1
Interim Report
2022
2
Key figures and financial ratios
(DKK million)
H1 2022 H1 2021
Full year
2021
Balance sheet
Total assets
27,335 23,579 24,860
Net interest
-bearing debt (NIBD) 10,986 8,573 9,150
Equity
8,184 7,796 7,981
Cash flow statement
Cash flow from operating activities (CFFO)
915 1,593 3,593
Investments in property, plant and equipment, net
301 207 547
Free cash flow
398 1,316 2,838
Share
buy-backs 1,307 1,813 3,200
Other key figures
Return on equity
25.8% 28.3% 30.7%
Equity ratio
29.9% 33.1% 32.1%
Gearing multiple (NIBD/EBITDA)
2.4 1.8 1.9
Earnings per share (EPS), DKK
- continuing operations 5.07 5.08 11.48
Earnings per share (EPS)
4.60 4.94 10.70
Free cash flow per share (FCFPS)
1.75 5.54 12.09
Price/earnings (P/E) ratio
57.9 71.5 31.3
Share price, end of period
266.30 353.00 335.10
Average number of shares outstanding
227.98 237.66 234.82
Market capitalisation
60,053 82,569 77,117
Average number of employees
18,130 16,572 16,866
Scope 1 & 2 CO2e emissions (tonnes)
15,405 ** 30,588
CEO remuneration ratio
** ** 35
Gender diversity, all employees (women/men)
63/37% 61/39% 62/38%
Gender diversity, management (women/men)
44/56% 43/57% 43/57%
Gender diversity, Board of Directors (women/men)***
40/60% 40/60% 40/60%
As a consequence of the planned divestment of the Hearing Implant business, comparative figures for 2021 in the income statem
ent
and cash flow statement as well as related key figures and financial ratios excluding organic growth have been restated.
(DKK million)
H1 2022 H1 2021
Full year
2021
Hearing Healthcare
Revenue
8,945 8,125
16,722
Organic growth
6% 55% 31%
Gross margin
76.4% 76.6% 77.1%
Operating profit (EBIT)
1,695 1,718
3,625
EBIT margin
18.9% 21.1% 21.7%
Communications
Revenue
552 621
1,183
Organic growth
-14% 16% -9%
Gross margin
45.9% 48.3% 48.3%
Operating profit (EBIT)
-107 -44
-122
EBIT margin
-19.3% -7.1% -10.3%
Group
Income statement
Revenue
9,497 8,746
17,905
Organic growth
4% 51% 27%
Gross margin
74.6% 74.5% 75.2%
EBITDA
2,128 2,187
4,730
EBITDA margin
22.4% 25.0% 26.4%
Adjusted EBIT*
1,588 1,674
3,503
Adjusted EBIT margin*
16.7% 19.1% 19.6%
Operating
profit (EBIT) 1,588 1,674
3,663
EBIT margin
16.7% 19.1% 20.5%
Net financial items
-95 -101
-202
Profit after tax
- continuing operations 1,157 1,216
2,711
Profit after tax
- discontinued operations
-107 -33
-183
Profit for
the period 1,050 1,183
2,528
*Adjusted for one
-offs in 2021. **No available data for the period. ***Shareholder-elected members.
3
The Group reports revenue and growth
rates on a quarterly basis, whereas full
income statements, balance sheets and
cash flow statements are only reported
on a half-yearly basis. Unless otherwise
indicated, the commentary below relates
to H1 2022.
As a result of the announced decision to
discontinue the Hearing Implants business,
this business area is now recognised as a
discontinued operation, and comparative
figures have been restated to reflect this.
For financial reviews of our Hearing
Healthcare and Communications
segments, please refer to page 9 and 13,
respectively.
Revenue
In H1, Group revenue amounted to DKK
9,497 million, corresponding to a growth
rate of 5% in local currencies compared
to a strong comparative base in H1 2021.
Organic growth was 4% driven by Hearing
Healthcare, whereas Communications saw
negative organic growth. In Q2, the Group’s
organic growth decelerated to 3% from
6% in Q1 due to a deceleration in Hearing
Healthcare and to a lower-than-expected,
albeit positive, contribution by Communi-
cations.
Group financial review
Income statement H1 2022
(DKK million)
Hearing
Healthcare
H1 2022
Communi-
cations
H1 2022
Group
H1 2022
Group
H1 2021
Group
growth
Revenue
8,945
552
9,497
8,746
9%
Production costs
-2,115
-299
-2,414
-2,226
8%
Gross
profit 6,830
253
7,083
6,520
9%
Gross margin
76.4%
45.8%
74.6%
74.5%
R&D costs
-534
-117
-651
-557
17%
Distribution costs
-4,170
-224
-4,394
-3,921
12%
Administrative expenses
-488
-19
-507
-425
19%
Share of profit after tax, associates and joint ventures
57
-
57
57
-
Operating profit (EBIT)
1,695
-107
1,588
1,674
-5%
EBIT margin
18.9%
-19.4%
16.7%
19.1%
Revenue and growth by business area
Growth
(DKK million)
Q2 2022 Q2 2021 Org. Acq. LCY FX Rep.
Hearing
Healthcare
4,634
4,292 3% 1% 3% 5% 8%
Communications
260
240 5% - 5% 4% 8%
Group
4,894
4,532 3% 1% 3% 5% 8%
Growth
(DKK million)
H1 2022 H1 2021 Org. Acq. LCY FX Rep.
Hearing
Healthcare
8,945
8,125 6% 1% 6% 4% 10%
Communications
552
621 -14% - -14% 3% -11%
Group
9,497
8,746 4% 1% 5% 4% 9%
4
Growth from acquisitions was 1% for the
Group, including the effect from the divest-
ment of FrontRow Calypso LLC in H2 2021.
Exchange rate effects impacted revenue
positively by 4%, mainly due to the appre-
ciation of the US dollar against the Danish
krone.
In terms of geography, Asia and our Other
countries region saw the highest growth
rates in H1 driven by recovery from a low
comparative base, although coronavirus
had a negative impact on growth in China,
particularly in Q2, and to a lesser extent on
growth in Japan and South Korea.
Europe and North America also contributed
positively to growth despite high compara-
tive numbers for H1 2021. Growth in the
US was lower than expected, in part due
to slowing momentum in the hearing aid
market in Q2.
The Pacific region delivered negative
growth, as it continued to be significantly
impacted by coronavirus restrictions and
floodings in H1.
Gross profit
The Group’s gross profit was DKK 7,083
million in H1, an increase of 9% compared
to H1 2021. The gross margin was 74.6%,
which is a minor increase of 0.1 percent-
age point compared to H1 2021, as mix
changes between business segments and
exchange rate effects more than offset
negative mix changes in Hearing Health-
care, which were more pronounced than
anticipated.
The dynamic supply chain situation contin-
ued to negatively impact the Group’s gross
margin by around 0.5 percentage point,
primarily due to higher freight charges.
Operating expenses (OPEX)
In H1, total OPEX amounted to DKK 5,552
million, corresponding to 9% growth in
local currencies compared to H1 2021.
This was slightly below our original plans,
in part due to lower sales in our Hearing
Care business.
OPEX saw organic growth of 8% of which
around half is attributable to the previously
flagged temporary cost savings of DKK
150-200 million in the comparative period.
At this stage, we see no inflationary pres-
sures beyond initial expectations.
