Lars Rasmussen - Chief Executive Officer Anders Lonning-Skovgaard - Chief Financial Officer Kristian Villumsen - Executive Vice President, Chronic Care

Patrick Wood - Bank of America Michael Jungling - Morgan Stanley Annette Lykke - Handelsbanken Lisa Clive - Bernstein Veronika Dubajova - Goldman Sachs Yi-Dan Wang - Deutsche Bank Christian Ryom - Nordea Scott Bardo - Berenberg Ian Douglas-Pennant - UBS

Thank you. Good afternoon and welcome to our full year ‘17/18 conference call.

I am Lars Rasmussen, CEO of Coloplast and I am joined by CFO, Anders Lonning-Skovgaard and Executive Vice President of Chronic Care, Kristian Villumsen and our Investor Relations team. We will start with a short presentation by Anders, Kristian and myself and then open up for questions.

Please turn to Slide #3. As announced earlier today, I have chosen to step down as CEO of Coloplast and the Board of Directors have unanimously appointed Kristian Villumsen as the new CEO effective as of December 4.

Being part of Coloplast for the last 30 years and leading the company since 2008 has truly been a great honor and I am incredibly proud of all we have accomplished over the past 10 years to build one of the best performing and most profitable med-tech companies in the world. We have advanced the interest of all our stakeholders, including our employees, shareholders and most importantly the consumers with intimate healthcare needs that we serve.

The company and its employees have created excellent results and continues to deliver on the LEAD20 strategy turning Coloplast into a true consumer healthcare company and positioning the company for continued success. I am confident that Kristian, who has been a critical partner in running the company together with a broader executive management team and organization will take Coloplast to new and greater heights in the years to come.

Regarding the announcement to change the Board of Directors, I would like to thank our Chairman of the Board, Michael Pram Rasmussen for rewarding collaboration and for the vote of confidence 10 years ago. I am honored to be nominated as the new Chairman of the Board replacing Michael who has chosen to not stand for reelection at the Annual General Meeting on December 5.

I look forward to working with the board and the new management team to secure a strong platform for future growth. With respect to the new executive management team, the current structure with four members will continue and Coloplast has initiated a process to find Kristian Villumsen’s replacement as Executive Vice President of Chronic Care.

I would now like to hand over to Kristian before we go to today’s results.

Thank you, Lars. I would like to start off by saying that I am both humbled and honored to have been given the opportunity to assume the role as CEO for a company that I regard as strong and with a proven strategy and continued ability to year in and year out deliver above market growth.

I have had the opportunity to meet many investors and analysts at our Capital Market Day events over the years, but for those of you that aren’t familiar with my background, just a few remarks. I joined Coloplast in 2008 and I have held a number of senior management positions across the company since then.

And from 2014, when the executive management team was strengthened to include CFO and EVP, Anders Lonning-Skovgaard and EVP of Global Operations, Allan Rasmussen and myself, I became responsible for the day-to-day running of global marketing and the sales regions in Ostomy and Continence Care as well as the innovation pipeline for both of these areas. I have been part of developing the LEAD20 strategy together with the current executive management team and I have spent the past 2 years leading the implementation of the strategy in the Chronic Care business.

So the immediate path forward for me will be to focus on executing on our LEAD20 strategy and our ambition to accelerate growth. I look forward to meeting many of you in due course as I transition into this new role.

Before I give the word back to Lars, I would like to take this opportunity to thank him for strong leadership and mentorship over the last 10 years.

Thank you, Kristian. Now turning to today’s results, which I am very pleased with.

Coloplast delivered a strong fourth quarter of 8% organic growth and a 33% EBIT margin in fixed currencies. For the full year, Coloplast delivered organic growth of 8% and a 31% EBIT margin in fixed currencies.

In November last year, we changed our long-term guidance and stepped up investments to accelerate growth. We have now delivered six consecutive quarters of 8% growth in a market that is growing 4% to 5%.

This speaks to the solid underlying performance across the business and our ability to continue to take market shares. Growth continues to be driven by the launch of new innovative products like SenSura Mio Convex and SpeediCath Flex and strong commercial execution.

During 2017/18, we initiated several growth investments in U.S. Ostomy Emerging Markets, Continence Care in Japan, Australia and South Korea, Interventional Urology, and Wound Care.

We made investments in innovation focused on products, development as well as strengthening our competencies within preclinical medical marketing and market access. In 2018/19, we will continue to focus on investing for growth and investment and invest up to 2% of revenues in incremental growth investments.

