Annual Report • Sep 12, 2008
Annual Report
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Bang & Olufsen Group
Bang & Olufsen Group
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The 2007/08 financial year was particularly challenging as well as unpredictable. In retrospect, it seems almost as if the year covered two entirely different chapters in the company's history – a fantastic first six months with the best November ever followed by a second half year characterised by a significant slowdown in international economic activity. As a result, after a boom period of several years, the whole of Western Europe and the US was severely affected.
The dramatic change in economic trends in some of Bang & Olufsen's main markets necessitated an adjustment of the expectations for the year's result. Not from good to bad but from very high expectations based on the historic peak period of recent years to more modest expectations based on the economic realities that have affected large parts of the world.
Despite these difficulties, it is a pleasure to note that the Group exited 2007/08 with the fourth highest turnover in the company's history. We should also be pleased with the fact that Bang & Olufsen remains a particularly solid business with a solvency ratio of over 50 per cent. This, no doubt, makes us the envy of many other businesses now that economic trends look less favourable.
Continued whole-hearted commitment to innovation, idea and product development is the key component of the Group's strategy. In addition to a number of new products, these focal points led, for instance, to the launch of Automatic Colour Management during the year. This patented system means that Bang & Olufsen's plasma TVs retain their full colour and picture quality over their lifetime whereas the colour spectrum of ordinary plasma screens gradually fades over time. Bang & Olufsen will always endeavour to differentiate its products and set new standards by delivering solutions that surprise and endure.
During the past year, the Group consistently maintained the qualitative development of its distribution. With the opening of 45 new B1 shops (net) worldwide, we now have 822 dedicated outlets around the world as well as more than 400 shop-inshops.
Moreover, we are delighted to note that Bang & Olufsen's sales to luxury hotels and residential projects worldwide as well as to the automotive industry continue to show positive trends.
On the backdrop of Bang & Olufsen's financial and product-related development, the Board unanimously decided on January 10, 2008 to dismiss the company's CEO. In the opinion of the Board, the dismissal was a pre-requisite for getting Bang & Olufsen back on track
Consequently, it is a pleasure to welcome our new CEO & President Kalle Hvidt Nielsen. In Kalle Hvidt Nielsen Bang & Olufsen now has a CEO who, with degrees in Engineering and Sales as well as marketing experience, has a particularly broad and professional background. Moreover, he can draw on several years of international management experience when he embarks on the task of moving Bang & Olufsen forward into a new and successful era.
Kind regards,
Jørgen Worning Chairman
CVR no.: 41257911
Place of domicile: Struer
Financial year: 1 June – 31 May
Adoption of the annual report: The annual report is expected to be adopted at the Annual General Meeting, which is held on 26 September, 2008.
Annual General Meeting: The Annual General Meeting will be held on Friday, 26 September, 2008 at 16.30 at Struer Gymnasium.
The product-related environmental review "To the last detail" – a story about environmental awareness as told through the development, production, use and disposal of a specific product.
Voluntary environmental review, including consumption of raw materials.
These reviews are available at www.bang-olufsen.com or from Bang & Olufsen's Safety, Health & Environment department on +45 96 84 10 69.
Statutory green accounts for the anodisation plant. A danish version can be requested at Bang & Olufsen's Safety, Health & Environment department on +45 96 84 10 69.
* 51 % owned
** 90 % owned - 100 % owned from July 2008
Known all over the world for spectacular, ideabased, quality products, Bang & Olufsen produces and develops a wide range of audio/video products as well as telephones. Within the CarFi sector, the development of a unique sound system for, so far, six Audi models is ongoing, and a partnership has been established with Aston Martin. Moreover, several of the world's leading hotels have been equipped with Bang & Olufsen audio/video products. The majority of all development and product development is centred at the Group's head office in Struer in Western Jutland.
At the end of the financial year, Bang & Olufsen employed approx. 2,500 people while the company's products are currently sold in more than 100 countries across the world.
Bang & Olufsen was founded in 1925 by two young Danish engineers, Peter Bang and Svend Olufsen, who met as students and shared an enthusiasm for the new phenomenon of the age: the radio.
The company's first two years were spent in an "incubator", i.e. the main building of Svend's parents' estate, Quistrup, just outside Struer. At the beginning, the estate's young workers assisted the
two engineers with their project, but as 25 people joined the fledgling company, Quistrup began to burst at the seams. Occasionally, Svend's mother, Anna Olufsen, supplemented the overstretched finances by selling eggs to pay the staff's weekly wages.
The first pioneering product, however, was not the mains radio, which the two engineers dreamed about, but the "Eliminator" – a mains receiver that eliminated the need for batteries. The timing was perfect – the Eliminator arrived in the market as electricity became commonplace in Danish households. It, therefore, provided Bang & Olufsen with the necessary start-up capital which enabled the business to move into its own factory in the village of Gimsing, which, at the time, was outside Struer, but is now part of the town.
In the final months of the Second World War, the factory was destroyed by Danish Nazi sympathisers as revenge for Bang & Olufsen's refusal to work for the occupying German forces, and because many of its employees were involved in the Danish Resistance.
In the post-war years, Bang & Olufsen faced a double challenge: to survive in the marketplace
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and rebuild the factory. Succeeding in both, during the 1950s and 60s, Bang & Olufsen established a recognized name for itself in the Danish market as "The Danish Quality Brand".
When, at the end of the 1960s, competition from Asian manufacturers forced scores of Danish and European radio and TV factories to close, Bang & Olufsen allied itself with a group of architects and designers and set about focusing on the ideas and the design behind the products as well as on their quality. Around the same time, Bang & Olufsen started sales from abroad.
In the late 1980s and early 90s, dark clouds once again gathered over Bang & Olufsen. Earnings did not match turnover, and the Group lacked sufficient funds to weather the storm. A large-scale disposal of non-core activities was undertaken and a new distribution strategy launched: no longer should Bang & Olufsen's products be sold through multibrand radio/TV stores, but through dedicated outlets which only dealt in Bang & Olufsen products.
Over the years, Bang & Olufsen shops (B1), have accounted for an increasing share of overall sales. Bang & Olufsen has also focused on developing a shop in shop concept where individual dealers can sell Bang & Olufsen's products providing a separate section of the shop is designed according to Bang & Olufsen's demands and specifications.
The emphasis on core skills and the distribution strategy has proved highly successful and since the late 90s, has contributed to growth in both turnover and revenue on the strength of a healthy financial base.
Pursuing a strategy for growth since 2000, Bang & Olufsen continues to establish shops worldwide, including shops in new growth regions such as India, China and Russia.
During this period, Bang & Olufsen has launched a number of pioneering products, which fully meet the company's high quality requirements and design, setting new standards for the industry.
Ground-breaking products have been launched for the audiophile world, with BeoLab 5 named as one of the world's finest loudspeakers, and within TV. In the latter area, Bang & Olufsen recently distinguished itself with the introduction of Automatic Colour Management, which enables the colour performance of plasma TVs to be controlled and adjusted so that the picture quality remains impeccable throughout the lifetime of the TV. Bang & Olufsen, therefore, has solved the problem of the plasma screen's colour balance changing over time with a subsequent deterioration in picture quality.
Bang & Olufsen has long been renowned for its user-friendly and functional remote controls which can control all the company's audio/video products. The classic Beo4, however, is now being replaced by the new Beo5, a portable central command device which offers a range of new functions in addition to those already known from Beo4. The Beo5 can, for instance, be configured specifically for the individual client's requirements. The Beo5, therefore, amounts to a unique, personal remote control which contains precisely those functions required for the user's individual home. As well as the company's
audio/video products, Beo5 has the ability to control remotely controlled systems such as lighting, curtains, windows, air-conditioning and alarms.
Over the past few years, the branded business has extended into new areas. As a result, Bang & Olufsen has developed sound systems for, so far, six Audi models. These have attracted strong praise with Bang & Olufsen being awarded the title of "Best Brand 2008" in the Car-HiFi category in the respected German auto magazine "Auto Motor und Sport." In the automotive area, Bang & Olufsen has also entered into a strategic partnership with Aston Martin, the UK's sports car maker, and latest, Mercedes-AMG.
Through its Enterprise department, Bang & Olufsen focuses on sales to hotels where the company's products are currently represented in more than 200 five-star hotels across the world. In addition, Bang & Olufsen Enterprise has initiated and expanded a number of partnerships with leading property developers for the supply of audio/video products for exclusive property projects, primarily in the Middle East and Asia.
BeoSound 9000 and BeoLab 5
Sales take place through two types of dedicated Bang & Olufsen shops:
Irrespective of where customers purchase Bang & Olufsen products, they will encounter well-trained personnel especially as Bang & Olufsen invests substantial sums in training shop staff.
Bang & Olufsen's products are currently available from 822 B1 shops and 421 shop in shops. The B1 shops account for 81 per cent of turnover, with the shop in shop outlets accounting for 19 per cent. Bang & Olufsen's strategy is to continue to focus on these two types of shops with the B1 shops as the most important, and the shop in shop outlets as a significant distribution channel in areas where the demographics do not justify a B1 shop. Bang & Olufsen owns 51 B1 shops directly, mainly in Australia, the UK and in the US.
Bang & Olufsen's products are available around the world and 88 per cent of the Group's turnover derives from exports. In a number of markets, operations are handled by Bang & Olufsen's own subsidiaries, c.f. overview Note 46, while sales and distribution development in certain overseas markets are organised by highly qualified business partners.
Most of Bang & Olufsen's production is centred in Struer, where the factories are located alongside the Development Department, the Administration and the Group's Head Office.
In 2006, Bang & Olufsen's new factory in Koprivnice in the Czech Republic was commissioned. By the end of the financial year, the 17,000 sq.m. factory employed around 260 people who are primarily involved in the production of audio and telephony products as well as assembly work. The Group's high quality requirements are, of course, maintained.
Bang & Olufsen's spare part distribution has also relocated to Koprivnice. Around 1,200 items are shipped daily from the new spare part warehouse which stores some 15,000 items. Bang & Olufsen's policy is to service all products up to 12 years after they have gone out of production.
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Many components and a few finished products are manufactured by suppliers from across the world. Carefully considered in and outsourcing processes aim at optimising both efficiency and quality.
Most of Bang & Olufsen's products are manufactured in a large number of varieties, depending on the customer's specific wishes.
"The Idea Factory" is where the ideas for new concepts and new products are conceived. The concept developers work in close collaboration with external designers and with engineers and technicians in the Development Department to realise the ideas. "Synthesis" is the key word – as technology and design not only go hand in hand, but add a new dimension to each other.
Bang & Olufsen has recently established a development department in connection with the factory in Koprivnice. Consequently, the factory can now also handle integrated product and production development. The department's approx. 30 employees primarily focus on mechanical and acoustic competencies. Once specifications have been determined in Denmark, the department can implement complete construction processes.
The objective is for Bang & Olufsen to launch between three and five new products each year. Internal competencies play a major role with regard to ensuring quality in the assembly and finish of the products and are an important element in the development of new products.
For the 500 engineers and technicians involved in the development of Bang & Olufsen products, the opportunities for direct interaction with the production departments are of the utmost importance to ensure that the finished products contain the desired features and quality.
Alongside the branded business, Bang & Olufsen is engaged in non-branded activities with regard to the development, production and sales of compact, digital amplifier units.
Bang & Olufsen ICEpower a/s is a subsidiary responsible for the patented ICEpower technology – a technology that enables small digital amplifiers to provide extremely high performance with particularly low heat output.
As a result of the compact design, reliability, energy savings, competitive prices and sound quality, Bang & Olufsen ICEpower's digital amplifier modules are in demand for use in, for instance, mobile phones, and as a result this technology can be found in a wide range of models from Samsung.
Operating profit
DKK million
DKK million
Result before tax
Return on equity %
| Group (DKK million) | 2007/08 | 2006/07 | 2005/06 | 2004/05 | 2003/04 |
|---|---|---|---|---|---|
| Profit and loss account | |||||
| Net turnover | 4,092 | 4,376 | 4,225 | 3,742 | 3,610 |
| Of which in foreign markets as a percentage of above | 88 | 85 | 82 | 82 | 83 |
| Operating profit | 195 | 530 | 439 | 372 | 337 |
| Net financials | (30) | (16) | (7) | 7 | 2 |
| Result before tax | 154 | 524 | 431 | 380 | 341 |
| Result for the year | 112 | 373 | 296 | 265 | 266 |
| Result for the year, the Parent's shareholders | 105 | 367 | 294 | 265 | 264 |
| Balance sheet | |||||
| Total assets, end of year | 2,817 | 2,962 | 2,915 | 2,784 | 2,721 |
| Share capital | 121 | 121 | 125 | 124 | 124 |
| Equity, end of year | 1,484 | 1,682 | 1,742 | 1,715 | 1,652 |
| Equity, end of year, the Parent's shareholders | 1,472 | 1,676 | 1,738 | 1,713 | 1,650 |
| Minority interests | 12 | 6 | 4 | 2 | 2 |
| Cash flow for the year | (104) | (346) | (229) | 259 | 28 |
| Of which cash flow from: | |||||
| Operating activities | 332 | 521 | 395 | 740 | 448 |
| Investment activities | (254) | (378) | (379) | (233) | (195) |
| - of which investment in tangible non-current assets | (190) | (158) | (185) | (123) | (138) |
| - of which investment in intangible non-current assets | (125) | (210) | (171) | (125) | (147) |
| - of which investment in associates | 0 | 0 | 0 | 0 | 0 |
| Financing activities | (181) | (488) | (246) | (248) | (225) |
| Employment | |||||
| Number of employees at year-end | 2,579 | 2,520 | 2,422 | 2,331 | 2,339 |
Main and key figures for 2004/05 onwards have been prepared on the basis of IFRS and "Recommendations and key figures 2005" issued by The Danish Society of Investment Proffesionals. Comparative figures for 2003/04 have been prepared on the basis of "Recommendations and key figures 1997" issued by The Danish Society of Investment Professionals, and the accounting principles applied in accordance with the Danish Financial Statements Act.
Parentheses denote negative figures.
| Group (DKK million) | 2007/08 | 2006/07 | 2005/06 | 2004/05 | 2003/04 |
|---|---|---|---|---|---|
| Key figures | |||||
| EBITDA | 483 | 789 | 670 | 616 | 623 |
| EBITDA-margin, % | 12 | 18 | 16 | 16 | 17 |
| Profit ratio, % | 5 | 12 | 10 | 10 | 9 |
| Return on assets, % | 7 | 21 | 20 | 18 | 16 |
| Return on invested capital, excl. goodwill, % | 29 | 51 | 52 | 48 | 42 |
| Return on equity, % | 7 | 22 | 17 | 16 | 16 |
| Current ratio | 1.9 | 1.9 | 2.4 | 2.5 | 2.7 |
| Equity ratio, % | 53 | 57 | 60 | 62 | 61 |
| Financial gearing | 0.2 | 0.0 | (0.1) | (0.3) | (0.1) |
| Net turnover/Invested capital, excl. goodwill | 2.4 | 2.8 | 3.3 | 2.9 | 2.5 |
| Earnings per share (nom. DKK 10), DKK | 9 | 31 | 25 | 22 | 22 |
| Diluted earnings per share (nom. DKK 10), DKK | 9 | 31 | 25 | 22 | 22 |
| Equity value per share (nom. DKK 10), DKK | 123 | 139 | 140 | 141 | 133 |
| Quotation as at 31 May | 265 | 698 | 684 | 389 | 355 |
| Price/earnings | 29 | 22 | 28 | 18 | 16 |
| Price/earnings, diluted | 29 | 22 | 28 | 18 | 16 |
| Quotation/equity value | 2.2 | 5.0 | 4.9 | 2.8 | 2.7 |
| Dividend proposed/paid per share (nom. DKK 10), DKK | 3.00 | 20.00 | 16.00 | 12.00 | 7.00 |
| Number of shares (A and B) | 12,081,338 | 12,081,338 | 12,450,925 | 12,414,240 | 12,380,330 |
| Number of own shares (A and B) | 767,787 | 619,923 | 669,587 | 435,479 | 164,340 |
| Average number of circulating shares | 11,376,530 | 11,683,175 | 11,872,383 | 12,097,376 | 11,850,685 |
| Average number of dilutive share options outstanding | 0 | 12,513 | 41,676 | 0 | 0 |
| Average number of circulating shares - diluted | 11,376,530 | 11,695,688 | 11,914,058 | 12,097,376 | 11,850,685 |
EBITDA:
Result before interest, tax, depreciations, amortisations and impairment losses
EBITDA-margin: Result before interest, tax, depreciations, amortisations and impairment losses x 100 Net turnover
Profit ratio: Operating profit x 100 Net turnover
Return on assets: Operating profit x 100 Average operational assets
Return on invested capital, excl. goodwill: Operating profit before depreciation and goodwill write offs Average invested capital, excl. goodwill
Return on equity: Bang & Olufsen a/s' share of result for the year x 100 Average equity, excl. minority interests
Current ratio: Current assets Current liabilities
Equity ratio: Equity, end of year x 100 Total equity and liabilities, end of year Interestbearing debt (net) end of year Equity, end of year
Financial gearing:
Net turnover/invested capital, excl. goodwill Net turnover x 100
Average invested capital, excl. goodwill
Earnings per share (nom. DKK 10), DKK: Result after tax Average number of circulating shares
Diluted earnings per share (nom. DKK 10), DKK: Result after tax Average number of circulating shares - diluted
Equity value per share (nom. DKK 10), DKK: Equity, end of year Number of shares, end of year
Price/earnings: Quotation Result per share (nom. DKK 10)
Price/earnings, diluted Quotation Diluted earnings per share (nom. DKK 10)
The Board of Directors and the Board of Management have today discussed and approved the annual report of Bang & Olufsen a/s for the financial year 1 June 2007 to 31 May 2008.
The annual report has been prepared in accordance with International Financial Reporting Standards as adopted by the EU and additional Danish disclosure requirements for annual reports for listed companies.
We consider the applied accounting policies appropriate for the annual report to provide a true and fair view of the Group's and the Parent's financial position at 31 May 2008 and of their
financial performance and their cash flows for the financial year 1 June 2007 to 31 May 2008.
We believe that the Directors' report gives a fair presentation of developments in the Group´s and the Parent´s activities and finances, results for the year and of the Group´s financial position in general as well as a fair description of the most significant risks and uncertainties to which the Group is exposed.
We recommend the annual report for adoption at the Annual General Meeting.
Struer, 13 August 2008
The Board of Management of Bang & Olufsen a/s
Karl Kristian Hvidt Nielsen (Precident & CEO) Peter Thostrup
The Board of Directors of Bang & Olufsen a/s
Jørgen Worning (Chairman)
Lars Brorsen (Deputy Chairman)
Niels Bjørn Christiansen
Thorleif Krarup
Preben Damgaard Nielsen
Jesper Olesen
Knud Olesen
Peter Skak Olufsen
Anette Revsgaard Sejbjerg
We have audited the annual report of Bang & Olufsen a/s for the financial year 1 June 2007 to 31 May 2008, which comprises the statement by Management on the annual report, Direcors' report, income statement, balance sheet, statement of changes in equity, cash flow statement and notes, including the accounting policies, for the Group as well as the Parent. The annual report has been prepared in accordance with International Financial Reporting Standards as adopted by the EU and additional Danish disclosure requirements for annual reports for listed companies.
The Management is responsible for the preparation and fair presentation of an annual report in accordance with International Financial Reporting Standards as adopted by the EU and additional Danish disclosure requirements for annual reports for listed companies. This responsibility includes: designing, implementing and maintaining internal controls relevant to the preparation and fair presentation of an annual report that is free from material misstatements, whether due to fraud or error, selecting and applying appropriate accounting policies, and making accounting estimates that are reasonable in the circumstances.
Our responsibility is to express an opinion on this annual report based on our audit. We have conducted our audit in accordance with Danish and International Standards on Auditing. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the annual report is free from material misstatements.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the annual report. The procedures selected depend on the auditor's judgement, including the assessment of the risks of material misstatements in the annual report, whether due to fraud or error. In making those risk assessments, the auditor considers internal controls relevant to the Company's preparation and fair presentation of an annual report in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by Management as well as evaluating the overall presentation of the annual report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Our audit has not resulted in any qualification.
In our opinion, the annual report provides a true and fair view of the Group's and the Parent's financial position at 31 May 2008 and of their financial performance and their cash flows for the financial year 1 June 2007 to 31 May 2008 in accordance with International Financial Reporting Standards as adopted by the EU and additional Danish disclosure requirements for annual reports for listed companies.
Copenhagen, 13 August 2008
Deloitte State Authorised Public Accounting Company
Jens Rudkjær
State Authorised Public Accountant
Henrik Z. Hansen
State Authorised Public Accountant
| Company | Board of Directors | Board of Management |
|---|---|---|
| Bang & Olufsen a/s | Jørgen Worning (Chairman) | Karl Kristian Hvidt Nielsen |
| Struer | Lars Brorsen (Deputy Chairman) | (President & CEO) |
| CVR no. 41257911 | Niels Bjørn Christiansen Thorleif Krarup |
Peter Thostrup |
| Brand building and Group staff | Preben Damgaard Nielsen | |
| functions as well as the development | Jesper Olesen* | |
| of Bang & Olufsen's | Knud Olesen* | |
| audio/video-products. | Peter Skak Olufsen | |
| Anette Revsgaard Sejbjerg* | ||
* Elected by the employees.
Jørgen Worning Lars Brorsen Thorleif Krarup
Jørgen Worning FLSmidth & CO A/S (CM) ALK-ABELLO A/S (CM)
Lars Brorsen Vorsitzender der Geschäftsführung von Jost-World GmbH + 14 S
Vice CEO Danfoss A/S + 14 S TrygVesta A/S William Demant Holding A/S Axcel A/S
Group4Securicor Plc. H. Lundbeck A/S (DCM) LFI A/S (DCM) Lundbeckfonden Brightpoint Inc. ALK-ABELLO A/S (DCM) Exiqon A/S (CM) Sport One Danmark A/S (CM)
Rockwool International A/S Axcess A/S Esportnation A/S AO Invest A/S DTU-Innovation A/S Brødrene A & O Johansen A/S ED Equity Partner A/S ED Project Partner A/S Damgaard Company II A/S Damgaard Group A/S Excitor A/S Proactive A/S (CM) Heart Made A/S (CM) Damgaard Company A/S
A/S Fiil-Sø (CM) + 1 S Hunsballe Frø A/S (CM) JP/Politikens Hus A/S EuroGrass BV
Karl Kristian Hvidt Nielsen Phase One A/S EskoGraphics A/S
Nordic Bioscience A/S (CM) + 3 S NN AX ApS (Noa Noa) + 1 S Bang & Olufsen Medicom a/s
CM = Chairman DCM = Deputy Chairman S = Subsidiaries
| Company | Board of Directors | Board of Management |
|---|---|---|
| Bang & Olufsen Operations a/s Struer (100 % owned) CVR no. 26035406 |
Peter Thostrup (Chairman) Kim Bo Hansen John Christian Bennett-Therkildsen |
John Christian Bennett-Therkildsen (CEO) |
| Purchasing, production and logistics for the Bang & Olufsen Group as well as sales of Bang & Olufsen's audio/video-products. |
||
| Bang & Olufsen s.r.o Koprivnice (100 % owned) |
Martin Wingaa (CEO) | |
| Handles production and development of some of the Group's audio-products. |
||
| Bang & Olufsen Telecom a/s Struer (100 % owned) CVR no. 24062112 |
John Christian Bennett-Therkildsen (Chairman) Peter Thostrup Kim Bo Hansen |
Peter Thostrup (CEO) |
| Develops and markets new telephony concepts as a dynamic part of electronic communication in the home. |
||
| Bang & Olufsen Ejendomme a/s Struer (100 % owned) CVR no. 29806357 |
Kim Bo Hansen (Chairman) Randi Toftlund Pedersen Peter Thostrup |
Peter Thostrup (CEO) |
| The purpose is to own property and activities which, in the opinion of the Board of Directors, relates to property administration. |
| Company | Board of Directors | Board of Management |
|---|---|---|
| OÜ BO-Soft | Allan Krog Erlandsen (Chairman) | Jaan Lievand (CEO) |
| Tallin (51 % owned) | Peter Eckhardt | |
| Jaan Lievand | ||
| Software development | ||
| Bang & Olufsen ICEpower a/s | Peter Thostrup (Chairman) | Peter Sommer (CEO) |
| Lyngby-Tårbæk (90 % owned)* | Jens Peter Zinck** | |
| CVR no. 25053591 | Kim Bo Hansen | |
| Peter Petersen | ||
| Develops, produces and markets | ||
| products based on highly effective amplifier technologies. |
||
| Bang & Olufsen GPS | Kim Bo Hansen (Chairman) | Klaus K. Knudsen |
| Taipei City, Taiwan (100 % owned) | John Christian Bennett-Therkildsen Peter Eckhardt |
|
| Sourcing company | ||
100 % owned from July 2008 * Joined July 2008 |
||
| Main banker for all companies Danske Bank A/S |
Auditors for all companies
Deloitte, State-Authorised Public Accounting Company
Dormant companies are not included.
The Group recorded a turnover of DKK 4,092 million for the 2007/08 financial year against DKK 4,376 million last year. Medicom was included in the comparative figures for 2006/07 at DKK 101 million. Adjusted for this, the year shows a decrease in turnover of DKK 183 million.
The Group's gross margin was 46.2 per cent against 46.6 per cent in 2006/07.
Operating profit totalled DKK 195 million against DKK 530 million, while result before tax was DKK 154 million against DKK 524 million. Results before tax was in part affected by non-recurring expenditures of DKK 40 million and a negative change in the net effect of capitalisation of DKK 50 million – in total DKK 90 million.
The Board of Directors recommends that a dividend of DKK 3.00 per share will be paid out, which is in line with the established dividend policy.
The A/V business' three largest markets, Denmark, Germany and the UK, saw an overall decline in turnover of DKK 228 million during the financial year. The North American market declined by DKK 34 million. Measured in local currency, the decline in the US amounts to 4 per cent for the financial year.
The Group's fastest growing geographical markets were Expansion Markets, Middle East and Asia Pacific at DKK 71 million. Among Expansion Markets, particularly Russia has excelled with an increase of DKK 28 million. European markets such as Switzerland and France also showed growth. Between them, the business areas Automotive and Enterprise achieved turnover growth of DKK 95 million, of which DKK 14 million in the fourth quarter. ICEpower also ended the year on a positive note.
With the three high-end car manufacturers Audi, Aston Martin and Mercedes-AMG as partners, Bang & Olufsen Automotive is well equipped to expand its position as the most attractive supplier of in-car sound systems.
During the financial year under review, Bang & Olufsen launched the ground-breaking, patented Automatic Colour Management technology, the new remote control concept Beo5, BeoVision 8 in a 32 inch version and BeoVision 7-40 for the US market.
In the fourth quarter and following the close of the financial year, the Group satisfactorily settled a case against five former dealers in the US as well as an arbitration case concerning the terms for Bang & Olufsen's acquisition of the distribution in Holland and an offshoot of an arbitration case from December 2007.
The Board of Directors expects the result for 2008/09 will be on or above the level for 2007/08 based on an expected lower turnover than in the 2007/08 financial year.
For Bang & Olufsen a/s, the first half of the financial year proceeded according to plan, culminating in the most successful November ever. By contrast, the second half year was characterised by a challenging market situation with a slowdown across Europe and the US. This contributed to a downgrading of expectations for the financial year on 9 January, 14 March and 7 July.
By the end of the financial year, the sales situation in the main business remained challenging with a decline in incoming orders.
In the fourth quarter and following the close of the financial year, the Group concluded a number of agreements and settlements, which are regarded as positive:
Bang & Olufsen's department for the development and sales of sound systems for cars, Automotive has announced a new partnership with Mercedes-AMG, Bang & Olufsen's third partner within this business area. The other partners are Aston Martin and Audi. Following the close of the financial year, Bang & Olufsen and Audi signed an agreement to expand their existing partnership further in the years ahead.
Bang & Olufsen has acquired a block of shares from Director Karsten Nielsen, one of the co-founders of the subsidiary, Bang & Olufsen ICEpower a/s, which has developed a pioneering technology included in all Bang & Olufsen's main products. It is, therefore, of considerable strategic importance that Bang & Olufsen now has attained full control of the company. The 10 per cent shareholding was acquired for DKK 23 million.
Bang & Olufsen satisfactorily concluded a legal dispute with five former dealers. Pending in the US courts for several years, the dispute concerned the terms for the start-up of the Bang & Olufsen shops previously run by the dealers. In financial terms, the satisfactory outcome means that a modest amount was expensed during the fourth quarter of the financial year.
Bang & Olufsen also concluded a three year legal dispute in Holland. This concerned arbitration proceedings relating to the terms for Bang & Olufsen's acquisition of its Dutch distribution. The matter has now been settled without further costs to the Group.