In organic terms, R&D costs increased by
16% driven by a normalisation of the cost
base and by an increase in the number of
employees, primarily in Hearing Aids. Dis-
tribution costs saw more modest organic
growth of 6% but also grew as a result of
exchange rate effects. Administrative ex-
penses saw 15% organic growth driven
by Hearing Healthcare.
Acquisitions added slightly more than 1%
to the Group’s OPEX, while exchange rate
effects were 4%.
Operating profit (EBIT)
The Group’s EBIT amounted to DKK 1,588
million in H1 to which Hearing Healthcare
contributed DKK 1,695 million, and Com-
munications realised an EBIT of DKK -107
million. Group EBIT was slightly below ex-
pectations due to the deceleration in or-
ganic growth in Q2 and to adverse mix
effects, impacting the gross margin. The
resulting EBIT margin was 16.7%, which
is a decrease of 2.4 percentage points
compared to H1 2021.
Half-year EBIT
(DKK million)
*2020 figures have not been restated for the discontinua-
tion of Hearing Implants but are adjusted for one-offs.
The Group’s EBIT growth was -5%, but it
was around 13%, adjusted for temporary
cost savings in the comparative period of
-193
1,506
1,674
1,829
1,588
-500
0
500
1,000
1,500
2,000
H1
2020*
H2
2020*
H1
2021
H2
2021
H1
2022
Half-year OPEX
(DKK million)
*2020 figures have not been restated for the discontinua-
tion of Hearing Implants but are adjusted for one-offs.
4,461
4,618
4,903
5,171
5,552
2,000
3,000
4,000
5,000
6,000
H1
2020*
H2
2020*
H1
2021
H2
2021
H1
2022
OPEX by function
Change
(DKK million)
H1 2022 H1 2021 DKK LCY Org.
R&D
costs 651 557 17% 17% 16%
Distribution costs
4,394 3,921 12% 8% 6%
Adm. Expenses
507 425 19% 15% 15%
Total
5,552 4,903 13% 9% 8%
Revenue by geographic region
Change
(DKK million)
H1 2022 H1 2021 DKK LCY Org.
Europe
4,016 3,823 5% 4% 3%
North America
3,875 3,434 13% 5% 5%
Pacific
505 558 -9% -10% -10%
Asia
824 741 11% 11% 11%
Other countries
277 190 46% 37% 36%
Total
9,497 8,746 9% 5% 4%
5
DKK 150-200 million and for the extraordi-
nary impact of around DKK 100 million of
the French reform. This EBIT growth was
driven by strong performances in Hearing
Aids and Diagnostics and by positive ex-
change rate effects, but was partly offset
by negative developments in Hearing Care
and Communications as well as by the
negative impact of the previously an-
nounced halt of sales to Russia and the
related write-down of receivables.
No one-off items were recognised in the
comparative period, as all one-off items
in 2021 related to H2.
Financial items
Reported net financial items amounted to
an expense of DKK 95 million in H1, which
is a minor decrease of DKK 6 million com-
pared to last year.
Profit for the period
Reported profit before tax for continuing
operations amounted to DKK 1,493 million
in H1, a decrease of 5% driven by the pre-
viously mentioned extraordinary factors
impacting profit in the comparative period.
Tax for the period amounted to DKK 336
million, corresponding to an effective tax
rate of 22.5%. This resulted in profit after
tax generated by the Group’s continuing
operations of DKK 1,157 million, which is
a decrease of 5%, corresponding to earn-
ings per share (EPS) of DKK 5.07.
Profit after tax generated by discontinued
operations amounted to DKK -107 million
due to an operating loss in Hearing Im-
plants, which is roughly in line with our
expectations. Please refer to Note 2 for
more details.
For the Group as a whole, profit after tax
was DKK 1,050 million, corresponding to
EPS of DKK 4.60, a decrease of 7% com-
pared to H1 2021.
Cash flow statement
For the Group’s continuing operations, cash
flow from operating activities (CFFO) was
DKK 915 million in H1, which is a 43%
decrease compared to last year. Aside
from the slightly lower EBIT, this is driven
by an increase in net working capital due
to the normalisation of trade receivables
following the below-normal levels seen in
2020 and 2021.
Net investments resulted in a cash flow
of DKK -517 million in H1 of which DKK
-404 million, or 4% of Group revenue, re-
lates to net investments in property, plant
and equipment and in intangible assets
(CAPEX). Compared to last year, CAPEX
increased by DKK 131 million or 48%
driven mostly by leasehold improvements
in Hearing Care. Net investments in other
non-current assets, which mostly com-
prise loans to customers and associates,
amounted to DKK -113 million compared
to DKK -4 million in H1 2021.
As a result of the lower CFFO and higher
investments, free cash flow before acquisi-
tions and divestments decreased by 70%
to DKK 398 million. Cash spent on acquisi-
tions totalled DKK 513 million in H1. This
mainly relates to acquisitions made by
Hearing Care, including the acquisition of
the initial 20% of the shares in ShengWang
in China. The purchase price for the remain-
ing 80% was paid in early H2, except for
RMB 300 million, which falls due over the
coming three years. Acquisitions in H1 also
include the acquisition by Diagnostics of
Inventis Srl. in Italy, which was closed in
June 2022.
Share buy-backs in the reporting period
amounted to DKK 1,307 million, as the
Group bought back 4,621,114 shares
at an average price of DKK 282.90.
EPS for continuing operations
by half
-year
(DKK)
*2020 figures have not been restated for the discontinua-
tion of Hearing Implants.
Cash flow from operating ac-
tivities (CFFO)
(DKK million)
*2020 figures have not been restated for the discontinua-
tion of Hearing Implants are but adjusted for one-offs.
CAPEX by half-year
(DKK million)
*2020 figures have not been restated for the discontinua-
tion of Hearing Implants.
0.50
4.18
5.08
6.40
5.07
0.00
2.00
4.00
6.00
8.00
H1
2020*
H2
2020*
H1
2021
H2
2021
H1
2022
766
1,944
1,593
2,000
915
0
500
1,000
1,500
2,000
2,500
H1
2020*
H2
2020*
H1
2021
H2
2021
H1
2022
327
340
273
438
404
0%
2%
4%
6%
0
200
400
600
H1
2020*
H2
2020*
H1
2021
H2
2021
H1
2022
CAPEX
CAPEX % of sales
Cash flow by main items
(DKK million)
H1 2022 H1 2021 Change
CFFO
915
1,593 -43%
Net investments
-517
-277 87%
Free cash flow before acquisitions and divestments
398
1,316 -70%
Acquisitions and divestments etc.
-513
-406 26%
Share buy
–backs -1,307
-1,813 -28%
Other financing
activities 1,621
1,242 31%
Cash flow for the period
199
339
-41%
6
After other financing activities of DKK
1,621 million, which primarily relate to
an increase in short-term bank facilities,
net cash flow from continuing operations
amounted to DKK 199 million in H1.
Net cash flow from discontinued opera-
tions was DKK -108 million. Please refer
to Note 2 for more details.
Balance sheet
As of 30 June 2022, total assets amounted
to DKK 27,335 million, which is an increase
of 10% compared to the end of 2021 and
includes exchange rate effects of 3%. The
amount includes DKK 1,006 million relating
to Hearing Implants, which is now recog-
nised as assets held for sale.
The increase in total assets is driven by
increases in other non-current assets,
primarily related to goodwill in respect
of acquisitions, trade receivables and
other current assets, the latter due to
higher prepaid expenses.
