GN Store Nord A/S
Making Life
Sound
Better
Annual Report 2021
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Introduction
2021 financial highlights 4
2021 key milestones 5
Chairman’s foreword 6
Five year financial overview 8
Business model and strategy
Vision and strategy 10
Business model 13
Engaged & focused employees 14
Innovation and ecosystem leadership 16
Global reach, local presence 17
Key business areas and product brands 18
Expanding hearing health 19
Technology for the deskless worker 21
Video games are awesome 23
It’s about to get more Lively 25
Serving attractive markets 26
Financial guidance 2022 27
Financial Performance
Group performance 2021 30
GN Hearing performance 2021 33
GN Audio performance 2021 36
Governance
Risk management 40
Doing business the right way 48
Building sustainable technology 51
Corporate governance 52
Board of Directors 54
Executive Management 57
Shareholder information 58
Additional financial information 2021
(unaudited)
Q4 financial highlights 61
Quarterly reporting by segment 63
Regional Growth Composition 65
Q4 segment disclosures 66
Consolidated Financial statements
Income statement 68
Statement of comprehensive income 68
Balance sheet at December 31 69
Statement of cash flow 70
Statement of equity 71
Consolidated Notes 72
Parent company Financial statements
Statements 128
Parent Company Notes 132
Statements
Statements by the Executive Management
and the Board of Directors 143
Independent Auditor’s Reports 144
Table of contents
GN Store Nord A/S
Lautrupbjerg 7
2750 Ballerup
Denmark
+45 45 75 00 00
info@gn.com
www.gn.com
Co.reg. no 24257843
Management’s report
Financial Statements
Business
model and
strategy
Page 9
GN Hearing
performance 2021
Page 33
GN Audio
performance 2021
Page 36
Other 2021 reports
www.gn.com/remuneration2021
www.gn.com/corporategovernance2021
www.gn.c
om/sustainabilityESG2021
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2021 financial highlights
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Guidance 2021
See more details on performance
Revenue (DKK)
+
20% organic revenue growth vs 2020
15.8bn
EBITA (DKK)
+
52% vs 2020
2.7bn
Free cash flow excl. M&A (DKK)
Cash conversion
with rate of 27%
0.7bn
Shareholder returns (DKK)
Via share
-buybacks and dividends
1,354m
Earnings per share (DKK)
+4
3% vs 2020
13.90
Revenue by region
North
America
36%
Europe
43%
Rest of
World
21
%
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Navigating rough waters, part II
I headlined my foreword to GN’s 2020 Annual Report “Navigating
safely through rough waters”. With the events of 2021 in mind, it
seems appropriate to pick up from there.
The COVID-virus is still a threat and the pandemic continued to affect
our company in different ways. GN Hearing continued to face repeated
challenges in different parts of the world, while GN Audio continued to
advance greatly as to fundamental demand. For GN overall and for our
customers and partners, it was still navigating rough and ever-chang-
ing waters.
While navigating best possible through varying degrees of restrictions
and lockdowns, disrupted global supply chains, employees’ and cus-
tomers’ health and well-being, we also used 2021 to begin redefining
GN to enter the company’s next phase.
Despite current challenges and limited short term visibility, there are
clear trends across the world in which GN has a unique position to play
a valuable role: we are entering a significantly more digitalized world
with online access to literally everything – where people need intelli-
gent devices to connect with one another like never before and they re-
quest technology made for people.
GN’s fundamentals are strong
Despite the challenges, the market fundamentals for GN’s two central
business pillars – the core hearing business and the audio business – are
as strong as ever before. A constantly growing number of people need
hearing care as well as professional audio and video solutions for digi-
tal collaboration.
GN Hearing to regain above market growth in 2022
Clearly, we would have preferred for GN Hearing to fare stronger
through 2021 than was the case. Headwinds in several areas gave us a
temporary setback and postponed our projected growth with some
months. However, our fundamental innovation capabilities are intact
and the hearing products we have today and those that are coming
shortly will allow us to regain above market growth in 2022.
GN Audio operating from a higher revenue base
For GN Audio, the business has elevated to a substantially higher reve-
nue base, which will sustain and grow despite the continued challeng-
ing global component supply situation. We should not expect the con-
tinued exorbitant growth rates we saw during the height of the pan-
demic but growing from this higher baseline we will continue to benefit
from significant shifts in work patterns, not only in our traditional en-
terprise business, but increasingly also with collaboration tools for gov-
ernments, education, health, and deskless workers at large.
Taking GN to a new level
New markets and segments are emerging, where GN is able to position
itself with clear competitive strength. We are redefining and setting up
the company to capture new and additional growth opportunities –
taking GN to a new level – utilizing the synergies that are rapidly evolv-
ing across the specialized hearing and audio technologies that GN
champions.
Additional to our core hearing and audio business, we now see great
imminent market and growth potential for our new high-end gaming
business, our hearing protection business, and our new direct-to-con-
sumer hearing aid business opportunities.
Chairman’s foreword
New markets and segments are
emer
ging, where GN is able to position
itself with clear competitive strength
Per Wold-Olsen, Chairman of the Board
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Gaming adds a whole new growth platform
Having SteelSeries join us adds a new sweet spot for GN into high-end
gear for gaming. SteelSeries has an outstanding track record of innova-
tion combined with robust design capabilities, strong commercial acu-
men and a well-recognized premium gaming brand.
Add GN Audio’s operational excellence and extensive global distribu-
tion footprint, and we believe we have a winning formula. For more
than 150 years, GN has facilitated communication between people –
bringing people closer – and gaming is yet another way that people
connect by the use of our technology.
New digital consumer platforms in hearing
With the increasing digitalization of the world, consumers demand
online solutions and services also from the hearing industry – as well as
broader health and well-being services. We have seen this online space
growing for some years and now further accelerated by the pandemic.
GN has prepared for this trend and not invested in traditional brick-
and-mortar retail – we believe the future is now for the digital agenda.
Thus, our acquisition of Lively is an important part of setting GN Hear-
ing up for a more digitalized world. With the over-the-counter hearing
aid regulation in the U.S., we believe this transition to always-on digital
health services will only accelerate across the world. Pioneering a fully
virtual hearing care experience, Lively’s customer-first, end-to-end au-
diology platform makes it easier to buy advanced hearing technology
and licensed care.
Reaching new audiences with Jabra Enhance Plus
We have observed and prepared for the over-the-counter space for
some time and now have Jabra Enhance Plus ready, a unique high-tech,
all-in-one earbud for the many people who experience mild-to-moder-
ate situation-based hearing challenges. With Jabra Enhance Plus we
will reach new audiences who would otherwise not seek hearing care.
And, as users age and their need for more extensive hearing care in-
creases, we see this as another channel into traditional medical hearing
care, which remains the core business for GN Hearing.
Fundamentally changing GN, but staying true to the core
Lively and Jabra Enhance Plus will be two important components in
the digital transformation that GN is undergoing. With strategic initia-
tives like these, we are expanding and fundamentally changing GN’s
breadth and depth as we gradually grow into a much more digitalized
and software centric company.
But we remain a company that stays true to our roots and core compe-
tencies: innovate, innovate, innovate and then professionally commer-
cialize the innovation to help people connect. In other words, we bring
people closer through the power of sound and vision – letting you hear
more, do more, and be more in life and at work than you ever thought
possible.
Thank you
For GN, we view 2021 as an “in-between year”. With some setbacks.
However, it was still a year when the company delivered revenues of
DKK 15.8 billion (20% growth) and EBITA of DKK 2.7 billion (52%
growth), successfully launched multiple new innovative products, final-
ized the development of next generation products, set new ambitious
sustainability targets, and delivered on two important acquisitions that
will become critical elements as we redefine GN for the future.
On behalf of the Board of Directors, I would like to thank our leader-
ship and our employees across the world for making all of this happen
… despite rough and ever-changing waters.
Jabra Enhance Plus, a unique high-tech,
all-in-one earbud for the many people who
experience mild-to-moderate situation
based hearing challenges.
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DKK million
2017
2018
2019
2020
2021
GN Store Nord
Revenue
9,585
10,607
12,574
13,449
15,775
Revenue growth
11%
11%
19%
7%
17%
Organic growth
8%
13%
15%
9%
20%
Gross profit margin
62.7%
62.0%
60.3%
54.3%
55.0%
EBITA*
1,744
1,956
2,321
1,866
2,619
EBITA margin*
18.2%
18.4%
18.5%
13.9%
16.6%
Operating profit (loss)
1,558
1,796
2,002
1,627
2,397
Financial items, net
-60
-203
-92
-6
-90
Profit (loss) before tax
1,504
1,606
1,913
1,612
2,271
Effective tax rate
25.4%
22.4%
23.3%
21.3%
21.2%
Profit (loss) for the year
1,122
1,247
1,468
1,269
1,790
Total assets
11,737
13,017
16,683
16,682
23,552
Total equity
4,783
5,096
4,849
5,178
6,229
ROIC (EBITA*/Average invested capital)
21%
24%
25%
19%
25%
Earnings per share, basic (EPS)
8.07
9.25
11.12
9.72
13.63
Earnings per share, fully diluted (EPS diluted)
8.02
9.13
10.98
9.63
13.49
Investments in property, plant and equipment
-103
-160
-232
-221
-457
Free cash flow excl. company acquisitions and divestments
1,134
1,110
1,296
1,865
702
Cash conversion (free cash flow excl. company acquisitions and
divest-
ments/EBITA*)
65%
57%
56%
100%
27%
Equity ratio
40.8%
39.1%
29.1%
31.0%
26.4%
Net interest-bearing debt
3,035
3,234
5,303
4,198
5,358
Net interest-bearing debt (period-end)/EBITDA
1.6
1.5
2.0
1.8
1.8
Payout ratio
16%
16%
14%
16%
12%
Share buybacks**
1,372
1,061
1,626
453
1,166
Outstanding shares, end of period (thousand)
136,443
132,576
128,952
128,975
127,718
Average number of outstanding shares (thousand)
138,980
134,114
130,762
128,805
128,816
Average number of outstanding shares, fully diluted (thousand)
139,968
135,864
132,367
130,032
130,194
Treasury shares, end of period (thousand)
9,241
13,108
13,316
13,293
10,458
Share price at the end of the period
200.5
243.3
313.3
487.2
411.3
Market capitalization
27,357
32,256
40,401
62,837
52,530
DKK million
2017
2018
2019
2020
2021
GN Hearing
Revenue
5,615
5,833
6,351
4,725
5,332
Revenue growth
9%
4%
9%
-26%
13%
Organic growth
6%
7%
7%
-24%
16%
Gross profit margin
69.4%
69.2%
69.0%
61.5%
63.8%
EBITA*
1,153
1,194
1,284
41
643
EBITA margin*
20.5%
20.5%
20.2%
0.9%
12.1%
ROIC (EBITA*/Average invested capital)
18%
19%
19%
1%
9%
Free cash flow excl. company acquisitions and divestments
866
574
672
127
198
Cash conversion (free cash flow excl. company acquisitions and divest-
ments/EBITA*)
75%
48%
52%
310%
31%
GN Audio
Revenue
3,970
4,774
6,223
8,724
10,443
Revenue growth
14%
20%
30%
40%
20%
Organic growth
10%
21%
26%
42%
22%
Gross profit margin
53.2%
53.2%
51.5%
50.4%
50.6%
EBITA*
721
905
1,192
2,002
2,164
EBITA margin*
18.2%
19.0%
19.2%
22.9%
20.7%
ROIC (EBITA*/Average invested capital)
46%
59%
57%
81%
79%
Free cash flow excl. company acquisitions and divestments
481
798
849
1,729
1,288
Cash conversion (free cash flow excl. company acquisitions and divest-
ments/EBITA*)
67%
88%
71%
86%
60%
*
Please refer to Key Ratio Definitions on page 126 for definition of EBITA
** Including buybacks as part of the share
-based incentive programs
Note: 2017 - 2018 are not adjusted for changes related to IFRS 16 and 2017 is not adjusted for changes related to IFRS 9 and IFRS 15
Five year financial overview
9,585
15,775
2017 2021
+65%
Revenue growth the
past four years
Revenue (DKKm)
+13%
CAGR
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Vision and strategy 10
Business model 13
Engaged & focused employees 14
Innovation and ecosystem leadership 16
Global reach, local presence 17
Key business areas and product brands 18
Expanding hearing health 19
Technology for the deskless worker 21
Video games are awesome 23
It’s about to get more Lively 25
Serving attractive markets 26
Financial guidance 2022 27
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Business
model and
strategy
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GN brings people closer through
the power of sound and vision - let-
ting people hear more, do more,
and be more in life and at work than
they ever thought possible
Utilizing the synergies derived from GN’s hearing, audio, and video
technologies and expertise, the Group is able to significantly improve
and personalize customers’ hearing and collaboration experiences.
Enabling a whole new level of individualization, GN will continue to de-
liver industry-leading innovation that addresses real life challenges for
people with hearing loss, for businesses seeking productivity gains, for
audio consumers looking for experiences beyond what can be delivered
today, and for enthusiast gamers.
GN’s strategy for 2020 and beyond is to take individualized customer
experience to a whole new level, and:
• further broaden the reach and appeal of GN’s hearing, audio, video,
and gaming product portfolios, where management sees ample op-
portunities for continued growth
• as new market segments open, leverage GN’s technological exper-
tise and commercial platform, where these provide a particular
competitive advantage
Our focus going forward
GN’s core technology capabilities have successfully taken the company
to where it is today.
Going forward, the company will stay true to our technology
foundation and pursue to take our innovation and technology
excellence to the next level.
We will do this via a much deeper understanding of our customers’
true needs and we will aspire to develop much-improved individualized
products that will serve individual customers even better.
Furthermore, we aim to take our commercial and operational execu-
tion to the next level. We see great opportunities to leverage the skill-
sets in our two operating companies to drive further synergies and to
become even more relevant to our customers.
And we will add adjacent acquisitions where we see opportunities and
synergies – such that we have recently done with entering the attrac-
tive gaming market with the acquisition of SteelSeries and the acquisi-
tion of Lively, providing GN access to the fast-growing online care mar-
ket with a leading online hearing care and digital marketing platform.
High growth combined with solid financial platform
In the mid-term, GN will continue to invest in growth through innova-
tion to deliver double-digit organic revenue growth rates.
We expect to continue delivering a strong EBITA margin in line with
historic levels and competition, and to deliver double-digit growth in
earnings per share.
GN expects to maintain a conservative capital structure policy of net
interest-bearing debt to EBITDA of 1.0 - 2.0x, where excess liquidity
will be distributed to shareholders through share buybacks and divi-
dends.
Mid-term guidance*
Vision and strategy
DKK million
Organic revenue
growth
EBITA margin Growth in EPS
GN Hearing
(Excl. Emerging Business)
>market growth
1
>20%
GN Audio
(Incl. SteelSeries)
>market growth
2
>20%
GN Store Nord >10%
>10%
1) In the mid-term, GN Hearing expects the global hearing aid market to continue to
grow at around 4-6% in units with an ASP decline of around 1-2% annually
2) In the mid-term, GN Audio expects its markets to continue to grow at around 10% an-
nually
*) The mid-term guidance was first issued on February 5, 2020, and re-confirmed on Feb-
ruary 10, 2022..
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To realize our ambition, GN Hearing will continue building on the
strong existing foundation of the business and retain the three strate-
gic pillars laid out in the ‘2020 and beyond’ strategy:
• Individualized customer experience
• Innovation leadership
• Commercial and ecosystem excellence
Current focus areas to execute on the strategy include that
GN Hearing will:
• Modernize hearing care by building new ways of
connecting hearing care professionals, consumers and
partners
• Digitize, simplify and automate the supply chain
• Simplify the way we work and reduce complexity
• Accelerate through M&A and partnerships
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Key trends and drivers
impacting GN Hearing’s business
Over the past few years, we have seen an acceleration of existing
trends as well as an emergence of new ones. The trends GN
Hearing continue to benefit from are:
Digitalization and data
Regulatory shifts
expanding the market
Changing competitive
landscape
Consumerization
Aging populations with
low adoption rates
Sustainability drives design
and manufacturing decisons
Core business
Emerging business
Simplify to grow
Unlocking the potential of the hearing solutions market
Digitize and simplify the way we work
• Deliver customer-centric products and
experiences with organic hearing including a
solid 2022 roadmap
• Be a trusted and innovative partner for our
hearing care professionals in key markets
• Participate in new channels and hearing solution
adjacencies
• Benefit from the combined synergies of GN to
reach new customer groups with lifestyle hearing
including Jabra Enhance Plus
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To realize our ambition, GN Audio will continue building on the strong
existing foundation of the business and retain the three strategic
pillars laid out in the ‘2020 and beyond’ strategy:
• Individualized customer experience
• Eco-system-led innovation
• Sustainable commercial & operational excellence
Current focus areas to execute on the strategy include that
GN Audio will:
• Transform from an audio-only business to an audio, video, and
gaming business
• Prioritize resources in Office, Collaboration, and Gaming while
tak-ing share in Consumer and Contact Center
• Broaden the scope of the Office business unit beyond office head-
sets
• Accelerate through M&A and drive simpler ways of working
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Gaming goes mainstream
Audio, video and data
replaces audio
-
only
UC moves beyond office
Work-life becomes hybrid
Products and channels
become more
consumerized
Sustainability drives design
and manufacturing decisons
Key trends and drivers
impacting GN Audio’s business
Over the past few years, we have seen an acceleration of existing
trends as well as an emergence of new ones
. The trends GN Audio
continue to benefit from are
:
Scale existing
business and
continue
portfolio
expansion
Convert
installed base
and gain market
share with
digital solutions
Win high-growth markets
Take share in maturing markets;
explore adjacent opportunities
Office
Collaboration
Gaming Contact center Consumer
Simplify to grow
Industry
solutions
1
Simplify the way we work
Enable
through M&A
Continue to take
market share by
expanding
propositions and
delivering
innovative products
to professionals
Lead the market
for premium and
software-led
gaming
peripherals
Continue growth
of the true
wireless
portfolio
Expand
propositions
towards non-
office workers
1) Targeting more than two billion "deskless workers" (teachers, doctors, retail staff, logistics personnel, first responders, and many
other key roles - see page 19). 2) Excludes smartphone players such as Apple, Samsung, and Huawei.
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Nurturing a highly skilled workforce
with engaged employees who exe-
cute on GN’s strategy and win in the
market is key to success
Strengthening leadership, employee, and talent development
GN’s fundamental growth strategy leads to increasing demands on the
incumbents of current jobs. The need for innovation will continue
along with an ongoing need to scale GN’s talent efforts globally.
In 2021, two targeted development initiatives kicked off to strengthen
leadership development and support employees’ growth, “Leading the
GN Way” and “Leading Strategy 2.0”
GN yearly conducts a global Talent Review and Succession planning
process (‘TRS’) to ensure that a bigger part of the organization is cali-
brated to build stronger talent and leadership pipelines at more levels.
Many leadership talents identified in 2020 have either been promoted
or expanded their area of responsibility during 2021.
GN’s strategy calls for a still broader range of leadership competencies
and capabilities, why an increased focus aims to ensure that leadership
talents have the right qualifications to efficiently lead a more complex
business.
Consequently, more effort is put into strengthening development
plans for senior leaders by introducing “Transform”, an individual and
data-driven Development Centre for senior leaders.
GN’s Graduate Program is an incubator, not only attracting candidates
to current tracks but also screening for talented candidates for other
entry level positions. When recruiting young talent, we strive for a di-
verse talent pool.
In 2021, we had 10 new graduate positions. In 2022, 14 new graduates
will join GN, as the Graduate Program expands with new IT and Supply
Chain tracks to complement existing Finance, Engineering and Market-
ing tracks.
Equal playing field for all
Creating an equal playing field is a cornerstone of our HR strategy to
instill fair and just practices and policies that ensure all employees can
thrive, be themselves and exercise their full potential. To become a
truly equitable employer we have started to embed inclusion and diver-
sity in our people processes.
As a company we do not tolerate discrimination or harassment of any
kind based on racial or ethnic characteristics, gender, religion, age, sex-
ual orientation, disabilities or any other classification as stated in GN's
Ethics Guide.
GN’s Ethics Guide is available in 10 languages here:
www.gn.com/responsibilitydocuments
Inclusion & diversity
Inclusion and diversity are a strategic priority at GN. To stay relevant as
a business we are humbly aware that we need access to all our employ-
ees’ competencies, creativity, engagement, and loyalty. We need the
best talents, and we need diverse talents.
In 2021, we strengthened our efforts to become an even more diverse
and inclusive organization. For example, we dedicated more resources
for inclusion and diversity activities, supported new employee-led
Engaged & focused employees
Strengthening our leadership
Strengthening our employees
Structured Talent Review and Succession
planning process secures we have
• the right people
• in the right positions
• at the right time
• with the right mindset
Data-driven Development Centre for senior
leaders providing impact-focused development
plans to unleash their potential across the GN
Group. In 2021, 25 senior leaders participated
Leaders go through a fully virtual leadership
development journey
“Leading Strategy 2.0”
92 new leaders participated in development
program to secure strong leadership quality
and collaboration
“Leading the GN Way”
Yearly “TRS” process
“Transform”
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Employee Resource Groups, entered a partnership with Dial Global
(global community for Diverse Inclusive Aspirational Leaders), and
launched online inclusion learning modules.
It is essential for GN to foster an inclusive environment welcoming a
variety of backgrounds and perspectives. Inclusion is embedded in GN’s
core values:
• We LISTEN to ensure that our employees feel heard and valued
• We CHALLENGE each other and welcome perspectives different
from our own to make smarter decisions
• We want to continuously TRANSFORM our company to meet the
needs of our customers and ensure that all employees experience a
sense of purpose and belonging
Gender and diversity representation in management
GN’s primary diversity focus is to advance stronger international repre-
sentation and gender diversity in our senior management, the Global
Management Teams (GMT) in both GN Audio and GN Hearing.
By the end of 2021, GN Hearing’s GMT comprised 18% female leaders
and 36% non-Danes. GN Audio’s GMT comprised 14% female leaders
and 64% non-Danes. At the end of 2021 women filled 21% of senior
management positions across the GN Group. By 2025, we aim to have
above 25% women in senior management positions.
Board of Directors
The Board of Directors at GN has seven members elected by the Gen-
eral Meeting, four of which are women. Thus, in 2021 we exceeded our
target of 50 % women in the Board.
Review GN’s Diversity Policy: www.gn.com/diversitypolicy
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GN Voice
– checking in twice a year
Highly engaged people. GN’s employee engagement survey tool,
GN Voice, provides valuable feedback from employees twice a year.
Leaders listen to their input and comments and take appropriate
action to continuously maintain a highly engaged organization
91%
Highly engaged workforce
Response rate in the latest
survey in 2021
8.0
October 2021
Initiatives inspired by GN Voice feedback
Mental well-being. Program supporting employees during a
pandemic, learning to balance work -from-home, insecurity from
ever changing conditions, and good mental well -being
Remote work. Global approach to flexible work enabling local
flexible working policies taking into consideration the employees’
needs, the needs of GN, and the nature of the work task
Collaboration space. Continued initiatives to transform traditional
office space to better support new hybrid ways of working with
some people working remotely and others from the office
Overall engagement score
On a 10-scale engagement score
is 0.2 above the middle range of
sector industry benchmark
45%
Percentage of
women in
new hires
34%
Percentage of
women
managers
Age distribution of employees
7,228
employees globally
50+
nationalities in
headquarter alone
40+
countries where GN has
own staff on the ground
48%
Women in
workforce 21%
Women in
senior
management
57%
AGM elected
women on GN’s
Board 33%
Women in
Executive
Management
2,033
new colleagues
onboarded
during 2021
< 30 years 30 - 40 years 40 - 50 years > 50 years
19% 34% 26% 21%
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2003
1
st
to introduce an
open mini BTE
2014
1st Made-for-
iPhone
hearing aids
2012
1
st
to introduce
2.4 GHz e2e
technology
2020
1
st
to introduce All
Access Directionality
& M&RIE
2008
1
st
to introduce
Asymmetric
directionality
Definitions: DSP: Digital Signal Processing; e2e: Ear to Ear
2000
1
st
Bluetooth
®
headset
2004
1
st
digital amplifier
with DSP
2014
1
st
wireless earbuds
with built-in heart rate
monitor
2013
1
st
BT Stereo
headphones with
Dolby
2019
1
st
smart panoramic -
4k-pixel plug-and-play
video solution
2011
1
st
Bluetooth
headset with ANC
In 2021 the R&D spend was DKK 1.4 bn, corresponding to an R&D to revenue ratio of 9%
2018
1st company to introduce direct
streaming from Android devices
using Bluetooth Low Energy
2015
Smart Hearing
Alliance with
Cochlear
2017
1
st
headset officially meeting
Open Office Microsoft
Skype for Business
requirements
2.4 GHz
2021
1
st
all-in-one earbuds
with advanced hearing
technology,
Jabra Enhance Plus
Innovation and ecosystem leadership
GN’s engineering capabilities in hardware and software for audio and video deliver unique and individualized
customer experiences. To enhance our impact, we partner with leading channels, ecosystems, scientists, and
other industry leaders to leverage technology and market access
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Countr ies with dir ec t sales
Countr ies with GN distr ibutors
GN Hearing
GN Audio
GN Hearing & GN Audio
GN offices
GN develops and manufactures
innovative and intelligent audio and
video communications solutions
that are sold in around 100
countries across the world
Global reach, local presence
Research & Development
GN has R&D centers in Denmark, the United States, the Netherlands,
and China.
The Gro
up commands a unique blend of leading expertise of the
human ear,
audio, video and speech, wireless technologies, software,
and miniaturization.
In 202
1, GN invested DKK 1.4bn in research and development.
Manufacturing
GN has its global manufacturing
sites for hearing aids in Denmark,
China, and Malaysia. Regional manufacturing centers are
located in the United States and Great Britain.
GN’s audio and video products are mainly produced by carefully select
-
ed manufacturers in China and Southeast Asia,
and most components
are sourced from suppliers in Asia. GN Audio works with a small number
of tier
-one manufacturers supported by more than 100 sub-suppliers.
Sales and distribution
GN’s hearing aids are sold in around 100 countries across the
world.
GN has its own organization in 30
+
countries and operates via partners
and distributors in another 70 countries.
GN’s audio and video products are sold via distributors and retailers in
around 80+ countries across the world. Partners are responsibl
e for lo-
gistics, local customization, and final packaging to optimize lead
-time to
the final customer, delivering from four regional centers in Mexico, Po-
land, China, and Hong Kong.
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Combining medical and
consumer audio expertise
For years, a key challenge in the hearing industry has
been the low penetration rate. Only one in five
people who could benefit from hearing
improvement wears hearing aids. Addressing
hearing loss has a huge positive impact on well-
being, quality of life, and overall health.
GN now combines its medical and consumer audio
capabilities to reach the millions of people who have
not yet sought help for their hearing challenges. This
will help many more people begin their hearing
health journey, by providing unique products that
can give them control of their hearing health.
Bringing these advanced hearing products to market
under the umbrella of Jabra, GN’s well-known and
trusted consumer electronics brand, this line of
products reaches out to an entirely new type of con-
sumers.
• Jabra Enhance Plus is a unique high-tech, all-in-
one earbud for the many people who experience
mild-to-moderate hearing loss. It's for people
who are not yet ready for traditional all-day wear
hearing aids and would prefer a lifestyle solution
to help them hear conversation, music, and calls
easier in select situations such as at social
gatherings, in meetings or while enjoying media
• Jabra Enhance Pro is a professional high-tech
hearing aid that offers more choice and conven-
ience than ever before for the millions of people
with hearing loss – available first at Costco Hear-
ing Aid Centers around the world
Expanding hearing health
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Jabra Enhance Plus (left) and Jabra Enhance Pro (right)
, two
new offerings intended to reach new customer groups with
accessible hearing solutions.
With the Jabra Enhance
portfolio we expand
hearing health to even
more people who need it
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Reaching new audiences
In October 2021, the U.S. Food and Drug Admin-
istration (FDA) published a proposal to make hearing
aids more accessible for millions of Americans.
GN welcomes this new legislation as it likely pro-
vides access for many more people with a hearing
disability. GN is committed to enabling millions of
people who need support to make the first step on
their hearing health journey.
Today, more than 430 million people globally live
with “disabling hearing loss levels”, many of whom
struggle to find a hearing solution that is right for
their lifestyle. Further, according to WHO, more
than 1.5 billion people are experiencing “some
degree of hearing loss”. Untreated hearing loss
makes it difficult for people to communicate and
socialize, ultimately impacting their overall health
and well-being.
GN is determined to change this – and the Jabra
Enhance line of products is one step. Jabra Enhance
Plus is a solution intended for those with mild-to-
moderate hearing loss but no hearing solution.
GN still expects millions of Americans will also look
to the care and support of a hearing care
professional and that solutions that come with the
care and expertise of a professional will remain the
preferred choice of many.
However, innovation based on the new regulation
could be a unique first step on people’s hearing
health journey. This will also support hearing care
professionals in general and traditional hearing aid
channels as more people will discover the benefits of
hearing aids.
The expected over-the-counter hearing aid legisla-
tion has made many hearing care professionals
worry about the future of their trade.
Dr. Jennifer Mayer, owner of South Shore Hearing
Center, (MA) USA, is one of the many hearing care
professionals, who has lately changed her opinion to
now see this upcoming legislation as more of an op-
portunity than a threat.
“I have a clinical background and a diagnostic prac-
tice, and I will continue to have that and to serve
those patients. I will now also have something else
that I can potentially fit to a patient who may not be
ready to take that step and only need help in certain
situations. This is a new audience.
I do think this must be incorporated into my practice.
It’s not for all, but there are people this will benefit.
Our job is to help people hear better – I’m committed
to doing that in any way I can.
Also, with the introduction of masks a lot of people
realized they couldn’t hear, so I’m already seeing a
lot of younger patients in their 30ies and 40ies, who
have hearing challenges, but are not ready to wear
hearing aids.”
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Our job is to help people hear
better –
I’m committed to
doing that in any way I can
…this is a new
audience
Dr. Jennifer Mayer, hearing care profes-
sional, on the upcoming over
-the-coun-
ter U.S. hearing aid legislation.
Room for growth with new audiences
Low usages of hearing aids, especially for less
severe hearing loss
Profound
Severe
Moderately
severe
Moderate
Mild
Degree of penetration
50 million Americans have clinical
mild
to moderate hearing loss.
Globally, more than 430 million
people live with hearing loss, many of
whom struggle to find a hearing
solution that is right for their lifestyle.
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Unified communication and
collaboration is moving beyond
the office
During the past two years, leading platforms for
unified communication and collaboration (UC&C)
have seen a massive uptake in the number of users.
Companies like Microsoft and Zoom have reported
never-before seen growth figures.
Some of this growth has come from the office space,
where many are already familiar with the benefits of
these technologies to support the need for
employees to work remotely and collaborate across
geographies.
A new growth wave is emerging from industries and
types of employees which are new to UC&C. The
need to keep services running, keep social
distancing, and equip personnel with adequate tools,
has created an acceleration of UC&C deployment
outside of the traditional office environment,
including a broad group of employees working in the
frontline.
While the core target customer traditionally was an
office-based worker, there is an opportunity beyond
the traditional office, also referred to as “deskless
workers”.
These more than two billion workers include
teachers, doctors, retail staff, logistics personnel,
first responders, and many other key roles.
In many industries, the traditional collaboration
solutions have been closed systems (e.g., land-
mobile radios) with push-to-talk functionality.
T
echnology for the
deskless worker
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M
ore than 2 billion
workers
potentially
need communication
tools
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However, the changing needs and the continued in-
novation by UC&C vendors allow more dynamic and
integrated solutions, encompassing communication,
push-to-talk capability, shift planning, logistics, and
other tasks, all in one place – supported by intelli-
gent audio and video devices.
In GN Audio, we have expanded our target audience
over the past few years to include more of the
deskless workers.
In the education sector, we’ve seen a strong de-
mand from school districts employing Jabra Pana-
Cast cameras and Jabra Speak solutions.
In the transportation and logistics sector, we serve
the trucking community and others via our
BlueParrott solutions.
And in the defense and security sector, our FalCom
solutions are getting more attention than ever from
governments around the world.
With strong collaboration with the leading UC&C
vendors and driven by our strong capabilities across
microphone technology, noise cancellation, video
intelligence, and focus on serving the end-user – no
matter their environment – we are strongly
positioned to address the rapidly changing needs of
the deskless worker.
More than a headset
For many deskless workers, a headset is more than a
tool to enable flexibility – it can be a mission critical
device.
The requirements for durability, portability, security,
noise suppression, disinfection, and integration with
various industry software ecosystems, are more di-
verse than in the office.
GN Audio is already a trusted provider across the
world to private enterprises, organizations and the
public sector, underpinned by the significant
demand for our professional and specialized
products over the recent years.
Transforming the frontline
The transition of the deskless worker to UC&C can
be a key contributor to GN Audio’s continued
growth. Working closely with our alliance partners,
our products are a natural extension to the
technologies to which many are shifting.
The deskless and frontline workers have been an
underserved segment technology-wise. In GN Audio,
we see this as an opportunity to make more workers
productive, effective, and connected – whatever
their task.
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I
t can be a
mission critical
device
PanaCast 20, engineered for
intelligent AI-enabled per-
sonal video conferencing
FalCom
offers advanced
hearing protection solu-
tion
s enabling special op-
erations, military, law en-
forcement and security
personnel to communi-
cate in the most extreme
environments
BlueParrott-C300-
XT, e
ngineered for
superior calls in high-
noise environments
PanaCast
50, engineered to be the first new-normal-ready intelligent video bar
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GN joins forces with SteelSeries,
a pioneer in premium software-
enabled gaming gear
Originally founded in Denmark in 2001, SteelSeries is
an innovative global pioneer in the premium gaming
gear market and is favored among the world’s
e-sports gamers for its superior quality, inventive
functionality and Scandinavian design heritage.
SteelSeries is particularly known for its premium
gaming headsets, keyboards and mice that are soft-
ware-enabled and system-integrated, which signifi-
cantly enhance the user experience and reinforce
customer loyalty.
The gaming gear market has experienced significant
growth over the past few years and is expected to
continue to grow in the mid-term at around 7-8%
per year.
SteelSeries has successfully executed on its strategy
in the premium end of this high-growth market and
has taken significant market share during the past
few years based on its strong, innovative product
offering and relentless commercial execution.
In October 2021, GN announced a signed agreement
to acquire SteelSeries and following customary reg-
ulatory approvals the deal was closed in January
2022 for a total purchase price of DKK 8.0 billion on
a cash and debt free basis.
With the acquisition, GN gains a very strong position
in the attractive upscale gaming gear market and ex-
pands its position in the premium audio market.
Video games are awesome
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SteelSeries’ vision is to build
the leading comprehensive
platform for enthusiast
gamers
– seamlessly con-
necting the best gear, the
biggest games, the gaming
community
, and e-sports
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Compelling strategic rationale
SteelSeries, with its best-in-class product portfolio,
attractive growth profile and margin structure, is a
company that presents an attractive growth and
scaling opportunity for GN.
SteelSeries brings a highly relevant and competitive
portfolio and strong engineering competencies.
Combining these forces with GN Audio’s strong
track record, flawless supply chain setup, and wide-
ranging distribution channels will drive synergies
and further value creation.
SteelSeries is now being integrated as an independ-
ent business under the SteelSeries brand within GN
Audio. SteelSeries CEO, Ehtisham Rabbani, reports
to René Svendsen-Tune, CEO of GN Audio.
Ehtisham Rabbani, CEO of SteelSeries, says:
“SteelSeries is a premium gaming gear brand with a
single-minded focus on helping gamers achieve glory.
We are thrilled to be part of GN. The fit is perfect as
we both share a relentless drive for creating cutting-
edge technology to delight our customers. We see
great upside in leveraging each organization’s unique
strengths to build an even more formidable, unified
company.”
Continued strong growth in 2021
In 2021, SteelSeries generated a revenue of DKK 2.7
billion, equaling an organic revenue growth of 26%.
The adjusted EBITA margin ended at 13.6%.
(Unaudited and adjusted numbers)
Learn more at www.steelseries.com
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Video games are awesome. There’s no limit
to how awesome they can be.
SteelSeries’
mission is to help every gamer push the
boundaries of awesome and feel like a star
Revenue
DKKm
731
970
1,244
2,020
2,697
0
500
1,000
1,500
2,000
2,500
3,000
2017 2018 2019 2020 2021
2021
13.6%
Adjusted EBITA margin
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Lively – a leader in online
hearing care – joins GN
Headquartered in New York City, U.S., Lively was
founded in 2018. Lively's mission is to empower peo-
ple with hearing loss to connect with their world
through effortless technology and delightful care.
Pioneering a fully virtual hearing care journey, Lively
is a customer-first, end-to-end audiology platform
that makes it easier for users to buy advanced hear-
ing technology with licensed professional care.
Today’s online market is estimated to account for
around 4% of the U.S. hearing care market. As more
online-savvy and younger consumers increasingly
seek hearing solutions, the online segment is ex-
pected to continue to grow at a much faster pace
than other segments.
On December 14, 2021, GN announced the acquisi-
tion of Lively. Following the transaction, GN Hearing
has an ownership of 91%, while the remaining 9% is
held by the current management team of Lively.
In 2021, Lively delivered revenue of DKK 114 million
and EBITA of DKK -171 million.
Learn more at www.listenlively.com
It’s about to get more Lively
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Content
Target users Market characteristics
Market share
Market size (
USD)
Market growth
Hearing aids*
Hearing aids for hearing
impaired
Aging population and low penetration
with hearing impaired
~5bn ~3-4%**
Hearing
protection
Tactical hearing protection
for defense and security
Hearing protection systems is a growing
political need
~0.6bn ~10%
Office
Office-based
knowledge workers
From desk-phone telephony in private
offices to UC&C in open offices
~2.1bn ~10%
Contact
center
“Calls for a living“
From desk-phones using on-premise
infrastructure to laptop-based cloud
calling
Collaboration Plug-and-play collaboration
From built
-in legacy equipment to UC&C-
enabled plug-and-play solutions
~2.5bn ~20%
Consumer
Preference for great calls,
music and an active lifestyle
From corded headbands to True Wireless
as the preferred form factor
~24bn ~10%
Gaming
Premium software-enabled
gaming gear
Growing base of gamers and low
penetration of purpose
-built gaming gear
~5.5bn ~7-8%
Serving attractive markets
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Driven by a unique portfolio of medical, professional and consumer
technology solutions, GN serves across attractive markets with high
barriers of entry and multiple drivers of sustainable long-term growth
Growing elderly and active population
of people with a hearing loss still live without hearing aids
Massive growth in Unified Communication ***
times more daily active
users on Microsoft
Teams – nearly 250
million active users
times more daily
active participants
on Zoom
A growing
, affluent, and aging
world population
, new digital
communication trends, and a growing
base of gamers offer opportunities for
intelligent audio and video solutions
80%
~6
~30
+5%
CAGR of
numbers of
gamers across
the world
Growing base of gamers
*Wholesale, ** Assuming 4-6% volume growth and 1-2% ASP, *** The growth in unified communication numbers is from pre COVID-19 levels (between late 2019 - early
2020) to COVID-19 levels (between late 2020 - early 2021). Sources: MarkeTrak, EuroTrak, GN estimates, Microsoft, Zoom, NewZoo, The NPD Group Inc.
