Annual Report • Apr 17, 2013
Annual Report
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Annual report 2012
Doro stands for easy to use telecom products for seniors. Today there are about 550 million seniors across the world, in 2020 the number is expected to be more than 700 million.
Doro is the market leader in telecom solutions for seniors. With over 38 years of experience in the telecom industry, the company focuses on developing, marketing and selling mobile phones, software and TeleCare and mHealth solutions specially adapted to the growing population of seniors globally – the silver economy.
Doro's broad range of user-friendly mobile phones is unique and the company's exceptional know-how has been recognised in several international design awards. The products are sold in more than 40 countries on five continents through an extensive network of partners. The company has had average annual growth of 20 percent the last five years, based on a changed strategy focusing on seniors as the main target group.
Doro sells phones with large buttons, clear sound, easy-to-read displays and, in particular, a number of functions that facilitate the user's everyday life. Read more on page 15. Through Doros new business unit Care, Doro provides solutions within mHelth and telecare including products such as wristband alarms, GSM ports and adapted mobile phones. Read more on page 19.
To reach the world's seniors, Doro has built up an international distribution network. This consists of leading operators, specialists and retailers who have natural contact channels to end-users. During the year, Doro's network expanded through several partnerships. Read more on pages 14 and 18.
Doro operates in one of the world's largest markets – telecom, in which it focuses on and is the leading player in the senior segment. There are currently about 550 million people over the age of 65 around the world. By 2020, seniors are expected to number more than 700 million. Read more on pages 13 and 17.
Doro offers seniors telecom products and services designed to meet their needs. With an in-depth knowledge of the target group Doro applies its own resources for product development. During 2012 the company launched for example a smartphone – Doro PhoneEasy®740, first of its kind adopted for seniors – with the newly developed straightforward user interface Doro Experience®, making it easy for users to connect with friends and relatives.
Doro's mission is to help people meeting the challenges of aging to live a simpler and safer everyday life.
2 Doro | Annual Report 2012 Doro | Annual Report 2012 3
Doro's vision is to be the most trusted global brand in easy-to-use telecom products for seniors.
3G phones, tablet and PC interface, and smartphone Mobile Telecare
Acquisition of Prylos & Birdy
International expansion
Several models for seniors
New strategy and new CEO
Challenged the Swedish telecom monopoly
Despite challenging consumer sentiment, Doro delivered a sales increase of 12.4 percent in 2012 – in line with its outlook for the year. Growth was strong in most of the company's markets, particularly the US, Canada and the UK. Doro reinforced its geographical footprint, broadened its product range and strengthened its brand. The company's overall market share in the Western European senior mobile phone market grew in 2012. Doro is now twice the size of the runner-up*.
7,3% Ebit margin in 2012
Sales growth in 2012
average annual revenue growth in the last five years
n Doro continued to ramp up investments in product development, further enhancing the competitiveness of the product mix.
n Agreements in the area of mHealth and teleCare were signed during the year.
n A number of new products in all product areas were launched, including Doro Experience® and a renewed range of 3G feature phones for seniors – a unique product line in the market. Doro's first smartphone adapted for seniors, first of its kind, was launched by the end of the year.
n A number of awards were received, including best consumer app and user-friendliness for our first smartphone, Doro PhoneEasy® 740.
n As of 1 January 2013, the business is organised into two business units – Consumer and Care.
n The global distribution network was strengthened through a number of new agreements including in the UK, Ireland and Australia. New markets include Hungary and Israel.
* GfK Senior Mobile Panel WE10 2012
| MSEK | 2012 | 2011 |
|---|---|---|
| Order book at the end of the period, SEK m | 96.7 | 84.2 |
| Order intake, SEK m | 805.8 | 747.9 |
| Equity/assets ratio, % | 40.5 | 39.5 |
| Equity per share, SEK | 10.80 | 9.16 |
| Earnings per share, SEK | 2.73 | 3.02 |
| Share price at period's end, SEK | 24.50 | 27.30 |
| Market value, SEK m | 474.1 | 528.2 |
| Personnel | 81 | 77 |
SALES PER QUARTER AND ROLLING 12 MONTH MSEK
2012 was an exciting year for Doro. We entered the year with plans for an extensive product development phase and several important launches throughout the year. We aimed for further strengthening our leading position in telecom products for seniors. These efforts paid off, despite the tough economic climate. Our overall market share in Western Europe increased and our leading postion was confirmed 1 .
Our efforts to address the more fragile senior population, with a telecare and mHealth offering, also started to take shape and gradually evolved during the year. Entering 2013, this effort became a business unit of its own – Care – with all the fundamentals to add to Doro's growth. This means Doro will have a two-legged operation going forward, with a dual growth track based on one common technology platform and brand. We strongly believe this is the right path for Doro based on several factors.
The global population of seniors is set to grow rapidly over the coming decades. To capture the opportunities created by this shift in demographics, we need an offering that covers as much of the target group as possible – and the different needs it encompasses. More vital seniors demand smart, easy-to-use and feature-rich mobile phones which simplify the complexity that technology brings. Elderly and more fragile seniors require products and solutions that enable them to live independently with dignity, confidence and security in and outside of their homes.
A GROWING SILVER ECONOMY PROJECTION SENIORS OF TOTAL POPULATION
1 GfK Senior Mobile Panel WE10 2012
The elderly also want to stay home as long as possible, even if they suffer from chronic diseases. This coincides with the economic reality of the social welfare system – which are already under pressure – to fund sheltered accommodation or secondary care in hospitals. In other words, the stage is set for a transformation in the delivery of health and care services. Technology will be key in this shift, and Doro will bring a fresh angle with its easy-to-use mobile phones supplemented by other newly developed products and services in Care. The market response has been positive, reinforcing our belief that mobile solutions will take a substantial part of this market over the coming years. Doro has the potential to become a major player in this market. We see good growth opportunities in this area, which features high margins, stable revenues and high entry barriers.
The Care unit currently accounts for only a small proportion of Doro's total sales. That will not change over night as we still see good growth opportunities for our Consumer unit. Doro has had a an average annual growth rate in the last five years of 20 percent, mainly driven by the high growth in the operations now referred to as the Consumer business unit. Preserving this growth rate will naturally be a challenge as the business increases. Still, in some of our geographical markets, our market penetration is low, presenting clear growth opportunities. Our progress in the UK in 2012 is a great example of how good partnerships supported by strong brand-building and marketing of the right products can result in stellar growth. In the Nordics – where our market position is the strongest with solid profitability – growth was strong, which demonstrates that high market penetration is no obstacle to further expansion when offering new and attractive products. Yet, 2012 also had its challenges, with lower margins in Germany due to increased competition from the low price segment. We believe that margins will improve in Germany in 2013 supported by a more locally adapted product range and other measures. The strength of our brand and a more diverse and attractive product portfolio make up our recipe for countering price competition, which will emerge from time to time in some geographical markets. We will continue to invest in product development in 2013. Our own studies show that about half our target group plan to buy a smartphone next time they upgrade. Today, fewer than one in five seniors have a smartphone, so the market opportunity for progression from feature phones to smart devices is clear. Consequently, we will launch our second smartphone later this year, to enlarge the reach of Doro's smartphone offer.
Our development of software and apps will play an increasingly important role in Doro's way forward – adding both value and fun to our devices in Consumer while facilitating functions for safety and connectivity with our partners' systems in Care. Our Doro Experience® software for PCs, tablets and smartphones, and its application store Doro Selection® is a prime example of how we, as the market leader, can drive innovation and anticipate users' needs.
Doro is today a financially strong company. We have an equity ratio of more than 40 percent. This enables us to consider acquisitions of targets related to technology or market access, potentially generating external growth in both Care and Consumer.
2013 has got off to a promising start with sound order intake. I am proud of the vibrant energy of our staff and am confident that Doro, on the strength of its dual growth track, will benefit from its position as the leading telecom actor in the growing silver economy in the years to come. It will be hard work, but we have a clear roadmap and the assets needed to succeed.
Lund, April 2013
Jérôme Arnaud, President and CEO
Doro focuses on development and design of its products and services, based on one common technical platform serving the two business units Consumer and Care. By outsourcing production and logistics and continuously building an even stronger brand and network of sales partners, Doro has a flexible and capital efficient business set-up.
Doro offers telecom products and services with an in-depth knowledge of the target group. Doro applies its own resources for product development. To gain cost-efficient access to the latest technology, Doro also establishes cooperative partnerships with leading technology companies.
Doro gains insights by compiling information in various ways, including extensive market surveys, focus groups and in-depth studies. This gathering of input is key and ensures that Doro has access to the very latest trends, to continuously improve the capacity and performance of its products. Doro's research and development spending has increased more than 50 percent during 2012 compared to 2011. Consequently to this ambitious effort, Doro's pipeline of launched products was stronger than ever during the year with for example a smartphone, several exciting feature phones, Doro Experience and a more complete offering within the Care segment.
Over the year, work has been carried out to develop a universal platform for mobile phones to further reduce lead times between product development and the market. Furthermore, seven patent applications were submitted in 2012.
Several of Doro's models offer Doro Experience®. This is an Android-based interface that connects seniors with those nearest and dearest to them, also allowing those people to configure the user's phone remotely. Among other functions, the user's calendars and photo albums can be accessed and updated.
Doro develops, in collaboration with partners, applications sought by today's increasingly tech savvy seniors. These include news services, games, etc. and will be available through Doro's own "app-store" adapted for seniors, which is called Doro Selection®.
Doro has its own sales organization that is continuously developing a global sales and distribution network – one of Doro's core competitive advantages - and that provides services, support and warranties to this network. The network for the Consumer unit consists of well-known operators and retailers. The network for Doro's Care unit is somewhat different, also including for example telecare system providers and system integrators.
Production and logistics are functions outsourced to efficient partners making Doro's business cost and capital efficient and easy to adapt to changes in demand.
All production is carried out according to Doro's specifications. In recent years, Doro has outsourced its production to a limited number of suppliers in China even though the company is starting to use European suppliers for some product categories. Decisive in the selection of manufacturing partners is that they are able to maintain production in accordance with Doro's requirements. Combined with extensive procurement expertise and contingency planning, these partnerships ensure reliable deliveries. Doro's manufacturing partners are continuously followed up through regular inspections.
Through the standardization of certain components, such as adapters and boxes, Doro has also been able to enhance the efficiency – not only of the production process but also that of the logistics function. Due to larger volumes, more versions and shortened leadtimes, an efficient logistics function is increasingly important. To minimize costs, Doro works both with direct deliveries to major customers, as well as with central warehouses.
Doro's brand is backed by a complete value chain, both from the perspective of customers and end-users – from a product developed according to the end-user's requirements regarding feel and simplicity, via products that function reliably, a competent sales organization and services, to support and warranties.
Doro's products maintain a high level of quality and the Group places great importance on its quality assurance efforts which are vital in a brand perspective. Doro is also careful in protecting its designs. The efficient protection in the EU is complemented with similar protection in other major markets.
Doro has continued to work with marketing activities adapted to the company's specific markets throughout the sales chain, to optimize return on efforts. For the business-to-business marketing the company has increased its presence through participation in several trade fairs. For reaching the end user, just as in the preceding year, Doro has worked with different media, such as TV, print and online advertisement. Doro is also to be found on Facebook and Twitter and campaigns through these channels have been carried out during the year to constantly increase our fan base and number of followers. During 2012 Doro's has completed some thrilling and brand-building marketing campaigns, especially in the Nordics and in the UK, with clear effect on sales.
Doro PhoneEasy® 615 was launched in a limited edition, signed by the Swedish artist and our new style icon Lill-Babs Svensson, followed by a full Christmas media plan in the Nordics.
During 8 weeks in November and December Doro released an extensive TV and online campaign in UK and Ireland with almost 1.000 spots of 20-second. About 15 million seniors across the two countries have seen the ads.
Doro PhoneEasy® 615 was launched in a limited edition, signed by the Swedish artist and our new style icon Lill-Babs Svensson, followed by a full Christmas media plan in the Nordics.
Doro is the market leader in mobile phones for seniors through its Consumer business unit. The company has acquired this position in recent years with the strategy of developing and selling mobile phones with the highest degree of usability and functions that facilitate and support the user's everyday life and security. Doro's range of easy-to-use mobile phones is unparalleled and has been recognised in several international design awards. The company's products are sold in more than 40 countries on five continents.
Doro's Consumer business unit develops and sells mobile phones predominantly, but also a wide range of assisting consumer electronics for seniors – from fixed line phones to universal remotes, software for both tablets and computers, and accessories.
Doro Consumer's primary target group consists of people over the age of 65. As this population currently comprises about 550 million seniors around the world, the market is very large indeed. By 2020, this group is expected to number more than 700 million people. Thanks to improvements in living standards and healthcare, the senior population is also keeping active for longer and staying healthier than previous generations. However, sight, hearing, movement, dexterity and memory nonetheless deteriorate as the body ages. In response to this trend, Doro Consumer develops products that offer the very best of all aspects from user-friendliness, through sound quality, to adapted up-to-date and relevant services. According to a new study, approximately 80 percent of people over 65 at Doro's main markets now have access to a mobile phone. The trend in the target group is evenly split – one half is considering buying a reliable, stylish and easy-to-use feature phone next time they buy a new mobile phone, and the other half wants a smartphone when upgrading next time.
"Innovative, user-friendly and constantly evolving consumer electronics for seniors"
Over the years, Doro's innovations and product development efforts have also been recognized and rewarded with
ComputerActive Magazine – At Mobile World Congress 2012 ComputerActive Magazine chose Doro Experience® as "the best Consumer app".
CTIA Emerging Technology Awards – At the International CTIA WIRELESS® 2012 Doro Experience® was announced best product for seniors in the category "best at convention".
Universal Design Award – Doro was chosen Company of the Year by The Swedish magazines Mobil: Business and Mobil in Stockholm.
Mobiles d'Or Mobiles d'Or – is an annually award from MedPi and the Magazine Journal of Telecoms and JDLI. The new mobile Doro PhoneEasy® 612 was chosen 2012.
iF Product Design Award – In December 2012, Doro received the prestigious German iF Product Design Award.
Doro is the world leader in mobile phones for seniors, and in Western Europe it is twice the size of the runner-up. In total, Doro has sold more than 1.2 million mobile phones during 2012. In some markets, such as the Nordics, the company's market share has reached 15 percent, while in other dedicated markets, for instance Canada, the market share is about 1 percent, indicating scope for further growth. To retain and expand this position and move with the ever-evolving trends on the market, Doro invests heavily for the future. And, as a direct result, Doro has an offering of 3G feature phones that is unique in the market, and a smartphone based on Doro's proprietary Doro Experience® platform tailored to meet the demands of increasingly tech-savvy seniors.
One of Doro's clear competitive advantages is its extensive network of resellers and distributors which, in the Consumer unit, consists of dominant telecom operators and consumer electronics retailers.
The partner network covers as of today over 40 countries around the world. In 2012 Doro Consumer expanded its geographical footprint even further. In the EMEA region a new subsidiary was started in Germany, also supporting Austria and Switzerland. In UK a sales agreement with the exclusive retail chain John Lewi was signed as well as an extended and expanded agreement with the operator O2, which is also active in the Irish market. In Ireland Doro signed new sales agreements with the operators meteor, Postfone and emobile and in Israel with Orange Israel. Hungary, a new market for Doro, the company deepened its partnership with Telenor.
In the ASIA/PACIFIC region Doro made an extensive move in Australia with agreements with both Vodafone Hutchison Australia and Optus.
The ramp-up in investments in product development has resulted in a more competitive product mix, including Doro's first smartphone and a renewed range of 3G feature phones. In 2013, a number of operators on Doro's markets will begin closing their GSM networks (2G) in favour of 3G and 4G, providing the company with an edge in its range of 3G products. Doro will also continue its investments in smartphones adapted for seniors with the further rollout of existing products and the planned launch of additional products.
The development of 3G feature phones, smartphones and Doro Experience® will be key for the Consumer unit going forward, with the aim of sustained organic growth, both through capitalising on a growing market and increasing market share. The company may also consider acquisitions with a view to securing relevant technology or a stronger geographical footprint.
The Doro PhoneEasy® 622 is Doro's highest-level feature phone to date and includes features such as the ability to record and share videos. It also has a weather forecast application on the home screen. As with all Doro mobile phones, it brings a host of ergonomic and inclusive design benefits such as loud, distinct and amplified sounds using wideband audio technology, adjustable text size, a large clear and bright screen, intuitive menus and the option to hide functions.
Doro Experience® makes using an Android tablet and staying in touch with family and friends easy for everybody. It enables users to send and receive emails and text messages, share photos, surf the internet, enjoy games, listen to web radio, keep track of important contacts and events, and more. It also includes access to Doro Experience® Manager, an internet-based service enabling the user or a trusted relative or friend to easily configure the tablet's apps, contacts, calendar events and more.
Doro has been developing products in the area of assisted living devices for many years. However, a more distinct strategic effort to move into telecare and mHealth took shape in 2012. On 1 January 2013, Care became a business unit of its own in the Doro Group, emphasising the company's strategy of develop the market for telecom products specially adapted to the growing senior population globally.
Doro's Care business unit enables telecare and mHealth services through remote and mobile technology. Better use of modern technology can enrich the lives of seniors simply by helping them to continue living independently at home.
As mentioned earlier, the proportion of elderly are increasing across the globe, in both advanced and emerging economies. For example, by 2050 the over 80s population is expected to comprise more than 10 percent of the total population of Europe, compared to about 4 percent in 2010. The moving age pyramid will pose an economic challenge to the social welfare systems of most countries, and will bring about an increase in age-related government spending, as a percentage of GDP, in the coming decades.
However, when polled, most seniors state that they want to remain in their own homes for as long as possible. As it generally costs less to deliver care and support in the home than to provide sheltered accommodation or secondary hospital care, the stage is set for a transformation in terms of how health and care services are provided. The need for solutions to enable people to live independently at home, thus reducing the increasing financial burden on social welfare systems, is extensive.
While new technologies, which have transformed everyday life in the past 20 years (such as mobile phones and the internet), will be key in this movement, they require expert adaptation to meet users' needs. Business unit Care focuses on adapting new technologies to this purpose to make them usable, relevant and readily accepted by both service users and payers.
By 2020 it is estimated there will be between 2 million and 15 million telecare users across Europe.
Traditionally, remote care provision has chiefly comprised fixed telephony. When support devices have been used, they have generally been more single-purpose in function and stigmatising in design. 'Modern independence services' is Doro's term for services that enable people to retain more autonomy yet still get help when they need it – without any stigma.
As telecare and mHealth solutions traditionally have been delivered through national fixed-line telecom networks, the technical protocol as a norm has been national. Two global trends are now challenging these national markets; the move from analogue fixed telephony to digital and the standardisation that mobile telephony brings. As a global
EU-27 Source: Eurostat 2008, modified by Pajama Ltd., 2012
player within mobile telecom geared at seniors Doro is well positioned to benefit from this. The company brings a fresh perspective to this field which paves the way for successful partnerships aimed at integrated remote telecare and mHealth services.
In the areas of mHealth and telecare, Doro has conducted a number of pilot projects over the year with good results. Development in this area is continuing and more pilot activities will be carried out. Doro has also developed an IP security protocol that can be integrated into the communications of alarm centres, allowing them to communicate more easily with Doro's telecare products. Several Care-products has also been launched for example the Doro Secure 680, a mobile phone that supports GPS providing a precise position for the origin of an alert, and the Doro Secure 211, a m2m gateway that receives signals from an alarm unit and forwards them via a GPRS network. Doro has embarked on its Care initiative by signing a deal in November 2012 with Bosch Healthcare, which will bring the Doro telecare offering to the German and Swiss markets and gradually to the rest of Europe starting in 2013. An agreement with the well known European telecare service provider Verklizan was signed towards the end of the year. Verklizan operates in the Netherlands, Germany, Switzerland and Austria.
