Annual Report • Apr 10, 2015
Annual Report
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| 2 | Doro in brief |
|---|---|
| 4 | The year in brief |
| 6 | Ceo comment |
| 8 | Strategy |
| 10 | Market |
| 12 | The Doro share |
| 15 | Sustainable operations |
| 18 | Administration report |
| 27 | The board and management team |
| 29 | Financial information |
| 40 | Notes and accounting principles |
| 58 | Auditors report |
| 59 | Quarterly summary |
| 60 | Five-year summary |
| 61 | Press releases |
| 62 | Definitions |
Doro is the clear market leader and number one brand for senior mobile solutions in Europe. The company is dedicated to understanding and meeting the needs, preferences of requirements of senior users with the objective to create satisfied and loyal end-users. Doro's products are highly appreciated by their users and as many as 82 percent would recommend them to friends and family.
Doro's product are sold in more than 40 countries on five continents through an extensive network of partners. The company has enjoyed compounded annual growth of 21 percent in the last five years, which is based on a strategy focused on seniors, attractive products and many loyal users and brand ambassadors.
Today, seniors are connected to the Internet to a lesser extent than other age groups. Doro considers it part of its mission to help seniors to access online services by providing relevant solutions, solving important problems in an easy way, yet at an acceptable cost and without any stigma.
Doro's vision is to be the most trusted global brand in easy-to-use telecom solutions for seniors.
Doro offers value added consumer solutions for seniors in form of easy-to-use phones with functions that facilitate everyday life. Doro also offers services that further enable and improve the quality of independent living for seniors and their families. Doro's complete offering spans from phones and smart devices, to software to support services targeting the needs and desires of the senior population, with a strong focus on ease of use and closing the technology gap between seniors and the rest of the population. Even if the seniors make a rather heterogeneous group, most of them will at some point need support in keeping up with the technical development, exploring new convenience services or just learn to use new technology.
Over the years, Doro has built up an international distribution network consisting of leading telecom operators, specialists and retailers with strong distribution channels to our end-customers. In 2014, Doro extended and expanded partnerships on
US AND CANADA
Doro's markets share of total revenue.
many important markets. Doro's distribution network, together with its ability to efficiently develop new distribution relationships, in a global market, are key competitive advantages.
Doro's phone offer focuses on the senior segment of the market and includes mobile phones for both active and fragile users. Currently, there are more than 550 million people aged 65 or older and demographics indicate that the number will be growing fast for many years to come. By the year 2020 the group is expected to consist of more than 700 million people.
Doro has comprehensive in-depth knowledge of its target group, and has in-house teams for product development in Paris, Lund and Hong Kong. In 2013, Doro acquired Isidor SAS to strengthen its software development capabilities and complement its existing Android competence with Windows OS. The acquisition of CareTech AB in 2014 adds further know-how in the area of digital care solution development.
During 2014, Doro launched its third smartphone, the Doro Liberto® 820, and three new feature phones, the Doro Liberto® 650 – the company's first web-enabled feature phone, the Doro PhoneEasy® 613 – a stylish clamshell camera phone, and the Doro PhoneEasy® 508 – a candy-bar design with a well-spaced convex keypad.
Growth resumed in several important markets and gross margin improved. Doro's new smartphone, the Doro Liberto® 820, was launched in the fourth quarter supported by sizeable marketing campaigns with strategic partners in important markets. The launch was successful and the phone was well received by partners, end-clients and industry media. During the year, Doro continued to expand in footprint in several key markets, such as Germany, France, USA and the Nordic region, through new and extended partnerships. Doro's total market share in the Western European senior mobile phone market increased to 48.5 percent (41.8) in 2014. In the fourth quarter, Doro also announced the acquisition of CareTech AB, the Nordic market leader within digital care solutions and services for elderly, which provides a solid platform for Doro's strategic expansion of its offering for fragile users.
QUARTERLY SUMMARY
Q2
GROSS MARGIN AMOUNTED TO
41%
2,100,000 MOBILE PHONES SOLD DURING 2014
| Outcome | ||
|---|---|---|
| Financial goals and goal achievement | Goal | 2014 |
| Annual growth, % | 20 | 11.8 |
| Long-term operating margin, % | 10 | 6.8 |
| Maximum leverage ratio (interest-bearing debt/equity) |
1,0 | 0.12 |
| Dividend, portion of net profit, % | 33 | 0 |
| Key figures | 2014 | 2013 | 2012 |
|---|---|---|---|
| Net sales, SEKm | 1,277 | 1,143 | 838 |
| Gross margin, % | 41.0 | 37.5 | 38.1 |
| Operating profit (EBIT), SEKm | 86.5 | 78.9 | 61.4 |
| Operating margin (EBIT), % | 6.8 | 6.9 | 7.3 |
| Cash flow from operations, SEKm | 22.5 | 110.5 | 40.2 |
| Earnings per share, SEK | 2.76 | 3.07 | 2.73 |
| Dividend per share, SEK | 0 | 1.5 | 1.25 |
| Number of employees | 172 | 149 | 81 |
2014 was an exciting year. During the year we have renewed our portfolio of solutions for seniors with one new smart phone, Doro Liberto® 820 and a range of new feature phones. We also strengthened our market position in Germany through strategic listings. Finally we acquired CareTech to enhance our service offerings in the care segment. All of the mentioned are important events that reflect Doro's ambition to stay in the forefront of market developments and create the platform to better profitability.
Doro Liberto® 820 was listed in specific key markets towards the end of the year, contributing to the double digit sales growth in 2014. The roll out of smart phones will continue to contribute to Doro's growth in 2015 and represent an increasing part of our sales. The Doro Liberto® 820 has been well received by both seniors and telecom operators and the successful market introduction shows that we are on the right track.
The senior segment is very heterogeneous and our ambition is to cater for the different needs of our users. Some of the seniors are very active, discovering the connected world with smart phones with Internet connectivity equipped with user friendly interfaces for a life on the move, while others live a more stationary life. The latter group needs safe and reliable feature phones that enable easy-to-use communications with family, friends and care services. The communications solutions that Doro provides are used for social reasons, but they also enable swift communications in cases of emergency. Our ambition is to provide safe and easy-to-use communications based not as much on technology as on the identified user needs. This focus on user needs is also why we aim at growing our offering for the care market, addressing the most dependent users. As the Telecare market becomes increasingly influenced by consumer choice, Doro can leverage its knowledge and market position.
The adaptation to new technology is slower in the senior segment than in other age groups. Therefore we foresee a much slower market transformation from feature phone to smart phones in the senior segment than in the general mobile phone market. In fact, our sales of feature phones are still growing. We believe that our product range today is highly competitive and we will develop our feature phone offer for many years to come.
The 2014 operating profit increased by 9.6 percent compared to 2013. The investments in the development of, and the marketing campaigns related to the Doro Liberto® 820 and its successors are impacting this result though. The gross margin improved significantly towards the end of 2014, partly as an effect of the regained growth in the Nordic region. I am satisfied that we have managed to invest for the future while successfully defending our positions in a rapidly changing market place, which is reflected in our sales growth of 12 percent for 2014.
However, we still need to improve our profitability in order to meet our financial targets. We are focusing on a better payback from our investments in smartphones when the sales grow, and on reducing our costs as percentage of sales.
In Germany we have had an especially impressive sales development, thanks to the listings with Telekom Deutschland and Vodafone Germany. Doro's sales growth in the DACH region (Germany, Austria and Switzerland) amounted to an impressive 73.3 percent and in Germany the market share increased to 33 percent. Also in France various telecom operators contributed to the sales growth. In the Nordics and the UK we made progress with several leading operators, and we managed to defend or increase our market shares.
Another important step we took during 2014 was to enter Italy, one of the larger mobile phone markets in Europe. The launch has been successful, and we expect Italy to increase its share of sales in the EMEA-region (Europe, Middle East and Africa) in 2015.
One of the most important events last year was the acquisition of CareTech, the Nordic market leader within digital
care solutions offering a full range of services, including a social alarm service which handles 60,000 users. Our strategy is to increase our Telecare business and CareTech offers a strategic platform from which we can build an international presence in the segment. We believe that the combination of Doro's mobile phones featuring alarm buttons and Care-Tech's alarm service offer attractive synergies. CareTech is a services business, and as the care segment grows, it will enable us to increase our recurring revenues and to improve our margins.
I look forward to yet an exciting year and I think, based on our strong portfolio and market position, that I have good reasons to be positive when looking ahead into 2015. We expect growth to continue in 2015 within the digital devices business as well as within CareTech AB, which was consolidated per 1 March 2015.
Lund, March 2015 Jérôme Arnaud, President & CEO
Doro's strategy is based on continued market leadership and constant innovation. This strategy is based on three pillars; the technology gap, increasing the service content of the business and increasing interaction with end users.
Doro is an expert on communication needs for seniors. Aiming to enhance the user experience, the company's core strategy is to develop secure and easy-to-use products and services for this target group. Rapid developments in mobile and IT technology together with greater use of digital technology in society mean that mobile and Internet connectivity have become essential if people are to feel actively involved in the world they live in. As most people increasingly communicate via mobile devices and the Internet, it creates a technology gap between some seniors and the rest of the population.
Doro's products and services aim to help close this gap. By offering value-added, easy-to-use, secure solutions, Doro hopes to enable seniors to communicate more with family and friends and to be active citizens and consumers despite the impairments that may come with age.
Doro has comprehensive expertise in this market and closely monitors developments in technology in order to keep up with new trends and solutions. At the heart of Doro's expertise, however, is a solid understanding of communication patterns and the specific needs of seniors. Armed with this indepth knowledge of the senior market, the company's product development activities focus on meeting identified needs of seniors by eliminating unnecessary and non-user friendly functions and concentrating on core communication needs.
Doro has developed this expertise through many years of experience and through unique research. Doro regularly undertakes major market surveys in order to fully understand the transformative drivers and attitudes of this target group. The 2014 survey involved 1,600 persons aged 60+ looking to buy a phone within the next 12 months. For more information on the survey see the market section of this report.
To date Doro's business model has been dominated by hardware, but in a broader strategic approach the service side of the business is now increasing. There are various reasons for expanding the service business. An increased share of services implies an increased share of recurring revenue and a more stable revenue stream. An offering which combines hardware and services makes Doro more competitive and enables product differentiation, while also increasing brand loyalty and alleviating immediate price pressure.
The acquisition of CareTech was a key step in the strategy to increase the services share of Doro's customer offering. CareTech offers a complete social alarm service and targets customer segments such as municipalities. CareTech currently operates one of Sweden's largest social alarm response centres, connecting some 60,000 senior residents to municipal services throughout Sweden.
A STRATEGY BASED ON THREE PILLARS
The seniors are a heterogeneous group but can roughly be divided into three segments; active, fragile and dependent seniors. Doro's renowned phones are primarily aimed for the active and fragile groups whereas the care products and services target the dependent group.
The acquisition of CareTech adds substantially to Doro's care offering. The offering includes Telecare and alarm services that enable elderly to independently live in their homes longer and safer. There is a steadily growing demand for these services among elderly.
CareTech is the Nordic market leader within digital care solutions, and has around 100 employees and a social alarm service handling 60,000 users. The acquisition is a good complement to Doro's existing care business, in which Doro provides the products but partners with companies who run the social alarm services. Through the CareTech acquisition Doro moves closer to the end user by actually also managing the Swedish alarm services in house.
CareTech also forms a good platform for Doro to offer CareTech's solutions combined with Doro's mobile phone and alarm button portfolio. This creates operational and business synergies between the mobile phone and the alarm button products, as well as the CareTech portfolio, and adds user value and competitive strength to the combined solutions.
The business model in CareTech which is built on recurring sales, is also something that Doro can take advantage of and develop further.
Doro believes that there are many potential synergies between the mobile phone business and alarm products that can create added value. Combining CareTech's service with the Doro's mobile devices – complete with alarm functions – will add user value. CareTech's recurring services model will also be evaluated and will be implemented where appropriate.
Technology adds to the potential of all Doro's devices. The strategy is to continue the dialogue between users and Doro, allowing Doro to refine and improve its product portfolio according to defined user needs but also to enhance the user experience.
A number of end users have agreed to let Doro track their device habits for research purposes. Doro can monitor and analyse how much time its end users spend phoning and surfing, what types of apps they download, etc. The information is of course anonymised.
Another example of user interaction is the opening of Doro's first flagship store in the 15th district of Paris. Doro displays its full range of senior communication products in this store and is able to get direct input from customers and potential customers. The same possibilities will be offered by Doro's direct merchant web shop that will be launched during 2015.
The Doro share operates in a fast-growing, but also rapidly changing and highly competitive market. Focusing on a solid understanding of the communication needs and habits of seniors, it is this aspect that drives Doro's market research and forms the cornerstone of the company's easy-to-use and reliable telecom products and services.
Doro addresses the senior segment of the mobile phone market, and has been the market leader for many years. Just as in the overall mobile market the senior market is transforming from feature phones to smartphones, with smartphones being the main driver of sales in terms of both volume and value over the next few years. But, while smart phones now dominate the overall mobile phone market sales, feature phones remain very important in the senior segment and the sales of senior feature phones are still growing.
This offers Doro an opportunity to improve both its ranges of mobile phones, continuing to develop attractive and competitive easy-to-use solutions for seniors for many years to come.
Seniors' interest for the communication possibilities that smart technology offers is growing fast. But, whereas the standard smart phones are indeed easy to use for young and middle aged persons, they are poorly adapted to the needs of seniors, who in many cases are uncomfortable with many icons, applications and options.
According to the panel study from the renowned research company GfK1, more than 2 million senior mobile phones were sold in France, Germany and the UK alone during 2014. Although the market is growing in volume (number of products sold), price pressure limits sales growth. The report shows that Doro is the market leader in all markets above. In 2014 additional market shares were gained especially in Germany, as an effect of the sales agreements with Telekom Deutschland and Vodafone Germany and the acquisition of Industrievertretung Schweiger GmbH (IVS) in 2013.
Demography is a strong driver for Doro's growth. The United Nations forecast that by the year 2050 the global population has increased from 7 billion to 9.6 billion. With declining fertility rates and increased life expectancy, the age structure is shifting rapidly, especially in the OECD countries. Seniors now comprise the fastest-growing age group. Today there are approximately 550 million people over the age of 65 in the World, and by 2020 the number of seniors is expected to exceed 700 million – representing almost 20 percent of the total population. This trend is the driving force behind what is known as the silver economy.
Over the coming decades the group of seniors will continue to grow in most OECD countries – not only as a proportion of
1) GfK Panelmarket Trends, Elderly Phone Market, EU3, Jan–Dec 2014.
the total population, but also in absolute terms. According to European Commission forecasts, between 2010 and 2050 the older population in the EU will increase by 58 million or 77 percent.
As the number of seniors grows, so does the number of people needing special products and solutions to keep in touch with friends, family and others. Doro develops solutions for a rapidly changing world, and although seniors are a heterogeneous group, over time most seniors will find that physical changes place restrictions on their use of communication devices. At the same time the World is becoming increasingly communicative and also seniors need to adapt to new communication patterns. Many seniors see the advantages that new technology brings but feel insecure using new devices and are therefore seeking simplicity and reassurance. Doro is firmly convinced that technological developments will lead to a digital gap between seniors and the rest of the population, and wants to close this gap through its offerings.
Doro was established in 1974 in Lund in the south of Sweden as a telephone distributor and retailer. Although Doro is now present in more than 40 countries, the company still has its strongest position and brand awareness in the Nordic countries, with a penetration level (measured as seniors equipped with a Doro device as a proportion of inhabitants 65+) of 17 percent. In Doro's other key regions the company's penetration is still modest but the aim is to increase penetration in all regions. In recent years Doro's sales outside the Nordics
have risen considerably and both the sales regions DACH (Germany, Austria and Switzerland) and EMEA (Europe, Middle East and Africa) are now bigger than the Nordics. However, the high level of penetration in the Nordic region shows that Doro does not necessarily need to extend its geographical footprint, given the great growth potential in existing markets. Increased brand awareness and expanding the care sector side of the business are also increasingly important for sustained growth.
Doro's strong brand needs to be maintained at many levels and among various groups of stakeholders – not only seniors but also their relatives, and others such as municipalities and the care sector.
Doro uses a wide range of marketing and brand activities to further increase brand awareness. In 2014 Doro used television, print and online advertising to trigger existing users to upgrade to smartphones or new feature phones and to reach potential customers who have not yet invested in a Doro solution. For business-to-business marketing the company is consistently present at the major industry trade fairs.
During 2014 Doro has renewed its marketing being less descriptive and product oriented and instead more emotional and focusing on the possibilities communication offers. Important marketing activities were initiated in several countries including Germany, where Doro was co funding important campaigns with its new vendor partners Vodafone and Telecom Deutschland.
ESTIMATED PERCENT CHANGE IN POPULATION, 2010 TO 2050, BY AGE, IN THE WORLD AND THE U.S.
| Population 65+, million seniors |
Doro penetration ≈ % |
|
|---|---|---|
| Nordic Region | 4.4 | 17 |
| DACH | 17.1 | 2–3 |
| EMEA & United Kingdom | 63.9 | 2–3 |
| USA and Canada | 47.1 | 1 |
During the year, the value of the Doro share decreased by 11.8 percent compared with the OMX Stockholm PI index, which increased by 11.9 percent. Including the ordinary dividend of SEK 1.50 per share, the Doro share decreased by 8.4 percent. The highest price paid for the share during the year was SEK 55.00 and lowest was SEK 25.10. As of December 30, 2014, the closing price for the Doro share was SEK 38.80 and the market capitalization SEK 823m (916).
In 2014, more than 98 percent of the turnover in the Doro share was generated on Nasdaq OMX Stockholm. In total approximately 27.8m shares were traded during the year with an average daily turnover of approximately 114,619 shares.
January 1, 2014, shareholders' equity amounted to SEK 20 806 174 (19,349,174) and the number of shares outstanding amounted to 20 806 174 (19,349,174) with a quotient value of SEK 1.00. In 2014, shareholders' equity increased by SEK 398,309 corresponding to 398,309 shares with a quotient value of SEK 1.00. At the end of 2014, shareholders' equity amounted to SEK 21,204,483 (20,806,174) and the number of shares amounted to 21,204,483 (20,806,174) with a quotient value of SEK 1.00.
At the Annual General Meeting in May 2014 being resolved in accordance with the Board's proposal to obtain authorization until the next Annual General Meeting, to decide to issue new shares up to an aggregated number of shares which at the date of the General Meeting corresponds to 10 per cent of outstanding shares. At the same General Meeting it was resolved in accordance with the proposal and after a vote authorizing the acquisition of own shares.
