biocare Annual Report 2011 — Corporate Governance56

Group structure

Executive Committee structure as of 31 December 2011

➝

Please refer to section 4.1 “Members of the Executive Committee” on page 71 for further information.

Corporate Governance report.

Corporate Governance at Nobel Biocare follows the “Swiss Code of Best Practicefor Corporate Governance” (economiesuisse, revised version 2008). The informationpublished in this report follows the SIX Swiss Exchange Directive on InformationRelating to Corporate Governance (DCG, SIX Swiss Exchange Corporate GovernanceDirective, revised version 29 October 2008).

1. Group structure and shareholders

1.1 Group structure

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Corporate Governance report 57

Listed company

Name Nobel Biocare Holding AG

Domicile 8302 Kloten, Switzerland

Listed at SIX Swiss Exchange

Market capitalization CHF 1’352 million (as of 31 December 2011)

Security number 003785164

ISIN number CH0037851646

Reuters NOBN.VX

Bloomberg NOBN VX

Nobel Biocare Holding AG is the only listed company of the Group.

Subsidiaries as of 31 December 2011

City and country Share capital Ownership Ownership of incorporation in ‘000 interest interest

2011 in % 2010 in %

Nobel Biocare Australia Pty Ltd. Macquarie Park, Australia AUD 600 100 100

Nobel Biocare (Österreich) GmbH Vienna, Austria EUR 36 100 100

Nobel Biocare Belgium NV Groot-Bijgaarden, Belgium EUR 138 100 100

Medicim, NV Mechelen, Belgium EUR 1’030 100 100

Nobel Biocare Brasil Ltda São Paulo, Brazil BRL 14’111 100 100

Nobel Biocare Canada Inc. Richmond Hill, Canada CAD 3’012 100 100

Nobel Biocare Procera Services Inc. Québec, Canada CAD 40’000 100 100

BioCad Medical Inc. Québec, Canada CAD 14’015 100 100

Nobel Biocare Asia Ltd. Hong Kong, People’s Republic of China HKD 15’010 100 100

Nobel Biocare Commercial (Shanghai) Co. Ltd Shanghai, People’s Republic of China USD 700 100 100

Nobel Biocare Trading (Shanghai) Co. Ltd. Shanghai, People’s Republic of China USD 140 100 100

Nobel Biocare Danmark A/S Hilleröd, Denmark DKK 500 100 100

Nobel Biocare Suomi Oy Helsinki, Finland EUR 8 100 100

Nobel Biocare France S.A.S. Bagnolet, France EUR 40 100 100

Nobel Biocare Deutschland GmbH Cologne, Germany EUR 307 100 100

Nobel Biocare UK Ltd. Uxbridge, Great Britain GBP 620 100 100

Nobel Biocare Magyarország Kft Budapest, Hungary HUF 24’000 100 100

Nobel Biocare India Pvt. Ltd. Mumbai, India INR 100 100 100

Alpha-Bio Tec Ltd. Petach Tikva, Israel ILS 39’100 100 100

Nobel Biocare Italiana S.r.l. Agrate Brianza, Italy EUR 10 100 100

Nobel Biocare Japan K.K. Tokyo, Japan JPY 12’500 100 100

Nobel Biocare Procera K.K. Narashino-Shi, Japan JPY 250’000 100 100

Nobel Biocare Korea Ltd. 1 Seoul, South Korea KRW 100’000 100 –

Nobel Biocare Lithuania Pty. Ltd. Vilnius, Lithuania LTL 280 100 100

Nobel Biocare México, S.A. de C.V. Mexico City, Mexico MXN 15’050 100 100

Nobel Biocare Investments N.V. Willemstad, Curaçao, the Netherlands Antilles CHF 1’240 2 100 100

Nobel Biocare Nederland BV Houten, the Netherlands EUR 450 100 100

Nobel Biocare Distribution Center BV Belfeld, the Netherlands EUR 90 100 100

Nobel Biocare New Zealand Ltd. Auckland, New Zealand NZD 1 100 100

Nobel Biocare Norge AS Son, Norway NOK 100 100 100

Nobel Biocare Polska Sp.z o.o. Warsaw, Poland PLN 50 100 100

Nobel Biocare Portugal S.A. Vila Nova de Gaia, Portugal EUR 60 100 100

Nobel Biocare Russia LLC Moscow, Russia RUB 3’000 100 100

Nobel Biocare Singapore Pte Ltd. Singapore SGD 65 100 100

Nobel Biocare South Africa (Pty) Ltd. Woodmead, South Africa ZAR 0.1 100 100

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Nobel Biocare Annual Report 2011 — Corporate Governance58

AlphaBio – Tec Dental Implants SA Woodmead, South Africa ZAR 400 100 100

Nobel Biocare Iberica S.A. Barcelona, Spain EUR 60 100 100

Nobel Biocare AB Gothenburg, Sweden SEK 317’186 100 100

Nobel Biocare Dental Products AB 3 Gothenburg, Sweden SEK 100 100 100

Nobel Biocare i Göteborg AB 3 Gothenburg, Sweden SEK 150 100 100

Nobel Biocare Holding AB Gothenburg, Sweden SEK 10’100 100 100

Nobel Orthopedics AB 3 Gothenburg, Sweden SEK 100 100 100

Nobel Biocare AG Kloten, Switzerland CHF 54 100 100

Nobel Biocare Finance AG Kloten, Switzerland CHF100 100 100

Nobel Biocare Management AG Kloten, Switzerland CHF100 100 100

Nobel Biocare Services AG Kloten, Switzerland CHF 250 100 100

Nobel Biocare Asia-Africa Holding AG Kloten, Switzerland CHF 1’000 100 100

Nobel Biocare Latin America Holding AG Kloten, Switzerland CHF 100 100 100

Nobel Biocare Taiwan Co. Ltd. Taipei, Taiwan TWD 105’000 100 100

Nobel Biocare (Thailand) Ltd. Bangkok, Thailand THB 100’000 100 100

Nobel Biocare USA, LLC Yorba Linda, USA USD 500 100 100

Nobel Biocare Procera, LLC Wilmington, USA USD 1 100 100

Nobel Biocare Holding USA Inc. Wilmington, USA USD 0.01 100 100

1 Established on 1 April 20112 Change of share capital currency as of 7 December 20113 Dormant/not operating

1.2 Significant shareholdersAs of 31 January 2012, the largest shareholders in Nobel Biocare Holding AG known to the Company:

Voting rights held (directly or indirectly; shares, purchasing and selling rights)

2011 % Date of disclosure

Government of Singapore (Singapore) 6’795’557 5.49 2 August 2011

Governance for Owners LLP (UK) 3’909’643 3.16 25 August 2011

Silchester International Investors LLP (UK) 3’903’125 3.15 19 October 2011

Invesco Trimark (USA) 3’770’555 3.05 16 December 2011

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Corporate Governance report 59

Published notifications (1 January 2011 to 31 January 2012)

Publication date Shareholder Reason for notification New holding

20 January 2011 Manning & Napier Advisors, Inc. Sale <3%

27 January 2011 UBS Fund Management (Switzerland) AG Acquisition 3.09%

22 February 2011 Artio Global Management LLC Acquisition 5.0006%

25 February 2011 UBS Fund Management (Switzerland) AG Sale <3%

28 February 2011 Artio Global Management LLC Sale 4.9964%

15 March 2011 UBS Fund Management (Switzerland) AG Acquisition 3.02%

21 April 2011 Artio Global Management LLC Acquisition 5.04%

27 April 2011 UBS Fund Management (Switzerland) AG Sale <3%

23 June 2011 Artio Global Management LLC Sale 4.93%

14 July 2011 Government of Singapore Investment Corporation Pte. Ltd. Acquisition 3.29%

9 August 2011 Government of Singapore Acquisition 5.49%

30 August 2011 Governance for Owners LLP Acquisition 3.158%

21 October 2011 Artio Global Management LLC Sale <3%

24 October 2011 Silchester International Investors LLP Acquisition 3.15%

10 November 2011 Nobel Biocare Holding AG Expiration of financial instruments <3%

16 December 2011 Invesco Limited Acquisitiion 3.04607%

All holdings stated as of registered share capital at that time.

The changes above were disclosed from 1 January 2011 to31 January 2012 and duly published on the website of SIXSwiss Exchange.

Detailed information on these disclosures can be accessedon http://www.six-swiss-exchange.com/shares/companies/major_shareholders_en.html

The disclosures made by the company can also be found onNobel Biocare’s website: www.nobelbiocare.com/disclosures

As of 31 January 2012, Nobel Biocare Holding AG is not awareof any other person directly or indirectly holding more than3 percent of its share capital.

Nobel Biocare Holding AG does not know of any material sha-reholders’ agreements or any other significant understan-dings reached between shareholders regarding the registeredshares of Nobel Biocare Holding AG they own, or the execu-tion of their ensuing shareholders’ rights.

1.3 Cross-shareholdingsNobel Biocare Holding AG has no cross-shareholdings withother companies, either in capital shareholdings or in votingrights.

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Nobel Biocare Annual Report 2011 — Corporate Governance60

2. Capital structure

2.1 CapitalAs of 31 December 2011, the share capital registered withthe Commercial Register amounted to CHF 49’513’812 divi-ded into 123’784’530 registered shares at a nominal value ofCHF 0.40 each.

As of 31 December 2011, Nobel Biocare Holding AG had noauthorized share capital and had issued neither participationcertificates nor bonus certificates.

2.2 Conditional capitalThe conditional share capital of CHF 99’048 (for the issuanceof 247’620 shares at par value CHF 0.40 each) may be usedfor the exercise of option rights granted to employees and

officers of the Company and/or of Group companies (fordetails pertaining to warrants and staff options, see section2.7 “Convertible bonds and warrants/options” on page 61.The rights of shareholders to subscribe shares in priority areexcluded.

In addition, the share capital may be increased by an amountof up to CHF 10’000’000 by issuing up to 25’000’000 fullypaid up registered shares with a nominal value of CHF 0.40each by exercising conversion and/or option rights which aregranted in connection with the issuance of bonds or similardebt instruments by the Company or in connection with atransaction.

For further details, please refer to the Articles of Incorporationwhich are available on the Company website www.nobel -biocare.com/governance/documents

2.3 Changes in capitalChanges in share capital

in CHF Issued share capital Authorized share capital Cond. share capital(in shares)

31 December 2008 49’726’612 – 199’048

(124’316’530) (–) (247’620)

Share cancellation –212’800 – –

(-532’000) (–) (–)

Capital increase – 10’000’000 1 10’000’000 1

(–) (25’000’000) 1 (25’000’000) 1

31 December 2009 49’513’812 10’000’000 199’048

(123’784’530) (25’000’000) (247’620)

No changes in 2010 – – –

(–) (–) (–)

31 December 2010 49’513’812 10’000’000 199’048

(123’784’530) (25’000’000) (247’620)

Expiration authorized capital – –10’000’000 1 10’000’000 1

(–) (-25’000’000) 1 (25’000’000) 1

31 December 2011 49’513’812 – 10’199’048

(123’784’530) (–) (25’247’620)

1 The indicated amount could only be exercised alternatively either as authorized or conditional capital or a combination of both up to the total amount until 6 April 2011. For further details, please refer to section 2.2 of this report or to the Articles of Incorporation which are available on the Company website: www.nobelbiocare.com/governance/documents

A table with additional information on the development of theshare capital structure of Nobel Biocare Holding AG and trea-sury shares over the last two years can also be found in note16 to the consolidated financial statements on page 124, aswell as notes 4 and 5 of the parent company accounts onpage 156.

2.4 Shares and participation certificatesAll Nobel Biocare Holding AG shares are registered shareswith a nominal value of CHF 0.40 each. All shares are fullypaid in, have equal voting rights (one vote per share) andentitle the owners to the same share in the Company’s assetsand profits. The entire share capital is evidenced by a Perma-

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Corporate Governance report 61

nent Global Share Certificate deposited with SIX SIS Ltd., acentral depositary. Shareholders are not entitled to demandthe printing and delivery of certificates (security papers) re-presenting shares.

As of 31 December 2011, Nobel Biocare Holding AG hadissued neither participation certificates nor bonus certificates.

2.5 Profit-sharing certificatesNobel Biocare Holding AG has not issued any profit-sharingcertificates (Genussscheine).

2.6 Limitations on transferability andnominee registrationsThe Company maintains a shareholders’ register showing thenames, first names, domicile, address and nationality (in thecase of legal entities the registered office) of the holders orusufructuaries of registered shares. The right to vote andother rights associated with the shares may only be exercisedby a shareholder who is registered in the shareholders’ regis-ter as a shareholder with the right to vote.

Every registration in the shareholders’ register requires a cer-tification in due form regarding the transfer of the share. TheCompany may deny recognition as a shareholder with theright to vote, if the formal acquirer of the shares to be regis-tered does not confirm, by declaring to have acquired and tohold the shares in his own name and for his own account,that he is the beneficial owner of the shares to be registeredand that he bears their economic risk. Upon request, formalacquirers of registered shares may also be registered in theshareholders’ register with the right to vote, if they complywith the requirements as nominee according to the Articlesof Incorporation. In case of denial of recognition as a share-holder with the right to vote, the formal acquirer or the appli-cant respectively shall be entered in the shareholders’ registeras shareholder without voting rights.

Registrations of shareholders in the shareholders’ register areeffected based on information given in the registrationrequest provided to the Company by the depository banks. Ifthe information provided to the Company in the registrationapplication changes, the shareholder has to inform the Com-pany immediately about the changes. The Company acceptsonly one representative per share. The Board of Directors mayregister applicants holding shares that belong economicallyto another person (“nominees”) with the right to vote in theshare register to the extent of up to 3 percent of the registeredshare capital as set forth in the commercial register. Registe-

red shares held by a nominee that exceed this limit may beentered in the shareholders’ register provided the nomineediscloses the names, addresses and numbers of shares of thepersons for whose account it holds 1 percent or more of theregistered share capital as set forth in the commercial register,or confirms that none of the persons it represents, as indivi-duals or as a group, holds directly or indirectly 1 percent ormore of the share capital as set forth in the commercial regis-ter and provided that the nominee has entered into a nomineeagreement with the Board of Directors.

Corporate bodies and partnerships or other groups of personsor joint owners who are mutually interrelated through capitalownership, voting rights, uniform management or otherwiselinked, as well as individuals or corporate bodies and partner-ships who act in concert to circumvent the regulations con-cerning limitations placed on nominees, shall be treated asone nominee within the meaning of the Articles of Incorpo-ration. After hearing the registered shareholder or nominee,the Board of Directors may cancel, with retroactive effect asof the date of registration, the registration of shareholders ifthe registration was effected on the basis of false information.The respective shareholder or nominee shall be informedimmediately of the cancellation of the registration. The Boardof Directors shall specify the details and issue the necessaryorders concerning adherence to these regulations. In parti-cular, it can put into force regulations concerning the regis-tration of registered shares. It may delegate its duties.

2.7 Convertible bonds and optionsConvertible bondsAs of 31 December 2011, neither Nobel Biocare Holding AGnor any of its subsidiaries had outstanding convertible bonds.

Employee stock optionsOn 9 February 2005, the Board of Directors of Nobel Biocaredecided on a new Employee Stock Option program for theBoard of Directors, officers and key employees of the Group.This staff option program comprises a total of 5’500’000 opti-ons (number adjusted for 1:5 share split in 2008), that couldbe granted over three years. The options vested approxima-tely 27 months after the grant date and could be exercisedduring the one-year period starting on the vesting date(exception granted to the third year grant, see below).

In the first two years of the program (2005 and 2006), a totalof 3’435’750 options were allotted. Since the exercise periodhas expired, there remained no options from these allotmentsas per 31 December 2011.

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Nobel Biocare Annual Report 2011 — Corporate Governance62

During 2007, the third and final year of the program,2’087’250 options (number adjusted for 1:5 share split in2008) were allotted. The strike price for these options is CHF84.70, the average share price during five trading days follo-wing the publication of the full-year report for 2006. Optionsgranted in 2007 vested on 1 July 2009 and can be exercisedduring the period 1 July 2009 up to and including 30 June2013 (extension of exercise period by 3 years based on a deci-sion of the Board of Directors on 1 February 2008; the exten-sion was not applicable to board members).

Options allotment 2007

Exercised Expired 1 Remaining

Grant 2007 – – 2’087’250

31 Dec 2007 – 36’000 2’051’250

31 Dec 2008 – 75’750 1’975’500

31 Dec 2009 – 189’250 1’786’250

31 Dec 2010 – 287’000 1’499’250

31 Dec 2011 – 50’000 1’449’250

1 Options expired as a result of the holder leaving the Company.

For further information on the employee stock option plan,please refer to note 18 of the consolidated financial state-ments on page 126.

The underlying shares for this program were initially providedthrough a share buyback program. In November 2007, theGroup decided to hedge its existing exposure from theEmployee Stock Option program by means of derivatives rat-her than by holding of physical shares. For further informationabout the share buyback program, please refer to note 16 ofthe consolidated financial statements on page 125 and note5 of the parent company accounts on page 157.

The total amount of all options corresponds to 1.2 percent ofthe total registered share capital as of 31 December 2011.

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3. Board of Directors

3.1 Members of the Board of Directors(as of 31 December 2011)

Rolf WatterChairman of the Board ad interim (non-executive), Swiss,born 1958. Rolf Watter is Chairman of the Nomination andCompensation Committee and of the Innovation and Techno-logy Committee. He has been a partner at the law firm Bär &Karrer AG in Zurich since 1994. Until September 2009, he wasmember of its executive board (from 2000) and an executiveboard member upon the incorporation of the firm in 2007. Healso teaches as a part-time professor at the University ofZurich’s law school. Education: Doctorate in law from the Uni-versity of Zurich, Master of Law degree from GeorgetownUniversity, Professor of Law at the University of Zurich. Cur-rent other assignments: Member of the Board of Directors ofZurich Financial Services (insurance) and its subsidiary ZurichInsurance Company (since 2002), of Syngenta AG (agribusi-ness) since 2000, UBS Alternative Portfolio AG (fund of hedgefunds and private equity) since 2000 as well as of A.W. Faber-Castell (Holding) AG (writing, coloring, and creative designproducts) since 1997. Member of the SIX Regulatory Boardand member of the Disclosure Commission of Experts of theSIX Swiss Exchange (since 2003 and 2002 respectively).Chairman of two charitable institutions. Previousassignments: Chairman of Cablecom Holding (telecommuni-cations, 2003–2008); non-executive Director of Feldschlöss-chen Getränke AG (beverages, 2001–2004), of CenterpulseAG (medical devices, 2002–2003), and of Forbo Holding AG(flooring systems, 1999–2005). Shares: 67’332* / Staff opti-ons: 0.

* Thereof 2’000 restricted shares granted by the Company, vesting on 30 June 2015

and 11’832 shares granted by the Company, vesting on 30 June 2016.

Raymund Breu Vice Chairman of the Board ad interim (non-executive),Swiss, born 1945. Raymund Breu is a member of the AuditCommittee and of the Nomination and Compensation Com-mittee. Raymund Breu was CFO of Novartis AG (pharmaceu-ticals) and a member of its Executive Committee from 1996until 2009. He joined the Treasury Department of the SandozGroup (pharmaceuticals) in 1975. In 1982, he became Headof Finance for Sandoz affiliates in the United Kingdom. In1985, he was appointed Chief Financial Officer of Sandoz Cor-poration in the United States where he was responsible forall of Sandoz’ finance activities in that country. In 1990, Ray-

mund Breu became Group Treasurer of Sandoz Ltd., Basel,Switzerland, and, in 1993, Head of Group Finance and a mem-ber of the Sandoz Executive Board. Education: PhD in mathe-matics, Swiss Federal Institute of Technology (ETH), Zurich,Switzerland. Current other assignments: Member of theBoard of Directors of Swiss Re (since 2003) and Member andVice Chairman of the Swiss Takeover Board (since 2002 andas of 2012, respectively). Previous assignments: No previousboard memberships or relevant assignments. Shares:76’562* / Staff options: 0.

* Thereof 2’000 restricted shares granted by the Company, vesting on 30 June 2015

and 4’562 restricted shares granted by the Company, vesting on 30 June 2016.

Daniela Bosshardt-Hengartner Non-executive Member, Swiss, born 1972. Daniela Boss-hardt-Hengartner is a member of the Nomination and Com-pensation Committee and the Innovation and TechnologyCommittee. Ms Bosshardt-Hengartner has been a manage-ment consultant in the healthcare sector since 2004. From2003, she was a financial analyst at M2 Capital ManagementAG (private equity); prior to that she was a financial analystat Bank am Bellevue, where she covered the fields of medicaltechnology, pharma and biotechnology from 1998 until 2002.Daniela Bosshardt-Hengartner started her career as a phar-macist. Education: MSc in Pharmaceutical Sciences from theSwiss Federal Institute of Technology (ETH) in Zurich, Swit-zerland. Current other assignments: Since 2006 board mem-ber of Vifor Pharma, Switzerland; since 2008 board memberof Galenica, Switzerland (pharma) and since 2009 boardmember of Prothor Holding SA/Manufacture La-Joux Perret,Switzerland (high-tech mechanical clockworks) and since2010 board member of RepRisk, Switzerland (environmentaland social risks data provider). Previous assignments: No pre-vious board memberships or relevant assignments. Shares:6’562* / Staff options: 0.

* Thereof 2’000 restricted shares granted by the Company, vesting on 30 June 2015

and 4’562 restricted shares granted by the Company, vesting on 30 June 2016.

Stig G. Eriksson Non-executive Member, Finnish, born 1948. Stig Erikssonis a member of the Innovation and Technology Committee.He was Vice President Business Development, Internationaland Mergers & Acquisitions of 3M (diversified technologycompany) from 2003 until 2006 and a long-time member of3M’s restricted European Operations Committee. Previously,he held various leading positions within the 3M organizationincluding that of CEO/Senior Managing Director of 3M France(1996–2003). From 1993 until 1996, he was ManagingDirector Healthcare Products Europe. From 1989 until 1993,

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Rolf Watter Raymund Breu Daniela Bosshardt-Hengartner

Stig G. Eriksson Edgar Fluri Robert Lilja

Oern Stuge

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he was Managing Director 3M Belgium and Benelux, andfrom 1986 until 1989 Group Director Healthcare ProductsEurope. Stig Eriksson worked at 3M’s headquarters in St Paul,Minnesota, USA as International Director Medical-SurgicalProducts (1983–1986) and was responsible for 3M’s DentalProducts Business in EMEA (1979–1983). Education: MBA inEconomics and Marketing from the Swedish School of Eco-nomics and Business Administration in Helsinki, Finland. Cur-rent or previous assignments: No other current or previousboard memberships or relevant assignments. Shares:10’812* / Staff options: 0.

* Thereof 2’000 restricted shares granted by the Company, vesting on 30 June 2015

and 4’562 shares granted by the Company, vesting on 30 June 2016.

Edgar Fluri Non-executive Member, Swiss, born 1947. Edgar Fluri isChairman of the Audit Committee. He has spent his profes-sional career with PricewaterhouseCoopers (assurance, tax,legal and advisory services) and has extensive experience ser-ving multinational and national companies in a variety ofindustries. He was Chairman of PricewaterhouseCoopersSwitzerland (1998–2008), head of Assurance and BusinessAdvisory Services EMEA (1998–2001) and a member of theGlobal Board of PricewaterhouseCoopers (2002–2005).Before the merger of PricewaterhouseCoopers, he was Chair-man of the Management Committee of STG-Coopers &Lybrand, a member of Coopers & Lybrand International andEuropean Boards (1996–1998) and Deputy Chairman of theManagement Committee (1991–1996). He first joined the firmin 1977 and became a partner in 1986. Edgar Fluri has beena part-time lecturer in public accounting and auditing at theUniversity of Basel since 1987 and was appointed titular pro-fessor in 1997. Education: Doctorate in Economics and Busi-ness Administration from the University of Basel, Swiss Cer-tified Public Accountant (CPA). Current other assignments:Member of the Board of Directors of Orior AG, Zurich (pre-mium convenience food) and Member of the SupervisoryBoard of Brenntag AG, Mülheim an der Ruhr, Germany (che-mical distribution), Member of the Board of Trustees of Beye-ler Foundation, Basel, Member of the Board of BeyelerMuseum AG and of the Board of Galerie Beyeler AG, Basel,Member of the Swiss accounting standards body (SwissGAAP FER). Previous assignments: Member of the Board ofthe Chamber of Commerce of Basel (1995–2008), Memberof the Board of the Swiss Institute of Certified Public Accoun-tants (1995–2007). Shares: 23’062* / Staff options: 0.

* Thereof 2’000 restricted shares granted by the Company, vesting on 30 June 2015

and 4’562 restricted shares granted by the Company, vesting on 30 June 2016.

Robert Lilja Non-executive Member, Swedish, born 1956. Robert Lilja isa member of the Audit Committee. He has extensive experi-ence of international financial markets. In 2004, he foundedLilja & Co. AG, a capital markets advisory boutique, in Zurich,Switzerland. From 1998 to 2004, he held various positionswith Lazard (financial advisory) in London, UK, and Frankfurt,Germany, including Head of Northern European Equity Capi-tal Markets Advisory and Interim Co-Head of Lazard Germany.He became a worldwide partner of Lazard in 1999. In 1998,he executed a special assignment for the Chairman of theWellcome Trust, the UK-based medical charity, before joiningLazard’s Capital Markets division in London, UK. From 1994to 1997, he authored a best-selling book on the global equitycapital markets published by Euromoney Books – “Interna-tional Equity Markets – the Art of the Deal.” In 1985, he joinedCSFB, at the time the international investment banking armof Credit Suisse, where he spent nine years in the Capital Mar-kets Department, lastly as Director of Investment Banking andfrom 1982 to 1985, he worked in the Gold & Uranium andFinance Divisions of Anglo American Corporation of SouthAfrica, in Johannesburg, South Africa. Education: Lic. oec.HSG, St. Gallen Graduate School of Economics, St. Gallen,Switzerland. Current other assignments: No other currentassignments. Previous assignments: Member of the Invest-ment Committee of the Guernsey-based fund manager Equi-librium Capital Limited (2009–2011). Shares: 24’937* / Staffoptions: 0.

* Thereof 2’000 restricted shares granted by the Company, vesting on 30 June 2015

and 4’562 restricted shares granted by the Company, vesting on 30 June 2016.

Oern Stuge Non-executive Member, Norwegian, born 1954. Oern Stugeis a member of the Innovation and Technology Committee.He is currently working as an entrepreneur and investor, ser-ving as Executive Chairman for Impulse Dynamics NV.(healthcare technology) and Bonesupport AB (bone substitu-tes); he is also Chairman of the Board of Aleva NeurosciencesSA and Acarix A/S (cardiac screening); member of the Super-visory board of Mediq NV (pharmaceuticals and medical sup-plies retail and distribution), Systagenix Ltd. (wound manage-ment) and Advanced Cardiac Therapeutics Inc.; SeniorAdvisor for HealthCap AB (life sciences investment fund), andUptake Medical Inc. (medical devices). Prior to joiningImpulse Dynamics, where he served one year as CEO, OernStuge worked for 12 years at Medtronic Inc. (medical tech-nology). He was President of the Cardiac Surgery Division andPresident for Medtronic Europe and Central Asia. Oern Stugewas also a member of the Medtronic Executive and Operating

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Committee, and he has been credited for transforming thecardiac surgery business and accelerated growth for Medtro-nic in its cardiovascular, neurological and spine businesses.Prior to Medtronic, he worked in senior management positi-ons for Abbott Laboratories Inc. (pharmaceutical and nutri-tional products) and Medinor A/S (medical technology). Edu-cation: Graduated “summa cum laude” in Medicine from theUniversity of Oslo, Norway; MBA from IMD, Switzerland. Pre-vious assignments: Member of the Board of Directors ofEucomed (European industry association for medical devices)2007-2009, member of the Board of Directors of Medicult A/S(In vitro fertilization) 2000-2005. Shares: 6’562* / Staff opti-ons: 0.

* Thereof 2’000 restricted shares granted by the Company, vesting on 30 June 2015

and 4’562 restricted shares granted by the Company, vesting on 30 June 2016.

All share and staff option holdings are reported as per31 January 2012.

None of the board members was a member of the ExecutiveCommittee of Nobel Biocare Holding AG or any of itsdirect/indirect subsidiaries in the three financial years prece-ding the period under review.

None of the board members has significant business con-nections with Nobel Biocare Holding AG or any of itsdirect/indirect subsidiaries.

3.2 Other activities and vested interestsApart from what has specifically been mentioned under 3.1,none of the board members holds any positions of relevanceunder the aspect of corporate governance in any – governing or supervisory bodies of any important organi-

zation, institution or foundation under private or public law;– permanent management or consultancy function for

important interest groups; – official function or political post.

3.3 Elections and terms of office

3.3.1 Principles of election and limits on terms of officeThe Board of Directors consists of at least four and a maxi-mum of nine members. The members of the Board ofDirectors are elected individually by the Annual General Mee-ting in each case for a one-year term of office. The term ofoffice of a member of the Board of Directors expires, subjectto prior resignation and removal, on the day of the next AnnualGeneral Meeting. Newly appointed members shall completethe term of office of their predecessors.

According to the Organizational Regulations, dated 1 Novem-ber 2011, after a board member’s initial election to the Board,the Nomination and Compensation Committee (NCC) willrecommend him/her for reelection for two consecutive years,resulting in an initial term of three years on the Board, unlessthere are specific reasons for the NCC not to do so. After thefirst three years of board membership, each board memberis subject to a performance assessment. In case of a positivereview, the NCC will propose the member for another threereelections.

There are no limits established by the Articles of Incorporationregarding how many times a member can be re-elected orany upper age limit for election. However, according to theOrganizational Regulations, a board membership is limited toa maximum of ten years and an upper age is defined the yearthe board member reaches the age of 70.

3.3.2 Time of first election and remaining term of office for each board memberThe Annual General Meeting on 30 March 2011 elected thefollowing Members of the Board:

Members of the Board (elected at Annual General Meeting 2011)

Name Position First elected Elected until

Rolf Watter Chairman ad interim 2007 2012

Raymund Breu Vice-Chairman ad interim 2010 2012

Daniela Bosshardt-Hengartner Member 2010 2012

Stig G. Eriksson Member 2006 2012

Edgar Fluri Member 2008 2012

Robert Lilja Member 2005 2012

Oern Stuge Member 2010 2012

Heino von Prondzynski 1 2010 2012

1 Resigned from Board and as Chairman as of 3 July 2011.

On 3 July 2011 the Board of Directors announced that it willpropose to shareholders to elect Michel Orsinger, Presidentand CEO of Synthes, to the Board at the next Annual GeneralMeeting, after which he would be appointed by the Board ofDirectors as Chairman of the Board of Nobel Biocare Hol-ding AG.

3.4 Internal organizational structureBased on the Articles of Incorporation, the Board constitutesitself (usually at its first meeting after the Annual General Mee-ting). It appoints its Chairman, Vice Chairman as well as aSecretary who is not necessarily a member of the Board. TheBoard of Directors meets at least five times a year. During

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2011, the Group General Counsel served as Secretary of theBoard. From 1 January 2011 to 31 December 2011, the Boardheld eleven meetings, including five times via telephone con-ference. The Board meetings usually lasted around 6 hours,telephone conferences around 1 hour. Each board memberparticipated in all meetings, except Edgar Fluri, who did notparticipate in the meeting of 21 October 2011. Michel Orsin-ger, who will be proposed to the Board at the next AnnualGeneral Meeting, attended the six board meetings and callsafter 3 July 2011 as a guest.

In Sweden, the MBL Law (“Lagen om Medbestämmande”)states that employee (union) representatives have full boardmember rights and obligations. As a company domiciled inSwitzerland, Nobel Biocare Holding AG does not have to com-ply with this law. However, to respect the employee represen-tation, two employee representatives who are on the boardof the Swedish entity Nobel Biocare AB are invited to partici-pate at board meetings of Nobel Biocare Holding AG as non-voting observers.

The Board has issued Organizational Regulations that interalia include the essential roles and responsibilities of theBoard, its Chairman, the CEO and the Executive Committee,as well as the related procedures and processes. The revisedversion of the Organizational Regulations also clarifies the roleof the Board regarding Internal Controls and Executive RiskManagement. The last revision took place as of 1 November2011. The Board also performs a self-assessment on a regularbasis.

Board CommitteesIn accordance with the Organizational Regulations, the Boardhas appointed a Nomination and Compensation Committee,an Audit Committee and an Innovation and Technology Com-mittee (formerly Strategy and Technology Committee, rena-med as of October 2011). Each Board Committee has a writ-ten charter approved by the Board of Directors outlining itsobjectives and duties (the Committee’s charters are publishedon the Nobel Biocare website: www.nobelbiocare.com/governance/documents). The members of the Committeesand their chairpersons are appointed each year at the firstBoard meeting after the Annual General Meeting for a periodof one year. Each committee consists of at least three mem-bers of the Board. The Board may, both on a permanent andinterim basis, appoint additional committees for any othermatters or specific areas. The Committees report regularly tothe Board on their activities and findings. Overall responsibi-

lity for duties delegated to the Committees remains with theBoard.

Committee memberships as of 31 December 2011

Name Audit Nomination Innovation Committee and and

Compensation Technology Committee Committee

Rolf Watter C C

Raymund Breu, F M M

Daniela Bosshardt-Hengartner M M

Stig G. Eriksson M

Edgar Fluri, F C

Robert Lilja, F M

Oern Stuge M

C ChairmanM MemberF Financial expert

Nomination and Compensation Committee (NCC)In accordance with the organizational regulations, the Com-mittee is composed of three members of the Board ofDirectors and invited guests from Management. The Boardnominates the Chairman of the NCC. The NCC nominates amember of Management to serve as a Secretary. In 2011, theVice President Human Resources served in that role. TheCommittee shall meet a minimum of five times a year and hasthe following authority, responsibilities and scope of work:– discussion and review of all relevant matters regarding

Human Resources strategy and implementation as well asregarding key management, including nomination andcompensation;

– management development and succession planning, toensure availability of best possible leadership and manage-ment;

– review of proposals for appointment and replacement ofEC members and related motion for endorsement by theBoard;

– review of compensation systems and compensation poli-cies;

– review and approval of compensation for managementmembers;

– review and approval of long-term incentive (LTI) programs; – composition of the Board and identification of candidates

with the required skills and expertise;– compensation of Board members.

The NCC will, through its Chairman, report back to the Boardand submit for and request Board approval should this be

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needed under the Organizational Regulations. The CEOattends the meetings of the Nomination and CompensationCommittee, with the exception of meetings that deal with hisown compensation or “Board only topics”. From 1 January2011 to 31 December 2011, the NCC met five times. All mem-bers participated in all meetings. Michel Orsinger attendedtwo meetings after 3 July 2011 as a guest.

Audit Committee (AC)The Committee is composed of at least three non-executivemembers of the Board of Directors, at least one of whichshould be a financial expert. The Committee meets at leastfour times per year and its primary objective is to support theBoard of Directors in the performance of its supervisoryduties. The Head of Internal Audit, Compliance and RiskManagement served as the Committee’s secretary throug-hout 2011. The CFO and the Group General Counsel partici-pated in the Committee’s meetings on a regular basis, whe-reas the Chairman of the Board and the CEO participated onrelevant agenda topics. The Audit Committee focuses on thefollowing major responsibilities and duties:– review of financial reporting;– supervision of external audit;– supervision of internal audit;– supervision of risk management;– supervision of internal controls;– supervision of compliance with organizational regulations

and corporate governance;– supervision of fraud prevention.

The Chairman of the AC presents a report on the outcome ofthe discussions and findings of the AC meetings to the Boardof Directors in the subsequent Board meeting. The report alsoincludes recommendations to the Board and decisions madeby the AC where the authority has been delegated by theBoard to the AC.

From 1 January 2011 to 31 December 2011, the Audit Com-mittee met nine times, thereof four times via telephone con-ference. All members participated in all meetings.

There is a standard agenda for all AC meetings, added by spe-cial topics, based on the annual agenda and upcoming prio-rities. In all meetings, the CFO, the Group General Counseland the Head Internal Audit, Compliance and Risk Manage-ment give an update on their activities. Furthermore, at theend of each meeting, there is a private session of the AC.

At the AC meetings, the following key topics are presentedand discussed on a regular basis: special accounting andreporting topics, cash status and forecast, key financing deci-sions, tax, status of litigation cases, compliance status andissues, audit reports and project updates. Additionally, finan-cial statements, media releases and the Annual Report arepresented, reviewed and approved. The treasury manual andthe charters of the AC and the Internal Audit function are revie-wed once a year.

The risk management process and the Internal Controls Sys-tem (ICS) status are reviewed at least annually. The compli-ance roadmap is reviewed periodically.

On a regular basis Nobel Biocare’s auditor, KPMG AG, is invi-ted for an audit update. Once per year, KPMG AG’s perfor-mance is assessed, the audit scope defined and their budgetapproved.

Upon request, the AC also approves key finance, risk andcompliance standards.

The AC also approves the annual work program of the InternalAudit function and assesses its performance.

The AC respectively defined members of the AC meet theCFO, the Group General Counsel and the Head Internal Audit,Compliance and Risk Management for private sessions. TheChairman of the AC also runs meetings with KPMG AG wit-hout management attendance.

Innovation and Technology Committee (ITC, formerlyStrategy and Technology Committee)The Committee is composed of at least three and maximumfour members of the Board of Directors and members ofManagement, one of them being the CEO. The Board estab-lishes the ITC. The ITC nominates a Member of Managementto serve as a Secretary. In 2011, the Head of Mergers andAcquisitions served in that role. The Committee has the fol-lowing authority, responsibilities and scope of work:– discussion and review of all relevant matters regarding

innovation, products, solutions and key technologies wit-hin all fields of the corporate strategy;

– review of major launch plans;– review of innovation and technology roadmaps for relevant

functions;– discussion of options for portfolio enlargement; – review of the key product development process;– review of patent strategy.

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The ITC will through its Chairman report back to the Boardand submit for and request Board approval should this beneeded under the Organizational Regulations. From 1January 2011 to 31 December 2011 the committee met fivetimes. Apart from Stig Eriksson and Daniela Bosshardt-Hen-gartner, who did not participate in the meeting of 15 February2011, all members attended all meetings. Michel Orsingerattended three meetings after 3 July 2011 as a guest.