The Care business unit currently accounts for around 10 percent of Group sales, but Doro has the fundamentals, based on its existing high-value platform, to become a major player in this field. Doro's commitment to being the technology enabler is reflected in its readiness to partner with other service providers.
The partner network of the Care business unit differs from Doro's extensive sales network in the Consumer business unit.
The partner network for Care will comprise:
In a short period of time, a partner network for the Care business unit has started to grow.
Telco operators
The traditional method of delivering telecare is through a dedicated device. Because of financial pressure, however, social service providers cannot always pay for the devices. Doro's devices enable the provision of telecare services as a supplementary feature of a standard product, such as a phone. This works across the range of Doro's devices and enables the healthcare system to limit spending on telecare services. Modern independence services enable users to retain more autonomy using equipment that also provides standard communication and entertainment access. This aspect of Doro Care products lowers the emotional and psychological barrier to telecare and healthcare solutions – a common challenge in persuading seniors and indeed healthcare system payers to make use of new technology. Standard devices, especially Doro's, are increasingly in use among seniors and this paves the way to introducing relevant services from a younger age and consequently developing a longer, more personalised engagement.
Within the framework of Doro Selection, the company also focuses on mHealth, that is, mobile-based services that help the user monitor and manage health and chronic conditions. All of Doro's mobile phones are already equipped with a button that allows the user to alert care personnel or relatives in the event of an accident. Further, Doro has developed the concept so that care personnel or relatives are alerted when the user has forgotten to take his or her medicine or when a test reveals values outside accepted limits.
In the complementary area telecare, which provides additional security for seniors and those close to them, Doro's range includes a fixed GSM port that uses the mobile network to automatically connect different sensors, such as fall sensors, wristband alarms and smoke detectors to a call center when activated.
Doro AB is a publicly owned limited company (hereafter also referred to as Doro). The company's registered office is in Lund, Sweden, under the corporate registration number 556161-9429. The address of the head office is Magistratsvägen 10, Lund, SE-226 43, Sweden. Doro has subsidiaries in France, Hong Kong, Norway, UK, Germany and the US. The legal structure of the Group is outlined in Note 9.
Doro is a Swedish company specializing in the development, marketing and sales of telecom products specially adapted to the growing worldwide population of seniors. With over 38 years of experience in telecommunications, and sales in more than 40 countries on five continents, Doro is the world's leading brand for easy-to-use mobile phones. The company created the category Care Electronics and in recent years the products have received several highly distinguished international design awards. With the purpose of developing its business, Doro initiated a development within telecare and assisted living devices, entirely in line with Doro's mission. Effective from January 1, 2013, Doro reports its operations according to its two business units, Consumer and Care.
Doro operates in the rapidly changing telecommunication market for seniors in Europe, North and South America and Asia/Pacific.
Doro does not have any production of its own, but production takes primary place in China. The company protects its products by owning the tools, protecting some designs and through active participation in the design, development and quality assurance processes.
Doro coordinates its purchases to obtain economies of scales and an attractive price.
During the year several new products and services were launched, for example:
Doro PhoneEasy® 520X a robust 3G, easy-to-use, camera phone targeted to the active user.
Doro Secure 680 an easy to use clamshell with GPS connected to alarm receiving centres – the first standard mobile phone with Tele Care functionality fully integrated.
Equity/assets ratio
| 2012 | 2011 | |
|---|---|---|
| Revenue, SEK m | 837.5 | 745.4 |
| Operating profit/loss, (EBITDA), SEK m | 83.1 | 75.6 |
| Operating profit/loss, (EBIT), SEK m | 61.4 | 62.0 |
| Profit/loss after financial items, SEK m | 49.5 | 72.9 |
| Profit/loss for the year, SEK m | 52.9 | 57.9 |
| Operating margin (EBIT), % | 7.3 | 8.3 |
| Return on average capital employed, % | 94.5 | 116.1 |
| Return on average shareholders' equity, % | 27.4 | 38.8 |
| Equity/assets ratio, % | 40.5 | 39.5 |
| Cash flow from current activities, SEK m | 40.2 | 104.9 |
| Liquid assets (incl. unused credit), SEK m | 141.1 | 179.9 |
| Number of employees, number | 81 | 77 |
| Earnings per share after tax, SEK | 2.73 | 3.02 |
| Reported shareholders' equity per share, SEK | 10.80 | 9.16 |
Please see page 63 and 64 for financial definitions.
Doro's net sales for 2012 amounted to SEK 837.5 m (745.4), an increase of 12.4 percent compared with 2011.
Growth was primarily driven by the US, Canada, the UK and the Nordic countries where new products were positively received by the customers.
EBIT amounted to SEK 61.4 m (62.0), which gives an EBIT margin of 7.3 percent (8.3). The slightly lower EBIT margin is primarily a result of ongoing investments in product development and a lower margin in EMEA caused by increased competition in the low price segment in Germany.
Profit for the year amounted to SEK 52.9 m (57.9). Net financial income was SEK -11.9 m (10.9). The main difference consists of the revaluation of future rate agreements that gave a negative result in 2012 and positive in 2011.
The tax expense is positive for the year and amounted to SEK 3.4 m, which is SEK 18.4 m lower than last year. The positive full-year tax is an effect from temporary differences related to provisions.
For the full-year, cash flow from current operations amounted to SEK 40.2 m (104.9).
Consolidated net cash flow, which over the year amounted to SEK -7.3 m (56.5), has been impacted by dividends totaling SEK 19.3 m, company acquisitions for SEK -0.4 m and investments of SEK -26.9 m. Investments are attributable to capitalized investments that are primarily attributable to product development.
At the end of the year, Doro had interest bearing liabilities of SEK 1.6 m (2.4) with a cash balance of SEK 141.1 m (148.4). The company also has unutilized credit facilities of SEK 31.5 m (31.5). The equity/assets ratio improved to 40.5 percent (39.5) at the close of the period.
The purpose of the treasury policy is to clarify responsibilities and outline general rules and guidelines in connection with
specific treasury-related areas within Doro, in order to support the operations, reduce financial risks and to increase capital utilization and cash flow.
Forecasted net flows per quarter based on normal business volumes and current price lists (usually valid 3 months) are hedged 75-100 percent. The main net currency flows for Doro today are EUR (inflow) and USD (outflow). Effective from January 1, 2013, Doro adopts hedge accounting in accordance with IFRS.
The Board consists of Bo Kastensson, Charlotta Falvin, Karin Moberg, Jonas Mårtensson, and CEO Jérôme Arnaud. CFO Gunnar Modalen is co-opted to the Board as its secretary.
The Board's proposal for guidelines for remuneration to Group Manangement for 2013 primarily entails that salaries and other remuneration terms for management must be in line with market norms. In addition to a basic salary, management can also receive variable remuneration and bonus which should have a predetermined ceiling and be based on achieved results in relation to established profit targets (and, in certain cases, other key figures).
The maximum cost of variable remuneration and bonus payments and variable remuneration for Group Management should not exceed SEK 10 m. The total cost for fixed and variable remuneration should be decided annually at a sum that includes the company's entire remuneration costs. The company's Group Manangement has the possibility to allocate parts of their fixed and variable salaries to other benefits, such as pensions. Pension plans for management should mainly be defined contribution plans.
Upon dismissal by the company, Group Manangement may be eligible for redundancy payments, which should have a predetermined ceiling. If the employee resigns from his/her position, no redundancy payment will be paid. The Board has the right to deviate from the guidelines if there is considered to be just cause. This proposal is in accordance with the resolution of the 2012 AGM.
Doro carries out product development and design projects together with different external partners. In addition to Doro's own development costs, a substantial part of the development costs are with the manufacturing partner. Doro contracts design companies from various countries and these costs are either fixed or variable.
Doro also sometimes buys technology from external companies. Doro invests in molding tools and design protection to protect the design of products. These costs are activated until such time as the first product is ready for delivery and depreciation is starting.
The Group's development costs for 2012 were SEK 42.5 m (25.9), mainly due to the broadening of the GSM portfolio
Effective from January 1, 2010, Doro reports its operations according to the following geographical regions: Nordic; UK; EMEA (Europe, the Middle East and Africa); USA/Canada and others. Effective from January 1, 2013, Doro reports its operations according to the two business units Consumer and Care.
| Regions | Nordic | EMEA | UK | USA/Canada | Other regions | Total | ||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| SEK m | % | SEK m | % | SEK m | % | SEK m | % | SEK m | % | SEK m | % | |
| Sales/growth | 274.4 | 17.9 | 286.8 | -3.5 | 130.9 | 25.5 | 125.2 | 20.4 | 20.2 | 176.7 | 837.5 | 12.4 |
| EBIT/margin | 48.1 | 17.5 | -2.2 | -0.8 | 5.2 | 4.0 | 12.4 | 9.9 | -2.1 | -10.4 | 61.4 | 7.3 |
| Main customers | 20:20 Mobile | Orange France | Orange UK | Consumer Cellular | ||||||||
| Elkjöp | IVS | 20:20 Ireland | Rogers Wireless | |||||||||
| Main competitors | Emporia | Emporia | Geemarc | Jitterburg | ||||||||
| ZTE | ZTE | Emporia | Sendo |
and the continuing development of Business Unit Care. At the end of 2012, Doro had no patents registered but Doro does have the right to use patents regulated by agreements.
Doro has registered the brands Doro, Care Electronics, Doro PhoneEasy, Ergonomic Sound, Airborne, Audioline and Atlantel. A number of product names, patterns and figures are also protected. During the year seven patent applications was filed according to the companys patent processes.
Investments are made in design, molding tools, certification processes, control equipment, inventory, computers and software systems. Investments amounted to SEK 26.9 m (21.2). See Accounting Principles.
During the year Doro was involved in four disputes.
Doro has a commercial dispute with a former distributor concerning stocks. The value of the stock is SEK 2.7 m, which has been completely written off. Doro is presently evaluating if additional measures are to be initiated.
In 2011, the German court Landgericht issued a ruling preventing German manufacturer ITM Einkaufs GmbH from selling a model similar in design to Doro's phones. The court found that the phone represented an encroachment on one of Doro's registered designs for its Doro PhoneEasy® 410gsm model. In an injunction imposing a considerable fine for infringement, the German Landgericht Hamburg court prohibited Emporia Deutschland from holding, selling, using, importing or exporting in, to or from the European Union a clamshell mobile phone marketed under the Telme brand. The phone was reminiscent of Doro's equivalent products and thus constitutes an infringement of Doro's registered design rights.
Emporia have appealed the decision at a higher court and a decision is pending.
In the court case against TelForceOne in Poland it was brought to a second instance who confirmed the initial ruling. In January 2013 a settlement was agreed between Doro and TelForceOne.
Doro have initiated court proceedings in Sweden against Emporia on the same grounds as in the court case in Germany, see above. A decision is pending.
Regular, quarterly, follow-ups of suppliers' quality take place with the help of the Doro scorecard. This focuses on the suppliers' plant processes and stipulates escalation points in terms of reported quality shortfalls and how these are to be remedied. For all potential new suppliers an on-site assessment is conducted including an initial evaluation linked to Doro's "Code of Supplier Conduct". Product quality is also checked continually by assessing individual batches.
Doro's Quality and Regulatory Manager validates the company's products to ensure that they meet the prevailing legal requirements in the relevant markets and correspond to technical specifications and environmental regulations.
Doro has a long term target of 10 percent for the operating margin and an annual sales growth target of 20 percent over the coming years.
The Company's long-term target is to pay a dividend of approximately one third of the net profit after tax.
Finally, the Board has set a maximum debt/equity-ratio of 1.0 (interest bearing debt/equity).
The Board has proposed a dividend of SEK 1.25 per share to be paid in 2013.
At present, Doro holds a net cash position, and, thus a strong financial base and readiness to finance growth through investments, either organic or via acquisitions.
The Group issues regular financial reports providing regular quarterly data for the following:
The Board has determined the following publication dates for quarterly reports in 2013:
| January–March | May 14 |
|---|---|
| January–June | August 21 |
| January–September | November 8 |
| Year-end report | February 14, 2014 |
The quarterly reports will be published on www.doro.com.
In addition to Group Management and finance staff, the Parent Company, Doro AB, provides service functions for the rest of the Group.
Marketing and product development are coordinated by the Parent Company, as well as product and quality department which monitors design and tooling issues, as well as quality assurance for deliveries. Purchasing and logistics is also coordinated by the Parent Company responsible for material flows within the Group.
Doro AB reported sales of SEK 831.6 m (733.7). The profit after financial items was SEK 32.8 m (56.1).
Doro AB is responsible for the subsidiaries' financing. At year-end the net cash of the Parent Company was SEK 138.6 m. Shareholders' equity was SEK 107.7 m (157.2).
Doro's risks and uncertainty factors are mainly related to the ability to continuously develop competitive products, supplier interruptions, customer relations and exchange rate fluctuations. Further information about Doro's financial risk management can be seen in Note 23. Other risks are explained below.
Doro is primarily active in telecommunications and is affected by the general price reductions and cost trend in the consumer electronics industry. This means that sales prices could fall faster than the manufacturing prices.
Doro works proactively with forecasting tools and evaluation programs for production planning and stock monitoring. The company cooperates with suppliers, enabling good flexibility based on forecasts converted into purchase orders. Altered demands from the authorities or technological advances can mean that products in stock will have a significantly lower sales value than expected.
Doro currently has no net debt. Doro has agreed credit facilities of SEK 31.5 m. In the event that the company would need further credit, it has well established relations with selected banks.
Doro's cash flow from operating activities is usually slightly negative during the first quarter of the year and positive during the remaining year. The company's cash and credit volumes are adapted to be able to meet these fluctuations.
Doro is active in competitive markets. The division into different market segments is a means of meeting the competition.
Furthermore, Doro continuously conducts market research to develop consumer insight, to be first in developing differentiating factors and to increase productivity. The development of the brand and its familiarity among seniors also represents an asset that differentiates Doro from its competitors.
In recent years Doro has experienced very low credit losses, due to the fact that the main customer group is large businesses groups with regular trade. In 2012 Doro had confirmed bad debt loss of SEK 0.1 m (0.1), with no impact on the Income Statement.
During 2012, no single customer accounted for more than ten percent of the revenue. In 2011, one customer accounted for 11 percent of the revenue. Of these, 79 percent were attributable to region Europe, Middle East and Africa and 21 percent to the United Kingdom.
Complaint risks concern costs for correcting faults that arise in the products supplied by Doro. Guarantees usually cover 12-24 months. Different allocation requirements are made for the outstanding guarantees. Comprehensive quality assurance has improved quality in recent years.
Doro has a coordinated insurance portfolio. A general policy has been established in consultation with external experts regarding the components of the portfolio, the amounts involved and the distribution of risk between the Parent Company and subsidiaries.
Political risk is seen as the risk when authorities in different countries create difficulties for business. All manufacturing is carried out in Asia (this also applies to virtually all competitors).
This risk may be considered to correspond to the cost that may incur in reducing its environmental impact. Doro has no manufacturing units of its own. Doro actively complies with new environmental directives. So far Doro has not had any problems meeting different forms of fees for recycling electrical waste, packaging and used batteries.
This risk is seen as the cost that may be incurred by Doro for running various legal processes and any costs incurred in relation to third parties. In 2012, Doro was involved in four disputes. Doro works with external expertise as a preventative measure and is proactive in protecting its rights.
The Annual General Meeting will be held at 15:00 p.m. on May 14, 2013 at the Hotel Scandic Anglais, Humlegårdsgatan 23, 102 44 Stockholm, Sweden.
The 2012 Annual General Meeting resolved to authorize the Board to make a decision to issue a total of at most 1,930,000 shares, entailing an increase in share capital of at most SEK 1,930,000, corresponding to a dilution of approximately 10 percent of the company's share capital and total voting rights. The authorization applies until the 2013 Annual General Meeting.
The Board proposes that the accumulated profit in the Parent Company of SEK 99,607,432.16 disposes a dividend (SEK 1.25 per share) of SEK 24,186,467.5 to the shareholders and SEK 75,420,964.66 to be carried forward as retained earnings.
Doro's growth is expected to continue in 2013 with expansion initiatives planned in both business units Consumer and Care. 2013 has started with a bigger order book and a higher order intake than previous year. No detailed forecast for 2013 is given.
Doro presented several new mobile phone releases at the Mobile World Congress in Barcelona: Doro PhoneEasy® 622, a modern and stylish feature phone with smart technology aiming at the consumer market, and Doro Secure® 681, the company's second handset specifically adapted for the delivery of telecare services both inside and outside the home.
Doro's products and services are designed to make day to day life simpler and more secure for our end customers. Operations are conducted in a responsible and honest manner to ensure and safeguard long term sustainable development. We want to earn the trust of all of our stakeholders, from shareholders and others active in the capital market, via employees and suppliers to customers and society. This is not simply a key value, it also plays an important role in our success. For this reason, Doro maintains a sustainability perspective in all of its decisions and processes.
Doro's core values are Trust, Care and Ease.
Doro creates and develops products with a high level of quality. When we develop a product, we always try to make it a little better than the product that preceded it. We try to improve it not only in terms of performance, but also developing it to be more energy efficient, ergonomic, user friendly and recyclable – we also keep service very much in mind. Doro takes a holistic view of the lifecycle of its products.
For us, quality and respect for the environment and people are among the 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 several environmental directives and stringent legal requirements. Doro's quality and environmental manager is responsible for Doro following the laws and regulations that apply. In addition, each country has an environmental officer responsible for ensuring that the respective countries' environmental legislation is followed.
One example of a EU directive which has a certain bearing on Doro's operations, is the energy-related products directive, ErP1). For Doro, this involves safeguarding ecological design, an energy efficient production process and low energy consumption in battery chargers and external power supply units. The first part of the ErP directive came into force in April 2010 and the second step was taken in April 2011. Doro's products meet these requirements. Mobile telephones are now also covered by the nickel directive, which limits the amount of nickel that may be released during normal contact with skin.
These core values pervade Doro's corporate culture and act as guiding principles in Doro's product development and interaction with employees, customers and end users. In a sector undergoing rapid change, Doro must have the flexibility necessary to be able to deliver the best easy to use products and at the same time take responsibility throughout the chain.
1) Energy-related Products.
Doro seeks to use materials with the least possible impact on the environment. As more environmentally sound materials are developed, we assess whether they can replace those currently used.
Registration of chemicals through REACH1) concerns importers or manufacturers of chemical substances. As an importer of products reaching their final technical specification and form at plants outside EU and since these products do not emit any chemical substances during normal use, Doro is not required to register or report its use of any chemicals. However, the products shall comply with the information requirements within REACH's SVHC section2). These requirements do not impose any limits per se but do demand that distributors and users be informed if the threshold value of any listed chemical is exceeded.
There are several EU directives that affect Doro's operations. Among the more extensive of these is the Directive on the restriction of the use of certain hazardous substances (RoHS)3) from 2006 and the 2012 Recast of the RoHS directive, which is the second stage of the directive. Today, the directive also entails a requirement for CE labeling effective from January 2013 and not simply environmental labeling as previously.
Doro does not conduct any operations requiring permits or registration. Nor does Doro own any production units – instead, it has extensive cooperation with several plants that manufacture Doro's products. Various environmental requirements are imposed in reviews of these plants. The two major suppliers are ISO 14001 certified, and an increasing number of plants are working with different environmental programs with the purpose of gaining ISO 14001 certification.