In September, we hosted the Capital Markets Day at our headquarters in Humlebæk in Denmark focusing on innovation and commercial initiatives to drive growth. The day provided an opportunity to meet the strong management team that is executing on our strategy everyday.

For those of you who were unable to attend, the presentations and webcast are available on our website. Today, the Board of Directors approved an ordinary dividend of DKK11 amounting to a total of DKK16 per share in dividends this year, an increase of 7% compared to last year demonstrating the strength of our business and commitment to increasing shareholder value.

Our guidance for ‘18/19 is an organic revenue growth of 8% in fixed currencies and 8% to 9% in Danish kroner and an EBIT margin of 30% to 31% in fixed currencies and around 31% in Danish kroner. Anders will explain how we have arrived at this guidance.

Please turn to Slide #4. For the full year, our revenues grew 8% organically and 6% in Danish kroner and amounted to DKK16.5 billion.

Acquisitions of distribution companies contributed approximately 1 percentage point to reported growth. In Ostomy Care, organic growth was 9% for the full year and growth in Danish kroner was 6%.

For Q4 in isolation, organic growth was 9%. Growth continues to be driven by our SenSura Mio and Brava supporting the products in larger markets like the UK, Germany and U.S.

SenSura Mio Convex continues to contribute strongly to growth. Our SenSura and Assura/Alterna portfolio growth was driven by satisfactory performance in markets like China and Brazil.

As expected, we delivered on tenders in emerging markets in Q4 that we won in Q3, but did not deliver on. Growth for the full year was negatively impacted by the Greek price reform and we continue to receive positive feedback from healthcare professionals and users who have trialed our new ostomy appliance, SenSura Mio Concave.

We have now secured reimbursement and launched the new product portfolio in 10 countries. We will launch the new SenSura Mio Baby and Kids portfolio over the coming year defining a new standard for pediatric Ostomy Care products.

In Continence Care, organic growth was 8% for the full year and growth in Danish kroner was 7%. For Q4 in isolation, organic growth was 7%.

The SpeediCath ready-to-use intermittent catheter continues to drive growth, and especially the compact version has performed well in countries such as U.S., UK and France. So far, we have seen a limited impact from the expiry of SpeediCath ready-to-use patent.

On the contrary, we continue to see healthy growth on the standard portfolio in particular in the U.S. and emerging markets.

Growth for the full year was negatively impacted by the Greek price reform. SpeediCath Flex continues to contribute to growth in key markets like the UK, France and Germany and the launch of SpeediCath Flex Coudé Pro in the U.S.

has been well received and will be a key growth driver going forward. Our Conveen collecting device portfolio posted positive growth due to satisfactory growth in France and emerging markets.

And finally, sales growth for Peristeen products remained satisfactory driven by U.S., France and the UK. In Interventional Urology, organic growth was 10% for the full year and growth in Danish kroner was 6%.

For Q4 in isolation, organic growth was 10%. The growth was primarily driven by sales of Titan penile implants in the U.S.

We see a satisfactory return on the last sales investments that we made into the U.S. Urology business last year and continue to invest this year.

Our endourology business saw satisfactory growth in especially France and Germany. In Wound & Skin Care, organic growth was 3% for the full year and growth in Danish kroner was flat.

Organic growth for Wound Care in isolation was 5% for the full year. For Q4, organic growth for the total business area was 4% and for Wound Care in isolation, it was 6%.

The growth in Wound Care was driven by stable growth in China and good growth across our European markets driven by this Biatain Silicone portfolio. The newly launched Biatain Silicone Sizes & Shapes portfolio contributed meaningfully to growth.

Overall, for the full year, the Greek price reform had a large negative impact on growth. The U.S.

Skin Care business detracted from growth this year in fourth quarter due to a high comparison base last year. For the full year, the growth in Skin Care was flat.

Contract Manufacturing of Compeed contributed negatively to growth in the first half of the year due to inventory reductions in connection to the sale of the Compeed brand from Johnson & Johnson to HRA Pharma. As expected, the DKK30 million negative impact in the first half was regained in the second half of the year.

Turning to our geographical segments, we saw organic growth of 5% for the full year and 6% in Q4 in our European markets. The growth continues to be satisfactory across the portfolio of countries and in particular, in key markets like the UK and France.

Organic revenue growth in other developed markets was 11% for the full year and 7% in Q4. The U.S.

Chronic Care business posted double-digit growth for the full year driven by new product launches and the continued upgrade of the catheter market to hydrophilic. Growth in Q4 was negatively impacted by a difficult comparison period for U.S.

