Annual Report • Sep 8, 2009
Annual Report
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| Financial overview | 3 | Income statement | 25 |
|---|---|---|---|
| Year in brief | 4 | Balance sheet | 26 |
| This is Doro | 5 | Shareholders' equity | 28 |
| CEO's statement | 6 | Cash flow statement | 30 |
| Organization | 9 | Quarterly summary | 31 |
| Strategy | 10 | Five-year summary | 32 |
| Care Electronics | 12 | Accounting principles | 33 |
| Home Electronics | 14 | Notes | 36 |
| Business Electronics | 16 | Definitions | 43 |
| Environment & Quality | 18 | Auditor's report | 45 |
| Shares | 20 | Group management | 46 |
| Directors' report | 21 | Board of directors | 47 |
| Five-year summary | 2007 | 2006 | 2005 | 2004 | 2003 |
|---|---|---|---|---|---|
| INCOME STATEMENT (SEK m) | |||||
| Income | 346.3 | 433.2 | 621.3 | 648.8 | 647.5 |
| Operating profit/loss before changes/write downs | 10.0 | –57.3 | –60.7 | 24.8 | 34.6 |
| Profit/loss after financial items | 8.1 | –81.7 | –75.2 | 27.3 | 27.6 |
| BALANCE SHEET (SEK m) | |||||
| Shareholders' equity | 39.5 | 31.6 | 32.1 | 96.3 | 70.4 |
| Balance sheet total | 161.4 | 181.7 | 270.0 | 307.3 | 242.4 |
| Key figures | |||||
| RETURN RATIOS | |||||
| Average return on capital employed % | 27.1 | neg | neg | 18.1 | 18.1 |
| Average return on shareholders' equity % | 21.1 | neg | neg | 32.2 | 25.6 |
| MARGINS | |||||
| Operating margin % | 2.7 | –17.8 | –11.4 | 2.9 | 2.3 |
| Value added per employee (SEK m per person) | 1.7 | 1.2 | 1.1 | 1.2 | 1.3 |
| CAPITAL INTENSITY | |||||
| Capital turnover rate (multiple) | 2.0 | 1.9 | 2.2 | 2.4 | 2.7 |
| FINANCIAL MEASUREMENTS | |||||
| Debt/equity ratio % | 24.5 | 17.4 | 11.9 | 31.3 | 29.0 |
| Cash flow from current activities | –30.2 | –5.4 | –43.5 | –28.7 | 40.7 |
| Number of employees (average) | 69 | 87 | 146 | 171 | 172 |
| Liquid assets (incl. unused credit) | 60.0 | 68.0 | 17.1 | 46.6 | 149.2 |
ed to SEK –30 million for the year. Adjusted for restructuring activities and the sale of Group companies the cash flow was SEK 3 million.
New mobile telephones specially developed for an older target group received Doro's most outstanding breakthrough on the market. The Doro HandleEasy 326gsm is a simple mobile phone with a large, easy to read display, large well-defined buttons and grip-friendly surface.
Doro launched its new NeoBio DECT product series in 2007 with similarities to the previous Doro 500 and 600 series but with new characteristics. The design builds on clean lines and Swedish design.
Doro has gathered products for professional users of headsets under the Doro ProSound name. During the year Doro was the first Swedish company and second company in the world to get a headset TCO certified – the Doro ProSound hs1120.
Doro develops and sells electronic products mainly in the telecoms sector. This takes place in all categories for three separate target groups.
Home Electronics' target group is families. The products are mainly home telephones, baby monitors and walkie-talkies.
Care Electronics concentrates more on an older target group. With a comprehensive range of products (i.e. home and mobile phones, remote controls, ring-tone amplifiers etc.) we help senior citizens to continue doing what they appreciate despite the physical disabilities of old age.
Business Electronics are for professional users. The area covers a range of ergonomic telecoms products such as corded and cordless phones, headsets and walkie-talkies. Doro's products for professional use are adapted for professional environments that use standard interfaces.
Common to all Doro products is that they are characterized by our expertise in customized design, technology and quality control of products in Asia.
Differentiation is primarily in Doro's functionally customized design.
Different ranges are aimed at the target groups through different channels in order to increase their relevance:
Doro has long-lasting relationships in the consumer and business-to-business retail sectors. In addition, retailers are now expanding rapidly in the categories concentrating on senior citizens with physical disabilities. We create greater relevance for the Doro brand from our target groups' needs through the right choice of functions and sales channels.
2007 was a turning point, but also a tough year for Doro, which is active on a market that continues to be difficult, mainly in home telephony. We succeeded in turning around last year's loss of SEK 77 million to a profit of SEK 9 million thanks to a combination of restructuring and investing in products where Doro can provide value and margins.
We've worked hard to make Doro a company that is able to provide value for shareholders. Over the past two years we have gone from a headcount of 146 to 58 and we are working with a limited number of key customers on our largest markets. We've restructured the business by selling the lossmaking subsidiaries in Australia and Poland, but we have also tightened cost control.
Doro's long-standing core business in the business unit of Home Electronics accounted for 72 per cent of the company's total sales in 2007 and has been profitable despite the continued price pressure on the home telephony market. The Business Electronics business unit represented 12 per cent of Doro's sales, reported growth of 5 per cent over the year and boosted its investment in IP-related products.
A new company is in the process of developing thanks to the growing business unit of Care Electronics. Our aim is to be a more profitable company, which is better balanced between mature and growing business units.
As stated in the annual report, sales for the 2007 financial year amounted to SEK 346 million compared to SEK 433 million in 2006. Adjusted for sales of businesses sales fell by 5 per cent, while volumes actually rose by 6 per cent. The drop is due mainly to the continued price pressure on cordless telephones in the fixed home telephony segment. The improved profit for the business unit is an effect of the restructuring, cut in costs and sales of businesses to focus the business and a larger number of products with higher margins. The cash flow from operating activities was SEK -30 million for the year. Adjusted for restructuring activities and the sale of Group companies, the cash flow was SEK 3 million.
Sales doubled at Care Electronics in 2007 to SEK 51 million (26 m) and volumes rose by 73 per cent. Sales soared by almost 160 per cent in Q4.
Care Electronics is today the business unit with the highest margins.
Even though the business was still in its infancy in 2007 with only 16 per cent of sales, growth during the year was encouraging. We've increased investments and set aside more resources for the business unit.
Two new GSM telephones for senior citizens were launched in 2007, the HandlePlus 324gsm and HandleEasy 326gsm. The launch of new, attractive products is an important step in Doro's development and the Care Electronics business unit.
The fact is that we have created a new market by launching products that encourage senior citizens to use mobile phones. The target group is expected to grow considerably over the coming years in line with an increasingly elderly population in Europe. Competitors in the segment mainly consist of smaller companies and companies of the same size as Doro, rather than household names in global mobile telephony. In order to remain competitive our pace in building up this business unit will be critical. Doro, with the support of an increasingly competitive range, signed contracts with specialist distributors in 2007 in Germany, Spain, Italy and Israel. This work will continue to receive top priority in 2008.
Overall sales fell for Home Electronics by 17 per cent to SEK 238 million (286 m) in 2007 on the back of continued price pressure, while volumes rose by 2 per cent. Home Electronics succeeded however to turn around a loss to a profit thanks to cost cuts and improved margins.
We also launched two new DECT series in 2007, the NeoBio and a series of streamlined telephones called Thin. Business Electronics became one of the first companies in the world to become TCO certified for the professional ProSound® headset. In France and the UK we launched a new, corded telephone specially adapted for hospitals in Q4. The product will be launched in the Nordic region in 2008. Sales rose by 15 per cent to SEK 41 million (35 m) and volumes by 20 per cent, mainly due to increased distribution of existing products.
Ref.1: AEDE - Europe in the making - 2. The socio economic cultures/2.5. Implications of the aging population in Europe.
I believe we are well on the way to creating a new, growthoriented Doro
In summary I would like to conclude my comments for 2007 by thanking all investors, partners and employees for their support during the year, in our business dealings as well as in the restructuring.
The number of products with higher margins is increasing all the time, which, together with the annual effect of the restructured cost base, is expected to have a continued positive effect. The organic sales increase is meanwhile being held back by price pressure in the highly competitive telephony segment in Care Electronics. We see that there are still challenges ahead before we have succeeded in turning Doro around and begin reporting a positive cash flow.
We are continuing with our efforts to develop Care Electronics as a growth area, which will successively boost the Group's margins. We're also investing in our core business units in Home Electronics and Business Electronics.
The strong customer base, in the form of retailers, is an important platform for the company and will also in future be focused upon.
Through this strategy we believe that Doro can increase its revenues in 2008, increase gross margins and by controlling costs, successively increase profits and start providing value for shareholders who've supported us throughout the restructuring period.
Care Electronics provides telecoms and electronics products adapted for senior citizens. We are seeing greater demand for simplified electronics products that facilitate everyday life for an ageing population. The demographic development on this market will favour growth in this segment.
We're continuing to launch products that help senior citizens communicate despite slight or more serious problems with hearing, eyesight, agility or other cognitive limitation. Doro's products also help senior citizens live in their own homes longer.
Our wide range, combined with continued recruitment of new distributors means that we can expand geographically. This will make 2008 a very exciting year.
We'll be launching the follow-ups of our home products and investing more in Voice Over IP products during the second half of 2008, mainly for the business sector.
The streamlining carried out in recent years has cut the company's costs. We now also have an organization better equipped to meet the demands and needs of our major European customers.
We will invest in IT systems to achieve better product management and logistics and provide customers with better service.
Since taking over as the new CEO in October 2007 I have started to create a stronger supply culture in the company. I believe we're well on the way to creating a new, growthoriented company that will be able to provide positive results. We have a growth strategy for Care Electronics and the core business units of Home Electronics and Business Electronics make up a good base in the Group. It's my job as CEO to ensure that we have motivated employees and the resources needed to carry out the strategies mentioned.
Furthermore, I will invest in international development, new distributors and in strengthening the employees' feeling of belonging to a closely-knit, international company, where everyone at every level takes part in the practical work. My experience from my previous position as CEO of Doro in France will help me with this challenge.
The platform from which Doro will create value consists of an attractive brand, a relevant product range on a select market segment, long-term customer relations and cost efficiency. There is still a lot of work to do and at Doro we are determined to provide the results and improve cash flow. It's our challenge and our job to make sure that we do.
Jérôme Arnaud
An organizational change was carried out in 2007, where the three business units that the company will concentrate on in future crystallized: Care, Home and Business Electronics.
Care Electronics is the new growth area with good margins. Further resources are being invested here and also allocated from other areas. Home Electronics is responsible for the major range, which in 2007 became profitable and Business Electronics was characterised by expansion opportunities, not least of all in IP telephony. The organizational change, designed to create growth, was carried out as a part of Doro's streamlining efforts in 2007. This has resulted in drastically reduced costs.
Doro's Hong Kong office has received more functions and has now, in addition to being a logistics centre, also been given responsibility for project development of new products. The office has been located at the Hong Kong Science & Technology Parks since 2006, which is close to our important technological collaborative partners and suppliers in the region. Doro's product development takes place in collaboration between Lund and Hong Kong, while all manufacturing takes place in China, Taiwan and South Korea.
The following objectives characterize the typical attributes of a Doro product:
Doro's modern designs should encourage the products' use and recognition with distinctive characteristics.
Doro's products should be characterized by smart functions based on the target groups' definite needs.
Doro's products should be developed and marketed with the highest degree of quality through a combination of material choice, form, user performance and durability.
Doro's products should be inspirational and make people happy even when Doro sells on volume markets.
Many of us live far too complicated lives. With products that have functions which are never used, or which we hardly know why they are there. Doro wants to change this. Doro is therefore developing products that are user-friendly and adapted to give people a simpler everyday life. Irrespective of whether you're at work, at home with the children or a senior citizen.
Our customer segments have clearly defined target groups.
Care Electronics represents Doro's growth area with stronger growth and added value than the business units that have dominated Doro's business in recent years. 2007 was a breakthrough year with strong customer and volume growth, which now make up the base of the profitable development. Growth doubled in 2007 although it was an area that only represented fifteen per cent of Doro's total sales and Doro is now investing resources for new product development for this target group. Doro is still a new player in the area but nevertheless has quickly gone from sales of individual products to Care Electronics being a leading player with a competitive product concept.
This work is now starting to show results and Doro is feeling the boost that Care Electronics has given the entire company.
The Care Electronics business unit is now also opening up for an expansion onto new markets with new specialized distributors for the senior citizen market. These distributors can work with greater added value and work in parallel with Doro's traditionally strong position with major consumer electronics chains, which has provided good synergy in Doro's distribution. Doro's products in Care Electronics are attracting attention, not least the investment in simple mobile phones for senior citizens, which are considered a product area with considerable growth potential.
Doro has a central role as a product developing and valueadding organization, mainly between Chinese suppliers and retailers primarily in the Nordic region, France and the UK. This creates conditions that can be utilized for new markets. Doro's added value mainly builds on the following factors:
Knowledge of the end user is important for Doro when designing new products. The basic knowledge of the end-user has been created by working together with various partners who have each made a contribution. Two significant partners are the world-leading companies Ergonomidesign and Ericsson Consumer & Enterprise Labs. Together with these two partners Doro has collected significant expertise, both about the end-users, their world and where the products can expect to be sold.
The expertise Doro has built up and the products developed for the senior citizen target group for Care Electronics is now leading to better sales.
Key words: Electronic aids and ease of use Target group: Senior citizens
The UN and Eurostats' demographic projections show that the number of Europeans over eighty years old will have doubled by 2050. A greater average life expectancy and higher income levels are also clear trends. This is Doro's starting point for its investment in the senior market with smart, well-designed products that are easy to use for people with poor eyesight, hearing and other limitations. This might mean that a telephone has a handset that's a little easier to hold, that there are pre-programmed buttons with pictures of the people you call more often or that it's possible to increase the volume in the handset so that you can easily hear the person you're talking to.
Care Electronics has had a promising start with good growth. Sales increased from a low level in 2007 and finally represented fifteen per cent of Doro's total sales, with high margins. New distributors are being added all the time, the product portfolio is more complete and now covers more of the needs of retailers, specialist distributors and consumers.
Doro Care Electronics designs products that are adapted to two types of segment:
Easy – simple products adapted to senior citizens' general needs.
Plus – products specially adapted to meet the specific needs of senior citizens with more severe physical disabilities.
This division is also the basis of the segmented distribution strategy between major electronics chains on the one side and specialist distributors and retailers for the senior market on the other. The Doro Audio Plus stamp indicates a higher degree of product adaptation and creates greater added value in distribution. Many telephony products for senior citizens have a mark indicating an earpiece, but offer no guarantees. Doro has therefore developed a more qualified standard, Doro Audio Plus, which demands that products work with hearing aids and provide a high degree of volume adjustment for people without hearing aids.
Doro Care Electronics' products are sold not only via traditional home electronics chains (Easy products), but also to a greater extent via specialist retailers of electronic devices (Plus products) in order to directly reach the senior target group. Doro's Care Electronics product portfolio was also launched on new markets in 2007, which will continue in 2008. Competition in Care Electronics is limited mainly to Care Plus, while the Care Easy category has tougher competition. Doro's competition strategy builds on successively extending the product range for the respective market channel.
Competitors include Geemarc Telecom from the UK, which sells telephony products adapted for the hearing impaired and Depaepe from France, which has developed products for hospital environments. Other companies with similar products include Siemens and British Telecom.
Doro continued its successful enterprise with the Swedish design company Ergonomidesign in 2007. An example of a new product that this enterprise resulted in is the Doro Hear-Plus 317c, which is a stationary telephone specially adapted to help the hearing impaired. The telephone combines good ergonomics with a few, clear functions. Two clear buttons enable the telephone to switch between handset/earpiece and headset connected to its own socket.
