1
Interim Report
2023
2
Key figures and financial ratios
(DKK million)
H1 2023 H1 2022
Full year
2022
Balance sheet
Total assets
29,833 27,335 29,857
Net interest
-bearing debt (NIBD) 12,197 10,986 12,711
Equity
8,990 8,184 8,562
Cash flow statement
Cash flow from operating activities (CFFO)
1,863 915 2,622
Investments in property, plant and equipment, net
306 301 630
Free cash flow
1,490 398 1,617
Share buy
-backs 17 1,307 1,840
Other key figures
Gearing multiple (NIBD/EBITDA)
2.5 2.4 2.9
Earnings per share (EPS), DKK
- continuing operations 5.63 5.07 10.06
Earnings per share (EPS)
2.60 4.60 9.21
Free cash flow per share (FCFPS)
6.68 1.75 7.15
Share price, end of period
288.50 266.30 192.55
Average number of shares outstanding
223.17 227.98 226.01
Average number of employees
20,922 18,130 19,239
Scope 1 & 2 CO2e emissions (tonnes)*
14,923 16,760 32,678
Renewable
electricity share 22% *** ***
Gender diversity, Board of Directors (women/men)**
40/60% 40/60% 40/60%
Gender diversity, all managers (women/men)
47/53% 44/56% 44/56%
Gender diversity, top level management (women/men)
25/75% *** 23/77%
Gender diversity, top level management teams (on/off target)
70/30% *** 71/29%
*2022 is restated due to improved data quality. **Shareholder
-elected members. ***No available data for the period.
(DKK
million)
H1 2023 H1 2022
Full year
2022
Hearing Healthcare
Revenue
10,694 8,945 18,645
Organic growth
15% 6% 5%
Gross margin
75.0% 76.4% 76.1%
Operating profit (EBIT)
2,162 1,695 3,443
EBIT margin
20.2% 18.9% 18.5%
Communications
Revenue
461 552 1,060
Organic growth
-15% -14% -13%
Gross margin
33.8% 45.9% 45.0%
Operating profit (EBIT)
-148 -107 -236
EBIT margin
-32.1% -19.4% -22.3%
Group
Income statement
Revenue
11,155 9,497 19,705
Organic growth
13% 4% 4%
Gross margin
73.3% 74.6% 74.4%
EBITDA
2,662 2,128 4,383
EBITDA margin
23.9% 22.4% 22.2%
Operating profit (EBIT)
2,014 1,588 3,207
EBIT margin
18.1% 16.7% 16.3%
Net financial items
-359 -95 -280
Profit after tax
- continuing operations 1,258 1,157 2,276
Profit after tax
- discontinued operations -676 -107 -192
Profit for the period
582 1,050 2,084
3
The Group reports revenue and growth
rates on a quarterly basis, whereas full
income statements, balance sheets and
cash flow statements are only reported on
a half-yearly basis. Unless otherwise indi-
cated, the commentary below relates to
H1 2023.
As a result of the announced decision to
discontinue the Hearing Implants business,
this former business area is recognised as
a discontinued operation.
For financial reviews of our Hearing
Healthcare and Communications
segments, please refer to page 9 and 13,
respectively.
Revenue
In H1, Group revenue amounted to DKK
11,155 million, corresponding to a growth
rate of 17% in local currencies. Organic
growth was 13%, driven by Hearing
Healthcare, with especially strong perfor-
mance in Hearing Aids, whereas Commu-
nications saw negative organic growth.
After having realised organic growth of
14% in Q1, the Group continued to see
strong organic growth of 12% in Q2.
Group financial review
Income statement H1 2023
(DKK million)
Hearing
Healthcare
H1 2023
Communi-
cations
H1 2023
Group
H1 2023
Group
H1 2022
Group
growth
Revenue
10,694
461
11,155
9,497
17%
Production costs
-2,677
-305
-2,982
-2,414
24%
Gross profit
8,017
156
8,173
7,083
15%
Gross margin
75.0%
33.8%
73.3%
74.6%
R&D costs
-607
-99
-706
-651
8%
Distribution costs
-4,726
-188
-4,914
-4,394
12%
Administrative expenses
-562
-17
-579
-507
14%
Share of profit after tax, associates and joint ventures
40
-
40
57
-30%
Operating profit (EBIT)
2,162
-148
2,014
1,588
27%
EBIT margin
20.2%
-32.1%
18.1%
16.7%
Revenue and growth by business area
Growth
(DKK million)
Q2 2023 Q2 2022 Org. Acq. LCY FX Rep.
Hearing
Healthcare
5,432 4,634 14% 4% 18% -1% 17%
Communications
215 260 -16% 0% -16% -2% -17%
Group
5,647 4,894 12% 4% 16% -1% 15%
Growth
(DKK million)
H1 2023 H1 2022 Org. Acq. LCY FX Rep.
Hearing
Healthcare
10,694 8,945 15% 4% 19% 1% 20%
Communications
461 552 -15% 0% -15% -1% -16%
Group
11,155 9,497 13% 4% 17% 1% 17%
4
Growth from acquisitions was 4% for the
Group, primarily related to Hearing Care
and to a lesser extent to Diagnostics. Ex-
change rate effects impacted revenue by
1%, mainly due to the appreciation of the
US dollar against the Danish krone in Q1.
In terms of geography, Asia saw the high-
est growth rates, driven by significant
growth in China, reflecting both a recovery
from material impacts of coronavirus last
year and a positive contribution from the
acquisition of Sheng Wang. Strong growth
in our Rest of world region was mainly re-
alised in Latin America.
North America also saw strong organic
growth and was the largest contributor
to growth in absolute terms due to solid
momentum in the US hearing aid market
and market share gains across channels
in Hearing Aids.
In Europe, organic growth was driven by
Germany, Poland and the UK. Despite neg-
ative market developments, the Group only
saw slightly negative organic growth in
France.
In the Pacific region, Australia saw strong
growth, although against a soft compara-
tive base, as H1 2022 was significantly im-
pacted by coronavirus-related restrictions
and floodings.
Gross profit
The Group’s gross profit was DKK 8,173
million in H1, an increase of 15% compared
to H1 2022. The gross margin was 73.3%,
a decrease of 1.3 percentage points com-
pared to H1 2022 and below our original
expectations. This development can mainly
be attributed to adverse exchange rate ef-
fects, but also to higher unit costs in Hear-
ing Healthcare and to significant gross
margin dilution in Communications due
to promotional activities, sales of legacy,
co-branded products and lower revenue.
Operating expenses (OPEX)
In H1, total OPEX amounted to DKK 6,199
million, corresponding to 13% growth in
local currencies compared to H1 2022.
OPEX grew by 7% organically, reflecting
continued investments in future growth
and general business expansion in
Hearing Healthcare. Communications,
however, reduced its OPEX materially in
response to the negative revenue growth.
Acquisitions, primarily in Hearing Care,
added 5% to the Group’s OPEX, while
exchange rate effects were -1%.
