Q4 highlights

The fourth quarter of 2015/16 showed continued strong growth in B&O PLAY ,
which grew by 40 per cent driven by new product launches and the continued
expansion of the retail network. Revenue in the Bang & Olufsen segment
disappointed due to postponed launch of new TV products, but overall the Group
realised the same revenue level as last year. Margins improved and capacity
costs were lower, which led to an improved profitability compared to last year.

Fourth quarter 2015/16

The revenue was flat compared to the fourth quarter last year (negative 1 per
cent in local currency). The revenue was a result of a continued strong growth
momentum in B&O PLAY of 40 per cent (42 per cent in local currency), where
demand for newly launched products was high in all channels, especially third
party retail and e-commerce. Revenue in the Bang & Olufsen segment declined by
15 per cent (negative 16 per cent in local currency) compared to the same
quarter last year. The decline in TV sales is mainly due to a postponed launch
of new TV products.


The underlying gross margin (i.e. adjusted for non-recurring and aperiodic
items and costs and license fees previously allocated to the Automotive
business) was at 40 per cent, which was an increase of 1 percentage point
compared to the same quarter last year. Both the Bang & Olufsen and the B&O
PLAY gross margins improved compared to last year, but the Group’s gross margin
only improved slightly due to the relatively higher B&O PLAY revenue share
compared to last year. Furthermore, the improvement of the Group’s gross margin
has materialised slower than expected, mainly due to the postponed launch of
new TV products.

Capacity costs in the underlying business were DKK 53 million lower than last
year, as distribution and marketing costs declined. The decrease is a result of
general savings across the Group, optimised distribution and a decision to hold
back selected marketing activities until the launch of upcoming new TV products
in the first half of the 2016/17 financial year.

Capacity costs included non-recurring and aperiodic costs of DKK 54 million
(DKK 189 million in 2014/15). The costs were mainly related to expenses
resulting from the dialogue regarding a potential launch of a takeover offer,
additional costs related to changes in the Executive Management Board, and
impairment of company-owned and company-operated stores resulting from a
decision to exit these in selected markets.

Earnings before interest and tax (EBIT) adjusted for costs previously allocated
to Automotive were DKK 6 million, compared to negative DKK 53 million in the
underlying business in the same quarter last year. The improvement was
primarily driven by the decrease in capacity costs.

Free cash flow for the fourth quarter was negative DKK 47 million compared to
positive DKK 43 million adjusted for the gain from sale of assets and
businesses in the same quarter last year. Net working capital changed to DKK
319 million, compared to DKK 334 million at the end of the third quarter of
2015/16.

Full year 2015/16

The Group’s total revenue for the 2015/16 financial year was DKK 2,633 million
compared to DKK 2,357 million last year, corresponding to an increase of 12 per
cent (9 per cent in local currency) which was in line with guidance. Gross
margins have been improved, however at a slower pace than anticipated and
capacity costs have been reduced in parallel. EBIT for the underlying business
in the 2015/16 financial year was negative DKK 69 million or negative 2.6 per
cent of the Group’s total revenue (adjusted for costs previously allocated to
Automotive) compared to negative DKK 323 million in the underlying business
last year, corresponding to an improvement of DKK 254 million.

In company announcement no. 15.16 it was announced that the dialogue with
Sparkle Roll regarding a potential launch of a takeover offer had been
terminated on the initiative of Bang & Olufsen’s Board of Directors. The
termination of the takeover dialogue provided clarity for Bang & Olufsen and
its stakeholders. Bang & Olufsen will continue its efforts to deliver
profitable growth based on continual additions to its portfolio of innovative
products.

As announced in company announcement no. 15.17, Bang & Olufsen has appointed
Henrik Clausen as new CEO with effect from 1 July, 2016.

Any enquiries about this interim report can be addressed to:

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

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


A webcast will be hosted on 11 August 2016 at 10:00 CET.

Access to the webcast is obtained through our website www.bang-olufsen.com.

Interim report Q4_15-16_UK.PDF