Page — 1
Interim report
H1 2022/23
Page — 2
Management’s review
Interim report H1 2022/23
Financial highlights
Revenue grew 6% (2% in local currencies), driven by
product sales and a strong performance in Brand
Partnering. The growth in product sales was driven by
EMEA and Americas and supported by the launch of
Beosound Theatre, whereas retail partners, especially
in the EMEA region, remained cautious about
inventory replenishment. Our exit from Russia and
Belarus in February 2022 had a 1.4pp negative impact
on growth.
Like-for-like sell-out declined by 3%, driven by EMEA
and Asia, whereas Americas continued to grow. Across
regions, the On-the-go category showed solid growth.
Gross profit grew 6.4% and gross margin was 44.4%,
which was in line with Q2 of last year and 7.8pp higher
than Q1. Gross margins on the Staged and Flexible
Living categories grew, partly offset by inventory
reductions of On-the-go products. Furthermore,
currency movements impacted the margin negatively.
EBIT was DKK 13m (Q2 21/22: DKK 27m), corresponding
to an EBIT margin of 1.5% (Q2 21/22: 3.4%). Special
items amounted to DKK 1m and the EBIT margin before
special items was 1.6% (Q2 21/22: 3.5%).
The result for the period was a profit of DKK 3m (Q2
21/22: profit of DKK 10m).
Free cash flow was DKK 1m (Q2 21/22: DKK 11m), driven
by a positive cash flow from operating activities.
Available liquidity was DKK 187m (Q1 22/23:
DKK 206m).
Progress on strategic priorities
In Q2, we had different activations that showcased our
abilities for personalisation. We celebrated Beoplay
A9’s tenth anniversary with the Art of A9, where we
commissioned a series of designs by leading artists
working across the fields of art, design and music to
customise the canvas cover.
We participated in an event during the Art Basel fair in
Miami, where we revealed bespoke products created for
very high net worth individuals. A select range of
products was plated in gold and we had more than 200
special guests attending.
In Q2, we re-launched Beosound Emerge, which we had
stopped producing in the previous financial year due to
component scarcity. We also launched Beocom Portal a
dedicated headphone designed for hybrid work.
Beocom Portal is our first headphone certified to work
with Zoom, and we are working on future certifications.
We launched Bang & Olufsen Radio feature on our
legacy platform, which further improved our product
ecosystem.
We continued to implement our Win City strategy
which now includes Paris and New York. In London we
continued to deliver healthy growth, and early 2023 we
will open a new flagship store. In Paris and New York,
we have completed the market segmentation, so we
know where our target customers are and how to
approach them.
In the first half of the year, the number of customers
with products registered in our app increased by 13%. In
addition to expanding our customer base, we also
increased the number of customers who own two or
more products by 12%.
Outlook 2022/23
We maintain the outlook for the financial year 2022/23.
However, we now expect revenue growth, EBIT margin
before special items and free cash flow to be at the
lower end of the range. The outlook is as follows:
• Revenue growth in local currencies: -4% to 5%
• EBIT margin before special items: -2% to 3%
• Free cash flow (DKKm): -50 to 100
The outlook for 2022/23 is subject to unusually high
uncertainty due to high inflation, rising interest rates
and the war in Ukraine, which, in combination, have
increased the risk of recession.
Q2 highlights
Revenue
DKK million
859
Q2 21/22: 809
Growth in local currencies
2%
Q2 21/22: 15%
EBIT before special items
DKK million
13
Q2 21/22: 28
Free cash flow
DKK million
1
Q2 21/22: 11
Page — 3
Management’s review
Interim report H1 2022/23
For definitions, see note 8.7 to the Annual Report 2021/22.
Key financial highlights
Q2
YTD
Year
(DKK million)
2022/23
2021/22
2022/23
2021/22
2021/22
Income statement
Revenue
859 809 1,471 1,475 2,948
EMEA
400 367 639 669 1,360
Americas
106 91 169 151 307
Asia
248
284
466
528
983
Brand Partnering & other activities
105 67 197 127 298
Gross margin, %
44.4
44.4
41.2
44.6
45.3
EMEA
35.9
40.3
33.7
41.4
42.2
Americas
32.5 31.2 27.3 31.4 35.1
Asia
44.8
41.5
36.8
39.9
37.7
Regions, total
38.3 39.6 34.0 39.7 39.7
Brand Partnering & other activities
87.9 97.3 88.1 97.0 95.2
EBITDA
67 81 35 140 257
EBIT before special items
14 28 -71 37 53
EBIT
13 27 -72 34 45
Special items, net
-1
-1
-1
-3
-8
Financial items, net
-11 -10 -29 -15 -54
Profit/loss before tax (EBT)
2 17 -101 19 -8
Profit/loss for the period
3 10 -100 11 -30
Financial position
Total assets
2,544 2,503 2,544 2,503 2,518
Share capital
613 613 613 613 613
Equity
1,012 1,127 1,012 1,127 1,100
Cash
189 214 189 214 162
Available liquidity
187
534
187
534
301
Net interest-bearing deposit/debt
4 339 4 339 111
Net working capital
335
217
335
217
335
Q2
YTD
Year
(DKK million)
2022/23
2021/22
2022/23
2021/22
2021/22
Cash flows
Cash flows from operating activities
54 65 26 112 76
Operational investments
-53 -54 -106 -80 -248
Free cash flow
1 11 -80 32 -172
Cash flows from investing activities
-49 -50 -99 -76 -239
Cash flows from financing activities
65 - 103 2 145
Cash flows for the period
70
15
30
38
-18
Key figures
Growth in local currencies, %
2 15 -4 27 10
EBITDA margin before special items, %
7.9
10.2
2.5
9.7
9.0
EBITDA margin, %
7.8 10.1 2.4 9.5 8.7
EBIT margin before special items, %
1.6 3.5 -4.8 2.5 1.8
EBIT margin, %
1.5 3.4 -4.9 2.3 1.6
Return on assets, %
-3.9 0.5 -3.9 0.5 -1.2
Return on invested capital, excl. goodwill, %
-2.7 10.7 -2.7 10.7 19.3
Return on equity, %
-9.9
1.0
-9.9
1.0
-2.7
Full-time equivalents at end of period
1,048 1,030 1,048 1,030 1,073
Stock-related key figures
Earnings per share (EPS), DKK
0.0
0.1
-0.8
0.1
-0.2
Earnings per share, diluted (EPS-D), DKK
0.0 0.1 -0.8 0.1 -0.2
Price/Earnings
390.3 329.1 -12.0 311.0 -67.6
Revenue per share, DKK
7.2 6.7 12.3 12.2 24.0
Revenue per share, diluted, DKK
7.2 6.8 12.3 12.3 24.0
Page — 4
Management’s review
Interim report H1 2022/23
Revenue grew 6% (2% in local
currencies), driven by product sales in
EMEA and Americas in combination
with a strong performance in Brand
Partnering. Product sales were
supported by the launch of Beosound
Theatre, but retail partners remained
cautious replenishing inventory.
Sell-out declined by 3%, driven by
EMEA and Asia, whereas Americas
continued to grow. Across regions, the
On-the-go category showed solid
growth.
Gross profit was up by 6.4% and gross
margin was in line with last year. We
achieved an EBIT margin before
special items of 1.6% (Q2 21/22: 3.5%).
Free cash flow was DKK 1m (Q2 21/22:
DKK 11m), driven by cash flow from
operating activities offset by
investments.
The launch of our new soundbar and TV solution,
Beosound Theatre, had a positive impact on our
financial performance for the quarter. The soundbar
has been well received by both reviewers and customers
and we have experienced a positive sell-out trajectory
after the launch.
The ongoing war in Ukraine, high inflation, rising
interest rates and regional lockdowns in China
continued to impact our performance in Q2. So far, the
macroeconomic development has had the biggest
impact on the Flexible Living category. By contrast, the
On-the-go category has been the most resilient,
delivering improved performance compared to Q2 of
last year.
Americas has been the least impacted region, and in Q2
we added a new store in San Francisco and expanded
our partnership with Origin Acoustics. In EMEA,
monobrand partners remained cautious about
inventory replenishment. Asia was still impacted by the
lockdowns in China. In December, China started to ease
their COVID-19 restrictions, but we do not believe the
economic environment will improve in the short term.
We continued to see improvements in the market for
components in Q2 and were able to relaunch Beosound
Emerge as planned. We reduced our component spot
buys by a further 20% compared to Q1, which was
already 50% lower than Q4 of last year.
Gross margin was at the same level as in Q2 of last year
and we saw an improvement compared to Q1. We
achieved improved margins on Staged and Flexible
Living products. This was offset by the On-the-go
category, which was adversely impacted by inventory
reductions. Currency movements also had an adverse
impact on margin.
We achieved a positive EBIT margin before special
items and a positive free cash flow.
Like-for-like sell-out
Like-for-like sell-out declined by 3% compared to Q2 of
last year. This was mainly related to the development in
Europe and lockdowns in China.
Sell-out in EMEA declined by 6%, mainly related to the
first months of Q2, whereas November saw positive sell-
out compared to last year. The decline for the quarter
was primarily driven by the monobrand channel. The
company owned stores, etail and multibrand all
delivered solid sell-out growth.
In the monobrand channel, we continued to see
partners being cautious about replenishing inventory.
Like-for-like sell-out in Asia declined by 1%. This was
driven by China, whereas all other countries in the
region saw sell-out improvements. The company
owned stores, eCommerce platform and etail delivered
growth, while both the monobrand and multibrand
channels reported lower sell-out.
Sell-out in Americas grew 9%, mainly driven by the
monobrand and etail channels. We saw a solid
performance in both the Staged and On-the-go
categories.
Product category like-for-like sell-out
The lockdowns in China impacted sell-out in all
product categories.
