Annual Report • Apr 6, 2018
Annual Report
Open in ViewerOpens in native device viewer
LASSE'S STORY
| Doro in brief | 3 |
|---|---|
| The year in brief | 4 |
| CEO's comments | 6 |
| Market and drivers | 10 |
| Strategy | 13 |
| Operations | 18 |
| A sustainable business | 23 |
| Employees | 30 |
| Doro share | 32 |
| Directors' Report | 34 |
| Corporate Governance Report | 37 |
| Board of Directors | 40 |
| Management | 41 |
| Financial statements | 42 |
| Notes | 51 |
| Board signing | 68 |
| Auditor's report | 69 |
| Quarterly summary | 72 |
| Five-year summary | 73 |
| Definitions | 74 |
| Press releases 2017 | 75 |
This Annual Report is a translation of the Swedish original. If any differences exist, the Swedish version is the official version and should prevail.
Follow the links on the cover, and on pages 5, 12, 17 and 22, to find out what our users think.
Our mission is to develop telecom products and services for Seniors to lead full and rich lives: to do things they want to do more easily as well as the things they thought they might never do.
Doro is the global market leader in telecom for seniors, and the market leader in digital safety solutions in Sweden and Norway. Doro provides easy-to-use mobile phones and smartphones, mobile applications and fixed line telephony. Our safety solutions offering extends from standalone products to integrated and tailored complete solutions combining hardware and software, services and support. They address individuals, their relatives, as well as health and social care providers.
Doro's solutions are sold in over 40 countries on five continents through an extensive network of leading telecom operators, specialists and resellers with distribution channels reaching endusers. Doro's growth story is founded on its genuine interest in, and deep insight into, seniors' needs and their expectations of life. Combined with long-term
Doro cares about our society's seniors—they are our heroes. We think everyone should have the opportunity of living a full and rich life without compromise. We want to make ageing an independent, empowering and rich phase of life. For us, age is just a number.
experience, this helps us take our work forward to produce specifically adapted solutions that simplify everyday lives and increase safety in an environment of growing technological complexity.
The usage of smartphones by people aged 65 and over is increasing, and more of these people are using a variety of channels to communicate with friends and family. So, by utilising its know-how and innovative capability, Doro sees clear value in developing and delivering solutions and systems that bring seniors a stronger sense of belonging, security, community and being a genuine member of society—just like everyone else. We're proud of what we've achieved so far and are now moving onto an even more service-centered strategy of developing complete smart solutions that help enhance the quality of life of our society's seniors.
countries
users satisfiedwiththeirDoromobilephone
| 5 | |
|---|---|
| continents |
continents
"With our in-depth understanding of seniors' wants and needs in the later phases of life, Doro creates the security users need."
product launches
Doro 2404, Doro 1360/1361/1362, Doro 2414, Doro 2424, Doro 8040/8042, Doro 540X, Doro 8020X
| Goal | Outcome 2016 |
Outcome 2017 |
|
|---|---|---|---|
| Annual growth, including acquisitions, % |
at least 10 | 7.1 | –1.8 |
| Long-term operating margin (EBIT)% |
at least 8 | 2.4 | 4.8 |
| Revenue from services, long term share of total revenue, % |
at least 30 | 6.8 | 10.0 |
| Net debt to EBITDA, times | at most 2.5 | 1.2 | 0.7 |
| Dividend as share of net profit after tax, % |
33 | 75 | 01) |
1) Doro has decided to pursue a buyback program corresponding to 37.6% of net profit after tax 2017. See page 36 for more information.
| 2016 | 2017 | |
|---|---|---|
| Net sales, SEKm | 1,959 | 1,924 |
| Gross margin, % | 38.5 | 38.6 |
| Operating profit (EBIT), SEKm | 47.7 | 92.0 |
| Operating margin (EBIT), % | 2.4 | 4.8 |
| Cash flow from operating activities, SEKm | 61.7 | 119.5 |
| Earnings per share after tax, SEK | 1.33 | 2.83 |
| Dividend per share, SEK 1) | 1.00 | 0.00 |
| Number of employees at year-end | 500 | 458 |
| 1) See proposed appropriation of profit on page 36. |
" I haven't needed to ask anyone for help with my new Doro phone – it's so easy to use!"
A year of change with robust earnings performance for the group and an updated strategy focusing on service-centered complete solutions.
At about this time last year, I had just started my journey with Doro. Looking back at the past year, I would mainly summarise it as exciting, although it has also been a year of change, with a number of challenges as well as achievements. The biggest challenge was that sales in our largest business, mobile phones, decreased year on year with a negative development on a number of our markets. A weak market for mobile phones in general was one reason, but we have also identified things that we can do differently and better. Among the achievements in the year is the strong earnings progress for the Group, for which the positive development and strong growth within Doro Care was an important contribution, and that our sales of smartphones continued to grow even if 2017 was not as strong as we had hoped. We launched ten new mobile phones in the year, with the Doro 8040 standing out especially and attracting a really positive market reception. In the first quarter we also won the Red Dot Award for design and mobile operator Orange's Supplier of Excellence Award for our easy-to-use 2G feature phone, the Doro 6050. Our ambition is
to continue to have the most relevant offering regarding mobile phones for seniors. Our new and stronger management team has, together with the Board of Directors, prepared Doro's updated strategy which we launched at our capital markets day in November 2017. A central component of the strategy is the development of service-centered complete solutions for the convenience and safety of seniors as well as relatives, SmartCare by Doro, which combines our strengths in telecom and telecare. An increased offering of services that are directly connected to and integrated in our phones is also one of many measures to return to growth for our mobile phones.
As incoming CEO, one of my first priorities was to increase growth in Doro Care. Doro Care's sales rose to SEK 276.6m in 2017, up 31.7 percent on 2016. This was supported by positive progress in Germany and a larger subscription-based operation in the Nordics, where we had a bigger subscriber base than in 2016. This progress is really pleasing, but obviously comes at a cost, requiring the hard work of my dedicated colleagues.
Another priority for 2017 was to focus on the Group's efficiency, shorten product development lead-times, whilst continuing to develop the company's growth strategy further. So, we started the year by comprehensively evaluating our working methods and processes, which resulted in the execution of a number of measures to increase efficiency and reduce costs through our business. As part of this, we began the
implementation of a new, Group-wide ERP system (Enterprise Resource Planning). This work will continue in 2018. At the end of the year, we also decided to relocate Doro's head office from Lund to Malmö. Apart from offering our employees a better working environment, it also gives us the chance to co-locate our head office with one of our alarm receiving centres and the administrative functions of Doro Care, which will help create a more cohesive Doro. Our relocation to these larger, shared premises will be in Autumn 2018.
Another focus in 2017 was advancing our position in smartphones, thus winning more market share internationally. In terms of total handset unit sales in the European market (including smartphones and feature phones), sales in Europe have been poor in recent years, even if 2017 was better than previously. Despite smartphone unit sales increasing in the year, sales did not accelerate at the rate we had worked for, so we
will be focusing more on this in 2018. In general, our mobile phone sales decreased in three out of four quarters, and for the full year 2017, which of course is a disappointment. For us, the US and Canada were very weak markets and other markets also had lower sales year on year. However, our focus on the seniorsegment has kept us on a stable level in total depite a weaker market for mobile phones in recent years. In 2018 we will strive to turn the negative development in 2017, by strengthening our product offering among other things. We also conclude that we are still under-represented in certain European regions. An increased presence in these regions is something we see as a possibility to extend our position as market leader in mobile telephony for seniors.
"We executed a number of measures to increase efficiency and reduce cost through our business."
" I am convinced that the combination of Doro's in-depth understanding of its consumers can make a big difference to people's everyday lives."
As seniors attain greater technological maturity, we want to get even better at communicating the value our products and solutions create and distinguish ourselves from the market's other participants. This is one of many reflections that have led us to decide that while we
continue to focus on seniors, we will be prioritising their relatives more, to improve safety and the active lives this enables. I'm convinced that the combination of Doro's in-depth understanding of its consumers, brand recognition among seniors and strong services offering, not least within Doro Care, can
make a big difference to people's everyday lives. Accordingly, this conviction is one of the drivers behind the continued evolution of innovative complete solutions. There's more information on the execution and directions of Doro's strategy on page 13.
In 2018 we are committed to work to turn around the negative trend in sales of mobile phones in 2017. Among other things, we will launch subscription-based mobile safety services, which will be fully integrated in our mobile phones, directly to consumers. We will increase our presence in markets where we are under-represented and open more sales channels in markets where we are already well established. Naturally, we will continue to develop the best mobile phones for seniors in the market.
In line with our updated strategy, we will also be working to develop and launch our SmartCare offering in the year to sharpen our service sales in the longer term. We executed the very first demo of this offering at Mobile World Congress in Barcelona at the end of February.
After a period of efficiency measures and development of Doro Care, we are now ready to study how to expand this operation geographically.
Just as in 2017, we will be continuing our work on actions to improve efficiency, for example management of logistics, inventory and transportation. "We will develop our SmartCare offering to sharpen our service sales in the longer term."
Last, but not least, I'm looking forward to continuing my exciting journey with my colleagues at Doro, working alongside them for safer and more active lives for seniors and their relatives.
Robert Puskaric, President and CEO
March 28, 2018
Subscription revenues, SEK 179.0m (124.7) Other incomes, SEK 97.6m (85.4) Share subscription revenue, 65 (59)%
* As from2017, Doro Care is reported as a separate region. The comperative figures for 2016 have been restated according to current structure.
The share of the global population aged over 65 is growing1),we're living longer and are healthier. This is a contributor to the growing demand for connected and mobile solutions for seniors. Forecasts for 2040 estimate that in Europe, there will be about two working people per pensioner, compared to 1980, when the corresponding figure was about five1). Helping older people live at home longer, which is usually what they want, is a clear focus for decisionmakers and the authorities. Older people want to balance their lives in town, the vacation home, or abroad. In order to balance the cost challenges facing society, we think the power of innovation to create intelligent solutions will become more important for retaining, or even enhancing, the quality of life of seniors and their relatives. Our experience indicates that this is a significant part of the efforts necessary to create the potential for a healthy population in a sustainable society.
Doro has always been engaged in how to find the best way to help seniors live active, rich lives. Somewhat carelessly, seniors are often lumped together as a single homogeneous group, instead of viewing them as individuals with widely differing needs and expectations of life. We also see these differing needs in our geographical markets. Doro's biggest markets display technological maturity and a growing demand for smartphones. Between 2014 and 2017 alone, smartphone usage by people aged 65 and over increased from 33 to 49 percent1). Our research also indicates that the mobile functionality seniors use most widely is calling, sending and receiving texts, capturing and viewing images, emailing and browsing the Internet1). Going forward, our challenge on the smartphone market will remain to stand out from other players in terms of making phones easy to understand and use. This is why Doro always puts the interests of seniors first when developing new solutions.
Public bodies are still facing a pressing need for digital safety solutions, products and services because they do not view the analog alternatives as equally reliable. In recent years, Doro's solutions have played a leading role in the migration to digital alarm systems by many of Sweden's municipalities, and we still see substantial development potential and opportunities on the market for digitalized solutions.
As a participant on the global market, we always present Doro in relation to the business environment we operate in. In our efforts to formulate Doro's new strategy, there are five primary market trends that we have identified, which are the foundation of our services offering:
• An increasing need for private operators in health and social care solutions.
Government finances are contracting or the same funds need to finance more in society. At the same time, there is vast technological development where continuous innovation gives us the prerequisites to be smart, so we can enhance the quality of life of seniors, simultaneous with participating and contributing to reducing social costs.
Our driver is to develop and deliver safe, complete solutions and systems that enable seniors to enjoy a stronger feeling of belonging, safety, community, and being
1) Sources: UN World Population Prospects och River Research
smartphone usage by people aged 65 and over
a genuine part of our society—just like everyone else. We think this is largely about instilling our seniors with selfconfidence so that they can live full and rich lives: to do the things they want to more easily and make things they never thought they could do possible.
Doro faces competitors in each segment worldwide, but the breadth of our product and service portfolio, as well as our geographical coverage, are unique. Doro's tailored telecom and telecare offerings match the different phases of ageing. Our competition consists of other handset producers, operators and businesses active in safety technology.
Of which aged >65 years:
15.6%
million
million
Source:CIA World Factbook
51
million
Source: CIA World Factbook
"Doro is so easy, it's wonderful if you want to learn how to use a smartphone"
Doro wants to make age a life stage of independence, empowerment and enjoyment. We want seniors to feel free to pursue their desires and get what they want out of life. Doro has been working to give senior users the possibility of adopting digital technology according to their own circumstances for a long time. While it might be obvious that individual circumstances differ, it is equally obvious that not everyone is lucky enough to remain completely healthy in their senior years. Even normal ageing involves compromised vision, hearing and motor skills. Additionally, many older people experience everything from limited movement to the need to get in touch with relatives or care staff quickly for help in different situations. This is why we are developing service-centered complete solutions that help seniors live active and rich lives.
The need for cost-efficient health and social care is growing simultaneously with changes to global demographics. Accordingly, innovative solutions to address the challenges facing society are imperative—now and in the future.
We presented an updated strategy to lead us in our work in becoming a complete provider of digital and physical solutions and services in an integrated services portfolio at Doro's capital markets day on 14 November 2017. The core components of Doro's updated strategy are about offering the market service-centered, complete solutions for senior comfort and safety—a direction that addresses external challenges and utilises our internal strengths. These complete solutions combine capabilities in the mobile telecom and telecare areas. We have called our offering, which is currently in development, SmartCare by Doro.
Where previously Doro's products and solutions were largely addressed separately, by integrating our mobile telecom and telecare offerings, we open a new dimension of possibilities. Our telecom offering currently spans feature phones and smartphones, and we will be adding subscription-based alarmservices in 2018. Our offering in the telecom offering is largely driven by seniors who want to be part of the technology society, which has accentuated the need for simple and adaptive products and solutions. The understanding of technology increases, which requires that our phones have the most popular functions and work with the most used applications. Our main focus so far has been on hardware, and our route to consumers was via resellers, distributors and operators. We now see possibilities to extend our position as market leader in mobile telephony for seniors by continuing to have the most relevant product offering in combination with services, and to increase our presence on markets where we are under-represented. The most fundamental drivers of Doro's telecare
offering are to produce smart products and services that make people safer and enable them to live at home longer. In turn, this helps reduce the costs for wider society, while enhancing the wellbeing of seniors and their relatives. At present, our business to consumers is through care providers, municipalities and non-profit bodies. Going forward, our ambition is to also offer security services directly to private individuals.
Primarily, Doro is planning for continued organic and acquisition-led geographical expansion across Europe, with the goal of attaining clear and relevant market positioning in relation to competitors and customers, and this applies to telecom and telecare—as well as ultimately, SmartCare by Doro.
SmartCare by Doro is an integrated, intelligent solution that enables relatives and connected call centres to receive alarms automatically or activated manually by the user. By becoming familiar with user routines and behaviour patterns, this solution will analyse how
to respond in situations where the assistance of relatives, care providers or the emergency services may be necessary, using Machine Learning. For example, an alarm may be triggered if a refrigerator door is not opened for a whole day, or if the user has not come out of the bathroom for a period differing from typical
behaviour patterns. SmartCare by Doro makes up an ecosystem of products and services such as Doro Smartphones, where all parties can connect to the cloud-based platform MyDoro. The solution is currently being developed and a launch is planned for the end of 2018.
As part of this new strategy, Doro will work to remain the mobile telephony market leader for seniors.
As part of executing Doro's new strategy, we have set three directions:
Connecting seniors, relatives, care givers and other service providers GEAR BOX Self-calibrating to individual behaviour Real-time detection and auto alarm generating SMART Notifications/ Alarm handling/ Care giving Sold as monthly subscription – upfront start fee SERVICE CENTERED Doro Connect/ Doro Smartphone/ Doro SmartCare Open to 3rd party products and services ECOSYSTEM For the private market because we care For evolved public financed elderly care B2C/B/G
SmartCare by Doro is an integrated and smart safety solution for seniors. An intelligent solution that monitors and connect the senior with relatives, care providers and other possible service providers. SmartCare by Doro includes Doro's mobile phones, safety products, subscription services and Doro's alarm receiving centres.
MyDoro is the spider in the web for SmartCare by Doro. MyDoro is a cloudbased service that makes it possible to monitor and handle all the senior's safety products, such as mobile phones, sensors and cameras, and services connected to a relative or to an alarm receiving centre. MyDoro will be offered as one version for individuals and one version for care providers.
We set new financial goals for our business at our capital markets day in November:
Net debt as share of EBITDA, times
Share of services
Annual growth
Dividend, share of net profit
"The best thing I like about Doro, I must tell you, is its simplicity."
Doro works continuously on producing solutions that create value in seniors' everyday lives. The common feature of our overall offering is that experiences should be easy and safe, so that the everyday lives of seniors and their relatives can also be so. When we create a new offering, our work always begins with end-user wants and needs. There are many reasons people need our solutions, which vary depending on their stage of life, and accordingly, we develop products that interact with each other and last.
Doro focuses on developing subscription-based mobile safety services that work within and outside the home. These services suit people that need extra safety at home in case anything unexpected happens, and people who want to be active outdoors more safely. This type of service encapsulates Doro's offering, in terms of the needs and challenges facing its target group and wider society.
Doro divides its offering between Telecom and Telecare. Telecom covers feature phones and smartphones, while Telecare includes safety alarms, services, alarm reception and support.
Doro's organisation is populated by professionals with a high level of technical competence, and many have worked for, and grown with, the company for a long time. Sales professionals, product developers and marketers operate close to customers and suppliers. This close collaboration is something that is becoming more important as Doro conducts more complex, and more effective, development projects. We also appoint external specialists on projects in segments we want to discover more about. Using this educational working method, we accumulate valuable knowledge, and thus create good potential for innovation and the supply of competence.
Doro leads its development work from its head office in Lund, supported by units in Kalix in Sweden, Hong Kong and China. In 2017, Doro co-located
more resources in Lund to streamline its processes. Development work is largely based on our extensive market research, which provides us with insight into the needs of seniors and their relatives. Doro's partnerships feature long-term relationships worldwide. Manufacturing and development is conducted jointly with carefully selected providers in the US, India, Taiwan and Australia. Doro's 14 offices around the world deal with distribution, marketing and sales, through an extensive network of carefully selected collaborative partners and various channels. These channels are resellers in
consumer electronics, ergonomics and rehabilitation, network operators and e-commerce providers. For Doro Care, the counterparties are municipalities, other organisations, and commercial care providers.
Doro endeavors to create added value for users, their families and wider society by enabling easier, free and safer everyday lives for seniors. Doro achieves this by
developing high-quality, easy-to-use communication solutions and safety services especially tailored for seniors. Through deep understanding, innovative product
development and well-structured distribution and sales, Doro creates value in the form of enhanced quality of life, the conservation of resources and economic value.
| UNDERSTANDING/ KNOW-HOW |
PRODUCT DEVELOPMENT | PRODUCTION | DISTRIBUTION | CUSTOMERS | SAFETY SERVICES |
|---|---|---|---|---|---|
| VALUE CREATION | |||||
| THE KNOWLEDGE BANK |
5.6 PERCENT |
1,858 CHECKS |
3.1 m NO. OF DEVICES |
40,000 TRAINED SALESPEOPLE |
15,000 SAFETY ALERTS |
| Doro has unique and deep knowledge about and insight into users' needs and requests |
This share of Doro's total sales is spent on product development |
performed by 11 collabora tion partners in 2017 |
delivered every year by distributors, operators and retailers |
worked for resellers in 2017 | are received daily in Sweden and Norway |
| Continuous studies of seniors and their relatives are conducted to develop products and services that fully meet their require ments for a safer and richer everyday life. By doing so, Doro contrib utes to raise awareness of what is needed to facili tate everyday life for the users and their relatives, and that it is possible and desirable to meet these needs and requests. |
By clearly and consciously specifying requirements, the development of Doro's hardware makes design and user interfaces provide an enhanced user experience and user-friendliness. Our product develop ment is certified for quality according to ISO 9001 and has clear processes and structure on how we develop products in accordance to customers' requirements. |
Doro's conscious and systematic quality control and monitoring processes and close dialogue with carefully selected produc tion partners means qual ity is embedded at every step. We always endeavor to choose high quality mate rials for best results. |
Collaborations with carefully selected dis tributors big enough to manage high flows but small enough to be able to adapt to flows so volume and destination flexibility is tailored over time and tracks fluctua tions in pricing, supply and demand. |
Doro works actively on training and informing customers' staff/sales people, so they inform users of the actual ben efits of Doro products and services. This ensures that users get accurate infor mation and can make the right purchasing decisions. |
Doro Care offers a com plete digital alarm chain in Sweden and Norway. Around the clock, every day. Doro's alarm receiv ing centres (ARC) in Sweden and Norway receive around 15,000 alerts daily from more than 125,000 connected safety alarms. The staff of the ARC's are educated assistant nurses, working experience from care providers and speak 15 dif ferent languages as well as Swedish and Norwegian. |
With the aim of simplifying everyday lives and making it easier for users to stay in touch, Doro has created a broad portfolio of feature phones and smartphones, with all models being user-friendly and based on individual user needs.
Doro develops apps that address the needs of its target group. Unlike many other providers, we adapt font sizes, contrast levels and designs within the apps themselves. To get up and running with a new Doro mobile as quickly as possible, users get comprehensive guidance appropriate for their individual understanding of technology. We also offer training and support on our website so that everyone can use our services easily.
Doro's feature phones are logical, intuitive and easy to use, and can be combined with a selection of our other services.
Once you start using a smartphone, it's hard to live without one. Using smartphones, users can safely stay in touch with family and friends through social networks, send messages, listen to music, make video calls and stream videos.
MY DORO MANAGER CONNECT & CARE
My Doro Manager is a practical web service that makes owning a Doro mobile even easier and safer. By logging into the website, users or their relatives can easily change mobile settings and content from any location. This service also enables data transfer to a new mobile.
Connect & Care® is an app and subscription service that makes staying in touch with family and friends easier. Doro Connect & Care® enables a network of family and friends to care for a loved one by monitoring their daily status, responding to requests for assistance and urgent alerts, or just stay in touch using a simple messaging service.
Doro Care offers reliable products, solutions and services for an end-to-end digital alarm chain, mainly for seniors and disabled people who want to feel safer within or outside the home. This solution covers the complete alarm chain, from safety alarms through accessories to alarm reception and call-outs. We have been developing digital safety alarms and systems for over ten years and are now the market leader in digital safety alarms in Sweden and Norway.
| DORO CONNECT | DORO ALARM APPLICATION (DAA) | SAFETY ALARMS | ALARM RECEPTION |
|---|---|---|---|
| Doro Connect is a mobile safety sub scription service. The service is suitable for people that want extra safety at home if something unexpected hap pens, and for people who want to feel safer and more secure outdoors. A mobile safety service that works within and outside the home. |
Doro Alarm Application (DAA) is a mobile app that makes Doro smartphones compatible with alarm receiving centres. The app enables alarms to be triggered using different functions on the phone. DAA can be downloaded or comes pre-installed on selected Doro smartphones. |
A safety alarm enhances user safety between health and social care staff visits, and suits people who want to manage their own lives at home. Doro has been developing safety alarms for over ten years and provides secure safety solutions that cover the com plete alarm chain, from safety alarms through accessories to alarm recep tion and call-outs. SmartCare by Doro is an offering that is in development. It is an integrated and intelligent solution that enables relatives and connected alarm receiving centres to receive alarms automatically or triggered manually by the user. Read more about SmartCare by Doro in the Strategy section. |
If you fall, need to contact staff or are just worried, then being able to trigger an alarm and get help brings a sense of security. A simple click sends the alarm to Doro's alarm receiving centre, and help is on its way. We provide a complete digital alarm chain in Sweden and Norway, which provides seniors and disabled people with a secure safety solution. A description of our alarm receiving centre in Sweden: Doro Care provides 24/7/365 alarm recep tion, specialising in safety alarms. The service receives some 15,000 alarms per day. Our alarm centre currently has over 90,000 alarms connected in some 150 municipalities, making us the largest private safety alarm receiving centre in Sweden. In order to be able to offer a competent alarm reception service, we put a premium on knowledge. Accordingly, our staff have nursing assistant training and health and social care work experience. Our staff speak some 15 languages as well as Swedish. |
" I think with the Doro it is just so clear what you want to do. It's just very easy to use."