Board members and attendances 2011

Name Full Board AC NCC ITC

Number of meetings in 2011 11 9 5 5

Rolf Watter 1 11 9 3 3

Raymund Breu 2 11 5 5

Daniela Bosshardt-Hengartner 11 4 4

Stig G. Eriksson 11 4

Edgar Fluri 10 9

Robert Lilja 11 9

Oern Stuge 11 5

Heino von Prondzynski 3 4 2 2 2

Antoine Firmenich 4 1 1

Michel Orsinger (guest) 6 2 3

1 Vice-Chairman and member of the Board until 3 July 2011, Chairman ad interim and member of the Board after 3 July 2011

2 Vice-Chairman and member of the Board after 3 July 20113 Chairman and member of the Board until 3 July 20114 Member of the Board until 30 March 2011

3.5 Definition of areas of responsibilityThe Board of Directors is entrusted with the ultimate directionof the Company as well as the supervision of management.The Board decides on all matters that have not been reservedfor or conferred upon another governing body of the Com-pany by law, by the Articles of Incorporation, or by the Com-pany’s organizational regulations. The Board’s duties andresponsibilities, inter alia, are to:– select, appoint, dismiss, supervise, rate the performance

of and approve the remuneration of (i) the CEO (upon pro-posal by the NCC) and (ii) the other members of the EC(upon proposal by the CEO and motion of the NCC);

– appropriately instruct and diligently supervise the CEO;– nominate the officers representing Nobel Biocare and

determine their signatory power for registration in the com-mercial registry;

– take appropriate actions and pass resolutions on all mattersto be submitted to, or required for the preparation of theshareholders’ meeting, pursuant to the Articles of Incorpo-ration, such as (i) annual reports to the shareholders, (ii)payment of dividends, (iii) election or reelection of board

members and the statutory auditors of Nobel Biocare andof the Group and (iv) amendments of the Articles;

– review and approve the overall strategy, the business stra-tegies, basic organization and the relevant Group policiesand general guidelines;

– approve the annual Group budget, the Group’s consolida-ted quarterly and annual financial statements, Nobel Bio-care’s annual financial statements and the annual report tothe shareholders;

– approve and regularly review the implementation of theGroup’s overall accounting principles, its financial controland planning procedures, and its compliance program;

– assess the risks associated with conducting the Group’sbusiness, based on reports provided by the management;

– approve the Group’s overall guidelines on lending and bor-rowing limits, and on new investments;

– ensure and review the design, implementation and opera-tion of a system of internal controls (“IC”) by managementin line with legal obligations and industry practices;

– review the Group information systems (“IS”) strategy;– review and approve acquisitions, divestitures, liquidations

and other transactions that are financially or strategicallymaterial to the business activities of the entire Group, themateriality being defined as exceeding a value ofCHF 1’000’000;

– designate a Secretary to the Board of Directors.

The Board of Directors assumes the ultimate responsibility forthe Company’s and Group’s business and affairs. Within theframework of the legal requirements of the company, theBoard delegates the overall business, affairs and day-to-daymanagement to the CEO and the EC, with the exception ofany Board or Shareholders’ meeting duties and authoritiesthat cannot be delegated.

The Chairman of the BoardIn addition to his legal and statutory duties, the Chairman car-ries out those tasks delegated to him by the Board. The Chair-man, specifically, has the authority, respectively the duty, to:– ensure supervision of the CEO;– maintain close cooperation with the CEO and the EC;– inform the board on important matters;– represent the board vis-à-vis the CEO and the EC;– represent Nobel Biocare vis-à-vis shareholders and, in spe-

cial cases, maintain relations with shareholders and inves-tors, complementing the regular activities of the CEO andthe EC;

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– represent, in special cases, Nobel Biocare and the Groupvis-à-vis the general public and the media, complementingthe regular activities of the CEO and the EC;

– prepare and chair the Shareholders’ meetings;– prepare and chair the meetings of the Board of Directors;– supervise the Board Committee’s work;– supervise the EC’s measures to ensure compliance with all

legal provisions and financial market regulations;– supervise the implementation of the resolutions of the

Board and the Board Committees;– attend management meetings, such as EC meetings, in

consultation with the CEO;– inspect all relevant books and files.

3.6 Information and control instruments vis-à-vis the Executive CommitteeGroup Management reports in a regular and structuredfashion to the Board of Directors. The primary means of infor-mation are regular systematic reporting by the CEO to theBoard, regular participation, including presentations, bymembers of the Executive Committee in Board meetings andregular information on relevant developments via electronicmeans. In every meeting, the CEO informs the Board on thecurrent course of business and important business transac-tions of Nobel Biocare and the Group. The information mustbe of a quality that enables the Board to effectively reviewand supervise the routines, guidelines and organizations ofNobel Biocare and the Group. The CFO and the Group GeneralCounsel regularly report on financial key figures and parame-ters and relevant legal matters, respectively. The Chairman ofthe Board and the CEO meet on a regular basis to address allrelevant business issues and to define appropriate follow-upactivities. Furthermore, the Chairman holds meetings withindividual members of the Executive Management as dee-med necessary and appropriate. Each board member is entit-led to request information on all matters relating to Nobel Bio-care and to the Group as a whole. Board members areexpected to attend Company events and visit operations andsubsidiaries from time to time. The Chairman of the AuditCommittee has the right to request relevant informationdirectly from respective departments of Nobel Biocare.

Internal AuditInternal Audit is an independent monitoring and advisorybody that reports to the AC, administrative wise to the CEO.The Head Internal Audit, Compliance and Risk Managementhas full access to all required corporate information and cancontact all members of the senior management and the AC

anytime. The Internal Audit function complies with IIA stan-dards.

The scope of activities, the accountability and responsibilityas well as the reporting line are well defined in the InternalAudit Charter. The Head Internal Audit, Compliance and RiskManagement is in charge of:– Assurance activities, including the Letter of Assurance pro-

gram:– Enterprise Risk Management (ERM)– Whistleblower Management (co-management with the

Group General Counsel)– Internal Controls System Management.

Internal Audit focuses its activities on governance, risk, com-pliance, financial accounting and reporting. The function pro-vides risk-led analyses and evaluates business processes by:– examining the reliability and completeness of financial and

compliance relevant information;– examining the adherence to the controls system related to

compliance with internal and external directives, processand controls standards, laws, regulations and industry stan-dards;

– examining whether the Group’s assets are secured;– assessing the business risks and the adequacy of mitigating

strategies and action plans.

In 2011, Internal Audit performed seven business audits andsupported one business review.

The selection of subsidiaries, plants or Group Functions isbased on materiality, country and company respectivelyfunction risks and rotation. The AC approves the audit scopeonce a year.

The scope comprises all audit-relevant business cycles.

The findings are assessed (level 1 to 5) based on a detailedcriteria catalogue, which has been approved by the AC. Inter-nal Audit provides in-depth recommendations per finding.Local and Group Management have to comment the findingsand recommendations and have to define remediation pro-grams with deadlines and accountabilities.

Copies of the full report (levels 1 to 5) are sent to local andregional Management. A management summary, includingthe details of medium to high rated findings (levels 3 to 5) aredisseminated to the CEO, the Group General Counsel, theCFO, the Chairman of the Board and the members of the Audit

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Committee. The external auditors also receive a copy of themanagement summary.

A reporting cycle has been defined and established, ensuringtimely and structured information of all stakeholders and deci-sion makers.

In case of very material findings (level 5) like fraud or materialbreaches of compliance standards, an exception report isimmediately issued and sent to the Chairman of the Board,the Chairman of the AC and the CEO. In 2011 no exceptionreport has been issued,

All reports are presented and discussed in the AC meeting.A quarterly follow-up with the audited units is made to trackthe implementation of the agreed action points. This follow-up status report is presented to the AC.

For further details on the Company’s risk management,please refer to pages 94 to 98.

4. Executive Committee

The Board delegates day-to-day management of the Com-pany to the CEO and the Executive Committee.

The CEO is responsible for Nobel Biocare’s and the Group’soverall business and affairs and has the final authority in allmatters of management that are not within the duties andauthorities of the Board of Directors or the Shareholders’meeting pursuant to the provisions of law, the Articles ofIncorporation or the Organizational Regulations. The CEO isresponsible for the implementation of all Board resolutionsand the supervision of all management levels in the Group.Without limiting the generality of the aforementioned, theCEO has the specific duties and powers to– develop the strategy of the Group and to obtain approval

for it by the Board;– be the main contact person of the Board;– direct the EC, specifically by supervising and coordinating

the activities of the EC, whose members are appointedbased on his proposal and approval by the Board;

– determine the agenda items of the meetings of the EC incoordination with its members, conduct those meetingsand ensure that the EC’s resolutions are implemented;

– represent Nobel Biocare vis-à-vis the shareholders and,together with the other members of the EC and in coordi-

nation with the Chairman, maintain relations with sharehol-ders and investors;

– represent Nobel Biocare and the Group towards the publicand media, together with the EC and in coordination withthe Chairman, who will, in special cases, complement suchactivities;

– inform the Chairman on an ongoing basis and the Boardregularly on the course of business, compliance with thebudget, and exceptional occurrences that exceed the nor-mal course of business.

Within the scope of the Organizational Regulations and otherrelated internal rules, the members of the EC (excluding theCEO) take over individual tasks and are individually responsi-ble to the CEO for the performance of these tasks. The mem-bers of the EC may, with the agreement of the CEO, delegatethe tasks relating to their areas of responsibility.

Without limiting the generality above, the EC has the specificduties to – organize and execute the management of Nobel Biocare

within the scope of the delegation so such responsibilitiesby the Board;

– prepare decisions to be taken within the scope of respon-sibilities of the Board and implement the related resolutionsof the Board under the supervision of the CEO;

– further develop and implement the business strategy;– prepare the consolidated Group budget for the review by

the Board;– manage the risks associated with conducting the Group’s

business;– design, implement and operate a system of Internal Con-

trols in line with legal obligations and industry practices;– appoint, supervise and dismiss the management of the

Group’s companies;– appoint members or representatives to the supervisory

boards of subsidiaries;– appoint, supervise and dismiss the managers reporting to

the individual members;– manage the staff and the divisional functions of the Group.

4.1 Members of the Executive CommitteeMembers of the Executive Committee are appointed by theBoard of Directors upon proposal of the CEO and respectivemotion of the NCC.

Changes announced in 2011Effective 1 January 2011, Melker Nilsson was appointed Pre-sident and General Manager North America and member of

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the EC replacing Bill Ryan. Mike Thompson was appointedSenior Vice President & General Manager Asia Pacific, andmember of the EC. He succeeded Tom Olsen, who becameExecutive Vice President of Sales for North America. Jörg vonManger-Koenig, Group General Counsel, was appointedSenior Vice President Legal and Compliance and member ofthe EC.

Effective 1 April 2011, Richard T. Laube was appointed ChiefExecutive Officer and member of the EC, replacing DomenicoScala.

Effective 12 August 2011, Melker Nilsson was appointed Exe-cutive Vice President Global Customer and Sales Develop-ment.

Effective 30 November 2011, Hans Schmotzer, Executive VicePresident Research and Development, left the Company. Hisresponsibilities were transferred ad interim to Hans Geiselhö-ringer, Executive Vice President Products and Development.Streamlining reporting structures within the EC MichaelGlenn Thompson, Senior Vice President and General ManagerAPAC, and Alexander Ochsner, Senior Vice President andGeneral Manager EMEA, both of whom report to Melker Nils-son, Executive Vice President Global Customer and SalesDevelopment, stepped down from the Executive Committee,to dedicate their full attention to their regional and marketresponsibilities.

A table with the composition of the Executive Committee asof 31 December 2011 can be found on page 76. Additionalinformation about the Executive Management is disclosed onpages 77 to 79.

4.2 Other activities and functionsApart from what is specifically mentioned in the ExecutiveCommittee section, none of the Executive Committee mem-bers has any positions of relevance under the aspect of cor-porate governance in any– governing or supervisory bodies of any important organi-

zation, institution or foundation under private or public law;– permanent management or consultancy function for

important interest groups;– official function or political post.

4.3 Management contractsHans Geiselhöringer, Executive Vice President GlobalResearch, Products & Development, is employed by MedtechStrategic Services AG in Küsnacht, and his tasks and respon-

sibilities are agreed upon in a management service contractwith this company. These services were compensated with afixed cash amount of EUR 868k in 2011 (664k in 2010). Thecontract expired on 31 December 2011 after which Hans Gei-selhöringer entered a regular executive employment contractwith Nobel Biocare. Further information can be found in note30 to the consolidated financial statements on page 147.

5. Compensations, shareholdingsand loans

5.1 Content and method of determining the compensation and the shareholding programsFor additional information regarding compensation, sharehol-dings and loans of the Board of Directors and the ExecutiveCommittee, please refer to the remuneration report on page80 as well as in note 12 to the financials of the parent companyon page 159.

6. Shareholders’ participation rights

Shareholders’ participation rights are described in detail inthe Articles of Incorporation of Nobel Biocare Holding AG.These Articles of Incorporation can be downloaded from theCompany’s website, www.nobelbiocare.com/governance/documents, or can be ordered via the contact addressesfound on page 76 of this Annual Report.

6.1 Voting rights restrictions and representationPlease see section 2.6 of this Corporate Governance reporton page 61 about the voting rights restrictions. The Articlesof Incorporation and the Board of Directors provide for therules regarding participation and representation at the Sha-reholders’ Meeting. A shareholder may only be representedby his legal representative, another shareholder with the rightto vote, proxies designated in an agreement with the nomi-nee, corporate bodies (“Organvertreter”), the independentproxy (“unabhängiger Stimmrechtsvertreter”) or by a bank ora broker (“Depotvertreter”). The Chairman of the Sharehol-ders’ Meeting decides whether a proxy will be accepted. Eachshare entitles to one vote.

6.2 Statutory quorumsThe Shareholders’ Meeting passes its resolutions and carriesout its elections with an absolute majority of the share votes

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represented, to the extent that neither the law nor the Articlesof Incorporation provide otherwise. Decisions at the GeneralMeeting calling for a quorum of at least two thirds of the votesrepresented and the absolute majority of the represented sha-res par values are required for:– the cases listed in art. 704 para. 1 CO;– the conversion of the global share certificate into individual

share certificates;– the removal of restrictions on the transfer of registered sha-

res;– the conversion of registered shares into bearer shares;– any change to the aforementioned provisions.

If an election cannot be completed upon the first ballot, therewill be a second ballot at which the relative majority decides.The Chairman has no casting vote. Elections and votes takeplace openly, provided that neither the Chairman nor a simplemajority of the votes requests a secret ballot.

6.3 Shareholder meetingsThe Articles of Incorporation of Nobel Biocare Holding AG donot contain any provisions deviating from the law as far ascalling of the shareholders’ meeting is concerned. The AnnualGeneral Meeting is held within six months after the close ofthe financial year. Extraordinary General Meetings can be cal-led as often as necessary, in particular, in all cases requiredby law. Extraordinary General Meetings are convened by theBoard of Directors within two months if shareholders repre-senting at least ten percent of the share capital request sucha meeting in writing, setting forth the items to be discussedand the proposals to be decided upon. General Meetings areconvened by the Board of Directors and, if need be, by theAuditors.

The convening of a General Meeting takes place by a publi-cation in the Swiss Official Gazette of Commerce at least 20days prior to the day of the meeting. Registered shareholdersmay also be informed by mail. The convening text states thedate, time and place of the meeting, the agenda, the propo-sals of the Board of Directors and the proposal of the share-holders who have requested the General Meeting or that anitem be included on the agenda. No resolutions can be passedregarding matters that have not been announced in this man-ner, except regarding the proposals to convene an extraordi-nary Shareholders’ Meeting or to carry out a special audit.

The annual business report and the Auditors’ report are sub-mitted for examination by the shareholders at the registeredoffice of the Company at least 20 days prior to the date of the

ordinary Shareholders’ Meeting. Reference to such submis-sion and to the shareholders’ rights to request the conveyingof these documents to them are included in the invitation tothe Shareholders’ Meeting.

6.4 AgendaOne or more shareholders whose combined holdings repre-sent an aggregate nominal amount of at least 0.1 percent ofthe Company’s share capital may demand that an item beincluded on the agenda of a General Meeting; such a demandmust be made in writing to the Board of Directors at the latest45 days before the General Meeting and include evidence ofthe required shareholding and shall specify the proposals.

6.5 Registration in the share registerThe Company maintains a shareholders’ register showing thenames, first names, domicile, address and nationality (in thecase of legal entities the registered office) of the holders orusufructuaries of registered shares.

7. Change of control and defensive measures

7.1 Duty to make an offerUnder the Swiss Federal Act on Stock Exchanges and Secu-rities Trading, shareholders and groups of shareholders actingin concert who acquire more than 33.3 percent of the votingrights of a company incorporated in Switzerland of which atleast one class of equity securities is listed on the Swiss StockExchange must submit a takeover bid to all remaining share-holders. The Articles of Incorporation of Nobel Biocare do notcontain any provisions on opting-out or opting-up (article 22of the Swiss Federal Act on Stock Exchanges and SecuritiesTrading).

7.2 Clauses on changes of controlAs of 31 December 2011, neither a member of the Board ofDirectors nor a member of the Executive Committee ormanagement had a contract that provides for benefits upontermination of employment due to changes of control. Howe-ver, all restricted shares granted in the Performance ShareUnit Plan (PSUP) will immediately vest in the case of a changeof control.

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Nobel Biocare Annual Report 2011 — Corporate Governance74

8. Auditors

8.1 Duration of the engagement and term of office of the lead auditorKPMG AG, Zurich, assumed the existing auditing engage-ment for the Nobel Biocare Holding Group on 30 March 2011(first time elected in 2002). The Annual General Meeting electsthe auditors for a term of one year, renewable annually. Theauditor in charge is Mr Rolf Hauenstein. He assumed hisresponsibility in 2008.

8.2 Auditing feesThe following fees were charged for professional services ren-dered by KPMG AG, for the 12-month period ending31 December:

Fees

in EUR ’000 2011 2010

Audit services 930 954

Non-audit services

Tax advice 43 17

Legal advice – –

Transaction consulting – –

Other non-audit services 17 1

Total non-audit services 60 18

Total 990 972

Audit services consist of standard audit work that needs tobe performed each year in order to issue an opinion on theconsolidated financial statements of the Group and to issuereports on the local statutory financial statements. It alsoincludes services that can only be provided by the Group audi-tor and includes audit of prospectuses, implementation ofnew or revised accounting policies, and internal controlreview of systems. Non-audit services include other servicesprovided by auditors but not restricted to those that can onlybe provided by the auditor signing the audit report.

8.3 Additional feesSee figures in the table in section 8.2 above.

8.4 Supervisory instruments vis-à-vis the auditorsThe Board of Directors performs its supervisory functions vis-à-vis the external auditors through the Audit Committee,which meets at least four times a year. The primary objectiveof the Audit Committee is to support the Board of Directorsin monitoring the Company’s internal control, accountingprinciples, risk management, financial reporting and auditing.

Please also refer to section 3.4 of this Corporate Governancereport on page 66. The Audit Committee, on behalf of theBoard of Directors, is also responsible for monitoring perfor-mance of the external auditors, checking their independenceand coordinating their work with the internal audit. In addi-tion, the Audit Committee monitors implementation of fin-dings of external and internal auditors by management. TheAudit Committee meets regularly with the statutory externalauditors as well as with internal audit. Furthermore, the AuditCommittee prepares proposals for the appointment or remo-val of the external auditors for submission to the Board, whichthen nominates the external auditor for election by the Gene-ral Meeting. The Audit Committee reports to the Board ofDirectors about its discussions with the external auditors. Atleast once a year, the lead partner takes part in a meeting ofthe Board of Directors.

The external auditors report their findings (from the mid-yearlimited review and from the full-year audit) at least twice ayear to the Audit Committee and to the Board of Directors, inline with the respective legal requirements in Switzerland(OR 728b Abs. 1).

In 2011, the external auditors participated in four meetingswith the Audit Committee, the Head of Internal Audit, Com-pliance and Risk Management participated in eight meetingsof the Audit Committee (as secretary). The external auditorsattended one Board meeting for a yearly presentation. In 2011the Head of Internal Audit, Compliance and Risk Managementparticipated in three meetings with the Board (for riskmanagement related topics).

Selection procedure: Selection of the external auditor lasttook place in 2002. Due to the independency criteria, onlytwo worldwide operating audit companies were invited tosubmit proposals and at the end of this process KPMG wasproposed based on regular business evaluation criteria suchas service level, global presence and rate.

The review of the performance of the external auditors andtheir compensation was performed based on answers of cor-porate functions and audited local organizations to a set ofquestions. The questions focused mainly on the efficiency ofthe audit process, professionalism of audit staff, technicalproficiency/understanding of accounting policies, adequacyof audit fees and fairness of audit approach.

Independence of the auditors is assessed and confirmedyearly. Non-audit services: Non-audit services up to

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Corporate Governance report 75

EUR 25’000 are at the discretion of the executive manage-ment. Any assignment above EUR 25’000 requires approvalfrom the Audit Committee. For each additional task, it is mandatory for the external auditors to confirm that it does notinterfere with independency of their work as external auditors.

9. Information policy

Nobel Biocare pursues an open and active information policyfor the benefit of both the financial markets and the generalpublic. All stakeholders should be given the same opportunityto follow Group developments. Publications are made availa-ble to all stakeholders at the same time. Nobel Biocare’s repor-ting and transparency surpasses legal requirements. InvestorRelations (IR) is a staff function at Nobel Biocare and reportsto the CFO, while the CEO holds ultimate responsibility for allexternal information to the financial community. The IRDepartment has the task of continuously providing factual,relevant information to shareholders and the stock market.The Board of Directors has issued guidelines to ensure thatinvestors will be informed in a timely and appropriate fashionin compliance with the rules specified in registration contractswith the SIX Swiss Exchange.

Insider trading policyIn order to prevent insiders from benefiting from confidentialinformation, the Board of Directors issued guidelines on how

to deter both corporate insiders and external consultants frommaking use of confidential information. The Board ofDirectors has established so-called blocking periods to pre-vent insiders from trading during sensitive periods. The Boardof Directors approved and implemented an amended InsiderDirective with effect of 25 September 2008, which is in com-pliance with the EU directive on Market Abuse.

Financial reporting and contact informationNobel Biocare publishes the Group’s financial accounts,together with interim reports, every quarter. These reports arepublished in English. A shorter media release of those ispublished in German. In each case, results are publishedbefore the start of stock market trading by way of the mediaand a posting on the Company’s website, www.nobel -biocare.com.

Media and analyst conferences take place at least once a year.Telephone conferences for analysts and investors take placeat least once every quarter. At www.nobelbiocare.com, theCompany offers access to its current share price, annualreports, quarterly reports, media releases and presentationsmade at investors’ and analysts’ conferences. The websitealso presents a financial calendar listing all relevant dates forinvestors. An e-mail subscription service provides updatesand alerts: www.nobelbiocare.com/email-alerts

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Nobel Biocare Annual Report 2011 — Corporate Governance76

Executive Committee Members as of 31 December 2011

Name Born Nationality Position Appointed

Richard Laube 1956 Swiss / USA Chief Executive Officer 2011

Dirk W. Kirsten 1968 Swiss / German Chief Financial Officer 2008

Hans Geiselhöringer 1 1968 German Executive Vice President Global Research, Products and Development 2010

Rolf Melker Nilsson 1960 Swedish Senior Vice President Global Sales and Customer Development 2011

Petra Rumpf 1967 German Senior Vice President Business Development and Strategic Planning 2007

Jörg von Manger-Koenig 1960 German Senior Vice President Legal & Compliance 2011

Nicolas Weidmann 1963 Swiss Senior Vice President Global Communications 2007

Ernst Zaengerle 1948 Swiss Executive Vice President Global Operations 2009

1 Under management service agreement until 31 December 2011

Please see page 69 for changes in the EC effective 1 January 2011.

2011 Financial calendar

Annual General Meeting 29 March 2012

Ex-dividend date 2 April 2012

Record date 4 April 2012

Payment of dividend 5 April 2012

Interim Report 1, January – March 27 April 2012

Interim Report 2, January – June 21 August 2012

Interim Report 3, January – September 8 November 2012

Contact information

Company address Nobel Biocare Holding AGP.O. Box, 8058 Zurich-Flughafen, SwitzerlandPhone +41 43 211 42 00, Fax +41 43 211 42 42 or +41 43 211 58 11E-mail investor.relations@nobelbiocare.comwww.nobelbiocare.com

Süha Demokan, Head of Investor RelationsPhone +41 43 211 42 30 or +41 79 430 81 46

Investor Relations E-mail suha.demokan@nobelbiocare.com

Nicolas Weidmann, Sr VP Global CommunicationsPhone +41 43 211 42 80 or +41 79 372 29 81

Media Relations E-mail nicolas.weidmann@nobelbiocare.com

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10. Executive Committee

Richard T. LaubeChief Executive Officer (CEO), dual Swiss-US citizen, born1956. Richard T. Laube was appointed Chief Executive Officeras of April 2011. Prior to joining Nobel Biocare, Richard Laubeheld the position of CEO of Nestlé Nutrition, Nestlé SA andwas a member of the Nestlé Executive Board (2005–2010).He had joined Nestlé as Deputy Executive Vice President, Cor-porate Business Development in 2005. From 1999–2005 hewas President of Roche Consumer Health and from 2001–2005 also Member of the Roche Corporate Executive Com-mittee. He also held the positions as Managing Director, Proc-ter & Gamble, Brazil (1996–1999), General Manager, Procter& Gamble Pharmaceuticals, Germany (1992–1996) andvarious marketing and brand management positions withProcter & Gamble in Japan, the US, and Switzerland (1980–1992). Education: Master and Bachelor degrees in Organiza-tional Development and Evaluation Research, Boston Univer-sity. Current other assignments: Since 2008 IndependentDirector of Logitech SA and member of its CompensationCommittee. Since 2010 he is Executive Advisor of Roark Capital Group. Shares: 110’000 / Performance share units:32’573 / Staff options: 0.

Dirk W. KirstenChief Financial Officer (CFO), Swiss-German dual citizen,born 1968. Dirk W. Kirsten was appointed Chief FinancialOfficer of Nobel Biocare, effective March 2008. He brings toNobel Biocare extensive financial expertise, gained over14 years in various finance and senior finance positions onthe banking, corporate and advisory side. Prior to joiningNobel Biocare, Dirk Kirsten held the position of Group Trea-surer at Syngenta (agribusiness, 2005–2008) in Basel, Swit-zerland. Before Syngenta, he was a senior finance executiveat Roche Holding AG, in Basel (healthcare, 2002–2004). Priorto his corporate experience, Dirk Kirsten worked with Deut-sche Bank (2000–2002), PricewaterhouseCoopers (assu-rance, tax and legal advisory services, 1999–2000) and UBS(1995–1998; formerly: SBC Warburg) in various internationaladvisory and investment banking positions. Education: PhDin Management with specialization in Corporate Finance/Sha-reholder Value Management, University of Cologne, Ger-many; MBA Class, London Business School, London, Eng-land (Program of International Management), in combinationwith Master Studies (Business administration: Finance, Tax,Accounting) at University of Cologne, Germany. Current other

assign ments: No other relevant current assignments. Shares:2’600 / Performance share units: 45’254 / Staff options: 0.

Hans GeiselhöringerExecutive Vice President Global Research, Products andDevelopment*, German, born 1968. Hans Geiselhöringer joi-ned Nobel Biocare in 2008 as Head of NobelProcera. In 2009,he was promoted to Head of NobelProcera & Guided Surgeryand in 2010 became accountable for Global Marketing andProducts. In 2011, he was appointed to Head of GlobalResearch, Products and Development. Hans Geiselhöringeris trained as a dental technician (SZI – Süddeutsche Zahn-technikerinnung). In 1998, he founded DentalX GmbH, a den-tal laboratory chain specializing in implantology, anaplasto-logy, functional and esthetic reconstructions and imagingtechnologies. In 2009, he founded Medtech Strategic Ser-vices AG, a professional service firm, specialized in medicaldesign and production technology. Hans Geiselhöringer is arenowned expert on dental technologies and material, andhas published/co-published various clinical and research arti-cles. From 2004 to 2009, Hans Geiselhöringer acted as a Glo-bal Speaker for Nobel Biocare. He is a member of numerousinternational dental associations and a recognized lecturer atdental conventions throughout the world. Shares: 0 / Perfor-mance share units: 28’500 / Staff options: 0.

* Under management service contract until 31 December 2011

Melker NilssonExecutive Vice President Global Customer and SalesDevelopment, Swedish citizen, born 1960. Melker Nilssonwas appointed Executive Vice President Global Customer andSales Development in August 2011. Previously he held theposition as President and General Manager North America(January-August 2011) and Chief Operating Officer NorthAmerica for Nobel Biocare (2010-2011). From 2006-2009 hewas President of Neoss US (dental implants, 2006-2009).Prior to that, Melker Nilsson held various managementassignments at Nobel Biocare in Europe and North Americafrom 1992-2005 and various management positions in salesand marketing in Luxembourg, Germany and Sweden forNordea (banking, 1986-1991). Education: Master’s degree inlaw from Lund University in Sweden. Shares: 0 / Performanceshare units: 12,512 /Staff options: 0.

Petra RumpfSenior Vice President, Business Development and Strate-gic Planning, German, born 1967. Petra Rumpf joined NobelBiocare in December 2007 as Vice President Business Deve-

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Richard T. Laube Dirk W. Kirsten Hans Geiselhöringer

Rolf Melker Nilsson Petra Rumpf Jörg von Manger-Koenig

Nicolas Weidmann Ernst Zaengerle

Nobel Biocare Annual Report 2011 — Corporate Governance78

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Corporate Governance report 79

lopment and Strategic Planning. Previously, she spent16 years with Capgemini Transformation Consulting gainingexperience in strategy development, business transforma-tion, and mergers and acquisitions working with leading cor-porations in life sciences, manufacturing and high-tech indus-tries. From 2002 until 2007, she was Vice President andmember of the Central European Management Team of Trans-formation Consulting. She was also a member of the GlobalTransformation Consulting Certification Board. Prior to that,she was Head of Strategy Consulting in Central Europe, Headof Marketing and Sales Consulting in Central Europe and Glo-bal Head of Mergers and Acquisitions. She joined Capgeminiin 1991. Education: BA in economics, University of Trier (Ger-many). MBA, specialization in finance and investment, ClarkUniversity, Massachusetts, USA. Current other assignments:No other relevant current assignments. Shares: 7’900 / Per-formance share units: 48’544 / Staff options: 35’000.

Jörg von Manger-KoenigSenior Vice President Legal & Compliance, German, born1960. Jörg von Manger-Koenig was appointed Senior VicePresident Legal & Compliance in January 2011. Since 2007he also serves as the Group General Counsel and Secretaryof the Board of Directors of Nobel Biocare. Before joiningNobel Biocare in 2007, he held the position of Executive VicePresident Legal/Regulatory Affairs and Intellectual PropertyRights of Berna Biotech AG (biologics, vaccines), Bern, Swit-zerland (2002-2006). From 1990-2002, Jörg von Manger- Koenig was with F. Hoffmann-La Roche in Basel, Switzerland(pharmaceuticals, chemicals), first in corporate legal services,then from 1995 as Head Global Regulatory Affairs of the Vita-mins and Fine Chemicals Division. Education: Law studies atthe Universities of Bonn, Germany, and Geneva, Switzerland;graduated in 1987, bar exam in 1990; practical legal educationin Bonn, Cologne and Düsseldorf, Germany, and with theCiba-Geigy Pharma Division. Shares: 0 / Performance shareunits: 26,001 / Staff options: 10,000.

Nicolas WeidmannSenior Vice President, Global Communications, Swiss,born 1963. Nicolas Weidmann joined Nobel Biocare as VicePresident Global Communications in January 2007. He hasextensive global communications experience in various

industries. Nicolas Weidmann joined Nobel Biocare from theleading Swiss retail group Pfister, where he was Head of Mar-keting and Communications, and a member of ExecutiveManagement (2006–2007). Previously, he was Chief Commu-nications Officer at Unaxis Management (now OC Oerlikon,technology, 2002–2006), Vice President Communicationsand Branding at Gate Gourmet International (airline catering,2000–2002), and Head of International Brand Managementand Trademark Licensing at General Motors Europe (automo-tive, 1996–2000). He also held corporate identity, brandingand communications positions at GM Europe (1995–1996),Wirz Identity (Corporate and Brand Identity, 1994–1995), andWirz Werbeberatung (advertising, 1993–1994). Education:MA in social psychology and economics from Zurich Univer-sity, Switzerland. Studies in journalism at Zurich University.Current other assignments: No other relevant currentassignments. Shares: 0 / Performance share units: 31’205 /Staff options: 25’000.

Ernst ZaengerleExecutive Vice President Global Operations, Swiss, born1948. Ernst Zaengerle joined Nobel Biocare’s Executive Com-mittee in October 2009. He formerly acted as a non-executivemember of the Nobel Biocare Board of Directors and a mem-ber of its Audit Committee since 2002. From 2000 to 2003,he was an Associate Partner of IMG (consulting) in St. Gallen,from 1998–2000 an Executive Vice President of Supply ChainManagement with Movado Group (watches) in the USA, andfrom 1992–1997 an Executive Vice President of Supply ChainManagement with Bally International (shoes and clothes) inSchönenwerd. From 1988 to 1992, he served as an ExecutiveVice President of Supply Chain Management and Sales FarEast for Omega SA, Biel (watches and jewelry). Education:MS in Mechanical Engineering, University of Applied Sci-ences in Konstanz and MS in Economics from the Universityof Konstanz. Current other assignments: member of theBoard of Prothor Holding SA (high-tech mechanical clock-works, since 2009). Shares: 4’200 / Performance share units:23’234 / Staff options: 0.

All share and staff option holdings are reported as per31 January 2012.

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80 Nobel Biocare Annual Report 2011 — Remuneration report

Remuneration report 2011.

This remuneration report provides anoverview of Nobel Biocare’s compensationprinciples. It includes compensationdisclosures of the Executive Committee andBoard of Directors which are also part of theconsolidated financial statements (note 18)and the parent company accounts (note 12).

Compensation and benefits philosophyNobel Biocare’s remuneration principles are designed toattract, motivate and retain internationally oriented, success-ful employees. The aim is to provide appropriate reward in acompetitive employment market and to support the develop-ment of a high performance environment. The elements ofthe remuneration system are:

– Base salary– Short-term incentive– Long-term incentive– Benefits

The ultimate goal of effective remuneration is to strengthenNobel Biocare’s global industry position for the benefit of itscustomers and their patients while delivering the expectedreturns to its shareholders.

To ensure long-term effectiveness, Nobel Biocare’s remune-ration system is designed to:

– Pay for performance and reward exceptional results.– Provide short-term and long-term incentives to attract high-

caliber talent and retain key employees and senior mana-gers, and to

– be globally applicable within a corporate framework.

Base salaryThe base salary is the amount of annual fixed pay as agreedupon in the employment contract and/or the annual compen-sation letter.

The base salary for an individual role is influenced by internaland external equivalence and considers aspects of the role,individual experience as well as the market. The base salaryis defined by the competencies required by the role, by thecorresponding responsibilities and by the internal paystructure. A base salary at median is considered competitivefor a jobholder fully complying with all the requirements of

the role. The individual base salary position is strongly linkedto the emerging experience of a jobholder. Merit increasesreflect emerging experience in the role, salary history, internalequivalence as well as market salary trends and inflation.

To ensure the compensation competitiveness, Nobel Biocareannually obtains information from external salary surveys wit-hin the relevant comparator groups. That information is alsoconsidered in the determination of the base salary. Base sala-ries are benchmarked on a yearly basis against similar posi-tions in other multinational companies which are comparablein scope, geography and business complexity, i.e. compara-ble with companies with which Nobel Biocare competes dailyfor business and talent. Nobel Biocare takes into accountsalary survey data provided by external global service provi-ders as well as selected local providers. Our main HR serviceproviders are Mercer, Towers Watson and AON Hewitt. Noneof these providers has further non-HR related mandates withNobel Biocare.

Short-term incentiveThe short-term incentive scheme of Nobel Biocare is contin-gent upon the financial success of the Group, is aligned withthe business strategy and supports a high-performance envi-ronment. The short-term incentive plan is competitive in themarkets in which Nobel Biocare operates. The short-termincentive scheme is reviewed annually.

Short-term variable compensation is designed to provideNobel Biocare employees with the opportunity to participatein the overall success of the Group based on their personalcontribution and measured against financial key performanceindicators (KPIs) as well as against personal objectives.

A short-term incentive plan has been in place since 2003, andis applied consistently within the organization according toposition levels. Financial KPIs are set at Group, regional, sub-regional and local levels. Employee performance is reviewedand assessed annually according to goal achievement. TheGroup’s financial KPIs for 2011 are net sales and earningsbefore interest and taxes (EBIT) growth. Additional KPIs havebeen set at regional, sub-regional, and local levels, alignedwith the business strategy. For reasons of competitiveness inthe marketplace Nobel Biocare will not disclose the KPIs inmore detail.

Nobel Biocare’s profitability is measured on the basis of theEBIT margin. The higher the absolute net sales, the higher the

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81Remuneration report

EBIT margin target. This mechanism considers the high ope-rating leverage of Nobel Biocare.

For eligible employees not belonging to the Executive Com-mittee (EC) and not belonging to internal audit, the Group’sfinancial KPIs account for at least 10 percent of the short-termvariable compensation. Depending on the role, Group, regio-nal, sub-regional, local and functional KPIs account for 10 to90 percent of the short-term variable compensation. Indivi-dual KPIs, including core competencies and leadership prin-ciples, account for the remaining 90 to 10 percent.

In 2010, the financial KPIs for EC members accounted for 30percent and the individual KPIs for 70 percent. This split hasbeen newly defined for 2011: for EC members, financial KPIsaccount for 70 percent of the short-term variable compensa-tion (50 percent Group KPIs, 20 percent regional or functionalKPIs); individual KPIs account for the remaining 30 percent.

Short-term incentive targets have to meet a threshold to gene-rate a pay-out and can be overachieved up to a maximum of120 percent for all eligible employees not belonging to theEC. For EC members the cap is set at 200 percent.

For eligible employees not belonging to the EC the targetshort-term variable compensation lies between 8 and 50 per-cent of base salary, depending on functional level, and is paidin cash. The target short-term variable compensation for ECmembers lies between 33 and 100 percent, the latter of whichapplies to the Chief Executive Officer (CEO). Apart from thoseselected Group, regional, sub-regional and local roles eligiblefor short-term incentives, sales representatives receive quar-terly incentives based on their sales performance in the givenquarter. These incentive compensation plans are region-spe-cific. In addition, for selected functions, team objectives aredefined and rewarded.

Long-term incentiveNobel Biocare currently offers two long-term incentiveawards to compensate outstanding contributions of keyemployees, directly supporting the achievement of corporategoals. These incentives are positioned to:

– encourage senior managers to focus on the performanceand long-term growth of the Group;

– align the interests of senior managers with those of NobelBiocare shareholders;

– allow senior managers to share in the long-term successof Nobel Biocare; and to

– foster and support a high performance culture and focuson sustainable value creation for patients, customers andshareholders.