Staged category sell-out declined by 8%, across both
speakers and TVs. Beosound Theatre was one of the
best-performing products in terms of sell-out value,
despite only being available to customers in the last two
months of Q2.
Management’s review for Q2
LIKE-FOR-LIKE SELL-OUT*
Q2
Q2
EMEA
-6%
Staged
-8%
Americas
9%
Flexible Living
-9%
Asia
-1%
On-the-go
9%
Total
-3%
Total
-3%
* Defined as sell-out from the same stores, provided they were open and active in both periods.
Page — 5
Management’s review
Interim report H1 2022/23
Flexible Living sell-out declined by 9%. We generally
saw lower volumes, except for Beosound Balance,
which performed well.
Sell-out in the On-the-go category grew 9%. We saw
positive sell-out trends across portable speakers,
headphones and earphones. Our newest earphone,
Beoplay EX, saw the highest sell-out value across all
On-the-go products.
Revenue in Q2
Revenue grew by 6.3% year on year (2% in local
currencies) to DKK 859m.
The increase in reported revenue was related to both
regional product sales, which grew by 1.7% (-2% in local
currencies), and Brand Partnering & other activities,
which grew by 58.3% (47% in local currencies).
In February 2022, we stopped all sales to Russia and
Belarus as a result of the invasion of Ukraine. Excluding
sales to the Russian market in Q2 of last year, the year-
on-year increase was 1.4pp higher for the Group and
1.5pp higher on product revenue.
The growth in product revenue was mainly driven by
the monobrand channel and B2B in Asia and Americas.
In EMEA, monobrand partners continued to be
cautious on inventory replenishment, and this
adversely impacted growth. The growth was largely
attributed to the launch of Beosound Theatre.
Revenue from our company owned stores grew, driven
by EMEA and Americas, while the stores in Asia saw a
small decline due to lower in-store traffic during
regional COVID-19 outbreaks. The company owned
stores delivered slightly better growth compared to the
monobrand channel.
The number of monobrand stores declined by nine
during Q2, which was related to the store closures
announced last year. We also completed several
relocations of existing stores, and in the US we opened a
new store in San Francisco.
Revenue from the multibrand channel declined, driven
by both Asia and Americas. The decline in Asia was
largely due to lockdowns in China, which resulted in
lower footfall, whereas multibrand in Americas in
general was impacted by a move to online channels. In
EMEA, revenue related to multibrand increased. This
was mainly due to low comparables and the sale of a
large quantity of headphones as we decided to reduce
inventory of products with shorter lifecycles. The low
comparables were due to take-back of slow-moving
inventory from a few multibrand partners last year.
The increase in the number of multibrand stores was
driven by the US, as we are now present in a number of
T-Mobile stores with a select number of products.
Compared to the beginning of the financial year, the
number of multibrand points of sale declined by
approximately 7%.
Online revenue was driven by the same trends as seen
in the previous quarters, with solid growth from etail,
partly offset by lower revenue from our eCommerce
platform. Our eCommerce sales accounted for
approximately 3% (Q2 21/22: 4%) of product revenue in
Q2. Our combined eCommerce and etail revenue
accounted for around 22% (Q2 21/22: 34%) of regional
product revenue.
The 58.3% growth in Brand Partnering & other activities
was driven by both higher licence income and product
revenue, mainly related to our Cisco partnership.
Revenue split
367
400
91
106
284
248
67
105
EMEA
Americas
Asia
Brand Partnering & other activities
Q2 2022/23
Q2 2021/22
327
332
193
143
222
279
67
105
Staged
Flexible Living
On-the-go
Brand Partnering & other activities
Q2 2022/23
Q2
2021/22
Monobrand
Multibrand
Points of sale
End Q2 22/23
End Q1 22/23
End Q2 22/23
End Q1 22/23
EMEA
312
322
1,547
1,535
Americas
28 27 2,225 1,535
Asia
79
79
996
788
Total
419
428
4,768
3,858
Page — 6
Management’s review
Interim report H1 2022/23
Staged category
Revenue grew by 1.6% to DKK 332m, primarily
attributable to the launch of Beosound Theatre, which
included sales of in-store display units and initial
inventory build in partner-driven monobrand stores
and at custom installers.
The remaining part of the Staged category saw
declining volumes from both TVs and speakers. The
impact from lower volume was partly offset by higher
average prices, driven by price increases implemented
since Q2 of last year.
Flexible Living category
Revenue declined by 25.9% to DKK 143m, with the
biggest declines in EMEA and Asia, while Americas
delivered growth. We generally saw lower sales volumes
compared to Q2 of last year, partly offset by the
relaunch of Beosound Emerge and higher average
prices. The decline was predominantly driven by
Beoplay A9, which last year experienced very high
demand in China. Despite the decline, Beoplay A9
continued to be the best-selling product in the category.
On-the-go category
Revenue increased by 25.7% to DKK 279m, driven by
EMEA and Asia and mainly related to sales of
headphones and earphones.
Growth in the earphone category was driven by Beoplay
EX, which delivered more revenue than all other
earphone products combined last year. Pricing on
Beoplay EX has remained stable since its launch, also
during the big commercial events in November.
The revenue growth from headphones was driven by all
products and supported by a large deal on headphones
as part of our efforts to reduce our inventory.
Portable speakers declined compared to Q2 of last year,
mainly reflecting high comparables in Americas, where
we ran a campaign together with a partner. The
development was partly offset by improved average
prices.
Gross profit
Gross profit was DKK 382m (Q2 21/22: DKK 359m). This
was equivalent to a gross margin of 44.4%, which was
on a par with last year.
Gross profit from regional product sales was DKK 288m
(Q2 21/22: DKK 294m), equivalent to a gross margin of
38.3% (Q2 21/22: 39.6%). The decline was related to the
On-the-go category and was mainly driven by the sale
of a large quantity of headphones as part of our efforts
to reduce inventory on products with shorter lifecycles.
This had a negative effect of 1.8pp on product gross
margin.
We delivered improved gross margin on Staged and
Flexible Living, partly due to price increases
implemented since Q2 of last year. Gross margin in the
On-the-go category declined to 19.0% (Q2 21/22: 24.2%)
but amounted to 23.1%, adjusted for the above-
mentioned sale of headphones.
We saw a positive development in logistics, as we
managed to ship most freight by sea in Q2. This had a
positive impact on both costs and emissions. Due to
high inventory, we had less products shipped inbound
from production partners. We managed to reduce
freight costs by around 33% compared to Q2 of last year.
Gross profit from Brand Partnering & other activities
was DKK 94m (Q2 21/22: DKK 65m), equivalent to a
gross margin of 87.9% (Q2 21/22: 97.3%). The growth in
gross profit was mainly driven by our new collaboration
with Cisco, where we have started to sell the Bang &
Olufsen Cisco 980 headset for hybrid work. The change
in mix, with more product sales, impacted the gross
margin in Q2 compared to Q2 of last year.
The development in currencies, in particular USD, had
an adverse impact on margin of approximately 2.2pp
compared to Q2 of last year. A lower fixed-costs-to-
revenue ratio partly offset the decline.
Capacity costs
Capacity costs were DKK 369m (Q2 21/22: DKK 332m),
corresponding to a year-on-year increase of 11%.
The increase reflected our focus on product
development and higher marketing costs.
Development costs increased by DKK 14m to DKK 81m
(Q2 21/22: DKK 67m). This was driven by higher incurred
costs in combination with a lower capitalisation ratio
compared to Q2 of last year. The increase in incurred
costs was partly driven by the addition of more
competencies, including in our new office in Sofia,
Bulgaria, which is focused on software development.
Distribution and marketing costs increased by
DKK 24m to DKK 255m (Q2 21/22: DKK 231m). The
marketing cost ratio was 9.6% in Q2 compared to 9.0%
in Q2 of last year. The increase was driven by higher
marketing costs in the three regions.
Q2
YTD
GROSS MARGIN
2022/23
2021/22
2022/23
2021/22
Staged
48.8%
46.0%
44.2%
46.0%
Flexible Living
51.8% 46.8% 46.2% 46.4%
On-the-go
19.0%
24.2%
14.5%
25.2%
Products, total
38.3% 39.6% 34.0% 39.7%
Brand Partnering & other activities
87.9%
97.3%
88.1%
97.0%
Total
44.4%
44.4%
41.2%
44.6%
Page — 7
Management’s review
Interim report H1 2022/23
Administrative expenses were stable at DKK 33m (Q2
21/22: DKK 34m).
EBIT
EBIT was DKK 13m (Q2 21/22: DKK 27m). This was
equivalent to an EBIT margin of 1.5% (Q2 21/22: 3.4%).
The margin decline was related to the higher capacity
cost ratio, partly offset by the increase in gross profit.
Currency movements had a negative impact of
approximately 1.5pp compared to last year.
The EBIT margin before special items was 1.6% (Q2
21/22: 3.5%). Special items amounted to an expense of
DKK 1m.
Financial items
Net financial items were an expense of DKK 11m versus
an expense of DKK 10m last year. The increase was
driven by higher interest expenses.
Profit/loss
The result before tax was a profit of DKK 2m (Q2 21/22:
DKK 17m) and income tax was an income of DKK 1m
(Q2 21/22: expense of DKK 7m).
The result for the period was a profit of DKK 3m (Q2
21/22: DKK 10m).
Cash flow
Free cash flow was DKK 1m compared to DKK 11m last
year. The year-on-year decline was related to lower cash
flows from operating activities, which were DKK 54m
compared to DKK 65m in Q2 of last year.
The decline in cash flows from operating activities was
mainly related to a lower result before tax and other
non-cash items, partly offset by a lower negative impact
from changes in net working capital compared to last
year and income tax received. The change in net
working capital was a negative DKK 10m compared to a
negative impact of DKK 26m last year.