Doro's new mobile phones specially developed for a more senior target group, saw the biggest breakthrough on the market. The HandlePlus 324gsm was the first mobile phone launched and is probably the simplest mobile phone available. The telephone only has five number buttons and you make your call using one of the five pre-programmed numbers. Inbuilt speakers, large buttons, headset and the ability to hang it around your neck make it simple to use and take with you.
More "normal" mobile phones with a full complement of buttons, but simplified functionality, have also been developed. Doro HandleEasy 326gsm is a simple mobile phone with a large, easy to read display, large well-defined buttons and is easy to hold.
The Doro Audio Plus stamp indicates a higher degree of product adaptation and creates greater added value in distribution.
Care Electronics is much more than large buttons. We combine good ergonomics and simplicity with few functions.
Jérôme Arnaud CEO & Business Unit Manager Doro Care Electronics
Key words: Smart function and design for the home Target group: Modern families
Home Electronics remains Doro's largest business unit. The majority of the range consists of home telephones (corded and cordless) and are IP compatible, i.e. compatible with the telephony services provided by internet providers. The product range also includes walkie-talkies (Personal Mobile Radio) and baby monitors.
66 per cent of Home Electronics' net sales in 2007 were attributable to sales of cordless phones, 22 per cent to corded phones, 2 per cent to IP telephony and 10 per cent to other products. The European market for cordless telephony, which is Doro's main market, continued to be under enormous price pressure in 2007, even if the market stabilised somewhat. During the period 2005-2007 the price per base unit for cordless phones has fallen 37 per cent.
According to estimates by the market research company MZA, around 35 million cordless phones were sold in Western Europe in 2007. This figure is based on the number of base units sold including one handset, which has significance because more than one handset can be used for the same base unit. MZA estimate that the number of handsets sold in Europe in 2007 was 58.5 million. This corresponds to a rise of 3 per cent compared to 2006. The market for cordless phones in Western Europe is expected to see sales increasing up to 2010 and then levelling off. The value of the European market for cordless phones is expected to be around EUR 1.3 billion for 2007 and expected to be relatively stable over the coming years.
According to MZA an estimated 24.7 million corded analogue telephones were sold in 2007, a drop of around 1 per cent. The drop from consumers is however greater, around 12 per cent, because cordless telephones are replacing corded phones to a greater extent. The Western European market is expected to be worth around EUR 350 million in 2007, but both volumes and value are expected to drop by 5-7 per cent annually over the next few years.
IP telephony is still being developed even though the high expectations of recent years have not been realized. Doro Home Electronics is helping to develop the next-generation telephony standard to replace DECT. The new standard is IP-based and called CAT-iq. The development of purely IP telephones in 2007 was for business telephones. The IP telephony market towards consumers is driven by operators and internet providers (ISP) or triple-play service suppliers.
Service providers offer Analogue Terminal Adaptor (ATA) boxes, often in combination with a new DECT telephone to get customers to transfer to their IP-based telephony. For consumers this involves no change.
All of Doro's Home Electronics models can be used in the range in order to transfer to IP telephony. In Sweden there were, according to the Swedish National Post and Telecom Agency, around 500,000 subscribers to IP-based telephony at the end of June, which is equivalent to an increase of around 60 per cent over the year. Most of the customers (95 per cent) were households. The number of households with IP-based telephony is therefore 11 per cent.
Doro's Home Electronics' products are mainly sold on the Western European market via major electronics chains. Good relationships with important retailers are crucial for Doro's success on the market. Part of Doro's strategy is to therefore have a strong sales and support organization for the major consumer electronics chains in Western Europe where Doro has been established for many years and holds a strategically important position. This position was strengthened in 2007, mainly in the UK.
Doro launched a new DECT product series, the NeoBio™ in 2007. With similarities from the former Doro 500 and 600 series but with new characteristics, the NeoBio's product design received a good reception from the market. The design builds on clean lines and Scandinavian design. Doro also launched a series of thin telephones in the Nordic region in 2007, which also received a good reception. The telephone's design is built on a thin profile and modern hi-tech feeling. Doro launched the Pink Selection in the UK in 2007 and a new DECT telephone, Arc, which gave good sales results.
Good relationships with important retailers are crucial for Doro's success on the market.
Thomas Bergdahl Business unit manager Doro Home Electronics
Key words: Ergonomic products for professional users Target group: Small and mid-size companies
Doro's professional products are fully compatible, meaning that they can be used in conjunction with existing technical solutions in the workplace.
Doro's products for professional use are divided into three groups:
Doro's "ingredient brand"– Ergonomic Sound™ is receiving lots of attention. Ergonomics is today an important element in the purchasing decision in terms of professional products. Doro is therefore taking ergonomics a step further by providing ergonomic functions for sound. In doing so we prevent work-related injury risks that would otherwise be caused by monotonous exposure and long-term use.
Doro has gathered products for professional users of headsets under the Doro ProSound name. Doro was the first Swedish company and second worldwide during the year to have a headset TCO approved – the Doro ProSound hs1120.
The Doro ProSound hs1120 has been designed in accordance with TCO Development's strict demands for good adaptation to the working environment and the environment in general. In addition to TCO's demands, the Doro ProSound hs1120 also uses Ergonomic Sound™ functions that help protect against sudden high noise levels by being captured by the headset instead of damaging the user's hearing.
The headset market is mainly dominated by the American company Plantronics and Jabra/GNnetcom. Doro ProSound is still in its infancy and market share is thus limited. Doro's aim is to enter this market in 2008.
In the latter part of 2007 Doro launched a niched product – the Doro aub200h (h=hygiene), which is a stationary telephone with specially designed buttons, magnetic handset rest, completely flat and without seams/joints. The aim is that it should be easy to clean and thereby very suitable for hospitals and public premises. This type of product is gaining ground in the UK where the problem of bacterial disease and hospital infections being reported is a major problem. Telephones and other objects used by many different people have been identified as one of the strongest contributory factors as to why some diseases are more widespread.
Two ranges of IP-based business solutions, the IP500 and 800 series, were introduced during the latter part of 2007. Doro's IP500 has been adapted for smaller companies. Sound, data gateway and switchboard functions, known as PBX functions, provide the IP500 with effective access to the internet, with connections both via the traditional telephone network and internet for up to eight users.
Doro's IP800 series is a range of IP terminals based on the SIP standard and can be adapted to various IP-based switchboards. The flagship, the Doro ip840c, is a corded VoIP telephone with a high-resolution display and it is possible to present detailed information such as current news headlines direct on the display. The telephone also uses broadband codec for the best possible sound quality. Sales of the IP 500 and 800 are expected to be more notable in the results for 2008.
| SIP | Session Initiation Protocol is a common, | |||||
|---|---|---|---|---|---|---|
| standardised network protocol for IP tele | ||||||
| phony. | ||||||
| VoIP | Voice over Internet Protocol is internet voice | |||||
| transfer. | ||||||
| Data gateway | A network node that links two separate net | |||||
| works. |
Our range builds on standardized solutions, which opens up new opportunities.
CEO & Business unit manager Doro Business Electronics
Doro places great emphasis on quality control. Regular checks and monitoring are the main elements in developing and manufacturing new products. Fully functional quality control with clear internal and external processes is a condition for being able to take the next step into the product area.
In the past few years Doro has concentrated manufacturing with a limited number of suppliers that have shown to have the capacity to maintain a high, even quality. Before a contract is signed with a new manufacturer, irrespective of product area, Doro carries out a factory evaluation consisting of a careful check of the company and production facilities. Every manufactured series is then inspected with spotchecks on site at the factory by our own staff before being transported to one of Doro's central warehouses in Malmö or Paris. Upon arrival at the warehouse the goods once again pass through quality control. In addition to these checks a more comprehensive check is made of the state of quality at all of the suppliers quarterly.
All suppliers are measured in the following areas:
In this way both Doro and the supplier can see what level the quality controls are at. Doro often helps with fault finding in the actual manufacturing process in Asia. This provides a great deal of knowledge into the options available for manufacturing new products, but also the ability to improve manufacturing of existing products.
Doro insists that suppliers sign a declaration stating their social responsibility. This declaration includes a number of demands about children and forced labour, working environments, remuneration levels, working hours and the right to belong to a union of choice. Doro's signing of the declaration gives the company the right to immediately cancel all links with the supplier upon breach of contract.
Doro markets and sells products whose use and recycling is covered by environmental directives, laws and regulations. Doro's quality and environmental manager is responsible for Doro following the laws and regulations that apply and each country has an environmental officer responsible for ensuring that the respective countries' environmental legislation is followed. Among the more comprehensive directives affecting Doro's business includes the EU's Waste of Electrical and Electronic Equipment ("WEEE") directive that came into force in August 2005 and the Restriction of the use of certain Hazardous Substances ("RoHS"), which came into force on 1 July 2006.
EU's REACH directive (Registration, Evaluation, Authorization and Restrictions of Chemicals) will be evaluated in 2008 for implementation in 2010. The effect on Doro as an importer of finished products is limited but it will still affect our processes.
Another directive due for implementation that will affect the company is the EUP directive (Energy Using Products). The effect on Doro will be to ensure ecological design, production and low energy use of battery chargers and external power supply units.
Doro has been listed on the OMX Nordic Exchange Stockholm since 1993. There are 17,407,631 shares.
No new share issues were carried out by Doro in 2007.
Doro will not pay any dividends for 2007. The shares quota value is SEK 1 (5). There are no outstanding convertibles or synthetic options.
Doro's share price climbed in 2007 by 16 per cent (fell by 34). Doro's market value on 31 December 2007 was SEK 101 million (87).
The AGM was held in Lund on 25 April 2007.
| 2007 | 2006 | 2005 | 2004 | 2003 | |
|---|---|---|---|---|---|
| Number of shares, (thousands)1 | 17,408 | 17,408 | 4,295 | 4,294 | 4,294 |
| Quota value, (SEK) | 1.00 | 5.00 | 5.00 | 5.00 | 5.00 |
| EPS after tax, (SEK)1 | 0.43 | –7.59 –15.68 | 5,55 | 3.65 | |
| Cash flow per share | –1.22 | –0.57 –10.12 | –6,70 | 9.50 | |
| Reported shareholders' equity, (SEK) 2.27 | 1.81 | 7.47 | 21.80 | 16.40 | |
| Market price at 31 Dec, (SEK) | 5.80 | 5.00 | 14.05 | 23.26 | 20.13 |
| Dividend, (SEK) | 0.00 | 0.00 | 0,00 | 0.00 | 0.00 |
| P/E ratio2 | 13.5 | N/A | N/A | 10.0 | 12.5 |
| Dividend yield (%)3 | N/A | N/A | N/A | N/A | N/A |
1 The average number of shares in 2001 was 2,101,791 and in 2006 10,814,669
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 on the closing date.
The parent company's share capital has changed in recent year through new share issues as follows:
| Year | Issue | No. of new shares |
Issue price1 |
Increase in share capital (SEK m) |
Amount paid (SEK m) |
|---|---|---|---|---|---|
| 1998 Directed issue | 2,740,260 | 18.48 | 2.7 | 50.6 | |
| 1998 New issue 1:7 | 1,212,894 | 27.00 | 1.2 | 32.7 | |
| 2001 Directed issue | 11,764,705 | 8.50 | 11.8 | 100.0 | |
| 2005 New issue | 7,141 | 1.00 | 0.0 | 0.0 | |
| 2005 Reverse split 5:1 | –17,180,000 | ||||
| 2006 New issue 3:1 | 12,885,000 | 6.00 | 64.4 | 71.2 | |
| 2006 Offset share issue | 227,631 | 7.66 | 1.1 | 1.5 | |
1 Issue prices not recalculated for new issues and reverse split
| The 10 largest shareholders | No. of shares |
% of shares |
No. of votes |
% of votes |
|---|---|---|---|---|
| Originat AB | 2,600,000 | 14.9 2,600,000 | 14.9 | |
| Doro Intressenter AB | 1,647,058 | 9.5 1,647,058 | 9.5 | |
| Gusgus AB | 848,250 | 4.9 | 848,250 | 4.9 |
| Johand AB | 848,250 | 4.9 | 848,250 | 4.9 |
| Runand AB | 848,249 | 4.9 | 848,249 | 4.9 |
| Alted AB | 825,751 | 4.7 | 825,751 | 4.7 |
| Erik A i Malmö AB | 816,250 | 4.7 | 816,250 | 4.7 |
| Dirbal AB | 800,000 | 4.6 | 800,000 | 4.6 |
| Venture Handels & Investment AB | 800,000 | 4.6 | 800,000 | 4.6 |
| Tedde Jeansson, SR | 691,355 | 4.0 | 691,355 | 4.0 |
| Sub-total | 10,725,163 | 61.6 10,725,163 | 61.6 |
| No. of shareholders |
As % of all shareholders |
No. of shares held |
As % of all shares |
|
|---|---|---|---|---|
| Under 501 shares | 2,403 | 72.7 | 242,864 | 1.4 |
| 501–1000 shares | 421 | 12.7 | 348,641 | 2.0 |
| 1001–5000 shares | 331 | 10.0 | 817,892 | 4.7 |
| 5001–10,000 shares | 62 | 1.9 | 468,616 | 2.6 |
| 10,001–20,000 shares | 36 | 1.1 | 555,962 | 3.1 |
| 20,001–50,000 shares | 23 | 0.7 | 794,751 | 4.5 |
| 50,001–100,000 shares | 8 | 0.2 | 547,800 | 3.1 |
| Over 100,000 shares | 21 | 0.6 | 13,631,105 | 78.3 |
| Total | 3,305 | 100.0% | 17,407,631 | 100.0% |
The number of shareholders has fallen from 3,774 to 3,305. Of the total shares held, about 12% (10) are held by foreign shareholders and about 1% (4) by institutional holders.
for Doro AB, corporate registration number 556161-9429.
Doro AB is a publicly owned limited company (hereafter 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 (post code 226 43), Sweden. Doro has operations in France, Hong Kong, Norway, the UK and Sweden. The structure of the Group is outlined in Note 14.
Business activities. Doro markets a broad and innovative range of telecoms and consumer electronics products, primarily for the European market. Doro provides user-friendly products of high quality and modern design for consumers and businesses. Doro's product range is divided into three Business Units: Home Electronics (cordless digital telephones, corded telephones, telephone answering machines, baby monitors etc.), Business Electronics (headsets and office telephones) and Care Electronics (various specialist products for senior citizens).
Global conditions. Doro operates mainly in the rapidly changing telephony products market for consumers and businesses in Europe. Production mainly takes place in China. The company protects its products by owning the tools and through active participation in the design, development and quality assurance processes.
Large purchase volumes make Doro an attractive customer and mean competitive costs per unit for the company in terms of development and production. Large purchase volumes also strengthen Doro's ability to negotiate with subcontractors.
Profits. Doro recorded sales of SEK 346 million (433 m) in 2007, a drop of 20 per cent compared to last year. Adjusted for sales of companies, sales fell by 5 per cent, while volumes rose by 6 per cent.
The market for the main product, cordless phones, hasn't changed in volume terms compared with last year. This market picture should be compared with strong volume growth in 2004 and 2005. The selling prices of DECT telephones have continued to fall and there is a general price pressure on the market. A certain degree of stabilisation was seen in Q4.
The profit before tax and financial items was SEK 9.2 million (-77 m). The headcount fell by 22 to 58 (80), which led to fewer overheads ahead of 2008. The year was burdened with one-off costs and restructuring costs of SEK 3 million (49 m).
Doro sold the previously wholly-owned subsidiary Doro Australia Ltd Pty on 16 May and the company had a positive impact on Doro's results of SEK 3 million up until that date. The results have been included in the Group's calculations. The capital loss that arose from the sale was covered by the liquidation of the restructuring reserve and thereby had no affect on the Group's results.
The Group's profit after tax was SEK 8 million (–95 m) for the year. A recalculation has been carried out for the Group's deferred tax assets, which has resulted in a tax cost of SEK1 million.