Operating profit (EBIT)
The Group’s EBIT amounted to DKK 2,014
million, corresponding to a growth rate of
27%. The EBIT margin was 18.1%, an ex-
pansion of 1.4 percentage points compared
to H1 2022, driven by material operating
leverage, resulting from strong performance
in Hearing Healthcare. EBIT in Communi-
cations developed negatively and was
weaker than expected, as the
implemented cost savings could not fully
offset the negative revenue growth and
gross margin decline.
Relative to H1 2022, exchange rates had a
negative impact on the Group’s EBIT in H1
of slightly more than DKK 50 million.
In H1, fair value adjustments of non-con-
trolling interests in step acquisitions, con-
tingent considerations etc. totalled a net
positive fair value adjustment of DKK 29
million (DKK 7 million in H1 2022). Please
refer to Note 1 for more details.
EBIT by half-year
(DKK million)
1,674
1,830
1,588
1,619
2,014
-500
0
500
1,000
1,500
2,000
2,500
H1
2021
H2
2021
H1
2022
H2
2022
H1
2023
OPEX by half-year
(DKK million)
4,903
5,171
5,552
6,032
6,199
3,000
4,000
5,000
6,000
7,000
H1
2021
H2
2021
H1
2022
H2
2022
H1
2023
OPEX by function
Change
(DKK
million)
H1 2023 H1 2022 DKK LCY Org.
R&D costs
706 651 8% 8% 8%
Distribution costs
4,914 4,394 12% 13% 7%
Administrative expenses
579 507 14% 15% 14%
Total
6,199 5,552 12% 13% 7%
Revenue by geographic region
Change
(DKK million)
H1 2023 H1 2022 DKK LCY Org.
Europe
4,528 4,016 13% 13% 9%
North America
4,572 3,875 18% 15% 14%
Asia
1,189 824 44% 53% 34%
Pacific region
553 505 10% 10% 10%
Rest of world
313 277 13% 14% 13%
Total
11,155 9,497 17% 17% 13%
5
Financial items
Reported net financial items amounted to
an expense of DKK 359 million in H1, an
increase of DKK 264 million compared to
last year, driven primarily by higher inter-
est expenses.
Profit for the period
Reported profit before tax for continuing
operations amounted to DKK 1,655 million
in H1, an increase of 11%, as higher EBIT
growth was somewhat offset by increased
financial expenses. Tax for the period
amounted to DKK 397 million, correspond-
ing to an effective tax rate of 24.0%. The
increase in the effective tax rate compared
to H1 2022 was driven by the discontinua-
tion of Danish coronavirus-related R&D
tax credits and by deductibility caps in in-
terest expenses. This resulted in profit af-
ter tax generated by the Group’s continu-
ing operations of DKK 1,258 million, which
is an increase of 9% compared to H1 2022,
corresponding to earnings per share (EPS)
of DKK 5.63.
Profit after tax from discontinued opera-
tions amounted to DKK -676 million. Of
this amount, DKK -638 million relates to
non-recurring, non-cash write-downs of
assets related to the cochlear implants
business and the remaining DKK -38 mil-
lion to an operating loss in Hearing Im-
plants. Please refer to Note 2 for more
details.
For the Group as a whole, profit after tax
was DKK 582 million.
Cash flow statement
For the Group’s continuing operations,
cash flow from operating activities (CFFO)
was DKK 1,863 million in H1, which is a
104% increase compared to H1 2022. This
increase was mainly driven by strong EBIT
growth as well as improvements in work-
ing capital, primarily in terms of inventory
reductions.
Net investments resulted in a cash flow
of DKK -373 million in H1 of which DKK
-411 million, or 4% of Group revenue, re-
lates to net investments in property, plant
and equipment and in intangible assets
(CAPEX). Compared to H1 2022, CAPEX
increased by DKK 7 million, or 2%, due to
slightly increased investments in property,
plant, and equipment. Net investments in
other non-current assets, which mostly
comprise loans to customers and associ-
ates, amounted to DKK 38 million com-
pared to DKK -113 million in H1 2022.
As a result of the higher CFFO and lower
level of investments, free cash flow before
acquisitions and divestments increased by
274% to DKK 1,490 million.
EPS for continuing operations
by half
-year
(DKK)
CAPEX by half-year
(DKK million)
CFFO by half-year
(DKK million)
5.08
6.40
5.07
4.99
5.63
0.00
2.00
4.00
6.00
8.00
H1
2021
H2
2021
H1
2022
H2
2022
H1
2023
273
438
404
504
411
0%
2%
4%
6%
0
200
400
600
H1
2021
H2
2021
H1
2022
H2
2022
H1
2023
CAPEX
CAPEX % of revenue
1,593
2,000
915
1,707
1,863
0
500
1,000
1,500
2,000
2,500
H1
2021
H2
2021
H1
2022
H2
2022
H1
2023
Cash flow by main items
(DKK million)
H1 2023 H1 2022 Change
CFFO
1,863 915 104%
Net
investments -373 -517 -28%
Free cash flow before acquisitions and divestments
1,490 398 274%
Acquisitions and divestments etc.
-313 -513 -39%
Share buy
–backs -17 -1,307 -99%
Other financing activities
-1,091 1,621 -167%
Cash
flow for the period 69 199 -65%
6
Cash spent on acquisitions totalled DKK
313 million in H1. This mainly relates to
acquisitions made by Hearing Care, partic-
ularly in Germany, as well as minor acqui-
sitions made by our Diagnostics business.
Share buy-backs in the reporting period
amounted to DKK 17 million, as the Group
bought back 84,665 shares at an average
price of DKK 195.02 under an employee
share salary arrangement.
Other financing activities resulted in a
cash outflow of DKK 1,091 million, which
primarily relates to repayment of borrow-
ings. Net cash flow from continuing opera-
tions amounted to DKK 69 million in H1.
Net cash flow from discontinued opera-
tions was DKK -10 million. Please refer
to Note 2 for more details.
Balance sheet
As of 30 June 2023, total assets amounted
to DKK 29,833 million, which is roughly
unchanged since the end of 2022 and in-
cludes exchange rate effects of -1%. The
amount includes DKK 304 million relating
to Hearing Implants, which is recognised
as assets held for sale.
The flat development was a result of an in-
crease in non-current assets – primarily re-
lated to goodwill in respect of acquisitions
– being offset by a decrease in assets held
for sale due to the write-down of assets
related to the CI business.
In H1, the Group’s net working capital in-
creased by 5% to DKK 3,832 million, as
lower inventories and increasing other lia-
bilities were more than offset by increased
trade receivables and prepaid expenses,
reflecting the higher activity level.
Net interest-bearing debt (NIBD)
amounted to DKK 12,197 million as of
30 June 2023, a decrease of DKK 514
million compared to 31 December 2022.
Relative to a 12-month rolling EBITDA, this
corresponds to a gearing multiple slightly
below 2.5 at the end of H1, a material de-
crease from 2.9 at the end of 2022, reflect-
ing the Group’s increased profits and strong
cash flow generation. With the gearing
multiple back within our medium- to long-
term target of 2.0-2.5, the Group may re-
sume its share buy-backs in H2, however
subject to cash generation and the level
of acquisitions completed.