Finally, Bang & Olufsen closed an offshoot of an arbitration case which, in mid-December last year, went against Bang & Olufsen. As stated in announcement 07.11 of 9 January 2008, the outcome of the December arbitration case did cost Bang & Olufsen DKK 25 million.
For the Bang & Olufsen a/s Group as a whole, turnover for the 2007/08 financial year was DKK 4,092 million against DKK 4,376 million last year. This represents a decrease of DKK 284 million, or 6.5 per cent. The comparative figures include Medicom's turnover at DKK 101 million. Adjusted for this, the Group saw a decrease in turnover of DKK 183 million or 4 per cent.
The branded business recorded a turnover of DKK 3,992 million against DKK 4,194 million for the 2006/07 financial year. Exchange rate developments had a negative impact on turnover at DKK 60 million compared to last year.
The Group's gross margin was 46.2 per cent against 46.6 per cent in 2006/07. The decline in the gross margin is primarily owing to a changed product mix with a greater emphasis on TVs.
Activities within the product development area continue to increase. Development costs amounted to DKK 546 million against DKK 459 million last year, an increase of DKK 87 million. DKK 51 million is attributable to the change in the net effect of capitalisation. The net effect of capitalisation of development costs was negative at DKK 16 million. Last year, the net effect was positive at DKK 35 million.
Distribution and marketing costs totalled DKK 1,004 million for 2007/08 against DKK 910 million last year. This includes non-recurring expenditures of DKK 21 million relating to the unsuccessful outcome of an arbitration case in December 2007. As part of the same case, DKK 4 million was expensed under financial items. In addition, DKK 49 million was expensed for losses and changes in provisions for losses on bad debts against DKK 17 million last year.
Administration costs amounted to DKK 149 million against DKK 139 million for the same period last year.
Operating profit for the financial year was DKK 195 million against DKK 530 million last year, i.e. a decrease of DKK 335 million.
Financial items amounted to a net expense of DKK 30 million against a net expense of DKK 16 million for the same period last year. The increase is owing to the DKK 4 million related to the arbitration case, a rise in exchange rate losses of DKK 5 million and a rise in interest costs owing to greater financing requirements as a result of recent years' shareholderoriented initiatives.
Result before tax was a profit of DKK 154 million. This represents a decrease of DKK 370 million compared to the DKK 524 million for the previous financial year. Result after tax was a profit of DKK 112 million against DKK 373 million last year.
Cash flow for the period was negative at DKK 104 million against DKK 346 million for the same period last year. Investment levels were sustained, and DKK 348 million was expended on shareholder-oriented initiatives against DKK 472 million last year. During the financial year, the Group raised a long-term loan of DKK 200 million.
(active shops at the end of each year)
B1: Shops, which are dedicated retailers of Bang & Olufsen products
SIS: Shop in shop with a sales area dedicated for Bang & Olufsen products
The Group began the financial year as planned, culminating in its best ever November sales. Since mid-December, turnover has been volatile, and, by the end of the financial year, order intake was lower than for the same period last year. The year as a whole, however, saw growth in markets such as Expansion Markets, including Russia, the Middle East, Asia Pacific, Switzerland and France as well as in business areas like Automotive and Enterprise. However, this has not been sufficient to compensate for the decline in turnover in the large markets such as Denmark, Germany and the UK.
During the financial year, Bang & Olufsen launched the ground-breaking, patented Automatic Colour Management technology, which sets new standards for plasma TV and, therefore, further differentiates Bang & Olufsen's products in this area. Automatic Colour Management is a calibration mechanism that optimises colour and picture quality throughout the lifetime of the plasma TV whereas, over time, conventional plasma screens lose their original colour, which leads to the picture fading. Automatic Colour Management automatically restores the colour balance so that the picture quality remains intact.
Bang & Olufsen's well-established remote control concept, Beo4, has been supplemented by the new remote control concept Beo5. The Beo5 is not only unique in its design, but also in its functionality as the software-based device can be set up in accordance with the precise needs and requirements of the individual Bang & Olufsen customer.
On the audio side, the Group launched a centre loudspeaker, BeoLab 10, which has strengthened and differentiated the TV portfolio. Combined with BeoVision 4 with Automatic Colour Management, BeoLab 10 represents a new and unique concept.
The TV portfolio has been further expanded by BeoVision 7-40 for the US market. Moreover, the BeoVision 8 family now includes a 32 inch version.
The multi-functional dvd machine, DVD2, was also launched alongside the BeoSound 6 mp3 player and the music mobile phone, Serenata.
The financial year saw the worldwide B1 network increased by a further 45 B1 shops. 76 B1 shops were opened or upgraded while 31 shops were closed or converted to shop in shops.
Consequently, by the end of May 2008, there were 822 B1 shops across the world against 777 at the end of the 2006/07 financial year.
B1 shops account for 81 per cent of the total turnover. The number of shop in shops is 421 against 522 at the end of the previous financial year.
The organic growth for Bang & Olufsen shops which have been in operation for more than 24 months was, for the financial year as a whole, -5 per cent for B1 shops and -11 per cent for shop in shops.
Bang & Olufsen Enterprise, which covers the Group's sales to luxury hotels across the world as well as construction projects in the Middle East and Asia, posted a particularly satisfactory development in turnover from DKK 96 million last year to DKK 155 million this year. This equates to an advance of 61 per cent. The positive development is partly owing to significant growth in the Middle East and Asia, including the installation during the financial year of Bang & Olufsen products in the largest hotel project ever in Macau, China.
The financial year under review also continued to see a good intake of orders for delivery in the years ahead. In the new financial year, Enterprise will intensify its sales efforts in the Middle Eastern region. Towards the end of the financial year, it was therefore decided, that Enterprise's daily management should be based in Dubai in order to grow the market in the area.
Bang & Olufsen's products are now represented in more than 200 five star hotels worldwide. Synergies from marketing, PR and local events between Bang & Olufsen's retailers and these prominent hotels are particularly positive and offer significant potential for all parties.
Bang & Olufsen Automotive's turnover for the financial year was DKK 123 million against DKK 87 million last year, equating to an advance of 41 per cent.
During the year, the partnership with Audi was extended to include six Audi models so that Bang & Olufsen Sound Systems are now available for Audi A4, Audi A5/S5, Audi R8 and – during the autumn – for Audi Q5. An even more advanced Bang & Olufsen Advanced Sound System is available for Audi A8/S8 and Audi Q7.
The previously announced partnership with Aston Martin has also proceeded according to plan and is now far advanced.
Automotive continues to make a contribution in terms of PR and method development – inspired by the automotive industry. As a consequence, Automotive expanded its ISO/TS 16949 quality
certificate to include all processes related to its activities within the motor industry. Moreover, Automotive has established an office in the Munich area in order to enhance its support to its German partners and to improve the recruitment of individuals with experience in the sector.
Turnover for Bang & Olufsen ICEpower a/s for the financial year totalled DKK 118 million against DKK 117 million in 2006/07, which means that ICEpower ended the year on a high note. As its achievements included a new contract with Samsung, ICEpower's technology will continue to be incorporated into many of Samsung's new mobile phones. In the first half of the financial year, sales on the project side fell slightly below expectations, and two new products were launched later than scheduled. These new products are variants of a stereo amplifier based on an ASX2 platform, which was introduced as a new concept in the previous financial year. Research and product development activities were maintained at a high level and on the sales side, a subsidiary was established in Japan during the first half of 2007/08.
A substantial part of the turnover continues to derive from the sale of standard amplifier modules and customised solutions for quality producers in the global audio market as well as increased royalty revenue in connection with the sale of amplifier technology and acoustic solutions for major OEM partners.
Result before tax for the 2007/08 financial year totalled DKK 25 million against DKK 39 million last year.
Bang & Olufsen Medicom a/s is included in the item, "Result of investments in associated companies after tax" with a negative result after tax of DKK 11 million. In the first three quarters of 2006/07, Medicom was included in the Group's figures with a turnover of DKK 101 million and a result of DKK 1 million.
Towards the end of the financial year, the Group appointed Kalle Hvidt Nielsen as the new President & CEO. Kalle Hvidt Nielsen, who joined the company on August 1, 2008, will now lay the foundation for the company's future development.
The year is expected to offer a range of different and exciting products that will contribute to maintaining the right balance in the product mix. Of the product launches planned for 2008/09, the following should be mentioned:
A new audio concept designed to set a new standard for enjoying music in the home. The concept is an important step in the new way of living with, and experiencing, music in the converging digital world. The product combines the very best from Bang & Olufsen's long tradition of producing sublime audio systems with the digital world of the present and future.
In the second half year, the BeoVision 8 family will be increased by a 40 inch version.
Towards the end of the financial year, Bang & Olufsen expects to build on the BeoVision 4 family by launching a new product, which in size and functionality will set new standards within Bang & Olufsen's video portfolio.
Towards the end of the financial year, Bang & Olufsen will launch a new concept for land line telephony.
Bang & Olufsen will continue the qualitative expansion of its distribution. On the backdrop of the challenging retail environment, Bang & Olufsen will, however, concentrate its efforts on existing shops and open fewer new ones.
The ambition for the financial year is a net addition of around 20 new B1 shops.
The A/V business, Bang & Olufsen's core business, is expected to face a challenging year - as has been the case since mid-December 2007. The Group expects a decline in turnover in the A/V business in the two first quarters of the 2008/09 financial year and expects growth to resume during the second half year at the earliest. This is, in part, owing to the fact that the timing of the launches of the new products is such that the products are not expected to be able to create a foundation for turnover growth until the second half of the financial year.
At the beginning of the 2008/09 financial year, Bang & Olufsen announced a further expansion of the Audi partnership in relation to the next generation of sound systems, which will be available in further Audi models from 2010. In addition the Group has announced the start of a new partnership with Mercedes-AMG, Bang & Olufsen's third partner in the Automotive business area.
As previously announced, the third automotive partner is Aston Martin. In the second quarter of the 2008/09 financial year, Bang & Olufsen expects to announce more about specific developments in the strategic partnership with the UK car manufacturer.
With these three high-end car manufacturers as partners, Automotive is well placed to expand its position as the most attractive supplier of in-car sound systems. Moreover, during the financial year, Bang & Olufsen was named as Number One Brand in the Car-HiFi category in the respected magazine auto motor und sport's reader survey: Best Brand 2008.
The Group expects to see further positive developments in this business area.
Bang & Olufsen has so far owned 90 per cent of the shares in Bang & Olufsen ICEpower a/s. However, immediately after the end of the 2007/08 financial year, the company acquired the remaining 10 per cent. The Group has, therefore, gained full control of this strategically important subsidiary which supplies unique technology to a broad segment of the Group's products, from loudspeakers and sound systems to TVs and sound systems for the automotive industry.
Bang & Olufsen expects to use its control to further optimise and broaden Bang & Olufsen ICEpower a/s' potential.
For 2008/2009, ICEpower's turnover is expected to remain at the same level as in 2007/08.
Market conditions for the 2008/09 financial year are expected to remain challenging. The first two months of the financial year are below last year's level.
Growth and an improvement to the results can at the earliest be expected in the second half year where the planned product launches will begin to take effect. The Group expects to be able to maintain its gross margin, and work will continue to focus on the Group's cost structure.
On that backdrop, Bang & Olufsen expects to post an operating profit and a result before tax on the same level as or above the result for the previous financial year, based on an expected lower turnover than in the 2007/08 financial year.
Bang & Olufsen's vision is to constantly question the ordinary in search of surprising, long-lasting experiences. A vision that demands a very high level of innovation in product development as well as in day-to-day operations, i.e. production, distribution, organisation and management. Bang & Olufsen, therefore, focuses strongly on maintaining and developing the skills that form the core of the company's innovative abilities. In practice, this means that within these areas, Bang & Olufsen constantly tests the limits of the possible.
For many years, Bang & Olufsen has placed considerable emphasis on innovation and systematising innovation so that today, an innovative spirit permeates the entire organisation. Taking its starting point in the company's vision, innovation is embedded into Bang & Olufsen's culture and values, such as excellence, originality, synthesis and passion. This is deeply rooted in the corporate culture, where employees have a natural passion for innovation and where excellence and originality are strived for. Every difference or disagreement is used as a basis for finding better solutions – a synthesis.
As part of this culture and the innovative environment, Bang & Olufsen has divided its product development activities into separate stages.
Responsibility for the early stages, when the concept is born, lies with the Product Innovation Department, known as the IdeaFactory. The department employs around 40 professionals skilled in concept and strategy development, operation and prototype production. As well as strengthening and streamlining concept development, the IdeaFactory's tasks include achieving synergies between the physical and virtual worlds.
Development takes place in close collaboration with a number of external design firms. Moreover, employees from other parts of the organisation, in particular the Development Department, as well as external partners, contribute to the process. Typically, staff from the IdeaFactory inspire the designers by providing technological and market input after which the designers return with a design proposal. From this mutual process, the final product concept materialises. When matured and approved, a concept is transferred to the Development
Department, which is responsible for the construction and realisation of unique concepts. There are, of course, close links between the IdeaFactory and the development process to ensure an efficient transition.
Bang & Olufsen's core competencies are directed at enhancing the user's experience when using the products. This applies to the more technical competencies (as described in the following) as well as to the process competencies that drive the entire innovation process, i.e. concept development, technology platform, quality and project management and ongoing process improvements.
Sound is one of Bang and Olufsen's core competencies and combines several knowledge areas, including basic acoustics, electro-acoustics, signal processing, highly effective amplifiers and psycho-acoustics. Bang & Olufsen's Development Department in Struer has unique measuring facilities at its disposal, which includes a large measuring room for acoustic free field measurements, several sound studios, and special facilities for the development of in-car sound. A trained and competent listening panel critically assesses the sound quality of all Bang & Olufsen's products.
Over the years, a platform of compact loudspeakers has been created with built-in amplifiers that offer extremely high acoustic performance. This platform applies to the entire product portfolio.
The most recent, major technological advance is the automatic adjustment of lower frequencies from the loudspeaker to the room and the patented acoustic lens created in partnership with Sausalito Audio Works. The BeoLab 5 loudspeaker, offering these advanced systems, is much admired by audio enthusiasts around the world and several international magazines have named BeoLab 5 one of the world's finest loudspeakers. The acoustic lens system is used in several other loudspeakers and in Bang & Olufsen Advanced Sound System for the Audi A8/S8 and Audi Q7.
The continued development of Bang & Olufsen's skills is assured through partnerships with European and American universities. At Aalborg University in Denmark, Bang & Olufsen employees have participated in the Sound Quality Research Unit under the four-year centre contract. The work has resulted in a number of scientific articles and one patent.
7
Focus is also on building up development skills in acoustics projects at the newly established development unit in the Czech Republic. The first acoustic development project, the centre loudspeaker BeoLab 10 for Beovision 4, was launched during the current financial year.
Bang & Olufsen's picture competencies are based on a combination of basic knowledge about the way in which we perceive picture quality, video signal processing, use of the TV screen and optimisation of the entire optical system from the screen to the eye. To exploit this knowledge, Bang & Olufsen has set up a number of special facilities, including a viewing room where the viewing panel makes critical assessments of Bang & Olufsen's own and other manufacturers' TVs. The aim is to optimise the picture quality in Bang & Olufsen TVs so that, irrespective of light conditions, they offer the best possible picture in the market.
To ensure the ultimate picture quality, only the best and most recent generations of LCD and plasma screens are built into Bang & Olufsen's flat screen products.
The picture experience is also affected by the glass plate at the front of the LCD or plasma screen. This is an area where Bang & Olufsen has accumulated considerable expertise. Consequently, most Bang & Olufsen TVs come with high tech front glass, which improves contrast and reduces screen reflections.
Bang & Olufsen's long-standing development work within the field of picture quality – and with it a wide range of technologies of which many are patent protected – is gathered under the VisionClear concept, which enhances picture quality for all types of video products.
Bang & Olufsen's picture competencies have recently attracted considerable attention in connection with the launch of Automatic Colour Management, for which a patent is pending. Here, a camera arm concealed in the top frame of a plasma TV enables the colour reproduction to be controlled and adjusted so that the picture quality remains impeccable over the lifetime of the TV. It is well known that the plasma screen's colour balance changes over time with the picture becoming more yellowish.
Operation competencies combine behavioural psychology, tactility, mechanics, graphics and software, which are crucial for the development of user-friendly operations of the products. A special room has been designed for testing by psychologists who, together with users, test the operation. All details are recorded and subsequently analysed in order to enhance the operations. Around ten employees are continually employed in developing the products' operation, which also includes research into user-friendliness.
Since the mid-1980s, all controls have been integrated into one remote control. The classic Beo4, a unique product, offers simple controls for the whole product portfolio. One press on the DVD button, for instance, switches on the TV, DVD and loudspeakers. With this one touch of the remote control, customers using the BeoLiving concept can adjust the lighting in a room, activate a projector, unroll the film screen and slide back the curtains. The same remote control and operating principles apply across all products.
With the latest remote control, Beo5, Bang & Olufsen has taken yet another step towards increased user-friendliness. Beo5 can be configured specifically for the individual customer and his/her requirements so that users have a unique, customised remote control that offers precisely those functions necessary for controlling the products in their own homes. The Beo5 can also remotely control lighting, curtains, windows, air-conditioning and alarms.
The unique design of Bang & Olufsen's products largely derives from the freedom given to its designers. This freedom is rooted in the very substantial mechanical construction skills available within the Development Department and the advanced material processes used in the production. The material quality, a strong Bang & Olufsen characteristic, is owing to the deliberate focus on, among other things, aluminium and plastic as well as close and enduring partnerships with a number of key suppliers.
Bang & Olufsen has accumulated very substantial knowledge resources with regard to anodisation, treatment and surface treatment of aluminium. To take an example, the aluminium surface of a BeoCenter 2 is anodised so the aluminium contains a number of minute pores allowing signs and figures to be printed. As a result of the subsequent hardening process, the surface is extremely tough so that signs and figures are indelible. Bang & Olufsen's high tech anodisation plant can colour aluminium surfaces in a variety of colours.
The Development Department possesses special skills in terms of producing robust constructions of critical mechanical details and integrating high quality movements in the products.
Bang & Olufsen's production is ISO 9000 certified and the Development Departments hold ISO 9001 certification. Bang & Olufsen's automotive production is certified according to ISO/TS 16949, a car industry quality standard.
In recent years, Bang & Olufsen has worked consistently on product development within a global perspective in order to exploit the cost and skills benefits available outside Denmark. This will continue going forward.
Consequently, Bang & Olufsen has established a development department in connection with the factory in Koprivnice in the Czech Republic. This provides opportunities for integrated product development and production maturity. Bang & Olufsen also benefits from its proximity to the University of Ostrava where it draws on the university's expertise. The company is also involved in training programmes within the engineering faculty. The department employs 30 people who focus on mechanical and acoustic competencies. Altogether, they represent one unit with mastery over all the skills necessary to carry out an entire construction process once the specifications have been determined at the head office in Denmark. In future, the Czech development department will be responsible for the implementation of acoustic, stand and audio projects.
Bang & Olufsen also draws on the approx. 40 people employed in the Estonian company, OÜ BO-Soft, which is partly owned by the Group. A number of strategic partners include TCS in India and IP Devel in Romania where 90 and 20 people respectively are primarily engaged in software and hardware development for Bang & Olufsen. In each case, these work in close partnership with the specialists in Struer.
All idea and concept development activities, however, will remain in Denmark, the heart of the Group's identity. As a result, the Group intends to invest substantially in its employees' competencies, methods and tools – which, in turn, will strengthen Struer and Århus as the focal point of product development.
The development of audio/video and automotive is based in Struer. In addition, there are small development and innovation units for software in Alexandra Park in Århus which collaborates with Aarhus University. In total, around 325 of Bang & Olufsen's employees in Denmark are involved with product development. Moreover, 50 people are employed at Bang & Olufsen ICEpower which is located in Lyngby, close to DTU, Denmark's Technical University.
Partnerships with knowledge centres, including universities, are an integral part of life at Bang & Olufsen and an important factor in the ongoing development of its core competencies. Bang & Olufsen has a long tradition for such partnerships and collaborates with universities in Europe and North America with regard to both research and its practical application. Bang & Olufsen's development engineers also participate in professional networks and conferences.
The partnership is based on an updated research strategy based on participation in research in all core competency areas. Each area has a "research gatekeeper" and a technology specialist, who is responsible for the research undertaken by PhD students financed by Bang & Olufsen. To further enhance co-operation with universities, Bang & Olufsen sponsors permanent lectureships within our core competencies as well as funding the stays of visiting professors in Struer.
Bang & Olufsen recently embarked on a research partnership with Aarhus University and the School of Engineering in Århus as well as the University of Surrey in the UK. The aim is to give Bang & Olufsen specialists access to the latest research and establish contact with graduates within specific areas.
Bang & Olufsen has also launched a Bang & Olufsen Scholarship scheme which offers financial support for special students studying within the company's core competencies. In addition, Bang & Olufsen sponsors an Innovation Camp where a significant number of
students and teachers from five European countries visit Struer for three weeks. The purpose of the Innovation Camp is to strengthen cross-national co-operation and understanding with regard to the different cultures and traditions within the engineering profession.
Bang & Olufsen enjoys close partnerships with some of the world's foremost suppliers in areas where Bang & Olufsen does not itself possess the requisite knowledge and competencies. These partners not only supply components for Bang & Olufsen's production, but also knowledge and skills for the development of the products. This is, for instance, the case with regard to flat screens, loudspeakers, DVD, Digital Video Broadcasting (DVB) and software development.
In recent years, Bang & Olufsen has been continually and systematically involved with product and distribution development as well as implementing rationalisation measures in all areas, including the reduction of production and capacity costs. The guiding principles behind this work have been innovation, simplification and focus. In 2006, this targetted approach resulted in the establishment of a new factory in Koprivnice in the Czech Republic.
The factory is an important component in Bang & Olufsen's future, balanced production in that a range of more labour-intensive tasks will be undertaken in the Czech Republic. The factory has, for instance, taken over some pre-assembly work as well as the completion of a substantial part of Bang & Olufsen's audio products. This means that production in Struer will place stronger emphasis on the introduction of new products – particularly flat-screen TVs. Concurrent with these changes, new skills will be needed from employees in the Danish production and several hundred employees have already taken part in a range of intensive courses. The same is the case with the production employees in the Czech Republic who have received intensive training to ensure that the extremely high quality levels apply equally to the Danish and Czech production processes.
Besides its internal training programmes, Bang & Olufsen also invests in training programmes for dealers, shop staff and technicians with a view to strengthening sales in the market. Previously, Bang & Olufsen offered one-off courses, but is now revitalising its commitment to training by setting up a sales academy – a training programme targetted at new shop owners, new shop managers and new shop employees. A training plan for each group will be implemented through Bang & Olufsen's sales training programme. Bang & Olufsen currently has 35 employees engaged in product training and the teaching of sales processes.
One important element is the e-learning portal, BEOCADeMY, which through internet-based courses and follow-up on class teaching, keeps sellers and technicians updated on product knowledge and sales. As well as making courses available for internal employees, Bang & Olufsen – via BEOCADeMY – instructs more than 2,700 sellers and 1,100 technicians and fitters on an annual basis. During the 2007 calendar year, 58,388 internet-based courses of up to one hour's duration took place while 747 class-based courses with a total of 7,448 participants were organised.
Several independent surveys have, in the past few years, shown that Bang & Olufsen enjoys a strong image - as a business as well as a workplace. Recently, Bang & Olufsen achieved second place in the year's major image survey undertaken by the Reputation Institute. Inside Bang & Olufsen, a great deal of work is centred on enhancing the working environment as well as providing opportunities for management and employees in terms of career development and the upgrading of skills.
During the past financial year, a large number of employees participated in training programmes of a shorter or longer duration. Altogether, the company has invested DKK 11 million in the staff training and development. Among the financial year's main areas are: leadership development at all levels, employees on master programmes, IPMA certification, the "Skills Development in Production" programme and various technical and personal development courses.
Over the past few years, Bang & Olufsen has directed considerable attention to competence development for managers and employees. Such efforts will be ongoing. Consequently, in the new financial year, the so-called IPMA certification, under which a large number of Technical Project Managers receive training in order to strengthen Bang & Olufsen's project management skills, will be continued.
All human activity impacts on the surrounding environment. This also applies to the production and use of Bang & Olufsen's products.
Bang & Olufsen continually strives to minimise environmental impact and achieve a balance between such impact and our products' qualities, economic viability, lifetime and aesthetics. Our wish is to be among the best in the industry – also within the environmental area. We wish to communicate openly about environmental issues and publish an annual environmental statement. We comply, of course, with current legislation at all times.
We wish to contribute to globally sustainable development and assess our activities from a life cycle perspective, which involves several phases:
Development (concept, design and construction) In this creative process, the product's environmental properties are determined. The aim is to reduce environmental impact during the subsequent life cycle phases.
Our choice of materials aims at avoiding materials that can give rise to environmental issues.
In our choice of production methods and production equipment, cleaner technologies have high priority.
We prioritise the near environment and the creation of a safe and healthy working environment for our employees. Our objective is to improve the physical as well as the psychological working environment.
When selecting suppliers we ensure that they have an appropriate attitude towards the environment and act accordingly. We wish to maintain a continuing dialogue with each individual supplier to create the right environmental conditions for the part of the product's life cycle for which the supplier is responsible.
We make environmental demands on our transport operators in terms of a high degree of utilisation and optimum application of technology for the transport units.
Our aim is for our products to be enjoyed problemfree in the customer's home environment, that the products have an extended life and a low energy consumption.
Our aim is to provide product parts that are suitable for recycling, and that major parts can be identified when dismantled in order to ensure appropriate disposal and recycling.
The Bang & Olufsen logo is a guarantee of quality. We want our customers to buy Bang & Olufsen products in the knowledge that we have made intelligent decisions on their behalf – also in respect of environmental issues.
Based on life cycle analysis of our products, we know that the biggest environmental impact from Bang & Olufsen's products is energy consumption while in use. Consequently, it has been obvious for us to focus our efforts on reducing stand-by consumption since this is often regarded as a pure waste of energy. Bang & Olufsen is, to a great extent, at the cutting edge of the latest EUP directive1 .
Packaging is yet another focus area. While the purpose of packaging is to protect the product during handling, storage and transport, it is, however, often seen as a waste of resources as well as a disposal problem. We employ materials that can be re-used after disposal. Packaging for the majority of our products consists of cardboard boxes where the product is secured by two shells of expanded polystyrene (EPS). Both cardboard and EPS can be recycled or incinerated after use. Legislatively, the area is covered by the EU's packaging directive2 which prescribes minimising packaging.
In October 2007, BeoCenter 6-26 won the Scandinavian packaging award, Scanstar, given for new, space-saving packaging. The box for the BeoCenter 6 is kept to a minimum so that it only accounts for 60 per cent of the previous amount of packaging. Later in the year, the packaging also won a Worldstar at the annual awards for the world's best packaging solutions. Reduced packaging also has environmental benefits in terms of transport as more products can be shipped on the same lorry, resulting in more efficient use of transport and reduced CO2 emissions.
Packaging for BeoCenter 6-26 after and before the reduction in packaging.
On the supplier front, we have worked actively with Corporate Social Responsibility (CSR) for the past three years. The CSR guidelines are set out in Bang & Olufsen's Code of Conduct which all suppliers must sign up to. Suppliers are divided into three risk groups where suppliers in the high-risk group are subject to a three-part audit. Bang & Olufsen recognizes that responsible supplier management is an ongoing process. Consequently, our aim is not to use the Code of Conduct to terminate a relationship with a supplier where an audit reveals critical deviations. Rather, we initiate joint action plans designed to improve the supplier's environmental and social standards. The implemented re-audits show improvements at supplier level with regard to human rights, employee rights and the environment.
As early as the product development stage we place extensive environmental demands on our products, the so-called compulsory features. In addition to purely statutory requirements, these compulsory features comprise internal requirements that exceed the statutory ones. One new compulsory feature introduced in 2008 is a ban on the use of the element tantalum/coltan. Extraction of tantalum/ coltan in the Congo has raised ethical questions relating to human rights and endangered animals in the area. Up to now, we have used condensers that contain tantal, but we are now phasing out the use of this.
Over the past year, we continued to monitor other countries' implementation of product environmentrelated legislation, including the two EU directives WEEE3 and RoHS4 within as well as outside Europe. We also continuously update our knowledge on
new requirements that can impact on our products. At present, no new requirements are expected to impact on the annual accounts.
In December 2006, the EU Commission approved the new chemical regulation REACH5 . The part of REACH that deals with materials and preparations has no direct bearing on us as we do not import from non-European countries. With regard to the evaluation of chemicals in articles, we have decided to participate actively together with the Danish Environmental Protection Agency and DHI in the pre-project: "The Consequences of REACH for electronic companies – Requirements for Downstream Use of Preparations and Production of Chemicals". At the time of writing, the project is nearing completion and all indications are that the part of REACH that relates to chemicals in articles will not impact on us.
