Annual
Report
2022
Demant A/S
Kongebakken 9
2765 Smørum
Denmark
CVR no. 71186911
1 January – 31 December 2022
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Key figures and financial ratios
Demant – Annual Report 2022 1
Insights and highlights
CEO letter 4
This is Demant 6
Purpose and strategy 7
Sustainability 9
Highlights in 2022 12
2022 in brief 13
Group financial review 15
Outlook 23
Our business
Hearing Healthcare 25
Hearing Aids 28
Hearing Care 31
Diagnostics 33
Communications 35
EPOS 36
Corporate information
Shareholder information 40
William Demant Foundation 43
Risk management activities 44
Corporate governance 48
Executive Board 51
Board of Directors 52
Financial report
Management statement 55
Independent auditor’s report 56
Consolidated financial statements 60
Notes to consolidated financial
statements 66
Parent financial statements 122
Contents
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Key figures and financial ratios
Demant – Annual Report 2022 2
(DKK million)
2022 2021 2020 2019 2018
Balance sheet
Total assets
29,857 24,860 21,927 21,798 17,935
Net interest
-bearing debt (NIBD) 12,711 9,150 7,135 8,185 5,835
Equity
8,562 7,981 8,279 7,645 7,059
Cash flow
statement
Adjusted cash flow from operating
activities (CFFO)²
2,622 3,593 2,710 2,149 1,765
Cash flow from operating activities
(CFFO)
2,622 3,593 2,621 2,149 1,683
Investment in property, plant and
equipment, net
630 547 493 561 409
Free cash flow
1,617 2,838 2,023 1,338 1,185
Share buy
-backs 1,840 3,200 197 946 1,751
Other key figures
Gearing multiple
(NIBD/EBITDA) 2.9 1.9 2.8 2.6 2.0
Earnings per share (EPS), DKK
-
continuing operations
10.06 11.48 4.68 6.00 7.32
Earnings per share (EPS)
9.21 10.70 4.68 6.00 7.32
Free cash flow per share (FCFPS)
7.15 12.09 8.44 5.49 4.76
Share price, end of
period 192.55 335.10 240.60 209.80 184.90
Average number of shares
outstanding
226.01 234.82 239.78 243.55 249.14
Average number of employees
19,239 16,866 16,155 15,352 14,250
Scope 1 & 2 CO2e emissions (tonnes)³
31,349 30,813 24,634 26,514 24,811
CEO remuneration ratio
39 38 35 34 32
Gender diversity, Board of Directors
(women/men)⁴
40/60% 40/60% 40/60% 20/80% 20/80%
Gender diversity, all managers
(women/men)
44/56% 43/57% 42/58% 41/59% 37/63%
Gender diversity, top level management
(women/men)⁵
23/77% 22/78% - - -
Gender diversity, top level management
teams (on/off target)⁵
71/29% 65/35% - - -
As a consequence of the planned divestment of the Hearing
Implants business, comparative figures for 2021 in the income state-
ment and cash flow statement as well as related key figures and financial ratios excluding organic growth have been restated.
Key figures and financial ratios – year
(DKK million)
2022 2021 2020 2019 2018
Hearing Healthcare
Revenue
18,645 16,722 13,163 14,946 13,937
Organic growth
5% 31% -13% 4% 7%
Gross margin
76.1% 77.1% 73.6% 75.8% 77.4%
Operating profit (EBIT)
3,443 3,626 1,211 2,085 2,428
EBIT margin
18.5% 21.7% 9.2% 14.0% 17.4%
Communications
Revenue
1,060 1,183 1,306 - -
Organic growth
-13% -9% - - -
Gross margin
45.0% 48.3% 50.3% - -
Operating profit (EBIT)¹
-236 -122 102 66 104
EBIT margin
-22.3% -10.3% 7.8% - -
Group
Income statement
Revenue
19,705 17,905 14,469 14,946 13,937
Organic growth
4% 27% -13% 4% 7%
Gross margin
74.4% 75.2% 70.4% 75.8% 77.4%
EBITDA
4,383 4,730 2,578 3,110 2,978
EBITDA margin
22.2% 26.4% 17.8% 20.8% 21.4%
Adjusted EBIT²
3,207 3,504 1,313 2,151 2,652
Adjusted EBIT margin²
16.3% 19.6% 9.1% 14.4% 19.0%
Operating profit (EBIT)
3,207 3,663 1,530 2,151 2,532
EBIT margin
16.3% 20.5% 10.6% 14.4% 18.2%
Net financial items
-280 -202 -194 -240 -164
Profit after tax
- continuing operations 2,276 2,711 1,134 1,467 1,830
Profit after tax
- discontinued operations -192 -183 - - -
Profit for the year
2,084 2,528 1,134 1,467 1,830
1
EBIT for Communications in 2017-2019 relates to the Group’s share of profit after tax from our former joint venture Sennheiser
Communications.
2
Adjusted for costs related to the 2018 restructuring programme, EPOS one-offs in 2020 and one-offs in 2021.
3
The newly acquired Hearing Care retail chain Sheng Wang has not yet been integrated into our emissions reporting for 2022.
4
Shareholder-elected members.
5
No available data for the period 2018-2020.
We refer to section 9.1 for a description of the accounting policies for key figures and financial ratios.
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Key figures and financial ratios
Demant – Annual Report 2022 3
(DKK million)
H2
2022
H1
2022
H2
2021
H1
2021
H2
2020
H1
2020
Balance sheet
Total assets
29,857
27,335 24,860 23,579 21,927 22,067
Net interest
-bearing debt
(NIBD)
12,711
10,986 9,150 8,573 7,135 8,388
Equity
8,562
8,184 7,981 7,796 8,279 7,449
Cash flow statement
Adjusted cash flow from
operating activities (CFFO)**
1,707
915 2,000 1,593 1,944 766
Cash flow from operating
activities (CFFO)
1,707
915 2,000 1,593 1,892 729
Investment in property, plant
and equipment, net
329
301 340 207 251 242
Free cash flow
1,219
398 1,522 1,316 1,534 489
Share buy
-backs 533
1,307 1,387 1,813 - 197
Other key figures
Gearing multiple
(NIBD/EBITDA)
2.9
2.4 1.9 1.8 2.8 3.9
Earnings per share (EPS),
DKK
- continuing operations 4.99
5.07 6.40 5.08 4.18 0.50
Earnings per share (EPS)
4.61
4.60 5.76 4.94 4.18 0.50
Free cash flow per share
(FCFPS)
5.40
1.75 6.55 5.54 6.40 2.04
Share price, end of period
192.55
266.30 335.10 353.00 240.60 174.90
Average number of shares
outstanding
224.06
227.98 232.59 237.66 239.78 239.90
Average number of
employees
20,349
18,130 17,161 16,572 16,203 16,107
Scope 1 & 2 CO2e emissions
(tonnes)³ ⁵
14,938
16,411 - - - -
Gender diversity, Board of
Directors (women/men)⁴ ⁵
40/60%
40/60% - - - -
Gender diversity, all
managers
(women/men)⁵ 44/56%
44/56% - - - -
As a consequence of the planned divestment of the Hearing Implant
s business, comparative figures for 2021 in the income state-
ment and cash flow statement as well as related key figures and financial ratios excl
uding organic growth have been restated.
We refer to section 9.1 for a description of the accounting policies for key figures and financial ratios.
Key figures and financial ratios – half-year
(DKK million)
H2
2022
H1
2022
H2
2021
H1
2021
H2
2020
H1
2020
Hearing Healthcare
Revenue
9,700
8,945 8,597 8,125 7,631 5,532
Organic growth
5%
6% 14% 55% 2% -27%
Gross margin
75.9%
76.4% 77.6% 76.6% 74.5% 72.3%
Operating profit (EBIT)
1,748
1,695 1,908 1,718 1,425 -214
EBIT margin
18.0%
18.9% 22.2% 21.1% 18.7% -3.9%
Communications
Revenue
508
552 562 621 760 546
Organic growth
-13%
-14% -27% 16% - -
Gross margin
43.9%
45.9% 48.2% 48.3% 52.9% 46.7%
Operating profit (EBIT)¹
-129
-107 -78 -44 81 21
EBIT margin
-25.4%
-19.3% -13.9% -7.1% 10.7% 3.8%
Group
Income statement
Revenue
10,208
9,497 9,159 8,746 8,391 6,078
Organic growth
3%
4% 10% 51% 2% -27%
Adjusted gross margin²
74.3%
74.6% 75.8% 74.5% 72.5% 70.0%
Gross margin
74.3%
74.6% 75.8% 74.5% 72.1% 68.2%
EBITDA
2,255
2,128 2,543 2,187 1,949 629
EBITDA
margin 22.1%
22.4% 27.8% 25.0% 23.2% 10.3%
Adjusted EBIT²
1,619
1,588 1,830 1,674 1,506 -193
Adjusted EBIT margin²
15.9%
16.7% 20.0% 19.1% 17.9% -3.2%
Operating profit (EBIT)
1,619
1,588 1,989 1,674 1,416 114
EBIT margin
15.9%
16.7% 21.7% 19.1% 16.9% 1.9%
Net financial items
-185
-95 -101 -101 -106 -88
Profit after tax
- continuing
operations
1,118
1,157 1,495 1,216 1,013 121
Profit after tax
- discontin-
ued operations
-84
-107 -150 -33 - -
Profit for the period
1,035
1,050 1,345 1,183 1,013 121
1
EBIT for Communications in 2017-2019 relates to the Group’s share of profit after tax from our former joint venture Sennheiser
Communications.
2
Adjusted for costs related to the 2018 restructuring programme, EPOS one-offs in 2020 and one-offs in 2021.
3
The newly acquired Hearing Care retail chain Sheng Wang has not yet been integrated into our emissions reporting for 2022.
4
Shareholder-elected members.
5
No available data for the period 2020-2021.
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CEO letter
Demant – Annual Report 2022 4
The year started on a high note: After a
strong and solid 2021, we had every rea-
son to have high expectations for 2022.
Most of the world opened again, the recov-
ery after coronavirus took off, which made
it possible for us to travel and meet each
other again after almost two years of iso-
lation, and seeing our customers, share-
holders and employees in real life again
has been one of the highlights of the year.
Our company is also driven by people’s in-
teraction. To communicate, to interact with
people and to listen to each other are cru-
cial elements in all our hearing healthcare
and communication solutions that enable
individuals to interact freely with the sur-
rounding world.
Market share gains
Early in the year, the good momentum lost
pace. Global stability, which companies
normally rely on, suffered further under the
war in Ukraine and under the macroeco-
nomic uncertainty and declining consumer
confidence that followed. Unfortunately,
this uncertainty had an impact on our re-
sults, as both industries in which we oper-
ate – hearing healthcare and audio tech-
nology – were negatively impacted, albeit
to varying degrees.
Given the difficult hearing healthcare mar-
ket, we did well. Our core Hearing Health-
care segment grew, and our Diagnostics
and Hearing Aids business areas both
gained market shares. Even with the global
challenges, we showed a unique ability to
mitigate disruptions to our supply chain,
and our set-up with proximity to the mar-
ket and the customers has proven valuable.
As great as 2021 was for our Diagnostics
business area, 2022 shaped up to be even
better. The results speak for themselves,
and one of the underlying mechanisms
driving the good performance has been
our work in training and education in diag-
nostic methods and hearing treatment.
Paradigm-shifting technology
Time and again, we have proven that our
technology is unique and life-changing for
our users. With our balance equipment, we
diagnose and provide treatment for vertigo
and thus offer people suffering from dizzi-
ness rehabilitation and thus the possibility
to live a normal life.
In Hearing Aids, our innovative audiology
platform continues to set new standards,
accentuated by the open sound landscape
– the hearing aids give access to the whole
sound image even in noisy environments –
which is still a “user first choice”. Our cus-
tomers have benefitted from it year after
year, not least with the latest hearing aid
platform, which was expanded in 2022 by
a complete line of custom in-the-ear de-
vices. In a highly competitive hearing aid
market, our Hearing Aids business area
has done well, and we remain committed
to continuing to improve our products with
paradigm-setting technology.
CEO letter
There is no single, exhaustive headline that describes 2022. We went
into the year full of optimism
and with an ambitious plan, and once
again
, we experienced first-hand how our ability to adapt to global
changes
is crucial for the continuous operation and development of
our company.
Despite headwind from a challenging macroeconomic
environment
and supply chain situation, we delivered top-line growth
of
10%, which is less than originally expected, but still a solid perfor-
mance
under tough conditions and indeed a testament to the strength
of our
organisation, people and culture.
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CEO letter
Demant – Annual Report 2022 5
Data create insight
When we talk about our core technology,
we do it with a great deal of confidence,
but what can we say will be next? In our
new families of premium hearing aids,
which will be launched shortly, we will
go one step further and offer the optimal
sound image for hearing aid users by re-
ducing sudden disruptive sounds and in
doing so making the open sound hearing
experience more comfortable, focused and
sharp. A key technological theme is how
we use data to gain insight and under-
standing, and – more importantly – how
we use such data to improve the treat-
ment of hearing loss and nudge users
to get the most out of their solutions.
Difficult market conditions
In Communications, our premium solutions
are also built on state-of-the-art technol-
ogy, and we continue our R&D efforts even
in a tough year. We have been impacted
by a challenged supply chain and a signifi-
cantly challenged gaming market, which is
why this part of our business did not live
up to the growth expectations we commu-
nicated at the beginning of the year. How-
ever, we remain dedicated to developing
EPOS and helping it prosper in enterprise
and gaming solutions.
Growth and expansion have also been im-
portant themes for our Hearing Care busi-
ness area in the past year despite weak
market conditions and overall performance
for the year below our expectations. On the
positive side, we have taken an important
strategic step in China with the acquisition
of the Sheng Wang chain. In a country
where the hearing healthcare infrastruc-
ture is still at an early stage, Demant's
hearing healthcare businesses are now
well positioned for future growth in China,
which enables us to help even more people
hear better.
Decision to discontinue
In early 2022, we communicated our deci-
sion to discontinue our Hearing Implants
business area. Following a careful strate-
gic review, we concluded that becoming a
global leader in hearing implants by provid-
ing the best hearing implants for the bene-
fit of both patients and customers was no
longer achievable for us. While the Oticon
Medical divestment process continues into
2023, we insist on ensuring the best life-
long support for existing patients – now
and in the future.
Importance of personal care
A key topic in our industry this year has
been the approval by the US Food and
Drug Administration of the over-the-coun-
ter (OTC) category of hearing aids in the
US. While we fully support expanding the
access to hearing healthcare, we remain
convinced that the involvement of an ex-
pert between a person with hearing loss
and the appropriate treatment is the best
solution for treating hearing loss most effi-
ciently. We continue to analyse this market
in terms of value both for the user and for
Demant.
Transition to net zero
The world is full of technology that makes
everyday life better in a sustainable way –
in terms of both sustainable health solu-
tions and climate sustainability. In 2022,
we have taken an important step in the
global transition to net zero by integrating
our climate strategy into our business and
operations. We have launched projects
that support our reduction targets in all
scopes, and based on this, we have sub-
mitted our goals to halve our CO2 emis-
sions by 2030 and reach net zero by 2050
to the Science Based Target Initiative. In
2023, we welcome their validation.
An inclusive workplace
Diversity, equity and inclusion were other
important sustainability focus areas for us
in 2022. With new ambitions and goals,
mainly focusing on gender balance, we
have throughout the year taken actions to
create a workplace where everyone feels
that they belong, and for the entire Group,
we work with leadership training and on
identifying any processes that may stand
in the way of creating a diverse and inclu-
sive workplace.
Finally, I would like to take this opportunity
to say a heartfelt thank you to our custom-
ers, to our employees and to the share-
holders in Demant. Thank you for helping
us create life-changing hearing health in
2022. Despite a very dynamic business en-
vironment in the past year and no doubt
also in 2023, I see many reasons to look
towards 2023 with optimism.
Søren Nielsen
S
eeing our customers, shareholders and
employees in real life again has been one
of the highlights of the year.
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This is Demant
Demant – Annual Report 2022 6
Hearing Care
Through individualised counselling, care
and aftercare, our global network of clinics
provides hearing care by performing hear-
ing tests and fitting hearing aids to help
users get the right solution for their specific
hearing loss and to ensure that every user
benefits the most from their hearing aids.
Hearing Aids
Boasting the industry’s most advanced
centre of excellence for research in audiol-
ogy and hearing loss, Demant develops
state-of-the-art hearing aids. Covering all
ranges of hearing loss, we manufacture
and distribute hearing aids to hearing clin-
ics all over the world, including local ser-
vice, support and training.
Diagnostics
We develop, manufacture and market a
wide range of solutions and services for
hearing and balance assessment, includ-
ing instruments, consumables and installa-
tion. Our products and solutions are used
by and bring value to audiologists, ENT
(ear, nose and throat) doctors and
healthcare professionals.
Communications
Under the EPOS brand, we design, manu-
facture and sell groundbreaking high-end
audio and video solutions for business pro-
fessionals and gamers, including headsets,
speakerphones, video conferencing devices,
software and accessories.
Discontinued operations:
Hearing Implants
We announced in 2022 our decision to
discontinue the Hearing Implants business
area, while still offering our products and
services to patients: We thus provide
cochlear implants and bone anchored
hearing systems to patients facing the
hardest hearing challenges. Once surgi-
cally implanted, the implants provide life-
long hearing assistance.
This is Demant
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Purpose and strategy
Demant – Annual Report 2022 7
Purpose and strategy
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Purpose and strategy
We create life-changing
differences through
hearing health
The Demant Group is built on a her-
itage of care, health and innovation
since 1904. Our shared purpose is
to create life-changing differences
through hearing health.
With our innovative technologies
and services, we are let into peo-
ple’s lives and involved in some of
the most important aspects of life
by offering the possibility to be ac-
tively engaged without constraints.
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Purpose and strategy
Demant – Annual Report 2022 8
Our strategy
Our strategic ambition is to become the
world’s leading hearing healthcare com-
pany and to significantly expand our posi-
tion within the enterprise and gaming
headsets industry.
We are active in niche markets – with sev-
eral major players, intense competition and
a high level of innovation – that are ex-
pected to grow in the foreseeable future.
In these markets, our strategy is to operate
multiple businesses that share value-add-
ing synergies. To obtain the benefit of
economies of scale, our clear goal is to
grow faster than the underlying markets
with a view to winning market shares over
time through both organic and acquisitive
growth. To this end, we have defined an
overall ambition for the Demant Group and
specific ambitions for the individual busi-
ness areas.
As a Group, we have the size and scale
necessary to compete effectively, and each
of our business areas pursues its own
strategy in such a way that we ensure
a customer-centric approach, while lever-
aging synergies across the business.