In H1, the Group’s net working capital in-
creased by 35% to DKK 4,089 million due
to a normalisation of trade receivables
and to higher inventories. The increase
was also impacted by prepaid expenses
related to the acquisition of the initial 20%
of ShengWang.
Net interest-bearing debt (NIBD) amounted
to DKK 10,986 million as of 30 June 2022,
an increase of DKK 1,836 million compared
to 31 December 2021. Relative to a 12-
month rolling EBITDA, this corresponds to
a gearing multiple of 2.4 at the end of H1,
which is within our medium- to long-term
target of 2.0-2.5. Due to payments in H2
relating to the acquisition of ShengWang,
the gearing multiple is expected to increase
in H2 and to slightly exceed our medium-
to long-term target at the end of 2022.
At 30 June 2022, the Group’s equity had
increased by DKK 203 million, or 3%, to
DKK 8,184 million as a result of the Group’s
profit for the period and foreign currency
translation adjustments in subsidiaries,
which more than offset share buy-backs
for the period.
Employees
At the end of H1, Demant had 18,548
employees compared to 17,448 at the
beginning of the year and 17,556 at the
end of H1 2021. The increase in H1 was
mainly driven by increased headcounts
in operations and R&D in Hearing Aids
and Diagnostics as well as by acquisitions
and opening of new hearing aid clinics in
Hearing Care.
Hedging activities
The material forward exchange contracts
in place as at 30 June 2022 to hedge
against the Group’s exposure to move-
ments in exchange rates are shown in
the table below.
Hedging activities
Currency
Hedging
period
Average
hedging rate
USD
10 months
657
JPY
9 months
5.58
AUD
9 months
478
GBP
9 months
868
CAD
11 months
520
PLN
10 months
155
Balance sheet by main items
(DKK million)
H1 2022 FY 2021 Change
Lease assets
2,104 2,079
1%
Other non
-current assets 15,305 14,895
3%
Inventories
2,445 2,366
3%
Trade receivables
3,609 3,203
13%
Cash
1,245 1,172
6%
Other current assets
1,621 1,145
42%
Assets held for sale
1,006 - n.a.
Total assets
27,335 24,860
10%
Equity
8,184 7,981
3%
Lease liabilities
2,171 2,121
2%
Other
non-current liabilities 4,784 4,296
11%
Trade payables
810 808
0%
Other current liabilities
11,165 9,654
16%
Liabilities related to assets held for sale
221 - n.a.
Total equity and liabilities
27,335 24,860
10%
7
Sustainability
For the first time, the Group presents sus-
tainability performance data in the Interim
Report. The data shows a slight improve-
ment in gender diversity at management
level compared to the same period last
year with a 1 percentage point increase
in women in management positions. The
gender distribution among all Demant em-
ployees also changed slightly to 63/37%
(women/men) in H1 from 61/39% in H1
2021.
Thanks to a newly implemented energy
data management system, the Group is
now able to collect and report robust en-
ergy and emissions data on a regular ba-
sis. In H1, we saw total CO2e emissions
amounting to 15,405 tonnes, which we es-
timate is no significant change compared
to last year, as the group’s current emis-
sion reduction projects are not reflected in
the data yet. At the end of 2022, we ex-
pect to see small reductions, which will
gradually increase in the coming years.
We continue to work diligently towards
our target of minimum 50% reduction of
scope 1 & 2 emissions in 2030 compared
to 2019 and net-zero emissions in scope 1,
2 and 3 before 2050.
Events after the balance sheet
date
After the balance sheet date, the Group
has finalised the acquisition of the remain-
ing 80% of the shares in ShengWang,
thereby taking full ownership. This follows
the 20% minority investment announced
on 4 March 2022. The transaction was
closed on 1 July 2022 from which date
ShengWang will be fully consolidated
into Demant. Please refer to Note 1 for
more details.
There have been no other events that ma-
terially change the assessment of this In-
terim Report 2022 from the balance sheet
date and up to today.
Key half-year sustainability figures
H1 2022 H1 2021 Change
Scope 1 & 2 CO2e emissions (tonnes)
15,405 n.a. n.a.
Gender diversity, all employees (women/men)
63/37% 61/39% 2 p.p.
Gender diversity,
Management (women/men) 44/56% 43/57% 1 p.p.
Gender diversity, Board of Directors (women/men)*
40/60% 40/60% -
*Shareholder
-elected members.
8
Our outlook for 2022, which is summarised
in the table above, is adjusted to reflect that
we now expect our markets to grow less in
H2 than originally anticipated due to neg-
ative impacts of consumer uncertainty,
which will more than offset positive ex-
change rate effects.
Assumptions
The outlook continues to be based on a
number of key assumptions as described
below (changes in bold):
• In H1, value growth in the hearing aid
market was below expectations due
to developments in Q2. Relative to Q2,
we still expect market conditions to
improve in H2, particularly in the im-
portant US market, but we now only
expect total market unit growth in
2022 in line with the structural level
of 4-6%. We now only expect limited
excess growth, as headwinds from
consumer uncertainty are expected
to outweigh any tailwinds from the
release of pent-up demand. We ex-
pect ASP growth in the market in H2
to be less negative than in H1.
• Growth in the French hearing aid mar-
ket to be negative in 2022 following the
extraordinary demand in 2021, which
we estimate benefitted the Group’s re-
venue by DKK 300 million and EBIT by
DKK 150 million. We do not expect this
benefit to recur. Developments in H1
were at least in line with expectations.
• The market for enterprise and gaming
headsets and video solutions to grow
below the estimated structural growth
level of around 12% due to the current
supply chain situation. The weakening
of the gaming market in H1 is now
also expected to carry over into H2,
however we expect the supply chain
situation to gradually improve.
• In H2, we expect to see market share
gains in Hearing Healthcare. For
Communications, we expect to see
double-digit organic growth in H2.
• Supply chain situation to remain dy-
namic throughout the year and to re-
sult in higher-than-normal component
costs and freight charges with an im-
pact that is roughly similar to the im-
pact in 2021, but with no material dis-
ruption to sales activities.
• The Group’s OPEX base to see no
benefit from temporary cost savings
in 2022, which we estimate amounted
to DKK 150-200 million in H1 2021.
• For Communications, we now expect
EBIT of around DKK -150 million in
2022 due to negative market trends.
In the medium to long term, we still
consider the fundamental growth
drivers of the market to be fully intact.
• The planned divestment of Hearing
Implants to close at the end of 2022.
Outlook for 2022 Ou
Outlook for 2022
Metric
Outlook for 2022
Organic growth
4
-6% (previously 5-9%)
Acquisitive growth
2
% based on revenue from acquisitions completed as of 15 August 2022
FX growth
5
% based on exchange rates as of 15 August 2022 and including the
impact of hedging
EBIT
DKK 3,500
-3,800 million (previously DKK 3,600-3,900 million)
Effective tax rate
22
-23%
Gearing
multiple
Gearing
multiple (NIBD relative to EBITDA) at the end of 2022 to slightly
exceed
medium- to long-term target of 2.0-2.5
Share buy
-backs
At least DKK 2.5 billion
Profit after tax from
discontinued opera-
tions
Negative by DKK 150
-200 million
9
Revenue
Revenue in our Hearing Healthcare seg-
ment amounted to DKK 8,945 million in
H1, corresponding to a growth rate of 6%
(Q2: 3%) in local currencies with organic
growth of 6% (Q2: 3%). This was driven
by Hearing Aids and Diagnostics, whereas
Hearing Care saw negative growth. Ac-
quisitive growth was 1% (Q2: 1%) and
exchange rate effects were 4% (Q2: 5%).