On the backdrop of REACH and participation in the project, we have initiated an internal chemical reduction programme under which the purchase and use of CMR6 materials class 1 and 2 are prohibited at Bang & Olufsen. Having completed the substitution of these chemicals, we believe that REACH will have no consequences for Bang & Olufsen.
No external environmental issues have, or could have, a significant impact on Bang & Olufsen's financial position and Bang & Olufsen's Mechanics Factory has been approved in accordance with the Danish Environmental Protection Act's section 5. With regard to changes to processes and production layout, the objective is to eliminate or limit pollution whenever possible. We maintain a regular dialogue with the authorities to establish the best solutions and minimise pollution, e.g. by using cleaner technology (BAT7 ).
Bang & Olufsen prepares annual statutory green accounts for the anodising plant. Anodising is an electro-chemical treatment of aluminium which results in a highly durable surface structure. This surface structure means that with ordinary use, the aluminium element will retain its original attractive appearance for many years.
As well as the green accounts, we also prepare a voluntary environmental review every year which details the environmental aspects of production at our factories as well as our working environment conditions.
We also prepare a product-related environment review "To the last detail, an account of environmental awareness told through the development, production, use and disposal of a specific product." "To the last detail" has been produced for BeoCenter 1, BeoSound 3200, BeoLab 1 and BeoCenter 2, automotive products for cars and BeoCenter 6.
"To the last detail" and the environmental review can be downloaded at www.bang-olufsen.com. The green accounts are available from the Environment Department on +45 96 84 10 69.
Under the guidelines for corporate governance issued by OMX The Nordic Stock Exchange Copenhagen, the company must consider these on the basis of the "comply or explain" principle.
In general, the Bang & Olufsen Group follows the OMX The Nordic Stock Exchange Copenhagen's recommendations for corporate governance. A few exceptions, however, are described in the following:
In accordance with the company's Articles of Association, notice of the Annual General Meeting must be given at least 2-4 weeks prior to the date of the General Meeting. The notice must contain a complete agenda and an explanation of the items on the agenda where such explanation is relevant. Proposals for agenda items must be submitted to the Board of Directors in writing by 15 August of the year in question.
Investor meetings and telephone conferences are held following the publication of each quarterly statement to provide participants with the opportunity to put questions to the Management Board. Telephone conferences are subsequently available at www.bang-olufsen.com. It is also possible to contact the company's Investor Relations function where the main purpose is to maintain an ongoing dialogue with current and potential shareholders.
Bang & Olufsen a/s' share capital is divided into A shares and B shares (multiple voting shares and ordinary shares respectively). The Board of Directors believe that the current division into two share classes is appropriate for the purpose of ensuring the company's continued and stable development. In a dialogue with the shareholders, the Board will continually assess the expediency of the aforementioned division.
For many years, the Board of Directors has been attentive to the company's relationship with its stakeholders, a fact that is reflected in the company's annual environmental statement which has been prepared since 1995/96. Equally, social issues both inside the company and beyond play an important role in the life of the company in general. In view of the work already under way, the company does not find it necessary to set out a formal policy for this area as the Board of Directors regularly monitors the Management Board's approach to these issues.
The company complies with the statutory regulations concerning the publication of material information relevant to shareholders' and the financial markets' evaluation of the company, its activities, business objectives, strategies and results. The Board of Directors has approved a policy aimed to ensure that such information complies with statutory regulations. All announcements are issued via Company News Service, OMX's distribution company, and can subsequently be accessed from the company's website www.bang-olufsen.com. All announcements are issued in both Danish and English.
The company publishes quarterly, half year and annual reports.
The Board of Directors has overall management responsibility for the company. In keeping with general practice in Denmark, the Board of Directors and the Management Board act independently of each other and have different responsibilities. The Management Board handles the day-to-day management of the company while the Board of Directors supervises the work of the Management Board and is responsible for general strategic management.
With regard to Bang & Olufsen a/s, all board members elected at the Annual General Meeting stand for election each year – (this has not previously been the case. The necessary change to the Articles of Association is expected to be approved at the 2008 Annual General Meeting). In general, six to eight board meetings are held annually together with ad hoc meetings as required. Board members elected by the AGM comprise a group of experienced international business people from Denmark and Germany. The age limit for members of the Board of Directors is 70.
The Board of Directors does not employ formalised self-evaluation. The Chairmanship evaluates the work of the Board of Directors on an ongoing basis.
In contrast to the recommendations, Bang & Olufsen a/s does not operate guidelines for the number of directorships board members may have. The deciding factors are the individual member's capacity, competence and contribution. Information concerning individual board members' age, retirement age and time of their election and any re-election is deemed irrelevant.
The Board of Directors' rules of procedure lay down regulations concerning the tasks and responsibilities between the members of the Management Board and the Board of Directors.
The Board of Directors has set up a compensation committee which carries out negotiations concerning the Board of Management's remuneration. The members of this committee are listed on page 20.
No information is provided on the remuneration of individuals. The Board of Directors believes the important factor is the overall remuneration and the related trends.
Incentive programmes are published comprehensively in the Annual Report in accordance with relevant rules and regulations. Members of the Board of Directors do not benefit from incentive programmes.
The Board of Directors believes that information provided under the section "Shareholder Information" on board members' ownership shares is sufficient.
Please refer to page 55 and 56 of this report.
The company's auditors are elected by the Annual General Meeting after recommendation from the Board of Directors. The audit fee is approved by the Board of Directors.
Bang & Olufsen aims to provide:
with all relevant information about the Group rapidly and concisely.
The objective of the information is to:
The information, and the provision of such information, must always comply with current regulations as issued by OMX The Nordic Exchange Copenhagen or other relevant bodies.
In conformity with the Danish Securities Trading Act, the company maintains an insider register of persons who, owing to their position, are deemed to have access to insider knowledge about the company. The company has set up internal rules for such individuals.
The individuals, who are included in the insider register and subject to the internal rules, are Board members and members of the Management Board of Bang & Olufsen a/s, other directors and senior managers who report directly to the Board of Directors or the Management Board of Bang & Olufsen a/s, elected auditors and other employees of Bang & Olufsen a/s who may have access to insider knowledge.
Also included are board members and members of the Management Board, other directors and senior managers in Bang & Olufsen a/s' subsidiaries, including the Group's foreign companies if their positions are deemed to provide them with access to insider knowledge
All board members, members of the Management Board and other insider-registered employees in the Bang & Olufsen a/s group may only buy or sell shares in Bang & Olufsen a/s for a period of 4 weeks after publication of each of the company's Interim Reports or Annual Reports.
Bang & Olufsen's share capital is divided into A shares (ordinary shares (multiple voting shares)) and B shares (ordinary shares). Each A share amount of DKK 10.00 carries 10 votes while each B share of DKK 10.00 carries 1 vote.
As at 31 May, 2008, the votes relating to A shares totalled 49.68 per cent of the total number of votes.
Bang & Olufsen's B shares are listed on OMX The Nordic Exchange Copenhagen. The company's identification code is DK 001021842-9.
The quotation on Bang & Olufsen's B shares fell from 698 as at 31 May, 2007 to 265 as at 31 May 2008, which equates to 433 points or a fall of approx. 62 per cent.
Between 1 June, 2007 and 31 May, 2008, OMX The Nordic Exchange C20 index fell by approx. 8 per cent.
During the same period, the market value of Bang & Olufsen's B shares fell from DKK 7,675 million to DKK 2,908 million.
Bang & Olufsen's A shares are not traded on a regulated market. Transactions with A shares are subject to the rules of an A share agreement which all A shareholders have signed up to. The agreement gives the other A shareholders an option to purchase if an A shareholder should wish to sell A shares.
| A shares (ordinary shares (multiple voting shares)): 1,085,543 of DKK 10 DKK 10,855,430 B shares (ordinary shares): |
|
|---|---|
| 10,995,795 of DKK 10 | DKK 109,957,950 |
| Total | DKK 120,813,380 |
| Circulating shares: Issued shares - own shares Total as at 31 May, 2008 |
12,081,338 (767,787) 11,313,551 |
| Average number of circulating shares | 11,376,530 |
Share price
Bang & Olufsen share price C20-index
Market value of shares compared to equity as at 31 may
Ordinary shares (multiple voting shares) not listed on OMX The Nordic Exchange Copenhagen are included at the same price as the ordinary shares
As at 31 May, 2008, Bang & Olufsen a/s' holding of own shares was valued at DKK 7,677,870 equating to approx. 6.36 per cent of the share capital.
As at 31 May, 2008, members of Bang & Olufsen a/s' Management Board held DKK 2,000 A shares (nominal) and DKK 6,080 B shares (nominal).
As at 31 May, 2008, members of Bang & Olufsen a/s' Board of Directors held DKK 275,400 A shares (nominal) and 246,700 B shares (nominal).
Bang & Olufsen's share option programme applies to a number of the Group's directors. As at 31 May, 2008, the total pool of options amounted to 193,500. These can be exercised during the period 2007-2011. For further details please see note 5.
As at 31 May, 2008, Bang & Olufsen a/s had approx. 29,400 registered shareholders corresponding to an ownership interest of approx. 80 per cent of the share capital. Approx. 28,500 of these shareholders are resident in Denmark.
Of the listed capital, approx. 84 per cent is placed in Denmark, approx. 4 per cent in the Netherlands and approx. 3 per cent in the UK and Northern Ireland.
As at 31 May, 2008, the following individuals or legal entities hold 5 per cent or more of the company's capital or share capital's voting rights.
| Nominal amount | Capital | Votes | |
|---|---|---|---|
| DKK 1,000 | % | % | |
| Lønmodtagernes Dyrtidsfond, Vendersgade 28, 1, 1363 Copenhagen K | 5,977 | 4.95 | 13.58 |
| Nordea Pension Danmark A/S, Klausdalsbrovej 615, 2750 Ballerup | 2,000 | 1.66 | 9.15 |
| Arbejdsmarkedets Tillægspension, Kongens Vænge 8, 3400 Hillerød | 14,358 | 11.88 | 6.57 |
| Kirsten og Peter Bang a/s, c/o Lars Peter Bang, Duevej 1, 7600 Struer | 1,155 | 0.96 | 5.28 |
| Chr. Augustinus Fabrikker A/S, Amaliegade 47, 1256 Copenhagen K | 1,360 | 1.13 | 5.05 |
| Bang & Olufsen a/s, Peter Bangs Vej 15, 7600 Struer | 7,678 | 6.36 | 3.51 |
The Company's Articles of Association specify the following rules concerning the appointment and replacement of members of the Company's Board of Directors and changes to the Company's Articles of Association:
The Company is headed by a Board of Directors which – besides any representatives elected by the Company's employees pursuant to the statutory provisions – consists of between 4 and 8 members elected by the Annual General Meeting. All board members elected at the Annual General Meeting stand for election each year (this has not previously been the case. The necessary change to the articles is expected to be approved at the 2008 Annual General Meeting). Re-election may take place.
Board members elected by the AGM comprise a group of experienced international business people from Denmark and Germany. The age limit for members of the Board of Directors is 70.
The Board of Directors does not employ formalised self-evaluation. The Chairmanship evaluates the work of the Board of Directors on an ongoing basis. In contrast to the recommendations, Bang & Olufsen a/s does not operate guidelines for the number of directorships board members may have. The deciding factors are the individual member's capacity, competence and contribution. Information concerning individual board members' age, retirement age and time of their election and any re-election is deemed irrelevant.
All matters considered at the Annual General Meeting shall be settled by simple majority vote. For the adoption of resolutions on amendments to the Articles of Association or on the dissolution of the Company, it is required that at least 2/3 of the share capital is represented at the Annual General Meeting, and that the resolution is passed by at least 2/3 of both the votes cast and of the share capital carrying voting rights represented at the Annual General Meeting. Should 2/3 of the share capital not be represented at the Annual General Meeting, but the resolution proposed be passed by 2/3 of both the votes cast and of the share capital carrying voting rights represented at the Annual General Meeting, a new Annual General Meeting shall be convened as soon as possible at which the resolution proposed may be passed by 2/3 of the votes cast, regardless of the proportion of the share capital represented.
The agreements that Bang & Olufsen has entered into concerning the supply of sound systems to the automotive industry contain "change of control" clauses. This applies both to the agreement entered into with Audi, and the agreement with Aston Martin Lagonda Ltd. As a consequence of these clauses, should a change of control of Bang & Olufsen take place, Audi and Aston Martin Lagonda Ltd. are entitled to terminate the contract between the parties.
The loan of originally DKK 74.5 million from Danske Bank to Bang & Olufsen s.r.o with a carrying amount of DKK 50.4 million as at 31 May, 2008 includes a clause stating that the loan can be called in if a shareholder obtains controlling influence in Bang & Olufsen a/s.
The Company's Articles of Association state the following:
Until 31 May, 2012, the Board of Directors is authorised, in one or more stages, to increase the company's B share capital by up to DKK 2,500,000 through the issue of shares offered to employees of the Bang & Olufsen Group at a price corresponding to the current market price or lower, and on terms to be decided by the company's Board of Directors. The Board is authorised to acquire – within 18 months from 28 September, 2007 – up to 10 per cent of the company's share capital at a price which must not be more than 10 per cent above or below the most recent price quoted for B shares (ordinary shares) on OMX The Nordic Exchange Copenhagen. Back to CONTENTS
The Group's dividend policy aims at paying between one third and half of the profits after tax as dividend. The Board of Directors proposes to the Annual General Meeting that DKK 3 per nominal DKK 10 share i.e. DKK 36.2 million be allocated.
Dividend is expected to be paid on Thursday, 2 October, 2008.
ABG Sundal Collier ABN AMRO Alm. Brand Henton Bankinvest-group Capinordic Bank Carnegie Bank A/S Cazenove Cheuvreus Intl Ltd Danske Equities Enskilda Securities FIH Capital Markets FIH Erhvervsbank A/S Gudme Raaschou Bank Handelsbanken Jyske Bank Nordea Oppenheim Proactive Independent Ideas Standard & Poors Equity Research
Bang & Olufsen invites investors and other stakeholders to visit the company's website: www.bang-olufsen.com, where a wide range of information of interest to the investors is available, i.e. announcements, annual reports, quarterly and half-yearly reports, the financial calendar and, not least, the company's history and a presentation of its products.
| 13 August, 2007 | Annual Report for the financial year 2006/07 |
|---|---|
| 8 October, 2007 | Interim Report for the 1st quarter 2007/08 |
| 9 January, 2008 H | alf year report 2007/08 |
| 8 April, 2008 | Interim Report for the 3rd quarter 2007/08 |
| 1 June, 2007 | Share capital and votes in Bang & Olufsen a/s |
|---|---|
| 14 August, 2007 | Financial calender for Bang & Olufsen a/s |
| 29 August, 2007 | Bang & Olufsen Sound System in Audi A4 |
| 7 September, 2007 | Annual General Meeting of Bang & Olufsen a/s |
| 28 September, 2007 | Development of Annual General Meeting |
| 11 December, 2007 | Bang & Olufsen cooperation with Aston Martin |
| 10 January, 2008 | President, CEO Torben Ballegaard Sørensen leaves Bang & Olufsen |
| 18 January, 2008 | Bang & Olufsen: No plans to replace the Chairman |
| 14 March, 2008 | Bang & Olufsen a/s downgrades the expectations for the 2007/08 financial year |
| 31 March, 2008 | Peter Thostrup resigns as Excecutive Vice President in Bang & Olufsen a/s as of |
| 30 September, 2008 | |
| 19 April, 2008 | Bang & Olufsen Sound System in the new Audi Q5 |
| 29 April, 2008 | Karl Kristian Hvidt Nielsen appointed new CEO of Bang & Olufsen a/s |
The statements can be read in full at www.bang-olufsen.com under Investors – financial statements.
Bang & Olufsen operates in a sector with very frequent and significant changes in technology. Distribution development largely takes place through retailer-owned shops, but in certain markets it might from time to time be necessary for the Group to acquire established retail networks. The draw on liquidity in individual financial years is characterized by considerable seasonal variations. The Group will occasionally be faced with small or medium-sized acquisition opportunities within new business areas and new fields of technology.
Based on this, Bang & Olufsen has a need for sufficient capital reserves and the Group will
therefore, as a long-term average, aim at an equity ratio of 40-50 per cent and a net interestbearing debt in a range between 0.25 and 2.00 times earnings before interest, tax, depreciations, amortisations and impairment losses (EBITDA). As at 31 May 2008 the equity ratio equals 52.7 %, while it, as at 31 May 2007, equalled 56.8 %.
As at the balance sheet date the financial gearing and the ratio between the net interest-bearing debt and EBITDA can be calculated as below:
| 2007/08 | 2006/07 | |
|---|---|---|
| Mortgage loans Loans from banks etc. Cash Net interest-bearing debt |
244.2 197.7 (107.1) 334.8 |
107.4 169.0 (196.4) 80.0 |
| Equity | 1,483.8 | 1,681.9 |
| Financial gearing | 0.23 | 0.05 |
| EBITDA | 482.7 | 789.3 |
| Net interest-bearing debt / EBITDA | 0.69 | 0.10 |
DKK million
Although the Group's products are marketed globally, most of the turnover derives from Europe. The company is a niche player in an industry dominated by major international electronics businesses.
The company differentiates itself in terms of design, quality and innovation. Over a number of years, the company has established a selective distribution system with dedicated Bang & Olufsen dealers. The combination of innovative products and a dedicated distribution has positioned the company as a supplier of luxury goods rather than exclusively A/V products.
The company can be affected by economic trends in the countries where the Group's products are sold, as well as by new technological initiatives by the industry's main players.
Sales trends are seasonal with the main emphasis on the period from October to January. In order to comply with the commercial challenges, substantial investments are made in product development and flexible production.
The Group is dependent on a large number of suppliers, primarily from Europe and Asia, and strives to maintain long-term supplier relations with regard to the purchase of development services and production goods. Bang & Olufsen endeavours to ensure that supplies of critical raw materials a re assured through contracts and agreements and, when possible, through co-operation with several suppliers.
Bang & Olufsen wishes to retain its position as an exciting and attractive workplace to attract and retain highly qualified employees at all times. Consequently, focus is on individual personal and career development which is secured through maintaining and creating interesting and challenging jobs throughout the Group. Each year, the Group, therefore, actively contributes to, and invests in, a range of training programmes for its employees.
Bang & Olufsen's insurance policy stipulates that insurance policies must cover any damage arising to Bang & Olufsen's assets and any claims that Bang & Olufsen may incur so that such damage or claims do not impact on the company's capital and future
operations to any significant extent. Consistent with this, the Group can be self-insured in respect of minor risks, while major risks are fully insured. When deemed financially beneficial, insurances contain an excess.
In respect of the above, a global insurance programme has been established to include all-risk, operational losses, business and product responsibility.
Bang & Olufsen has a written contingency plan and works continually with risk management in order to protect against damage to own and contractors' facilities.
As a result of the Bang & Olufsen Group's extensive international activities, the profit & loss account, balance sheet and equity are exposed to a number of financial risks at any given time.
These risks comprise:
Bang & Olufsen continually assesses these risks at Group level. As it is the Group's policy not to speculate in financial instruments, its financial management is solely directed towards the management of financial risks in relation to operations and financing.
In 2007/08, 88 per cent (2006/07: 85 per cent) of the Group's turnover is in foreign currency. Since the Group's purchasing policy is to match purchasing and sales currencies to the greatest possible extent, the figure does not express the Group's foreign exchange rate risk.
The Group has net inflows in EUR, GBP and CHF while USD accounts for the most significant exposure on the outflow side.
The Group's foreign exchange rate risks are managed centrally by the parent company's finance department based on a foreign exchange rate policy approved by the Board of Directors. Forward contracts are used to continually cover net positions. These forward
contracts are classified as hedging and fulfil the accounting requirements for hedging future cash flow. Forward contracts are used for commercial transactions only.
The Group's net monetary items in foreign currencies are disclosed in note 44.
Fluctuations in foreign exchange rates of 5 per cent for GBP, 5 per cent for CHF and 10 per cent for USD against DKK can be expected to impact on the Group's pre-tax result by 7 per cent, 7 per cent and 2 per cent respectively. (2006/07: 3 per cent, 2 per cent and 3 per cent respectively).
Besides the foreign exchange rate risk relating to current transactions, the Bang & Olufsen Group's equity is affected by foreign exchange rate risks relating to the translation of the Group's foreign subsidiaries from local currencies to DKK. The translation risk is of no significance to Bang & Olufsen's annual report.
The Group's interest rate risk relates to interestbearing debt and interest-bearing assets.
The Group's interest-bearing assets consist mainly of liquid funds, which at year end totalled DKK 107 million (2006/07: DKK 196 million). Liquid funds yield interest on the short-term money market. The interest rate risk is deemed to be insignificant in that a change in the interest rate level of 0.5 per cent for 2007/08 would have impacted on the Group's result before tax by approx. DKK 0,5 million.
At year end, the Group's interest-bearing debt totalled DKK 442 million (2006/07: DKK 276 million) corresponding to 15,7 per cent of the balance sheet total. (2006/07: 9.3 per cent).
The interest-bearing debt is of a medium-term nature. For further information, please see Note 32 and 33.
Due to the low debt level and the fact that borrowings are exclusively in fixed interest loans, the Group's interest rate risks are insignificant and are not expected to impact significantly on the Group's result.
The Group's most important primary financial instruments comprise trade receivables and bank deposits. The amounts at which these balance sheet items are recognized correspond to the maximum credit risk.
At the end of the financial year, the Group was selling its products through 1,257 dealers worldwide. In view of the large number of dealers and the wide geographical spread, and the fact that the Group has no substantial concentrations of credit risk, the Group regards the credit risk in relation to receivables as limited.
The individual dealers, including their geographical location, are subject to ongoing evaluation. When deemed necessary, the Group employs bank guarantees or credit insurance against outstanding debts.
Losses relating to receivables have been at a minimal level over the previous four years. For the year 2007/08 losses and provision for losses on receivables are DKK 49 million. The losses are mainly related to the declining turnover in the UK market.
Liquid funds are placed with financial institutions with high credit ratings. Derivatives, including foreign exchange forward contracts, are entered into with such institutions only.
It is deemed, therefore, that the credit risk relating to liquid funds is of no significance to Bang & Olufsen's annual report.
The financial reserve is continually assessed and managed by the parent company's finance department. This ensures that, at any given time, there is sufficient, flexible and unused assurance credit available provided by major, reputable financial institutions. On the basis of its financial reserve arrangements, the Group believes that there is no reason to expect liquidity issues.
The liquidity risk, therefore, is not significant in relation to Bang & Olufsen's annual report.
Courage to constantly question the ordinary in search of surprising, long-lasting experiences.
| 71 | 1 | Accounting principles applied |
|---|---|---|
| 81 | 2 | Significant accounting estimates |
| and judgements | ||
| 82 | 3 | Segment-information |
| Notes to the profit and loss account | ||
| 85 | 4 | Net turnover |
| 86 | 5 | Expenses, further information |
| 94 | 6 | Dividend |
| 94 | 7 | Financial income |
| 94 | 8 | Financial costs |
| 94 | 9 | Tax on result for the year |
| 96 | 10 | Minority interests' share of result for the year |
| 96 | 11 | Earnings per share |
| Notes to the balance sheet | ||
| 97 | 12 | Intangible assets |
| 99 | 13 | Tangible assets |
| 103 | 14 | Investment property |
| 104 | 15 | Impairment of assets |
| 105 | 16 | Investments in subsidiaries |
| 105 | 17 | Investments in associates |
| 106 | 18 | Other financial receivables |
| 106 | 19 | Deferred tax assets |
| 107 | 20 | Inventories |
| 108 | 21 | Trade receivables |
| 108 | 22 | Receivables from subsidiaries |
| 108 | 23 | Receivables from associates |
25 Other receivables 26 Share capital 27 Retained earnings 28 Minority interests 29 Pensions 30 Deferred tax 31 Provisions 32 Current and non-current financial liabilities, mortgage loans 33 Current and non-current financial liabilities, loans from banks etc. 34 Other non-current liabilities 35 Income tax 36 Other payables Notes to the cash flow statement 37 Adjustments 38 Change in working capital 39 Acquisitions of activities 40 Disposal of activities 41 Cash and cash equivalents
| Bang & Olufsen a/s | Group | Parent company | |||
|---|---|---|---|---|---|
| (DKK million) | 2007/08 | 2006/07 | 2007/08 | 2006/07 | |
| Notes | |||||
| 4 | Net turnover | 4,092.0 | 4,375.7 | 948.1 | 966.7 |
| 5 | Production costs | (2,199.6) | (2,338.0) | (526.4) | (463.8) |
| Gross profit | 1,892,4 | 2,037.7 | 421.7 | 502.9 | |
| 5 | Development costs | (545.5) | (458.8) | (565.5) | (464.9) |
| 5 | Distribution and marketing costs | (1003.5) | (910.2) | - | - |
| 5 | Administration costs etc. | (148.7) | (138.7) | (42.9) | (32.4) |
| Operating profit | 194.7 | 530.0 | (186.7) | 5.6 | |
| Result of investments in associates after tax | (11.2) | (1.1) | |||
| Gain on sale of shares in subsidiary | - | 11.5 | - | 27.1 | |
| 6 | Dividend | 916.5 | 189.0 | ||
| 7 | Financial income | 20.0 | 15.7 | 59.0 | 44.1 |
| 8 | Financial costs | (49.8) | (31.7) | (36.1) | (25.3) |
| Financial items, net | (29.8) | (16.0) | 22.9 | 18.8 | |
| Result before tax | 153.7 | 524.4 | 752.7 | 240.5 | |
| 9 | Tax on result for the year | (41.4) | (151.9) | 25.8 | (13.5) |
| Result for the year | 112.3 | 372.5 | 778,5 | 227.0 | |
| Attributable to: | |||||
| Shareholders of the parent company | 104.7 | 367.4 | |||
| 10 | Minority interests | 7.6 | 5.1 | ||
| 112.3 | 372.5 | ||||
| 11 | Earnings per share | ||||
| Earnings per share, DKK Diluted earnings per share, DKK |
9.2 9.2 |
31.4 31.4 |
|||
| Earnings per share from continuing operations, DKK | 9.2 | 31.4 | |||
| Diluted earnings per share from continuing operations, DKK | 9.2 | 31.4 | |||
| Proposed profit distribution: | |||||
| Retained earnings | 742.3 | (14.6) | |||
| Proposed dividend for the financial year | 36.2 | 241.6 | |||
| 778.5 | 227.0 |
The proposed dividend for 2007/08 corresponds to a dividend of DKK 3.00 per share (DKK 20.00 in 2006/07).