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GN Hearing
In 2022, GN Hearing expects to grow faster than the projected market
growth of 4-6% volume growth and -1% to -2% ASP decline, with an
organic revenue growth between 5-10%. Non-recurring items primarily
related to investments in the supply chain in the magnitude of
DKK ~ -150 million are expected in 2022 in order to restore
profitability. For the core hearing aid business, the EBITA margin is
expected to be ~14% for 2022 excluding non-recurring items. In the
Emerging Business (including the Lively acquisition and further
investments into the digital space), GN Hearing will continue to invest,
and with the expected strong topline growth, the EBITA impact is
expected at DKK ~ -190 million.
The GN Hearing financial guidance is based on the following assump-
tions:
• Revenue in core hearing aid business: Q1 2022 organic revenue
growth to be low-single digit. H2 2022 organic revenue growth to
be high-single digit following key product launches with extension
of the ReSound ONE platform in H1 2022 and a new platform
launch in Q3 2022
• EBITA in core hearing aid business: Q1 2022 EBITA margin to be
low-single digit (excluding non-recurring items) with a gradual im-
provement in the three remaining quarters towards 20% by Q4
2022
• Non-recurring items: DKK ~ -150 million in EBITA investments pri-
marily in the supply chain
GN Audio
In 2022, GN Audio expects to grow significantly faster than the market.
The current situation around the global supply situation is expected to
impact the market growth especially in the first half of the year. Given
the global supply situation, GN Audio’s organic revenue growth for
2022 is expected to be >5%, while the organic revenue growth for
SteelSeries is expected to be >10% (will be treated as M&A growth in
the reported revenue). For GN Audio, the EBITA margin is expected to
be ~20% for 2022 excluding non-recurring items. Non-recurring items
related to the SteelSeries acquisition in the magnitude of DKK ~ -400
million are expected in 2022 covering transaction and integration costs
as well as non-cash PPAs related to customary inventory adjustments.
The GN Audio financial guidance is based on the following assump-
tions:
• Revenue: Q1 2022 organic revenue growth of ~ -25% (in GN Audio
organic and SteelSeries) due to supply chain constraints. H2 2022
to return to double-digit growth rates as supply situation is ex-
pected to ease
• EBITA: Q1 2022 EBITA margin to be in the mid-teens (excluding
non-recurring items) with a gradual improvement in the three re-
maining quarters resulting in an EBITA margin of ~20% for 2022
(excluding non-recurring items)
• Non-recurring items: Transaction related costs of DKK ~ -100 mil-
lion and non-cash PPAs of DKK ~ -200 million following the
SteelSeries acquisition to be booked primarily in Q1 2022. Integra-
tion costs of DKK ~ -100 million
Financial guidance 2022
Forward-looking statements
The forward-looking statements in this report reflect the
management's current expectations of certain future events and
financial results. Statements regarding the future are, naturally,
subject to risks and uncertainties, which may result in
considerable deviations from the outlook set forth.
Furthermore, some of these expectations are based on
assumptions regarding future events, which may prove
incorrect. Changes to such expectation and assumptions will not
be disclosed on an ongoing basis, unless required pursuant to
general disclosure obligations to which GN is subject.
Factors that may cause actual results to deviate materially from
expectations include – but are not limited to – general economic
developments and developments in the financial markets,
technological developments, changes and amendments to
legislation and regulations governing GN’s markets, changes in
the demand for GN's products, competition, fluctuations in sub-
contractor supplies and developments in ongoing litigation
(including but not limited to class action and patent
infringement litigation in the United States).
For more information, see the "Management's report" and "Risk
management” elsewhere in this Annual Report. This Annual
Report should not be considered an offer to sell securities in GN.
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Other activities and EPS
For full year 2022, EBITA in “Other” is expected to be DKK ~ -190 mil-
lion.
For full year 2022, adjusted EPS (excluding non-recurring items and
amortization and impairment of acquired intangible assets) is
expected to grow >10% compared to adjusted EPS of DKK 15.29 in
2021.
Primary risk factors in relation to the financial guidance
Due to the ongoing COVID-19 pandemic and the global supply situa-
tion – which impacts GN in many ways – it must be stressed that the
basic assumptions behind the guidance remain more uncertain than
normal. The situation is impacting GN’s operational performance, pre-
dictability and visibility across markets, channels and supply chain.
The financial guidance is contingent on no new significant local
restrictions due to COVID-19 and an ease of the supply chain situation
in H2 2022.
Financial guidance 2022
Organic
revenue growth
Adjusted
EBITA margin
4)
Non-recurring items
(DKK million)
5)
Growth in
adjusted EPS
6)
GN Hearing
- Core business organic 5-10% ~14% ~ -150
- Emerging Business
1)
(DKK million) ~ -190
GN Audio
2) 3)
~ 20% ~ -400
- GN Audio organic
>5%
- SteelSeries
>10%
Other (DKK million)
~ -190
GN Store Nord >10%
Note 1) Emerging Business mainly includes the Lively acquisition
Note 2) The SteelSeries organic revenue growth will be reported as M&A growth for GN Audio
Note 3) GN Audio and SteelSeries organic revenue growth constrained by the current global supply chain situation
Note 4) Excluding non-recurring items
Note 5) Non-recurring items in GN Hearing primarily related to supply chain investments (DKK ~ -150m) and in GN Audio related to transaction (DKK ~ -100m) and integration costs
(DKK ~ -100m) as well as non-cash PPAs (DKK ~ -200m), associated with SteelSeries
Note 6) Compared to 2021 adjusted EPS (excluding non-recurring items and amortization and impairment of acquired intangible assets) of DKK 15.29
Based on foreign exchange rates as of February 10, 2022
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Revenue
In 2021, GN Store Nord increased revenue by 17% to DKK 15,775
million compared to DKK 13,449 million in 2020. Organic revenue
growth was 20%, compared to 9% in 2020.
The revenue growth reflects strong execution across the company,
while significantly impacted by the global shortage of certain
components in GN Audio and impact from local COVID-19 restrictions
in GN Hearing. The foreign exchange contribution was around -3% and
M&A contribution was insignificant.
Earnings
EBITA in Other amounted to DKK -188 million in 2021, compared to
DKK -177 million in 2020 in line with financial guidance. GN Store
Nord’s EBITA, excluding transaction related costs of DKK 45 million as-
sociated with the SteelSeries acquisition, ended at DKK 2,664 million
compared to DKK 1,752 million in 2020 (excluding gain from legal set-
tlements and litigation of DKK 114 million) which translates into an
EBITA growth of 52%.
The EBITA margin in 2021 (excluding transaction related costs)
amounted to 16.9%, compared to 13.0% (excluding gain from legal set-
tlements and litigation) in 2020, mainly reflecting the revenue growth
across the company.
In 2021, amortization and impairment of acquired intangible assets
were DKK -226 million, compared to DKK -235 million in 2020.
Financial items were DKK -90 million in 2021, compared to DKK -6 mil-
lion in 2020. The development in financial items was mainly driven by a
positive non-cash contribution from foreign exchange revaluation of
certain balance sheet items and a fair value adjustment related to an
existing ownership interest in 2020. In 2021, share of profit (loss) in as-
sociates were DKK -36 million compared to DKK -9 million in 2020,
mainly driven by the minority interest in Lively. Gain (loss) on divest-
ment of operations etc. was DKK 4 million in 2021 compared to DKK -4
million in 2020.
In 2021, the profit before tax was DKK 2,316 million (excluding transac-
tion related costs) compared to DKK 1,498 million in 2020 (excluding
gain from legal settlement and litigation). The effective tax rate was
21.2%, translating into a net profit of DKK 1,790 million, an increase of
41% compared to 2020.
Other performance indicators
Free cash flow excl. M&A was DKK 702 million in 2021 compared to
DKK 1,865 million in 2020. The free cash flow excl. M&A reflects the
earnings level on top of investments into future growth opportunities.
In 2021, the cash conversion ended at 27% compared to 100% in 2020
primarily driven by the development in working capital, the acquisition
of a block of the corporate headquarter in Denmark, significant tax
payments and the gain from legal settlement and litigation.
Earnings per share (EPS) reached DKK 13.90 in 2021, (excluding trans-
action related costs of DKK 45 million) compared to DKK 9.72 in 2020,
equal to an increase of 43%, in line with the updated financial guidance.
The return on invested capital (ROIC) was 25% in 2021 compared to
19% in 2020, driven by the strong earnings growth.
By the end of 2021, equity in GN Store Nord amounted to DKK 6,229
million, compared to DKK 5,178 million in 2020. The increase was pri-
marily driven by the net profit generated during the year on top of the
execution of the share buyback program paused in October 2021, as
well as the ordinary dividend payment and changes in foreign exchange
rates.
Group performance 2021
Revenue (DKKm) and organic revenue growth
GN Store Nord
EBITA (DKKm) and EBITA margin
GN Store Nord
* Excluding
transaction related costs associated with the Altia Systems acquisition of
DKK 52 million
*
*Excluding gain from legal settlements and litigation of DKK 114 million
**
*Excluding transaction related costs associated with the SteelSeries acquisition of
DKK
45 million
9,585
10,607
12,574
13,449
15,775
8%
13%
15%
9%
20%
0
5,000
10,000
15,000
20,000
2017 2018 2019 2020 2021
Revenue Organic revenue growth
1,744
1,956
2,373
1,752
2,664
18.2%
18.4%
18.9%
13.0%
16.9%
0
500
1,000
1,500
2,000
2,500
3,000
2017 2018 2019* 2020** 2021***
EBITA EBITA margin
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Capital structure
Net interest-bearing debt ended at DKK 5,358 million in 2021, com-
pared to DKK 4,198 million by the end of 2020. Net interest-bearing
debt to EBITDA leverage ratio reached 1.8x, same as by the end of
2020, driven by the strong earnings growth on top of significant
shareholder distribution and the acquisition of Lively.
As previously communicated, GN has a long-term capital structure tar-
get of a net interest-bearing debt between one and two times to
EBITDA.
Following closing of the SteelSeries and Lively acquisitions, GN ex-
pects its financial leverage to increase, but due to the expected strong
cash flow generation across the business, it is expected that GN will be
back within the leverage target in a couple of years. Leverage (includ-
ing the DKK 8.0 billion purchase price for SteelSeries) by the end of
2021 would have been around 4.4x. By the end of 2021 GN had a
healthy balance sheet with ample sources of liquidity having cash and
cash equivalent of DKK 6,208 million.
In November 2021, GN successfully placed a new three-year EUR 600
million Eurobond issue with a coupon of 0.875%, related to the financ-
ing of the SteelSeries acquisition. In addition, GN has established a new
Revolving Credit Facility of EUR 350 million which is fully undrawn and
replaced the DKK 2 billion and USD 40 million facilities which have
been terminated accordingly.
In line with the last couple of years, GN continues to proactively secure
a diversified funding profile. The different sources of financing now
available to GN include the convertible bond market (via the listed
convertible bond), traditional bonds (via the Euro Medium-Term Note
program), the short-term Euro Commercial Paper Program, bilateral
loan facilities provided by EIB as well as uncommitted bank facilities
including overdraft lines.
Financial overview 2021
GN Hearing
GN Audio
Group total*
DKK million
2021
2020
Growth
2021
2020
Growth
2021
2020
Growth
Revenue
5,332
4,725
13%
10,443
8,724
20%
15,775
13,449
17%
Organic growth
16%
-24%
22%
42%
20%
9%
Gross profit
3,400
2,905
17%
5,282
4,393
20%
8,682
7,298
19%
Gross profit margin
63.8%
61.5%
+2.3%p
50.6%
50.4%
+0.2%p
55.0%
54.3%
+0.7%p
EBITA
643
41
1,468%
2,209
***
1,888
**
17%
2,664
***
1,752
**
52%
EBITA margin
12.1%
0.9%
+11.2%p
21.2%
***
21.6%
**
-0.4%p
16.9%
***
13.0%
**
+3.9%p
Earnings per share (EPS)
13.90
***
9.72
43%
Free cash flow excl. M&A
198
127
56%
1,288
1,729
-26%
702
1,865
-62%
Cash conversion
31%
310%
NA
60%
86%
-26%p
27%
100%
-73%p
* Including "Other", ** Excluding gain of DKK 114 million from legal settlements and litigation
*** Excluding transaction related costs of DKK 45 million associated with the acquisition of SteelSeries
Free cash flow (DKKm) and cash conversion
GN Store Nord
*
Including gain from legal settlements and litigation of DKK 114 million
Earnings per share (EPS)
GN Store Nord
*
Including gain from legal settlements and litigation of DKK 114 million
**
Excluding transaction related costs associated with the SteelSeries
acquisition
of DKK 45 million
1,134
1,110
1,296
1,865
702
65%
57%
56%
100%
27%
0
500
1,000
1,500
2,000
2017 2018 2019 2020* 2021
Free cash flow excl. M&A Cash conversion
8.07
9.25
11.12
9.72
13.90
0
2
4
6
8
10
12
14
16
2017 2018 2019 2020* 2021**
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Dividend and share buyback program
In 2021, GN distributed in total DKK 1,354 million back to shareholders
through share buybacks and dividends. In March 2021, GN paid out
DKK 206 million in dividend (DKK 1.45 per share) in respect of the fiscal
year 2020 as approved at the Annual General Meeting in 2021.
In order to deleverage following the announcement of SteelSeries, GN
paused its share buyback program in October 2021, a program which
was initiated in May 2021 and amounted to DKK 1,148 million before
pausing.
The Board of Directors will propose to pay out DKK 1.55 per share in
dividend for the fiscal year 2021 (equivalent to a total dividend of DKK
214 million), an increase of 7% compared to the year before.
Acquisition of SteelSeries and Lively
In October 2021, GN announced a signed agreement to acquire
SteelSeries – a global innovation driven pioneer in premium software-
enabled gaming gear. The transaction was closed on January 12, 2022,
for a total purchase price of DKK 8.0 billion on a cash and debt free ba-
sis (see pages 23-24 for more details on SteelSeries).
In December 2021, GN announced the acquisition of New York based
Lively – a leading online hearing care and digital marketing platform.
Following the transaction, GN Hearing has an ownership of 91%, while
the remaining 9% is held by the current management team. The pur-
chase price was DKK 625 million on a cash and debt free basis (see
page 25 for more details on Lively).
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GN distributed in total
DKK 1,
354 million back to
shareholders through
share buybacks and
dividends
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GN Hearing performance 2021
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Organic revenue growth
Revenue
of DKK 5.3 bn
16%
EBITA margin
EBITA
of DKK 0.6 bn
12.1%
+ 17%
North America
+ 26%
Rest of World
+ 7%
Europe
Organic revenue growth
By region
Free cash flow
excl. M&A (DKKm)
198
R&D investment
as percent of revenue
11%
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• Organic revenue growth of 16%
• EBITA margin of 12.1%
• Solid market recovery
• R&D transformation initiated
Revenue
GN Hearing delivered 16% organic revenue growth in 2021 which was
in line with the updated financial guidance. Revenue growth was 13%
including around -3% impact from the development in foreign ex-
change rates and around -1% impact from M&A. The revenue in 2021
reached DKK 5,332 million, compared to DKK 4,725 million in 2020.
The hearing aid market continued to be negatively impacted by COVID-
19 due to local restrictions, thus also impacting GN Hearing in different
parts of the world. However, the solid performance in GN Hearing re-
flects the strong portfolio of hearing aids including ReSound ONE and
ReSound Key, while the second half of the year was impacted by delays
in key product launches.
North America
In North America, the hearing aid market in 2021 saw a strong recov-
ery following the pandemic with volumes being above 2019 levels, but
with significant differences across states and channels. GN Hearing’s
organic revenue growth was 17% in 2021 (-13% compared to 2019)
driven by solid performance in the independent market with ReSound
ONE and ReSound Key. The performance in VA was negatively im-
pacted by challenging conditions following the ongoing pandemic lead-
ing to inability to visit clinics and insufficient training time for hearing
care professionals. This led to a market share loss during the year, but
with a stabilizing trend in the second half of the year. In Costco, the re-
ception and up-take driven by the launch of Jabra Enhance Pro have
been encouraging resulting in a strong position in the branded segment
in Costco. Growth in Costco was, however, negatively impacted by the
ASP development in the channel. Revenue growth in North America
was 11% including around -5% impact from the development in foreign
exchange rates and around -1% impact from M&A.
Europe
In Europe, the hearing aid market in 2021 saw a solid recovery follow-
ing the pandemic, but some markets continued to be impacted by
COVID-19 restrictions. France saw a significant market growth due to
the new healthcare reform, but also the southern European countries
experienced solid market growth. Countries like Germany and the Ben-
elux continued to be negatively impacted by COVID-19. GN Hearing ex-
perienced an organic revenue growth of 7% in Europe (-7% compared
to 2019). Revenue growth was 7% including an insignificant impact
from the development in foreign exchange rates.
Rest of World
The Rest of World region continued to be impacted by COVID-19 in dif-
ferent ways across countries, dependent on the level of local re-
strictions. GN Hearing saw strong performance in among other China,
while Japan and ANZ continued to deal with heavy restrictions during
most of 2021. In the Rest of World region organic revenue growth was
26% for 2021 (-1% compared to 2019). Revenue growth was 24% in-
cluding around -2% impact from the development in foreign exchange
rates.
Earnings and other financial highlights
GN Hearing’s gross profit reached DKK 3,400 million in 2021 corre-
sponding to a gross margin of 63.8% compared to 61.5% in 2020 due
to higher revenue and volumes.
GN Hearing
Revenue (DKKm) and organic revenue growth
GN Hearing
EBITA (DKKm) and EBITA margin
GN Hearing
5,615
5,833
6,351
4,725
5,332
6%
7%
7%
-24%
16%
0
2,000
4,000
6,000
8,000
2017 2018 2019 2020 2021
Revenue Organic revenue growth
1,153
1,194
1,284
41
643
20.5% 20.5%
20.2%
0.9%
12.1%
0
500
1,000
1,500
2017 2018 2019 2020 2021
EBITA EBITA margin
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In 2021, GN Hearing’s OPEX continued to be prudently managed, with
OPEX reaching DKK 2,757 million, 4% below the level of 2020. Sales,
distribution, and administrative expenses decreased by 9% which re-
flect prudent cost management while continuing to investment in mar-
ket normalization and IT infrastructure. R&D investments increased by
13% compared to 2020, in line with GN Hearing’s strategy.
GN Hearing’s EBITA increased to DKK 643 million in 2021 compared to
DKK 41 million in 2020, driven by sales recovery and prudent cost man-
agement. As a result, the EBITA margin reached 12.1% in 2021 com-
pared to 0.9% in 2020 which was in line with the updated financial guid-
ance.
The return on invested capital (ROIC) was 9% in 2021 compared to 1%
in 2020, mainly due to the revenue growth. ROIC is still below historical
levels due to the impact from COVID-19.
Free cash flow excl. M&A was DKK 198 million in 2021 compared to
DKK 127 million in 2020. The free cash flow excl. M&A reflects the
earnings level on top of investments into future growth opportunities.
Business highlights
ReSound Key
Launched in February 2021, ReSound Key are essential hearing aids
providing access to proven and award-winning hearing technology
worldwide. Based on an advanced chip platform and GN’s Organic
Hearing philosophy, ReSound Key promises clear, natural sound
quality.
Jabra Enhance Pro
Launched in June 2021, Jabra Enhance Pro is a new premium hearing
aid line-up launched into Costco Hearing Aid Centers in North Ameri-
ca, enabling consumers to choose high quality FDA-approved hearing
solutions from a well know consumer brand. The reception and up-take
have been encouraging resulting in a strong position in the branded
segment in Costco.
Jabra Enhance Plus
Announced August 2021, Jabra Enhance Plus is a first-of-its-kind inno-
vation bringing together the convenience of true wireless ear-buds with
advanced hearing technology to alleviate unaddressed user needs and
enable millions to take a first step on their hearing health journey.
Jabra Enhance Plus is commercially available by end of February 2022.
Draft OTC legislation
In October 2021, FDA issued the proposed OTC Hearing Aid ruling,
which GN has been welcoming. GN is committed to enable millions of
Americans who need support to make their first step on their hearing
health journey and aims to develop new innovative solutions comply-
ing with the new US over-the-counter hearing aid regulation. GN will
leverage its unique combination of medical grade technology and con-
sumer audio expertise (see more information on page 20).
Transformation of R&D
Announced in October 2021, GN Hearing initiated a transformation of
R&D with the objective to further increase quality, predictability of
delivery times, and R&D efficiency. While GN Hearing’s R&D innovation
capabilities are fully intact, the transformation focuses on ensuring a
better and more user friendly software design, a more efficient
organizational set-up as well as strengthened project management
capabilities.
Free cash flow (DKKm) and cash conversion
GN Hearing
Revenue distribution
GN Hearing
866
574
672
127
198
75%
48%
52%
310%
31%
0
200
400
600
800
1,000
2017 2018 2019 2020 2021
Free cash flow excl. M&A Cash conversion
North
America
47%
Europe
28%
Rest of
the world
25%
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GN Audio performance 2021
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+ 27%
North America
+ 16%
Europe
+ 30%
Rest of World
Organic revenue growth
By region
Free cash flow
excl. M&A (DKKm)
1,288
R&D investment
as percent of revenue
7%
EBITA margin
EBITA
of DKK 2.2 bn
21.2%
Organic revenue growth
Revenue
of DKK 10.4 bn
22%
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• Organic revenue growth of 22%
• EBITA margin of 21.2%
• Volatility and shortages in global
supply
• Strong underlying market demand
Revenue
GN Audio delivered 22% organic revenue growth in 2021, on top of the
42% delivered in 2020, which was in line with the updated financial
guidance. Revenue growth was 20% including around -2% impact from
the development in foreign exchange rates.
The strong growth was delivered across regions and segments, with
double-digit growth in both Enterprise and Consumer. The strong
performance reflects the strength of GN Audio’s innovative world-
leading product portfolio in combination with strong execution in the
supply chain in a very challenging environment and commercial excel-
lence initiatives across all three regions.
In the second half of 2021, the global supply situation became more
challenging impacting supply of certain components across industries.
GN Audio experienced a negative impact on sales due to delays in
deliverables and decommitment of contracted deliverables and,
consequently, enters 2022 with a significant order backlog.
Operating in a market with attractive conditions accelerated by the
pandemic and elevated to a higher level, new product introductions
and strong execution strengthened GN Audio’s leading position in 2021
across the attractive enterprise market.
North America
GN Audio saw strong performance in 2021 in North America across
segments with double-digit growth in both Enterprise and Consumer.
Organic revenue growth for the region was 27% (47% compared to
2019). Revenue growth was 21% including around -6% impact from the
development in foreign exchange rates equal to a revenue of DKK
3,161 million.
Europe
In Europe, GN Audio delivered revenue of DKK 5,283 million in 2021,
corresponding to organic revenue growth of 16% (88% compared to
2019) with double-digit growth in both the Enterprise and Consumer
segments. Strong performance across countries, with especially
Germany and the UK delivering significant growth. Revenue growth
was 17% including around 1% impact from the development in foreign
exchange rates.
Rest of World
In the Rest of World Region, GN Audio saw strong performance across
the region with particularly strong organic revenue growth in Australia,
India and Brazil. Organic revenue growth was 30% (86% compared to
2019) driven by double-digit organic revenue growth across Enterprise
and Consumer. Revenue growth was 27% including around -3% impact
from the development in foreign exchange rates equal to a revenue of
DKK 1,999 million.
Earnings and other financial highlights
GN Audio’s gross profit reached DKK 5,282 in 2021 compared to DKK
4,393 million in 2020. The gross margin was 50.6% in 2021 compared
to 50.4% in 2020 and was negatively impacted by increased freight and
production costs due to COVID-19. GN Audio continues to be impacted
by tariffs.
GN Audio
Revenue (DKKm) and organic revenue growth
GN Audio
EBITA (DKKm) and
EBITA margin
GN Audio
*Excluding
transaction related costs associated with the Altia Systems acquisition
of DKK 52 million
*
*Excluding gain from legal settlements and litigation of DKK 114 million
**
*Excluding transaction related costs associated with the SteelSeries acquisition
of DKK
45 million
3,970
4,774
6,223
8,724
10,443
10%
21%
26%
42%
22%
0
2,000
4,000
6,000
8,000
10,000
12,000
2017 2018 2019 2020 2021
Revenue Organic revenue growth
721
905
1,244
1,888
2,209
18.2%
19.0%
20.0%
21.6%
21.2%
0
500
1,000
1,500
2,000
2,500
2017 2018 2019* 2020** 2021***
EBITA EBITA margin
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GN Audio’s OPEX was DKK 3,073 million in 2021 (excluding transac-
tion related costs of DKK 45 million associated with the acquisition of
SteelSeries), reflecting an increase of 23% compared to 2020 (exclud-
ing gain from legal settlements and litigation of DKK 114 million). Sell-
ing, distribution and administrative costs (excluding transaction related
costs) increased by 24% compared to 2020, mainly driven by continued
investments in future growth opportunities while investments in R&D
increased by 31%.
GN Audio’s EBITA, excluding transaction related costs, ended at DKK
2,209 million in 2021. As a result, the EBITA margin was 21.2%, com-
pared to 21.6% in 2020 (excluding gain from legal settlements and liti-
gation) in line with the updated financial guidance, reflecting leverage
in the business and investments in future growth opportunities.
The return on invested capital (ROIC) was 79% in 2021, compared to
81% in 2020 driven by continued strong performance.
Free cash flow excl. M&A was DKK 1,288 million in 2021 compared to
DKK 1,729 million in 2020. The free cash flow excl. M&A reflects the
strong earnings level on top of investments in future growth opportu-
nities.
Business highlights
New Jabra PanaCast camera line-up
In April 2021, GN Audio announced the launch of a new Jabra PanaCast
camera line-up that has been engineered to help business navigate the
flexible hybrid way of working. The line-up combines immersive video,
world-leading audio technologies and cutting-edge Artificial Intelli-
gence to completely reinvent meetings and collaboration.
The line-up consists of Jabra PanaCast, the world’s first intelligent 180°
Panoramic-4K plug-and-play video solution for flexible use, Jabra Pana-
Cast 50, the world’s first new normal-ready intelligent video bar, and
Jabra PanaCast 20, an intelligent personal camera allowing high-qual-
ity, secure video collaboration. The global roll-out was negatively im-
pacted by supply constraints, but the feedback and reception of the so-
lutions have been very encouraging.
New Jabra Elite line-up of true wireless earbuds
In August 2021, GN Audio announced three products to establish a new
era of Jabra Elite true wireless earbuds. The additions to the Elite port-
folio include Jabra Elite 7 Pro, Jabra Elite 7 Active and Jabra Elite 3, all
engineered to specific use cases.
Jabra Evolve2 30 and Jabra Evolve2 75
During 2021, GN Audio launched different new enterprise headsets,
Jabra Evolve2 30 and Jabra Evovle2 75. Jabra Evolve2 30 is a new
value-for money headset, while Jabra Evolve2 75 is an innovative new
solution, specifically engineered to make flexible working simpler and
more productive for everyone. Jabra Evolve2 75 features fully adjusta-
ble ANC as the first in the Evolve range and is further packed with new
features to increase flexibility and increase concentration.
Free cash flow (DKKm) and cash conversion
GN Audio
Revenue distribution
GN Audio
481
798
849
1,729
1,288
67%
88%
71%
86%
60%
0
500
1,000
1,500
2,000
2017 2018 2019 2020 2021
Free cash flow excl. M&A Cash conversion
North
America
30%
Europe
51%
Rest of
World
19%
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GN aligns its enterprise risk management efforts with the ISO 31000
standard for risk management. The company views this as a valuable
approach to protecting shareholder value. It also helps validate invest-
ment decisions.
The Group Risk and Compliance department facilitates the recurring
risk management process. It covers all businesses and value chains, and
all relevant executives and functional specialists participate. Moreover,
the assessment and monitoring of climate-related risks is integrated in
the recurring risk management process to enable proactive mitigation
of any potential impact.
The risk reviews assess current and emerging risks from a risk cata-
logue of 150+ risks. The management teams of the respective busi-
nesses prioritize the risks to a number of top risks for each business and
assign formal risk owners to each top risk. The risk owner is also re-
sponsible for the mitigation of the risk.
The Executive Management reviews the top business risks and presents
a consolidated Top 10 to the Board of Directors for review.
The main types of risk associated with GN’s businesses, and the main
risk mitigation taken to manage them are outlined on the following
pages.
Risk management
Inputs (raw
materials)
Component
suppliers
Inbound
logistics
Manufacturing
Assembly
Outbound
logistics
Marketing
Sales
Service
• Research & Development • Quality Management • Product Management • Information Technology • Information Security •
Procurement • Human Resources • Strategy • Mergers & Acquisitions • Finance • Legal • Intellectual Property Rights • Sustainability
Risk management across the supply chain
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Q1
Q2
Q4
Q3
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Risk owners review
mitigation measures
effectiveness of Top 25
risks. Update of risk
assessment if required.
Any changes or new risks to
consider.
Executive Management Team
re-assesses Top 25 risks. Final
validation of Top 10 risks for
review by Board of Directors.
Board of Directors’ Top 10
risk review.
Prepare external reporting
(Annual Report, February)
Board Top Risk Review
10
25
10
25
40+ risk workshops with
executives responsible for value
chain and corporate support
functions.
150+ risks from risk taxonomy
assessed, prioritized and
consolidated.
Initial risk assessment process
Global Management Teams
for GN Audio and GN
Hearing and Executive
Management review to
identify Top 25 risks.
Risk likelihood and impact
for Top 25 analyzed and
evaluated. Individual risk
owners assigned.
Mitigation identified and
reviewed for Top 25 risks.
Executive Management
Team identifies GN Group
Top 10 risks.
Audit Committee reviews
enterprise risk management
governance and process.
Board Audit Committee
Risk Governance Review
Executive impact review
150+
Mitigation review
10
25
Risk identification and mitigation process
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Characteristics
Some product categories which GN Audio and GN Hearing serve have
short product cycles and experience commoditization of technological
capabilities, increased software content in products, and a requirement
to provide substantial differences in end-user experiences to maintain
competitiveness. Additionally, both businesses need to develop new
categories for the future.
It is necessary for GN's businesses to maintain their technological lead-
ership in key categories to strengthen GN's long-term strategic poten-
tial.
Mitigating actions
GN's unwavering commitment to innovation excellence continued in
2021. It aligns current and future customer needs, innovation, portfolio
planning and core technology. It also helps maximize the output from
available R&D resources without compromising on high-quality stand-
ards.
GN increasingly explores and leverages its technological synergies be-
tween GN Audio and GN Hearing, expands its R&D capabilities, and in-
vests in additional software development capabilities. Further, it con-
tinuously explores opportunities to acquire competencies and deepen
innovation partnerships within its ecosystem.
Characteristics
COVID-19 affected GN's two businesses very differently, triggering un-
precedented demand and supply challenges.
GN Audio experiences significant demand while the supply chain has
been challenged by global shortage of certain components, manufac-
turing friction, and logistical bottlenecks.
COVID-19 continued to impact the global hearing aid market due to
mutations of the virus and related restrictions. GN Hearing is simulta-
neously exposed to COVID-19 impact on manufacturing and logistics
assets.
Additionally, GN depends on global free trade regimes for the optimal
application of its value chains.
Continued disruption in the wake of COVID-19 or new significant trade
wars could impact GN negatively.
Mitigating actions
Throughout 2021 the supply chain organizations of GN Audio and GN
Hearing have been engaged in ongoing crisis management. All relevant
mitigating measures have been deployed, including ongoing monitor-
ing of the supply situation across categories, tighter relationship with
critical component suppliers, increased dual-sourcing, alternative sites,
buffer stock, firm orders for future requirements, and redesign of leg-
acy products to accommodate newer chipsets with better global avail-
ability.
GN also exerts significant effort to reduce the impact of continued
COVID-19 outbreaks in production locations.
In line with the industry in general, GN supports efforts to diversify its
sourcing and manufacturing base and build higher resilience in the
longer run.
Research and
development
Operations
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GN Hearing
Characteristics
GN Hearing generates a significant part of its revenue from partner-
ships with a number of leading channels that occasionally put their
business up for tender. This means that GN Hearing is exposed to the
risk of losing business as these are re-tendered.
On top of the traditional business model for hearing aid manufacturers
GN expects significant change in the future, pivoting towards increas-
ingly online and direct-to-consumer models. GN Hearing believes this
to be a sizeable future opportunity.
Mitigating actions
GN Hearing mitigates the risk through ongoing relationship manage-
ment and by maintaining a compelling product portfolio. GN Hearing
invests in digitalizing the customer journey and adapting to emerging
online models.
In December 2021, GN Hearing acquired Lively, a US leading online
hearing care and digital marketing platform. With the increasing digi-
talization of the world, consumers demand online solutions and ser-
vices also from the hearing industry. The online space has been grow-
ing for several years and has been accelerated by the pandemic. Fur-
ther, the U.S. OTC hearing aid regulation is expected to expand the
market, in particular by driving earlier adoption for people with mild-
to-moderate hearing loss and younger consumer segments.
GN Audio
Characteristics
GN Audio has seen significant growth from work-from-home solutions
during COVID-19 and the subsequent expansion of hybrid working pat-
terns provides robust future momentum in GN Audio's main markets.
In addition to its traditional enterprise headset market, GN Audio has
decided to pursue the high-growth market for video collaboration. GN
Audio has introduced several compelling devices to capture a robust
share of the market.
Within its consumer-focused products - true wireless earbuds - GN Au-
dio is experiencing increasing commoditization of core technologies,
but also a large market opportunity for its latest generation of true
wireless earbuds.
The attractive growth rates also entail a risk that new competition en-
ters the market and challenges GN Audio’s leading position.
Mitigating actions
GN Audio strives to deepen its presence and relevance across B2B and
retail channels. Its future product roadmaps assume a high cadence of
new product introductions to support this effort by addressing users’
needs through superior and competitive product portfolios.
Its products also align with ecosystem partners and certification
requirements, while the sales organization continuously adapt to new
domains and customer segments. The business has increased its brand
awareness building activities across key segments to ensure adequate
share of mind with corporate and private decision-makers in a
cluttered market.
COVID-19
Characteristics
The shifts in work models seen in 2021 suggest that the market for GN
Audio will continue to increase as penetration of virtual collaboration
devices for professional use is still very low. The risk remains whether
the substantially higher demand for work-from-home and efficient vir-
tual collaboration solutions is sustainable.
COVID-19 impacts GN Hearing's markets depending on the state of the
pandemic in each market and the associated lockdowns and other re-
strictions limiting the activity in the traditional hearing care channel.
GN Hearing expects all markets to return to normal with attractive mid
and long term growth prospects as the underlying need to hear is in-
tact.
Mitigating actions
GN Audio invests heavily in providing solutions for the new work and
collaboration trends and expands into new customer segments to cap-
ture more opportunity and diversify its sources of demand.
GN Hearing is working diligently to support hearing care professionals
in delivering services to customers during the pandemic where feasible.
It has developed digital solutions to assist hearing aids users cope with
pandemic restrictions and allow resilient fitting, service and mainte-
nance.
GN Hearing prepares launches of new hearing aids in 2022 and beyond
to meet market demands for robust, innovative and user-friendly hear-
ing aids.
Marke
ting and sales
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Characteristics
In December 2021, GN acquired Lively and in January 2022, GN closed
an agreement to acquire SteelSeries. It is critical that GN is able to suc-
cessfully build on those two acquisitions as multipliers of GN and cata-
lysts for continued growth across GN’s businesses and GN as a whole.
Mitigating actions
GN follows best practices for post-acquisition integration, including
dedicated governance structures and resources.
SteelSeries will be a new growth engine to GN operating with its own
identity, brand and execution strength, thus preserving the uniqueness
upon which SteelSeries’ success is built. Also, SteelSeries will add engi-
neering competencies, commercial capabilities, differentiated brands, a
large customer base, an innovative high-growth product offering, and
further technical expertise and intellectual property to GN. SteelSeries
will benefit from GN‘s commercial and operational excellence, and fi-
nancial strength, allowing SteelSeries to continue its strong growth
trajectory and take share in the fast-growing market for premium soft-
ware-enabled gaming gear.
Lively provides GN Hearing access to the fast-growing telehealth mar-
ket, utilizing a proven business model with rapid growth. Lively is a cus-
tomer-first, end-to-end audiology platform that makes it easier for us-
ers to buy advanced hearing technology with licensed professional
care. The acquisition of Lively will benefit GN Hearing’s network of
hearing care professionals by adding valuable capabilities to GN’s oper-
ations, including digital channel access, in-depth expertise of digital
marketing and telehealth, and data driven consumer behavior to at-
tract new, younger consumers.
Characteristics
GN's customers expect a flawless user experience over the lifetime of
the product. Software and hardware must provide a delightful user-ex-
perience for GN to maintain and increase customer satisfaction and, ul-
timately, market share.
Mitigating actions
Within its businesses GN applies best practices for quality manage-
ment, from supplier selection over manufacturing practices to ongoing
service.
In 2021, GN strengthened its quality management governance to ena-
ble distinct focus on product quality on top of the quality efforts inher-
ent in its long-standing regulatory compliance framework.
Characteristics
The long-term success of GN's businesses is based on intellectual
property rights embedded in current and future products and services.
Competitors and other third parties may attempt to constrain GN's
freedom to operate.
If GN manages to defend and expand its freedom-to-operate, its busi-
nesses are able to pursue the development of competitive products
and consumer experiences without paying license fees or engaging in
costly lawsuits.
Mitigating actions
GN maintains and further expands the protection of its Intellectual
Property Right assets: Additional staff, increased defensive filing
activity and infringement suits to protect GN assets, highly granular
monitoring of patent activity and deep embedding in Research and
Development.
Integration of SteelSeries
and Lively
Quality
Intellectual property
rights
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U.S. over-the-counter regulation
Characteristics
The U.S. hearing aid market is important to GN Hearing and regulatory
changes to the market could present both a risk and an opportunity to
GN Hearing.
In 2021, the U.S. Food and Drug Administration (FDA) published a pro-
posal to make hearing aids more accessible for millions of Americans.
The over-the-counter (OTC) regulation was enacted in 2017.
A public commenting period took place from October 2021 till mid-
January 2022 and FDA has communicated an intent to publish the final
rule 60 days after. This means that an OTC category could open in Q2
2022.
If GN Hearing is not able to capture the new OTC market and at the
same time sufficiently maintain the current traditional hearing aid mar-
ket, GN Hearing may experience a negative impact.
Mitigating actions
GN is committed to enabling millions of Americans who need support
to make the first step on their hearing health journey and believe GN
across its businesses – combining its medical hearing and consumer
audio capabilities – benefits from numerous innovative assets within
hardware, software and business models to support the OTC market.
GN has innovated to create Jabra Enhance Plus – a solution intended
for those with mild-to-moderate hearing loss but no hearing solution.
Jabra Enhance Plus is designed and developed to combine great ear-
bud functionality with high-quality amplification (i.e. hearing aid tech-
nology).
At the same time, GN Hearing continues to serve the large population
of Americans looking to a hearing care professional for solutions that
come with the care and expertise of a professional.