Skin Care. Growth rates in Japan and Australia were – remained very satisfactory and growth in the U.S.

for the full year was positively impacted by inventory reductions of DKK70 million in Q1 last year. Revenue in emerging markets grew organically by 14% for the full year and 14% in Q4.

Markets like China, Brazil and Middle East continue to deliver very satisfactory performance. A number of smaller markets that we have recently invested in, for example, Poland and India also delivered strong performance and growth for the full year was negatively impacted by the Greek price reform.

As mentioned earlier, we won several tenders in Q3 that we deliver on in Q4 in primarily Ostomy Care. With this, I will now hand over to Anders.

Thank you, Lars and good afternoon everyone. Before I go through the results, I would like to say thank you for Lars for the strong leadership and good collaboration.

I would also like to say that I am excited that Kristian has been selected as the future CEO and I am looking forward to continuing to work with Kristian in his new capacity. Reported revenue for the full year increased by DKK921 million or 6% compared to the same period last year.

Most of the growth was driven by organic growth, which contributed DKK1.2 billion or 8% to reported revenue. Acquisitions contributed DKK185 million or 1% to reported revenue.

Foreign exchange rates had a significant negative impact of DKK584 million or 4 percentage points on reported revenue, primarily due to the depreciation of the U.S. dollar and Argentinian pesos against the Danish kroner.

The Argentinian economy is now defined as hyperinflationary and therefore Coloplast will apply hyperinflationary accounting principles to its Argentinian subsidiary, which represented 0.7% of revenues in ‘17/18 with effect from Q4. The depreciation of the Argentinian peso had a negative impact of around DKK120 million for the full year, of which DKK45 million relates to the application of other inflationary accounting principles and this included in the reported growth for Q4.

Reported revenue growth was positively impacted by the DKK 90 million one-off revenue adjustment to the U.S. Department of Veterans Affairs in our third quarter last year.

The matter did not affect organic growth for the year. Overall, for the full year, the Greek price reform implemented in October last year in Ostomy Care, Continence Care and Wound Care had a negative impact of around DKK75 million.

Please turn to Slide 6. Gross profit was up by 5% for the full year to around DKK11 billion.

This equals a gross margin of 67% compared to 68% last year. FX had a negative impact of 20 basis points on the gross margin.

Fixed currencies and adjusted for the DKK90 million Veterans Affairs payment in Q3 last year, the full year gross margin was flat compared to last year at around 68%. The gross margin was positively impacted by improvements in production efficiency at our volume sites and the relocation of SenSura Mio and Biatain Silicone to Hungary.

The gross margin was negatively impacted by product mix due to the launch of new products, where the production economy is not yet fully optimized. In Q4, we had an additional DKK20 million in restructuring costs related to the reduction of employee, production employees in Denmark bringing the full year amount to DKK50 million versus DKK20 million last year.

As mentioned last quarter, we have accelerated the closure of the Thisted factory in Denmark, resulting in an increase in restructuring cost this year. Distribution to sales ratio came in at 29% compared to 28% last year.

The 8% increase is in line with our long-term guidance of increased investments to drive further growth over the next couple of years. The clear majority of the new incremental investment cases for this financial year were approved in Q1 across our business areas and regions.

Overall, new investments remain on track and we have seen a return on some of these investments already. The admin to sales ratio came in at 4% of sales on par with the recent trend.

The R&D to sales ratio came in at 4% of sales, in line with last year. 11% increase in R&D costs reflects a higher general activity level.

Net operating income amounted to DKK39 million compared to DKK21 million last year, the increase was mainly due to non-recurring income from a patent settlement in interventional urology in Q1. For the full year, our operating profit in fixed currencies increased by 4%, corresponding to an EBIT margin of 31%.

The numbers are adjusted for the DKK90 million Veterans Affairs payment in Q3 last year. Natural currencies and adjusted for the Veterans Affairs payments, the development in operating profit was flat, corresponding to an EBIT margin of 31%.

Operating cash flow amounted to DKK4.4 billion compared to DKK3.3 billion last year. The increase was primarily explained by higher mesh payments last year compared to this year.

Total mesh payments for the year – for the full year amounted to DKK0.5 billion. Total mesh payments to-date amounted to DKK4.7 billion.

Cash flow from investing activities was impacted by the site expansion in Nyírbátor in Hungary and the acquisition of a plot of land in Costa Rica as well as capacity expansion in machines to produce new and existing products. Investments in intangible assets, property, plant and equipment amounted to DKK669 million for the full year.