After a strong Q1, all three business areas
saw slowing organic growth in Q2, partic-
ularly due to a weaker hearing aid market.
Hearing Aids was able to offset this by
gaining market share thanks to the expan-
sion of our product portfolio with new form
factors and price points, and Diagnostics
also saw growth well ahead of the under-
lying market growth rate and exited H1
with a strong order book. Hearing Care,
on the other hand, saw negative growth
in Q2 due to a tough comparative base fol-
lowing the introduction of the French hear-
ing healthcare reform in H1 2021 and due
to lower-than-expected revenue in the US,
resulting from the decision to exit selected
managed care plans and from the lower-
than-expected market growth.
Gross profit
Gross profit increased by 10% on H1 2021
to DKK 6,830 million, resulting in a gross
margin of 76.4%. The gross margin was
0.2 percentage point below the margin in
H1 2021 due to the negative impact of the
continuing dynamic supply situation and
also due to negative geography and chan-
nel mix effects in Hearing Aids. The gross
margin was, however, positively impacted
by solid development in Diagnostics and
by exchange rate developments.
Operating expenses (OPEX)
OPEX totalled DKK 5,192 million in H1,
which is an increase of 12% in local cur-
rencies compared to H1 last year. In or-
ganic terms, OPEX increased by 8%.
Around half of the organic increase in
OPEX can be attributed to temporary
cost savings in the comparative period
as described above and the other half
to increased activity levels, including in-
vestments in R&D. Acquisitions impacted
OPEX by slightly less than 2% compared
to H1 2021, while exchange rate effects
were 4%.
OPEX by half-year
(DKK million)
*2020 figures have not been restated for the discontinua-
tion of Hearing Implants.
4,227
4,297
4,559
4,822
5,192
2,000
3,000
4,000
5,000
6,000
H1
2020*
H2
2020*
H1
2021
H2
2021
H1
2022
Hearing Healthcare
Income statement
(DKK million)
H1 2022 H1 2021 Growth
Revenue
8,945 8,125
10%
Production costs
-2,115 -1,905
11%
Gross profit
6,830 6,220
10%
Gross margin
76.4% 76.6%
R&D costs
-534 -466
15%
Distribution costs
-4,170 -3,688
13%
Administrative expenses
-488 -405
20%
Share of profit after tax, associates and joint ventures
57 57
0%
Operating profit (EBIT)
1,695 1,718
-1%
EBIT margin
18.9% 21.1%
Revenue by business area
Growth
(DKK million)
Q2 2022 Q2 2021 Org. Acq. LCY FX Rep.
Hearing Aids
2,491
2,257 8% -2% 6% 4% 10%
Hereof sales to
Hearing Care
-454
-412 1% 4% 6% 5% 10%
Hearing Care
2,034
2,006 -7% 4% -3% 5% 1%
Diagnostics
563
441 16% 3% 18% 10% 28%
Hearing
Healthcare
4,634
4,292 3% 1% 3% 5% 8%
Growth
(DKK million)
H1 2022 H1 2021 Org. Acq. LCY FX Rep.
Hearing Aids
4,842
4,416 9% -2% 7% 3% 10%
Hereof sales to
Hearing Care
-895
-871 -5% 4% -1% 4% 3%
Hearing Care
3,932
3,737 -3% 4% 1% 4% 5%
Diagnostics
1,066
843 17% 2% 19% 8% 27%
Hearing
Healthcare
8,945
8,125 6% 1% 6% 4% 10%
10
Operating profit (EBIT)
EBIT in H1 amounted to DKK 1,695 million,
which compares to an EBIT of DKK 1,718
million in H1 2021, corresponding to a 1%
decline. The resulting EBIT margin is 18.9%,
which is a decrease of 2.2 percentage
points compared to H1 2021. Adjusted
for the temporary cost savings and the
estimated extraordinary impact of the
French reform, the EBIT margin increased
by around 1 percentage point compared
to H1 2021, in part supported by positive
exchange rate effects.
Share of profit after tax in associates and
joint ventures amounted to DKK 57 million
in H1, which is unchanged compared to last
year and reflects continued good perfor-
mance by associates in our Hearing Care
business.
EBIT by half-year
(DKK million)
*2020 figures have not been restated for the discontinua-
tion of Hearing Implants.
Management
commentary
Market trends
Overall, the hearing healthcare market,
which comprises the markets for hearing
aids and diagnostic instruments and ser-
vices, developed in line with historical
growth rates in H1 compared to pre-
pandemic levels, albeit with differences
between individual market segments
and regions.
Hearing aid market
Based on available market statistics,
covering slightly less than two-thirds of
the market, and on our own assumptions,
we estimate that the global hearing aid
market saw unit growth of around 8% in
H1, with 12% in Q1 and 5% in Q2 com-
pared to the same periods in 2021. In H1,
the market continued to see significant
growth in some government channels that
have been lagging, such as the NHS and
VA, although these had not yet fully nor-
malised compared to pre-pandemic levels.
Emerging markets saw particularly strong
growth in the period. In Q2, however, the
market saw slowing growth due to coro-
navirus impacts in Asia and the Pacific
region and to general consumer uncer-
tainty, not least in markets dominated
by private pay, such as the US. These
headwinds outweighed any tailwinds
from the release of pent-up demand.
Compared to pre-pandemic levels in H1
2019, we estimate that unit growth in H1
for the total market was in line with the
structural growth rate of 4-6% per year.
However, geography and channel mix
changes led to a larger-than-expected
ASP decline in the period. Consequently,
value growth in the hearing aid market
was below expectations.
Relative to the same period in 2021, growth
in Europe in H1 2022 was driven by signif-
icant recovery in the NHS, particularly in
Q1. Several other European markets also
developed well in the period. Germany
saw double-digit growth in H1, which to
some extent reflects slower growth in the
comparative period. In France, growth was
roughly flat in H1 but, as expected, nega-
tive in Q2 due to the boost last year from
the hearing healthcare reform.
Unit growth in North America was predo-
minantly driven by VA, which saw strong
growth in Q1. The commercial channel
also delivered positive unit growth in H1,
but growth was slightly negative in Q2
and lower than expected. Compared to
pre-pandemic levels, the US market de-
veloped in line with the structural growth
rate, as did Canada, which saw solid
growth throughout H1.
Looking beyond Europe and North Amer-
ica, we estimate that market unit growth
in China was negative in H1, significantly
impacted by coronavirus lockdowns during
most of Q2, although the situation improved
materially towards the end of the period.
Also, growth in Australia was negative in
H1 due to coronavirus-related restrictions
and floodings during the period. Japan de-
livered growth with sequential improve-
ment between Q1 and Q2, but the market
growth rate remains below the structural
growth rate.
While a few emerging markets are still
impacted by coronavirus, most emerging
markets have recovered strongly and saw
very strong growth in H1.
Diagnostic instruments market
The market for diagnostic instruments
and services remains resilient. We esti-
mate that compared to last year, growth
in H1 was above the estimated structural
market growth rate of 3-5% per year.
-214
1,425
1,718
1,907
1,695
-500
0
500
1,000
1,500
2,000
2,500
H1
2020*
H2
2020*
H1
2021
H2
2021
H1
2022
Estimated hearing aid market unit growth in 2022 by region
(vs. 2021)
Q1 Q2 H1
Europe
20% 9% 14%
North America
8% 1% 4%
US (commercial) 6% -1% 2%
US (VA) 19% 2% 9%
Rest of world
4% 4% 4%
Global
12% 5% 8%
CAGR vs. 2019
4% 6% 5%
11
Hearing Aids
In H1 2022, total revenue in Hearing Aids
grew by 7% (Q2: 6%) in local currencies
driven by 9% organic growth (Q2: 8%).