Cash flows from operational investments were an
outflow of DKK 53m in line with last year (Q2 21/22:
DKK 54m). The investments were primarily related to
the development of new products and platforms.
Cash flows from financing activities were DKK 65m
(Q2 21/22: DKK 0m). The cash inflow was related to net
repo transactions of DKK 78m (Q2 21/22: DKK 80m),
which were used to access liquidity on an intra-day
basis for short-term liquidity planning and offset by
cash outflow related to lease liabilities.
The cash position was DKK 189m (Q1 22/23: DKK 125m).
Total available liquidity was DKK 187m (Q1 22/23:
DKK 207m), made up of cash and securities amounting
to DKK 590m less DKK 403m in bank loans related to
repo transactions.
Our combined capital resources, consisting of available
liquidity and the undrawn part of our ESG-linked credit
facility, amounted to DKK 307m (Q1 22/23: DKK 337m).
Net working capital
Net working capital increased by DKK 10m during the
quarter to DKK 335m.
Trade receivables increased by DKK 49m. The increase
was driven by higher sales in Q2. Sales with extended
credit accounted for 12% of revenue in the quarter (Q2
21/22: 4%). The increase was related to the launch of
Beosound Theatre and sales of in-store display units to
the monobrand stores.
Trade payables increased by DKK 16m, mainly related
to timing of payments.
Inventories declined by DKK 56m during the quarter.
We entered the quarter with a high inventory, which
was established in Q4 of last year and mainly related to
lockdowns in China.
The inventory reduction was predominantly related to
On-the-go products, partly driven by a large deal in
EMEA. With the reduction in inventory of products
with shorter lifecycles, the inventory composition
improved significantly at the end of Q2 and now
consists mainly of Staged and Flexible Living products.
We are working to further reduce our inventory during
the remainder of the financial year.
Other liabilities decreased by DKK 18m during the
quarter, primarily related to derivatives.
Page — 8
Management’s review
Interim report H1 2022/23
Net working capital to the last 12 months' revenue was
11.4% (Q2 21/22: 7.4%). The net working capital ratio
remained at the high level from the end of the last
financial year and was at the same level as Q1 22/23
(11.2%).
Net interest-bearing deposit
Net interest-bearing deposit, including net lease
liabilities of DKK 120m, amounted to DKK 4m,
compared to net interest-bearing deposit of DKK 111m
at year-end 31 May 2022. The decrease was mainly due
to the negative free cash flow of DKK 80m for the year.
During the quarter, the net interest-bearing deposit
decreased by DKK 23m.
For further details, see note 8.
Equity
Equity was DKK 1,012m, corresponding to a decline of
DKK 98m, driven by the loss for the year.
Financial performance H1 2022/23
Revenue amounted to DKK 1,471m, which was at the
same level as last year (H1 21/22: DKK 1,475m). Revenue
declined by 4% in local currencies.
The On-the-go category grew by 11%, partly driven by
inventory reduction, while both the Staged and Flexible
Living categories declined. Our financial performance
was adversely impacted by retail partners being more
cautious, working to reduce their inventories due to
current macroeconomic uncertainties. Recent product
launches had a positive impact on growth. The revenue
from Brand Partnering & other activities increased year-
on-year and was driven by both higher licence income
and product revenue, mainly related to our Cisco
partnership.
Gross margin was 41.2% (H1 21/22: 44.6%), equivalent to
a year-on-year decrease of 3.4pp. The margin was
adversely impacted by reductions of On-the-go
inventory. Gross margin was positively impacted by
price increases implemented since H1 of last year, offset
by change in product mix and higher component costs.
Brand Partnering & other activities constituted a larger
portion of revenue, supporting the overall margin.
Currency movements had an adverse effect on gross
margin of approximately 2.3pp.
Capacity costs amounted to DKK 678m (H1 21/22:
DKK 624m). The increase was driven by targeted
investment into our strategic focus areas, where we
have prioritised product development and sales and
marketing.
EBIT was DKK -72m (H1 21/22: DKK 34m), equivalent to
a margin of -5.1% (H1 21/22: 2.3%). The decline was
driven by the lower gross profit and higher capacity
costs.
EBIT before special items was DKK -71m (H1 21/22:
DKK 37m) with a margin of -5.0% (H1 21/22: 2.5%).
Free cash flow was DKK -80m (H1 21/22: DKK 32m),
primarily driven by lower EBITDA of DKK 35m (H1
21/22: DKK 140m) and more investments, primarily
related to the development of new products and
platforms.
Page — 9
Management’s review
Interim report H1 2022/23
We entered 2022/23 with a high
degree of uncertainty due to declining
consumer confidence driven by high
inflation, rising interest rates and the
war in Ukraine and further impacted
by regional lockdowns in China.
We continued to execute on our
strategy in Q2 albeit at a slower pace
due to the macroeconomic
environment.
Additionally, we sharpened our
longer-term strategic direction to
ensure that our priorities and
investments stay firmly and focused on
track going forward.
In Q2, we continued to execute on our strategy themes
though with more caution and consideration to the
external operating environment. Plans and resource
allocations were revisited to factor in the increasing
uncertainty.
While adjusting plans and executions in the short term,
we also sharpened our strategic direction and intent for
the longer term.
Since the launch of our turnaround strategy in 2020, we
have continuously collected insights. We have
strengthened our understanding of our heritage and its
unique advantages, our market potential, target
audience and value creation logic. We have now
established clarity on the strategic direction we believe
is right for the company, and how we intend to create
superior value for our customers, partners and
shareholders in the longer-term future. The purpose of
this is to establish a differentiated and attractive
market position while orienting ourselves towards
scalable growth.
In view of the current economic climate, it is important
that we balance our long-term growth investments with
short-term results, and that the investments we make
are the critical few that can take us in the intended
strategic direction.
Strategy execution in Q2 – delivering on our
priorities for the first half of the fiscal year
Product offering expanded
In the last financial year, component scarcity halted
production of the recently launched Beosound Emerge
as it shared core components with other products in the
portfolio. We have seen a gradual improvement in
component availability, and in Q2 we were able to
relaunch Beosound Emerge.
In Q2, we also launched Beocom Portal, a headphone
designed for hybrid work. Beocom Portal is certified to
work with Zoom, and we are exploring opportunities on
certifications for other platforms. In Q2, we also
received Zoom certification for Beoplay EX, further
expanding our hybrid work offering together with our
partnership with Cisco on the Bang & Olufsen Cisco 980
headset.
Showcasing bespoke and limited offerings
Bang & Olufsen has unique opportunities to create
special editions and bespoke solutions, unlike any other
audio company. In Q2, we executed several activations
showcasing our capabilities for customisation. One
example was an event during the Art Basel fair in
Miami, where we revealed bespoke products created for
very high net worth individuals (VHNWIs). More than
200 special guests attended the event and showed their
appreciation of and interest in our brand and our
unique products.
In Q2, we also celebrated Beoplay A9’s tenth
anniversary with the Art of A9. We commissioned a
series of designs by leading artists working across the
fields of art, design and music to customise the canvas
cover. In China alone, we had more than 60 million
views on Weibo in the first few days.
Building the brand and driving demand
Our customer base, defined as customers registered in
our app, saw a 13% increase in the first half of the
financial year.
In addition to expanding the customer base, we also
increased the number of customers who own two or
more products by 12% during the period. The number of
newsletter subscribers continued to increase in Q2. The
duration of visits to our corporate website continued
the positive trajectory seen in previous quarters. The
launch of Beosound Theatre drove more traffic to our
website, supported by social media posts.
Pillars of growth
In the six core markets in Europe, we saw different sell-
out patterns in Q2. Four of the six countries delivered
sell-out at the same or a higher level than last year. The
biggest decline was in Denmark, which has a broader
Progress on key strategic priorities for 2022/23,
and a sharpened longer
-term direction
Page — 10
Management’s review
Interim report H1 2022/23
customer base and is therefore comparatively more
impacted by macroeconomic changes.
In Asia, sell-out was adversely impacted by the regional
lockdowns in China, and a decline in in-store footfall.
Sell-out in South Korea was slightly better than Q2 of
last year.
In Q1, Americas was included as a core market.
Throughout Q2, we continued to see solid sell-out
performance. A new partner-owned store opened in San
Francisco, and there are plans to open more in selected
states, as part of a monobrand expansion in close
collaboration with our network of US partners. Further,
we expanded our partnership with Origin Acoustics, to
boost our efforts in the custom installation (CI)
channel.
In Q1, we announced that we had expanded our Win
City concept to include Paris and New York. We have
completed market segmentation in both cities. In New
York, we have built a BeoHome in our SoHo flagship
store, where customers can enjoy a truly immersive and
cinematic experience.
In London, we expanded our company owned store
network, with a new flagship store on New Bond Street
in Mayfair. The store will welcome customers in 2023
and will offer a range of new customer engagement
opportunities. The New Bond Street store will
complement our existing stores in London and help us
create a connected network of retail experiences.
Reducing CO2 emissions
At our aluminium factory in Struer, we have until now
been using gas heaters in our anodising facilities. We
want to move away from natural gas and in Q1 we began
the installation of an electric boiler. Installation of the
new boiler, which runs on 100% renewables energy, was
completed in Q2.
At COP27, it was announced that Bang & Olufsen had
joined the First Movers Coalition (FMC), a public-
private partnership driven by the World Economic
Forum. The FMC aims to leverage the purchasing power
and supply chains of companies to create markets for
innovative clean energy technologies and decarbonise
seven industrial hard-to-abate sectors. Bang & Olufsen
has joined the aluminium sector and is one of ten new
companies that have joined the FMC.