At 30 June 2023, the Group’s equity had
increased by DKK 428 million, or 5%, to
DKK 8,990 million, as profit for the period
of DKK 582 million was somewhat offset
by foreign currency translation adjust-
ments in subsidiaries.
Employees
At the end of H1, Demant had 21,154
employees compared to 20,570 at the
beginning of the year and 18,597 at the
end of H1 2022. The average number of
employees was 20,922 in H1 compared
to 18,130 in H1 2022. The increase in H1
was mainly driven by acquisitions in
Hearing Care and by increased headcounts
in operations in Hearing Aids.
Hedging activities
The material forward exchange contracts
in place as at 30 June 2023 to hedge
against the Group’s exposure to move-
ments in exchange rates are shown in
the table below.
Hedging activities
Currency
Hedging
period
Average
hedging rate
USD
11 months 693
JPY
9 months 5.22
AUD
10 months 461
GBP
11 months 839
CAD
11 months 509
PLN
10 months 153
Balance sheet by main items
(DKK million)
H1 2023 FY 2022 Change
Lease assets
2,391 2,304 4%
Other non
-current assets 17,915 17,531 2%
Inventories
2,739 2,904 -6%
Trade receivables
3,826 3,626 6%
Cash
1,158 1,130 2%
Other current assets
1,500 1,398 7%
Assets held for sale
304 964 -68%
Total assets
29,833 29,857 0%
Equity
8,990 8,562 5%
Lease liabilities
2,474 2,380 4%
Other non
-current liabilities 9,734 7,960 22%
Trade payables
825 865 -5%
Other
current liabilities 7,753 9,915 -22%
Liabilities related to assets held for sale
57 175 -67%
Total equity and liabilities
29,833 29,857 0%
7
Sustainability
In July 2023, the Science Based Targets in-
itiative validated and approved our targets
to reduce the Group’s scope 1, 2 and 3
CO2e emissions. Demant has committed
to reduce aggregate scope 1 and 2 emis-
sions by 46% as well as to reduce scope 3
emissions by 46% by 2030 from a 2019
base year. Demant has also committed to
reach net zero emissions across the value
chain by 2050. The validated targets will
be published on the Science Based Targets
initiative’s website during the month of
August.
In H1, total scope 1 and 2 CO2e emissions
amounted to 14,923 tonnes, which repre-
sents an 11% decrease compared to H1
2022. The decrease can be attributed to
our gradual transition to renewable elec-
tricity. Demant aims to reach 50% renew-
able electricity in 2025 and 100% by 2030.
The targets for renewable electricity are
an important step towards reducing our
scope 2 emissions and meeting our com-
mitments to the Science Based Targets
initiative.
In 2022, Demant introduced targets for
gender diversity in top-level management.
In 2025, we aim to have 30% women in
top-level management (VP level and above)
and in H1 we reached a share of 25%.
Furthermore, we aim at increasing the
number of top-level management teams
that have a diverse gender composition
by improving the balance of the gender
composition in each team. Our target is
that by 2025, at least 75% of top-level
management teams will have a maximum
of 75% of the same gender. In H1, 70% of
teams were on target.
The data also shows a slight improvement
in gender diversity in all management lev-
els compared to the full year 2022 with a
3 percentage point increase in the share of
women in management positions which
reached 47%.
Events after the reporting
period
No events have occurred after the reporting
date that might affect this Interim Report
2023.
Key sustainability figures by half
-year
H1 2023 H1 2022 Change
Scope 1 & 2 CO2e emissions (tonnes)*
14,923 16,760 -11%
Renewable electricity share
22% *** -
H1 2023 FY 2022 Change
Gender diversity, Board of Directors
(women/men)** 40/60% 40/60% No change
Gender diversity, all managers (women/men)
47/53% 44/56% 3 p.p.
Gender diversity, top level management
(women/men)
25/75% 23/77% 2 p.p.
Gender diversity, top level management teams
(on/off target)
70/30% 71/29% 1 p.p.
*2022 is restated due to improved data quality.
**Shareholder
-elected members.
***No available data for the period.
8
The Group’s outlook for 2023, which is
summarised in the table above, has been
upgraded to reflect the Group’s strong per-
formance in H1 and increased expectations
of H2. Specifically, we now expect the hear-
ing aid market to grow at a faster rate than
previously assumed, and we expect our
strong commercial momentum and market
share gains in Hearing Healthcare to be
sustained for longer than previously antici-
pated.
Assumptions
The outlook is based on a number of key
assumptions as described below (changes
versus most recent outlook in bold):
• Following a stabilisation of the global
hearing aid market in H1, we now ex-
pect the market unit growth rate in
2023 to be slightly above the struc-
tural growth rate of 4-6%. We expect
a negative contribution from ASP de-
clines around the normal level of 1-2%
due to mix effects.
• We expect the weak momentum in the
markets for enterprise solutions and
gaming headsets to continue through-
out 2023. In 2023, we expect our Com-
munications segment to see negative
organic growth and to generate EBIT
that is more negative than the level in
2022, as lower revenue and gross
margin are only partly offset by cost
savings already implemented. We
continue to consider further actions
with a view to aligning the business
with current activity levels.
• Due to a high level of attractive oppor-
tunities, we expect the level of bolt-on
acquisitions in 2023 to be higher than
normal.
• Despite higher-than-normal cost infla-
tion, we plan to grow OPEX less than
revenue through focused cost control in
order to support margin improvement.
• As announced on 22 June, the expected
profit after tax from discontinued op-
erations is based on a scenario where
the divestment of our cochlear implants
business is closed at the end of 2023.
Our bone anchored hearing systems
business will remain with the Group,
pending a review of our strategic op-
tions.
Outlook for 2023
Outlook for 2023
Metric
Outlook for 2023
Organic growth
11
-14% (previously 6-10%)
Acquisitive growth
3% based on revenue from acquisitions completed as of 15 August 2023
FX growth
-
2% based on exchange rates as of 15 August 2023 and including the im-
pact of hedging (previously
-1%)
EBIT
DKK 4,000
-4,400 million (previously DKK 3,800-4,200 million)
Net financials
Negative by around DKK 700 million (previously negative by around DKK
600 million)
Effective tax rate
24
-25% (previously 25-26%)
Gearing multiple
Gearing multiple (NIBD/EBITDA) at the end of 2023 within our medium
- to
long
-term target of 2.0-2.5
Share buy
-backs
None
Profit after tax from
discontinued opera-
tions
Negative by DKK 700
-850 million (previously negative by DKK 700-1,000
million)
9
Revenue
Revenue in our Hearing Healthcare seg-
ment amounted to DKK 10,694 million in
H1, corresponding to a growth rate of 19%
in local currencies with organic growth of
15%. This was driven primarily by Hearing
Aids, but Hearing Care and Diagnostics
also saw solid growth. Acquisitive growth
was 4% and exchange rate effects were
1%.
After a very strong Q1, Hearing Aids and
Hearing Care saw slightly decelerating or-
ganic growth in Q2, but growth was still
strong, as the global hearing aid market
remained solid, and we continued to gain
market share thanks to the launch of new
products. Following a softer Q1, partly due
to delays in the ramp-up of the new pro-
duction facility in Poland, Diagnostics saw
stronger growth in Q2, a reflection of a
strong order book.