At the end of 2014, Doro had 7,710 shareholders compared with 7,944 the year before. Swedish shareholders accounted for 57.7 (62.5) percent of the ownership while foreign shareholders accounted for 42.3 (37.5) percent. Approximately 68 percent of the shares were held by institutions and approximately 32 percent by natural persons. At the end of the year, senior executives and Board members of Doro had a combined holding of 214,197 shares and 375,000 shares respectively. By year end, Doro AB held no treasury share. The three largest shareholders measured in share capital
and votes, by year end, were Aif Clients, W8imy Clearstream Banking S.A. and Avanza Pension Försäkring AB.
There are no limitations on the transferability of shares imposed by law or Doro's articles of association. The Company is unaware of any agreements between shareholders that could entail limitations on the right to transfer shares. Neither Doro AB nor its Group companies are party to any material agreement taking effect, being amended or ceasing to apply in the event of control of the Company or a Group company changing due to a public takeover bid.
An extraordinary General Meeting was held on 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 subscribed for 325.000 warrants. Other key employees subscribed for 175.000 warrants. Doro Incentive subscribed for 141.000 warrants possible to be used for future employees. 841.000 warrants were issued in total.
Detailed information about the warrants program is available at www.doro.com
Doro's long-term target is a dividend payout ratio of approximately one-third of net profit. In addition, the Board has set a maximum debt/equity ratio of 1.0. By the end of 2014, Doro had a net cash position of SEK 36.5m to finance future strategic growth initiatives. The acquisition of CareTech AB, which was announced on December 16, 2014, was completed on January 30, 2015, and did not affect Doro's financial position for 2014.
The Board proposes that no dividend is to be paid in 2014. Read more about the Doro share and the current share price at www.doro.com.
| Year | Transaction | Change in number of shares |
Issue price in SEK* |
Increase in share capital in SEKm |
Amount paid in SEKm |
Total number of shares |
|---|---|---|---|---|---|---|
| 1998 | Directed issue | 2,740,260 | 18.48 | 2.7 | 50.6 | |
| 1998 | New issue, 1:7 | 1,212,894 | 27.00 | 1.2 | 32.7 | |
| 2001 | Directed issue | 11,764,705 | 8.50 | 11.8 | 100 | |
| 2005 | New issue | 7,141 | 1.00 | 0.0 | 0 | |
| 2005 | Reverse split, 5:1 | –17,180,000 | 0.00 | 0.0 | 0 | |
| 2006 | New issue, 3:1 | 12,885,000 | 6.00 | 64.4 | 71.2 | |
| 2006 | Offset issue | 227,631 | 7.66 | 1.1 | 1.5 | |
| 2009 | Directed issue | 1,700,000 | 9.50 | 1.7 | 16.2 | |
| 2011 | Directed issue | 241,543 | 25.56 | 0.2 | 6.3 | |
| 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 |
SHARE DATA
| 2014 | 2013 | 2012 | 2011 | 2010 | |
|---|---|---|---|---|---|
| Undiluted number of shares at year-end, thousand | 21,204 | 20,806 | 19,349 | 19,349 | 19,108 |
| Share price at year-end, SEK | 38.80 | 44.00 | 24.50 | 27.30 | 31.20 |
| Quotient value, SEK | 1.00 | 1.00 | 1.00 | 1.00 | 1.00 |
| Earnings per share, SEK | 2.76 | 3.07 | 2.73 | 3.02 | 2.99 |
| Cash flow per share, SEK1) | 1.06 | 5.60 | 2.08 | 5.47 | 4.21 |
| Reported equity, SEK | 15.79 | 13.79 | 10.8 | 9.16 | 6.35 |
| Dividend per share, SEK2) | 0 | 1.50 | 1.25 | 1.00 | 0.50 |
| P/E 3) | 14.05 | 14.33 | 8.98 | 9.04 | 10.40 |
| Dividend yield, %4) | – | 3.4 | 5.1 | 3.7 | 1.6 |
1) Cash flow from operations divided by undiluted number of shares at year-end.
2) The Board of Directors' proposal to the AGM.
SHAREHOLDINGS BY HOLDING SIZE
MAJOR SHAREHOLDERS
3) The share price at year-end divided by earnings per share for the year. 4) Dividend per share divided by the share price at year-end.
At 31 December 2014
| Holding, no. of shares | No. of shareholders | % of all shareholders |
|---|---|---|
| 1 – 500 | 5,053 | 65.5 |
| 501 – 1,000 | 1,306 | 16.9 |
| 1,001 – 5,000 | 1 061 | 13.8 |
| 5,001 – 10,000 | 131 | 1.7 |
| 10,001 – 15,000 | 40 | 0.5 |
| 15,001 – 20,000 | 14 | 0.2 |
| Over 20,001 | 105 | 1.4 |
| Total | 7,710 | 100.0 |
| Ten largest shareholders | shares | and votes, % |
|---|---|---|
| Aif Clients | 1,619,673 | 7,6 |
| W8imy Clearstream Banking S.A. | 1,508,529 | 7,1 |
| Avanza Pension | 1,465,847 | 6,9 |
| Nordea Fonder | 1,267,428 | 6,0 |
| Objectif Investissement Microcaps | 740,000 | 3,5 |
| Nordnet Pensionsförsäkring | 726,157 | 3,4 |
| Originat AB | 650,000 | 3,1 |
| Hajskäret Invest AB | 380,000 | 1,8 |
| Swedbank Robur Fonder | 346,426 | 1,6 |
| Kastensson Holding AB | 285,000 | 1,3 |
| Subtotal | 8,989,060 | 42,4 |
Total number of shares 21,204,483 100
No. of
Share of capital
Doro gains insight into user habits in many ways, including research and field testing. Analyzing this input is key and ensures that Doro has a sound understanding of seniors' mobile behavior. Every year Doro conducts a major market study. The 2014 market survey was conducted in four European markets – the UK, France, Germany and Sweden. It included 1,600 respondents in total, addressing seniors older than 60 years looking to buy a phone within the next 12 months.
The study mapped the respondents' current and planned usage of a number of devices such as mobile phones, tablets, PCs/laptops, alarm buttons and other electronic devices.
One conclusion is that there is a growing appetite among seniors for new technology, but that many are hindered to use the standard devices, for various reasons.
The survey also mapped various technology motivators. There are several drivers behind the increased use of smartphones etc. among the senior population. Some are similar to the growth drivers in the mobile phone market as a whole, while others are more specific to the senior segment.
One important motivator is the phone as a social currency. To use a new smart phone makes the senior feel independent and it secures his or her sense of inclusion and relevance.
The influence of relatives is evident among the senior population. Many want to engage with technology – or feel they must do so – in order to meet the expectations of their families. This includes sending or receiving photos and to communicate over the Internet using services such as What's app or Skype.
Doro's products and services are designed to make daily life simpler and safer for the Company's end customers. Operations are conducted in a responsible and honest way in order to secure and safeguard long-term sustainable development. Doro wants to earn the trust of all its stakeholders, from shareholders and others active in the capital market through employees and suppliers to customers and society. This is not just a key value; it also plays an important role in the Company's success. For this reason, Doro includes a sustainability perspective in all decisions and processes.
Doro's core values are Trust, Care and Ease
These core values imbue Doro's corporate culture and act as guiding principles in Doro's product development and interaction with employees, customers and end users. In a rapidly evolving industry, Doro must understand the various needs that end users have and how such needs change. Doro needs to be flexible in order to deliver the best easy-touse products while taking responsibility throughout the entire chain.
Doro creates and develops high-quality products. When we develop a product, we always try to make it a little better than its predecessor – not just in terms of performance, but also as regards energy efficiency, ergonomics, user-friendliness, recycling and service. Doro takes a holistic view of the life cycle of its products.
For us, quality and respect for people and the environment are cornerstones of our business, on which we have built our success and the Group's long-term profitability.
The use and recycling of our products are covered by various environmental directives and stringent legal requirements. Doro's quality and environmental manager is responsible for Doro's compliance with applicable laws and regulations. In addition, each country in which Doro operates has an environmental officer responsible for ensuring compliance with the environmental legislation of the country in question.
One example of an EU directive with a certain bearing on Doro's operations is the ErP directive1. For Doro, this involves ensuring ecological design, an energy-efficient production process and low energy consumption by battery chargers and external power supply units. The first part of the ErP directive entered into force in April 2010, with the second stage in April 2011. Doro's products meet all the requirements. Mobile phones are now also covered by the nickel directive, which limits the amount of nickel that may be released in normal contact with skin.
Doro seeks to select materials with the minimum possible impact on the environment. As more environmentally friendly materials are developed, we assess whether they can replace those currently used.
Registration of chemicals according to REACH2 affects importers or manufacturers of chemical substances. As an importer of finished products with a final technical specification and design originating in a non-EU manufacturing unit, and since these products do not emit any chemical substances in normal use, Doro is not required to register or report its use of any chemicals. However, the products must comply with the disclosure requirements of REACH's SVHC3 section. These requirements do not in themselves impose any limitations, but necessitate informing distributors and users if the threshold for any listed chemical is exceeded.
There are a number of other EU directives that affect Doro's operations. Among the more exhaustive are the directive on the restriction of the use of certain hazardous substances (RoHS4) from 2006, in the 2012 recast – which is the second stage of the directive. The directive now also entails CE labelling, effective from January 2013, and not just environmental labelling as was previously the case. New restrictions on materials are set in the POP5 regulation, which was tightened up in certain respects in 2012.
Doro does not conduct any operations requiring permits or notification. Nor does Doro own any production units; instead, it cooperates extensively with a number of plants that manufacture its products. Various environmental requirements are imposed during inspections of such plants. The two largest suppliers are ISO 14001 certified, and an increasing number of plants are working on various environmental programmes with the intention of gaining ISO 14001 certification.
2) Registration, Evaluation, Authorisation and restriction of Chemicals
3) Substances of Very High Concern
4) Restriction on the use of Certain Hazardous Substances
5) Persistent Organic Pollutants
In its own operations Doro seeks to minimise its external impact on the environment through the efficient use of resources at all stages. Product and packaging logistics are optimised by means of a constant focus on planning and reviewing volume requirements for packaging and instructions. As far as is commercially viable, Doro uses environmentally certified suppliers and transport companies. Doro also makes extensive use of video- and teleconferencing.
The WEEE Directive6 affects Doro's operations. There is also a 2008 directive regarding batteries which states that battery importers must bear the costs associated with battery waste.
As an importer, Doro must also ensure that all imported battery cells are labelled in accordance with the directive.
Doro is also a member of the packaging industry's own recycling scheme.
Through the GSM Association Doro cooperates with mobile operators and suppliers to develop energy-efficient infrastructure and ensure that customers use energy-efficient handsets. Reducing mobile device emissions through design and recycling is an example.
Other important cornerstones of Doro's business are honesty and conducting business with great personal integrity and respect for the privacy of others. Clear guidelines for employees and suppliers alike are provided in our Code of Ethics. It is the responsibility of each manager to ensure that his or her staff are familiar with these rules and comply with them. The company also applies the Doro Corporate Social Responsibility Policy, which is based primarily on the UN's and ILO, International Labour Organizations, generally accepted principles and local legislation. Doro gives direct feedback to suppliers through its Supplier Scorecard.
Since 2008 Doro has conducted third-party audits to ensure compliance with the company's policies. If discrepancies are discovered, Doro is entitled to terminate all cooperation with the supplier. In this regard inspections are conducted regularly at all plants.
Doro's Code of Ethics provides guidance for both employees and the company's suppliers in order to ensure responsible conduct in respect of all our stakeholders.
With regard to our employees, we focus in particular on:
With regard to our customers, we focus on:
With regard to our suppliers, we focus on:
With regard to society, we focus on:
With regard to our shareholders, we focus on:
• Communication
The code is available in full at www.doro.com.
Recruiting, retaining and developing individuals with the right expertise and attitude is crucial for a company such as Doro. We therefore attach considerable importance to employee satisfaction. We strive to provide employees with the scope and resources to grow, both in their current positions and through opportunities to move on to other roles within Doro.
Doro aims to keep decision paths short and for each individual to feel involved in and responsible for the development of the Company. In Doro's flat organisation responsibilities and powers are delegated, which places demands on employees.
One advantage of Doro's organisation is that the sales force, product developers and marketers live close to customers and suppliers – an aspect that is becoming increasingly important as joint development projects are on the rise and reaching completion faster. Another advantage is that Doro's employees come from a diverse range of backgrounds, speak a variety of languages and understand different cultures.
With operations in more than 40 countries, Doro has a large number of interfaces with suppliers, retailers and customers. Today, the exchange of experience and expertise between the various companies is relatively well developed and the ambition is to formalise training activities, particularly for sales methods and product development.
In 2014 the Doro Liberto® 820 smartphone was successfully launched in a number of countries including France, Germany, the UK and the Nordic countries. The company aims to launch Doro smartphones in all markets by the end of 2015. These smartphones address the growing number of seniors who want a mobile phone that provides full access to Internet applications (apps), but with Doro's renowned quality and user friendliness. Attractive Doro attributes include large and visible icons, clear sound and a built-in digital coach.
In addition, smartphones make Doro an interesting partner for telecom operators and retail chains – not only because smartphones drive more data (and therefore more operator revenues) compared to feature phones, but also because Doro smartphones add something new and different to the shelves. The various smartphone brands tend to look
increasingly alike, lacking the form factor differentiators of the old generation phones such as clamshell, bar and slider phones. Doro's smartphones have distinctive features that differentiate them from standard smartphones, and this enhances the shelf standout.
Doro's strategy is to continue to develop its smartphone product range as well as its portfolio of feature phones. The company aims to launch a 4G smartphone in 2015, while the feature phones are expected to represent an important share of the product portfolio for many years to come. By leveraging its market leadership in communication solutions for seniors the company is also expanding into adjacent markets; Doro already offers an easy-to-use PC, and has plans to develop a tablet for seniors with a secure and user-friendly interface.
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 under corporate identity number 556161-9429. The head office is situated at 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 shown in Note 9.
Doro is a Swedish company that develops, markets and sells mobile communications solutions that are specially adapted for the growing number of seniors worldwide. With nearly 40 years' experience and operations in more than 40 countries, Doro is the world-leading brand for easy-to-use mobile phones and complementary safety services for seniors. Doro created the category of Care Electronics and has won a number of international design awards, most recently Best Mobile Device for Accessibility & Inclusion at the 20th Global Mobile Awards.
Doro operates in the rapidly changing market for mobile communications 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 the design, development and quality assurance processes. Doro coordinates its sourcing so as to achieve economies of scale and attractive prices.
Information about the Doro Share can be found on page 12-13.
During the year a number of new products and services were launched. Examples include:
Doro's sales during the year amounted to SEK 1,277.1m (1,142.5), an increase of 11.8 percent compared with 2013. Adjusted for acquisitions the increase was 2.3 percent. The growth is primarily driven by EMEA, Germany and the UK, where new product launches have been well received by customers. EBIT amounted to SEK 86.5m (78.9), giving an EBIT margin of 6.8 percent (6.9). The operating margin is largely at the same level as in the previous year, because the increase in net sales and gross margin were offset by the costs of a number of major marketing campaigns in several of our larger markets. Net income for the year amounted to SEK 58.2m (60.6). Net financial items were SEK -7.2m (-0.7).
Cash flow from operating activities amounted to SEK 22.5m (110.5).
The Group's net cash flow, which during the year amounted to SEK -42.2m (-60.8), was charged with share dividends of SEK -31.7m, (-24,2) corporate acquisitions of SEK -21.9m (-110,2) and investments of SEK -29.3m (-36,5).
The investments that were capitalised are primarily attributable to product development.
At year-end Doro had interest-bearing liabilities of SEK 41.7m (45.2), while cash and cash equivalents amounted to SEK 78.2m (123.9). The debt/equity ratio increased to 39.3 percent (38.3) at the end of the period.
The aim of the policy is to clarify responsibilities and to describe 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.
The estimated net flows based on normal volumes and current price lists (which usually apply for around three months) are 60–80 percent hedged. Doro applies hedge accounting in accordance with IFRS.
The Board of Directors consists of Chairman of the Board Bo Kastensson, Charlotta Falvin, Karin Moberg, Jonas Mårtensson, Fredrik Hedlund and CEO Jérôme Arnaud. The Company's CFO Christian Lindholm is co-opted onto the Board as secretary.
The Board's proposed guidelines for remuneration of senior executives for 2015 essentially mean that salaries and other terms of employment for the management will be at market levels. In addition to fixed basic salary, the management can also receive variable remuneration and bonuses which are to have a predetermined ceiling and are to be based on results achieved relative to established targets (and in certain cases other key performance indicators).
The maximum cost of variable remuneration and bonuses to the Company's senior executives must not exceed SEK 15 million.
For 2014 the amount was SEK 13 million. An amount is to be set annually for the total cost for fixed and variable remuneration. This amount must include all the Company's remuneration costs. The Company's senior executives are able to allocate part of their fixed and variable remuneration to other benefits, such as pension benefits. The management's pension plans shall mainly be defined contribution plans.
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 payable if employment is terminated by the employee. The Board has the right to deviate from the guidelines if there are particular reasons for this in individual cases.
This proposal is in line with the guidelines adopted by the 2014 Annual General Meeting.
Doro carries out product development and design projects jointly with various external partners. In addition to the Company's own development costs, the manufacturing partner also has significant development costs. Doro engages design companies from different countries and the costs may be either fixed or variable. Doro also sometimes buys technology from various external companies.
In addition, Doro invests in various moulding tools and design rights in order to protect the products' designs. These costs are capitalised until the products are ready to be supplied, when depreciation begins.
For 2014 the Group's costs of development work amounted to SEK 65.6m (50.0), primarily due to the development of smartphones and increased resources for our own software production.
At the end of 2014 Doro had been granted two registered European patents as well as the right to use various patents under contract. Doro has registered the trademarks Doro, Care Electronics, Doro PhoneEasy, Doro Secure, Doro Experience, Doro Connect & Care, Doro Liberto, Ergonomic Sound, Audioline, along with a large number of other product names and figurative trademarks.
Doro has also protected its designs through a large number of registered design rights. During the year we applied for three patents in accordance with the Company's patent routines, as well as a couple of new trademarks and design rights.
Investments are made in design, moulding tools, certification processes, control equipment, other equipment, computers and software systems.
Investments amounted to SEK 29.3m (36.5). See also Accounting principles.
During the year Doro was not involved in any disputes that have affected or will affect the Company's position in a material manner.
Doro has brought an action against mobile phone manufacturer Beafon Mobile GmbH citing infringement of the Company's registered design rights. During the year the parties reached a settlement that involves Beafon paying EUR 1 for each phone sold for use of the design rights. A further dispute is ongoing with Beafon in respect of a similar phone that Beafon has decided to launch.