We build on four enablers that are de-
signed to serve our purpose, deliver on
our ambitions and execute our strategy:
a well-founded operating model, a strong
organisation, focus on people and culture
and a strong commitment to sustainability:
Operating model
Our operating model ensures that we re-
main focused on excelling in the different
business areas, while – equally important
– harvesting synergies across the Group.
With a clear technology overlap between
the business areas, innovation is the core
of our operating model, and Demant will
continue to invest heavily in R&D and fo-
cus on value-adding collaboration across
the R&D functions of our individual busi-
ness areas.
With sales companies and distribution
channels all over the world, the Group
benefits from a strong global distribution
set-up that enables us to continuously in-
crease our reach to a variety of countries,
markets and customer segments. Each
business area is supported by a global
shared services set-up that provides a
strong infrastructure in the Group and
enables the business areas to exploit the
competitive advantages and economies of
scale that derive from being part of a large
Group.
Organisation
All our business areas have dedicated or-
ganisations to enable them to service their
individual markets, ensure a customer-
centric approach and execute their specific
strategic initiatives. The organisation and
operating model combined support a strong
collaboration culture across business areas.
People & culture
Our employees are our most valuable re-
source and key to executing our strategy.
The people and culture agenda is based
on a set of global focus areas and initia-
tives to create a diverse and inclusive cul-
ture. We strive for strong employee en-
gagement and fair opportunities for all,
and we believe that world-class
leadership is key to attracting and retain-
ing the brightest minds in the industry, in-
cluding leaders that do their utmost to cre-
ate engagement and an innovative work
environment.
Sustainability
Our core commitment to society is to help
people overcome their hearing loss and
thus improve their quality of life by provid-
ing innovative solutions. We believe that
this is what makes us a positive impact
company. Running a sustainable company
– environmentally, socially and financially
– is key to our long-term success, and we
proudly and with enthusiasm do our bit to
solve global challenges, while ensuring
sustainability in our operational practices.
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Sustainability
Demant – Annual Report 2022 9
Sustainability
Through life-changing hearing health, we contribute to building a more
sustainable world where all people have the opportunity to hear, actively
participate in life and be appreciated.
Today,
one in five people live with hearing loss and, due to an ageing
population
, this number is increasing. Testing your hearing is the first
step towards better hearing, but many hearing losses go
undetected.
If we can enable more people to hear better, we can give them a voice
and thus the opportunity to be part of soci
ety without constraints. We
empower
them to tune in to life and take an active part in their commu-
nity for the good of everyone.
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Sustainability
Our sustainability strategy
at a glance
Main priorities
Strategic sustainability
projects
Purpose and core
contribution
Life-changing differences
through hearing health
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Sustainability
Demant – Annual Report 2022 10
Sustainability reporting
The full Sustainability Report is available
on our website. Find it here
Sustainability highlights
In 2022, w
e continued to strengthen our sustainability performance.
Among the i
mportant milestones of the year were the advancements
we
made in our two main sustainability priorities: diversity, equity and
inclusion and
climate impact (see next page). The Group made progress
in all material areas of our strategy.
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Sustainability
Demant – Annual Report 2022 11
Sustainability highlights and targets
New Diversity, equity
and inclusion policy
and targets
Increase in women in
top-level management
Submission of targets
to the Science Based
Targets initiative
Roadmap for renewable
electricity
Relief Ukraine
employee fund
In 2022, the number of women in
Demant’s top-level management
increased by 1 percentage point
to 23%.
The number of management
teams with unbalanced team
composition was reduced from
35% to 29% in 2022.
In 2022, Demant submitted both
its short-term targets and its
net-zero target to the Science
Based Targets initiative, which
are currently awaiting validation.
Demant launched several Group-
wide projects in 2022 to meet
the ambitions in all scopes.
Analysing the Group’s electricity
consumption and the mechanisms
available in our largest markets,
we developed a Group roadmap
for renewable electricity to boost
the transition.
Alongside this transition, individual
sites and business areas are al-
ready working on reducing their
energy consumption as much as
possible.
William Demant Foundation allo-
cated DKK 9 million to humanitar-
ian aid in and outside Ukraine, in-
cluding a special fund for employ-
ees to support Ukrainian refugees
through humanitarian organisa-
tions of their choice. Many applica-
tions came from employees in Po-
land where the crisis is particularly
close to their daily lives.
DKK 2 million was distributed
among approx. 30 organisations,
supporting refugees with food,
shelters and hospital equipment
among many other things.
Group targets
Diversity, equity and inclusion Emissions Renewable electricity
2025
30% women in top-level
management
50% renewable electricity
75% of top-level management
teams have a maximum of 75%
of one gender
2030
Approx. 50% reduction in scope
1 and 2, expected similar reduc-
tion in scope 3
100% renewable electricity
2050
Net-zero emissions
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Highlights in 2022
Demant – Annual Report 2022 12
Less than 20% of Brits
with hearing difficulty
seek professional help
Demant expands the
Executive Board
Demant completes
acquisition of
Sheng Wang in China
Demant intends
to discontinue its Hear-
ing Implants business
Interacoustics
obtains recognised
environmental standard
certification
Demant establishes
new technology and
innovation centre in
Kuala Lumpur
Oticon introduces
world-class custom
hearing aids
TVR Chair making
life-changing differences
in Australia and Canada
Study: Poor audio
causes our brains to
work 35% harder to
interpret information
Love your ears
– Audika campaign
raises awareness
of hearing
Highlights in 2022
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2022 in brief
Demant – Annual Report 2022 13
–
2022 in brief
Group revenue
Revenue by business area
EBIT
3,207
DKK MILLION
EBIT
MARGIN
16.3%
North
America
41%
Revenue by geographic region FY 2022
FY 2022
DKK 19,705 MILLION
10% growth
DKK 4,863 MILLION
11% growth
DKK 4,894 MILLION
8% growth
Q4
Q1
Europe
41%
Asia
10%
Pacific
5%
Other
3%
Q2
Q3
DKK 5,345 MILLION
12% growth
DKK 4,603 MILLION
9% growth
Financial results shown for continuing operations
Hearing Aids
DKK 8,231 MILLION
Communications
DKK 1,060 MILLION
Diagnostics
DKK 2,291 MILLION
Hearing Care
DKK 8,123 MILLION
Hearing Healthcare
DKK 18,645 MILLION
41%
12%
5%
42%
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Demant – Annual Report 2022 14
Hearing Healthcare
Communications
Hearing Healthcare saw organic growth
of 5% driven by strong performances in
Hearing Aids and Diagnostics
Communications saw organic growth of
-13%, primarily due to a very weak gam-
ing market, resulting in a negative EBIT
GROWTH
7%
IN LOCAL
CURRENCIES
GROWTH
-13%
IN LOCAL
CURRENCIES
Outlook for the Group in 2023
ORGANIC GROWTH
3-7%
EBIT MARGIN
-22.3%
EBIT MARGIN
18.5%
EBIT
-236
DKK MILLION
EBIT
3,443
DKK MILLION
To be updated
EBIT
3,600-4,000
DKK MILLION
ACQUISITIVE GROWTH
3%
1.3
DKK BILLION
INVESTED IN R&D
20,570
EMPLOYEES
Group financial key figures
Cash flow from
operating activities
Earnings per share
EPS
10.06
DKK
CFFO
2.6
DKK BILLION
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Demant – Annual Report 2022 15
Group financial review
FY
(DKK million)
Hearing
Healthcare
2022
Communi-
cations
2022
Group
2022
Group
adjusted
2021
Group
adjusted
growth
One-offs
2021
Group
reported
2021
Group
reported
growth
Revenue
18,645
1,060
19,705
17,905
10% - 17,905 10%
Production costs
-4,453
-583
-5,036
-4,447
13% - -4,447 13%
Gross profit
14,192
477
14,669
13,458
9% - 13,458 9%
Gross margin
76.1%
45.0%
74.4%
75.2%
75.2%
R&D costs
-1,083
-231
-1,314
-1,139
15% - -1,139 15%
Distribution costs
-8,787
-445
-9,232
-8,043
15% 60 -7,983 16%
Administrative expenses
-1,001
-37
-1,038
-892
16% - -892 16%
Share of profit after tax, associates and joint ventures
122
-
122
120
2% - 120 2%
Other operating income
-
-
-
-
- 99 99 -
Operating profit (EBIT)
3,443
-236
3,207
3,504
-8% 159 3,663 -12%
EBIT margin
18.5%
-22.3%
16.3%
19.6%
20.5%
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Demant – Annual Report 2022 16
H1
(DKK million)
Hearing
Healthcare
2022
Communi-
cations
2022
Group
2022
Group
adjusted
2021
Group
adjusted
growth
One-offs
2021
Group
reported
2021
Group
reported
growth
Revenue
8,945
552
9,497
8,746
9% - 8,746 9%
Production costs
-2,115
-299
-2,414
-2,226
8% - -2,226 8%
Gross profit
6,830
253
7,083
6,520
9% - 6,520 9%
Gross margin
76.4%
45.8%
74.6%
74.5%
74.5%
R&D costs
-534
-117
-651
-557
17% - -557 17%
Distribution costs
-4,170
-224
-4,394
-3,921
12% - -3,921 12%
Administrative expenses
-488
-19
-507
-425
19% - -425 19%
Share of profit after tax, associates and joint ventures
57
-
57
57
- - 57 -
Operating profit (EBIT)
1,695
-107
1,588
1,674
-5% - 1,674 -5%
EBIT margin
18.9%
-19.4%
16.7%
19.1%
19.1%
H2
(DKK million)
Hearing
Healthcare
2022
Communi-
cations
2022
Group
2022
Group
adjusted
2021
Group
adjusted
growth
One-offs
2021
Group
reported
2021
Group
reported
growth
Revenue
9,700
508
10,208
9,159
11% - 9,159 11%
Production costs
-2,338
-284
-2,622
-2,221
18% - -2,221 18%
Gross profit
7,362
224
7,586
6,938
9% - 6,938 9%
Gross margin
75.9%
44.1%
74.3%
75.8%
75.8%
R&D costs
-549
-114
-663
-582
14% - -582 14%
Distribution costs
-4,617
-221
-4,838
-4,122
17% 60 -4,062 19%
Administrative expenses
-513
-18
-531
-467
14% - -467 14%
Share of profit after tax, associates and joint
ventures 65
-
65
63
3% - 63 3%
Other operating income
-
-
-
-
- 99 99 -
Operating profit (EBIT)
1,748
-129
1,619
1,830
-12% 159 1,989 -19%
EBIT margin
18.0%
-25.4%
15.9%
20.0%
21.7%
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Demant – Annual Report 2022 17
Introduction
Unless otherwise indicated, the commen-
tary below on our financial results is based
on adjusted figures, i.e. 2021 figures are
shown before one-offs related to the sale
of FrontRow Calypso LLC and to the rever-
sal of provisions made during the corona-
virus pandemic. No one-off adjustments
have been made for 2022.
As a result of the announced decision to
discontinue the Hearing Implants business,
this business area is recognised as a dis-
continued operation, and comparative fig-
ures for 2021 in the income statement and
cash flow statement have been restated to
reflect this.
For detailed financial reviews of our Hear-
ing Healthcare and Communications seg-
ments, please refer to page 25 and 35,
respectively.
Revenue
For the full year, Group revenue amounted
to DKK 19,705 million, corresponding to a
growth rate of 5% in local currencies. Or-
ganic growth was 4%, which is within the
most recent organic growth guidance of
2-4% for 2022, but below our original ex-
pectations for the year. Acquisitive growth
was 2%, and exchange rates had an im-
pact on revenue of 5%, which includes the
effect of exchange rate hedging. Total re-
ported growth for 2022 was 10%.
Revenue for H2 amounted to DKK 10,208
million, corresponding to a growth rate of
6% in local currencies. Organic growth was
3%, which was entirely driven by Hearing
Healthcare, and growth from acquisitions
was 2%. Exchange rates impacted reve-
nue by 6%, and total reported growth for
H2 was 12%.
In terms of geography, revenue in Europe
continued to grow in H2, but many mar-
kets saw growth below expectations due
to increased macroeconomic uncertainty.
Growth in government channels found a
more moderate level in H2 after having
been high at the beginning of the year
where the comparative period was im-
pacted by coronavirus restrictions. In addi-
tion, the growth rate in H2 continued to be
negatively impacted by a high compara-
tive base in France following the hearing
healthcare reform implemented in 2021.
HEARING
HEALTHCARE
18,645
DKK MILLION
(+12%)
COMMUNICATIONS
1,060
DKK MILLION
(-10%)
GROUP REVENUE
19,705
DKK MILLION
(+10%)
Growth rates by business segment
H1 2022 H2 2022 FY 2022
Hearing Healthcare
Organic 6% 5% 5%
Acquisitions 1% 3% 2%
Local currencies
6% 7% 7%
FX
4% 6% 5%
Total
10% 13% 12%
Communications
Organic -14% -13% -13%
Acquisitions 0% 0% 0%
Local currencies
-14% -13% -13%
FX
3% 3% 3%
Total
-11% -10% -10%
Group
Organic 4% 3% 4%
Acquisitions 1% 2% 2%
Local currencies
5% 6% 5%
FX
4% 6% 5%
Total
9% 12% 10%
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Demant – Annual Report 2022 18
Supported by strong performance in Diag-
nostics and market share gains in Hearing
Aids, organic growth was slightly positive
in North America. However, our growth in
the region was weaker than expected due
to developments in Hearing Care and
Communications, which weighed on our
growth in the region.
Asia and Other countries continued their
strong performance, partly due to low
comparative figures and despite the nega-
tive effect of the coronavirus situation in
China. In the Pacific region, organic growth
was flat in H2.
Gross profit
The Group’s gross profit increased by 9%
to DKK 14,669 million in 2022, correspond-
ing to a gross margin of 74.4%. This is a
decrease of 0.8 percentage point com-
pared to 2021, primarily related to nega-
tive mix changes in Hearing Healthcare.
In H2, the Group’s gross profit amounted
to DKK 7,586 million, corresponding to an
increase of 9% compared to H2 2021 and
resulting in a gross margin of 74.3%, a de-
cline of 1.5 percentage points. The gross
margin declined in both Hearing Health-
care and Communications due to mix
changes and a negative impact of foreign
exchange rates.
In H2, we continued to see some impact of
the dynamic supply chain situation, which
predominantly relates to higher freight
charges, although the impact became less
pronounced in the period. In addition, we
saw some negative impact in H2 of higher-
than-normal wage inflation.
Operating expenses (OPEX)
For the full year, OPEX increased by 10%
in local currencies of which 7 percentage
points related to organic growth and 3
percentage points to acquisitions.
In H2, OPEX growth was 12% in local cur-
rencies compared to H2 2021. In organic
terms, OPEX increased by 6% in H2, re-
flecting limited ability in the short term to
align costs with the lower revenue level in
Hearing Care and Communications. We
continued to expand our R&D activities to
ensure continued technological leadership,
which resulted in higher R&D costs, and
we also saw growing administrative ex-
penses in the period. To adjust our cost
base to market developments, we took
cost reduction measures in Hearing Aids,
Hearing Care and Communications, which
will result in OPEX savings of approx. DKK
100 million on an annual basis. These
measures had minimal effect in 2022 but
will have full effect from 2023.
The Group saw an impact of 6% on OPEX
of acquisitions made in H2, most of which
related to Sheng Wang and Inventis Srl.
Changes in foreign exchange rates added
5% to OPEX growth.
Revenue by geographic region
Change
(DKK million)
H2 2022 H2 2021 DKK LCY Org.
Europe
4,092 3,911 5% 4% 2%
North America
4,203 3,715 13% 1% 1%
Asia
1,063 806 32% 34% 19%
Pacific region
550 531 4% 0% 0%
Other countries
300 196 52% 38% 37%
Total
10,208 9,159 12% 6% 3%
OPEX by function
Change
(DKK million)
H2 2022 H2 2021 DKK LCY Org.
R&D costs
663 582 14% 14% 12%
Distribution costs
4,838 4,122 17% 12% 5%
Administrative expenses
531 467 14% 8% 8%
Total
6,032 5,171 17% 12% 6%
Revenue by geographic region H2 2022
Europe
40%
North America
41%
Asia
10%
Pacific
6%
Other countries
3%
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Demant – Annual Report 2022 19
Five-year OPEX
(DKK million)
*20
18-2020 figures have not been restated to reflect the dis-
continuation of Hearing Implants but
have been adjusted for
one
-offs.
Operating profit (EBIT)
The Group’s reported EBIT amounted to
DKK 3,207 million in 2022, which corre-
sponds to an EBIT margin of 16.3%.
In H2, EBIT was DKK 1,619 million, a de-
cline of 12% compared to H2 2021. Hear-
ing Healthcare contributed DKK 1,748 mil-
lion and Communications DKK -129 mil-
lion. The resulting EBIT margin for H2 was
15.9%, which is a decline of 4.1 percent-
age points. The lower EBIT margin was
due to lower profitability in Hearing Care
and Communications, which both saw rev-
enue levels materially below original ex-
pectations and thus cost bases that were
misaligned with realised activity levels.
Exchange rates had a minor positive im-
pact on EBIT.
Despite improvements in the supply chain
dynamics, we saw an increasing effect of
the higher-than-normal inflation on our
cost base. The recent development in the
coronavirus situation in China also had
an impact on profitability, as revenue was
materially impacted in Q4, but with limited
flexibility to adjust OPEX.
As a consequence of our acquisition strat-
egy, we realised certain fair value adjust-
ments of non-controlling interests in step
acquisitions, contingent considerations etc.
These totalled a net positive fair value ad-
justment of DKK 23 million (DKK 64 million
in 2021). Please refer to Note 6.1 for more
details.
Financial items
For the full year, net financials amounted
to DKK -280 million, which is an increase
of DKK -78 million compared to 2021. The
increase predominantly relates to H2 where
net financials totalled DKK -185 million.
This is an increase of DKK 84 million, which
mainly relates to higher interest rates paid
on higher net interest-bearing debt.
Profit for the year – continuing
operations
Reported profit before tax from continuing
operations in 2022 amounted to DKK
2,927 million, which is a decrease of 15%
compared to 2021 and below our expecta-
tions due to a lower EBIT. Tax amounted
to DKK 651 million. The resulting effective
tax rate was 22.2%, which is in line with
our guidance of 22-23%.
For H2, profit before tax from continuing
operations was DKK 1,434 million and tax
amounted to DKK 315 million.
For the full year, reported net profit for
continuing operations was DKK 2,276
million, or a decrease of 16%, resulting
in earnings per share (EPS) of DKK 10.06.
In H2, reported net profit for continuing
operations was DKK 1,119, which corre-
sponds to an EPS of DKK 4.99.
Discontinued operations
In line with our most recent expectations,
profit after tax from discontinued opera-
tions amounted to DKK -192 million for the
full year and DKK -85 million for H2 2022.