Gross profit
Gross profit increased by 17% on H1 2022
to DKK 8,017 million, resulting in a gross
margin of 75.0%. The gross margin was
1.4 percentage points below the margin in
H1 2022, mostly due to adverse exchange
rate effects and growing unit costs as a
result of an increased share of rechargea-
ble hearing aids sold. Also, a change in the
mix between business areas had a slightly
dilutive impact on the gross margin in
Hearing Healthcare.
Operating expenses (OPEX)
OPEX totalled DKK 5,895 million in H1,
which is an increase of 14% in local cur-
rencies compared to H1 last year. In or-
ganic terms, OPEX increased by 9%, re-
flecting continued investments, while ac-
quisitive growth was 5% and exchange
rate effects -1%.
OPEX by half-year
(DKK million)
.
4,559
4,822
5,192
5,679
5,895
2,000
3,000
4,000
5,000
6,000
7,000
H1
2021
H2
2021
H1
2022
H2
2022
H1
2023
Hearing Healthcare
Income statement
(DKK million)
H1 2023 H1 2022 Growth
Revenue
10,694 8,945 20%
Production costs
-2,677 -2,115 27%
Gross profit
8,017 6,830 17%
Gross margin
75.0% 76.4%
R&D
costs -607 -534 14%
Distribution costs
-4,726 -4,170 13%
Administrative expenses
-562 -488 15%
Share of profit after tax, associates and joint ventures
40 57 -30%
Operating profit (EBIT)
2,162 1,695 28%
EBIT margin
20.2% 18.9%
Revenue by business area
Growth
(DKK million)
Q2 2023 Q2 2022 Org. Acq. LCY FX Rep.
Hearing Aids
3,040 2,491 20% 0% 20% 2% 22%
Hereof sales to
He
aring Care
-530 -454 12% 7% 19% -2% 17%
Hearing Care
2,290 2,034 7% 8% 15% -3% 13%
Diagnostics
632 563 9% 6% 15% -3% 12%
Hearing
Healthcare
5,432 4,634 14% 4% 18% -1% 17%
Growth
(DKK million)
H1 2023 H1 2022 Org. Acq. LCY FX Rep.
Hearing Aids
6,088 4,842 23% 0% 23% 3% 26%
Hereof sales to
He
aring Care
-1,100 -895 18% 6% 24% -1% 23%
Hearing Care
4,508 3,932 8% 8% 16% -2% 15%
Diagnostics
1,198 1,066 6% 7% 13% -1% 12%
Hearing
Healthcare
10,694 8,945 15% 4% 19% 1% 20%
10
Operating profit (EBIT)
EBIT in H1 amounted to DKK 2,162 million,
corresponding to an EBIT margin of 20.2%.
This is an increase of 1.3 percentage points
compared to H1 2022. The increase was
driven primarily by increased operating
leverage in Hearing Aids, but also by im-
proved efficiency in Hearing Care, while
the EBIT margin in Diagnostics was diluted
by OPEX investments.
Share of profit after tax in associates and
joint ventures amounted to DKK 40 million
in H1, a decrease of DKK 17 million.
EBIT by half-year
(DKK million)
Management
commentary
Market trends
Overall, the hearing healthcare market,
which comprises the markets for hearing
aids and diagnostic instruments and ser-
vices, saw positive growth in H1 in line
with historical growth rates compared
to pre-pandemic levels.
Hearing aid market
Based on available market statistics,
covering slightly less than two-thirds of
the market, and on our own assumptions,
we estimate that the global hearing aid
market saw unit growth of around 5%
in H1, with 7% in Q1 and 3% in Q2 com-
pared to the same periods in 2022.
In H1, we estimate that – with the excep-
tion of Europe – growth was positive
across all regions. In Q2, growth deceler-
ated slightly compared to Q1, primarily
driven by comparative figures, and when
comparing H1 to pre-pandemic levels, we
estimate that the global hearing aid mar-
ket was in line with the structural growth
rate of 4-6%.
We estimate that in H1 geography and
channel mix changes offset price increases
and that the ASP development was flat-
tish. Overall, value growth in the hearing
aid market was within our medium- to
long-term expectations.
Unit growth in Europe was flat, as growth
in the NHS as well as in some smaller
markets was offset by negative growth
in Germany and France. In France, growth
decelerated sequentially in Q2, as the mar-
ket continued to normalise following the
hearing healthcare reform in 2021. Exclud-
ing the development in France, we estimate
that growth was flat in Europe in Q2.
In North America, the market saw solid
growth in H1, reflecting good underlying
momentum throughout the period. In the
US commercial market, unit growth was
solid, and it continued to be driven by
managed care, whereas the private pay
market saw slightly negative growth. Alt-
hough growth was positive in the VA
channel, volume declined sequentially
between Q1 and Q2, and on a CAGR ba-
sis, growth remains slightly below pre-
pandemic trends. In Canada, growth in
H1 was solid.
Looking beyond Europe and North Amer-
ica, we estimate that market growth in
Rest of world was strong at 10% in H1.
This is primarily driven by a rebound from
lockdowns and coronavirus-related re-
strictions, particularly in China, resulting in
very strong Q2 growth. Japan and South
Korea also saw strong market growth. In
Australia, growth was positive in both Q1
and Q2, with sequential improvement in
Q2. We estimate that several other emerg-
ing markets saw strong growth in H1.
Diagnostic instruments market
We estimate that compared to H1 last
year, growth in the market for diagnostic
instruments and services was within the
estimated structural market growth rate
of 3-5% per year.
1,718
1,908
1,695
1,748
2,162
0
500
1,000
1,500
2,000
2,500
H1
2021
H2
2021
H1
2022
H2
2022
H1
2023
Estimated hearing aid market unit growth in 2023 by region
(vs. 2022)
Q1 Q2 H1
Europe
4% -4% 0%
North America
9% 5% 7%
US (commercial) 9% 5%
7%
US (VA) 9% 4%
6%
Rest of world
9% 10% 10%
Global
7% 3% 5%
CAGR vs. 2019
5% 5% 5%
11
Hearing Aids
In H1, total revenue in Hearing Aids grew
by 23% (Q2: 20%) in local currencies.
Growth was entirely organic. Exchange
rate effects added 3% (Q2: 2%) to growth.
Hearing Aids
(DKK
million)
H1 2023 H1 2022
Revenue
6,088 4,842
Growth
Organic
23%
Acquisitions
0%
Local currencies
23%
FX
3%
Total
26%
Internal revenue from sales to our Hearing
Care business area accounted for 18% of
total revenue and external sales for the
remaining 82%. Our commentary below
focuses on total revenue, including revenue
from sales through our own retail clinics.
The very strong performance was the re-
sult of solid hearing aid market develop-
ments combined with market share gains
in most geographies. The commercial mo-
mentum was driven by excellent commer-
cial and operational execution and boosted
by the successful launches of new pre-
mium hearing aids starting in Q1, including
our new flagship product, Oticon Real.