In addition, the holder of the rights to the French brand and trademark EASYPC has written to Doro threatening to object to Doro's trademark application in the EU for "Doro EasyPC". Doro has contested that there is any risk of confusion and opposition proceedings are now in progress before the EU's registration authority OHIM.
Regular follow-up of suppliers' quality is carried out quarterly using the "Doro scorecard". Follow-up focuses on the 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 qualityrelated processes. At the same time, an initial evaluation is carried out in connection with Doro's Code of Supplier Conduct. The product quality of individual consignments is also checked on an ongoing basis.
Doro's quality and environmental manager continually monitors the Company's products to check that, as a minimum, they meet requirements set by authorities in relevant markets, technical specifications and environmental requirements.
The Company has a long-term operating margin target of 10 percent and an annual growth target of 20 percent for the coming years.
The Company's long-term target is a dividend of around a third of net profit after tax. Finally, the Board of Directors has specified a maximum debt/equity ratio of 1.0 (interest-bearing liabilities/shareholders' equity).
The Board has proposed to the 2015 Annual General Meeting that no dividend is paid for 2014.
At present Doro has a net cash position, providing a strong financial base and readiness to finance growth through investments – either organic or via acquisitions.
The various financial reports provide the following quarterly statements:
In addition to Group management and financial functions, the 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, among other things, 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 had sales of SEK 1,013.7m (993.8). Profit after financial items amounted to SEK 31.9m (80). Doro AB is responsible for the subsidiaries' financing. The Parent Company's net debt was SEK -43.8m at year-end 2014. Shareholders' equity amounted to SEK 264.9m (259.5).
Doro's risks and uncertainties primarily relate to its ability to continually develop competitive products, to disruptions in supply, customer relations and exchange rate fluctuations. Further information on Doro's management of financial risks can be found in Note 23. Other risks are described below.
Doro operates mainly within telecommunications and is affected by general price decreases and cost development within the consumer electronics industry. This means that selling prices may fall faster than production prices.
Doro works actively with various forecasting tools and followup programmes for production planning and stock management.
The Company works in partnership with suppliers, which allows good flexibility based on forecasts that are converted into purchase orders.
Changes in authorities' requirements and technological developments could result in products in stock having a significantly lower sales value than estimated.
During the year Doro converted a EUR 5m loan into a SEK 50m overdraft facility with Handelsbanken. As of the closing day, the Company had no net debt. In January 2015 a loan of SEK 180m was raised in connection with the acquisition of CareTech.
Doro's cash flow from operating activities is usually slightly negative in the first quarter, with positive cash flow during the rest of the year. The Company's cash funds and credit agreements have been adapted to deal with these fluctuations.
Doro operates within competitive markets. Market segmentation is one way of facing this competition.
In addition, Doro continually carries out market surveys to find out end customers' needs and requirements, so as to be able to develop unique products. Activities to increase productivity are carried on in parallel. Brand development within the seniors market is also a distinguishing feature that is an asset of the Company.
In recent years Doro has had a very low level of bad debts since its main customer group is large business groups with regular trade. In 2014 Doro had confirmed bad debts of less than SEK 0.3m (0.1). Probable bad debts amount to SEK 3.5m.
In 2014 no individual customer accounted for more than 10 percent of revenue. In 2013 one individual customer in the US market accounted for 15 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, a policy was drawn up stating the type of insurance to be taken out, the amounts of cover required and the distribution of risk between the Parent Company and subsidiaries.
Political risk refers to the risk that authorities in various countries take political decisions that make continued operations more difficult, more expensive or impossible. All production takes place in Asia (this is also largely true of all our competitors).
Environmental risk refers to the costs that may be incurred by the Group in reducing its environmental impact. Doro does not manufacture products itself.
Doro works actively to comply with various new directives relating to the environment and has had no problems with managing charges for returns of electronic waste, packaging and used batteries.
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.
In 2014 Doro was involved in two disputes. Doro draws on external expertise with a view to prevention and actively safeguards its rights.
The Annual General Meeting will be held at 3 p.m. on 27 April 2015 at the Scandic Anglais Hotel, Humlegårdsgatan 23, 102 44 Stockholm.
The following unrestricted funds in the Parent Company are available to the Annual General Meeting:
| Share premium reserve | 76,246,707.70 |
|---|---|
| Fair value reserve | -3,568,404.00 |
| Retained earnings | 90,505,939.34 |
| Profit for the year | 24,568,375.84 |
| 187,752,618.88 |
The Board of Directors proposes that no dividend is paid for 2014 and that the the funds of SEK 187,752,618.88 available to the Annual General Meeting are carried forward.
The Group's sales and profit for 2015 are expected to increase. As in previous years, the majority is expected to be generated in the second half of the year.
Doro presented a number of launches at the Mobile World Congress in Barcelona: Doro Liberto®820 Mini – the elegant, compact successor to the Doro Liberto®820 model, offering consumers a full-scale Doro smartphone experience at an attractive price point.
Doro Connect & Care® – an innovative service that makes it easier to stay in contact with older relations and thereby arrange assistance and support.
Doro 820 Claria and Doro 820 Mini Claria – a unique mobile phone solution for the blind people based on our partnership with Claria (formerly Telorion), an award-winning supplier of mobile solutions for the visually impaired.
In January 2015 Doro acquired CareTech AB, a leading player in digitalisation of safety alarms for seniors living in their own homes.
The acquisition strengthens Doro's position in the strategic Care segment.
IVS GmbH has in the beginning of 2015 sold its subsidiary Service and Sales GmbH.
Doro has during the first quarter of 2015 incurred an extra cost of about 20 MSEK due to insufficient currency hedging during a period of rapid and significant appreciation of USD versus the majority of the currencies in which Doro has its main revenue streams.
This extra cost have affected first quarter´s result. The hedging routines have been reviewed and the Company views the main part of the extra costs to be a non-recurring item.
Essential to Doro's continued success is having the confidence of the market, shareholders and the public. To achieve this, the Board of Directors and the management must work in a way that is responsible, transparent and committed. It is thus reassuring that over the year our Company has had an effective Board of Directors that has worked 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 occurs ever more rapidly – not only in terms of the macroeconomic climate and the specific business conditions in which Doro operates, but also the increased competition that we are now seeing in some of our markets. We are well prepared to face market developments and can adapt the Company quickly to new circumstances.
We are also seeing a period of significant investment in new products and services that make life easier for the world's seniors. This makes great demands of the Board's ability to take well-founded decisions and to balance the risks and opportunities that are always associated with a commercial enterprise.
Just as important for Doro's credibility is our openness to the market and the fact that we continually provide information about our ongoing measures and business results. This forms the basis of a value-adding relationship with all our stakeholders in which both existing and new shareholders can feel sure that they will receive 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 Sweden's 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. In addition to these, the Company is governed in accordance with its articles of association, internal instructions and policies, and recommendations issued by relevant organisations. This corporate governance report has been prepared by the Board of Directors of Doro AB in accordance with the Swedish Annual Accounts Act and the Code. The report forms part of the formal Annual Report.
According to Euroclear Sweden AB's register of shareholders, as of 31 December 2014 Doro AB had 7,710 shareholders. Foreign investors accounted for 42.3 percent of the total number of shares. The number of shares in Doro AB as of 31 December 2014 amounted to SEK 21,204,483 and on the same date Doro's market capitalisation was SEK 822.7 million. Doro's largest shareholder is AIF Clients, which owns 7.6 percent of the Company's shares.
The Swedish Corporate Governance Code is to be applied to all companies that are listed on the Stockholm stock exchange. The aim is to improve corporate governance in listed companies and to create confidence in these companies, both among the general public and among players in the capital market. The Code is based on the principle of "comply or explain", which means that companies may deviate from the rules provided they give a satisfactory explanation for the deviation and describe the chosen 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 the profit or loss for the year. The 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 day and have notified their intention to attend are entitled to participate in the general meeting.
The Annual General Meeting appoints the members of the Company's Nomination Committee. The tasks of the Nomination Committee are to nominate Board members and, where relevant, auditors for election at the next Annual General Meeting, and to propose to the Annual General Meeting remuneration for work on the Board and its committees. The Nomination Committee also proposes a chairman for the Annual General Meeting.
The Nomination Committee consists of Tedde Jeansson, who is chairman of the Nomination Committee; Arne Bernroth, nominated by Nordea Fonder AB; and Bo Kastensson (Chairman of the Board of Doro AB).
Doro AB's Board of Directors consists of the Company's CEO along with five other members, all elected by the Annual General Meeting held on 12 May 2014. A more detailed
presentation of each member can be found on page 27. The Company's CFO Christian Lindholm is co-opted onto the Board as secretary. Other senior executives participate in Board meetings by presenting information.
The Board met eight times in 2014. Three meetings were held in Stockholm, two on the Company's premises in Lund and one meeting was held in Paris. In addition, two meetings were held by telephone. All members were present at all the meetings. The Company's CFO and the Board secretary were present at all the meetings.
The Board deals with matters arising such as the market situation, budget, results for the period and cost efficiency. All the Board meetings follow an agenda approved in advance. This is sent out to each Board member a week in advance of the meeting, along with relevant documentation and a list of matters outstanding from the previous meeting. The meetings of the Remuneration Committee and Audit 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 sent out with comments.
The Board's rules of procedure lay down the form that work of the Board of Doro AB is to take. The Board's rules of procedure are based on the articles of association, the Companies Act and the Code. The Board has an overall responsibility for the Doro Group.
The Board's responsibility also includes Doro's relations with shareholders, the public, authorities and other organisations and stakeholders. The Board is responsible for executing decisions made by the Annual General Meeting and for achieving the business objectives set out in the articles of association. The Board's mandate is described in the articles of association and in the Companies Act.
The Company's Board appoints its Chief Executive Officer. The distribution of duties between the Board of Directors and the CEO is described in the Board's rules of procedure and in the instructions for the CEO. These documents establish that the Board is responsible for the Company's governance, supervision, organisation, strategies, internal control and policies. In addition, the Board decides on matters concerning major
investments, matters of principle relating to the governance of subsidiaries and on the election of board members and managing directors of subsidiaries.
The Board ensures the quality of the financial reporting. The CEO is in turn responsible for the Company being managed in accordance with the Board's guidelines and instructions. In addition, the CEO is responsible for budget work and the planning of the Company's operations in order to achieve specific objectives. The CEO shall ensure a good control environment and that the Group's risk taking always complies with the Board's instructions. Any deviations must be reported to the Board. The Board also receives regular updates from the CEO via monthly reports.
The Board as a whole is responsible for remuneration matters and other terms of employment for the Group management and five other key employees. The Chairman of the Board is to approve the terms for managers who report to the CEO. In total, the terms of employment for eleven people are dealt with (11 in 2013).
The Board fees are decided annually by the Annual General Meeting.
Proposals for fees are prepared in the Company's Nomination Committee.
The Board then sets the remuneration to the CEO. The Board has appointed Bo Kastensson and Karin Moberg to the Remuneration Committee from among its members. The Committee met for the first time on 9 May 2014 to determine the remuneration principles for 2014. Both the members were present at the meeting. A second meeting was held on 4 November 2014 with a view to discussing current pay levels, bonus schemes and the remuneration principles for 2015; both members also attended this meeting. The minutes of these meetings were presented at the subsequent Board meetings.
The total fees to the members of the Board amounted to SEK 950,000 in accordance with the decision by the Annual General Meeting. Of this amount, the fees to the Chairman of the Board amounted to SEK 350,000 and to other Board members SEK 150,000. The Company's CEO received no Board fee.
The Company's CEO received a salary of SEK 4,053,000 for his work in 2014. Variable remuneration to the CEO amounted to SEK 124,000 for 2014. Salaries to the other five members of the Group management amounted to SEK 5,776 million.
These five members were paid variable remuneration of SEK 633,000 for the 2014 financial year. All employed members of the Group management including the CEO receive employment benefits in the form of a company car. The Annual General Meeting held on 12 May 2014 adopted guidelines for remuneration of senior executives for the 2014 financial year.
Under his current employment contract, the CEO and the Company have a reciprocal notice period of 12 months. The CEO is entitled to full salary and other employment benefits during the notice period. Other senior executives have a notice period of three to nine months.
The ten subsidiaries Doro A/S, Doro GmbH, IVS GmbH, Doro SAS, Doro UK Ltd., Doro Hong Kong Ltd., Doro Inc., Doro SRL, Aldebaran SAS and Doro Incentive AB are governed and supervised by their own boards of directors in the country concerned, primarily consisting of representatives of Doro AB in Sweden. Doro AB's President and CEO is the chairman of the board of each subsidiary with the exception of Doro SAS in France, where Bo Kastensson is chairman. The subsidiaries report to the Board of Doro AB whenever they meet. The reports contain information on each company's development and financial position.
The Financial Committee consists of the Chairman of the Board Bo Kastensson and the Board member Jonas Mårtensson along with the Company's CEO Jérôme Arnaud and CFO Christian Lindholm. The Committee's primary task is to prepare quarterly reports and decision-making documentation for acquisitions and the Group's financing.
The Board of Directors has 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 the Group
management to monitor and identify commercial risks and to govern the Company in such a way that it is able to manage the 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 2014 Annual General Meeting appointed Ernst & Young as Doro's auditor for a period of one year, with Stefan Engdahl as chief auditor.
In the past three years the fees for audit work within the Doro Group amounted to SEK 1,200,000 (2014), SEK 1,300,000 (2013) and SEK 779,000 (2012) respectively.
The focus and scope of the audit is presented by the Company's auditor. An audit is performed based on the quarterly close as of 30 September, the result of which is reported at a meeting with the Audit Committee.
During 2014 the Audit Committee consisted of Board members Bo Kastensson, Karin Moberg, Jonas Mårtensson and Charlotta Falvin. The Committee held meetings on 13 February and 4 November. Minutes of these meetings are included in the minutes of the Board meetings held on the same dates. All members attended all the meetings, along with the auditor Stefan Engdahl. The Audit Committee satisfies the independence requirement in the Swedish Corporate Governance Code.
The Committee's primary task is to support the Board in its work on auditing and internal control, accounting and financial reporting. In 2014 the work focused mainly on follow-up of the 2013 audit and on more detailed review of the period January– September 2014, known as the hard close. In addition, the Committee performed an in-depth review of the interim report for the third quarter (for the period up to and including September 2014).
An important part of the control environment is that the organisation, decision-making structures, responsibilities and authority levels are clearly defined and communicated in the Company's steering documents. More information on the Company's internal control can be found in the directors' report on page 25.
The Group controller is responsible for raising certain matters with the CFO. In view of the limited size of the finance department, there is judged to be no need for a separate internal audit function.
According to Swedish Corporate Governance Code, the Board shall ensure that the Company has sound internal control and shall constantly be kept informed concerning, and evaluate the functioning of, the Company's system for internal control. In addition, the Board shall submit a report showing how internal control over financial reporting is organised 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 has 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 organisation 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 that of material misstatement, e.g. in bookkeeping 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 to which Doro is exposed are managed according to established rules, instructions and follow-up procedures. The purpose of this is to minimise 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 organisation that enable the efficient distribution of responsibility for specific control activities aimed at the timely detection and prevention of the risk of reporting errors. Such control activities include a clear decision-making hierarchy and procedures for major decisions such as acquisitions, other types of major investments, divestments, agreements and analyses.
An important duty of Doro's staff units is to implement, develop further and maintain the Group's control procedures and conduct internal control geared to business-critical matters. Those responsible for processes at different levels are responsible for implementing the necessary controls in respect of financial reporting. The period close and reporting processes include controls relating to measurement, accounting principles and estimates.
Continual analysis of financial reporting is carried out and this, along with the analysis performed at Group level, is of great importance in ensuring that the financial statements are free from material misstatement.
The Group controller plays an important role in the internal control process, bearing responsibility for the financial reporting from each unit being accurate, complete and timely.
Doro works with the communications consultancy Hallvarsson & Halvarsson AB, which aims to promote 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 organisation has access to policies and guidelines.
The Board receives monthly financial reports. External information and communication is governed by the Company's Communications Policy, among other things, which describes Doro's general disclosure principles.
Doro's compliance with adopted policies and guidelines is monitored by the Board and management team. The Company's financial position is discussed at each Board meeting. The Board's Remuneration and Audit Committees play 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-up of earnings, analysing deviations 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 control and, in specific cases, to instruct the auditors to perform separate reviews focusing on specific areas. In light of this, the Board has not found it necessary to establish a separate internal audit function.