In its own operations, Doro seeks to minimize its external impact on the environment through the efficient use of resources at all levels. Product and packaging logistics are optimized through a continuous focus on planning and review of volume requirements regarding packaging and instructions. As far as can be justified by business considerations, Doro uses environmentally certified suppliers and transport companies. Doro also use video and telephone widely.
Another directive affecting Doro's operations is that dealing with waste of electrical and electronic equipment WEEE4) and the directive from 2008 concerning batteries, which entails importers of batteries being required to bear the costs associated with battery waste.
As an importer, Doro must also ensure that all battery cells are labeled in accordance with the directive. Doro is also part of the packaging industry's own recycling organization.
Doro cooperates with mobile operators and vendors through GSM World to develop energy-efficient infrastructure and to ensure that their customers use energy-efficient handsets. Examples of these activities include:
1) Registration, Evaluation, Authorization and restrictions of Chemicals.
2) Substances of Very High Concern.
3) Restriction on the Use of Certain Hazardous Substances
4) Waste of Electric and Electronic Equipment.
Other important cornerstones in Doro's operations are honesty and conducting business with great personal integrity and with respect for the integrity of others. Clear guidelines for employees and suppliers are given in our code of ethical conduct. It is the responsibility of each manager to ensure that their employees are familiar with these rules and adhere to them. The company also applies the Doro Corporate Social Responsibility Policy, which is based primarily on the generally accepted principles of the United Nations.
Through its "Supplier Score Card", Doro gives direct feedback to suppliers.
Since 2008, Doro has conducted third-party audits to assure adherence with the company's policies. If discrepancies are discovered, Doro is entitled to discontinue all cooperation with the supplier. In this regard, inspections are regularly conducted at all plants.
Great and equal potential for development Recruiting, retaining and developing the individuals who bring the right kind of expertise and attitude is therefore crucial. For this reason, Doro attaches considerable importance to the satisfaction of its personnel. We strive to give our employees the room and resources to grow, both in their current positions and through opportunities for advancement.
Doro aims to keep paths for decision making short and has the objective that each individual should feel involved in, and responsible for, the development of the company.
In Doro's flat organization, responsibilities and authority are delegated, requiring that employees work with a large measure of freedom.
One advantage with Doro's organization is that sales people, product developers and marketers live close to customers and suppliers – an aspect that is increasing in importance as joint development projects increase in number and are completed quicker. Another advantage is that Doro among its employees have persons from diverse origin, speaking a variety of languages and understanding 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 competence between
the various companies is relatively well developed and the ambition is to formalize training activities, primarily in sales methods and product development.
Doro's Ethical Code provides guidance to both employees and suppliers to ensure responsible behavior towards all of our stakeholders.
With regard to Doro's employees, we focus in particular on:
With regard to Doro's customers, we focus on:
With regard to Doro's suppliers, we focus on:
With regard to society, we focus on:
With regard to Doro's shareholders, we focus on:
• Communicating with shareholders
The complete text of Doro's Ethical Code is available at www.doro.com.
Sales per employee, SEK m/person
The confidence of the market, shareholders and the general public is crucial to Doro's success. It requires responsible, committed and transparent work by the Board of Directors and management team. It is therefore reassuring to know that our company has a well-functioning Board of Directors, which, over the year, cooperated constructively with the company's management team and other employees. The role of the Board of Directors is particularly important in a global business environment with faster changes both in regard to the macro climate and the specific business conditions in which Doro operates, as well as the increased competition we are now seeing in some of our markets. We are well prepared to meet developments in the market and can quickly adjust the company to new conditions.
We are also in a period of significant investment in new products and services that enable the world's seniors. This imposes great demands on the Board's capacity to reach well-founded decisions and to balance the risks and opportunities that are always associated with commercial operations.
Equally important for Doro's credibility is our openness to the market and that we provide continuous information on our ongoing measures and the results of our operations. This represents the foundation for a value-generating relationship with all of our stakeholders where our shareholders, both existing and new, must feel secure in receiving correct information at the right time.
Doro AB is incorporated under the laws of Sweden with a public listing on the OMX Nasdaq Stockholm. The governance of Doro is based on Swedish legislation and regulations primarily the Swedish Companies Act, but also the rules of Nasdaq OMX Stockholm, the Swedish Code of Corporate Governance (the Code) and other relevant rules. In addition, governance follows the Articles of Association, internal instructions and policies and recommendations issued by relevant organizations. 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. It does form part of the formal Annual Report and it has been reviewed by the company's auditors.
Doro AB had 7 072 shareholders according to the 2012 year-end shareholders register published by Euroclear Sweden AB. Foreign investors held about 31.8 percent of the shares. The number of shares in Doro AB at year-end 2012 amounted to 19,349,174 shares. Doro's market capitalization as of December 31, 2012, was SEK 474.1 m.
The largest single shareholder is Försäkringsaktiebolaget Avanza Pension with a holding of 10.0 percent of the shares.
The Code is applicable to all companies which are listed on the OMX Nasdaq Stockholm. The aim is to improve corporate governance in listed companies and foster trust in companies both among the general public and in the capital market. The Code is based on the "comply or explain" principle, which means that it is possible to deviate from the Code provided that an account is given of the chosen alternative solution and the reasons for the deviation. The Code is available on the website www.bolagsstyrning.se.
The Annual General Meeting is the company's highest decision making institution. The Annual General Meeting appoints the
Board and Chairman of the Board for Doro AB. It also appoints the auditors of the company.
The Annual General Meeting also decides how profits or losses are to be appropriated. Other issues that arise are issues that are mandatory items under the Swedish Companies Act. The Annual General Meeting shall be held within six months of the close of the financial year. Shareholders who are registered in the company's share register, and who notify the company of their participation, are entitled to participate in the Annual General Meeting.
The Annual General Meeting decides on the members of the company's Nomination Committee. The Nomination Committee's task is to submit proposals for Board members and auditors and their fees as well as fees for work on the Board committees to the next Annual General Meeting, at which the Board and auditors are due to be elected. The Nomination Committee also proposes the chair of the AGM.
The Nomination Committee consists of Tedde Jeansson who is elected Chairman of the Nomination Committee, Arne Bernroth nominated by Nordea Investment Funds and Bo Kastensson (Chairman of Doro AB).
The Board of Directors of Doro AB consists of the Managing Director and four other members elected by the Annual General Meeting on March 21, 2012. A more detailed presentation of each member is given on page 34.
The company's CFO is co-opted to the Board as its secretary. Other company executives take part in Board meetings in a reporting capacity.
The Board held ten meetings in 2012, five times in Stockholm, three times at Doro's premises in Lund and one meeting was held at another place in Sweden. In addition, one meeting was held by telephone. All board members attended all meetings.
The company's CFO and Board Secretary, was present at almost all meetings. The Board continually addresses subjects such as the business situation, the budget, periodical accounts and cost efficiency.
Each Board meeting was governed by an approved agenda. Supporting documentation for the agenda items as well as a list of outstanding issues from previous meetings were distributed to the Board Members a week prior to the meetings.
Meetings of the Remuneration and Audit Committees have been reported to the Board and the corresponding minutes have been distributed. Each month, the previous month's results are sent out along with comments.
The Rules of Procedure for the Board apply to the work to be carried out by the Board of Doro AB. The rules of procedure are based on the Articles of Association, the Swedish Companies Act and the Code. The Board's field of work covers the entire Doro Group.
The field of work also includes Doro's relations to shareholders, the general public, authorities and other organizations and interested parties. The Board is responsible to the Annual General Meeting in accordance with the fiduciary duties and the duties of care, which are placed on the Board by the rules of procedure and by applicable laws and regulations. The Board is responsible for the implementation of the resolutions of the Annual General Meeting and the business objectives set out in the Articles of Association. The Board has the authorities granted by the Articles of Association and the Swedish Companies Act.
The Board appoints the Managing Director of the company. The distribution of work between the Board and Managing Director is indicated in the Board's rules of procedure and the Managing Director instruction. These state that the Board is responsible for the governance, supervision, organization, strategies, internal control and policies of the company. In addition, the Board decides on major investments and matters of principle relating to the governance of subsidiaries, as well as election of Board members in subsidiaries and the Managing Director.
The Board also establishes the quality of the financial reporting. The Managing Director in turn is responsible for ensuring that the company is administered in accordance with Board's guidelines and instructions.
In addition, the Managing Director is responsible for budgeting and planning the company's operations so that specified goals are attained. The Managing Director ensures that the control environment is good and that the Group's risk taking at any time is compatible with the Board's guidelines. Any deviations have to be reported to the Board. The Board also receives regular information from the Managing Director through a monthly report.
The Board as a whole bears responsibility for remuneration issues and other employment terms for senior executives and three of the heads of subsidiaries. The Chairman of the Board approves principles for remuneration to the management reporting to the Managing Director. Employment terms for eight people are dealt with.
The fees paid to the Board are decided each year at the Annual General Meeting. Proposals for fees are discussed beforehand by the Nomination Committee. On the other hand, the Board decides on the remuneration of the Managing Director.
A special Remuneration Committee, appointed by the Board consists of Bo Kastensson and Karin Moberg.
The Remuneration Committee held its first meeting on February 14, 2012 to decide on 2012 principles.
Both members were present at the meeting. A second meeting was held on November 7, 2012 to discuss current salary level, both members were also present at this meeting. The meetings were minuted and reported at the next Board meeting.
Fees paid to the Board during the financial year totaled SEK 800,000, in accordance with a decision of the Annual General Meeting. Of the Board's total fee, SEK 350,000 was paid to the Chairman of the Board and SEK 150,000 to other Board members. The company's Managing Director did not receive any fee.
The company's Managing Director received salary totaling SEK 3,437 m during the equivalent period. The Managing Director did not receive any variable remuneration or bonus for 2012. Salary received by the other six members of Group Management totaled SEK 5,102 m. Variable salary for these six members were paid for 2012 at the amount of SEK 188 t. Other Group Management did not receive any bonus for 2012. Amongst the Group Management there are two persons engaged
as consultants; CFO on an interim basis starting October 2012 and another person who has been engaged the full-year. Both consultants invoice their fees to the company. In 2012 total invoiced fees were SEK 2.6 m. All employed members of Group Management, and the Managing Director, receive the additional benefit of a car. Annual General Meeting held on March 21, 2012 decided on guidelines for Group Management pertaining to the year 2012. Under the current contract of employment the Managing Director and the company has the mutual termination notice period of 12 months.
In the event of termination by the company, 12 months' salary is payable. Applicable salary, bonus and benefits are payable during the period of notice. The other members of Group Management have notice periods of 3–9 months.
The seven wholly-owned active subsidiaries Doro A/S, Doro GmbH., Doro SAS., Doro UK Ltd., Doro Hong Kong Ltd., Doro Inc. and Doro Incentive AB are governed by their own Boards in the country concerned, principally consisting of representatives of Doro AB in Sweden. The Managing Director of Doro is the Chairman in each subsidiary, except in Doro SAS in France where Bo Kastensson is the Chairman. These subsidiaries report to the Board of Doro AB in Sweden at every meeting. This report also includes the results of operations and financial position of the company concerned.
The Financial Committe consists of Chairman of the Board Bo Kastensson and the Board member Jonas Mårtensson together with the company's Managing Director Jérôme Arnaud and CFO Gunnar Modalen. The committees' tasks are primarily to provide the Board with proposals regarding interim reports as well as acquisitions and Group financing.
The Board of Directors has ultimate responsibility for ensuring that the company has a satisfactory system for internal control and for preparing reliable financial statements. It is the responsibility of the Board of Directors and the management to monitor and identify the business risks and to guide the company to tackle the most significant risks.
The auditors inspect how the company is managed by the Board of Directors and the Managing Director, as well as the quality of the company's financial statements. The registered auditing firm of Ernst & Young AB was elected as auditor at the 2012 Annual General Meeting with a mandate period of one year. Göran Neckmar is the chief auditor. Fees for audit engagements in the Group in the last three years totaled SEK 779,000 (2012), SEK 600,000 (2011) and SEK 1,000,000 (2010) respectively.
The scope and focus of the audit are presented by the company's auditor. A review is carried out based on the quarterly report from September 30 and the result of this is reported at the audit meeting with the Audit Committee.
In 2012, the Audit Committee consisted of Board members Bo Kastensson, Karin Moberg, Jonas Mårtensson and Charlotta Falvin. One meeting was held on February 14 and one meeting was held on November 7. The meetings were minuted in the same minutes as for the Board meeting held at the same time.
All members were present at the meetings, which were also attended by the auditor Göran Neckmar. The Audit Committee fulfils the guidelines regarding independence in the Swedish Companies Act.
The Committee's primary task is to support the Board in fulfilling its work in the areas of audit and internal control, accounting and financial reporting.
Work in 2012 focused on follow-up of the 2011 audit and the hard close audit carried out as of September 30, 2011. In addition, the third quarter interim report (for the period up to and including September 2011) was reviewed by the committee.
The 2012 Annual General Meeting resolved to authorize the Board to make a decision to issue a total of at most 1,930,000 shares, entailing an increase in share capital of at most SEK 1,930,000, corresponding to a dilution of approximately 10 percent of the company's share capital and total voting rights. The authorization applies until the 2013 Annual General Meeting.
An important part of the control environment is that the organizational structure, the decision hierarchy and the authority to act are clearly defined and communicated in the company's guiding documents. Please refer to page 33 for the Board's report on internal control.
The group-controller is responsible for escalating formal issues to CFO. Considering the limited size of the finance department, the company has decided to not retain an internal auditor.
• Q2 report • Business development
August
• Strategy
According to Swedish code for corporate governance, the Board must ensure that the Company has good internal control and remains informed about and evaluate the functioning of the Company's system for internal control. In addition, the Board shall produce a report showing how internal control regarding the financial statements is organized and, if there is no internal audit, evaluate the need for such a function and justify their position
Control environment with the aim of creating and maintaining a working control environment, the Board has established a number of fundamental documents that are important for the financial reporting. These specifically include the Board's working procedue, instructions for the Managing Director and the committees. The primary responsibility for enforcing the Board's instructions regarding the control environment in the daily routines resides with the Managing Director. He reports regularly to the Board as part of established routines. Furthermore, there will be reports from the Company's auditors.
The internal control system also builds on a management system that is based on the Company's organization and methods of running the business, with clearly defined roles, areas of responsibility and delegated authorities. The controlling documents also play an important role in the control structure e.g. policies and guidelines.
The Group carries out an ongoing risk assessment for identifying material risks regarding the financial statements. With regards to the financial statements, the main risk is considered to comprise material misstatements in the accounts e.g. regarding book keeping and the valuation of assets, liabilities, income and expenses or other discrepancies. Fraud and losses through embezzlement are a further risk.
Risk management is built into each process and different methods are used for evaluating and limiting risks and for ensuring that the risks that Doro is exposed to are managed in accordance with determined policies, instructions and established follow-up routines. The purpose of this is to minimize possible risks and promote correct accounting, reporting and the release of information.
These are intended for managing the risks that the Board and the management consider to be significant for the business, the internal control and the financial statements.
The control structure partially consists of clear roles within the organization which facilitate effective distribution of responsibilities for specific control activities with the aim of discovering and, preventing the risk of errors in the reports in time. Such control activities can be clear decision making and decision processes for major decisions such as larger investment, divestments, agreements, analytical follow-ups etc. An important task for Doro's staff is also to implement, further develop and enforce the Group's control routines and to implement the internal control for dealing with critical business matters. Those responsible for the process at different levels are responsible for implementing the necessary controls regarding the financial statements. In the annual accounts and reporting processes there are controls pertaining to valuation, accounting principles and estimates.
The continual analysis made of the financial statements, together with the analysis made at Group level is very important for ensuring that the financial statements do not contain any material misstatements.
The Group's controller plays an important role in the internal control process, having the responsibility for the financial statements from each unit being correct, complete and on time.
Doro works together with the communication bureau Vero Kommunikation AB that aims to promote completeness and correctness in financial reports released to the stock market. Through regular updates and messages, the employees concerned are made aware of, and have access to, information about changes to accounting principles and reporting requirements or other released information. The organization has access to policies and guidelines.
The Board receives financial reports monthly. The external information and communication is notably governed by the Communication Policy, which describes Doro's general principles for the release of information.
Doro's adherence to the adopted policies and guidelines is followed-up by the Board and the Group Management. The Company's financial situation is discussed at each Board meeting. The Board's Remuneration and Audit Committees play important roles with regards to for example, remuneration, financial statements and internal control.
Before publication of Interim Reports and Annual Reports, the Board reviews the financial statements.
Doro's management conducts a monthly follow-up of results with analyses of deviation from budget, forecast and previous years. All monthly accounts are discussed within the Group Management. The external auditors' tasks include an annual review of the internal control in Group subsidiaries.
The Board meets with the auditors two times each year, partly to go through the internal controls and partly, in specific cases, to give the auditors additional tasks to undertake specifically targeted internal controls.
Against this overall background, the Board does not consider it necessary to establish a special internal audit.
The Board of Doro AB
Please find additional information on www.doro.com:
| Name | Bo Kastensson | Charlotta Falvin | Karin Moberg | Jonas Mårtensson | Jérôme Arnaud |
|---|---|---|---|---|---|
| Position | CEO Kastensson Holding AB |
Founder and Managing Director of FriendsOfAdam |
Partner in Alted AB |
President and CEO, Doro AB |
|
| Qualifications | Bachelor of Arts, Lund University |
Master of Science in Business administration, Lund University |
Bachelor of Science in Economics, Stock holm University |
Bachelor of Science in Economics, Stockholm School of Economics |
Master of Science, École Centrale de Paris |
| Year elected | 2006. Chairman since 2007 |
2011 | 2009 | 2007 | 2007 |
| Born | 1951 | 1966 | 1963 | 1963 | 1963 |
| Nationality | Swedish | Swedish | Swedish | Swedish | French |
| Other assignments | Chairman: • Coromatic Group AB • Axema Access Control AB Boardmember: • Pricer AB • Skandinaviska Kraft AB • Reservekraft AS Industrial Advisor EQT |
Chairman: • MultiQ International AB • Barista BFT Coffee AB • Ideon AB Boardmember: • Axis AB • Sydsvenska Industri & Handelskammaren • Fasiro AB |
Chairman: • Caretech AB Boardmember: • IAR Systems Group AB • SBAB |
Chairman: • Ownpower Projects Europe AB • Transticket AB Boardmember: • PAN Vision AB • Deltaco AB • IAR Systems Group AB |
– |
| Dependence - Company - Owners |
No No |
No No |
No No |
No No |
Yes No |
| Previous experience |
Former CEO of Bewa tor Group, Incentive Development and various positions Axel Johnson Group |
VD TAT, VD Decuma, COO Axis |
Managing Director Telia e-bolaget, Marke ting Director and Com munications Director TeliaSonera |
Senior positions within corporate finance at SEB Enskilda, Maizels, Westerberg & Co and Nordea |
Matra Nortel Communications |
| Own and related party holdings 2012 |
513,000 shares (through companies) |
– | 20,000 shares | 165,000 shares (through company) |
147,004 shares 200,000 warrants |
| Own and related party holdings 2011 |
506,000 shares (through companies) |
– | 20,000 shares | 165,000 shares (through company) |
147,004 shares 200,000 warrants |
| Attendence Board |
10/10 | 10/10 | 10/10 | 10/10 | 10/10 |
| Attendence Audit committee Rem. committee |
2/2 2/2 |
2/2 – |
2/2 2/2 |
2/2 – |
– – |
| Remuneration Board |
350,000 | 150,000 | 150,000 | 150,000 | – |
Authorized accountant, Ernst & Young AB, Malmö. Doro's auditor since 2011.Extensive experience of auditing listed companies as MultiQ International AB and Victoria Park. Born 1956. Holdings: 0 shares, 0 options.