The aim of long-term remuneration is to reward senior mana-gers and executives by linking compensation with Group andcountry-specific performance targets over a three-yearperiod; hence reflecting Nobel Biocare’s commitment to sus-tainable growth. Nominated employees can only participatein one long-term incentive plan.

The Group currently has two long-term, performance-basedplans in place that have been approved by the Nominationand Compensation Committee of the Board of Directors(NCC): a Performance Share Unit Plan (PSUP) and a Perfor-mance Cash Bonus Plan (PCBP) which is being discontinued.

a) Performance Share Unit Plan (PSUP)This long-term incentive plan covers, with a single global pro-gram, key position holders within the Group as well asselected employees throughout the organization as identifiedby the CEO and endorsed by the NCC. Participants are gran-ted performance-based share units; all grants have to beapproved by the NCC. Vesting of these grants is subject tospecific performance achievements over the vesting period.The performance achievements are subject to conditions defi-ned by the NCC.

For nominated employees not belonging to the EC, the initialvalue of the grants is between 10 and 40 percent of the basesalary and is allocated to long-term compensation within thelong-term incentive plan. For EC members, the initial value ofthe grants is between 70 and 100 percent, the latter of whichapplies to the CEO only. The reference price of the grants islinked to the average share price during the five days followingthe release of the respective full year results (2011: CHF 18.42;2010: CHF 28.00).

In the case of a change of control, all restricted share units ofthe participant shall immediately vest. The PSUP Plan is revie-wed annually.

Terms of awards grant 2010 and 2011Vesting is subject to a service period and the outperformanceof the Nobel Biocare (NOBN) share price relative to the SwissLeader Index (SLI) for the vesting period. If this relative out-performance is achieved, each share unit will be convertedinto a predetermined amount of Nobel Biocare shares at ves-ting date. Should NOBN share price underperform the SLI at

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82 Nobel Biocare Annual Report 2011 — Remuneration report

the end of each vesting period, no NOBN shares will be allo-cated at conversion date. Should the NOBN share outperformthe SLI by 20 percent or more at the end of each vestingperiod, each share unit may receive 2 NOBN shares at con-version date. Between 0 percent relative performance and 20percent outperformance, the number of NOBN shares allo-cated at vesting date will be between 1 and 2 and is calculatedas a linear function of the NOBN outperformance against theSLI. One third (tranche 1) of the allocated share units vestafter one year (28 February), one third (tranche 2) after twoyears (28 February) and the remaining third (tranche 3) afterthree years (28 February).

Tranche 1 of the PSUP 2010 was forfeited on 28 February2011.

Terms of awards grant 2009Vesting is subject to a three-year service period lasting until30 April 2012 and to the outperformance of the Nobel Biocare(NOBN) share price relative to the Swiss Market Index (SMI)for the period. If this relative outperformance is achieved,each share unit will be converted into a predeterminedamount of Nobel Biocare shares at the vesting date. Shouldthe NOBN share outperform the SMI by 40 percent or aboveat the end of the defined 3-year period, each share unit reflectsthe right to receive 2 NOBN shares at vesting date. Between0 percent relative performance and 40 percent outperfor-mance, the number of NOBN shares allocated at vesting dateis calculated as a linear function of the NOBN outperformanceagainst SMI.

b) Performance Cash Bonus Plan (PCBP) – until 31December 2011This long-term incentive plan covered key position holderswithin country organizations. The plan was approved by theCEO and endorsed by the NCC.

Participants in the Performance Cash Bonus Plan are entitledto be rewarded on the basis of specific performance achie-vements over a three-year period. Performance will be mea-sured for the period from 2011 to 2013 by a combination ofGroup and country-specific KPIs.

For 2011, the financial Group KPIs were net sales and EBITgrowth; two additional financial KPIs for 2011 per countrywere determined by the Senior Vice President or Presidentand General Manager in charge of the respective region towhich the country organization belongs.

The value was between 10 and 20 percent of base salary andwas fully paid in cash in local currency. The NCC has decidedto discontinue the PCBP as per 2012.

Employee benefitsEmployee benefits are country-specific and are structured inaccordance with local practice, local legal requirements andcompetitive benchmarking. Nobel Biocare regularly reviewsits benefit coverage worldwide and assesses its programs inthis area with the support of selected vendors.

Responsibilities and methods of determiningremuneration and compensation plansThe Board of Directors decides on the Board members’ remu-neration policies, as well as on the individual compensationplans based on the NCC’s proposals. The Vice Chairman pro-poses the remuneration of the Chairman of the Board. Whenthe remuneration of individual members of the Board is underdiscussion, the affected member abstains from voting.

In addition to proposing remuneration plans and policies, theNCC endorses the base salary and performance goals of theCEO as proposed by the Chairman. The CEO proposes thebase salaries and performance goals of EC members forapproval by the NCC. The NCC regularly informs the full Boardof Directors on the status of compensation.

Compensation of Executive Committee (EC) membersEC members take part in the PSUP. The fair value per unit wasmeasured based on a Monte Carlo simulation. Market condi-tions are taken into account when estimating the fair value ofthe instruments granted. Service conditions are not taken intoaccount for the grant date fair value calculation. Additionalinformation regarding the measurement of performanceshare unit grants is disclosed in note 18 of the consolidatedfinancial statements.

Except for two EC members, one being seconded from theUSA to Switzerland on a home-based approach and oneunder management service contract, EC members, includingthe CEO, are covered by the pension scheme applicable to allemployees with a Swiss employment contract.

Contract details and clauses on changes of controlThe CEO contract contains a six-month notice period. Theperiod of notice for all other EC members is up to six months,except one with a 12 month notice period. EC members wholeft Nobel Biocare in 2011 were released from some of theirduties during the termination period. They retained the right

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to receive salary and variable compensation for the durationof the termination period. During 2011 a non-compete pay-ment for the former CEO Domenico Scala was settled. Addi-tional information is disclosed below in the table “Remune-ration of the Executive Committee members”.

As of 31 December 2011, no changes of control clauses exis-ted within the employment contracts except the clause men-tioned under the PSUP.

Compensation of the Board of DirectorsThe Board compensation has been benchmarked against acarefully selected group of peer companies, based on datapublished by Ethos. Based on the benchmark comparison thetotal compensation of the Board of Directors has been adjus-ted to bring it closer to market practice.

The 2011 total compensation of the Board of Directors is divi-ded into cash and restricted shares. The cash portion beco-mes payable in equal installments April and October eachyear, applied pro rata temporis for each member of the Board,if appropriate. In 2011, an additional reimbursement betweenEUR 12’996 and EUR 16’244 is due to Board members whoparticipate in a committee, and an additional EUR 28’428 isgranted for the Audit Committee Chair.

The Board of Directors’ fees are not pensionable.

Members of the Board participate in a specific Board ofDirectors share plan. Shares were granted on 30 June 2011,and are blocked until 30 June 2016. For the related fair valuecalculation, please see note 18 of the consolidated financialstatements.

Each Board member received the equivalent of EUR 64’978in shares, i.e. 4’562 shares (converted into shares using thefive-day average closing share price from 6 June 2011 to 10June 2011. The former Chairman of the Board, who left NobelBiocare’s Board on 3 July 2011, received the equivalent ofEUR 203’055 in shares, i.e.14’255 shares. Rolf Watter wasappointed as the Chairman of the Board ad interim. In thisfunction he received an additional allocation of EUR 103’558in shares, i.e. 7’270 shares.

As publicly announced on 4 July 2011, Michel Orsinger willbe proposed as Chairman of the Board at the Annual GeneralShareholders’ Meeting 2012. Therefore, he attended Boardmeetings as a guest. For services to and attendance of Boardmeetings, he received 3’421 shares and a cash payment inthe amount of EUR 21’321. The restricted shares are blockeduntil 30 June 2016.

Members of the Executive Committee as of 31 December 20111

Name Position Appointed

Richard Laube 2 Chief Executive Officer 2011

Dirk W. Kirsten Chief Financial Officer 2008

Hans Geiselhöringer 3 Executive Vice President Global Research, Products and Development 2010

Rolf Melker Nilsson 4 Senior Vice President Global Sales and Customer Development 2011

Petra Rumpf Senior Vice President Business Development and Strategic Planning 2007

Jörg von Manger-Koenig Senior Vice President Legal & Compliance 2011

Nicolas Weidmann Senior Vice President Global Communications 2007

Ernst Zaengerle Executive Vice President Global Operations 2009

1 Domenico Scala was Chief Executive Officer until 31 March 2011 and advisory until 31 October 2011. Alexander Ochsner (Senior Vive President and Manager Europe, Mid-dle East and Africa), Hans Schmotzer (Executive Vice President Research and Development) and Michael Glenn Thompson (Senior Vice President and General ManagerAsia/Pacific) were members of the Executive Committee until 30 November 2011.

2 CEO as of 1 April 2011.3 Executive Vice President Marketing and Products until 30 September 2011; Executive Vice President Global Research, Products and Development from 30 November 2011.

Hans Geiselhöringer has been under management service contract since 10 February 2010.4 President & General Manager North America until 11 August 2011; seconded to Switzerland as of 12 August 2011.

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Remuneration of the Executive Committee members for the years ended 31 December

in EUR ‘000 Richard Laube, CEO Other Executive Domenico Scala 1 TotalCommittee members

2011 2010 2011 2010 2011 2010 2011 2010

Fixed compensation 540 – 3’649 3’203 545 579 4’734 3’782

Variable compensation 2 146 – 563 816 542 278 1’251 1’094

Fair value of performance share units 3 482 – 2’343 1’441 – 474 2’825 1’915

Pension expense and social security costs 58 – 267 554 155 159 480 713

Other benefits 4 13 – 203 267 – 29 216 296

Costs related to International assignment – – 413 5 – – – 413 –

Non-compete settlement – – – – 1’300 – 1’300 –

Fair value of options – – – – – – – –

Total 1’239 – 7’438 6’281 2’542 1’519 11’219 7’800

1 Highest total compensation.2 Variable compensation is on an accrual basis.3 Based on the income statement charge 2011 for the PSUP 2009, 2010 and 2011.4 Other benefits for the year 2011 refer to expense allowances; for the year 2010 it includes car allowances and tax equalization payments.5 Includes costs of relocation, housing and international school fees as well as tax allowances.

In 2011, the Group changed the split between financial andindividual KPIs within the short-term incentive scheme for ECmembers. The financial KPIs now account for 70 percent ofthe short-term variable compensation (50 percent GroupKPIs, 20 percent regional or functional KPIs). This impacts the

variable compensation 2011 in comparison with 2010. Inaddition, the new composition of the EC has an impact onthe pension expenses and social security costs, as thoseschemes are not comparable in costs between the differentcountries of employment.

Number of performance share units, shares and stock options held as of 31 December 2011

Number 1 Number 2 Per- Per- Per- Per- Per- Per- Per- Per- Stock of shares of per- formance formance formance formance formance formance formance formance option

held formance share units share units share units share units share units share units share units share units grant 2007share units grant granted grant granted grant granted grant granted

held 2011 2011 2010 2010 2009 2009 2008 2008forfeited forfeited forfeited forfeited

Richard Laube 110’000 32’573 32’573 – – – – – – – –

Dirk W. Kirsten 2’600 45’254 18’925 – 11’700 3’900 18’529 – 5’138 5’138 –

Hans Geiselhöringer 3 – 28’502 28’502 – – – – – – – –

Rolf Melker Nilsson – 12’512 10’608 – 2’856 952 – – – – –

Petra Rumpf 7’900 48’544 19’571 – 12’875 4’292 20’390 – 6’031 6’031 35’000

Jörg von Manger-Koenig – 26’001 13’377 – 5’610 1’870 8’884 – – – 10’000

Nicolas Weidmann – 31’205 12’921 – 8’125 2’709 12’868 – 4’757 4’757 25’000

Ernst Zaengerle 4’200 23’234 16’151 – 10’625 3’542 – – – – –

Alexander Ochsner 4 500 34’920 14’091 – 9’270 3’090 14’649 – 2’257 2’257 –

Michael G. Thompson 4 – 11’325 11’325 – – – – – – – –

Domenico Scala 5 29’280 55’812 – – 28’571 9’524 36’765 – 13’593 13’593 10’000

Hans Schmotzer 4 – 31’343 12’636 – 8’313 2’771 13’165 – 2’637 2’637 –

1 Includes shares acquired in the market.2 Excluding performance share units which forfeited.3 Under management service contract.4 As of 30 November 2011.5 As of 31 March 2011.

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Number of performance share units, shares and stock options held as of 31 December 2010

Number of 1 Number of 2 Performance Performance Performance Stock option shares held performance share units share units share units grant 2007

share units held grant 2010 grant 2009 grant 2008

Dirk Kirsten 3 1’600 35’367 11’700 18’529 5’138 –

Hans Geiselhöringer 4 – – – – – –

Petra Rumpf 5 7’900 39’296 12’875 20’390 6’031 35’000

Nicolas Weidmann – 25’750 8’125 12’868 4’757 25’000

Ernst Zaengerle 4’200 7 10’625 10’625 – – –

Alexander Ochsner 500 26’176 9’270 14’649 2’257 –

Thomas M. Olsen 39’890 23’431 7’252 12’192 3’987 75’000

Robert Gottlander 6 47’160 32’168 10’150 16’075 5’943 75’000

Bill Ryan – 12’816 7’615 5’201 – –

Domenico Scala 29’280 78’929 28’571 36’765 13’593 10’000

Hans Schmotzer – 24’115 8’313 13’165 2’637 –

Total 130’530 308’673 114’496 149’834 44’343 220’000

1 Includes shares acquired in the market.2 Includes performance share units received in 2010, 2009 and 2008.3 Amounts do not include EUR 33 k in Nobel Biocare convertible bonds acquired in the market.4 Under management service contract.5 Amounts do not include EUR 331 k in Nobel Biocare convertible bonds acquired in the market.6 Robert Gottlander was a member of the Executive Committee until 25 October 2010.7 Including 1,000 restricted shares.

Members of the Board (all non-executive) elected by the Annual General Meeting on 30 March 2011

Name Nationality Position First elected Elected until

Rolf Watter 2 Swiss Chairman a.i. 2007 2012

Raymund Breu Swiss Vice Chairman a.i. 2010 2012

Daniela Bosshardt-Hengartner Swiss Member 2010 2012

Stig G. Eriksson Finnish Member 2006 2012

Edgar Fluri Swiss Member 2008 2012

Robert Lilja Swedish Member 2005 2012

Oern Stuge Norwegian Member 2010 2012

Heino von Prondzynski 1 German Chairman 2010 2012

1 Chairman until 3 July 2011.2 Chairman ad interim since 3 July 2011.

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Remuneration of the Board of Directors for the years ended 31 December1

in EUR ‘000 2011 2010

Cash 1 Fair value of 2 Total Cash 1 Fair value of Totalrestricted restricted

shares shares

Rolf Watter 3 146 157 303 60 26 86

Raymund Breu 89 60 149 45 26 71

Daniela Bosshardt-Hengartner 88 60 148 45 26 71

Stig G. Eriksson 77 60 137 60 26 86

Edgar Fluri 93 60 153 70 26 96

Robert Lilja 80 60 140 60 26 86

Oern Stuge 77 60 137 45 26 71

Heino von Prondzynski 4 158 188 346 64 39 103

Rolf Soiron 5 – – – 18 – 18

Antoine Firmenich 6 32 – 32 60 26 86

Jane Royston 5 – – – 15 – 15

1 Cash compensation is on an accrual basis, including social security contributions.2 Based on the income statement charge 2011 as disclosed in note 18 of the consolidated financial statements.3 Chairman ad interim since 3 July 2011.4 Chairman until 3 July 2011.5 Compensation based on period of service ending 25 March 2010.6 Compensation based on period of service ending 31 March 2011.

Based on the benchmark comparison the total compensationof the Board of Directors has been adjusted to bring it closer

to market practice.

Number of shares held as of 31 December 2011

Name Number of 1 Number of Restricted shares Restricted sharesunrestricted restricted grant 2011 grant 2010shares held shares held

Rolf Watter 2 53’500 13’832 11’832 2’000

Raymund Breu 70’000 6’562 4’562 2’000

Daniela Bosshardt-Hengartner – 6’562 4’562 2’000

Stig G. Eriksson 4’250 6’562 4’562 2’000

Edgar Fluri 16’500 6’562 4’562 2’000

Robert Lilja 18’375 6’562 4’562 2’000

Oern Stuge – 6’562 4’562 2’000

Antoine Firmenich 1’000 3’000 3 – 2’000

Heino von Prondzynski 4 37’800 17’255 14’255 3’000

1 Includes shares acquired in the market.2 Chairman ad interim since 3 July 2011.3 Number of restricted shares held as of 31 March 2011 (including grants 2010 and 2009).4 Chairman until 3 July 2011; numbers as of 3 July 2011.

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Number of shares held as of 31 December 2010

Name Number of 1 Number of Restricted shares Restricted sharesunrestricted restricted grant 2010 grant 2009shares held shares held

Rolf Watter 26’200 3’000 2’000 1’000

Raymund Breu 2 20’000 2’000 2’000 –

Daniela Bosshardt-Hengartner 2 – 2’000 2’000 –

Stig G. Eriksson 3’250 3’000 2’000 1’000

Edgar Fluri 8’500 3’000 2’000 1’000

Robert Lilja 17’375 3’000 2’000 1’000

Oern Stuge 2 – 2’000 2’000 –

Heino von Prondzynski 2 26’800 3’000 3’000 –

Rolf Soiron 3 434’185 4 3’000 5 – 1’500

Antoine Firmenich 1’000 3’000 2’000 1’000

Jane Royston 3 – 4 2’000 – 1’000

1 Includes shares acquired in the market.2 Period of service starting 25 March 2010.3 Period of service ending 25 March 2010.4 Number of unrestricted shares held as of 25 March 2010.5 Number of restricted shares held as of 25 March 2010 (including grant 2009 and 2008).

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Financial reporting.

Parent company accountsNobel Biocare Holding AG, KlotenIncome statement 152Balance sheet 153

Notes to the parent company accountsNote 1 Basis for preparation 154Note 2 Property, plant and equipment 154Note 3 Details of investments 155Note 4 Shareholders’ equity 156Note 5 Treasury shares 156Note 6 Dividend income 157Note 7 Financial expenses 157Note 8 Tax expenses 157Note 9 Securities, sureties, guarantees

and pledges in favor of third parties 158Note 10 Straight bond 158Note 11 Pension liabilities 158Note 12 Remuneration of the Board of Directors

and Executive Committee (EC) 159Note 13 Major shareholders 166Note 14 Risk assessment 167Note 15 Subsequent events 167

Appropriation of available earnings 168Report of the statutory auditor 169

Key figures 90Financial review 91Risk management 94

Consolidated financial statementsConsolidated income statement 100Consolidated statement of comprehensive income 100Consolidated balance sheet 101Consolidated statement of changes in equity 102Consolidated cash flow statement 104

Notes to the consolidated financial statementsNote 1 General information 105Note 2 Significant accounting policies 105Note 3 Critical accounting estimates and judgments 112Note 4 Operating segments 114Note 5 Personnel expenses 115Note 6 Financial income and finance cost 116Note 7 Income tax expense 117Note 8 Property, plant and equipment 118Note 9 Intangible assets 119Note 10 Categorization of financial assets 121Note 11 Non-current receivables 122Note 12 Inventories 122Note 13 Trade and other receivables 122Note 14 Prepaid expenses and accrued income 123Note 15 Cash and cash equivalents 124Note 16 Equity 124Note 17 Earnings per share 126Note 18 Share-based payment transactions 126Note 19 Deferred tax assets and liabilities 129Note 20 Provisions 130Note 21 Employee benefits 131Note 22 Categorization of financial liabilities 134Note 23 Trade payables 136Note 24 Other liabilities 136Note 25 Accrued expenses and deferred income 137Note 26 Commitments 137Note 27 Contingent liabilities and pledged assets 138Note 28 Risks related to financial instruments 139Note 29 Risk assessment 146Note 30 Related parties 147Note 31 Subsidiaries 148Note 32 Subsequent events 149Report of the statutory auditor 150

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Nobel Biocare Annual Report 2011 — Financial reporting90

Key figures.

in EUR million 2011 2010 2009 2008 2007

Income statement

Revenue 569.2 576.6 581.4 619.2 665.9

Gross profit 432.5 448.0 467.9 493.6 559.3

Profit from operations (EBIT) 72.1 84.9 128.6 132.9 216.7

Profit before tax 55.5 100.4 137.3 159.4 212.0

Income tax expense –15.7 –54.7 –31.5 –49.7 –45.8

Profit attributable to owners of Nobel Biocare 39.8 45.7 105.8 109.7 166.2

Balance sheet

Non-current assets 324.5 344.4 300.0 275.1 195.8

Current assets 267.7 426.9 422.6 422.4 460.0

Total equity 281.5 320.0 317.7 267.6 267.9

Non-current liabilities 136.8 35.9 271.2 287.4 224.8

Current liabilities 173.9 451.4 133.7 142.5 163.1

Cash and cash equivalents including bank overdraft 107.5 239.5 240.7 163.4 186.2

Miscellaneous

Net cash from operating activities 93.1 97.1 177.8 169.0 134.1

Depreciation, amortization and impairment losses 32.5 29.6 27.8 28.2 17.2

Investments in property, plant and equipment 17.0 23.3 18.3 30.4 24.9

Research and development expenses 29.0 31.6 25.0 32.9 22.2

Employees as of the end of the period (number) 2’472 2’433 2’242 2’541 2’242

Ratios

Revenue growth (%) –1.3 –0.8 –6.1 –7.0 10.9

Revenue growth in local currencies (%) –0.7 –6.4 –7.7 –4.2 15.4

Gross margin (%) 76.0 77.7 80.5 79.7 84.0

Operating expenses/revenue ratio (%) 63.3 63.0 58.4 58.3 51.4

EBITDA margin (%) 18.4 19.9 26.9 25.8 35.0

Operating (EBIT) margin (%) 12.7 14.7 22.1 21.5 32.5

Net profit margin (%) 7.0 7.9 18.2 17.7 25.0

Return on average equity (%) 1 14.0 14.2 35.5 41.6 49.8

Equity/assets ratio (%) 47.5 41.5 44.0 38.4 40.9

Cash/total assets (%) 18.1 31.1 33.4 23.7 28.7

Net debt 36.2 13.2 –1.9 65.3 –45.2

Net debt/equity ratio (%) 12.9 4.1 –0.6 24.4 –16.9

Net debt/EBITDA (%) 0.35 0.12 –0.01 0.41 –0.19

Interest coverage ratio (times) 2 15.2 6.7 7.7 9.2 35.0

1 Includes net profit for the last four quarters over average equity for the last four quarters2 Calculated as profit before tax divided by interest and other financial expenses

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Financial review.

RevenueIn 2011, Nobel Biocare generated revenue of EUR 569.2 mil-lion, which reflects a decline of 1.3 percent versus 2010. Year-on-year constant exchange rate (CER) growth was minus0.7 percent, a slight decline versus the prior year, but a clearmomentum improvement compared with the year before(2010/2009: minus 6.4 percent). While North America grew7.6 percent (CER) in 2011, Europe, Middle East and Africa(EMEA) was down 5.0  percent (CER) versus 2010 andAsia/Pacific (APAC) declined 5.1 percent (CER) versus theprior year.

In EMEA, Nobel Biocare continued to be negatively affectedfrom its heavy exposure to southern Europe. For the last fouryears, the Spanish market, which was traditionally one of thelargest businesses of Nobel Biocare, has continued to declinesignificantly. In addition, as the impacts of the euro crisis havebecome more obvious, market conditions in both Italy andFrance are becoming increasingly difficult. These develop-ments were not sufficiently compensated, even though Ger-many was essentially stable, and Russia and several smallercountries grew in 2011. Across the entire region, revenuedeclined by 5.0 percent at CER.

In North America, Nobel Biocare made substantial progressin 2011. Supported by good patient flow and higher treatmentvolumes, Nobel Biocare was able to leverage on its marketshare in the United States and grow by 7.6 percent (CER)throughout the entire region. These improvements reflect thecontinued strengthening of the organization since 2010 anda greater emphasis on value-adding activities to a broadercustomer base in North America.

In APAC, Nobel Biocare was affected by the economic con-sequences of the March 2011 earthquake and tsunami inJapan. Across the entire APAC region, the Group recorded arevenue decline of 5.1  percent at CER. Excluding Japan,which accounts for about two-thirds of the regional revenue,APAC grew 7.6 percent (CER) in 2011. China grew at a strongdouble-digit rate again and has become relevant for the regionalso on an absolute basis.

Nobel Biocare’s implant business grew by 1.0 percent in 2011with implant fixtures sales increasing by 2.8 percent. Revenuefrom standardized abutments declined as a consequence oflower prices and a partial shift toward individualized abut-ments. NobelActive grew more than 20 percent in 2011 andhas grown at a double-digit rate for 16 consecutive quarters.

The individualized CAD/CAM business, NobelProcera, decli-ned overall by 9.0 percent in 2011 versus 2010. While salesfrom new NobelProcera implant bridges (up to 14-unitbridges) and NobelProcera overdenture bars grew signifi-cantly during 2011, simple copings and small-unit bridgesdeclined during the same period. In individualized abutments,an increasingly significant part of the company’s NobelPro-cera business line, Nobel Biocare managed to grow at a dou-ble-digit rate. The modest growth in total consumable busi-ness was diluted by lower scanner sales versus 2010, partiallyas a result of price changes.

Gross profit and gross profit marginIn 2011, gross profit decreased to EUR 432.5 million, 3.5 per-cent less than in the previous year. This reflects a gross profitmargin of 76.0 percent, compared with 77.7 percent in 2010.

The gross margin decrease is mainly attributable to the deve-lopment of the NobelProcera gross margin. While the marginfor implant systems benefited from slightly higher volumesand strict cost management, it was diluted by lower sales pri-ces, higher input prices and increasing royalty payments.NobelProcera’s margin was affected by a decline in copingvolumes coupled with a rising cost basis (mainly depreciation)as the result of capacity investments in late 2010 and early2011.

Profit from operationsProfit from operations (EBIT) for 2011 was EUR 72.1 million,15.1 percent lower than in 2010. The resulting EBIT margindecreased from 14.7 percent in 2010 to 12.7 percent in 2011.Currency translation effects accounted for 1.5 percentagepoints of this decline but were mostly offset by currency gainsrecorded in the financial result. The remaining variance is acombination of various effects: (i) lower gross margin (1.3 per-centage points), (ii) exceptional expenses due to the situationin Japan and the CEO change (0.7 percentage points) and(iii) ongoing savings in operating expenses of 1.5 percentagepoints on a CER basis. The Group continued to invest in cus-tomer activities, training & education as well as in productdevelopment and innovation. Overall, the organization remai-ned very cost-disciplined and projects were phased in linewith revenue developments. As a consequence of this, anddespite the high operating leverage, Nobel Biocare was ableto protect its operating margin (14.9 percent) on a CER basisand excluding exceptional costs.

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Nobel Biocare Annual Report 2011 — Financial reporting92

Financial result In 2011, the financial result was minus EUR 16.6 million ver-sus plus EUR  15.5  million in 2010. Excluding theEUR 30.0 million exceptional foreign exchange gains recor-ded in 2010, the prior-year comparison base was minus14.5 million.

The 2011 foreign exchange result nets two opposing ele-ments: on one hand the Group recorded 7.0 million in foreignexchange gains from its ongoing hedging program and the-reby offset 1.2 percentage points of the EBIT margin dilutionrecorded in operating profit. On the other hand, in conjunctionwith the upcoming maturity of the outstanding convertiblebond, EUR 11.6 million of one-off hedging costs were incur-red in Q3 2011, as a result of special hedging against therapidly falling euro, which abruptly reversed course with thepegging of the Swiss franc by the Swiss National Bank.

TaxesIn 2011, tax expenses were EUR  15.7  million versusEUR 54.7 million in 2010. Excluding exceptional tax expensesof EUR 29.8 million, which were recorded in 2010 due to arestructuring of internal profit streams, the 2010 comparisonbase is EUR 24.9 million. The significant tax expense decreasein 2011 is attributable to lower profit before tax. The underly-ing tax rate in 2011 was 28.3  percent, compared with24.8 percent in 2010. The higher tax rate was mainly a con-sequence of the lower EBIT margin and an unfavorable regio-nal profit contribution mix. The tax restructuring from 2010had a positive impact of EUR 6.1 million (11 percentage pointson the tax rate) on the 2011 results.

Net profitIn 2011, net profit came in at EUR 39.8 million (2010:EUR 45.7 million), 12.9 percent below the prior-year amount.The net margin was 7.0 percent versus 7.9 percent in 2010.The aforementioned revenue decrease and lower gross mar-gin are the main reason for the lower operating profit and netmargin. The combined financial result and tax expense had apositive impact on the net margin compared with 2010.

Reported EPS was EUR 0.32 (2010: EUR 0.37).

Liquidity and financial positionFor the full year 2011, Nobel Biocare generated operatingcash flow of EUR 93.1 million (2010: EUR 97.1 million). Inclu-ding capital expenditures, operating cash flow wasEUR 74.8 million versus EUR 70.2 million in 2010. Besidesthe restrictive handling of additional capital expenditures for

NobelProcera, the main reason for this stable operating cashflow was a further reduction of accounts receivable (EUR 25.1million versus EUR 15.8 million in 2010) while revenue remai-ned almost flat. Group DSO was brought down from 76 to60, which significantly supported the cash flow generationdespite lower margins.

Various financial transactions resulted in substantial cash out-flows. Foreign exchange hedging activities aimed at pro-tecting the income statement and balance sheet led to a cashoutflow of EUR 34.9 million. In April, Nobel Biocare paid ashareholder dividend of EUR 33.0 million (2010: EUR 46.3 mil-lion). In November, the company redeemed its outstandingconvertible bond, issued in 2007, for a total amount ofEUR 246.9 million, in addition to the EUR 16.0 million worthof repurchases made during the course of the year. Theredemption was partially refinanced through the issuance ofa CHF 120 million, 5-year straight bond as well as throughfunds drawn on Nobel Biocare’s existing syndicated creditfacility.

At the end of 2011, Nobel Biocare reported a cash positionof EUR 107.5 million versus EUR 239.5 million in 2010. Thiscash level fully covers all operating cash requirements andoptimizes net interest expenses. It is further supported by thesyndicated credit facility and also gives the Group sufficientfinancial flexibility from a strategic perspective.

Currency impactsDuring 2011, the volatility of currencies was at a historic high.Nobel Biocare’s reporting currency, the euro, depreciated22 percent against the Swiss franc from April to early Augustbefore being pegged by the Swiss National Bank at a 17 per-cent higher level only a few weeks later. The euro crisis andrelated volatility had a significant impact on Nobel Biocare’sincome statement, balance sheet and cash flow.

On the income statement, currency movements negativelyaffected the top line by 0.6 percent, mainly due to the weakUS dollar and the varying regional growth contributionthroughout the Group. Currency movements negativelyaffected the EBIT margin by 1.5 percentage points, mainlydue to Nobel Biocare’s high cost base in Switzerland (head-quarters) and Sweden (two production plants). Seventy-seven percent of that currency impact could be gained backthrough the ongoing EBIT hedging program, which is accoun-ted for in the financial result. On the other hand, exceptionalhedges to protect the Group against the threat of a devalua-tion of the euro to a level below parity with the Swiss franc

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in conjunction with the convertible bond redemption, ultima-tely became worthless following the decision of the SwissNational Bank to peg the franc to the euro; this resulted inEUR 11.6 million of exceptional hedging costs.

On the balance sheet, almost all positions reflect significantforeign exchange translation effects versus 2010 and there-fore are comparable with prior-year figures only to a limitedextent. Also, the impacts on cash flow, as summarized above,were significant and led to high hedging rollover costs, alsoin connection with the November 2011 redemption of the out-standing convertible bond. As a result of the reduction ofgross gearing and gross cash holdings as of November aswell as the subsequent further simplification of the Group

financing structure, the balance sheet’s foreign currency sen-sitivity was significantly reduced toward the end of 2011.

Share repurchases and dividend paymentsDuring 2011, no share buyback program was executed. Adividend of CHF 0.35 per share or EUR 33.0 million was paidon 6 April 2011.

The Board of Directors will propose to the next Annual GeneralMeeting the payment of a dividend of CHF 0.15 on each CHF0.40 par value registered share. This corresponds to a payoutratio of 38 percent of net profit. As in the year before, theintention is to pay out this dividend to shareholders in a tax-advantaged form through a reduction of additional paid-incapital.

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Nobel Biocare Annual Report 2011 — Financial reporting94

Risk management.

As an innovative medical technology company, Nobel Biocareis exposed to various risks. Therefore, the Group introduceda systematic risk management process in 2005. Leveragingthe experience gained during the first years of systematicallymonitoring risks, Nobel Biocare has established comprehen-sive Enterprise Risk Management (ERM), which was furtherreshaped throughout 2011.

The risk map contains 14 key risks with more than 80 differentscenarios, which were identified by analyzing the value chain,the business environment and the product life cycle, andassessed in terms of likelihood and free cash flow at risk. Fur-thermore the current risk controls were qualified. Risk miti-gation goals and strategies, as well as operational actionplans, are defined and have been put in place for all risks. Keyperformance and key risk indicators are also defined in orderto underpin the risk assessment and the quality of related con-trols.

The Executive Committee (EC) as well as the Board ofDirectors (BoD) has periodically reviewed the key risks, whichwere presented by the respective risk owner.

The risk owner is accountable for a drill-down of the riskmanagement activities on a more operational level. This inclu-des, for example, initiation or management of action plans,definition of operational risk standards, collection of data(indicators), management or monitoring of controls and tra-cking of incidents.

In addition to this Group-wide approach, various operationalrisk management initiatives were strengthened or newlyimplemented during the year.

Also during 2011, the Internal Controls System (ICS) was furt-her enhanced and training occurred across the Group. Theapplied methodology provides high quality controls and redu-ces financial reporting, fraud, and compliance risks.

In addition, Nobel Biocare has undertaken to further integrateand strengthen its overall governance, risk and compliance(GRC) activities, also by focusing Internal Audit’s activities onthis topic. The Audit Committee gets a periodic update on theGroup compliance roadmap.

The Head of Internal Audit, Compliance and Risk Manage-ment co-ordinates all ERM and ICS activities. In this role, hereports directly to the CEO and to the Audit Committee.

At least once a year the risk map data are reported to the Exe-cutive Committee and the Board of Directors.

The risk categories are defined as follows:

Strategy risks:This category includes new technologies, M&A activities, alli-ances and partnerships as well as entrance into new markets.

R&D risks:This category includes risks in the design of new productsand potential patent infringements.

Market risks:This category comprises risks of the “idea to market” respecti-vely the “life cycle management” process.

Operations risks:This category includes production, supply chain and IT risks,especially business and IT interruptions, quality managementissues as well as IT security incidents.

Financial risks:This category covers potential financial reporting shortco-mings, IFRS changes, tax, treasury as well as foreignexchange, market and interest rate risks. It also includes alloperational risks related to the execution of internal and exter-nal reporting, the performance of market transactions or taxcases with high sensitivity on the consolidated IFRS grouptax rate.

Human resources risks:This category includes the risk of not attracting and retainingkey managers and experts or not developing them adequa-tely. Personnel risks also include the corporate culture, espe-cially Nobel Biocare’s attractiveness as an employer of choiceand the risk of losing key team members.

Legal and compliance risks:This category comprises non-compliance with laws and regu-lations, as well as product liability and warranties.

The following risks and uncertainties pertain to those that arepresently considered material in terms of likelihood andimpact or areas in which Nobel Biocare faced material issuesin 2011. General risks and uncertainties that affect companiesin general are not outlined here.

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Risk management 95

Strategy risks:In recent years Nobel Biocare acquired several companiesand entered into various strategic partnerships. There is a riskof not generating the expected financial return on these trans-actions.

R&D risks:Design and technology errors are regarded as significant risksin any medical technology company such as Nobel Biocare.Only clinically tested products are launched. A sound designchange process with defined stage gates (decision points)and a dedicated risk management process with correspon-ding governance structures are in place. Areas of importanceinclude the product approval and registration processes. Allproducts, packages, applications and technologies are con-tinuously and systematically monitored, tested and improved.The network among clinicians is of major importance to main-tain a leadership position regarding the clinical use of our pro-ducts.

In recent years various companies were acquired to streng-then the R&D and product portfolio. These acquisitions addedto Nobel Biocare’s own R&D activities. A rigorous develop-ment and testing approach has been chosen for new productlaunches such as NobelReplace Conical Connection / Plat-form Shifting and NobelActive 3.0 as well as NobelClinician.

As an R&D-based operation, the Group focuses on building,further developing and defending its portfolio of intellectualproperty (IP) rights, including patents, trademarks, designsand copyrights. In doing so, the Group may face legal risksarising from third-party infringements of the Group’s IP, vio-lation of confidentiality with regard to our IP, or disclosure oftrade secrets and blocking IP rights of a third party, all of whichmay not be sufficiently remedied by legal means.

Market risks:The dental implant industry is characterized by rapid productdevelopment, with a significant competitive advantage beinggained by companies that are first-to-market with their pro-ducts. Therefore, market participants are in constant pursuitof innovative products and techniques and frequently intro-duce new products. The Group’s ability to compete success-fully also depends on its ability to be a best-in-class serviceprovider.

The Group’s product management strategy aligns R&D acti-vities quickly and effectively with customer needs. The broadnetwork of key opinion leaders, the university program as well

as the scientific input by innovative customers provide atimely input of new technology trends and product specifica-tions.

The development cycle for Nobel Biocare’s operations isgenerally substantially shorter than in other fields of life sci-ences, e.g. the pharmaceutical industry. It normally takes bet-ween two to four years from concept to launch. Nevertheless,uncertainties relating to results from costly clinical trials andmarket launch activities do represent a risk to the Group.

The Group markets its products to specialized dentists, gene-ral practitioners and dental laboratories. Dental professionalsplay a significant role in determining which brand of dentalimplant or prosthetic a patient receives. Hence, a successfulproduct launch has also to consider the different customer /patient needs. Nobel Biocare has defined clear market seg-ments with differentiated product and service requirements,which are also reflected in the “Integrated Marketing Plan”and in the “Customer Value Management” system.