New organization for greater focus on products and customers. A new organization was formed on 21 December 2006 for sharper focus on customers and customized products. During Q1 2007 a reorganization was completed, dividing the business into three business units:
The new organization means development times for new products can be cut further. In addition, the Group moved away from a national organization during the year and now has a Key Account Management-based sales organization with shared service centres in Lund and Paris and purchasing logistics in Hong Kong.
Business units. Doro carries out business activities through three business units, which are currently divided as: Home Electronics, which is mainly home telephony and represented 72 per cent (83) of sales for the year, Business Electronics, mainly office telephony, 12 per cent (10) of sales and Care Electronics, specialising in telecoms and electronics products for senior citizens, 16 per cent (7) of sales.
Home Electronics, which previously represented the majority of Doro's losses, has improved its profit margins during the year. The continued price fall led to sales dropping by 17 per cent to SEK 238 million (286 m), while volumes rose by 2 per cent compared to last year. Overall, the business area turned around a profit in 2007 as a direct result of the cost savings schemes and improved margins.
Doro launched the new NeoBio series in September and in Q4 sales started to take off. The new series builds on a more modern technological platform, but the legacy from Doro's former series can be still seen in the design. The new thin-lined DECT telephones, th50 and th55 were well received by the market with their clean, streamlined designs. This series has so far only been launched in the Nordic region.
Business Electronics has continued to grow due to improved distribution of its existing products. Sales increased by 16 per cent to SEK 41 million (35 m) and volumes by 20 per cent.
A new series of corded office telephones was launched in the UK and France in Q4. These will also be launched in the Nordic region in 2008.
Care Electronics doubled its sales in 2007 to SEK 51 million (26 m), while volumes rose by 73 per cent. Care Electronics, which develops and distributes telecoms and electronics products specially adapted for senior citizens, has seen an accelerated sales trend over the year.
The sales increase was mainly an effect of the introduction of a new GSM telephone, the HandleEasy 326gsm, with a functional design for senior citizens.
Care Electronics is a very attractive area for the future, where Doro's position on the market over the year has been strengthened by new product launches specially adapted for the needs of senior citizens.
Regions. Doro's largest markets are France (40 per cent of sales), the Nordic region (35 per cent) and the UK (10 per cent). Doro also sells via distributors on other selected markets (15 per cent).
Organization and staff. The overall objectives of the Group in staff issues are to recruit, train and retain skilled, committed staff. Annual career assessment talks are an important part of this work.
The Group management team was reorganized in 2007 and now consists of five individuals. Due to the new organization some staff have been given new areas of responsibility.
The average number of employees was 61 (87).
Changes to the board and Group management. Bo Kastensson was appointed as the new chairman of the board at the AGM on 25 April. Former board member Anders Bülow left the board and Jonas Mårtensson was elected as a new board member. Rune Torbjörnsen left his position on the board when the new CEO was appointed on 24 October. The board now consists of Bo Kastensson, Anders Berg, Jonas Mårtensson and Tomas Persson.
Jérôme Arnaud was appointed as the new CEO by the board on 24 October. He is the former CEO of Doro France. He is also the head of the Business Electronics and Care Electronics business areas.
The board's proposal for guidelines for remuneration to senior executives for 2008 mainly mean 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 a flexible remuneration, which should have a pre-determined ceiling and be based on the results in relation to profit targets (and in certain cases other key figures). The maximum cost of bonus payments should not exceed SEK 5 million. The total cost for fixed and flexible remuneration should be decided annually at a sum that includes the company's entire remuneration costs, which allow for senior executives to allocate parts of their fixed and flexible salaries to other benefits, such as pensions. Pension plans for management should mainly be defined contribution plans.
Upon dismissal by the company senior executives might be eligible for a redundancy payment, which should have a predetermined ceiling. If the employee resigns his/her position then no redundancy payment will be paid.
The board will have the right to deviate from the guidelines if there is considered to be just cause.
Organizational structure. Doro has carried out an efficiency plan in recent years to create a lower cost level with improved efficiency and increased distribution capacity. Part of this focus involved the sale of Doro Australia Ltd Pty. The buyer was Westan PTY LTD, Melbourne, Australia, which acquired all the shares on 16 May and will thereby also be Doro's distributor in Australia and New Zealand. Assets in Doro Atlantel Sp.Zo.o were sold on 3 April to TM Distribution Sp.zo.o who will be a distributor for Doro's products in Poland. The Danish and Finnish companies were sold during the year to the benefit of local distributors. There is currently a merger underway in Sweden between Doro Nordic AB and Doro AB.
Product development and development costs. Doro carries out various projects together with different external partners for product development and design. Most of the costs are usually absorbed by the manufacturing partner. In many cases these costs are part of Doro's acquisition values of the products. Doro employs design companies from various countries and these costs are either fixed or variable. Doro also sometimes buys technology from various external companies. The Group's development costs for 2007 were SEK 5 million (5m). Doro also invests in various moulding tools to protect the design of products. These are activated until such time as the first product is ready for delivery. The development work is then written off over one to two years depending on the type of product.
At the end of 2007 Doro had no patents registered by the company but it does have the right to use various patents regulated by agreements. Doro has registered the brands Doro, Airborne, Audioline and Atlantel. A number of product names, patterns and figures are also protected.
Sales per product area and primary segment. Doro operates in the following product areas: cordless telephones, corded telephones (including telephone answering machines, caller-id products), GSM telephones and other consumer-related electronics products. DECT telephones are the largest product area, accounting for 51 per cent (49) of total sales followed by corded telephones with more than 29 per cent (27) of total sales.
Performance in the various segments is reported in Note 2.
Investments. Investments are made in design, moulding tools, control equipment, inventory, computers and software systems. Investments amounted to SEK 5 million (3m). See accounting principles.
Legal processes. Doro is involved in two disputes. A detailed account is given in Note 21.
In the most important dispute Doro made a claim totalling SEK 106 million upon Sojitz (Nissho Iwai) in Japan. Doro lost in the first instance in July 2005. The court's decision has been appealed against and the next decision is expected to take another year.
A dispute about stock has been won but not finalised. No new disputes arose in 2007.
The environment. Doro has no business activities that require environmental licences.
Doro does not own any production units. Comprehensive co-operation takes place with a number of factories where production services are purchased. Whilst surveying factories, various environmental demands are set. An increasing number of factories are working with different environmental programmes and intend to apply for ISO 14000 certificates.
Quality. Regular, quarterly, follow-ups of suppliers' quality take place with the help of the Doro score card. This card emphasises on the suppliers' factories processes and escalation point in terms of reported quality shortfalls and how they are remedied. An evaluation takes place on site of possible new suppliers for all quality related processes, while a first evaluation linked to Doro's "Code of Supplier Conduct" is carried out. Product quality is also checked continually from individual batches.
Regulations. Doro's "Quality and Regulatory Manager" checks on the company's products that they at least meet the prevailing legal requirements on actual markets, technical specification and environmentally related demands.
Ethics. Doro uses third-parties to verify that suppliers are meeting their respective countries' legislation and Doro's demands about employment terms and conditions. This is also carried out on an ongoing basis at regular intervals at all factories.
Cash flow, investments and financial position. The cash flow from operating activities was SEK 7 million (12 m) in Q4. Cash flow for the year from operating activities was SEK -30 million (-6 m), mainly as a result of the restructuring scheme, which had a negative impact on the profits by SEK 24 million, and which was paid in 2007. Major items included are salary payments for dismissed personnel (around SEK 6 million), consultancy costs (around SEK 4 million), cancelled contracts (around SEK 3 million) and costs for moving (around SEK 2 million).
The sale of Doro's subsidiary in Australia meant a drop in the consolidated working capital of around SEK 16 million without the corresponding positive effect in the cash flow from operating activities. The sale is reported as part of the Group's investment activities as a positive sum of SEK 9.4 million. In total this involves a negative impact on cash flow of around SEK 7 million.
Investments for the year amounted to SEK 5 million (1 m).
At the end of the period Doro had liquid assets of SEK 8 million, and unutilised credit facilities of SEK 52 million, giving the company a total of SEK 60 million at its disposal on 31 December 2007. The equity/assets ratio was 24 per cent at year-end, compared with 17 per cent at the start of the year.
Dividend and financial targets. The board set a results target at the time of the new share issue in 2006 for an operating margin of a minimum five per cent over a business cycle. The previous targets of a maximum debt/equity ratio of 1.3 (interest-bearing debt/equity) remain unchanged.
The organic expansion will be funded from internally provided funds, while new share issues will finance larger acquisitions.
Financial overview. Reports are presented in the various financial reports with quarterly developments:
Quarterly reports. The board has decided on the following dates to publish quarterly reports in 2008:
January–March 2008: 6 May
The quarterly reports will be published on Doro's website: www.doro.com
Parent company. 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 co-ordinated by the parent company, while the product and quality department monitors design and tooling issues as well as quality assurance for deliveries. Purchasing and logistics staff are responsible for material flows within the Group.
Doro AB reported sales of SEK 29 million (27m). The loss after financial items was SEK 31 million (-88).
Doro AB is responsible for the majority of the subsidiaries' financing. Net debt is SEK 46 million (30m). Shareholders' equity totals SEK 45 million (73m).
The board and its work schedule. Doro's board consisted at the beginning of the year of five members elected by the EGM on 12 September 2006. One of the main shareholders (Mellby Gård Group) was represented by a single board member, Anders Bülow. Anders Berg and Tomas Persson were re-elected as board members and Jonas Mårtensson was elected as a new board member.
CEO Rune Torbjörnsen was included as an ordinary board member and the CFO is co-opted to the board as its secretary. Other company executives take part in board meetings in a reporting capacity.
Rune Torbjörnsen left the board in conjunction with the change of CEO on 24 October. Doro now has four ordinary board members.
The board held 7 (13) meetings during the 2007 financial year and the items on the agenda are set out below. A number of tele-conferences were held in addition to those planned. Attendances were very good.
January: Approval of the annual accounts and a review with auditors
April meeting 1: Quarterly report
April meeting 2: Statutory meeting. Signing on behalf of the company by the board and two board members together (of whom one shall be the board chairman or the CEO)
June: Review of the cost-efficiency scheme
August: Quarterly report
October: Quarterly report and change of CEO
December: Budget for 2008 and new credit agreements.
Information is sent out about one week before each meeting. Each month the previous month's results are sent out along with comments. The board continually addresses subjects such as the business situation, budget, periodical accounts and costefficiency. Five board members are planned for 2008. Doro did not have any formal committees in 2007.
Nominations. Nominations for the board are co-ordinated by an informal nominations committee comprising of representatives of the main owners, Originat, Doro Intressenter, Alted, Dirbal and Venture together with a representative from Nordea, whereby a proposal for a new board is submitted. A formal nominations committee is not therefore considered necessary.
Auditing. The scope and focus of auditing are planned and decided by Anders Berg, Bo Kastensson and Jonas Mårtensson. The scope and focus of the audit are presented by the company's auditor. An interim audit is carried out based on the quarterly report from 30 September and the result of the audit is reported at a meeting with the chairman of the board and senior executives, both after the interim audit and after the final audit. At the February board meeting the company's auditors present the results of their audit of the Group's internal systems and the annual accounts for the entire board.
Remuneration issues. Remuneration issues are decided by Anders Berg, Bo Kastensson, Jonas Mårtensson and Tomas Persson. Salaries and bonus schemes for managers were discussed and established at various meetings. The board as a whole has responsibility for remuneration issues and other employment terms for senior executives and the heads of subsidiaries. The chairman of the board approves all terms for management reporting to the CEO. Employment terms for around 10 people are dealt with.
Swedish code of corporate governance. From 1 July 2008 Doro will be covered by the Swedish code of corporate governance when a special Audit Committee and Remuneration Committee will be formed. A proposal has been submitted to the AGM 2008 for a new Nominations Committee. Information about this will be available at www.doro.com. The company began a process in 2007 to prepare itself for the changes that will be required.
Risks. Doro's risks and uncertainty factors are mainly related to supplier interruptions, customer relations and exchange rate fluctuations. Doro's financial risk management can be seen in Note 32. Other risks are explained below.
Price risks. Only currency and interest risks pose price risks to financial instruments. Doro has no liquid assets placed outside normal bank accounts.
Doro is primarily active in telephony and is affected by the general price reductions in the electronics industry. This can mean that buy-back prices are lower than the acquisition prices. Doro works proactively with various forecasting tools and stock monitoring programs. The company cooperates with various suppliers, enabling good flexibility based on forecasts and converted into purchase orders. Changing demands by authorities or technological advances can mean that products in stock will have a significantly lower sales value than expected.
Various forms of price changes of raw materials have so far been able to be absorbed by falling prices of electronics components.
Cash flow risks. Doro's cash flow from operating activities is usually negative during the first six months of the year and positive in the final quarter. Credit volumes are adjusted to meet these fluctuations.
Sensitivity analysis. Doro is affected by different factors and the following effects arise following a 1 per cent change in different variables (SEK million):
| 2007 | 2006 | |
|---|---|---|
| Price change | +/– 3 | +/– 4 |
| Volume change | +/– 1 | +/– 1 |
| US dollar rate | +/– 2 | +/– 3 |
| Interest rate change | +/– 0 | +/– 1 |
The analysis is made in a static environment. In reality, a drop in USD for example can lead to lower prices for customers while an increase can be compensated for with a slight time delay.
An underlying reason for the price pressure on the market, not least in Home Electronics, is probably the weaker US dollar in recent years.
Competition risks. Doro is active in competitive markets. The new division into different market segments is a means of meeting the competition. Furthermore, Doro continuously runs programmes to increase productivity.
Credit risks. In recent years Doro has experienced very low credit losses (less than 0.5 per cent of sales) due to the fact that the main customer group is large businesses with regular trade. The largest single customer accounts for less than 7 per cent of the Group's sales. Doro operates in most countries without credit insurance.
Complaint risks. 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.
Insurance risks. 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 risks. Political risk is seen as the risk that authorities in different countries create difficulties for business, or make business more expensive or impossible. All manufacturing is carried out in Asia (this applies to nearly all the competition). All sales are carried out in stable countries.
Environmental risks. This risk is seen as the costs that may be incurred by Doro for reducing environmental impact. Doro has no manufacturing units of its own. Doro actively complies with new environmental directives. So far Doro has not had any problem meeting different forms of fees for returning electrical waste, packaging and used batteries.
Legal disputes. This risk is seen as the cost that may be incurred by Doro for running different legal proceedings and costs to third parties. Doro is involved in a number of disputes. Extra legal advice has been sought as a preventative measure, resulting in very few new disputes. The fixed telephony industry has so far had few patent disputes. As long as different patent claims are made to all players they will often cancel each other out.
Annual General Meeting. The AGM will be held at 5 p.m. on 6 May 2008 at the hotel Scandic Star, Glimmervägen 5 in Lund, Sweden.
Proposed dividend. The board has decided to recommend to the Annual General Meeting that no dividend be paid for the year (0.00).
Proposed treatment of accumulated loss. The board and the CEO propose that the accumulated loss in the parent company of SEK 32,160,586.72 be carried forward.
Expected future developments. The successively improved share of products with higher margins and the full-year effect of the restructuring scheme are expected to continue having a positive effect on profits in 2008. Organic sales growth is still being held back by price pressures being felt currently for telephony products in Home Electronics. In Care Electronics we are expecting increased efforts and new product launches to mean continued positive sales growth.