Unit growth and ASP growth in H1 were
18% and 4%, respectively, compared to
the same period last year. The unit growth
rate was thus significantly higher than the
market growth rate in H1, reflecting broad-
based market share gains. The positive
ASP development was driven primarily by
geography and product mix changes, but
also by price increases implemented last
year.
Compared to 2022, our growth in Europe
was strong in both Q1 and Q2. Germany
and France were the primary positive con-
tributors in Q1, and in Q2, we saw contin-
ued strong growth in Germany as well as
in the UK, Poland and Spain. In France, we
saw a negative growth rate in Q2, which
was, however, slightly higher than the
market growth rate.
North America delivered strong organic
growth and market share gains in both
Q1 and Q2, although growth decelerated
slightly in the latter part of the period.
We continued to see strong traction with
Oticon Real and Philips HearLink and
gained market share across most chan-
nels, including with independents, chains
and VA where Oticon Real was launched
at the beginning of May. In Canada, we
saw strong growth in both Q1 and Q2.
Asia was the region with the highest
growth in percentage terms in both Q1
and Q2 due to the impacts of coronavirus-
related restrictions in H1 2022, especially
in China where growth accelerated in Q2.
Our Rest of world region, which mostly
comprises emerging markets, saw strong
growth throughout H1 driven by good
commercial momentum and strong tender
activities in several countries. Meanwhile,
our Pacific region saw only modest growth
in the period.
Growth in units and ASP
(local
currencies)
H1 2023 H2 2022 H1 2022
Units
18% 10% 16%
ASP
4% -2% -8%
Total
23% 8% 7%
Revenue and growth
Growth
(DKK million)
Q2 2023 Q2 2022 Org. Acq. LCY FX Rep.
Hearing Aids
3,040 2,491 20% 0% 20% 2% 22%
Hereof sales to external customers
2,510 2,037 22% -1% 21% 3% 23%
Hereof sales to Hearing Care*
530 454 12% 7% 19% -2% 17%
Growth
(DKK million)
H1 2023 H1 2022 Org. Acq. LCY FX Rep.
Hearing Aids
6,088 4,842 23% 0% 23% 3% 26%
Hereof sales to external customers
4,988 3,947 24% -1% 23% 3% 26%
Hereof sales to Hearing Care*
1,100 895 18% 6% 24% -1% 23%
*Revenue from internal sales to Hearing Care is eliminated from the reported revenue for Hearing Healthcare and for the Group
, i.e. we only include revenue from external customers. The pricing used in
internal transactions is determined on an arm’s length
basis and thus reflects normal commercial terms.
12
Hearing Care
In H1, revenue in Hearing Care grew by
16% (Q2: 15%) in local currencies with
8% (Q2: 7%) organic growth and 8% (Q2:
8%) acquisitive growth. The latter is mainly
attributable to the acquisition of Sheng
Wang in China in Q3 2022, but also to ac-
quisitions in Germany, Japan, North Amer-
ica and France.
Hearing Care
(DKK million)
H1 2023 H1 2022
Revenue
4,508 3,932
Growth
Organic
8%
Acquisitions
8%
Local currencies
16%
FX
-2%
Total
15%
The positive momentum in Hearing Care in
H1 was driven by solid organic growth in
most major markets outside the US and
France, our two biggest markets. Organic
growth decelerated slightly from 9% in Q1
to 7% in Q2 driven by France. Throughout
H1, organic growth was predominantly
driven by unit growth, but we also saw a
slightly positive ASP development due to
price increases implemented in H2 last
year.
In Europe, we saw positive developments
in several markets, particularly in Poland
and the UK. However, organic growth in
France turned negative in Q2, as market
growth slowed down.
Organic growth in North America was
slightly positive in H1, driven by very solid
growth in Canada. In the US, growth was
flat in H1 following a slight deceleration in
Q2 due to slower growth in the private pay
market. The strategic decision made last
year to reduce our share of sales related to
managed care has been carried out, lead-
ing to a stabler business model in the US.
Acquisitions contributed to growth in both
the US and Canada in the period.
In Australia, we saw strong growth sup-
ported by a softer comparison base, as
revenue was negatively impacted by coro-
navirus-related restrictions and by flood-
ings in H1 2022. In China, Sheng Wang
delivered revenue slightly ahead of original
expectations following stronger-than-
expected recovery from coronavirus im-
pacts at the beginning of the year.
Diagnostics
In Diagnostics, revenue in H1 increased by
13% (Q2: 15%) in local currencies. Organic
growth was 6% (Q2: 9%), while contribu-
tion from acquisitions was 7% (Q2: 6%).
A major part of acquisitive growth relates
to the acquisition of Inventis Srl. in June
2022, while a minor part relates to the
acquisition of Virtualis, a French player
active within balance testing, in January
2023. Exchange rate effects contributed
with -1% (Q2: -3%).
Diagnostics
(DKK million)
H1 2023 H1 2022
Revenue
1,198 1,066
Growth
Organic
6%
Acquisitions
7%
Local currencies
13%
FX
-1%
Total
12%
Following a relatively slow start to Q1,
which saw growth negatively impacted by
the ramp-up of our new Diagnostics pro-
duction facility in Poland, growth acceler-
ated in Q2, emphasising the good underly-
ing momentum of our business.
In terms of geographies, we saw strong
performances in most markets in H1. On
an organic basis, Asia was the biggest
contributor driven by China, which saw
very strong growth following a soft Q2 last
year, but Europe and the Pacific region also
delivered strong growth. In addition, growth
in Q2 was supported by a large tender win
in our Rest of world region.
In North America, organic growth was
slightly positive, in part driven by strong
comparative figures.
Overall, organic growth was primarily
driven by instrument sales, which acceler-
ated in Q2, although service revenue also
saw strong growth, particularly in the US.
In terms of product categories, growth was
broad-based with particularly strong per-
formance in the Audiometer, Impedance,
and Balance product categories.
13
Revenue
In H1, revenue in Communications was
DKK 461 million, corresponding to -15%
growth in local currencies, all of which was
organic growth. Exchange rate effects were
-1%.
Please refer to Management commentary
on page 14 for more details.
Communications
(DKK million)
Q2 2023 Q2 2022
Revenue
215 260
Growth
Organic
-16%
Acquisitions
0%
Local currencies
-16%
FX
-2%
Total
-17%
(DKK million)
H1 2023 H1 2022
Revenue
461 552
Growth
Organic
-15%
Acquisitions
0%
Local currencies
-15%
FX
-1%
Total
-16%
Gross profit
The gross profit amounted to DKK 156
million in H1, resulting in a gross margin
of 33.8%. This is a substantial decrease of
12.0 percentage points compared to H1
2022, driven in part by high levels of pro-
motional activities in Gaming, also amongst
competitors, including discounted sales of
legacy, co-branded products. Also, the de-
cline in revenue and some production costs
associated with the ramp-down of produc-
tion of co-branded products contributed
negatively to the margin development.
Operating expenses (OPEX)
OPEX amounted to DKK 304 million in H1,
corresponding to a decrease of 16% com-
pared to H1 2022, or 15% in organic terms.