Parantheses denote negative figures or figures to be deducted. Notes: See pages 71 - 127
| Bang & Olufsen a/s | Group | Parent company | ||||
|---|---|---|---|---|---|---|
| (DKK million) | 31/5 08 | 31/5 07 | 31/5 08 | 31/5 07 | ||
| Notes | ||||||
| Intangible assets | ||||||
| Goodwill | 44.8 | 44.8 | 3.2 | 3.2 | ||
| Acquired rights | 41.1 | 44.4 | 35.9 | 38.2 | ||
| Completed development projects | 218.8 | 244.6 | 204.5 | 220.3 | ||
| Development projects in progress | 112.5 | 116.2 | 97.0 | 108.4 | ||
| 12, 15 | Total intangible assets | 417.2 | 450.0 | 340.6 | 370.1 | |
| Tangible assets | ||||||
| Land and buildings | 274.4 | 252.1 | 83.7 | 89.4 | ||
| Plant and machinery | 221.8 | 203.8 | 8.8 | 9.8 | ||
| Other equipment | 50.0 | 70.7 | 30.9 | 27.3 | ||
| Leasehold improvements | 28.7 | 29.1 | 0.1 | 0.1 | ||
| Tangible assets in progress and | ||||||
| prepayments for tangible assets | 80.8 | 62.2 | 6.7 | 0.6 | ||
| 13 | Total tangible assets | 655.7 | 617.9 | 130.2 | 127.2 | |
| 14 | Investment property | 52.8 | 56.4 | 73.2 | 78.4 | |
| Financial assets | ||||||
| 16 | Investments in subsidiaries | 722.8 | 722.6 | |||
| 17 | Investments in associates | 6.3 | 15.8 | 2.0 | 2.0 | |
| 18 | Other financial receivables | 52.0 | 88.2 | 3.0 | 0.2 | |
| Total financial receivables | 58.3 | 104.0 | 727.8 | 724.8 | ||
| 19 | Deferred tax assets | 22.7 | 21.2 | - | - | |
| Total non-current assets | 1,206.7 | 1,249.5 | 1,271.8 | 1,300.5 | ||
| 20 | Inventories | 801.4 | 694.3 | 1.4 | 0.4 | |
| Receivables | ||||||
| 21 | Trade receivables | 593.0 | 733.8 | - | - | |
| 22 | Receivables from subsidiaries | 921.4 | 255.2 | |||
| 23 | Receivables from associates | - | 8.5 | - | 1.8 | |
| 24 | Income tax receivables | 39.7 | 27.0 | 9.2 | 28.4 | |
| 25 | Other receivables | 38.9 | 30.0 | 12.6 | 3.3 | |
| Prepayments | 30.5 | 22.8 | 7.0 | 5.9 | ||
| Total receivables | 702.1 | 822.1 | 950.2 | 294.6 | ||
| Cash | 107.1 | 196.4 | 5.3 | 5.3 | ||
| Total current assets | 1,610.6 | 1,712.8 | 956.9 | 300.3 | ||
| Total assets | 2,817,3 | 2,962.3 | 2,228.7 | 1,600.8 |
Notes: See pages 71 - 127
| Bang & Olufsen a/s | Group | Parent company | |||
|---|---|---|---|---|---|
| (DKK million) | 31/5 08 | 31/5 07 | 31/5 08 | 31/5 07 | |
| Notes | |||||
| Equity | |||||
| 26 | Share capital | 120.8 | 120.8 | 120.8 | 120.8 |
| Share premium | 14.6 | 14.6 | 14.6 | 14.6 | |
| Translation reserve | (42.9) | (17.3) | |||
| Reserve for cash flow hedges | - | 0.1 | - | 0.1 | |
| 27 | Retained earnings | 1,379.2 | 1,557.7 | 1,522.8 | 1,055.2 |
| Equity attributable to shareholders of the parent company | 1,471.7 | 1,675.9 | 1,658.2 | 1,190.7 | |
| 28 | Minority interests | 12.1 | 6.0 | ||
| Total equity | 1,483.8 | 1,681.9 | 1,658.2 | 1,190.7 | |
| Non-current liabilities | |||||
| 29 | Pensions | 9.5 | 9.7 | - | - |
| 30 | Deferred tax | 64.2 | 67.8 | 72.7 | 79.6 |
| 31 | Provisions | 77.3 | 97.0 | 3.1 | 4.3 |
| 32 | Mortgage loans | 235.7 | 93.4 | 198.5 | 54.6 |
| 33 | Loans from banks etc. | 101.1 | 97.1 | 48.9 | 37.5 |
| 34 | Other non-current liabilities | 6.6 | 6.1 | 3.4 | 3.4 |
| Total non-current liabilities | 494.4 | 371.1 | 326.6 | 179.4 | |
| Current liabilities | |||||
| 32 | Mortgage loans, short term part | 8.5 | 14.0 | 6.9 | 12.4 |
| 33 | Loans from banks etc., short term part | 42.9 | 32.4 | 35.4 | 25.0 |
| Other loans from banks | 53.7 | 39.5 | 53.6 | 39.2 | |
| 31 | Provisions | 46.0 | 33.3 | 0.3 | 0.2 |
| Trade payables | 216.0 | 213.7 | 49.7 | 34.7 | |
| Payables to associates | 1.8 | - | 0.1 | - | |
| 35 | Income tax | 66.3 | 122.3 | - | - |
| 36 | Other payables | 320.0 | 356.2 | 97.9 | 119.2 |
| Deferred income | 83.9 | 97.9 | - | - | |
| Total current liabilities | 839.1 | 909.3 | 243.9 | 230.7 | |
| Total liabilities | 1,333.5 | 1,280.4 | 570.5 | 410.1 | |
| Total equity and liabilities | 2,817.3 | 2,962.3 | 2,228.7 | 1,600.8 |
Parantheses denote negative figures or figures to be deducted. Notes: See pages 71 - 127
Purchase of intangible assets
Amortisation
DKK million
Depreciation
Purchase of tangible assets
DKK million
| Bang & Olufsen a/s | Group | Parent company | |||||
|---|---|---|---|---|---|---|---|
| (DKK million) | 2007/08 | 2006/07 | 2007/08 | 2006/07 | |||
| Notes | |||||||
| Result for the year | 112.3 | 372.5 | 778.5 | 227.0 | |||
| Depreciations, amortisations and impairment losses | 299.2 | 248.9 | 166.1 | 126.5 | |||
| 37 | Adjustments | 92.6 | 162.6 | (27.9) | (18.7) | ||
| 38 | Change in working capital | (22.2) | (142.2) | (682.1) | (58.1) | ||
| Interest received etc. | 20.0 | 15.7 | 59.0 | 44.1 | |||
| Interest paid etc. | 49.8 | (31.7) | (36.1) | (25.3) | |||
| Income tax paid | 120.3 | (105.0) | 32.0 | (10.3) | |||
| Cash flow from operating activities | 331.8 | 520.8 | 289.5 | 285.2 | |||
| Purchase of intangible non-current assets | (124.9) | (210.1) | (109.6) | (169.0) | |||
| Purchase of tangible non-current assets | (190.4) | (157.6) | (25.0) | (8.0) | |||
| Purchase to investment property | - | - | (1.9) | (3.1) | |||
| Purchase to investment in subsidiaries | - | - | (0.2) | - | |||
| Sale of intangible non-current assets | 1.5 | 0.7 | 1.6 | - | |||
| Sale of tangible non-current assets | 23.3 | 9.8 | - | (0.5) | |||
| Sale of investment property | - | - | - | 1.0 | |||
| 39 | Acquisitions of activities | - | - | - | - | ||
| 40 | Disposals of activities | - | 32.7 | - | 32.7 | ||
| Change in financial receivables | 36.2 | (53.9) | (2.8) | (0.2) | |||
| Cash flow from investment activities | (254.3) | (378.4) | (137.9) | (147.1) | |||
| Proceeds from long-term loans | 200.0 | - | 200.0 | - | |||
| Repayment of long-term loans | (48.7) | (46.3) | (39.8) | (37.4) | |||
| Dividend paid | (247.7) | (200.2) | (241.6) | (199.2) | |||
| Dividend, own shares | 14.0 | 11.3 | 14.0 | 11.3 | |||
| Repurchase of own shares | (100.2) | (271.3) | (100.2) | (271.3) | |||
| Sale of own shares | 1.6 | 18.5 | 1.6 | 18.5 | |||
| Cash flow from financing activities | (181.0) | (488.0) | (166.0) | (478.1) | |||
| Change in cash and cash equivalents | (103.5) | (345.6) | (14.4) | (340.0) | |||
| Cash and cash equivalents 1 June | 156.9 | 502.5 | (33.9) | 306.1 | |||
| 41 | Cash and cash equivalents 31 May | 53.4 | 156.9 | (48.3) | (33.9) |
(DKK million)
| Equity attributable to equity holders of the parent company | Minority interests |
Total | |||||
|---|---|---|---|---|---|---|---|
| Reserve for | |||||||
| Share | Translation | cash flow | Retained | Equity | |||
| Share capital | premium | reserve | hedges | earnings | Group | ||
| Equity 1 June 2006 | 124.5 | 14.6 | (4.7) | - | 1,603.6 | 4.1 | 1,742.1 |
| Equity and exchange rate adjustments | |||||||
| in subsidiaries | - | - | (12.6) | - | 14.1 | - | 1.5 |
| Change in fair value of derivative | |||||||
| financial instruments | - | - | - | 0.1 | - | - | 0.1 |
| Net income recognized directly in equity | - | - | (12.6) | 0.1 | 14.1 | - | 1.6 |
| Retained earnings | - | - | - | - | 367.4 | 5.1 | 372.5 |
| Total recognized income and expense for the year | - | - | (12.6) | 0.1 | 381.5 | 5.1 | 374.1 |
| Capital reduction | (3.7) | - | - | - | 3.7 | - | - |
| Employee shares | - | - | - | - | 10.8 | - | 10.8 |
| Grant of share options | - | - | - | - | 0.4 | - | 0.4 |
| Tax regarding share options | - | - | - | - | (0.4) | - | (0.4) |
| Option for minority interest | - | - | - | - | (1.2) | (2.2) | (3.4) |
| Purchase of own shares | - | - | - | - | (271.3) | - | (271.3) |
| Sale of own shares | - | - | - | - | 18.5 | - | 18.5 |
| Dividend paid regarding 2005/06 | - | - | - | - | (199.2) | (1.0) | (200.2) |
| Dividend, own shares | - | - | - | - | 11.3 | - | 11.3 |
| (3.7) | - | - | - | (427.4) | (3.2) | (434.3) | |
| Equity 31 May 2007 | 120.8 | 14.6 | (17.3) | 0.1 | 1,557.7 | 6.0 | 1,681.9 |
(DKK million)
| Equity attributable to equity holders of the parent company | Minority interests |
Total | |||||
|---|---|---|---|---|---|---|---|
| Reserve for | |||||||
| Share | Translation | cash flow | Retained | Equity | |||
| Share capital | premium | reserve | hedges | earnings | Group | ||
| Equity 1 June 2007 | 120.8 | 14.6 | (17.3) | 0.1 | 1,557.7 | 6.0 | 1,681.9 |
| Equity and exchange rate adjustments | |||||||
| in subsidiaries | - | - | (25.6) | - | 32.2 | - | 6.6 |
| Change in fair value of derivative | |||||||
| financial instruments | - | - | - | (0.1) | - | - | (0.1) |
| Net income recognized directly in equity | - | - | (25.6) | (0.1) | 32.2 | - | 6.5 |
| Retained earnings | - | - | - | - | 104.7 | 7.6 | 112.3 |
| Total recognized income and expense for the year | - | - | (25.6) | (0.1) | 136.9 | 7.6 | 118.8 |
| Employee shares | - | - | - | - | 10.4 | - | 10.4 |
| Grant of share options | - | - | - | - | 11.1 | - | 11.1 |
| Change in deferred tax regarding share options | - | - | - | - | (6.1) | - | (6.1) |
| Option for minority interest | - | - | - | - | (2.2) | 2.2 | - |
| Transfer to minority interests | - | - | - | - | (2.4) | 2.4 | - |
| Purchase of own shares | - | - | - | - | (100.2) | - | (100.2) |
| Sale of own shares | - | - | - | - | 1.6 | - | 1.6 |
| Dividend paid regarding 2006/07 | - | - | - | - | (241.6) | (6.1) | (247.7) |
| Dividend, own shares | - | - | - | - | 14.0 | - | 14.0 |
| - | - | - | - | (315.4) | (1.5) | (316.9) | |
| Equity 31 May 2008 | 120.8 | 14.6 | (42.9) | - | 1,379.2 | 12.1 | 1,483.8 |
(DKK million)
| Reserve for | Equity | ||||
|---|---|---|---|---|---|
| Share | cash flow | Retained | parent | ||
| Share capital | premium | hedges | earnings | company | |
| Equity 1 June 2006 | 124.5 | 14.6 | - | 1,256.0 | 1,395.1 |
| Change in fair value of derivative financial instruments | - | - | 0.1 | - | 0.1 |
| Net income recognized directly in equity | - | - | 0.1 | - | 0.1 |
| Retained earnings | - | - | - | 227.0 | 227.0 |
| Total recognized income and expense for the year | - | - | 0.1 | 227.0 | 227.1 |
| Capital reduction | (3.7) | - | - | 3.7 | - |
| Employee shares | - | - | - | 10.8 | 10.8 |
| Grant of share options | - | - | - | 2.1 | 2.1 |
| Tax regarding share options | - | - | - | (0.3) | (0.3) |
| Option for minority interest | - | - | - | (3.4) | (3.4) |
| Purchase of own shares | - | - | - | (271.3) | (271.3) |
| Sale of own shares | - | - | - | 18.5 | 18.5 |
| Dividend paid regarding 2005/06 | - | - | - | (199.2) | (199.2) |
| Dividend, own shares | - | - | - | 11.3 | 11.3 |
| (3.7) | - | - | (427.8) | (431.5) | |
| Equity 31 May 2007 | 120.8 | 14.6 | 0.1 | 1,055.2 | 1,190.7 |
(DKK million)
| Reserve for | Equity | ||||
|---|---|---|---|---|---|
| Share | cash flow | Retained | parent | ||
| Share capital | premium | hedges | earnings | company | |
| Equity 1 June 2007 | 120.8 | 14.6 | 0.1 | 1,055.2 | 1,190.7 |
| Change in fair value of derivative financial instruments | - | - | (0.1) | - | (0.1) |
| Net income recognized directly in equity | - | - | (0.1) | - | (0.1) |
| Retained earnings | - | - | - | 778.5 | 778.5 |
| Total recognized income and expense for the year | - | - | (0.1) | 778.5 | 778.4 |
| Employee shares | - | - | - | 10.4 | 10.4 |
| Grant of share options | - | - | - | 11.0 | 11.0 |
| Change in deferred tax regarding share options | - | - | - | (6.1) | (6.1) |
| Purchase of own shares | - | - | - | (100.2) | (100.2) |
| Sale of own shares | - | - | - | 1.6 | 1.6 |
| Dividend paid regarding 2006/07 | - | - | - | (241.6) | (241.6) |
| Dividend, own shares | - | - | - | 14.0 | 14.0 |
| - | - | - | (310.9) | (310.9) | |
| Equity 31 May 2008 | 120.8 | 14.6 | - | 1,522.8 | 1,658,2 |
| Specification of movements in share capital: | 2007/08 | 2006/07 | 2005/06 | 2004/05 | 2003/04 |
|---|---|---|---|---|---|
| Share capital at the beginning of the year | 120.8 | 124.5 | 124.1 | 123.8 | 134.3 |
| Capital increase | - | - | 0.4 | 0.3 | 0.4 |
| Capital reduction | - | (3.7) | - | - | (10.9) |
| Share capital at the end of the year | 120.8 | 120.8 | 124.5 | 124.1 | 123.8 |
The annual report for Bang & Olufsen a/s, which comprises the separate financial statements for the parent company, Bang & Olufsen a/s, and the consolidated financial statements for the Bang & Olufsen Group, has been prepared in accordance with the International Financial Reporting Standards (IFRS) and further Danish disclosure requirements for the presentation of financial statements for listed companies. Further Danish disclosures requirements for the presentation of financial statements are imposed in the Danish announcement on Adoption of IFRS issued in accordance with the Danish Financial Statements Act and are imposed by the OMX Nordic Exchange Copenhagen. IFRS is implemented so that the annual report also respects the regulations in financial reporting standards endorsed by the European Union.
The presentation currency in the financial statements is DKK, which is considered the functional currency for the Group.
All new and amended Standards and Interpretations, which are relevant for the Bang & Olufsen Group, and which have become effective as for financial periods beginning on 1 June 2007, have been applied in the preparation of the annual report.
The application of new and amended Standards and Interpretations has not resulted in any changes of amounts in the annual report for 2007/08 or previous years. The Group's accounting principles applied are consequently unchanged compared to 2006/07.
At the time of the announcement of this annual report, a number of new or amended Standards or Interpretations are still not effective. The assessment of the Management is that these Standards and Interpretations will not have significant influence on the annual report.
Assets are recognized in the balance sheet, when it is probable that future economic benefits resulting from an event occurring before, or on, the balance sheet date will flow to the Group, and the value of the asset can be measured reliably. Assets are derecognized in the balance sheet, when it is no longer probable that future economic benefits will flow to the Group.
Liabilities are recognized in the balance sheet, when it is probable that the Group will give up future economic benefits as a consequence of a legal or constructive obligation resulting from an event occurring before, or on, the balance sheet date, and the value of the liability can be measured reliably. Liabilities are derecognized in the balance sheet, when it is no longer probable that the Group will give up future economic benefits to meet the obligation.
Purchases and sales of financial assets and liabilities are accounted for at the trade date of the agreement.
On initial recognition, assets and liabilities are measured at cost price. Subsequently assets and liabilities are measured as described below for each financial statement item. Certain financial assets and liabilities are measured at amortized cost price, by which a constant effective rate of interest is recognized over the duration. Amortized cost price is calculated as initial cost price less instalments and addition/deduction of the accumulated depreciation/amortization of the difference between the cost price and the nominal amount. Consequently the difference between initial cost and the maturity amount is allocated over the duration of the asset/liability.
When recognizing and measuring, due consideration is made for losses and risks that arise before the financial statements are finalized and which confirm or invalidate conditions, which existed on the balance sheet date.
Income is recognized in the profit and loss account, when it is earned. Furthermore all costs incurred to achieve the earnings of the year, including depreciation and amortizations, impairment losses and provisions, are recognized in the profit and loss account as well as reversal of amounts due to changes in accounting judgements and estimates, if the amounts have previously been recognized in the profit and loss account.
For a list of subsidiaries, please refer to note 46.
The consolidated financial statement comprises the parent company, Bang & Olufsen a/s, and the subsidiaries in which the Group holds more than 50 % of the voting rights or in other ways has a controlling influence on the subsidiary's financial and operational policies. Companies, which are not subsidiaries, but in which the Bang & Olufsen Group holds 20 % or more of the voting rights or in other ways has a significant influence on the operational or financial management, are regarded as associated companies. Associated companies are consolidated in the item "Result from investments in associates after tax".
When judging whether or not Bang & Olufsen a/s has a controlling or significant influence, potential voting rights that are currently exercisable or convertible are considered.
The consolidated financial statement has been prepared on the basis of the audited financial statements of the parent company and its subsidiaries by adding uniform items from the individual companies. In the process of consolidation, intra-group income and expenses, shareholding, dividend, accounts receivable and payable and unrealized intra-group profits and losses have been eliminated.
Newly acquired subsidiaries are included in the consolidated financial statement as from the date of acquisition, and companies sold are included until the date of sale. Comparative figures are not adjusted for newly acquired or sold companies.
The parent company's shares in the consolidated subsidiaries, recognized at historical cost price, are netted against the parent company's share of the subsidiaries' fair value of the identifiable net assets and contingent liabilities at the time of the acquisition.
Goodwill is calculated at the time of the acquisition as the difference between the cost price and the fair value of the assets, the liabilities and the contingent liabilities acquired. For business combinations taking place on 1 June 2004 or later, goodwill is recognized in the balance sheet under intangible non-current assets. This goodwill is not amortized; instead quarterly impairment tests are performed. If the cost of acquisition is less than the fair value of the net assets acquired, the difference is recognized directly in the profit and loss account at the time of the business combination.
Goodwill acquired before 1 June 2004 but after 1 June 2002 was recognized in the balance sheet under intangible non-current assets and amortized on a straight-line basis over its estimated useful life, which was determined on the basis of Management's experience of the individual business areas, although a maximum of 20 years applied.
For acquisitions before 1 June 2002 goodwill was calculated at the time of the acquisition as the difference between the cost price and the acquired company's equity value calculated in accordance with the Group's accounting principles applied. Goodwill was amortized directly over the equity.
For business combinations before 1 June 2004 the accounting classification and accounting treatment are maintained according to the former accounting principles applied. Goodwill as from before 1 June 2004 is recognized based on the cost price that was recognized according to the former accounting principles applied with deduction of amortization and impairment losses until 31 may 2004. Goodwill is not amortized after 1 June 2004; instead it is tested for impairment quarterly as of 1 June 2004.
Additions and disposals of shops are treated as either business combinations, ref. the above description, or as additions and disposals of single assets and liabilities. The treatment is based on a specific assessment.
Minority interests include third party shareholders' share of the equity value and the result for the year in subsidiaries, which are not 100 % owned.
The part of the subsidiaries' result, which can be attributed to minority interests, forms an integrated part of the profit or loss for the period. Minority interests' share of the equity is stated as an integrated part of the equity.
When minority interests are obligated to cover a share of any losses, this is recognized as an asset. An individual assessment of the need for provisions for losses is made.
Transactions in foreign currency are during the year translated at the exchange rate effective on the transaction date. Gains and losses arising from the difference between the exchange rate on the transaction date and the exchange rate prevailing at the date of payment are recognized in the profit and loss account as financial income or financial costs.
Receivables, payables and other monetary items in foreign currency, which exist at the balance sheet date, are translated at the exchange rates prevailing at this date. Currency gains and losses arising from the differences between the exchange rate prevailing at the balance sheet date and the exchange rate prevailing at the transaction date, are recognized in the profit and loss account as financial income or financial costs.
When recognizing foreign subsidiaries with a functional currency different from Bang & Olufsen a/s' presentation currency, profit and loss accounts are translated using average exchange rates, while balance sheet items are translated using the exchange rates prevailing on the balance sheet date. Differences deriving from translation of the foreign subsidiaries' opening equity to the exchange rates prevailing at the balance sheet date, and the differences owing to the translation of the profit and loss accounts of the foreign subsidiaries from average exchange rates to balance sheet date exchange rates, are recognized in the equity.
Derivative financial instruments are initially recognized in the balance sheet at cost price and are subsequently measured at fair value. Derivative financial instruments are recognized in other receivables and other debt.
Changes to the fair value of derivative financial instruments, which meets the conditions for hedging the fair value of a recognized asset or a recognized liability, are recognized in the profit and loss account together with any changes in the fair value of the hedged asset or the hedged liability.
Changes to the fair value of derivative financial instruments, which meets the conditions for hedging future cash flow, are recognized in the equity. Income and expenses relating to these hedge transactions are transferred from the equity when the hedged position is realized, and are included in the value of the hedged position.
For derivative financial instruments, which do not qualify as hedging instruments, changes to the fair value are recognized in the profit and loss account as financial income or financial costs.
Revenue is recognized in the profit and loss account, when delivery and transfer of ownership to the customer have taken place, if the revenue can be measured reliably, and payment is expected to be received. Revenue is recognized net of value added tax and discounts related to the sale.
Revenue regarding sales of goods is recognized in the profit and loss account, if the transfer of ownership has taken place before the end of the financial year.
Revenue associated with the rendering of services, which among other things includes sales of hours in connection with development projects, is recognized as the services are rendered.
Royalty is recognized on a straight-line basis during the period covered by the royalty agreement.
Rentals are recognized in the period, where the letting out of the property takes place.
Production costs comprise wages, stock consumption and indirect costs, including salaries, depreciation/amortization and impairment losses, which are incurred with the purpose of achieving the net turnover for the year.
Development costs, which do not meet the criteria for capitalization, are recognized in the profit and loss account as development costs along with amortization and impairment losses on capitalized development projects.
Distribution and marketing costs comprise costs relating to sales and distribution of the Group's products, including salaries for sales personnel, advertising and exhibition costs, depreciation/amortization and impairment losses. Costs in subsidiaries, which are responsible exclusively for the sales of the Group's products, are allocated to distribution and marketing costs.
Administration costs comprise costs for the administrative personnel, management and office costs etc. including depreciation/ amortization and impairment losses.
In the Group's profit and loss account the share of result after tax in associated companies after proportional elimination of intra-group profits and losses is recognized as "Result from investments in associates after tax".
Dividend from subsidiaries and associates is recognized in the parent company's profit and loss account in the financial year, where the dividend is declared. In situations where the dividend received exceeds the earnings after the acquisition of the company, the dividend is recognized as a write-down of the cost price of the investment instead of in the profit and loss account.
Financial income and costs include interest, amortizations premium or allowance, fair value adjustments and realized and unrealized foreign exchange gains and losses.
Tax for the year, which includes the anticipated tax liability on taxable earnings and changes in deferred tax for the year, is recognized in the profit and loss account with the share that is attributable to the result for the year and directly on equity with the share, which can be attributed to entries made directly on the equity.
The parent company is included in an obligatory Danish joint taxation scheme with all companies controlled by the parent company. The calculated Danish tax of the jointly taxed income is distributed among the jointly taxed companies in proportion to their taxable income (full distribution with reimbursement for tax deficits).
The Group pays tax according to the instalment principle. Any allowances, deductions or refunds related to the payments of tax are included in financial income or costs.
Goodwill is initially recognized in the balance sheet at historical cost price as described under "Consolidation practice". Subsequently goodwill is measured at historical cost price less accumulated impairment losses. Goodwill is not amortized.
Development projects, that are clearly defined and identifiable, and which are expected to be marketed as new products within future potential markets, are recognized as intangible non-current assets.
Development projects are recognized at cost price and are amortized over the expected useful life when the criteria for capitalization have been met.
Development costs that do not meet the criteria for recognition in the balance sheet are recognized in the profit and loss account when incurred.
The cost price comprises salaries, wages, materials, services and depreciation of other equipment, plant and machinery that relate to the Group's development activities.
Subsidies concerning development projects are deducted in the incurred costs.
Interest expenses related to financing development projects are recognized in the profit and loss account.
Capitalized development projects are measured at the lower of cost price less accumulated amortizations and impairment losses and recoverable amount.
After the completion of the development work, development projects are amortized on a straight-line basis over the estimated useful life. The amortization period is normally 3-6 years.
Acquired rights comprise software, key money and patents. These are measured at cost price less accumulated amortization and impairment losses.
Acquired rights are amortized on a straight-line basis over the shorter of the estimated useful life and the contractual duration.
Tangible non-current assets are measured at cost price with deduction of accumulated depreciation and impairment losses.
The cost price comprises the acquisition price and costs directly related to the acquisition until the time, when the asset is ready for use. For non-current assets produced by the company, the cost price comprises direct costs for wage consumption, materials, components and sub-contractors.
The cost price of a tangible non-current asset is divided into separate components, which are depreciated separately, if the expected useful life differs for the separate components.
Subsidies concerning tangible non-current assets are deducted in the cost price.
Interest expenses related to financing the production of tangible non-current assets are recognized in the profit and loss account.
For tangible non-current assets held under finance leases, the cost price equals the lower of fair value of the leased assets and net present value of future minimum lease payments. The interest rate implicit in the lease or the incremental borrowing rate is used as discount rate, when calculating net present value.
Depreciation is carried out on a straight-line basis over the expected useful life of the assets considering the assets' residual values.
The following depreciation periods are used:
| Land and buildings | |
|---|---|
| L and |
None |
| Buildings | 40 years |
| Interior refurbishment/special installations | 10 years |
| Plant and machinery | |
| Single purpose production tools | 3 - 6 years |
| Other plant and machinery | 8 - 10 years |
| Other equipment | 3 - 10 years |
Leasehold improvements are depreciated on a straight-line basis over the term of the lease, though not exceeding 10 years.
Investment property is property held to earn rentals or for capital appreciation rather than for use in the production or supply of goods or services or for administrative purposes in the company that owns the property.
Investment property is measured at cost price with deduction of accumulated depreciation and impairment losses. Investment property is depreciated on a straight-line basis over 40 years.
Subsidies concerning investment property are deducted in the cost price.
The carrying amount of both investment property and intangible and tangible non-current assets is reviewed each quarter to determine if there are indications of decreases in value not reflected by ordinary depreciation/amortization. If this is the case, the recoverable amount of the asset is determined, and if the amount is lower than the carrying amount, an impairment loss is recognized, so that the carrying amount is reduced to the asset's recoverable amount. The recoverable amount for an asset is the higher of the net sales price and the value in use. If it is not possible to set a recoverable amount for one asset, the asset is assessed within the smallest group of assets for which a reliable recoverable amount can be set.
Goodwill and development projects in progress are tested for impairment each quarter irrespective of whether there is any indication of impairment.
Investments in subsidiaries and associates are measured at historical cost price in the balance sheet of the parent company. If the historical cost price exceeds the recoverable amount, an impairment loss is recognized, so that the carrying amount is reduced to the investments' recoverable amount.
In situations where the dividend distributed exceeds the earnings after the acquisition of the company, the dividend is recognized as a write-down of the cost price of the investment.
Investments in associates are measured in the balance sheet of the Group at the equity value according to the Group's accounting principles applied, after proportional elimination of intra-group profits and losses.
Other financial receivables comprise primarily loans to external parties and are measured at amortized cost price corresponding to face value less provisions for losses.
Provisions for losses are based on an individual assessment of each account outstanding.
Inventories are measured at the lower of cost price using the FIFO-principle and net realisable value.
Cost price of raw materials, consumables and purchased goods comprises the invoice price with added delivery costs. The cost price of finished goods and work in progress comprises the purchase price of materials and direct labour costs, plus indirect production costs.
Indirect production costs include indirect materials and wages, maintenance and depreciation on plant and machinery, factory buildings and other equipment as well as costs for factory administration and management.
Costs of financing are not included in the cost price.
Receivables are measured in the balance sheet at amortized cost price corresponding to face value less provisions for losses.
Provisions for losses are based on an individual assessment of each outstanding account.
Dividend is recognized as a liability at the time of approval by the Annual General Meeting.
Acquisition fees, fees received in connection with the disposal of own shares and dividend received on own shares are recognized under retained earnings in the equity.
The reserve consists of paid-in premium in connection with the subscription of shares.
The reserve is a distributable reserve, and therefore it can be used for declaration of dividend or to cover deficits.
The translation reserve for exchange rate differences in the consolidated financial statement consists of exchange rate differences that occur when translating the foreign subsidiaries' financial statements from their functional currency into Bang & Olufsen a/s' presentation currency.