Lund, 1 April 2015 The Board of Doro AB
| JÉRÔME ARNAUD |
CHRISTI AN LINDHOLM |
THOMAS BERGDAHL |
ULRIK NILSSO N |
CAROLINE NOUBLANCHE |
CHRIS MILLINGTO N |
|
|---|---|---|---|---|---|---|
| POSITIO N |
CEO, Doro AB Deputy Director of Sales (interim) |
CFO | Vice President Product Develop ment |
Vice President Operations |
Deputy MD Marketing & Port folio |
Director Brand & Marketing Stra tegy and Managing Director UK/IRE |
| EMPLOYED SINCE | 2000 | 2013 | 2002 | 1991 | 2011 | 2005 |
| EDUCATIO N |
MSc Engineering, École Centrale de Paris |
BSc Economics, Växjö University |
MSc, Industrial Engineering and Management, Insti tute of Technology Linköping |
Technician, tele coms |
HEC Business School, Paris |
Economics and Finance, Leeds City College |
| YEAR OF BIRT H |
1963 | 1964 | 1964 | 1971 | 1976 | 1970 |
| NATIO NALITY |
French | Swedish | Swedish | Swedish | French | British |
| PRE VIOUS EXPERIE NCE |
Business develop ment at Matra Nor tel Communications |
CFO of TFS Interna tional AB, Clinical Data Care AB, Wilnor AB and BU Controller at Perstorp AB |
Director of manufa turing, Anoto |
Supply manager | Founder and CEO of Prylos |
Sales Management and Business Development Oregon Scientific Sony UK and Ken wood Electronics UK |
| OWN AND RELATED PARTIES shareholdings, 2014 |
163,336 shares 200,000 warrants |
– 65,000 warrants |
36,082 shares 65,000 warrants |
3,897 shares 65,000 warrants |
2,449 shares 65,000 warrants |
5,433 shares 65,000 warrants |
| OWN AND RELATED PARTIES shareholdings, 2013 |
147,004 shares 200,000 warrants |
35,000 shares 50,000 warrants |
632 shares 40,000 warrants |
30,000 warrants | 13,800 shares 52,000 warrants |
| Consolidated Income statement/Statement of comprehensive Income – the Group |
30 |
|---|---|
| Statement of comprehensive Income – the Group | 30 |
| Balance sheet – The Group | 31 |
| Shareholders' equity – The Group | 33 |
| Cash flow statement – The Group | 34 |
| Income statement – Parent company | 35 |
| Statement of comprehensive income – Parent Company | 35 |
| Balance sheet – Parent company | 36 |
| Changes in shareholders' equity – Parent company | 38 |
| Cash flow statement – Parent company | 39 |
| Notes and accounting principles | 40 |
| Board signing | 57 |
| Auditor's Report | 58 |
| Quarterly Summary | 59 |
| Five-Year Summary | 60 |
| Press releases 2014 | 61 |
| Financial definitions | 62 |
| SEK m | Notee | 2014 | 2013 |
|---|---|---|---|
| REVENUE | |||
| Sale of goods | 2, 3 | 1,270.3 | 1,134.4 |
| Other revenue | 2 | 6.8 | 8.1 |
| 1,277.1 | 1,142.5 | ||
| OPER ATING COSTS |
|||
| Merchandise | 19 | –749.8 | –709.9 |
| Other external costs | 4, 16 | –279.2 | –229.1 |
| Personnel costs | 5 | –118.7 | –89.8 |
| Depreciation and impairment of property, plant and equipment | 8 | –4.4 | –8.6 |
| Depreciation and impairment of intangible assets | 7 | –38.5 | –26.2 |
| Operating profit/loss | 2 | 86.5 | 78.9 |
| PROFIT/LOSS FROM FINANCIAL ITEMS | |||
| Interest income and similar profit/loss items | 6 | 0.7 | 0.5 |
| Interest costs and similar profit/loss items | 6 | –7.9 | –1.2 |
| Profit/loss after financial items | 79.3 | 78.2 | |
| Tax on profit/loss for the year | 17 | –21.1 | –17.6 |
| PROFIT/LOSS FOR THE YEAR | 58.2 | 60.6 | |
| (Attributable to: Parent company's shareholders) | 58.2 | 60.6 | |
| KEY FIGURES | |||
| Average number of shares, thousands | 11 | 21,059 | 19,740 |
| Average number of shares after dilution, thousands | 21,059 | 19,772 | |
| Earnings per share after tax, SEK | 2.76 | 3.07 | |
| Earnings per share after tax,after dilution, SEK | 2.76 | 3.06 |
| SEK m | 2014 | 2013 |
|---|---|---|
| PROFIT/LOSS FOR THE YEAR | 58.2 | 60.6 |
| Other comprehensive income to be reclassified to profit or loss in subsequent periods: | ||
| Translation differences | 8.7 | 2.5 |
| Effects from cash flow hedges | –2.8 | –1.7 |
| Deferred tax | 0.6 | 0.4 |
| Total result | 64.7 | 61.8 |
| (Related to Parent Company's shareholders.) |
| Note | 2014 | 2013 |
|---|---|---|
| 7 | 151.9 | 142.2 |
| 7 | 10.3 | 15.7 |
| 7 | 0.4 | 0.5 |
| 7 | 36.8 | 41.2 |
| 7 | 1.8 | 0.0 |
| 8 | 4.8 | 7.0 |
| 0.7 | 0.5 | |
| 17 | 15.6 | 20.7 |
| 222.3 | 227.8 | |
| 19 | 204.6 | 130.3 |
| 2.9 | 1.3 | |
| 23 | 269.5 | 243.5 |
| 10 | 61.1 | 17.4 |
| 5.8 | 1.0 | |
| 10 | 8.3 | 3.7 |
| 12, 23 | 78.2 | 123.9 |
| 630.4 | 521.1 | |
| 852.7 | 748.9 | |
| Shareholders' equity and liabilities, SEK m | Note | 2014 | 2013 |
|---|---|---|---|
| SHARE HOLDERS ' EQUIT Y |
|||
| Share capital 21,204,483 (20,805,174) shares, quota value SEK 1 | 11 | 21.2 | 20.8 |
| Other allocated capital | 162.3 | 147.9 | |
| Reserves | 5.5 | –1.0 | |
| Profit/loss brought forward | 87.6 | 58.7 | |
| Profit/loss for the year | 58.2 | 60.6 | |
| Total shareholders' equity | 334.8 | 287.0 | |
| LON G TER M LIA BILITIES |
|||
| Interest-bearing liabilities | |||
| Liabilities to credit institutions | 24 | 0.0 | 44.3 |
| Total interest-bearing liabilities | 0.0 | 44.3 | |
| Non interest-bearing liabilities | |||
| Provisions for pension | 21 | 2.8 | 1.7 |
| Other provisions | 22 | 54.1 | 68.2 |
| Other long-term liabilities | 18 | 2.7 | 24.1 |
| Total non interest-bearing liabilities | 59.6 | 94.0 | |
| CURRENT LIA BILITIES |
|||
| Interest-bearing liabilities | |||
| Liabilities to credit institutions | 12 | 41.7 | 0.9 |
| Total interest-bearing liabilities | 41.7 | 0.9 | |
| Non interest-bearing liabilities | |||
| Provisions for guarantees | 20 | 42.9 | 41.1 |
| Accounts payable – trade | 159.9 | 165.4 | |
| Other liabilities | 18 | 26.6 | 24.6 |
| Current tax liability | 8.7 | 8.0 | |
| Accrued expenses and prepaid income | 13 | 178.5 | 83.6 |
| Total non interest-bearing liabilities | 416.6 | 322.7 | |
| TOTAL SHARE HOLDERS ' EQUITY AND LIABILITIES |
852.7 | 748.9 | |
| Pledged assets | 14 | 170.0 | 170.0 |
| Contingent liabilities | 15 | – | – |
| Other allocated | Losses brought | Total Share | |||
|---|---|---|---|---|---|
| Change in shareholders' equity 2014, SEK m | Share capital | capital | Reserves1) | forward | holders' equity |
| Shareholders' Equity December 31, 2012 | 19.3 | 109.0 | –2.2 | 82.9 | 209.0 |
| Total Result for the year | 60.6 | 60.6 | |||
| Other comprehensive income | 1.2 | 1.2 | |||
| Total result | 0.0 | 0.0 | 1.2 | 60.6 | 61.8 |
| Share issue in kind | 1.5 | 39.1 | 40.6 | ||
| Warrants, buy-back | –0.2 | –0.2 | |||
| Dividend | –24.2 | –24.2 | |||
| Total transactions with shareholders | 1.5 | 38.9 | 0.0 | –24.2 | 16.2 |
| Shareholders' Equity December 31, 2013 | 20.8 | 147.9 | –1.0 | 119.3 | 287.0 |
| Total Result for the year | 58.2 | 58.2 | |||
| Other comprehensive income | 6.5 | 6.5 | |||
| Total result | 0.0 | 0.0 | 6.5 | 58.2 | 64.7 |
| New Share issue connected to warrantprogram | 0.4 | 13.7 | 14.1 | ||
| Warrants | 0.7 | 0.7 | |||
| Dividend | –31.7 | –31.7 | |||
| Total transactions with shareholders | 0.4 | 14.4 | 0.0 | –31.7 | –16.9 |
| Shareholders' Equity December 31, 2014 | 21.2 | 162.3 | 5.5 | 145.8 | 334.8 |
1) Specification of reserves.
| 2014 | 2013 | ||
|---|---|---|---|
| Accumulated translationdifferences, January 1 | 0.3 | –2.2 | |
| Translation differences for the year | 8.7 | 2.5 | |
| Accumulated translation differences, December 31 | 9.0 | 0.3 | |
| Accumulated effects of cash flow hedges, January,1 | –1.3 | 0.0 | |
| Effects of cash flow hedges for the year | –2.8 | –1.7 | |
| Deferred tax in effects of cash flow hedges | 0.6 | 0.4 | |
| Accumulated effects of cash flow hedges, December 31 | –3.5 | –1.3 | |
| Total reserves, December 31 | 5.5 | –1.0 |
| SEK m | Note | 2014 | 2013 |
|---|---|---|---|
| Profit/loss after financial items1) | 79.3 | 78.2 | |
| Adjusted for items not in cash flow | |||
| Change in allocations | 20, 21, 22 | –11.3 | –7.0 |
| Depreciation and write downs | 7, 8 | 42.9 | 34.8 |
| Adjustment for other non-cash items: | |||
| Unrealized exchangedifferences in cash flow hedges | –15.1 | 1.7 | |
| Reverse of additional purchaseprice in acquisitions | 18 | –8.7 | –3.5 |
| Interest part in amount for acquisition below | 18 | 0.8 | 0.0 |
| Total adjustment for other non-cash items | 8.6 | 26.0 | |
| Taxes paid | 17 | –18.3 | –5.6 |
| Cash flow from current activities before changes in working capital | 69.6 | 98.6 | |
| Change in working capital | |||
| Change in stocks | 19 | –74.1 | 6.0 |
| Change in receivables | –60.9 | –3.6 | |
| Change in non-interest-bearing liabilities | 87.9 | 9.5 | |
| Cash flow from current activities | 22.5 | 110.5 | |
| INVEST MENT ACTI VITIES |
|||
| Acquisitions | 18 | –21.9 | –110.2 |
| Acquisition of intangible fixed assets | 7 | –27.7 | –35.2 |
| Acquisition of tangible fixed assets | 8 | –1.6 | –1.3 |
| Cash flow from current activities | –51.2 | –146.7 | |
| FINANCIN G ACTI VITIES |
|||
| Dividend | –31.7 | –24.2 | |
| New Share issue | 14.1 | 0.0 | |
| Warrant Program, new issue | 0.7 | 0.0 | |
| Warrant Program, buy back | 0.0 | –0.2 | |
| Amortization of loans | –45.0 | –0.8 | |
| Loan raised | 41.5 | 44.1 | |
| Cash flow from financing activities | –20.4 | 18.9 | |
| Cash flow for the year | –49.1 | –17.3 | |
| Liquid assets at start of year | 123.9 | 141.1 | |
| Exchange rate difference in liquid assets | 3.4 | 0.1 | |
| Liquid assets at end of year | 23 | 78.2 | 123.9 |
1) Paid and received interests appear in note 6.
| SEK m | Note | 2014 | 2013 |
|---|---|---|---|
| OPERATIN G INCO ME |
|||
| Net sales | 2, 3 | 1011.6 | 990.8 |
| Other revenue | 2 | 2.1 | 3.0 |
| 1013.7 | 993.8 | ||
| OPERATIN G COSTS |
|||
| Merchandise | 19 | –578.7 | –608.8 |
| Other external costs | 4, 16 | –319.2 | –256.8 |
| Personnel costs | 5 | –42.4 | –38.1 |
| Depreciation and impairment of property, plant and equipment | 8 | –3.4 | –7.7 |
| Depreciation and impairment of intagible assets | 7 | –35.4 | –25.3 |
| Operating profit/loss | 2 | 34.6 | 57.1 |
| PROFIT/LOSS FROM FINANCIAL ITEMS | |||
| Interest income and similar profit/loss items | 6 | 4.9 | 24.2 |
| Interest costs and similar profit/loss items | 6 | –7.6 | –1.3 |
| Profit/loss after financial items | 31.9 | 80.0 | |
| Tax on profit/loss for the year | 17 | –7.3 | –10.5 |
| PROFIT/LOSS FOR THE YEAR | 24.6 | 69.5 |
| SEK m | 2014 | 2013 |
|---|---|---|
| PROFIT/LOSS FOR THE YEAR | 24.6 | 69.5 |
| Other comprehensive income to be reclassified to profit or loss in subsequent periods: | ||
| Effects from cash flow hedges | –2.8 | –1.7 |
| Deferred tax | 0.6 | 0.4 |
| Total result | 22.4 | 68.2 |
| (Related to Parent Company's shareholders) |
| Assets, SEK m | Note | 2014 | 2013 |
|---|---|---|---|
| FIXED ASSETS | |||
| Intangible assets | |||
| Capitalized expenditure for development work | 7 | 36.8 | 41.5 |
| Goodwill | 7 | 0.0 | 0.0 |
| Customer register | 7 | 1.9 | 4.9 |
| Brands | 7 | 0.5 | 0.5 |
| Tangible assets | |||
| Equipment and tools | 8 | 2.1 | 4.3 |
| Financial assets | |||
| Participations in Group companies | 9, 25 | 73.4 | 68.2 |
| Deferred income tax recoverable | 17 | 12.0 | 14.6 |
| Total fixed assets | 126.7 | 134.0 | |
| CURRENT ASSETS |
|||
| Inventories | |||
| Finished goods and goods for resale | 19 | 156.9 | 87.6 |
| Advanced payment to suppliers | 2.9 | 0.9 | |
| Current receivables | |||
| Accounts receivable – trade | 23 | 202.1 | 189.1 |
| Receivables from Group companies | 175.8 | 113.2 | |
| Other current receivables | 10 | 52.9 | 10.3 |
| Prepaid expenses and accrued income | 10 | 10.1 | 2.9 |
| Cash and bank balances | 12, 23 | 9.9 | 94.9 |
| Total current assets | 610.6 | 498.9 | |
| TOTAL ASSETS |
737.3 | 632.9 |
| Shareholders' equity and liabilities, SEK m | Note | 2014 | 2013 |
|---|---|---|---|
| SHARE HOLDERS ' EQUIT Y |
|||
| Restricted equity | |||
| Share capital 20,805,174 (19,349,174) shares, quota value SEK 1 | 11 | 21.2 | 20.8 |
| Revaluation reserve | 0.5 | 0.5 | |
| Other allocated capital | 55.5 | 55.5 | |
| Total restricted equity | 77.2 | 76.8 | |
| Non-restricted equity | |||
| Share premium reserve | 76.2 | 61.9 | |
| Fair value reserve | –3.5 | –1.3 | |
| Profit/loss brought forward | 90.4 | 52.6 | |
| Profit/loss for the year | 24.6 | 69.5 | |
| Total non-restricted equity | 187.7 | 182.7 | |
| Total shareholders' equity | 264.9 | 259.5 | |
| PRO VISIONS |
|||
| Provisions for guarantees | 20 | 36.9 | 33.7 |
| Other provisions | 22 | 36.6 | 52.3 |
| Total provisions | 73.5 | 86.0 | |
| LON G-TER M LIA BILITIES |
|||
| Interest-bearing liabilities | |||
| Liabilities to credit institutes | 0.0 | 44.3 | |
| Total interest-bearing liabilities | 0.0 | 44.3 | |
| CURRENT LIA BILITIES |
|||
| Interest-bearing liabilities | |||
| Overdraft facility | 12 | 41.5 | 0.0 |
| Liabilities to Group companies | 12.2 | 8.9 | |
| Total interest-bearing liabilities | 53.7 | 8.9 | |
| Non interest-bearing liabilities | |||
| Accounts payable – trade | 140.6 | 140.6 | |
| Prepayments | 0.0 | 0.0 | |
| Liabilities to Group companies | 29.8 | 11.2 | |
| Other liabilities | 8.5 | 5.1 | |
| Current tax liability | 6.3 | 4.4 | |
| Accrued expenses and prepaid income | 13 | 160.0 | 72.9 |
| Total non interest-bearing liabilities | 345.2 | 234.2 | |
| TOTAL SHARE HOLDERS ' EQUITY AND LIABILITIES |
737.3 | 632.9 | |
| Pledged assets | 14 | 170.0 | 170.0 |
| Contingent liabilities | 15 | – | – |
| Changes in shareholders' equity 2014, SEK m | Share capital |
Revaluation reserve |
Statutory reserve |
Share premium reserve |
Fair value reserve |
Retained earnings |
Total share holders' equity |
|---|---|---|---|---|---|---|---|
| Shareholders' Equity December 31, 2012 | 19.3 | 0.5 | 55.5 | 22.8 | 76.8 | 174.9 | |
| Profit for the year | 69.5 | 69.5 | |||||
| Other comprehensive income | –1.3 | –1.3 | |||||
| Total result | –1.3 | 69.5 | 68.2 | ||||
| Dividend | –24.2 | –24.2 | |||||
| Share issue in kind | 1.5 | 39.1 | 40.6 | ||||
| Total transactions with shareholders | 1.5 | 0 | 0 | 39.1 | 0 | –24.2 | 16.4 |
| Shareholders' Equity December 31, 2013 | 20.8 | 0.5 | 55.5 | 61.9 | –1.3 | 122.1 | 259.5 |
| Profit for the year | 24.6 | 24.6 | |||||
| Other comprehensive income | –2.2 | –2.2 | |||||
| Total result | –2.2 | 24.6 | 22.4 | ||||
| Dividend | –31.7 | –31.7 | |||||
| New Share issue in connection with excercise of warrants |
0.4 | 13.7 | 14.1 | ||||
| Warrant program | 0.6 | 0.6 | |||||
| Total transactions with shareholders | 0.4 | 0.0 | 0.0 | 14.3 | 0.0 | –31.7 | –17.0 |
| Shareholders' Equity December 31, 2014 | 21.2 | 0.5 | 55.5 | 76.2 | –3.5 | 115.0 | 264.9 |
| SEK m | Note | 2014 | 2013 |
|---|---|---|---|
| Profit/loss after financial items1) | 31.9 | 80.0 | |
| Adjusted for items not in cash flow | |||
| Change in allocations | 20, 21, 22 | –12.5 | –9.4 |
| Depreciation and write downs | 7, 8 | 38.8 | 33.0 |
| Unrealized exchangedifferences in cash flow hedges | –15.1 | 1.7 | |
| Other items not in cash flow | 0.0 | –2.0 | |
| Total adjustment for other non-cash items | 11.2 | 23.3 | |
| Taxes paid | –2.1 | 0.0 | |
| Cash flow from current activities before changes in working capital | 41.0 | 103.3 | |
| Change in working capital | |||
| Change in stocks | 19 | –69.3 | 3.7 |
| Change in receivables | –112.0 | –132.4 | |
| Change in non-interest-bearing liabilities | 105.8 | 25.6 | |
| Cash flow from current activities | –34.5 | 0.2 | |
| INVEST MENT ACTI VITIES |
|||
| Acquisition of Group Company | 18 | –5.1 | –46.4 |
| Acquisition of intangible fixed assets | 7 | –27.7 | –35.2 |
| Acquisition of tangible fixed assets | 8 | –1.2 | –1.0 |
| Cash flow from current activities | –34.0 | –82.6 | |
| FINANCING ACTI VITIES |
|||
| Dividend | –31.7 | –24.2 | |
| New share issue 2) | 14.1 | 40.6 | |
| Warrantprogram | 0.6 | 0.0 | |
| Change in non interest-bearing liabilities subsidiares | 3.3 | –22.0 | |
| Loans raised | 41.5 | 44.3 | |
| Amortization of loan | -44.3 | 0.0 | |
| Cash flow from financing activities | –16.5 | 38.7 | |
| Cash flow for the year | –85.0 | –43.7 | |
| Liquid assets at start of year | 94.9 | 138.6 | |
| Liquid assets at end of year | 23 | 9.9 | 94.9 |
1) Paid and received interests appeaer in note 6.