CapEx to sales amounted to 4%. Adjusted for payments made in connection with the mesh litigation and acquisitions including Comfort Medical and Lilial, the free cash flow amounted to approximately DKK4.1 billion, which was approximately the same level as last year.

Our cash conversion rate, calculated as 12-months trailing average was 99%. Net working capital amounted to 23% of sales compared to 25% at the start of the year.

Full year return on invested capital after tax before special items was 44% against 47% last year. With respect to the mesh litigation in the U.S., we have settled more than 95% of the known cases.

We still view the provision as sufficient and we are in the final phase of the mesh litigation. In ‘18, ‘19, we expect to pay out the remaining DKK500 million of the – in total DKK5.25 billion provision.

Please turn to Slide 7. For ‘18, ‘19, we expect revenues to grow around 8% organically in fixed currencies and 8% to 9% in Danish kroner.

Acquisitions are expected to contribute 0.4 percentage point to reported growth. Our guidance assumes stable growth trends across our regions as well as a continued positive impact from new product launches and commercial investments.

Our guidance assumes an annual negative price pressure of up to 1 percentage point. As highlighted in previous quarters, a reimbursement review for Ostomy Care and Continence Care is currently underway in France.

The impact and timing of the proposed cut is still uncertain, but we currently expect that the impact will be in the second half of the financial year. We also expect a smaller reform in Switzerland across all businesses – business areas and the pricing pressure among health insurance companies in Holland.

The guidance in Danish kroner is impacted by the appreciation of the U.S. dollar against the Danish kroner.

The currency impact is based on spot rates as of October 30, 2018. For ‘18, ‘19, we expect an EBIT margin of 30% to 31% in fixed currencies and around 31% in Danish kroner.

The EBIT guidance in Danish kroner is impacted by the appreciation of the U.S. dollar and the depreciation of the Hungarian forint against the Danish kroner based on spot rates as of October 30, 2018.

On our operating expenses, we expect broadly stable trends into ‘18, ‘19. We will again invest up to 2% of sales in the incremental investments into innovation, market access and sales and marketing initiatives in the UK, Emerging Markets and the U.S.

across all business areas. We will also invest to ensure compliance with the EU’s new medical device regulation by 2020.

Most of the investments will be initiated in Q1, hence I expect the quality phase similar to last year. High growth from our new product launches still means pressure on the gross margin.

But as previously communicated, we continued to relocate manufacturing out of Denmark to Hungary. And we will close the factory in Thisted and reduce the number of production workers in Denmark by approximately 200 people in ‘18, ‘19.

We expect restructuring cost of approximately DKK25 million in ‘18, ‘19 compared to DKK50 million in ‘17, ‘18. We expect higher single-digit wage inflation in Hungary in ‘18, ‘19.

Overall, our expectation is that the gross margin in fixed currencies will be in line with ‘17, ‘18. The Global Operations Plan IV is on track and it is still expected to deliver an EBIT margin improvement of 100 basis points in ‘19, ‘20 and 150 basis points in ‘20, ‘21.

We currently expect our net financials to end the financial year 2018, ‘19 at minus DKK75 million, primarily due to hedging losses on U.S. dollar against Danish kroner.

CapEx guidance for ‘18, ‘19 is expected to be around DKK750 million and is driven especially by investments in more capacity for new and existing products as well as factory expansion in Costa Rica and a new distribution center in UK. Finally, our effective tax rate is expected to be around 23%.

This concludes our presentation. Thank you very much.

Operator, we are now ready to take questions.

Perfect. Thank you very much for taking my questions.

I have three please, the first would be just around the general appetite for M&A, given your balance sheet and a lot of the assets, both because of what the market has done, but also individual assets have clearly become quite dramatically cheaper of late, I will be curious to see if you have any sort of strategic review or intent change on that side. And the second one is really on the Wound & Skin Care business, Q4 the margins stepped up quite handily year-on-year, which was very different from first three quarters of the year, is there anything we should be reading into the margin inflection in the fourth quarter and in general it would be helpful to gather some views you have on the Wound Care market, given obviously you have some competitors out there cutting price, so it would be helpful to understand how that will work?

Thank you.

Alright. Let me start out by saying by the way that Kristian did present at the beginning of the meeting, but he will not take further questions today.

He will take questions in connection to the Q1 results, when he assumes his new role in December. And then back to your questions, the – you are right we have a good balance sheet.

We also have a strong leadership team in place, a very experienced leadership team in place. So we think we have the fundamentals there if the right opportunities comes up.

We have quite consistently pointed to the fact that if we were to strengthen our business, it would be in Wound Care and it would also be on distribution on the Chronic Care side. So that would be what you would be looking for.