The decrease reflects cost saving measures
implemented both in H2 2022 and in H1
2023. The latter will take full effect in H2
2023. On a percentage basis, cost savings
were realised almost equally between R&D
and distribution costs, although in absolute
terms, most of the savings were realised
in our distribution, as we have, for strate-
gic reasons, shifted our focus in some se-
lect markets. Exchange rate effects were
slightly negative.
OPEX by half-year
(DKK million)
Operating profit (EBIT)
As a result of the decline in revenue and
of the gross margin headwinds, which
more than outweighed the implemented
cost savings, EBIT amounted to DKK -148
million, which is below our original expec-
tations. We continue to consider further
actions with a view to aligning the busi-
ness with current activity levels and thus
improving profitability.
EBIT by half-year
(DKK million)
344
349
360
353
304
200
400
H1
2021
H2
2021
H1
2022
H2
2022
H1
2023
-44
-78
-107
-129
-148
-200
-150
-100
-50
0
H1
2021
H2
2021
H1
2022
H2
2022
H1
2023
Communications
Income statement
(DKK million)
H1 2023 H1 2022 Growth
Revenue
461 552 -16%
Production costs
-305 -299 2%
Gross profit
156 253 -38%
Gross margin
33.8% 45.8%
R&D costs
-99 -117 -15%
Distribution costs
-188 -224 -16%
Administrative expenses
-17 -19 -11%
Operating profit (EBIT)
-148 -107 n.a.
EBIT margin
-32.1% -19.4%
14
Management
commentary
Market trends
We estimate that growth in our addressa-
ble market within enterprise solutions and
gaming headsets was negative in H1. Both
businesses continued to see tough market
conditions, with macroeconomic uncertain-
ties negatively impacting corporate budg-
ets and consumer spending.
Communications (EPOS)
As outlined above, revenue in H1 saw
growth of -15% (Q2: -16%) in local curren-
cies, all of which was organic growth.
Growth was disappointing and below
our original expectations, particularly in
Q2 where revenue slowed down sequen-
tially compared to Q1 due to a deteriorat-
ing market, particularly for enterprise solu-
tions.
In Enterprise Solutions, we continued to
be impacted by material hesitation among
end customers when it comes to investing
in larger projects. Along with some supply
constraints for our video solutions, this led
to a lower order intake than expected.
However, the launch in June of EPOS’ new
top-of-the-line enterprise headset, IM-
PACT 1000, got a very positive reception
in the market and is expected to support
growth in H2.
In Gaming, the market remained very soft
in H1 with high inventories in the sales
channels following weak end-user demand
in H2 2022. Also, prices were impacted by
significant promotional activities amid fierce
competition.
Regionally, the negative organic growth
was most pronounced in Europe, which is
the largest region for Communications, but
revenue in North America and Asia also
developed negatively.
Throughout H1, our realised sales prices
were negatively impacted by sales of leg-
acy, co-branded products at discounted
prices, and we expect this impact to con-
tinue in H2.
15
We have today discussed and approved
this Interim Report 2023 for Demant A/S .
Interim Report 2023 has been prepared in
accordance with IAS 34, Interim Financial
Reporting, as adopted by the EU, and fur-
ther Danish disclosure requirements in re-
spect of interim reports for listed compa-
nies. Interim Report 2023 has not been
audited or reviewed by our auditors.
In our opinion, Interim Report 2023 gives
a true and fair view of the Group’s assets,
liabilities and financial position at 30 June
2023 as well as of the results of our activi-
ties and cash flows for the first six months
of 2023.
We also believe that the financial review
and management commentary contain
a fair review of the development in the
Group’s business and financial position,
the results for the period and the Group’s
financial position as a whole as well as a
description of the principal risks and un-
certainties facing Demant A/ S
Smørum, 16 August 2023
Management statement
Executive Board
Søren Nielsen, President & CEO
René Schneider, CFO
Niels Wagner, President Hearing Care
Board of Directors
Niels B. Christiansen, Chair
Niels Jacobsen, Vice Chair
Thomas Duer
Charlotte Hedegaard
Heidir Hørby
Anja Madsen
Sisse Fjelsted Rasmussen
Kristian Villumsen
16
Discontinued operations
The Hearing Implants business is pre-
sented as a discontinued operation.
Consolidated income statement
(DKK million)
H1 2023 H1 2022
Full year
2022
Revenue
Production costs
-2,982 -2,414 -5,036
Gross profit
R&D costs
-706 -651 -1,314
Distribution costs
-4,914 -4,394 -9,232
Administrative expenses
-579 -507 -1,038
Share of profit after tax, associates and joint ventures
Operating profit (EBIT)
Financial income
Financial expenses
-406 -131 -363
Profit
before tax 1,655 1,493 2,927
Tax on profit for the period
-397 -336 -651
Profit after tax
- continuing operations 1,258 1,157 2,276
Profit after tax
- discontinued operations -676 -107 -192
Profit for the
period 582 1,050 2,084
Profit for the period attributable to:
Demant A/S' shareholders
Non
-controlling interests 1 1 2
Earnings per share (EPS), DKK
- continuing operations 5.63 5.07 10.06
Diluted earnings per share (DEPS), DKK
- continuing
operations
Earnings per share (EPS), DKK
Diluted earnings per share (DEPS), DKK
17
Consolidated statement of comprehensive income
(DKK million)
H1 2023 H1 2022
Full year
2022
Profit for the year
Foreign currency translation adjustment, subsidiaries
-177 438 60
Value adjustments of hedging instruments:
Value adjustment for the period
Value adjustment transferred to revenue
-46 104 202
Tax on items that have
been or may subsequently be
reclassified to the income statement
Items that have been or may subsequently be reclassified
to the income statement
-185 422 190
Actuarial gains/losses on defined benefit plans
Tax on items that will not subsequently be reclassified
to the income statement
Items that will not subsequently be reclassified to the
income statement
Other comprehensive income/loss
-185 422 268
Comprehensive income
Comprehensive income attributable to:
Demant A/S’ shareholders
Non
-controlling interests 1 1 2
Breakdown of tax on other
comprehensive income:
Foreign currency translation adjustment, foreign enterprises
Value adjustment of hedging instruments for the period
-8 3 9
Value adjustment of hedging instruments transferred to
revenue
Actuarial gains/losses on defined benefit plans
Tax on other comprehensive income
18
Assets held for sale
The assets of the Hearing Implants
business are presented as assets held
for sale.
Consolidated balance sheet
(DKK
million)
H1 2023 H1 2022
Full year
2022
Assets
Goodwill
Patents and licences
Other intangible assets
Prepayments and assets under development
Intangible assets
Land and buildings
Plant and machinery
Other plant, fixtures and operating equipment
Leasehold improvements
Prepayments and assets under construction
Property, plant and equipment
Lease assets
Investments in associates and joint ventures
Receivables from
associates and joint ventures 270 333 371
Other investments
Customer loans
Other receivables
Deferred tax assets
Other non
-current assets 4,590 4,502 4,700
Non
-current assets 20,306 17,409 19,835
(DKK million)
H1 2023 H1 2022
Full year
2022
Inventories
Trade receivables
Receivables from associates and joint ventures
Income tax
Customer loans
Other receivables
Unrealised gains on financial contracts
Prepaid expenses
Cash
Assets held for sale
Current assets
Assets
19
Liabilities related to assets held for sale
The liabilities of the Hearing Implants busi-
ness are presented as liabilities related to
assets held for sale.