2) Consists 2014 of new share issue in connection with exercise of warrants. 2013 it consists of a directed non-cash issue for acquisitions of subsidiaries.
The Annual Report and Consolidated Accounts were approved for publication by the Board and CEO on April 1, 2015 and will be presented to the AGM on April 27, 2015 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 adopted by the EU.
Furthermore, the Consolidated Accounts were 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 Report of the Parent Company was 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.
The accounting principles applied agree with those used in the previous year's report, with the exceptions detailed below.
As of 1 January 2014 the following amendments has been regarded, but none of them has implied any changes in the way Doro report.
and focuses on both associates and joint ventures. EU has endorsed the standard beginning on 1 January 2014.
Standards and interpretation that are issued, but not yet effective, up to the date of issuance of the Group`s financial statements are disclosed below. The Group intends to adopt these standards when they become effective if EU has not decided another date of adoption. None of the changes is expected to have any impact in Doros Financial Statements, but especially the effects of IFRS 9 and IFRS 15 will be evaluated further.
Step 1. Identify an agreement between two parties where there is a right and an obligation.
Step 2. Identify the various commitments. An arrangement contains promises to transfer goods or services to the customer (performance obligations). All obligations which by their nature can be distinguished are presented separately.
IFRS 15 could either be implemented using a full retrospective approach or a modified retrospective approach.
Assets, provisions and liabilities are based on historical cost unless otherwise stated below.
All amounts, unless otherwise stated, are in millions of Swedish kronor (SEK m).
The Group's Consolidated Accounts include the Parent Company Doro AB, and the companies in which the Parent Company, directly or indirectly owns shares equaling more than half of the voting rights. This means that Doro AB has a controlling influence over Group company, which entitles Doro AB to devise strategies for the Group company with a view to obtaining financial gains.
At the end of the financial year there were 10 (9) operating companies in the Group.
Acquired companies are included in the Consolidated Accounts from the date of acquisition or when control of the company arise. Sold companies are included up to and including the date they are sold.
The Consolidated Accounts are prepared in line with the acquisition method, which means that the historical cost of participations in Group companies is broken down into identifiable assets and liabilities at their fair value on the date of acquisition. Unutilized loss carry-forwards for tax purposes in the acquired company are converted into deferred tax assets in the Consolidated Accounts if assessed earning 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 earningsdependent. The calculation is then based on future profit and hence the total purchase price. On a quarterly basis, an assessment is made and any adjustment of the expected purchase price. Changes in the item in question are recognized in the income statement.
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 | 2014 | 2013 | 2014 | 2013 | |
| EUR | 9.11 | 8.65 | 9.4 | 8.85 | |
| HKD | 0.89 | 0.84 | 1.00 | 0.83 | |
| NOK | 1.08 | 1.11 | 1.04 | 1.06 | |
| GBP | 11.32 | 10.22 | 12.07 | 10.61 | |
| USD | 6.89 | 6.51 | 7.75 | 6.42 |
Receivables and liabilities in foreign currencies are translated at the closing day rates and unrealized exchange gains and losses are included in the profit/loss.
Doro only has one revenue segment: product sales. Revenue from product sales is recognized principally when all risks and rights associated with ownership have been transferred to the buyer, which usually occurs upon delivery.
Employee remuneration is reported as salaries earned and paid plus earned bonus. Earned 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 fall due for payment. Prepaid fees are recognized as an asset to the extent that cash repayment or reductions in future payments may accure 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 defined-benefit 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 with regard to defined-benefit pension plans is the present value of the defined-benefit obligation at the close of the reporting period. Since the recognized liability with regard to definedbenefit pension plans is an insignificant amount, the assumptions on which the actuarial calculations are based are not presented in the annual report.
Product development is carried out in cooperation with various manufacturing partners and most expenditure is borne by them. Doro works in an environment of rapid technological development. 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 the 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, consisting of goodwill, upgrading and enhancement of IT platforms, equipment and tools, are recognized at historical cost less accumulated depreciation/amortization according to plan, except goodwill, 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. Included in shareholders' equity and liabilities are overdraft facilities, liabilities to credit institutions, accounts payable and other current liabilities. With the exception of forward currency contracts, financial instruments are initially recognized at historical cost, equaling 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 per 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 completed its task 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 thereof 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 thereof is de-recognized from balance sheet when contractual obligations are met or otherwise extinguished. The same applies to part of a financial liability.
The acquisition or divestment of financial assets is recognized at the transaction date, which is the date on which the Company undertake to acquire or divest the asset.
Financial instruments are measured at fair value and classified into the following categories:
Fair value is determined based on the following three levels:
All financial instruments measured at fair value have been measured according to Level 2.
Derivatives are classified as Held for trade or Held for sale.
• Measurement at fair value occurs in the income statement.
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 accounts receivable. Deductions for doubtful accounts receivable 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 receivables 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. Doro's overall hedging strategy is followed according to the adopted treasury policy in terms of purpose, amounts, maturities and currencies.
results in the hedging reserve (which is in other comprehensive income) will then be dissolved in the cost of goods sold for forward exchange contracts pertaining to purchases, or in sales for forward exchange contracts pertaining to sales. Value changes pertaining to forward exchange contracts from the date on which hedge accounting ceased will be recognized directly in the cost of goods sold, or sales.
Forward exchange contracts linked to commercial flows not subject to hedge accounting are classified as "held for trade". Value changes pertaining 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 only occurs for forward contracts in EUR, USD, NOK and GBP and which refer to exposures that have not yet entered the balance sheet.
Foreign exchange derivatives linked to liquidity management and loans are not subject to hedge accounting. They are classified as "held for trade". Value changes pertaining 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 calculated. The recoverable amount is the higher of an asset's net sale value and its value in use. When establishing value in use, present value computation is performed for estimated future payments that the asset is expected to generate during its useful life.
In present value computation, an interest rate before tax is used for the purpose of the calculation that reflects the current market interest rate and the risk attributable to the asset. If the recoverable amount is below the carrying amount then the asset is impaired to its recoverable amount. Reversals of impairment are recognized if there are no grounds for such impairment, except in terms of goodwill. Impairment and reversals of impairment are recognized in the income statement.
At least once a year, an assessment of forecast future earnings and cash flow trends is made with regard to goodwill. When the carrying amount exceeds the recoverable amount, it is impaired.
Depreciation according to plan occurs on a straight-line basis on the historical cost of the asset category and the estimated useful life:
| Tools for the manufacture of products included in intangible assets, | |
|---|---|
| capitalized development costs. All tools previously classified as prop | |
| erty is fully depreciated. | |
| Computers, cars, furniture etc. | 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 occurs on a straight-line basis on the historical cost of the asset category:
| Capitalized expenditure for development work | 1-3 years |
|---|---|
| Trademarks | 5 years |
| Customer register and distribution agreements | 3-5 years |
Leases are classified in the Consolidated Accounts as either financial or operating leases. Finance leases exist when the financial risk and benefits associated with ownership are essentially transferred to the lessee. Leases are otherwise considered operating. Leases for company cars, photocopiers, computer equipment and the like are recognized as operating leases Finance leases occur only to a minor extent.
Rents for premises are included in operating leases. No significant leases were entered during 2014.
Inventories are measured at the lower of cost (in accordance with the first-in, first out principle – FIFO) and the net sale 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 sale value includes impairment due to technological and commercial obsolescence made in the Group company in question.
Impairment increases according to a scale, with products impaired to 50 percent after 6–12 months as inventory, depending on the product group, and fully impaired after 18 months. In addition, individual impairment tests may be carried out. The measurement technique using different obsolescence steps provides a sound assessment of fair value.
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 deviations (mainly in the share of returned products), warranty provision requirements are changed. The total warrenty 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 calculated 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. The 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, the calculation is made based on tax rates on the closing date applied to temporary differences between an asset or liability's value in terms of accounting and taxations, 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, which the Company considers to be three to four years. 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. In 2014 and 2013 Doro had no current investments,
Doro monitors since several year its operations by market: the Nordic region, EMEA (Europe, Middle East and Africa), DACH ( Germany, Austria and Switzerland) the UK, the US & Canada and other regions. Results belonging to central functions was until 2013 allocated to the regions but as of 2014 these results are accounted for separately. The figures for 2013 in Note 2 has been adjusted accordingly.
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 pertain to the following:
When assessing testing for 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 further described in Note 7.
When measuring deferred tax assets an assessment is made of future surpluses for tax purposes of each company, 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 further 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")
| Group | Parent Company | ||||
|---|---|---|---|---|---|
| Income divided into type of income | 2014 | 2013 | 2014 | 2013 | |
| Product sales | 1,270.3 | 1,134.4 | 1011.6 | 990.8 | |
| Other revenue | 6.8 | 8.1 | 2.1 | 3.0 | |
| Total | 1,277.1 | 1,142.5 | 1013.7 | 993.8 |
| Group | Parent Company | |||
|---|---|---|---|---|
| Other Revenue | 2014 | 2013 | 2014 | 2013 |
| EU funding | –0.4 | 0.7 | –0.4 | 0.7 |
| Activated development costs | 4.3 | 4.3 | 0.0 | 0.0 |
| Insurance income | 1.2 | 0.0 | 1.2 | 0.0 |
| Recovered receivables | 0.1 | 0.5 | 0.0 | 0.0 |
| Release of provisions | 0.0 | 0.1 | 0.0 | 0.0 |
| Positive currency effect | 0.9 | 2.1 | 1.3 | 2.2 |
| Gain on sale of fixed assets | 0.5 | 0.2 | 0.0 | 0.0 |
| Rent income | 0.0 | 0.1 | 0.0 | 0.0 |
| Development of software | 0.0 | 0.1 | 0.0 | 0.1 |
| Others | 0.2 | 0.0 | 0.0 | 0.0 |
| 6.8 | 8.1 | 2.1 | 3.0 |
The parent company applies fair value accounting for financial instruments in accordance with Annual Accounts Act Chap 4:14.
| 2014 | 2013 | |
|---|---|---|
| Germany | 352.0 | 187.5 |
| France | 250.8 | 227.6 |
| Sweden | 196.6 | 179.9 |
| United Kingdom | 178.5 | 185.2 |
| USA | 110.8 | 171.8 |
| Norway | 38.2 | 50.7 |
| Belgium | 28.9 | 29.8 |
| Finland | 27.5 | 24.9 |
| Ireland | 20.5 | 10.2 |
| Canada | 19.9 | 34.8 |
| Denmark | 3.8 | 12.6 |
| Other countries | 50.2 | 19.4 |
| Total | 1,277.7 | 1,134.4 |
Since 2011 Doro has chosen to follow up the operation based on the regions that Doro is active in.
| 2014 Operating profit per geographical region |
Nordic | Europe, Middle east and Africa |
Germany, Austria and Switzerland |
United Kingdom |
USA and Canada |
Other Regions |
Central | Total |
|---|---|---|---|---|---|---|---|---|
| Income/Net Sales | 269.5 | 312.9 | 348.9 | 211.4 | 139.7 | 9.7 | –15.0 | 1,277.1 |
| Operating cost | –192.8 | –241.7 | –311.7 | –165.3 | –107.9 | –9.3 | –119.0 | –1,147.7 |
| Operating profit | 76.7 | 71.2 | 37.2 | 46.1 | 31.8 | 0.4 | –134.0 | 129.4 |
| Depreciation | 0.0 | –0.5 | –4.8 | –0.1 | –4.0 | 0.0 | –33.5 | –42.9 |
| Operating result | 76.7 | 70.7 | 32.4 | 46.0 | 27.8 | 0.4 | –167.5 | 86.5 |
| 2013 | Europe, | Germany, | ||||||
|---|---|---|---|---|---|---|---|---|
| Operating profit per | Middle east | Austria and | United | USA and | Other | |||
| geographical region | Nordic | and Africa | Switzerland | Kingdom | Canada | Regions | Central | Total |
| Income/Net Sales | 271.5 | 277.2 | 201.3 | 182.2 | 204.4 | 5.9 | 0.0 | 1,142.5 |
| Operating cost | –182.0 | –219.0 | –180.0 | –149.5 | –163.8 | –6.7 | –127.8 | –1,028.8 |
| Operating profit | 89.5 | 58.2 | 21.3 | 32.7 | 40.6 | –0.8 | –127.8 | 113.7 |
| Depreciation | 0.0 | –0.2 | –3.0 | 0.0 | –1.7 | 0.0 | –29.9 | –34.8 |
| Operating result | 89.5 | 58.0 | 18.3 | 32.7 | 38.9 | –0.8 | –157.7 | 78.9 |
There were no transactions between regions in 2014 or 2013. Doro is unable to report assets and liabilities per segment, because only the income statement is followed up. In 2014 no single customer accounted for more than 10% of the revenues. In 2013 one single customer accounted for 14,8% of the revenues. Of these 100% related to the region USA and Canada.
Salaries, remuneration, social charges and pension cost have appeared with the following amounts:
| Closing value | ||
|---|---|---|
| Tangible Fixed assets | 2014 | 2013 |
| Sweden | 2.1 | 4.3 |
| France | 1.3 | 1.2 |
| Germany | 1.1 | 1.3 |
| Hong Kong | 0.3 | 0.2 |
| Total | 4.8 | 7.0 |
| Closing value | ||
| Intangible Fixed assets | 2014 | 2013 |
| Sweden | 36.8 | 41.2 |
| France | 71.3 | 66.5 |
| Germany | 93.1 | 91.9 |
| Total | 201.2 | 199.6 |
Of the Parent Company's invoicing SEK 78.1 m (42.1) relates to subsidiaries. Invoicing from subsidiaries to the Parent Company amounted to SEK 89.3 m (67.2). Invoicing between subsidiaries amounted to SEK 4.3 m (0.8).
Total charges for rental agreements and leases during the year amounted to SEK 9,0 m (7,5) for the group and SEK 2,9 m (3,0) for the parent company. Agreed future rental and leasing costs fall due for payment as shown below.
| Group | Parent Company | |||
|---|---|---|---|---|
| Rental and leasing | 2014 | 2013 | 2014 | 2013 |
| Within 1 year | 8.1 | 7.3 | 2.7 | 2.1 |
| Within 2 to 5 years | 9.4 | 13.5 | 2.1 | 2.4 |
| Later than 5 years | 0.0 | 0.0 | 0.0 | 0.0 |
| Total | 17.5 | 20.8 | 4.8 | 4.5 |
Average number of employees
| Number | 2014 | of whom men |
2013 | of whom men |
|---|---|---|---|---|
| Parent Company | 41 | 27 | 34 | 21 |
| Norway | 3 | 3 | 3 | 3 |
| United Kingdom | 10 | 7 | 9 | 5 |
| France | 37 | 22 | 28 | 14 |
| Hong Kong | 8 | 6 | 8 | 6 |
| Germany | 56 | 40 | 35 | 25 |
| Total | 155 | 105 | 117 | 74 |
| Salaries and remuneration | 81.6 | 61.3 | 25.3 | 24.4 |
|---|---|---|---|---|
| 81.6 | 61.3 | 25.3 | 24.4 | |
| Payroll overheads excluding | ||||
| pension costs | 23.2 | 18.3 | 9.1 | 7.2 |
| 23.2 | 18.3 | 9.1 | 7.2 | |
| Pension costs | 9.5 | 7.3 | 5.5 | 4.9 |
| of which premium-based | 8.7 | 7.1 | 5.5 | 4.9 |
| 9.5 | 7.3 | 5.5 | 4.9 | |
SEK m 2014 2013 2014 2013
Group Parent Company
| 2014 total |
Women % |
2013 total |
Women % |
|
|---|---|---|---|---|
| Board | 6 | 33 | 6 | 33 |
| Group Management | 6 | 17 | 7 | 14 |
| whereof situated in: | ||||
| Sweden | 3 | 0 | 3 | 0 |
| United Kingdom | 1 | 0 | 1 | 0 |
| France | 2 | 50 | 3 | 33 |
Amongst the senior managers in 2013 there were two persons included that was not employed, but invoiced their fees. One was placed in Sweden and the other in France.
| 2014 | 2013 | |||
|---|---|---|---|---|
| SEK m | Board and CEO |
Other employ ees |
Board and CEO |
Other employ ees |
| Sweden | 3.8 | 22.5 | 3.1 | 22.3 |
| Norway | 2.4 | 2.7 | ||
| United Kingdom | 6.7 | 5.1 | ||
| France | 2.1 | 19.4 | 1.8 | 14.7 |
| Germany | 21.2 | 9.5 | ||
| Hong Kong | 3.7 | 3.1 | ||
| Italy | 0.8 | 0.0 | ||
| Total | 5.9 | 76.7 | 4.9 | 57.4 |
| Other | ||||
|---|---|---|---|---|
| remunera | ||||
| The Board 2014 | Fees | Pension | tion | Total |
| Chairman of the Board | 350 | 0 | 0 | 350 |
| Other Board members1) | 600 | 0 | 0 | 600 |
| Total | 950 | 0 | 0 | 950 |
1)Fee to the Chairman of the Board is SEK 350 k (350) and to other Board members SEK 150 k (150) as decided on Annual General Meeting May 12,2014.
| Senior Executives | Variable remunera |
Other | |||
|---|---|---|---|---|---|
| 2014 | Salary | tion | Pension | benefits | Total |
| Jérôme Arnaud (CEO) | 4,053 | 124 | 537 | 67 | 4,781 |
| Other senior executives |
5,776 | 633 | 1,799 | 517 | 8,725 |
| Total | 9,829 | 757 | 2,336 | 584 | 13,506 |
The amounts include salaries and remunerations to employed senior excecutives. In 2014, the management team has consisted of six persons.
| Remunera | ||||
|---|---|---|---|---|
| The Board 2013 | Fees | tion via company |
Total | |
| Chairman of the Board | 350 | 350 | 0 | 700 |
| Other Board members1) | 600 | 150 | 0 | 750 |
| Total | 950 | 500 | 0 | 1,450 |
1) Fee to the Chairman of the Board is SEK 350 k (350) and to other Board members SEK 150 k (150) as decided on Annual General Meeting May 14, 2013. The Chairman of the Board and one of the Board Memebers have invoiced consultancy fees in addition to their Board Fees. Please also see Note 25.
| Senior Executives | Variable remunera |
Other | |||
|---|---|---|---|---|---|
| 2013 | Salary | tion | Pension | benefits | Total |
| Jérôme Arnaud (CEO) | 3,722 | 745 | 367 | 64 | 4,898 |
| Other senior executives |
4,302 | 927 | 1,393 | 299 | 6,921 |
| Total | 8,024 | 1,672 | 1,760 | 363 | 11,819 |
The amounts include salaries and remunerations to employed senior excecutives. In 2013, the management team has consisted of seven persons. In the management team there are two positions on a consultancy basis; CFO until November 2013 on an interim basis and a second person who has been active throughout the year. Both these have invoiced their renumerations to the company. The amounts are not included in the table above but totals to SEK 4.4 m.