The shareholding data reported above includes shares owned through companies and related parties and reflects holdings as per December 31, 2012.
| Namn | Jérôme Arnaud | Gunnar Modalen |
Thomas Bergdahl |
Ulrik Nilsson | Caroline Noublanche |
Chris Millington | Louis Jouanny |
|---|---|---|---|---|---|---|---|
| Position | President and CEO Doro AB and Managing Director of Doro SAS, France. Director Business Unit Care. |
CFO | Vice President Product Development |
Vice President Operations |
Director Business Unit Consumer |
Director Brand and Marketing Strategy and Managing Direc tor UK/IRE |
Head of Sales Business Unit Consumer |
| Employed since | 2000 | 2012 (consultant) |
2002 | 1991 | 2011 | 2005 | 2011 (consultant) |
| Qualifications | Master of Science, École Centrale de Paris |
Bachelor of Business Admi nistration, Lund University |
Master of Science in Indus trial Engineering and Manage ment, Institute of Technology Linköping |
Telecom technician |
HEC business school, Paris |
Business Studies and Finance, Leeds City College |
Master of Science, ESIEA, Paris |
| Born | 1963 | 1959 | 1964 | 1971 | 1976 | 1970 | 1958 |
| Nationality | French | Swedish | Swedish | Swedish | French | British | French |
| Previous experience |
Working with business develop ment, Matra Nortel Communications |
CFO at Rederi AB TransAtlantic, VP Perstorp Group |
Director of manufacturing, Anoto |
Supply manager | CEO and founder of Prylos |
Sales Manage ment and Busi ness Develop ment at Oregon Scientific, Sony UK and Kenwood Electronics UK |
VP EMEA, Mobile Computing Mar keting Programs, Fujitsu |
| Own and related party holdings 2012 |
147,004 shares 200,000 warrants |
– – |
50,000 shares 50,000 warrants |
632 shares 40,000 warrants |
– 30,000 warrants |
20,000 shares 52,000 warrants |
– – |
| Own and related party holdings 2011 |
147,004 shares 200,000 warrants |
– – |
50,000 shares 50,000 warrants |
632 shares 40,000 warrants |
– 30,000 warrants |
20,000 shares 52,000 warrants |
– – |
The shareholding data reported above includes shares owned through companies and related parties and reflects holdings as per December 31, 2012.
Doro has been listed on the OMX Nasdaq Stockholm, Nordic list, Small companies since 1993.
Between January 1, 2012 and December 31, 2012, Doro's share price decreased from SEK 27.30 to SEK 24.50, a decrease of 10.3 percent.
Over the same period, the OMX Stockholm PI increased by 9.5 percent. During the year, the highest price paid for Doro shares was SEK 33.90 and the lowest price paid was SEK 21.50. Last price paid at year-end was SEK 24.50 giving a market capitalization of SEK 474.1 m (528.2).
At January 1, 2012, the share capital in Doro AB amounted to SEK 19,349,174 divided among 19,349,174 shares, corresponding to a nominal value per share of SEK 1.00. Each share entitles the holder to one voting right and all shares convey equal rights to participation in the assets and earnings of the company. The share capital in Doro AB has not changed during 2012.
At the close of 2012, Doro had 7,072 shareholders, compared with 6,114 shareholders at the end of the preceding year. The proportion of foreign shareholders at year-end amounted to 31.8 percent (35.4). Of the Swedish investors 37.2 percent was held by legal entities and 31.1 percent was held by natural persons.
At the end of the year, Group Management had a combined holding of 217,636 shares in Doro. At the same time, the members of the Board of Doro held 845,004 shares. At the close of the year, Doro AB held no treasury shares.
The largest single shareholder with holdings above 10 percent of shares is Försäkringsaktiebolaget Avanza Pension.
The transferability of shares is not limited by legislative regulations or Doro's Articles of Association. The Company is
unaware of any agreements between shareholders that could entail any limitations to the right to transfer shares.
Neither Doro AB nor its subsidiaries are party to any material agreement taking effect, being amended or ceasing to apply in the event that control of the Company or Group companies changes due to a public takeover bid.
In accordance with the mandate given by the Annual General Meeting on March 23, 2011, all of Doro's employees have been offered to purchase warrants granting them the right to acquire shares at the target price of SEK 35.30 during April 1, 2014 – June 30, 2014.
39 employees have subscribed for 752,770 warrants, including the CEO who has subscribed for the full 200,000 warrants allocated to him. Doro Incentive AB has subscribed for 192,830 warrants, enabling the Company to potentially sell these at market prices to new employees following the close of the subscription period. Doro Incentive AB has during 2012 repurchased 18,000 warrants from employees who have left Doro. Doro Incentive AB holds 210,830 warrants as of December 31, 2012.
Further detailed terms for the issue of new warrants is available at www.doro.com.
The Company's long-term target is to pay a dividend of approximately one third of the net profit after tax. Additionally, the Board has set a maximum debt/equity ratio of 1.0 (interestbearing debt/equity).
At present, Doro holds a net cash position and therefore has a strong financial base and readiness to finance growth through investments, either organically or via acquisitions.
The Board has proposed a dividend of SEK 1.25 per share to be paid in 2013.
Read more about the share and view the updated share price at www.doro.com.
In recent years, the share capital of the Parent Company has changed as shown below:
| Amount paid, SEK m |
|---|
| 50.6 |
| 32.7 |
| 100.0 |
| 0.0 |
| 0.0 |
| 71.2 |
| 1.5 |
| 16.2 |
| 6.3 |
1) Issue prices not recalculated for new issues and reverse split.
| 2012 | 2011 | 2010 | 2009 | 2008 | |
|---|---|---|---|---|---|
| Number of shares at year-end, thousands1) | 19,349 | 19,349 | 19,108 | 19,108 | 17,408 |
| Market price at year-end, SEK | 24.50 | 27.30 | 31.20 | 11.00 | 5.00 |
| Par value, SEK | 1.00 | 1.00 | 1.00 | 1.00 | 1.00 |
| Profit for the year, SEK | 2.73 | 3.02 | 2.99 | 1.30 | –0.66 |
| Cashflow per share, SEK | 2.08 | 5.47 | 4.21 | 3.66 | –1.24 |
| Reported shareholders' equity per share, SEK | 10.8 | 9.16 | 6.35 | 3.54 | 1.73 |
| Dividend, SEK | 1.25* | 1.00 | 0.50 | 0.00 | 0.00 |
| P/E ratio2) | 8.98 | 9.04 | 10.4 | 8.5 | N/A |
| Dividend yield, %3) | 5.1 | 3.7 | 1.6 | N/A | N/A |
1) The average number of shares ('000) in 2011 was 19,188. The average number of shares ('000) in 2009 was 17,573.
2) The P/E ratio is calculated as the market price on the closing date divided by the EPS after tax. 3) The dividend yield is calculated by dividing the dividend by the market price in the closing date.
* The Board of Directors' proposal to the AGM.
| Ten largest shareholders | No. of shares | Shares and votes, % |
|---|---|---|
| Försäkringsaktiebolaget Avanza Pension | 1,925,493 | 10.00 |
| Nordea Investment Funds | 1,452,918 | 7.50 |
| Originat AB | 1,130,000 | 5.80 |
| Lazard Frere Banque, W8IMY | 580,000 | 3.00 |
| Clearstream Banking S.A., W8IMY | 550,543 | 2.80 |
| Catella Fondförvaltning | 532,400 | 2.80 |
| Kastensson Holding AB | 513,000 | 2.60 |
| Nordnet Pensionsförsäkring AB | 502,710 | 2.60 |
| Hajskaeret Invest AB | 430,000 | 2.20 |
| ABN AMRO Bank NV, W8IMY | 386,545 | 2.00 |
| Subtotal | 8,003,609 | 41.40 |
Source: Euroclear Sweden AB.
| Holding, number of shares |
No. of shareholders |
As % of all shareholders |
No. of shares held |
As % of all shares |
|---|---|---|---|---|
| 1 – 500 | 4,462 | 63.10 | 762,121 | 3.9 |
| 501 – 1,000 | 1,236 | 17.50 | 1,073,901 | 5.5 |
| 1,001 – 5,000 | 1,092 | 15.40 | 2,646,477 | 13.7 |
| 5,001 – 10,000 | 139 | 2.00 | 1,021,938 | 5.3 |
| 10,001 – 15,000 | 35 | 0.50 | 433,327 | 2.2 |
| 15,001 – 20,000 | 25 | 0.40 | 463,015 | 2.4 |
| Over 20,001 – | 83 | 1.20 | 12,948,395 | 67.0 |
| Total | 7,072 | 100.00 | 19,349,174 | 100.0 |
The number of shareholders has increased from 6,114 to 7,072. Of the total shares held, about 31.8 percent (35.4) are held by foreign shareholders. Euroclear Sweden AB.
Investors per category 2012, %
Analysts covering Doro:
Christian Lee, [email protected]
Henrik Dahlgren, [email protected]
| Income statement | 39 |
|---|---|
| Balance sheet | 40 |
| Shareholders' equity | 40 |
| Cash flow statement | 40 |
| Income statement | 42 |
|---|---|
| Balance sheet | 43–44 |
| Shareholders' equity | 45 |
| Cash flow statement | 45 |
| 1. Accounting principles | 46–49 |
|---|---|
| 2. Result per segment and income type | 49–50 |
| 3. Intra-Group transactions | 50 |
| 4. Rental and leasing agreements | 50 |
| 5. Employees | 50–52 |
| 6. Interest and similar items | 52 |
| 7. Intangible fixed assets | 52–53 |
| 8. Tangible fixed assets | 53 |
| 9. Participation in Group companies | 54 |
| 10. Prepaid expenses and accrued income | 54 |
| 11. Share capital and dividends | 54 |
| 12. Overdraft facilities | 55 |
| 13. Accrued expenses and prepaid income | 55 |
| 14. Pledged assets to credit institutions | 55 |
| 15. Contingent liabilities | 55 |
| 16. Auditors | 55 |
| 17. Taxes | 55–56 |
| 18. Acquisitions | 56 |
| 19. Finished goods and goods for resale | 57 |
| 20. Allocations for guarantees | 58 |
| 21. Pension allocations | 58 |
| 22. Other allocations | 58 |
| 23. Risk management and financial instruments | 58–60 |
| SEK m | Note | 2012 | 2011 |
|---|---|---|---|
| Revenue | |||
| Sale of goods | 2,3 | 821.5 | 737.8 |
| Other revenue | 2 | 16.0 | 7.6 |
| 837.5 | 745.4 | ||
| Operating costs | |||
| Merchandise | 19 | -508.3 | -433.2 |
| Other external costs | 4,16 | -176.2 | -167.3 |
| Personnel costs | 5 | -69.9 | -69.3 |
| Depreciation and impairment of property, plant and equipment | 8 | -5,5 | -2.2 |
| Depreciation and impairment of intangible assets | 7 | -16,2 | -11.4 |
| Operating profit/loss | 2 | 61.4 | 62.0 |
| Profit/loss from financial items | |||
| Interest income and similar profit/loss items | 6 | 1.6 | 11.0 |
| Interest costs and similar profit/loss items | 6 | -13.5 | -0.1 |
| Profit/loss after financial items | 49.5 | 72.9 | |
| Tax on profit/loss for the year | 17 | 3.4 | -15.0 |
| PROFIT/LOSS FOR THE YEAR | 52.9 | 57.9 | |
| Attributable to: | |||
| Parent company's shareholders | 52.9 | 57.9 | |
| Key figures | |||
| Average number of shares (thousands) | 11 | 19,349 | 19,188 |
| Earnings per share before tax* | 2.56 | 3.80 | |
| Earnings per share after tax* | 2.73 | 3.02 |
* No dilution effect.
| SEK m | 2012 | 2011 |
|---|---|---|
| PROFIT/LOSS FOR THE YEAR | 52.9 | 57.9 |
| Translation differences | -1.9 | -0.4 |
| Total result | 51.0 | 57.5 |
(Related to Parent Company's shareholders.)
| Assets, SEK m | Note | 2012 | 2011 |
|---|---|---|---|
| ASSETS | |||
| NON-CURRENT ASSETS | |||
| Equipment and tools | 8 | 12.5 | 8.9 |
| Capitalized expenditure for development work | 7 | 28.8 | 26.7 |
| Trademarks | 7 | 0.7 | 1.0 |
| Goodwill | 7 | 25.8 | 26.4 |
| Customer register | 7 | 3.9 | 5.2 |
| Long term deposits | 0.5 | 0.5 | |
| Deferred tax asset | 17 | 21.0 | 17.4 |
| 93.2 | 86.1 | ||
| CURRENT ASSETS | |||
| Inventories | 19 | 91.3 | 60.2 |
| Prepayments to supplier | 0.6 | 2.2 | |
| Accounts receivable – trade | 23 | 161.0 | 114.6 |
| Other current receivables | 21.2 | 35.6 | |
| Current tax receivables | 4.6 | 0.0 | |
| Prepaid expenses and accrued income | 10 | 3.4 | 1.7 |
| Cash and bank balances | 12, 23 | 141.1 | 148.4 |
| 423.2 | 362.7 | ||
| TOTAL ASSETS | 516.4 | 448.8 |
| Shareholders' equity and liabilities, SEK m | Note | 2012 | 2011 |
|---|---|---|---|
| SHAREHOLDERS' EQUITY | |||
| Share capital 19,349,174 shares, quota value SEK 1 | 11 | 19.3 | 19.3 |
| Other allocated capital | 109.0 | 109.0 | |
| Reserves | -2.2 | -0.3 | |
| Profit/loss brought forward | 30.0 | -8.6 | |
| Profit/loss for the year | 52.9 | 57.9 | |
| Total shareholders' equity | 209.0 | 177.3 | |
| LONG TERM LIABILITIES | |||
| Interest-bearing liabilities | |||
| Liabilities to credit institutions | 0.8 | 1.6 | |
| Total interest-bearing liabilities | 0.8 | 1.6 | |
| Non interest-bearing liabilities | |||
| Provisions for guarantees | 20 | 27.5 | 23.9 |
| Provisions for pension | 21 | 1.5 | 1.1 |
| Other provisions | 22 | 67.9 | 57.9 |
| Other long-term liabilities | 18 | 2.9 | 5.8 |
| Total non interest-bearing liabilities | 99.8 | 88.7 | |
| CURRENT LIABILITIES | |||
| Interest-bearing liabilities | |||
| Liabilities to credit institutions | 0.8 | 0.8 | |
| Total interest-bearing liabilities | 0.8 | 0.8 | |
| Non interest-bearing liabilities | |||
| Accounts payable – trade | 122.5 | 82.2 | |
| Other liabilities | 18 | 3.0 | 2.3 |
| Current tax liability | 0.6 | 1.6 | |
| Accrued expenses and prepaid income | 13 | 79.9 | 94.3 |
| Total non interest-bearing liabilities | 206.0 | 180.4 | |
| TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES | 516.4 | 448.8 | |
| Pledged assets | 14 | 219.2 | 213.6 |
| Contingent liabilities | 15 | – | – |
| Other allocated | Losses brought | Total share | |||
|---|---|---|---|---|---|
| Changes in shareholders' equity 2012, SEK m | Share capital | capital | Reserves1) | forward | holders' Equity |
| Shareholders' Equity December 31, 2010 | 19.1 | 100.4 | 0.1 | 1.7 | 121.3 |
| Total Result for the year | 57.9 | 57.9 | |||
| Other comprehensive income | -0.4 | -0.4 | |||
| Total result | -0.4 | 57.9 | 57.5 | ||
| New issue of shares | 0.2 | 6.1 | 6.3 | ||
| Premium for Warrant Program | 1.8 | 1.8 | |||
| Dividend | -9.6 | -9.6 | |||
| Total transactions with shareholders | 0.2 | 7.9 | 0.0 | -9.6 | -1.5 |
| Shareholders' Equity December 31, 2011 | 19.3 | 108.3 | -0.3 | 50.0 | 177.3 |
| Effect of Warranty Program | 0.7 | -0.7 | 0.0 | ||
| Shareholders' Equity December 31, 2011 | 19.3 | 109.0 | -0.3 | 49.3 | 177.3 |
| Total Result for the year | 52.9 | 52.9 | |||
| Other comprehensive income | -1.9 | -1.9 | |||
| Total result | 0.0 | 0.0 | -1.9 | 52.9 | 51.0 |
| Dividend | -19.3 | -19.3 | |||
| Total transactions with shareholders | 0.0 | 0.0 | 0.0 | -19.3 | -19.3 |
| Shareholders' Equity December 31, 2012 | 19.3 | 109.0 | -2.2 | 82.9 | 209.0 |
| 1) Specifikaction of reserves. | |||||
| 2012 | 2011 | ||||
| Accumulated translation differences, January 1 | -0.3 | 0.1 | |||
| Translation differences for the year | -1.9 | -0.4 | |||
| Accumulated translation differences, December 31 | -2.2 | -0.3 |
| SEK m | Note | 2012 | 2011 |
|---|---|---|---|
| Profit/loss after financial items1) | 49.5 | 72.9 | |
| Adjusted for items not in cash flow | |||
| Change in allocations | 20,21,22 | 14.1 | 36.9 |
| Depreciation and write downs | 7,8 | 21.7 | 13.6 |
| Adjustment for other non-cash items | 18 | 11.4 | -10.1 |
| Total adjustment for other non-cash items | 47.2 | 40.4 | |
| Taxes paid | 17 | -4.3 | -3.5 |
| Cash flow from current activities before changes in working capital | 92.4 | 109.8 | |
| Change in working capital | |||
| Change in stocks | 19 | -31.1 | -4.7 |
| Change in receivables | -48.5 | -4.9 | |
| Change in non-interest-bearing liabilities | 27.4 | 4.7 | |
| Cash flow from current activities | 40.2 | 104.9 | |
| INVESTMENT ACTIVITIES | |||
| Acquisitions | 18 | -0.4 | -19.6 |
| Acquisition of intangible fixed assets | 7 | -21.4 | -15.2 |
| Acquisition of tangible fixed assets | 8 | -5.5 | -6.0 |
| Cash flow from current activities | -27.3 | -40.8 | |
| FINANCING ACTIVITIES | |||
| Dividend | -19.3 | -9.6 | |
| Premium for Warrant Program | 0.0 | 1.8 | |
| Amortization of debt | -0.8 | 0.0 | |
| Loans raised | 0.0 | 2.6 | |
| Cash flow from financing activities | -20.1 | -5.2 | |
| Cash flow for the year | -7.2 | 58.9 | |
| Liquid assets at start of year | 148.4 | 89.5 | |
| Exchange rate difference in liquid assets | -0.1 | 0.0 | |
| Liquid assets at end of year | 23 | 141.1 | 148.4 |
1) Paid and received interests appear in note 6.
| SEK m | Note | 2012 | 2011 |
|---|---|---|---|
| Operating income | |||
| Net sales | 2,3 | 821.5 | 731.9 |
| Other revenue | 2 | 10.1 | 1.8 |
| 831.6 | 733.7 | ||
| Operating costs | |||
| Merchandise | 19 | -508.3 | -432.7 |
| Other external costs | 4,16 | -218.1 | -196.8 |
| Personnel costs | 5 | -31.2 | -38.4 |
| Depreciation and impairment of property, plant and equipment | 8 | -5.1 | -1.8 |
| Depreciation and impairment of intangible assets | 7 | -23.7 | -18.5 |
| Operating profit/loss | 2 | 45.2 | 45.5 |
| Profit/loss from financial items | |||
| Interest income and similar profit/loss items | 6 | 1.6 | 11.0 |
| Interest costs and similar profit/loss items | 6 | -14.0 | -0.4 |
| Profit/loss after financial items | 32.8 | 56.1 | |
| Tax on profit/loss for the year | 17 | 4.2 | -12.6 |
| PROFIT/LOSS FOR THE YEAR | 37.0 | 43.5 |
| SEK m | 2012 | 2011 |
|---|---|---|
| PROFIT/LOSS FOR THE YEAR | 37.0 | 43.5 |
| Total result | 37.0 | 43.5 |
(Related to Parent Company's shareholders.)