We want to participate in driving innovation and take
needed climate action in this decade. Our commitment
to source more sustainably and increase our use of
recycled materials is in line with our overall
sustainability strategy and underlines our ambition to
lead change within our own industry.
Our target is for at least 10% of our primary aluminium
purchases to have near-zero carbon emissions by 2030.
We also commit to ensure that by 2030 at least 50% of
the aluminium used in our production is recycled.
Improving our logistics can help us reduce emissions.
In the past, we have been too reliant on air freight and
we have aimed to transport more products using lower-
emission solutions. In Q2, we saw improvements in our
logistics system and the majority of our freight was
shipped by sea compared to almost none in Q1.
Sharpening our strategic direction, and intent
for the longer-term
Bang & Olufsen is a global beacon of design and sound,
as well as the unrivalled leader in luxury audio. For
almost a century now, we have been creating
unforgettable moments for generations of design and
music lovers with our iconic products, which have
redefined what audio equipment can look, feel and
sound like. As a result of our design, engineering
excellence and innovation, our products have become
art museum and collector’s items. There is a vibrant
secondary market for current and older Bang & Olufsen
products, and our customers have created communities
to share their passion for our brand. Designers and
product builders have looked to us for inspiration, and
some of the most renowned luxury brands continued to
show interest in collaborating with us.
Since the launch of our turnaround strategy, we have
managed to grow all markets and categories and to
increase our customer base and the average product
ownership. We have grown most of our channels
including our company owned stores. Our product
portfolio is strong, desirable and our products continue
to reap positive reviews and awards. We have
demonstrated that we can charge a premium for our
products and we have achieved better price consistency
Page — 11
Management’s review
Interim report H1 2022/23
across channels. Our partner satisfaction has increased
and we have sustained a healthier balance between
supply and demand. Our marketing metrics have
improved and we have a proven go-to-market Win City
concept.
We want to leverage our rich heritage, the improved
business foundation we have gradually built through
our turnaround efforts, and the insights and clarity we
now have on our business and the path to growth, to
sharpen our strategic direction.
A direction echoing the best of our past while
pointing us towards an exciting future
Bang & Olufsen is a one-of-a-kind in an ocean of short-
lived, black-and-white plastic products. Our heritage
and our ability to transform have brought us to where
we are today and provided us with a unique and
relevant trajectory to the future. We want to expand on
these fundamental and advantageous capabilities in
the future by turning them into our purpose and
driving force: We create Magical Moments, Designed
for Life.
We want to be among the best audio leaders driving the
transformation to spatial, adaptive, and personalised
sound, producing a new level of magical sound
experiences, while bringing magical moments to all our
customers in our key touch points across the customer
journey. We want to create products that are designed
for the lifestyle and lifetime of our customers and are
built with consideration and respect for the life of our
planet.
We are already delivering on our purpose and ambition.
Our newly launched Beosound Theatre offers
unparalleled spatial sound features for immersive,
magical experiences. Our first cradle-to-cradle certified
product, Beosound Level, demonstrates how modular
design enables upgradability and repairability and
hence product longevity.
Our purpose not only reflects our heritage and what
distinguishes us, it also resonates with forces of change
in the future where; Longevity continues to be a key
parameter of action in a world of scarcity. Our agenda is
not only driven by governments and regulators but
commanded by consumers. Younger customer
demographics are projected to drive consumption,
particularly in the luxury sector where we believe that
Millennials and Gen Zs will drive the majority of growth
up to 2025 – and beyond. These younger segments look
for purposeful brands, they consume responsibly, and
they want immersive brand, product and channel
experiences. Technology shifts to a web3 era and new
technologies like blockchain, machine learning, AR/VR,
5G and 6G connectivity, edge sensors and computing
will lay the foundation for next generation audio and
immersive, adaptive and interactive sound experiences.
We believe these forces of change play to our strength
and make our purpose and capabilities more relevant
than ever before.
Winning more than 200 million affluent design
and music lovers
In our core markets, we have identified more than 200
million affluent design and music lovers, spanning our
four customer segments, Very High Net Worth
Individuals (VHNWIs), Gen Z’s (and young Millennials),
Well-established and Careerists.
We have set a clear focus on winning two segments, the
younger customer generations and VHNWIs as
communicated in Q1. The next generation of Bang &
Olufsen customers are affluent young Millennials and
Gen Zs. They represent our future and require us to
adapt to their values and expectations. The VHNWIs are
an under-tapped segment with a perfect fit to our
propositions.
Together, these two segments are interesting because of
their impact on brand perception and consumption in
the broader market. Gen Z and young Millennials
define what is cool and in popular demand, while
VHNWIs define what constitutes contemporary luxury.
We believe their influence will help elevate the
visibility, attractiveness and exclusivity of our brand
and products, and will also help drive demand among
the Careerists and Well-Established segments.
Page — 12
Management’s review
Interim report H1 2022/23
A unique proposition of Luxury Timeless
Technology
To win our audience, we want to deliver on a
proposition of: Luxury Timeless Technology. With
this proposition we set out our position in luxury, we
continue our heritage of building long-lasting products,
and we explore and leverage technology. We also
challenge industry conventions of short product
lifecycles and frequent product replacements, which
makes our journey even more exciting and important.
We are thus making a deliberate move away from the
mainstream consumer electronics market to reclaim a
differentiated and unparalleled position in luxury
audio.
To orient Bang & Olufsen towards the updated
direction, we have already started making five
directional shifts within key areas of our business:
1. Reigniting our brand to become a culturally relevant
luxury love brand
The Bang & Olufsen brand is strong, and punches well
above its weight, but lacks unaided awareness. We will
continue to work with relevant brand ambassadors,
partnerships and sponsorships to gain reach and
exposure to the right customer audience. We will also
continue our current brand ignition efforts, engaging
more directly and interactively with our audience,
driving conversations, and taking a more active role in
culture. To do so we will continue our marketing
activations within art, design, sports and music like the
previously mentioned ‘Art of A9’ co-creation.
Additionally, we will articulate and activate our unique
heritage, which is our licence to operate in luxury, and
our means of differentiation in consumer electronics.
Ultimately, we want to improve our brand awareness,
continue growing our customer base and increase
average ownership of our products.
2. Building a seamlessly connected product portfolio,
bridging our past, present and future
We have a very strong portfolio today. We see desire,
interest and growth across our product categories, and
we have improved our product NPS over the years. We
continue to build for a product ecosystem and for
interoperability enabled by our transition to become a
platform player. This transition is a function of two
choices;
1. Everything we ship runs on one of our two software
platforms as this enables our products to connect
seamlessly. It also enables us to connect our
current portfolio to our iconic products of the past
and new product propositions of the future. It
further allows us to continue improving and
extending our product experience and it prolongs
product lifetime through regular software updates,
upgrades and remote servicing
2. We build product platforms. Our inhouse design
and architecture activities enable us to do
modularisation, product versioning, and to
leverage our strong CMF capabilities to
accommodate different use cases, and
customisations as per customer request. This helps
us build for scale and simplify our portfolio and
pricing strategy
We will continue to create desirable and award-winning
propositions for our target audience across the
categories we currently cover. We will strengthen our
focus on developing entry propositions for our younger
audience, and full solutions for the VHNWIs.
Acknowledging that both audiences have an affinity for
customised products, we will continue to leverage our
strong capabilities in design and craftsmanship to offer
product personalisation and a bespoke programme.
Going forward, we will expand our recently launched
bespoke offering to other categories with more options,
and in more countries.
Testifying to the timelessness of our products and our
ability to connect past icons with current and future
products, we will continue our Classics program
making it a category of its own. We will recreate and
relaunch more icons of the past as we have done with
Beogram 4000c. In addition, we are committed to
getting all products we start developing from 2022/23
cradle-to-cradle certified, and we will continue to
develop our modular design capabilities to allow for
product repair and upgradability on both the hardware
and software side.
3. Creating magical moments in connected touch points
We have a strong and resilient channel footprint in
place. Nonetheless, we will continue to work with our
routes to markets to build superior and consistent
experiences on par with luxury peers.
Specifically, we will continue to improve our strong
monobrand network, which plays a crucial role in
providing magical brand experiences. We will also
continue our improvement efforts in the multibrand
and etail channels, where we want to move towards
presence with partners sharing similar brand
positioning and brand values.
The role of our own eCommerce platform is
increasingly important, as this is not only a channel of
commerce, but an ideal universe for brand experience
and customer engagement. We will therefore continue
our digital acceleration efforts to grow our commercial
results and customer experience in the channel.
Our company owned stores are an important vehicle for
bringing ultimate brand and product experiences to
life. We will continue to build presence through
company owned stores in strategically important
locations following our Win City focus.
Additionally, we will explore new routes to market that
supplement our current channel mix, to meet our
customers where they are, and to ensure superior brand
experience throughout the customer journey.
Page — 13
Management’s review
Interim report H1 2022/23
Our long-term goal is to create an ecosystem of the right
channels, built on the same baseline of magical
customer experiences, with clearly defined purposes
and roles for channel verticals, and a strong backbone
connecting our channels to provide greater consistency
and seamlessness.
We have already taken gradual steps in this direction by
terminating select monobrand partners last year, in
order to ensure consistent, high quality brand
experience, and we recently announced the opening of
a new company owned flagship store in London.
4. Winning in key, global cities
Through our Win London project, we have developed
and validated a go-to-market approach that works.
Knowing that our customers live, work and socialize in
cities, and understanding that some global cities
function as hubs and epicentres of cultural and
commercial exchange, we have decided to expand our
Win City strategy, as previously announced.
Our efforts in London are ongoing, and we are making
good progress in New York and Paris. We have
developed a roadmap of key cities to include in the
coming years, and we have established a global project
team and a documented playbook, to ensure focused,
scalable execution where best practices are shared, and
synergies created among the Win City executions.