GILL'S STORY
Both our products and services pass through several steps from the requirements of the stakeholders to satisfied customer. For each step in the business model, there are policies, guidelines, routines and instructions which guide us in the right direction to create value for our stakeholders. Management and supporting processes supervise, support and develop.
In 2017, Doro studied the UN's Global Sustainable Development Goals, and concluded that our sustainability work is a good fit with three of them. This is why we created three focuses to work on, each of which reflects a global goal.
What we sell should be good for the world
Production and products that do not harm the environment or people
Our staff enjoy good conditions, and conduct themselves well
Reduced inequalities Our phones and telecare solutions improve the lives of seniors and disabled people. Our products enable them to live more like other people.
We utilise good materials in our products to improve their environmental performance end to end through life cycles, from raw material to recycling. We reduce our environmental impact through more efficient and environmental transportation.
Phones are an important information channel. Our staff and suppliers enjoy fundamental freedoms and comply with legal standards.
Target 10.2: By 2030, empower and promote the social, economic and political inclusion of all, irrespective of age, sex, disability, race, ethnicity, origin, religion or economic or other status.
Our phones and telecare solutions improve the lives of seniors and disabled people. Our products enable them to live more like other people.
With its adaptive products and solutions, Doro simplifies everyday lives, creating security for seniors and their relatives. As the market leader in easy-to-use and secure telecom and telecare solutions for seniors, we're helping create a society where older people can enjoy safer and more active lives fully. Our servicebased home security solutions enable more seniors to live in their homes for longer, which is usually what they want themselves. This also offers gains from socioeconomic and environmental perspectives, one of many examples being health and social care staff being able to avoid vehicle journeys because user status is presented digitally.
Doro provides technology that helps seniors live more active and richer lives. Our customer base consists of a range
of institutions such as municipalities and health authorities, as well as consumers.
Our customers should feel safe using our products, solutions and services. Personal data is managed with a high degree of confidentiality in Doro's partnerships with municipalities, which is why we accredited our call centre with ISO 27001 in 2017. This means we apply stringent standards to the systematic management of information security based on customer requirements and legislation. This sets high standards on:
This work is founded on our information security policy and guidelines. Amongst many other requirements, it includes rules governing how staff should conduct themselves to avoid personal data being disclosed to third parties, but instead, should only be available to the individuals that this information relates to.
Creating high awareness and processes regarding information security among staff is an important part of this work. This is why one initiative in the year was training our employees to satisfy the requirements set on internal processes by certification. These training packages will remain a priority, as will focusing on reducing the risks.
Doro has competitors on the market that provide similar services, but what is unique is the breadth of our product and services portfolios. Our tailored, complete offerings in telecom and telecare have been produced to match the different phases of ageing. Our strength is that Doro's technology enables high integrity and safety, which are long-term value creators for all our customers.
Target 12.2 By 2030, achieve the sustainable management and efficient use of natural resources.
Target 12.4 By 2020, achieve the environmentally sound management of chemicals and all wastes throughout their life cycle, in accordance with agreed international frameworks, and significantly reduce their release to air, water and soil in order to minimize their adverse impacts on human health and the environment.
Target 12.6 Encourage companies, especially large and transnational companies, to adopt sustainable practices and to integrate sustainability information into their reporting cycle.
We utilise good materials in our products to improve their environmental performance end to end through life cycles, from raw material to recycling. We reduce our environmental impact through more efficient and environmental transportation. For example, hardware components within our Care offering can be recycled because they are produced in a way, and using materials, that enable disinfection.
In different ways, Doro attempts to contribute to more sustainable development in every aspect of our business from raw material to production and use by consumers (see value creation illustration on page 19). Doro does not conduct any production in-house and our manufacturing partners are in locations including China. It is important for Doro to live up to our values in every part of our business, including our partners' production units, which require
systematic working methods for specifying requirements and monitoring. Doro complies with the GSM Association's Universal Charging Solution (UCS) initiative to standardise USB chargers on the market and eventually reduce the production of new chargers.
Doro endeavors to select materials with the minimum environmental impact possible. As more environmental materials are developed, we evaluate whether
they can replace current alternatives. Our membership of the Electronic Industry Citizenship Coalition (EICC) has enabled Doro to start work on improving the traceability of raw materials through the supplier level, and thus ensure that wherever possible, conflict minerals are not used.
Doro satisfies EU standards governing materials and chemicals in our products.
The usage of hazardous substances is formalised within RoHS (Restriction of the use of certain Hazardous Substances in electrical and electronic equipment). The purpose of this EU directive is to reduce risks to human health and the environment, and stipulates CE labelling in addition to environmental labelling. The POP (Persistent Organic Pollutants) directive sets another new limitation in terms of materials. We also comply with REACH/SVHC (Substance of Very High Concern), the Batteries Directive, the Packaging Directive and labelling plastic for recycling etc.
Doro has contracts and partnerships with about a dozen manufacturing partners in China. Most specialise in consumer electronics and telecom, although we also have agreements with a number of accessory producers. It is important that Doro is clear about what it stands for and conducts itself accordingly—in every aspect of our business. Doro endeavors to secure long-term relationships and close collaborations with partners and suppliers. We want to be a positive force for change and create incentives for our partners and suppliers to evolve and improve. We believe we can contribute to progress by standing up for our values and demanding that our suppliers satisfy our code of conduct and environmental standards. Our risk analysis in 2017 identified occupational health & safety of our partners in China as one of our major sustainability risks, which means objectives and monitoring are important.
All our suppliers undertake to comply with our Code of Conduct, which has been produced in two versions—one for the European market and a more specific and extensive one for the Asian market. Doro has been executing thirdparty audits of existing suppliers at least every third year since 2008, depending on whether the supplier is rated high or low risk. We make our own visits to China four times per year, to ensure on site that plants are complying with our Code and guidelines. Our Chinese inspectors also play a crucial role in our efforts in upholding the Code, verifying all deliveries before shipping from each plant, and because they are on site, they can detect any unsatisfactory working conditions.
If a supplier breaches the Code or any other standard, we make it clear that this is not acceptable. Accordingly, to continue our partnership, we demand that the supplier produces a remedial actionplan. If the supplier still does not satisfy standards, Doro is entitled to discontinue the collaboration immediately, which has not been necessary to date.
We give feedback back to our current suppliers using a Supplier Score Card after each visit, with CSR being one of several evaluation and monitoring parameters. We are always clear about the standards we apply to new suppliers.
Doro also sets clear environmental standards for its suppliers, and works actively on improving the environmental performance of products through efficient design. When developing a new product, we always endeavor to make it better than the previous version—in terms of performance, energy consumption, ergonomics, user-friendliness, and in terms of recycling and servicing.
Doro's largest suppliers hold ISO 14001 certification, and more plants are executing a range of environmental programs to achieve ISO 14001 certification.
Doro does not conduct any operations that require permits or reporting to regulators.
In house, Doro works on optimising logistics for products and packaging. As far as possible, Doro uses
environmentally accredited suppliers and haulage contractors. We utilise maritime freight, and video and teleconferencing extensively.
In-house, Doro endeavors to minimise its external environmental impact by utilising resources efficiently in every context. Doro Care Sweden has been environmentally certified since 2011, and more parts of our Norwegian operations secured environmental certification in 2017.
Doro takes a holistic view of product life cycles. Manufacturing products that last a long time and have good battery capacity is an important part of its environmental philosophy. Our Care products can be disinfected and parts exchanged, conferring them with good environmental performance. Quality, respect for the environment and people are fundamental as we build the Group's success and long-term profitability.
Target 16.5 Substantially reduce corruption and bribery in all their forms.
Target 16.10 Ensure public access to information and protect fundamental freedoms, in accordance with national legislation and international agreements.
Phones are an important channel for accessing information. Our staff and suppliers should enjoy fundamental freedoms and comply with legal standards.
Doro operates in a sector in rapid transformation, which is why we need to be flexible and adapt to new user behaviour patterns and needs as we develop technology solutions. It is also important that Doro retains its core values and behaviour consistent with its Code of Conduct, even when progress is rapid. This implies responsibility in every aspect of our business. Doro's core values permeate our business culture and are guiding principles when we develop products and interact with each other, our customers and end-users. Our ethical Code of Conduct is the bridge between these principles, and our behaviour and
actions. We will be producing a plan to make us even better at disseminating our values to the people in our organisation during 2018.
Trust: Trust that we will always deliver on our promises.
Ease: Simplicity, and doing what we can to make everyday life easier.
Care: Care and sympathy for other people's needs.
Our complete Code of Conduct is available at Doro's website.
To stay at the leading edge in our sector, we need to hire, retain and develop the right people with the right competence. This means employees are our most important resources and ambassadors. Find out more about how we achieve a positive working climate on page 30.
| Legal requirement | How we respond |
|---|---|
| 1. The Company's business model |
The business model is presented on page 23 |
| 2. Policy including audit procedures |
The following policies are primarily relevant for sustainability aspects and are published on our website: Environmental Policy • Health & Safety Policy • Business ethics • Group management follows up on these policies annually |
| 3. Policy outcomes | Our policies are monitored coincident with internal and external audits (ISO 9001, 14001, 27001), as well as annual follow-ups by Group management |
| 4. Material risks | Our most material sustainability risks are information security and suppliers, see page 36 |
| 5. Risk management Risk management is reviewed on page 36 | |
| 6. Central performance indicators |
Employee satisfaction and motivation • Employee loyalty • Share of transportation from Asia by sea/air • Achieve ISO 27001 (information security) for call centers • Reduce information security risks • Increased awareness of information security by training staff • Achieve ISO 14001 (environment) for our Oslo operation. • |
All of the last four points are targets that have been satisfied.
To the general meeting of the shareholders in Doro AB (publ), corporate identity number 556161-9429
It is the board of directors who is responsible for the statutory sustainability report for the year 2017 on pages 23–29 and that it has been prepared in accordance with the Annual Accounts Act.
Our examination has been conducted in accordance with FAR's auditing standard RevR 12 The auditor's opinion regarding the statutory sustainability report. This means that our examination of the statutory sustainability report is substantially different and less in scope than an audit conducted in accordance with International Standards on Auditing and generally accepted auditing standards in Sweden. We believe that the examination has provided us with sufficient basis for our opinion.
A statutory sustainability report has been prepared.
Malmö 28 March, 2018 PricewaterhouseCoopers AB
Magnus Willfors Authorised Public Accountant Auditor in charge
Johan Rönnbäck Authorised Public Accountant
EMPLOYEES "We are convinced that differing competences and backgrounds are necessary to keep growing, on new and established markets."
To be able to offer our seniors pleasurable lives by using our products and solutions, it's critical that our employees feel the same when they go to work each morning. Doro's core values are Trust, Ease and Care, and we think it's important to embed these core values into our everyday philosophy. This may be about looking for smart and simple solutions in what we do, but also in how we behave towards each other, our customers and partners. Our core values set the criteria for our annual employee reviews, and eventually, will also be the foundation of Doro's leadership programme. In 2017, we conducted an employee satisfaction survey, which had a positive outcome. We measure motivation and satisfaction, as well as loyalty, and take actions on a departmental basis on any segments where there are shortcomings. One practical outcome is that in 2018, we will relocate operations from Lund and Malmö to new, shared premises in central Malmö, because of dissatisfaction with the current premises being too crowded. We have also implemented more communication channels to all staff.
Doro has a flat organisational structure, which we hope, creates the potential to identify future talent and competences, but also promotes profitability and growth through a clear connection to our overall business goals. It is important for us that Doro is a sustainable employer that considers employees' drive and needs. To streamline our HR administration and care for our staff better, we implemented a new HR system across all our operations in 2017, and work on this will continue in 2018. To even out our peaks and ensure that we have access to the resources and competence necessary to execute our mission, we appoint consultants when we need them. Our search and selection process is managed by an external recruitment agency.
We are convinced that differing competences and backgrounds are necessary to keep growing, on new and established markets. Our customers and consumers are located in over 40 countries, as are our operations. Even if most of Doro's
employees are in the Nordics, we prioritise local presence on all our markets. Doro's global diversification and understanding of people and the society they live in are fundamental to our business. Our employees represent a wide variety of job categories including engineers, accountants, developers, care assistants, sales professionals and marketers. Many of them speak several languages, especially at our alarm receiving centre in Malmö. However, collaboration between our businesses is in English to create functional communication group wide.
We continued to develop our procedures and monitoring of health and safety in 2017. We have policy and guidelines in place that apply group wide. Each business in individual countries then implement them in accordance with their national legislation, in order to satisfy the relevant standards. Followups are conducted yearly to verify that our site offices are satisfying their standards. This process is in continuous development.
Our occupational health and safety risks are not substantial, but the most important ones we have identified are travel by car, travel to less safe countries and stress.
The Doro share is listed on Nasdaq Stockholm in the smallcap segment, where companies have market capitalizations of up to EUR 150m. OMX Technology, the Stockholm Stock Exchange sector index where Doro is a constituent, rose by a total of 9.2 percent in 2017. In the same period, Doro's share price fell by 17.6 percent. The Stockholm Stock Exchange overall rose by 6.4 percent. At year-end 2017, Doro's market capitalization was SEK 1,038 m (1,232). In 2017, more than 87 percent (93) of turnover in the Doro share was on Nasdaq Stockholm. A total of some 16.0 million (21.1) shares were traded in the year, with average daily turnover of 63,633 (83,495) shares.
The AGM (Annual General Meeting) in April 2017 approved the Board of Directors' proposal to authorise the Board to reach decisions on new share issues up to an aggregate maximum number of shares, which at the day of the AGM, correspond to 10 percent of all outstanding shares, in the period until the following AGM. The resolution was unanimous. The same AGM also approved the Board of Directors' proposal to authorise the Board to decide to purchase treasury shares of a number, which any time, does not exceed 10 percent of all the shares of the Company. This resolution was unanimous. 517,000 new shares were issued coincident with staff exercise of warrants in July, the authorisation to purchase treasury shares was not exercised in 2017.
As of December 31, 2017, Doro's share capital amounted to SEK 23,755,255 (23,238,255) with a total number of outstanding shares of 23,755,255 (23,238,255), each with a quotient value of SEK 1.00. All shares carry equal votes.
Effective January 4, 2017, Jérôme Arnaud, formerly CEO and president of Doro, sold all his holdings in Doro, of 163,336 shares, to Accendo Capital. On September 28, 2017, the privately held investment firm Rite Ventures reported a shareholding in the Company of over 2.2 million shares, or 9.3 percent of the capital and votes.
The Doro share is regularly monitored by financial analysts who work for Remium and Redeye, who publish updated research at www.introduce.se/foretag/ doro and www.redeye.se/bolag/doro. Coincident with the Company's publication of its quarterly interim reports, the CEO and CFO host a webcast presentation associated with each report. This webcast, normally held at 9 a.m. on the reporting date, is available at the Company's website, https://corporate. doro.com. The CEO and CFO take questions at these presentations. In addition to the quarterly report webcasts, the CEO and CFO are also available for meetings and telephone conferences with investors, financial analysts and shareholders regularly through the year.
Doro's long-term target is a dividend payout ratio of 33 percent of net profit (albeit considering capital structure and share buy-backs). The Board of Directors proposes that no dividend should be paid for 2017 since a decision has been taken to undertake a share buyback program.
| Holding, no. of shares |
Number of shareholders |
% of all shareholders |
|---|---|---|
| 1–500 | 6,522 (8,746) | 77.3 (79.0) |
| 501–1,000 | 928 (1,161) | 11.0 (10.5) |
| 1,001–5,000 | 763 (897) | 9.0 (8.1) |
| 5,001–10,000 | 88 (107) | 1.0 (1.0) |
| 10,001–15,000 | 37 (44) | 0.4 (0.4) |
| 15,000–20,000 | 17 (17) | 0.2 (0.2) |
| Över 20,001 | 83 (94) | 1.0 (0.8) |
| Total | 8,438 (1, 066) | 100.0 |
Source: Euroclear
| Transaction | 2017 | 2016 | 2015 | 2014 | 2013 |
|---|---|---|---|---|---|
| Number of shares at year-end,000 | 23,755 | 23,238 | 23,238 | 21,204 | 20,806 |
| Share price at year-end, SEK | 43.70 | 53.00 | 62.00 | 38.80 | 44.00 |
| Share price high | 60.75 | 78.00 | 62.00 | 55.00 | 57.30 |
| Share price low | 42.10 | 45.10 | 37.50 | 25.10 | 24.60 |
| Market capitlization at year-end, SEKm | 1,038 | 1,232 | 1,440 | 823 | 915 |
| Quotient value, SEK | 1.00 | 1.00 | 1.00 | 1.00 | 1.00 |
| Earnings per share, SEK | 2.83 | 1.33 | 2.78 | 2.76 | 3.07 |
| Cash flow per share, SEK1) | 5.03 | 2.66 | 3.69 | 1.06 | 5.60 |
| Reported equity, SEK | 24.57 | 22.38 | 20.74 | 15.79 | 13.79 |
| Dividend per share, SEK | – | 1.00 | – | – | 1.50 |
| Dividend share of net profit, % | – | 75 | – | – | 51 |
| P/E–ratio2) | 15.44 | 39.73 | 22.30 | 14.05 | 14.33 |
| Dividend yield, % 3) | – | 1.9 | – | – | 3.4 |
1) Cash flow from operating activities dividend by number of shares before dilution at year-end
2) Share price at year-end divident by earnings per share for the year
3) Dividend per share divided by share price at year-end
| Year | Transaction | Change in number of shares |
Issue price, SEK |
Increase in share capital, SEKm |
Amount deposited, SEKm |
Total number of shares |
|---|---|---|---|---|---|---|
| 2001 | Directed issue | 11,764,705 | 8.50 | 11.8 | 100 | 21,467,859 |
| 2005 | New share issue | 7,141 | 1.00 | 0.0 | 0 | 21,475,000 |
| 2005 | Reverse split, 5:1 | –17,180,000 | 0.00 | 0.0 | 0 | 4,295,000 |
| 2006 | New share issue, 3:1 | 12,885,000 | 6.00 | 64.4 | 71.2 | 17,180,000 |
| 2006 | Offset issue | 227,631 | 7.66 | 1.1 | 1.5 | 17,407,631 |
| 2009 | Directed issue | 1,700,000 | 9.50 | 1.7 | 16.2 | 19,107,631 |
| 2011 | Directed issue | 241,543 | 25.56 | 0.2 | 6.3 | 19,349,174 |
| 2013 | Directed issue | 1,457,000 | 27.89 | 1.5 | 40.6 | 20,806,174 |
| 2014 | Warrant program | 398,309 | 35.30 | 0.4 | 14.1 | 21,204,483 |
| 2015 | Directed issue | 2,033,772 | 41.50 | 2.0 | 84.4 | 23,238,255 |
| 2017 | Warrant program | 517,000 | 42.00 | 0.5 | 21.7 | 23,755,255 |
| As of December 31, 2017 Ten largest shareholders |
No. of shares |
Proportion of capital and votes, % |
|---|---|---|
| Accendo Capital | 3,743,092 | 15.8 |
| Rite Ventures | 1,916,199 | 8.1 |
| FCP Objectif Investissement, Microcaps | 997,000 | 4.2 |
| Humle Kapitalförvaltning | 932,288 | 3.9 |
| Clearstream Banking S.A., W8IMY | 745,121 | 3.1 |
| Nordea Investment Funds | 736,209 | 3.1 |
| Avanza Pension | 730,975 | 3.1 |
| Origo Quest 1 | 634,592 | 2.7 |
| LINC AB | 600,000 | 2.5 |
| Originat AB | 560,000 | 2.4 |
| Subtotal | 11,595,476 | 48.8 |
| Total number of shares | 23,755,255 | 100 |
Source: Euroclear
Doro AB (also referred to below as Doro) is a public limited company. The Company has its registered office in Lund, Sweden. It is registered in Sweden with corporate identity number 556161-9429. The head office address is Magistratsvägen 10, 226 43 Lund, Sweden. Doro has subsidiaries in France, Hong Kong, Norway, the UK, Germany, Italy and the US. The legal structure of the Group is stated in Note 9.
Doro AB provides telecom products and services for seniors so they can live full and rich lives—doing the things they want to do more easily, and making things they never thought they could do possible. As the market leader in its segment—telecom for seniors—Doro provides easy-to-use mobile feature phones and smartphones, mobile apps and fixed line telephony with high volume and clear sound quality. Doro Care provides safety alarms and services for seniors and disabled people in their homes. Doro received several international design awards during the year, including the Orange Partner Award for Outstanding Excellence in Smart Mobile Designs for Seniors.
Doro operates in the rapidly changing market for mobile communication and safety solutions for older consumers in Europe, North and South America and the Asia-Pacific region. Doro's products are manufactured by contractors, mainly in China. Doro protects its products by owning moulding tools and design rights, and also by actively participating in design, development and quality assurance processes. Doro coordinates its sourcing to achieve economies of scale and attractive pricing.
Information on the Doro share is on pages 32–33.
Total revenue amounted to SEK 1,924.0m (1,959.1), a decrease of 1.8 percent.
Profit after tax amounted to SEK 66.5m (31.0).
Earnings per share after tax amounted to SEK 2.83 (1.33).
Doro launched a range of products and services in the year, including:
Radio transmitter 9350—radio transmitter module compatible with social alarm band. Supplied with or without casing to fit proprietary or third-party accessories.
Doro's total revenue in the year amounted to SEK 1,924.0m (1,959.1), a decrease of 1.8 percent on 2016. Growth was 31.7 percent in Doro Care and 12.9 percent in the DACH region (Germany, Austria, Switzerland and central Europe). Other markets returned low or negative growth, with the US and Canada down by 49.4 percent. Slow progress in the US and Canada was due to a technology migration that increased sales in 2016.
EBIT was SEK 92.0 M (47.7), generating an EBIT margin 4.8 percent (2.4). The margin expansion is due partly to reduced overheads and is partly because 2016 was affected by several non-recurring expense items.
Profit after tax amounted to SEK 66.5m (31.0). Net financial items were SEK –0.3m (–8.3).
Cash flow from operating activities amounted to SEK 119.5m (61.7). The Group's net cash flow and change in cash and cash equivalents, which amounted to SEK –3.9m (17.1) in the year, was charged with investments of SEK –70.2m (–96.4). The investments that were capitalised are primarily attributable to product development. A dividend of SEK 23.3m (0) was paid. At year-end, Doro had interest-bearing liabilities of SEK 165.0m (236.7), while cash and cash equivalents amounted to SEK 57.1m (61.0). The equity ratio increased to 49.6 percent (40.4) at the end of the period.
The aim of the Policy is to clarify responsibilities and define general rules and guidelines for specific areas within Doro, with a view to supporting operations, reducing financial risk and allowing efficient use of capital and cash flow.
Estimated currency flows based on normal volumes and current price lists (which usually apply for around three months) are 70–90 percent hedged. Doro applies hedge accounting in accordance with IFRS.
The members of the Board of Directors are Chairman of the Board Johan Andsjö, Karin Moberg, Jonas Mårtensson, Lena Hofsberger and Deputy Chairman Henri Österlund. The Chief Executive Officer Robert Puskaric also participates at Board meetings. The Company's CFO Carl-Johan Zetterberg Boudrie is co-opted to the Board of Directors as Secretary.
The Board's proposed guidelines for remuneration of senior executives for 2018 are principally that salaries and other terms of employment for the management will be at market levels. In addition to fixed basic salary, management can also receive variable remuneration and bonuses with a predetermined ceiling and based on results achieved relative to established targets (and in certain cases, other key performance indicators).