Profit for the year
For the Group as a whole, profit after tax
in 2022 was DKK 2,084 million, corre-
sponding to an EPS of 9.21. In H2, net
profit after tax was DKK 1,034 million.
At the annual general meeting, the Board
of Directors will propose that the entire
profit for the year be retained and trans-
ferred to the company’s reserves.
Earnings per share (EPS) for
continuing operations
(DKK per share)
*20
18-2020 figures have not been restated to reflect the dis-
continuation of Hearing Implants.
Cash flow statement
The Group’s cash flow from operating
activities (CFFO) declined by 27% to
DKK 2,622 million in 2022. In H2, CFFO
amounted to DKK 1,707, down by 15%
due to the lower operating profit, but it
was positively impacted by an improve-
ment in the net working capital in the pe-
riod.
In 2022, our net investments in tangible
and intangible assets (CAPEX) amounted
to DKK 908 million, which is an increase of
28%. CAPEX relative to sales was 5%,
8,386
9,392
9,079
10,014
11,584
4,000
6,000
8,000
10,000
12,000
2018 2019 2020 2021 2022
7.32
6.00
4.68
11.48
10.06
0.00
2.00
4.00
6.00
8.00
10.00
12.00
14.00
2018 2019 2020 2021 2022
Full-year EBIT
(DKK million)
*20
18-2020 figures have not been restated to reflect the dis-
continuation of Hearing Implants but
have been adjusted for
one
-offs.
Half
-year EBIT
(DKK million)
*20
18-2020 figures have not been restated to reflect the dis-
continuation of Hearing Implants but
have been adjusted for
one
-offs.
2,652
2,151
1,313
3,504
3,207
0
1,000
2,000
3,000
4,000
2018 2019 2020 2021 2022
1,506
1,674
1,830
1,588
1,619
0
500
1,000
1,500
2,000
2,500
H2
2020
H1
2021
H2
2021
H1
2022
H2
2022
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Demant – Annual Report 2022 20
which is slightly above our medium- to
long-term ambition. In H2, CAPEX was
DKK 504 million, up by 15% on the same
period in 2021. The change can mainly be
attributed to increased investments in
property, plant and equipment relating
to the construction of production facilities
in Poland and Mexico.
Net investments in other non-current
assets, which comprise customer loans
and loans to associates, amounted to DKK
97 million, resulting in total net investments
of DKK 1,005 million in 2022. For H2, net
investments in other non-current assets
amounted to DKK -16 million and net in-
vestments to DKK 488 million.
The free cash flow before acquisitions and
divestments decreased by 43% to DKK
1,617 million for the full year and declined
by 20% in H2 to DKK 1,219 million.
Cash flow relating to acquisitions and di-
vestments increased significantly in 2022
and totalled DKK 2,323 million for the year.
In H2, cash flow from acquisitions and di-
vestments amounted to DKK 1,810 million
of which the main part can be attributed to
the acquisition of Sheng Wang at the be-
ginning of H2.
Share buy-backs amounted to DKK 1,840
million in 2022 of which DKK 533 million
was spent in H2. In November 2022, the
share buy-back programme was paused,
as we lowered our earnings expectations
for the financial year.
Mainly relating to increased borrowings
during the year, other financing activities
amounted to DKK 2,774 million in 2022,
and the net cash flow from continuing op-
erations totalled DKK 228 million. For H2,
other financing activities amounted to DKK
1,153 million, and the net cash flow from
continuing operations was DKK 29 million.
The net cash flow from discontinued oper-
ations was DKK -253 million for the full
year and DKK -145 million in H2. Please
refer to Note 6.3 for more details.
CFFO
(DKK million)
*20
18-2020 figures have not been restated to reflect the dis-
continuation of Hearing Implants but
have been adjusted for
one
-offs.
CAPEX
(DKK million)
*20
18-2020 figures have not been restated to reflect the dis-
continuation of Hearing Implants but
have been adjusted for
one
-offs.
1,683
2,149
2,621
3,593
2,622
0
1,000
2,000
3,000
4,000
2018 2019 2020 2021 2022
598
756
667
711
908
0%
2%
4%
6%
0
200
400
600
800
1,000
2018 2019 2020 2021 2022
CAPEX
CAPEX % of sales
Cash flow by main items
(DKK million)
FY
H2
H1
Change
2022 2021
2022 2021
2022 2021
FY H2 H1
CFFO
2,622 3,593
1,707 2,000
915 1,593
-27% -15% -43%
Net investments
-1,005 -755
-488 -478
-517 -277
33% 2% 87%
Free cash flow before acquisitions
and divestments
1,617 2,838
1,219 1,522
398 1,316
-43% -20% -70%
Acquisitions and divestments etc.
-2,323 -547
-1,810 -141
-513 -406
325% 1184% 26%
Share buy
–backs -1,840 -3,200
-533 -1,387
-1,307 -1,813
-43% -62% -28%
Other financing activities
2,774 1,422
1,153 180
1,621 1,242
95% 541% 31%
Cash flow for the period
228 513
29 174
199 339
-56% -83% -41%
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Demant – Annual Report 2022 21
Balance sheet
As of 31 December 2022, the Group’s total
assets amounted to DKK 29,875 million.
This is an increase of 20% compared to 31
December 2021 with organic growth ac-
counting for 5%, acquisitive growth for
13% and growth from exchange rate ef-
fects for 2%. The increase is primarily due
to an increase in goodwill, mostly related
to acquisitions, and to higher inventories.
Relative to 30 June 2022, total assets in-
creased by 9%, mainly driven by goodwill
and inventories.
Relative to the end of 2021, our net work-
ing capital increased by 27%. The higher
net working capital mostly reflects a nor-
malisation from the lower level we have
seen in the past years. Reflecting continu-
ous net working capital focus, the Group’s
net working capital was DKK 3,648 million
at the end of 2022, down by 11% since 30
June 2022, which is mainly due to a de-
crease in prepaid expenses following the
full acquisition of Sheng Wang. Please re-
fer to Note 9.1 for our definition of net
working capital.
In 2022, our net interest-bearing debt
(NIBD) increased by 39% for the full year
and by 16% in H2 and amounted to DKK
12,711 million at 31 December 2022. The
increase in debt mainly relates to a high
level of acquisitions during the year as well
as to share buy-backs. As a result of the
increase in net interest-bearing debt and
the lower realised EBITDA, our current
gearing (NIBD/EBITDA) is 2.9, which is
above our gearing target of 2.0-2.5. The
additional debt mainly consists of short-
to medium-term financing.
Positively impacted by profit and currency
translation but offset by share buy-backs,
total equity for the full year increased by
7% to DKK 8,562 million of which DKK 1
million is attributable to non-controlling in-
terests and DKK 8,561 million to the share-
holders of Demant A/S. In H2, total equity
increased by 5%, mainly as a result of
profit generated by the Group and the de-
cision in H2 to pause our share buy-backs.
Share buy-backs recognised in the Group’s
balance sheet totalled 6,969,114 shares
bought at an average price of DKK 264.08,
totalling DKK 1,840 million.
Employees
As of 31 December 2022, the Group had
20,570 employees compared to 18.548 as
of 30 June 2022, an increase of 11%, mainly
driven by acquisitions. Most of the new
employees, who joined the Group, are
from Sheng Wang, which contributed
with approx. 1,300 employees.
The total number of employees increased
by 18% for the full year compared to the
17,448 employees at the end of 2021.
Hedging activities
The material forward exchange contracts
in place as of 31 December 2022 to hedge
against the Group’s exposure to move-
ments in exchange rates are shown in the
table below.
Hedging activities
Currency
Hedging
period
Average
hedging rate
USD
10 months 701
JPY
10 months 5.34
AUD
9 months 487
GBP
9 months 855
CAD
9 months 533
PLN
9 months 150
Balance sheet by main items
Change
(DKK million)
FY 2022 H1 2022 FY 2021 H2 2022 FY 2022
Lease assets
2,304 2,104 2,079 10% 11%
Other non
-current assets 17,531 15,305 14,895 15% 18%
Inventories
2,904 2,445 2,366 19% 23%
Trade receivables
3,626 3,609 3,203 0% 13%
Cash
1,130 1,245 1,172 -9% -4%
Other current assets
1,398 1,621 1,145 -14% 22%
Assets held for sale
964 1,006 - -4% n.a.
Total assets
29,857 27,335 24,860 9% 20%
Equity
8,562 8,184 7,981 5% 7%
Lease liabilities
2,380 2,171 2,121 10% 12%
Other non
-current liabilities 7,960 4,784 4,296 66% 85%
Trade payables
865 810 808 7% 7%
Other current liabilities
9,915 11,165 9,654 -11% 3%
Liabilities related to assets held for
sale
175 221 - -21% n.a.
Total equity and liabilities
29,857 27,335 24,860 9% 20%
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Demant – Annual Report 2022 22
Sustainability
In our new Diversity, equity and inclusion
policy, Demant has introduced targets for
gender diversity in top-level management.
The percentage of women in top-level
management increased by 1 percentage
point from 22% in 2021 to 23% in 2022.
We also saw an increase in women man-
agers of 1 percentage point among all
people managers in Demant.
Furthermore, we have a target aiming at
increasing the number of top-level man-
agement teams with a diverse gender
composition by in each team obtaining an
improved balance of the gender composi-
tion. The target is defined as follows: Hav-
ing a maximum of 75% of the same gen-
der on 75% of top-level management
teams in 2025. We saw a 6 percentage
point increase in teams that were on tar-
get from 65% in 2021 to 71% in 2022.
Our data show an increase of 2% in CO2e
emissions from 2021 to 2022. Though we
saw a considerable decrease in reported
electricity consumption, our total energy
consumption increased in 2022. This was
mainly due to a significant increase in re-
ported natural gas for which the scope of
reporting was expanded in 2022.
However, the increase in energy consump-
tion has not resulted in an equivalent in-
crease in emissions. As natural gas in most
countries emits less CO2e than conven-
tional electricity, the increase in reported
natural gas does not impact the emissions
as significantly as the global decrease in
electricity consumption.
Furthermore, the newly acquired hearing
care retail chain Sheng Wang has not been
integrated into our energy reporting.
Please refer to the Sustainability Report
for more details on energy consumption
and emissions.
The CEO remuneration ratio increased
from 38 to 39. For more details on remu-
neration, please refer to the
Remuneration
Report.
The full Sustainability Report is available
on our website.
Events after the balance
sheet date
There have been no events that materially
change the assessment of this Annual
Report 2022 from the balance sheet date
and up to today.
Key full-year sustainability figures
2022 2021 Change
Scope 1
-2 emissions (tonnes CO2e) 31,349 30,813 2%
CEO remuneration ratio
39 38 1
Gender
diversity, Board of Directors (women/men)* 40/60% 40/60% -
Gender diversity, all managers (women/men)
44/56% 43/57% 1 p.p.
Gender diversity, top
-level management 23/77% 22/78% 1 p.p.
Gender diversity, top
-level management teams
(on/off target)
71/29% 65/35% 6 p.p.
*Shareholder-elected members.
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Outlook
Demant – Annual Report 2022 23
Key assumptions for our outlook for 2023:
• Due to continued macroeconomic head-
winds, we expect the unit growth rate in
the global hearing aid market in 2023 to
be slightly below the structural growth
rate of 4-6% with a negative contribu-
tion from ASP declines around the nor-
mal level of 1-2% due to mix effects.
• We see material uncertainty about the
growth trajectory in 2023 in the markets
for enterprise and gaming headsets and
for video solutions due to low consumer
confidence and caution by enterprises
when it comes to investment decisions.
In our Communications segment, we ex-
pect modest positive organic growth in
2023, albeit negative in Q1. Supported
by cost savings, we expect an EBIT that
is less negative than in 2022.
• Due to a high level of attractive opportu-
nities, we expect the level of bolt-on ac-
quisitions in 2023 to be higher than nor-
mal, and our gearing multiple at the end
of the year is thus expected to be around
the high end of our medium- to long-
term target.
• Despite higher-than-normal cost inflation,
we plan to grow the Group’s OPEX less
than revenue through focused cost control
in order to support margin improvement.
• We expect the divestment of Hearing
Implants to close in Q2 2023, resulting in
payment of DKK 700 million of the total
DKK 850 million consideration.
The Group’s medium- to long-term outlook
remains unchanged:
In Hearing Healthcare, we aim to gain
market shares in organic terms in all our
business areas, translating into an organic
growth rate of at least 5% p.a.
In Communications, we aim to grow reve-
nue in organic terms at least in line with the
market growth rate, corresponding to an
organic growth rate of at least 12% p.a.
For the Group, we aim to deliver organic
growth of 6-8% p.a., which is in line with
our historical performance. Additionally,
we expect to add 1-2% p.a. to growth
from bolt-on acquisitions. Consequently,
we aim to grow the Group’s revenue by
7-10% p.a. in local currencies.
We aim to increase EBIT margins in all our
business areas, particularly in Communi-
cations. For the Group, the EBIT margin is
subject to changes in our business mix.
We expect to invest around 4% of the
Group’s revenue in tangible and intangible
assets. In addition, we will continue to pri-
oritise value-adding acquisitions.
We target a gearing multiple of 2.0-2.5,
and any excess free cash flow after acqui-
sitions will be returned to our shareholders
in the form of share buy-backs.
Outlook
Outlook for 2023
Organic growth 3-7%
Acquisitive growth 3% based on revenue from acquisitions completed as of 6 February 2023
FX growth -1% based on exchange rates as of 6 February 2023 and including
the impact of hedging
EBIT DKK 3,600-4,000 million
Net financials Negative by around DKK 600 million
Effective tax rate 25-26%
Gearing Gearing multiple (NIBD/EBITDA) at the end of 2023 around the high
end of our medium- to long-term target of 2.0-2.5
Share buy-backs None
Profit after tax from
discontinued operations
Negative by around DKK 100 million
Medium- to long-term outlook
Revenue growth 7-10% p.a. in local currencies with organic growth of 6-8% p.a. and
acquisitive growth of 1-2% p.a.
EBIT margin We aim to increase EBIT margins in all our business areas over time.
For the Group as a whole, the EBIT margin is subject to changes in the
business mix as well as to acquisitions and exchange rate effects
CAPEX On an annual basis, we expect to invest around 4% of the Group’s
revenue in tangible and intangible assets (excluding customer loans
and acquisitions)
Gearing We target a gearing multiple (NIBD/EBITDA) of 2.0-2.5
Capital allocation Subject to our gearing target, we will return any excess free cash flow
after acquisitions to our shareholders in the form of share buy-backs
Medium- to long term outlook
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Outlook
Demant – Annual Report 2022 24
Our business
Hearing Healthcare
Hearing Aids
Hearing Care
Diagnostics
Communications
EPOS
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Hearing Healthcare
Demant – Annual Report 2022 25
Financial review
Hearing Healthcare
GROWTH
7%
IN LOCAL
CURRENCIES
REVENUE
18,645
DKK MILLION
Income statement
H1 H2 FY
(DKK million)
2022 2021 Growth 2022 2021 Growth 2022 2021 Growth
Revenue
8,945 8,125 10% 9,700 8,597 13% 18,645 16,722 11%
Production costs
-2,115 -1,905 11% -2,338 -1,930 21% -4,453 -3,835 16%
Gross profit
6,830 6,220 10% 7,362 6,667 10% 14,192 12,887 10%
Gross margin
76.4% 76.6% 75.9% 77.6% 76.1% 77.1%
R&D Costs
-534 -466 15% -549 -476 15% -1,083 -942 15%
Distribution costs
-4,170 -3,688 13% -4,617 -3,891 19% -8,787 -7,579 16%
Administrative expenses
-488 -405 20% -513 -455 13% -1,001 -860 16%
Share of profit after tax, associates and
joint ventures
57 57 0% 65 63 3% 122 120 2%
Operating profit (EBIT)
1,695 1,718 -1% 1,748 1,908 -8% 3,443 3,626 -5%
EBIT margin
18.9% 21.1% 18.0% 22.2% 18.5% 21.7%
Revenue by business area
H1 H2 FY
(DKK million)
2022 2021 Growth 2022 2021 Growth 2022 2021 Growth
Hearing Aids
4,842 4,416 10% 5,149 4,563 13% 9,991 8,979 11%
Internal sales to Hearing Care -895 -871 3% -865 -762 14% -1,760 -1,633 8%
Sales to external customers 3,947 3,545 11% 4,284 3,801 13% 8,231 7,346 12%
Hearing Care
3,932 3,737 5% 4,191 3,816 10% 8,123 7,553 8%
Diagnostics
1,066 843 26% 1,225 980 25% 2,291 1,823 26%
Hearing Healthcare
8,945 8,125 10% 9,700 8,597 13% 18,645 16,722 11%
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Hearing Healthcare
Demant – Annual Report 2022 26
Revenue
In 2022, our Hearing Healthcare segment
generated revenue of DKK 18,645 million.
This corresponds to a growth rate of 7% in
local currencies, with organic growth ac-
counting for 5% and acquisitive growth for
2%. Exchange rate effects added 5% to
growth, and total reported growth was
thus 12%.
In H2, revenue amounted to DKK 9,700
million, corresponding to growth of 7% in
local currencies. The organic growth of 5%
was driven by strong performances in
Hearing Aids and Diagnostics, which both
gained market shares in the period. Mean-
while, Hearing Care saw negative organic
growth materially below our original ex-
pectations. Driven by acquisitions in Hear-
ing Care and Diagnostics, acquisitive
growth added 3% to growth in H2, while
positive exchange rate effects added an-
other 6%. Total reported growth was 13%
in the period.
Gross profit
Our gross profit increased by 10% in 2022
to DKK 14,192 million, corresponding to a
gross margin of 76.1%. For H2, the gross
profit also increased by 10%, and the gross
margin was 75.9%, a decrease of 1.7 per-
centage points compared to H2 2021. The
decrease is mainly attributable to mix ef-
fects in Hearing Aids, as an increasing
share of rechargeable units had a slightly
dilutive effect, and to geography and chan-
nel mix changes. A change in the mix be-
tween business areas as well as exchange
rate effects also had a slightly negative
impact.
While we saw some easing of the impact
of the dynamic supply chain situation as
well as reduced freight charges, we also
saw some negative effect of higher-than-
normal wage inflation.
Growth rates
H1 2022 H2 2022 FY 2022
Hearing Aids
Organic 9% 9% 9%
Acquisitions -2% -1% -1%
Local currencies
7% 8% 7%
FX
3% 5% 4%
Total
10% 13% 11%
Hearing Care
Organic -3% -2% -3%
Acquisitions 4% 7% 6%
Local currencies
1% 5% 3%
FX
4% 5% 4%
Total
5% 10% 8%
Diagnostics
Organic 17% 10% 13%
Acquisitions 2% 5% 4%
Local currencies
19% 15% 17%
FX
8% 10% 9%
Total
27% 25% 26%
Hearing Healthcare
Organic 6% 5% 5%
Acquisitions 1% 3% 2%
Local currencies
6% 7% 7%
FX
4% 6% 5%
Total
10% 13% 12%
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Hearing Healthcare
Demant – Annual Report 2022 27
Operating expenses (OPEX)
For the full year, OPEX amounted to DKK
10,871 million with an increase of 11% in
local currencies.