| Assets, SEK m | Note | 2012 | 2011 |
|---|---|---|---|
| FIXED ASSETS | |||
| Intangible assets | |||
| Capitalized expenditure for development work | 7 | 29.2 | 27.1 |
| Goodwill | 7 | 0.0 | 1.9 |
| Customer register | 7 | 7.8 | 10.8 |
| Brands | 7 | 0.8 | 4.6 |
| Tangible assets | |||
| Equipment and tools | 8 | 11.0 | 7.3 |
| Financial assets | |||
| Participations in Group companies | 9 | 21.8 | 21.6 |
| Deferred income tax recoverable | 17 | 20.3 | 16.1 |
| Total fixed assets | 90.9 | 89.4 | |
| CURRENT ASSETS | |||
| Inventories | |||
| Finished goods and goods for resale | 19 | 91.3 | 60.2 |
| Advanced payment to suppliers | 0.6 | 2.2 | |
| Current receivables | |||
| Accounts receivable – trade | 23 | 160.0 | 113.2 |
| Receivables from Group companies | 0.1 | 2.8 | |
| Other current receivables | 20.2 | 32.4 | |
| Prepaid expenses and accrued income | 10 | 2.6 | 1.3 |
| Cash and bank balances | 12, 23 | 138.6 | 144.7 |
| Total current assets | 413.4 | 356.8 | |
| TOTAL ASSETS | 504.3 | 446.2 |
| Shareholders' equity and liabilities, SEK m | Note | 2012 | 2011 |
|---|---|---|---|
| SHAREHOLDERS' EQUITY | |||
| Restricted equity | |||
| Share capital 19,349,174 shares, quota value SEK 1 | 11 | 19.3 | 19.3 |
| Revaluation reserve | 0.5 | 0.5 | |
| Other allocated capital | 55.5 | 55.5 | |
| Non-restricted equity | |||
| Share premium reserve | 22.8 | 22.8 | |
| Profit/loss brought forward | 39.8 | 15.6 | |
| Profit/loss for the year | 37.0 | 43.5 | |
| Total shareholders' equity | 174.9 | 157.2 | |
| Provisions | |||
| Provisions for guarantees | 20 | 27.5 | 23.9 |
| Other provisions | 22 | 67.9 | 57.3 |
| Total provisions | 95.4 | 81.2 | |
| CURRENT LIABILITIES | |||
| Interest-bearing liabilities | |||
| Liabilities to Group companies | 30.9 | 10.9 | |
| Total interest-bearing liabilities | 30.9 | 10.9 | |
| Non interest-bearing liabilities | |||
| Accounts payable – trade | 119.5 | 79.0 | |
| Prepayments | 0.1 | 0.0 | |
| Liabilities to Group companies | 10.4 | 31.7 | |
| Other liabilities | 1.6 | 0.6 | |
| Accrued expenses and prepaid income | 13 | 71.5 | 85.6 |
| Total non interest-bearing liabilities | 203.1 | 196.9 | |
| TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES | 504.3 | 446.2 | |
| Pledged assets | 14 | 191.8 | 191.6 |
| Contingent liabilities | 15 | - | - |
| Changes in shareholders' equity 2012, SEK m | Share capital | Revaluation reserve |
Statutory reserve |
Share premium reserve |
Losses brought forward |
Total share holders' equity |
|---|---|---|---|---|---|---|
| Shareholders' Equity December 31, 2010 | 19.1 | 0.5 | 55.5 | 14.2 | 25.9 | 115.2 |
| Profit for the year | 43.5 | 43.5 | ||||
| New issue of shares | 0.2 | 6.1 | 6.3 | |||
| Dividend | -9.6 | -9.6 | ||||
| Premium for Warrant Program | 1.8 | 1.8 | ||||
| Total transactions with shareholders | 0.2 | 7.9 | -9.6 | -1.5 | ||
| Shareholders' Equity December 31, 2011 | 19.3 | 0.5 | 55.5 | 22.1 | 59.8 | 157.2 |
| Effect of Warranty Program | 0.7 | -0.7 | 0.0 | |||
| Shareholders' Equity December 31, 2011 | 19.3 | 0.5 | 55.5 | 22.8 | 59.1 | 157.2 |
| Profit for the year | 37.0 | 37.0 | ||||
| Dividend | -19.3 | -19.3 | ||||
| Total transactions with shareholders | -19.3 | -19.3 | ||||
| Shareholders' Equity December 31, 2012 | 19.3 | 0.5 | 55.5 | 22.8 | 76.8 | 174.9 |
| SEK m | Note | 2012 | 2011 |
|---|---|---|---|
| Profit/loss after financial items1) | 32.8 | 56.1 | |
| Adjusted for items not in cash flow | |||
| Change in allocations | 20,21,22 | 14.2 | 37.3 |
| Depreciation and write downs | 7,8 | 28.8 | 20.3 |
| Other items not in cash flow | 13.4 | -10.1 | |
| Cash flow from current activities before changes in working capital | 89.2 | 103.6 | |
| Change in working capital | |||
| Change in stocks | 19 | -31.1 | -4.7 |
| Change in receivables | -42.0 | -13.7 | |
| Change in non-interest-bearing liabilities | 3.6 | 11.3 | |
| Cash flow from current activities | 19.7 | 96.5 | |
| INVESTMENT ACTIVITIES | |||
| Acquisition of intangible fixed assets | 7 | -21.4 | -28.5 |
| Acquisition of tangible fixed assets | 8 | -5.1 | -5.8 |
| Cash flow from investments | -26.5 | -34.3 | |
| FINANCING ACTIVITIES | |||
| Dividend | -19.3 | -9.6 | |
| Premium for warrant program | 0.0 | 1.8 | |
| New share issue2) | 0.0 | 6.3 | |
| Change in non interest-bearing liabilities | 20.0 | -4.1 | |
| Cash flow from financing activities | 0.7 | -5.6 | |
| Cash flow for the year | -6.1 | 56.6 | |
| Liquid assets at start of year | 144.7 | 88.1 | |
| Liquid assets at end of year | 23 | 138.6 | 144.7 |
1) Paid and received interests appear in note 6.
2) 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 8, 2013 and will be presented to the AGM on May 14, 2013 for approval.
The Consolidated Financial Statements 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 have been drawn up in accordance with the Swedish Annual Accounts Act and the Swedish Financial Reporting Board's recommendation RFR 1 (Supplementary Accounting Regulations for Groups).
The Annual Report of the Parent Company has been 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.
The accounting principles applied agree with those used in the previous year's report, with the exceptions detailed below.
The amendments and updates listed below began took effect as of January 1, 2012.
The application of these standards and interpretations has had no effect on the Group's financial results or position.
The amendments and updates listed below have been adopted by the IASB and are to be applied as of January 1, 2013 or thereafter unless another date has been determined by the EU:
and liabilities' fair values. The purpose of the standard is to ensure that fair value assessments are more consistent and less complex in that the standard provides a precise definition and a shared source in IFRS regarding fair value assessments and associated disclosures. The standard came into effect on January 1, 2013.
Doro is currently assessing the potential effects of the above adopted but not yet applied new and amended standards.
In addition to changes above, Doro will, as of January 1, 2013, change the accounting for segments to include the two Business Units Consumer and Care. Furthermore the company will adopt hedge accounting according to IFRS.
Assets, allocations 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 those companies in which the Parent Company, directly or indirectly, owns more than half the voting rights. This means that Doro AB has a decisive influence over Group companies and that Doro AB has the right to set strategies for the Group companies with the aim of making gains.
At the end of the financial year there were 6 (5) operating companies in the Group.
Acquired companies are included in the Consolidated Accounts from the date of acquisition. Sold companies are included up to and including their sale date.
The Consolidated Accounts are drawn up in line with the acquisition method, which means that the acquisition value of the shares in Group companies is divided among identifiable assets and liabilities at their fair value on the date of acquisition. Provisions for deferred tax on acquired untaxed reserves are made in conjunction with the acquisition.
Unutilized loss carryforwards obtained in conjunction with the acquisition are converted into deferred tax assets in the Consolidated Accounts if the assessed earning capability means that it can be expected that the assets can be utilized. Furthermore, deferred tax is calculated on the difference between the actual
values of assets and liabilities and the fiscal residual value. For cases where the acquisition value of shares in Group companies exceeds the acquired shareholders' assets and liabilities, calculated as above, the difference is accounted for as goodwill, which is tested at least once a year for impairment.
For corporate acquisitions, the purchase price can be earnings-dependent. The calculation is based on future profits and therefore the total purchase price can vary. Quarterly, an assessment is made and, if necessary, the expected purchase price is adjusted.
Intra-Group balances and internal profits have been eliminated in the Consolidated Accounts. When eliminating internal transactions, the fiscal effect is also calculated on the basis of rates of taxation applicable in each country.
The relationship of an overseas activity to the Parent Company is crucial for its classification and thereby the translation method. Doro applies the current method in the translation of foreign Group companies' balance sheets and income statements; consequently, all assets and liabilities of 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 the 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 booked directly to the statement of comprehensive income.
The following exchange rates have been used in consolidating the accounts:
| Average rate | Closing day rate | |||
|---|---|---|---|---|
| Currency | 2012 | 2011 | 2012 | 2011 |
| EUR | 8.70 | 9.01 | 8.59 | 8.92 |
| HKD | 0.87 | 0.83 | 0.84 | 0.89 |
| NOK | 1.16 | 1.15 | 1.17 | 1.15 |
| GBP | 10.69 | 10.35 | 10.53 | 10.65 |
| USD | 6.73 | 6.47 | 6.51 | 6.89 |
Receivables and liabilities in foreign currencies are valued at the closing day rates and unrealized exchange rate profits and losses are included in the results.
Flows for January to April 2013 were hedged n November 2012 in accordance with the treasury policy (approved by the Board in December 2008).
In Doro's accounts for 2012, these forward contracts were recognized at their market value. For additional details, see Note 23.
Doro only has one type of revenue: Product sales. Revenue from product sales is included in the accounts principally when all risks and rights connected with ownership have been transferred to the buyer, which usually occurs in connection with delivery.
Remuneration to staff is reported as paid salaries plus accrued bonus payments. Complete allocation is made for various commitments such as unclaimed holiday entitlement and payroll overheads, as accrued costs.
The predominant share of Doro's personnel pension commitments 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 obligation to pay further fees if this legal entity lacks sufficient funds to pay all employee remunerations 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 an obligatory, contractual or voluntary basis. The Group has no further payment commitments once these fees have been paid. The fees are reported as personnel costs when they become due for payment. Prepaid fees are reported as an asset to the extent that the Group may benefit from cash repayment or deductions in future payments.
In addition, a limited number of employees in 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 pension plans is that they specify the amount of 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 commitments 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 represents the current value of the defined-benefit commitment at the close of the reporting period. Since
the recognized liability with regard to defined-benefit pension plans represents 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 different manufacturing partners and most of the costs are borne by them. Doro works in an environment with rapid technological development. Product development costs include those for product adaptations, design, model approval, etc.
Expenses relating to the development phase are capitalized as an intangible fixed 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 will result in intangible fixed assets being capitalized. This criteria includes the option of ending a project, proof that a project is technically feasible and that the market exists, as well as the intention and opportunity to use or sell the intangible fixed asset exists. There must also be the opportunity to reliably measure costs during the development phase.
External partners' manufacturing tools are, however, owned by Doro and their cost is capitalized and depreciated according to plan if the lifespan of the product is expected to exceed one year.
Doro has no research costs.
Tangible and intangible fixed assets, mainly consisting of goodwill, machinery and equipment, are reported at their acquisition value with deductions for the accumulated depreciation according to plan, except goodwill, which is not depreciated in the Group.
Financial instruments recognized as assets in the balance sheet include accounts receivable, other receivables, forward currency contracts, short-term investments and bank balances. Included among shareholders' equity and liabilities are overdraft facilities, liabilities to credit institutes, accounts payable and other current liabilities. Effective from the fourth quarter of 2008, the Group uses financial derivatives to hedge itself against exchange rate fluctuations. These instruments are solely forward contracts. Hedge accounting is not applied, but as of January 1, 2013, the Group has adopted Hedge accounting according to IFRS. See more in Note 23.
With the exception of forward currency contracts, financial instruments are initially reported at cost – equivalent to the fair value of the instrument plus transaction expenses. Instruments are then reported subject to how they have been classified in accordance with the following. Forward currency contracts are reported in the balance sheet as per the contract date and are recognized at fair value, both initially and in connection with subsequent reassessments. Changes in value are reported in the income statement.
A financial asset or financial liability is recognized in the balance sheet when the company becomes party to the instrument's contractual terms. Trade receivables 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. Trade payables are recognized when invoices are received.
A financial asset or part thereof is derecognized when the contractual rights are realized, mature or are no longer under the company's control. This also applies for parts of a financial asset. A financial liability or part thereof is derecognized when contractual obligations are met or otherwise extinguished. The same applies for part of a financial liability.
The acquisition or sale of financial assets is reported on the transaction date, which is the date on which the Company pledges to acquire or sell the asset.
Financial assets and liability are offset against one another and the net amount recognized in the balance sheet only when the company has a legally enforceable right to set off the amounts and intends either to settle on a net basis or to realize the asset and settle the liability simultaneously. The Group classifies its financial assets as follows:
The classification depends on the purpose for which the financial asset has been acquired. Management determines the classification of financial assets on the first occasion on which they are reported.
Financial assets recognized at fair value in the income statement are financial assets held for trade. A financial asset is classified in this category if it is principally acquired with the intention of being sold in the near future. Derivatives are classified as being held for trade unless identified as hedges. Assets in this category are classified as current assets.
Loans and receivables are non-derivative financial assets with determined or determinable payments that are not quoted in an active market. They are included among current assets, with the exception of items maturing more than 12 months after the close of the reporting period, which are classified as noncurrent assets. The Group's loan receivables and accounts receivable consist of accounts receivable and other receivables in the balance sheet. Accounts receivable are reported net with deductions for doubtful receivables. Deductions for doubtful accounts receivable are based on a model whereby deductions increase with the extent to which maturity has been exceeded. In addition, individual accounts receivable are assessed with regard to expected customer losses. Other receivables are reported net with deductions for doubtful receivables based on individual assessments of the losses expected on those receivables.
Financial assets available for sale are those that are not derivatives and that can be identified as being available for sale or that are not included in any of the other categories.
Other financial liabilities are measured at amortized cost.
At least at every year-end closing, an assessment is made as to whether there is any indication impairment of the reported values of the Group's assets. When there is an indication that an asset has declined in value, its recyclable value is established. The recyclable value is the higher value of an asset's net sale value and its utilization value. When establishing the utilization value, a current value is assessed for the estimated future payments that the asset is expected to generate during its utilization.
When establishing the current value an interest calculation is used before tax that reflects the actual market interest and the risk that is linked with the asset. If the recyclable value falls below the booked value then a write-down of assets to the recyclable value is made. Reversals are recognized out if there is no longer good cause to recognize impairment. 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 its recoverable amount impairment of goodwill is recognized.
Linear depreciation according to plan is based on the acquisition values of the assets and their estimated economic lifespan:
| Tools (for manufacturing products) | |
|---|---|
| (if the product's lifespan is > 1 year) | 2–3 years |
| Computers, cars, furniture etc. | 2–5 years |
Intangible assets are depreciated during their estimated economic lifespan. For capitalized product development depreciation is effective as of market launch of each product. Linear depreciation according to plan is based on the acquisition values of the assets:
| Balanced expenditure for development | 1–3 years |
|---|---|
| Trademarks | 5 years |
| Customer register | 5 years |
Leases are classified in the Consolidated Accounts as either financial or operating leases. Financial leasing exists where the financial risk and benefits associated with the ownership in all essential matters are transferred to the lessee. In other cases, leasing is considered operational. Financial leasing agreements for company cars, copying machines, computer equipment and the like are reported as operational leasing. Financial leasing occurs only to a lesser extent.
Doro has in general no financial leasing agreements. Property rents are included in operational leasing. No significant lease agreements were entered during 2011.
Inventories are valued at 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 inventories is recognized according to a model whereby older inventory is subject to greater impairment. Different product families have different periods of depreciation. Net sales values are defined as the sales price minus sales costs. Depreciation of net sale value includes impairment due to technological and commercial obsolescence is recognized in each respective Group company.
Impairment increases according to a scale, with products being depreciated to 50 percent after 6–12 months and then fully depreciated after 18 months depending on the product family. In addition, individual impairment tests may be carried out.
Provisions are made for the cost of repairing goods that can be returned within the guarantee period (between one and two years from the sale to the end user).
A statistics program has been developed that provides forecasts based on the time that products are sold and returned, the proportion requiring repairs, scrapping, compensation through the exchange of the product or a credit as well as costs for checks, repairs (including parts) and transport. When deviations occur (mainly in numbers of products being returned) requirements for guarantee provisions are carried out.
Provisions are defined as liabilities that are uncertain with reference to amount or time of settlement. A provision is reported when there is an undertaking as a result of an event that has occurred, it is probable that a flow of resources will be required in order to regulate the undertaking and that a reliable estimation of the amount can be made. Pensions, guarantee commitments, disputes and additional costs are recorded as provisions in the balance sheet.
All tax expected to be paid on the recorded results is recognized in the income statement. This tax has been estimated according to each country's tax regulations and is accounted for under the item taxes.
The Group's total tax in the income statement consists partly of current tax on taxable profits for the period and partly of deferred tax. The deferred tax mainly consists of a change to deferred tax assets regarding taxable loss carryforwards and other temporary differences.
Tax legislation in certain countries allows for allocation to special reserves and funds. Companies can thus, within certain limits, dispose and retain reported operating profits without being taxed immediately. The untaxed reserves are subject to tax only when they are dissolved for reasons other than covering losses.
The Group uses the balance sheet method when calculating deferred income taxes recoverable and liabilities. The balance sheet method means that calculation is made from the tax rate on the closing day applied to the temporary differences between an asset or liability's accountable or taxable value and taxable loss carryforward. Deferred tax assets are included in the balance sheet only to the extent of value that can probably be utilized within the near future which the Company considers to be three to four years. An individual assessment is made of the situation for companies in each country.
Cash flow statements are drawn up using the indirect method, which means the operating profit/loss after financial items is adjusted for transactions that did not entail payments in and out during the period and for income and expenses relating to the cash flow of investment activities.
Cash and equivalents comprise cash and bank balances and current interestbearing investments.
As of 2011 Doro monitors its operations by market: Nordic region, EMEA (Europe, Middle East and Africa), the UK, the US & Canada and other regions.
The balance sheet items that appear as 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 order to prepare Doro's financial reports, the Board and Management and the Board make various judgments and estimates that can significantly affect the amounts recognized. These areas are:
When goodwill is tested for impairment, assumptions are made regarding the future development of revenue and cash flow for the lowest possible cash-generating unit. This is further described in Note 7.
When evaluating deferred tax assets an assessment is made of the future taxable surplus of each company and thereby of the opportunities to exercise the carry-forwards. The size of the loss carryforwards is detailed in Note 17.
Individual assessments are carried out when evaluating the credit risks in accounts receivable. The assessment is based on historical payment behavior and other information. Doro has historically had very low credit losses, but is active in follow-ups. Refer to Note 23 for further information.