The maximum cost, including social security contributions, for variable remuneration may not exceed the fixed remuneration to the company's senior executives. The total expense for fixed and variable remuneration
will be determined yearly at an amount that includes all the company's remuneration expenses. The company's senior executives are entitled to allocate a portion of their fixed and variable remuneration to other benefits, such as pension benefits. Management's pension plans will mainly be defined contribution.
If employment is terminated by the Company, senior executives may be entitled to severance pay; in which case, this shall have a predetermined ceiling. No severance pay is due if employment is terminated by the employee. The Board is entitled to depart from these guidelines if there are particular reasons for this in individual cases. This proposal is consistent with the guidelines adopted by the Annual General Meeting 2017.
Doro conducts product development and design projects jointly with various external partners. In addition to the Company's own development costs, manufacturing partners also bear significant development costs. Doro engages design companies from different countries and the costs may be either fixed or variable. Doro also sometimes sources technology from various external companies.
In addition, Doro invests in various moulding tools and design rights in order to protect product designs. These costs are capitalised until products are ready for shipment, when depreciation begins.
For 2017, the Group's costs of development work amounted to SEK 49.1m (42.1).
Doro has registered the trademarks Doro, Doro Care, Care Electronics, Doro PhoneEasy, Doro Secure, Doro Experience, Doro Connect & Care, Doro Liberto, Ergonomic Sound, Audioline, Swisstone, CareTech and i-care, as well as many other product names and figurative trademarks. Doro has also protected its designs through a large number of registered design rights.
Investments are made in design, moulding tools, certification processes, control equipment, other equipment, computers and software systems. Investments amounted to SEK 70.2m (67.4). See also accounting principles.
During the year Doro was not involved in any disputes that have affected, or will affect, the Company's position materially.
Doro regularly assesses suppliers using the "Doro Scorecard". Assessments focus on suppliers' manufacturing processes and specifies points of escalation for reported quality failures and associated remedial action. Potential suppliers are assessed on site in respect of all quality-related processes. At the same time, Doro conducts an initial assessment pursuant to its Code of Supplier Conduct. Product quality checks are also conducted on individual consignments.
Doro's Quality Manager continually monitors the Company's products to check that, as a minimum, they meet the standards set by authorities in relevant markets, technical specifications and environmental requirements.
The Company has a long-term operating margin target of 8 percent and an annual growth target of 10 percent (including acquisitions) for the coming years. For the long term, revenue from services will be a minimum of 30 percent of total revenue The Company's target is a dividend of one-third of profit after tax (allowing for its capital structure and share repurchases). Finally, the Board of Directors has specified that net debt as a share of EBITDA will not exceed a multiple of 2.5.
In February 2018, the Board of Directors decided to execute a share repurchase programme for an aggregate maximum of up to SEK 25m, until and including 26 April 2018. The Board also decided not to propose a dividend for 2017.
In addition to Group management and finance functions, Parent Company Doro AB also provides a number of support functions for the rest of the Group. Marketing and product development are coordinated by the Parent Company, while the product and quality department oversees design and
tool modifications, as well as quality assurance of deliveries. Purchasing and logistics are also coordinated by the Parent Company, which is responsible for flows of material within the Group. Doro AB and wholly owned subsidiary Doro Care AB were merged in June 2017.
Doro AB had net sales of SEK 1,531.8m (1,439.5). Profit after financial items amounted to SEK 48.5m (–1.3). Doro AB manages its subsidiaries' financing. The Parent Company's net debt was SEK 138.5m (221.0) at yearend 2017. Shareholders' equity amounted to SEK 411.3m (373.2m).
Doro's risks and uncertainties primarily relate to its ability to continually develop competitive products, disruptions in supply, customer relations and exchange rate fluctuations and the public tender financing process in Doro Care.
More information on Doro's management of financial risks is in Note 23. Other risks are described below.
Doro operates largely in telecommunications and is affected by general price decreases and the progress of costs in the consumer electronics industry. This means that selling prices may fall faster than production prices. Doro actively utilises a range of forecasting tools and monitoring programmes for production planning and stock management. The Company works in partnership with suppliers, enabling high flexibility based on forecasts that are converted into purchase orders. Changes to regulatory standards and technological progress could result in products in stock having a significantly lower sales value than estimated.
For Care products, pricing is normally determined by competitive public tender for new hardware sales, or new contracts for services for safety solutions.
In March 2016, Doro signed a loan agreement with Svenska Handelsbanken for a total credit facility of SEK 310m. SEK 50m (40) of this facility was repaid in the year. The loan facility with Handelsbanken also includes a SEK 50m overdraft facility.
Doro's cash flow from operating activities fluctuates naturally through the year due to the seasonality of sales. The Company's cash funds and credit agreements have been adapted to address these fluctuations.
Doro operates in competitive markets. Market segmentation is one way of facing the competition. In addition, Doro continually conducts market research into end-customers' needs and preferences, so it can develop unique products. Activities to increase productivity are conducted in parallel. Brand development within the seniors' market is another distinguishing feature of Doro that is an asset to the Company.
In recent years, Doro has maintained a low level of bad debt, since its main customer base consists of large corporate groups with regular trade. In 2017, Doro incurred bad debt of SEK 5.3m (2.5). Doubtful debt in 2017 amounted to SEK 3.5m (6.7). In 2017, no individual customer accounted for more than 10 percent of revenue.
The risk of complaints refers to the costs of correcting faults arising in products supplied by Doro. Warranty periods are usually 12–24 months. Various provisions are made for outstanding warranties. The Group's extensive quality work has improved quality in recent years.
Doro has a coordinated programme for insurance. Drawing on external expertise, Doro has formulated a policy stating the type of insurance to be arranged, the amounts of cover required and risk allocation between the Parent Company and subsidiaries.
Political risk is the risk that authorities in various countries take political decisions that make continued operations more difficult, more expensive or impossible. All production is in Asia (as is also the case for basically all competitors).
There is a risk of loss or spreading of information, but also that information is not available when it should be. Because of this, we have been working on applying ISO27001 in the most sensitive parts of the company. The risks have been evaluated in a very structured way during 2016–2017 in connection with our certification. The risks that have required or require action have plans that are revised on a regular basis.
This type of risk refers to the costs that may be incurred by Doro for pursuing various legal proceedings, as well as costs of third parties. Doro was not party to any material legal dispute in 2017. Doro draws on external expertise with a view to prevention and actively safeguards its rights.
Sustainability risks are evaluated in a general way by each department concerned. Suppliers are an important risk since there could be suppliers with poor conditions regarding working environment or environmental impact in our supply chain. We perform our own as well as third party audit of our most important suppliers to ensure a proper level regarding foremost working environment and environmental impact.
Doro's sustainability report, in accordance with the new requirements in the Annual Accounts Act, can be found on pages 23–29.
The Annual General Meeting will be held at 2 p.m. on 27 April 2018 at Hotel Scandic Anglais, Humlegårdsgatan 23, 102 44 Stockholm, Sweden.
In accordance with the authorisation of the AGM 2017, Doro has decided to execute a share repurchase programme of an aggregate total of up to SEK 25m, which is consistent with the previous year's dividend, in the period up to and including 26 April 2018. The Board has also decided not to propose any dividend for 2017. The aim is to bring flexibility to the company's capacity for distributing a portion of earnings to shareholders, and to serve as a tool for the Board to optimise the Company's capital structure if it considers this the best option for utilising the Company's cash reserves at the time.
The following unrestricted funds in the Parent Company are available to the Annual General Meeting:
| Share premium reserve | 179,811,455.70 |
|---|---|
| Fair value reserve | –836,943.00 |
| Retained earnings | 79,323,323.94 |
| Profit for the year | 36,758,226.40 |
| 295,056,063.04 |
The Board of Directors proposes that the funds at the disposal of the Annual General Meeting are carried forward.
Our expectation for 2018 is sales in the SEK 1.9–2.1 billion interval, and that EBIT will be in the SEK 100–140m interval, excluding potential acquisitions.
In February 2018 the company announced that Group management had been strengthened by the inclusion of Jörgen Alsing, vice president with responsibility for the new function SmartCare & Services. The new function strengthens Doro's drive for safety services for seniors and their relatives. It was also announced that Annika Björk had been appointed new Human Resources Director and member of Group management.
Having the confidence of the market, shareholders and the public is essential to Doro's continued success. To maintain it, the Board of Directors and management must conduct themselves in a responsible, transparent and committed manner. Accordingly, it is reassuring that in the year, the Board of Directors worked effectively and constructively with the Company's management and other employees. The role of the Board is becoming increasingly important in a global business environment where change is occurring ever more rapidly—not only in terms of the macroeconomic climate and specific business conditions that Doro operates in, but also through the increased competition now present in some of our markets.
We are well prepared to face changing market conditions and the Company can adapt quickly to new circumstances.
We are also in a period of significant investment in new products and services that make life easier for the world's seniors. This places great demands on the Board's ability to take well-founded decisions and to balance the risks and opportunities always associated with a commercial enterprise.
Doro's openness to the market and the fact that we continually provide information about ongoing actions and results of operations are just as important to Doro's credibility. This is the basis of a value-creating relationship with all our stakeholders, whereby existing and new shareholders can be sure they are receiving accurate information at the right time.
Doro AB is a Swedish public limited company listed on OMX Nasdaq Stockholm ("the Stockholm Stock Exchange"). Doro's corporate governance is based on Swedish legislation, primarily the Swedish Companies Act, but also on the Stockholm Stock Exchange's Rule Book for Issuers, the Swedish Corporate Governance Code ("the Code") and other applicable rules. The Company is also governed by its Articles
of Association, internal instructions and policies, and recommendations issued by relevant bodies. This Corporate Governance Report has been prepared by the Board of Directors of Doro AB in compliance with the Swedish Annual Accounts Act and the Code. This Report is part of the formal Annual Accounts.
According to the share register maintained by Euroclear Sweden AB as of 31 December 2017, Doro AB had 8,438 shareholders. Foreign shareholders represented 41.1 percent of the total number of shares. The number of shares of Doro AB as of 31 December 2017 was 23,755,255, and at the same date, Doro's market capitalisation was SEK 1,038m. Doro's largest shareholder is Accendo Capital, which holds 15.8 percent of the Company's shares.
All companies listed on the Stockholm Stock Exchange must comply with the Swedish Corporate Governance Code. Its aim is to improve the corporate governance of listed companies and to create confidence in them, from the public and participants on the capital markets. The Code is based on the principle of "comply or explain", which means that companies may depart from the rules provided they give a satisfactory explanation for their departure and review the selected alternative. The Code is available on the website www.corporategovernanceboard.se.
The Annual General Meeting is the Company's highest decision-making body. The Board of Directors and Chairman of the Board of Doro AB are elected at the Annual General Meeting. The Company's auditors are also appointed. The Annual General Meeting approves the Income Statement and Balance Sheet, and the
appropriation of profit or loss for the year. Other matters to be dealt with are laid down in the Swedish Companies Act. The Annual General Meeting is to be held within six months of the end of the financial year. Shareholders who are registered in Euroclear Sweden's register of shareholders on the record date and have notified their intention to attend are entitled to participate at the Annual General Meeting.
The Annual General Meeting appoints the members of the Company's Nomination Committee. The duties of the Nomination Committee are to nominate Board members and, where appropriate, auditors for election at the next Annual General Meeting, and to propose remuneration for work on the Board and its Committees to the Annual General Meeting. The Nomination Committee also proposes a Chairman for the Annual General Meeting.
The members of the Nomination Committee are Chairman Mark Shay, nominated by Accendo Capital, Christoffer Häggblom, nominated by Rite Ventures and Carl Rydin, nominated by Origo Capital. Johan Andsjö, Chairman of Doro AB, is a co-opted member of the Nomination Committee.
Doro AB's Board of Directors consists of five members elected by the AGM on 27 April 2017. Johan Andsjö was elected as Chairman. There is a more detailed presentation of each member on page 40. The Company's former CFO Magnus Eriksson was co-opted to the Board of Directors as Secretary up to and including the Board meeting on 13 September 2017. Subsequently, Doro AB's current CFO Carl-Johan Zetterberg Boudrie was co-opted to the Board of Directors as Secretary. Other senior executives participate at Board meetings to make presentations.
The Board of Directors met on 12 occasions in 2017, four meetings were held in Stockholm, three meetings were held at the Company's premises in Lund, and one meeting was held at the Company's premises in Malmö. Other meetings were held as conference calls. All Board members attended all meetings apart from Lena Hofsberger, who was absent on 9 November 2017. The Company's CFO and Board Secretary attended all meetings apart from one. The Board deals with matters arising such as market conditions, budgets, results for the period and cost efficiency. All Board meetings follow an agenda, which is approved in advance. This is sent out to each Board member a week in advance of each meeting, along with relevant documentation and a list of matters outstanding from the previous meeting. The meetings of the Remuneration Committee are reported back to the Board and minutes of these meetings are distributed to the Board. Each month, the previous month's results are also distributed with comments.
The Board of Directors' rules of procedure stipulate the working methods for Doro AB's Board of Directors. The rules of procedure are based on the Articles of Association, the Swedish Companies Act and the Code. The Board bears overall responsibility for the Doro Group. The Board of Directors' responsibilities also encompass Doro's relationships with its shareholders, the general public, public authorities and other organisations and interest groups. The Board of Directors is responsible for executing resolutions made by the AGM and for achieving the business targets stated in the Articles of Association. The Board of Directors' authorisations are stated in the Articles of Association and the Swedish Companies Act.
An appraisal of the overall work of the Board of Directors through a collective internal assessment of the Board's work should be conducted yearly. The results of this appraisal should be reported to the Nomination Committee.
The Company's Board of Directors appoints its Chief Executive Officer. The segregation of duties between the Board of Directors and the Chief Executive officer is stated in the Board of Directors' rules of procedure and instructions for the Chief Executive Officer. These documents state that the Board of Directors is responsible for the Company's governance, monitoring, organization, strategies, internal controls and policies. The Board of Directors also decides on major investments, matters of principle regarding governance of subsidiaries and electing Board members and Presidents of subsidiaries. The Board of Directors assures the quality of financial reporting. In turn, the Chief Executive Officer is responsible for the Company being managed in accordance with the Board of Directors' guidelines and instructions. Additionally, the Chief Executive Officer is responsible for budgeting and planning the Company's operations to achieve specific targets. The Chief Executive Officer should make arrangements for a good control environment and for the Group's risk-taking always complying with the Board of Directors' instructions. Any non-compliance must be reported to the Board of Directors. The Board of Directors also receives regular updates from the Chief Executive Officer through monthly reports.
The whole Board is responsible for remuneration matters and other terms of employment for Group management and two other key employees. The Chairman of the Board approves the employment terms of managers who report to the CEO. In total, this applies to the terms of employment for nine people.
Directors' fees are decided annually by the Annual
General Meeting. The Company's Nomination Committee consults on proposals for fees.
The Board then sets the remuneration for the CEO. The Board has appointed Jonas Mårtensson and Henri Österlund internally to be members of the Remuneration Committee. The Committee held its first meeting on 27 April 2017,in which both members participated, to decide on remuneration principles for 2017.
Total Directors' fees amounted to SEK 1,350,000, in accordance with an Annual General Meeting resolution. Of this amount, the fees to the Chairman of the Board were SEK 450,000, SEK 300,000 to the Deputy Chairman, with each other Board member
receiving SEK 200,000. The Company's current Chief Executive Officer received a salary of SEK 3,406,000 for his work in February to December 2017. Pursuant to the current employment contract, the Chief Executive Officer and the company have a mutual notice period of 12 months. During the notice period, the Chief Executive Officer is entitled to full salary and other employment benefits. The company's former Chief Executive Officer received SEK 367,000 for January 2017. Salaries to the Group management's other six members amounted to SEK 7,353,000. SEK 255,000 of variable compensation was paid for 2017. All employed members of Group management including the CEO are offered an employment benefit in the form of a company car. The Annual General Meeting held on 27 April 2017 adopted guidelines for remuneration of senior executives for the financial year 2017. The Company's other senior executives have notice periods of two to twelve months.
The 15 subsidiaries are managed and monitored by the Board of Directors in each country, mainly consisting of representatives of Doro AB in Sweden. Doro AB's Chief Executive Officer and President is Chairman of every subsidiary apart from Doro SAS in France, where pursuant to local French law, Johan Andjsö is President/ Chairman. The subsidiaries report to Doro AB's Board of Directors at each meeting. Their reports contain
information on each company's progress and financial position.
The Finance Committee became an integrated part of the Board of Directors in the year, with the Company's financial position and other issues within the remit of the Finance Committee discussed regularly during Board meetings. The Committee's primary duty is to consult on quarterly financial statements, and provide decision support for acquisitions and the Group's financing.
The Board of Directors bears ultimate responsibility for ensuring that the Company has a satisfactory structure for internal control and the preparation of reliable financial reports. It is the responsibility of the Board and Group management to monitor and identify commercial risks and govern the Company in such a way that it is able to manage its main risks.
The auditors monitor and review how the Company is being managed by its Board of Directors and CEO, and the quality of the Company's financial reporting.
The AGM 2017 appointed audit firm PricewaterhouseCoopers AB as Doro's auditors for a period of one year, with Magnus Willfors as Auditor in Charge. In the past three years, the Doro Group's audit fees have amounted to SEK 1.6m (2017), SEK 2.0m (2016), and SEK 2.1m (2015).
The responsibilities of the Audit Committee are an integrated part of Board meetings and minutes of these meetings. The auditor is scheduled to participate at meetings twice a year.
The focus and scope of the audit is presented by the Company's auditor. An audit is conducted based on the quarterly accounts as of 30 September, with its outcome presented at a meeting with the Audit Committee.
All members attended all meetings, along with the auditor, Magnus Willfors. The Audit Committee satisfies the requirement of independence stated in the Swedish Corporate Governance Code. The main duty of the Committee is to support the Board of Directors in its work on auditing and internal control, accounting and financial reporting. The main focus of work in 2017 was on following up on the year-2016 audit, and a more detailed review of the January-September 2017 period, known as the hard close.
The clear definition and communication of organizational resources, decision-making structures, responsibilities and authority levels in the Company's policy documents is an important component of the control environment. More information on the Company's internal controls is in the Directors' Report on page 39.
The Group Controller is responsible for raising specific issues with the CFO. In view of the limited size of the Finance department, Doro does not consider that there is any need for a separate internal audit function.
The company's Board of Directors shall have a minimum of three and a maximum of seven members. Members are elected at the Annual General Meeting (AGM) for the period until the end of the first Annual General Meeting held after the Board member was appointed. The Articles of Association can be amended at Annual General Meetings or shareholders' meetings.
The AGM on 27 April 2017 resolved to authorize the Board of Directors to decide on new issues of shares of a total maximum not exceeding 10 percent of the total number of outstanding shares. The AGM also decided to authorize the Board of Directors to take decisions on the purchase of treasury shares, of a maximum number of shares that treasury holdings do not exceed 10 percent of all the shares of the company at any time.
According to Swedish Corporate Governance Code, the Board shall ensure that the Company has sound internal controls and shall constantly be kept informed concerning, and evaluate the functioning of, the Company's system for internal controls. In addition, the Board shall submit a report showing how internal controls over financial reporting are organized and, if there is no internal audit function, evaluate the need for such a function and justify its position.
With a view to creating and maintaining a functioning control environment, the Board has established a number of fundamental documents of significance for financial reporting, including in particular the Board's rules of procedure and instructions for the CEO and the committees. The CEO bears the primary responsibility for maintaining the control environment established by the Board in the day-to-day work of the Company. He reports regularly to the Board as part of established procedures. In addition, reports are received from the Company's auditors.
The internal control system also rests on a management system based on the Company's organization and method of conducting operations, with clearly defined roles, areas of responsibility and delegation of powers. Steering documents such as policies and guidelines also play an important role in the control structure.
The Group conducts ongoing risk assessment to identify material risks in respect of the financial statements.
The main risk relating to the financial statements is considered to be of material misstatement, e.g. in accounting records and the measurement of assets, liabilities, income and expenses, or other discrepancies.
Fraud and losses through embezzlement are a further risk. Risk management is an integral part of each process and various methods are used to evaluate and limit risks, and to ensure that the risks Doro is exposed to are managed according to established rules, instructions and follow-up procedures. The purpose of this is to minimize any risks and promote accurate accounting, reporting and disclosure.
Control activities are in place to manage the risks that the Board and Company management consider to be material to the business, internal control and financial reporting.
The control structure sets out clear roles within the organization that enable the efficient segregation of duties for specific control activities aimed at the timely detection and prevention of the risk of reporting errors. Such control activities include a clear decisionmaking hierarchy and procedures for major decisions such as acquisitions, other types of major investment, divestments, agreements and analyses.
Implementing, improving and maintaining the Group's control procedures and conducting internal controls for mission-critical issues is an important duty of Doro's central functions. The individuals responsible for processes at different levels are responsible for implementing the necessary controls over financial reporting. The period close and reporting processes include controls relating to measurement, accounting principles and estimates.
Jointly with the analysis conducted at group level, continuous analysis of financial reporting is critical for ensuring that the financial statements are free from material misstatement.
The Group controller serves an important role in the internal control process, bearing responsibility for financial reporting from each unit being accurate, complete and timely.
Doro collaborates with communications consultancy Hallvarsson & Halvarsson AB, with the aim of promoting completeness and accuracy in financial statements released to the stock market. Regular updates and bulletins inform the employees concerned of changes to accounting principles and reporting requirements and also provide them with other information. The organization has access to policies and guidelines. The Board receives monthly financial reports. External information and communication is regulated by documents including the Company's Communications Policy, which states Doro's general disclosure principles.
Doro's compliance with adopted policies and guidelines is monitored by the Board and management. The Company's financial position is discussed at each Board meeting. The Board's Remuneration Committee and Steering/Finance Committee serve an important role in matters such as remuneration, financial reporting and internal control. Before publication of Interim Reports and the Annual Report, the Board and management review the financial statements.
Doro's management conducts monthly follow-ups of earnings, analyzing variances from budget, forecasts and the previous year. The duties of the external auditor include performing an annual review of the internal controls implemented by Group subsidiaries.
The Board meets with the auditors twice a year to discuss internal controls, and in specific cases, instruct the auditors to perform separate reviews focusing on specific areas.
In this overall context, the Board does not consider it necessary to establish a dedicated internal audit function.