Medical device regulation
Characteristics
GN Hearing must comply with the EU Medical Device Regulation and
similar regulatory requirements concerning quality management sys-
tems and product safety of medical devices. If it fails to do so, it will
not be able to launch any new or significantly changed hearing aid
products within the EU or other specific markets.
Mitigating actions
GN Hearing has continued upgrading its Corporate Quality organiza-
tion for improved regulatory compliance. Quality management, safety
and documentation processes for ReSound ONE and Class 1 Medical
Devices and accessories have been certified to comply with the EU
Medical Device Regulation (MDR) that is generally considered a very
strict regulatory regime.
More product platforms are in the pipeline for certification before the
deadline for full transition to MDR in 2024.
Characteristics
GN depends on available and reliable information technology systems
and services. At the same time, GN is exposed to an ever-increasing risk
of cyber-attacks. If one or more high priority services become
unavailable due to a cyber-attack, GN may experience loss of data
integrity, significant recovery costs, and loss of revenue and reputation
among important stakeholders.
Additionally, GN is required to demonstrate adequate cyber security
maturity to satisfy large business and government customers and
failure to do so may exclude GN from parts of its addressable market.
Mitigating actions
GN continuously invests in training, governance and technological
measures to curb the cyber threat and increase overall resilience and
compliance with information security standards and certifications.
GN is committed to ensuring a high level of IT Security across the entire
organization. IT security management systems are in place based on ISO
27000. In addition, GN’s IT Security Policy include training materials, and
all training is conducted annually for all employees. The IT Security
Policy was last updated in May 2021.
GN ensures a continuous IT Security monitoring through our Security
Operations Center. This enables us to discover and disable threats early.
Regulatory risk
Information security
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Characteristics
GN remains an attractive destination for top-tier engineering and
commercial talent. GN is, however, not immune to the general scarcity
of key talent populations within, for example, engineering and
software development. GN needs to consciously focus on attracting
and retaining top-tier talent with the competencies and capabilities
required in the future.
Lack of talent could result in loss of momentum in innovation and
product development, delaying the introduction of compelling prod-
ucts, and ultimately impact the successful execution of GN's strategic
objectives.
Mitigating actions
GN has expanded its recruiting efforts while continuing its efforts to
develop an attractive employee value proposition. Human Resources
work closely with the Research and Development departments to
understand future competency needs.
Characteristics
Climate change is projected to increase the frequency, severity, and du-
ration of extreme weather, impacting communities and economies
worldwide. Governments are moving to mitigate this threat through
regulation and investment in innovation. Consumer awareness of cli-
mate issues is also growing rapidly. Consequently, GN faces both cli-
mate-related physical and transitional risks.
Physical risks
Global production of electronic components is concentrated in areas
projected to be significantly exposed to floods and storms. Climate-
related disruption could reduce GN’s production capacity, negatively
impacting revenues, and possibly incurring costs to cover repair and
contingency plans.
Transitional risks
While GN is not a direct player in carbon-intensive industries, both GN
Audio’s and GN Hearing’s supply chains begin with mining activities,
which have a substantial climate impact. If GN’s suppliers do not decar-
bonize at a sufficient rate, GN could be adversely affected by both reg-
ulation and changing consumer preferences.
The shift towards electrification and digitalization is increasing the de-
mand for critical minerals used in GN products. This could increase di-
rect costs in the short to medium term.
Mitigating actions
GN has set goals to significantly reduce direct emissions by 2025, as
well as committing to the Science Based Targets initiative, which
requires GN to set longer-term emissions reduction goals covering our
entire value chain and aligning with climate science.
GN is integrating assessment and monitoring of climate-related risks –
based on transition scenarios and climate impact analysis – in existing
risk management procedures to enable proactive mitigation of any po-
tential impact.
GN is establishing production capacity across different geographies, as
well as innovating to increase production efficiency and circularity, to
mitigate the risks rooted in supply chain disruption and lack of raw ma-
terials or components.
GN’s progress toward aligning with the Taskforce for Climate-related
Financial Disclosure (TCFD) guidance for climate action, including
governance, strategy, metrics and targets, is further detailed in GN’s
2021 Sustainability – ESG Report (available for download here:
www.gn.com/sustainabilityESG2021
).
Human resources
Climate risk
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Characteristics
Due to the nature of its operations, investments, and financing
activities, GN is exposed to a number of financial risks. GN has
centralized the handling of these financial risks in Group Treasury
except for commercial risks, which are managed by the Group’s
operating businesses (divisions).
The financial risks are managed in accordance with the overall financial
risk management guidelines set out in GN’s Group Treasury Policy
which is reviewed on an ongoing basis.
GN’s net interest-bearing debt increased during 2021 to DKK 5,358
million and NIBD/EBITDA ended at 1.8x driven by strong cash
conversion and strong earnings growth on top of significant
shareholder distribution and the acquisition of Lively.
GN’s loans and bonds are primarily long-term with maturities extended
until 2036 with mostly fixed interest rates.
In October 2021, GN announced a signed agreement to acquire
SteelSeries for a total purchase price of DKK 8.0 billion on a cash and
debt free basis. In December 2021, GN announced the acquisition of
Lively for a total purchase price of DKK 625 million on a cash and debt
free basis.
Annual EBITA impact from a 5% increase in currency before hedging
(DKK million)
Currency
GN Hearing
GN Audio
GN Store Nord
USD
38
-92
-54
GBP
5
31
19
JPY
6
13
19
AUD
1
22
23
Mitigating actions
GN has hedged a substantial part of the expected net cash-flow in
foreign currencies to secure the EBITA contribution of the material
trading currencies for the next 12 months across both GN Hearing and
GN Audio. GN is also monitoring the combined impact of minor trading
currencies and hedges those on a case-by-case basis.
Due to the acquisition of SteelSeries, GN has entered into an M&A
bridge facility to finance the acquisition with a maturity of 12 months
plus 6 months extension at the discretion of GN. In order to de-risk the
bridge facility, GN issued two bonds in November 2021 under the
EMTN program for an aggregate value of almost DKK 5 billion.
Moreover, GN has entered into a bilateral loan (R&D loan) worth
around EUR 75 million in December 2021.
The remaining part of the bridge loan will be financed by the available
cash and cash equivalents, potential other debt instruments and the
continued cash flow generation by the company.
GN also has a short-term, uncommitted Euro Commercial Paper
program (“ECP”) in place to diversify its borrowing instruments. The
program size is up to EUR 250 million, with a utilization of EUR 116
million on December 31, 2021.
In total, GN has outstanding senior unsecured bonds of EUR 870
million in aggregate under the EMTN program in December 2021 with
maturities from 2023 to 2036. Moreover, GN currently has R&D loans
outstanding of EUR 225 million with maturities from 1 to 7 years with
mostly fixed interest rates.
To mitigate potential liquidity or refinancing risks, GN has access to a
Revolving Credit Facility of EUR 350 million which was undrawn as of
December 31, 2021.
Please refer to note 4.2 in the Financial statements for further
information about financial risks
Financial
risk
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GN’s commitment to responsible
business forms the foundation of
the compliance and sustainability
strategy. Principles and processes
are set in GN’s Code of Conduct
Safeguarding Human Rights
As signatories to the UN Global Compact and its principles of
responsible business, GN safeguards human rights in operations and
supply chain. Within GN operations, employee rights are contractually
protected and strengthened by policies. GN’s whistleblower hotline
offers an anonymous and independent mechanism in case of perceived
violations.
Safeguarding human rights in our supply chain is anchored in GN’s
Codes of Conduct. Suppliers are audited based on the UN Global Com-
pact principles of responsible business and the SA8000 standard. We
assess potential human rights-related risks to lie mostly in the area of
working conditions and occupational health and safety. We require ma-
jor audit findings to be addressed through a corrective action plan.
To strengthen responsible supply chain management processes, in
2021, GN Audio joined the Responsible Business Alliance. This comple-
ments our own auditing processes with industry-leading frameworks.
Conflict Minerals Due Diligence
If minerals originate from mines controlled by military groups in con-
flict regions, they are known as conflict minerals. As stipulated in our
Conflict Minerals Policy, GN will not use conflict minerals.
GN requires suppliers to exclude conflict minerals from GN products,
encourages suppliers to move to externally certified smelters and re-
finers, and requires suppliers to comply with our Code of Conduct.
GN uses the five-step due diligence guidance laid out by OECD for es-
tablishing a due diligence process and has put in place an audit pro-
gram where proof of compliance is required with the Responsible Min-
erals Assurance.
In 2021, GN received the requested information from 100% of its rele-
vant suppliers of which 91% were certified in accordance with RMAP,
TI-CMC Category A, RJC, LBMA , or DMCC. A non-conformity escalation
process is in place. Supported by a third-party smelter validation ser-
vice, it has in 2021 been validated that the identified smelters used by
our suppliers are conflict-free. No suppliers were excluded in 2021.
In 2021, GN conducted a supplier risk assessment on cobalt, which is
emerging as a fifth conflict mineral, with a view to adding this mineral
into our conflict minerals due diligence processes from 2022, using co-
balt reporting templates (CRTs).
Business Ethics Governance
Policy management and compliance training
GN’s commitment to doing things the right way and comply with inter-
national regulations and internal policies is anchored in our Code of
Conduct, the GN Ethics Guide, our Anti-corruption policies, our Sup-
plier Codes of Conduct and other policies and guidelines. These outline
the fundamental requirements for how GN operates and describe the
responsibilities and ethical standards expected of all employees and
relevant business partners.
To ensure and document that employees are always familiar with the
GN Ethics Guide and other key policies, employees have to electroni-
cally sign off on complying with GN policy within specific areas on an
Doing business the right way
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Safeguarding
human rights
Due to COVID -19 we were limited in our ability to do on -site audits.
All non-compliance cases identified were resolved satisfactorily
100%
In 2021, GN received the requested
information from all relevant suppliers
Tier 1 and key tier 2 suppliers are actively audited
24
audits conducted
among GN Audio’s
suppliers
16
audits conducted
among GN
Hearing’s suppliers
Major findings were in the areas of
working conditions and health and safety
Conflict Minerals Due Diligence
2021
audits and findings
GN products contain tantalum, tin, tungsten, and gold.
GN will not use conflict minerals
Review GN
’s Codes of Conduct and policies :
www.gn.com/responsibilitydocuments
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annual basis. Likewise employees annually take GN’s general e-learning
courses within key topics, such as anti-corruption, information security
and competition compliance. Every year this is supplemented with tai-
lored compliance training for selected business units and employees.
Anti-corruption compliance reviews
As part of GN’s global anti-corruption compliance program, compli-
ance reviews of selected GN subsidiaries or business units are con-
ducted. This is to identify and assess relevant risk areas, to review that
adequate controls are in place to ensure compliance, and to potentially
assist with corrective actions. The selection of subsidiaries or business
units for compliance reviews is based on an annual country risk assess-
ment consisting of defined risk indicators.
In 2021, due to COVID-19 travel restrictions, focus was on subsidiaries
in the EMEA region and HQ functions. In 2022, when travel resumes,
the intention is to turn focus overseas again.
Third-party due diligence
In 2021, GN completed the roll-out of a process for assessing and
managing corruption risks associated with third-party business
partners in high-risk countries. This involves questionnaires and
screenings focusing on the potential reputational and legal risks and a
thorough check of beneficial owners to ensure GN is at no risk of
violating international sanctions regimes.
Whistleblower system
GN’s whistleblower hotline, the GN Alertline, is independently man-
aged by a third party. The hotline can be used by employees as well as
external parties to report concerns and experienced or perceived mis-
conduct. This is an important tool for ensuring that alleged illegal or
unethical conduct is reported and immediately addressed. All com-
plaints are treated with the required confidentiality and GN is commit-
ted to dealing with any employee who takes action and/or participates
in an investigation in a fair and respectful manner. This is emphasized
in GN’s non-retaliation policy. In 2021, the EU Whistleblower directive
came into force and GN has ensured that our policies and systems are
fully compliant.
Access to reporting and additional details on GN’s whistle-
blower hotline: www.gn.com/alertline
More details on GN’s compliance efforts and policies at
www.gn.com/documents
IT security and data ethics
Data privacy
GN is committed to protecting the personal data entrusted to us by
customers, users, and employees.
In 2021, we have refined the processes surrounding our digital systems
in compliance with the principles of EU’s General Data Protection Reg-
ulation (GDPR). Further, we have implemented processes and solutions
that meet the increasing global data privacy regulatory demands.
Our internal awareness training has been updated with mandatory
data privacy e-learning and we are implementing additional solutions
to ensure continual employee training and awareness.
In 2022, GN will continue to strengthen our data protection posture to
provide excellent, secure, and trustworthy solutions.
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Policy management and
compliance training
GN has completed the roll -out of a process for assessing
and managing corruption risks associated with third -
party business partners in high-risk countries.
Third-party due diligence
3
new general e-learning
courses were launched
group-wide
4
functions specific
microlearning courses
were launched
Never stop learning. To support online training, GN conducts live
training sessions in selected subsidiaries. In 2021, these were
performed as video sessions due to COVID -19 restrictions
GN whistleblower system
25
concerns reported – mainly related to inappropriate behavior, harassment/
bullying, conflicts of interest, misappropriation of information, and COVID -19
restriction violations - all in-scope reports have been investigated -
remediating and disciplinary actions have been taken where appropriate.
27
countries where GN’s
whistleblower system is
available
24
different languages
that GN’s whistleblower
system accommodate
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IT Security
GN is committed to ensuring a high level of IT Security across the entire
organization. IT security management systems are in place based on ISO
27000. In addition, we have an IT Security Policy with training materials,
and all training is conducted annually for all employees. The IT Security
Policy was last updated in May 2021.
We ensure continuous IT Security monitoring through our Security Oper-
ations Center. This enables us to discover and disable threats early and
keep our organization safe.
Data ethics
GN uses data for various purposes, which entail benefits for GN and its
customers. GN is committed to act ethically responsible with data and
comply with ethical principles. By actively considering data ethics GN
intends to ensure human dignity, equality, fairness, responsible use of
data, transparency and awareness by minimizing risk of algorithm bias
and discrimination, lack of transparency, lack of control, and lack of re-
sponsibility and accountability.
GN has implemented appropriate organizational and technical security
measures to ensure that any use of data happens in a safe and secure
manner. GN will periodically review the contents of GN Data ethics tak-
ing into consideration input from employees and partners, develop-
ment in trends, technology, legislation and ethical data values.
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GN’s data privacy policy is available at
www.gn.com/privacy-policy
For a description of GN’s Data Ethics Policy, please re-
fer to www.gn.com/dataethicspolicy
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In 2021, GN committed to science
based targets and took further
initiatives to reduce emissions
GN’s continuous success throughout more than 150 years has relied on
our ability to innovate and adapt to new circumstances and expecta-
tions.
To ensure future success, we keep innovating and adapting in order to
build the technology of the future, sustainably.
This is as relevant as ever as the world faces the dual challenge of tack-
ling the COVID-19 pandemic and the urgent issue of climate change.
Managing these two concerns was a priority in 2021, while we also
continued to address all other relevant sustainability topics: Firstly,
because it’s the right thing to do and, secondly, because it will
ultimately benefit our investors, customers, and employees.
Committed to science based targets
2021 was a pivotal year in our steps to help reverse climate change
through our commitment to science based targets.
This was supported by initiatives to reduce our emissions through re-
newable energy, increased use of ocean freight to replace air freight,
and a move to more sustainable packaging.
At the same time, we improved on carbon transparency through three
product life-cycle assessments, and our disclosures in line with the
Carbon Disclosure Project and the Taskforce for Climate-Related Fi-
nancial Disclosures frameworks.
A significant reduction of business travel emissions came inherently as
a consequence of COVID-19, and we are committed to permanently
limit business travel to only allow truly purposeful travel, halving our
footprint per employee compared to 2019.
2025 goals inspired by the Sustainable Development Goals
To ensure we do what is required, GN’s 2025 sustainability goals are in-
spired by the UN Sustainable Development Goals (SDGs).
By 2025:
1. we aim to be climate neutral in our own company activities, while
also reducing our indirect emissions
2. we aim use at least 50% sustainable material in new products, hav-
ing truly sustainable packaging across GN, launching take-back
schemes for all relevant products and regions, and repairing or re-
furbishing more products per year
3. we aim to help more than 10 million people with hearing loss, con-
tinue to raise awareness and break down stigmas around hearing
loss, and work with our foundations as well as an NGO partner on
supporting unmet hearing needs across the world
Progress during 2021 towards our 2025 goals
During 2021, we made progress towards our goals and are on track to
meet them.
Highlights include reaching 9.4 million people with hearing loss, closing
an agreement to move our headquarter and our hearing aid production
site in Denmark to 100% renewable energy, and launching all new
products in sustainable, FSC certified packaging.
We continued to work on all environmental, social, and governance
(ESG) topics that are material to GN, whether it is moving towards re-
cycled material in products, nurturing a diverse and inclusive work-
force, supporting children with hearing loss in low-income countries, or
working with our suppliers on safeguarding human rights for everyone
working in our value chain.
Full disclosure on our goals and progress is made in GN’s separate
2021 Sustainability - ESG Report.
Building sustainable technology
Download GN’s 20201 Sustainability – ESG report
GN’s 2021 Sustainability - ESG report (available for download
here: www.gn.com/sustainabilityESG2021) provides a full over-
view of our progress across all areas.
The 2021 Sustainability – ESG report forms part of this 2021
Annual Report for GN Store Nord A/S and, thus, in combination
constitutes GN’s corporate responsibility report according to
Sections 99a, 99b, 99d and 107d in the Danish Financial
Statements Act, and also includes GN’s EU Taxonomy
Regulation disclosure.
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Management structure
GN is governed by a two-tier management structure. The Board of Di-
rectors is responsible for the overall governance of the company, and
the Executive Management handles the daily management of the com-
pany’s affairs under the guidelines and supervision of the Board. The
ultimate authority rests with the shareholders in General Meeting.
Board of Directors
Composition and responsibilities
GN’s Board currently comprises 10 members. Seven members are
elected by the shareholders at the Annual General Meeting for an an-
nual term until GN’s next Annual General Meeting. Further, three
members are elected by the employees in accordance with the Danish
Companies Act for terms of four years.
Competencies of the Board
GN’s Board strives to recruit members with diverse and complemen-
tary competencies. The current Board is a diverse group in terms of
global experience, functional competencies, and industry background.
The composition is a mix of members with executive positions and pro-
fessional board members, providing a good balance between knowledge,
competencies, experience, and availability for a substantial workload.
GN’s board members possess expertise within med-tech, innovation,
product development, digitalization, online marketing, commercializa-
tion, financial and human resources. Of the current members elected
by the general meeting, four are women, three are men, and the Board
comprises six different nationalities. See pages 54-56 for a description
of the Directors’ competencies and experience.
The Board of Directors’ self-evaluation
Led by the Chairman, the Board conducts an annual self-evaluation of
its work through which the Board tracks its work, efficiency, composi-
tion, and organization together with strengths and development areas.
The self-evaluation, among other, covers the evaluation criteria set out
in the Danish Recommendations on Corporate Governance. The self-
evaluation process ensures a systematic approach and covers the con-
tributions of each individual Board member, the full Board, and the
committees. Following an anonymous self-evaluation questionnaire
answered by the Board members and the Executive Management, the
Chairman has individual meetings with each individual to follow up on
the findings. These are presented in a Board meeting by the Chairman
combined with a Board discussion of the results.
The overall conclusions of the 2021 evaluation did not result in any sig-
nificant remarks and the appropriateness of the current Board compo-
sition was confirmed The Chariman will account for the process and
the general conclusions in his statement at the Annual General Meet-
ing. Additional information on the evaluation process and the general
conclusions of the 2021 evaluation may be found on the com-
pany’s website: www.gn.com/boardevaluation
The Board conducted its annual self-evaluation in October 2021 as it
has done in previous years. The Board had intended to obtain external
assistance to the Board evaluation in 2020/21. However, due to the
continued extraordinary working conditions for the Board with mostly
virtual meetings during the ongoing COVID-19 pandemic (in 2021 only
one meeting was held physically before the annual self-evaluation took
place), the Board did not find that it was the right time to bring in an
external consultant. Therefore, and since the Board is comfortable us-
ing the same framework and process for its annual self-evaluation as
has been used in previous years, the Board decided to postpone the in-
volvement of external assistance until a later point in time.
Board committees
As part of the overall governance of the company, the Board has es-
tablished Audit, Nomination, Remuneration, and Strategy committees
to assist with monitoring and preparatory work relating to key areas of
Corporate governance
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Annual General Meeting
Board of Directors
Executive Management
GN’s framework for
corporate governance
Board Committees
Group functions
Division management – Global Management Teams
Hearing Audio & video
GN’s management structure is built to support its two main business
divisions, GN Audio and GN Hearing. The Board members of GN
Store Nord are elected at GN’s Annual General Meeting. GN’s
Executive Management comprises the CFO of the Group’s parent
company, GN Store Nord, the CEO of GN Hearing, and the CEO of
GN Audio.
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the Board’s responsibilities. The committees’ main duties in general
and the specific tasks performed in 2021 are summarized below:
• The Audit Committee continued to provide oversight of the finan-
cial reporting process, the audit process, GN’s system of internal
controls and compliance with laws and regulations. The committee
reviewed the whistleblower reporting system, main accounting
principles, tax strategy and compliance and risk management pro-
cesses covering key risks. Further, the committee considered the
need for an internal audit function which was not deemed neces-
sary at this time.
• The Remuneration Committee assisted the Board in decisions con-
cerning remuneration of Executive Management and senior em-
ployees.
• The Strategy Committee assisted the Board in ensuring that GN’s
technological core capabilities are maintained and further en-
hanced and oversaw investments in projects aiming at discovering
potential future business opportunities.
• The Nomination Committee advised the Board of Directors in rela-
tion to the skills that the Board of Directors and Executive Manage-
ment must have to best perform their tasks.
See charters and composition of the four committees at:
www.gn.com/boardcommittees
Chairmanship
The Chairman and the Deputy Chairman form the Chairmanship of the
Board, which prepares and organizes the work of the Board and per-
forms preparatory tasks for and advise the Board in relation to strat-
egy, implementation of strategy, business development, budget, and
projects, and performs in-depth business reviews of selected areas.
Remuneration
GN pursues a policy of offering the Board of Directors and Executive
Management remuneration that is competitive with industry peers and
other global companies to retain and attract competent professional
leaders of the business and members of the Board of Directors.
Meeting attendance 2021
Chairmanship
Audit
Committee
Nomination
Committee
Remuneration
Committee
Strategy
Committee
GN Store Nord
A/S Board
GN Hearing A/S
Board
GN Audio A/S
Board
Per Wold-Olsen
(C) 30/30
(C) 4/4
(C) 9/9
14/14
(C) 17/17
(C) 8/8
(C) 8/8
Jukka Pekka Pertola
(DC) 30/30
4/4
9/9
14/14
(DC) 17/17
(DC) 8/8
(DC) 8/8
Hélène Barnekow
4/4
(B) 16/17
(B) 8/8
(B) 8/8
Montserrat Maresch Pascual
9/9
14/14
(B) 16/17
(B) 8/8
(B) 8/8
Wolfgang Reim
4/4
(C) 14/14
(B) 17/17
(B) 8/8
(B) 8/8
Ronica Wang
4/4
(B) 17/17
(B) 8/8
(B) 8/8
Anette Weber
(C) 4/4
(B) 16/17
(B) 8/8
(B) 8/8
(C) Chairman
(DC) Deputy Chairman
(B) Board member
Please visit
www.gn.com/About/Management for more elaborate descriptions of the board members’ competencies and management duties.
#/# signifies the number of Board and Committee meetings in which each member has participated followed by the total number of Board and Committee meetings.
53/148
Report on Corporate Governance cf. section 107b of the
Danish Financial Statements Act
The Board and the Executive Management continuously
strive to maintain a good corporate governance level.
The website of the Committee on Corporate Gov-
ernance - https://corporategovernance.dk/english
–
lists its recommended best practice guidelines.
GN is required to report on its compliance with these rec-
ommendations according to the “comply or explain” prin-
ciple. GN’s compliance with the individual recommenda-
tions is reviewed once a year by the Board.
Download GN’s 2021 Corporate Governance Re-
port: www.gn.com/corporategovernance2021
Risk management related to financial reporting is de-
scribed in this report on page 47. Internal control systems
are described in the above-mentioned Corporate Govern-
ance Report. This constitutes GN’s statutory report on
corporate governance as required under section 107b of
the Danish Financial Statements Act.
GN’s full Remuneration Policy is available on
www.gn.com/remunerationpolicy
GN’s full Remuneration Report for 2021 is available
here: www.gn.com/remuneration2021
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Board of Directors
Per Wold-Olsen
(Chairman)
MBA. Formerly president
Merck & Co
., Inc., Interconti-
nental Division, USA.
Chairman since 2008.
Jukka Pekka Pertola
(Deputy Chairman)
M.Sc. Electrical Engineering.
Professional board member.
Former CEO of Siemens A/S.
Hélène Barnekow
M.Sc. (International Business).
CEO, Microsoft Sweden.
Chairman of the Boards of GN Audio A/S and GN Hearing A/S.
Chairman of the Board of Oncopeptides AB.
Member of the Board
of
Amarin Corporation plc.
Extensive global leadership expertise and knowledge of the
healthcare industry. Brings a unique set of capabilities and values
to the Board of GN Store Nord within m
arketing and product
development as well as commercialization of innovation. Also
possesses in
-depth knowledge of the U.S. market as well as
emerging markets.
Deputy Chairman of the Boards of GN Audio A/S and GN Hearing
A/S. Chairman of the Board
s of Asetek A/S, Siemens Gamesa Re-
newable Energy A/S, Tryg A/S, Tryg Forsikring A/S
, COWI Holding
A/S
. Deputy Chairman of the Boards of GomSpace Group AB and
GomSpace A/S.
Broad international background with more than 20 years of man-
agement experience in the ICT, energy, industry, infrastructure and
healthcare sectors, solid experience with various business models
stretching from B2C to complex project business, IT outsourcing
solutions, technology services and professional services.
Member of the Boards of GN Audio A/S and GN Hearing A/S.
Member of the Board of
Voyado AB.
Unique capabilities within general commercial management and
marketing, including go
-to-market, branding, communications,
product management and channel management from
the mobile
communications and IT sector.
Board member since
2008
Board member since
2020
Board member since
2013
Term
2021/2022
Term
2021/2022
Term
2021/2022
Considered independent
No
Considered independent
Yes
Considered independent
Yes
Nationality
Norway
Nationality
Finland
Nationality
Sweden
Year of birth
1947
Year of birth
1960
Year of birth
1964
No. of GN shares
34,626 (-190,258)
No. of GN shares
3,000 (+1,000)
No. of GN shares
10,000 (unchanged)
Total remuneration 2021 (DKKt)
2,140
Total remuneration 2021 (DKKt)
1,418
Total remuneration 2021 (DKKt)
605
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Board of directors
Montserrat Maresch Pascual
MBA (Business Administra
-
tion). Co
-founder and Senior
Advisor, Naar + Maresch AB
Wolfgang Reim
Ph.D. in physics. Professional
board member and self
-em-
ployed consultant within the
medical industry. CEO,
Amann Girrbach AG.
Ronica Wang
MBA, B.A. Sc. (Engineering),
Co
-founder & Global Managing
Partner
, The InnoGrowth
Group Ltd. Former CEO of
Avon Japan (listed on JASDAQ)
and leadership positions with
J&J, Hutchison
-Priceline,
Procter & Gamble
Anette Weber
Lic.oec HSG, Finance &
Accounting. Group CFO of
BUCHERER
AG.
Member of the Boards of GN Audio A/S, GN Hearing A/S, and the
GN Store Nord Foundation.
International executive background and experience
. In-depth com-
petences within retail,
branding, business development and imple-
mentation of business and marketing strategies
and models, digi-
tal transformation, operations performance, and optimization of
customer experience.
Member of the Boards of GN Audio A/S and GN Hearing A/S. Chair-
man
of the Board of Ondal Medical GmbH. Member of the Boards
of Elekta AB, AudEERING GmbH and LAP Laser GmbH.
Global leadership experience from the healthcare industry and
special knowledge in the areas of business process reengineering,
innovation managemen
t, global sourcing, and supply chain
management. Contributes to the Board with extensive M&A
understanding.
Member of the Boards of GN Audio A/S and GN Hearing A/S. Mem-
ber of the Board of Hotelbeds Group
Ltd.
In
-depth experience in global brand marketing, digital strat-
egy/ecommerce/omni
-channel, business transformation, and
sales/ channel management across consumer health, healthcare,
technology, FMCG, affordable luxury, travel industries.
Extensive
knowledge of Asia/China/Japan
.
Member of the Boards of GN Audio A/S and GN Hearing A/S. Mem-
ber of the Supervisory Board
and Chair of the audit committee of
New Work S.E.
Extensive global leadership expertise and knowledge from various
leadership positions in the global healthcare and IT industry.
In
-depth knowledge of finance, digitalization, development, gen-
eral
and change management, platform economies, and M&A.
Board member since
2020
Board member since
2008
Board member since
2015
Board member since
2020
Term
2021/2022
Term
2021/2022
Term
2021/2022
Term
2021/2022
Considered independent
Yes
Considered independent
No
Considered independent
Yes
Considered independent
Yes
Nationality
Spain and Sweden
Nationality
Germany
Nationality
Hong Kong
Nationality
Germany
Year of birth
1964
Year of birth
1956
Year of birth
1962
Year of birth
1971
No. of GN shares
1,400 (+700)
No. of GN shares
30,000 (-21,000)
No. of GN shares
9,850 (+800)
No. of GN shares
1,450 (+850)
Total remuneration 2021 (DKKt)
870
Total remuneration 2021 (DKKt)
1,045
Total remuneration 2021 (DKKt)
695
Total remuneration 2021 (DKKt)
870
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Employee elected members
Leo Larsen
M.Sc. (Electrical Engineering)
and a diploma in business ad-
ministration and international
trade. Senior Director, Audio
Research, GN Audio.
Morten Andersen
B.Sc. (Mechanical Engineer-
ing). Vice President, Compo-
nent Manufacturing in Opera-
tions, GN Hearing.
Marcus Stuhr Perathoner
Manager, Customer
Experience & Escalations,
GN Audio.
Board & Committee positions
Member of the Board of the
GN Store Nord Foundation
Board & Committee positions
-
Board & Committee positions
-
Special competencies
N/A
Special competencies
N/A
Special competencies
N/A
Board member since
2007
Board member since
2011
Board member since
2018
Term
2018/2022
Term
2018/2022
Term
2018/2022
Considered independent
N/A
Considered independent
N/A
Considered independent
N/A
Nationality
Denmark
Nationality
Denmark
Nationality
Denmark
Year of birth
1959
Year of birth
1963
Year of birth
1977
No. of GN shares
1,137 (unchanged)
No. of GN shares
854 (unchanged)
No. of GN shares
0 (unchanged)
Total remuneration 2021 (DKKt)
290
Total remuneration 2021 (DKKt)
290
Total remuneration 2021 (DKKt)
290
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Executive Management
René Svendsen-Tune
CEO, GN Store Nord
and GN Audio
Gitte Pugholm Aabo
CEO, GN Hearing
Peter La Cour Gormsen
CFO, GN Store Nord
and GN Audio
Member of the
Executive Management since
2015
Member of the
Executive Management since
2019
Member of the
Executive Management since
2021
Year of birth
1955
Year of birth
1967
Year of birth
1974
No. of GN shares
116,998 (+26,328)
No. of GN shares
6,823 (unchanged)
No. of GN shares
7,918 (-2,000)
No. of GN options
174,464 (+40,000)
No. of GN options
142,884 (+38,250)
No. of GN options
41,708 (+18,250)
No. of GN warrants
1,052 (-346)
No. of GN warrants
-
No. of GN warrants
98 (unchanged)
Board positions
Chairman of the Boards of
Stokke AS and
GN Store Nord
Foundation
, Deputy Chairman
of the Boards of NKT A/S
and
Nilfisk Holding A/S.
Board positions
Member of the Committee of
Directors of Danmarks
Nationalbank (the Danish
National Bank), member of the
Boards of HIMPP A/S, ALK-
Abelló A/S, Union Therapeutics
and the Danish Chamber of
Commerce, member of the
executive committee of the
Danish Chamber of Commerce.
Board positions
None
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Through an open and active
dialogue, GN strives to provide all
stakeholders with timely and
relevant information
The GN share
The total market value of GN’s shares, excluding treasury shares, was
DKK 53 billion at the end of 2021. The price of the GN share was DKK
411.3 on December 31, 2021, which is equivalent to a decrease of 16%
compared to the end of 2020.
GN is, among other indices, included in the C25 index and Large Cap in-
dex on Nasdaq Copenhagen, as well as the Stoxx Europe 600 index, the
Stoxx Europe Sustainability index and the MSCI Europe mid cap index.
Ownership
The GN share is 100% free float, and the company has no dominant
shareholders. GN has approximately 30,000 registered shareholders
where 25% of shareholders are located in Denmark, 53% in rest of Eu-
rope, 20% in North America and 2% in Rest of World.
The 10 largest registered shareholders held in total about 35% of the
GN share capital at the end of 2021 (including GN’s holding of treasury
shares). One shareholder - APG Asset Management N.V. (Holland) -
have informed GN that they hold 5% or more of the share capital.
Share capital and voting rights
GN’s share capital of DKK 552,703,928 consists of 138,175,982 shares,
each carrying four votes. GN has one share class with no restrictions on
ownership or voting rights.
Treasury shares
On December 31, 2021, GN held 10,457,899 treasury shares corre-
sponding to 7.6% of the share capital, and the value of the treasury
shares was DKK 4.3 billion. As part of the EUR 330 million convertible
bond offering concluded in May 2019, around 5,200,000 shares are
kept in Treasury to hedge future obligations of the convertible bond.
At the Annual General Meeting to be held on March 9, 2022, the Board
of Directors will propose to reduce the company’s share capital by can-
celing 982,604 shares equivalent to all treasury shares held today in
excess of the shares needed to hedge future obligations of the convert-
ible bond and 4,300,000 shares – which are held for hedging of long-
term incentive programs.
Until the Annual General Meeting on March 9, 2022, the Board of Di-
rectors is authorized to acquire shares in GN. The company's holding of
treasury shares may at no time exceed 15% of the share capital of the
company.
Dividend policy and share buyback programs
GN’s overall financial target is to deliver a competitive shareholder re-
turn through a combination of dividend payments and share price ap-
preciation. GN aims to pay out a dividend corresponding to 15 - 25% of
the annual net profit and to distribute additional excess cash to share-
holders through share buyback programs.
Dividend payments and share buybacks are subject to, among other
factors, cash requirements to support the ongoing operations,
Shareholder information
Shareholder return distribution
(DKK
million)
Geographical split of shareholders
(Million)
North
America
20%
Europe
53%
Rest of
the world
2%
Denmark
25%
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strategic opportunities, and the company’s capital structure. As previ-
ously communicated, it is currently GN’s target to maintain a capital
structure consisting of equity and debt with the net interest-bearing
debt amounting to between one to two times EBITDA.
In order to deleverage following the announcement of SteelSeries, GN
paused its share buyback program in October 2021, a program which
was initiated in May 2021 and amounted to DKK 1,148 million before
pausing. New share buyback programs are not considered before GN is
back within its target leverage profile of one to two times net-interest-
bearing debt to EBITDA.
At the Annual General Meeting on March 9, 2022, the Board of Direc-
tors will propose to pay out a total dividend of DKK 214 million (equiv-
alent to DKK 1.55 per share) in respect of the 2021 financial year, com-
pared to DKK 206 million in 2020 (equivalent to DKK 1.45 per share).
Incentive programs
By the end of 2021, the total number of outstanding warrants in GN
Hearing was 1,474 (0.2%) of the share capital in GN Hearing. The total
number of outstanding warrants in GN Audio was 1,486 (0,4%) of
the share capital in GN Audio. The total number of outstanding
options in GN Store Nord was 1,870,184 (1.4%) of the share capital in
GN Store Nord.
Investor relations policy
As part of GN’s investor relations activities an active dialogue is pur-
sued with existing and potential shareholders as well as with financial
analysts. GN ensures that relevant and timely information is provided
to the financial community to ensure that the GN share is fairly priced.
This is accomplished through information continually announced to
the market as company announcements and press releases, combined
with investor meetings, conferences and presentations of the com-
pany’s interim and annual results.
Following the release of interim and annual results, GN conducts road-
shows where the Executive Management and the investor relations
team inform investors and financial analysts about the recent
developments in the company. GN is covered by sell-side analysts, who
continually release analyst research reports on GN and the industry dy-
namics.
GN’s investor relations policy is available at:
www.gn.com/aboutIR
A full list of the analysts covering GN is available at:
www.gn.com/analysts
GN has a 30-days period prior to publication of a financial report.
During these silent periods, any communication with stakeholders is
restricted.
GN’s website www.gn.com contains historic and current information
about GN, including company announcements and press releases,
current and historic share price data, investor presentations and annual
and interim reports. The investor relations team can be contacted at:
Investor@gn.com
Notices for the Annual General Meeting
GN sends notices to convene Annual General Meetings by email.
Letters are sent to shareholders who have requested this instead of
emails. Thus, GN encourages all registered shareholders to sign up at
the investor portal with their email addresses and check the box la-
belled “subscribe/unsubscribe” in the field “Notice for the Annual
General Meeting”. Shareholders will then receive the notice by email in
the future.
Share price development
* Index : 31
-12-2019 = 100
Financial calendar for 202
2
Event
Date
Annual General Meeting
March 9, 202
2
Meet the Management
March 23, 2022
Interim Report Q1 202
2 May 5, 2022
Interim Report Q2 202
2 August 18, 202
2
Interim Report Q3 202
2 November 11, 202
2
Read company
announcements on www.gn.com
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GN Hearing
Revenue
GN Hearing’s revenue in Q4 2021 was DKK 1,429 million compared to
DKK 1,378 million in Q4 2020, an organic revenue growth of 2%. Reve-
nue growth was 4% including around 3% impact from the develop-
ment in foreign exchange rates and around -1% impact from M&A.
In North America, the overall hearing aid market continued to perform
strongly with GN Hearing delivering -1% organic revenue growth in Q4
2021 (-15% compared to Q4 2019). In Europe, GN Hearing delivered
1% organic revenue growth (-7% compared to Q4 2019) while organic
revenue growth in the Rest of World Region, was 11% (-10% compared
to Q4 2019).
Earnings and other financial highlights
GN Hearing’s gross profit increased 4% to DKK 908 million in Q4 2021.
The gross margin reached 63.5%, compared to 63.4% in Q4 2020 due
to higher volumes but offset by mix effects. EBITA in Q4 2021 was
DKK 219 million, compared to DKK 153 million in Q4 2020. The EBITA
margin in Q4 2021 was 15.3%, compared to 11.1% in Q4 2020, primar-
ily driven by prudent cost management whereas OPEX decreased by
4%. In Q4 2021, free cash flow excl. M&A reached DKK -61 million,
com-pared to DKK 263 million in Q4 2020 mainly driven by tax pay-
ments. Cash conversion was -28% compared to 172% in Q4 2020.