Fees are paid to the Chairman and other Board members in accordance with decisions made by the AGM. Payment for work on the boards of subsidiaries is made separately. Remuneration to the CEO and other senior executives comprises a basic salary, variable remuneration, other benefits (primarily a company car) and pension premiums. The balance between basic salary and variable remuneration should be in proportion to the executive's responsibilities and authorities. There are 6 (6) members of the management team. Average number of senior executives in the management team in 2014: 6 (7).
The retirement age for CEO and other senior executives of the Group is 65 and pensions are usually paid in accordance with the general pension plan plus full remuneration for the entire amount of salaries according to the ITP/ITPK plans. All pension benefits are irrevocable, i.e. not dependent on continued employment.The retirement age for the CEO is 65 years. No agreements have been signed concerning pension commitments or the equivalent, more than is mentioned in the periods of notice mentioned above, whether for board members or senior executives. Pension schemes for senior executives are substantially premium-based with premiums of SEK 2,3 m (1,8) paid.
If notice is served by the company or by the CEO himself, the period of notice is one year. The CEO has the right to salary over 12 months during the period of notice. No severance pay will be paid if notice is given by CEO. Other senior executives have agreement of salary during notice between 3 and 9 months.
These procedures are explained in the Directors' Report.
"No member of the board receives any share-based payments (options, convertible debentures or similar) issued by Doro or its principal owner.
In accordance with the mandate given by the Annual General Meeting on 23 March 2011, all of Doro´s employees were offered warrants granting them the right to acquire shares at a predetermined price of SEK 35.30 during the period 1 April 2014 – June 2014 and a warrant price of SEK 3.40. The warrant price was calculated according to the Black & Scholes model, taking into consideration the dividend approved by the 2011 AGM, a share price of SEK 28.68, volatility of 29%, a risk-free interest rate of 2.79% and a term of 3.25 years (31 March 2011 – 30 June 2014). The CEO subscribed for 200,000 warrants and other members of Group management subscribed for 155,000 warrants. Doro Incentive subscribed for 192,830 warrants which were to be used for future employees. During the term of the programme Doro Incentive bought back warrants from employees and at the end of the programme had 316,380 warrants that were not exercised. During the exercise period from April to June 2014 a total of 398,309 warrants were exercised.
An Extraordinary General Meeting held on 21 August 2014 passed a resolution on a directed issue of new warrants to senior executives and key individuals within the Doro Group. Each warrant gives the holder the right to buy one share to a predetermined price of SEK 42.00 during the period from 22 May 2017 to 21 June 2017. The warrant price of 1,26 SEK was calculated according to the Black & Scholes model, taking into consideration an estimated dividend and a share price of SEK 31.10, volatility of 30%, a risk-free interest rate of 0.31% and a term of 2.78 years (12 September 2014 – 21 June 2017). The CEO subscribed for 200,000 warrants and other members of Group management subcribed for 325,000 warrants. Doro Incentive subcribed for 141,000 warrants that were to be used for future employees. In total 841,000 warrants were issued.
| The Group | Parent Company | |||
|---|---|---|---|---|
| Income | 2014 | 2013 | 2014 | 2013 |
| Interest income, external | 0.2 | 0.5 | 0.3 | 0.5 |
| Interest income, internal | 0.0 | – | 4.1 | 1.5 |
| Exchange rate gain | 0.5 | 0.1 | 0.5 | 0.1 |
| Dividend from Group Caompany | 0.0 | – | 0.0 | 22.2 |
| Other | 0.0 | 0.0 | 0.0 | 0.0 |
| Total | 0.7 | 0.6 | 4.9 | 24.3 |
| Expenses | ||||
| Interest expenses, external | –2.6 | –1.3 | –1.8 | –0.9 |
| Interest expenses, internal | 0.0 | – | –0.3 | –0.5 |
| Exchange rate losses | –5.3 | 0.0 | –5.3 | 0.0 |
| Other | 0.0 | 0.0 | –0.2 | 0.0 |
| Total | –7.9 | –1.3 | –7.6 | –1.4 |
| Financial net | –7.2 | –0.7 | –2.7 | 22.9 |
Interest income consists of interest earned on balances of bank accounts. Interest expense consists of interest on bank loans and interest for late payments. Closing earlier loans converted into overdraft facility with Handelsbanken totaling SEK 50 m. Exchange gains and losses of SEK –4.8 m (0.1) arising from revaluation of foreign exchange contracts.
| Group/Goodwill, SEK m | 2014 | 2013 |
|---|---|---|
| Opening cost | 142.2 | 25.8 |
| Acquisitions during the year | 1.4 | 113.1 |
| Exchange rate difference | 8.3 | 3.3 |
| Closing accumulated cost | 151.9 | 142.2 |
| Group / Customer register and distribution agreements | 2014 | 2013 |
| Acquisition value brought forward | 21.2 | 5.4 |
| Acquisitions during the year | 0.0 | 15.3 |
| Exchange rate difference | 1.4 | 0.5 |
| Closing accumulated acquisition value | 22.6 | 21.2 |
| Write-downs brought forward | –5.5 | –1.5 |
| Write-downs for the year | –6.2 | –4.0 |
| Exchange rate difference | –0.6 | 0.0 |
| Closing depreciation/write-downs | –12.3 | –5.5 |
| Closing residual value according to plan | 10.3 | 15.7 |
| Parent company / Goodwill | 2014 | 2013 |
| Acquisition value brought forward | 19.1 | 19.1 |
| Acquisitions during the year | 0.0 | 0.0 |
| Closing accumulated acquisition value | 19.1 | 19.1 |
| Write-downs brought forward | –19.1 | –19.1 |
| Write-downs for the year | 0.0 | 0.0 |
| Closing depreciation/write-downs | –19.1 | –19.1 |
| Closing residual value according to plan | 0.0 | 0.0 |
| Parent company / Customer register | 2014 | 2013 |
|---|---|---|
| Acquisition value brought forward | 14.8 | 14.8 |
| Acquisitions during the year | 0.0 | 0.0 |
| Closing accumulated acquisition value | 14.8 | 14.8 |
| Write-downs brought forward | –9.9 | –7.0 |
| Write-downs for the year | –3.0 | –2.9 |
| Closing depreciation/write-downs | –12.9 | –9.9 |
| Closing residual value according to plan | 1.9 | 4.9 |
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.
Goodwill has been allocated to Doro excluding IVSoch IVS separately. For IVS separable cash flows can be identified, but since the other Group companies' activities and their contributions are very much dependent on each other there is no breakdown of this goodwill.
| 2014 | 2013 | ||||
|---|---|---|---|---|---|
| SEK m | Doro, other | IVS | Doro, other | IVS | |
| Goodwill | 65.0 | 86.9 | 60.3 | 81.9 | |
| Forecast period | 5 years 5 years | 5 years 5 years | |||
| Average growth rate, % | 14.5 | 3 | 5 | 4 | |
| Sustainable growth, % | 2 | 2 | 2 | 2 | |
| Discount rate (WACC) before tax, % | 15 | 17 | 15 | 18 | |
| Discount rate (WACC) after tax, % | 12 | 12 | 12 | 12 |
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 is deemed to exist.
Growth rate after 5 years: A change in the growth rate from 2 to 1 percent implies no impairment. Discount rate after tax increases by 1 percentage point: the discount rate after tax changes from 12 to 13 percent. The change implies no impairment.
Growth rate after 5 years: A change in the growth rate from 2 to 1 percent implies no impairment. Discount rate after tax increases by 1 percentage point: the discount rate after tax changes from 12 to 13 percent. The change implies no impairment.
For the Parent Company goodwill was originally acquired internally from Doro Nordic AB and originates from internal divestments of operations
in 2002. Goodwill and the customer register in the Parent company are eliminated at the Group level.
The Parent Company acquired from Doro Finans AB the internal brands Doro and Audioline in 2007. These brands are fully depreciated according to plan. As the brands are acquired internally they are eliminated at group level. In 2011 Doro made the acquisitions of the companies Birdy och Prylos. The trademark related to the acquisitions have been identified.
| The Group/Brands, SEK m | 2014 | 2013 |
|---|---|---|
| Acquisition value brought forward | 1.0 | 1.0 |
| Acquisitions during the year | 0.0 | 0.0 |
| Exchange rate difference | 0.1 | 0.0 |
| Closing accumulated acquisition value | 1.1 | 1.0 |
| Depreciation according to plan brought forward | –0.5 | –0.3 |
| Depreciation according to plan for the year | –0.2 | –0.2 |
| Closing depreciation according to plan | –0.7 | –0.5 |
| Closing residual value according to plan | 0.4 | 0.5 |
| Parent Company/Brands | 2014 | 2013 |
| 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 | –36.3 | –36.0 |
| Depreciation according to plan for the year | –0.2 | –0.3 |
| Closing depreciation according to plan | –36.5 | –36.3 |
| Closing residual value according to plan | 0.3 | 0.5 |
| Group/Right to lease | 2014 | 2013 |
| Acquisition value brought forward | 0.0 | 0 |
| Acquisitions | 1.8 | 0.0 |
| Closing accumulated cost | 1.8 | 0.0 |
| The Group's capitalized expenditure for development work / IT, SEK m |
2014 | 2013 |
| Acquisition value brought forward | 76.0 | 58.7 |
| Acquisitions during the year | 18.6 | 21.4 |
| Acquisitions | 0.0 | 0.0 |
| Exchange rate difference | 0.4 | 0.0 |
| Sales/Disposals | 0.0 | –11.9 |
| Reclassifications | 13.8 | 7.8 |
| Closing accumulated acquisition value | 108.8 | 76.0 |
| Depreciation according to plan brought forward | –49.4 | –39.3 |
| Depreciation according to plan for the year | –32.1 | –22.0 |
| Sales/Disposals | 0.0 | 11.9 |
| Exchange rate difference | –0.2 | 0.0 |
| Closing depreciation according to plan | –81.7 | –49.4 |
| Closing residual value according to plan | 27.1 | 26.6 |
| Ongoing capitalized expenditure for | ||
| development work /IT, SEK m | 2014 | 2013 |
| Opening balance | 14.6 | 9.4 |
| Balanced during the year | –13.8 | –7.8 |
| New expenditure | 9.1 | 13.8 |
| Cost accounted | –0.2 | –0.8 |
| Closing balance | 9.7 | 14.6 |
Total closing residual value 36.8 41.2
| Parent company / Capitalized expenditure for | ||
|---|---|---|
| development work / IT, SEK m | 2014 | 2013 |
| Acquisition value brought forward | 76.4 | 59.1 |
| Acquisitions during the year | 18.6 | 21.4 |
| Sales/Disposals | 0.0 | –11.9 |
| Reclassifications | 13.8 | 7.8 |
| Closing accumulated acquisition value | 108.8 | 76.4 |
| Depreciation according to plan brought forward | –49.5 | –39.3 |
| Depreciation according to plan for the year | –32.2 | –22.1 |
| Sales/Disposals | 0.0 | 11.9 |
| Closing depreciation according to plan | 0.0 | 0.0 |
| Closing residual value according to plan | –81.7 | –49.5 |
| Closing residual value according to plan | 27.1 | 26.9 |
| Ongoing capitalized expenditure for | ||
| development work /IT | 2014 | 2013 |
| Opening balance | 14.6 | 9.4 |
| Balanced during the year | –13.8 | –7.8 |
| New expenditure | 9.1 | 13.8 |
| Cost accounted | –0.2 | –0.8 |
| Closing balance | 9.7 | 14.6 |
| Total closing residual value | 36.8 | 41.5 |
| Group | Parent Company | |||
|---|---|---|---|---|
| Equipment and tools, SEK m | 2014 | 2013 | 2014 | 2013 |
| Acquisition value brought forward | 29.1 | 35.4 | 22.3 | 30.7 |
| Acquisitions during the year | 1.6 | 1.3 | 1.2 | 1.0 |
| Acquisitions | 0.4 | 1.8 | 0.0 | 0.0 |
| Sales/Disposals | –0.3 | –9.4 | 0.0 | –9.4 |
| Reclassifications | 0.0 | 0.0 | 0.0 | 0.0 |
| Exchange rate difference | 0.6 | 0.0 | – | – |
| Closing acquisition value | 31.4 | 29.1 | 23.5 | 22.3 |
| Depreciation according to plan | –22.1 | –22.9 | –18.0 | –19.7 |
| Depreciation according to plan | –4.4 | –8.6 | –3.4 | –7.7 |
| Sales/Disposals | 0.2 | 9.4 | 0.0 | 9.4 |
| Reclassifications | 0.0 | 0.0 | 0.0 | 0.0 |
| Exchange rate difference | –0.3 | 0.0 | – | – |
| Closing depreciation according to plan |
–26.6 | –22.1 | –21.4 | –18.0 |
| Closing residual value according to plan |
4.8 | 7.0 | 2.1 | 4.3 |
| Subsidiary | No. of shares | % | Nominal value | Book value, SEK m, 2014 |
Shareholders' equity, SEK m, 20141) |
Profit and loss, SEK m, 2014 |
Book value, SEK m, 2013 |
|
|---|---|---|---|---|---|---|---|---|
| Doro A/S, Norway | 200 | 100 | NOK | 0.1 | 0.60 | 2.2 | 0.6 | 0.60 |
| Doro UK Ltd | 3,013,400 | 100 | GBP | 32.1 | 4.20 | 17.5 | 3.9 | 4.20 |
| Doro SAS2) | 66,667 | 100 | EUR | 8.9 | 11.60 | 5.6 | –8.0 | 11.60 |
| Doro Hong Kong Ltd | 4,500 | 100 | HKD | 4.0 | 5.10 | 5.6 | 0.0 | 5.10 |
| Doro Inc | 3,000 | 100 | USD | 0.0 | 0.04 | 4.3 | 1.4 | 0.04 |
| Doro Incentive AB | 50,000 | 100 | SEK | 0.1 | 0.06 | 0.1 | 0.0 | 0.06 |
| Doro Deutschland GmbH | 1 | 100 | EUR | 0.2 | 0.20 | –1.4 | –1.0 | 0.20 |
| IVS Industrievertretung Schweiger GmbH3) | 9,239 | 33,33 | EUR | 0.1 | 46.50 | 101.0 | 23.2 | 46.50 |
| Service and Sales GmbH | 4.5 | 1.2 | 0 | |||||
| Doro S.R.L | 1 | 100 | EUR | 0.1 | 0.1 | 0.1 | 0.0 | – |
| Aldebaran SAS | 275,000 | 100 | EUR | 2.6 | 5.0 | 3.2 | –0.1 | – |
| Total | 73.4 | 142.7 | 21.2 | 68.3 |
1) Equity according to balance sheet of subsidiaries.
2) Isidor SAS has been merged with Doro SAS in 2014.
3) IVS industrievertretung Schweiger GmbH is included in the Group to 100%. Doro AB owns 33,33% and Doro Deutschland GmbH owns 66,67%.
| Subsidiary – Company reg. no | Registered office | SEK m | 2014 | 2013 | |
|---|---|---|---|---|---|
| Doro A/S – 934210719 | Fredrikstad, Norway | Opening balance | 68.3 | 21.8 | |
| Doro UK Ltd – 1180330 | Chalfont St Peter, United Kingdom | Acquisition | 5.0 | 46.5 | |
| Doro SAS – 309,662,195 | Versailles, France | Newformed company | 0.1 | 0.0 | |
| Doro Hong Kong Ltd – 08194263-000-12-98-6 Kowloon, Hong Kong | Closing balance | 73.4 | 68.3 | ||
| 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 | Note 11 | |||
| Service and Sales GmbH – HRB 3892 | Amberg, Germany | SHARE CAPIT |
AL AND DIVIDENDS | ||
| Doro S.R.L – 08721340969 | Milano, Italy | ||||
| Aldebaran SAS – 504,770,116 | Paris, France | No. of shares | Voting rights | Class | |
| A shares | 21,204,483 | 1 vote per share | Normal |
| Prepaid expenses and accrued | Group | Parent Company | ||
|---|---|---|---|---|
| income | 2014 | 2013 | 2014 | 2013 |
| Rent | 0.6 | 0.8 | 0.4 | 0.5 |
| Acquisition costs CareTech | 0.0 | 0.0 | 3.0 | 0.0 |
| Insurance premiums | 1.4 | 0.0 | 1.2 | 0.0 |
| Exhibition costs | 2.3 | 1.6 | 2.3 | 1.6 |
| IT costs | 0.6 | 0.4 | 0.6 | 0.4 |
| Licence costs | 2.2 | 0.0 | 2.2 | 0.0 |
| Other prepaid expenses | 1.2 | 0.9 | 0.4 | 0.4 |
| Total | 8.3 | 3.7 | 10.1 | 2.9 |
| Group | Parent Company | |||
|---|---|---|---|---|
| Other current receivables | 2014 | 2013 | 2014 | 2013 |
| VAT receivable | 39.2 | 11.9 | 34.4 | 8.5 |
| Cash Flow hedges | 16.0 | 0.4 | 16.0 | 0.4 |
| Other current receivables | 6.0 | 5.1 | 2.5 | 1.4 |
| Total | 61.2 | 17.4 | 52.9 | 10.3 |
21,204,483 shares at a quota value of SEK 1.00 per share = SEK 21,204,483.
Doro has during the year issued new shares as a result of an warrant program in the company.
As a result of the share issue, the number of shares rised from 20,806,174 to 21,204,483 shares.
The Board of Directors proposes that no dividend to the shareholders for the 2014 fiscal 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 of 1.26 SEK 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.
| Group | Parent Company | |||
|---|---|---|---|---|
| SEK m | 2014 | 2013 | 2014 | 2013 |
| Approved credit | 50.0 | 0.0 | 50.0 | 0.0 |
| Utilized credit | 41.5 | 0.0 | 41.5 | 0.0 |
Former foregin loans in Euro is converted into an overdraft facility for SEK 50 m in Q4 2014 with a contractual requriment of a minimum equity ratio of 12,5 % and EBT SEK 50m. As of March 31, 2015 subject to the credit of a covernance agreement where EBT and net debt relative to EBITDA is measured quarterly. EBT rolling 12 months, shall during Q4 2014 to Q3 2015 amount to at least SEK 50m after which the result should amount to SEK 85m over the next subsequent four quarters.