Lund, Sweden, March 2018
Chairman of the Board
Primary occupation: Chairman of the Board
Education: B.Sc., Royal institute of Technology, Stockholm
Year of election: 2016
Year of birth: 1972 Nationality: Swedish
Other assignments: Board member: Crystal Almond holding (Wind Hellas), Adamo Telecom Iberia SA, Advisory Board T-mobile NL
Dependence: Company: No Owners: No
Previous assignments: CEO of Salt (former Orange Switzerland), Consejero Delegado Yoigo
Own and related parties shareholdings: 80,000 shares
Member of the Board Primary occupation: Founder and CEO of FriendsofAdam AB
Education: MBA, Stockholm University
Year of election: 2009 Year of birth: 1963
Nationality: Swedish
Other assignments: Chairman of the Board: Friends-OfAdam AB, Board member: Doro Care AB, SBAB
Dependence: Company: No Owners: No
Previous assignments: 14 years experience from leading posi-
tions at Telia Company Board member: AP 7, IAR Systems Group AB, Caretech AB Own and related parties share-
holdings, 2016: 5,000 shares
Member of the Board Primary occupation: Partner and Board member in Alted AB
Education: MBA, Stockholm School of Economics Year of election: 2007
Year of birth: 1963
Other assignments: Chairman of the Board: Alcadon Group AB, Ownpower Projects Europe AB, Board member: DistIT AB, IAR Systems Group AB, JNM Invest AB
Dependence: Company: No
Owners: No Previous assignments: 17 years in corporate finance at SEB
Enskilda, Maizels, Westberg & Co and Nordea Own and related parties shareholdings: 50,000 shares
(through companies)
Own and related parties shareholdings: 0 shares
Previous assignments: CEO of Aleris, CEO of SSP Group Ltd, and a number of positions at Compass Group Plc and SAS Service Partner
LENA HOFSBERGER Member of the Board Primary occupation: Professional Board member Education: Master of Business Administration, Bachelor of Arts, Both degrees Gothenburg
University
Year of election: 2015 Year of birth: 1954 Nationality: Swedish Other assignments: Chairman of the Board: Ambea AB (publ) PharmaRelations AB, Leos Lekland, RestaurangAssistans AB, Board member: Max Hamburgerrestauranger Dependence: Company: No Owners: No
Vice chairman of the Board Primary occupation: Managing Partner, Accendo Capital
Education: M.Sc. (econ.), Helsinki School of Economics
Year of election: 2015
Year of birth: 1971 Nationality: Finnish
Other assignments: Founder and partner Accendo Capital
Dependence: Company: No Owners: Yes
Previous assignments: Board member: Okmetic Oyj, Talentum Oyj, Comptel Oyj, Partner: Conventum Corporate Finance, Triton, Associate: Doughty Hanson in Stockholm
Own and related parties shareholdings: 6,830 shares
Auditor PricewaterhouseCoopers AB
Other assignments: Elanders AB, Carl Bennet AB, Lifco AB, Midway Holding AB, Arise AB and Genovis AB
Year of birth: 1963
Nationality: Swedish
CEO Employed since: 2017 Education: MBA, Lund University Year of birth: 1969 Nationality: Swedish Other assignments: – Previous experience: Ericsson AB Own and related parties shareholdings: 14,193 shares
Vice President Product Development Employed since: 2002 Education: MSc, Industrial Engineering and Management, Institute of Technology Linköping Year of birth: 1964 Nationality: Swedish Previous experience: Director of Manufacturing, Anoto
Own and related parties shareholdings: 23,710 shares
HENRIC UNGH
Vice President Sales Employed since: 2016 Education: MBA, Lund University Year of birth: 1968
Nationality: Swedish Previous experience: Sales Director at DS Smith, VP Global Customer Unit Vodafone at Sony, Sales Director Carphone Warehouse at Sony Ericsson Own and related parties
shareholdings: 10,500 shares
Vice President Operations Employed since: 2017 Education: Master of Science in Industrial Engineering from Lund University
Year of birth: 1975 Nationalityt: Swedish
Previous experience: Procurement Director Findus Group, Director Sourcing & Partner Management Sony Mobile Companion Products
Own and related parties shareholdings: 0 shares
CFO
Employed since: 2016 Education: MSc Eng., Royal Institute of Technology and MSc Program, Stockholm University Year of birth: 1978
Nationality: Swedish
Previous experience: CFO at Lekolar, Vice President Business Development Beijer Electronics
Own and related parties shareholdings: 0 shares
Vice President Marketing & Communications Employed since: 2017
Education: Degree in Marketing at IHM Business School
Year of birth: 1967
Nationality: Swedish
Previous experience: Head of Marketing & Communications at Elfa AB, Marketing Director at Inwido Sverige AB, Nordic Marketing Manager Gum Category at Kraft Foods, Marketing Manager Cadbury Sweden AB
Own and related parties shareholdings: 0 shares
Vice President Human Resources (interim) Employed since: 2017
Education: Master of Science in law, Lunds University
Year of birth: 1963
Nationality: Svensk
Previous experience: Human Resources Director, Bring Sverige, Human Resources Director, Bring Frigo Group, Central negotiator at the Road Transport Employers' Association
Own and related parties shareholdings: 0 shares
DORO ANNUAL REPORT 2017 41 Management
| SEKm | Note | 2017 | 2016 |
|---|---|---|---|
| REVENUE | |||
| Net sales | 2, 3 | 1,924.0 | 1,959.1 |
| Other revenue | 2 | 34.4 | 16.0 |
| OPERATINGS COST | |||
| Merchandise | 19 | –1,182.1 | –1,205.7 |
| Other external costs | 4, 16 | –343.1 | –361.8 |
| Personnel costs | 5 | –277.0 | –274.2 |
| Depreciation and impairment of property, plant and equipment | 8 | –5.3 | –2.9 |
| Depreciation and impairment of intangible assets | 7 | –58.9 | –70.8 |
| Other expenses | 2 | 0.0 | –12.0 |
| Operating profit/loss | 2 | 92.0 | 47.7 |
| PROFIT/LOSS FROM FINANCIAL ITEMS | |||
| Interest income and similar profit/loss items | 6 | 5.2 | 2.6 |
| Interest costs and similar profit/loss items | 6 | –5.5 | –10.9 |
| Profit/loss after financial items | 91.7 | 39.4 | |
| Tax on profit/loss for the year | 17 | –25.2 | –8.4 |
| Profit/loss for the year | 66.5 | 31.0 | |
| Attributable to: Parent company's shareholders | 66.5 | 31.0 | |
| KEY FIGURES | |||
| Average number of shares, thousands | 11 | 23,536 | 23,238 |
| Average number of shares after dilution, thousands | 23,591 | 23,411 | |
| Earnings per share after tax, SEK | 2.83 | 1.33 | |
| Earnings per share after tax,after dilution, SEK | 2.82 | 1.32 |
| SEKm | 2017 | 2016 |
|---|---|---|
| PROFIT/LOSS FOR THE YEAR | 66.5 | 31.0 |
| Other comprehensive income to be reclassified to profit or loss in subsequent periods: |
||
| Translation differences | 1.1 | 4.9 |
| Effects from cash flow hedges | –3.1 | 4.9 |
| Deferred tax | 0.7 | –1.1 |
| Other comprehensive income | –1.3 | 8.7 |
| Total result | 65.2 | 39.7 |
| Attributable to: Parent company's shareholders | 65.2 | 39.7 |
| Assets, SEKm | Note | 2017 | 2016 |
|---|---|---|---|
| ASSETS | |||
| Goodwill | 7 | 375.3 | 372.1 |
| Customer register and distribution agreements | 7 | 11.5 | 17.0 |
| Trademarks | 7 | 0.0 | 0.0 |
| Capitalized expenditure for development work | 7 | 77.9 | 73.3 |
| Right to lease | 7 | 1.8 | 1.7 |
| Equipment and tools | 8 | 19.0 | 12.9 |
| Long-term receivables | 4 | 7.3 | 6.5 |
| Other financial non-current assets | 0.5 | 0.8 | |
| Deferred tax asset | 17 | 9.5 | 11.9 |
| 502.8 | 496.2 | ||
| CURRENT ASSETS | |||
| Inventories | 19 | 196.9 | 217.9 |
| Prepayments to supplier | 2.1 | 6.3 | |
| Accounts receivable – trade | 23 | 360.4 | 371.2 |
| Other current receivables | 4, 10 | 28.4 | 66.8 |
| Current tax receivables | 9.8 | 39.1 | |
| Prepaid expenses and accrued income | 10 | 19.8 | 29.4 |
| Cash and bank balances | 12, 23 | 57.1 | 61.0 |
| 674.5 | 791.7 | ||
| TOTAL ASSETS | 1,177.3 | 1,287.9 |
| Shareholders' equity SEKm | Note | 2017 | 2016 |
|---|---|---|---|
| SHAREHOLDERS' EQUITY | |||
| Share capital | 11 | 23.8 | 23.2 |
| Other allocated capital | 264.0 | 242.9 | |
| Reserves | 12.0 | 13.3 | |
| Profit/loss brought forward | 217.4 | 209.6 | |
| Profit/loss for the year | 66.5 | 31.0 | |
| Total shareholders' equity | 583.7 | 520.0 | |
| LONG TERM LIABILITIES | |||
| Interest-bearing liabilities | |||
| Provisions for pension | 21 | 2.6 | 2.2 |
| Liabilities to credit institutions | 4, 24 | 100.0 | 162.2 |
| Total interest-bearing liabilities | 102.6 | 164.4 | |
| Non interest-bearing liabilities | |||
| Other provisions | 22 | 16.6 | 32.6 |
| Total non interest-bearing liabilities | 16.6 | 32.6 | |
| CURRENT LIABILITIES | |||
| Interest-bearing liabilities | |||
| Liabilities to credit institutions | 4, 12, 24 | 62.4 | 72.3 |
| Total interest-bearing liabilities | 62.4 | 72.3 | |
| Non interest-bearing liabilities | |||
| Provisions for guarantees | 20 | 51.5 | 58.1 |
| Accounts payable – trade | 158.8 | 254.9 | |
| Other liabilities | 13.2 | 16.9 | |
| Current tax liability | 4.4 | 2.6 | |
| Accrued expenses and prepaid income | 13 | 184.1 | 166.1 |
| Total non interest-bearing liabilities | 412.0 | 498.6 | |
| TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES | 1,177.3 | 1,287.9 |
| Share | |||||
|---|---|---|---|---|---|
| Changes in shareholders' equity, SEKm | Capital | Other allocated capital | Reserves 1) | Profit brought forward | Total Shareholders' Equity |
| Shareholders' Equity December 31, 2015 | 23.2 | 244.7 | 4.5 | 209.6 | 482.0 |
| Total Result for the year | 31.0 | 31.0 | |||
| Other comprehensive income | 8.8 | 8.8 | |||
| Total result | 0.0 | 0.0 | 8.8 | 31.0 | 39.8 |
| Warrants | –1.8 | –1.8 | |||
| Total transactions with shareholders | 0.0 | –1.8 | 0.0 | 0.0 | –1.8 |
| Shareholders' Equity December 31, 2016 | 23.2 | 242.9 | 13.3 | 240.6 | 520.0 |
| Total Result for the year | 66.5 | 66.5 | |||
| Other comprehensive income | –1.3 | –1.3 | |||
| Total result | 0.0 | 0.0 | –1.3 | 66.5 | 65.2 |
| Dividend | –23.2 | –23.2 | |||
| New Share issue connected to warrant program | 0.6 | 21.1 | 21.7 | ||
| Total transactions with shareholders | 0.6 | 21.1 | 0.0 | –23.2 | –1.5 |
| Shareholders' Equity December 31, 2017 | 23.8 | 264.0 | 12.0 | 283.9 | 583.7 |
| 1) Specifikaction of reserves | 2017 | 2016 | |
|---|---|---|---|
| Accumulated translation differences, January 1 | 11.7 | 6.7 | |
| Translation differences for the year | 1.1 | 4.9 | |
| Accumulated translation differences, December 31 | 12.8 | 11.7 | |
| Accumulated effects of cash flow hedges, January 1 | 1.6 | –2.2 | |
| Effects of cash flow hedges for the year | –3.1 | 4.9 | |
| Deferred tax in effects of cash flow hedges | 0.7 | –1.1 | |
| Accumulated effects of cash flow hedges, December 31 | –0.8 | 1.6 | |
| Total reserves, December 31 | 12.0 | 13.3 |
| SEKm | Note | 2017 | 2016 |
|---|---|---|---|
| CURRENT ACTIVITIES | |||
| Operating profit | 92.0 | 47.7 | |
| Adjusted for items not in cash flow | |||
| Change in provisions | 20, 21, 22 | –22.2 | 4.7 |
| Depreciation and write downs | 7, 8 | 64.2 | 73.7 |
| Unrealized exchange differences in cash flow hedges | 9.9 | –0.6 | |
| Total adjustment for other non-cash items | 51.9 | 77.8 | |
| Paid and received interest, net | –5.0 | –8.3 | |
| Taxes paid | 17 | –10.9 | –26.3 |
| Cash flow from current activities before changes in working capital | 128.0 | 90.9 | |
| Change in working capital | |||
| Change in stocks | 19 | 20.9 | –25.3 |
| Change in receivables | 63.0 | –3.7 | |
| Change in non-interest-bearing liabilities | –92.4 | –0.2 | |
| Cash flow from current activities | 119.5 | 61.7 | |
| INVESTMENT ACTIVITIES | |||
| Acquisitions of subsidiaries | 18 | 0.0 | –29.0 |
| Acquisition of intangible fixed assets | 7 | –58.4 | –59.7 |
| Acquisition of tangible fixed assets | 8 | –11.8 | –7.7 |
| Cash flow from current activities | –70.2 | –96.4 |
| SEKm | Note | 2017 | 2016 |
|---|---|---|---|
| FINANCING ACTIVITIES | |||
| Dividend | –23.2 | 0.0 | |
| New Share issue | 21.7 | 0.0 | |
| Warrant Program, buy back | –1.2 | –0.6 | |
| Amortization of loans | –75.5 | –79.8 | |
| Loan raised and change in bank overdraft facility | 25.0 | 129.8 | |
| Cash flow from financing activities | –53.2 | 49.4 | |
| Cash flow for the year | –3.9 | 14.7 | |
| Liquid assets at start of year | 61.0 | 43.9 | |
| Exchange rate difference in liquid assets | 0.0 | 2.4 | |
| Liquid assets at end of year | 23 | 57.1 | 61.0 |
| SEKm | Note | 2017 | 2016 |
|---|---|---|---|
| OPERATING INCOME | |||
| Net sales | 2, 3 | 1,531.8 | 1,439.5 |
| Other revenue | 2 | 24.1 | 5.7 |
| OPERATING COSTS | |||
| Merchandise | 19 | –971.0 | –936.9 |
| Other external costs | 4, 16 | –376.5 | –373.6 |
| Personnel costs | 5 | –97.2 | –64.0 |
| Depreciation and impairment of property, plant and equipment | 8 | –3.1 | –0.5 |
| Depreciation and impairment of intangible assets | 7 | –62.0 | –57.7 |
| Other expenses | 2 | 0.0 | –10.1 |
| Operating profit/loss | 2 | 46.1 | 2.4 |
| PROFIT/LOSS FROM FINANCIAL ITEMS | |||
| Interest income and similar profit/loss items | 6 | 10.2 | 7.2 |
| Interest costs and similar profit/loss items | 6 | –7.8 | –10.9 |
| Profit/loss after financial items | 48.5 | –1.3 | |
| Group contributions received | 1.4 | 0.0 | |
| Tax on profit/loss for the year | 17 | –13.1 | –0.2 |
| PROFIT/LOSS FOR THE YEAR | 36.8 | –1.5 |
| SEKm | 2017 | 2016 |
|---|---|---|
| Profit/loss for the year | 36.8 | –1.5 |
| Other comprehensive income to be reclassified to profit or loss in subsequent periods: |
||
| Effects from cash flow hedges | –3.1 | 4.9 |
| Deferred tax | 0.7 | –1.1 |
| Other comprehensive income | –2.4 | 3.8 |
| Total result | 34.4 | 2.3 |
| Assets, SEKm | Note | 2017 | 2016 |
|---|---|---|---|
| FIXED ASSETS | |||
| Intangible assets | |||
| Capitalized expenditure for development work | 7 | 77.9 | 52.0 |
| Goodwill | 7 | 198.7 | 0.0 |
| Customer register | 7 | 6.3 | 0.0 |
| Brands | 7 | 0.0 | 0.0 |
| Tangible assets | |||
| Equipment and tools | 8 | 14.0 | 0.8 |
| Financial assets | |||
| Participations in Group companies | 9, 25 | 118.2 | 309.9 |
| Receivables from Group companies | 0.0 | 29.5 | |
| Deferred tax assets | 17 | 1.4 | 8.1 |
| Total fixed assets | 416.5 | 400.3 | |
| CURRENT ASSETS | |||
| Inventories | |||
| Goods for resale | 19 | 139.3 | 130.5 |
| Advanced payment to suppliers | 0.3 | 0.1 | |
| Current receivables | |||
| Accounts receivable – trade | 23 | 267.1 | 266.7 |
| Receivables from Group companies | 210.2 | 253.6 | |
| Other current receivables | 10 | 23.7 | 42.4 |
| Current tax receivables | 0.0 | 3.9 | |
| Prepaid expenses and accrued income | 10 | 19.7 | 7.4 |
| Cash and bank balances | 12, 23 | 41.5 | 43.4 |
| Total current assets | 701.8 | 748.0 | |
| TOTAL ASSETS | 1,118.3 | 1,148.3 | |
| Shareholders' equity and liabilities, SEKm | Note | 2017 | 2016 |
| SHAREHOLDERS' EQUITY | |||
| Restricted equity | |||
| Share capital 23,755,255 (23,238,255) shares, quota value SEK 1 | 11 | 23.8 | 23.2 |
| Revaluation reserve | 0.5 | 0.5 | |
| Other allocated capital | 55.5 | 55.5 | |
| Reserve for development expenses | 36.5 | 28.5 | |
| Total restricted equity | 116.3 | 107.7 |
| Shareholders' equity and liabilities, SEKm | Note | 2017 | 2016 |
|---|---|---|---|
| Non-restricted equity | |||
| Share premium reserve | 179.7 | 158.6 | |
| Fair value reserve | –0.8 | 1.6 | |
| Profit/loss brought forward | 79.3 | 106.8 | |
| Profit/loss for the year | 36.8 | –1.5 | |
| Total non-restricted equity | 295.0 | 265.5 | |
| Total shareholders' equity | 411.3 | 373.2 | |
| PROVISIONS | |||
| Provisions for guarantees | 20 | 42.8 | 49.9 |
| Other provisions | 22 | 15.8 | 25.0 |
| Total provisions | 58.6 | 74.9 | |
| LONG-TERM LIABILITIES | |||
| Interest-bearing liabilities | |||
| Liabilities to credit institutes | 100.0 | 160.0 | |
| Total interest-bearing liabilities | 100.0 | 160.0 | |
| CURRENT LIABILITIES | |||
| Interest-bearing liabilities | |||
| Overdraft facility | 12 | 0.0 | 0.0 |
| Liabilities to credit institutes | 60.0 | 50.0 | |
| Liabilities to Group companies | 20.0 | 54.4 | |
| Total interest-bearing liabilities | 80.0 | 104.4 | |
| Non interest-bearing liabilities | |||
| Accounts payable – trade | 125.5 | 178.1 | |
| Liabilities to Group companies | 208.2 | 160.2 | |
| Other liabilities | 12.2 | 5.6 | |
| Current tax liability | 3.1 | 0.0 | |
| Accrued expenses and prepaid income | 13 | 119.4 | 91.9 |
| Total non interest-bearing liabilities | 468.4 | 435.8 | |
| TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES | 1,118.3 | 1,148.3 |
| Changes in shareholders' equity 2017, SEKm | Share capital | Revaluation reserve |
Statutory reserve |
Development expenses reserve |
Share premium reserve |
Fair value reserve |
Retained earnings |
Total share holders' equity |
|---|---|---|---|---|---|---|---|---|
| Shareholders' equity December 31 | 23.2 | 0.5 | 55.5 | 0.0 | 158.6 | –2.2 | 135.3 | 370.9 |
| Profit for the year | –1.5 | –1.5 | ||||||
| Other comprehensive income | 3.8 | 3.8 | ||||||
| Total result | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 3.8 | –1.5 | 2.3 |
| Allocation of earnings to development expenses reserve | 28.5 | –28.5 | 0.0 | |||||
| Total transactions with shareholders | 0.0 | 0.0 | 0.0 | 28.5 | 0.0 | 0.0 | –28.5 | 0.0 |
| Shareholders' equity December 31 | 23.2 | 0.5 | 55.5 | 28.5 | 158.6 | 1.6 | 105.3 | 373.2 |
| Profit for the year | 36.8 | 36.8 | ||||||
| Other comprehensive income | –2.4 | –2.4 | ||||||
| Total result | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | –2.4 | 36.8 | 34.4 |
| Allocation of earnings to development expenses reserve | 8.0 | –8.0 | 0.0 | |||||
| Dividend | –23.2 | –23.2 | ||||||
| Merger difference | 5.2 | 5.2 | ||||||
| New Share issue connected to warrant program | 0.6 | 21.1 | 21.7 | |||||
| Total transactions with shareholders | 0.6 | 0.0 | 0.0 | 8.0 | 21.1 | 0.0 | –26.0 | 3.7 |
| Shareholders' equity December 31 | 23.8 | 0.5 | 55.5 | 36.5 | 179.7 | –0.8 | 116.1 | 411.3 |
| SEKm | Note | 2017 | 2016 |
|---|---|---|---|
| OPERATING ACTIVITIES | |||
| Operating profit | 46.1 | 2.4 | |
| Adjusted for items not in cash flow | |||
| Change in provisions | 20, 21, 22 | –16.3 | 2.0 |
| Depreciation and write downs | 7, 8 | 65.1 | 58.1 |
| Unrealized exchange differences in cash flow hedges | 9.9 | –0.6 | |
| Total adjustment for non-cash items | 58.7 | 59.5 | |
| Net paid financial items | –0.5 | –3.7 | |
| Taxes paid | 0.4 | –4.4 | |
| Cash flow from current activities before changes in working capital | 104.7 | 53.8 | |
| Change in working capital | |||
| Change in stocks | 19 | 11.3 | –9.6 |
| Change in receivables | 140.8 | –44.9 | |
| Change in non-interest-bearing liabilities | –124.2 | 28.6 | |
| Cash flow from operating activities | 132.6 | 27.9 | |
| INVESTMENT ACTIVITIES | |||
| Acquisition of subsidiaries | 18 | 0.0 | 0.0 |
| Capital injection to subsidiaries | –8.4 | 0.0 | |
| Acquisition of intangible fixed assets | 7 | –63.7 | –50.6 |
| Acquisition of tangible fixed assets | 8 | –9.2 | 0.0 |
| Loan to subsidiary | 0.0 | –29.5 | |
| Cash flow from investment activities | –81.3 | –80.1 |
| SEKm Note |
2017 | 2016 |
|---|---|---|
| FINANCING ACTIVITIES | ||
| Dividend | –23.2 | 0.0 |
| New share issue | 21.7 | 0.0 |
| Warrant program | –1.2 | 0.0 |
| Increase of non interest-bearing liabilities subsidiares | 0.0 | 32.7 |
| Amortization of loan | 25.0 | 130.8 |
| Loans raised | –75.5 | –75.0 |
| Cash flow from financing activities | –53.2 | 88.5 |
| Cash flow for the year | –1.9 | 36.3 |
| Liquid assets at start of year | 43.4 | 7.1 |
| Liquid assets at end of year 23 |
41.5 | 43.4 |
The Annual Accounts and Consolidated Accounts were approved for publication by the Board of Directors and Chief Executive Officer on March 28, 2018 and will be presented to the AGM on April 27, 2018 for approval.
The Consolidated Accounts were prepared in accordance with International Financial Reporting Standards (IFRS/IAS) as issued by the International Accounting Standards Board (IASB) as endorsed by the EU.
The Consolidated Accounts were also prepared in accordance with the Swedish Annual Accounts Act and the Swedish Financial Reporting Board's recommendation RFR 1 (Supplementary Accounting Rules for Groups).
The Annual Accounts of the Parent Company were prepared in accordance with the Swedish Annual Accounts Act and applying the Swedish Financial Reporting Board's recommendation RFR 2 (Accounting for Legal Entities). Statements applicable to listed companies issued by the Swedish Financial Reporting Board have also been applied.
There are no new accounting principles or interpretation statements that came into effect as of January 1, 2017 that materially affect these financial statements.
IASB has submitted several updated accounting standards that came into effect as of 1 January 2018. None of these are expected to have a significant effect on the consolidated financial statements.
IFRS 9 addresses the classification, measurement and derecognition of financial assets and financial liabilities, introduces new rules for hedge accounting and a new impairment model for financial assets. The Group has reviewed its financial assets and liabilities and assessed the potential impact on its consolidated financial statements resulting from the application of IFRS 9. Doro concluded that its current hedge relationships qualifies as continuing hedges upon the adoption of IFRS 9 and has updated its hedge documentation in accordance with IFRS 9. Regarding impairment, the effect of the impairment model for expected credit losses will be insignificant. As the effects are insignificant the opening balances as of 1 January 2018 will not be affected by the adption of the new standard.