Events after the end of the financial year. No events of any significance have taken place after the end of the financial year that affect this annual report.
| The Gro |
Parent Company |
||||
|---|---|---|---|---|---|
| (SEK m) | Note | 2007 | 2006 | 2007 | 2006 |
| Income/net sales | 1, 2, 3 | 346.3 | 433.2 | 28.6 | 26.9 |
| Operating costs | |||||
| Manufacturing services bought in | –230.6 | –331.2 | 0.0 | –0.6 | |
| Other external costs | 4, 22, 27 | –50.4 | –92.7 | –32.5 | –32.4 |
| Personnel costs | 5–10 | –55.4 | –66.6 | –26.7 | –14.5 |
| Depreciation and impairment of property, plant and equipment |
13 | –0.8 | –11.4 | –0.3 | –9.7 |
| Depreciation and impairment of intangible assets |
12 | 0.0 | –8.2 | –0.3 | – |
| Operating profit/loss | 2 | 9.2 | –76.9 | –31.2 | –30.3 |
| Profit/loss from financial items | |||||
| Profit/loss from shares in Group companies | 24 | 0.0 | 0.6 | 1.8 | –56.3 |
| Interest income and similar profit/loss items | 11 | 1.2 | 10.2 | 1.3 | 11.8 |
| Interest costs and similar profit/loss items | 11 | –2.3 | –15.6 | –2.9 | –13.6 |
| Profit/loss after financial items | 8.1 | –81.7 | –30.9 | –88.4 | |
| Tax on profit/loss for the year | 23 | –0.6 | –13.0 | 0.8 | 1.2 |
| PROFIT/LOSS FOR THE YEAR | 7.5 | –94.7 | –30.1 | –87.2 | |
| Attributable to: Parent company's shareholders |
7.5 | –94.7 | |||
| Key figures | |||||
| Average number of shares (thousands) | 16 | 17,408 | 10,815 | ||
| Earnings per share before tax | 0.47 | –7.56 | |||
| Earnings per share after tax | 0.43 | –8.76 |
| The Gro up |
Parent Company |
||||
|---|---|---|---|---|---|
| Assets (SEK m) |
Note | 2007 | 2006 | 2007 | 2006 |
| FIXED ASSETS | |||||
| Intangible assets | |||||
| Capitalised expenditure for development work | 12 | 1.7 | – | – | – |
| Goodwill | 12 | 8.8 | 8.8 | – | – |
| Brands | 12 | – | – | 17.9 | – |
| Tangible assets | |||||
| Equipment and tools | 13 | 3.8 | 2.2 | 1.0 | 0.6 |
| Financial assets | |||||
| Participations in Group companies | 14 | – | – | 61.4 | 71.3 |
| Other long-term securities held | – | – | – | – | |
| Deferred income tax recoverable | 23 | 15.7 | 16.2 | 15.7 | 15.7 |
| Total fixed assets | 30.0 | 27.2 | 96.0 | 87.6 | |
| CURRENT ASSETS | |||||
| Stocks | |||||
| Finished goods and goods for resale | 35 | 51.2 | 51.3 | – | – |
| Advanced payment to suppliers | 5.0 | 0.2 | – | – | |
| Current receivables | |||||
| Accounts receivable – trade | 32 | 53.0 | 59.5 | 0.7 | 2.5 |
| Receivables from Group companies | – | – | 8.5 | 25.0 | |
| Other current receivables | 5.8 | 5.9 | 1.4 | 2.1 | |
| Prepaid expenses and accrued income | 15 | 8.1 | 7.1 | 1.7 | 1.7 |
| Cash and bank balances | 8.3 | 30.5 | 1.8 | 2.6 | |
| Total current assets | 131.4 | 154.5 | 14.1 | 33.9 | |
| TOTAL ASSETS | 161.4 | 181.7 | 110.1 | 121.5 |
| Shareholders ' eq uity and |
The | Gro up |
Parent Company |
|||
|---|---|---|---|---|---|---|
| liabilities (SEK m) |
Note | 2007 | 2006 | 2007 | 2006 | |
| SHAREHOLDERS' EQUITY | ||||||
| Restricted equity | ||||||
| Share capital 17,407,631 shares, quota value SEK 1 | 16 | 17.4 | 87.0 | 17.4 | 87.0 | |
| Revaluation reserve | – | – | 4.6 | 4.6 | ||
| Other allocated capital | 86.2 | 86.2 | 55.5 | 55.5 | ||
| Share premium reserve | – | – | – | 5.7 | ||
| Reserves | 2.6 | 2.2 | – | – | ||
| Non-restricted equity | ||||||
| Profit/loss brought forward | –74.2 | –49.1 | –2.1 | 7.6 | ||
| Profit/loss for the year | 7.5 | –94.7 | –30.1 | –87.2 | ||
| Total shareholders' equity | 39.5 | 31.6 | 45.3 | 73.2 | ||
| Pro visions |
||||||
| Provisions for taxation | 29 | – | – | – | – | |
| Provisions for guarantees | 27 | 9.7 | 11.8 | – | – | |
| Other provisions | 21, 26, 28, 30, 31 | 10.1 | 35.3 | 4.7 | 4.4 | |
| Total provisions | 19.8 | 47.1 | 4.7 | 4.4 | ||
| CURRENT LIABILITIES | ||||||
| Interest-bearing liabilities | ||||||
| Bank overdraft facilities | 17 | 2.1 | 0.0 | 0.0 | 0.0 | |
| Liabilities to credit institutions | 6.0 | 4.5 | – | – | ||
| Liabilities to Group companies | – | – | 46.4 | 30.0 | ||
| Total interest-bearing liabilities | 8.1 | 4.5 | 46.4 | 30.0 | ||
| Non interest-bearing liabilities | ||||||
| Accounts payable – trade | 77.4 | 77.9 | 5.0 | 5.2 | ||
| Liabilities to Group companies | – | – | 0.4 | 0.5 | ||
| Other liabilities | 1.8 | 4.0 | 1.5 | 0.7 | ||
| Accrued expenses and prepaid income | 18 | 14.7 | 16.6 | 6.8 | 7.5 | |
| Total non interest-bearing liabilities | 94.0 | 98.5 | 13.7 | 13.9 | ||
| TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES | 161.4 | 181.7 | 110.1 | 121.5 | ||
| Pledged assets | 19 | 258.0 | 257.1 | 231.4 | 241.3 | |
| Contingent liabilities | 20 | 0.0 | 7.7 | 0.0 | 7.7 |
| Changes | in shareholders ' eq uity 2007 (SEK m) |
Share capital |
Other allocated capital |
Reserves | Profits brought forward |
Total shareholders' equity |
|---|---|---|---|---|---|---|
| The | Gro up |
|||||
| Shareholders' equity 31 December 2005 | 21.5 | 55.5 | 4.2 | –49.1 | 32.1 | |
| New issue | 65.5 | 13.6 | 79.1 | |||
| Issue costs | –7.9 | –7.9 | ||||
| Unconditional shareholders' contribution | 25.0 | 25.0 | ||||
| Exchange rate differences 1) | –2.0 | –2.0 | ||||
| Total changes in shareholders' equity not reported in the income statement |
65.5 | 30.7 | –2.0 | 94.2 | ||
| Loss for the year | –94.7 | –94.7 | ||||
| Shareholders' equity 31 December 2006 | 87.0 | 86.2 | 2.2 | –143.8 | 31.6 | |
| Loss coverage | –69.6 | 69.6 | 0.0 | |||
| Exchange rate differences 1) | 0.4 | 0.4 | ||||
| Total changes in shareholders' equity not reported in the income statement |
–69.6 | 0.4 | 69.6 | 0.4 | ||
| Profit for the year | 7.5 | 7.5 | ||||
| Total income and costs for the year | 0.4 | 7.5 | 7.9 | |||
| Shareholders' equity 31 December 2007 | 17.4 | 86.2 | 2.6 | –66.7 | 39.5 |
Specification of exchange rate differences shown as shareholders' equity concern translation of the overseas Group companies' income statements and balance sheets in Swedish kronor (independent overseas activities).
| 2007 | 2006 | |
|---|---|---|
| Accumulated exchange rate differences, 1 Jan. | 2.2 | 4.2 |
| Exchange rate differences for the year 2) | 0.4 | –2.0 |
| Accumulated exchange rate differences, 31 Dec. | 2.6 | 2.2 |
1) Exchange rate differences upon translation of financial reports of overseas activities using the current method.
2) Hedging activities have in the past reduced the effect of exchange rate differences. No hedging took place in 2007, so the effect is SEK 0.0 million for 2007 (cut by SEK 0.3 m in 2006). For risk management in the Group see Note 32.
| Total | |||||
|---|---|---|---|---|---|
| Share | Revaluation | Statutory | Accumulated | shareholders' | |
| capital | reserve | reserve | deficit | equity | |
| Parent Company |
|||||
| Shareholders' equity 31 December 2005 | 21.5 | – | 55.5 | –20.4 | 56.6 |
| New issue | 65.5 | 13.6 | 79.1 | ||
| Issue costs | –7.9 | –7.9 | |||
| Unconditional shareholders' contribution | 25.0 | 25.0 | |||
| Write-up of shares in Group companies | 4.6 | 4.6 | |||
| Group contribution received (net after tax) | 3.0 | 3.0 | |||
| Total changes in shareholders' equity not | |||||
| reported in the income statement | 65.5 | 4.6 | 33.7 | 103.8 | |
| Loss for the year | –87.2 | –87.2 | |||
| Shareholders' equity 31 December 2006 | 87.0 | 4.6 | 55.5 | –73.9 | 73.2 |
| Loss coverage | –69.6 | 69.6 | |||
| Group contribution received (net after tax) | 2.2 | 2.2 | |||
| Total changes in shareholders' equity not | |||||
| reported in the income statement | –69.6 | 71.8 | 2.2 | ||
| Loss for the year | –30.1 | –30.1 | |||
| Shareholders' equity 31 December 2007 | 17.4 | 4.6 | 55.5 | –32.2 | 45.3 |
| the | Gro up |
Parent | Company | |
|---|---|---|---|---|
| (SEK m) Note |
2007 | 2006 | 2007 | 2006 |
| CURRENT ACTIVITIES | ||||
| Profit/loss after financial items | 8.1 | –81.7 | –30.9 | –88.4 |
| Adjusted for items not in cash flow, etc | ||||
| Change in allocations 26–31 |
–20.6 | 19.4 | 0.3 | 2.6 |
| Depreciation and write downs 12, 13 |
0.8 | 19.6 | 10.6 | 66.3 |
| Income tax paid | –0.1 | –0.4 | – | – |
| Capital loss from disposals 24, 36 |
– | – | –0.4 | – |
| Cash flow from current activities before changes in working capital |
–11.8 | –43.1 | –20.4 | –19.5 |
| Change in working capital | ||||
| Change in stocks 35 |
–10.9 | 11.8 | – | – |
| Change in receivables | –6.2 | 37.8 | 19.0 | 36.5 |
| Change in non interest-bearing liabilities | –1.3 | –11.9 | –0.2 | 0.4 |
| Cash flow from current activities | –30.2 | –5.4 | –1.6 | 17.4 |
| INVESTMENT ACTIVITIES | ||||
| Capital contribution to subsidiaries | – | – | –9.1 | –27.9 |
| Repayment of conditional shareholders' contribution and redemption of shares |
– | – | – | – |
| Disposal of Group companies 36 |
9.4 1) | 13.4 | 9.4 | – |
| Acquisition of other securities | – | 0.1 | – | – |
| Acquisition of intangible fixed assets 12 |
–1.7 | – | –18.2 | – |
| Acquisition of tangible fixed assets 13 |
–3.4 | –4.0 | –0.7 | –3.7 |
| Cash flow from investment activities | 4.4 | 9.5 | –18.6 | –31.6 |
| FINANCING ACTIVITIES | ||||
| New issue | – | 79.1 | – | 79.1 |
| Issue costs | – | –7.9 | – | –7.9 |
| Unconditional shareholders' contribution | – | 25.0 | – | 25.0 |
| Change in interest-bearing liabilities | 3.6 | –76.6 | 16.4 | –83.6 |
| Group contribution received | – | – | 3.0 | 4.2 |
| Cash flow from financing activities | 3.6 | 19.6 | 19.4 | 16.8 |
| Cash flow for the year | –22.2 | 23.7 | –0.8 | 2.6 |
| Liquid assets at 1 Jan. 2007 | 30.5 | 8.0 | 2.6 | 0.0 |
| Exchange rate difference in liquid assets | – | – | – | – |
| Liquid assets during the year of disposed companies | – | –1.2 | – | – |
| Liquid assets at 31 Dec. 2007 2) | 8.3 | 30.5 | 1.8 | 2.6 |
1) This item is reported as cash flow from current activities in the financial statement
2) Liquid assets consist of cash and bank balances
| 2007 | 2006 | |||||||
|---|---|---|---|---|---|---|---|---|
| (SEK m) | Q 1 | Q 2 | Q 3 | Q 4 | Q 1 | Q 2 | Q 3 | Q 4 |
| Net sales | 79 | 73 | 81 | 114 | 107 | 102 | 104 | 121 |
| Operating costs | –77 | –71 | –80 | –108 | 112 | –114 | –111 | –154 |
| Operating profit/loss before depreciation | 2 | 1 | 1 | 6 | –5 | –12 | –7 | –33 |
| Planned depreciation and write-downs | –1 | 0 | 0 | 0 | –2 | –2 | –2 | –14 |
| Operating profit/loss after depreciation | 1 | 1 | 1 | 6 | –7 | –14 | –9 | –47 |
| Net financial items | 0 | –1 | 0 | 0 | 0 | 1 | 2 | –7 |
| Profit/loss after financial items | 1 | 0 | 1 | 6 | –7 | –13 | –8 | –54 |
| Tax on profit for the year | 0 | 0 | 0 | –1 | 0 | 0 | –5 | 8 |
| Net profit/loss | 1 | 0 | 1 | 6 | –7 | –13 | –13 | –62 |
| 2007 | 2006 | |||||||
|---|---|---|---|---|---|---|---|---|
| (SEK m) | Q 1 | Q 2 | Q 3 | Q 4 | Q 1 | Q 2 | Q 3 | Q 4 |
| Intangible assets | 9 | 9 | 9 | 10 | 17 | 17 | 17 | 9 |
| Tangible assets | 3 | 2 | 2 | 4 | 13 | 11 | 7 | 2 |
| Financial assets | 16 | 16 | 16 | 16 | 30 | 30 | 30 | 16 |
| Stock | 66 | 56 | 43 | 51 | 100 | 77 | 60 | 51 |
| Current receivables | 57 | 55 | 56 | 72 | 71 | 103 | 56 | 73 |
| Cash and bank balances | 13 | 6 | 5 | 8 | 5 | 5 | 5 | 31 |
| Total assets | 164 | 144 | 130 | 161 | 236 | 243 | 176 | 182 |
| Shareholders' equity | 31 | 32 | 33 | 40 | 26 | 80 | 70 | 32 |
| Interest-bearing liabilities | 3 | 11 | 10 | 8 | 82 | 71 | 14 | 5 |
| Non interest-bearing liabilities/provisions | 130 | 101 | 87 | 114 | 128 | 92 | 92 | 146 |
| Total shareholders equity and liabilities | 164 | 144 | 130 | 161 | 236 | 243 | 176 | 182 |
| 2007 | 2006 | |||||||
|---|---|---|---|---|---|---|---|---|
| (SEK m) | Q 1 | Q 2 | Q 3 | Q 4 | Q 1 | Q 2 | Q 3 | Q 4 |
| Operating profit/loss after financial items | 1 | 0 | 1 | 6 | –7 | –13 | –8 | –54 |
| Planned depreciation | 1 | 0 | 0 | 0 | 2 | 2 | 2 | 14 |
| Paid income tax | 0 | 0 | 0 | 0 | 0 | 0 | –5 | –5 |
| Change in working capital | –16 | –25 | 1 | 1 | 4 | –4 | 9 | 47 |
| Cash flow from current activities | –14 | –25 | 2 | 7 | –1 | –15 | –2 | 12 |
| Disposal of Group companies | 0 | 9 | 0 | 0 | 0 | 0 | 13 | 0 |
| Investments | 0 | –1 | 0 | –3 | –1 | –1 | –1 | 2 |
| Cash flow from investment activities | 0 | 8 | 0 | –3 | –1 | –1 | 12 | 2 |
| New issue | 0 | 0 | 0 | 0 | 0 | 30 | 41 | 0 |
| Unconditional shareholders' contribution | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 25 |
| Change in interest-bearing liabilities | –2 | 9 | –1 | –2 | 0 | –11 | –57 | –9 |
| Translation differences, other | –1 | 1 | –1 | 2 | –1 | –3 | 6 | –5 |
| Cash flow from financing activities | –3 | 10 | –2 | 0 | –1 | 16 | –10 | 11 |
| Cash flow (Change in liquid assets) | –17 | –8 | –1 | 4 | –3 | 0 | 0 | 25 |
| (SEK m) | 2007 | 2006 | 2005 | 2004 | 2003 | |
|---|---|---|---|---|---|---|
| Income statement | ||||||
| Income | 346.3 | 433.2 | 621.3 | 648.8 | 647.5 | |
| Operating profit/loss before depreciation and write downs | 10.0 | –57.3 | –60.7 | 24.8 | 34.6 | |
| Operating profit/loss after depreciation and write downs | 9.2 | –76.9 | –71.0 | 19.1 | 15.4 | |
| Net financial items | –1.1 | –4.8 | –4.2 | 8.3 | 12.2 | |
| Profit/loss after financial items | 8.1 | –81.7 | –75.2 | 27.3 | 27.6 | |
| Balance sheet | ||||||
| Fixed assets | 30.0 | 27.2 | 58.2 | 50.5 | 44.2 | |
| Current assets | 123.1 | 154.5 | 211.8 | 256.8 | 198.1 | |
| Cash and bank balances | 8.3 | 30.5 | 8.0 | 14.5 | 33.1 | |
| Shareholders' equity | 39.5 | 31.6 | 32.1 | 96.3 | 70.4 | |
| Interest-bearing liabilities | 8.1 | 4.5 | 81.2 | 34.8 | 12.6 | |
| Non interest-bearing liabilities and provisions | 113.8 | 145.6 | 156.7 | 176.2 | 159.1 | |
| Balance sheet total | 161.4 | 181.7 | 270.0 | 307.3 | 242.4 | |
| KEY FIGURES (Definitions on page 43) | ||||||
| Return ratios Average return on capital employed % |
27.1 | neg | neg | 18.1 | 18.1 | |
| Average return on shareholders' equity % | 21.1 | neg | neg | 32.2 | 25.6 | |
| Margins | ||||||
| Gross margin % | 2.9 | –13.2 | –9.7 | 3.8 | 5.3 | |
| Operating margin % | 2.7 | –17.8 | –11.4 | 2.9 | 2.3 | |
| Net margin % | 2.2 | –18.9 | –12.1 | 4.2 | 4.3 | |
| Value added per employee (SEK m per person) | 1.7 | 1.2 | 1.1 | 1.2 | 1.3 | |
| Capital turnover | ||||||
| Capital turnover rate (multiple) | 2.0 | 1.9 | 2.2 | 2.4 | 2.7 | |
| Financial data | ||||||
| Debt/equity ratio % | N/A | N/A | 2.28 | 0.21 | N/A | |
| Interest cover ratio (multiple) | 8.9 | N/A | N/A | 10.5 | 6.6 | |
| Equity/assets ratio % | 24.5 | 17.4 | 11.9 | 31.3 | 29.0 | |
| Cash flow from current activities | –30.2 | –5.4 | –43.5 | –28.7 | 40.7 | |
| Number of employees | 69 | 87 | 146 | 171 | 172 | |
| Liquid assets (incl. unused credit) | 60.0 | 68.0 | 17.1 | 46.6 | 149.2 | |
| Investments | 5.1 | 4.0 | 8.9 | 9.0 | 4 7 |
2004, 2005, 2006 and 2007 according to IAS/IFRS. 2003 has not been restated.