In H2, OPEX was DKK 5,679 million with
growth of 12% in local currencies distrib-
uted evenly between organic and acquisi-
tive growth. Organic growth was driven by
balanced growth in Hearing Aids and Di-
agnostics, reflecting higher activity levels.
In Hearing Care, OPEX could not in the
short term be adjusted to reflect lower-
than-expected activity levels and thus
grew at a faster pace than revenue. This
includes acquisitive growth, mostly related
to Sheng Wang. Exchange rate effects
added 5% to growth in OPEX.
Operating profit (EBIT)
In 2022, EBIT amounted to DKK 3,443 mil-
lion, corresponding to an EBIT margin of
18.5%.
In H2, EBIT amounted to DKK 1,748 mil-
lion, corresponding to an EBIT margin of
18.0%. This was a decrease of 4.2 per-
centage points compared to the very
strong EBIT margin realised in H2 2021
where the Hearing Aids and Hearing Care
businesses benefitted from some release
of pent-up demand and the positive im-
pact of the French hearing healthcare re-
form. The margin decrease is first and
foremost attributable to Hearing Care
where revenue was lower than originally
expected, but where the cost base could
not be adjusted accordingly in the short
term. Negative mix effects in Hearing Aids
also had a slightly negative impact on the
EBIT margin, while exchange rate effects
were slightly positive.
Full-year OPEX
(DKK million)
*20
18-20 figures have not been restated to reflect
the discontinuation of Hearing Implants but have
been adjusted for one
-offs.
Half
-year EBIT
(DKK million)
*2018
-2020 figures have not been restated to reflect the dis-
continuation of Hearing Implants but have been adjusted for
one
-offs.
Full-year EBIT
(DKK million)
*20
18-2020 figures have not been restated to reflect the dis-
continuation of Hearing Implants but have been adjusted for
one
-offs. EBIT for 2019 was negatively impacted by DKK 550
million as a result of the IT incident.
8,386
9,392
8,524
9,381
10,871
2,000
5,000
8,000
11,000
14,000
2018 2019 2020 2021 2022
1,425
1,718
1,908
1,695
1,748
0
500
1,000
1,500
2,000
2,500
H2
2020
H1
2021
H2
2021
H1
2022
H2
2022
2,428
2,085
1,211
3,626
3,443
0
1,000
2,000
3,000
4,000
2018 2019 2020 2021 2022
OPEX by function
Change
(DKK million)
H2 2022 H2 2021 DKK LCY Org.
R&D costs
549 476 15% 15% 13%
Distribution costs
4,617 3,891 19% 13% 6%
Administrative expenses
513 455 13% 7% 7%
Total
5,679 4,822 18% 12% 6%
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Hearing Aids
Demant – Annual Report 2022 28
Core SDG impact
Based on the estimated lifetime of hearing
aids and the total number of hearing aid fit-
tings by the Group over the last five years,
we facilitated 12.2 million years with im-
proved quality of life in 2022.
The Eriksholm Research Centre contributed
to a new outcome measure that can indicate
communication difficulties. A clinical version
of this assessment method will enable hear-
ing healthcare professionals to provide more
personalised and effective treatment to peo-
ple with hearing impairment at an earlier
stage.
Key 2022 sustainability results
We improved electricity efficiency at our main
production site in Mierzyn, Poland, and re-
duced our total electricity consumption at
our production site in Tijuana, Mexico.
Hearing Aids
REVENUE
9,991
DKK MILLION
GROWTH
7%
IN LOCAL
CURRENCIES
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Oticon Real
Hands-free
communication
Demant - Annual Report 2022 28
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Hearing Aids
Demant – Annual Report 2022 29
Market developments
Based on available market statistics, cov-
ering slightly less than two-thirds of the
market, and on our own assumptions, we
estimate that the global hearing aid mar-
ket saw unit growth of around 4% in 2022.
This is at the low end of the structural
growth range of 4-6% per year and below
our initial expectations, particularly in Q3
and Q4.
In addition, growth has been more sub-
dued in North America than in Europe and
the rest of the world, as we have seen an
increasing negative impact of macroeco-
nomic uncertainty on private pay markets,
e.g. in the US. This has led to geography
and channel mix changes in 2022, which
have been more pronounced than normally,
resulting in a larger-than-expected decline
in the ASP for the year.
For Q4, we estimate that global market
unit growth was around -1%, and during
the year, we have seen the hearing aid
market growth rate decelerate signifi-
cantly.
Compared to the same period last year,
we estimate that growth in Europe was
-2% in Q4. In France, growth was slightly
negative in Q4, but the total market vol-
ume remained significantly above the level
before the hearing healthcare reform in
2021. In the UK, market growth was flat
with stronger growth in the NHS than in
the commercial part of the market due to
lower comparative figures attributable to
the coronavirus pandemic last year. In Ger-
many, growth was negative in Q4.
Driven predominantly by Veterans Affairs
(VA), growth in North America decelerated
to -3% in Q4. In the US, the commercial
part of the market declined in Q4, and we
continue to see negative mix effects, with
managed care and large chains growing
more than the independent part of the
market. Growth in Canada was slightly
negative.
Looking beyond North America and Europe,
we estimate that in Q4, unit growth in
Australia was positive compared to the
same period last year and that Japan saw
slightly negative growth. Growth in China
was negative in Q4 due to the coronavirus
situation following the lifting of restrictions.
Several other emerging markets saw strong
positive growth, in part due to low com-
parative figures attributable to corona-
virus-related restrictions in the compara-
tive period.
In August 2022, the long-awaited regula-
tion of the over-the-counter (OTC) cate-
gory of hearing aids was finalised by the
US Food and Drug Administration (FDA),
and the rule took effect on 17 October
2022. As previously communicated, the
content of the final rule does not change
our fundamental belief in the importance
of providing a combination of personal
counselling, individual fitting, life-long ser-
vice and highly advanced technology, but
the new category may improve access to
hearing healthcare solutions in the future.
We continue to monitor the developments
closely.
Business update
In 2022, total revenue in Hearing Aids
amounted to DKK 9,991 million, corre-
sponding to an organic growth rate of 9%
(Q4: 11%). In terms of acquisitions, we
saw a slightly negative effect of the di-
vestment of FrontRow Calypso LLC in
2021. Internal revenue from sales to our
Hearing Care business accounted for 18%
of total revenue. Our commentary below
focuses on total revenue, including reve-
nue from sales through our own retail clin-
ics, and thus covers our total wholesale
activities. However, internal revenue is
eliminated from the reported revenue for
our Hearing Healthcare segment and thus
for the Group.
Despite a weaker-than-expected hearing
aid market, Hearing Aids continued to per-
form well in 2022 due to strong momen-
tum created by our portfolio of industry-
leading hearing aids, which was expanded
by more form factors and price points,
contributing to our Hearing Aids business
area gaining market share in 2022.
Compared to H1 2022, the unit growth
rate was more moderate in H2 and the
ASP growth rate was less negative, end-
ing at 10% and -2%, respectively. The
negative ASP development in H2 is due
Hearing Aids
(DKK million)
Q1 2022 Q2 2022 Q3 2022 Q4 2022 FY 2022
Revenue
2,351 2,491 2,446 2,703 9,991
Growth
Organic 9% 8% 6% 11% 9%
Acquisitions -2% -2% -2% 0% -1%
Local currencies
7% 6% 4% 11% 7%
FX
2% 4% 6% 5% 4%
Total
9% 10% 10% 16% 11%
Estimated hearing aid market unit
growth in 2022 by region
(vs. 2021)
Q1 Q2 Q3 Q4 FY
Europe
20% 9% 0% -2% 6%
North America
8% 1% 0% -3% 1%
US (commercial) 6% -1% -3% -4% -1%
US (VA) 19% 2% 9% -1% 6%
Rest of world
4% 4% 4% 2% 1%
Global
12% 5% 1% -1% 4%
CAGR vs. 2019
4% 6% 4% 3% 4%
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Demant – Annual Report 2022 30
to changes in sales mix in relation to geog-
raphies and channels, which were more
significant than expected and more than
offset price increases implemented at the
beginning of the period.
In Q4, growth was 11% in local currencies,
all of which was organic growth. The de-
velopment in the organic growth rate is
due to strong traction created by our prod-
uct portfolio and to increased sales mo-
mentum in the US driven by increased
sales to a large US private customer.
Growth in Q4 was entirely driven by unit
growth, and the ASP was slightly nega-
tive, as price increases were offset by
channel and geography mix changes.
Despite strong performance and market
share gains in Hearing Aids, we an-
nounced cost reduction initiatives affecting
selected parts of the central organisation.
The initiatives were implemented in Q4.
In terms of geographies, North America
delivered strong growth in Q4 driven by
continuously strong momentum and addi-
tional sales momentum with chains in the
US. Supported by the launch of Oticon
Own in November 2022, we succeeded in
increasing our unit market share with VA,
which stood at 16.3% in December 2022.
Sales in Canada grew in Q4.
In Europe, we continued to see solid growth
in France, and in other countries, such as
Germany, Poland and Italy, we saw good
performance in Q4. Following a strong H1,
growth in the UK slowed down in H2 but
remained positive in Q4. The halt of sales
to Russia, Belarus and the provinces of
Donetsk and Luhansk continued to have a
slightly negative impact on growth in Q4.
Sales growth in Asia was strong in Q4,
in part due to low comparative figures. In
China, sales were negatively impacted by
the coronavirus situation, but other coun-
tries in the region, such as Japan, performed
well. In the Pacific region, sales growth was
negative due to developments in Australia.
Sales in Other countries, which mostly com-
prises emerging markets, continued to see
very strong commercial momentum in Q4.
Product update
We will shortly start the roll-out of new
families of premium hearing aids in all our
brands. This includes our flagship hearing
aid, Oticon Real™, which is based on the
new Polaris R platform and designed to
further improve the performance of our
ground-breaking Deep Neutral Network
(DNN) technology. With this introduction,
Oticon continues to build on the unique
BrainHearing™ philosophy, showing sig-
nificant improvements in speech clarity
and reduced listening efforts in environ-
ments with sudden and disruptive sounds.
The new hearing aids will be available
at the three upper price points in both
miniRITE and miniBTE styles across all our
hearing aid brands, and they will include
both rechargeable and non-rechargeable
versions.
Growth in units and ASP
(LCY)
H1 2022 H2 2022 FY 2022
Units
16% 10% 13%
ASP
-8% -2% -5%
Total
7% 8% 7%
Revenue and growth
Growth
(DKK million)
FY 2022 FY 2021 Org. Acq. LCY FX Rep.
Total revenue
9,991 8,979 9% -1% 7% 4% 11%
Internal sales to Hearing Care* 1,760 1,633 -2% 6% 4% 4% 8%
Sales to external customers 8,231 7,346 11% -3% 8% 4% 12%
Growth
(DKK million)
Q4 2022 Q4 2021 Org. Acq. LCY FX Rep.
Total revenue
2,703 2,338 11% 0% 11% 5% 16%
Internal sales to Hearing Care* 395 381 -6% 7% 1% 3% 4%
Sales to external customers 2,308 1,957 14% -2% 13% 5% 18%
*Revenue from internal sales to Hearing Care is eliminated from the reported revenue for Hearing Healthcare and for the Group
, i.e. we only include revenue from external customers. The
pricing used in internal transactions is determined on an arm’s length basis and thus reflects normal commercial terms.
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Demant – Annual Report 2022 31
Core SDG impact
We offer people over 60
years of age free yearly
hearing assessments and
aim to increase the number
by at least 5% each year.
Key 2022 sustainability result
As part of the global
Campaign for Better
Hearing, we donated 587
hearing aids.
Hearing Care
REVENUE
8,123
DKK MILLION
GROWTH
3%
IN LOCAL
CURRENCIES
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Audika – Love your ears
Campaign
Demant - Annual Report 2022 31
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Market developments
Please refer to the Hearing Aids section
above for details on developments in the
hearing aid market in 2022, but please
note that our Hearing Care business is not
present in emerging markets and govern-
ment channels. Overall, we estimate that
the growth rate in the addressable market
for Hearing Care has been below the global
unit market growth rate.
Business update
In 2022, revenue in Hearing Care amounted
to DKK 8,123 million, corresponding to an
organic growth rate of -3% (Q4: 1%). Ac-
quisitive growth was 6% (Q4: 6%), result-
ing in growth in local currencies of 3% (Q4:
7%). In 2022, we made acquisitions in
North America, Germany and Japan as
well as in China where we acquired the
country’s largest network of clinics, Sheng
Wang.
In 2022, our Hearing Care business per-
formed below expectations, and we deliv-
ered negative organic growth. During the
year, we saw increasingly negative effects
of the general macroeconomic uncertainty
on the hearing aid market, especially in
markets that are dominated by private
pay. These effects were exacerbated in
the US by our strategic decision to exit
selected managed care plans, and lower-
than-expected growth in the private pay
market made it difficult to replace existing
managed care activities with new custom-
ers. In addition, strong comparative figures
in France had, as expected, a negative im-
pact on growth following the hearing
healthcare reform implemented in 2021.
Revenue growth in Hearing Care was pre-
dominantly driven by unit growth and sup-
ported by slightly positive development in
the ASP in H2 2022, as we saw an impact
of price increases, which more than out-
weighed geography mix changes in the
period.
In Q4, growth was 7% in local currencies
of which organic growth accounted for
1% and acquisitive growth for 6%. As
expected, the growth rate improved com-
pared to Q3, mainly due to lower compar-
ative figures in the US and France.
Organic revenue growth in Europe was
positive in Q4. In France, revenue remained
at a high level following the hearing
healthcare reform implemented in 2021,
and in the UK, we saw positive develop-
ments in Q4 after a challenging year. In
other European markets, such as Poland
and Spain, we saw strong performance. In
Q4, revenue growth was supported by ac-
quisitions in several European markets,
predominantly in Germany.
In North America, we realised a slightly
negative organic growth rate in Q4, an
improvement compared to Q3, in part due
to lower comparative figures attributable
to the coronavirus situation in 2021. In the
US, the market remained negatively im-
pacted by low consumer confidence, par-
ticularly in the private pay market. This
had a negative impact on our Hearing
Care business in the US, which saw a
growth rate in Q4, which was in line with
the market growth rate. To address the
current market developments, we an-
nounced cost reduction initiatives and the
rationalisation of approx. 50 clinics in No-
vember 2022. These measures took effect
from the beginning of 2023. In Canada, or-
ganic revenue growth was positive for most
of the year, but growth turned negative in
Q4. In both the US and Canada, acquisi-
tions contributed to growth in the period.
After having been impacted by corona-
virus-related restrictions at the beginning
of H2, our Australian activities delivered
solid organic growth in Q4.
In China, which under normal circum-
stances would account for slightly less
than 5% of our total Hearing Care revenue,
we have seen declining sales momentum
in Q4 due to the ongoing coronavirus situ-
ation.
Hearing Care
(DKK million)
Q1 2022 Q2 2022 Q3 2022 Q4 2022 FY 2022
Revenue
1,898 2,034 2,018 2,173 8,123
Growth
Organic 2% -7% -5% 1% -3%
Acquisitions 5% 4% 8% 6% 6%
Local currencies
7% -3% 3% 7% 3%
FX
3% 5% 7% 3% 4%
Total
10% 1% 9% 10% 8%
Audika clinic
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Diagnostics
Demant – Annual Report 2022 33
Core SDG impact
Every year, our technology helps
screen and diagnose over 200 million
people with suspected hearing loss
and screen over 20 million newborns.
Key 2022 sustainability results
Thinking beyond the audiogram, we
researched new methods of measur-
ing the ability to hear in noise, and we
continued to improve validations of
hearing aid fittings on children aged
3-12.
As planned, we obtained ISO 14001
certification of our Diagnostics head-
quarters in Middelfart, Denmark.
Diagnostics
REVENUE
2,291
DKK MILLION
GROWTH
17%
IN LOCAL
CURRENCIES
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Diagnostics
Grason-Stadler
Corti
TM
ear screener
Demant - Annual Report 2022 33
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Diagnostics
Demant – Annual Report 2022 34
Market developments
The market for diagnostic instruments and
services continued to remain resilient in
2022. We estimate that in 2022, the mar-
ket growth rate was above the estimated
structural market growth rate of 3-5% and
that the total market for hearing and bal-
ance equipment is now back at the esti-
mated structural growth rate of 3-5% per
year from the pre-pandemic level.
Business update
Diagnostics generated revenue of DKK
2,291 million in 2022, corresponding to
17% growth in local currencies (Q4: 13%)
of which organic growth accounted for
13% (Q4: 7%). Acquisitive growth was 4%
(Q4: 5%), which predominantly relates to
our acquisition of Italian Inventis Srl.
The strong organic growth generated in
2022 is the result of another exceptionally
successful year where we not only gained
market shares in most geographies but
also saw positive market development.
Building on a strong foundation of innova-
tion, a complete product portfolio in sev-
eral brands and global distribution, our
Diagnostics business is in a market-
leading position. As previously mentioned,
we successfully acquired Inventis Srl. in
2022, and we have during the year added
the business to our existing Diagnostics
set-up.
In Q4, growth decelerated slightly, but we
continued to see solid organic growth of
7%. Diagnostics generated growth in many
product categories, with fitting and bal-
ance instruments, audiometers and imped-
ance equipment contributing the most to
growth, and the order book was solid at
the end of 2022.
From a geographical perspective, we saw
strong performance in many regions in Q4.
In Europe, growth was broadly based and
supported by the acquisition of Inventis
Srl., but in the US, which is our biggest
market, growth decelerated in Q4, alt-
hough it remained positive. As far as the
rest of the world is concerned, many coun-
tries delivered strong growth, but we saw
a negative impact of the coronavirus situa-
tion in China.
Diagnostics
(DKK million)
Q1 2022 Q2 2022 Q3 2022 Q4 2022 FY 2022
Revenue
503 563 613 612 2,291
Growth
Organic 19% 16% 12% 7% 13%
Acquisitions 1% 3% 5% 5% 4%
Local currencies
19% 18% 18% 13% 17%
FX
6% 10% 13% 7% 9%
Total
25% 28% 31% 20% 26%
MAICO
easyTone
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Communications
Demant – Annual Report 2022 35
Core SDG impact
Through pioneering audio excellence,
EPOS audio and video solutions help
prevent stress and listening fatigue,
which can be caused by imperfect
audio experiences, and also help
improve concentration and the ability
to focus for a longer time.