IFRS 15 Revenue from Contracts with Customers IFRS 15 establishes a comprehensive framework for determining whether,
how much and when revenue is recognised. The new standard is based on the principle that revenue is recognised when control of a good or service transfers to a customer. Doro carried out an analysis and impact assessment during the past financial year. The main part of the Group's sales are products delivered a specific point in time. IFRS 15 does not affect the Group's accounting of this type of sales. The accounting of the Group's sales of services delivered over time are neither affected by IFRS 15. In addition Doro Care offers a package deal of performance obligations (alarm device, alarm receiving services, communication etc). Based on a detailed analysis of these contracts, Doro identified a need to adjust the allocation of sales prices between different performance obligations included in the package deals. The changed allocation model has no significant impacts on Doro's consolidated financial statements. As the effects are insignificant the opening balances as of 1 January 2018 will not be affected by the adption of the new standard.
IFRS 16 Leases was published in January 2016 and replaces the former IAS 17 Leases and the related IFRIC 4, SIC-15 and SIC-27 interpretation statements. Although accounting for lessors will be unchanged in all material respects, the accounting for lessees will change. There will no longer be a distinction between operating and finance leases, all leases will be recognized in the Balance Sheet apart from short-term leases and those of minor value. The model reflects the fact that at the start of a lease, the lessee obtains the right to use an asset for a period of time and has an obligation to pay for that right. The standard is effective for financial years beginning on or after 1 January 2019. Doro's evaluation of the impact of IFRS 16 is on-going.
Other new or revised accounting standards are not considered to have a material impact on Doro's financial statements.
Assets, provisions and liabilities are based on historical cost unless otherwise stated below.
All amounts, unless otherwise stated, are in millions of Swedish kronor (SEKm).
The Group includes Parent Company Doro AB, and the companies in which the Parent Company, directly or indirectly owns shares controlling more than half of the voting rights. This means that Doro AB exerts a controlling influence over Group companies.
At the end of the financial year there were 14 (15) trading companies in the Group.
Acquired companies are included in the Consolidated Accounts from the acquisition date or when control of the company is obtained. Sold companies are included up to and including the date they are sold.
The Consolidated Accounts are prepared in accordance with the purchase method, which means that the historical cost of participations in Group companies is divided between identifiable assets and liabilities at their fair value on the acquisition date. Unutilized loss carry-forwards for tax purposes in the acquired company are converted into deferred tax assets in the Consolidated Accounts if the assessed earnings capacity is such that utilising them is deemed possible. Furthermore, deferred tax is calculated on the difference between the fair values of assets and liabilities and their tax base.
In cases where the historical cost of participations in Group companies exceeds the net of acquired assets and liabilities, as above, the difference is recognized as goodwill, which is tested at least once a year for impairment.
For company acquisitions, the purchase price can be earnings dependent. The calculation is then based on future profit and hence the total purchase price. On a quarterly basis, an assessment is made as well as an adjustment of the expected purchase price. Changes in the item in question are recognized in profit or loss.
Intra-Group balances and unrealized internal gains are eliminated in the Consolidated Accounts. When eliminating internal transactions, accounts is also taken of the tax effect on the basis of nominal tax rates in each country.
All of the assets and liabilities of foreign Group companies are translated at the closing day rate, while all items in the income statements are translated at the average rate for the financial year. The exchange rate differences arising in this context are partly an effect of the differences between the income statements' average rates and closing day rates, and partly of the fact that net assets are translated at a different rate at the end of the year than at the beginning of the year. Translation differences are recognized in the Statement of Comprehensive Income.
The following exchange rates have been used in the translation of foreign operations:
| Average rate | Closing day rate | |||
|---|---|---|---|---|
| Currency | 2017 | 2016 | 2017 | 2016 |
| EUR | 9.63 | 9.44 | 9.83 | 9.54 |
| HKD | 1.10 | 1.10 | 1.05 | 1.17 |
| NOK | 1.03 | 1.02 | 1.00 | 1.05 |
| GBP | 11.03 | 11.59 | 11.07 | 11.19 |
| USD | 8.53 | 8.57 | 8.21 | 9.07 |
Receivables and liabilities in foreign currencies are translated at the closing day rates and unrealized exchange gains and losses related to operations are included in other income and other expenses. Exchange rate differences related to non-operational items, such as cash and cash equivalents and bank loans, are recognised in net financial income/expense.
Dors's revenues includes product sales of mainly telephone handsets and alarm devices and sales of alarm services. The services are normally offered as a package deal for a contracted period including alarm device, alarm services and communication between the alarm device and the alarm receiving centre. Product sales are recognised when the essentially all risks and rights associated with ownership has been transferred to the buyer, which usually occurs on delivery. Revenues relating to services are recognised in the period when services are rendered.Doro has discount agreements with most customers. Contracted discounts reduce sales revenue in the period the sale is recognised.
Employee remuneration is reported as salaries earned and paid plus vested bonus. Accrued holiday pay and social security contributions are recognized as accrued expenses.
The predominant share of Doro's obligations towards employees consists of various defined-contribution pension plans.
A defined-contribution pension plan is a pension plan according to which the Group pays fixed fees to a separate legal entity. The Group has no legal or informal obligations to pay further fees if this legal entity lacks sufficient funds to pay all remuneration to employees associated with the employees' service during current or previous periods.
For defined-contribution pension plans, the Group pays fees to publicly or privately managed pension insurance plans on a compulsory, contractual or voluntary basis. The Group has no further payment obligations once these fees have been paid. The fees are recognized as personnel costs when they become due for payment. Prepaid fees are recognized as an asset to the extent that cash repayment or reductions in future payments may accrue to the Group.
In addition, a limited number of employees at the Group's French subsidiary have defined-benefit pension plans. A defined-benefit pension plan is one that is not a defined-contribution plan. Characteristic of definedbenefit plans is that they specify an amount for the pension benefit to be received by an employee following retirement. This is normally based one or more factors such as age, period of service and salary.
All obligations for which provisions are made are assessed by an actuary to determine the amount of the provision. The liability recognized in the Balance Sheet for defined-benefit pension plans is the present value of the defined-benefit obligation at the end of the reporting period.
Since the recognized liability regarding defined-benefit pension plans is an insignificant amount, the assumptions on which the actuarial calculations are based are not presented in the Annual Accounts.
Product development is conducted in collaboration with various manufacturing partners and most expenditure is borne by them. Doro works in an environment of rapid technological progress. Product development refers to expenditure for product adaptations, design, model approval, etc.
Expenses relating to the development phase are capitalized as an intangible asset if it is likely, with a high degree of reliability, that they will result in future financial benefits for the Group.
This means that strict criteria must be met before a development project results in intangible assets being capitalized. Such criteria include the option of ending a project, proof that a project is technically feasible and that a market exists, and that there is an intention and opportunity to use or sell the intangible asset. There must also be an opportunity to reliably measure expenses during the development phase.
External partners' moulds for manufacturing products are, however, owned by Doro and expenditure for them is capitalized and depreciated according to plan if the lifespan of the product is expected to exceed one year. Doro has no research expenses.
Property, plant and equipment and intangible fixed assets are recognized at historical cost less accumulated depreciation/amortization according to plan, except goodwill and right to lease, which is not amortized in the Group.
Financial instruments recognized as assets in the Balance Sheet include, on the asset side, accounts receivable, other receivables, forward currency contracts, non-current investments and bank balances. Overdraft facilities, liabilities to credit institutions, accounts payable and other current liabilities are included in shareholders' equity and liabilities. With the exception of forward currency contracts , financial instruments are initially recognized at historical cost, equal to the fair value of the instrument plus transaction expenses. Instruments are then recognized subject to how they have been classified in accordance with the following. Forward currency contracts are recognized in the Balance Sheet as of the contract date and are measured at fair value, both initially and in subsequent reassessments. For more information see the section on hedge accounting below.
A financial asset or financial liability is recognized in the Balance Sheet when the company becomes party to the instrument's contractual terms. Accounts receivable are recognized in the Balance Sheet when invoiced. Liabilities are recognized once the counterparty has delivered and there is a contractual obligation to pay, even though an invoice may not yet have been received. Accounts payable are recognized when invoices are received.
A financial asset or part of a financial asset is de-recognized from the Balance Sheet when the contractual rights are realized, mature or are no longer under the company's control. This also applies for part of a financial asset. A financial liability or part of a financial liability is de-recognized from the Balance Sheet when contractual obligations are met or otherwise extinguished. The same applies to part of a financial liability.
The purchase or sale of financial assets is recognized at the transaction date, which is the date on which the Company undertakes to purchase or sell the asset.
A financial asset and financial liability are offset against each other and the net amount recognized in the Balance Sheet only when there is a legal right to offset the amounts and there is an intention to settle the items to a net amount or realize the asset and settle the liability simultaneously.
Financial instruments are measured at fair value and classified in the following categories:
Fair value is determined based on the following three levels:
• Level 3: Based on input data not observable on the market All financial instruments measured at fair value have been measured according to Level 2.
Derivatives held for trading
• Measurement at fair value in profit or loss.
Derivatives accounted for as hedges
• Measurement at fair value through other comprehensive income.
• Measurement at fair value through other comprehensive income.
Accounts receivable and loans receivable are non-derivative financial assets with determined or determinable payments that are not quoted on an active market. They are included among currents assets, with the exception of items maturing more than 12 month after the close of the reporting period, which are classified as non-current assets. The Group's accounts receivable and loans receivable consist of accounts receivable and other receivables in the Balance Sheet. Accounts receivable are recognized net less doubtful debt. Deductions for doubtful debt are based on a model in which extended maturities give increased deductions. In addition, an individual assessment is made of accounts receivable, with account taken of anticipated bad debt losses. Other receivables are recognized net less doubtful debt based on individual assessments with account taken of the expected losses they are expected to incur.
Other financial liabilities consist of accounts payable, liabilities to banks and accrued expenses, apart from social security contributions and taxes. Other financial liabilities are measured at amortized cost.
Effective from January 1, 2013, Doro applies hedge accounting for forward currency contracts. The hedging strategy conforms to an adopted finance policy in terms of purpose, amounts, maturities and currencies.
Changes in the value of forward exchange contracts classified as cash flow hedges are recognized in other comprehensive income. Hedge
accounting ceases when the underlying exposure enters the Balance Sheet (i.e. when purchases and sales occur). Accumulated results in the hedging reserve (which is in other comprehensive income) are then dissolved against cost of goods sold of forward exchange contracts relating to purchases, or against sales for forward exchange contracts relating to sales.
Forward exchange contracts linked to commercial flows not subject to hedge accounting are classified as "held for trading". Value changes relating to such foreign exchange transactions have been recognized directly in sales for contracts relating to sales, and in the cost of goods sold for contracts relating to purchases. Hedge accounting is only used for forward contracts in EUR, USD, NOK and GBP and that relate to exposures that have not yet entered the Balance Sheet. Currency derivatives linked to liquidity management and loans are not subject to hedge accounting. They are classified as "held for trading". Value changes relating to such foreign exchange transactions are recognized in net financial income/expense.
At least at every year-end at the close of accounts, an assessment is made as to whether there is any indication of impairment of the carrying amounts of the Group's assets. When there is such an indication, the recoverable amount of the asset is measured. The recoverable amount is the greater of an asset's net realizable value and its value in use. When establishing value in use, present value measurement is performed for estimated future payments that the asset is expected to generate during its useful life.
In present value measurement, an interest rate before tax is used for the purpose of the measurement that reflects the current market interest rate and the risk attributable to the asset. If the recoverable amount is less than the carrying amount, the asset is impaired to its recoverable amount.
Reversals of impairment are recognized if there are no grounds for such impairment, except for goodwill. Impairment and reversals of impairment are recognized in profit or loss.
At least once a year, an assessment of forecast future earnings and cash flow trends is made with regard to goodwill, capitalised expenditure for ongoing development projects and leasehold rights on premises. When the carrying amount exceeds the recoverable amount, it is impaired.
Depreciation according to plan is on a straight-line basis on the historical cost of the asset category and the estimated useful life: Tools for the manufacture of products are included in intangible assets, capitalized expenditure for development work. Equipment and tools 2–5 years
| Intangible assets are amortized over their estimated useful life. For | ||||
|---|---|---|---|---|
| capitalized product development, amortization commences as of market | ||||
| launch of the product in question. Amortization according to plan is on a | ||||
| straight-line basis on the historical cost of the asset category: | ||||
| Capitalized expenditure for development work | 1–3 years | |||
| Trademarks and brands | 1–5 years | |||
| Customer register and distribution agreements | 3–5 years |
Leases are classified in the Consolidated Accounts as either finance or operating leases. Finance leases exist when the financial risk and benefits associated with the ownership are essentially transferred to the lessee.
Finance leases mainly refer to the lease of alarm devices to public sector customers. Leases for company cars, photocopiers, computer equipment and similar are recognized as operating leases. Rent for premises is included in operating leases.
Inventories are measured at the lower of cost (in accordance with the first-in, first out principle—FIFO) and net realizable value (in accordance with the lowest value principle). Cost is calculated for each delivery.
Technological development is rapid and prices fall regularly. Impairment of inventory is recognized according to a model whereby older inventory gives greater impairment. Different product groups have varying rates of impairment. The net sales value is defined as the selling price less selling expenses. Impairment to the net realizable value includes impairment due to technological and commercial obsolescence made in the Group company in question.
Provisions are defined as liabilities that are uncertain in term of amounts or time of settlement. A provision is recognized when there is an undertaking ensuring from a transpired event, it is probable that an outflow of resources will be required in order to settle the undertaking and that the amount can be reliably estimated. Pensions, guarantee commitments, disputes and additional expenses are recognized as provisions in the Balance Sheet.
Provisions are made for estimated repair expenditure and losses of margins regarding goods that may be returned within the warranty period (between one and two years from the sale to the end user).
A statistical program has been developed that captures outcomes regarding the time at which products are sold until they are returned, the proportion that is repaired, scrapped, compensated for through product exchange of crediting as well as cost for checking, repairs (including parts) and transport. In the event of variances (mainly in the share of returned products), warranty provision requirements are changed. The total warranty reserve is classified as current liabilities as majority of guarantees falls within one year.
All tax expected to be payable on reported profit is recognized in the Income Statement. Such taxes have been computed according to each country's tax regulations and are recognized under the item tax on profit for the year.
The Group's total tax in the Income Statement consists of current tax on taxable profits for the period, and deferred tax. Deferred tax mainly consists of changes in deferred tax assets with respect to loss carry-forwards and for tax purposes and other temporary differences.
The Group uses the balance sheet method for calculating deferred tax assets and liabilities. According to the balance sheet method, computation is based on tax rates on the closing date applied to temporary differences between an asset or liability's value in terms of accounting and taxation, and loss carry-forwards for tax purposes. Deferred tax assets are recognized in the Balance Sheet only to the extent of value that can probably be utilized within the foreseeable future. An individual assessment is performed of the situation for companies in each country.
Cash flow statements are prepared using the indirect method, which means that profit/loss after financial income/expense is adjusted for transactions that did not entail incoming and outgoing payments during the period, and for income and expenses relating to the cash flow of investment activities.
Cash and equivalents comprise cash, bank balances and current investments.
On the sale of share warrants, the purchase consideration received is recognised as an increase in Other paid-up capital. On the repurchase of share warrants, the purchase consideration is recognised as a reduction in other paid-up capital.
Operating segments are reported in a manner consistent with the internal reporting presented to the chief operating decision maker of the Group. The chief operating decision maker is the function responsible for the allocation of resources and the assessment of the segments' earnings. For Doro, this function has been identified as the CEO. For more information about Doro's segment reporting, see Note 2.
The balance sheet items entitled current assets and current liabilities are expected to be recovered or paid within a twelve-month period. All other balance sheet items are recovered or repaid later.
In their preparation of Doro's Consolidated Accounts, the Board of Directors and the CEO, besides estimates made, have made a series of judgments regarding critical accounting matters that can significantly affect the amounts recognized. These relate to the following:
When testing carrying amounts of goodwill for impairment, assumptions are made about the future expected profit and cash flow trend for the lowest possible cash-generating unit. This is described in more detail in -Note 7.
When measuring deferred tax assets, an assessment of future surpluses for tax purposes of each company is made, and thereby of the ability to utilize the loss carry-forwards. The size of the loss carry-forwards is detailed in Note 17.
Individual assessments are made when evaluating credit risks in accounts receivable. The assessment is based on past payment capacity and other information. Doro has in the past had very low realized bad debt losses, but is active in follow-up. Refer to Note 23 for more information.
Measurement of inventory is based on an inventory turnover model. In addition, individual assessments are performed based on past sale statistics and sales forecasts compared with product volumes in inventory and in production with suppliers.
Participations in Group companies are measured at historical cost. If the recoverable amount (see section above entitled "impairment") should prove to be lower, there is an impairment. Impairment of the value of participations in subsidiaries is reversed when there are no longer grounds for such impairment.
The parent company applies fair value accounting for financial instruments in accordance with Annual Accounts Act Chap 4:14.
| Group | Parent Company | |||
|---|---|---|---|---|
| Net sales | 2017 | 2016 | 2017 | 2016 |
| Net sales of products | 1,731.3 | 1,826.0 | 1,398.3 | 1,439.5 |
| Net sales of services | 192.7 | 133.1 | 133.5 | 0.0 |
| Total | 1,924.0 | 1,959.1 | 1,531.8 | 1,439.5 |
| Group | Parent Company | |||
|---|---|---|---|---|
| Other Revenue | 2017 | 2016 | 2017 | 2016 |
| Activated development costs | 13.3 | 11.7 | 10.1 | 5.7 |
| Recovered receivables | 0.0 | 1.3 | 0.0 | 0.0 |
| Gain on sale of fixed assets | 0.1 | 0.1 | 0.1 | 0.0 |
| Valutakursvinster | 14.2 | 0.0 | 13.6 | 0.0 |
| Others | 6.8 | 2.9 | 0.3 | 0.0 |
| Total | 34.4 | 16.0 | 24.1 | 5.7 |
| Other Expenses | 2017 | 2016 | 2017 | 2016 |
| Exchange rate differences | 0.0 | –12.0 | 0 | –10.1 |
| Total | 0.0 | –12.0 | 0.0 | –10.1 |
Doro is recognized as a functional organization. The functional matrix structure provides a focused support for the organization and these services will be shared amongst the various products, geographical regions and distribution channels.
The regions are responsible for the regional sales and reports to the Vice President Sales. Doro's operations has been integrated as one reporting segment with a common strategy and common profit control as well as cost budget and investment budget.
The Doro business is one reporting segment and the financial information is analyzed and reviewed by the executive chief operating decision maker as one segment in the assessment of Doro's performance. The most important measure to control the business is EBIT.
The location of the customers in combinations with type of offerings to the customers forms the basis of sales by geographic region. No single customer amounts to more than 10% of Net sales. All significant tangible and intangible fixed assets are controlled by the Parent company in Sweden.
| Total revenue per region | 2017 | 2016 |
|---|---|---|
| Nordic | 332.6 | 353.1 |
| Care | 276.6 | 210.1 |
| EMEA (Europe (other), Mid East and Africa) | 437.0 | 461.4 |
| DACH (Germany, Austria, Switzerland, Central Europe) |
522.4 | 462.9 |
| UK (Great Britain, Ireland) | 239.9 | 266.4 |
| USA and Canada | 96.1 | 189.8 |
| Rest of the world | 22.6 | 18.9 |
| Central overhead | –3.2 | –3.5 |
| Total | 1,924.0 | 1,959.1 |
| whereof Sweden | 384.0 | 401.2 |
Of the Parent Company's invoicing SEK 179.5m (132.8) relates to subsidiaries. Invoicing from subsidiaries to the Parent Company amounted to SEK 157.7m (146.0). Invoicing between subsidiaries amounted to SEK 0m (58.9).
Costs for operational rental and leasing charges during the year amount to SEK 18.8m (18.3) for the group and SEK 9.2m (3.0) for the parent company. Agreed future rental and leasing costs fall due for payment as shown below.
| The Group | Parent Company | |||
|---|---|---|---|---|
| Operational leasing | 2017 | 2016 | 2017 | 2016 |
| Within 1 year | 17.4 | 17.1 | 9.4 | 2.8 |
| Within 2 to 5 years | 40.7 | 23.6 | 25.5 | 3.5 |
| Later than 5 years | 14.5 | 0.0 | 13.9 | 0.0 |
| Total | 72.6 | 40.7 | 48.8 | 6.3 |
Cost for leasing of alarm devices from finance companies amounts to SEK 22.1m (26.5). Short-term financial lease liability amounts to SEK 2.4m (21.6) and long-term financial lease liability amounts to SEK 0.0m (2.4). No new lease agreents were signed during the year.
The Group has both operational and financial lease out of alarm devices to customers in the public sector. The lease term is normally 12 to 24 months with an option of addtional 12 to 24 months. No provision for bad debts has been recorded as customers in the public sector are considered to be financially sound.
Agreed future leasing revenue are due as shown below.
| Group | Parent Company | ||
|---|---|---|---|
| 2017 | 2016 | 2017 | 2016 |
| 6.4 | 23.6 | 6.4 | 23.6 |
| 7.3 | 6.5 | 7.3 | 6.5 |
| 0.0 | 0.0 | 0.0 | 0.0 |
| 13.7 | 30.1 | 13.7 | 30.1 |
AVERAGE NUMBER OF EMPLOYEES
| Of whom | Of whom | |||
|---|---|---|---|---|
| Number | 2017 | men | 2016 | men |
| Parent Company | 93 | 62 | 57 | 36 |
| Other companies Sweden | 114 | 37 | 137 | 60 |
| Norway | 71 | 49 | 68 | 38 |
| United Kingdom | 15 | 10 | 13 | 8 |
| France | 26 | 11 | 36 | 20 |
| Hong Kong | 9 | 7 | 9 | 7 |
| Germany | 51 | 36 | 52 | 38 |
| Italy | 2 | 2 | 1 | 1 |
| Total | 381 | 214 | 373 | 208 |
Salaries, remuneration, social charges and pension cost have appeared with the following amounts:
| The Group | Parent Company | |||
|---|---|---|---|---|
| SEKm | 2017 | 2016 | 2017 | 2016 |
| Salaries and other remuneration | 193.9 | 194.9 | 60.6 | 39.4 |
| 193.9 | 194.9 | 60.6 | 39.4 | |
| Payroll overheads excluding pension | ||||
| costs | 56.3 | 55.5 | 22.0 | 12.8 |
| 56.3 | 55.5 | 22.0 | 12.8 | |
| Pension costs | 18.9 | 16.0 | 11.4 | 7.1 |
| of which premium-based | 18.3 | 16.7 | 11.4 | 7.1 |
| 18.9 | 16.0 | 11.4 | 7.1 |
| Number | 2017 total |
Women % |
2016 total |
Women % |
|---|---|---|---|---|
| Board | 5 | 40 | 6 | 33 |
| Group Management | 7 | 20 | 6 | 17 |
| 2017 | 2016 | ||||
|---|---|---|---|---|---|
| SEKm | Board and CEO |
Other employees |
Board and CEO |
Other employees |
|
| Sweden | 4.9 | 90.2 | 6.0 | 88.8 | |
| Norway | 0.0 | 35.1 | 0.0 | 27.5 | |
| United Kingdom | 0.0 | 8.8 | 0.0 | 7.5 | |
| France | 0.2 | 19.3 | 9.1 | 21.1 | |
| Germany | 0.0 | 28.2 | 0.0 | 28.6 | |
| Hong Kong | 0.0 | 5.5 | 0.0 | 5.3 | |
| Italy | 0.0 | 3.0 | 0.0 | 2.3 | |
| Total | 5.1 | 190.1 | 15.1 | 181.1 |
| Other remu |
||||
|---|---|---|---|---|
| The Board 2017 | Fees Pension | neration | Total | |
| Chairman of the Board | 450 | 0 | 0 | 450 |
| Other Board members | 900 | 0 | 0 | 900 |
| Total | 1,350 | 0 | 0 | 1,350 |
Vice chairman of the board Henri Österlund received SEK 300,000. Jonas Mårtensson, Karin Moberg and Lena Hofsberger each received SEK 200,000.
| Bonus and variable remu |
Other | ||||
|---|---|---|---|---|---|
| Senior Executives 2017 | Salary | neration Pension | benefits | Total | |
| Robert Puskaric (CEO from 1 February 2017) |
3,406 | 0 | 1,031 | 137 | 4,574 |
| Jérôme Arnaud (CEO until 31 January 2017) |
367 | 0 | 24 | 8 | 399 |
| Other senior executives | 7,353 | 255 | 2,570 | 297 | 10,475 |
| Total | 11,126 | 255 | 3,625 | 442 | 15,448 |
The above amounts include salaries and remunerations to employed senior executives. In 2017, the management team had seven members. In addition to salaries and remunerations to senior executives, consultancy fees of SEK 2,445,000 have been paid to interim senior executives.
| Other remu |
||||
|---|---|---|---|---|
| The Board 2016 | Fees Pension | neration | Total | |
| Chairman of the Board | 400 | 0 | 0 | 400 |
| Other Board members | 871 | 0 | 0 | 871 |
| Total | 1,271 | 0 | 0 | 1,271 |
Bo Kastensson, who served as Chairman until the end of the AGM on 3 May 2016, received SEK 175,000. Magnus Mandersson, who was elected as Chairman by the AGM on 3 May 2016, and resigned on 17 October 2016, received SEK 216,000. Johan Andsjö, who was elected to the Board of Directors by the AGM on 3 May 2016, and was then elected as Chairman on 17 October 2016, received SEK 105,000. Charlotta Falvin, who resigned from the Board at the AGM on 3 May 2016, received SEK 75,000. Henri Österlund, Lena Hofsberger, Karin Moberg and Jonas Mårtensson each received SEK 175,000.
| Bonus and variable remu |
Other | |||||
|---|---|---|---|---|---|---|
| Senior Executives 2016 | Salary | neration Pension | benefits | Total | ||
| Jérôme Arnaud (CEO) | 13,367 | 477 | 391 | 101 | 14,336 | |
| Other senior executives | 8,508 | 2,695 | 681 | 11,884 | ||
| Total | 21,875 | 477 | 3,086 | 782 | 26,220 |
The above amounts include salaries, remuneration on and severance pay to employed senior executives. In 2016, the management team had seven members. The Chief Executive Officer's salary of SEK 13.4m includes severance pay of SEK 9.0m.