Growth from acquisitions was -2% (Q2: -
2%) following the divestment of FrontRow
Calypso LLC in H2 2021, and exchange
rate effects added 3% (Q2: 4%) to growth.
Internal revenue from sales to our Hearing
Care business area accounted for 18% of
total revenue and external sales for the
remaining 82%. Our commentary below
focuses on total revenue, including reve-
nue from sales through our own retail
clinics, and thus pertains to our total
wholesale activities.
In H1, Hearing Aids continued to see good
traction for our latest product families,
which were recently expanded with more
form factors and price points, and we con-
tinued to gain market share, albeit in a
market that grew less than expected in
H1 due to developments in Q2.
Unit growth and ASP growth in H1 were
16% and -8%, respectively, compared
to the same period last year. The unit
growth rate was thus around twice the
market growth rate in H1. The negative
ASP development is driven by changes
in the sales mix in relation to geographies,
channels and products, including very
strong growth in the NHS and in emerging
markets.
Compared to 2021, growth in Europe was
strong in both Q1 and Q2. The UK was the
primary positive contributor in Q1, driven
by strong development in the NHS, but
we also saw good growth in a number of
other markets, including Italy, Poland and
Spain. After a slow Q1, Germany saw ac-
celerating growth in Q2, as did France, de-
spite strong development in the compara-
tive period. Mainly related to Q2, the im-
pact of the current halt in sales to Russia,
Belarus and the provinces of Donetsk and
Luhansk had a slightly negative impact on
growth.
North America delivered solid organic
growth and market share gains in both
Q1 and Q2, albeit in a market that grew
less than anticipated. We continue to see
solid traction with Oticon More and Philips
HearLink and have gained market share
with VA. In Canada, where the market is
back to normal growth compared to pre-
pandemic levels, we performed well in Q2.
Growth in Asia continued to be impacted
by coronavirus restrictions in H1, especially
in China where lockdowns had a very pro-
found impact on sales, particularly in Q2.
In the Pacific region, we also saw negative
impacts of coronavirus and periods of
floodings in Australia, which resulted in
negative growth in H1.
Our Other countries region, which mostly
comprises emerging markets, continued to
see very strong growth from Q1, driven by
good commercial momentum and strong
tender activities in several countries during
the period.
Looking ahead, we recently announced
the continued expansion of our portfolio
of industry-leading hearing aids with new
custom form factors built on our ground-
breaking Polaris technology. In addition,
we are introducing new products in the
Essential category in all four hearing aid
brands. Both portfolio expansions will be
rolled out in H2 2022.
Hearing Aids
(DKK million)
H1 2022 H1 2021
Revenue
4,842
4,416
Growth
Organic 9%
Acquisitions -2%
Local currencies
7%
FX
3%
Total
10%
Growth in units and ASP
(local
currencies)
H1 2022 H2 2021 H1 2021
Units
16% 17% 50%
ASP
-8% 1% 4%
Total
7% 18% 55%
Revenue and growth
Growth
(DKK million)
Q2 2022 Q2 2021 Org. Acq. LCY FX Rep.
Hearing Aids
2,491
2,257 8% -2% 6% 4% 10%
Hereof sales to external customers
2,037
1,845 10% -3% 7% 4% 10%
Hereof sales to Hearing Care* 454
412 1% 4% 6% 5% 10%
Growth
(DKK million)
H1 2022 H1 2021 Org. Acq. LCY FX Rep.
Hearing Aids
4,842
4,416 9% -2% 7% 3% 10%
Hereof sales to external customers 3,947
3,545 12% -3% 9% 3% 11%
Hereof sales to Hearing Care* 895
871 -5% 4% -1% 4% 3%
*Revenue from
internal sales to Hearing Care is eliminated from the reported revenue for Hearing Healthcare and for the Group, i.e. we only include revenue from external
customers. The pricing used in internal transactions is determined on an arm’s length basis and thus
reflects normal commercial terms.
12
Hearing Care
In H1 2022, revenue in Hearing Care grew
by 1% (Q2: -3%) in local currencies with
-3% (Q2: -7%) organic growth and 4%
(Q2: 4%) acquisitive growth.
Hearing Care
(DKK million)
H1 2022 H1 2021
Revenue
3,932
3,737
Growth
Organic -3%
Acquisitions 4%
Local currencies
1%
FX
4%
Total
5%
Sales in Hearing Care were lower than
expected in H1, mainly attributable to de-
velopments in the US where sales were
impacted by the decision to exit selected
managed care plans. This impact was ex-
acerbated by lower-than-expected market
growth in Q2. Growth was also negatively
impacted by weak markets in the Pacific
region and by high comparative figures
in France.
In H1, growth was predominantly driven
by unit growth, as the ASP declined slightly.
In Europe, we saw positive development in
several markets, particularly in Poland and
Spain, but as expected, the growth rate
was negatively impacted by very high
comparative figures in France due to the
hearing healthcare reform implemented
last year. This impact was most pro-
nounced in Q2.
Revenue in North America was below
expectations, mainly due to slowing mo-
mentum in the US in Q2. Our strategic de-
cision to reduce our share of sales related
to managed care continues to have a neg-
ative impact on growth. This has been ex-
acerbated by the market slowdown in Q2,
which has made it more difficult than an-
ticipated to generate new leads to replace
the leads from managed care partners. We
are currently working on initiatives to fur-
ther boost non-managed care lead gener-
ation in the coming period. Canada deliv-
ered positive organic growth, and acquisi-
tions contributed to growth in both markets.
In Australia, revenue was negatively im-
pacted by lockdowns and coronavirus-
related restrictions in the first part of H1,
but performance remained subdued in the
latter part of H1, in part caused by floods
in some areas.
Diagnostics
In Diagnostics, revenue increased by 19%
(Q2: 18%) in local currencies in H1 driven
by 17% (Q2: 16%) organic growth. Ex-
change rate effects contributed with 8%
(Q2: 10%).
Diagnostics
(DKK million)
H1 2022 H1 2021
Revenue
1,066 843
Growth
Organic 17%
Acquisitions 2%
Local currencies
19%
FX
8%
Total
27%
Following a very strong 2021, we contin-
ued to perform extremely well throughout
H1, which underlines the good momentum
in our business. We continue to gain mar-
ket share both in instrument sales and
in services in many markets. We have a
strong order book, and the outlook for our
Diagnostics business remains positive.
In terms of geographies, we saw strong
performance in most markets in H1, with
the US market as the most significant
growth contributor. In Europe, growth was
broad-based in both Q1 and Q2 with high
growth rates in the UK, Germany and
Poland. In addition, we also saw strong
performance in South America, driven by
Brazil, and Asia continues to perform well
despite lockdowns in China, which have
limited growth, particularly in Q2.
In terms of product categories, growth was
broad-based with particularly strong per-
formance in the Fitting, Balance and Im-
pedance product categories.
In line with our strategic priorities, we
acquired the Italian company, Inventis Srl.,
in Q2. Inventis is a strong player that fo-
cuses on software for audiometers and
balance solutions. Following the acquisi-
tion and going forward, Inventis will remain
a separate brand under our Diagnostics
business area.