Evaluation of inventory is based on a model of the turnover of the inventory. In addition, comparisons are made by individual assessments based on historic sale statistics and sales forecast with the product volumes in inventory and production by suppliers.
Impairment and reversal of impairment of participation in Group companies Participations in Group companies are valued at cost. If the recyclable value (see paragraph above entitled "Impairment") should prove to be lower, impairment is recognized. Impairment of the value of participations in subsidiaries can be reversed when there is no longer a reason for impairment.
Group contributions that a parent receives from a subsidiary are recognized as financial income, and group contributions from the parent to the subsidiary are recognized either as an equity interest in the subsidiary, i.e. similar to shareholder contribution, or as an expense because of the relationship between accounting and taxation.
| Group | Parent Company | ||||
|---|---|---|---|---|---|
| Income divided into type of income | 2012 | 2011 | 2012 | 2011 | |
| Product sales | 821.5 | 737.8 | 821.5 | 731.9 | |
| Other revenue | 16.0 | 7.6 | 10.1 | 1.8 | |
| Total | 837.5 | 745.4 | 831.6 | 733.7 |
| Group | Parent Company | ||||
|---|---|---|---|---|---|
| Other Revenue | 2012 | 2011 | 2012 | 2011 | |
| EU funding | -0.9 | 1.8 | -0.9 | 1.8 | |
| Activated development costs | 5.0 | 1.1 | 0.0 | 0.0 | |
| Recovered receivables | 0.4 | 1.8 | 0.0 | 0.0 | |
| Release of provisions | 0.3 | 2.9 | 0.0 | 0.0 | |
| Positive currency effect* | 10.8 | 0.0 | 10.8 | 0.0 | |
| Gain on sale of fixed assets | 0.2 | 0.0 | 0.2 | 0.0 | |
| Rent income | 0.2 | 0.0 | 0.0 | 0.0 | |
| 16.0 | 7.6 | 10.1 | 1.8 |
*2011 the currency effects were negative, 6,8 Mkr, and was accounted for in other external costs.
Doro has since 2011 chosen to follow up the operation based on the regions that Doro is active in, but as of January 1, 2013, the operations will be followed by two business units, Consumer and Care, along with regional sales. Our business unit Consumer aims at a senior target group in constant evolution on one hand, and the business unit Care aims at an elderly target group requesting assistance.
| 2012 | |||||||
|---|---|---|---|---|---|---|---|
| Operating profit per geographical region | Nordic | Europe, Middle East and Africa |
United Kingdom | USA and Canada | Other Regions | Total | |
| Income/Net Sales | 274.4 | 286.8 | 130.9 | 125.2 | 20.2 | 837.5 | |
| Operating cost | -219.3 | -281.4 | -122.4 | -109.6 | -21.7 | -754.4 | |
| Operating profit | 55.1 | 5.4 | 8.5 | 15.6 | -1.5 | 83.1 | |
| Depreciation | -7.0 | -7.6 | -3.3 | -3.2 | -0.6 | -21.7 | |
| Operating result | 48.1 | -2.2 | 5.2 | 12.4 | -2.1 | 61.4 |
| 2011 | ||||||||
|---|---|---|---|---|---|---|---|---|
| Europe, Middle | ||||||||
| Operating profit per geographical region | Nordic | East and Africa | United Kingdom | USA and Canada | Other Regions | Total | ||
| Income/Net Sales | 232.6 | 297.2 | 104.3 | 104.0 | 7.3 | 745.4 | ||
| Operating cost | -193.5 | -269.7 | -103.3 | -94.2 | -9.1 | -669.8 | ||
| Operating profit | 39.1 | 27.5 | 1.0 | 9.8 | -1.8 | 75.6 | ||
| Depreciation | -4.2 | -5.5 | -1.8 | -1.9 | -0.2 | -13.6 | ||
| Operating result | 34.9 | 22.0 | -0.8 | 7.9 | -2.0 | 62.0 |
There has been no transactions between the regions during 2012 and 2011. Doro can not report assets and liabilities per segment, because follow-up is only made by the income statement. During 2012 Doro has not had any customer that exceeds 10 percent of the revenue. In 2011 Doro had a single customer that generated 11 percent of the revenue. 79 percent of the revenue was related to region Europe, Middle East and Africa and 21 percent to the United Kingdom.
| 2012 | 2011 | |
|---|---|---|
| France | 173.2 | 166.1 |
| Sweden | 172.9 | 136.1 |
| United Kingdom | 112.2 | 90.2 |
| USA | 81.7 | 58.6 |
| Germany | 55.6 | 66.4 |
| Norway | 51.9 | 43.4 |
| Canada | 41.0 | 45.1 |
| Belgium | 28.8 | 23.6 |
| Denmark | 14.5 | 24.3 |
| Other countries | 89.7 | 84.0 |
| Total | 821.5 | 737.8 |
The Group's main part of the material assets are located in Sweden.
| 2012 | 2011 | ||||||
|---|---|---|---|---|---|---|---|
| Acquisition value | Closing depreciations |
Closing value | Acquisition value | Closing depreciations |
Closing value | ||
| Sweden | 30.7 | -19.7 | 11.0 | 22.0 | -14.6 | 7.4 | |
| France | 3.5 | -2.3 | 1.2 | 3.5 | -2.1 | 1.4 | |
| Hong Kong | 0.7 | -0.4 | 0.3 | 0.4 | -0.4 | 0.0 | |
| Other countries | 0.5 | -0.5 | 0.0 | 0.4 | -0.3 | 0.1 | |
| Total | 35.4 | -22.9 | 12.5 | 26.3 | -17.4 | 8.9 |
Of the Parent Company's invoicing SEK 0 m (0) relates to subsidiaries. Invoicing from subsidiaries to the Parent Company amounted to SEK 58 m (45,9). Invoicing between subsidiaries amounted to SEK 0 m (0).
Costs for operational rental and leasing charges during the year amounts to SEK 5.7 m (3.3) for the group and SEK 2.5 m (1.6) for the parent company. Agreed future rental and leasing costs fall due for payment as shown below.
| The Group | Parent Company | |||||
|---|---|---|---|---|---|---|
| Rental and leasing agreements | 2012 | 2011 | 2012 | 2011 | ||
| Within 1 year | 5.3 | 5.5 | 2.5 | 2.8 | ||
| Within 2 to 5 years | 7.0 | 4.7 | 4.2 | 2.7 | ||
| Later than 5 years | 0.0 | 0.0 | 0.0 | 0.0 | ||
| Total | 12.3 | 10.2 | 6.7 | 5.5 |
| Number | 2012 | Of whom men | 2011 | Of whom men |
|---|---|---|---|---|
| Parent Company | 32 | 19 | 31 | 18 |
| Norway | 3 | 3 | 3 | 3 |
| United Kingdom | 8 | 4 | 8 | 5 |
| France | 27 | 14 | 21 | 10 |
| Hong Kong | 7 | 6 | 7 | 6 |
| Germany | 0 | 0 | 0 | 0 |
| Total | 77 | 46 | 70 | 42 |
Salaries, remuneration, social charges and pension cost have appeared with the following amounts:
| The Group | Parent Company | |||||
|---|---|---|---|---|---|---|
| 2012 | 2011 | 2012 | 2011 | |||
| Salaries and other remuneration | 45.6 | 45.1 | 18.4 | 25.0 | ||
| 45.6 | 45.1 | 18.4 | 25.0 | |||
| Payroll overheads excluding pension costs | 12.6 | 14.0 | 5.5 | 8.5 | ||
| 12.6 | 14.0 | 5.5 | 8.5 | |||
| Pension costs | 8.1 | 5.9 | 5.7 | 4.0 | ||
| of which premium-based | 7.3 | 5.3 | 5.7 | 4.0 | ||
| 8.1 | 5.9 | 5.7 | 4.0 |
| 2012 | Women | 2011 | Women | |
|---|---|---|---|---|
| total | % | total | % | |
| Board | 5 | 40 | 5 | 40 |
| Group Management | 7 | 17 | 5 | 40 |
| whereof situated in: | ||||
| Sweden | 3 | 0 | 3 | 33 |
| United Kingdom | 1 | 0 | 0 | 0 |
| France | 3 | 33 | 2 | 50 |
Amongst the Group Management are two persons included that are not employed, but invoice their fees. One is placed in Sweden and the other in France.
| 2012 | 2011 | |||
|---|---|---|---|---|
| Board and CEO | Other employees | Board and CEO | Other employees | |
| Sweden | 2.7 | 16.5 | 4.2 | 20.8 |
| Norway | 0.0 | 2.6 | 0.0 | 2.6 |
| United Kingdom | 0.0 | 5.1 | 0.0 | 3.9 |
| France | 1.5 | 14.5 | 1.8 | 9.4 |
| Germany | 0.0 | 0.3 | 0.0 | 0.0 |
| Hong Kong | 0.0 | 3.2 | 0.0 | 2.6 |
| Total | 4.2 | 42.2 | 6.0 | 39.2 |
| The Board 2012 | Fees | Pension | Other remuneration | Total |
|---|---|---|---|---|
| Chairman of the Board | 350 | 0 | 0 | 350 |
| Other Board members* | 450 | 0 | 0 | 450 |
| Total | 800 | 0 | 0 | 800 |
* Fee to the Chairman of the Board is SEK 350 k (300) and to other Board members SEK 150 k (100) as decided on Annual General Meeting March 21, 2012.
| Group Management 2012 | Salary | Bonus | Pension | Other remuneration | Total |
|---|---|---|---|---|---|
| Jérôme Arnaud (CEO) | 3,431 | 0 | 469 | 64 | 3,964 |
| Other Group Management | 5,102 | 188 | 2,022 | 316 | 7,629 |
| Total | 8,534 | 188 | 2,491 | 380 | 11,593 |
The amounts include salaries and remunerations to employed Group Management. In 2012, the Group Management has been expanded from five to seven people. One of these has been a member of the Group Management from January 1, 2012 and the other from October 10, 2012. The amounts include salary and remuneration to the Group's former CFO until October, when she left the company. They also include an amount of SEK 1.1 m for the period during which she was no longer operative. The Group Management includes two individuals engaged as consultants: the interim CFO from October 2012 and a second person who has been active throughout the year. Both of these individuals invoice the company for their services. The invoice amounts are not included in the table above, but amounts to SEK 2.6 m.
| The Board 2011 | Fees | Pension | Other remuneration | Total |
|---|---|---|---|---|
| Chairman of the Board | 300 | 0 | 0 | 300 |
| Other Board members* | 300 | 0 | 0 | 300 |
| Total | 600 | 0 | 0 | 600 |
* Fees to other Board members amounted to SEK 100 k (100) each.
| Group Management 2011 | Salary | Bonus | Pension | Other remuneration | Total |
|---|---|---|---|---|---|
| Jérôme Arnaud (CEO) | 3,337 | 1,943 | 124 | 74 | 5,478 |
| Other Group Management | 3,808 | 1,558 | 1,366 | 523 | 7,255 |
| Total | 7,145 | 3,501 | 1,490 | 597 | 12,733 |
Pension schemes for Group Management are primarily premium-based with premiums of SEK 2.5 m (1.5) being paid in 2012.
Fees are paid to the Chairman and other Board members in accordance with decisions made by the AGM. Remuneration to the CEO and other Group Management comprises a basic salary, variable remuneration, bonus, 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 (4) other members of the Group Management. Average number of executives in the Group Management in 2012: 6 (5).
The retirement age for other Group Management 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 below, whether for Board members or Group Management.
Bonus refers to earned bonus. The bonus is linked to operationg profit, EBIT. The maximum cost for variable remuneration and bonus to Group Managment must not exceed SEK 10.0 m (5.0). The bonus is normally paid out during the year after it is earned. In 2013 there will be no bonus paid for 2012. Bonus for 2011 paid in 2012 was SEK 2.8 m.
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 during the 12 month notice period. No severance pay will be paid if notice is given by CEO. Other senior executives have agreement of salary during notice between 3 and 6 months.
These procedures are explained in the Directors' Report.
No member of the Board receives any share-based compensation (options, convertible debentures or similar) issued by Doro or its principal owner. In accordance with the mandate provided by the Annual General Meeting on March 23, 2011, all of Doro's employees have been offered warrants granting them the right to acquire shares at the target price of SEK 35.30 between April 1, 2014 and June 30, 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 annual general meeting in 2011, a share price of SEK 28.68, volatility of 29%, riskfree interest of 2.79% and duration of 3.25 year (2011-03-31 – 2014-06-30). The CEO subscribed for 200,000 warrants and the rest of the Group Management subscribed for 155,000 warrants. Doro Incentive AB subscribed for 192,830 warrants possible to be used for future employees. During 2012, Doro Incentive AB purchased 18,000 warrants from employees who left Doro. Doro Incentive AB holds 210,830 warrants as per December 31, 2012.
| The Group | Parent Company | ||||
|---|---|---|---|---|---|
| Income | 2012 | 2011 | 2012 | 2011 | |
| Interest income, external | 1.6 | 0.9 | 1.6 | 0.9 | |
| Interest income, internal | - | - | 0.0 | 0.0 | |
| Exchange rate gain | 0.0 | 10.1 | 0.0 | 10.1 | |
| Other | 0.0 | 0.0 | 0.0 | 0.0 | |
| Total | 1.6 | 11.0 | 1.6 | 11.0 | |
| Expenses | |||||
| Interest expenses, external | -0.1 | -0.1 | 0.0 | 0.0 | |
| Interest expenses, internal | - | - | -0.6 | -0.4 | |
| Exchange rate losses | -13.4 | 0.0 | -13.4 | 0.0 | |
| Other | 0.0 | 0.0 | 0.0 | 0.0 | |
| Total | -13.5 | -0.1 | -14.0 | -0.4 | |
| Financial net | -11.9 | 10.9 | -12.4 | 10.6 |
Interest income consists of interest earned on bank balances and current investments. Interest expenses consist of interest paid on bank loans. At yearend, two bank loans were outstanding totaling SEK 1.6 m (2.4). The overdraft facility is unused. Exchange gains and losses amounting to a negative net of SEK 13.4 m (10.1) derive from revaluations of foreign exchange contracts.
| Group/ Goodwill | 2012 | 2011 |
|---|---|---|
| Opening cost | 26.4 | 8.8 |
| Acquisitions during the year | 0.0 | 17.7 |
| Exchange rate difference | -0.6 | -0.1 |
| Closing accumulated cost | 25.8 | 26.4 |
| Group / Customer register | 2012 | 2011 |
| Acquisition value brought forward | 5.6 | 0.0 |
| Acquisitions during the year | 0.0 | 5.9 |
| Exchange rate difference | -0.2 | -0.3 |
| Closing accumulated acquisition value | 5.4 | 5.6 |
| Write-downs brought forward | -0.4 | 0.0 |
| Write-downs for the year | -1.1 | -0.4 |
| Closing depreciation/write-downs | -1.5 | -0.4 |
| Closing residual value according to plan | 3.9 | 5.2 |
| Parent company/Goodwill | 2012 | 2011 |
|---|---|---|
| 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 | -17.2 | -15.3 |
| Write-downs for the year | -1.9 | -1.9 |
| Closing depreciation/write-downs | -19.1 | -17.2 |
| Closing residual value according to plan | 0.0 | 1.9 |
| Parent company/Customer register | 2012 | 2011 |
| Acquisition value brought forward | 14.8 | 8.9 |
| Acquisitions during the year | 0.0 | 5.9 |
| Closing accumulated acquisition value | 14.8 | 14.8 |
| Write-downs brought forward | -4.0 | -1.8 |
| Write-downs for the year | -3.0 | -2.2 |
| Closing depreciation/write-downs | -7.0 | -4.0 |
| Closing residual value according to plan | 7.8 | 10.8 |
The Group assesses the need for goodwill to be written down on an annual basis or when indications of impairment arise. Impairment testing is applied at the lowest level where separable cash flows can be identified. Since all Goup companies' activities and payments are highly inter-dependent, consolidated goodwill is not broken down further.
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. The average growth rate for the unit is estimated to 5 percent (4) annualy over the next five years. Sustainable growth is estimated at 1 percent (2). 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 forecasted cash-flows have been calculated using a pre-tax discount rate of 14.4 percent (13.9), corresponding to 12.0 percent (12 ) after tax. 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. A sensitivity analysis shows that even if growth were halved and the WACC raised by 1 percentage point, there would still be no need for 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 depreciated yearly with SEK 3.6 m and will be fully depreciated according to plan in 2012. As the brands are acquired internally they are eliminated at group level. In 2011 Doro made the acquisitions of the companies Birdy och Prylos. Goodwill related to trademarks connected to the acquisition have been identified.