Fees are paid to the Chairman and other Board members in accordance with AGM resolution. Remuneration to the CEO and other senior executives comprises basic salary, variable remuneration, other benefits (mainly company cars) and pension premiums. The balance between basic salary and variable remuneration should be in proportion to the executive's responsibilities and authorities. The average number of senior executives in the management team in 2017 was 7 (7).
The retirement age of the CEO and other senior executives of the Group is 65 and pensions are usually paid in accordance with occupational pensions plan plus full provisioning for the full amount of salaries according to the ITP/ ITPK plans (supplementary pensions for salaried employees). All pension benefits are irrevocable, i.e. not dependent on continued employment. The retirement age of the CEO is 65 years. No agreements have been signed concerning pension commitments or equivalent, apart from as stated regarding the periods of notice mentioned above, whether for Board members or senior executives. Pension schemes for senior executives are substantially defined contribution with premiums of SEK 3.6m 3.1) paid.
If notice is served by the company or by the CEO himself, the period of notice is one year. The CEO is entitled to salary for 12 months during the period of notice. No severance pay will be paid if notice is served by CEO. Other senior executives are entitled to salary for notice periods of between two and twelve months.
These procedures are explained in the Directors' Report.
An Extraordinary General Meeting on 21 August 2014 resolved on a directed issue of new warrants to senior executives and key employees of the Doro Group. Each warrant gives the holder the right to buy one share to a predetermined price of SEK 42.00 in the period 22 May 2017 to 21 June 2017. The warrant price is calculated according to the Black & Scholes model, taking into consideration estimated dividend and the applied share price of SEK 31.10, volatility 30 percent, risk-free interest of 0.31 percent and dura on of 2.78 years (12 September 2014–21 June 2017). The CEO subscribed for 200,000 warrants and the rest of the Group management subscribed for 325,000 warrants. Doro Incentive subscribed for 141,000 warrants for potential future employees. A total of 841,000 warrants were issued.
In 2015, an additional 135,000 warrants were subscribed and 65,000 warrants were repurchased.
Another 65,000 warrants were subscribed in 2016, and 265,000 were repurchased.
In June 2017 the warrant program was closed after 517,000 warrants had been used to subscribe for 517,000 new shares.
| The Group | Parent Company | ||||
|---|---|---|---|---|---|
| Income | 2017 | 2016 | 2017 | 2016 | |
| Interest income, external | 0.3 | 0.2 | 0.0 | 0.1 | |
| Interest income, internal | 0.0 | 0.0 | 5.4 | 5.1 | |
| Exchange rate gain | 4.7 | 2.4 | 4.8 | 2.0 | |
| Other | 0.2 | 0.0 | 0.0 | 0.0 | |
| Total | 5.2 | 2.6 | 10.2 | 7.2 | |
| Expenses | |||||
| Interest expenses, external | –4.9 | –5.8 | –4.2 | –5.2 | |
| Interest expenses, internal | 0.0 | 0.0 | –1.2 | –0.6 | |
| Exchange rate losses | 0.0 | –4.8 | 0.0 | –4.8 | |
| Other | –0.6 | –0.3 | –2.4 | –0.3 | |
| Total | –5.5 | –10.9 | –7.8 | –10.9 | |
| Financial net | –0.3 | –8.3 | 2.4 | –3.7 |
| INTANGIBLE FIXED ASSETS | ||
|---|---|---|
| Group/ Goodwill | 2017 | 2016 |
| Opening cost | 372.1 | 348.6 |
| Acquisitions during the year | 0.0 | 16.8 |
| Exchange rate difference | 3.2 | 6.7 |
| Closing accumulated cost | 375.3 | 372.1 |
| Group / Customer register and | ||
| distribution agreements | 2017 | 2016 |
| Acquisition value brought forward | 46.0 | 37.3 |
| Acquisitions during the year | 0.0 | 7.3 |
| Exchange rate difference | 0.2 | 1.4 |
| Closing accumulated acquisition value | 46.2 | 46.0 |
| Write-downs brought forward | –29.0 | –21.0 |
| Write-downs for the year | –5.2 | –7.2 |
| Exchange rate difference | –0.5 | –0.8 |
| Closing depreciation/write-downs | –34.7 | –29.0 |
| Closing residual value according to plan | 11.5 | 17.0 |
| Parent company / Goodwill | 2017 | 2016 |
| Acquisition value brought forward | 19.1 | 19.1 |
Closing depreciation/write-downs –25.8 –19.1 Closing residual value according to plan 198.7 0.0
| Parent company / Goodwill | 2017 | 2016 | |
|---|---|---|---|
| Acquisition value brought forward | 19.1 | 19.1 | |
| Acquisitions during the year | 5.4 | 0.0 | |
| Merger of subsidiary | 200.0 | 0.0 | |
| Closing accumulated acquisition value | 224.5 | 19.1 | is deemed to exist. |
| Write-downs brought forward | –19.1 | –19.1 | |
| Write-downs for the year | –6.7 | 0.0 | SENSITIVITY ANALYSIS |
| Parent company / Customer register | 2017 | 2016 |
|---|---|---|
| Acquisition value brought forward | 14.8 | 14.8 |
| Acquisitions during the year | 8.1 | 0.0 |
| Closing accumulated acquisition value | 22.9 | 14.8 |
| Write-downs brought forward | –14.8 | –14.0 |
| Write-downs for the year | –1.8 | –0.8 |
| Closing depreciation/write-downs | –16.6 | –14.8 |
The Group assesses the need for goodwill to be written down on an annual basis or when indications of impairment arise. Impairment testing is applied at the lowest level where separable cash flows can be identified. Since all the Group companies' activities and their contributions are very much dependent on each other there is no breakdown of goodwill.
Closing residual value according to plan 6.3 0.0
The recoverable value of the unit has been established based on the current value in use of future cash flows. Future cash flows are estimated on the basis of expected growth rate in accordance with established forecasts for the next five years. These forecasts are based on historical experience, but also takes expected future development into account. Assumptions regarding future growth and profitability are based on external and internal estimates of market growth, past performance and management's assessment of market shares.The WACC discount factor, has been set using the Capital Asset Pricing Model (CAPM). As part of the WACC the risk free interest equivalent to the yield on 10-year government-bonds has been applied with the addition of stock market 's risk premium for small companies. The return requirement has been ascertained based on the optimum capital structure as derived from the capital market. Since the recoverable amount exceeds the carrying amount, no need for impairment
Growth rate after 5 years:In the impairment test Doro used a sustainable growth rate of 2 percent (2). A change in the growth rate from 2 to 1 percent implies no impairment. Discount rate before tax increases by 1percentage point: In the impairment test Doro used a WACC discount factor of 13.9% (13.6%) before tax. A change of the discount rate to 14.9% implies no impairment.
| The Group / Brands, SEKm | 2017 | 2016 |
|---|---|---|
| Acquisition value brought forward | 1.8 | 1.8 |
| Acquisitions during the year | 0.0 | 0.0 |
| Exchange rate difference | 0.1 | 0.0 |
| Closing accumulated acquisition value | 1.9 | 1.8 |
| Depreciation according to plan brought forward |
–1.8 | –1.6 |
| Depreciation according to plan for the year | –0.1 | –0.2 |
| Closing depreciation according to plan | –1.9 | –1.8 |
| Closing residual value according to plan | 0.0 | 0.0 |
| Parent company/ Brands | 2017 | 2016 |
| Acquisition value brought forward | 36.8 | 36.8 |
| Acquisitions during the year | 0.0 | 0.0 |
| Closing accumulated acquisition value | 36.8 | 36.8 |
| Depreciation according to plan brought forward |
–36.8 | –36.7 |
| Depreciation according to plan for the year | 0.0 | –0.1 |
| Closing depreciation according to plan | –36.8 | –36.8 |
| Closing residual value according to plan | 0.0 | 0.0 |
| Group / Right to lease | 2017 | 2016 |
| Acquisition value brought forward | 1.7 | 1.8 |
| Exchange rate difference | 0.1 | –0.1 |
| Closing accumulated cost | 1.8 | 1.7 |
| The Group's capitalized expenditure for development work / IT, SEKm |
2017 | 2016 |
|---|---|---|
| Acquisition value brought forward | 205.1 | 159.3 |
| Acquisitions during the year | 42.7 | 47.2 |
| Acquisitions | 0.0 | 0.0 |
| Exchange rate difference | 0.0 | 0.0 |
| Sales/Disposals/Write-downs | –2.8 | –30.1 |
| Reclassifications | 16.2 | 28.7 |
| Closing accumulated acquisition value | 261.2 | 205.1 |
| Depreciation according to plan brought forward |
–136.4 | –103.8 |
| Depreciation according to plan for the year | –53.7 | –46.3 |
| Sales/Disposals/Write-downs | 2.7 | 13.7 |
| Reclassifications | 0.0 | 0.0 |
| Exchange rate difference | 0.0 | 0.0 |
| Closing depreciation according to plan | –187.4 | –136.4 |
| Closing residual value according to plan | 73.8 | 68.7 |
| Ongoing capitalized expenditure for development work /IT, SEKm |
2016 | |
|---|---|---|
| Opening balance | 4.6 | 20.8 |
| Reclassifications | –16.2 | –28.7 |
| New expenditure | 15.7 | 14.3 |
| Cost accounted | 0.0 | –1.8 |
| Closing balance | 4.1 | 4.6 |
| Total closing residual value | 77.9 | 73.3 |
| Parent company / Capitalized expenditure | ||
|---|---|---|
| for development work / IT, SEKm | 2017 | 2016 |
| Acquisition value brought forward | 184.9 | 148.4 |
| Acquisitions during the year | 42.7 | 42.1 |
| Merger of subsidiary | 23.2 | 0.0 |
| Sales/Disposals/Write-downs | –1.4 | –26.0 |
| Reclassifications | 16.2 | 20.4 |
| Closing accumulated acquisition value | 265.6 | 184.9 |
| Depreciation according to plan brought | ||
| forward | –141.3 | –110.7 |
| Depreciation according to plan for the year | –53.5 | –42.3 |
| Merger of subsidiary | –6.2 | 0.0 |
| Sales/Disposals/Write-downs | 1.4 | 11.7 |
| Reclassifications | 0.0 | 0.0 |
| Closing depreciation according to plan | –199.6 | –141.3 |
| Closing residual value according to plan | 66.0 | 43.6 |
| Ongoing capitalized expenditure for | ||
| development work /IT, SEKm | 2017 | 2016 |
| Opening balance | 8.4 | 20.4 |
| Reclassifications | –16.2 | –20.4 |
| Merger of subsidiary | 4.0 | 0.0 |
| New expenditure | 15.7 | 10.2 |
| Cost accounted | 0.0 | –1.8 |
Closing balance 11.9 8.4 Total closing residual value 77.9 52.0
| The Group | Parent Company | ||||
|---|---|---|---|---|---|
| Equipment and tools, SEKm | 2017 | 2016 | 2017 | 2016 | |
| Acquisition value brought forward | 33.9 | 25.8 | 14.4 | 14.5 | |
| Acquisitions during the year | 11.8 | 7.8 | 9.2 | 0.0 | |
| Merger of subsidiary | 0.0 | 0.0 | 14.4 | 0.0 | |
| Acquisitions | 0.0 | 2.2 | 0.0 | 0.0 | |
| Sales/Disposals | –2.7 | –2.3 | 0.0 | –0.1 | |
| Reclassifications | 0.0 | 0.0 | 0.0 | 0.0 | |
| Exchange rate difference | –0.4 | 0.3 | 0.0 | 0.0 | |
| Closing acquisition value | 42.6 | 33.9 | 38.0 | 14.4 | |
| Depreciation according to plan brought forward |
–20.9 | –18.1 | –13.6 | –13.1 | |
| Depreciation according to plan for the year |
–5.3 | –3.4 | –3.1 | –0.6 | |
| Merger of subsidiary | 0.0 | 0.0 | –7.3 | 0.0 | |
| Sales/Disposals | 2.7 | 0.6 | 0.0 | 0.1 | |
| Reclassifications | 0.0 | 0.0 | 0.0 | 0.0 | |
| Exchange rate difference | –0.1 | 0.0 | 0.0 | 0.0 | |
| Closing depreciation according to plan |
–23.6 | –20.9 | –24.0 | –13.6 | |
| Closing residual value according to plan |
19.0 | 13.0 | 14.0 | 0.8 |
| Subsidiary | No of. shares |
% | Book value SEKm, 2017 |
Book value SEKm, 2016 |
|---|---|---|---|---|
| Doro AS, Norway | 200 | 100 | 0.6 | 0.6 |
| Doro UK Ltd | 3,013,400 | 100 | 4.2 | 4.2 |
| Doro SAS | 66,667 | 100 | 11.6 | 11.6 |
| Doro Hong Kong Ltd | 4,500 | 100 | 5.1 | 5.1 |
| Doro Inc | 3,000 | 100 | 0.0 | 0.0 |
| Doro Incentive AB | 50,000 | 100 | 0.1 | 0.1 |
| Doro Deutschland GmbH | 1 | 100 | 0.2 | 0.2 |
| IVS Industrievertretung Schweiger GmbH1) |
9,239 33.33 | 46.5 | 46.5 | |
| Doro S.R.L | 1 | 100 | 0.1 | 0.1 |
| Aldebaran SAS | 275,000 | 100 | 5.2 | 5.2 |
| Doro Care AB2) | 0.0 | 236.3 | ||
| Doro Care Trygghetsjour AB | 2,500 | 100 | 11.3 | |
| Doro Care Nordic AB | 1,000 | 100 | 0.1 | |
| Doro Care Sales UK Limited | 1 | 100 | 0.0 | |
| Doro Care GmbH | 1 | 100 | 2.0 | |
| Doro Care AS | 242,294 | 100 | 31.3 | |
| Total | 118.2 | 309.9 |
1) IVS industrievertretung Schweiger GmbH is included in the Group to 100%. Doro AB owns 33.33% and Doro Deutschland GmbH owns 66.67%.
2) Doro Care AB was merged into Doro AB on 11th June 2017.
| 2017 | 2016 | |
|---|---|---|
| Opening balance | 309.9 | 309.9 |
| Acquisition | 0.0 | 0.0 |
| Merger of wholly-owned subsidiary | –191.7 | 0.0 |
| Closing balance | 118.2 | 309.9 |
| Subsidiary – Company reg. no | Registered office |
| Doro AS – 934210719 | Fredrikstad, Norway |
|---|---|
| Doro UK Ltd – 1180330 | Chalfont St Peter, United Kingdom |
| Doro SAS – 309 662 195 | Versailles, France |
| Doro Hong Kong Ltd – 08194263-000-12-98-6 | Kowloon, Hongkong |
| Doro Inc. – 4706937 810 0 090679976 | New York, USA |
| Doro Incentive AB – 556843-4962 | Lund, Sweden |
| Doro Deutschland GmbH – HRB75859 | Köln, Germany |
| IVS Industrievertretung Schweiger GmbH – HRB 2040 | Amberg, Germany |
| Doro S.R.L – 08721340969 | Milano, Italy |
| Aldebaran SAS – 504 770 116 | Paris, France |
| Doro Care Trygghetsjour AB – 556569-9740 | Malmö, Sweden |
| Doro Care Nordic AB – 556773-1301 | Kalmar, Sweden |
| Doro Care Sales UK Limited – 7776454 | London, United Kingdom |
| Doro Care GmbH – HRB 6783 | Taunus, Germany |
| Doro Care AS – 986616500 | Oslo, Norge |
| The Group | Parent Company | ||||
|---|---|---|---|---|---|
| Other current receivables | 2017 | 2016 | 2017 | 2016 | |
| VAT receivable | 13.4 | 27.1 | 16.9 | 29.2 | |
| Cash Flow hedges | 4.0 | 12.4 | 4.0 | 12.4 | |
| Financial lease receivables | 6.5 | 23.7 | 2.4 | 0.0 | |
| Other current receivables | 4.5 | 3.6 | 0.4 | 0.8 | |
| Total | 28.4 | 66.8 | 23.7 | 42.4 |
| Prepaid expenses and accrued | The Group | Parent Company | ||
|---|---|---|---|---|
| income | Rent | 2016 | 2017 | 2016 |
| Prepaid rent | 1.0 | 4.8 | 0.7 | 0.5 |
| Insurance premiums | 0.9 | 1.0 | 0.2 | 0.0 |
| Exhibition costs | 1.3 | 1.6 | 1.3 | 1.6 |
| IT costs | 1.6 | 0.9 | 1.6 | 0.7 |
| Licence costs | 3.4 | 3.5 | 3.3 | 3.3 |
| Installation expenses | 6.8 | 12.9 | 6.8 | 0.0 |
| Other prepaid expenses | 4.8 | 4.7 | 5.8 | 1.3 |
| Total | 19.8 | 29.4 | 19.7 | 7.4 |
23,755,255 shares at a quota value of SEK 1.00 per share = SEK 23,755,255.
In 2017 Doro issued 517,000 new shares in connection to the closing of a warrant program.
The Board of Directors proposes no dividend for the 2017 financial year.
An extraordinary General Meeting was held in August 21, 2014, and descision was made on directed issue of new warrants to senior executives and key employees within the Doro group. Each warrant gives the holder the right to buy one share to a predetermined price of SEK 42.00 during May 22, 2017 until June 21, 2017. The warrant price is calculated according to the Black & Scholes model, taking into consideration estimated dividend and used share price of SEK 31.10, volatility 30%, riskfree interest 0.31% and duration of 2.78 year (2014-09-12–2017-06-21). The CEO subscribed for 200,000 warrants and the rest of the group management subcribed for 325,000 warrants. Doro Incentive subcribed for 141,000 warrants possible to be used for future employees. Totaly 841,000 warrants were issued. In 2015 an additional 135,000 warrants were subscribed and 65,000 warrants were re-purchased. In 2016 65,000 warrants were subscribed and 265,000 warrants were re-purchased. In June 2017 the warrant program was closed and 517,000 warrants were utilised to purchase 517,000 new shares.
| The Group | Parent Company | |||
|---|---|---|---|---|
| SEKm | 2017 | 2016 | 2017 | 2016 |
| Approved credit | 50.0 | 50.0 | 50.0 | 50.0 |
| Utilized credit | 0.0 | 0.0 | 0.0 | 0.0 |
| The Group | Parent Company | |||
|---|---|---|---|---|
| SEKm | 2017 | 2016 | 2017 | 2016 |
| Holiday pay liability | 17.7 | 22.6 | 10.6 | 5.6 |
| Payroll overheads | 11.2 | 10.6 | 7.4 | 2.6 |
| Other staff liabilities | 7.3 | 11.7 | 2.0 | 0.0 |
| Accrued royalty | 35.3 | 29.3 | 30.9 | 29.3 |
| Accrued customer bonus | 56.3 | 37.8 | 36.7 | 24.2 |
| Other accrued expenses | 56.3 | 54.1 | 31.8 | 30.2 |
| Total | 184.1 | 166.1 | 119.4 | 91.9 |
| The Group | Parent Company | |||
|---|---|---|---|---|
| SEKm | 2017 | 2016 | 2017 | 2016 |
| Chattel mortgages | 170.0 | 186.6 | 170.0 | 170.0 |
| Shares in subsidiary | 0.0 | 243.2 | 0.0 | 236.3 |
| Total | 170.0 | 429.8 | 170.0 | 406.3 |
| CONTINGENT LIABILITIES | ||
|---|---|---|
| The Group | Parent Company | |||
|---|---|---|---|---|
| 2017 | 2016 | 2017 | 2016 | |
| Guarantees for subsidiary | 0.0 | 0.0 | 0.0 | 0.0 |
| Total | 0.0 | 0.0 | 0.0 | 0.0 |
Doro AB has the ultimate responsibility for the obligations of its subsidiary, Doro UK Ltd. Doro UK Ltd acts as an agent for Doro AB in the UK and Ireland and has no external customer relations of its own.