On disposal of the net investment the reserve for exchange rate differences on that foreign subsidiary is recognized in the profit and loss account.
The reserve is a distributable reserve.
The reserve for exchange rate differences has been reset to zero as at 1 June 2004 in accordance with IFRS 1.
The Group's incentive programmes comprise a share option programme for a number of directors and employee shares.
The share option programme solely comprises equity-settled share options.
The value of the services received from the employees is measured by reference to the fair value of the share options granted. The fair value of the share options is measured on the grant date and is recognized as an expense in the profit and loss account during the period from the grant date to the vesting date. The counter item to this is recognized directly in equity.
At initial recognition of the share options an estimate is made over the number of share options expected to vest. Subsequently, until the vesting date, the estimation is adjusted if the number of equity instruments expected to vest differs from previous estimates. Thus the number of share options actually recognized equals the number of equity instruments that ultimately vested.
The fair value of the share options is calculated on the basis of the Black-Scholes model for determining the value of options. When calculating the fair value of the share options the terms and conditions that are linked to the share options are taken into consideration.
The consequence on the taxes of the share option programme is recognized.
The employee shares have been granted to the employees in the Danish companies of the Bang & Olufsen Group as free shares or with a right to subscribe for shares in Bang & Olufsen a/s at a quotation below the market quotation. The discount element of the employee shares is recognized at the grant date as an expense in the profit and loss account. The counter item to this is recognized directly in equity. The consequence on the taxes of the employee share arrangement is recognized. The discount element is calculated as the difference between the subscription price and the fair value of the employee share calculated on the basis of the Black-Scholes model for determining the value of options.
The Bang & Olufsen Group operates pension plans for certain groups of employees in Denmark and abroad. In general, these plans are defined contribution plans.
Costs regarding defined contribution plans are recognized continuously in the profit and loss account in the period, where the pension is earned, and the contribution payable is recognized in the balance sheet as a liability. The premium payments (e.g. a fixed amount or a fixed percentage of the salary) are made into independent insurance companies, which are responsible for the pension obligations. Once the pension contributions for the defined contribution plans have been paid, the Bang & Olufsen Group has no further pension obligations to current or past employees.
For defined benefit plans a yearly actuarial calculation is made of the present value of the defined benefit obligation. The present value is calculated based on conditions about the future development in among other things salary levels, interest rates, inflation and mortality. The actuarially calculated present value of the defined benefit obligation with deduction of the fair value of any plan assets is recognized in the balance sheet.
If the net defined benefit liability is an asset it is only recognized if it corresponds to or is lower than any cumulative unrecognized net actuarial losses and future refunds from the plan or it would result in reductions in future contributions to the plan.
Differences between the expected development in plan assets and in the defined benefit obligation and the actual values are actuarial gains and losses. Actuarial gains and losses are recognized only if the accumulated values exceed the highest of 10 % of the defined benefit obligation or 10 % of the fair value of the plan assets as at the beginning of the financial year ("The Corridor Method"). Amounts that fall outside the corridor are recognized over the remaining working years for the employees concerned.
Provisions comprise provisions for warranty, provisions for fairness and other provisions. Provisions for warranty comprise obligations to repair products within the warranty period. Provisions for fairness comprise obligations to repair products after the warranty period. The provisions are recognized and measured on the basis of the company's experience with warranty repairs and other obligations. The provisions are discounted if this has a material effect on the measurement of the obligation.
Provision for deferred tax is calculated according to the liability method on the basis of all temporary differences between the tax-based value and the carrying amount of assets and liabilities.
The tax-based value of assets is determined considering the planned use of the asset. In the calculation of deferred tax, the tax-based value of any losses and provisions etc. is entered, if it is likely that these can be offset against future taxable income. If the deferred tax constitutes a positive amount, this is recognized in the balance sheet as a deferred tax asset.
Income tax is recognized as the tax expected to be liable on the year's taxable income less prepaid tax.
Fixed interest loans, such as mortgage loans or bank loans, are recognized at the date of the loan at the received proceeds less transaction costs. In subsequent periods, the loans are measured at amortized cost price corresponding to the present value using the effective rate of interest, so that the difference between the proceeds and the nominal amount (debt discount) is recognized in the profit and loss account over the term of the loan.
Other financial liabilities are measured at amortized cost price, which is practically the same as the nominal value.
Prepayments comprise incurred costs related to the following financial years. Deferred income comprises received payments related to income in the following financial years.
The presentation of the cash flow statement follows the indirect method, based on the result for the year.
The cash flow statement shows the cash flow for the year, the year's change in cash and cash equivalents as well as cash and cash equivalents at the beginning and end of the year.
Cash flow from operating activities is stated as the result for the year adjusted for non-liquid profit and loss account items and changes to the working capital. The working capital comprises current assets less current liabilities, excluding items, which are recognized as cash and cash equivalents.
Cash flow from investment activities comprises the acquisition and sale of investment property and intangible, tangible and financial noncurrent assets.
Cash flow from financing activities comprises borrowings and instalments on mortgage debt and other long-term debt, dividend paid and proceeds from increases in the share capital as well as sales and repurchase of own shares.
Cash and cash equivalents comprise cash less current bank debt, which forms part of the Group's ongoing cash flow management. Cash flow in foreign currency, including cash flow in foreign subsidiaries, is translated at average monthly exchange rates, which do not deviate materially from the exchange rates prevailing on the date of payment.
The Group's main activities and primary segments are:
The Group's geographical areas and secondary segments are:
Scandinavia comprises Denmark, Sweden, Norway and Finland.
Central Europe comprises Germany, Switzerland and Austria.
The secondary segments are broken down according to the location of customers and assets.
The division into segments is, in all material respects, in accordance with the Group's management structure and the internal financial management.
The segment figures have been prepared using the same accounting principles applied as for the consolidated financial statements.
Segment income and expenses and segment assets and liabilities comprise those items, which can be directly allocated to the segment. Intra-group trade takes place on market terms.
Non-current assets in the segment comprise those assets, which are used directly in the operations of the segment, including intangible non-current assets and investments in subsidiaries and associates.
Current assets in the segment comprise those current assets, which are used directly in the operations of the segment, including inventories, trade receivables, other receivables, prepayments and cash.
Segment liabilities comprise liabilities derived from the operations of the segment, including trade payables and other payables.
When preparing the annual report it is necessary that Management makes a number of accounting estimates and judgements, which influence the carrying amount of certain assets and liabilities and the recognized revenue and costs for the financial years. Significant judgements are among others made when assessing provisions and contingent liabilities.
Management bases the judgements on historical experience and other assumptions that are believed to be reasonable under the given circumstances. The result of the assumptions is used to evaluate the carrying amount of the assets and liabilities and the recognized revenue and costs, which is not obvious from other material. The actual results can differ from the estimated results.
The following accounting estimates and judgements are believed to be material for the annual report:
The Bang & Olufsen Group repairs or replaces products that do not function satisfactorily both within the warranty period and in certain situations after the warranty period. Consequently provisions are made for future returns. The provisions are made based on historical statistics of returns and based on Management's judgements.
The future returns can differ from the historical pattern, but it is the assessment of Management that the estimate of the provisions is reasonable and appropriate.
Contingent liabilities, including the outcome of ongoing lawsuits, are naturally uncertain. Management has estimated these based on legal assessments in the individual cases. It is the assessment of Management that the estimate of the contingent liabilities is reasonable.
(DKK million)
| Branded business |
Non-branded business |
|||
|---|---|---|---|---|
| 2007/08 | 2006/07 | 2007/08 | 2006/07 | |
| Primary segment - activities | ||||
| Net turnover | 3,991.7 | 4,194.0 | 117.9 | 217.9 |
| Internal turnover External turnover |
(7.9) 3,983.8 |
(25.6) 4,168.4 |
(9.7) 108.2 |
(10.6) 207.3 |
| Gross profit | 1,823.3 | 1,960.0 | 76.7 | 93.6 |
| Depreciations and amortisations | (292.7) | (241.3) | (4.1) | (4.6) |
| Impairment losses recognized in the profit and loss account Operating profit (EBIT) |
(2.4) 159.4 |
(3.0) 488.8 |
- 35.3 |
- 41.2 |
| Result from investments in associates | - | 0.3 | (11.2) | (1.4) |
| Result before tax | ||||
| Result for the year | ||||
| Non-current assets | 1,204.0 | 1,238.2 | 21.9 | 27.8 |
| Current assets | 1,529.4 | 1,629.8 | 28.4 | 57.8 |
| Total assets | 2733.4 | 2,868.0 | 50.3 | 85.6 |
| Equity | 1,567.3 | 1,810.1 | 36.6 | 65.2 |
| Non-current liabilities | 420.5 | 289.2 | 0.1 | 0.3 |
| Current liabilities | 745.6 | 768.7 | 13.6 | 20.1 |
| Total equity and liabilities | 2,733.4 | 2,868.0 | 50.3 | 85.6 |
| Capital additions | 307.6 | 359.2 | 7.7 | 8.5 |
| Investments in associates | 6.3 | 6.3 | (1.7) | 9.5 |
| Average number of employees: | ||||
| Denmark | 1,755 | 1,764 | 39 | 39 |
| Abroad | 746 | 597 | 1 | 3 |
| 2,501 | 2,361 | 40 | 42 |
| Unallocated items | Other/eliminations | Bang & Olufsen a/s Group |
||||
|---|---|---|---|---|---|---|
| 2007/08 | 2006/07 | 2007/08 | 2006/07 | 2007/08 | 2006/07 | |
| - | - | (17.6) | (36.2) | 4,092.0 | 4,375.7 | |
| - | - | 17.6 | 36.2 | - | - | |
| - | - | - | - | 4,092.0 | 4,375.7 | |
| - - - - - |
- - - - - |
(7.6) - - - - |
(15.9) - - - - |
1,892.4 (296.8) (2.4) 194.7 (11.2) 153.7 112.3 |
2,037.7 (245.9) (3.0) 530.0 (1.1) 524.4 372.5 |
|
| 32.3 | 35.0 | (51.5) | (51.5) | 1,206.7 | 1,249.5 | |
| 50.2 | 27.0 | 2.6 | (1.8) | 1,610.6 | 1,712.8 | |
| 82.5 | 62.0 | (48.9) | (53.3) | 2,817.3 | 2,962.3 | |
| (68.1) | (141.9) | (52.0) | (51.5) | 1,483.8 | 1,681.9 | |
| 73.8 | 81.6 | - | - | 494.4 | 371.1 | |
| 76.8 | 122.3 | 3.1 | (1.8) | 839.1 | 909.3 | |
| 82.5 | 62.0 | (48.9) | (53.3) | 2,817.3 | 2,962.3 | |
| - | - | - | - | 315.3 | 367.7 | |
| - | - | - | - | 4.6 | 15.8 | |
| - | - | - | - | 1,794 | 1,803 | |
| - | - | - | - | 747 | 600 | |
| - | - | - | - | 2,541 | 2,403 |
| Total assets |
Total capital additions |
Total | external turnover | ||||
|---|---|---|---|---|---|---|---|
| 2007/08 | 2006/07 | 2007/08 | 2006/07 | 2007/08 | 2006/07 | ||
| Scandinavia | 1,970.6 | 2,124.8 | 248.3 | 307.6 | 673.6 | 884.4 | |
| Central Europe | 128.2 | 123.5 | 1.3 | 8.2 | 966.0 | 941.5 | |
| Rest of Europe | 630.3 | 623.0 | 52.5 | 47.2 | 1,703.1 | 1,813.5 | |
| North America | 31.8 | 33.5 | 2.2 | 3.5 | 234.2 | 271.3 | |
| Asia | 43.8 | 43.2 | 5.7 | 1.2 | 389.0 | 378.0 | |
| Rest of the world | 12.6 | 14.3 | 5.3 | - | 126.1 | 87.0 | |
| Total | 2,817.3 | 2,965.0 | 315.3 | 367.7 | 4,092.0 | 4,375.7 | |
| Export share | 88 % | 85 % |
| Group | Parent company | ||||
|---|---|---|---|---|---|
| (DKK million) | 2007/08 | 2006/07 | 2007/08 | 2006/07 | |
| Notes | |||||
| 4 | Net turnover | ||||
| Geografical break down | |||||
| Denmark | 490.9 | 661.5 | 948.1 | 966.7 | |
| Norway | 63.8 | 73.0 | - | - | |
| Sweden | 100.4 | 130.1 | - | - | |
| Finland | 18.5 | 19.8 | - | - | |
| Scandinavia | 673.6 | 884.4 | 948.1 | 966.7 | |
| Germany | 612.0 | 592.3 | - | - | |
| Switzerland | 287.5 | 281.1 | - | - | |
| Austria | 66.5 | 68.1 | - | - | |
| Central Europe | 966.0 | 941.5 | - | - | |
| The UK | 466.0 | 570.2 | - | - | |
| France | 216.4 | 211.3 | - | - | |
| Spain/Portugal | 258.2 | 278.6 | - | - | |
| Italy | 196.2 | 227.0 | - | - | |
| Belgium | 105.5 | 107.7 | - | - | |
| Holland | 271.1 | 271.8 | - | - | |
| Rest of Europe | 189.7 | 146.9 | - | - | |
| Rest of Europe | 1,703.1 | 1,813.5 | - | - | |
| USA | 234.2 | 271.3 | - | - | |
| North America | 234.2 | 271.3 | - | - | |
| Japan | 59.4 | 68.6 | - | - | |
| Singapore | 79.3 | 66.5 | - | - | |
| Rest of Asia | 250.3 | 242.9 | - | - | |
| Asia | 389.0 | 378.0 | - | - | |
| Middle East | 58.5 | 63.1 | - | ||
| Rest of the world | 67.6 | 23.9 | - | - | |
| Rest of the world | 126.1 | 87.0 | - | - | |
| Total | 4,092.0 | 4,375.7 | 948.1 | 966.7 | |
| Break down by categories | |||||
| Sales of goods | 4,037.8 | 4,318.2 | - | - | |
| Rendering of services | 33.8 | 33.5 | 286.1 | 245.9 | |
| Royalty | 15.3 | 23.0 | 580.0 | 642.8 | |
| Rental income from investment property | 5.1 | 1.0 | 82.0 | 78.0 | |
| Total | 4,092.0 | 4,375.7 | 948.1 | 966.7 |
| Group | Parent company | ||||||
|---|---|---|---|---|---|---|---|
| Notes | (DKK million) | 2007/08 | 2006/07 | 2007/08 | 2006/07 | ||
| 5 | Expenses, further information | ||||||
| The following amounts are included in production costs, development costs, distribution and marketing costs and administration costs. Information about the expenses are provided below: |
|||||||
| Development costs Expensed development costs before capitalisation Of which capitalised Amortisations and impairment losses on development projects Development costs recognized in the profit and loss account |
529.9 (130.9) 146.5 545.5 |
493.5 (142.2) 107.5 458.8 |
552.0 (117.7) 131.2 565.5 |
507.1 (132.1) 89.9 464.9 |
|||
| Classification based on the nature of expense | |||||||
| Intangible non-current assets | |||||||
| Amortisations of intangible non-current assets are recognized in the following items in the profit and loss account: |
|||||||
| Production costs Development costs Distribution and marketing costs Administration costs etc. |
1.2 151.7 0.7 0.1 153.7 |
0.8 110.2 0.9 3.7 115.6 |
1.0 136.4 - 0.1 137.5 |
4.1 92.4 - 0.4 96.9 |
|||
| Impairment losses on intangible non-current assets are recognized in the following item in the profit and loss account: |
|||||||
| Distribution and marketing costs No impairment losses on intangible non-current assets have been reversed. |
2.4 2.4 |
- - |
- - |
- - |
|||
| Tangible non-current assets | |||||||
| Depreciations of tangible non-current assets are recognized in the following items in the profit and loss account: |
|||||||
| Production costs Development costs Distribution and marketing costs Administration costs etc. Impairment losses on tangible non-current assets are recognized in the following item in the profit and loss account: |
114.1 12.0 12.4 1.0 139.5 |
101.1 5.9 10.4 9.1 126.5 |
11.1 9.4 - 0.8 23.3 |
17.9 2.6 - 1.4 21.9 |
|||
| Distribution and marketing costs | - | 3.0 | - | - | |||
| No impairment losses on tangible non-current assets | - | 3.0 | - | - |
have been reversed.
| Group | Parent company | ||||||
|---|---|---|---|---|---|---|---|
| (DKK million) | 2007/08 | 2006/07 | 2007/08 | 2006/07 | |||
| Notes | |||||||
| 5 | Expenses, further information (continued) | ||||||
| Investment property | |||||||
| Depreciations of investment property are recognized in the | |||||||
| following items in the profit and loss account: | |||||||
| Production costs | 3.6 | 3.7 | 5.3 | 6.3 | |||
| Development costs | - | 0.1 | 1.6 | 0.9 | |||
| Administration costs etc. | - 3.6 |
- 3.8 |
0.4 7.3 |
0.5 7.7 |
|||
| No impairment losses on investment property have | |||||||
| been recognized. | |||||||
| No impairment losses on investment property have | |||||||
| been reversed. | |||||||
| Employees | |||||||
| Remuneration to the Board of Directors | 3.6 | 2.8 | 3.6 | 2.8 | |||
| Remuneration to the Board of Management | 16.0 | 7.5 | 16.0 | 7.5 | |||
| Share-based payment | 20.6 | 19.9 | 12.4 | 12.3 | |||
| Wages, salaries and fees | 835.6 | 840.4 | 306.2 | 278.3 | |||
| Pensions | 39.5 | 44.7 | 20.2 | 19.9 | |||
| Other statutory contributions | 36.4 | 35.9 | 4.0 | 2.5 | |||
| 951.7 | 951.2 | 362.4 | 323.3 | ||||
| Average number of full-time employees: | |||||||
| Denmark | 1,794 | 1,803 | 719 | 708 | |||
| Abroad | 747 | 600 | - | - | |||
| 2,541 | 2,403 | 719 | 708 | ||||
| Employee costs are recognized in the following items | |||||||
| in the profit and loss account: | |||||||
| Production costs | 337.3 | 312.0 | 121.0 | 95.5 | |||
| Development costs | 256.0 | 266.4 | 228.8 | 217.3 | |||
| Distribution and marketing costs | 266.9 | 293.0 | - | - | |||
| Administration costs etc. | 91.5 | 79.8 | 13.4 | 10.5 | |||
| 951.7 | 951.2 | 362.4 | 323.3 | ||||
Remuneration to the Board of Directors, the Board of Management and other key management personnel:
| 2007/08 | 2006/07 | |||||
|---|---|---|---|---|---|---|
| Board of | Board of Directors of Management of |
Other key | Board of | Board of Directors of Management of |
Other key | |
| the parent company |
the parent company |
management personnel |
the parent company |
the parent company |
management personnel |
|
| Wages, salaries and fees | 3.6 | 6.6 | 5.5 | 2.8 | 7.5 | 5.1 |
| Severance pay | - | 8.3 | - | - | - | - |
| Bonus | - | 1.1 | 0.8 | - | - | 1.2 |
| Pensions | - | - | 0.8 | - | - | 0.6 |
| Remuneration | 3.6 | 16.0 | 7.1 | 2.8 | 7.5 | 6.9 |
| Share-based payment | - | 6.1 | 2.4 | - | 7.2 | 1.7 |
| Total remuneration | 3.6 | 22.1 | 9.5 | 2.8 | 14.7 | 8.6 |
Group
| 2007/08 | 2006/07 | |||||
|---|---|---|---|---|---|---|
| Board of | Board of | Board of | Board of | |||
| Directors of Management of | Other key | Directors of Management of | Other key | |||
| the parent | the parent | management | the parent | the parent | management | |
| company | company | personnel | company | company | personnel | |
| Wages, salaries and fees | 3.6 | 6.6 | 2.9 | 2.8 | 7.5 | 2.6 |
| Severance pay | - | 8.3 | - | - | - | - |
| Bonus | - | 1.1 | - | - | - | 0.6 |
| Pensions | - | - | 0.4 | - | - | 0.3 |
| Remuneration | 3.6 | 16.0 | 3.3 | 2.8 | 7.5 | 3.5 |
| Share-based payment | - | 6.1 | 1.5 | - | 7.2 | 1.0 |
| Total remuneration | 3.6 | 22.1 | 4.8 | 2.8 | 14.7 | 4.5 |
Share option programme, Group
The Bang & Olufsen Group's share option programme comprises a number of directors in the Group. As at 31 May 2008, the total pool of options totals 261,900 options, which can be exercised in the period 2008-2013. Exercise of the share options is dependent on the owner of the option being employed at Bang & Olufsen at the time of the exercise. There are no further conditions for the acquisition of the options.
The exercise prices, which are linked to earnings in the financial years 2005/06 and 2006/07, are based on exercise prices of 500 and 601, which are adjusted with 5 % on the date of the company's financial statement announcement to the OMX Nordic Exchange Copenhagen A/S first time, at the announcement in August 2006 and August 2007 respectively. The annual addition no longer apply or is limited to the extent that dividend is paid out on the latest Annual General Meeting before the announcement in question. The exercise price, which is linked to earnings in the financial year 2007/08, is set at 625.
The share options can only be settled with shares. To cover the share option programme, Bang & Olufsen a/s has purchased own shares, which cover the full commitment. The shares are recognized directly in the equity.
| Share options, | Board of | Other | Total number | Exercise price | |
|---|---|---|---|---|---|
| Bang & Olufsen Group | Management | directors | of shares | per option | Exercise period |
| Outstanding 1 June 2006 | 140,000 | 33,208 | 173,208 | 430 | August 2003 - August 2010 |
| Exercised 2006/07 | - | (1,236) | (1,236) | 305 | August 2003 - August 2007 |
| Exercised 2006/07 | - | (972) | (972) | 177 | August 2004 - August 2008 |
| Exercised 2006/07 | (70,000) | (15,500) | (85,500) | *360 | August 2006 - August 2009 |
| Allocated 2006/07 | - | 5,500 | 5,500 | *525 | August 2007 - August 2010 |
| Allocated 2006/07 | 70,000 | 32,500 | 102,500 | *615 | August 2008 - August 2011 |
| Outstanding 31 May 2007 | 140,000 | 53,500 | 193,500 | 573 | August 2007 - August 2011 |
| As at 31 May, 2007, the share options are divided as follows: | |||||
| Qualification period: | |||||
| Financial year 2005/06 | 70,000 | 21,000 | 91,000 | *525 | August 2007 - August 2010 |
| Financial year 2006/07 | 70,000 | 32,500 | 102,500 | *615 | August 2008 - August 2011 |
| Outstanding 31 May 2007 | 140,000 | 53,500 | 193,500 | 573 | August 2007 - August 2011 |
| Share options, | |||||
| Bang & Olufsen Group | |||||
| Outstanding 1 June 2007 | 140,000 | 53,500 | 193,500 | 573 | August 2007 - August 2011 |
| Exercised 2007/08 | - | (3,000) | (3,000) | *525 | August 2007 - August 2010 |
| Allocated 2007/08 | 13,500 | 74,400 | 87,900 | 625 | August 2010 - August 2013 |
| Forfeited 2007/08 | (13,500) | (3,000) | (16,500) | 625 | August 2010 - August 2013 |
| Outstanding 31 May 2008 | 140,000 | 121,900 | 261,900 | 594 | August 2008 - August 2013 |
| As at 31 May, 2008, the share options are divided as follows: | |||||
| Qualification period: | |||||
| Financial year 2005/06 | 70,000 | 18,000 | 8,000 | *533 | August 2007 - August 2010 |
| Financial year 2006/07 | 70,000 | 32,500 | 102,500 | *624 | August 2008 - August 2011 |
| Financial year 2007/08 | - | 71,400 | 71,400 | 625 | August 2010 - August 2013 |
| Outstanding 31 May 2008 | 140,000 | 121,900 | 261,900 | 594 | August 2008 - August 2013 |
* The exercise price is adjusted cf. above.
At the dates of exercise of the share options the average weighted share price was as follows:
Exercises in August 2007 595
| 2007/08 | 2006/07 | |
|---|---|---|
| The following amounts regarding the share option programme have | ||
| been recognized as part of the employee costs in the Group | 10.2 | 9.1 |
| The recognition according to the Black-Scholes model for determining | Options | Options |
|---|---|---|
| the value of options is based on the following conditions: | granted in | granted in |
| 2007/08 | 2006/07 | |
| Expected volatility | 22.3 % | 29.7 % |
| 5 year risk-free interest rate | 4.31 % | 3.64 % |
In 2007/08 and 2006/07 an average addition for the Bang & Olufsen a/s share of 2.66 % and 2.50 % respectively has been used in the calculation. The expected term is fixed for the end of the maturity period.
The volatility is based on the historical volatility.
Calculated on the basis of the closing rate of 264.5 as at 31 May 2008 the equity value totals DKK 0.0 million. The closing rate as at 31 May 2007 was 698 corresponding to a calculated equity value of DKK 24.3 million.
Share option programme, parent company
A number of directors in Bang & Olufsen a/s are comprised by the Group's share option programme. As at 31 May, 2008, the pool of unexercised options totals 194,400 options, which can be exercised in the period 2008-2013.
| Share options, | Board of | Other | Total number | Exercise price | |
|---|---|---|---|---|---|
| Bang & Olufsen a/s | Management | directors | of shares | per option | Exercise period |
| Outstanding 1 June 2006 | 140,000 | 14,972 | 154,972 | 430 | August 2002 - August 2009 |
| Exercised 2006/07 | - | (972) | (972) | 177 | August 2004 - August 2008 |
| Exercised 2006/07 | (70,000) | (7,000) | (77,000) | *360 | August 2006 - August 2009 |
| Allocated 2006/07 | - | 2000 | 2.000 | *525 | August 2007 - August 2010 |
| Allocated 2006/07 | 70,000 | 18,000 | 88,000 | *615 | August 2008 - August 2011 |
| Outstanding 31 May 2007 | 140,000 | 27,000 | 167,000 | 572 | August 2007 - August 2011 |
As at 31 May, 2007, the share options are divided as follows:
| Qualification period: | |||||
|---|---|---|---|---|---|
| Financial year 2005/06 | 70,000 | 9,000 | 79,000 | *525 | August 2007 - August 2010 |
| Financial year 2006/07 | 70,000 | 18,000 | 88,000 | *615 | August 2008 - August 2011 |
| Outstanding 31 May 2007 | 140,000 | 27,000 | 167,000 | 572 | August 2007 - August 2011 |
Share options, Bang & Olufsen a/s
| Outstanding 1 June 2007 | 140,000 | 27,000 | 167,000 | 572 | August 2007 - August 2011 | |
|---|---|---|---|---|---|---|
| Allocated 2007/08 | 13,500 | 30,400 | 43,900 | 625 | August 2010 - August 2013 | |
| Forfeited 2007/08 | (13,500) | (3,000) | (16,500) | 625 | August 2010 - August 2013 | |
| Outstanding 31 May 2008 | 140,000 | 54,400 | 194,400 | 587 | August 2008 - August 2013 | |
| As at 31 May, 2008, the share options are divided as follows: | ||||||
| Qualification period: | ||||||
| Financial year 2005/06 | 70,000 | 9,000 | 79,000 | *533 | August 2007 - August 2010 | |
| Financial year 2006/07 | 70,000 | 18,000 | 88,000 | *624 | August 2008 - August 2011 | |
| Financial year 2007/08 | - | 27,400 | 27,400 | 625 | August 2010 - August 2013 | |
| Outstanding 31 May 2008 | 140,000 | 54,400 | 194,400 | 587 | August 2008 - August 2013 | |
| * The exercise price is adjusted cf. above. | ||||||
| 2007/08 | 2006/07 | |||||
| The following amounts regarding the share option programme have | ||||||
| been recognized as part of the employee costs in the parent company: | 8.3 | 8.2 | ||||
| The recognition according to the Black-Scholes model for determining | Options | Options | ||||
| the value of options is based on the following conditions: | granted in | granted in | ||||
| 2007/08 | 2006/07 | |||||
| Expected volatility | 22.3 % | 29.7 % | ||||
| 5 year risk-free interest rate | 4.31 % | 3.64 % |
In 2007/08 and 2006/07 an average addition for the Bang & Olufsen a/s share of 2.66 % and 2.50 % respectively has been used for the calculation. The expected term is fixed for the end of the maturity period.
The volatility is based on the historical volatility.
Calculated on the basis of the closing rate of 264.5 as at 31 May 2008 the equity value totals DKK 0.0 million. The closing rate as at 31 May 2007 was 698 corresponding to a calculated equity value of DKK 21.0 million.
Notes ...
Employee shares, Group
The period 1 June 2007 to 31 May 2008:
In the autumn of 2007 the employees in the Danish companies in the Bang & Olufsen Group were granted employee shares. The grant depended on the seniority of the employee. The employee shares were granted at no cost for the employees.
