Q4 HIGHLIGHTS


The fourth quarter of 2014/15 was financially challenging for Bang & Olufsen’s
continuing business, which showed healthy revenue growth but unsatisfactory
underlying earnings. A number of significant steps, including a brand license
agreement and the sale of the Automotive assets were taken to sharpen the
company’s strategic focus, thereby strengthening the capital structure and
creating a leaner, more agile business model on which a profitable, growing
company can be built.


On 31 March Bang & Olufsen entered into an Automotive brand license agreement
with HARMAN International Industries, Incorporated and an agreement to transfer
its Automotive assets to HARMAN. The agreement enables Bang & Olufsen to focus
on building the Bang & Olufsen and B&O PLAY consumer brands as well as
strengthening the company’s financial position, while maintaining a strong
brand presence in the Automotive industry. The transaction was closed on 29 May
and impacted the free cash flow positively by DKK 1,105 million in the fourth
quarter.

Revenue of the continuing business grew 14 per cent in the fourth quarter,
driven especially by B&O PLAY as strong customer demand for newly launched
products, as well as continued expansion of the third party distribution drowe
growth. The revenue growth for the continuing business was in line with the
guidance for the quarter.

Earnings before interest and tax for the continuing business was a loss of DKK
410 million in the fourth quarter, of which DKK 357 million related to the
non-recurring and aperiodic items and costs for shared functions and license
fees previously allocated to Automotive as detailed below. The underlying EBIT
for the continuing business was negative DKK 53 million, which was below
guidance of a positive EBIT in the quarter.

The free cash flow adjusted for the sale of assets was DKK 43 million compared
to negative DKK 73 million for the same period last year, and was in line with
guidance. The free cash flow for the quarter was DKK 1,166 million, of which
DKK 1,123 million relates to the sale of assets.

As a result of the Automotive transaction and the sale of the 33 per cent stake
in Medicom as well as the revised strategy, the company has reassessed the
value of certain assets of the continuing business. This resulted in value
adjustments of the tangible assets, investment property, inventory, and
specific trade receivables.

The gross margin of the continuing business was 9.2 per cent in the fourth
quarter. The underlying gross margin (i.e. adjusted for non-recurring and
aperiodic items and cost and license fees previously allocated to the
Automotive business) was 38.9 per cent. The gross margin was 40.1 per cent in
the same quarter last year in the continuing business. The decline in gross
margin was mainly related to a higher share of revenue from B&O PLAY and a
change in product mix in the Bang & Olufsen segment.

In accordance with IFRS and as no external Automotive related licence fee
income is expected in 2015/16, no internal license fee has been charged to the
Automotive division. The internal license fee charged to the Automotive
division in previous periods have been reversed in the unadjusted figures.

The capacity costs of the continuing business increased by DKK 214 million
compared to the same quarter last year, of which DKK 131 million were
non-recurring and aperiodic, non-cash items.

In addition, the capacity costs were negatively impacted by DKK 19 million
related to shared costs and license fees, previously allocated to discontinued
operations. These shared costs will be mitigated during 2015/16 through cost
reduction measures such as footprint optimization, streamlining of supply-chain
related areas and reduction in service and support functions as described in
Company Announcement no. 14.26 (31 March 2015).

Reported EBIT in the continuing business was negative DKK 807 million for the
2014/15 financial year. The underlying EBIT for the continuing business was
negative DKK 323 million. This was below guidance of negative DKK 230 – 260
million. EBIT for the continuing business was negative DKK 261 million last
year.

Earnings after tax for the Group including earnings from the sale of assets and
businesses was positive DKK 221 million in the fourth quarter.


Any enquiries about this announcement can be addressed to:

Investor contact, Claus Hojmark Jensen, tel.: +45 2325 1067


Press contact, Jan Helleskov, tel.: +45 5164 5375


A webcast will be hosted on 13 August 2015 at 10.00 CET. Access to the webcast
is obtained through our home page www.bang-olufsen.com

BO_AR14-15_UK.pdf