Operations risks:This risk category relates to production, supply chain, qualityassurance and information technology. Product and manu-facturing process approvals by authorities, as well as productliability due to production errors, are regarded as significantrisks in any medical technology company such as Nobel Bio-care. A permanent quality assurance process is essential. Toreduce exposure to these risks, Nobel Biocare adheres to andis in compliance with the US Food and Drug Administration’sQuality System Regulations, Medical Device Directive93/42/EEC, ISO 13485 – Quality Management System forMedical Devices, as well as other applicable laws, regulationsand standards. Nevertheless, if the Group fails to comply withthe aforementioned requirements, access of products to themarket may be delayed, jeopardized or even suspended.

One of the other primary risks in this category is the depen-dency on specific suppliers for purchased key products, ser-vices or materials. There is also a risk that production / supplychain disturbances can occur for several reasons, such astechnological problems, strikes, fire, earthquakes, waterdamage, or interruption of transportation channels like airtransport.

Therefore, all factories have developed contingency plans andthe Group is adequately insured for losses due to operationalinterruption. Furthermore, the Group minimizes this risk byhaving multiple production facilities for its entire product

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Nobel Biocare Annual Report 2011 — Financial reporting96

range. Nobel Biocare’s facilities in Karlskoga, Sweden, andYorba Linda, California, USA, manage the Group’s implantproduction using globally standardized processes and manu-facturing technology. In most cases production can be trans-ferred at short notice if necessary. The three factories for indi-vidualized production in Stockholm, Sweden, Mahwah, NewJersey, USA, and Chiba, Japan, utilize a common system-sha-ring technology. This not only ensures compatibility, but alsoallows orders to be immediately transferred from one pro-duction facility to the other, as proven after the earthquakeevent in Japan. The acquired facilities (Alpha-Bio Tec in Israeland BioCad in Canada) meet the same Group quality require-ments. Nobel Biocare’s capacity for production is securedthrough long-term leased or owned facilities.

Procurement focuses on suppliers that provide industry-stan-dard technology, thus allowing a shift of purchases from onesupplier to another. This means that Nobel Biocare is notdependent on any specific single supplier. For strategic pro-ducts, materials or services, key suppliers are contractuallybound to maintain a minimum stock on hand.

The Group is dependent to a high degree on its informationtechnology systems. All such systems are potentially vulne-rable to damage or interruption from a variety of sources,including, but not limited to, computer viruses, security brea-ches, natural disasters, design, programming or handlingerrors and telecommunication failures. Most of the systemsare outsourced to specialized providers. Nobel Biocare is furt-her aligning its software landscape, migrating proprietary tostandard software packages and harmonizing, standardizing,optimizing and integrating the business processes / functionsand the respective software design.

Another IT-related risk is a potential flaw in fully automatedbusiness processes. Nobel Biocare has partially outsourcedthe IT monitoring of business critical automated processes,programs and transactions to specialized service providers.

Financial risks: Non-compliance with International Financial Reporting Stan-dards (IFRSs), local accounting rules or the Group’s internalaccounting and treasury policies can lead to qualified audi-tors’ opinions and/or the restatement of prior financial disclo-sures. Non-compliance with the regulations of the SIX SwissExchange can lead to sanctions. External auditors regularlyaudit the Group’s consolidated financial statements, as wellas audit or review the financial statements of its subsidiaries.In 2011, Nobel Biocare spent significant time to train Finance

staff in all compliance-related matters, and also continued tobroaden the Group’s Internal Control System (ICS) and com-pliance know-how.

Changes regarding the interpretation of or changes to IFRScan lead to potentially material adverse effects on the balancesheet, cash flow statement and/or income statement. NobelBiocare is in permanent contact with its auditors and otherthird-party experts in an effort to analyze in advance theimpact of any planned changes to IFRS and to comply withthem latest when they become binding.

Preparing financial statements in accordance with IFRS requi-res that management make estimates, judgments andassumptions with regard to the application of policies andreported amounts of balance sheet positions, income state-ment items and the disclosure of contingent liabilities. Keyareas of estimation uncertainty include the impairment ofgoodwill, income taxes, share-based payments, provisionsand employee benefits. For further details, please refer tonote 3.

The Group is exposed to risks related to financial instruments.For further details and a policy explanation, please refer tonote 28 of the consolidated financial statements.

Credit risk represents the risk of financial loss to the Group ifa customer or counterparty to a financial instrument fails tomeet its contractual obligations. This risk arises principallyfrom the Group’s customer receivables and its financialinvestments. The Group has a credit policy under which eachcustomer is analyzed individually, and credit risk related tofinancial investments is handled and assessed centrally. In2011, the Group’s accounts receivable exposure was againreduced. The Group has significantly improved again its glo-bal day’s sales outstanding ratio.

Liquidity risk is the risk that the Group will not be able to meetits financial obligations when they become due. To avoid this,the Group secures financial flexibility either through physicalcash holdings or committed bank facilities. In 2010, NobelBiocare extended the committed syndicated banking facilityof EUR 330 million for five years (through 2015). In 2011, theoutstanding convertible bond (issued in 2007) was paid backand partially refinanced by the issuance of a new bond of CHF120 million and 5 years maturity.

Market risk is the risk that market prices, such as foreignexchange rates and interest rates, move disadvantageously

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Risk management 97

and thereby adversely affect the Group’s income or the valueof its holdings of financial instruments. These risks are parti-ally hedged in keeping with the Group’s Treasury and RiskManagement policies.

Currency risk is the risk that the fair value of or future cashflows from financial instruments change as a result of foreignexchange rate fluctuations. The Group is exposed to currencyrisk with respect to the income statement (transaction risks)and to equity (currency translation risks). Nobel Biocare sys-tematically hedges almost all committed income statementrisks and partially hedges future income statement risks, whe-reas currency translation risk is not systematically hedged. In2011, the Group entered into some exceptional hedging inorder to protect itself against material cash flow and equityrisk in conjunction with the sudden devaluation of the euroand the redemption of the convertible bond.

The Group faces the risk that the fair value of future cash flowsfrom financial instruments change when interest ratesfluctuate, and that such changes could have an adverse effecton the Group’s financial condition. Management of theGroup’s liquid funds and loans is coordinated centrally.

The tax laws and regulations in the respective jurisdictionswhere the Group may have a liability to pay taxes, as well astheir interpretation by tax authorities may change. Suchchanges may have a material impact on the Group’s futureearnings. In addition, a significant degree of estimation isinvolved in determining the worldwide provision for incometaxes. There are various transactions and calculations forwhich the ultimate tax liability remains uncertain. Nobel Bio-care monitors all these risks on an ongoing basis and buildsor releases accordingly tax provisions based on ownjudgment of the probability of any additionally required taxpayments. Further details are provided in note 3.

Human Resources risks:The Group depends on the continued service of key membersof senior management and key experts. The loss of any ofthese individuals could disrupt the Group’s operations.Moreover, the Group’s future success will depend on, amongother things, its ability to continue to hire and retain the neces-sary qualified scientific, technical and managerial personnel.The Group competes for such personnel with numerous othercompanies, academic institutions and organizations.

By standardizing and documenting processes and informa-tion critical to its business, the Group reduces the risk of being

dependent on specific individuals. Furthermore, Nobel Bio-care has further professionalized the Group-level and regionalHR functions and will pursue additional key initiatives to gain,retain and develop the best people. Additional initiatives havebeen launched to further standardize, harmonize and roll-outHR related standards and to increase the level of IT supportfor HR management.

Legal and compliance risks:The Group faces the legal risks attendant to a business ope-ration where products for human use are researched, deve-loped, manufactured, marketed and sold. This includes pro-duct liability and risks related to warranties, as well asunfavorable changes in legislation and regulations, e.g. mar-keting and advertising, or legal and regulatory repercussionsin case of non-compliance with product regulations.

The Group also faces general legal risks such as contract-rela-ted claims, employment issues, unauthorized commitmentsand fraud, etc. Furthermore, Nobel Biocare Holding AG, as alisted company, is highly influenced by changes in the areaof financial market regulation and corporate governance, aswell as by the legal, regulatory and reputational risks associa-ted with non-compliance in this field.

As a globally active enterprise, the Group aims to preemptsuch issues by maintaining a strong legal and complianceorganization, which is closely involved in the business, andby strengthening internal processes, standards and gover-nance.

Internal Controls System (ICS)In 2011, Nobel Biocare further enhanced and improved thedocumentation of its Internal Controls System (ICS), whichmeets Swiss legal requirements and addresses the needs ofa company that operates on a global scale.

The concept is based on the Committee of SponsoringOrganizations of the Treadway Commission (COSO) frame-work. The controls are designed to mitigate financial repor-ting, fraud and compliance risks across all companies of theGroup, and cover a broad range of business support and coreprocesses. In 2011, management testing of all relevant con-trols was performed by all subsidiaries in order to verify theoperational effectiveness of this system. Focus was also givenon improving the segregation of duties concept in SAP andin finance-related processes.

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Nobel Biocare Annual Report 2011 — Financial reporting98

The global whistleblower hotline was used as intended andmanaged as designed. All staff and managers have access toindependent and neutral communication channels to reportpotential non-compliance with laws, regulations, as well asinternal and external business standards. No major caseswere reported. The number of cases remained almostunchanged from the previous year and is in line with interna-tional benchmarks.

All subsidiary managers and their controllers have signed a“Letter of Assurance” that covers all relevant aspects of cor-porate governance, compliance, risks and controls. It is apowerful tool in the effort to further strengthen the compli-ance culture of Nobel Biocare at the Group as well as the sub-sidiary level.

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Nobel Biocare Annual Report 2011 — Financial reporting100

Consolidated income statement.

in EUR ‘000 Note 2011 2010

Revenue 4 569’179 576’583

Cost of goods sold –136’677 –128’610

Gross profit 432’502 447’973

Selling expenses –220’436 –223’976

Administrative expenses –110’935 –107’447

Research and development expenses –29’005 –31’641

Profit from operations (EBIT) 72’126 84’909

Financial income 6 34’435 33’152

Finance cost 6 –51’092 –17’664

Profit before tax 55’469 100’397

Income tax expense 7 –15’688 –54’728

Profit attributable to owners of Nobel Biocare 39’781 45’669

Basic earnings per share (EUR) 17 0.32 0.37

Diluted earnings per share (EUR) 17 0.32 0.37

Consolidated statement of comprehensive income.

in EUR ‘000 Note 2011 2010

Profit attributable to owners of Nobel Biocare 39’781 45’669

Other comprehensive income:

Foreign currency translation differences 7 –37’276 19’573

Reclassification of foreign currency translation differences to income statement, net of tax 6, 7 1’217 –26’968

Effective portion of changes in fair value of cash flow hedges, net of tax 7 –6’397 3’073

Net change in fair value of cash flow hedges reclassified to income statement, net of tax 7 –2’649 –474

Total other comprehensive income/(expenses) for the period –45’105 –4’796

Total comprehensive income/(expenses) for the period attributable to owners of Nobel Biocare –5’324 40’873

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Consolidated balance sheet.

in EUR ‘000 Note 31 December 2011 31 December 2010

Assets

Property, plant and equipment 8 86’331 90’233

Intangible assets 9 212’558 223’388

Non-current receivables 10, 11 3’420 3’974

Deferred tax assets 19 22’235 26’817

Total non-current assets 324’544 344’412

Inventories 12 23’946 23’401

Trade and other receivables 10, 13 109’362 132’855

Current income tax assets 5’799 4’016

Prepaid expenses and accrued income 14 13’754 14’665

Derivative financial instruments 10 7’389 12’179

Cash and cash equivalents 10, 15 107’456 239’816

Total current assets 267’706 426’932

Total assets 592’250 771’344

Equity and liabilities

Share capital 16 31’861 31’861

Share premium 111’023 151’113

Treasury shares 16 –21’498 –40’216

Retained earnings 160’118 177’231

Total equity attributable to owners of Nobel Biocare 16 281’504 319’989

Provisions 20 3’172 2’734

Pension liabilities 21 8’643 6’232

Loans and borrowings 22 98’400 –

Deferred tax liabilities 19 26’269 26’427

Other non-current liabilities 357 494

Total non-current liablities 136’841 35’887

Bank overdraft 15 – 297

Loans and borrowings 22 36’928 252’366

Trade payables 22, 23 15’378 19’284

Current provisions 20 5’935 6’745

Current income tax liabilities 36’763 56’202

Other current liabilities and derivatives 24 16’748 19’285

Accrued expenses and deferred income 25 62’153 61’289

Total current liabilities 173’905 415’468

Total liabilities 310’746 451’355

Total equity and liabilities 592’250 771’344

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Nobel Biocare Annual Report 2011 — Financial reporting102

Consolidated statement of changes in equity.

in EUR ‘000 Note Share capital Share premium

Balance as of 1 January 2010 31’861 166’429

Comprehensive income:

Profit for the year

Other comprehensive income:

Foreign currency translation differences

Reclassification of foreign currency translation differences to income statement, net of tax

Effective portion of changes in fair value of cash flow hedges, net of tax

Net change in fair value of cash flow hedges reclassified to income statement, net of tax

Total other comprehensive income, net of tax

Total comprehensive income/(expenses)

Transactions with owners of Nobel Biocare:

Acquisition of treasury shares 16

Expiry of call and written put options on own shares 16 –11’912

Allocation of shares to share plan participants 18 –194

Convertible bond – equity component 22 –3’210

Share-based payment expenses, net of tax 18

Dividends to owners of Nobel Biocare relating to 2009 16

Total transactions with owners of Nobel Biocare –15’316

Balance as of 31 December 2010 31’861 151’113

Balance as of 1 January 2011 31’861 151’113

Comprehensive income:

Profit for the year

Other comprehensive income:

Foreign currency translation differences

Reclassification of foreign currency translation differences to income statement, net of tax

Effective portion of changes in fair value of cash flow hedges, net of tax

Net change in fair value of cash flow hedges reclassified to income statement, net of tax

Total other comprehensive expenses, net of tax

Total comprehensive income/(expenses)

Transactions with owners of Nobel Biocare:

Acquisition of treasury shares 16

Expiry of call options on own shares 16 –22’720

Allocation of shares to share plan participants 18 –301

Convertible bond – equity component 22 –17’069

Share-based payment expenses 18

Dividends to owners of Nobel Biocare relating to 2010 16

Total transactions with owners of Nobel Biocare –40’090

Balance as of 31 December 2011 31’861 111’023

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Consolidated financial statements 103

Treasury shares Translation Hedging Other retained Total retained Total equity attribut-reserve reserve earnings earnings able to owners of

Nobel Biocare

–56’567 –115’886 221 291’659 175’994 317’717

45’669 45’669 45’669

19’573 19’573 19’573

–26’968 –26’968 –26’968

3’073 3’073 3’073

–474 –474 –474

–7’395 2’599 –4’796 –4’796

–7’395 2’599 45’669 40’873 40’873

–4’817 –4’817

20’716 8’804

452 –258 –258 –

3’206 3’206 –4

3’709 3’709 3’709

–46’293 –46’293 –46’293

16’351 –39’636 –39’636 –38’601

–40’216 –123’281 2’820 297’692 177’231 319’989

–40’216 –123’281 2’820 297’692 177’231 319’989

39’781 39’781 39’781

–37’276 –37’276 –37’276

1’217 1’217 1’217

–6’397 –6’397 –6’397

–2’649 –2’649 –2’649

–36’059 –9’046 –45’105 –45’105

–36’059 –9’046 39’781 –5’324 –5’324

–5’056 –5’056

22’720 –

1’054 –753 –753 –

17’069 17’069 –

4’911 4’911 4’911

–33’016 –33’016 –33’016

18’718 –11’789 –11’789 –33’161

–21’498 –159’340 –6’226 325’684 160’118 281’504

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Nobel Biocare Annual Report 2011 — Financial reporting104

Consolidated cash flow statement.

in EUR ‘000 Note 2011 2010

Profit before tax 55’469 100’397

Adjusted for:

Depreciation, amortization and impairment losses 32’451 29’583

Net financial result 6 16’657 –15’488

Share-based payment expenses 18 4’911 3’895

Other non-cash (income)/expenses –3’896 4’228

Changes in working capital and provisions:

Decrease in trade and other current receivables 25’144 15’752

(Increase)/decrease in inventories –203 1’176

Decrease in trade and other current liabilities –7’772 –4’461

Increase in provisions, accrued expenses and deferred income 3’000 4’476

Income taxes paid –32’655 –42’439

Net cash from operating activities 93’106 97’119

Purchases of property, plant and equipment –16’987 –23’334

Purchases of intangible assets –1’367 –3’630

Purchases of marketable securities – –36’936

Proceeds from sale of marketable securities – 36’882

Interest received 2’083 1’106

Other investing and hedging activities 6 –30’528 5’408

Net cash used in investing activities –46’799 –20’504

Acquisition of treasury shares 16 –5’056 –4’817

Proceeds from current interest-bearing loans and borrowings 22 36’928 –

Repayment of current interest-bearing loans and borrowings 22 –262’812 –1’429

Proceeds from non-current interest-bearing loans and borrowings 22 95’775 –

Repayment of non-current interest-bearing loans and borrowings 22 – –35’433

Hedging of interest-bearing loans and borrowings –4’412 –

Interest paid –5’829 –7’180

Dividends paid 16 –33’016 –46’293

Net cash used in financing activities –178’422 –95’152

Decrease in cash and cash equivalents –132’115 –18’537

Cash and cash equivalents as of 1 January, including bank overdraft 239’519 240’737

Effect of exchange rate differences on cash held 52 17’319

Cash and cash equivalents as of 31 December, including bank overdraft 1 15 107’456 239’519

1 Cash and cash equivalents including bank overdraft of EUR 0 k as of 31 December 2011, and EUR 297 k as of 31 December 2010.

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Notes 105

Notes to the consolidated financialstatements.

1General information

Nobel Biocare Holding AG (the Company) is a limited liabilitycompany incorporated and domiciled in Switzerland. Theconsolidated financial statements of Nobel Biocare (NOBN,SIX Swiss Exchange) for the year ended 31 December 2011comprise the Company and its subsidiaries (the Group).

Nobel Biocare is a highly focused and specialized leader inthe market of implant-based dental restorations. The Group’sbroad portfolio includes dental implant systems for all indica-tions, a comprehensive range of high-precision individualizedprosthetics, CAD/CAM systems, diagnostics, treatment plan-

ning and guided surgery solutions. Nobel Biocare supportsits customers through all phases of professional develop-ment, offering world-class training and education as well asa range of practice support and patient information materials.Nobel Biocare is headquartered in Zurich, Switzerland.

The consolidated financial statements of Nobel Biocare Groupwere authorized for issue by the Board of Directors of NobelBiocare Holding AG on 8 February 2012. A resolution toapprove the consolidated financial statements will be propo-sed at the Annual General Meeting on 29 March 2012.

2Significant accounting policies

2.1. Basis of preparation The consolidated financial statements are prepared in accor-dance with International Financial Reporting Standards(IFRSs) and comply with Swiss law.

The consolidated financial statements are presented in euro(EUR), rounded to the nearest thousand. Although the parentcompany is domiciled in Switzerland, the consolidated finan-cial statements are presented in EUR since the Group’s cashinflow to a large extent is in EUR. The subsidiaries preparetheir individual financial statements using the functional cur-rency in the respective country. The consolidated financialstatements are prepared on a historical cost basis except thatderivative financial instruments and financial assets classifiedas at fair value through profit or loss are stated at their fairvalue. Non-current assets and disposal groups held for saleare stated at the lower of the carrying amount and fair valueless costs to sell.

The accounting policies set out below have been applied con-sistently to all years presented in these consolidated financialstatements.

Effect of adopting new standards, amendments and interpretations

There are no new or amended IFRSs and International Finan-cial Reporting Interpretations Committee (IFRIC) interpretati-ons that are effective for the first time for the financial yearended 31 December 2011 that have had a significant impacton the Group’s accounting policies.

The International Accounting Standards Board (IASB) and theIFRIC have issued a number of new and amended standards

and interpretations that are not yet effective for the financialyear 2011. The impact of the following new and amendedstandards and interpretations has not yet been systematicallyanalyzed. However, management has conducted a prelimi-nary assessment:

IAS 19 (amended) – Employee benefits (effective from 1 January 2013)

– Under the amended standard the corridor approach hasbeen eliminated and all actuarial gains and losses are recog-nized in other comprehensive income (OCI) as they occur.All current and past service costs have to be immediatelyrecognized in the income statement. Expected return onplan assets and interest costs are replaced with a net inte-rest amount that is calculated by applying the discount rateto the net defined liability (asset). This will replace thefinance charge and the expected return on plan assets. Pen-sion liabilities in the balance sheet will increase by appro-ximately EUR 8 million, and the equity will be reducedaccordingly based on the assumption that this amendmenthad been applied to the 2011 consolidated financial state-ment. Based on an initial review the Group estimates thatconsolidated net income in 2011 would have been appro-ximately EUR 200 k lower. The Group will apply the revisedstandard as of 1 January 2013.

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Nobel Biocare Annual Report 2011 — Financial reporting106

IFRS 9 – Financial instruments (effective from 1 January 2015)

– The standard sets out new requirements for how financialassets should be classified and measured. The basis of clas-sification depends on the entity’s business model and thecontractual cash flow characteristics of the financial asset.The two measurement categories for financial assets areamortized cost and fair value. The Group has yet to assessthe full impact of IFRS 9. However, initial indications arethat the new standard will not have a significant impact onthe Group’s consolidated financial statements. The Groupwill likely apply the new standard as of 1 January 2015.

IFRS 10 – Consolidated financial statements (effective from 1 January 2013)

– The key principle under the new standard is that controlexists, and therefore consolidation is required when theinvestor has power over the investee, exposure to variablereturns and the ability to use that power to affect its returnsfrom the investee. The standard provides additional gui-dance to assist in the determination of control where thisis difficult to assess. Management is currently evaluatingthe impact of the new standard. However, initial indicationsare that the new standard will not have a significant impacton the Group’s consolidated financial statements. TheGroup will apply the new standard as of 1 January 2013.

IFRS 12 – Disclosures of interests in other entities (effective from 1 January

2013)

– The new standard provides disclosure requirements oninterests in subsidiaries, associates, joint ventures andunconsolidated structured entities. Applying the standardwill lead to additional disclosures related to interests inother entities that help financial statement readers to eva-luate the nature, risks and financial effects associated withinterests in other entities. The Group will apply the newstandard as of 1 January 2013.

Other standards and amendments to existing standards havebeen published and are mandatory for the Group’s accoun-ting periods beginning on or after 1 January 2012, but theGroup has not early-adopted them, nor is a significant impacton the Group’s accounting policies expected.

2.2. Basis of consolidation Subsidiaries

Subsidiaries are companies controlled by Nobel Biocare Hol-ding AG. Control exists when the Company has the power,directly or indirectly, to govern the financial and operatingpolicies of a company so as to obtain benefits from its activi-ties. Subsidiaries are included in the consolidated financial

statements from the date the control effectively commencesuntil the date control ceases.

According to the full consolidation method, all assets and lia-bilities as well as income and expenses of the subsidiaries areincluded in the consolidated financial statements. The shareof non-controlling interests in the net assets and results ispresented separately as non-controlling interests in the con-solidated balance sheet and income statement, respectively.

Associates

Associates are companies where the Group is able to exercisesignificant influence, but not control, over the financial andoperating policies.

The consolidated financial statements include the Group’sshare of the total recognized gains and losses of associateson an equity accounting basis, from the date significant influ-ence commences until the date it ceases. When the Group’sshare of losses exceeds the carrying amount of the associate,the carrying amount is reduced to zero and recognition offurther losses is discontinued except to the extent that theGroup has incurred obligations with respect to the associate.

Transactions eliminated on consolidation

Intragroup balances and transactions, as well as any unreali-zed gains and losses or income and expenses arising fromintragroup transactions, are eliminated in preparing the con-solidated financial statements.

2.3. Foreign currency Foreign currency transactions

Transactions in foreign currencies are translated at the foreignexchange rate at the date of the transaction. Monetary assetsand liabilities in foreign currencies are translated at the foreignexchange rate at the balance sheet date. Non-monetaryassets and liabilities in foreign currencies that are stated athistorical cost are translated at the foreign exchange rate atthe date of the transaction. Non-monetary assets and liabili-ties in foreign currencies that are stated at fair value are trans-lated at the foreign exchange rate at the date the values weredetermined.

All foreign exchange differences arising on translation, inclu-ding the result of hedging transactions related to operations,are recognized in the income statement as financial incomeor financial expenses.

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Notes 107

Financial statements of foreign operations

Assets and liabilities of foreign operations, including goodwilland fair value adjustments arising on consolidation, are trans-lated at the foreign exchange rates at the balance sheet date.Income and expenses of foreign operations are translated atrates approximating the foreign exchange rates at the datesof the transactions. Foreign exchange differences arising ontranslation of foreign operations are recognized directly inother comprehensive income and presented in equity as atranslation reserve.

If a loan is made to a foreign operation, and the loan in sub-stance forms part of the Group’s investment in the foreignoperation, translation differences arising on the loan are alsorecognized directly in other comprehensive income. On dis-posal of a foreign operation, cumulative translation diffe-rences recognized in other comprehensive income are reclas-sified to the income statement as part of the gain or loss ondisposal.

2.4. Segment reporting Operating segments are determined based on internal repor-ting provided to the chief operating decision maker (CODM).The CODM is responsible for making strategic decisions andfor allocating resources to the segments. The Board ofDirectors has been identified as the CODM of the Group.

2.5. Revenue recognitionRevenue is reported net of sales taxes, discounts, rebates andreturn of goods. Revenue is recognized when the amount ofrevenue can be reliably measured, it is probable that futureeconomic benefits will flow to the Group, the associated costscan be reliably estimated and other specific criteria have beenmet as described below.

Revenue from the sale of goods is recognized in the incomestatement when the significant risks and rewards of owner-ship have been transferred to the buyer, which is usually ondelivery to third parties.

Revenue from training and education is generally recognizedin the period in which the services are provided.

2.6. Financial income and finance costFinancial income comprises interest receivable on fundsinvested, foreign exchange gains and losses, dividends, gainson the disposal of financial investments and positive changesin the fair value of financial instruments held for trading andderivatives that are recognized in the income statement. Inte-

rest income is recognized in the income statement as itaccrues, using the effective interest method. Dividends arerecognized in the income statement on the date the entity’sright to receive payments is established.

Finance cost comprises interest payable on borrowings cal-culated using the effective interest method, interest expensesderived from net present value calculations on the deferredpurchase price related to the acquisition of Nobel Biocare Pro-cera AB, losses on the disposal of financial investments andnegative changes in the fair value of financial instrumentsheld for trading and derivatives that are recognized in theincome statement.

2.7. Income tax Income tax on the profit or loss for the year comprises currentand deferred tax. Income tax is recognized in the incomestatement except to the extent that it relates to items recog-nized directly in other comprehensive income or equity, inwhich case it is recognized in other comprehensive incomeor equity, respectively.

Current tax is the expected tax payable on the taxable incomefor the year, using tax rates enacted or substantially enactedat the balance sheet date, and includes any adjustment totaxes payable with respect to previous years.

Deferred tax is recognized, based on the balance sheet liabilitymethod, on temporary differences between the carryingamounts of assets and liabilities for financial reporting purpo-ses and the amounts used for taxation purposes. No tempo-rary differences are recognized on the initial recognition ofgoodwill, on the initial recognition of assets or liabilities thataffect neither the accounting nor taxable profit, or on diffe-rences relating to investments in subsidiaries to the extentthat they will probably not reverse in the foreseeable future.The amount of deferred tax recognized is based on theexpected manner of realization or settlement of the carryingamount of assets and liabilities, using tax rates enacted orsubstantially enacted at the balance sheet date.

A deferred tax asset is recognized only to the extent that it isprobable that future taxable profits will be available againstwhich the asset can be utilized. Deferred tax assets are redu-ced to the extent that it is no longer probable that the relatedtax benefit will be realized.

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Nobel Biocare Annual Report 2011 — Financial reporting108

2.8. Property, plant and equipment Property, plant and equipment are stated at cost less accu-mulated depreciation and impairment losses. Where an itemof property, plant and equipment comprises major compo-nents having different useful lives, the components areaccounted for as separate items of property, plant and equip-ment.

Depreciation is charged to the income statement on astraight-line basis over the estimated useful lives of property,plant and equipment. Leasehold improvements are deprecia-ted over the shorter of the lease term and the useful lives ofthe asset. Land is not depreciated. The estimated useful livesare usually as follows:

in years

Buildings 25

Leasehold improvements 3–8

Machinery 5–8

Equipment 3–5

2.9. Intangible assets Goodwill

All business combinations are accounted for by applying theacquisition method. Goodwill arising on acquisition of a sub-sidiary or associate represents the excess of the cost of theacquisition over the fair value of the net identifiable assetsacquired. With respect to associates, the carrying amount ofgoodwill is included in the carrying amount of the investmentin the associate.

Goodwill is stated at cost less accumulated impairment los-ses. For the purpose of impairment testing, goodwill is allo-cated to cash-generating units or groups of cash-generatingunits that are expected to benefit from the synergies of thebusiness combination from which the goodwill arose. Eachunit or group of units represents the lowest level within NobelBiocare at which management monitors goodwill. Negativegoodwill arising on acquisition is recognized directly in theincome statement.

Intangible assets acquired in business combinations

Intangible assets acquired in a business combination (inclu-ding patents, licenses and in-process research and develop-ment) are recognized separately from goodwill if they are sub-ject to contractual or legal rights or are separately transferableand their fair value can be reliably estimated.

Patents and licenses

Patents and licenses (intellectual property rights) acquired bythe Group from third parties or in a business combination arestated at cost less accumulated amortization and impairmentlosses.

Research and development costs

Expenditures on research and development activities includethe cost of materials, direct labor and an appropriate propor-tion of overhead relating to research and development.

Expenditures on research activities are expensed as incurred.Expenditures on development activities are capitalized if theproduct or process is technically and commercially feasible,future economic benefits are probable, the costs can be reli-ably measured, and the Group intends to and has sufficientresources to complete development and to use or sell theasset. Capitalized development expenditures are stated atcost less accumulated amortization and impairment losses.Amortization starts when the developed assets are availablefor use. Capitalized development expenditures are tested forimpairment every year.

Other development expenditures for which the aforementio-ned criteria are not met are expensed as incurred.

Computer programs

Computer programs comprise expenditures for computersoftware acquired by the Group from third parties or in a busi-ness combination.

Computer programs are stated at cost less accumulatedamortization and impairment losses.

Other intangible assets

Other intangible assets comprise expenditures for customerrelationships, technology, brands and non-competitionagreements acquired by the Group from third parties or in abusiness combination.

Other intangible assets are stated at cost less accumulatedamortization and impairment losses.

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Notes 109

Amortization is charged to the income statement on astraight-line basis over the estimated useful life of the intan-gible asset. The estimated useful lives are usually as follows:

in years

Patents and licenses 3–5

Development costs 3–5

Computer programs 3

Customer relationships 10

Technology 10–12

2.10. Impairment of non-financial assetsThe carrying amounts of the Group’s non-financial assets,other than inventories and deferred tax assets, are reviewedat each balance sheet date to determine whether there is anyindication of impairment. If any such indication exists, theasset’s recoverable amount is estimated. Goodwill, intangibleassets with an indefinite useful life and capitalized develop-ment expenditures are tested for impairment at least once ayear.

An impairment loss is recognized in the income statementwhenever the carrying amount of an asset or its cash-gene-rating unit exceeds its recoverable amount. The recoverableamount of an asset is the greater of the fair value less coststo sell and value in use.

An impairment loss is reversed if there is an indication thatthe impairment loss may no longer exist, and there has beena change in the estimates used to determine the recoverableamount. However, an impairment loss of goodwill is not rever-sed.

2.11. LeasesLeases of property, plant and equipment where the Group hassubstantially all the risks and rewards of ownership of the lea-sed asset are classified as finance leases. The Group has nomaterial finance lease contracts.

Leases where the lessor effectively retains all the risks andrewards of ownership are classified as operating leases. Pay-ments made under operating leases (net of any incentivesreceived from the lessor) are charged to the income state-ment on a straight-line basis over the period of the lease.

2.12. Inventories Inventories are stated at the lower of cost and fair value lesscost to sell. Fair value less cost to sell is the estimated selling

price in the ordinary course of business, less estimated sellingcosts. The cost of inventories consisting of material, labor andproduction costs is calculated according to the first-in, first-out principle. The cost includes expenditures incurred inmanufacturing or acquiring the inventories and bringing themto their existing location and condition. Production costsinclude an appropriate share of overhead based on normaloperating capacity.

2.13. Non-derivative financial assetsLoans, trade and other receivables

Loans, trade and other receivables are initially recognized atfair value and are subsequently measured at amortized cost,less any provision for impairment. A provision for impairmentis recognized on an individual basis or on a portfolio basiswhere there is objective evidence that impairment losses havebeen incurred.

Financial investments

Financial investments comprise fixed-term deposits with aterm of more than 90 days from the date of acquisition andinvestments in debt securities and equity-linked notes.

Fixed-term deposits are initially measured at fair value andsubsequently at amortized cost less any impairment losses.

Investments in debt securities are classified as available-for-sale financial assets. Subsequent to initial recognition, theyare measured at fair value and changes therein, other thanimpairment losses and foreign exchange gains and losses onavailable-for-sale monetary items, are recognized in the state-ment of comprehensive income and presented within equityin other retained earnings. When an investment is derecog-nized, the cumulative gain or loss in the statement of com-prehensive income is transferred to the income statementwithin financial income or finance cost. In 2011, the Groupdid not have any investments in debt securities.

Investments in equity-linked notes are classified as held fortrading if acquired principally with the purpose of selling inthe short term. They are initially and subsequently measuredat fair value. Gains or losses arising from the changes in fairvalue are presented in the income statement within financialincome or finance cost. In 2011, the Group did not have anyinvestments in equity-linked notes.

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Nobel Biocare Annual Report 2011 — Financial reporting110

Cash and cash equivalents

Cash includes cash on hand, in postal accounts and at banks.Cash equivalents comprise fixed-term deposits and commer-cial papers with an original maturity of 90 days or less.

2.14. Non-derivative financial liabilitiesNon-derivative financial liabilities are initially recognized at fairvalue, which is the proceeds received, less attributable trans-action costs. Subsequent to initial recognition, they are statedat amortized cost with any difference between cost andredemption value being recognized in the income statementover the period of the debt instrument using the effective inte-rest method. Any discount between the net proceeds recei-ved and the principal value due upon redemption is amortizedover the duration of the debt instrument and is recognized aspart of finance cost using the effective interest method. Finan-cial liabilities are removed from the balance sheet when thecontractual obligation is discharged, cancelled or expired.

Bank overdrafts that are repayable upon demand and forman integral part of the Group’s cash management are shownwithin borrowings in current liabilities in the consolidatedbalance sheet. Within the cash flow statement, bank over-drafts are included as a component of cash and cash equiva-lents.

2.15. Share capitalRegistered shares with discretionary dividends are classifiedas equity. Dividends on these shares are recognized in equityin the period in which they are declared.

Treasury shares

When the Company or its subsidiaries purchase the Compa-ny’s own shares, the consideration paid, including any attri-butable transaction costs, is presented as treasury shares anddeducted from equity. Where such shares are subsequentlysold or reissued, any resulting gain or loss is included in sharepremium within equity.

2.16. Compound financial instrumentsConvertible bond

Compound financial instruments issued by the Group com-prise convertible notes that can be converted into share capi-tal. The liability component of a compound financial instru-ment is recognized initially at the fair value of a similar liabilitythat does not have an equity conversion option. The equitycomponent is recognized initially as the difference betweenthe fair value of the compound financial instrument as a wholeand the fair value of the liability component. Any directly attri-

butable transaction costs are allocated to the liability andequity components in proportion to their initial carryingamounts. Subsequent to initial recognition, the liability com-ponent of a compound financial instrument is measured atamortized cost using the effective interest method. The equitycomponent of a compound financial instrument is not reva-lued subsequent to initial recognition.

2.17. Derivative financial instruments and hedging activitiesThe Group uses derivative financial instruments to protectitself from foreign currency and interest rate risk exposures.Foreign exchange risk arises from future commercial trans-actions, recognized assets and liabilities and net investmentsin foreign operations. Interest rate risk is the risk of the resultand/or cash flows being negatively affected by changes ininterest rates. There are established policies and proceduresfor risk assessment and approval, reporting and monitoringof derivative financial instruments. They are not used for tra-ding purposes.

Derivative financial instruments are initially and subsequentlyrecognized at fair value. Any resultant gain or loss on reva-luation of derivative financial instruments that do not qualifyfor hedge accounting is recognized immediately in theincome statement within financial income or finance cost.

All derivatives with a positive fair value are disclosed in thebalance sheet within derivative financial instruments, whileall derivatives with a negative fair value are disclosed withinother liabilities and derivatives. The fair value of a derivativefinancial instrument is classified as a non-current asset or lia-bility when the remaining maturity period is more than12 months and as a current asset or liability when the remai-ning maturity period is 12 months or less.

Cash flow hedges

The Group applies hedge accounting for material future cashflows in all foreign currencies and for hedges of particularrisks associated with a recognized asset or liability. Where aderivative financial instrument is designated as a highly pro-bable forecasted transaction, the effective portion of any gainor loss on the derivative financial instrument is recognizeddirectly in the statement of comprehensive income and is pre-sented in the hedging reserve in equity. The gain or loss rela-ting to the ineffective portion is recognized immediately in theincome statement within financial income or finance cost.

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Notes 111

The cumulative gain or loss is removed from equity and recog-nized in the income statement at the same time as the hedgedtransaction.

When a hedging instrument is sold, terminated or exercised,but the hedged transaction is still expected to occur, thecumulative gain or loss at that point remains in equity and isrecognized in accordance with the above policy when thetransaction occurs. If the hedged transaction is no longer pro-bable, the cumulative unrealized gain or loss recognized inequity is recognized immediately in the income statementwithin financial income or finance cost.

Hedge of monetary assets and liabilities

Where a derivative financial instrument is used to economi-cally hedge the foreign exchange exposure of a recognizedmonetary asset or liability, hedge accounting is generally notapplied. Any gain or loss on the hedging instrument is recog-nized as financial income or finance cost in the income state-ment. Related foreign exchange gains and losses are alsorecognized as financial income or finance cost as incurred.

2.18. Non-current assets held for sale and discontinuedoperations Non-current assets (or disposal groups) are classified as heldfor sale if their carrying amount will be recovered principallythrough a sale transaction rather than from continuing use.The asset (or disposal group) must be available for immediatesale in its present condition, and the sale must be highly pro-bable. On initial classification as held for sale, non-currentassets and disposal groups are recognized at the lower of car-rying amount and fair value less costs to sell. Impairment los-ses on initial classification as held for sale are included in theincome statement.