The employee shares are according to Danish legislation placed in closed depots until the end of the seventh calendar year after the grant. Thus, the employee shares can not be sold or in other ways be at the employees disposal during the 7 years.
The employee shares were granted by use of Bang & Olufsen a/s' supply of own shares.
The employees in the Group were granted 17,029 employee shares corresponding to 0.14 % of the share capital in Bang & Olufsen a/s. The granted employee shares had a fair value of DKK 610.00 per share. The fair value is calculated as of 13 August 2007, which was the date of the grant. The fair value corresponds to the quotation for the shares on the grant date.
The discount element per employee share is DKK 610.00, which is recognized in the profit and loss account.
| 2007/08 | |
|---|---|
| In the Bang & Olufsen Group the following amount has been recognized | |
| in the profit and loss account regarding the employee shares | 10.4 |
In the autumn of 2006 the employees in the Danish companies in the Bang & Olufsen Group were granted employee shares. The grant depended on the seniority of the employee. The employee shares were granted at no cost for the employees.
The employee shares are according to Danish legislation placed in closed depots until the end of the seventh calendar year after the grant. Thus, the employee shares can not be sold or in other ways be at the employees disposal during the 7 years.
The employee shares were granted by use of Bang & Olufsen a/s' supply of own shares.
The employees in the Group were granted 17,733 employee shares corresponding to 0.14 % of the share capital in Bang & Olufsen a/s. The granted employee shares had a fair value of DKK 609.00 per share. The fair value is calculated as of 21 August 2006, which was the date of the grant. The fair value corresponds to the quotation for the shares on the grant date.
The discount element per employee share is DKK 609.00, which is recognized in the profit and loss account.
| 2006/07 | |
|---|---|
| In the Bang & Olufsen Group the following amount has been recognized | |
| in the profit and loss account regarding the employee shares | 10.8 |
Employee shares, parent company
The employees in Bang & Olufsen a/s were granted 6,756 employee shares corresponding to 0.06 % of the share capital in Bang & Olufsen a/s. The granted employee shares had a fair value of DKK 610.00 per share. The fair value has been calculated as of 13 August 2007, which was the date of the grant. The fair value corresponds to the quotation for the shares on the grant date.
| 2007/08 | |
|---|---|
| In Bang & Olufsen a/s the following amount has been recognized | |
| in the profit and loss account regarding the employee shares | 4.1 |
The period 1 June 2006 to 31 May 2007:
The employees in Bang & Olufsen a/s were granted 6,804 employee shares corresponding to 0.05 % of the share capital in Bang & Olufsen a/s. The granted employee shares had a fair value of DKK 609.00 per share. The fair value has been calculated as of 21 August 2006, which was the date of the grant. The fair value corresponds to the quotation for the shares on the grant date.
| 2006/07 | |
|---|---|
| In Bang & Olufsen a/s the following amount has been recognized | |
| in the profit and loss account regarding the employee shares | 4.1 |
| Group | Parent company | ||||
|---|---|---|---|---|---|
| (DKK million) | 2007/08 | 2006/07 | 2007/08 | 2006/07 | |
| Notes | |||||
| 6 | Dividend | ||||
| Dividend received from subsidiaries | 916.5 | 189.0 | |||
| 7 | Financial income | ||||
| Interest income from banks etc. | 4.4 | 7.0 | 1.6 | 4.6 | |
| Interest income from subsidiaries | 40.7 | 9.9 | |||
| Interest income from associates | 0.1 | - | 0.1 | - | |
| Exchange rate gains, net | - | - | 16.4 | 29.1 | |
| Other financial income | 15.5 | 8.7 | 0.2 | 0.5 | |
| Financial income | 20.0 | 15.7 | 59.0 | 44.1 | |
| 8 | Financial costs | ||||
| Interest costs on mortgage loans | 11.8 | 6.4 | 10.0 | 4.2 | |
| Interest costs on bank loans etc. | 14.8 | 10.0 | 11.9 | 6.8 | |
| Interest costs to subsidiaries | 11.5 | 12.1 | |||
| Exchange rate losses, net | 12.3 | 7.6 | - | - | |
| Other financial costs | 10.9 | 7.7 | 2.7 | 2.2 | |
| Financial costs | 49.8 | 31.7 | 36.1 | 25.3 | |
| 9 | Tax on result for the year | ||||
| Parent company: | |||||
| Current tax | (29.6) | (5.5) | (29.6) | (5.5) | |
| Change in current tax due to change in tax rate | 0.6 | - | 0.6 | 16.0 | |
| Change in deferred tax | (16.3) | 16.0 | (16.3) | 16.0 | |
| Change in deferred tax due to change in tax rate | (8.5) | - | (8.5) | - | |
| Adjustment to previous years, current tax | 16.2 | 2.1 | 16.2 | 2.1 | |
| Adjustment to previous years, deferred tax | 11.8 | 0.9 | 11.8 | 0.9 | |
| Total, parent company | (25.8) | 13.5 | (25.8) | 13.5 | |
| Subsidiaries: | |||||
| Current tax | 98.4 | 145.3 | |||
| Corrections | 1.7 | - | |||
| Change in current tax due to change in tax rate | (11.3) | - | |||
| Change in deferred tax | (0.6) | (5.9) | |||
| Change in deferred tax due to change in tax rate | 0,6 | - | |||
| Foreign withholding tax, current year | - | 2.2 | |||
| Adjustment to previous years, current tax | (22.6) | (3.1) | |||
| Adjustment to previous years, deferred tax | 1.0 | (0.1) | |||
| Total, subsidiaries | 67.2 | 138.4 | |||
| Tax on result for the year, total | 41.4 | 151.9 | (25.8) | 13.5 | |
| Tax on result for the year is recognized as follows: | |||||
| Tax recognized in the profit and loss account | 41.4 | 151.9 | (25.8) | 13.5 |
| Group | Parent company | |||||
|---|---|---|---|---|---|---|
| (DKK million) | 2007/08 | 2006/07 | 2007/08 | 2006/07 | ||
| Notes | ||||||
| 9 | Tax on result for the year (continued) | |||||
| Tax on result for the year can be detailed as follows: | ||||||
| Calculated tax of result before tax | 38.4 | 146.8 | 188.2 | 67.3 | ||
| Tax effect of: | ||||||
| Non-deductible costs and non-taxable income | 3.8 | (13.1) | 0.5 | (3.9) | ||
| Differing tax rate in foreign subsidiaries | 10.0 | 12.3 | - | - | ||
| Reduction of the rate from 28 % to 25 % | (18.6) | - | (7.9) | - | ||
| Adjustment of tax relating to previous years | 6.4 | 3.8 | 28.0 | 3.0 | ||
| Non-capitalised tax losses | 3.5 | (0.1) | - | - | ||
| Foreign withholding tax | - | 2.2 | - | - | ||
| Non-taxable dividend from investments in subsidiaries | - | - | (229.1) | (52.9) | ||
| Other | (2.1) | - | (5.5) | - | ||
| 41.4 | 151.9 | (25.8) | 13.5 | |||
| Danish Income tax rate | 25.0 % | 28.0 % | 25.0 % | 28.0 % | ||
| Tax effect of: | ||||||
| Non-deductible costs and non-taxable income | 2.5 % | (2.5 %) | (0.1 %) | (1.6 %) | ||
| Differing tax rate in foreign subsidiaries | 6.5 % | 2.4 % | - | - | ||
| Reduction of the rate from 28 % to 25 % | (12.1 %) | - | (1.0 %) | - | ||
| Adjustment of tax relating to previous years | 4.2 % | 0.7 % | (3.7 %) | 1.2 % | ||
| Non-capitalised tax losses | 2.2 % | - | - | - | ||
| Foreign withholding tax | - | 0.4 % | - | - | ||
| Non-taxable dividend from investments in subsidiaries | - | - | (30.4 %) | (22.0 %) | ||
| Other | (1.4 %) | - | (0.8 %) | - | ||
| The year's average effective tax rate | 26.9 % | 29.0 % | (3.4 %) | 5.6 % | ||
The weighted tax rate equals 26.9 % (29.0 % in 2006/07). The decrease is primarily owing to adjustments of tax relating to previous years and the reduction of the Danish tax rate from 28 % to 25 %. Income tax paid in the parent company including tax paid on account amounts to DKK 82.0 million in 2007/08 (DKK 81.1 million in 2006/07). The parent company pays current tax for jointly taxed Danish companies.
| Group | Parent company | ||||
|---|---|---|---|---|---|
| (DKK million) | 2007/08 | 2006/07 | 2007/08 | 2006/07 | |
| Notes | |||||
| 10 | Minority interests' share of result for the year | ||||
| Bang & Olufsen ICEpower a/s | 2.4 | 2.9 | |||
| OÜ BO-Soft | 5.2 | 2.2 | |||
| Minority interests' share of result for the year | 7.6 | 5.1 | |||
| 11 | Earnings per share | ||||
| Result for the year | 112.3 | 372.5 | |||
| Minority interests' share of result for the year | (7.6) | (5.1) | |||
| Result for the year attributable to the share holders | 104.7 | 367.4 | |||
| Average number of shares | 12,081,338 | 12,329,417 | |||
| Average number of own shares | (704,808) | (646,242) | |||
| Average number of circulating shares | 11,376,530 | 11,683,175 | |||
| Average number of dilutive share options outstanding | - | 12,513 | |||
| Average number of circulating shares | 11,376,530 | 11,695,688 | |||
| Earnings per share, DKK | 9.2 | 31.4 | |||
| Diluted earnings per share, DKK | 9.2 | 31.4 | |||
| Earnings per share from continuing operations, DKK | 9.2 | 31.4 | |||
| Diluted earnings per share from continuing operations, DKK | 9.2 | 31.4 |
The calculation of earnings per share from continuing operations takes place on the same basis as the calculation of earnings per share, since no discontinued operations exist in 2007/08 or 2006/07.
In the period until 1 August 2008 the average number of circulating shares is unchanged.
(DKK million)
| Completed | Development | ||||
|---|---|---|---|---|---|
| Acquired | development | projects in | |||
| Group | Goodwill | rights | projects | progress | Total |
| Cost price 1 June 2006 | 18.0 | 104.6 | 851.7 | 109.8 | 1,084.1 |
| Amortisations and impairment losses 1 June 2006 | - | (92.5) | (635.4) | - | (727.9) |
| Carrying amount 1 June 2006 | 18.0 | 12.1 | 216.3 | 109.8 | 356.2 |
| Cost price 1 June 2006 | 18.0 | 104.6 | 851.7 | 109.8 | 1,084.1 |
| Additions during the year | 27.5 | 40.4 | 45.9 | 96.3 | 210.1 |
| Disposals during the year | (0.7) | (0.2) | (192.1) | - | (193.0) |
| Completed development projects | - | - | 89.9 | (89.9) | - |
| Cost price 31 May 2007 | 44.8 | 144.8 | 795.4 | 116.2 | 1,001.2 |
| Amortisations and impairment losses 1 June 2006 | - | (92.5) | (635.4) | - | (727.9) |
| Amortisations during the year | - | (8.1) | (107.5) | - | (115.6) |
| Reversed amortisations on disposals during the year | - | 0.2 | 192.1 | - | 192.3 |
| Amortisations and impairment losses 31 May 2007 | - | (100.4) | (550.8) | - | (651.2) |
| Carrying amount 31 May 2007 | 44.8 | 44.4 | 244.6 | 116.2 | 450.0 |
| Cost price 31 May 2007 | 44.8 | 144.8 | 795.4 | 116.2 | 1,001.2 |
| Amortisations and impairment losses 31 May 2007 | - | (100.4) | (550.8) | - | (651.2) |
| Carrying amount 31 May 2007 | 44.8 | 44.4 | 244.6 | 116.2 | 450.0 |
| Cost price 1 June 2007 | 44.8 | 144.8 | 795.4 | 116.2 | 1,101.2 |
| Exchange rate adjustment to year-end rate | (0.1) | - | - | - | (0.1) |
| Additions during the year | 2.5 | 3.8 | 17.8 | 100.8 | 124.9 |
| Disposals during the year | - | (0.1) | (128.5) | (1.6) | (130.2) |
| Completed development projects | - | - | 102.9 | (102.9) | - |
| Cost price 31 May 2008 | 47.2 | 148.5 | 787.6 | 112.5 | 1,095.8 |
| Amortisations and impairment losses 1 June 2007 | - | (100.4) | (550,8) | - | (651.2) |
| Amortisations during the year | - | (7.2) | (146.5) | - | (153.7) |
| Reversed amortisations on disposals during the year | - | 0.2 | 128.5 | - | 128.7 |
| Impairment losses during the year | (2.4) | - | - | - | (2.4) |
| Amortisations and impairment losses 31 May 2008 | (2.4) | (107.4) | (568.8) | - | (678.6) |
| Carrying amount 31 May 2008 | 44.8 | 41.1 | 218.8 | 112.5 | 417.2 |
| Cost price 31 May 2008 | 47.2 | 148.5 | 787.6 | 112.5 | 1,095.8 |
| Amortisations and impairment losses 31 May 2008 | (2.4) | (107.4) | (568.8) | - | (678.6) |
| Carrying amount 31 May 2008 | 44.8 | 41.4 | 218.8 | 112.5 | 417.2 |
The addition to goodwill in 2006/07 related to the business combination regarding the Dutch distribution in previous years.
No contractual obligations regarding purchase of intangible assets exist.
| Completed | Development | ||||
|---|---|---|---|---|---|
| Acquired | development | projects in | |||
| Parent company | Goodwill | rights | projects | progress | Total |
| Cost price 1 June 2006 | 3.2 | 89.3 | 670.7 | 100.4 | 863.6 |
| Amortisations and impairment losses 1 June 2006 | - | (81.0) | (484.6) | - | (565.6) |
| Carrying amount 1 June 2006 | 3.2 | 8.3 | 186.1 | 100.4 | 298.0 |
| Cost price 1 June 2006 | 3.2 | 89.3 | 670.7 | 100.4 | 863.6 |
| Additions during the year | - | 36.9 | 43.6 | 88.5 | 169.0 |
| Disposals during the year | - | - | (213.8) | - | (213.8) |
| Completed development projects | - | - | 80.5 | (80.5) | - |
| Cost price 31 May 2007 | 3.2 | 126.2 | 581.0 | 108.4 | 818.8 |
| Amortisations and impairment losses 1 June 2006 | - | (81.0) | (484.6) | - | (565.6) |
| Amortisations during the year | - | (7.0) | (89.9) | - | (96.9) |
| Reversed amortisations on disposals during the year | - | - | 213.8 | - | 213.8 |
| Amortisations and impairment losses 31 May 2007 | - | (88.0) | (360.7) | - | (448.7) |
| Carrying amount 31 May 2007 | 3.2 | 38.2 | 220.3 | 108.4 | 370.1 |
| Cost price 31 May 2007 | 3.2 | 126.2 | 581.0 | 108.4 | 818.8 |
| Amortisations and impairment losses 31 May 2007 | - | (88.0) | (360.7) | - | (448.7) |
| Carrying amount 31 May 2007 | 3.2 | 38.2 | 220.3 | 108.4 | 370.1 |
| Cost price 1 June 2007 | 3.2 | 126.2 | 581.0 | 108.4 | 818.8 |
| Additions during the year | - | 4.0 | 14.5 | 91.1 | 109.6 |
| Disposals during the year | - | (0.1) | (36.2) | (1.6) | (37.9) |
| Completed development projects | - | - | 100.9 | (100.9) | - |
| Cost price 31 May 2008 | 3.2 | 130.1 | 660.2 | 97.0 | 890.5 |
| Amortisations and impairment losses 1 June 2007 | - | (88.0) | (360.7) | - | (448.7) |
| Amortisations during the year | - | (6.3) | (131.2) | - | (137.5) |
| Reversed amortisations on disposals during the year | - | 0.1 | 36.2 | - | 36.3 |
| Amortisations and impairment losses 31 May 2008 | - | (94.2) | (455.7) | - | (549.9) |
| Carrying amount 31 May 2008 | 3.2 | 35.9 | 204.5 | 97.0 | 340.6 |
| Cost price 31 May 2008 | 3.2 | 130.1 | 660.2 | 97.0 | 890.5 |
| Amortisations and impairment losses 31 May 2008 | - | (94.2) | (455.7) | - | (549.9) |
| Carrying amount 31 May 2008 | 3.2 | 35.9 | 204.5 | 97.0 | 340.6 |
No contractual obligations regarding purchase of intangible assets exist.
Notes ...
| Tangible | ||||||
|---|---|---|---|---|---|---|
| L | easehold | non-current | ||||
| L | and and | Plant and | Other | improve- | assets in | |
| Group | buildings | machinery | equipment | ments | progress | Total |
| Cost price 1 June 2006 | 568.6 | 1,048.9 | 220.3 | 60.5 | 49.1 | 1,947.4 |
| Depreciations and impairment | ||||||
| losses 1 June 2006 | (235.8) | (848.2) | (162.1) | (33.9) | - | (1,280.0) |
| Carrying amount 1 June 2006 | 332.8 | 200.7 | 58.2 | 26.6 | 49.1 | 667.4 |
| Cost price 1 June 2006 | 568.6 | 1,048.9 | 220.3 | 60.5 | 49.1 | 1,947.4 |
| Exchange rate adjustment to year-end rate | (1.0) | - | (0.5) | (0.6) | - | (2.1) |
| Reclassification | (11.5) | (5.6) | 17.0 | - | 0.1 | - |
| Transferred to investment property | (79.0) | - | - | - | - | (79.0) |
| Additions during the year | 7.8 | 52.7 | 22.7 | 13.5 | 60.9 | 157.6 |
| Completed assets | 3.7 | 33.9 | 2.2 | - | (39.8) | - |
| Disposals during the year Disposal regarding |
(8.1) | (20.4) | (13.6) | (5.0) | (5.5) | (52.6) |
| Bang & Olufsen Medicom a/s | - | (28.7) | (5.4) | - | (2.6) | (36.7) |
| Cost price 31 May 2007 | 480.5 | 1,080.8 | 242.7 | 68.4 | 62.2 | 1,934.6 |
| Depreciations and impairment | ||||||
| losses 1 June 2006 | (235.8) | (848.2) | (162.1) | (33.9) | - | (1,280.0) |
| Exchange rate adjustment to year-end rate | 0.9 | - | 0.4 | 0.4 | - | 1.7 |
| Reclassification | 0.3 | 4.6 | (4.9) | - | - | - |
| Transferred to investment property | 19.5 | - | - | - | - | 19.5 |
| Depreciations during the year Reversed depreciations on disposals |
(18.6) | (79.2) | (21.9) | (6.8) | - | (126.5) |
| during the year | 5.3 | 19.0 | 12.8 | 4.0 | - | 41.1 |
| Reversed depreciations on disposals regarding Bang & Olufsen Medicom a/s |
- | 26.8 | 3.7 | - | - | 30.5 |
| Impairment losses during the year | - | - | - | (3.0) | - | (3.0) |
| Depreciations and impairment | ||||||
| losses 31 May 2007 | (228.4) | (877.0) | (172.0) | (39.3) | - | (1,316.7) |
| Carrying amount 31 May 2007 | 252.1 | 203.8 | 70.7 | 29.1 | 62.2 | 617.9 |
| Cost price 31 May 2007 | 480.5 | 1,080.8 | 242.7 | 68.4 | 62.2 | 1,934.6 |
| Depreciations and impairment | ||||||
| losses 31 May 2007 | (228.4) | (877.0) | (172.0) | (39.3) | - | (1,316.7) |
| Carrying amount 31 May 2007 | 252.1 | 203.8 | 70.7 | 29.1 | 62.2 | 617.9 |
| Of which assets under finance leases | - | 0.7 | 0.1 | - | - | 0.8 |
Notes ...
| Tangible | ||||||
|---|---|---|---|---|---|---|
| L | easehold | non-current | ||||
| L | and and | Plant and | Other | improve- | assets in | |
| Group | buildings | machinery | equipment | ments | progress | Total |
| Cost price 1 June 2007 | 480.5 | 1,080.8 | 242.7 | 68.4 | 62.2 | 1,934.6 |
| Exchange rate adjustment to year-end rate | 8.5 | 0.9 | 1.6 | (3.9) | 0.4 | 7.5 |
| Reclassification | 12.6 | 17.4 | (30.0) | - | - | - |
| Additions during the year | 24.9 | 60.9 | 20.5 | 9.3 | 74.8 | 190.4 |
| Completed assets | 0.3 | 40.1 | 1.3 | - | (41.7) | - |
| Disposals during the year | (2.3) | (51.2) | (15.7) | (4.9) | (14.9) | (89.0) |
| Cost price 31 May 2008 | 524.5 | 1,148.9 | 220.4 | 68.9 | 80.8 | 2,043.5 |
| Depreciations and impairment | ||||||
| losses 1 June 2007 | (228.4) | (877.0) | (172.0) | (39.3) | - | (1,316.7) |
| Exchange rate adjustment to year-end rate | (0.4) | (0.2) | 1.0 | 2.3 | - | 2.7 |
| Reclassification | (1.3) | (4.7) | 6.0 | - | - | - |
| Depreciations during the year | (20.2) | (93.6) | (18.3) | (7.4) | - | (139.5) |
| Reversed depreciations on disposals | ||||||
| during the year | 0.2 | 48.4 | 12.9 | 4.2 | - | 65.7 |
| Depreciations and impairment | ||||||
| losses 31 May 2008 | (250.1) | (927.1) | (170.4) | (40.2) | - | (1,387.8) |
| Carrying amount 31 May 2008 | 274.4 | 221.8 | 50.0 | 28.7 | 80.8 | 655.7 |
| Cost price 31 May 2008 | 524.5 | 1,148.9 | 220.4 | 68.9 | 80.8 | 2,043.5 |
| Depreciations and impairment | ||||||
| losses 31 May 2008 | (250.1) | (927.1) | (170.4) | (40.2) | - | (1,387.8) |
| Carrying amount 31 May 2008 | 274.4 | 221.8 | 50.0 | 28.7 | 80.8 | 655.7 |
| Of which assets under finance leases | - | - | - | - | - | - |
Neither in 2007/08 nor 2006/07 subsidies regarding acquisitions of tangible assets have been received, and there are no unfulfilled conditions regarding subsidies that have been received in the past. No contractual obligations regarding purchase of tangible assets exist.
The cash value of property in Denmark according to the most recent valuation is DKK 297.0 million (DKK 295.6 million in 2006/07). The cash value of property contains both land and buildings and investment property. The cost price for foreign property is DKK 139.1 million (DKK 99.5 million in 2006/07)
The assets under finance leases consist solely of trucks and cars that can be purchased by the end of the lease term at favourable prices. The lease arrangements do not impose any restrictions in the Group's rights of disposal.
| L | easehold | Tangible | ||||
|---|---|---|---|---|---|---|
| L | and and | Plant and | Other | improve- | assets in | |
| Parent company | buildings | machinery | equipment | ments | progress | Total |
| Cost price 1 June 2006 | 186.2 | 22.3 | 134.2 | 1.4 | 4.1 | 348.2 |
| Depreciations and impairment | ||||||
| losses 1 June 2006 | (95.2) | (11.1) | (102.3) | (1.2) | - | (209.8) |
| Carrying amount 1 June 2006 | 91.0 | 11.2 | 31.9 | 0.2 | 4.1 | 138.4 |
| Cost price 1 June 2006 | 186.2 | 22.3 | 134.2 | 1.4 | 4.1 | 348.2 |
| Transferred from investment property | 13.9 | - | - | - | - | 13.9 |
| Additions during the year | 1.1 | 0.1 | 6.3 | - | 0.5 | 8.0 |
| Completed assets | 1.8 | 0.3 | 0.9 | - | (3.7) | (0.7) |
| Disposals during the year | (1.7) | - | (7.8) | (0.1) | (0.3) | (9.9) |
| Cost price 31 May 2007 | 201.3 | 22.7 | 133.6 | 1.3 | 0.6 | 359.5 |
| Depreciations and impairment | ||||||
| losses 1 June 2006 | (95.2) | (11.1) | (102.3) | (1.2) | - | (209.8) |
| Transferred from investment property | (9.8) | - | - | - | - | (9.8) |
| Depreciations during the year | (8.2) | (1.8) | (11.8) | (0.1) | - | (21.9) |
| Reversed depreciations on disposals | ||||||
| during the year | 1.3 | - | 7.8 | 0.1 | - | 9.2 |
| Depreciations and impairment | ||||||
| losses 31 May 2007 | (111.9) | (12.9) | (106.3) | (1.2) | - | (232.3) |
| Carrying amount 31 May 2007 | 89.4 | 9.8 | 27.3 | 0.1 | 0.6 | 127.2 |
| Cost price 31 May 2007 | 201.3 | 22.7 | 133.6 | 1.3 | 0.6 | 359.5 |
| Depreciations and impairment | ||||||
| losses 31 May 2007 | (111.9) | (12.9) | (106.3) | (1.2) | - | (232.3) |
| Carrying amount 31 May 2007 | 89.4 | 9.8 | 27.3 | 0.1 | 0.6 | 127.2 |
| Of which assets under finance leases | - | - | - | - | - | - |
| L | easehold | Tangible | ||||
|---|---|---|---|---|---|---|
| L | and and | Plant and | Other | improve- | assets in | |
| Parent company | buildings | machinery | equipment | ments | progress | Total |
| Cost price 1 June 2007 | 201.3 | 22.7 | 133.6 | 1.3 | 0.6 | 359.5 |
| Additions during the year | 2.9 | 0.8 | 14.7 | - | 6.6 | 25.0 |
| Completed assets | - | - | 0.3 | - | (0.5) | (0.2) |
| Disposals during the year | (0.5) | (0.2) | (1.0) | - | - | (1.7) |
| Cost price 31 May 2008 | 203.7 | 23.3 | 147.6 | 1.3 | 6.7 | 382.6 |
| Depreciations and impairment | ||||||
| losses 1 June 2007 | (111.9) | (12.9) | (106.3) | (1.2) | - | (232.3) |
| Depreciations during the year | (8.1) | (1.8) | (11.4) | - | - | (21.3) |
| Reversed depreciations on disposals | ||||||
| during the year | - | 0.2 | 1.0 | - | - | 1.2 |
| Depreciations and impairment | ||||||
| losses 31 May 2008 | (120.0) | (14.5) | (116.7) | (1.2) | - | (252.4) |
| Carrying amount 31 May 2008 | 83.7 | 8.8 | 30.9 | 0.1 | 6.7 | 130.2 |
| Cost price 31 May 2008 | 203.7 | 23.3 | 147.6 | 1.3 | 6.7 | 382.6 |
| Depreciations and impairment | ||||||
| losses 31 May 2008 | (120.0) | (14.5) | (116.7) | (1.2) | - | (252.4) |
| Carrying amount 31 May 2008 | 83.7 | 8.8 | 30.9 | 0.1 | 6.7 | 130.2 |
| Of which assets under finance leases | - | - | - | - | - | - |
Neither in 2007/08 nor 2006/07 subsidies regarding acquisitions of tangible assets have been received, and there are no unfulfilled conditions regarding subsidies that have been received in the past. No contractual obligations regarding purchase of tangible assets exist.
The cash value of property in Denmark according to the most recent valuation is DKK 243.0 million (DKK 241.6 million in 2006/07). The cash value of property contains both land and buildings and investment property.
| Group | Parent company | ||||
|---|---|---|---|---|---|
| (DKK million) | 2007/08 | 2006/07 | 2007/08 | 2006/07 | |
| Notes 14 |
Investment property | ||||
| Cost price 1 June | 80.3 | 1.3 | 181.1 | 196.2 | |
| Depreciations and impairment losses 1 June | (23.9) | (0.6) | (102.7) | (108.8) | |
| Carrying amount 1 June | (56.4) | 0.7 | 78.4 | 87.4 | |
| Cost price 1 June | 80.3 | 1.3 | 181.1 | 196.2 | |
| Transferred to/from land and buildings | - | 79.0 | - | (13.9) | |
| Additions during the year | - | - | 1.9 | 3.1 | |
| Completed assets | - | - | 0.2 | 0.7 | |
| Disposals during the year | - | - | - | (5.0) | |
| Cost price 31 May | 80.3 | 80.3 | 183.2 | 181.1 | |
| Depreciations and impairment losses 1 June | (23.9) | (0.6) | (102.7) | (108.8) | |
| Transferred to/from land and buildings | - | (19.5) | - | 9.8 | |
| Depreciations during the year | (3.6) | (3.8) | (7.3) | (7.7) | |
| Reversed depreciations on disposals during the year | - | - | - | 4.0 | |
| Depreciations and impairment losses 31 May | (27.5) | (23.9) | (110.0) | (102.7) | |
| Carrying amount 31 May | 52.8 | 56.4 | 73.2 | 78.4 | |
| Cost price 31 May | 80.3 | 80.3 | 183.2 | 181.1 | |
| Depreciations and impairment losses 31 May | (27.5) | (23.9) | (110.0) | (102.7) | |
| Carrying amount 31 May | 52.8 | 56.4 | 73.2 | 78.4 | |
The Group's investment property is a house that is used only for rental, and the property that is used by the associated company Bang & Olufsen Medicom a/s. Some of the parent company's buildings are investment property, since these are owned solely for rental to the other companies in the Group.