13
Revenue
In H1, revenue in Communications was
DKK 552 million, corresponding to -14%
(Q2: 5%) growth in local currencies, all of
which was organic growth. Exchange rate
effects were 3% (Q2: 4%). The negative
growth is due to very high comparative
figures in Q1, but growth was positive
in Q2 due to a softer comparative base.
Overall, growth was below our original
expectations, particularly in Q2 that saw
a further weakening of the market for
gaming headsets as well as continued
supply chain challenges that had a nega-
tive impact on the sale of specific product
families.
Please refer to Management commentary
on page 14 for more details.
Communications
(DKK million)
Q2 2022 Q2 2021
Revenue 260 240
Growth
Organic
5%
Acquisitions 0%
Local currencies 5%
FX 4%
Total 8%
(DKK million)
H1 2022 H1 2021
Revenue 552 621
Growth
Organic -14%
Acquisitions 0%
Local currencies
-14%
FX
3%
Total
-11%
Gross profit
The gross profit amounted to DKK 253
million in H1, resulting in a gross margin
of 45.8%. This is a decrease of 2.5 per-
centage points compared to H1 2021 due
to mix effects and to negative exchange
rate effects, as most production costs are
denominated in US dollars, a currency that
has appreciated significantly against the
Danish krone. Supply chain costs remain
above normal levels.
Operating expenses (OPEX)
OPEX amounted to DKK 360 million in H1,
corresponding to 5% growth compared to
H1 2021. Organic growth was 3% driven
by increased R&D spending whereas both
distribution costs and administrative ex-
penses were below last year’s amounts.
Foreign exchange rate effects were 2%.
OPEX by half-year
(DKK million)
Operating profit (EBIT)
As a result of the decline in revenue and of
the gross margin headwinds due to higher
supply chain costs and exchange rate ef-
fects, EBIT amounted to DKK -107 million,
which was below expectations.
EBIT by half-year
(DKK million)
234
321
344
349
360
0
200
400
H1
2020
H2
2020
H1
2021
H2
2021
H1
2022
21
81
-44
-78
-107
-150
-100
-50
0
50
100
H1
2020
H2
2020
H1
2021
H2
2021
H1
2022
Communications
Income statement
(DKK million)
H1 2022 H1 2021 Growth
Revenue
552 621
-11%
Production costs
-299 -321
-7%
Gross profit
253 300
-16%
Gross margin
45.8% 48.3%
R&D costs
-117 -91
29%
Distribution costs
-224 -233
-4%
Administrative expenses
-19 -20
-5%
Operating profit (EBIT)
-107 -44
n.a
EBIT margin
-19.4% -7.1%
14
Management
commentary
Market trends
Growth rates in the markets for gaming
and enterprise solutions were mixed in H1.
We estimate that both markets saw nega-
tive growth in Q1 due to high comparative
figures and a challenging supply chain sit-
uation, particularly within wireless products.
In Q2, growth in the market for enterprise
solutions improved thanks to lower com-
parative figures, as demand remained solid,
but the gaming market has weakened as a
result of lower consumer confidence and
spending.
In H2, the gaming market is likely to con-
tinue to face challenges because of lower
consumer confidence, however we expect
the enterprise solutions market to remain
more resilient. We also expect supply chain
impacts to gradually ease, but overall, the
market for enterprise and gaming head-
sets and video solutions is expected to see
growth in 2022 below the estimated struc-
tural growth level of around 12%. However,
we still view the fundamental growth driv-
ers of the market as fully intact in the me-
dium to long term.
Communications (EPOS)
As outlined above, revenue in H1 saw
growth of -14% (Q2: 5%) in local curren-
cies, which is entirely attributable to organic
growth. The sequential improvement in or-
ganic growth from -25% in Q1 to 5% in Q2
was driven entirely by lower comparative
figures, and absolute revenue levels were
below expectations in Q2.
This was most predominantly the case
in Gaming due to the general weakening
of the market, and growth in Gaming re-
mained negative throughout H1.
In Enterprise Solutions, performance was
more solid during H1, and growth was
slightly positive. However, revenue contin-
ued to be negatively impacted by supply
chain challenges for specific product fami-
lies, particularly for Digital Enhanced Cord-
less Telecommunications (DECT) products.
In terms of geographies, negative organic
growth was most pronounced in Europe,
which accounts for most of the revenue
generated by Communications. In North
America, organic growth was slightly neg-
ative, but reported growth was positive due
to positive exchange rate effects. Asia saw
strong organic growth, with India as the key
growth driver.
We continue to follow an ambitious prod-
uct roadmap and will soon be launching
new video solutions, the EPOS EXPAND
Vision 1 and 5. These launches are im-
portant next steps on our journey towards
becoming a full-suite supplier of state-of-
the-art unified collaboration and commu-
nication solutions for professionals, and
we expect these products to contribute
slightly to growth in the latter part of H2.
15
Management statement
Executive Board
Board of Directors
16
Discontinued operations
The Hearing Implants business is presented
as discontinued operations. Comparative
figures have been restated.
Consolidated income statement
(DKK million)
H1 2022 H1 2021
Full year
2021
Revenue
Production costs
-2,414 -2,226
-4,447
Gross profit
R&D costs
-651 -557
-1,139
Distribution costs
-4,394 -3,921
-7,983
Administrative expenses
-507 -425
-892
Share of profit
after tax, associates and joint ventures 57 57
Other operating income
Operating profit (EBIT)
Financial income
Financial expenses
-131 -121
-244
Profit before tax
Tax on profit for the period
-336 -357
-750
Profit after tax
- continuing operations 1,157 1,216
Profit after tax
- discontinued operations -107 -33
-183
Profit for the period
Profit for the period attributable to:
Demant A/S' shareholders
Non
-controlling interests 1
Earnings per share (EPS), DKK
- continuing operations 5.07 5.08
Diluted earnings per share (DEPS), DKK
- continuing
operations
Earnings per share (EPS), DKK
Diluted earnings per share (DEPS), DKK
17
Consolidated statement of comprehensive income
(DKK million)
H1 2022 H1 2021
Full year
2021
Profit for the year
Foreign currency translation adjustment, subsidiaries
Value adjustments of hedging instruments:
Value adjustment for the period
-118 -91
-177
Value adjustment transferred to revenue 104 -1
Tax on items that have been or may subsequently be reclassi-
fied
to the income statement
-2 21
Items that have been or may subsequently be reclassified
to the income statement
Actuarial gains/losses on defined
benefit plans - - 62
Tax on items that will not subsequently be reclassified
to the income statement
Items that will not subsequently be reclassified
to the income statement
Other comprehensive
income/loss 422 133
Comprehensive income
Comprehensive income attributable to:
Demant A/S’ shareholders
Non
-controlling interests
Breakdown of tax on other comprehensive income:
Foreign currency translation adjustment, foreign enterprises
-5 -1
-3
Value adjustment of hedging instruments for the period
Value adjustment of hedging instruments transferred to
revenue
Actuarial gains/losses on defined benefit plans
Tax on other comprehensive income
-2 21
18
Assets held for sale
The assets in the Hearing Implants busi-
ness are presented as assets held for
sale. Comparative figures have not been
restated.