AUDITORS
The 2017 AGM elected Magnus Willfors (PricewaterhouseCoopers AB) to be the auditor of the Parent Company, Doro AB. PwC will carry out auditing at all large units for the period of one year, except for Doro SAS for which EY has the audit assignment.
| The Group | Parent Company | |||
|---|---|---|---|---|
| Fees and costs, SEKm | 2017 | 2016 | 2017 | 2016 |
| PwC | ||||
| Auditing assignments | 1.1 | 0.0 | 0.7 | 0.0 |
| of which PricewaterhouseCoopers AB | 0.7 | 0.0 | 0.7 | 0.0 |
| Auditing outside the assignment | 0.0 | 0.0 | 0.0 | 0.0 |
| of which PricewaterhouseCoopers AB | 0.0 | 0.0 | 0.0 | 0.0 |
| Tax assignments | 0.0 | 0.0 | 0.0 | 0.0 |
| of which PricewaterhouseCoopers AB | 0.0 | 0.0 | 0.0 | 0.0 |
| Other advisory services by auditors | 0.1 | 0.0 | 0.1 | 0.0 |
| of which PricewaterhouseCoopers AB | 0.1 | 0.0 | 0.1 | 0.0 |
| EY | ||||
| Auditing assignments | 0.5 | 2.0 | 0.0 | 0.8 |
| Auditing outside the assignment | 0.3 | 0.2 | 0.3 | 0.2 |
| Tax assignments | 0.8 | 0.4 | 0.7 | 0.4 |
| Other advisory services by auditors | 0.1 | 0.8 | 0.0 | 0.8 |
| Total | 2.9 | 3.4 | 1.8 | 2.2 |
| The Group | Parent Company | |||
|---|---|---|---|---|
| Taxes on profit/loss for the year | 2017 | 2016 | 2017 | 2016 |
| Current tax | –22.1 | –7.8 | –7.2 | 0.0 |
| Deferred tax | –3.1 | –0.6 | –5.9 | –0.2 |
| Total tax on profit/loss for the year | –25.2 | –8.4 | –13.1 | –0.2 |
Connection between the tax expense for the year and the reported earnings before tax:
| The Group | Parent Company | |||
|---|---|---|---|---|
| Taxes, SEKm | 2017 | 2016 | 2017 | 2016 |
| Reported profit/loss before tax | 91.7 | 39.4 | 49.9 | –1.3 |
| Tax at current rate 22.0 % | –20.2 | –8.7 | –11.0 | 0.3 |
| Non-deductible expenses | –0.2 | –1.2 | –2.1 | –0.5 |
| Non-taxable income | 0.3 | 3.1 | 0.0 | 0.0 |
| Utilisation of previously unrecognized tax loss carryforwards |
0.0 | 0.0 | 0.0 | 0.0 |
| Change in valuation in losses carryforwards |
1.2 | 0.2 | 0.0 | 0.0 |
| Change in valuation of temporary differences |
0.0 | 0.0 | 0.0 | 0.0 |
| Tax cost/revenue concerning previous year |
–3.6 | 3.1 | 0.0 | 0.0 |
| Adjustment for tax rates in foreign Group company |
–2.7 | –4.9 | 0.0 | 0.0 |
| Reported tax | –25.2 | –8.4 | –13.1 | –0.2 |
Temporary differences arise in those cases where accounted values of assets or liabilities and their tax value are different. Temporary differences, unutilized losses carry forward and other future tax deductions have led to deferred tax liabilities and tax assets for the following:
| The Group | Parent Company | |||
|---|---|---|---|---|
| Deferred tax asset | 2017 | 2016 | 2017 | 2016 |
| Unutilized losses carry forward | 5.9 | 7.2 | 0.0 | 0.2 |
| Temporary differences, provisions | 4.3 | 9.0 | 1.2 | 8.4 |
| Temporary differences, other | –0.7 | –4.3 | 0.2 | –0.5 |
| Total reported deferred tax asset | 9.5 | 11.9 | 1.4 | 8.1 |
Deferred tax assets are shown for unutilized losses carried forward and temporary differences in the balance sheet, when they are calculated to be used in the near future. A single calculation is made for each company with respect to past earnings trends, future plans and the option of using losses carried forward.
Of the consolidated losses carried forward, SEK 79 m (95) can be used without a time limit being imposed. The remaining losses are in the United Kingdom, France and Sweden.
| Losses carry forward fall due as follows: | 2017 | 2016 |
|---|---|---|
| Without limit | 79 | 95 |
| Total | 79 | 95 |
Non-accounted deferred tax assets in the balance sheet concerning unutilized taxable losses carry forward amount to:
| The Group | Parent Company | |||
|---|---|---|---|---|
| SEKm | 2017 | 2016 | 2017 | 2016 |
| 14 | 15 | 0 | 0 |
| The Group | Parent Company | |||
|---|---|---|---|---|
| Gross changes of deferred taxes | 2017 | 2016 | 2017 | 2016 |
| Opening balance | 11.9 | 15.6 | 8.1 | 9.4 |
| Tax attributable to the income statement |
–3.1 | –0.6 | –5.9 | –0.2 |
| Tax attributable to other comprehensive income |
0.7 | –1.8 | 0.7 | –1.1 |
| Acquisitions/Mergers | 0.0 | –1.3 | –1.5 | 0.0 |
| Closing balance | 9.5 | 11.9 | 1.4 | 8.1 |
On April 15, 2016, DORO AB acquired all shares of Trygghetssentralen AS in Norway. Costs for the acquisition of SEK 1.2m was charged to the operating result (Other external expenses) for the first half year. The purchase price was paid in cash with SEK 29.4m, whereof 8.8m referred to settlement of Trygghetssentralen's loans from its previous owner. In Q4 a final cash settlement of SEK 1.1m was paid. Goodwill is linked to the enhanced position in the Care area in Norway that Trygghetssentralen's sales channel provide, as well as increased expertise in the Care area. On the acquisition date, the headcount was 68 permanent employees and approximately 60 temporary employees. Trygghetssentralen has annual sales of NOK 68m. In 2016 the Trygghetssentralen business was integrated with Doro and consequently it is not possible to measure Net sales and EBIT for the acquired operations isolated.
| Fair value | SEKm |
|---|---|
| Intangible assets | 7.4 |
| Tangible fixed assets | 2.2 |
| Deferred tax asset | 0.5 |
| Inventories | 2.2 |
| Accounts receivable | 6.1 |
| Other receivables, prepaid expenses and accrued income | 2.0 |
| Cash and bank | 1.5 |
| Accounts payable | –1.2 |
| Deferred tax liability | –1.9 |
| Other liabilites, accrued expenses and prepaid income | –5.1 |
| Acquired Net Assets | 13.7 |
| Goodwill | 16.8 |
| Total purchase consideration | 30.5 |
| Cash in company acquired | –1.5 |
| The acquisition's impact on the Group's cash flow | 29.0 |
| The Group | ||||
|---|---|---|---|---|
| Company acquisition impact on Group cash flow |
2017 | 2016 | ||
| Trygghetssentralen AS | 0.0 | –29.0 | ||
| 0.0 | –29.0 |
| The Group, SEKm | 2017 | 2016 |
|---|---|---|
| Opening gross stock | 233.6 | 201.8 |
| Acquisition | 0.0 | 2.2 |
| Change in gross stock | –18.8 | 23.2 |
| Internal profit in stock | –0.1 | 4.0 |
| Exchange rate difference | 2.0 | 2.4 |
| Closing gross stock | 216.7 | 233.6 |
| Opening write-downs of stock | –15.7 | –13.3 |
| Acquisition | 0.0 | 0.0 |
| Change in write-downs of stock | –3.9 | –2.2 |
| Exchange rate difference | –0.2 | –0.2 |
| Closing write-downs of stock1) | –19.8 | –15.7 |
| Net stock in balance sheet | 196.9 | 217.9 |
1) Acquisition value for the inventory that write-downs of stock of SEK 19.8m (15.7) relates to is based on inventory book value of SEK 54.2m (46.1).
| Parent company, SEKm | 2017 | 2016 |
|---|---|---|
| Opening gross stock | 141.3 | 129.8 |
| Merger of subsidiary | 21.4 | |
| Change in gross stock | –10.5 | 11.5 |
| Closing gross stock | 152.2 | 141.3 |
| Opening write-downs of stock | –10.8 | –9.0 |
| Merger of subsidiary | –1.3 | |
| Change in write-downs of stock | –0.8 | –1.8 |
| Closing write-downs of stock1) | –12.9 | –10.8 |
| Net stock in balance sheet | 139.3 | 130.5 |
1) Acquisition value for the inventory reserve of SEK 12.9m (10.8) is based on inventory book value of SEK 53.9m (42.7).
| The Group | Parent Company | |||
|---|---|---|---|---|
| SEKm | 2017 | 2016 | 2017 | 2016 |
| Opening balance | 58.1 | 54.3 | 49.9 | 48.0 |
| Acquisition | 0.0 | 0.0 | 0.0 | 0.0 |
| Amount released | –73.9 | –75.1 | –19.9 | –65.8 |
| New provisions | 67.0 | 78.7 | 12.8 | 67.7 |
| Exchange rate difference | 0.3 | 0.2 | 0.0 | 0.0 |
| Closing balance | 51.5 | 58.1 | 42.8 | 49.9 |
| The Group, SEKm | 2017 | 2016 |
|---|---|---|
| Opening balance | 2.2 | 2.9 |
| Amount released | 0.0 | –0.8 |
| New provisions | 0.4 | 0.0 |
| Exchange rate difference | 0.0 | 0.1 |
| Closing balance | 2.6 | 2.2 |
| The Group | Parent Company | ||||
|---|---|---|---|---|---|
| SEKm | 2017 | 2016 | 2017 | 2016 | |
| Opening balance | 32.6 | 31.1 | 25.0 | 25.0 | |
| Amount released | –34.0 | –2.4 | –26.4 | 0.0 | |
| New provisions | 17.9 | 3.7 | 17.2 | 0.0 | |
| Unutilized amount cancelled | 0.0 | 0.0 | 0.0 | 0.0 | |
| Reclassification | 0.0 | 0.0 | 0.0 | 0.0 | |
| Exchange rate difference | 0.1 | 0.2 | 0.0 | 0.0 | |
| Closing balance | 16.6 | 32.6 | 15.8 | 25.0 |
| The Group | Parent Company | |||
|---|---|---|---|---|
| 2017 | 2016 | 2017 | 2016 | |
| Additional royalty costs | 15.8 | 29.1 | 15.8 | 25.0 |
| Other provisions | 0.8 | 3.5 | 0.0 | 0.0 |
| Closing balance | 16.6 | 32.6 | 15.8 | 25.0 |
Additional royalty costs include costs that are known but that have not been debited at the time of invoicing and those that are unknown but expected at the time of invoicing. The provision for additional costs is charged against costs for goods sold to obtain correct allocation by period of the gross margin.
The Board of Directors of Doro has adopted a treasury policy that regulates how financial risks are to be identified and managed. Risk Management aims to reduce or eliminate risks. The main objective is to achieve a financial low risk profile.
Doro AB (parent company) has the overall responsibility for the Group´s financial risk management including currency risk management, liquidity management and cash management. Centralisation and coordination enable substantial economies of scale with respect to the terms obtained for financial transactions and financing. The risk to which Doro is exposed are described below.
The Group is primarily exposed to credit risk associated with commercial transactions with customers but also in financial transactions. The latter as counterparty risk associated with foreign exchange hedging and issuer risk in potential short-term investments. Credit and counterparty risks are managed centrally by the parent company Doro AB. Financial instruments may only be done with approved banks. Short-term investments may only be done with the counterparty categories government, municipalities and banks. In 2017 there there were no short-term investments carried out.
Accounts receivable amounted to SEK 360.4m (371.2) and leasing receivables amounted to SEK 13.7m (30.1). In recent years Doro has experienced low credit losses (less than 0.5 percent of sales) due to the fact that the main customer group is large business with regular trade. The single largest customer accounts for less than 10% of Group sales. In most countries Doro operates without credit insurance.
| Group | ||
|---|---|---|
| Age analysis of accounts receivable | 2017 | 2016 |
| Not yet due | 309.2 | 275.5 |
| Due for payment < 60 days | 51.4 | 96.5 |
| Due for payment > 60 days | 6.2 | 8.4 |
| Total accounts receivable | 366.8 | 380.4 |
| Expected bad debt losses | –6.4 | –9.2 |
| Accounts receivable in the financial state ments |
360.4 | 371.2 |
| Group | ||
| Impaired accounts receivable | 2017 | 2016 |
| Impaired accounts receivable | 2017 | 2016 |
|---|---|---|
| Opening balance | –9.2 | –4.6 |
| Through Aquisitions | 0.0 | –0.4 |
| Expected bad debt losses | –3.5 | –6.7 |
| Confirmed bad debt losses | 5.3 | 2.5 |
| Translation differences | 0.0 | –0.1 |
| Amount reversed | 1.0 | 0.1 |
| Closing balance | –6.4 | –9.2 |
Other receivables including financial lease receivables are not yet due.
At 31 December 2017, the Group had SEK 165.0 m (236.7) in interest-bearing liabilities, including finacial lease agreements for alarm devices within Doro Care, amounting to SEK2.4m (24.0). In April 2016 a new Revolving Facility Agreement was signed, amounting to SEK 310m. At 31 December 2017, the RCF was amortized to SEK 220m, whereof 160m was utilized.
At 31 December 2017, Group liquidity amounted to SEK 57.1 m (61.0). In addtion the Group also had an untilized bank overdraft facility of SEK 50m (50.0).
The overall objective is to meet the short-term financing need from Group operations, while minimizing surplus liquidity. Doro should have a liquidity reserve at minimum SEK 20.0m.
Doro is exposed to foreign exchange risks caused by unfavourable exchange rate fluctuations that may affect sales, earnings and equity. Foreign exchange risk are described below, broken down into transaction exposure and translation exposure.
Transaction exposure arises when sales and purchases take place in foreign currencies. Doro has income and expenses in different currencies. Goods are primarily purchased in USD, while sales are commonly in EUR, GBP and the Nordic currencies. In accordance with the treasury policy, forecast currency flows are hedged on a quarterly basis for periods for which the price list is set at between 70 to 90 percent. The hedge horizon can thus vary between three to six months. Foreign exchange management is centralised in Doro AB's Finance department, which buys and sells currencies in accordance with the treasury policy. Since 2013, Doro has been applying hedge accounting in accordance with IFRS (see accounting principles for further information).
| Before hedging 2017 |
After Hedging 2017 |
Sensitivity at 5% weaker SEK |
Before hedging 2016 |
After Hedging 2016 |
Sensitivity at 5% weaker SEK |
|
|---|---|---|---|---|---|---|
| NOK | 19.2 | 19.2 | 1.0 | 23.3 | 7.5 | 0.4 |
| EUR | 278.6 | 55.4 | 2.8 | 237 | 65.8 | 3.3 |
| GBP | 75.0 | 8.6 | 0.4 | 92.4 | 19.7 | 1 |
| USD | –305.4 | –48.4 | –2.4 | –303.2 | –87.6 | –4.4 |
The table shows outstanding transaction exposure at year-end for the hedged period. The hedged period as per the end of December refers to flows through the end of May. The net market value for all outstanding currency futures amounts to SEK –4.1m at 31 December 2017, whereof SEK –1m refers to transaction exposures recognised as hedge.
Translation exposure arises when foreign assets and liabilities, as well as the income statements of foreign subsidiaries, are translated into SEK upon consolidation. Doro does not hedge the translation exposure.
At year-end the value of foreign net assets was SEK 256m (184). The breakdown by currency is shown in the table below.
| Value of foreign assets | 2017 | 2016 |
|---|---|---|
| USD | 9 | 9 |
| NOK | 13 | 3 |
| EUR | 197 | 139 |
| GBP | 31 | 26 |
| HKD | 6 | 7 |
| Total | 256 | 184 |
Interest rate risk is the risk that the Group's net financial income/expense decreases due to rising market interest rates. Doro's existing loan portfolio exclusively comprises loans with variable interest. In 2017, the average interest on borrowings was 2.2 percent. If SEK interest rates increased by one percentage point, Doro's net financial income/expense would deteriorate by approximately SEK 1.5m, based on indebtedness as of 31December 2017.
| 0–3 | 3 months | 3 years | ||||
|---|---|---|---|---|---|---|
| Group, SEKm | Currency | months | –1 year 1–3 years | or more | Total | |
| Bank loan | SEK | 60.0 | 100.0 | 160.0 | ||
| Overdraft facility | SEK | 0.0 | ||||
| Futures | EUR | 3.5 | –0.4 | 3.1 | ||
| Futures | USD | –2.8 | 1.1 | –1.7 | ||
| Futures | GBP | 2.7 | 0.1 | 2.8 | ||
| Futures | HKD | 0.1 | 0.1 | |||
| Leasing liability | SEK | 1.6 | 0.7 | 2.3 | ||
| Accounts payable | SEK | 158.8 | 158.8 | |||
| Total | 163.9 | 61.5 | 100.0 | – | 325.4 |
| Group 2017 | Financial assets and liabilities at fair value through profit |
Derivatives subject to hedge accounting |
Saleable assets |
Accounts receivable and loans receivable |
Other financial liabilities |
Carrying amount |
Fair value |
|---|---|---|---|---|---|---|---|
| Accounts receivable | 360.4 | 360.4 | 360.4 | ||||
| Leasing receivable | 13.8 | 13.8 | 13.8 | ||||
| Other receivable | 4.5 | 4.5 | 4.5 | ||||
| Foreign exchange derivatives subject to hedge accounting |
4.0 | 4.0 | 4.0 | ||||
| Bank balances | 57.1 | 57.1 | 57.1 | ||||
| Assets | 0.0 | 4.0 | 0.0 | 435.8 | 0.0 | 439.8 | 439.8 |
| Foreign exchange derivatives subject to hedge accounting |
7.6 | 7.6 | 7.6 | ||||
| Liabilities to credit instituions | 162.4 | 162.4 | 162.4 | ||||
| Accounts payable | 158.8 | 158.8 | 158.8 | ||||
| Additional purchase consideration |
0.5 | 0.5 | 0.5 | ||||
| Other liabilities | 186.7 | 186.7 | 186.7 | ||||
| Liabilities | 0.5 | 7.6 | 0.0 | 0.0 | 507.9 | 516.0 | 516.0 |
| Group 2016 | |||||||
| Accounts receivable | 371.2 | 371.2 | 371.2 | ||||
| Other receivable | 3.6 | 3.6 | 3.6 | ||||
| Foreign exchange derivatives subject to hedge accounting |
12.1 | 12.1 | 12.1 | ||||
| Foreign exchange derivatives held for trading |
0.3 | 0.3 | 0.3 | ||||
| Bank balances | 61.0 | 61.0 | 61.0 | ||||
| Assets | 0.3 | 12.1 | 0.0 | 435.8 | 0.0 | 448.2 | 448.2 |
| Foreign exchange derivatives subject to hedge accounting |
3.2 | 3.2 | 3.2 | ||||
| Liabilities to credit institutions | 234.5 | 234.5 | 234.5 | ||||
| Accounts payable | 254.9 | 254.9 | 254.9 | ||||
| Other liabilities | 169.7 | 169.7 | 169.7 | ||||
| Liabilities | 0.0 | 3.2 | 0.0 | 0.0 | 659.1 | 662.3 | 662.3 |
The breakdown of fair value determination is performed at the following three levels: Level 1: According to quoted prices on an active market for the same instrument. Level 2: Based on directly or indirectly observable market data not included in Level 1. Level 3: Based on input date not observable on the market. Derivates at fair value in the table above have been valued according to Level 2.
For other financial instruments, the carrying amount is a reasonable estimate of fair value.
| Parent Company 2017 | Financial assets and liabilities at fair value through profit |
Derivatives subject to hedge accounting |
Saleable assets |
Accounts receivable and loans receivable |
Other financial liabilities |
Carrying amount |
Fair value |
|---|---|---|---|---|---|---|---|
| Accounts receivable | 267.1 | 267.1 | 267.1 | ||||
| Receivables from Group companies |
13.8 | 13.8 | 13.8 | ||||
| Other receivables | 210.2 | 210.2 | 210.2 | ||||
| Foreign exchange derivatives subject to hedge accounting |
0.4 | 0.4 | 0.4 | ||||
| Foreign exchange derivatives held for trading |
4.0 | 4.0 | 4.0 | ||||
| Bank balances | 41.5 | 41.5 | 41.5 | ||||
| Assets | 0.0 | 4.0 | 0.0 | 533.0 | 0.0 | 537.0 | 537.0 |
| Foreign exchange derivatives subject to hedge accounting |
7.6 | 7.6 | 7.6 | ||||
| Foreign exchange derivatives held for trading |
0.5 | ||||||
| Liabilities to credit institutions | 160.0 | 160.0 | 160.0 | ||||
| Accounts payable | 125.5 | 125.5 | 125.5 | ||||
| Accounts payable | 228.2 | 228.2 | 228.2 | ||||
| Other liabilities | 119.4 | 119.4 | 119.4 | ||||
| Liabilities | 0.5 | 7.6 | 0.0 | 0.0 | 633.1 | 640.7 | 640.7 |
| Parent Company 2017 | |||||||
| Accounts receivable | 266.7 | 266.7 | 266.7 | ||||
| Leasing receivable | 0.0 | 0.0 | |||||
| Receivables from Group companies |
253.6 | 253.6 | 253.6 | ||||
| Other receivables | 0.7 | 0.7 | 0.7 | ||||
| Foreign exchange derivatives subject to hedge accounting |
12.1 | 12.1 | 12.1 | ||||
| Foreign exchange derivatives held for trading |
0.3 | 0.3 | 0.3 | ||||
| Bank balances | 43.4 | 43.4 | 43.4 | ||||
| Assets | 0.3 | 12.1 | 0.0 | 564.4 | 0.0 | 576.8 | 576.8 |
| Foreign exchange derivatives subject to hedge accounting |
3.2 | 3.2 | 3.2 | ||||
| Liabilities to credit institutions | 210.0 | 210.0 | 210.0 | ||||
| Accounts payable | 178.1 | 178.1 | 178.1 | ||||
| Receivables from Group companies |
214.6 | 214.6 | 214.6 | ||||
| Other liabilities | 91.9 | 91.9 | 91.9 | ||||
| Liabilities | 0.0 | 3.2 | 0.0 | 0.0 | 694.6 | 697.8 | 697.8 |
| The Group | Parent Company | |||
|---|---|---|---|---|
| Long-term | 2017 | 2016 | 2017 | 2016 |
| Bank loans | 100.0 | 159.8 | 100.0 | 160.0 |
| Financial leasing liability | 0.0 | 2.4 | 0.0 | 0.0 |
| Total | 100.0 | 162.2 | 100.0 | 160.0 |
| Short-term | ||||
| Bank loans | 60.0 | 50.7 | 60.0 | 50.0 |
| Financial leasing liability | 2.4 | 21.6 | 2.4 | 0.0 |
| Overdraft facilities | 0.0 | 0.0 | 0.0 | 0.0 |
| Factoring facilities | 0.0 | 0.0 | 0.0 | 0.0 |
| Total | 62.4 | 72.3 | 62.4 | 50.0 |
| Total liabilities to credit institutes | 162.4 | 234.5 | 162.4 | 210.0 |
The bank loans accrue interest of 1.85 percent + STIBOR. Plan amortisation is on a semi-annual basis. All liabilities to credit institutions are denominated in Swedish kronor.
| The Group | Parent Company | ||||
|---|---|---|---|---|---|
| Maturity dates of long-term liabilities | 2017 | 2016 | 2017 | 2016 | |
| 1–2 years | 100.0 | 62.4 | 100.0 | 60.0 | |
| 2–5 years | 0.0 | 99.8 | 0.0 | 100.0 | |
| More than 5 years | 0.0 | 0.0 | 0.0 | 0.0 | |
| Total | 100.0 | 162.2 | 100.0 | 160.0 |
Helmut Schweiger, owner of 2.9% of Doro, has at year-end a liability to Doro amounting to SEK 2.3 million (1.9) referring to tax expenses relating to the time before Doro acquired IVS GmbH from him. The parties have agreed that Helmut Schweiger pays the liability when the Group settles the corresponding liability towards the German tax authority. The liability was settled in March 2018.
No other related party transactions during the year, apart from salaries and remunerations in Note 5.
NOTE 26
SIGNIFICANT EVENTS AFTER THE REPORTING DATE
Resources Director and member of Group management.
In February 2018 the company announced that Group management had been strengthened by the inclusion of Jörgen Alsing, vice president with responsibility for the new function SmartCare & Services. The new function strengthens Doro's drive for safety services for seniors and their relatives. It was also announced that Annika Björk had been appointed new Human
Guidelines on Alternative Performance Measures (APMs) for companies with securities listed on a regulated market within the European Union have been issued by ESMA (the European Securities and Markets Authority). These guidelines apply to APMs disclosed when publishing regulated information on or after July 3, 2016. Reference is made in the annual report to a number of non-IFRS performance measures that are used to help investors as well as management analyse the company's operations. Described below are the non-IFRS performance measures that are used as a complement to the financial information that is reported in accordance with IFRS.
