Bang & Olufsen

Annual / Quarterly Financial Statement • Aug 16, 2013

Please see attached Annual Report 2012/13 and attached Interim Report, 4th
quarter 2012/13 (1 March 2013 - 31 May 2013)

Q4 HIGHLIGHTS

Bang & Olufsen realised revenue of DKK 2,814 million in the 2012/13 financial
year, corresponding to a decline of 6 per cent compared to last year. The
positive contribution from the successful launch of many new and innovative
products was more than outweighed by continued challenging market conditions in
Europe, combined with short-term, adverse revenue effects of terminating
low-performing retailers and taking control of the distribution in China. The
Group EBIT was negative DKK 188 million. Both revenue and EBIT were in line
with the company’s latest guidance.

-- The Group’s revenue was DKK 740 million for the fourth quarter of the
2012/13 financial year compared to revenue of DKK 867 million in the same
period last year.
-- The B2C business recorded revenue of DKK 582 million in the fourth quarter
of the 2012/13 financial year compared to DKK 688 million in the same
period last year. Fourth quarter last year was a tough comparison base due
to the launch of BeoPlay V1.
-- Based on the success of recently launched products and a strong roadmap for
new products for the next 12-18 months, Bang & Olufsen has decided to
reduce the complexity in the product portfolio by terminating a number of
older, non-productive products across all product segments. The new product
launches and the terminations of old products will significantly rejuvenate
and strengthen the product portfolio, make it even more attractive to
consumers and retailers and further position Bang & Olufsen as a leader
within high-end AV solutions.
-- The B2B business recorded revenue of DKK 159 million in the fourth quarter
of the 2012/13 financial year compared to revenue of DKK 158 million in the
same period last year.
-- B2C revenue in all markets outside Europe saw strong increases in the
fourth quarter compared to the same quarter last year. North America
increased to DKK 49 million from the unusually low DKK 15 million in the
same quarter last year, BRIC markets increased by 21 per cent and Rest of
world increased by 22 per cent. The strong developments outside Europe were
offset by a 30 per cent decrease in Europe.
-- The Group’s gross margin in the fourth quarter was 35.8 per cent, compared
to a gross margin of 40.6 per cent last year. The decline in the gross
margin was mainly a result of extraordinary inventory write-downs (DKK 22
million) reflecting the decision to terminate older, non-productive product
and an adverse effect from indirect production costs due to a significant
inventory reduction in the quarter. These effects were only partially
offset by a decrease in warranty provisions (DKK 23 million) reflecting a
continued positive development in the quality level of the product
portfolio.
-- Capacity costs were DKK 304 million in the fourth quarter, compared to DKK
271 million in the fourth quarter last year. The quarter was impacted by
higher amortisation and lower capitalisation on development projects of DKK
25 million compared to the same quarter last year. Additional cost
increases relate to an increased level of own retail and the establishment
of a B&O PLAY organisation. The capacity costs included net non-recurring
items of DKK 15 million, mainly related to network restructuring and
organisational changes.
-- Earnings before tax for the fourth quarter of the 2012/13 financial year
were negative DKK 45 million against positive DKK 77 million in the same
quarter last year.
-- Free cash flow in the fourth quarter was positive at DKK 59 million
compared to negative DKK 51 million in the same period last year. The
Group’s net working capital was reduced to DKK 557 million at the end of
the fourth quarter of the 2012/13 financial year compared to DKK 613 at the
end of the 2011/12 financial year.
-- The 2013/14 financial year is the third year of the transition phase in the
“Leaner, Faster, Stronger” strategy. The key focus for the year will be to
continue to build a strong foundation that will prepare Bang & Olufsen for
future growth, while ensuring a significant improvement in the financial
results.
-- After the end of the reporting period Bang & Olufsen has taken over 20
shops from the previous master dealer Richcom in China (including Beijing
and Shanghai). This means that Bang & Olufsen now owns and operates 31 out
of the 36 stores in China and Hong Kong. The final purchase price has not
been finalised yet, but is expected to be in the level of DKK 35 million.

Any enquiries about this announcement can be addressed to:

CEO, Tue Mantoni, tel.: +45 9684 5000

Press contact, Morten Juhl Madsen, tel.: +45 4030 8986

Investors, Claus Højmark Jensen, tel: +45 2325 1067

A webcast will be hosted on 16 August 2013 at 10.00. Access to the webcast is
obtained through our web page www.bang-olufsen.com/investor.