A discontinued operation is a component of the Group’s busi-ness that represents a separate major line of business or geo-graphical area of operations, or is a subsidiary acquired exclu-sively with a view to resell. Classification as a discontinuedoperation occurs upon disposal or when the operation meetsthe criteria to be classified as held for sale, if earlier.

2.19. Employee benefits The Group operates or participates in both defined contribu-tion and defined benefit plans throughout the world accor-ding to national laws and regulations of the countries in whichit operates.

Defined contribution plans

Except for Sweden, which has a defined benefit plan that istreated like a defined contribution plan (see note 21), themajority of the Group’s pension commitments are definedcontribution plans in which regular payments are made toindependent authorities or bodies that administer pensionplans.

Contributions to defined contribution plans are recognized asan expense in the income statement as incurred.

Defined benefit plans

Where the Group has personnel pension funds with definedbenefit components, the net obligation is determined inaccordance with the projected unit credit method. Theamount of future benefits that employees have earned inreturn for their service in the current and prior periods is esti-mated. These benefits are discounted to determine the pre-sent value, and the fair value of any plan assets is deducted.The discount rate is the yield at the balance sheet date onhigh-quality corporate bonds that are denominated in the cur-rency in which the benefits will be paid, and that have maturitydates approximating the terms of the related pension liability.The calculation is performed by a qualified actuary on anannual basis. The net obligation is calculated separately foreach defined benefit plan.

When the benefits of a plan are improved, the portion of theincreased benefits relating to past service by employees isrecognized as an expense in the income statement on astraight-line basis over the average period until the benefitsbecome vested. To the extent that the benefits vest immedia-tely, the expense is recognized immediately in the incomestatement.

Actuarial gains and losses arising from subsequent calculati-ons are recognized to the extent that they exceed ten percentof the higher of the defined benefit obligation and the fairvalue of the plan assets. The amount exceeding this corridoris amortized over the expected average remaining workinglife of the employees participating in the plan. Otherwise, theactuarial gain or loss is not recognized.

Where the calculation results in a benefit to the Group, therecognized asset is limited to the total of any cumulative unre-cognized net actuarial losses and past service cost and thepresent value of any future refunds from the plan or reducti-ons in future contributions to the plan. In order to calculatethe present value of economic benefits, consideration is given

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Nobel Biocare Annual Report 2011 — Financial reporting112

to any minimum funding requirements that apply to any planin the Group. An economic benefit is available to the Groupif it is realizable during the life of the plan or upon settlementof the plan liabilities.

2.20. Share-based payment transactionsThe Group operates several equity-settled share-based pay-ment programs: a performance share unit plan (PSUP) thatcovers executives of operating units and the headquarters,a share plan that covers members of the Board of Directorsand selected individuals and an employee stock option pro-gram which was replaced in 2008 by the PSUP.

Performance share unit plan (PSUP)

The fair value of the employee services received in exchangefor the grant of the awards is recognized as a personnelexpense with a corresponding increase in equity. The totalamount expensed is recognized over the vesting period,which is the period over which all of the specified vesting con-ditions are to be satisfied. Vesting of the awards is subject toa service period and to the achievement of market conditions.The fair value of awards granted is measured based on aMonte Carlo simulation. In determining the fair value of theawards, the service condition is not taken into account.

The Group accrues for the expected cost of social charges inconnection with the allotment of shares under the PSUP. Thedilution effect of the share-based awards is considered whencalculating diluted earnings per share.

Share plan

The fair value of the services received in exchange for thegrant of the restricted shares is recognized as a personnelexpense with a corresponding increase in equity. The fairvalue of the shares is measured at the grant date share price,adjusted for transfer restrictions. The share plan does notinvolve vesting conditions.

Staff option program

With the introduction of the PSUP in 2008 no new optionswere granted to employees under the staff option program.

2.21. ProvisionsA provision is recognized in the balance sheet when the Grouphas a legal or constructive obligation as a result of a pastevent, and it is probable that an outflow of economic benefitswill be required to settle the obligation.

The amounts recognized as provisions represent manage-ment’s best estimate of the expenditures that will be requiredto settle the obligation as of the balance sheet date. If theeffect is material, provisions are determined by discountingthe expected future cash flows at a pre-tax rate that reflectscurrent market assessments of the time value of money and,where appropriate, the risks specific to the liability. Provisionsare reviewed at each balance sheet date and adjusted toreflect the current best estimate.

Returns and warranties

Provisions for returns and warranties are recognized whenthe underlying products are sold. The provisions are basedon historical return rates and historical warranty data and aweighting of all possible outcomes against their associatedprobabilities.

Disputes and litigation

Provisions for tax disputes and litigation regarding patents,trademarks and product responsibilities are only recognizedwhen the Group believes that it is probable that it will have topay to settle the disputes. The costs provided for correspondto the estimated amount required to settle the dispute or liti-gation.

2.22. Contingent liabilities Contingent liabilities are possible obligations arising frompast events whose existence will be confirmed only by theoccurrence or non-occurrence of one or more uncertainfuture events not wholly within the control of the Group. Theymay also be present obligations that are unrecognizedbecause the future outflow of resources is not probable orthe amount cannot be reasonably determined. Contingent lia-bilities are not recognized in the balance sheet but are disclo-sed in the notes to the consolidated financial statements.

3 Critical accounting estimates and judgments

The preparation of financial statements in conformity withIFRS requires management to make estimates, judgmentsand assumptions that affect the application of policies andreported amounts of assets and liabilities, income and expen-

ses, as well as the disclosure of contingent liabilities. Thesejudgments, estimates and assumptions are based on histori-cal experience and various other factors that are believed tobe reasonable under the circumstances. Actual results may

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Notes 113

differ from these estimates. The estimates and underlyingassumptions are reviewed on an ongoing basis and revisedif necessary. Revisions are recognized in the period in whichthe estimate is revised if the revision affects only that period,or in the period of the revision and future periods if the revisionaffects both current and future periods. Critical judgmentsmade by management in the application of IFRS that mighthave a significant effect on the consolidated financial state-ments and key sources of estimation uncertainties are dis-cussed below.

Impairment of goodwill

Goodwill is tested annually for impairment in accordance withthe accounting policy described in note 2.10. The recoverableamounts of cash-generating units have been determinedbased on value-in-use calculations. These calculations requirethe use of estimates. Further details are disclosed in note 9.

Income taxes

The Group is subject to taxes in numerous jurisdictions. Sig-nificant judgment is required in determining a worldwide pro-vision for taxes. There are many transactions and calculationsduring the ordinary course of business for which the ultimatetax determination is uncertain. The Group recognizes liabili-ties for anticipated tax audit issues based on estimates ofwhether additional taxes will be due. Where the final tax out-come of these matters is different from the amounts that wereinitially recorded, such differences will impact the income taxand deferred tax provisions in the period in which such deter-mination is made. Management believes that the estimatesare reasonable, and that the recognized liabilities for incometax-related uncertainties are adequate.

Were the actual final outcome on the judgment areas to differby ten percent from management’s estimates, the Groupwould need to:– Increase the income tax liability by EUR 1’930 k and

decrease the deferred tax liability by EUR 182 k, if unfavor-able; or

– Decrease the income tax liability by EUR 2’610 k andincrease the deferred tax liability by EUR 182 k, if favorable.

Further details are disclosed in notes 7 and 19.

Share-based payments

The Group operates two equity-settled share-based paymentprograms: a performance share unit plan (PSUP) and a shareplan. At each balance sheet date, the Group revises its esti-mates for the PSUP and the number of awards that areexpected to vest based on the related vesting conditions otherthan market conditions. It recognizes the impact of the revi-sion to original estimates, if any, in the income statement,with a corresponding adjustment to equity. Further details areprovided in note 18.

Provisions

Provisions are made, among other reasons, for returns, war-ranties, disputes and litigation. A provision is recognized inthe balance sheet when the Group has a legal or constructiveobligation as a result of a past event, and it is probable thatan outflow of economic benefits will be required to settle theobligation. The nature of these costs is such that judgmenthas to be applied to estimate the timing and amount of cashoutflows. Depending on the outcome of the respective trans-actions, actual payments may differ from these estimates.Further details are disclosed in note 20.

Employee benefits

Actuarial assumptions and valuation methods are required tomeasure the balance sheet obligation and the income state-ment expense. Assumptions used in determining the net cost(income) for pensions include the discount rate, future salaryand pension increases and mortality rates. Changes in theseassumptions will impact pension costs and the carryingamount of pension obligations.

The appropriate discount rates are determined at the end ofeach year by reference to market yields at the balance sheetdate on high-quality corporate bonds of equivalent currencyand term to the benefit obligations. Other key assumptionsfor pension obligations are based in part on current marketconditions. Further details are provided in note 21.

Should the discount rate used differ by 25 basis points frommanagement’s estimates, the carrying amount of pensionobligations would be approximately EUR 1’750 k lower orEUR 1’790 k higher.

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Nobel Biocare Annual Report 2011 — Financial reporting114

4 Operating segments

Operating segments are determined based on the reportsreviewed by the Board of Directors that are used to make stra-tegic decisions and to allocate resources to the segments.

Operating segments are identified geographically as the busi-ness is managed on a global basis and is run in four geogra-phical areas. The business contribution is derived from sales,the cost of goods purchased from manufacturing sites andexpenses related to the sale of products in the respective regi-ons. Certain administrative expenses directly attributable to

the sale of products are also allocated to the four geographicregions. The Board of Directors reviews and assesses thebusiness (i.e. sales and business expenses) on this basis.

Revenue arises from two integrated product groups, implantsystems and individualized products. These products are soldin all operating segments, often with both implant systemsand individualized products forming part of a combined offeras Nobel Biocare is a full-solution provider.

in EUR ‘000 Europe, Middle East North America Asia/Pacific Latin America/ Total Groupand Africa (EMEA) Rest of the world

2011 2010 2011 2010 2011 2010 2011 2010 2011 2010

External sales 236’448 248’330 200’103 193’695 123’596 125’584 9’032 8’974 569’179 576’583

Share of total revenue 41% 43% 35% 33% 22% 22% 2% 2% 100% 100%

Business expenses –139’478 –143’369 –105’674 –105’284 –65’708 –63’666 –6’908 –6’847 –317’768 –319’166

Business contribution 96’970 104’961 94’429 88’411 57’888 61’918 2’124 2’127 251’411 257’417

Certain expenses, presented in the reconciliation, are not attri-butable to a particular segment and are reviewed as a wholeacross the Group irrespective of geographic origin. Unalloca-ted business expenses include certain production costsremaining with the manufacturing sites. Functional costscomprise headquarter and plant functions, which include glo-bal marketing and product development, certain symposiaevents, quality, logistics, research and development and otheradministrative functions. Also included are reconciling and

other items, e.g., adjustments and eliminations made in pre-paring the financial statements. The business contributionalso excludes the effects of Group-wide equity-settled share-based expenses and depreciation, amortization and impair-ment expenses. The revenue from external customers repor-ted to the Board of Directors is measured in a mannerconsistent with that in the income statement. There are nosignificant sales between the segments. No individual custo-mer represents a significant portion of the Group’s revenue.

Reconciliation

in EUR ‘000 2011 2010

Business contribution 251’411 257’417

Unallocated business expenses –13’982 –10’974

Functional costs –128’011 –128’048

Depreciation, amortization and impairment losses –32’451 –29’583

Share-based payment expenses –4’911 –3’895

Reconciling and other items 70 –8

Operating profit (EBIT) 72’126 84’909

Net financial result –16’657 15’488

Profit before tax 55’469 100’397

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Notes 115

Geographical informationIn presenting information on the basis of geographical areas, revenue is based on the geographical location of the customer.The allocation of assets is based on their geographical location.

Revenue

in EUR ‘000 2011 2010

United States 166’004 159’971

Japan 79’601 85’336

Switzerland 6’321 6’449

Other countries 317’253 324’827

Total revenue 569’179 576’583

Non-current assets

in EUR ‘000 2011 2010

United States 92’782 94’973

Israel 67’146 70’552

Sweden 45’093 48’458

Switzerland 37’677 40’810

Other countries 56’191 58’828

Total 298’889 313’621

Non-current receivables 3’420 3’974

Deferred tax assets 22’235 26’817

Total non-current assets 324’544 344’412

5Personnel expenses

in EUR ‘000 2011 2010

Wages and salaries 165’296 159’340

Social security costs 18’936 17’723

Defined contribution plan expenses 5’665 5’401

Defined benefit plan expenses 5’080 5’017

Cost for share-based payment transactions 4’911 3’895

Total personnel expenses 199’888 191’376

At the end of 2011, Nobel Biocare employed 2’472 employeesworldwide, an increase of 39 employees from the previousyear.

The increase in employees and personnel expenses relatesmainly to manufacturing due to the extension of certain pro-duct lines, additions to the sales force in emerging marketsas well as certain increases in the centralized functions of ITand Quality & Environment.

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Nobel Biocare Annual Report 2011 — Financial reporting116

Personnel expenses are recognized in the following line items in the income statement:

in EUR ‘000 2011 2010

Cost of goods sold 34’840 33’331

Selling expenses 104’432 105’077

Administrative expense 45’650 38’928

Research and development expenses 14’966 14’040

Total personnel expenses 199’888 191’376

6 Financial income and finance cost

in EUR ’000 2011 2010

Interest income 2’335 1’497

Net foreign exchange gains/(losses) 29’273 –573

Derivative instruments at fair value through profit or loss – 1’600

Net change in fair value of cash flow hedges reclassified from other comprehensive income 2’827 644

Reclassification of cumulative translation differences from other comprehensive income – 29’984

Financial income 34’435 33’152

Interest expenses –10’270 –11’105

Derivative instruments at fair value through profit or loss –35’557 –

Reclassification of cumulative translation differences from other comprehensive income –1’217 –

Other financial expenses –4’048 –6’559

Finance cost –51’092 –17’664

Net financial result –16’657 15’488

Net foreign exchange gains and losses generally arise fromoperating in multiple currencies, while gains and losses onderivative instruments result from hedging such exposures.In 2011, derivative instruments at fair value through profit orloss included option premiums paid to hedge the economicrisk of the rising Swiss franc against the euro in conjunctionwith the approaching redemption of the convertible bond. Asa result of the decision of the Swiss National Bank in Septem-ber to set a minimum exchange rate of CHF 1.20 to the euro,these options lost their value resulting in a loss ofEUR 11’648 k. This amount is included within the cash flowstatement under “other investing and hedging activities”along with rollover effects on derivatives.

In 2010, net foreign exchange gains primarily related to thesimplification of internal funding structures, which resulted

in the reclassification of cumulative translation differences ofEUR 29’984 k to the income statement, which had been pre-viously recognized in other comprehensive income as pre-sented in equity.

Other financial expenses mainly comprise fees for theEUR 330’000 k syndicated banking facility. On 22 Novem-ber 2010, the Group announced that the previous agreementwas replaced and extended for five years to 2015. In con-junction with this replacement, the remaining capitalized feesrelating to the original agreement were recognized in theincome statement in full, in favor of the new fee structure tobe recognized in the income statement over the life of theamended contract. As of 31 December 2011, CHF 45’000 kor EUR 36’928 k (31 December 2010: EUR 0 k) was drawnon the facility. For additional information, refer to note 22.

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Notes 117

7Income tax expense

The following amounts are recognized in the income statement:

in EUR ‘000 2011 2010

Income taxes relating to the current period, net, before internal business restructuring –13’014 –25’767

Income taxes relating to internal business restructuring – –41’226

Income taxes relating to past periods, net 1’829 –1’815

Current income tax expense –11’185 –68’808

Deferred tax income due to temporary difference, before internal business restructuring –4’986 1’433

Deferred tax income relating to internal business restructuring – 11’410

Increase/(decrease) of recognition of tax loss carryforwards 483 1’237

Deferred tax income/(expense) –4’503 14’080

Total income tax expense in the income statement –15’688 –54’728

Tax effects on other comprehensive income are as follows:

in EUR ‘000 2011 2010

Before tax Tax Net of tax Before tax Tax Net of tax(expense)/ (expense)/

benefit benefit

Foreign currency translation differences –37’276 – –37’276 19’573 – 19’573

Reclassification of foreign currency translation differences to income statement 1’217 – 1’217 –29’984 3’016 –26’968

Effective portion of change in fair value of cash flow hedges –6’449 52 –6’397 3’424 –351 3’073

Net change in fair value of cash flow hedges reclassified to income statement –2’827 178 –2’649 –644 170 –474

Total –45’335 230 –45’105 –7’631 2’835 –4’796

The Group’s tax rate is calculated as follows:

in % 2011 2010

Statutory income tax rate 7.8 7.8

Effect of higher tax rates in other jurisdictions 14.6 12.0

Non-tax deductible expenses 3.1 2.1

Current tax losses not recognized and recognitions of tax loss carryforwards of prior years 3.3 –1.2

Tax rate changes and other effects 2.8 2.3

Income tax rate before tax adjustment of prior years and internal business restructuring 31.6 23.0

Tax adjustments of prior years and reassessment of tax exposure –3.3 1.8

Effect of internal business restructuring – 29.7

Total income tax rate 28.3 54.5

The effect of higher tax rates in other jurisdictions increasedfrom 12.0 percent in 2010 to 14.6 percent in 2011 mainly dueto the change in profitability of the Group’s entities in therespective countries.

The decrease of 26.2 percentage points in the income tax ratefrom 54.5 percent in 2010 to 28.3 percent in 2011 is mainlyrelated to the one-time effect from the internal businessrestructuring during 2010, where intangible assets weretransferred between Group companies at fair market value.

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Nobel Biocare Annual Report 2011 — Financial reporting118

No tax assets resulting from recognized tax loss carryforwards were written off in 2011.

8 Property, plant and equipment

in EUR ’000 Land, buildings Machinery Equipment Totaland leaseholdimprovements

Cost

Balance as of 1 January 2010 24’788 91’056 45’591 161’435

Additions for the year 5’880 13’161 4’217 23’258

Disposals –147 –5’823 –6’261 –12’231

Effect of changes in exchange rates 3’588 12’229 4’646 20’463

Balance as of 31 December 2010 34’109 110’623 48’193 192’925

Accumulated depreciation

Balance as of 1 January 2010 12’669 37’558 35’375 85’602

Depreciation charge for the year 3’068 10’470 5’146 18’684

Disposals –145 –5’823 –6’138 –12’106

Effect of changes in exchange rates 1’867 5’019 3’626 10’512

Balance as of 31 December 2010 17’459 47’224 38’009 102’692

Carrying amount

Balance as of 1 January 2010 12’119 53’498 10’216 75’833

Balance as of 31 December 2010 16’650 63’399 10’184 90’233

in EUR ’000 Land, buildings Machinery Equipment Totaland leaseholdimprovements

Cost

Balance as of 1 January 2011 34’109 110’623 48’193 192’925

Additions for the year 6’167 6’417 4’378 16’962

Disposals –1’970 –85 –5’229 –7’284

Effect of changes in exchange rates 758 2’392 454 3’604

Balance as of 31 December 2011 39’064 119’347 47’796 206’207

Accumulated depreciation

Balance as of 1 January 2011 17’459 47’224 38’009 102’692

Depreciation charge for the year 4’282 12’790 4’222 21’294

Impairment charge for the year – 837 – 837

Disposals –1’955 –85 –5’131 –7’171

Effect of changes in exchange rates 430 1’411 383 2’224

Balance as of 31 December 2011 20’216 62’177 37’483 119’876

Carrying amount

Balance as of 1 January 2011 16’650 63’399 10’184 90’233

Balance as of 31 December 2011 18’848 57’170 10’313 86’331

As of 31 December 2011, the fire insurance value of property,plant and equipment amounted to EUR 168’095 k(2010: EUR 162’577 k).

The impairment in the amount of EUR 837 k is the write-downof some production machines to the recoverable amount.

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Notes 119

The depreciation charge related to property, plant and equipment is recognized in the following lines in the income statement:

in EUR ‘000 2011 2010

Cost of goods sold 17’177 13’354

of which: impairments 837 –

Selling expenses 3’165 3’486

Administrative expense 1’041 1’098

Research and development expenses 748 746

Total depreciation charge 22’131 18’684

As of 31 December 2011, the Group had capital commitments of EUR 595 k (2010: EUR 4’776 k).

9Intangible assets

in EUR ’000 Goodwill Patents and Development Computer Other intangible Totallicences costs programs assets

Cost

Balance as of 1 January 2010 151’097 15’137 6’535 22’201 46’415 241’385

Additions for the year 19 4 149 3’380 237 3’789

Disposals – – – –3’231 –1’085 –4’316

Effect of changes in exchange rates 17’745 2’154 941 1’616 6’742 29’198

Other effects –1’399 – – – – –1’399

Balance as of 31 December 2010 167’462 17’295 7’625 23’966 52’309 268’657

Accumulated amortization

Balance as of 1 January 2010 10’346 4’836 13’106 5’722 34’010

Amortization charge for the year 2’619 529 2’702 5’093 10’943

Reversal of impairment – – –44 – –44

Disposals – – –3’231 –1’085 –4’316

Effect of changes in exchange rates 1’580 708 1’414 974 4’676

Balance as of 31 December 2010 14’545 6’073 13’947 10’704 45’269

Carrying amount

Balance as of 1 January 2010 151’097 4’791 1’699 9’095 40’693 207’375

Balance as of 31 December 2010 167’462 2’750 1’552 10’019 41’605 223’388

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Nobel Biocare Annual Report 2011 — Financial reporting120

in EUR ’000 Goodwill Patents and Development Computer Other intangible Totallicences costs programs assets

Cost

Balance as of 1 January 2011 167’462 17’295 7’625 23’966 52’309 268’657

Additions for the year – – – 1’367 – 1’367

Disposals – – – –1’972 – –1’972

Effect of changes in exchange rates –695 1 – 138 –1’022 –1’578

Other effects –317 – – – – –317

Balance as of 31 December 2011 166’450 17’296 7’625 23’499 51’287 266’157

Accumulated amortization

Balance as of 1 January 2011 14’545 6’073 13’947 10’704 45’269

Amortization charge for the year 2’145 515 3’209 4’451 10’320

Disposals – – –1’972 – –1’972

Effect of changes in exchange rates 1 – 86 –105 –18

Balance as of 31 December 2011 16’691 6’588 15’270 15’050 53’599

Carrying amount

Balance as of 1 January 2011 167’462 2’750 1’552 10’019 41’605 223’388

Balance as of 31 December 2011 166’450 605 1’037 8’229 36’237 212’558

The amortization charge related to intangible assets is recognized in the following line items in the income statement:

in EUR ‘000 2011 2010

Cost of goods sold 2’289 2’051

Selling expenses 1’998 2’552

of which: impairments – –44

Administrative expense 2’168 452

Research and development expenses 3’865 5’844

Total amortization charge 10’320 10’899

The impairment reversal amounting to EUR 44 k was recog-nized in selling expenses within the income statement in2010.

A new estimate of the contingent purchase price of the50 percent share in the Swedish Individualized business (pre-viously Procera Sandvik AB) resulted in a reduction ofEUR 317 k (2010: EUR 1’399 k) for the respective purchase

price provision (see note 20). The goodwill reduction is shownas ”other effects”.

Goodwill impairment tests Goodwill has been allocated to the Group’s cash-generatingunits. The allocation is made to those cash-generating unitsor groups of cash-generating units that are expected to bene-fit from the business combination from which the goodwillarose.

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Notes 121

The following cash-generating units have carrying amounts of goodwill:

in EUR ‘000 2011 2010

Europe, Middle East and Africa 60’332 61’923

North America 79’171 77’856

Asia/Pacific 24’728 25’388

Latin America/Rest of the world 2’219 2’295

Total goodwill as of 31 December 166’450 167’462

The impairment test for goodwill is based on calculations ofvalue in use. Cash flow projections based on actual operatingresults and the business plans have been used as input in thecalculations, as well as forecasts included in industry reports.Cash flows after 2014 are extrapolated using a 2.0 percentgrowth rate. Key assumptions used in the calculation of therecoverable amount are the discount rate and the EBIT mar-gin. The impairment test comprises scenarios including hig-her pre-tax discount rates and lower EBIT margins. In all sce-

narios the recoverable amount of the units significantlyexceeds its carrying amount, except for Latin America/Restof the world where the recoverable amount was not signifi-cantly higher than the carrying amount. If the discount rateused for Latin America/Rest of the world were 3 percent hig-her, the recoverable amount would be equal to the carryingamount. If the EBIT margin were 1 percent lower than theplanned EBIT margin, the recoverable amount would be equalto the carrying amount.

The pre-tax discount rates used for the value in use calculations are as follows:

in % 2011 2010

Europe, Middle East and Africa 8.6 9.7

North America 9.6 11.5

Asia/Pacific 9.2 11.8

Latin America/Rest of the world 15.1 15.7

10Categorization of financial assets

in EUR ‘000 2011 2010

Derivative instruments at fair value through profit or loss 6’594 9’277

Hedging instruments (cash flow hedges) 795 2’902

Total derivative financial instruments 7’389 12’179

Accrued income 158 35

Receivables (non-current) 3’420 3’974

Trade and other receivables (current) 109’362 132’855

Cash and cash equivalents 107’456 239’816

Total loans and receivables 220’396 376’680

Total financial assets as of 31 December 227’785 388’859

Derivative financial instruments comprise primarily foreign exchange forwards. For more information about derivative financialinstruments, refer to note 28.

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Nobel Biocare Annual Report 2011 — Financial reporting122

11 Non-current receivables

in EUR ‘000 2011 2010

Non-current receivables 831 1’696

Rent deposits 2’589 2’278

Total non-current receivables as of 31 December 3’420 3’974

Non-current receivables are carried at amortized cost.

12 Inventories

in EUR ‘000 2011 2010

Raw materials and consumables 4’676 5’092

Work in progress 844 2’228

Finished products and goods for resale 18’426 16’081

Total inventories as of 31 December 23’946 23’401

Inventories in the amount of EUR 54 k (2010: EUR 168 k) werecarried at their fair values less cost to sell in relation to phase-out programs.

Inventories in the amount of EUR 106’263 k (2010:EUR 103’804 k) were consumed in the production processduring the year and recognized as an expense within the costof goods sold.

ObsolescenceThe recoverability of all inventory items is regularly tested,and provisions are made for obsolete or slow-moving items.The cost for obsolescence is included in cost of goods soldand amounted to EUR 1’095 k (2010: EUR 384 k).

13 Trade and other receivables

in EUR ‘000 2011 2010

Trade receivables due from third parties 118’644 141’777

Allowance for bad debts –15’680 –19’248

Trade receivables 102’964 122’529

Non-trade receivables 6’398 10’326

Total current receivables as of 31 December 109’362 132’855

Trade receivables by currency in % 2011 2010

Euro 33 35

US dollar 24 20

Japanese yen 16 18

Canadian dollar 5 5

Australian dollar 3 4

Other currencies 19 18

Total as of 31 December 100 100

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Notes 123

Reconciliation of changes in the allowance for bad debts

in EUR ‘000 2011 2010

Balance as of 1 January –19’248 –15’875

Additions –10’908 –10’026

Reversals 3’804 5’077

Write-offs 10’441 3’447

Effect of changes in exchange rates 231 –1’871

Balance as of 31 December –15’680 –19’248

Ageing of trade receivables

in EUR ’000 2011 2011 2010 2010Gross Allowance Gross Allowance

Not past due 73’702 –54 79’310 –171

Past due 0 – 30 days 11’812 –265 12’978 –

Past due 31 – 90 days 9’587 –464 15’246 –438

Past due 91 – 180 days 5’315 –520 10’814 –1’031

Past due 181 – 360 days 4’952 –1’626 8’196 –3’205

Past due > 360 days 13’276 –12’751 15’233 –14’403

Balance as of 31 December 118’644 –15’680 141’777 –19’248

The Group has established an allowance for impairment thatrepresents its estimate of losses to be incurred with respectto trade receivables. The allowance is determined based onhistorical data of payment statistics and regional circumstan-ces.

As of 31 December 2011, terms of receivables in the amountof EUR 2’944 k (2010: EUR 2’942 k) had been renegotiated.

Total impairment losses recognized in the income statementduring 2011 on trade receivables were EUR 7’845 k(2010: EUR 7’025 k).

14Prepaid expenses and accrued income

in EUR ‘000 2011 2010

Accrued income 158 35

Selling expenses 469 437

Rent, leases and insurance expenses 2’508 2’644

Marketing expenses 3’799 4’015

Royalty and R&D expenses 72 65

Other items 6’748 7’469

Total prepaid expenses and accrued income as of 31 December 13’754 14’665

Marketing expenses include prepayments to universities ofEUR 2’363 k (2010: EUR 2’936 k), which are related to ser-vices for future periods (see note 26). Other items mainly

include prepayments for IT and other services, as well as feesin relation to the syndicated bank facility.

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Nobel Biocare Annual Report 2011 — Financial reporting124

15 Cash and cash equivalents

in EUR ‘000 2011 2010

Cash 94’322 238’318

Fixed-term deposits and commerical papers < three months 13’134 1’498

Total cash and cash equivalents 107’456 239’816

Bank overdraft – –297

Cash and cash equivalents, net of overdraft, as of 31 December 107’456 239’519

Cash and cash equivalents by currency in % 2011 2010

Euro 37 51

Swiss franc 5 3

US dollar 14 7

Swedish krona 18 25

Japanese yen 7 4

Other currencies 19 10

Total as of 31 December 100 100

As of 31 December 2011, the Group held restricted cash amounting to EUR 7’122 k (2010: 11’975 k).

16 Equity

in EUR ‘000 2011 2010

Issued as of 1 January – fully paid 31’861 31’861

Issued as of 31 December – fully paid 31’861 31’861

The share capital of Nobel Biocare Holding AG is held in Swissfranc (CHF). The number of issued shares by Nobel BiocareHolding AG on 31 December 2011 totaled 123’784’530(2010: 123’784’530) with a par value of CHF 0.40 per share,fully paid up.

The share capital may be increased by issuing no more than247’620 shares (2010: 247’620), each with a par value ofCHF 0.40, to be fully paid up, equaling an amount of no morethan CHF 99’048 (2010: CHF 99’048) by virtue of the exerciseof options granted to employees and officers of the Group.

In addition, the share capital may be increased by an amountof up to CHF 10 million by issuing up to 25 million fully paid-up registered shares with a nominal value of CHF 0.40 follo-wing the exercise of conversion and/or option rights whichare granted in connection with the issuance of bonds or simi-lar debt instruments by the Company or one of its Group com-panies in capital markets or in connection with a transaction.

The holders of registered shares are entitled to receive divi-dends as declared from time to time and are entitled to onevote per share at meetings of the Company. All shares rankequally with regard to the Company‘s residual assets.

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Notes 125

Treasury shares The table below summarizes the activities in treasury shares.

Number of shares Share buyback Other Total treasuryprogram 1 shares

Balance as of 1 January 2010 318’246 300’000 618’246

Purchase – 403’810 403’810

Share-based payment transactions –22’810 – –22’810

Balance as of 31 December 2010 295’436 703’810 999’246

Balance as of 1 January 2011 295’436 703’810 999’246

Purchase – 360’754 360’754

Share-based payment transactions –56’880 – –56’880

Balance as of 31 December 2011 238’556 1’064’564 1’303’120

Share buyback program 1On 30 June 2010, 19’000 treasury shares were granted toshare plan participants as described in note 18. Participantsof the performance share unit plan were granted 3’810 trea-sury shares.

On 30 June 2011, 56’880 treasury shares were granted toshare plan participants as described in note 18.

Other treasury sharesIn 2010, the Group acquired in total 403’810 treasury sharesto cover its existing exposure from the performance shareunit plan for consideration of EUR 4’817 k.

In 2011, the Group acquired in total 360’754 treasury sharesto cover its existing exposure from the performance shareunit plan for consideration of EUR 5’056 k.

Options on the Group’s own sharesCall options on the Group’s own shares outstanding as of 31 December have the following terms:

Purpose Type Expiry date Exercise Options Optionsprice CHF 2011 2010

Hedging ESOP expsoure Call 30 Jun 2011 84.06 – 50’380

Hedging convertible exposure Call 8 Nov 2011 84.97 – 3’315’865

Total as of 31 December – 3’366’245

On 29 March 2010, 517’870 written put options on theGroup’s own shares expired. The recognized financial liabilityof EUR 8’804 k was reclassified into equity.

On 30 June 2010, 2’015’205 call options held to hedge theexposure of the employee staff option program expired.

On 30 June 2011, 50’380 call options held to hedge the expo-sure related to the performance share unit program expired.

On 8 November 2011, 3’315’865 call options held to hedgethe exposure related to the convertible bond expired.

Translation and hedging reserveThe translation reserve comprises all foreign exchange diffe-rences arising from the translation of the financial statementsof foreign operations.

The hedging reserve comprises the effective portion of thecumulative net change in the fair value of cash flow hedginginstruments where the hedged transaction has not yet occur-red.

DividendsOn 30 March 2011, the AGM approved a dividend of CHF 0.35per registered share. The dividend was paid to shareholderson 6 April 2011 out of reserves without deduction of withhol-ding tax. The total amount of the dividend paid wasCHF 42.8 million or EUR 33.0 million.

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Nobel Biocare Annual Report 2011 — Financial reporting126

On 8 February 2012, the Company’s Board of Directors deci-ded to propose to the AGM a dividend to shareholders ofCHF 0.15 per registered share to be paid out of reserves wit-hout deduction of withholding tax. The total amount of the

proposed dividend is CHF 18.4 million or approximatelyEUR 15 million depending on exchange rates at the pay-outdate.

17 Earnings per share

Basic earnings per shareThe calculation for basic earnings per share is based on the profit attributable to owners of Nobel Biocare and the weightedaverage number of ordinary shares outstanding during the year.

in EUR ‘000 2011 2010

Profit attributable to owners of Nobel Biocare 39’781 45’669

Shares ‘000

Weighted average number of ordinary shares at 31 December 122’775 123’036

Basic earnings per share (in EUR) 0.32 0.37

Diluted earnings per shareThe calculation for diluted earnings per share is based on theprofit attributable to owners of Nobel Biocare and theweighted average number of ordinary shares outstanding

during the year, including those performance share units thatmay be exercised and that have a dilutive effect. Anti-dilutiveperformance share units are not included in the calculation.

in EUR ‘000 2011 2010

Profit attributable to owners of Nobel Biocare 39’781 45’669

Shares ‘000

Weighted average number of ordinary shares at 31 December 122’775 123’036

Weighted average number of ordinary (diluted) shares at 31 December 122’775 123’036

Diluted earnings per share (in EUR) 0.32 0.37

18 Share-based payment transactions

Summary of share-based payment transactions charged to personnel expenses

in EUR ’000 2011 2010

Plan

Performance share unit plan 4’158 3’650

Share plan 753 245

Total 4’911 3’895

Performance share unit program (PSUP)This long-term incentive plan covers executives of operatingunits and the headquarters with a single, global program. Par-

ticipants are granted performance-based share units (PSUs)under the PSUP. Vesting of these shares is subject to specificperformance achievements over the vesting period. The

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Notes 127

PSUP is accounted for as an equity-settled share-based pay-ment plan under IFRS 2.

Terms of awards grant 2011 and 2010

Vesting is subject to a service period and the outperformanceof the Nobel Biocare (NOBN) share price relative to the SwissLeader Index for the vesting period. If this relative outperfor-mance is achieved, each share unit will be converted into apredetermined amount of Nobel Biocare shares at vestingdate. One-third (tranche 1) of the allocated share units vestafter one year, one-third (tranche 2) after two years and theremaining third (tranche 3) after three years. The performanceshare units cannot be settled in cash.

The fair value of services received in return for performanceshare units granted is measured by reference to the fair valueof units granted. Grant date fair value per unit was measuredbased on a Monte Carlo simulation. Market conditions aretaken into account when estimating the fair value of theinstruments granted. Service conditions are not taken intoaccount for the grant date fair value measurement of the ser-vices received.

Terms of awards grant 2009

Vesting is subject to a three-year service period lasting until30 April 2012, and to the outperformance of the Nobel Biocare

(NOBN) share price relative to the Swiss Market Index for theperiod. If this relative outperformance is achieved, each shareunit will be converted into a predetermined amount of NobelBiocare shares at the vesting date. The performance shareunits cannot be settled in cash.

The fair value of services received in return for performanceshare units granted is measured by reference to the fair valueof units granted. Grant date fair value per unit was measuredbased on a Monte Carlo simulation. Market conditions aretaken into account when estimating the fair value of theinstruments granted. Service conditions are not taken intoaccount for the grant date fair value measurement of the ser-vices received.

Terms of awards grant 2008

Vesting was subject to a service period lasting until 31 March2011, and to the achievement of a certain level of compoundsales growth and EBIT margin for the financial years 2008 to2010, both of which are equally weighted. The actual numberof shares allotted upon vesting depended on the achievementof the performance conditions. Since the performance con-ditions were not met at the vesting date, the PSUs forfeited.

Performance share units – terms of awards

2011 2011 2011 2010 2010 2010

Tranche 1 2 3 1 2 3

Number of awards granted 359’621 359’621 359’621 205’686 205’686 205’686

Fair value per unit (CHF) 5.62 6.09 6.54 7.26 9.15 9.57

Grant date 28 Feb 2011 28 Feb 2011 28 Feb 2011 28 Feb 2010 28 Feb 2010 28 Feb 2010

Vesting date 28 Feb 2012 28 Feb 2013 28 Feb 2014 28 Feb 2011 28 Feb 2012 28 Feb 2013

Expected dividend yield Nobel Biocare (%) 2.09 2.26 2.26 1.32 1.40 1.40

Expected dividend yield Swiss Leader Index (%) 2.76 2.76 2.76 2.69 2.69 2.69

Expected volatility Nobel Biocare (%) 37.50 38.10 44.70 38.00 46.50 43.40

Expected volatility Swiss Leader Index (%) 14.90 17.30 23.00 20.50 26.30 24.90

Risk-free interest rate (%) 0.38 0.73 1.04 0.39 0.66 0.97

Expected correlation Nobel Biocare and Swiss Leader Index 0.49 0.50 0.56 0.52 0.58 0.60

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Nobel Biocare Annual Report 2011 — Financial reporting128

The movements of performance share units are as follows:

Number of performance share units Grant 2011 Grant 2010 Grant 2009 Grant 2008 Total

Outstanding as of 1 January 2010 – 301’659 93’822 395’481

Granted 205’686 205’686

Exercised –1’905 –1’905

Forfeited –7’963 –17’583 –4’884 –30’430

Outstanding as of 31 December 2010 197’723 282’171 88’938 568’832

Outstanding as of 1 January 2011 – 197’723 282’171 88’938 568’832

Granted 359’621 359’621

Forfeited –8’806 –33’062 –55’678 –53’867 –151’413

Expired – –54’887 –35’071 –89’958

Outstanding as of 31 December 2011 350’815 109’774 226’493 – 687’082

Share planA separate share-based payment plan was established formembers of the Board of Directors and selected individualsin 2008 as they do not participate in the PSUP. In June 2011,Share plan participants were granted 56’880 shares(2010: 19’000) of Nobel Biocare Holding AG for no conside-

ration. A transfer restriction applies for the share plan 2011until 30 June 2016 and for the share plan 2010 until 30 June2015.