All investment property is situated in Struer and is used for production, storage and offices. Due to the location of the investment property it is not possible to estimate the fair value of the property, since the fair value is completely dependent on the companies in the Group's continued use of the property. Furthermore it is not possible to establish a range of estimates within which the fair value of the investment property is most likely to be. Independent valuers have not been used.
No contractual obligations to purchase, construct or develop investment property exist. Furthermore no contractual obligations regarding repairs, maintenance or enhancements of the investment property exist.
Rental income from the investment property of DKK 5.1 million have been received in 2007/08 (DKK 1.6 million in 2006/07). In the same period the direct operating expenses regarding the investment property that generated rental income were DKK 3.9 million (DKK 0.9 million in 2006/07). The properties are leased on contracts with a remaining duration of 36 months. According to the existing leases a rental income of DKK 5.2 million will be received in 2008/09.
In 2007/08 DKK 42.9 million have been received in rental income from the investment property (DKK 42.8 million in 2006/07). In the same period the direct operating expenses regarding the investment property that generated rental income were DKK 18.1 million (DKK 20.8 million in 2006/07).
The parent company's investment property is rented to the subsidiaries on operating lease agreements with a lease term of 3 months. According to the existing operating lease agreements the parent company will receive a rental income of DKK 12.2 million in the 3 months, which are included in the agreements' lease term.
Notes ...
The impairment loss on goodwill (DKK 2.4 million) has been recognized in the English subsidiary in connection with the purchase of 2 shops.
No impairment losses on completed development projects have been recognized in 2007/08 or 2006/07.
The determination of the recoverable amount of the intangible assets is based on the estimated value in use of the assets. The value in use is calculated based on all expected future cash flows from the assets according to the budgets approved by management, and a discount rate before tax of 10 %.
No impairment losses on completed development projects have been recognized in 2007/08 or 2006/07.
The determination of the recoverable amount of the development projects is based on the estimated value in use of the projects. The value in use is calculated based on all expected future cash flows from the projects according to the budgets approved by management, and a discount rate before tax of 10 %.
In 2007/08 no impairment losses on tangible assets have been recognized (DKK 3.0 million in 2006/07).
The impairment loss in 2006/07 was recognized in connection with the purchase of 5 shops in Germany in May 2007, so that the purchased assets were measured at expected sales price.
No impairment losses on tangible assets have been recognized in 2007/08 or 2006/07.
No impairment losses on financial assets have been recognized in 2007/08 or 2006/07.
No impairment losses on financial assets have been recognized in 2007/08 or 2006/07.
| Group | Parent company | ||||
|---|---|---|---|---|---|
| (DKK million) | 2007/08 | 2006/07 | 2007/08 | 2006/07 | |
| Notes 16 |
Investments in subsidiaries | ||||
| Cost price 1 June | 722.6 | 728.2 | |||
| Additions during the year | 0.2 | - | |||
| Disposals during the year Cost price 31 May |
- 722.8 |
(5.6) 722.6 |
|||
| For a list of subsidiaries please refer to note 46. | |||||
| 17 | Investments in associates | ||||
| Cost price 1 June | 19.0 | 17.0 | 2.0 | - | |
| Additions during the year, transferred investment | - | 2.0 | - | 2.0 | |
| Cost price 31 May | 19.0 | 19.0 | 2.0 | 2.0 | |
| Value adjustment 1 June Recognition of transferred investment in |
(3.2) | (11.0) | |||
| Bang & Olufsen Medicom a/s at intrinsic value | - | 8.4 | |||
| Equity adjustments in associates | - | 0.5 | |||
| Net result for the year after tax | (11.2) | (1.1) | |||
| Negative investment offset against receivable | 1.7 | - | |||
| Value adjustment 31 May | (12.7) | (3.2) | |||
| Carrying amount 31 May | 6.3 | 15.8 | 2.0 | 2.0 | |
Bang & Olufsen's share
| Name and registered office | Owners share |
Total assets |
Total liabilities |
Share capital |
Equity | Result for the year |
Equity | Result for the year |
|---|---|---|---|---|---|---|---|---|
| Bang & Olufsen Medicom a/s, Struer | 35 % | 9.1 | 13.9 | 8.0 | (4.8) | (31.9) | (1.7) | (11.2) |
| John Bjerrum Nielsen A/S, Bramming | 33 % | 45.0 | 26.1 | 10.0 | 18.9 | - | 6.3 | - |
| Group | Parent company | ||||||
|---|---|---|---|---|---|---|---|
| Notes | (DKK million) | 2007/08 | 2006/07 | 2007/08 | 2006/07 | ||
| 18 | Other financial receivables | ||||||
| Other financial receivables (gross) 1 June | 105.4 | 50.6 | 0.2 | - | |||
| Exchange rate adjustment to year-end rate | (7.7) | (0.4) | - | - | |||
| Movements during the year | (28.0) | 55.2 | 2.8 | 0.2 | |||
| Other financial receivables (gross) 31 May | 69.7 | 105.4 | 3.0 | 0.2 | |||
| Write-down for expected losses 1 June | (17.2) | (14.2) | - | - | |||
| Exchange rate adjustment to year-end rate | 0.7 | 0.1 | - | - | |||
| Change in write-down during the year | (18.4) | (5.4) | - | - | |||
| Actual losses during the year | 17.2 | 2.3 | - | - | |||
| Write-down for expected losses 31 May | (17.7) | (17.2) | - | - | |||
| Other financial receivables (net) 31 May | 52.0 | 88.2 | 3.0 | 0.2 |
The write-down of other financial receivables is recognized in the profit and loss account as part of distribution and marketing costs. The write-down is based on an individual assessment of the creditworthiness of each individual debtor. The Group and Parent company has no overdue other financial receivables, for which no write-down has been recognized.
The fair value of other financial receivables in the Group amounts to DKK 49.6 million (DKK 87.8 million in 2006/07). The fair value in the parent company amounts to DKK 2.0 million (DKK 0.2 million in 2006/07). The fair value has been calculated based on the present value of the future expected cash flow from the receivables.
| Non- | U | nused | |||||
|---|---|---|---|---|---|---|---|
| current | Inven- | tax | |||||
| Group | assets | tories Receivables | Provisions | losses | Other | Total | |
| Deferred tax assets 1 June 2006 | 7.2 | 0.3 | 4.0 | 10.8 | 6.5 | - | 28.8 |
| Recognized in the profit and loss account | (3.5) | (0.1) | (2.5) | 1.0 | (2.8) | 0.3 | (7.6) |
| Deferred tax assets 31 May 2007 | 3.7 | 0.2 | 1.5 | 11.8 | 3.7 | 0.3 | 21.2 |
| Exchange rate adjustment to year-end rate | 0.1 | - | - | - | - | - | 0.1 |
| Recognized in the profit and loss account | (0.2) | 0.5 | 4.6 | 0.3 | (3.7) | (0.1) | 1.4 |
| Deferred tax assets 31 May 2008 | 3.6 | 0.7 | 6.1 | 12.1 | - | 0.2 | 22.7 |
Deferred tax assets relate to the subsidiaries in Denmark, Norway, Sweden, Germany, the UK, Belgium, France, Italy, Spain and Singapore. Deferred tax assets have been calculated based on local tax rates. Deferred tax assets relating to the subsidiary in the US have not been recognized in 2007/08. In 2006/07 deferred tax assets relating to the subsidiary in the US and the Australian subsidiary in New Zealand were not recognized. The unrecognized deferred tax assets amount to DKK 79.1 million (DKK 92.5 million in 2006/07). The basis for the unrecognized deferred tax assets is tax losses of DKK 141.8 million (DKK 237.3 million in 2006/07). The taxlosses can be carried forward for a peroid of 1-20 years.
| Group | Parent company | ||||
|---|---|---|---|---|---|
| Notes | (DKK million) | 2007/08 | 2006/07 | 2007/08 | 2006/07 |
| 20 | Inventories | ||||
| Raw materials | 124.1 | 147.2 | - | - | |
| Work in progress | 40.0 | 40.4 | - | - | |
| Spare parts | 166.4 | 142.3 | - | - | |
| Finished goods | 470.9 | 364.4 | 1.4 | 0.4 | |
| Inventories 31 May | 801.4 | 694.3 | 1.4 | 0.4 | |
| The following amounts of the carrying amount are | |||||
| expected to be realised after more than 12 months: | |||||
| Spare parts | 96.4 | 75.9 | - | - | |
| Inventories 31 May | 96.4 | 75.9 | - | - |
The reason, why a large part of the spare parts is expected to be realised after 12 months, is due to the fact that it is the Group's policy to be able to make repairs to products for up to 12 years after the products are sold.
| Carrying amount of inventories carried at | ||||
|---|---|---|---|---|
| net realisable value | 0.7 | - | - | - |
| Stock consumption recognized as part of production costs during the year |
1,754.3 | 1,870.4 | 0.1 | - |
| Write-down of inventories recognized as part of production costs during the year |
23.1 | 21.0 | - | - |
| Reversal of write-down of inventories recognized as part of production costs during the year |
17.5 | 14.8 | - | - |
The reversal of write-down of inventories during the year has taken place due to the fact that sales of the inventories, which were written-down, exceeded the expected. The reversal of write-down of inventories last year took place due to the same circumstances.
| Group | Parent company | |||
|---|---|---|---|---|
| (DKK million) | 2007/08 | 2006/07 | 2007/08 | 2006/07 |
| Trade receivables | ||||
| Trade receivables (gross) 31 May | 662.5 | 786.7 | - | - |
| Write-down for expected losses 1 June | (52.9) | (56.4) | - | - |
| Exchange rate adjustment to year-end rate | 2.7 | 0.8 | - | - |
| Change in write-down during the year | (30.5) | (11.7) | - | - |
| Actual losses during the year | 11.2 | 14.4 | - | - |
| Write-down for expected losses 31 May | (69.5) | (52.9) | - | - |
| Trade receivables (net) 31 May | 593.0 | 733.8 | - | - |
All trade receivables fall due within 1 year.
The write-down of trade receivables is recognized in the profit and loss account as part of distribution and marketing costs. The write-down is based on an individual assessment of the creditworthiness of each individual debtor. The Group and the Parent company have no overdue trade receivables, for which no write-down has been recognized.
The fair value of trade receivables in the Group amounts to DKK 593.0 million (DKK 733.8 million in 2006/07), while the fair value in the parent company amounts to DKK 0.0 million (DKK 0.0 million in 2006/07). The carrying amount of receivables that fall due within one year is expected to be a reasonable approximation of the fair value.
Receivables from subsidiaries (net) 31 May 921.4 255.2
All receivables from subsidiaries fall due within 1 year.
There has been no need for write-down of receivables from subsidiaries.
The fair value of receivables from subsidiaries amounts to DKK 921.4 million (DKK 255.2 million in 2006/07). The carrying amount of receivables that fall due within one year is expected to be a reasonable approximation of the fair value.
| Receivables from associates (net) 31 May | 2.1 | 8.5 | - | 1.8 |
|---|---|---|---|---|
| Negative investment offset against receivable | (1.7) | - | - | - |
| Transferred to payables to associates | (0.4) | - | - | - |
| Receivables from associates (net) 31 May | - | 8.5 | - | 1.8 |
All receivables from associates fall due within 1 year.
There has been no need for write-down of receivables from associates.
The fair value of receivables from associates in the Group amounts to DKK 0.0 million (DKK 8.5 million in 2006/07). The fair value of receivables from associates in the parent company amounts to DKK 0.0 million (DKK 1.8 million in 2006/07). The carrying amount of receivables that fall due within 1 year is expected to be a reasonable approximation of the fair value.
| Group | Parent company | ||||
|---|---|---|---|---|---|
| Notes | (DKK million) | 2007/08 | 2006/07 | 2007/08 | 2006/07 |
| 24 | Income tax receivable | ||||
| Income tax receivable 1 June | 27.0 | 16.6 | 28.4 | 14.8 | |
| Exchange rate adjustment to year-end rate | (0.4) | (0.1) | - | - | |
| Adjustment previous years | (1.6) | (0.1) | (16.2) | (2.2) | |
| The year's current tax incl. jointly taxed subsidiaries | 1.0 | - | 29.6 | 5.5 | |
| Change in tax rate | - | - | (0.6) | - | |
| Income tax paid during the year | 29.7 | 17.0 | - | 10.3 | |
| Income tax refunded during the year | (2.5) | (1.6) | (32.0) | - | |
| Transferred to income tax payable | (13.5) | (4.8) | - | - | |
| Income tax receivable 31 May | 39.7 | 27.0 | 9.2 | 28.4 | |
DKK 0.0 million of the income tax receivable in the Group is expected to be received after 1 year (DKK 0.0 million in 2006/07). DKK 0.0 million of the income tax receivable in the parent company is expected to be received after 1 year (DKK 0.0 million in 2006/07).
| Value added tax receivable | 17.5 | 3.5 | 9.8 | - |
|---|---|---|---|---|
| Other receivables | 21.4 | 26.5 | 2.8 | 3.3 |
| Other receivables 31 May | 38.9 | 30.0 | 12.6 | 3.3 |
All other receivables fall due within 1 year.
There has been no need for write-down of other receivables.
The fair value of other receivables in the Group amounts to DKK 38.9 million (DKK 30.0 million in 2006/07), while the fair value in the parent company amounts to DKK 12.6 million (DKK 3.3 million in 2006/07). The carrying amount of receivables that fall due within one year is expected to be a reasonable approximation of the fair value.
As at 31 May, 2007, the share capital comprises: 1,085,543 ordinary shares of DKK 10.00
| 1,085,543 ordinary shares of DKK 10.00 | ||||
|---|---|---|---|---|
| (multiple voting shares) | 10.8 | 10.8 | 10.8 | 10.8 |
| 10,995,795 ordinary shares of DKK 10.00 | 110.0 | 110.0 | 110.8 | 110.0 |
| 120.8 | 120.8 | 120.8 | 120.8 | |
Each ordinary share (multiple voting share) of DKK 10.00 gives 10 votes, while each ordinary share of DKK 10.00 gives 1 vote.
| Number of ordinary shares (multiple voting shares) 1 June | 1,085,543 | 1,119,910 | 1.085.543 | 1,119,910 |
|---|---|---|---|---|
| Annulment of shares | - | (34,367) | - | (34,367) |
| Number of ordinary shares (multiple voting shares) 31 May | 1,085,543 | 1,085,543 | 1.085.543 | 1,085,543 |
| Number of ordinary shares 1 June | 10,995,795 | 11,331,015 | 10,995,795 | 11,331,015 |
| Annulment of shares | (335,220) | - | (335,220) | |
| Number of ordinary shares 31 May | 10,995,795 | 10,995,795 | 10,995,795 | 10,995,795 |
| Group | Parent company | |||||
|---|---|---|---|---|---|---|
| (DKK million) | 2007/08 | 2006/07 | 2007/08 | 2006/07 | ||
| Notes 26 |
Share capital (continued) | |||||
| Number of own shares: | ||||||
| Ordinary shares | 767,787 767,787 |
619,923 619,923 |
767,787 767,787 |
619,923 619,923 |
||
| Nominal value in DKK million % of share capital, year-end |
7.7 6.4 |
6.2 5.1 |
7.7 6.4 |
6.2 5.1 |
261,900 of the Group's own shares (ordinary shares) are reserved for the coverage of the share option programme, cf. note 5. There are no other reservations regarding the Group's own shares.
| Acquisitions during the year: | ||||
|---|---|---|---|---|
| Number of shares | 164,893 | 389,085 | 164,893 | 389,085 |
| Nominal value in DKK million | 1.6 | 3.9 | 1.6 | 3.9 |
| % of share capital, year-end | 1.4 | 3.2 | 1.4 | 3.2 |
| Total acquisition sum DKK million | 100.2 | 271.3 | 100.2 | 271.3 |
The acquisitions were undertaken in accordance with the authority from the Annual General Meeting to purchase own shares with the purpose of subsequent capital reductions and the coverage of the share option programme.
| 20,029 | 69,162 | 20,029 | 69,162 |
|---|---|---|---|
| 0.2 | 0.7 | 0.2 | 0.7 |
| 0.1 | 0.6 | 0.1 | 0.6 |
| 1.6 | 18.5 | 1.6 | 18.5 |
In 2007/08 20,029 own ordinary shares were used (69,162 in 2006/07). Of these 3,000 were used for share based programmes and 17,029 have been granted as employee shares (in 2006/07 51,429 were used for share based programmes and 17,733 were granted as employee shares).
In the 2006/07 financial year, on 1 February, 2007, the company made a capital reduction and consequently annulled 34,367 own ordinary shares (multiple voting shares) and 335,220 own ordinary shares.
In the 2007/08 financial year DKK 241.6 million have been paid as dividend corresponding to DKK 20.00 per share (DKK 199.2 million corresponding to DKK 16.00 per share in 2006/07). On the Annual General Meeting 26 September 2008 a dividend for the financial year 2007/08 of DKK 36.2 million corresponding to DKK 3.00 per share will be proposed. This proposed dividend is not incorporated in the annual report.
| Balance 1 June | 6.0 | 4.1 |
|---|---|---|
| Transfer to minority interests | 2.4 | - |
| Minority interests' share of result for the year | 7.6 | 5.1 |
| Dividend paid | (6.1) | (1.0) |
| Option for minority interest | 2.2 | (2.2) |
| Balance 31 May | 12.1 | 6.0 |
In defined contribution plans Bang & Olufsen recognizes the premium payments (e.g. a fixed amount or a fixed percentage of the salary) for independent insurance companies, which are responsible for the pension obligations in the profit and loss account. Once the pension contributions for defined contribution plans have been paid, Bang & Olufsen has no further pension obligations to current or past employees. The pension plans in the Danish and the majority of the foreign companies are all defined contribution plans.
In the Group DKK 38.8 million (DKK 50.0 million in 2006/07) have been recognized in the profit and loss account as costs related to defined contribution plans. In the parent company DKK 20.2 million (DKK 19.9 million in 2006/07) have been recognized as costs related to defined contribution plans.
In defined benefit plans Bang & Olufsen is obliged to pay a certain benefit (e.g. retirement benefit as a fixed sum of the final salary). In defined benefit plans Bang & Olufsen carries the risk, since changes to the calculation basis result in changes in the actuarially calculated capital value.
The major defined benefit plans in the Group include employees in Germany and Norway. In the Group a net obligation of DKK 8.3 million (DKK 8.6 million in 2006/07) has been recognized relating to the Group's obligations to current or past employees concerning defined benefit plans. The obligation is calculated after deduction of the plan assets. The parent company has no defined benefit plans.
In the Group DKK 0.7 million (DKK 1.2 million in 2006/07) have been recognized in the profit and loss account regarding defined benefit plans. The gain of DKK 6.5 million obtained in connection with the settlement of the defined benefit plan in Holland was added to the amount in 2006/07. In total, a net income of DKK 5.3 million was recognized in 2006/07 in the Group financial statement regarding defined benefit plans.
| Group | ||
|---|---|---|
| 2007/08 | 2006/07 | |
| Present value of defined benefit obligation | 29.0 | 28.1 |
| Fair value of the plan assets | (20.3) | (18.1) |
| Unrecognized actuarial gains and losses | (0.4) | (1.4) |
| Defined benefit plans 31 May, net | 8.3 | 8.6 |
| Of which included as part of the liabilities | 9.5 | 9.7 |
| Of which included as part of the assets | (1.2) | (1.1) |
| Development in the present value of the defined benefit obligation: |
||
| Present value of the defined benefit obligation 1 June | 28.1 | 56.8 |
| Exchange rate adjustment to year-end rate | 0.2 | (0.4) |
| Contribution regarding the current year | 1.3 | 0.8 |
| Interest costs | 1.3 | 1.0 |
| Actuarial gains and losses | (1.6) | (0.2) |
| Settlement of defined benefit plan | - | (29.7) |
| Benefits paid | (0.3) | (0.2) |
| Present value of the defined benefit obligation 31 May | 29.0 | 28.1 |
| Defined benefit obligation from plans that are wholly unfunded Defined benefit obligation from plans that |
4.1 | 4.0 |
| are wholly or partly funded | 24.9 | 24.1 |
| Group | Parent company | ||||||
|---|---|---|---|---|---|---|---|
| (DKK million) | 2007/08 | 2006/07 | 2007/08 | 2006/07 | |||
| Notes 29 |
Pensions (continued) | ||||||
| Development in the fair value of the plan assets regarding | |||||||
| defined benefit plans: | |||||||
| Fair value of the plan assets 1 June | 18.1 | 39.7 | |||||
| Exchange rate adjustment to year-end rate | 0.2 | (0.3) | |||||
| Expected return on plan assets | 0.9 | 0.8 | |||||
| Actuarial gains and losses | 0.5 | (0.8) | |||||
| Disposal of assets in connection with settlement of | |||||||
| defined benefit plan | - | (21.7) | |||||
| Administration costs | (0.1) | - | |||||
| Benefits paid | (0.1) | (0.1) | |||||
| Contributions by the employer | 0.8 | 0.5 | |||||
| Present value of the plan assets 31 May | 20.3 | 18.1 | |||||
| Amounts recognized in the profit and loss account: | |||||||
| Contribution regarding the current year | 1.3 | 0.8 | |||||
| Interest costs on the obligation | 1.3 | 1.0 | |||||
| Expected return on plan assets | (0.9) | (0.8) | |||||
| Recognized actuarial gains and losses | (1.1) | 0.2 | |||||
| Gain on settlement of defined benefit plan | - | (6.5) | |||||
| Administration costs | 0.1 | - | |||||
| Total amount recognized for defined benefit plans | 0.7 | (5.3) | |||||
| Total amount recognized for defined contribution plans | 38.8 | 50.0 | 20.2 | 19.9 | |||
| Total amounts recognized | |||||||
| in the profit and loss account, cf. note 5 | 39.5 | 44.7 | 20.2 | 19.9 | |||
| Actual return on plan assets regarding the | |||||||
| defined benefit plans | - | - | |||||
The defined benefit plan in Germany is partly funded in an independent pension fund. As at 31 May 2008, the actuarially calculated net obligation is recognized in the Group's balance sheet at DKK 4.8 million (DKK 5.7 million in 2006/07). The net obligation is calculated as the present value of the future payments of DKK 12.3 million (DKK 12.3 million in 2006/07) less the fair value of the pension fund´s assets DKK 7.5 million (DKK 7.1 million in 2006/07). The actuarial calculation is based on a calculation rate of 5.0 % p.a., an expected rate of salary increase of 2.0 % p.a. and an expected rate of return on plan assets of 4.0 % p.a. In the Group's profit and loss account the defined benefit plan is recognized as an income of DKK 0.7 million (an expense of DKK 0.5 million in 2006/07).
The defined benefit plan in Norway is also partly funded in an independent pension fund. As at 31 May 2008 the actuarially calculated net receivable is recognized in the Group's balance sheet at DKK 1.2 million (DKK 1.1 million in 2006/07). The net receivable is calculated as the fair value of the plan assets of DKK 8.9 million (DKK 7.7 million in 2006/07) less the present value of the future payments of DKK 9.5 million (DKK 7.8 million in 2006/07) and added unrecognized actuarial losses of DKK 0.6 million (DKK 1.2 million in 2006/07). The actuarial calculation is based on a calculation rate of 5.0 % p.a., an expected rate of salary increase of 3.0 % p.a. and an expected rate of return on plan assets of 6.0 % p.a. In the Group's profit and loss account the defined benefit plan is recognized as an expense of DKK 0.6 million (DKK 0.4 million in 2006/07).
As of 1 October, 2006 the Dutch company entered into defined contribution plans with the employees. In this connection the defined benefit plans were settled for all employees with the exception of two.
| Non- | Share | ||||||
|---|---|---|---|---|---|---|---|
| current | Inven- | Receiv- | based | ||||
| Group | assets | tories | ables | Provisions | payment | Other | Total |
| Deferred tax 1 June 2006 | 77.8 | 2.0 | (0.3) | 6.5 | (8.6) | (0.7) | 63.7 |
| Disposal of activity | 0.8 | - | - | - | - | - | 0.8 |
| Recognized in the profit and loss account | 6.9 | (1.7) | (8.1) | 0.8 | 4.7 | 0.7 | 3.3 |
| Deferred tax 31 May 2007 | 85.5 | 0.3 | (8.4) | (5.7) | (3.9) | - | 67.8 |
| Exchange rate adjustment to year-end rate | (0.3) | - | - | - | - | - | (0.3) |
| Recognized in the profit and loss account | (22.8) | 7.5 | 14.6 | (7.2) | (2.2) | 0.7 | (9.4) |
| Recognized in equity | - | - | - | - | 6.1 | - | 6.1 |
| Deferred tax 31 May 2008 | 62.4 | 7.8 | 6.2 | (12.9) | - | 0.7 | 64.2 |
| Parent company | |||||||
| Deferred tax 31 May 2006 | 74.3 | 0.1 | - | (1.5) | (8.6) | (1.6) | 62.7 |
| Recognized in the profit and loss account | 10.8 | (0.1) | - | (0.1) | 4.7 | 1.6 | 16.9 |
| Deferred tax 31 May 2007 | 85.1 | - | - | (1.6) | (3.9) | - | 79.6 |
| Recognized in the profit and loss account | (11.9) | - | - | 1.1 | (2.2) | - | (13.0) |
| Recognized in equity | - | - | - | - | 6.1 | - | 6.1 |
| Deferred tax 31 May 2008 | 73.2 | - | - | (0.5) | - | - | 72.7 |
Deferred tax has been calculated based on local tax rates.
Notes ...
Provisions 31 ...
| Jubilee- | Other | ||||
|---|---|---|---|---|---|
| Group | Warranty | Fairness | benefits | obligations | Total |
| Provisions 1 June 2006 | 68.4 | 34.1 | 15.2 | 5.3 | 123.0 |
| Exchange rate adjustment to year-end rate | (0.4) | (0.3) | (0.1) | - | (0.8) |
| Provisions during the year | 62.9 | 4.1 | 1.4 | 3.1 | 71.5 |
| Provisions used during the year | (46.7) | (9.3) | (1.0) | - | (57.0) |
| Provisions reversed during the year | (0.2) | (3.8) | (2.9) | - | (6.9) |
| Provisions reversed at sale of Bang & Olufsen Medicom a/s | (0.2) | - | (0.5) | - | (0.7) |
| Change in the calculation of present value during the year | - | 0.7 | 0.5 | - | 1.2 |
| Provisions 31 May 2007 | 83.8 | 25.5 | 12.6 | 8.4 | 130.3 |
| Exchange rate adjustment to year-end rate | (1.1) | (0.8) | - | (0.7) | (2.6) |
| Provisions during the year | 42.9 | 10.1 | 1.7 | 2.0 | 56.7 |
| Provisions used during the year | (43.8) | (7.2) | (1.1) | (0.7) | (52.8) |
| Provisions reversed during the year | (5.4) | (1.0) | (3.6) | - | (10.0) |
| Change in the calculation of present value during the year | 0.8 | 0.7 | 0.3 | (0.1) | 1.7 |
| Provisions 31 May 2008 | 77.2 | 27.3 | 9.9 | 8.9 | 123.2 |
| The expected due dates of the provisions | |||||
| as at 31 May 2007 are as follows: | |||||
| Falls due 1 - 5 years | 59.5 | 17.8 | 3.5 | 7.3 | 88.1 |
| Falls due after 5 years | - | 0.1 | 8.3 | 0.5 | 8.9 |
| Non-current provisions | 59.5 | 17.9 | 11.8 | 7.8 | 97.0 |
| Falls due within 1 year | 24.3 | 7.6 | 0.8 | 0.6 | 33.3 |
| Provisions 31 May 2007 | 83.8 | 25.5 | 12.6 | 8.4 | 130.3 |
| The expected due dates of the provisions | |||||
| as at 31 May 2008 are as follows: | |||||
| Falls due 1 - 5 years | 41.2 | 18.3 | 3.1 | 8.2 | 70.8 |
| Falls due after 5 years | - | 0.1 | 5.8 | 0.6 | 6.5 |
| Non-current provisions | 41.2 | 18.4 | 8.9 | 8.8 | 77.3 |
| Falls due within 1 year | 36.0 | 8.9 | 1.0 | 0.1 | 46.0 |
| Provisions 31 May 2008 | 77.2 | 27.3 | 9.9 | 8.9 | 123.3 |
| Jubilee | ||
|---|---|---|
| Parent Company | benefits | Total |
| Provisions 1 June 2006 | 4.8 | 4.8 |
| Provisions during the year | 0.5 | 0.5 |
| Provisions used during the year | (0.2) | (0.2) |
| Provisions reversed during the year | (0.8) | (0.8) |
| Change in the calculation of present value during the year | 0.2 | 0.2 |
| Provisions 31 May 2007 | 4.5 | 4.5 |
| Provisions during the year | 0.6 | 0.6 |
| Provisions used during the year | (0.3) | (0.3) |
| Provisions reversed during the year | (1.5) | (1.5) |
| Change in the calculation of present value during the year | 0.1 | 0.1 |
| Provisions 31 May 2008 | 3.4 | 3.4 |
| The expected due dates of the provisions as at 31 May 2007 are as follows: Falls due 1 - 5 years Falls due after 5 years Non-current provisions Falls due within 1 year Provisions 31 May 2007 |
1.4 2.9 4.3 0.2 4.5 |
1.4 2.9 4.3 0.2 4.5 |
| The expected due dates of the provisions as at 31 May 2008 are as follows: Falls due 1 - 5 years Falls due after 5 years Non-current provisions Falls due within 1 year |
1.3 1.8 3.1 0.3 |
1.3 1.8 3.1 0.3 |
| Provisions 31 May 2008 | 3.4 | 3.4 |
The company gives 2 - 5 years warranty on certain products and thereby undertakes the liability to repair or replace products, which do not function satisfactorily. Some products are repaired after the end of the warranty period, and a provision regarding this fairness is recognized.