Key 2022 sustainability results
Building on the existing expertise
on psychoacoustics in Demant,
EPOS introduced the new EPOS
BrainAdapt™, a group of pioneering
technologies that work together to
improve cognitive performance. This
benefits the user as well as people
taking part in the communication.
Communications
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Communications – EPOS
Demant - Annual Report 2022 35
EPOS
EXPAND Vision 3
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EPOS
Demant – Annual Report 2022 36
EPOS
Financial review
Income statement
H1 H2 FY
(DKK million)
2022 2021 Growth 2022 2021 Growth 2022 2021 Growth
Revenue
552 621 -11% 508 562 -10% 1,060 1,183 -10%
Production costs
-299 -321 -7% -284 -291 -2% -583 -612 -5%
Gross profit
253 300 -16% 224 271 -17% 477 571 -16%
Gross margin
45.8% 48.3% 44.1% 48.2% 45.0% 48.3%
R&D costs
-117 -91 29% -114 -106 8% -231 -197 17%
Distribution costs
-224 -233 -4% -221 -231 -4% -445 -464 -4%
Administrative expenses
-19 -20 -5% -18 -12 50% -37 -32 16%
Operating profit (EBIT)
-107 -44 n.a. -129 -78 n.a. -236 -122 n.a.
EBIT margin
-19.4% -7.1% -25.4% -13.9% -22.3% -10.3%
REVENUE
1,060
DKK MILLION
GROWTH
-13%
IN LOCAL
CURRENCIES
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EPOS
Demant – Annual Report 2022 37
Revenue
In 2022, revenue in Communications
amounted to DKK 1,060 million. This corre-
sponds to -13% growth in local currencies,
all of which was organic growth. The de-
cline in revenue is due to strong compara-
tive figures at the beginning of the year
and significant negative growth in Gaming
throughout most of the year. During the
year, increasing macroeconomic uncertainty
weighed on consumers, which continued
to negatively impact the performance in
Gaming. Enterprise Solutions, however,
fared better for most of the year, but we
saw some buyer hesitation towards the
end of 2022. In H2, revenue reached DKK
508 million, corresponding to an organic
growth rate of -13%, which is more nega-
tive than our most recent expectations due
to both Gaming and Enterprise Solutions.
Gross profit
For the full year, gross profit was DKK 477
million, and the gross margin was 45.0%.
In H2, gross profit was DKK 224 million,
resulting in a gross margin of 44.1%. Com-
pared to H2 2021, the gross margin de-
clined by 4.1 percentage points, mainly
due to adverse effects of changes in for-
eign exchange rates, as most production
costs are denominated in US dollars. In
addition, freight charges were higher than
normally but eased during H2.
Operating expenses (OPEX)
In 2022 as a whole, OPEX amounted to
DKK 713 million, which is an increase of
3% compared to 2021. We had originally
expected higher revenue and had there-
fore adjusted our cost base to reflect this
expected growth. In H2 specifically, OPEX
amounted to DKK 353 million, correspond-
ing to an increase of 1%. The increase re-
flects our continuous investments in prod-
uct development and R&D, whereas distri-
bution costs decreased relative to H2 2021.
Administrative expenses increased, which
largely reflects phasing in the comparative
period.
OPEX by half-year
(DKK million)
Operating profit (EBIT)
EBIT for the full year was DKK -236 million,
corresponding to an EBIT margin of -22.3%,
a significant decline compared to 2021. The
realised EBIT is slightly below our most re-
cent guidance and significantly below our
original plans. In H2, EBIT amounted to
DKK -129 million, corresponding to an EBIT
margin of -25.4%. The decline in profit
compared to H2 2021 is due to low reve-
nue, a lower gross margin as well as con-
tinuous investments in R&D.
321
344
349
360
353
0
200
400
H2
2020
H1
2021
H2
2021
H1
2022
H2
2022
EBIT by half-year
(DKK
million)
81
-44
-78
-107
-129
-200
-150
-100
-50
0
50
100
H2
2020
H1
2021
H2
2021
H1
2022
H2
2022
EPOS
GSP 601
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EPOS
Demant – Annual Report 2022 38
Market developments
In 2022, growth in the markets for gaming
headsets and enterprise solutions was neg-
ative, but with significant differences in
growth rates between individual markets.
At the beginning of the year, growth in both
markets was negatively impacted by high
comparative figures from 2021 and a chal-
lenging supply situation. However, in sub-
sequent quarters, the market for enterprise
solutions improved and saw growth due to
lower comparative figures, whereas the
gaming market remained weak as a result
of declining consumer confidence and lower
spending. Towards the end of the year, the
gaming market did not see the traditional
seasonal increase in revenue, and even
though the market for enterprise solutions
has remained solid, it did see some soften-
ing in Q4.
Overall, we estimate that in 2022, the mar-
ket growth rate for enterprise headsets
was flat, whereas the market for gaming
headsets saw significant negative growth
compared to 2021. For both markets, we
estimate that growth was stronger in Asia
than in the US and Europe.
Despite negative market growth in 2022,
we still consider the fundamental growth
drivers of the market to be intact, although
growth will most likely come from a lower
starting point.
Business update
Revenue in our Communications business
amounted to DKK 1,060 million in 2022,
corresponding to an organic growth rate
of -13% (Q4: -23%). This was substan-
tially below the original plans for the year,
mainly due to lower-than-expected market
growth in Gaming.
In Q4, organic revenue growth was -23%,
mainly due to continuously weak consumer
spending, which significantly impacted the
normal seasonal development in Gaming.
Growth was also impacted by a slight de-
lay in sales of our new video solutions and
by some buyer hesitation affecting Enter-
prise Solutions. Both Enterprise Solutions
and Gaming saw negative growth in Q4,
and in order to adjust to market conditions,
we announced and initiated initiatives in
November 2022 to lower our cost base in
Communications. These initiatives will take
full effect in 2023.
In terms of geographies, we saw negative
growth in all the regions where we oper-
ate, although it was most pronounced in
North America.
In 2022, we saw a significant impact of
macroeconomic uncertainty on our mar-
kets, and as we have now entered 2023,
this uncertainty remains elevated. We are
focused on improving the financial perfor-
mance of our business and remain com-
mitted to promoting and solidifying EPOS
as a leading premium player in the indus-
try. This includes maintaining and expand-
ing our state-of-the-art product portfolio,
spanning headsets and video solutions for
enterprises and gaming headsets.
Product update
Recently, EPOS launched its new video so-
lutions, EPOS EXPAND Vision 1 and 5,
which are important steps in our journey to
becoming a full-suite supplier of state-of-
the-art unified collaboration and commu-
nication solutions for professionals.
In addition, EPOS has released its first sci-
entific research, examining the impact of
EPOS BrainAdapt™ technology on listen-
ing performance. The study highlights a
reduction in listening efforts as well as
improved word recognition when using
EPOS headsets. This illustrates the scien-
tific benefits of our technologies, which are
designed to support the brain’s natural
way of processing sound.
Communications
(DKK million)
Q1 2022 Q2 2022 Q3 2022 Q4 2022 FY 2022
Revenue
292 260 256 252 1,060
Growth
Organic -25% 5% 0% -23% -13%
Acquisitions 0% 0% 0% 0% 0%
Local currencies
-25% 5% 0% -23% -13%
FX
2% 4% 5% 2% 3%
Total
-23% 9% 5% -21% -10%
EPOS
EXPAND Vision 5
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Shareholder information
Demant – Annual Report 2022 40
Share capital
As of 31 December 2022, Demant’s nomi-
nal share capital was DKK 46,075,747.00
divided into 230,378,735 shares of DKK
0.20 each.
All shares are the same class and carry
one vote each. The change compared to
the year before is due to the cancellation
of treasury shares by DKK 1,949,819.60,
which was approved at the annual general
meeting on 10 March 2022.
The Board of Directors has been authorised
by the annual general meeting to increase
the company’s share capital by a total nom-
inal value of up to DKK 4,800,000. This in-
crease may consist of no more than DKK
4,800,000 of the share capital with pre-
emptive rights for existing shareholders
and of no more than DKK 4,800,000 of the
share capital without pre-emptive rights
for existing shareholders. The increase in
the company’s share capital can also be
carried out through a combination of share
capital with and without pre-emptive rights,
but it cannot exceed a total nominal value
of DKK 4,800,000. Furthermore, the Board
of Directors has been authorised to increase
the share capital by an additional nominal
value of up to DKK 2,500,000 for shares
offered to employees. All authorisations
are valid until 1 March 2026.
Ownership
William Demant Foundation is the majority
shareholder in Demant through its invest-
ment company William Demant Invest and
has previously communicated its intention
to maintain an ownership interest of 55-
60% of Demant’s share capital. As of 31
December 2022, William Demant Founda-
tion held – either directly or indirectly –
approx. 57% of the share capital.
No other shareholders had flagged an
ownership interest of 5% or more as of
31 December 2022.
Demant had 33,616 individual investors as
of 31 December 2022. Approx. 77% of the
share capital is registered in Denmark and
11% is registered in North America. The
remaining 12% of the share capital is split
Shareholder information
Share information
(DKK 1,000)
2022 2021 2020 2019 2018
Share capital at 1 January
48,025 48,138 49,057 50,474 51,793
Capital reduction
-1,950 -113 -919 -1,416 -1,319
Share capital at 31 December
46,076 48,025 48,138 49,057 50,474
Nominal value per share, DKK
0.2 0.2 0.2 0.2 0.2
Total number of
shares, thousand 230,378 240,127 240,691 245,287 252,368
Highest share price, DKK
339.3 394.7 244.4 237.2 318.6
Lowest share price, DKK
173.1 219.6 132.2 160.5 167.4
Share price, year
-end, DKK 192.6 335.1 240.6 209.8 184.9
Market capitalisation at 31 December, DKK million*)
42,977 77,117 57,718 50,470 45,308
Average daily trading turnover, DKK million*)
76.2 111.0 99.8 112.4 128.6
Average number of shares, million*)
226.0 234.8 239.8 243.6 249.1
Number of
shares at 31 December, million*) 223.2 230.1 239.9 240.6 245.2
Number of treasury shares at 31 December, million
7.2 10.0 0.8 4.7 7.1
*Excluding treasury shares.
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Demant – Annual Report 2022 41
between the remaining geographies but is
predominantly registered in Europe.
As of 31 December 2022, the company
held 7,193,778 treasury shares, corre-
sponding to 3.1% of the share capital.
Share price development
The price of Demant shares decreased by
43.3% in 2022, and on 31 December 2022,
the share price was DKK 192.55. This cor-
responds to a market capitalisation of DKK
43.0 billion (excluding treasury shares). The
average daily trading turnover in 2022
was DKK 76 million. The company is a
constituent of the OMX Copenhagen 25 In-
dex (C25), which covers the 25 largest and
most frequently traded shares on Nasdaq
Copenhagen. The C25 Index decreased by
13.5% during the year.
Capital allocation
The company follows the principles of its
capital allocation policy and uses its cash
flow from operating activities for value-
adding investments and acquisitions. Sub-
ject to Demant’s targeted gearing multiple
of 2.0-2.5 measured as net interest-
bearing debt relative to EBITDA, any ex-
cess liquidity will be distributed back to
the shareholders through share buy-backs.
Until the next annual general meeting in
March 2023, the Board of Directors has
been authorised to let the company buy
back shares at a nominal value of up to
10% of the share capital. The purchase
price may not deviate by more than 10%
from the price quoted on Nasdaq Copen-
hagen.
Investor Relations (IR)
Demant strives to ensure a steady and
consistent flow of information to IR stake-
holders in order to promote the basis for
a fair pricing of the company’s shares –
pricing that will at any time reflect the
company’s strategies, financial capabilities
and outlook for the future. The flow of in-
formation will contribute to a reduction of
the company-specific risk associated with
investing in Demant shares, thereby lead-
ing to a reduction of the company’s cost
of capital.
We aim to reach this goal by continuously
providing relevant, correct, adequate and
timely information in our company an-
nouncements. In the course of the year,
we publish interim reports semi-annually
and interim management statements on
a quarterly basis, all of which contain up-
dates on the Group and its financial posi-
tion as well as results in relation to the
full-year outlook, including updates on
important events and transactions in the
period under review.
We strive to maintain an active and open
dialogue with analysts as well as current
and potential investors, which helps the
company stay updated on the views, inter-
ests and opinions of the company’s vari-
ous stakeholders. At our annual general
meeting and through presentations, indi-
vidual meetings, participation in investor
conferences, webcasts, capital markets
days etc., we aim to maintain an ongoing
dialogue with a broad spectrum of stake-
holders. In 2022, we held more than 350
investor meetings and presentations.
Development in share price and daily turnover in 2022
0
50
100
150
200
250
300
350
400
450
500
100
150
200
250
300
350
400
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Daily turnover (DKK million)
Share price (DKK)
Turnover Demant OMX C25 (rebased)
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Shareholder information
Demant – Annual Report 2022 42
We also use our website,
www.demant.com, as a means of commu-
nication with our stakeholders.
At the end of 2022, 17 equity analysts
were covering Demant. We refer to our
website for a full list of analyst coverage.
Demant has a three-week quiet period
prior to publication of annual reports, in-
terim reports and interim management
statements where communication with
IR stakeholders on the current market
development is restricted.
Annual general meeting 2023
The annual general meeting will be held
on Thursday, 8 March 2023 at 4:00 p.m.
Shareholders can attend the meeting
physically at the company’s headquarters.
The meeting will also be webcast live on
our website.
Contact information for
investors and analysts
Phone: +45 3917 7300
E-mail: info@demant.com
Company announcements and investor news in 2022
3 Jan Managers’ transactions
25 Jan President of Oticon Medical Jes Olsen retires (investor news)
7 Feb Erroneous publication of two key figures on Demant’s website
8 Feb Annual Report 2021
8 Feb Notice to annual general meeting
4 Mar Investment in leading growth platform in China
10 Mar Extension of Demant’s Executive Board
10 Mar Decisions of annual general meeting
25 Mar Disclosure of historical quarterly figures (investor news)
25 Apr Completion of capital reduction
27 Apr Divestment of Hearing Implants
3 May Interim Management Statement covering Q1 2022
14 Jun Demant completes full acquisition of Sheng Wang
12 Aug Comparative figures for 2021 (investor news)
16 Aug Interim Report 2022
1 Nov
Pre-announcement of Interim Management Statement for Q3 2022 and
updated outlook
9 Dec Financial calendar 2023
Mathias Holten
Møller
Head of Investor Relations
Peter Pudselykke
Investor Relations Officer
Financial calendar 2023
24 Jan
Deadline for submission of items for the agenda of the annual general
meeting
7 Feb Annual Report 2022
8 Mar Annual general meeting
3 May Interim Management Statement
16 Aug Interim Report 2023
7 Nov Interim Management Statement
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William Demant Foundation
Demant – Annual Report 2022 43
William Demant Foundation, Demant’s
majority shareholder, was founded in 1957
by William Demant, son of the company’s
founder Hans Demant. Its primary goal is
to safeguard and expand the Demant
Group’s business and provide support for
various commercial and charitable causes
with particular focus on audiology and
hearing impairment. William Demant In-
vest, which is a fully owned holding
company for all William Demant Founda-
tion’s investment activities, holds the
Foundation’s shares in Demant. Charitable
tasks are thus handled by the Foundation
itself and the Foundation’s investment ac-
tivities by William Demant Invest. Voting
rights and decisions to buy and sell De-
mant shares are still exercised and made
by William Demant Foundation.
In accordance with William Demant In-
vest’s investment strategy, the Founda-
tion’s investments – apart from an owner-
ship interest in Demant – also include
other assets. William Demant Invest
makes active investments in companies
whose business model and structure re-
semble those of the Demant Group but fall
outside the Group’s strategic sphere of in-
terest. The investments include, among
others, majority ownership of Össur and
Vision RT. The Foundation has made a
management agreement on a commercial
arm’s length basis with Demant, which
governs the exchange of various invest-
ment support and administrative services
between the Foundation, William Demant
Invest and Demant. Please also see Note
8.1.
William Demant Foundation
Ukraine
Donation of DKK 9 million
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Risk management activities
Demant – Annual Report 2022 44
Risk management activities in the Demant
Group include a variety of risks, many of
which may impact the operational perfor-
mance and reputation of the Group. The
executive management works on identify-
ing and mitigating risks on an ongoing ba-
sis. In connection with the preparation of
the Group’s strategic, budgetary and an-
nual plans, the Board of Directors consid-
ers the risks identified.
In general, the hearing healthcare market
consists of a few, highly specialised play-
ers that operate in an extremely competi-
tive market. Historically, the market has
seen stable growth driven by demographic
changes, but today’s macroeconomic situ-
ation may impact market dynamics, espe-
cially in markets with a large share of pri-
vate pay.
In the period during and after the corona-
virus pandemic, the Group has seen an in-
creasing number of changes to the exter-
nal operating environment, most of which
are beyond our own control. While navi-
gating in the current market conditions, we
monitor potential changes to the competi-
tive situation to ensure that we respond
swiftly and effectively to any changes in
the market. As a part of the general busi-
ness planning, the Executive Board is re-
sponsible for navigating in these dynamic
conditions.
Sustainability risks
Demant is a positive-impact business that
helps people overcome their hearing loss
and thus improve their quality of life. Due
to the nature of our business and value
chain, Demant is not exposed to, nor do
we represent, large sustainability-related
risks. The most material risks include talent
retention, diversity, equity and inclusion,
human rights, climate impact, bribery and
corruption. Please refer to our
Sustainabil-
ity Report for more details on environmen-
tal, social and governance risks.
Internal control and reporting
Once a year, we carry through a very de-
tailed planning and budgetary process,
and any deviations from the plans and
budgets resulting from this process are
carefully monitored month by month. To
ensure high quality in the Group’s financial
reporting systems, the Board of Directors
and Executive Board have adopted poli-
cies, procedures and guidelines for finan-
cial reporting and internal control to which
the subsidiaries and reporting units must
adhere.
The responsibility for maintaining sufficient
and efficient internal control and risk man-
agement lies with the Executive Board.
The Board of Directors has assessed the
Group’s existing control environment and
concluded that it is adequate.
Characteristics
Changes in the economic climate can di-
rectly impact our activity level. This is es-
pecially true in relation to the current mac-
roeconomic uncertainty and coronavirus-
related restrictions, which are still impact-
ing some regions. Such changes may
adversely affect the demand for hearing
healthcare solutions and audio equipment.
Many developed countries are currently
experiencing higher-than-normal inflation
rates, which may impact the economies
in the Group’s markets. In 2022, we have
seen some hearing aid markets being neg-
atively impacted by macroeconomic uncer-
tainty. These developments have also im-
pacted the market for gaming headsets
and may thus affect the Group’s future
financial performance.