The fair value of the shares was measured at the grant dateshare price, adjusted for transfer restrictions.

2011 2010

Number of shares 56’880 19’000

Fair value per share (CHF) 16.30 17.80

Grant date 30 Jun 2011 30 Jun 2010

Vesting date 30 Jun 2016 30 Jun 2015

Risk-free interest rate (%) 1.00 0.90

Staff option programWith the introduction of the performance share unit plan in2008, no new options were granted in 2011 and 2010 under

the stock option plan. As of 31 December 2011, only optionsfrom the 2007 grant were outstanding.

Options outstanding as of 31 December have the following terms:

Grant year 2007 Vesting date Expiry date Exercise price Number of optionsCHF

2011 2010

Options outstanding as of 31 December 1 Jul 2009 30 Jun 2013 84.70 1’449’250 1’499’250

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Notes 129

The movements of options outstanding and their weighted average exercise price are as follows:

2011 2010

Weighted Number of Weighted Number ofaverage exercise options average exercise options

price (CHF) price (CHF)

Options outstanding as of 1 January 84.70 1’499’250 84.70 1’786’250

Forfeited 84.70 –50’000 84.70 –287’000

Options outstanding as of 31 December 84.70 1’449’250 84.70 1’499’250

Options exercisable as of 31 December 84.70 1’449’250 84.70 1’499’250

The weighted average remaining contractual life of the options outstanding as of 31 December 2011 is 1.50 years(2010: 2.50 years). No options were exercised in 2011 or in 2010.

19Deferred tax assets and liabilities

Deferred tax assets and liabilities are attributable to the following items:

in EUR ‘000 Assets Liabilities Net

2011 2010 2011 2010 2011 2010

Property, plant and equipment 2’017 1’350 –5’690 –7’624 –3’673 –6’274

Intangible assets 11’257 15’138 –23’869 –22’364 –12’612 –7’226

Inventories 6’720 6’280 –10 6’720 6’270

Provisions and accruals 6’230 7’838 –229 –173 6’001 7’665

Loans and borrowings –3’524 –2’150 –3’524 –2’150

Recognized tax losses carried forward 1’515 1’030 1’515 1’030

Employee benefits 1’539 1’075 1’539 1’075

Tax assets/liabilities 29’278 32’711 –33’312 –32’321 –4’034 390

Offset –7’043 –5’894 7’043 5’894 – –

Total tax assets/liabilities as of 31 December 22’235 26’817 –26’269 –26’427 –4’034 390

The Group has not recognized deferred tax assets in respect of the following items:

in EUR ‘000 2011 2010

Tax losses carried forward 9’163 8’517

Total unrecognized deferred tax assets as of 31 December 9’163 8’517

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Nobel Biocare Annual Report 2011 — Financial reporting130

The unrecognized deferred tax assets concerning the tax losses carried forward will begin to expire in one year.

in EUR ‘000 Balance as of Recognized Recognized Recognized Exchange Balance as of 1 January 2010 in profit in other directly differences 31 December 2010

or loss comprehensive in equityincome

Property, plant and equipment –3’916 –1’508 –850 –6’274

Intangible assets –18’639 12’735 –1’322 –7’226

Inventories 4’551 1’641 78 6’270

Provisions and accruals 5’803 1’585 277 7’665

Unrealized exchange gains –4’363 –521 3’016 –282 –2’150

Recognized tax losses carried forward 1’037 18 –25 1’030

Employee benefits 719 263 93 1’075

Share-based payment transactions 319 –133 –186 –

Total –14’489 14’080 3’016 –186 –2’031 390

in EUR ‘000 Balance as of Recognized Recognized Recognized Exchange Balance as of 1 January 2011 in profit in other directly differences 31 December 2011

or loss comprehensive in equityincome

Property, plant and equipment –6’274 2’988 –387 –3’673

Intangible assets –7’226 –5’261 –125 –12’612

Inventories 6’270 405 45 6’720

Provisions and accruals 7’665 –2’183 519 6’001

Unrealized exchange gains –2’150 –1’451 77 –3’524

Recognized tax losses carried forward 1’030 535 –50 1’515

Employee benefits 1’075 464 1’539

Total 390 –4’503 – – 79 –4’034

20 Provisions

in EUR ‘000 Warranties Returns Contingent Other Totalpurchase price provisions

related to theacquisition of a Group company

Balance as of 1 January 2011 1’439 1’418 1’539 5’083 9’479

Provisions made 143 1’243 – 2’734 4’120

Provisions used –338 –1’135 –586 –1’487 –3’546

Provisions reversed –140 –15 –317 –533 –1’005

Unwinding of discount – – 62 – 62

Effect of changes in exchange rates –27 8 –12 28 –3

Balance as of 31 December 2011 1’077 1’519 686 5’825 9’107

Non-current provisions 440 – 338 2’394 3’172

Current provisions 637 1’519 348 3’431 5’935

Balance as of 31 December 2011 1’077 1’519 686 5’825 9’107

Provisions for returns and warranties are recognized whenthe underlying products are sold. The provisions are basedon historical warranty data and historical return rates and a

weighting of all possible outcomes against their associatedprobabilities.

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Notes 131

The acquisition in 2001 of the remaining 50 percent share inNobel Biocare Procera AB (previously Procera Sandvik AB)was made up of a cash payment and a contingent purchaseprice based on a defined segment of the annual sales valueup to and including 2012. The reversal of part of the provisionfor the contingent purchase price, which was credited to therespective goodwill account (see note 9), was made due to anew estimate of future payment obligations.

The unwinding of the discount related to Nobel Biocare Pro-cera AB amounts to EUR 62 k.

The present value of the contingent purchase price related tothe acquisition of Nobel Biocare Procera AB amounts toEUR 686 k (2010: EUR 1’539 k). Of this amount, the non-cur-rent portion amounts to EUR 338 k (2010: EUR 1’059 k), andthe current portion amounts to EUR 348 k (2010: EUR 480 k).

In 2011, other provisions mainly include provisions related tovarious restructuring activities within the Group of EUR 618 k(2010: EUR 1’838 k), as well as provisions relating to value-added taxation and other expected cash outflows occurringin the normal course of business of EUR 5’207 k (2010:EUR 3’245 k).

21Employee benefits

The defined benefit obligation of the pension plans is the pre-sent value of accrued pension obligations at the balance sheetdate considering future salary and pension increases and alsoturnover rates (using the projected unit credit method).

The Group operates defined benefit plans in Switzerland,Japan and Sweden. The majority of plans are funded.

In Switzerland, pension liabilities are covered by assets heldby legally separate entities. The actuarial valuations for thedefined benefit plans were performed at the balance sheetclosing date. The Swiss pension plans are treated as definedbenefit plans in accordance with IAS 19.

In Japan, the Group maintains employee retirement allo-wance plans that provide both retirement and pre-retirementbenefits for all regular employees with benefits based on finalmonthly base salary, years of credited service at terminationand mode of exit. The actuarial valuations for the definedbenefit plans were performed for the Japanese pension plans,which are treated as defined benefit plans in accordance withIAS 19.

The Group has a Swedish multi-employer pension plan thatshould be accounted for as a defined benefit plan. The Swe-dish plan primarily covers the following benefits:

– Retirement pension;– ITPK (complementary occupational pension);– Disability pension;– Group family pension.

Virtually every clerical employee in the private sector in Swe-den is covered by such a plan. The plan is financed by employ-ers, who determine whether the pension insurance is withAlecta (Alecta Pensionsförsäkring, Ömsesidigt), or alternati-vely, as regards retirement pension and ITPK, whether a pro-vision is to be made in-house by companies within the fra-mework of the FPG/PRI system. The Group has elected to takeout pension insurance with Alecta.

Irrespective of how the plan is financed – via pension insu-rance with Alecta or through in-house provisions by compa-nies – the plan is a defined benefit scheme with respect toretirement pensions and group family pensions. Paid pensi-ons are related to the employee’s final salary and the totalemployment period covered by the plan. This means that theGroup should report its proportional share of the definedbenefit commitments, and the assets under management andexpenses associated with the plan in the same manner as anyother defined benefit plan, and provide the information requi-red for such plans.

Alecta, however, is unable to provide sufficient informationto report the Group’s proportional share of the defined benefitcommitments, the assets under management and expensesassociated with the plan. There is also no agreement on howany surplus or deficit should be distributed to the participantsin the pension plan. As a result, and in line with the SwedishFinancial Accounting Standards Council’s Emerging IssuesTask Force, the scheme is reported as a defined contributionplan. Accordingly, the Group cannot provide the disclosurerequirements with respect to the defined benefit plan in Swe-den.

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Nobel Biocare Annual Report 2011 — Financial reporting132

The following tables summarize the Group’s defined contribution and defined benefit plans.

Defined contribution plansThe amounts recognized in the income statement are as follows:

in EUR ‘000 2011 2010

Cost of goods sold –1’158 –969

Selling expenses –2’990 –2’655

Administrative expenses –884 –999

Research and development expenses –634 –778

Expense recognized in the income statement –5’666 –5’401

Defined benefit plansThe amounts recognized in the balance sheet are as follows:

in EUR ‘000 2011 2010

Present value of funded obligation –43’490 –32’143

Present value of unfunded obligation –3’963 –3’124

Total present value of obligations –47’453 –35’267

Fair value of plan assets 31’090 22’400

Unrecognized actuarial losses 7’720 6’635

Net liability in the balance sheet as of 31 December –8’643 –6’232

Deferred taxes 1’539 1’075

Net impact on retained earnings –7’104 –5’157

The amounts recognized in the income statement are as follows:

in EUR ‘000 2011 2010

Current service cost –4’574 –2’740

Interest cost –958 –626

Expected return on plan assets 681 473

Net actuarial loss recognized in the year –228 –287

Plan amendment losses – –1’837

Expense recognized in the income statement –5’079 –5’017

in EUR ‘000 2011 2010

Cost of goods sold –255 –3

Selling expenses –613 –855

Administrative expenses –3’885 –3’962

Research and development expenses –326 –197

Expense recognized in the income statement –5’079 –5’017

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Notes 133

The movement in the present value of the defined benefit obligation is as follows:

in EUR ‘000 2011 2010

Balance as of 1 January –35’267 –17’570

Current service cost –4’574 –2’740

Interest cost –958 –626

Contribution by plan participants –10’723 –9’161

Plan amendment losses – –1’837

Benefits paid 5’710 5’259

Actuarial gain/(loss) on benefit obligation –648 –3’892

Exchange differences –993 –4’700

Balance as of 31 December –47’453 –35’267

The movement in the fair value of plan assets is as follows:

in EUR ‘000 2011 2010

Balance as of 1 January 22’400 12’547

Expected return on plan assets 681 473

Employer’s contributions 2’572 1’978

Contributions by plan participants 10’723 9’161

Benefits paid –5’516 –5’049

Actuarial gain/(loss) on benefit obligation –420 169

Exchange differences 650 3’121

Balance as of 31 December 31’090 22’400

Plan assets are allocated as follows:

in % 2011 2010 Expected long-term Contribution torate of return rate of return

Bonds 75.3 73.0 2.3 1.7

Equity securities 2.3 2.0 6.0 0.1

Property 17.4 19.0 3.5 0.6

Other 5.0 6.0 3.5 0.2

Total 100.0 100.0 2.6

Cost –0.1

Net return 2.5

The determination of the expected return on assets is basedon the risk premium approach. On the basis of current marketconditions for each asset class, the risk premium is deter-mined and added to government bond yields to derive theexpected rate of return per asset class.

In 2011, the actual return on plan assets was EUR 261 k(2010: EUR 642 k).

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Nobel Biocare Annual Report 2011 — Financial reporting134

Principal actuarial assumptions are as follows:

in % Switzerland Japan

2011 2010 2011 2010

Discount rate 2.3 2.8 2.0 2.0

Expected return on plan assets 2.5 3.0 NA NA

Average future salary increases 1.5 1.5 2.0 2.0

Future pension increases 0.3 0.3 – –

Assumptions regarding future mortality experience are set based on actuarial advice in accordance with published statisticsand experience in each country.

As this is the fourth year this information is disclosed, only current year and comparatives for 2010, 2009 and 2008 are pre-sented.

in EUR ‘000 2011 2010 2009 2008

Fair value of plan assets 31’090 22’400 12’547 10’874

Present value of benefit obligation –47’453 –35’267 –17’570 –14’146

Deficit –16’363 –12’867 –5’023 –3’272

Gains/(losses) on plan liabilities from changes in assumptions –1’345 –3’218 –758 680

Experience gains/(losses) on plan liabilities 609 –903 –338 –815

Experience gains/(losses) on plan assets –424 187 –203 –340

Total actuarial losses –1’160 –3’934 –1’299 –475

Contributions expected to be paid in 2012 amount to EUR 3’028 k.

22 Categorization of financial liabilities

in EUR ‘000 2011 2010

Straight bond 98’400 –

Other non-current liabilities 357 494

Total non-derivative non-current liabilities 98’757 494

Convertible bond – 252’366

Credit facility 36’928 –

Trade payables 15’378 19’284

Non-trade payables and other liabilities 7’448 11’200

Accrued expenses 27’017 27’253

Bank overdraft – 297

Total non-derivative current liabilities 86’771 310’400

Total non-derivative financial liabilities 185’528 310’894

Derivative instruments at fair value through profit or loss 6’608 7’748

Hedging instruments (cash flow hedges) 2’692 337

Total derivative financial instruments 9’300 8’085

Total financial liabilities as of 31 December 194’828 318’979

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Notes 135

As of 31 December 2011, unused credit lines amounted toEUR 297’597 k (2010: EUR 333’043 k). The principal part ofexisting credit lines is with Nobel Biocare Holding AG. Exis-

ting credit line agreements include covenants covering thenet debt/EBITDA ratio of the Group. The covenants were metas of 31 December 2011, and 31 December 2010.

The following table shows the outstanding loans and borrowings:

in EUR ’000 2011 2010 Interest rate Maturity Currency

Straight bond (at amortized cost) 98’400 – 4.0% 10 Oct 2016 CHF

Total non-current interest-bearing loans and borrowings 98’400 –

Syndicated credit facility (at nominal value) 36’928 – 1.4% 6 Feb 2012 CHF

Convertible bond (at amortized cost) – 252’366 1.0% 8 Nov 2011 CHF

Total current interest-bearing loans and borrowings 36’928 252’366

Carrying amount of liability as of 31 December 135’328 252’366

The Group has a EUR 330’000 k committed syndicated creditfacility in place until November 2015. As of 31 December2011, EUR 36’928 k was drawn on the facility in conjunctionwith the recent redemption of the convertible bond. As of31 December 2010, no amount was drawn upon the facility.

On 10 October 2011, Nobel Biocare Holding AG, Kloten, Swit-zerland, issued a CHF 120’000 k (EUR 98’475 k) straight bondwith a coupon of 4 percent and a maturity date of 10 Octo-ber 2016. Fees related to the bond total EUR 968 k, which isamortized over the duration of the bond.

The following table shows the change in the carrying amount of the straight bond:

in EUR ’000 2011 2010

Carrying amount of liability as of 1 January – –

Issuance of domestic straight bond 95’775 –

Accrued interest 894 –

Translation difference 1’731 –

Carrying amount of liability as of 31 December 98’400 –

On 8 November 2011, the convertible bond was redeemedwith no conversions having been executed. The nominalamount of the bond, issued through the Group’s wholly-owned subsidiary Nobel Biocare Investment N.V., Curaçao,

Netherlands Antilles, was CHF 385’000 k (EUR 315’940 k), ofwhich the nominal value of CHF 297’910 k (EUR 241’901 k)was outstanding at the maturity date.

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Nobel Biocare Annual Report 2011 — Financial reporting136

The following table shows the change in the carrying amount of the convertible bond:

in EUR ’000 2011 2010

Carrying amount of liability as of 1 January 252’366 236’962

Repurchase of liability –15’952 –35’433

Accrued interest 9’643 11’121

Interest paid –2’402 –2’415

Translation difference 3’205 42’131

Repayment at maturity date –246’860 –

Carrying amount of liability as of 31 December – 252’366

23 Trade payables

in EUR ‘000 2011 2010

Trade payables as of 31 December 15’378 19’284

Trade payables by currency in % 2011 2010

Euro 28 22

Swiss franc 8 13

US dollar 26 32

Swedish krona 28 22

Other currencies 10 11

Total non-current receivables as of 31 December 100 100

24 Other liabilities

in EUR ‘000 2011 2010

Other non-current liabilities 357 494

Other current liabilities 7’448 11’200

Derivative financial instruments 9’300 8’085

Total other current liabilities 16’748 19’285

Total other liabilities as of 31 December 17’105 19’779

For information about derivative financial instruments, refer to note 28.

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Notes 137

25Accrued expenses and deferred income

in EUR ‘000 2011 2010

Personnel-related costs 34’070 32’842

Accrued selling expenses 6’576 5’949

Accrued marketing expenses 3’873 3’776

Accrued legal and tax expenses 2’906 2’722

Accrued royalty and R&D expenses 3’257 2’347

Other accrued expenses 10’405 12’459

Deferred income 1’066 1’194

Total prepaid expenses and accrued income as of 31 December 62’153 61’289

26Commitments

Operating leases

in EUR ’000 2011 2010

Buildings and leasehold improvements 51’631 54’427

Cars 5’726 5’247

Other 2’259 1’076

Total operating lease commitments as of 31 December 59’616 60’750

In 2011, EUR 18’314 k (2010: EUR 17’525 k) were expensed in the income statement with respect to operating leases.

Non-cancelable operating leases are payable as follows:

in EUR ’000 2011 2010

Less than one year 15’909 16’413

Between one and five years 34’478 34’479

More than five years 9’229 9’858

Total operating lease commitments as of 31 December 59’616 60’750

Universities, R&D and clinical research contractsThe Group supports various universities in integrating dentalimplant therapy into the overall pre-doctoral education of the

general dentist, as well as supporting various research pro-jects. The Group also has various contracts with regard toR&D and clinical research with other institutions.

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Nobel Biocare Annual Report 2011 — Financial reporting138

The following table shows the Group’s commitments with respect to non-cancelable support contracts with universities, aswell as commitments with regard to R&D and clinical studies.

in EUR ’000 2011 2010

Less than one year 6’386 5’543

Between one and five years 7’829 7’101

More than five years 649 424

Total non-cancelable contracts as of 31 December 14’864 13’068

The charges with respect to universities, R&D and clinical research contracts were recognized in the following line items inthe income statement:

in EUR ’000 2011 2010

Selling expenses 1’278 2’807

Administrative expenses 262 102

Research and development expenses 4’962 1’377

Total charge 6’502 4’286

27 Contingent liabilities and pledged assets

As of 31 December 2011, the Group had EUR 248 k contin-gent liabilities (2010: 0 k), and no pledged assets (2010: EUR623 k).

Ongoing disputesLitigation/Legal proceedingsAt the beginning of July 2005, a lawsuit against Nobel Biocareclaiming patent infringement was filed by a doctor in NewYork. The suit concerns two patents, which the doctor allegesare infringed by the Stargrip and Replace products. The suitwas put on hold by the court pending reexamination procee-dings at the US Patent Office regarding one of the patents.Those proceedings are complete, and the Court reinstated thelitigation in May 2009. Nobel Biocare has evaluated thesepatents in depth and has numerous defenses that it will vigo-rously pursue. Nobel Biocare contends that it does not inf-ringe these patents, and that the patent claims are invalidbased on prior art.

Nobel Biocare Investments N.V. is facing claims by an assetmanagement company. In August 2008, the asset manage-ment company obtained an attachment of an account ofNobel Biocare Investments N.V. in Curaçao. In July 2011, thecompetent court in Curaçao denied the asset managementcompany’s claims against Nobel Biocare Investments N.V.that were the basis for the attachment of the funds, and char-

ged them with the cost. The asset management companyappealed against this decision.

In April 2009, a New York court rejected the asset manage-ment company’s request to start arbitration in the US. In Octo-ber 2009, the Federal Appeals Court in New York ruled on theasset management company’s appeal against this decision,vacated the case and remanded it back to the first instancecourt for further proceedings. In January 2011, the firstinstance court in New York City dismissed the asset manage-ment company’s claim against Nobel Biocare InvestmentsN.V. with prejudice on the merits and costs imposed on themstill to be determined. The asset management company hadfailed to produce evidence supporting its claim. It appealedthe decision of the first instance court while Nobel Biocarerequested sanctions be determined against the assetmanagement company. Nobel Biocare rejects all claims bythis company as lacking any legal basis and has filed a courtcase in Switzerland to establish this fact as well as for therefund of certain unjustified paid fees. In December 2009, thecompetent court in Zug decided to have jurisdiction over thecase.

In June 2010, a Canadian company filed a complaint againstBioCad Medical Inc. suing for patent infringement in the Fede-ral Court Quebec, Canada. The lawsuit alleges that BioCad

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Notes 139

infringes a Canadian patent owned by said Canadian com-pany on the production of superstructures for dentalimplants. BioCad Medical Inc. and its consulting patent lawy-ers are of the opinion that no valid claims of the Canadiancompany’s patent are being infringed and will, therefore,vigorously defend the patent infringement suit. In addition,Nobel Biocare has filed for invalidation of the respective Ger-man patent of the Canadian company with the German Fede-ral Patent Court and for declaratory judgment with the com-petent court in Milan, Italy, that neither the respective Italiannor the German patent of said company are infringed. A firstmain hearing of the court in Milan is scheduled for Octo-ber 2012. A decision is expected in early 2013.

In July 2010, a Californian dentist filed a class action suit inthe Federal Court of Los Angeles (USA) against Nobel BiocareUSA LLC, Nobel Biocare AB and Nobel Biocare Holding AGalleging product defects of NobelDirect implants and clai-ming damages. In August 2011, the United States DistrictCourt for the Central District of California in Los Angeles gran-ted the dentist’s motion, holding that the requirements for a

class certification had been met. The certified class includesall individuals in the United States who have purchased anyNobelDirect dental implants other than “NobelDirectGroovy”. Nobel Biocare denies the plaintiff’s allegations in thelawsuit and vigorously rejects the claims. It is of the opinionthat the available long-term data on the product, which werethoroughly reviewed by the competent Swedish Medical Pro-ducts Agency (SMPA) several times, prove that NobelDirectis to be regarded as safe and efficacious. Nobel Biocare filedan appeal in order to seek interlocutory review of the DistrictCourt’s decision.

The costs relating to these lawsuits may not be fully coveredby insurance. However, it is not expected that any materialliabilities will arise from these contingent liabilities.

There are other minor disputes pending regarding contractualobligations, including warranty- and labor-related disputes,arising from the ordinary business of Nobel Biocare and itssubsidiaries.

28Risks related to financial instruments

Risk managementGroup Treasury is responsible for evaluating, monitoring andmanaging financial exposures within the parameters outlinedin the Group Treasury Policy. The Audit Committee, on behalfof the Board, approved the annual update of the Group Trea-sury Policy in August 2011. It is binding on a Group-wide basisincluding all subsidiaries. The Group Treasury Policy provideswritten principles for overall risk management, as well asdetailed written policies covering specific areas, such asforeign exchange risk, interest rate risk, credit risk, the use ofderivative financial instruments and non-derivative financialinstruments, and investment of excess liquidity. The GroupTreasury Policy also defines the maximum risk tolerance withregard to earnings at risk (EaR) for committed and uncom-mitted exposures, as well as the value at risk (VaR) for trans-lation risks.

Basic financial exposure management principlesManagement has to ensure that the number and experienceof personnel, as well as infrastructure capacity, meet therequirements with respect to business volume and comple-xity, and that adequate internal control processes and mecha-nisms are in place.

The Group evaluates the following financial exposures:

– Credit risk– Liquidity risk– Market risk

– Currency risk– Interest rate risk– Other price risk

Credit riskCredit risk is the risk of financial loss to the Group if a customeror counterparty to a financial asset fails to meet contractualobligations.

The Group’s credit exposure with respect to financial instru-ments consists of cash and cash equivalents, derivative finan-cial instruments and surplus liquidity invested in marketablesecurities, as well as placements with banks. In addition, cre-dit risk arises from credit exposure to customers, includingoutstanding receivables and committed transactions. In orderto minimize credit risk related to financial instruments, NobelBiocare requires a strong credit rating for counterparties andensures that the commitment terms of funds do not exceed12 months. The minimum short-term rating for major financial

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Nobel Biocare Annual Report 2011 — Financial reporting140

counterparties is A1, and the minimum long-term rating issingle A. During 2011, Nobel Biocare continued to closelymonitor the credit quality of the Group’s financial counterpar-ties.

Trade receivablesNobel Biocare’s customer base mainly consists of dentists,dental clinics and dental laboratories. The Group’s exposureto credit risk with respect to trade receivables is consideredlow compared with other industries. Under the Group’s creditpolicy, each customer is analyzed individually, and for each

customer an individual credit limit is established. Such limitsare reviewed periodically.

On a global basis, no individual customer represents a signi-ficant portion of the Group’s revenue or a significant portionof the total trade receivables. The demographics of theGroup’s customer base also have a low degree of influenceon credit risk, again due to the very low default risk of theindustry. The exposure to credit risk for trade receivables bygeographical region is presented in the following table. Formore information on trade receivables, refer to note 13.

Net trade receivables by region

in EUR ‘000 2011 2010

North America 26’920 27’346

Europe, Middle East and Africa 43’568 56’465

Asia/Pacific 26’638 31’915

Latin America/Rest of the world 5’838 6’803

Total as of 31 December 102’964 122’529

Concentration of credit risk Of the total Group cash and cash equivalents, EUR 58.1 mil-lion (2010: EUR 174.4 million) was placed at major relations-hip banks, which are large international banks with a mini-mum credit rating of A. The highest cash amount depositedat a single bank was EUR 23.0 million (2010: EUR 41.2 mil-lion). As of 31 December 2011, the positive value of derivativeinstruments amounted to EUR 7’389 k (2010: EUR 12’179 k).The carrying amount of financial assets as disclosed in note10 represents the maximum credit exposure.

Liquidity riskLiquidity risk is the risk that the Group would not be able tomeet its financial obligations when they fall due. Such a shor-

tage of liquidity could arise from weak operational perfor-mance, insufficient cash holdings or limited access to externaldebt and equity financing, either through banks or capitalmarkets.

During 2011, the Group continued to maintain a strong focuson minimizing any liquidity risk by centralizing cash at theGroup’s core banks.

As of 31 December 2011, the Group held EUR 107.5 million(2010: EUR 239.8 million) liquidity on its balance sheet, the-reof 48.5 million (2010: EUR 167.2 million) centrally.

In addition to its on-balance sheet liquidity, as of 31 December 2011, the Group had the following committed and uncommittedcredit lines with various banks:

Credit lines

in EUR ’000 2011 2010

Committed syndicated facility (six banks) 330’000 330’000

Other committed credit lines 856 1’053

Uncommitted credit lines 3’669 2’285

Total as of 31 December 334’525 333’338

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Notes 141

The syndicated banking facility with Group core banks conti-nued to serve as a back-up facility going forward. As of31 December 2011, EUR 36’928 k was drawn on the facility.

Other committed credit lines totaled EUR 856 k. Of thisamount, no amount was used as of 31 December 2011. Ofthe uncommitted credit lines, no amount was drawn as of31 December 2011.

In line with its liquidity planning and monitoring, the Groupanalyzes the entire liquidity/maturity profile of all existing

financial assets and liabilities on a continuous basis, includingderivatives (on a gross basis), which are needed for foreignexchange and interest rate hedging. The table below gives anoverview of all contractual cash flows. Balances due within12 months equal their carrying balances, as the impact of dis-counting is not significant.

On 10 October 2011, Nobel Biocare issued a CHF 120’000 kstraight bond with a coupon of 4 percent and a maturity dateof 10 October 2016. For more details please refer to note 22.

Maturity analysis of financial assets and liabilities

in EUR ‘000 Carrying Total 6 months 6–12 months 1–2 years 2–5 yearsamount contractual or less

cash flowamount

as of 31 December 2011

Accrued income 158 158 158 – – –

Receivables (non-current) 3’420 3’813 86 45 2’354 1’328

Trade and other receivables (current) 109’362 109’362 106’232 3’130 – –

Cash and cash equivalents 107’456 107’456 107’456 – – –

Total non-derivative financial assets 220’396 220’789 213’932 3’175 2’354 1’328

Straight bond –98’400 –118’229 – –3’949 –3’949 –110’331

Other non-current liabilities –357 –386 – – –386 –

Loans and borrowings –36’928 –37’098 –37’098 – – –

Trade payables –15’378 –15’378 –15’378 – – –

Non-trade payables and other liabilities –7’448 –7’448 –7’448 – – –

Accrued expenses –27’017 –27’017 –26’305 –712 – –

Total non-derivative financial liabilities –185’528 –205’556 –86’229 –4’661 –4’335 –110’331

Outflow (at fair value through profit or loss) – –525’442 –525’442 – – –

Inflow (at fair value through profit or loss) – 526’822 526’822 – – –

Outflow (cash flow hedges) – –82’508 –40’033 –31’633 –10’842 –

Inflow (cash flow hedges) – 81’367 40’184 30’899 10’284 –

Total gross-settled derivatives –2’053 239 1’531 –734 –558 –

Total net-settled derivatives 142 142 142 – – –

Net surplus/(exposure) 32’957 15’614 129’376 –2’220 –2’539 –109’003

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Nobel Biocare Annual Report 2011 — Financial reporting142

in EUR ‘000 Carrying Total 6 months 6–12 months 1–2 years 2–5 yearsamount contractual or less

cash flowamount

as of 31 December 2010

Accrued income 35 35 35 – – –

Receivables (non-current) 3’974 4’266 200 132 2’679 1’255

Trade and other receivables (current) 132’855 132’854 119’211 13’643 – –

Cash and cash equivalents 239’816 239’816 239’816 – – –

Total non-derivative financial assets 376’680 376’971 359’262 13’775 2’679 1’255

Other non-current liabilities –494 –534 – – –148 –386

Convertible bond –252’366 –260’025 – –260’025 – –

Trade payables –19’284 –19’284 –19’284 – – –

Non-trade payables and other liabilities –11’200 –11’200 –10’998 –202 – –

Accrued expenses –27’253 –27’253 –26’987 –266 – –

Bank overdraft –297 –297 –297 – – –

Total non-derivative financial liabilities –310’894 –318’593 –57’566 –260’493 –148 –386

Outflow (at fair value through profit or loss) – –626’080 –626’080 – – –

Inflow (at fair value through profit or loss) – 628’545 628’545 – – –

Outflow (cash flow hedges) – –49’463 –24’794 –18’649 –6’020 –

Inflow (cash flow hedges) – 50’849 25’549 19’173 6’127 –

Total gross-settled derivatives 3’307 3’851 3’220 524 107 –

Total net-settled derivatives 787 787 –522 1’309 – –

Net surplus/(exposure) 69’880 63’016 304’394 –244’885 2’638 869

As of 31 December 2011, non-current financial liabilitiesincluded the new straight bond, with a carrying amount ofEUR 98’400 k. Other non-current financial liabilities wereEUR  357  k. Current financial liabilities amounted to EUR86’771 k and included bank lending and overdrafts, trade pay-ables and other liabilities (including derivative financial instru-ments). For more information, refer to note 22. For off-balancesheet commitments to universities and other institutions andfor non-cancelable operating lease commitments, refer tonote 26.

Including all interest-bearing financial assets (including cashand cash equivalents and derivatives) and all interest-bearingfinancial liabilities, the Group had a net debt position ofEUR 36’194 k as of 31 December 2011, compared with a netdebt position of EUR 13’200 k as of 31 December 2010.

Derivative instrumentsFinancial instruments held by Nobel Biocare comprise deri-vative financial instruments that are stated at fair value andare presented within derivative financial instruments andother liabilities and derivatives on the balance sheet. As of31 December 2011, these consisted of foreign exchange for-wards and foreign exchange options. The full fair value of aderivative financial instrument is classified as a non-current

asset or liability when the remaining maturity period is morethan 12 months and as a current asset or liability when theremaining maturity period is 12 months or less.

The level in a fair value hierarchy under which a financialinstrument is classified is determined based on the signifi-cance of the data used to calculate the fair value. The firstlevel comprises quoted prices in active markets where arm’s-length transactions for identical items are conducted regu-larly. The second level comprises externally observable data.Such data may include the use of recent arm’s-length trans-actions, reference to other instruments that are substantiallythe same, discounted cash flow analysis and option-pricingmodels, while making maximum use of market inputs andrelying as little as possible on entity-specific inputs. The thirdlevel comprises all other inputs not externally observable.

At the balance sheet date, the fair value of derivative instru-ments is determined using multiple valuation techniques.These include volatilities and spot and swap rates publishedby Bloomberg. Therefore, the fair value measurements of allfinancial derivative instruments held by Nobel Biocare corres-pond to level two, while other financial instruments are mea-sured at amortized cost, which approximates fair value.

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Notes 143

Market riskCurrency risk

Foreign exchange risk arises from future commercial trans-actions, recognized assets and liabilities and net investmentsin foreign operations.

Foreign currency exposures of individual affiliates are mana-ged and optimized against the functional currency of therespective entity. According to the Treasury Policy, GroupTreasury has the mandate to hedge a minimum of 90 percentof committed balance sheet exposures in core currencies. Inaddition to this, Nobel Biocare continued to reduce futureEBITDA volatility by hedging parts of its anticipated EBITDAfor up to two years, on a rolling basis. While the effectivehedge ratio is also impacted by the availability of transactionalexposures that qualify for hedge accounting, near-term cashflows are hedged to a higher degree than more future cashflows. Hedge accounting is applied whenever possible andfeasible. At the end of 2011, the average cash flow hedgehorizon of all future sales had a maturity of less than one year.

Nobel Biocare designates certain derivatives as hedges of aparticular risk associated with a recognized asset or liabilityor a highly probable forecasted transaction (cash flow hedge).At the inception of the transaction, the Group documents therelationship between hedging instruments and hedged items,as well as its risk management objectives and strategy forundertaking various hedging transactions. Also, the effecti-veness of all hedges is documented at inception and testedon a regular basis.

The Treasury Policy contains a list of approved hedging instru-ments. Hedging of existing exposures in the balance sheetand of future (uncommitted) exposures is executed with for-ward and option contracts. Combinations of plain vanilla opti-ons are also allowed as per Treasury Policy, but only on a neu-tral or net-long basis. The fair value of various derivativeinstruments used for hedging purposes is disclosed in notes10 and 22. Movements in the hedging reserve in sharehol-ders’ equity are shown in the consolidated statement ofchanges in equity. There was no ineffectiveness from cashflow hedges related to sales during 2011.

In 2011, put options were bought to protect against the eco-nomic risk of the rising Swiss franc against the euro in con-junction with the approaching redemption of the convertiblebond. As a result of the decision of the Swiss National Bankin September to set a minimum exchange rate of CHF 1.20to the euro, these options subsequently lost their value. The

expense recognized in relation to this transaction wasEUR 11’648 k.

The Group has certain investments in foreign operationswhose net assets are exposed to foreign currency translationrisk. In 2011, Group Treasury continued to focus on monito-ring and reducing foreign currency translation risk, which isreported to senior management on a regular basis. There isas yet no systematic hedging of translation risk by net invest-ment hedges.

Foreign currency risk analysis

During 2011, Group Treasury continued to focus on its riskand compliance function by using quantitative risk analysismodels to monitor and control the Group’s currency risks ona regular basis. A regular treasury and risk managementreport is compiled by the independent treasury controller andis distributed to Senior Management. The report containsquantitative risk management monitoring, as well as qualita-tive comments. Statistical models of value at risk (VaR) andearnings at risk (EaR) build up the quantitative basis of ana-lysis for currency transaction and translation risks. Analysisof currency economic risk is performed on an ad hoc basis.Both VaR and EaR are similar techniques used to quantify theexpected loss from an adverse market movement with a spe-cified probability over a particular period of time. They reflectthe interdependencies between risk variables and providemanagement with a more comprehensive understanding ofthe Group’s risk profile. While the VaR measures the potentialcurrency impact on the Group’s consolidated equity, the EaRmeasures such impacts on the Group’s consolidated profit orloss.

By assuming that past changes in risk factors reflect futuremovements of market rates, and by taking into account thecurrent risk portfolio, the Group has chosen the historicalsimulation method to assess currency risks. Other majorassumptions underlying the analysis include the following:

– The calculation uses a 95 percent confidence level as defi-ned in the Treasury Policy. Thus, on average, there is a 5 per-cent probability of market fluctuations affecting the Group’snet income or equity by more than the simulated net EaRor VaR during the holding period.

– A holding period of 12 months has been applied as per Trea-sury Policy.

– The portfolio, consisting of underlying currency exposuresand hedges, is assumed to remain the same at the end ofeach holding period.

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Nobel Biocare Annual Report 2011 — Financial reporting144

– Historical market data for various risk factors (foreignexchange rates and interest rates) from the past three andten years is used.

However, as the results of the analysis largely rely on the cho-sen historical data, the model does not cover any event notoccurring within the time period chosen. By choosing a longeror shorter time horizon of applied historical rates for riskfactors, the output of the analysis may vary. Therefore, in theconcrete risk management process, this method is always

used based on a thorough understanding of underlying expo-sures.

For the year 2011, the aforementioned risk analysis presentedthe following results. The gross impact implies the potentialadverse movement from the exposures only, whereas the netimpact also includes the movement of the hedges in place.The diversification effect considers the correlations betweendifferent risk factors and the nature of underlying exposuresin the portfolio, such as long and/or short positions.

Earnings at risk for a 12-month holding period (currency transaction risk) – committed

in EUR ‘000 2011 2010

Currency, as of 31 December Gross impact Net impact Risk reduction Gross impact Net impact Risk reduction

Swiss franc 8’181 1’616 80.2% 34’506 2’211 93.6%

Euro 211 14 93.4% 1’057 173 83.6%

Japanese yen 4’043 67 98.3% 7’612 781 89.7%

Swedish krona 14’117 152 98.9% 31’909 1’473 95.4%

US dollar 9’257 4’404 52.4% 9’831 2’047 79.2%

Other core currencies 957 463 51.6% 1’173 454 61.3%

Remaining currencies 3’331 3’158 5.2% 2’814 1’370 51.3%

Total undiversified 40’097 9’874 75.4% 88’902 8’509 90.4%

Diversification –21’905 –7’812 –18’401 –6’894

Earnings at risk – committed 18’192 2’062 88.7% 70’501 1’615 97.7%

As of 31 December 2011, the potential adverse net impact in value (after hedging) of all committed cash flows, was EUR 2’062 k(2010: EUR 1’615 k) for one year ahead.