| The Group / Brands | 2012 | 2011 |
|---|---|---|
| Acquisition value brought forward | 1.1 | 0.0 |
| Acquisitions during the year | 0.0 | 1.1 |
| Exchange rate difference | -0.1 | 0.0 |
| Closing accumulated acquisition value | 1.0 | 1.1 |
| Depreciation according to plan brought forward | -0.1 | 0.0 |
| Depreciation according to plan for the year | -0.2 | -0.1 |
| Closing depreciation according to plan | -0.3 | -0.1 |
| Closing residual value according to plan | 0.7 | 1.0 |
| Parent company/ Brands | 2012 | 2011 |
|---|---|---|
| Acquisition value brought forward | 36.8 | 35.8 |
| Acquisitions during the year | 0.0 | 1.0 |
| Closing accumulated acquisition value | 36.8 | 36.8 |
| Depreciation according to plan brought forward | -32.2 | -28.6 |
| Depreciation according to plan for the year | -3.8 | -3.6 |
| Closing depreciation according to plan | -36.0 | -32.2 |
| Closing residual value according to plan | 0.8 | 4.6 |
| The Group's capitalized expenditure | ||
|---|---|---|
| for development work / IT | 2012 | 2011 |
| Acquisition value brought forward | 42.3 | 24.4 |
| Acquisitions during the year | 12.7 | 8.1 |
| Acquisitions | 0.0 | 6.3 |
| Exchange rate difference | -0.1 | -0.2 |
| Sales/Disposals | 0.0 | 0.0 |
| Reclassifications | 3.8 | 3.7 |
| Closing accumulated acquisition value | 58.7 | 42.3 |
| Depreciation according to plan brought forward | -24.4 | -13.5 |
| Depreciation according to plan for the year | -14.9 | -10.9 |
| Sales/Disposals | 0.0 | 0.0 |
| Reclassifications | 0.0 | 0.0 |
| Closing depreciation according to plan | -39.3 | -24.4 |
| Closing residual value according to plan | 19.4 | 17.9 |
| Ongoing capitalized expenditure | ||
|---|---|---|
| for development work /IT | 2012 | 2011 |
| Opening balance | 8.8 | 5.8 |
| Balanced during the year | -7.5 | -3.7 |
| New expenditure | 8.7 | 7.1 |
| Cost accounted | -0.6 | -0.4 |
| Closing balance | 9.4 | 8.8 |
| Total closing residual value | 28.8 | 26.7 |
| Parent company / Capitalized expenditure | ||
|---|---|---|
| for development work / IT | 2012 | 2011 |
| Acquisition value brought forward | 42.6 | 24.4 |
| Acquisitions during the year | 12.7 | 14.5 |
| Reclassifications | 3.8 | 3.7 |
| Closing accumulated acquisition value | 59.1 | 42.6 |
| Depreciation according to plan brought forward | -24.3 | -13.5 |
| Depreciation according to plan for the year | -15.0 | -10.8 |
| Closing depreciation according to plan | -39.3 | -24.3 |
| Closing residual value according to plan | 19.8 | 18.3 |
| Ongoing capitalized expenditure | ||
|---|---|---|
| for development work /IT | 2012 | 2011 |
| Opening balance | 8.8 | 5.8 |
| Balanced during the year | -7.5 | -3.7 |
| New expenditure | 8.7 | 7.1 |
| Cost accounted | -0.6 | -0.4 |
| Closing balance | 9.4 | 8.8 |
| Total closing residual value | 29.2 | 27.1 |
| Parent | ||||
|---|---|---|---|---|
| The Group | Company | |||
| Equipment and tools | 2012 | 2011 | 2012 | 2011 |
| Acquisition value brought forward | 22.6 | 18.9 | 18.2 | 15.4 |
| Acquisitions during the year | 5.5 | 2.6 | 5.1 | 2.4 |
| Acquisitions | 0.0 | 0.5 | 0.0 | 0.0 |
| Sales/Disposals | 0.0 | -0.3 | 0.0 | 0.0 |
| Reclassifications | 7.4 | 0.9 | 7.4 | 0.4 |
| Exchange rate difference | -0.1 | 0.0 | 0.0 | - |
| Closing acquisition value | 35.4 | 22.6 | 30.7 | 18.2 |
| Depreciation according to plan brought | ||||
| forward | -17.4 | -15.1 | -14.6 | -12.8 |
| Depreciation according to plan for the year | -5.5 | -2.2 | -5.1 | -1.8 |
| Sales/Disposals | 0.0 | 0.3 | 0.0 | 0.0 |
| Reclassifications | 0.0 | -0.4 | 0.0 | 0.0 |
| Exchange rate difference | 0.0 | 0.0 | - | - |
| Closing depreciation according to plan | -22.9 | -17.4 | -19.7 | -14.6 |
| Closing residual value according to plan | 12.5 | 5.2 | 11.0 | 3.6 |
| Ongoing expenditure for | ||||
| Equipment and tools | 2012 | 2011 | 2012 | 2011 |
| Opening balance | 3.7 | 0.7 | 3.7 | 0.7 |
| Balanced during the year | -3.7 | 3.4 | -3.7 | 3.4 |
| Reclassifications | 0.0 | -0.4 | 0.0 | -0.4 |
| Cost accounted | 0.0 | 0.0 | 0.0 | 0.0 |
| Closing balance | 0.0 | 3.7 | 0.0 | 3.7 |
| Total Tangible Fixed assets | 12.5 | 8.9 | 11.0 | 7.3 |
| Shareholders' | Profit and | Book value | ||||||
|---|---|---|---|---|---|---|---|---|
| Subsidiary | No of. shares | % | Nominal value | Book value 2011 | equity 1) 2011 | loss 2012 | 2010 | |
| Doro A/S | 200 | 100 | NOK | 0,1 Mkr | 0.60 | 2.6 | 0.6 | 0.60 |
| Doro UK Ltd. | 3,013,400 | 100 | GBP | 32,1 Mkr | 4.20 | 9.8 | 1.3 | 4.20 |
| Doro SAS | 66,667 | 100 | EUR | 8,9 Mkr | 11.60 | 30.6 | 4.0 | 11.60 |
| Doro Hong Kong Ltd. | 4,500 | 100 | HKD | 4,0 Mkr | 5.10 | 4.6 | 0.1 | 5.10 |
| Doro Inc. | 3,000 | 100 | USD | 0,0 Mkr | 0.04 | 1.2 | 0.6 | 0.04 |
| Doro Incentive AB | 50,000 | 100 | SEK | 0,1 Mkr | 0.06 | 0.1 | 0.0 | 0.06 |
| Doro Deutschland GmbH | 1 | 100 | EUR | 0,2 Mkr | 0.20 | 0.3 | 0.1 | 0.0 |
| 21.8 | 49.2 | 6.7 | 21.6 |
1) Shareholders' equity (net assets) refers to Group book value per subsidiary, shareholders' equity according to the subsidiary's balance sheet.
| 2012 | 2011 | |
|---|---|---|
| Opening balance | 21.6 | 21.5 |
| Newformed company | 0.2 | 0.1 |
| Closing balance | 21.8 | 21.6 |
| Subsidiary – Company reg. no | Registered office |
|---|---|
| Doro A/S – 934210719 | Fredrikstad, Norway |
| Doro UK Ltd. – 1180330 | Chalfont St Peter, United Kingdom |
| Doro SAS –309 662 195 | Versailles, France |
| Doro Hong Kong Ltd. – 08194263-000-12-98-6 | Kowloon, Hong Kong |
| Doro Inc. – 4706937 810 0 090679976 | New York, USA |
| Doro Incentive AB – 556843-4962 | Lund, Sweden |
| Doro Deutschland GmbH – HRB75859 | Cologne, Germany |
During 2012 Doro Deutschland Gmbh was constituted to support the German market.
| The Group | Parent Company | |||
|---|---|---|---|---|
| 2012 | 2011 | 2012 | 2011 | |
| Prepaid rent | 0.8 | 0.4 | 0.7 | 0.3 |
| Other prepaid expenses | 2.6 | 1.3 | 1.9 | 1.0 |
| Total | 3.4 | 1.7 | 2.6 | 1.3 |
| No. of shares | Voting rights | Class | |
|---|---|---|---|
| A shares | 19,349,174 | 1 vote per share | Normal |
Share capital
19,349,174 shares at a quota value of SEK 1.00 per share = SEK 19,349,174.
Dividends
The Board of Directors proposes that dividend of SEK 1.25 will be distributed to the shareholders for the 2012 fiscal year.
| The Group | Parent Company | |||
|---|---|---|---|---|
| 2012 | 2011 | 2012 | 2011 | |
| Approved credit | 31.5 | 31.5 | 30.0 | 30.0 |
| Utilized credit | 0.0 | 0.0 | 0.0 | 0.0 |
| The Group | Parent Company | |||
|---|---|---|---|---|
| 2012 | 2011 | 2012 | 2011 | |
| Chattel mortgages | 170.0 | 170.0 | 170.0 | 170.0 |
| Shares in Group companies 1) | 49.2 | 43.6 | 21.8 | 21.6 |
| Total | 219.2 | 213.6 | 191.8 | 191.6 |
1) Instead of book value of shares the Group reports the value of the Group's net assets in the consolidated accounts. By net assets (shareholders' equity), the Group refers to the consolidated book value by subsidiary, i.e. shareholders' equity according to the subsidiaries' balance sheet total including consolidated residual value of the subsidiary.
Doro has no contingent liabilities.
| The Group | Parent Company | |||
|---|---|---|---|---|
| 2012 | 2011 | 2012 | 2011 | |
| Holiday pay liability | 5.3 | 4.4 | 3.3 | 2.6 |
| Payroll overheads | 4.6 | 3.9 | 2.0 | 1.5 |
| Stock accounts interim | 5.7 | 30.5 | 5.7 | 30.5 |
| Other staff liabilities | 1.5 | 11.9 | 0.5 | 11.1 |
| Accrued Royalty | 20.9 | 11.9 | 20.9 | 11.9 |
| Accrued customer bonus | 19.7 | 16.9 | 19.5 | 16.6 |
| Other accrued expenses | 22.2 | 14.8 | 19.6 | 11.4 |
| Total | 79.9 | 94.3 | 71.5 | 85.6 |
The 2012 AGM elected Göran Neckmar (Ernst & Young AB) to be the auditor of the Parent Company, Doro AB. Ernst & Young will carry out auditing at all large units for the period of one year.
| The Group | Parent Company | |||
|---|---|---|---|---|
| Fees and costs | 2012 | 2011 | 2012 | 2011 |
| Auditing assignments | 0.8 | 0.6 | 0.6 | 0.5 |
| Auditing outside the assignment | - | - | - | - |
| Tax assignments | 0.7 | 1.8 | 0.7 | 1.8 |
| Other advisory services by auditors | 0.8 | 0.7 | 0.7 | 0.7 |
| Total | 2.3 | 3.1 | 2.0 | 3.0 |
Auditing assignments refer to the auditing of the Annual Report, the accounts and the administration by the Board of Directors and the CEO. Auditing assignments also include what the company's auditors are required to perform, advise on, or other contributions resulting from observations made during this auditing work or while carrying out these assignments.
| The Group | Parent Company | |||
|---|---|---|---|---|
| Taxes on profit/loss for the year | 2012 | 2011 | 2012 | 2011 |
| Current tax | -0.3 | -3.5 | 0.0 | 0.0 |
| Deferred tax | 3.7 | -11.5 | 4.3 | -12.6 |
| Total tax on profit/loss for the year | 3.4 | -15.0 | 4.3 | -12.6 |
Connection between the tax expense for the year and the reported earnings before tax:
| The Group | Parent Company | |||
|---|---|---|---|---|
| Taxes | 2012 | 2011 | 2012 | 2011 |
| Reported profit/loss before tax | 49.5 | 72.9 | 32.8 | 56.1 |
| Tax at current rate 26.3 % | -13.0 | -19.2 | -8.6 | -14.7 |
| Non-deductible expenses | -0.3 | -2.4 | -0.1 | -1.9 |
| Non-taxable income | 1.4 | 0.0 | 1.4 | 0.0 |
| Utilisation of previously unrecognized tax loss carryforwards | 1.4 | 0.0 | 1.4 | 0.0 |
| Temporary differences without corresponding capitalization of deferred tax | 0.0 | -7.0 | 0.0 | -7.0 |
| Change in valuation in losses carryforwards | 0.4 | 11.5 | 0.0 | 11.1 |
| Change in valuation of temporary differences | 13.0 | 1.6 | 11.0 | 0.0 |
| Adjustment for change in tax rate | -0.6 | 0.0 | -0.8 | 0.0 |
| Adjustment for tax rates in foreign Group company | 1.0 | 0.5 | 0.0 | 0.0 |
| Reported tax | 3.4 | -15.0 | 4.3 | -12.6 |
Temporary differences arise in those cases where accounted values of assets or liabilities and their tax value are different. Temporary differences, unutilized losses carry forward and other future tax deductions have led to deferred tax liabilities and tax assets for the following:
| The Group | ||||
|---|---|---|---|---|
| Deferred tax asset | 2012 | 2011 | 2012 | 2011 |
| Unutilized losses carry forward | 4.0 | 16.1 | 4.0 | 16.1 |
| Temporary differences, provisions | 14.6 | 0.0 | 14.6 | 0.0 |
| Temporary differences, other | 2.4 | 1.3 | 1.7 | 0.0 |
| Total reported deferred tax asset | 21.0 | 17.4 | 20.3 | 16.1 |
Deferred tax assets are shown for unutilized losses carried forward and temporary differences in the balance sheet, when they are calculated to be used in the near future. A single calculation is made for each company with respect to past earnings trends, future plans and the option of using losses carried forward. Of the consolidated losses carried forward, SEK 78 m (123) can be used without a time limit being imposed. None of the consolidated losses are restricted in time. The substantial remaining losses are in Sweden and the United Kingdom.
| Losses carry forward fall due as follows: | 2012 | 2011 |
|---|---|---|
| Without limit | 78 | 123 |
| Total | 78 | 123 |
Non-accounted deferred tax assets in the balance sheet concerning unutilized taxable losses carry forward amount to:
| The Group | Parent Company | ||
|---|---|---|---|
| 2012 | 2011 | 2012 | 2011 |
| 18 | 19 | 0 | 0 |
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. Costs directly related to the acquisitions SEK 2.3 m has been accounted for in other external costs in 2011.
On July 11, 2011, Doro SAS acquired 100 percent of Prylos SAS. Prylos is a French company that offers an Android-based platform for Doro's new product launches, as well as a focused development team within senior telecom solutions. The acquisition will support Doro's growth strategy, which includes expanding into mobile health solutions. Prylos activities had sales of SEK 7.5m 2011. As of October 1, 2011 all sales etc. for Prylos software is sold through Doro AB. On the acquisition date, the number of employees was 12. Prylos SAS was merged with Doro SAS on December 30, 2011.
| SEK m | 2011 |
|---|---|
| Purchase consideration | 17.1 |
| Net debt | -1.9 |
| Total acquisition value | 15.2 |
| Fair value of acquired net assets | -6.2 |
| Goodwill | 9.0 |
| SEK m Fair value | |
|---|---|
| Intangible fixed assets | 5.9 |
| Tangible fixed assets | 0.1 |
| Finacial fixed assets | 0.2 |
| Deferred tax assets | 0.2 |
| Accounts receivables | 2.0 |
| Other current assets | 2.0 |
| Cash | 0.5 |
| Interest-bearing liabilities | -2.4 |
| Accounts payable | -0.9 |
| Other current liabilities | -1.4 |
| Acquired net assets | 6.2 |
| Goodwill | 9.0 |
| Total purchase consideration | 15.2 |
| Deferred payment | -0.9 |
| Contingent consideration | -1.8 |
| Net debt in acquired company | 1.9 |
| Change in the Group's cash flow resulting from the acquisition | 14.4 |
During 2012, SEK 0.4 m of the deferred payment has been disbursed. The potential additional purchase consideration has been revalued at SEK 1.4 m and is recognized as a long-term liability. The result effect of this revaluation, SEK 0.4 m, is recognized in the operating result under Other external costs. In the cash flow analysis it is recognized under Adjustments for other non-cash items. The additional purchase price amounts to EUR 0.0 – 0.8 m.
On August 31, 2011, Doro SAS acquired 100 percent of Birdy Technology SAS, which operates in the area of teleassistance. As its main product, Birdy Technology develops a fixed GSM gateway which, via the mobile network connects various sensors (fall sensors, wrist alarms, smoke detectors etc.) to a callcenter when the sensors are trigged. In this way, senior's everyday lives are made safer and more comfortable, while relatives are granted peace of mind. Birdy Technology's customers include both private and public home-tele-assistance companies in France. The acquisition of Birdy Technology represents an opportunity for Doro to strenghen its offer in tele-assistance, forming a solid platform from which to add mHealth services at a later stage. Birdy Technology activities had sales of SEK 11.6 m 2011. As of October 1, 2011, all sales etc. for Birdy Technology products is sold through Doro AB. On the acquisition date, the number of employees was 2. Birdy Technology SAS was merged with Doro SAS on December 30, 2011.
The acquired net assets and goodwill are presented below:
| SEK m | 2011 |
|---|---|
| Purchase consideration | 15.5 |
| Net cash | 0.4 |
| Total acquisition value | 15.9 |
| Fair value of acquired net assets | -7.2 |
| Goodwill | 8.7 |
The following assets and liabilities were included in the acquisition:
| SEK m Fair value | |
|---|---|
| Intangible Fixed Assets | 7.4 |
| Tangible Fixed assets | 0.4 |
| Inventory | 0.6 |
| Accounts Receivables | 1.6 |
| Other current Assets | 0.2 |
| Cash | 0.9 |
| Interest-bearing liabilities | -0.5 |
| Accounts payable | -0.9 |
| Other current liabilities | -0.3 |
| Tax | -0.3 |
| Deferred tax liability | -1.9 |
| Acquired net assets | 7.2 |
| Goodwill | 8.7 |
| Total purchase consideration | 15.9 |
| Share issue in kind | -6.3 |
| Contingent consideration | -4.0 |
| Net cash in acquired company | -0.4 |
| Change in the Group's cash flow resulting from the acquisition | 5.2 |
The potential additional purchase consideration has been revalued at SEK 2.3 m, of which SEK 1.5 m is accounted for as a long-term liability and SEK 0.8 m as a current liability. The result effect of this revaluation, SEK 1.7 m, is recognized in the operating result under Other external costs. In the cash flow analysis it is recognized under Adjustments for other non-cash items. The additional purchase price amounts to EUR 0.0 – 0.6 m.
| The Group | 2012 | 2011 |
|---|---|---|
| Opening gross stock | 65.2 | 60.5 |
| Change in gross stock | 31.7 | 4.7 |
| Closing gross stock | 96.9 | 65.2 |
| Opening write-downs of stock | -5.0 | -5.5 |
| Change in write-downs of stock | -0.6 | 0.5 |
| Closing write-downs of stock * | -5.6 | -5.0 |
| Net stock in balance sheet | 91.3 | 60.2 |
| Parent company | 2012 | 2011 |
|---|---|---|
| Opening gross stock | 65.2 | 60.5 |
| Change in gross stock | 31.7 | 4.7 |
| Closing gross stock | 96.9 | 65.2 |
| Opening write-downs of stock | -5.0 | -4.9 |
| Change in write-downs of stock | -0.6 | -0.1 |
| Closing write-downs of stock * | -5.6 | -5.0 |
| Net stock in balance sheet | 91.3 | 60.2 |
* Acquisition value for the inventory reserve of SEK 5.6 m (5.0) is based on inventory book value of SEK 26.6 m (14.2).
Doro's products are subjected to extensive quality testing. Guarantees are given to end-users that extend for a minimum of one year after the date of purchase. Customers may be compensated in various forms through repairs, exchanging for similar products, credits or other measures. Doro has created a statistics model to estimate future compensation requirements based on predicted returned products over time, means of compensation and expenses for various compensation forms. Guarantee times have risen due to the regulations for guarantees now being two years on some markets.
| The Group | Parent Company | ||||
|---|---|---|---|---|---|
| 2012 | 2011 | 2012 | 2011 | ||
| Opening balance | 23.9 | 24.4 | 23.9 | 24.4 | |
| Amount released | -31.9 | -31.5 | -31.9 | -31.5 | |
| New allocations | 35.5 | 31.0 | 35.5 | 31.0 | |
| Closing balance | 27.5 | 23.9 | 27.5 | 23.9 |
| The Group | 2012 | 2011 |
|---|---|---|
| Opening balance | 1.1 | 0.7 |
| Amount released | 0.0 | 0.0 |
| New allocations | 0.4 | 0.4 |
| Closing balance | 1.5 | 1.1 |
| The Group | Parent Company | |||
|---|---|---|---|---|
| 2012 | 2011 | 2012 | 2011 | |
| Opening balance | 57.9 | 20.9 | 57.3 | 19.5 |
| Amount released | -5.0 | -1.0 | -5.0 | -0.8 |
| New allocations | 21.2 | 38.6 | 21.2 | 38.6 |
| Unutilized amount cancelled | -6.2 | -0.6 | -5.6 | 0.0 |
| Closing balance | 67.9 | 57.9 | 67.9 | 57.3 |
| The Group | Parent Company | |||
|---|---|---|---|---|
| 2012 | 2011 | 2012 | 2011 | |
| Additional costs | 66.6 | 50.8 | 66.6 | 50.8 |
| Other allocations | 1.3 | 7.1 | 1.3 | 6.5 |
| Closing balance | 67.9 | 57.9 | 67.9 | 57.3 |
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 identified and managed. Risk management aims to reduce or eliminate risks. The main focus 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. Through centralization and coordination significant economies of scale can be obtained regarding terms for financial transactions and financing. The risks Doro is exposed to are described below.
The Group is primarily exposed to credit risk associated with financial investments and receivables management as well as counterparty risk associated with hedging. Credit and counterparty risks are managed centrally by the parent company of Doro AB and is regulated by the Treasury Policy. Financial instruments may only be made with counterparts/issuers within the categories government, municipalities and banks. As of December 31, 2012 the short-term investments in municipal and state amounted to SEK 70.0 m (40.0) and in banking SEK 0 m (15.0).