But we of course do not have any plans. So this is just a general comment that we have the balance sheet and the organization needed should opportunities exist.

And then on the Wound & Skin Care side, you are right we are stepping up and seeing nice results. We had a quite negative impact for the full year of the Greek healthcare reform.

So this basically speaks to the fact that when you are looking at Europe as – in general, we have nice performance. We also have good performance in Emerging Markets, Northeast and China.

And then we are waiting to create a stronger platform in the U.S. And then when it comes to the profitability side, I don’t know if you would like to add anything further to that, Anders.

What I can add is that that you are right, we had a stronger Q4 profitability compared to the previous quarters. There are a couple of reasons for that.

One reason is the Greek, that impacting – the Wound Care profitability quite negatively in the first quarters of the year. And then secondly, we had an okay quarter in China and then also a good quarter related to our Compeed business that is also part of the Wound & Skin Care franchise.

So, that’s the main reasons.

Very helpful. Thank you.

Great. Thank you.

I would like to ask three please. Firstly a question about sort of the CEO change and the management premium, Lars, since you became CEO, I guess through excellent execution, you have added material sort of valuation premium to Coloplast.

How do you safeguard this premium as the future Chairman, how involved will you be in the detail and the decision-making of the organization? Question number two is on gross margin and what drove the Q4 gross margin expansion for the group when for the previous three quarters, we saw significant declines and I am talking about the gross margin adjusted for restructuring charges, this fourth quarter just seems to be incredibly good compared to the first three quarters?

And question number three is on sales growth. In your guidance, you highlight that it’s 8% constant currency growth, but over the last 2 years, you have made acquisitions of about 1 percentage point.

Should this perhaps mean that the organic growth rate is going to be more like 7%, if this M&A type bolt-on stuff continues, i.e., is the organic growth rate below the 8% for the next fiscal year in your guidance? Thank you.

On the CEO change, I think it’s – maybe I should start with, what is it I mean, I have been CEO for 10 years and I would also like to have a change to do something else in my professional life. So I am looking at a professional career or professional board career, because I think that I am young enough for that still.

And I can do that at this point in time, because I think the leadership team across the board in Coloplast is really strong and Kristian was ready to step up to become CEO. So I think that the timing was very good.

And then as I was explaining that to my chairmanship, they then said – Michael Rasmussen said that he wanted to – they actually were having the same consideration, so whether I would be willing to take responsibility as Chairman of the Board. And for me, I would like to do that, but given that there was a board that 100% agreed, that would be a good idea and that the Board would discuss that without me and they would also discuss it with Kristian, if he could then see that role also, because there is a risk that when you have had a successful run that you would like to see that everything is going to be the same as it used to be.

But we have to be mindful that what we try to do with this company is to create more value every single year. And to create more value 5 years from now, I’d say, that we do all the things that we do today.

So the mandates that I go into this new role with is that we are going to create further value. And therefore, I expect changes to happen, of course.

I’m no longer in an operational role, so I will be in a board position. With my board colleagues, we will put all the pressure that we can on the Executive Management to deliver further growth and the profitability.

But that will be in that capacity. I will not be an acting Chairman of the Board, who will oversee or try to run out or run around in the company every single day, that’s not what is in the future.

I’m going to resume responsibility for a board and that’s basically it. When it comes to gross margin, would you like to add to that?

Yes. So in relation to the gross margin development in Q4, Michael, the main reason for the strong gross margin compared to the three previous quarters is that the leverage effect, because we have had a high absolute revenue in our fourth quarter, so the leverage effect on the fixed costs have been higher than the previous quarters.

And then we also had you can say lower impact from currencies. So, that’s the main reason.

And could you repeat the last question, please?

Yes. The last question is that your guidance for sales growth is in constant, so the 8% is in constant currency, but you don’t give us an organic growth number.

And given that you have made acquisitions for the group accounting to about 1%, I am just thinking whether the organic growth rate that you mean by 8% in constant currency is actually less.

The 8% is an organic number.

Okay, okay. So the acquisitions that you have made, they are not 1% in the past that comes on top of those, on top of the 8%?

So Michael, the way you should look at it, so our growth guidance for ‘18/19 is an organic growth of 8%, then we are expecting the acquisitions that is coming in with Q1 impact is around 0.4% and that gives us reported growth guidance in the level of 8% to 9%.

Okay, great. And may I quickly follow-up on the CEO change, you held your Capital Markets Day very recently and there was no mention of a transition process.