Consolidated balance sheet 31 December
(DKK
million)
H1 2022 H1 2021
Full year
2021
Assets
Goodwill
Patents and licences
Other intangible assets
Prepayments and assets under development
Intangible assets
Land and buildings
Plant and machinery
Other plant, fixtures and operating equipment
Leasehold improvements
Prepayments and assets under construction
Property, plant and equipment
Lease assets
Investments in associates and joint ventures
Receivables from
associates and joint ventures 333 273
Other investments
Other receivables
Deferred tax assets
Other non
-current assets 4,502 4,211
Non
-current assets 17,409 16,088
(DKK million)
H1 2022 H1 2021
Full year
2021
Inventories
Trade receivables
Receivables from associates and joint ventures
Income tax
Other receivables
Unrealised gains on
financial contracts 27 26
Prepaid expenses
Cash
Assets held for sale
Current assets
Assets
19
Liabilities related to assets held for sale
The liabilities in the Hearing Implants busi-
ness are presented as liabilities related to
assets held for sale. Comparative figures
have not been restated.
Consolidated balance sheet 31 December
(DKK
million)
H1 2022 H1 2021
Full year
2021
Equity and liabilities
Share capital
Other reserves
Equity attributable to Demant A/S' shareholders
Equity
attributable to non-controlling interests 5
Equity
Borrowings
Lease liabilities
Deferred tax liabilities
Provisions
Other
liabilities 349
Deferred income
Non
-current liabilities 6,427
Borrowings
Lease liabilities
Trade payables
Payables to
associates and joint ventures 1
Income tax
Provisions
Other liabilities
Unrealised losses on financial contracts
Deferred income
Liabilities related to
assets held for sale 221
Current liabilities
Liabilities
Equity and liabilities
20
Discontinued operations
The Hearing Implants business is presented
as discontinued operations. Comparative
figures have been restated.
Consolidated cash flow statement
(DKK million)
H1 2022 H1 2021
Full year
2021
Operating profit (EBIT)
Non
-cash items etc.
Change in receivables etc.
-563
-400
-474
Change in inventories
-107
-49
-335
Change in trade payables and other liabilities etc.
-252
Change in provisions
-1
Dividends received
Cash
flow from operating profit 1,215 1,881
Financial income etc. received
Financial expenses etc. paid
-131
-123
-245
Income tax paid
-191
-179
-477
Cash flow from operating activities (CFFO)
Acquisition of enterprises, participating interests and
activities
-513
-406
-708
Divestment of enterprises, participating interests and
activities
Investments in and disposal of intangible assets
-103
-66
-164
Investments in property, plant and equipment
-311
-215
-562
Disposal of property, plant and equipment
Investments in other non
-current assets -269
-152
-434
Disposal of other non
-current assets 156
Cash
flow from investing activities (CFFI)
-1,030 -683
-1,302
(DKK million)
H1 2022 H1 2021
Full year
2021
Repayments of borrowings
-2,168 -2,268
-2,409
Proceeds from borrowings
Change in short
-term bank facilities 1,553 1,270
Repayments of lease liabilities
-290 -255
-530
Transactions with non
-controlling interests -1 -5
-34
Share buy
-backs -1,307 -1,813
-3,200
Cash flow from
financing activities (CFFF) 314 -571
-1,778
Cash flow for the period, net
- continuing operations 199 339
Cash flow for the period, net
- discontinued operations -108 -82
-314
Cash flow for the year, net
Cash and cash equivalents at the beginning of the year
Foreign currency translation adjustment of cash and cash
equivalents
-18 12
Cash and cash equivalents at the end of the year
Breakdown of cash and cash equivalents at the end of the
year:
Cash
Cash and cash equivalents at the end of the year
21
Consolidated statement of changes in equity
(DKK million)
Other reserves
Share
capital
Foreign
currency
translation
reserve
Hedging
reserve
Retained
earnings
Demant
A/S’ share-
holders’
share
Non-
controlling
interests’
share
Equity
Equity at 1.1.2022
-54
Comprehensive income:
Profit for the period
Other comprehensive income:
Foreign currency translation adjustment, subsidiaries
Value adjustments of hedging instruments:
Value adjustment, for the period
-118
-118
-118
Value adjustment transferred to revenue
Tax on other comprehensive income
-5
-2
-2
Other comprehensive income/loss
-11
Comprehensive income/loss for the period
-11
Share buy
-backs
-1,307
-1,307
-1,307
Share
-based compensation
Capital reduction through cancellation of treasury shares
-2
Equity at 30.06.2022
-65
22
Consolidated statement of changes in equity
(DKK million)
Other reserves
Share
capital
Foreign
currency
translation
reserve
Hedging
reserve
Retained
earnings
Demant
A/S’ share-
holders’
share
Non-
controlling
interests’
share
Equity
Equity at 1.1.2021
-414
Comprehensive income:
Profit for the period
Other
comprehensive income:
Foreign currency translation adjustment, subsidiaries
Value adjustments of hedging instruments:
Value adjustment, for the period
-91
-91
-91
Value adjustment transferred to revenue
-1
-1
-1
Tax on other comprehensive income
-1
Other
comprehensive income/loss
-70
Comprehensive income/loss for the period
-70
Share
buy-backs
-1,813
-1,813
-1,813
Share
-based compensation
Transactions with non
-controlling interests
-5
-5
Non
-controlling interests on acquisition
-7
-7
-1
-8
Equity at 30.06.2021
-211
-15
23
In H1 2022, the Group acquired Inventis
Srl., a developer and manufacturer of audi-
ological and balance equipment based in
Italy.
Furthermore, the Group acquired a number
of minor retail entities in North America and
Europe for which we paid acquisition costs
exceeding the fair values of the acquired
assets, liabilities and contingent liabilities.
Such positive balances in value can be
attributed to expected synergies between
the activities of the acquired entities and
our existing activities, to future growth
opportunities and to the value of staff
competencies in the acquired entities.
These synergies are not recognised
separately from goodwill, as they are not
separately identifiable.
At the time of acquisition, non-controlling
interests’ shares of acquisitions were
measured at their proportionate shares of
the total fair value of the acquired entities,
including goodwill. On obtaining a control-
ling interest through step acquisitions,
previously held non-controlling interests
are at the time of obtaining control included
in the income statement at their fair value
with fair value adjustments.
In H1 2022, a few adjustments were made
to the preliminary recognition of acquisi-
tions made in 2021. These adjustments
were made in respect of payments made,
contingent considerations provided and
net assets and goodwill acquired. The im-
pact of these adjustments on goodwill was
DKK 9 million (DKK 5 million in H1 2021),
and the impact on contingent considera-
tions was DKK 2 million (DKK 7 million in
H1 2021). In relation to acquisitions with
final recognition in 2014-2021, adjust-
ments were made in 2022 in respect of
estimated contingent considerations. Such
adjustments are recognised in the income
statement.
Note 1 – Acquisition of enterprises and activities
(DKK million)
H1 2022
H1 2021
Hearing Healthcare
Total
Total
North
America
Europe
Intangible assets
2
25
27
5
Property, plant and equipment
2
11
13
4
Other non
-current assets
3
16
19
73
Inventories
4
26
30
3
Current receivables
6
46
52
7
Cash and
cash equivalents
3
26
29
13
Non
-current liabilities -4
-57
-61
-67
Current liabilities
-15
-39
-54
-25
Acquired net assets
1
54
55
13
Goodwill
58
264
322
437
Acquisition cost
59
318
377
450
Carrying amount of non
-controlling interests on obtaining control -
-
-
-11
Fair value adjustment of non
-controlling interests on obtaining control
-
-
-
1
Contingent consideration and deferred payments
-6
-65
-71
-73
Acquired cash and cash equivalents
-3
-26
-29
-13
Cash acquisition cost
50
227
277
354
Figures are shown at fair value on the acquisition date.