5. Exploring existing and new adjacent opportunities
We will continue to explore adjacent business
opportunities which we are uniquely positioned to tap
into.
Our brand partnerships continue to be of great
importance to us, not only as a driver of commercial
value, but also as a brand awareness and customer
acquisition engine. We remain focused on exploring
further opportunities in our current brand partnerships
and with new, potential partners.
We will also continue our business-to-business efforts,
tapping into the hybrid work trend where demand for
multi-purpose devices drives willingness to invest in
high quality, long-lasting audio equipment. Our
enterprise certifications are an important milestone in
this journey. We will continue to expand our presence
in the high-end hospitality segment, which represents
an ideal environment for our products and their
exposure to our target audience.
Designing the future since 1925 – and for
decades ahead
With our sharpened strategic direction, we are
orienting the company towards a unique market
position. We are also moving the industry to a different
and better place, and we believe that no-one else is
better positioned to lead that change. What we have
done for the past 97 years is more relevant than ever,
given the current economic climate and current trends.
In the months to come, we will refine and clarify our
strategic priorities and the sequencing of these, to
maintain our cost and investment diligence while
ensuring we develop our business in the desired
direction.
Page — 14
Management’s review
Interim report H1 2022/23
Like-for-like sell-out
Sell-out declined by 6%. The decline was driven by
monobrand and eCommerce. The development in
monobrand varied significantly across countries. The
northern European countries generally experienced
lower demand, whereas the mid and southern
European countries saw a positive or stable sell-out
trend. Combined sell-out in the six core markets was at
the same level as last year.
The company owned stores and etail delivered solid
growth compared to last year. Multibrand saw
moderate growth compared to last year.
The overall decline was related to both Staged and
Flexible Living products while the On-the-go category
experienced solid demand. Partner inventory levels
remained at a satisfactory level.
Revenue
Revenue was DKK 400m (Q2 21/22: DKK 367m). This
was equivalent to an increase of 9.1% (8% in local
currencies). In February 2022, we stopped all sales to
Russia and Belarus following the invasion of Ukraine.
Excluding sales to Russia last year, revenue increased
by 11.7%.
The growth was mainly related to multibrand. This
year, we disposed of a large quantity of headphones
through a partner, and last year was adversely impacted
by take-back of products as we observed slow-moving
products with a few partners.
The company owned stores delivered solid revenue
growth.
Sales to the monobrand channel declined, driven by
On-the-go and Flexible Living. The Staged category
increased, driven by the launch of Beosound Theatre.
We saw revenue decline from both the eCommerce
platform and etail compared to Q2 of last year.
Total revenue from our Staged category declined by 2%.
The launch of Beosound Theatre had a positive impact
on revenue growth. The remaining products in this
category experienced lower revenue, which was partly
offset by higher selling prices driven by the price
increases implemented since Q2 of last year.
Revenue from the Flexible Living category declined by
15%. We experienced a general decline in the volume
sold, which was partly mitigated by the relaunch of
Beosound Emerge and higher selling prices.
Revenue from the On-the-go category increased by
56%. The main reasons for the increase were low
comparables as we took products back last year
whereas, this year, we reduced inventory and sold a
large quantity of Beoplay Portal.
Gross profit
Gross profit amounted to DKK 143m (Q2 21/22:
DKK 148m). This was equivalent to a gross margin of
35.9% (Q2 21/22: 40.3%).
The decline was related to product mix, with more sales
from On-the-go, which was further impacted by the sale
of a large quantity of headphones with a negative
impact of 3.4pp. Furthermore, currency movements
contributed to the margin decline, partly offset by a
positive effect from a lower fixed-costs-to-revenue
ratio.
H1 2022/23
Revenue was DKK 639m (H1 21/22: DKK 669m). This
represented a decline of 4.4% (-5% in local currencies).
The decline was primarily driven by the Staged and
Flexible Living categories, while On-the-go was
growing.
Gross margin decreased by 7.7pp to 33.7%, primarily
driven by product mix offset by additional component
costs.
EMEA
Q2 revenue split (%)
55%
61%
12%
16%
33%
23%
22/23 21/22
Staged Flexible Living On-the-go
Q2
YTD
(DKK million)
2022/23
2021/22
Change
2022/23
2021/22
Change
Revenue
400 367 33 639 669 -30
Growth in local currencies
8%
3%
20%
-5%
Gross profit
143 148 -4 215 277 -61
Gross margin
35.9%
40.3%
-4.4%
33.7%
41.4%
-7.7%
Page — 15
Management’s review
Interim report H1 2022/23
Like-for-like sell-out
Sell-out increased by 9%. The growth was mainly
driven by monobrand and etail. The main contribution
to the sell-out growth in the monobrand channel came
from the high-end products in the Staged category in
combination with new products like Beosound Theatre
and Beoplay EX.
The growth in etail was driven by a solid performance
on On-the-go products. Last year, sell-out in the
multibrand channel was driven by campaigns with
Verizon, which we have not had this year. This had an
adverse impact on like-for-like sell-out. Our company
owned stores performed slightly better than last year,
whereas our eCommerce sales declined in line with Q1.
Revenue
Revenue was DKK 106m (Q2 21/22: DKK 91m),
equivalent to an increase of 17.3% (0% in local
currencies).
The growth was positively affected by the ramp-up of
our expanded partnership with Origin Acoustics on
custom installations.
The monobrand channel delivered solid growth, driven
by the Staged category, partly related to the launch of
Beosound Theatre.
The etail channel also delivered solid growth, partly
driven by a strong execution in November, where we
sold out of several products during Black Week.
The multibrand channel declined, mainly due to
activations made last year leading to high comparables.
Revenue from our eCommerce channel declined, but
we saw a positive performance in November, partly
driven by our private sale activation.
Revenue from the Staged category increased by 75%.
Both speakers and TVs contributed to the growth. The
growth in speakers was driven by both higher volume
and higher prices since Q2 of last year. Furthermore, TV
sales benefited from the launch of Beosound Theatre.
Revenue from the Flexible Living category was up 18%
compared to last year. We saw good revenue growth
across the current portfolio, including from the
relaunch of Beosound Emerge. The growth was
supported by price increases implemented since Q2 of
last year, which offset volume declines on some
products.
Revenue from On-the-go declined by 4% compared to
last year. The decline was driven by portable speakers,
with campaign activities driving revenue last year.
Earphones and headphones delivered solid growth. In
the earphone category in particular, growth was driven
by the strong performance of Beoplay EX.
Gross profit
Gross profit amounted to DKK 34m (Q2 21/22:
DKK 28m). This was equivalent to a gross margin of
32.5% (Q2 21/22: 31.2%).
The increase was related to improved product mix and
higher margins and was positively impacted by a lower
fixed-costs-to-revenue ratio.
H1 2022/23
Revenue was DKK 169m (H1 21/22: DKK 151m),
equivalent to a year-on-year increase of 12.4% (-4% in
local currencies). The growth was primarily driven by
the Staged and Flexible Living categories, while On-the-
go was flat.
Gross margin decreased by 4.1pp to 27.3%, driven by
changes in product mix and higher component and
logistics costs.
Americas
Q2 revenue split (%)
32%
21%
16%
16%
52%
62%
22/23 21/22
Staged Flexible Living On-the-go
Q2
YTD
(DKK million)
2022/23
2021/22
Change
2022/23
2021/22
Change
Revenue
106 91 16 169 151 19
Growth in local currencies
0%
99%
-4%
98%
Gross profit
34 28 6 46 47 -1
Gross margin
32.5%
31.2%
1.3%
27.3%
31.4%
-4.1%
Page — 16
Management’s review
Interim report H1 2022/23
Like-for-like sell-out
Sell-out declined by 1%, mainly related to the regional
lockdowns in mainland China and the impact on
consumer confidence. By contrast, the other markets in
the region experienced growing sell-out, with especially
Taiwan and Japan delivering solid growth rates.
Sell-out in China declined by 6%, driven by the
monobrand channel, while etail performed better than
Q2 of last year. In Q1, we took over the operations of our
business on JD.com and we saw a positive performance
lift from this in Q2.
Revenue
Revenue was DKK 248m (Q2 21/22: DKK 284m),
corresponding to a -12.9% decline (-16% in local
currencies).
Revenue from our two core Asian markets declined by
23% in local currencies and accounted for
approximately 73% of total revenue in Asia.
The development in the Asia region as a whole, and in
our two core markets, was impacted by the continued
lockdowns in China. The multibrand channel, in
particular, was impacted by these lockdowns. In Q1, we
were adversely impacted by operational delays as we
took over the engagement with JD.com. In Q2, we saw
solid improvements and higher sales than in Q2 of last
year.
Revenue from the Staged category declined by 6%. The
decline was due to lower quantities sold within both
speakers and TVs, partly offset by higher average prices
and a positive impact from the launch of Beosound
Theatre.
The Flexible Living category declined by 37%, mainly
attributed to Beoplay A9, which last year experienced
very high growth. However, Beoplay A9 continued to be
the highest-selling Flexible Living speaker. We saw
positive contributions from Beosound Balance and
Beosound 2, driven by both higher volume and higher
average prices and further supported by the relaunch of
Beosound Emerge.
The On-the-go category grew by 15% year on year. This
was driven by portable speakers and earphones. The
growth in portable speakers was related to higher
volumes of Beoplay A1 and generally higher average
prices. Growth in earphone sales was driven by a strong
performance on Beoplay EX.
Gross profit
Gross profit amounted to DKK 111m (Q2 21/22:
DKK 118m), equivalent to a gross margin of 44.8% (Q2
21/22: 41.5%).
The increase was driven by improved margins on all
product categories, supported by price increases.