And I am just curious as to why that happened? And also why is this an indication perhaps that you have done this on a fairly short notice, because you are still looking for a successor for Kristian, if it was planned, wouldn’t you had a successor for Kristian already in the announcement today?

The way I understand this, Michael is that the day you decide that you are going to do this, you also inform the market. So when I mentioned to my Board of Directors that I wanted to step down as CEO, Chairmanship then said, would you consider to be Chairman of the Board?

And that part of it had to be discussed at the board operations because I only wanted to take it if it was 100% consent from the rest of the board members and therefore they needed to be together, which they were today. So, the final decision was made today at the board meeting and then we could inform the authorities.

Okay, alright. Thank you.

Thank you very much. I wondered if you could share a little bit more insight into the growth rate within Continence Care, if we look into the growth rate in Q4...

Into the growth rate for what?

For Continence Care. I wondered in the light of your launch in the U.S.

in May with the Coude Pro version of SpeediCath Flex as well as we can see in the UK you have a very solid growth rate in UK as well. I am just wondering what it takes to get you into a bit higher than the Q4 numbers of 7%.

And also should we expect the competitive landscape for Continence Care to be slightly different with ConvaTec launching also products into the market fairly soon? And are you expecting a lower growth rate?

In other words, I could also say are you expecting a lower growth rate for Continence Care than you do for Ostomy Care?

No, we are not expecting a lower growth for Continence Care than we do for Ostomy Care. We have some strong comps in Europe for the quarter that we compare against last year.

So, that’s the only thing that are different in this quarter. So in that sense, we do see that, that is going according to plan and the Pro launch is going really well.

So we actually, if anything expect the growth rate in the U.S. to be very strong going forward.

So, I see this as basically a comp issue in this quarter.

If I then follow-up with a question on BBT, once you are launching this product in a year time or so, should we see that as a sort of to come on top of the current growth or do you expect the growth for the existing portfolio to sort of slowdown and then you will compensate or bring closer to the 8% or 9% level with the BBT or should we see on top of what you already have right now?

It is primarily seen as a replacement product sort of replacing the base product in – the base SpeediCath product in many markets. So for us, it is a way to set a higher standard for what the – what is the sort of the entry level catheter category when you go into this market.

So you should see it as a more – it’s a more defensive move and we have some other things in the pipeline that are more offensive when it comes to that. But BBT is very much setting – simply raising the bar for what it takes to compete in the hydrophilic-coated catheter ready to use space.

Okay. Thanks.

I will jump back in queue.

Hi. Thanks very much.

I have two questions, first of all, your strong growth in Wound Care in the quarter is in contrast to your larger competitors who are clearly having a tougher time, so how much of this do you believe is market share gains due to their internal issues, I am just trying to get a sense for how long this above market growth can last. And then second question, following the reimbursements I guess 1 year or 2 ago for single use catheters in Japan, Korea, Australia, how far along are you in building out the sales force and really penetrating in those markets or is there still [Technical Difficulty] for greater adoption?

So the stronger growth in Wound Care is very much driven by the Biatain Silicone is driven by Europe and we are taking market shares in – with what we are doing. We have launched a number of new products.

And I think that if you are looking at – it sounded as if you said it’s something about internal issues with some of our competitors. But if you are looking at the numbers that came out for Smith & Nephew, the numbers that you can also see with ConvaTec, it’s – most companies are growing, it’s flat or at maximum, a couple of percentage points.

We have a smaller business, but we also launched quite a number of new products. And the numbers that we are coming with is despite the fact that we have these issues in Greece.

But we have a footprint where we are strong in Europe. We are strong in – or have strong growth in Europe.

We have strong growth in Emerging Markets and we have – we are building up our position in the U.S. So we think that if anything, we are not on a decelerating curve yet, it’s on the contrary for Wound Care.

So how long that’s going to last, that’s a good question. And we are not guiding on growth rates for each of the business areas that we are in, but we are guiding for the growth rate for the full business.

And we once again as you saw have 8% growth for the full year next year. And that also includes a good growth in Wound Care.

And then your question about Japan reimbursement is, how much of the current potential are we covering with our sales force?

Yes. Effectively and also Korea and Australia, I mean those are fairly new markets for you for Continence Care and I am just wondering how far long you are in penetrating that?

Yes. But maybe a good number would be approximately halfway.

So maybe half of the current potential is covered by the sales force that we are having. But of course we start from going for the accounts where the biggest opportunities and then we are building from there because it is the sales, which is different from the sales that we do in Ostomy Care for example.

But we are very pleased with the traction that we are having and our growth numbers in those markets are up compared to where they were a couple of years back due to this.