24
The total impact on the income statement
of fair value adjustments of non-controlling
interests in step acquisitions amounted to
DKK 0 million (DKK 1 million in H1 2021).
For acquisitions, adjustments of contingent
considerations made via the income state-
ment in the amount of DKK 7 million (DKK
3 million in H1 2021) are recognised under
Distribution costs.
Of total acquisition costs in the reporting
period, the fair value of estimated contin-
gent considerations in the form of earnouts
or deferred payments accounted for DKK
71 million (DKK 73 million in H1 2021).
Earnouts depend on the results of the ac-
quired entities for a period of 1-5 years
after takeover and can total a maximum
of DKK 71 million (DKK 73 million in H1
2021) for acquisitions.
The acquired assets include contractual
receivables amounting to DKK 33 million
(DKK 3 million in H1 2021) of which DKK 1
million (DKK 0 million in H1 2021) was
thought to be uncollectible at the date
of the acquisition. Of total goodwill in the
amount of DKK 322 million (DKK 437 mil-
lion in H1 2021), DKK 21 million (DKK 354
million in H1 2021) can be amortised for
tax purposes.
Transaction costs in connection with ac-
quisitions made in 2022 amounted to DKK
0 million (DKK 4 million in H1 2021) and
are recognised under Distribution costs.
Revenue and profit generated by the ac-
quired enterprises since our acquisition in
2022 amount to DKK 35 million (DKK 65
million in H1 2021) and DKK 2 million (DKK
5 million in H1 2021), respectively. Had
such revenue and profit been consolidated
on 1 January 2022, we estimate that con-
solidated pro forma revenue and profit
would have been DKK 9,572 million (DKK
9,042 million in H1 2021) and DKK 1,070
million (DKK 1,184 million in H1 2021), re-
spectively. Without taking synergies with
our core business into account, we believe
that these pro forma figures reflect the
level of consolidated earnings after our
acquisition of the enterprises.
The above statements of the fair values
of acquisitions are not considered final
until 12 months after takeover.
Acquisitions after balance sheet date
On 14 June 2022, we announced the
acquisition of the remaining 80% of the
shares in ShengWang, thereby taking full
ownership of the business. This follows the
20% minority investment announced on
4 March 2022.
Including the consideration paid for the
initial 20% minority investment, the pur-
chase price amounts to RMB 1,750 million
(DKK 1,863 million) on a cash- and debt-
free basis for 100% ownership of which
RMB 300 million (DKK 319 million) will be
payable over the coming three years. The
acquisition will be financed through exist-
ing cash reserves and already established
credit facilities.
The payment was transferred on 1 July
2022 from which date Demant took
ownership and achieved control of
ShengWang.
As approval and publication of this Interim
Report 2022 is close to the closing date
of the acquisition of ShengWang, the pur-
chase price allocation in accordance with
IFRS 3 is being prepared but has not been
finalised yet. Therefore, opening balances,
total consideration, acquired assets and
liabilities and goodwill effects have not
been disclosed in this Interim Report 2022.
Apart from the acquisition of ShengWang,
Demant has acquired additional minor
distribution enterprises from the balance
sheet date and until the date of publication
of this Interim Report 2022. We are in the
process of estimating their fair values. The
acquisition costs are expected to relate
primarily to goodwill.
Note 1 – Acquisition of enterprises and activities – continued
25
Discontinued operations
On 27 April 2022, Demant announced
the decision to discontinue its Hearing
Implants business. In H1, discontinued
operations thus comprise the Hearing
Implants business, which realised a profit
after tax of DKK -107 million. The negative
result can be attributed to a decline in
revenue due to the halt in sales of cochlear
implants following the voluntary field cor-
rective action announced on 14 October
2021 as well as to a lower gross margin.
These effects more than offset growth in
the bone anchored hearing systems busi-
ness following the launch of the Ponto 5
sound processors.
Following the verification and validation
of a solution to the issue resulting in the
voluntary field corrective action, Hearing
Implants is now again able to meet a num-
ber of contractual obligations and to offer
support in special user cases, which is in
line with the plans made for the discontin-
uation of the business.
Assets held for sale
On 27 April 2022, Demant entered into
an agreement with the intention to divest
the Hearing Implants business to Cochlear
Limited for a conditional payment of DKK
850 million on a cash- and debt-free basis.
Assets classified as held for sale at 30 June
2022 thus comprise the Hearing Implants
business. Cochlear will take over the obli-
gations to service existing customers. The
divestment is subject to regulatory approval
and other customary closing conditions
with closing expected in H2 2022.
Accounting policies
Discontinued operations represent a sepa-
rate line of business disposed of or in prep-
aration for sale. The results of discontinued
operations are presented separately in the
income statement and comparative figures
are restated. Assets and liabilities from
discontinued operations are presented as
separate items in the balance sheet, and
cash flows from discontinued operations
are presented separately in the cash flow
statement.
Assets and liabilities from discontinued
operations and assets held for sale, except
financial assets etc., are measured at the
lower of their carrying amount and their
fair value less costs to sell. Non-current
assets held for sale are not depreciated.
Key accounting estimates and judge-
ments
No key estimates were identified.
Note 2.2 - Assets held for sale
and liabilities related to assets
held for sale
(DKK million)
H1
2022
Balance sheet items
Intangible assets
579
Property, plant and
equipment 28
Lease assets
23
Deferred tax assets
42
Other non
-current assets 1
Non
-current assets
673
Current assets
333
Assets held for sale
1,006
Provisions
30
Deferred tax liabilities
21
Lease liabilities
23
Other liabilities
147
Liabilities related to assets held
for sale
221
Note 2 – Discontinued operations and assets held for sale
Note 2.1 - Discontinued operations
(DKK million)
H1 2022 H1 2021
Full year
2021
Revenue
221 266
482
Expenses
-346 -293
-678
Amortisation and depreciation
-10 -10
-21
Profit before tax
- discontinued operations -135 -37
-217
Tax on
profit for the period 28 4
34
Profit for the period
- discontinued operations
-107 -33
-183
Profit for the period for discontinued operations
attributable to:
Demant A/S' shareholders
-107 -33
-183
-107 -33
-183
Earnings per share (EPS), DKK
-0.47 -0.14 -0.78
Diluted earnings per share (DEPS), DKK
-0.47 -0.14 -0.78
Cash flow from discontinued operations
Cash flow from operating activities (CFFO)
-100 -82
-318
Cash flow from investing activities (CFFI)
-10 - 4
Cash flow from financing activities (CFFF)
2
- -
Cash flow for the period, net
- discontinued operations -108 -82
-314
26
This Interim Report 2022 is presented in
accordance with IAS 34, Interim Financial
Reporting, as adopted by the EU and fur-
ther Danish disclosure requirements in re-
spect of interim reports for listed compa-
nies. We have not prepared a separate in-
terim report for the Parent. The report is
presented in Danish kroner (DKK), which
is the functional currency of the Parent.
The accounting policies used for this In-
terim Report 2022 are the same as the
accounting policies used for our Annual
Report 2021 to which we refer for a full
description. The Group has adopted all
new, amended and revised accounting
standards and interpretations as pub-
lished by the IASB and adopted by the
EU, effective for the accounting period
beginning on 1 January 2022. The amend-
ments, revised standards and interpreta-
tions have not had a significant effect.
Note 3 – Accounting policies and estimates