Earnings at risk for a 12-month holding period (currency transaction risk) – uncommitted

in EUR ‘000 2011 2010

Currency, as of 31 December Gross impact Net impact Risk reduction Gross impact Net impact Risk reduction

Swiss franc 5’728 4’645 18.9% 3’432 1’804 47.4%

Japanese yen 1’912 1’303 31.9% 3’171 2’929 7.6%

Swedish krona 7’398 3’884 47.5% 5’326 3’128 41.3%

US dollar 5’671 3’862 31.9% 11’410 9’185 19.5%

Other core currencies 1’390 1’390 – 2’077 2’077 –

Remaining currencies 1’415 1’415 – 3’931 3’931 –

Total undiversified 23’514 16’499 29.8% 29’347 23’054 21.4%

Diversification –8’349 –4’761 –13’302 –9’141

Earnings at risk – Uncommitted 15’165 11’738 22.6% 16’045 13’913 13.3%

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Notes 145

As of 31 December 2011, the potential adverse net impact in value (after hedging) of all anticipated cash flows was EUR 11’738 k(2010: EUR 13’913 k) for one year ahead.

Value at risk for a 12-month holding period (currency translation risk)

in EUR ‘000 2011 2010

Currency, as of 31 December Gross impact Gross impact

Swiss franc 2’783 15’096

Swedish krona 6’670 41’204

US dollar 14’003 14’612

Other core currencies 3’183 –

Remaining currencies 10’560 10’644

Total undiversified 37’199 81’556

Diversification –17’044 –31’331

Value at risk 20’155 50’225

As of 31 December 2011, the potential adverse impact onGroup equity of all currency translation risk exposures wasEUR 20’155 k (2010: EUR 50’225 k) for one year ahead.

Interest rate riskInterest rate risk is the risk of the result and/or cash flowsbeing negatively affected by changes in interest rates.

At Nobel Biocare, borrowing and investment horizons haveto be compatible with the needs and requirements of opera-tional activities. Thus, duration gaps between assets and lia-bilities can occur. As of 31 December 2011, the only materialinterest-bearing financial liability consists of the new straightbond, which is measured at amortized cost. To pre-hedge theinterest rate risk of the straight bond, the Group entered intointerest rate swaps in the second half of 2010 and at the begin-ning of 2011. Hedge accounting was applied to these instru-ments.

Interest rate risks are presented by way of a sensitivity analysisbased on the following assumptions:

Fair value interest rate risk:

Fixed-rate borrowings (including bond issuances) are exclu-ded from the sensitivity analysis as they are not measured atfair value and, therefore, not subject to fair value interest raterisk. As of 31 December 2011 and 2010, the Group did nothold any significant fixed-rate financial instruments that weremeasured at fair value.

Cash flow interest rate risk:

The Group has no significant variable-rate investments or bor-rowings. Cash flow interest rate risk is, therefore, limited to

fluctuations in the interest rate on cash and cash equivalentsheld.

The sensitivity analysis assumes the same interest rate shiftfor all currencies.

With all other variables held constant, an increase/(decrease)in interest rates by 25 basis points would have resulted in anannualized increase/(decrease) in profit for the year 2011 ofEUR 193 k (2010: EUR 451 k) mainly due to increased/(decrea-sed) interest income on cash and cash equivalents. Equitywould not have been affected.

Other price riskOther price risk would mainly comprise security price risk orcommodity price risk. Since the Group has very limited com-modity price risk exposure due to the nature of the business,it is not actively managed.

With respect to security price risk, management has decidednot to invest in any financial securities other than highly ratedcommercial paper and short-term bonds. This decision,backed by the Group Treasury Policy and approved by theAudit Committee on behalf of the Board of Directors, wasstrictly followed in 2011.

Fair valueFor financial receivables and payables with a remaining life ofless than one year, the nominal amount is deemed to reflectthe fair value. As of 31 December 2011 and 2010, the Groupdid not have any material non-current financial assets. On theliability side, the fair value of the bond was EUR 102’827 k asof 31 December 2011. The carrying amount of the bond was

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Nobel Biocare Annual Report 2011 — Financial reporting146

EUR 98’400 k at the end of 2011 (see note 22). As of Decem-ber 2010, the fair value of the outstanding portion of the con-vertible bond was EUR 258’579 k and the carrying amount ofthe convertible bond was EUR 252’366 k.

Capital managementThe Group’s strategy, reflected through its financial policies,is to maintain a strong equity base and hold at any point intime a minimum credit quality equivalent to BBB as definedby Standard & Poor’s or better rating equivalent. Investments,i.e. capital expenditures and acquisitions, are done based ona proper analysis of future cash flow generation, as well astheir potential risk for the Group balance sheet. The Board,represented by the Audit Committee, monitors cash and capi-tal structure development on an ongoing basis and decideson the appropriate level of risk limits on a regular basis.Throughout 2011, equity in relation to total assets remainedstable. Cash to total assets was maintained at a high level,but decreased after the redemption of the convertible bondin November 2011.

The dividend policy is based on the above balance sheetmanagement principles and is designed to maintain attractivedividend yields for investors and an affordable pay-out ratioof between 35 percent and 45 percent (calculated as the divi-dend in percentage of available profit for the year) as a generaltarget. Additionally, share repurchases can make sense in thecase of significant surplus cash that cannot be reinvested intothe business at proper capital returns. Financial flexibilitymust not be reduced through shareholder returns and has tobe guaranteed at any point in time through appropriate cashholdings and/or committed credit lines. By doing so, theGroup seeks to balance the interest of shareholders and debtholders.

During 2011, the Group acquired in total 360’754 treasuryshares to hedge its existing exposure from the performanceshare unit plan.

Neither the Group nor any of its subsidiaries are subject toexternally imposed capital requirements.

29 Risk assessment

As part of the Enterprise Risk Management (ERM) system,the Group has systematically analyzed, updated and docu-mented its risk assessment with regard to risks that couldhave a material effect on the financial statements.

Risks are reported to the Executive Committee and the Boardof Directors at least once a year. Key risks and significant inci-dents are discussed in all Executive Committee, Board, aswell as in local management team meetings. The Board ofDirectors of Nobel Biocare last approved the Risk Assessmentin their Board meeting held on 16 December 2011.

The Group has also implemented an Internal Controls System(ICS) for all subsidiaries and relevant Group functions basedon the Committee of Sponsoring Organizations (COSO) fra-mework. Nobel Biocare complies with the Swiss Code of Obli-gations. The controls and processes are designed to providereasonable assurance regarding the reliability of financialreporting and the preparation of financial statements in accor-dance with International Financial Reporting Standards (IFRS)and with Swiss law.

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Notes 147

30Related parties

Transactions with related parties are conducted on an arm’s-length basis.

Transactions with members of the Executive Committee andthe Board of DirectorsMembers of the Executive Committee and the Board ofDirectors control 0.3 percent (2010: 0.2 percent) of the votingshares of the Company.

There are no material loans, securities, advances or creditsgranted to any member of the Board of Directors or the Exe-cutive Committee.

Executive Committee

in EUR ‘000 2011 2010

Short-term benefits (including fixed salaries and variable compensation) 6’614 5’172

Non-compete settlement 1’300 –

Post-employment benefits 480 713

Share-based payments 2’825 1’915

Total compensation 11’219 7’800

Board of Directors

in EUR ‘000 2011 2010

Cash compensation 840 542

Share-based payments 705 247

Total compensation 1’545 789

No member of the Board of Directors or the Executive Com-mittee received additional fees or compensation for additionalservices performed on behalf of Nobel Biocare Holding AGor its subsidiaries with the exception of Hans Geiselhöringer,who became Executive Vice President Marketing and Pro-ducts and a member of the Executive Committee on 10 Feb-ruary 2010. During 2011, a company in which Hans Geisel-höringer has an economic interest provided laboratoryservices amounting to EUR 276 k, and Nobel Biocare soldproducts to this company amounting to EUR 171 k. Anothercompany in which Hans Geiselhöringer has an economic inte-rest provided consultancy services, included in the tableabove in short-term benefits, amounting to EUR 784 k. NobelBiocare also reimbursed expenses such as travel expenses(EUR 85 k) relating to the consultancy services.

As of 31 December 2011, there were no significant outstan-ding receivables from or payables due to any related party.

Executive Committee members who left the EC in 2011 werereleased from some of their duties during their terminationperiod. Based on their individual agreements, they retain theright to receive salary and bonuses and may be entitled toretain their options and restricted share units.

Other related party transactions None of the Board members holds or has held any operationalpositions within the Group during the last five years.

As of 31 December 2011, Rolf Watter, interim Chairman ofthe Board of Directors, was a 4 percent (2010: 4 percent) sha-reholder in and an employee of the law firm Bär & Karrer AG,Zurich. In 2011, the Group had transactions with Bär & KarrerAG of EUR 4 k (2010: EUR 4 k).

Further information as required by Swiss law relating to remu-neration and ownership of shares and options of the membersof the Board of Directors and the Executive Committee canbe found in note 12 of the parent company accounts.

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Nobel Biocare Annual Report 2011 — Financial reporting148

31 Subsidiaries

City and country Share capital Ownership Ownership of incorporation in ‘000 interest interest

2011 in % 2010 in %

Nobel Biocare Australia Pty Ltd. Macquarie Park, Australia AUD 600 100 100

Nobel Biocare (Österreich) GmbH Vienna, Austria EUR 36 100 100

Nobel Biocare Belgium NV Groot-Bijgaarden, Belgium EUR 138 100 100

Medicim, NV Mechelen, Belgium EUR 1’030 100 100

Nobel Biocare Brasil Ltda São Paulo, Brazil BRL 14’111 100 100

Nobel Biocare Canada Inc. Richmond Hill, Canada CAD 3’012 100 100

Nobel Biocare Procera Services Inc. Québec, Canada CAD 40’000 100 100

BioCad Medical Inc. Québec, Canada CAD 14’015 100 100

Nobel Biocare Asia Ltd. Hong Kong, People’s Republic of China HKD 15’010 100 100

Nobel Biocare Commercial (Shanghai) Co. Ltd Shanghai, People’s Republic of China USD 700 100 100

Nobel Biocare Trading (Shanghai) Co. Ltd. Shanghai, People’s Republic of China USD 140 100 100

Nobel Biocare Danmark A/S Hilleröd, Denmark DKK 500 100 100

Nobel Biocare Suomi Oy Helsinki, Finland EUR 8 100 100

Nobel Biocare France S.A.S. Bagnolet, France EUR 40 100 100

Nobel Biocare Deutschland GmbH Cologne, Germany EUR 307 100 100

Nobel Biocare UK Ltd. Uxbridge, Great Britain GBP 620 100 100

Nobel Biocare Magyarország Kft Budapest, Hungary HUF 24’000 100 100

Nobel Biocare India Pvt. Ltd. Mumbai, India INR 100 100 100

Alpha-Bio Tec Ltd. Petach Tikva, Israel ILS 39’100 100 100

Nobel Biocare Italiana S.r.l. Agrate Brianza, Italy EUR 10 100 100

Nobel Biocare Japan K.K. Tokyo, Japan JPY 12’500 100 100

Nobel Biocare Procera K.K. Narashino-Shi, Japan JPY 250’000 100 100

Nobel Biocare Korea Ltd. 1 Seoul, South Korea KRW 100’000 100 –

Nobel Biocare Lithuania Pty. Ltd. Vilnius, Lithuania LTL 280 100 100

Nobel Biocare México, S.A. de C.V. Mexico City, Mexico MXN 15’050 100 100

Nobel Biocare Investments N.V. Willemstad, Curaçao, the Netherlands Antilles CHF 1’240 2 100 100

Nobel Biocare Nederland BV Houten, the Netherlands EUR 450 100 100

Nobel Biocare Distribution Center BV Belfeld, the Netherlands EUR 90 100 100

Nobel Biocare New Zealand Ltd. Auckland, New Zealand NZD 1 100 100

Nobel Biocare Norge AS Son, Norway NOK 100 100 100

Nobel Biocare Polska Sp.z o.o. Warsaw, Poland PLN 50 100 100

Nobel Biocare Portugal S.A. Vila Nova de Gaia, Portugal EUR 60 100 100

Nobel Biocare Russia LLC Moscow, Russia RUB 3’000 100 100

Nobel Biocare Singapore Pte Ltd. Singapore SGD 65 100 100

Nobel Biocare South Africa (Pty) Ltd. Woodmead, South Africa ZAR 0.1 100 100

AlphaBio – Tec Dental Implants SA Woodmead, South Africa ZAR 400 100 100

Nobel Biocare Iberica S.A. Barcelona, Spain EUR 60 100 100

Nobel Biocare AB Gothenburg, Sweden SEK 317’186 100 100

Nobel Biocare Dental Products AB 3 Gothenburg, Sweden SEK 100 100 100

Nobel Biocare i Göteborg AB 3 Gothenburg, Sweden SEK 150 100 100

Nobel Biocare Holding AB Gothenburg, Sweden SEK 10’100 100 100

Nobel Orthopedics AB 3 Gothenburg, Sweden SEK 100 100 100

Nobel Biocare AG Kloten, Switzerland CHF 54 100 100

Nobel Biocare Finance AG Kloten, Switzerland CHF100 100 100

Nobel Biocare Management AG Kloten, Switzerland CHF100 100 100

Nobel Biocare Services AG Kloten, Switzerland CHF 250 100 100

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Notes 149

Nobel Biocare Asia-Africa Holding AG Kloten, Switzerland CHF 1’000 100 100

Nobel Biocare Latin America Holding AG Kloten, Switzerland CHF 100 100 100

Nobel Biocare Taiwan Co. Ltd. Taipei, Taiwan TWD 105’000 100 100

Nobel Biocare (Thailand) Ltd. Bangkok, Thailand THB 100’000 100 100

Nobel Biocare USA, LLC Yorba Linda, USA USD 500 100 100

Nobel Biocare Procera, LLC Wilmington, USA USD 1 100 100

Nobel Biocare Holding USA Inc. Wilmington, USA USD 0.01 100 100

1 Established on 1 April 20112 Change of share capital currency as of 7 December 20113 Dormant/not operating

32Subsequent events

There have been no material events between 31 December 2011 and the date of authorization that would require adjustmentsto the consolidated financial statements or disclosures.

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Nobel Biocare Annual Report 2011 — Financial reporting150

Report of the statutory auditor.

Report of the Statutory Auditor on the ConsolidatedFinancial Statements to the General Meeting ofShareholders of Nobel Biocare Holding AG, KlotenAs statutory auditor, we have audited the accompanying con-solidated financial statements of Nobel Biocare Holding AG,which comprise the income statement, statement of compre-hensive income, balance sheet, statement of changes inequity, cash flow statement and notes on pages 100 to 149for the year ended 31 December 2011.

Board of Directors’ ResponsibilityThe board of directors is responsible for the preparation andfair presentation of the consolidated financial statements inaccordance with International Financial Reporting Standards(IFRS) and the requirements of Swiss law. This responsibilityincludes designing, implementing and maintaining an inter-nal control system relevant to the preparation and fair pre-sentation of consolidated financial statements that are freefrom material misstatement, whether due to fraud or error.The board of directors is further responsible for selecting andapplying appropriate accounting policies and making accoun-ting estimates that are reasonable in the circumstances.

Auditor’s ResponsibilityOur responsibility is to express an opinion on these consoli-dated financial statements based on our audit. We conductedour audit in accordance with Swiss law and Swiss AuditingStandards as well as International Standards on Auditing.Those standards require that we plan and perform the auditto obtain reasonable assurance whether the consolidatedfinancial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evi-dence about the amounts and disclosures in the consolidatedfinancial statements. The procedures selected depend on theauditor’s judgment, including the assessment of the risks ofmaterial misstatement of the consolidated financial state-ments, whether due to fraud or error. In making those riskassessments, the auditor considers the internal control sys-tem relevant to the entity’s preparation and fair presentationof the consolidated financial statements in order to designaudit procedures that are appropriate in the circumstances,

but not for the purpose of expressing an opinion on the effecti-veness of the entity’s internal control system. An audit alsoincludes evaluating the appropriateness of the accountingpolicies used and the reasonableness of accounting estima-tes made, as well as evaluating the overall presentation of theconsolidated financial statements. We believe that the auditevidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion.

OpinionIn our opinion, the consolidated financial statements for theyear ended 31 December 2011 give a true and fair view of thefinancial position, the results of operations and the cash flowsin accordance with International Financial Reporting Stan-dards (IFRS) and comply with Swiss law.

Report on Other Legal RequirementsWe confirm that we meet the legal requirements on licensingaccording to the Auditor Oversight Act (AOA) and indepen-dence (article 728 CO and article 11 AOA) and that there areno circumstances incompatible with our independence.

In accordance with article 728a paragraph 1 item 3 CO andSwiss Auditing Standard 890, we confirm that an internal con-trol system exists, which has been designed for the prepara-tion of consolidated financial statements according to theinstructions of the board of directors.

We recommend that the consolidated financial statementssubmitted to you be approved.

KPMG AG

Rolf Hauenstein Peter StösselLicensed Audit Expert Licensed Audit ExpertAuditor in Charge

Zurich, 8 February 2012

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Nobel Biocare Annual Report 2011 — Financial reporting152

Parent company accounts.

Income statement

in CHF ‘000 Note 2011 2010

Financial income 2’190 5’992

Dividend income 6 1’012’009 674’818

Total income 1’014’199 680’810

Personnel expenses –1’158 –13’639

Administrative expenses –16’052 –22’644

Depreciation –487 –776

Financial expenses 7 –19’337 –21’901

Net foreign exchange gains/(losses) –1’178 29’110

Depreciation investments 3 –1’100’279 –514’102

Total expenses –1’138’491 –543’952

Profit/(loss) before tax –124’292 136’858

Tax income/(expenses) 8 –786 221

Net result –125’078 137’079

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Parent company accounts Nobel Biocare Holding AG, Kloten 153

Balance sheet

in CHF ‘000 Note 31 December 2011 31 December 2010

Assets

Equipment and leasehold improvements 689 1’147

Property, plant and equipment 2 689 1’147

Computer programs – 7

Intangible assets – 7

Investments 3 1’740’102 2’330’905

Loans due from Group companies 167’756 146’853

Financial assets 1’907’858 2’477’758

Total non-current assets 1’908’547 2’478’912

Other receivables due from Group companies 241 40’408

Other receivables 34 1’075

Tax asset 47 –

Treasury shares 5 14’230 17’617

Prepaid expenses and accrued income 1’470 3’843

Cash and cash equivalents 7’239 5’152

Total current assets 23’261 68’095

Total assets 1’931’808 2’547’007

Shareholders’ equity and liabilities

Share capital 49’514 49’514

Share premium 1’088’121 1’130’970

thereof: reserves from capital contribution 1’081’694 1’130’970

Reserve for treasury shares 37’728 32’831

Free reserve 215’360 220’257

Retained earnings 410’755 535’833

Shareholders’ equity 4 1’801’478 1’969’405

Loans due to Group companies 4’858 256’678

Straight bond 10 120’000 –

Total non-current liabilities 124’858 256’678

Loans due to Group companies – 315’303

Other payables due to Group companies 3’776 2’660

Other payables 20 632

Tax liabilities – 534

Accrued expenses and deferred income 1’676 1’795

Total current liabilities 5’472 320’924

Total liabilities 130’330 577’602

Total shareholders’ equity and liabilities 1’931’808 2’547’007

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Notes to the parentcompany accounts.

1 Basis for preparation

These financial statements have been prepared on a historicalcost basis and are in accordance with Swiss law.

2 Property, plant and equipment

Equipment and leasehold improvements

in CHF ’000 2011 2010

Cost

Balance as of 1 January 3’736 3’326

Additions for the year 18 410

Balance as of 31 December 3’754 3’736

Accumulated depreciation

Balance as of 1 January 2’589 1’921

Depreciation charge for the year 476 668

Balance as of 31 December 3’065 2’589

Carrying amount as of 31 December 689 1’147

The fire insurance value of property, plant and equipmentamounts to CHF 1’640 k as of 31 December 2011 (2010: CHF1’640 k).

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Notes to the parent company accounts 155

3Details of investments

Investments held directly by Nobel Biocare Holding AG are:

Company, domicile, purpose 2011 2010

Percentage Share capital Percentage Share capitalheld (in ‘000) held (in ‘000)

Nobel Biocare Services AG, Kloten, Switzerland

Acquisition, divestment and administration, including marketing and granting of licenses of intellectual property rights of any kind in favorof the Nobel Biocare Group, as well as the rendering of other servicesin favor of the Nobel Biocare Group in the fields of management andmarketing 100 CHF 250 100 CHF 250

Nobel Biocare AG, Kloten, Switzerland

Distribution of dental implants and industrialized dental prosthetics 100 CHF 54 100 CHF 54

Nobel Biocare Asia-Africa Holding AG, Kloten, Switzerland

Acquisition, divestment and administration of direct and indirectinvestments in Asia and Africa 100 CHF 1’000 100 CHF 1’000

Nobel Biocare Latin America Holding AG, Kloten, Switzerland

Acquisition, divestment and administration of direct and indirectinvestments in Latin America 100 CHF 100 100 CHF 100

Nobel Biocare Finance AG, Kloten, Switzerland

Financing, investments and trading 100 CHF 100 100 CHF 100

Nobel Biocare Holding AB, Gothenburg, Sweden

Development, manufacturing and sale of pharmaceuticals and medical technical products 100 SEK 10’100 100 SEK 10’100

Nobel Biocare Investments N.V., Willemastad, Curaçao, theNetherland Antilles

Financing, investments and trading 100 CHF 1’240 1 100 EUR 1’000

Nobel Biocare Holding USA Inc., Wilmington, New CastleCounty Delaware, USA

Acquisition, sale and administration, including marketing and granting of licenses of intellectual property rights of any kind 100 USD 0.01 100 USD 0.01

Nobel Biocare Management AG, Kloten, Switzerland

Rendering of services in favor of the Nobel Biocare Group includingbut not limited to the fields of management and administration, marketing, research and development and IT services 100 CHF 100 100 CHF 100

AlphaBio – Tec Dental Implants SA, Woodmead, South Africa

Distribution of dental implants and dental devices and related activities 100 ZAR 400 100 ZAR 400

1 change of share capital currency as of 7 December 2011

For investments held indirectly see note 31 Subsidiaries in thenotes to the consolidated financial statements.

Investments are valued at acquisition cost less adjustmentsfor impairment. In 2011 and 2010, dividend income (2011:CHF 965’509 k, 2010: CHF 514’102 k) from one subsidiaryresulted in impairments of that subsidiary in the sameamount. In 2011, capital contributions of CHF 509’476 k toanother subsidiary increased the book value of the investmentin that subsidiary prior to recognizing an impairment of CHF134’770 k.

Nobel Biocare Holding AG is the parent company of the NobelBiocare Group.

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Nobel Biocare Annual Report 2011 — Financial reporting156

4 Shareholders’ equity

As of 31 December 2011, the issued share capital of the Company consisted of 123’784’530 shares with a par valueof CHF 0.40 each (2010: 123’784’530). The shares of the Com-pany are listed on the SIX Swiss Exchange.

There are no voting restrictions. Further details are providedon page 60 of the Corporate Governance Report.

Equity reconciliation

in CHF ‘000 Number Share Share Reserve for Free Retained Totalof shares capital premium treasury reserves earnings

shares

Balance as of 1 January 2010 123’784’530 49’514 1’130’970 27’072 226’016 466’495 1’900’067

Dividend payment –67’741 –67’741

Allocation of shares to share plan participants –898 898 –

Acquisition of treasury shares 6’657 –6’657 –

Net result 137’079 137’079

Balance as of 31 December 2010 123’784’530 49’514 1’130’970 32’831 220’257 535’833 1’969’405

Balance as of 1 January 2011 123’784’530 49’514 1’130’970 32’831 220’257 535’833 1’969’405

Dividend payment –42’849 –42’849

Allocation of shares to share plan participants –1’615 1’615 –

Acquisition of treasury shares 6’512 –6’512 –

Net result –125’078 –125’078

Balance as of 31 December 2011 123’784’530 49’514 1’088’121 37’728 215’360 410’755 1’801’478

Conditional share capitalThe share capital may be increased by issuing no more than247’620 shares (2010: 247’620), each with a par value ofCHF 0.40, to be fully paid up, equaling an amount of no morethan CHF 99’048 (2010: CHF 99’048) by virtue of the exerciseof options granted to employees and officers of the Group(see note 18 Share-based payment transactions in the notesto the consolidated financial statements).

In addition, the share capital may be increased by an amountof up to CHF 10 million by issuing up to 25 million fully paid-up registered shares with a nominal value of CHF 0.40 follo-wing the exercise of conversion and/or option rights whichare granted in connection with the issuance of bonds or simi-lar debt instruments by the Company or one of its Group com-panies in capital markets or in connection with a transaction.

5 Treasury shares

Number of shares Share buyback Other Total treasuryprogram 1 shares

Balance as of 1 January 2010 318’246 300’000 618’246

Purchase – 403’810 403’810

Share-based payment transactions –22’810 – –22’810

Balance as of 31 December 2010 295’436 703’810 999’246

Balance as of 1 January 2011 295’436 703’810 999’246

Purchase – 360’754 360’754

Share-based payment transactions –56’880 – –56’880

Balance as of 31 December 2011 238’556 1’064’564 1’303’120

Regarding the treasury shares of the Group, see note 16Equity in the consolidated financial statements.

Treasury shares held by Nobel Biocare Holding AG are carriedat the lower of cost or market.

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Notes to the parent company accounts 157

Share buyback program 1On 30 June 2010, 19’000 treasury shares were granted toBoard members under the share plan as described in note 18to the consolidated financial statements. Participants of theperformance share unit plan were granted 3’810 treasury sha-res.

On 30 June 2011, 56’880 treasury shares were granted toshare plan participants under the share plan as described innote 18 to the consolidated financial statements.

Other treasury sharesIn 2011, the Company acquired in total 360’754 treasury sha-res to cover its existing exposure from the performance shareunit plan for consideration of CHF 6’512 k.

In 2010, the Company acquired in total 403’810 treasury sha-res to cover its existing exposure from the performance shareunit plan for consideration of CHF 6’657 k.

6Dividend income

In 2011, dividend income of CHF 1’012’009 k (2010: CHF674’818 k) related to dividends received from subsidiaries.The dividend income from one subsidiary of CHF 965’509 k

(2010: CHF 514’102 k) resulted in impairments of that subsi-diary in the same amount.

7Financial expenses

in CHF ’000 2011 2010

Interest expenses –1’344 –573

Other financial expenses –17’993 –21’328

Total financial expenses –19’337 –21’901

In 2011, other financial expenses comprised the amortizationof the arrangement fee on and the payment of commitmentfees for a credit facility of CHF 2’463 k (2010: CHF 3’883 k).On 22 November 2010, it was announced that the agreementwas replaced and extended for five years to 2015. In con-junction with this replacement, the remaining capitalized feesrelating to the original agreement were recognized in theincome statement in 2010 in full (CHF 1’595 k), in favor of the

new fee structure to be recognized in the income statementover the life of the amended contract.

In 2011, other financial expenses comprised a CHF 8’896 k(2010: CHF 8’314 k) write-down of treasury shares to theirmarket value as of 31 December. Also included are expensesof CHF 7’067 k to hedge the interest rate risk of the straightbond issued in 2011.

8Tax expenses

As a holding company, Nobel Biocare Holding AG is only sub-ject to direct federal tax at an effective tax rate of 7.83 percent.Dividend income of subsidiaries or of other qualifying parti-cipations, as well as gains on disposal of qualified participa-tions, are basically exempt from tax due to participation relief.

In 2011, tax expenses of CHF 786 k mainly related to capitaltax of CHF 565 k. In 2010, total tax income of CHF 221 k rela-ted to capital tax expenses of CHF 650 k and tax income ofCHF 871 k related to a reversal of tax provisions for previousfiscal years.

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Nobel Biocare Annual Report 2011 — Financial reporting158

9 Securities, sureties, guarantees and pledges in favor of third parties

in CHF ’000 2011 2010

Guarantees to bond holders – 385’000

Third-party guarantees 28’878 45’050

Total contingent liabilities as of 31 December 28’878 430’050

Nobel Biocare Investments N.V., Curaçao, the NetherlandsAntilles, issued a one percent convertible bond in the principalamount of CHF 385’000 k due on 8 November 2011. NobelBiocare Holding AG irrevocably and unconditionally guaran-teed repayment to the bondholders in accordance with Article111 of the Swiss Code of Obligations.

Nobel Biocare Holding AG provided a guarantee of an equityratio of 5 percent to its subsidiary Nobel Biocare Holding AB.The guarantee only applied if called upon by the subsidiaryon or before 31 December 2011.

Third-party guarantees include a guarantee to a service pro-vider.

Existing credit lines include a negative pledge clause. Cove-nants covering key ratios such as the net debt/EBITDA ratioare included in these agreements. All covenants were met asof 31 December 2011 and 31 December 2010.

The Company is part of a value-added tax (VAT) group and is,therefore, jointly liable to the Swiss Federal Tax Authoritiesfor the VAT liability of the other members.

10 Straight bond

in CHF ’000 2011 2010 Interest rate Maturity Currency

Straight bond 120’000 – 4.0% 10 Oct 2016 CHF

Carrying amount of straight bond as of 31 December 120’000

As of 10 October 2011, Nobel Biocare Holding AG issued afour percent straight bond in the principal of CHF 120’000 kdue in 2016. The straight bond is initially and subsequentlyrecognized at the redemption value, which is the proceeds

received, before transaction costs. Related transaction costswere recognized in the income statement as other financialexpenses. Interest expenses are accrued on a monthly basis.

11 Pension liabilities

No liabilities were due to the pension plan as of 31 December2011 (2010: CHF 0 k).

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Notes to the parent company accounts 159

12Remuneration of the Board of Directors and Executive Committee (EC)

Compensation and benefits philosophyNobel Biocare’s remuneration principles are designed toattract, motivate and retain internationally oriented, success-ful employees. The aim is to provide appropriate reward in acompetitive employment market and to support the develop-ment of a high performance environment. The elements ofthe remuneration system are:

– Base salary– Short-term incentive– Long-term incentive– Benefits

The ultimate goal of effective remuneration is to strengthenNobel Biocare’s global industry position for the benefit of itscustomers and their patients while delivering the expectedreturns to its shareholders.

To ensure long-term effectiveness, Nobel Biocare’s remune-ration system is designed to:

– Pay for performance and reward exceptional results.– Provide short-term and long-term incentives to attract high-

caliber talent and retain key employees and senior mana-gers, and to

– be globally applicable within a corporate framework.

Base salaryThe base salary is the amount of annual fixed pay as agreedupon in the employment contract and/or the annual compen-sation letter.

The base salary for an individual role is influenced by internaland external equivalence and considers aspects of the role,individual experience as well as the market. The base salaryis defined by the competencies required by the role, by thecorresponding responsibilities and by the internal paystructure. A base salary at median is considered competitivefor a jobholder fully complying with all the requirements ofthe role. The individual base salary position is strongly linkedto the emerging experience of a jobholder. Merit increasesreflect emerging experience in the role, salary history, internalequivalence as well as market salary trends and inflation.

To ensure the compensation competitiveness, Nobel Biocareannually obtains information from external salary surveys wit-hin the relevant comparator groups. That information is also

considered in the determination of the base salary. Base sala-ries are benchmarked on a yearly basis against similar posi-tions in other multinational companies which are comparablein scope, geography and business complexity, i.e. compara-ble with companies with which Nobel Biocare competes dailyfor business and talent. Nobel Biocare takes into accountsalary survey data provided by external global service provi-ders as well as selected local providers. Our main HR serviceproviders are Mercer, Towers Watson and AON Hewitt. Noneof these providers has further non-HR related mandates withNobel Biocare.

Short-term incentiveThe short-term incentive scheme of Nobel Biocare is contin-gent upon the financial success of the Group, is aligned withthe business strategy and supports a high-performance envi-ronment. The short-term incentive plan is competitive in themarkets in which Nobel Biocare operates. The short-termincentive scheme is reviewed annually.

Short-term variable compensation is designed to provideNobel Biocare employees with the opportunity to participatein the overall success of the Group based on their personalcontribution and measured against financial key performanceindicators (KPIs) as well as against personal objectives.

A short-term incentive plan has been in place since 2003, andis applied consistently within the organization according toposition levels. Financial KPIs are set at Group, regional, sub-regional and local levels. Employee performance is reviewedand assessed annually according to goal achievement. TheGroup’s financial KPIs for 2011 are net sales and earningsbefore interest and taxes (EBIT) growth. Additional KPIs havebeen set at regional, sub-regional and local levels, alignedwith the business strategy. For reasons of competitiveness inthe marketplace Nobel Biocare will not disclose the KPIs inmore detail.

Nobel Biocare’s profitability is measured on the basis of theEBIT margin. The higher the absolute net sales, the higher theEBIT margin target. This mechanism considers the high ope-rating leverage of Nobel Biocare.

For eligible employees not belonging to the Executive Com-mittee (EC) and not belonging to internal audit, the Group’sfinancial KPIs account for at least 10 percent of the short-termvariable compensation. Depending on the role, Group, regio-

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Nobel Biocare Annual Report 2011 — Financial reporting160

nal, sub-regional, local and functional KPIs account for 10 to90 percent of the short-term variable compensation. Indivi-dual KPIs, including core competencies and leadership prin-ciples, account for the remaining 90 to 10 percent.

In 2010, the financial KPIs for EC members accounted for 30percent and the individual KPIs for 70 percent. This split hasbeen newly defined for 2011: for EC members, financial KPIsaccount for 70 percent of the short-term variable compensa-tion (50 percent Group KPIs, 20 percent regional or functionalKPIs); individual KPIs account for the remaining 30 percent.

Short-term incentive targets have to meet a threshold to gene-rate a pay-out and can be overachieved up to a maximum of120 percent for all eligible employees not belonging to theEC. For EC members the cap is set at 200 percent.

For eligible employees not belonging to the EC the targetshort-term variable compensation lies between 8 and 50 per-cent of base salary, depending on functional level, and is paidin cash. The target short-term variable compensation for ECmembers lies between 33 and 100 percent, the latter of whichapplies to the Chief Executive Officer (CEO). Apart from thoseselected Group, regional, sub-regional and local roles eligiblefor short-term incentives, sales representatives receive quar-terly incentives based on their sales performance in the givenquarter. These incentive compensation plans are region-spe-cific. In addition, for selected functions, team objectives aredefined and rewarded.

Long-term incentiveNobel Biocare currently offers two long-term incentiveawards to compensate outstanding contributions of keyemployees, directly supporting the achievement of corporategoals. These incentives are positioned to:

– encourage senior managers to focus on the performanceand long-term growth of the Group;

– align the interests of senior managers with those of NobelBiocare shareholders;

– allow senior managers to share in the long-term successof Nobel Biocare; and to

– foster and support a high performance culture and focuson sustainable value creation for patients, customers andshareholders.

The aim of long-term remuneration is to reward senior mana-gers and executives by linking compensation with Group andcountry-specific performance targets over a three-year

period; hence reflecting Nobel Biocare’s commitment to sus-tainable growth. Nominated employees can only participatein one long-term incentive plan.

The Group currently has two long-term, performance-basedplans in place that have been approved by the Nominationand Compensation Committee of the Board of Directors(NCC): a Performance Share Unit Plan (PSUP) and a Perfor-mance Cash Bonus Plan (PCBP) which is being discontinued.

a) Performance Share Unit Plan (PSUP)

This long-term incentive plan covers, with a single global pro-gram, key position holders within the Group as well asselected employees throughout the organization as identifiedby the CEO and endorsed by the NCC. Participants are gran-ted performance-based share units; all grants have to beapproved by the NCC. Vesting of these grants is subject tospecific performance achievements over the vesting period.The performance achievements are subject to conditions defi-ned by the NCC.

For nominated employees not belonging to the EC, the initialvalue of the grants is between 10 and 40 percent of the basesalary and is allocated to long-term compensation within thelong-term incentive plan. For EC members, the initial value ofthe grants is between 70 and 100 percent, the latter of whichapplies to the CEO only. The reference price of the grants islinked to the average share price during the five days followingthe release of the respective full year results (2011: CHF 18.42;2010: CHF 28.00).

In the case of a change of control, all restricted share units ofthe participant shall immediately vest. The PSUP Plan is revie-wed annually.

Terms of awards grant 2010 and 2011

Vesting is subject to a service period and the outperformanceof the Nobel Biocare (NOBN) share price relative to the SwissLeader Index (SLI) for the vesting period. If this relative out-performance is achieved, each share unit will be convertedinto a predetermined amount of Nobel Biocare shares at ves-ting date. Should NOBN share price underperform the SLI atthe end of each vesting period, no NOBN shares will be allo-cated at conversion date. Should the NOBN share outperformthe SLI by 20 percent or more at the end of each vestingperiod, each share unit may receive 2 NOBN shares at con-version date. Between 0 percent relative performance and 20percent outperformance, the number of NOBN shares allo-cated at vesting date will be between 1 and 2 and is calculated

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Notes to the parent company accounts 161

as a linear function of the NOBN outperformance against theSLI. One third (tranche 1) of the allocated share units vestafter one year (28 February), one third (tranche 2) after twoyears (28 February) and the remaining third (tranche 3) afterthree years (28 February).

Tranche 1 of the PSUP 2010 was forfeited on 28 February2011.

Terms of awards grant 2009

Vesting is subject to a three-year service period lasting until30 April 2012 and to the outperformance of the Nobel Biocare(NOBN) share price relative to the Swiss Market Index (SMI)for the period. If this relative outperformance is achieved,each share unit will be converted into a predeterminedamount of Nobel Biocare shares at the vesting date. Shouldthe NOBN share outperform the SMI by 40 percent or aboveat the end of the defined 3-year period, each share unit reflectsthe right to receive 2 NOBN shares at vesting date. Between0 percent relative performance and 40 percent outperfor-mance, the number of NOBN shares allocated at vesting dateis calculated as a linear function of the NOBN outperformanceagainst SMI.

b) Performance Cash Bonus Plan (PCBP) – until 31 December 2011

This long-term incentive plan covered key position holderswithin country organizations. The plan was approved by theCEO and endorsed by the NCC.

Participants in the Performance Cash Bonus Plan are entitledto be rewarded on the basis of specific performance achie-vements over a three-year period. Performance will be mea-sured for the period from 2011 to 2013 by a combination ofGroup and country-specific KPIs.