Okay. Thanks.

Good afternoon and thank you for taking my questions. I have two please, the first one is on the margin guidance for the full year, I am a little surprised to see that there is a possibility that we might end up with a 30% constant currency margin for the year, if I sort of reflect back on what we discussed at the Capital Markets Day, it seem to me that the 30% really would only be a possibility if you carried out some incremental acquisitions, so maybe Lars and Anders, you can talk about under what scenarios you would end up at that 30% versus the 31% in constant currencies and elaborate a little bit on the investment opportunities that you see for 2019 if those have changed since the Capital Markets Day.

My second question is just to push you a little bit more on the Continence Care growth rate, because if I look at the group comparison, it really wasn’t that difficult this quarter and the growth here does seem to have slowed down, so maybe you can comment a bit more on the competitive environment that you are seeing and give us a little bit more – greater degree of confidence in that – on that growth as we head into ‘19? Thank you.

Alright. Let me start with the margin guidance question Veronika.

So the assumptions we are using is an organic growth of around 8% and that is going from 7.5% to 8.5% in terms of growth. Secondly, we are expecting next year to have a flat development in our gross margin as I explained earlier.

And then we will continue our investments into sales and marketing and innovation of up to 2%. And that gives an EBIT margin guidance in the level of 30% to 31%.

I am not – it does not include further acquisitions.

Yes. So go ahead.

Okay. So if I am understanding what you are saying correctly Anders, is if you end up at slightly south of 8%, you would be at 30.5% and if you do slightly more than 8%, you would be at 31%, is that the way to think about it?

Yes. So that is – yes, you are right.

And so that is to think about it.

That’s great. Thank you.

Okay. Thank you.

And if I just may say Lars, congratulations on the retirement. You will be very sorely missed.

We wish you all the best and Kristian, look forward to working with you. Thank you.

Thank you very much.

Thanks very much. I have a couple of questions, so first of all on the convex product, is there any reason why your share of convex products would not approach your share of flat products which it would seem is on a much higher level than your convex products.

And then secondly on the concave product, can you provide some color on how the buildup of concave has been versus your expectations and based on the launch experience of concave in the key markets so far, how long do you think it would take the concave products to get to the same level of sales as convex for example, that will be helpful? Thank you.

On the convex side, there is no doubt that convex is picking up and we will be approaching the same average rate that we have for the rest of the portfolio. I also think that we are all competitors, so I don’t see any reason why we should not be able to do that and how to go above it.

When it comes to concave, it’s a new category. We don’t have a lot of experiences by building new categories.

If I look at the forecast that we have in the group on what was expecting from the individual countries that are launching, we are trailing slightly ahead of those forecasts. So, we are doing a little bit better than what we thought.

So, things are going according to what we planned for and also what we hoped for, but it’s still early days on concave, but we definitely see the need and the feedback that we get from people who are using it is that many people who had frequent tickets issues beforehand, they are now not seeing those issues.

Okay, thank you. And then one quick question for Anders, based on the current spot rates, what would you expect the FX impact on your margin be for the coming year?

Thank you.

Yes. So as I said before, the EBIT margin in constant currency, our guidance is 30% to 31%, but in reported currency, my expectation is around 31% and it’s very much driven by the development in the U.S.

dollar and the HUF, the Hungarian forint.

Okay, thank you.

Hi. I have a couple of questions.

My first question goes to your ostomy business and more specifically, the accessories. I can see that in your market commentary you now assume a higher market share, which suggests that you have outgrown the market and also that the accessories business is growing significantly stronger than the rest of the Ostomy Care business can you first confirm whether this is correct?

And then secondly, how this impacts the profitability of your Ostomy Care business? And then I have a second question.

Thank you.

Why don’t you take that, Anders?

Yes. So in terms of your question around accessories, you are correct that we have seen again this year strong accessories growth development and again that we are taking market share, so our market share is now in the level of 30% to 35%.

So we have a strong portfolio and it’s also because we have now launched most of our accessories portfolio in emerging markets, including China. So, we are very satisfied with our accessories growth development.

In terms of the profitability level, our accessories are also contributing to our profitability levels in ostomy, so yes, that is also having a positive profitability impact.

And if I may add to that, Anders, despite the fact that accessories is growing faster than the rest of the portfolio we are taking market shares in bags and plates.

Okay, thank you. That’s very helpful.

And my second question goes to whether you can add any additional detail around where you will be increasing investment for the next year. So this year, we have seen you increase investment both in R&D and in your sales and distribution costs, should we expect that the increments that you will implement for next year will have a sort of similar distribution across your OpEx lines?