Similarly, coronavirus-related restrictions
continue to pose a risk for our activities in
some geographies and thus our financial
results, as a significant part of our sales is
based on in-person counselling of individu-
als with hearing difficulties. In addition,
lockdowns and other coronavirus-related
restrictions may also affect the global sup-
ply chain and thus increase the risk of sud-
den changes. Stability in sourcing and de-
livering high-quality manufactured goods
on time is crucial for us to be able to fulfil
the commitments we have made to our
customers. Supply disruptions of any kind
– driven by internal or external factors –
may result in delayed deliveries, inefficient
production set-ups or inability to meet
demand.
Our response and mitigation efforts
We work with business and contingency
plans to service our customers in the best
possible way in any given situation. As
always, this is done while we ensure the
safety of our employees.
In case of macroeconomic or geopolitical
headwinds, we seek to adapt our organi-
sation, activities and costs accordingly
to mitigate the financial impacts.
We closely monitor our supply situation
and seek to keep adequate safety stocks
to counter potential interruptions in our
production. Our main production facilities
in Poland and Mexico are located in close
proximity to our largest markets, which
has been important in order to quickly and
efficiently serve our customers despite
dynamic changes in the supply chain. We
continuously evaluate our production foot-
print and dependency on key suppliers to
strike a sound balance between flexibility,
exposure and costs.
Risk management activities
Risk management activities
Macroeconomic and geopolitical risks
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Demant – Annual Report 2022 45
Characteristics
As a major player in the hearing healthcare
market, the Group is exposed to certain
regulatory risks in terms of changes to
product requirements, reimbursement
schemes and public tenders in the markets
where we operate. In most markets, the
current regulatory landscape is considered
stable, so for the time being, we do not ex-
pect significant changes in the regulatory
environment.
In 2022, we have seen regulatory changes
in the US market, which may impact the
hearing aid market in the coming years.
The US Food and Drug Administration
(FDA) finalised the long-awaited proposed
rule to establish a new over-the-counter
(OTC) category of hearing aids, and the
rule took effect in October. The content of
the final rule does not change our funda-
mental belief in the importance of provid-
ing a combination of personal counselling,
individual fitting, life-long service and
highly advanced technology, but the new
category may improve access to hearing
healthcare solutions.
For the US market in general, an increas-
ing part of hearing aid purchases has over
the past couple of years been covered by
insurance companies. The emergence of
large managed care organisations contin-
ues to pose a risk to average selling prices
in the hearing aid market, as volumes may
to an increasing extent be consolidated on
fewer players. It may also impact sales in
our retail business.
Our response and mitigation efforts
The Group is, as always, focused on ad-
hering to legal requirements for our prod-
ucts and services to ensure that our prod-
ucts are safe to use and meet the require-
ments and needs of our users.
While regulatory changes are an intrinsic
part of the hearing healthcare market, we
feel well positioned to respond to such
changes in the commercial environment.
We continuously work on adapting our
operating model – something we have
already done in markets where we have
seen changes to reimbursement schemes
over the years.
We continue to monitor any changes in
the regulatory landscape and engage in
dialogues with regulators as part of our
day-to-day business planning.
Characteristics
Both our Hearing Healthcare and Commu-
nications segments operate in markets that
are highly product-driven and in markets
where significant R&D initiatives help un-
derpin our market position. It is vital for us
to maintain our innovative edge and to at-
tract the most competent staff.
An important part of our ongoing product
innovation is to take out, protect and main-
tain patents for our own groundbreaking
technology. The inability to protect our in-
novation could negatively impact our busi-
nesses.
In terms of product development, the com-
plexity of our products has continued to in-
crease in recent years. To remain competi-
tive, it is therefore essential that we use
our R&D investments efficiently to create
product innovation.
When developing products and creating
innovation, we must adhere to standards
and regulations in terms of risk manage-
ment, and we are subject to risk assess-
ment by external bodies in respect of all
aspects of our business – from development
and production to the final release of prod-
ucts to customers. Managing these risks is
a crucial part of the Group’s ongoing risk
management efforts, and failure to do so
may put the Group’s customers at risk.
In 2022, Demant announced the intention
to divest its Hearing Implants business,
and this transaction is still subject to mer-
ger clearance. Closing is expected in Q2
2023, but inability to close the transaction
could pose an additional commercial and
financial risk.
Our response and mitigation efforts
We continuously engage with customers,
healthcare practitioners and other stake-
holders to ensure that we develop ground-
breaking products. We incorporate the re-
quirements of international standards and
regulations into the design and develop-
ment of manufactured devices to limit our
product risk. All processes in our quality
management system (QMS) contribute to
ensuring that our products are safe and
meet the requirements and needs of our
users. Notified bodies inspect our QMS on
a yearly basis. Demant works continuously
to improve these systems.
As a general principle, our products are
designed and marketed under risk man-
agement guidelines complying with ISO
14971 to ensure the safety of our users.
In case of an unexpected incident, we act
fast and decisively and maintain a trans-
parent dialogue with relevant stakeholders.
Regulatory risks
Innovation and commercial risks
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Demant – Annual Report 2022 46
Characteristics
Business ethics are an inevitable part of
conducting business in a global world with
many stakeholders – both employees and
external business partners.
The Group sells its products in countries
that may be subject to EU or US sanctions.
To ensure compliance, distributors engag-
ing in business in these countries are there-
fore subject to sanction checks. In 2022,
following the Russian invasion of Ukraine,
Demant halted all its trade activities in
Russia and Belarus, which now also en-
sures compliance with EU and US sanc-
tions imposed on these countries. These
sanctions include financial sanctions,
trade/export controls and sanctions
against entities and individuals. The Group
continues to monitor the situation to en-
sure compliance at all times, and failure to
do so may negatively impact the company.
Our Data Ethics Policy can be found here.
Our response and mitigation efforts
Failure to operate the company in a re-
sponsible and ethical way may tarnish
the company’s reputation and have finan-
cial consequences for the Group. Our or-
ganisation continuously monitors current,
amended and new legislation and with a
view to ensuring proper compliance. This
includes alignment with global tax stand-
ards as well as adherence to general regu-
lations.
We continuously expand and improve
our Group Business Ethics Programme to
reflect our all-important commitment to a
high level of business ethics. This includes
the Demant Group Code of Conduct, a
global whistleblower scheme and a num-
ber of global policies and guidelines in the
business ethics areas.
Demant collects and reports on the Busi-
ness Ethics Programme on an ongoing
basis, which is shared with the Executive
Board and the Board of Directors.
Characteristics
As our Group becomes increasingly digital-
ised, more devices and control systems are
connected online, resulting in a broader
interface across our IT infrastructure that
could potentially be compromised.
As a large, global organisation, we are
dependent on numerous IT systems and
the general IT infrastructure to operate ef-
ficiently across our value chain. This car-
ries an inherent risk of system errors, hu-
man errors, data breaches or other inter-
ruptions that may impact the Group finan-
cially. In addition, we may be exposed to
attempts to access or steal information,
computer viruses, denial of service and
other digital security breaches, which may
have negative consequences for the Group
and our customers.
Our response and mitigation efforts
We regularly conduct maturity assess-
ments to measure progress in IT security.
We continuously seek to minimise these
risks, and our IT strategy includes preven-
tion and contingency plans.
By way of example, our IT security com-
mittee set up by our Board of Directors
continuously follows up on and monitors
our IT security set-up to ensure that the
Group remains focused on ensuring proper
IT security. Once a year, the committee
reviews a maturity assessment based on
the Cybersecurity Framework of the Na-
tional Institute of Standards and Technol-
ogy (NIST), the purpose of which is to en-
sure that also in future, we continue to fo-
cus on relevant parameters. The assess-
ment was made by an external party in
2021, while it was done internally in 2022.
We train and educate our employees in IT-
related topics on an ongoing basis to limit
any IT-related incidents that may nega-
tively impact the Group. We regularly up-
date policies to ensure that they are up-to-
date and reflect the current environment.
Read more on page 46 in the Sustainabil-
ity Report.
Business ethics risks
IT risks
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Demant – Annual Report 2022 47
Characteristics
Financial risk management concentrates
on identifying risks in respect of changes in
the financial markets and customers’ pro-
pensity to pay for products and services.
The Group is exposed to exchange rate
risks, as the company trades with counter-
parties in a number of countries, and as
the company may have varying cash flows
in different currencies. Failure to adequately
balance the Group’s foreign exchange rate
risks may impact the financial performance
of the company.
In addition to exchange rate risks, the
Group is exposed to interest rate risks, as
changes in lending rates impact the com-
pany’s interest expenses and credit profile.
From a commercial point of view, the
Group is exposed to credit risks if our cus-
tomers fail to pay for products and ser-
vices provided. Such risks mainly relate to
trade receivables and loans to customers
or business partners, and failure to ade-
quately manage credit risks can adversely
impact the Group.
Our response and mitigation efforts
Around two-thirds of the Group’s sales are
invoiced in other currencies than Danish
kroner or euros. To ensure predictability
in terms of profit, we hedge against ex-
change rate risks – mainly through for-
ward exchange contracts with a horizon
of up to 18 months. It is the Group’s policy
to exclusively hedge financial risks arising
from our commercial activities and not to
undertake any financial transactions of a
speculative nature. Furthermore, to reduce
our exchange rate exposure, we continu-
ously seek to balance positive and nega-
tive cash flows in our main trading curren-
cies as much as possible.
The Group continuously adapts its capital
structure to the prevailing market condi-
tions in order to secure attractive financ-
ing. Currently, around 40% of the Group’s
debt is funded through facilities with fixed
rates and through financial instruments,
which limits the interest rate risk.
The executive management monitors the
capital structure of the company to ensure
that it remains well-balanced. Interest rates
have increased during 2022, which has
impacted the company’s financial ex-
penses. Demant has centralised the man-
agement of financial risks with Group
Treasury, which is responsible for securing
attractive funding given the prevailing
market conditions.
To mitigate potential liquidity and refi-
nancing risks, Demant has access to con-
siderable undrawn credit facilities. Gener-
ally, Demant has remained a highly cash-
generating company. The Group has not
defaulted on loan agreements, neither in
the financial year 2022 nor in previous
years.
To minimise the risk of suffering losses on
customers, the Group monitors the credit
risk on an ongoing basis as a part of the
financial review of our business. The Group
generally has a diversified customer base,
and in 2022, the accumulated revenue
from our ten largest customers accounted
for approx. 12% of total consolidated reve-
nue. We regularly adjust our financial ac-
counts to reflect the current credit risks.
When granting loans to business partners,
we require that our counterparties provide
security in their business. In general, we
estimate that the risk relative to our total
credit exposure is well-balanced at Group
level, and historically, we have only suf-
fered limited credit-related losses. Follow-
ing the halt of sales to Russia, we have
immaterial receivables in the region.
Please refer to Note 4.1 for additional in-
formation on financial and credit risks.
Financial risks
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Corporate governance
Demant – Annual Report 2022 48
Corporate governance
Insights and highlights
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Corporate governance
Demant – Annual Report 2022 49
Board and Executive
Board members
in Smørum, Denmark
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Corporate governance
Demant – Annual Report 2022 50
The Remuneration Report is available on
our website here.
Board meetings
Audit committee meetings
Nomination committee meeting
Remuneration committee meetings
IT security committee meetings
Feb Mar
Jun
Aug
Dec
Feb
Aug Dec
N
ov
Jan Feb Nov
Feb May
Mar
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Executive Board
Demant – Annual Report 2022 51
Executive Board
Arne Boye Nielsen
(ma
n)
President
Born 19
68
Nationality: Danish
31,161
shares
(+
2,753)
Niels Wagner
(ma
n)
President
Born 19
71
Nationality: Danish
24,498
shares
(+
2,321)
Joined the company in 1990
Education:
Holds an MSc in Business
Administration from Copenhagen Business
School
(CBS)
Competences
: Broad business and leader-
ship experience from various management
positions in the Group, including
M&A and
heading a broad portfolio of
diagnostic
companies
operating under various brands
Other positions:
Össur hf. (M, C audit
committee
, M remuneration committee),
Revenio
Group Oyj (C, M audit committee)
Areas of responsibility
: President of
Demant’s Diagnostics business area
since 199
6 and the Communications
business area since 2002
Joined the company in 2007
(also with
the company 1996-2003)
Education:
Holds an MSc in Economics
from Aarhus University
Competences:
Broad business and leader-
ship experience from various management
positions in the Group, including
M&A and
heading
the Group’s numerous retail com-
panies
operating under various brands
Area of responsibility:
President of
Demant’s
Hearing Care business area
since 2007
Abbreviations
C = Chair, VC = Vice Chair, M = Member
Søren Nielsen
(ma
n)
President & CEO
Born 1970
Nationality: Danish
32,091
shares
(+
4,049)
René Schneider
(ma
n)
CFO
Born 1973
Nationality: Danish
17,745
shares
(+1
,930)
Joined the company in 1995
Education:
Holds an MSc in Engineering
from the Technical University of Denmark
Competences:
Broad business and leader-
ship experience from various management
positions in the Group, including the com-
mercial area, product innovation, quality
and strategic development. International
board experience, strong insights into the
MedTech industry as wel
l as a wide net-
work in the global hearing healthcare
community
Other positions:
HIMPP A/S (M), HIMSA
A/S (C), HIMSA II A/S (C), EHIMA (M), Vision
RT Ltd. (M), Committee on Life Science un-
der the Confederation of Danish Industry
(C), Committee on Business
Policy under
the Confederation of Danish Industry (M)
and Central Board of the Confederation
of Danish Industry (M)
Area of responsibility:
President of
Demant’s Hearing Aids business area
Joined the company in 2015
Education:
Holds an MSc in Economics
from Aarhus University
Competences:
Broad business and finan-
cial leadership experience from various
management positions with major listed
companies, leading to international experi-
ence in such areas as streamlining and re
-
establishing companies, completing M&A
and driving value creation
A
reas of responsibility: Finance, HR, IT,
Legal & Compliance
and Corporate Func-
tions
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Board of Directors
Demant – Annual Report 2022 52
Board of Directors
Niels B. Christiansen
(
man)
Chair
Born 1966
Nationality: Danish
8,060 shares
(unchanged)
Niels Jacobsen
(
man)
Vice
Chair
Born
1957
Nationality: Danish
9
01,340 shares
(unchanged)
Joined the Board in 2008
Chair since 2017
Chair of the nomination, remuneration and
IT security committees and member of the
audit committee
Considered independent:
No
Position:
CEO & President, LEGO A/S
Other positions:
William Demant Founda-
tion (
VC), William Demant Invest A/S (M),
Tetra Laval S.A.
(M) and Committee on
Business Policy under the Confederation
of Danish Industry (C)
Education:
Holds an MSc in Engineering
from the Technical University of Denmark
and an MBA from INSEAD
Competences:
International leadership
experience from major, global
, industrial,
consumer goods and high
-
tech companies,
business management and board experi-
ence as well
as strong insights into indus-
trial policy
Attendance in Board and committee
meetings:
No absence
Joined the Board in 2017
Vice
Chair since 2017
Member of the audit, nomination, remuner-
ation and IT security committees
Considered independent:
No
Position:
CEO, William Demant Invest A/S
Other positions:
Nissens A/S (M), Thomas
B. Thrige Foundation (C), ABOUT YOU
Holding GmbH (
VC), ATP Langsigtet Dansk
Kapital
(M) and Central Board of the Con-
federation of Danish Industry
(M). Related
to William Demant Invest: Jeudan A/S (C),
Össur hf. (C)
and Vision RT Ltd. (C)
Education:
Holds an MSc in Economics
from Aarhus University
Competences:
International leadership
experience from major, global companies
in the global healthcare and MedTech in-
dustry, business management and board
experience as well as in
-depth insights
into financial matters, accounting, risk
management and M&A
Attendance in Board and
committee
meetings: No absence
Sisse Fjelsted
Rasmussen
(
woman)
Born 19
67
Nationality: Danish
No
shares
Anja Madsen
(
woman)
Born 1976
Nationality: Danish
1,500 shares
(unchanged)
Joined the Board in 2021
Chair
of the audit committee and member
of the IT security committee
Considered independent:
Yes
Position:
CFO, Stark Group
Other positions:
Conscia A/S (M)
Education:
Holds an MSc in Business
Economics and Auditing from Copenhagen
Business School (CBS)
Competences:
International leadership
experience
within the area of finance and
accounting
, including board and CFO ex-
perience from listed companies as well
as
in-depth insights into value creation,
change management and M&A
Attendance in Board and comm
ittee
meetings:
No absence
Joined the Board in 2020
Member of the audit committee
Considered independent:
Yes
Position:
Executive Vice President, Føtex
Other positions:
Lemvigh-Müller A/S (M)
Education:
Holds a BSc in Economics from
London School of Economics and an MBA
from INSEAD
Competences:
International leadership
experience from large companies in the
retail segment; experienced leader of oper-
ations
, e-commerce and transformation
with
a background in strategy execution;
lived and worked in the UK for many years
Attendance in Board and committee
meetings:
Absent from two Board meet-
ings
and one audit committee meeting
Abbreviations
C = Chair, VC = Vice Chair, M = Member
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Board of Directors
Demant – Annual Report 2022 53
Casper Jensen
(
man)
Born 1979
Nationality: Danish
1,
779 shares
(+
585)
Jørgen Møller Nielsen
(
man)
Born 1962
Nationality: Danish
366 shares
(unchanged)
Staff-elected Board member in 2019 for a
term of four years
Considered
independent: N/A
Position:
Vice President of Sales,
Interacoustics, a subsidiary company of
Demant
Has been with the Demant Group since
2012
Education:
Holds an MBA from Coventry
University
Attendance in Board and committee
meetings:
No absence
Staff-elected Board member since 2017
and also from 2011
-2015
Re
-
elected in 2019 for a term of four years
Considered independent:
N/A
Position:
Senior Project Manager, Demant
facility in Ballerup, Denmark
Has been with the Demant
Group since
2001
Education:
Holds an MSc in Electrical
Engineering from the Technical University
of Denmark and a Diploma in Business
Administration (Organisation and Strategy)
Attendance in Board and committee
meetings:
No absence
Abbreviations
C = Chair, VC = Vice Chair, M = Member
Kristian Villumsen
(
man)
Born 1970
Nationality: Danish
4,130 shares
(
unchanged)
Thomas Duer
(
man)
Born 1973
Nationality: Danish
1,335 shares
(unchanged)
Joined the Board in 2021
Member of the audit committee
Considered independent:
Yes
Position:
President & CEO, Coloplast
Other positions:
Committee on Life
Science under the Confederation of Danish
Industry (M)
Education:
Holds an MSc in Political
Science from Aarhus U
niversity and a
Master in Public Policy from Harvard
University
Competences:
International leadership
experience from the global MedTech indus-
try, management experience from such
areas as innovation,
sales, strategy de-
ployment and commercial excellen
ce
Attendance in Board and committee
meetings:
Absent from one Board and
one audit committee meeting
Staff-elected Board member since 2015
Re
-
elected in 2019 for a term of four years
Considered independent:
N/A
Position:
Senior Director, Requirements,
Configuration & Test, R&D, Demant
Has been with the Demant Group since
2002
Other positi
ons: Danske Sprogseminarer
A/S (M), Oticon A/S (M, staff
-elected)
Education:
Holds an MSc in Electrical
Engineering from the Technical University
of D
enmark
Attendance in Board and committee
meetings:
No absence
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Management statement
Demant - Annual Report 2022 55
Management statement
0BExecutive Board
René Schneider, CFO Arne Boye Nielsen , President Diagnostics
1BBoard of Directors
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Independent auditor’s report
Demant - Annual Report 2022 56
Report on the audit of the
Financial Statements
Independent auditor’s report
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Independent auditor’s report
Demant - Annual Report 2022 57
Insights and highlights
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Independent auditor’s report
Demant - Annual Report 2022 58
Insights and highlights
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Independent auditor’s report
Demant - Annual Report 2022 59
CVR No 3377 1231
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Consolidated financial
statements
Demant - Annual Report 2022 60
Consolidated financial
statements
Demant – Annual Report 2022
.