For 2011, the financial Group KPIs were net sales and EBITgrowth; two additional financial KPIs for 2011 per countrywere determined by the Senior Vice President or Presidentand General Manager in charge of the respective region towhich the country organization belongs.

The value was between 10 and 20 percent of base salary andwas fully paid in cash in local currency. The NCC has decidedto discontinue the PCBP as per 2012.

Employee benefitsEmployee benefits are country-specific and are structured inaccordance with local practice, local legal requirements andcompetitive benchmarking. Nobel Biocare regularly reviews

its benefit coverage worldwide and assesses its programs inthis area with the support of selected vendors.

Responsibilities and methods of determining remunerationand compensation plansThe Board of Directors decides on the Board members’ remu-neration policies, as well as on the individual compensationplans based on the NCC’s proposals. The Vice Chairman pro-poses the remuneration of the Chairman of the Board. Whenthe remuneration of individual members of the Board is underdiscussion, the affected member abstains from voting.

In addition to proposing remuneration plans and policies, theNCC endorses the base salary and performance goals of theCEO as proposed by the Chairman. The CEO proposes thebase salaries and performance goals of EC members forapproval by the NCC. The NCC regularly informs the full Boardof Directors on the status of compensation.

Compensation of Executive Committee (EC) membersEC members take part in the PSUP. The fair value per unit wasmeasured based on a Monte Carlo simulation. Market condi-tions are taken into account when estimating the fair value ofthe instruments granted. Service conditions are not taken intoaccount for the grant date fair value calculation. Additionalinformation regarding the measurement of performanceshare unit grants is disclosed in note 18 of the consolidatedfinancial statements.

Except for two EC members, one being seconded from theUSA to Switzerland on a home-based approach and oneunder management service contract, EC members, includingthe CEO, are covered by the pension scheme applicable to allemployees with a Swiss employment contract.

Contract details and clauses on changes of controlThe CEO contract contains a six-month notice period. Theperiod of notice for all other EC members is up to six months,except one with a 12 month notice period. EC members wholeft Nobel Biocare in 2011 were released from some of theirduties during the termination period. They retained the rightto receive salary and variable compensation for the durationof the termination period. During 2011 a non-compete pay-ment for the former CEO Domenico Scala was settled. Addi-tional information is disclosed below in the table “Remune-ration of the Executive Committee members”.

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Nobel Biocare Annual Report 2011 — Financial reporting162

As of 31 December 2011, no changes of control clauses exis-ted within the employment contracts except the clause men-tioned under the PSUP.

Compensation of the Board of DirectorsThe Board compensation has been benchmarked against acarefully selected group of peer companies, based on datapublished by Ethos. Based on the benchmark comparison thetotal compensation of the Board of Directors has been adjus-ted to bring it closer to market practice.

The 2011 total compensation of the Board of Directors is divi-ded into cash and restricted shares. The cash portion beco-mes payable in equal installments April and October eachyear, applied pro rata temporis for each member of the Board,if appropriate. In 2011, an additional reimbursement betweenCHF 16’000 and CHF 20’000 is due to Board members whoparticipate in a committee, and an additional CHF 35’000 isgranted for the Audit Committee Chair.

The Board of Directors’ fees are not pensionable.

Members of the Board participate in a specific Board ofDirectors share plan. Shares were granted on 30 June 2011,and are blocked until 30 June 2016. For the related fair valuecalculation, please see note 18 of the consolidated financialstatements.

Each Board member received the equivalent of CHF 80’000in shares, i.e. 4’562 shares (converted into shares using thefive-day average closing share price from 6 June 2011 to 10June 2011. The former Chairman of the Board, who left NobelBiocare’s Board on 3 July 2011, received the equivalent ofCHF 250’000 in shares, i.e.14’255 shares. Rolf Watter wasappointed as the Chairman of the Board ad interim. In thisfunction he received an additional allocation of CHF 127’500in shares, i.e. 7’270 shares.

As publicly announced on 4 July 2011, Michel Orsinger willbe proposed as Chairman of the Board at the Annual GeneralShareholders’ Meeting 2012. Therefore, he attended Boardmeetings as a guest and provided advisory services. For ser-vices to and attendance of Board meetings, he received 3’421shares and a cash payment in the amount of CHF 26’250. Therestricted shares are blocked until 30 June 2016.

Members of the Executive Committee as of 31 December 2011

Name Position Appointed

Richard Laube 2 Chief Executive Officer 2011

Dirk W. Kirsten Chief Financial Officer 2008

Hans Geiselhöringer 3 Executive Vice President Global Research, Products and Development 2010

Rolf Melker Nilsson 4 Senior Vice President Global Sales and Customer Development 2011

Petra Rumpf Senior Vice President Business Development and Strategic Planning 2007

Jörg von Manger-Koenig Senior Vice President Legal & Compliance 2011

Nicolas Weidmann Senior Vice President Global Communications 2007

Ernst Zaengerle Executive Vice President Global Operations 2009

1 Domenico Scala was Chief Executive Officer until 31 March 2011 and advisory until 31 October 2011. Alexander Ochsner (Senior Vive President and Manager Europe, Mid-dle East and Africa), Hans Schmotzer (Executive Vice President Research and Development) and Michael Glenn Thompson (Senior Vice President and General ManagerAsia/Pacific) were members of the Executive Committee until 30 November 2011.

2 CEO as of 1 April 2011.3 Executive Vice President Marketing and Products until 30 September 2011; Executive Vice President Global Research, Products and Development from 30 November 2011.

Hans Geiselhöringer has been under management service contract since 10 February 2010.4 President & General Manager North America until 11 August 2011; seconded to Switzerland as of 12 August 2011.

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Notes to the parent company accounts 163

Remuneration of the Executive Committee members for the years ended 31 December

in CHF ‘000 Richard Laube, CEO Other Executive Domenico Scala 1 TotalCommittee members

2011 2010 2011 2010 2011 2010 2011 2010

Fixed compensation 665 – 4’492 4’427 671 800 5’828 5’227

Variable compensation 2 180 – 693 1’127 667 384 1’540 1’511

Fair value of performance share units 3 594 – 2’885 1’992 – 655 3’479 2’647

Pension expense and social security costs 72 – 329 766 191 219 592 985

Other benefits 4 16 – 250 370 – 39 266 409

Costs related to International assignment – – 509 5 – – – 509 –

Non-compete settlement – – – – 1’600 – 1’600 –

Fair value of options – – – – – – – –

Total 1’527 – 9’158 8’682 3’129 2’097 13’814 10’779

1 Highest total compensation.2 Variable compensation is on an accrual basis.3 Based on the income statement charge 2011 for the PSUP 2009, 2010 and 2011.4 Other benefits for the year 2011 refer to expense allowances; for the year 2010 it includes car allowances and tax equalization payments.5 Includes costs of relocation, housing and international school fees as well as tax allowances.

In 2011, the Group changed the split between financial andindividual KPIs within the short-term incentive scheme for ECmembers. The financial KPIs now account for 70 percent ofthe short-term variable compensation (50 percent GroupKPIs, 20 percent regional or functional KPIs). This impacts the

variable compensation 2011 in comparison with 2010. Inaddition, the new composition of the EC has an impact onthe pension expenses and social security costs, as thoseschemes are not comparable in costs between the differentcountries of employment.

Number of performance share units, shares and stock options held as of 31 December 2011

Number 1 Number 2 Per- Per- Per- Per- Per- Per- Per- Per- Stock of shares of per- formance formance formance formance formance formance formance formance option

held formance share units share units share units share units share units share units share units share units grant 2007share units grant granted grant granted grant granted grant granted

held 2011 2011 2010 2010 2009 2009 2008 2008forfeited forfeited forfeited forfeited

Richard Laube 110’000 32’573 32’573 – – – – – – – –

Dirk W. Kirsten 2’600 45’254 18’925 – 11’700 3’900 18’529 – 5’138 5’138 –

Hans Geiselhöringer 3 – 28’502 28’502 – – – – – – – –

Rolf Melker Nilsson – 12’512 10’608 – 2’856 952 – – – – –

Petra Rumpf 7’900 48’544 19’571 – 12’875 4’292 20’390 – 6’031 6’031 35’000

Jörg von Manger-Koenig – 26’001 13’377 – 5’610 1’870 8’884 – – – 10’000

Nicolas Weidmann – 31’205 12’921 – 8’125 2’709 12’868 – 4’757 4’757 25’000

Ernst Zaengerle 4’200 23’234 16’151 – 10’625 3’542 – – – – –

Alexander Ochsner 4 500 34’920 14’091 – 9’270 3’090 14’649 – 2’257 2’257 –

Michael G. Thompson 4 – 11’325 11’325 – – – – – – – –

Domenico Scala 5 29’280 55’812 – – 28’571 9’524 36’765 – 13’593 13’593 10’000

Hans Schmotzer 4 – 31’343 12’636 – 8’313 2’771 13’165 – 2’637 2’637 –

1 Includes shares acquired in the market.2 Excluding performance share units which forfeited.3 Under management service contract.4 As of 30 November 2011.5 As of 31 March 2011.

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Nobel Biocare Annual Report 2011 — Financial reporting164

Number of performance share units, shares and stock options held as of 31 December 2010

Number of 1 Number of 2 Performance Performance Performance Stock option shares held performance share units share units share units grant 2007

share units held grant 2010 grant 2009 grant 2008

Dirk Kirsten 3 1’600 35’367 11’700 18’529 5’138 –

Hans Geiselhöringer 4 – – – – – –

Petra Rumpf 5 7’900 39’296 12’875 20’390 6’031 35’000

Nicolas Weidmann – 25’750 8’125 12’868 4’757 25’000

Ernst Zaengerle 4’200 7 10’625 10’625 – – –

Alexander Ochsner 500 26’176 9’270 14’649 2’257 –

Thomas M. Olsen 39’890 23’431 7’252 12’192 3’987 75’000

Robert Gottlander 6 47’160 32’168 10’150 16’075 5’943 75’000

Bill Ryan – 12’816 7’615 5’201 – –

Domenico Scala 29’280 78’929 28’571 36’765 13’593 10’000

Hans Schmotzer – 24’115 8’313 13’165 2’637 –

Total 130’530 308’673 114’496 149’834 44’343 220’000

1 Includes shares acquired in the market.2 Includes performance share units received in 2010, 2009 and 2008.3 Amounts do not include CHF 50 k in Nobel Biocare convertible bonds acquired in the market.4 Under management service contract.5 Amounts do not include CHF 500 k in Nobel Biocare convertible bonds acquired in the market.6 Robert Gottlander was a member of the Executive Committee until 25 October 2010.7 Including 1,000 restricted shares.

Members of the Board elected by the General Meeting on 25 March 2011

Name Nationality Position First elected Elected until

Rolf Watter 2 Swiss Chairman a.i. 2007 2012

Raymund Breu Swiss Vice Chairman a.i. 2010 2012

Daniela Bosshardt-Hengartner Swiss Member 2010 2012

Stig G. Eriksson Finnish Member 2006 2012

Edgar Fluri Swiss Member 2008 2012

Robert Lilja Swedish Member 2005 2012

Oern Stuge Norwegian Member 2010 2012

Heino von Prondzynski 1 German Chairman 2010 2012

1 Chairman until 3 July 2011.2 Chairman ad interim since 3 July 2011.

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Notes to the parent company accounts 165

Remuneration of the Board of Directors for the years ended 31 December

in CHF ‘000 2011 2010

Cash 1 Fair value of 2 Total Cash 1 Fair value of Totalrestricted restricted

shares shares

Rolf Watter 3 180 193 373 83 36 119

Raymund Breu 109 74 183 62 36 98

Daniela Bosshardt-Hengartner 108 74 182 62 36 98

Stig G. Eriksson 95 74 169 83 36 119

Edgar Fluri 114 74 188 97 36 133

Robert Lilja 98 74 172 83 36 119

Oern Stuge 95 74 169 62 36 98

Heino von Prondzynski 4 194 232 426 88 53 141

Rolf Soiron 5 – – – 25 – 25

Antoine Firmenich 6 40 – 40 83 36 119

Jane Royston 5 – – – 21 – 21

1 Cash compensation is on an accrual basis, including social security contributions.2 Based on the income statement charge 2011 as disclosed in note 18 of the consolidated financial statements.3 Chairman ad interim since 3 July 2011.4 Chairman until 3 July 2011.5 Compensation based on period of service ending 25 March 2010.6 Compensation based on period of service ending 31 March 2011.

Based on the benchmark comparison the total compensationof the Board of Directors has been adjusted to bring it closer

to market practice.

Number of shares held as of 31 December 2011

Name Number of 1 Number of Restricted shares Restricted sharesunrestricted restricted grant 2011 grant 2010shares held shares held

Rolf Watter 2 53’500 13’832 11’832 2’000

Raymund Breu 70’000 6’562 4’562 2’000

Daniela Bosshardt-Hengartner – 6’562 4’562 2’000

Stig G. Eriksson 4’250 6’562 4’562 2’000

Edgar Fluri 16’500 6’562 4’562 2’000

Robert Lilja 18’375 6’562 4’562 2’000

Oern Stuge – 6’562 4’562 2’000

Antoine Firmenich 1’000 3’000 3 – 2’000

Heino von Prondzynski 4 37’800 17’255 14’255 3’000

1 Includes shares acquired in the market.2 Chairman ad interim since 3 July 2011.3 Number of restricted shares held as of 31 March 2011 (including grants 2010 and 2009).4 Chairman until 3 July 2011; numbers as of 3 July 2011.

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Nobel Biocare Annual Report 2011 — Financial reporting166

Number of shares held as of 31 December 2010

Name Number of 1 Number of Restricted shares Restricted sharesunrestricted restricted grant 2010 grant 2009shares held shares held

Rolf Watter 26’200 3’000 2’000 1’000

Raymund Breu 2 20’000 2’000 2’000 –

Daniela Bosshardt-Hengartner 2 – 2’000 2’000 –

Stig G. Eriksson 3’250 3’000 2’000 1’000

Edgar Fluri 8’500 3’000 2’000 1’000

Robert Lilja 17’375 3’000 2’000 1’000

Oern Stuge 2 – 2’000 2’000 –

Heino von Prondzynski 2 26’800 3’000 3’000 –

Rolf Soiron 3 434’185 4 3’000 5 – 1’500

Antoine Firmenich 1’000 3’000 2’000 1’000

Jane Royston 3 – 4 2’000 – 1’000

1 Includes shares acquired in the market.2 Period of service starting 25 March 2010.3 Period of service ending 25 March 2010.4 Number of unrestricted shares held as of 25 March 2010.5 Number of restricted shares held as of 25 March 2010 (including grant 2009 and 2008).

13 Major shareholders

The Board of Directors is aware of the following major shareholders as of 31 December:

2011 % 2010 %

Government of Singapore (SG) 6’795’557 5.5 not disclosed <3

Governance for Owners LLP (UK) 3’909’643 3.2 not disclosed <3

Silchester Internaltional Investors LLP (UK) 3’903’125 3.2 not disclosed <3

Invesco Limitied (USA) 3’770’555 3.0 not disclosed <3

Nobel Biocare Holding AG and Subsidiaries 1 1’303’120 1.1 999’246 0.8

Artio Global Management LLC not disclosed <3 3’852’452 3.1

Others 104’102’530 84.1 118’932’832 96.1

Total 123’784’530 100.0 123’784’530 100.0

1 In 2010 Nobel Biocare Holding AG held in addition 3,366,245 call options, representing 2.7% shareholdings.

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Notes to the parent company accounts 167

14Risk assessment

As part of the Enterprise Risk Management (ERM) Systemthe Company has systematically analyzed, updated and docu-mented its risk assessment with regard to risks that couldhave a material effect on the financial statements.

Risks are reported to the Executive Committee and the Boardof Directors at least once a year. Key risks and significant inci-dents are discussed in all Executive Committee, Board, aswell as in local management team meetings. The Board ofDirectors of Nobel Biocare last approved the Risk Assessmentin their Board meeting held on 16 December 2011.

The Company has implemented a risk based Internal ControlsSystem (ICS) based on the Committee of Sponsoring Organi-zations (COSO) framework. The controls are designed andtested to provide reasonable assurance regarding the reliabi-lity of financial reporting and the preparation of financial state-ments in accordance with the International Financial Repor-ting Standards (IFRS) and with Swiss law. The AuditCommittee monitors the quality of the executed controls andprocesses, as well as the design of the ICS.

15Subsequent events

There have been no material events between 31 December2011 and the date of authorization that would require adjust-

ments to the financial statements or disclosure.

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Nobel Biocare Annual Report 2011 — Financial reporting168

Appropriation of available earnings.

Appropriation of available earnings

in CHF 2011 2010

Proposal of the Resolution of theBoard of Directors Annual General Meeting

Available earnings at the disposal of the Annual General Meeting 410’755’001 535’832’838

Carryforward 410’755’001 535’832’838

Allocation from capital contribution to free reserves 18’372’212 43’324’586

Withholding tax free distribution as dividend of CHF 0.15 (2011) per registered share out of free reserves –18’372’212 –43’324’586

Carryforward

If the Annual General Meeting approves the above proposalfrom the Board of Directors, the dividend of CHF 0.15 perregistered share will be paid out of reserves withoutdeduction of withholding tax as of 5 April 2012. The Companywill not pay a dividend on treasury shares held by Nobel Bio-care Holding AG or one of its subsidiaries.

Dividends on staff options, which may be exercised beforethe date of dividend payment and totaling 247’620 shares,could lead to additional dividend payments and allocationfrom capital contribution to free reserves of CHF 37’143.

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Notes to the parent company accounts 169

Report of the statutory auditor.

Report of the Statutory Auditor on the FinancialStatements to the General Meeting of Shareholders ofNobel Biocare Holding AG, KlotenAs statutory auditor, we have audited the accompanyingfinancial statements of Nobel Biocare Holding AG, whichcomprise the balance sheet, income statement and notes onpages 152 to 168 for the year ended 31 December 2011.

Board of Directors’ ResponsibilityThe board of directors is responsible for the preparation ofthe financial statements in accordance with the requirementsof Swiss law and the company’s articles of incorporation. Thisresponsibility includes designing, implementing and maintai-ning an internal control system relevant to the preparation offinancial statements that are free from material misstatement,whether due to fraud or error. The board of directors is furtherresponsible for selecting and applying appropriate accoun-ting policies and making accounting estimates that are rea-sonable in the circumstances.

Auditor’s ResponsibilityOur responsibility is to express an opinion on these financialstatements based on our audit. We conducted our audit inaccordance with Swiss law and Swiss Auditing Standards.Those standards require that we plan and perform the auditto obtain reasonable assurance whether the financial state-ments are free from material misstatement.

An audit involves performing procedures to obtain audit evi-dence about the amounts and disclosures in the financialstatements. The procedures selected depend on the auditor’sjudgment, including the assessment of the risks of materialmisstatement of the financial statements, whether due tofraud or error. In making those risk assessments, the auditorconsiders the internal control system relevant to the entity’spreparation of the financial statements in order to design auditprocedures that are appropriate in the circumstances, but notfor the purpose of expressing an opinion on the effectivenessof the entity’s internal control system. An audit also includes

evaluating the appropriateness of the accounting policiesused and the reasonableness of accounting estimates made,as well as evaluating the overall presentation of the financialstatements. We believe that the audit evidence we have obtai-ned is sufficient and appropriate to provide a basis for ouraudit opinion.

OpinionIn our opinion, the financial statements for the year ended 31December 2011 comply with Swiss law and the company’sarticles of incorporation.

Report on Other Legal RequirementsWe confirm that we meet the legal requirements on licensingaccording to the Auditor Oversight Act (AOA) and indepen-dence (article 728 CO and article 11 AOA) and that there areno circumstances incompatible with our independence.

In accordance with article 728a paragraph 1 item 3 CO andSwiss Auditing Standard 890, we confirm that an internal con-trol system exists, which has been designed for the prepara-tion of financial statements according to the instructions ofthe board of directors.

We further confirm that the proposed appropriation of avai-lable earnings complies with Swiss law and the company’sarticles of incorporation. We recommend that the financialstatements submitted to you be approved.

KPMG AG

Rolf Hauenstein Peter StösselLicensed Audit Expert Licensed Audit ExpertAuditor in Charge

Zurich, 8 February 2012

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Share information.

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Nobel Biocare Annual Report 2011 — Share information172

The Nobel Biocare share.

Share information

Listing SIX Swiss Exchange

Security number 003785164

ISIN number CH0037851646

Reuters NOBN.VX

Bloomberg NOBN VX

Further capital and share-related information may be foundin the Corporate Governance section.

Dividend policy and proposalNobel Biocare’s dividend policy is based on the capitalmanagement principles as outlined on page 60 and shouldreflect the Group’s long-term financial development, takinginto account the need for investments and the expected eco-nomic fluctuations in particular years. It is designed to main-tain attractive dividend yields for investors and an affordablepayout ratio of between 35 percent and 45 percent (calculatedas dividend in percentage of available profit for the year) as ageneral target.

For 2011, the Board of Directors proposes a dividend of CHF0.15 (2010: CHF 0.35). The proposed dividend for the 2011financial year is equivalent to 38 percent of profit after tax(2010: 75 percent).

Share trends and turnover

2011 2010

Share price at year-end CHF 10.92 CHF 17.63

Market value CHF 1’352 mn CHF 2’182 mn

Variance –38.1% –49.3%

All-year high CHF 20.78 CHF 36.15

Date 16 Feb 2011 04 Jan 2010

All-year low CHF 7.76 CHF 15.20

Date 23 Sep 2011 03 Nov 2010

Trading volume (shares) 293.0 mn 303.0 mn

Average per day 1’153’724 1’192’882

The analysts listed on page 174 follow the Nobel Biocareshare. Please note that any opinions, estimates or forecastsregarding Nobel Biocare’s performance made by these ana-lysts are theirs alone and do not represent opinions, forecastsor predictions of Nobel Biocare or its management. NobelBiocare does not by its reference above imply its endorse-ment of or concurrence with such information, conclusionsor recommendations.

doc_090154fa8050daed_10039_NobelBiocare 17.02.2012 18:41 Page 172

The Nobel Biocare share 173

Share data1

2011 2010 2009 2008 2007 2006

Shares on 31 December (number) 123’784’530 123’784’530 123’784’530 124’316’530 132’828’970 131’496’125

Average number of shares (number) 122’775’158 123’035’900 123’276’298 122’269’517 123’439’020 124’789’750

Shares after full conversion 2 (number) 149’032’150 149’032’150 149’032’620 124’564’150 133’086’590 133’086’590

Share price 31 December (CHF) 10.92 17.63 34.78 21.42 60.60 72.05

Market value 31 December (CHF mn) 1’352 2’182 4’305 2’663 8’049 9’474

Dividend per share 3 (CHF) 0.15 0.35 0.55 0.55 0.95 0.85

Yield 3 (%) 1.37 1.99 1.58 2.57 1.57 1.18

Dividend percentage 3 (%) 38 75 43 41 46 45

Basic earnings per share (EUR) 0.32 0.37 0.86 0.90 1.35 1.27

Diluted earnings per share (EUR) 0.32 0.37 0.85 0.90 1.34 1.26

Equity per share (EUR) 2.27 2.59 2.58 2.19 2.17 2.89

Equity per share after full conversion (EUR) 1.89 2.15 2.13 2.15 2.01 2.71

Cash flow from operations per share (EUR) 0.76 0.79 1.44 1.38 1.09 1.28

P/E ratio after tax 27 34 27 16 27 35

1 Numbers prior to 2008 adjusted to reflect 1:5 share split2 Includes conditional capital of 25’247’620 shares3 Proposed dividend for 2011

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Nobel Biocare Annual Report 2011 — Share information174

Analyst coverage

Firm Analyst E-Mail

Bank am Bellevue Gina Francioli gfr@bellevue.ch

Bank of America Merrill Lynch Ed Ridley-Day ed.ridleyday@baml.com

Bank Vontobel Daniel Jelovcan daniel.jelovcan@vontobel.ch

Berenberg Bank Tom Jones tom.jones@berenberg.de

Bryan, Garnier Mathieu Chabert mchabert@bryangarnier.com

BZ Bank Florian Gaiser florian.gaiser@bzbank.ch

Cheuvreux – –

Citigroup Jonathan Beake jonathan.beake@citi.com

Commerzbank Oliver Metzger oliver.metzger@commerzbank.com

Credit Suisse Christoph Gretler christoph.gretler@credit-suisse.com

Deutsche Bank Yi-Dan Wang yi-dan.wang@db.com

Equita SIM Fabio Fazzari f.fazzari@equitasim.it

Exane BNP Paribas Julien Dormois julien.dormois@exanebnpparibas.com

Goldman Sachs Veronika Dubajova veronika.dubajova@gs.com

Helvea Simon Götschmann sgoetschmann@helvea.com

J.P. Morgan Cazenove David Adlington david.adlington@jpmorgan.com

Jefferies International Ingeborg Oie ioie@jefferies.com

Kepler Capital Markets Maja Pataki maja.pataki@keplercm.com

MainFirst Bank Stefan Vollert stephan.vollert@mainfirst.com

Morgan Stanley Michael Jüngling michael.jungling@morganstanley.com

Morningstar Bill Buhr bill.buhr@morningstar.com

Nomura Martin Brunninger martin.brunninger@nomura.com

Northcoast Research Ed Snyder ed.snyder@northcoastresearch.com

Sanford C. Bernstein Lisa Clive lisa.clive@bernstein.com

Societe Generale Alex Kleban alex.kleban@sgcib.com

Standard & Poor’s Jacob Thrane jacob_thrane@standardandpoors.com

UBS Martin Wales martin.wales@ubs.com

Zürcher Kantonalbank Sibylle Bischofberger sibylle.bischofberger@zkb.ch

Contact information

Company address Nobel Biocare Holding AGP.O. Box, 8058 Zurich-Flughafen, SwitzerlandPhone +41 43 211 42 00, Fax +41 43 211 42 42 or +41 43 211 58 11E-mail investor.relations@nobelbiocare.comwww.nobelbiocare.com

Süha Demokan, Head of Investor RelationsPhone +41 43 211 42 30 or +41 79 430 81 46

Investor Relations E-mail suha.demokan@nobelbiocare.com

Nicolas Weidmann, Sr VP Global CommunicationsPhone +41 43 211 42 80 or +41 79 372 29 81

Media Relations E-mail nicolas.weidmann@nobelbiocare.com

doc_090154fa8050daed_10039_NobelBiocare 17.02.2012 18:41 Page 174

The Nobel Biocare share 175

10

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2007 2008 2009 2010 2011

2004 2005 2006 2007 2008 2009 2010 2011

Nobel Biocare

Swiss Market Index

Nobel Biocare

Swiss Market Index

Nobel Biocare

Swiss Market Index

Nobel Biocare vs. Swiss Market Index 2011 (in percent)

Nobel Biocare vs. Swiss Market Index since 5 years (in percent)

Nobel Biocare vs. Swiss Market Index since listing (in percent)

Jan 11 Apr 11 Jul 11 Oct 11 Dec 11

2004 2005 2006 2007 2008 2009 2010 2011

Nobel Biocare vs. Swiss Market Index since 5 years (in percent)

Nobel Biocare vs. Swiss Market Index since listing (in percent)

doc_090154fa8050daed_10039_NobelBiocare 17.02.2012 18:41 Page 175

Mahwah, USA

Québec, Canada

Zurich, SwitzerlandGlobal & EMEA headquarters

Stockholm, Sweden

Karlskoga, Sweden

Gothenburg, Sweden

Belfeld, Netherlands Tokyo, Japan

Mechelen, Belgium

Yorba Linda, USANorth America headquarters

Hong Kong, ChinaAsia/Pacific headquarters

Tel Aviv, Israel

Production standardized products Production individualized

NobelProcera products Innovation center Distribution center

Direct sales Indirect sales

Nobel Biocare worldwide.

176 Nobel Biocare Annual Report 2011– Addresses

BioCad Medical, Inc.750 Boulevard Du Parc-TechnologiqueQuébec, Québec G1P 4S3 CanadaPhone +1 418 683 8435Fax +1 418 263 2531

Nobel Biocare Procera Services, Inc.750 Boulevard Du Parc-TechnologiqueQuébec, Québec G1P 4S3 CanadaPhone +1 418 683 8435Fax +1 418 263 2531

MexicoNobel Biocare Mexico SA de CVBlvd. Manuel Avila Camacho No. 36Piso 11 int. 3, Lomas de Chapultepec11000 Mexico City, MexicoPhone +52 55 524 974 60Fax +52 55 554 072 77

USANobel Biocare USA, LLC22715 Savi Ranch ParkwayYorba Linda, California 92887 USAPhone +1 714 282 4800Fax +1 714 998 9236

Nobel Biocare Procera, LLC800 Corporate DriveMahwah, New Jersey 07430 USAPhone +1 201 529 7100Fax +1 201 828 9250

Asia/Pacific

AustraliaNobel Biocare Australia Pty LtdLevel 4, 7 Eden Park Drive2113 Macquarie Park, NSW, AustraliaPhone +61 2 8064 5100Fax +61 2 9888 5266

ChinaNobel Biocare Trading(Shanghai) Co. LtdNo. 137 Xian Xia Road, Room 801/806Sheng Gao International Building200051 Shanghai, ChinaPhone +86 21 5206 6655Fax +86 21 5206 0774

Headquarters

SwitzerlandNobel Biocare Holding AGP.O. Box8058 Zürich-Flughafen, SwitzerlandVisiting address: BalsbergBalz Zimmermann-Strasse 78302 Kloten, SwitzerlandPhone +41 43 211 42 00Fax +41 43 211 42 42

Africa

South AfricaNobel Biocare South Africa (Pty) LtdUnit E105, First Floor, Building 5,Yellow wood PlaceWoodmead Business Park,145 Western Services Road2157 Woodmead, South AfricaPhone +27 11 802 0112Fax +27 11 802 0120

Alpha-Bio Tec Dental Implants SAUnit E105, First Floor, Building 5,Yellow wood PlaceWoodmead Business Park,145 Western Services Road2157 Woodmead, South AfricaPhone +27 11 656 6504Fax +27 11 802 0120

Americas

BrazilNobel Biocare Brasil, Ltda.Rua Samuel Morse, 120–4º andar04576-060 Brooklin, São Paulo, BrazilPhone +55 11 5102 7000Fax +55 11 5102 7001

CanadaNobel Biocare Canada, Inc.9133 Leslie StreetUnit 100Richmond Hill, Ontario L4B 4N1CanadaPhone +1 905 762 3500Fax +1 905 762 3504

Nobel Biocare Annual Report 2011– Addresses

Hong KongNobel Biocare Asia Ltd14/F Cambridge House, Taikoo Place979 King’s RoadQuarry Bay, Hong KongPhone +852 2 845 12 66/14 12Fax +852 2 537 66 04

IndiaNobel Biocare India Pvt LtdFortune 2000, 103 A &B 1st Floor,C-WingBandra Kurla Complex, Bandra (East)400051 Mumbai, Maharashtra, IndiaPhone +91 22 6751 9999Fax +91 22 6751 9900

JapanNobel Biocare Japan K.K.8F Shinagawa Grand Central Tower2-16-4, Konan108-0075 Minato-Ku, Tokyo, JapanPhone +81 3 6717 6191Fax +81 3 6717 6176

Nobel Biocare Procera K.K.3-6-2 Akanehama275-0024 Narashino-shi, Chiba, JapanPhone +81 47 455 0171Fax +81 47 455 0181

KoreaNobel Biocare Korea LtdNo. 3734, 37th Floor ASEM Tower, 159-1Samsung-dong, Kangnam-ku135-798, Seoul, KoreaPhone +822 6001 3799Fax +822 6001 3911

New ZealandNobel Biocare New Zealand Ltd. Level 4, 7 Eden Park Drive 2113 Macquarie Park, NSW, AustraliaPhone: +61 2 8064 5100 Fax, +61 2 9888 5266

SingaporeNobel Biocare Singapore Pte. Ltd400 Orchard Road No. 19–07Orchard Tower238875 Singapore, SingaporePhone +65 6737 7967Fax +65 6737 7801

TaiwanNobel Biocare Taiwan Co. Ltd.5 F, No. 68, Rueiguang RdNei Hu District114 Taipei, TaiwanPhone +886 2 2793 9933Fax +886 2 2793 9883

ThailandNobel Biocare (Thailand) Ltd87 M Thai Tower 23/F,All Seasons PlaceWireless Road, Lumpini, Pathumwan10330 Bangkok, ThailandPhone +662 627 9495Fax +662 627 9160

Europe

AustriaNobel Biocare Österreich GmbHLinke Wienzeile 244–2461150 Vienna, AustriaPhone +43 1 892 8990Fax +43 1 892 8990 21

BelgiumNobel Biocare Belgium NVIndustriezone MaalbeekRoekhout 171702 Groot-Bijgaarden, BelgiumPhone +32 2 467 41 70Fax +32 2 467 41 80

Medicim NVKardinaal Mercierplein 12800 Mechelen, BelgiumPhone +32 15 44 32 00Fax +32 15 44 32 09

DenmarkNobel Biocare Danmark A/SMilnervej 43lPostboks 594300 Hilleröd, DenmarkPhone +45 39 40 48 46Fax +45 39 40 42 25

FinlandNobel Biocare Suomi OyHandelshusgatan 7 A 5700930 Helsinki, FinlandPhone +358 9343 69 70Fax +358 9343 69 774

FranceNobel Biocare France S.A.SLes Mercuriales, Tour du Levant40, rue Jean Jaurès 93170 Bagnolet, FrancePhone +33 1 49 20 00 30Fax +33-1 49 20 00 33

GermanyNobel Biocare Deutschland GmbHStolberger Strasse 20050933 Cologne, GermanyPhone +49 221 500 850Fax +49 221 500 853 33

HungaryNobel Biocare Magyarország Kft.Bocskai út 134–1461113 Budapest, HungaryPhone +36 1 279 3379Fax +36 1 279 33 71

IrelandNobel Biocare UK Ltd7th Floor, Hume HouseBallsbridgeDublin 4, IrelandPhone + 44 208 756 3300Fax +44 (0)208 573 6740

ItalyNobel Biocare Italiana Srl Head Office Corso Europa, 2 20122 Milano – Italy Office Parco Tecnologico - ENERGY PARK Building 03 SUD - Via Monza, 7/A 20871 Vimercate (MB) – Italy Phone +39 039 683 61 Fax +39 039 689 94 74

LithuaniaUAB Nobel BiocareVytenio st. 9/AVivulskio g.2503113 Vilniaus, LithuaniaPhone +370 5 2683448Fax +370 5 2683374

NorwayNobel Biocare Norge ASBrevikbråteveien 9Postboks 1441556 Son, NorwayPhone +47 23 24 98 30Fax +47 23 24 98 31

PolandNobel Biocare Polska Sp. z o.o.ul. Walbrzyska 1102-739 Warszawa, PolandPhone +48 22 549 93 50Fax +48 22 549 93 51

PortugalNobel Biocare Portugal, S.AEdificio Tower PlazaRotunda Eng. Edgar Cardoso, 23,Piso 154400-676 Vila Nova de Gaia, PortugalPhone +351 22 374 73 50Fax +351 22 3709700

RussiaNobel Biocare Russia LLC Stanislavskogo str., 21, build. 2 109004, Moscow Phone +7 495 974 77 55 Fax +7 495 974 77 66

SpainNobel Biocare Ibérica SAJosep Plà, 2Torre B2, pl. 908019 Barcelona, SpainPhone +34 93 508 88 00Fax +34 93 508 88 01

SwedenNobel Biocare ABP.O. Box 5190Västra Hamngatan 1, 411 17 Göteborg40226 Gothenburg, SwedenPhone +46 31 818 800Fax +46 31 16 31 52

Production Stockholm:Nobel Biocare AB, ProceraVästbergavägen 2612630 Härgersten, SwedenPhone +46 8 578 540 00Fax +46 8 578 540 01

Production Karlskoga:Nobel Biocare ABDimbovägen 269151 Karlskoga, SwedenPhone +46 586 818 50Fax +46 586 365 60

SwitzerlandNobel Biocare AGBalsberg, Balz Zimmermann-Strasse 78302 Kloten, SwitzerlandPhone +41 43 211 32 50Fax +41 43 211 32 60

The NetherlandsNobel Biocare Nederland BVDe Molen 73994 DA Houten, NetherlandsPhone +31 30 635 49 49Fax +31 30 635 49 50

Nobel Biocare Distribution Center BVKozakkenberg 4Industrial Zone 77085951 DL Belfeld, NetherlandsPhone +31 77 47 57 420Fax +31 77 47 57 439

United KingdomNobel Biocare U.K. Limited, 3 Furzeground Way, Stockley Park Uxbridge Middlesex UB11 1EZ United Kingdom

Middle East

IsraelAlpha-Bio Tec Ltd.4 Tnufa St.P.O. Box 393649511 Petach Tikva, IsraelPhone +972 3 929 1000Fax + 972 3 922 8078

177

178 Nobel Biocare Annual Report 2011– Disclaimer

This Annual Report contains forward-looking statements. Forward-looking state-

ments are not based on historical facts but rather on management’s expectations

regarding future growth, results of operations, performance, future capital and other

expenditures (including the amount, nature and sources of funding thereof), com-

petitive advantages, business prospects and opportunities. Statements by Nobel

Biocare about its future plans and intentions, results, levels of activity, performance,

goals or achievements or other future events constitute forward-looking statements.

Wherever possible, words such as “anticipate”, “believe”, “expect”, “may”, “could”,

“will”, “potential”, “intend”, “estimate”, “should”, “plan”, “predict” or the negative

or other variations of these words, or similar words or phrases, have been used to

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Nobel Biocare management’s current beliefs and assumptions and are based on in-

formation currently available to them. Forward-looking statements involve significant

known and unknown risks, uncertainties and assumptions and other factors that may

cause Nobel Biocare actual results, levels of activity, performance or achievements to

differ materially from those implied by forward-looking statements. These factors

should be considered carefully and undue reliance should not be placed on the for-

ward-looking statements. Although the forward-looking statements are based upon

what Nobel Biocare’s management believes to be reasonable assumptions, Nobel

Biocare cannot assure investors that actual results will be consistent with these for-

ward-looking statements. Nobel Biocare undertakes no obligation to update forward-

looking statements to reflect events or circumstances that occur after the date the

statements were made.

Disclaimer.

Imprint

Nobel Biocare Holding AG

P.O. Box, 8058 Zürich-Flughafen, Switzerland

Phone +41 43 211 42 00

www.nobelbiocare.com

The binding version of the Nobel Biocare Annual Report 2011

is in English. A condensed version is available in German.

Concept and design: New Identity Ltd., Basel, Switzerland

Editorial: Nobel Biocare Corporate Communications

Photographer: Stephan Knecht, Zurich, Switzerland

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