GN Audio
Revenue
GN Audio’s revenue in Q4 2021 was DKK 2,671 million compared to
DKK 2,706 million in Q4 2020, translating into an organic revenue
growth of -4%. Revenue growth was -1% including around 2% impact
from the development in foreign exchange rates. In Q4 2021, GN Au-
dio experienced volatility in supply and delays in component delivera-
bles impacting sales negatively, but demand remains strong. Conse-
quently, GN Audio left 2021 with a significant order backlog.
GN Audio continues to work closely with suppliers of components to
address demand. Despite supply chain challenges, both Enterprise and
Consumer delivered solid performance in the quarter.
In North America, GN Audio delivered organic revenue growth of 7%
(14% compared to Q4 2019), while Europe saw organic revenue growth
of -18% (45% compared to Q4 2019). Organic revenue growth in the
Rest of World region was 38% in Q4 2021 (81% compared to Q4 2019).
Earnings and other financial highlights
In Q4 2021, GN Audio’s gross profit reached DKK 1,316 million corre-
sponding to a gross margin of 49.3%, slightly higher than in Q4 2020,
reflecting underlying improvements but offset by increased freight and
production costs due to COVID-19. In Q4 2021, GN Audio’s EBITA was
DKK 475 million (excluding transaction related costs of DKK 31 mil-
lion) equivalent to an EBITA margin of 17.8%, primarily reflecting in-
vestments into future growth opportunities.
In Q4 2021, free cash flow excl. M&A reached DKK 198 million, com-
pared to DKK 625 million in Q4 2020 reflecting investments in future
growth opportunities and a negative impact from working capital.
GN Store Nord
In Q4 2021, EBITA in Other ended at DKK -43 million compared to
DKK -49 million in Q4 2020. Amortization of acquired intangible assets
amounted to DKK -103 million compared to DKK -51 million in Q4
2020, primarily reflecting an impairment loss in relation to channel in-
vestments in GN Hearing.
Financial items were DKK 34 million compared to DKK -35 million in Q4
2020 primarily driven by a non-cash fair value adjustment of the exist-
ing ownership interest in Lively.
Q4 financial highlights
GN Hearing
GN Audio
Group total*
DKK million
Q4 2021
Q4 2020
Growth
Q4 2021
Q4 2020
Growth
Q4 2021
Q4 2020
Growth
Revenue
1,429
1,378
4%
2,671
2,706
-1%
4,100
4,084
0%
Organic growth
2%
-16%
-4%
43%
-2%
15%
Gross profit
908
873
4%
1,316
1,318
0%
2,224
2,191
2%
Gross profit margin
63.5%
63.4%
+0.1%p
49.3%
48.7%
+0.6%p
54.2%
53.6%
+0.6%p
EBITA
219
153
43%
475
**
642
-26%
651
**
746
-13%
EBITA margin
15.3%
11.1%
+4.2%p
17.8%
**
23.7%
-5.9%p
15.9%
**
18.3%
-2.4%p
Earnings per share (EPS)
3.50
**
4.09
-14%
Free cash flow excl. M&A
-61
263
NA
198
625
-68%
-279
896
NA
Cash conversion
-28%
172%
NA
45%
97%
-52%p
-45%
120%
NA
* Including "Other"
** Excluding transaction related costs of DKK 31 million associated with the acquisition of SteelSeries
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Q4
Q4
Full year
Full year
2021
2020
2021
2020
DKK million
(unaud.)
(unaud.)
(aud.)
(aud.)
GN Store Nord
Revenue
4,100
4,084
15,775
13,449
Revenue growth
0%
11%
17%
7%
Organic growth
-2%
15%
20%
9%
Gross profit margin
54.2%
53.6%
55.0%
54.3%
EBITA*
620
746
2,619
1,866
EBITA margin*
15.1%
18.3%
16.6%
13.9%
Profit (loss) before tax
540
657
2,271
1,612
Effective tax rate
20.7%
19.8%
21.2%
21.3%
ROIC (EBITA*/Average invested capital)
25%
19%
25%
19%
Earnings per share, basic (EPS)
3.30
4.09
13.63
9.72
Earnings per share, fully diluted (EPS diluted)
3.29
4.04
13.49
9.63
Free cash flow excl. M&A
-279
896
702
1,865
Cash conversion (Free cash flow excl. M&A/EBITA*)
-45%
120%
27%
100%
Equity ratio
26.4%
31.0%
26.4%
31.0%
Net interest-bearing debt
5,358
4,198
5,358
4,198
Net interest-bearing debt (period-end)/EBITDA
1.8
1.8
1.8
1.8
Payout ratio
-
-
12%
16%
Share buybacks**
54
-
1,166
453
Outstanding shares, end of period (thousand)
127,718
128,975
127,718
128,975
Average number of outstanding shares (thousand)
127,719
128,894
128,816
128,805
Average number of outstanding shares, fully diluted (thousand)
128,314
130,401
130,194
130,032
Treasury shares, end of period (thousand)
10,458
13,293
10,458
13,293
Share price at the end of the period
411.3
487.2
411.3
487.2
Market capitalization
52,530
62,837
52,530
62,837
Q4
Q4
Full year
Full year
2021
2020
2021
2020
DKK million
(unaud.)
(unaud.)
(aud.)
(aud.)
GN Hearing
Revenue
1,429
1,378
5,332
4,725
Revenue growth
4%
-20%
13%
-26%
Organic growth
2%
-16%
16%
-24%
Gross profit margin
63.5%
63.4%
63.8%
61.5%
EBITA*
219
153
643
41
EBITA margin*
15.3%
11.1%
12.1%
0.9%
ROIC (EBITA*/Average invested capital)
9%
1%
9%
1%
Free cash flow excl. M&A
-61
263
198
127
Cash conversion (Free cash flow excl. M&A/EBITA*)
-28%
172%
31%
310%
GN Audio
Revenue
2,671
2,706
10,443
8,724
Revenue growth
-1%
38%
20%
40%
Organic growth
-4%
43%
22%
42%
Gross profit margin
49.3%
48.7%
50.6%
50.4%
EBITA*
444
642
2,164
2,002
EBITA margin*
16.6%
23.7%
20.7%
22.9%
ROIC (EBITA*/Average invested capital)
79%
81%
79%
81%
Free cash flow excl. M&A
198
625
1,288
1,729
Cash conversion (Free cash flow excl. M&A/EBITA*)
45%
97%
60%
86%
ROIC and NIBD/EBITDA are calculated based on EBITA and EBITDA for the latest four quarters
* Excluding gain (loss) on divestments of operations etc. and amortization of acquired intangible assets but
including amortization of development projects and software developed in
-house.
** Incl. buybacks as part of share based incentive programs
Quarterly financial highlights
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Quarterly reporting by segment
Q1 2020
Q2 2020
Q3 2020
Q4 2020
Q1 2021
Q2 2021
Q3 2021
Q4 2021
Full year 2020
Full Year 2021
DKK million
(unaud.)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
(aud.)
(aud.)
Income statement
Revenue
GN Hearing
1,314
715
1,318
1,378
1,234
1,322
1,347
1,429
4,725
5,332
GN Audio
1,653
1,944
2,421
2,706
2,876
2,456
2,440
2,671
8,724
10,443
Total
2,967
2,659
3,739
4,084
4,110
3,778
3,787
4,100
13,449
15,775
Organic growth
GN Hearing
-14%
-54%
-11%
-16%
1%
95%
4%
2%
-24%
16%
GN Audio
22%
32%
72%
43%
82%
32%
1%
-4%
42%
22%
Total
3%
-13%
29%
15%
46%
49%
2%
-2%
9%
20%
Gross profit
GN Hearing
841
332
859
873
769
832
891
908
2,905
3,400
GN Audio
827
1,009
1,239
1,318
1,480
1,264
1,222
1,316
4,393
5,282
Total
1,668
1,341
2,098
2,191
2,249
2,096
2,113
2,224
7,298
8,682
Gross profit margin
GN Hearing
64.0%
46.4%
65.2%
63.4%
62.3%
62.9%
66.1%
63.5%
61.5%
63.8%
GN Audio
50.0%
51.9%
51.2%
48.7%
51.5%
51.5%
50.1%
49.3%
50.4%
50.6%
Total
56.2%
50.4%
56.1%
53.6%
54.7%
55.5%
55.8%
54.2%
54.3%
55.0%
Development costs
GN Hearing
-149
-124
-120
-118
-139
-154
-155
-131
-511
-579
GN Audio
-110
-118
-181
-145
-199
-168
-173
-185
-554
-725
Other *
-22
-20
-19
-23
-34
-27
-9
-15
-84
-85
Total
-281
-262
-320
-286
-372
-349
-337
-331
-1,149
-1,389
Selling and distribution costs and administrative expenses etc.
GN Hearing
-637
-544
-570
-602
-532
-525
-563
-558
-2,353
-2,178
GN Audio
-429
-483
-394
-531
-567
-564
-575
-687
-1,837
-2,393
Other *
-21
-27
-19
-26
-25
-23
-27
-28
-93
-103
Total
-1,087
-1,054
-983
-1,159
-1,124
-1,112
-1,165
-1,273
-4,283
-4,674
EBITA
GN Hearing
55
-336
169
153
98
153
173
219
41
643
GN Audio
288
408
664
642
714
532
474
444
2,002
2,164
Other *
-43
-47
-38
-49
-59
-50
-36
-43
-177
-188
Total
300
25
795
746
753
635
611
620
1,866
2,619
EBITA margin
GN Hearing
4.2%
-47.0%
12.8%
11.1%
7.9%
11.6%
12.8%
15.3%
0.9%
12.1%
GN Audio
17.4%
21.0%
27.4%
23.7%
24.8%
21.7%
19.4%
16.6%
22.9%
20.7%
Total
10.1%
0.9%
21.3%
18.3%
18.3%
16.8%
16.1%
15.1%
13.9%
16.6%
Depreciation and software amortization
GN Hearing
-47
-45
-54
-35
-42
-41
-40
-40
-181
-163
GN Audio
-28
-29
-31
-34
-33
-31
-34
-37
-122
-135
Other *
-29
-32
-30
-24
-30
-33
-32
-36
-115
-131
Total
-104
-106
-115
-93
-105
-105
-106
-113
-418
-429
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Quarterly reporting by segment (continued)
Q1 2020
Q2 2020
Q3 2020
Q4 2020
Q1 2021
Q2 2021
Q3 2021
Q4 2021
Full year 2020
Full Year 2021
DKK million
(unaud.)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
(aud.)
(aud.)
EBITDA
GN Hearing
102
-291
223
188
140
194
213
259
222
806
GN Audio
316
437
695
676
747
563
508
481
2,124
2,299
Other *
-14
-15
-8
-25
-29
-17
-4
-7
-62
-57
Total
404
131
910
839
858
740
717
733
2,284
3,048
EBITA
300
25
795
746
753
635
611
620
1,866
2,619
Amortization and impairment of acquired intangible assets
-50
-52
-82
-51
-41
-42
-40
-103
-235
-226
Gain (loss) on divestment of operations etc.
1
-1
-1
-3
-
-9
-
13
-4
4
Operating profit (loss)
251
-28
712
692
712
584
571
530
1,627
2,397
Share of profit (loss) in associates
-1
-6
-2
-
-1
-20
9
-24
-9
-36
Financial items, net
-111
49
91
-35
-99
-12
-13
34
-6
-90
Profit (loss) before tax
139
15
801
657
612
552
567
540
1,612
2,271
Tax on profit (loss)
-33
-2
-178
-130
-130
-118
-121
-112
-343
-481
Profit (loss)
106
13
623
527
482
434
446
428
1,269
1,790
Balance sheet
Inventories
GN Hearing
580
603
610
650
677
675
683
743
650
743
GN Audio
585
711
805
1,072
939
1,049
1,019
1,205
1,072
1,205
Total
1,165
1,314
1,415
1,722
1,616
1,724
1,702
1,948
1,722
1,948
Trade receivables
GN Hearing
1,095
835
1,025
972
987
1,020
1,111
1,124
972
1,124
GN Audio
1,477
1,593
1,860
1,704
1,670
1,721
2,057
2,169
1,704
2,169
Other *
-
-
-
-
-
2
2
-
-
-
Total
2,572
2,428
2,885
2,676
2,657
2,743
3,170
3,293
2,676
3,293
Net working capital
GN Hearing
927
649
581
552
785
862
883
1,010
552
1,010
GN Audio
765
512
764
357
652
662
793
837
357
837
Other *
-142
-121
-139
-93
-189
-136
-149
-122
-93
-122
Total
1,550
1,040
1,206
816
1,248
1,388
1,527
1,725
816
1,725
Free cash flow excl. M&A
GN Hearing
-66
-117
47
263
-204
123
340
-61
127
198
GN Audio
-67
579
592
625
438
371
281
198
1,729
1,288
Other *
-27
55
-27
8
-256
16
-128
-416
9
-784
Total
-160
517
612
896
-22
510
493
-279
1,865
702
Acquisitions and divestments of companies
-29
-10
-107
-
-38
-1
-1
-314
-146
-354
Free cash flow
-189
507
505
896
-60
509
492
-593
1,719
348
* "Other" comprises Group Functions, GN Ejendomme and eliminations.
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Regional growth, Q4 2021
GN Hearing
GN Audio
Consolidated total
Q4 2021
Q4 2020
Q4 2021
Q4 2020
Q4 2021
Q4 2020
(DKK million)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
Europe - revenue
432
420
1,320
1,592
1,752
2,012
Organic growth
1%
-18%
-14%
FX growth
2%
1%
1%
M&A growth
0%
0%
0%
Revenue growth
3%
-9%
-17%
74%
-13%
46%
North America - revenue
639
640
813
730
1,452
1,370
Organic growth
-1%
7%
3%
FX growth
3%
4%
4%
M&A growth
-2%
0%
-1%
Revenue growth
0%
-24%
11%
-2%
6%
-14%
Rest of World - revenue
358
318
538
384
896
702
Organic growth
11%
38%
26%
FX growth
2%
2%
2%
M&A growth
0%
0%
0%
Revenue growth
13%
-23%
40%
27%
28%
-2%
Total revenue
1,429
1,378
2,671
2,706
4,100
4,084
Organic growth
2%
-16%
-4%
43%
-2%
15%
FX growth
3%
-3%
2%
-5%
2%
-4%
M&A growth
-1%
-1%
0%
0%
0%
0%
Revenue growth
4%
-20%
-1%
38%
0%
11%
Regional growth, YTD 2021
GN Hearing
GN Audio
Consolidated total
YTD 2021
YTD 2020
YTD 2021
YTD 2020
YTD 2021
YTD 2020
(DKK million)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
Europe - revenue
1,474
1,376
5,283
4,528
6,757
5,904
Organic growth
7%
16%
14%
FX growth
0%
1%
0%
M&A growth
0%
0%
0%
Revenue growth
7%
-14%
17%
60%
14%
33%
North America - revenue
2,524
2,276
3,161
2,620
5,685
4,896
Organic growth
17%
27%
22%
FX growth
-5%
-6%
-6%
M&A growth
-1%
0%
0%
Revenue growth
11%
-32%
21%
14%
16%
-13%
Rest of World - revenue
1,334
1,073
1,999
1,576
3,333
2,649
Organic growth
26%
30%
28%
FX growth
-2%
-3%
-2%
M&A growth
0%
0%
0%
Revenue growth
24%
-24%
27%
43%
26%
6%
Total revenue
5,332
4,725
10,443
8,724
15,775
13,449
Organic growth
16%
-24%
22%
42%
20%
9%
FX growth
-3%
-1%
-2%
-2%
-3%
-1%
M&A growth
-1%
-1%
0%
0%
0%
-1%
Revenue growth
13%
-26%
20%
40%
17%
7%
Regional Growth Composition
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Income statement
GN Hearing
GN Audio
Other*
Consolidated total
Q4 2021
Q4 2020
Q4 2021
Q4 2020
Q4 2021
Q4 2020
Q4 2021
Q4 2020
(DKK million)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
Revenue
1,429
1,378
2,671
2,706
-
-
4,100
4,084
Production costs
-521
-505
-1,355
-1,388
-
-
-1,876
-1,893
Gross profit
908
873
1,316
1,318
-
-
2,224
2,191
Development costs
-131
-118
-185
-145
-15
-23
-331
-286
Selling and distribution costs
-397
-455
-541
-467
-
-
-938
-922
Management and administrative expenses
-145
-155
-166
-55
-28
-26
-339
-236
Other operating income and costs, net
-16
8
20
-9
-
-
4
-1
EBITA
219
153
444
642
-43
-49
620
746
Amortization and impairment of acquired intangible assets
-85
-33
-18
-18
-
-
-103
-51
Gain (loss) on divestment of operations etc.
13
-3
-
-
-
-
13
-3
Operating profit (loss)
147
117
426
624
-43
-49
530
692
Share of profit (loss) in associates
-23
3
-
-
-1
-3
-24
-
Financial items
61
-17
-1
-9
-26
-9
34
-35
Profit (loss) before tax
185
103
425
615
-70
-61
540
657
Tax on profit (loss)
-89
-56
-35
-138
12
64
-112
-130
Profit (loss) for the period
96
47
390
477
-58
3
428
527
Additional information
GN Hearing
GN Audio
Other*
Consolidated total
Q4 2021
Q4 2020
Q4 2021
Q4 2020
Q4 2021
Q4 2020
Q4 2021
Q4 2020
(DKK million)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
Revenue distributed geographically
Denmark
29
39
69
86
-
-
98
125
Europe
403
381
1,251
1,506
-
-
1,654
1,887
North America
639
640
813
730
-
-
1,452
1,370
Rest of World
358
318
538
384
-
-
896
702
Revenue
1,429
1,378
2,671
2,706
-
-
4,100
4,084
Incurred development costs
-154
-129
-234
-201
-17
-25
-405
-355
Capitalized development costs
103
96
114
95
-
-
217
191
Amortization, impairment and depreciation of development
projects**
-80
-85
-65
-39
2
2
-143
-122
Expensed development costs
-131
-118
-185
-145
-15
-23
-331
-286
EBITDA
259
188
481
676
-7
-25
733
839
Depreciation and software amortization
-40
-35
-37
-34
-36
-24
-113
-93
EBITA
219
153
444
642
-43
-49
620
746
EBITA margin
15.3%
11.1%
16.6%
23.7%
N/A
N/A
15.1%
18.3%
Number of employees, end of period
4,553
4,404
2,358
1,863
317
246
7,228
6,513
Cash flow statement
GN Hearing
GN Audio
Other*
Consolidated total
Q4 2021
Q4 2020
Q4 2021
Q4 2020
Q4 2021
Q4 2020
Q4 2021
Q4 2020
(DKK million)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
Operating activities before changes in working capital
344
303
523
731
-9
-18
858
1,016
Cash flow from changes in working capital
-173
-11
-9
355
-33
-43
-215
301
Cash flow from operating activities excluding financial
items and tax
171
292
514
1,086
-42
-61
643
1,317
Cash flow from investing activities:
Development projects, investment
-103
-96
-114
-95
-
-
-217
-191
Other
-379
-78
-43
-28
-136
-49
-558
-155
Cash flow from operating and investing activities before fi-
nancial items and tax
-311
118
357
963
-178
-110
-132
971
Tax and financial items
-64
145
-159
-338
-238
118
-461
-75
Cash flow from operating and investing activities (free cash
flow)
-375
263
198
625
-416
8
-593
896
Cash flow from M&A activities
-314
-
-
-
-
-
-314
-
Free cash flow excl. M&A
-61
263
198
625
-416
8
-279
896
* "Other" comprises Group Shared Services, GN Ejendomme and eliminations
** Does not include amortization of acquired intangible assets, cf. definition of EBITA
Q4 segment disclosures
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Consolidated financial statements
Consolidated income statement 68
Consolidated Statement of comprehensive income 68
Consolidated balance sheet at December 31 69
Consolidated statement of cash flow 70
Consolidated statement of equity 71
Consolidated
Financial
statements
GN Store Nord
Annual Report 2021 Financial Statements – Consolidated
Content
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Content
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DKK million
Note
2021
2020
Revenue
2.2
Production costs
2.3, 2.4, 3.4, 3.6
-7,093
-6,151
Gross profit
Development costs
2.3, 2.4, 3.4
-1,389
-1,149
Selling and distribution costs
2.3, 2.4, 3.4
-3,484
-3,349
Management and administrative expenses
2.3, 2.4, 3.4, 5.8
-1,205
-1,037
Other operating income and costs, net
EBITA*
Amortization and impairment of acquired intangible assets
2.6, 3.4
-226
-235
Gain (loss) on divestment of operations etc.
5.1
-4
Operating profit (loss)
Share of profit (loss) in associates
5.6
-36
-9
Financial income
2.4, 4.5
Financial expenses
4.5
-327
-300
Profit (loss) before tax
Tax on profit (loss)
2.5
-481
-343
Profit (loss) for the year
Attributable to:
Non-controlling interests
Shareholders in GN Store Nord A/S
Earnings per share (EPS)
Earnings per share (EPS)
4.1
Earnings per share fully diluted (EPS diluted)
4.1
* Please refer to Key Ratio Definitions on page 126 for definition of EBITA
DKK million
Note
2021
2020
Profit (loss) for the year
Other comprehensive income
Items that will not be reclassified to the income statement
Actuarial gains (losses)
5.4
-1
Tax relating to actuarial gains (losses)
2.5
-10
Items that may be reclassified subsequently to the income statement
Adjustment of cash flow hedges
4.3
-13
Foreign exchange adjustments, etc.
-601
Tax relating to other comprehensive income
2.5
-8
Other comprehensive income for the year, net of tax
-601
Total comprehensive income for the year
Attributable to:
Non-controlling interests
Shareholders in GN Store Nord A/S
Consolidated income
statement
Consolidated statement of
comprehensive income
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DKK million
Note
2021
2020
Assets
Intangible assets
3.1, 3.4
Property, plant and equipment
3.2, 3.3, 3.4
Investments in associates
5.6
Deferred tax assets
2.5
Other non-current assets
3.5, 4.3, 5.4
Total non-current assets
Inventories
3.6
Trade receivables
3.7, 4.3
Tax receivables
Other receivables
4.3
Cash and cash equivalents
Total current assets
Total assets
Equity and Liabilities
Share capital
Other reserves
-4,829
-5,161
Proposed dividends for the year
Retained earnings
Total equity
Bank loans and issued bonds
4.2, 4.3, 4.4
Lease liabilities, non-current
3.3, 4.3, 4.4
Pension obligations
5.4
Provisions, non-current
3.8
Deferred tax liabilities
2.5
Other non-current liabilities
4.3, 4.4
Total non-current liabilities
Bank loans
4.2, 4.3, 4.4
Lease liabilities, current
3.3, 4.3, 4.4
Trade payables
4.3
Tax payables
Provisions
3.8
Other current liabilities
4.3, 4.4
Total current liabilities
Total equity and liabilities
Consolidated balance sheet at December 31
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DKK million
Note
2021
2020
Operating activities
Operating profit (loss)
Depreciation, amortization and impairment
3.4
Other non-cash adjustments
5.7
Cash flow from operating activities before changes in working capital
Change in inventories
-137
-471
Change in receivables
-610
-189
Change in trade payables and other payables
Total changes in working capital
-710
Cash flow from operating activities before financial items and tax
Interest received
Interest etc. paid
-320
-99
Tax paid, net
2.5
-571
-289
Cash flow from operating activities
Investing activities
Development projects
3.1
-755
-638
Investments in intangible assets, excluding development projects
3.1
-312
-234
Investments in property, plant and equipment
3.2
-457
-221
Investments in other non-current assets
-271
-297
Disposal of intangible assets and property, plant and equipment
Disposal (repayment) of other non-current assets
Acquisition of companies/operations
5.1
-354
-147
Divestment of companies/operations
5.1
Cash flow from investing activities
-1,764
-1,487
Cash flow from operating and investing activities (free cash flow)
DKK million
Note
2021
2020
Financing activities
Increase of short-term loans
4.4
Decrease of long-term loans
4.4
-139
-458
Decrease of short-term loans
4.4
-855
Net proceeds from issue of EMTN bonds
4.4
Paid dividends
-188
-187
Share-based payment (exercised)
Purchase of treasury shares
4.1
-1,166
-453
Other adjustments
-30
-12
Cash flow from financing activities
-1,771
Net cash flow
-52
Cash and cash equivalents, beginning of period
Adjustment foreign currency, cash and cash equivalents
-19
Cash and cash equivalents, end of period
Consolidated statement of cash flows
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2021
Other reserves
DKK million
Share
capital
Foreign
exchange
adjust-
ments
Hedging
reserve
Treasury
shares
Proposed
dividends
for the
year
Retained
earnings
Equity,
share-
holders
in
GN Store
Nord A/S
Non-con-
trolling
interests
Total
equity
Balance at January 1, 2021
-1,500
-21
-3,640
Profit (loss) for the period
Actuarial gains (losses)
Tax relating to actuarial gains
(losses)
-10
-10
-10
Adjustment of cash flow hedges
Foreign exchange adjustments,
etc.
Tax relating to other comprehen-
sive income
-8
-8
-8
Other comprehensive income for
the year
Total comprehensive income for
the year
Reduction of share capital
-16
-
-857
Share-based payment (granted)
Share-based payment (exercised)
-43
Tax related to share-based incen-
tive plans
Purchase of treasury shares
-1,166
-1,166
-1,166
Reclassification of non-controlling
interests by recognizing a put op-
tion liability
-66
-66
-34
-100
Proposed dividends for the year*
-214
Paid dividends
-188
-188
-188
Dividends, treasury shares
-18
Balance at December 31, 2021
-1,104
-3,731
* Equivalent to DKK 1.55 per share (2020: DKK 1.45 per share)
2020
Other reserves
DKK million
Share
capital
Foreign
exchange
adjust-
ments
Hedging
reserve
Treasury
shares
Proposed
dividends
for the
year
Retained
earnings
Equity,
share-
holders
in
GN Store
Nord A/S
Non-con-
trolling
interests
Total
equity
Balance at January 1, 2020
-910
-11
-3,424
Profit (loss) for the period
Actuarial gains (losses)
-1
-1
-1
Tax relating to actuarial gains
(losses)
-
Adjustment of cash flow hedges
-
-13
-13
-13
Foreign exchange adjustments,
etc.
-601
-601
-601
Tax relating to other comprehen-
sive income
Other comprehensive income for
the year
-590
-10
-1
-601
-601
Total comprehensive income for
the year
-590
-10
Reduction of share capital
-
Share-based payment (granted)
Share-based payment (exercised)
-43
Tax related to share-based incen-
tive plans
Purchase of treasury shares
-453
-453
-453
Reclassification of non-controlling
interests by recognizing a put op-
tion liability
-13
-13
-11
-24
Proposed dividends for the year*
-206
Paid dividends
-187
-187
-6
-193
Dividends, treasury shares
-19
Balance at December 31, 2020
-1,500
-21
-3,640
Consolidated statement of changes in equity
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Section 1 - Basis of preparation
Overview of the financial accounting policies in general and an
introduction to Management's key accounting estimates and
judgments.
1.1 General accounting policies 73
1.2 Significant accounting estimates and judgments 74
1.3 Non-IFRS measures 74
Section 2 - Results of the year
Insights into the results for the year, including operating segments,
employee costs and taxes.
2.1 Segment disclosures 76
2.2 Revenue and geographical information 80
2.3 Staff Costs 82
2.4 Government grants 82
2.5 Tax 83
2.6 Income statement classified by function 85
Section 3 - Operating assets and liabilities
Insights into the assets that form the basis for the activities in GN
Store Nord, and the related liabilities. Most of these are included in
invested capital and some in net working capital.
3.1 Intangible assets 87
3.2 Property, plant and equipment 90
3.3 Leases 92
3.4 Depreciation, amortization and impairment 93
3.5 Other non-current assets 94
3.6 Inventories 96
3.7 Trade receivables 97
3.8 Provisions 98
Section 4 - Capital structure and financing
items
Insight into GN Store Nord's capital structure and financial items as
well as financial risks.
4.1 Outstanding shares and treasury shares 100
4.2 Financial risks 101
4.3 Financial instruments 105
4.4 Liabilities from financing activities 110
4.5 Financial income and expenses 111
Section 5 - Other disclosures
Statutory notes and other disclosures.
5.1 Acquisition and divestment of companies and operations 113
5.2 Remuneration of the Board of Directors and Executive
Management 116
5.3 Share-based incentive plans 118
5.4 Pension obligations 121
5.5 Contingent liabilities 122
5.6 Investments in associates 123
5.7 Other non-cash adjustments 123
5.8 Fees to statutory auditors 123
5.9 Related parties 123
5.10 Events after the reporting period 123
Consolidated Notes
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Content
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1.1 General accounting policies
The annual report of GN Store Nord has been prepared in accordance
with International Financial Reporting Standards (IFRS) as adopted by
the EU and the Danish disclosure requirements for annual reports of
listed companies.
The annual report has been prepared in accordance with the historical
cost convention, as modified by the revaluation of certain financial
instruments (including derivative financial instruments) at fair value.
The description of the accounting policies in the individual notes is part
of the complete description of GN Store Nord’s accounting policies.
New standards, interpretations and amendments
adopted by GN Store Nord
As of January 1, 2021, GN Store Nord adopted all relevant new or
revised International Financial Reporting Standards and IFRIC Interpre-
tations with effective date January 1, 2021 or earlier. The new or
revised standards and interpretations did not affect recognition and
measurement materially nor did they result in any material changes to
disclosures in the notes. Apart from this, the annual report is presented
in accordance with the accounting policies applied in previous years’
annual reports.
Accounting standards not yet adopted
A number of new standards, amendments to standards and interpreta-
tions are effective for annual periods beginning after January 1, 2021
and have not been applied in preparing this annual report. None of
these new standards, amendments to standards and interpretations
are expected to have significant impact on the financial statements of
GN Store Nord.
GN Store Nord will adopt new standards and interpretations as of the
effective dates.
The IFRS Interpretations Committee has published two agenda deci-
sions clarifying how arrangements in respect of a specific part of cloud
technology, Software-as-a-Service (SaaS), should be accounted for. In
the most recent agenda decision, published in April 2021, they address
how a customer should account for the costs of configuring or custom-
ising the supplier’s application software in a SaaS arrangement that is
determined to be a service contract. As GN Store Nord has cloud com-
puting arrangements an analysis has been initiated of the impact of the
agenda decision on the accounting policies applied to implementation
costs in cloud computing arrangements.
Consolidated Financial Statements
The consolidated financial statements relate to the financial state-
ments of the parent company, GN Store Nord, and its subsidiaries as at
December 31, 2021. Control is achieved when the Group is exposed or
has rights to variable returns from its involvement with the investee
and has the ability to affect those returns through its power over the
investee.
Generally, there is a presumption that a majority of voting rights re-
sults in control. To support this presumption and when GN Store Nord
has less than a majority of the voting or similar rights of an investee,
GN Store Nord considers all relevant facts and circum-stances in
assessing whether it has power over an investee.
Group companies are listed on pages 124-125. Enterprises that are not
subsidiaries, but where GN Store Nord holds between 20% and 50% of
the voting rights and over which it exercises significant influence, but
where it does not have power to govern the financial and operating
policies, are considered associates. When assessing whether GN Store
Nord exercises control or significant influence, potential voting rights
that are substantive and options on acquisition of additional ownership
interests are taken into account.
The consolidated financial statements are prepared as a consolidation
of the financial statements of the parent company and those of the
individual subsidiaries, all of which are presented in accordance with
the Group’s accounting policies. Intra-group income and expenses,
shareholdings, intra-group balances and dividends, and realized and
unrealized gains and losses on intra-group transactions are eliminated.
On consolidation, the carrying amount of shares held by the parent
company in subsidiaries is set off against the subsidiaries’ equity.
Foreign Currency Translation
Functional Currency and Presentation Currency
Financial statement items for each of the reporting enterprises in the
Group are measured using the currency used in the primary financial
environment in which the reporting enterprise operates. Transactions
denominated in currencies other than the functional currency are
considered transactions denominated in foreign currencies. The
consolidated financial statements are presented in Danish kroner
(DKK), which is the functional currency and presentation currency of
the parent company.
Translation of Transactions and Balances
On initial recognition, transactions denominated in foreign currencies
are translated to the functional currency at the exchange rates at the
transaction date. Foreign exchange differences arising between the
exchange rates at the transaction date and at the date of payment are
recognized in the income statement as financial income or financial
expenses. Receivables, payables and other monetary items denomi-
nated in foreign currencies are translated at the exchange rates at the
balance sheet date. The difference between the exchange rates at the
balance sheet date and at the date at which the receivable or payable
Section 1 - Basis of preparation
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arose or was recognized in the latest annual report is recognized in the
income statement as financial income or financial expense.
Translation of Subsidiaries
On recognition in the consolidated financial statements of foreign
entities with a functional currency other than GN Store Nord’s
presentation currency, the income statements are translated at the
exchange rates at the transaction date, and the balance sheet items
are translated at the exchange rates at the balance sheet date. An
average exchange rate for the month is used as the exchange rate at
the transaction date to the extent that this does not significantly
distort the presentation of the underlying transactions. Foreign
exchange differences arising on translation of the opening balance of
equity of such enterprises at the exchange rates at the balance sheet
date and on translation of the income statements from the exchange
rates at the transaction date to the exchange rates at the balance
sheet date are recognized in other comprehensive income.
Foreign exchange adjustment of balances with foreign entities that are
considered part of the investment in the entity is recognized in other
comprehensive income in the consolidated financial statements under
a separate translation reserve.
Cash Flow Statement
The cash flow statement is presented using the indirect method based
on the operating profit (loss). The cash flow statement shows the cash
flow from operating, investing and financing activities for the year and
the year’s changes in cash and cash equivalents as well as the cash and
cash equivalents at the beginning and end of the year. The cash flow
effect of acquisitions and disposals of enterprises is shown separately
in cash flows from investing activities. Cash flow from acquired enter-
prises is recognized in the cash flow statement from the acquisition
date. Cash flow from disposed of enterprises is recognized up until the
disposal date.
Cash flow from operating activities comprises cash flow from the
year’s operations adjusted for non-cash operating items and changes in
working capital. Working capital comprises current assets excluding
items stated as cash and cash equivalents and excluding tax receivable,
as well as current liabilities excluding bank loans, tax payable and
provisions.
Cash flow from investing activities comprises payments in connection
with acquisitions and disposals of enterprises and activities, acquisi-
tions and disposals of intangible assets, property, plant and equipment
and other non-current assets and acquisitions and disposals of securi-
ties that are not included in cash and cash equivalents.
Cash flow from financing activities comprises changes in the size or
composition of the share capital and related costs as well as the raising
of loans, repayment of interest-bearing debt, payment of the principal
portion of lease liabilities, acquisition and disposal of treasury shares
and payment of dividends to shareholders.
Cash and cash equivalents comprise cash and short-term marketable
securities with a term of three months or less and are subject to an
insignificant risk of changes in value.
1.2 Significant accounting estimates
and judgments
The recognition of certain items of income and expenses and the deter-
mination of the carrying amount of certain assets and liabilities implies
making accounting estimates and judgments. Significant accounting
estimates and judgments comprise revenue recognition, computation
of amortization, depreciation and impairment, useful lives and remain-
ing useful lives of non-current assets. Furthermore, recognition of
pension obligations and similar non-current obligations as well as pro-
visions requires significant accounting estimates and judgments.
The estimates used are based on assumptions, which by Management
are deemed reliable, but by nature are associated with uncertainty. The
assumptions may be incomplete or incorrect, and unexpected events
or circumstances may arise. Accordingly, the Company is subject to
risks and uncertainties that may lead to a situation where actual
results differ from estimates.
A description of significant accounting estimates and judgments is
included in the relevant notes:
Estimate/Judgment
Section
Revenue recognition
2.1 Segment disclosures
Measurement of deferred tax
2.5 Tax
Recognition and measurement of goodwill
and development projects
3.1 Intangible assets
Loans to dispensers and ownership interests
3.5 Other non-current assets
Measurement of inventories
3.6 Inventories
Measurement of trade receivables
3.7 Trade receivables
Measurement of provisions
3.8 Provisions
1.3 Non-IFRS measures
This Annual Report includes financial measures which are not defined
by IFRS. These measures are included because they are used by GN
Store Nord’s Management to analyze and manage the business and to
provide stakeholders with useful information on the group’s financial
position, performance and development. Please refer to Key Ratio
Definitions on page 126 for a definition of these measures.
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Insights into the results for the year, including operating segments,
employee costs and taxes.
2.1 Segment disclosures 76
2.2 Revenue and geographical information 80
2.3 Staff Costs 82
2.4 Government grants 82
2.5 Tax 83
2.6 Income statement classified by function 85
Section 2 -
Results of the year
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2.1 Segment disclosures
Income statement 2021
DKK million
GN Hearing
GN Audio
Other GN
Eliminations
Consolidated
total
External revenue
5,332
10,443
-
-
15,775
Internal revenue
-
-
563
-563
-
Revenue
5,332
10,443
563
-563
15,775
Production costs
-1,932
-5,161
-
-
-7,093
Gross profit
3,400
5,282
563
-563
8,682
Development costs
-579
-725
-91
6
-1,389
Selling and distribution costs
-1,549
-1,935
-
-
-3,484
Management and administrative expenses
-602
-498
-668
563
-1,205
Other operating income and costs, net
-27
40
2
-
15
EBITA*
643
2,164
-194
6
2,619
Amortization and impairment of acquired intan-
gible assets
-156
-70
-
-
-226
Gain (loss) on divestment of operations etc.
4
-
-
-
4
Operating profit (loss)
491
2,094
-194
6
2,397
Share of profit (loss) in associates
-35
-
-1
-
-36
Financial items
-51
-36
-3
-
-90
Profit (loss) before tax
405
2,058
-198
6
2,271
Tax on profit (loss)
-136
-383
39
-1
-481
Profit (loss) for the year
269
1,675
-159
5
1,790
Impairment losses and reversals regarding intan-
gible assets and property, plant and equipment
recognized in the income statement
-69
-
-
-
-69
Eliminations in the income statement primarily concern internal revenue, intersegment rent and management fee
* Please refer to Key Ratio Definitions on page 126 for definition of EBITA
Income statement 2020
DKK million
GN Hearing
GN Audio
Other GN
Eliminations
Consolidated
total
External revenue
4,725
8,724
-
-
13,449
Internal revenue
-
-
456
-456
-
Revenue
4,725
8,724
456
-456
13,449
Production costs
-1,820
-4,331
-
-
-6,151
Gross profit
2,905
4,393
456
-456
7,298
Development costs
-511
-554
-90
6
-1,149
Selling and distribution costs
-1,772
-1,577
-
-
-3,349
Management and administrative expenses
-596
-348
-549
456
-1,037
Other operating income and costs, net
15
88
-
-
103
EBITA*
41
2,002
-183
6
1,866
Amortization and impairment of acquired intan-
gible assets
-158
-77
-
-
-235
Gain (loss) on divestment of operations etc.