The value of account receivables amounts to SEK 165.9 m (118.4.). In recent years Doro has experienced very low credit losses (less than 0.5 percent of sales) due to that the main customer group is large businesses with regular trading. The single largest customer accounts for 11.7 percent (11) of the Groups sales. In most countries Doro operates without credit insurance.
| The Group | ||
|---|---|---|
| Age analysis of accounts receivable | 2012 | 2011 |
| Not yet due | 126.7 | 110.4 |
| Due for payment < 60 days | 34.9 | 3.7 |
| Due for payment > 60 days | 4.3 | 4.3 |
| Total accounts receivable | 165.9 | 118.4 |
| Expected customer losses | -4.9 | -3.8 |
| Accounts receivable in report | 161.0 | 114.6 |
| The Group | ||
|---|---|---|
| Doubtful accounts receivable, change | 2012 | 2011 |
| Opening balance | -3.8 | -4.4 |
| Expected customer losses | -1.5 | -2.0 |
| Confirmed customer losses | 0.0 | -0.1 |
| Amount cancelled | 0.4 | 2.7 |
| Closing balance | -4.9 | -3.8 |
Other receivables are not yet due.
As per the end of 2012 the Group had SEK 1.6 m (2.4) in interestbearing liabilities whereof SEK 0.8 m (0.8) falls due within twelve months.
The group credit facilities amounts to SEK 31.5 m (31.5) of which SEK 0.0 m (0.0) was utilized. Doro's credit contract expires June 30, 2013. The Group's liquidity amounted as per December 31, 2012 to SEK 141.1 m (148.4) which includes financial investments and bank funds.
Doro is exposed to currency risk due to fluctuations in exchange rate that may affect sales, earnings and equity negatively. The management is below divided into risk management in connection with transaction exposure and translation exposure.
Doro's overall hedging strategy continues to comply with the established treasury policy in terms of purpose, amount, maturities and currencies. What was changed on January 1, 2013 is the way that entered forward exchange contracts are reported.
Until December 31, 2012, all revaluations of outstanding foreign exchange contracts have been reported among financial items. On maturity, accumulated changes in value were transferred from financial items to operating result, leading to fluctuations in operating result and financial net.
From January 1, 2013, the changes in the value of forward exchange contracts classified as cash-flow hedges are recognized under Other Comprehensive Income. Hedge accounting ceases when the underlying exposure is reported in the balance sheet (i.e. when purchases and sales are made). Accumulated results in the hedging reserve (included under Other Comprehensive Income) will then be dissolved against the cost of goods sold for forward exchange contracts arising from purchases, or against sales revenue for forward exchange contracts arising from sales. Forward exchange contracts that are not hedged will be classified as "held for trading". Changes in the values of these foreign currency transactions will be recognized directly in the sales revenue for contracts relating to sales and in the cost of goods sold for contracts relating to purchases. This will only occur in exceptional cases. In connection with the implementation, all EUR, USD, NOK and GBP forward exchange contracts related to exposures that have not yet entered the balance sheet will be classified as hedge accounting. Initially, CAD forward exchange contracts will not be hedged due to the relatively small volumes involved and the uncertainty in the timing of the cash flows. Flows formerly measured in DKK have been transferred to EUR and no forward exchange contracts remain in DKK.
Transaction exposure arises when sales and purchases are made in foreign currencies. Doro has income and expenses in different currencies. Products are primarily contracted and paid in USD and the sales are mainly in EUR, GBP and the Nordic currencies. In accordance with the treasury policy forcasted cash flows are hedged on a quarterly basis to between 75 and 100 percent. The foreign exchange management is centralized and concentrated to the finance department at Doro AB, which buys and sells currencies under the treasury policy. The market value of current forward contracts was SEK -3.0 m (10.4) at the end of 2012.
(Before and after hedging)
| Before hedging | After hedging | Before hedging | After hedging | |
|---|---|---|---|---|
| Currency | 2012 | 2012 | 2011 | 2011 |
| CAD | 44 | 8 | 52 | 11 |
| DKK | 4 | 0 | 13 | 4 |
| EUR | 268 | 19 | 23 | 1 |
| GBP | 76 | 4 | 224 | 20 |
| NOK | 61 | 22 | 61 | -23 |
| USD | -333 | -23 | -298 | -83 |
Translation exposure arises when foreign assets and liabilities, as well as income statements, in foreign subsidiares are translated into SEK upon consolidation. Doro does not hedge the translation exposure. At year-end the value of foreign net assets was SEK 49.0 m (44.0). The below table show the breakdown by currency.
| Value of foreign assets | 2012 | 2011 |
|---|---|---|
| USD | 1 | 1 |
| NOK | 3 | 2 |
| EUR | 31 | 27 |
| GBP | 10 | 9 |
| HKD | 4 | 5 |
| Total | 49 | 44 |
| 2012 | 2011 | ||||
|---|---|---|---|---|---|
| The Group | Reported | Actual | Reported | Actual Classification | |
| Accounts receivable | 161.0 | 161.0 | 114.6 | 114.6 Accounts receivable and loans receivable | |
| Other receivables | 25.8 | 25.8 | 25.4 | 25.4 Accounts receivable and loans receivable | |
| Currency options/forwards | 0.0 | 0.0 | 10.4 | 10.4 Financial asset at fair value | |
| Short term investments | 70.0 | 70.0 | 55.0 | 55.0 Saleable assets | |
| Cash at bank | 71.1 | 71.1 | 93.4 | 93.4 Saleable assets | |
| Assets | 327.9 | 327.9 | 298.8 | 298.8 | |
| Currency options/forwards | 3.0 | 3.0 | 0.0 | 0.0 Other financial liabilities | |
| Liabilities to credit institutions | 1.6 | 1.6 | 2.4 | 2.4 Other financial liabilities | |
| Accounts payable | 122.5 | 122.5 | 82.2 | 82.2 Other financial liabilities | |
| Other liabilities | 7.2 | 7.2 | 10.3 | 10.3 Other financial liabilities | |
| Liabilities | 134.3 | 134.3 | 94.9 | 94.9 |
| 2012 2011 |
||||
|---|---|---|---|---|
| Reported | Actual | Reported | Actual Classification | |
| 160.0 | 160.0 | 113.2 | 113.2 Accounts receivable and loans receivable | |
| 0.1 | 0.1 | 2.8 | 2.8 Accounts receivable and loans receivable | |
| 20.2 | 20.2 | 22.1 | 22.1 Accounts receivable and loans receivable | |
| 0.0 | 0.0 | 10.4 | 10.4 Financial asset at fair value | |
| 70.0 | 70.0 | 55.0 | 55.0 Saleable assets | |
| 68.6 | 68.6 | 89.7 | 89.7 Saleable assets | |
| 318.9 | 318.9 | 293.2 | 293.2 | |
| 3.0 | 3.0 | 0.0 | 0.0 Other financial liabilities | |
| 0.0 | 0.0 | 0.0 | 0.0 Other financial liabilities | |
| 119.5 | 119.5 | 79.0 | 79.0 Other financial liabilities | |
| 41.3 | 41.3 | 42.6 | 42.6 Other financial liabilities | |
| 2.2 | 2.2 | 0.8 | 0.8 Other financial liabilities | |
| 166.0 | 166.0 | 122.4 | 122.4 | |
The funds available to the annual general meeting consists of:
| Total | 99,607,432.16 |
|---|---|
| Profit for the year | 37,085,557.91 |
| Profit brought forward | 62,521,874.25 |
The board of directors proposes that the funds available for the annual general meeting are allocated so that:
| Total | 99,607,432.16 |
|---|---|
| Carried forward | 75,420,964.66 |
| SEK 1.25 per share is distributed to the shareholders | 24,186,467.50 |
After payment of the proposed dividend, the company and the group will continue to have a satisfactory financial position meeting the demands of the industry in which the company operates. After payment of the proposed dividend, the company and the group will continue to have a satisfactory level of consolidation and liquidity position and a satisfactory general financial position.
Payment of the proposed dividend will not affect the company's short or long term ability to discharge its present liabilities or the company's ability to make any required investments.
In summary, considering the company's and the group's current financial position and nature of operations the board of directors recommends the declaration of the proposed dividend.
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 the Parent Company's position and earnings and directors' report give a true overview of developments in the Group's and the Parent Company's business, position and earnings and describes significant risks and uncertainty factors faced by Group companies and the Parent Company.
Lund, April 8, 2013
Bo Kastensson Chairman of the Board
Board member Board member Board member CEO and Board member
Charlotta Falvin Karin Moberg Jonas Mårtensson Jérôme Arnaud
Our auditor's report was submitted on April 8, 2013
Ernst & Young AB
Göran Neckmar Authorized Public Accountant
To the annual meeting of the shareholders of Doro AB (publ) Corporate identity number 556161-9429
We have audited the annual accounts and consolidated accounts of Doro AB (publ) for the year 2012, except for the corporate governance statement on pages 30-37. The annual accounts and consolidated accounts of the company are included in the printed version of this document on pages 20-60.
Responsibilities of the Board of Directors and the Managing Director for the annual accounts and consolidated accounts 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 2012 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 2012 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 30-37. 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 ABC AB for the year 2012. 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 on pages 30-37 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 the Board of Directors' reasoned statement and a selection of supporting evidence in order to be able to assess 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, April 8, 2013
Ernst & Young AB
Göran Neckmar Authorized Public Accountant
| 2012 | 2011 | |||||||
|---|---|---|---|---|---|---|---|---|
| SEK m | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | Q4 |
| Quarterly profit trend | ||||||||
| Income/Net sales | 170 | 156 | 211 | 300 | 135 | 165 | 181 | 264 |
| Operating costs | -153 | -147 | -189 | -265 | -126 | -152 | -162 | -229 |
| Operating profit/loss before depreciation | 17 | 9 | 22 | 35 | 9 | 13 | 19 | 35 |
| Planned depreciation and write-downs | -5 | -4 | -6 | -7 | -3 | -3 | -3 | -5 |
| Operating profit/loss after depreciation | 12 | 5 | 16 | 28 | 6 | 10 | 16 | 30 |
| Net financial items | -9 | 2 | -4 | 0 | -1 | -2 | 11 | 3 |
| Profit/loss after financial items | 7 | 12 | 28 | 5 | 8 | 27 | 33 | |
| Taxes | 0 | -1 | 14 | -10 | 0 | 0 | -1 | -14 |
| Net profit/loss | 3 | 6 | 26 | 18 | 5 | 8 | 26 | 19 |
| Quarterly balance sheet for the Group | ||||||||
| Intangible assets | 60 | 64 | 57 | 59 | 26 | 27 | 58 | 59 |
| Tangible assets | 8 | 8 | 14 | 12 | 5 | 5 | 6 | 9 |
| Financial assets | 1 | 1 | 1 | 1 | 0 | 0 | 1 | 1 |
| Deferred Tax Asset | 17 | 17 | 31 | 21 | 31 | 31 | 30 | 17 |
| Inventories | 67 | 67 | 83 | 91 | 48 | 46 | 49 | 60 |
| Current receivables | 118 | 108 | 136 | 191 | 87 | 130 | 129 | 155 |
| Cash and bank balances | 89 | 107 | 114 | 141 | 65 | 66 | 93 | 148 |
| Total assets | 360 | 372 | 436 | 516 | 261 | 304 | 365 | 449 |
| Shareholders' equity | 160 | 166 | 190 | 209 | 117 | 126 | 159 | 177 |
| Long-term Liabilities | 85 | 99 | 100 | 47 | 62 | 70 | 89 | |
| Current Liabilities | 121 | 147 | 207 | 97 | 116 | 135 | 183 | |
| Total shareholders' equity and liabilities | 372 | 436 | 516 | 261 | 304 | 365 | 449 | |
| Quarterly cash flow | ||||||||
| Operating profit/loss after financial items | 3 | 7 | 12 | 28 | 6 | 8 | 26 | 33 |
| Depreciation accrding to plan | 5 | 4 | 6 | 7 | 3 | 3 | 3 | 5 |
| Other non cash flow items | 10 | -1 | 4 | -2 | 1 | 2 | -10 | -3 |
| Taxes | 0 | -2 | -1 | -1 | -1 | -1 | -1 | -1 |
| Change in working capital | -51 | 18 | -8 | 2 | -21 | -9 | 33 | 31 |
| Cash flow from current activities | -33 | 26 | 13 | 34 | -12 | 3 | 51 | 65 |
| Investments | -7 | -8 | -5 | -7 | -4 | -3 | -24 | -10 |
| Cash flow from investment activities | -8 | -5 | -7 | -4 | -3 | -24 | -10 | |
| Dividend/Premium for Warrant Program | 0 | 0 | 0 | -9 | 1 | 0 | 0 | |
| Change in interest-bearing liabilities | 0 | -1 | 0 | 0 | 0 | 0 | 0 | |
| Cash flow from financial activities | -19 | 0 | -1 | 0 | -9 | 1 | 0 | 0 |
| Translation differences and other | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |
| Liquid assets (change in liquid funds) | -59 | 18 | 7 | 27 | -25 | 1 | 27 | 55 |
Sales per quarter and rolling 12 months, SEK m
EBIT per quarter and rolling 12 months, SEK m
| SEK m | 2012 | 2011 | 2010 | 2009 | 2008 |
|---|---|---|---|---|---|
| Income statement | |||||
| Income | 837.5 | 745.4 | 632.8 | 492.6 | 362.5 |
| Operating profit/loss before depreciation and write-downs, EBITDA | 83.1 | 75.6 | 63.1 | 38.1 | –3.6 |
| Operating profit/loss after depreciation and write-downs, EBIT | 61.4 | 62.0 | 47.0 | 26.7 | –8.2 |
| Net financial items | -11.9 | 10.9 | -0.6 | -1.7 | –1.9 |
| Profit/loss after financial items | 49.5 | 72.9 | 46.4 | 25.0 | –10.1 |
| Balance sheet | |||||
| Fixed assets | 93.2 | 86.1 | 60.8 | 41.9 | 34.1 |
| Current assets | 282.1 | 214.3 | 186.8 | 150.0 | 123.4 |
| Cash and bank balances | 141.1 | 148.4 | 89.5 | 40.4 | 12.6 |
| Shareholders' equity | 209.0 | 177.3 | 121.3 | 67.6 | 30.0 |
| Long-term liabilities | 100.6 | 90.3 | 46.0 | 21.4 | 14.5 |
| Current liabilities | 206.8 | 181.2 | 169.8 | 143.3 | 125.5 |
| Balance sheet total | 516.4 | 448.8 | 337.1 | 232.3 | 170.1 |
| KEY FIGURES (Definitions: see below) | |||||
| Return ratios | |||||
| Average return on capital employed, % * | 94.5 | 116.1 | 80.1 | 52.0 | neg |
| Average return on shareholders' equity, % * | 27.4 | 38.8 | 60.4 | 46.7 | neg |
| Earnings per share after taxes paid, SEK * | 2.34 | 3.62 | 2.04 | - | - |
| Cash conversion rate | 65 | 169 | 171 | - | - |
| Margins | |||||
| Operating margin, EBITDA, % | 9.9 | 10.1 | 10.0 | 7.7 | –1.0 |
| Operating margin, EBIT, % | 7.3 | 8.3 | 7.4 | 5.4 | –2.3 |
| Net margin, % | 5.9 | 9.8 | 7.3 | 5.1 | –2.8 |
| Capital turnover | |||||
| Capital turnover rate (multiple) | 1.7 | 1.9 | 2.2 | 2.4 | 2.2 |
| Financial data | |||||
| Equity/assets ratio, % | 40.5 | 39.5 | 36.0 | 29.1 | 17.6 |
| Cash flow from current activities | 40.2 | 104.9 | 80.4 | 64.4 | –21.4 |
| Number of employees | 81 | 77 | 61 | 60 | 59 |
| Liquid assets (incl. unused credit) | 172.6 | 177.5 | 121.5 | 51.6 | 28.3 |
| Investments | 27.3 | 40.8 | 20.6 | 17.5 | 10.2 |
* No dilution effect.
Average return on capital employed Operating profit/loss divided by the quarterly average
capital employed excluding cash and bank balances.
Profit/loss after financial items and tax dividend by average share-holders' equity.
Net investments including acquisitions.
CCS – Cash conversion rate Cash flow from current operations divided by EBIT.
Net sales for the year divided by the average balance sheet total.
Cash flow from current activities.
Cash flow from current activities divided by the average number of shares.
Cash balances plus approved unutilized bank credit and short-term investments.
Profit/loss after financial items as a percentage of the year's sales.
Net interest-bearing liabilities minus cash balances as a percentage of shareholders' equity.
Profit/loss after taxes paid divided by average number of shares for the period.
Earnings per share after taxes paid, after dilution Profit/loss after taxes paid divided by the average number of shares for the period after dilution.
Profit/loss after financial items minus tax divided by average number of shares for the period.
Profit/loss after financial items minus tax divided by the average number of shares for the period after dilution.
Profit/loss after financial items 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 net financial items plus interest expenses divided by financial expenses.
Operating profit/loss (after depreciation) as a percentage of the year's sales.
| December 13 Consumer Cellular launches Doro PhoneEasy® 618 – the first 3G model for seniors on the North American market. |
|
|---|---|
| November 15 | Doro continues its international expansion through a sales agreement with Irish O2. |
| November 14 Bosch selects Doro to enrich its telecare offering with mobile solutions. |
|
| November 12 | Doro to showcase new offerings within telecare and Telehealth at MEDICA – the world's largest trade fair for medical equipment. |
| November 8 | Report for the third quarter 2012. |
| November 5 | European market leader integrates the protocol Doro Secure IP in its alarm receiving centers. |
| October 30 | Doro to present its report for the third quarter via audiocast and telephone conference. |
| October 15 | Irish eMobile chooses another Doro mobile to strengthen its offer. |
| October 11 | Doro strengthens its partnership with Irish postfone. |
| October 8 | Doro continues to strengthen its international presence through a sales agreement with Meteor of Ireland. |
| September 27 Following earlier sales success, O2 markets a second Doro easy-to-use mobile phone in the UK and Ireland. |
|
| September 25 Doro's investments in product development give further results – Doro PhoneEasy® 520X. |
|
| August 20 | Doro PhoneEasy® 615 is now one of Orange Israel's best selling phones. |
| August 17 | Doro opens up a new market – Hungary – and develops its cooperation with Telenor. |
| August 9 | Doro to present its report for the second quarter via audio cast and telephone conference. |
| June 20 | Doro® continues to broaden its presence in Australia and to strengthen its cooperation with Vodafone. |
| May 14 | Doro loses dispute with Fysics of the Netherlands. |
| April 27 | Doro® increases its presence in Australia with a retail agreement with a telecom operator. |
March 23 Bulletin from Doro AB's Annual General Meeting 2012.
March 21 Bulletin from Doro AB (publ.) Annual General Meeting 2012. February 29 Doro Reveals First Application Partners. February 27 Doro Enters The Smart World. February 16 Notice of annual general meeting 2012. January 31 Doro Experience – an easy-to-use function for smartphones, tablets and PCs. January 27 German Court confirms previous preliminary ruling against German competitor on phone design. January 26 Doro to present its year-end report via webcast and telephone conference. January 25 Doro's design is rewarded with the French Janus de la Santé Award. January 23 John Lewis of the UK to market four Doro easy-to-use home phones.
Our web site with information, news and support to you as a consumer.
Our group web site with information about the company Doro, press releases and the latest financial information.
Our facebook page where you easily can ask questions and express your views.
Our channel with guides to our products.
Profit/loss before depreciation as a percentage of the year's income.
Shareholders' equity as a percentage of the balance sheet total.
Shareholders' equity divided with the total number of shares at year-end.
Total assets minus non interest-bearing liabilities.
Number of shares at the end of each period divided with number of periods.
Average number of shares adjusted with the dilution effect from warrants is calculated as the difference between the assumed number of shares issued at
the exercise price and the assumed number of shares issued at average market price for the period.
Equity per share
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.
Cash and bank balances reduced with interest bearing liabilities.
Closing market price at the end of the period.
Share price at period's end times the number of shares at the end of the period.
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