60
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Consolidated financial
statements
Demant - Annual Report 2022 61
Consolidated income statement
(DKK million)
Note 2022 2021
Revenue
1.2 19,705 17,905
Production costs
1.3 / 1.4 / 1.6 / 8.3 -5,036 -4,447
Gross profit
R&D costs
1.3 / 1.4 / 8.3 -1,314 -1,139
Distribution costs
1.3 / 1.4 / 8.3 -9,232 -7,983
Administrative expenses
1.3 / 1.4 / 8.2 / 8.3 -1,038 -892
Share of profit after tax, associates and
joint ventures
3.4 / 6.1 122 120
Other operating income
6.2 - 99
Operating profit (EBIT)
Financial income
4.2 83 42
Financial expenses
4.2 -363 -244
Profit
before tax 2,927 3,461
Tax on profit for the year
5.1 -651 -750
Profit after tax
- continuing operations 2,276 2,711
Profit after tax
- discontinued operations 6.3 -192 -183
Profit for the year
Profit for the year attributable to:
Demant A/S' shareholders
Non
-controlling interests 2 15
Earnings per share (EPS), DKK
-
continuing operations
1.5 10.06 11.48
Diluted earnings per share (DEPS), DKK
-
continuing operations
1.5 10.06 11.48
Earnings per share (EPS), DKK
1.5 9.21 10.70
Diluted earnings per share (DEPS), DKK
1.5
Consolidated statement of comprehensive income
(DKK million)
2022 2021
Profit for the year
Foreign currency translation adjustment, subsidiaries
Value adjustments of hedging instruments:
Value adjustment for the year
-40 -177
Value adjustment transferred to revenue
Tax on items that have been or may subsequently be reclassified
to the income statement
-32 29
Items that have been or may subsequently be reclassified to the
income statement
Actuarial gains/losses on defined benefit plans
Tax on items that will not subsequently be reclassified to the
income statement
-27 -12
Items that will not subsequently be reclassified to the income
statement
Other comprehensive income
Comprehensive income
Comprehensive income attributable to:
Demant A/S’ shareholders
Non
-controlling interests 2 15
Breakdown of tax on other comprehensive income:
Foreign currency translation adjustment, foreign enterprises
Value adjustment of hedging instruments for the year
Value adjustment of hedging instruments transferred to revenue
-44 -8
Actuarial gains/losses on defined
benefit plans -27 -12
Tax on other comprehensive income
-59 17
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Consolidated financial
statements
Demant - Annual Report 2022 62
(DKK million)
Note 2022 2021
Equity and liabilities
Share capital
Other reserves
Equity attributable to Demant A/S' shareholders
Equity
attributable to non-controlling interests 1 4
Equity
Borrowings
4.3 / 4.4 6,098 2,795
Lease liabilities
3.3 / 4.4 1,766 1,610
Deferred tax liabilities
5.2 620 470
Provisions
7.1 175 268
Other
liabilities 4.3 / 7.2 566 340
Deferred income
7.3 501 423
Non
-current liabilities 9,726 5,906
Borrowings
4.3 / 4.4 6,598 6,422
Lease liabilities
3.3 / 4.4 614 511
Trade payables
4.3 865 808
Income tax
Provisions
7.1 33 81
Other liabilities
4.3 / 7.2 2,445 2,302
Unrealised losses on financial contracts
2.3 / 4.3 / 4.5 15 81
Deferred income
7.3 513 501
Liabilities related to assets held for sale
6.3 175 -
Current
liabilities 11,569 10,973
Liabilities
Equity and liabilities
Consolidated balance sheet 31 December
(DKK million)
Note 2022 2021
Assets
Intangible assets
3.1 12,582 10,317
Property, plant and equipment
3.2 2,553 2,277
Lease assets
3.3 2,304 2,079
Investments in associates and joint ventures
3.4 822 858
Receivables from associates and joint
ventures
3.4 / 4.3 / 4.4 371 267
Other
investments 4.3 / 4.5 15 11
Customer loans
1.8 / 3.4 / 4.3 / 4.4 566 494
Other receivables
3.4 / 4.3 / 4.4 84 75
Deferred tax assets
5.2 538 596
Other non
-current assets 4,700 4,380
Non
-current assets 3.5 19,835 16,974
Inventories
1.6 2,904 2,366
Trade receivables
1.7 / 4.3 3,626 3,203
Receivables from associates and joint
ventures
4.3 170 147
Income tax
Customer loans
1.8 / 4.3 / 4.4 229 196
Other
receivables 4.3 / 4.4 376 420
Unrealised gains on financial contracts
2.3 / 4.3 / 4.5 103 6
Prepaid expenses
Cash
4.3 / 4.4 1,130 1,172
Assets held for sale
6.3 964 -
Current assets
Assets
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Consolidated financial
statements
Demant - Annual Report 2022 63
Acquisition of enterprises, participating in-
terests and activities includes loans of DKK
0 million (DKK 63 million in 2021) classified
as other non-current assets, which have
been settled as part of acquisitions with-
out cash payments.
(DKK million)
Note 2022 2021
Operating profit (EBIT)
Non
-cash items etc. 1.9 1,074 869
Change in receivables etc.
-491 -474
Change in inventories
-532 -335
Change in trade payables and other liabilities etc.
Change in provisions
Dividends
received 164 106
Cash flow from operating profit
Financial income etc. received
Financial expenses etc. paid
-359 -245
Income tax paid
-517 -477
Cash flow from operating activities (CFFO)
Acquisition of enterprises, participating interests and activities
-2,323 -708
Divestment of enterprises, participating interests and activities
Investments in intangible assets
-277 -164
Investments in
property, plant and equipment -647 -562
Disposal of property, plant and equipment
Investments in other non
-current assets -356 -434
Disposal of other non
-current assets 259 390
Cash flow from investing activities (CFFI)
-3,328 -1,302
(DKK million)
Note 2022 2021
Repayments of borrowings
4.4 -2,737 -2,409
Proceeds from borrowings
4.4 8,606 2,506
Change in short
-term bank facilities 4.4 -2,477 1,889
Repayments of lease liabilities
3.3 / 4.4 -614 -530
Transactions with non
-controlling interests -4 -34
Share buy
-backs -1,840 -3,200
Cash flow from financing activities (CFFF)
Cash flow for the period, net
- continuing operations
Cash
flow for the period, net - discontinued operations 6.3 -253 -314
Cash flow for the year, net
-25 199
Cash and cash equivalents at the beginning of the year
Foreign currency translation adjustment of cash and cash
equivalents
-17 21
Cash and cash equivalents at the end of the year
Breakdown of cash and cash equivalents at the end of the
year:
Cash
4.3 / 4.4 1,130 1,172
Cash and cash equivalents at the end of the year
Consolidated cash flow statement
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Consolidated financial
statements
Demant - Annual Report 2022 64
Consolidated statement of changes in equity
(DKK million)
Other reserves
Share
capital
Foreign
currency
translation
reserve
Hedging
reserve
Retained
earnings
Demant
A/S’
share-
holders’
share
Non-
controlling
interests’
share
Equity
Equity at 1.1.2022
-54
Comprehensive income:
Profit for the year
Other comprehensive income:
Foreign currency translation adjustment, subsidiaries
Value adjustments of hedging instruments:
Value adjustment, year -
-40
-40
-40
Value adjustment transferred to revenue -
Actuarial gains/losses on defined benefit plans
Tax on other comprehensive income
-35
-27
-59
-59
Other comprehensive income
Comprehensive income for the year
Share buy
-backs -
-1,840
-1,840
-1,840
Share
-based compensation -
Capital reduction through cancellation of treasury shares
-2
Transactions with non
-controlling interests -
-3
-3
-8
-11
Other
changes in equity -
-3
-3
Equity at 31.12.2022
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Consolidated financial
statements
Demant - Annual Report 2022 65
Consolidated statement of changes in equity
(DKK million)
Other reserves
Share
capital
Foreign
currency
translation
reserve
Hedging
reserve
Retained
earnings
Demant
A/S’
share-
holders’
share
Non-
controlling
interests’
share
Equity
Equity at
1.1.2021 48
-414
Comprehensive income:
Profit for the year
Other comprehensive income:
Foreign currency translation adjustment, subsidiaries
Value adjustments of hedging instruments:
Value adjustment, year -
-177
-177
-177
Value adjustment transferred to revenue -
Actuarial gains/losses on defined benefit plans
Tax on other comprehensive income
-3
-12
Other comprehensive income
-109
Comprehensive income for the year
-109
Share buy
-backs -
-3,143
-3,143
-3,143
Share
-based compensation -
Transactions with non
-controlling interests -
-14
-14
-40
-54
Equity at 31.12.2021
-54
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Notes to consolidated financial statements
Demant - Annual Report 2022 66
Section 1 – page 67
Operating activities and
cash flow
1.1 Segment disclosures
1.2 Revenue
1.3 Employees
1.4 Amortisation, depreciation and
impairment losses
1.5 Earnings per share
1.6 Inventories
1.7 Trade receivables
1.8 Customer loans
Section 2 – page 79
Exchange rates
2.1 Exchange rate risk policy
2.2 Sensitivity analysis in respect of
exchange rates
2.3 Hedging and forward exchange
contracts
Section 3 – page 82
Asset base
3.1 Intangible assets
3.2 Property, plant and equipment
3.3 Leases
3.4 Other non-current assets
3.5 Non-current assets by
geographies
3.6 Impairment testing
Section 4 – page 91
Capital structure and
financial management
4.1 Financial risk management and
capital structure
4.2 Net financial items
4.3 Categories of financial
instruments
4.4 Net interest-bearing debt,
liquidity and interest rate risks
4.5 Fair value hierarchy
Section 5 – page 99
Tax
5.1 Tax on profit
5.2 Deferred tax
Section 6 – page 102
Acquisitions
6.1 Acquisition of enterprises and
activities
6.2 Divestment of enterprises and
activities
6.3 Discontinued operations and
assets held for sale
Section 7 – page 108
Provisions, other
liabilities etc.
7.1 Provisions
7.2 Other liabilities
7.3 Deferred income
7.4 Contingent liabilities
Section 8 – page 113
Other disclosure
requirements
8.1 Related parties
8.2 Fees to auditors
8.3 Government grants
8.4 Events after the balance sheet
date
Section 9 – page 116
Basis for preparation
9.1 Group accounting policies
9.2 Accounting estimates and
judgements
Section 10 – page 127
Notes to Parent
financial statements
Section 11 – page 135
Subsidiaries, associates
and Joint ventures
Notes to consolidated financial
statements
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Section 1
Operating activities and cash flow
Demant - Annual Report 2022 67
Operating activities and cash
flow
REVENUE
19,
705
DKK MILLION
FREE CASH
FLOW
1,617
DKK MILLION
Demant – Annual Report 2022 67
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Section 1
Operating activities and cash flow
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Section 1
Operating activities and cash flow
Demant - Annual Report 2022 68
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Section 1
Operating activities and cash flow
Demant - Annual Report 2022 69
1.1 Segment disclosures (continued)
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Section 1
Operating activities and cash flow
Demant - Annual Report 2022 70
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Demant - Annual Report 2022 71
1.2 Revenue (continued)
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Demant - Annual Report 2022 72
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Demant - Annual Report 2022 73
1.3 Employees (continued)
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Section 1
Operating activities and cash flow
Demant - Annual Report 2022 74
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Section 1
Operating activities and cash flow
Demant - Annual Report 2022 75
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Section 1
Operating activities and cash flow
Demant - Annual Report 2022 76
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Section 1
Operating activities and cash flow
Demant - Annual Report 2022 77
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Section 1
Operating activities and cash flow
Demant - Annual Report 2022 78
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Section 2
Exchange rates
Demant - Annual Report 2022 79
Exchange rates
Interacoustics
Probe placement indicator
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Section 2
Exchange rates
Demant – Annual Report 2022 79
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Exchange rates
Demant - Annual Report 2022 80
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Exchange rates
Demant - Annual Report 2022 81
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Section 3
Asset base
Demant - Annual Report 2022 82
Asset base
INTANGIBLE
ASSETS
12,582
DKK MILLION
PROPERTY,
PLANT AND
EQUIPMENT
2,553
DKK MILLION
OTHER
NON-CURRENT
ASSETS
1,843
DKK MILLION
Demant – Annual Report 2022 82
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Asset base
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Asset base
Demant - Annual Report 2022 83
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Asset base
Demant - Annual Report 2022 84
3.1 Intangible assets (continued)
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Asset base
Demant - Annual Report 2022 85
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Section 3
Asset base
Demant - Annual Report 2022 86
recognised in the income statement:
3.2 Property, plant and equipment (continued)
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Section 3
Asset base
Demant - Annual Report 2022 87
3.3 Leases (continued)
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Asset base
Demant - Annual Report 2022 88
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Section 3
Asset base
Demant - Annual Report 2022 89
-current assets by geographic region:
3.4 Other non-current assets (continued)
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Asset base
Demant - Annual Report 2022 90
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Section 4
Capital structure and financial
management
Demant - Annual Report 2022 91
Capital structure and financial
management
NET
INTEREST-
BEARING
DEBT
12,
711
DKK MILLION
NET FINANCIAL
ITEMS
-280
DKK MILLION
Demant – Annual Report 2022 91
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management
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Section 4
Capital structure and financial
management
Demant - Annual Report 2022 92
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Section 4
Capital structure and financial
management
Demant - Annual Report 2022 93
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Capital structure and financial
management
Demant - Annual Report 2022 94
4.3 Categories of financial
instruments (continued)
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management
Demant - Annual Report 2022 95
4.4 Net interest-bearing debt, liquidity and interest rate risks (continued)
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management
Demant - Annual Report 2022 96
4.4 Net interest-bearing debt, liquidity and interest rate risks (continued)
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management
Demant - Annual Report 2022 97
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Section 4
Capital structure and financial
management
Demant - Annual Report 2022 98
4.5 Fair value hierarchy (continued)
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Section 5
Tax
Demant - Annual Report 2022 99
Tax
TAX ON PROFIT
651
DKK MILLION
EFFECTIVE
TAX RATE
22.2%
DKK MILLION
Demant – Annual Report 2022 99
Insights and highlights
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Tax
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Section 5
Tax
Demant - Annual Report 2022 100
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Tax
Demant - Annual Report 2022 101
5.2 Deferred tax (continued)
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Section 6
Acquisitions
Demant - Annual Report 2022 102
Acquisitions
Sonic
Demant – Annual Report 2022 102
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Acquisitions
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Section 6
Acquisitions
Demant - Annual Report 2022 103
Hearing Healthcare
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Acquisitions
Demant - Annual Report 2022 104
6.1 Acquisition of enterprises and activities (continued)
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Section 6
Acquisitions
Demant - Annual Report 2022 105
6.1 Acquisition of enterprises and activities (continued)
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Section 6
Acquisitions
Demant - Annual Report 2022 106
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Section 6
Acquisitions
Demant - Annual Report 2022 107
6.3 Discontinued operations and assets held for sale (continued)
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Section 7
Provisions, other liabilities etc.
Demant - Annual Report 2022 108
Provisions, other liabilities etc.
PROVISIONS
208
DKK MILLION
OTHER
LIABILITIES
3,011
DKK MILLION
Demant – Annual Report 2022 108
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Provisions, other liabilities etc.
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Section 7
Provisions, other liabilities etc.
Demant - Annual Report 2022 109
(D million)
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Section 7
Provisions, other liabilities etc.
Demant - Annual Report 2022 110
7.1 Provisions (continued)
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Section 7
Provisions, other liabilities etc.
Demant - Annual Report 2022 111
7.1 Provisions (continued)
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Section 7
Provisions, other liabilities etc.