Description of financial performance measures that are not used in IFRS
| measure | Description | Reason for use of the measure |
|---|---|---|
| Restructuring costs | Costs for impairment together with personnel costs in connection with restructuring. |
This measure shows the specific costs that have arisen in connec tion with restructuring of a specific operation, which contributes to a better understanding of the underlying cost level in the continu ing operations. |
| Gross Margin % | Net Sales minus Merchandise costs in percentage of Net Sales. | Gross Margin is an important measure for showing the margin before Personnel expenses and Other external expenses. |
| Sales growth comparable entities % |
Net Sales for the period minus Net Sales for entities acquired dur ing the year minus Net Sales for the corresponding period last year in percentage of Net Sales for the corresponding period last year. |
Sales growth for comparable entities shows the Group's organic growth excluding acquired businesses. |
| Equity/assets ratio | Equity expressed as a percentage of total assets. | A traditional measure for showing financial risk, expressing the amount of restricted equity that is financed by the owners. |
| Return on average shareholders' equity |
Profit/Loss rolling twelve months after financial items and tax divided by average shareholders' equity. |
Shows from a shareholder perspective the return that is generated on the owners' capital that is invested in the company. |
| Capital employed | Total assets reduced with non-interestbearing debt and cash and bank balances. |
This measure shows the amount of total capital that is used in the operations and is thus one component for measuring the return from operations. |
| Return on average capital employed |
Operating profit/loss rolling twelve months, divided by the quar terly average capital employed excluding cash and bank balances. |
This is the central ratio for measuring the return on the capital tied up in operations. |
| Recurring revenues | Net Sales during the quarter from existing recurring agreements. | The measure shows revenues during the quarter from recurring agreements. |
| Number of subscribers | Number of subscribers connected to the alarm receiving center. | The mearsure shows the volume of customers in the alarm receiving center. |
| Leverage ratio | Interest bearing liabitlities divided by Equity. | The mearsure shows the company's financial risk (interest rate sensitivity). |
| Dividend yield | Dividend per share divided by the share price at year-end. | Return measure on investment in the company's shares. |
| P/E ratio | The share price at year-end divided by earnings per share for the year. |
Measure on the value of the company's shares. |
| Capital turnover rate | Net sales divided by the average total assets. | The measure shows how much capital the operation requires. |
| Cash conversion rate % | Cash flow from operating activities divided by EBIT. | Measures the proportion of profit that are converted to cash flow. |
Calculation of financial performance measures that are not defined in IFRS
| 2017 | 2016 | |
|---|---|---|
| Capital employed | ||
| Total assets | 1,177.3 | 1,287.9 |
| Non interest-bearing liabilities | 428.6 | 533.5 |
| Cash and bank | 57.1 | 61.0 |
| Reported Capital employed | 691.6 | 693.4 |
| Leverage ratio | ||
| Interest bearing liabilities | 165.0 | 234.5 |
| Equity | 583.7 | 520.0 |
| Reported leverage ratio | 0.28 | 0.45 |
| Capital turnover rate | ||
| Net sales | 1,924.0 | 1,959.1 |
| Average total assets | 1,232.6 | 1,243.4 |
| Reported capital turnover rate | 1.6 | 1.6 |
The undersigned hereby pledge that the consolidated accounts and the annual report have been drawn up in accordance with the International Financial Reporting Standards (IFRS) as adopted by the EU and according to good accounting practices and give a true picture of the Group´s and company´s position and earnings, and the consolidated directors´report and directors´report give a true overview of developments in the Group´s and company´s business, position and earnings and describes significant risks and uncertainty factors faced by Group companies.
Lund, March 28, 2018
Chairman of the Board
Henri Österlund Lena Hofsberger Karin Moberg
Vice-Chairman of the Board Board member Board member
Jonas Mårtensson Robert Puskaric
Board member CEO
Our auditor´s report was submitted on March 28, 2018 PricewaterhouseCoopers AB
Magnus Willfors Johan Rönnbäck
Authorized Public Accountant Audito-in-charge
Authorized Public Accountant
To the general meeting of the shareholders of Doro AB (publ), corporate identity number 556161-9429
We have audited the annual accounts and consolidated accounts of Doro AB (publ) for the year 2017 except for the corporate governance statement on pages 37–39. The annual accounts and consolidated accounts of the company are included on pages 34–68 in this document.
In our opinion, the annual accounts have been prepared in accordance with the Annual Accounts Act and present fairly, in all material respects, the financial position of parent company as of 31 December 2017 and its financial performance and cash flow for the year then ended in accordance with the Annual Accounts Act. The consolidated accounts have been prepared in accordance with the Annual Accounts Act and present fairly, in all material respects, the financial position of the group as of 31 December 2017 and their financial performance and cash flow for the year then ended in accordance with International Financial Reporting Standards (IFRS), as adopted by the EU, and the Annual Accounts Act. Our opinions do not cover the corporate governance on pages 37–39. The statutory administration report is consistent with the other parts of the annual accounts and consolidated accounts.
We therefore recommend that the general meeting of shareholders adopts the income statement and balance sheet for the parent company and the group.
Our opinions in this report on the the annual accounts and consolidated accounts are consistent with the content of the additional report that has been submitted to the parent company's audit committee in accordance with the Audit Regulation (537/2014) Article 11.
We conducted our audit in accordance with International Standards on Auditing (ISA) and generally accepted auditing standards in Sweden. Our responsibilities under those standards are further described in the Auditor's Responsibilities section. We are independent of the parent company and the group in accordance with professional ethics for accountants in Sweden and have otherwise fulfilled our ethical responsibilities in accordance with these requirements. This includes that, based on the best of our knowledge and belief, no prohibited services referred to in the Audit Regulation (537/2014) Article 5.1 have been provided to the audited company or, where applicable, its parent company or its controlled companies within the EU.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinions.
The audit of the annual accounts and consolidated accounts for financial year 2016 was conducted by another auditor who have issued an unqualified opinion dated 3 April 2017 regarding the report on the annual accounts and consolidated accounts.
We designed our audit by determining materiality and assessing the risks of material misstatement in the consolidated financial statements. In particular, we considered where management made subjective judgements; for example, in respect of significant accounting estimates that involved making assumptions and considering future events that are inherently uncertain. As in all of our audits, we also addressed the risk of management override of internal controls, including among other matters consideration
of whether there was evidence of bias that represented a risk of material misstatement due to fraud.
We tailored the scope of our audit in order to perform sufficient work to enable us to provide an opinion on the consolidated financial statements as a whole, taking into account the structure of the Group, the accounting processes and controls, and the industry in which the group operates.
The scope of our audit was influenced by our application of materiality. An audit is designed to obtain reasonable assurance whether the financial statements are free from material misstatement. Misstatements may arise due to fraud or error. They are considered material if individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the consolidated financial statements.
Based on our professional judgement, we determined certain quantitative thresholds for materiality, including the overall group materiality for the consolidated financial statements as a whole. These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements, both individually and in aggregate on the financial statements as a whole.
Key audit matters of the audit are those matters that, in our professional judgment, were of most significance in our audit of the annual accounts and consolidated accounts of the current period. These matters were addressed in the context of our audit of, and in forming our opinion thereon, the annual accounts and consolidated accounts as a whole, but we do not provide a separate opinion on these matters.
The value of Goodwill with indefinite economic use amounted, as of 31 December 2017, to SEK 375.3m. In accordance with IFRS, management shall annually perform an impairment test.
No impairment requirement was identified in conjunction with the testing undertaken by management. In our audit, we have focused on the risk that Goodwill is reported at an incorrectly high level and that an impairment needs could exist.
Some of the assumptions and judgments undertaken by management regarding future cash flows and other circumstances are complex and have an impact on the calculation of the value in use. This applies, in particular, to the following: growth rate, profit margins and discount rate. Changes in these assumptions could lead to a change in the reported value of Goodwill.
Our audit activities include a review of the applied calculation model and the challenging of significant assumptions applied by management in their tests.
We have assessed the reasonableness of the budget presented by management, and which has been approved by the Board of Directors, by evaluating historical outcome against adopted budgets.
We have compared the country specific growth in perpetuity values with independent forecasts regarding economic growth and have noted that the assumptions applied are within a reasonable interval; and
We have assessed the discount rate (weighted average cost of capital ("WACC")) against comparable operations and have noted that the assumptions applied are within a reasonable interval.
We have also evaluated the management's assessment of the manner in which the group's calculation models are impacted by changes in assumptions, and have compared this with the information presented in the annual accounts related to impairment testing.
In our audit, we have noted no significant deviations and our assessment is that the disclosures provided regarding significant assumptions and sensitivity analyses as found in the Annual report are correct.
This document also contains other information than the annual accounts and consolidated accounts and is found on pages 3–33 and 72–75. The Other Information does not include the annual report, except for the sustainability report and our report regarding this. The Board of Directors and the Managing Director are responsible for this other information.
Our opinion on the annual accounts and consolidated accounts does not cover this other information and we do not express any form of assurance conclusion regarding this other information.
In connection with our audit of the annual accounts and consolidated accounts, our responsibility is to read the information identified above and consider whether the information is materially inconsistent with the annual accounts and consolidated accounts. In this procedure we also take into account our knowledge otherwise obtained in the audit and assess whether the information otherwise appears to be materially misstated.
If we, based on the work performed concerning this information, conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
The Board of Directors and the Managing Director are responsible for the preparation of the annual accounts and consolidated accounts and that they give a fair presentation in accordance with the Annual Accounts Act and, concerning the consolidated accounts, in accordance with IFRS as adopted by the EU. The Board of Directors and the Managing Director are also responsible for such internal control as they determine is necessary to enable the preparation of annual accounts and consolidated accounts that are free from material misstatement, whether due to fraud or error.
In preparing the annual accounts and consolidated accounts, The Board of Directors and the Managing Director are responsible for the assessment of the company's and the group's ability to continue as a going concern. They disclose, as applicable, matters related to going concern and using the going concern basis of accounting. The going concern basis of accounting is however not applied if the Board of Directors and the Managing Director intends to liquidate the company, to cease operations, or has no realistic alternative but to do so.
Our objectives are to obtain reasonable assurance about whether the annual accounts and consolidated accounts as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinions. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs and generally accepted auditing standards in Sweden will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these annual accounts and consolidated accounts.
A further description of our responsibility for the audit of the annual accounts and consolidated accounts is available on Revisorsinspektionen's website www.revisorsinspektionen.se/revisornsansvar. This description is part of the auditor´s report.
In addition to our audit of the annual accounts and consolidated accounts, we have also audited the administration of the Board of Directors and the Managing Director of Doro AB (publ) for the year 2017 and the proposed appropriations of the company's profit or loss.
We recommend to the general meeting of shareholders that the profit be appropriated in accordance with the proposal in the statutory administration report and that the members of the Board of Directors and the Managing Director be discharged from liability for the financial year.
We conducted the audit in accordance with generally accepted auditing standards in Sweden. Our responsibilities under those standards are further described in the Auditor's Responsibilities section. We are independent of the parent company and the group in accordance with professional ethics for accountants in Sweden and have otherwise fulfilled our ethical responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinions.
The Board of Directors is responsible for the proposal for appropriations of the company's profit or loss. At the proposal of a dividend, this includes an assessment of whether the dividend is justifiable considering the requirements which the company's and the group's type of operations, size and risks place on the size of the parent company's and the group's equity, consolidation requirements, liquidity and position in general.
The Board of Directors is responsible for the company's organization and the administration of the company's affairs. This includes among other things continuous assessment of the company's and the group's financial
situation and ensuring that the company's organization is designed so that the accounting, management of assets and the company's financial affairs otherwise are controlled in a reassuring manner. The Managing Director shall manage the ongoing administration according to the Board of Directors' guidelines and instructions and among other matters take measures that are necessary to fulfill the company's accounting in accordance with law and handle the management of assets in a reassuring manner.
Our objective concerning the audit of the administration, and thereby our opinion about discharge from liability, is to obtain audit evidence to assess with a reasonable degree of assurance whether any member of the Board of Directors or the Managing Director in any material respect:
Our objective concerning the audit of the proposed appropriations of the company's profit or loss, and thereby our opinion about this, is to assess with reasonable degree of assurance whether the proposal is in accordance with the Companies Act.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with generally accepted auditing standards in Sweden will always detect actions or omissions that can give rise to liability to the company, or that the proposed appropriations of the company's profit or loss are not in accordance with the Companies Act.
A further description of our responsibility for the audit of the administration is available on Revisorsinspektionen's website: www. revisorsinspektionen.se/revisornsansvar. This description is part of the auditor´s report.
The Board of Directors is responsible for that the corporate governance statement on pages 37–39 has been prepared in accordance with the Annual Accounts Act.
Our examination of the corporate governance statement is conducted in accordance with FAR's auditing standard RevU 16 The auditor's examination of the corporate governance statement. This means that our examination of the corporate governance statement is different and substantially less in scope than an audit conducted in accordance with International Standards on Auditing and generally accepted auditing standards in Sweden. We believe that the examination has provided us with sufficient basis for our opinions.
A corporate governance statement has been prepared. Disclosures in accordance with chapter 6 section 6 the second paragraph points 2–6 of the Annual Accounts Act and chapter 7 section 31 the second paragraph the same law are consistent with the other parts of the annual accounts and consolidated accounts and are in accordance with the Annual Accounts Act.
PricewaterhouseCoopers AB, box 4009, 203 11 Malmö, was appointed auditor of Doro AB (publ) by the general meeting of the shareholders on the 27 April 2017 and has been the company's auditor since the 27 April 2017.
Malmö, 28 March, 2018 PricewaterhouseCoopers AB
Authorized Public Accountant Authorized Public Accountant Auditor in charge
Magnus Willfors Johan Rönnbäck
| 2017 | 2016 | |||||||
|---|---|---|---|---|---|---|---|---|
| SEKm | Q 1 | Q 2 | Q 3 | Q 4 | Q 1 | Q 2 | Q 3 | Q 4 |
| QUARTERLY PROFIT TREND | ||||||||
| Net sales | 452 | 446 | 465 | 560 | 413 | 474 | 473 | 599 |
| Capitalised product development/ other income |
5 | 2 | 2 | 2 | 3 | 8 | 1 | 5 |
| Operating costs | –426 | –414 | –429 | –509 | –394 | –461 | –441 | –560 |
| Operating profit/loss before depreciation |
31 | 34 | 38 | 53 | 22 | 21 | 33 | 45 |
| Planned depreciation and write-downs |
–14 | –15 | –16 | –19 | –13 | –17 | –19 | –25 |
| Operating profit/loss after depreciation |
17 | 19 | 22 | 34 | 9 | 4 | 14 | 20 |
| Net financial items | 0 | 0 | 0 | –1 | –1 | –3 | 0 | –4 |
| Profit/loss after financial items | 18 | 19 | 21 | 33 | 8 | 1 | 14 | 16 |
| Taxes | –5 | –4 | –6 | –10 | –2 | 0 | –1 | –5 |
| Net profit/loss | 13 | 15 | 16 | 23 | 6 | 1 | 13 | 11 |
| QUARTERLY BALANCE SHEET FOR THE GROUP |
||||||||
| Intangible assets | 464 | 463 | 464 | 466 | 445 | 469 | 473 | 464 |
| Property, plant and equipment | 15 | 17 | 18 | 19 | 8 | 10 | 10 | 13 |
| Financial assets | 7 | 7 | 7 | 8 | 13 | 12 | 8 | 7 |
| Deferred Tax Asset | 13 | 12 | 12 | 10 | 18 | 18 | 21 | 12 |
| Inventories | 232 | 279 | 259 | 197 | 231 | 212 | 240 | 218 |
| Current receivables | 363 | 378 | 383 | 420 | 378 | 426 | 429 | 513 |
| Cash and bank balances | 36 | 58 | 64 | 57 | 51 | 34 | 23 | 61 |
| Total assets | 1,129 | 1,213 | 1,207 | 1,177 | 1,143 | 1,180 | 1,204 | 1,288 |
| Shareholders' equity | 531 | 541 | 557 | 584 | 486 | 496 | 511 | 520 |
| Long -term liabilities | 150 | 165 | 165 | 119 | 218 | 239 | 192 | 201 |
| Current liabilities | 448 | 507 | 485 | 474 | 439 | 445 | 501 | 567 |
| Total shareholders' equity and liabilities |
1,129 | 1,213 | 1,207 | 1,177 | 1,143 | 1,180 | 1,204 | 1,288 |
| 2017 | 2016 | |||||||
|---|---|---|---|---|---|---|---|---|
| SEKm | Q 1 | Q 2 | Q 3 | Q 4 | Q 1 | Q 2 | Q 3 | Q 4 |
| QUARTERLY CASH FLOW | ||||||||
| Operating profit | 31 | 34 | 38 | 53 | 22 | 21 | 33 | 45 |
| Other non-cash items | 4 | 5 | –1 | –4 | 11 | –5 | –2 | –5 |
| Taxes | –7 | –4 | –1 | 2 | –9 | –10 | –8 | 0 |
| Change in working capital | 14 | –21 | –11 | –12 | –57 | 1 | 14 | 10 |
| Cash flow from operating activities | 42 | 14 | 25 | 39 | –33 | 7 | 37 | 50 |
| Investments | –16 | –15 | –18 | –21 | –14 | –45 | –18 | –20 |
| Cash flow from investing activities | –16 | –15 | –18 | –21 | –14 | –45 | –18 | –20 |
| Dividend warrant program premium | 0 | –23 | 0 | 0 | 0 | 0 | 0 | 0 |
| New share issue and warrant program premium |
–1 | 21 | 0 | 0 | 0 | 0 | 0 | 0 |
| Change in interest-bearing liabilities | –50 | 25 | 0 | –25 | 53 | 20 | –31 | 8 |
| Cash flow from financing activities | –51 | 23 | 0 | –25 | 53 | 20 | –31 | 8 |
| Translation differences and other | 0 | 0 | 0 | 0 | 0 | 1 | 1 | 0 |
| Cash flow (change in cash and cash equivalents) |
–25 | 22 | 7 | –7 | 7 | –17 | –11 | 39 |
| SEKm | 2017 | 2016 | 2015 | 2014 | 2013 |
|---|---|---|---|---|---|
| INCOME STATEMENT | |||||
| Net sales | 1,924.0 | 1,959.1 | 1,838.0 | 1,276.2 | 1,142.5 |
| Operating profit/loss before depreciation and write-downs, EBITDA |
156.2 | 121.5 | 139.2 | 122.6 | 113.7 |
| Operating profit/loss after depreciation and write-downs, EBIT |
92.0 | 47.7 | 95.2 | 79.7 | 78.9 |
| Net financial items | –0.3 | –8.3 | –10.8 | –0.4 | –0.7 |
| Profit/loss after financial items | 91.7 | 39.4 | 84.4 | 79.3 | 78.2 |
| BALANCE SHEET | |||||
| Fixed assets | 502.8 | 496.2 | 481.4 | 222.3 | 227.8 |
| Current assets | 617.4 | 730.7 | 673.8 | 552.2 | 397.2 |
| Cash and bank balances | 57.1 | 61.0 | 43.9 | 78.2 | 123.9 |
| Shareholders' equity | 583.7 | 520.0 | 482.0 | 334.8 | 287.0 |
| Long-term liabilities | 119.2 | 197.1 | 170.3 | 59.6 | 138.3 |
| Current liabilities | 474.4 | 570.8 | 546.6 | 458.3 | 323.6 |
| Balance sheet total | 1,177.3 | 1,287.9 | 1,198.9 | 852.7 | 748.9 |
| KEY FIGURES (Definitions on page 74) |
|||||
| RETURN RATIOS | |||||
| Average return on capital employed, % |
13.5 | 7.5 | 17.2 | 32.8 | 52.2 |
| Average return on shareholders' equity, % |
12.1 | 6.2 | 15.6 | 18.7 | 24.4 |
| Cash conversion rate, SEK | 130 | 129 | 90 | 26 | 140 |
| SEKm | 2017 | 2016 | 2015 | 2014 | 2013 |
|---|---|---|---|---|---|
| MARGINS | |||||
| Operating margin, EBITDA, % | 8.1 | 6.2 | 7.6 | 9.6 | 10.0 |
| Operating margin, EBIT, % | 4.8 | 2.4 | 5.2 | 6.2 | 6.9 |
| Net margin, % | 4.8 | 2.0 | 4.6 | 6.2 | 6.8 |
| CAPITAL TURNOVER | |||||
| Capital turnover rate (multiple) | 1.6 | 1.6 | 1.8 | 1.6 | 1.8 |
| FINANCIAL DATA | |||||
| Equity/assets ratio, % | 49.6 | 40.4 | 40.2 | 39.3 | 38.3 |
| Cash flow from operating activities | 119.5 | 61.7 | 85.7 | 22.5 | 110.5 |
| Number of employees | 458.0 | 500.0 | 358.0 | 172.0 | 149.0 |
| Cash and cash equivalents (incl. unused credit) |
107.1 | 111.0 | 89.8 | 86.7 | 123.9 |
| Investments (incl. acquisitions) |
70.2 | 96.4 | 220.7 | 51.2 | 146.7 |
Number of shares at the end of the month divided by the number of months.
Average number of shares adjusted for the dilution effect from warrants is calculated as the difference between the assumed number of shares issued at the redemption price and the assumed number of shares issued at the average share price for the period.
Total assets less non-interest-bearing liabilities and cash and cash equivalents.
Net sales for the year divided by the average balance sheet total.
Cash flow from operating activities divided by EBIT.
CASH FLOW Cash flow from operating activities.
CASH FLOW PER SHARE Cash flow from operating activities divided by the average number of shares.
EARNINGS PER SHARE AFTER TAX Profit/loss after tax divided by the average number of shares for the period.
Profit/loss after financial items divided by the average number of shares for the period, after dilution.
Operating profit/loss (after depreciation/amortisation) as a percentage of sales for the year.
Profit/loss before depreciation/amortisation as a percentage of sales for the year.
Shareholders' equity at the end of the period divided by the number of shares at the end of the period.
Shareholders' equity at the end of the period divided by the number of shares at the end of the period, after dilution.
EQUITY/ASSETS RATIO Shareholders' equity as a percentage of the balance sheet total.
Profit/loss after net financial items plus interest expenses divided by financial expenses.
Share price at the end of the period multiplied by the number of shares at the end of the period.
Interest-bearing liabilities minus cash position as a percentage of shareholders' equity.
Profit/loss after financial items as a percentage of sales for the year.
Number of shares at the close of the period.
The number of shares at the end of the period adjusted for the dilution effect from warrants is calculated as the difference between the assumed number of shares issued at the redemption price and the assumed number of shares issued at the average share price at the end of the period.
Shareholders' equity divided by the number of shares at year-end.
Operating profit/loss divided by the quarterly average capital employed excluding cash and bank balances.
Profit/loss after financial items and tax divided by average shareholders' equity.
Closing price at the end of the period.
| 14-Nov | Doro updates on strategies and financial targets |
|---|---|
| 31-Oct | Invitation to Doro's Capital Markets Day 2017 |
| 24-Oct | Doro AB's nomination committee for the 2018 Annual General Meeting |
| 24-Oct | Interim report for January-September 2017 |
| 10-Oct | Doro to present its interim report for July–September 2017 via audiocast and telephone conference |
| 4-Oct | Doro strengthens Group management with new VP Operations |
| 11-Sep | Magnus Eriksson to leave Doro |
| 5-Sep | Changes in Doro's Group management |
| 13-Jul | Interim report January-June 2017 |
| 3-Jul | Change in number of outstanding shares in Doro |
| 28-Jun | Doro to present its interim report for April–June 2017 via audiocast and telephone conference |
| 22-May | Excercise of Employee Warrants in Doro |
| 27-Apr | Press release from Doro AB's (publ) annual general meeting 2017 |
| 27-Apr | Interim report January–March 2017 |
| 7-Apr | Doro to present its interim report January–March 2017 via audiocast and telephone conference |
| 5-Apr | Annual report 2016 |
| 28-Mar | Notice of annual general meeting 2017 |
| 17-Feb | Year-end report 2016 |
| 3-Feb | Doro to present its Year-end report 2016 via audiocast and telephone conference |
| 4-Jan | Doro's CEO Jérome Arnaud has sold shares |
Building tools?
Free accounts include 100 API calls/year for testing.
Have a question? We'll get back to you promptly.