Definitions of key figures appear on page 43.
This Annual Report and Consolidated Accounts were approved by the board and CEO on 15 April 2008 for publication and will be presented to the AGM on 6 May for determination.
The Consolidated Accounts have been produced in accordance with the International Financial Reporting Standards (IFRS/IAS) issued by the International Financial Accounting Standards Board (IASB) and interpretations from the International Financial Reporting Interpretations Committee (IFRIC) 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 Accounting Standards Council's recommendation 32:06 (Accounting for legal entities), plus the Swedish Financial Accounting Standards Council's Emerging Issues Task Force's statement concerning listed companies.
New accounting principles. The accounting principles applied correspond to those applied last year with the exception of the following.
A number of new/amended standards and interpretations came into force during the year, of which the following had significance for the Doro Group:
IFRS 7 Financial instruments: Disclosures. IFRS 7 has not affected the income statement or balance sheet and only involves additional demands for disclosures about financial assets and liabilities.
Addition to IAS 1 Presentation of financial statements. The addition requires that information should be submitted that makes it possible for the user of financial reports to judge the company's objectives, principles and methods for managing capital.
IASB also has new/amended standards that have yet to come into force, which can be freely applied in advance. The Doro Group has not applied these standards in advance. Of future standards, IFRS 8 Operations sector, will affect the Group's financial reporting.
IFRS 8 Operating segments. IFRS 8 (Operating segments) is a new standard that applies from 1 January 2009. The new standard replaces IAS 14 and places demands on segment information to be presented from the executive management's perspective, meaning that this should correspond to the internal reporting procedures. Doro will apply the standard from 1 January 2009.
The basis for preparing accounts. Assets, allocations and liabilities are based on historical acquisition values unless otherwise stated below.
All amounts, unless otherwise stated, are in millions of Swedish kronor (SEK m).
Consolidated accounts. Principles. 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 5 (10) 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 to their actual value at the date of acquisition. If the terms for provisions for the restructuring scheme are met then provisions are made in the acquisition analysis. Provisions for deferred tax on acquired untaxed reserves are made in conjunction with the acquisition. Unutilised tax carry forwards obtained in conjunction with the acquisition are converted into deferred tax assets if the assessed earning capability means that it can be expected that the assets can be utilised. 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 a write-down requirement.
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. Every year a new reconciliation and booking of the expected purchase price is carried out. An examination is carried out to see whether a need for depreciating goodwill exists.
The internal 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.
Exchange rates. Translation of foreign activities. The relationship of an overseas activity to the parent company is crucial for its classification and thereby the translation method. Doro's overseas activities mainly buy from external companies and sell in local currency and are classified as autonomous. All Group companies overseas are therefore classified as independent. This means that all assets and liabilities in the subsidiaries are translated at the closing day rate, whilst all items in the income statements are translated at the closing day rate, whilst 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 an effect partly 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. Exchange rate differences are not carried forward in the income statements and are instead carried directly to equity.
Exchange rates. The following exchange rates have been used in consolidating the accounts:
| Average rate | Closing day rate | ||||
|---|---|---|---|---|---|
| Country | Currency | 2007 | 2006 | 2007 | 2006 |
| Australia | AUD | 5.64 | 5.56 | N/A | 5.41 |
| Denmark | DKK | 1.24 | 1.24 | 1.26 | 1.21 |
| Euroland | EUR | 9.25 | 9.26 | 9.44 | 9.05 |
| Hong Kong | HKD | 0.86 | 0.95 | 0.82 | 0.88 |
| Norway | NOK | 1.16 | 1.15 | 1.19 | 1.10 |
| Poland | PLN | 2.45 | 2.38 | 2.62 | 2.36 |
| UK | GBP | 13.49 | 13.57 | 12.79 | 13.53 |
| USA | USD | 6.74 | 7.39 | 6.40 | 6.85 |
Effects of changing exchange rates. Translation of receivables and liabilities in foreign currencies. Receivables and liabilities in foreign currencies are valued at the closing day rates and unrealised exchange rate profits and losses are included in the results.
Hedging of future flows. Doro did not hedge any future flows in 2007. For further information see Note 32.
Revenue recognition. 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, when the price is fixed and the collection of a receivable is probable.
Remuneration to staff. 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.
Pensions. Provisions for and payments of pensions (corresponding to future payments) are made according to different pension plans. All pension commitments not taken over by insurance companies, or otherwise hedged through funding by an external party, are reported in the balance sheet. Most of Doro's commitments to staff are in the form of various premium-related pension plans. In addition there are few benefit-linked pension plans. In France and Poland there are agreements concerning pension remuneration based on factors such as salary, period of employment, etc. An actuarial assessment has been made for all commitments, for which provisions have been made, to determine the liability.
Research and development. 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 developments. Product development costs include those for product adaptations, design, model approval, etc. Doro only has internally processed development.
Costs relating to the development phase are capitalised 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 capitalised. 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. When capitalisation has occurred the intangible fixed asset is written off over its expected lifespan. Depreciation plans of two years start from the time each respective product is introduced on the market.
External partners' manufacturing tools are however owned by Doro and their cost is capitalised and deducted 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. 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.
Financial instruments. The Group uses no financial derivatives to hedge itself against exchange rate fluctuations.
Write-downs. Each annual account considers whether there is any indication for write-downs of the reported values of the Group's assets. When there is an indication that an asset has dropped in value its recyclable value is established. The recyclable value is the higher value of an asset's net sale value and its utilisation value. When establishing the utilisation value a current value is assessed for the estimated future payments that the asset is expected to generate during its utilisation. When establishing the current value and 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. Write-backs are carried out if there is no longer good cause for write-downs: Write-downs and write-backs are reported in the income statement.
An annual goodwill reconciliation is done for the expected earnings and cash flow development. Write-downs of goodwill are done if considered necessary. There is currently only goodwill related to France of SEK 8.8 million. A simplified estimate has been made because of the positive cash flow expected in France.
Depreciation. Linear depreciation according to plan is based on the acquisition values of the assets and their estimated economic lifespan:
Tools (for manufacturing products) 2–3 years (if the product's lifespan is > 1 year) Computers, cars, furniture etc. 2–5 years
Leasing. Leasing is classified in the consolidated accounts as financial or operational leasing. 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 it is an operational leasing. Financial leasing agreements for company cars, copying machines, computer equipment and the like are reported for intangible reasons as operational leasing. Doro has no financial leasing agreements. Property rents are included in operational leasing. No significant leasing agreements were signed in 2007.
Stocks. Stocks are valued at whatever is the lower of the acquisition value (FIFO) and the net sale value (lowest value principle). The acquisition value is calculated for each delivery.
Technological development is rapid and prices fall regularly. Write-down of stock is carried out in line with a model where older stock ages give higher write-down requirements. Different product families have different write-down periods. Net sales values are defined as the sales price minus sales costs. Writedowns to the net sale value including write-downs due to technological and commercial obsolescence are made in each respective Group company. Write-downs increase on a scale and the products are written down to 50 per cent after 6-12 months and then fully written down after 18 months depending on the product family. In addition to these principles, individual writedown assessments are carried out.
Guarantees and repairs. Provisions are made for the cost of repairing goods that can be returned within the guarantee period (normally one year 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.
Accounts receivable and liabilities. Accounts receivable and similar operationally-related financial instruments are reported according to the trade date principle. Accounts receivable are reported net after deductions for uncertain accounts receivable. Deductions for uncertain accounts receivable are based on a model in which the due date gives an increased deduction. In addition, individual assessments are made of the accounts receivable, taking expected customer losses into account.
Other receivables are reported net after deductions for uncertain accounts receivable that are based on individual assessments with consideration to expected losses connected with these receivables. Operational liabilities are reported at their acquisition value.
Provisions. Provisions are defined as liabilities that are uncertain with reference to amount or time of regulation. 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 restructuring measures are recorded as provisions in the balance sheet.
Taxes. All tax is accounted for in the income statement that is expected to be paid on the recorded results. 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 carry-forwards and other Group tax deductions.
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 carry forward. Deferred tax assets are included in the balance sheet only to the extent of value that can probably be utilised within the near future. An individual assessment is made of the situation for companies in each country. Companies that have been profitable for many years give a full value of their loss carry forwards. Companies that have recently become profitable give a valuation according to their plans. Companies that have shown an uneven trend of profits and losses give a specific estimation of the probable outcome of the value of the loss carry forwards. When calculating deferred tax the current nominal tax rate in each country is used.
The Group's balance sheet shows the individual company's untaxed reserves divided into shareholders' equity and deferred tax. The Group's income statement shows deferred tax as tax relating to the annual change in untaxed reserves.
Cash flow statement. 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 future income and expenses relating to the cash flow of investment activities.
Liquid assets. Liquid assets comprise cash and bank balances plus approved bank credits. There is no other type of liquidity (short-term investments etc).
Segment reporting. Doro's reporting is based on income statements and balance sheets from different countries. Subsidiaries are gathered together in segment reporting by country groups, reflected in the internal accounts. Goodwill relating to different markets is divided into these groups.
Classification. The balance sheet items that appear as 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.
Hedging of net investments in foreign subsidiaries. Doro's policy was that the parent company raised external loans in exposed currency. Exchange rate differences for these loans, after deductions for the relating tax effect, are reported in the consolidated accounts directly under shareholders' equity to the extent that they correspond to translation differences in the foreign subsidiary. No hedging of net investments in foreign subsidiaries was carried out in 2007.
Intra-Group hedging. Doro's parent company had internal forward contracts with its subsidiaries. However, these subsidiaries have valued their receivables/liabilities at the closing day rates, because these forward contracts cease to be used in 2008.
Write-downs and write-backs of participations in Group companies. Participations in Group companies are valued at their acquisition value. If the recyclable value (see paragraph above entitled "Write-downs") should prove to be lower, a write down occurs. Write backs can occur of previous write-downs of the value of participations in subsidiaries when there is no longer a reason for the write-down.
Group contributions and shareholders' contributions. Group contributions that are paid and received are accounted for directly under equity as a reduction or increase of non-restricted equity. The tax effect is considered for the Group contribution. This tax effect is booked in the income statement and under shareholders' equity. Paid shareholders contributions are recorded by the payee as an increase in the "Participations in Group companies" item, after which an assessment is made as to whether a writedown of the participation is appropriate. Received shareholders' contributions are recorded by the receiver directly against nonrestricted shareholders' equity.
Amounts in SEK million unless otherwise stated.
Income (called net sales in Parent Company) divided into type of income
| 2007 | 2006 | |
|---|---|---|
| Product sales | 346.3 | 415.7 |
| Service and repairs | 5.5 | |
| Training and technical service | 4.0 | |
| Project sales | 8.0 | |
| Total | 346.3 | 433.2 |
Doro is organised into various geographic areas and reporting sectors. Results are therefore presented for each geographic segment.
| Operating | Operating | ||
|---|---|---|---|
| Profit/loss 2007 | Net sales | expenses | profit/loss |
| Nordic region | 133.0 | –130.3 | 2.7 |
| Rest of Europe | 201.6 | –200.0 | 1.6 |
| Rest of world | 10.6 | –7.5 | 3.1 |
| Parent company and eliminations | 1.3 | 0.5 | 1.8 |
| Total | 346.3 | –337.1 | 9.2 |
| Operating | Operating | ||
| Profit/loss 2006 | Net sales | expenses | profit/loss |
| Nordic region | 175.9 | –180.1 | –4.2 |
| Rest of Europe | 211.3 | –216.2 | –4.9 |
| Rest of world | 46.4 | –58.9 | –12.5 |
| Parent company and eliminations | –0.4 | –54.9 | –55.3 |
| Total | 433.2 | –510.1 | –76.9 |
| Balance sheet 2007 | Assets | Liabilities | Net assets |
| Nordic region | 86.2 | –55.0 | 31.2 |
| Rest of Europe | 77.1 | –57.0 | 20.1 |
| Rest of world | _ | – | – |
| Parent company and eliminations | –1.9 | –9.9 | –11.8 |
| Total | 161.4 | –121.9 | 39.5 |
| Balance sheet 2006 | Assets | Liabilities | Net assets |
| Nordic region | 88.3 | –46.2 | 42.1 |
| Rest of Europe | 84.7 | –64.8 | 19.9 |
| Rest of world | 24.1 | –20.2 | 3.9 |
| Parent company and eliminations | –15.6 | –18.9 | –34.3 |
| Total | 181.7 | –150.1 | 31.6 |
| Investments | 2007 | 2006 | |
| Nordic region | 0.0 | 0.0 | |
| Rest of Europe | 1.0 | 0.0 | |
| Rest of world | 0.0 | 0.3 | |
| Parent company and eliminations | 4.1 | 3.7 | |
| Total | 5.1 | 4.0 | |
| Depreciation | 2007 | 2006 | |
| Nordic region | 2.0 | 2.6 | |
| Rest of Europe | 0.3 | 0.5 | |
| Rest of world | 0.0 | 1.0 | |
| Parent company and eliminations | –1.5 | 15.4 | |
| Total | 0.8 | 19.5 | |
| Write-downs | 2007 | 2006 | |
| Nordic region | – | – | |
| Rest of Europe | – | – | |
| Rest of world | – | – | |
| Parent company and eliminations | – | – | |
| Total | 0.0 | 0.0 |
Of the parent company's invoicing, SEK 26 million (23) relates to subsidiaries. Invoicing from subsidiaries to the parent company amounted to SEK 5 million (7).