Consolidated balance sheet
(DKK million)
H1 2023 H1 2022
Full year
2022
Equity and liabilities
Share capital
Other reserves
Equity attributable to Demant A/S' shareholders
Equity attributable to
non-controlling interests 6 5 1
Equity
Borrowings
Lease liabilities
Deferred tax liabilities
Provisions
Other
liabilities 654 349 566
Deferred income
Non
-current liabilities 11,587 6,427 9,726
Borrowings
Lease liabilities
Trade payables
Payables to
associates and joint ventures - 1 -
Income tax
Provisions
Other liabilities
Unrealised losses on financial contracts
Deferred income
Liabilities related to
assets held for sale 57 221 175
Current liabilities
Liabilities
Equity and liabilities
20
Discontinued operations
The Hearing Implants business is pre-
sented as a discontinued operation.
Consolidated cash flow statement
(DKK million)
H1 2023 H1 2022
Full year
2022
Operating profit (EBIT)
Non
-cash items etc. 714 463 1,074
Change in receivables etc.
-276 -563 -491
Change in inventories
Change in trade payables and other liabilities etc.
-92 -252 10
Change in provisions
Dividends received
Cash
flow from operating profit 2,460 1,215 3,435
Financial income etc. received
Financial expenses etc. paid
-332 -131 -359
Income tax paid
-305 -191 -517
Cash flow from operating activities (CFFO)
Acquisition of enterprises, participating interests and
activities
-313 -513 -2,323
Investments in intangible assets
-105 -103 -277
Investments in property, plant and equipment
-315 -311 -647
Disposal of
property, plant and equipment 9 10 16
Investments in other non
-current assets -133 -269 -356
Disposal of other non
-current assets 171 156 259
Cash flow from investing activities (CFFI)
-686 -1,030 -3,328
(DKK million)
H1 2023 H1 2022
Full year
2022
Repayments of borrowings
-2,598 -2,168 -2,737
Proceeds from borrowings
Change in short
-term bank facilities -290 1,553 -2,477
Repayments of lease
liabilities -333 -290 -614
Transactions with non
-controlling interests -1 -1 -4
Share buy
-backs -17 -1,307 -1,840
Cash flow from financing activities (CFFF)
-1,108 314 934
Cash flow for the period, net
- continuing operations 69 199 228
Cash flow for the period, net
- discontinued operations -10 -108 -253
Cash flow for the year, net
Cash and cash equivalents at the beginning of the year
Foreign currency
translation adjustment of cash and cash
equivalents
-31 -18 -17
Cash and cash equivalents at the end of the year
Breakdown of cash and cash equivalents at the end of the
year:
Cash
Cash and cash equivalents at the end of the year
21
Consolidated statement of changes in equity
(DKK million)
Other reserves
Share
capital
Foreign
currency
translation
reserve
Hedging
reserve
Retained
earnings
Demant
A/S’ share-
holders’
share
Non-
controlling
interests’
share
Equity
Equity at 1.1.2023
Comprehensive income:
Profit for the period
Other comprehensive income:
Foreign currency translation adjustment, subsidiaries
-177
-177
-177
Value adjustments of hedging instruments:
Value adjustment for the period
Value adjustment transferred to revenue
-46
-46
-46
Tax on other comprehensive income
Other comprehensive income/loss
-177
-8
-185
-185
Comprehensive income/loss for the period
-177
-8
Share buy
-backs
-17
-17
-17
Share
-based compensation
Capital reduction through cancellation of treasury shares
-1
Transactions with non
-controlling interests
-1
-1
Non
-controlling interests at acquisition
Equity at 30.06.2023
-106
22
Consolidated statement of changes in equity
(DKK million)
Other reserves
Share
capital
Foreign
currency
translation
reserve
Hedging
reserve
Retained
earnings
Demant
A/S’ share-
holders’
share
Non-
controlling
interests’
share
Equity
Equity at 1.1.2022
-54
Comprehensive income:
Profit for the period
Other comprehensive income:
Foreign currency translation adjustment, subsidiaries
Value adjustments of
hedging instruments:
Value adjustment for the period
-118
-118
-118
Value adjustment transferred to revenue
Tax on other
comprehensive income
-5
-2
-2
Other comprehensive income/loss
-11
Comprehensive income/loss for the period
-11
Share buy
-backs
-1,307
-1,307
-1,307
Share
-based compensation
Capital reduction through
cancellation of treasury shares
-2
Equity at 30.06.2022
-65
23
In H1 2023, Demant acquired Mr. Optik, a
German retail company, and Virtualis, a
French player active within balance testing.
Furthermore, the Group acquired a number
of minor retail entities in North America
and Europe for which we paid acquisition
costs exceeding the fair values of the ac-
quired assets, liabilities and contingent
liabilities. Such positive balances in value
can be attributed to expected synergies
between the activities of the acquired enti-
ties and our existing activities, to future
growth opportunities and to the value of
staff competencies in the acquired entities.
These synergies are not recognised sepa-
rately from goodwill, as they are not sepa-
rately identifiable.
At the time of acquisition, non-controlling
interests’ shares of acquisitions were
measured at their proportionate shares of
the total fair value of the acquired entities,
including goodwill. On obtaining a control-
ling interest through step acquisitions, pre-
viously held non-controlling interests are
at the time of obtaining control included in
the income statement at their fair value
with fair value adjustments.
In H1 2023, a few adjustments were made
to the preliminary recognition of acquisi-
tions made in 2022. These adjustments
were made in respect of payments made,
contingent considerations provided and
net assets and goodwill acquired. The im-
pact of these adjustments on goodwill was
DKK 3 million (DKK 9 million in H1 2022),
and the impact on contingent considera-
tions was DKK 2 million (DKK 2 million in
H1 2022). In relation to acquisitions with
final recognition in 2017-2022, adjustments
were made in 2023 in respect of estimated
contingent considerations. Such adjust-
ments were recognised in the income
statement.
Note 1 – Acquisition of enterprises and activities
(DKK million)
H1 2023
H1 2022
Hearing Healthcare
Total
Total
Europe
North
America
Intangible assets
27
4
31
27
Property, plant and equipment
41
1
42
13
Other non
-current assets 113
17
130
19
Inventories
33
2
35
30
Current receivables
66
6
72
52
Cash and cash
equivalents 25
2
27
29
Non
-current liabilities -336
-1
-337
-61
Current liabilities
-79
-9
-88
-54
Acquired net assets
-110
22
-88
55
Goodwill
596
8
604
322
Acquisition cost
486
30
516
377
Carrying amount of non
-controlling interests on obtaining control -80
-
-80
-
Fair value adjustment of non
-controlling interests on obtaining control -26
-
-26
-
Contingent
consideration and deferred payments -118
-3
-121
-71
Acquired cash and cash equivalents
-25
-2
-27
-29
Cash acquisition cost
237
25
262
277
Figures are shown at fair value on the acquisition date.