H1 2022/23
Revenue was DKK 466m (H1 21/22: DKK 528m),
equivalent to a year-on-year decrease of 11.9% (-14% in
local currencies). The decline was primarily due to the
Staged and Flexible Living categories, while On-the-go
grew, driven by the online channels.
Gross margin decreased by 3.1pp to 36.8%, driven by
mix as the overall category margins improved.
Asia
Q2 revenue split (%)
32%
30%
32%
42%
37%
28%
22/23 21/22
Staged Flexible Living On-the-go
Q2
YTD
(DKK million)
2022/23
2021/22
Change
2022/23
2021/22
Change
Revenue
248 284 -37 466 528 -63
Growth in local currencies
-16%
28%
-14%
34%
Gross profit
111 118 -7 171 211 -40
Gross margin
44.8%
41.5%
3.3%
36.8%
39.9%
-3.1%
Page — 17
Management’s review
Interim report H1 2022/23
Revenue
Revenue was DKK 105m (Q2 21/22: DKK 67m),
corresponding to a 58.3% increase (47% in local
currencies). The reported growth benefited from
currency tailwind.
Licence fee revenue grew by 29%. The growth was
mainly driven by the automotive industry, which was
supported by a solid order backlog. The addition of the
Korean luxury car brand Genesis also contributed to the
growth. Licensing income accounted for 72% of total
revenue in Brand Partnering & other activities.
Revenue from co-branded products provided a
significantly larger part of growth than last year, mainly
related to the ramp-up of the Bang & Olufsen Cisco 980
headphones. Revenue related to aluminium production
for third parties also increased significantly compared
to last year, largely due to the partnership with
Harman.
Gross profit
Gross profit amounted to DKK 94m (Q2 21/22:
DKK 65m), equivalent to a gross margin of 87.9%
(Q2 21/22: 97.3%).
The decline in gross margin was related to the change
in mix, as the category now includes more product
revenue from our brand collaboration.
H1 2022/23
Revenue was DKK 197m (H1 21/22: DKK 127m),
equivalent to a year-on-year increase of 56.0% (40%
in local currencies). The increase came mainly from
our Cisco partnership and headphone sales.
Gross margin decreased by 8.9pp to 88.1%, driven
by the above-mentioned change in mix.
Brand Partnering
& other activities
Q2
YTD
(DKK million)
2022/23
2021/22
Change
2022/23
2021/22
Change
Revenue
105 67 39 197 127 71
Growth in local currencies
47%
-15%
44%
-5%
Gross profit
94 65 28 174 123 50
Gross margin
87.9%
97.3%
-9.4%
88.1%
97.0%
-8.9%
Page — 18
Management’s review
Interim report H1 2022/23
Key events
in Q2
Expanded
partnership with
Origin Acoustics
We have expanded our partnership
with Origin Acoustics and together
we will create a
broader network of
Bang & Olufsen integration
-centric
resellers across America.
Bang & Olufsen has a long history in
the custom installation market,
including years of su
ccessful
collaboration with Origin Acoustics.
As the US Brand Manager for the
Custom
installation channel, Origin
Acoustics will be responsible for
bringing the full line of Bang &
Olufsen products to a wider audience
in the North American market.
Girls’ Day in Science
Once again, we participat
ed in the Danish nationwide
campaign ‘Girls’ Day in Science’. The purpose of the day is
to inspire young female students from high schools and
senior high schools (17
-19 years) to consider studies within
the field
of science, technology, engineering and
mathematics by meeting role models who have already
taken that path.
22 students from colleges of vocational education and
their teachers visited our location in Struer. Here, they met
some of our female specialis
ts, who gave them an
introduction to career paths in B&O, shared their personal
stories and invited them to experience their areas of
expertise hands
-on.
Our support of the Girls’ Day in Science initiative is
aligned with the UN Sustainable Development G
oals.
Beosound Balance
in Natural
Aluminium
Beosound Balance is one of Bang &
Olufsen’s most popular Flexible
Living speakers. In Q2, we presented
Beosound Balance in a new Natural
Aluminium colourway, crafted with a
luxurious and modern finish with a
Scandinavian aesthetic.
Launch of first NFT drop:
The DNA Collection
To make the leap from the physical into the digital
universe, Bang & Olufsen has reimagined how its products
might look, feel and work by collaborati
ng with
pioneering Web3 artists, including Hackatao, Thomas Lin
and Shavonne Wong, to fuse art and music into a first
-of-
its
-kind collection.
The customers of tomorrow are already present in the
digital universe and we want to build new brand
relevance an
d tap into a younger audience.
Each NFT is made from a unique combination of materials,
art and music. The first drop was made available in
November.
Beocom Portal
launched
With the launch of Beocom
Portal, we
have ramped up our enterprise efforts
with a dedicated headset proposition
for the growing number of hybrid
workers.
Beocom Portal is made specifically to
cater to the needs of professionals
who want high
-quality audio and
design as well as
features and
technology suited for work.
Page — 19
Management’s review
Interim report H1 2022/23
Art of the A9
Beoplay A9 was launched ten years
ago and has become a timeless
classic. Today, it remains one of the
most loved and best
-selling products
in our portfolio. It is a testament to
our longevity ambitions, which is a
key part of our strategy.
For this celeb
ration, Bang & Olufsen
commissioned a series of designs by
leading creatives working across the
fields of art, design and music to
customise the canvas cover of
Beoplay A9 in their own inimitable
style
in order to create a series of
highly limited
-edition cover artworks.
New flagship store
in Mayfair, London
The new store on New Bond Street in Mayfair will give
new and existing customers a dedicated space to immerse
themselves in the Bang & Olufsen universe of seamless
ly
connected audio and visual prod
ucts.
The new store will come with a state
-of-the-art
demonstration space, delivering an immersive experience
in
-store that will showcase the products at their best and
place Bang & Olufsen among like
-minded luxury brands.
The store will also house an ac
tivation zone for a raft of
curated events that cater to customers’ passions, including
live workshops, music, podcast recordings, special guests,
and more. It will strengthen our presence in London, while
complementing our existing locations in the capita
l, such
as Harrods and Selfridges.
Bang & Olufsen
has joined the
First Movers
Coalition
The First Movers Coalition (FMC) is a
public
-private partnership driven by
the World Economic Forum. The FMC
aims to leverage the purchasing
power and supply chains
of
companies to create markets for
innovative clean energy technologies
and decarbonise seven industrial
hard
-to-abate sectors. We have
joined the aluminium sector and are
one of ten new companies that have
joined the FMC.
Bang & Olufsen has committed t
o a
target that at least 10% of the
company’s primary aluminium
purchases must have near
-zero
carbon emissions by 2030. We have
also committed to ensure that by
2030 at least 50% of the aluminium
we use in our production is recycled.
The commitments aim to
be
collectively significant enough to
commercialise decarbonisation
technologies.
Art Basel fair
We
participated in an event during Art Basel in Miami,
where we revealed bespoke products created for very
high net worth individuals.
We presented a
select range of products that were plated
in gold
. The products drew a lot of attention from the
more
than 200 special
ly invited guests who attended our event.
All photos
from the event in this report are courtesy of
Lensology
Page — 20
Management’s review
Interim report H1 2022/23
We maintain our outlook for the
financial year 2022/23. However, we
now expect revenue growth, EBIT
margin before special items and free
cash flow to be at the lower end of the
range.
The outlook remains subject to
unusually high uncertainty due to high
inflation, rising interest rates and the
war in Ukraine, which, in combination,
have increased the risk of recession.
We plan to continue our investments in
strategy execution, but the timing and
size of these investments will be
adjusted based on market
developments.
Revenue growth in local currencies
Revenue growth in local currencies is expected to be at
the lower end of the range between -4% to 5%. The
expectations are subject to the following assumptions:
• Improved market conditions in China during Q4.
• Launch of three or more product innovations in the
remainder of the financial year.
• No impact on product availability due to geopolitical
or COVID-19 related lockdowns.
• No major COVID-19 related lockdowns in the second
half of the year.
EBIT margin before special items
EBIT margin before special items is expected to be at
the lower end of the range between -2% and 3%. In
addition to the company's assumptions regarding
revenue growth, the expectations are based on the
following assumptions:
• Cost of goods sold is expected to be impacted by the
inflationary pressure currently experienced in the
market, but the pressure on sourcing components
through spot buys is expected to decline in the
second half of the year.
• Continued investments into marketing and product
development.
• Exchange rates against DKK, including in particular
USD, CNY and EUR, in line with current exchange
rate levels, overall.
Free cash flow
Free cash flow is expected to be at the lower end of the
range from DKK -50m to DKK 100m. In addition to the
company's assumptions regarding revenue growth and
EBIT margin before special items, the company's
expectations regarding free cash flow are based on the
following assumptions:
• Improved net working capital.
• Continued investments related to product and retail
development as well as IT.
Sensitivities
The outlook for 2022/23 is subject to unusually high
uncertainty related to consumer confidence due to high
inflation, rising interest rates and the war in Ukraine,
which, in combination, have increased the risk of
recession. Furthermore, there is higher geopolitical
uncertainty and risk related to current and potential
future regional COVID-19 related lockdowns in China.
Outlook for 2022/23 maintained
Safe harbour statement
The report contains statements relating to the
expectations for future developments, including future
revenues and operating results, as well as expected
business-related events. Such statements are subject to
uncertainty and carry an element of risk since many
factors, some of which are beyond Bang & Olufsen's
control, may cause actual developments to deviate
significantly from the expectations expressed in this
report. Without being exhaustive, such factors include
general economic and commercial factors, such as
market and competitive matters, supplier issues and
financial issues in the form of foreign exchange, interest
rates, credit and liquidity risk.