Yes. So our expectation is that it will be a similar split, so most of the investments will impact our distribution to sales ratio.

So, we are continuing to invest into sales and marketing activities. As we also explained at the Capital Markets Day, we are going to invest into the UK.

We are going to invest into our continence business in the U.S. and we are also going to invest into selected emerging markets and also into urology care.

And then we will also invest further into innovation. So as we have communicated also at the Capital Markets Day, we are expecting to have an R&D ratio to sales of around 4%.

So we will also continue to invest into innovation in order to again launch great products also in the future.

Okay, thank you.

Yes, thanks very much for taking my questions. And yes, just to say, Lars, it’s been a great ride, congratulations on the promotion and also welcome Kristian.

So, first question for me please. Just to follow-on, on the accessories performance, obviously, this has been a strong success story going from a very small market share to over 30% in 4, 5 years or so.

But I also understand this has been a very fragmented market with lots of different players and lots of different products. So my question is, is there room to further market share expansion in your mind or have you now reached saturation point?

And I would also like to follow-up a little bit on the performance in other developed markets for the quarter, which seemed to have slowed somewhat to around 7%. I just wonder if you could give us some sense of whether that’s North America not performing to expectation or if there is some other key developed regions that have been responsible for that slightly below trend growth?

Yes, thank you for your comments, Scott. On the accessories, we think we can grow quite a bit more than what we have done now, because it is as you said a fragmented part of the market and that means that this is a place where there is a vast opportunity to expand the market.

And we have for example also recently started to really go into the emerging markets where we are building the category. So, it means that it’s not only can we take more market share, because we have a portfolio, which is getting more and more complete, but we also now use it to expand the market.

So, you will both see bigger market share, but you will also see a growing market. We are sort of adding to the growth of the market going forward.

Does that make sense?

Yes, it does. Thanks, Lars.

And then on the other developed markets, it’s actually quite impacted this quarter by the fact that we had this very strong push on skin care last year, because one of our competitors got closed down from FDA. So, we don’t have that effect this year.

So all-in-all, that’s actually enough to skew the number, so you see this, but apart from that, it’s actually in line with what you saw last year, growth-wise.

Understood. Thanks.

Just a follow-up, you seem to be pretty confident that there would be no real change in the price pressure dynamic if you like that the group sees on an annual basis but have pulled out or called out regularly this French reform impact. So I was just wondering, have you got actually some visibility on timing and magnitude in France at this point, perhaps you could just share a few more details there?

And lastly, some of your competitors in the wound market have pointed towards the UK being an increasingly weak environment with increased tender patterns and price pressure. I just wondered are you seeing those dynamics, is that something that concerns you?

Thanks.

So, there is this rumor about the French reform and we also expect that should be in the second half of the year and what kind of numbers that we will arrive at once that is negotiated, we don’t know. Once we get clarity on that, of course we will share it immediately, but this is going to be a negotiation situation.

So as long as they will be negotiated, I don’t expect that we will have any further comments than what we have had all along that there will be a price review.

And the other question on the UK wound?

Yes. On the wound care, wound, what we see is that we are seeing increasing – that we see positive growth in the UK.

But as I said before, we have new products to work with and we have a smaller market share. So of course we are probably not the first ones to feel all the movements that are going on in the market with the market share that we are having, but we are seeing a positive development in the UK.

Very good. Thanks so much.

Thanks very much for taking my question. And I would just like to add my voice to the echo and people saying congratulations to Lars.

You have made a lot of money for your shareholders and I think you have probably made your patients’ lives a lot better as well, so congratulations. And so firstly, on Kristian’s replacement, are you looking internally or externally for that role and can you lay any other criteria that you are looking at there?

And secondly, on the Vizient contract or the GPO there, have you done any more work on what you could do differently next time to get a different result? Please.

Yes. So having had Kristian in the role before we have a pretty clear view on what we go for and we are hoping of course for options both internally and externally, but we are looking into that, very concentrated right now, but I can’t comment further on it at this point in time.

And your second question, sorry, was about...

The GPO contract.

Yes. Of course, we have taken – we take it quite seriously about the GPOs, because we think that that’s the next level for us in the U.S.

So, we have all the measures in place on that, but nothing – I mean, the only thing that really counts is that we are winning the GPO contracts, right. So yes, so we do whatever we can.

Alright. Operator back to you.

Yes, thank you very much everybody for some very enjoyable meetings. And I will be road-showing a little bit next week.

So, I know that I am meeting some of you, so I am looking forward to that. Thank you very much.