Provisions of DKK 104.5 million (DKK 109.3 million in 2006/07) regarding expected warranty and fairness claims have been recognized. The provisions are based on previous experience relating to the level of repair and returned goods. The specification of the expected due dates is based on previous experience regarding the timing of claims and returns, if any.
No reimbursements will be received regarding the provisions.
Notes ...
| Falls due | Falls due | Falls due | Falls due after | |
|---|---|---|---|---|
| Group | within 1 year | 1 - 5 years | after 5 years | 1 year total |
| Financial liabilities: | ||||
| Fixed rate loans, interest rate level 5.8 - 6.4 % | 6.9 | 14.0 | 184.5 | 198.5 |
| Fixed rate loans, interest rate level 4.0 - 5.0 % | 1.6 | 6.5 | 30.7 | 37.2 |
| Carrying amount 31 May 2008 | 8.5 | 20.5 | 215.2 | 235.7 |
| Fixed rate loans, interest rate level 5.8 - 6.4 % | 4.4 | 6.6 | - | 6.6 |
| Fixed rate loans, interest rate level 4.0 - 5.0 % | 9.6 | 38.2 | 48.6 | 86.8 |
| Carrying amount 31 May 2007 | 14.0 | 44.8 | 48.6 | 93.4 |
| Parent company | ||||
| Financial liabilities: | ||||
| Fixed rate loans, interest rate level 5.8 - 6.4 % | 6.9 | 14.0 | 184.5 | 198.5 |
| Carrying amount 31 May 2008 | 6.9 | 14.0 | 184.5 | 198.5 |
| Fixed rate loans, interest rate level 5.8 - 6.4 % | 4.4 | 6.6 | - | 6.6 |
| Fixed rate loans, interest rate level 4.0 - 5.0 % | 8.0 | 32.0 | 16.0 | 48.0 |
| Carrying amount 31 May 2007 | 12.4 | 38.6 | 16.0 | 54.6 |
The fair value of the current and non-current financial liabilities, mortgage loans in the Group amounts to DKK 242.2 million (DKK 105.6 million in 2006/07), while the fair value in the parent company amounts to DKK 206.0 million (DKK 67.0 million in 2006/07). The fair value is calculated as the present value of the expected future interest and capital repayments.
| Falls due | Falls due | Falls due | Falls due after | |
|---|---|---|---|---|
| Group | within 1 year | 1 - 5 years | after 5 years | 1 year, total |
| Financial liabilities: | ||||
| Fixed rate loans, interest rate level 5.8 - 6.4 % | 25.0 | 12.5 | - | 12.5 |
| Fixed rate loans, interest rate level 4.0 - 5.0 % | 17.9 | 66.2 | 22.4 | 88.6 |
| Carrying amount 31 May 2008 | 42.9 | 78.7 | 22.4 | 101.1 |
| Fixed rate loans, interest rate level 5.8 - 6.4 % | 25.0 | 37.5 | - | 37.5 |
| Fixed rate loans, interest rate level 4.0 - 5.0 % | 7.4 | 29.9 | 29.7 | 59.6 |
| Carrying amount 31 May 2007 | 32.4 | 67.4 | 29.7 | 97.1 |
| Parent company | ||||
| Financial liabilities: | ||||
| Fixed rate loans, interest rate level 5.8 - 6.4 % | 25.0 | 12.5 | - | 12.5 |
| Fixed rate loans, interest rate level 4.0 - 5.0 % | 10.4 | 36.4 | - | 36.4 |
| Carrying amount 31 May 2008 | 35.4 | 48.9 | - | 48.9 |
| Fixed rate loans, interest rate level 5.8 - 6.4 % | 25.0 | 37.5 | - | 37.5 |
| Carrying amount 31 May 2007 | 25.0 | 37.5 | - | 37.5 |
The fair value of the current and non-current financial liabilities, loans from banks etc. in the Group amounts to DKK 144.0 million (DKK 129.5 million in 2006/07), while the fair value in the parent company amounts to DKK 84.3 million (DKK 62.5 million in 2006/07).
The fair value is calculated as the present value of the expected future interest and capital repayments.
Liabilities regarding finance leases are recognized in loans from banks etc. as follows:
| Group | Falls due within 1 year |
Falls due 1 - 5 years |
Total |
|---|---|---|---|
| Carrying amount 31 May 2008 | - | - | - |
| Carrying amount 31 May 2007 | 0.4 | 0.2 | 0.6 |
| Parent company | |||
| Carrying amount 31 May 2008 | - | - | - |
| Carrying amount 31 May 2007 | - | - | - |
Neither in the Group nor in the parent company contingent leases have been recognized as an expense in 2007/08 or 2006/07.
None of the assets under finance leases have been subleased. Thus, at the balance sheet date, no non-cancellable subleases regarding assets under finance leases, from which sublease payments are received, exist in the Group or in the parent company.
The fair value of liabilities regarding assets under finance leases corresponds to the carrying amount. The fair value is estimated to be the present value of the expected future cash flow at a market interest rate for similar leases.
| Falls due | Falls due after | |
|---|---|---|
| Group | 1 - 5 years | 1 year, total |
| Accrued deposit | 3.0 | 3.0 |
| Other non-current liabilities | 3.6 | 3.6 |
| Carrying amount 31 May 2008 | 6.6 | 6.6 |
| Accrued deposit | 2.4 | 2.4 |
| Other non-current liabilities | 3.7 | 3.7 |
| Carrying amount 31 May 2007 | 6.1 | 6.1 |
| Falls due | Falls due after | |
| Parent company | 1 - 5 years | 1 year, total |
| Other non-current liabilities | 3.4 | 3.4 |
| Carrying amount 31 May 2008 | 3.4 | 3.4 |
| Other non-current liabilities | 3.4 | 3.4 |
| Carrying amount 31 May 2007 | 3.4 | 3.4 |
The fair value of other non-current liabilities in the Group amounts to DKK 5.7 million (DKK 4.9 million in 2006/07), while the fair value in the parent company amounts to DKK 2.9 million (DKK 2.7 million in 2006/07).
The fair value is calculated as the present value of the expected future interest and capital repayments.
| Group | Parent company | ||||
|---|---|---|---|---|---|
| Notes | (DKK million) | 2007/08 | 2006/07 | 2007/08 | 2006/07 |
| 35 | Income tax | ||||
| Accrued income tax 1 June | 122.3 | 78.3 | - | - | |
| Exchange rate adjustment to year-end rate | (0.8) | (0.1) | - | - | |
| Corrections | 0.4 | - | - | - | |
| Adjustment previous years | (18.7) | (3.1) | - | - | |
| The year's current tax incl. jointly taxed subsidiaries | 69.7 | 139.7 | - | - | |
| Income tax paid during the year | (93.1) | (87.4) | - | - | |
| Other | - | (0.3) | - | - | |
| Transferred to income tax receivable | (13.5) | (4.8) | - | - | |
| Accrued income tax 31 May | 66.3 | 122.3 | - | - | |
DKK 0.0 million of the accrued income tax in the Group is expected to be paid after 1 year (DKK 0.0 million in 2006/07). DKK 0.0 million of the accrued income tax in the parent company is expected to be paid after 1 year (DKK 0.0 million in 2006/07).
| Payroll-related items | 143.1 | 118.3 | 55.3 | 37.0 |
|---|---|---|---|---|
| Taxes and duties | 39.7 | 48.0 | - | 33.7 |
| Phantom shares | 0.2 | 1.9 | 0.2 | 1.9 |
| Other payables | 137.0 | 188.0 | 42.4 | 46.6 |
| Other payables, total | 320.0 | 356.2 | 97.9 | 119. 2 |
All other payables fall due within one year.
The fair value of other payables in the Group amounts to DKK 320.0 million (DKK 356.2 million in 2006/07), while the fair value in the parent company amounts to DKK 97.9 million (DKK 119.2 million in 2006/07).
The carrying amount of payables that fall due within one year is expected to be a reasonable approximation of the fair value.
| (DKK million) | Group | Parent company | |||
|---|---|---|---|---|---|
| Notes 37 |
Adjustments | 2007/08 | 2006/07 | 2007/08 | 2006/07 |
| Change in liabilities | (6.7) | 4.5 | (1.1) | (0.3) | |
| Financial income etc. | (20.0) | (15.7) | (59.0) | (44.1) | |
| Financial costs etc. | 49.8 | 31.7 | 36.1 | 25.3 | |
| Share of associates' result after tax | 11.2 | 1.1 | |||
| Gain on sale of non-current assets | - | - | 0.5 | 1.2 | |
| Gain on disposal of activities | - | (11.5) | - | (27.1) | |
| Tax on result for the year | 41.4 | 151.9 | (25.8) | 13.5 | |
| Various adjustments | 16.9 | 0.6 | 21.4 | 12.8 | |
| Adjustments, total | 92.6 | 162.6 | (27.9) | (18.7) | |
| 38 | Change in working capital | ||||
| Change in receivables | 131.9 | (93.2) | (674.8) | (94.8) | |
| Change in inventories | (107.1) | (131.4) | (1.0) | (0.2) | |
| Change in accounts payables etc. | (47.0) | 82.4 | (6.3) | 36.9 | |
| Change in working capital, total | (22.2) | (142.2) | (682.1) | (58.1) | |
| 39 | Acquisitions of activities | ||||
| In 2006/07 Bang & Olufsen a/s acquired a development | |||||
| activity in Estonia. The effect of the acquisition is immaterial to the Group's financial statement. |
|||||
| 40 | Disposal of activities | ||||
| (Sale of 65 % of the shares in Bang & Olufsen Medicom a/s) | |||||
| Tangible non-current assets | - | 7.9 | - | - | |
| Financial non-current assets | - | 2.2 | - | 3.6 | |
| Inventories | - | 4.5 | - | - | |
| Receivables | - | 27.4 | - | 2.0 | |
| Non-current liabilities | - | (0.4) | - | - | |
| Current liabilities | - - |
(20.4) 21.2 |
- - |
- 5.6 |
|
| Gain on disposal | - | 11.5 | - | 27.1 | |
| Addition to cash and cash equivalents | - | 32.7 | - | 32.7 | |
| 41 | Cash and cash equivalents | ||||
| Cash and cash equivalents consists of: | |||||
| Cash | 107.1 | 196.4 | 5.3 | 5.3 | |
| Other bank loans | (53.7) | (39.5) | (53.6) | (39.2) | |
| Cash and cash equivalents 31 May | 53.4 | 156.9 | (48.3) | (33.9) |
There are no restrictions in the Group's or the parent company's use of cash and cash equivalents.
| (DKK million) | Group | Parent company | |||
|---|---|---|---|---|---|
| Notes 42 |
Fees to the auditors, elected at the Annual General Meeting |
2007/08 | 2006/07 | 2007/08 | 2006/07 |
| Statutory audit: Deloitte Statutory audit, total |
4.3 4.3 |
4.1 4.1 |
0.5 0.5 |
0.5 0.5 |
|
| Other services: Deloitte Other services, total Fees to the auditors, |
1.9 1.9 |
1.3 1.3 |
0.4 0.4 |
0.4 0.4 |
|
| elected at the Annual General Meeting, total | 6.2 | 5.4 | 0.9 | 0.9 |
The Group and the parent company have entered into a number of operating leases and rental agreements regarding plant and machinery, shops and other property. There is a big diversity in the length of the agreements. The longest agreement runs for 6 years. All agreements contain conditions regarding renewal. The Group and the parent company are entitled to determine, whether or not the agreements are renewed. None of the agreements cause limitations in the Group's or the parents company's rights of disposal.
| Leasing commitments relating to plant and machinery etc. | 41.6 | 35.4 | 26.7 | 18.8 |
|---|---|---|---|---|
| Leasing commitments relating to establishment of shops | 185.8 | 185.6 | - | - |
| Leasing commitments relating to office and factory property | 108.1 | 45.8 | 64.2 | 6.3 |
| Total | 335.5 | 266.8 | 90.9 | 25.1 |
| Which can be specified as follows: | ||||
| for payment within 1 year | 75.9 | 68.8 | 18.5 | 13.0 |
| for payment between 1 and 5 years | 179.6 | 159.1 | 42.2 | 12.1 |
| for payment after 5 years | 80.0 | 38.9 | 30.2 | - |
| Total | 335.5 | 266.8 | 90.9 | 25.1 |
| Rental and leasing costs for the year | 78.5 | 70.6 | 26.4 | 21.4 |
| Of which minimum rent and lease payments | 78.5 | 70.6 | 26.4 | 21.4 |
| Expected future income from non-cancellable | ||||
| sublease agreements, total | 6.3 | 6.6 | - | - |
Neither in the Group nor in the parent company contingent rent or lease payments have been recognized in the profit and loss account in 2007/08 or 2006/07.
In connection with the establishment of shops in previous financial years, the Group has entered into a number of long-tem rental agreements. The agreements include conditions concerning the right to sublet. As at the balance sheet date neither the Group nor the Parent company have entered into any non-cancellable lease agreements.
| Group | Parent company | |||||
|---|---|---|---|---|---|---|
| Notes 43 |
(DKK million) Contingent liabilities and other financial commitments (continued) |
2007/08 | 2006/07 | 2007/08 | 2006/07 | |
| b | Guarantees Total guarantees as at 31 May |
24.7 | 18.0 | 7.9 | 2.6 | |
| Of which regarding subsidiaries | 0.3 | 0.3 | - | - | ||
| Of which regarding associates | 5.2 | - | 5.2 | - |
None of the guarantees are expected to result in any losses.
Bang & Olufsen Operations a/s has issued letters of intent to the subsidiaries in the US and Japan.
The Danish companies in the Group share common registration and are jointly and severally liable for VAT and other taxes.
Security of DKK 185.8 million (DKK 185.8 million as at 31 May 2007) has been given in land and buildings and investment property for the Group's mortgage and bank debt of DKK 388.2 million (DKK 236.9 million as at 31 May 2007). Security of DKK 142.0 million (DKK 142.0 million as at 31 May 2007) has been given in land and buildings and investment property for the parent company's mortgage and bank debt of DKK 289.7 million (DKK 129.5 million as at 31 May 2007). Other tangible non-current assets related to the land and buildings and investment property are included in the security. The carrying amount of the Group's land and buildings and investment property is DKK 207.9 million (DKK 221.1 million as at 31 May 2007), while the carrying amount in the parent company is DKK 155.6 million (DKK 167.8 million as at 31 May 2007). No intangible non-current assets are pledge as security for liabilities. No financial assets are pledge as security for liabilities.
In security of all receivables and payables with Danske Bank a statement has been made, that no shares in the subsidiaries of Bang & Olufsen a/s can be sold or pledged as security without the consent of the bank.
In security of Bang & Olufsen Ejendomme a/s' mortgage loan of DKK 40.0 million (DKK 41.6 million in 2006/07) a statement has been made to Nykredit Realkredit a/s, that the shares in Bang & Olufsen Ejendomme a/s at all times must remain 100 % owned of Bang & Olufsen a/s.
The loan of initially DKK 74.5 million from Danske Bank to Bang & Olufsen s.r.o, with a remaining debt of DKK 59.7 million as of 31 May 2008 (DKK 67.0 as at 31 May 2007) includes a clause stating, that the loan can be called for, if a shareholder obtains controlling influence in Bang & Olufsen a/s.
The companies in the Group are parties to a few ongoing lawsuits. It is the assessment of the Management, that the outcome of the lawsuits will not influence the Group's financial position. No further information is given regarding the awsuits, as further information might harm the Group.
The extent and type of the Group's and parent company's financial instruments are given in the profit and loss account, balance sheet and notes in accordance with the accounting principles applied. Information regarding conditions that can affect amount, dates of payment or reliability of future payments, where such information is not directly evident from the consolidated or the parent company's financial statements, or follows from common practice, is given below.
| 2007/08 | 2006/07 | ||||||
|---|---|---|---|---|---|---|---|
| Currency | Payment/maturity | Assets | Liabilities | Net | Assets | Liabilities | Net |
| EUR | 0-12 months | 456.9 | 158.3 | 298.6 | 500.3 | 178.1 | 322.2 |
| > 12 months | 21.2 | 7.8 | 13.4 | 31.9 | 3.8 | 28.1 | |
| GBP | 0-12 months | 111.5 | 30.7 | 80.8 | 125.9 | 34.6 | 91.3 |
| > 12 months | 9.2 | - | 9.2 | 44.7 | - | 44.7 | |
| SEK | 0-12 months | 18.6 | 6.9 | 11.7 | 48.5 | 11.7 | 36.8 |
| > 12 months | 1.9 | - | 1.9 | - | - | - | |
| JPY | 0-12 months | 9.1 | 1.9 | 7.2 | 16.2 | 2.3 | 13.9 |
| > 12 months | - | 0.2 | (0.2) | - | - | - | |
| CHF | 0-12 months | 29.5 | 5.7 | 23.8 | 55.8 | 6.7 | 49.1 |
| > 12 months | - | 0.1 | (0.1) | - | - | - | |
| USD | 0-12 months | 64.0 | 29.2 | 34.8 | 96.2 | 51.5 | 44.7 |
| > 12 months | 3.1 | 2.2 | 0.9 | 12.9 | 3.0 | 9.9 | |
| CZK | 0-12 months | 6.1 | 42.0 | (35.9) | 9.4 | 26.9 | (17.5) |
| > 12 months | 5.3 | 52.2 | (46.9) | 3.2 | 59.6 | (56.4) | |
| SGD | 0-12 months | 24.3 | 3.1 | 21.2 | 33.1 | 4.8 | 28.3 |
| > 12 months | 0.1 | 0.1 | - | 0.3 | - | 0.3 | |
| AUD | 0-12 months | 21.3 | 13.3 | 8.0 | 20.3 | 16.1 | 4.2 |
| > 12 months | - | 2.0 | (2.0) | - | - | - | |
| Other | 0-12 months | 14.2 | 6.0 | 8.2 | 23.5 | 5.7 | 17.8 |
| > 12 months | 7.5 | - | 7.5 | 4.1 | - | 4.1 |
Monetary items* in the balance sheet of the parent company as at 31 May translated to DKK:
| 2007/08 | 2006/07 | ||||||
|---|---|---|---|---|---|---|---|
| Currency | Payment/maturity | Assets | Liabilities | Net | Assets | Liabilities | Net |
| EUR | 0-12 months | 48.3 | 18.7 | 29.6 | 27.9 | 6.4 | 21.5 |
| GBP | 0-12 months | - | 0.1 | (0.1) | 15.7 | 0.1 | 15.6 |
| SEK | 0-12 months | 1.1 | 0.2 | 0.9 | - | 0.6 | (0.6) |
| JPY | 0-12 months | - | - | - | - | 0.1 | (0.1) |
| CHF | 0-12 months | 0.5 | - | 0.5 | 8.3 | - | 8.3 |
| USD | 0-12 months | 10.6 | 3.2 | 7.4 | 4.5 | 1.9 | 2.6 |
| CZK | 0-12 months | 10.6 | - | 10.6 | 1.7 | - | 1.7 |
| SGD | 0-12 months | - | - | - | 5.7 | - | 5.7 |
| AUD | 0-12 months | - | - | - | 0.2 | - | 0.2 |
| Other | 0-12 months | 1.2 | 0.3 | 0.9 | - | 1.6 | (1.6) |
* Monetary items are cash and cash equivalents etc., receivables and payables, which are settled in cash.
| Group | Parent company | |||
|---|---|---|---|---|
| 2007/08 | 2006/07 | 2007/08 | 2006/07 | |
| Other financial receivables | 52.0 | 88.2 | 3.0 | 0.2 |
| Trade receivables | 593.0 | 733.8 | - | - |
| Receivables from subsidiaries | 921.4 | 255.2 | ||
| Receivables from associates | - | 8.5 | - | 1.8 |
| Other receivables | 38.9 | 30.0 | 12.6 | 3.3 |
| Cash | 107.1 | 196.4 | 5.3 | 5.3 |
| Loans and receivables | 791.0 | 1,056.9 | 942.3 | 265.8 |
| Other non-current liabilities | 6.6 | 6.1 | 3.4 | 3.4 |
| Mortgage loans | 244.2 | 107.4 | 205.4 | 67.0 |
| Loans from banks etc. | 197.7 | 169.0 | 137.9 | 101.7 |
| Trade payables | 216.0 | 213.7 | 49.7 | 34.7 |
| Payables to associates | 1.8 | - | 0.1 | - |
| Other payables | 320.0 | 356.2 | 97.9 | 119.2 |
| Financial liabilities measured at amortised costs | 986.3 | 852.4 | 494.4 | 326.0 |
There are no material forward contracts in the Group and the parent company as at 31 May, 2008. There were no material forward contracts in the Group and the parent company as at 31 May, 2007.
No related parties have controlling influence over the Bang & Olufsen Group or Bang & Olufsen a/s.
The related parties that have significant influence in Bang & Olufsen a/s, are the board of directors, the board of management and certain other key management personnel and the close family members of these persons. Related parties also include companies in which these persons have significant interests.
The related parties that have significant influence in the Bang & Olufsen Group, are the board of directors, the board of management and certain other key management personnel in Bang & Olufsen a/s and certain members of the board of management and other key management personnel in other companies in the Group, and the close family members of these persons. Related parties also include companies in which these persons have significant interests.
The related parties in Bang & Olufsen a/s also comprise the companies in which the company have a controlling interest, cf. note 46.
The related parties in Bang & Olufsen a/s and the Bang & Olufsen Group also comprise the associated companies, Bang & Olufsen Medicom a/s and John Bjerrum Nielsen A/S, in which Bang & Olufsen a/s has significant influence, cf. note 17.
Bang & Olufsen's share in the subsidiaries and associates are shown in note 46.
Except from what results from the employment and shareholdings, if any, there have been no transactions with the board of directors, the board of management and other key management personnel. Remuneration and share option programmes are listed in note 5.
The transactions with the subsidiaries and the associates have included the following:
| Group | Parent company | |||
|---|---|---|---|---|
| 2007/08 | 2006/07 | 2007/08 | 2006/07 | |
| Purchase of raw materials from associates | 42.7 | 47.9 | - | - |
| Rendering of services from associates | 1.0 | 0.6 | - | - |
| Rental income from associates | 4.8 | 1.3 | - | - |
| Rendering of services and subsidies to associates | 4.2 | 3.4 | 4.2 | 3.4 |
| Rendering of services from subsidiaries | 88.4 | 68.9 | ||
| Rendering of services to subsidiaries | 255.8 | 234.8 | ||
| Royalty income from subsidiaries | 580.0 | 642.8 | ||
| Rental income from subsidiaries | 82.0 | 78.0 | ||
The transactions with the subsidiaries have been eliminated in the consolidated financial statements in accordance with the accounting principles applied.
Bang & Olufsen a/s' and the Bang & Olufsen Group's outstanding balances with the subsidiaries and the associates appear from the balance sheet. The outstanding balances yield interest. The interest charged on the outstanding balances is shown in notes 7 and 8. The terms of payment on the outstanding accounts regarding purchase of goods are current month + 30 days. There are no securities regarding the outstanding balances, and there have been no need for write-downs of the outstanding balances. Furthermore, there have been no actual losses regarding the outstanding balances in 2007/08 or 2006/07.
Bang & Olufsen a/s has received DKK 916.5 million as dividend from the subsidiaries (DKK 189.0 million in 2006/07). No dividend has been received from the associates in 2007/08 (DKK 0.0 million in 2006/07).
Bang & Olufsen a/s has issued guarantees for the related parties, cf. note 43 b. None of the guarantees are expected to result in any losses.
Besides this, there have been no transactions with the related parties.
| Number of not |
|||||
|---|---|---|---|---|---|
| Bang & Olufsen | |||||
| Share capital | Group's | disclosed | |||
| Company name | Place of registration | Currency | local currency | share | subsidiaries |
| Branded business | |||||
| Bang & Olufsen a/s | Struer, DK | DKK | 124,509,250 | 100 % | |
| Bang & Olufsen Operations a/s | Struer, DK | DKK | 155,000,000 | 100 % | |
| Scandinavia | |||||
| Bang & Olufsen Danmark a/s | Copenhagen, DK | DKK | 3,000,000 | 100 % | |
| Bang & Olufsen AS | Oslo, N | NOK | 3,000,000 | 100 % | |
| Bang & Olufsen Svenska AB | Stockholm, S | SEK | 4,150,000 | 100 % | |
| Central Europe | |||||
| Bang & Olufsen Deutschland G.m.b.H. | Munich, D | EUR | 1,022,584 | 100 % | 3 |
| Bang & Olufsen AG | Bassersdorf, CH | CHF | 200,000 | 100 % | |
| Bang & Olufsen Ges. m.b.H | Tulin, A | EUR | 1,744,148 | 100 % | |
| United Kingdom/Benelux | |||||
| Bang & Olufsen United Kingdom Ltd. | Berkshire, GB | GBP | 2,600,000 | 100 % | 2 |
| S.A. Bang & Olufsen Belgium N.V. | Wemmel, B | EUR | 942,000 | 100 % | |
| Bang & Olufsen b.v. | Hilversum, N | EUR | 18,000 | 100 % | |
| Rest of Europe | |||||
| Bang & Olufsen France S.A. | Levallois-Perret, F | EUR | 3,585,000 | 100 % | 1 |
| Bang & Olufsen España S.A. | Madrid, E | EUR | 1,803,036 | 100 % | 2 |
| Bang & Olufsen Italia S.p.A. | Milan, I | EUR | 774,000 | 100 % | |
| North America | |||||
| Bang & Olufsen America Inc. | Arlington Heights, USA USD | 34,000,000 | 100 % | 3 | |
| Asia | |||||
| Bang & Olufsen Japan K. K. | Tokyo, JP | JPY | 100,000,000 | 100 % | |
| Bang & Olufsen Asia Pte Ltd. | Singapore, SG | SGD | 2 | 100 % | |
| Bang & Olufsen Wholesale Pty Ltd. H | awthorn, AUS | AUD | 1,500,001 | 100 % | 3 |
| Middle East | |||||
| Bang & Olufsen Middle East FZ-LLC | Dubai, UAE | EUR | 113,116 | 100 % | |
| Other | |||||
| Bang & Olufsen Expansion a/s | Struer, DK | DKK | 7,000,000 | 100 % | |
| Bang & Olufsen s.r.o | Koprivnice, CZ | CZK | 187,800,000 | 100 % | 1 |
| Bang & Olufsen Telecom a/s | Struer, DK | DKK | 23,900,000 | 100 % | |
| Bang & Olufsen Ejendomme a/s | Struer, DK | DKK | 1,000,000 | 100 % | |
| OÜ BO-Soft | Tallin, EE | EEK | 40,000 | 51 % | |
| Bang & Olufsen GPS Taiwan | Taipei, TW | TWD | 1,000,000 | 100 % | |
| Non-branded business | |||||
| Bang & Olufsen ICEpower a/s* | Lyngby-Tårbæk, DK | DKK | 1,939,750 | 90 % | 3 |
| Associates | |||||
| John Bjerrum Nielsen A/S | Bramming, DK | DKK | 10,000,000 | 33 % | |
| Bang & Olufsen Medicom a/s** | Struer, DK | DKK | 8,000,000 | 35 % |
Dormant companies have not been included.
* As of 1 June 2008 Bang & Olufsen a/s has acquired the remaining 10% shares in Bang & Olufsen ICEpower a/s.
** Bang & Olufsen Medicom a/s is recognized as an associate from 1 March 2007.
Printing: datagraf a/s
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