Net debt relative to EBITDA shall not exceed 1,2 times until June 2016, after which the ratio drops to 1,0.
| Group | Parent Company | |||
|---|---|---|---|---|
| SEK m | 2014 | 2013 | 2014 | 2013 |
| Holiday pay liability | 7.7 | 6.2 | 4.2 | 3.3 |
| Payroll overheads | 5.9 | 5.2 | 1.9 | 1.5 |
| Stock accounts interim | 91.9 | 7.6 | 91.9 | 7.6 |
| Other staff liabilities | 3.6 | 3.7 | 0.1 | 3.1 |
| Accrued Royalty | 21.0 | 19.4 | 21.0 | 18.9 |
| Accrued customer bonus | 17.3 | 21.8 | 14.5 | 21.8 |
| Other accrued expenses | 31.1 | 19.7 | 26.4 | 16.7 |
| Total | 178.5 | 83.6 | 160.0 | 72.9 |
| Group | Parent Company | |||
|---|---|---|---|---|
| SEK m | 2014 | 2013 | 2014 | 2013 |
| Chattel mortgages | 170.0 | 170.0 | 170.0 | 170.0 |
| Total | 170.0 | 170.0 | 170.0 | 170.0 |
Doro has no contingent liabilities.
The 2014 AGM elected Stefan Engdahl (Ernst & Young AB) as auditor of the Parent Company, Doro AB. Ernst & Young will carry out auditing at all large units for the period of one year.
| Group | Parent Company | |||
|---|---|---|---|---|
| Fees and costs, SEK m | 2014 | 2013 | 2014 | 2013 |
| Auditing assignments | 1.0 | 1.1 | 0.4 | 0.6 |
| Auditing outside the assignment | 0.2 | 0.2 | 0.2 | 0.2 |
| Tax assignments | 0.4 | 0.6 | 0.4 | 0.6 |
| Other advisory services | ||||
| by auditors | 2.1 | 2.6 | 2.1 | 2.6 |
| Total | 3.7 | 4.5 | 3.1 | 4.0 |
| Group | Parent Company | |||
|---|---|---|---|---|
| Taxes on profit/loss for the year, SEK m |
2014 | 2013 | 2014 | 2013 |
| Current tax | –15.1 | –13.1 | –4.0 | –4.4 |
| Deferred tax | –6.0 | –4.5 | –3.3 | –6.1 |
| Total tax on profit/loss for the year |
–21.1 | –17.6 | –7.3 | –10.5 |
Relationship between tax expense for the year and reported earnings before tax:
| Group | Parent Company | |||
|---|---|---|---|---|
| Taxes, SEK m | 2014 | 2013 | 2014 | 2013 |
| Reported profit/loss before tax | 79.3 | 78.2 | 31.9 | 80.0 |
| Tax at current rate 22,0 % | –17.4 | –17.2 | –7.0 | –17.6 |
| Non-deductible expenses | –0.3 | –0.4 | –0.3 | –0.1 |
| Non-taxable income | 0.0 | 0.3 | 0.0 | 0.3 |
| Tax effect on Group dividends | 0.0 | –0.6 | 0.0 | 4.9 |
| Change in valuation in losses carryforwards |
1.0 | 0.7 | 0.0 | 0.0 |
| Change in valuation of temporary differences |
0.7 | 2.0 | 0.0 | 2.0 |
| Tax cost concerning previous year | –1.9 | 0.0 | 0.0 | 0.0 |
| Adjustment for tax rates in foreign Group company |
–3.2 | –2.4 | 0.0 | 0.0 |
| Reported tax | –21.1 | –17.6 | –7.3 | –10.5 |
Temporary differences arise 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:
| Group | Parent Company | |||
|---|---|---|---|---|
| Deferred tax asset, SEK m | 2014 | 2013 | 2014 | 2013 |
| Temporary differences, provisions | 15.5 | 20.6 | 11.0 | 11.5 |
| Temporary differences, other | 0.1 | 0.1 | 1.0 | 3.1 |
| Total reported deferred tax asset | 15.6 | 20.7 | 12.0 | 14.6 |
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 88 m (83) can be used without a time limit being imposed. The remaining losses are in the United Kingdom and in France.
| Losses carry forward fall due as follows, SEK m: | 2014 | 2013 |
|---|---|---|
| Without limit | 88 | 83 |
| Total | 88 | 83 |
Non-accounted deferred tax assets in the balance sheet concerning unutilized taxable losses carry forward amount to:
| Group | Parent Company | |||
|---|---|---|---|---|
| SEK m | 2014 | 2013 | 2014 | 2013 |
| 26 | 20 | 0 | 0 |
On August 1, 2014, Doro acquired the French company Aldebaran with an employee The company has a shop with a privileged location in Paris and is the first Doro Flag Ship Store. Net sales for 2014 through December amounted to kEUR 413 of which kEUR 97 refers to the time after the acquisition Earnings for 2014 to December amounted to kEUR 38 which kEUR -9 refers to the time after the acquisition Goodwill is attributable to the increased sales taht this form of product exposure will bring Doro. Cost of acquisition have been charged to operating profit of SEK 0,4 m.
| Fair value | SEK m |
|---|---|
| Intangible assets | 1.8 |
| Fixed assets | 0.4 |
| Stock | 0.2 |
| Other receivables | 0.1 |
| Cash and bank | 1.3 |
| Accounts payable, trade | –0.2 |
| Other liabilites | –0.3 |
| Acquired net assets | 3.2 |
| Goodwill | 1.4 |
| Total purchase consideration | 4.7 |
| Cash in company acquired | –1.3 |
| The acquisition's impact on the Group's cash flow | 3.4 |
On January 30, 2015 acquired Doro AB 63,7% of the stock in CareTech AB in Kalix. The remaining 36,3% was acquired on 18 February 2015 through an issule of new shares. Cost of acquisition has been charged to 2014 earnings with SEK 3 m. The purchase price was paid in cash with SEK 148,1 m and SEK 84,4 m as a share issue in kind.
Goodwill is linked to the enhanced position in the Care segment that CareTech's new sales channels provide, as well as increased expertise in the care segment for the senior population. On the acquisition date, the headcount was 154. Net sales for 2014 amounted to SEK 130,1 m with an EBIT of SEK 7,5 m.
| SEK m | |
|---|---|
| Intangible assets | 51.7 |
| Fixed assets | 4.9 |
| Other financial assets | 0.3 |
| Stock | 9.9 |
| Accounts receivable trade | 15.7 |
| Other receivables and prepaid expenses | 4.4 |
| Net Debt | -9.2 |
| Accounts payable, trade | -11.9 |
| Deferred tax liability | -4.2 |
| Other current debts and accrued expenses | -19.7 |
| Acquired net assets | 41.9 |
| Goodwill | 190.6 |
| Total purchase consideration | 232.5 |
Some uncertainty exists in the data above because Care Tech's financial statements ar not completely clear.
Goodwill is attributable to future customers and products, cross-selling oppurtunities for Doro, ability to improve future Doro products with advanced features for acquired technical know-how, and skilled development team. The acquisitions are expected to generate costsavings as a result of economies of scale.
During 2013 costs of SEK 7,1m directly attributable to the acquisitions were booked as other operating expenses in the group.
On May 13, Doro acquired 100 percent of the German company IVS Industrievertretung Schweiger GmbH. The acquisition of IVS leads to a reinforcement of Doro's market position in Germany, the opportunity to grow faster in other German-speaking countries and expansion into the growing Eastern European market.
IVS for the full year 2013 had sales of SEK 296.4 m and a profit after tax of SEK –0.4 m. Since the acquisition date, IVS has generated sales of SEK 189.7 m and a profit after tax of SEK 12.1 m.
On the acquisition date, the headcount was 64. Costs directly attributable to the acquisition of SEK 6.0 m has been accounted for in the profit and loss.
| Fair value | SEK m |
|---|---|
| Intangible assets | 12.3 |
| Fixed assets | 1.6 |
| Deferred tax asset | 4.6 |
| Stock | 45.0 |
| Accounts receivable trade | 62.2 |
| Other current assets | 10.0 |
| Cash and bank | 2.5 |
| Provisions | –21.2 |
| Interestbearing liabilities | –9.2 |
| Accounts payable, trade | –27.1 |
| Other current debts | –11.0 |
| Acquired net assets | 69.7 |
| Goodwill | 79.6 |
| Total purchase consideration | 149.3 |
| Share issue in kind | –40.6 |
| Deferred payment | –16.7 |
| Contingent consideration | –12.6 |
| Net debt in acquired company | 6.6 |
| Change in the Group's cash flow resulting from the acquisition | 86.0 |
| Impact on the cash flow 2014 | |
| Withholding of payment for kEUR 2 000, the present value of | |
| estimated 2013 to kEUR 1914 | –16.7 |
| Difference at kEUR booked as a financial expense | –0.8 |
| Currency adjustment | –0.7 |
| The acquisition's impact on the Group's cash flow in 2014 | –18.2 |
Withholding of payment was recorded as a current liability in 2013 while additional purchase price was recorded as a long-term liability. The additional purchase price that is fixed in size at EUR 1,6 m, conditional upon company reaches a minimum results. The amount payable no earlier than 10 January, 2015. The additional purchase price of EUR 1,6 m is reported as a current liability in 2014.
On 3 July 2013 Doro acquired its French software design partner Isidor SAS. The acquisition strengthens Doro's development team and increases Doro's opportunities to shorten the time-to-launch of smartphones for seniors and programs for easy Internet access for tablets and computers. The acquisition price was EUR 2.8 m on a cash and debt free basis, with a maximum contingent consideration of EUR 2.2 million based on the results for 2013 and the next two years. For fullyear 2013 Isidor had income of SEK 6,664 k and profit after tax of SEK 34 k. In the period from the acquisition date to the end of 2013 Isidor had income of SEK 3,261 k and profit after tax of SEK 47 k. Acquisition expenses of SEK 1.1 m were charged to profit in 2013. At the acquisition date the company had seven employees. In December 2014 Isidor SAS was merged with Doro SAS.
| Fair value | SEK m | |
|---|---|---|
| Intangible assets | 3.0 | |
| Fixed assets | 0.2 | |
| Accounts receivable trade | 2.9 | |
| Other current assets | 0.3 | |
| Tax receivable | 0.4 | |
| Cash and bank | 0.8 | |
| Interestbearing liabilities | –0.3 | |
| Accounts payable, trade | –1.0 | |
| Other current debts | –2.4 | |
| Deferred tax liability | –1.0 | |
| Acquired net assets | 2.9 | |
| Goodwill | 33.5 | |
| Total purchase consideration | 36.4 | |
| Contingent consideration | –11.7 | |
| Net debt in acquired company | –0.5 | |
| Change in the Group's cash flow resulting from the acquisition | 24.2 | |
| Contingent consideration | 2014 | 2013 |
| Current | 0.9 | 0.7 |
| Long-term | 2.7 | 11.0 |
| Total contingent consideration for Isidor | 3.6 | 11.7 |
| The change benefits on | 2014 | |
| Payment for result in 2013 | –0.3 | |
| Change in valuation recognized in the operationg result | –8.6 | |
| Currency adjustment | 0.8 | |
| Total changes | –8.1 |
| The Group, SEK m | 2014 | 2013 |
|---|---|---|
| Opening gross stock | 141.2 | 96.9 |
| Acquisition | 0.2 | 50.0 |
| Change in gross stock | 71.8 | –4.6 |
| Internal profit in stock | –1.8 | –2.4 |
| Exchange rate difference | 3.4 | 1.3 |
| Closing gross stock | 214.8 | 141.2 |
| Opening write-downs of stock | –10.9 | –5.6 |
| Acquisition | 0.0 | –5.0 |
| Change in write-downs of stock | 1.2 | –0.2 |
| Exchange rate difference | –0.5 | –0.1 |
| Closing write-downs of stock * | –10.2 | –10.9 |
| Net stock in balance sheet | 204.6 | 130.3 |
1) Acquisition value for the inventory that write-downs of stock of SEK 10.2 m (10,9) relates to is based on inventory book value of SEK 36,4 m (30,4).
| Parent company, SEK m | 2014 | 2013 |
|---|---|---|
| Opening gross stock | 92.9 | 96.9 |
| Change in gross stock | 70.2 | –4.0 |
| Closing gross stock | 163.1 | 92.9 |
| Opening write-downs of stock | –5.3 | –5.6 |
| Change in write-downs of stock | –0.9 | 0.3 |
| Closing write-downs of stock * | –6.2 | –5.3 |
| Net stock in balance sheet | 156.9 | 87.6 |
1) Acquisition value for the inventory reserve of SEK 6.2 m (5.3) is based on inventory book value of SEK 30,4 m (20.9).
| Group | Parent Company | |||
|---|---|---|---|---|
| SEK m | 2014 | 2013 | 2014 | 2013 |
| Opening balance | 41.1 | 27.5 | 33.7 | 27.5 |
| Acquisition | 0.0 | 6.9 | 0.0 | 0.0 |
| Amount released | –45.6 | –39.3 | –43.9 | –39.3 |
| New allocations | 47.1 | 45.8 | 47.1 | 45.5 |
| Exchangeratedifference | 0.3 | 0.2 | – | – |
| Closing balance | 42.9 | 41.1 | 36.9 | 33.7 |
| The Group, SEK m | 2014 | 2013 |
|---|---|---|
| Opening balance | 1.7 | 1.5 |
| Amount released | 0.0 | 0.0 |
| New allocations | 0.9 | 0.2 |
| Exchange rate difference | 0.3 | 0.0 |
| Closing balance | 2.8 | 1.7 |
| Group | Parent Company | |||
|---|---|---|---|---|
| SEK m | 2014 | 2013 | 2014 | 2013 |
| Opening balance | 68.2 | 67.9 | 52.3 | 67.9 |
| Acquisitions | 0.0 | 14.3 | 0.0 | 0.0 |
| Amount released | –2.1 | 0.0 | –0.3 | 0.0 |
| New allocations | 5.2 | 4.0 | 2.7 | 2.8 |
| Unutilized amount cancelled | –18.5 | –19.6 | –18.5 | –19.6 |
| Reclassification | 0.4 | 1.2 | 0.4 | 1.2 |
| Exchange rate difference | 0.9 | 0.4 | – | – |
| Closing balance | 54.1 | 68.2 | 52.3 | |
| Group | Parent Company | ||||
|---|---|---|---|---|---|
| 2014 | 2013 | 2014 | 2013 | ||
| Additional costs | 53.9 | 68.0 | 36.6 | 52.3 | |
| Other allocations | 0.2 | 0.2 | 0.0 | 0.0 | |
| Closing balance | 54.1 68.2 |
36.6 | 52.3 |
Additional 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 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 financial investments and in accounts receivable, as well as counterparty risk associated with futures hedging. Credit and counterparty risks are managed centrally by the parent company of Doro AB and regulated by the treasury policy. Financial instruments may only be done with counterparties/issuers within the categories government, municipalities and banks. At 31 December 2014 and 31 December 2013 there were no short-term investmetns.
The value of accounts receivable amounted to SEK 269,4m (248,6). In recent years Doro has experienced very 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 9,2 percent (14,8) of Group sales. In most countries Doro operates without credit insurance.
| Group | ||||
|---|---|---|---|---|
| Age analysis of accounts receivable | 2014 | 2013 | ||
| Not yet due | 236.6 | 224.0 | ||
| Due for payment < 60 days | 33.4 | 21.4 | ||
| Due for payment > 60 days | 7.4 | 3.2 | ||
| Total accounts receivable | 277.4 | 248.6 | ||
| Expected bad debt losses | –8.0 | –5.1 | ||
| Accounts receivable in the financial statements | 269.4 | 243.5 |
| Group | ||||
|---|---|---|---|---|
| Impaired accounts receivable | 2014 | 2013 | ||
| Opening balance | –5.1 | –4.9 | ||
| Expected bad debt losses | –3.5 | –0.9 | ||
| Confirmed bad debt losses | –0.3 | –0.1 | ||
| Translation differences | –0.1 | 0.0 | ||
| Amount reversed | 1.0 | 0.8 | ||
| Closing balance | –8.0 | –5.1 |
Other receivables are not yet due.
At 31 December 2014, the Group had SEK 41,7m (45,2) in interestbearing liabilities. In connection with Doro obtaining an overdraft facility, previous Euroloans were cancelled. Thus there is no long-term loans remianing within the Group.
At 31 December 2014, Group liquidity amounted to SEK 78,2m (123,9).
Doro is exposed to foreign exchange risks caused by unfavourable exchange rate fluctuations that may affect sales, earnings and equity. Risks and risk management 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 net flows are hedged on a quarterly basis for periods for which the price list is set at between 60 and 80 percent. The hedge horizon can thus vary between three and six months. Foreign exchange management is centralised at the finance department of Doro AB, which buys and sells currencies under the treasury policy.
Since 2013, Doro applies hedge accounting in accordance with IFRS.(see accounting principles for further information).
| Before hedging 2014 |
After hedging 2014 |
Before hedging 2013 |
After hedging 2013 |
|
|---|---|---|---|---|
| CAD | 4 | 4 | 15 | 8 |
| NOK | 18 | 9 | 16 | 8 |
| EUR | 257 | 64 | 109 | 2 |
| GBP | 70 | 5 | 66 | 11 |
| USD | –244 | –103 | –152 | –2 |
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.