OUTLOOK 2022/23
January 2023
October 2022
Revenue growth in local currencies (%)
-4 to 5 -4 to 5
EBIT margin before special items (%)
-2 to 3 -2 to 3
Free cash flow (DKKm)
-50 to 100 -50 to 100
Page — 21
Consolidated financial statements
Interim report H1 2022/23
0Condensed income statement
Q2
YTD
Year
(DKK million)
Notes
2022/23
2021/22
2022/23
2021/22
2021/22
Revenue
2, 4 859 809 1,471 1,475 2,948
Production costs
-477
-450
-865
-817
-1,612
Gross profit
Development costs
5 -81 -67 -150 -145 -279
Distribution and marketing costs
-255
-231
-460
-414
-875
Administrative expenses
-33 -34 -68 -65 -136
Operating profit/loss (EBIT)
Financial income
Financial expenses
-15 -13 -37 -20 -65
Financial items, net
-11 -10 -29 -15 -54
Profit/loss before tax (EBT)
Income tax
Profit/loss for the period
Earnings per share
Earnings per share (EPS), DKK
Diluted earnings per share (EPS-D), DKK
-0.8
-0.2
Page — 22
Consolidated financial statements
Interim report H1 2022/23
1BCondensed statement of comprehensive income
Q2
YTD
Year
(DKK million)
2022/23
2021/22
2022/23
2021/22
2021/22
Profit/loss for the period
Items that will be reclassified subsequently to the income statement:
Foreign exchange adjustments of foreign entities
-12 10 -7 13 16
Fair value adjustments of derivatives
-11
-14
-13
Value adjustments of derivatives reclassified in
Revenue
Production costs
-6 -1 -11 -1 -6
Tax on other comprehensive income/loss
-2
-2
-1
Other comprehensive income for the period, net of tax
-6 6 -1 10 21
Total comprehensive income/loss for the period
-3 16 -98 21 -9
Page — 23
Consolidated financial statements
Interim report H1 2022/23
ASSETS
(DKK million)
Notes
30-11-22
30-11-21
31-05-22
Goodwill
Acquired rights and software
Completed development projects
Development projects in progress
5 87 65 138
Intangible assets
Property, plant and equipment
Right-of-use assets
Tangible assets
Non-current other receivables
Deferred tax assets
Total non-current assets
Inventories
Trade receivables
Tax receivable
Other receivables
Prepayments
Securities
8 401 430 415
Cash
8 189 214 162
Total current assets
Total assets
EQUITY AND LIABILITIES
(DKK million)
Notes
30-11-22
30-11-21
31-05-22
Share capital
Translation reserve
Cash flow hedge reserve
Retained earnings
Total equity
Lease liabilities
Pensions
Deferred tax
Provisions
Mortgage loans
Other non-current liabilities
Total non-current liabilities
Lease liabilities
Mortgage loans
Bank loans
8 403 110 276
Provisions
Trade payables
Tax payable
Other liabilities
Total current liabilities
Total liabilities
Total equity and liabilities
Condensed statement of financial position
Page — 24
Consolidated financial statements
Interim report H1 2022/23
Q2
YTD
Year
(DKK million)
Notes
2022/23
2021/22
2022/23
2021/22
2021/22
Profit/loss before tax (EBT)
-101
-8
Financial items, net
Depreciation, amortisation and impairment
Operating profit/loss before depreciation,
amortisation and impairment (EBITDA)
Other non-cash items
-7
-13
Change in net working capital
6 -10 -26 0 -30 -148
Interest received
Interest paid
-9 -7 -17 -13 -28
Income tax received/paid
-5
-14
-33
Cash flows from operating activities
Purchase of intangible non-current assets
-36
-36
-82
-58
-181
Purchase of tangible non-current assets
-17 -18 -29 -22 -68
Sublease payment
Other cash flows from investing activities
Operational investments
-53 -54 -106 -80 -248
Free cash flow
Purchase of securities
Sale of securities
Financial investments
Cash flows from investing activities
-49 -50 -99 -76 -239
Q2
YTD
Year
(DKK million)
Notes
2022/23
2021/22
2022/23
2021/22
2021/22
Repayment of lease liabilities
-11 -8 -21 -15 -36
Repayment of mortgage loans
-1 -1 -2 -2 -4
Proceeds from loans and borrowings
Repayment of loans and borrowings
Purchase of treasury shares
Settlement of matching share programme
-1
-
-1
-
-
Settlement to other liabilities
Cash flows from financing activities
Cash and cash equivalents, opening balance
Foreign exchange gain/loss on cash and cash
equivalents
-6 -2 -3 -2 2
Change in cash and cash equivalents
Cash and cash equivalents, closing balance
Available liquidity
8 187 534 187 534 301
Condensed statement of cash flows
Page — 25
Consolidated financial statements
Interim report H1 2022/23
Condensed statement of changes in equity
(DKK million)
Share capital
Translation
reserve
Cash flow
hedge reserve
Retained
earnings
Total
Equity 1 June 2022
Profit/loss for the period
Foreign exchange adjustments of foreign entities
-7
-7
Fair value adjustments of derivatives
Value adjustments of derivatives reclassified in
Revenue
Production costs
-11
-11
Income tax on items that will be reclassified to the income statement
Comprehensive income/loss for the period
Share-based payments
Equity 30 November 2022
Equity 1 June 2021
Profit/loss for the period
Foreign exchange adjustments of foreign entities
Fair value adjustments of derivatives
-14
-14
Value adjustments of derivatives reclassified in
Revenue
Production costs
Income tax on items that will be reclassified to the income statement
Comprehensive income/loss for the period
Share-based payments
Acquisition of own shares
Equity 30 November 2021
Page — 26
Consolidated financial statements
Interim report H1 2022/23
1 Basis of reporting
This interim report has been prepared in accordance with IAS 34 Interim Financial Reporting, as adopted by the
EU, and additional Danish disclosure requirements for interim financial reports of listed companies.
No interim report has been prepared for the parent company.
The interim report follows the same accounting policies as the Annual Report for 2021/22.
New standards, interpretations and amendments adopted by Bang & Olufsen
Bang & Olufsen has implemented the International Financial Reporting Standards (IFRS) and amendments
effective as of 1 June 2022 and endorsed by the EU. The implementation of new or amended standards and
interpretations had no material impact on the interim financial statements.
2 Critical accounting estimates and judgements
In preparing the interim financial report, Management makes various accounting estimates and assumptions,
which form the basis of the presentation, recognition and measurement of Bang & Olufsen's assets and liabilities.
Estimates and judgements are regularly reassessed.
Due to the current high uncertainty and declining consumer confidence, increased risk of recession, increasing
inflation, rising interest rates, the war in Ukraine, and geopolitical uncertainty and risks related to current and
potential future regional COVID-19 related lockdowns, we have considered the recoverability of trade receivables
and the value of inventories. We have also assessed the value of intangible assets, deferred tax assets and property,
plant and equipment. We have realised no impairment of assets other than the deferred tax asset. The method of
calculating both inventory obsolescence and write-downs on trade receivables remains unchanged.
Apart from this, critical accounting estimates and judgements are consistent with those applied in note 1.2 to the
consolidated financial statements in the 2021/22 Annual Report, to which reference is made.
3 Seasonality
Due to the composition of the Bang & Olufsen business, some degree of seasonality of revenue must be expected.
Historically, the highest revenue has been realised in Q2 due to the seasonal nature of the business.
In the current situation, seasonality may be impacted by regional COVID-19 related lockdowns and effects related
to the current high macroeconomic uncertainty described above.
Notes
Page — 27
Consolidated financial statements
Interim report H1 2022/23
4 Segment information – Q2
(DKK million)
EMEA
Americas
Asia
Regions, total
Brand Partnering
& other activities
All
Q2 2022/23
Revenue
400 106 248 754 105 859
Production costs
-257
-72
-137
-466
-11
-477
Gross profit
143 34 111 288 94 382
Gross margin
35.9%
32.5%
44.8%
38.3%
87.9%
44.4%
Q2 2021/22
Revenue
367 91 284 742 67 809
Production costs
-219
-63
-166
-448
-2
-450
Gross profit
148 28 118 294 65 359
Gross margin
40.3%
31.2%
41.5%
39.6%
97.3%
44.4%
(DKK
million) Staged Flexible Living On-the-go Products, total
Brand Partnering
& other activities All
Q2 2022/23
Revenue
332 143 279
754
105
859
Production costs
-171 -69 -226 -466 -11 -477
Gross profit
161 74 53
288
94
382
Gross margin
48.8% 51.8% 19.0% 38.3% 87.9% 44.4%
Q2 2021/22
Revenue
327 193 222
742
67
809
Production costs
-177 -103 -168 -448 -2 -450
Gross profit
150 90 54
294
65
359
Gross margin
46.0% 46.8% 24.2% 39.6% 97.3% 44.4%
Gross profit is a segment KPI. There are no unallocated elements, and total gross profit reconciles to the income statement.
Page — 28
Consolidated financial statements
Interim report H1 2022/23
Segment information – YTD
(DKK million)
EMEA
Americas
Asia
Regions, total
Brand Partnering
& other activities
All
2022/23
Revenue
639 169 466 1,274 197 1,471
Production costs
-424
-123
-295
-842
-23
-865
Gross profit
215 46 171 432 174 606
Gross margin
33.7%
27.3%
36.8%
34.0%
88.1%
41.2%
2021/22
Revenue
669 151 528 1,348 127 1,475
Production costs
-392
-104
-317
-813
-4
-817
Gross profit
277 47 211 535 123 658
Gross margin
41.4%
31.4%
39.9%
39.7%
97.0%
44.6%
(DKK
million) Staged Flexible Living On-the-go Products, total
Brand Partnering
& other activities
All
2022/23
Revenue
545 268 461
1,274
197
1,471
Production costs
-304 -144 -394 -842 -23 -865
Gross profit
241 124 67
432
174
606
Gross margin
44.2% 46.2% 14.5% 34.0% 88.1% 41.2%
2021/22
Revenue
592 341 415
1,348
127
1,475
Production costs
-320 -183 -310 -813 -4 -817
Gross profit
272 158 105
535
123
658
Gross margin
46.0% 46.4% 25.2% 39.7% 97.0% 44.6%
Gross profit is a segment KPI. There are no unallocated elements, and total gross profit reconciles to the income statement.