Demant - Annual Report 2022 112
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Section 8
Other disclosure
requirements
Demant - Annual Report 2022 113
Other disclosure
requirements
EPOS
BrainAdapt
TM
Demant – Annual Report 2022 113
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Other disclosure
requirements
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Section 8
Other disclosure
requirements
Demant - Annual Report 2022 114
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Section 8
Other disclosure
requirements
Demant - Annual Report 2022 115
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Section 9
Basis for preparation
Demant - Annual Report 2022 116
Basis for preparation
Interacoustics
Balance testing
Demant – Annual Report 2022 116
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Basis for preparation
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Section 9
Basis for preparation
Demant - Annual Report 2022 117
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Section 9
Basis for preparation
Demant - Annual Report 2022 118
9.1 Group accounting policies (continued)
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Section 9
Basis for preparation
Demant - Annual Report 2022 119
9.1 Group accounting policies (continued)
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Section 9
Basis for preparation
Demant - Annual Report 2022 120
9.1 Group accounting policies (continued)
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Section 9
Basis for preparation
Demant - Annual Report 2022 121
9.1 Group accounting policies (continued)
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Section 9
Basis for preparation
Demant - Annual Report 2022 122
Parent
financial statements
Oticon Own
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financial statements
Demant – Annual Report 2022 122
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Demant - Annual Report 2022 123
Parent income statement
(DKK million)
Note 2022 2021
Revenue
- -
Administrative expenses
10.1 / 10.2 -73 -114
Other operating income and expenses
- 28
Operating loss (EBIT)
-73 -86
Share of profit after tax, subsidiaries
10.8 1,584 2,025
Share of
profit after tax, associates and joint ventures 10.8 -3 -
Financial income
10.3 49 24
Financial expenses
10.3 -147 -95
Profit before tax
1,410 1,868
Tax on profit for the year
10.4 29 32
Profit for the year
10.5 1,439 1,900
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Section 9
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Demant - Annual Report 2022 124
Parent balance sheet 31 December
(DKK million)
Note 2022 2021
Assets
Goodwill
23 26
Intangible assets
10.6 23 26
Land and buildings
24 24
Property, plant and equipment
10.7 24 24
Lease assets
1 1
Investments in subsidiaries
10.8 14,904 12,574
Loans to subsidiaries
10.8 1,284 1,429
Investments in associates and joint ventures
10.8 33 36
Other receivables
8 10
Other non
-current assets 16,230 14,050
Non
-current assets 16,277 14,100
Receivables from subsidiaries
953 -
Income tax
30 33
Other receivables
32 5
Prepaid expenses
18 9
Receivables
1,033 47
Current assets
1,033 47
Assets
17,310 14,147
(DKK million)
Note 2022 2021
Equity and liabilities
Share capital
46 48
Other reserves
1,812 1,644
Retained earnings
2,522 2,762
Total equity
4,380 4,454
Deferred tax liabilities
10.4 8 7
Provisions
8 7
Borrowings
6,062 2,762
Lease liabilities
1 1
Other debt
232 29
Non
-current liabilities 10.9 6,295 2,792
Borrowings
10.9 6,051 5,512
Debt to subsidiaries
383 1,336
Other debt
10.9 193 46
Current liabilities
6,627 6,894
Liabilities
12,922 9,686
Equity and liabilities
17,310 14,147
Contingent liabilities
10.10
Related parties
10.11
Events after the balance sheet date
10.12
Parent accounting policies
10.13
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Section 9
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Demant - Annual Report 2022 125
Parent statement of changes in equity
(DKK million)
Other reserves
Share capital
Foreign cur-
rency transla-
tion reserve
Hedging
reserve
Reserve
according to
equity
method
Retained
earnings
Total equity
Equity at 1.1.2021
48
-78
1
502
5,295
5,768
Restatement of opening balances
-
-
-
-510
-
-510
Equity at 1.1.2021 (restated)
48
-78
1
-8
5,295
5,258
Profit for the year
-
-
-
2,025
-125
1,900
Dividends received
-
-
-
-768
768
-
Foreign currency translation adjustment of investments in subsidiaries etc.
-
2
-
418
-
420
Other changes in equity in subsidiaries
-
-
-
50
-38
12
Value adjustment for the
year -
-
1
-
-
1
Tax relating to changes in equity
-
1
-
-
-
1
Share buy
-backs -
-
-
-
-3,143
-3,143
Share
-based compensation -
-
-
-
4
4
Other changes in
equity -
-
-
-
1
1
Equity at 31.12.2021
48
-75
2
1,717
2,762
4,454
Profit for the year
-
-
-
1,581
-142
1,439
Dividends received
-
-
-
-1,731
1,731
-
Foreign currency translation adjustment of investments in subsidiaries etc.
-
-1
-
55
-
54
Other changes in equity in subsidiaries
-
-
-
256
-
256
Value adjustment for the year
-
-
16
-
-
16
Tax relating to changes in equity
-
-
-4
-
-
-4
Share buy
-backs -
-
-
-
-1,840
-1,840
Capital reduction through cancellation of treasury shares
-2
-
-
-
2
-
Share
-based compensation -
-
-
-
9
9
Other changes in equity
-
-
-4
-
-
-4
Equity at 31.12.2022
46
-76
10
1,878
2,522
4,380
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Section 9
Basis for preparation
Demant - Annual Report 2022 126
At the balance sheet date in 2022, the
share capital was nominally DKK 46 mil-
lion (DKK 48 million in 2021) divided into
the corresponding number of shares of
DKK 0.20.
There are no restrictions on the negotiabil-
ity or voting rights of the shares. At year-
end 2022, the number of outstanding
shares was 223,161,030 (230,130,144
in 2021).
As part of the company’s share buy-back
programme, the company acquired
6,969,114 treasury shares in 2022
(9,763,327 shares in 2021), amounting to
a total of DKK 1,840 million (DKK 3,143
million in 2021).
2022
2021
Treasury
shares
Percentage
of share
capital
Treasury
shares
Percentage
of share
capital
Treasury shares at 1.1.
9,997,689
4.2%
797,697 0.3%
Cancellation of treasury shares
-9,749,098
-4.1%
-563,335 -0.2%
Share buy
-backs 6,969,114
3.0%
9,763,327 4.1%
Treasury shares at 31.12.
7,217,705
3.1%
9,997,689 4.2%
Parent statement of changes in equity (continued)
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Section 10
Notes to Parent financial statements
Demant - Annual Report 2022 127
Notes to Parent financial
statements
EPOS
Impact 100
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Notes to Parent financial
statements
Demant – Annual Report 2022 127
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Notes to Parent financial statements
Demant - Annual Report 2022 128
(DKK million)
2022 2021
Employee costs
Wages and salaries
59 57
Share
-based
remuneration
12 11
Total
71 68
Average number of
full
-time employees 32 29
For further details on the remuneration of
the Executive Board and the Board of Di-
rectors and the share-based remuneration
programme, please refer to Note 1.3 in
the consolidated financial statements.
10.2 Fees to statutory auditors
10.3 Net financial items
(DKK million)
2022 2021
Interest from subsidiaries
39 24
Interest income
10 -
Financial income
49 24
Interest to subsidiaries
-5 -1
Interest expenses
-103 -43
Transaction costs
-2 -6
Foreign exchange losses, net
-37 -45
Financial expenses
-147 -95
Net financial items
-98 -71
10.1 Employees
Remuneration
of Executive Board and Board of Directors (included in employee costs)
(DKK million)
2022 2021
Executive Board*
Wages and salaries
25.9 18.4
Cash bonus
1.7 -
Share
-based remuneration 8.7 5.3
Total
36.3 23.7
Board of Directors
Fee
4.8 4.8
Total
4.8 4.8
*The amounts are based on the principles set out in Note 1.3
.
(DKK million)
2022* 2021
Statutory audit
2 2
Other services
- 1
Total
2 3
* PricewaterhouseCoopers Statsautoriseret Revisionspartnerselskab (PricewaterhouseCoopers Denmark) was appointed Group
auditor at the
annual general meeting in March 2022, replacing Deloitte Statsautoriseret Revisionspartnerselskab.
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Notes to Parent financial statements
Demant - Annual Report 2022 129
10.4 Tax on profit for the year and deferred tax
(DKK million)
2022 2021
Current tax on profit for the year
30 33
Adjustment of current tax, prior years
- -4
Change in deferred tax
-1 -
Adjustment of deferred tax, prior years
- 3
Tax on profit for
the year 29 32
Deferred tax recognised in the balance sheet:
Deferred tax, net at 1.1.
7 10
Changes in deferred tax
1 -
Adjustment of deferred tax, prior years
- -3
Deferred tax, net at 31.12.
8 7
10.5 Proposed distribution of net profit
(DKK million)
2022 2021
Transferred to reserves for net revaluation according to the equity method
1,581 2,025
Retained earnings
-142 -125
Total
1,439 1,900
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10.6 Intangible assets
(DKK million)
Goodwill
Rights
and other
intangible
assets
Total
intangible
assets
Cost at 1.1.2022
65
11
76
Cost at 31.12.2022
65
11
76
Amortisation at 1.1.2022
-39
-11
-50
Amortisation for the year
-3
-
-3
Amortisation at 31.12.2022
-42
-11
-53
Carrying amount at 31.12.2022
23
-
23
Cost at 1.1.2021
65
11
76
Cost at 31.12.2021
65
11
76
Amortisation at 1.1.2021
-35
-11
-46
Amortisation for the year
-4
-
-4
Amortisation at 31.12.2021
-39
-11
-50
Carrying amount at 31.12.2021
26
-
26
10.7 Property, plant and equipment
(DKK million)
Land and
buildings
Cost at 1.1.2022
31
Cost at 31.12.2022
31
Depreciation and impairment losses at 1.1.2022
-7
Depreciation and impairment losses at 31.12.2022
-7
Carrying amount at
31.12.2022 24
Cost at 1.1.2021
31
Cost at 31.12.2021
31
Depreciation and impairment losses at 1.1.2021
-7
Depreciation and impairment losses at 31.12.2021
-7
Carrying amount at 31.12.2021
24
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Demant - Annual Report 2022 131
The carrying amount of investments in
subsidiaries includes capitalised goodwill
in the amount of DKK 7,819 million (DKK
6,768 million in 2021). Amortisation of
capitalised goodwill for the year is DKK
562 million (DKK 493 million in 2021).
Loans to subsidiaries of DKK 1,284 million
(DKK 1,429 million in 2021) are considered
additions to the total investments in the
particular enterprises and are therefore
considered non-current.
Please refer to Section 11 Subsidiaries and
associates for further information on sub-
sidiaries, joint ventures and associates.
10.8 Financial assets
(DKK million)
2022
2021
Investments in
subsidiaries
Loans to
subsidiaries
Investments in
associates and
joint ventures
Loans to
associates and
joint ventures
Investments in
subsidiaries
Loans to
subsidiaries
Investments in
associates and
joint ventures
Loans to
associates and
joint ventures
Cost at 1.1.
10,843
1,429
50
-
10,418
944
54
1
Restatement of opening balances
-
-
-
-
258
-
-
-
Cost at 1.1. (restated)
10,843
1,429
50
-
10,676
944
54
1
Foreign currency translation adjustments
-
18
-
-
-
5
-
-
Additions during the year
2,166
173
-
-
167
563
-
-
Disposals during the year
-
-336
-
-
-
-83
-4
-1
Cost at 31.12.
13,009
1,284
50
-
10,843
1,429
50
-
Value adjustments at 1.1.
1,731
-
-14
-
514
-
-12
-
Restatement of opening balances
-
-
-
-
-510
-
-
-
Value adjustments at 1.1. (restated)
1,731
-
-14
-
4
-
-12
-
Foreign currency translation adjustments
54
-
1
-
419
-
-1
-
Share of profit after tax
1,584
-
-3
-
2,025
-
-
-
Dividends received
-1,730
-
-1
-
-767
-
-1
-
Other adjustments
256
-
-
-
50
-
-
-
Value adjustments at 31.12.
1,895
-
-17
-
1,731
-
-14
-
Carrying amount at 31.12.
14,904
1,284
33
-
12,574
1,429
36
-
Non
-current financial assets 14,904
1,284
33
-
12,574
1,429
36
-
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Demant - Annual Report 2022 132
A part of other debt of DKK 193 million
(DKK 46 million in 2021) has a contractual
maturity of less than one year, and a part
of other debt of DKK 232 million (DKK 29
million in 2021) has a contractual maturity
of 1-5 years.
Interest-bearing debt broken down by
currency: 74% in Danish kroner (72% in
2021), 20% in euros (21% in 2021), 4% in
US dollars (7% in 2021), 1% in Canadian
dollars (0% in 2021) and 1% in other cur-
rencies (0% in 2021).
The maximum interest rates on part of
the Parent’s non-current debt are limited
through an interest rate cap.
Sensitivity analysis in respect
of interest rates
Based on the bank debt facilities at the
end of the 2022 financial year, a rise of
1 percentage point in the general interest
rate level will cause an increase in the Par-
ent’s annual interest expenses before tax
of approx. DKK 75 million (DKK 37 million
in 2021). About 38% (55% in 2021) of the
interest-bearing debt is subject to fixed or
limited interest rates, partly due to a bought
cap (a strip of call options), and partly due
to loans being raised at fixed interest rates.
Interest cap
(DKK million)
Expiry
Interest
rate/strike
Contractual
amount
at year-end
Positive
fair value
at year-end
Negative
fair value
at year-end
2022
DKK/DKK
2023 0% 650
20
-
650
20
-
2021
DKK/DKK
2023
0% 650
-
-
650
-
-
10.9 Interest-bearing debt
Contractual cash flows
(DKK million)
Less than
1 year
1-5 years
More than
5 years
Total
Carrying
amount
Weighted
average
effective
interest
rate
2022
Debt to credit institutions etc.
5,998
5,322
885
12,205
11,867
Short
-term bank facilities etc. 254
-
-
254
246
Lease liabilities
1
-
-
1
1
Interest
-bearing liabilities 6,253
5,322
885
12,460
12,114
2.0%
2021
Debt to credit institutions etc.
3,226
2,774
-
6,000
5,973
Short
-term bank facilities etc. 2,316
-
-
2,316
2,301
Lease liabilities
-
1
-
1
1
Interest
-bearing liabilities 5,542
2,775
-
8,317
8,275
0.5%
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Demant - Annual Report 2022 133
Demant A/S has provided security in re-
spect of credit facilities established by
Danish subsidiaries. These credit facilities
totalled DKK 1,517 million in 2022 (DKK
2,472 million in 2021) of which DKK 199
million was drawn (DKK 514 million in
2021).
Moreover, Demant A/S has established a
mutual guarantee with Oticon A/S in the
amount of DKK 650 million (DKK 650 mil-
lion in 2021), which is being drawn upon
on a current basis.
Demant A/S has provided security in re-
spect of rent as well as guarantees con-
cerning the continuous operation and pay-
ment of liabilities in 2022 for some of our
subsidiaries.
The Parent is jointly taxed with William
Demant Invest A/S, which is the admin-
istration company, and all Danish subsidi-
aries of both. Under the Danish Corpora-
tion Tax Act, the Parent is first of all fully li-
able for corporate tax payments and for
withholding tax at source in respect of in-
terest, royalties and dividends in relation to
its own subsidiaries and is secondly liable
for tax payments due for William Demant
Invest A/S and its partly owned subsidiar-
ies.
For the purposes of section 357 of the
Republic of Ireland Companies Act 2014,
Demant A/S has undertaken to indemnify
the creditors of its subsidiaries incorpo-
rated in the Republic of Ireland in respect
of all losses and liabilities for the financial
year ending on 31 December 2022 or any
amended financial period incorporating
said financial year. No material loss is ex-
pected to arise from this guarantee.
10.11 Related parties
William Demant Foundation, Kongebakken
9, 2765 Smørum, Denmark, is the only re-
lated party with a controlling interest. Con-
trolling interest is achieved through a com-
bination of William Demant Foundation’s
own shareholding and the shareholding of
William Demant Invest A/S for which Wil-
liam Demant Foundation exercises the vot-
ing rights. Subsidiaries and associated en-
terprises of William Demant Invest A/S are
related parties to Demant A/S.
Related parties with significant influence
are the company’s Board of Directors and
their related parties. Furthermore, related
parties are the Executive Board and com-
panies in which the above persons have
significant interests.
10.12 Events after the balance
sheet date
Please refer to Note 8.4 in the consolidated
financial statements.
10.10 Contingent liabilities
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Demant - Annual Report 2022 134
The financial statements of the Parent,
Demant A/S, are presented in accordance
with the provisions of the Danish Financial
Statements Act for class D entities.
The Parent financial statements are pre-
sented in Danish kroner (DKK), which is
also the functional currency for the Parent.
The accounting policies are the same as
last year.
In respect of recognition and measurement,
the Parent’s accounting policies are gener-
ally consistent with the Group’s accounting
policies. The instances in which the Par-
ent’s accounting policies deviate from
those of the Group are described below.
The Parent has decided to apply the re-
cognition and measurement in accordance
with IFRS 15 and 16. The standards affect
the Parent’s proportionate share of its
subsidiaries’ equity value, and IFRS 16
affects the Parent’s leases.
Changes to comparative
figures
The 2021 comparative figures for invest-
ments in subsidiaries and equity have
been restated due to the identification of
incorrect accounting treatment of intra-
group transactions in the past.
Effects of the changes to the comparative
figures for 2021:
• “Restatement to opening balances”,
cost opening balance for 2021 for
investments in subsidiaries: DKK 258
million
• “Restatement to opening balances ”,
value adjustments opening balance for
2021 for investments in subsidiaries:
DKK -510 million
• “Restatement to opening balances”,
opening balance for 2021 in equity: DKK
-510 million
• Changes to the “Reserve according to
equity method” closing balance for
2021: DKK -215 million
• Changes to the “Retained earnings”
closing balance for 2021: DKK -37 mil-
lion
Income statement
Tax
The Parent is jointly taxed with its Danish
subsidiaries and its parent, William De-
mant Invest A/S. Current income tax is al-
located to the jointly taxed Danish compa-
nies in proportion to their taxable income.
Balance sheet
Goodwill
Goodwill is amortised on a straight-line
basis over 20 years, which is the useful life
determined on the basis of Management’s
experience in respect of the individual
business activities. Goodwill is written
down to its recoverable amount, if lower
than its carrying amount.
Rights
Rights acquired are amortised on a
straight-line basis over their estimated
useful lives and measured at cost less
accumulated amortisation and impairment
losses. The amortisation period is five years.
Rights acquired are written down to their
recoverable value, if lower than their carry-
ing value.
Investments in subsidiaries and
associates
Investments in subsidiaries and associates
are recognised and measured using the
equity method, i.e. interest is measured at
the proportionate share of the equity val-
ues of such subsidiaries and associates
with the addition or deduction of the carry-
ing amount of goodwill and with the addi-
tion or deduction of unrealised intra-group
profits or losses, respectively.
The Parent’s proportionate shares of prof-
its or losses in subsidiaries and associates
are recognised in the income statement af-
ter elimination of unrealised intra-group
profits or losses less any amortisation and
impairment of goodwill.
Subsidiaries and associates with negative
equity values are measured at DKK 0, and
any receivables from such companies are
written down with the Parent’s share of
the negative equity value to the extent that
such receivable is considered irrecovera-
ble. If the negative equity value exceeds
the value of receivables, if any, such resid-
ual amount is recognised under provisions
to the extent that the Parent has a legal or
constructive obligation to cover liabilities
incurred by the particular subsidiary or as-
sociate.
On distribution of profit or loss, net revalu-
ation and net impairment losses on invest-
ments in subsidiaries and associates are
transferred to reserves for net revaluation
according to the equity method.
Other investments
On initial recognition, other investments
are measured at cost. Subsequently, they
are measured at fair value on the balance
sheet date, and any changes in fair values
are recognised in the income statement
under net financial items.
Provisions
Provisions include liabilities, which are un-
certain in respect of the amount or the tim-
ing of their settlement. Provisions may in-
clude different types of liabilities, such as
deferred tax liabilities, onerous contracts,
pension obligations as well as provisions
for disputes etc.
Statement of changes in equity
In compliance with the format require-
ments of the Danish Financial Statements
Act, any items included under comprehen-
sive income in the consolidated financial
statements are recognised directly in eq-
uity in the Parent financial statements.
Cash flow statement
In compliance with section 86(4) of the
Danish Financial Statements Act, a cash
flow statement is not drawn up for the
Parent, such statement being included in
the consolidated cash flow statement.
10.13 Parent accounting policies
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Demant – Annual Report 2022 135
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