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 143 m (110). The breakdown by currency is shown in the table below.
| Value of foreign assets | 2014 | 2013 |
|---|---|---|
| USD | 4 | 2 |
| NOK | 2 | 2 |
| EUR | 113 | 89 |
| GBP | 17 | 12 |
| HKD | 6 | 5 |
| Total | 143 | 110 |
| Financial assets and liabilities at | Derivatives subject to hedge |
Accounts receiv able and loans |
Other financial | Carrying | |||
|---|---|---|---|---|---|---|---|
| Group 2014 | fair value through profit and loss | accounting | Saleable assets | receivable | liabilities | amount Fair value | |
| Accounts receivable | 269.5 | 269.5 | 269.5 | ||||
| Other receivable | 4.3 | 4.3 | 4.3 | ||||
| Currency futures subject to hedge accounting | 15.4 | 15.4 | 15.4 | ||||
| Currency futures held for trading | 0.6 | 0.6 | 0.6 | ||||
| Current investments | 0.0 | 0.0 | |||||
| Bank balances | 78.2 | 78.2 | 78.2 | ||||
| Assets | 0.6 | 15.4 | 78.2 | 273.8 | 0.0 | 368.0 | 368.0 |
| Currency futures subject to hedge accounting | 7.4 | 7.4 | 7.4 | ||||
| Liabilities to credit instituions | 41.7 | 41.7 | 41.7 | ||||
| Accounts payable | 159.9 | 159.9 | 159.9 | ||||
| Additional purchase consideration | 17.3 | 17.3 | 17.3 | ||||
| Other liabilities | 175.7 | 175.7 | 175.7 | ||||
| Liabilities | 17.3 | 7.4 | 0.0 | 0.0 | 377.3 | 402.0 | 402.0 |
| Group 2013 | |||||||
| Accounts receivable | 243.5 | 243.5 | 243.5 | ||||
| Other receivable | 4.9 | 4.9 | 4.9 | ||||
| Currency futures subject to hedge accounting | 0.3 | 0.3 | 0.3 | ||||
| Currency futures held for trading | 0.1 | 0.1 | 0.1 | ||||
| Current investments | 0.0 | 0.0 | |||||
| Bank balances | 123.9 | 123.9 | 123.9 | ||||
| Assets | 0.1 | 0.3 | 123.9 | 248.4 | 0.0 | 372.7 | 372.7 |
| Currency futures subject to hedge accounting | 4.1 | 4.1 | 4.1 | ||||
| Liabilities to credit instituions | 45.2 | 45.2 | 45.2 | ||||
| Accounts payable | 165.4 | 165.4 | 165.4 | ||||
| Additional purchase consideration | 41.7 | 41.7 | 41.7 | ||||
| Other liabilities | 79.5 | 79.5 | 79.5 | ||||
| Liabilities | 41.7 | 4.1 | 0.0 | 0.0 | 290.1 | 335.9 | 335.9 |
| Parent Company 2014 | Financial assets and liabilities at fair value through profit and loss |
Derivatives subject to hedge accounting |
Saleable assets | Accounts receiv able and loans receivable |
Other financial liabilities |
Carrying amount |
Fair value |
|---|---|---|---|---|---|---|---|
| Accounts receivable | 202.1 | 202.1 | 202.1 | ||||
| Receivables from Group companies | 175.8 | 175.8 | 175.8 | ||||
| Other receivables | 0.8 | 0.8 | 0.8 | ||||
| Currency futures subject to hedge accounting | 15.4 | 15.4 | 15.4 | ||||
| Currency futures held for trading | 0.6 | 0.6 | 0.6 | ||||
| Current investments | 0.0 | 0.0 | 0.0 | ||||
| Bank balances | 9.9 | 9.9 | 9.9 | ||||
| Assets | 0.6 | 15.4 | 9.9 | 378.7 | 0.0 | 404.6 | 404.6 |
| Currency futures subject to hedge accounting | 7.4 | 7.4 | 7.4 | ||||
| Liabilities to credit institutions | 41.5 | 41.5 | 41.5 | ||||
| Accounts payable | 140.6 | 140.6 | 140.6 | ||||
| Receivables from Group companies | 29.8 | 29.8 | 29.8 | ||||
| Other liabilities | 158.4 | 158.4 | 158.4 | ||||
| Liabilities | 0.0 | 7.4 | 0.0 | 0.0 | 370.3 | 377.7 | 377.7 |
| Parent Company 2013 | |||||||
| Accounts receivable | 189.1 | 189.1 | 189.1 | ||||
| Receivables from Group companies | 113.2 | 113.2 | 113.2 | ||||
| Other receivables | 1.1 | 1.1 | 1.1 | ||||
| Currency futures subject to hedge accounting | 0.3 | 0.3 | 0.3 | ||||
| Currency futures held for trading | 0.1 | 0.1 | 0.1 | ||||
| Current investments | 0.0 | 0.0 | |||||
| Bank balances | 94.9 | 94.9 | 94.9 | ||||
| Assets | 0.1 | 0.3 | 94.9 | 303.4 | 0.0 | 398.7 | 398.7 |
| Currency futures subject to hedge accounting | 4.1 | 4.1 | 4.1 | ||||
| Liabilities to credit institutions | 44.3 | 44.3 | 44.3 | ||||
| Accounts payable | 140.6 | 140.6 | 140.6 | ||||
| Receivables from Group companies | 20.1 | 20.1 | 20.1 | ||||
| Other liabilities | 71.2 | 71.2 | 71.2 | ||||
| Liabilities | 0.0 | 4.1 | 0.0 | 0.0 | 276.2 | 280.3 | 280.3 |
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.
Currency futures and additional purchase considerated 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.
Former foregin loans in Euro is converted into an overdraft facility for SEK 50 m in Q4 2014.
| Group | Parent Company | ||||
|---|---|---|---|---|---|
| 2014 | 2013 | 2014 | 2013 | ||
| Amounts that fall due in 1 - 5 years |
0.0 | 44.3 | 0.0 | 44.3 | |
| Amounts that fall due later than 5 years |
0.0 | 0.0 | 0.0 | 0.0 | |
| Total | 0.0 | 44.3 | 0.0 | 44.3 |
No related party transactions during the year exept for salaries and remuneration according to note 5. During 2013 the Chairman Bo Kastensson and the board member Jonas Mårtensson billed consulting services to Doro AB. The compensation was made on market terms and refers to advisory services in the IVS acquisition process. Bo Kastensson billed SEK 350 000, plus VAT through his company Kasting Advising AB. Jonas Mårtensson billed SEK 150 000, plus VAT through his compnay JNM Invest AB.
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, April 1, 2015 | ||
|---|---|---|
| Bo Kastensson Chairman of the Board |
||
| Charlotta Falvin Board member |
Fredrik Hedlund Board member |
Karin Moberg Board member |
| Jonas Mårtensson Board member |
Jérôme Arnaud CEO |
|
| Our auditor's report was submitted on April 1, 2015 | ||
| Ernst & Young AB |
Stefan Engdahl Authorized Public Accountant
We have audited the annual accounts and consolidated accounts of Doro AB (publ) for the year 2014, except for the corporate governance statement on pages 22-28. The annual accounts and consolidated accounts of the company are included in the printed version of this document on pages 18-57.
The Board of Directors and the Managing Director are responsible for the preparation and fair presentation of these annual accounts in accordance with the Annual Accounts Act and of the consolidated accounts in accordance with International Financial Reporting Standards, as adopted by the EU, and the Annual Accounts Act, and for such internal control as the Board of Directors and the Managing Director 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.
Our responsibility is to express an opinion on these annual accounts and consolidated accounts based on our audit. We conducted our audit in accordance with International Standards on Auditing and generally accepted auditing standards in Sweden. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the annual accounts and consolidated accounts are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the annual accounts and consolidated accounts. The procedures selected depend on the auditor's judgement, including the assessment of the risks of material misstatement of the annual accounts and consolidated accounts, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the company's preparation and fair presentation of the annual accounts and consolidated accounts in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Board of Directors and the Managing Director, as well as evaluating the overall presentation of the annual accounts and consolidated accounts.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.
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 the parent company as of 31 December 2014 and of its financial performance and its cash flows 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 2014 and of their financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards, as adopted by the EU, and the Annual Accounts Act. Our opinions do not cover the corporate governance statement on pages 22-28. The statutory administration report is consistent with the other parts of the annual accounts and consolidated accounts.
We therefore recommend that the annual meeting of shareholders adopt the income statement and balance sheet for the parent company and the group.
In addition to our audit of the annual accounts and consolidated accounts, we have also audited the proposed appropriations of the company's profit or loss and the administration of the Board of Directors and the Managing Director of Doro AB (publ) for the year 2014. We have also conducted a statutory examination of the corporate governance statement.
The Board of Directors is responsible for the proposal for appropriations of the company's profit or loss. The Board of Directors and the Managing Director are responsible for administration under the Companies Act and that the corporate governance statement has been prepared in accordance with the Annual Accounts Act.
Our responsibility is to express an opinion with reasonable assurance on the proposed appropriations of the company's profit or loss and on the administration based on our audit. We conducted the audit in accordance with generally accepted auditing standards in Sweden.
As a basis for our opinion on the Board of Directors' proposed appropriations of the company's profit or loss, we examined whether the proposal is in accordance with the Companies Act.
As a basis for our opinion concerning discharge from liability, in addition to our audit of the annual accounts and consolidated accounts, we examined significant decisions, actions taken and circumstances of the company in order to determine whether any member of the Board of Directors or the Managing Director is liable to the company. We also examined whether any member of the Board of Directors or the Managing Director has, in any other way, acted in contravention of the Companies Act, the Annual Accounts Act or the Articles of Association.
We believe that the audit evidence which we have obtained is sufficient and appropriate in order to provide a basis for our opinions.
Furthermore, we have read the corporate governance statement and based on that reading and our knowledge of the company and the group we believe that we have obtained a sufficient basis for our opinion. This means that our statutory 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 recommend to the annual 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.
A corporate governance statement has been prepared, and its statutory content is consistent with the other parts of the annual accounts and the consolidated accounts.
Malmö, 1 April 2015 Ernst & Young AB
Stefan Engdahl Authorized Public Accountant
| 2014 | 2013 | |||||||
|---|---|---|---|---|---|---|---|---|
| SEK m | Q 1 | Q 2 | Q 3 | Q 4 | Q 1 | Q 2 | Q 3 | Q 4 |
| Quarterly profit trend | ||||||||
| Income/Net sales | 233 | 277 | 330 | 437 | 209 | 273 | 279 | 381 |
| Operating costs | -217 | -252 | -290 | -389 | -195 | -248 | -250 | -336 |
| Operating profit/loss before depreciation | 16 | 25 | 40 | 48 | 14 | 25 | 29 | 45 |
| Planned depreciation and write-downs | -11 | -11 | -11 | -10 | -7 | -8 | -9 | -12 |
| Operating profit/loss after depreciation | 5 | 14 | 29 | 38 | 8 | 17 | 20 | 33 |
| Net financial items | -2 | -1 | 1 | -5 | 0 | 0 | 0 | 0 |
| Profit/loss after financial items | 3 | 13 | 30 | 33 | 8 | 17 | 20 | 33 |
| Taxes | -1 | -3 | -6 | -11 | -1 | -4 | -5 | -7 |
| Net profit/loss | 2 | 10 | 24 | 22 | 7 | 13 | 15 | 26 |
| Quarterly balance sheet for the Group | ||||||||
| Intangible assets | 197 | 203 | 201 | 201 | 67 | 172 | 208 | 199 |
| Tangible assets | 6 | 6 | 6 | 5 | 11 | 11 | 9 | 7 |
| Financial assets | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 1 |
| Deferred Tax Asset | 20 | 19 | 19 | 16 | 21 | 15 | 13 | 21 |
| Inventories | 116 | 133 | 189 | 205 | 87 | 132 | 133 | 130 |
| Current receivables | 193 | 199 | 259 | 348 | 133 | 233 | 224 | 267 |
| Cash and bank balances | 70 | 89 | 96 | 78 | 145 | 111 | 68 | 124 |
| Total assets | 603 | 649 | 769 | 853 | 465 | 674 | 655 | 749 |
| Shareholders' equity | 292 | 288 | 316 | 335 | 217 | 203 | 258 | 287 |
| Long -term Liabilities | 108 | 108 | 66 | 60 | 66 | 129 | 136 | 138 |
| Current Liabilities | 204 | 253 | 387 | 458 | 182 | 342 | 261 | 324 |
| Total shareholders' equity and liabilities | 603 | 649 | 769 | 853 | 465 | 674 | 655 | 749 |
| Quarterly cash flow | ||||||||
| Operating profit/loss after financial items | 3 | 13 | 30 | 33 | 8 | 17 | 20 | 33 |
| Depreciation accrding to plan | 11 | 11 | 11 | 10 | 7 | 8 | 9 | 11 |
| Other non cash flow items | -2 | 3 | -14 | -10 | -1 | 2 | 0 | -3 |
| Taxes | -4 | -3 | -4 | -7 | 0 | -3 | -1 | -2 |
| Change in working capital | -38 | 23 | -9 | -34 | 5 | 16 | -47 | 32 |
| Cash flow from current activities | -30 | 47 | 14 | -8 | 18 | 40 | -19 | 71 |
| Investments | -24 | -12 | -8 | -7 | -14 | -94 | -23 | -16 |
| Cash flow from investment activities | -24 | -12 | -8 | -7 | -14 | -94 | -23 | -16 |
| Dividend/ Premium for Warrant Program | 0 | -32 | 0 | 0 | 0 | -24 | 0 | 0 |
| New share issue and premium for warrant program | 0 | 14 | 1 | 0 | 0 | 0 | 0 | 0 |
| Change in interest-bearing liabilities | 0 | 0 | 2 | -5 | 0 | 44 | -1 | 1 |
| Cash flow from financial activities | 0 | -18 | 3 | -5 | 0 | 20 | -1 | 1 |
| Translation differences and other | 0 | 2 | -2 | 2 | 0 | 0 | 0 | 0 |
| Liquid assets (change in liquid funds) | -54 | 19 | 7 | -18 | 4 | -34 | -43 | 56 |
| SEK m | 2014 | 2013 | 2012 | 2011 | 2010 |
|---|---|---|---|---|---|
| Income statement | |||||
| Income | 1,277.7 | 1,142.5 | 837.5 | 745.4 | 632.8 |
| Operating profit/loss before depreciation and write-downs, EBITDA | 129.4 | 113.7 | 83.1 | 75.6 | 63.1 |
| Operating profit/loss after depreciation and write-downs, EBIT | 86.5 | 78.9 | 61.4 | 62.0 | 47.0 |
| Net financial items | –7.2 | –0.7 | –11.9 | 10.9 | –0.6 |
| Profit/loss after financial items | 79.3 | 78.2 | 49.5 | 72.9 | 46.4 |
| Balance sheet | |||||
| Fixed assets | 222.3 | 227.8 | 93.2 | 86.1 | 60.8 |
| Current assets | 552.2 | 397.2 | 282.1 | 214.3 | 186.8 |
| Cash and bank balances | 78.2 | 123.9 | 141.1 | 148.4 | 89.5 |
| Shareholders' equity | 334.8 | 287.0 | 209.0 | 177.3 | 121.3 |
| Long-term liabilities | 59.6 | 138.3 | 73.1 | 88.7 | 46.0 |
| Current liabilities | 458.3 | 323.6 | 234.3 | 182.8 | 169.8 |
| Balance sheet total | 852.7 | 748.9 | 516.4 | 448.8 | 337.1 |
| KEY FIGURES (Definitions on page 62) | |||||
| Return ratios | |||||
| Average return on capital employed, % | 32.8 | 52.2 | 94.5 | 116.1 | 80.1 |
| Average return on shareholders' equity, % | 18.7 | 24.4 | 27.4 | 38.8 | 60.4 |
| Eranings per share, after taxes paid, SEK | 2.9 | 3.68 | 2.34 | 3.62 | 2.04 |
| Cash Conversion Rate | 26.0 | 140 | 65 | 169 | 171 |
| Margins | |||||
| Operating margin, EBITDA, % | 10.1 | 10.0 | 9.9 | 10.1 | 10.0 |
| Operating margin, EBIT, % | 6.8 | 6.9 | 7.3 | 8.3 | 7.4 |
| Net margin, % | 6.2 | 6.8 | 5.9 | 9.8 | 7.3 |
| Capital turnover | |||||
| Capital turnover rate (multiple) | 1.6 | 1.8 | 1.7 | 1.9 | 2.2 |
| Financial data | |||||
| Equity/assets ratio, % | 39.3 | 38.3 | 40.5 | 39.5 | 36.0 |
| Cash flow from current activities | 22.5 | 110.5 | 40.2 | 104.9 | 80.4 |
| Number of employees | 172.0 | 149.0 | 81.0 | 77.0 | 61.0 |
| Liquid assets (incl. unused credit) | 86.7 | 123.9 | 172.6 | 177.5 | 121.5 |
| Investments (incl. acquisitions 2011,2013) | 51.2 | 146.7 | 27.3 | 40.8 | 20.6 |
| 16 December | Doro makes a strategic acquisition within Care: CareTech AB |
|---|---|
| 27 October | Doro to present its report for the third quarter via audio cast and telephone conference |
| 20 October | Doro signs agreement with Vodafone in some key European markets |
| 14 October | Doro AB's Nomination Committee for the 2015 Annual General Meeting |
| 9 October | Doro's partner Consumer Cellular adds Target's US stores to its distribution |
| 8 September | Doro introduces its new smartphone – The Doro Liberto® 820 – with first listing through Telekom Deutschland |
| 5 September | Introducing the Doro Liberto® 820 |
| 21 August | Press release from Doro AB's Extraordinary General Meeting 2014 |
| 12 August | Doro present its report for the second quarter via audiocast and telephone conference |
| 14 July | Doro extends partnership with Australian Optus |
| 11 July | Notice of extraordinary general meeting 2014 |
| 16 June | The leading German operator Telekom Deutschland GmbH lists Doro |
| 15 May | Doro receives final settlement from litigation against Emporia |
| 13 May | Press release from Doro AB's Annual General Meeting 2014 |
| 7 May | Leading Austrian operator Telekom Austria (A1) lists Doro |
| 6 May | Doro to present its report for the first quarter via audiocast and telephone conference |
| 11 April | Exercise of employee warrants in Doro |
| 11 April | Notice of annual general meeting 2014 |
| 14 March | Doro opens experience store in Paris and increases efforts within direct sales channels |
| 25 February | Doro reveals four new mobile phones at the Mobile World Congress in Barcelona |
| 4 Februari | Doro to present its report for the fourth quarter via audiocast and telephone conference |
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.
Net sales for the year divided by the average balance sheet total.
Cash position plus granted unutilised credits from banks and current investments in interest-bearing certificates.
Cash flow from operating activities divided by EBIT.
CASH FLOW Cash flow from operating activities.
Cash flow from operating activities divided by the average number of shares.
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.
Profit/loss after taxes paid divided by the average number of shares for the period.
Profit/loss after taxes paid divided by the average number of shares for the period, after dilution.
Profit/loss before tax divided by the average number of shares for the period.
Profit/loss before tax 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.
Shareholders' equity as a percentage of the balance sheet total.
Profit/loss after net financial items plus interest expenses divided by financial expenses.
Net investments including acquisitions.
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.
Cash and bank balances less interest-bearing liabilities.
Profit/loss after financial items as a percentage of sales for the year.
Average number of employees.
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.
DORO AB Magistratsvägen 10 226 43 Lund Sweden Tel +46 280 50 00 Fax +46 280 50 01
First Floor Bridge House Chiltern Hill Chalfont St Peter Bucks SL9 9UE United Kingdom Tel +44 1753 883 080 Fax +44 1753 883 081
10 Rue de Châteaudun 75009 Paris France Tel +33 1 47 03 61 80 Fax + 33 1 42 96 24 30
BP 446 78055 Saint Quentin en Yvelines Cdx France Tel +33 1 30 07 17 00 Fax +33 1 30 07 17 85
Kråkerøyveien 2 NO-1671 Kråkerøy Norway Tel +47 69 35 86 00 Fax +47 69 35 86 69
1540 Broadway New York NY 10036 USA Tel +1 212 692 1067 Fax +1 212 208 2514
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