Costs for operational rental and leasing charges during the year totalled SEK 0.5 million (2). Agreed future rental and leasing costs amount to SEK 1.9 million (0.7) and fall due for payment over the next four years as follows: 2008 (SEK 0.8 m), 2009 (SEK 0.7 SEK) 2010 (SEK 0.5 SEK) and 2011 (SEK 0.0).
| Of which | Of which | |||
|---|---|---|---|---|
| 2007 | men | 2006 | men | |
| Parent company | 21 | 18 | 16 | 89% |
| Other, Sweden | 10 | 7 | 13 | 69% |
| Norway | 5 | 4 | 6 | 84% |
| Denmark | 1 | 1 | 2 | 100% |
| Finland | – | – | 2 | 100% |
| UK | 4 | 2 | 4 | 75% |
| Australia | – | – | 19 | 37% |
| Hong Kong | 4 | 3 | 4 | 75% |
| France | 17 | 7 | 19 | 42% |
| Poland | – | – | 2 | 50% |
| Total | 61 | 41 | 87 | 62% |
| 2007 | Total Women (%) | 2006 | Total Women (%) | |
|---|---|---|---|---|
| Board | 4 | 0% | 5 | 0% |
| Group management | 5 | 0% | 6 | 0% |
| Parent company | 1 | 0% | 1 | 0% |
| Other, Sweden | 0 | 0% | 0 | 0% |
| Norway | 1 | 0% | 1 | 0% |
| Denmark | 0 | 0% | 1 | 0% |
| Finland | 0 | 0% | 1 | 0% |
| UK | 0 | 0% | 1 | 0% |
| Australia | – | 0% | 1 | 0% |
| Hong Kong | 0 | 0% | 1 | 0% |
| France | 1 | 0% | 1 | 0% |
| Poland | 0 | 0% | 1 | 0% |
7.1 Staff absence in Sweden (as a percentage)
| 2007 | 2006 | |||
|---|---|---|---|---|
| Of which | Of which | |||
| Total | over | Total | over | |
| Age | absence | 60 days | absence | 60 days |
| Under 30 | – | – | 2.2 | – |
| 30–50 | 1.9 | 3.8 | 4.3 | 3.8 |
| Over 50 | 16.4 | 15.9 | 0.6 | – |
| Men | 5.2 | 3.6 | 4.1 | 4.0 |
| Women | 2.2 | – | 3.0 | – |
These figures include one individual who has been on sick leave throughout 2006 and 2007.
No serious work-related injuries occurred in 2007 and 2006 (that led to an absence of over 60 days) at any Doro site.
| 2007 | 2006 | |
|---|---|---|
| Salaries and other remuneration | ||
| Parent company | 16.1 | 8.3 |
| Subsidiaries | 21.2 | 29.9 |
| Group total | 37.3 | 45.1 |
| Payroll overheads excluding pension costs | ||
| Parent company | 6.1 | 3.2 |
| Subsidiaries | 6.2 | 7.2 |
| Group total | 12.3 | 10.4 |
| Pension costs (of which premium-based) | ||
| Parent company | 2.8 (2.8) | 1.5 (1.5) |
| Subsidiary | 0.8 (0.8) | 2.6 (2.5) |
| Group total | 3.6 (3.6) | 4.1 (4.0) |
Pension costs for the managing directors of the subsidiaries amounted to SEK 0.2 million (0.5).
| The board | Other | The board | Other |
|---|---|---|---|
| and CEO | employees | and CEO | employees |
| 3.2 | 17.2 | 1.4 | 18.9 |
| 1.3 | 2.2 | 1.0 | 2.6 |
| 0.0 | 0.5 | 0.0 | 1.1 |
| 0.0 | 0.0 | 0.7 | 0.3 |
| 0.0 | 2.7 | 0.0 | 1.7 |
| – | – | 0.6 | 5.1 |
| 0.0 | 1.4 | 0.0 | 1.4 |
| 1.4 | 7.3 | 1.2 | 8.5 |
| 0.2 | 0.1 | 0.3 | 0.2 |
| 6.0 | 31.3 | 5.2 | 39.8 |
| 2007 2006 |
| Other | ||||
|---|---|---|---|---|
| The board 2007 | Fees | Pension | remuneration | Total |
| Chairman of the board | 200 | 0 | 0 | 200 |
| Other board members | 225* | 0 | 0 | 225 |
| Total | 425 | 0 | 0 | 425 |
| * Fees to other board members amounted to SEK 75,000 each. | ||||
| Other |
| Senior executives 2006 | Salary | Bonus | Pension* remuneration | Total | |
|---|---|---|---|---|---|
| Jérôme Arnaud (CEO) Other senior executives 4,039 Total |
1,495 5,534 |
98 529 627 |
2031) 697 900 |
153 188 341 |
1,949 5,453 7,402 |
1) Concerns Doro SAS.
Remuneration paid in 2007 to other executives no longer with the company Other
| Salary | Bonus | Pension* remuneration | Total | ||
|---|---|---|---|---|---|
| Rune Torbjörnsen | |||||
| (former CEO) | 1,541 | 392 | 834 | 1,155 | 3,922 |
| Other | 1,228 | 0 | 296 | 6 | 1,530 |
| Total | 2,769 | 393 | 1,130 | 1,161 | 2,392 |
* Pension schemes for senior executives are all premium-based with premiums of SEK 1.8 million (1.3) paid.
Principles. Fees are paid to the Chairman and other Board members in accordance with decisions made by the AGM. Payment for work on the boards of subsidiaries is made separately.
Remuneration to the CEO and other senior executives comprises a basic salary, variable remuneration, other benefits (primarily a company car) and pension premiums. The balance between basic salary and variable remuneration should be in proportion to the executive's responsibilities and authorities. Rune Torbjörnsen was part of the management team as CEO until October.
There are 4 (6) other members of the management team. Jörgen Lindell was part of the management team between March 2007 and July 2007.
Comments to the table. The annual salary to the CEO, Jerôme Arnaud, consists of a fixed salary of SEK 1.495 million.
Bonus. The maximum bonus is 50 per cent of the fixed
salary. This refers to earned bonus. The bonus is linked to profits and sales growth, where the bonus normally begins when 90 per cent of the target is reached. The bonus is normally paid out during the year after it is earned. The maximum cost of the bonus must not exceed SEK 3.5 million.
Pensions. The retirement age for other senior executives of the Group is 65 and pensions are usually paid in accordance with the general pension plan plus full remuneration for the entire amount of salaries according to the ITP/ITPK plans. All pension benefits are irrevocable, i.e. not dependent on continued employment. The period of notice for senior executives is in line with LAS (the Employment Protection Act), or a maximum of 12 months.
No agreements have been signed concerning pension commitments or the equivalent, more than is mentioned in the periods of notice mentioned above, whether for board members or senior executives.
Notice. The period of notice by the company and the CEO is one year. The CEO has the right to salary over 12 months during the period of notice.
No severance pay will be paid if notice is given by senior management.
Nominations and decision-making processes. These procedures are explained in the directors' report.
Share-related compensation. No member of the board or senior executive receives any compensation relating to shares (options, convertible debentures or similar) issued by Doro or the main owner.
Options. There are no remaining options to be issued to senior executives.
Note 11 Interest income, expenses and similar items
| The Group | Parent Company | |||
|---|---|---|---|---|
| Income | 2007 | 2006 | 2007 | 2006 |
| Interest income, external | 1.2 | 0.6 | 1.0 | 0.4 |
| Interest income, internal | – | – | 0.4 | 1.5 |
| Exchange rate gains | 0.0 | 9.5 | 0.0 | 9.9 |
| Other | 0.0 | 0.1 | –0.1 | 0.0 |
| Total | 1.2 | 10.2 | 1.3 | 11.8 |
| Expenses | The Group 2007 |
2006 | Parent Company 2007 |
2006 |
| Interest expenses, external Interest expenses, internal |
2.0 – |
3.7 – |
1.6 1.3 |
2.7 1.6 |
| Exchange rate losses | 0.0 | 7.5 | 4.8 | |
| Other | 0.3 | 4.4 | 4.5 |
Interest expenses are the same as interest paid because there are no loans except bank overdraft facilities (where interest is paid at the end of each period).
Comments on Doro's currency policy are available in Note 32.
The effects of exchange rate fluctuations on the business amounted to SEK 5 million (5) and financial items were affected by SEK 0 million (2). Exchange rate fluctuations include those differences arising between booking and paying liabilities and receivables in other currencies, the consolidation effect of the subsidiaries' results and the change to the average exchange rate when purchasing manufacturing services.
Net investments in foreign subsidiaries have been previously hedged by raising loans in the appropriate currencies. Doro's loans in 2007 only reflected the loans needed for the business and investments of net assets in foreign currencies are no longer hedged. Because the company no longer hedges transactions, Doro is therefore not affected by financial items and effects of exchange rate fluctuations are only applicable to the business.
Goodwill is divided between the Group's cash generating units identified by market area (geographically).
| 2007 | 2006 | |
|---|---|---|
| Nordic region | 0 | 0 |
| Rest of Europe | 9 | 9 |
| Rest of the world | 0 | 0 |
| Total | 9 | 9 |
| The Group / Goodwill | 2007 | 2006 |
| Acquisition value brought forward | 14.0 | 14.0 |
| Acquisitions during the year | 0 | 0 |
| Adjustment of acquisition value | 0 | 0 |
| Closing accumulated acquisition value | 14.0 | 14.0 |
| Write-downs brought forward | 5.1 | 0.0 |
| Write-downs for the year | 0.0 | 5.1 |
| Closing depreciation/write-downs | 5.1 | 5.1 |
| Closing residual value according to plan | 8.8 | 8.8 |
An examination of the need for a write-down takes place annually and when indications of a need for a write-down appear. Recoverable amounts for cash-generating units are set based on calculated beneficial values. A write-down test has been carried out at the lowest level, where separable cash flow has been identified. No acquisitions were carried out in 2006 or 2007 and no sums have been paid as an additional purchase price.
| Acquisition value brought forward 4.5 Acquisitions during the year 1.7 Closing accumulated acquisition value 6.2 Depreciation according to plan brought forward 4.5 Depreciation according to plan for the year 0.0 Closing depreciation according to plan 4.5 Closing residual value according to plan 1.7 |
for development work | 2007 | 2006 |
|---|---|---|---|
| 4.5 | |||
| 0.0 | |||
| 4.5 | |||
| 1.5 | |||
| 3.0 | |||
| 4.5 | |||
| 0.0 |
A depreciation plan of two years starts from the market introduction date of each respective product. Purchases in 2007 refer to market introductions in 2008. A total of SEK 2.7 million has been carried as an expense for development work in 2007.
The parent company acquired brands for SEK 17.9 million from subsidiaries. Because these brands were internally developed they have been eliminated in the consolidated balance sheet.
| The Group | Parent Company | |||
|---|---|---|---|---|
| Equipment and tools | 2007 | 2006 | 2007 | 2006 |
| Acquisition value brought forward | 31.7 | 42.9 | 17.9 | 18.5 |
| Acquisitions during the year | 3.4 | 4.0 | 0.7 | 2.9 |
| Sales/Disposals/Other | –21.9 | –15.3 | –15.6 | –3.5 |
| Closing acquisition value | 13.2 | 31.7 | 3.0 | 17.9 |
| Depreciation according to plan | ||||
| brought forward | 29.7 | 31.6 | 17.3 | 11.8 |
| Depreciation according to plan | ||||
| for the year | 0.8 | 11.4 | 0.3 | 9.7 |
| Sales/Disposals/Other | –21.1 | –13.1 | 15.6 | –4.2 |
| Closing depreciation according | ||||
| to plan | 9.4 | 29.7 | 2.0 | 17.3 |
| Closing residual value according | ||||
| to plan | 3.8 | 2.2 | 1.0 | 0.6 |
| (SEK m) | Share- | |||||
|---|---|---|---|---|---|---|
| Book holders' | Book | |||||
| No. of | Nominal | value | equity2) | value | ||
| Subsidiary | shares | % | value | 2007 | 2007 | 2006 |
| Doro A/S, Norway | 3,000 | 100 | NOK 1.5 m | 0.6 | 1.0 | 0.6 |
| Doro Denmark A/S1) | 5,000 | 100 | DKK 5.0 m | 5.7 | 6.3 | 15.6 |
| Doro Tele OY1) | 500 | 100 | EUR 10 (000) | 0.0 | –0.4 | 0.0 |
| Doro Finans AB1) | 1,000 | 100 | SEK 0.1 m | 11.0 | 21.2 | 11.0 |
| Doro Nordic AB1) | 200,000 | 100 | SEK 20.0 m 19.3 | 22.3 | 19.3 | |
| Doro UK Ltd | 3,013,400 | 100 | GBP 3.0 m | 7.1 | 5.6 | 7.1 |
| Doro Audioline GmbH1) | 1 | 100 | CHF 20 (000) | 1.0 | 0.8 | 1.0 |
| Doro Hong Kong Ltd | 4,500 | 100 | HKD 4.5 m | 5.1 | 4.9 | 5.1 |
| Doro SAS | 30,000 | 100 | EUR 4.5 m | 11.6 | 18.8 | 11.6 |
| Doro Atlantel Sp.Zo.o.1) 2,800 | 100 | PLN 14.0 m | 0.0 | 0.0 | 0.0 | |
| Doro Australia Ltd Pty – sold 2007 | – | – | 0 | |||
| Total | 61.4 | 80.6 | 71.3 | |||
| 1) Dormant company |
2) Shareholders' equity (Net assets) refers to Group book value per subsidiary, e.g. shareholders' equity according to the subsidiary's balance sheet including consolidated residual value attributable to the subsidiary.
| 2007 | 2006 | |
|---|---|---|
| Opening balance | 71.3 | 95.4 |
| New issue | – | 28.0 |
| Adjusted acquisition value | – | – |
| Shareholders' contribution | – | – |
| Redemption of shares | – | – |
| Repayment of conditional shareholders' contribution | – | – |
| Merger of Group company | – | – |
| Write-downs for the year | –10.0 | –56.6 |
| Write-backs for the year | – | – |
| Write-ups for the year | – | 4.6 |
| Closing balance | 61.4 | 71.3 |
Write-downs after balancing cash flow and results estimates amounted to SEK 10.0 million for the year distributed among the following companies:
Doro Denmark A/S SEK 10.0 m
Write-backs have been made where there is no longer reason for the write-down.
There are sub-groups within the Group, which include the following:
– Doro UK Ltd is the parent company of Gima Electronics Ltd.