-5
1
-
-
-4
Operating profit (loss)
-122
1,926
-183
6
1,627
Share of profit (loss) in associates
-6
-
-3
-
-9
Financial items
8
13
-27
-
-6
Profit (loss) before tax
-120
1,939
-213
6
1,612
Tax on profit (loss)
-2
-443
103
-1
-343
Profit (loss) for the year
-122
1,496
-110
5
1,269
Impairment losses and reversals regarding intan-
gible assets and property, plant and equipment
recognized in the income statement
-46
-90
-
-
-136
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2.1 Segment disclosures (Continued)
Other segment disclosures 2021
DKK million
GN Hearing
GN Audio
Other GN
Eliminations
Consolidated
total
Incurred development costs
-538
-957
-91
-
-1,586
Capitalized development costs
316
439
-
-
755
Amortization, impairment and depreciation of
development projects***
-357
-207
-
6
-558
Expensed development costs
-579
-725
-91
6
-1,389
EBITDA**
806
2,299
-63
6
3,048
Depreciation and software amortization
-163
-135
-131
-
-429
EBITA*
643
2,164
-194
6
2,619
* Please refer to Key Ratio Definitions on page 126 for definition of EBITA
** Excluding gain (loss) on divestments of operations etc. but including amortization of development projects
*** Does not include amortization and impairment of acquired intangible assets, as per definition of EBITA on page 126
Cash flow statement 2021
DKK million
GN Hearing
GN Audio
Other GN
Eliminations
Consolidated
total
Cash flow from operating activities before
changes in working capital
1,119
2,548
-55
-
3,612
Cash flow from changes in working capital
-410
-336
36
-
-710
Cash flow from operating activities before fi-
nancial items and tax
709
2,212
-19
-
2,902
Cash flow from investing activities:
Development projects
-316
-439
-
-
-755
Other investing activities
-278
-178
-553
-
-1,009
Cash flow from operating and investing activi-
ties before financial items and tax
115
1,595
-572
-
1,138
Tax and financial items
-267
-311
-212
-
-790
Cash flow from operating and investing activi-
ties (free cash flow)
-152
1,284
-784
-
348
Cash flow from M&A activities
-350
-4
-
-
-354
Free cash flow excl. M&A
198
1,288
-784
-
702
Other segment disclosures 2020
DKK million
GN Hearing
GN Audio
Other GN
Eliminations
Consolidated
total
Incurred development costs
-558
-614
-90
-
-1,262
Capitalized development costs
345
293
-
-
638
Amortization, impairment and depreciation of
development projects***
-298
-233
-
6
-525
Expensed development costs
-511
-554
-90
6
-1,149
EBITDA**
222
2,124
-68
6
2,284
Depreciation and software amortization
-181
-122
-115
-
-418
EBITA*
41
2,002
-183
6
1,866
Cash flow statement 2020
DKK million
GN Hearing
GN Audio
Other GN
Eliminations
Consolidated
total
Cash flow from operating activities
before changes in working capital
695
2,499
-54
-
3,140
Cash flow from changes in working capital
187
157
24
-
368
Cash flow from operating activities
before financial items and tax
882
2,656
-30
-
3,508
Cash flow from investing activities:
Development projects
-345
-293
-
-
-638
Other investing activities
-439
-234
-176
-
-849
Cash flow from operating and investing
activities before financial items and tax
98
2,129
-206
-
2,021
Tax and financial items
-10
-507
215
-
-302
Cash flow from operating and investing
activities (free cash flow)
88
1,622
9
-
1,719
Cash flow from M&A activities
-39
-107
-
-
-146
Free cash flow excl. M&A
127
1,729
9
-
1,865
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2.1 Segment disclosures (Continued)
Balance sheet 2021
DKK million
GN Hearing
GN Audio
Other GN
Eliminations
Consolidated
total
Assets
Goodwill
4,170
1,187
-
-
5,357
Development projects
1,014
708
-
-9
1,713
Other intangible assets
280
332
590
-1
1,201
Property, plant and equipment
478
365
457
-
1,300
Investments in associates
119
-
34
-
153
Deferred tax assets
367
145
-
-77
435
Loans to dispensers and ownership interests
969
-
-
-
969
Other financial assets
430
-
-
-
430
Total non-current assets
7,827
2,737
1,081
-87
11,558
Inventories
743
1,205
-
-
1,948
Trade receivables
1,124
2,169
-
-
3,293
Receivables from group companies*
-
2,198
-
-2,198
-
Tax receivables
66
126
9
-124
77
Other receivables
251
162
161
-106
468
Cash and cash equivalents
250
197
5,761
-
6,208
Total current assets
2,434
6,057
5,931
-2,428
11,994
Total assets
10,261
8,794
7,012
-2,515
23,552
DKK million
GN Hearing
GN Audio
Other GN
Eliminations
Consolidated
total
Equity and Liabilities
Equity
5,918
5,110
-4,791
-8
6,229
Bank loans and issued bonds
-
-
9,513
-
9,513
Lease liabilities, non-current
193
67
51
-
311
Pension obligations
-
7
-
-
7
Provisions, non-current
79
138
4
-
221
Deferred tax liabilities
268
184
29
-79
402
Other non-current liabilities
475
250
2
-
727
Total non-current liabilities
1,015
646
9,599
-79
11,181
Bank loans
1
8
1,606
-
1,615
Lease liabilities, current
78
37
12
-
127
Trade payables
235
940
105
-
1,280
Amounts owed to group companies*
1,895
-
303
-2,198
-
Tax payables
66
130
-
-124
72
Provisions, current
180
164
-
-
344
Other current liabilities
873
1,759
178
-106
2,704
Total current liabilities
3,328
3,038
2,204
-2,428
6,142
Total equity and liabilities
10,261
8,794
7,012
-2,515
23,552
*Net amount
Eliminations in the balance sheet primarily concern tax and intercompany balances
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2.1 Segment disclosures (Continued)
Balance sheet 2020
DKK million
GN Hearing
GN Audio
Other GN
Eliminations
Consolidated
total
Assets
Goodwill
3,257
1,108
-
-
4,365
Development projects
1,084
426
-
-15
1,495
Other intangible assets
402
377
369
-1
1,147
Property, plant and equipment
513
306
238
-
1,057
Investments in associates
499
-
24
-
523
Deferred tax assets
351
143
-
-102
392
Loans to dispensers and ownership interests
759
-
-
-
759
Other financial assets
428
-
-
-
428
Total non-current assets
7,293
2,360
631
-118
10,166
Inventories
650
1,072
-
-
1,722
Trade receivables
972
1,704
-
-
2,676
Receivables from group companies*
-
1,334
593
-1,927
-
Tax receivables
27
171
-
-135
63
Other receivables
221
99
149
-71
398
Cash and cash equivalents
246
181
1,230
-
1,657
Total current assets
2,116
4,561
1,972
-2,133
6,516
Total assets
9,409
6,921
2,603
-2,251
16,682
DKK million
GN Hearing
GN Audio
Other GN
Eliminations
Consolidated
total
Equity and Liabilities
Equity
4,904
3,599
-3,313
-12
5,178
Bank loans and issued bonds
-
-
5,069
-
5,069
Lease liabilities, non-current
211
78
35
-
324
Pension obligations
30
6
-
-
36
Provisions, non-current
115
88
-
-
203
Deferred tax liabilities
266
148
32
-84
362
Other non-current liabilities
331
151
-
-
482
Total non-current liabilities
953
471
5,136
-84
6,476
Bank loans
1
6
334
-
341
Lease liabilities, current
79
31
11
-
121
Trade payables
265
913
60
-
1,238
Amounts owed to group companies*
1,927
-
-
-1,927
-
Tax payables
78
139
193
-157
253
Provisions, current
176
157
-
-
333
Other current liabilities
1,026
1,605
182
-71
2,742
Total current liabilities
3,552
2,851
780
-2,155
5,028
Total equity and liabilities
9,409
6,921
2,603
-2,251
16,682
*Net amount
Eliminations in the balance sheet primarily concern tax and intercompany balances
Accounting policies
Segment Information
GN Store Nord’s Management has identified GN Hearing and GN Audio as the
reportable segments in the Group. GN Hearing is operating within the hearing
instrument industry, primarily producing and selling hearing instruments and
products related hereto.
GN Audio is a leading
supplier in the market for audio
and collaboration solutions including headsets, video cameras and speaker-
phones for professional use and selected consumer products
.
Segment information is based on the Group’s accounting policies. In the
Group, segment performance is evaluated on the basis of EBITA as defined
under key ratio definitions. Segment revenue and expense and segment
assets and liabilities comprise items directly attributable to a segment and
items that can be allocated to a seg
ment on a reasonable basis.
Other GN primarily reflects cost from Group Functions, including new
business opportunities and research projects under the supervision of the GN
Store Nord Strategy Committee, which are outside the reportable segments
in the Gr
oup. Furthermore, unallocated balance sheet items are included in
Other GN.
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2.2 Revenue and geographical information
Revenue disaggregation
Revenue is predominantly recognized at a point in time, and revenue
recognized over time is not significant. Revenue is in all material
respects related to sale of goods; hearing aid instruments, DKK 5,332
million (2020: DKK 4,725 million) and audio and collaboration
solutions, DKK 10,443 million (2020: DKK 8,724 million). Revenue is
attributed to countries on the basis of the customer's location. Only
the US represents a material single country and constitutes the vast
majority of revenue in North America. One distributor in the Audio
segment comprises more than 10% of the group's total revenue
amounting to DKK 2,891 million (2020: DKK 2,371 million).
Geographical information on assets
Assets are attributed to countries based on the domicile location of the
asset. Apart from Denmark only the US represents a material single
country and constitutes the vast majority of assets in North America.
Contract liabilities
GN Store Nord has recognized the following revenue-related contract
liabilities:
DKK million
2021
2020
Deferred revenue related to pre-paid extended war-
ranties (Other current liabilities and Other non
-current
liabilities)
167
125
Contract liabilities at December 31
167
125
Revenue recognized, included in contract
liabilities at
the beginning of the year
51
54
Revenue from contracts with customers
Intangible assets and property,
plant and equipment
GN Hearing
GN Audio
Consolidated total
Consolidated total
DKK million
2021
2020
2021
2020
2021
2020
2021
2020
Denmark
89
110
259
199
348
309
3,676
3,127
Europe
1,385
1,266
5,024
4,329
6,409
5,595
415
408
North America
2,524
2,276
3,161
2,620
5,685
4,896
5,020
4,091
Rest of World
1,334
1,073
1,999
1,576
3,333
2,649
460
438
Total
5,332
4,725
10,443
8,724
15,775
13,449
9,571
8,064
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2.2 Revenue and geographical information
(Continued)
Accounting policies
Revenue
Revenue from the sale of hearing aids and audio and collaboration solutions is
recognized in the income statement when the customer obtains control of the
goods. When considering at what point in time the customer obtains control
of the goods, a number of indicators are considered, including whether:
•
GN Store Nord has a present right to payment for the goods
•
The customer has legal title to the goods
•
The customer has physical possession of the goods
•
The customer has the significant risks and rewards of ownership of the
goods
•
The customer has accepted the goods
In the majority of sales, the customer obta
ins control of the goods either
upon shipment from a distribution hub or upon delivery to the customer.
The amount of revenue recognized varies with discounts and rebates offered
to customers. Discounts and rebates are estimated based on the expected
amou
nt to be provided to the customers and reduce revenues recognized.
Revenue is only recognized to the extent that it is highly probable that a
significant reversal will not occur. Revenue from contracts in which GN Store
Nord provides on
-going access to research against a fee and in which the
counterparty reasonably expects that GN Store Nord will continue to perform
research is recognized over the access period.
When goods are sold with a right of return, a refund liability and a right to the
returned prod
ucts are recognized as a provision and a current asset,
respectively. The refund liability is deducted from revenue and the right to the
returned products is offset in cost of sales. The portion of goods sold that is
expected to be returned is estimated based on historical product returns data.
The estimated amounts of both returns, discounts and rebates are reassessed
at each reporting date.
GN Store Nord typically provides warranties for general repairs of defects
that existed at the time of sale, as requ
ired by law. These assurance-type
warranties are accounted for as described in the accounting policies for
warranty provisions.
As part of a sales transaction, certain future services such as extended
warranties may be included. In case such service
-type warranties are sold, the
transaction price is allocated to the promised goods and services based on
stand
-alone selling prices. Observable prices are as far as possible used to
determine the stand
-alone selling prices but if such are not available a cost
pl
us a margin approach is used.
Extended warranties are initially recognized as contract liabilities in the
balance sheet and recognized in the income statement on a straight
-
line basis
over the term of the extended warranty period.
The typical payment terms
for customers is between 30 and 60 days. GN
Store Nord does not expect to have contracts with payment terms exceeding
one year. As a consequence, the transaction prices are not adjusted for the
time value of money. Revenue is measured excluding VAT, taxes
and granted
cash and quantity discounts in relation to the sale and expected returns of
goods.
Production Costs
Production costs comprise costs, including depreciation and salaries, incurred
in generating the revenue for the year. Production costs include
direct and in-
direct costs for raw materials and consumables, wages and salaries, inventory
write
-downs, maintenance and depreciation and impairment of production
plant and costs and expenses relating to the operation, administration and
management of fact
ories.
Development Costs
Development costs comprise costs, salaries, and depreciation of operating
assets and equipment directly or indirectly attributable to the Group’s
development activities. Furthermore, amortization and write
-down of
capitalized development projects are included as part of development costs.
Selling and Distribution Costs
Selling and distribution costs comprise costs relating to the sale and
distribution of products and services, including salaries, sales commissions,
advertising and marketing costs, depreciation and impairment, expected
losses on trade receivables etc.
Management and Administrative Expenses
Management and administrative expenses comprise expenses
incurred for management and administration. Administrati
ve expenses
include office expenses, depreciation and impairment, etc.
Other Operating Income and Costs, net
Other operating income and costs comprise items secondary to the principal
activities of the enterprises.
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2.2 Revenue and geographical information
(Continued)
2.3 Staff Costs
DKK million
2021
2020
Wages, salaries and remuneration
3,529
3,203
Pensions, defined benefit plans
5
6
Pensions, defined contribution plans
171
130
Other social security costs
339
320
Share-based incentives
50
77
Total
4,094
3,736
Included in:
Production costs and change in payroll costs included
in inventories
600
557
Development costs
852
705
Selling and distribution costs
2,042
1,929
Management and administrative expenses
599
543
Financial expenses
1
2
Total
4,094
3,736
Average number of employees
Number of employees, year-end
7,228
6,513
For information regarding remuneration of the Board of Directors and Executive Manage-
ment, please refer to note 5.2 Remuneration of the Board of
Directors and Executive Man-
agement
2.4 Government grants
As a consequence of COVID-19 several government grants have been
received by GN Store Nord during 2021 and 2020. Most of the grants
relate to compensation for fixed costs and compensation for salary
costs in GN Hearing and are recognized as a deduction from costs in
the following line items:
DKK million
2021
2020
Production costs
-
10
Development costs
-
34
Selling and distribution costs
10
26
Management and administrative expenses
4
23
Financial income
-
10
Total
14
103
Significant accounting estimates and judgments
Revenue recognition
Certain contracts with customers include a right of return and volume re-
bates that give rise to variable consideration. In estimating the variable
consideration GN Store Nord is required to use either the expected value
method or the most likely amount method based on which method better
predicts the amount of consideration to which it will be entitled. Significant
accounting estimates and judgments involve determining the portion of
expected returns of goods as well as the amount of discounts and rebates.
The portion of goods sold that is expected to be returned is estimated
based on historical product returns data.
In sales, where the customer obtains control of the goods upon delivery to
the customer, the significant judgments made in determining when the
customer obtains control of promised goods involve determining when a
customer has physical possession of the goods and when the customer has
accepted the goods due to uncertainty in transportation time.
Accounting policies
Government grants
Government grants are recognized when there is reasonable assurance
that the grant will be received and that all attached conditions will be
complied with. A grant relating to an expense item, is recognized on a
systematic basis over the periods that the related costs, for which it is
intended to compensate, are expensed. Government grants are presented
as a deduction from the relevant functional cost line items in the income
statement. Government grants that are receivable as compensation for
expenses or losses already incurred or for the purpose of giving immediate
financial support to the Group with no future related costs are recognized
in profit or loss in the period in which they become receivable.
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2.5 Tax
Tax on profit (loss)
DKK million
2021
2020
Tax on profit (loss)
Current tax for the year
-431
-485
Deferred tax for the year
-46
143
Effect of change in income tax rates
-6
-
Withholding tax
-
-1
Adjustment to current tax with respect to prior years
-3
-37
Adjustment to deferred tax with respect to prior years
5
37
Total
-481
-343
Reconciliation of effective tax rate
Danish tax rate
22.0%
22.0%
Effect of tax rates in foreign jurisdictions
1.0%
1.0%
Non-taxable income
-0.9%
-1.0%
Non-deductible expenses
1.7%
1.5%
Utilization of previously not recognized tax assets
-0.6%
0.0%
Withholding tax
0.0%
0.1%
Other, including provisions for uncertain tax positions*
-2.0%
-2.3%
Effective tax rate
21.2%
21.3%
Tax relating to other comprehensive income
Actuarial gains (losses)
-10
-
Adjustment of cash flow hedges
-8
3
Foreign exchange adjustments, etc.
-
11
Total
-18
14
*Other primarily relates to tax subsidies relating to R&D countered by provisions for uncer-
tain tax positions.
Deferred Tax
DKK million
2021
2020
Deferred tax, net
Deferred tax at January 1, net
30
-129
Adjustment with respect to prior years
5
37
Effect of change in income tax rates
-6
-
Addition of deferred tax on acquisition of enterprises
52
-
Deferred tax for the year recognized in profit (loss) for
the year
-46
143
Deferred tax for the year recognized in other compre-
hensive income for the year
-20
6
Tax related to share-based incentive plans
-3
4
Foreign exchange adjustments
21
-31
Deferred tax at December 31, net
33
30
Deferred tax is recognized in the balance sheet as
follows:
Deferred tax assets
435
392
Deferred tax liabilities
-402
-362
Deferred tax at December 31, net
33
30
Deferred tax, net relates to:
Intangible assets
-612
-527
Property, plant and equipment
20
42
Other securities
-2
-5
Current assets
113
130
Current liabilities
6
5
Intercompany liabilities
-
-2
Tax loss carryforwards
126
94
Provisions
330
272
Other
52
21
Total
33
30
Tax value of unrecognized tax assets
Other tax assets
3
15
Unrecognized tax assets at December 31
3
15
Unrecognized tax assets are based on the Group's expectations to the
future utilization of the tax assets. All tax losses carryforward have no
expiry date. Deferred tax, net includes DKK 35 million expected to be
utilized within 12 months (2020: DKK 20 million).
Repatriation of retained earnings from certain foreign subsidiaries,
however not planned or expected in the foreseeable future, may
trigger withholding tax liabilities up to DKK 64 million (2020:
DKK 45 million).
Accounting policies
Tax on profit (loss) for the year
The parent company is jointly taxed with all Danish subsidiaries. The cur-
rent Danish corporation tax is allocated between the jointly taxed compa-
nies in proportion to their taxable income. The jointly taxed companies are
taxed under the on-account tax scheme.
Tax for the year comprises current tax and changes in deferred tax for the
year. The tax expense relating to the profit (loss) for the year is recognized
in the income statement, and the tax expense relating to amounts recog-
nized in other comprehensive income is recognized in other comprehensive
income.
Current tax payable is recognized in current liabilities and deferred tax is
recognized in non-current liabilities. Tax receivable is recognized in current
assets and deferred tax assets are recognized in non-current assets.
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2.5 Tax (Continued)
Approach to tax and taxes paid
The tax GN pays is an important part of our wider economic and social
impact and a key mechanism by which GN contributes to the develop-
ment of the countries where we operate. GN is committed to paying
tax responsibly, complying with tax regulations and acknowledges its
responsibility to stakeholders to meet expectations of good tax prac-
tices.
The GN Tax Policy is reviewed annually and approved by the Board of
Directors. Please refer to our tax policy on the GN website:
www.gn.com/taxpolicy
.
We monitor and support the international initiatives building trust in
multinationals tax management and payments. In acting responsibly,
we disclose our main taxes paid on a regional level and for Denmark
separately. For the financial year 2021 our estimated corporate tax
payment amounts to DKK 571 million (2020: DKK 289 million).
GN is subject to taxation in the countries in which we operate. The tax
legislation and tax rates in these countries differ, impacting the tax we
pay. The allocation of taxes paid is based on the “principal model”,
which is in alignment with our operational and commercial activities
and is recognized by OECD as an acceptable transfer pricing model to
allocate taxable profits. The allocation is based on functions, assets,
and risks in every entity.
While acting responsibly, GN observes and complies with the
applicable international tax initiatives regarding reporting and
disclosure requirements. We continuously monitor the development to
consider our response to the proposed international disclosure
requirements.
Accounting policies
Deferred Tax
Deferred tax assets, including the tax base of tax loss carryforwards, are
recognized at the expected value of their utilization, either as a set-off
against tax on future income or as a set-off against deferred tax liabilities
in the same legal tax entity and jurisdiction. Deferred tax is measured using
the balance sheet liability method on all temporary differences between
the carrying amount and the tax base of assets and liabilities. Deferred tax
is not recognized on goodwill unless this is deductible for tax purposes.
Deferred tax is measured according to the tax rules and at the tax rates
applicable in the respective countries at the balance sheet date when the
deferred tax is expected to crystallize as current tax. The change in
deferred tax as a result of changes in tax rates is recognized in the income
statement. If a tax deduction on computation of the taxable income in
Denmark or in foreign jurisdictions is obtained as a result of share-based
payment programs, the tax benefit for the deduction is recognized directly
in the balance sheet. Deferred tax assets are subject to annual impairment
tests and are recognized only to the extent that it is probable that the
assets will be utilized.
Significant accounting estimates and judgments
Deferred tax
Management has made judgments in determining the Company’s valuation
of tax, deferred tax assets and deferred tax liabilities and the extent to
which deferred tax assets are recognized. GN Store Nord recognizes
deferred tax assets only to the extent that it is probable that taxable profit
will be available against which the temporary differences and unused tax
losses can be utilized.
Regions
Nature of Activity
Number of
employees,
end of period
EBT IFRS
(DKK million)
Effective tax
rate
Tax paid
(DKK million)
Accrued tax
(DKK million)
Denmark
Principal
1,710
1,441
19.9%
402
239
Europe
R&D, Production, distribution and sales
957
256
35.2%
64
52
North America
R&D, Production, distribution and sales
1,601
244
12.3%
23
16
Rest of World
R&D, Production, distribution and sales
2,960
330
22.4%
82
76
Total
Total GN Group
7,228
2,271
21.2%
571
383
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2.6 Income statement classified by function
The group presents the income statement based on a classification of
costs by function. However, in order to present EBITA in the income
statement, which is the measure of profit used by Management,
amortization and impairment of acquired intangible assets are
separated from the individual functions and presented as a separate
line item. If amortization and impairment of acquired intangible assets
are allocated to the individual line items by function, the income
statement will present as follows:
DKK million
2021
2020
Revenue
15,775
13,449
Production costs
-7,093
-6,151
Gross profit
8,682
7,298
Development costs
-1,454
-1,232
Selling and distribution costs
-3,645
-3,501
Management and administrative expenses
-1,205
-1,037
Other operating income and costs, net
15
103
Gain (loss) on divestment of operations etc.
4
-4
Operating profit (loss)
2,397
1,627
In the above income statement amortization and im-
pairment of acquired intangible assets has been
allo-
cated to functions as follows:
Development costs
-65
-83
Selling and distribution costs
-161
-152
Amortization and impairment of acquired intangible
assets
-226
-235
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Introduction
Insights into the assets that form the basis for the activities in GN
Store Nord, and the related liabilities. Most of these are included in
invested capital and some in net working capital.
3.1 Intangible assets 87
3.2 Property, plant and equipment 90
3.3 Leases 92
3.4 Depreciation, amortization and impairment 93
3.5 Other non-current assets 94
3.6 Inventories 96
3.7 Trade receivables 97
3.8 Provisions 98
Section 3 -
Operating assets and liabilities
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3.1 Intangible assets
The carrying amount of In-house development projects and software
include development in progress of DKK 684 million and DKK 412
million respectively (2020: DKK 458 million and DKK 192 million).
Goodwill
Additions during the year of DKK 703 million relate to the cash-
generating units GN Hearing with DKK 703 million (2020: DKK 14
million) and GN Audio DKK 0 million (2020: DKK 0 million) cf. note 5.1
Acquisition and divestment of companies and operations.
Management performs an annual impairment test of the carrying
amount of goodwill. The impairment test covers the Group's cash-
generating units (CGU) to which the carrying amount of goodwill is
allocated.
DKK million
Goodwill
In-house devel-
opment pro-
jects
Customer rela-
tionships
Software
Patents and
rights
Other
Total
Cost at January 1
4,365
4,787
593
1,022
782
738
12,287
Additions on company acquisitions
703
-
9
3
48
2
765
Additions
-
755
-
311
-
1
1,067
Disposals
-12
-127
-120
-60
-13
-78
-410
Transfers
-
-
-
21
-
-
21
Foreign exchange adjustments
301
-
44
8
11
30
394
Cost at December 31
5,357
5,415
526
1,305
828
693
14,124
Amortization and impairment at January 1
-
-3,292
-385
-635
-489
-479
-5,280
Amortization
-
-533
-50
-98
-63
-48
-792
Disposals
-
127
93
58
13
69
360
Impairment
-
-4
-
-
-2
-63
-69
Transfers
-
-
-
-4
-
-
-4
Foreign exchange adjustments
-
-
-30
-9
-11
-18
-68
Amortization and impairment at December 31
-
-3,702
-372
-688
-552
-539
-5,853
Carrying amount at December 31, 2021
5,357
1,713
154
617
276
154
8,271
Cost at January 1
4,749
4,120
715
907
783
774
12,048
Additions on company acquisitions
14
-
-
-
-
-
14
Additions
-
638
-
156
3
61
858
Disposals
-10
-
-56
-
-
-18
-84
Transfers
-
29
-
-28
-
-1
-
Foreign exchange adjustments
-388
-
-66
-13
-4
-78
-549
Cost at December 31
4,365
4,787
593
1,022
782
738
12,287
Amortization and impairment at January 1
-
-2,751
-368
-584
-410
-513
-4,626
Amortization
-
-413
-66
-90
-83
-49
-701
Disposals
-
-
47
-
-
17
64
Impairment
-
-99
-34
-
-
-3
-136
Transfers
-
-29
-
28
-
1
-
Foreign exchange adjustments
-
-
36
11
4
68
119
Amortization and impairment at December 31
-
-3,292
-385
-635
-489
-479
-5,280
Carrying amount at December 31, 2020
4,365
1,495
208
387
293
259
7,007
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3.1 Intangible assets (Continued)
Carrying amount
of goodwill
DKK million
Pre-tax discount
rate
%
Weighted average
cost of capital
%
2021
2020
2021
2020
2021
2020
CGUs
GN Hearing
4,170
3,257
8
8
7
7
GN Audio
1,187
1,108
10
10
8
8
Total
5,357
4,365
In the impairment test, the discounted future cash flows of each CGU
(the value in use) were compared with the carrying amounts. Future
cash flows are based on the budget for 2022, market forecasts for
2023 – 2026, strategy plans, etc. approved by the Board of Directors.
Budgets and strategy plans are based on specific assumptions for the
individual CGU regarding sales, operating profit, working capital, in-
vestments in non-current assets, etc. The calculations apply expected
growth in the terminal period of 2.0% p.a. (2020: 2.0% p.a.).
The GN Hearing segment expects to deliver strong organic growth
next year. The GN Audio segment is expecting to maintain their strong
position in the growing market for audio and collaboration solutions.
The market growth in the Hearing Aid industry and the Audio market is
driven by these main factors:
GN Hearing:
• Shifting demographics with a growing elderly and more affluent
population
• Intensified noise pollution drives the increased prevalence of hear-
ing loss
• Increased penetration rates as more people with a hearing loss will
use hearing aids in the future, and
• Increased use of two hearing aids instead of only one, which is rela-
tively common today
GN Audio:
• Continued transition from desk phones to Unified Communications
• Video playing an increasingly larger role in future experiences
• Increasing flexibility requirements by office-workers, demands for
productivity, focus on cloud-based solutions, and general technol-
ogy improvements
• A significant part of our future growth is expected to come from
the increased penetration of professional headsets
• UC technology has the potential to reduce travel cost and carbon
footprint by the companies that adopt the technology
The expected revenue growth in the GN Hearing segment and
GN Audio segment is based on the current differentiated product offer-
ing with unique technology as well as future product launches. Based
on the impairment test and related assumptions, Management has not
identified any goodwill impairment at December 31, 2021. No likely
change in the assumptions applied will result in an impairment.
Development projects and software
In-progress and completed development projects comprise
development and design of hearing instruments and audio and
collaboration solutions. Most development projects are expected to be
completed in the coming years, after which product sales and
marketing can be commenced. Management performs at least one
annual impairment test of the carrying amount of recognized
development costs. The recoverable amount is assessed based on sales
forecasts. During the year, impairments of DKK 4 million related to
projects were recognized. In Management's assessments, the
recoverable amount exceeds the carrying amount at December 31,
2021.
Software comprises development, design and test of production and
planning software and reporting systems, business intelligence etc.
Implementation of these systems is expected to optimize internal pro-
cedures and processes. In 2021, Management assessed that the ex-
pected useful lives were reflected in the carrying amounts at
December 31, 2021.
Customer relationships
Customer relationships primarily comprise acquired customer relation-
ships. The most significant customer relationship relates to the acquisi-
tion of Audigy, BlueParrot and US Beltone.
Patents and rights
Patents and rights primarily comprise acquired patents and rights. The
most significant patents and rights relate to technologies for the de-
velopment of new hearing instruments for GN Hearing and rights to
the use of certain technologies for development of headsets and video
communications solutions. During the year, impairments of DKK 2 mil-
lion related to patents were recognized. In Management's assessments,
the recoverable amount exceeds the carrying amount at December 31,
2021.
Other
The Group's other intangible assets comprise DKK 60 million (2020:
DKK 71 million) related to trademarks, DKK 94 million (2020: DKK 142
million) related to supply agreements and DKK 0 million (2020: DKK 46
million) related to know-how. During the year, impairments of DKK 63
million related to trademarks, know-how and other acquired
intangibles were incurred in connection with a review of expectations
and budgets for a number of assets. In Management's assessments, the
recoverable amount exceeds the carrying amount at December 31,
2021.
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3.1 Intangible assets (Continued)
Accounting policies
Goodwill
At the acquisition date goodwill is recognized in the balance sheet at cost as
described under Business combinations. Subsequently, goodwill is
measured
at cost less accumulated impairment losses. Goodwill is not amortized but is
tested for impairment at least once a year. The carrying amount of goodwill is
allocated to the Group’s cash
-generating units at the acquisition date.
Identification of c
ash-generating units is based on how Management monitor
the operation in the Management reporting.
As a result of the integration of acquired enterprises in the existing group,
Management assesses that the smallest cash
-generating units to which the
carryi
ng amount of goodwill can be allocated are: GN Hearing and GN Audio.
Development projects, Software, Patents, Licenses and
Other Intangible Assets
Intangible assets are measured at cost less accumulated amortization and
im-
pairment
. Amortization is provided on a straight-line basis over the expected
useful lives of the assets. When changing the depreciation period, the effect
on the depreciation is recognized prospectively as a change in accounting esti-
mates. Amortization and impairment is recognized in the
income statement
as production costs, development costs, distribution costs and administrative
expenses.
The expected useful lives are as follows:
Completed development projects
1
-5 years
Software
1
-7 years
Customer relationships
up to 8
years
Patents, licenses, trademarks and other
intellectual property rights
up to 20 years
Development projects that are clearly defined and identifiable, where the
technical utilization degree, sufficient resources and a potential future market
or deve
lopment opportunities in the Company is evidenced, and where
GN
Store Nord intends to produce, market or use the project, are recognized
as intangible assets if it is probable that costs incurred will be covered by fu-
ture earnings. The cost of such develop
ment projects includes direct wages,
salaries, materials and other direct and indirect costs attributable to the de-
velopment projects. Amortization and write
-down of such capitalized devel-
opment projects are started at the date of completion and are includ
ed in de-
velopment costs. Other development costs are recognized in the income
statement as incurred.
Gains or losses on the disposal of intangible assets are determined as the
difference between the selling price less selling costs and the carrying amount
at the disposal date, and are recognized in the income statement as other
operating income or other operating costs, respectively.
Impairment of Goodwill and in
-progress development projects
Goodwill is subject to at least one annual impair
ment test. Similarly, in-
progress development projects are tested for impairment
at least annually.
An impairment test is also performed whenever there is an indication that an
asset may be impaired.
The carrying amount of goodwill is tested for impairment together with the
other non
-current assets in the cash-generating unit to which the goodwill is
allocated. Goodwill is written down to the recoverable amount if the carrying
amount is higher than the
computed recoverable amount. The recoverable
amount is computed as the present value of the expected future net cash
flows from the enterprises or activities to which the goodwill is allocated.
Recognition of impairment losses in the income statement
An
impairment loss is recognized if the carrying amount of an asset or its
cash
-generating unit exceeds the recoverable amount of the asset or the
cash
-generating unit. Impairment of goodwill is recognized in a separate line
item in the income statement. Impa
irment of goodwill is not reversed.
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3.1 Intangible assets (Continued)
3.2 Property, plant and equipment
Significant accounting estimates and judgments
Goodwill
Determining whether goodwill is impaired requires a comparison of the
recoverable amount with the carrying amount. The recoverable amount is
determined as the net present value of the future cash flows expected to
arise from the cash generating unit to which goodwill is allocated.
Development projects
Development projects are measured at cost less accumulated amortization
and impairment. An impairment test is performed of the carrying amount
of recognized development projects. The impairment test is based on
assumptions regarding strategy, product life cycle, market conditions,
discount rates and budgets, etc., after the project has been completed and
production has commenced. If market-related assumptions etc., are
changed, development projects may have to be written down.
Management examines and assesses the underlying assumptions when
determining whether or not the carrying amount should be written down.
In addition, Management continuously assess the useful lives of its
products to ensure that amortization of development projects reflects the
useful lives.
DKK million
Factory
and office
buildings
Leasehold
improvements
Plant and
machinery
Operating
assets and
equipment
Assets
under
construction
Total
Cost at January 1
419
180
780
691
30
2,100
Additions on company acquisitions
-
-
-
4
-
4
Additions
211
21
20
70
135
457
Disposals
-
-11
-37
-49
-
-97
Transfers
-
-
147
-21
-147
-21
Foreign exchange adjustments
6
12
13
17
-
48
Cost at December 31
636
202
923
712
18
2,491
Depreciation and impairment at January 1
-213
-137
-567
-559
-
-1,476
Depreciation
-22
-14
-109
-54
-
-199
Disposals
-
10
37
46
-
93
Transfers
-
-
-
4
-
4
Foreign exchange adjustments
-5
-10
-10
-13
-
-38
Depreciation and impairment at December 31
-240
-151
-649
-576
-
-1,616
Carrying amount at December 31, 2021
396
51
274
136
18
875
Leased assets, c.f. note 3.3
385
-
-
40
-
425
Total carrying amount at December 31, 2021
781
51
274
176
18
1,300
Cost at January 1
442
172
940
412
36
2,002
Additions
3
19
17
68
114
221
Disposals
-6
-10
-34
-44
-
-94
Transfers
-18
-
-133
271
-120
-
Foreign exchange adjustments
-2
-1
-10
-16
-
-29
Cost at December 31
419
180
780
691
30
2,100
Depreciation and impairment at January 1
-213
-134
-735
-325
-
-1,407
Depreciation
-18
-13
-100
-55
-
-186
Disposals
6
9
32
44
-
91
Transfers
10
-
227
-237
-
-
Foreign exchange adjustments
2
1
9
14
-
26
Depreciation and impairment at December 31
-213
-137
-567
-559
-
-1,476
Carrying amount at December 31, 2020
206
43
213
132
30
624
Leased assets, c.f. note 3.3
391
-
-
42
-
433
Total carrying amount at December 31, 2020
597
43
213
174
30
1,057
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3.2 Property, plant and equipment
(Continued)
Accounting policies
Property, plant and equipment
Land and buildings, plant and machinery and fixtures and fittings, other plant
and equipment are measured at cost less accumulated depreciation and
impairment losses. Cost comprises the purchase price and costs of materials,
components, suppliers, direct
wages and salaries and indirect production
costs until the date when the asset is available for use. Liabilities related to
dismantling and removing the asset and restoring the site on which the asset
is located are added to the cost. Where individual comp
onents of an item of
property, plant and equipment have different useful lives, they are accounted
for as separate items, which are depreciated separately.
Depreciation is provided on a straight
-line basis over the expected useful lives
of property, plant
and equipment. The expected useful lives are as follows:
Buildings and installations (land is not depreciated)
10
-50 years
Leasehold improvements
5
-20 years
Plant and machinery
1
-7 years
Operating assets and equipment
2
-7 years
The basis of depreciation is calculated as the residual value of the asset less
impairment losses. The residual value is determined at the acquisition date
and reassessed annually. If the residual value exceeds the carrying amount,
depreciation is disconti
nued. When changing the depreciation period or the
residual value, the effect on the depreciation is recognized prospectively as a
change in accounting estimates. Depreciation and impairment is recognized in
the income statement as production costs, develo
pment costs, distribution
costs and administrative expenses.
Expenses for repairs and maintenance of property, plant and equipment are
included in the income statement. Gains or losses on disposal or scrapping of
an item of property, plant and equipment a
re determined as the difference
between the sales price reduced by costs related to dismantling and removing
the asset, selling costs and costs related to restoring the site on which the
asset is located and the carrying amount. Gains or losses are recognized in the
income statement as Other operating income or Other operating costs,
respectively.
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3.3 Leases
GN Store Nord’s leases mainly consist of property leases of e.g. offices
but also include cars and office equipment. Rental contracts are typi-
cally made for fixed periods but may have extension options. Contracts
may contain both lease and non-lease components. In such cases the
consideration in the contract is allocated to the lease and non-lease
components based on their relative stand-alone prices. Lease terms are
negotiated on an individual basis and contain a wide range of different
terms and conditions.
Lease liabilities
DKK million
2021
2020
Contractual maturity analysis of lease liabilities:
Less than one year
134
129
Between one and three years
180
185
More than three years
144
157
Total
458
471
The maturity analysis is based on non-discounted cash flows.
Amounts expensed in the income statement and total cash outflow
DKK million
2021
2020
Interest expense on lease liabilities
10
10
Expenses for low-value assets and short-term leases
13
17
Cash outflow re. lease liabilities
132
141
Total cash outflow for leases
155
168
Significant accounting estimates and judgments
Leases
In determining the lease term, management considers all facts and
circumstances that create an economic incentive to exercise an extension
option, or not exercise a termination option. Extension options (or periods
after termination options) are only included in the lease term if the lease is
reasonably certain to be extended (or not terminated). The assessment is
reviewed if a significant event or a significant change in circumstances
occurs which affects this assessment and that is within the control of the
lessee.
Right-of-use assets from leases included in property, plant and equipment
2021
2020
DKK million
Factory
and office
buildings
Operating
assets and
equipment
Total
Factory
and office
buildings
Operating
assets and
equipment
Total
Carrying amount at January 1
391
42
433
441
40
481
Additions
128
19
147
86
30
116
Remeasurements
-31
-3
-34
8
-4
4
Depreciation
-114
-18
-132
-121
-23
-144
Foreign exchange adjustments
11
-
11
-23
-1
-24
Carrying amount at December 31
385
40
425
391
42
433
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3.3 Leases (continued)
3.4 Depreciation, amortization
and impairment
DKK million
2021
2020
Depreciation, amortization and impairment for the year of prop-
erty, plant and equipment (incl. leased assets) and intangible as-
sets are recognized in the income statement as follows:
Production costs
-132
-143
Development costs
-558
-525
Selling and distribution costs
-88
-115
Management and administrative expenses
-188
-149
Amortization and impairment of acquired intangible assets
-226
-235
Total
-1,192
-1,167
Amortization of intangible assets is recognized in the income state-
ment as follows:
Development costs
-535
-413
Selling and distribution costs
-2
-3
Management and administrative expenses
-94
-87
Amortization and impairment of acquired intangible assets
-161
-198
Total
-792
-701
Impairment of intangible assets is recognized in the income state-
ment as follows:
Development costs
-4
-99
Amortization and impairment of acquired intangible assets
-65
-37
Total
-69
-136
Accounting policies
Leases
Leases are recognized as a right
-of-use asset and a corresponding liability at
the date at which the leased asset is available for use by the group. Each lease
payment is allocated between the liability and finance cost. The finance cost
is charged to prof
it or loss over the lease period so as to produce a constant
periodic rate of interest on the remaining balance of the liability for each
period. The right
-of use asset is depreciated over the shorter of the asset's
useful life and the lease term on a stra
ight-line basis.
Assets and liabilities arising from a lease are initially measured on a present
value basis. Lease liabilities include the net present value of the following
lease payments:
•
fixed payments (including in-substance fixed payments), less any lease
incentives receivable
•
variable lease payment that are based on an index or a rate
•
amounts expected to be payable by the lessee under residual value
guarantees
•
the exercise price of a purchase option if the lessee is reasonably certain
to exercise that option, and
•
payments of penalties for terminating the lease, if the lease term reflects
the lessee exercising that option
The lease payments are discounted using the interest rate implicit in the
lease. If that rate cannot be determined, the lessee’s incremental borrowing
rate is used, being the rate that the lessee would have to pay to borrow the
funds necessary to obtain an
asset of similar value in a similar economic
environment with similar terms and conditions. Right
-of-use assets are
measured at cost comprising the following:
•
the amount of the initial measurement of lease liability
•
any lease payments made at or before the commencement date less any
lease incentives received
•
any initial direct costs, and
•
restoration costs
Payments associated with short
-term leases and leases of low-value assets
are recognized on a straight
-line basis as an expense in profit or loss. Short-
term leases are leases with a lease term of 12 months or less. Low
-value
assets comprise e.g. IT
-equipment and small items of office furniture.
Extension and termination options
Extension and termination options are included in a number of leases acr
oss
the group. These terms are used to maximize operational flexibility in terms
of managing contracts
.
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3.5 Other non-current assets
DKK million
2021
2020
Loans to dispensers of GN Hearing products
529
443
Pre-paid discounts
210
198
Ownership interests
230
118
RAP, SIP and DCP
356
280
Pension assets
15
-
Other
59
148
Total
1,399
1,187
RAP (Retirement Advantage Plan) and SIP (Savings and Investment
Plan) are programs in which customers earn funds based on purchases
made. DCP (Deferred Compensation Plan) is a program in which Man-
agement in certain foreign subsidiaries may choose to defer compensa-
tion. The amounts invested by the Group on behalf of customers and
Management are recognized in Other non-current assets. The Group’s
liabilities related to the programs are recognized in Other non-current
liabilities at DKK 277 million (2020: DKK 230 million).
All ownership interests are accounted for at fair value through profit or
loss.
Dispenser loans are provided to dispensers of GN Hearing products in
order to support their future growth. The majority of dispenser loans is
related to dispensers in the US. GN Hearing's assessment of credit risk
associated with non-current loans to dispensers depends primarily on
change in payment behavior and current economic conditions. Before a
loan is extended, the creditworthiness of the individual dispenser is
analyzed. Calculating the expected credit loss rates, GN Store Nord
considers historical loss rates for each category of dispensers, and
provides for credit losses against loans to customers by comparing the
development in the actual loan balance to the agreed development in
the loan balance.
The table below illustrates how the 12-month and lifetime expected
credit loss are calculated for dispenser loans and how the credit risk
exposure on dispenser loans are grouped by GN Store Nord’s internal
credit rating:
2021
2020
Expected credit
loss rate
Estimated gross
carrying
amount at
default
Carrying
amount (net of
loss allowance)
Expected credit
loss rate
Estimated gross
carrying
amount at
default
Carrying
amount (net of
loss allowance)
GN Store Nord internal credit rating
%
DKK million
DKK million
%
DKK million
DKK million
Performing
12-month expected credit loss
3%
545
529
3%
458
443
Underperforming
Lifetime expected credit losses
100%
143
-
100%
128
-
Write-off
Assets derecognized through the income statement
100%
17
-
100%
41
-
Total dispenser loans at December 31
705
529
627
443
The 12month and lifetime expected credit losses have developed as follows:
DKK million
Performing
(12 month ECL)
Underperforming
(lifetime ECL)
Total
Opening loss allowance as at January 1, 2021
-15
-128
-143
Transferred to underperforming (lifetime ECL)
1
-27
-26
New dispenser loans, net
-2
-
-2
Write-off
-
17
17
Changes in model/risk parameters
-
-
-
Foreign exchange adjustments and other changes
-
-5
-5
Closing loss allowance as at December 31, 2021
-16
-143
-159
Opening loss allowance as at January 1, 2020
-15
-116
-131
Transferred to underperforming (lifetime ECL)
2
-58
-56
New dispenser loans
-2
-
-2
Write-off
-
41
41
Changes in model/risk parameters
-
-5
-5
Foreign exchange adjustments and other changes
-
10
10
Closing loss allowance as at December 31, 2020
-15
-128
-143
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3.5 Other non-current assets (Continued)
Accounting policies
Loans to
dispensers
Loans to dispensers and other receivables are measured at amortized cost
less an allowance for expected credit losses. Both loans to dispensers and
other receivables are held for collection of contractual cash flows and those
cash flows represen
t solely payments of principal and interest.
Ownership Interests and savings plans
Ownership interests between 20% and 50% in unlisted enterprises in which
the Group does not exercise significant influence on the financial and operat-
ing policies are recogn
ized under non-current assets at fair value. Gains and
losses on such ownership interests will either be recorded under financial
items in the income statement or in other comprehensive income. This will de-
pend on the Group’s irrevocable election at the ti
me of initial recognition to
account for the ownership interests at fair value through profit (loss) or other
comprehensive income.
Where the Group has elected to present fair value gains and losses on owner-
ship interests in other comprehensive income, th
ere is no subsequent reclassi-
fication of fair value gains and losses to the income statement following the
derecognition of the investment. Changes in the fair value of ownership inter-
ests at fair value though profit or loss are recognized in financial ite
ms in the
income
statement.
The savings plans RAP, SIP and DCP are measured at fair value through profit
or loss.
Impairment of dispenser loans
The impairment methodology applied to calculate expected credit losses
associated with dispenser loans carried at amortized cost depends on whether
there has been a significant increase in credit risk. Loss allowances on
dispenser loans are measured equal to 12
-
month expected credit losses, if the
Significant accounting estimates and judgments
Financial support arrangements
GN Store Nord grants loans to dispensers and acquires ownership interests
in dispensers. The agreements are typically comprehensive, complex and
cover several aspects of the relationship between the parties. Management
assesses the recognition and classification of income and expenses for each
of these agreements, including whether the agreement represent a dis-
count on future sales. Management also assesses whether current eco-
nomic conditions and changes in customers' payment behavior could indi-
cate impairment of the outstanding balances.
Ownership Interests
When considering whether or not GN Hearing exercises significant influ-
ence in unlisted enterprises a number of judgments are made. These judg-
ments include considering:
• Representation on the board of directors
• Participation in policy-making processes
• Material transactions between the entity and GN
• Interchange of managerial personnel
• Provision of essential technical information
credit risk has not increased significantly since initial recognition. If the credit
risk has increased significantly, the loss allowance will be measured at an
amount equal to lifetime expected credit losses.
The calculation of 12
-month expected credit losses on dispenser loans are
based on a weighted average of historica
l annual losses on customers.
Payment plans are agreed with dispensers when issuing loans to these. The
credit risk of loans to dispensers is considered to have increased significantly
since initial recognition when actual loan balances differ from the agr
eed
development in loan balances with more than 40%. At this point the loan is
considered to be in default and credit impaired.
The calculation of lifetime expected credit losses on dispenser loans is based
on the difference between the development in the
actual loan balances and
the agreed development in loan balances. The allowances are increased in
steps if the difference between the actual loan balance and the agreed devel-
opment in loan balances increases.
Indicators that there is no reasonable expectation of recovery of a dispenser
loan include bankruptcy, change of control and change in the payment
behavior or financial situation of the dispenser. In such cases a full or partial
write
-off of a dispenser loan will be recognized by derecognizing the asset.
Where recoveries are made, these are recognized in the income statement.
Impairment of Pre
-paid discounts
The carrying amount of Pre
-paid discounts is subject to an annual test for
indications of impairmen
t. When there is an indication that assets may be
impaired, the recoverable amount of the asset is determined.
Recognition of impairment losses in the income statement
Impairment losses are recognized in the income statement in the relevant
functional lin
e items. Impairment of dispenser loans are reversed only to the
extent of changes in the assumptions and estimates underlying the impair-
ment calculation.
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3.6 Inventories
DKK million
2021
2020
Raw materials and consumables
660
449
Work in progress
35
24
Finished goods and merchandise
1,253
1,249
Total
1,948
1,722
The above includes write-downs amounting to
-172
-153
Costs of goods sold included in Production Costs
-6,512
-5,547
Accounting policies
Inventories
Inventories are measured at cost in accordance with the FIFO-principle.
Inventories in GN Hearing are measured at cost using the standard cost
method. Standard costs take into account normal levels of raw materials
and consumables, staff costs, efficiency and capacity utilization. Standard
costs are reviewed regularly and adjusted in accordance with the FIFO-
principle.
Raw materials and goods for resale are measured at cost, comprising pur-
chase price plus delivery costs.
Work in progress and finished goods are measured at cost, comprising the
cost of direct materials, wages and salaries and indirect production over-
heads. Indirect production overheads comprise indirect materials, wages and
salaries, maintenance and depreciation of production machinery, buildings
and equipment as well as factory administration and management.
Where the net realizable value is lower than cost, inventories are written
down to this lower value. The net realizable value of inventories is calcu-
lated as the sales amount less costs of completion and costs necessary to
make the sale.
Significant accounting estimates and judgments
Measurement of inventories
The net realizable value of inventories is calculated based on the size of the
inventory and decreases in the recoverable amount of purchased raw ma-
terials, technical obsolescence (e.g., faulty products), physical obsoles-
cence (e.g. damaged products) and financial obsolescence (e.g., reduced
demand or substituting products). GN Store Nord performs write-downs of
inventories based on an individual assessment of products or product
groups and expected product sales from 6 to 24 months following the bal-
ance sheet date.
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3.7 Trade receivables
The loss allowance included in total trade receivables, based on the
above ageing profile and expected loss rates, have developed as
follows:
DKK million
2021
2020
Loss allowance at January 1
-216
-150
Increase in loss allowance during the year
-27
-143
Trade receivables written off as uncollectible
24
16
Reversal of unused loss allowance
44
49
Foreign exchange adjustments
-6
12
Loss allowance at December 31
-181
-216
The total loss allowance of DKK 181 million is included in trade
receivables at December 31, 2021 (2020: DKK 216 million). GN Store
Nord's assessment of credit risk associated with individual receivables
depends primarily on aging, change in customer payment behavior,
current economic conditions etc. as described in significant accounting
estimates.
No security has been pledged to GN Store Nord for trade receivables.
Accounting policies
Measurement of trade receivables
Trade receivables are measured at amortized cost less expected lifetime
credit losses. The expected loss rates are based on days past due and
whether a receivable concerns a GN Hearing or a GN Audio customer.
Current expectations and estimates of expected credit losses are
furthermore based on change in customer behavior and current economic
conditions. Expected credit losses are based on an individual assessment of
each receivable and at portfolio level.
Significant accounting estimates and judgments
Measurement of trade receivables
If a customer’s financial condition deteriorates, further loss allowance may
be required in future periods. In assessing the adequacy of expected credit
losses, Management specifically analyzes receivables, including doubtful
debts, concentrations of credit risk, credit ratings, current economic condi-
tions and changes in customers’ payment behavior.
DKK million
Current
1-60 days past
due
61-90 days past
due
91-120 days
past due
121-180 days
past due
More than 181
days past due
Total
Gross carrying amount - Trade receivables
2,864
329
47
38
38
158
3,474
Loss allowance at December 31
-24
-12
-3
-12
-19
-111
-181
Trade receivables at December 31, 2021
2,840
317
44
26
19
47
3,293
Expected loss rate
1%
4%
6%
32%
50%
70%
5%
Gross carrying amount - Trade receivables
2,260
317
51
40
39
185
2,892
Loss allowance at December 31
-20
-16
-5
-6
-20
-149
-216
Trade receivables at December 31, 2020
2,240
301
46
34
19
36
2,676
Expected loss rate
1%
5%
10%
14%
51%
80%
7%
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3.8 Provisions
DKK million
Right of
return
provisions
Warranty
provisions
Other
provisions
Total
Provisions at January 1
143
186
207
536
Additions
126
220
59
405
Consumed
-104
-188
-5
-297
Reversed
-39
-5
-60
-104
Foreign exchange adjustments
9
10
6
25
Provisions at December 31, 2021
135
223
207
565
Which is presented in the consolidated balance sheet as:
Non-current liabilities
-
85
136
221
Current liabilities
135
138
71
344
Provisions at December 31, 2021
135
223
207
565
Warranty provisions concern products sold. The warranty provision
covers any defects in design, materials and workmanship for a period
of 1-4 years from delivery and completion. Provisions for right of
return concern GNs obligation to take back products sold to customers
who has the right to return the product for credit. Other provisions
primarily consist of provisions for legal disputes, obligations regarding
onerous contracts and property leases.
Accounting policies
Provisions
Warranty provisions are recognized as the underlying goods and services
are sold based on warranty costs incurred in previous years and expecta-
tions of future costs.
Provisions are recognized when, as a result of events before or at the bal-
ance sheet date, the Group has a legal or a constructive obligation and it is
probable that there may be an outflow of resources embodying economic
benefits to settle the obligation. On measurement of provisions, the costs
required to settle the liability are discounted if the effect is material to the
measurement of the liability.
A provision for onerous contracts is recognized when the expected benefits
to be derived by the Group from a contract are lower than the unavoidable
costs of meeting its obligations under the contract (onerous contracts). A
provision for onerous contracts is recognized e.g. when the Company has
entered a binding legal agreement for the purchase of components from
suppliers that exceeds the benefits from the expected future use of the
components and the Company can only sell the components at a loss.
Significant accounting estimates and judgments
Provisions
Warranty provisions are recognized based on historical and future
warranty costs related to the Group’s products. Future warranty costs may
differ from past practices and the level of costs. The amount recognized as
a provision is Management’s best estimate of the expenses required to
settle the obligation.
In accordance with GN Store Nord’s business policy, some products are
supplied with a right of return. Provisions for future returns of goods are
recognized based on historical product returns data. The probability of
future returns may differ from past practices.
Agreement has been made with a number of the suppliers that the
suppliers purchase components for the production of hearing instruments
and headsets based on sales estimates prepared by GN Store Nord. To the
extent that GN Store Nord's actual purchases from suppliers are lower
than sales estimates, GN Store Nord will be under an obligation to
purchase any remaining components from the suppliers. Management
assesses sales estimates on an ongoing basis, and to the extent that
component inventories at suppliers are not expected to be used, GN Store
Nord recognizes a provision for onerous purchase contracts.
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Introduction
Insight into GN Store Nord's capital structure and financial items as
well as financial risks.
4.1 Outstanding shares and treasury shares 100
4.2 Financial risks 101
4.3 Financial instruments 105
4.4 Liabilities from financing activities 110
4.5 Financial income and expenses 111
Section 4 - Capital structure
and financing items
GN Store Nord
Annual Report 2021 Financial Statements – Consolidated
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4.1 Outstanding shares and treasury shares
All shares are fully issued and paid up. The nominal value of each share
is DKK 4 and no shares carry any special rights.
The treasury shares had a market value of DKK 4,301 million at
December 31, 2021 (2020: DKK 6,476 million). The total cost of
acquired treasury shares in 2021 was DKK 1,166 million (2020: DKK
453 million). No treasury shares were sold during the year.
Treasury shares have been acquired under the share buyback program
in order to reduce the share capital, hedge the option- and warrant-
based long-term incentive programs as well as the obligation under the
convertible bond issued in 2019.
Weighted average number of shares
Shares, thousands
2021
2020
Weighted average number of outstanding shares
128,816
128,805
Dilutive effect of share-based payment with positive
intrinsic value – average for the period
1,378
1,227
Diluted weighted average number of shares
130,194
130,032
Result used for calculating EPS
DKK million
2021
2020
Profit (loss) for the year attributable to shareholders
in GN Store Nord A/S used for the
calculation of earn-
ings per share
1,756
1,252
Cash distributions
DKK million
2021
2020
Dividend paid related to prior years
206
206
Share repurchase during the year
1,166
453
Total
1,372
659
Proposed dividend for the year
214
206
DKK per share
Dividend paid related to prior years
1.45
1.45
Proposed dividend for the year
1.55
1.45
Thousands
Outstanding
shares
Treasury shares
Total number of
shares
Nominal value
of outstanding
shares (DKK)
Nominal value
of treasury
shares (DKK)
Nominal value
of total shares
(DKK)
Treasury shares
as a percentage
of share capital
Number/value of shares at January 1, 2021
128,975
13,293
142,268
515,899
53,173
569,072
9.3%
Purchase of ownership interest in subsidiaries
995
-995
-
3,980
-3,980
-
Shares acquired by GN Store Nord A/S
-2,252
2,252
-
-9,007
9,007
-
Shares cancelled
-
-4,092
-4,092
-
-16,368
-16,368
Number/value of shares at December 31, 2021
127,718
10,458
138,176
510,872
41,832
552,704
7.6%
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4.1 Outstanding shares and treasury shares
(Continued)
4.2 Financial risks
GN Store Nord is exposed to several financial risks arising from its
operating, investing and financing activities, comprising currency risk,
interest rate risk, liquidity risk and credit risk. Financial risks are
managed centrally by Group Treasury, except for commercial credit
risk which is managed decentralized by the Group’s operating
businesses. The Group’s Treasury Policy has been reviewed by the
Audit Committee and approved by the Board of Directors.
Cash flow, liquid funds and debt are coordinated centrally to ensure
the solvency and liquidity of the Group. Material financial risks are
identified, managed and reported adequately. Financial transactions
are entered into only to mitigate risks from business activities or
financing of the Group.
The areas exposed to financial risks are mainly cash and cash equiva-
lents as well as loans and other financial indebtedness, the Group’s
Income Statement in Financial income and expenses, the Group’s cash
flow through Cash flow from financing activities and the Group’s
Equity in Other Comprehensive Income. GN’s objectives, policies and
process for measuring and managing the risk exposure to these items
are summarized in the table and further explained in the notes below.
Accounting policies
Earnings per Share
and Diluted Earnings per Share
Earnings per share (EPS) is calculated by dividing the profit for the year after
tax by the weighted average number of shares outstanding in the year.
Diluted earnings per share is calculated by increasing the weighted avera
ge
number of shares outstanding by the number of additional ordinary shares
that would be outstanding if potentially dilutive shares were issued. The
dilutive effect of outstanding share based payment is calculated using the
Treasury Stock method.
Equity
D
ividends
The expected dividend payment for the year is disclosed as a separate item in
equity. Proposed dividends are recognized as a liability at the date they are
adopted by the Annual General Meeting (declaration date).
Hedging reserve
The hedging rese
rve includes the accumulated net change in the fair value of
hedging transactions qualifying for hedge accounting.
Treasury Shares
Treasury shares are recognized at cost. Gains and losses on disposal of own
shares are calculated as the difference between
the purchase price measured
in accordance with the FIFO
-
principle and the selling price. Gains or losses are
recognized directly in retained earnings. Dividends received from treasury
shares are recognized directly in retained earnings. Capital reductions
from
the cancellation of treasury shares are deducted from the share capital at an
amount corresponding to the nominal value of the shares.
Foreign exchange adjustments
The translation reserve in the consolidated financial statements comprises
foreign exch
ange differences arising on translation of financial statements of
foreign subsidiaries from their functional currencies into the presentation
currency used by GN Store Nord (DKK) and foreign exchange adjustments of
balances considered to be part of the to
tal net investment in foreign entities.
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4.2 Financial risks (Continued)
Financial risk
Exposure
Risk Management Policy
Mitigating actions
Low Risk
Foreign currency risk
Based on the current revenue and cost composition, the anticipated pri-
mary foreign exchange exposures for the Group in 202
2 (excluding
EUR) are mainly arising from USD, GBP, JPY and AUD, whereas other
currencies on a stand
-alone basis would not have a material impact.
EUR denominated financing carries FX revaluation risk.
All hedging is conducted at Group level.
A minimum of
75% and not more than 100% of the Net currency expo-
sure in each operating business to maintain this hedging level at any
point in time.
EUR denominated financing is hedged into DKK by natural hedging,
through EUR denominated assets or through
foreign exchange deriva-
tives.
GN has hedged a substantial part of the expected net cash-flow in
foreign currencies to secure the EBITA contribution of the material
trading currencies for the next 12 months across both GN Hearing and
GN Audio.
GN is also m
onitoring the combined impact of minor trading currencies
and hedges those on a case
-by-case basis.
Low Risk
Interest rate risk
All non-current financing carried fixed interest rates as of 31 December
202
1. EUR 100 million of the financing has been swapped to variable in-
terest rates.
At least 50% of all Interest-Bearing Debt should be fixed in
interest, either through fixed rate agr
eements or through derivative in-
struments.
With the current level of debt carrying fixed interest rates, no mitigating
actions are currently needed.
Low Risk
Liquidity risk,
funding, and capital
structure
GN’s net interest-bearing debt has increased during 2021 to DKK 5,358
million mainly driven through moderate growth with strong cash gener-
ation from normal operations which was off
-set by investments, divi-
dend and share buyback.
The latest share buyback program was paused
in Q4 2021
.
GN’s loans, bonds and Revolving Credit Facilities are
mostly long-term
with maturities between 202
2 to 2036
with predominantly fixed and for
a smaller potion variable interest rates based on short term reference
rates.
GN’s cash flow, liquid funds and debt are coordinated centrally to en-
sure the solvency and liquidity of the Group.
To mitigate potential liquidity or refinancing risks, GN has refinanced its
Revolving Credit Facility for amount of EUR 350 million and tenor of 5
years plus 2 years’ extension option at GN’s discretion. At December 31,
2021 the Revolving Credit Facilities were unutilized.
Low Risk
Financial credit risk
GN’s exposure to credit risk arises primarily from trade and other receiv-
ables.
GN has established policies for credit risk management related to cus-
tomers including the use of credit rating agencies.
GN has decentralized the credit risk management relating to customer
including the use of credit rating agencies to the divisions (GN Hearing
and GN Audio).
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4.2 Financial risks (Continued)
Foreign currency risk
GN Store Nord has exposure towards foreign currencies exchange rate
risk, mainly arising from the fluctuations of USD, in connection with
commercial transactions. The general policy is to minimize GN Store
Nord's currency exposure through natural matching of in- and out-
flows to mitigate the impact of exchange rate fluctuations on earnings
and cash flow, thereby increasing the predictability of the financial
results. Additionally, the Group uses approved hedging instruments,
including currency derivatives such as FX Spot, FX Forward, FX Swaps
and FX Option contracts, to protect the Group’s EBITA and Free Cash
Flow from adverse currency movements by determining the aggregate
of the expected net cash flow 12 months forward and monetary
balance sheet items.
Sensitivity analysis for foreign currency risk
The below sensitivity analysis illustrates the potential change in GN
Store Nord’s profit or loss and equity in response to a weakening /
strengthening of the currencies of which GN Store Nord has significant
exposure to at the balance sheet date. This analysis assumes that all
other variables, in particular interest rates, remain constant. At year-
end an increase of 5% in the exchange rates would affect the Income
statement and Equity as outlined in the table below:
USD
GBP
DKK million
2021
2020
2021
2020
Income statement
55
18
-9
-21
Other Comprehensive Income
11
20
-9
-11
The exposure at year-end is not necessarily representative of the past
or future exposure of the Group.
The sensitivity analysis comprises cash and cash equivalents, current
receivables, trade payables, current and non-current loans, intercom-
pany balances and derivative exchange rate instruments as of Decem-
ber 31. The effects of a change in foreign exchange rates related to
these items would be included in the Income statement. A change in
the value of derivative exchange rate instruments used for hedging
would be included in Other comprehensive income if hedge accounting
is applied.
Interest rate risk
All of GN Store Nord’s non-current debt has a fixed interest rate: listed
instruments of EUR 330 million Bond-with-Warrant-Units 0% and
notes issued under the EMTN program including EUR 220 million notes
with fixed coupon of 0.75% per annum, EUR 600 million notes with
fixed coupon of 0.875% per annum, EUR 50 million private placement
with fixed coupon of 1.97% per annum and GBP 40 million private
placement with fixed coupon of 3.2% per annum as well as bilateral
loans with fixed interest rates.
The short-term debt with variable interest rate consists of a bilateral
loan of nominal EUR 100 million at short term rates plus margin.
An increase of variable interest rates on the bank loans of 1 percentage
point before considering the effect of interest rate swaps would result
in a net increase in the annual interest expenses of DKK 7 million
(2020: DKK 7 million).
The interest rate benchmark reform (IBOR reform) is not expected to
have any significant effect on GN Store Nord. The Groups loans and
bonds are predominantly with fixed interest rates and transition
agreements are included in relevant documents. Hedge accounting is
not applied for interest rate swaps.
For financial liabilities at amortized cost changes to the basis for deter-
mining the contractual cash flows required by the IBOR reform will be
reflected by adjusting their effective interest rate. No immediate gain
or loss is recognized. GN does not have any significant IBOR-linked
lease payments
Specification of net interest-bearing debt
DKK million
2021
2020
Cash and cash equivalents
6,208
1,657
Bank loans and issued bonds, non-current liabilities
-9,513
-5,069
Bank loans, current liabilities
-1,615
-341
Lease liabilities
-438
-445
Total
-5,358
-4,198
Funding, liquidity and capital structure
The Group’s capital structure includes interest bearing long-term debt
with maturities between 2023 and 2036, including bank loans, convert-
ible bonds, notes under the Euro Medium Term Note (EMTN) program
and a drawing right attached to a EUR 350 million revolving credit fa-
cility which on December 31, 2021 were unutilized. In addition, the
Group utilizes short-term uncommitted facilities from its main relation-
ship banks as well as its EUR 250 million Euro Commercial Paper pro-
gram which was utilized at EUR 116 million at December 31, 2021.
Due to the acquisition of SteelSeries, GN Store Nord has entered into
an M&A bridge facility to finance the acquisition with a maturity of 12
months plus 6 months extension at the discretion of GN. In order to de-
risk the bridge facility, GN issued two bonds in November 2021 under
the EMTN program for an aggregate value of almost DKK 5 billion.
Moreover, GN Store Nord has entered into one bilateral loan agree-
ment (R&D loan) worth EUR 75 million in December 2021. The remain-
ing part of the bridge loan will be financed by the available cash and
GN Store Nord
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4.2 Financial risks (Continued)
cash equivalents, potential other debt instruments and the continued
cash flow generation by the Group.
In May 2019 GN Store Nord issued EUR 330 million convertible bonds
consisting of Bond-with-Warrant Units. The Bond-with-Warrant Units
consists of senior unsecured zero coupon bonds due 2024 with detach-
able unsecured warrants expiring 2024. The bonds have a denomina-
tion of EUR 100,000 per Bond.
Initially 5.2 million treasury shares are underlying the warrant units
and those treasury shares will be kept to hedge the future obligations
of GN Store Nord under the warrant units. The bonds carry no interest
and will be redeemed at par at maturity, unless redeemed or pur-
chased and cancelled earlier under their terms.
Any Unit holder may, at any time until 2024, exercise a warrant unit
and require GN to redeem the corresponding bond at its principal
amount. GN does not expect to issue any new shares upon exercise of
warrant units, but will deliver up to 5.2 million shares currently held in
treasury, based on the initial strike price (DKK 473.8512), which is sub-
ject to adjustment from time to time upon certain customary events
(anti-dilution clauses). The proceeds from the sale of these treasury
shares at the initial strike price will amount to DKK 2,465 million corre-
sponding to the nominal amount of the issued bonds of EUR 330 mil-
lion at the exchange rate at the time of pricing of DKK/EUR 7.4684.
In December 2019 GN Store Nord issued EUR 220 million Eurobonds
consisting of senior unsecured notes due 2023 under its EMTN pro-
gram. The notes were issued at a price of 99.683% of the nominal
amount with a fixed coupon of 0.750% per annum and have been listed
on Euronext Dublin. The bonds have a denomination of EUR 100,000
per bond. The bonds will be redeemed at par at maturity, unless re-
deemed earlier under their terms. GN Store Nord has an issuer call op-
tion and may redeem the bonds at a redemption margin of +0.250%.
In February 2021 GN Store Nord issued EUR 50 million private place-
ment consisting of senior unsecured notes due 2036 under its EMTN
program. The notes were issued with a fixed coupon of 1.97% per an-
num. The private placement will be redeemed at par at maturity, un-
less redeemed earlier under their terms. GN Store Nord has an issuer
call option and may redeem the bonds at a redemption margin of
+0.35%
In November 2021, GN Store Nord issued EUR 600 million Eurobonds
consisting of senior unsecured notes due 2024 under its established
EMTN program for the purpose of de-risking the M&A bridge facility.
The notes were issued at a price of 99.671% of the nominal amount
with a fixed coupon of EUR 0.875% per annum and have been listed on
Euronext Dublin. Similar to its EUR 200 million EMTN bond, this bond
has a denomination of EUR 100,000 per bond. The bonds will be re-
deemed at par at maturity, unless redeemed earlier under their terms.
GN Store Nord has an issuer call option and may redeem the bonds at
redemption margin of +0.30%.
In November 2021, GN Store Nord also issued GBP 40 million private
placement consisting of senior unsecured notes due 2036 under its
EMTN program for the purpose of de-risking the M&A bridge facility.
The notes were issued with a fixed coupon of 3.2% per annum. The pri-
vate placement will be redeemed at par at maturity, unless redeemed
earlier under their terms. GN Store Nord has an issuer call option and
may redeem the bonds at a redemption margin of +0.35%
In December 2021, GN Store Nord has entered into one bilateral loan
agreement (R&D loan) worth EUR 75 million as well, to be disbursed in
2022.
On December 31, 2021, GN Store Nord had an equity ratio of 26.4 %
(2020: 31.0%) and net interest-bearing debt of DKK 5,358 million
(2020: DKK 4,198 million). GN has a long-term capital structure target
of a net interest-bearing debt between one- and two-times EBITDA. As
of December 31, 2021 GN Store Nord had undrawn committed borrow-
ing facilities of EUR 350 million (2020: DKK 2,000 million and USD 40
million).
GN’s overall financial target is to deliver a competitive shareholder
return through a combination of dividend payments and share price
appreciation. GN aims to pay out a dividend corresponding to 15 - 25%
of the annual net profit and to distribute additional excess cash to
shareholders through share buyback programs.
Financial credit risk
Credit risk is defined as an unexpected loss in cash and earnings if the
customer is unable to pay its obligation in due time. GN may incur
losses if the credit quality of its customers deteriorates or if they de-
fault on their payment obligations to GN. GN’s exposure to credit risk
arises primarily from trade and other receivables. Such credit risk is
managed decentralized through the divisions (GN Hearing and
GN Audio). Assessment of credit risks related to customers is further
described in note 3.7 Trade receivables and note 3.5 Other non-current
assets.
Surplus cash positions in GN Store Nord’s subsidiaries are centralized
through Group Treasury if feasible, and cash is mainly held in current
accounts or as short-term money market deposits. Cash positions are
primarily held with financial institutions through which GN Store Nord
conducts its day-to-day banking transactions and which are highly
rated with Moody’s and Standard & Poor’s.
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4.3 Financial instruments
Accounting policies
Financial Liabilities
Amounts owed to credit institutions and banks as well as the issued EMTN
bonds are recognized at the date of borrowing at fair value of the proceeds
received less transaction costs paid. In subsequent periods, the financial
liabilities are measured at amortized cost, corresponding to the capitalized
value using the effective interest rate. Accordingly, the difference between
the proceeds and the nominal value is recognized in the income statement
over the term of the loan.
Issued Bond-With-Warrant units are initially recognized at fair value less
related transaction costs. The fair value of the bonds is estimated by calcu-
lating the present value of all contractual future cash flows using an inter-
est rate for a bond with similar credit risk and duration as the issued bonds,
but without the attached warrants. The difference between the fair value
and the proceeds is considered to be the value of the warrants and is rec-
ognized in Equity. The equity component is not re-measured subsequently.
After initial recognition the bonds are measured at amortized cost using
the effective interest method. By applying the effective interest method a
constant interest rate is used to increase the carrying amount of the bonds
and the difference between the carrying amount and the principal amount
is in this way recognized as an interest expense in Financial expenses over
the remaining term to maturity. In case the bonds are redeemed before
maturity, the difference between the carrying amount at amortized cost
and the principal amount will be recognized as a loss in Financial expenses.
Other liabilities, comprising trade payables, amounts owed to associates as
well as other payables, are measured at amortized cost.
Categories of financial assets and liabilities
The financial assets and liabilities presented in the balance sheet can be grouped in the following categories:
DKK million
2021
2020
Financial assets
Trade receivables
3,293
2,676
Other receivables
440
370
Other non-current assets
804
789
Financial assets at amortized cost
4,537
3,835
Derivative financial instruments included in Other receivables
20
15
RAP, SIP, DCP and Ownership interests, etc. included in Other non-current assets
595
398
Financial assets at fair value through profit or loss
615
413
Derivative financial instruments included in Other receivables
8
13
Financial assets at fair value through Other comprehensive income
8
13
Financial liabilities
Issued bonds (bond-with-warrant units)
2,363
2,326
Issued EMTN bonds
6,778
1,627
Bank loans, non-current
372
1,116
Bank loans, current
1,615
341
Lease liabilities
438
445
Other non-current liabilities
5
27
Other current liabilities
-
114
Trade payables
1,280
1,238
Financial liabilities at amortized cost
12,851
7,234
Derivative financial instruments included in Other liabilities
13
15
RAP, SIP and DCP included in Other non-current liabilities
277
230
Contingent consideration included in Other liabilities
88
34
Financial liabilities at fair value through profit or loss
378
279
Derivative financial instruments included in Other liabilities
1
38
Financial liabilities at fair value through Other comprehensive income
1
38
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4.3 Financial instruments (Continued)
Contractual maturity analysis for financial liabilities
DKK million
Less than one year
Between one and
three years
More than three
years
Total
2021
Issued bonds
70
6,226
3,404
9,700
Bank loans, non-current
1
1
372
374
Bank loans, current
1,615
-
-
1,615
Other non-current liabilities
-
58
224
282
Trade payables
1,280
-
-
1,280
Contingent consideration
-
60
28
88
Total non-derivative financial liabilities
2,966
6,345
4,028
13,339
Derivative financial liabilities
5
-
9
14
Total
2,971
6,345
4,037
13,353
2020
Issued bonds
12
1,661
2,455
4,128
Bank loans, non-current
1
745
373
1,119
Bank loans, current
341
-
-
341
Other non-current liabilities
-
62
195
257
Other current liabilities
116
-
-
116
Trade payables
1,238
-
-
1,238
Contingent consideration
34
-
-
34
Total non-derivative financial liabilities
1,742
2,468
3,023
7,233
Derivative financial liabilities
53
-
-
53
Total
1,795
2,468
3,023
7,286
The maturity analysis is based on non-discounted cash flows.
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4.3 Financial instruments (Continued)
Fair value adjustments of cash flow hedges
DKK million
2021
2020
Fair value adjustment for the year recognized in Other comprehen-
sive income
9
8
Reclassified from equity to revenue during the year
26
-21
Reclassified from equity to production costs during the year
-
-
Adjustment of cash flow hedges in Other comprehensive income
35
-13
Fair value adjustment of non-designated hedges recognized in
Other operating income and costs, net
16
-20
Net gain / loss and fair value adjustment of ineffective hedges rec-
ognized in Other operating income and costs, net
-
7
Fair value adjustment of non-designated hedges recognized in fi-
nancial items
-129
81
All exchange rate instruments mature within 24 months from the
balance sheet date, with a large majority having maturity in 2022. The
interest rate swaps outstanding as of December 31, 2021 are
denominated in EUR and have maturities in 2025 and 2036 and swap
from fixed interest to variable interest.
The gains and losses on cash flow hedges recognized in Other
comprehensive income as of December 31, 2021 will be recognized in
the Income statement in the period during which the hedged
forecasted transaction affects the Income statement.
Accounting policies
Derivative Financial Instruments
Derivative financial instruments are initially and subsequently recognized
in the balance sheet at fair value. Positive and negative fair values of
derivative financial instruments are recognized as other receivables and
payables, respectively. Fair values of derivative financial instruments are
computed on the basis of market data and generally accepted valuation
methods.
Changes in the fair value of derivative financial instruments designated as
and qualifying for recognition as a hedge of the fair value of a recognized
asset or liability are recognized in the income statement together with
changes in the value of the hedged asset or liability as far as the hedged
portion is concerned. Changes in the portion of the fair value of derivative
financial instruments designated as and qualifying as a cash flow hedge
that is an effective hedge of changes in the value of the hedged item are
recognized in other comprehensive income. If the hedged transaction re-
sults in gains or losses, amounts previously recognized in other compre-
hensive income are transferred from equity to the same item as the
hedged item.
When a hedging instrument expires, or is terminated, or when a hedge no
longer meets the criteria for hedge accounting, any gains or losses previ-
ously recognized in Other comprehensive income remains in Equity until
the forecast transaction occurs. When the forecast transaction is no longer
expected to occur, the cumulative gain or loss that were reported in equity
are immediately reclassified to the income statement.
For derivative financial instruments, where hedge accounting is not applied
(economic hedges), changes in fair value are recognized in the Income
statement as either Other operating income and costs, net or Financial
items.
Derivative financial instruments
Exchange rate instruments and interest rate swaps
2021
2020
DKK million
Average rate
(DKK)
Contract
amount, net*
Fair value, as-
sets
Fair value, liabil-
ities
Average rate
(DKK)
Contract
amount, net*
Fair value, as-
sets
Fair value, liabil-
ities
USD / DKK
-
-
-
-
624
-134
7
33
USD / EUR
656
1,250
1
1
613
731
10
-
JPY / EUR
5.77
335
5
-
6.01
240
6
-
GBP**
876
90
4
2
824
566
1
3
AUD / DKK
-
-
-
-
449
31
-
1
EUR / DKK
744
-6,395
10
1
744
-484
1
1
Other currency pairs
700
8
1
616
3
14
Interest rate swaps
744
-
9
400
-
1
Total
28
14
28
53
* Positive contract amounts indicate sale of currencies vs. DKK or EUR
** Includes exchange rate instruments vs. DKK and EUR
GN Store Nord
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4.3 Financial instruments (Continued)
2021
2020
DKK million
Quoted prices
(level 1)
Observable
input
(level 2)
Unobservable
input
(level 3)
Total
Quoted prices
(level 1)
Observable
input
(level 2)
Unobservable
input
(level 3)
Total
Financial assets
Derivative financial instruments included in Other receivables
-
20
-
20
-
15
-
15
RAP, SIP, DCP included in Other non-current assets
-
356
-
356
-
280
-
280
Ownership interests, etc. included in Other non-current assets
-
-
239
239
-
-
118
118
Financial assets at fair value through profit or loss
-
376
239
615
-
295
118
413
Derivative financial instruments included in Other receivables
-
8
-
8
-
13
-
13
Financial assets at fair value through Other comprehensive income
-
8
-
8
-
13
-
13
Financial liabilities
Derivative financial instruments included in Other liabilities
-
13
-
13
-
15
-
15
RAP, SIP and DCP included in Other non-current liabilities
-
277
-
277
-
230
-
230
Contingent consideration included in Other liabilities
-
-
88
88
-
-
34
34
Financial liabilities at fair value through profit or loss
-
290
88
378
-
245
34
279
Derivative financial instruments included in Other liabilities
-
1
-
1
-
38
-
38
Financial liabilities at fair value through Other comprehensive income
-
1
-
1
-
38
-
38
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4.3 Financial instruments (Continued)
In addition to the above, Other non-current liabilities include a liability
of DKK 250 million (2020: DKK 150 million) related to put options
issued on shares held by non-controlling shareholders which is
measured at fair value (fair value hierarchy level 3). Adjustments to the
fair value are accounted for as other equity transactions.
DKK million
2021
2020
Fair value net gains (losses) recognized in the income statement:
Net fair value gains (losses) on RAP, SIP and DCP
2
6
Net fair value gains (losses) on ownership interests and derivatives
re. ownership interests
5
36
Net fair value gains (losses) on contingent
consideration
-2
8
Exchange rate instruments and interests rate swaps
The fair value of the exchange rate instruments and interest rate
swaps are determined using quoted forward exchange rates and for-
ward interest rates, respectively at the balance sheet date and can be
categorized as level 2 (observable inputs) in the fair value hierarchy.
Ownership interests
The fair value of the ownership interests is based on a market approach
model. The key input is market observations of sales prices of compa-
rable retail entities, combined with internal GN data such as number of
sold hearing aids and the financial statements in which GN holds an in-
terest. In the model, the ownership interests are divided into four
groups of revenue multiple, according to the relative size and profita-
bility of the dispensers. Since most of the data is based on non-observ-
able data, the model is categorized as level 3 in the fair value hierarchy.
The model is updated on a quarterly basis and any changes are re-
flected in the Income statement or in Other comprehensive income as
applicable. The fair value models are sensitive to the dispenser’s finan-
cial performance for the last twenty-four months rolling on a quarterly
basis.
Derivative financial instruments related to ownership interests
Derivative financial instruments related to ownership interests in dis-
pensers of GN Hearing products, are recognized in the balance sheet at
fair value. The fair value model is based on a market approach model,
using market observations of sales prices of comparable retail entities.
The key inputs used are the number of hearing aid units sold by cus-
tomer, average selling prices, and the estimated probability that the in-
struments will be exercised. The fair value model is categorized as level
3 in the fair value hierarchy, and is updated on a quarterly basis, and
any material changes are reflected in the income statement. The fair
value models are sensitive to the customers financial performance the
last twelve months of any quarter and the probability of the instru-
ments being exercised.
RAP, SIP and DCP programs
RAP (Retirement Advantage Plan) and SIP (Savings and Investment
Plan) are programs in which customers earn funds based on purchases
made. DCP (Deferred Compensation Plan) is a program in which Man-
agement in certain foreign subsidiaries may choose to defer compensa-
tion. The asset value is based on the fair value of the mutual fund in-
vestments, and the liability is based on the value generated by partici-
pant contributions, participant distributions, forfeitures, and invest-
ment earnings or losses. Both asset and liabilities are categorized as
level 2 in the fair value hierarchy. Each quarter GN receive a report re-
garding the fair value of the assets from a third-party contractor, and
will update the financial statements according to this report.
Contingent consideration
Contingent consideration, resulting from business combinations or di-
vestments, is valued at fair value at the acquisition or divestment date
as part of the transaction. The fair value is based on discounted cash
flows and contractual terms of the contingent considerations and on
non-observable inputs, such as the financial performance of the ac-
quired enterprises. The key assumptions take into consideration the
probability of meeting each performance target and the discount fac-
tor. Contingent considerations are categorized as level 3 (unobserva-
ble inputs) in the fair value hierarchy. The models are updated on a
quarterly basis and any changes are reflected in the income statement.
The fair value models are sensitive to the financial performance of the
acquired enterprises, the probabilities of meeting the agreed objectives
and the discount factor.
Fair value disclosures re. financial instruments at amortized cost
Based on observable inputs (fair value hierarchy level 2) the fair value
of issued bonds (zero coupon) amounted to DKK 2,422 million at De-
cember 31, 2021 (2020: DKK 2,394 million), and the fair value of EMTN
bonds amounted to DKK 6,832 million (2020: DKK 1,673 million). For
other financial assets and liabilities, the fair value is approximately
equal to the carrying amount.
GN Store Nord
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4.4 Liabilities from financing activities
DKK million
Bank loans,
non-current
Issued bonds
Other non-cur-
rent liabilities
Lease liabilities
Bank loans,
current
Payment re.
frozen vacation
pay included in
Other liabilities *
Total
Liabilities at January 1
1,116
3,953
482
445
341
109
6,446
Cash flows
-
5,134
-7
-132
526
-109
5,412
Foreign exchange adjustments
-
2
28
8
4
-
42
New leases
-
-
-
117
-
-
117
Non-cash interest expenses
-
52
-
-
-
-
52
Loans reclassified to current
-744
-
-
-
744
-
-
Other non-cash adjustments
-
-
224
-
-
-
224
Liabilities at December 31, 2021
372
9,141
727
438
1,615
-
12,293
Liabilities at January 1
1,418
3,927
507
489
1,197
-
7,538
Cash flows
-296
-
-21
-141
-855
-
-1,313
Foreign exchange adjustments
-6
-15
-26
-23
-1
-
-71
New leases
-
-
-
120
-
-
120
Non-cash interest expenses
-
41
-
-
-
-
41
Other non-cash adjustments
-
-
22
-
-
-
22
Liabilities at December 31, 2020
1,116
3,953
482
445
341
-
6,337
* Payment made to LD Fonde relating to the change in vacation year in Denmark and presented in Cash flow from financing activities.
GN Store Nord
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4.5 Financial income and expenses
DKK million
2021
2020
Financial income
Gains and fair value adjustments on ownership
interests
13
50
Interest income*
2
5
Financial income, other
130
123
Fair value adjustments of derivative financial
instruments
-
81
Foreign exchange gain
92
35
Total
237
294
Financial expenses
Losses and fair value adjustments on ownership
interests
-8
-14
Interest expenses*
-91
-68
Financial expenses, other
-75
-93
Fair value adjustments of derivative financial
instruments
-129
-
Impairments on loans to dispensers
-24
-70
Foreign exchange loss
-
-55
Total
-327
-300
*Interest income and expenses from financial assets and liabilities at amortized cost
Financial income, other includes income relating to remeasurement of
existing ownership interests in business combinations achieved in
stages, reversal of a provision on a financial guarantee obligation
regarding an associated company’s bank credit facility, income from
government grants and other items.
Accounting policies
Financial income and expenses
Financial income and expenses comprise interest income and expense,
costs of permanent loan facilities, gains and losses on securities, receiva-
bles, payables and transactions denominated in foreign currencies, credit
card fees, amortization and impairment of financial assets and liabilities,
etc. Also included are realized and unrealized gains and losses on derivative
financial instruments that are not designated as hedges.
Borrowing costs that are directly attributable to the construction or
production of a qualifying asset form part of the cost of that asset. Other
borrowing costs are recognized as an expense. A qualifying asset is an asset
that necessarily takes a substantial period of time to get ready for its
intended use.
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Introduction
Statutory notes and other disclosures.
5.1 Acquisition and divestment of companies and operations 113
5.2 Remuneration of the Board of Directors and Executive
Management 116
5.3 Share-based incentive plans 118
5.4 Pension obligations 121
5.5 Contingent liabilities 122
5.6 Investments in associates 123
5.7 Other non-cash adjustments 123
5.8 Fees to statutory auditors 123
5.9 Related parties 123
5.10 Events after the reporting period 123
Section 5 -
Other disclosures
GN Store Nord
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5.1 Acquisition and divestment of
companies and operations
Acquisitions
During 2021, GN Hearing acquired and divested a few minor hearing
instrument chains and distributors, primarily in the US. These acquisi-
tions all strengthen GN Hearing's sales and distribution channels.
On December 14, 2021, GN Hearing announced the acquisition of
Lively, a leading online hearing care and digital marketing platform, en-
abling consumers to explore, purchase and receive hearing care from
licensed hearing care professionals in the U.S. all from the comfort of
their home. The acquisition was completed on the 20
th
of December as
a business combination achieved in stages, after which GN owns 100%
of the voting equity interests. Through the acquisition, GN Hearing
gains access to the fast-growing telehealth market, utilizing a proven
business model with rapid growth. Furthermore, the acquisition will di-
rectly benefit GN Hearing’s network of hearing care professionals by
adding valuable capabilities to GN’s operations, including digital chan-
nel access, in-depth expertise of digital marketing and telehealth, and
data driven consumer behavior to attract new, younger consumers.
Goodwill relating to these transactions is allocated to the cash-gener-
ating units GN Hearing with DKK 703 million (2020: DKK 14 million)
and GN Audio DKK 0 million (2020: DKK 0 million). Goodwill of DKK 0
million has provisionally been determined to be deductible for tax pur-
poses. Goodwill comprises the expected synergies as well as the value
of the highly skilled workforce of Lively. GN has recognized deferred
tax assets of DKK 52 million (2020: DKK 0 million) as part of identified
assets and liabilities, which were not recognized in the acquired compa-
nies prior to acquisition.
Fair value at acquisition date
DKK million
Lively
Other
2021
2020
Identifiable assets acquired, liabilities as-
sumed and consideration transferred
Other intangible assets
51
11
62
-
Non-current assets
56
1
57
-
Current assets
100
-
100
1
Non-current liabilities
-22
-
-22
-2
Current liabilities
-149
-2
-151
-13
Fair value of identified net assets
36
10
46
-14
Goodwill
703
-
703
14
Consideration transferred
739
10
749
-
Fair value of existing ownership interest
-303
-
-303
-
Payable consideration
-20
-
-20
-
Contingent consideration
-60
-
-60
-
Acquired cash and cash equivalents
-47
-
-47
-
Cash consideration paid
309
10
319
-
In 2021, GN paid out DKK 35 million (2020: DKK 147 million) in contin-
gent consideration and other payable consideration related to prior
years’ acquisitions. The payments were mainly related to the acquisi-
tion of Audigy Group. An adjustment of DKK 0 million (2020: DKK 8
million mainly related to the Audigy acquisition) has been recognized
as financial income in the income statement.
DKK million
2021
2020
The share of revenue and profit (loss) for the year
from the acquisition date can be specified as follows:
Revenue
5
4
EBIT
-6
-3
Profit (loss) for the year
-4
-3
Acquired operations if they had been owned
throughout the year:
Revenue
114
7
EBIT
-171
-5
Profit (loss) for the year
-139
-5
Divestments etc.
In 2021 and 2020 GN Hearing divested a number of minor hearing in-
strument distributors primarily in the US.
DKK million
2021
2020
Non-current assets
-41
-22
Current assets
-7
-1
Disposed net assets
-48
-23
Fair value of assets received
62
31
Fair value of liabilities assumed
-3
-9
Cash consideration received
-
1
Gain (loss) on divestment of operations
11
-
Other adjustments
-7
-4
Gain (loss) on divestment of operations etc.
4
-4
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5.1 Acquisition and divestment of companies
and operations (Continued)
Post balance sheet date acquisitions
On January 12 2022, GN Audio acquired 100% of the Danish based
company SteelSeries Group A/S, a global pioneer in premium software-
enabled gaming gear. SteelSeries, with its attractive growth profile and
margin structure, presents an attractive new growth opportunity for
GN. The acquisition of SteelSeries will bring complementary engineer-
ing competencies, commercial capabilities, differentiated brands, a
large customer base and an innovative high-growth product offering,
adding further technical expertise and IP to GN. SteelSeries will benefit
from GN‘s commercial and operational excellence, and financial
strength, allowing SteelSeries to continue its strong growth trajectory
and take share in the fast-growing market for premium software-ena-
bled gaming gear.
Based on GN’s successful track-record of integrating acquired assets
and a thorough due diligence analysis of SteelSeries, it is anticipated
that the combination will produce significant scaling opportunities and
revenue synergies when combining SteelSeries with GN’s extensive
global distribution footprint. Goodwill comprises the expected syner-
gies as well as the value of SteelSeries highly skilled workforce.
The provisionally determined goodwill of DKK 5,550 million relating to
this transaction will be allocated to the cash-generating unit GN Audio.
Goodwill of DKK 0 million has provisionally been determined to be de-
ductible for tax purposes. In order to effect the acquisition GN has in-
curred direct acquisition-related costs of DKK 45 million in professional
and consulting fees etc. These are expensed in management and ad-
ministrative expenses in 2021.
The fair value of the identifiable assets and liabilities at acquisition date
are provisionally determined as follows:
Fair value
at acquisi-
tion date
DKK million
SteelSeries
Identifiable assets acquired, liabilities assumed and consideration trans-
ferred
Patents, rights and other intangibles
1,015
Trademarks
764
Customer relationships
749
Property plant and equipment and non-current assets
49
Current assets
1,084
Cash
218
Bank debt and non-current liabilities
-1,011
Deferred tax liabilities
-609
Other current liabilities
-569
Fair value of identified net assets
1,690
Goodwill
5,550
Consideration transferred
7,240
Acquired cash and cash equivalents
-218
Cash consideration paid
7,022
DKK million
SteelSeries
Estimated unaudited stand-alone financials for SteelSeries for 2021
Revenue
2,697
Profit (loss) for the year *
199
*This excludes estimated annual amortizations in the range of DKK 225
-
275 million related
to the Purchase Price Accounting adjustments
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5.1 Acquisition and divestment of companies
and operations (Continued)
Accounting policies
Business Combinations
Enterprises acquired or formed during the year are recognized in the
consoli-
dated financial statements from the date of acquisition or formation. The ac-
quisition date is the date when the parent company effectively obtains con-
trol of the acquired enterprise. Enterprises disposed of are recognized in the
consolidated income
statement until the disposal date. The comparative fig-
ures are not restated for acquisitions.
For acquisitions of new enterprises in which the parent company is able to ex-
ercise control over the acquired enterprise, the purchase method is used. The
acquire
d enterprises’ identifiable assets, liabilities and contingent liabilities
are measured at fair value at the acquisition date. Identifiable intangible as-
sets are recognized if they are separable or arise from a contractual right. De-
ferred tax on revaluatio
ns is recognized.
Any excess of the cost over the fair value of the identifiable assets, liabilities
and contingent liabilities acquired is recognized as goodwill under intangible
assets. Goodwill is not amortized but is tested at least annually for impair-
ment. The first impairment test is performed within the end of the acquisition
year. Upon acquisition, goodwill is allocated to the cash
-generating units,
which subsequently form the basis for the impairment test. Goodwill and fair
value adjustments in con
nection with the acquisition of a foreign entity with
another functional currency than the presentation currency used by GN Store
Nord are treated as assets and liabilities belonging to the foreign entity and
translated into the foreign entity’s functional
currency at the exchange rate
at the transaction date.
The cost of a business combination comprises the fair value of the considera-
tion agreed upon. When a business combination agreement provides for an
adjustment to the cost of the combination conting
ent on future events, the
amount of that adjustment is included in the cost of the combination if the
adjustment is probable and can be measured in a reliable manner. Subsequent
changes to contingent considerations are recognized in the income state-
ment. I
f uncertainties regarding measurement of identifiable assets, liabilities
and contingent liabilities exist at the acquisition date, initial recognition will
take place on the basis of preliminary fair values. If identifiable assets, liabili-
ties and conting
ent liabilities are subsequently determined to have different
fair value at the acquisition date than first assumed, goodwill is adjusted up
until twelve months after the acquisition. The effect of the adjustments is rec-
ognized in the opening balance of eq
uity and the comparative figures are re-
stated accordingly.
When acquiring a controlling interest in steps, GN Store Nord assesses the fair
value of the acquired net assets at the time control is obtained. At such time,
interests acquired previously are also adjusted to fair value. The difference be-
tween the fair value and the carrying amount is recognized in the income
statement.
Acquisition of additional equity interest after a business combination is not
accounted for using the acquisition method, but rather as equity transactions.
Disposals of equity interest while retaining control are also accounted for as
equity transactions. Transactions resulting in a loss of control result in a gain
or loss being recognized in the income statement.
When acquiring less than 100% of the shares in a company, GN Store Nord
recognizes the goodwill on a transaction
-by-transaction basis or as a propor-
tion of goodwill in accordance with GN Store Nord’s ownership interest.
In business combinations where put options have been
issued regarding
shares held by non
-controlling interests the non-controlling interests are rec-
ognized initially. As long as the put options remain unexercised the non
-con-
trolling interests are updated at the end of each reporting period, including its
sha
re of allocations of profit or loss. The non-controlling interests are thereaf-
ter derecognized by recognizing a financial liability for the put options and the
difference is included as an equity transaction.
If the put options are exer-
cised
, the same treatment is applied up to the date of exercise. The amount
recognized as the financial liability at that date
, is extinguished by the pay-
ment of the exercise price. If the put option expires unexercised, the position
is unwound so the non
-controlling interest is recognized at the amount it
would have been, had the put options never been issued. The financial liability
is derecognized in equity
.
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5.2 Remuneration of the Board of Directors
and Executive Management
Share-based incentive plans
The Group's long-term equity-settled incentive program is specified
and described in note 5.3 share-based incentive plans.
Executive Management and Board of Directors Remuneration
The total remuneration of the Executive Management is based on the
“General Guidelines for Incentive Pay to Management”, as adopted at
GN´s Annual General Meeting. The remuneration of the Executive Man-
agement is based on a fixed base salary and participation in GN Store
Nord’s option- and warrant-based long-term incentive programs. Fur-
thermore, the remuneration includes a yearly bonus plan with a target
bonus of 50% of the base salary with a potential to underperform or
outperform the target leading to an effective potential bonus range
between 0 - 100% of the base salary. The Executive Management´s bo-
nus is based on three parameters in light of the Group's focus areas:
• René Svendsen-Tune’s bonus is subject to the performance of
GN Audio’s EBITA, GN Audio’s revenue and individual performance
targets
• Gitte Pugholm Aabo’s bonus is subject to the performance of
GN Hearing’s EBITA, GN Hearing’s revenue and individual perfor-
mance targets
• Peter la Cour Gormsen’s bonus is subject to the performance of
GN Store Nord’s EBITA, GN Store Nord’s revenue and individual
performance targets
Remuneration to Executive Management and
Board of Directors can be specified as follows:
2021
2020
DKK million
Fixed
salary
Other ben-
efits*
Bonus
Share-
based
incentives
Total
Fixed
salary
Other ben-
efits*
Bonus
Share-
based
incentives
Total
René Svendsen-Tune, CEO, GN Store Nord & GN Audio
8.1
0.2
7.5
4.7
20.5
7.0
0.2
7.3
6.6
21.1
Gitte Pugholm Aabo, CEO, GN Hearing from September 20,
2019
7.5
0.2
2.1
4.8
14.6
6.9
0.2
4.1
3.9
15.1
Peter la Cour Gormsen, CFO, GN Store Nord & GN Audio from
January 1, 2021
3.5
0.3
3.2
1.6
8.6
-
-
-
-
-
Marcus Desimoni, CFO, GN Store Nord until December 31,
2020
-
-
-
-
-
4.4
0.8
3.8
10.1
19.1
Total Executive Management remuneration
19.1
0.7
12.8
11.1
43.7
18.3
1.2
15.2
20.6
55.3
Board of Directors remuneration
8.5
0.9
-
-
9.4
7.8
0.6
-
-
8.4
Total remuneration to Executive Management and Board of
Directors
27.6
1.6
12.8
11.1
53.1
26.1
1.8
15.2
20.6
63.7
* Other benefits include car allowances, company paid telephone, internet and housing cost. For the Board of Directors Other benefits include travel allowance and social security costs
GN Store Nord
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5.2 Remuneration of the Board of Directors
and Executive Management (Continued)
The Group does not make pension contributions for members of the
Executive Management. Executive Management has usual severance
agreements and change-of-control agreements.
Members of the Board of Directors receive a fixed remuneration as
approved by the shareholders at the Annual General Meeting on March
17, 2021. The fixed remuneration is based on GN Store Nord´s corpo-
rate governance structure in which an audit committee, a strategy
committee, a remuneration committee and a nomination committee
have been established. Further, the appointed board members of GN
Store Nord also serve on the Board of Directors of GN Hearing A/S and
GN Audio A/S.
The full-year remuneration of the Board of Directors is as follows
(DKK thousand):
GN Store Nord A/S
GN Hearing A/S
Chairman
870
Chairman
288
Deputy Chairman
580
Deputy Chairman
201
Other Board members
290
Other Board members
115
Remuneration Committee Chairman
350
Remuneration Committee,
other members
175
Audit Committee Chairman
350
Audit Committee, other members
175
Strategy Committee Chairman
350
GN Audio A/S
Strategy Committee, other members
175
Chairman
288
Nomination Committee Chairman
170
Deputy Chairman
201
Nomination Committee, other members
85
Other Board members
115
In addition to the remuneration, members of the Board of Directors
who are not Danish residents are entitled to a fixed travel allowance in
connection with participation in board meetings in Denmark. For Euro-
pean-based board members the allowance amounts to DKK 22,500 per
meeting and for Non-European based board members the allowance
amounts to DKK 45,000 per meeting.
The base fee for the Board of Directors remained unchanged from
2020 to 2021. In light of the negative financial impact on the company
of the COVID-19 pandemic, the Board in April 2020 decided to tempo-
rarily reduce their fee by 10% from May onwards (reinstated in October
2020), which is reflected in the total Board of directors remuneration
for 2020 below:
DKK thousand
2021
2020
Board fee Board of Directors
Per Wold-Olsen (Chairman)
2,140
2,033
Jukka Pertola (Deputy chairman)
1,418
992
William E. Hoover, Jr. (Deputy chairman until March 2020)
-
333
Helene Barnekow
605
641
Montserrat Pascual
870
609
Wolfgang Reim
1,045
1,058
Ronica Wang
695
660
Anette Weber
870
609
Leo Larsen*
290
276
Morten Andersen*
290
276
Marcus Stuhr Perathoner*
290
276
Total fee Board of Directors
8,513
7,763
* Employee elected members
DKK thousand
2021
2020
Fixed travel allowance & social security
Per Wold-Olsen
113
112
Helene Barnekow
206
175
Montserrat Pascual (from Q2 2020)
285
152
Wolfgang Reim
90
89
Ronica Wang
135
45
Anette Weber (from Q2 2020)
45
-
Total Board of Directors travel allowance and social security
874
573
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5.3 Share-based incentive plans
Option and warrant programs
GN Store Nord has an option-based and a warrant-based long-term
equity-settled incentive program whereby the Executive Management
and other employees in key positions are granted options and warrants
linked to shares in GN Store Nord A/S, GN Hearing A/S and GN Audio
A/S. For members of Executive Management the grant size can vary
between 50-100% of their base salary. Warrants and options are
granted at no consideration.
Calculation of share price for GN Hearing A/S and GN Audio A/S
The 2019 -2021 option programs are based on GN Store Nord A/S
shares, whereas the warrant programs for 2015-2018 are based on GN
Hearing A/S and GN Audio A/S shares. On a quarterly basis the share
price for GN Hearing A/S and GN Audio A/S is calculated, using a top-
down approach based on analysis of external broker reports for the
allocation of GN Store Nord A/S’ share price into GN Hearing, GN
Audio and Other. This calculation is also the basis for the Black-Scholes
valuation as stated below regarding valuation of warrants.
Vesting conditions and exercise of warrants
The 2015-2018 warrant programs are incentive programs with a three-
year vesting period from the grant date. Warrants vest when a set of
criteria are met: The share price of GN Store Nord has increased and
the share price of GN Hearing A/S and GN Audio A/S has outperformed
a peer group index of competitors and industry indices, as defined by
the Board of Directors of GN Hearing and GN Audio, respectively.
Vested warrants may be exercised during a four-week exercise window
opening each quarter for a three-year period after vesting. The quar-
terly four-week exercise window will open following the release of an
external Valuation Report concerning the value of the shares of GN
Hearing A/S and GN Audio A/S.
Vesting conditions and exercise of options
The 2019-2021 programs are long-term incentive programs with a
three-year vesting period from the grant date. The programs include a
performance multiplier, based on revenue growth and EBITDA im-
provement relative to a broad peer group of comparable companies.
This means, that after the three-year vesting period, the initial share
option grant can either increase, decrease or stay the same, depending
on GN’s performance relative to a peer group. The maximum effect of
the performance multiplier is to decrease the number of options to 0
or increase the number of options by a factor of 2. For executive man-
agement the gross return on each annual grant is capped at a value
equal to four times the annual base salary at the time of grant. Vested
options may be exercised at any time outside black-out periods for a
three-year period after vesting.
Valuation model and assumptions
The fair value of the warrants and options are calculated using the
principles of the Black-Scholes option pricing model. For the 2015-
2018 warrants the model has taken the overperformance criteria into
account using Monte Carlo simulation. The fair values of options
granted during the year are based on the underlying market prices at
the grant dates.
The exercise price for the annual ordinary grant of options is based on
the average share price for GN Store Nord A/S in the five days follow-
ing the release of the annual report in the year in which the options are
awarded.
The following assumptions were applied for the calculation of the fair value at the grant date of GN Store Nord A/S options:
Executive Management
Other employees
2021
2020
2021
2020
Number of options granted in the year
96,500
158,480
378,437
535,641
Share price of GN Store Nord A/S at ordinary grant date
548
390
548
390
Vesting period
3 years
3 years
3 years
3 years
Life of option
6 years
6 years
6 years
6 years
Volatility*
32%
29%
32%
29%
Expected dividend
0.3%
0.4%
0.3%
0.4%
Risk-free interest rate**
0.00%
0.00%
0.00%
0.00%
Fair value per option at ordinary grant (DKK)***
127
83
143
87
Total fair value at grant (DKK million)
12
13
54
47
Amortization period of the program
2021 - 2024
2020 - 2023
2021 - 2024
2020 - 2023
* Volatility is estimated by external experts, and is calculated based on data from a historical period
matching the expected time to expiry of the options
** Risk
-free interest rate is estimated by external experts and based on the zero yield curve derived from Danish government bonds with maturity equal to the expiry of the options
*** The fair value assumes a performance multiplier of 1
GN Store Nord
Annual Report 2021 Financial Statements – Consolidated
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5.3 Share-based incentive plans (Continued)
Exercise of warrants
When employees exercise their warrants they are exchanged with
shares in GN Store Nord A/S based on the relationship between the
value of the warrant and the value of the GN Store Nord A/S share at
the time of exercise. Hereafter the employee is free to keep the GN
Store Nord A/S shares or sell them in the open market.
GN Store Nord A/S
GN Hearing A/S
GN Audio A/S
DKK
Number of options*
DKK
Number of warrants
DKK
Number of warrants
Average
exercise
price
Executive
Manage-
ment
Other
employees
Total
Average
exercise
price
Executive
Manage-
ment
Other
employees
Total
Average
exercise
price
Executive
Manage-
ment
Other
employees
Total
Outstanding at January 1, 2020
311
170,288
604,713
775,001
31,042
473
7,259
7,732
30,275
2,638
4,585
7,223
Granted during the year
381
158,480
535,641
694,121
-
-
-
-
-
-
-
-
Exercised during the year
-
-
-
-
29,927
-240
-3,168
-3,408
28,381
-1,060
-2,232
-3,292
Forfeited during the year
350
-
-29,228
-29,228
31,792
-
-86
-86
32,491
-
-93
-93
Outstanding at December 31, 2020
344
328,768
1,111,126
1,439,894
31,923
233
4,005
4,238
31,865
1,578
2,260
3,838
Transferred during the year
343
23,458
-23,458
-
-
-
-
-
33,913
98
-98
-
Granted during the year
550
96,500
378,437
474,937
-
-
-
-
-
-
-
-
Exercised during the year
-
-
-
-
31,620
-233
-2,487
-2,720
31,920
-526
-1,826
-2,352
Forfeited during the year
415
-
-44,647
-44,647
26,936
-
-44
-44
-
-
-
-
Outstanding at December 31, 2021
395
448,726
1,421,458
1,870,184
32,632
-
1,474
1,474
31,777
1,150
336
1,486
Weighted average term to maturity
(Years)
4.0
4.1
4.0
-
1.8
1.8
1.5
1.6
1.5
Exercisable at December 31, 2020
-
-
-
-
618
618
840
236
1,076
Exercisable at December 31, 2021
-
-
-
-
1,474
1,474
1,150
336
1,486
* The performance multiplier can decrease the number of options to 0 or as maximum effect increase the number of options by a factor of 2
GN Store Nord
Annual Report 2021 Financial Statements – Consolidated
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5.3 Share-based incentive plans (Continued)
Outstanding warrants and options at December 31, 2021 by grant date
are shown below:
Accounting policies
Share-based incentive plans
The Executive Management and a number of key employees are included in
share-based incentive plans (equity-settled plans). For equity-settled pro-
grams, the warrants and options are measured at the fair value at the
grant date and recognized in the income statement as a staff cost of the
respective functions over the vesting period. The counter item is recog-
nized in equity. On initial recognition, an estimate is made of the number of
warrants and options expected to vest. This estimate is subsequently re-
vised for changes in the number of warrants and options expected to vest.
Accordingly, recognition is based on the number of warrants and options
that are ultimately vested. The fair value of granted warrants and options
is estimated using the Black-Scholes option pricing model. Vesting condi-
tions are taken into account when estimating the fair value of the warrants
and options.
GN Store Nord A/S
GN Hearing A/S
GN Audio A/S
DKK
Number of options*
DKK
Number of warrants
DKK
Number of warrants
Grant date
Exercise
price
Executive
Manage-
ment
Other
employees
Total
Exercise
price
Executive
Manage-
ment
Other
employees
Total
Exercise
price
Executive
Manage-
ment
Other
employees
Total
March 2017
-
-
-
-
30,451
-
244
244
28,794
494
126
620
August 2017
-
-
-
-
39,391
-
35
35
-
-
-
-
February 2018
-
-
-
-
31,792
-
943
943
33,913
656
210
866
August 2018
-
-
-
-
46,342
-
49
49
-
-
-
-
September 2018
-
-
-
-
44,817
-
12
12
-
-
-
-
December 2018
-
-
-
-
34,047
-
191
191
-
-
-
-
April 2019
313
139,071
538,641
677,712
-
-
-
-
-
-
-
-
June 2019
325
-
26,479
26,479
-
-
-
-
-
-
-
-
September 2019
282
44,393
-
44,393
-
-
-
-
-
-
-
-
February 2020
381
168,762
481,195
649,957
-
-
-
-
-
-
-
-
May 2020
311
-
7,605
7,605
-
-
-
-
-
-
-
-
November 2020
476
-
3,348
3,348
-
-
-
-
-
-
-
-
February 2021
550
96,500
360,595
457,095
-
-
-
-
-
-
-
-
May 2021
495
-
3,595
3,595
-
-
-
-
-
-
-
-
Outstanding at December 31
448,726
1,421,458
1,870,184
-
1,474
1,474
1,150
336
1,486
* The performance multiplier can decrease the number of options to 0 or as maximum effect increase the number of options by a factor of 2
GN Store Nord
Annual Report 2021 Financial Statements – Consolidated
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5.4 Pension obligations
DKK million
2021
2020
Present value of defined benefit obligations
359
359
Fair value of plan assets
-367
-323
Net obligations
-8
36
Of which is included in other non-current assets, refer to note 3.5
-15
-
Of which is included in pension obligations
7
36
The present value of defined benefit obligations includes un-
funded pension obligations not covered by payments to insur-
ance companies of DKK 19 million (2020: DKK 18 million).
Development in present value of defined benefit obligations
Obligations at January 1
359
349
Foreign exchange adjustments
23
-26
Costs for the year
4
4
Interest expense
7
9
Actuarial (gains) losses regarding demographic assumptions
1
-2
Actuarial (gains) losses regarding financial assumptions
-18
33
Pension payments, unfunded
-
-
Settlements, amendments etc.
-
9
Pension payments
-17
-17
Obligations at December 31
359
359
Maturity of pension obligations
Less than one year
19
17
Between one and five years
81
72
More than five years
259
270
Total
359
359
Development in fair value of plan assets
Plan assets at January 1
323
323
Foreign exchange adjustments
24
-28
Interest income
6
7
Return on plan assets in excess of interest income
29
30
Payment by GN Store Nord
2
2
Settlements, amendments etc.
-
4
Pension payments
-17
-15
Plan assets at December 31
367
323
DKK million
2021
2020
Pension costs recognized in the income statement
Costs for the year
-4
-4
Interest expense
-7
-9
Interest income from plan assets
6
7
Defined benefit plans total
-5
-6
Defined contribution plans total
-171
-130
Total pension costs recognized in the income statement
-176
-136
The costs are recognized in the following income statement
items
Production costs
-26
-19
Development costs
-50
-33
Selling and distribution costs
-54
-48
Management and administrative expenses
-45
-34
Financial expenses
-1
-2
Total
-176
-136
The following accumulated actuarial gains (losses) since Janu-
ary 1, 2005 are recognized in the Statement of other Compre-
hensive Income
Accumulated actuarial gains (losses)
-14
-60
Breakdown of plan assets
Shares
61%
61%
Bonds
37%
37%
Cash and cash equivalents
2%
2%
Total
100%
100%
At the balance sheet date the actuarial calculations for the prevailing
American defined benefit plan are based on a discount rate of 2.75%
(2020: 2.25%).
A 25 basis point decrease in the discount rate will result in a DKK 10
million increase in the defined benefit obligation and a 25 basis point
increase will result in a DKK 9 million decrease in the defined benefit
obligation.
Defined contribution plans
The Group has pension commitments regarding certain groups of em-
ployees in Denmark and abroad. Pension plans are generally defined
contribution plans. The pension plans are funded by current payments
to independent pension funds and insurance companies, which are re-
sponsible for payment of the pension benefits. When contributions to
defined contribution plans have been paid, the Group has no further
commitments to present or former employees. Contributions to de-
fined contribution plans are recognized in the income statement when
they are due.
Defined benefit plans
The Group has an American pension plan, which is not covered by pay-
ments to insurance companies but is partly off-set by the fair value of
reserved pension funds. At July 1, 2003, the pension plan was frozen,
meaning that employees covered by the plan will continue to be enti-
tled to the pension payments earned up to this date. However, employ-
ees will not earn further pension payments.
GN Store Nord
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5.4 Pension obligations (Continued)
5.5 Contingent liabilities
DKK million
2021
2020
Guarantees
4
4
Guarantees
The majority of guarantees are related to performance guarantees.
Security
The Group has not pledged any assets as security in the present or
prior financial years.
Purchase obligations
GN Store Nord has agreed with a number of suppliers that the
suppliers will purchase components for the production of hearing
instruments and headsets based on sales estimates prepared by GN
Store Nord. To the extent that GN Store Nord's sales estimates exceed
actual purchases from suppliers, GN Store Nord is under an obligation
to purchase any remaining components from the suppliers.
Management assesses sales estimates on an ongoing basis. To the
extent that component inventories at suppliers exceed the volumes
expected to be used, GN Store Nord recognizes a provision for onerous
purchase contracts.
Pending litigations and disputes
GN Store Nord and its subsidiaries are parties to pending litigations,
claims and disputes arising out of the normal conduct of their business
including various cases involving patent infringements. While
provisions that management deems to be reasonable and appropriate
have been made for probable losses, there are uncertainties connected
with these estimates. GN Store Nord does not expect the pending
litigations and claims to have a material impact on GN Store Nord’s
financial position, operating profit or cash flows in addition to the
amounts recognized as provisions for legal disputes.
Accounting policies
Pensions
Contributions to defined contribution plans are recognized in the income
statement in the period to which they relate and any contributions
outstanding are recognized in the balance sheet as other payables.
Defined benefit plans are subject to an annual actuarial estimate of the
present value of future benefits under the defined benefit plan. The
present value is determined on the basis of assumptions about the future
development in variables such as salary levels, interest rates, inflation and
mortality. The present value is determined only for benefits earned by
employees from their employment with the Group. The actuarial present
value less the fair value of any plan assets is recognized in the balance
sheet under pension obligations. Pension costs for the year are recognized
in the income statement based on actuarial estimates and financial
expectations at the beginning of the year. Any difference between the
expected development in plan assets and the defined benefit obligation
and actual amounts results in actuarial gains or losses. Actuarial gains or
losses are recognized in other comprehensive income.
Significant accounting estimates and judgments
Provisions, Contingencies and Litigations
GN Store Nord’s Management assesses provisions, contingent assets and
contingent liabilities and the likely outcome of pending or threatening liti-
gations and claims on an ongoing basis. The outcome depends on future
events that are by nature uncertain. In assessing the likely outcome of liti-
gations, claims and tax disputes, etc., Management bases its assessment on
external legal assistance and decided cases.
GN Store Nord
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5.6 Investments in associates
DKK million
2021
2020
Aggregated financial information for associates:
Total share of profit (loss) in associates
-36
-9
Total unrecognized profit (loss) in associates
-
30
Total share of net assets in associates
153
523
Carrying amount of associates
153
523
Transactions with associates comprise sale of goods of DKK 146
million (2020: DKK 66 million) and purchase of services, licenses and
other assets of DKK 19 million (2020: DKK 87 million). At year end GN
has DKK 48 million (2020: DKK 150 million) in receivables from
associates. Share of profit (loss) in associates includes a profit of DKK
31 million (2020: DKK 0 million), of dividend received in excess of
carrying value of the associates.
5.7 Other non-cash adjustments
DKK million
2021
2020
Share-based payment (granted)
50
77
(Gain) loss on divestment of operations
-11
-
Loss allowance on trade receivables, inventory write-
downs, etc.
-29
130
Adjustment of provisions
13
139
Total
23
346
5.8 Fees to statutory auditors
DKK million
2021
2020
Statutory audit
-10
-9
Tax advice services
-1
-1
Other services
-12
-5
Total
-23
-15
Fees for services other than statutory audit of the financial statements
amounts to DKK 13 million (2020: DKK 6 million). Services other than
statutory audit of the financial statements provided by Pricewater-
houseCoopers Statsautoriseret Revisionspartnerselskab (Pricewater-
houseCoopers Denmark) comprise services primarily related to tax
compliance and transfer pricing, transaction/project support and tech-
nical accounting advisory services.
5.9 Related parties
No single entity or person has control or exercises significant influence
over the GN Group as a whole. Key Management personnel and
associated companies are the sole related parties of the Group.
Transactions with Key Management personnel constitute
remuneration, as disclosed in note 5.2 Remuneration of the Board of
Directors and Executive Management and 5.3 Share-based incentive
plans, and transactions with associates are disclosed in note 5.6
Investments in associates.
5.10 Events after the reporting period
Please refer to note 5.1 Acquisition and divestment of companies and
operations for disclosures on the acquisition of SteelSeries made after
the reporting period.
Accounting policies
Investments in Associates in the Consolidated Financial Statements
On acquisition of investments in associates, the purchase method is used,
cf. Business Combinations.
In the consolidated financial statements investments in associates are rec-
ognized according to the equity method. Investments in associates are
measured at the proportionate share of the enterprises’ net asset values
calculated in accordance with the Group’s accounting policies minus or
plus the proportionate share of unrealized intra-group profits and losses
and plus the carrying amount of goodwill.
Profit (loss) from Investments in Associates
The proportionate share of the profit (loss) after tax of the individual asso-
ciates is recognized in the income statement of the Group after elimination
of the proportionate share of intra-group profits (losses).
GN Store Nord
Annual Report 2021 Financial Statements – Consolidated
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Domicile
Currency
Ownership %
Share capital
GN Store Nord A/S
Denmark
DKK
552,703,928
GN Ejendomme A/S
Denmark
DKK
100
115,625,000
GN Financing A/S
Denmark
DKK
100
400,000
GN Audio A/S
Denmark
DKK
100
35,109,000
Falcom A/S
Denmark
DKK
100
88,501,000
GN Audio Australia Pty Ltd.
Australia
AUD
100
2,500,000
GN Áudio Brasil Importacão & Comércio Ltda.
Brazil
BRL
100
407,821
GN Audio Canada Inc.
Canada
CAD
100
409,800
GN Audio (China) Ltd.
China
CNY
100
65,116,155
GN Audio (Shanghai) Co., Ltd.
China
CNY
100
15,481,000
GN Audio Logistic (Xiamen) Ltd.
China
CNY
100
4,133,738
GN Audio France SA
France
EUR
100
80,000
GN Audio Germany GmbH
Germany
EUR
100
51,100
GN Audio Hong Kong Limited
Hong Kong
HKD
100
33,500,000
GN Audio India Private Limited
India
INR
100
40,000,000
Jabra Connect India Private Limited
India
INR
51
20,000,000
GN Audio Italy s.r.l.
Italy
EUR
100
10,200
GN Audio Japan Ltd.
Japan
JPY
100
10,000,000
GN Audio Benelux B.V.**
Netherlands
EUR
100
18,000
GN Audio Philippines, Inc.
Philippines
PHP
100
10,000,000
GN Audio Poland Sp. Z.o.o.
Poland
PLN
100
50,000
GN Audio Singapore Pte. Ltd.
Singapore
SGD
100
700,000
Jabra Connect Singapore Pte.Ltd.
Singapore
USD
51
12,000
GN Audio Spain, S.A.
Spain
EUR
100
66,111
GN Audio Sweden AB
Sweden
SEK
100
5,100,000
GN Audio UK Ltd.
United Kingdom
GBP
100
100,000
GN Audio USA Inc.
USA
USD
100
45,900,000
Falcom US, LLC*
USA
USD
100
-
Domicile
Currency
Ownership %
Share Capital
GN Hearing A/S
Denmark
DKK
100
65,252,600
GN Hearing 2 A/S
Denmark
DKK
100
400,000
GN Hearing Australia Pty. Ltd.
Australia
AUD
100
4,000,002
GN Hearing Austria GmbH
Austria
EUR
100
482,500
GN ReSound Produtos Médicos Ltda.
Brazil
BRL
100
1,019,327
Beltone Holdings Canada, LTD
Canada
CAD
100
1,039
GN Hearing Care Canada Ltd.
Canada
CAD
100
8,435,000
GN Hearing Shanghai Ltd.
China
CNY
100
20,491,300
GN ReSound China Ltd.
China
CNY
100
34,000,000
GN Hearing Czech Republic spol. s r.o.
Czech Republic
CZK
100
102,000
Audigy Group International A/S
Denmark
DKK
100
400,000
Dansk Hørecenter ApS
Denmark
DKK
100
165,657,000
GN Hearing Finland Oy/Ab
Finland
EUR
100
55,502
GN Hearing SAS
France
EUR
100
2,300,000
GN Hearing GmbH
Germany
EUR
100
296,549
GN ReSound GmbH Hörtechnologie
Germany
EUR
100
2,162,253
GN Hearing India Private Limited
India
INR
100
20,983,210
GN Hearing S.r.l.
Italy
EUR
100
181,190
GN Hearing Japan K.K.
Japan
JPY
100
499,000,000
GN Hearing Korea Co., Ltd.
Korea
KRW
100
136,700,000
GN Hearing (Malaysia) Sdn Bhd
Malaysia
MYR
100
2,500,000
GN Hearing Benelux B.V.
Netherlands
EUR
100
680,670
GN Hearing New Zealand Limited
New Zealand
NZD
100
2,000,000
GN Hearing Norway AS
Norway
NOK
100
2,000,000
GN Hearing RUS LLC
Russia
RUB
100
10,000
GN Hearing Pte. Ltd.
Singapore
SGD
100
1,740,000
Nessa Hearing Pte. Ltd.
Singapore
SGD
92
250,000
Interton Slovakia S.R.O.
Slovakia
EUR
85
6,639
GN Hearing Care S.A.
Spain
EUR
100
66,110
GN Hearing Sverige AB
Sweden
SEK
100
100,000
GN Hearing Switzerland AG
Switzerland
CHF
100
500,000
Companies in GN Group
GN Store Nord
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Companies in the GN Group (Continued)
Domicile
Currency
Ownership %
Share capital
GN Hearing A/S continued:
GN Hearing UK Ltd.
United Kingdom
GBP
100
7,376,000
GN US Holdings Inc.
USA
USD
100
36,000,000
GN Hearing Care Corporation
USA
USD
100
190,000
GN ReSound Holdings, LLC.
USA
USD
100
31,634
ReSound Holdings, Inc.
USA
USD
100
10,000
Lively Hearing Corporation
USA
USD
91
32,061,457
GN NB Holdings Inc.
USA
USD
100
100,000
Great Hearing Benefits, LLC*
USA
USD
100
-
Beltone Holdings US, LLC
USA
USD
100
3,000
Beltone Hearing Care Foundation*
USA
USD
100
-
Audigy Group, LLC*
USA
USD
100
-
Audigy Medical, LLC*
USA
USD
100
-
Audigy Venture, LLC*
USA
USD
100
-
Associates
Audio Nova S.R.L.
Romania
ROL
49
1,000
Himpp A/S
Denmark
DKK
11
1,600,000
HIMSA A/S
Denmark
DKK
25
1,000,000
HIMSA II A/S
Denmark
DKK
17
500,000
Himsa II K/S
Denmark
DKK
15
3,250,000
K/S Himpp
Denmark
DKK
9
19,950,000
Progetto Udire S.R.L.
Italy
EUR
35
838,700
audEERING Gmbh
Germany
EUR
31
8,378,000
Hearing Center of the East Bay, LLC
USA
USD
50
25,000
BelMart LLC
USA
USD
30
3,556,822
Bold North Beltone, LLC*
USA
USD
30
-
AXE Audiology, LLC*
USA
USD
30
-
Statewide Hearing, LLC*
USA
USD
30
-
Beltopia LLC
USA
USD
25
1,734,500
* Without par value
** GN Audio Benelux B.V. (registration number 20113074) and GN Hearing Benelux B.V. (registration number 09033081) applies th
e group
exemption of article 2:403 of the Dutch Civil Code and does not prepare individual financial statements.
Note: A few minor companies have been omitted from the list.
GN Store Nord
Annual Report 2021 Financial Statements – Consolidated
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In this annual report the following financial terms
(non-IFRS measures) are used:
Operating profit (loss)
Profit (loss) before tax and financial items.
EBITDA
Operating profit (loss) before depreciation and impairment of property, plant and equipment, amor-
tization and impairment of intangible assets, except development projects, impairment of goodwill
and gains (losses) on
divestment of operations etc.. EBITDA therefore include amortization of devel-
opment projects.
EBITA
Operating profit (loss) before amortization and impairment of acquired intangible assets, impair-
ment of goodwill and gains (losses) on
divestment of operations etc. EBITA therefore include amor-
tization of development projects and software developed in-house.
Free cash flow
Cash flow from operating and investing activities
Convertible bond
EUR 330 million senior unsecured zero coupon bonds due 2024 with detachable unsecured warrant
units expiring 2024 (refer to note 4.2 Financial risks).
Key Ratio Definitions
Organic growth
=
Absolute organic revenue growth
Revenue in comparative period
Organic growth is a measure of growth excluding the impact of acquisitions, divestments and for-
eign exchange adjustments from year-on-year comparisons.
Net working capital (NWC)
=
Inventories + receivables + other operating current assets - trade payables - other operating current
liabilities
Net interest bearing debt (NIBD)
=
Bank loans and issued bonds + Lease liabilities - Cash and cash equivalents
Dividend payout ratio
=
Total dividend
Profit (loss) for the year
Gross margin
=
Gross profit
Revenue
EBITA margin
=
EBITA
Revenue
ROIC (Return on invested
capital including goodwill)
=
EBITA
Average invested capital including goodwill
Invested capital
=
NWC + property, plant and equipment and intangible assets + loans to dispensers of GN Hearing
products + pre-paid discounts + ownership interests – provisions
Cash conversion
=
Free cash flow excl. company acquisitions and divestments
EBITA
Return on equity (ROE)
=
Profit (loss) for the year
Average equity of the Group
Equity ratio
=
Equity of the Group
Total assets
Earnings per share, basic (EPS)
=
Profit (loss) for the year attributable to shareholders in GN Store Nord A/S
Average number of shares outstanding
Earnings per share, fully diluted
(EPS diluted)
=
Profit (loss) for the year attributable to shareholders in GN Store Nord A/S
Average number of shares outstanding, fully diluted
Market capitalization
Number of shares outstanding x share price at the end of the period
Outstanding shares
Number of shares listed - treasury shares
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Annual Report 2021 Financial Statements – Consolidated
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Income statements 128
Statement of comprehensive income 128
Balance sheet at December 31 129
Statement of cash flow 130
Statement of equity 131
Parent company
Financial
statements
GN Store Nord
Annual Report 2021 Financial Statements – Parent Company
Content
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Content
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DKK million
Note
2021
2020
Revenue
563
456
Gross profit
563
456
Development costs
-91
-90
Management and administrative expenses
1,2,3,4
-663
-549
Other operating income and costs, net
25
-
Operating profit (loss)
-166
-183
Share of profit after tax in subsidiaries
10
1,943
1,332
Share of profit (loss) in associates
11
-1
-3
Financial income
5
100
110
Financial expenses
5
-170
-143
Profit (loss) before tax
1,706
1,113
Tax on profit (loss)
6
50
139
Profit (loss) for the year
1,756
1,252
Proposed profit appropriation/distribution of loss
Transferred to reserve for net revaluation according to the equity method
-57
1,332
Retained earnings
1,599
-286
Proposed dividends for the year
214
206
1,756
1,252
DKK million
2021
2020
Profit (loss) for the year
1,756
1,252
Other comprehensive income
Items that will not be reclassified subsequently to the income statement
Other changes in equity in subsidiaries
36
-1
Items that may be reclassified subsequently to the income statement
Adjustment of cash flow hedges
-
4
Tax relating to other comprehensive income
-
-1
Foreign exchange adjustments, etc.
396
-601
Other changes in equity in subsidiaries
27
-2
Other comprehensive income for the year
459
-601
Total comprehensive income for the year
2,215
651
Income statement
Statement of
comprehensive income
GN Store Nord
Annual Report 2021 Financial Statements – Parent Company
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DKK million
Note
2021
2020
Assets
Intangible assets
7
589
369
Property, plant and equipment
8, 9
59
71
Investments in subsidiaries
10
11,201
8,618
Investments in associates
11
34
24
Amounts owed by subsidiaries
14
4,019
3,704
Total non-current assets
15,902
12,786
Tax receivables
40
-
Other receivables
14
158
138
Cash and cash equivalents
5,761
1,230
Total current assets
5,959
1,368
Total assets
21,861
14,154
Equity and liabilities
Share capital
553
569
Other reserves
-1,277
-1,610
Proposed dividends for the year
214
206
Retained earnings
6,739
6,013
Total equity
6,229
5,178
Bank loans and issued bonds
14, 17
9,513
5,069
Lease liabilities, non-current
9, 14
14
30
Deferred tax liabilities
12
26
28
Total non-current liabilities
9,553
5,127
Bank loans
14, 17
1,606
334
Lease liabilities, current
9, 14
8
7
Trade payables
14
94
56
Tax payables
-
156
Amounts owed to subsidiaries
14, 17
4,186
3,087
Other payables
14
185
209
Total current liabilities
6,079
3,849
Total equity and liabilities
21,861
14,154
Balance sheet at December 31
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Annual Report 2021 Financial Statements – Parent Company
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DKK million
Note
2021
2020
Operating activities
Operating profit (loss)
-166
-183
Depreciation, amortization and impairment
3
104
94
Other non-cash adjustments
-22
13
Cash flow from operating activities before changes in working capital
-84
-76
Change in receivables
-20
-84
Change in trade payables and other payables
25
136
Total changes in working capital
5
52
Cash flow from operating activities before financial items and tax
-79
-24
Interest and dividends, etc. received
32
2,023
Interest paid
-
-
Tax paid, net
-143
159
Cash flow from operating activities
-190
2,158
Investing activities
Investments in intangible assets
7
-290
-149
Investments in tangible assets
8
-31
-22
Disposal of intangible assets
26
-
Investments in associates
-11
-
Amounts owed by subsidiaries
-315
247
Cash flow from investing activities
-621
76
Cash flow from operating and investing activities (free cash flow)
-811
2,234
Financing activities
Decrease of long-term loans
17
-6
-303
Increase in short-term loans and amounts owed to subsidiaries
17
1,568
-
Decrease of short-term loans and amounts owed to subsidiaries
17
-
-1,471
Net proceeds from issue of EMTN bonds
17
5,134
-
Paid dividends
-188
-187
Purchase/sale of treasury shares
-1,166
-453
Cash flow from financing activities
5,342
-2,414
Net cash flow
4,531
-180
Cash and cash equivalents, beginning of period
1,230
1,410
Cash and cash equivalents, end of period
5,761
1,230
Statement of cash flows
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2021
Other reserves
DKK million
Share
capital*
Hedging
reserve
Treasury
shares
Reserve
according
to the
equity
method
Proposed
dividends
for the
year
Retained
earnings
Total
equity
Balance sheet total at December 31, 2020
569
6
-3,640
2,024
206
6,013
5,178
Profit (loss) for the period
-
-
-
-57
-
1,813
1,756
Adjustment of cash flow hedges
-
-
-
-
-
-
-
Other changes in equity in subsidiaries
-
-
-
63
-
-
63
Foreign currency translation adjustments of in-
vestments in subsidiaries etc.
-
-
-
396
-
-
396
Tax relating to other comprehensive income
-
-
-
-
-
-
-
Other comprehensive income for the year
-
-
-
459
-
-
459
Total comprehensive income for the year
-
-
-
402
-
1,813
2,215
Reduction of the share capital
-16
-
873
-
-
-857
-
Other changes in equity in subsidiaries
-
-
-
22
-
-
22
Purchase of ownership interests in subsidiaries by
payment in treasury shares
-
-
202
-
-
-43
159
Share-based payment (granted)
-
-
-
-
-
4
4
Tax related to share-based incentive plans
-
-
-
-
-
5
5
Purchase of treasury shares
-
-
-1,166
-
-
-
-1,166
Proposed dividends for the year*
-
-
-
-
214
-214
-
Paid dividends
-
-
-
-
-188
-
-188
Dividends, treasury shares
-
-
-
-
-18
18
-
Balance sheet total at December 31, 2021
553
6
-3,731
2,448
214
6,739
6,229
* Equivalent to DKK 1.55 per share (2020: DKK 1.45 per share)
The reserve according to the equity method includes foreign exchange adjustments of DKK -1,104 million
(2020: DKK -1,500 million). Retained earnings, which are available for distribution from the Parent Company
amounts to DKK 3,228 million (2020: DKK 2,585 million).
2020
Other reserves
DKK million
Share
capital*
Hedging
reserve
Treasury
shares
Reserve
according
to the
equity
method
Proposed
dividends
for the
year
Retained
earnings
Total
equity
Balance sheet total at December 31, 2019
569
3
-3,424
1,190
206
6,305
4,849
Profit (loss) for the period
-
-
-
1,332
-
-80
1,252
Adjustment of cash flow hedges
-
4
-
-
-
-
4
Other changes in equity in subsidiaries
-
-
-
-18
-
-
-18
Foreign currency translation adjustments of in-
vestments in subsidiaries etc.
-
-
-
-601
-
-
-601
Tax relating to other comprehensive income
-
-1
-
15
-
-
14
Other comprehensive income for the year
-
3
-
-604
-
-
-601
Total comprehensive income for the year
-
3
-
728
-
-80
651
Reduction of the share capital
-
-
-
-
-
-
-
Other changes in equity in subsidiaries
-
-
-
51
-
-
51
Purchase of ownership interests in subsidiaries by
payment in treasury shares
-
-
237
-
-
-43
194
Share-based payment (granted)
-
-
-
-
-
13
13
Tax related to share-based incentive plans
-
-
-
55
-
5
60
Purchase of treasury shares
-
-
-453
-
-
-
-453
Proposed dividends for the year*
-
-
-
-
206
-206
-
Paid dividends
-
-
-
-
-187
-
-187
Dividends, treasury shares
-
-
-
-
-19
19
-
Balance sheet total at December 31, 2020
569
6
-3,640
2,024
206
6,013
5,178
Statement of changes in equity
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Notes – Income statement and balance sheet
1 Staff costs 133
2 Share-based incentive plans 133
3 Depreciation, amortization and impairment 134
4 Fees to statutory auditors 134
5 Financial income and expenses 135
6 Tax 135
7 Intangible assets 135
8 Property, plant and equipment 136
9 Leases 137
10 Investments in subsidiaries 138
11 Investments in associates 138
12 Deferred tax 138
Notes – Other disclosures
13 Contingent assets and liabilities 138
14 Financial instruments 139
15 Outstanding shares and treasury shares 140
16 Related party transactions 140
17 Liabilities from financing activities 141
18 Accounting policies 141
Parent Company Notes
GN Store Nord
Annual Report 2021 Financial Statements – Parent Company
Content
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1 Staff costs
DKK million
2021
2020
Wages, salaries and remuneration
208
167
Pensions
21
11
Share-based incentives
4
13
Other social security costs
1
1
Total
234
192
Executive Management remuneration can be specified
as follows:
Peter la Cour Gormsen, CFO, GN Store Nord from Jan-
uary 1, 2021
(2020: Marcus Desimoni, CFO, GN Store Nord until De-
cember 31, 2020)
Fixed salary
3.5
4.4
Other benefits
0.3
0.8
Bonus
3.2
3.8
Share-based incentives*
1.6
9.1
Total
8.6
18.1
Board of Directors remuneration
6.4
5.9
Total remuneration
15.0
24.0
Staff costs are included in Management and adminis-
trative expenses.
Average number of employees
291
223
Number of employees at year-end
317
246
* In 2020 non
-vested share-based incentives for Marcus Desimoni were expensed for the
full vesting period and recognized per December 31, 2020
For information regarding Executive Management and Board of Direc-
tors total remuneration please refer to note 5.2 Remuneration of the
Board of Directors and Executive Management in the consolidated
financial statements.
2 Share-based incentive plans
For 2019-2021 a share-based incentive plan has been implemented in
GN Store Nord. For a description of this, see note 5.3 Share-based
incentive plans in the consolidated financial statements. The following
assumptions were applied for the calculation of the fair value at the
grant date of the options:
Executive Management
Other employees
2021
2020
2021
2020
Number of option awarded in the year
18,250
39,303
50,288
54,560
Share price GN Store Nord at ordinary grant date
548
390
548
390
Vesting period
3 years
3 years
3 years
3 years
Life of option
6 years
6 years
6 years
6 years
Volatility*
32%
29%
32%
29%
Expected dividend
0.3%
0.4%
0.3%
0.4%
Risk-free interest rate**
0.00%
0.00%
0.00%
0.00%
Fair Value per option at ordinary grant (DKK)***
127
83
143
87
Total fair value at grant (DKK million)
2
3
7
4
Amortization period of the program
2021 - 2024
2020 - 2023
2021 - 2024
2020 - 2023
* Volatility is estimated by external experts, and is calculated based on data from a historical period matching the expected time to expiry of the options
** Risk-free interest rate is estimated by external experts and based on the zero yield curve derived from Danish government bonds with maturity equal to the expiry of the options
*** The fair value assumes a performance multiplier of 1
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2 Share-based incentive programs
(Continued)
3 Depreciation, amortization and
impairment
Depreciation, amortization and impairment for the year of property,
plant and equipment (incl. leased assets) and intangible assets of DKK
104 million (2020: DKK 94 million), is recognized in the income
statement as management and administrative expenses.
4 Fees to statutory auditors
DKK million
2021
2020
Statutory audit
-3
-2
Tax advice services
-1
-1
Other services
-9
-3
Total
-13
-6
Services other than statutory audit are described in note 5.8 Fees to
statutory auditors in the consolidated financial statements.
DKK
Number*
Average
exercise
price
Executive
Management**
Other
employees
Total
Outstanding options at January 1, 2020
313
50,367
67,022
117,389
Options granted during the year
384
39,303
54,560
93,863
Options forfeited during the year
345
-
-13,497
-13,497
Outstanding options at December 31, 2020
344
89,670
108,085
197,755
Options transferred during the year***
332
23,458
-5,046
18,412
Options granted during the year
547
18,250
50,288
68,538
Options forfeited during the year
398
-
-5,441
-5,441
Outstanding options at December 31, 2021
392
131,378
147,886
279,264
Weighted average term to maturity (Years)
3.9
4.1
4.0
Number of exercisable options at December 31, 2020
-
-
-
Number of exercisable options at December 31, 2021
-
-
-
* The performance multiplier can decrease the number of options to 0 or as maximum effect increase the number of options by a factor of 2
** Includes Marcus Desimoni, former CFO of GN Group
*** Transfers relate to options transferred between GN Group companies due to changes in executive management in Group companies
DKK
Number*
Grant date
Exercise
price
Executive
Management**
Other
employees
Total
April 2019
313
63,543
57,722
121,265
February 2020
381
49,585
37,990
87,575
November 2020
476
-
3,348
3,348
February 2021
550
18,250
45,231
63,481
May 2021
495
-
3,595
3,595
Outstanding options at December 31, 2021
131,378
147,886
279,264
* The performance multiplier can decrease the number of options to 0 or as maximum effect increase the number of options by a factor of 2
** Includes Marcus Desimoni, former CFO of GN Group
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5 Financial income and expenses
DKK million
2021
2020
Financial income
Interest income from subsidiaries*
49
68
Interest income from bank balances*
1
4
Financial income, other
1
3
Fair value adjustment of derivative financial instru-
ments, net
49
-
Foreign exchange gain
-
35
Total
100
110
Financial expenses
Interest expense to subsidiaries*
-2
-7
Interest expenses on bank loans and issued bonds*
-74
-65
Financial expenses, other
-52
-26
Foreign exchange loss
-42
-45
Total
-170
-143
*Interest income and expenses from financial assets and liabilities at amortized cost
6 Tax
DKK million
2021
2020
Tax on profit (loss)
Current tax for the year
38
-83
Deferred tax for the year
13
132
Adjustment to current tax in respect of prior years
10
10
Adjustment to deferred tax in respect of prior years
-11
80
Total
50
139
Reconciliation of effective tax rate
Danish tax rate
22.0%
22.0%
Non-taxable income
0.0%
-0.1%
Non-deductible expenses
0.1%
0.3%
Adjustment of tax with respect of prior years
0.0%
-8.1%
Share of profit (loss) in subsidiaries
-25.0%
-26.3%
Share of profits (loss) in associates
0.0%
0.1%
Other, including provisions for uncertain tax positions
0.0%
-0.4%
Effective tax rate
-2.9%
-12.5%
In 2021, the company paid preliminary taxes of DKK 353 million in
Danish corporate income tax for the year on behalf of the joint Group
taxation (For the year 2020 DKK 272 million was paid in final tax for
the year in Danish corporate income tax).
7 Intangible assets
Software
DKK million
2021
2020
Cost at January 1
670
522
Additions
290
149
Transfers
21
-
Other adjustments
-1
-1
Cost at December 31
980
670
Amortization and impairment at January 1
-301
-224
Amortization
-86
-77
Transfers
-4
-
Amortization and impairment at December 31
-391
-301
Carrying amount at December 31
589
369
Amortized over
1 - 7 years
1 - 7 years
The carrying amount includes software in progress of DKK 412 million
(2020: DKK 191 million).
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8 Property, plant and equipment
2021
2020
DKK million
Factory and office
buildings
Operating
assets and equip-
ment
Total
Factory and office
buildings
Operating
assets and equip-
ment
Total
Cost at January 1
-
52
52
-
30
30
Additions
-
31
31
-
22
22
Transfers
-
-21
-21
-
-
-
Cost at December 31
-
62
62
-
52
52
Depreciation and impairment at January 1
-
-17
-17
-
-7
-7
Depreciation
-
-11
-11
-
-10
-10
Transfers
-
4
4
-
-
-
Depreciation and impairment at December 31
-
-24
-24
-
-17
-17
Carrying amount at December 31
-
38
38
-
35
35
Leased assets, c.f. note 9
20
1
21
35
1
36
Total carrying amount at December 31
20
39
59
35
36
71
Operating assets and equipment are depreciated over 2
-7 years.
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9 Leases
Lease liabilities
DKK million
2021
2020
Contractual maturity analysis of lease liabilities:
Less than one year
8
7
Between one and three years
14
13
More than three years
-
18
Total
22
38
The maturity analysis is based on non-discounted cash flows.
The parent company’s leases mainly consist of property leases of e.g.
offices but also include cars and office equipment. Rental contracts are
typically made for fixed periods but may have extension options.
Contracts may contain both lease and non-lease components. In such
cases the consideration in the contract is allocated to the lease and
Amounts expensed in the income statement and total cash outflow
DKK million
2021
2020
Expense relating to low-value assets and short-term
leases
1
-
Cash outflow re. lease liabilities
6
6
Total cash outflow for leases
7
6
non-lease components based on their relative stand-alone prices. Lease
terms are negotiated on an individual basis and contain a wide range of
different terms and conditions.
The following right-of-use assets from leases are included in property, plant and equipment:
Leased assets
2021
2020
DKK million
Factory
and office
buildings
Operating
assets and
equipment
Total
Factory
and office
buildings
Operating
assets and
equipment
Total
Carrying amount at January 1
35
1
36
39
2
41
Additions
-
1
1
-
-
-
Remeasurements
-9
-
-9
2
-
2
Depreciation
-6
-1
-7
-6
-1
-7
Carrying amount at December 31
20
1
21
35
1
36
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10 Investments in subsidiaries
DKK million
2021
2020
Cost at January 1
6,594
6,400
Additions, capital contribution
159
194
Cost at December 31
6,753
6,594
Value adjustment at January 1
2,024
3,190
Share of profit after tax in subsidiaries
1,943
1,332
Foreign currency translation adjustments
396
-601
Direct equity postings in subsidiaries
85
103
Dividends received
-
-2,000
Value adjustments at December 31
4,448
2,024
Carrying amount at December 31
11,201
8,618
Group companies are listed on pages 124-125. Before the Annual
General Meeting on March 9, 2022, a dividend of DKK 1,000 million will
be declared from both GN Hearing A/S and GN Audio A/S to GN Store
Nord A/S, DKK 2,000 million in total.
11 Investments in associates
DKK million
2021
2020
Aggregated financial information for associates is
provided below:
Total share of loss in associates for the year
-1
-3
Total share of net assets in associates
34
24
Carrying amount of associates
34
24
12 Deferred tax
DKK million
2021
2020
Deferred tax, net
Deferred tax at January 1, net
-28
-240
Adjustment in respect of prior years
-11
80
Deferred tax for the year recognized in profit (loss) for
the year
13
132
Deferred tax at December 31, net
-26
-28
Deferred tax, net relates to
Intangible assets
-43
-42
Other
17
14
Total
-26
-28
13 Contingent assets and liabilities
The parent company has issued guarantees on behalf of subsidiaries of
DKK 24 million (2020: DKK 23 million).
The company is jointly taxed with all Danish subsidiaries. The company
is jointly and severally liable with the other companies in the joint
taxation for Danish corporate taxes and withholding taxes on dividend,
interests and royalties within the joint taxation.
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14 Financial instruments
Categories of financial assets and liabilities
DKK million
2021
2020
Other receivables
75
55
Amounts owed by subsidiaries
4,019
3,704
Financial assets at amortized cost
4,094
3,759
Derivative financial instruments included in Other receivables
83
83
Financial assets at fair value through profit or loss
83
83
Issued bonds (bond-with-warrant units)
2,363
2,326
Issued EMTN bonds
6,778
1,627
Bank loans, non-current
372
1,116
Lease liabilities
22
37
Bank loans, current
1,606
334
Other payables
-
19
Trade payables
94
56
Amounts owed to subsidiaries
4,186
3,087
Financial liabilities at amortized cost
15,421
8,602
Derivative financial instruments included in Other payables
77
102
Financial liabilities at fair value through profit or loss
77
102
For a description of loans in GN Store Nord, as well as interest rate and
foreign exchange risk on these, please refer to note 4.2 Financial risks
in the consolidated financial statements.
Contractual maturity analysis for financial liabilities
DKK million
Less than
one year
Between
one
and three
years
More than
three
years
Total
2021
Issued bonds
70
6,226
3,404
9,700
Long-term bank loans
1
1
372
374
Short-term bank loans
1,606
-
-
1,606
Amounts owed to subsidiaries
4,186
-
-
4,186
Trade payables
94
-
-
94
Total non-derivative financial liabilities
5,957
6,227
3,776
15,960
Derivative financial liabilities
68
-
9
77
Total financial liabilities
6,025
6,227
3,785
16,037
2020
Issued Bonds
12
1,661
2,455
4,128
Long-term bank loans
1
745
373
1,119
Short-term bank loans
334
-
-
334
Amounts owed to subsidiaries
3,087
-
-
3,087
Other payables
19
-
-
19
Trade payables
56
-
-
56
Total non-derivative financial liabilities
3,509
2,406
2,828
8,743
Derivative financial liabilities
102
-
-
102
Total financial liabilities
3,611
2,406
2,828
8,845
The maturity analysis is based on non-discounted cash flows.
Fair value disclosures re. financial instruments at amortized cost
Based on observable inputs (fair value hierarchy level 2) the fair value
of issued bonds (zero coupon) amounted to DKK 2,422 million at
December 31, 2021 (2020: DKK 2,394 million), and the fair value of
EMTN bonds amounted to DKK 6,832 million (2020: 1,673 million). For
other financial assets and liabilities, the fair value is approximately
equal to the carrying amount.
The foreign currency risk in GN Store Nord A/S mainly arises from
translation of receivables, debt and cash balances related to EUR and
USD, of which a large part of the USD risk is related to intercompany
balances. The foreign currency risk is mitigated through non-
designated derivatives. At year end 2021 the FX derivatives had a fair
value of DKK 16 million (2020: -18 million), of which DKK -9 million
(2020: -21 million) are related to derivatives of USD vs EUR or DKK and
DKK 12m (2020: DKK 7 million) are related to derivatives of EUR vs
DKK. Interest swaps have value of DKK -9 million (2020: DKK -1
million). The fair value of derivatives is categorized as level 2
(observable inputs) in the fair value hierarchy.
DKK million
2021
2020
Fair value adjustment for the year recognized in Other compre-
hensive income
-
4
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Annual Report 2021 Financial Statements – Parent Company
Content
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15 Outstanding shares and treasury shares
For information regarding outstanding shares and treasury shares
please refer to note 4.1 Outstanding shares and treasury shares in the
consolidated financial statements.
Funding, liquidity and capital structure is managed at Group level,
please refer to note 4.2 Financial risks in the consolidated financial
statements.
16 Related party transactions
In addition to disclosures given in note 5.9 Related parties, related
parties for the parent company comprise group enterprises and
associates over which GN Store Nord A/S exercises control or
significant influence.
Group companies are listed on pages 124-125. Trade with group enter-
prises comprised:
DKK million
2021
2020
Sale of services to group enterprises
563
456
Lease income from group enterprises
28
25
Sale of intangible assets to Group enterprises
26
-
Purchase of services from group enterprises
-108
-89
Lease costs paid to group enterprises
-32
-30
The parent company's balances with group enterprises at December
31, 2021 are disclosed in the balance sheet. Interest income and
expenses with respect to group enterprises are disclosed in note 5
Financial income and expenses. Further, balances with Group enter-
prises comprise trade balances related to the purchase and sale of
goods and services.
Sale of services to group enterprises consists of facility services, can-
teen services, management fee and IT costs. Purchase of services from
group enterprises mainly consists of facility services and canteen ser-
vices. Furthermore, the parent company has purchased development
services from subsidiaries related to the exploring research projects.
No transactions have been carried out with the Board of Directors, the
Executive Management, senior employees, major shareholders or other
related parties, apart from remuneration disclosed in notes 5.2
Remuneration of the Board of Directors and Executive Management
and 5.3 Share-based incentive plans in the consolidated financial
statements.
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Annual Report 2021 Financial Statements – Parent Company
Content
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17 Liabilities from financing activities
18 Accounting policies
The financial statements of the parent company, GN Store Nord A/S
have been prepared in accordance with International Financial Report-
ing Standards as adopted by the EU and Danish disclosure require-
ments for annual reports of listed companies. The financial statements
have been prepared in accordance with the historical cost convention,
as modified by the revaluation of certain financial instruments (includ-
ing derivative financial instruments) at fair value.
The accounting policies for the financial statements of the parent com-
pany have been changed in line with the changes to accounting policies
described in note 1.1 in the consolidated financial statements. These
changes have not had any material impact on recognition and meas-
urement in the parent company. Apart from the above-mentioned
changes the accounting policies for the financial statements of the par-
ent company are unchanged from the last financial year and are the
same as for the consolidated financial statements with the following
additions:
Supplementary accounting policies for the parent company
Investments in subsidiaries
Revenue in the parent company primarily relates to services rendered
to GN Group companies during the year.
Investments in subsidiaries are accounted for using the equity method
whereby the investment is initially recognized at cost and adjusted
thereafter for the post-acquisition change in the share of the subsidiar-
ies net assets. The share of the subsidiaries profit or loss, less unreal-
ized intra-Group profits, is included in the income statement of the par-
ent company and the share of the subsidiaries other comprehensive in-
come is included in other comprehensive income of the parent com-
pany. Received dividends reduce the carrying amount of the invest-
ments in subsidiaries.
To the extent net profit in subsidiaries exceeds declared or proposed
dividends from such companies, net revaluation of investments in sub-
sidiaries is transferred to Net revaluation reserve under Equity accord-
ing to the equity method.
Management’s report for the GN Parent company
The GN Parent Company reports GN Corporate level activities and
investments into GN Hearing and GN Audio. Revenue in 2021 grew
DKK 107 million (2020: DKK 98 million), primarily due to changes in
the Group Functions. Costs increased during the year due to changes in
the Group Functions. The GN Parent Company applies the equity
method for recognizing share of profit and investments in subsidiaries
and profit for the year and total equity developed in line with the
Group’s overall development. In 2021 no dividends have been received.
(2020: DKK 2,000 million).
DKK million
Bank loans
Issued bonds
Lease liabilities
Bank loans,
current
Amounts owed
to subsidiaries
Payment re.
frozen vacation
pay included in
Other payables *
Total
Liabilities at January 1
1,116
3,953
37
334
3,087
19
8,546
Cash flows
-
5,134
-6
528
1,060
-19
6,697
Foreign exchange adjustments
-
2
-
-
39
-
41
New leases and remeasurements
-
-
-9
-
-
-
-9
Loans reclassified to current
-744
-
-
744
-
-
-
Non-cash interest expenses
-
52
-
-
-
-
52
Liabilities at December 31, 2021
372
9,141
22
1,606
4,186
-
15,327
Liabilities at January 1
1,418
3,927
41
1,196
3,663
-
10,245
Cash flows
-296
-
-7
-862
-609
-
-1,774
Foreign exchange adjustments
-6
-15
-
-
33
-
12
New leases
-
-
3
-
-
-
3
Non-cash interest expenses
-
41
-
-
-
-
41
Liabilities at December 31, 2020
1,116
3,953
37
334
3,087
-
8,527
* Payment made to LD Fonde relating to the change in vacation year in Denmark and presented in Cash flow from financing activities.
GN Store Nord
Annual Report 2021
Content
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Today, the Executive Management and the Board of Directors have
discussed and approved the GN Store Nord Annual Report 2021.
The annual report has been prepared in accordance with International
Financial Reporting Standards as adopted by the EU and further
requirements in the Danish Financial Statements Act.
It is our opinion that the consolidated financial statements and the
parent company financial statements give a true and fair view of the
financial position of the group and the parent company at 31
December 2021 and of the results of the group's and the parent
company's operations and cash flows for the financial year 1 January –
31 December 2021.
Further, in our opinion, the Management's report gives a fair review of
the development in the group's and the parent company's activities
and financial matters, results of operations, cash flows and financial
position as well as a description of material risks and uncertainties that
the group and the parent company face.
In our opinion, the Annual Report of GN Store Nord A/S for the
financial year 1 January to 31 December 2021 with the file name
GNStoreNord-2021-12-31.zip is prepared, in all material respects, in
compliance with the ESEF Regulation.
We recommend that the annual report be approved at the Annual
General Meeting.
Statements by the Executive Management
and the Board of Directors
Ballerup, February 10, 2022
Executive Management
René Svendsen-Tune
CEO, GN Store Nord & GN Audio
Gitte Pugholm Aabo
CEO, GN Hearing
Peter la Cour Gormsen
CFO, GN Store Nord & GN Audio
Board of Directors
Per Wold-Olsen
Chairman
Jukka Pekka Pertola
Deputy chairman
Hélène Barnekow
Montserrat Maresch Pascual
Wolfgang Reim
Ronica Wang
Anette Weber
Morten Andersen
Leo Larsen
Marcus Stuhr Perathoner
GN Store Nord
Annual Report 2021
Content
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Our opinion
Basis for opinion
Independent Audit
or’s Reports
Report on the audit of the Financial Statements
GN Store Nord
Annual Report 2021
Content
145/148
Key audit matters
GN Store Nord
Annual Report 2021
Content
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Statement on Management’s Report
Management’s responsibilities for the Financial Statements
GN Store Nord
Annual Report 2021
Content
147/148
Hellerup, 10 February 2022
PricewaterhouseCoopers
Statsautoriseret Revisionspartnerselskab
CVR no 3377 1231
Mogens Nørgaard Mogensen
State Authorised Public Accountant
mne21404
Mads Melgaard
State Authorised Public Accountant
mne34354
GN Store Nord
Annual Report 2021
Content
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