24
The total impact on the income statement
of fair value adjustments of non-controlling
interests in step acquisitions amounted to
DKK 26 million (DKK 0 million in H1 2022).
For acquisitions, adjustments of contingent
considerations made via the income state-
ment in the amount of DKK 3 million (DKK
7 million in H1 2022) are recognised under
distribution costs.
Of total acquisition costs in the reporting
period, the fair value of estimated contin-
gent considerations in the form of earnouts
or deferred payments accounted for DKK
121 million (DKK 71 million in H1 2022).
Earnouts depend on the results of the ac-
quired entities for a period of 1-5 years
after takeover and can total a maximum
of DKK 121 million (DKK 71 million in H1
2022) for acquisitions.
The acquired assets include contractual
receivables amounting to DKK 33 million
(DKK 33 million in H1 2022) of which DKK
0 million (DKK 1 million in H1 2022) was
thought to be uncollectible at the date
of the acquisition. Of total goodwill in the
amount of DKK 604 million (DKK 322 mil-
lion in H1 2022), DKK 11 million (DKK 21
million in H1 2022) can be amortised for
tax purposes.
Transaction costs in connection with ac-
quisitions made in 2023 amounted to DKK
4 million (DKK 0 million in H1 2021) and
are recognised under distribution costs.
Revenue and profit after tax generated by
the acquired enterprises since our acquisi-
tion in 2023 amount to DKK 99 million
(DKK 35 million in H1 2022) and DKK 4
million (DKK 2 million in H1 2022), respec-
tively. Had such revenue and profit been
consolidated on 1 January 2023, we esti-
mate that consolidated pro forma revenue
and profit after tax would have been DKK
11,191 million (DKK 9,572 million in H1
2022) and DKK 584 million (DKK 1,070
million in H1 2022), respectively. Without
taking synergies with our core business
into account, we believe that these pro
forma figures reflect the level of consoli-
dated earnings after our acquisition of
the enterprises.
The above statements of the fair values
of acquisitions are not considered final
until 12 months after takeover.
Acquisitions after the reporting period
Demant has acquired additional minor
distribution enterprises from the reporting
date and until the date of publication of
this Interim Report 2023. We are in the
process of estimating their fair values.
The acquisition costs are expected to
relate primarily to goodwill.
Note 1 – Acquisition of enterprises and activities
25
On 27 April 2022, Demant announced
the decision to discontinue its Hearing
Implants business as well as its intention
to divest it to Cochlear Limited.
Following dialogues with regulatory au-
thorities, Demant and Cochlear Limited
announced on 22 June 2023 that they had
agreed to amend the scope of the original
transaction. The amended transaction only
involves Demant’s cochlear implants (CI)
business, whereas the bone anchored
hearing systems (BAHS) business is no
longer part of the transaction and thus re-
mains with Demant for now, pending a re-
view of strategic options. Demant’s deci-
sion to exit Hearing Implants, including the
BAHS business, still stands, and the entire
Hearing Implants business area thus con-
tinues to be recognised as a discontinued
operation.
Due to the amended scope, no considera-
tion will be paid as part of the transaction.
As a result hereof, Demant has written
down the value of its CI business to a net
realisable value of zero.
In H1, discontinued operations realised a
profit after tax of DKK -676 million. Of this
amount, DKK -638 million relates to the
write-down of the CI business and the re-
maining DKK -38 million to an operating
loss realised by Hearing Implants.
Accounting policies
Discontinued operations represent a sepa-
rate line of business disposed of or in prep-
aration for sale. The results of discontinued
operations are presented separately in the
income statement, and comparative fig-
ures are restated. Assets and liabilities of
discontinued operations are presented as
separate items in the balance sheet, and
cash flows from discontinued operations
are presented separately in the cash flow
statement.
Note 2 – Discontinued operations and assets held for sale
Note 2.1 - Discontinued operations
(DKK million)
H1 2023 H1 2022
Full year
2022
Revenue
254 221 497
Expenses
-295 -346 -737
Amortisation, depreciation and
impairment losses -647 -10 -10
Profit before tax
- discontinued operations -688 -135 -250
Tax on profit for the period
12 28 58
Profit for the period
- discontinued operations -676 -107 -192
Profit for the period for discontinued operations
attributable to:
Demant A/S' shareholders
-676 -107 -192
-676 -107 -192
Earnings per share (EPS), DKK
-3.03 -0.47 -0.85
Diluted earnings per share (DEPS), DKK
-3.03 -0.47 -0.85
Cash flow from discontinued operations:
Cash flow from operating activities (CFFO)
-12 -100 -232
Cash flow from investing activities (CFFI)
-4 -10 -4
Cash flow from financing activities (CFFF)
6 2 -17
Cash
flow for the period, net - discontinued operations -10 -108 -253
26
The divestment of the CI business to Coch-
lear Limited is expected to close before the
end of 2023, subject to regulatory approval
by the CMA, the Australian Competition
and Consumer Commission (ACCC) and
the European Commission (EC).
The review of strategic options relating to
the BAHS business is not expected to be
completed until after closing of the trans-
action with Cochlear.
Assets classified as held for sale at 30
June 2023 thus comprise the full Hearing
Implants business.
Accounting policies
Assets and liabilities of discontinued oper-
ations and assets held for sale, except fi-
nancial assets etc., are measured at the
lower of their carrying amount and their
fair value less costs to sell. Non-current
assets held for sale are not depreciated.
Key accounting estimates and
judgements
No key estimates were identified.
Note 2 – Discontinued operations and assets held for sale
Note 2.2 - Assets held for sale and liabilities related to assets held
for sale
(DKK million)
H1 2023
Full year
20
22
Balance sheet items
Intangible assets
97 577
Property, plant
and equipment 1 27
Lease assets
1 18
Deferred tax assets
32 32
Other non
-current assets 3 2
Non
-current assets 134 656
Current assets
170 308
Assets held for sale
304 964
Provisions
6 28
Deferred tax
liabilities 6 -
Lease liabilities
2 19
Other liabilities
43 128
Liabilities related to assets held for sale
57 175
27
This Interim Report 2023 is presented in
accordance with IAS 34, Interim Financial
Reporting, as adopted by the EU, and fur-
ther Danish disclosure requirements in re-
spect of interim reports for listed compa-
nies. We have not prepared a separate in-
terim report for the Parent. The report is
presented in Danish kroner (DKK), which
is the functional currency of the Parent.
The accounting policies used for this In-
terim Report 2023 are the same as the
accounting policies used for our Annual
Report 2022 to which we refer for a full
description. The Group has adopted all
new, amended and revised accounting
standards and interpretations as pub-
lished by the IASB and adopted by the
EU, effective for the accounting period
beginning on 1 January 2023. The amend-
ments, revised standards and interpreta-
tions have not had a significant effect.
Note 3 – Accounting policies and estimates