– Doro Atlantel Sp.Zo.o is the parent company of Doratel Sp.Zo.o.
| Subsidiary – Company reg. no | Registered office |
|---|---|
| Doro A/S - 934210719 | Fredrikstad, Norway |
| Doro Denmark A/S - 180130 | Bröndby, Denmark |
| Doro Tele OY - 0994069-9 | Helsinki, Finland |
| Doro Finans AB - 556450-7282 1) | Lund, Sweden |
| Doro Nordic AB - 556558-0221 | Lund, Sweden |
| Doro UK Ltd - 1180330 | Redditch, UK |
| Gima. Ltd - 1627693 1) | Redditch, UK |
| Doro Audioline GmbH – 122237 1) | Köniz, Switzerland |
| Doro Hong Kong Ltd - 08194263-000-12-98-6 | Kowloon, Hong Kong |
| Doro SAS - 309 662 195 | Versailles, France |
| Doro Atlantel Sp.zo.o. - KRS 0000036162 | Krakow, Poland |
| Doratel Sp.Zo.o - KRS 0000202938 | Krakow, Poland |
| 1) Dormant company |
| The Group | Parent Company | ||
|---|---|---|---|
| 2007 | 2006 | 2007 | 2006 |
| 0.4 | 0.4 | 0.3 | 0.2 |
| 6.7 | 6.6 | 1.4 | 1.5 |
| 1.0 | 0.1 | 0.0 | 0.0 |
| 8.1 | 7.1 | 1.7 | 1.7 |
| No. of shares | Voting rights | Class | |
|---|---|---|---|
| A shares | 17,407,631 | 1 vote per share | Normal |
17,407,631 shares at a nominal SEK 1 per share = SEK 17,407,631. Drop in share capital of SEK 65,563,155 through a reduction of the share capital to cover losses.
No dividend was proposed as of 31 December 2007.
Convertibles or options
There are no outstanding convertibles or options.
| The Group | Parent Company | |||
|---|---|---|---|---|
| 2007 | 2006 | 2007 | 2006 | |
| Approved credit | 60.0 | 57.0 | 39.0 | 51.0 |
| Utilised credit | 2.1 | 0.0 | 0.0 | 0.0 |
| The Group | Parent Company | |||
|---|---|---|---|---|
| 2007 | 2006 | 2007 | 2006 | |
| Holiday pay liability | 3.5 | 3.2 | 1.3 | 1.0 |
| Payroll overheads | 1.3 | 0.8 | 0.8 | 0.3 |
| Other staff liabilities | 5.8 | 4.0 | 2.8 | 1.9 |
| Other accrued expenses | 4.0 | 8.6 | 1.8 | 4.3 |
| Total | 14.7 | 16.6 | 6.8 | 7.5 |
| The Group | Parent Company | |||
|---|---|---|---|---|
| 2007 | 2006 | 2007 | 2006 | |
| Chattel mortgages | 170.0 | 170.0 | 170.0 | 170.0 |
| Trade debtors and stock | 7.4 | 30.5 | – | – |
| Shares in Group companies 1) | 80.6 | 56.6 | 61.4 | 71.3 |
| Totalt | 258.0 | 257.1 | 231.4 | 241.3 |
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.
| The Group | Parent Company | |||
|---|---|---|---|---|
| 2007 | 2006 | 2007 | 2006 | |
| Guarantees to subsidiaries | 0.0 | 7.7 | 0.0 | 7.7 |
| Total | 0.0 | 7.7 | 0.0 | 7.7 |
Doro works in an environment with purchased products. Disputes arise with suppliers because they do not deliver products that have the agreed quality, functionality or delivery time. Doro normally only has a small amount of these disputes.
Doro has reported a major dispute with a supplier in previous years' annual reports, for which funds of SEK 31 million were set aside in the accounts for 1999 and 2000. This means that there is no remaining risk. Sojitz (formerly Nissho Iwai) was taken to court in Osaka, Japan, in 2000 and sued for a total of SEK 106 million. In July 2005 the local court ruled in Sojitz's favour, which Doro has appealed against. The entire legal process is expected to take a further year.
A successful outcome will mean that the entire sum will give the same result as a cash flow effect after deductions for ongoing legal fees and technical costs.
Doro also has a commercial dispute with a previous distributor concerning stocks. The value of the stock is SEK 2.7 million, which has been completely written down. Doro has won the principle issues in other instances in a court ruling, which was not contested. A number of other practical issues concerning the handling of the stock were not solved at the time of the annual accounts. Other legal activities have delayed the decision, which could take a further one to two years.
Doro's principle is to report reserves for estimated risks and legal costs until the case has been settled in a higher court.
The 2007 AGM elected Ingvar Ganestam (Ernst & Young AB) to be the parent company, Doro AB's auditor. Ernst & Young will carry out auditing at all large units for the period 2007–2011.
| The Group | Parent Company | |||
|---|---|---|---|---|
| Fees and costs | 2007 | 2006 | 2007 | 2006 |
| Auditing assignments | 1.1 | 1.1 | 0.6 | 0.2 |
| Other assignments | 0.2 | 0.2 | 0.0 | 0.1 |
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. Other assignments refer to all other activities.
| The Group | Parent Company | |||
|---|---|---|---|---|
| Taxes on profit/loss for the year | 2007 | 2006 | 2007 | 2006 |
| Tax paid | –0.0 | –0.4 | – | – |
| Deferred tax | –0.6 | –12.6 | – | – |
| Tax effect on Group contribution | ||||
| received | – | – | 0.8 | 1.2 |
| Total tax on profit/loss for the year | –0.6 | –13.0 | 0.8 | 1.2 |
Connection between the tax expense for the year and the reported earnings before tax:
| The Group | Parent Company | |||
|---|---|---|---|---|
| 2007 | 2006 | 2007 | 2006 | |
| Reported profit/loss before tax | 8.1 | –81.7 | –30.9 | –88.3 |
| Tax at current rate 28% | –2.3 | 22.9 | 8.7 | 24.7 |
| Tax effect on non-deductible expenses: | ||||
| Write-down of goodwill | – | –1.4 | – | – |
| Write-down of participations in | ||||
| Group companies | – | 0.0 | –2.4 | –15.9 |
| Other non-deductible expenses | –0.7 | –2.9 | –0.1 | –2.9 |
| Tax effect from Group contribution | ||||
| received | – | – | 0.8 | 1.2 |
| Tax effect from temporary differences | 1.3 | –0.4 | 1.3 | –0.4 |
| Non-taxable income: | ||||
| Dividend from Group companies | – | – | 2.9 | 0.1 |
| Group adjustment for deferred tax | ||||
| not taken into account | 3.2 | –8.6 | 0.0 | 0.0 |
| Change in value of deferred tax | ||||
| on loss carry forwards | –0.6 | –9.0 | 0.0 | 0.0 |
| Non-accounted deferred tax | ||||
| on loss carry forwards | –2.5 | –10.1 | –10.4 | –5.6 |
| Change in value of temporary | ||||
| differences | 0.0 | –3.6 | 0.0 | 0.0 |
| Adjustment for tax rates in foreign | ||||
| Group company | 1.0 | 0.5 | 0.0 | 0.0 |
| Reported tax | –0.6 | –12.6 | 0.8 | 1.2 |
Temporary differences arise in those cases where accounted values of assets or liabilities and their tax value are different. Temporary differences, unutilised loss carry forwards and other future tax deductions have led to deferred tax liabilities and tax assets for the following:
| The Group | Parent Company | |||
|---|---|---|---|---|
| 2007 | 2006 | 2007 | 2006 | |
| Deferred tax receivables | ||||
| Unutilised loss carry forwards | 15.7 | 16.2 | 15.7 | 15.7 |
| Total reported deferred tax | ||||
| receivables | 15.7 | 16.2 | 15.7 | 15.7 |
Deferred tax receivables are shown for unutilised loss carry forwards and temporary differences in the balance sheet, when they can be met by resolving untaxed reserves or those that in all probability 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 loss carry forwards.
Of the consolidated loss carry forwards, SEK 294 million (303) can be used without a time limit being imposed. The substantial remaining losses are in Sweden, the UK and Poland.
The loss carry forwards fall due as follows:
| 2008 | 11 |
|---|---|
| 2009 | 5 |
| 2010 | 4 |
| Later | 0 |
| Without limit | 294 |
| Total | 314 |
Non-accounted deferred tax receivables in the balance sheet concerning unutilised taxable loss carry forwards amount to:
| The Group | Parent Company | ||
|---|---|---|---|
| 2007 | 2006 | 2007 | 2006 |
| 74 | 77 | 42 | 32 |
Temporary differences exist in the Group concerning intangible assets recorded under their respective taxable value in the consolidated balance sheet. Temporary differences arise for costs for which tax deductions can be made at a later date. These intangible assets (concerning the sale of brands between Group companies) appear in the Group companies' own balance sheets but are eliminated to zero in the consolidated balance sheet due to intra-Group transactions. The deferred tax receivable regarding the Group difference for these assets amounts to SEK 7.7 million (9.2), which has not been included as a value in the consolidated balance sheet.
Deferred tax receivables referring to allocations for temporary differences amount to zero (1m), which have not been included as a value in the consolidated balance sheet.
| Profit/loss from participations in Group companies | Note 24 | ||||
|---|---|---|---|---|---|
| ---------------------------------------------------- | --------- | -- | -- | -- | -- |
| The Group | Parent Company | |||
|---|---|---|---|---|
| 2007 | 2006 | 2007 | 2006 | |
| Capital gains | – | 0.6 | 0.4 | – |
| Dividends | – | – | 10.0 | 0.3 |
| Write-down of shares | – | – | –10.0 | –56.6 |
| Write-back of shares | – | – | 1.4 | 0.0 |
| Total | – | 0.6 | 1.8 | –56.3 |
Items that can affect comparisons between years include the following major items (SEK million):
| The Group | 2007 | 2006 |
|---|---|---|
| Restructuring costs (excl. tax) | – | 32 |
| Other one-off costs | 3 | 17 |
An allocation for restructuring was made in Q4 2006.
| 2007 | 2006 | |
|---|---|---|
| Opening balance | 32 | 13 |
| Amount released | –24 | –13 |
| New allocations | 0 | 32 |
| Unutilised amounts cancelled | 0 | 0 |
| Closing balance | 8 | 32 |
A major restructuring of the Doro Group was carried out in 2007. This included job lay-offs and relocation to other offices etc. This allocation is expected to be resolved in 2008.
Doro's products are subjected to extensive quality testing. Guarantees are given to end-users that extend for a maximum 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.
| 2007 | 2006 | |
|---|---|---|
| Opening balance | 11.8 | 12.2 |
| Amount released | –9.7 | –11.5 |
| New allocations | 7.6 | 11.4 |
| Unutilised amount cancelled | –0.0 | –0.3 |
| Closing balance | 9.7 | 11.8 |
At most of its units Doro has premium-based pension systems. In certain countries there are fixed sums paid out when an employee retires. Furthermore there are shares in pensions that are premium-based in Sweden.
| 2007 | 2006 | |
|---|---|---|
| Opening balance | 0.1 | 0.1 |
| Amount released | –0.1 | –0.1 |
| New allocations | 0.2 | 0.1 |
| Unutilised amount cancelled | 0.0 | 0.0 |
| Closing balance | 0.2 | 0.1 |
Doro makes allocations for different estimated tax costs.
| 2007 | 2006 | |
|---|---|---|
| Opening balance | 0.0 | 0.0 |
| Amount released | 0.0 | 0.0 |
| New allocations | 0.0 | 0.0 |
| Unutilised amount cancelled | 0.0 | 0.0 |
| Closing balance | 0.0 | 0.0 |
The situation about disputes is explained in Note 21. Reserves are made continually to cover the cost of court cases.
| 2007 | 2006 | |
|---|---|---|
| Opening balance | 2.0 | 1.5 |
| Amount released | –0.7 | –0.7 |
| New allocations | 0.2 | 1.2 |
| Unutilised amount cancelled | – | – |
| Closing balance | 1.5 | 2.0 |
Different allocations are made for estimates of commitments to customers and various other commitments.
| 2007 | 2006 | |
|---|---|---|
| Opening balance | 1.3 | 1.1 |
| Amount released | –1.2 | –1.1 |
| New allocations | 0.0 | 1.3 |
| Unutilised amount cancelled | – | – |
| Closing balance | 0.1 | 1.3 |
Risk management at Doro. The Board of Directors has established various frameworks in Doro's financial policy and outlined which risks may be taken. Risk management aims to identify, quantify and reduce or eliminate risks. Doro's financial policy establishes frameworks for how different types of financial risks are managed and defines the risk exposure with which the business may be run. The main objective is to achieve a low risk profile.
Doro AB (the parent company) has overall responsibility for the Group's financial issues. Through centralisation and coordination, significant benefits of scale can be achieved regarding the terms obtained for financial transactions and financing. At present there is only one cash pool in Sweden, which is used by the parent company for several foreign currencies.
The Group only experiences credit risks in accounts receivable, which are dealt with via the respective company. The value of these receivables before tax and before write-downs for doubtful accounts receivable amounts to SEK 55.7 million (65.5).
In recent years Doro has experienced very low credit losses (less than 0.5 per cent of sales) due to the fact that the main customer group is large businesses with regular trade. The largest single customer accounts for less than 7 per cent of the Group's sales. Doro operates in most countries without credit insurance.
Doro has a factoring agreement with Nordea for its Swedish customers to safeguard the payment of accounts receivable. Doro still has credit risks relating to these receivables.
The parent company runs no commercial activities and provides a number of service functions for the Group. The parent company has essentially therefore only internal sales and a very low credit risk.
| The Group | |||
|---|---|---|---|
| Age analysis of accounts receivable (SEK m) | 2007 | 2006 | |
| Not yet due | 47.9 | 65.5 | |
| Due for payment < 60 days 1) | 7.3 | – | |
| Due for payment > 60 days | 0.5 | – | |
| Total accounts receivable | 55.7 | 65.5 | |
| Expected customer losses | –2.7 | –6.0 | |
| Accounts receivable in report | 53.0 | 59.5 |
1) No figures for the 2006 due date structure are presented because the reports did not contain this data and that the sale of companies means that this data cannot be regenerated.
| The Group | ||
|---|---|---|
| Doubtful accounts receivable, change (SEK m) | 2007 | 2006 |
| Opening balance | –6.0 | –4.5 |
| Expected customer losses | 0.0 | –2.0 |
| Confirmed customer losses | 0.0 | –0.2 |
| Amount cancelled | 3.4 | 0.7 |
| Translation differences | –0.1 | 0.0 |
| Closing balance | –2.7 | –6.0 |
The Group is only in debt to Nordea in the form of borrowings of Swedish accounts receivable (see factoring mentioned under credit risk) of SEK 6.0 million (4.5) that fall due for payment within 12 months. In addition, the Group has an annual credit contract with Nordea. Utilised bank overdraft facilities stood at SEK 2.1 million (0.0).
The bank overdraft limit is SEK 60 million. Volumes of bank overdrafts and letters of credit are adapted to Doro's seasonal fluctuations in product flow and their need for financing. Doro has ongoing dialogues with the bank. The risk of insufficient credit is considered very small. The Group's liquidity consists of cash at bank of SEK 8.3 million (30.5).
Surplus liquidity is not put into financial instruments but allocated to the business.
Doro is primarily active with telephony and is affected by many market risks. The risks that can have an affect on Doro's business appear in the comments below.
Currency risks. Foreign currency management is concentrated within Doro AB. Doro AB buys and sells currencies within the framework for established risk limits.
Doro usually has a very limited currency risk on various receivables because most sales are made in local currencies, even if the percentage to distributors and major European customers has increased in USD and EUR. However, Doro does have a very significant exposure regarding liabilities. Because a large proportion of products are bought in USD, changes can have a big impact. Currencies are bought on an ongoing basis and in 2007 were mainly based on the spot rates. Exchange rate fluctuations affect the Group's results in various ways:
Transaction exposure. This arises when income from sales and costs for purchases are in different currencies. Doro has large exposure because a lot of products are purchased in USD and income from most sales is in local currency. The exception is sales to markets where Doro does not have its own company, where both the income and costs are mainly in USD, and to some major European customers.