Page — 29
Consolidated financial statements
Interim report H1 2022/23
5 Development costs
Q2
YTD
Year
(DKK million)
2022/23
2021/22
2022/23
2021/22
2021/22
Incurred development costs before capitalisation
82 73 161 145 328
Of which capitalised
-27
-28
-60
-46
-138
Incurred development costs after capitalisation
56
45
101
99
190
Capitalisation (%)
32.4% 38.5% 36.7% 31.8% 42.0%
Total charges and impairment losses on development projects
25
22
49
46
89
Development costs recognised in the consolidated income statement
81 67 150 145 279
Incurred development costs before capitalisation ratio (% of revenue)
9.6%
9.0%
11.0%
9.8%
11.1%
6 Change in net working capital
Change in
Change in
Change in
(DKK million)
30-11-22
31-05-22
Q2 2022/23 YTD
Q2 2021/22 YTD
2021/22
Inventories
568
629
61
-168
-260
Trade receivables
445 397 -48 -48 41
Other receivables*
90
88
-2
-6
2
Prepayments
38 28 -10 5 4
Trade payables
-648
-581
67
220
79
Other liabilities
-152 -212 -58 -32 -13
Deferred income - non-current
-6
-14
-8
-1
-1
Total
335 335 - -30 -148
* Other receivables were adjusted for financial receivables related to leases of DKK 1m not included as net working capital at 30 November 2022 (31 May 2022: DKK 1m).
The decrease in other liabilities primarily related to provisions for employee bonus.
Page — 30
Consolidated financial statements
Interim report H1 2022/23
Special items consist of non-recurring expenses related to restructuring or structural changes that we do not
consider to be a part of our ordinary operations such as redundancies and specific consultancy costs and transition
costs in connection with restructuring.
Q2
YTD
Year
(DKK million)
2022/23
2021/22
2022/23
2021/22
2021/22
Severance and garden leave, Executive Management Board
1 - 1 - 4
Restructuring costs and severance
- 1 - 1 2
Consultants
- - - 2 2
Total
1 1 1 3 8
8 Net interest-bearing deposit/debt
Net interest-bearing deposit/debt consists of interest-bearing assets less interest-bearing debt. Interest-bearing
assets consist of securities, cash, and sublease and finance lease receivables. Interest-bearing debt consists of
mortgage loans, bank loans and lease liabilities. We have placed the majority of our cash in Danish mortgage
bonds, all with an AAA S&P rating to minimise negative interest. To maintain short-term financial flexibility, we
use repo transactions, whereby we can access liquidity on an intra-day basis if needed by lending our banks bonds
in return for cash, while committing to a reverse transaction at a predetermined future date. Bonds are presented
as securities on the balance sheet as ownership of the bonds remains with the company during the term of the
repo. The obligation to return cash for bonds under such repo transactions is recognised as short-term bank loans.
As of 30 November 2022, repo transactions amounted to DKK 403m.
During the quarter the net interest bearing deposit decreased by DKK 23m to DKK 4m compared to DKK 111m at
year-end 2021/22. Available liquidity amounted to DKK 187m (year-end 2021/22: DKK 301m).
(DKK million)
30-11-22
30-11-21
31-05-22
Mortgage loans (non-current)
-56 -60 -58
Mortgage loans (current)
-4 -4 -4
Bank loans (current)
-403
-110
-276
Lease liabilities (non-current)
-90 -104 -95
Lease liabilities (current)
-34 -26 -39
Other non-current liabilities*
-3 -4 -
Interest-bearing debt
-591 -308 -472
Finance lease receivables (non-current)
3 5 4
Finance lease receivables (current)
2 2 2
Cash (current)
189 214 162
Securities (current)
401
430
415
Interest-bearing assets
595 651 583
Net interest-bearing deposit/debt
4 339 111
* Only the interest-bearing part of Other non-current liabilities has been included in net interest-bearing deposit/debt.
During the quarter, net available liquidity decreased by DKK 20m to DKK 187m (31 August 2022: DKK 207m),
consisting of cash and securities offset by repo transactions. As of 31 May 2022, net available cash was DKK 301m.
(DKK million)
30-11-22
30-11-21
31-05-22
Cash (current)
189 214 162
Securities (current)
401
430
415
Bank loans (current)
-403 -110 -276
Available liquidity
187 534 301
Including the undrawn part of our ESG-linked credit facility, capital resources were DKK 307m (year-end 2021/22:
DKK 433m), consisting of available liquidity of DKK 187m and undrawn committed credit facilities of DKK 120m.
7 Special items
Page — 31
Consolidated financial statements
Interim report H1 2022/23
Related parties with significant interests
Other related parties of Bang & Olufsen with significant interests include the Board of Directors, the Executive
Management Board and their close family members. Related parties also include companies in which these
persons have control or significant interests.
Transactions with related parties
Bang & Olufsen did not enter into any significant transactions with members of the Board or the Executive
Management Board, except for compensation and benefits paid because of their membership of the Board or
employment with Bang & Olufsen.
Pursuant to Bang & Olufsen A/S’s Remuneration Policy, the Board of Directors has resolved to allocate restricted
shares under Bang & Olufsen A/S’s Combined Performance and Retention Share Programmes to the Executive
Management Board, key employees and certain other employees.
The Long-Term Incentive Programme (LTIP) is a combined performance and retention share programme. The
performance shares are eligible for vesting depending on the level of achievement of certain KPIs defined by the
Board of Directors for each performance year. The remaining shares are retention shares, which are subject to the
participants’ continued employment and satisfactory people review ratings.
The programmes are accounted for on an accrual basis over the three-year vesting period. The value of each
programme is adjusted on a timely basis until vesting based on the likelihood that certain KPIs will be met.
Costs related to the programmes have been recognised as staff costs and amounted to DKK 4m for the quarter
(Q2 2021/22: DKK 7m) and DKK 11m for H1 22/23 (H1 21/22: DKK 10m).
9 Related parties
10 Share-based programmes
Programme
Performance
period
Maximum shares
Total value at
time of allocation
Release after
Annual Report
Average share
price at grant
date
Remaining time
to vesting
Number
Number
Number
DKK
Months
2020/21
01.06.2020-
31.05.2023
3,091,511
22
2022/23
12.93
9
2021/22
01.06.2021-
31.05.2024
2,218,064 37 2023/24 33.11 21
2022/23
01.06.2022-
31.05.2025
2,582,108
38
2024/25
14.28
33
Page — 32
Consolidated financial statements
Interim report H1 2022/23
Financial instruments by category
(DKK million)
30/11/22
30/11/21
31/05/22
Non-current other receivables
22 24 27
Trade receivables
445 486 397
Other receivables
91
98
89
Cash
189 214 162
Financial assets at amortised cost
747 822 675
Securities
401 430 415
Fair value through income statement
401 430 415
Derivatives used for hedge accounting
7 9 9
Fair value through other comprehensive income
7 9 9
Financial assets
1,155 1,261 1,099
Mortgage loans
60 64 62
Bank loans
403 110 276
Lease liabilities
124 130 134
Trade payables
648 722 581
Financial liabilities at amortised cost
1,235 1,026 1,053
Derivatives used for hedge accounting
8
27
18
Fair value through other comprehensive income
8 27 18
Financial liabilities
1,243 1,053 1,071
The fair value is approximately equal to the carrying amount for all financial assets and liabilities.
Securities
Securities comprise listed Danish mortgage bonds and are measured at fair value with all changes in fair value
recorded in the income statement. Bonds are measured using observable market values (level 1 in the fair value
hierarchy). We use repo transactions and as ownership of the bonds remains with us during the term of the repo,
the bonds remain on the balance sheet.
Derivative financial instruments
Derivative financial instruments comprise primarily foreign exchange contracts used to hedge the foreign
exchange risk related to unrecognised future transactions. Derivatives are measured at fair value in accordance
with level 2 in the fair value hierarchy using valuation techniques that apply market data such as exchange rates,
credit risk and volatility.
See note 7.3 in the 2021/22 Annual Report for an overview of foreign exchange contracts.
11 Financial instruments
Page — 33
Consolidated financial statements
Interim report H1 2022/23
The capital structure consists mainly of equity, an undrawn credit facility and working capital financing. It is the
objective of Bang & Olufsen's capital management to ensure shareholders the best possible return on their
investment in Bang & Olufsen, while ensuring that Bang & Olufsen will be able to meet all its existing and future
commitments.
Capital resources were DKK 307m (year-end 2021/22: DKK 433m), consisting of available liquidity of DKK 187m and
the undrawn part of our ESG-linked credit facility of DKK 120m.
The company holds a total of 3,122,870 treasury shares (31 August 2022: 3,244,692 shares) to cover outstanding
long-term incentive programmes.
For details of monetary transactions, see the statement of changes in equity.
Except as described elsewhere in these consolidated interim financial statements, no events have occurred in the
period from the balance sheet date until the presentation of the financial statements that materially affect the
assessment of the consolidated financial statements.
12 Capital structure
13 Subsequent events
Page — 34
Consolidated financial statements
Interim report H1 2022/23
Management's statement
Executive Management Board:
Board of Directors:
