Interim Report Q2 2022
GN
Store Nord in Q2 2022 delivered 29% revenue growth of which 8% was
organic, driven by strong
Enterprise
and Hearing
performance. Global supply chain situation improving but remain challenging
Guidance revision to reflect consumer sentiment: Significant reduction of SteelSeries guidance;
reduction
of GN Audio organic revenue growth guidance driven by Consumer business sentiment;
GN Hearing confirming the lower end of the guidance range
. See guidance section on page 9
GN Store Nord
8%
organic growth
• In Q2 2022, GN delivered 29% revenue growth, of which 8% was organic, leading to a revenue of DKK
4,857 million. A strong improvement of DKK 1 billion compared to Q1 2022
•
The global supply chain situation is improving, but continues to be challenging
•
Adj. EBITA was DKK 610 million and free cash flow excl. M&A was DKK -412 million driven by net working
capital and investments in growth opportunities
•
Adj. Leverage ended at 5.7x, reflecting M&A activities and timing effects of the earnings profile
•
August 17, GN signed mandate documents with its commercial banking group for a three-year EUR 520
million loan to cover its short-term funding requirements
GN Hearing
4%
organic growth
•
GN Hearing delivered revenue growth of 16% in Q2 2022, of which 4% was organic. The growth was
driven by strong performance in Europe while negatively impacted by COVID-19 restrictions in China and
consumer sentiment in the US. Adj. EBITA margin was 6.6% in the Core business driven by higher freight
and material costs, investments in launch activities and the development in FX
•
The Emerging business, primarily Lively, delivered another strong quarter with 79% organic revenue
growth. EBITA was DKK -49 million
•
Free cash flow excl. M&A was DKK -326 million driven by the lower reported earnings level and
investments in growth opportunities
•
ReSound OMNIA, announced on August 16, addresses the No. 1 hearing aid challenge: hearing speech in
noise. ReSound OMNIA delivers an 150% improvement in speech understanding in noisy environments
•
Our first custom rechargeable hearing aids, “Custom made by ReSound”, launched in June 2022
•
Financial guidance confirmed for the lower end of the guidance range
GN Audio
10%
organic growth
• GN Audio delivered revenue growth of 36% in Q2 2022, of which 10% was organic, driven by 18% organic
revenue growth in the B2B Enterprise segment despite constraints from an improving yet challenging
global supply chain situation. The growth was negatively impacted by a -25% organic revenue growth in
the Consumer business, which now accounts for less than 20% of GN Audio organic
•
SteelSeries delivered organic revenue growth of -30% while gaining market share in a significantly
declining market, impacted by a challenged supply chain and lower consumer sentiment
•
Adj. EBITA margin was 18.0%, reflecting investments in growth opportunities, higher freight and material
costs, the development in FX and the consolidation of SteelSeries
•
Free cash flow excl. M&A was DKK 49 million reflecting strong execution in a challenging environment but
offset by inventory build-up of critical components and trade receivables
•
Financial guidance revision to reflect consumer sentiment: Significant reduction of SteelSeries organic
revenue guidance; reduction of GN Audio organic revenue growth guidance due to Consumer business
sentiment; and revision of adj. EBITA margin for GN Audio primarily due to FX
Financial overview Q
2 2022
GN Hearing GN Audio
DKK million – Q2 2022
Core
business
Emerging
business
GN
Hearing
GN Audio
organic
SteelSeries
GN Audio
Revenue
1,488
41
1,529
2,841
487
3,328
Organic growth
4%
79%
4%
10%
-30%
10%
Adj. EBITA**
98
-49
49
600
Adj. EBITA margin **
6.6%
3.2%
18.0%
GN Store Nord*
GN Hearing
GN Audio
DKK million
Q2 2022
Q2 2021
Growth
Q2 2022
Q2 2021
Growth
Q2 2022
Q2 2021
Growth
Revenue
4,857
3,778
29%
1,529
1,322
16%
3,328
2,456
36%
Organic growth
8%
49%
4%
95%
10%
32%
M&A growth
14%
0%
4%
0%
20%
0%
Adj. Gross profit**
2,496
2,096
19%
940
832
13%
1,556
1,264
23%
Adj. Gross profit margin**
51.4%
55.5%
-4.1%p
61.5%
62.9%
-1.4%p
46.8%
51.5%
-4.7%p
Adj. EBITA**
610
635
-4%
49
153
-68%
600
532
13%
Adj. EBITA margin**
12.6%
16.8%
-4.2%p
3.2%
11.6%
-8.4%p
18.0%
21.7%
-3.7%p
Non-recurring items
-111
0
-43
0
-68
0
Adj. Earnings per share (EPS)***
3.17
3.55
-11%
Free cash flow excl. M&A
-412
510
-922
-326
123
-449
49
371
-322
* Including "Other", ** Excluding non-recurring items (DKK -54 million in COGS in GN Audio, DKK -14 million in OPEX in GN Audio, DKK -16 million in COGS in GN Hearing and
DKK -27 million in OPEX in GN Hearing), *** Excluding non-recurring items (DKK -111 million) and amortization of acquires intangible assets
2
Q2
Q2
YTD
YTD
Full year
2022
2021
2022
2021
2021
DKK million
(unaud.)
(unaud.)
(unaud.)
(unaud.)
(aud.)
GN Hearing
Revenue
1,529
1,322
2,866
2,556
5,332
Revenue growth
16%
85%
12%
26%
13%
Organic growth
4%
95%
3%
34%
16%
Gross profit margin
60.4%
62.9%
60.2%
62.6%
63.8%
EBITA*
6
153
-64
251
643
EBITA margin*
0.4%
11.6%
-2.2%
9.8%
12.1%
ROIC (EBITA*/Average invested capital)
4%
9%
4%
9%
9%
Free cash flow excl. M&A
-326
123
-501
-81
198
Cash conversion (Free cash flow excl. M&A/EBITA*)
NA
80%
NA
-32%
31%
GN Audio
Revenue
3,328
2,456
5,850
5,332
10,443
Revenue growth
36%
26%
10%
48%
20%
Organic growth
10%
32%
-12%
55%
22%
Gross profit margin
45.1%
51.5%
42.9%
51.5%
50.6%
EBITA*
532
532
677
1,246
2,164
EBITA margin*
16.0%
21.7%
11.6%
23.4%
20.7%
ROIC (EBITA*/Average invested capital)
21%
94%
21%
94%
79%
Free cash flow excl. M&A
49
371
-91
809
1,288
Cash conversion (Free cash flow excl. M&A/EBITA*)
9%
70%
-13%
65%
60%
GN Store Nord
Revenue
4,857
3,778
8,716
7,888
15,775
Revenue growth
29%
42%
10%
40%
17%
Organic growth
8%
49%
-7%
47%
20%
Gross profit margin
49.9%
55.5%
48.6%
55.1%
55.0%
EBITA*
499
635
515
1,388
2,619
EBITA margin*
10.3%
16.8%
5.9%
17.6%
16.6%
Profit (loss) before tax
325
552
98
1,164
2,271
Effective tax rate
21.5%
21.4%
21.4%
21.3%
21.2%
ROIC (EBITA*/Average invested capital)
11%
29%
11%
29%
25%
Earnings per share, basic (EPS)
1.89
3.29
0.40
6.96
13.63
Earnings per share, fully diluted (EPS diluted)
1.89
3.25
0.40
6.87
13.49
Free cash flow excl. M&A
-412
510
-969
488
702
Cash conversion (Free cash flow excl. M&A/EBITA*)
-83%
80%
-188%
35%
27%
Equity ratio
22.6%
33.9%
22.6%
33.9%
26.4%
Net interest-bearing debt
14,966
4,408
14,966
4,408
5,358
Net interest-bearing debt (period-end)/EBITDA
6.8
1.3
6.8
1.3
1.8
Share buybacks**
-
408
-
408
1,166
Outstanding shares, end of period (thousand)
127,750
129,113
127,750
129,113
127,718
Average number of outstanding shares (thousand)
127,750
129,612
127,737
129,519
128,816
Average number of outstanding shares, fully diluted (thousand)
128,024
131,255
128,176
131,233
130,194
Treasury shares, end of period (thousand)
9,444
9,063
9,444
9,063
10,458
Share price at the end of the period
248.7
547.8
248.7
547.8
411.3
Market capitalization
31,771
70,728
31,771
70,728
52,530
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
Financial highlights
3
Highlights Q2 2022
• GN Hearing delivered revenue growth of 16% in Q2 2022,
of which 4% was organic. The growth was driven by strong
performance in Europe while negatively impacted by
COVID-19 restrictions in China and consumer sentiment in
the US. Adj. EBITA margin was 6.6% in the Core business
driven by higher freight and material costs, investments in
launch activities and the development in FX
• The Emerging business, primarily Lively, delivered another
strong quarter with 79% organic revenue growth. EBITA
was DKK -49 million
• Free cash flow excl. M&A was DKK -326 million driven by
the lower reported earnings level and investments in
growth opportunities
• ReSound OMNIA, announced on August 16, addresses the
No. 1 hearing aid challenge: hearing speech in noise.
ReSound OMNIA delivers an 150% improvement in speech
understanding in noisy environments
• Our first custom rechargeable hearing aids, “Custom made
by ReSound”, launched in June 2022
• Financial guidance confirmed for the lower end of the
guidance range
Revenue
GN Hearing delivered organic revenue growth of 4% in Q2
2022 driven by strong performance in Europe while
negatively impacted by COVID-19 restrictions in China and
consumer sentiment in US. Revenue growth was 16%
including around 8% impact from the development in
foreign exchange rates and around 4% impact from M&A,
reflecting the Lively acquisition. The Emerging business
(Lively) delivered 79% organic revenue growth. In H1
2022, GN Hearing delivered 3% organic revenue growth.
GN Hearing revenue development
North America
The hearing aid market in North America was soft in Q2
2022 reflecting a lower consumer sentiment, with
volumes slightly below Q2 2021. GN Hearing’s organic
revenue growth in North America was -9% driven by solid
performance in the independent market offset by the
performance in the VA and the negative ASP development
in Costco. Revenue growth was 5% including around 12%
impact from the development in foreign exchange rates
and 2% impact from M&A. In H1 2022, GN Hearing
delivered organic revenue growth of -4% in North
America.
Europe
In Europe, GN Hearing delivered strong organic revenue
growth of 25% driven by Germany and Southern Europe.
The growth was positively impacted by larger than normal
revenue from GN Hearing’s key strategic partner,
Cochlear. Revenue growth was 37% including around 1%
impact from the development in foreign exchange rates
and 11% impact from M&A reflecting a retail ownership in
transition. In H1 2022, GN Hearing delivered organic
revenue growth of 14% in Europe.
Rest of World
The Rest of World region continued to be impacted by
COVID-19, depending on the level of local restrictions
across countries, with especially China and to a smaller
extent Korea having restrictions during Q2 2022. Despite
the severe impact from COVID-19 in China, organic
revenue growth in the Rest of World region was 9%. Like
Europe, the growth was positively impacted by larger than
normal revenue from GN Hearing’s key strategic partner,
Cochlear. Revenue growth was 15% including around 6%
impact from the development in foreign exchange rates.
In H1 2022, GN Hearing delivered organic revenue growth
of 6% in the Rest of World region.
Earnings and other financial highlights
Adj. gross profit reached DKK 940 million in Q2 2022
corresponding to an adj. gross margin of 61.5% compared
to 62.9% in Q2 2021. The adj. gross margin is negatively
impacted by elevated freight costs, increased material
costs, the development in VA and Costco as well as mix
effects. In order to mitigate the impact from increasing
material costs, pricing initiatives were put into place
during Q1 2022, with some positive impact seen in Q2
2022. In H1 2022, GN Hearing delivered an adj. gross
margin of 60.9%.
GN Hearing continued to take prudent OPEX measures to
manage costs. Due to investments in launch activities and
the consolidation of the Lively acquisition, adj. OPEX
increased by 31% compared to Q2 2021. Adj. selling and
distribution costs increased by 55% reflecting Lively, retail in
transition, additional launch costs and FX. Adj. general and
administrative expenses decreased by 8% in Q2 2022
compared to Q2 2021. Adj. R&D costs decreased by 10%
GN Hearing
16% revenue growth and 4% organic revenue growth in the Core business in Q2
2022
. Launch of ReSound OMNIA, which delivers 150% improvement in speech
understanding in noisy environments
1,322
1,347
1,429
1,297
1,488
Q2 2021 Q3 2021 Q1 2022Q4 2021
40 41
Q2 2022
1,337
1,529
Revenue Emerging business (DKKm)
Revenue Core business (DKKm)
Org.
growth
95% 4% 2% 2% 4%
4
compared to Q2 2021 primarily driven by timing effects. The
incurred development costs increased by 19%. Other
operating income amounted to DKK -47 million in Q2 2022
compared to DKK -2 million in Q2 2021 due to the
development in FX. In H1 2022, adj. OPEX increased by 29%
compared to H1 2021. GN Hearing’s adj. EBITA was DKK 49
million, with the Core business delivering adj. EBITA of DKK
98 million corresponding to an adj. EBITA margin of 6.6%
including a negative impact from the development in FX. The
Emerging business, primarily Lively, delivered an EBITA of
DKK -49 million. Reported EBITA amounted to DKK 6 million
reflecting non-recurring items of DKK -43 million in Q2 2022.
In H1 2022, the adj. EBITA margin in the Core business was
4.5%, while the adj. EBITA margin in GN Hearing was 0.3%.
GN Hearing adj. EBITA development
*Excluding non-recurring items
The return on invested capital (ROIC) was 4% in Q2 2022,
while free cash flow excl. M&A was DKK -326 million in Q2
2022 compared to DKK 123 million in Q2 2021, mainly driven
by lower reported EBITA as a reflection of Lively and launch
activities. Additionally, GN Hearing has invested in growth
through financial support agreements related to expansion of
share of wallet with selected ReSound and Beltone partners.
Cash flow from M&A activities amounted to DKK -216 million,
reflecting a European retail ownership in transition. GN´s
strategy related to hearing aid retail is unchanged and GN
refrains from forward integration. In H1 2022, free cash flow
excl. M&A was DKK -501 million.
Business highlights
Custom made by ReSound
During Q2 2022, GN Hearing launched our first custom
rechargeable hearing aids, Custom made by ReSound,
offering the most advanced technology in a stylish design. It
provides all day comfort and streaming with outstanding
sound quality even in the toughest listening environments.
Roll-out began by the end of June 2022, starting in the US.
ReSound OMNIA
On August 16, 2022, GN Hearing announced its new product
platform, ReSound OMNIA, a new hearing aid platform that
will set a new standard in hearing technology and improve
how people interact with the world around them. ReSound
OMNIA provides significantly better hearing in noisy
environments and has been engineered and proven to deliver
150% improvement in speech understanding compared to
current hearing aids. Coupled with optimal comfort and
seamless connection to devices, these advances give people
living with hearing loss a solution that will help them hear
even the finest details of sound more easily.
Update on OTC
Following the announcement from FDA on August 16, it is
currently expected that the OTC market will open by October
2022. GN Hearing is strongly positioned with Jabra Enhance
Plus and GN will seek to register the product as an OTC
product, allowing consumers to buy the revolutionary
product online and in retail stores, including Best Buy.
Restoring profitability and non-recurring items
As communicated, GN Hearing expects the Core business to
restore profitability to an EBITA margin of more than 20% in
2024, driven by above-market revenue growth and several
operational initiatives, primarily related to the supply chain.
To accelerate the initiatives and restore profitability, GN
Hearing will incur DKK ~ -150 million in non-recurring items in
2022. For Q2 2022, non-recurring items amounted to DKK-43
million, translating into DKK -72 million in H1 2022.
GN Hearing non-recurring items
With the focus to digitalize, simplify and automate the supply
chain, it has been decided to outsource GN Hearing’s UK
distribution setup to an external partner operating out of the
Netherlands. The associated non-recurring costs will be
booked in H2 2022.
Market development
The hearing aid market has in general recovered and is
expected to return to historical volume growth levels in 2022,
however with continued differences across channels and
countries. The ASP development in the quarter was negative,
impacted by channel and country mix. We continue to believe
that the fundamentals of the hearing aid market are intact.
Management quote
“In Q2, GN Hearing delivered solid revenue growth despite soft
market conditions in the US and COVID-19 restrictions in
China. Our innovative R&D engine is at full speed with five
exciting products launched this year, the most recent being
ReSound OMNIA which delivers an outstanding 150%
improvement in speech understanding in noise. GN Hearing
now offers a fresh and very strong portfolio of solutions
addressing the diverse needs, experiences, and desires people
have when handling their hearing difficulties.”
Gitte Aabo, CEO of GN Hearing
(DKK million) Q2 2022 YTD 2022
Revenue - -
Production costs -16 -19
Gross profit -16 -19
Development costs -4 -7
Selling and distribution costs -10 -28
Management and administrative expenses -13 -18
Other operating income and costs, net - -
EBITA -43 -72
153
173
219
98
-67
-49
Q2 2022
49
Q2 2021 Q3 2021 Q4 2021 Q1 2022
26
-41
Adj. EBITA Core business (DKKm)*
Adj. EBITA Emerging business (DKKm)*
Adj. EBITA
margin*
11.6% 12.8% 15.3% 2.0% 6.6%
5
Highlights Q2 2022
• GN Audio delivered revenue growth of 36% in Q2 2022, of
which 10% was organic, driven by 18% organic revenue
growth in the B2B Enterprise segment despite constraints
from an improving yet challenging global supply chain
situation. The growth was negatively impacted by a -25%
organic revenue growth in the Consumer business, which
now accounts for less than 20% of GN Audio organic
• SteelSeries delivered organic revenue growth of -30%
while gaining market share in a significantly declining
market, impacted by a challenged supply chain and lower
consumer sentiment
• Adj. EBITA margin was 18.0%, reflecting investments in
growth opportunities, higher freight and material costs,
the development in FX and the consolidation of
SteelSeries
• Free cash flow excl. M&A was DKK 49 million reflecting
strong execution in a challenging environment but offset
by inventory build-up of critical components and trade
receivables
• Financial guidance revision to reflect consumer sentiment:
Significant reduction of SteelSeries organic revenue
guidance; reduction of GN Audio organic revenue growth
guidance due to Consumer business sentiment; and
revision of adj. EBITA margin primarily due to FX
Revenue
GN Audio delivered 10% organic revenue growth in Q2 2022
on top of the 32% organic revenue growth delivered in Q2
2021. The growth was driven by 18% organic revenue growth
in B2B Enterprise despite constraints from an improving yet
challenging global supply chain situation. The growth was
negatively impacted by a -25% organic revenue growth in the
Consumer business, which now accounts for less than 20% of
GN Audio organic. GN Audio continues to experience a very
strong B2B Enterprise order backlog. SteelSeries delivered
organic revenue growth of -30% while gaining market share in
a significantly declining market, impacted by a challenged
supply chain and lower consumer sentiment.
GN Audio revenue development
Revenue growth was 36% including a 20% impact from M&A,
reflecting SteelSeries. The impact from the development in
foreign exchange rates was around 6%. In H1 2022, GN Audio
delivered organic revenue growth of -12%, while SteelSeries
delivered -32%.
North America
In North America, GN Audio delivered -5% organic revenue
growth for the region on a high comparison base of 55% in
Q2 2021. Revenue growth was 40% including around 31%
impact from M&A and around 14% impact from
development in foreign exchange rates. In H1 2022, GN
Audio delivered -15% organic revenue growth in North
America.
Europe
In Europe, GN Audio delivered organic revenue growth of
22% compared to 20% organic revenue growth in Q2
2021 with strong performance in, among other, Germany
and the UK. Revenue growth was 33% including around
10% impact from M&A and around 1% impact from the
development in foreign exchange rates. In H1 2022, GN
Audio delivered -12% organic revenue growth in Europe.
Rest of World
In the Rest of World region, GN Audio delivered 0%
organic revenue on top of 32% organic revenue growth in
Q2 2021. In the Rest of World region, strong performance
was in particular seen in Korea and India. Revenue growth
was 33% including around 26% impact from M&A and
around 7% impact from the development in foreign
exchange rates. In H1 2022, GN Audio delivered -7%
organic revenue growth in the Rest of World region.
Earnings and other financial highlights
GN Audio delivered an adj. gross margin of 46.8% in Q2
2022 compared to 51.5% in Q2 2021, driven by a negative
impact from the elevated level of freight, increased
material costs, development from foreign exchange rates
and the consolidation of SteelSeries. Reported gross
margin was 45.1%, reflecting non-recurring items of DKK
-54 million in non-cash PPAs related to the SteelSeries
acquisition. In order to mitigate the impact from
increasing material costs, GN Audio initiated price
increases across the B2B Enterprise portfolio during Q1
2022, but with only limited effect in Q2 2022 due to the
large order backlog. In H1 2022, the adj. gross margin was
46.2%.
GN Audio’s adj. OPEX was DKK 956 million in Q2 2022,
reflecting a 31% increase compared to Q2 2021 primarily
driven by the consolidation of SteelSeries. Selling and
GN Audio
36% revenue growth and 10% organic revenue growth in Q2 2022 driven by
strong
B2B Enterprise performance despite constraints from an improving yet
challenging global supply chain situation
2,456
2,440
2,671
450
487
2,072
2,841
3,328
Q2 2022Q4 2021Q2 2021 Q3 2021 Q1 2022
2,522
Revenue GN Audio Organic (DKKm)
Revenue SteelSeries (DKKm)
Org.
growth
32% 1% -4% -30% 10%
6
distribution costs increased by 44%, while adj. general &
administrative costs increased 57%, mainly driven by the
consolidation of SteelSeries. Investments into R&D was
flat compared to Q2 2021. In H1 2022, adj. OPEX
increased by 16%. GN Audio’s adj. EBITA ended at DKK
600 million in Q2 2022, translating into an adj. EBITA
margin of 18.0%, compared to 21.7% in Q2 2021. The
development reflects the gross margin development due
to increasing freight and production costs, the
consolidation of SteelSeries and the development in FX.
Reported EBITA was DKK 532 million, reflecting DKK -68
million in non-recurring items related to the acquisition of
SteelSeries. In H1 2022, GN Audio delivered an adj. EBITA
margin of 16.5%.
GN Audio adj. EBITA development
*Excluding non-recurring items
The return on invested capital (ROIC) was 21% in Q2 2022
compared to 94% in Q2 2021, driven by the lower
reported EBITA as ROIC is calculated based on a 12-
months rolling EBITA. The invested capital has increased
significantly due to the goodwill recognition from the
SteelSeries acquisition. Free cash flow excl. M&A was DKK
49 million in Q2 2022 compared to DKK 371 million in Q2
2021, driven by slightly lower reported EBITA, inventory
build of certain critical components and timing of trade
receivables. In H1 2022, free cash flow excl. M&A was DKK
-91 million.
Business highlights
Launches and product roadmap
In order to mitigate the component shortages, GN Audio
continued during Q2 to execute on several initiatives to
strengthen the portfolio, including re-engineering of certain
high-volume products. The first re-engineered products were
shipped by the end of June. GN Audio continues to focus on
bringing best in class innovation to market and a strong R&D
product roadmap is in place with innovative and industry-
leading product launches in H2 2022, in line with the
historical launch cadence.
On May 24, SteelSeries announced the launch of a new high-
end gaming headset series, Arctis Nova Pro. Several years in
the making, the goals were to challenge the status quo,
alleviate pain points in gaming, and design the ultimate sound
experience. Crafted from the ground up, the Arctis Nova Pro
series produces a new level of excellence for high fidelity
audio, AI-powered voice clarity, and all-day comfort with sleek
Danish design aesthetics.
On June 21, SteelSeries announced the launch of the Apex
Pro Mini & Apex Pro Mini Wireless Keyboard building on the
award-winning Apex line of keyboards. The 60% form factor
with OmniPoint 2.0 has an 11x faster response time, 10x
faster actuation, and is 2x more durable than standard
mechanical switches.
SteelSeries integration and non-recurring items
The SteelSeries integration is progressing well. GN Audio
continues to expect annual run-rate of operational synergies
of around DKK 150 million by the end of 2022 and around
half is expected in 2022. In addition, future revenue synergies
are expected. During Q2 2022, GN booked non-recurring
items related to the SteelSeries acquisition of DKK -68
million, of which DKK -54 million was booked as COGS (non-
cash PPAs) and DKK -14 million was recognized as general
and administrative expenses. In 2022, GN Audio continues to
expect total transaction and integration costs of around DKK
-200 million, and non-cash PPAs of around DKK -200 million.
GN Audio non-recurring items
Current global supply chain situation
As previously communicated, certain components are in
global shortage impacting many industries. In Q2 2022, the
global supply situation saw an improving trend but continued
to be challenging. We continue to expect further supply
easing in the coming quarters.
Market development
In Q2 2022, the demand in GN Audio’s core addressable
Enterprise market continued to be strong driven by flexible
working, significant uptake of Unified Communications
platforms and other attractive megatrends. The consumer
and gaming gear markets experienced softness due to lower
consumer sentiment. For the coming years, GN Audio expects
that the markets will continue its favorable trends and that
the overall addressable market will grow at around 10% in
value when assuming stable macroeconomics and supply
situation.
Management quote
“GN Audio delivered strong growth in the B2B Enterprise
business on top of the very high comparison base from last
year, thanks to strong execution from our dedicated teams
across the world. Right now, we are seeing an easing of the
component situation but we are still constrained, and supply
continue to run below demand. Consumer sentiment is low
impacting the markets in which our Consumer business and
SteelSeries operate, but the demand for our Enterprise
products continues to be very strong.”
René Svendsen-Tune, CEO of GN Audio
(DKK million) Q2 2022 YTD 2022
Revenue - -
Production costs -54 -196
Gross profit -54 -196
Development costs - -
Selling and distribution costs - -
Management and administrative expenses -14 -91
Other operating income and costs, net - -
EBITA -68 -287
532
488
475
364
600
Q1 2022Q2 2021 Q3 2021 Q4 2021 Q2 2022
Adj. EBITA (DKKm)*
21.7% 20.0% 17.8% 14.4% 18.0%
Adj. EBITA
margin*
7
Highlights Q2 2022
• In Q2 2022, GN delivered 29% revenue growth, of which
8% was organic, leading to a revenue of DKK 4,857 million.
A strong improvement of DKK 1 billion compared to Q1
2022
• The global supply chain situation is improving, but
continues to be challenging
• Adj. EBITA was DKK 610 million and free cash flow excl.
M&A was DKK -412 million driven by net working capital
and investments in growth opportunities
• Adj. Leverage ended at 5.7x, reflecting M&A activities and
timing effects of the earnings profile
• August 17, GN signed mandate documents with its
commercial banking group for a three-year EUR 520
million loan to cover its short-term funding requirements
Revenue
GN delivered 8% organic revenue growth in Q2 2022 on top
of the 49% organic revenue growth in Q2 2021. Revenue
growth was 29% including around 14% impact from M&A,
reflecting Lively and SteelSeries. The impact from the
development in foreign exchange rates was around 7%. In H1
2022, GN delivered organic revenue growth of -7%, while
revenue growth was 10%.
GN Store Nord revenue development
Earnings and other financial highlights
EBITA in Other amounted to DKK -39 million in Q2 2022,
compared to DKK -50 million in Q2 2021 due to prudent cost
management. GN Store Nord’s adj. EBITA was DKK 610
million compared to DKK 635 million in Q2 2021, primarily
driven by the global supply chain situation, a lower
profitability in GN Hearing and the consolidation of
SteelSeries and Lively. This corresponds to an adj. EBITA
margin of 12.6% in Q2 2022 compared to 16.8% in Q2 2021.
Reported EBITA was DKK 499 million, reflecting non-
recurring items of DKK -111 million due to supply chain
initiatives in GN Hearing and the non-recurring items related
to SteelSeries. In H1 2022, GN delivered an adj. EBITA margin
of 10.0%.
GN Store Nord adj. EBITA development
*Excluding non-recurring items
In Q2 2022, amortization of acquired intangible assets
amounted to DKK -96 million compared to DKK -42 million
reflecting the consolidation of SteelSeries. Financial items
were DKK -77 million in Q2 2022 compared to DKK -12
million in Q1 2022, driven by the financing of SteelSeries. In
Q2 2022, share of profit (loss) in associates was DKK 5 million
compared to DKK -20 million in Q2 2021.
The adj. profit before tax was DKK 436 million in Q2 2022
(reported profit before tax was DKK 325 million) compared to
DKK 552 million in Q2 2021. The effective tax rate was
21.5%, translating into an adj. net profit of DKK 342 million in
Q2 2022 (reported net profit of DKK 255 million) compared
to DKK 434 million in Q2 2021. In H1 2022, adj. net profit was
DKK 373 million.
Free cash flow excl. M&A was DKK -412 million in Q2 2022
compared to DKK 510 million in Q2 2021, mainly driven by
the lower reported earnings, the investments in growth
through financial support agreements, inventory build-up of
critical components and trade receivables. Cash flow from
M&A activities amounted to DKK -216 million, reflecting a
European retail ownership in transition, to which GN Hearing
is a key partner.
Adj. earnings per share (Adj. EPS), was DKK 3.17 in Q2 2022
compared to DKK 3.55 in Q2 2021. In H1 2022, GN delivered
an adj. earnings per share of DKK 3.95.
GN Store Nord adj. EPS development
*Excluding non-recurring items and amortization of acquired intangible asset
GN Store Nord
3,778
3,787
4,100
3,859
4,857
Q2 2022Q1 2022Q2 2021
Q3 2021 Q4 2021
Revenue (DKKm)
Org.
growth
49%
2% -2% -21% 8%
3.55
3.70
4.13
0.77
3.17
Q3 2021Q2 2021 Q4 2021 Q1 2022 Q2 2022
Adj. EPS (DKK)*
TA
gin
635
625
651
264
610
Q1 2022Q2 2021 Q2 2022Q4 2021Q3 2021
Adj. EBITA (DKKm)
*
16.8%
16.5% 15.9% 6.8% 12.6%
Adj. EBITA
margin*
8
By the end of Q2 2022, equity in GN Store Nord amounted to
DKK 6,638 million compared to DKK 6,016 million in Q1
2022. The increase was driven by the net profit generated in
the quarter.
Capital structure
Net interest-bearing debt was DKK 14,966 million by the end
of Q2 2022 compared to DKK 14,227 million in Q1 2022,
which was primarily driven by investment in growth
opportunities through financial support agreements and the
European retail ownership in transition. As a result, the adj.
leverage ended at 5.7x reflecting the debt development and
the flat development in adj. 12-months rolling EBITDA.
Reported leverage ratio was 6.8x reflecting the DKK -404
million non-recurring items.
By the end of Q2 2022, GN had cash and cash equivalents of
DKK 560 million. Moreover, on August 17, GN signed
mandate documents with its commercial banking group for a
three-year EUR 520 million loan to cover its short-term
funding requirements. Finalization of the loan will be subject
to final agreement on customary long form documentation.
With the recent M&A activity and in line with expectations,
GN Store Nord’s financial leverage ratio is currently above the
long-term leverage target of 1-2x NIBD/EBITDA. As a result,
GN Store Nord will focus on de-leveraging to be within its
capital structure policy again. Reflecting the lower consumer
sentiment, GN now expects to de-leverage to our long-term
leverage target by end of 2024. As a consequence, GN Store
Nord’s share buyback program has been paused for the time
being.
During H1 2022, GN distributed DKK 214 million to
shareholders through the annual dividend payment. In March
2022, GN paid out DKK 1.55 per share in respect of the fiscal
year 2021, as approved at the Annual General Meeting in
2022.
In line with the last couple of years, GN continues to
proactively secure a diversified funding profile. The diverse
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, KfW and the commercial
banking group as well as uncommitted bank facilities
including overdraft lines.
Foreign exchange exposure
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.
9
Financial guidance 2022 (previous)
Organic revenue
growth
Adjusted EBITA
margin
3)
Non-recurring items
(DKK million)
4)
Growth in
adjusted EPS
5)
GN Hearing
- Core business organic
5-10%
~14%
~ -150
- Emerging Business
1)
(DKK million)
~ -190
GN Audio
2)
~20%
~ -400
- GN Audio organic
>5%
- SteelSeries
>10%
Other (DKK million)
~ -190
GN Store Nord
>10%
Financial guidance 2022 (Updated as of August 17)
Organic revenue
growth
Adjusted EBITA
margin
3)
Non-recurring items
(DKK million)
4)
Growth in
adjusted EPS
5)
GN Hearing
- Core business organic
5-8%
~14%
~ -150
- Emerging Business
1) 8)
(DKK million)
~ -200
GN Audio
2) 8)
17-18%
~ -400
- GN Audio organic
6)
0-5%
- SteelSeries
7)
> -25%
Other (DKK million)
~ -190
GN Store Nord
-10% to 0%
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) Excluding non-recurring items
Note 4) Non-recurring items in GN Hearing primarily related to supply chain investments (DKK ~ -150m) and in GN Audio related to transaction and integration costs
(DKK ~ -200m) as well as non-cash PPAs (DKK ~ -200m), associated with SteelSeries
Note 5) Compared to 2021 adjusted EPS (excluding non-recurring items and amortization and impairment of acquired intangible assets) of DKK 15.29
Note 6) The growth assumption for the Enterprise business, which accounts for more than 80% of the GN Audio organic business, is unchanged and the Enterprise
business is still expected to grow double-digit in H2 2022. The market in which the Consumer business operates is now expected to decline ~25% in 2022 due to lower
consumer sentiment resulting in a significant negative growth assumption for the GN Audio Consumer business in 2022
Note 7) Addressable gaming gear market is now estimated to decline ~25% in 2022 to reflect consumer sentiment
Note 8) Reflecting updated FX assumptions for 2022 following the significant appreciation of the USD
Financial guidance based on foreign exchange rates as of August 17, 2022
Primary risk factors in relation to the financial guidance
Due to the COVID-19 pandemic, the global supply situation and consumer sentiment – 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, predictability and visibility across markets, channels and supply chain.
Financial guidance 202
2
Guidance revision to reflect consumer sentiment: Significant reduction of SteelSeries guidance; reduction of
GN Audio organic revenue growth guidance driven by Consumer business sentiment;
revision of GN Audio
adj. EBITA margin primarily driven by FX;
GN Hearing confirming the lower end of the guidance range.
Consequently, GN Store Nord now expects
growth in adj. EPS between -10% to 0%
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).
Due to the COVID-19 situation – which impacts the company in many different ways – it must be stressed that the basic
assumptions behind the guidance remain significantly more uncertain than normal.
10
Teleconference
GN will host a teleconference at 11.00 am CEST on August
18, 2022. Please visit www.gn.com to access the
teleconference. Presentation material will be available on the
website approximately one hour prior to the start of the
teleconference.
Financial calendar 2022
Interim Report Q3 2022: November 11, 2022
Note: As it appears from this report, GN’s Q2 2022 interim
report has been pre-released on August 17, 2022, i.e. one day
earlier than originally planned in the financial calendar 2022.
All other dates in the financial calendar 2022 remain
unchanged.
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 further information please contact:
Henriette Wennicke
VP, Investor Relations & Treasury
GN Store Nord A/S
Email: hwennicke@gn.com
Tel: +45 45 75 03 33
Rune Sandager
Director, Investor Relations & Treasury
GN Store Nord A/S
Email: rsandager@gn.com
Tel: +45 45 75 92 57
Company reg. no. 24257843
Additional information
11
Note 1 – Accounting policies 18
Note 2 – Segment disclosures Q2 2022 19
Note 3 – Incentive plans 22
Note 4 – Shareholdings 22
Content
Financial statements
Financial statements
Quarterly reporting by segment
12
Regional growth composition Q
2 2022 13
Consolidated income statement
14
Consolidated statement of comprehensive income
14
Consolidated balance sheet
15
Consolidated statement of cash flow
16
Consolidated statement of equity
17
Notes
12
Quarterly reporting by segment
Q1 2021
Q2 2021
Q3 2021
Q4 2021
Q1 2022
Q2 2022
YTD 2021
YTD 2022
Full year
2021
DKK million
(unaud.)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
(aud.)
Income statement
Revenue
GN Hearing
1,234
1,322
1,347
1,429
1,337
1,529
2,556
2,866
5,332
GN Audio
2,876
2,456
2,440
2,671
2,522
3,328
5,332
5,850
10,443
Total
4,110
3,778
3,787
4,100
3,859
4,857
7,888
8,716
15,775
Organic growth
GN Hearing
1%
95%
4%
2%
2%
4%
34%
3%
16%
GN Audio
82%
32%
1%
-4%
-30%
10%
55%
-12%
22%
Total
46%
49%
2%
-2%
-21%
8%
47%
-7%
20%
Gross profit
GN Hearing
769
832
891
908
801
924
1,601
1,725
3,400
GN Audio
1,480
1,264
1,222
1,316
1,006
1,502
2,744
2,508
5,282
Total
2,249
2,096
2,113
2,224
1,807
2,426
4,345
4,233
8,682
Gross profit margin
GN Hearing
62.3%
62.9%
66.1%
63.5%
59.9%
60.4%
62.6%
60.2%
63.8%
GN Audio
51.5%
51.5%
50.1%
49.3%
39.9%
45.1%
51.5%
42.9%
50.6%
Total
54.7%
55.5%
55.8%
54.2%
46.8%
49.9%
55.1%
48.6%
55.0%
Development costs
GN Hearing
-139
-154
-155
-131
-138
-142
-293
-280
-579
GN Audio
-199
-168
-173
-185
-189
-166
-367
-355
-725
Other *
-34
-27
-9
-15
-21
-16
-61
-37
-85
Total
-372
-349
-337
-331
-348
-324
-721
-672
-1,389
Selling and distribution costs and administrative expenses etc.
GN Hearing
-532
-525
-563
-558
-733
-776
-1,057
-1,509
-2,178
GN Audio
-567
-564
-575
-687
-672
-804
-1,131
-1,476
-2,393
Other *
-25
-23
-27
-28
-38
-23
-48
-61
-103
Total
-1,124
-1,112
-1,165
-1,273
-1,443
-1,603
-2,236
-3,046
-4,674
EBITA
GN Hearing
98
153
173
219
-70
6
251
-64
643
GN Audio
714
532
474
444
145
532
1,246
677
2,164
Other *
-59
-50
-36
-43
-59
-39
-109
-98
-188
Total
753
635
611
620
16
499
1,388
515
2,619
EBITA margin
GN Hearing
7.9%
11.6%
12.8%
15.3%
-5.2%
0.4%
9.8%
-2.2%
12.1%
GN Audio
24.8%
21.7%
19.4%
16.6%
5.7%
16.0%
23.4%
11.6%
20.7%
Total
18.3%
16.8%
16.1%
15.1%
0.4%
10.3%
17.6%
5.9%
16.6%
Depreciation and software amortization
GN Hearing
-42
-41
-40
-40
-38
-41
-83
-79
-163
GN Audio
-33
-31
-34
-37
-45
-48
-64
-93
-135
Other *
-30
-33
-32
-36
-35
-37
-63
-72
-131
Total
-105
-105
-106
-113
-118
-126
-210
-244
-429
EBITDA
GN Hearing
140
194
213
259
-32
47
334
15
806
GN Audio
747
563
508
481
190
580
1,310
770
2,299
Other *
-29
-17
-4
-7
-24
-2
-46
-26
-57
Total
858
740
717
733
134
625
1,598
759
3,048
EBITA
753
635
611
620
16
499
1,388
515
2,619
Amortization and impairment of acquired intangible assets
-41
-42
-40
-103
-103
-96
-83
-199
-226
Gain (loss) on divestment of operations etc.
-
-9
-
13
-1
-6
-9
-7
4
Operating profit (loss)
712
584
571
530
-88
397
1,296
309
2,397
Share of profit (loss) in associates
-1
-20
9
-24
17
5
-21
22
-36
Financial items
-99
-12
-13
34
-156
-77
-111
-233
-90
Profit (loss) before tax
612
552
567
540
-227
325
1,164
98
2,271
Tax on profit (loss)
-130
-118
-121
-112
49
-70
-248
-21
-481
Profit (loss)
482
434
446
428
-178
255
916
77
1,790
Balance sheet
Development projects
GN Hearing
1,019
1,001
989
1,014
1,026
1,045
1,001
1,045
1,014
GN Audio
508
585
655
708
859
925
585
925
708
Other *
-13
-12
-10
-9
-7
-6
-12
-6
-9
Total
1,514
1,574
1,634
1,713
1,878
1,964
1,574
1,964
1,713
Inventories
GN Hearing
677
675
683
743
770
816
675
816
743
GN Audio
939
1,049
1,019
1,205
2,012
2,282
1,049
2,282
1,205
Total
1,616
1,724
1,702
1,948
2,782
3,098
1,724
3,098
1,948
Trade receivables
GN Hearing
987
1,020
1,111
1,124
1,144
1,262
1,020
1,262
1,124
GN Audio
1,670
1,721
2,057
2,169
1,975
2,890
1,721
2,890
2,169
Other *
-
2
2
-
2
2
2
2
-
Total
2,657
2,743
3,170
3,293
3,121
4,154
2,743
4,154
3,293
Net working capital
GN Hearing
785
862
883
1,010
1,036
1,078
862
1,078
1,010
GN Audio
652
662
793
837
1,646
2,021
662
2,021
837
Other *
-189
-136
-149
-122
-165
-319
-136
-319
-122
Total
1,248
1,388
1,527
1,725
2,517
2,780
1,388
2,780
1,725
Free cash flow excl. M&A
GN Hearing
-204
123
340
-61
-175
-326
-81
-501
198
GN Audio
438
371
281
198
-140
49
809
-91
1,288
Other *
-256
16
-128
-416
-242
-135
-240
-377
-784
Total
-22
510
493
-279
-557
-412
488
-969
702
Acquisitions and divestments of companies
-38
-1
-1
-314
-7,037
-216
-39
-7,253
-354
Free cash flow
-60
509
492
-593
-7,594
-628
449
-8,222
348
* "Other" comprises Group Functions, GN Ejendomme and eliminations.
13
Regional growth composition Q2 2022
GN Hearing
GN Audio
Consolidated total
Q2
Q2
Q2
Q2
Q2
Q2
2022
2021
2022
2021
2022
2021
(DKK million)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
Europe - revenue
475
346
1,601
1,201
2,076
1,547
Organic growth
25%
84%
22%
20%
23%
30%
FX growth
1%
0%
1%
-1%
1%
-1%
M&A growth
11%
0%
10%
0%
10%
0%
Revenue growth
37%
84%
33%
19%
34%
29%
North America - revenue
689
658
1,069
761
1,758
1,419
Organic growth
-9%
121%
-5%
55%
-7%
80%
FX growth
12%
-19%
14%
-15%
13%
-17%
M&A growth
2%
0%
31%
0%
18%
0%
Revenue growth
5%
102%
40%
40%
24%
63%
Rest of World - revenue
365
318
658
494
1,023
812
Organic growth
9%
61%
0%
32%
4%
42%
FX growth
6%
-3%
7%
-5%
6%
-4%
M&A growth
0%
0%
26%
0%
16%
0%
Revenue growth
15%
58%
33%
27%
26%
38%
Total revenue
1,529
1,322
3,328
2,456
4,857
3,778
Organic growth
4%
95%
10%
32%
8%
49%
FX growth
8%
-10%
6%
-6%
7%
-7%
M&A growth
4%
0%
20%
0%
14%
0%
Revenue growth
16%
85%
36%
26%
29%
42%
Regional growth composition YTD 2022
GN Hearing
GN Audio
Consolidated total
YTD
YTD
YTD
YTD
YTD
YTD
2022
2021
2022
2021
2022
2021
(DKK million)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
Europe - revenue
844
700
2,824
2,895
3,668
3,595
Organic growth
14%
24%
-12%
61%
-7%
52%
FX growth
1%
-1%
1%
-1%
1%
-1%
M&A growth
6%
0%
9%
0%
8%
0%
Revenue growth
21%
23%
-2%
60%
2%
51%
North America - revenue
1,330
1,229
1,860
1,496
3,190
2,725
Organic growth
-4%
35%
-15%
57%
-10%
46%
FX growth
9%
-12%
9%
-16%
9%
-14%
M&A growth
3%
-1%
30%
0%
18%
0%
Revenue growth
8%
22%
24%
41%
17%
32%
Rest of World - revenue
692
627
1,166
941
1,858
1,568
Organic growth
6%
42%
-7%
36%
-2%
38%
FX growth
4%
-4%
6%
-6%
5%
-5%
M&A growth
0%
0%
25%
0%
15%
0%
Revenue growth
10%
38%
24%
30%
18%
33%
Total revenue
2,866
2,556
5,850
5,332
8,716
7,888
Organic growth
3%
34%
-12%
55%
-7%
47%
FX growth
6%
-7%
4%
-7%
4%
-7%
M&A growth
3%
-1%
18%
0%
13%
0%
Revenue growth
12%
26%
10%
48%
10%
40%
14
Consolidated income statement
Q2 2022
Q2 2021
YTD 2022
YTD 2021
Full Year
2021
(DKK million)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
(aud.)
Revenue
Production costs
-2,431
-1,682
-4,483
-3,543
-7,093
Gross profit
Development costs
-324
-349
-672
-721
-1,389
Selling and distribution costs
-1,225
-815
-2,242
-1,663
-3,484
Management and administrative expenses
-372
-298
-794
-581
-1,205
Other operating income and costs, net
-6
-10
EBITA*
Amortization and impairment of acquired intangible assets
-96
-42
-199
-83
-226
Gain (loss) on divestment of operations etc.
-6
-9
-7
-9
Operating profit (loss)
Share of profit (loss) in associates
-20
-21
-36
Financial items
-77
-12
-233
-111
-90
Profit (loss) before tax
Tax on profit (loss)
-70
-118
-21
-248
-481
Profit (loss) for the period
Attributable to:
Non-controlling interests
Shareholders in GN Store Nord A/S
Earnings per share (EPS):
Earnings per share (EPS)
Earnings per share, fully diluted (EPS diluted)
* 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.
Consolidated statement of comprehensive income
Q2 2022
Q2 2021
YTD 2022
YTD 2021
Full Year
2021
(DKK million)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
(aud.)
Profit (loss) for the period
Other comprehensive income
Items that will not be reclassified to profit or loss
Actuarial gains (losses)
Tax relating to actuarial gains (losses)
-10
Items that may be reclassified subsequently to profit or loss
Adjustment of cash flow hedges
Foreign exchange adjustments, etc.
-71
Tax relating to other comprehensive income
-1
-2
-1
-4
-8
Other comprehensive income for the period
-65
Total comprehensive income for the period
Attributable to:
Non-controlling interests
Shareholders in GN Store Nord A/S
15
Consolidated balance sheet
Jun. 30 2022
Mar. 31 2022
Dec. 31 2021
Sep. 30 2021
(DKK million)
(unaud.)
(unaud.)
(aud.)
(unaud.)
Assets
Intangible assets
Property, plant and equipment
Investments in associates
Deferred tax assets
Other non-current assets
Total non-current assets
Inventories
Trade receivables
Tax receivables
Other receivables
Cash and cash equivalents
Total current assets
Total assets
Equity and liabilities
Equity
Bank loans and issued bonds
Lease liabilities, non-current
Pension obligations
Provisions, non-current
Deferred tax liabilities
Other non-current liabilities
Total non-current liabilities
Bank loans
Lease liabilities, current
Trade payables
Tax payables
Provisions, current
Other current liabilities
Total current liabilities
Total equity and liabilities
16
Consolidated statement of cash flow
Q2 2022
Q2 2021
YTD 2022
YTD 2021
Full Year
2021
(DKK million)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
(aud.)
Operating activities
Operating profit (loss)
Depreciation, amortization and impairment
Other non-cash adjustments
-84
-48
Cash flow from operating activities before changes in working capital
Changes in working capital
-255
-739
-370
-710
Cash flow from operating activities before financial items and tax
Financial items, net
-172
-225
-104
-219
Tax paid, net
-81
-29
-159
-131
-571
Cash flow from operating activities
-60
Investing activities
Development projects
-251
-196
-453
-343
-755
Investments in other intangible assets, net
-59
-74
-150
-132
-308
Investments in property, plant and equipment, net
-42
-58
-62
-300
-457
Investments in other non-current assets, net
-231
-38
-244
-51
Company acquisitions
-216
-1
-7,253
-39
-354
Cash flow from investing activities
-799
-367
-8,162
-865
-1,764
Cash flow from operating and investing activities (free cash flow)
-628
-8,222
Financing activities
Paid dividends
-43
-41
-198
-188
-188
Share-based payment (exercised)
Purchase/sale of treasury shares and other equity instruments
-408
-408
-1,166
Net proceeds from issue of EMTN bonds
Increase/decrease in bank loans and other adjustments
-245
-299
Cash flow from financing activities
-690
-399
Net cash flow
-404
-181
-5,659
Cash and cash equivalents beginning of period
Adjustment foreign currency, cash and cash equivalents
-2
Cash and cash equivalents, end of period
17
Consolidated statement of equity
Other reserves
Q2 2021 (DKK million)
Share
capital*
Foreign
exchange
adjustmen
ts
Hedging
reserve
Treasury
shares
Proposed
dividends
for the
year
Retained
earnings
Equity,
sharehold
ers in GN
Store
Nord A/S
Non-
controllin
g interests
Total
equity
Balance at December 31, 2020
-1,500
-21
-3,640
Profit (loss) for the period
Adjustment of cash flow hedges
Foreign exchange adjustments, etc.
Tax relating to other comprehensive
income
-4
-4
-4
Other comprehensive income for the
period
Total comprehensive income for the
period
Reduction of the share capital
-16
-857
Share-based payment (granted)
Share based payment (exercised)
-53
Tax related to share-based incentive
plans
Purchase/sale of treasury shares
-408
-408
-408
Reclassification of non-controlling
interests by recognizing a put option
liability
-15
-9
Paid dividends
-188
-188
-188
Dividends, treasury shares
-18
Balance at June 30, 2021
-1,333
-7
-2,989
Q2 2022 (DKK million)
Balance at December 31, 2021
-1,104
-3,731
Profit (loss) for the period
Adjustment of cash flow hedges
Foreign exchange adjustments, etc.
Tax relating to other comprehensive
income
-1
-1
-1
Other comprehensive income for the
period
Total comprehensive income for the
period
Reduction of the share capital
-4
-293
Share-based payment (granted)
Share-based payment (exercised)
-3
Tax related to share-based incentive
plans
Reclassification of non-controlling
interests by recognizing a put option
liability
-26
-19
Paid dividends
-198
-198
-198
Dividends, treasury shares
-16
Balance at June 30, 2022
-648
-3,426
* shares of DKK 4 each
18
Note 1 – Accounting policies
This interim report has been prepared in accordance with IAS 34 “Interim Financial Reporting” as adopted by the EU and
Danish interim financial reporting requirements for listed companies.
New standards, interpretations and amendments adopted by GN Store Nord
As of January 1, 2022, GN Store Nord adopted all relevant new or revised International Financial Reporting Standards and
IFRIC Interpretations with effective date January 1, 2022, or earlier. The new or revised Standards and Interpretations did not
affect recognition and measurement or result in any material changes to disclosures. Apart from this, the accounting policies
applied are unchanged from those applied in the Annual Report 2021.
Please refer to the section “Accounting standards not yet adopted” in the accounting policies in the Annual Report 2021 for
information on the on-going analysis regarding accounting for the costs of configuring or customizing the supplier’s
application software in a Software-as-a-Service (SaaS) arrangement.
19
Note 2 – Segment disclosures Q2 2022
Income statement
GN Hearing
GN Audio
Other**
Consolidated total
Q2 2022
Q2 2021
Q2 2022
Q2 2021
Q2 2022
Q2 2021
Q2 2022
Q2 2021
(DKK million)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
Revenue
1,529
1,322
3,328
2,456
-
-
4,857
3,778
Production costs
-605
-490
-1,826
-1,192
-
-
-2,431
-1,682
Gross profit
924
832
1,502
1,264
-
-
2,426
2,096
Development costs
-142
-154
-166
-168
-16
-27
-324
-349
Selling and distribution costs
-563
-356
-662
-459
-
-
-1,225
-815
Management and administrative expenses
-166
-167
-182
-107
-24
-24
-372
-298
Other operating income and costs, net
-47
-2
40
2
1
1
-6
1
EBITA*
6
153
532
532
-39
-50
499
635
Amortization and impairment of acquired intangible assets
-18
-24
-78
-18
-
-
-96
-42
Gain (loss) on divestment of operations etc.
-6
-9
-
-
-
-
-6
-9
Operating profit (loss)
-18
120
454
514
-39
-50
397
584
Share of profit (loss) in associates
5
-20
-
-
-
-
5
-20
Financial items
73
-22
-47
8
-103
2
-77
-12
Profit (loss) before tax
60
78
407
522
-142
-48
325
552
Tax on profit (loss)
-13
-17
-87
-111
30
10
-70
-118
Profit (loss) for the period
47
61
320
411
-112
-38
255
434
Cash flow statement
GN Hearing
GN Audio
Other**
Consolidated total
Q2 2022
Q2 2021
Q2 2022
Q2 2021
Q2 2022
Q2 2021
Q2 2022
Q2 2021
(DKK million)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
Operating activities before changes in working capital
140
258
541
578
-2
-18
679
818
Cash flow from changes in working capital
-40
16
-295
36
80
9
-255
61
Cash flow from operating activities excluding financial
items and tax
100
274
246
614
78
-9
424
879
Cash flow from investing activities:
Development projects
-96
-76
-155
-120
-
-
-251
-196
Other
-455
-51
22
-44
-115
-76
-548
-171
Cash flow from operating and investing activities before
financial items and tax
-451
147
113
450
-37
-85
-375
512
Tax and financial items
-91
-24
-64
-80
-98
101
-253
-3
Cash flow from operating and investing activities (free
cash flow)
-542
123
49
370
-135
16
-628
509
Cash flow from M&A activities
-216
-
-
-1
-
-
-216
-1
Free cash flow excl. M&A
-326
123
49
371
-135
16
-412
510
Additional information
GN Hearing
GN Audio
Other**
Consolidated total
Q2 2022
Q2 2021
Q2 2022
Q2 2021
Q2 2022
Q2 2021
Q2 2022
Q2 2021
(DKK million)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
Revenue distributed geographically
Denmark
19
18
55
62
-
-
74
80
Europe
456
328
1,546
1,139
-
-
2,002
1,467
North America
689
658
1,069
761
-
-
1,758
1,419
Rest of World
365
318
658
494
-
-
1,023
812
Revenue
1,529
1,322
3,328
2,456
-
-
4,857
3,778
Incurred development costs
-158
-133
-252
-243
-18
-29
-428
-405
Capitalized development costs
96
76
155
120
-
-
251
196
Amortization, impairment and depreciation of development
projects***
-80
-97
-69
-45
2
2
-147
-140
Expensed development costs
-142
-154
-166
-168
-16
-27
-324
-349
EBITDA
47
194
580
563
-2
-17
625
740
Depreciation and software amortization
-41
-41
-48
-31
-37
-33
-126
-105
EBITA*
6
153
532
532
-39
-50
499
635
EBITA margin
0.4%
11.6%
16.0%
21.7%
N/A
N/A
10.3%
16.8%
Number of employees, end of period
5,047
4,483
2,710
2,163
356
290
8,113
6,936
* 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.
** "Other" comprises Group Shared Services, GN Ejendomme and eliminations
*** Does not include amortization of acquired intangible assets, cf. definition of EBITA
20
Note 2 – Segment disclosures Q2 2022 (Continued)
Balance sheet
GN Hearing
GN Audio
Other*
Consolidated total
Jun. 30
Jun. 30
Jun. 30
Jun. 30
Jun. 30
Jun. 30
Jun. 30
Jun. 30
2022
2021
2022
2021
2022
2021
2022
2021
(DKK million)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
ASSETS
Goodwill
4,747
3,348
6,687
1,138
-
-
11,434
4,486
Development projects
1,045
1,001
925
585
-6
-12
1,964
1,574
Other intangible assets
474
346
2,615
357
715
447
3,804
1,150
Property, plant and equipment
500
483
406
333
451
408
1,357
1,224
Investments in associates
293
482
13
-
34
24
340
506
Deferred tax assets
393
358
50
146
-77
-102
366
402
Loans to dispensers and ownership interests
1,007
794
-
-
-
-
1,007
794
Other financial assets
516
539
2
-
-
-
518
539
Total non-current assets
8,975
7,351
10,698
2,559
1,117
765
20,790
10,675
Inventories
816
675
2,282
1,049
-
-
3,098
1,724
Trade receivables
1,262
1,020
2,890
1,721
2
2
4,154
2,743
Receivables from group companies**
-
-
-
2,028
-
-2,028
-
-
Tax receivables
108
37
51
74
-9
-90
150
21
Other receivables
361
257
275
124
29
81
665
462
Cash and cash equivalents
205
207
332
159
23
1,349
560
1,715
Total current assets
2,752
2,196
5,830
5,155
45
-686
8,627
6,665
Total assets
11,727
9,547
16,528
7,714
1,162
79
29,417
17,340
EQUITY AND LIABILITIES
Equity
5,276
5,254
4,590
4,623
-3,228
-4,003
6,638
5,874
Bank loans and issued bonds
-
-
7
-
10,686
5,460
10,693
5,460
Lease liabilities, non-current
205
196
58
73
45
18
308
287
Pension obligations
-
28
7
6
-
-
7
34
Provisions, non-current
78
117
82
110
4
-
164
227
Deferred tax liabilities
317
260
662
156
-50
-52
929
364
Other non-current liabilities
484
357
287
160
2
2
773
519
Total non-current liabilities
1,084
958
1,103
505
10,687
5,428
12,874
6,891
Bank loans
-
23
10
9
4,383
225
4,393
257
Lease liabilities, current
80
79
38
32
14
8
132
119
Trade payables
286
226
1,337
847
101
75
1,724
1,148
Amounts owed to group companies**
3,774
1,945
7,160
-
-10,934
-1,945
-
-
Tax payables
12
20
98
117
-110
147
-
284
Provisions, current
140
178
103
196
-
-
243
374
Other current liabilities
1,075
864
2,089
1,385
249
144
3,413
2,393
Total current liabilities
5,367
3,335
10,835
2,586
-6,297
-1,346
9,905
4,575
Total equity and liabilities
11,727
9,547
16,528
7,714
1,162
79
29,417
17,340
Invested capital***
8,633
6,539
12,469
2,769
837
707
21,939
10,015
Average invested capital
7,586
6,706
7,619
2,717
772
568
15,977
9,991
* "Other" comprises Group Shared Services, GN Ejendomme and eliminations
** Net amount
*** Includes Net working capital (Inventories, Trade receivables, Other receivables, Trade payables and Other current liabili
ties), Goodwill, Development projects, Other intangible assets,
Property, plant and equipment, Loans to dispensers and ownership interests and Provisions
21
Note 2 – Segment disclosures YTD 2022
Income statement
GN Hearing
GN Audio
Other**
Consolidated total
YTD
2022
YTD
2021
YTD
2022
YTD
2021
YTD
2022
YTD
2021
YTD
2022
YTD
2021
(DKK million)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
Revenue
2,866
2,556
5,850
5,332
-
-
8,716
7,888
Production costs
-1,141
-955
-3,342
-2,588
-
-
-4,483
-3,543
Gross profit
1,725
1,601
2,508
2,744
-
-
4,233
4,345
Development costs
-280
-293
-355
-367
-37
-61
-672
-721
Selling and distribution costs
-1,104
-736
-1,138
-927
-
-
-2,242
-1,663
Management and administrative expenses
-340
-325
-398
-207
-56
-49
-794
-581
Other operating income and costs, net
-65
4
60
3
-5
1
-10
8
EBITA*
-64
251
677
1,246
-98
-109
515
1,388
Amortization and impairment of acquired intangible assets
-33
-48
-166
-35
-
-
-199
-83
Gain (loss) on divestment of operations etc.
-7
-9
-
-
-
-
-7
-9
Operating profit (loss)
-104
194
511
1,211
-98
-109
309
1,296
Share of profit (loss) in associates
22
-21
-
-
-
-
22
-21
Financial items
45
-90
-66
-37
-212
16
-233
-111
Profit (loss) before tax
-37
83
445
1,174
-310
-93
98
1,164
Tax on profit (loss)
8
-18
-95
-250
66
20
-21
-248
Profit (loss) for the period
-29
65
350
924
-244
-73
77
916
Cash flow statement
GN Hearing
GN Audio
Other**
Consolidated total
YTD
2022
YTD
2021
YTD
2022
YTD
2021
YTD
2022
YTD
2021
YTD
2022
YTD
2021
(DKK million)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
Operating activities before changes in working capital
215
490
866
1,475
-18
-46
1,063
1,919
Cash flow from changes in working capital
-103
-214
-608
-215
-28
59
-739
-370
Cash flow from operating activities excluding financial
items and tax
112
276
258
1,260
-46
13
324
1,549
Cash flow from investing activities:
Development projects, investment
-187
-137
-266
-206
-
-
-453
-343
Other investing activities
-493
-109
-7,023
-86
-193
-327
-7,709
-522
Cash flow from operating and investing activities before
financial items and tax
-568
30
-7,031
968
-239
-314
-7,838
684
Tax and financial items
-173
-146
-73
-163
-138
74
-384
-235
Cash flow from operating and investing activities (free
cash flow)
-741
-116
-7,104
805
-377
-240
-8,222
449
Cash flow from M&A activities
-240
-35
-7,013
-4
-
-
-7,253
-39
Free cash flow excl. M&A
-501
-81
-91
809
-377
-240
-969
488
Additional information
GN Hearing
GN Audio
Other**
Consolidated total
YTD
2022
YTD
2021
YTD
2022
YTD
2021
YTD
2022
YTD
2021
YTD
2022
YTD
2021
(DKK million)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
Revenue distributed geographically
Denmark
37
40
102
143
-
-
139
183
Europe
807
660
2,722
2,752
-
-
3,529
3,412
North America
1,330
1,229
1,860
1,496
-
-
3,190
2,725
Rest of World
692
627
1,166
941
-
-
1,858
1,568
Revenue
2,866
2,556
5,850
5,332
-
-
8,716
7,888
Incurred development costs
-308
-243
-481
-484
-40
-64
-829
-791
Capitalized development costs
187
137
266
206
-
-
453
343
Amortization, impairment and depreciation of development
projects***
-159
-187
-140
-89
3
3
-296
-273
Expensed development costs
-280
-293
-355
-367
-37
-61
-672
-721
EBITDA
15
334
770
1,310
-26
-46
759
1,598
Depreciation and software amortization
-79
-83
-93
-64
-72
-63
-244
-210
EBITA*
-64
251
677
1,246
-98
-109
515
1,388
EBITA margin
-2.2%
9.8%
11.6%
23.4%
N/A
N/A
5.9%
17.6%
Number of employees, end of period
5,047
4,483
2,710
2,163
356
290
8,113
6,936
* 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.
** "Other" comprises Group Shared Services, GN Ejendomme and eliminations
*** Does not include amortization of acquired intangible assets, cf. definition of EBITA
22
Note 3 – Incentive plans
As of June 30, 2022, the total number of outstanding warrants in GN Hearing was 1,066 (0.2% of the shares issued in GN
Hearing). The total number of outstanding warrants in GN Audio was 1,407 (0.4% of the shares issued in GN Audio). The total
number of outstanding options in GN Store Nord is 3,142,532 (2.3% of the shares issued in GN Store Nord)
Note 4 – Shareholdings
On June 30, 2022, members of the board of directors and the executive management, respectively, own 79,808 and 131,739
shares in GN Store Nord.
On June 30, 2022, GN owns 9,443,678 treasury shares, equivalent to 6.9% of the 137,193,378 shares issued.
The GN stock is 100% free float, and the company has no dominant shareholders. APG Asset Management N.V. has reported
an ownership interest in excess of 5% of GN’s share capital. Foreign ownership of GN is estimated to be around 70%.
Note 5 – Acquisition of companies and operations
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 engineering 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-enabled gaming gear.
Based on GN’s successful track-record of integrating acquired assets, 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 synergies as well as the value of SteelSeries highly skilled workforce.
On April 21 2022, GN Hearing acquired 56% of Belaudicao Lda, as a business combination achieved in stages, after which GN
owns 100% of the company. The acquisition, which is an ownership in transition, will strengthen GN Hearing’s sales and
distribution. Goodwill comprises expected synergies as well as the value of the highly skilled workforce of Belaudicao.
The goodwill of DKK 5,425 million relating to SteelSeries is allocated to the cash-generating unit GN Audio, and the goodwill of
DKK 237 million relating to Belaudicao is allocated to the cash-generating unit GN Hearing. Goodwill of DKK 0 million has been
determined to be deductible for tax purposes.
DKK million
SteelSeries
Belaudicao
Identifiable assets acquired, liabilities assumed and consideration transferred, provisionally determined
Patents, rights and other intangibles
1,036
-
Customer relationships
747
203
Trademarks
762
-
Property plant and equipment and non-current assets
92
54
Current assets
1,252
38
Cash
227
31
Bank debt and non-current liabilities
-1,050
-33
Deferred tax liabilities
-573
-46
Other current liabilities
-678
-42
Fair value of identified net assets
1,815
205
Goodwill
5,425
237
Consideration transferred
7,240
442
Fair value of existing ownership interest
-
-194
Acquired cash and cash equivalents
-227
-31
Cash consideration paid
7,013
217
DKK million
SteelSeries
Belaudicao
The share of revenue and profit (loss) for the period from the acquisition date can be specified as
follows:
Revenue
937
46
Profit (loss) before tax*
-307
-8
* Includes effect of PPA adjustments on inventory and amortization of acquired intangible assets
23
Statement by the Executive
Management and the Board of
Directors
August 17, 2022
Executive Management
Board of Directors
24
Co.reg. no 24257843
gn.com