Doro's currency policy does not include hedging, because hedging has a price, plus the fact that currency fluctuations affect the forward price in the end, which means that protection is only ever short-term. Instead Doro opts for a long-term solution, which can either benefit the company over the short term or not. At the start of 2007 there were therefore no warrant contracts and of those taken out in 2006 none were utilised in 2007.
(Gross and after options)
| (SEK m) | 2007 Currency |
2007 | 2006 Currency |
2006 |
|---|---|---|---|---|
| After | After | |||
| Gross options | Gross | options | ||
| SEK | –30 | –30 | +1 | –72 |
| DKK | +5 | +5 | +5 | 0 |
| NOK | +10 | +10 | +18 | –6 |
| EUR | +135 | +135 | +154 | +84 |
| GBP | +20 | +20 | +16 | –6 |
| AUD | +19 | +19 | +30 | –20 |
| USD | –160 | –160 | –240 | +20 |
| PLN | +12 | +12 | +20 | +20 |
Conversion exposure of foreign assets. Doro has net investments in foreign subsidiaries. These were hedged until 2006. No net investments were hedged in 2007.
At year-end the value of foreign net assets was SEK 31 million (48), of which SEK 0 million (46) was hedged in the form of loans in the same currency.
| 2007 | 2007 Value Of which hedged |
2006 Value |
2006 Of which hedged |
|
|---|---|---|---|---|
| DKK | 6 | 0 | 16 | 15 |
| NOK | 1 | 0 | 1 | 0 |
| EUR | 12 | 0 | 20 | 18 |
| GBP | 7 | 0 | 15 | 10 |
| CHF | 1 | 0 | 1 | 1 |
| AUD | 0 | 0 | –3 | 0 |
| HKD | 5 | 0 | 6 | 6 |
| PLN | 0 | 0 | 6 | 7 |
| Total | 31 | 0 | 62 | 57 |
Conversion of foreign subsidiaries' income statements is affected by the exchange rate. These conversion differences are inconsiderable.
Interest and currency exposure. Doro has concentrated a large part of its loans and a change in interest rates has an insignificant affect on results. All loans are short-term and have variable interest rates. The reason for this is the large variations in borrowing requirements (because each cash flow is uneven) and the fact that variable interest rates produce lower annual costs.
| 2007 | 2006 | |||||
|---|---|---|---|---|---|---|
| The Group | Reported | Actual | Reported | Actual | Classification | |
| Accounts receivable | 53.0 | 53.0 | 59.5 | 59.5 | Accounts receivable and loans receivable | |
| Other receivables | 5.8 | 5.8 | 5.9 | 5.9 | Accounts receivable and loans receivable | |
| Currency options | – | – | 0.0 | 0.1 | Options reported as guarantees | |
| Cash at bank | 8.3 | 8.3 | 30.5 | 30.5 | Saleable assets | |
| Assets | 67.1 | 67.1 | 95.9 | 96.0 | ||
| Bank overdraft facilities | 2.1 | 2.1 | 0.0 | 0.0 | Other financial liabilities | |
| Liabilities to credit institutions | 6.0 | 6.0 | 4.5 | 4.5 | Other financial liabilities | |
| Accounts payable | 77.4 | 77.4 | 77.9 | 77.9 | Other financial liabilities | |
| Other liabilities | 1.8 | 1.8 | 4.0 | 4.0 | Other financial liabilities | |
| Liabilities | 87.3 | 87.3 | 86.4 | 86.4 |
| Parent company | 2007 Reported |
Actual | 2006 Reported |
Actual | Classification | |
|---|---|---|---|---|---|---|
| Accounts receivable | 0.7 | 0.7 | 2.5 | 2.5 | Accounts receivable and loans receivable | |
| Receivables at Group companies | 8.5 | 8.5 | 25.0 | 25.0 | Accounts receivable and loans receivable | |
| Other receivables | 1.4 | 1.4 | 2.1 | 2.1 | Accounts receivable and loans receivable | |
| Currency options | 0.0 | 0.0 | 0.0 | 0.1 | Options reported as guarantees | |
| Cash at bank | 1.8 | 1.8 | 2.6 | 2.6 | Saleable assets | |
| Assets | 12.4 | 12.4 | 32.2 | 32.3 | ||
| Bank overdraft facilities | 0.0 | 0.0 | 0.0 | 0.0 | Other financial liabilities | |
| Liabilities to credit institutions | 0.0 | 0.0 | 0.0 | 0.0 | Other financial liabilities | |
| Accounts payable | 5.0 | 5.0 | 5.2 | 5.2 | Other financial liabilities | |
| Liabilities to Group companies | 0.4 | 0.4 | 0.5 | 0.5 | Other financial liabilities | |
| Other liabilities | 1.5 | 1.5 | 0.7 | 0.7 | Other financial liabilities | |
| Liabilities | 6.9 | 6.9 | 6.4 | 6.4 |
Financial instruments are valued at their actual value. This is done by assessing the value of different receivables and liabilities at the exchange rate on the closing date. Receivables are adjusted with various needs for write-downs of customer receivables. Doro does not own securities or similar assets and does not therefore have any problems valuing them. Neither does Doro have any financial derivatives.
Other financial instruments (primarily accounts receivable and accounts payable) are reported according to the trade date principle. Receivables are reported at the amount at which they are expected to be received after individual assessment. Business debts are reported at the accrued acquisition value.
No reclassification has been carried out during the year.
Because Doro only has financial instruments in the form of receivables, cash at bank and operational-related liabilities, the effects of any profits/losses are limited to interest and currency exposure. The effects on profits/losses are reported in Note 11.
| (SEK m) | 2007 | 2006 |
|---|---|---|
| SEK | 18 | 9 |
| EUR | –7 | –16 |
| GBP | 0 | –3 |
| DKK | –2 | 0 |
| NOK | 0 | –2 |
| AUD | 0 | –6 |
| HKD | 0 | 0 |
| USD | –9 | –12 |
| PLN | 0 | 4 |
| Total | +0 | –26 |
A sensitivity analysis can be found in the Directors' Report.
Issues concerning interested parties arose in conjunction with Doro's choice of distributor in Poland with TM Distribution Sp. Zo.o. TM Distribution is owned by Magdalena Duhanik-Persson and Tomas Persson. Because Tomas Persson is a member of Doro's board it has been important for Doro that this partnership is conducted according to market-related terms. Because the distribution solution has no considerable effect on Doro no further measures have been deemed necessary in relation to interested parties.
Allocations for pensions are reported in Note 28. Most of Doro's commitments to staff are in the form of various premium-related pension plans. In addition there are a few benefit-linked pension plans. In France and Poland there are agreements concerning pension remuneration based on factors such as salary, period of employment, etc.
Allocations are made for these commitments at the subsidiaries in France and Poland. The cost for the benefit-linked plans (comparable) in France and Poland are as follows:
| The Group | |||
|---|---|---|---|
| 2007 | 2006 | ||
| Costs for service during current period | 0.0 | 0.1 | |
| Interest costs | – | – | |
| Actuarial profit and loss | – | – | |
| Total | 0.0 | 0.1 |
| 2007 | 2006 | |
|---|---|---|
| Opening gross stock | 65.9 | 92.9 |
| Change in gross stock | –6.2 | –27.0 |
| Closing gross stock | 59.7 | 65.9 |
| Opening write-downs of stock | 14.6 | 21.2 |
| Change in write-downs of stock | –6.0 | –6.6 |
| Closing write-downs of stock | 8.6 | 14.6 |
| Net stock in balance sheet | 51.2 | 51.3 |
Doro consolidated its Australian companies up to the time of sale on 16 May 2007. For different comparison purposes a pro forma account has been drawn up for 2007 and 2006 not including the Australian companies. On 31 December 2006 Doro had 80 employees and 64 excluding employees in Australia.
Income statement
| Doro incl AU 2007 |
Doro excl AU 2007 |
Doro incl AU 2006 |
Doro excl AU 2006 |
|
|---|---|---|---|---|
| Net sales | 346 | 336 | 433 | 387 |
| Operating costs | –336 | –326 | –490 | –418 |
| Operating profit/loss before depreciation | 10 | 10 | –57 | –31 |
| Depreciation according to plan | –1 | –1 | –20 | –19 |
| Operating profit/loss after depreciation | 9 | 9 | –77 | –50 |
| Net financial items | –1 | –1 | –5 | –4 |
| Operating profit/loss after financial items | 8 | 8 | –82 | –54 |
| Tax | –1 | –1 | –13 | –10 |
| Net profit/loss | 8 | 8 | –95 | –64 |
| Balance sheet | ||||
| Doro incl AU 2007 |
Doro excl AU 2007 |
Doro incl AU 2006 |
Doro excl AU 2006 |
|
| Intangible fixed assets | 10 | 10 | 9 | 9 |
| Tangible fixed assets | 4 | 4 | 2 | 1 |
| Stock | 51 | 51 | 51 | 40 |
| Current liabilities | 88 | 88 | 89 | 97 |
| Cash and bank balances | 8 | 8 | 31 | 25 |
| Total assets | 161 | 161 | 182 | 172 |
| Shareholders' equity | 40 | 40 | 32 | 43 |
| Interest-bearing liabilities | 8 | 8 | 5 | 5 |
| Non interest-bearing liabilities | 114 | 114 | 146 | 125 |
| Total shareholders equity and liabilities | 161 | 161 | 182 | 172 |
Number of employees. Average number of employees.
Average return on capital employed. Operating profit/loss divided by the quarterly average capital employed excluding cash and bank balances.
Average return on shareholders' equity. Profit/loss after financial items and final tax dividend by average shareholders' equity.
Gross margin. Profit/loss before depreciation as a percentage of the year's income.
Added value per employee. Net sales minus costs for manufacturing services bought in divided by the average number of employees.
Operating margin. Operating profit/loss (after depreciation) as a percentage of the year's sales.
Liquid funds. Cash balances plus approved unutilised bank credit. Doro does not have any other liquid funds (short-term investments).
Net margin. Profit/loss after financial items as a percentage of the year's sales.
Capital turnover rate. Net sales for the year divided by the average balance sheet total.
Net debt/equity ratio. Net interest-bearing liabilities minus cash balances as a percentage of shareholders' equity.
Interest cover ratio (multiple). Profit/loss after net financial items plus financial expenses divided by financial expenses.
Equity/assets ratio. Shareholders' equity as a percentage of the balance sheet total.
Capital employed. Total assets minus non interest-bearing liabilities.
Cash flow. Cash flow from current activities.
Investments. Net investments excluding acquisitions.
Earnings per share before tax. Profit/loss after financial items divided by the average number of shares.
Earnings per share after tax. Profit/loss after financial items minus final tax divided by the average number of shares.
Cash flow per share. Cash flow from current activities divided by the average number of shares.
The undersigned hereby pledge that the consolidated accounts and the annual report have been drawn up in accordance with the International Financial Reporting Standards (IFRS) as adopted by the EU and according to good accounting practices and give a true picture of the Group's and company's position and earnings, and that the consolidated directors' report and directors' report give a true overview of developments in the Group's and company's business, position and earnings and describes significant risks and uncertainty factors faced by Group companies.
Lund, 15 April 2008
Bo Kastensson Chairman
Anders Berg Tomas Persson Jonas Mårtensson
My auditor's report was submitted on 15 April 2008
Ingvar Ganestam Authorised Public Accountant
I have audited the annual accounts, the consolidated accounts, the accounting records and the administration of the Board of Directors and CEO of Doro AB for the 2007 financial year. The company's annual report is included on pages 21-44 of the printed version of this document. It is the Board of Directors and the CEO who have responsibility for these accounts and the administration of the Company, and the Annual Accounts Act is applied when drawing up the annual report and the International Financial Reporting Standards (IFRS), as adopted by the EU, are applied when drawing up the consolidated accounts. My responsibility is to express an opinion about the annual accounts, the consolidated accounts, and the administration, based on my audit.
I conducted my audit in accordance with Generally Accepted Auditing Standards in Sweden. Those standards require that I plan and perform the audit to obtain reasonable assurance that the annual accounts and consolidated accounts are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the accounts. An audit also includes assessing the accounting principles used and their application by the Board of Directors and the CEO, as well as evaluating the overall presentation of information in the annual accounts and consolidated accounts.
As a basis for my opinion concerning discharge from liability, I examined significant decisions, actions taken and circumstances of the company in order to be able to determine the liability, if any, to the Company of any Board Member or the CEO.
I also examined whether any Board Member or the CEO has, in any other way, acted in contravention of the Swedish Companies Act, The Annual Accounts Act or the Articles of Association. I believe that my audit provides a reasonable basis for my opinion set out below.
The annual accounts have been prepared in accordance with the Swedish Annual Accounts Act and, give a true and fair view of the company's financial position and results of operations, in accordance with generally accepted accounting principles in Sweden. The consolidated accounts have been prepared in accordance with International Financial Reporting Standards (IFRS), as adopted by the EU and the Annual Accounts Act, and, thereby give a true and fair view of the Group's results and financial position. The Directors' report has been drawn up in accordance with the remainder of the annual accounts and consolidated accounts.
I recommend that the annual general meeting adopts the income statements and balance sheets of the parent company and the Group, that the loss of the parent company be dealt with in accordance with the proposal in the Directors' report and that the members of the Board of Directors and the CEO be discharged from liability for the financial year.
Lund, 15 April 2008
Ernst & Young AB
Ingvar Ganestam Authorised Public Accountant
Main employment: CEO Doro AB, Director, Care Electronics and Business Electronics, CEO of Doro SAS, France
Qualifications: Master of Science Shareholding:
300,000 shares Options: 0
Employed since 2000. Previously at Matra Nortel Communications working with business development.
Main employment: Deputy CEO and Director of Home Electronics
Qualifications: Master of Science
Shareholding: 75,000 shares
Options: 0
Employed since 2002. Previously at Anoto as Director of manufacturing.
Stefan Sjölin, born 1955.
Main employment: Deputy CEO and CFO. Qualifications:
Economist and Master of Science.
Shareholding: 100,000 shares.
Options: 0 Employed since 2006. Previously deputy CEO and CFO at Karlshamns AB (publ).
born 1970 Main employment: Marketing Director
Qualifications: Economist
Shareholding:
75,000 shares
Options: 0 Employed since 2004. Previously at Fitch as Accounts Director.
born 1971 Main employment: Sales Director and CEO Doro A/S, Norway. Qualifications: Bachelor of Arts
Shareholding: 87,600 shares
Options: 0 Employed since 2001. Previously at Accenture as a consultant in Communication and High Tech.
Rune Torbjörnsen was part of the Group management until 28 October 2007.
Various board assignments Qualifications: Dr. of Philosophy. Other positions: Chairman of Coromatic Group AB and Caretech AB. Board member of Pricer AB, Metric AS (Norway) and Scanpocon A/S (Denmark)
Shareholding: 681,000 shares Options: 0 Chairman of the Board since 2007.
Main employment: Senior advisor and management consultant Qualifications:
B.Sc. Economics from DHS Other positions:
No other board assignments Shareholding: 150,000 shares. Options: 0
Board member since 2007.
Jonas Mårtensson, born 1963.
Main employment: Partner Alted AB. Qualifications: B.Sc. Economics
Other positions: Transticket AB, PanVision AB (Subsidiary of KF). Shareholding:
165,000 shares Options: 0 Board member since 2007.
Main employment: Chairman of TM Invest
Qualifications: Bachelor of Arts from Lund University
Other positions: Chairman of Range Servant AB, TM Invest sp.zo.o and TM Toys sp.zo.o.
Shareholding: 25,000 shares
Options: 0 Board member since 2002.
Ingvar Ganestam Svensson, born 1949.
Authorised Accountant Ernst & Young AB, Malmö.
Doro's auditor since 2007.
Extensive experience of auditing listed companies including Tetra Pak AB, Lindab AB and the IKEA Group.
The board and auditors | Doro Annual Report 2007 | 47
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